Tag Archives: Microsoft

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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Tech talent balks at government work, by Ali Breland

Almost everything governments do is immoral, so the reluctance to work on government projects is understandable. There are still some honest people left in the world. From Ali Breland at thehill.com:

Workers at Silicon Valley’s biggest tech companies are increasingly questioning their employers on the ethics of their work, in some cases leaving jobs and publicly rejecting recruiting offers to make a stand.

The pushback comes as tech companies have expanded into controversial projects, taking big-dollar contracts to provide services to the government and military. That work touches on a range of contentious issues from surveillance, intelligence and data collection to military weaponry.

The highly public protests are raising worries that the industry’s business dealings with government could make it harder to recruit and keep top talent.

In one high-profile example, Matt Meshulam, a software engineer based in Chicago, received an email from an Amazon recruiter in August. But instead of setting up a time to speak, he sent back a quick note explaining why he had no interest in working at the tech behemoth.

“I am not willing to consider opportunities with Amazon as long as it sells facial recognition technology to law enforcement agencies, and enables ICE’s separation of immigrant families by providing technology to Palantir,” he wrote, referring to U.S. Immigration and Customs Enforcement. Meshulam even shared parts of his letter on Twitter.

Meshulam is one of a number of engineers who have publicly turned down recruiters from high-profile tech companies under the hashtag #TechWontBuildIt.

Their reasons range from corporate efforts to thwart unionization, such as Tesla, to concerns over Facebook’s data privacy practices.

 

 

Jumping The Great White Shark Of Bubble Finance, by David Stockman

David Stockman has hated Amazon all the way up. Nevertheless, he’s got some pertinent things to say about what he calls “bubble finance.” From Stockman at davidstockmanscontracorner.com:

Wall Street has now truly jumped the shark—the one jockeyed by Jeff Bezos.

Last night Amazon reported a whopping 41% plunge in free cash flow for the March 2018 LTM period compared to prior year. Yet it was promptly rewarded by a $50 billion surge in market cap—-with $10 billion of that going to the guy riding topside on the Great White Shark of Bubble Finance.

That’s right. Amazon’s relatively meager operating free cash flow for the March 2017 LTM period had printed at $9.0 billion, but in the most recent 12 months the number has slithered all the way down to just $5.3 billion.

And that’s where the real insanity begins. A year ago Amazon’s market cap towered at $425 billion—meaning that it was being valued at a downright frisky 47X free cash flow. But fast forward a year and we get $780 billion in the market cap column this morning and 146X for the free cash flow multiple.

Folks, a company selling distilled water from the Fountain of Youth can’t be worth 146X free cash flow, but don’t tell the giddy lunatics on Wall Street because they are apparently just getting started.

Already at the crack of dawn SunTrust was out with a $1900 price target—meaning an implied market cap of $970 billion and 180X on the free cash flow multiple.

At this point, of course, you could say who’s counting and be done with it. But actually it’s worse—-and for both Amazon and the US economy.

That’s because Amazon is both the leading edge of the most fantastic ever bubble on Wall Street and also a poster boy for the manner in which Bubble Finance is hammering growth, jobs, incomes and economic vitality on main street.

Moreover, soon enough a collapsing Wall Street bubble will bring the already deeply impaired main street economy to its knees. So Amazon is a double-destroyer.

In this context, Bezos e-Commerce juggernaut racked up $174 billion of sales during the March LTM period, which represented a massive $45 billion or 35% gain over prior year (both figures exclude AWS). By way of comparison, that one-year gain is nearly double Macy’s total annual sales!

Even when you adjust for the Whole Foods acquisition that was not in the 2017 LTM numbers, the sales gain was about $35 billion or 27%.

Either way, the robo-traders got damn excited, scooping up AMZN’s shares hand-over-fist on the back of its “great sales momentum”. But as we said yesterday, headline reading algos don’t get far below the surface, and in this case they didn’t even break the skin.

Fully 96% of Amazon’s $5.0 billion of  LTM operating income was accounted for by its cloud services business (AWS).

To continue reading: Jumping The Great White Shark Of Bubble Finance

The Friendly Faces of Fascism, by Robert Gore

Like flies drawn to steaming manure, tycoons are drawn to politics and government, all in the interests of a better world, of course.

