nuTonomy looks to beat Uber at its own game
Head of US robotics start-up says big players are not committed to driverless cars
In the increasingly crowded global race to put driverless cars on the road, a US start-up stood out from the pack last week after beating Uber to offer the first robo-taxi service to the public.
Karl Iagnemma, chief executive of robotics start-up nuTonomy, believes the field is less crowded than it appears.
While Uber, Google, Tesla and Volvo are all road-testing autonomous vehicles, the scale of the challenge means the future of self-driving cars will be dominated by a “small number” of technology providers, he says.
Mr Iagnemma, a robotics specialist who founded nuTonomy with fellow MIT scientist Emilio Frazzoli, says: “There’s a relatively small number of teams with a credible path towards putting robust software on the road”.
The start-up’s chief executive, who grew up in Detroit and was an undergraduate intern at General Motors, is sceptical about the big carmakers’ record in self-driving technology.
“All the technology going into self-driving cars is robotic technology,” he says. “It’s not automotive. That explains why some of the traditional automotive players didn’t develop this technology.”
Mr Iagnemma adds: “Right now we have a number of options for organic growth and partnership. Although it seems like it’s a crowded space with a lot of players, this technology is specialised and not every team working on this is going to come up with a solution.
The road tests nuTonomy is conducting are taking place in the One North district of Singapore, which is occupied mainly by research institutes and has the quietly industrious air of a university campus.
The start-up has given its driving software the discretion to choose between conflicting rules of the road, violating lower priority rules if necessary to ensure safety.
“If the car is faced with a situation where it doesn’t know what to do, it can at least stop and call for help,” Mr Iagnemma says.
One such occasion — when engineers intervened to override the autonomous controls — involved a food truck and a man dressed in a chicken suit as a promotional stunt.
The start-up, which raised $16m in a Series A funding round in May, was attracted to Singapore as a launch market because of strong government backing.
This month, Singapore’s transport regulator, the Land Transport Authority, shortlisted nuTonomy and Delphi, the vehicle technology provider, to conduct tests of robotic vehicles in the city-state.
Singapore authorities believe self-driving cars offer a comfortable means of transiting the “first and last mile” between public transit stations and a commuter’s home and office, curbing private car usage.
In April, Singapore rail operator SMRT announced a joint venture with Dutch company 2 Getthere Holding to market, supply and operate automated vehicles across Asia. These 24-person pods would likely be used within quieter environments such as hospital grounds, business parks or campuses to ferry commuters to the nearest public transit station. Singapore’s regulator is also exploring the use of self-driving buses.
“Other countries have an uneven regulatory landscape. The regulatory landscape in the US is developing. Singapore is going to present a smoother path to market than anywhere else in the world,” Mr Iagnemma says.
He adds that nuTonomy is searching for another city to conduct trials: “We’ve got a pool of cities under consideration. We don’t know where the next city will be.”
Asked whether he personally enjoys driving, Mr Iagnemma laughs and says: “I’m a bit indifferent. Everybody likes driving through scenic winding roads. It’s hard to find people who like sitting in traffic in cities.”
Asian equity markets are mixed as investors digest the decidedly less dovish rhetoric from Fed officials at Jackson Hole symposium on Friday. Fed chair Yellen got the ball rolling with remarks that the case for rate hike has strengthened in recent months as economy is nearing FOMC targets on employment and inflation. While US stocks initially bounced on the comments, Fed vice chairman Fischer then implied that 2 rate hikes within the next 3 meetings, starting with September, is not entirely out of question. Those comments produced some selling late in the US session as greenback firmed and policy expectations were recalibrated. Fixed income markets now see a 33% chance of a September hike vs 21% before Friday's developments, while the outlook for 1 hike by the end of year rose to 60% from 53%. Nikkei225 is thus rising sharply on weaker JPY, while EM and commodity dependent indices and sectors are under pressure from stronger dollar and higher borrowing costs. In FX, USD/JPY tested a 2-week high of 102.20, AUD/USD fell to 4-week low below 0.7550, and gold pared its recent gains below 1,325.
- Over the weekend, there were other Jackson Hole speakers - BOJ Gov Kuroda reiterated that there is ample space for additional policy easing in order to achieve inflation target, while ECB's Coeure cheered ECB's negative rates and asset purchases as "very effective" at supporting growth and inflation. Note that Fed's Bullard and Lockhart also spoke early on Friday with clear consideration of a hike sometime this year - perhaps as soon as the Sept meeting.
