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The Bot Brief

POSTED 10/16/2022

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

- Victor Hugo

 

Bots In the News:

With only one stock in positive territory within the portfolio of the Bot Index, it is no wonder the October mid-month performance was so poor. The Bot Index fell 4.44%, well beneath the 1.56% slide recorded by the S & P 500. The Swiss firm ABB Ltd. was the sole ‘up’ stock for the week and its gain was only 55 basis points.

This year has truly been a downer for the investment markets, with the bots in particular. Since the beginning of the year, the Bot Index has declined by 33% versus the broader market’s 24.82% decay. While there doesn’t seem a light at the end of the tunnel, there was good news in the Wall Street Journal regarding the robotic industry as a whole and its future in replacing a declining human workforce. Likewise, PwC released its projections for world economic growth which provides a glimpse of optimism which is based upon increasing productivity, a key component of the Robotic Revolution. Both topics to be discussed in our subsequent commentary.

There was only one stock in the Bot Index that recorded a double-digit decline. NIO Inc. fell 17.08% based upon macro and micro trends. The recent projections of an international recession, OPEC’s production cuts, rising interest rates and heavy governmental and personal debt loads spell trouble for luxury goods such as the EV’s made by NIO Inc. Likewise, the company missed its most recent quarter earning projection by 3 cents and experienced a widening 2nd quarter loss of $412 million.

Robotic Impactful Information:

PwC, the old Price Waterhouse Cooper Accounting firm just released its projections for the global economy. They reached some interesting conclusions such as: By 2050 China will be the largest economy and hold 20% of International GDP, India will be the second largest with 15%, the U.S. will have fallen to third place with only 12% of world GDP and the EU countries will represent only 9%. The most interesting revelation, however, is the optimistic level of projected world growth which is expected to double by 2050 (while population growth is minimal). PwC’s hypothesis is based upon the growth is “due to continued technology driven productivity improvements.” Clearly, those improvements will be a function of increased automation in the manufacturing sector. Since many of the currently dominate economies are more service oriented, it will be interesting to assess PwC’s methodology since automation in the service industries is just slowly emerging as a productive factor.

The Wall Street Journal just published a piece on the expanding use of robots to supplant the human work force. With corporations desperate for employees, the article focused on the rapid acceptance of robots. The feature noted that last year, a half million robots were installed globally, representing the most robust year for placements. Last year’s growth now places the number of working robots at 3.5 million. There are over 1,100 companies that are producing some type of industrial or service robots. It seems, however, that the old mantra of robotic suitability is in those dirty, dangerous or demeaning jobs remains intact. However, there is hope that the newest generation of robots are becoming more mobile, more flexible and with greater vision. Thus, greater gains in productivity are likely.

 

 

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.