Can Machines Save Us From the the Machines?

Is it just me or is the cyber landscape getting more scary? Even as companies and consumers get better at playing defense, a host of new cyber threats is at our doorsteps—and it’s unclear if anyone can keep them out.

My doom-and-gloom stems from the dire predictions of Aviv Ovadya, the technologist who predicted the fake news epidemic, and now fears an “information apocalypse” as the trolls turbo-charge their efforts with AI. He points to the impending arrival of “laser phishing” in which bots will perfectly impersonate people we know by scraping publicly available images and social media data. The result could be the complete demolition of an already-crumbling distinction between fact and fiction.

Meanwhile, the phenomenon of crypto-jacking—in which hackers hijack your computer to mine digital currency—has quickly morphed from a novelty to a big league threat. Last week, for instance, hackers used browser plug-ins to install malignant mining tools on a wide range of court and government websites, which in turn caused site visitors to become part of the mining effort.

The use of browser plug-ins to launch such attacks is part of a familiar strategy by hackers—treating third parties (in this case the plug-ins) as the weakest link in the security chain, and exploiting them. Recall, for instance, how hackers didn’t attack Target’s computer systems directly, but instead wormed their way in through a third party payment provider. The browser-based attacks feel more troubling, though, because they take place right on our home computers.

All of this raises the question of how we’re supposed to defend ourselves against this next generation of threats. One option is to cross our fingers that new technologies—perhaps Microsoft’s blockchain-based ID systems—will help defeat phishing and secure our browsers. But it’s also hard, in an age when our machines have run amok, to believe more machines are the answer.

For a different approach, I suggest putting down your screen for a day and picking up How to Fix the Future. It’s a new book by Andrew Keen, a deep thinker on Silicon Valley culture, that proposes reconstructing our whole approach to the Internet by putting humans back at the center of our technology. Featuring a lot of smart observations by Betaworks founder John Borthwick, the book could help us fight off Ovadya’s information apocalypse.

Have a great weekend.

Jeff John Roberts

@jeffjohnroberts

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

'Black Panther' Review: All That a Superhero Movie Can Be, and More

What should a superhero movie be? What can it be? With Black Panther, we finally have an answer worthy of our time.

In the last decade alone—where the promise of progress in Hollywood read first as fantasy, then as farce—America’s cathedral of heroes offered little access to depictions that fell outside the mechanisms of the industry. Batman and Iron Man, billionaires. Thor, a Norse god. Spider-Man, a youthful prodigy. Captain America, a World War II recruit, became the literal manifestation of national courage and hope.

Black superheroes were never afforded the same deification. During the tail end of black cinema’s golden age, Wesley Snipes’ early-aughts Blade trilogy flirted with pop immortality, but even that character’s legend faded across the years. I sometimes wondered if black superheroes were ever meant to endure in the mainstream, the truth of America being what it is, or if the recurring image of black valor was too much of an irritant to the illusion Hollywood needed to project, to protect.

As you can imagine, what emerges in the opening tints of Black Panther sets the stage for no ordinary undertaking. Here, the past and present are linked by a shared future. Writer-director Ryan Coogler, raised as he was in Northern California, stays close to home, dropping us in the murk of 1992 Oakland. The occasion—death.

We are first introduced to Prince N’Jobu (played pristinely by Sterling K. Brown), a Wakandan spy who is secretly selling vibranium—the meteoric ore native to Wakanda that is the life source to the nation’s technological prosperity—to Ulysses Klaue, a rogue black market dealer. When N’Jobu’s misdeeds are unearthed, King T’Chaka, his brother, is forced to confront him. Their meeting ends fatally, and the king must bear the weight of his secret: that it was he who murdered his brother to save the life of Zuri (Forest Whitaker), his trusted advisor. And though we don’t know it yet, this is the film’s heart, the moment every subsequent action will flow through.

[embedded content]

The ensuing story splits along dueling ideologies. It picks up where Captain America: Civil War drew to a close, with T’Challa (Chadwick Boseman) assuming control of his country’s fate in the wake of his father’s death. For decades, Wakanda’s utopian spirit has thrived under the cloak of East Africa’s ethereal beauty, believing that if world powers discovered its technological and scientific ingenuity, the country would risk constant threat. Old-guard preservationists—among them, T’Challa’s mother Ramonda (Angela Bassett) and Okoye (Danai Gurira), head of the king’s women-only security unit, Dora Milaje—believe the country must continue as it has for centuries, solely nurturing its own people. Others, like W’Kabi (Daniel Kaluuya) and Nakia (Lupita Nyong’o), confidants to T’Challa, subscribe to a more pan-Africanist worldview, believing that Wakandans have a great duty to aid the less fortunate—be they refugees, poor kids in the US, or activists caught in the tempest of protest against unjust state influence. The time comes when Wakanda can remain immune no longer, realizing that it too must yield to the cry of a changing world.

A specter of change arrives in the form of Erik “Killmonger” Stevens (a villainous, power-drunk Michael B. Jordan); he’s a former Black Ops mercenary fueled by blood and vengeance for the death of this father, Prince N’Jobu. His price is T’Challa’s throne and sovereignty over the nation. Killmonger, who finds an ally in W’Kabi, believes Wakanda must position itself as a global wellspring by equipping marginalized factions with its cutting-edge weaponry—a move he’s sure will liberate the country from the shadows and into an international superpower. Coogler and Joe Robert Cole, who co-wrote the script, turn an age-old narrative on its head via Killmonger’s revisionist fury: The colonized as the colonizers.

Lines are drawn, and what transpires is a film of beauty, backbone, and startling discipline. Technically lush, Black Panther infuses itself with diasporic hybridity: Wakandan dress, architecture, and dialect pull from Mali, Nigeria, Kenya, Ethiopia, and Tanzania. Rachel Morrison, the Academy Award-nominated cinematographer attached to the film, delivers shots full of color and pure awe. When T’Challa travels to the ancestral plain to seek advice from his father, its gaping purple skies extend into the theater, as if we are on this dreamlike quest too. As Marvel films go, Black Panther is rife with franchise touchstones: thrilling action scenes—the most daring of which begins in an underground South Korean casino and rockets into a car chase through the frenzied streets of Busan—are undercut with moments of human spirit and levity (Letitia Wright’s Shuri and Winton Duke’s M’Baku offer up well-timed blushes of humor).

Coogler and T’Challa chart a parallel path here, seeking answers to the same question: who are you ultimately responsible to, your people or the people of the world? For his part, Coogler does due diligence by injecting the film with nods to black culture beyond the backdrop of Wakanda and the traditions of its people. I especially loved the moment when Jordan’s Killmonger, revealed to be of royal blood, calls Bassett’s Ramonda “auntie” with a razor-thin smirk. Or when Shuri jokes with T’Challa about the time-honored footwear he wore to impress tribal leaders, laying into him with, “What are thooose?!?!”

Even free of such context, Black Panther is an unmistakable triumph. Delivered through Coogler’s judicious eye, its existence alone generates a counter-history in film and mass media—first by scraping whiteness from its narrative core, then by making black people and black self-determination the default.

The 31-year-old writer-director has redefined the possibility of a superhero epic, a credit to his singular vision and belief that black stories matter, and that they imbue relevance on the big screen no matter what narrative shape they take. He proved that with Fruitvale Station, his breakout 2013 film about the killing of Oscar Grant, and again with Creed, the 2015 boxing flick that mined the importance of legacy and family.

Black Panther will manifest as a movement bigger than this moment. It’s more than historic pre-sale records, or box-office predictions. The collective hype that’s followed the film since inception has been absolutely volcanic, like nothing I’ve witnessed before.

It’s not that our need for black superheroes has shifted. Films like The Meteor Man and Steel may not have been commercially vibrant, but their stories and their images remain vital to black communities as what one friend described as “arbiters of hope and virtue in ways that transcend the limitations of our everyday, colonized lives.” Another friend who I spoke to this week shared a comparable sentiment: “we need black superheroes to remind ourselves that inventing yourself is not only possible, but necessary for survival.” I cite them because Black Panther, Coogler’s pièce de résistance, has been a reflection of shared hopes in creative industries where black identity is either undervalued or co-opted for empty laughs. These worlds, these august narratives, have always been viable to us.

So, what can a superhero movie be? It can be truth and fire and love. If we’re lucky, it is all of those things, perhaps more. It’s no mistake that Black Panther overflows with them.

All Hail King T’Challa

Number of crypto hedge funds doubles in four months: Autonomous NEXT data

LONDON (Reuters) – Hedge funds focused on trading cryptocurrencies more than doubled in the four months to Feb. 15, hitting a record high of 226, showed new data from fintech research house Autonomous NEXT on Thursday.

The firm had recorded just 110 global hedge funds with a similar strategy as of Oct. 18, up from 55 funds at Aug. 29 and just 37 at the start of 2017.

Assets under management hit between $3.5 and $5 billion, according to the firm.

Reporting by Maiya Keidan and Jemima Kelly

Walmart goes to the cloud to close gap with Amazon

SAN BRUNO/SUNNYVALE, Calif. (Reuters) – One of Walmart Inc’s best chances at taking on Amazon.com Inc in e-commerce lies with six giant server farms, each larger than ten football fields.

These facilities, which cost Walmart millions of dollars and took nearly five years to build, are starting to pay off. The retailer’s online sales have been on a tear for the last three consecutive quarters, far outpacing wider industry growth levels.

Powering that rise are thousands of proprietary servers that enable the company to crunch almost limitless swathes of customer data in-house.

Most retailers rent the computing capacity they need to store and manage such information. But Walmart’s decision to build its own internal cloud network shows its determination to grab a bigger slice of online shopping, in part by imitating Amazon’s use of cloud-powered big data to drive digital sales.

The effort is helping Walmart to stay competitive with Amazon on pricing and to tightly control key functions such as inventory. And it is allowing the company to target shoppers with more customized offers and improved services, two top executives told Reuters in interviews at Walmart’s San Bruno and Sunnyvale campuses in California.

“It has made a big difference to how fast we can grow our e-commerce business,” said Tim Kimmet, head of cloud operations for Walmart.

He said Walmart, for example, is using cloud data to stock items frequently ordered by customers via voice shopping devices such as Google Home.

The network is helping the retailer improve its in-store operations as well. Using data gleaned from millions of transactions, the company sped up the process by which customers can return online purchases to their local stores by 60 percent. And Walmart can adjust prices at its physical locations almost instantly across entire regions.

“We are now able to execute change faster,” Jeremy King, Walmart’s chief technology officer, told Reuters. He added that Walmart can now make over 170,000 monthly changes to software that supports its website, compared to less than 100 changes previously.

To be sure, Walmart, the world’s largest brick-and-mortar retailer, holds just a 3.6 percent share of the U.S. e-commerce market compared to Amazon’s 43.5 percent, according to digital research firm eMarketer.

Still, Walmart’s cloud effort is significant at a time when U.S. retail is undergoing immense disruption, and data-based decision making has become more important than ever to understand how shoppers make purchases.

Walmart employees work at the company’s network operations center in Sunnyvale, California, U.S. October 25, 2017. REUTERS/Nandita Bose

Walmart’s online revenue climbed 50 percent year-over-year during the third quarter, helping it post its strongest-ever quarterly growth since 2009.

“The battle between Walmart and Amazon has been playing out on all fronts and the cloud is the latest frontier,” said Kerry Liu, chief executive of Rubikloud Technologies, which offers artificial intelligence technology services to retailers.

EXCESS CAPACITY

The cloud initiative is but one of several steps Wal-Mart is taking to boost its e-commerce business. The company has expanded its online selection and acquired smaller e-commerce retailers. Walmart is offering free two-day shipping on orders of $35 or more, and it recently asked vendors to supply it with merchandise priced at $10 and up to help it turn a profit online.

