Category Archives: Economics

Business, Climate Solutions, Cutting Edge, Earth and Ecology, Economics, Tech

Battery Day Bombshell: Tesla and Elon Musk to Announce EV Breakthrough in June, details leaked to Reuters

May 17, 2020 Danny Leeds

https://www.tesla.com/sites/tesla/files/curatedmedia/hero.mp4

”Holy Grail” believed to be impossible before at least 2025 might now be on the way thanks to battery design improvements

Tesla has proven already that a well designed and engineered EV has many superior qualities compared to an equivalent ICE (internal combustion engine) vehicle. Teslas have shown that they can last up to one million miles with far less maintenance.

Battery will be the product of a 3-way Joint Venture with contributors from Tesla, Contemporary Amperex Technology Ltd (China) and Jeff Dahn based at Dalhousie University in Halifax, Nova Scotia

The new low-cost long life battery will first be used for the Model 3 version manufactured for the Chinese market. The plan, according to sources that spoke anonymously to Reuters, is for an initial roll-out in China and later for the low cost Model 3 to be introduced into other markets, such as North America, for example.

The “million mile” moniker is an illustration of the long lasting life span of the battery design. Less obvious, however, are the potentially ground breaking application as a resource that can be used via Tesla Energy in energy storage products. With highly reliable battery packs lasting potentially up to three decades it will be possible for small for homeowners to have a backup source during outages, or a hybrid solution with solar panels combining with power from the grid as needed.

Battery stored solar generated energy can reduce costs or even be an income source when excess is sold back to public utilities. And, of course a complete off grid, solar and wind powered, fully sustainable system could be employed in large and small settings. A massive version of such a system is already in place at the Nevada gigafactory itself.

Challenges remain yet the upcoming announcement nevertheless changes the outlook considerably

This highly ambitious project and these blockbuster potentials require many desperate elements to come together for this dream to be realized. One is the new, groundbreaking battery design which is the bombshell news being hinted at by Reuter’s unnamed sources.

Based on low-cobalt and cobalt-free battery chemistries, and the use of chemical additives, materials and coatings, the new design is projected to enable batteries to store more energy for longer periods, sources said. Additionally, nano-engineered materials are said to be a contributing factor in creating more bruise resistant and less damage prone due to rapid charging stresses. These improvements are said to make the “million mile” claim for the replacement cycle a reality.

SBA Releases Paycheck Protection Program Forgiveness Application for Coronavirus Aid

May 16, 2020 Eric Cho

Banks make final approval, official form, with schedule for documentation, lays out detailed requirements

The US treasury department, along with the SBA made the highly anticipated document and details available on Friday. The application, which can be downloaded from this link and printed, or filled out online, contains the requirements needed in order for the so called Paycheck Protection Program, or PPP, recipients to apply for forgiveness under the program.

Read more: Lynxotic coronavirus coverage

This release also clarifies the process whereby the borrower must fill out the form and provide any additional accompanying documentation. Once completed the borrower must submit the form and accompanying documents to the lending institution where they received the PPP funds. The lending bank will make the final decision to approve any forgiveness.

The 11 pages included in the file consist of the forgiveness application itself and instructions on how to fill it out. The application itself has two important schedules: Schedule A and the worksheet for Schedule A.

Key is the 60-day period which has been designated as the period within which the funds must be used, in order for the expenses to be forgivable. In some cases there can be, apparently, some flexibility regarding the date an expense was incurred, such as hours worked by employees, vs. the date those incurred expenses were paid, such as the scheduled payroll payment date or pay period closing date. The applicable dates, can in some cases, be the date the expenses were incurred, not paid, in case of discrepancies.

While some may find this application and the accompanying instructions more than sufficient, such as ongoing businesses that maintained employment and lease / mortgage payments, and already have a ratio to costs between them at 75% / 25% as prescribed in the original guidelines. Others, however, may have a more difficult time deciphering what exactly they can or can’t expect forgiveness for.

Though the release is a major step toward clarification, confusion still abounds in the details of the program and forgiveness eligibility

Articles are appearing online picking apart the confusion that may be caused by this initial attempt to clarify the process and set it into motion. The SBA has indicated that more guidance will be forthcoming.

One gripe being mentioned is the lack of narrative-based guidance, basically a verbal explanation for the various cases that could potentially arise and how they should be handled.

Many businesses had to furlough or fire employees due to lack of funds and then re-hire or re-activate them to comply with the SBA program, in particular wanting to be sure to qualify for forgiveness. This was an acute need in some situations, such as restaurants or other businesses that were required to close and deemed non-essential. In many of those cases the employees were paid not to work or to do minimal work while receiving a full paycheck.

Companies in that situation, even with full forgiveness granted, face a daunting, uphill battle to regain profitability or viable revenue streams to keep them running after the 60 days of funds has run out. The lingering effects of the pandemic and the lock-down and stay-at-home orders along with the general state of fear (well founded in many cases, it appears) create a situation where former levels of business revenue and activity may take a long time to regain.

This is not taking into account the economic after-effects and general depressed state of consumption being seen in current national published data.

While the SBA has taken a large and positive step forward with the release of this application and achieved some clarification of the process, much more help for struggling businesses will be needed as we emerge, slowly, from the coronavirus / covid-19 crisis.

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Business, Economics, Finance, Lifestyle, News

Income Absurdity: Majority Live Paycheck to Paycheck, while an Elite Few Hoard Astronomical Amounts

October 20, 2019 Kat Lee

Comparing the Wealth of Jeff Bezos to those with less than $10,000 is like comparing Jupiter to a Golf Ball… Graphic by Lynxotic / Adobe

Income Divides So Vast We Cannot See The Forest For The Money Trees…

Income inequality has been talked about a lot over the past couple decades. The vast inequities between those who make the most and those who make the least amount of money have caused a noticeable change in the American populace. Class divides have become a significant topic of debate; socioeconomic status can dictate one’s entire wellbeing; and Socialism, once considered a quasi-dirty word in America, is now an ideology championed by several politicians and an enormous number of young voters.

Just how bad is income inequality, though?

As it turns out, our anxieties over the concept are well grounded, and class divides may even be worse than our minds are able to comprehend.

The Incomprehensible Disparity and Absurdity of Income Inequality:

According to data from the 2018 Sussie Global Wealth Report and the Bloomberg Billionaires Index, the number of people worldwide who have less than $10,000 total 3.2 billion. The bulk of those people fall in the $1,000-$10,000 range. Staggeringly, though, 1.5 billion of them have under $1,000. This is an enormous base, showing that the massive majority of people in the world are living on strained finances.

Bottom Net Worth of each bracket	How Many Adults	Who
$100	1,500,000,000	Subsistence Farmer
$1,000	1,700,000,000	Median U.S. Renter
$10,000	1,300.000,000	Median U.S. Family with no College
$100,000	436,000,000	A.O.C. after a few years in Congress
$1 million	40,000,000	UK’s current P.M.
$100 million	49,000	Exxon CEO
$1 billion	2,700	Berlusconi
$10 billion	150	Musk, etc.
$100 billion	2	Bezos and Gates

**Data: Credit Suisse Global Wealth Report 2018, Bloomberg, Federal Reserve

The difference between the billions of people at the bottom of this income pyramid, and the handful of people at the top is almost too much to truly conceptualize. To visualize it is to compare golf balls to planets. The number of people holding the majority of wealth is infinitesimal, hardly perceptible compared to those who live in fiscal straits.

Of course, there are certain variables that this global data may not take into account. For example, countries that do not have monetary economies or egalitarian societies that place less emphasis on individual earnings may fall into lower brackets, but they may measure their wealth in different ways.

Systemic Problems Rooted in Politicians’ Undeniable Marriage to Capitalism Portends a Bleak Future

However, from the Western perspective of a developed nation, this data is quite shocking. In the United States alone, income equality is alarming, almost too much to really wrap one’s head around. As aforementioned, the numbers are impossible to visualize in their entirety. While we can see people living in poverty and signs of inequity, the true extent of the issue is borderline unfathomable. We cannot imagine billions of people compared to figures in the single digits. The problem is evidently systemic at this point, the result of nearly 250 years of capitalism and hundreds of choices made by politicians, businessmen, and everyday citizens along the way.

Furthermore, while there has been increased awareness and conversation about this issue in recent years, the immediate future does not look promising of any reformation. In 2018, the first time ever in America, billionaires paid lower tax rates than the working class. This is in no small part due to the 2017 Tax Cuts and Jobs Act, a cornerstone of President Trump’s trickledown economics plan.

Thus, the lower class citizens of our country are not just earning less than our billionaires, but they are also forking over a larger slice of their paycheck to the government. It all adds significant insult to the injury that is our persistent income inequality issue.

Although we cannot visualize or even really even begin to understand income inequality all together, what we can see is that there is a form of unfairness at hand, that resources are distributed unevenly, and that many people are getting the short end of the stick that falls from the almighty money tree.

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Economics, Stock Market

Stocks Dive, Trump Goes Berserk: It’s Not Sexy, but the Inverted Yield Curve has Never Been Wrong

August 14, 2019 Danny Leeds

Stocks decline a day after Trump gave the markets a jolt of optimism…

Truth is, no one knows why stocks bounce one day and collapse the next. Yesterday, the reduction in trade war tensions, due to the postponement of a tariff increase, was credited with the surge in market prices.

Today, all major indices are down around 3%, while the VIX, known as the “fear index” spiked 20% higher, and there are plenty of factors that may have set the sell-off in motion:

This time, it’s the inversion of the yield curve that is given the blame, primarily, for the Dow Jones Industrial Average being down, at the end of Wednesday’s session, over 800 points. Asleep yet?

Don’t worry, this won’t take long:

The Mysterious Yield Curve, Deconstructed

When shorter dated bonds, bonds that “mature” sooner, have higher yields (pay a higher percentage in interest) than longer dated ones, that’s an inverted yield curve. Inverted, because, it is not “normal” to be paid more for taking less risk, that is to say, holding a bond for a shorter period of time. Also, it’s not logical.

Unless, in theory, people are seeing the near term risk as higher than the long term one. Which, honestly, may or may not be accurate, but perception is all and all.

And this is not the first inversion lately. For several months, since March, the 3-month yield rose above the 10-year, then again in July and has remained so. However, today it’s the 2-year vs. the 10-year, and it is considered the “main” pair, and that’s what got the ball rolling down hill.

Extremes are also a concern. For example, the 30-year Treasury yield dropped to it’s lowest rate ever at 2.05%.

And, to top it all off, the snowball begins to roll when the 2-year vs. 10-year curve inverts, particularly due to the history of what happens after this phenomena occurs.

The R word. Yes, recession. Not sometimes. Always. At least so far.

Not necessarily right away. The first inversion prior to the 2008 financial crisis was in December of 2005. However, according to the Fed Bank of Cleveland, a recession can generally be expected approximately one year after the yield curve inverts.

Trump Goes Berserk. Blames Fed Chairman and the “Crazy” Curve!

Does this guy sound worried?

..Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!
— Donald J. Trump (@realDonaldTrump) August 14, 2019

Germany and China Numbers and That Pesky Trade War that Tariff-man loves so much

Ok, that’s pretty much the bond story. Other factors weighing on stock prices? There’s that pesky trade war with China which, yesterday’s jubilation notwithstanding, is not over. Not by a long shot.

Then, in came the news that Germany’s GDP contracted for the first time in ten years. What has been called the “Golden Decade” for the mighty Teutonic economy, the world’s 4th largest, is now officially at an end.

This, again, ties back to the trade wars as Germany is an export driven economy and exports to the US and China, (who, as we know are locked in their battle over trade) primarily and mainly cars. Car sales, particularly in China, are very weak. In China the sales figure have gone down for the last 13 months.

Also in China, industrial production, it was announced, in July of 2019 was weaker than for the same month in 2018. Still a positive number, mind you, at 4.8%, but the lowest growth percentage in 17 years.

Other economic numbers for the Chinese economy, also announced today, were weak in many key segments. Retail sales were less than expected and unemployment is on the rise. All in all, a gloomy report for what has been the rising star on the world stage in terms of growth.

Plenty of Triggers, not many Rainbows

So, if we are looking for reasons why people in the stock markets, generally, might be in the mood to sell, we can point to these factors, not to mention political dangers in Asia with the ongoing Hong Kong protests, and tension.

Although sometimes people sell just to sell (often politely called “profit taking”) this appears to be something else.

Also, while it is too early to say that any positive effect will arise in trade talks, with the US and China both feeling weaker and therefore more accommodating, that is, at least one possible silver lining.

Another is that, for the first time in all recorded history of the bond market, the inversion might not lead to a recession, after all.

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Breaking News, Business, Economics

Trump Blinks: Stocks Bounce, Apple gets Reprieve…(for now)

August 13, 2019 Danny Leeds

12 days ago, Trump announced that the remaining $300 billion in Chinese goods headed for the US would receive a 10% tariff, in addition to the $250 billion in other products already tagged with a 25% levy.

The reaction by the markets and the Chinese government was both swift and negative. In a move that was credited ( or blamed depending on your perspective) to the People’s Bank of China, for all practical purposes equivalent to the US Federal Reserve, the yuan was “allowed” to drop below the 7 to 1 rate against the dollar. Hitting the lowest point relative to the US currency since 2008.

The announcement was made today by the administration that the 10% hike, tentatively scheduled for September 1st, would be delayed until December 15th for some of the items on the list that were to have the tariffs applied. Those rescheduled include many important products for the holiday gift-giving season, including consumer electronics, computers and products such as Apple’s iPhone.

Speaking to a group of reporters on an airport tarmac around noon on Tuesday, Trump seemed to acknowledge something he previously had not, that the tariffs, which he appears to love so much, would harm companies and consumers in the US:

“We’re doing this for the Christmas season,”…“Just in case some of the tariffs would have an impact on U.S. customers.”
Donald Trump, August 13, 2019

He then backtracked, apparently attempting to clarify that he still believed, erroneously, that only China would be affected negatively:

“But so far they’ve had virtually none,” he continued. “But just in case they might have an impact on people, what we’ve done is we’ve delayed it, so that they won’t be relevant to the Christmas shopping season.”

The tweet with the original announcement from August 1st:

…buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and…
— Donald J. Trump (@realDonaldTrump) August 1, 2019

Retreat and Regroup: The New Trump Strategy?

This move, which amounts to a one-hundred-and-eighty-degree shift from his previous actions as the aggressor and instigator in the trade war so far, was unexpected and, in many quarters, welcome.

Whether China will see this as a conciliatory move or as a clear sign of weakness, by a man known to bluff with threats and then back-track almost on a daily basis, remains to be seen.

Economic problems are looming both here in the US and in Asia, as analysts have begun to talk of a recession, and fears of the trade war fallout have, according to market commentators, weighed on the markets and significantly increased volatility. There is widespread Fear of a repeat of the swoon from December 2018 when the market dropped, capping off what turned out to be the worst performance in a decade, ending the year down over 6%.

For companies like Apple, of course, the delay at least until December 15th is welcome news and that was reflected in the market today, with Apple and Best Buy both rebounding, up around 5% and 8%, respectively.

As many have pointed out, when Tariff-Man imposes a levy on Chinese goods coming into the US, it is virtually everyone except China that pays.

First of all, the actual tax, which is what a tariff is, will be collected from US importers as the goods enter the country. The taxes are paid at that time directly to the US customs.

The impact on China is not positive, however, and the higher prices that inevitably result from the tariffs, when ultimately passed on to the US consumer, cause a decrease in sales volumes, thereby hurting the producers in China directly.

Basically, in a nutshell, as in all previous trade wars, in the end, everybody loses. This is why, in a previous post, we stated that Trump was joining a “circular firing squad” with no hope of a positive outcome.

Since the impact on tariffs takes time to reach the US economy, it is right about now that the levies would create negative fallout for Tump, his campaign and his popularity (and lack thereof). Clearly, it is no coincidence that this retreat is happening now.

With a man in the White House that is known to vacillate, there is no easy way to ascertain if this retreat marks the beginning of a surrender phase for Trump. While the “it’s for Christmas” excuse can help him to save face in this moment, and seeing the stock market’s reaction is certain welcome for many, this war was Trump’s invention and it is unlikely that he will suddenly admit that he was in error for starting it in the first place.

The “American Carnage” that would have been seen in the economy and the stock market, had he gone through with his threats and even raised the 10% up to 25% is almost unfathomable, and we can all breathe a sigh of relief that, for now, an renewed escalation is somewhat less likely than it was yesterday.

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Breaking News, Business, Economics, Stock Market

Market Drops on Trade War Escalation: Dow Closes Down 767

August 5, 2019 Danny Leeds

Does over 925 points lost by the Dow Jones Industrial Average intraday qualify as a Market Crash? With the NASDAQ down over 4% and Bonds at record low yields, and the Chinese Yuan breaking the psychologically important 7 to 1 barrier against the dollar, it appears the Trade War is getting serious indeed. The Dow closed for the day down 767 points.

After Trump’s now infamous tweet, late last week, that set markets in the US tumbling, now, China’s immediate retaliation plans have been revealed, pushing the markets into a tailspin.

Lowering the currency exchange rate has the effect of countering the tariff by increasing the number of yuan generated by dollar denominated exports. Naturally there are more complex peripheral and ancillary effects that will be debated by economists until the end of time. The People’s Bank, for what it’s worth, claimed that the drop was “driven and determined” by market forces.<p>The yuan is now at its lowest point relative to the dollar since 2008.

The NASDAQ and tech stocks are now down for the sixth straight day. A man who at his inauguration spoke of “the end of American carnage”, and who touts his ability to conjure up stock market gains is now facing a serious problem, in addition to his legal and political woes.

Dow Drops 925 Intraday on Trump’s Tariffs and Yuan Devaluation

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Business, Economics, Stock Market

Dow Drops 925 Intraday on Trump’s Tariffs and Yuan Devaluation

August 5, 2019 Danny Leeds

Bonds Hit Record Low Yields in Wild Wall Street Action

The carrot is gone and the sticks are out. After Trump’s now infamous tweet late last week that set markets in the US tumbling, now, the other shoe is dropping as China’s retaliation plans are revealed.

After Trump announced an additional 10% tariff on $300 billion of China goods entering the US, to be levied starting September 1st, China has already implemented a response.

First, the People’s Bank of China, which is the equivalent of the US Fed, allowed the yuan to fall below the peg of 7 to the dollar that has stood as a psychological barrier and is considered an important level to maintain.

Lowering the currency exchange rate has the effect of countering the tariff by increasing the number of yuan generated by dollar denominated exports.

Naturally there are more complex peripheral and ancillary effects that will be debated by economists until the end of time.

The People’s Bank, for what it’s worth, claimed that the drop was “driven and determined” by market forces.

The yuan is now at its lowest point relative to the dollar since 2008.

A second form of retaliation that China appears likely to implement is the reduction of or an outright halt on purchase of US agricultural products.

An increase in the quantities of US agricultural products was one of the concessions negotiated during the recent talks with China during the G-20 summit.

Trump tweeted his displeasure at the lack of follow-through on this promise:

…buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and…
— Donald J. Trump (@realDonaldTrump) August 1, 2019

And seemed to imply that this lack of cooperation was possibly the trigger behind his sudden decision to announce the 10% increase in tariffs.

With the US States that comprise the bulk of the large farmers that would be most affected by this issue being the same States that helped Trump win a narrow victory in the Electoral College in 2016, this is a “counterpunch” that will likely not sit well with the current resident of the White House.

Based on what I know, in view of new tariff threat by the US side, the Chinese side has decided to suspend tariff exemption for US farms goods and Chinese enterprises have halted buying US farm products. The Chinese side won't submit to the US.
— Hu Xijin 胡锡进 (@HuXijin_GT) August 5, 2019

These small steps, partly perhaps only threats, partly already in effect, are but a tiny slice of possible retaliation by the Middle Kingdom.

Tariff-Man Joins Circular Firing Squad

Tariff-Man is learning, apparently very slowly, some of the many reasons that Trade Wars are famous for not having any winning countries, but rather, are just a “circular firing squad” which produces only losers.

A common boast throughout the Trump Administrations tenure has been that the stock market is at or near all time highs and that he himself is the sole reason it is. With his trade policies being widely blamed for dramatic market losses that boast may have to be taken out of his toolkit, at least for the foreseeable future.

If today’s responses from China, followed by the stock market reaction, are any indication of where we are headed, it looks to be a bumpy Fall with September and October being statistically dangerous months for the financial markets, in general .

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Business, Economics, Politics

Trump Topples Rally with Tariffs: Dow Drops Nearly 600 Intraday

August 1, 2019 Danny Leeds

10% on $300 Billion will Commence September 1st…

The DJIA was up more than 300 points when the announcement was made, then it ultimately ended the session down 280. The new tariffs are on the 300 billion in goods that have been, until this point, coming into the country without a toll. There are also 250 billion in Chinese goods that already have a 25% levy attached.

Recent trade negotiations in Shanghai concluded on Wednesday with little or no progress. Talks are scheduled to resume in September.

Speaking on July 30th, before reporters Trump speculated that China may be thinking of delaying a resolution until after the election in 2020, saying:

“They would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden…. They’ll pray that Trump loses. And then they’ll make a deal with a stiff, somebody that doesn’t know what they’re doing like Obama and Biden, like all the presidents before.”
Donald J. Trump

Calling the tariff a “small additional levy” Trump also said in a series of tweets that China’s promise to buy large amounts of agricultural products from the US, was not kept.

While speaking to reporters this afternoon at the White House, he also threatened to lift the percentage to 25% and beyond, “But we are not looking to do that, necessarily”.

Products that will be included in this new batch of tariffed goods will be consumer electronics such as iPhones, toys and shoes, among other items.

There was some surprise noted, as the meetings and discussions in Shanghai appeared to end on a somewhat positive note, initially. Now, with this announcement, there is a sense of the talks having fallen short of any progress at all.

Fallout of the Trade War to Begin Hitting Home

Trump continues to claim that China will pay these levies, although studies have shown that the consumer in the US will ultimately pay through higher costs on all tariffed goods. The higher prices will also harm sellers in the US due to a reduced volume of sales.

While there is sill also a lot of “carrot” talk, how the negotiations can also take a turn for the better at any time, coming from both sides, it does not appear that there is much substance to be gleaned from these pronouncements.

Since the percentage of some of the products that will be affected, such as toys, include as high as 85% currently coming from China, these tariffs can have a substantial effect on the marketplace.

Also, possibly unintended beneficiaries to the trade war are neighboring countries such as Vietnam and Cambodia, that are already showing signs of increased activity due to the shifting of origin of manufacturing to those countries in order to avoid the levies.

Tariff-man is staying true to his self-given moniker and in September, as the next wave hits, it is yet to be seen what the economic effects will be, either in China or here in the US.

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Business, Economics, Politics, Stock Market

Dow Futures Drop over 500 points after Trump Threatens on China Trade

May 5, 2019 Danny Leeds

“Tariff-Man” talks tuff when traders expect cream puffs

Nasdaq futures down over 2%

Futures began to tumble when Trump announced he would raise tariffs on $200 Billion in Chinese goods and soon add a levy on $325 billion more. In the largest drop in Futures since January, traders appear to be reacting to the expectation of a positive resolution to the trade tensions, only to be surprised by the escalation by Trump.

….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019

Brinksmanship? Or will both sides make good on threats?

As reported by the Wall Street Journal, China may be pulling out of the talks, which only raises the stakes. It’s entirely possible that both sides are talking tough in an attempt to gain an advantage and claim victory, if and when the talks resume. A sudden positive, “unexpected” reversal on both sides would likely spur a knee jerk market rally, for example, so volatility in the markets appears to be likely for the week ahead.

Needless to say, a trade war escalation would be a serious event for both sides. Although China may feel the negative effects of such an all out Tariff avalanche first, the potential downside for the U.S.A. is not clear and would be by no means insignificant.

With both sides broadcasting extreme positions, on the other hand, the talks may well halt, which would “require” Trump to make good on his threats (in order to save face). Stay Tuned.

Warren’s Facebook Ad Calling For Breakup Is Removed, Then Restored

March 28, 2019 Lynxotic News Staff

Egg On Face Of Facebook, Again.

Presidential candidate Elizabeth Warren recently made a point, and then proved that point with the “help” of Facebook. The Massachusetts Senator posted an ad calling for the “break up” of tech giants Facebook, Google and Amazon. The video advertisement was removed by Facebook. Their reasoning for the removal was that the ad was in breach of Facebook’s advertising and copyright policy (the Facebook logo was used in the ad). The removal was reversed by Facebook based on a stated policy of wanting to allow a “robust debate”. The ad wasn’t expensive. It was only $100, but proved in the end to make an invaluable point.

The ensuing bru-ha-ha was worth many times the original sum by bringing more attention and focus to the very issue the ad was meant to highlight:

Curious why I think FB has too much power? Let's start with their ability to shut down a debate over whether FB has too much power. Thanks for restoring my posts. But I want a social media marketplace that isn't dominated by a single censor. #BreakUpBigTech https://t.co/UPS6dozOxn
— Elizabeth Warren (@ewarren) March 11, 2019

Opposing Monopolists: a rising trend among Democrats

Warren acknowledged the invaluable place that these companies play in our lives, during her speech at SXSW. She also affirmed that they need to be “broken up” in order to promote innovation.

“Facebook, Amazon, and Google. We all use them. But in their rise to power, they’ve bulldozed competition, used our private information for profit, and tilted the playing field in their favor.
It’s time to break up these big companies so they don’t have so much power over everyone else.
Presidential Candidate Elizabeth Warren

The Senator isn’t the only high profile Democrat taking big tech companies to task, Alexandria Ocasio-Cortez was a voice of opposition in the recent Amazon HQ to Queens deal.

E.U. Slaps Google with $1.7 Billion Fine

March 28, 2019 Danny Leeds

Antitrust Violations Pile Up Against Big Tech

Google was fined 1.7 billion dollars (1.5 Billion Euros) for online advertising antitrust violations. This is the third fine from European authorities since 2017. The fines, along with those against other big tech firms, have established the European Union as the most consequential oversight body in policing internet tech firms that are seen as having too much power.

Europe is a leader in taking a stronger approach to reigning in firms such as Amazon, Facebook and Google (Alphabet). A broad consensus holds that these huge tech behemoths represent a danger to fair competition.

“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites, this is illegal under E.U. antitrust rules.”
Margrethe Vestager, Europe’s top antitrust watchdog

A variety of infractions have been committed by Google in the past couple years. They were fined for misusing their Android ownership to undercut rivals. Google was also fined for attaching an increased amount of text ads to third party companies who used the Google search bar.

The internet search leader bundled its ad platform within the third party custom search engines. This practice undercut Microsoft, Yahoo, and other digital advertising companies.

European authorities have been more aggressive with tech companies, demanding improved privacy, transparency, and even copyright regulations. Competition Commissioner Margrethe Vestager has fined Google over 3 billion dollars since 2017. Alphabet/Google owes a total of 8.2 Euros (9.3 billion dollars). Google hasn’t paid the fines yet, and plans to appeal. Google stock is up 17 percent in 2019.

In the U.S., Senator Elizabeth Warren, Democratic candidate for President in 2020 said that Facebook, Google, Amazon and Apple should be broken up due to various antitrust issues.

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Economics, News

Amazon Pulls Out Of New York Deal Due To State And Local Opposition

February 14, 2019 Kat Lee

Amazon scrapped plans for its contentious HQ2 project in Queens, New York, following backlash from local lawmakers and unions. The cancellation came after much fanfare, and a sweepstakes like fervor from city and state officials (including Governor Cuomo, and Mayor de Blasio) who made clear they were in favor of the deal. The agreement to lure Amazon with government incentives became a subject of great debate due to a climate of high cost of living, lack of affordable housing and rapid gentrification.

The 2.8 billion dollars in incentives offered to Amazon came with promises to jumpstart the Queens waterfront, and also included a helicopter pad for CEO Jeff Bezos. The Amazon/Queens location deal came under fire and skepticism for largely being brokered behind closed doors. This lead local community leaders to petition door to door for it to be blocked.

“….. a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”
Amazon Public Release

Stock Market Outlook 2019

February 11, 2019 Lynxotic News Staff

Consensus Views Or Contrary Swans

Funny thing about consensus vs. contrary views – they are often identical if you believe what you read. “Wall of worry” and “Slope of Hope”: it’s all irrelevant if you are wearing blinders and have no mooring, or any basis for what the facts are.

Add to all that the fact that most opinions are paid advertisements, mainly for sell-side firms, and it’s tough to wade through the B.S. As per usual, according to a survey from CNBC, the S&P 500 will reach 3000 by the end of 2019.

According to my own non-scientific survey this is the 20th consecutive year that such surveys predict a gain in the market. A prediction for the coming or current year is almost always positive. The negative predictions are saved for “next year” (in other words later in 2020 as seen from in early 2019). Then, of course, the predictions change, and turn positive, just before the year turns.

Such nonsense goes even deeper while pundits and hacks will cite “pervasive pessimism” in the face of almost total bullishness to claim to have a “contrary” view while in reality herding like Spanish bulls in springtime.

“It’s tough to make predictions, especially about the future”
Yogi Berra

Using actual data such as the Put-Call Ratio, VIX, AAII Sentiment Survey, or, for example, levels of margin debt and mutual fund money flows, can at least give a picture of the state against which one intends to be contrary.

Then, once in a while, in full-on Black Swan fashion, the prevailing “wisdom” blows up and everyone declares shock that such a thing could happen. A recent example of this was the disastrous collapse of the “short vol” trade in February of 2018.

A one-eyed man in the land of the blind can see a bit more than the rest. A first step is to be aware of the hype and see past the herd. In the last 100 years, Bull markets have tended to last longer than Bear markets (which move faster) and that alone leads to a bias toward a false idea that investing in stocks can lead to a steady, constant gain profile.

To sum up our outlook for 2019 in terms of end of year projections, the word “grim” comes to mind. Bear Markets follow Bull Markets, Raising Rates pop bubbles, the 2008 excess was never dealt with, and on and on and on. Clearly, the most bullish possible prediction anyone looking at facts could possibly make is that the next down phase in the market might come a bit later (2020 anyone?) rather than sooner.

Naturally, that is exactly what the “pessimistic” pundits are predicting. Far from pessimistic in reality, this is the most wildly optimistic, bullish possible take on the current juncture imaginable. Perfect for the true contrarian outlook which points toward a real Bear Market, sooner rather than later.

This is not to say that it looks like all gloom and doom for the coming year(s). There are exciting changes afoot, particularly in media and digital communication, and, as with all times of great change, the aftermath of the coming storm points toward a cleansing and realignment of world economies and cultures. Bring it on…….

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