The R&D Market Pulse Index for the week ending August 11, 2017 closed at 3,405.57 for the 25 companies in the R&D Index. The Index was down -1.52% (or 52.41 basis points) over the week ending August 4, 2017. Three R&D Index companies gained value last week from 0.19% (Qualcomm) to 1.39% (Bristol-Myers Squibb). Twenty-two R&D Index companies lost value last week from -0.06% (Johnson & Johnson) to -4.29% (GlaxoSmithKline).

The increasingly acrimonious dialogue last week between President Trump and North Korea was the primary reason for the declines seen in the R&D Index members, along with most all global stock indices. The declines continued most of last week, with only a token gain on Friday. The CBOE (Chicago Board Options Exchange) Volatility Index (referred to as the ‘fear index’) rose to its highest level (16.04) since last November, which had fallen to a record low in recent weeks reflecting a calm period.

The Dept. of Labor reported last week that the U.S. inflation rate is running at about a 1.7% increase over 2016, below the Fed’s desired rate of 2.0%. Consumer prices rose only 0.1% in July. These low rates puzzle Federal Reserve officials, who expect them to be higher for the U.S. economy’s considerable growth over the past year. July saw some gains in airfares, apparel, physicians’ services and prescription drug prices, which could imply a further inflationary increase in the coming months, according to analysts. The low inflation rate may cause the Fed to reconsider or delay its plans for another short-term interest rate hike this Fall.

R&D Index member Apple’s R&D spending for its third quarter, which ended July 1, rose 15% over its Q3 2016 R&D spending to $2.9 billion. Its 12-month R&D was $11.2 billion which is about 5% of its revenue for the period, a level of R&D it has not invested in since 2004. Apple is close-mouthed about its R&D investments. Analysts expect much of it is being spent on self-driving cars, health-care monitoring or augmented reality—along with its next generation of iPhones and cellular-enabled smart-watches. It should be noted that Apple’s current R&D spending still trails its big tech competitors—Amazon, Google and Microsoft—by 30% to 60%.

A report by the OECD last week noted that most of the largest economies are expected to see increases in Q2 2017 with global growth increasing to 3.7% in Q2 from 3.2% in Q1. The UK and Russia are expected to see slower growth and the U.S. is expected to see stable growth. The slower U.S. growth forecast for Q2 was due to the lack of any increases in investment spending (R&D) and tax cuts that were expected, but did not happen.

R&D Index Week Ending August 11, 2017

		Ticker	Exchange	2017 R&D billions$	08/04/17	08/11/17	8/11/17 to 8/4/17	8/11/17 to 1/1/17
1	Amazon	AMZN	NASDAQ	17,774	987.58	967.99	-1.98%	29.09%
2	Alphabet/Google	GOOGL	NASDAQ	15,845	945.79	930.09	-1.66%	17.37%
3	Microsoft	MSFT	NASDAQ	13,987	72.68	72.50	-0.25%	16.67%
4	Intel	INTC	NASDAQ	13,499	36.30	35.87	-1.18%	-1.10%
5	Apple	AAPL	NASDAQ	11,506	156.39	157.48	0.70%	35.97%
6	Volkswagen AG	VLKAY	OTC	11,260	31.04	30.40	-2.06%	6.00%
7	Roche Pharm	RHHBY	OTC	10,174	31.92	31.48	-1.38%	10.34%
8	Toyota	TM	NYSE	9,170	113.64	112.12	-1.34%	-4.33%
9	Johnson & Johnson	JNJ	NYSE	9,060	133.18	133.10	-0.06%	15.53%
10	Novartis	NVS	NYSE	7,870	84.97	83.35	-1.91%	14.43%
11	General Motors	GM	NYSE	7,468	35.27	34.93	-0.96%	-0.26%
12	Pfizer	PFE	NYSE	7,288	33.64	33.25	-1.16%	2.37%
13	Bristol-Myers Squibb	BMY	NYSE	6,942	55.95	56.73	1.39%	-2.93%
14	Cisco	CSCO	NASDAQ	6,827	31.80	31.47	-1.04%	4.14%
15	Qualcomm	QCOM	NASDAQ	6,723	52.62	52.72	0.19%	-19.14%
16	Oracle	ORCL	NYSE	6,702	49.96	48.24	-3.44%	25.46%
17	Honda	HMC	NYSE	6,519	28.37	27.56	-2.86%	-5.58%
18	Astra Zeneca PLC	AZN	NYSE	6,363	30.17	29.08	-3.61%	6.44%
19	Merck & Co.	MRK	NYSE	5,759	63.10	62.38	-1.14%	5.96%
20	Daimler	DDAIY	OTC	5,084	60.53	59.80	-1.21%	-15.44%
21	Bayer AG	BAYN	XETRA	4,880	107.00	105.70	-1.22%	6.63%
22	Sanofi SA	SNY	NYSE	4,755	48.08	47.55	-1.10%	17.58%
23	IBM	IBM	NYSE	4,628	145.16	141.84	-2.29%	-14.55%
24	GlaxoSmithKline	GSK	NYSE	4,508	40.53	38.79	-4.29%	0.73%
25	Eli Lilly Co	LLY	NYSE	4,489	82.31	81.15	-1.41%	10.33%
	Total			209,080	3,457.98	3,405.57	-1.52%	14.19%
			Biopharmaceutical		710.85	702.56	-1.17%	8.87%
			Automotive		268.85	264.81	-1.50%	-5.64%
			ICT		1,490.70	1,470.21	-1.37%	12.53%

About the R&D Index

The R&D Market Pulse Index is a weekly stock market summary of the top international companies involved in research and development. The top 25 industrial spenders of R&D in 2017 were selected based on the latest listings from Schonfeld & Associates’ June 2017 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT  (8) and conglomerate (1) organizations who invested a cumulative total of more than $209 billion in R&D in 2017, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2017 Global R&D Funding Forecast. The stock prices used in the R&D Index are tabulated from NASDAQ, NYSE, XETRA and OTC common stock prices (in U.S. dollars) for the companies selected at the close of stock trading business on the Friday preceding the publication of the R&D Market Pulse Index in R&D Magazine’s R&D Daily eNewsletter.

The companies used in the R&D Index include Amazon, Alphabet/Google, Microsoft, Intel, Apple, Volkswagen AG, Roche Pharma, Toyota, Johnson & Johnson, Novartis, General Motors, Pfizer, Bristol-Myers Squibb, Cisco, Qualcomm, Oracle, Honda Motor Company, Astra Zeneca plc, Merck & Company, Daimler, Bayer AG, Sanofi SA, IBM, GlaxoSmithKline and Eli Lilly Co. Stock prices are based on those stocks traded on the U.S. exchanges. R&D Index trends (in the stock prices) are just one indicator of the amount of capital available to these high-technology companies to invest in R&D and should not be implied to indicate the absolute value of R&D investments made by these organizations. The companies chosen for the R&D Index have very large sophisticated internal and global R&D organizations with each company investing between $4.5 and $17 billion annually on their R&D efforts.