>>> Asian Update

Asian Mid-session Market Update: Yen craters on reports of ¥27T fiscal stimulus announcement from Abe; Australia core inflation top estimates, dampening the case for easing next week

***Economic Data***
- (AU) AUSTRALIA Q2 CONSUMER PRICES (CPI) Q/Q: 0.4% V 0.4%E; Y/Y: 1.0% (multi-year low) V 1.1%E; TRIMMED MEAN Q/Q: 0.5% V 0.4%E; Y/Y: 1.7% V 1.3%E
- (CN) CHINA JUNE INDUSTRIAL PROFITS Y/Y: 5.1% V 3.7% PRIOR
- (CN) China July Westpac Consumer Confidence Index: 114.0 v 115.9 prior

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +1.4%, S&P/ASX +0.1%, Kospi -0.1%, Shanghai Composite -1.6%, Hang Seng -0.1%, Sep S&P500 +0.2% at 2,167

***Commodities/Fixed Income***
- Aug gold -0.2% at $1,318/oz, Sep crude oil -0.3% at $42.80/brl, Sep copper flat at $2.22/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.5 tonnes to 954.2 tonnes; 3rd straight decline; lowest since July 1st
- (US) Weekly API Oil Inventories: Crude: -0.8M v -2.3M prior; 2nd straight draw
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6671 V 6.6778 PRIOR; 2nd straight firmer Yuan fix
- (CN) PBOC to inject CNY180B in 7-day reverse repos
- (CN) China MoF sells 3-yr bonds at 2.43%
- JGB: (JP) Japan govt considering issuance of 50-year JGBs as part of a fiscal stimulus plan - longest maturity of postwar era - financial press
- (JP) BOJ offers to buy ¥430B in 5-10yr JGBs, ¥200B in 10-25yr JGBs, and ¥120B in JGBs with maturity over 25-yr

***Market Focal Points/FX***
- Asian equity markets are once again mixed following a flattish session on Wall St. After-market earnings saw some notable upside surprises from Apple, Panera, and US Steel, while Twitter was sharply lower as the company whiffed on top-line results and guidance. Japan is at the forefront among the gainers on late-session speculation of a ¥27T fiscal stimulus decision by PM Abe. Conversely, credit concerns in China sent Shanghai Composite lower by over 1.5%. Among FX majors, USD/JPY spiked up over 100pips above ¥106.40 after stimulus rumors. AUD/USD saw some brief strength on mixed Q2 Australia CPI data that saw core annualized inflation topping expectation, rising over 50pips above 0.7560 before selling off below 0.7470.

- Fuji News reported PM Abe would announce the details of a ¥27T stimulus package as soon as today, with the cabinet approval for the plans coming next week. Accompanying the speculation, US financial press also reported the govt is considering issuance of 50-year JGBs as part of a fiscal stimulus - the longest maturity of postwar era - though Japan Finance Ministry deflected that report. Also late last week, Nikkei speculated the fiscal stimulus may be in ¥20-30T range if it includes govt guarantees and other off-budget measures. Fresh economic measures could also accompany the moves by the BOJ as it begins its 2-day meeting ahead of Friday's policy announcement. Today's Nikkei feature speculated that more BOJ members are inclined to support new monetary actions, even though a separate report forecast Q1 net earnings of Japan's top 3 banks to fall about 30% due to depressed lending amid negative BOJ interest rate policy.

- Australia Q2 CPI report has been billed as one of the key deciding factors on whether RBA would move rates again to new record lows next week. Although the headline y/y figure was a decimal below consensus, the RBA-tracked core CPI was slightly hotter than expected, pushing the probability of a cut below 50% from over 60% before the release. Economists with Barclays, CitiGroup, and TD Securities said they still expect rates to move lower from the current level, but noted that may not happen next week after this latest set of inflation data.

- In China, Moody's echoed sentiment from Fitch last week about the growing size of China shadow banking system, stating the leverage in the economy continues to rise as credit growth outpaces nominal GDP. Economist with UBS advocated for more policy easing by the PBoC, calling for RRR to be cut another 1-2 times this year.


