Can AI Keep Propping Up the Stock Market?

0:00Today on the AI Brief, we're talking about Fed Chair Jerome Powell's comments on AI from last week. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. To join the conversation, follow the Discord link in our show notes.

0:23Welcome back to the AI Daily Brief. Quick note before we get into today's content, I am coming back from some holiday travel. Hope you guys are all coming off of great long weekends as well. And so because of that, I am going to be doing just a extended headlines edition today. Tomorrow, we will be back to our normal format, combining headlines in the main episode. But for now, we are just doing headlines, and we kick off with comments from Fed Chair Jerome Powell on AI from last week. The comments came during a panel at the European Central Bank's Forum on Central Banking in Portugal. Fed Chair Jerome Powell said that the massive investments being made in AI suggest, quote, a sense of something big coming here.

1:00Now, part of why people might have been interested in Powell's take on this is that one of the Fed's mandates is full employment. And so consequently, what Powell and the Fed think about what AI will do to jobs could have a pretty big impact on the potential of future policy. Alas, KG, as always, Powell would not commit to a strong opinion on the matter. Powell said that right now it was too early to know whether AI would eliminate jobs, augment those that already exist, or create entirely new categories. He pointed out that at this stage, the Fed's role in the whole thing is pretty limited. Said Powell, there's not a lot a central bank can do about that.

1:33But like everybody else, we're meeting with all the experts and asking ourselves, what will the effects on productivity, on inflation, on growth, and will it be enormously displacing? And if so, for whom? Powell went on saying that the Fed is investing, quote, a lot of time and effort into investigating these potential impacts, although he did also say that they are not currently using generative AI in their work. And to be clear, this isn't just interesting or important from a what happens in the future sort of standpoint. Given how tied the markets are to financial stability, which is the key mandate of the Fed, understanding what is going on with AI in a market context is really important right now.

2:07Over the last couple of years, the emergence of the generative AI category has been the most important thing propping up the stock market. Obviously, the impact has been extremely top heavy in stocks like NVIDIA, but overall, it's dragged the market north, even though there's a broader sense, particularly among regular people, that there's still something fundamentally off with the economy. Throughout that time, there have been calls that AI is in a bubble, although I do think that they seem to be getting a little bit louder recently. One of the things that I anticipate doing this week is digging deep into the recent Sequoia report on this, but you're seeing more and more arguments like the one made by Roger McNamee earlier today on Twitter, where he wrote, when firms like Sequoia and Goldman Sachs tell me there is a bubble, I pay attention.

2:45When their argument is based narrowly on discretionary capex, alarm bells go off. Why? Because there are lots of other reasons to think generative AI is going to disappoint. Like I said, I'm anticipating doing a full show on this later this week, so I don't want to get into it that deeply today. And I will give you a little preview and spoiler alert of my position on this. I think that perhaps these market doomsayers are thinking about things in a slightly inaccurate way, or at least not in the way that I would think about them. But one of the things we pay attention to here is narratives and shifts in narratives.

3:14And right now there is at least the attempt to shift the narrative to AI as bubble. Then again, we saw something almost exactly like this last summer, and so this may just be part of the summer doldrums. You may have noticed that there's a lot less big news news when it comes to generative AI over the last month or so than there was before that. And I think we're in for a couple months of relative quiet. During that quiet, there will be some activity, it seems, in the government when it comes to Washington, D.C. and AI. The Senate Commerce Committee is holding a hearing on Thursday focused on privacy-related concerns that come from the rise of AI.

3:46According to The Hill, the hearing will examine how AI has, quote, accelerated the need for a federal comprehensive privacy law. Swirling around this is the attempt to push forward the American Privacy Rights Act, which again The Hill describes as giving people more control over their data and adding requirements such as letting users opt out of targeted advertising and data transfers. 2024 so far has been a lot quieter than 2023 when it comes to AI policy in the United States, with arguably the biggest action being Chuck Schumer and a group of bipartisan senators releasing their AI roadmap, which basically did nothing at all, at least for now.

4:18Now, of course, this was always to be expected given that it is presidential election season, but it is still notable even to me just how little engagement with AI is going on in Washington right now. Could voter interest change that, though? Well, Time recently published a new survey summing it up as saying U.S. voters value safe AI development over racing against China. Time sums up that in the poll, 75 % of Democrats and 75 % of Republicans believe that, quote, quote, taking a careful, controlled approach to AI by preventing the release of tools that terrorists and foreign adversaries could use against the U.S.

4:51is preferable to, quote, moving forward on AI as fast as possible to be the first country to get extremely powerful AI. Another statistic, 50 % of voters believe the U.S. should use its advantage in the AI race to prevent any country from building a powerful AI system by enforcing, quote, safety restrictions and aggressive testing requirements, compared to 23 % who say the U.S. should try to build powerful AI as fast as possible to outpace China. The poll also shows a lot of skepticism of open-source AI. Now, this polling came from the AI Policy Institute. To AIPI's credit, it is not clear about its bias at all.

