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Amazon posts record profits as Apple thanks stimulus aid for forecast-beating earnings, despite worst US quarter on record

July 30, 2020 by Leave a Comment

The two tech giants announced their second quarter results on Thursday, both topping expectations on Wall Street as online sales and virtual products see a surge amid the ongoing health crisis.

Amazon revenue jumped to $88.9 billion, up 40 percent from 2019, and the company brought on some 175,000 new employees in recent months. Though it had predicted it would lose money after dropping billions on coronavirus-related measures, Amazon’s net income nonetheless doubled compared to the year prior, from $2.6 billion to $5.2 billion, in what CEO Jeff Bezos deemed “another highly unusual quarter.”

“I couldn’t be more proud of and grateful to our employees around the globe. As expected, we spent over $4 billion on incremental Covid-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand,” Bezos said in a press release.

Despite the big spending, Amazon has come under fire for its handling of the pandemic, with employees repeatedly complaining of major shortages of protective gear and unsafe working conditions, some even saying they were fired after speaking out about the lack of equipment. The e-commerce king also took heat after slashing a meager $2 hazard pay boost for workers, even as Bezos and other company executives see their fortunes swell.

Also on rt.com WORST DROP EVER for US economy as GDP crashes 33% due to Covid pandemic lockdowns

Despite a massive US economic contraction due to lingering business closures driven by the pandemic – declining nearly 33 percent between April and June alone, the worst drop on record, according to the Bureau of Economic Analysis – Apple also reported blowout earnings for the second quarter, noting revenue gains in every category.

The pandemic has been something of a boon for Apple, as consumers are forced to work and learn from home and increasingly look to its devices and apps. CEO Tim Cook also credited emergency relief spending in the US and elsewhere for the company’s performance.

“I think the economic stimulus that was in place – and I’m not just focused on the US, but more broadly – was a help,” he told Reuters, adding that a “strong” launch for the iPhone SE also played a role in recovering sales following a slump in April.

Stocks for both Amazon and Apple rallied during after-hours trading on the heels of Thursday’s optimistic quarterly reports, surging by 4.9 and 6.1 percent respectively.

Also on rt.com US headed for double-dip recession as coronavirus shows no signs of slowing down – veteran economist Stephen Roach

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Article source: https://www.rt.com/business/496705-amazon-apple-us-worst-quarter/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

‘This Is a New Phase’: Europe Shifts Tactics to Limit Tech’s Power

July 30, 2020 by Leave a Comment

The momentum in the United States is set to grow. The Justice Department is expected to announce an antitrust case against Google in the coming weeks. The Federal Trade Commission and state attorneys general are also probing Facebook, Apple and Amazon for potential anti-competitive behavior.

But the actions still lag those of Europe, where officials are coupling their new lawmaking efforts against Big Tech with more traditional tactics such as antitrust investigations. European Union officials are investigating whether Apple’s App Store policies are anti-competitive, and are preparing charges against Amazon for abusing its e-commerce dominance to box out smaller rivals. The European Union is also reviewing Google’s purchase of the wearables maker Fitbit, while Britain opened an inquiry in June into Facebook’s acquisition of Giphy, a GIF company.

Google, Facebook, Apple and Amazon are closely monitoring Europe’s proposals. While the companies have publicly said they want to work with the region’s lawmakers and regulators, their lobbying groups have argued that Europe’s aggressive actions are partially an effort to protect homegrown industries.

“Popular tech services are increasingly being developed outside of the E.U.,” said Christian Borggreen, vice president of the Computer and Communications Industry Association, an industry group in Brussels. “The E.U. should strive to become a leader in tech innovation, not just in tech regulation.”

Amazon, Facebook, Apple and Google declined to comment.

For years, Europe set the standard in tech regulation — only to find that its efforts did not make much of a dent as the tech behemoths continued to grow.

Consider that the European Commission found Google guilty of antitrust violations three times between 2017 and 2019, resulting in fines of roughly 8.25 billion euros, or about $9.7 billion at current conversion rates. But the cases each took several years to complete, giving Google ample time to secure its dominance in online advertising, smartphone software and internet search. The monetary penalties, which are small for a company with more than $160 billion in annual revenues, remain tied up in court appeals.

