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S&P Futures Hit Record Above 3,500 As Dollar Tumbles To 27 Month Low

S&P Futures Hit Record Above 3,500 As Dollar Tumbles To 27 Month Low



S&P Futures Hit Record Above 3,500 As Dollar Tumbles To 27 Month Low Tyler Durden Fri, 08/28/2020 - 07:53

After sprinting out of the gates and surging as high as 3,509 during Trump's acceptance speech, the E-Mini S&P future faded some of its gains even as it remained green for a seventh straight day as investors worried about a lack of detail in the U.S. Federal Reserve’s policy shift which assured super low interest rates for years to come. Despite continued US levitation European and Asian markets were mixed, while Japanese markets were roiled as Prime Minister Shinzo Abe resigned for health reasons (again) sending the Yen surging. The dollar was headed for its worst daily decline in a month.

Futures initially jolted higher as investors bet interest rates would remain low for longer and more stimulus was likely. But markets have since been choppy, with some traders disappointed that the Fed did not reveal more details about how the new framework will work or provide any clues as to what it will do at its next policy meeting.

“It’s not so much about what to do about inflation when it comes but about getting inflation above target. The challenge is to get inflation up to target and not very much was said about that,” said Colin Asher, a senior economist at Mizuho.

The S&P 500 and the Nasdaq are on track for their fifth consecutive week of gains, but the Dow is still about 3.6% from its February all-time high. The Fed on Thursday unveiled a new policy aim for 2% inflation on average so that too low a pace would be followed by an effort to lift inflation “moderately above 2% for some time” and to restore the economy to full employment. In the previous session, the Dow briefly turned positive on the year, while the S&P 500 closed at a record level even as the U.S. economy struggles to recover, forcing the Fed to adopt an unprecedented policy of accepting inflation overshoots for an unknown period of time.

In further proof that technology companies are booming in the pandemic, business software provider Workday jumped 11.2% in premarket trading after raising its annual subscription forecast. Dell Technologies gained 4.5% after reporting quarterly profit that beat expectations as remote working and online learning boosted demand for its notebooks and software products.  Cosmetics retailer Ulta Beauty Inc ULTA.N jumped 15.1% after posting quarterly profit ahead of market expectations.

The Euro Stoxx 50 recovered from earlier losses and was last up 0.03%, while Germany’s DAX slid 0.49%. Britain’s FTSE 100 was 0.4% higher. 

Earlier, Asian stocks were little changed, with communications falling and finance rising, after falling in the last session. Asian shares outside of Japan limped higher, with the MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.19%. Markets in the region were mixed, with Shanghai Composite and Singapore's Straits Times Index rising, and Australia's S&P/ASX 200 and Japan's Topix Index falling. The Topix declined 0.7%, with TerraSky and Airtrip falling the most. Japanese shares dropped, with the Nikkei 225 down 1.4%. Abe resigned on Friday because of a chronic health condition, saying he would stay as prime minister until a new leader was appointed.

“This is a negative for Japanese stocks because it raises questions about what polices come next. We do see the familiar pattern of falling stocks pushing up the yen,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo. The yen, seen as a safe-haven currency to buy in times of uncertainty, surged to 105.32, gaining 150 pips on the session.

The Shanghai Composite Index rose 1.6%, with Western Superconducting and Whirlpool China posting the biggest advances.

In rates, Treasuries pared overnight losses as the US session gets underway after bear-steepening during Asia session, extending the response to Fed Chair Powell’s comments Thursday. A selloff in Aussie bonds weighed initially, with impact fading during European morning as U.S. stock futures pulled back from record highs. Treasuries remain cheaper by more than 1bp at long end while yields out to 10-year are richer on the day; bunds lag by ~1bp while gilts keep pace. The 5s30s curve steepened as much as 5.5bp to 125bp, highest since June 5 when it reached 128.5bp, steepest since 2006; 2s10s peaked at 62.5bp, steepest since June 9.

In FX, the dollar slumped 0.6% against a basket of other currencies, dropped to a more than two year low. The greenback has fallen sharply since June as many analysts are predicting more pain ahead given U.S. rates are likely to stay low for longer and the political uncertainty before the U.S. presidential election in November.

