WSJ : Illegal Immigration Is a Bigger Problem Than Ever. These Five Charts Expla

Illegal Immigration Is a Bigger Problem Than Ever. These Five Charts Explain Why.
Record numbers of migrants are coming with children and from countries they can’t be deported back to, overwhelming U.S. authorities


Historically high numbers of people are illegally entering the U.S., straining an immigration system already overwhelmed by the number of families coming across the border to request asylum.

Border agents made 2.05 million arrests in the federal fiscal year that ended in September, new government data show, the second year in a row that figure has exceeded two million. In the past, the numbers have risen and fallen based on significant economic and policy changes like recessions and pandemic-era border restrictions. But they never exceeded 1.7 million and never stayed at an elevated level as long as they have the past few years.

The record numbers of people entering the country illegally aren’t the only reason border communities are struggling in Texas and shelters are full as far away as Massachusetts. In the past, most migrants were single adults from Mexico looking for work. If caught by the Border Patrol, they could easily and quickly be deported.

Now, a fast-growing share are families with children, who are difficult to deport to their home countries. The change started around 2014 and has exploded in the past two years.

Many families are fleeing gang violence in Central America, though recently a growing number are escaping political repression and poverty in South America.

After crossing into the U.S., they typically surrender to the first border agent they find.

Smugglers encourage adults to travel with children, telling them they are likely to be quickly released into the U.S. because the Border Patrol doesn’t have the capacity to hold families for more than a day or two. Once released, they can wait years for their cases to be processed in clogged immigration courts.

Some initially stay in shelters, taxing resources in places such as Chicago and New York as numbers have grown recently. But most eventually find jobs in a U.S. economy that has recovered from the Covid-19 downturn more robustly than Latin America.

Shifting migrant routes
Routes to the U.S. have changed in recent years, with a particular shift toward Texas. Some people head there because it is the closest border crossing from Central and South America. Others want an entry point closer to their final destination on the East Coast.

But Border Patrol resources have historically been built up in Arizona and California, where Mexican migrants were more likely to cross.

The agency tries to quickly move staff, but savvy smugglers often target spots where they know U.S. authorities have the least ability to detain people.

The result has been a surge of migrants crossing the Rio Grande into Texas and regular releases of families by overwhelmed Border Patrol agents in communities like Del Rio and the Rio Grande Valley.

Recently, though, the daily flow of migrant families and others from harder-to-deport-to countries has grown so large that even border cities with the most resources, like El Paso and San Diego, are struggling to handle the number of people arriving every day.

When deportations are difficult
Managing large numbers of illegal border crossings is tougher when migrants can’t be easily deported.

Because Mexico and the U.S. share a border and have long had strong relations, deporting migrants from that country is relatively easy.

Recently, a large number of people are coming from countries that have strained ties with the U.S., making deportations difficult or impossible. Since 2022, for instance, more than 715,000 Cubans and Venezuelans illegally crossed the U.S.-Mexico border, fleeing political repression and economic distress.

Venezuela and Cuba both recently agreed to start accepting deportees for the first time in years, though it remains to be seen if the change will deter migration.

Economic problems caused by the hangover of the Covid-19 pandemic also are driving increased migration from South American countries like Ecuador, Colombia and Peru, which accept U.S. deportations but require long and costly flights.


A global problem
Migration to the U.S. is becoming increasingly global, with more asylum seekers from as far away as India, Uzbekistan and Mauritania making their way to Mexico and then crossing into the U.S.

The expanding roster of starting points is making it more difficult for the U.S. government to devise a comprehensive migration strategy. The reasons people are leaving their countries differ vastly from nation to nation. The U.S. must also negotiate more diplomatic arrangements to ensure foreigners can be deported.

Researchers and officials say that so long as demand for low-skilled labor remains high in the U.S. and political, economic and environmental distress keep pushing people to leave troubled countries, the numbers of people willing to do whatever it takes to cross the border will remain high.

FT : UK infrastructure has deteriorated in last 10 years, manufacturers warn

UK infrastructure has deteriorated in last 10 years, manufacturers warn
Government should prioritise investment in roads and 5G, says survey by trade body Make UK

More than two-thirds of the UK’s manufacturers believe the country’s infrastructure has deteriorated over the past decade, affecting their capacity to do business, according to the sector’s main trade body.

The government should prioritise investment in roads and 5G broadband, according to more than 60 per cent of the 150 respondents to a survey by Make UK. Upgrades to local rail infrastructure were also seen as a pressing issue.

The study found that 68 per cent of companies said the state of the UK’s national infrastructure had worsened in the last 10 years, while 57 per cent complained local networks had deteriorated over the same time period.

