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Generative AI holds tremendous potential to transform work across industries and boost overall productivity.
In fact, Citi research analysts take the view that Generative AI can not only bring the power of AI itself to the masses but accelerate the very democratization of innovation.
As such, it&rsquo;s a game changer, they say.
ChatGPT has become the fastest growing consumer application in history (Time to reach 100 million users worldwide) 
&nbsp;
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/64b554a05e118134f6cae46d" width="892" height="424" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission
Source: Citi Research, SimilarWeb, OpenAI
&nbsp;
Generative AI potentially represents the latest inflection point in the evolution of AI
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/64b5558b5e118134f6cae475" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission
Source: Citi Research, IDC 
Its impact will be far reaching, the report says.&nbsp;
<ul>
<li>Public markets: The reverberations have already been felt across public markets&ndash;from Alphabet shares slumping in February to Nvidia shares surging.</li>
</ul>
<ul>
<li>Private markets: Equity funding going to Generative AI firms rose more than 70% YoY in 2022, according to data from CB Insights. The research firm notes that three of the top 5 largest funding rounds in the March quarter this year went to generative AI companies.</li>
</ul>
<ul>
<li>Public policy: Policy makers are trying to keep step. For example Italian regulators banned ChatGPT for almost a month earlier this year while the EU parliament passed the AI act with a big majority.</li>
</ul>
<ul>
<li>Cybersecurity: Generative AI could be a force multiplier for cyber vendors as it amplifies the ability of the masses (i.e., less sophisticated IT and security professionals) to assess threats in a timely manner as complex security situations are now simplified. Generative AI, the analysts say, could solve for the talent shortage (estimated ~3.5M positions that need to be filled globally) that the security industry currently faces.</li>
</ul>
&nbsp;
Generative AI Technology Value Stack
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/64b557605a2139265a958242" width="978" height="582" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research
Artificial intelligence (AI) describes algorithms (such as ChatGPT) that can be used to create new content, including audio, code, images, text, simulations, and videos. It builds on exponential increases in the size and capabilities of deep learning models, made possible thanks to high-performance computing (HPC) power and richer datasets. Further, we see Google&rsquo;s innovations in Transformers and diffusion models now serve as the foundational basis for LLMs and Generative AI.
According to a recent Accenture analysis based on US jobs data, nearly 40% of working hours across industries can be impacted by Large Language Models (LLMs). Based on the same analysis, Accenture also notes that in 5 out of 22 occupation groups, Generative AI can affect more than half of all hours worked.
Generative AI will transform work across industries 
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/64b557fe5e118134f6cae4be" width="950" height="530" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, Accenture
The redeployment of worker time (gained via automation and/or augmentation using Generative AI) into other activities could meaningfully boost overall productivity for years to come.
According to a recent McKinsey analysis, Generative AI could add labour productivity growth of 0.1 to 0.6 percent annually through 2040. That&rsquo;s trillions of additional dollars to the global economy
The report points out that consumers have not only enthusiastically embraced Generative AI, but also have high trust-levels for Generative AI-based interactions - recent studies also support this view.
<ul>
<li>Generative AI acceptance and trust: As noted earlier, the fact that ChatGPT has become the fastest growing consumer application in history illustrates that consumers have enthusiastically embraced Generative AI. However, we believe they also have high trust-levels for Generative AI-based interactions &ndash; multiple recent studies support our view and below we share findings from one such study carried out by Capgemini based on a sample of ~8600 respondents across multiple countries that suggests that ~73% of the respondents trust content written by Generative AI.</li>
</ul>
<ul>
<li> Generative AI: Assessing the risk/reward &mdash; The team also outlines in detail how to assess the risk/reward associated with Generative AI via a two-stage framework. In the first stage, they aim to identify companies that are &ldquo;affected&rdquo; vs. others that are not, as opposed to simply tagging them as &ldquo;winners&rdquo; and &ldquo;losers&rdquo;. In the next stage, they look to gauge those &ldquo;affected&rdquo; based on two principles explained in full in the full report.</li>
</ul>
<ul>
<li> Generative AI: Impact Across Supersectors &mdash; The team then leverages contributions from Citi&rsquo;s supersectors to assess Generative AI&rsquo;s adoption curve, as well as those where Generative AI poses a potentially material risk to business models.</li>
</ul>
<ul>
<li> Generative AI: Challenges &amp; regulation &mdash; The key challenges in the team&rsquo;s view include those centered around bias, inequality, authenticity, infringements as well as the more debated one underpinned by existential concerns. The emergence of Generative AI has unsurprisingly seen AI as a broader topic become a firm focus for policy makers around the world. However, the regulatory path taken so far has varied. Given the stakes involved, we do believe policy &amp; governance evolution will play a defining role.</li>
</ul>
<ul>
<li> Generative AI: Top-down perspectives &mdash; Citi&rsquo;s strategists observe that the current hype around AI is nothing in comparison to what they have seen in the previous equity bubbles. Meanwhile, Citi Research&rsquo;s ESG team emphasizes that it is incredibly important to understand the potential limitations of Generative AI and utilize it with caution.</li>
</ul>
For more information on this subject, and if you are a Velocity subscriber, please see the full report, first published on July 10th here <a href="https://www.citivelocity.com/t/r/eppublic/2kgmj" target="_blank" rel="noopener" data-link-source="tiny">Global Equity - AI Unleashed: Generative AI Impact and Citi&rsquo;s GAIN Baskets</a>.
And for more on AI please see these recent items and more besides on the<a href="https://icg.citi.com/icghome/what-we-think" target="_blank" rel="noopener" data-link-source="tiny"> ICG website</a>
<a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-time-what-you-need-to-know-about-ai-regulation-" target="_blank" rel="noopener" data-link-source="tiny">What You Need to Know About AI Regulation</a>
<a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/how-will-artificial-intelligence-change-education" target="_blank" rel="noopener" data-link-source="tiny">How Will Artificial Intelligence Change Education?</a>
<a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-is-coming-to-a-data-centre-near-you-" target="_blank" rel="noopener" data-link-source="tiny">AI Is Coming to a Data Centre Near You</a>
<a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-is-coming-to-a-data-centre-near-you-" target="_blank" rel="noopener" data-link-source="tiny">How AI is Turbocharging Sports Tech</a>
<a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-is-coming-to-a-data-centre-near-you-" target="_blank" rel="noopener" data-link-source="tiny">AI Time: Artificial Intelligence is Driving Progress in Autonomous Vehicles </a>&nbsp;
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
&nbsp;

A recent report from Citi Research’s Amit Harchandani lays out how the team views generative AI and it’s potential to drive profound transformation across a range of industries. 