Residual or more month end rebalancing could be a factor behind the renewed Greenback weakness, though the aforementioned Yen revival has certainly contributed to the dollar reversing further from Thursday’s post-Fed chair policy revelation recovery highs to lower lows. The DXY index is now 100+ ticks down at 92.279 and the ytd trough looms (92.124) amidst broad and increasingly heavy losses across the board, as US stock futures continue to rally or consolidate near record peaks. The euro seized on the dollar’s weakness to gallop another 0.7% higher and was last at $1.1905, close to a more than two-year high it recently touched. The yen soared to 105.35 yen per dollar on news of Abe's resignation.

On the back of dollar weakness, China’s yuan was on pace for a fifth weekly advance, the longest run since November last year, as the greenback stays weak. The currency traded onshore has risen 0.8% over the past five sessions, taking the climb since July 24 to 2.2%. The yuan jumped as much as 0.48% to 6.8612 a dollar on Friday to trade at its highest since January.

In commodities, Crude oil prices dipped as a massive storm raced inland past the heart of the U.S. oil industry in Louisiana and Texas without causing any widespread damage to refineries. Brent crude fell 0.47% to $44.88 a barrel. U.S. West Texas Intermediate crude dropped 0.49% to $42.83 per barrel. Gold prices bounced 1%, with the spot price at $1,949 an ounce. The precious metal tends to perform well when the dollar is weak and the U.S. central bank sends a dovish message on the future path of interest rates.

Expected data include wholesale inventories and personal income and spending. Big Lots is reporting earnings.

Market Snapshot

  • S&P 500 futures up 0.4% to 3,500.00
  • MXAP up 0.05% to 173.56
  • MXAPJ up 0.2% to 577.53
  • Nikkei down 1.4% to 22,882.65
  • Topix down 0.7% to 1,604.87
  • Hang Seng Index up 0.6% to 25,422.06
  • Shanghai Composite up 1.6% to 3,403.81
  • STOXX Europe 600 down 0.3% to 369.59
  • German 10Y yield rose 2.1 bps to -0.386%
  • Euro up 0.8% to $1.1917
  • Italian 10Y yield rose 0.3 bps to 0.894%
  • Spanish 10Y yield rose 0.4 bps to 0.393%
  • Sensex up 0.9% to 39,453.11
  • Australia S&P/ASX 200 down 0.9% to 6,073.81
  • Kospi up 0.4% to 2,353.80
  • Brent futures down 0.2% to $44.98/bbl
  • Gold spot up 1.4% to $1,956.80
  • U.S. Dollar Index down 0.7% to 92.35

Top Overnight News from Bloomberg

  • Abe announced he plans to step down for health reasons, after eight years at the head of Japan
  • The Jackson Hole symposium is set to continue after Fed Chairman Powell’s speech on Thursday shook the dollar and longer-dated treasuries overnight
  • The number of Americans killed by Covid-19 exceeded 180,000, while the resurgence continues in Europe, with Germany reporting a daily increase in cases close to a four-month high

Snapshot of key global markets courtesy of NewsSquawk:

Asian bourses eventually traded mixed as markets digested the Fed’s shift to an average inflation targeting framework, which briefly lifted the S&P 500 to the 3500 level for the first time ever and the Nasdaq to a fresh record intraday high during Wall Street hours. Some of the moves were then reversed as the dust settled and the recent big tech rally stalled - which dragged the Nasdaq into the red, although US equity futures have since caught a second wind overnight with E-mini S&P taking its turn to breach the 3500 milestone. As such, Nikkei 225 (-1.4%) was initially lifted as exporters benefitted from currency weakness, but plunged heading into the cash close amid reports that Japanese PM Abe is planning to resign due to worsening health conditions, while the Hang Seng (+0.6%) and Shanghai Comp. (+1.6%) were supported after this week’s liquidity efforts resulted to a net weekly injection of CNY 200bln and amid a deluge of earnings including blue-chip names PetroChina, and China Vanke, whose shares all traded higher despite posting varied results. Conversely, ASX 200 (-0.9%) bucked the trend as weakness in Australia’s tech and miners spearheaded the declines in the index, with sentiment not helped by the continued deterioration in ties with its largest trading partner China after Canberra’s move to veto the Belt & Road Initiative agreement, while China also suspended imports of beef from Australia's John Dee after finding a banned substance. Finally, 10yr JGBs were lower amid spill-over selling from USTs which were heavily pressured as participants contemplated over the Fed’s tolerance for overshooting inflation, to push the US 10yr yield to its highest since mid-June, while the unprecedented levels seen in the E-mini S&P and a tepid BoJ Rinban announcement added to the dampened mood for bonds.

