Bard is unveiled, Alphabet shares receive a boost

Bard The race for AI has taken another turn as Google’s efforts have finally paid off, and now the company is eager to launch its chatbot service.

The initial backlash the company faced a couple of weeks earlier seems to have been drowned out with the company’s latest foray into the AI space.

Soon, chatbot enthusiasts can utilize Google’s latest innovation: Bard.

The news

Google recently announced opening access to its AI chatbot tool Bard, the company’s answer to rival ChatGPT.

Since Tuesday, users have been given access to a waitlist, allowing them to experiment with Bard.

Bard has similar tools that can allow users to try the following and more:

  • Outline and create essay drafts
  • Write out a plan for a baby shower
  • Create lunch ideas with the content of a refrigerator

According to Google, it will start rolling out Bard to the United States and the United Kingdom, with plans to expand the tool to more countries and languages in the future.

AI extravaganza

The news comes after several major tech companies, like Google, Microsoft, and Facebook, among countless others, stepped up their efforts in the race to develop and deploy AI-powered tools.

The increased focus on AI sprang up after the viral success of OpenAI’s ChatGPT.

Last week, Google announced it would integrate AI into its productivity tools, such as Gmail, Google Docs, and Google Sheets.

After their news, Microsoft announced a similar upgrade to its productivity tools.

In February, Google unveiled Bard through a demo that sparked criticism after it provided an inaccurate response to some questions.

As a result, Alphabet, Google’s parent company, experienced a 7.7% share drop, wiping out $100 billion from its market value.

Read also: Baidu stocks improve after ERNIE Bot demo

ChatGPT impact

Bard follows ChatGPT’s model, wherein it is built on a massive language model.

ChatGPT, a product developed by AI research firm OpenAI, was released to the public in late November.

The models are trained on massive amounts of data online to help the AI create unique responses to the user’s creative prompts.

It was ChatGPT’s success and the spotlight given to it that led to Google management calling a “code red” situation for its search business.

However, Bard’s mistakes during the demo emphasized the challenge Google and other companies had with integrating AI technology into their core products.

Large language models are helpful, but they can also present several issues, including:

  • Biases
  • Incorrect facts
  • Responding aggressively

On Tuesday, Google released a blog post saying its AI tools are stall prone to mistakes.

The company reassured people that it still uses human feedback to improve its system and add guardrails, such as capping the number of exchanges in a dialogue to keep the interactions helpful and stay on topic.

Last week, GPT-4 was launched as the next-generation version of the tech and to power Microsoft’s Bing browser with similar safeguards.

After its first day, GPT-4 surprised users with its early test and company demo.

Public sway

Sundar Pichai, the CEO of Google and Alphabet, told employees that Bard’s success would largely rely on public testing in an email.

“As more people start to use Bard and test its capabilities, they’ll surprise us. Things will go wrong,” Pichai wrote.

“But the user feedback is critical to improving the product and the underlying technology.”

The message came as Google launched Bard.

Following the announcement, Alphabet shares were up nearly 4% in mid-day trading.

Pichai’s email also revealed that over 80,000 Google employees helped update Bard’s development following his all-hands-on-deck call to action in February.

The Tuesday note also said the company is working on testing responsibly, having invited 10,000 testers from different backgrounds and perspectives.

Pichai also told employees they should be proud of their work and the years of tech breakthroughs that led them to where they are.

“Even after all this progress, we’re still in the early stages of a long AI journey,” he said.

“For now, I’m excited to see how Bard sparks more creativity and curiosity in the people who use it.”

Credit Suisse failures raise banking fears worldwide

Credit SuisseWhile the United States is dealing with a significant financial crisis, Europe faces a similar problem.

On Wednesday, 167-year-old European bank Credit Suisse was on the brink of failure.

With the two financial institutions dealing with their unique problems, investors have grown anxious regarding the health of the global financial system.

The Swiss situation

Following the bank’s most major single-day selloff, Credit Suisse executives met with Swiss authorities to scour options to help the bank stabilize.

