Weekly Market Update - 9 January 2023

Extreme Weather

The insurance industry is struggling to adapt to a new normal in which climate change-fueled losses are now regularly exceeding $100 billion a year. Insured losses from natural disasters hit about $120 billion in 2022, most of which was weather related, according to data compiled by Munich Re. Hurricane Ian, which hit Florida in September, was responsible for about half that. Including uninsured losses, the total cost of storms, droughts, earthquakes and fires last year was $270 billion. Before 2005, the year Hurricane Katrina battered New Orleans, insured losses had never exceeded an annual $50 billion, adjusting for inflation.

Source: Bloomberg

ChatGPT Investment

Microsoft is in discussions to invest as much as $10 billion in OpenAI, the creator of viral artificial intelligence bot ChatGPT, according to people familiar with its plans. The proposal under consideration calls for the software giant to put the money in over multiple years, though the final terms may change, the people said, asking not to be named discussing a private matter. Separately, Apple’s push to replace the chips inside its devices with homegrown components will include dropping a key Broadcom part in 2025, according to people familiar with the situation. Apple is Broadcom’s largest customer and accounted for about 20% of the chipmaker’s revenue in the last fiscal year, amounting to almost $7 billion.

Source: Bloomberg

Goldman Cut Backs

Contrasting with last week's good news from the US labor market, Goldman Sachs is embarking on one of its biggest rounds of job cuts ever, with a plan to eliminate about 3,200 positions from midweek. The firm is also poised to unveil financials tied to a new unit that houses its credit card and installment-lending business, which will record more than $2 billion in pretax losses.

Source: Bloomberg