Top Asian News

  • New Zealand Deploys Spy Agency as Hackers Hit Stock Market
  • Goldman Pays Malaysia $2.5 Billion; Funds to Repay 1MDB Debt
  • Xiaomi’s Stock Surge a Big Reversal After Post-IPO Struggles
  • SoftBank Group to Sell $12.5 Billion of Wireless Unit Stock

European stocks see choppy price action, although bourses ultimately trade mixed/subdued (Euro Stoxx 50 -0.5%), as the region came under pressure after the cash open and subsequently nursed some of this downside – with little initial follow-through for European bourses from surprise reports that Japanese PM Abe will be stepping down from his position due to ill health. Participants must be wary of month-end rebalancing, although UBS suggests that this August flows are likely to be considerably less eventful than in July; “This month has seen lower levels of dispersion in global equity markets so far, with the model showing only CAD and NZD expected to see tangible buying pressure at month-end as local equity markets have underperformed SPX.” Overall, Core European bourses see little by way of under/outperformers, although peripheries, i.e. Spain’s IBEX (+0.7%) and Italy’s FTSE MIB (+0.2%) stand as the winners aided by their exposures to the financial sector – which is seeing clear outperformance in Europe amid the high yield environment. Overall, European sectors are mostly lower with no clear risk profile to be extrapolated, although tech resides as the laggard following a week of firm gains. In terms of individual movers; Bayer (-3.3%) sees losses after a judge overseeing the Roundup dispute remarks that they may consider lifting the ban on litigation proceedings as a consumer lawyer says Bayer are not abiding by the USD 11bln settlement, according to sources. Enel (+0.2%) is propped up by reports that Macquarie is reportedly working on a binding offer for the Co’s 50% stake in Open Fiber, according to Il Sole 24.

Top European News

  • European Equities Set for Pain if Euro’s Advance Nears $1.30
  • Apartment Prices Surge in Russia, Raising Fears of a Bubble
  • World’s Biggest Wealth Fund to Publish All Vote Plans by 2021
  • Sweden’s Historic Crisis Plan Exposes Central Bank’s Limits

In FX, the yen was in focus after Japanese PM Abe announced that he will stand down before his official term ends due to a recurring health problem. In response, Japanese stocks and bonds have fallen on concerns that his brand of expansive policy may not be replicated by the next leader, while the Yen has rebounded firmly with Usd/Jpy sub-106.00 ansd testing support/underlying bids ahead of 105.50 from almost a big figure above and the headline pair decisively through decent option expiry interest between 106.50-60 (1 bn) in advance of the NY cut.

  • DXY - Residual or more month end rebalancing could be a factor behind the renewed Greenback weakness, though the aforementioned Yen revival has certainly contributed to the Buck reversing further from Thursday’s post-Fed chair policy revelation recovery highs to lower lows. Indeed, the index is now 100+ ticks down at 92.279 and the ytd trough looms (92.124) amidst broad and increasingly heavy losses across the board, as US stock futures continue to rally or consolidate near record peaks. Ahead, PCE price metrics may well take on greater importance given the switch to average inflation targeting with flexibility, but from a more timely activity perspective Chicago PMI and any big revision to final Michigan sentiment will also be worth watching.
  • AUD/NZD/EUR/GBP/CHF/CAD - Understandably, all benefiting from their US rival’s demise, albeit to varying degrees. The Aussie has breached 0.7300 and the Kiwi is edging closer to 0.6700, while the Euro has rotated over 360 degrees again only this time from the low 1.1800 area to 1.1900+. Similarly, Cable is nudging nearer 1.3300 from under 1.3200 at one stage and setting minor new 2020 highs in the process, regardless of latest negative sounding Brexit news like senior EU sources claiming a 2 week ultimatum for UK PM Johnson to salvage post-transition trade and security negotiations. Elsewhere, the Franc is eyeing 0.9000 compared to 0.9100 at the other extreme following a significantly better than forecast Swiss KOF leading index and the Loonie has pared more recent declines to trade circa 1.3060 in the run up to Canadian Q2 GDP.
  • SCANDI/EM - The Sek and Nok have resumed bullish trajectories regardless of Euro strength elsewhere, with the former encouraged by Swedish Q2 GDP contracting a tad less than envisaged, while EM currencies are taking advantage of Usd depreciation almost across the board, as the Zar recovers alongside Gold and even the Try regroups with some assistance from an improvement in Turkish consumer sentiment.

