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Today’s Featured Topic

As Obesity Rates Near Tipping Point, MRP Adds New Investment Theme

Summary: Obesity as an epidemic is at a tipping point around the world. Health care companies and governments around the world are taking more action to fight obesity due to its association with chronic diseases, and the high societal and economic costs of managing those problems. Some companies are poised to benefit.

Faced with growing demand for improved delivery of health services at lower costs, the U.S. health care industry is transitioning away from a traditional fee-for-service (FFS) system towards more risk-based payment models. As such, managing the costs of chronic conditions has become high priority for health care providers and employers. After all, chronic illnesses are the biggest strain on the industry, accounting for more than 80% of the $3.5 trillionspent in annual health care costs. By 2026, U.S. health spending is projected to reach $5.7 trillion, with prescription drugs seeing the fastest annual growth during that time.

One area receiving greater attention from health care professionals and payers is the fight against obesity. That’s because of the many chronic (and expensive) diseases associated with it, including heart disease and stroke, high blood pressure, diabetes, some cancers, and the list goes on. In fact, the World Health Organization (WHO) deems obesity one of the leading preventable causes of death.

The world is seeing an escalation of obesity, which is the result of excess fat deposition in the body. Typically, a person with a body mass index (BMI) of 30 or higher is considered obese. Energy sparing technology, packaged or fast food, and the proliferation of desk jobs are partly to blame. Humans have become less active physically, and are consuming a lot more sugar, salt, additives, and processed foods than ever before.

In America, the obesity rate is on the rise again after briefly leveling off in recent years. At this point, more than a third of rural residents qualify as obese while the rate in metropolitan areas is about 28.7%. The highest obesity rates are in Southern states; in rural Louisiana and Texas, the number of obese residents approaches 40%. In general, 75% of men in the U.S. are overweight. The same is true for 69% of U.S. women. Things are not looking great for kids either. In 2016, the obesity rate for boys and girls was already 21% and 18%, respectively. If nothing changes, half of all U.S. teenagers will be overweight or obese by 2030 — as will one-third of kids between 6 and 11 years old. This is a major problem because a child with obesity is five to seven times more likely to be obese as an adult than one who is not obese.

It’s not just an American issue. Three in five Britons are overweight or obese, according to a 2017 report by the Organization for Economic Co-operation and Development (OECD). And just last month, the WHO reported that, about one in five boys (18%-21%) was found to be obese in Cyprus, Greece, Italy, Malta and Spain. The obestiy rate for girls was only slightly lower. The paradox is that the region gave birth to the Mediterranean Diet, a way of eating that is known to have positive effects on cardiovascular and metabolic health. Yet, childhood obesity in southern European countries was twice as prevalent than in northern European countries such as Denmark, Ireland and Norway, where rates of obesity in boys and girls ranged between 5% and 9%.

In Scotland, where almost 29% of children are at risk of being overweight and 14% are likely to become obese, the government has resorted to banning fruit juices and smoothies from school canteens across the country, with strict weekly portion limits also placed on unhealthy foods. Lower sugar limits on breakfast foods, snacks and baked products are also being proposed nationally.

A similar tactic is being adopted by some health care providers who are starting to advocate food-as-medicine, even in cases of a chronic disease. One example is US-based Geisinger Health Systems which launched its “Fresh Food Farmacy” on the rationale that a prescription for fresh food can help treat diabetes. Instead of relying solely on drugs to manage the disease, doctors are writing prescriptions for certain patients to enter the Fresh Food Farmacy program, which entails 15 hours of education about diabetes and healthier living, followed by 10 free nutritious meals a week for participants and their families.

After a year, patients in the program have seen their A1C levels drop to the point where diabetes medication usage was down 48%, and body weight was down 12%. With operational costs of $2,400 per patient each year, early findings show costs for patients in Geisinger Health Plan dropped by 80%: from an average of $240,000 per member per year, to $48,000 per member per year (even with free food!) The Geisinger model is replicable and other health systems are considering this approach to manage obese patients.

With obesity rates rising around the world, companies dedicated to treating and servicing obese patients are positioned to benefit. On that basis, MRP is adding Obesity as a Long Theme. Investor can get exposure to the theme via the Obesity ETF (SLIM).

SLIM invests globally in biotech, drug makers, health care and medical device companies whose businesses are focused on obesity & obesity related disease, as well as companies focused on weight loss programs, weight loss supplements, or plus-sized apparel. The fund invests at least 80% of its net assets in the stocks that comprise the Solactive Obesity Index.

