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Apple, Lenovo and Microsoft failing on child labor checks says Amnesty – ZDNet

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Apple, Lenovo and Microsoft failing on child labor checks says Amnesty – ZDNet

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cobalt-mining.jpg
Inside a cobalt mine in the Democratic Republic of Congo.


Image: Amnesty International

Major electronics firms - including Apple, HP, Samsung, Microsoft and Lenovo - are failing to check that cobalt mined by child labourers has not been used in their products, says Amnesty International in a report published today.

The report traces the sale of cobalt, used in lithium-ion batteries in phones, laptops and tablets, from mines in central Africa where it says children as young as seven and adults work in dangerous conditions.

"The glamourous shop displays and marketing of state of the art technologies are a stark contrast to the children carrying bags of rocks, and miners in narrow man-made tunnels risking permanent lung damage," said Mark Dummett, business and human rights researcher at Amnesty International upon the publication of the report, This is what we die for: Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt.

"Millions of people enjoy the benefits of new technologies but rarely ask how they are made. It is high time the big brands took some responsibility for the mining of the raw materials that make their lucrative products."

The report, prepared by Amnesty in conjunction with Afrewatch, documents how traders buy cobalt from the former province of Katanga in the Democratic Republic of Congo, where child labour has been shown to be rife. The report charts how this cobalt is then sold to Congo Dongfang Mining (CDM), a wholly-owned subsidiary of Chinese mineral giant Zhejiang Huayou Cobalt Ltd (Huayou Cobalt).

Amnesty International's investigation used investor documents to show how Huayou Cobalt and its subsidiary CDM process the cobalt before selling it to three battery component manufacturers in China and South Korea. In turn, they sell to battery makers who claim to supply technology companies, including Apple, HP, Lenovo, Microsoft, Samsung and Sony.

Amnesty International contacted the 16 multinationals who were listed as direct or indirect customers of the battery manufacturers that are documented as sourcing processed ore from Huayou Cobalt.

While some of the multinationals denied sourcing from Huayou Cobalt and others from the DRC, Amnesty says that none provided enough details to independently verify where the cobalt in their products came from.

"It is a major paradox of the digital era that some of the world's richest, most innovative companies are able to market incredibly sophisticated devices without being required to show where they source raw materials for their components," said Emmanuel Umpula, Afrewatch (Africa Resources Watch) executive director.

"The abuses in mines remain out of sight and out of mind because in today's global marketplace consumers have no idea about the conditions at the mine, factory, and assembly line. We found that traders are buying cobalt without asking questions about how and where it was mined."

Child labor and deadly mines

Amnesty International researchers found that the vast majority of miners work long hours every day without basic protective equipment, such as gloves, work clothes or facemasks to protect them from lung or skin damage.

Children told Amnesty International they worked for up to 12 hours a day in the mines, carrying heavy loads to earn between one and two dollars. In 2014, about 40,000 children worked in mines across southern DRC, many of them mining cobalt, according to UNICEF.

Paul, a 14-year-old orphan, started mining at the age of 12. He told researchers he had been made ill by spending so much time underground.

"I would spend 24 hours down in the tunnels. I arrived in the morning and would leave the following morning ... I had to relieve myself down in the tunnels ... My foster mother planned to send me to school, but my foster father was against it, he exploited me by making me work in the mine."

Today there is no regulation of the global cobalt market, unlike other metals and ores used in electronic and other consumer goods. Cobalt does not fall under existing "conflict minerals" rules in the US, which cover gold, coltan/tantalum, tin and tungsten mined in DRC.

What the tech giants say

Amnesty International says that none of the companies named had been in touch with Huayou Cobalt or traced where the cobalt in their products had come from prior to being contacted.

All of the named companies say they have "zero tolerance policies" on child labor but Amnestry International's Dummett said: "this promise is not worth the paper it is written [on] when the companies are not investigating their suppliers".

Apple does not deny the link between its products and Huayou, saying that it is "evaluating dozens of different materials, including cobalt, in order to identify labor and environmental risks as well as opportunities for Apple to bring about effective, scalable and sustainable change".

