Chinese smartphone maker Honor says AI’s power is ‘worthless’ without data privacy

The transforming power of artificial intelligence is of no value unless user data is protected, George Zhao, CEO of Chinese smartphone company Honor, told CNBC in an exclusive interview. His comments come as Apple this month announced it will start rolling out personalized AI tools on certain devices in the U.S. this fall. “We say user data doesn’t leave [the device],” Zhao said. “This is a principle we adhere to.” Honor CEO George Zhao (L) and GSMA CEO John Hoffman on stage at Shanghai Mobile World Congress during an awards ceremony on June 27, 2024.

HANGZHOU, China — The transforming power of artificial intelligence is of no value unless user data is protected, CEO of Chinese smartphone company Honor, George Zhao, told CNBC in an exclusive interview on Thursday.

His comments come as Apple this month announced it will start rolling out personalized AI tools on certain devices in the U.S. this fall.

Honor already integrates some AI functions, such as enabling users to open text messages and other notifications just by looking at them, or eliminating copy-paste steps by directly linking Yelp-like apps to navigation or ride-hailing apps.

This week at Mobile World Congress in Shanghai, Honor unveiled new AI tools for detecting the use of deepfakes in videos, and for simulating lenses that can decrease myopia during long hours of screen usage.

Zhao emphasized that Honor’s approach is to keep AI operations involving personal data limited to the smartphone. It’s also known as on-device AI, and stands in contrast with AI tools that tap cloud computing to operate.

“Without data security and user privacy protection, AI will become worthless,” Zhao said in Mandarin, translated by CNBC. “This has always been one of our value propositions.”

“We say user data doesn’t leave [the device],” Zhao said. “This is a principle we adhere to.”

Apple Intelligence, the iPhone company’s AI product, claims that it uses on-device processing and draws on “server-based models” for more complex requests. Apple said its new “Private Cloud Compute” never stores user data.

Honor says its on-device AI is self-developed, and the company is working with Baidu and Google Cloud for some other AI features.

“Overall, my view is that AI’s development to date has two directions,” Zhao said. “Network

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T+1 to increase costs and volumes in ETF securities lending

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Exchange traded fund providers face additional costs in their securities lending activity due to the US moving its settlement cycle to T+1 at the same time as industry observers expect stock lending to increase.

The US, Canada and Mexico moved to a shortened settlement cycle at the end of May for US equities and corporate bonds from two business days after the trade date, referred to in the industry as T+2, to one day, or T+1.

The move has significant implications for the industry because many of the largest ETF issuers, representing 80 per cent of global ETF assets, engage in securities lending programmes to earn additional revenue on behalf of their ETFs, according to Brown Brothers Harriman.

However, the International Securities Lending Association said the difference in settlement cycles between the US and Europe creates a “misalignment” that will lead to extra costs in the ETF securities lending market.

This article was previously published by Ignites Europe, a title owned by the FT Group.

Tony Holland, regulatory and markets consultant at Isla, said the US move to T+1 created a “funding gap from misalignment” for ETFs engaging in securities lending.

“How can you pay for something on T+1 if you are not receiving the cash proceeds from the investor until T+2?” said Holland.

He said it was not clear “if a fund will go overdrawn to pay for the US security”, whether the authorised participant would “swallow” the funding cost, whether the cost will be passed back to the ETF creator, or whether the cost will be passed to the end fund investor once they settle on T+2.

ETFs may have to “move more levers to get into a position to raise the cash financing to pay for the US security on T+1, he added.

Others agreed that the move to T+1 would trigger more activity in the securities lending market.

Matthew Chessum, director, securities finance at S&P Global Market Intelligence, said: “We are expecting to see an increase in volumes as a result of this change.

“Securities lending will be required to assist in providing liquidity to asset owners, who need to cover short positions that are expected to be generated by a mismatch in either settlement dates or [foreign exchange]

The US economy is benefiting from the higher-pressure effect

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Last remaining Wall Street bears struggle to convince optimistic clients

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Nike shares tumble after downgrading sales outlook

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Tata Steel threatens to shut Port Talbot blast furnaces early over strikes

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Tata Steel, Britain’s biggest steel producer, has threatened to shut down its two blast furnaces in south Wales from as early as next week unless workers from the Unite union call off a strike. 

The Indian-owned group operates two of Britain’s last remaining such facilities at Port Talbot and had been planning to close one of them by the end of June and the second by September. 

Tata said on Thursday that due to the strike, which is set to start on July 8, it might have to begin the process of closing both from July 1 for safety reasons. They would then be permanently shut no later than July 7.

“If in the coming days, we cannot be certain that we are able to continue to safely and stably operate our assets through the period of strike action, we will not have any choice but to pause or stop heavy end operations (including both blast furnaces) on the Port Talbot site,” the company said. 

Tata also said it had started legal action against Unite, challenging the validity of the strike ballot. 

