Amid growing reports of AI agents going rogue and warnings about the technology's potential to destroy humanity in the next decade, many leaders of major US AI companies have begun to call for more caution in the development of this technology.
"We must slow the pace at which we improve the capabilities of AI models. Progress will still seem fast, and we must make wise use of the time we gain," Anthropic CEO Dario Amodei wrote in an extensive essay released last Saturday. Elon Musk, who runs xAI, and Sam Altman, CEO of OpenAI, publicly said they agree with Amodei.
US President Donald Trump, on the other hand, clearly does not.
"The only control or 'guardrails' that AI needs is a STRONG AND SMART (High IQ!) PRESIDENT, and the U.S.A. has that, in spades!" Trump wrote on Truth Social on Monday.
He also argued that China would benefit from any slowdown in US AI development. But an editorial in China's state-backed Global Times newspaper said the move by US AI bosses was part of a "Cold War playbook" aimed at slowing China's technological development. This will likely be a point of discussion at Trump's scheduled meeting with Chinese President Xi Jinping next week in Washington.
Whether these apocalyptic fears are legitimate remains to be seen, but the potential for a slowdown in AI development – and thus AI spending – did cause jitters on Wall Street and global bourses early in the week.
But if AI is as dangerous as these warnings suggest, then there seems to be little chance that the race to dominate the technology will slow. The risk for the governments involved is too great.
Moving to the week's marquee event, the Fed increased interest rates by 25 basis points on Wednesday to 3.75%-4.00% – and signalled that there may be more rate rises to come.
While the hike itself was widely expected, the unanimous decision and signalling were slightly more hawkish than anticipated – especially given the previous doubts about Fed Chair Kevin Warsh's willingness to tighten policy against the public objections of the president who appointed him.
President Trump was quick to criticize the move, writing on Truth Social: "Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World – BY FAR." Importantly, he didn't target Warsh himself, instead telling reporters that the board was to blame for being "very hostile" and "very political."
For now, investors seem to approve of the hike and the hawkish messaging. While the front end of the yield curve rose, the back end nudged lower, potentially indicating that investors now have more faith in the Fed's – and especially Warsh's – ability and willingness to combat inflation.
Of course, one of the key inflationary forces is the spike in energy prices, and a 25-basis-point hike can't do anything to bring about a ceasefire in the Middle East or restore refining capacity.
Crude prices surged early in the week, with Brent settling nearly 3% higher on Tuesday after crude loading at Saudi Arabia's Red Sea port of Yanbu was suspended. That came days after the Kingdom's East-West pipeline was temporarily shut following a drone attack from Baghdad, where Iranian-backed militias operate.
The pipeline has helped Saudi Arabia reroute its exports through the Red Sea and the Bab el-Mandeb Strait during this conflict to avoid the Strait of Hormuz. At the same time, Yemen's Iran-aligned Houthis have moved to tighten their control over Bab el-Mandeb, while increasing their strikes on the Saudis.
Brent traded as high as $109 per barrel on Monday and Tuesday, but prices began to slip mid-week, trading as low as $102/bbl by early Friday. This followed Saudi reports that they were seeking to maintain crude shipments by increas
