Fed may pause interest rate increases, temporarily, in this week’s R&D Power Index

The R&D World Index (RDWI) for the week ending June 2, 2023, closed at 2,787.25 for the 25 companies in the RDWI. The Index was up 2.13% (or 58.24 basis points). Twenty-two of the 25 RDWI members gained value last week from 0.10% (Astra Zeneca PLC) to 4.23% (Toyota). Three of the 25 RDWI members lost value last week from -0.20% (Stellantis NV) to -2.86% (Sanofi SA).

The college enrollment rate for recent U.S. high school graduates fell to 62% in 2022 from 66% in 2019, according to a recent study by the U.S. Department of Labor. The rate was 70% in 2009. More high school graduates are taking blue-collar jobs in a historically strong labor market. The unemployment rate for teenage workers fell to a 70-year low of 9% in May while average hourly earnings for this group in hospitality and leisure jobs increased by 30% in April 2023 from April 2019. The high school grads are finding they can get a job without a college degree and with decent wage growth. The grads are also put off by the increasingly high cost of a four-year college degree. These employment statistics are expected to stay this way given an aging workforce and a pandemic slowdown in immigration, according to analysts.

Technology executives and artificial intelligence (AI) scientists issued a joint statement last week that AI poses an extinction risk as great as pandemics and nuclear war. Released by the Center for AI Safety (CAIS), San Francisco. More than 350 people signed the statement, including developers and executives at OpenAI, Microsoft, Google, Skype, and the United Nations. AI experts and tech executives signed a letter in March calling for AI developers to pause their work on the technology for at least six months, which would give the industry time to set safety standards for AI design and to curb potential harms of the riskiest AI technologies.

Amazon.com, Seattle, announced last week that it is rolling out new AI tools across a dozen of its largest warehouses to screen items for damage before orders are shipped to customers. The company says it expects the tools to reduce the number of damaged items that are sent out, speed up picking and packing and eventually automate more of its fulfillment operations. Scanning for damage is currently performed manually. This current process is part of a broader push to bring more AI to logistics operations as many companies try to manage their complicated supply chains while continuing to move their goods rapidly and reliably.

Federal Reserve executives signaled last week that they are increasingly likely to hold short-term interest rates steady at their next June 13-14 meeting before preparing to raise the rates again later this summer. The fed’s 2023 schedule includes meetings on July 26, September 20, November 1, and December 13. This pause would give Fed members more time to study the economic effects of the Fed’s 10 consecutive prior rate increases, as well as recent banking stress. The Fed has raised rates by 5 percentage points since March 2022 to combat high inflation.

Albermarle, Charlotte, North Carolina, signed a long-term contract with RDW Index member Ford Motor Company, Dearborn, Michigan, in May to supply enough lithium to manufacture about three million electric vehicle (EV) batteries. Albermarle is the world’s third-largest producer of lithium chemicals used to make EV-grade lithium-ion batteries. The company has lithium operations in Nevada, Chile, and Australia and has been actively pursuing an agreement with Liontown Resources, Australia. The company announced in May that it plans to double the capacity of its existing plant in Western Australia.

Exxon Mobil, Houston, Texas, and Chevron, San Ramone, California, were noted last week to be in advanced talks with Algeria on a deal that would allow the energy giants to drill for the first time in the gas-rich North Africa region. The deal could be finalized by the end of 2023. Algeria has the third-largest reserve of shale gas in the world. Algeria already has three pipelines to Europe giving it an advantage over more distant European suppliers who could supplement the now-lost Russian natural gas supplies. Chevron has partnered with Eni in Egypt, Israel on the Leviathan project, and Shell in Cyprus.

Telecom Malaysia, Kuala Lumpur, has signed a memorandum of understanding (MOU) with ZTE, Shenzhen, China, to collaborate on a range of R&D initiatives. The two companies will work on network and technology planning and overall digital transformation by bringing together software as a service (SaaS), platform as a service (PaaS), and Anything as a Service provider to develop customized end-to-end solutions for various industry sectors.

Scotland’s biotech ILC Therapeutics, Motherwell Scotland, has signed an R&D partnership with Dechra Pharmaceuticals, Northwich, U.K., which will see international veterinary Dechra and ILC Therapeutics develop ILC’s Caniferon to treat atopic dermatitis in dogs. This disease is the most common form of eczema affecting canines with the global market exceeding $1 billion. Dechra’s expertise is in the development, manufacture, marketing, and sales of high-quality veterinary, endocrinology, and topical dermatology products for veterinarians worldwide.

 

R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies), and ICT (9 companies) which invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spending in the world by government, industries, and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index