School’s over for Huawei
Also in today’s edition: Irdai wants answers; Climate summit 🏾🏽 oil deals; Tesla vs. Sweden; The $86 billion elephant in OpenAI's room
Good morning! A dictionary capturing our cultural zeitgeist is one of the last things people usually expect. And yet, that’s what’s happened. Bloomberg reports that Merriam-Webster has chosen “authentic” as its word of the year. Apparently, the reason behind this was the confluence of social media and AI making it harder to sift the real from the fake. Besides that, the word also describes an aspirational quality that celebrities such as Taylor Swift strive to build their identity around. We approve! 🖤
Roshni Nair, Jaideep Vaidya, and Adarsh Singh also contributed to today’s edition.
A quick programming note: We are off on November 29 on account of our annual company meet. There will be no editions of The Signal and The Signal Daily podcast on November 30.
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The Market Signal
Stocks & Economy: Wall Street bets that the Federal Reserve will reduce interest rates are getting bolder. Billionaire founder of Pershing Square Capital Management, Bill Ackman, now believes the Fed will cut rates as early as the first quarter of 2024. A rate cut in June is a foregone conclusion.
The optimism was reflected in equities as well which continued their November rise, albeit marginally on Tuesday, following a brief pause after the Thanksgiving weekend. The dollar weakened against other currencies but Asian stocks were subdued in early trades. Shares opened weakly in Japan too.
Indian equities shrugged off global developments on Tuesday to post gains as foreign and local institutions turned big buyers. The trend is likely to continue today as the GIFT Nifty indicates a positive opening.
How India Shut The Door On Huawei
Four years after the US government raised concerns about China influencing the American education system by offering millions of dollars in funding to public schools, it has emerged that India too took steps to break Huawei’s ties with the country’s top tech schools.
It all started in the aftermath of the 2020 border clashes between Indian and Chinese soldiers. At the time, Chinese tech major Huawei was trying to make inroads into India’s leading tech schools, including the Indian Institutes of Technology (IITs), by offering generous research grants.
The Indian government then stepped in and sensitised the institutes about national security concerns and asked them to walk away from any collaboration with Huawei, reported The Economic Times. These institutes were at the forefront of India’s research and development in key strategic areas such as big data, machine learning, artificial intelligence, and telecommunications.
India's insurance regulator Irdai has summoned the top executives of Care Health Insurance to explain why the company issued “excessive” stock options worth over ₹250 crore ($30 million) to non-executive chairperson Rashmi Saluja despite telling it not to do so. Per Irdai rules, insurers can pay non-executive directors “only profit-related commission” up to ₹10 lakh ($12,000) per year.
The matter came up after the Burman family, owners of FMCG major Dabur, in September made an open offer to buy a majority stake in Care Health’s biggest subsidiary, financial services company Religare, as part of its push to become less boomer. The Religare board rejected the proposal and accused the Burmans of having links with company founders Shivinder and Malvinder Singh, who are charged with fraud. The Burmans then alleged that the Religare board failed to comply with corporate governance rules and accused Saluja of insider trading.
Spirit Is Willing But The Flesh Is Weak
Pope Francis and King Charles III will likely be the most notable heads of state in attendance at the UN Framework Convention on Climate Change’s COP28 summit in Dubai.
US President Joe Biden, otherwise projected as a climate change champion, has decided to skip the talks, billed as one of the most important of our times. Indian Prime Minister, Narendra Modi, who was the first to demand $1 trillion from rich countries, will attend the summit.
Conflict of interest: There is already controversy regarding Sultan al-Jaber heading this year’s summit as president-designate because he is also chief of UAE’s state oil firm Adnoc. Financial Times reported citing unverified documents that Dubai was planning to use COP28 to strike energy deals with other countries.
India’s finance minister Nirmala Sitharaman has said that it is time for action and COP28 should provide a definite direction on climate finance and technology transfer, both key demands of developing countries.
This is the biggest summit ever with nearly 70,000 delegates expected to attend. While a phase-out of fossil fuels will be on the agenda, the central theme will be who will foot the bill for climate change adaptation, mitigation, and loss and damage. Developed countries have not stood by their previous commitments to provide billions of dollars and now the tag is estimated to have gone into the trillions of dollars. Under the circumstances, the Pope seems to be the best hope to get planetary folks to save their home.
Who’ll Blink First?
