Cloudy With a Chance of AI
A Match Made in Heaven
In a groundbreaking fusion of artificial intelligence and meteorology, Google DeepMind's GenCast is revolutionizing weather prediction.
This AI-powered model is not just matching current forecasting systems — it's surpassing them with remarkable consistency.
GenCast, trained on nearly four decades of historical weather data, demonstrates an extraordinary 97% accuracy rate compared with the current gold standard, the European ensemble forecast (ENS) system.
What sets GenCast apart is its ability to generate probabilistic forecasts, offering a spectrum of potential weather scenarios with associated likelihoods, much like how large language models (LLMs) like ChatGPT process information.
Source: Instagram
The model's prowess extends beyond day-to-day weather predictions. GenCast excels in forecasting wind conditions and tracking the paths of tropical hurricanes and cyclones, a capability that could prove invaluable for natural disaster preparedness and potentially save thousands of lives annually
GenCast, however, is not without limitations: Its reliance on historical data, for instance, may lead to inaccuracies when applied to future climate scenarios.
Additionally, the model still grapples with certain aspects of forecasting, such as upper troposphere conditions and hurricane-intensity predictions.
Importantly, GenCast is designed to complement — not replace — human expertise.
As DeepMind researcher Ilan Price notes: “There [are] actual meteorological experts that are looking at the forecast, making judgment calls and looking at additional data if they don't trust a particular forecast.”
Moving forward, DeepMind's ambition to explore predictions based solely on observational data could further revolutionize weather forecasting. This innovation isn't occurring in isolation; other tech giants like Nvidia and Huawei are also applying AI to weather prediction, signaling a new era in meteorological science.
The partnership between AI and weather forecasting, exemplified by GenCast, marks a significant leap forward in our ability to understand and predict weather phenomena. As these technologies continue to evolve, we can anticipate more accurate, timely and potentially lifesaving weather forecasts.
The future of meteorology is here, and it's powered by artificial intelligence.
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Trump’s Favorite Whipping Boy
Donald Trump’s history of haranguing Fed Chair Jerome Powell has raised questions about Powell’s future at the central bank.
Despite Trump's campaign rhetoric suggesting he would fire Powell, the reality is more complex. “No president has ever fired a Fed chair,” says Paradigm’s macro authority Jim Rickards. He adds, “It's not even clear if that's legal.”
For his part, Powell says he does not believe Trump has that power and he would not step down voluntarily before his term ends in 2026. In a recent interview, Trump seems to soften his stance when questioned about replacing Powell, saying: “No, I don't think so. I don't see it.”
“Still, there’s good reason for Trump to keep Powell around,” Jim says. “Whatever the long-term results of Trump’s economic policies, it’s likely the short-term results could be rocky.
“We may be in for a recession in early 2025,” he continues. “The Trump White House could simply blame Powell for the bad news (whether he deserves the blame or not) and avoid responsibility, at least for a while… Trump gets to avoid controversy and keep Powell around as a convenient punching bag.
“The irony would be if Powell resigned early of his own accord and left Trump holding the bag for whatever economic turmoil we may face,” Jim concludes. “As they say, two can play.”
In the meantime, markets await the latest policy proclamation from Powell and the Fed’s Open Market Committee. It’s due for release at 2:00 p.m. EST.
As mentioned yesterday, there’s no drama about the decision itself: The benchmark fed funds rate will be cut another quarter percentage point to 4.5%.
But there might be a surprise included with the FOMC’s economic forecasts for next year — or during Powell’s press conference. With signs that inflation is accelerating, will he tamp down expectations for aggressive rate cuts in 2025? We’ll follow up tomorrow with Jim Rickards’ assistance.
Until the decision, markets are treading water as they often do on these Fed Wednesdays. All the major U.S. stock indexes are in the green — but not dramatically, with the S&P 500 up less than a quarter percent at 6,062.
Precious metals continue losing ground with gold at $2,636 and silver at $30.15. Crude is back above $70. Bitcoin is back below $105,000.
Two Key Dates on Trump’s Calendar
As President-elect Trump prepares to take office on Jan. 20, 2025, two key events loom large on the calendar in the five days leading up to Inauguration Day.
On Jan. 15, the contract extension between the International Longshoremen's Association (ILA) and port employers is set to expire, potentially triggering a major dockworkers' strike.
Trump has thrown his support behind the union, meeting with ILA leaders and expressing concern over the threat of automation to American jobs.
In a social media post, Trump claims to have “studied automation,” indicating the cost savings from automation do not justify the harm caused to dockworkers.
Just four days later — on Jan. 19, 2025 — a congressional ban on TikTok is scheduled to go into effect unless the app’s Chinese parent company, ByteDance, sells TikTok to a non-Chinese owner.
