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An alarming debt crisis has unfolded in Laos in recent years, raising worries about the tiny nation’s obligation to its biggest creditor — China.

China became the largest foreign investor in Laos in late 2013 and since then, its influence has only continued to skyrocket.

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A majority of Laos’ public debt, which the IMF estimates 122% of GDP this year, is owed to Beijing due to infrastructure deals under China’s Belt And Road Initiative, or BRI.

Laos borrowed billions from President Xi Jinping’s government to finance railways, highways and hydroelectric dams, depleting its foreign reserves in the process.

Combined with increasing food and fuel prices across the globe, plus a currency crisis — the Laotian kip has depreciated to record lows against the U.S. dollar, triggering soaring inflation.

It’s widely feared the country may be on the brink of economic collapse if the economic crisis spins out of control.

In response, the government has implemented several stability measures, including interest rate increases, bond issuances, and working with the Asian Development Bank on debt management practices. It has also reduced spending on critical services like education and health care.

But without a clear-cut debt reduction deal with China, Laos’ financial hardships will not likely ease, analysts warn.

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“Laos should negotiate an upfront debt treatment with China, such as debt reduction in net present value terms, to enable Laos to meet debt services obligations sustainably,” said Toshiro Nishizawa, a professor at The University of Tokyo who focuses on economic policy.

Extended repayment periods and reduced interest rates are one option, he added, as is a climate-centric approach like debt-for-climate swaps, which would entail Laos committing to environmental policies in return for a haircut.

Short-term relief

China gave Laos significant near-term debt relief from 2020 to 2022, providing “temporary relief,” said the World Bank estimating that deferred repayments over those three years reached about 8% of Laos’ GDP in 2022. But the generosity of the world’s second-largest economy only extends so far.

“Given the approach China has taken previously, it may offer short-term relief, but only that,” said Mariza Cooray, a research fellow and senior economist in the Lowy Institute’s Indo-Pacific Development Centre, in a report published earlier this year.

CNBC has reached out to the Chinese foreign ministry for comment.

China needs to do more for Laos, and do it quickly.

Mariza Cooray

LOWY INSTITUTE’S INDO-PACIFIC DEVELOPMENT CENTRE

“As with Sri Lanka and Zambia, China has also so far been unwilling to take a haircut on its debt, despite obvious signs that this will ultimately be necessary and to everyone’s benefit,” she wrote, adding that “China needs to do more for Laos, and do it quickly.”

It’s in Beijing’s best interests to prevent Laos from defaulting.

Strong China–Laos relations help Beijing’s position in Southeast Asia as Washington gains influence in the Indo-Pacific. Shared socialist ties between China and Laos is another factor.

Moreover, “Chinese banks do not want to become creditors burdened with non-performing assets, nor does China want to look like an unreliable lender to developing nations,” said Nishizawa. “China is unwilling and unable to let Laos default.”

‘Debt trap’ concerns

Some media reports have warned of a so-called debt trap — a scenario in which Beijing would seize valuable infrastructure assets in Laos — should the latter default or be unable to pay on time.

Concerns grew after state-owned energy company Électricité du Laos, which accounts for around 37% of Laos’ external debt, signed a 25-year concession agreement with China Southern Power Grid in 2021. The deal gave the Chinese state-owned enterprises (SOEs) a majority stake and the rights to export Laos’s electricity overseas.

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But some experts have debunked fears of Chinese debt-trap diplomacy in BRI nations.

Researchers Deborah Brautigam of Johns Hopkins’ China Africa Research Initiative (CARI) and Meg Rithmire of Harvard Business School have pointed out that Sri Lanka, for instance, owes more debt to Japan, the World Bank, and the Asian Development Bank than to China.

“When debt distress strikes, we do not see Chinese banks attempting ‘asset seizure,’ and so far, no cases in Africa of international arbitration or involvement of courts, either,” CARI noted in a 2020 research paper.

“Instead, Chinese officials are trying to develop tailor-made solutions to address debt (and development) sustainability, case by case,” they said.

Ultimately, Laos must diversify its foreign investment but given its economic turmoil, it will be hard to achieve without a debt restructuring deal.

“A successful conclusion to ongoing debt renegotiations will be crucial,” said Pedro Martins, senior economist at the World Bank’s Laos office.

In the meantime, Vientiane still has plenty of options at its disposal.

“This could involve tax reforms, including the reduction of excessive tax exemptions and improved tax collection on the revenue side,” said Harumi Taguchi, principal economist at S&P Global Market Intelligence.

“On the expenditure side, financial management reforms, including strict controls on repayment from SOEs and lending/guarantees to SOEs, would be key,” she said.

Improving expenditure efficiency, strengthening the financial sector and boosting the business environment while promoting exports are other solutions, added Martins.

Some 165 photographers working on assignment for National Geographic shot more than 2.1 million images in 2023.

Now, 29 are featured in its annual “Pictures of the Year” retrospective.

The feature — published in the magazine’s December issue and online in November — contains “stunning photographs that unearth remarkable, rarely seen moments,” according to National Geographic.

The full collection shows moments of joy and silence, celebrations of tradition and science, and the exploration of Earth and outer space.

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National Geographic’s ‘Pictures of the Year’ for 2023

Here are several images from that collection.

‘Fun’ but deadly

The highly prized cover photo shows a close encounter with a sea krait, a highly venomous snake, snapped by photographer Kiliii Yuyan.

Cover shot by Kiliii Yuyan

CNBC Travel spoke to Yuyan about this photo, taken near the Rock Islands Southern Lagoon in Palau, an island state between the Philippines and Papua New Guinea.

“The krait is more curious than anything, often coming straight at me to investigate around me,” he said. “They are such fun, energetic and curious animals.”

Despite the risks, Yuyan said he wasn’t afraid of being bitten.

“They are extremely venomous but not aggressive,” he said. “There are lots of ways to go in this world, and death by sea snake at least gives my family a good story to tell.”

‘Incredibly hard’

Photographer Louie Palu shot this image at a military facility north of the Arctic Circle, showing Finnish and U.S. soldiers training, on skis, for winter warfare.

Louie Palu

The training was conducted in response to Russia’s invasion of Ukraine, according to National Geographic. This photo was taken shortly before Finland joined NATO, it said. Finland became an official member of the NATO military alliance on April 4, 2023.

The United States is increasing its military winter readiness as areas of the Arctic become more strategically important, according to the national security website Defense One. Troops learn to operate in snow and mountains, and use equipment in sub-zero temperatures, it said.

In an article on Defense One, First Lt. Liam Burke said working in the cold is “incredibly hard.”

“We thought a five-kilometer movement would take us three hours,” he told Defense One. “But on skis with your gear … it took us almost double that time.”

The twilight of life

“Queen of the Arctic Seas” and “alien flower.”

Both are names that marine biologist Alexander Semenov has used to refer to the lion’s mane jellyfish, one of the largest species of jellyfish.

Alexander Semenov

He photographed this one in its “final stage of life,” according to National Geographic — after it had reproduced and lost hundreds of tentacles, which are said to resemble a lion’s mane.

The jellyfish is listed as an “extreme jellyfish” on the Smithsonian’s Ocean Portal website, which states that the largest known specimen measured 120 feet from top to bottom.

A journey home

This harrowing photograph by Renan Ozturk — a former National Geographic “Adventurer of the Year” — captures a journey home.

Renan Ozturk

A group of volcanologists and mountaineers are returning after weeks of exploring Mount Michael — a 2,765-foot active volcano in the Atlantic Ocean’s South Sandwich Islands.

The peak contains one of eight known lava lakes in the world, a rare geographic occurrence in which magma is held above the Earth’s surface inside a volcanic crater or depression.

A medical breakthrough

In 2019, Yale University neuroscientist Nenad Sestan discovered a way to partially resuscitate a pig’s brain hours after the pig had died.

Max Aguilera-Hellweg

Today, researchers at Yale use concentrated hemoglobin (in red) and a solution known as OrganEx (in blue) to restore organ functions shortly after the host has died, according to Yale. The procedure slows cell death, which researchers say could bring new hope to people awaiting organ transplants.  

According to the World Health Organization, many donated organs don’t reach their intended targets in time, and thus are unused.

Isolation and memories

New Delhi-based photographer Chinky Shukla captured this nighttime photograph of Taj Mohammad standing with his sheep and goats.

Chinky Shukla

Mohammad lives in rural Rajasthan in northern India. He spoke of his memories — of the ground shaking and huge clouds filling the sky — when India tested its nuclear weaponry in the nearby municipality of Pokhran in 1998.  

Today India celebrates “National Technology Day” annually on May 11 to commemorate the 1998 tests.  

A billion butterflies

These are not leaves on trees — they are butterflies.

Jaime Rojo

Branches sag under the weight of monarch butterflies at El Rosario Sanctuary, one of many colonies in Mexico’s Monarch Butterfly Biosphere Reserve, a UNESCO World Heritage Site.

Jaime Rojo, a senior fellow at the International League of Conservation Photographers, took this photo shortly before sunset, outside of the sanctuary’s normal operating hours, according to Nat Geo.

