CPI Report, AI Chip Boom, and Starlink's Business | Bloomberg Technology

CPI Report, AI Chip Boom, and Starlink's Business | Bloomberg Technology

Inflation and Market Reaction

  • The CPI report revealed higher-than-expected inflation, leading to market pressure and a reassessment of expectations for Federal Reserve rate hikes.
  • Bitcoin and other risk assets experienced a sell-off as the market adjusted to the possibility of higher interest rates for an extended period.

Technology Developments

  • TSMC, the world's largest contract manufacturer of semiconductors, reported a better-than-expected 16% jump in sales, driven by demand for AI chips.
  • Several companies, including Meta, Intel, and TSMC, are developing their own AI chips to reduce reliance on expensive NVIDIA chips.
  • Alphabet's cloud event highlighted the tension between cloud providers and AI builders over dependence on NVIDIA.

Cryptocurrency Regulation

  • Coinbase and Circle sent letters to Senators Schumer and McConnell urging Congress to enact a comprehensive regulatory framework for stablecoins and digital asset market structure.
  • Coinbase's Chief Policy Officer, Faryar Shirzad, emphasized the need for comprehensive frameworks from Congress and the Administration to regulate digital assets and stablecoin issuance.
  • Shirzad stressed the importance of the U.S. crypto industry's growth in reflecting U.S. values and laws, as it enhances American national security.

Inflation and Economic Policy

  • Larry Summers, a former U.S. Treasury Secretary, expressed no surprise at the inflation numbers, given the economic growth, low unemployment, budget deficits, and easy financial conditions.
  • Summers warned that the neutral rate is likely higher than the Fed's 2.6% estimate, raising the possibility of a rate hike instead of a cut in June.
  • He criticized the Federal Reserve's handling of inflation in 2021, arguing that they dismissed indicators and made policy based on hope rather than reality.
  • Summers emphasized the Fed's influence on inflation expectations and the importance of supply-side policies, particularly maintaining economic openness and competition from foreign goods.
  • SpaceX's Starlink satellite business is crucial for the company's future, as it aims to generate profits to fund the development of Starship and enable human travel to Mars.
  • Starlink's profitability depends on increasing its profit margin by reducing satellite and ground infrastructure costs while maintaining customer trust and reliability.
  • To expand its user base beyond the current level, Starlink needs to optimize satellite positioning, improve ground infrastructure, address technical issues, provide reliable customer service, and continue expanding coverage while targeting specific regions.

Venture Capital Investments

  • Toyota Ventures, Toyota's venture capital arm, has raised $300 million for its venture fund, with $150 million each allocated to its Frontier Fund and Climate Fund.
  • Toyota Ventures operates as a limited partner, with a focus on long-term investments in disruptive innovation in AI, mobility, robotics, fintech, climate, carbon capture and storage, renewable energy, and battery electric technologies.
  • Christie's Ventures, the venture arm of Christie's auction house, invests in fintech, AI, human-computer interfaces, and hardware.
  • Christie's Ventures evaluates investments based on both potential returns and the potential for bringing new capabilities to Christie's, with five out of ten investments actively used within the company.

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