Macro :
Keep an eye on :
- HLF US : Carl Icahn Bought Herbalife Shares Today at $59.31 Each (2.3mil shares)
- OCDO LN : Rumor Walmart could look to swap Asda Stake into Ocado
Asia Mid-Session Market Update: USD, Nikkei225 rally on repriced Fed hike expectations after less dovish Yellen and Fischer
***Economic Data***
- (CN) China July Industrial Profits Y/Y: 11.0% v 5.1% prior; YTD: +6.9%
- (AU) AUSTRALIA JULY HIA NEW HOME SALES M/M: -9.7% V +8.2% PRIOR
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +2.4%, S&P/ASX -1.0%, Kospi -0.2%, Shanghai Composite +0.1%, Hang Seng -0.4%, Sep S&P500 -0.1% at 2,167
***Commodities/Fixed Income***
- Dec gold flat at $1,324/oz, Oct crude oil flat at $47./brl, Dec copper flat at $2.09/lb
- (US) National Hurricane Center (NHC): New Tropical Depression (Nine) forms in the Florida straits; Expected to move into Gulf of Mexico
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6856 V 6.6488 PRIOR; Weakest Yuan setting since July 23rd
- (CN) PBOC to inject CNY60B in 7-day reverse repos and CNY30B in 14-day reverse repos
- (KR) South Korea sells 3-year govt bonds at 1.26%
***Market Focal Points/FX***
- Asian equity markets are mixed as investors digest the decidedly less dovish rhetoric from Fed officials at Jackson Hole symposium on Friday. Fed chair Yellen got the ball rolling with remarks that the case for rate hike has strengthened in recent months as economy is nearing FOMC targets on employment and inflation. While US stocks initially bounced on the comments, Fed vice chairman Fischer then implied that 2 rate hikes within the next 3 meetings, starting with September, is not entirely out of question. Those comments produced some selling late in the US session as greenback firmed and policy expectations were recalibrated. Fixed income markets now see a 33% chance of a September hike vs 21% before Friday's developments, while the outlook for 1 hike by the end of year rose to 60% from 53%. Nikkei225 is thus rising sharply on weaker JPY, while EM and commodity dependent indices and sectors are under pressure from stronger dollar and higher borrowing costs. In FX, USD/JPY tested a 2-week high of 102.20, AUD/USD fell to 4-week low below 0.7550, and gold pared its recent gains below 1,325.
- Over the weekend, there were other Jackson Hole speakers - BOJ Gov Kuroda reiterated that there is ample space for additional policy easing in order to achieve inflation target, while ECB's Coeure cheered ECB's negative rates and asset purchases as "very effective" at supporting growth and inflation. Note that Fed's Bullard and Lockhart also spoke early on Friday with clear consideration of a hike sometime this year - perhaps as soon as the Sept meeting.
- In economic data, China put out its July industrial profits growing 11%, which was more than double the rate of annual growth in the prior month. China stats bureau researcher attributed the rise in profits to lower costs, recovery in commodity prices, and a relatively low comparison base. In Australia, July HIA new home sales fell nearly 10% after rising by a 3-month high of 8.2% previously. Despite the volatility in the numbers, HIA economist said that "short term outlook for healthy levels of new home construction remains intact", but hinted that 2017 could see more challenges in the property sector.
***Equities***
US equities / ADRs:
- GM: Unifor autoworkers (GM, Ford and Fiat) authorize strike
- MRK: US District Court rules company's patent on NuvaRing contraceptive is invalid - financial press
- AAPL: Company's tax arrears in Ireland may be around €500M to €1B - Ireland press
- AMZN: Said to consider teams that work 30-hour weeks; Workers would still receive same benefits as those working full time - Washington Post
- CZR: Judge rules company must face creditor lawsuit, potentially forcing into bankruptcy - NY Post
- SUNE: DE Shaw said to consider a bid for company's Terraform stake - financial press
Notable movers by sector:
- Consumer staples: China Shengmu Organic Milk 1432.HK +1.8% (H1 results)
- Energy: Sinopec 386.HK -1.1% (H1 results); Beach Energy BPT.AU +1.8% (FY16 results)
- Financials: China Pacific Insurance Grou 2601.HK -1.3% (H1 results)
- Industrials: Austal ASB.AU +10.4% (FY16 results); Lingbao Gold Co 3330.HK -2.3% (H1 results); Cardno Ltd CDD.AU -1.7% (FY16 results); BYD Company 1211.HK +2.8% (H1 results)
- Materials: Xingye Copper International 505.HK -3.9% (H1 results); Perseus Mining PRU.AU -2.1% (FY16 results); Regis Resources Ltd RRL.AU -1.8% (FY16 results)
- Technology: Inspur International 596.HK -8.0% (H1 results)
US hedge fund Marathon makes Brexit bet on European property
Marathon, a $13bn US hedge fund, is building a big Brexit trade, increasing its investments in property across Ireland, France, Germany and the Netherlands, in a bet that they will be among the big beneficiaries from companies leaving London in the next few years.
