(^34) Best columns: Business
“Business credibility is in the tank,” Joshua Arnold
said. A recent Pew Research survey found “a society-
wide erosion of trust” that business leaders would
“act in the best interests of the public.” So what’s
gone wrong for business? You can trace the moment
that business leaders’ credibility took a nosedive to
“just when their marketing took a lurch to the left.”
Big companies heard that consumers wanted social
responsibility and community service. Instead, they’ve
given us virtue signaling. They have forced “explicit,
obnoxious, and controversial political messages into
areas that are not inherently political.” Look at Net-
flix. Last month, the company “threatened to boycott
the state of Georgia, a new hotbed of film produc-
tion, over a law that would protect unborn babies
with a detectable heartbeat.” Meanwhile, Netflix
has no qualms doing business in China, apparently
unmoved by the regime’s “vast concentration camps,
organ harvesting,” or religious persecution. Netflix
lost 126,000 domestic subscribers last quarter and
“has blamed the loss on everything but its tone-deaf
activism.” It’s not only social conservatives who are
alienated. Most people can smell a phony. If these
companies “want to exercise real social responsibility,
that’s fine, but their virtue signaling is see-through,
hypocritical, and roundly condemned by all sides.”
All the news about China and the Federal Reserve
rate cuts may be clouding the bigger stock market
picture, said John Authers. “The political pos-
sibilities are endless,” and it’s tempting to try to
game out whether the trade war will escalate. But
whatever happens with the political winds, there’s a
“massive overvaluation” in U.S. assets. U.S. compa-
nies are much more highly valued than those in the
rest of the world, relative to their earnings. “Why is
the U.S. doing so well despite the concern about a
flagging economy?” It’s not just low interest rates.
The main reason is that U.S. companies’ earnings
have been rising at a steady clip. On the surface, this
is fine. “But should we really trust those earnings?”
Companies do a lot to smooth out their earnings
reports. Right now, the earnings per share that U.S.
companies report to their investors have raced way
ahead of the real profits calculated by government
economists. That’s a red flag that earnings may be
experiencing “some kind of bubble.” Many compa-
nies are “talking down their prospects.” Investors
should take note. Earnings appear to be overstated
and face a troubled immediate future. The valua-
tion measures don’t tell us about specific timing, but
they do show a stretch of poor stock market perfor-
mance ahead. Ne
ws
co
m
Customers
can smell
hypocrisy
Joshua Arnold
Washington Examiner
U.S. stocks
are still
overvalued
John Authers
Bloomberg.com
Responding to pressure from President
Trump, the Pentagon last week announced
a review of the bidding process for a $10
billion contract that has spawned a war
among tech giants, said Michael Warren in
CNN.com. The $10 billion contract called
the Joint Enterprise Defense Infrastruc-
ture, or JEDI, would give one company
the responsibility to move the Department
of Defense’s computing operations onto
the cloud over the course of the next 10
years. It initially involved four bidders:
Amazon, Microsoft, IBM, and Oracle; the
Pentagon winnowed the field to Amazon
and Microsoft. However, “White House
officials in recent weeks have shown Trump a document that al-
leges a large conspiracy” to award the contract to Amazon that
caught Trump’s attention. The document “is identical to one cre-
ated by Oracle’s top Washington lobbyist” and “provides a visual
representation of a narrative that Oracle has been pushing for
months—that a web of individuals inside and outside the Defense
Department were greasing the wheels.”
“Amazon’s foes have Trump’s ear,” said Naomi Nix in Bloomberg
.com. Amazon had already won a $600 million cloud-services
contract from the CIA in 2013, “showing it can manage sensi-
tive government data.” But Trump’s dislike for Amazon CEO
Jeff Bezos is clearly in play. Trump “has long denounced Bezos
in tweets” and blamed him for everything from paying the
U.S. Postal Service too little to deliver packages to the coverage
he’s gotten in the Bezos-owned Washington Post. Under federal
rules, Trump can’t unilaterally take the contract away from Ama-
zon, but the review could make the Pen-
tagon preopen the bidding process.
Rehashing the bidding on JEDI endan-
gers national security, said Frank Konkel
in Nextgov.com. “JEDI was designed to
be the centerpiece to the Pentagon’s tech-
nological plans to enable more advanced
technology” that lets the military more
easily analyze “troves of surveillance
information collected by sensors, drones,
and other aircraft and satellites.” Now
the Pentagon’s plans hang in limbo, put-
ting the military at a severe disadvantage
“against adversaries who are ‘weapon-
izing their use of data.’” That includes China, which is investing
billions in AI “and does not face bureaucratic or legal challenges
and oversight when making technological decisions.”
“Why does President Trump suddenly care who wins the Penta-
gon’s $10 billion cloud-storage contract?” asked Patrick Tucker
and Frank Konkel in DefenseOne.com. Trump’s disdain for
Bezos is well-known. Oracle, by contrast, enjoys a close relation-
ship with him. Oracle’s co-CEO, Safra Catz, served on Trump’s
transition team. Last year she had a private dinner with the
president—an opportunity she used to bring up concerns about
the JEDI contract. Despite all this, the Pentagon tried to play
it fairly. In July, a court ruled against Oracle and upheld the
Pentagon’s procedures. Defense officials, the court said, “always
placed the interests of the war fighter first and have acted with-
out bias, prejudice, or self-interest.” Unfortunately, “the same
cannot be said of all parties to the debate over JEDI.”
JEDI: A giant Pentagon contract turns into a political test
Oracle co-CEO Catz has built ties with Trump.
rick simeone
(Rick Simeone)
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