Mike Thornton, partner and head of manufacturing at audit firm RSM, which helped carry out the survey, said that infrastructure quality was one of the key criteria for businesses when choosing where to set up, alongside a country’s tax and regulatory framework and access to skills. “Manufacturers have made their needs clear and infrastructure must be a priority,” he added.

The findings follow calls last week for greater spending on transport, energy and water networks by the National Infrastructure Commission, a government advisory board. In only its second five-yearly assessment, the NIC called for a sharp increase in infrastructure investment from an average of £55bn annually to £80bn per year in the 2030s, with more than half coming from the private sector.

The Make UK survey, however, found that its members believed that “infrastructure changes should be delivered by the state to ensure that agents of the economy can perform as efficiently as possible”. 

More than half of respondents said local authorities should be given responsibility for infrastructure investment as they would “likely have a better view of what is working in their areas”.

The calls for more investment follow recent government cuts to major rail and road projects.

Earlier this month the government axed plans to build the northern leg of the HS2 high-speed rail line between Birmingham and Manchester. There are also doubts about whether the southern section between Birmingham and London will run into the planned terminus in the centre of the capital at Euston after the government said it would only be built if it could be financed through private investment.

In March, the government also announced delays to a number of road schemes, including a £9bn road tunnel under the Thames, known as the Lower Thames Crossing, the £320mn A27 Arundel bypass and the £250mn Rimsrose Valley bypass in Liverpool.

Although the government pledged earlier this month to invest up to £8bn in tackling potholes, a report by the Asphalt Industry Alliance earlier this year said the backlog of repairs was the highest it had been, while “structural conditions continue to decline”. 

The AIA found that 11 per cent of the local road network across England and Wales was considered to be in poor condition and likely to require maintenance in the next 12 months. It added that on average local roads were now being resurfaced less than once every century.

Noble Francis, economics director at the Construction Products Association, said that although the government was “constantly churning out strategies and road maps highlighting the importance of infrastructure for economic growth, productivity and competitiveness, it doesn’t actually deliver on the improvements.”

Earlier this year, a study by the Resolution Foundation said the cost of reversing the under-investment in infrastructure since the 1970s would be the equivalent of 1.6 per cent of GDP annually over the next two decades, or about £40bn a year.

FT : Investors demand highest premium in years to hold risky European debt

Investors demand highest premium in years to hold risky European debt
Spreads on euro-denominated junk bonds rise to widest levels since 2016

Europe’s riskiest corporate borrowers are paying the highest premium in seven years to tap the region’s €412bn junk bond market, highlighting growing fears that a long period of high interest rates and an economic slowdown could trigger further defaults.

The so-called “spread” — or gap — between the yields on euro-denominated corporate debt rated triple C or lower and government paper has widened to more than 18 percentage points on average, according to an ICE BofA index.

That marks the biggest spread since June 2016 and surpasses levels seen in 2020 when the Covid-19 crisis triggered fears of messy defaults and bankruptcies. At the start of last year, the spread was as low as 6.7 percentage points.

Government bond yields have soared on both sides of the Atlantic in recent weeks, dragged skywards by concerns that both the Federal Reserve and the European Central Bank will keep interest rates ‘higher for longer’ to get inflation under control. But corporate bond yields have climbed at an even faster pace.

Expanding spreads indicate that bondholders are demanding larger premiums to compensate them for the risk of a default.

European companies that have defaulted on bonds or loans in recent months include French retailer Casino Guichard-Perrachon, Netherlands-based manufacturer Keter and Belgium-based Ideal, according to rating agency Moody’s.

Analysts and investors said the widening of risky European spreads underscored persistent concerns over the health of the region’s economy. They also pointed to structural issues within Europe’s high-yield bond market — including its lack of depth and liquidity — which have fuelled sharper moves than those in the same asset class in the US.

“I think the economic backdrop in Europe is definitely worse than in the US,” said Christian Hantel, a corporate bond portfolio manager at Swiss firm Vontobel. The widening of spreads “has to be seen in the context of slower economic growth, the aggressive interest rate hikes and the ongoing elevated inflation numbers”.


Many more North American companies have defaulted on their debt so far this year compared with Europe. Spreads for triple-C rated bonds in the US have also yawned wider since the end of the summer, as markets have increasingly priced in expectations of interest rates staying elevated well into next year. But they remain tighter than their European counterparts at roughly 10 percentage points, around levels seen just a few months ago.

Very low-grade European borrowers also suffer from having a narrower investor base than their counterparts in the US, where the high-yield bond market is $1.3tn (€1.1tn) in size, say analysts.

