Top stories today:

1. Microsoft acquihires Inflection AI, including CEO Mustafa Suleyman
2. GPT-5 coming likely during summer, ”materially better” than GPT-4
3. Fed expected to keep rates at 5.25% - 5.50%
4. Temu hopes to reduce U.S.'s GMV % to 30% in 2025
5. Finland remains #1 in World Happiness Report, U.S. drops to #23

0. Data and calendar

1. Microsoft acquihires Inflection AI, including CEO Mustafa Suleyman

• Suleyman, former Deepmind, co-founder, to become CEO of Microsoft AI.

• Investors to be made whole, having invested $1.5B.

• Not a direct acquihire, potentially to avoid regulatory scrutiny.

• Co-founder Reid Hoffman is a Microsoft board member.

• Inflection to keep operating as an “AI studio business.”

Our view: this strengthens Microsoft’s position in the AI wars, but Google and Anthropic are running right behind

2. GPT-5 coming likely during summer, ”materially better” than GPT-4

GPT-4 already ranks on par with Claude 3 (in user voting, see below), even as Anthropic claims it has a higher MMLU score:

• Still in training, and will require “red-teaming.”

4. Fed expected to keep rates at 5.25% - 5.50%, potentially signaling June cut, at 2:00 PM ET

• Fed Chair Powell speaks at 2:30 PM ET.