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Futures Reverse Earlier Stagflationary Losses As Dollar Dumps, Cryptos Soar

Futures Reverse Earlier Stagflationary Losses As Dollar Dumps, Cryptos Soar

In a mirror image of Thursday’s overnight action, US index futures reversed an early overnight drop, when sentiment was dented by growing concerns about the growing..



Futures Reverse Earlier Stagflationary Losses As Dollar Dumps, Cryptos Soar

In a mirror image of Thursday's overnight action, US index futures reversed an early overnight drop, when sentiment was dented by growing concerns about the growing global energy crisis, which sent European gas prices to a record 100 euros, and a global stagflationary wave which overshadowed the positive sentiment from a short-term Congressional deal that averted a government shutdown. However as US traders arrived at their desks, what was earlier a drop of as much as 40 points reversed to a gain of 13 points with the Emini now trading up 14 points or 0.34% to 4,312, Dow eminis were up 47 at 745am, reversing an earlier loss, while Nasdaq 100 e-minis also turned higher and were last up 29.5 or 0.2%. As stocks bounced the dollar resumed its decline while oil’s rally stalled and Treasuries were steady.

Wall Street ended sharply lower on Thursday, closing below its 100-day moving average (DMA), and the S&P 500 posted its worst month since the onset of the global health crisis, following a tumultuous month and quarter wrecked by concerns over COVID-19, inflation fears and budget wrangling in Washington. President Joe Biden signed a measure to continue funding the government through Dec. 3, although congressional Democrats and Republicans continued brawling over raising the debt ceiling beyond $28.4 trillion to avert a U.S. credit default.  As such, the short-term deal that averted a U.S. government shutdown was dwarfed by concern the crisis could return in weeks and also delay Biden’s $4 trillion economic vision.

On Friday, the first day of October, oil giants such as Exxon and Chevron slipped about 0.9% premarket, while the big banks dropped 1% each. Industrials Caterpillar, Deere and Nucor also came under pressure after Democratic leaders of the U.S. House of Representatives delayed a planned vote on a $1 trillion bipartisan infrastructure bill on Thursday. These are the stocks that would benefit the most from government spending on infrastructure.

The FAAMGs slipped 3.7% in Q3, breaking its five-quarter winning streak. Merck Inc jumped 4.7% after the drugmaker’s experimental oral drug for COVID-19, molnupiravir, reduced by around 50% the chance of hospitalization or death for patients at risk of severe disease in a study. Here are some of the other big movers.

  • Lordstown Motors (RIDE US) gains 7% in premarket trading after confirming a pact with Foxconn Technology.
  • Five9 (FIVN US) shares tick higher after co’s shareholders vote against Zoom’s takeover deal; analysts say it doesn’t come as a surprise and that both stocks have a strong appeal as standalone companies
  • International Business Machines (IBM US) slightly higher after Jefferies initiates with buy and a $170 target, saying co. now has a clear path to outperform growth expectations after several years of transition
  • IFF (IFF US) shares rose 2.5% in postmarket trading Thursday after the company announced Chairman and CEO Andreas Fibig’s retirement.
  • Helbiz (HLBZ US) shares rose 5.6% premarket after the scooter-share startup announced that CEO Salvatore Palella bought $2 million of PIPE or private investment in public equity units, consisting of shares and warrant

“There’s certainly plenty to be concerned about,” said Michael Hewson, chief market analyst at CMC Markets in London. “The gains year-to-date are still pretty decent, which raises the question of how much more is left in the tank, and whether this October will live up to the reputation of Octobers past and deliver a huge curveball, as well as giving investors an anxiety attack.”

Meanwhile, the debate over whether rising inflation mixed with patchier growth was a recipe for stagflation continued. “You can argue whether it’s really stagflation or not, but the whole growth-inflation backdrop seems to have just tilted to a less favorable one,” said Rob Carnell, Asia-Pacific head of research at ING in Singapore.

All eyes are now on consumer spending, inflation and factory activity data later in the day for signs of economic health and clues regarding the Federal Reserve’s timeline for tapering its asset purchases and hiking key interest rates.

Meanwhile, with stellar economic growth figures now in the rear view mirror, markets were looking ugly going into October, Michael Hewson, chief markets analyst at CMC Markets, said. Data overnight showed that Asia’s manufacturing activity broadly stagnated in September as signs of slowing Chinese growth weighed on the region’s economies.

“There is a sense that with October’s reputation, worries about surging energy prices, supply chain disruptions, concerns about inflation and power shortages, October could be a fairly windy affair,” Hewson said.

In Europe, banks and energy companies led the Stoxx Europe 600 Index down, dragging it as much as 0.9% lower en route for the benchmark’s worst week since January, although a wave of buying has managed to cut the drop in half. Banks, oil & gas and mining stocks are the weakest performers. BMW shares dodged the trend, gaining 1.6% after the German carmaker raised its profit expectations for this year despite a worsening chip shortage.

Asian stocks fell on the first day of the new quarter amid concerns over a vote on a U.S. infrastructure bill and China’s order to top state-owned energy companies to secure supplies for this winter. The MSCI Asia Pacific Index slid as much as 1.3%, with tech stocks weighing most on the gauge. Taiwan Semiconductor Manufacturing, Samsung Electronics and Nintendo were among the biggest contributors to the drop. Markets in China and Hong Kong were closed for a holiday.  Futures on the S&P 500 and Nasdaq 100 slumped during Asia trading hours after losses on Wall Street and as House Democrats delayed a vote on a bipartisan infrastructure deal. “I am surmising that Asia is responding to the terrible overnight session on Wall Street and the uncertainty surrounding the U.S. infrastructure vote,” said Jeffrey Halley, a senior market analyst at Oanda Corp. in Singapore. “Liquidity will be reduced with both Hong Kong and mainland China away.” Shares in Asia also fell following a report that China’s central government officials ordered energy companies -- from coal to electricity and oil -- to secure winter supplies at all costs. What China’s order means is that there “may be further input price pressures, which may weigh on firms’ margins ahead,” said Jun Rong Yeap, a market strategist at IG Asia Pte. Asian stocks capped the September quarter with a 5.2% slide, snapping a winning streak of five straight quarters. A mix of higher yields, China’s corporate crackdown and worry over its slowing economic growth have hurt sentiment. Investors are also bracing for the Federal Reserve to wind down its stimulus amid elevated inflation, supply-chain bottlenecks and a global energy crunch. “The ongoing Evergrande saga and increasing number of property firms that are facing liquidity issues is also weighing on sentiment,” said Justin Tang, head of Asian research at United First Partners. “All this comes amid the rise in bond yields, so plenty of things for investors to digest.” Chinese markets are closed for a week from Friday for the Golden Week holiday.

Japanese equities fell, capping their worst week since April 2020, amid mounting concerns over factors from stimulus cuts and supply-chain bottlenecks globally to new leadership at home. Electronics and chemicals makers were the biggest drags on the Topix, which fell 2.2%, with 32 of 33 industry groups in the red. The benchmark declined 5% on the week. Fast Retailing and Daikin were the largest contributors to a 2.3% daily loss in the Nikkei 225. “Investors are concerned about the impact of supply-chain issues in China, Vietnam and other Southeast Asian countries on the retail sector in the upcoming earnings season,” said Takashi Ito, an equity market strategist at Nomura Securities. U.S. stocks fell Thursday, capping their worst month since March 2020, as investors also eyed risks from inflation, slowing growth, the global energy crunch and regulatory risks emanating from China. U.S. index futures slid Friday as negotiations in Congress failed to produce an agreement on an infrastructure bill. Japanese stocks also reacted this week as Fumio Kishida emerged as the country’s likely next prime minister by winning leadership of the ruling Liberal Democratic Party. Expectations that a potential victory by vaccine czar Taro Kono would lead to favorable new policies had helped drive gains in local equities early last month in the wake of Yoshihide Suga’s resignation. Any change in finance minister under Kishida may pose uncertainties for the stock market, said Tomoichiro Kubota, a senior market analyst at Matsui Securities. Former Olympics minister Shunichi Suzuki -- reported by local media to be in line for the job -- may not be as strong in the position as current minister Taro Aso, he added.

Australian shares also tumbled, caping their fourth weekly loss led lower by banks. The S&P/ASX 200 index fell 2% to close at 7,185.50, dragged lower by weakness in the bank and mining sectors. For the week, the benchmark slipped 2.1%, its fourth consecutive week of losses. All industry groups closed lower, with the financials subgauge down 2.8% for the day, its biggest daily drop since Jun. 21.  The broader problem is that Australian shares “have a greater exposure to sectors which are vulnerable to a slowdown in the global economy” said Shane Oliver, head of investment strategy and chief economist at AMP Capital. If the issues of “a debt-ceiling in the U.S., are not resolved and results in default, or the issues regarding energy shortages in Europe and China are not resolved,” Australia remains vulnerable to the fallout, he said. Domino’s Pizza was among the worst performers on the Australian benchmark Friday. Whitehaven was the strongest performer, joining the rally among Asia’s coal producers after China ordered the country’s top state-owned energy companies to secure supplies at all costs. In New Zealand, the S&P/NZX 50 index was little changed at 13,279.15.

In rates, the yield on 10-year Treasuries hovered around 1.48% after earlier dropping to the lowest level since Monday. Treasuries were mixed across the curve, with futures off session lows and curves steady, holding Thursday’s late-day flattening move into the 4pm New York month-end index rebalancing. US yields remained within 1bp of Thursday’s closing levels, the 10-year around 1.485%; bunds and gilts outperform by ~3bp and ~2bp. Focal points for U.S. trading include ISM manufacturing, while Fed’s Harker and Mester are scheduled to speak. Bunds and gilts bull flatten, long end Germany richer by ~1.5bps to gilts with yields off 3.6bps near 0.24%. Cash USTs drift higher. Peripheral and semi-core spreads widen a touch. Japanese government bonds advanced as stocks tumbled and dip buying emerged after a recent bout of selling.

In FX, it was a quiet session with NOK topping the leader board but ranges are generally narrow. The Bloomberg Dollar Spot Index was little changed and is on course for a fourth weekly advance. Demand for dollar long gamma exposure in the front-end persists as a U.S. jobs report due next week provides a fresh catalyst for one-week implieds among major currencies to hit multi-week highs.The euro was steady at around $1.1580, barely budging after data showed inflation in the euro area accelerated to 3.4% in September, compared with expected 3.3%, and the highest level in 13 years. A measure stripping out volatile components such as food and energy climbed to 1.9%, a rate not seen since 2008; yields on European bonds fell, led by the long end. Norway’s krone led G-10 gains as European gas surged to a record 100 euros as China stepped up a global fight for energy supplies, in a move that threatens to derail the economic recovery. Prices later retreated. Cable inched up while gilt yields fell. The U.K.’s Debt Management Office confirmed the nation’s next green gilt will be launched in the week starting Oct. 18, subject to market conditions. Australia’s dollar is headed for a fourth weekly decline as weak equities weigh on growth-linked currencies. A sovereign bond sale met strong investor appetite.

In commodities, crude futures drift lower, putting in a small bounce off the lows as the European session progresses. WTI is down 0.5% near $74.60, Brent is in the red but bounces to trade near $78. Spot gold holds a tight range, so far little changed from Monday’s levels near $1,754/oz. That said, it's only a matter of time before upward pressure on prices returns after China ordered its state-owned companies to secure energy supplies at all costs. Base metals are mostly in the green with LME copper the best performer, snapping back above the $9,000 mark. Gold steadied after posting the biggest gain since March after initial jobless claims in the U.S. climbed.

After sliding progressively lower in recent weeks, crytpos bounced sharply higher, with both bitcoin and ethereum up around 8%.

To the day ahead now, and the data highlights include the global manufacturing PMIs for September, as well as the flash Euro Area CPI reading for September and German retail sales for August. In the US, there’ll also be the ISM manufacturing reading for September, along with personal income and personal spending data for August. Central bank speakers include the Fed’s Harker and Mester, and the ECB’s Schnabel.

Market Snapshot

  • S&P 500 futures up 0.3% to 4,309
  • STOXX Europe 600 down 0.3% to 453.69
  • German 10Y yield fell 2.8 bps to -0.228%
  • Euro little changed at $1.1580
  • MXAP down 1.2% to 194.86
  • MXAPJ down 0.9% to 631.09
  • Nikkei down 2.3% to 28,771.07
  • Topix down 2.2% to 1,986.31
  • Hang Seng Index down 0.4% to 24,575.64
  • Shanghai Composite up 0.9% to 3,568.17
  • Sensex down 0.7% to 58,700.42
  • Australia S&P/ASX 200 down 2.0% to 7,185.50
  • Kospi down 1.6% to 3,019.18
  • Brent Futures down 0.7% to $77.95/bbl
  • Gold spot down 0.2% to $1,752.92
  • U.S. Dollar Index little changed at 94.28

Top Overnight News from Bloomberg

  • Global bond investors are facing their worst year at this point in more than two decades after a selloff in September triggered by hawkish statements from central bankers including Federal Reserve Chair Jerome Powell. The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has lost 4.1 percent so far this year, the biggest slump for any such period since at least 1999. Comments last month from Powell that the Fed could start scaling back bond buying in November and a move closer by the Bank of England to raising rates triggered a surge in bond yields globally
  • House Speaker Nancy Pelosi plans to try again Friday for a vote on bipartisan infrastructure legislation that’s been held up by a battle between moderate and progressive Democrats over President Joe Biden’s economic agenda
  • European manufacturers are increasingly strained by global supply-chain problems that are pushing up prices and may last well into next year. A gauge by IHS Markit measuring business activity in manufacturing fell last month by the biggest margin since April 2020 -- the beginning of the Covid-19 pandemic. Growth in new orders, output and employment slowed considerably
  • China’s leadership has told the country’s state- owned miners to produce coal at full capacity for the rest of the year even if they exceed annual quota limits as they struggle with the deepening power crisis
  • The U.K. government is getting rid of most of the measures that helped businesses stay afloat during the darkest days of the pandemic. Starting Oct. 1, creditors will once again be allowed to serve statutory demands -- a written warning from a creditor to ask for payment of money owed -- and file winding-up petitions for companies that haven’t paid their debts on time. The government reintroduced personal liability rules for directors in July

A more detailed look at global markets courtesy of Nesquawk

Asia-Pac stocks began Q4 on the backfoot following the negative handover from Wall St. where all major indices declined to close out the worst month and quarter in the S&P 500 since the start of the pandemic, with risk appetite in Asia also not helped by the absence of key markets including Hong Kong which was closed for an extended weekend and with mainland China observing Golden Week holidays. ASX 200 (-2.0%) was heavily pressured by broad losses across its sectors and with the declines led by the top-weighted financial industry and losses in the mining giants, although gold producers weathered the storm and were underpinned by the recent reprieve in the precious metal. Furthermore, there were headwinds from the continued substantial COVID-19 infection numbers and a slowdown in domestic PMI data, as well as the postponement of free trade negotiations with Europe as a fallout from the cancelled submarine deal. Nikkei 225 (-2.3%) suffered from the haven currency inflows and although the latest Tankan data was mostly better than expected in which the Large Manufacturers Index rose for a fifth consecutive quarter to its highest since 2018, the BoJ noted that automakers' sentiment worsened due to parts shortages caused by disruptions at Southeast Asian factories and large automakers' sentiment index was the weakest since December. The removal of Japan’s state of emergency which had been widely flagged, did little to spur risk appetite, although Rakuten was among the few that have bucked the trend as it prepares to list its unit Rakuten Bank. KOSPI (-1.6%) conformed to the broad weakness with the index dampened despite the better-than-expected trade data, while it was also reported that South Korea is to extend current social distancing measures by two weeks and North Korea announced it had conducted an anti-aircraft missile test on Thursday. Finally, 10yr JGBs traded higher with prices lifted by risk aversion in stocks which also underpinned Bunds and T-note futures overnight, while prices in the Japanese benchmark breached resistance at 151.50 and reports noted the BoJ plans to maintain the current pace and size of JGB purchases during Q4.