In commodites, WTI and Brent front month futures trade relatively flat in early European hours, with some earlier downside coinciding with losses in stocks in what seems to be a sentiment-driven move; albeit, the magnitude of the price action across the oil complex has been minimal. Focus has now shifted away from developments in the Gulf of Mexico as Hurricane Laura is downgraded to a Tropical Storm and production starts coming back online. Aside from that, news flow for the complex has remained light, with participants eyeing the weekly Baker Hughes Rig Count as the only crude-related scheduled release. WTI October trades on either side of USD 43/bbl, contained within a tight USD 0.3/bbl range, whilst its Brent counterpart similarly oscillates around USD 45/bbl having printed a current 0.4/bbl range. Elsewhere, spot gold and silver gain impetus from the JPY-led USD declines. The yellow metal has reclaimed a USD 1950+/oz status (vs. low 1923/oz), whilst silver eyes USD 27.50/oz to the upside from an overnight base of USD 26.82/oz. Meanwhile, Shanghai copper prices rose 1% and London prices remain supported by the weaker Dollar. Finally, Dalian iron ore futures closed higher by 1.4% amid a softer Buck alongside expectations for firm demand from the steel industry.

US Event Calendar

  • 8:30am: Advance Goods Trade Balance, est. $72.0b deficit, prior $70.6b deficit
  • 8:30am: Retail Inventories MoM, est. -1.05%, prior -2.6%; Wholesale Inventories MoM, est. -0.85%, prior -1.4%
  • 8:30am: Personal Income, est. -0.25%, prior -1.1%; Personal Spending, est. 1.6%, prior 5.6%
  • 8:30am: Real Personal Spending, est. 1.3%, prior 5.2%
  • 8:30am: PCE Deflator MoM, est. 0.4%, prior 0.4%; PCE Deflator YoY, est. 1.0%, prior 0.8%
    • PCE Core Deflator YoY, est. 1.23%, prior 0.9%; PCE Core Deflator MoM, est. 0.5%, prior 0.2%
  • 9:45am: MNI Chicago PMI, est. 52.6, prior 51.9
  • 10am: U. of Mich. Sentiment, est. 72.8, prior 72.8; Current Conditions, est. 82.4, prior 82.5; Expectations, est. 66, prior 66.5

DB's Henry Allen concludes the overnight wrap

Happy Friday and hope you’ve had a good week. Jim’s taken another day off ahead of the UK bank holiday on Monday, so I’m back again for the second time this week. In fact, with Craig about to go on paternity leave, there’s the chance we might get to talk even more over the coming months. Whether that’s good news or bad I’ll let you decide, but from what Jim was saying I figured that the best route out of this was having a baby. Given the parenting manual I read each day in this email however, I can’t say he’s made it sound attractive.

Speaking of manuals, the Federal Reserve released some changes to their own one yesterday as the US central bank announced a revision to their longer-run goals and monetary policy strategy. In terms of the two big changes that stand out, the first is that the FOMC will now look to achieve an inflation rate averaging 2% over time, so that if there’s a period as in recent years when inflation has undershot the target, policy can then aim for an inflation rate above the 2% target for the period afterwards. The other main change is with regard to the Fed’s maximum employment objective, where the new statement says that policy will now be informed by the FOMC’s “assessments of the shortfalls of employment from its maximum level”, as opposed to “deviations from its maximum level” as it previously said. That reflects an evolution of their view in recent years as the unemployment rate has fallen below the levels they had previously estimated it could without generating above-target inflation, particularly as low-income communities were among the biggest beneficiaries of the unemployment rate falling to such low levels.

Our US economists write that both of these dovish revisions were in line with their expectations. However, the release of the results now opens the door wider than previously to the chance of a modification of the FOMC’s rates guidance and balance sheet policy at the September meeting. Their view is that the Committee will reveal enhanced forward guidance next month and adjustments to their asset purchases, most likely in the form of an extension of duration. You can find their piece here for those wanting more depth.

In terms of the market reaction, Treasuries whipsawed between gains and losses after the announcement, with 10yr yields falling to an intraday low of 0.648% in the immediate aftermath. However, we then got a major reversal that saw yields move up by over 10bps to end of the session at a 2-month high of 0.752%, ending the day +6.4bps higher, and this morning they’re up a further +1.8bps at 0.770%. There was also a notable steepening of the yield curve, with the 2s10s curve up +5.6bps at a 2-month high.