"As we gain a better understanding of the challenges associated with cobalt we believe our work in the African Great Lakes region and Indonesia will serve as important guides for creating lasting solutions".

Both Samsung and its supplier Samsung SDI say they do not source cobalt-derived battery parts from CDM or Huayou Cobalt - directly or indirectly. Samsung SDI does say, however, that "it is impossible for us to determine whether the cobalt supplied to Samsung SDI comes from DRC Katanga's mine".

Microsoft said it couldn't guarantee that none of the cobalt used in its products could be sourced back to the former Katanga province of DRC "due to our supply chain complexity".

It said that it did source batteries from a supplier that Amnesty says buys cobalt from CDM and Huayou but that this was a "very limited number of batteries for a product development project". It adds that "to our knowledge", these batteries are "not used in any product currently sold by Microsoft".

HP says it had started an investigation with its suppliers but "as of now we have not found any linkage between our products and the DRC mine". Similarly Sony says it has launched an investigation, which also "so far" has not yielded any "obvious" signs that Sony products contain cobalt originating from Katanga in the DRC".

Lenovo said it had identified two "third-party trademark licensees" that make products sold under the Motorola brand that source batteries from a supplier Amnesty has linked to CDM and Huayou. Lenovo says if an internal investigation verifies Amnesty's concerns then it will order the licensee to stop using the supplier until it can "demonstrate compliance to Lenovo's requirements".

Amnesty International and Afrewatch conclude the report by calling on multinational companies who use lithium-ion batteries in their products to conduct human rights due diligence, investigate whether the cobalt is extracted under hazardous conditions or with child labour, and be more transparent about their suppliers.

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Global fears cast gloom on the Fed’s rate hike plans – CNNMoney

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Global fears cast gloom on the Fed’s rate hike plans – CNNMoney

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Global volatility could force the Federal Reserve to pump the brakes this year.

The Fed raised its key interest rate in December and projected there would be four more rate hikes in 2016.

Not so fast. American stocks are getting nauseous from the global economic slowdown and falling oil prices.

The Dow has fallen 250 or more points five times in the first 10 trading days this year. The S&P 500 is down 8% in two weeks and the Nasdaq has lost 10% in that time. All three indexes are in a correction -- down 10% from their most recent highs.

Many on Wall Street believe there will only be two rate increases this year.

"We doubt that the Fed will be hiking the federal funds rate four times this year," Ed Yardeni, chief investment strategist at Yardeni Research. Yardeni is calling for only one rate hike this year.

The Fed meets next week but no one expects it to raise rates again at that meeting. But it could raise rates at its meeting in March.

Rate increases are the Fed's way of saying that the U.S. economy is looking healthy. When it hikes less or changes its forecast, that's a sign that the Fed is feeling less confident about the economy's health.

The Fed cares about how U.S. markets perform -- at least to the degree that stocks impact the U.S. economy. And its committee members have seen this before: In August stocks were on a roller coaster ride, which partially caused the Fed to not raise rates in September.

Related: Oil prices dive on Iran sanctions fallout

Fed Chair Janet Yellen and her colleagues try to look beyond short-term volatility, but sometimes they can't ignore it. Oil prices have fallen to their lowest point in 12 years at $28 a barrel.

Falling oil prices are keeping inflation -- one of the Fed's key metrics -- below where Yellen wants it to be. The Fed wants inflation to be moving towards 2%, but inflation in November only hit 0.5% -- its highest mark all year.

Oil prices don't need to go up for the Fed to raise rates, Yellen said in December.

"All they need to do is stabilize," she said.

That's not happening so far. What's worse is that when oil prices fall, energy firms cut back on spending. Those spending cuts hurt U.S. economic growth.

Related: World stock markets start week with drop

The U.S. economy probably didn't finish 2015 strong. The Atlanta Fed is projecting the economy grew 0.6% in the fourth quarter. Barclays' economists forecast a meager 0.3% growth between October and December.

If it's anywhere near those guesses, economic growth will be well behind last year's fourth quarter figure of 2.1%.