“Europe has a bank-based financial system. The US has a market-based financial system,” said Torsten Sløk, chief economist at Apollo. “There’s much fewer places to go in Europe — you can really only basically go to the banking sector, because credit markets just play a much smaller role.”

That relatively small market size also allows for individual credits to have a disproportionate influence over the direction of an index or sub-index.

A bond issued by the heavily indebted French telecoms group Altice, yielding 29 per cent and maturing in May 2027, has the largest weighting in Europe’s triple-C high-yield gauge, at 4.7 per cent. Its spread has widened to more than 28 percentage points from less than 26 percentage points in late September, Bloomberg data shows.

“Idiosyncratic names [can] push the [index’s] spread out,” said Anton Dobrovskiy, investment specialist on the euro high-yield team at T Rowe Price, adding that risk aversion linked to the Israel-Hamas war was also likely to have amplified moves in European credit spreads this month.

Times of market and economic uncertainty typically hit the lowest-grade companies hardest, noted Vontobel’s Hantel.

“Triple-Cs are the weakest link of the high-yield universe and the corporate credit market in general,” he said. “It’s not a surprise that we see more stress here.”

FT : Saving Atos: Jean-Pierre Mustier handed one of France’s messiest rescue mis

Saving Atos: Jean-Pierre Mustier handed one of France’s messiest rescue missions
Former UniCredit boss steps into governance and political quagmire to turn around indebted tech contractor

A French paratrooper in his youth, Jean-Pierre Mustier has been parachuted in to manage the kind of corporate minefield his home country seems adept at producing.

The former UniCredit chief may face his biggest challenge yet as chair of IT services group and military contractor Atos following his predecessor Bertrand Meunier’s resignation last Monday. Mustier now has the prospect of angry minority shareholders, looming debt repayments, a bruised board and political opposition to a break-up plan concocted with Czech billionaire Daniel Křetínský — all under the watchful gaze of the French state.

“While Mustier’s job is not impossible, it is a very difficult task . . . and you are forced to make a decision. You can’t kick the can down the road because of the liquidity issue, the funding crisis,” said Chandramouli Sriraman, analyst at Stifel.

The slow demise of what was once seen as a national champion has gripped France’s business and defence circles, who wonder how a company whose supercomputers run models for the French nuclear arsenal could fall on such hard times.

Křetínský’s move to buy the company’s legacy IT unit and a stake in the faster-growing big data business has added a nationalistic twist to the saga, with rightwing lawmakers agitating over the sale of a holding in a sensitive business to a foreigner.

Shares in Atos, which has changed chief executive three times in as many years, have fallen 90 per cent in the past three years to €4.68, giving the company a market valuation of €521mn.

“It has become a political issue,” said economist Jean-Hervé Lorenzi, lamenting “the mess” that a company managing all the IT for next year’s Olympic Games in Paris “has been allowed to slide into”.


Mustier’s first task will be to assess whether he can salvage the rescue plan spearheaded by Meunier, who invited the former Société Générale banker and fellow alumnus of elite engineering school École Polytechnique to join the board in May. That deal involves selling Atos’s lossmaking IT consulting unit to Křetínský, who has also agreed to inject cash into the rebranded faster-growing supercomputing and cyber security division Eviden via a capital raising.

“If we don’t split, it’s like having conjoined twins and one of them is extremely sick and you decide to kill both of them,” said a person close to Atos. “There is no good option.”

Created in the 1990s, Atos provided digital services to companies in the early internet years. Under Thierry Breton, a former French finance minister who became Atos CEO for a decade until 2019 and is now EU commissioner for internal markets, the company took on debt to fund acquisitions, reaching more than €14bn in market value. But it came late to cloud computing, buying supercomputer maker Bull in 2014.

After Breton’s departure the group racked up setbacks including the aborted purchase of US IT services firm DXC in 2021 and an accounting probe in the US. Business has deteriorated since Atos unveiled the break-up plan last year.

Křetínský in August agreed to participate in a €900mn capital boost for Eviden in exchange for a 7.5 per cent stake — a financial contribution Meunier sought to help meet Eviden’s capital needs and the €2.25bn in debt payments it faces in 2025. That part of the deal, however, has drawn fire from shareholders, defence officials and politicians.

Křetínský reached the deal when Atos shares were worth around €15. If carried out now, the capital raising would be much more dilutive and less appealing for existing shareholders, who will vote on it at a meeting next year.

Hedge fund CIAM and UDAAC, a grouping of small investors, have also accused Atos chair Meunier of misleading and inadequate disclosures in lawsuits filed against the company. Another small shareholder, Alix AM, has filed a complaint with France’s financial prosecutor for “active and passive corruption” in the planned transaction with Křetínský. Atos has “firmly” rejected the allegations.