Unite said last week that about 1,500 workers would begin an indefinite strike from July 8. Members of the union in April voted for industrial action for the first time in 40 years in protest at Tata’s decision to shut both furnaces this year. The closures would result in up to 2,800 job losses and are part of a government-funded plan to shift to production using an electric arc furnace requiring fewer workers. 

Rajesh Nair, chief executive of Tata Steel UK, told employees in a message on Thursday that closing the two furnaces early would have “major implications for our company”.

The company, he said, had proposed to Unite a set of outline exemptions “from the strike action to explore whether minimum levels of service and support could be maintained to enable ironmaking, steelmaking . . . to continue to operate safely”.

Sharon Graham, Unite general secretary, said Tata’s statement was the “latest in a long line of threats that won’t deter us”. 

Unite, added Graham, had “secured serious investment from Labour to safeguard jobs” and called on Tata executives in India to “take hold of this dispute . . . [and] negotiate”. 

Labour has promised to cut a better deal for the industry if it wins the general election on July 4.

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IMF says Fed should hold interest rates where they are until ‘at least’ end of year

International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks during the 2024 CNBC CEO Council Summit in Washington, D.C. on June 4, 2024. Shannon Finney | CNBC

The Federal Reserve should wait to cut interest rates until “at least” the end of the year, according to the head of the International Monetary Fund. The U.S. is the only G20 economy to see growth above pre-pandemic levels, and “robust” growth indicates ongoing upside risks to inflation, the 190-country agency said.

“We do recognize important upside risks,” IMF Managing Director Kristalina Georgieva said at a press briefing on Thursday. “Given those risks, we agree that the Fed should keep policy rates at current levels until at least late 2024.” The Fed’s current fed funds rate has stood within the range of 5.25% to 5.50% since July 2023.

The IMF, often called the world’s “lender of last resort,” forecasts that the core personal consumption expenditures price index — the Fed’s preferred measure of inflation — will end 2024 at around 2.5% and reach the Fed’s 2% target rate by mid-2025, ahead of the Fed’s own projection for 2026.

U.S. economic strength during the Fed’s rate-hike cycle was aided by labor supply and productivity gains, Georgieva said, while highlighting the need for “clear evidence” that inflation is coming down to the 2% target before the Fed cuts rates.

Nonetheless, the IMF’s “more optimistic” assessment of the downward inflation trajectory is based on indications of a cooling labor market in the U.S. and weakening consumer demand.

“I want to recognize that a lesson we learned from the last [few] years is we are at a time of more uncertainty. This uncertainty also lies ahead. We are confident, however, that the Fed will move through that, and certainly with the same prudence it has demonstrated over the last year,” Georgieva said.

Correction: A previous version of this article misstated Kristalina Georgieva’s name.

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Chewy stock pops 34% after Roaring Kitty posts a dog picture, then gives it all back

A photo illustration of the Chewy logo is seen on a smartphone and a PC screen. Pavlo Gonchar | SOPA Images | Lightrocket | Getty Images

Chewy shares rallied dramatically on Thursday after meme stock leader Roaring Kitty posted a picture on social media platform X that resembles the logo of the online pet food retailer, but the gains were quickly erased later in the session.

Roaring Kitty, whose legal name is Keith Gill, has stirred up trading in speculative names such as GameStop by posting cryptic images and memes online. A picture of a cartoon dog appeared on his X feed Thursday afternoon, briefly driving up Chewy shares as much as 34% to $39.10.

The stock later fell into negative territory again in Thursday’s session, dipping 0.5%.

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There’s also a strong connection between meme stock GameStop and Chewy. GameStop CEO Ryan Cohen was the founder and CEO of Chewy, who was instrumental in PetSmart’s takeover of Chewy in 2017 and its subsequent initial public offering in 2019.

Cohen joined the GameStop board of directors along with two other Chewy executives in January 2021, partly helping fuel the initial GameStop rally. He later took over as GameStop CEO in 2023, leading a turnaround in the brick-and-mortar video game retailer.

Shares in pet retailers such as Chewy and Petco saw big spikes during the pandemic when stuck-at-home consumers adopted cats and dogs in droves. With the adoptions came purchases of needed accessories such as new beds and leashes for their furry family members.

But as the pandemic ended and people began venturing outside again, adoption numbers slowed and consumers had less need for discretionary pet items such as toys and cages, which carry higher profit margins than pet food.

Over the past year or so, Chewy and Petco have seen consistently strong pet food sales, but revenue for higher margin categories has fallen.

Gill is a former marketer for Massachusetts Mutual Life Insurance. He came into the limelight after successfully encouraging retail investors to buy GameStop shares and call options in 2021 to squeeze out short-selling hedge funds. The mania in 2021 led to a series of congressional hearings featuring Gill in brokers’ practices and the “gamification” of retail trading.

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Cocoa prices tumble as African crop fears ease

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