S&P Global — 22 May 2024
Daily Update: May 22, 2024
Advances in AI Renew Interest in Smart Cities
By Nathan Hunt
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In October 2017, the city of Toronto announced a partnership with Alphabet’s Sidewalk Labs to develop a showcase smart city along the waterfront. The plan was ambitious in scope, covering everything from mobility to housing affordability, with strict rules governing data privacy. Almost immediately, the Sidewalk Labs initiative fell afoul of criticism about the use of the data generated by the development and the privatization of urban development. In May 2020, Alphabet announced the project's cancellation, citing economic concerns related to the COVID-19 pandemic. This high-profile failure cooled interest in smart city initiatives around the world.
Recent advances in AI, specifically the commercialization of large language models and generative AI, have renewed interest in smart cities. A recent article from S&P Global — “The Rise of AI-Powered Smart Cities” — outlines the promises and perils of this new generation of smart city.
At a basic level, a smart city requires advanced infrastructure. Implementing sensors on critical infrastructure is only beneficial if collecting and processing the data is possible. From a collection standpoint, a smart city would require some combination of a robust fiber network, widespread Wi-Fi/5G connectivity or a wide area network (LPWAN/LoRaWAN). Another critical piece of infrastructure is a system capable of processing all the data collected by the smart city — which could include video, audio and sensor data from streetlights, streets, pedestrian traffic areas and more. Certainly, some of that data would require the use of generative AI, but much of the analysis and optimization could be handled by standard AI.
Not all aspects of a smart city would require a centralized, AI-powered “brain.” A great deal of the responsiveness to sensors and optimizations could be handled at the point of use through edge computing. Another way to optimize a smart city would be to create a “digital twin” of the city. This is a digitized version of the city that could be optimized for flood resilience, traffic flow and sustainability without disruption to actual city residents. The creation of a digital twin would be a massive undertaking, requiring detailed knowledge of critical infrastructure and a real-time awareness of resident behavior.
Critics of smart cities focus on many of the same issues that sunk public perceptions of the Sidewalk Labs initiative in Toronto. Data privacy is a massive issue. London’s CCTV network already draws criticism for its Orwellian oversight of ordinary residents. A smart city would combine this type of visual data with multiple other sources of information. Cybersecurity is another issue. A hacker capable of undermining the security of a smart city would have almost unlimited scope for mischief-making. Finally, there is the real bias built into many of our existing datasets for things like crime statistics. An algorithm that uses prior arrest data to dispatch law enforcement whenever certain groups gather in public would be a dystopian outcome indeed.
Today is Wednesday, May 22, 2024, and here is today’s essential intelligence.
Listen: Venture Capital Arm Of Mining Giant Vale Hunting For Sustainable Mining Tech
In this episode of Energy Evolution, Taylor Kuykendall interviews Bruno Arcadier, head of Vale Ventures, the venture capital arm of international mining giant Vale. Vale Ventures aims to invest in cutting-edge technologies that will revolutionize the mining industry and make it more sustainable. The mining sector plays a critical role in the energy transition because metals like copper, nickel and cobalt are essential components in renewable energy technologies. The challenges in promoting the energy transition in mining include decarbonizing the supply chain, reducing greenhouse gas emissions and addressing waste management.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
This Week In Credit: Mixed Week For Rating Activity
Last week was a mixed one for rating activity as downgrades outnumbered upgrades but positive outlooks outnumbered negative ones. There were two rising stars, Antero Resources Corporation and Freeport-McMoRan Inc. — US issuers from the oil and gas and mining sectors, respectively — bringing this year's total to 13. S&P Global Ratings added four new risky credits, all US issuers and two from the telecommunications sector. One default last week brought this year's count to 57. Close to 60% have been US issuers, and S&P Global Ratings recently published its US speculative-grade corporate default forecast of 4.5% by March 2025.
—Read the article from S&P Global Ratings
Australian Bank Dividend Payments To Slow As Stiff Competition Drags On Earnings
Australian bank dividends will likely stay flat despite slightly higher payouts in the fiscal first half as lenders flagged pressures on cash earnings. ANZ Group Holdings Ltd., Westpac Banking Corp. and National Australia Bank Ltd. (NAB) reported lower net profits for the October-to-March period, citing strong competition as a cause for margin pressure. ANZ's cash earnings fell to A$3.55 billion from A$3.58 billion, while NAB's cash earnings fell to A$3.55 billion from A$3.66 billion. Westpac's net profit was down 16% year over year to A$3.34 billion. Only Commonwealth Bank of Australia, which operates on a different fiscal calendar, reported a slight increase in cash earnings of A$5.03 billion in its first half ended Dec. 31, 2023, up from A$5.02 billion.
—Read the article from S&P Global Market Intelligence
ECSA Watch: Tonnage Tug-Of-War Shapes South Atlantic Grain Freight
Despite confidence in a balanced supply of ships in the prior week, tonnage concerns for dry bulk markets in the East Coast South America market resurfaced in the week ended May 17 due to a long list of ballasters. This renewed apprehension contrasted with the previous bullish sentiment that was buoyed by increased activity in the Pacific and Southeast Asia, as well as support from paper trade movements cascading from the strength in the Capesize market.
—Read the article from S&P Global Commodity Insights
President Of Iran, OPEC's Third Largest Crude Producer, Killed In Helicopter Crash
Iranian President Ebrahim Raisi and other officials died in a helicopter crash May 19, state television reported, as they were heading to inaugurate a project at the Tabriz oil refinery. Raisi's death is unlikely to change oil policy in OPEC's third largest producer, according to analysts with S&P Global Commodity Insights, but it underscores the geopolitical risks underlying crude exports from the Middle East.
—Read the article from S&P Global Commodity Insights
US Tech M&A, Investments, And Shareholder Returns Compete For Healthy Cash Generation In 2024
S&P Global Ratings believes the M&A environment for the US technology sector has turned the page from a period of depressed activity since the spring of 2022, shifting when the long-awaited Microsoft/Activision and Broadcom/VMware M&As finally closed late last year. Furthermore, an expectation for growth, albeit moderating, and the likely end of rate hikes replaced concerns of a possible global recession. Pent-up demand for inorganic growth has proved too strong to keep a lid on M&A in US tech as issuers seek to scale efficiencies and expand product offerings and capabilities.
—Read the article from S&P Global Ratings