We’ve also summarized the following articles related to this topic in the Biotechnology & Healthcare section of today’s report.

  • Obesity: Rural America struggles with obesity epidemic
  • Obesity: Plus-size clothing and overweight models are normalising obesity, warn experts
  • Obesity: Kallyope and Novo Nordisk announce collaboration to discover novel therapeutics for obesity and diabetes
  • Obesity: Omada Health launches new programs for obesity-related diseases
  • Obesity: How new fresh-food prescriptions are beating pricey drugs

 

Chart: Diet Management (SLIM) vs S&P 500 (SPY)

https://staticapp.icpsc.com/icp/loadimage.php/mogile/1287583/40928c3eba8dbb455115a98318563b21/image/png

 

Other Disruptive Change

Markets

  • Bonds: Defaults surge in China as companies suffer credit crunch
  • Stocks: Beijing Paddles Hard as a Bear Market Threatens
  • Digital Currencies: Bitcoin threatens to fall below $6,000 as security flaws continue to dog industry

Economics & Trade

  • Trade War: Europe’s Retaliation Takes U.S. Trade Tensions to the Next Level

Finance

  • Banks: Biggest Banks Pass Fed’s Stress Tests

Construction & Real Estate

  • Housing: Homebuyers hit by lumber prices near record highs

Services

  • Advertising: China wins the World Cup advertising game
  • F&B: CO2 shortage could hit UK beer and chicken supplies during World Cup
  • Retail: Amazon could actually benefit from the Supreme Court ruling on sales tax
  • Video Games: Electronic Arts Creating Netflix For Video Games

Manufacturing & Logistics

  • Packaging: Investors Demand Nestle, Pepsi and Others Cut Plastic Use

Technology

  • AI: New SYSPRO Survey Shows Next-Gen ERP Technology Users “Want IT Their Way”
  • AI: Salesforce develops natural language processing model that performs 10 tasks at once

Transportation

  • Aerospace: SpaceX just sold the US Air Force the cheapest enormous rocket it’s ever bought
  • Autos: Trump threatens 20% tariff on EU car imports
  • Satellites: Satellite groups no longer UK’s sleeping giants
  • Shipping & Logistics: Shipping costs have hit a record high in the US

Commodities

  • Mining: There’s more to come in mining investment splurge
  • Oil: OPEC agrees modest hike in oil supply after Saudi and Iran compromise
  • Oil: A Sour Outcome From OPEC for China’s Futures

Biotechnology & Healthcare

  • Health Care: Insurers to Expand Presence in Affordable Care Act Marketplaces Despite Uncertainty
  • Health Care: Salesforce aims new cloud tool at payers
  • Health Care: AI Hospital Software Knows Who’s Going to Fall
  • Pharma: What Is Ailing the Drug Industry?

Endnote

  • Advertising: Facebook used to the dominant digital hangout of teens. Now other digital hangouts have eclipsed the social network

 

Joe Mac’s Market Viewpoint

Top 

 

 

 

CAPEX Booms!

The Federal Reserve has said for years that it wants to get inflation in the U.S. back to 2% per year. Some indicators are already showing inflation rates higher than that. But, the Fed persists with its fixation on the core personal consumption expenditures (“PCE”) deflator as a superior measure. That number has been stuck below 2% since May 2012. The trend of the inflation data, however, may be changing soon.

Joe Mac’s Market Viewpoint: CAPEX Booms! 

 

Other Viewpoint Reports

Joe Mac’s Market Viewpoint: The Inflation Complication 

Joe Mac’s Market Viewpoint: A Review of MRP Themes 

Joe Mac’s Market Viewpoint: The Coming Value Rotation 

Joe Mac’s Market Viewpoint: Beyond the Bond Bubble 

 

Current MRP Themes

Top 

 

 

 

 

Autos (S)

 

Electric Utilities (L)

 

TIPS (L)

 

 

 

Long-Dated UST (S)

 

Defense  (L)

 

Industrials (L)

 

 

 

Materials (L)

 

U.S. Financials & Regional Banks (L)

 

ASEAN Markets (L)

 

 

 

Oil & U.S. Energy (L)

 

France (L)

 

Greece (L)

 

 

 

Saudi Arabia (L)

 

Palladium (L)

 

U.S. Healthcare Providers (S)

 

 

 

Gold & Gold Miners (L)

 

Robotics & Automation (L)

 

Video Gaming (L)

 

 

 

Lithium (L)

 

Steel (L)

 

Value Over Growth (L)

 

 

Solar (L)

 

CRISPR (L)

 

Major Data Points

Top 

 

 

 

1.

