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AI fears are reaching the highest levels of finance and law
Silicon Valley numbers have long warned about the dangers of artificial intelligence. Now their anxiety has migrated to other spheres of power: the legal system, global gatherings of business leaders and Wall Street’s top regulators.
Last week, the Financial Industry Regulatory Authority (FINRA), the securities industry’s self-regulator, classified AI as an “emerging risk” and the World Economic Forum in Davos, Switzerland, released research that concluded that AI AI-powered misinformation poses the biggest near-term threat to the global economy.
These reports came just weeks after the Financial Stability Oversight Council in Washington said AI could result in “direct consumer harm” and Gary Gensler, chairman of the Securities and Exchange Commission, publicly warned about the threat. the financial stability of numerous investments. companies that rely on similar AI models to make buying and selling decisions.
“AI can play a central role in after-action reporting of a future financial crisis,” he said in a speech in December.
At the World Economic Forum’s annual conference for top CEOs, politicians and billionaires, held in a chic Swiss ski town, AI is one of the central themes and a topic on many of the panels and events.
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In a report released last week, the forum said its survey of 1,500 policymakers and industry leaders found that fake news and propaganda written and driven by AI chatbots are the main greater short-term risk for the global economy. About half of the world’s population is taking part in this year’s elections in countries including the United States, Mexico, Indonesia and Pakistan, and disinformation researchers are concerned that AI will make it easier for people to spread false information and increase social conflict. .
Chinese propagandists are already using generative AI to try to influence policy in Taiwan, The Washington Post reported on Friday. AI-generated content is appearing in fake news videos in Taiwan, government officials said.
The forum’s report came a day after FINRA, in its annual report, said AI raised “concerns about accuracy, privacy, bias and intellectual property” while offering potential cost and efficiency gains.
And in December, the Treasury Department’s FSOC, which monitors the financial system for risky behavior, said that undetected flaws in the AI’s design could produce biased decisions, such as denying loans to applicants who would otherwise would be qualified.
Generative AI, which is trained on huge data sets, can also produce wildly incorrect conclusions that appear convincing, the council added. The FSOC, chaired by Treasury Secretary Janet L. Yellen, recommended that regulators and the financial sector devote more attention to monitoring potential risks emerging from the development of AI.
The SEC’s Gensler is among AI’s most outspoken critics. In December, his agency requested information about the use of AI from several investment advisers, according to Karen Barr, head of the Investment Adviser Association, an industry group. The request for information, known as a “sweep,” came five months after the commission proposed new rules to prevent conflicts of interest between advisors who use a type of AI known as predictive data analysis and their clients.
“Any resulting conflicts of interest could cause harm to investors in a more pronounced way and on a broader scale than previously possible,” the SEC said in its proposed rulemaking.
Investment advisors are already required under existing regulations to prioritize their clients’ needs and avoid such conflicts, Barr said. His group wants the SEC to withdraw the proposed rule and base any future actions on what it learns from its informational sweep. “SEC regulation misses the mark,” she said.
Financial services companies see opportunities to improve customer communications, back-office operations and portfolio management. But AI also carries greater risks. Algorithms that make financial decisions could produce biased lending decisions that deny minorities access to credit or even cause a global market collapse if dozens of institutions relying on the same AI system sell at the same time.
“This is something different from what we have seen before. AI has the ability to do things without human hands,” said attorney Jeremiah Williams, a former SEC official who now works at Ropes & Gray in Washington.
Even the Supreme Court sees cause for concern.
“AI obviously has great potential to dramatically increase access to important information for both lawyers and non-lawyers. But it is equally obvious that it risks invading privacy interests and dehumanizing the law,” wrote Chief Justice John G. Roberts Jr. in his year-end report on the U.S. judicial system.
Like drivers who follow GPS instructions that lead them into a dead end, humans may rely too much on AI in managing money, said Hilary Allen, associate dean at American University Washington College of Law. “There is a great mystique about the fact that AI is smarter than us,” she said.
AI also may not be better than humans at detecting unlikely hazards or “tail risks,” Allen said. Before 2008, few people on Wall Street predicted the end of the housing bubble. One reason was that because housing prices had never fallen nationally, Wall Street models assumed such a uniform decline would never occur. Even the best AI systems are only as good as the data they’re based on, Allen said.
As AI becomes more complex and capable, some experts worry about “black box” automation, which is unable to explain how it arrived at a decision, leaving humans uncertain about its soundness. Poorly designed or managed systems can undermine the trust between buyer and seller necessary for any financial transaction, said Richard Berner, clinical professor of finance at New York University’s Stern School of Business.
“Nobody did a stress scenario with machines running out of control,” added Berner, first director of Treasury’s Office of Financial Research.
In Silicon Valley, the debate over the potential dangers surrounding AI is not new. But it gained traction in the months following the launch of OpenAI’s ChatGPT in late 2022, which showed the world the capabilities of the next-generation technology.
OpenAI presents plan to address AI dangers
Amid an artificial intelligence boom that has fueled the rejuvenation of the tech industry, some company executives have warned that AI’s potential to unleash social chaos rivals that of nuclear weapons and lethal pandemics. Many researchers say these concerns distract from the real-world impacts of AI. Other experts and entrepreneurs say concerns about the technology are overblown and risk putting pressure on regulators to block innovations that could help people and boost profits for tech companies.
Over the past year, politicians and policymakers around the world have also struggled to understand how AI will fit into society. Congress held several hearings. President Biden issued an executive order saying AI was “the most important technology of our time.” The UK convened a global forum on AI, where Prime Minister Rishi Sunak warned that “humanity could lose control of AI completely”. Concerns include the risk that “generative” AI – which can create text, video, images and audio – could be used to create disinformation, displace jobs or even help people create dangerous biological weapons.
AI poses “extinction risk” equivalent to nuclear weapons, tech leaders say
Tech critics have pointed out that some of the leaders who have sounded the alarm, such as OpenAI CEO Sam Altman, are nevertheless driving the development and commercialization of the technology. Smaller companies have accused AI heavyweights OpenAI, Google and Microsoft of exaggerating the risks of AI to trigger regulations that would make it harder for new entrants to compete.
“The problem with hype is that there is a disconnect between what is said and what is actually possible,” said Margaret Mitchell, chief ethics scientist at Hugging Face, an open-source AI start-up based in New York. . “We had a honeymoon period where generative AI was very new to the public and they could only see the good, as people started using it they could see all the problems with it.”
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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