—— 300 Million Jobs May Be Lost to AI Automation; First Citizens Acquires SVB; Cracks Emerge at Charles Schwab; Disney to Lay Off 7,000 Employees; Boston Marathon Changes Longtime Sponsor; Binance Accused of Illegal Operations; Money Market Funds Become New Safe Haven
1. 300 Million Jobs May Be Lost to AI Automation
A new study by Goldman Sachs finds that generative AI, including ChatGPT, could help humans complete around 25% of their work. Over the next 10 years, this powerful technology is expected to contribute to a 7% annual increase in global GDP, but it also implies that automation will force many into unemployment.
Study author Joseph Briggs said generative AI could displace around 300 million workers in the U.S. and Europe, with lawyers and management-level employees facing the highest risk of replacement.
In the U.S., AI could help about 7% of workers complete at least half of their tasks, placing them at high risk of being replaced. Thirty percent of workers perform physical labor or outdoor work that AI cannot substitute.
For 63% of American workers, AI could take over less than half of their responsibilities, putting them at lower risk.
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2. First Citizens Acquires Silicon Valley Bank
The U.S. Federal Deposit Insurance Corporation (FDIC) announced today that First Citizens BancShares Inc. has agreed to acquire a total of $72 billion in assets from Silicon Valley Bank at a discount of $16.5 billion.
The FDIC will retain the remaining $90 billion in securities and other assets, and the Deposit Insurance Fund has paid out $20 billion in total insurance compensation.
Upon completion of the acquisition, First Citizens will rank among the top 15 banks in the United States.
Following the acquisition news, First Citizens’ stock surged 44%, returning to levels before SVB’s collapse.
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3. Cracks Emerge at Charles Schwab
On the surface, wealth management giant Charles Schwab, with more than 50 years of history, appeared immune to crises like those that hit Silvergate and Silicon Valley Bank, as it has little exposure to cryptocurrency or startups.
Moreover, less than 20% of its clients hold deposits above the FDIC’s $250,000 insurance cap, far below SVB’s 90%.
However, as the crisis drags on, many investors are beginning to notice cracks in Schwab’s seemingly solid business. Last year, the value of long-term bonds held by Schwab surged to $29 billion. Rising interest rates have also driven investors to withdraw savings from key Schwab products and accounts.
Since March 8, Schwab’s stock has fallen 8%, and Wall Street analysts believe the company’s profits are likely to take a hit.
CEO Walt Bettinger said Schwab has sufficient liquidity to meet 100% of withdrawal requests and can also borrow from the Federal Home Loan Bank or issue certificates of deposit to cover funding gaps.
As interest rates continue to rise, the value of Schwab’s long-term bond holdings may fall further, and the company will also have to offer higher savings rates.
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4. Disney to Lay Off 7,000 Employees
Today, Walt Disney CEO Bob Iger stated in a letter to employees that the first group of employees to be laid off will begin receiving notifications over the next four days. A larger second round of layoffs will begin in April, and all affected staff will be notified before the summer.
Reportedly, Disney plans to cut a total of 7,000 employees and implement other cost-saving measures to reduce expenses by $5.5 billion.
In November of last year, Bob Iger returned to the company he served for 15 years and launched a series of restructuring plans to improve financial performance.
As of October 1, Disney employed 220,000 people worldwide, 25% of whom were part-time or contract workers. The new layoffs will impact nearly every division, including theme parks and the ESPN network.
The second and third rounds of layoffs are scheduled to begin in April and summer, respectively.
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5. Boston Marathon Changes Longtime Sponsor
Today, the Boston Athletic Association announced that the Boston Marathon — the world’s oldest running event — has signed a 10-year sponsorship deal with Bank of America.
Starting in 2024, the event will be renamed “Boston Marathon Presented by Bank of America.”
This year’s sponsor remains John Hancock, a Boston-based wealth management firm that has sponsored the marathon for nearly 40 years.
David Tyrie, Head of Global Marketing at Bank of America, stated that the bank hopes to use this large-scale platform to better promote the race and contribute to communities across the United States.
On April 17 this year, nearly 30,000 people are expected to participate in the 26.2-mile Boston Marathon.
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6. Binance Accused of Illegal Operations
Today, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil complaint against cryptocurrency exchange Binance, alleging that the company operated illegally in the United States and that the majority of its trading volume and profits came from U.S. users.
The CFTC stated that operating in the U.S. requires compliance with registration, regulatory requirements, and laws — which Binance CEO Changpeng Zhao allegedly ignored.
Binance, which is registered in the Cayman Islands, claims it does not serve U.S. customers and has implemented many adjustments in recent years to block American users.
The CFTC alleges that Binance may have previously known that U.S. users were accessing the platform via VPN but chose to turn a blind eye.
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7. Money Market Funds Become New Safe Haven
According to data provider EPFR, money market funds have attracted a total of $286 billion since the beginning of March, marking the largest single-month net inflow since the onset of the pandemic.
Following the U.S. government’s takeover of Silicon Valley Bank on March 9, Goldman Sachs’ U.S. money market fund gained $52 billion, a 13% increase. JPMorgan and Fidelity’s funds also rose by $46 billion and $37 billion, respectively.
Money market funds primarily invest in low-risk, highly liquid assets, including short-term government bonds. As the Federal Reserve continues to raise rates, the yields of these products have become increasingly attractive.
Bank of America’s research shows that, as of last Wednesday, the total value of U.S. money market funds hit a record high of $5.1 trillion.
In March, money market funds attracted $286 billion, the highest level since April 2020.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.