OpenAI Engineer Arrested for Spying, September CPI Comes In Hot

Zaid Admani (0:00)

Public.com presents The Rundown. Your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, October 14th. In today's episode, we'll break down this morning's inflation report and why a Fed rate hike is back on the table. We'll also tell you about how an OpenAI engineer allegedly bugged an executive conference room and what ASML's earnings reveal about the AI book. Then stick around to the end of the show to find out why Bumble is breaking up with Wall Street. We got a great show for you today.

Let's go.

Stocks went basically nowhere for the second day in a row on Tuesday. The S&P 500 was basically flat, falling 0.02%. And the NASDAQ fell by 0.15% as big bank earnings didn't impress anybody and chip stocks kept sliding. In fact, the SOX semiconductor index has dropped for six straight sessions, losing nearly 6% in that time period. Now, the big news this morning is that we got the September CPI report, and this could shake up the macro vibes. Headline inflation in September was up 3.7% compared to a year ago. That's above the 3.6% that economists had expected, and it's up from the 3.4% in August. The main culprit here is no surprise, it's gas prices. Because the war with Iran is still dragging on, gas prices surged more than 9% in September alone. But it's not just a gas price issue, because if you look at core inflation, which strips out food and energy, that was up 2.6% year over year in September, which is higher than the 2.5% expected. So this could be a sign that higher energy prices are increasing prices of other things across the economy. Also, average hourly wages were only up 3% in September from a year ago. So with prices up 3.7%, people are falling behind, and inflation is starting to sting even more. For the last couple of weeks or so, most people thought that the Fed would hold off on hiking rates at the October meeting. According to the prediction market on public.com, the odds of a Fed rate hike in October was less than 20% before the CPI report came out this morning. But now after the CPI report, the odds of a rate hike in October have jumped to 47%.

I mean, that is a pretty significant jump in odds. It's essentially a coin flip on what the Fed will do at the end of the month. So we'll see what ends up happening. I mean, the stock market did not love this CPI report. I'm recording this right at the open, and all three major indices are in the red. The next Fed meeting isn't for a couple more weeks. A lot can happen between now and then. We'll continue to stay on top of everything. So definitely get subscribed to the podcast if you haven't already, and tune in every day to stay in the loop.

Let's run through some headlines. And we're starting with OpenAI. An OpenAI engineer has been arrested by the FBI after allegedly hiding a recording device in an executive conference room. Prosecutors say that he wrapped the device in toilet paper and plugged it into a USB port behind the TV in a conference room to secretly record conversations. This sounds like something straight out of a terrible spy movie. The employee that was arrested was 35-year-old Abdul Rehman al-Fuzan, who was a Saudi national. He joined OpenAI's product team back in July of last year. It goes without saying that OpenAI fired him on Friday of last week, and then he was arrested by the FBI. There are so many interesting details about the story. First of all, the conference room that he bugged was where a lot of top secret meetings would happen. It hosted leadership meetings, briefings with government officials and business partners, and also confidential research and product discussions. And the way he figured out on which conference room to bug was by asking OpenAI's own internal AI tool. On top of that, he used an AI chatbot to help build a DIY recording device, which is what he used. According to the FBI, he bugged the conference room on September 28th. OpenAI's security team found it two days later during a sweep, and they called the FBI. Investigators then installed a camera in the room behind the TV, which prosecutors say captured him coming back and looking behind the TV on October 5th to retrieve his recording device. Another interesting detail here is that OpenAI said they used their own AI models to analyze the device and figure out who planted it. So we kind of have a situation here where AI is being used to do crimes and also solve crimes. Big picture though, I'm really curious to see what's going to come of this. You know, the US government is treating this like a serious national security issue because AI development is a matter of geopolitics at this point. So I wonder if working at these AI labs like OpenAI and Anthropic will soon require a heightened level of security. It's possible that going forward, these labs might start looking less like tech startups and like defense contractors with background checks and security clearances and constant security sweeps. Because I mean, these are multi-trillion dollar companies working on leading-edge technology with geopolitical implications. And there was a dude that went full MacGyver with a $14 circuit board and a wad of two-ply toilet paper to spy on them. So yeah, I wouldn't be surprised if there's some heightened security moving forward.