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Tag Archives: Apple

The Snowflake Barons Are Eating Each Other, by Mytheos Holt

Things aren’t going so well for the social media and tech barons. From Mytheos Holt at spectator.org:

In 2008’s iconic superhero film The Dark Knight, Heath Ledger’s Joker barks at Christian Bale’s Batman:

Don’t talk like one of [the cops]; you’re not! Even if you’d like to be. To them, you’re just a freak, like me. They need you now, but when they don’t, they’ll cast you out like a leper. See, their morals, their code, it’s a bad joke, to be dropped at the first sign of trouble. They’re only as good as the world allows them to be. I’ll show you, when the chips are down, these civilized people? They’ll eat each other.

He might as well have been talking about Silicon Valley.

Twenty-eighteen was a bad year for the totalitarian titans of tech. Faced with one scandal after another, the industry retreated behind a wall of lobbying money, hoping their bank accounts would shield them from their increasingly ugly image in the public eye as politically bigoted, misanthropic, overgrown children, incapable of following rules, norms, or even laws.

Twenty-nineteen doesn’t look to be much better. European governments, and the European Union itself, have begun sharpening their swords for the industry, albeit sometimes in ill-advised ways. California has passed a brutal consumer protection bill that opens big tech to a host of lawsuits for privacy-related offenses. President Donald Trump’s own son has raised stern alarms about the industry’s power and “gross hypocrisy,” as he put it. Publications formerly friendly to the industry are blasting it for betraying the creators who sustain its business. Like bad imitations of Han Solo, Princess Leia, and Luke Skywalker in A New Hope, the industry finds itself surrounded by filth, with the walls closing in. But, their research into AI withstanding, there is no Threepio around to save them, and unlike Han, Leia, and Luke, Big Tech are the evil empire.

As a result, the industry is doing what any group of cornered predators does, and eating each other to try to stay alive. Thus, a piece in Forbes magazine informs the reader that:

Microsoft, the industry’s journeyman of governmental warfare, is cleverly advocating regulation of a narrow slice of potentially creepy technology: facial recognition. Apple is pointing fingers, suggesting its data-privacy stance is holier than Facebook’s and Google’s. Facebook, in a preview of how the industry will battle its adversaries, has simultaneously called for some form of regulation while darkly warning of the unintended consequences of the wrong kind. (One argument certain to get Donald Trump’s attention: Regulate us too severely, and you’ll only empower our Chinese competitors.)

Probably the most encouraging development listed is Apple’s turn against Facebook and Google. Where once Facebook, Apple, Amazon, Netflix, and Google were regarded as an impregnable block of interests, nicknamed (with predatory appropriateness) FAANG, now the only fangs involved are being stuck in each other.

Politically, they may be the only ones left to care about those fangs. The industry’s pervasive, irrational, and wild hostility to Republicans has converted even the stodgiest establishmentarians, including current (and former) Attorney General William Barr, into vocal public critics of tech. And the aforementioned California privacy law represents a complete failure of the industry’s political power even within its effectively monopartisan own backyard, which suggests that Democrats are no longer willing to carry water for the most vicious monopolists this side of Cornelius Vanderbilt, no matter how performatively “woke” they are.

Indeed, that California law puts tech between a rock and a hard place, as other business interests — and even some tech companies — seem to be anxious to pass a (presumably less stringent) national privacy law aimed at pre-empting the California law before it goes into place. Due to the support of big business, that national plan has the support of Republicans, but that is cold comfort for the biggest tech companies, seeing as debating a national consumer privacy law forces them into a conversation they’ve wanted to avoid for ages: namely, how much consumers’ privacy — in other words, their data — should be protected. What’s worse, having that conversation at the national level may well lead to regulations as strict, or stricter, than California’s being imposed on the entire United States. And even if the regulations aren’t as strict, the days of hoovering up data and violating privacy without anyone’s batting an eye are unquestionably over. Heads, the American people win. Tails, tech loses.