***Equities***
US equities / ADRs:
- LOGM: Announces Merger with Citrix's GoTo Family of Products to Create Billion Dollar Industry Leader in a $1.8B deal; +17.7% afterhours
- UIS: Reports Q2 +$0.36 v -$0.38e, R$748.9M v $692Me; +8.6% afterhours
- AAPL: Reports Q3 $1.42 v $1.39e, R$42.4B v $41.8Be; +6.8% afterhours
- PNRA: Reports Q2 $1.78 v $1.75e, R$699M v $698Me; agrees to sell and refranchise Company-owned bakery-cafes in Canada; +3.9% afterhours
- X: Reports Q2 -$0.31 v -$0.55e, R$2.58B v $2.66Be; +2.7% afterhours
- NCR: Reports Q2 $0.72 v $0.65e, R$1.62B v $1.55Be; +1.7% afterhours
- TSS: Reports Q2 $0.74 v $0.72e, R$1.15B v $1.15Be; -0.2% afterhours
- JNPR: Reports Q2 $0.50 v $0.47e, R$1.22B v $1.19Be; -1.3% afterhours
- ILMN: Reports Q2 $0.86 adj v $0.73e, R$600M v $594Me; Appointed CEO Jay Flatley Executive Chairman; Names Francis deSouza CEO; -3.0% afterhours
- MTCH: Reports Q2 $0.17 adj v $0.16e, R$301.1M v $297Me; -5.0% afterhours
- TWTR: Reports Q2 $0.13 v $0.10e, R$602M v $614Me; -10.8% afterhours
- AKAM: Reports Q2 $0.64 v $0.63e, R$572M v $574Me; -11.7% afterhours


Notable movers by sector:
- Consumer discretionary: Wanda Commercial Properties Group Co 169.HK +1.3% (Glass Lewis recommendation); Shimano Inc 7309.JP +4.8% (H1 result); Asahi Group Holdings 2502.JP +4.5% (raises guidance)
- Financials: SAI Global SAI.AU -4.8% (Canaccord Genuity cuts to Sell)
- Industrials: Mitsui Chemical 4183.JP +13.6% (revises H1 guidance); Dandong Xintai Electric Co 300372.CN +10.0%; Bradken BKN.AU +9.1% (restructuring business model); Nufarm NUF.AU +2.6% (RBC initiates with Outperform); GrainCorp GNC.AU -6.5% (Shareholder withdraws bid); Hyundai Motor Co 005380.KR +0.4% (Q2 result)
- Technology: LG Display Co 034220.KR +2.1% (Q2 result)
- Materials: Itochu Corp 8001.JP -7.1% (Claucus Research publishes negative report); Shin-Etsu Chemical Co 4063.JP +15.5% (Q1 result); Fortescue Metals Group FMG.AU +8.1% (Q4 result)
- Energy: Yanzhou Coal Mining Co.1171.HK -0.8% (Q2 result); China Shenhua Energy Co 1088.HK -0.6% (China govt urges to cut coal capacity)

WSJ : Apple’s New Mantra: Good Enough

Apple’s New Mantra: Good Enough

The new iPhone might boost Apple’s sales, though expectations are low

Apple has never found “good enough” to be acceptable for its products, except maybe for its latest results.

And that is telling. Apple reported another sharp drop in iPhone sales for its fiscal third quarter ended June 25. The company also projected what will be its third consecutive revenue decline for the current quarter—making this slump unprecedented in at least the last 15 years of the company’s operating history.

Apple’s saving grace this time around is that few expected anything better—and many expected worse. The midpoint of company’s revenue forecast for the current quarter ending in September came in ahead of Wall Street’s estimates—an important point, since the period is expected to include the initial launch of the next iPhone model. That set up a relief rally for a stock that has badly lagged behind peers, down 8% so far this year.

But relief will only go so far. Apple’s outlook is the latest indication that the next iPhone will indeed be a modest upgrade—and unlikely to spark a big resurgence in sales. That could put the company’s largest business into a holding pattern for another year. And while the smaller, cheaper iPhone SE appears to be a success, that comes at a cost. The average selling price of the iPhone lineup slipped below the $600 mark for the first time in two years.

Still, at just eight times forward earnings excluding net cash, Apple is chronically undervalued. At the current price, no bad news is good enough.