 

US Services Growth Remains Robust: Markit

The IHS Markit US Services PMI edged down to 56.5 in June of 2018 from 56.8 in May which was the highest reading since April of 2015. Figures compare with market expectations of 56.4, preliminary estimates showed. TE

 

2.

US Private Sector Activity Growth Higher than Expected

The IHS Markit US Composite PMI fell to 56 in June of 2018 from 56.6 in May, still above market expectations of 55.1, the flash estimate showed. TE

 

3.

 

US Factory Growth at 7-Month Low: Markit

The IHS Markit US Manufacturing PMI fell to 54.6 in June of 2018 from 56.4 in May, well below market expectations of 56.5. The reading pointed to the slowest expansion in factory activity in 7 months, following the strong growth rates seen in recent months, preliminary estimates showed. TE

 

4.

Oil Prices Jump on OPEC Deal

Oil prices rallied on Friday after news suggested the OPEC leaders reached a deal on oil production levels during a closely watched meeting in Vienna. Details on the agreement are not available yet but news refer production could increase by less than 1 million bpd which is lower than markets were expecting. TE

 

5.

European Shares Rise

Major stock indexes in Europe closed in the green on Friday after news that OPEC leaders agreed on production levels during its Vienna meeting, sending oil prices higher. TE

 

6.

Chinese Yuan Hits 23-week Low

USDCNY increased to a 23-week high of 6.5166. TE

 

Other Disruptive Change

Top 

 

 

 

Markets

Bonds: Defaults surge in China as companies suffer credit crunch 

Defaults on Chinese corporate debt are swelling, and are now extending to foreign-currency-denominated bonds, bought mainly by overseas investors. Companies have defaulted on at least 20.7 billion yuan ($3.19 billion) in yuan bonds and $350 million in dollar debt in the six months through June, marking a 40% increase compared to the same period last year. The government’s deleveraging campaign and a crackdown on shadow banking have left more businesses strapped for cash.

CEFC Shanghai International Group, which missed 2.1 billion yuan in bond payments last month, is expected to default on another 2 billion yuan in debt coming due in late June, which would put the six-month total for Chinese businesses at more than $3.8 billion. The total for all of 2018 could exceed the 2016 record.

Tightening credit, coming on top of the recent trade friction with the U.S., is weighing on stocks. The Shanghai Composite Index slumped 1.4% Thursday to a year-to-date low of 2,875. The prevailing view among investors is that the rise in defaults reflects such factors as worsening liquidity conditions and a cooling economy. NAR 

https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fs3-ap-northeast-1.amazonaws.com%2Fpsh-ex-ftnikkei-3937bb4%2Fimages%2F_aliases%2Fmiddle_320%2F7%2F6%2F2%2F6%2F14416267-1-eng-GB%2FTotal_defaults_by_Chinese_companies-column_chart-ft-nar-themeregular-320x356.png?source=nar-cms

 

Stocks: Beijing Paddles Hard as a Bear Market Threatens

Chinese stocks are almost in a bear market. That’s leaving Beijing in a pickle. Shanghai’s main benchmark closed Friday nearly 20% down from its most recent high, set in January. Worries about escalating U.S.-China trade tensions have sent the index down 4% this week alone.

The trade-war rhetoric is just pushing Chinese stocks further in the direction they were already headed. Regulators have been trying to rein in China’s monster shadow banking system for several months, cracking down on the proliferation of wealth-management products. This, along with rising wholesale borrowing costs, has dried up some of the liquidity that had been underpinning stocks.

Signs of softening economic growth, and the declining yuan, have meanwhile hardly steadied the mood. And the arrival of fresh foreign capital into Chinese stocks, thanks to the inclusion of some of them in MSCI’s key indexes this month, hasn’t been enough to move the dial.

A cut in the reserves that banks are required to hold at the central bank, which help increase liquidity, seems likely. Beijing will want to ensure this isn’t taken as a sign of panic. But beneath the calm surface, policy makers are paddling ever harder. WSJ

 

Digital Currencies: Bitcoin threatens to fall below $6,000 as security flaws continue to dog industry

Bitcoin and major digital currencies were in free fall Friday with most coins shedding as much as 10%, wiping billions off the market cap of cryptocurrencies. Bitcoin, the worlds biggest digital currency, is trading back at multimonth lows as ongoing exchange flaws continue to undermine the integrity of the market. The overnight news that Japan’s financial watchdog has hit six exchanges with orders to improve business follows two exchange hacks in the past eleven days, which saw $70 million of cryptocurrency seized. Aslam said that the hacks were doing severe damage to the reputation of both bitcoin and blockchain.

