Financial Review

Facebook Busted

…Facebook breached by Cambridge Analytica; shares slammed. Uber autonomous car kills pedestrian in Tempe. SCOTUS: Dreamers can drive in AZ; Pennsylvania un-gerrymandered. AT&T-Time Warner case. Budget deal Friday deadline.

Financial Review by Sinclair Noe for 03-19-2018

DOW – 335 = 24,610
SPX – 39 = 2712
NAS – 137 = 7344
RUT – 15 = 1570
10 Y – .01 = 2.84%
OIL – .19 = 62.15
GOLD + 3.00 = 1317.60

 

Facebook stock was slammed today as American and British lawmakers demanded that it explain how a political data firm with links to Trump’s 2016 campaign was able to harvest private information from more than 50 million Facebook profiles without the social network’s alerting users. Over the weekend, The New York Times and The Observer of London reported that Cambridge Analytica, a political data firm founded by Steve Bannon and Robert Mercer, a wealthy Republican donor, had used the Facebook data to develop methods that it claimed could identify the personalities of individual American voters and influence their behavior. The firm’s so-called psychographic modeling underpinned its work for the Trump campaign in 2016, though many have questioned the effectiveness of its techniques. But Facebook did not inform users whose data had been harvested. The lack of disclosure could violate laws in Britain and in many American states. The fallout from the reports added to questions Facebook was already confronting over the use of its platform by those seeking to spread Russian propaganda and fake news.

 

The data was obtained in 2014, when Cambridge Analytica, through an outside researcher, paid users small sums to take a personality quiz and download an app; and about 270,000 people used the app, which would scrape some private information from their profiles and from those of their friends – about 50 million users’ data was harvested. The researcher hired by Cambridge Analytica, told Facebook and his app’s users that he was collecting information for academic purposes, not for a political data firm owned by a wealthy conservative. Facebook did nothing to verify how the information was being used. Cambridge Analytica harvested private information from the Facebook profiles of more than 50 million users without their permission, making it one of the largest data leaks in the social network’s history. And Facebook knew about this problem a couple of years ago. They deleted the app. In 2016, they requested that Cambridge Analytica delete the stolen data they had collected – maybe it has been deleted, maybe not. Cambridge denies ever misusing data.  Facebook did not notify users that their data was misused.

 

Over the weekend, Facebook was on the defensive. Top executives took to Twitter to argue that the company’s protections had not been breached, and that Facebook was thus not at fault. Facebook has suspended the account of Cambridge Analytica, which seems trivial as a response. There is now a very good chance that Facebook will face some increased regulation, starting first in Europe, where privacy rights are actually a thing. On Capitol Hill, a bill called the Honest Ads Act would require online political ads—like those Facebook earns millions from—to abide by the same rules as ads run via print and broadcast media, such as disclosing who paid for the ad. It would also require large digital platforms such as Facebook to track and report political spending by campaigns in ways they don’t have to do now. Facebook lost 6.8% today – that works out to a loss of about $40 billion.  Facebook shares are now down just over 10% from a record high on Feb. 1. Investors are not only concerned about losing advertising dollars. They’re also concerned Facebook and other tech companies might come under relatively heavy regulation.

 

There are actually bigger concerns than a bit of regulation. This afternoon British television news revealed video from an undercover sting of Cambridge Analytica executives, caught on camera claiming that the firm could use sex workers, bribes, ex-spies and fake news to help candidates win votes around the world.

 

It might be a first, unfortunately. An autonomous Uber car killed a woman in the street in Tempe, in what appears to be the first reported fatal crash involving a self-driving vehicle and a pedestrian in the US. Uber said it was pausing its self-driving car operations in Phoenix, Pittsburgh, San Francisco and Toronto. Uber has been testing its self-driving cars in numerous states and temporarily suspended its vehicles in Arizona last year after a crash involving one of its vehicles, a Volvo SUV. Last week, there were 10 pedestrian traffic fatalities in the Phoenix metro area – those involved cars with drivers. Arizona had the highest rate of pedestrian fatalities per 100,000 population based on data for the first six months of 2017.