Top Asian News

  • Tata Said to Win Air India in Historic Deal Years in Making
  • Post- Suga Jump in Japan Stocks Vanishes With Uninspiring Leader
  • Zee Says Unable to Convene Holders’ Meeting as Sought by Invesco
  • Asian Factories Recover as Restrictions Ease After Delta Hit

Bourses in Europe kicked off the first trading day of the month on the back foot (Euro Stoxx 50 -0.8%; Stoxx 600 -0.9%), although the selling has somewhat stabilised following the downside momentum experienced heading into and around the cash open. This followed on from a downbeat APAC session and as Chinese markets entered a week-long hibernation due to Golden Week. US equity futures have also succumbed to the risk aversion, with the cyclical RTY (-0.9%) narrowly lagging its ES (-0.6%), NQ (-0.6%) and YM (-0.6%) peers. Back to Europe, the morning saw the final release of the manufacturing PMIs all highlighted the theme of intense supply-side imbalances, with some also noting of the follow-through to consumer demand, whilst IHS suggested that the theme of supply issues and rising prices could continue "well into 2022". The core and periphery equity cash markets are experiencing broad-based losses. Sectors are predominantly in the red and show a somewhat broad performance with no clear bias nor theme. Travel & Leisure opened as the marked underperformer but has since made its way up the ranks. Banks are hit amid the pullback in yields after the European close yesterday – with the US 10yr cash yield back under 1.50% and the 20yr sub-2%. Utilities, however, buck the trend as EDF (+4.2%) shares extend on gains and reside at the top of the Stoxx 600 – with desks citing an element of relief from the French announcement on energy which left electricity tariffs untouched; E.ON (+1.8%), National Grid (+1.6%) and Engie (+1.6%) follow suit. In terms of individual movers, BMW (+1.8%) nursed the losses seen at the open after the German automaker upped its auto revenue guidance despite the ongoing semiconductor shortage, adding that "the continuing positive pricing effects for both new and pre-owned vehicles will overcompensate these negative sales volume effects in the current financial year." ING (-0.8%) meanwhile has trimmed the losses seen at the open following the announcement of a EUR 1.7bln share buyback programme.

Top European News

  • Orcel Wrestles Italy Over the Remains of the World’s Oldest Bank
  • EU Mulls Freeing Up Aid to Poland and Hungary, With Strings
  • Fire at Romanian Covid Hospital Kills at Least Four People
  • European Gas Hit Record 100 Euros as Energy Crunch Worsens

In FX, having held just above 94.000 on Thursday when the final position squaring for month end culminated in a loss of bullish momentum, the Dollar and index have firmed up again amidst a risk-off start to October. However, sentiment has gradually improved and US Treasuries have reverted to a more pronounced bull-flattening trajectory to keep the Buck capped ahead of yesterday’s new cycle peaks as the DXY straddles 93.300 within a narrow 94.201-395 band vs its 94.109-504 prior session extremes in the run up to a busy slate of data, surveys and yet more Fedspeak. Elsewhere, the Yen is also benefiting from a degree of safe-haven demand and eyeing 111.00 vs its US peer after containing losses through 112.00 when negative rebalancing flows were peaking, and with some traction from an encouraging Japanese Tankan survey on balance overnight, while the Franc and Gold are both underpinned around 0.9300 and Usd 1750/oz respectively, but the Euro remains heavy after losing 1.1600+ status and deriving no real support from rather mixed Eurozone manufacturing PMIs, below forecast German retail sales or even y/y HICP marginally topping consensus.

  • NZD/AUD/GBP/CAD - Somewhat contrasting fortunes for the high beta, activity, cyclical and commodity bloc, as the Kiwi continues to pivot 0.6900 against its US rival and defend the psychological 1.0500 mark vs the Aussie that has overcome disappointment on the back of softer PMIs and considerably weaker than expected housing finance data to extend beyond 0.7200 where hefty 1.7 bn option expiry interest resides. Meanwhile, the Pound is hovering just under 1.3500 following a healthy looking upward revision to the final UK PMI, but the Loonie is lagging between 1.2739-1.2674 parameters pre-Canadian monthly GDP and the official manufacturing PMI.
  • SCANDI/EM - Rather perverse price action in Eur/Nok and Eur/Sek as the former retreats beneath 10.1000 after a slowdown in Norway’s manufacturing PMI, but the latter rebounds around a 10.1500 axis irrespective of faster growth in Sweden. Similarly, EM currencies are mixed with the Rub underperforming as Brent reverses through Usd 78/brl, but the Mxn firmer post-Banxico’s rate hike regardless of a downturn in WTI and the Try happy with lower oil prices rather than rattled by another bank predicting that the CBRT will slash benchmark rates by a further 300 bp before year end.

In commodities, WTI and Brent front month futures have been drifting lower throughout the European session with no clear catalyst aside from the overall risk environment. Markets are gearing up OPEC-related headlines ahead of the confab on Monday, with sources yesterday noting that OPEC+ is considering options for releasing more oil to the market at next week's meeting. However, oil analysts caveat that this is just the nature of their meetings whereby "all options are on the table". Recent sources also suggested that despite prices hitting a three-year high above USD 80/bbl for the November Brent contract, the ministers are unlikely to deviate from current plans. All signs currently point towards a smooth meeting – with no pushback seen from any members, although surprises cannot be omitted. On that note, it'll be interesting to see if the meeting provides commentary surrounding the troubles among some African nations to ramp up production amid maintenance problems and low investments. Nonetheless, there is no question that OPEC+ is facing outside pressure to up its production volumes: The White House said the National Security Adviser plans to discuss oil prices with Saudi Arabia, while it noted oil price remains a concern and they have been in touch with OPEC. As a reminder, unanimity among OPEC+ members is required for any tweaks to the Declaration of Cooperation (DoC). WTI Nov resides around USD 74.50bbl (74.23-75.57/bbl range), whilst Brent Dec trades on either side of USD 78/bbl (vs 77.55-78.87/bbl range). Elsewhere, spot gold and silver are in a holding pattern awaiting the next catalyst, with prices somewhat consolidating following yesterday's run. The yellow metal has re-established support at USD 1,750/oz, whilst spot silver drifts higher after printing a floor around the USD 22/oz mark. Over to industrial metals, LME copper is attempting to claw back some of its recent losses whereby prices fell under USD 9k/t in the prior session – a level the red metal has reclaimed, although the absence of China in the market over the next week may provide some headwinds to the overnight demand. For the nickel watchers, BHP said its Kwinana nickel sulphate plant outside Perth had yielded its first nickel sulphate crystals, with the Co. aiming to produce 100k tonnes per annum of nickel sulphate. Finally, it's worth being cognizant of a sources piece via SGH Macro (dated yesterday), which suggested that due to the current power shortages, China's MIIT will "severely" restrict the output of heavy electricity-consuming sectors going forward, such as copper, steel, cement, aluminium.