The Mighty Transformational Power of Generative AI 

Download Report

&nbsp;
Technology advances seem to be dominating the headlines. There are new ways to search the web using artificial intelligence and machine learning, alternate payment systems using blockchain and digital currency, and innovative ways to socialize gaming, and shop using the metaverse. In most cases, the advances have been facilitated by increasing computing speeds that enable faster calculations as well as better connectivity, but all are based on existing computing technology.&nbsp;
But that is all about to change. The next phase of computing &mdash; quantum computing &mdash; is getting closer to becoming practically useful as we are quickly coming to a point where quantum computers will be able to perform valuable tasks faster, more efficiently, or cheaper than classical computers. Quantum computing breaks away from traditional classical computing using quantum mechanics as a base. If you made it through physics class in high school or college, you might remember that quantum mechanics as a daunting concept associated with geniuses like Albert Einstein, Niels Bohr, and Max Planck. But you don&rsquo;t have to be a rocket scientist to start thinking about how quantum computing can revolutionize industry and society. And given the speed that quantum computing is progressing, we believe now is the time to for nation-states, corporates, and market participants to start getting ready for its arrival.
In the report that follows, we look at what quantum computing is and what its advantages are compared with classical computing in terms of optimization, machine learning, simulation, and cryptography. We then apply those advantages to specific industries to highlight areas where quantum computing can materially advance processes from logistics and drug discovery to portfolio optimization and cybersecurity.
Most importantly, we set out steps that nation-states and corporates can begin implementing in preparation for the arrival of quantum computing. Setting up appropriate funding to encourage research and development is important on a national scale, as is ensuring education and training to avoid a talent skills gap. Corporates should improve their awareness of how quantum computing will affect their industry, create impact assessments, and contextualize opportunities.

Why Quantum Computing Is a Big Deal Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value.

Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value.

Why Quantum Computing Is a Big Deal

How Big Could Quantum Computing Become? Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI).

Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI).

How Big Could Quantum Computing Become?

How Will Quantum Computing Disrupt Industry? Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies.

Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies.

How Will Quantum Computing Disrupt Industry?

Preparing for Quantum Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

Preparing for Quantum

Why Quantum Computing Is a Big Deal Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value. How Big Could Quantum Computing Become? Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI). How Will Quantum Computing Disrupt Industry? Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies. Preparing for Quantum Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

The newness and complexity of quantum computing is a challenge for stakeholders, but fostering awareness of what these machines can achieve could help with preparation and execution. The debate around the arrival of quantum advantage will continue, and it will appear at different times for different use cases. When it does, despite the upskilling and technology integration that will be necessary, quantum computing is likely to scale exponentially.


Moving Quickly From Theory to Reality

The newness and complexity of quantum computing is a challenge for stakeholders, but fostering awareness of what these machines can achieve could help with preparation and execution. The debate around the arrival of quantum advantage will continue, and it will appear at different times for different use cases. When it does, despite the upskilling and technology integration that will be necessary, quantum computing is likely to scale exponentially.

Quantum Computing 

All About the Flows: Why FX Risk Management Should Be Part of Your Payments Strategy

Since the 1930s, hydrogen has run into application difficulties in implementing what has appeared, on the surface, to be its great allure: in theory, it is more abundant and more versatile than all other fuel sources outside of petroleum. Hydrogen can be &mdash; and has been &mdash; a transportation fuel; it makes up 2.5% of all energy consumed due to its critical use in refining as an upgrading ingredient to turn heavy products, like residual fuel oil, into light products, like gasoline and diesel; it can be a source of power generation and can be stored longer and more efficiently as a last resort replacement for interruptible renewables like wind, solar, and hydro than utility-scale batteries; and since it burns at high temperatures, it can be a clean replacement for coking coal.
Obstacles surrounding its explosivity began to confront hydrogen with the Hindenburg disaster in 1937, which rapidly brought its promise as a light, clean fuel for zeppelin airships to an end. Despite this, it has been tamed as the principal fuel for rockets. Hydrogen now confronts scalability issues in creating electrolyzers, leakage issues when it comes to pipelines and storage, and cost hurdles along with &ldquo;not-in-my-backyard&rdquo; (NIMBY) obstacles. And the high cost of scalable projects has certainly slowed down the development of hydrogen projects globally.
But signs of breakthroughs have emerged over the past few years. This partly stems from an overall acceleration in green technology investments, which Bloomberg NEF (BNEF) indicates reached $1.1 trillion with 30% financing growth in 2022. Although very little of that acceleration was in hydrogen, the beginning of 2023 brought the first large-scale global hydrogen financing with an $8.5 billion hydrogen project in Saudi Arabia.
Between 2021 and 2022, the U.S. enacted a series of new laws, including the Inflation Reduction Act, which together with prior legislation and existing authorities are expected to provide as much as $1.7 trillion in investment incentives. A significant proportion of these incentives are for hydrogen projects, including via the support of hydrogen hubs around the country. The tax credits provided by the Inflation Reduction Act are so generous that net production costs of green hydrogen after adjusting for tax benefits could be negative later this decade. In response, Europe enacted its own Green Deal Industrial Plan, and government incentives are being offered in a growing list of countries already endowed with renewable resource potential and/or with the incentives to reach net zero, including Australia, Chile, China (the leading producer of hydrogen in the world), India, Japan, Oman, Saudi Arabia, and the UAE. It looks like it is time for hydrogen&rsquo;s doubting Thomases to retreat.

Hydrogen 101

The Subsidy Arms Race Is On

Hydrogen Costs Are Falling While Demand Is Rising  

Despite Momentum, Challenges Remain Ahead  

Hydrogen 101   The Subsidy Arms Race Is On   Hydrogen Costs Are Falling While Demand Is Rising   Despite Momentum, Challenges Remain Ahead  

Despite nearly a century of allure, hydrogen has not been used to its full potential. Hydrogen shows particular promise in the transportation, hard-to-abate industrial, and power generation sectors, but still faces obstacles around scalability, cost, and public perceptions. However, as investment and policy momentum have been building in recent years, signs of breakthrough are emerging. Amid these high hopes, we discuss technical, political, and cost developments to better understand hydrogen’s potential future trajectory.


A Reality Check on the Hydrogen Craze

Despite nearly a century of allure, hydrogen has not been used to its full potential. Hydrogen shows particular promise in the transportation, hard-to-abate industrial, and power generation sectors, but still faces obstacles around scalability, cost, and public perceptions. However, as investment and policy momentum have been building in recent years, signs of breakthrough are emerging. Amid these high hopes, we discuss technical, political, and cost developments to better understand hydrogen’s potential future trajectory.

Hydrogen

In this episode, Ryan Rugg, who is our Digital Assets head for Treasury and Trade Solutions (TTS) talks to Ronit Ghose, Head of Future of Finance & Digital, Citi Global Insights about Blockchain technology and beyond, looking at the real future of finance. 

Citi Digital Dispatch, Episode 2: Future of Finance

We ask Citi Research’s Auto analyst Itay Michaeli if the new ruling in California to allow fully autonomous taxis is landmark decision towards a future of driverless cars. Itay goes on to discuss where and how we may see other green lights ahead. 

Is This a Watershed Moment for Driverless Cars?