Late in the day, the central bank and the country’s financial market regulator released a joint statement, saying they would provide an economic lifeline if needed, emphasizing the bank’s importance to the broader financial system.

The whole situation unraveled when Wall Street was preparing to clock out.

The day then concluded with lowered stocks that prominent and small banks dragged.

With the financial world in limbo, all eyes are on Credit Suisse as people wait to see how the crisis plays out.

Experts are still weighing in on how massive it would be for Credit Suisse to collapse.

The Swiss bank employs more than 50,000 people worldwide and holds half a trillion dollars in assets, making it hard to overstate the impact of a potential collapse.

Last week, two lenders also fell: Silicon Valley Bank and Signature.

SVB and Signature

Signature and Silicon Valley Bank are smaller regional lenders than Credit Suisse.

However, their failures have stirred investor confidence worldwide.

Over the weekend, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation released a joint statement saying they were taking necessary measures to protect all depositors.

The statement accounted for Silicon Valley Bank and Signature Bank.

The decision allows customers to access insured and uninsured deposits from the “bridge bank” that the FDIC created for SVB and Signature deposits.

Because they are FDIC-insured, depositors are insured up to $250,000 for each account ownership category.

However, some customers could be insured for more if they had more than one type of deposit account.

Read also: Bank stocks have become a prospect amid recession fears

The bank’s importance

Credit Suisse is one of the most prominent lenders in Europe.

According to Andrew Kenningham, the chief European economist at Capital Economics, the bank was “much more globally interconnected, with multiple subsidiaries outside Switzerland, including in the US.”

“Credit Suisse is not just a Swiss problem but a global one,” he said.

The lender is a “global systemically important bank” or “G-SIB.”

When even one megabank is in a crisis, people immediately speculate on the system’s status and wonder who would fall next.

Despite the financial lifeline Swiss authorities provide, there are still various risks and unknowns from Credit Suisse, making investors worry.

According to George Washington School of Law professor Arthur Wilmarth, the Credit Suisse fiasco proves the financial crisis has not been contained.

“I think it was naive for most people to think that it might be contained just with a couple of regional banks, because clearly there are still shocks reverberating within our own banking system,” said Wilmarth.

“And this would indicate that it could potentially spread to banks of a very large size.”

The financial market

Although Silicon Valley Bank and Credit Suisse are not directly connected, they are still two significant entities in the financial markets.

The Swiss lender is faced with problems that have plagued it for years, escalating at the time as SVB and Signature have undergone troubles requiring the federal authorities’ help.

Peter Boockvar, Bleakley Financial Group’s chief investment officer, noted the situation:

“Credit Suisse has been a slow-moving car crash for years. But now, today’s news of course is happening in the vortex of SVB.”

The lender’s situation leads to anxiety in the banking sectors for both sides of the Atlantic.

Increased scrutiny

Silicon Valley Bank’s failure didn’t directly contribute to Credit Suisse’s situation but put the bank under intense scrutiny.

The pressure might have helped the selloff to bring Credit Suisse to its knees.

European and US banks face similar macroeconomic environmental factors.

Years of low (and negative in Europe) interest rates led to yields on government bonds like Treasuries shooting up, ruining the bank’s underlying asset’s value.

“Today’s events show that there are numerous vulnerabilities of different sizes, degrees and locations in the US and global financial system,” Dennis M. Kelleher, CEO of Better Markets.

“These cascading events illustrate again that regulation and supervision of the largest financial institutions in the United States, and indeed the globe, continues to be insufficient, largely because of successful lobbying by the financial industry.”

Norfolk Southern urged to compensate derailment victims

Norfolk SouthernA tremendous tragedy struck the citizens of East Palestine, Ohio, in early February.

As a Norfolk Southern train derailed, toxic substances were spilled into the air and neighboring water.

Residents returned warily after being evacuated, but the harm had already been done.

While Norfolk Southern has helped to restore normalcy to East Palestine, many people have expressed their outrage and dissatisfaction.

Jim Stewart

Jim Stewart is just one of several East Palestine residents who have complained about the train transit firm.