Other legal efforts, such as Europe’s landmark privacy law called the General Data Protection Regulation, were aimed at many industries and were not just targeted at the tech companies. Since G.D.P.R.’s implementation in 2018, it has been faulted for lack of enforcement.

Article source: https://www.nytimes.com/2020/07/30/technology/europe-new-phase-tech-amazon-apple-facebook-google.html

Filed Under: Media Business

WORST DROP EVER for US economy as GDP crashes 33% due to Covid pandemic lockdowns

July 30, 2020 by Leave a Comment

Data shows that US gross domestic product (the broadest measure of economic activity) shrank by 32.9 percent. That’s by far the worst plunge ever recorded, based on Bureau of Economic Analysis (BEA) data spanning back to 1947.

Before the pandemic, the worst GDP drop on record was in the first quarter of 1958, when GDP fell 10.0 percent on an annualized basis. The economic shock in April, May, and June was roughly four times as sharp as the worst quarterly decline during the Great Recession.

According to the BEA, economic activity contracted by 5.0 percent in the first quarter of 2020, which captured only the start of the coronavirus pandemic and business shutdowns in March.

Also on rt.com ‘This is the beginning of the greatest financial crisis in US history’: Peter Schiff makes dire predictions to Boom Bust

“The decline in second-quarter GDP reflected the response to COVID-19, as ‘stay-at-home’ orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses,” the BEA said.

“This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending.”

The bureau added that “The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.”

The report shows sharp contractions in personal consumption, exports, inventories, investment, and spending by state and local governments. Personal consumption, which historically has accounted for about two-thirds of all activity in the United States, subtracted 25 percent from the Q2 total, with services accounting for nearly all of that drop.

Also on rt.com ‘Blow-up’ event could COLLAPSE US DOLLAR as America’s debt mounts, ex-IMF official warns

The report “just highlights how deep and dark the hole is that the economy cratered into in Q2,” said Mark Zandi, chief economist at Moody’s Analytics, as quoted by CNBC. “It’s a very deep and dark hole and we’re coming out of it, but it’ going to take a long time to get out,” he said.

Also on Thursday, the government reported that another 1.43 million Americans filed for state unemployment last week, an increase of 12,000. Although roughly in line with expectations, it was the second week in a row of increased unemployment filings.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/496657-us-economic-activity-historic-plunge/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Eurozone unemployment rises despite lifting of coronavirus restrictions

July 30, 2020 by Leave a Comment

That’s worse than the 7.7 percent rate which had been expected by EU statistical office Eurostat. According to its data, the unemployment rate across the European Union also grew from 7.0 percent in May to 7.1 percent in June.

“Eurostat estimates that 15.023 million men and women in the EU, of whom 12.685 million in the euro area, were unemployed in June 2020,” the statistical office said. Compared with May 2020, the number of unemployed increased by 281,000 in the EU and by 203,000 in the euro area.

Data also showed that in June, 2.962 million young persons (under 25) were unemployed in the EU, of whom 2.360 million were in the eurozone. The youth unemployment rate was 16.8 percent in the EU and 17.0 percent in the euro area, up from 16.2 percent and 16.5 percent respectively the previous month. Compared with May, youth unemployment increased by 124,000 in the EU and by 80,000 in the eurozone.

Also on rt.com Eurozone faces deep economic crisis after its worst quarter ever

The lowest unemployment among the EU countries in June was recorded in the Czech Republic (2.6 percent), Poland (three percent), Germany (4.2 percent) and Malta (4.2 percent). The highest level of unemployed was recorded in Greece (15.5 percent, as of April) and Spain (15.6 percent).

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/496627-eurozone-unemployment-growth-covid/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Saudi Arabia books $29-BILLION deficit in Q2

July 30, 2020 by Leave a Comment

Reuters reports the Kingdom’s oil revenues for April to June were down 45 percent on the year, with total budget revenues down 49 percent from a year earlier.

