Over an eventful and dramatic week, Sam Altman, the co-founder and CEO of ChatGPT-creator OpenAI, was fired by the firm’s board of directors for “not being consistently candid in his communications” – a reason more vague than a fortune cookie’s prophecy. The move then backfired, with the company’s president quitting in solidarity and almost all of the firm’s employees threatening to quit if the board didn’t reinstate Altman. Microsoft (OpenAI’s biggest investor) lobbed in some pressure to bring him back, then opted instead to hire him (and OpenAI’s president) to lead the software giant’s AI wing. After five days of drama, the board brought back Altman and fired themselves (well, three out of four of them).
In quieter AI corners, Nvidia reported better-than-expected quarterly results. The chipmaker at the forefront of this year’s AI boom more than tripled its revenue from a year ago – raking in $18.1 billion. And it signaled that this party’s just getting started, forecasting higher-than-expected sales of around $20 billion for the current quarter, despite a big drop in sales to China due to newly toughened AI chip export rules from the US government.
Investors have been making up their own minds about what’s next for the European Central Bank (ECB) and the Bank of England (BoE). The two central banks, encouraged by falling inflation, both left interest rates unchanged at their latest meetings, but warned that it was way too soon to think about interest rate cuts. But investors aren’t buying it: they see the eurozone and UK economies headed for a period of near-stagnation (that is, really low growth), which they believe will force both central banks to slash interest rates at least three times next year, starting in June, to be precise. That’s a big shift from just seven weeks ago when traders thought the BoE and ECB would make their first cuts in early 2025 and September 2024, respectively.
The Nikkei 225 Index, a benchmark for Japanese stocks, briefly touched a new 33-year high this week. The index has seen a roughly 29% gain this year, driven by strong company earnings, reforms in corporate governance led by the Tokyo Stock Exchange, and a prolonged period of yen depreciation, which enhances the earnings of exporters. The Japanese currency has tumbled more than 12% against the US dollar this year, leaving it not far from its weakest level in three decades.
Global investors began this year buying Chinese stocks at a record pace – anticipating a strong economic rebound after the country abandoned its restrictive zero-Covid policies. But that didn’t quite materialize. So foreigners have significantly reduced their positions in recent months, as they become increasingly tense about troubles in the property sector and an overall sluggishness in economic growth. At this point, more than three-quarters of the foreign money that flowed into China’s stock market in the first seven months of the year has now left, despite the government’s efforts to restore confidence in the world’s second-biggest economy.
