Imagine a world where robots are taking over jobs by the hundreds of thousands—exciting for investors, but a nightmare for workers. That's the stark reality we're diving into today, and trust me, it's about to spark some heated debates.
This week's edition of Market Factors kicks off with a deep look at how automation is boosting corporate profits while putting a damper on job prospects for everyday people. We'll also explore how some top strategists are shifting to a more cautious outlook on the markets, and wrap up with insights into the lasting ways the pandemic has reshaped our daily routines.
Automation on the Rise: Giants Like Amazon and Walmart Lead the Charge
The standout news for investors this week comes from a New York Times piece revealing that Amazon.com plans to swap out 600,000 positions with AI-driven robots and cutting-edge automation. A quick check using Microsoft's Copilot AI—my go-to for searching these days, replacing older favorite sites—shows Walmart is also ramping up its own automation efforts.
As usual, my first instinct was to hunt for investment angles—think companies cashing in on helping these retail behemoths cut down on human labor. For Amazon, that search didn't pan out; they acquired their robotics partner, Kiva Systems, back in 2012 and now handle much of it in-house. Outsourced help often comes from a private firm called Covariant, which is a bummer for public investors looking to buy in.
Walmart, on the other hand, spun off its internal robotics division to Symbotic Inc. (SYM-Q) as part of a long-term partnership. Symbotic will deliver AI-powered robots to streamline online orders and deliveries, potentially adding a whopping US$5-billion to their backlog.
Amazon and Walmart stand out as two of the most efficiently operated companies globally, pioneering smarter ways to run their businesses. Take Walmart's "just-in-time" inventory system, for example—it revolutionized retail by minimizing stock on hand and maximizing profits. This approach has become the gold standard across the industry.
But here's where it gets controversial... If this automation wave spreads globally, following the lead of these giants, we're looking at golden opportunities for investors in robotics and AI, but also massive social disruption. Symbotic's stock has skyrocketed 325% since late April 2025—that's not a typo—and while that's great for shareholders, it's cold comfort for unskilled workers facing unemployment.
Automation makes perfect financial sense for big corporations willing to foot the initial bill. Robots don't ask for health benefits, call in sick, or gripe about overtime. Plus, advancements in AI are opening up even more possibilities for mechanization.
This could lead to a tough job landscape where even low-wage gigs are scarce, leaving many people struggling without solid support. Think about it: the dot-com boom showed us the pattern—innovation sparks a financial frenzy, followed by the tech spreading everywhere. Automation is right in the middle of AI's rollout phase, and even if we're early on, it seems like an unstoppable force in the coming years.
Equity Markets: Bulls Turning Bearish
Shifting gears to equities, Wall Street's optimists are having doubts. Savita Subramanian, head of U.S. equity and quantitative strategy at BofA Securities, has been bullish in the past, pointing to the "asset-light" economy as a reason for higher valuations on the S&P 500. But her recent analysis flips the script toward caution.
She tracks 20 key valuation metrics, and currently, four are at all-time highs, including price to operating cash flow. Another five—such as price to GAAP earnings per share, median price-to-earnings, EV/EBITDA, the S&P 500's performance versus WTI crude oil, and its ratio to the Russell 2000—have surpassed the peaks seen in the late 1990s and early 2000s.
In fact, 19 out of those 20 metrics are now above their historical averages. That's a clear sign of potential overvaluation.
BofA uses a special checklist for spotting bear markets, covering things like consumer sentiment, long-term growth forecasts, banking loan standards, M&A deals, and how cheap stocks compare to pricey ones. Fortunately, only 60% of these indicators are flashing warnings right now, below the 70% threshold seen at past market tops.
Still, Subramanian is wary of credit problems in U.S. regional banks and possible liquidity squeezes if big pension funds offload their holdings in passive S&P 500 ETFs.
Her advice? Be picky with investments, focusing on stocks that show strong price trends, upward earnings estimates, and decent valuations.
