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Hello again, supply enthusiasts!!

A strong dollar may seem like a sign of economic strength for the United States, but it also poses certain risks. In this issue, I explore why it’s causing stress for our trading partners around the globe and a headache for manufacturers here at home.

Also, we’ve been talking for a long time about how AI will act as a sidekick to help us do our jobs better. Well, that vision of the future is now a reality. Read on to discover six jobs where AI is changing the nature of work. 

This issue features the usual assortment of AI Insights and recommendations for the week's podcasts, books, shows, charts, tweets, an excerpt from my upcoming book, and a final chuckle. 

Let’s get going. 

Industry Highlights: Strong US Dollar Causing Stress Here and Abroad

The US dollar continues to ride high against its peers. Is this good or bad news? Well, it depends very much on whether you live here or abroad, whether you’re a consumer, an importer, an exporter, a manufacturer, a company with overseas interests, a currency investor, or a central bank … in short, it’s complex. Here’s what we know. 

The increasingly muscular greenback is stoking currency fears in economies around the world. As the dollar strengthens, it creates a ripple effect that affects various aspects of global markets and macroeconomics. The diverging monetary policies between the United States and other major economies, such as Japan and the EU, have significant consequences for trade, inflation, and capital flows.

Financial Times markets columnist Katie Martin writes that the strong US dollar is “throwing up pockets of stress around the world.” The first immediate consequence of a strong dollar is the weakening of other currencies, such as the euro. When the European Central Bank signals a potential rate cut (probably happening in June), it will lead to a widening interest rate differential between Europe and the US (we most likely won’t cut rates until September). In short, this results in a stronger dollar and a weaker euro. 

I listened to the Unhedged podcast featuring Katie Martin chatting with Robert Armstrong about why the US dollar is “the world’s problem.” They’re both worried about this rate differential. For importing countries in Europe, it will mean higher costs for commodities and goods priced in dollars, like oil and food. American exports have become relatively more expensive in foreign markets. This hampers the competitiveness of US goods and services abroad, impacting businesses and industries that rely heavily on exports. A strong dollar can also exacerbate trade imbalances when American consumers opt for foreign goods, leading to a higher trade deficit. This can affect domestic industries and employment, as increased imports can displace local production and jobs.

A weaker domestic currency can be beneficial for countries with strong export sectors. For instance, if a country like Germany experiences a weaker euro against the dollar, it can make its products more competitive in the US market. However, this can also lead to inflationary pressures within the exporting country, as higher demand for their goods and services stimulates their economy.

US manufacturers, especially those dependent on exports or competing with imported goods, can face pressure from a strong dollar. Higher prices resulting from a strong currency can weaken foreign demand, leading to reduced orders, layoffs, and job losses in the manufacturing sector. And what about tourism? A strong dollar can discourage foreign tourists from visiting the US as their currencies weaken against the dollar.

As the dollar strengthens, servicing debt becomes more expensive for countries with dollar-denominated debt. Moreover, the attractiveness of US Treasury bonds and other safe-haven assets inevitably diverts capital flows away from emerging markets, arguably having an even harsher impact on their economies. This can lead to currency depreciation and create stress in these markets. Indonesia and South Korea have already taken measures to stabilize their currencies by raising interest rates or expressing concern over exchange rates. Some central banks may intervene directly in the foreign exchange market to support their currencies. There’s a lot of talk right now about Japan’s central bank potentially intervening to strengthen the increasingly sickly yen.

Capital inflows as foreign investors seek higher returns on US assets might be beneficial in the short term, but it will lead to asset price bubbles and financial instability if not effectively managed.

Then, there’s politics. Balancing a strong currency with maintaining a competitive and balanced economy is a complex task for policymakers. Adam Tooze warns about the dangers of “dollar nationalism,” particularly in the context of a possible Trump victory:

“For [Trump], a strong dollar ‘kills’ America, to the benefit of China. Trump’s close adviser Robert Lighthizer favors the use of tariffs to force a co-ordinated dollar devaluation. A comprehensive push to devalue the dollar for the sake of reviving US manufacturing would politicize the global currency system in a way that goes far beyond the surgical strikes delivered by financial sanctions.”

Meanwhile, the Biden administration is “choosing not to make an issue” of the strong dollar, seeing it as a symptom of America’s rebounding economy despite protests from the IMF and political leaders in Brazil, Germany, and elsewhere. The situation will become increasingly unstable, but a non-interventionist stance means the power to tame the hot dollar lies, ultimately, with the US consumer.

The Future of Work: How AI Is Changing 6 Different Jobs

There are two schools of thought about AI and its effect on our working lives. Some technology insiders are predicting an “AI Jobpocalyse” with the potential to replace as much as 80% of tasks in 80% of jobs by 2033. Others downplay this threat and talk instead of a future where AI will not replace, but assist us in our roles, automating the boring stuff and helping workers do their jobs better. 