>>> Apple beats by $0.04, reports revs in-line; guides Q4 rev mostly above estim

Apple beats by $0.04, reports revs in-line; guides Q4 rev mostly above estimates, gross margin a little light
  • Reports Q3 (Jun) earnings of $1.42 per share, $0.04 better than the Capital IQ Consensus of $1.38; revenues fell 14.6% year/year to $42.36 bln vs the $42.1 bln Capital IQ Consensus; gross margins of 38.0% vs 37.9% ests vs 39.7% last year.
  • iPhones 40.4 mln vs 40.2 mln ests vs 47.5 mln last year.
    • iPads 9.95 mln vs 8.7 mln ests vs 10.9 mln last year.
    • Macs 4.2 mln vs 4.6 mln ests vs 4.4 mln last year.
  • Americas rev -11%; Europe -7%; China -33%; Asia/Pac -20%.
  • Co issues upside guidance for Q4, sees Q4 revs of $45.5-47.5 bln vs. $45.8 bln Capital IQ Consensus Estimate; gross margin 37.5-38% vs. 38.3% ests.
Conf Call
  • The company expects September quarter iPhone sell through to improve (June Quarter was -8%)
  • Expects service revs to be size of a Fortune 100 company next year.
  • Encouraged by growth prospects in China & India; co will continue making investments in China
  • Co indicated that 9 month iPhone sales in India were up 51% YoY.
  • Co plans additional store openings in India.
  • 3 million locations are now accepting Apple Pay; service is now live in 9 markets.
  • Half of Apple Pay transaction volume are from international transactions
  • Company had growth in Russia, Turkey, and Canada.
  • Co reduced iPhone channel inventory by 4 mln units; co exited quarter near the low end of 5-7 week range for target inventory.
  • Co expects iPhone ASP's to improve in Q4.
  • Co had double digit iPhone growth in Brazil and India.
  • Mac install base reached all time high in the June quarter
  • iPad Pro helped ASP's; reduced channel inventory by 500K units.
  • Asked about investments: Co said its investing in research and development; looking on the outside for talent and intellectual property. Co will continue to look for acquisitions.
  • Co sees DRAM in an oversupply situation; co expects decline in commodity prices. (-->-ve MU)

>>> US After Hours Summary: AAPL +7%, EW +6.4%, X +3% following earn


After Hours Summary: AAPL +7%, EW +6.4%, X +3% following earnings/guidance, Apple suppliers higher... AKAM -12%, TWTR -10.6%, CHRW -6% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: UIS +8.6%, AAPL +6.8%, EW +6.4%, ZIXI +6.3%, BWLD +5.3%, CAVM +5.2% (light volume - also names Raghib Hussain COO), PNRA +3.8%, MDR +3.6%, (also McDermott and Nakilat-Keppel Offshore Marine announce a MoU for an exclusive cooperation agreement to pursue projects within Qatari waters), X +2.7%, GHL +2.6%, WNC +1.8%, IRBT +1.7%, NCR +1.7%, FSB +1.6%, BXMT +1.3%, TRU +1.1%, AI +1.1% (light volume)

Companies trading higher in after hours in reaction to news: REPH +50.8% (announces its Phase III clinical trial evaluating intravenous (IV) meloxicam (N1539) achieved the primary endpoint), BIND +29% (BIND Therapeutics confirms Pfizer's $40 mln bid is highest and best in 363 auction for substantially all of BIND's assets), LOGM +17.7% (LogMeIn confirms it will merge with Citrix's GoTo family of products in a $1.8 bln deal ; also reported earnings), PTX +9.2% (discloses reorganization of senior management team), ADI +8.4% (Linear Tech confirms deal with Analog Devices, agrees to be acquired for ~$60.00/share, or ~$14.8 bln), FRGI +3.8% (to join the S&P SmallCap 600), ZFGN +2.9% (insider buy disclosures), NSU +0.7% (light volume, 60%-owned subsidiary Bisha Mining Share Co will be increasing its total land package of exploration licenses to 814 square kilometers)

Apple suppliers / related tech names and CAVM peers are trading higher in sympathy:  QRVO +4.8%, INVN +2.9%, SWKS +2.7%, CRUS +2.5%, AVGO +2.1%, MXIM +1.9%, NXPI +1.5%, TXN +0.5%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NANO -11.7%, AKAM -11.7%, TWTR -10.6%, RHI -10.3%, RSYS -6.8%, CHRW -5.7%, MTCH -5%, MTSI -4%, UHS -3.8%, ULTI -3.2% (ticking lower), ILMN -3%, BJRI -2.7%, (also expands buyback by $100 mln to $350 mln), ASH -1.7%, JNPR -1.3%