And that's just the beginning of the list of things that could hold back the Fed. The U.S. dollar could strengthen more as currencies like China's continue to lose value. The broader global slowdown is another major factor possibly making the Fed hit pause on its rate hike plans.

CNNMoney (New York) First published January 19, 2016: 2:27 AM ET

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Market Extra: This chart shows how long it could take Iran to get its oil production up to speed

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Market Extra: This chart shows how long it could take Iran to get its oil production up to speed

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Oil prices sputtered along on Monday, as the beaten-down commodity market began adjusting to the harsh new reality of Iran’s inclusion in the global oil production fold.

As expected, economic and financial sanctions on Iran came to an end on Saturday evening for that country’s work on curbing its nuclear-related infrastructure. It’s a moment that oil traders and investors have been dreading for months and comes as U.S. oil is down 20% year to date, on the heels of a 31% plunge in 2015. Brent oil is down 22% year-to-date and sank 35% last year.

When the Iran news finally reached the market in Asia on Monday, oil prices plunged, driving Brent crude LCOH6, -0.31%  to $27.67 a barrel. That’s the lowest level for Brent since November 2003, according to analysts at Commerzbank. Prices moved off that level to hover around $29 a barrel in European trading hours. U.S. WTI crude CLG6, -0.85%  also traded cautiously, last off around 11 cents to $28.83 a barrel.

While the Iran news was zero surprise for this market, that doesn’t mean it won’t be an excuse for bears to push oil prices even lower, said analysts. The U.S. Energy Information Administration has forecast OPEC crude production to rise by 500,000 barrels a day in 2016, with Iran expected to make up for the bulk of that rise.

Read: Could this surprising factor save oil from Iran-fueled slide?

With the Iran cat now out of the bag, investors will naturally start questioning how quickly the country will get its oil production back to normal. Naturally, more supply for an already overflowing market couldn’t come at a worse time, Eugen Weinberg, head of commodity research at Commerzbank and a team of analysts, said in a note on Monday.

Weinberg said the prospect of additional oil from Iran will put the brakes on a recovery for oil in the foreseeable future. However, it shouldn’t be such a weight on oil given that the market should have already priced in the prospect of a “realistic” 500,000 barrel per day increase in Iranian oil shipments, he said.

Weinberg said it’s unlikely Iran’s production volume will see a significant, sharp increase this year. “After all, Iraq and Libya took roughly twelve months to regain their original production levels following the wars in 2003 and 2011 respectively,” and Libya was only able to restore its production levels for a short time.

Here’s the chart from Commerzbank laying out the process of production normalization for those countries:

Commerzbank

Iraq, Libya may offer clues to Iran’s production ramp-up

Something else that may keep Iran from putting its foot to the floor on production: its inability to invest in its oil infrastructure for several years now. Therefore it will take “more, rather than less time for oil production to normalize,” said Commerzbank’s Weinberg.

In observance of the Martin Luther King Jr. holiday, U.S. stock and bond markets are closed on Monday. Oil futures will trade via Globex through the New York morning, but then all trading will be halted from 1 to 6 p.m. Eastern Time.

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In One Chart: Tesla has a big lead over its rivals, in one chart

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In One Chart: Tesla has a big lead over its rivals, in one chart

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Tesla Motors Inc. sold more electric cars in the U.S. then anyone else in 2015, a feat made a little bit easier because competitor Nissan Motor Co. is working on a complete do-over for its best-selling EV, the Leaf.

Cost-estimating website HowMuch.net did a chart that visually illustrates Tesla’s dominance in the electric-car arena, ranking the Model S’s 24 competitors from the second-place Leaf all the way down to the 25th-place Volvo XC90, which sold only 86 units in 2015:


In 2014, the Leaf, which starts at $29,000, handily beat the Tesla TSLA, -0.58%  Model S, which starts around $70,000. A little over 30,000 Leafs were sold that year, compared with almost 19,000 Model S cars, according to Insideevs.com.

