In the last five years, the financial industry has been impacted by the emergence of digitalization and machine learning. In this article, we explore two methods that have undergone rapid development in recent years: Gaussian processes and Bayesian optimization. Gaussian processes can be seen as a generalization of Gaussian random vectors and are associated with the development of kernel methods. Bayesian optimization is an approach for performing derivative-free global optimization in a small dimension, and uses Gaussian processes to locate the global maximum of a black-box function. The first part of the article reviews these two tools and shows how they are connected. In particular, we focus on the Gaussian process regression, which is the core of Bayesian machine learning, and the issue of hyperparameter selection. The second part is dedicated to two financial applications. We first consider the modeling of the term structure of interest rates. More precisely, we test the fitting method and compare the GP prediction and the random walk model. The second application is the construction of trend-following strategies, in particular the online estimation of trend and covariance windows.

This paper considers the design of optimal resource allocation policies in wireless communication systems which are generically modeled as a functional optimization problem with stochastic constraints. These optimization problems have the structure of a learning problem in which the statistical loss appears as a constraint, motivating the development of learning methodologies to attempt their solution. To handle stochastic constraints, training is undertaken in the dual domain. It is shown that this can be done with small loss of optimality when using near-universal learning parameterizations. In particular, since deep neural networks (DNN) are near-universal their use is advocated and explored. DNNs are trained here with a model-free primal-dual method that simultaneously learns a DNN parametrization of the resource allocation policy and optimizes the primal and dual variables. Numerical simulations demonstrate the strong performance of the proposed approach on a number of common wireless resource allocation problems.

Touch sensing is widely acknowledged to be important for dexterous robotic manipulation, but exploiting tactile sensing for continuous, non-prehensile manipulation is challenging. General purpose control techniques that are able to effectively leverage tactile sensing as well as accurate physics models of contacts and forces remain largely elusive, and it is unclear how to even specify a desired behavior in terms of tactile percepts. In this paper, we take a step towards addressing these issues by combining high-resolution tactile sensing with data-driven modeling using deep neural network dynamics models. We propose deep tactile MPC, a framework for learning to perform tactile servoing from raw tactile sensor inputs, without manual supervision. We show that this method enables a robot equipped with a GelSight-style tactile sensor to manipulate a ball, analog stick, and 20-sided die, learning from unsupervised autonomous interaction and then using the learned tactile predictive model to reposition each object to user-specified configurations, indicated by a goal tactile reading. Videos, visualizations and the code are available here: https://sites.google.com/view/deeptactilempc

We introduce Continual Learning via Neural Pruning (CLNP), a new method aimed at lifelong learning in fixed capacity models based on neuronal model sparsification. In this method, subsequent tasks are trained using the inactive neurons and filters of the sparsified network and cause zero deterioration to the performance of previous tasks. In order to deal with the possible compromise between model sparsity and performance, we formalize and incorporate the concept of graceful forgetting: the idea that it is preferable to suffer a small amount of forgetting in a controlled manner if it helps regain network capacity and prevents uncontrolled loss of performance during the training of future tasks. CLNP also provides simple continual learning diagnostic tools in terms of the number of free neurons left for the training of future tasks as well as the number of neurons that are being reused. In particular, we see in experiments that CLNP verifies and automatically takes advantage of the fact that the features of earlier layers are more transferable. We show empirically that CLNP leads to significantly improved results over current weight elasticity based methods.

In the space of only a few years, deep generative modeling has revolutionized how we think of artificial creativity, yielding autonomous systems which produce original images, music, and text. Inspired by these successes, researchers are now applying deep generative modeling techniques to the generation and optimization of molecules - in our review we found 45 papers on the subject published in the past two years. These works point to a future where such systems will be used to generate lead molecules, greatly reducing resources spent downstream synthesizing and characterizing bad leads in the lab. In this review we survey the increasingly complex landscape of models and representation schemes that have been proposed. The four classes of techniques we describe are recursive neural networks, autoencoders, generative adversarial networks, and reinforcement learning. After first discussing some of the mathematical fundamentals of each technique, we draw high level connections and comparisons with other techniques and expose the pros and cons of each. Several important high level themes emerge as a result of this work, including the shift away from the SMILES string representation of molecules towards more sophisticated representations such as graph grammars and 3D representations, the importance of reward function design, the need for better standards for benchmarking and testing, and the benefits of adversarial training and reinforcement learning over maximum likelihood based training.

This post was done in partnership with Wirecutter. When readers choose to buy Wirecutter's independently chosen editorial picks, Wirecutter and Engadget may earn affiliate commission. Wireless TV headphones allow you to enjoy TV shows, movies, and video games without disturbing people around you. After spending dozens of hours researching the available options and testing 20 systems, we're confident that the Sennheiser RS 165 is the best one available today. It's easy to set up, sounds much better than the competition, and produces almost no latency between the audio and video (a major problem with many systems). The Sennheiser RS 165 is the best-sounding wireless TV headphone system we tested, and unlike with most of the competition, we didn't detect any noticeable delay between audio and the video we watched, making for the best experience. The lightweight headphones are comfortable to wear, easy to charge, and easy to add to most existing TVs or home theater setups. The rechargeable batteries last long enough to make it through several movies.

A group of researchers at Sandia National Laboratories have developed a tool that can cross-train standard convolutional neural networks (CNN) to a spiking neural model that can be used on neuromorphic processors. The researchers claim that the conversion will enable deep learning applications to take advantage of the much better energy efficiency of neuromorphic hardware, which are designed to mimic the way the biological neurons work. The tool, known as Whetstone, works by adjusting artificial neuron behavior during the training phase to only activate when it reaches an appropriate threshold. As a result, neuron activation become a binary choice – either it spikes or it doesn't. By doing so, Whetstone converts an artificial neural network into a spiking neural network.

Electricity distributors stand to save hundreds of thousands of dollars by decreasing their peak demand charge. Some have tried to discharge batteries or turn off customers' water heaters at peak hours to reduce their demand. But these efforts are only as effective as the utility's ability to predict the day's energy consumption. The smallest inaccuracy can mean the difference between tens of thousands of dollars--implementing a peak-shaving strategy with incorrect load predictions can often increase demand cost. Thankfully, advances in deep learning and neural networks can offer utilities an incredibly accurate picture of the next day's energy consumption.

Electricity distributors stand to save hundreds of thousands of dollars by decreasing their peak demand charge. Some have tried to discharge batteries or turn off customers' water heaters at peak hours to reduce their demand. But these efforts are only as effective as the utility's ability to predict the day's energy consumption. The smallest inaccuracy can mean the difference between tens of thousands of dollars--implementing a peak-shaving strategy with incorrect load predictions can often increase demand cost. Thankfully, advances in deep learning and neural networks can offer utilities an incredibly accurate picture of the next day's energy consumption.

Rapid technological advances in digitization and data and analytics have been reshaping the business landscape, supercharging performance, and enabling the emergence of new business innovations and new forms of competition. At the same time, the technology itself continues to evolve, bringing new waves of advances in robotics, analytics, and artificial intelligence (AI), and especially machine learning. Together they amount to a step change in technical capabilities that could have profound implications for business, for the economy, and more broadly, for society. Some companies are gaining a competitive edge with their use of data and analytics, which can enable faster and larger-scale evidence-based decision making, insight generation, and process optimization. But there is room to catch up and to excel.