Looking at other asset classes, the dollar saw some dramatic moves of its own as it fell to an intraday low of -0.63% following Powell’s announcement, before paring back its losses to close down -0.01%, while gold shed -1.28%. US equities continued to power forward however, and in a line we’ve repeated every day this week, the S&P 500 hit another record high as the index advanced +0.17%, even managing to surpass the 3,500 mark at one point in trading. That said, tech stocks unusually lagged yesterday, with the NASDAQ shedding -0.34%, but the S&P 500’s banks rose +2.50% as they benefited from Powell’s comments.

Updating our screens overnight, there’s every chance we could see yet another rise in the S&P 500 today, with futures up another +0.60% this morning. Meanwhile in Asia, equity markets have seen further advances, with the Nikkei (+0.52%), the Hang Seng (+0.87%), the Shanghai Comp (+0.51%) and the KOSPI (+0.80%) all moving higher. The strong move for the KOSPI came as the South Korean Prime Minister announced that the level 2 social distancing rules would be extended for another week, but stopped short of moving up to the stricter level 3 as the current flareup in new infections continues.

In the political sphere, there were also some further headlines from President Trump’s speech to the Republican National Convention, where he formally accepted his party’s nomination for president. Trump made a number of second-term pledges, including further tax cuts, the creation of 10m jobs in 10 months, as well as ending “our reliance on China”. Opinion polls continue to show Trump lagging behind Democratic candidate Joe Biden however, with the FiveThirtyEight polling average currently showing Biden with an 8.4pt lead over Trump.

With the plethora of headlines yesterday, the coronavirus got somewhat less attention than usual from investors, but the series of negative developments out of Europe continued. In terms of the numbers, multiple countries saw new cases at their highest levels in months, with Spain reporting a 4-month high of 3,781, Italy reporting a 3-month high 1,411, and the UK reported a 2-month high of 1,522. In France, where cases have also been rising recently, it was announced that masks would become compulsory throughout Paris from this morning in order to stem the spread, and comes as the country reported 6,111 cases in the most recent 24 hour period, in the worst day since late March. So definitely a situation worth keeping an eye on in the coming days in case further restrictions are imposed.

Amidst rising coronavirus cases, European equities took a rather different path to the US, with the STOXX 600 down -0.64%, as other European bourses including the DAX (-0.71%), the CAC 40 (-0.64%) and the FTSE 100 (-0.75%) also moved lower. For sovereign bonds however, it was a similar picture to the US as they pared back earlier gains to lose ground on the day. By the close 10yr bunds yields had risen +1.0bps, as they reached their highest level in nearly 2 months.

Over in the US, Hurricane Laura hit the coast of Louisiana yesterday with winds just over 240kmph, matching a record set in 1856. Thankfully the storm lost more than half of its power by midday and was downgraded down from hurricane status to tropical storm, but by that time it had caused major flooding throughout the region. The impacted area contains a number of chemical and liquid natural gas producers, though Brent crude (-1.21%) and WTI (-0.81%) oil prices fell back yesterday as the damage wasn’t as bad as some had anticipated. In our Chart of the Day yesterday, we looked at 170 years of hurricane data, and showed how this Atlantic hurricane season could end up rivalling the most severe on record in 2005, which included Hurricane Katrina. The 170 year average of named storms is just below 10 per season, however in the last 25 years we have only seen 3 years with fewer than 10 and an annual average of 15. The Atlantic has already seen 13 such storms and 5-13 all arrived at the earliest point in any year. See the link here for more.

Finally, in terms of yesterday’s data, the weekly initial jobless claims came in at 1.006m (vs. 1m expected) for the week ending August 22, which represented a fall from the prior week’s 1.104m but was still higher than the 971k the week before that. Meanwhile the continuing claims number for the week ending August 15 fell to a post-pandemic low of 14.535m, though this was also above the 14.4m expected. In somewhat better news, the Q2 contraction in GDP was revised to a shallower annualised decline of -31.7% (vs. -32.9% initial estimate), while pending home sales in July were up +5.9% (vs. +2.0% expected) to reach their highest level since 2005.