Tesla just got a reprieve in its faceoff against Sweden. But it’s temporary. The country with one of the strongest labour movements in Europe won’t cede easily to CEO Elon Musk.
A court has ordered the national transport agency to deliver licence plates to the electric carmaker by means other than the country’s postal service, PostNord AB. PostNord workers had joined several labour groups backing the 130 mechanics affiliated with IF Metall and refused to deliver the plates. IF Metall went on strike in October to pressure Tesla into collective bargaining agreements (CBAs).
Over 90% of Swedish workers are protected by CBAs, where wages are set by companies and unions, not the government. Tesla’s refusal to play ball had unified dockworkers and car dealerships alike. Automation and under-pressure wages are unsettling factory floors globally, and workers and companies are ranging against one another, as witnessed in Detroit last month.
Is OpenAI Still Worth $86 Billion?
That’s the question following the most dramatic turn of events in Silicon Valley of late. As Bloomberg columnist Matt Levine puts it, “It would be very, very funny if the events of the last 10 days caused no change in the valuation of OpenAI.”
What’s the big deal?: Some analysts reckon that the board versus leadership chaos that ultimately resulted in the reinstatement of CEO Sam Altman and president Greg Brockman could affect OpenAI’s price tag despite the employee share sale going through. Even early backer Vinod Khosla admits the fracas “almost destroyed” the company’s valuation of $86 billion—which trebled ever since Microsoft committed $10 billion in the beginning of 2023.
Much of this is also to do with the concessions Altman agreed to, including an independent investigation into the runup to his firing. It’s likely that OpenAI’s soon-to-be former board members will dish, which may spook industry watchers.
So long, Charlie: Charles T. Munger, who built Berkshire Hathaway into arguably the world’s greatest investing firm with legendary investor Warren Buffet, has died at 99.
They’re home: Over two weeks since the Uttarkashi tunnel collapsed, rescue workers drilled through the debris and pulled out the 41 workers trapped inside to safety.
Clipped wings: Beleaguered airline Spicejet is in talks with private credit funds to raise $100 million, largely to refinance existing debt.
Dark horse: Amazon has entered the chatbot race with Amazon Q, a workplace AI assistant that will compete with Google’s Duet AI, Microsoft’s Copilot, and OpenAI’s ChatGPT Enterprise.
Not ok: Proxy advisory firms have written to the independent directors of Raymond Ltd, urging them to investigate allegations of sexual assault against managing director and promoter Gautam Singhania.
Beefing up: India is set to buy a second indigenous aircraft carrier worth ₹40,000 crore ($4.8 billion) to counter China’s military presence in the Indian Ocean.
Just stop: The Delhi High Court imposed a ₹2 lakh (~$2,400) fine on BharatPe’s former managing director Ashneer Grover for posting about the company on social media in violation of previous court orders. The court said it was ‘appalled’ at his behaviour; Grover apologised.
THE DAILY DIGIT
The number of billion-dollar releases by Disney in 2023. It’s the first time since 2014 that the entertainment giant hasn’t launched a billion-dollar blockbuster. (Variety)
Faking it: Love is blind but separation sure comes with strings attached. As mortgage rates and average home prices rise in the US, divorced or separated couples are looking at a horrible prospect: living together! Some are looking for workarounds such as creating boundaries inside the house—one floor to each. But that still does not solve the problem of inquisitive friends and confused children. If anything, it’s making matters worse. Seeing no way out, a few couples are trying the ‘living peacefully’ route. Others can’t wait for the housing market to turn.
Next station, shtick: Sustainability warriors, look up. Virgin Atlantic will be using Sustainable Aviation Fuel (SAF) to fly a Boeing 787 from London to New York. What exactly is it though? The fuel is mostly made from waste cooking oils, animal fat, and corn waste from animal feed. Interestingly, flights are not allowed to use fuels with more than 50% SAF, but the Virgin Atlantic flight has been given an exception for its proof-of-concept trial. Its detractors have dismissed it as a gimmick though. Make of that what you will.
Hope?: This one’s for the dog lovers. Biotech company Loyal has announced that it has moved one step closer to bringing a drug that increases the lifespan of our furry little friends. The drug has been given conditional approval for now and is not available to pet owners yet. But the scientific community is gung-ho on the idea, with researchers conducting a canine clinical trial of rapamycin, a drug which has been shown to extend the lives of lab mice. Science FTW y’all!