What we’re reading (12/10)
“Divided Fed Approves Third Rate Cut This Year, Sees Slower Pace Ahead” (CNBC). “A Federal Reserve split over where its priorities should lie cut its key interest rate Wednesday, but signaled a tougher road ahead for further reductions. Fulfilling expectations of a ‘hawkish cut,’ the central bank’s Federal Open Market Committee lowered its key overnight borrowing rate by a quarter percentage point, putting it in a range between 3.5%-3.75%.”
“Oracle Shares Tumble As AI Spending Outruns Returns” (Wall Street Journal). “Oracle co-founder Larry Ellison. Oracle is facing mounting anxiety from investors about how much it’s spending to build out data centers for the artificial-intelligence industry. The cloud-computing company’s revenue and operating income for the most recent financial quarter fell slightly short of analysts’ expectations, while the company raised its spending forecast, adding fuel to concerns over the timeline for turning the AI industry’s ravenous demand for computing capacity into profits.”
“Is It A Bubble?” (Howard Marks). “The role of newness is well described in my favorite passage from a book that greatly influenced me, A Short History of Financial Euphoria by John Kenneth Galbraith. Galbraith wrote about what he called ‘the extreme brevity of the financial memory’ and pointed out that in the financial markets, ‘past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.’ In other words, history can impose limits on awe regarding the present and imagination regarding the future. In the absence of history, on the other hand, all things seem possible.”
“Why The A.I. Boom Is Unlike The Dot-Com Boom” (New York Times). “For all the similarities, however, there are many differences that could lead to a distinctly different outcome. The main one is that A.I. is being financed and controlled by multitrillion-dollar companies like Microsoft, Google and Meta that are in no danger of going kaput, unlike the dot-com start-ups that were little more than an idea and a bunch of engineers.”
“The Elusive Returns To AI Skills: Evidence From A Field Experiment” (Teo Firpo, et al.). “As firms increasingly adopt Artificial Intelligence (AI) technologies, how they adjust hiring practices for skilled workers remains unclear. This paper investigates whether AI-related skills are rewarded in talent recruitment by conducting a large-scale correspondence study in the United Kingdom. We submit 1,185 résumés to vacancies across a range of occupations, randomly assigning the presence or absence of advanced AI-related qualifications. These AI qualifications are added to résumés as voluntary signals and not explicitly requested in the job postings. We find no statistically significant effect of listing AI qualifications in résumés on interview callback rates. However, a heterogeneity analysis reveals some positive and significant effects for positions in Engineering and Marketing. These results are robust to controlling for the total number of skills listed in job ads, the degree of match between résumés and job descriptions, and the level of expertise required. In an exploratory analysis, we find stronger employer responses to AI-related skills in industries with lower exposure to AI technologies. These findings suggest that the labor market valuation of AI-related qualifications is context-dependent and shaped by sectoral innovation dynamics. “