“We are glad that [Meunier] is gone . . . but Mustier is taking up the same project, so ultimately, it’s a bit of window dressing,” said CIAM chief Catherine Berjal.

The prospect of Křetínský taking a stake in the division responsible for Atos’s most sensitive tech has also raised concerns among government officials and politicians. “The hypothesis of such a powerful, foreign player getting closer to our most sensitive military capacities deserves all our attention,” centre-right lawmakers said in a letter published in August.

Many believe Mustier will go back to the drawing board. “Either the [shareholder vote] never happens or it is called and the shareholders refuse the capital increase,” said Sophie Vermeille, a lawyer for UDAAC. “The only question is when Atos puts in place a plan B.”

One person familiar with the talks over the company’s future said “Mustier . . . is not going to take the slightest risk”.

People close to Křetínský’s side say he would gladly do without the stake in Eviden, describing political criticism as a “thorn in our side”.

The Czech energy tycoon, a fluent French speaker who started investing in France in 2018 and has impressed the Paris elite with his knowledge of French literature, has bought publisher Editis from Vivendi, invested in appliance retailer Fnac-Darty and is taking over food retailer Casino. But he sold a stake in newspaper Le Monde last month after a newsroom revolt.

Atos executives admitted last Monday that if the Křetínský deal fell through they would need to look for other options, including asset sales, a share sale or issuing more debt.

Defence groups Thales and Airbus have expressed an interest in Atos assets, including the cyber security business, according to people close to the matter. The government might turn to these companies if it loses trust in Atos to handle its military activities, the people added.

Meanwhile the blame game has begun on Atos, with some pointing the finger at Breton. Critics, including Meunier, say the former finance minister pressed ahead with acquisitions for the sake of growth.

In an interview with La Tribune last month, Meunier said Breton’s acquisition strategy had been “achieved with questionable or insufficient selectivity and the signing of contracts whose remuneration was too low in relation to costs”.

A former Atos employee close to Breton hit back, saying it was Meunier’s erratic strategy that had dragged down Atos, distracted its management and led investors to lose trust in the group.

Meunier pushed to have the state take a stake in the company to stabilise the shareholding but was rebuffed by the finance ministry and other officials, according to a person with knowledge of the meetings. “They didn’t want to save Atos,” the person said.

Meunier, Mustier, Atos and the French finance ministry declined to comment.

But some in Paris business circles argue that Meunier, a former private equity executive at PAI Partners and CVC, shares the blame after putting forward turnaround plans that have foundered while shareholders grew frustrated by the falling share price.

“Meunier likes to blame Breton, but he left four years ago,” said CIAM’s Berjal. “He could have made better choices.”

For the person familiar with talks over the company’s future, “Meunier inherited a difficult situation but did not handle it well, and the house of cards fell down. That’s the story.”

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Charles Schwab Has Had a Terrible Year. But the brokerage king won’t be dethroned according to Barron’s

Cover:
-Charles Schwab Has Had a Terrible Year. But the brokerage king won’t be dethroned according to Barron’s. For some advisors, the move to Charles Schwab from TD Ameritrade didn't go smoothly. The snags in the $1.3T Labor Day transition have come amid a trying year for the company. The stock is down 35%, bank deposits had fallen 28% year over year as of Sept. 30, and net new assets tumbled in July and August as some Ameritrade customers and advisors took their business elsewhere.

Interview:
-This week, Barron’s features David Samra, a portfolio manager at Artisan Partners, who considers the current market headwinds to be an opportunity to invest in consumer-focused companies with low valuations and long-term potential. Samra, based in Boston, has run the $28.2B Artisan International Value since its 2002 inception, and applies classic value-investing principles—the sort espoused by Benjamin Graham and his pupil, Warren Buffett—to non-US markets. Samra buys well-run companies trading at a significant discount to intrinsic value.

Tech Trader:
-Heading into its earnings report on Wednesday, Netflix’s shares had fallen by nearly a third over the past three months. Investors have been increasingly worried about Netflix’s future profitability and its ability to retain subscribers. Rather, Netflix delivered a surprise by materially beating profit and subscriber expectations, driving its shares up 16% the next day. For the September quarter, the company posted earnings of $3.73 a share, well ahead of the consensus of $3.49. Paid net subscriber additions came in at 8.8 million, versus Wall Street’s 6.1M estimate.