US Event Calendar

  • 8:30am: Aug. Personal Income, est. 0.2%, prior 1.1%
  • 8:30am: Aug. Personal Spending, est. 0.6%, prior 0.3%
  • 8:30am: Aug. PCE Deflator MoM, est. 0.3%, prior 0.4%; PCE Deflator YoY, est. 4.2%, prior 4.2%
  • 8:30am: Aug. PCE Core Deflator YoY, est. 3.5%, prior 3.6%; PCE Core Deflator MoM, est. 0.2%, prior 0.3%
  • 8:30am: Aug. Real Personal Spending, est. 0.4%, prior -0.1%
  • 9:45am: Sept. Markit US Manufacturing PMI, est. 60.5, prior 60.5
  • 10am: Aug. Construction Spending MoM, est. 0.3%, prior 0.3%
  • 10am: Sept. ISM Manufacturing, est. 59.5, prior 59.9
  • 10am: Sept. U. of Mich. 1 Yr Inflation, est. 4.8%, prior 4.7%; 5-10 Yr Inflation, prior 2.9%
  • 10am: Sept. U. of Mich. Sentiment, est. 71.0, prior 71.0; Expectations, est. 67.1, prior 67.1;
  • Current Conditions, est. 77.1, prior 77.1

DB's Jim Reid concludes the overnight wrap

I always thought I had a busy job. However if you want a truly hectic one then join the social committee and become chair person of the parents circle at school. My wife volunteered for these roles and she’s now run off her feet. I have to book slots to speak with her. One of her first big events is a colour run tomorrow at the school where hundreds of kids and parents run round a field whilst lots of dye is thrown at them. Why I’m yet to fathom. At least the crutches will be a good excuse to sit at the side with a cup of coffee! The weather forecast is absolutely horrid so this could be a technicoloured mudbath. I dread to think what our kids will end up looking like.

As a cold, wet October gets underway, the US government has avoided being stuck in the mud and will indeed remain open. Last night, both chambers of Congress passed a standalone stopgap spending bill to fund the government through 3 December which could mean that we’re back here again in 2 months. Without the debt ceiling provisions we remain just over 2 weeks away from the Treasury no longer being able to service the national debt. With Republicans unwilling to raise the debt ceiling, that measure is still most likely to pass through budget reconciliation, where Democrats can approve the measure with a simple majority in the Senate, rather than the 60 votes needed to override a filibuster.It’s now a race for Democrats to finish their interparty negotiations on the $3.5 trillion “Build Back Better” plan before the October 18th deadline. In 2011 and 2013, the agreement to raise the debt ceiling was reached with just 2 and 1 day remaining respectively, but both of those bills were bipartisan.

Staying in Washington, there was less success when it came to passing the $550bn bipartisan infrastructure package. We had anticipated a vote on the bill yesterday, which has already been passed by the Senate, but Speaker Pelosi pulled the vote after it became apparent there wasn’t enough support among her Democratic colleagues for it to pass. The issue is that some of the more progressive members among the House Democrats don’t want to vote for it without the larger reconciliation package, which contains much of Biden’s agenda on social programs, and they fear that voting through the infrastructure bill will see moderates scale back the amount of spending on the reconciliation bill, so they’re using their votes on infrastructure as leverage. There were continued attempts yesterday to come up with a framework on reconciliation that had the agreement of Senators Manchin and Sinema (the two Democratic moderates in the Senate), and would thus guarantee an amount that could pass both chambers. But Manchin said last night that he still wanted to cut the amount in the reconciliation package to $1.5tn, from the $3.5tn that was originally proposed, which is something that will not be liked by the progressives. Keep an eye on this however, as it’s possible we could get a vote in the House today on infrastructure instead.

Since it’s the start of Q4 today, and the fact that we never shut down here on the EMR, we’ll shortly be releasing our September and Q3 performance review, running through how different financial assets fared over the last month. For September as a whole, markets had a pretty weak performance that included declines for both bonds and equities. That came amidst jitters over Evergrande, rising energy prices and hence inflationary pressures, as well as a hawkish turn from multiple central banks. In turn, the major equity indices fell back for the first time since January, bringing a consistent run of 7 consecutive monthly increases to an end. Looking at Q3 as a whole was much more positive however, and it’s worth noting that a number of fears about Covid and new variants at the start of the quarter didn’t materialise, with no major new variants emerging since delta. In fact the virus has taken a back seat of late. Anyway, full performance details in the report out shortly.

Back to yesterday now, and markets ended Q3 in a notable risk-off manner as they awaited fiscal developments in the United States, with the S&P 500 having now lost just over -5% since its closing peak back on September 2. US equities lost ground later in the session, with the S&P 500 down -1.19% as part of a broad-based decline, though Europe’s STOXX 600 managed a smaller -0.05% loss. The S&P 500 fell roughly -0.9% in the last half hour of the day yesterday after spending much of the New York afternoon trying to get back to unchanged. To highlight how broad-based the losses were, 23 of the 24 S&P 500 industry groups were lower yesterday, with only semiconductors posting small recovery gains after large losses back on Wednesday. This helped the FANG+ index eke out a +0.22% gain to break a run of 4 consecutive losses. One of the largest laggards in the US yesterday was Bed, Bath and Beyond, which saw its share price fall -22.18% as the company’s adjusted Q2 EPS came in at $0.04 vs $0.52 expected and they revised 2022 EPS estimates to $0.70-$1.10 per share, from its June forecast of $1.40-$1.55 per share. Management cited “unprecedented supply chain challenges" that have been impacting the whole industry and steeper cost inflation outpacing their plans to offset those particular headwinds. There’s been similar commentary from chip producers recently and as we head into earnings season this will be an important factor to pay attention to. After multiple quarters of corporates outperforming low expectations, could this quarter see the inverse for many companies?

Meanwhile, Fed Chair Powell maintained that the surging inflation data is being caused by these supply chain challenges and they will abate. Under questioning from the House Financial Services Committee, Powell said he expects inflation to ease in the first half of 2022. However most of the questioning during yesterday’s hearing was directed at Treasury Secretary Yellen regarding the debt ceiling. Yellen said she was in favour of Congress getting rid of the debt ceiling entirely, repeating her warnings of “catastrophe” if Congress did not raise the limit soon.

All this came against a backdrop of divergent sovereign bond yields. Yesterday saw higher bond prices over in the US, with yields on 10yr Treasuries down -2.1bps to 1.517% and rallying into the weak equity close. But in Europe, yields on 10yr bunds (+1.4bps), OATs (+1.8bps) and BTPs (+3.4bps) moved higher, while Gilts continued their recent underperformance with the spread of 10yr gilt yields over bunds widening a further +3.1bps to reach their widest level since the Brexit referendum in 2016, at 123bps.

Overnight in Asia, most equity markets have begun the new quarter on a negative note, with the Nikkei (-2.01%) and Kospi (-1.32%) declining just as China starts a week-long holiday. In terms of the latest on the power issues, Bloomberg reported overnight that China’s state-owned energy companies have been ordered to secure supplies for the winter by the central government so as to ease the crisis situation. Separately, Japan and Australia made progress in their reopening strategy with Japan coming completely out of the state of emergency (which marks the first time in six months that no region is under an emergency) while Australia brought forward the lift-off on international travel to November. Looking forward, equity futures are pointing to further declines as we start Q4 today, with those on the S&P 500 down (-0.53%).

On the inflation side, there were a number of interesting releases yesterday from the Euro Area ahead of today’s flash CPI estimate for September. In Germany, the EU-harmonised measure of CPI inflation rose to +4.1% (vs. +4.0% expected), marking the highest rate since the formation of the Euro Area. In France the equivalent measure also rose, but by slightly less than expected to +2.7% (vs. +2.8% expected), albeit that was still the strongest in nearly a decade. Finally in Italy, inflation came in as expected at +3.0%, the highest since 2012.