Every year, up to a billion monarch butterflies migrate to the reserve, before departing for Eastern Canada in the spring, according to UNESCO.

“During [this] time, four successive generations are born and die,” states UNESCO. “How they find their way back … remains a mystery.”

To see all 29 photographs, visit NatGeo.com.

I strolled through the tawny labyrinth-like halls — past quirky cafes, curious tourists, men on motorbikes carrying groceries to their homes, and veiled women ringing temple bells.

It’s life as usual in Jaisalmer Fort, a UNESCO World Heritage Site that thousands of people call home.

Jaisalmer Fort, a UNESCO World Heritage Site in Rajasthan, India.

Source: Chaitanya Raj Singh

The city of Jaisalmer is in the Thar Desert in Rajasthan, India — near the Pakistan border. But its remote location doesn’t stop hundreds of thousands of tourists from braving the sandy emptiness to see it.  

My guide, Sanjay Vasu has been showing tourists around the city for the past 25 years. He pointed out the Hawa Pol gate, saying its where locals congregate during the hot summer months.

Jaisalmer Fort’s Hawa Pol gate.

Didier Marti | Moment | Getty Images

A tourist stops Vasu to ask, “Which way to the Jaisalmer Fort?”

“Well, my friend, you are already within,” said Vasu, smiling at his confusion.

Centuries of life

King Rawal Jaisal built the fabled fort in 1156. With exterior walls that span some 1,500 feet — the space inside is vast, with several areas once marked as living quarters for people, and their families, who served the city’s royal court.  

Centuries later, the fort is still home to the descendants of those families.

The faces of those living in Jaisalmer Fort.

Source: Shalbha Sarda

The fort has a tumultuous history — from its glorious days as a major city on the Silk Road to enduring plunder and conquests by foreign invaders and more recent conflicts with Pakistan.

But today, the fort attracts other types of outsiders – hundreds of thousands of travelers who come to the location, which was named a UNESCO World Heritage Site in 2013, along with five other forts in Rajasthan.

But unlike the others, Jaisalmer Fort boasts a royal palace as well as public temples, shops, hotels, cafes and homes. It is a neighborhood, a business district, and a place of worship for a significant portion of Jaisalmer’s population, which lives within its crumbling walls.

Struggles of a ‘living fort’

But Jaisalmer Fort’s status as a “living fort” isn’t without consequence, said heritage specialist Kavita Jain.

“The fort’s population has increased several fold, leading to an increased load on infrastructure,” she said. “Old sewage lines and improper drainage have caused water to seep into the foundation, and when one stone falls, it can bring down several others.”

An alleyway inside Jaisalmer Fort.

Source: Shalbha Sarda

Architect and conservationist Asheesh Srivastava has been restoring the fort since 2001. He started the project with the Indian National Trust for Art and Cultural Heritage and now works with Shri Girdhar Smarak Dharmarth Nyas Trust, maintained by the city’s royal family.

Srivastava acknowledges that much remains to be accomplished. “It is important that local residents rekindle their appreciation for their heritage, which may have been overshadowed by routine familiarity.”

Homes go higher

Although the government has allotted land to the residents in the town, they prefer to live within the fort.  

Families are expanding their homes, adding new levels and building higher than previous generations. But the original foundation may be unable to withstand the weight.

“I have seen huge voids in the foundation during excavation because sand is washed away,” said Srivastava.

The fort has intricate hand-carved balconied windows, known as “jharokhas,” that contain detailed filigree work, said heritage specialist Kavita Jain.

Source: Chaitanya Raj Singh

Additionally, artisans proficient in ancient construction techniques, skilled at working with lime plaster and hand-carved stone, are difficult to find now. They learned these time- and labor-intensive skills from their predecessors, but younger tradespeople learn modern construction skills, said Srivastava.

Help needed

Chaitanya Raj Singh, the current King of Jaisalmer whose family owns 60% of the fort, said more locals are needed to help restore it, which would reduce reliance on outside help.

“It will support their livelihood and help them sustain,” he said.

With the assistance of the state government, plans to establish regulations for the construction and expansion of the fort are underway, he said.

“I sincerely hope for greater cooperation from residents and authorities,” said Singh. “This fort has remained frozen in time, and our goal is to keep it for future generations to see as it once was.”

The challenges are manifold and will require help from the government, shop owners and residents. But a thorough restoration of the fort can yield long-term economic benefits, like premium pricing and rents, said Srivastava.

