The Bot Brief

"There is no force on earth more powerful than an idea whose time has come."       

- Victor Hugo

Bots in The News:

Friday was not a pretty trading day for the technology sector. The Bot Index fell 2.23%, considerably more than the 1.11% slide in the S & P 500. Breaking a string of 5 weeks of outperformance, the bots were harmed by two stocks that experienced double digit declines. The worst performer was Azenta that dropped 23.16%. Investors were clearly disappointed by the decline in earnings and management’s explanation of the covid impact. The December quarter numbers represented the second consecutive decline in earnings despite a relatively strong revenue number.

3D Systems fell 10.57% as investors took profits from the strong market move this year.

Google dropped 9.8% upon the announcement that Microsoft was serious about challenging Google’s 93% market share of its search engine. Having invested $10 billion in ChatGPT (discussed in last week’s Bot Brief), Microsoft is integrating the AI functionality into its own search engine Bing.

Finally, NIO Inc.’s near 8% decline was attributed to its January deliveries which were the worst since May 2022.

On the positive side, the Motley Fool reported regarding Tesla’s 3.64% increase, “The recent rise came as investors realized recent price cuts were mor of a strategy to hold market share than a sign of desperation and demand disruption.”

The best performer was Northrup Grumman whose 5.26% gain was likely a result of the recent controversy over the shooting down of the pair of flying objects in the past week.

Is That a Balloon in Your Pocket or Are You Just Happy to See Me?

By now virtually everyone on the planet knows that the U.S. was traversed by a Chinese balloon before being shot down off the coast of South Carolina. The Bot Brief has frequently commented on the use of drones to fulfill a number of defense and civilian functions and has several companies within the Bot Index that produce drones as either a primary or secondary product. This is the first time, however, that a high altitude balloon has come to the forefront of surveillance activities. Hence, there is considerable dialogue regarding the intent of the endeavor, the communication between the drone and the initiator, the propulsion, the camera(s), the potential payload of subsequent balloon incursions and why was it shot down in coastal waters.

With the advice and assistance of one of our contacts in the Homeland Security Office, here are some of our conjectures without the foreknowledge of information regarding the wreckage:

Communication between the drone and mainland China on such a craft, with limited power, would suggest that the gathering of data and transmitting that data over the curvature of the earth would be problematic. However, China has significant assets within the continental U.S. to which could be easily transmitted.

Depending upon the configuration of the balloon, propulsion power could certainly be gleaned from solar as well as wind power. Speeds of wind at that altitude can reach 100 miles per hour, the balloon can move on it own quickly but could capture that wind as well for auxiliary power. In fact, Google recently purchased Titan Aerospace that is in the process of making solar-powered drones that can remain aloft for six months.

One of the fears of high-altitude foreign incursions is the payload that might be utilized. We already know that the Chinese have tested hypersonic glide vehicles launched from balloons. The Hong Kong South China Morning Post noted that, “balloon dropped HGVs were part of an effort to develop precision warheads for hypersonic weapons, which would give the Chinese military an ‘unstoppable nuclear-capable weapon’”.

Also noted weas the capacity to create an Electro-Magnetic Pulse which could disrupt and permanently damage electrical components and entire systems.

Finally, one conjecture as to why the device was shot down over the coast of S.C. is that a land-based crash might destroy any valuable information on the devices contained on the craft. We won’t know what the Defense Department  uncovers but it is certain that information gleaned from the recovery will be important in understanding the intent of the balloon’s efforts.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association, Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of material presented.