THE ECONOMY

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High inflation has coincided with massive amounts of spending on the AI boom, but the historic amount of investment may be getting more blame than it deserves, at least according to an Oct. 13 report from Goldman Sachs that examines how much AI spending is contributing to inflation measures.

This year, companies around the world are expected to invest $1 trillion in AI, including $581 billion in the US, according to a separate report Goldman Sachs published in August.

Some Federal Reserve officials have blamed AI spending for contributing to inflation’s remaining above the Fed’s 2% target. Earlier this month, Christopher Waller, a Federal Reserve Governor, listed the reasons he had lost confidence that inflation was easing, including what he called mounting “evidence…that the artificial intelligence buildout was significantly driving up high-tech consumer prices, and projections for the size of that buildout ballooned.”

Fed board member Lisa Cook in a September speech said AI was among factors contributing to inflation. Amid the data center buildout, demand for energy and construction labor affects the economy broadly, Cook noted. “Prices for AI-related goods—such as chips, computers, and software—have surged,” and electricity and water prices have both risen around 5% in the past year, Cook said.

Productivity gains may reduce inflation, but when will they come?—LB

      

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CFOVILLE

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Lineage Cell Therapeutics, a clinical-stage biotech developing novel, “off-the-shelf” cell therapies to treat medical conditions, including vision or hearing loss, is approaching the five-year mark since it struck a major deal with a pharmaceutical company worth up to $670 million. The small-cap company’s CFO, Jill Howe, is playing an integral role in reinvesting the proceeds from that deal to develop other products, and communicating those efforts with investors.

In late 2021, Lineage announced a collaboration and license agreement with Roche and Genentech for development and commercialization of OpRegen, a cell therapy to treat certain eye conditions. The deal included $50 million up front and up to an additional $620 million in development and milestone payments.

Proceeds in part went to developing Lineage’s patented manufacturing platform called AlloSCOPE, from which Lineage has “spun out three really strong assets,” Howe said.

Next steps. Working alongside CEO Brian Culley and other key leaders, Howe helped identify those assets during an “extensive” evaluation process a couple of years ago, she said.

For investors, the value proposition “has to read authentic,” Howe said.—AZ

      

INTEREST RATES

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Sure, it might be spooky season, but not everything needs to be a trick or a treat.

That was the case with the October 28 Federal Open Market Committee meeting, in which the US central bank, in a widely anticipated move, kept rates unchanged: Fed officials voted 10–2 to hold rates steady.

The FOMC said it was maintaining benchmark rates in a range between 3.75% to 4%. Fed Governor Lisa Cook and Beth Hammack, Cleveland Fed president, were the two dissenters, advocating instead for a quarter-point hike.

“Inflation remains elevated,” the Fed’s post-meeting statement said. “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s two percent goal. The Committee will deliver price stability.”

While the move was expected, it invites speculation as to where monetary policy goes from here. Federal Reserve Chair Kevin Warsh, for his part, voiced confidence about the central bank’s actions thus far.

Warsh plans to cut one of the FOMC’s rate-setting meetings next year.—NP

      

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market forces

Francis Scialabba

Stat: ~$6.3 billion. That’s the estimated financial impact to Binance after the crypto exchange said it experienced a “security incident.” Hackers may have accessed an engineer’s laptop. (ABC News)

Quote: “We believe that AWS can grow north of 40% in each 2027 and in 2028, and be a trillion-dollar revenue business in the next five to 10 years.”—Andy Jassy, Amazon’s president and CEO, on Amazon Web Services (TechCrunch)

Read: The nice salesperson who helped you pick out some squishy running shoes may be a moonlighting elite distance runner. (the Wall Street Journal)

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