Investment Insight - Is GPT-4 the Cure for Stagflation? [ENG]

The market's volatility in recent months has been primarily driven by monetary policy, which is closely tied to inflation. Recent advancements in artificial intelligence (AI), such as the release of the Large Language Model (LLM) GPT-4, have the potential to significantly influence inflation dynamics in the short to medium-term. In fact, GPT-4 represents an important step forward in AI capabilities, offering potential transformations across work, education, and planning sectors.

The Bank of Japan's research paper, 'Inflation Dynamics in the Age of Robots: Evidence and Some Theory' by T. Fueki and K. Maejhashi, suggests that automation and the rise of robots have contributed to the 'missing' inflation shock observed in recent decades. As GPT-4 revolutionises various service industries, this AI breakthrough could lead to a substantial increase in productivity and even a significant disinflationary force in the coming quarters, which could bring relief to central banks worldwide.

Balancing the Opportunities and Risks of AI

We believe ensuring that AI is used to enhance human productivity and growth, rather than replace workers, is a societal responsibility that demands long-term thinking and prioritisation over short-term gains. Human-level AI (AGI) seems near, and the coming development of artificial superintelligence (ASI) requires strict control and regulation to ensure AI remains only but a beneficial tool for humanity. If you think things are going a little too fast, you could think about joining the 'Pause Giant AI Experiments' open letter!

This paper by Dan Hendrycks 'Natural Selection Favors AIs over Humans' is an interesting reflection on the ultimate risks.
At RAM AI, we leverage cutting-edge technologies, such as LLMs (2023 RAM AI Go Beyond Sentiment), artificial neural networks, and GPT-4, to enhance our investment strategies and uncover new opportunities. We are nevertheless committed to maintain control, interpretability and ensure that AI only serves as a valuable aid in delivering alpha and long-term returns to our investors.

Emmanuel Hauptmann
CIO, Partner & Head of Systematic Equities

___________________

Disclaimer

The figures, comments, opinions and/or analyses contained herein reflect the sentiment of RAM with respect to market trends based on its expertise, economic analyses and the information in its possession at the date on which this document was drawn up and may change at any time without notice. They may no longer be accurate or relevant at the time of reading, owing notably to the publication date of the document or to changes on the market.
This document is intended solely to provide general and introductory information to the readers, and notably should not be used as a basis for any decision to buy, sell or hold an investment. Under no circumstances may RAM be held liable for any decision to invest, divest or hold an investment taken on the basis of these comments and analyses. 
RAM therefore recommends that investors obtain the various regulatory descriptions of each financial product before investing, to analyse the risks involved and form their own opinion independently of RAM. Investors are advised to seek independent advice from specialist advisors before concluding any transactions based on the information contained in this document, notably in order to ensure the suitability of the investment with their financial and tax situation.
Past performance and volatility are not a reliable indicator of future performance and volatility and may vary over time, and may be independently affected by exchange rate fluctuations.