To the day ahead now, and the Jackson Hole symposium wraps up, with today’s proceedings including a speech from Bank of England Governor Bailey. Otherwise there are a number of data releases, including the preliminary French CPI reading for August and the final Q2 GDP reading. Meanwhile the European Commission will be releasing their final consumer confidence reading for August and Canada will be releasing their own GDP print for June. From the US, we’ll get July data on personal income and personal spending, along with the final University of Michigan sentiment reading for August, the MNI Chicago PMI for August and preliminary wholesale inventories for July.

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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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Cuban election: high turnout despite opposition call for boycott

Cubans turned out in higher numbers than expected at the recent elections.



Results of the five-yearly Cuban national assembly elections on March 26 will have disappointed opposition figures, who had called for a boycott to signal unhappiness with the government’s performance.

Two-thirds of the electorate submitted valid votes (that were not spoiled nor blank) despite opposition calls for people to stay away. Given all the difficulties and tensions of the past few years, the high numbers of voters seems to suggest that, although it is under strain, the Cuban political system is more resilient than expected. Turnout had been dropping since the days of former leader Fidel Castro, and poor voter numbers could have signalled significant dissatisfaction with the current president, Miguel Díaz-Canel Bermúdez.

One of the reasons for the high turnout may be a sense of communal rejection of US threats to national sovereignty, the importance of which should not be ignored, according to historians such as Louis Pérez. Tightening of US sanctions has certainly contributed to everyday suffering and economic hardship. Another reason for a high turnout may be President Díaz-Canel Bermúdez’s efforts to push ahead with reforms, increasing accountability and creating more opportunities for private enterprise and participation in decision-making at local level.

The election results and turnout of 76% might also be interpreted as an indication that among the majority who still support the government even in the middle of the recession, there is an increased willingness to actively express preferences rather than offer unconditional loyalty. This shift is expressed in the growing proportion (up from 20% of valid votes in 2018 to 28% in 2023) who selected specific candidates from the list for their constituency, rather than fully complying with official encouragement to simply indicate acceptance of the complete slate.

The backdrop

The elections mark the end of the first term of Díaz-Canel Bermúdez, during which the population has suffered from a severe recession.

Since the last election in 2018, the country has witnessed a series of major disasters, including a plane crash, three hurricanes, three tropical storms, a tornado, a gas explosion that destroyed a hotel and a huge fire at the country’s main oil depot. But the economic impact of those disasters were dwarfed by two further blows: the COVID pandemic and, above all, US foreign policy towards Cuba.

Despite the development and successful roll-out of effective vaccines, the possibility of an economic bounce-back from the COVID-induced recession (an 11% fall in GDP) has been effectively blocked by unprecedented restrictions on Cuba’s access to international trade and finance resulting from US sanctions imposed by the Trump administration and maintained under Joe Biden’s presidency.

March 2023 election: type of vote

Cuban voting by type of vote. Author based on Cuban electoral commission figures., Author provided

The effects of COVID and tightened US sanctions have combined with the sorry state of the country’s infrastructure. Another factor was caused by the price of food and energy imports soaring between 2020 and 2022, which resulted in power outages and food shortages. A 2021 currency reform exacerbated disruption and hardships by sparking an inflationary surge.

Read more: Cuba: why record numbers of people are leaving as the most severe economic crisis since the 1990s hits -- a photo essay

Long queues and a growing sense of frustration also contributed to unprecedented protests in mid-2021 and a record-breaking wave of emigration. In 2022, almost 250,000 people – over 2% of the population – are reported to have left for the US, including many of Cuba’s youngest and brightest.

How do elections work?

The Cuban electoral system was originally created as a “participatory” rather than “representative” system of democracy in an attempt to avoid the political conflict, violence, corruption and foreign interference experienced before the 1959 revolution, as described by political scientist William LeoGrande.

As the Cuban Communist party is the only legal political party, Cuban elections are not contests between parties. The 470 candidates for the national assembly do not represent the party. Instead, around half of them are representatives of municipal governments (themselves elected in municipal elections) and the rest are nominated by bigger organisations. These include neighbourhood committees, official trade unions, the women’s federation, students’ organisations and the small farmers’ association. Local electoral commissions then select one candidate for each seat from the list of nominated candidates. It is not a requirement for candidates, members of mass organisations or the electoral commission to be members of the party; however, many are, effectively making it impossible for self-proclaimed dissidents to be selected.

