From Europe to China and much more
We start with Europe's €56bn challenge, while checking if Italy is ahead of Germany. We move to China's love for Apple & Tesla before checking interesting data points comparing humans with LLM models.
Europe & it’s €56bn deficit for spending on NATO
NATO's European member states are confronted with the imperative of securing an additional €56 billion annually to fulfill the alliance's defense expenditure objective, although the deficit has decreased by fifty percent over the past decade.
Research findings reveal that several EU nations, notably Italy, Spain, and Belgium, struggling to meet NATO's defense spending target of 2 percent of gross domestic product (GDP), also grapple with substantial levels of debt and fiscal deficits within Europe.
Amidst heightened calls for the 32 members of the US-led alliance to bolster defense outlays in response to Russia's extensive incursion into Ukraine, Europe finds itself grappling with fiscal constraints amidst a period of sluggish economic expansion.
Germany recorded the largest deficit in absolute terms, falling short by €14 billion last year in meeting the stipulated benchmark.
Following Germany, Spain registered a deficit of €11 billion, trailed closely by Italy with €10.8 billion and Belgium with €4.6 billion. Notably, these three countries were among the six EU nations reporting debt levels exceeding 100 percent of their GDP last year.
Belgium's defense expenditure stood at a mere 1.21 percent of GDP in the preceding year, marking one of the lowest levels within the alliance, as indicated by recently disclosed figures. Spain and Italy also recorded modest levels, with defense spending at 1.24 percent and 1.47 percent of GDP, respectively.
Implementation of new EU fiscal regulations slated for the forthcoming year is poised to introduce further austerity measures as member states endeavor to adhere to a 3 percent cap on annual deficits and a 60 percent debt-to-GDP ratio threshold.
Anticipated breaches of the annual deficit limit by over ten bloc nations are likely to prompt sanctions by the European Commission.
Projections indicate a notable surge in defense spending among Eurozone countries, with figures expected to double from €150 billion in 2021 to €320 billion by 2026.
Italy overtaking Germany?
Italy's economic performance has displayed resilience in contrast to the challenges faced by Germany, where uncertainties have loomed, compounded by successive crises within Chancellor Olaf Scholz's administration.
Italy's economy exhibited growth during the final quarter of the preceding year, in stark contrast to Germany, which experienced a contraction. This divergence in economic trajectories suggests a potential continuation of Italy's comparatively stronger performance.
Projections from the Bank of Italy anticipate a growth rate of 0.6 percent for the current year, surpassing the Bundesbank's more conservative forecast of 0.4 percent growth for Germany.
The recent surge in demand for Italian government bonds has resulted in a notable contraction of the significant differentials in borrowing costs between Italy and Germany, reaching its lowest point in over a span of two years.
This trend reflects a growing sense of optimism among investors regarding the economic outlook of Italy, coupled with strategic positioning in anticipation of potential interest rate adjustments.
Specifically, the differential, often referred to as the spread, between the respective 10-year borrowing rates of Italy and Germany has decreased to 1.16 percentage points. This noteworthy decline contrasts starkly with previous levels, which exceeded 2 percentage points as recently as October.
The story of China and her two favourites - Apple & Tesla
Apple and Tesla are encountering challenges within China in maintaining their market shares as domestic competitors make significant strides. To mitigate this, both companies have resorted to discounting strategies to sustain their appeal.
Particularly notable is the decline in Apple's market share, which has been accelerated by concerted efforts to curtail iPhone usage among government personnel and the resurgence of Chinese tech giant Huawei.
Beyond the borders of the United States, China stands out as the largest market for both Apple and Tesla, contributing 19 percent and 22 percent, respectively, to their total revenues in their latest fiscal periods.
The escalating hurdles faced by these companies in the Chinese market have not gone unnoticed by Wall Street, reflected in a 9 percent decline in Apple's share price and a 28 percent drop for Tesla in the current year.
Apple experienced a significant decline in smartphone sales, down 24 percent year-over-year in the first six weeks of this year. In contrast, Huawei saw a remarkable increase of 64 percent in sales during the same period.
Despite maintaining a solid performance in China last year, Tesla is facing fierce price competition and early indications of decelerating demand growth.
Market share data reveals a slip from 7.9 percent to 6.6 percent in China's new energy vehicle sales, encompassing EVs and plug-in hybrids, over the first two months of this year compared to the same period last year.
Tesla has recurrently resorted to discounting strategies to sustain sales in China, with recent incentives amounting to as much as Rmb34,600 ($4,800) aimed at enticing Chinese consumers to purchase Model 3 sedans and Model Y SUVs.
Additionally, Tesla drivers are encountering an increasing number of restricted areas for their vehicles, including military and government installations.
Data points around humans and today’s AI models
Yann LeCunn is a Turing-award winning AI and a leading professional in the world of machine learning and computational neuroscience. In a recent post, he has come up with some interesting data points that compares human beings with today’s GenAI Large Language Models (LLMs):
Communication through language operates at a comparatively low bandwidth, with an estimated rate of less than 12 bytes per second. This assessment is based on the average reading speed of individuals, which is approximately 270 words per minute or 4.5 words per second.
Assuming an average of 2 bytes per token and 0.75 words per token, this translates to 12 bytes per second.
Notably, a state-of-the-art Large Language Model (LLM) is typically trained with a colossal quantity of tokens, on the order of 1x10^13 two-byte tokens, equivalent to 2x10^13 bytes.
To put this into perspective, if one were to attempt reading this volume of text consistently for 12 hours a day, it would require approximately 100,000 years to complete.
In contrast, visual perception operates at a significantly higher bandwidth, estimated at around 20 megabytes per second.
This enhanced bandwidth is facilitated by the intricate network of the human visual system, wherein each of the two optical nerves comprises approximately 1 million nerve fibers.
These fibers collectively transmit data at a rate of roughly 10 bytes per second per fiber.
To illustrate, consider a four-year-old child who, over the course of their waking hours totaling approximately 16,000 hours, would have processed an astonishing 1x10^15 bytes of visual information.
Visual perception boasts a data bandwidth approximately 16 million times greater than that of written or spoken language.
- Within just four years of life, a child accumulates visual data surpassing the volume processed by the largest LLMs trained on the entirety of publicly available internet text.
It is unequivocally evident that achieving artificial intelligence (AI) on par with human capabilities necessitates leveraging high-bandwidth sensory inputs, notably vision. The assertion is grounded in the understanding that human-level AI entails not only cognitive prowess but also the ability to perceive and interpret the world akin to humans.