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Weekly Market Update 11/19/2021

By November 29, 2021 No Comments

When Life Gives You Lemons…Buy Robots

With wages rising at their fastest pace in 20 years and US job openings near all-time highs, a push towards automation is accelerating as companies look for alternative methods to increase capacity and/or protect profit margins.  Furthermore, the government’s fiscal response to the pandemic, notably the Paycheck Protection Program (PPP), has fortified many companies’ balance sheets and enabled for historic levels of capex in areas such as robotics.  As a result, North American businesses have ordered roughly 29,000 robots worth almost $1.5B this year through the end of September, a record according to the Association for Advancing Automation (A3).  In addition, recent interest in robotic solutions is expanding beyond the more traditional applications, namely auto manufacturing, as almost two-thirds of robots ordered in the third quarter of 2021 are going to nonautomotive industries such as the metals industry, food and consumer goods industry, semiconductors, electronics, and photonics.  Moving forward, it appears as though this trend towards automation will likely persist, as per the Federal Reserve’s latest Senior Loan Officer Survey, expectations for C&I (commercial and industrial) loan demand for the next six months highlighted increased need for plant and equipment investments.  Ultimately it appears increasingly likely that the pandemic will materially change, not just where and how we work, but in many industries, who or what does the work.

Regards,

Ian G. Browning, CFA | Director, Investment Strategies & Shareholder
Peter E. Simmons, JD | President & CEO

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