Walmart has stored information in smaller internal data centers for years. And it uses public cloud storage for non-critical data. Most retailers rent server capacity offered by companies such as Amazon Web Services, Alphabet Inc’s Google, Microsoft Corp and IBM.

(For a graphic on big players in the cloud market, see tmsnrt.rs/2EYe9Ii)

But Walmart’s decision to build a network that is not reliant on a single third-party cloud technology provider has transformed its ability to understand shoppers, who now move between store, desktop, mobile and app to make purchases. About 80 percent of Walmart’s cloud network is now in-house.

Walmart’s Kimmet said security was another big factor behind the effort, enabling the retailer to better protect customer data. That secrecy extends to the locations of its six “mega clouds” or giant server farms, and 75 “micro clouds” whose locations the company declined to disclose publicly.

Walmart shareholders so far appear supportive of its cloud strategy. The company’s shares have risen 49 percent in the last 12 months, defying the broader retail sector downturn and outperforming the wider S&P 500 index, which has risen 14 percent over the same period.

Still, some investors have expressed concerns that Walmart’s approach will make it harder for the retailer to downsize if market conditions change significantly. A few of them told Reuters they would like to see Walmart commercialize its excess capacity, much as its rival Amazon has done.

Amazon Web Services (AWS) generated $18.34 billion in revenue in 2017 and has garnered 26 percent of the cloud market, according to estimates from Jefferies Group LLC.

“Walmart is very good at following Amazon’s innovations. Now they must find a way to monetize the cloud business they are building the way AWS did,” said Charles Sizemore, founder of Sizemore Capital Management LLC, who owns shares of Walmart.

Walmart’s Kimmet said the retailer has no immediate plans to provide cloud services for other companies. But he did not rule it out as a future revenue driver.

Reporting by Nandita Bose in San Bruno, Sunnyvale California; Editing by Greg Roumeliotis and Marla Dickerson

​The most popular Linux desktop programs are…

Video: Barcelona: Bye Microsoft, hola Linux

LinuxQuestions, one of the largest internet Linux groups with 550,000 members, has just posted the results from its latest survey of desktop Linux users. With approximately 10,000 voters in the survey, the desktop Linux distribution pick was: Ubuntu.

While Ubuntu has long a been popular Linux distro, it hasn’t been flying as high as it once was. Now it seems to be gathering more fans again. For years, people never warmed up to Ubuntu’s default Unity desktop. Then, in April 2017, Ubuntu returned to GNOME for its default desktop. It appears this move has brought back some old friends and added some new ones.

An experienced Linux user who voted for it said, “I had to pick Ubuntu over my oldest favorite, Fedora. [That’s] Simply based on how quick and easy I can get Ubuntu set up after a clean install, so easy with the way they have it set up these days.”

Right behind Ubuntu was Linux Mint. Mint is a favorite for users who want an easy-to-use Linux desktop — or for users who want to switch over from Windows.

http://www.zdnet.com/article/the-most-popular-linux-desktop-programs-are/, followed closely by antiX. With either of these, you can run a high-quality Linux on PCs powered by processors as old as 1999’s Pentium III.

In the always hotly-contested Linux desktop environment survey, the winner was the KDE Plasma Desktop. It was followed by the popular lightweight Xfce, Cinnamon, and GNOME.

If you want to buy a computer with pre-installed Linux, the Linux Questions crew’s favorite vendor by far was System76. Numerous other computer companies offer Linux on their PCs. These include both big names like Dell and dedicated small Linux shops such as ZaReason, Penguin Computing, and Emperor Linux.

Many first choices weren’t too surprising. For example, Linux users have long stayed loyal to the Firefox web browser, and they’re still big fans. Firefox beat out Google Chrome by a five-to-one margin. And, as always, the VLC media player is far more popular than any other Linux media player.

For email clients, Mozilla Thunderbird remains on top. That’s a bit surprising given how Thunderbird’s development has been stuck in neutral for some time now.

When it comes to text editors, I was pleased to see vim — my personal favorite — win out over its perpetual rival, Emacs. In fact, nano and Kate both came ahead of Emacs.

There was, however, one big surprise. For the best video messaging application the winner was… Microsoft Skype. Now, Skype’s been available on Linux for almost a decade, and recently, Canonical made it easier than ever to install Skype on Linux. But, still, Skype on Linux?

Jeremy Garcia, founder of LinuxQuestions, thought the result might have come about because: “Video Messaging Application was a new category this year and participation was extremely low. Additionally, Secure Messaging Application was broken out into a separate category that had higher participation and resulted in a tie between Signal and Telegram.”

Of course, it’s also possible that even passionate Linux people can like a Microsoft product. After all, Microsoft now supports multiple Linux distributions on its Azure cloud.

Related stories

Used Cars Are Cheap, And That's Good For O'Reilly

In mid-January, when markets were still relatively calm, we published an article about O’Reilly and how it could benefit from the widening price gap between used and new cars that would lead to consumers keeping their cars a bit longer. We bought the stock, as we had mentioned, when it broke through a $260 resistance level. Since then, the stock has come back down to levels we think are once again a good buying opportunity. Below is the article in its entirety with an updated price chart below the original.

It’s a never ending battle of making your cars better and also trying to be better yourself. – Dale Earnhardt

Late last year, the lease on my car was expiring and I needed to make a decision on whether to lease another car, or exercise the option to buy my current car at the contractual residual value. At the time my car only had 27,000 miles, which, for a 2013 was quite low. Based on a back of the envelope valuation with the help of Kelley Blue Book, I decided to buy it.

Based on the surprisingly high value indicated by the Kelley Blue Book estimate, I wondered how the price/value of a used car compared to a new car and whether there might be periods when it was better to buy or lease new versus periods when it was better to buy a used car. It turns out there is.

The chart below shows the CPI Index for both new vehicles and used cars and trucks. As the two lines indicate, prices declined significantly during the recession, particularly for used vehicles. As we approached the end of the recession and jobs were being created, the price of both new and used vehicles started recovering. But used car pricing increased dramatically during this period. Partly because of a lack of financing options for new cars and partly because consumers were probably treading lightly after the worst recession since the early 1930s. From 2010 to mid-2014, price inflation for used cars remained above those of new cars – at least using 2008 as a base.

But the index for used car prices started trending downward and accelerated its downward trajectory in 2016, while new car pricing continued to creep higher. The result is that the cost of a new car today relative to a used car is at its widest spread in at least 10 years. Translation: used cars are cheap relative to new cars – and I’m assuming that leasing and buying is the same thing – after all, a lease is based on the sales price of the car.

So I started to think about investment ideas that would benefit from what I predict will be a slowdown in the purchases of new cars in favor of either keeping current cars longer or deciding to buy a used car instead. As I cross referenced our several equity screeners (Growth at Reasonable Price, Asymmetrical Return/Risk, and Dividend Growth), I came across O’Reilly Automotive Inc (ORLY)

Profile

O’Reilly Automotive, Inc. is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories. It primarily operates in the United States, with Texas and California as its largest markets with 670 and 530 stores in each. It operates a single business segment which involves supplying new and remanufactured automotive hard parts, maintenance items, and a complete line of automotive tools and professional service equipment. It offers its products to do-it-yourself (DIY) customers and Do-It-For-Me (DIFM) customers including professional mechanics, and service technicians.

Business Segment

O’Reilly operates in a single business segment supplying automotive aftermarket parts, tools, supplies, equipment and accessories to DIY and DIFM market segments in the United States. DIY customers are consumers who repair and work on their own cars. DIFM customers include commercial installers including auto repair shops, gas stations, fleet operators, parts resellers who provide installation and repair services, and car dealer service departments. In FY 2016, O’Reilly derived approximately 58% of its sales from DIY customers and 42% from the DIFM customer segment. The DIFM segment is expected to contribute a greater share of future growth because it is the least price-sensitive market.

When prices for parts rise, professional mechanics and service providers are less likely to change their demand and will pass along the added cost to the consumer. In the case of the DIY market, new cars are now too complicated for most owners to fix or maintain by themselves so they are more likely to take their car to the shop for needed repairs. Nonetheless, households and individuals remain the major market segment, contributing 61.5% of the industry’s revenue.

Source: IBISWorld

Strategy

O’Reilly operates through a “dual market strategy” which means that it serves both the DIY market and the DIFM market. Much of the company’s competitive edge is attributed to the successful execution of this dual market strategy. This strategy enables the company to target a larger customer base for automotive aftermarket parts, capitalize on existing retail and distribution infrastructure, and operate profitably in large markets and even in less dense areas that attract fewer competitors. Such a strategy also enhances the service levels offered to DIY customers because of its broad inventory and extensive product knowledge required by professional service providers whom O’Reilly also caters too.

Other sources of its competitive advantage include a strong distribution network and broad portfolio of widely known brands. It operates 27 regional distribution centers – 19 owned with a total of 10.6 million square feet. It also has five-night-a-week delivery via a company-owned fleet. As of June 30, 2017, the company had 4,934 stores in 47 states and over 75,000 employees. Its merchandise generally consists of nationally recognized, premium brands like AC Delco, Bosch, Armor All, Castrol, and many other high-quality brands.

In the coming years, O’Reilly intends to implement the following growth strategies: aggressively open new stores, grow sales in existing stores, pursue strategic acquisitions, enhance store design and location, and enhance its e-commerce website. The company is expanding its nationwide presence by opening new stores at a rapid rate. In 2017 alone, it opened 190 stores. The figure below illustrates O’Reilly’s aggressive nationwide expansion. As of December 2016, the company has also acquired 48 stores from Bond Auto Parts and plans to open 200 new stores in 2018.

Source: O’Reilly’s Investor Presentation

The company has also been investing heavily on technology. It is implementing a voice-picking technology in its distribution centers, rolling out routing software to improve logistic efficiencies, and making proven return-on-investment-based capital enhancement in material handling equipment such as conveyor systems, picking modules, and lift equipment.

In terms of marketing and sales, O’Reilly leverages television, radio, direct mail and newspaper advertisements, in-store and online promotions, and sporting event sponsorships. It also participates in cooperative advertising with its vendors. It sponsors nationally-televised races and more than 1,600 grassroots, local, and regional motorsport events in 47 states.

Recent Results

O’Reilly reported revenues of $8,5 billion in revenues for FY2016, an increase of 7.9% from FY2015. For the third quarter ended September 30, 2017, the company reported sales of $2.3 billion, operating income of $461M, and net income of $284M.

In nine months ended September 30, 2017, the company reported sales of $6,7 billion, operating income of $1,3 billion, and net income of $831K. It expects total revenue of $8.9 billion to $9.0 billion for FY2017.

For the past three years, O’Reilly has shown strong financial growth and the trend is expected to continue considering its aggressive expansion through additional stores and Bond Auto Parts stores acquisitions.

Source: Mergent Online

Analysis

O’Reilly doesn’t pay a dividend so it is probably not attractive for income-seeking investors. However, looking at the company’s financial progress over the years reveals some very attractive trends:

  • Margins across the board have increased. For example, gross margins increased from 44.5% to 52.6% over the last 10 years, while operating margins increased from 9% to 19.5%.
  • Return on equity has increased from 15% to over 83% on a trailing 12 month basis. The biggest driver of this increase was due to an increase in leverage, but asset turnover has also increased as has net profit margin.
  • Using supply chain financing, cash conversion cycle has been reduced to 5 days, better than all of its closest peers.

And some not so attractive trends:

  • Debt to Equity has increased from less than 1.5 in early 2017 to 4.7 as of September 30th, 2017. Times interest earned also decreased but is still at a very healthy 21x
  • Current ratio has steadily decreased from 1.25x to less than 1x
  • Cash from operations declined slightly from the year ago period.