Hence, the nattering nabobs of the net, caught in a trap built from their own missteps, are trying frantically to chew through each other to escape. It will not work. Accountability has come for the snowflake barons, and while defection from the whole may spare some of them the same pain as others, there is no doubt that all of them will be put through pain. It’s about time. After all, their morals, their code, and especially their terms of service are a bad joke to be dropped at the first sign of trouble. And the more Americans realize this, the more they will be ahead of the curve.

 

 

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China Won’t Be Taking Over, by Raúl Ilargi Meijer

China’s got a lot of wood to chop before it can take over the world. From Raúl Ilargi Meijer at theautomaticearth.com:

In the New Year, after a close to the old one that was sort of terrible for our zombie markets, do prepare for a whole lot of stories about China (on top of Brexit and Yellow Vests and many more windmills fighting the Donald). And don’t count on too many positive ones that don’t originate in the country itself. Beijing will especially be full of feel-good tales about a month from now, around Chinese New Year 2019, which is February 5.

And we won’t get an easy and coherent true story, it’ll be bits and pieces stitched together. What will remain is that China did the same we did, just on steroids. It took us 100 years to build our manufacturing capacity, they did it in under 20 (and made ours obsolete). It took us 100 years to borrow enough to get a debt-to-GDP ratio of 300%, they did it in 10.

In the process they also accumulated 10 times more non-productive assets than us, idle factories, bridges to nowhere and empty cities, but they thought that would be alright, that demand would catch up with supply. And if you look at how much unproductive stuff we ourselves have gathered around us, who can blame them for thinking that? Perhaps their biggest mistake has been misreading our actual wealth situation; they didn’t see how poorly off we really are.

Xiang Songzuo, “a relatively obscure economics professor at Renmin University in Beijing”, expressed some dire warnings about the Chinese economy in a December 15 speech. He didn’t get much attention, not even in the West. Not overly surprising, since both Beijing and Wall Street have a vested interest in the continuing China growth story.

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The “Stock Market Crash Of 2018” Is Rapidly Transforming Into “The Financial Crisis Of 2019”, by Michael Snyder

Nothing goes up forever, and when stock markets stop going up, it often means the economy will go down, too. From Michael Snyder at theeconomiccollapseblog.com:

Stock markets are crashing all over the world, we are seeing extremely violent “flash crashes” in the forex marketplace, economic conditions are slowing down all over the globe, and fear is causing many investors to become extremely trigger happy.  The stock market crash of 2018 wiped out approximately 12 trillion dollars in global stock market wealth, but things were supposed to calm down once we got into 2019.  But clearly that is not happening.  After Apple announced that their sales during the first quarter are going to be much, much lower than previously anticipated, Apple’s stock price started shooting down like a rocket and by the end of the session on Wednesday the company had lost 75 billion dollars in market capitalization.  Meanwhile, “flash crashes” caused some of the most violent swings that we have ever seen in the foreign exchange markets…

It took seven minutes for the yen to surge through levels that have held through almost a decade.

In those wild minutes from about 9:30 a.m. Sydney, the yen jumped almost 8 percent against the Australian dollar to its strongest since 2009, and surged 10 percent versus the Turkish lira. The Japanese currency rose at least 1 percent versus all its Group-of-10 peers, bursting through the 72 per Aussie level that has held through a trade war, a stock rout, Italy’s budget dispute and Federal Reserve rate hikes.

This is the kind of chaos that we only see during a financial crisis.

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iPhone Sales Croak, China’s Economy Deteriorating Faster than Expected, Apple Warns. Shares Plunge, by Wolf Richter

Apple is running into trouble in China, and the US stock market bellwether is now down over 35 percent from its recent all-time high. From Wolf Richter at wolfstreet.com:

“We did not foresee the magnitude of the economic deceleration.” Oh dude, starting the year out on the right foot.

On Wednesday after the market closed, Apple released a letter to shareholders in which it said that revenues are going to be a lot worse in the quarter ended December 29 than its guidance two months ago, that iPhone revenues have dropped year-over-year, that China’s economic problems are deeper than expected, and that iPhone revenues are hurting elsewhere too. This confirms a series of revenue warnings from Apple suppliers.

