1) The Big Issues Affecting Tech and Global Economy 2018
a) China: defaults could be a real challenge for Xi Jinping and his one-party system that today claims legitimacy from its record of economic prosperity as a result of its decades-old "China First" policies (pdf):
But don't expect any changes in Chinese censorship and other policies that favor Chinese companies over foreign competition, require foreign companies to have local Chinese "partners" and mandate the disclosure of proprietary intellectual property so it can be co-opted by the government and Chinese competitors. China, thus far, has made a mockery (pdf) of WTO rules and fair free trade, and the EU and prior U.S. administrations did almost nothing about it. At least the Trump administration has brought it forward as an issue that must be dealt with.
What I can tell you is that outside the media circus centered in Washington D.C., and its echo chambers in New York and Hollywood, no one is waiting "with bated breath" for Hillary to become President in 2020, or Chuck Schumer to become Senate Majority Leader, and most voters in Alabama voted against (50.1%) or reluctantly for Doug Jones. For the long view, the Brits and Michael Moore have probably got it right--Trump is headed for re-election in 2020.
In the meantime, Trump will continue to be the star, director, and producer of his own ultimate reality TV show "President of the United States of America" via multiple channels including Twitter, while the U.S. government's heavy machinery is ably run by Trump's Team: Pence (VP and all-around pinch hitter), Kelly (White House), Mnuchin (Treasury), Powell (Federal Reserve), Cohn (economic policy), Tillerson (State Department), Mattis (Defense), McMaster (national security), Ross (Commerce), Lighthizer (Trade), etc... I think you get the drift. If not, read and watch this tweet from Thursday (Dec 28):
My recommendation: ignore the noise and misinformation, the tax reform bill and repatriation of billions of dollars now offshore should be a boost for the U.S. economy and tech industry in 2018.I've been saying it for a long, long time. #NoKo pic.twitter.com/LQl7tGhMdO— Donald J. Trump (@realDonaldTrump) December 28, 2017
c) Brexit, EU, and the ECB (European Central Bank): It's all a mess, and most of it will still be a mess a year from now--the fundamental flaws in the euro currency (pdf) and ECB policy (interest rates too low for too long), the dysfunctional EU (and I'll just leave it at that for now), and the messy divorce called Brexit (divorces do tend to be messy, and expensive).
Where the media gets it so wrong: the EU, specifically, Germany, has the most to lose, not the UK. Theresa May's objective should be to cut the best deal she can and get out quick, rather than be dragged down by maintaining ties to EU institutions and rules which the UK cannot control. Trump is ready right now to do a free trade deal with the UK, possibly including Canada and Norway, after Trump kills NAFTA outright, or essentially by renegotiating its terms.
Goldman Sachs denies moving operations from London to Dublin | CBSnews.com Dec 27, 2017: "As part of our Brexit planning we are considering options related to elements of fund administration within the EU," she said, emphasizing that changes to headcount would be small. The Financial Times reported earlier on Wednesday that Goldman would move its European asset management business, with about 20 employees, to Dublin.Whatever the outcome, the hoped for windfall from the City of London financial centre to Frankfurt, Paris, Luxembourg, Dublin, or elsewhere within the EU, will be disappointing, to say the least.
U.S. stocks mount milestone-shattering run in 2017: S&P 500 index gained 19.4 percent while Dow rose 25.1 percent | richmond.com.
- 2017 Reviewed: "... it is important to understand just how dramatically US equity markets have changed this year. Correlations for one key group – Technology – have declined by the same amount as during the bursting of the dot com bubble. Except unlike in 2000, markets have remained in rally mode ... This notable shift augurs well for 2018, as capital markets are finally functioning as they should."--DataTrekResearch.com
- The Quants Run Wall Street Now | WSJ.com: "For decades, investors imagined a time when data-driven traders would dominate financial markets. That day has arrived."
- Howard Marks: "There are old investors, and there are bold investors, but there are no old bold investors."
3) ICYMI Tech News:
- Valuing Amazon.com, Inc. (NASDAQ:AMZN) | SeekingAlpha.com: Amazon does not defy laws of value investing.
- Tech's leaps, limps and likes: The 7 trends that defined 2017 | ZDNet.com
- India: "Young Indians are hooked to Facebook, Instagram, and YouTube. But for older Indians, WhatsApp is the ultimate social network."--WhatsApp has become the de facto social network for older users in India, where the app has more than 200M users--buzzfeed.com. But note "a secret unit of Facebook has helped create troll armies for governments around the world including India for digital propaganda to influence elections."--ZeroHedge.com.
- Apple, Epson face French legal complaints over allegedly shortening life of products--reuters.com and Apple faces lawsuits after saying it slows down aging iPhones--reuters.com.
- Apple, suppliers drop on report of weak iPhone X demand--reuters.com.
- Apple apologizes after outcry over slowed iPhones
Wishing You a Happy New Year and Prosperous 2018!
-- John Poole, Editor, Domain Mondo
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