“I have witnessed such successful transformations in my projects, such as in … Lucknow, Uttar Pradesh,” he said. “I hope Jaisalmer Fort addresses the issues in time.”

Japan and Thailand are two of the most popular places to visit in Asia.

But both are losing ground with Chinese nationals as safety concerns rise among younger travelers.

Both countries were the top choices for Chinese holidaymakers earlier this year but fell in the third quarter — Thailand to No. 6 and Japan to No. 8 — according to the marketing company China Trading Desk, which gauges Chinese travel sentiment on a quarterly basis.

Both countries now lag behind South Korea, Malaysia and Australia in terms of Chinese travelers’ next vacation destinations, with Singapore — deemed one of the safest places for travelers in 2023 — rising to the top spot.

CNBC Travel has reached out to tourism authorities in Japan and Thailand for comment.

Japan: food safety

The release of treated radioactive wastewater from Japan’s Fukushima nuclear power plant into the Pacific Ocean in August has significantly affected how Chinese people feel about traveling there, said Subramania Bhatt, CEO of China Trading Desk, the marketing agency behind the survey.

China Trading Desk’s survey of more than 10,000 Chinese citizens — 94% of whom are under the age of 40 — showed eating great food (23%) was the top motivator for outbound travelers, topping local history and culture (22%), nature (22%) and shopping (10%).

The World Health Organization and other safety groups have said seafood from Japan is safe to eat, but fears among Chinese travelers have “turned one of their most popular destinations into one of their least popular,” Bhatt said.  

Thailand: scamming compounds

In a twist on the “set-jetting” trend — in which movies and television shows attract tourists to visit their filming locations — several blockbuster movies released this summer are dissuading Chinese travelers from visiting Thailand.

Recent Chinese movies “Lost in the Stars” and “No More Bets” are both fictional, and neither is set in Thailand, but some say the plotlines closely mirror real-life events that have made headlines in recent years — including a Chinese woman who was pushed from a cliff by her husband in Thailand in 2019. (She broke 17 bones — but survived.)

This is especially true of “No More Bets,” which follows a young couple lured to Southeast Asia to take new jobs, only to get trapped in an online scamming compound — a situation the United Nations estimates is happening to hundreds of thousands of people in the region.

Many compounds are in the border areas outside of Thailand — in Cambodia, Laos and Myanmar — often in special economic zones where there is “little to no rule of law,” according to the United Nations. Victims come from across Southeast and South Asia, as well as mainland China, Taiwan and even as far as Latin America, it said.

The problem has grown since the Covid-19 pandemic, said Pia Oberoi, senior advisor on migration and human rights in Asia-Pacific for the United Nations Human Rights Office of the High Commissioner, as the clientele of casinos operators dwindled in the wake of Covid-related border shutdowns.

“A number of compounds … have been repurposed by transnational crime groups into places in which people are forced to kind of carry out scams against other people. So we say there’s two sets of victims here … the people that have been scammed in many cases from lots and lots of money, but also others that are forced to take part in perpetrating these scams in the centers around the Southeast Asia region,” she told “Squawk Box Asia” on Monday.

Beyond scams, the areas are said to operate as “lawless playgrounds,” where trafficking of drugs, wildlife and humans is rife.

“This is an incredibly lucrative business. There are billions of dollars that are being generated,” said Oberoi.  

Dangers to tourists?

Rumors of dangers to travelers have spread across Chinese social media, but Oberoi noted she hasn’t seen any evidence of tourists “being snatched up off the streets and dragged into these centers.”

“In fact, the methods of recruitment are actually much more sophisticated,” she said, which can include using recruitment platforms to give the impression job-seekers are headed to real jobs.

A man walks near a casino along the Myanmar-China border, which are known to be hotbeds for drug, wildlife and human trafficking.

Ye Aung Thu | Afp | Getty Images

She said governments are taking steps to intervene, but more needs to be done to break up entrenched issues in the region related to corruption and enforcing the rule of law.

“We’ve seen a roadmap between ASEAN and the People’s Republic of China around law enforcement response, but what we really want to put a focus on is, of course, the people that have been caught up,” she told CNBC. “There’s been some horrific levels of violence and abuse seen by the people that are being forced to commit these crimes.”

Tourism as a catalyst for change

In 2019, some 11 million Chinese travelers visited Thailand — making China the country’s largest source market for incoming visitors, according to Reuters.

As of September, fewer than 2.5 million Chinese nationals have visited Thailand, according to Thailand’s Ministry of Tourism & Sports — far less than the 5 million Thai authorities projected would arrive this year.