5:23The summary above the fold on its website reads, American voters are worried about risks from AI technology. The AI Policy Institute's mission is to channel public concern into effective regulation. We engage with policymakers, media, and the public to shape a future where AI is developed responsibly and transparently. That doesn't, of course, mean that you should reject these poll results as somehow too biased to be ignored or anything like that. I just think it's important to have that background when you go into it. Again, beyond the scope of this particular episode, but I think the way in which the bias of a polling organization shows up in the formation of the questions can be extremely subtle, but still pretty clear.

5:57Daniel Coulson, the executive director of the AIPI, had a fairly middle-of-the-road summary, though, of the results from the survey. He said, What I perceive from the polling is that stopping AI development is not seen as an option, but giving industry free reign is also seen as risky. And so there's the desire for some third way. And when we present that in the polling, that third path, mitigated AI development with guardrails, it's the one that people overwhelmingly want. One thing that I will certainly validate from my own experience here is that to the extent that the sides of this debate are defined on the one hand as the AI safety pausists and on the other, the accelerationists, pretty much a huge majority of people I find are clearly in the middle somewhere.

6:35And so that may be what's coming out in these results. If you want to check out the AI Policy Institute for yourself, you can find them at theaipi.org. Today's episode is brought to you by Superintelligent, the platform for fun, fast AI learning. Super has a ton of new things going on. We recently announced our partnership with Spotify, through which users of that app can now access Superintelligent content directly from their mobile apps. We've also just launched the AI learning feed. In addition to seeing the tutorials that we're dropping, there are polls, news items with related lessons, and a chance for people to show off the projects and use cases that are making AI come alive for them.

7:12We've also just kicked off the Super Summer Challenge, where each week we'll share a new challenge that you can use to discover new AI tools and use cases. Go to besuper.ai and use code SUPERFUN for 50 % off your first two months. That's besuper.ai. Today's episode is brought to you by Venice. Venice is a private, uncensored generative AI app. It accesses open source models to enable text, image, and code generation without the fear of being spied on or having your data exploited. Discuss anything with Venice without concerns about it being monitored, sold, or given to advertisers and governments.

7:43Venice is different because your conversations and creations are kept securely within your own browser, never stored or accessible by Venice. Unlike other AI apps, Venice won't tell you what's okay to say or not. Venice won't patronize you. It simply provides direct access to machine intelligence. No topics are off-limits, no ideas are taboo. With Venice, you're in control of the AI, as you should be. Pro subscriptions are available for$49 a year or$8 per month. Try it for free without an account at venice.ai. Now, speaking of the fear that AI technology could make it to the hands of people we don't want, at the end of last week it came out that OpenAI last year experienced a security breach.

8:19On July 4th, the New York Times reported, early last year, a hacker gained access to the internal messaging systems of OpenAI and stole details about the design of the company's AI technologies. The hacker lifted details from discussions in an online forum where employees talked about OpenAI's latest technologies, but did not get into the systems where the company houses and builds its artificial intelligence. The company did tell its board of directors and its employees last April, April 2023, but, quote, The executives decided not to share the news publicly because no information about customers or partners had been stolen.

8:49The executives did not consider the incident a threat to national security because they believed the hacker was a private individual with no known ties to a foreign government. The company did not inform the FBI or anyone else in law enforcement. Interestingly, this was the event that triggered what would lead to Leopold Aschenbrenner's ultimate departure from the company. Writes the Times, For some OpenAI employees, the news raised fears that foreign adversaries such as China could steal AI technology that, while now mostly a work and research tool, could eventually endanger U.S. national security.

9:17After the breach, Leopold Aschenbrenner, an OpenAI technical program manager focused on ensuring that future AI technologies do not cause serious harm, sent a memo to OpenAI's board of directors arguing that the company was not doing enough to prevent the Chinese government and other foreign adversaries from stealing its secrets. Leopold discussed this on the Duarkes show last month. Said an OpenAI spokesperson, We appreciate the concerns Leopold raised while at OpenAI, and this did not lead to his separation, but while we share his commitment to building SafeAGI, we disagree with many of the claims he has since made about our work.

9:46This includes his characterizations of our security, notably this incident, which we addressed and shared with our board before he joined the company. Only point being that even if it is the popular opinion in the U.S. that what matters the most is safe deployment of AI, that may not be ultimately what the U.S. political establishment values. Going back to that Schumer roadmap, one of the things that stood out to me as extremely clear is how much more that guidance document prioritized being out ahead and beating China and other global adversaries than it did around worrying about some of the more concerning AI safety scenarios.

10:21And China is certainly surging ahead when it comes to AI. The South China Morning Post recently published a piece, China's AI competition deepens as SenseTime Alibaba claimed progress at AI show. Basically, there was just a conference in Shanghai called the World Artificial Intelligence Conference, and some of the companies presenting at the event had some big claims. For example, the co-founder and CEO of SenseTime claimed that SenseNova 5.5 surpassed five of eight key metrics. When it comes to big mainstream conversations around AI, ultimately, I think all of these different factors, from safety concerns to job and employment concerns to global competitiveness and geopolitical concerns, continue to battle for supremacy as policy gets made and as the industry develops.

11:02For now, though, that is going to do it for today's AI Daily Brief. Like I said, a slightly shorter edition, mostly just a combination of the headlines and my deeper analysis shows. Back to the normal format tomorrow, and until next time, peace. Love you guys.