The local electoral commissions, whose members are selected from the mass organisations, are responsible for the organisation of the ballots and counting of the vote. Once selected, candidates must receive over 50% of valid votes to become a member of the national assembly. Voters can either accept all the candidates on the list for their constituency (a “united vote”) or select some and not others. Voting is secret and voluntary.

Over the years, and particularly over the past decade, efforts have been made to ensure that candidates are representative of the population. They include ministers, workers, farmers, educators, managers and health workers. The average age of candidates in 2023, at 46 years, is lower than previous elections, while the proportion who are non-white has increased (45% compared with 41% in 2018), and 53% are women.

The national turnout for these elections, confirmed by the national electoral commission, was 76%. Although this is above the turnout in legislative elections in the UK (67.3% in 2019) and US (at 62.8% of the voting age population in 2020 and 47.5% in 2022, according to the Pew Research Center), it is significantly less than the 86% recorded in the last national election in 2018. The abstention rate increased, from 14% registered electors in 2018 to 24% in 2023, and in blank or spoiled ballots, from 5.6% to 9.7%, a possible indication that the hardship of the past few years have taken their toll on public confidence in the government.

Díaz-Canel Bermúdez, who lacks the status and charisma of his predecessors Fidel Castro and his brother, Raúl Castro (who were both leaders of the 1959 revolution), will need to be alert to concerns of the electorate as he begins his second term. He will need to find ways to improve living standards quickly. He has pushed ahead with reforms to allow Cubans to create private companies, foster innovation through university-enterprise links, and devolve budgets and decision-making to enable municipal authorities to directly respond to local demands.

However, with inflation persisting and fiscal resources overstretched, his scope for macroeconomic stimulation is restricted. A major obstacle is the US government’s seeming commitment to retain the most important economic sanctions, but Díaz-Canel Bermúdez must prevent further erosion in confidence in Cuba’s government and its political system.

Emily Morris has received funding from University College London, the Ford Foundation and the British Embassy, Havana.

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Aspen looks to rebound in production and revenue after Covid-19

Last year, South African-based vaccine manufacturer Aspen Pharmacare was facing reports that it had not received a single order for its manufactured Covid-19…



Last year, South African-based vaccine manufacturer Aspen Pharmacare was facing reports that it had not received a single order for its manufactured Covid-19 shots and that manufacturing lines were sitting idle. But now the vaccine producer is looking to turn things around.

Aspen’s disclosure of its financial results in March unveiled that manufacturing revenue had decreased by 12% to R 603 million ($33.8 million), which Lorraine Hill, Aspen Group’s COO, said is attributable to lower Covid vaccine sales.

However, things were not all negative as Aspen said it was in negotiations with customers seeking to “secure a portion of Aspen’s sterile manufacturing capabilities.”

Stephen Saad

Aspen CEO Steven Saad said in a release:

The Group’s performance under challenging trading conditions was anticipated and is aligned to guidance previously shared for the first half of the financial year. Consistent with our previous communications, we are optimistic that the results for the second half of this financial year will not only exceed those reported for the first half but will also exceed those of the second half of the prior year.

Aspen had initially invested in three sterile manufacturing lines at its production site in Gqeberha, South Africa, and had plans to invest in two more production lines. The intention was to transition the manufacturing of its own anesthetic products from third-party producers to enhance the supply, Hill told Endpoints News in an email.

“The COVID pandemic, however, fast-tracked our plans to manufacture vaccines as we pivoted and re-prioritized in-housing our anesthetic products to manufacture the COVID vaccine,” Hill said.

Hill stated that in August of last year, Aspen entered a long-term agreement with India’s Serum Institute for Aspen to manufacture, market and eventually distribute four vaccines in Africa. The Serum Institute deal will also help Aspen gain further entry into the routine vaccine market, which has “sustainable” demand and can diversify the manufacturer’s portfolio, Hill told Endpoints.

“This is an important milestone as Aspen seeks to optimize our sterile manufacturing capacity in Gqeberha. The four products are Pneumococcal vaccine, Rotavirus vaccine, Polyvalent Meningococcal Vaccine and the Hexavalent Vaccine with transfer activities currently underway,” Hill said.

The company also secured agreements with the Bill & Melinda Gates Foundation and the Coalition for Epidemic Preparedness Innovations in the meantime. Hill added that the grant funding from these deals has helped to offset the production costs related to starting production of the Serum Institute vaccines.

Saad added in the release that Aspen expects the new manufacturing business to bring in around R 2 billion ($112 million) in 2024.

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