Staying on inflation, we might be sounding like a broken record on this point, but European natural gas prices continued their astonishing rise yesterday, with futures up another +12.89% to bring their gains over September as a whole to +94.23%. There was further evidence it was having an impact on monetary policy as well, with Ukrainian central bank Deputy Governor Nikolaychuk saying that his personal view was that “we’ll need to keep the rate unchanged at 8.5% for longer than we envisaged before.” They were previously looking to cut rates. On the other hand, the Czech central bank rose its benchmark rate +75bps, beyond the 50bps expected and the largest hike in nearly 25 years. Governor Jiri Rusnok said that “we simply need to send a strong signal to people and the economy that we won’t allow inflation expectations to become detached from our target.” He warned that trying to reverse inflation after it is already present would be “dangerous”. He promised more hikes, with the conversation now moving to a question of how much and how often. The Czech koruna gained +0.78% versus the dollar yesterday – its biggest gain in nearly three months. We should note that in some ways the Czech story is uncoupled from the current European energy crisis, since the country has seen inflation run above target for the past three years. But in France, Prime Minister Castex said last night that the government would block an increase in regulated gas tariffs and lower electricity taxes so as to reduce the burden of the latest rise on consumers.

Looking at yesterday’s other data, UK GDP growth in Q2 was revised higher to show +5.5% growth (vs. 4.8% prior estimate), which leaves GDP 3.3% beneath the pre-pandemic level in Q4 2019, rather than 4.4% as previously estimated. In light of the stronger than expected Q2, DB’s UK economist has revised down our Q3 and Q4 projections, reflecting base effects, unfolding supply-side restrictions, and slowing demand momentum. The lower profile for growth will see a +3.6% expansion in 2022, and then +1.5% in 2023. You can read the full update here. Otherwise, German unemployment fell by -30k in September (vs. -37k expected), which leaves the unemployment claims rate at 5.5% as expected. And in the US, the weekly initial jobless claims unexpectedly rose to 362k (vs. 330k expected) in the week through September 25, while Q2 growth was revised up a tenth to an annualised rate of +6.7%.

To the day ahead now, and the data highlights include the global manufacturing PMIs for September, as well as the flash Euro Area CPI reading for September and German retail sales for August. In the US, there’ll also be the ISM manufacturing reading for September, along with personal income and personal spending data for August. Central bank speakers include the Fed’s Harker and Mester, and the ECB’s Schnabel.



Tyler Durden Fri, 10/01/2021 - 08:08

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Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023

Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023
PR Newswire
STOCKHOLM, March 31, 2023

Infosys achieves a notable rise in overall ranking in the Nordics with a customer…



Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023

PR Newswire

Infosys achieves a notable rise in overall ranking in the Nordics with a customer satisfaction score of 81 percent as compared to the industry average of 73 percent

STOCKHOLM, March 31, 2023 /PRNewswire/ -- Infosys (NSE: INFY) (BSE: INFY) (NYSE: INFY), a global leader in next-generation digital services and consulting, today announced that it has been recognized as one of the top service providers in the Nordics, achieving the highest awarded score in Whitelane Research and PA Consulting's 2023 IT Sourcing Study. The report ranked Infosys as the number one service provider and an 'Exceptional Performer' in the categories of Digital Transformation, Application Services, and Cloud & Infrastructure Hosting Services. Infosys also ranked number one in overall General Satisfaction and Service Delivery.

For the report, Whitelane Research and PA Consulting, the innovation and transformation consultancy, surveyed nearly 400 CXOs and key decision-makers from top IT spending organizations in the Nordics and evaluated over 750 unique IT sourcing relationships and more than 1,400 cloud sourcing relationships. These service providers were assessed based on their service delivery, client relationships, commercial leverage, and transformation capabilities.

Some of Infosys' key differentiating factors highlighted in the report are:

  • Infosys ranked as a top provider in the Nordics across key performance indicators on service delivery quality, account management quality, price level and transformative innovation.
  • Infosys' ranked above the industry average by 8 percent year-on-year, making it one of the top system integrators in the Nordics.
  • Infosys is positioned as a "Strong Performer" in Security Services and scored significantly above average on account management.

Arne Erik Berntzen, Group CIO of Posten Norge, said: "Infosys has been integral in helping Posten Norge transform its IT Service Management capabilities. As Posten's partner since 2021, Infosys picked up the IT Service Management function from the incumbent, successfully transforming it through a brand-new implementation of ServiceNow, redesigning IT service management to suit the next-generation development processes and resulting in a significant improvement of the overall customer experience. I congratulate Infosys for achieving the top ranking in the 2023 Nordic IT Sourcing Study."

Antti Koskelin, SVP & CIO at KONE, said: "Infosys has been our trusted partner in our digitalization journey since 2017 and have helped us in establishing best-in-class services blueprint and rolling-in our enterprise IT landscape over the last few years. Digital transformations need partners to constantly learn, give ideas that work and be flexible to share risks and rewards with us, and Infosys has done just that. I am delighted that Infosys has been positioned No. 1 in Whitelane's 2023 Nordic Survey. This is definitely a reflection of their capabilities."

Jef Loos, Head of Research Europe, Whitelane Research, said, "In today's dynamic IT market, client demand is ever evolving, and staying ahead of the curve requires a strategic blend of optimized offerings and trusted client relationships. Infosys' impressive ranking in Whitelane's Nordic IT Sourcing Study is a testament to their unwavering commitment to fulfilling client demands effectively. Through their innovative solutions and exceptional customer service, Infosys has established itself as a leader in the industry, paving the way for a brighter and more successful future for all."

Hemant Lamba, Executive Vice President & Global Head – Strategic Sales, Infosys said, "Our ranking as one of the top service providers across the Nordics in the Whitelane Research and PA Consulting 2023 IT Sourcing Study, endorses our commitment to this important market. This is a significant milestone in our regional strategy, and the recognition revalidates our commitment towards driving customer success and excellence in delivering innovative IT services. Through our geographical presence in the Nordics, we will continue to drive business innovation and IT transformation in the region, backed by a strong partner network. We look forward to continuing investing in this market to foster client confidence and further enhance delivery."

About Infosys

Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.

Visit to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.

Safe Harbor

Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India and the US, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2022. These filings are available at Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.



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Asking the right dumb questions

You’ll have to forgive the truncated newsletter this week. Turns out I brought more back from Chicago than a couple of robot stress balls (the one piece…



You’ll have to forgive the truncated newsletter this week. Turns out I brought more back from Chicago than a couple of robot stress balls (the one piece of swag I will gladly accept). I was telling someone ahead of the ProMat trip that I’ve returned to 2019 travel levels this year. One bit I’d forgotten was the frequency and severity of convention colds — “con crud,” as my comics friends used to call it.

I’ve been mostly housebound for the last few days, dealing with this special brand of Chicago-style deep-dish viral infection. The past three years have no doubt hobbled my immune system, but after catching COVID-19 three times, it’s frankly refreshing to have a classic, good old-fashioned head cold. Sometimes you want the band you see live to play the hits, you know? I’m rediscovering the transformative properties of honey in a cup of tea.

The good news for me is that (and, hopefully, you) is I’ve got a trio of interviews from ProMat that I’ve been wanting to share in Actuator. As I said last week, the trip was really insightful. At one of the after-show events, someone asked me how one gets into tech journalism. It’s something I’ve been asked from time to time, and I always have the same answer. There are two paths in. One is as a technologist; the other is as a journalist.

