Happy morning, Munchers! 🙏

As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 55 seconds.

Yesterday, top Silicon Valley VCs toured the Middle East for money, OpenAI got a chance to redeem itself in Italy, and America slipped further in the oil war. 🔥

Let’s dive in.

What’s hot, what’s not?

Market Commentary

• Inflation in America came down from 5% to 6%, but don’t let the media fool you. Core inflation (normal inflation minus food and energy) was up 0.4% which means that price surges are still sticky. Moral of the story? Fed is still gonna hike. 🤷🏻

• Consolidation is a super important part in the price of any asset, and it looks like oil prices are deciding to chill out near the $80 region. Life’s good, just not if you wanna put some petrol in your car.

• Markets remained super volatile yesterday. Go back to bed, folks. 💀

Story Roundup

1 - Silicon Valley VCs hit the MENA region up. 💸

Hypocrisy seems to be running rampant among America’s hottest VCs, but as they say, money corrupts people.

Silicon Valley investors have been touring the Middle East region in an attempt to build long-term ties with sovereign wealth funds.

Traditional backers of VC funds have turned off the free money faucet, which has forced these guys to go hunting for funding from the Gulf.

On paper, it’s a win-win, because MENA economies want to diversify away from oil with investments into red-hot sectors like AI and tech.

But some VCs who previously refused meetings and money from Saudi funds (over human rights concerns) have now quietly reversed their decisions.

Times change. 🤷🏻

2 - Italy gives OpenAI a to-do list. ☑️

Italy became the first country to slap a ban on AI tech as we know it.

Turns out they’ve seen some of the cool stuff that GPT can do, and want back in.

But before they unban it all, OpenAI needs to -
- publish a notice detailing its data processing
- add age gating to prevent minors from accessing the service
- clarify the legal basis for processing people's data for training its AI
- provide ways for users to exercise their rights over their personal data

If ChatGPT and co. follow along, they’ll be unbanned in Italy.

But hey, remember this - if you’re getting something for free, then you are the product.

3 - East grabs the upper hand in the oil war. 💪🏻

3 short years back, the US was seen as the “peacemaker” in global oil trade.

Cut to today, and it looks like America has now become the target.

OPEC’s decision to chop their production (and send oil prices flying) is putting some pressure on Sleepy Joe in the White House.

The risks of inflation and recession have both increased, and Saudi is also changing it’s production levels in line with Russia.

That brings Western influence over energy production down.

Most analysts reckon that oil prices are gonna move around $80 for the next few years. For every $5 increase in the price of oil, US inflation goes up by 0.2 percentage points.

Slippery situation. 🤔

4 - Swiss lawmakers say NO the the great CS rescue. ⛑️

Turns out that not all is well by the Bahnhofstrasse and Swiss regulators have decided against a SFr109bn rescue package for Credit Suisse.

The lower house voted down the government bill to authorise the bailout, but this move is a little too late.

Taxpayer money will still be used to smooth the acquisition over and a SFr 9 billion guarantee will be given to UBS against losses on the Credit Suisse deal.

That’s a price tag of over $10 billion.

Too big to fail. 🤷🏻

5 - US credit and debit spending ticks lower quickly. 📉

The Great American consumerism machine has been hit hard by a quick dryup in credit.

US consumer spending on credit increased by 0.1% - the slowest pace since February ‘21 (and excluding that, since 2008).

Households making over $125k a year saw a drop in real after-tax wages for the first time in a long, long while.

That drop is probably because of tons of layoffs and hiring freezes - so a slowdown in the labour market will be a hefty drag on consumer spending in the coming months.

Looking cold. 😬

Hope you enjoyed this issue of Market Munch. If you’ve got any feedback - good or bad (😏) you can hit reply to this email and I'll get a ping in my inbox. Thanks a ton for reading!

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Cheers, and have a lovely day. 🙏

- Aryaansh ⚡