Weekly Bot Brief Newsletter on Robotics 5/31/2019

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

Bot Index Highlights:

They say that bad things always happen in sets of three. The same may be said about the fact that for the past three weeks, the Bot Index has declined by three plus percentage points each. This week the drop was by 3.66% and well below the 2.62% slide in the S & P 500. Continuing concerns within the macro environment of trade and international conflicts contributed to investor retreat from the higher beta issues.

Only two names provided positive returns within the Bot Index. Hiwin Technologies, based in Taiwan, rose 2.58% and OMRON Corp. gained 1.55%. Lockheed Martin was the best U.S. component and it turned virtually a flat result for the week.

The Index had three stocks that fell by double digits. NIO Inc., the Chinese electric car maker dropped 20.98%. The company’s prospects were reassessed by Merrill Lynch from neutral to underperform with a price target to $3. The stock closed at $3.05, which was about one-third of its price when the stock was placed within the Bot Index on September 14, 2018. The company has been beset with revenue woes as well as some concern over a May 22 article that appeared in the South China Morning Post that hinted at a U.S. consideration to remove all Chinese companies from pension and insurance company portfolios.

The other two weakest performers included Ekso Bionics that fell 10.74% and Cyberdyne who slid 10.71%. NVIDIA Corp. was subject to several negative articles including a Barron’s report that was entitled, “NVIDIA and Other Chip Stocks Have More to Worry About Than Tariffs”. The stock slid another 6.67% for the week, however, over the weekend several pundits expressed optimism due to the depressed valuation. Faro Technologies slid 5.76% and Accuray Inc. declined 6.55% to end the week.

Congratulations are in Order:

This week Dr. Arthur Laffer was awarded the nation’s highest civilian honor, the Presidential Medal of Freedom, citing him as, “one of the most influential economists in American history”. As the author of the Laffer Curve, Dr. Laffer has supported the fact that by lowering taxes, greater economic activity will promote employment, creation of wealth and, counter intuitively, add to government revenue flow. Dr. Laffer is an outspoken advocate of low regulations, low taxes and free trade. It is this last topic that has placed him at odds with the current Administration’s tariff policy. However, in recent interviews, Dr. Laffer has noted that past international trade practices have been at the expense of U.S. manufacturers.

Dr. Laffer has been a contributor to the Bot Brief and his interview last year on productivity was carried in total.

The Great Jobs Boom:

The cover story of last week’s The Economist focused on the surprising job growth within the world’s developed nations. Noting that, “Across the OECD, a jobs bonanza is underway. In the past five years the group has added 43 million jobs. The unemployment rate as a share of the total labour force is at its lowest in decades.” Furthermore, the article expounded on the broad based boom with the comment, “Unemployment among unskilled workers and the young is tumbling, as is long-term joblessness…The Incidence of ‘low pay’- workers who earn less than two-thirds of the median – has been falling for two decades.” Not only are more people employed (which to the Laffer Curve’s hypothesis of lower taxes might mean more government revenue due to more income taxes and less welfare benefits), wages are rising. “A broader measure of whether work pays, where the total of all compensation is expressed as a share of national income is rising in many rich countries, including America and Britain.” Perhaps the recent accolade to Dr. Arthur Laffer is founded in this manifestation of economic and employment strength.

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

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 and its commentaries, analysis, opinions and research represent the subjective views 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