The first half of the year has seen dramatic change where commodities are concerned. At the beginning of the year there appeared to be a balance between tailwinds from China&rsquo;s post-COVID recovery and headwinds from the US, EU, and the rest of the OECD. That has given way to an unexpected reversal in the roles of China and the US, with Chinese growth and demand languishing and the US seeing a little-predicted surge in oil demand.
Commodities market price returns, YTD 2023
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/64ecbe2e860feb324c9feba5" width="737" height="570" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission. Source: Citi Research, Bloomberg
Several wildcard issues have emerged. One in particular has a potentially huge, unexpected impact on commodities: a potential ceasefire between Russia and Ukraine. Other wildcard risks can also be massively impactful by the end of this year.
Here are a few of them:
<ul>
<li>While macro headwinds will likely emerge in late 2023 or 2024, the short run could bring bullish changes. Citi&rsquo;s economists are projecting global GDP growth of 2.3% this year and 2.0% next year (with a potential US recession), along with continued increases in US and EU central bank rates. Commodities demand is particularly sensitive to GDP. Impacts from China and Ukraine have led to sustained commodity weakness after an initial bullish reaction to China&rsquo;s return and Russia/Ukraine dislocation.</li>
<li>The Energy Transition is bringing divergence to commodities, with fossil fuel demand flattening to zero and then negative net growth, while battery, EV, and energy transmission/distribution demand growth will likely be metals intensive for most of the decade to come. Citi Research analysts expect peak oil product demand to be reached by this decade&rsquo;s end, although petrochemical and jet fuel demand will likely grow as motor vehicle demand retrenches. Meanwhile, overall energy supply should increase as a percentage of GDP growth.</li>
<li>One of the major risks is of a ceasefire emerging in the Russia/Ukraine war as early as this summer given the costs and risks of both parties. Citi Research&rsquo;s analysts give this a 30% probability as happening before year&rsquo;s end, but there are also chances that the battle could continue in a virtual stalemate (50% probability) and a smaller (20% probability) of one or the other side winning a decisive advantage as the battle simmers at a lower level. A ceasefire would definitely be bearish for commodities, they say.</li>
<li>China remains a critical part of both global commodity supply and demand. There are two risks emerging and potentially unfolding at the same time: 1) China seeing much lower than 5% growth (partly caused by domestic changes in policy, demographics, and economic challenges), with negative impacts on commodity demand; and 2) an intensification of the supply chain battles between China and the US, and between China and Europe as well, reducing global trade growth and seeing inflationary forces emerging from homing supply.</li>
<li>Oil producers Iran, Iraq, Libya, Nigeria, and Venezuela produced 900-k b/d more in June 2023 than in June 2022, partly because of low output last year. But among them, Citi Research analysts can see 2-m b/d or more supply growth over the next 12 months and also the possibility of 2-m b/d less supply.</li>
<li>Additionally, there are Vox Populi issues arising in various parts of the world, challenging commodity supply growth, whether in metals supply in Chile, Peru, and elsewhere in Latam, or Africa, or related to oil in the Middle East.</li>
</ul>
The full Citi Research report, published on 17 July 2023, is available to Velocity subscribers here: <a href="https://www.citivelocity.com/rendition/eppublic/documentService/dXNlcl9pZD1NS3FrX3NueXBOYw/ZG9jX2lkPTMwMTY4NTY4" target="_blank" rel="noopener" data-link-source="tiny">Summertime Doldrums or Fireworks?&nbsp; </a>
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research’s Edward Morse and team lays out some of the commodities wildcards for the remainder of the year. 

Commodities Wildcards for 2H 2023 

DOWNLOAD ISSUE

Amanda Hale,&nbsp;Andrew Newson and&nbsp;Matthew Cherrill, of Citi&rsquo;s Global Trustee &amp; Fiduciary Services, sit down to discuss the latest regulatory highlights.
This edition&rsquo;s featured topics include:
<ul type="disc">
<li>UK: FCA says Consumer Duty Sets Higher Standards for Financial Services Customers</li>
<li>EU: European Commission Adopts European Sustainability Reporting Standards</li>
<li>Global: FSB Consults on Policies to Address Vulnerabilities From Liquidity Mismatch in Open-ended Funds</li>
<li>Global: IOSCO Proposes Detailed Guidance for Open-ended Fund use of Anti-dilution Liquidity Management Tools</li>
<li>Global: FSB Finalises Global Regulatory Framework for Crypto-asset Activities</li>
</ul>

Global Trustee and Fiduciary Services Bite-Sized  Issue 8, August 2023

Article

The financial institution and fintech space in ASEAN is among the most exciting and fast-changing corners of the treasury world. 
The patterns that shape consumer behavior worldwide are most sharply defined here. Customers demand that financial services be a seamless part of their digital lives. In ASEAN jurisdictions such as Indonesia and the Philippines, this digital expectation has been a powerful engine for inclusion, bringing millions into the financial mainstream as more prosaic brick-and-mortar models are leapfrogged. ASEAN has 440 million internet users, 80% of them are digital consumers; the region is on track to be a US$1 billion digital economy by 2030.
The financial institutions and fintechs who serve this emerging consumer force must provide new and dynamic business models. Citi is proud to help them do so: we work with our clients to connect the dots, anticipate change and galvanize economies as they grow.
ASEAN is fertile ground for growth in cross-border payments activity. There is a compelling demographic picture of youth, growing middle class wealth and widespread comfort with digital finance. Bringing these things together, there is great potential here not only for innovation but scale.
The opportunity for clients in ASEAN is far bigger than just payments. Front-to-back solutions offer transformational possibilities. Citi has an innate understanding of what liquidity solutions, payments and trade finance really mean: not just mundane matters of cash management but real transactions touching real lives, creating wealth and delivering efficiency to businesses. This understanding helps the bank support its clients on their treasury journeys.
With that opportunity comes challenge. ASEAN has a fragmented regulatory environment, and a client trying to build business in Vietnam will have very different options and hurdles to one in Singapore or the Philippines.
But financial institutions and fintechs with the right support from a multinational partner will be aligned with a vibrant, growing market. Citi is ready to help them take advantage

Navigating ASEAN’s payments revolution

Navigating opportunities and obstacles for financial institutions and fintech companies in a fragmented region

Tomorrow’s transactions

Devika Kornbacher, Partner and Co-Head of the Global Tech Group and Dessislava Savova, Partner and Head of the Continental Europe Tech Group at Clifford Chance joined us to compare the EU-US regulatory approaches with respect to AI in financial services.  Common themes in existing rules and standards include accountability, transparency and explainability.  The proposed EU AI Act is the first comprehensive Regulation of AI which is expected to apply to all industries with very few exceptions and have extraterritorial reach.   We anticipate a final version of the AI Act will be agreed by the beginning of 2024.  In contrast, US regulators and policymakers are mainly relying on existing rules and regulation by enforcement, supplemented by frameworks on the horizon from several agencies.  Globally we have seen different jurisdictions take different approaches with no globally agreed framework yet in place. We anticipate an EU-US code of conduct in the future.

Regulation of AI in Financial Services: EU and US Approaches

<div>India&rsquo;s Unified Payments Interface (UPI), the instant payment system built and backed by the Indian state, is the foundation upon which one of the world&rsquo;s most vibrant digital payments industries has been built. Innovation continues here at pace, creating a compelling opportunity for providers and customers.</div>
<div>&nbsp;</div>
<div>The UPI is open architecture, fully interoperable and free to access. UPI was designed to enable interoperability between money custodians, payment rails and front-end payment applications. This means barriers to entry are low, encouraging not only banks but also fintechs to participate in the development of payment architecture.</div>
<div>&nbsp;</div>
<div>The result is the most active digital payments market in the world: the National Payment Corporation of India (NPCI) logs ten billion digital payment transactions a month through UPI, and seeks to reach 100 billion transactions a month. It is also a market in a constant state of evolution.</div>

India is a market in a constant state of evolution. There are two initiatives to watch. 