Business Drivers

The key drivers of current and future demand of its products are number of miles driven, number of registered light vehicles, and unemployment rates. The primary business driver for the industry is total miles driven. With the lack of comprehensive mass transit in the U.S., the company expects modest improvements in total number of miles driven in the U.S. as supported by increasing number of registered vehicles and sustained employment levels. Moreover, declining gas prices since 2015 has contributed to the steep increase in the number of miles driven resulting in more vehicle wear and tear and rising demand for replacement and maintenance parts and tools. Likewise, the average age of vehicles increases due to constant scrappage rates (a rate of new car sales under the ten-year trend) and overall quality of vehicles. As the average age of vehicles increases, a larger percentage of the miles driven are outside of the manufacturer’s warranty period. These out-of-warrant older vehicles generate a stronger demand for aftermarket products especially in case of routine maintenance cycles and more frequent mechanical failures.

Given these demand drivers, the U.S. automotive aftermarket industry is expected to have strong growth in the coming years. According to industry estimates, the market is forecast to grow at a CAGR of 3% from 2016 to 2018, to reach a total value of $284 billion in 2018. O’Reilly should leverage this high growth in the market to generate revenues and profits.

Industry Analysis

The U.S. automobile parts retail industry has about 37,000 establishments (single-location and multiple-location companies) with combined annual revenue of $53 billion. With a CAGR of 3.4%, it is expected to grow at an estimated $273.4 billion according to Automotive Aftermarket Suppliers Association (AASA). O’Reilly claims that in this industry landscape, its addressable market amounts to $161 billion.

Source: IBISWorld

The U.S. industry is largely concentrated, with the ten largest companies accounting for about 50% of the market size. The 50 largest companies generate about 60% of the total industry revenue; four largest companies contributing about 45%.

Source: O’Reilly’s Investor Presentation

Outlook

Overall, O’Reilly is in a favorable position in light of the demand for used cars vs. new cars. The external key drivers (increased miles driven, favorable economic conditions, decreased price of gas, etc.) combined with its key strategies (dual market, aggressive expansion, selective acquisition) put the company in a strongly competitive position that will continue to boost its profitability.

Valuation

From a valuation perspective using a multiple analysis, ORLY looks attractive on a relative basis compared to peers as well as its own five-year average. As the chart below indicates, the current PE ratio of 22 is considerably lower than the high reached in late 2015 of 31.25, despite a steady increase in earnings per share.

We believe the stock is poised for additional earnings growth and multiple expansion and is well-positioned to benefit in the event of an economic downturn – one in which consumers may postpone their purchases of new vehicles.

Income Enhancement

There isn’t a very attractive option to use for enhancing income. However, for investors looking to generate some income from a position in ORLY who are willing to give up some upside, you may want to consider selling a call option expiring in January 2019, with a current bid of $22.70 and strike price of 280. Assuming a 100 share purchase to coincide with the sale of 1 contract (representing 100 shares), this would result in an estimated income yield from the option premium of around 1% – and if the stock is called, would result in an additional return of 10.6%.

There is also the possibility of the company buying back more shares, which has been the primary driver of a shareholder yield of 12% over the last 12 months.

Our Take

Despite our bullishness on the used car parts industry and ORLY’s improving financial performance, on a technical basis, the stock looks indecisive flirting with the $261 level and supported by $240. We would like to see some conviction to the upside before dipping a toe in and we are conscious of a possible pullback to the $240 level. We would be buyers on a breakthrough to the upside or a pullback to the $240 level. We bought when the price broke to the upside.

Today, the price of the stock is back down to $252 after once again testing the $240 level. We believe its another good entry point and this time, we expect the price to surpass the recent high of $280.

See, when you drive home today, you’ve got a big windshield on the front of your car. And you’ve got a little bitty rearview mirror. And the reason the windshield is so large and the rearview mirror so small is because what’s happened in your past is not near as important as what’s in your future. – Joel Osteen

End of Article

Disclaimer: Please note, this article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It is intended only to provide information to interested parties. Readers should carefully consider their own investment objectives, risk tolerance, time horizon, tax situation, liquidity needs, and concentration levels, or contact their advisor to determine if any ideas presented here are appropriate for their unique circumstances.

  • Past performance is not an indicator of future performance.
  • Investing in any security has risks and readers should ensure they understand these risks before investing.
  • Real Estate Investment Trusts are subject to decreases in value, adverse economic conditions, overbuilding, competition, fluctuations in rental income, and fluctuations in property taxes and operating expenses.
  • This post is illustrative and educational and is not a specific offer of products or services.
  • Information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein, nor is the author compensated by any of the products mentioned.
  • Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the topics or subjects discussed.
  • Information presented is not believed to be exhaustive nor are all the risks associated with the topic of each article explicitly mentioned. Readers are cautioned to perform their own analysis or seek the advice of their financial advisor before making any investment decisions based on this information.
  • Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice and you are encouraged to consult your own lawyer, accountant, or other advisor before making any financial decision.
  • All expressions of opinion reflect the judgment of the author, which does not assume any duty to update any of the information
  • Any positive comments made by others should not be construed as an endorsement of the author’s abilities to act as an investment advisor.

Disclosure: I am/we are long ORLY.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

McDonald's Just Did Something So Stunningly Strange That It'll Make You Wonder What's Coming Next

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

If there’s one thing McDonald’s wants you to think right now, it’s that it isn’t, you know, McDonald’s.

Not the old McDonald’s, that is.

Not the old, slightly worn, very predictable McDonald’s where the ice-cream machines rarely seemed to work.

The burger chain is trying all sorts of peculiar things to change its image.

It’s using, gasp, fresh beef. Or even no beef at all in its McVegan Burger.

But its latest foray into the unknown has a rather charming air about it.

McDonald’s, you see, is venturing into the area of, well, pretentiousness. 

You might think it unlikely or even a touch potty when I tell you that this is an ad campaign promoting the Big Mac x Bacon Limited Edition Collaboration in Canada.

But take a look and see if you find it refreshingly winning.

Here’s the Big Mac holding up a mirror to society, which, some might say, it’s been doing for a long time. 

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And here it is celebrating its sheer greatness.

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And then there’s the sense of exalted meaning that courses through every bite of a pickle-filled Big Mac. 

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What about the sense of existential harmony that pervades your Big Mac-eating experience?

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Perhaps these ads feel faintly silly.

For me, however, they show a certain courage and a willingness to shake previous negativity and rise to something slightly better. Or, at least, different.

There’s actually nothing special about this alleged collaboration at all. Anyone can ask for bacon to be added to their Big Mac.

But the attempts at wit offer a little confidence.

What’s most important for McDonald’s now — if it wants customers to reassess what they feel about a brand that’s being constantly challenged by fresher, younger competitors — is to revamp its products to create a true sense of surprise.

The problem, of course, is that McDonald’s is a huge company. 

Making the winds of change blow across the whole McDonald’s world will take a lot of doing. 

And a serious injection of, um, greatness. 

Exclusive: BMC Software explores IPO: sources

(Reuters) – U.S. business software company BMC Software Inc [BSII.UL] is holding conversations with investment banks about an initial public offering (IPO) that could value it at more than $10 billion, including debt, people familiar with the matter said on Friday.

The move comes as the private equity firms that control BMC – Bain Capital and Golden Gate Capital – consider ways to start cashing out on their investment after taking the company private in 2013 in a $6.9 billion leveraged buyout.

BMC has held discussions with banks in recent weeks about appointing underwriters for an IPO, the sources said. The timing of the IPO has not been decided, and the deliberations have not been affected by this week’s stock market volatility, the sources added.

The sources asked not to be identified because the matter is confidential. BMC did not immediately respond to a request for comment, while Bain and Golden Gate declined to comment.

Based in Houston, BMC provides software that helps corporations organize their information technology management functions. It generated revenue of $1.8 billion for the 12 months that ended Sept. 30, according to Moody‘s.

BMC has been facing increasing competition from so-called software-as-a-service technology rivals, and last year explored a merger with peer CA Inc (CA.O). That deal fell through over challenges in agreeing upon debt financing terms, sources said at the time.

BMC’s mainframe software business is estimated to generate approximately half of the company’s operating profit and cash flow, yet it is a flat to modestly declining business, Moody’s said in a research note in November.

January was the strongest month for IPOs on record in terms of proceeds, however IPO activity was blunted this week by wild swings in the U.S. stock market. The receptivity of the IPO market will hinge on such volatility subsiding.

Reporting by Greg Roumeliotis in New YorkEditing by Matthew Lewis

Amazon Studios Taps NBC Entertainment’s Jennifer Salke to Succeed Roy Price

Amazon has named a new head for its television and film production unit nearly four months after the departure of former studio head Roy Price amid sexual harassment allegations.

To fill that role, Amazon has tapped NBC Entertainment president Jennifer Salke, who will now report to Jeff Blackburn, Amazon’s senior vice president of business development and digital entertainment. Salke, who joined Comcast-owned NBC in 2011, helped the network revamp its TV lineup in recent years with popular series such as the critically-acclaimed drama This Is Us and the singing competition The Voice. In a statement on Friday, Amazon’s Blackburn said that Salke has “built an impeccable reputation as a big leader who emphasizes creativity, collaboration, and teamwork.”

Amazon did not say exactly when Salke would start her new position, but she will be taking over for Amazon Studios COO Albert Cheng, who has served as interim head of the studio since Price was forced out in October over accusations that he sexually harassed producer Isa Hackett. Price had overseen Amazon’s entry into the streaming entertainment market, helping to build it’s Hollywood arm into a competitor of traditional film studios as well as rival streamers like Netflix, with Amazon Studios spending roughly $4.5 billion annually on original programming. Price oversaw Amazon’s acquisition of award-winning TV series such as Transparent as well as independent films like Manchester by the Sea, which won the studio its first-ever Academy Awards last year.

Price resigned in October, the same month that several allegations against Harvey Weinstein led to the Hollywood mogul’s ouster from The Weinstein Company. Those allegations against Weinstein kicked off a wave of backlash against sexual misconduct by powerful men in Hollywood and helped lead to the “Me Too” movement and the Time’s Up campaign against harassment in the entertainment industry.

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Immediately after Price’s departure, Amazon had already been rumored to be dead-set on hiring a female replacement, with potential candidates reportedly including Salke as well as Paramount TV president Amy Powell, Fox TV Group chairman Dana Walden, and A+E Networks CEO Nancy Dubuc, among others.

In her own statement, Salke said that she is “incredibly excited” about heading up Amazon Studios. “In the studio’s relatively short existence they have innovated, disrupted, and created characters that are already an indelible part of pop-culture,” she said. “I am both honored and emboldened by the opportunity to lead this extraordinary business.”

In addition to Price’s departure last fall, a handful of other TV and film executives have left Amazon in recent months, including former original TV series head Joe Lewis. The studio had faced criticism over the past year for failing to deliver a breakout hit TV series, with Price and his fellow executives even reportedly passing on popular and critically-acclaimed series like The Handmaid’s Tale and Big Little Lies, which went on to rack up awards for rivals Hulu and HBO, respectively.

None other than Amazon CEO Jeff Bezos reportedly said last year that he wants Amazon’s studio to develop a global TV hit on the scale of HBO’s Game of Thrones. As such, Amazon reportedly agreed to pay a whopping $250 million to land the global television rights to the classic The Lord of the Rings fantasy novel series, with plans to produce a “multi-season” TV series based on the books for Prime subscribers and the potential for additional spin-off series. Meanwhile, just this week, Amazon was reported to be developing a new TV series featuring the Conan the Barbarian character once portrayed by Arnold Schwarzenegger on the big screen.

Nvidia's upbeat forecast powered by data center, cryptocurrency demand

(Reuters) – Nvidia Corp’s (NVDA.O) upbeat current-quarter revenue forecast on Thursday underscored surging demand for its graphics chips used in data centers, gaming devices and cryptocurrency mining, sending its shares up as much as 12 percent in extended trading.