Companies trading lower in after hours in reaction to news: VNOM -3.3% (Viper Energy Partners prices 7,000,000 common units representing limited partner interests at $16/unit), LLTC -1.7% (modestly pulling back from late move higher - Linear Tech confirmed after the close deal with Analog Devices, agrees to be acquired for ~$60.00/share, or ~$14.8 bln), CTXS -1.5% (LogMeIn confirms it will merge with Citrix's GoTo family of products in a $1.8 bln deal ; also reported earnings), WBA -1.3% (Walgreens Boot Alliance announces 15 mln share secondary offering on behalf of selling shareholders)

>>> US Close Dow -0.10% S&P +0.03% Nasdaq +0.24% Russell +0.58%

Closing Market Summary: Averages End Mixed with Earnings and Fed in Focus

The stock market ended the Tuesday affair on a flat note as investors eyed an influx of quarterly reports and upcoming policy statements from the Federal Reserve and Bank of Japan. The major indices recovered from an early pullback, responding to a modest rebound in crude oil and sector leadership from heavily-weighted technology (+0.4%) and industrials (+0.7%). The Nasdaq Composite (+0.2%) finished ahead of the S&P 500 (UNCH) and the Dow Jones Industrial Average (-0.1%).

The major averages began the day on a modestly higher note, mirroring an early rebound in crude oil. The positive move in oil helped lift the broader market as the major indices notched early highs alongside the energy component. However, the rebound in oil proved to be short-lived as investors remained cautious ahead of inventory data from the American Petroleum Institute and the Department of Energy. The energy component pulled back mid-morning, bringing the broader market along with it.

The benchmark index inched off its low throughout the session as investors set their sights on the remainder of a busy macroeconomic week. Five sectors finished in the green as materials (+0.7%) and industrials (+0.7%) topped the leaderboard. The remaining gainers finished with upticks between 0.2% (financials) and 0.4% (technology). Conversely, defensively-oriented telecom services (-1.5%), utilities (-0.9%), consumer staples (-0.8%), and health care (-0.2%) rounded out the board. For its part, WTI crude ended its pit session lower by 0.5% ($42.91/bbl; -$0.22).

The heavily-weighted industrial sector (+0.7%) helped lead the broader market as United Technologies (UTX 107.89, +3.24) and Caterpillar (CAT 82.75, +4.06) outperformed. United Technologies jumped 3.1% after beating analysts' estimates for the quarter and raising its full-year earnings estimates. On the flipside, 3M (MMM 177.66, -1.97) underperformed after reporting a mixed quarter and lowering its local currency sales growth estimates. Separately, airlines outperformed alongside positive quarterly results from JetBlue Airways (JBLU 18.67, +1.39).

The high-beta chipmakers outperformed in the technology space (+0.4%), evidenced by the 3.8% gain in the PHLX Semiconductor Index. The index jumped alongside Linear Technology (LLTC 62.49, +14.02) after speculation mounted that Analog Devices (ADI 62.87, +2.34) was interested in the company. Additionally, Texas Instruments (TXN 71.42, +5.20) outperformed after reporting positive quarterly results. In the broader space, Apple (AAPL 96.67, -0.67) lagged ahead of this evening's earnings release.

In the consumer discretionary space (-0.2%), Dow component McDonald's (MCD 121.71, -5.69) finished at the bottom of the price-weighted index. The stock was under pressure as investors weighed a bottom-line beat against slower than expected second-quarter comparable store sales growth. Conversely, retail names outperformed as the sub-group traded higher in sympathy with Nordstrom (JWN 43.93, +1.19). The stock was upgraded to "Overweight" from "Neutral"at Piper Jaffray.

Biotechnology finished behind the broader health care (-0.2%) sector as the sub-group moved lower in sympathy with Gilead Sciences (GILD 81.05, -7.50). The drug maker fell 8.5% after lowering its full-year sales guidance. In the broader sector, Anthem (ANTM 137.59, -2.39) underperformed ahead of tomorrow morning's earnings report. Conversely, medical equipment names displayed relative strength as the group moved higher following positive earnings results from Baxter (BAX 48.01, +1.91) and Waters (WAT 155.09, +6.65).

The U.S. Dollar Index (97.14, -0.15) settled modestly lower as the pound, euro, and yen each gained against the greenback. Sterling ticked higher by 0.1% against the dollar (1.3134) while the single currency gained 0.1% against the buck (1.0988). Separately, the dollar fell 1.1% against the yen (104.63) amid jitters leading into Friday's policy decision from the Bank of Japan.

Treasuries settled higher as yields slipped throughout the complex. The yield on the 10-yr note finished lower by one basis point at 1.56%.

