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An AI-generated parody is shaking the markets

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For a few minutes, an ominous image of black smoke billowing from what appeared to be a government building near the Pentagon sparked investor fear for a few minutes on Monday, sending stocks crashing.

Experts fast rejected the photo if fake, most likely cobbled together with artificial intelligence, and the markets quickly recovered. But it illustrated one of the big fears behind the government’s zeal to regulate AI: that the technology could be used to stir panic and sow disinformation, with potentially disastrous consequences.

It may have been the first time an AI-generated image moved markets, according to Bloomberg. The photo — which claimed an explosion had been reported near the Pentagon — first appeared on Facebook. It then quickly spread to Twitter through accounts with large followings, including financial news site ZeroHedge (which has a blue check mark through its Twitter Blue subscription service) and Kremlin-controlled RT.

Within minutes, internet sleuths began exposing the image, and shortly afterward ZeroHedge and RT removed it from their accounts, while Facebook blocked access to the original post. Still, the incident underscores how even unsophisticated spoofs can quickly spread misinformation, especially through trusted social media channels.

Regulators have warned of exactly these kinds of problems:

There may be more powerful threats ahead. In a blog post on Monday, Sam Altman — the CEO of OpenAI whose Senate testimony on AI gripped Washington last week — and two top lieutenants warned that these systems could fall within a decade. could achieve “superintelligence”.

In response, they said, global governments should consider creating a regulatory agency, similar to the International Atomic Energy Agency, that can inspect, audit and if necessary limit systems that exceed a certain level of capability. to go. “Management of the most powerful systems, as well as decisions about their deployment, must have strong public scrutiny,” Altman and colleagues write.

AI isn’t always terrible for stocks, it’s worth noting. Investors have pushed up the market caps of companies tied to the technology, including Alphabet, Meta, Microsoft and the chipmaker Nvidia.

According to Morgan Stanley Wealth Management, seven stocks accounted for 85 percent of the S&P 500’s earnings this year last week. All but one member of that group is heavily invested in AI

Yet many of those stocks are vulnerable to AI-driven disruptions. At a conference in San Francisco on Monday, Bill Gates suggested why that might be“You’ll never go to a search site again,” he said. “You never go to a productivity site. You will never go to Amazon again.”

TikTok is suing Montana for banning the video app. The Chinese-owned company argued in federal court that the attempt to prevent the company from operating within state borders was unconstitutional. Meanwhile, The Information reports that Oracle, TikTok’s cloud provider, is on its own limited access to the source code of the appundermining claims that the company’s plan to address data privacy concerns in the US was moving forward.

Western states make a deal to preserve the Colorado River. Arizona, California and Nevada agreed to temporarily cut water from the drought-stricken river in exchange for $1.2 billion in federal payouts to irrigation districts, cities and Indian tribes in the three states. But the pact only runs until 2026, and future droughts could further deplete the river’s supplies.

Glenn Youngkin is reportedly reconsidering his candidacy for president. The Republican governor of Virginia has had reservations after previously ruling out a run for 2024, according to Axios. He has been encouraged by GOP donors who would like to see a more moderate alternative to Donald Trump, who is leading in the Republican polls.

E. Jean Carroll demands new damages from Donald Trump. The writer, who won $5 million this month from the former president after a jury found him liable for sexual assault and defamation, now wants a “very significant” additional amount after he insulted her on CNN at a town hall on May 10. Lawyers for Ms. Carroll accused Mr. Trump of continuing to defame their client.

Investors continue to flee crypto. Cryptocurrency assets saw a fifth consecutive week of investor outflows last week, totaling $232 million, according to digital asset investment firm CoinShares. Decreasing enthusiasm for crypto was felt at the Bitcoin Miami industry eventwhere the number of visitors this year has been halved compared to 2022.

As the White House and House Republicans continue negotiate a deal Raising the debt ceiling, with Treasury Secretary Janet Yellen reiterating that the country could run out of money next week, an unlikely issue has become a key point in the talks.