The company, which also reported better-than-expected quarterly results, is reaping the benefits from the launch of its Volta chip architecture last year. Volta help build processors that power a range of technologies such as artificial intelligence and driverless cars.

“Virtually every internet and cloud service provider has embraced our Volta GPUs,” Nvidia’s Chief Executive Officer Jensen Huang said in a statement. (bit.ly/2iJPeNN)

Revenue from Nvidia’s widely watched data center business, which counts Amazon.com Inc’s (AMZN.O) Amazon Web Services and Microsoft Corp’s (MSFT.O) Azure cloud business among its customers, more than doubled to $606 million.

That trounced analysts’ average estimate of $541.1 million.

Data center should continue to grow pretty nicely into calendar 2018 and beyond, Morningstar analyst Abhinav Davuluri said.

The boom in cryptocurrencies is also powering demand for chips from Nvidia and rival AMD (AMD.O) as they provide the high computing ability required for cryptocurrency “mining.”

“Strong demand in the cryptocurrency market exceeded our expectations,” Chief Financial Officer Colette Kress said on a conference call.

“While the overall contribution of cryptocurrency to our business remains difficult to quantify, we believe it was a higher percentage of revenue than the prior quarter.”

The company said inventory levels of its gaming GPUs throughout the quarter was lower than historical channel inventory levels due to surging demand from cryptocurrency miners.

The price of Bitcoin, the most popular cryptocurrency, rose more than 1,300 percent in 2017. Prices have, however, dropped about 40 percent this year.

Nvidia’s revenue from gaming, for which it is best known, rose 29 percent to $1.74 billion, accounting for a more than half of its total revenue in the fourth quarter, and also beating analysts’ estimate of $1.59 billion.

The company forecast current-quarter revenue of $2.90 billion, plus or minus 2 percent, well above the analysts’ average estimate of $2.47 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $1.12 billion, or $1.78 per share, in the fourth quarter ended Jan. 28 from $655 million, or 99 cents per share, a year earlier.

Results include a $133 million gain related to the new U.S. tax law.

Total revenue rose 34 percent to $2.91 billion, topping estimate of $2.69 billion.

Excluding items, the company said it earned $1.72 per share.

Nvidia earned $1.57 per share, excluding the tax benefit, according to Thomson Reuters I/B/E/S, beating estimate of $1.17.

The company’s shares were trading at $233 in extended trading. They have surged about 83 percent in the past 12 months.

Reporting by Arjun Panchadar and Supantha Mukherjee in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila

Uber says hackers behind 2016 data breach were in Canada, Florida

WASHINGTON (Reuters) – The two people who hacked ride-hailing firm Uber’s data in 2016 were in Canada and Florida at the time, a company security executive told a U.S. congressional committee on Tuesday.

About 25 million people whose data was compromised in the breach live in the United States, Uber Technologies Inc [UBER.UL] chief information security officer John Flynn said in written testimony to a Senate Commerce Committee panel.

Of those, 4.1 million were drivers, said Flynn, whose testimony described new details about the hack, the handling of which prompted newly appointed Uber Chief Executive Officer Dara Khosrowshahi to fire two top security officials.

Uber disclosed the breach of 57 million worldwide users in November, about a year after it occurred.

Reuters reported in December that a 20-year-old man was primarily behind the breach, and that he was paid by Uber to destroy the data through a so-called “bug bounty” program, which is designed to reward researchers for uncovering security vulnerabilities.

Flynn confirmed the man who obtained data from Uber was in Florida and revealed that his partner, who first contacted the company on Nov. 14, 2016, to demand a six-figure payment, was in Canada.

Uber’s security team made contact with both people and received “assurances” the pilfered data had been destroyed before paying them $100,000, Flynn said. Sources familiar with the breach told Reuters in December the company did a forensic analysis of the Florida hacker’s computer to verify the deletions.

Marten Mickos, CEO of HackerOne, Inc., testifies to the Senate Commerce Consumer Protection, Product Safety, Insurance and Data Security Subcommittee on Capitol Hill in Washington, U.S., February 6, 2018. REUTERS/Joshua Roberts

A Canadian Royal Canadian Mounted Police representative said she had no immediate comment on the case.

Flynn said Uber had made mistakes, including paying the hackers through its “bug bounty” program.

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“We made a misstep in not reporting to consumers, and we made a misstep in not reporting to law enforcement,” Flynn said.

Republican and Democratic lawmakers admonished Uber for its delay in disclosing the breach.

”The fact that the company took approximately a year to notify impacted users raises red flags within this committee as to what systemic issues prevented such time-sensitive information from being made available to those left vulnerable,” Republican Jerry Moran said.

Democratic Senator Richard Blumenthal said Uber’s management of the hack was “morally wrong and legally reprehensible,” and that the company appeared to violate state rules for data breach disclosure.

Compromised data includes names, phone numbers and email addresses but not Social Security numbers or credit card information of Uber users. Driver’s license numbers of 600,000 drivers were also compromised.

Reporting by Dustin Volz and Jim Finkle; Editing by Alistair Bell and Grant McCool

Akamai revenue, profit top estimates on robust cloud demand

(Reuters) – Akamai Technologies Inc’s (AKAM.O) profit and revenue topped analysts’ estimates on Tuesday, and the company said it had cut about 400 positions, or 5 percent of its global workforce.

The company’s shares were up 8.2 percent at $68.87 in extended trading.

Activist investor Elliott Management, which has disclosed a 6.5 percent stake, would push Akamai to curtail what the hedge fund sees as wasteful spending, among other measures, sources told Reuters in December.

“As part of our effort to improve operational efficiency, we reduced headcounts in targeted areas of business, most notably in areas tied to our media business,” Chief Executive Tom Leighton said on a post-earnings call with analysts.

Akamai’s media business, which helps in faster delivery of content through the web, has been under pressure from large customers, such as Apple Inc (AAPL.O) and Amazon.com (AMZN.O), developing in-house capabilities to handle their web traffic.

Revenue in the unit declined 3 percent to $284 million in the fourth quarter ended Dec. 31, the ninth straight quarterly drop.

To offset the weakness, the company is bolstering its cloud security solutions.

Revenue in the company’s cloud unit surged over 32 percent to $135.2 million. Quarterly sales growth in the unit has averaged about 30 percent in 2017.

The company, which recorded a $52 million charge related to the restructuring in the fourth quarter, said it would take another charge of about $15 million in the current quarter.

Total revenue rose 7.7 percent to $663.5 million, beating analysts’ average estimate of $649.1 million, according to Thomson Reuters I/B/E/S.

The company’s net income plunged to $19.1 million, or 11 cents per share, from $91.6 million, or 52 cents per share, a year earlier, due to the charges.

Akamai also recorded a $26 million provisional charge associated with the recent U.S. tax law changes.

Excluding items, the company earned 69 cents per share, 6 cents above analysts’ average estimate.

The company forecast first-quarter revenue in the range of $647 million to $659 million, above analysts’ average estimate of $647.61 million.

Profit is expected to be about 67 cents to 70 cents per share, compared with expectations of 61 cents.

Reporting by Sonam Rai and Arjun Panchadar in Bengaluru; Editing by Sriraj Kalluvila

6 Brainstorming Tips to Get Your Creative Juices Flowing

You sit down with your team for a brainstorming session and wait for the creativity to flow — but nothing comes to you. When there’s too much pressure to think up your next big idea, this is often the scenario that results. But if you can reframe your thinking and seek inspiration in unexpected places, you’ll be amazed at the ideas that start pouring in.

These six entrepreneurs share simple ways to jumpstart your creative thinking. Remember: It often helps to think outside of the box — or even outside of the office.

Seek inspiration from outside sources.

When you find yourself at a loss for ideas, looking beyond your brand can inspire your own upcoming project. Dalia MacPhee, CEO of clothing brand DALIA MACPHEE, turns to the greats in fashion and photography to jog her creativity.

“A few years ago, we were trying to come up with a new fashion campaign for our latest collection. I suggested we start looking up the best fashion and art photography published in the last 60 years,” she says. “Just being exposed to similar creative got the juices flowing, and by the end, everyone at the table had at least three great ideas.”

Get your blood pumping.

Derek Robinson, founder and CEO of digital marketing agency Top Notch Dezigns, knows that staying still can be a productivity killer when you’re already stumped. If you take a break and get moving, you may be surprised at the resulting boost in creativity.

“I move from work to any task that is physically exhausting,” he says. “A few months ago, when I was in a brainstorming session with our web design team, I could not think beyond my initial idea. A two-mile midday run had everyone around me surprised, but once I was back, I was raring to go. A couple sets of tennis tend to work equally well.”

Don’t limit ideas.

“I find a mental block is simply me being distracted or doubting my ideas,” says Ben Landis, founder and CEO of social growth accelerator Fanbase. When you take the pressure off by embracing all ideas, good and bad, you’ll likely find something to work with among the deluge.

“When I am in a brainstorming session, we have a rule that all ideas are good ideas. This isn’t always true, but if you can say anything without judgment, more ideas will come out,” he says. “We write everything down, then revisit the best ones.”

Keep your environment clean.

Sometimes having an unobstructed mind is as simple as working in an uncluttered space. Jared Atchison, co-founder of WordPress form builder WPForms, finds that a clean and quiet environment with lots of natural light breeds the best ideas.

“I’m most creative when my environment is clean, minimalist and quiet. It also helps if the environment brings nature indoors with large windows, bamboo flooring or an outside deck,” he says. “When my outside environment is free of clutter, my mind has more room for creative thought.”

Change your surroundings.

If bringing nature indoors doesn’t do the trick, try taking a walk outside instead. Matthew Capala, CEO of global boutique search marketing agency Alphametic, knows that vibrant city streets can offer a lot more inspiration than the four white walls of a conference room.

“Encountering resistance during strategy sessions is common, especially in the world of SEO. Finding creative workarounds and getting back into a flow state can be a matter of literally walking around,” he says. “Our office is in an arts district in Miami, and the street art is one of the reasons I chose the location. Being inspired by the surroundings makes creative impulses contagious.”

Eliminate the word ‘but.’

“We get caught up in things we can’t do and things that won’t work,” says Jen Brown, founder and artistic director of improv-based education program The Engaging Educator. By flipping the script and staying positive during brainstorming sessions, your ideas will take a turn for the positive, too.

“The word ‘but’ creates a block in our minds. By eliminating ‘but’ and substituting it with ‘yes,’ we open up possibilities and ideation becomes limitless,” she says. “For one client, we used a ‘but’ button — every time someone said ‘but’ during a brainstorm, we hit a buzzer. It broke the habit quickly.”

What You and Your Business Can Do to Avoid Identity Theft This Tax Season

Identify theft is a topic and headline that has attracted many headlines over the past few years, with individuals, large corporations, and government organizations falling victim to identify theft and data breaches. Identity theft and data breaches are always a risk, but can be even more prevalent during tax season, when information is at a premium, and business owners are already under extra pressure.

A study conducted by IBM identifies the average cost of a data breach at $3.62 million, and while this figure will obviously vary from organization to organization, the implication is clear. Data breaches and identify theft can have a large negative effect on your business, and lead you to spend large amounts of time and energy repairing the damage caused. Drilling specifically to smaller business, a study by Verizon identifies the following statistics for small businesses and data breaches:

  • Average cost is between $84,000 and $148,000
  • 60 percent of small business go out of business within six months of an attack
  • 61 percent of all data breaches impacted small to medium size business in 2017

This is a topic that definitely should be taken seriously, but it shouldn’t result in paralysis by analysis — there are things you can do today to protect yourself and your business from identify theft.

