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Struggling lithium hopeful Lake Resources [ASX:LKE] is down nearly 5% today, sinking to a new 52-week low.

The stock is down nearly 90% in the past 12 months, fast approaching micro-cap territory.

Not too long ago it was worth over a billion dollars. Lake is now trading under $150 million.

Since its all-time high in April 2022, LKE is down 95%.

Aussie gold miner Evolution Mining [ASX:EVN] is down over 15% in late afternoon trade after its December quarterly report showed gold production of 161,073 ounces at an all-in sustaining cost (AISC) of $1,618 an ounce.

Clearly, the big market response implies December’s gold production came in much lower than anticipated. Consensus estimates had Evolution Mining producing 191,510 ounces. So today’s numbers were a material miss. Hence the sell-off.

Net mine cash flow rose 85% to $131.8 million.

Looking to FY24, Evolution guided for gold production of 789,000 ounces, copper production of 62,500 tonnes and AISC of $1,340 an ounce.

Evolution Mining $EVN reported gold production for the second quarter that missed the average analyst estimate. Details below: pic.twitter.com/5fvy5sGmrl

— CommSec (@CommSec) January 16, 2024

25% of global chief executives surveyed by PwC ahead of the World Economic Forum expect generative AI to cause at least 5% headcount reductions in 2024.

The Financial Times reported:

‘Some 46 per cent of those surveyed said they expect the use of generative AI — systems that can spew out humanlike text, images and code in seconds — to boost profitability in the next 12 months, the survey added. However, 47 per cent said the technology will deliver little or no change. The findings, based on interviews with 4,702 company chiefs spread across 105 countries, point to the far-reaching impacts that AI models are expected to have on economies and societies, a topic that will feature prominently at the annual meetings.

‘A growing number of executives are planning to deploy generative AI in the coming months, the survey showed, after 32 per cent reported they had adopted it across their company in the past year. Some 58 per cent said they expect it to improve the quality of their products or services in the next 12 months, while 69 per cent said their employees will need to learn new skills. ‘

 

Last week, Bill Gates interviewed OpenAI’s Sam Altman.

The 30-minute discussion canvassed why ‘today’s AI models are the stupidest they’ll ever be, how societies adapt to technological change, and even where humanity will find purpose once we’ve perfected artificial intelligence‘.

If you’re up for it, you can watch/listen to the interview here.

During the conversation, Gates raised concerns about the speed of AI improvements:

‘I guess you and I have some concerns that AI will force us to adapt faster than we’ve had to ever before.’

To which Altman replied:

‘That’s the scary part. It’s not that we have to adapt. It’s not that humanity is not super-adaptable. We’ve been through these massive technological shifts, and a massive percentage of the jobs that people do can change over a couple of generations. And over a couple of generations, we seem to absorb that just fine. [But] each technological revolution has gotten faster and this will be the fastest by far.’

Here’s the discomfiting part:

‘That’s the part that I find potentially a little scary — the speed with which society is going to have to adapt and that the labour market will change.’

Gates then chimed in saying the fear of white collar job displacement has obscured the threat to blue collar jobs via robotics:

‘[Robotics] could change the job market for a lot of the blue-collar type work, pretty rapidly.’

Uncover Alpha’s Rihard Jarc set off a debate about how sustainable Google’s competitive advantage is in search.

Will the mass adoption of generative AI spell trouble for Google Search?

Jarc thinks so.

Here’s an interesting snippet:

‘Search is over 50% of GOOGL‘s revenue, and it is becoming increasingly apparent to me that LLMs, when combined with the proper UI and flow, are a better solution to solving the core problem that Google Search addresses, which is answering a question. The other issue that is becoming clearer is that we will soon have LLM assistants who can answer different questions in many touchpoints we didn’t have before. So, solutions for solving the problem of answering a question become accessible at almost every step. Example: MSFT Office and other products, WhatsApp, IG, FB, AMZN, AAPL Siri, not to mention a variety of startup products and apps, both on apps and platforms as well as hardware products. With it, the need for you to go “Google” something becomes smaller.

‘In the past, the main thing that kept the GOOGL moat so strong was the fact that you couldn’t make a Search engine so good because you didn’t have enough data to make it good for it to compete with Google Search. But without users using your search engine, you couldn’t get data. So the circle was complete. But now a lot of LLMs answer the questions as well as, if not better for some questions as a Google Search, and here is where the moat has gone, IMO. This opens up the gate for other big companies as well as startups to be able to compete for the basic need that search solves (answering a question).‘

I sold my $GOOGL position today.

I will be publishing an article explaining the reasons in the coming days, but in a short summary:$GOOGL was one of my biggest positions and has done well for me over the years, but I want to go on the sidelines right now.