The Friday move sent bitcoin perilously close to the $6,000 support level and the Feb. 6 low of $5,947.40. Some see bitcoin potentially trading below $3,000.

Year-to-date numbers paint a bleak picture for owners of digital currencies. Bitcoin has shed 56%, ether is down 37%, Bitcoin Cash has lost 70%, Litecoin, 63% and XRP, the coin that runs on the Ripple protocol is the worst performer, losing 78% of its value.

The total value of all cryptocurrencies was last at $258 billion, the lowest level since April 10. MW


 

 

Economics & Trade

Trade War: Europe’s Retaliation Takes U.S. Trade Tensions to the Next Level

The European Union’s retaliatory tariffs on U.S. products came into force on Friday, the latest shots fired in what increasingly looks like a global trade war. The EU, the world’s largest trading bloc, imposed levies on 2.8 billion euros ($3.3 billion) of American products in response to U.S. duties on its steel and aluminum exports that were justified on national security grounds.

The EU is imposing a 25 percent duty on a range of U.S. products including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. The EU measures cover a total of around 200 categories in total, also including various types of corn, rice, orange juice, cigarettes, cigars, t-shirts, cosmetics, boats and steel.

The EU is reserving the right to target more U.S. products with further duties no later than June 1, 2021. Second-stage retaliation would involve levies ranging from 10 percent to 50 percent on an extra 3.6 billion euros of American goods imported into the EU.

Meanwhile, risk sentiment benefited from signs that Washington may be seeking to calm tensions with China. European stocks rose, along with U.S. futures, while declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts. B

 

North Korea: Putin and Moon pledge economic links with North Korea

Wrapping up the first state visit of a South Korean president to Russia in 19 years, Moon Jae-in and Vladimir Putin agreed to start talks on a bilateral trade in services and investment deal, and revive plans for rail lines, a gas pipeline and a power line linking South Korea to Russia through North Korea.

Since his election more than a year ago, Mr Moon has sought to nurture relations with Russia, which he sees as a crucial partner not only in attempts to denuclearise North Korea, but also to integrate the reclusive nation into the region’s wider economy. For Mr Putin, closer ties with Seoul are key in ensuring Russia is not sidelined in efforts to settle the security situation on the Korean peninsula, so far dominated by the US and China.

But bilateral economic co-operation was as important in the talks between Mr Putin and Mr Moon as geopolitics.

State-controlled South Korean gas company Kogas signed a memorandum of understanding with Russian gas producer Novatek over potential participation in its new $27bn LNG project in the Arctic, amid interest from Saudi Arabian and Chinese rivals. The two governments also signed agreements on regional exchanges, key to Russia’s goal to reinvigorate the economy of its struggling far eastern provinces, and on co-operation in technology, an area where Moscow hopes for investment from South Korea. FT


 

 

Finance

Banks: Biggest Banks Pass Fed’s Stress Tests

The nation’s biggest banks are strong enough to continue lending if the economy plunges into a severe downturn, an assessment by the Federal Reserve on Thursday that could fuel Wall Street’s calls to further relax financial regulations. The banks are riding high thanks to tax cuts and recent moves to soften regulations. They are eager to return more of their profits to shareholders, and the test results suggest regulators will give many the green light to pay dividends or buy their own shares next week.

To prevent a repeat of those taxpayer-financed rescues, the Fed now requires banks to maintain capital cushions that would allow them not only to stay afloat but also to keep lending during periods of intense financial stress. Since 2009, the 35 banks that underwent the tests have added about $800 billion in the highest quality type of capital, the Fed said.

This is the second straight year that all the big United States banks were found to have enough capital to withstand a hypothetical recession. In 2017, the banks sailed through the first round of the stress tests, and, a week later, the Fed approved all 34 banks’ plans to return money to their shareholders.