A comprehensive and open digital public-good infrastructure serves as the backbone for one of the world’s most interesting markets for new payment ideas

India: the Frontier of Payments Innovation

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time.
The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging &mdash; between new entrants and existing players, often with new business models &mdash; to seize a slice of the cross-border payments wallet.
The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world.
Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor.
This report builds on qualitative contributions from key market infrastructure experts &mdash; from within and outside of Citi &mdash; FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi&rsquo;s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences.
We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack &mdash; including alternative payment methods and other industry-driven developments &mdash; and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market.
While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape.
As we show in this report, best-in-class client experiences &mdash; leveraging new technologies &mdash; can address clients&rsquo; key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments.

Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi

Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>

<div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>

Growing Revenue Pie Is Attracting Competition

The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>

<div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>

The Pain Points

Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>

<div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>

Keys to Winning Share for Banks

Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>

<div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>

Where Are Clients on their API Journey?

Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

<div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

Delivering Best-in-Class Client Experiences

Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div> The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div> Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div> Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div> Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. A race is emerging between new entrants and existing players, often with new business models, to seize a slice of the cross-border payments wallet. The evolving landscape is driven by changing behaviors as the streamlined, transparent, 24x7 real-time payments experience of consumers is crossing over to the corporate and institutional client market Best-in-class client experiences, leveraging new technologies, can address clients' key pain points and have the potential to transform cross=border payments for the benefit of all.

Who Will Be Moving $250 Trillion in the Next Five Years?

Future of Cross-Border Payments 

China&rsquo;s economic reopening has stalled, and Citi Research economists have downgraded their 2023 GDP forecasts for the country to below 5%. But slowing activity data have also triggered new measures from Beijing, with more likely to come.
Selected Economies - Total public and private debt (% of GDP)
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/650ab2aee5a0cd05fc46a764" width="730" height="494" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, BIS 
China - Consumer and Producer Prices (YY %) 
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/650ab308b8eb7b26ed4a364d" width="738" height="487" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, BIS
Currently, economic risks in China remain skewed to the downside, the Citi Research report said. A further slowdown in China growth would negatively impact Europe via reduced exports to China and less investment in new capacity at home, it added. On the positive side, European consumers may benefit from more choice and lower prices if Chinese exporters try to replace flagging domestic demand with more exports. The composition of China&rsquo;s recovery may also be changing, with new policy support measures targeting infrastructure/property, the report noted.
&nbsp;China&rsquo;s economy is grossly undershooting expectations since the end of zero-Covid policies. At <a href="https://www.citivelocity.com/t/r/eppublic/2fa73" target="_blank" rel="noopener" data-link-source="tiny">peak optimism in April</a>, Citi Research analysts expected the Chinese economy to expand by 6.1% this year; <a href="https://www.citivelocity.com/t/r/eppublic/2neBu" target="_blank" rel="noopener" data-link-source="tiny">now</a> that forecast has dropped to 4.7%.
While Chinese authorities are reacting to the growth weakness, aggressive stimulus as in 2016, for example, seems increasingly unlikely as worries about side effects abound: BIS data show that China&rsquo;s total debt has increased to nearly 300% of GDP.
To some policy makers, that suggests belt-tightening and accepting lower trend growth may be the price of avoiding a financial crisis. The scope for rate cuts is limited by simultaneously high interest rates in advanced economies and thus the risk of de-stabilising capital outflows.
However, others argue that Chinese authorities are falling behind the curve as real rates have risen by 300bp since the middle of last year despite recent modest rate cuts as the economy has fallen into deflation. The risk of Japanification is high. Either way, China is heading for lower domestic demand growth than in the past, the authors say.
China&rsquo;s economy is the second-largest national economy, accounting for 18% of global GDP, 2pp more than the EU. Its shares in global exports (2022 14.6%) and global imports (2022 11.0%) are only slightly smaller. What is more, these shares have risen from less than 5% of global GDP and just over 5% of global exports and imports in 2003. An end of China&rsquo;s growth story will likely have repercussions that go beyond short-term trade fluctuations.
Emerging markets are likely to be hit most. Many Asian economies are interwoven with Chinese supply chains, while economies as far away as Africa and Latin America are exposed via commodity exports. In addition, China is often a large investor in infrastructure in these markets.
Among industrialised economies, the geographical proximity points to Japan and Australia as most exposed to a China slowdown.
US, Euro Area - Exports and Imports to China 
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/650ab3ad05fbaf35967ae9a4" width="761" height="492" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, NPB 
EU - Exports to China (% of GDP)
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/650ab43405fbaf35967ae9a8" width="782" height="495" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research, NPB
However, of key importance is also the diverging exposure between the US and Europe. Whereas the US and the EU imported roughly the same amount from China over the past five years, European exports were two-thirds larger than US exports to China and have also been growing faster. Within Europe, Germany is by far the most exposed, with exports to China accounting for 3% of GDP, compared to less than 1% of GDP in France or Italy (see the charts above).
Political impact 
China&rsquo;s economic slowdown could also have political implications. The &ldquo;Chinese dream&rdquo; of leaving poverty in rural areas behind to join the urban middle classes could diminish political stability internally in China. That could also raise tensions with neighbouring countries, as well as with the US and Europe.
Since the US-China trade disputes broke out in 2016-2020 &ndash; aggravated by the experience of the pandemic and Russia&rsquo;s attack on Ukraine &ndash; western economies aim to make their supply chains more reliable, including by removing politically risky locations from their supply chains. This could mean wholesale re-onshoring, but also, large firms diversifying their supplier base and smaller firms increasing warehousing along the supply chain. Weaker Chinese growth lowers the attractiveness of producing in China and may therefore accelerate the process to the benefit of production in other Asian economies or Europe.
However, while it may be feasible to make the US and European economies more independent of Chinese supply, substituting Chinese demand will be much more difficult especially for Europe. For example, China&rsquo;s car market is as big as the US&rsquo;s and Europe&rsquo;s combined, and for electrical vehicles, China&rsquo;s market is double that of the US and Europe combined, according to data from Germany&rsquo;s carmaker federation VDA. In some markets, China is at the cutting edge of technology and not selling there would amount to losing the know-how not just to succeed in China but in the whole world. The analysts say they would therefore expect Europe&rsquo;s approach of &ldquo;de-risking&rdquo; to prevail over &ldquo;de-coupling&rdquo; for the coming years.
For more information on this subject, and if you are a Velocity subscriber, please see: <a href="https://www.citivelocity.com/t/r/eppublic/2o7L1" target="_blank" rel="noopener" data-link-source="tiny">Multi-Asset - Evolving China Macro: Impact on the European Economy and Equities</a> (originally published on 1 September 2023).
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research’s Beata Manthey, Christian Schulz, and others looks at the stalling of China’s economic reopening and the possible implications for the European Union and beyond. 

