The first fatality linked to a self-driving car occurred in May and is generating a large amount of public interest. While the event was indeed tragic, we knew it would happen eventually. Autonomous car accidents are now in the realm of aircraft accidents—they are likely to be statistically safer, yet infinitely more newsworthy.
I have an engineering background, but I am still surprised at the rapid technological advances that have taken place in this arena the past few years. Much like many segments of biotechnology and medical research, society’s ability to come to grips with the legal and moral obligations is not keeping pace with the technological advances.
I am a firm believer that self-driving cars will be the norm one day, and transportation fatalities will be significantly reduced as a result. Today, nearly every driver believes they are an above-average driver. While logic dictates that the majority cannot be above average, the real problem is that every driver has a different definition of what it means to be a good driver. Automation will help resolve these differences and make the actions of all vehicles on the road much more predictable. Predictability will result in additional safety, efficiency, and improved traffic flow. According to the National Highway Traffic Safety Administration, human error currently accounts for more than 90% of all automobile crashes. Therefore, automation makes sense.
On the subject of statistics, commercial aviation is the safest mode of transportation in the U.S., with just 0.06 deaths per billion miles. Bus transportation is the next safest at 0.14 fatalities per billion miles, followed by subways and metro rail at 0.24, commuter rail and Amtrak at 0.47, and cars and trucks at 5.75. Motorcycles represent the other extreme at 217 deaths per billion miles. There is not enough data to adequately assess self-driving cars yet, but the one fatality is against a backdrop of more than 130 million miles. The miles are quickly adding up, and we will soon have the fatality figure for the first billion miles.
Self-driving cars are coming, and they’re coming fast. The technology is not ready for mass deployment at this time, but it is likely to be here long before consumer trust is ready to accept it. The biggest problem the industry has today is that it doesn’t know what it doesn’t know. However, this, too, will eventually be resolved.
The market rally hoisted all sectors into solid, positive trends. After lurking in third the past three weeks, Telecom replaced Utilities at the top today. Real Estate remains firmly in second place, and Utilities is now in third, which again places the three highest-yielding sectors at the head of the pack. The other eight sectors are in the same rank-order as they were a week ago, although all are exhibiting stronger momentum. The middle of the rankings is getting crowded with only a few momentum points separating Consumer Staples, Energy, Health Care Industrials, and Materials. Materials has a rather robust momentum score of 25, which would place it in the upper half under typical market conditions. Today, it is only good for a ranking position of eighth, although it makes eighth appear honorable. Technology and Financials were still in the red a week ago, and today’s double-digit positive momentum scores make it obvious they had a good week. However, these two sectors are still at the bottom of the list from an intermediate-term perspective.
The style categories tried to align themselves in a recognizable pattern for many weeks but were unsuccessful in those attempts. Today that shortcoming was clearly rectified, with the four smallest-capitalization categories moving to the top, the four largest now at the bottom, and the three middle-tier segments aptly wedged between the extremes. The changes required to achieve this alignment were not subtle. Small-Cap Value ascended three places higher to claim the leadership role, Small-Cap Blend moved four places upward, and both Small-Cap Growth and Micro-Cap surged five places higher to their new positions. Downside moves were also dramatic, with Mid-Cap Value falling from first to fifth, Mid-Cap Blend giving up two positions, Large-Cap Value dropping six, and Mega-Cap relinquishing five spots. Large-Cap Growth was the only style category that did not change its ranking position, and it sits at the bottom for an eighth week.
Changes in the global rankings were rather muted compared to the style and sector groupings. Latin America is at the top for a third week and continues to hold a wide margin over Emerging Markets. Pacific ex-Japan and Canada swapped places, producing the only changes in the ranking positions. Pacific ex-Japan got the better part of the exchange and landed three spots higher, while Canada fell from third to sixth. Between them, China and the U.S. held their positons while registering healthy increases in momentum. Japan and EAFE both made the transition from red to green, leaving only the U.K. and the Eurozone in negative momentum territory. Both the U.K. and Eurozone benefited from the global rally of that past week, but for them, it wasn’t enough to overcome the pullbacks suffered as a result of the Brexit vote. Britain’s transition of leadership from David Cameron to Theresa May happened much sooner and more smoothly than expected, helping to stabilize markets there.
“We have every reason to believe that autonomous vehicles will be safer—they’re never drunk or tired or distracted. What we don’t know is what kinds of errors they may introduce. Where humans fail the most may not be where autonomous vehicles do. They may fail in entirely new ways.”
—Nidhi Kalra, codirector at RAND Center for Decision Making Under Uncertainty
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