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The Bot Brief

POSTED 03/26/2023

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

- Victor Hugo

 

Bots in The News:Bot Index vs. S & P 500

As was generally expected, the Fed chose to increase the Fed Fund rate by one quarter of a point in last week’s meeting. Hoping to bridge the SVB crisis and yet continue its expensive money inflation fight the Fed governors had only four choices: Either accept that there is a banking “crisis” and cut rates, do nothing to rates, continue to tighten but modestly or raise the rate 50bps as it has done in recent months. The Fed decided to maintain an inflation fighting course, however, less aggressively.

The markets responded in an equally milk toast fashion, giving investors a 1.40% increase. With some help from its Asian holdings, the Bot Index’s increase was slightly higher than the broad averages, closing the week with a 1.82% gain.

Intuitive Surgical continued its strength (6% in the prior week) to close up 7.83%. Investor interest was piqued following an article by the Motley Fool entitled, “2 Unstoppable Growth Stocks to Buy and Hold Forever”.

Both EV components jumped in last week’s trading. NIO Inc. gained 9.81% while Tesla added 5.71%. While a Friday released UBS report regarding a survey that indicated a slowing in car buyers interested in EV purchases, dropped NIO stock 3%, the report did point out the expectation that EV’s would gain 26% market share by 2026. The current penetration is 12%.

Retail sales were down .4% month over month in February, worse that the .3% expected decline. The report certainly contributed to the 83 basis point decline experienced by Amazon last week.

The only other decliner of significant note was Oceaneering International who fell 2.17%. The decline in the price of crude oil during the week was the source of the stock’s retreat.

2020's Decade of Bot Index Performance

Productivity and Bots…..again.

In the continuing conundrum of why all the spending on robotics, AI and automation hasn’t immediately impacted productivity, The Economist offered a rational explanation in its February 4th edition. They note, “More recent work emphasizes the time required to accumulate what is known as intangible capital, or the basic know-how needed to make effective use of new tech. Indeed, Erik Brynjolfsson of Stanford, Daniel Rock of MIT and Chad Severson of the university of Chicago suggest a disruptive new technology may be associated with a ‘productivity J-curve’. Measured productivity growth may actually decline in the years or decades after a new technology appears, as firms and workers divert time and resources to studying the tech and designing business processes around it. Only later as these investment bear fruit does the J curve surge upward.”

Likewise, The American Economic Review featured a February tome by Carter Braxton from the University of Wisconsin, that explored the impact of technological changes on labor worker displacement. His finding included, “technological change accounts for 45% of the decline in earnings after job loss. Technological change lowers earnings after job loss by requiring workers to have new skills to perform newly created jobs in their prior occupation. When workers lack the required skills, they move to occupation where their skills are still employable but are paid a lower wage.

 

 

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.