News
The Bot Brief
POSTED 08/04/2024
"There is no force on earth more powerful than an idea whose time has come."
- Victor Hugo
Bots in the News:
The equity markets took a major downturn in last week’s trading. The S & P 500 slipped 2% while the Bot Index collapsed almost six and a half percent. A number of factors converged to force investors to liquidate and seek safer waters. Initially, several major tech companies reported earnings that were not up to the expectations that would support lofty multiples. Intel dropped more than 26% and Amazon fell 16% after each reported earnings that were below Wall Street’s consensus.
Following the earnings reports was the devastating jobs report that showed only 114k openings versus and expected 175k+. Consistent with the poor showing, unemployment jumped .2% to a 2 ¾ year high of 4.3% while hourly earnings eased to 3.6%. The labor report was extremely important to investors who focus on the Sahm Rule. This economic postulate notes that a recession is imminent when the three-month average of the unemployment rate jumps more than half a percentage point in a year. In the eleven times the Rule was triggered, each time led to a recession and the average time from trigger to actualization was only 3.3 months.
The news was sufficient to see the Dow drop 752 points, the NASDAQ to decline 664 points and the S & P to fall 120.
The Bot Index noted seven of its thirty components drop by double-digits. Leading the weakest performers were shares of Cognex Corp., who fell 23%. The company reported revenue that was down 1% year over year, operating margin down to 16.1% from 26.9% in the year-ago quarter and earnings per share which was off 37% year over year. The automobile slowdown, particularly in the EV space (which uses complex AI software in the self-driving mode), seems the culprit in Cognex poor showing.
Other double-digit decliners included: iRobot (-19.46%), 3D Systems (-18.95%), Immersion Corp. (-17.54%), Faro Corp. (-15.16%), Novanta Inc. (-12.13%) and Oceaneering International (-11.16%).
There were only six gainers in the Bot Index and the only meaningful results were in the defense category. We reported in the prior week’s Bot Brief the three companies that reported earnings in the sector that exceeded expectations. With the recent events in the Middle East, the fortunes of those three companies were enhanced. Lockheed Martin gained 4.56%, Northrup Grumman rose 2.97% and Raytheon Technologies increased 2.18%.
Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), 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 the material presented.