Welcome to another edition of “Over the Weekend.” This is where I summarize interesting finance and economics content that I read, listened to, or viewed this past week. I also link to the sources so you can check them out “over the weekend.”
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1. Putin continues to blame the West and NATO
In his state of the nation speech on Feb. 21, Russian President Vladimir Putin continued to use the West and the expansion of Nato as his excuse for invading Ukraine.
“They are not going to stop. The threat continues every day,” Putin said. “The elite of the West does not conceal their ambitions, which is to strategically defeat Russia…They do that by making local conflicts into much wider and bigger ones.”
Putin added that the United States in particular sees the war in Ukraine “as an anti-Russian project.”
2. Russia suspends its participation in nuclear arms treaty
Russia is suspending its participation in the New START nuclear arms reduction treaty. The treaty states that both the United States and Russia are permitted to conduct inspections of each other’s weapons sites, but inspections have been halted since 2020 due to the Covid-19 pandemic.
The New START treaty is the only agreement left regulating the world’s two largest nuclear arsenals.
The treaty puts limits on the number of deployed intercontinental-range nuclear weapons that both the US and Russia can have. According to US officials, Russia has continually refused to allow inspections of its nuclear facilities.
This story and the one cited in #1 show that tensions between the U.S. and Russia aren’t easing. Among many important questions is whether things will escalate from here and if they will remain isolated in Ukraine. Could war expand across Eastern Europe? Will China follow a similar path with Taiwan? How will the U.S. react if that happens?
3. AI decides who gets laid off.
According to Insider, AI might not take your job, but companies are already using it to help them decide whom to lay off.
The article cites a Capterra survey of 300 HR leaders in the United States. 98% of the HR leaders surveyed said that they’ll rely on software and algorithms to reduce labor costs in the event of a 2023 recession.
Only 50% of those leaders are completely confident their technology will make unbiased recommendations, however, and less than half (47%) are entirely comfortable making layoff decisions based on recommendations from that same tech.
This is yet another example of why ethics must be at the heart of the development and use of AI. While the technology certainly has many benefits, it is not immune to the same prejudices that plague humans. In 2017, for example, Amazon reportedly built an AI tool to hire people but had to shut it down because it was discriminating against women.
4. Inflation remains higher than forecasted.
The Federal Reserve’s preferred inflation gauge rose last month at its fastest pace since June. Entrenched high prices in the U.S. economy could lead the Fed to keep raising interest rates well into this year.
Source: Yahoo Finance
In the Jan. 21 edition of “Over the Weekend,” I wrote that the tight job market made me doubt that the Fed could reduce inflation as quickly as it had predicted.
Yesterday’s report from the Commerce Department seems to support my skepticism.
Also, in the Jan. 7 edition of “Over the Weekend,” I cited research from Darius Dale of 42 Macro. He argued that the Fed’s forecasts were too aggressive, and this would lead to errors in how it handled interest rates. Those mistakes, he said, would result in a harsher recession than what most investors are expecting. He added that the recession won’t come until the second half of this year at the earliest.
Darius’ predictions seem to be spot on so far.
5. Enough bad news. Check out this fascinating stuff!
This Twitter thread by Trung Phan provides examples of the incredible innovation that can occur when one industry learns from another. Here are some examples:
- Ferrari F1 pit crew —> Children’s hospital ICU process
- Poultry incubator —> Human baby incubator
- Sawmills —> Dyson bagless vacuum
- Grape press —> Printing press
- Airplane landing gear —> Foldable baby stroller
- Peregrine falcon —> B2 Bomber
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