Case in point: Tariffs. Trump announced 10% tariffs on $200 Billion of goods, effective September 24, and an increase to 25% at the end of the year. This is in addition to the $50 Billion of tariffs that are already in place at a rate of 25%. How did the market react? They continued to rally across all regions. Notably, dips are being bought at a historically tough period for the market. Just two weeks ago, the S&P 500 closed down every day of the week, and the following week closed up every day. One week later, the S&P 500 charged to an all-time high, barely dipping at the beginning of this week. Investors I’ve spoken to tell me they are simply “tired of the tweeting moves.” Unless there is something particularly severe or imminent, it seems this market is able to see through the media hype and focus on the earnings backdrop that really matters.
Perhaps this recent resilience shows that the bull market may not be as late cycle as many bears have suspected. While the 10-Year Treasury is back above 3% again (which typically creates investor anxiety), it’s true that bond yields and stocks tend to trade together until the 10-Year reaches around 5%. Since 1996, stocks gained all 11 times we saw higher rates. Since rates began to climb in September 2017, the S&P is up 11%. It seems history is repeating itself.
At a recent town hall meeting in San Francisco, Google CEO Sundar Pichai said, “AI is one of the most important things humanity is working on. It is more profound than… electricity or fire.” No one knows what tomorrow’s market holds, but one thing that seems certain is that RAAI is here to stay. Even when this bull market does turn (it has to eventually, right?!), investors who have their money in this space may find themselves riding a bull of their own as companies around the globe continue to adopt new technologies to compete in the world market. The appetite for robotics, automation, and AI is not only insatiable—it’s a competitive mandate for the future. And that mandate will remain long after the market becomes anything but rosy.
By Bill Studebaker, President & CIO, ROBO Global
For more trends in robotics and artificial intelligence, visit the Robotics & AI Channel