GLOBAL OUTLOOK

UN Assembly: Diplomacy, Delays, and Dollars

With the UN General Assembly taking place in midtown Manhattan, diplomats are running around the city, Ram Vans are taking a little bit longer, and people are once again wondering if the UN is just a fancy excuse for traffic jams. While many leaders speak about predictable issues and offer impractical solutions, there are always several standout moments that are worth discussing. Here is a breakdown of the event:

• This assembly has taken a noticeably firmer stance on the issue of climate change with the UN Secretary-General stating that “climate meltdown” needs to be addressed to alleviate concerns regarding lowland areas and small island nations.

  • Small island nations have already begun losing land and feeling the effects of climate change. Additionally, even in the US, we have seen significant shifts and increased natural disasters due to the climate crisis.

• The UN’s Pact for the Future aims to create a more equitable and sustainable global economy for all. 

  • The plan involves utilizing lithium, cobalt, and nickel, minerals used for renewable energy. Found mainly in Chile and the DRC, the Pact will attempt to ensure these nations benefit economically while also minimizing climate impact. 

• Several African leaders, including Bassirou Faye, Senegal’s President and the youngest elected leader on the continent, have made public demands for more representation of African nations including permanent seats on the UN Security Council.

  • Multiple nations, including the US and France, have agreed that Africa should have the representation they seek as the continent has 1.4 billion people but no guaranteed say in international affairs.

  • This would be a major change for the foundation of the security council which could lead the way to abolishing veto powers or other controversial provisions

• Speaking of the veto, President Macron of France gave a rousing speech speaking against the problematic procedures that limit equality in the chamber including the infamous veto power for the permanent members of the UNSC

• President Biden gave his final speech in front of the United Nations; he commented “some things are more important than staying in power”. While his speech might have lacked substantive solutions, his delegation's commitment to compromise sets a tone for a productive session of the assembly.

• Being the home of the UN, NYC brings in about $4.75 billion - the same amount as hosting multiple super bowls in one year, which made about 1.3 billion for Glendale in 2023 

  • The ripple effect of the local economy might be worth the extra traffic jams, as hotels, restaurants, and small businesses receive a benefit from the UN being in town. 

And with that, we can see that diplomacy is like attempting to have a family gathering- everyone has different opinions, old grudges resurface, and after a lot of disagreements, the only thing everyone can agree on is: let's do it again next year.

Zelensky goes to Washington

Ukrainian president Volodymyr Zelensky has had a bit of a doozy week. With the election on the horizon, Zelensky planned a surprise visit to the US, on Sunday he visited Scranton, Pennsylvania, not because he’s a huge fan of The Office, but to tour the Scranton Ammunition Plant which supplies 155mm shells to Ukraine.

On Wednesday, Zelensky gave a speech at the United Nations warning the UN on how Russia plans to attack Ukraine’s nuclear power plants. On Thursday Zelensky visited Biden to lay down what he calls his “victory plan”, Biden also announced a 2.4 billion dollar aid package in security systems. Then Zelensky ended the day by meeting with presidential candidate Kamala Harris. Zelensky also plans to meet up with Donald Trump on Friday morning at Trump Tower in New York, which would be the first time the two have met since 2019. It’s still unclear what Trump plans to do about Ukraine.

Back in the warfront Russia has increased shelling dramatically especially in the Donetsk region, where the Russians plan to advance before the rains of autumn turn the terrain into unpassable bogs. Suffice to say you probably wouldn’t want to be the president of Ukraine this time of the year.

MACRO

Joy to the World, Rates Have Come Down

September 18th: Regressing inflation and a cooling labor market prompted the Federal Reserve to issue a target rate cut to the tune of 50 basis points( a basis point is 0.01 ) 

For non Gabelli-Students… the Federal Reserve is a privately funded bank whose leadership is nominated by the president of the United States and answers to Congress. This unique public-private structure insulates the Fed’s finances from political matters without completely letting them off the government’s leash. These characteristics make them the perfect watchdog for the United States’ monetary and financial system. 

It is important to clarify that the Federal Reserve does not directly control the target rate. Rather, the Fed dictates the acceptable range for the target rate. It was this range that was subjected to last Wednesday’s 50 basis point deduction (5.00%-5.25% → 4.75%-5.00%). 

The target rate is any interest rate on overnight reserve loans that falls within the Fed’s established range. Overnight lending is critical to the stability of the financial system since the practice enables banks to have the cash necessary to meet unexpected withdrawals. In the past, failures to do so have resulted in numerous bank collapses and an overall loss of confidence in the financial system. Ultimately, it is the loss of confidence in the financial system that is most damaging since it can give way to political radicalization. Just ask Weimar Germany. 

 By lowering the range for the target rate, the Federal Reserve effectively gives banks more leeway in overnight lending. Hence, banks can now lend out more money and afford to cover their reserve obligations at a lower premium. The long-term result of this will be greater accessibility to debt and credit, which allow firms to expand operations and therefore create new jobs. 

Port Strike: jobs, automation, and disruption ahead

TECH

EnergyX & GM: A Clean Energy Investment You Can't Miss!

Founded in 2018, EnergyX aims to lead the energy transition with innovative technologies that change how we power and store clean energy. Energy Exploration Technologies Inc. (EnergyX) and General Motors Co. (NYSE: GM) announced a significant partnership in 2023, with GM Ventures leading a $50 million Series B financing round in EnergyX. This collaboration aims to develop cutting-edge lithium extraction and refinery technologies–crucial for the electric vehicle (EV) industry.

Collaboration Breakdown:

Through its patented technologies and government-sponsored projects, EnergyX will likely be a leading player in the future of sustainable energy. Interested in a greener future? More details about the funding round (ending Friday next week) can be found here.

Musk’s Supercomputer Bet: A Big Step Forward for the Tech World

Elon Musk isn’t just focused on electric cars and space travel anymore—he’s making serious moves in AI with a supercomputing investment set to shake up technology and the economy. Tesla is putting $500 million into its in-house supercomputer named “Dojo” to help the company enhance its Full Self-Driving (FSD) systems. The bigger picture? Musk's push into AI doesn’t stop at Tesla—his AI startup, xAI, is building a new supercomputer named “Colossus,” poised to challenge tech giants like OpenAI and Google.

Why Supercomputers?

Supercomputers are the backbone of AI innovation. They provide the computational muscle needed to train complex machine-learning models much faster. With Dojo, Tesla aims to improve the speed and intelligence of its self-driving cars, cutting down the time it takes to reach full autonomy. More efficient autonomous vehicles could mean safer roads, fewer accidents, and improved logistics—all of which can contribute to economic growth.

Colossus, on the other hand, aims to power xAI’s broader AI research. While details on xAI’s projects remain limited, Musk has suggested that the company tackle challenges like natural language processing, robotics, and energy optimization. Every single one could transform industries and create new markets, opening the door to economic advancements from manufacturing to smart cities.

Economic Implications

At a macroeconomic level, Musk’s focus on AI-driven supercomputing aligns with trends indicating that AI could contribute $15.7 trillion to the global economy by 2030. Tesla’s advancements could disrupt the auto industry by accelerating the shift to autonomous vehicles, leading to economic ripple effects across insurance, public transport, and delivery sectors. Furthermore, by making supercomputing more accessible through xAI, Musk is positioning his companies to become essential players in the next phase of AI-driven economic growth.

Musk’s latest investment could be a game-changer for AI and the entire economy. Whether through more efficient self-driving technology or broader AI breakthroughs, the future looks promising for technological innovation and economic expansion.