Weekly Bot Brief on Robotic Research and Investment Review 11-2-2018

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

Bot Index Highlights:

The higher beta bot stocks enjoyed a market turnaround this week as the S & P 500 gained over 2%. On the news that there might be a pending trade agreement between the U.S. and China, world markets were encouraged during the first four trading days of the week. However, on Friday, the Administration’s lead economic advisor Larry Kudlow told CNBC that there was “No plan in the works for China.” Consequently, the markets turned south, erasing an almost 200-point gain into a decline of over 100 points on the Dow. The techs took the news worse than the market and, together with the poor earnings from Apple, the NASDAQ fell a percent.

All was not lost, however, as the Bot Index broke the four-week losing streak to gain 6.28%. The Index was stimulated most significantly by its Asian components. The news regarding China-U.S. trade that hit the U.S. markets on Friday came after most of the Asian markets had closed. Consequently, Hiwin Technologies gained a spectacular 25.54%, followed by double digit increases by OMRON Corp. (+10.08%), Fanuc Corp. (13.41%) Keyence (+14.51%) and Yaskawa Electric (+17.47%). Cyberdyne Inc. also increased 6.88% for the week.

Weaker stocks included 3D Systems who tumbled 16.46% after reporting a third quarter loss and Apple which fell 4.25% as investors were informed of weaker than expected IPhone sales growth.

What Thomas Jefferson had to say about the current state of employment, economics and regulations:

This week Amazon expressed its need to hire an additional 100,000 staffers to prepare for the Christmas gift season. Wall Street analysts noted that the figure was about seventeen percent below each of the prior two years. In a CNBC interview this Friday, a Citicorp analyst expressed his opinion that the reduction was, in part, a function of the application of robotic automation in Amazon’s 26 fulfillment centers. It has been widely cited that warehouse robots represent a 400% improvement in productivity and management has stated that improvements in fulfillment costs provided the impetus for a recently announced company-wide $15 per hour minimum wage.

The Bot Brief had an opportunity to visit the Jefferson Memorial on a recent sojourn to the District of Columbia. We were surprised to see the following quote on the East wall of the tribute to the framer of the U.S. Declaration of Independence and the prescience it provides in the current state of our robotic revolution:

“I am not an advocate for frequent changes in laws and constitutions. But laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors.”

Clearly, we are in a position where we are in the process of changing our coat to better fit our growing reliance upon automation. John F. Kennedy once remarked at a dinner hosting Nobel Prize winners, “I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone.” Surely, Jefferson’s concept of the need for mankind and its institutions to adapt to changing opportunities and challenges, constitutes an exceptional perception of universal laws. The future ‘new truths discovered and manners and opinion changes’ that Jefferson foresaw will, most assuredly, involve robots and the adaptation of our laws to fit a vastly changing world.

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.

Balcones Investment Research can be reached at its website BalconesInvestmentResearch.com and is headquartered in Florida; with offices in Texas and North Carolina, United States

Cover photo courtesy of The Mirror, UK