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May 7: US Banking Collapse, Gold Record Highs, AI danger to humanity (Recap ep226)

In today’s recap, Marcello goes on to discuss what is occurring with the US financial system and the likely causes for the recent collapse of so many regional banks.Fears of an ostensibly deteriorating economy have caused gold to achieve new record highs. Is AI going to pose a threat to humanity? Hinton, a pioneer of AI, warns the world about its possible dangers.

Shares of many U.S. regional banks were in virtual free fall this week through Thursday. As many as 16 mid-sized banks have shed more than $57B in market capitalization since last Friday on renewed fears around the sector’s stability. The KBW Regional Banking Index has plunged about 31% this year & is down -12.1% so far this month. Short-sellers reaped a combined $430.47M in paper profits betting against PacWest, Western Alliance, Zion & First Horizon through Thursday.
On Thursday gold futures were trading near $100 higher from Tuesday’s open of $1990 trading to a low of $2038.50 & a high of $2085.40, ending at $2051.30. Silver rose +1.70% to rise above $26.00 an ounce, once again. Prices remain elevated, even as even as the World Gold Council reported that global physical demand saw a sharp drop in Q1. In the first 3 months of 2023, global gold demand totaled 1,080.80 tonnes, a drop of -13% from Q1 of 2022.
AI pioneer Geoffrey Hinton stated in an interview on Friday that Artificial intelligence could pose a more urgent threat to humanity than climate change. Widely known as one of the godfathers of AI, recently announced he had quit Alphabet, after a decade at the firm, saying he wanted to speak out on the risks of the tech without it affecting his former employer. He is now among a growing number of tech leaders publicly espousing concern about the possible threat posed by AI if machines were to achieve greater intelligence than humans.
U. S. national Debt stands at $31.7T. The yearly interest due on this enormous amount is $562B. U.S. debt during World War II was +114% of GDP & now is +129% of GDP. This tremendous sum is not sustainable. The budget negotiations between the Republicans who wish to reduce federal spending & Democrats who wish to continue the profligate spending, have become increasingly financially destabilizing, as the Treasury Secretary now indicates the debt ceiling must be increased by June 01, to prevent the government from running out of money.
Shake Shack shares were up +16.57% on Thursday at $61.57, after posting revenues of $253.28M for the quarter ended March 2023, surpassing analysts estimates by +3.12%. This compares to year-ago revenues of $203.39M. The company has topped consensus revenue estimates 3 times over the last 4 quarters.The New York City based restaurant franchise stock is up +48.25% in 2023 & +12.56% y/y, with a market cap of $2.23B.
Shares of Apple rose +4.69% on Friday at $173.57, after beating quarterly earnings & revenue estimates, with particularly upbeat results for its flagship iPhone which topped $50B. The largest tech firm in the world will increase its share repurchase by $90B. The stock is up +33.59 in 2023 & +10.36% y/y, with a market cap of $2.75T.
Crowds from across the U.K & the world gathered on Saturday in London, where Charles III will be crowned king in Britain’s biggest ceremonial event in 7 decades, a gilded display of pageantry dating back 1,000 years. Charles succeeded his mother Queen Elizabeth II when she died last September at 96. At 74, he will become the oldest British monarch to have the 360-year-old St. Edward’s Crown placed on his head, as he sits upon a 14th century throne at London’s Westminster Abbey.

Strong U.S. jobs data brighten the economic outlook; According to Labor Department data released Friday, the U.S. economy added 253K jobs in April, far surpassing analyst forecasts of 180K new jobs; Russia claimed on Wednesday that Ukraine tried to assassinate President Putin in an overnight drone attack on the Kremlin in the Russian capital of Moscow.

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