This Burger Flipping Robot Arrives Just in Time

This Burger Flipping Robot Arrives Just in Time

Today’s Daily Reckoning Australia begins with an introduction.

Meet Flippy.

He’s a robot that can clean a hot, greasy grill, and even flip burgers.

Currently, he works in California.

You might see him in action if you’re travelling there anytime soon.

Take a look:

Source: Miso Robotics; Daily Mail UK

Thank goodness for Flippy.

The economic expansion in America is so prodigious that there’s essentially a shortage of workers in the hospitality industry — and most other industries to boot.

Unfortunately for the prophets of doom raging against mass underemployment from automation, there’s little evidence of it actually happening.

Robots are acting as a compliment to labour, and not as a threat.

For example, the US Department of Labor says that the unemployment rate for restaurant workers is the lowest it’s ever been.

Robots can also help business owners because they have the potential to remove the tedious and arduous tasks that put potential employees off lower skilled work.

That’s a problem at the moment because it’s easy for people to walk off the job and find one somewhere else.

What does this mean?

For one, it’s going to drive a lot of capital spending in this space. This will be a continuation of what’s already happening. The International Federation of Robotics said last week that global sales grew by 29% in 2017 on the previous year.

This is not going to slow down anytime soon.

China, for one, is installing huge numbers of industrial robots. And considering China is facing a demographic time-bomb, it will need a whole lot more.

You may have heard the line that China will get old before it gets rich. That’s because China — like the Western world — faces a shortage of workers relative to its retiring population.

All this helps make robotics a high growth industry.

It will also make the world far more productive.

And it’s yet another reason that the eternal doom-mongering is a distraction from the wealth-creating opportunities that are, and will remain, abundant for the next decade.

Yes, there will be a hiccups and slowdowns along the way. The rise of robotics doesn’t abolish the business cycle. But if you’re sitting around waiting for the world to collapse, you will find the world leaving you behind.

It certainly also puts Donald Trump’s wall with Mexico in a new context. Global demographics suggest it won’t be long before the US is courting educated Mexicans to settle in the United States to add to the labour pool.

Perhaps one day the same will be true of Indonesians and Australia. Only time will tell. For now, our unemployment and underemployment are much higher than in the United States.

Hopefully we see similar strength in consumer spending in Australia that we do in the US. In fact, we got a little taste of that yesterday.

High-end retailer Kathmandu Holdings Ltd [ASX:KMD] released a trading update yesterday. The company said that sales and profit margins were both up on last year. Same-store sales in Australia saw double-digit growth.

That’s a good sign. It’s also a taste of what we could see across a swathe of stocks once the full-year results start filtering out.

A look back at the year so far

Outside the banking Royal Commission, market commentary has been heavily preoccupied with what’s been happening overseas.

First it was rising interest rates in the US.

Then came a slowing Europe and fears of a US-China trade war that are still swirling.

But the Australian economy is ticking over nicely, all things considered. I think earnings surprises to the upside will be more common than those to the downside.

Certainly, the downshift in the Aussie dollar this year should give a boost to any stock with US dollar earnings.

That alone puts the miners in the spotlight.

It’s interesting to note that for all the fuss about trade, neither the price of oil nor copper has reacted down in a big way. That suggests the markets are not pricing in some sort of cataclysmic clash that derails the global economy.

You can also look at this in another way: The price of gold priced in US dollars is looking decidedly limp right now. That suggest there’s little ‘haven’ buying of gold to protect against developments elsewhere.

Let commodity markets be your guide here. It’s hardly the bush leagues, and they span the entire global supply chain.

That means my basic investment thesis stays the same: Using any market selloff to accumulate the best stocks you can find.


Callum Newman Signature

Callum Newman,
Editor, The Daily Reckoning Australia