It’s obvious on the face of it. But the point is that people tend to enter the field in one of two distinct ways. Either they love writing or they’re really into tech. I was the former. I moved to New York City to write about music. It’s something I still do, but it’s never fully paid the bills. The good news for me is I sincerely believe it’s easier to learn about technology than it is to learn how to be a good writer.

I suspect the world of robotics startups is similarly bifurcated. You enter as either a robotics expert or someone with a deep knowledge of the field that’s being automated. I often think about the time iRobot CEO Colin Angle told me that, in order to become a successful roboticist, he first had to become a vacuum salesman. He and his fellow co-founders got into the world through the robotics side. And then there’s Locus robotics, which began as a logistics company that started building robots out of necessity.

Both approaches are valid, and I’m not entirely sure one is better than the other, assuming you’re willing to surround yourself with assertive people who possess deep knowledge in areas where you fall short. I don’t know if I entirely buy the old adage that there’s no such thing as a dumb question, but I do believe that dumb questions are necessary, and you need to get comfortable asking them. You also need to find a group of people you’re comfortable asking. Smart people know the right dumb questions to ask.

Covering robotics has been a similar journey for me. I learned as much about supply chain/logistics as the robots that serve them at last week’s event. That’s been an extremely edifying aspect of writing about the space. In robotics, no one really gets to be a pure roboticist anymore.

Q&A with Rick Faulk

Image Credits: Locus Robotics

I’m gonna kick things off this week with highlights from a trio of ProMat interviews. First up is Locus Robotics CEO, Rick Faulk. The full interview is here.

TC: You potentially have the foundation to automate the entire process.

RF: We absolutely do that today. It’s not a dream.

Lights out?

It’s not lights out. Lights out might happen 10 years from now, but the ROI is not there to do it today. It may be there down the road. We’ve got advanced product groups working on some things that are looking at how to get more labor out of the equation. Our strategy is to minimize labor over time. We’re doing integrations with Berkshire Grey and others to minimize labor. To get to a dark building is going to be years away.

Have you explored front-of-house — retail or restaurants?

We have a lot of calls about restaurants. Our strategy is to focus. There are 135,000 warehouses out there that have to be automated. Less than 5% are automated today. I was in Japan recently, and my meal was filled by a robot. I look around and say, “Hey, we could do that.” But it’s a different market.

What is the safety protocol? If a robot and I are walking toward each other on the floor, will it stop first?

It will stop or they’ll navigate around. It’s unbelievably smart. If you saw what happened on the back end — it’s dynamically planning paths in real time. Each robot is talking to other robots. This robot will tell this robot over here, “You can’t get through here, so go around.” If there’s an accident, we’ll go around it.

They’re all creating a large, cloud-based map together in real time.

That’s exactly what it is.

When was the company founded?

[In] 2014. We actually spun out of a company called Quiet Logistics. It was a 3PL. We were fully automated with Kiva. Amazon bought Kiva in 2012, and said, “We’re going to take the product off the market.” We looked for another robot and couldn’t find one, so we decided to build one.

The form factors are similar.

Their form factor is basically the bottom. It goes under a shelf and brings the shelf back to the station to do a pick. The great thing about our solution is we can go into a brownfield building. They’re great and they work, but it will also take four times the number of robots to do the same work our robots do.

Amazon keeps coming up in my conversations in the space as a motivator for warehouses to adopt technologies to remain competitive. But there’s an even deeper connection here.

Amazon is actually our best marketing organization. They’re setting the bar for SLAs (service-level agreements). Every single one of these 3PLs walking around here [has] to do same- or next-day delivery, because that’s what’s being demanded by their clients.

Do the systems’ style require in-person deployment?

The interesting thing during COVID is we actually deployed a site over FaceTime.

Someone walked around the warehouse with a phone?

Yeah. It’s not our preferred method. They probably actually did a better job than we did. It was terrific.

As far as efficiency, that could make a lot of sense, moving forward.

Yeah. It does still require humans to go in, do the installation and training — that sort of thing. I think it will be a while before we get away from that. But it’s not hard to do. We take folks off the street, train them and in a month they know how to deploy.

Where are they manufactured?

We manufacture them in Boston, believe it or not. We have contract manufacturers manufacturing some components, like the base and the mast. And then we integrate them together in Boston. We do the final assembly and then do all the shipments.

As you expand sales globally, are there plans to open additional manufacturing sites?

We will eventually. Right now we’re doing some assemblies in Amsterdam. We’re doing all refurbishments for Europe in Amsterdam. […] There’s a big sustainability story, too. Sustainability is really important to big clients like DHL. Ours is an inherently green model. We have over 12,000 robots in the field. You can count the number of robots we’ve scrapped on two hands. Everything gets recycled to the field. A robot will come back after three or four years and we’ll rewrap it. We may have to swap out a camera, a light or something. And then it goes back into service under a RaaS model.

What happened in the cases where they had to be scrapped?

They got hit by forklifts and they were unrepairable. I mean crushed.

Any additional fundraising on the horizon?

We’ve raised about $430 million, went through our Series F. Next leg in our financing will be an IPO. Probably. We have the numbers to do it now. The market conditions are not right to do it, for all the reasons you know.

Do you have a rough timeline?

It will be next year, but the markets have got to recover. We don’t control that.

Q&A with Jerome Dubois

Image Credits: 6 River Systems

Next up, fittingly, is Jerome Dubois, the co-founder of Locus’ chief competitor, 6 River Systems (now a part of Shopify). Full interview here.

TC: Why was [the Shopify acquisition] the right move? Had you considered IPO’ing or moving in a different direction?

JD: In 2019, when we were raising money, we were doing well. But Shopify presents itself and says, “Hey, we’re interested in investing in the space. We want to build out a logistics network. We need technology like yours to make it happen. We’ve got the right team; you know about the space. Let’s see if this works out.”

What we’ve been able to do is leverage a tremendous amount of investment from Shopify to grow the company. We were about 120 employees at 30 sites. We’re at 420 employees now and over 110 sites globally.

Amazon buys Kiva and cuts off third-party access to their robots. That must have been a discussion you had with Shopify.

Up front. “If that’s what the plan is, we’re not interested.” We had a strong positive trajectory; we had strong investors. Everyone was really bullish on it. That’s not what it’s been. It’s been the opposite. We’ve been run independently from Shopify. We continue to invest and grow the business.

From a business perspective, I understand Amazon’s decision to cut off access and give itself a leg up. What’s in it for Shopify if anyone can still deploy your robots?

Shopify’s mantra is very different from Amazon. I’m responsible for Shopify’s logistics. Shopify is the brand behind the brand, so they have a relationship with merchants and the customers. They want to own a relationship with the merchant. It’s about building the right tools and making it easier for the merchant to succeed. Supply chain is a huge issue for lots of merchants. To sell the first thing, they have to fulfill the first thing, so Shopify is making it easier for them to print off a shipping label.

Now, if you’ve got to do 100 shipping letters a day, you’re not going to do that by yourself. You want us to fulfill it for you, and Shopify built out a fulfillment network using a lot of third parties, and our technology is the backbone of the warehouse.

Watching you — Locus or Fetch — you’re more or less maintaining a form factor. Obviously, Amazon is diversifying. For many of these customers, I imagine the ideal robot is something that’s not only mobile and autonomous, but also actually does the picking itself. Is this something you’re exploring?

Most of the AMR (autonomous mobile robot) scene has gotten to a point where the hardware is commoditized. The robots are generally pretty reliable. Some are maybe higher quality than others, but what matters the most is the workflows that are being enacted by these robots. The big thing that’s differentiating Locus and us is, we actually come in with predefined workflows that do a specific kind of work. It’s not just a generic robot that comes in and does stuff. So you can integrate it into your workflow very quickly, because it knows you want to do a batch pick and sortation. It knows that you want to do discreet order picking. Those are all workflows that have been predefined and prefilled in the solution.