Nissan 7201, -0.59%  has said it is working on a new battery system that could double the Leaf’s driving range. The 2016 Leaf can go up to 107 miles on a single charge, which was an improvement over the 2015 model and made some buyers think twice about buying a Leaf in 2015.

A basic Model S goes 240 miles on a single charge.
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Apple, Microsoft, Samsung And Other Tech Firms Implicated In Child Labor Report – TechCrunch

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Apple, Microsoft, Samsung And Other Tech Firms Implicated In Child Labor Report – TechCrunch

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Apple, Samsung and Microsoft are among a host of tech companies and carmakers implicated in a new report that sheds light on apparent child labor practices in the sourcing of minerals used to create batteries.

An Amnesty International report — created in partnership with Africa-focused NGO Afrewatch — delves into the world of cobalt mining in the Democratic Republic of the Congo (DC), which accounts for half of the world’s cobalt sourcing, finding that children as young as seven are working in dangerous conditions for a mere dollar or two of income each day.

Beyond allegations of children laboring in between or instead of school, the report claimed that working conditions are extremely hazardous. Aside from the issue of working in cramped conditions daily with little to no protection, Amnesty claimed that some 80 miners died in southern DRC during the final four months of 2015. Many more deaths may have gone unreported since, in the event of an accident, bodies can be buried in the rubble, the organization added.

The report focused on Congo Dongfang Mining (CDM) and Huayou Cobalt, DC-based subsidiaries of companies from China and Korea respectively, which “buy cobalt from [traders in] areas where child labour is rife.” The cobalt is then sold to battery component makers, who use it to develop batteries which are sold on to carmakers and tech companies, the report claimed.

cobalt

Movement of cobalt from DRC mines to the global market — via Amnesty International

Amnesty said it traced 16 multinational companies who are listed as customers of Huayou Cobalt.

Samsung SDI, the division of the Korean tech giant that deals with batteries, told TechCrunch that has no dealings with either Huayou Cobalt or CDM. It added that it “conducts written evaluations and on-site inspections in areas such as human rights, labor, ethics, environment, and health and safety on a two-year basis and awards them with certification.” Emails to Apple and Microsoft did not elicit responses at the time of writing.

Amnesty itself said it received a mixture of responses from the 16 companies it contacted:

One company admitted the connection, while four were unable to say for certain whether they were buying cobalt from the DRC or Huayou Cobalt. Six said they were investigating the claims. Five denied sourcing cobalt from via Huayou Cobalt, though they are listed as customers in the company documents of battery manufacturers. Two multinationals denied sourcing cobalt from DRC.

“It is a major paradox of the digital era that some of the world’s richest, most innovative companies are able to market incredibly sophisticated devices without being required to show where they source raw materials for their components,” Afrewatch Executive Director Emmanuel Umpula said in a statement.

“The abuses in mines remain out of sight and out of mind because in today’s global marketplace consumers have no idea about the conditions at the mine, factory, and assembly line. We found that traders are buying cobalt without asking questions about how and where it was mined,” Umpala added.

“Amnesty International and Afrewatch are calling on multinational companies who use lithium-ion batteries in their products to conduct human rights due diligence, investigate whether the cobalt is extracted under hazardous conditions or with child labour, and be more transparent about their suppliers,” the two organizations said in a joint statement.

Update: Apple provided TechCrunch with the full text of its statement to Amnesty International — a portion of which appeared in the Amnesty posting. It is reproduced in its entirety below.

We appreciate the concerns Amnesty International raised. As discussed in our recent conversation, we share your interest in and dedication to improving the lives of workers around the world. Apple believes every worker in our supply chain has a right to safe, ethical working conditions.

Underage labor is never tolerated in our supply chain and we are proud to have led the industry in pioneering new safeguards. We not only have strict standards, rigorous audits and industry-leading preventative measures, but we also actively look for any violations. Any supplier found hiring underage workers must 1) fund the worker’s safe return home, 2) fully finance the worker’s education at a school chosen by the worker and his or her family, 3) continue to pay the worker’s wages, and 4) offer the worker a job when he or she reaches the legal age.

