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My introduction to artificial intelligence application ChatGPT involved instructions to write 500 words “in the style of Scott Barlow” and the software happily obliged in a way that was disconcertingly accurate. It was clear that either my columns had been fed into the app or it knew to read them quickly and mimic the style. I felt immediately linked to the technology.

According to Fortune magazine, Microsoft is investing US$10-billion in OpenAI, the developers of ChatGPT, and will eventually own 49 per cent of the company. A version of Microsoft’s Bing search engine that includes ChatGPT-like functionality is already being previewed.

Morgan Stanley analyst Keith Weiss estimates that every percentage point in market share that Microsoft gains from Google is worth US$2-billion in annual revenues. Microsoft is clearly the easiest way to invest in the proliferation of artificial intelligence (AI), specifically what are called large language models like ChatGPT.

Search engines are one of the few businesses where success could move the profitability needle for a tech giant like Microsoft. But I am less interested in AI as an investment (so far) compared with its potential to change jobs like mine and behaviour generally. Podcast host Derek Thompson called it “a calculator, but for creativity” which seemingly opens up a whole new world of functionality.

I will be testing the new Bing search engine as soon as it becomes available. For those looking for more information on the topic of AI, Mr. Thompson’s podcast is available here (they refer 2022 as The Year of Artificial Intelligence), and investors should stay tuned for an upcoming related podcast from the Globe and Mail’s The Decibel.

-- Scott Barlow, Globe and Mail market strategist

Also see: Retail investors flock to small-cap AI firms as Big Tech battles for share

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The Rundown

Rebounding yields could scuttle U.S. stock rally as Powell stays firm on rates

The fate of an early year rally in stocks may depend on whether equities can withstand a recent rise in U.S. Treasury yields, as investors increasingly come around to the Federal Reserve’s higher-for-longer mantra on interest rates. Yields, which move inversely to prices, fell to start the year, after hitting the highest level in more than a decade in late 2022. They have shot higher in recent days, however, following a strong U.S. employment report that led investors to recalibrate expectations for how high the Fed will need to raise interest rates to keep inflation moving lower. As Reuters reports, some investors worry that a continued repricing of rate expectations could weigh on equities in coming weeks.

Low visibility, low volatility make strange pairing

Like mirages on the horizon, recession forecasts seem to be appearing and disappearing with great regularity - questioning any investment conviction, the reliability of pandemic-distorted data and still-low volatility gauges in financial markets. In just six weeks of 2023, economic forecasters have hurriedly revised away this year’s long-assumed recessions in euro zone and the United States - confounded by a mix of warm weather in Europe and some wild U.S. jobs market revisions and statistical quirks that have dramatically reshaped the interest rate outlook stateside. Investors trying to bet on where all this pans out can’t be filled with confidence. Yet, as Mike Dolan of Reuters reports, market volatility gauges have stayed peculiarly serene.

The year of the bull? What China’s reopening might mean for emerging markets in 2023

Forecasting geopolitical trends is not an exact science, especially when it comes to China – the recent downing of a suspected spy balloon over the U.S. providing a case in point. But no one can question the clarity of China’s pivot on COVID policy. If, as investors apparently expect, China can navigate its current challenges and get its economy rolling again, it will have a significant positive impact not just on the world’s second-largest economy, but also on emerging markets as an asset class. Regina Chi of AGF Investments explains.

Also see:

Emerging market funds see big inflows in January on China reopening

Outsized U.S. share of world equity may revert to norm

Is bitcoin out of the woods? Consider the options

Have bitcoin and ether finally turned a corner? It’s looking that way, if crypto options traders are anything to go by.

Canadian dollar expected to rise later in 2023 on more favorable global outlook

The Canadian dollar is set to rise later this year as the global economic outlook turns more favorable for commodity-linked currencies and investors bet central banks will cut interest rates in 2024, according to a Reuters poll released on Wednesday.

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Tuesday’s analyst upgrades and downgrades

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What’s up in the days ahead

Value investing professor Dr. George Athanassakos will explain why window dressing by portfolio managers and tax-loss selling by individual investors had a great impact on this year’s record high January stock returns.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff