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Weekly Bot Brief Newsletter on Robotics 1/10/2020

POSTED 01/12/2020

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

Bot Index Highlights:

The first ten days of 2020 proved extremely lucrative for investors, particularly those who held robotic names in their portfolios. The Bot Index rose almost 2 ½ %, besting the S & P 500 by nearly a percent and a half. Given the drone strike on an Iranian military leader, it was not surprising that several of the defense holdings within the Bot Index performed extremely well. AeroVironment Inc., a drone manufacturer gained 12.78%, while Northrup Grumman rose 8.84% and Lockheed Martin increased 8.84%. Within the Bot Index almost one third of the components provided returns exceeding 5%. The best of which was recorded by 3D Systems, the three-dimensional copy company who gained 14.17%. The stock rose on January 8th on volume four times normal, however, there appeared to be no significant news to propel the shares.

Other gainers included Google, who announced it’s Waymo Division had logged 20 million miles in testing its self-driving vehicles. The stock rose almost 7%. Faro Technologies continued its streak of gains, rising another 7.10%. Apple, last year’s best performer among the Bot Index, rose 5.68%. Teledyne benefitted by 5.49% from an Investor’s Business Daily article entitled, “These 5 Top Stocks Are In or Near Buy Zones”. Oceaneering International was also the beneficiary of positive press as it was included in a Goldman Sachs analysis, “These 3 Oil Stocks Are Set For Enormous Gains in 2020”. The stock added 7.04%. Finally, the sole international-based extraordinary gainer – Yaskawa Electric rose 6.29%.

There were only three poor performers within the Bot Index over the period. The low-priced issues - Accuray Inc. and Ekso Bionics, each lost 7.09% and 5.37% respectively. The big loser, however, was NIO  Corp., the Chinese electric car manufacturer. The stock has been on a roller-coaster over the past few weeks, but reeled 12.69% this week as Tesla reported its commencement of SUV deliveries in China, signaling major competition.

Economic Inputs:

In volume 1, Number 3 of the American Economic Review there was an intriguing article entitled, “Aging, Output Per Capita, and Secular Stagnation” by Gauti Eggertsson (Brown University), Manuel Lancastre (Brown University) and Laurence Summers (Harvard). The premise of the feature was that it confirmed the positive correlation between population aging and per capita output growth.  That theory focused on the fact that ‘aging impacts output per capital in at least three channels: It reduces the fraction of active workers in the population thereby reducing output per capita; It can increase capital per worker via capital deepening thus potentially offsetting the first effect and; It can induce a positive technical change due to a relative labor force scarcity that triggers labor saving and technological innovation, thus increasing total factor productivity which also may offset the (initial premise).”

What this infers is that the worldwide aging of the population’s impact upon economic growth is somewhat muted and offset by the increased saving (capital development) and the ability to use the (thus) lower interest rates to expand technologically-based productivity increasing enhancements such as robotics. Since that comes from such a luminary as Larry Summers (former Secretary of the Treasury and former President of Harvard University) one must assume that the Bot Brief’s continued assertion that, despite changing demographics which would normally accompany lower economic growth rates, productivity enhancements from capital devoted to technology (such as robotics) will supersede a slowing labor force growth rate and worldwide growth can continue.

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