Changes in how energy projects are approved — known in Washington parlance as allowing — have become a growing focus of lawmakers on both sides over the past year. However, the two sides disagree about how to review the process, and it’s unclear if that can be resolved in time to work its way into a deal to avoid US bankruptcy.

Permit has dual support. Lawmakers claim that under the current system, getting approval for critical new energy projects can take up to a decade, while Canada and the European Union have regulations designed to get projects up and running within three years.

But what each party wants to achieve with licensing is different:

  • For Republicans (and Sen. Joe Manchin, the West Virginia Democrat key to passing the Inflation Reduction Act last year), a revision would mean accelerating fossil fuel projects such as coal plants.

  • For Democrats, it would lead to faster approval of clean energy projects and the construction of power lines from those facilities.

A major bone of contention is the federal preemption. Currently, states can reject electricity transmission projects that cross their territory, hampering the country’s energy transition plans. Giving preemption rights to the federal government, supporters argue, would accelerate renewable energy adoption, especially in places where it is not generated.

New legislation from Mr. Manchinbacked by the White House, would set time limits for states to approve or deny interstate transmission projects before the Federal Energy Regulatory Commission, which would take over the centralized federal licensing authority, could intervene.

But in recent negotiations, Republicans have proposed resolving the issue of federal preemption power at the end of the roadleaving Democrats concerned about meeting the IRA’s clean energy goals.

In any case, time is ticking. Ms Yellen on Monday sharpened the language of her debt ceiling warnings, saying it was “highly likely” that the US would run out of cash by early June, rather than “probably”. And Speaker of the House Kevin McCarthy said a deal had to come this week to avoid a default.

In other debt ceiling news: How extreme weather in California advance the date of a possible default, and why the Republicans are demanding it cut back IRS funding could increase federal budget deficits by some $120 billion.

— Jamie Dimonthe CEO of JPMorgan Chase, answering questions about who will succeed him at the bank’s investor day on Monday.

As FTX founder Sam Bankman-Fried awaits trial, federal prosecutors are gathering one of the largest amounts of evidence ever gathered in a white-collar securities fraud case.

Authorities have already collected more than six million pages of evidence, The Times reports. (For comparison, the 2004 case against Martha Stewart was 525,000 pages.) Here’s some of what’s in that evidence list:

  • The contents of Mr. Bankman-Fried’s Google accountswhich alone account for 2.5 million pages.

  • a notebook by Caroline Ellison, an old lieutenant and one-time friend of Mr. Bankman-Fried who ran FTX’s sister company, the Alameda Research trading firm. (She has pleaded guilty to fraud and is cooperating with prosecutors.)

  • a mobile phone of Ryan Salamea top FTX executive whose $4 million Maryland home was raided by FBI agents last month.

  • Four laptopsincluding one from former FTX director Gary Wang (who also works with prosecutors) that was so crammed with data that FBI experts struggled to decipher it.

Much of the FTX business data was owned by the law firm Sullivan & Cromwell, which took control of the company after it filed for bankruptcy — and has been billed $55 million to date, including for the document detective work, according to The Times.

Offers

  • Chevron agreed buy PDC Energy, a shale oil producer, for $6.3 billion to focus on US energy production. (WSJ)

  • Mizuho from Japan agreed Buy Green Hill, the controversial US boutique investment bank, for $550 million. (Bloomberg)

  • Activist investor TCS Capital, which has a 4 percent stake in Yelp, appealed to the recommendation site to sell itself. (WSJ)

  • “Shareholder activists Drag businesses into American culture wars” (WSJ)

Policy

The best of the rest

  • Amatriciana fans, look away: Pasta prices are rising in Italy, leading to an emergency meeting of the government and calls for a “pasta strike” for consumers. (CNBC)

  • “Your company does not want you to use Ozempic for weight loss. This is why.” (WSJ)

  • The founder of Amazon Jeff Bezos would have proposed to Lauren Sanchez, his girlfriend, aboard his mega yacht. (The mail online)

  • Recycling plastic has a unintended consequence: emissions of microplastics into the air and water supply. (Wapo)

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