These countries “have the most stable outlook and [are the] most likely to benefit from Brexit,” said Bruce Richards, co-founder and chief executive of the distressed debt and property specialist.
Hedge funds were reluctant to put on trades ahead of Britain’s referendum on EU membership in late June given the closeness of the polls. With the volatility triggered by the vote long since vanished, hedge fund managers such as Marathon, and private equity firms such as CVC, have been preparing for any opportunities created by the UK’s decision to leave.
Marathon, which acquired a cluster of European real estate this year, including a portfolio of commercial properties in the Netherlands from Credit Suisse, is planning to buy more in France, Germany, the Netherlands and Ireland.
“Many bank service sector jobs will undoubtedly move to Frankfurt and Paris as EU rules will likely require bank employees to be domiciled within the EU when serving EU clients,” Mr Richards said.
Marathon believes London will remain the centre for finance in Europe but predicts that many jobs will move elsewhere.
Although UK economic data since the vote has been mixed, there are other signs that hedge fund investors still anticipate trouble for the economy. Bets among speculators on a decline in the pound touched a record last week, according to the Commodity Futures Trading Commission.
Since the first quarter, Marathon has acquired office buildings in Amsterdam, multifamily residences in Dublin, industrial warehouse properties or logistic centres in France and shopping centres in Germany.
Investors will be handed more up-to-date information on the UK economy this week, with a snapshot of the manufacturing sector in August and a survey of house prices for the same month both scheduled for release.
The UK will likely slide into a “mild” recession next year, according to Marathon, so Mark Carney, Bank of England governor, will probably continue on a path of easy monetary policy that the central bank began at the start of this month.
In the US, the credit cycle is unlikely to present opportunities for investors in distressed assets until 2018, according to Mr Richards.
Investors have been anticipating a rising tide of distress in credit and real estate markets. Marathon expects “anaemic growth” of 1 per cent in the coming year. “Monetary policy has reached a point of diminishing returns,” Mr Richards said, adding that “lower rates are no longer simulative but rather oppressive.”
Marathon, founded almost 20 years ago, in June sold a minority stake to Blackstone Group, as the world’s biggest alternative asset manager.
In 2011, Mr Richards said Europe presented “the motherlode of distressed opportunities” as the continent grappled with its sovereign debt crisis and growth sputtered.
Weekly Update
Dow -0.85% S&P -0.68% Nasdaq -0.37% Russell +0.10% Brazil -2.34% Nikkei -1.12% Hang Seng -0.12% CSI -1.72% Shanghai -1.22% EuroStoxx +1.42% FTSE -0.30% CAC +0.94% Dax +0.41% Ibex +2.47% MIB +3.27% SMI
Markets drifted sideways most of the week as they anticipated a key policy speech from Fed Chair Yellen at Jackson Hole on Friday. Volumes were light and ranges remained narrow despite relatively heavy news flow including economic data releases and late season earnings reports. Healthcare stocks were in crosshairs for much of the week as several headlines affected trading. Pfizer's acquisition of Medivation pushed up oncology stocks early, but renewed drug price gouging concerns from Washington D.C. weighed on a swath of names competing within the US pharmacy market. After ending last week near $50/bbl, oil prices backed off early in the week exaggerated by a roll in the front month futures contract. Press reports continued to focus on the September meeting of energy producers in Algeria and the potential for coordinated action, but the likelihood of a meaningful agreement still seems low.