As for whether tourism — of all things — could exert economic pressure on Southeast Asian governments to do more, Oberoi said, “We hope that a human rights response sees a way forward — governments will understand that actually the reputation of the country does depend on a comprehensive response.”

Cambodia has banned “No More Bets” from theaters, which hasn’t stopped it from grossing nearly $500 million in China, as of early September.

“Some viewers of ‘No More Bets’ have even expressed fears that traveling to the region could jeopardize their lives,” said China Trading Desk’s Bhatt. “Over time, Southeast Asia has increasingly become associated with danger, and what was once a popular destination for outbound tourism has now acquired a negative connotation.”

Some workers go to great lengths to hide hush trips from their bosses.

But employees of the Polish company PhotoAid needn’t bother.

The company, which helps travelers take their own passport photos at home, allows its employees to stay at an apartment in Spain for free — provided they work while they’re there.

The apartment is in Tenerife, the largest of Spain’s Canary Islands, an archipelago west of Morocco. Employees can stay up to three weeks at a time and can visit as many times in year as they like, depending on demand from other employees.

https://belajarlahlagi.comThe company reimburses half of employees’ airfare too, up to 1,000 Polish zlotys ($246), once a year. Flights from Warsaw to Tenerife can start at around $150 for a six-hour direct flight.

Employees can stay up to three weeks at a time at the Tenerife apartment and can visit as many times as they like.

Source: PhotoAid

The company started renting the apartment in Tenerife’s capital, Santa Cruz de Tenerife, in the summer of 2022 as a way to create relationships and build morale among its employees, all of whom work remotely, said co-founder Rafal Mlodzki.

Plus, Mlodzki said he and the other co-founders, Marcin and Tomasz Mlodzki — who are also his brothers — wanted to offer a company perk that would stand out.  

How the ‘workcations’ work

PhotoAid is a small company with a young workforce, so most employees don’t have children, said Mlodzki. But those who do tend to group together and use the benefit in the summer months when schools are closed.

Employees can request to bring their partners too, which the company reviews on a case-by-case basis, he said.  

Employees must abide by several rules, he said, such as the check-in and check-out protocol. Employees must upload a photo of the apartment on arrival, then do the same on departure to show the next group of employees how they left it.

Workcation time spent in Tenerife doesn’t count as employee vacation time, which is up to 26 days a year, said PhotoAid co-founder Rafal Mlodzki.

Source: PhotoAid

On arrival, employees are assigned a cleaning task too, but the company hires a professional cleaner for deep cleans, he said. While drinking wine on the balcony and chatting into the night are regular occurrences, employees are not allowed to drink during work hours, he said.   

Mlodzki told CNBC Travel that employees like to visit Tenerife with coworkers with shared interests. For example, a recent group played sports in their free time, while another group went to music concerts.

‘The best onboarding in the world’

Around 50 of PhotoAid’s 143 employees have now stayed at the Tenerife apartment, many meeting their teammates in person for the first time during their stays. Around 10 were onboarded as new starters there too, said Mlodzki.

“One of the reasons we decided to open this office was the possibility of offering the best onboarding in the world for senior team members. Those onboarded are not only thrilled but also deeply understand the company and their role in it,” said Mlodzki.

Coworkers with shared interests — such as sports and music — travel to Tenerife together.

Source: PhotoAid

“Often, spontaneous moments occur. For example, after a series of 45-minute sets with 10-minute breaks, we might go on a mini mountain trip and continue onboarding informally. It might even transition into an evening on the terrace.

“We just onboarded our new chief operating officer during a workation in Tenerife, and he was deeply impressed. He had never experienced an onboarding like this before.”

Two senior leaders have scheduled a strategic planning and brainstorming session at the apartment this winter, where average temperatures in January are 68 degrees Fahrenheit, higher than 34 F in the Polish capital of Warsaw.

The apartment

The 3,200-square-foot apartment overlooks the port of Santa Cruz de Tenerife. It has three bedrooms, a spacious lounge with board games, two balconies and a small gym. There are also eight workspaces with high-speed internet, computer monitors and ergonomic chairs.

The apartment has eight workspaces with high-speed internet, computer monitors and ergonomic chairs.

Source: PhotoAid

There’s a bakery next door for fresh bread, with restaurants, bars, wineries, and vermuterias (bars specializing in Spanish vermouth) nearby.

Workation as a ‘wow’ factor

When she was interviewing, Aleksandra Staromiejska said the Tenerife benefit made PhotoAid stand out. Now a company digital public relations specialist, she stayed in the apartment for two weeks in May, along with a colleague from her team. 

Aleksandra Staromiejska started her work days early to maximize her time at the beach, she said.