With respect to the solving of the grabbing and picking, I’ve been on the record for a long time saying it’s a really hard problem. I’m not sure picking in e-comm or out of the bin is the right place for that solution. If you think about the infrastructure that’s required to solve going into an aisle and grabbing a pink shirt versus a blue shirt in a dark aisle using robots, it doesn’t work very well, currently. That’s why goods-to-person makes more sense in that environment. If you try to use arms, a Kiva-like solution or a shuttle-type solution, where the inventory is being brought to a station and the lighting is there, then I think arms are going to be effective there.

Are these the kinds of problems you invest R&D in?

Not the picking side. In the world of total addressable market — the industry as a whole, between Locus, us, Fetch and others — is at maybe 5% penetration. I think there’s plenty of opportunity for us to go and implement a lot of our technology in other places. I also think the logical expansion is around the case and pallet operations.

Interoperability is an interesting conversation. No one makes robots for every use case. If you want to get near full autonomous, you’re going to have a lot of different robots.

We are not going to be a fit for 100% of the picks in the building. For the 20% that we’re not doing, you still leverage all the goodness of our management consoles, our training and that kind of stuff, and you can extend out with [the mobile fulfillment application]. And it’s not just picking. It’s receiving, it’s put away and whatever else. It’s the first step for us, in terms of proving wall-to-wall capabilities.

What does interoperability look like beyond that?

We do system interoperability today. We interface with automation systems all the time out in the field. That’s an important part of interoperability. We’re passing important messages on how big a box we need to build and in what sequence it needs to be built.

When you’re independent, you’re focused on getting to portability. Does that pressure change when you’re acquired by a Shopify?

I think the difference with Shopify is, it allows us to think more long-term in terms of doing the right thing without having the pressure of investors. That was one of the benefits. We are delivering lots of longer-term software bets.

Q&A with Peter Chen


Image Credits: Covariant

Lastly, since I’ve chatted with co-founder Pieter Abbeel a number of times over the years, it felt right to have a formal conversation with Covariant CEO Peter Chen. Full interview here.

TC: A lot of researchers are taking a lot of different approaches to learning. What’s different about yours?

PC: A lot of the founding team was from OpenAI — like three of the four co-founders. If you look at what OpenAI has done in the last three to four years to the language space, it’s basically taking a foundation model approach to language. Before the recent ChatGPT, there were a lot of natural language processing AIs out there. Search, translate, sentiment detection, spam detection — there were loads of natural language AIs out there. The approach before GPT is, for each use case, you train a specific AI to it, using a smaller subset of data. Look at the results now, and GPT basically abolishes the field of translation, and it’s not even trained to translation. The foundation model approach is basically, instead of using small amounts of data that’s specific to one situation or train a model that’s specific to one circumstance, let’s train a large foundation-generalized model on a lot more data, so the AI is more generalized.

You’re focused on picking and placing, but are you also laying the foundation for future applications?

Definitely. The grasping capability or pick and place capability is definitely the first general capability that we’re giving the robots. But if you look behind the scenes, there’s a lot of 3D understanding or object understanding. There are a lot of cognitive primitives that are generalizable to future robotic applications. That being said, grasping or picking is such a vast space we can work on this for a while.

You go after picking and placing first because there’s a clear need for it.

There’s clear need, and there’s also a clear lack of technology for it. The interesting thing is, if you came by this show 10 years ago, you would have been able to find picking robots. They just wouldn’t work. The industry has struggled with this for a very long time. People said this couldn’t work without AI, so people tried niche AI and off-the-shelf AI, and they didn’t work.

Your systems are feeding into a central database and every pick is informing machines how to pick in the future.

Yeah. The funny thing is that almost every item we touch passes through a warehouse at some point. It’s almost a central clearing place of everything in the physical world. When you start by building AI for warehouses, it’s a great foundation for AI that goes out of warehouses. Say you take an apple out of the field and bring it to an agricultural plant — it’s seen an apple before. It’s seen strawberries before.

That’s a one-to-one. I pick an apple in a fulfillment center, so I can pick an apple in a field. More abstractly, how can these learnings be applied to other facets of life?

If we want to take a step back from Covariant specifically, and think about where the technology trend is going, we’re seeing an interesting convergence of AI, software and mechatronics. Traditionally, these three fields are somewhat separate from each other. Mechatronics is what you’ll find when you come to this show. It’s about repeatable movement. If you talk to the salespeople, they tell you about reliability, how this machine can do the same thing over and over again.

The really amazing evolution we have seen from Silicon Valley in the last 15 to 20 years is in software. People have cracked the code on how to build really complex and highly intelligent looking software. All of these apps we’re using [are] really people harnessing the capabilities of software. Now we are at the front seat of AI, with all of the amazing advances. When you ask me what’s beyond warehouses, where I see this really going is the convergence of these three trends to build highly autonomous physical machines in the world. You need the convergence of all of the technologies.

You mentioned ChatGPT coming in and blindsiding people making translation software. That’s something that happens in technology. Are you afraid of a GPT coming in and effectively blindsiding the work that Covariant is doing?

That’s a good question for a lot of people, but I think we had an unfair advantage in that we started with pretty much the same belief that OpenAI had with building foundational models. General AI is a better approach than building niche AI. That’s what we have been doing for the last five years. I would say that we are in a very good position, and we are very glad OpenAI demonstrated that this philosophy works really well. We’re very excited to do that in the world of robotics.

News of the week

Image Credits: Berkshire Grey

The big news of the week quietly slipped out the day after ProMat drew to a close. Berkshire Grey, which had a strong presence at the event, announced on Friday a merger agreement that finds SoftBank Group acquiring all outstanding capital stock it didn’t already own. The all-cash deal is valued at around $375 million.

The post-SPAC life hasn’t been easy for the company, in spite of a generally booming market for logistics automation. Locus CEO Rick Faulk told me above that the company plans to IPO next year, after the market settles down. The category is still a young one, and there remains an open question around how many big players will be able to support themselves. For example, 6 River Systems and Fetch have both been acquired, by Shopify and Zebra, respectively.

“After a thoughtful review of value creation opportunities available to Berkshire Grey, we are pleased to have reached this agreement with SoftBank, which we believe offers significant value to our stockholders,” CEO Tom Wagner said in a release. “SoftBank is a great partner and this merger will strengthen our ability to serve customers with our disruptive AI robotics technology as they seek to become more efficient in their operations and maintain a competitive edge.”

Unlike the Kiva deal that set much of this category in motion a decade ago, SoftBank maintains that it’s bullish about offering BG’s product to existing and new customers. Says managing partner, Vikas J. Parekh:

As a long-time partner and investor in Berkshire Grey, we have a shared vision for robotics and automation. Berkshire Grey is a pioneer in transformative, AI-enabled robotic technologies that address use cases in retail, eCommerce, grocery, 3PL, and package handling companies. We look forward to partnering with Berkshire Grey to accelerate their growth and deliver ongoing excellence for customers.

Container ships at dock

Image Credits: John Lamb / Getty Images

A healthy Series A this week from Venti Technologies. The Singapore/U.S. firm, whose name translates to “large Starbucks cup,” raised $28.8 million, led by LG Technology Ventures. The startup is building autonomous systems for warehouses, ports and the like.

“If you have a big logistics facility where you run vehicles, the largest cost is human capital: drivers,” co-founder and CEO Heidi Wyle tells TechCrunch. “Our customers are telling us that they expect to save over 50% of their operations costs with self-driving vehicles. Think they will have huge savings.”


Image Credits: Neubility / Neubility

This week in fun pivots, Neubility is making the shift from adorable last-mile delivery robots to security bots. This isn’t the company’s first pivot, either. Kate notes that it’s now done so five times since its founding. Fifth time’s the charm, right?