1. Search is over…

— Rihard Jarc (@RihardJarc) January 16, 2024

We talked about this last week, but the Worley saga over allegedly dodgy dealings in Ecuador are dragging on.

And will likely drag on for a while yet.

Today, the contracting giant Worley released a 12-page response to queries from the ASX. The response cleared things up as much as it obfuscated.

A key source of confusion was Worley’s statement last week that the amount in dispute between its subsidiary and Ecuador is nearly US$470 million yet Worley said its ‘net residual balance sheet exposure to the Ecuador contractual dispute is A$58 million’.

There’s a big gulf between US$470 million and A$58 million.

What gives?

The US$470 million figure is made up of three components. The third component interests us here. It refers to claims brought by Ecuador against Worley worth about US$327.2 million.

Worley tried to explain it this way:

‘Prior to and during the course of the arbitration, WOR was being pursued (in its view unreasonably) by Ecuador in separate civil liability claims and tax claims, independent from the arbitration process. These claims are being managed in the ordinary course of business by WOR as a global provider of complex contract services.6 In the arbitration, WOR asked the tribunal to order Ecuador to desist from such baseless claims. In WOR’s view, asserted in submissions which are referred to in the Decision, these claims were part of a pattern of harassment. WOR considers the claims to be without merit, and to date, all of the claims which have been decided have been resolved in WOR’s favour.’

In a footnote, WOR elaborated further:

‘At present, 23 of the civil claims (relating to amounts totalling US$111.7 million) have been resolved in WOR’s favour by courts in Ecuador and are not subject to appeal (the principal ground for decision in all 23 of these civil claims was that the claim was statute of limitations barred, on the basis of time elapsed). A court of first instance has decided 1 tax claim (relating to US$6.5 million) in WOR’s favour, although this remains subject to an ongoing appeal. The remaining 17 civil claims (relating to amounts totalling US$182.2 million) and 2 tax claims (relating to amounts totalling US$26.8 million) have not yet been finally resolved but in many cases have been pending actions by Ecuadorian officials for lengthy periods – WOR believes 7 of the 17 civil claims which remain unresolved (relating to amounts totalling US$70.7 million) are statute of limitations barred, and believes the remaining 10 civil claims (relating to amounts totalling US$ 111.5 million) have other procedural and substantive defects that should result in the dismissal of these claims.’

So 23 claims resolved. 19 claims — worth US$209 million — still pending.

Elon Musk wants more control.

This sentence would be true even if you lopped off the last word.

Elon Musk wants more.

It would still be true if you lopped off more.

Elon Musk wants.

And, often, what Elon Musk wants, Elon Musk gets. We’ll see if it works in this case.

Overnight, Musk said he wants more clout at Tesla, seeking more shares and power as he pushes the automaker into robotics and AI.

As the Wall Street Journal reported:

‘On Monday, Musk gave board members what amounts to an ultimatum, saying he feels uncomfortable making Tesla a leader in those two areas without controlling roughly 25% of the company.

The recently approved spot Bitcoin ETFs have seen over US$10 billion of trading volume in the first three days of operation.

Bloomberg’s Eric Balchunas puts those numbers in perspective.

Interest in Bitcoin ETFs is historically high. Make of that what you will.

Let me put into context how insane $10b in volume is in first 3 days. There were 500 ETFs launched in 2023. Today, they did a COMBINDED $450m in volume. The best one did $45m. And many have had months to get going. $IBIT alone is seeing more activity than the entire '23 Freshman… https://t.co/wV1zQFtPW1

— Eric Balchunas (@EricBalchunas) January 16, 2024

A US Federal Reserve official said overnight rate cuts should be ‘carefully calibrated and not rushed’.

But Waller did also warn against keeping rates too high for long.

Right now, he thinks the Fed’s policy is sufficiently restrictive and the US economy resilient. This resiliency makes it hard for Waller to envisage the Fed cutting rates quickly and by big chunks:

‘This cycle, however, with economic activity and labour markets in good shape and inflation coming down gradually to 2%, I see no reason to move as quickly or cut as rapidly as in the past.’

Fed governor Chris Waller: Rate cuts are coming into view but the process should be “carefully calibrated and not rushed.”

As long as growth is fine, “I see no reason to move as quickly or cut as rapidly” as the Fed has in past cutting cycles. pic.twitter.com/Noyjq02VeM

— Nick Timiraos (@NickTimiraos) January 16, 2024

 

Good morning!

Kiryll with you today on this rainy day in Melbourne.

Doesn’t look too good for roofless courts at the Australian Open.

But, hey, it’s Melbourne.

This pelting rain may turn into rays of sunshine in a few hours.

Enough about the weather. Let’s talk markets.