China’s Faltering Reopening: Ripple Effects in the EU and Beyond 

Earth Observation is a collective term for perhaps the most important toolbox of our time.
Together, Earth observation tools allow governments, companies and investors to make informed decisions about sustainability issues from climate change and methane emissions to monitoring illegal deforestation and suspicious shipping activity.
The Citi Research report analyzes the nascent technologies behind Earth Observation, solutions provided and the three major sectors of the Earth Observation ecosystem.
Earth imaging can be done from planes, of course. But satellites are also increasingly important as they provide the means by which we can observe vast areas of the planet and monitor their development over time.
They use technology such as hyperspectral imaging to capture detailed data about the properties of materials. Scientists can then use these to assess atmospheric composition; the quality of water, soil and air; different pollution types; crop health; prevalence of diseases; geological threats and opportunities; and forest fires or areas vulnerable to them.
How Satellite Technology Can Assist Climate Action
 <img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/650c0ae0b8eb7b26ed4a3b5a" />
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&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
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<div class="gallery-footnote" style="box-sizing: border-box; text-align: left; clear: both; font-size: 13px; white-space: normal;">Source: Citi Research</div>
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The authors divide the Earth Observation ecosystem into three buckets of activity:
1) hardware original equipment makers (OEMs),
2) data generators
3) platforms/analytics.
- Hardware OEMs focus on designing and building spacecraft for government and commercial contractors.
- Data generators&rsquo; focus is operating satellite constellations that generate different types of data.
- And companies focused on platforms and analytics procure data from data generators and either process it to make it easier for customers to manage or analyze it to&nbsp; &nbsp; &nbsp;help solve problems.
From an environmental perspective, the authors note, Earth Observation facilitates high-level decision-making, letting governments make informed choices in tackling environmental issues. It also gives companies the ability to analyze supply chains and environmental impact more rigorously and offers investors the chance to hold those companies to their commitments.
Finally, Earth Observation technologies make data accessible to a broad demographic beyond policymakers, raising public awareness of corporate actions&rsquo; environmental impact. That could bring about an era of far greater transparency and corporate responsibility.
Addressing two climate problems
Two fronts in the climate change fight could particularly benefit from Earth Observation&rsquo;s tools: methane emissions and deforestation.
The authors note that methane emissions can now be detected from space, which is important since scientists calculate that methane is 80 times more potent than carbon dioxide as a greenhouse gas.
Methane leaks from gas pipelines, oil wells, fossil-fuel processing plans and landfills; reducing methane emissions is seen as one of the fastest ways to address rising greenhouse gas emissions and slow climate change.
Companies that source or place key commodities such as palm oil, beef, soy, cocoa, rubber and timber on the EU market are now under increased scrutiny to show that these products aren&rsquo;t linked to illegal deforestation and don&rsquo;t contribute to forest degradation, with operators given 18 months to accelerate supply-chain monitoring to meet new requirements.
Geospatial ESG&rsquo;s arrival
Geospatial AI, the report says, has the potential to deliver greater supply-chain transparency and accountability, from the footprint of commodity supply chains to fugitive methane emissions.
The authors note research that suggests ESG insights can be scaled globally to help investors and financial institutions better understand environmental impacts at different scales and across different applications.
For example, Earth Observation has been used for many years by the insurance industry to model catastrophe risk and determine the extent of damage from an extreme weather event. The insurance sector is arguably at the cutting edge of modeling how such events are likely to change in different climate scenarios.
A growing interest in determining environmental risk and financial materiality has coincided with improvements in satellite technology and machine learning, spurring the emergence of data providers with in-house expertise that can be applied to challenges such as methane emissions and commodity-linked deforestation.
For more information on this subject, if you are a Velocity subscriber, please see the full report here <a href="https://www.citivelocity.com/t/r/eppublic/2ngv6" target="_blank" rel="noopener" data-link-source="tiny">Global ESG &amp; SRI: The Earth Observation Ecosystem: A Critical Climate Enabler</a>.
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
&nbsp;
</div>

Earth observation-analysing and presenting information about our planet’s physical, chemical and biological systems via remote sensing-offers potentially vital guidance for decision making about sustainability issues. A recent report from Citi Research’s Anita McBain and team delves deeper.  

Earth Observation: The Toolbox of Our Time 

Transcript

In this insightful episode, we delve into the realm of neurodiversity featuring Darren Jarvis, Chief Administrative Officer, Markets, Banking and Services, Citi and James Cusack, CEO of Autistica. Both guests take us through their personal journeys, shedding light on the hurdles they've encountered and the victories they've achieved. They underscore the significance of open dialogues, empathy, and establishing nurturing environments that unlock the potential of individuals with diverse neurological profiles.
&nbsp;
We explore alternative perspectives on cognitive diversity and discuss how embracing different ways of thinking fuels creativity and innovation within organizations.&nbsp; Both guests share valuable insights into the work they&rsquo;re doing to increase awareness, understanding, and support for neurodivergent individuals in the workplace and beyond.
&nbsp;
During our conversation, we delve into the importance of terminology, the transformative power of acceptance, and the positive effects of embracing neurodiversity. Darren and James also provide practical strategies for organizations to promote inclusion, implement reasonable adjustments, and leverage the unique strengths of neurodiverse individuals.
&nbsp;
Join us as we navigate the realm of neurodiversity, exploring its role in catalyzing change, nurturing innovation, and shaping a more inclusive society. Whether you're an individual seeking self-understanding or an organization aiming to harness cognitive diversity, this episode offers valuable insights and actionable steps toward a more inclusive future.
&nbsp;
LEGAL:&nbsp;
Citibank N.A. (&ldquo;Citi&rdquo;), and Autistica. are not affiliated and are independent companies, though Autistica has a relationship with Citi through Citi&rsquo;s internal awareness program. &nbsp;The speakers&rsquo; views are their own and may not necessarily reflect the views of Citi or any of its affiliates.
&nbsp;
All opinions are subject to change&nbsp;without notice. Neither the information&nbsp;provided,&nbsp;nor any opinion expressed constitutes&nbsp;a solicitation for the purchase or sale of any security. The expressions of opinion&nbsp;are not&nbsp;intended to be a forecast of future events or a guarantee of future results.

James Cusack, CEO, Autistica James Cusack became chief executive of Autistica, the UK's leading autism research charity, in 2020 having joined as director of science in 2015. He is the first openly autistic chief executive of a major UK charity. &nbsp; James is passionate about creating breakthroughs that enable autistic people to thrive. He believes strongly in building breakthroughs through listening to autistic people and their families, thinking carefully about change and how it happens, and undertaking work which is truly innovative and high quality.&nbsp; As director of science, James established early death in autism as a national priority, developed the UK&rsquo;s first network for autism research, led a sector-wide exercise on the community&rsquo;s priorities for autism research, and developed a health checks programme that, if effective, will be offered to every adult in the UK.&nbsp; Since becoming chief executive, James has established Autistica's visionary and ambitious 2030 Goals, which have raised the charity's long-term aspirations for fundraising, as well as building a deep respect for research among critical policy- and decision-makers across government, the civil service and the NHS. &nbsp; As well as having experience in clinical, educational, and social care settings, before joining Autistica, James had a successful career in autism research at the University of Aberdeen. &nbsp; Proudly Aberdonian, James now lives in Leighton Buzzard with his wife, 2 daughters, and dog, Molly. He enjoys running, football, and making and eating pizza (with varying success).

