Dear Reader,
It changes by the hour…
At five this morning, the stock market futures were projecting that we were going to be in for a terrible day. By 9:29 a.m., just before the market opened, the futures were sharply up. And by midday, we witnessed an explosive rally.
What’s going on around here?
Last week’s market action was purely fear-driven, and the high-frequency trading algorithms took over. It was the equivalent of panic selling. The five-day rut on the markets last week was overdone.
The talk today is about central bank relief in the form of another drop in interest rates. This would certainly provide some relief to the markets under these conditions.
It is important for us to keep things in context in situations like this. For those of us that remember the swine flu from April 2009 through April 2010, known as the H1N1 virus, things were a lot different.
Somewhere between 151,700–575,400 people died worldwide, with more than 60 million cases and 274,000 hospitalizations. 12,469 people in the U.S. died during that period.
Yet that was small compared to the 80,000 people that died in the U.S. from the common influenza during the 2017–2018 winter. And since the beginning of the outbreak of COVID-19 in November of last week (we’re four months in), about 3,000 have died worldwide.
And what did the S&P 500 do during the H1N1 virus outbreak from April 2009 to April 2010? It rocketed almost 50% during that 12-month period. It recovered from the financial crisis in spite of the H1N1 virus.
We’re going to stay away from investing in companies that are obviously negatively impacted by less travel (airlines and travel companies). We’ll focus on those that make progress no matter what: high-tech companies.
I’ll keep readers updated on the latest developments. But for now, let’s turn to our insights.
Most of us don’t realize how far along we are when it comes to quantum computers…
As regular readers know, we reached the point of quantum supremacy last September. That’s the point at which a quantum computer can outperform the most powerful classical supercomputer on earth. Here’s what happened…
Google ran tests on its 53-qubit quantum computer. In those tests, it gave the quantum computer a task that would take the world’s most powerful supercomputer, Summit, 10,000 years to complete.
The quantum computer finished in three minutes and 20 seconds. Beyond amazing.
Of course, Google’s quantum computer is not available for anyone else to use. That’s where cloud-based quantum computing services come in…
Early stage quantum company D-Wave just launched its second-generation cloud services offering. It calls it Leap 2.
D-Wave Quantum Computing System
Source: D-Wave
Leap 2 uses a form of quantum computing called quantum annealing. This technology is great for optimization. It can handle complex problems with up to 10,000 different variables in order to find the most optimal solution.
And here’s the exciting part – anyone can use Leap 2. That’s the beauty of D-Wave’s cloud-based offering. We can simply set up an account, pay for computing time, and quantum computing is right at our fingertips.
Of course, it takes some time to learn how to program problems on D-Wave’s platform. But anyone willing to learn the process can tackle complex optimization problems with quantum technology.
That means any corporation, nonprofit, entrepreneur, government, or even hobbyist can take advantage of D-Wave’s services today.
D-Wave is a private company I’ve been tracking for years. Amazon CEO Jeff Bezos, Google, Goldman Sachs, and even the CIA’s venture capital arm In-Q-Tel have invested in this company.
This diverse range of investors tells us how wide-ranging the applications of quantum computing are. Bezos is primarily interested in logistics optimization. Google is interested in big data. Goldman Sachs wants to predict financial markets and asset prices. And the CIA is focused on intelligence and national defense matters.
So quantum computing is here, and it’s going to have a major impact on society. To get a better feel for this, I’ve been putting myself at the center of the trend. I recently completed a specialized course on quantum computing from MIT. And I had the chance to experiment with IBM’s cloud-based quantum computer. I even took a stab at writing a few algorithms.
And I’m already neck-deep in a second course on quantum cryptography. I want to deeply understand the implications of quantum computing on cybersecurity and encryption technology.
The world will need radical changes to how we encrypt and secure our data. And that will bring some great investment opportunities.
Our next topic is further proof of how fast the self-driving trend is moving…
Toyota just invested $400 million into a self-driving startup called Pony.ai. Pony is based out of Silicon Valley. And it has research teams in China. There, Pony partnered with Toyota to test self-driving cars in Beijing and Shanghai.
Obviously, those pilot programs must be doing well to warrant this $400 million investment. This tells us that Pony is getting closer to launching its own self-driving ride-hailing services. We can think of this as an Uber-like service with no drivers.
Pony.ai Self-Driving Car
Source: Pony.ai
And since there won’t be any drivers, that means Pony would manage fleets of cars of its own choosing. Toyota would like for those cars to be Toyotas. That’s the reason for the investment.
The use of Toyotas is pervasive throughout Asia – in particular for taxis… It’s a logical investment for Toyota to make in order to preserve, and hopefully grow, that market segment for its cars.
Up to this point, Toyota has been quiet about its self-driving aspirations. This move shows us that the self-driving trend is moving faster than most people think. All the big players are invested and/or partnered in this space.
In my 2020 prediction series, I predicted that we would see the first fully autonomous vehicles on the road this year. That predication is looking better and better.
So we’ll keep an eye on Toyota going forward. The company plans to do some self-driving demonstrations in Tokyo at the Olympics this year. That would be a great place to showcase the technology… presuming the Olympics goes forward. Sadly, the COVID-19 outbreak could throw a big wrench into those plans.
Either way, we shouldn’t be surprised to see cars with no drivers on the road very soon.
We’ll close today with a major medical breakthrough…
Researchers out of the Washington University School of Medicine just found a way to convert human pluripotent stem cells into cells that can produce insulin. They injected these insulin-producing cells into mice with severe diabetes. And the results were staggering…
Within two weeks, blood glucose levels in the mice returned to normal… and stayed that way. The mice remained normal for at least nine months. And some went more than a year with stable blood glucose levels. From just one injection.
Anybody who knows an insulin-dependent diabetic patient knows how huge this development is. Those with severe diabetes typically rely on insulin injections every day. If these new insulin-producing cells can be produced at scale, those daily injections go away. Just one injection per year could keep blood glucose levels stable.
This is great news for insulin-dependent diabetics. And it is also a major market opportunity.
Human insulin is about a $40 billion market annually. That market would disappear almost overnight if we had an approved therapy to deliver insulin-producing cells to those who need them. Then that $40 billion would flow to the company delivering the therapy.
For this reason, I expect we will see a group spin this research out into a new company for further development. That’s something I’ll watch for closely.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