Source: Aleksandra Staromiejska

She started and finished her work early, she said, to spend as much time as possible at the beach, a 20-minute bus ride away. Over the weekend, she and her colleague went hiking in Macizo de Anaga (Anaga mountains).

“I noticed my productivity levels were higher,” said Staromiejska. “I really wanted to do my job quickly so I could finish my work day and have time to go to the beach.”

Vacations to Spain’s Canary Islands are popular with employees of PhotoAid, a company based in the much colder city of Warsaw, Poland.

Source: PhotoAid

“It was actually a very relaxing trip. Just being in nature is something else. My batteries were just charged up,” she said.

The Spanish apartment is often mentioned in employee satisfaction surveys, said Mlodzki.

“When we recruit, it’s an attractive benefit that candidates always react positively to.”

A vacay with the boss?

Enamored by the culture and scenery, Mlodzki said he spends half his time in Warsaw and half his time in Tenerife, staying in the master bedroom at PhotoAid’s apartment. 

Mlodzki acknowledged that some people might feel nervous about spending so much time with their boss. (Indeed, Staromiejska admitted she did before her workation.) But he said it’s great for rapport.

“It’s super interesting for me to get to know more people. To give and get feedback is very enriching for me,” he said.

Rafal Mlodzki, Aleksandra Staromiejska and Michel Jonca. “It’s super interesting for me to get to know more people,” said co-founder Mlodzki.

Source: PhotoAid

From leasing the apartment to paying for employees’ flights, Mlodzki said the investment has been worth it.

 “We think about the Tenerife office as the ‘company charger’ with the goal of reenergizing employees and boosting team spirits that can get depleted by remote work.”

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Paramount Global shares surged Friday following reports from Deadline and Puck News that Skydance and RedBird Capital were exploring potentially taking over the media giant.

Paramount shares closed up more than 12% Friday. The company has a market cap of about $10.4 billion and its year to date share price is virtually flat, lagging the S&P 500′s 20% gain.

https://www.cnbc.com/2023/12/08/paramount-para-takeover-interest-reports.html

Paramount’s controlling shareholder, Shari Redstone, has been open to making big deals, especially as the company weathers the storms of declining revenue and streaming losses.

RedBird, controlled by longtime former Goldman Sachs partner Gerry Cardinale, is invested in a variety of media and sports assets, including David Ellison’s Skydance, which helped produce Paramount’s 2022 blockbuster “Top Gun: Maverick,” among other hits.

Paramount has a long-term debt load of $15.6 billion, and investors have speculated about how the company will be able to forge a path in 2024. TV ad revenue was also a weak spot for the company in its most recent quarterly report.

Meanwhile, the company is reportedly considering bundling its Paramount+ streaming service with Apple TV+.

Paramount, RedBird Capital and Skydance did not immediately respond to CNBC’s requests for comment.

Google is facing scrutiny over its demonstration video for its newly launched artificial intelligence model, Gemini.

On Wednesday, just weeks before the year’s end, Google launched what it considers its largest and most capable AI model Gemini and presented a demonstrative video to media outlets and the public.

The six-minute video includes spoken conversations between the user and a Gemini-powered chatbot, and also shows Gemini’s ability to recognize visual pictures and physical objects and know the difference. Some of the capabilities were impressive, such as Gemini’s ability to voice aloud a description of drawings of a duck, and describing a drawing of a duck versus a rubber duck, among other examples.

The company’s description on YouTube includes a short line that says, “For the purposes of this demo, latency has been reduced, and Gemini outputs have been shortened for brevity.” However, it doesn’t make that disclaimer in the video itself.

Following the launch, the company later confirmed to Bloomberg the demo wasn’t conducted in real time, but instead used still images and fed text prompts that Gemini responded to, as previously pointed out by The Information. The author noted that was “quite different” from what Google seemed to be suggesting: “that a person could have a smooth voice conversation with Gemini as it watched and responded in real-time to the world around it.”

After multiple requests for comment, the company on Friday told CNBC in a statement, “The video is an illustrative depiction of the possibilities of interacting with Gemini, based on real multimodal prompts and outputs from testing. We look forward to seeing what people create when access to Gemini Pro opens on December 13.”

Though demos are often edited, the subsequent findings of Gemini bring up déjà vu for the search giant.

Google faced criticism from the public and Wall Street earlier in the year for what its own employees called a “rushed, botched” demonstration of its AI chatbots, which happened the same week Microsoft planned on showcasing its Bing integration with ChatGPT.

Earlier this month, The Information reported that Google scrapped plans for a set of in-person events to launch Gemini, eventually settling on a virtual launch.

