R&D Market PUlse Index for the week ending August 18, 2017 closed at 3,383.56 for the 25 companies in the R&D Index. The Index was down -0.65% (or 22.01 basis points) over the week ending August 11, 2017. Seven R&D Index companies gained value last week from 0.01% (Apple) to 2.08% (Bayer AG). Eighteen R&D Index companies lost value last week from -0.01% (Microsoft) to -5.03% (Eli Lilly).
The stock market suffered from two significant events last week that caused investor concerns about global economic stability—one was remarks by President Trump concerning the white supremicist violence in Charlottesville, Va., on August 11-13 and the other was the terrorist attacks in Barcelona, Spain on Thursday, August 17. Both affected investors’ overall confidence and they fled to other investment vehicles such as bonds and gold.
China announced on friday new rules limiting its foreign direct investments. China will restrict investments in foreign properties, such as hotels, cinemas, entertainment and sports teams. It will also restrict the establishment of equity-investment funds, and any investment platforms that are not linked to a specific project. China will not restrict investments in technology-based businesses. These changes are likely to affect U.S. enterprises more than other countries since about 40% of previous Chinese investments were made in the U.S. Chinese companies currently employ about 140,000 workers in the U.S. compared to only 16,000 eight years ago in 2009.
R&D Index member Amazon sold $16 billion in various bonds last tuesday, the fourth largest bond offering in 2017, behind AT&T ($22.5 billion), BAT Capital ($17.3 billion) and R&D Index member Microsoft ($17 billion). The bonds will be used to finance Amazon’s $13.7 billion acquisition of Whole Foods Market. This is only Amazon’s fourth bond offering since 1998 and the first since 2014. Moody’s raised Amazon’s rating stating that the benefits of the Whole Foods acquisition outweighed the additional debt being taken on to fund the deal.
The volatility of last week’s stock market, the low inflation rates and Trump’s likely problems with passing any tax relief bills this year are combining to put roadblocks toward the Fed raising short-term interest rates for a third time in 2017. Notes released last week from the Fed’s July meeting already reveal a split in Fed officials support for a third rate hike and the continued issues since that meeting have not changed anything to reverse that trend.
A report released last week by the U.S. Department of Commerce noted that autonomous vehicle development currently being pursued by automotive and other companies is likely to affect more than 11% of all U.S. jobs, including taxis, trucks, ambulances, police, bus drivers, delivery trucks, real-estate personnel and even plumbers. The report noted that most workers whose jobs are affected will likely be unable to find alternate employment.
|R&D Index Week Ending August 18, 2017|
|Ticker||Exchange||2017 R&D billions$||08/11/17||08/18/17||8/18/17 to 8/11/17||8/18/17 to 1/1/17|
|9||Johnson & Johnson||JNJ||NYSE||9,060||133.10||132.63||-0.35%||15.12%|
|18||Astra Zeneca PLC||AZN||NYSE||6,363||29.08||29.12||0.14%||6.59%|
|19||Merck & Co.||MRK||NYSE||5,759||62.38||61.49||-1.43%||4.45%|
|25||Eli Lilly Co||LLY||NYSE||4,489||81.15||77.07||-5.03%||4.79%|
About the R&D Market Pulse 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 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.