There are two modes of human interaction: voluntary and involuntary. The symbol of the former is the market; the symbol of the latter is government. Historically, the pendulum has swung back and forth. Since the early 1900s the pendulum has swung towards government and the involuntary. Humanity’s future hinges on whether or not it will swing back. Ominously, many of the biggest beneficiaries of voluntary free choice are ideologically opposed to it.

It may seem paradoxical that Mark Zuckerberg, Eric Schmidt, Jeff Bezos, Bill Gates, and Tim Cook, among others, build fortunes on the voluntary choices of billions of customers, then join forces with those aligned against voluntary choice. Silicon Valley used to be almost a libertarian outpost, now it’s a bastion of statism. However, there are skewed rationales for it, lodged in the nature of government and business in the 21st century, psychology, and historical precedent.

Government has become so big and all-pervasive that once a business reaches a certain size, it’s going to run into the behemoth blob. Facebook, Google, Amazon, Apple, and Microsoft are huge, and aside from Apple, they dominate their markets. (Apple had a little under 15 percent of the smart phone market in the first quarter of 2017). Computers and the internet are at the heart of the national security state, and Facebook, Google, Apple, and Microsoft are the heart of social media, search, smartphones, communications, and business computing. Along with Amazon, they all have significant roles in cloud data storage. In its voracious quest for information with which to track, blackmail, and subjugate the citizenry, it was inevitable the government would turn to these treasure troves.

How does a company say no to the FBI, the CIA, the Department of Defense, the NSA, and other intrusive government agencies? With difficulty. The “war on terrorism and drugs” rhetoric probably doesn’t cut any mustard, but as Senator Chuck Schumer said, the agencies, “have six ways from Sunday at getting back at you.” You get along by going along. Large shareholders—hedge, pension, and mutual funds—and the corporate collections of cowards known as boards of directors would take a dim view of a CEO who for ideological reasons fought a quixotic and ultimately unprofitable battle with the federal government over something as trivial as a principle.

Let’s not forget that the government has $4 trillion a year to throw around. Amazon received a $600 million dollar contract from the CIA in 2013. Tucked into the latest National Defense Authorization Act is an amendment authorizing $54 billion in online purchases by the government. Amazon will undoubtedly get the lion’s share. The government buys billions of dollars worth of computer and smart phone hardware and software every year. It also buys a lot of advertising, and Facebook and Google are the dominant online advertising platforms. You have to keep a customer that large satisfied.

Beyond payola, there’s publicity, prestige, pride, politics, and power. The first thing you do once you’ve acquired your tens of billions is set up a tax-exempt foundation. Founder and foundation then dive head first into the pool of altruistic goop into which anyone who acquires any measure of fame and fortune in contemporary America dives. It simply won’t do to say you’ve accomplished all you’ve accomplished for yourself. You must find a cause greater than yourself and proclaim your devotion to it.

That incantation serves several purposes. Bill Gates transformed from evil monopolist to philanthropic saint after he established his foundation and retired from Microsoft to devote his efforts full-time to it. Once you’ve acquired the halo, you’re ready to grab the power to which you’re wealth and superior intellect entitle you. Like flies drawn to steaming manure, tycoons are drawn to politics and government, all in the interests of a better world, of course.

There’s nothing new about this. In America, the prototype is John D. Rockefeller. He used state of the art refining technology, ruthless negotiating tactics, industrial consolidation, bribery, and governmental suppression of competitors to become the nation’s first billionaire. Rockefeller was a charter member of the oligarchy that guided the US into central banking, the income tax, foreign interventionism, and its nascent empire in the first few decades of the 1900s. His foundation sheltered his fortune from taxes, gave a bunch of money to worthy causes, burnished his image, augmented his power, and promoted world government organs like the Council on Foreign Relations and, after his death, the Trilateral Commission.

Anyone who gets involved with the behemoth blob wants power, the ability to use force to direct the actions of others. Any shred of a morality that recoils at coercively exacting involuntary compliance is abandoned. Involvement with the corrupt obscenity that is our government means either a conscious or unconscious surrender to the Dark Side paradigm: might makes the only wrong and right.