1. Set up a virtual private network for your business. 

Wi-fi can be convenient, but using an unsecured wi-fi connection is one of the easiest ways for hackers and other criminals to obtain your personal and business information. A VPN network is not a guarantee of securing your personal and business information, but it is more secure than wi-fi, and relatively simple to set up.

Setting up your business VPN, if you feel comfortable setting up a business email account and profile, is something you can do over a weekend, and is well within your budget.

2. Review your business credit report.

Setting up and improving your business credit is a process that many entrepreneurs overlook, but in addition to giving your business the financing it needs, is also something you need to monitor on a continuous basis.

You are entitled to a free credit report from each of the three major credit bureaus, and can request them either from the credit bureaus or from annualcreditreport.com. Even better, you can configure you account to send you automatic alerts and messages to keep you current on changes to your business credit file.

3. Consider identify theft insurance.

Insurance is a thing that you hope to never use, but it’s something you should certainly give serious thought to getting. This is even more true when it comes to protecting the identify and credit of your business — imagine only finding out that someone has taken out loans in the name of your business when you are looking to expand or grow your business?

There are lots of different options out there, so be sure to work with your CPA or financial professional to find a policy that is a good fit for your budget, and your business.

4. Remember that the IRS will never initiate contact except by mail.

As a CPA one of the most common questions I get, especially around tax time, is whether or not a small business owner should respond to a phone call or email from the IRS. Getting an email, or listening to a voicemail that sounds like it is from the IRS can be intimidating, stressful, and even a little scary, but the answer is a definite no — the IRS will never begin correspondence in any way but via mail.

In other words, never provide personal or business information over the phone, via email, or to an online portal without receiving official confirmation that the request is legitimate.

5. Secure your mobile devices.

It’s easier than ever before to conduct business and engage with customers via your phone, tablet, or other mobile device, but that doesn’t mean your security procedures should be any less vigorous than on your desktop computers.

Passwords are a great first step, but some other suggestions including the following, and can be set up for free.

  • Log out completely from any banking or payment app when you are done using it
  • Avoid downloading any unnecessary apps, or apps that request permissions that seem out of the ordinary, such as access to password/confidential information
  • Watch for shoulder surfers, i.e. be aware of your surroundings and anyone who appears especially interested in your phones content.

Identity theft is a real issue, and can cost you time, damage your reputation, and impact your bottom line. That said, taking a few simple steps today can help you secure you and your businesses information, and won’t break the bank.

Major Banks Ban Buying Bitcoin With Your Credit Card

Most major U.S. credit card issuers have now banned the use of their cards to buy Bitcoin or other digital currencies, in a move intended to decrease both financial and legal risk.

Bank of America began blocking cryptocurrency purchases on Friday, according to Bloomberg. JPMorgan did the same on Saturday.

Citigroup also says it is halting cryptocurrency purchases on credit, and Capital One and Discover had already enacted their own bans. That means all of the top five credit card issuers have announced or implemented bans.

The moves are above all in the banks’ self-interest. As Fortune previously reported, the mania surrounding cryptocurrency late last year appears to have motivated many retail investors to use credit cards as leveraging tools, buying more cryptocurrency than they could afford. With Bitcoin down roughly 50% from December highs, many of those investors are likely underwater right now, and may not be able to pay off their initial Bitcoin purchases soon, if ever.

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Further, as Bloomberg points out, banks may be responsible for monitoring customers’ behavior to prevent money laundering after they make a credit-backed Bitcoin purchase, a tough standard for them to comply with.

The bans — or more to the point, the news of the bans — may exacerbate ongoing declines in cryptocurrency prices. After a hefty bounce Saturday morning, crypto markets broadly retreated on Sunday. Bitcoin is now trading at around $8,500 from a December high near $20,000.

In the longer term, however, tighter cryptocurrency investment controls, whether from regulators or lenders, seem likely to help mitigate the consequences of both hype and scams. For much of 2017, those threatened to overshadow the underlying promise of blockchain technology, which is still in the very early stages of evolution.

Lomography Lomo'Instant Square Review: Great For Square Photo Lovers

One of my favorite cameras ever is the original Polaroid SX-70. This marvel of engineering, chemistry, and industrial design introduced the world to fully integral instant photography—before the SX, instant photography wasn’t quite instant, requiring a peel-apart film that relied on some pretty gnarly chemicals.

The SX-70 was like the iPod of its time. With a sleek metallic and leather exterior, the device popped up, transforming a jacket-pocketable slab into a sophisticated SLR camera. It was an expensive, high-tech imaging solution the likes of which the world had never seen in the early ’70s.

Perhaps most importantly, the SX-70 was the first Polaroid camera with the iconic, instantly-recognizable square photos that define that photo format. Until recently, the only way to get that iconic square instant photo was by shooting imperfect, Dutch-made Polaroid Originals film in a compatible (vintage or modern) camera. But you Huey Lewis-types now have another photographic option: last year, Fujifilm developed a square version of its awesome Instax film. Unfortunately, Fuji then proceeded to hamper it with an expensive hybrid digital/analog camera.

Enter the Lomography Lomo’Instant Square. It’s the first analog camera to shoot square Instax film. Like the SX-70, this camera is compact, and folds up when not in use. So far, so good…

The design and build quality of this camera is impressive. Lomo didn’t always make great-feeling, tightly-assembled cameras but since the Automat series began, it’s clear that these areas have been vastly improved. My review unit was a creamy white hue with color-matched faux leather on it.

Opening the camera takes a bit of force, which means it’s unlikely it’ll spring open in your bag. That’s reassuring to me, since the camera uses rubber for a bellows assembly behind the lens, a potential point of failure if debris falls inside the camera’s body. When closed, it vaguely resembles a pair of electrobinoculars from Star Wars.

The camera also protects its own front lens, opening and closing shutters that cover the glass as it unfolds. I was annoyed by how the camera’s lens mechanism resets its focus every time the camera is closed, so you’ll need to remember to check it each time you take the camera out.

Speaking of focus, the Lomo’Instant Square has a fairly forgiving range of zones to choose from. That said, I recommend you splurge and get the combo version of this camera, since it includes a much-needed portrait attachment. Though the Lomo’Instant Square features a tiny selfie mirror, at arms’ length, you’d be hard-pressed to take a portrait that’s not out of focus. Screw the 0.5m attachment onto the camera and your selfies will look so, so, so much better.

Photo modes are plentiful since this shares its exposure system with Lomo’s other recent instant cameras. Multiple exposures, 1 stop +/- compensation, and even a bulb mode are all standard features. I’d say that’s just enough control to help steer the otherwise-automatic exposure system into giving you the results you want, and certainly enough to let you experiment.

One pain point for me was the viewfinder. Unlike the magical, complicated SLR setup inside the SX-70, the Lomo’Instant Square has an off-center viewfinder that’s far, far away from the long lens. It’s tricky to frame shots up just right, and you’ll need to mentally compensate for parallax to make sure your subject is where you want it.

There are a few things you should know before you take the plunge and pick the Square. First, it’s expensive at more than $200. For the sake of comparison, the newest Polaroid Originals-branded model, the OneStep 2 sells for about half that, and gives you true Polaroid-sized pictures.

If that doesn’t dissuade you, grab the combo option that includes the Splitzer, a must-have portrait lens attachment, and an adapter back that’ll let you use Instax Mini film. That last piece is super cool—Instax Square film isn’t cheap at around $1.30 per shot, so you’ll probably get more use out of your camera if you can also shoot the cheaper, easier-to-find Mini-sized film.

Taken on its own, I’m impressed with what Lomo’s done here. Do I love it as much as my SX-70? No. But the square prints, fabulous design, and reliable Instax chemistry make this a far more approachable experience.

Apple Sets Records With Its Best iPhone Ever

If there’s anything that can be said of Apple, it’s that it knows how to make money—even if things don’t appear to be going well.

Apple this week posted a record quarterly profit of $20 billion, thanks in no small part to iPhone revenue jumping 13%. However, Apple’s iPhone unit sales fell year-over-year due to what some analysts have said was sluggish demand for the iPhone X.

Profit aside, that hasn’t stopped people from finding things to complain about. This week, there were reports about why the iPhone X was a mistake for Apple and others about internal Apple meetings about delaying work on new iOS features to improve its mobile operating system’s security and stability. Even Apple co-founder Steve Wozniak couldn’t resistant taking a jab at the company.

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Here’s a look back at the biggest Apple news from the past week:

This is Fortune’s latest weekly roundup of the biggest Apple news. Here’s last week’s roundup.

  1. Apple on Thursday announced that it had $88.3 billion in revenue during the holiday quarter and a $20 billion profit, or $3.89 per share. Both were records. But Apple also worried Wall Street by issuing revenue guidance for the current quarter of $60 billion and $62 billion—far below an average analyst consensus of $65.4 billion. Many analysts believe Apple’s sales forecast is a reflection of slumping demand for the iPhone; shipments for the device dropped 1% year-over-year during the holiday quarter. The earnings also prompted Bernstein Research analyst Toni Sacconaghi to downgrade Apple from “outperform” to “market perform.”
  2. Apple may have changed its plans for this year’s iOS release. According to a report, Apple software chief Craig Federighi last week shelved plans to add new features to this year’s iOS 12 update and instead focused his team on improving the security and reliability of the mobile operating system. The new updates aside from the security and stability updates will likely come to iOS in 2019.
  3. The U.S. Department of Justice and the Securities and Exchange Commission have launched an investigation into a software update Apple released last year that throttled iPhone performance. The agencies are investigating whether Apple violated securities laws in its initial disclosure about the update, which slows the processing performance of iPhones when their batteries start to malfunction.
  4. Apple quickly responded to the investigations this week, saying that it has “never—and would never” introduce software updates that would artificially degrade the iPhone user experience. Apple said that the update was not designed to “shorten the life of any Apple product” and get customers to upgrade to a new handset. Instead, the feature is intended to protect iPhones and keep them working when the battery starts to malfunction.
  5. Apple co-founder Steve Wozniak said recently that he’s generally pleased with Apple’s iPhone X. But his biggest complaint about it centers on the device’s power button and all the functions that can be handled from it, including toggling the device on and off, taking screen shots, or making mobile payments via Apple Pay.

One more thing…There’s been some iPhone X hate making the rounds online lately. In a commentary this week, I discussed why the iPhone X is not only a great smartphone, but also the best iPhone Apple has ever released. Check it out.

The Sound of a Cyber Bubble Popping

The cryptocurrency market is in a meltdown. Bitcoin prices are down nearly 60% from their December highs, and major banks are cutting off credit card access to crypto exchanges—no surprise in the wake of a mania that saw everyone and their dog sharing hot crypto tips.

Meanwhile, the cyber-security industry is experiencing its own bubble bursting, albeit in much less dramatic fashion. As Reuters reported last month, investors are at last acknowledging the obvious: There are too many VC-bloated start-ups chasing too few clients, while unicorns are morphing into zombies struggling to find an IPO or other exit.

This situation may explain a recent flurry of press releases from cyber firms like Tenable, Cylance and Duo. The releases tout revenue growth and appear intended to assure anyone who will listen that “hey, we’re surviving the cyber shake-out just fine thank you very much.”

It’s hard to say for now which firms will be left standing at the end of 2018 but, for now, it’s clear the peak of the cyber-boom, when VCs would shower money on any company with blinky lights, is over. The investor uncertainty, though, is just one part of the cyber story. There’s also the more important question of whether all these companies have helped harden the country against hacking, and the answer appears to be yes.

Based on recent conversations with ordinary executives, I’ve found cyber-literary has shot up. While hackers are still getting through (they always will), managers and general counsels are finally attuned to the threat and doing something about it.

This change is also trickling down to more humble enterprises. I met a company this week called CyberSight, which offers free and low-cost ransomware protection to the likes of small businesses and county governments, and many of them are actually implementing it. This is a welcome change from a year ago when too many companies blew off cyber defense as an exotic affair they didn’t need.