Shares plunged 7.5% after hours to $146. If shares close at this level on Thursday, it would be the lowest close since November 7, 2017. Shares have plunged 38% in three months. Wow, this was quick:

In its “Letter from Tim Cook,” Apple slashed its revenue guidance by 6% to 10% from its prior guidance two months ago, to about $84 billion in the quarter, down from its previous guidance of $89 billion to $93 billion.

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Apple Lost $11 Billion Buying Back Its Own Stock In 2018, by Tyler Durden

At least Apple used its own money to speculate on its stock. A lot of companies borrow money to buy their own stock. Like Apple, many of them have bought stock are prices far higher than current prices. From Tyler Durden at zerohedge.com:

There’s a funny thing about buybacks: when stocks are rising (and are therefore more expensive), companies have zero doubts  about repurchasing their own stock, especially if said purchase is funded with cheap debt. Of course, by repurchasing their stock, the price goes even higher making management’s equity-linked comp more valuable, which explains why management teams usually have no misgivings about allocating capital to this most simplistic of corporate uses of funds. However, when stocks fall, companies tend to clam down on buybacks due to fears that the drop may continue, forcing the CFO or Treasurer to explain his actions to the CEO or the board, and why they risked losses on capital (as well as getting a pink slip) instead of investing in “safer” corporate strategies like M&A, R&D or capex.

The irony, of course, is that companies should not be buying back stocks when the stock is rising (as that’s when it is more expensive), and accelerate repurchases when it is dumping. And yet, that virtually never happens in reality as management teams, like most investors and algos, tend to chase momentum and direction. Meanwhile, confused by underlying pricing mechanics, management – which is singlehandedly responsible for the levitation in the stock price with its buybacks – then watches its stock price tumble even more one stock repurchases are halted.

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Is All Lost? Record Share Buybacks But Stocks Get Crushed, by Wolf Richter

One thing that happens when stocks go into bear markets and the economy heads south is that practices that were overlooked when rising markets were lifting all boats get intense scrutiny. If the current downtrend continues, count on Congressional hearings on share buybacks, especially those funded with debt. From Wolf Richter at wolfstreet.com:

The vengeance of share buybacks: buyback queen Apple plunges.

In the third quarter, share buybacks by S&P 500 companies totaled $203.8 billion, according to S&P Dow Jones Indices today. These are actual buybacks, not hyperventilated announcements of possible future share buybacks:

  • Share buybacks in Q3 jumped 57.7% from a year earlier.
  • This was the third quarter in a row of record share buybacks.
  • For the first three quarters this year, buybacks totaled a mind-bending $583 billion.
  • This $583 billion was up 34% from the same period in 2017.
  • This $583 billion was within a hair of beating the full-year all-time record of $589 billion set in 2007 before it all collapsed.
  • Since Q1 2012 — in less than seven years — all share buybacks combined totaled an even more mind-bending $3.54 trillion.

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FANGMAN Stocks Plunge 4.4% Today, Down $905 Billion, or 20%, since Aug. 31, by Wolf Richter

The so-called FANGMAN stocks are having a rough go of it recently. From Wolf Richter at wolfstreet.com:

It gets costly when the entire market depends on a handful of over-hyped mega-caps.

For the beginning of Thanksgiving week, it was a little messy today in the stock market, with the Nasdaq dropping 3% to 7,028. It’s down 13.6% from its peak at the end of August. But it’s still up 1.8% year-to-date, so nothing serious has happened yet, just some of the gains this year have turned out to be head-fakes.

Folks who went through the wholesale Nasdaq destruction of 2000-2002 will just smile mildly because that’s when the Nasdaq, as the dotcom bubble imploded, lost 78%. Given our Everything Bubble is even bigger and crazier, the Nasdaq’s current sell-off barely registers on my own Richter scale, so to speak.

The Dow fell 1.6%, is down just 7.2% from its peak, and for the year is clinging to a 1.2% gain.

And the S&P 500 dropped 1.7% today and is down 8.5% from the peak. It too remains, if by the thinnest margin, in the green for the year.

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