James Cusack became chief executive of Autistica, the UK's leading autism research charity, in 2020 having joined as director of science in 2015. He is the first openly autistic chief executive of a major UK charity. &nbsp; James is passionate about creating breakthroughs that enable autistic people to thrive. He believes strongly in building breakthroughs through listening to autistic people and their families, thinking carefully about change and how it happens, and undertaking work which is truly innovative and high quality.&nbsp; As director of science, James established early death in autism as a national priority, developed the UK&rsquo;s first network for autism research, led a sector-wide exercise on the community&rsquo;s priorities for autism research, and developed a health checks programme that, if effective, will be offered to every adult in the UK.&nbsp; Since becoming chief executive, James has established Autistica's visionary and ambitious 2030 Goals, which have raised the charity's long-term aspirations for fundraising, as well as building a deep respect for research among critical policy- and decision-makers across government, the civil service and the NHS. &nbsp; As well as having experience in clinical, educational, and social care settings, before joining Autistica, James had a successful career in autism research at the University of Aberdeen. &nbsp; Proudly Aberdonian, James now lives in Leighton Buzzard with his wife, 2 daughters, and dog, Molly. He enjoys running, football, and making and eating pizza (with varying success).

James Cusack, CEO, Autistica 

Darren Jarvis, Chief Administrative Officer, Markets, Banking and Services, Citi Darren Jarvis is the Chief Administrative Officer for Markets, Banking and Services at Citi. Previously he was the Chief Administrative Officer for Institutional Clients Group (ICG), Citi based in London. Reporting to Paco Ybarra, CEO of Citi&rsquo;s Institutional Client Group. Darren&rsquo;s role is to work with product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework. Darren leads a number of cross product control projects and represents the Citi control initiatives. Prior to this Darren was &nbsp;the Head of ICG Operational Risk and Control at Citi, in this role Darren worked with ICG product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework across ICG. In addition, Darren leads a number of cross-ICG control projects and represents the ICG on cross-Citi control initiatives. Previously, Darren was the Global Head of Business Controls and Supervision for the Markets Business at Citigroup. In this role, Darren had responsibility for the co-ordination of the First line of Defence controls across all business operations and locations within the Markets business. Prior to taking up this role Darren was the Chief Auditor for the Institutional Client Group within the Internal Audit Department at Citi. Before joining Citi Darren had over 20 years of experience as a senior internal auditor in the capital markets sector, working at Goldman Sachs, JP Morgan and Morgan Stanley.

Darren Jarvis is the Chief Administrative Officer for Markets, Banking and Services at Citi. Previously he was the Chief Administrative Officer for Institutional Clients Group (ICG), Citi based in London. Reporting to Paco Ybarra, CEO of Citi&rsquo;s Institutional Client Group. Darren&rsquo;s role is to work with product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework. Darren leads a number of cross product control projects and represents the Citi control initiatives. Prior to this Darren was &nbsp;the Head of ICG Operational Risk and Control at Citi, in this role Darren worked with ICG product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework across ICG. In addition, Darren leads a number of cross-ICG control projects and represents the ICG on cross-Citi control initiatives. Previously, Darren was the Global Head of Business Controls and Supervision for the Markets Business at Citigroup. In this role, Darren had responsibility for the co-ordination of the First line of Defence controls across all business operations and locations within the Markets business. Prior to taking up this role Darren was the Chief Auditor for the Institutional Client Group within the Internal Audit Department at Citi. Before joining Citi Darren had over 20 years of experience as a senior internal auditor in the capital markets sector, working at Goldman Sachs, JP Morgan and Morgan Stanley.

Darren Jarvis, Chief Administrative Officer, Markets, Banking and Services, Citi

James Cusack, CEO, Autistica James Cusack became chief executive of Autistica, the UK's leading autism research charity, in 2020 having joined as director of science in 2015. He is the first openly autistic chief executive of a major UK charity. &nbsp; James is passionate about creating breakthroughs that enable autistic people to thrive. He believes strongly in building breakthroughs through listening to autistic people and their families, thinking carefully about change and how it happens, and undertaking work which is truly innovative and high quality.&nbsp; As director of science, James established early death in autism as a national priority, developed the UK&rsquo;s first network for autism research, led a sector-wide exercise on the community&rsquo;s priorities for autism research, and developed a health checks programme that, if effective, will be offered to every adult in the UK.&nbsp; Since becoming chief executive, James has established Autistica's visionary and ambitious 2030 Goals, which have raised the charity's long-term aspirations for fundraising, as well as building a deep respect for research among critical policy- and decision-makers across government, the civil service and the NHS. &nbsp; As well as having experience in clinical, educational, and social care settings, before joining Autistica, James had a successful career in autism research at the University of Aberdeen. &nbsp; Proudly Aberdonian, James now lives in Leighton Buzzard with his wife, 2 daughters, and dog, Molly. He enjoys running, football, and making and eating pizza (with varying success). Darren Jarvis, Chief Administrative Officer, Markets, Banking and Services, Citi Darren Jarvis is the Chief Administrative Officer for Markets, Banking and Services at Citi. Previously he was the Chief Administrative Officer for Institutional Clients Group (ICG), Citi based in London. Reporting to Paco Ybarra, CEO of Citi&rsquo;s Institutional Client Group. Darren&rsquo;s role is to work with product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework. Darren leads a number of cross product control projects and represents the Citi control initiatives. Prior to this Darren was &nbsp;the Head of ICG Operational Risk and Control at Citi, in this role Darren worked with ICG product heads, their respective control leads and the firm&rsquo;s second line and Internal Audit partners, to further strengthen Citi&rsquo;s focus on the control framework across ICG. In addition, Darren leads a number of cross-ICG control projects and represents the ICG on cross-Citi control initiatives. Previously, Darren was the Global Head of Business Controls and Supervision for the Markets Business at Citigroup. In this role, Darren had responsibility for the co-ordination of the First line of Defence controls across all business operations and locations within the Markets business. Prior to taking up this role Darren was the Chief Auditor for the Institutional Client Group within the Internal Audit Department at Citi. Before joining Citi Darren had over 20 years of experience as a senior internal auditor in the capital markets sector, working at Goldman Sachs, JP Morgan and Morgan Stanley.

Season 3

In this insightful episode, we delve into the realm of neurodiversity featuring Darren Jarvis, Chief Administrative Officer, Markets, Banking and Services, Citi and James Cusack, CEO of Autistica. Both guests take us through their personal journeys, shedding light on the hurdles they've encountered and the victories they've achieved. They underscore the significance of open dialogues, empathy, and establishing nurturing environments that unlock the potential of individuals with diverse neurological profiles.

Good Things Happen E6: Unlocking the Potential of Neurodivergent Talent

<h1><a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-in-healthcare-health-administration-" target="_blank" rel="noopener" data-link-source="tiny">Insights: AI in Healthcare: Health Administration</a></h1>
A recent report from Adam Spielman of Citi Global Insights looks at the possibilities for AI to impact health administration, potentially cutting costs and helping ease the huge burden on clinicians.
<h1><a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-in-healthcare-the-importance-of-biopharma-" target="_blank" rel="noopener" data-link-source="tiny">Insights: AI in Healthcare: The Importance of Biopharma</a></h1>
A recent report from Adam Spielman of Citi Global Insights looks at biopharma and why AI is especially important in this area. He says biopharma will be affected by AI more than any other aspect.
<h1><a href="https://icg.citi.com/icghome/what-we-think/global-insights/insights/ai-in-healthcare-the-role-of-clinicians-" target="_blank" rel="noopener" data-link-source="tiny">Insights: AI in Healthcare: The Role of Clinicians</a></h1>
A recent report from Adam Spielman of Citi Global Insights focuses on how the role of doctors will change with AI. Generative AI tools are set to increasingly automate many aspects of healthcare.