Saudi Arabia has taken some austerity steps already in an attempt to rein in public spending and mitigate the impact of the oil crisis on its economy, but it seems more would be needed.

“A pullback in spending is essential for containing the deficit,” Reuters quoted Monica Malik, chief economist at Abu Dhabi Commercial Bank, as saying. “The proactive stance of the government was already reflected in the austerity measures announced in April. However, these will dampen the recovery outlook.”

READ MORE: Saudi reserves plunge as kingdom struggles with Covid-19 pandemic oil-market rout

So far this year the Saudi government has announced a cut in 2020 budget expenditures of $13.2 billion through “a partial reduction in some items with the least social and economic impact,” along with a tripling of value-added tax to 15 percent from five percent and a suspension of the so-called cost-of-living allowances for all Saudi public servants, who are the majority of Saudis in employment.

Also on rt.com Oil price crash sparks a wave of banking mergers in the Middle East

The problem with these austerity measures is that they may slow down the economy’s recovery once the crisis is over. And the fact that the Kingdom also plans to borrow a lot to get through the worst of it is not helping, either, because loans need to be repaid. For now, there is a strong interest in Saudi debt, but if we are indeed past peak oil demand, this may change before long. So far this year, Riyadh has borrowed almost $13 billion on the international and domestic markets.

The IMF expects Saudi Arabia’s economy to contract by 6.8 percent this year. The Kingdom itself has called the figure pessimistic.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/496619-saudi-arabia-books-deficit/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Afraid of Airlines? There’s Always the Private Jet

July 30, 2020 by Leave a Comment

“Flying private is much safer, and consistently so,” said Sridhar Tayur, founder of OrganJet, a company that provides private jet travel for organ-transplant patients. “Social distancing is easier. The pilots wear masks. The passengers — usually a small number — know each other.”

The major drawback for many travelers is, of course, the cost. A one-way charter flight between New York and Miami with the private jet company Silver Air costs between $15,000 and $20,000 for the entire aircraft, depending on the jet (their planes seat between four and 10). Bring nine friends, and that still amounts to a few thousand dollars per person each way — significantly more than the cost of your average first-class ticket, and far more than the price of a basic economy seat. Another company, Jet It, charges $4,200 per hour (though purchasing a membership reduces the per-hour rate to $1,600), not including airport fees. Their HondaJet Elite aircraft seats six.

To reduce the price of the $8,000-to-$10,000-per-hour flight, Jamie Gibson, the founder of the website Flightess and a high-end charter flight attendant, says more groups of first-time fliers are chartering planes with friends and family, and thus reducing the per-person cost. Prepandemic, her regular clients were executives who tended to travel alone. The cost is further reduced by the CARES Act tax break. Private jet customers aren’t required to pay the 7.5 percent Federal Excise Tax between March 28 and Dec. 31, 2020, which is typically charged on all private jet flights and hours. Additionally, companies don’t have to pay any fuel taxes during that period, which is one less cost they would otherwise pass onto consumers.

While commercial air travel is getting pummeled, private jet travel has not been hit nearly as hard, said Mr. Gollan.

In April, passenger count on commercial airlines fell 95 percent year-over-year, while passenger count on private jet charters was down 67 percent, according to Mr. Gollan’s analysis of Argus’s data. By June, private jet operators saw just a 22 percent decrease.

Article source: https://www.nytimes.com/2020/07/30/travel/private-jets-coronavirus.html

Filed Under: Your Money

How Pimco’s Cayman-Based Hedge Fund Can Profit From the Fed’s Rescue

July 30, 2020 by Leave a Comment

A hedge fund like Pimco’s can put money into a U.S.-based vehicle, which then buys asset-backed securities using some combination of cash and short-term loans. The investment vehicle takes the securities to the Fed and gets a TALF loan.

Those TALF funds can be used to pay back whatever the investment vehicle borrowed to buy the asset-backed securities, so that its holdings are funded mostly by the cheap Fed loan, and a sliver of its own money (what is known as a “haircut” in financial parlance). It essentially earns the difference between what it makes in interest from the securities and what it is paying on the Fed loan.

