GS Basics: Hawkish Fed And AI Development

The report discusses the hawkish shift in Federal Reserve policy alongside rapid advancements in open-source and small-scale 'local' AI models like VibeThinker-3B. It highlights risks to hyperscaler business models as token pricing faces deflationary pressure.

Key Takeaways

• 1.The June FOMC meeting delivered a hawkish surprise with projections for higher interest rates and inflation.
• 2.Rapid advancements in local and open-source AI models are challenging existing hyperscaler moats.
• 3.The oil market is reacting to a new 14-point MOU that appears to alleviate geopolitical pressure via Iranian reconstruction.

Table of Contents

• Markets
• Oil
• Fed
• Open Source
• Local
• Hyperscalers
• Risk

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