So let’s celebrate cyber victories where we can find them. Finally, returning to crypto, don’t forget it’s tax time—if you bought or sold, here’s a plain English Q&A to get you through. Have a great weekend.

Jeff John Roberts

@jeffjohnroberts

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

THREATS

Bye-bye little bots: Twitter users are losing tens of thousands of followers in the wake of a searing report about a “follower factory” that let people inflate their social media popularity with the help of bots, many of which were crafted by means of identity theft. A Twitter board member was among those who lost followers in the purge.

Apple and the FBI, it’s complicated: In the wake of a 2016 terrorist attack, media outlets (including Fortune) reported on bad blood between Apple and law enforcement over the iPhone maker’s encryption polices. Today, the two sides still don’t see eye-to-eye but are in many ways more friendly than you think.

Looming specter of Spectre: Sure enough, those scary Spectre and Meltdown viruses may be coming to a chip near you. Researchers have already found 130 malware samples that appear to have been built in order to exploit the worldwide chip vulnerabilities disclosed in January.

Netflix and Phish: When you have 118 million subscribers, many of them addicted to binge-watching, your service will be a popular target for scammers. A fake Netflix subscription email is making the rounds (again), threatening to cancel Netflix customers’ accounts if they don’t supply their credit card number. One guess what happens if you click.

Hey Hawaii, good call on canning that button pusher who kept confusing drills with real life. 

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ACCESS GRANTED

The robbery caper began in a Ruby Tuesday’s restaurant in Times Square, where Meza met his victim, who had earlier disclosed he was an early investor in Ethereum. The cryptocurrency was once worth pennies but last year soared to over $1,000.

— If you’re going to rob someone at gunpoint for their crypto-currency, for heaven’s sake, don’t transfer the funds to a popular exchange in your own name. Fortune obtained exclusive details about a crazy crypto heist in New York.

ONE MORE THING

Obligatory SuperBowl tidbit: Jeopardy host Alex Trebek chided his contestants over their complete and utter ignorance of football, a topic that regularly pops up in the weeks before the gig game. The show then trolled the players with a tweet, saying “Our contestants answered as many clues in this category as the @Browns had wins this season.”

Tencent-led group to invest $1.6 billion in menswear firm Heilan: sources

HONG KONG (Reuters) – Tencent Holdings Ltd is leading a deal to invest 10 billion yuan ($1.59 billion) in Chinese menswear group Heilan Home Co Ltd, upping a retail rivalry with fellow internet giant Alibaba Group Holding Ltd, sources with knowledge of the matter said.

China’s second-largest e-commerce company JD.com Inc and online clothing platform Vipshop Holdings Ltd will also be among the group that plans to acquire less than 10 percent of the company for 5 billion yuan, one source said.

Another 5 billion yuan would help set up an industrial investment fund to focus on deals that fit with Heilan’s business, the person said, requesting anonymity because they were not authorized to speak to the media.

Heilan had a market value of about $8.13 billion as of Monday, when it halted shares from trading, pending deal announcements.

Tencent, JD.com and Vipshop declined to comment. A Heilan spokesman was not immediately available to comment.

The proposed deal, which could be announced as early as Friday, extends a recent push by Tencent, China’s biggest social network and gaming company, into bricks-and-mortar retail to further compete with Alibaba.

Heilan which has clothing brands such as HLA and SANCANAL, has been a long-time partner of Alibaba’s online marketplace Tmall.

But last month Tencent, which has a market capitalization of $563 billion, said it would invest 4.2 billion yuan for a stake in Yonghui Superstores. It is also looking to take a stake in the China business of French supermarket retailer Carrefour.

The recent moves reflect a wider, long-running stand-off between Tencent and Alibaba, which have made competing investments in areas as diverse as bike-sharing apps, food delivery and gaming.

JD.com, in which Tencent is a top-10 investor, traditionally leads against Alibaba in online retail sales of electronics and home appliance products, but lags behind in the fashion business.

Tencent and JD.com last month jointly made an $863 million investment in Vipshop, in a bid to tap the country’s young female shoppers and gain access to consumer and transaction data to help them compete with Alibaba’s online payment platform Alipay.

Jiangsu-based Heilan was set up by Zhou Jianping, one of the richest people in China’s fashion industry, in 1997. It runs more than 5,000 stores, mostly in China, and recorded 12.5 billion yuan in operating income in the first three quarters last year, its website showed.

Reporting by Julie Zhu; Editing by Stephen Coates

The #1 Lesson Cryptocurrency Investors Can Learn from the Dot-com Bubble

Life as we once knew it drastically changed in the mid-90s. The Internet’s popularity was on the rise, and many savvy businesses and companies saw the potential of a hyper-connected, digital world. This lead to the dot-com bubble–a sharp rise, and fall, in stock prices that was fueled by investments in Internet-based companies.

With experts predicting we are now in a cryptocurrency bubble, it seems as if history is at risk of repeating itself.  

While we’ve moved far past the early stages of Internet start-ups and e-commerce companies, digital is continuing to change our everyday lives–from how we work, live, and play to the future of money itself. Interest in cryptocurrency, similar to the frenzy we saw in the early days of the dot-com bubble, is reaching a crescendo–yet many experts are already predicting its demise.

Warren Buffet has gone on the record saying that crypto will come to a bad ending. Jamie Dimon, J.P. Morgan’s CEO, called Bitcoin a fraud before later admitting that he regretted making that statement.

Meanwhile, other big-name investors and companies are going out of their way to invest in crypto–from Richard Branson to Microsoft .

But are the naysayers right? Are we headed toward a catastrophic implosion of dot-com level proportions?

Yes, the crypto market is volatile. There are too many unknowns to be certain, but if we look at the histories of companies like Amazon, eBay, Priceline, and Shutterfly, then maybe we can gain some clarity.

These e-commerce companies were born during the dot-com era, and they weathered the storm and emerged as some of the most successful and stable companies in history. The dot-com crash didn’t destroy the concept of e-commerce or the fact that consumers want to buy airline tickets, antiques, or pet food online–there was simply a gold rush in the early development stages. Once the dust settled, however, the strong survived.  

Don’t call it a comeback

In the end, the dot-com bubble was a movement. Smart investors saw the future of digital-based commerce and, as they invested, the movement snowballed into madness. Many of the companies that popped up during that time were run by people who were in over their heads, or they didn’t have the technology to keep up with the demand. When the crash happened, it thinned the herd.

Mona El Isa, the chief executive and co-founder of Melonport, summed this notion up at a recent TechCrunch conference when she said, “The dot-com bubble was messy, but if we look at some of the largest companies that exist today they are a result of the dot-com bubble and they are part of our everyday lives.”

Which leads us back to what we’re seeing with cryptocurrency today. Even if this bubble bursts, the concept of digital currency will not go away. It may wipe out 90% of today’s existing startup currencies, but the strong will survive. Companies, like Kodak, who try to create a currency without providing real customer value may see efforts go to waste. And this will pave the way for the Amazon of cryptocurrency to make its mark on the world.

To further the power of this movement, it’s important to remember that cryptocurrency isn’t a company. It doesn’t have shareholders. It isn’t VC-backed. Which means this movement extends beyond any other economic bubble we’ve seen–it’s happening in an arena that’s removed from the stock markets. So, when, and if, the bubble bursts, it won’t go quietly into that good night. The parameters may change drastically from what we are seeing today, but digital currency–in one form or another–is the future.

How to invest in a movement

So, if cryptocurrency is the future–how do you invest? From a business standpoint, it’s important to look at crypto through a risk-management lens. Business leaders and board members should be learning everything they can about this new trend so they can determine how, where, and why it might affect or fit into the business. Is there a way to offer customers value through cryptocurrency? Is the time right to execute? Is there a long-term strategy in place that will take advantage of the crypto movement when the stormy waters calm down?

These are the types of questions you need to consider. Do what’s best for your business and what’s best for your customer. As with any digital movement, you need to be aware of the trends and aware of how it could change your business. This is the only way to defend your company from possible disruption.

Final word

For anyone who is considering investing in cryptocurrency, it’s important to remember that this is a long-term movement. Our world is becoming increasingly smaller and more reliant on digital means–currency transformation is inevitable.

It’s the smart investors who understand that this isn’t a fragile economic trend. Digital currency will continue to adapt and change over the next few years–and the companies and entrepreneurs who pay close attention now will have the best chance at deftly navigating the troubled waters.

Amazon.com opens its own rainforest in Seattle

SEATTLE (Reuters) – Amazon.com Inc on Monday opens a rainforest-like office space in Seattle that it hopes will spark new ideas for employees.

While cities across North America are seeking to host Seattle-based Amazon’s second headquarters, the world’s largest online retailer is still expanding its main campus. Company office towers and high-end eateries have taken the place of warehouses and parking lots in Seattle’s South Lake Union district. The Spheres complex, officially open to workers on Tuesday, is the pinnacle of a decade of development here.

The Spheres’ three glass domes house some 40,000 plants of 400 species. Amazon, famous for its demanding work culture, hopes the Spheres’ lush environs will let employees reflect and have chance encounters, spawning new products or plans.

The space is more like a greenhouse than a typical office. Instead of enclosed conference rooms or desks, there are walkways and unconventional meeting spaces with chairs.

Amazon has invested $3.7 billion on buildings and infrastructure in Seattle from 2010 to summer 2017, a figure that has public officials competing for its “HQ2” salivating. Amazon has said it expects to invest more than $5 billion in construction of HQ2 and to create as many as 50,000 jobs.

Earlier this month, the online retailer narrowed 238 applications for its second headquarters to 20. The finalists, from Boston and New York to Austin, Texas, largely fit the bill of being big metropolises that can attract highly educated tech talent.

Amazon started the frenzied HQ2 contest last summer and plans to pick a winner later this year.

Seattle’s mayor, the governor of Washington and Amazon’s top real estate executive were expected to speak during the Spheres’ opening ceremony. The Spheres will become part of Amazon’s guided campus tours, and members of the public can also visit an exhibit at the Spheres by appointment starting Tuesday.

Reporting By Jeffrey Dastin in Seattle, editing by Peter Henderson and Cynthia Osterman

The Universe At The Edge Of The Restaurant

We sit here. Whether it be the early morning coffee, or the late night Grand Marnier, we all sit here and ponder the markets’ universe. Our chairs are comfortable enough, but the swirling mass of data, and projections, that surround us, is anything but that. “It’s all going to Hell in a handbasket” or “Equities are headed to the Moon” and the Sayers of Sooth seems to be staring at parallel universes.

There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another theory which states that this has already happened.

– Douglas Adams

The total size of the assets of the world’s central banks are now 21.7 trillion, and they are growing by approximately $300 billion per month, according to Bloomberg data. Yardeni Research has updated its last report and now pegs the assets of the PBOC at $5.5 trillion, the assets of the ECB at $5.3 trillion, the assets of the BOJ at 4.6 trillion and, in fourth place, the assets of the Fed at $4.4 trillion. This totals $19.8 trillion for the world’s “major” central banks and, make note, this number is not decreasing or Flatlining but “Growing.” The assets of the major central banks were up 5% in December alone, according to Yardeni Research.

Yardeni Research also shows that BOJ’s assets are 92.9% of their nominal GDP while the ECB’s assets are 38.0% of their nominal GDP and the Fed’s assets are 22.4% of our nominal GDP. This should give you a comparative landscape for judgment. What we are actually looking at here, in my view, is money created from nothing but “Pixie Dust.”

The economists call it “Quantitative Easing” but it is actually a parallel universe where money is digitally concocted from nothing and tossed out to be spent. at will, on the markets. You see, it is money for the markets alone, because there are no goods or services or virtually any costs, in this newly created central bank economic universe.