We have been reporting on our supply chain for 10 years because we believe transparency and the feedback that comes with it makes us better. Of more than 1.6 million workers covered in 633 audits in 2014, our auditors uncovered 16 cases of underage labor and all were successfully addressed. We take any concerns seriously and investigate every allegation. We engage with our suppliers all over the world, including directly with smelters and refiners. We’re also working on site to support programs that educate workers on local laws and protect the rights of miners.

Our efforts around conflict minerals are illustrative of our commitment to forging sustainable solutions to complex challenges deep within our supply chain. In the last 5 years, Apple worked with peers and stakeholders to implement and improve an industry wide standard, drove compliance with the Conflict Free Sourcing Program or equivalent third party audit programs, and expanded traceability to the mine site. As of November 2015, over 95% of our reported smelters are compliant or participating in a third party audit verifying their conflict-free sourcing practices. And we will not stop until we reach our goal of 100%.

Apple goes beyond what is legally required to drive further change in the DRC and neighboring countries. We provide significant funding and strategic guidance to several programs that are increasing the number of registered miners operating in, and selling their materials through, conflict-free channels, providing educational and health care support to mining communities, developing best practices for small scale miners to improve their productivity and health & safety, and improving methods for tracking and trading materials from the mine to the smelter.

Though it would be a simpler solution to stop our suppliers from sourcing from countries where challenges exist such as the DRC, doing so goes against our core value of leaving the world better than we found it.

We are currently evaluating dozens of different materials, including cobalt, in order to identify labor and environmental risks as well as opportunities for Apple to bring about effective, scalable and sustainable change. As we gain a better understanding of the challenges associated with cobalt we believe our work in the African Great Lakes region and Indonesia will serve as important guides for creating lasting solutions.

We know from experience that we can’t do this alone, and there are no quick fixes to the complex challenges in a global supply chain. But we are committed to being a force for change by advocating for and supporting positive government action and partnering with companies and other stakeholders such as Amnesty International working to make a difference. We have made significant progress, though we know our work is never done and will not stop until every person in our supply chain is treated with the respect and dignity they deserve.

Featured Image: Amnesty International

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The Margin: Just 62 people own as much wealth as half the world’s population: Oxfam

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The Margin: Just 62 people own as much wealth as half the world’s population: Oxfam

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World Economic Forum


Oxfam’s report on inequality is aimed at swaying the political and financial elites meeting in Davos this week.

The wealth divide between the world’s richest and poorest is turning into a Grand Canyon.

Last year, just 62 individuals held wealth equivalent to the amount owned by 3.6 billion people, about half the world’s population. That’s according to a new report by Oxfam published Monday, ahead of the World Economic Forum in Davos, which aims to show just how deep the gulf of inequality has become.

“Oxfam’s prediction — made ahead of last year’s Davos — that the 1% would soon own more than the rest of us by 2016, actually came true in 2015, a year early,” the nonprofit said in a statement.

Read: The 10 wealthiest couples on the planet

The wealth of those 62 one-percenters has risen by more than half-a-trillion dollars in the last five years, the report said. At the same time, the total owned by the poorest half has fallen by a trillion dollars.

In monetary terms, that club of 62 has seen its riches climb by $542 billion, or 44%, to $1.76 trillion since 2010. That’s as the less-fortunate half has seen its wealth slide by 41%.

“Power and privilege are being used to rig the system to increase the gap between the richest and the rest to levels we have not seen before. Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” said Raymond C. Offenheiser, president of Oxfam America, in a statement.

Oxfam


Some other factoids in the Oxfam report: the daily income of the poorest 10% worldwide has risen by less than a cent every year, and their annual income has risen by less than $3 each year for the past quarter century.

With the report, Oxfam is urging world’s leaders make a big initiative to tackle tax havens. Its release comes as the financial and political elites gather in Switzerland for the World Economic Forum, which begins in earnest on Wednesday in Davos.

“Globally, it is estimated that a total of $7.6 trillion of individual’s wealth sits offshore — a 12th of the total. If tax would be paid on the income that this wealth generates, an extra $190 billion would be available to governments every year,” Oxfam said in the report.