But while the results are likely to cheer bank executives and shareholders, skeptics caution against regulators responding to the strong performances by watering down safeguards against future crises. NYT


 

 

Construction & Real Estate

Housing: Homebuyers hit by lumber prices near record highs

If rising mortgage rates and a limited supply of homes weren’t enough, lumber futures hit at an all-time high of $639 per 1,000 board feet on May 17, and although they’ve pulled back to $547 since then, they’re still well above a market that has rarely climbed above $400 the past few decades. As a result of the higher wood costs, the price of the average new single-family home has increased by almost $9,000 since January 2017. At the end of April, the average new single-family home price was $407,300. Lumber prices have increased due to a confluence of factors. A severe Canadian wildfire, an ongoing trade dispute between the United States and Canada and limited rail capacity are the main culprits.

Millenials are the age group most harmed by these rising prices for new homes. Fresh out of college, millenials have to pay off student loans, take on entry-level job positions and learn how to manage their personal finances. The expense can serve as a major impediment for these first-time home buyers.

Adding to that strain are rising mortgage costs – the current rate is 4.83 percent – a 0.7 percent increase from last year. With the NAHB’s average price for a new single-family home of $407,300, recent home buyers are paying $135 more on their mortgages per month than buyers a year ago. USAToday


 

 

Services

Advertising: China wins the World Cup advertising game

China’s national team did not make it to the World Cup, but the country’s advertisers have. The quadrennial event is serving as a global coming-out party for China Inc. Four of the 12 official sponsors of the world’s most-watched sports spectacle are Chinese.

Collectively, Chinese companies are said to be the largest World Cup ad buyer; estimates say they have splashed out more than $800 million on the tournament. The campaign is apparently part of President Xi Jinping’s initiative to encourage the globalization of Chinese brands.

Real estate conglomerate Dalian Wanda Group is the only Chinese sponsor categorized as a FIFA partner, a status that allows it to be involved in various events put on by soccer’s world governing body.

And while most of the world cannot read the Wanda ads, home appliance maker Hisense and smartphone maker Vivo Communication Technology are displaying their Romanized logos around the fields. Hisense, which bought Toshiba’s TV-making operations last year, is keen to raise its brand power overseas. In April, the company announced seven new models, including a World Cup Special Edition TV.

In addition, three Chinese brands — Diking; Luci, a virtual reality company; and Yadea, an electric scooter maker — are listed as region-restricted FIFA National supporters. NAR

https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fs3-ap-northeast-1.amazonaws.com%2Fpsh-ex-ftnikkei-3937bb4%2Fimages%2F_aliases%2Fmiddle_320%2F2%2F7%2F6%2F8%2F14398672-1-eng-GB%2F20180621-FIFA-Table.png?source=nar-cms

 

F&B: CO2 shortage could hit UK beer and chicken supplies during World Cup

Britain is facing a shortage of meat, salad and ready meals – as well as a World Cup beer drought – as stocks of carbon dioxide used by the food and drink industry run low. With northern Europe already battling a CO2 supply problem, three of the largest UK plants producing the gas have closed for maintenance, sparking panic among brewers, pub groups and food suppliers.

The gas is in short supply across Europe amid high summer demand for fizzy drinks and beer, coupled with shutdowns at ammonia and bioethanol plants, key sources of CO2. The pub chain Wetherspoons and the Tottenham-based brewer Beavertown said the flow of beer and soft drinks could be cut off within days.

Food supplies are also facing disruption because suppliers use CO2 to keep products fresh during storage and transit. The British Meat Processors’ Association said it had asked the government to prioritise CO2 supplies to pork and poultry slaughterhouses because the gas is used in the most humane form of slaughter. Without increased supplies, farms could end up with a backlog of animals that cannot be slaughtered. Poultry producers said on Wednesday that 60% of chicken processing plants could be out of operation within days. Guardian

 

Retail: Amazon could actually benefit from the Supreme Court ruling on sales tax

At first blush it looked like the Supreme Court ruling in South Dakota v. Wayfair could spell trouble for Amazon.com Inc., but experts say the decision could actually provide fresh opportunities for the e-commerce giant. Amazon shares fell 1.1% shortly after the Thursday ruling was announced. Investors feared the ruling could hurt the company. However, Amazon already collects sales tax on its own goods. Experts say third parties and small businesses are the companies that will really be affected by the case.

Amazon already has the capabilities to comply with the Supreme Court ruling. It has all of the relevant seller data on its platform—from a seller’s city/state location, to its product catalog sold on Amazon’s marketplace, to the pricing offered by the seller, to the volume of sales for each of those products—to apply the appropriate tax amount upon checkout by consumers. Thus, Amazon is unlikely to cede a meaningful portion of its market share to traditional retailers as a result of the ruling, which could leave smaller online retailers more exposed. MW

 

Video Games: Electronic Arts Creating Netflix For Video Games

Electronic Arts (EA) stock received a big price-target hike Friday from a Wall Street analyst who believes EA is building a “Netflix for video games.”