There comes a point. I’m afraid, where you begin to suspect that if there’s any real truth, it’s that the entire multidimensional infinity of the Universe is almost certainly being run by a bunch of maniacs.

– Douglas Adams

Oh no!

The significance of all of this newly created money is beyond compare when considering the debt and equity markets, in my estimation. This $21.7 trillion, in newly minted assets, is larger than any economy on Earth, according to data provided by the IMF. The central banks have created a whole new nation, if you will, out of “Pixie Dust,” without any government, without any voting and without any representation.

You may say that each central bank reports to a specific government, but the money that they have created and provided to all of the world’s economies now reports to no one. It has already been tossed out of the various vaults and is useable just like the old, created by some country, money. We once thought all of this impossible. We have learned otherwise. It is Bitcoin, nationalized.

The impossible often has a kind of integrity to it which the merely improbable lacks.

– Douglas Adams

This 21.7 trillion is actually a “free cash flow.” It is unencumbered by wages, or cost of goods sold, or any other data attributed to arriving at the “free cash flow” of a corporation or a government. It is just money, after all, and the cost to make it was almost NOTHING. There are no capital expenditures.

Investopedia states,

Free cash flow (FCF) is a measure of a company’s financial performance, calculated as operating cash flow minus capital expenditures. FCF represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Let us then turn to data provided by the St. Louis Fed. They stipulate that the Corporate Cash Flow of the United States was $2.231 trillion at the end of the 3rd quarter of 2017. This data may be found here.

This is at a time when the GDP of the U.S. was $19.74 trillion, according to the Bureau of Economic Analysis. This means that America’s “Free Cash Flow” was 11.30% of our total GDP. Consequently, since the central banks’ creation of money is not encumbered by any capital expenditures, at all, no cost of goods or services, zero, this means that the “real value” of the $21.7 trillion is 8.87 times its stated value if compared with the United States in terms of the “actual” effect on both the debt and equity markets.

In other words, the comparison of the central banks’ $21.7 trillion in assets is most accurately compared to the “free cash flows” of a government. This pegs its “actual” significance at a whopping $175.094 trillion, if considered, again, utilizing the “free cash flow” of the United States. Consider that for a moment. Where did this unnamed country come from?

There is no problem so complicated that you can’t find a very simple answer to it if you look at it right.

– Douglas Adams

Given this massive and unprecedented “Free Cash Flow” I state, with a good deal of certainty, that it is the money the money and the money that is driving equity prices higher, keeping yields relatively low and compressing all risk assets in upon their benchmarks. The economists may call it Quantitative Easing, but I say that the central banks used “Pixie Dust” and poured it into the markets and that we have entered a sort of financial Wonderland where every day is “Happily Ever After.”

The markets are flying!

There is an art … or rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss.

– Douglas Adams

S&P 500 Earnings: The Rally Is Being Supported By The Earnings Numbers

This we rearranged the presentation of earnings data a little bit to show the S&P 500 earnings growth and forward estimate growth in a different light. Also shown is the S&P 500 earnings yield relative to the 10-year Treasury or “Fed Model” calculation, showing the S&P 500 is still undervalued relative to the 10-year Treasury yield.

What a start to the year.

Note the accelerating pace of the growth in the forward 4-quarter estimate. I thought going over 10% growth was a big deal in November, December ’17, but in fact the “forward 4-quarter” growth rate has now accelerated to 15%.

Lots of Large-cap Technology companies reporting next week. Large-cap growth has been the “style-box” leader for a while now.

Microsoft (NASDAQ:MSFT) reports Wednesday night after the bell, while Amazon and Apple report Thursday night after the close.

Microsoft is up 9.5% year-to-date already in ’18 after its 40% gain in ’17. I would not be surprised to see the stock consolidate some of its 13 month gains, though Microsoft is a huge beneficiary of tax reform, almost as much as Apple (NASDAQ:AAPL). (Long MSFT, AAPL, AMZN.)

Dollar Falls After Mixed Signals From Trump Administration

Disappointing US GDP and contradictory comments on currency strength at Davos burden dollar

The USD depreciated against majors as soft Q4 GDP numbers on Friday and mixed comments on the desired strength and weakness of the currency made at the World Economic Forum in Davos put downward pressure on the greenback. The Trump administration is pushing its tough stance on trade, but tried to soften the tone in an effort to be more inclusive. Economic fundamentals and monetary policy have been supportive of the currency, but political lack of stability has hurt the buck. Next week the market will focus on the U.S. Federal Reserve and the U.S. non farm payrolls (NFP).

  • US President Trump to deliver his first State of the Union Address
  • Fed anticipated to keep rates on hold at 1.25-1.50 percent
  • US forecasted to have added 184,000 jobs in January

Dollar Confused Ahead of US Jobs Report and Fed Statement

The EUR/USD gained 1.73 percent in the last five days. The single currency is trading at 1.2426 after contradictory statements from the Trump administration confused markets. Secretary of the Treasury Steve Mnuchin said on Wednesday that the weaker dollar was good for the US in relation to trade. The USD retreated and the EUR touched three year highs. Next day President Trump said the he ultimately wants to see a strong dollar as the currency is a reflection of the strength of the economy. The USD recovered some ground versus the EUR, but the damage had already been done and the EUR advanced 0.27 percent on Friday.

The first estimate for US GDP for the fourth quarter was released and it was short of expectations at 2.6 percent. The forecast the market was looking for was 3.0 percent, but given its the advanced estimate there will be two more released that could see the final GDP figure higher in the following months.

The EUR has been rising despite the words from European Central Bank (ECB) President Mario Draghi. The central bank kept its rate and massive quantitative easing program untouched. Draghi made sure to mention that stimulus would remain for as long as needed, but had to concede there were few chances it will change interest rates. The ECB President made a comment warning about using verbal intervention to talk down a currency when asked about the Davos statement from Mnuchin.

US President Trump will deliver its first Sate of the Union address on Tuesday, January 30, at 9:00 pm EST. Failing to avoid a government shutdown Trump will focus on the positives during his first year. His achievements in passing legislation came late in 2017 but he is sure to mention the tax reform bill. The stock market record breaking pace and overall strength of the economy while inherited will also be mentioned with the infrastructure plan something to look for in the immediate future. The USD got a Trump bump in late 2016 when just after winning the elections

The U.S. non farm payrolls (NFP) will be published on Friday, February 2 at 8:30 am EST. Economists are expecting the US to add 184,000 positions in January. Last month’s report came in lower than expected but the saving grace for the USD was that hourly wages grew 0.3 percent as expected. There are similar gains forecasted for January wages with a special emphasis on inflationary data as the Fed ponders what to do with stagnant wages despite a strong job component.

The USD/CAD lost 1.38 percent during the week. The currency pair is trading at 1.2323 with a weaker greenback sliding against a stronger loonie. The Bank of Canada (BoC) lifted its benchmark rate 25 basis points earlier in the month and Friday’s release of Canadian inflation coming in even lower than expected at -0.4 percent and validates the slowing inflationary rise view from the central bank.

The uncertain future of NAFTA had previously sapped the loonie from any positive impact from the interest rate hike, but comments this week about the importance trade by the Trump administration have lessened the anxiety about the trade deal. While the US representatives were sure to mention America first, even Trump conceded that America is not alone. The March deadline is fast approaching and negotiations have little to show for it. Elections in Mexico and the United States will make the trade deal a heavy politicized item in 2018. The biggest surprise at Davos from the White House was the apparent softening of their hard line on the Trans Pacific Pact (TPP). The now 11 nation deal was one of the first casualties of the administration and the remaining members agreed to go ahead without the US this week.

Oil prices have been boosted by the weak US dollar and encouraging signs that the global demand for energy is on the rise. The Organization of the Petroleum Exporting Countries (OPEC) production cut agreement was instrumental in stopping the free fall of crude. US shale producers were predicted to have ramped up their supply by now, but weather and other factors have stood in their way. The main risk for crude is a sudden revival of the US dollar that could trigger a sell-off in commodities with investors looking to book profits at current three level highs.

Market events to watch this week:

Tuesday, January 30
10:00am USD CB Consumer Confidence
10:30am GBP BOE Gov Carney Speaks
7:30pm AUD CPI q/q
9:00pm USD President Trump Speaks
Wednesday, January 31
8:15am USD ADP Non-Farm Employment Change
8:30am CAD GDP m/m
10:30am USD Crude Oil Inventories
2:00pm USD FOMC Statement
2:00pm USD Federal Funds Rate
Thursday, February 1
4:30am GBP Manufacturing PMI
10:00am USD ISM Manufacturing PMI
Friday, February 2
4:30am GBP Construction PMI

*All times EST

Fujitsu in talks to sell mobile phone unit, highlighting fading Japanese presence

(Reuters) – Japan’s Fujitsu Ltd said on Friday it was in talks about selling its mobile phone business to investment fund Polaris Capital Group, becoming the latest Japanese electronics maker to withdraw from the sector.

The sale, if realized, would leave just three Japanese electronics makers – Sony Corp, Sharp Corp and Kyocera Corp – in a global market dominated by Apple Inc, Samsung Electronic Co Ltd and cheaper Chinese rivals.

The potential deal calls for Tokyo-based Polaris Capital to take a majority stake in Fujitsu’s mobile phone unit, which is valued at around 40 billion yen to 50 billion yen ($365 million to $456 million), a source familiar with the situation said.

The size of the stake is still under negotiation, said the person, who asked not to be identified as the discussions were confidential.

An official agreement is expected by the end of the month, the Nikkei newspaper said.

Polaris will aim to list the business in several years, the Yomiuri newspaper reported.

Fujitsu said in a statement that no decision has been made and a representative declined to comment on how large a stake is being negotiated.

Around the year 2000, there were more than 10 major Japanese handset firms producing traditional flip phones, including NEC Corp and Toshiba Corp.

But most have since withdrawn from the business, caught out by the meteoric rise of Apple and Samsung.

Domestic makers failed to gain a global presence by being overly reliant on the lucrative domestic market, which gave them little incentive to change their Japan-specific mobile phone formats and expand overseas.

The rise of low-cost component producers such as Taiwan’s MediaTek Inc also have made it easier for price-competitive Chinese rivals to enter the market.

Fujitsu, whose shares were up 1.0 percent in a flat broader market, has been unloading other non-core businesses as well.

Last year, Lenovo Group agreed to buy a majority stake in Fujitsu’s personal computer unit for up to $269 million in a bid to capture a larger share of a market that is battling weak sales as more people switch to mobile devices.

The Nikkei added that retaining the mobile division’s staff and factories will likely be a condition of the deal. Fujitsu, which wants to focus on its core information technology services business, is also expected to continue operating its Arrows brand under Polaris, the source said.

Fujitsu, which spun off its mobile phone operations into a separate company in 2016, had drawn interest from other investment funds such as Britain’s CVC Capital Partners Ltd and Chinese personal computer maker Lenovo Group Ltd, the Nikkei reported last year.

Reporting by Minami Funakoshi and Junko Fujita in Tokyo, writing by Makiko Yamazaki in Tokyo, with additional reporting by Rushil Dutta in Bengaluru; Editing by Shri Navaratnam and Malcolm Foster

Alibaba, U.S. grocer Kroger had early business development talks: source

SAN FRANCISCO (Reuters) – Chinese e-commerce and technology company Alibaba Group Holding Ltd and U.S. grocer Kroger Co have had early discussions on working together, including a meeting in which U.S. executives traveled to China, a source familiar with the matter said.

The business development talks are at an initial stage, and it is not clear if they will lead to any cooperation, the person said, declining to be named.

The discussions come as U.S. e-commerce company Amazon.com Inc has expanded aggressively into groceries with its acquisition of Whole Foods Market.

The talks between the two firms were reported earlier by the New York Post.