Today's trading volume was below the recent average as fewer than 803 million shares changed hands on the NYSE floor.

Today's economic data included the Case-Shiller 20-city Index for May, Consumer Confidence for July, and New Home Sales for June: 

  • The Case-Shiller 20-city Home Price Index for May fell to 5.2%, which was below the Briefing.com consensus of 5.4%. This followed the previous month's unrevised reading of 5.4%.
  • The Conference Board's Consumer Confidence Index dipped to 97.3 in July from a downwardly revised 97.4 (from 98.0) in June.
    • The consensus estimate for July was 96.0, so this report was better than expected.
    • The slight change can be attributed entirely to the Expectations Index, which fell from 84.6 in June to 83.3 in July as consumers softened their stance somewhat on the outlook for business and labor market conditions.
    • Conversely, the Present Situations Index rose from 116.6 to 118.3.
    • Confidence levels contribute to the outlook for consumer spending, but ultimately, spending activity rests predominately on income trends.
  • New home sales in June were at a seasonally adjusted rate of 592,000, up 3.5% from the revised May rate of 572,000 (from 551,000).
    • The June number was well ahead of the consensus estimate of 560,000 and 25.4% above the same period a year ago.
    • The strong year-over-year growth reflects a robust improvement in the context of the current economic environment.
    • Still, there is a long way to go to get back to the peak rate of 1.389 million seen in July 2005 and, for that matter, the seasonally adjusted annual rate of 891,000 seen in January 2007 (i.e. pre-Great Recession).
    • The gain in June was paced by a 10.9% increase in the West region and a 10.4% increase in the Midwest.
    • The Northeast and the South saw sales declines of 5.6% and 0.3%, respectively.
    • Notably, there was a large sales pickup in homes priced between $400,000 and $499,999, which accounted for 18% of sales versus 10% in May.
    • The percentage of home sold at all other price points were either flat, or down, from the prior month..
    • Altogether, homes priced under $300,000 accounted for 48% of homes sold (vs. 53% in May) while homes priced over $300,000 accounted for 52% of homes sold (vs. 48% in May).
    • The median sales price was $306,700, up 6.1% year-over-year
    • At the current sales pace, the inventory of new homes for sale is at a 4.9-months supply versus 5.1 months in May

Tomorrow's economic data will include the weekly MBA Mortgage Index, which will be released at 7:00 ET. Durable Orders for June (consensus -1.0%) and Pending Home Sales for June (consensus +1.1%) will be released at 8:30 ET and 10:00 ET, respectively. The day's data will be capped off with the FOMC's July rate decision, which will cross the wires at 14:00 ET. 

  • Russell 2000 +7.1% YTD
  • S&P 500 +6.1% YTD
  • Dow Jones +6.0% YTD
  • Nasdaq Composite +2.1% YTD

WSJ : Driverless Cars Threaten to Crash Insurers’ Earnings

Driverless Cars Threaten to Crash Insurers’ Earnings

The technology may be decades away, but firms are already scrambling to figure out how to deal with an expected decline in premium revenue as autos become safer

The insurance industry has a $160 billion blind spot: the driverless car.

Car insurers last year hauled in $200 billion of premiums, about a third of all premiums collected by the property-casualty industry. But as much as 80% of the intake could evaporate in coming decades, say some consultants, assuming crucial breakthroughs in driverless technology make driving safer and propel big changes in car ownership.

As the threat approaches, U.S. insurance executives are spending millions and embedding with car companies, testing the technology themselves, and wrestling with whether to lower prices as parts of the autonomous future hit America’s roads.

For the actuaries who set insurance rates, it is a puzzle like no other: How do they prepare for a world of so many fewer auto accidents? In the future, will underwriters be insuring drivers or computer code?

“Change is coming and we need to get ahead of it,” said Allstate Corp. Chief Executive Tom Wilson in an interview. The suburban Chicago insurer is spending millions on research for new products and services that involves more than 200 data scientists and tech experts at a company it founded called Arity.


“It isn’t going to happen tomorrow but it is going to happen soon,” he said.


So far, however, the industry hasn’t made dramatic changes to the way it prices car insurance. Truly autonomous cars are years away from dealer showrooms, and many insurers say there isn’t enough data to determine how much safer even some of the newest “semi-autonomous” gear makes America’s roads.

Highlighting the technological challenges still ahead for driverless-car makers, federal authorities in late June disclosed a probe into the May death of a 40-year-old who was killed while operating a Tesla Motors sedan on “Autopilot.”

