Five Gold Rings

Fri, 2017/12/29 - 8:54am | Your editor
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Wall Street has got it wrong about Apple's stock drop. It is not because demand for its newest model has been weak that AAPL shares have dropped lately. It is more a matter of the smartphone maker having cheated its customers by throttling their downloads if they had older batteries, inciting them to replace their iPhones.

Now Apple has apologized and admitted that it had let its customers down. It will now sell new batteries for older iPhones at $29 each vs an earlier disuasive price of $79. For some reason information on this scandal is more available on this side of the pond than in the US.

Comments tech newsletter writer Shelly Palmer, “Apple thinks they can buy your love for $29.”

The other hot news in London on the last trading day in 2017 is that the Forties oil and gas pipeline from the Scottish North Sea is now partly back in service. That means the current temporary glut in oil stocks in Europe and the US will not boost prices for much longer. In anticipation of more volatile pricing, China now intends to have a market of its own to trade oil futures, although it is mostly a consumer rather than—like the existing pricing services in Oklahoma and Scotland—a producer. Mexico also wants to allow visible price data for its market to be gathered. It is like its northern neighbor, a producer as well as a consumer.

The oil cartel, under the Seven Sisters decades ago, and under OPEC more recently, controlled markets by controlling supply. A key factor was having the best price data at any minute of the day, while other players had to settle for delayed prices, then often made available by the specialized press. One of the fact sheets was called Platt's Oilgram, my first jounalism employer. It still exists but is on-line with a new owner.

Today's pink paper (Financial Times) notes that the largest passive fund managers in the USA, Blackrock, State Street, and Vanguard, are installing shareholder “stewards” to better deploy their control of proxy voting in major companies. In the US, about a third of shares are now owned by passive exchange-traded funds, which the paper expects will rise to half by 2021 on current trends. In Britain passive funds own a quarter of all shares traded in London.

By voting for management, as they do well over 91% of the time, passive investing funds allow excess reward to the top brass, short-termism in strategy, undersized dividends, and self-perpetuating company management. So the new activist officers can make a differencd. However the reporters conclude that sheer numbers favor the current regime continuing, with no oversight. If a fund employing thousands to track an index puts 20 or 30 people in its “stewardship office” they won't make a different, the FT concludes.

 

More for paid subscribers follows from India, Britain, Canada, Israel, Japan, Spain, Hong Kong, Bermuda, Australia, and New Zealand. Happy New Year.

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