Spokespeople for Kroger in the United States and Alibaba in China did not immediately respond to requests for comment.

This week Amazon opened to the public its Amazon Go checkout-free grocery store, which relies on cameras and sensors to track what shoppers remove from the shelves.

Amazon’s renewed push into groceries with last year’s Whole Foods acquisition put pressure on leading U.S. supermarket Kroger to improve technology including mobile ordering and delivery. Kroger is rolling out curbside pickup as one way to fend off Amazon.

Alibaba has been making an aggressive push into working with U.S. and Canadian companies that could be interested in selling in China as well as rolling out its cloud services and payment products. The talks with Kroger were not CEO-level, said the person, describing Kroger as one of many U.S. companies holding initial discussions with the Chinese company.

In China, Alibaba’s Hema supermarket chain has become a test bed for the e-commerce firm’s move into traditional retail, where mobile phones are used to order, pay and get information about items.

Kroger, which wants to sell more general merchandise like Amazon and Walmart, could direct customers to the Alibaba site, where they could buy general merchandise, the New York Post reported, citing a source.

Reporting By Peter Henderson; Editing by Muralikumar Anantharaman

Software AG fourth-quarter margins hit record; IoT business may double in 2018

FRANKFURT (Reuters) – Software AG reported record margins in the fourth quarter on Thursday and forecast that its new business line serving the industrial internet could as much as double in size in 2018.

Germany’s No.2 business software maker after SAP said its adjusted earnings before interest, tax and amortization (EBITA) rose by 9 percent to 98.4 million euros ($122.4 million), in line with a Reuters poll of analysts.

Reporting by Douglas Busvine; Editing by Maria Sheahan

Google, Tencent, Sequoia China join $15 million funding for pharma startup XtalPi

BEIJING (Reuters) – Alphabet Inc’s Google, Tencent Holdings Ltd and Sequoia Capital China have joined a $15 million B series funding round for Boston- and Shenzhen-based artificial intelligence (AI) pharmaceutical firm XtalPi Inc.

Sequoia led the round, which brings the startup’s total funding amount to $20 million, XtalPi and Google said in statements on Wednesday.

XtalPi uses AI, cloud computing and quantum physics to improve drug design processes.

The deal is the first co-investment by Google and Tencent since the two companies revealed this month that they have signed a patent sharing agreement, paving the way for cooperation between the two firms.

Google has recently ramped up investment in the Chinese market where its search engine remains blocked. Last month it announced it had launched a dedicated AI lab in the country.

Reporting by Cate Cadell; Editing by Himani Sarkar

Netflix crosses $100 billion market cap as subscribers surge

(Reuters) – Netflix Inc (NFLX.O) snagged 2 million more subscribers than Wall Street expected in the final three months of last year, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.

The results drove Netflix to a market capitalization of more than $100 billion for the first time. Shares jumped 9 percent to a new high over $248 in after-hours trading on Monday after rallying throughout the month and rising 53 percent last year.

After signing up more than half of all U.S. broadband households, Netflix is building its customer base in 190 countries by spending billions on programming.

Netflix picked up 6.36 million subscribers in international markets from October through December, when it released new seasons of critically acclaimed shows “Stranger Things” and “The Crown” as well as Will Smith action movie “Bright.” That topped Wall Street expectations of 5.1 million, according to FactSet.

Along with 1.98 million customer additions in the United States, the company ended the year with 117.58 million streaming subscribers around the globe, a sharp uptick even after price increases in October.

“Netflix is pouring more and more money into making content, and it is directly translating into more subscribers,” BTIG analyst Richard Greenfield said. “They see a huge opportunity and they are moving as fast as they can to attack it.”

The company also said it took a $39 million non-cash charge for “unreleased content we’ve decided not to move forward with.” A source familiar with the matter said the charge was related to content starring Kevin Spacey, with whom Netflix cut ties after he was accused of sexual misconduct.

Netflix temporarily halted production of “House of Cards” to write out Spacey’s character and decided not to release the film “Gore,” which starred Spacey as Gore Vidal.

Spacey has apologized to one of his accusers, and according to his representatives is seeking unspecified treatment.

The charge is one of the first signs of costs faced by companies in the wake of a widespread campaign against sexual harassment.

FILE PHOTO: The Netflix logo is pictured on a television in this illustration photograph taken in Encinitas, California, U.S., on January 18, 2017. REUTERS/Mike Blake/File Photo

Netflix turned a DVD-by-mail business into an online competitor of movie channel HBO. As it grew it began licensing its own original shows to ensure a stream of new offerings if studio suppliers ended deals.

In fact, Walt Disney Co (DIS.N) is making a major push into online streaming and will pull its first-run shows and movies from Netflix in 2019 as Hollywood fights for audiences.

Netflix plans to spend up to $8 billion this year on TV shows and movies to fend off Disney, Amazon.com Inc (AMZN.O), studios-owned Hulu and local competitors that are jumping into online video.

In 2017, Netflix recorded its first full-year profit in international markets. The company has said it is aiming for steady improvements in profitability overseas this year.

“We believe our big investments in content are paying off,” Netflix said in a quarterly letter to shareholders.

Netflix is raising its marketing budget faster than revenue is growing and expects negative cash flow in 2018 of $3 billion to $4 billion, up from $2 billion in 2017.

Last October, Netflix raised prices for two of its three main subscription plans to help fund the substantial content investment, helping to drive revenue higher.

For the December quarter, Netflix reported diluted earnings-per-share of 41 cents, even with the expectations of analysts polled by Thomson Reuters I/B/E/S.

Revenue for the three months totaled $3.286 billion, in line with forecasts.

Looking ahead, Netflix forecast streaming customer additions of 6.35 million for the first quarter, above analysts’ expectation of 5.01 million, according to FactSet.

Investors appear confident in Netflix’s ability to grow. Netflix recently traded at 91 times expected earnings for the next 12 months, versus Amazon at 152 times earnings and Disney at 17 times earnings, according to Thomson Reuters data.

Reporting by Lisa Richwine in Los Angeles and Aishwarya Venugopal in Bengaluru; Editing by Peter Henderson and Lisa Shumaker

Space Startup Rocket Lab Has Reached Orbit For the First Time

The six-year-old startup Rocket Lab has successfully put a rocket into orbit, and deployed a payload of three satellites. The launch started from New Zealand at 2:43 Sunday afternoon, or 8:43 p.m. Saturday U.S. Eastern Time. The mission, dubbed “Still Testing,” was the second using the company’s lightweight Electron rocket.

Rocket Lab streamed its launch live, and it can still be viewed on YouTube, complete with informative commentary.

Rocket Lab aims to lower the cost of access to space, in a way parallel to, but distinct from, the mission of Elon Musk’s SpaceX. Where SpaceX seems near mastering the art of landing and reusing large rockets, Rocket Lab wants to produce smaller ones, using lower-cost methods like 3-D printing.

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Those smaller rockets — including the current Electron model — are meant to serve the growing demand for deployment of small satellites known as microsats or cubesats. According to the Wall Street Journal, Rocket Lab is aiming to double its rocket production by this summer to meet that demand.

The payload for the launch, according to SpaceNews, included two cubesats for the data company Spire and one for Planet Labs. Rocket Lab CEO Peter Beck told SpaceNews that the succesful launch meant the company would move forward with commercial missions.

Snap Needed Emotional Intelligence This Week but Didn't Have Any

Snap, parent corporation of social network Snapchat, has faced a number of recent leaks about the business, including a new round of layoffs. But the company’s reaction, a threat to sue or imprison employees who might talk to the press, was the second time in a week the company showed a disturbing lack of emotional intelligence.

Snap has made some bad moves in the past, like the initial fight among the co-founders. Turning down $3 billion for an acquisition by Facebook and the fall stock plunge. But the biggest problem of late has been the attitudes toward employees that management clumsily communicated.

Patience is understandably running thing. Over the last six months, Snap has faced the following:

  • Expenses raced ahead of income, increasing fiscal pressures as user growth has not kept pace with expectations. (When Fortune writes, “Its first trick was making selfies disappear. Its latest is sending gargantuan piles of cash into the ether,” you know the coverage will be ugly.)
  • The company saw two big stock drops immediately after earnings announcements in August and November.
  • The current stock price of about $14 remains far below the $17 IPO figure.
  • Layoffs this week and October after a September restructuring suggest the level of problem and money pressures Snap faces.

Snap has been like a sieve for insider news getting out to the press, which has made the company irate, as reported by Cheddar’s Alex Heath. This resulted in a harsh memo that in part said the following:

As a result, all employees must keep our information strictly confidential until disclosed by Snap. We have a zero-tolerance policy for those who leak Snap Inc. confidential information. This applies to outright leaks and any informal “off the record” conversations with reporters, as well as any confidential information you let slip to people who are not authorized to know that information.

If you leak Snap Inc. information, you will lose your job and we will pursue any and all legal remedies against you. And that’s just the start. You can face personal financial liability even if you yourself did not benefit from the leaked information. The government, our investors, and other third parties can also seek their own remedies against you for what you disclosed. The government can even put you in jail.

Not that anyone should minimize the need for a basic level of confidentiality. Leaking information from a public company, particularly if some people have a chance to trade on the insights before others do, can be a significant legal risk. But there are different ways to communicate, and Snap management opted for as heavy-handed a one as might be imagined. If they wished an effective deterrent, internal training and emphasis would have been far more effective.

Instead, this move is almost guaranteed to scare employees not into knowing compliance with right actions but further into psychological bunkers and out of the company as soon as possible.

What can you expect when a culture of secrecy reportedly makes many employees feel isolated and in danger? This is like entrepreneurs who are so intent on protecting their “brilliant” ideas that they never learn how limited or flawed the concepts are because they won’t listen. If you regularly divide employees, you miss the communication and collaboration necessary for innovation and solving problems.

And speaking of innovation, as the hammer comes down in this way, it also strikes in another. In the memo released at the time of the most recent layoffs, via Cheddar, CEO Evan Spiegel discussed the need to create a “highly scalable business model” and an “organization that scales internally.” He wrote, “This means that we must become exponentially more productive as we add additional resources and team members.”

To many, that translates as “your life should be ours.” There is only so productive people can be. They aren’t machines, and if you continually expect more and more, even with additional tools and resources (but likely not), you burn people out. That may work if you think everyone but yourself is replaceable and you want to use individuals as tools to make money — but, on second thought, no, it probably won’t. Some have pulled it off, but far more often these attitudes have limited success at most.

Then that memo ended as follows:

Lastly, I’d like to make it very clear that our team is not here to win 2nd place. The journey is long, the work is hard, but we have and we will consistently, systematically, out-innovate our competitors with substantially few resources and in far less time. And we will have a blast doing it.

Put differently: You won’t have the resources you need but you will succeed and work faster and harder because you are order to, and you will enjoy the process whether you want to or not.

The communications style of Snap in these two instances betrays a remarkable degree of emotional tone deafness. Even though the people responsible are likely sure they are motivating employees while helping select for the types of people who will do well by them, they transmit subtexts that are off-putting to many who could be of immense help but are unwilling to submerge themselves into the drive to enhance the financial well being of a tiny group.

The people at Snap could have avoided the problem with a few steps:

  • Clarify and be honest with yourself about what you really want to achieve. Have someone from the outside look at materials, interview people, and offer a disinterested observation of the situation.
  • Look at things from an employee’s viewpoint and put yourself in their shoes. Given the general atmosphere, if you heard this as an employee, how might you react?
  • Recognize that how you feel personally and what you want to accomplish may not work well together. Focus on approaches most likely to produce the needed results, not something that makes you feel vindicated.
  • Get expert help. If you pride yourself on an engineering culture, as Snap seems to, don’t assume you’re also a master of psychology and motivation. Chances are that you aren’t.