Good morning readers. In his recent address, Federal Reserve Chair Jerome Powell suggested the likelihood of interest rate cuts this year but refrained from specifying a timeline. He emphasized the importance of maintaining a delicate balance between economic growth and inflation control, signaling that any adjustments to policy rates would hinge upon data analysis. Market response was positive, with stocks seeing gains during Powell's address. His remarks reflect the Fed's careful approach, prioritizing stability in monetary policy.

Let’s jump into today’s storylines.

In today’s digest:

• OpenAI reveals Elon Musk’s true intentions when launching the company

• Headline Hustle: NYCB receives a $1 billion cash injection from venture capital firm to stay alive, Apple rejects Epic Games’ developer account in retaliation to new EU rules, Nikki Haley drops out of presidential race

• Unpacking the SEC's new (but lax) emission rules

• Pulse Points: What’s Trending

AI

Elon Musk wanted to merge OpenAI with Tesla

OpenAI have clapped back at Elon Musk letting him and the rest of the world know…“we’re sad that it’s come to this”.

OpenAI's founders have fired back, framing Musk not just as a critic but as someone who once sought "absolute control" over the AI startup. According to their account, Musk's vision for OpenAI included transforming it into a profit-driven company (the reason he’s suing them now), with himself as CEO, wielding majority equity and initial board control.

Let’s set the record straight

Musk who was not only supportive of OpenAI's pivot away from its open-source roots but actively pushed for it, even proposed a merger with his own Tesla to secure the hefty funding required to compete on a global scale. But when the company rejected his offer to merge the two together, Elon (along with his money) took a hike saying he’d start his own AI competitor and that OpenAI had “a zero percent chance of success”.

But perhaps the most revealing aspect of OpenAI's response is the clarification of what "open" meant to them. Contrary to Musk's recent critique, being "open" was more about talent attraction than a commitment to sharing AI advancements freely—a stance Musk himself seemed to align with at the time.

Naturally, Elon had to respond

As Musk counters on social media, proposing a name change for OpenAI to "ClosedAI" in exchange for dropping the lawsuit, the irony is palpable. His own venture into AI, xAI, keeps its innovations under wraps, challenging his public stance on the importance of open-source AI. Meanwhile, OpenAI's ChatGPT continues to thrive, reaching over 100 million daily users, highlighting the impact and potential of their AI models.

The company isn’t mincing words. In a blog post, the company wrote “we’re sad that it’s come to this with someone whom we’ve deeply admired—someone who inspired us to aim higher, then told us we would fail, started a competitor, and then sued us when we started making meaningful progress towards OpenAI’s mission without him”.

IN THE KNOW

Headline Hustle

💰️ NYCB receive a $1 billion lifeline to stay afloat. New York Community Bank (NYCB) secures a vital $1 billion+ investment led by Steven Mnuchin's Liberty Strategic Capital. Despite a 40% stock plunge earlier, the announcement triggers a 31% surge, closing 7% higher. Analysts view the investment as a lifeline amid recent losses and credit downgrades. Former comptroller Joseph Otting replaces CEO Alessandro DiNello, with four new board appointments. While deposit stability remains uncertain amidst regulatory delays, market optimism cautiously grows about NYCB's survival and credit rating restoration.

📱 Apple rejects Epic Games’ developer account from launching app store for iPhones in Europe. Apple rejects Epic Games' bid to launch a European app store due to alleged retaliation for Epic's antitrust activism, lawsuits, and CEO Tim Sweeney's social media comments. Sweeney compares Apple's tactics to medieval feudalism. This marks Apple's first public denial of competing app stores in Europe, raising concerns about antitrust compliance. The clash stems from Epic's 2020 lawsuit challenging Apple's App Store rules, reflecting wider regulatory pressures on Apple's lucrative app ecosystem. Tensions persist despite Apple's efforts to comply with new EU laws.

🇺🇸 Nikki Haley drops out of presidential race, doesn’t endorse Trump. Nikki Haley suspends her 2024 Republican presidential campaign, becoming the last major contender to bow out, leaving Donald Trump as the likely GOP nominee. Despite vocal opposition to Trump, Haley acknowledges the former president's firm hold on the party. Her campaign, which initially gained momentum, faced setbacks amid attacks from Trump and struggles to gain traction. Haley's exit highlights divisions within the GOP and underscores Trump's enduring influence over the party's direction.

FINANCE

SEC green lights weakened climate disclosure rules

In the world of finance, not all emissions are created equal, especially when it comes to disclosing them to the public. On the surface, the Securities and Exchange Commission's (SEC) recent move might seem like another mundane regulatory update, but dive a little deeper, and you'll find a decision that could ripple across the globe.

The SEC has given the green light to new disclosure requirements for public companies regarding their greenhouse gas emissions, a topic that has stirred both anticipation and controversy over the past two years.

What are the new requirements? And what do they mean?

At the heart of this development is a rule, narrowly passed with a 3-2 vote, aimed at shedding light on the climate risks companies face by mandating the reporting of direct (Scope 1) and energy-related (Scope 2) emissions. Interestingly, a provision for reporting certain indirect emissions, or Scope 3, was omitted after considerable pushback from corporations concerned about the complexity and burden such reporting would entail. This rule signifies a significant step towards transparency, offering investors consistent and reliable information about the climate risks companies face, while also sparking debate over its breadth and impact.

Critics from environmental circles argue that by excluding Scope 3 emissions, the SEC is overlooking a major chunk of greenhouse gas production, potentially leaving investors in the dark about the full extent of companies' environmental footprints. On the flip side, Republican commissioners and some industry groups have voiced concerns that the new requirements could overburden companies and detract from the attractiveness of U.S. capital markets.

Despite these contentious views, the rule reflects an evolving understanding of the importance of climate-related disclosures within the financial landscape. It's a delicate compromise that seeks to balance the need for greater transparency with concerns about the regulatory and operational challenges companies might face.

Big picture: While the rule marks a significant step forward, its limited scope and the anticipated legal challenges highlight the ongoing struggle to find a middle ground between comprehensive environmental disclosure and the practicalities of corporate compliance. The question now is not just about what companies will disclose, but how these disclosures will shape the future of climate governance and corporate responsibility.

SNIPPETS

Pulse Points

• Microsoft engineer alerts company about AI tool, Copilot Designer, and how it’s generating graphic and explicit images, disregarding copyright laws.

• The Bank of Canada kept its main interest rate steady at 5% on Wednesday, deeming it too early for rate reductions despite positive trends in inflation and wage growth.

• Meta is investing heavily in artificial intelligence, developing an AI system to drive the video recommendation engine for Facebook across all its platforms, according to a company executive.

• A New Mexico jury convicted "Rust" armorer Hannah Gutierrez-Reed of involuntary manslaughter and acquitted her of tampering with evidence after deliberating for approximately two and a half hours on Wednesday.

• A New Jersey man was arrested for allegedly trafficking 675 SpaceX Starlink terminals bought with stolen credit card accounts or hacked Starlink billing accounts, according to police.

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