A recent WSJ article on this topic falls into the latter camp. The authors point to March Census data showing that 2.6% of employers cut jobs between July and February in response to the introduction of GenAI, while 2.8% have reported adding jobs because of it—a small net gain.

Increasingly industry-specific and task-specific models are fast being embedded into daily workloads. Outcomes vary; for some, it’s about freeing up time by working faster and smarter. For others, the nature of their entire role is changing.

The WSJ investigation begins in the medical sphere, where a GP is using audio-to-text GenAI that listens in on her appointments and takes near-perfect notes (which she always checks afterward). For the GP, the benefit is giving her full attention to the patient as they talk rather than having to tap away at a keyboard. It’s also solving the challenge of ‘documentation burnout’ where doctors get frustrated or even quit the profession due to the neverending burden of recording patient info into medical records and charts. Reading this, it struck me that the next logical step would be for the AI to suggest diagnoses and potential treatments for the GP to review. 

Then there’s a law firm associate whose role - in the past - would have been to hit the books and wade through decades of case law to create a brief for their seniors. Now, he simply asks ChatGPT to do so (instantly) using keyword searches or by asking specific questions. The junior lawyer hasn’t been replaced - now, he’s spending much more time working closely with the senior partner rather than being sequestered in a law library basement. For the young lawyer, GenAI means the ability to take on more cases at once, impress his superiors, and climb the career ladder faster. Lawyers need to be careful - last year, two New York lawyers were sanctioned after they created a brief using ChatGPT which hallucinated “bogus case law.” 

It’s hard to envision the impact LLMs will have on any role involving research. PhD candidates, for example, generally spend a whole year or more conducting an exhaustive literature review into their chosen topic. It’s hard work, but the task forces the researcher to deeply dive into their discipline and truly understand the issues involved. An effortless literature review generator might do this job in seconds but somewhat misses the point. 

Digital marketers - particularly copywriters - feared the worst when LLMs first arrived, but the profession appears to be alive and thriving. They’re using ChatGPT as a productivity booster and idea generator, producing outlines or initial drafts with the tool, then refining and personalizing the text to fit their needs. The writer interviewed by WSJ says he asks GenAI to pretend to be a skeptic to test his content and reveal anything he may have missed. Personally, I like to think I’m getting pretty good at spotting unrefined AI-generated text in candidate cover letters.

WSJ also interviewed a visually impaired cloud engineer who uses GenAI to help him read, process information, and make decisions faster. The tool finds the text he is looking for and presents it in a clean, uniform look and format that puts much less stress on his eyes. 

The final interviewee - a Hollywood illustrator and storyboard artist -is the only one who is raging against the machine. With AI image generators scraping billions of images of artwork without copyright permission and destroying creative jobs at an alarming rate, the industry has turned to technology for help.

Nightshade, developed by a University of Chicago computer scientist, alters images on a pixel level to convey distorted information to AI models. It’s not exactly a virus, but any model trained on “Nightshaded” images will later produce corrupted results. You can see below that a poisoned image generator’s output is distorted from a dog to a cat, a car to a cow, a handbag to a toaster, and so on. 

I’m wondering if the use cases for Nightshade can be expanded to protect every creative industry - music, writing, art, and film - from unauthorized AI scraping. 

AI Insights

• Should AI be in charge of nukes? AI can think faster and make decisions based on facts, not emotion. But putting AI in charge of deploying nukes could sign humanity’s death warrant. The US and China are meeting in Geneva to discuss AI risks and to reduce miscommunication around key issues, particularly around the position that only humans should make the decision to deploy nuclear weapons. By the way, I love Randall Munroe’s (XKCD) take on this issue - in his comic, instead of the usual Judgement Day sci-fi scenario, newly sentient computers are horrified when they discover humans have nukes, and immediately disarm the planet by launching them all into the sun. 

• Apple to revamp Siri to catch up to OpenAI: You would think that Apple would have moved faster to upgrade Siri - after all, ChatGPT was launched 18 months ago. But better late than never - an all-new Siri will be released at Apple’s annual developers conference on June 10. 

• Chinese developers are selling AI clones of dead relatives: Didn’t Black Mirror imagine this back in 2013? A thriving industry in China allows the recently bereaved to buy an avatar of their deceased loved ones. Clunky and repetitive at first, these “ghostbots”, are becoming cheaper and more sophisticated as GenAI improves. If it seems a bit macabre to you, it’s important to understand that confiding in the dead is an important part of the tradition of Chinese ancestor worship.  

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The Supply Aside

📕 Read - The Coming Wave by Mustafa Suleyman

“We are about to cross a critical threshold in the history of our species. Everything is about to change.” Deepmind cofounder Mustafa Suleyman’s new book is a stark warning about humanity’s lack of preparedness for the age of AI. Fragile governments are sleepwalking into disaster and global upheaval. Time is running out, but Suleyman says there’s still a chance to solve “the containment problem” and establish human control over powerful, fast-evolving technologies. The author was recently in the news as his company, Inflection AI, was acquired by Microsoft. He now heads up their new consumer division AI. If you can't beat them, join them?

