The R&D Index for the week ending May 18, 2018 closed at 4,202.36 for the 25 companies in the R&D Index. The Index was down -1.70% (or 72.77 basis points) from the week ending May 11, 2018. Seven R&D Index companies gained value last week from 0.39% (Pfizer) to 4.13% (Qualcomm). Seventeen R&D Index companies lost value last week from -0.04% (IBM) to -5.92% (Cisco). One R&D Index company (GlaxoSmithKline) was unchanged for the week at 40.03.
Capital spending (capex) at U.S. industrial firms rose 24% to $166 billion in 1Q 2018 from 1Q 2017, according to a report released last week by Credit Suisse. This is a record increase for the first quarter and is credited in part to the U.S. tax code changes and large cash reserves. More than half of the capex spending is credited to the technology industry. Some companies, such as R&D Index member Google/Alphabet have sustained large capex investments ($7.3 billion in 1Q 2018) that have worried investors about the sustainability of these investments. Google’s stock value has fallen recently as a result, despite strong 1Q profit reports. Large capex investments have also been reported for R&D Index members Amazon and General Motors with mixed stock investment responses.
U.S. recycler organizations are likely to increase the cost to consumers this year by as much as 3%, according to recycling consultants. Some recycling companies are losing money on all of their operations and have closed or are likely to close. Collection companies that used to sell recycling waste for up to $150/ton last year now find that they have to pay processors up to $5/ton to accept the materials. Much of the recycling waste previously was shipped to China for processing, but China put a freeze on those imports, until at least June 4, partly in response to the ongoing U.S.-China trade disputes.
China’s Tianqi Lithium last week agreed to pay $4.1 billion for a 24% share of Sociedad Quimica y Minera de Chile that would allow both companies to control about 70% of the global lithium market. The purchase represents a 20% premium over the Chilean mining concern’s current value which is already inflated at 30 times expected earnings. Toyota, VW, BMW and Apple are all looking to secure lithium and cobalt supplies for their future electric product and battery needs. Both materials are currently in an oversupply status and analysts question companies’ panic to currently overpay for future supply security.
| R&D Index Week Ending May 18, 2018 |
| Ticker | Exchange | 2017 R&D billions$ | 05/11/18 | 05/18/18 | 5/18/18 to 5/11/18 | 5/18/18 to 12/29/17 | |
| Amazon | AMZN | NASDAQ | 17,774 | 1,602.91 | 1,574.37 | -1.78% | 34.62% |
| Alphabet/Google | GOOGL | NASDAQ | 15,845 | 1,103.38 | 1,069.64 | -3.06% | 1.54% |
| Microsoft | MSFT | NASDAQ | 13,987 | 97.70 | 96.36 | -1.37% | 12.65% |
| Intel | INTC | NASDAQ | 13,499 | 54.67 | 53.50 | -2.14% | 15.90% |
| Apple | AAPL | NASDAQ | 11,506 | 188.59 | 186.31 | -1.21% | 10.09% |
| Volkswagen AG | VLKAY | OTC | 11,260 | 40.40 | 40.19 | -0.52% | -0.62% |
| Roche Pharm | RHHBY | OTC | 10,174 | 27.72 | 27.93 | 0.76% | -11.56% |
| Toyota | TM | NYSE | 9,170 | 138.07 | 136.04 | -1.47% | 6.97% |
| Johnson & Johnson | JNJ | NYSE | 9,060 | 127.24 | 124.24 | -2.36% | -11.08% |
| Novartis | NVS | NYSE | 7,870 | 77.55 | 77.06 | -0.63% | -8.22% |
| General Motors | GM | NYSE | 7,468 | 36.89 | 37.79 | 2.44% | -7.81% |
| Pfizer | PFE | NYSE | 7,288 | 35.50 | 35.64 | 0.39% | -1.60% |
| Bristol-Myers Squibb | BMY | NYSE | 6,942 | 51.86 | 52.71 | 1.64% | -13.98% |
| Cisco | CSCO | NASDAQ | 6,827 | 45.93 | 43.21 | -5.92% | 12.82% |
| Qualcomm | QCOM | NASDAQ | 6,723 | 55.23 | 57.51 | 4.13% | -10.17% |
| Oracle | ORCL | NYSE | 6,702 | 46.82 | 46.32 | -1.07% | -2.03% |
| Honda | HMC | NYSE | 6,519 | 33.08 | 32.98 | -0.30% | -3.23% |
| Astra Zeneca PLC | AZN | NYSE | 6,363 | 36.40 | 36.33 | -0.19% | 4.70% |
| Merck & Co. | MRK | NYSE | 5,759 | 59.69 | 59.14 | -0.92% | 5.10% |
| Daimler | DDAIY | OTC | 5,084 | 79.92 | 79.26 | -0.83% | -6.27% |
| Bayer AG | BAYN | OTC | 4,880 | 30.58 | 30.77 | 0.62% | -1.03% |
| Sanofi SA | SNY | NYSE | 4,755 | 38.38 | 38.88 | 1.30% | -9.58% |
| IBM | IBM | NYSE | 4,628 | 144.14 | 144.08 | -0.04% | -6.09% |
| GlaxoSmithKline | GSK | NYSE | 4,508 | 40.03 | 40.03 | 0.00% | 12.86% |
| Eli Lilly Co | LLY | NYSE | 4,489 | 82.45 | 82.07 | -0.46% | -2.83% |
| Total | 209,080 | 4,275.13 | 4,202.36 | -1.70% | 10.83% | ||
| Biopharmaceutical | 607.40 | 604.80 | -0.43% | -5.17% | |||
| Automotive | 328.36 | 326.26 | -0.64% | -0.30% | |||
| ICT | 1,736.46 | 1,696.93 | -2.28% | 2.39% | |||