The Trader:
-While one should not dismiss the macroeconomic and geopolitical issues that are weighing on markets, overestimating their significance could also hurt an investment portfolio. Michael Antonelli, managing director and market strategist at Baird favors energy stocks, which have been getting a boost with oil trading above $90 a barrel. The Energy Select Sector ETF has been trading sideways this year but offers safe dividends. “High quality” consumer-discretionary stocks also look good and will benefit as long as the economy stays strong, he says. Retail sales rose 0.7% in September, and American Express posted yet another quarter of record revenue and profit as America’s propensity to shop continued, even if its stock fell 5.4% on Friday following the release.
-Quarter after quarter, the United States’ largest banks have proven to be resilient despite a challenging economic environment. They also passed the Federal Reserve’s stringent stress test in June, even after a spate of upheaval rocked the industry in March. Regulators have had to admit that the sector has been resilient in the face of stress, even as they prepare tougher capital rules. Earnings bear that out, with nearly three-quarters of banks beating earnings estimates, and the six largest ones—including JPMorgan Chase and Wells Fargo. The SPDR S&P Bank ETF has been trading in a narrow range since mid-March, when Silicon Valley Bank and Signature Bank collapsed and Wall Street was in a panic over what bank would go next. While that has largely subsided, stock prices haven’t recovered. Now investors are worried about what comes next for the economy—and the impact on US banks, which fell again this past week.

Features:
-With several stocks trading for under 10X projected 2023 earnings and yielding 5% or more, investors ought to take a closer look. Some of the better plays include industry leader BlackRock, as well as T. Rowe Price Group, AllianceBernstein Holding, Federated Hermes, and Affiliated Managers Group. A stronger stock market like this year’s would normally boost the stocks because it leads to more assets under management and larger fees and profits. “The stock market is up, but it has been concentrated in a handful of stocks,” says KBW analyst Michael Brown. “That hasn’t improved sentiment enough to drive flows back into these stocks.” What could go right? Flows could become less negative, and third-quarter profit reports might offer some hopeful signs. Bond investments look more attractive than in the past 15 years, which could prompt investments in fixed-income funds.
-Frontier Communications has long been an undervalued stock. It got a positive catalyst last week in the form of Jana Partners, with the activist investor calling for a sale of the internet, television, and phone provider. Frontier has been transitioning from a copper wire to a modern fiber-optic cable one. The process has been slow and requires billions of dollars of investment before generating positive returns. Higher interest rates and a stock-market rout have only raised the cost of financing that transition. Once running, however, fiber-based internet costs less to run and performs better, allowing Frontier to charge more. Frontier says that 85% of its footprint has only one or no fiber competitor, which will boost adoption.

Europe:
-Nokia announced plans to cut up to 14,000 jobs as part of a cost-saving initiative after profit tumbled 69% in the third quarter. The Finnish telecom equipment maker said its plan will address the “challenging market environment.” It’s still early in the day but the cost-cutting measures may not spare the stock from a similar fate to its Swedish rival Ericsson, whose shares tumbled 6% Tuesday after it said tough market conditions would persist into 2024. Nokia stock fell 8.5% in European trading, while its American depositary receipts fell 9.7% in early New York trading.

Emerging Markets:
-no update this week

Commodities:
-The Chinese government is planning to place further restrictions on graphite exports. Graphite is essential for the manufacturing of batteries and China is the dominant global supplier. Export controls could raise prices of the material for electric-vehicle makers such as Tesla and intensify the search for alternative sources of graphite.

Streetwise:
-Stocks haven’t looked this overpriced in 20 years, says Jack Hough, citing a Wall Street economist. He cites the 10-year Treasury yield, recently up to about 5%, compared with the “earnings yield” of the S&P 500 index, or the price/earnings ratio flipped upside down, which is also near 5%. Why take a chance on risky stocks when safe bonds seem similarly priced? BofA Securities points out that since 1945, the correlation between rising real yields and falling P/E ratios has been weak, and negative. Stick with stocks, in other words. Another point the bulls make about the S&P 500’s valuation is that it has been driven higher by recent gains for seven tech giants that carry the most sway in the index—or that did until this past week, when Tesla had an earnings mishap, falling behind Berkshire Hathaway (BRK.B). The others are Microsoft, Alphabet, Amazon.com, and Meta Platforms, which report results in the week ahead; Apple, which is up the following week; and Nvidia, which reports closer to Thanksgiving. The P/E ratio for the seven has climbed from 29 to 45 this year.

TechCrunch : Telegram is still leaking user IP addresses to contacts

Telegram is still leaking user IP addresses to contacts

The popular messaging app Telegram can leak your IP address if you simply add a hacker to your contacts and accept a phone call from them.

Denis Simonov, a security researcher, who is also known as n0a, recently highlighted the issue and wrote a simple tool to exploit it. TechCrunch verified the researcher’s findings by adding Simonov to the contacts of a newly created Telegram account. Simonov then called the account, and shortly after provided TechCrunch with the IP address of the computer where the experiment was being carried out.