Because investors have just a small amount of money at stake, returns on each invested dollar can be quite high. Investors said they anticipated high single-digit returns in 2020, far lower than the double-digit returns in 2008 but still generous.

The Fed has so far released detailed data only on TALF’s first round of loans, though the program has since finalized another, larger round. In all, it had made $937 million in loans as of last week, mostly against commercial mortgage and small business loan-backed securities. A third round closes on Thursday, and the Fed will most likely release additional data in mid-August.

Pimco’s Cayman Islands-based fund, which has borrowed via a U.S.-based entity called TOCU IX, is one of several foreign investors using an American investment vehicle to gain access to TALF. The pension plan of the Oxford University Press Group will tap the program through a fund set up by the New York-based investment manager MacKay Shields. A Singapore-based fund is a material investor in an offering by the giant financial firm BlackRock, according to the Fed’s first round of detailed disclosures.

The fact that some investors based overseas can make money from TALF does not break Congress’s rules, but it may fall shy of what some lawmakers intended. They specified that loans, advances and asset purchases made under the Fed’s programs should be restricted to “businesses that are created or organized in the United States or under the laws of the United States.” But they said nothing about who could ultimately benefit.

Article source: https://www.nytimes.com/2020/07/30/business/economy/fed-talf-wall-street.html

Filed Under: Economy News

Coin Shortage? It May Be Time to Use Your State Quarters

July 30, 2020 by Leave a Comment

Austin Riddle, a rising high school senior in Alabama, has taken this time to mine the coins for content. He created a TikTok series in 14 parts titled “Ranking State Quarters,” in which he provides commentary on every state quarter to a soundtrack of songs like the Super Smash Bros. theme. The videos amassed a total of 600,000 views in late March.

“I thought quarters were kind of boring so I thought it would be funny to rank them,” he wrote in a direct message on Instagram in April. His justifications are brief and tend to accentuate the positive. No. 38, Utah: “I like the golden spike.” No. 47, Kansas: “It’s just a buffalo, but the sunflower is nice.” No. 2, Ohio: “This astronaut is everything!”

Mr. Riddle joins a comedic tradition of dunking on state quarters. In the early 2000s, Conan O’Brien had a continuing bit in which he compared collecting the coins to being a die-hard Dungeons and Dragons player and spoke of them in an exaggerated nerd drawl. But he also seemed genuinely jazzed to present over-the-top fakes (“Florida: home of the crabs-infested Donald Duck costume”).

Starting around 2005, a coin designer named Daniel Carr created a parody series of state quarters, called “State Carrters,” which he forged in his home mint and sold at craft fairs around the American West. Mr. Carr, 62, said he got the idea after submitting the winning designs for New York’s and Rhode Island’s state quarters. For the Rhode Island quarter, he was proud to receive Numismatics Magazine’s award for best trade coin of 2001, an honor he likened to winning “the Emmy Award of coins.”

Others have felt inspired by the visuals of the coins. In the fall of 2019, Charlotte Clark, 21, started painting intricate details onto state quarters and posting her creations on TikTok while living in her native Britain. She said the quarters inspired her to learn about the U.S. states she had never visited, like Wyoming. She now lives in New York.

Chanel Glenn, a 30-year-old marketing producer in Atlanta, is a lifelong state quarter collector who said she is attracted to the unique, artistic designs. She is constantly on the lookout for interesting coins, she said: “Any time I see a quarter and it looks like one I don’t have, I keep it. Period.”

Article source: https://www.nytimes.com/2020/07/30/style/state-quarters-coin-collectors-shortage-us-mint.html

Filed Under: Your Money

China’s Huawei is now the world’s largest smartphone maker

July 30, 2020 by Leave a Comment

That’s according to a new report by Canalys which showed that the majority of sales came from China while its international business suffers as a result of US sanctions.

