Goldman Sachs chief economist Jan Hatzius sees artificial intelligence creating substantial dislocations in developed world economies. He estimates, for example, that almost half of the current functions of the legal and office support functions can be automated using generative AI applications similar to ChatGPT.
Mr. Hatzius published The Potentially Large Effects of Artificial Intelligence on Economic Growth earlier this week. He described the importance of AI lay in its “ability to generate novel, human-like output” and “break down communication barriers between humans and machines.”
All told, Goldman Sachs sees 25 per cent of all labour in Europe and North America as subject to automation and two-thirds of all jobs at least partially affected.
Some occupations are more at risk than others. Mr. Hatzius’s analysis points to 46 per cent of office and administrative support work being automated, 44 per cent of legal tasks and 37 per cent of architectural and engineering work. Construction and maintenance work is less replaceable.
The potential for massive labour disruption is clear as AI use becomes more pervasive and this must be managed by public policy. Mr. Hatzius sees substantial economic growth benefits from AI – as much as an additional 7 per cent added per year to global GDP – but the costs will be too high if unemployment rates approach 20 per cent.
For investors, the rise of AI makes Microsoft Corp. attractive. The company is integrating AI with its Bing search engine and also throughout the Azure cloud computing platform.
— Scott Barlow, Globe and Mail market strategist
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Stocks to ponder
Vecima Networks Inc. (VCM-T) Victoria-based Vecima is a provider of solutions that enables cable and telecommunications providers to improve their broadband internet capabilities by delivering faster, high quality and reliable internet services to their customers. The small-cap stock has delivered large returns to its shareholders, with its share price nearly tripling in value over the past three years. Year-to-date, the share price is up 16 per cent and is nearing a record high. Based on analysts’ target prices, the share price is anticipated to rally between 24 per cent and 47 per cent over the next year. Vecima also pays a dividend. Jennifer Dowty takes a closer look at the investment case.
Gold Resource Corp. (GORO-A) While gold can be lovely, investing in this shiny metal company has been anything but a pretty picture. The company recently eliminated its dividend and spun off a key part of its business. But The Contra Guys are finding a key reason to stick with the stock.
The Rundown
Money markets are signaling rate cuts are nearing. Central bankers are not. Here’s the one to wager on
Officials in the U.S. Treasury Department and Canada’s Ministry of Finance are assuring us that all is well with the economy. Central bankers, for their part, are dropping few hints they may be poised to cut interest rates any time soon. But the people who actually trade bonds – the folks with their skin and their clients’ money in the game – have adopted a bleaker outlook. Bond market participants now are wagering that the U.S. Fed (as well as the Bank of Canada) will cut rates in the not-too-distant future in order to stave off an ever-worsening financial crisis precipitating a serious economic slump. Who will be proven correct? Veteran bond fund manager Tom Czitron has some thoughts.
Buoyant bitcoin’s losing its liquidity
Bullish bitcoin has been a surprise winner of the banking blowout. Yet investors aiming to amp up their bets face an ominous obstacle: a lack of liquidity that could trigger wild price swings.
Anomalies abound in today’s economy. Can artificial intelligence know what’s going on?
All the fuss today is about machine learning and ChatGPT. The algorithms associated with them work well if the future is similar to the past. But what if we are at an inflection point in economic and political conditions and the future is different from the past? Will record profit margins, inflated asset prices and low inflation and interest rates of the past 30 years be an accurate reflection of the future? Is this time different? Investing professor Dr. George Athanassakos has some thoughts.
Investors seek value in clobbered U.S. regional bank shares
As U.S. banking contagion worries ebb, some investors are hunting for shares of fundamentally strong regional lenders that were swept up in this month’s epic sell-off, as David Randall of Reuters reports.
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Ask Globe Investor
Question: If you had a six-year-old grandchild, and wanted to set up a Registered Education Savings Plan with maximum yearly contributions, what would you put in the account? If you had already set up such a RESP which is now worth $28,000, what investments would you choose?– Glenys P.
Answer: My reply is the same in both cases: high-quality, dividend paying stocks. The reason is that during the early years of a RESP, the emphasis should be on growth. A six-year-old is at least 12 years away from starting college, so there’s a long time frame with which to work. As the child starts approaching college age, the plan should become more conservative to preserve assets and ensure a sudden market crash doesn’t wipe away years of gains.
At six years old, stocks like Canadian-National Railway Co. (CNR-T), Royal Bank of Canada (RY-T), Fortis Inc. (FTS-T), Enbridge Inc. (ENB-T), Brookfield Corp. (BN-T), and Telus Corp. (T-T) would all be suitable. You could also use equity mutual funds or ETFs, but I prefer direct stock ownership.
As the time to enter school approaches, start selling the stocks and put the profits into GICs or a high-interest savings account to ensure the money is not at risk.
–Gordon Pape (Send questions to gordonpape@hotmail.com and write Globe Question in the subject line.)
What’s up in the days ahead
Office REITs are struggling as workers hesitate to resume commuting and real estate owners wrestle with hefty debt loads that will soon be subject to much higher interest rates. Is there an opportunity here for investors? David Berman and Tom Czitron will share their insight.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
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