Read: Meet the richest person in each U.S. state

The nonprofit also highlighted that 9 out of 10 of this year’s World Economic Forum corporate partners have a presence in at least one tax haven. It estimates that tax dodging by multinational corporations comes at a cost to developing countries of least $100 billion every year. Corporate investment in tax havens almost quadrupled between 2000 and 2014, according to Oxfam.

It took a final jab at wage inequality in the U.S., noting that salaries of chief executive officers at top companies have risen by half since 2009, but the minimum wage has been stuck at $7.25. That’s even as the cost of groceries has shot up 25%, Oxfam noted.

“Given that a solid majority of voters across all political backgrounds support an increase, it seems an obvious thing to do, but Congress isn’t budging,” said Offenheiser.
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Big banks brace for oil loans to implode – CNNMoney

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Big banks brace for oil loans to implode – CNNMoney

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oil stocks hurting banks

Big banks are cringing as crude oil is crumbling.

Firms on Wall Street helped bankroll America's energy boom, financing very expensive drilling projects that ended up flooding the world with oil.

Now that the oil glut has caused prices to crash below $30 a barrel, turmoil is rippling through the energy industry and souring many of those loans. Dozens of oil companies have gone bankrupt and the ones that haven't are feeling enough financial stress to slash spending and cut tens of thousands of jobs.

Three of America's biggest banks warned last week that oil prices will continue to create headaches on Wall Street -- especially if doomsday scenarios of $20 or even $10 oil play out.

For instance, Wells Fargo (WFC) is sitting on more than $17 billion in loans to the oil and gas sector. The bank is setting aside $1.2 billion in reserves to cover losses because of the "continued deterioration within the energy sector."

JPMorgan Chase(JPM) is setting aside an extra $124 million to cover potential losses in its oil and gas loans. It warned that figure could rise to $750 million if oil prices unexpectedly stay at their current $30 level for the next 18 months.

"The biggest area of stress" is the oil and gas space, Marianne Lake, JPMorgan's chief financial officer, told analysts during a call on Thursday. "As the outlook for oil has weakened, we would expect to see some additional reserve build in 2016."

Citigroup(C) built up loan loss reserves in the energy space by $300 million. The bank said the move reflects its view that "oil prices are likely to remain low for a longer period of time."

If oil stays around $30 a barrel, Citi is bracing for about $600 million of energy credit losses in the first half of 2016. Citi said that figure could double to $1.2 billion if oil dropped to $25 a barrel and stayed there.

Related: $10 oil: Crazy or the real floor beneath the oil crash?

More oil companies will die

The oil crash has already caused 42 North American oil companies to file for bankruptcy since the beginning of 2015, according to a list compiled by Houston law firm Haynes and Boone. It's only likely to get worse. Standard & Poor's estimates that 50% of energy junk bonds are "distressed," meaning they are at risk of default.

"There is a lot of distress in the industry. There will be a lot of pain but they'll get through it," said Buddy Clark, a 33-year veteran of the energy finance space and a partner at Haynes and Boone.

The financial pain has gotten so great that now there's murmurs of a bail out for the U.S. oil industry, though it's clear any assistance would run into political opposition.

Related: Is it time to bail out the U.S. oil industry?

Are banks ready?

All of this raises the question: Is Wall Street doing enough to prepare for the oil storm?

"One year from now, are you going to look back and say, 'Whoops, we didn't get ahead of this enough,'" outspoken banking analyst Mike Mayo asked JPMorgan boss Jamie Dimon during Thursday's conference call.

Dimon said if it were up to him, he'd reserve against the potential for even greater losses. However, he said those decisions are limited by accounting rules.

Still, Dimon said the energy portfolio makes up just a small portion of JPMorgan's balance sheet and many of the loans are backed by physical assets. That means banks can sell off assets to recover money if a company defaults on its loans.

"We're not worried about the big oil companies. These are mostly the smaller ones that you're talking," Dimon said.

Paul Miller, a banking analyst at FBR, said oil loans don't represent nearly the same threat to banks that mortgages did last decade. He also pointed out that banks have been forced to stockpile capital to help them absorb losses.