Telegram boasts 700 million users all over the world, and has always marketed itself as a “secure” and “private” messaging app, even though experts have repeatedly warned that Telegram is not as secure as end-to-end encrypted app Signal, for example.

The fact that Telegram leaks your IP address to people in your contacts during a voice call has been known for years, but it’s likely that new, less technical users may not be aware.

Simonov, who works for the cybersecurity firm T.Hunter, told TechCrunch: “Telegram focuses on security and privacy, however, in order to stay safe you need to be aware of the nuances of how the messenger’s voice calls work.”

“An unprepared person can easily reveal his IP address to his interlocutor if he does not know about them,” Simonov said.

The reason Telegram leaks a user’s IP addresses during a call is that, by default, Telegram uses a peer-to-peer connection between callers “for better quality and reduced latency,” Telegram spokesperson Remi Vaughn told TechCrunch.

“The downside of this is that it necessitates that both sides know the IP address of the other (since it is a direct connection). Unlike on other messengers, calls from those who are not your contact list will be routed through Telegram’s servers to obscure that,” Vaughn said.

To avoid leaking your IP address, you have to go to Telegram’s Settings > Privacy and Security > Calls, and then select “Never” in the Peer-to-Peer menu, as shown below.

Other messaging and calling apps have been found to leak IP addresses as well. In 2017, a researcher found that WhatsApp was leaking metadata in a way that could allow hackers to find a user’s IP address. In August, 404 Media reported that hackers could reveal the IP address of someone on Skype with no interaction.

Microsoft at the time said it would fix the vulnerability. Telegram, on the other hand, clearly thinks this is just how the app should work.

TechCrunch : Humanoid robots face a major test with Amazon’s Digit pilots

Humanoid robots face a major test with Amazon’s Digit pilots
The new bipedal robot pilots could be a watershed moment for the industry

Announced amid a deluge of news at this week’s Delivering the Future event in Seattle was word that Amazon will begin testing Agility’s Digit in a move that could bring the bipedal robot to its nationwide fulfillment centers. It’s baby steps as these things go, and such early-stage deals don’t necessary mean something bigger down the road.

Take, for instance Agility’s Ford pilot, when the startup was exploring last-mile delivery as a potential way forward. Not too long after, the firm began focusing Digit’s output exclusively on warehouse and factory work.

In April of last year, Amazon named Agility one of the first five recipients of the company’s $1 billion Industrial Innovation Fund. While being included in the fund doesn’t guarantee that Amazon will utilize your technology down the road, it’s a pretty clear indicator that the retail giant is — at the very least — interested in its potential.

“The Innovation Fund is really about exploring what’s possible out there,” Amazon Robotics chief technologist Tye Brady told me in an interview this week. “It’s about understanding practical real-world examples, as well.”

The executive adds that, while Amazon Robotics has thus far exclusively traded in wheeled locomotion, legs present a good deal of possibility.

“We are interested in walking robots,” says Brady. “I find that very interesting, the ability to move on different terrains is interesting. We’re also interested in what works — and frankly what doesn’t work — about it. The humanoid form is really interesting. I don’t know if it’s a good thing or a bad thing. We’re experimentalists at heart. We’re gonna figure that out. We’re going to do a pilot and see how that works out.”

The company’s focus on wheeled AMRs (autonomous mobile robots) dates back to its 2012 purchase of Kiva Systems, whose platforms have formed the foundation for the whole of Amazon Robotics. There are currently 750,000 AMRs deployed across the company’s warehouse network. The company has launched non-AMR systems, as well, including picking arms like Sparrow, which was launched during the same event last year.

It’s difficult to overstate how profound an impact Amazon’s efforts have had on the rest of the industrial robotics space. For one thing, the company has turned up the pressure for the competition to automate in order to meet growing customer expectations of same- and next-day deliveries. For another, the decision to stop supporting Kiva customers outside the Amazon ecosystem led directly to the foundation of some of the industry’s biggest names, including Locus Robotics and 6 River Systems.

A system needs to demonstrate an increase in productivity in order for Amazon to integrate it into its growing robotics ecosystem. It’s less innovation for innovation’s sake, and more scoping out any possible advantage that will get goods to customers in less time. Including drones.

How, precisely, humanoid robots specifically and bipedal robots more generally might slot in remains to be seen. The other big hurdle there is that any new system needs to match the company’s almost unthinkable scale.

There are a number of startups vying to own the humanoid robotics crown at the moment, including 1X, Figure and Tesla. Agility’s Digit is the least human-looking of the bunch, but it’s got a ton of funding and a massive head start. The company also recently opened a new factory in Salem, Oregon, which it claims can produce up to 100,000 Digits a year once fully online.