For insurers, the key to determining how much to charge remains predicting the likelihood that accidents will happen and how much they will cost in repairs and medical care for the injured.

To get that figure, actuaries know how many billions of miles cars typically are driven and how that translates into accidents—currently estimated at one fatality for about every 90 million miles driven in America. They know that male and female drivers have different crash rates, and age matters. And they know that people who have caused wrecks or have certain traffic violations are riskier to insure.

The rates charged by car insurers are subject to approval by state regulators, who seek to ensure that most of each premium dollar goes to claims and claims-handling costs, not to excessive overhead or profits.

But in a future of autonomous cars, actuaries may have to replace calculations about individuals with issues such as: how often cars are hacked and which parts of the country have better satellite imagery. They’ll also have to identify the safety differences across driverless cars, from Google to Tesla, just as they now know that today’s auto makers have safety features of varying quality.

So far, Google’s self-driving cars have racked up more than 1.5 million miles of testing, while Tesla says Autopilot has topped 130 million miles.

In a report last year, KPMG actuaries estimated an 80% drop in the U.S. accident-frequency rate by 2040. Among its assumptions: By 2020, some fully autonomous cars will be available and authorities will be experimenting with upgrades to road infrastructure to help driverless cars navigate.


Data on semi-autonomous gear remains limited to a small subset of vehicles. One of the few insurers adjusting prices already is Liberty Mutual. The insurer gives discounts for some gear including automatic emergency braking, which halts a car to avert a front-to-rear crash. Liberty Mutual is conducting research on the features with the Massachusetts Institute of Technology, and said discounts vary by feature, state regulation and other factors.

Autonomous vehicles “will certainly drive down the cost of insurance as we think of it today, but…there will be other liabilities associated with intelligent cars that will need to be insured,” Liberty Mutual Chief Executive David Long said in an interview.

Consultants say car insurers such as Liberty Mutual that also sell property and liability policies for business customers may be best positioned. That is because many experts see responsibility for car crashes shifting to auto makers and suppliers if caused by equipment malfunction or hacked software.

As insurers debate the impact of a driverless future, timing remains one of the biggest questions.

KPMG forecasts fully autonomous vehicles to be widely available by 2025, while Deloitte Consulting expects proliferation in the late 2020s.

Deloitte forecasts approximately $200 billion in personal-car-insurance premiums to hold steady for seven or eight years, then slide to about $40 billion by 2040. It projects about $100 billion of this $200 billion could migrate to product-liability insurance and coverage bought by ride-sharing businesses.

Deloitte and KPMG stood by their research when reached after news of the Tesla fatality.

A system that monitors the environment for driving hazards gets a test drive at the University of Michigan’s 32-acre outdoor lab known as Mcity.
A system that monitors the environment for driving hazards gets a test drive at the University of Michigan’s 32-acre outdoor lab known as Mcity. PHOTO: PETER BAKER FOR THE WALL STREET JOURNAL
State Farm Mutual Automobile Insurance Co. has positioned itself to get an inside look at the technology as it is being developed. The country’s largest auto insurer is a founding partner at the University of Michigan’s Mobility Transformation Center, whose Mcity lab is a leading test site for driverless gear.

Just as air bags and seat belts did in generations past, increasingly common semi-autonomous equipment is expected to offer significant improvements in safety. Among the most effective is automatic braking, which is in fewer than 10% of cars now but will be standard on new cars by 2022, according to the insurance-industry funded Insurance Institute for Highway Safety.

The Highway Loss Data Institute, a sister organization to IIHS, last year found that 11 front-crash-prevention systems from six manufacturers showed 10% to 15% lower rates of claims for damaging other vehicles, compared with models without the gear.

Surprisingly, the institute found no consistent reduction in claim rates from “lane-departure warning” systems. Researchers had a hunch many drivers found the beeping annoying and were turning off the feature. So they visited Honda dealerships in Germantown, Md., and Alexandria, Va., to take a look at cars as they arrived for servicing.

Of 184 cars, only a third had the feature turned on.

While many in the insurance industry expect the new technologies to improve and proliferate, “we are still operating in an era when car makers are recalling millions of vehicles for the simplest of technology failures: ignition switches, floor mats and air bags,” said Robert Hartwig, president of trade group Insurance Information Institute.

He said many prognosticators with speedy timetables for driverless-car adoption “have drunk too much of the Silicon Valley Kool-Aid.”