Needham analyst Laura Martin reiterated her buy rating on EA stock and raised her price target to 170 from 135. But shares dipped 0.6%, near 142.30, in afternoon trading on the stock market today. EA stock broke out of a seven-week flat base with a buy point of 131.23 on May 9. Martin sees Electronic Arts benefiting from the shift to “games as a service” where consumers subscribe to video games instead of buying them outright. She compared EA with other subscription entertainment services including Netflix (NFLX), Spotify Technology (SPOT), Pandora Media (P) and Hulu.

Ahead of the E3 video game conference last week in Los Angeles, EA announced Origin Access Premier. The subscription PC gaming service will give customers access to access to more than 100 games in its vault. Plus, subscribers will enjoy full access to new EA releases on PC before anyone else. EA currently has about 4 million subscribers who pay an average of $5 a month. That implies EA’s subscription revenue will be about $240 million in fiscal 2019. IBD


 

 

Manufacturing & Logistics

Packaging: Investors Demand Nestle, Pepsi and Others Cut Plastic Use

A group of 25 investors managing more than $1 trillion in assets are demanding that Nestle SA, PepsiCo Inc., Procter & Gamble Co. and Unilever NV reduce their use of plastic packaging, calling it environmentally damaging.

The initiative was organized by As You Sow, a nonprofit shareholder advocacy group that pushes companies to act responsibly. It was signed by investment managers including Hermes Investment Management, Impax Asset Management, NEI Investments and Walden Asset Management.

The group is asking the companies to disclose annual plastic packaging use, set plastic use reduction goals, facilitate recycling and transition to recyclable, reusable or compostable packaging as much as possible.

The investors said they want to push the companies to hold to those promises after five of the Group of Seven nations, excluding the U.S. and Japan, adopted a charter aimed at significantly reducing single-use plastic by 2040. Similarly, Nestle, PepsiCo and Unilever have pledged to make packaging more recyclable, compostable, biodegradable and from higher recycled content by 2025. P&G aims to reduce its plastic packaging by 20 percent by 2020 and about 90 percent of its packaging is already recyclable. B


 

 

Technology

AI: New SYSPRO Survey Shows Next-Gen ERP Technology Users “Want IT Their Way”

SYSPRO, a global provider of industry-built ERP software, has released a survey of technology users that indicates millennial and future generations of workers will have very specific demands on business software based on their preferred use of personal devices. Specifically, more than 76% of respondents said next-generation users will be drawn to ERP vendors that let them do business “their way.”

In fact, when asked “What do you think would be the single biggest morale ‘buzz kill’ to a millennial or newer ERP software user,” nearly 3-to-1 selected “inflexibility” as being the most problematic, versus concerns over limited feature/functionality or poor service. Meanwhile, seventy-one (71%) percent of the survey respondents believe speed and efficiency will be the top priority of millennials and newer users.

Based on the extensive and growing use of personal devices, SYSPRO’s technology leaders began aggressively focusing on infusing personalization and flexibility components that we believed would be most useful and preferred by the changing landscape of future ERP users. MI

 

AI: Salesforce develops natural language processing model that performs 10 tasks at once

Even cutting-edge NLP algorithms share a problem: They’re highly optimized for a specific task. “Deep learning models are often pretty fragile,” Bryan McCann, a research scientist at Salesforce, told VentureBeat in a briefing. “You can have a model that works for translation, but it might not do well on sentiment analysis or summarization.”

Undeterred, scientists at Salesforce Research took a two-pronged stab at the problem. They developed both a 10-task natural language processing challenge — the Natural Language Decathlon (decaNLP) — and a model that can solve it — the Multitask Question Answering Network (MQAN).

DecaNLP puts the MQAN through a veritable gauntlet of linguistic tests, including question-answering and machine translation. Then there’s a document summarization test, a natural language inference test, a sentiment analysis test, a semantic role labeling test, a relation extraction test, a goal-oriented dialog test, a query generation test, and a pronoun resolution test.

The researchers found that the MQAN, when jointly trained on all 10 tests without any task-specific modules or parameters, performed at least as well as 10 MQANs trained on each test separately. And in some domains it showed improvement compared to single-task models. The model’s ability to perform well in tasks it hasn’t been trained to do could pave the way for more robust, natural chatbots that are better able to infer meaning from human users’ questions. VB


 

 

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