Macro :
- Gross Says Yellen’s Economy ‘May Never Walk Normally Again’
- September in Play for Bond Traders as Goldman Sees 40% Fed Odds
- Helicopter Money a No-Go for the SNB, Maechler Tells Blick
Keep an eye on :
- AAPL US : EU Said Likely to Rule in Apple Tax Case Next Week: FT
- AAPL US : Apple’s Irish Tax Arrears May Be Less Than EU1B: Irish Times
- ARO FP : Aeropostale Gets Bids From Sycamore Partners, Liquidators: Rtrs
- ATO FP : Atos to Replace ARM Holdings in S&P Europe 350 Index
- BMPS IM : Paschi Weighs Converting EU3b Subordinated Bond Into Stock: Sole
- BKG LN : Housebuilder Berkeley Group May Leave FTSE 100: Mail on Sunday
- ENI IM : Eni Says Goliat Field Output Is Still Suspended; No Time Table
- FCA IM:Fiat Chrysler CEO Sees Samsung as ‘Potential Strategic Partner’
- HLF US : Carl Icahn Bought Herbalife Shares Today at $59.31 Each (2.3mil shares)
- MS IM : Abu Dhabi Funds May Buy 20%-25% of Mediaset Premium: Repubblica
- ML FP : Michelin Buys Brazil’s Levorin; No Terms
- OCDO LN : Rumor Walmart could look to swap Asda Stake into Ocado
- GLE FP : OTP Eyes SocGen Croatia Unit Splitska Banka, Jutarnji Says
- SAZ GY : Stada Elects Carl Ferdinand Oetker Chair of Supervisory Board
- SRCG SW : Sunrise CEO Is Looking for International TV Partnerships: SZ
- TGYM IM : Technogym Interested in Health Care, Rehab Services Sectors: MF
- VIV FP : Spotify Said to Retaliate Against Artists With Apple Exclusives
- VIV FP : Amazon Said to Be Near to Introducing Music Streaming: FT
- VOW3 GY : VW’s Piech Queried Winterkorn on Diesel in Spring 2015: BamS
- VOW# GY : VW Missed Production of 22,000 Cars Due to Supplier Spat: Welt
- ZURN VX : Zurich Insurance to Cut 300 Swiss Jobs by Aug. 31, SZ Says
Barrons weekend summary: positive on CF, SYMC, GG
Cover story: Barrons list of the 10 Best Dividend Stocks includes VZ, MET, ABBV, DOW, QCOM, CSCO, TGT, CCL, JPM, and USB, ranked by yield, from a high of 4.3% to a low of 2.4%; All shares trade below 17.5 times 2017 profit estimates and have payout ratios below 80%.
Tech Trader: Since he took the reins from Steve Jobs five years ago, AAPL chief Tim Cook has skillfully lead the company through a tumultuous period in the tech world, and nearly doubled revenue, but he needs to forge a stronger cloud-computing strategy.
Trader: If the Fed has been giving mixed signals, the market has exhibited contradictory reactions, but regardless of what the central bank does, the debate on fiscal stimulus should pick up ahead of the elections; Positive on PYPL: As the dominant player in the transaction space, company stands to benefit from the growing consumer preference for online and mobile payments; Many institutional investors are underweight on real estate, and changing that will bring new attention to REITs.
Advisor Rankings: Barrons list of the Top 100 Independent Financial Advisors for 2016 is topped by Fred Fern of Churchill Management Group, Ron Carson of Carson Wealth Management Group, and Spuds Powell of Kayne Anderson Rudnick Investment Management; Barrons inaugural list of the Top 20 Independent Advisory Firms is topped by Mariner Holdings, Creative Planning, and Edelman Financial Services.
Features: 1) Positive on CF: Though shares are down 57% this year amid a fertilizer glut, they could be a good play for contrarian investors because of an outsize yield and potential 20% upside; 2) Positive on SYMC: Shares havent moved much, but the acquisition of Blue Coat Systems, new leadership, and an advanced system to attack cyberthreats could boost shares 25% or more; 3) Positive on GG: Company has spent heavily to develop new mines in Canada and Argentina, invested more than $700M a year to improve operations, and new chief David Garofalo plans to cut costs and bolster cash flow.
Small Caps: Positive on TILE: Market leader in modular flooring has seen improved profit margins, which could pave the way for greater operating leverage and higher earnings once revenue rebounds.
Profile: Ben Segal, who runs the Neuberger Berman International Equity fund, looks for quality stocks with 50% upside (top 10 holdings: Keyence, SAP, Givaudan, Tecan Group, CHKP, TM, Insurance Australia Group, ASML Holding, NLSN, Bunzi).
Interview: Richard Greenfield of BTIG Research, an expert on the tech and media sectors, says DIS is a Sell and NFLX a Buy, and that traditional media companies are on the way to extinction.
Follow-Up: Cautious on MYL: The financial fallout from the EpiPen pricing controversy will be manageable, and shares look cheap, but since its unclear whether value will be unlocked or squandered, investors should sell; Cautious on Infineon: With shares now trading at the premium valuation they deserve, its time for investors to take their profits; Cautious on SIG: Jewelry company has cut costs and explored options for its in-house financing business, but that hasnt been enough to compensate for other troubles, and investors should cut their losses.
European Trader: Positive on Assa Abloy: Swedish lockmaker has used a mix of savvy deal making and technical innovation to transform itself into a leading player, and it should see more growth.
Asian Trader: The Bank of Japan isnt targeting the companies it probably wants to protect, notably banks and export-oriented automobile companies whose stocks have been slammed by negative interest rates and a soaring yen.
Emerging Markets: Investors should be wary of making long-term stock bets on Mexico, given the possibility Donald Trump could take the White House and damage the countrys status as a safe harbor.
Commodities; The fact that oat prices are so low by historical standards suggests a bounce is likely, and views on the grain are increasingly bullish.
Streetwise: Thomas Lee of Fundstrat sees a narrowing in credit spreads as a sign investors are willing to take more risk, a situation that could benefit small-cap stocks.