Citi’s Adam Spielman is the author of a series of reports on the impact of AI on the healthcare sector.  Here he discusses several aspects of his research including AI’s impact on clinicians, its potential to drastically lessen their administrative burden, and why biopharma could be the area that AI impacts most of all. 

AI in Healthcare: Are AI Doctors on Call? 

Interview with CEO of Quantinuum &ndash; Rajeeb Hazra, discussion includes:
<ul type="square">
<li>Why are energy &amp; climate sectors expected to benefit from the quantum computing revolution?</li>
<li>What are some of the biggest challenges in the energy sector that quantum computing could help overcome?</li>
<li>Which parts of our climate systems could quantum computing help us better understand?</li>
<li>How could quantum computers improve battery technology?</li>
<li>How could quantum computers improve carbon capture processes?</li>
</ul>

Energy & Climate: How Quantum Computers Could Help Overcome Some of our Biggest Challenges?

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Overall purchase intentions for major devices are tracking downward relative to prior purchases. This suggests consumer sentiment remains pressured amid continued recession and inflation woes. China remains the weakest market of all the regions, seeing steep declines in smartphones. However, there are some green shoots, as within the US, there is an uptick of purchase intent (2023 vs. 2022) across most categories.
Purchase Intentions vs Prior Purchases
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/65129d0ce292b13403ff6628" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research 
 Smartphone Demand Indicators Remain Weak. This can be attributed to China, which was partially offset by higher purchase intentions in the US compared with last year. However, on average, participants are willing to pay more for smartphones, up +6% year over year, implying the mix shift to premium devices continues.
Televisions. Amidst lackluster purchase intentions, bigger is better when it comes to TV sizes it seems, especially in China and US, consistent with recent OMDIA data in which monthly LCD TV display shipment weighted average size surpassed 50&rdquo; in May 2023 (up 5% year over year).
Personal Computers, Tablets, and Peripherals. Dollar spending intentions have increased in both PCs and tablets, across all regions. Purchase intentions for peripherals continue to be mixed, with keyboards, monitors, and webcams making gains versus prior purchases and mice/headphones declining.
Gaming. Game console purchase interest has slightly declined in 2023 compared with prior surveyed years (27%➔29%➔26%). Overall, software purchase intent is around 60% within the next six months. Purchase intentions for AR/VR saw greatest increases across all regions.
Overall purchase intentions for AR/VR headsets and robotic vacuums saw an increase and digital/action cameras held steady. Purchase intentions for AR/VR saw greatest increases across all regions, while robotic vacuums and mops interest grew in the UK, US, Japan, and held steady in China.
The UK&rsquo;s future purchase intentions compared with the prior saw declines across most categories; however, AR/VR, robotic vacuums, and cameras remained steady. Actual purchases compared with future intent was down in all categories, except for AR/VR, vacuums, and digital cameras.
Japan was added to the survey this year, and results for purchase versus intent followed suit with the rest of the regions surveyed, with indications that intent was down; however, laptops/desktops increased in intent, as well as vacuums/mops.&nbsp;&nbsp;&nbsp;&nbsp;
Priority 
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&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research 
Smartphones tops the list for priority purchases and purchase intentions (see above) in the near term, driven by a need to upgrade to newer devices or move to 5G. Globally, respondents expect to replace their current smartphones slightly sooner -- 2.3 versus 2.5 years.
Respondents globally are planning to spend more in future smartphone purchases compared what was spent on prior devices, implying continued premium mix shift opportunity, particularly in China and the US. Average spend is expected to increase +6% relative to last year, with China leading with +16%, then US at +10%, offset by -3% seen in the UK.
Foldable Phone Interest
<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/65129ec5e292b13403ff6634" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research 
Foldable Phones. Of note was that interest in foldable phones ticked up. Users in all regions (ex-Japan not surveyed last year) are more likely to buy foldable phones. China and US are willing to pay more, an increase of spend compared with last year. It is apparent that foldable phone interest and price preference ticked higher and more device makers entered the market. &nbsp;
Remote Working
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&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: Citi Research 
In addition, the note also looks at attitudes towards working from home with about 50% of the employed respondents indicated they were working from home at least two days per week, suggesting little change in the results since the survey last year. Unsurprisingly, survey participants indicated more than 60% were likely to upgrade their electronics over the next 12 months, which was the same as last year&rsquo;s survey.&nbsp;
The full Citi Research note goes into greater detail and also looks at attitudes towards tablets, TVs, and also greater detail on wearable devices including particular products in the AR and VR market that are proving most popular with consumers.
For more information on this subject, please see the full report, originally published on 11 September 2023, here: <a href="https://www.citivelocity.com/t/r/eppublic/2ort0" target="_blank" rel="noopener" data-link-source="tiny">Global Consumer Electronics and Hardware &amp; Storage - Lackluster Consumer Tech Spending Intentions Persist</a>
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
&nbsp;
&nbsp;

A recent report from Citi Research’s Asiya Merchant, in collaboration with Citi’s global technology team, surveyed consumer spending habits around consumer electronics. How has the pandemic changed purchasing behaviour for consumer electronics? The authors explored that question and more, utilizing Citi’s Research Innovation Lab to survey more than 4,000 consumers, across four key regions, to learn about their buying behavior and future plans. 

How to Spend on IT? 

Key topics discussed:
<ul type="disc">
<li>How can quantum computing improve conventional machine learning models?</li>
<li>What are the biggest challenges in AI that quantum computers could help overcome?</li>
<li>What industries could Quantum Machine Learning be applied to?</li>
<li>What does this mean for Generative AI?</li>
<li>What new use cases could Quantum Generative AI lead to?</li>
</ul>

Following on from the Quantum Computing GPS report, Tahmid Quddus Islam, Citi Global Insights  in conversation with  Jack Hidary, CEO, SandBoxAQ.

Generative AI: What Happens When it Gets a Quantum Boost?

 Professor Deeph Chana, Managing Director, NATO DIANA talks about the rationale behind the €1 billion NATO Innovation Fund, the world’s first multi-sovereign venture capital fund, and the type of emerging technologies that it will support. He also talks about the Defence Innovation Accelerator that he leads and how entrepreneurs and start-ups can get involved. 

Investing in Emerging and Disruptive Technologies ft. NATO's Defence Innovation Accelerator

