The Musk-a16z administration

Welcome to Cautious Optimism, a newsletter on tech, business, and power.

• 📈 Trending Up: Negative growth at Cisco … Codeium, at >$10M ARR … H5 bird flu … Aftermath … Europe Europeing … AI using computers for us (BBG) … Bolt (no, not that one) …

• 📉 Trending Down: Cybertruck reliability … AMD’s payroll … human manufacturing labor …

Inflation: Mostly slowing, with some bumps in the road

Yesterday, the government bean counters reported that consumer prices moved up 0.2% in October, and 2.6% compared to the year-ago period. There’s nuance to why inflation’s MoM number was higher than the preceding month and why that’s not too much an issue.

What matters is that inflation is no longer a fanged threat, but instead something that we need to continue working on stamping into the ground. Progress.

What does the latest data mean for rate cuts? CME FedWatch calculates that the market is pricing in a 79% chance of a 25 bip cut (0.25%) at the next Fed meeting in mid-December. Looking ahead, however, to January and the market expects that the Fed won’t cut again, with 60% confidence. So, one rate cut coming, and then the chances of quick snips at borrowing costs get murky. (A January cut would boost potential 2025 IPOs, but let’s not fret too much. Yet.)

Via Done by Alex

The Musk-a16z administration

In Trending Up and Trending Down I’ve joked recently that the incoming Presidential administration is the Musk presidency, given his outsized work to return Trump to the White House. I may have been understating the case:

• The Times reports that Musk’s current “role, in the eyes of some Trump aides, even outstrips that of Howard Lutnick and Linda E. McMahon, the two formally appointed leaders of the Trump transition,” that he’s taking part in calls with foreign leaders and has “attended at least one national security meeting with Mr. Trump alongside the likes of Stephen Miller, a top aide, and Donald Trump Jr."

• There’s already some lightweight rumbling that Musk barnacling to Trump is ruffling some feathers, but for now, this picture from Getty Images tagged as “U.S. Speaker of the House Mike Johnson (R) escorts Elon Musk (2nd-R) as he arrives with U.S. President-elect Donald Trump (L) at a House Republicans Conference meeting at the Hyatt Regency on Capitol Hill” I think sums it up.

• And there’s the Musk-Ramaswamy cost-cutting effort, which remains to start, let alone achieve results; but if Musk wanted a return for his massive investment in Trumps’s campaign, he’s likely to get it. Why would a regulator come after you for breaking the law if you could fire them?

Anyway, it’s more than Musk. Here’s the Times, again (emphasis added):

Another person who could have some influence is Marc Andreessen, a prominent tech investor who, like Mr. Musk and Mr. Howery, spent election night at Mar-a-Lago.

The investor and his co-founder Ben Horowitz are confident enough in their results to record in-house podcasts going over their own views and contributions to the incoming administration. (One venture investor I know and quite like asked me to watch the clip in full and share notes; I will, but have yet to find the full hour needed in the evening because, well, I have two very young children.)

Capital, staffing help, personal time, and boosterism? That’s venture capital, baby, and the a16z leaders are putting their wealth (broadly defined) to work. So, I reckon that it’s fair to state that:

• The Musk-a16z bloc was important in Trump winning the election.

• The Musk-a16z bloc is therefore responsible for a good chunk of its results.

If your hackles are up, relax. The group wanted Trump to win, they wanted his administration to come into power, and they wanted what he will deliver. At least in theory; but we can take them at their word regardless, and judge them accordingly.

CO has wondered how long the above alignment will last. Trump rocked D.C. yesterday by appointing, variously:

• An unqualified, serial cheater with a penchant for crusader tattoos to run the military.

• A treasonous liar (to paraphrase Mitt Romney) to run our intelligence agencies.

• A man who allegedly participated in sex trafficking parties involving a minor to be the nation’s top legal enforcer.

And that’s not bringing up whatever RFK Jr. intends to do to our national health apparatus. We’re back to Trump-led chaos, and, meanwhile, a16z partners are tweeting anodyne stuff like this:

Ok, but how about some good news?

I got you. You are not reading Unblinkered Disillusionment, after all. Here’s OpenAI’s Sam Altman, responding to widespread reporting that current AI model training methods are showing diminishing returns, perhaps akin to running into a barrier:

Onward.