Google is in fierce competition with Microsoft-backed OpenAI’s GPT-4, which has been the most advanced and successful model up until this point. Google this week released a white paper that claimed Gemini’s most powerful model “Ultra” outperformed GPT-4 against several benchmarks, albeit incrementally.

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November’s solid jobs report did not assure that the economy will come in for a soft landing, but it did help to clear the runway a little more.

After all, there’s nothing about a 3.7% unemployment rate and another 199,000 jobs that even whispers “recession,” let alone screams it.

At least for now, then, the U.S. economy can take another win with a small “W” as it looks to navigate through what had been the highest inflation level in more than 40 years — and a still-uncertain path ahead.

“Overall, the jobs market is doing its part to get us to a soft landing,” said Daniel Zhao, lead economist at jobs rating site Glassdoor. “It’s boring in all the right ways. That’s a welcome change after a few years of less-boring reports.”

Indeed, despite a high level of anxiety heading into the Labor Department’s nonfarm payrolls report, the details were fairly benign.

The level of job creation was just above the Wall Street estimate of 190,000. Average hourly earnings rose 4% from a year ago, exactly in line with expectations. The unemployment rate unexpectedly declined to 3.7%, easing worries that it could trigger a historically dead-on signal known as the Sahm Rule, which coordinates increases of the unemployment rate by half a percentage point to recessions.

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Still, the solid report couldn’t dispense the lingering feeling that the economy isn’t out of the woods yet. The fear primarily comes from worries that the Federal Reserve’s aggressive interest rate increases haven’t exacted their full toll and still could trigger a painful downturn.

“The key uncertainty for the labor market in 2024 is whether job growth slows to a more sustainable pace, or whether the economy moves from monthly job gains to monthly job losses. The former would be consistent with the Fed’s soft-landing scenario, while the latter would mean recession,” said Gus Faucher, chief economist at PNC Financial Services. “PNC still thinks recession is the more likely outcome in 2024, but it is a close call.”

All about consumers and inflation

Key to whether the so-called landing is soft or hard will be the consumer, who collectively accounts for nearly 70% of all U.S. economic activity.

On that front, there was another round of good news Friday: The University of Michigan’s closely watched consumer sentiment survey showed that inflation expectations, a key economic variable for prices, plummeted in December. Respondents put one-year inflation expectations at 3.1%, a stunning 1.4 percentage point drop.

However, such gauges can be “fluky” and are not in line with some other signals coming from consumers, said Liz Ann Sonders, chief investment strategist at Charles Schwab. Debates over soft landings and inflation expectations and interest rate outlooks tend to miss bigger points, Sonders added.

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The risk of recession is quite low, says Goldman Sachs’ Jan Hatzius

Prior to 2023, Sanders and Schwab had been stressing the notion of “rolling recessions,” meaning that contractions could hit certain sectors individually while not dragging down the economy as a whole. The distinction may still apply heading into 2024.

“The recession versus soft landing debate sort of misses the necessary nuances of this unique cycle,” Sonders said. “A best-case scenario is not so much a soft landing, because that ship has already sailed for [some] segments. It’s that we continue to roll through such that if and when services gets hit more than the brief ding so far and it takes the labor market with it, you’re already in stabilization or recovery mode in areas that already took their big hits.”

Getting to the soft landing, then, likely will require navigating some of those peaks and valleys, none more so than establishing confidence that inflation really has been vanquished and the Fed can take its foot off the brake. Inflation, according to the Fed’s preferred gauge, is running at 3.5% annually, well above the central bank’s 2% goal, though is consistently falling.

Still nervous about rates

There was one other good piece of inflation news Friday: Rental costs nationally declined 0.57% in November and were down 2.1% year over year, the latter being the biggest slide in more than 3½ years, according to Rent.com.

However, one interesting development from the latest economic data was a bit less market confidence that the Fed will be cutting interest rates quite as aggressively as traders previously believed.

While the traders in the fed funds futures space still roundly expect that the Fed is done hiking, it now expects only about a 45% chance of a previously expected cut in March, according to CME Group data. Traders previously had been expecting 1.25 percentage points worth of cuts in 2024 but lowered that outlook as well to a toss-up with just a full point of decreases following the data releases.

That may in itself seem like only a nuanced change, but the move in pricing reflects uncertainty over whether the Fed keeps talking tough on inflation, or concedes that policy no longer needs to be as tight. The fed funds rate is targeted in a range between 5.25% and 5.5%, its highest level in more than 22 years.