At the heart of it lies a simple truth: governments can anything they want to you if they claim they’re doing it for you. The altruistic veneer conceals every horror, from history’s bloodthirstiest regimes down to nanny state bureaucrats dictating toilets’ flush capacity. A warm place in hell is reserved for those who covet power under cover of professed good intentions. The hottest fires are reserved for those who give it to them, surrendering without protest control of their own lives.

Once the government has assumed control, the entrepreneurs and executives of ostensibly private businesses toe the government’s line. It’s the only way to survive and indeed thrive under fascism, the correct label for the current system. All under cover of noble aims and approved good causes, of course. In Atlas Shrugged, Ayn Rand drew a sharp distinction between her competent champions of freedom and the incompetent toadies of soul-crushing altruism, collectivism, and statism. In real life freedom’s biggest beneficiaries have become some of its biggest—because of their competence and gargantuan fortunes— enemies.

The gravest threats to the most basic civil liberties—freedom of thought, expression, and transaction—come from the technology giants. Not simply because they’re the dominant commercial, communications and computing platforms, but because they’ve aligned themselves with the government. They’re engaging in creeping censorship, gathering massive amounts of data, cooperating with the surveillance state, and propagating propaganda. Call it the Orwellian or Panopticon state: Facebook, Google, Amazon, Apple, and Microsoft will be invaluable in establishing it. We’re at least halfway there. No surprise that these companies have been stock market leaders. It’s the first rule of fascist investing: buy the companies the government favors.

Italian economist and philosopher Vilfredo Pareto (1848-1923) argued that regardless of the label given to a system of government, a ruling class always emerges and enriches itself. There are no historical counterexamples, certainly not 2017 America. What’s historically unprecedented, however, is the power and control America’s technological oligarchy can potentially exercise, and the relative weakness of those who champion freedom and warn of impending involuntary servitude. The louder the oligarchs proclaim their good intentions and hail tomorrow’s better world, the graver the threat becomes.

The Story of a Man Who

Did It For Himself

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What, We Worry? by Robert Gore

NORMALLY THERE WOULD BE A PICTURE HERE AND ALFRED E. NEUMAN’S WOULD BE THE OBVIOUS CHOICE. HOWEVER, I DIDN’T KNOW IF THAT WOULD VIOLATE MAD MAGAZINE’S TRADEMARKS, COPYRIGHTS, AND OTHER INTELLECTUAL PROPERTY RIGHTS, AND I’M NOT GOING TO WASTE TIME CALLING A LAWYER TO FIND OUT. HAVING GREAT RESPECT FOR MAD, I DID NOT POST ALFRED’S PICTURE, ALTHOUGH I’M SURE I COULD GET AWAY WITH IT. YOU ALL KNOW WHAT HE LOOKS LIKE ANYWAY.

Crowd psychology, not news, drives markets.

SLL reviewed Robert Prechter’s The Socionomic Theory of Finance, the thesis of which is that financial markets, particularly equity markets, are driven by endogenous social mood, not news developments or other “fundamentals.” If ever a market session supported the socionomic hypothesis, yesterday’s did.

Over the weekend hundreds of thousands of computers around the world were afflicted by ransomware called WannaCry that encrypts files and makes them inaccessible unless the owner forks over a Bitcoin payment. The ransomware exploited a bug in Microsoft software of which the company was aware and for which it had made available a patch. However, users had to download the patch, and for an older version of software, users had to pay for it, so many computers were still vulnerable. Although the hackers who distributed the ransomware are unknown, apparently they used an exploit codenamed ETERNALBLUE, originally developed by the NSA, to penetrate Microsoft’s software.

A computer security expert discovered a kill switch in WannaCry that stopped the program from spreading by diverting it to a dead-end on the internet, but there may be a variant that does not have the kill switch. It is unknown how far the program will spread or what havoc it will ultimately wreak. What is crystal clear, however, is what many computer experts have warned of for years: many of the world’s computers and much of the infrastructure, including the internet, is highly vulnerable to disruption or outright shutdown.

This was just ransomware that hit Microsoft software, demanding $300 ransom per machine. It doesn’t take much imagination to envision scenarios where the ransom is say, $10 billion from a government, and the threat is that a substantial chunk of the Internet, electric grid, the government’s defense and intelligence systems, or some other critical function goes down. This cannot be dismissed as far-fetched because nobody on the planet knows but a small fraction of who has what hacking capability or access to what computers and networks, or what’s already been hacked. As the NSA just demonstrated, Intelligence agencies, who you might think have the best handle on the matter, have had their hacks hacked. (Wikileaks Vault 7 release disclosed the CIA’s hacking tools.)

How did the stock market react to this blatant demonstration of technological vulnerability? The Dow was up 89, the S&P up 11, and the Nasdaq composite was up 29. The stock market has been powered this year by Alphabet (Google), Amazon, Apple, Netflix, Facebook, and Microsoft. Any kind of extended disruption of the Internet or pervasive, disabling computer virus or worm would cost these companies billions of dollars and whack their share prices. Yet, Alphabet was up $4.08, Amazon down $3.98, Apple down $.45, Netflix down $.70, Facebook down $.13, and Microsoft up $.05. Hardly earth-shattering moves.

The legions of speculators, investors, and commentators who look for exogenous causes of stock market movements will perhaps say that WannaCry was dismissed because the damage was limited. However, the reported number of computers that have been affected rose all day, and there were news stories that at least one variation of the ransomware had no kill switch, which means it could proliferate unchecked. So during the trading day, nobody really knew how bad the damage was or how bad it would get. Also, while all the implications for computer and network security are not fully known, this incident, the worst of its kind so far, is a loud and clear warning of proliferating risks. Those risks are especially worrisome for companies whose business models depend on computers and the internet.

All of which was apparently irrelevant to the stock market yesterday, joining a lengthy historical list of exogenous factors that “should” have moved the market, but didn’t (see Prechter’s book for many more examples). Crowd psychology drives the market, not the news, and right now the crowd is manifestly bullish.

Disclaimer: Robert Gore has no position in any of the stock indexes or technologically vulnerable and richly valued companies mentioned in this article, and thinks anybody who does is living on borrowed time.

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Microsoft Slams NSA For Letting Its Hacking Tools Cause Global Malware Epidemic, by Tyler Durden

From Wikileaks we know that the CIA exploits vulnerabilities in technology companies’ hardware and software without informing them of the vulnerabilities. Not surprisingly, the NSA apparently does too, and it’s blowing up in a big way. From Tyler Durden at zerohedge.com:

In early April, when we reported that the hacker group known as the Shadow Brokers had released the password to NSA’s “Top Secret Arsenal” of tools that allowed anyone to “back door” into virtually any computer system (in what it claimed was a protest of Trump’s betrayal), few people noticed. On Friday, however, the entire world did notice when an unknown group of hackers reportedly used the same set of NSA-created tools to launch a global malware cyberattack using the WannaCry ransomware virus, holding at least 200,000 computer systems around the globe hostage, and demanding a payment of $300 in bitcoin to unlock infected computers, or else threatening to wipe out the contents of the host machine.

The crippling, global attack prompted Europol to warn that Monday could be a dark day for an unknown number of Windows XP-based systems which could simply fail to start, leading to massive productivity losses around the globe, while others predicted that the spread of the worm could accelerate in the coming days once the hackers bypass the temporary measure that prevented further distribution of the worm over the weekend.

Meanwhile, on Sunday afternoon, Microsoft itself got involved in the global hacking scandal and criticized the NSA for its role in spreading the WannaCry epidemic; specifically the tech giant urged governments to use and store their cyber warfare tools responsibly.

“We have seen vulnerabilities stored by the CIA show up on WikiLeaks, and now this vulnerability stolen from the NSA has affected customers around the world,” Microsoft President and Chief Legal Officer Brad Smith wrote in a blog post this afternoon. “This attack provides yet another example of why the stockpiling of vulnerabilities by governments is such a problem.”

To continue reading: Microsoft Slams NSA For Letting Its Hacking Tools Cause Global Malware Epidemic

 

 

Putin Jabs NSA For Letting The Ransomware “Genies Out Of The Bottle”, by Tyler Durden

Either by design or out of ignorance, the media is not giving this story the attention it deserves, nor is it delineating its many disturbing implications. Perhaps nobody wants to fire up potential copycats, but the state of computer security around the world is gravely inadequate and the consequences will most likely be disastrous. From Tyler Durden at zerohedge.com:

Following the worldwide “Wanna Cry” cyber attack that was launched last Friday and quickly spread to thousands of computers, Vladimir Putin took a jab at the NSA for authoring tools that “may harm their own authors and creators” should the “genies be let out of the bottle.”  Per The Hill:

“We are fully aware that the genies, in particular, those created by secret services, may harm their own authors and creators, should they be let out of the bottle.”

“Microsoft’s management has made it clear that the virus originated from US intelligence services.”

For those who haven’t followed the story closely, the outbreak of the virus, dubbed WannaCry, began last Friday. According to cybersecurity experts, and subsequently confirmed by Microsoft, the WannaCry virus is based on an NSA-developed tool that was leaked to the public by a group called Shadow Brokers. The virus, which is ravaging computer networks worldwide, encrypts user files and demands a ransom in cryptocurrency Bitcoin to release them.

Here is an animated map from the NYT showing how quickly the virus spread:

[Please refer to linked story for map]

Microsoft, which has criticized the American spy agencies for their alleged role in creating the situation, released a patch for its no longer supported Windows XP operating system to prevent computers still running it from being infected. The tech company patched a vulnerability in its newer supported software last month after the leak was made public, but operating systems that were not updated are still vulnerable.

Meanwhile, Microsoft President and Chief Legal Officer Brad Smith, blasted “the stockpiling of vulnerabilities by governments” which then get leaked into the public domain as equivalent to the “U.S. military having some of its Tomahawk missiles stolen.”

To continue reading: Putin Jabs NSA For Letting The Ransomware “Genies Out Of The Bottle”

Why You Must Dump Microsoft NOW, by Paul Rosenberg

From Paul Rosenberg at freemansperspective.com:

I’ve written about dumping Microsoft before – and I stand by those comments – but the newest outrage from Redmond forces me to it again. I don’t care how “inconvenient” you think it may be, you have to stop enriching Microsoft. NOW.

Yes, I have serious issues with Apple too, but at least Wozniak and Jobs started out as real hackers. Gates was a political monopolist, and it still shows.

What’s Happening Now

As of August 1, 2015 (that is, a few days ago), Microsoft announced a new privacy policy and a new services agreement. In the words of one network professional, “Basically, they redefined their operating system to be spyware.”

The European Digital Rights organization examined these new policies in depth and concluded this:

Summing up these 45 pages, one can say that Microsoft basically grants itself very broad rights to collect everything you do, say, and write with and on your devices in order to sell more targeted advertising or to sell your data to third parties. The company appears to be granting itself the right to share your data either with your consent “or as necessary.”

If you’d like to verify anything, you can find the privacy statement here and the services agreement here.

The Ugly Details

The first detail to mention is that this applies to “Bing, Cortana, MSN, Office, OneDrive, Outlook.com, Skype, Windows, Xbox, and other Microsoft services… Microsoft websites, apps, software, and devices.” So, more or less anything of theirs that you touch.

And of course, they are doing all of this for you! Or at least they say so.

They collect… in their own words:

[Y]our first and last name, email address, postal address, phone number, … passwords, password hints, and similar security information, … your age, gender, country and preferred language, … your location, … the teams you follow, … the stocks you track, … favorite cities, … credit card number and the security code, … items you purchase, the web pages you visit, and the search terms you enter, … IP address, device identifiers, … your contacts and relationships, … your documents, photos, music or video you upload, … subject line and body of email, text or other content of an instant message, audio and video recording of a video message.

And so on.

Now, if you are prepared to jump through a lot of hoops, they say you can opt out of some of this… not that many people will ever do it.

I’m not going to bore you with everything, but I will add just a few more tidbits:

• Windows now has a device encryption feature, but they keep a copy of your recovery key, stored in their (very secure, trust us) “cloud.”

• The also grab “data about the networks you connect to.” I interpret that as, “All your networks are belong to us too.”

• “[W]e will access, disclose, and preserve personal data, including your content (such as the content of your emails, other private communications, or files in private folders), when we have a good faith belief that doing so is necessary.” (Their own words!) What that really means is, “We’ll listen in, record what you type, then store it or sell it as we see fit.”

To continue reading: Why You Must Dump Microsoft NOW