🤖 Can AI Take Down The Financial System?

Good morning. US stock futures moved higher in Friday morning trading as investors parsed over stronger than expected retail sales data.

🤖 AI seen as “risk to financial system stability”

📝 Our report: A panel of regulators just gave their hot new take on all things artificial intelligence (AI) saying, "Watch out, folks, AI might stir up some trouble in the financial sandbox if left unattended!" The Financial Stability Oversight Council, which comprises top financial regulators and is chaired by Treasury Secretary Janet Yellen, flagged the risks posed by AI for the first time in its annual financial stability report.  

 🔑 Key points:

• While the group said AI could spur innovation or efficiencies at financial firms like banks, the rapidly advancing technology requires vigilance from both the companies and their watchdogs.

• The panel also flagged the growing role of nonbanks and private credit as meriting close attention, and said financial institutions and regulators should continue to try to better gauge risks stemming from climate change.

• Some regulators including the Securities and Exchange Commission, which sits on the panel, are scrutinizing how firms use AI, while the White House recently issued an executive order aimed at mitigating AI risk.

💡 So what: Managing AI in a way that avoids risks in the financial system will ultimately involve a combination of regulatory frameworks, ethical considerations, and industry best practices. By combining these strategies, regulators and industry stakeholders can work together to harness the benefits of AI in finance while minimizing potential risks to the stability of the financial system.

 Friday - No Major Economic News

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📱 X moves closer to being “everything” app

WHAT: Elon Musk's social media playground, X (formerly Twitter), just got a shiny new money-transmitter license from its 13th U.S. state. The most recent approval from the state of Pennsylvania grants X the ability to facilitate money transfers and paves the way for the company to allow users to send money to one another, similar to PayPal's Venmo.

WHY: Since acquiring Twitter in October 2022, Musk has said he envisions remodeling the company into the purveyor of an "everything app" similar to popular Chinese app WeChat, which lets users send messages but also hail a taxi or pay merchants.

🛍️ Amazon claims victory over EU on tax claim

WHAT: Amazon just danced its way out of a tax tango with the European Union (EU)! The EU tried to hit them with a €250 million bill but the EU Court of Justice said the European Commission failed to establish that a tax arrangement between Amazon and Luxembourg was “state aid that was incompatible with the internal market.”

WHY: The ruling is another painful defeat for EU Competition Chief Margrethe Vestager, who’s led a decade-long campaign against sweetheart tax deals doled out to big companies by member states.

🚚 EV truck maker signs deal with telecoms giant

WHAT: AT&T and Rivian just struck a deal to give a high-tech makeover to AT&T's fleet! They're getting Rivian vans and R1 vehicles to roll into the future with style. AT&T said the vehicles will be purchased through a pilot program aimed at cutting transport vehicle emissions.

WHY: In addition to the fleet purchase, Rivan and AT&T announced that AT&T will be Rivian’s exclusive provider of internet connectivity for all Rivian commercial vehicles in the U.S. and Canada.

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