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Weekly Bot Brief Newsletter on Robotics 9/27/2019

POSTED 09/29/2019

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

Bot Index Highlights:Bot Index vs. S & P 500, 7-29-2019

With the University of Michigan’s Consumer Confidence Index increasing a full point to 93.2, durable goods orders climbing .2% (well above the -1.2% consensus) and personal income growth rising .4% (with a .6% jump in wages), one would anticipate that the market would view the information positively. Instead, macro-political events trumped the good economic news and forced stocks lower during last week’s trading. In a rather extreme announcement, the White House indicated they were in the early stages of investigating limitations or even an outright ban on U.S. investments in China. The week also noted the Democratic Party leadership’s impeachment proceedings on President Trump. Consequently, the Standard & Poor’s 500 dropped a bit over 1% for the week.

Under the backdrop of continuing economic conflict between the U.S. and China, it was not surprising that the leading loser in the Bot Index was the Chinese auto firm NIO Inc. The trade announcement drove NIO stock downward by almost a half of its prior week’s value. Beset by earnings problems and dilution created by a capital raise, the stock fell 42.45%.

AeroVironment fell 13.04% as its Chief Financial Officer left the company and Immersion Corp. and FARO Technologies declined 7.52% and 6.71% respectively to round out the week’s worst performers.

The best performers within the Bot Index were two Japanese holdings, Cyberdyne (+6.58%) and Fanuc Corp. (1.03%). Ekso Bionics rose 3.7% and Rockwell Automation increased 2.58%.

The Bot Index fell 2.57% for the week.

When Work Disappears:

In the September issue of The American Economic Review Insights, an interesting article was posted by David Autor, David Dorn and Gordon Hanson from MIT, University of Zurich and the University of California. The title of the publication was When Work Disappears: Manufacturing Decline and the Falling Marriage Market Value of Young Men. While the basis of the article involved labor opportunity shocks associated with trade issues, a corollary argument might be made regarding labor displacement by robotics. The article examined the circumstances to family formation from 1990 to 2014 due to the increase in manufacturing competition from China. The analysis uncovered a series of negative shocks, primarily to young males, as a result of the trade-related blue-collar employment shift. The article summed up the impact with, “Contractions in the supply of economically secure young adult men stemming from rising trade pressure spur a surge in male idleness and premature mortality, a decline in marriage and fertility, an increase in the fraction of mothers who are unmarried and who are heads of single, non-cohabitating households and a growth in the fraction of children raised in poverty.” It could be assumed that a similar scenario may unfold as robotic-led labor disruptions mirror trade-led disruptions. The Bot Brief has maintained that there will inevitably be labor substitutions that will impact certain demographic sectors more than others. Offsetting this, however, is the expansion in labor productivity and the opening of new economic and employment frontiers in space and oceanic exploration, advances in transportation, healthcare and communication.

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