The Chinese vendor shipped 55.8 million devices, down five percent year on year. Meanwhile, South Korea’s Samsung (which is second in China sales) shipped 53.7 million smartphones, a 30 percent plunge versus the same period last year.

Overall, smartphone shipments in international markets plunged 27 percent year-on-year in the April to June quarter.

Statistics showed that Huawei sold over 70 percent of its smartphones in mainland China in the second quarter. In Europe (a key region for Huawei) the company’s smartphone market share dropped sharply to 16 percent in the second quarter versus 22 percent in the same period in 2019. According to Counterpoint Research, Huawei is the third-largest smartphone maker in Europe behind Samsung and Apple.

Analysts say that given the massive population of China, success there often spurs companies to a large “global” market share.

Also on rt.com Global smartphone market suffers largest annual decline in history due to coronavirus pandemic

“It will be hard for Huawei to maintain its lead in the long term,” said analyst at Canalys Mo Jia. “Its major channel partners in key regions, such as Europe, are increasingly wary of ranging Huawei devices, taking on fewer models, and bringing in new brands to reduce risk.”

The analyst added that “Strength in China alone will not be enough to sustain Huawei at the top once the global economy starts to recover.” 

The growth in shipments comes as Huawei struggles to do international business amid pressure from the United States. In 2019, the Chinese tech company was placed on the US Entity List, which restricted its access to American technology.

Thus, Huawei could not use licensed Google Android on its latest flagship devices. The company was forced to release its own operating system called HarmonyOS last year.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/496594-huawei-largest-smartphone-company/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Lawmakers, United in Their Ire, Lash Out at Big Tech’s Leaders

July 29, 2020 by Leave a Comment

House lawmakers, who had opened an investigation into the tech companies in June 2019, made the most of it. Representative Jerry Nadler, Democrat of New York, confronted Mr. Zuckerberg with the C.E.O.’s own emails, saying they showed a plot to take out a young competitor. Representative Jim Jordan, Republican of Ohio, said Google was biased and asked Mr. Pichai whether the company would change its products to help elect Joseph R. Biden for president.

In one of the sharpest exchanges, Representative Pramila Jayapal, a Washington Democrat, confronted Mr. Bezos on accusations that an Amazon lawyer had lied to the committee about how the company develops its own products. She asked him to answer whether it misused data with a yes or no.

“I can’t answer that question yes or no,” said Mr. Bezos, appearing rattled.

Yet while the hearing was ripe with theater, any impact will be limited by antitrust laws that were created a century ago and that are imperfect for corralling internet firms. Since the 1980s, enforcement officials have used the notion of consumer welfare as the predominant test for antitrust violations — generally meaning that if prices are not going up, the markets are most likely competitive enough. The tech giants have generally not driven up prices of digital services or consumer goods; many do not charge at all for services like Google Maps or Instagram.

While Democrats at the hearing indicated they were more inclined to change antitrust law, Representative Jim Sensenbrenner, Republican of Wisconsin, said he did not think the laws needed to change. Ultimately, Congress doesn’t have the power to break up the companies.

Still, the proceedings provided fuel to other investigations of the tech companies by the Justice Department, the Federal Trade Commission and state attorneys general. The Justice Department is expected to soon announce charges against Google accusing it of abusing its dominance in online advertising, people with knowledge of the investigation have said. The F.T.C. is preparing to question Mr. Zuckerberg under oath in its investigation of Facebook’s grip over social networking and acquisitions of nascent rivals.

“This is a critical juncture in how the Washington policy clash with the titans of Silicon Valley unfolds,” said Gene Kimmelman, a former Justice Department antitrust official and a special adviser to the consumer advocacy group Public Knowledge.

Regulators around the world are also moving to limit the power of the tech giants. Europe has led the charge with antitrust investigations and Margrethe Vestager, the region’s top trustbuster, recently vowed to take a harder line on the companies. On Wednesday, Turkey passed legislation giving its government sweeping new powers to regulate social media content.

Article source: https://www.nytimes.com/2020/07/29/technology/big-tech-hearing-apple-amazon-facebook-google.html

Filed Under: Media Business
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