Diversions: How COVID Reshaped Society Permanently
For our Diversions segment, Stripe Inc.'s CEO, Patrick Collison, shared his thoughts on X about the pandemic's enduring impact on the world. I wouldn't have caught this without a tip from Marginal Revolution, since I've stepped back from X.
Collison pointed out that in France, iconic small shops like cheese stores (fromageries) have shuttered, replaced by chain pizza spots. I've noticed the same here in Toronto, with local eateries closing and retail spaces near King and Yonge Streets sitting vacant.
Stock market participation exploded during COVID and hasn't dialed back, helping prop up share prices. Collison also mentioned chats with educators who say post-pandemic students are skipping classes and assignments more often.
Remote work is still a hit, and the crowded office might be fading into history. And hey, I'm guilty too—I haven't shed all those lockdown pounds yet.
To clarify for beginners, these changes aren't just temporary; they're reshaping habits, economies, and even personal health in ways that stick. For instance, imagine how the shift to online shopping during lockdowns has made physical stores less necessary, creating opportunities for e-commerce but hurting traditional retail.
The Essentials
Hungry for more on market movers, analyst takes, technical stock analysis, insider dealings, and other daily, weekly, or monthly updates? Head over to our Inside the Market page for all that and more.
Globe Investor Highlights
- Morgan Housel explains why investors dread dipping into their savings—and tackles other questions from our team.
- From FOMO to margin-call fears: Gold's rollercoaster ride hits a new phase.
- David Berman shares three strategies readers are using to handle a potential market bubble without dumping everything.
- Mike Dolan reports that the U.S. is locking in higher inflation as investors let go of price worries. On a similar note, Jamie McGeever discusses how Jerome Powell's focus on jobs over inflation is driving down Treasury yields.
- Global fund managers are revisiting Japan's stocks and bonds amid leadership shifts.
What's Coming Up
The economic spotlight in Canada shines on two major events next week. Thursday brings retail sales data for August, with analysts forecasting a 1.0% month-over-month bump. Then, on Wednesday, the Bank of Canada will decide on interest rates, with futures markets suggesting about a 71% chance of a cut, per Bloomberg.
Earnings season is heating up. Rogers Communications Inc. kicks it off Thursday with expectations of $1.256 per share, followed by Celestica Inc. (U.S.$1.477) and TMX Group Ltd. ($0.488) on Monday. Tuesday features Advantage Energy Ltd. ($0.134), and Wednesday is packed with Gildan Activewear Inc. (U.S.$0.983), Agnico-Eagle Mines Ltd. (U.S.$1.883), Allied Properties REIT ($0.509), and Canadian Pacific Kansas City ($1.104).
Across the border, September's U.S. consumer prices come out Friday, tipped for a 0.4% monthly rise. Also on Friday, the S&P Global U.S. Manufacturing PMI will preview October activity, expected at a growth-indicating 51.9.
Tuesday will reveal September durable goods orders, predicted to drop 0.6% from the prior month. The Fed announces its rate decision next Wednesday.
U.S. earnings highlights include Honeywell International Inc. ($2.568), Blackstone Inc. ($1.225), and Ford Motor Co. ($0.36) on Thursday; Procter & Gamble Co. ($1.885) on Friday; Keurig Dr Pepper Inc. ($0.539) on Monday.
Tuesday brings Corning Inc. ($0.665), Royal Caribbean Cruises Ltd. ($5.675), United Parcel Service Inc. ($1.32), and American Tower Corp. ($2.472). Wednesday is a blockbuster with Visa Inc. ($2.976), Caterpillar Inc. ($4.519), Microsoft Corp. ($3.684), Alphabet Inc. ($2.279), Meta Platforms Inc. ($6.739), and Starbucks ($0.551).
Check our detailed earnings and economic calendar for the full scoop.
And this is the part most people miss: Is automation a force for good, creating efficiencies that benefit everyone, or a recipe for inequality and lost livelihoods? Do we need stronger social safety nets—or even regulations—to balance the scales? What do you think—will this tech revolution uplift society or widen the gap? Share your views in the comments; I'm eager to hear agreements and disagreements!
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