Neubility currently has 50 robots out in the world, a number it plans to raise significantly, with as many as 400 by year’s end. That will be helped along by the $2.6 million recently tacked onto its existing $26 million Series A.

Model-Prime emerged out of stealth this week with a $2.3 million seed round, bringing its total raise to $3.3 million. The funding was led by Eniac Ventures and featured Endeavors and Quiet Capital. The small Pittsburgh-based firm was founded by veterans of the self-driving world, Arun Venkatadri and Jeanine Gritzer, who were seeking a way to create reusable data logs for robotics companies.

The startup says its tech, “handles important tasks like pulling the metadata, automated tagging, and making logs searchable. The vision is to make the robotics industry more like web apps, or mobile apps, where it now seems silly to build your own data solution when you could just use Datadog or Snowflake instead.”

Image Credits: Saildrone

Saildrone, meanwhile, is showcasing Voyager, a 33-foot uncrewed water vehicle. The system sports cameras, radar and an acoustic system designed to map a body of water down to 900 feet. The company has been testing the boat out in the world since last February and is set to begin full-scale production at a rate of a boat a week.

Image Credits: MIT

Finally, some research out of MIT. Robust MADER is a new version of MADER, which the team introduced in 2020 to help drones avoid in-air collisions.

“MADER worked great in simulations, but it hadn’t been tested in hardware. So, we built a bunch of drones and started flying them,” says grad student Kota Kondo. “The drones need to talk to each other to share trajectories, but once you start flying, you realize pretty quickly that there are always communication delays that introduce some failures.”

The new version adds in a delay before setting out on a new trajectory. That added time will allow it to receive and process information from fellow drones and adjust as needed. Kondo adds, “If you want to fly safer, you have to be careful, so it is reasonable that if you don’t want to collide with an obstacle, it will take you more time to get to your destination. If you collide with something, no matter how fast you go, it doesn’t really matter because you won’t reach your destination.”

Fair enough.

Image Credits: Bryce Durbin/TechCrunch


Here you go, way too fast. Don’t slow down, you’re gonna crash. Na-na-na-na-na-na-na-na-na. (Subscribe to Actuator!)



Asking the right dumb questions by Brian Heater originally published on TechCrunch

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Waymo retires its self-driving Chrysler Pacifica minivan

More than five years ago, a newly minted Waymo took the wraps off of what would become its first commercialized autonomous vehicle: a Chrysler Pacifica…



More than five years ago, a newly minted Waymo took the wraps off of what would become its first commercialized autonomous vehicle: a Chrysler Pacifica Hybrid minivan loaded with sensors and software.

Now, the minivan, a symbol of the early and hypey AV days, is headed for retirement as Waymo transitions its fleet to the all-electric Jaguar I-Pace vehicles equipped with its fifth-generation self-driving system.

When the Chrysler Pacifica Hybrid AV was first revealed, it might not have been what people expected from the former Google self-driving project turned Alphabet-owned business. The design wasn’t ripped from the pages of a graphic sci-fi novel and it was hardly flashy. But the white minivan — highlighted with the same blue and green accent colors found on the Waymo logo — embodied the company’s aim. Waymo wanted a friendly looking vehicle people would feel comfortable using.

The partnership with established manufacturer Fiat Chrysler — now Stellantis — also derisked an already risky frontier tech pursuit. Under the deal, Fiat Chrysler would handle the manufacturing and provide Waymo with minivans that built in redundancies designed for autonomous driving.

Waymo never got close to the 62,000-minivan order it agreed to in 2018 as part of an expanded partnership with Fiat Chrysler. But the minivan did become a critical part of its commercialization plan and over its lifespan the fleet provided tens of thousands of rides to the public, according to the company. (Waymo has never revealed detailed figures of its minivan fleet beyond that its total global fleet is somewhere around 700 vehicles.)

“It’s bittersweet to see it go,” Chris Ludwick, product management director at Waymo who has been at the company since 2012, told TechCrunch. “But I’m also happy for this next chapter.”

A bit of history

Waymo revealed the Chrysler Pacifica Hybrid in December 2016 and then provided more technical and business model details a month later at the 2017 North American International Auto Show. The first look at the minivan in December came just five days after Google’s self-driving project officially announced that it was a business with a new name and slightly tweaked mission.

At the time, little was known about what the Google self-driving project — also known as Chauffeur — intended to do beyond a stated goal to commercialize self-driving cars. The Google self-driving project had developed a custom low-speed vehicle without a steering wheel called the Firefly, but that cute gumdrop-shaped car never made it to commercial robotaxi status.

Waymo Firefly and Chrysler Pacifica autonomous vehicles. Image Credits: Waymo

The lowly minivan seemed to represent a more grounded realistic vision toward the goal. By spring 2017, the company had launched an early rider program that let real people in the Phoenix area (who had been vetted and signed an NDA) use an app to hail a self-driving Chrysler Pacifica minivan with a human safety operator behind the wheel.

Waymo eventually opened up the service to the public — no NDA required — and grew its service area to Phoenix suburbs Chandler, Tempe, Ahwatukee and Mesa. Waymo repeated that process as it took the important step of removing the human safety operator from behind the wheel, launching driverless rides in 2019 and eventually a driverless robotaxi service in 2020 that was open to the public.

Minivan proving ground

Image Credits: Waymo

The minivan’s initial reveal represented the moment when “Chauffeur” became Waymo and less of a science project, he noted. But there was still considerable work to be done.

The Chrysler Pacifica was the ultimate commercial proving ground, according to anecdotes from Ludwick, who recounted the progress of moving from autonomous driving 10 miles in one day, then 100 miles, and then a 100 miles everyday.

For instance, the company discovered that families were far more enthusiastic to use the minivan than it assumed. The minivan also helped develop the company’s AV operations playbook, including how to park vehicles in between rides and where to locate depots for maintenance and charging.

The minivan also became a testbed for how to operate a driverless fleet during the COVID-19 pandemic. Prior to COVID, the fleet in Phoenix was a mix of driverless vehicles and those with human safety operators behind the wheel.

“In three months we turned it fully driverless and figured out how to disinfect the vehicles between each ride,” he said.

All-electric chapter

Waymo jaguar ipace autonomous vehicle

Image Credits: Waymo

The next chapter for Waymo is focused on its all-electric Jaguar I-Pace vehicles, which will be pulled into the service area in the Phoenix suburbs of Chandler and Tempe that the minivan covered. The Jaguar I-Pace is currently the go-to driverless vehicle for robotaxi rides in downtown Phoenix and to the Phoenix International Sky Harbor Airport. The 24/7 service runs on a five-mile stretch between downtown Phoenix and an airport shuttle stop, specifically, the 44th Street Sky Train station.

On Thursday, the White House gave a shout-out to Waymo (along with other companies) for its commitment to an all-electric fleet as part of the White House EV Acceleration Challenge.

Waymo intends to deploy the all-electric Jaguar I-Pace across all of its ride-hailing service territories this spring now that the minivan has been retired. The nod to Waymo was part of a larger announcement from the Biden administration around public and private sector investments into EVs as part of its goal of having 50% of all new vehicle sales be electric by 2030.

The next task for Waymo may be its most challenging: The company has to figure out how to grow the service, charge its all-electric fleet efficiently and eventually turn a profit.

But Ludwick believes the company is well positioned thanks, in part, to the Chrysler Pacifica.

“When I look at what the Pacifica got us, it’s a lot,” he said, noting that the vehicle had to travel at higher speeds and make unprotected left turns.

Waymo retires its self-driving Chrysler Pacifica minivan by Kirsten Korosec originally published on TechCrunch

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