In a somewhat surprising move, TikTok CEO Shou Chew met with Trump at Mar-a-Lago on Monday.
Trump, who tried to ban the social media platform during his first term in office, now says he has a “warm spot” (ew) for TikTok — particularly since he believes the platform rocked the vote for Team Trump this election season.
Together, these two dates pose immense challenges for Trump. (And unless we’re missing something, these events are not examples of Biden “Trump-proofing” the president-elect’s early days in office… Unless Biden was really playing the loooong game.)
The potential port strike could disrupt supply chains, impacting the economy for months, possibly years, while the TikTok ban raises questions about national security and free speech.
But Trump’s stance on both matters seems to have evolved since his first term, reflecting the balance his administration must strike between “America first” policies and the hard realities of global trade and technology.
As his inauguration approaches, how Trump navigates these pressing issues could set the tone for his second term and have far-reaching consequences for American workers, consumers and the tech industry.
A Warning From Year 2000
“It’s important to know that every investor has different goals and time horizons,” says Paradigm editor Davis Wilson at The Million Mission. “And [three] investor types operate daily in the stock market.”
For instance: “How much should you pay for Tesla (TSLA) stock today?” Davis asks. “The answer depends on one important factor — time horizon.
- If you’re a long-term investor, the smart price to pay can be determined by discounting cash flows in Microsoft Excel. (Easier said than done.)
- If you’re looking to cash out in one year, pay attention to Tesla’s product sales cycles and do your best to predict if we’ll have a bear market within the year.
- If you’re a day trader, the answer is who cares what price you pay! You’re just trying to make a few dollars before dinner, and that can be done at any price.
“Whereas Tesla’s current $475 stock price may look ridiculously expensive to one investor, a different investor may be willing to buy at these prices.”
According to Davis, it’s time to break glass in case of emergency “when too many investors [are] the day-trader type.
“We saw this with Cisco Systems (CSCO) in 2000,” he notes. “The stock began the year 1999 trading around $20. Within 14 months, the stock was $80.
“Cisco was trading at a 200X price-earnings ratio and a 40X price-to-sales ratio. Yet people continued to buy the stock at higher and higher prices.
“The reason was that many investors were characterized as day traders at the time,” Davis says. “These traders didn’t care about fundamentals, P/E ratios, growth prospects, etc.” Their goal? “To make a few dollars before dinner…
“This is how the dot-com bubble began — when the makeup of investors shifted more in favor of short-term traders vs. long-term investors.
“Eventually the bubble burst, wiping out over $6 trillion of household wealth,” he says.
“I mention this today because there seems to be a subset of companies whose stock prices are controlled by short-term traders,” says Davis.
“You know the names: MicroStrategy, SoundHound AI, Robinhood and I’m even throwing Tesla into this category. Regardless of price, these stocks continue to get bought.
“In just over one month, MicroStrategy is up nearly 40%,” he adds. “SoundHound AI has more than doubled. Tesla and Robinhood are moving higher because of hype.
“And because of Elon Musk’s newfound friendship with Donald Trump… which is apparently worth an additional $400 billion in market cap in one month.
“These are not fundamentally driven moves,” Davis recaps. “These prices are rising because short-term traders are controlling prices.
“We’ve seen this playbook before,” he warns. “I’m not calling the top yet. But I believe this is the biggest risk to the stock market.”
Majoring in Minors: SF Edition
San Francisco's bureaucratic brilliance strikes again!
In a stunning display of misplaced municipal priorities, the city’s Department of Public Works has been obsessing over tiny cafe tables (and potted cacti!) while ignoring a treacherously uneven sidewalk.
The saga begins with Lisa Church, a long-time Nob Hill resident who spent four years filing 311 complaints about a sidewalk near 1360 Taylor St.…
Courtesy: X, @emily_hoeven
The DPW swooped into action... but not for the dangerous sidewalk.
No, they were laser-focused on Taylor Street’s Cafe Isabella, demanding the removal of “unpermitted” outdoor tables as well as two potted cacti that had flanked the cafe’s doorway for 20 years.
Meanwhile, Nob Hill resident 74-year-old Jane Oleson, tells The San Francisco Chronicle that the sidewalk was like an “obstacle course.” Another local reports a sprained ankle last year while walking her dog in the area.
The city's response? Complaints were mysteriously “closed” despite the sidewalk remaining untouched. It took journalist Emily Hoeven’s inquiry to finally spark action, with the DPW suddenly deciding maybe a sidewalk that could hospitalize residents might be worth fixing.
But what does one expect from a city that spends a half-million dollars on designer trash cans? (Already graffitied and derelict, by the way.)
Chalk it up to another case of urban absurdity this year.
Happy Wednesday! We’ll be back with another round of 5 Bullets tomorrow…
Best regards,
Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets
