Category Archives: Business

Business, Lifestyle, News, Politics, Tech

Zuckerberg Skillfully Cornered on Facebook Policies by AOC at D.C. Hearings

Video October 25, 2019 Lynxotic News Staff

Zuckerberg stumbled and evaded while attempting to respond to AOC on Facebook Behaviors and Policies, especially its Political “Lie Exemption” Policy

While Mark Zuckerberg’s controversial Libra cryptocurrency project is what initially got him into the House for another hearing on October 23rd, the House Financial Services Committee Members took this as an opportunity to express their concerns about Facebook’s paramount involvement in a variety of controversial issues.

Each committee member was given five minutes to address their Facebook policy concerns with Zuckerberg, and they did not waste their time, especially Alexandria Ocasio-Cortez as she interrogates him regarding Facebook’s influential role in endangering the nation’s democracy and general safety.

Here’s a brief rundown of the topics she addresses that continue to put Zuckerberg and his insidiously dangerous Facebook ‘megaphone‘ under hot water to this very day:

Libra Cryptocurrency: Another Scam to hide behind an Outsourced Entity in order to Evade Accountability? This time, he’s going for the Poor and “Unbanked”

On June 14, 2019, Zuckerberg released his plans to launch a cryptocurrency project called Libra on Facebook, and since then, it’s been facing a lot of criticism from the government and anti-trust regulators.

The Libra cryptocurrency is a part of Facebook’s future mobile payment system, proposed at Facebook’s annual developer conference in April. The crypto currency project aims to allow Facebook’s 2.4 billion worldwide users to exchange payments with minimal fees and without the need for a third-party software.

“It’s not that Facebook is evil, which it may or may not be. Facebook hasn’t shown an ability to think through unintended consequences or prevent bad actors from weaponizing its platform.”
ScotT Galloway, Marketing Professor at NYU, Author of “The Four”, well-known for his unsparing critiques of influential tech companies

But, while the idea appears to have good intentions behind it, much like many of Zuckerberg’s other ideas, the problems and potential dangers are in the details.

So, the real issue is in how the Libra cryptocurrency project can potentially influence Facebook’s extremely wide global user base in a number of negative ways.

“If 50 percent of Facebook users all of a sudden use this coin, then you potentially have a new reserve currency globally. If you would weaponize a global currency and start monkeying with it, you could have what capitalists fear more than war: a recession–or some sort of a global economic meltdown.”
SCOTT GALLOWAY

California Representative Congressman Brad Sherman interrogated Zuckerberg extensively on this topic during the Financial Services Committee Hearing, which illustrated these repercussions specifically.

Brad Shermon eloquently points out a pattern that Zuckerberg struggles to answer. He appears to be attempting to hide behind platitudes of egalitarian ideals in order to avoid accountability for content controlled by his platform.

“…but for the richest man in the world to come here and hide behind the poorest people in the world and say that’s who you are trying to help, you are trying to help those to whom the dollar is not a good currency—drug dealers, terrorists and tax evaders..”
Rep. Brad Sherman to Zuckerberg at the House FInancial Services COMmittee Hearing

Cambridge Analytica: AOC cites Facebook’s Biggest Scandal that brought ‘Catastrophic Impact’ to American Democracy in the 2016 Election

But the House Financial Services Committee wasn’t having it, and AOC Exposes Facebook’s Flaws for All to See:

"So, you won't take down lies or you will take down lies? I think that's just a pretty simple yes or no."

Complete exchange between @RepAOC @AOC and Mark Zuckerberg at today's House Financial Services Cmte hearing.

Full video here: https://t.co/heT7Psnlp1 pic.twitter.com/0iiWtfU5gQ
— CSPAN (@cspan) October 23, 2019

Alexandria Ocasio-Cortez begins her five-minute interrogation by citing Facebook’s Cambridge Analytica Data Scandal from 2018. Her reasoning is that, before even considering the Libra cryptocurrency issue, it’s important to analyze how Facebook handled Cambridge Analytica because the Libra cryptocurrency project has potential for far worse.

Essentially, AOC gave Zuckerberg a chance to make a case for himself. He had an opportunity to show that he and Facebook are equipped to adequately deal with the repercussions of establishing Libra, and to answer this fundamental question: has Facebook learned from its past mistakes regarding the Cambridge Analytica Data Scandal so that they could take the necessary actions to ensure that data scandals won’t happen again?

Next she asks, what year and month did Zuckerberg first become aware of Cambridge Analytica? He doesn’t remember, but it was probably around March 2018, when the scandal became public.

When did Facebook COO Sheryl Sandberg become aware of Cambridge Analytica? Again, Zuckerberg says he doesn’t know, so AOC asks a follow-up question. Did anyone on his leadership team know about Cambridge Analytica prior to when the initial report came from The Guardian on December 11, 2015? Now, for this one, Zuckerberg believes that this was the case and that members of his leadership team were tracking it internally. Additionally, he takes this opportunity and appears to try to avoid responsibility by saying that he was aware of Cambridge Analytica as an entity, but he also wasn’t aware of how they were using Facebook specifically.

When was the issue discussed with his board member Peter Teal? Once again, Zuckerberg proclaims his ignorance, to which AOC iterates that his answers are unacceptable. It is unacceptable that he did not properly discuss the “largest data scandal” with respect to his company that had “catastrophic impacts on the 2016 election.”

While Zuckerberg flaggingly scrambles to defend himself by explaining that they did discuss the issue when it happened, he fails to answer whether Facebook is capable of being accountable for their actions by addressing their mistakes with handling data privacy so that they wouldn’t be repeated. If Facebook truly cared about handling data privacy, then they would have taken extensive measures to address the issue. Maybe then, Zuckerberg would’ve actually remembered enough about the issue to answer AOC’s questions.

Facebook Policy allows Politicians to Pay to Spread Misinformation

Zuckerberg’s seemingly flagrant irresponsibility with regards to handling Facebook leads AOC to confront him on the current hot topic: “Facebook’s official policy to allow politicians to pay to spread disinformation in 2020 elections and in the future.” She demands to know how far this policy could be pushed before Facebook decides to fact-check and take down these posts, because, again, they have the potential to influence the next election directly.

Could politicians enact voter suppression by advertising wrong election date to zip codes with primarily black communities? Zuckerberg vaguely explains that content will be taken down if it were to cause an obvious immediate harm. Okay, but what if it’s not obvious? Will his answer suffice then? The answer is likely no, because infinite ways can be found to dodge this issue, then, once again, and we’re back to square one.

Further she presses him, Could she (AOC) run ads targeting Republicans in primaries saying that they voted for the Green New Deal? Zuckerberg is unsure, but answers that she probably could. Elizabeth Warren recently did something similar in her “Zuckerberg Supports Trump” ad.

Does Zuckerberg see the potential problem here with a complete lack of fact-checking on political advertisements? To that, he appeals to common morals: lying is bad. His logic is that he doesn’t want to prevent constituents from seeing that politicians had lied, which clarifies that Zuckerberg won’t take these ads down.

The problem with this logic is that the general public is assumed to have the ability to differentiate between lies and the truth. But, as this current presidency has proven, many, if not most, people clearly do not.

Thoughts on Zuckerberg’s On-Going Dinner Parties with Far-Right Figures? Debatable, or so he tries to imply.

Further, Zuckerberg’s on-going dinner parties in which he cultivates relationships with known politically far-right figures is also suspicious. After all, there have been numerous times that alt-right entities abused social media platforms in the service of discrimination and hate crimes.

Did Zuckerberg discuss the alleged social media bias against conservatives, and does he believe that this bias exists? Zuckerberg indicated that he couldn’t remember the question or answer it, appearing to want to avoid confirming or denying these associations under oath, so AOC moved on.

Next she asked Zuckerberg to explain why he named the Daily Caller, a publication well-documented to have ties to white supremacists, an official fact-checker for Facebook? Once again, Zuckerberg tries to escape responsibility by saying that they don’t actually appoint independent fact-checkers and that they come from an independent organization called the International Fact-Checking Network (IFCN) that has rigorous standards for who they allow to serve as a fact-checking entity.

White-supremacist-tied publications meet a rigorous standard for fact-checking? Zuckerberg had no answer, which is again, an indicator that she had pushed him into areas he would prefer to avoid. After research, it turns out that he lied, or at minimum mis-led in his answer on multiple points, First, the (IFCN) have generally “certified” a total of 62 organizations globally, but it is, indeed, Facebook and presumably Zuckerberg personally, that chose the 6 in particular that are Facebook partners.

There’s a Pattern Here: Facebook and other Social Media Platforms Need to be held Accountable

Clearly, Zuckerberg still thinks that he could get by with excuses in an effort to absolve himself from the endless blame that Facebook receives from The Media for meddling with numerous socially-influential affairs.

It’s hard not to notice that while Mr. Zuckerberg has been given many chances to make amends for Facebook’s failures, the opportunity has been for naught, apparently, because his private for-profit company is only interested in maintaining user engagement, which he now claims is in the name of free speech and equality. However, clearly, these cannot actually be achieved without specifically executing processes that address the discriminatory practices.

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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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AI, Business, Entertainment, Tech

Self-Driving Cars in Entertainment Media: Quantum Leap into Lifestyles of the Future

Video October 13, 2019 Kat Lee

One Innovation can Lead to Thousands More

We are at points of transition in the worlds of vehicles and entertainment. On both fronts, the past few years have given us unprecedented change. For vehicles, the now practical concept of self-driving cars opens up the possibility of getting around without a human operator behind the wheel. Meanwhile, for entertainment, the rise of streaming services and cord cutting has changed the way we consume media on a mobile basis.

These two evolutions may seem unconnected right now. However, both concepts are still in their infancy. Given recent history, entertainment companies are currently dead set on finding the latest platform to create and distribute their content on, and self-driving vehicles have seemingly limitless potential. It is clear that these two innovative concepts will intersect, potentially in the near future.

With no one operating a car, traveling becomes an experience of little beyond being a passenger. Whether it is doing a daily commute or taking a cross-country road trip, “driving” no longer requires attention and awareness. Being in a car becomes a slot of time where people are essentially trapped in the confines of a small space with no responsibilities. It is the perfect time for catching up on news, entertainment, or communication.

While it might be easy to imagine people in self-driving cars perpetually staring at their smart phones or laptops, there is the possibility that entertainment companies could collaborate with vehicle manufacturers to change the very design of vehicles and make car-riding a transmedia experience.

A Completely new Lifestyle built around Time in Transit

What this would look like is unclear, but one can imagine a car surrounded in screens—on the backs of seats, propped on dashboards, and even over some of the windows, making entertainment accessibly (maybe even unavoidably) built into a vehicle’s architecture. Many companies are gearing up for the potential. Finnish company FlexSound is pioneering “augmented audio” devices that can produce movie theater quality audio by imbedding transducers into car seats and headrests, allowing the occupant to feel the sound directly, for example.

The potential does not stop there, though. Consuming media exclusively in a car offers a very particular experience, one that companies could capitalize on with originality. Virtual reality simulations are one of the latest breakthroughs in entertainment tech. Currently, virtual reality occupies a vague area somewhere between film and video games. Despite its growing popularity, VR is yet to find an exact home in the day-to-day lives of consumers.

Perhaps self-driving cars can provide that stable home for VR. With the help of technology, media equipped vehicles could change the very landscape that one is driving through everyday. With screens disguised as windshields, a boring commute could become an adventure through some of the world’s most interesting places. Perhaps the commute could even be through different worlds. Hypothetically, by hooking your Tesla up with a Disney or Warner Brothers package, you could find yourself driving across a Star Wars planet, Gotham City, or some other fictional place every single day.

Who will lead in the Contest to provide Entertainment Solutions for a Newly Liberated Population?

Of course, VR could offer more than just moving through these places. There could be narratives involved. During your drive across Gotham City, the Joker could pop out of an alley, or you could find yourself in a car chase with the Batmobile. On the other hand, your car could become a Disney World ride, and driving your kids to school could become a Millennium Falcon or Buzz Lightyear adventure that involves shooting down enemy ships in a distant galaxy.

The possibilities are endless. Of course, it will all be a façade, but so is every form of visual entertainment. Ever since Thomas Edison created the Kinetoscope in 1897 to produce the first motion pictures, we have been happily living in a world filled with enthralling illusions.

The future of entertainment is unclear, but self-driving cars merging with media outlets is one distant idea that has already crossed the minds of industry executives. If self-driving cars become more popular over the next decade, it is possible that we will see this conglomeration / convergence take effect. Perhaps Uber and Lyft will do away with their drivers and start producing movies instead. Or maybe they will team up with Netflix, Amazon, or Apple+ to have a constant stream of content. Or maybe instead of Ubers and Lyfts altogether, we will get around in Disney Taxis or join in on Universal Studios Carpools. Again, the possibilities are endless. What’s your take?

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Business, Tech

Attorneys General Initiate Antitrust Probe against Google: 30+ States will announce on September 9

September 3, 2019 Danny Leeds

According to “a source knowledgeable about the probe” and quoted by Reuters and The Washington Post in stories today, more than 30 attorneys general will announce the investigation next week.

In response to the news Google issued the following statement:

“We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector”
Google representative Jose Castaneda

The source also intimated that the probe would be focused “on the intersection of privacy and antitrust”, but did not give any further detail.

In July, the US Justice Department announced that it would begin a broad investigation into the possible anticompetitive practices of the largest technology companies. It has been considered likely that Google, Amazon, Facebook and possibly even Apple would be in the crosshairs.

The Federal Trade Commission, who are also responsible for the enforcement of antitrust violations, is looking into Amazon and Facebook and whether they have abused their dominance in online retail and social media, respectively.

Google, after having large fines levied against them in Europe in March for antitrust violations relating to online advertising, will now face the task of changing the outcome of similar accusations of misconduct in the US.

Amazon also has had difficulties coming out on top in European cases. Only yesterday in Paris, the Commercial Court handed down a verdict against the online giant, resulting in a 4 million euro fine and a demand that 7 key clauses in their agreement with “marketplace seller partners” be brought into compliance with French laws.

Meanwhile, Facebook is also under scrutiny as they are under investigation by the FTC for a potential breach of antitrust regulations. Similar to Google in the European case mentioned above, the probe into facebook involves its social media, digital advertising and mobile applications.

In a separate matter, Facebook is also under scrutiny by the European Commission in questions relating to its new Crypto Currency “Libra”. A more general inquiry into its possibly anticompetitive behaviors within the EU in also underway.

Overall, it appears likely that these various probes are only the beginning, as all of the massive tech companies mentioned are already the target of governments and politicians, particularly in the US and Europe.

In a peculiar twist, both Republicans and Democrats in the US seem to agree on at least one thing, that these companies are too big and too powerful and should be investigated at minimum and potentially targeted in antitrust actions for illegal behaviors.

The Trump Administration, AOC, Elizabeth Warren, even Joe Biden have come out in favor of breaking up big tech at the hands of the government, after serious violations of antitrust law have been established.

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Finance, Lifestyle

Apple Card is Now Available: Daily Cash Expanded, All USA can Apply in Wallet App

Video August 20, 2019 Madison Santel

https://www.apple.com/105/media/us/apple-card/2019/c90ec3fe-63dc-4557-b1ea-50d7539c76bd/films/this-is/apple-card-this-is-tpl-cc-us-2019_1280x720h.mp4

Uber and Uber Eats added to Daily Cash at 3%, more vendors expected soon…

As with most things financial, there are lots of details, but some interesting perks, particularly for frequent customers of Apple products.

Immediate sign up on your iPhone

First perk: no lengthily complicated application process. According to the pre-launch information (see video above), just go to the Wallet app and tap on the Apple Card interface (once the Card is live) and go through the simple activation steps.

Using the Card

The card will function as would any other card in your wallet for Apple Pay. This includes online purchases and in-store checkout where you normally would use Apple Pay.

You can designate the Apple Card as your default payment method in your wallet for purchases using your iPhone, iPad, Mac or Apple Watch.

https://video-lynxotic.akamaized.net/AppleCard_Keynote_M.mov

video of keynote announcing launch of apple card

The MasterCard Goldman Sachs Connection

The extended uses for the digital and physical version of the card are enabled through the partnership between MasterCard and Apple. You will be able to use the Apple Card anywhere that a MasterCard is accepted.

Goldman Sachs is the credit provider for your Apple Card and they will set your interest rate based, as would be expected, on your current credit score. Rates are projected to be in the range of 13.24% to 24.24% which is below the average in the US.

An extended fixed payment system is likely to be offered for large purchases according to the pre-release data.

Main Perks and Advantages

There are many unconventional and improved aspects to the use and especially the user experience associated with the new card. In the keynote announcement earlier this year (see video above) a great emphasis was made on the ways that the project was focused on improving the experience and helping users attain a healthier financial lifestyle.

This includes various features designed to help reduce interest charges, not only by offering lower overall rates, but by giving the user options and calculations that can provide payment alternatives to the traditional “minimum monthly” payment currently the norm.

Payments can be made from your linked bank account or can be transferred from Apple Cash in your Wallet app.

There is no annual fee for the card, no international fees and no fee for exceeding your credit limit or making a late payment. Also, there is not increased interest rate penalty, per se, for late payment, which is common in some other credit card accounts. Late payment will, naturally, result in interest accrual, but based on your current rate.

There is an separate app, particularly useful on iPad, which does not have the Wallet app, where data on transactions, payments and other details are provided. This, in typical Apple style, is far superior to any credit card app interface from banks and lenders.

Rewards and “Daily Cash”

Rather than a points system commonly seen on traditional credit card accounts, the Apple Card has a cash back system which can kick back up to 3% on a daily basis.

They call this “Daily Cash” and, as the name implies, your rebated cash will be credited to your account every 24 hours and be directly transferred to your Apple Cash account. If you do not sign up for Apple Cash, you will get your rebates sent to your bank account monthly.

Percentages vary, 3% is for all purchases made directly from Apple, 2% for all Apple Pay transactions and 1% for using the physical card at any non-Apple Pay retailer.

There is no cost to transfer your rewards cash to your bank account and this can take from one to three days. There will be an option to get instant transfers, which will incur a 1% fee. The transfers are done through the Apple Cash card from the Wallet app to the linked bank account.

Best Features and Conclusion

The overall sense is that this is going to be a very popular offering, based on the positive attributes of the card and the deal.

Although the terms are clearly slanted towards encouraging financial activity benefiting the emerging Apple financial eco-system, with the reward percentage on direct Apple purchases and Apple Pay coming in higher than the “out of network” transactions made with the physical card only, the rest of the perks are more than enough to pique the interest of a great number of iPhone users.

The titanium card appearance, styling and feel will attract many for that reason alone. Quel chic! And it is likely that the card will cause an increase in Apple Pay transactions, with double cash back for pulling out your iPhone instead of the physical card.

Ultimately, the software tools enabling privacy – no data to Apple and Goldman Sachs promising never to use or sell your data – along with the fantastic tools for tracking transactions, spend, payments and interest are perhaps the most likely to create love.

Who doesn’t hate dealing with credit card companies and their antiquated interfaces and systems? Some credit card providers do not even allow automatic payment scheduling, apparently hoping you will pay late so they can rack up those late payment penalty fees. Doing away with even the worst, most evil, aspects of credit card accounts is already a huge step forward.

Let’s hope that Apple will manage this as well as it appears. It looks like a top flight offering that has plenty of advantages that make it head and shoulders above the pack, and, for iPhone users it seems like a “must have” if there ever was one.

Easy sign-up on iPhone
Accepted worldwide (wherever Mastercard is available)
Up to 3% cash back
Daily cash back
No fees
Engraved Titanium physical card with concealed numbers
Spending tracking
Clear transaction labeling with more data
Built-in Privacy

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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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Video August 6, 2019 Madison Santel

https://www.apple.com/105/media/us/apple-card/2019/c90ec3fe-63dc-4557-b1ea-50d7539c76bd/films/this-is/apple-card-this-is-tpl-cc-us-2019_1280x720h.mp4