 

The U.S. Supreme Court today ruled that Arizona must continue to issue driver’s licenses to the so-called Dreamers immigrants and refused to hear the state’s challenge to an Obama-era program that protects hundreds of thousands of young adults brought into the country illegally as children. The case centered on the Deferred Action for Childhood Arrivals (DACA) program created in 2012 that Trump has tried to rescind. Those who signed up for DACA are shielded from deportation and given work permits. The justices on Feb. 26 required the Trump administration to keep DACA in place at least for now, turning away its appeal of a judge’s nationwide injunction that halted the president’s September order to begin winding down the program in March. A second federal judge has since issued a similar injunction. Today, the high court refused to hear Arizona’s appeal of a lower court ruling that barred the state from denying driver’s licenses to people protected under DACA. So, attempts to prevent Dreamers from getting driver’s licenses has now failed on every level of the judiciary.

 

The Supreme Court also turned down a request that it take a fresh look at whether the death penalty is constitutional anywhere in the nation. The court also refused to consider a narrower question in the same case: Whether Arizona’s capital sentencing system, which appears to make virtually all murderers eligible for the death penalty, violates the Constitution.

 

Also, the Supreme Court turned down a Republican request to block Pennsylvania’s new congressional map. Last month, the Pennsylvania Supreme Court cast aside the state’s old map and redrew its 18 congressional districts. Under the new district map that will likely be in place for November’s midterm elections, multiple Republican-held seats would become more competitive. In the 2016 election Pennsylvania Democratic Congressional candidates got 75,000 more total votes than Republican Congressional candidates, but the Republicans took 13 of the 18 congressional seats.

 

The AT&T-Time Warner merger case went to trial today. The Justice Department filed a lawsuit in November to stop the U.S. No. 2 wireless carrier, which owns DirecTV and other services with 25 million subscribers, from buying movie and TV show maker Time Warner, which owns HBO and CNN. The government has argued that the deal could allow a more powerful AT&T to raise prices for pay TV rivals and subscribers while hampering the development of online video. They estimate it will hike a subscriber’s monthly cable bill by 45 cents. AT&T denies that prices would rise and plans to argue the deal is necessary for it to compete with media companies like Facebook, Alphabet, Amazon and Netflix. AT&T lawyers have said the Time Warner deal may have been singled out for enforcement. The outcome of the AT&T/Time Warner case could affect other pending “vertical” mergers, in which different parts of a supply chain, rather than rivals in the same business, join together. For example, health insurer Cigna wants to buy pharmacy benefits manager Express Scripts and CVS Health wants to acquire health insurer Aetna.

 

Finance ministers and central bank governors of the world’s 20 biggest economies, also known as the G-20, are meeting in Buenos Aires to discuss the global economic outlook, but since Trump’s decision on March 8 to impose tariffs of 25 percent on steel and 10 percent on aluminum, trade has become the focal point of the meeting. The White House is also considering tariffs on at least $30 billion worth of imports from China. The move would be retaliation for alleged Chinese technology intellectual property theft. As with all G-20 meeting, do not expect any specific action.

 

Lawmakers have until midnight Friday to approve a spending bill or see the government’s funding authority lapse for the third time this year. Republicans and Democrats could push for some political wins in what might be their last spending fight before November’s midterm elections. Congress has already passed five stopgap spending bills during the current fiscal year but they have not managed a longer-term agreement. Lawmakers finally broke through last month, when they approved a bill that would allow them to increase spending on defense and domestic programs by about $300 billion over two years. Funding at home would go to things such as improving infrastructure and fighting the opioid crisis. Combined with massive tax cuts passed by Republicans last year, the budget plan could take deficits over $1 trillion during the next fiscal year.

Previous post

Ten Years On

Next post

3 or 4?

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.