Moderating wage and price inflation, an unemployment rate that remains surprisingly low and an economic trajectory that feels broadly in line with a soft landing. Can the current state of play in the U.S. continue?
A recent Citi Research report look at five episodes of wage disinflation since 1965 in search of clues.
Global Chief Economist Nathan Sheets and team continue to think that a period of rising unemployment, with a corresponding economic downturn, will be needed to loosen up a tight U.S. labor market and associated wage and services inflation. But they admit that the economy&rsquo;s resilience and increasing signs of disinflation make that a tough call.
To help make that call, the team looks at the recent evolution of U.S. wage data, considering how much further wage growth will need to fall to bring inflation into line with the Fed&rsquo;s expectations. And what would such an adjustment likely mean for the unemployment rate? In tackling these questions, Sheets and his team look at five episodes of significant U.S. wage disinflation since 1965.
Their findings: All five episodes were associated with periods of recession. To get meaningful traction bringing down wages, a broader slowing of the economy has been needed, with a marked rise in the unemployment rate. To be more specific, in these episodes two percentage points of wage deceleration looks to be associated with a two to three percentage-point rise in unemployment.
Those findings lead the authors to conclude that despite encouraging signs in recent data, &ldquo;there are few antecedents in the U.S. experience for anything approximating a soft landing.&rdquo; If there is to be a soft landing, the case has to be made for why this time will be different.
Looking at wage data
As a first step, Sheets and team ask: What pace of wage growth is likely to make Fed Chair Powell and his colleagues comfortable? The Fed is looking for wages to rise at a pace consistent with its inflation target, which suggests to the authors underlying wage growth of roughly 3% to 3.5%&mdash;the sum of the 2% inflation target plus their estimate of trend labor productivity growth, which looks to be around 1% to 1.5%. The intuition, they write, is that rising productivity increases firms&rsquo; margins and allows them to pay higher wages without additional price hikes, essentially financing higher wages with higher productivity.
To evaluate wage performance, the authors looked at two principal measures of wage growth: average hourly earnings (AHE) and the employment cost index (ECI). The two generally move together, and both indicate wages are now up roughly 4% to 4.5% from a year ago. Moreover, both of those series indicate wage growth has moderated: The 12-month change in AHE peaked at 5.9% in March 2022, while ECI peaked at 5.1% in 2022&rsquo;s second quarter.
Labor Productivity Growth 
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&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
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*Note: Shading represents recessions.
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Source: Citi Research, BLS, NBER, Haver Analytics
&nbsp;
Wage Growth 
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&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
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Source: Citi Research, BLS, Haver Analytics
By the authors&rsquo; reckoning, wage growth is still running 1 to 1.5 percentage points above the Fed&rsquo;s desired range. From the Fed&rsquo;s perspective, a key risk is that this still-rapid wage growth gets embedded in workers&rsquo; expectations for future wage gains and ultimately in prices. Once that occurs, it becomes difficult for central banks to regain control of inflation.
This raises a central question for U.S. economic performance: How much does the unemployment rate need to rise to slow wage growth from its recent 4% to 4.5% readings to the &ldquo;safety zone&rdquo; of 3% to 3.5% likely consistent with the Fed&rsquo;s 2% inflation target?
Five episodes of wage disinflation
With that central question on the table, Sheets and his team look to answer two queries:
1. In previous episodes of rapid wage inflation, how much has the unemployment rate risen as conditions adjust?
2. Have those episodes typically been associated with recessionary conditions?
The authors address those questions by studying five significant episodes of wage disinflation, where a drop in wage growth of more than 1.5 percentage points was seen for at least two years. They are the first oil shock (1972-1975), the Volcker disinflation (1981-1987), the early 1990s, the dot-com crash (2000-2002), and the Global Financial Crisis (2007-2009).
&nbsp;
ECI Wage Disinflation Cycles 
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<img src="https://icg.citi.com/rcs/v1/media/icgPublic/akpublic/storage/retrieveMediaFile/65159755e99f3c20aed42bb5" />
&copy; 2023 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission. 
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*Shading denotes periods when wage growth fell at least 1.5 pct pts over two years or longer. **ECI is backcast from 1975:Q3 using its relationship with AHE of production &amp; non-supervisory employees.
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Source: Citi Research, BLS, Haver Analytics
The authors note that wage growth in the current cycle peaked at 5.7% in 2022&rsquo;s second quarter and had fallen to 4.6% a year later. That means the peak-to-trough wage-growth adjustment needed to return to the Fed&rsquo;s safety zone looks to be around 2.5 percentage points, with some 1.5 percentage points still remaining. The authors also note that in four of the five historical episodes they looked at, the wage disinflation that occurred was between 1.5 and 2.5 percentage points, broadly similar to the peak-to-trough adjustment needed in this cycle. (The Volcker disinflation was the outlier.)
In the last four episodes, wage growth fell to roughly 2%, near the Fed&rsquo;s inflation objective. That&rsquo;s below the authors&rsquo; estimate of the sustainable &ldquo;run rate&rdquo; for wages, which suggests that just as wages tend to cyclically overshoot when labor markets are tightening, they tend to undershoot during subsequent periods of wage disinflation. Which leads the authors to what they call a stark implication: If wage growth undershoots its sustainable run rate and falls to 2%, as happened in the four previous episodes, perhaps we need to consider the possibility of a larger wage disinflation than the 1 to 1.5 percentage-point estimate.
Finally, the authors note that all five wage-disinflation episodes were associated with recessions, leaving no example of significant wage disinflation of the magnitude currently required without a recession. That suggests that to get meaningful traction bringing down wages, a broader economic slowdown is necessary.
Unemployment implications
As wage growth slowed during the five episodes studied, how much did the unemployment rate rise? Broadly speaking, these periods saw rises in the unemployment rate ranging from 2.25 percentage points in the early 1990s and the dot-com crash to nearly 5.5 percentage points through the Global Financial Crisis.
Wage growth, the authors note, is typically still rising at a solid pace as it approaches its peak. It then tends to fall off sharply, by roughly 2 percentage points, over the following six quarters or so, with all five cycles seeing an appreciable rise in the unemployment rate following the wage-growth peak.
The team&rsquo;s work leads to an interesting insight into a &ldquo;typical&rdquo; U.S. business cycle: Wage growth flattens out as it moves toward its peak, then falls off sharply&mdash;by 2.1 percentage points&mdash;over the following quarters. The unemployment rate, meanwhile, moves sideways and then inflects upward, rising 2.7 percentage points on average. The relationship between the two looks to be roughly one for one.
The authors&rsquo; conclusion is that the behavior of wage growth through the current cycle has broadly resembled previous ones. But the unemployment rate has diverged, remaining low with the labor market staying tight. A similar lag was seen in the 1972 cycle, a comparison that gives the authors pause as it was the Fed&rsquo;s least durable disinflation effort.
Intrigued and beguiled
Reviewing the evidence from their investigation, Sheets and team note the association shown between wage disinflation cycles, increases in the unemployment rate and periods of recession. But they admit to being intrigued (and perhaps beguiled) by the pattern of recent U.S. data, with the unemployment rate staying low amid declines in wage growth and inflation.
Can this favorable performance persist? The authors call a soft-landing scenario &ldquo;certainly possible,&rdquo; but caution that their work clearly indicates it would be unique relative to the experience of the past six decades. So is there a case to be made that &ldquo;this time is different?&rdquo;
The authors note one striking feature of the current cycle: Inflation expectations have remained well anchored, which likely reflects a combination of credibility accumulated by the Fed and the effect of a decade of soft inflation before the pandemic.
Those expectations give the Fed more room to maneuver, the authors argue: It can remain patient and see how the economy performs, allowing inflation to fall gradually instead of hiking &ldquo;until something breaks.&rdquo;
More broadly, the authors note, many features of the pandemic downturn and subsequent recovery have been surprising and unique. Perhaps the endgame of this cycle will bring another surprise. For more information on this subject, please see <a href="https://www.citivelocity.com/t/r/eppublic/2p2ZV" target="_blank" rel="noopener" data-link-source="tiny">Recession vs. Soft Landing: Is This Time Different?</a> (12 Sept)
&nbsp;
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
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What lessons does the past hold that might inform views for the next 12 months and whether we’re heading for a US recession, or an economic soft landing? 

Recession vs. Soft Landing 

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