"The big banks might have 1% to 6% of exposure. That's not going to kill them. This is not like 2006 or 2007," Miller said.

Despite the turmoil, JPMorgan isn't planning to run away from the oil patch.

"To the extent we can responsibly support clients, we're going to. And if we lose a little bit more money because of it, so be it," Dimon said.

CNNMoney (New York) First published January 18, 2016: 4:13 AM ET

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Need to Know: How investors should prepare for that short-term stock breather

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Need to Know: How investors should prepare for that short-term stock breather

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After the worst start in history for U.S. stocks, some would look at the bright green lighting up futures screens this morning and say it’s about time. Not even another cut in the International Monetary Fund’s global growth forecast can spoil the mood this morning.

Gains come after the worst annual growth in 25 years for China has left investors stimulus-hungry, forks pointed at Beijing. That’s not to mention a growing frozen-Fed mentality out there after some recent soft data. The CME Group’s FedWatch tool puts chances of a rate hike in March at 31% (down from 50% a few days ago notes IBankCoin), in April at 35% and 50% for June.

Meanwhile, it’s been hard to move an inch without some forecast about where this market is headed next. From big sell-it-all calls last week to the relaxed bulls over at Goldman Sachs, you might have thought everyone has had their say. But a few calls more have been spilling out, and they’re saying this market is due a bounce.

David Bianco, Deutsche Bank’s chief U.S. equity strategist, told investors Monday that the next 5% move for the S&P 500 will be “up and soon.” (h/t Business Insider) He said he isn’t panicked by the recent slide in stocks because it’s being driven by a “a profit recession centered at certain industries caused by factors that we’ve long flagged as risks.”

Our call of the day is looking for a bounce too, but it comes with a warning: If you’re ready to leap into the next big rally, you’d better be ready for what’s to will follow. Yep, another pullback.

Our chart of the day takes a whack at oil as Brent floors it with some supersize gains. That’s as the IEA warns the oil market could “drown” in oversupply.

Key market gauges

Futures for the Dow industrials YMH6, +1.31% and the S&P 500 ESH6, +1.29% are taking off in a big way after Monday’s Martin Luther King holiday that shuttered U.S. markets, it not Globex. Helping out was a 3.2% Shanghai Composite COMP, -2.74%
surge after that sluggish (for China) growth data. The Nikkei NIK, +0.55%  and other Asia markets rose across the board. After a plunge last week and no surprise on Iran sanctions being lifted, U.S. crude CLH6, +0.92% is back over $31 a barrel and Brent LCOH6, +2.80%   is closing in on $30, up nearly 5%.

Elsewhere, Europe SXXP, +2.04%  has a lock on that rally fever. Gold GCG6, -0.39% is off a little and the dollar DXY, +0.14%  is up against the yen.

The call of the day Jonathan Krinsky, chief market technician for MKM Partners, says brace for a short-term bounce in the S&P 500. That’s after the worst start to the year in history may have winded the bears and sentiment indicators like the American Association of Individual Investors poll shows the fewest bulls since 2002.

He and his team doesn’t think the sellers are finished with this market, and are more interested in “selling a bounce than trying to catch one. In the “best-case” scenario, investors could see that S&P 500 bounce to near 1,900, but don’t expect it to move past 1,950, says Krinsky. On the downside, he says 1,820 and then 1,740 are likely to be tested in the coming months. Here’s his chart:

MKM Partners

“With that said, we understand many clients must remain invested. In that regard, we would fight the urge to bottom-fish beaten-down names, and stick with those exhibiting relative strength,” he says. A similar sell-any-rallies mentality was expressed earlier this month by J.P. Morgan equity strategist Mislav Matejka.

Krinsky offers up 20 names that are above their 200-day moving averages, a chart level that many technical analysts watch closely. They include DreamWorks Animation DWA, -2.30% Popeyes Louisiana Kitchen PLKI, +0.33% Allscripts Healthcare MDRX, -2.53% Dean Foods
DF, -1.09% Luminex LMNX, +0.15%  and Universal Forest Products UFPI, +1.45%

The economy

It’s a light week for U.S. economic data. The only item on tap Tuesday is a home builder’s index due at 10 a.m. There will be no Fed speakers this week ahead of a policy meeting on Jan. 26-27.

