Economy

Fed vs. inflation
Warsh faces new test: “Reputation is on the line

After winning President Donald Trump’s trust, the next test awaits future Fed chief Kevin Warsh: convincing both his colleagues at the central bank and the financial market, writes Bloomberg.

Warsh has spoken of a “regime change” at the Fed, promising to shrink the balance sheet and arguing that an AI-driven productivity boom can keep inflation down. A weaker labor market or falling inflation would give him room to push for more interest rate cuts. But if that doesn’t happen, it will be much harder to fulfill the promises, warns TS Lombard economist Dario Perkins.

– The last thing an economist needs is the chance to test his theories in practice. It’s his reputation that’s on the line, he says.

Budget crisis in the US
The US government partially shuts down despite agreement

At 06:00 Swedish time, parts of the US government shut down down again. This after a budget package was given the green light in the Senate but did not have time to be fully approved before the deadline expired, several media outlets report.

The shutdown is expected to be short-lived, however, as the House of Representatives is expected to approve the budget package early next week, which has the support of the Senate and President Donald Trump.

The agencies affected include the Treasury, Defense, Interior, Transportation, Health and Labor departments.

Many Americans will probably barely notice the shutdown, since most federal employees who work weekends – such as military personnel and air traffic controllers – are classified as essential and therefore not laid off, writes Bloomberg.

The future of Open AI
Sources: Nvidia puts billion-dollar plans in Open AI on hold

Nvidia's plans to invest as much as $100 billion, equivalent to 884 billion kronor, in OpenAI have been put on hold. Sources tell WSJ.

The negotiations are said to have stalled after certain people within Nvidia expressed concerns about the deal, according to the newspaper.

Nvidia CEO Jensen Huang has reportedly stressed in private conversations in recent months that the investment the companies announced in September is non-binding. At the same time, he has criticized OpenAI for “lack of discipline” in its business model and expressed concern about the increasing competition from Google and Anthropic.

Nvidia does not want to comment on the negotiations, but says in a statement that the chip giant has been a partner of OpenAI for ten years and “looks forward to continuing to work together”. OpenAI has not yet commented on the information. 

The future of Open AI
Judge agrees with Open AI – dismisses Musk’s lawsuit

A judge signaled on Friday that she will dismiss a lawsuit from Elon Musk’s AI company XAI against rival OpenAI. This is reported by Reuters.

In a preliminary assessment, District Judge Rita Lin stated that she will agree with OpenAI. A final decision is expected after oral hearings on 3 February.

XAI sued OpenAI in September, accusing the company of recruiting employees from the company to obtain trade secrets about the AI ​​chatbot Grok. 

Tesla's future
Wall Street: Tesla no longer a car company

The announcement that Tesla will stop making two car models to focus on building robots has ended a long debate on Wall Street, according to Bloomberg. The market now largely agrees that Tesla is not an automotive company.

"While the automotive business remains Tesla's core business, we believe the end of the S/X marks a symbolic handover - from vehicles to physical AI," writes Barclays analyst Dan Levy.

Tesla's market capitalization currently amounts to almost $ 1.6 trillion. By comparison, auto giants GM and Ford are valued at about $ 80 billion and $ 60 billion, respectively.