What I Read This Week…

The Fed is expected to begin cutting interest rates this week, OpenAI has introduced a new series of AI models called o1, and Anduril has released a new family of autonomous air vehicles

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Caught My Eye…

• The Federal Reserve is expected to begin cutting interest rates starting this Wednesday. There's debate about whether the Fed will start with a standard 0.25 percentage point cut or a more aggressive 0.50 point cut, with recent market pricing showing increased bets on a larger initial cut. The Federal Reserve cutting interest rates this week is significant because it marks a turning point in monetary policy after a period of aggressive rate hikes. What is more important than the size of the first cut is the pace and extent of rate cuts, as well as the expected terminal rate at the end of the rate-cutting cycle, as these factors are ultimately what impacts long-term borrowing costs for businesses and consumers. Rate cuts have an outsized effect on our economy – not just technology and venture capital, but stock and bond markets, as well as currency exchange rates, other central banks' policies, and international capital flows.

• OpenAI has introduced a new series of AI models called o1, designed to enhance reasoning capabilities and solve complex problems in science, math, and programming. The o1 model is trained to spend more time thinking through problems before responding, mimicking human problem-solving strategies by using a "chain of thought" process, which means that it breaks down complex problems into smaller steps and shows its work in the process. o1 outperforms GPT-4o on reasoning-heavy tasks, especially in physics, chemistry, biology, mathematics, and programming. However, o1 has some weaknesses compared to GPT-4o, as o1 takes longer to produce responses (30 seconds for o1 vs. 3 seconds for GPT-4o), and o1 is weaker at some tasks than GPT-4o (e.g. writing an email or summarizing the plot of a movie). Thus, o1 is not intended to replace GPT-4o, but rather to complement it for specific use cases requiring advanced reasoning.

• Anduril Industries has unveiled the Barracuda family of air-breathing, software-defined Autonomous Air Vehicles, designed for mass production in military operations. Air-breathing engines use atmospheric oxygen to burn fuel, as opposed to rocket engines that carry their own oxidizer, which allows for more efficient operation within the atmosphere. Software-defined means that many of the vehicle's capabilities are controlled by software rather than being hardwired into the physical components, which reduces the friction to modify capabilities of these vehicles. Moreover, these vehicles are autonomous, which means that they can operate without direct human control (in other words, the vehicles can make decisions and adjust their flight path based on pre-programmed instructions and with their onboard sensors and software). Perhaps more significant than the features of the Barracuda family is that Barracuda leverages commercially available components and requires fewer than ten tools for assembly, which reduces reliance on specialized defense manufacturing and increases the rate of assembly during production to better meet surges in demand.

Other Reading…

• What Is AI Best at Now? Improving Products You Already Own (Wall Street Journal)

• Salesforce's AgentForce: The AI Assistants That Want to Run Your Entire Business (VentureBeat)

• Inside Google’s 7-Year Mission to Give AI a Robot Body (Wired)

• Half of All Active Satellites are Now From SpaceX (Science News)

• Donald Trump Prepares to Unveil Cryptocurrency Business (NYTimes)

• Online Dating Caused a Rise in US Income Inequality (Bloomberg)

• Nanoplastics Put Stress on Trees and Impair Photosynthesis (Phys.org)

On X…