What I Read This Week…

The Federal Reserve cut interest rates by 25 basis points, OpenAI announced their latest reasoning model o3, and research shows that many smartwatch wristbands contain high levels of PFAS chemicals

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Caught My Eye…

• The Federal Reserve cut interest rates by 25 basis points on Wednesday, lowering the federal funds rate to 4.25%-4.50%. Jerome Powell described the decision as a "closer call" and indicated only two rate cuts for 2025, down from four rate cuts projected earlier this year. Powell emphasized they are entering "a new phase" where they will be "cautious about further cuts" after having reduced rates by a full percentage point since September, reflecting the Fed's growing concerns about persistent inflation. Public markets responded negatively to the Fed's more cautious approach to future cuts, with the S&P 500 decreasing 3% within hours of the announcement.

• OpenAI announced their latest reasoning model, o3, demonstrating another step function advance in AI capabilities. The model sets new performance records across multiple benchmarks, achieving 96.7% on the American Invitational Mathematics Exam, 87.7% on graduate-level science questions, and a Codeforces rating above the 99th percentile. Using a "private chain of thought" approach, o3 can adjust its reasoning time across three settings (low, medium, high compute), taking longer to respond but providing more reliable answers. However, o3 still has limitations in handling basic tasks despite its advanced capabilities. The model also requires higher computational costs, at $20 per task in low-compute mode. o3's approach to problem-solving differs from previous models: instead of retrieving memorized information, it searches through possible solutions and reasons about them step by step, though this process takes more time and computing power. This addresses a limitation of previous LLMs because it can recombine existing knowledge in new ways to solve novel problems rather than just applying memorized patterns.

• New research shows that many smartwatch wristbands contain concerning levels of leachable PFAS chemicals. Researchers at University of Notre Dame tested 22 wristbands across various brands and prices, finding that 15 contained fluorine indicating fluoropolymer content, which are chemicals containing fluorine atoms that create water and stain-resistant surfaces. Nine bands had measurable PFHxA, a specific type of PFAS used in manufacturing, with four showing levels above 1 part per million, the highest concentrations ever seen in wearable consumer products applied to the skin. The findings raise concerns because smartwatch bands maintain direct skin contact for extended periods - often more than 12 hours daily - and recent studies indicate PFAS can pass through human skin under normal conditions. While the specific health effects of this exposure remain unclear, this discovery provides the first evidence of high PFAS levels in products that come into prolonged contact with the skin.

Other Reading…

• Just How Frothy is America’s Stock Market? (The Economist)

• OpenAI’s GPT-5 Is Behind Schedule and Expensive (WSJ)

• MI300X vs H100 vs H200 Benchmark Part 1: Training – CUDA Moat Still Alive (SemiAnalysis)

• AI Aids Discovery of Solar Cell Materials with Near-Record Efficiency (Chemistry World)

• Apple Explores a Face ID Doorbell and Lock Device in Smart Home Push (Bloomberg)

• Are Amazon’s Drones Finally Ready for Prime Time? (NYTimes)

• Our Remedies Proposal in DOJ’s Search Distribution Case (Google Blog)

• The Investing Cult Fueling MicroStrategy’s Ascent (WSJ)

• Palantir and Anduril Join Forces With Tech Groups to Bid for Pentagon Contracts (Financial Times)

• The Case for Clinical Trial Abundance (Institute for Progress)

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