When the Norfolk Southern train crashed and spilled hazardous cargo, he was about to sell his house and retire.

Stewart is now concerned that the value of his property has declined.

He and his wife planned to list the property in the spring, while prices were still rising and inventory was limited.

They also talked about his son’s family acquiring their own property down the street from them.

“Since the derailment, I lost all those options,” said Stewart. “Who is going to buy contaminated land?”

“The older people are willing to stay and live it out. The younger bunch, they are smarter. They’re thinking of their families.”

“I wouldn’t want my grandchildren here. We don’t know if the ground is going to be good enough to grow grass. There are too many unknowns.”

James Stewart expressed his displeasure with the derailment during a Town Hall meeting on February 22.

“You burned me,” he told Norfolk Southern CEO, Alan Shaw.

“We were going to sell our house. Our value went phoom.”

When asked if Norfolk Southern intended to buy Stewart’s house, Shaw replied: “We’re going to do what’s right for this community.”

James Stewart works as a manager for a commercial baking company.

“I worked hard. I’m still working,” he reportedly told Shaw. “I’m in the 44th year at my job. I wanted to get out. Now I’m just stuck.”

The home was valued $85,000 when Stewart acquired it in 2016.

He feels he has lost a significant amount of wealth as a result of the derailment.

According to Zillow, the property was valued $135,000 in February, but the paucity of transactions has made a current appraisal tough to come up with.

“I’ll never get that. I’ll be lucky to get what I paid for it, if that,” Stewart said regarding the estimate.

He also feels that the renovations and testing required to assure the house’s safety would be too expensive.

Read also: Mortgage rates continue their upward rise for 5 straight weeks

Senate hearing

Jim Stewart is one of many people who have been let down by Alan Shaw and Norfolk Southern.

Neither the CEO nor the corporation has promised to pay for the property’s diminished worth.

Sen. Ed Markey pressed Shaw four times at last Thursday’s Senate session to commit to paying homeowners.

Shaw, on the other hand, just gave a frustrated response: “Senator, I’m committed to do what’s right.”

Markey refused to accept his response, stating:

“Will you commit to ensuring that these families, these innocent families do not lose their life savings in their homes and small businesses? The right thing to do is to say, ‘Yes, we will.'”

“These families want to know long term, are they just going to be left behind. Once the cameras move on, once the national attention dies down, where will these families be?”

“I think they’re going to be in the crosshairs of the accountants of Norfolk Southern saying ‘We’re not going to pay full compensation.'”

Compensation

Compensation for homeowners and businesses isn’t tough for a firm the magnitude of Norfolk Southern.

East Palestine is home to around 5,000 inhabitants and 2,600 residential structures.

According to Attom, the average property value in January 2023 will be $146,000.

All residential real estate in town, including single-family homes and multi-family structures, is valued at around $380 million.

The values represent only a small portion of Norfolk Southern’s income.

In 2022, the firm earned $4.8 billion in operating income and $3.3 billion in net income, up 9% over the previous year.

Norfolk Southern has $456 million in cash on hand as of December 31.

The corporation was returning profits to shareholders, repurchasing $3.1 billion in shares and paying $1.2 billion on dividends in 2022.

Norfolk Southern declared a 9% dividend hike just days before the catastrophe.

The company’s board of directors approved a $10 billion share repurchase plan in 2022, with power to acquire $7.5 billion of the remaining funds as of December 31.

At the hearing on Thursday, Senator Jeff Merkley questioned the company:

“Will you pledge to no more stock buybacks until a raft of safety measures have been completed to reduce the risk of derailments and crashes in the future?”

Alan Shaw, on the other hand, dodged the subject by responding, “I will commit to continuing to invest in safety.”

Norfolk Southern also spends a lot of money on lobbying, spending $1.8 million last year, according to OpenSecrets.org.

Senators questioned the lobbying spending at the session, mostly because Shaw refused to commit to supporting the bipartisan bill sponsored by the Senate following the derailment to improve train safety.

Alan Shaw refused to support the bill’s provisions when asked about them.

Instead, he answered: “We are committed to the legislative intent to make rail safer.”