What Else I’m Reading

• How the financial system would respond to a superpower war: A Bank of England study that simulated the effects of a major war on the financial system found that almost immediately, “stocks tank, volatility explodes and investors scramble to de-risk their portfolios … big sovereign-wealth funds start dumping American, British and euro-zone government debt.” And that’s just the beginning. An interesting article that debunks several myths around the stability of the global financial system. 

• Lawsuit alleges inmates are kept longer in prison for their cheap labor: Are American businesses exploiting US prisoners? Inmates sent on “job assignments”  like food service and warehouse jobs are earning only 12-40 cents per hour, vastly below the minimum wage, in a scheme that generates billions in corporate and government revenue. The chain gangs portrayed in films like Cool Hand Luke and Oh Brother Where Art Thou are more brutal, but somehow more honest than the situation today.    

• Musk’s mass firings and performance management reviews: The latest mass firings at Tesla inspired the FT’s Anjli Raval to explore best practices in performance management. I was surprised to read that only 2% of HR chiefs at Fortune 500 companies believe their performance management systems inspire employees to improve.

📺 Watch - Jensen Huang at the SIEPR Economic Summit

NVIDIA CEO Jensen Huang is a compelling speaker who predicts, in this video, that NVIDIA will help increase the computational capability for deep learning by another million times in the next ten years. “And what happens when you do that? We’ll have continuous learning.”

Huang talks about the next generation of AI that can understand the meaning (not just the pattern) of almost all digital knowledge. Sometimes it feels like we’ve reached saturation point with AI news, but Huang has the ability to reignite a sense of wonder and excitement about the technology’s possibilities. The best part was when he wishes his Stanford audience much pain and suffering in their professional lives. His rationale being that the new generation has high expectations since they have achieved much as Stanford students, which is natural. However, people with high expectations have low resilience. So, to increase your resilience, we need a healthy dose of pain and suffering. So, we need resilience for success, which is one way to earn it. Love it!

👂 Listen - All-in Podcast with Sam Altman

This episode of the All-in Podcast features OpenAI’s Sam Altman, who seems more loquacious than usual - perhaps because he feels among his own people with the All-in crew. Altman chats about what’s next for OpenAI, GPT-5, open source, AI reasoning, and what an AI-powered iPhone competitor could look like (Altman thinks “innovation is dying at Apple”). He also talks openly about how he was fired and rehired, and his current situation at OpenAI. 

💡 Think - Geopolitics meets technology

At the recently concluded Annual ISM conference, Ian Bremmer was one of the keynote speakers. Surprisingly, he was much more engaging and energetic than he is as a TV talking head. He spoke about the impact of China's authoritarian regime and India's economic reforms, showing how these forces disrupt and transform global trade. China will dominate post-carbon energy transformation, while America will lead in AI. Bremmer was bullish on India as an impending economic powerhouse.

He also noted that while China lags behind the US in AI, they have created an unmatched algorithm in TikTok. Bremmer boldly stated that Tesla sucks and that China is way ahead in EV cars. Yet, Tesla remains the most valuable automotive company in the world. With the US virtually banning Chinese EV cars, we wouldn't know about their perceived superiority.

Overall, it was highly informative. It's reassuring to hear that it's not all doom and gloom when considering the interplay between geopolitics and technology and how it will shape our future.

📕 From my upcoming book…

The following is a short excerpt from my upcoming book, Fire the Boss, Keep the Love: 10 Jobs, 10 Exits, 10 Lessons. The release date is coming soon!

While I’m fairly average at many things, something that I’ve felt has come naturally to me and worked to my advantage since the early days of my career is the ability to spot talent.

Whether it was building allegiances with bosses who I knew were destined for the big time or mentoring young guns who had tremendous potential to go the distance, it’s been rare that I have mistaken an A-player for a B or C-player, and vice versa.

In my experience, people who build successful careers have the following qualities:

• Conscientiousness and the willingness to work hard and hustle where necessary

• People skills and the ability to build long-term professional relationships

• A hunger for learning, characterized by a thirst for knowledge and a desire to keep improving

• A bias towards taking action and the willingness to stand by the results they achieve.

If people consistently display these qualities over an extended period of time, they will begin to outperform and be recognized over time.

Nothing can stop an individual who works hard, gets on with people, keeps growing, and isn't afraid to take action.

Charts of the Week

Quote of the Week

Tweets of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you want to see me address, email me at [email protected]!

Want more?

If you’d like to read more of my writing on the supply chain, entrepreneurship, or the future of work, check out my website.

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Happy reading this weekend!

-- Naseem