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Today’s briefing:
AI Job Losses
OpenAI’s Mega Deal
Fed Hits the Brakes
🤖 The AI Job Reset
Amazon is slashing 14,000 corporate jobs, a move that signals a deeper shift: The company is aggressively reining in costs specifically to increase spending on artificial intelligence.
Why it matters: This isn't a standard layoff. Amazon is planning a massive $118 billion capital expenditure this year, with the bulk aimed at building AI data centers to compete with Google and Microsoft.
The big picture: CEO Andy Jassy, who has been focused on making Amazon operate "like the world's largest start-up," warned in June that AI advances would "reduce" the company's corporate headcount in the coming years.
📉 The White-Collar Wipeout
Amazon's strategy is a high-profile example of what CEOs are planning everywhere: operating with much smaller human workforces.
A mad rush is underway to train AI with true human expertise
The training: Startups like Mercor are paying doctors and lawyers to train AI, aiming to replace junior employees first, and senior ones later.
OpenAI is reportedly hiring former bankers for the same reason.
CEOs are blunt about the impact on white-collar jobs:
"[AI will replace] literally half of white-collar jobs."
🏦 Revenge of the "Showhorses"
The investment banking world offers a perfect case study of this disruption:
The traits most prized in junior recruits —attention to detail, 24/7 responsiveness, and a "Stakhanovite work ethic”—are precisely the ones easiest for AI to copy.
For the past 20 years, banking has been shifting away from "verbally-fluent" generalists toward technically proficient "workhorses" who could master complex financial modeling.
The AI irony: Those same "workhorses" are now unwittingly training their replacements.
OpenAI is reportedly paying former bankers $150 an hour—more than they earned doing the job at ~$50 an hour—to teach AI to build the models that define junior banking.
Once AI automates this "grunt work," the competitive differentiator will snap back.
Value will shift from accuracy and stamina to “strong judgment, credibility, and the ability to tell a story” —skills AI can't (yet) replicate.
🪜 The Bottom Line: A Broken Ladder
This erosion of the entry-level grind threatens the entire professional apprenticeship model.
If you remove the lower rungs of the ladder, the whole structure becomes "rickety and unstable."
As a former banker warns:
"You can't prompt a chatbot to learn client management or intuition."
What’s next: A managing analyst may emerge, one who focuses less on execution and more on overseeing AI output, testing its assumptions, and interpreting its conclusions
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💰 OpenAI's $500B Shuffle
OpenAI has completed its massive, long-awaited reorganization, splitting itself into a non-profit foundation and a $500 billion for-profit entity it controls.
Why it matters: The deal solidifies Microsoft's partnership, unlocks a path to massive new funding for the capital-hungry AI lab, and paves the way for a monster IPO.
The move sent Microsoft's valuation soaring past $4 trillion.
The New Structure
Here's the equity breakdown:
Microsoft: Holds a 27% stake in the new group, valued at approximately $135 billion.
OpenAI Foundation: Holds a 26% stake, valued at around $130 billion.
Employees & Other Investors: Hold the remaining 47%.
"I think this is going to be one of the most successful public offerings in history."
OpenAI co-founder and CEO Sam Altman will not take equity as part of the restructuring.
“the most likely path"
🤝 The New Deal Terms
What Microsoft gets:
Extended IP Access: Microsoft gets exclusive IP rights for models and products through 2032, even if OpenAI achieves AGI.
Research Access: It retains rights to OpenAI's research IP (like training methods) until 2030 or AGI verification, whichever comes first.
What Microsoft gives up:
No More Exclusivity: Microsoft loses its right of first refusal to be OpenAI's compute provider.
Less Control: It also gives up rights to block OpenAI acquisitions or security issuances.
What OpenAI gets:
Cloud Freedom: OpenAI can now partner with other cloud providers.
New Partners: It can jointly develop some products with third parties (though API products must still be exclusive to Azure).
Government Contracts: It can now provide API access to US government national security customers, regardless of the cloud provider.
The catch: OpenAI has agreed to purchase an incremental $250 billion in Azure cloud services.
🤖 The AGI Clause
A major point of contention was defining Artificial General Intelligence (AGI).
The Old Way: Microsoft's access was set to end once OpenAI's board declared AGI.
The New Way: An AGI declaration must now be verified by an independent expert panel.
🌍 The "For-Good" Mission
The OpenAI Foundation will use its massive new equity stake to fund its philanthropic mission.
"The more OpenAI succeeds as a company, the more the nonprofit's equity stake will be worth, which the nonprofit will use to fund its philanthropic work."
The foundation is starting with a $25 billion commitment focused on two key areas:
Health and curing diseases, including creating open-source health datasets.
Technical solutions for AI resilience to maximize AI's benefits and minimize its risks.
The bottom line: This deal gives both parties what they wanted. OpenAI gets the cash and freedom it needs to grow, and Microsoft gets long-term, locked-in access to the world's leading AI models.
📉 Fed Hits the Brakes
The Federal Reserve cut its benchmark interest rate by a quarter point on Wednesday, landing it in the 3.75% to 4% range—its lowest level since late 2022.
Why it matters: This wasn't just a rate cut. The Fed also signaled it will halt its quantitative tightening (QT) program in December, ending its three-year effort to shrink its massive balance sheet.
The goal: To ease borrowing conditions amid new signs of stress in money markets and a weakening labor market.
He also described the labor market as "gradually cooling," as companies like Amazon, UPS, and General Motors announce thousands of job cuts.
Yes, but: Don't pencil in another cut for Christmas.
The decision divided the committee, with one member wanting a deeper half-point cut and another wanting to hold steady.
"There were strongly differing views about how to proceed in December."
Powell stated that expectations for another cut at the December 10 meeting were "far from a foregone conclusion."
The market reaction: Stocks dropped on Powell's cautious comments, and rate-sensitive two-year Treasury yields climbed.
Results from Prior Poll:
How do you predict Milei's victory and pro-U.S. alignment will impact China's economic influence in Argentina?
🟨🟨🟨⬜️⬜️⬜️ It will significantly decrease. (20%)
🟨🟨🟨🟨⬜️⬜️ It will slightly decrease. (24%)
🟩🟩🟩🟩🟩🟩 It will have no real impact. (32%)
🟨🟨🟨🟨⬜️⬜️ It will increase, as Argentina seeks diverse partners. (24%)