Thematic Report

Digital drones, drugs and dollars

by Shaun Cochran / May 5, 2019


Theorality expects a digitally driven productivity revolution over the next two to three decades. Structural inflation looks unlikely in the absence of extreme policy options. April brought a plethora of developments to support that view, be it in drone delivery, digital service scalability, drug development or the provision of money itself. Of course progress will be painstaking, allowing shorter-term market participants to overpay for exposure and likely be disappointed. The patient can simply park money in high-quality long-duration debt for yield and wait to get exposure to the digital productivity gains we expect once the related technologies have matured down the line.

Commercial drone deliveries begin the slow motion revolution
Australian and US regulators granted approvals for Alphabet’s Wing to begin regional autonomous drone deliveries for local businesses. This pivotal move sets a precedent and will encourage other drone fleet operators to begin the application process, which was previously regarded as too onerous. While consumer acceptance will begin to burgeon once convenience and logistical benefit begin to be realised on wider roll outs.

Enterprise AI adoption continues to differentiate
Theorality’s base case is that 2019 will usher in a wave of enterprise AI adoption, with industry specific solutions benefiting from the maturation of vision and voice models. Ubisoft announced that its virtual chatbot has fielded over 10m customer questions, now reaching a rate of 25,000 per day.
Amenity Analytics’ text-mining platform to examine earnings documents reportedly helped Barclays Capital return 12.97% over a benchmark index.

Machine learning heralds new possibilities for protein modelling
AI continues to facilitate incremental improvement in our understanding of genomics. Harvard developed software to predict the 3D structures of proteins ‘upwards of a million times faster’ than other solutions without sacrificing accuracy. Researchers from Los Alamos Laboratory created the first billion-atom biomolecular simulation of an entire gene of DNA. With more compute power, researchers expect to do the same for the entire human genome; this would be a profound step change.

State-level blockchain exploration makes tentative progress
April’s news was consistent with our long-held view that sovereign-level central bank-sponsored cryptocurrency rollouts are inevitable. A report out of the World Economic Forum revealed that 44 central banks around the world are actively experimenting with the issuance of sovereign crypto-currencies. In China, the forex regulator has created a blockchain platform for financial institutions to manage the end-to-end process of granting particular loans, signing up major banks.

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