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Home / Apple / Wall Street senses change when the bear reveals his Faangs | Nils Pratley | business

Wall Street senses change when the bear reveals his Faangs | Nils Pratley | business



August's trillion dollar headline was delivered by Apple as it became the first company to achieve such a high stock market appreciation. Amazon arrived in September. October was a fallow month for trillion dollar statistics, but here comes the November offer. The big five "Faang" companies – the three other initials from Facebook, Netflix and Google – have collected $ 1

tn in capitalization from their high points this year. The sector has turned at spectacular speed.

It's just a demonstration of the excitement and emissions of investing in technology, it can be said. There is something in that idea, of course, since no one owns these shares for a boring life. Investors focus on fabulous earnings growth, projected many years into the future. It only takes a modest shift in the economic weather of appreciation to be whacked.

However, tech shares do not hold an entirely different investment universe. There are at least two reasons why the current technological routing can signal broader market concerns.

First, investors can see 2019 and decide that the only way is slower for the world economy. One engine – the United States – has been driving in exaggeration this year as President Trump's taxpayer has eaten into the system. That effect will fade and next year's story will be the pace at which the US Federal Reserve raises interest rates. There is a danger that the Fed will do too much, too early. Meanwhile, the second global driver – China – is spitting. A growth of 6.5% looks good from a western perspective, but is the most important since the financial crisis in 2008. There is nothing that will obviously improve next year's views.

It is partly because of the second factor – the trade war between the US and China. "If you want a short-term solution, there is no solution," said Jack Ma, the Alibaba billionaire in September, and predicts 20 years of commercialism. Investors would not believe it, but they must reconsider.

Hopes of a truce on this month's G20 are low and falling after US vice president Mike Pence told an Asia Pacific conference this week that the US "Will not Change China Changes Its Ways". Meanwhile, China has launched a high-profile, price-fixing survey on three major computers, including a US company. That relationship can be disproportionate, but it obviously does not mean peace of intellectual property. On the current form you will bet that the next round of US rate hikes – scheduled in January – will take place.

"All good things eventually come to an end," Goldman Sachs market analysts said Tuesday and turned a bearish tone in their predictions for 2019. "Cash will represent a competitive asset class for shares for the first time in many years," Wall Street banks said. It is eye-catching, as the forecasts at the end of the year should be, but it reflects the sudden downbeat mood. If Apple can no longer switch more iPhones at higher prices, which is the microbare concerned with the technology sector, something may have changed.

Bumpy road ahead for Renault

The reaction of senior Renault leaders to the arrest of Carlos Ghosn was fascinating. "On behalf of you, we would like to give our full support to our chairman and CEO," CEO Thierry Bolloré wrote to the staff before saying that "the governing bodies play their full part in defending Groupe Renault's business interests."

It is not difficult to read between the lines. On the Renault side, they obviously do not trust the process that Ghosn has been accused of under reporting his income on Nissan and commits many "misdeeds". And they clearly suspect that this affair will be a struggle for control of a three-way business alliance that also contains Mitsubishi.

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You can understand Renault management's suspicion. Nissan's CEO Hiroto Saikawa did not expect to hear about Ghosn denied fraud charges. Nor did he attempt to explain whether Nissan, or its auditors, could have been involved in any alleged offense. He just seemed anxious to condemn the "negative" aspects of Ghosn's regime and ignore the obvious issues of salmon governance at Nissan himself.

If Renault's top brass smells a force gripping, you can not blame them. Given the relative utility of the two companies, Renault, owner of 43% Nissan, desperately needs the partnership to hold. FT's revelation on Tuesday that Ghosn had planned a merger between Renault and Nissan before being arrested in Tokyo, and that the Japanese company's board was against will only elaborate tensions.

Good luck to the French government, owner of 15% of Renault. This story seems to be very messy very fast.


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