“The key thing though, from a broader perspective, is that they can cut if the economy were to see more of a slowdown than we expect. Then the Fed could cut, could provide some support,” Jan Hatzius, chief economist at Goldman Sachs, said Friday on CNBC’s “Squawk on the Street.” “That means the risk of recession is in my view quite low.”

Goldman Sachs thinks there’s about a 15% chance of a recession next year.

If that forecast, which is about the standard probability given normal economic conditions, holds up, it will require continued strength in the labor market and for consumers.

Periods of labor unrest this year indicate, though, that not all may be well on Main Street.

“If things were going great, then people would not be marching in the cold and rain because they want more pay because the cost of living is going up,” said Giacomo Santangelo, an economist at job search site Monster.

Workers won’t need economists to tell them when the economy has landed, he added.

“The alleged definition of a soft landing is to bring inflation down to 2% to 2½% and have unemployment go up to that full employment level. That’s really what we’re looking for, and we’re not there yet,” Santangelo said. “When you’re on an airplane, you know what it feels like when a plane lands. You don’t need the person in the cockpit to come on and go, ’Alright, we’re going to be landing now.“

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LONDON — The U.K. on Thursday accused Russia of conducting a years-long “campaign of malicious cyber activity” against politicians, civil servants and journalists aimed at undermining British democracy.

Britain’s National Cyber Security Centre — part of GCHQ, the country’s intelligence agency — said in a report that Russian spies had been running the cyber campaign against high-profile British individuals and entities since at least 2015 through to this year, targeting several pivotal U.K. political events.

The hacking group responsible was identified as Star Blizzard, which GCHQ said is “almost certainly” part of Moscow’s Federal Security Service (FSB) spy agency.

Russia’s Ministry for Foreign Affairs did not immediately respond to CNBC’s request for comment on the report.

Included in the claims of malicious activity were attacks against U.K. politicians, including via phishing emails, as well as the targeting of universities, journalists, public sector bodies and non-government organizations, “many of whom play a key role in U.K. democracy,” the report said.

The NCSC also said the spy group had leaked U.K.-U.S. trade documents ahead of the 2019 U.K. general election, and hacked documents from U.K. think tanks whose work included the defense of democracy against disinformation.

U.K. Foreign Secretary David Cameron described the attempts to interfere in U.K. politics as “completely unacceptable.”

The NCSC said the findings exposed part of a “broader pattern of cyber activity” conducted by Russian intelligence across the globe.

In response, the U.K. and international allies including the U.S., Australia, Canada and New Zealand, issued a new cyber security advisory Thursday aimed at sharing technical details about how hackers carry out attacks and how targets can defend against them.

It also published fresh guidance for individuals at higher risk of being targeted by cyberattacks.

The report comes ahead of the U.K.’s next general election, due to be called before January 2025, and in the wake of Britain’s 2016 Brexit vote.

Evidence thus far has been inconclusive that the Kremlin directly meddled in the Brexit vote — though a 2020 report found that was due in part to a lack of thorough assessment by the U.K. government.

The European Union on Friday agreed to landmark rules for artificial intelligence, in what’s likely to become the first major regulation governing the emerging technology in the western world.

Major EU institutions spent the week hashing out proposals in an effort to reach an agreement. Sticking points included how to regulate generative AI models, used to create tools like ChatGPT, and use of biometric identification tools, such as facial recognition and fingerprint scanning.

Germany, France and Italy have opposed directly regulating generative AI models, known as “foundation models,” instead favoring self-regulation from the companies behind them through government-introduced codes of conduct.

Their concern is that excessive regulation could stifle Europe’s ability to compete with Chinese and American tech leaders. Germany and France are home to some of Europe’s most promising AI startups, including DeepL and Mistral AI.

The EU AI Act is the first of its kind specifically targeting AI and follows years of European efforts to regulate the technology. The law traces its origins to 2021, when the European Commission first proposed a common regulatory and legal framework for AI.

The law divides AI into categories of risk from “unacceptable” — meaning technologies that must be banned — to high, medium and low-risk forms of AI.

Generative AI became a mainstream topic late last year following the public release of OpenAI’s ChatGPT. That appeared after the initial 2021 EU proposals and pushed lawmakers to rethink their approach.

ChatGPT and other generative AI tools like Stable Diffusion, Google’s Bard and Anthropic’s Claude blindsided AI experts and regulators with their ability to generate sophisticated and humanlike output from simple queries using vast quantities of data. They’ve sparked criticism due to concerns over the potential to displace jobs, generate discriminative language and infringe privacy.

WATCH: Generative AI can help speed up the hiring process for health-care industry