Current Events Quiz

Google's Mixed Quarter and the State of Big Tech

• Google announced a 70 billion dollar stock buyback plan and reported that their Cloud unit was profitable for the first time in its history.

• Google's Q on search revenue was up year over year two percent, but down five percent quarter over quarter.

• YouTube was down 2.5 percent year over year and down 16 percent quarter over quarter, while other bets, including Nest, were down 35 percent year over year.

• Net income for Google was 15 billion dollars.

• The earnings call lacked a clear strategic plan for dealing with operating costs and AI strategy.

• There is confidence within Google that they have a significant AI advantage over Microsoft, but there is a fear of regulatory concerns and making mistakes.

• Google's lack of a clear strategy and cost-cutting plan has led to a loss of faith among shareholders.

• Sundar Pichai is capable of leading Google, but there are concerns about his authority and the need for change in leadership.

• Big Tech companies are now cash cows, with single-digit growth rates and a focus on financial engineering, rather than innovation.

• Microsoft had seven percent year-over-year revenue growth, while Facebook was up 3 percent from a year earlier.

• According to Jerome Powell, the economic outlook for the year is uncertain with the most likely scenarios being sub-one percent growth or going into a recession.

• Powell also stated that the only way to combat inflation is to slow the economy and cool off wages, which may lead to a recession.Addressing Inflation, Labor Participation, and the Role of AI in the Economy

• The current fiscal policy in the US is causing annual deficits of two trillion dollars.

• To combat inflation, addressing the supply side, such as energy costs and supply chain bottlenecks, could be more effective than solely reducing demand.

• The lack of creativity in addressing inflation and labor participation is a concern, with the current approach being too violent for the economy.

• Unemployment hacking has become a high art, with people learning to hack unemployment benefits and not taking available jobs.

• Unlocking the supply of unused labor could alleviate the cost of labor and fill open jobs, which is a more positive way to address the labor shortage.

• The Federal Reserve's reaction to data is slow compared to more nimble companies with better data.

• The ex-China world order means that nearshoring or onshoring will keep costs higher, making prices of goods and services higher, leading to higher inflation.

• The tension between labor and capital will increase as physical labor becomes more expensive, and knowledge work becomes more deflationary due to AI automation.

• AI automation can increase productivity by up to 30%, allowing for wage growth and higher productivity among knowledge workers.

• Knowledge workers who do not embrace this transition may not be able to compete in the workforce, as it will require upskilling and basic programming and coding knowledge.

• AI automation can be used to sort databases, find Twitter handles and LinkedIn profiles, and automate newsletter building, among other tasks.

• Sequoia led a $20 million round in Harvey.ai, a legal super wizard for law firms, indicating the growing role of AI in various industries.AI and Land Banking in San Francisco Real Estate Market

• Open AI APIs allow for natural language programming without the need for specific commands or a new language to learn.

• The AI technology is easy to use and has a lot of potential for development.

• The integration of AI tools with other tools will drive new products and progress in the market.

• The decline in public growth stocks and private companies has created a reset moment for asset classes.

• Commercial real estate market is facing an 80% decline in bids for a $300 million office tower in San Francisco due to the high vacancy rate of over 30%.

• The building might be bought by an equity investor who is willing to wait for the market to come back, which is called land banking.

• The availability of low-cost capital in the form of debt or preferred stock allowed valuations to balloon on the equity, but now prices are down by 70% across all three asset classes.

• Downtown San Francisco has seen a decline in cell phone traffic of around 70%, while the wider Bay Area is still vibrant.

• A healthy vacancy rate for an office market is 5-10%, while a high vacancy rate is considered 15%.

• San Francisco's vacancy rate is over 30%, which could get worse due to the effect of remote work.

• The demand for office space in San Francisco might take up to a decade to return to normal levels.

• A fire commissioner was beaten with a metal pipe by a gang of homeless addicts who were encamped in front of his mother's house, highlighting the issues of homelessness and drug addiction in San Francisco.Discussion on Assault Case and Lab Meat

• The defendant in an assault case in San Francisco accused the victim of using bear spray on him first, but the charges were dropped by the DA due to concerns about the validity of the accusation.

• The defendant's lawyer claims that the victim was the one who had been accused of bear spray attacks on homeless people in the past.

• There is a video of the defendant and his accomplice chasing the victim with a metal pipe, which goes beyond self-defense.

• The victim was severely injured and could have been killed by the deadly force used against him.

• The drop of charges against the defendant is controversial, and justice should be applied equally to all parties involved.

• Lab meat is divided into three categories: alternative proteins, recombinant DNA synthesis, and cellular meat.

• Alternative proteins are made from plant-based proteins, but they are expensive and not as tasty as traditional animal protein.

• Recombinant DNA synthesis involves synthesizing animal proteins using bacteria or yeast cells, which is more energy-efficient and can result in identical protein as traditional animal protein.

• However, recombinant DNA synthesis is still too expensive due to the challenges of strain engineering, process engineering, and scale manufacturing.

• Cellular meat involves growing meat from animal cells, which is the hardest category to achieve due to the complex nature of meat.

• Animal agriculture emissions are one of the largest contributors to global warming, and lab meat could address this issue.

• The author believes that market forces should drive the adoption of lab meat, but it requires significant investment and technological advancements to become a viable alternative to traditional animal protein.