There’s no shortage of excitement around the category, but proving things out at scale is another question entirely. Whether Digit succeeds or fails at the tasks laid out for it could have a profound impact on the trajectory of humanoid robots generally. Much like the Kiva Systems have proven a major catalyst for AMRs, if Amazon successfully rolls out Digit at scale, suddenly everyone will want to get their hands on some humanoid workers.

The biggest talking point around the form factor is the fact that humans build workspaces for other humans. That includes shelving heights, terrain, aisle width and the staircase, the bane of the ARM’s existence. From this standpoint a humanoid robot suddenly makes a lot more sense. The reality of things is that most companies operate in brownfield sites. That is to say their warehouses and factories generally aren’t built with specific automation solutions in mind. Humanoid robots slot nicely into a brownfield site.

Of course, Amazon has the resources to build any facility it wants, so it’s logical that many of its own robots are effectively working in greenfield sites. Those limitations are less of a concern for Amazon than much of the competition, but obviously if an effective system can slot into the existing workflow with minimal friction, that’s certainly ideal.

Image Credits: Amazon

Brady confirms, however, that Digit isn’t the end-all, be-all of Amazon’s plans for mobile manipulation.

“When you start to bring [sensing, compute and actuation] together in interesting combinations, really unique things start to happen,” he says. “We’re world leaders when it comes to mobile robots. And now we are very much in the business of manipulating not only packages, but also objects. And to bring them together, it’s exciting to see all of the possibilities.”

That could mean alternate ways in. For instance, Amazon knows how to build both an AMR and a robot arm. If one were to effectively mount the latter to the former, they would have a kind of mobile manipulation on their hands.

“You see with the Agility robot — you can think of that as a mobile manipulator,” says Brady. “That has interest to us. The mode of mobility has particular interest to us, because we don’t happen to have done a lot of work in bipedal robots. But absolutely, we could combine that with identification systems, manipulation systems, sortation systems. Anything and everything we’ll do to innovate for our customer and improve safety for employees. We’re getting there with the core fundamentals.”

If for any reason Digit fails to stick the landing, that certainly doesn’t mean the end of it or bipedal robots generally. Perhaps it simply doesn’t sit comfortably in Amazon’s existing work flows. Maybe the robot’s not quite ready for Amazon scale or Amazon’s not quite in a place where Digit makes sense.

Regardless, it would be smart for anyone remotely interested in bipedal robots to sit up and take notice here. The pilots could well have a profound impact on the way we think of the category, going forward.

>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES
-Hamas has released two US hostages captured during its devastating assault on Israel almost two weeks ago, amid intense diplomatic efforts to ease tensions in the Middle Eastern conflict and deliver humanitarian aid to civilians. The women — named by the Israeli prime minister’s office as mother and daughter Judith Tai Raanan and Natalie Shoshana Raanan — were snatched by Hamas militants from the Nahal Oz kibbutz in southern Israel on October 7, in what was the deadliest attack on the country in its 75-year history.
-This week, Biden made his second presidential visit to a transformed Middle East. Israel, where he landed, is a traumatized nation at war, while its Arab neighbors are gripped by rage, angst and fear. The US president has been sucked into one of the world’s most intractable problems — the Israeli-Palestinian conflict, a diplomatic quagmire he sought to avoid, but which has become inescapable in the wake of Hamas’s deadly October 7 attack on southern Israel, and the Jewish state’s ferocious retaliatory offensive on Gaza.
-US House Republicans voted in a secret meeting on Friday to end populist firebrand Jim Jordan’s attempt to become Speaker, extending weeks of Capitol Hill uncertainty that will delay Congress’s ability to approve more aid for Israel and Ukraine. Republicans, who hold a narrow majority in the House, will hold another contest on Monday to select a new candidate for the speakership, their third since the ouster of Kevin McCarthy two weeks ago. Another floor vote on the nominee could happen on Tuesday.
-In its latest twice yearly Financial Stability Report, the US central bank flagged the potential for “broad adverse spillovers to global markets” in the event that the Middle East conflict and the war in Ukraine intensify or stresses emerge elsewhere.
-This weekend Apple will roll out acclaimed director Martin Scorsese’s Killers of the Flower Moon in more than 3,600 US cinemas and thousands more in 63 other markets around the world. Cook has taken a deep personal interest in the film, appearing at its premiere at the Cannes Film Festival and throwing his support behind an auteur-friendly Hollywood rollout that is more rooted in the celluloid era than the iPhone age.
-A company backed by BlackRock has abandoned plans to build a 1,300-mile pipeline across the US Midwest to collect and store carbon emissions from the corn ethanol industry following opposition from landowners and some environmental campaigners.
-A Chinese container ship is at the center of a Finnish investigation into the potential sabotage of a gas pipeline and data cable between the Nordic country and Estonia. Finnish police said on Friday evening it was focusing on Newnew Polar Bear, a Hong Kong-registered container ship, as its movements coincided with the time and place of the damage.
-Italian prime minister Giorgia Meloni has publicly ended her relationship with her partner and father of her child Andrea Giambruno after embarrassing footage of his inappropriate comments to a female colleague was broadcast on national television. “Our paths have diverged for some time and the time has come to acknowledge it,” said Meloni.
-Washington’s tightened export controls on chips may leave Chinese tech groups relying on outdated and stockpiled chips to pursue their artificial intelligence ambitions, with industry giants Alibaba and Baidu facing new hurdles for the manufacturing of their latest self-designed AI processors.

