The Federal Reserve is back in the spotlight this week.
In meetings that are taking place today and tomorrow, there is an expectation that the Fed will reduce the federal funds rate by at least another 25 basis points. This would be prudent considering the protracted trade negotiations between the U.S. and China.
The need to cut interest rates is even more exacerbated by the moves last week by the European Central Bank. It cut its key interest rate again to negative 0.5% – that’s right, negative interest rates – and delivered the largest amount of monetary stimulus in almost four years.
The U.S. dollar strength is nearing 15-year highs right now, which will likely force the Federal Reserve to act.
The moves taken by central banks around the world to address economic slowdowns stand in stark contrast to the data out of the U.S. industrial production, which measures factory, mining, and utility output. It rose in the month of August. Economists had predicted remarkably slower growth.
U.S. dollar strength is very important to the world of high tech, as the technology products and services sold by the companies that I cover in my research are exported around the world. If the U.S. dollar is seen as too strong for foreign companies to buy U.S. products, that would hurt future sales.
The Federal Reserve has little choice but to act now and reduce interest rates. I think 50 basis points would be appropriate, but 25 will be the most likely outcome. Either way, this will be good for U.S.-based stock markets as well as technology companies as we wait for progress on U.S.-China trade negotiations.
I’ll keep an eye on this story. For now, let’s turn to our insights…
We just discovered a super-Earth…
Groundbreaking news… Using the Hubble Space Telescope, scientists discovered an “Earth-like” planet with water vapor in the atmosphere. This suggests that water may be pervasive on the planet.
The planet is called K2-18b. Its mass is eight times larger than Earth’s. And it is 111 light-years away.
What’s more, the planet exists in the habitable zone of its solar system. That means it is just the right distance away from its star for temperatures to allow water to exist in a liquid state – which means it could potentially be conducive for life.
To date, this is the only planet we have found with water vapor in the atmosphere that exists in a habitable zone. We don’t know what kind of life exists on it – if any. The planet is just too far away for the Hubble telescope to determine.
But we will be able to discover more about K2-18b soon…
The James Webb Space Telescope will launch in 2021. Its technology will be much more advanced than the Hubble’s.
For one, the James Webb will be good at “seeing” in infrared light. Also, it will be located a million miles away from Earth. It will be launched into orbit around the Sun, not the Earth like the Hubble Telescope. That will allow it to use the Earth to block the sun’s light… and will magnify its ability to see into deep space.
K2-18b will certainly be one of the James Webb Telescope’s first targets. Observing this “super-Earth” may finally answer the question that’s weighed on humanity’s mind for millennia… Is there other life out there? My bet is a big yes.
Now all we need is one of those wormholes that we discussed before so that we can travel there more quickly than 111 years at light speed…
Coinbase is expanding into next-generation ICOs…
Word is out that cryptocurrency exchange company Coinbase will launch an initial exchange offering (IEO) platform within a years’ time.
An IEO is the next generation of the initial coin offering (ICO). ICOs flourished in 2017 and early 2018, raising tens of billions of dollars for blockchain projects. But they have since come to a dead stop in the U.S. because the regulators clamped down.
IEOs are seen to be more buttoned-up from a regulatory standpoint. They look and feel more like a securities offering. Rather than a company conducting an ICO by itself, it can use a regulated digital exchange to conduct an IEO.
If done in a certain way, IEOs will look much more like traditional initial public offerings (IPOs). But instead of shares in a brokerage account, investors would purchase digital assets (tokens).
So this move by Coinbase is significant.
For one, Coinbase has more regulatory credibility than any other player in the blockchain industry. It has always been proactive about meeting Financial Industry Regulatory Authority and Securities and Exchange Commission regulations.
Plus, Coinbase is one of the most successful digital asset platforms in the world. It got its start by serving as a bridge between fiat currency and cryptocurrency. In other words, it’s been one of the best platforms for moving back and forth between fiat and crypto.
The fact that Coinbase is going in this direction shows us that it is confident the market for security tokens will be strong. Coinbase is placing a big bet on the long-term viability of digital assets and the blockchain industry.
This will make Coinbase an even stronger player in the digital assets space. It will likely be a powerhouse in security tokens… for which a lot of infrastructure has been laid this year.
I expect to see an emerging market for security tokens in 2020. This will become an entirely new asset class for investors.
We’ll talk a lot more about security tokens in the coming months…
(I’m not the only one tracking the development of the digital asset space. My colleague Teeka Tiwari has been paying close attention to this market for years and providing valuable research on cryptocurrencies. Teeka is hosting a cryptocurrency event this Wednesday at 8 p.m. ET. If you’d like to learn about what he’s seeing in the crypto market, you’ll have to tune in. Reserve your spot here.)
Google’s AI is now a best-in-class dermatologist…
Google just developed a new artificial intelligence (AI) that can diagnose skin problems just as well as a board-certified dermatologist.
According to a research paper that just came out, the AI processed more than 50,000 differential diagnoses from more than 40 dermatologists over seven years. This is how the AI learned to become just as good as a board-certified dermatologist.
And surprising to me, 25% of all treatments around the world are related to skin conditions. It is one of the most common reasons why people go to the doctor. That’s why Google targeted dermatology as a focus for its AI.
Of course, our first reaction might be, “Doctors are screwed.” But that’s not true. Google’s AI will support existing doctors. Especially those that are early in their careers. Basically, it will supplement a human diagnosis with a much larger data set.
This is a great example of how humans will work alongside AI. The two will coexist. In other words, the use of artificial intelligence will not take all our jobs.
And here’s what’s most exciting about this…
There is a gross shortage of qualified physicians around the world… especially in developing countries. That’s especially true of specialists.
AI will shine in those places where specialists are few and far between. With just the support of a physician’s assistant or nurse, medically “trained” AI can help fill the shortage of medical doctors and ensure high-quality health care at low costs.
Dermatology is just one example. AI is already proven to be effective in radiology as well. With a large enough data set of differential diagnoses and supplemental data, it is clear that AI can be used to augment health care for just about any human condition.
This will lead to much faster and more accurate diagnoses. No more trial and error. And that, in turn, will help revolutionize the medical field and even end all human disease… in our lifetimes.
Editor, The Bleeding Edge