NEW YORK TIMES
-Republicans vote out Rep. Jim Jordan as speaker nominee, continuing chaos in the House. Jim Jordan’s candidacy was rejected by Republicans during a secret ballot vote, leaving the chamber paralyzed with no consensus on a way forward. The House will meet again on Monday in an effort to find a new speaker. About a dozen party members have begun making calls to explore their own bids.
-Chaos and frustration rule as republicans’ bitter speaker fight deepens. With the House GOP back to square one on electing a new speaker, tempers flared and uncertainty over how the impasse might be resolved only grew.
-Hamas has released two Americans; but 200 people are still held captive. A woman and her teenage daughter, dual citizens from Illinois, were being reunited with family on an Israeli military base, officials said.
-President Biden and aides advise Israel to avoid widening war with Hezbollah strike. US officials learned that the Israeli defense minister and other military officials supported a pre-emptive strike on Hezbollah. Prime Minister Benjamin Netanyahu has been cautious.
-US Deficit, pegged at $1.7T, effectively doubled in 2023.
The widening gap between what the government spends and what it earns comes as Congress continues to spar over the proper levels of federal spending.
-Kenneth Chesebro, a Trump-aligned Lawyer, pleads guilty in Georgia
It comes a day after another Trump lawyer made a similar deal, and both agreed to cooperate with prosecutors investigating the 2020 election case.
-Trump seeks freeze of gag order in election case during appeal. Judge Tanya S. Chutkan, who imposed the order, agreed to put it on hold for eight days as the parties filed additional papers.
-Little Punishment or change after South Korea’s Halloween calamity. Families of the 159 people crushed to death last year say the government has never acknowledged its mistakes or accepted responsibility.
-The Supreme Court temporarily sides with the White House in disinformation fight. The justices have set the stage for a major test of the role of the First Amendment in the internet era.
-The Supreme Court rejected Missouri’s effort to override federal gun laws, for now.
-The DeSantis-Haley rivalry heats up, with attacks focused on Israel. As they vie to be the race’s alternative to Donald Trump, Ron DeSantis and Nikki Haley have been trading barbs on the Israel-Hamas conflict.
-DeSantis says he would cancel student visas of Hamas sympathizers. At a GOP candidate showcase in Iowa, Gov. Ron DeSantis of Florida and his rivals repeatedly sought to one-up one another on support for Israel.
-10 Charged in $20M scheme to sell black-market HIV drugs. Prosecutors said the defendants encouraged low-income patients to sell their medication to them and then they resold the drugs to buy luxury goods.
-OpenAI is in talks for deal that would value company at $80B. The San Francisco start-up’s valuation could triple in less than six months.
-The multimillion dollar machines at the center of the U.S.-China Rivalry. The U.S. is taking unusual action to clamp down on sales of chip-making machinery to China, even as Chinese firms are racing to stockpile the equipment.

NY POST
-Rep. Jim Jordan (R-Ohio) gave up his run to become Speaker of the House of Representatives. Jordan failed to win the gavel in a third round of voting Friday, with 25 members — more than in either of the earlier ballots — voting against him. Potential replacements filled the void soon after, with Majority Whip Tom Emmer (R-Minn.) and Reps. Kevin Hern (R-Okla.) and Jack Bergman (R-Mich.) throwing their hats in the ring, in hopes of being the one to replace Rep. Kevin McCarthy (R-Calif.), who was stripped of the speakership in an Oct. 3 vote.
-The pharmaceutical companies behind Ozempic, Mounjaro and Wegovy — which have exploded in popularity with adults looking to lose weight — are testing whether the drugs are safe for children. Eli Lilly, the maker of Mounjaro, said it is planning to give the anti-diabetes meds to kids as young as six years old, according to Bloomberg News. The drug giant began recruiting children 12 and up this week for a clinical trial, according to the report.