Earnings

Health insurer UnitedHealth UNH, -1.35% reported early and shares are up. Morgan Stanley MS, -4.35% is up 4% after the investment bank beat earnings expectations. Bank of America
BAC, -3.54% is still to come.

Delta DAL, -1.85%  is down 1% after the airline’s results.

Netflix NFLX, -2.82%  is after the close.

The stat $1 to $2 a day — That’s roughly the amount children, some as young as seven, are reported to be earning in harsh and dangerous conditions mining cobalt in the Democratic Republic of the Congo, according to a new report from Amnesty International and Afrewatch. They say Apple AAPL, -2.40% Samsung 005930, +4.00% and Sony SNE, -3.86% have failed to do basic checks to ensure that cobalt mined by child laborers hasn’t been used in their products.
The buzz

Netflix’s CEO Reed Hastings says the streaming service may soon get a license to operate in China.

Jan Koum, the CEO of Facebook FB, -3.46% -owned WhatsApp, said the company is dumping the $1 annual fee for subscribers and is now looking at a business-to-consumer strategy for a revenue stream. Koum spoke to Wired Magazine about the move. ”We view this as a logical next step to drive and hopefully accelerate consumer adoption,“ said Credit Suisse analysts in a note.

Twitter TWTR, -5.58%  (the service, not the stock) has been suffering on and off outages across the globe.

Security risk in home routers has been unearthed by The Wall Street Journal.

The World Economic Forum has begun in Davos, Switzerland, and the BBC has done a fun little map showing connections between delegates.

Lots of chatter about the Oxfam wealth inequality report that came out Monday that shows 62 wealthy individuals own as much as the poor half of the world. And they all fit neatly in a bus now:

Oxfam


The chart

Iranian oil is something the market will just have to get used to, even though it could take longer than anyone thinks for production to get up to full speed. Bucking up against that rally for oil this morning is this chart from investment strategist Callum Thomas, which shows how oil prices tend to crater going into February, followed by a nice ride up. But, of course, one could say the rule books on crude are being rewritten these days.

The quote
Getty Images


The problem on Europe’s doorstep

“We have until March, the summer maybe, for a European solution. Then Schengen goes down the drain.” — Unnamed German official tells Reuters that Berlin could shut its borders to immigrants from Syria and other places as that flow of people is expected to swell to huge levels once cold weather has passed. That official and others said that could be the beginning of the end of the European Union.

Random reads
Reuters


Glenn Frey and ‘The Eagles’ in June 30, 2011

Tributes flow as Eagles Founder Glenn Frey dies at 67.

Andy Murray says reports of match-fixing in tennis don’t surprise him.

Jada Pinkett Smith’s plans for an Oscar boycott go down badly with some.

Donald Trump’s bungled “Two Corinthians” Bible reference

Speaking of, the U.K. parliament debated whether to ban Trump from entering the U.K. and called him a wazzock.

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Capitol Report: SEC, industry to dig into Aug. 24 volatility that hit ETFs, big-cap stocks

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Capitol Report: SEC, industry to dig into Aug. 24 volatility that hit ETFs, big-cap stocks

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SEC


On Aug. 24, there were big gaps in the values of the E-mini and SPY exchange-traded fund -- which track the same index, the S&P 500.

The Securities and Exchange Commission’s go-to-group of industry professionals on the stock market will meet to discuss a single day of trading last summer that raised questions over the operation of exchange-traded funds and equities more generally .

The SEC’s Equity Market Structure Advisory Committee, made up of regulators, academics and representatives of fund managers, brokers and stock exchanges, is planning a Feb. 2 meeting to discuss the events of Aug. 24 and “certain issues affecting customers in the current equity market structure.”

On Aug. 24, U.S. stocks and equity-related futures markets experienced extraordinary volume and significant price volatility, particularly at the 9:30 a.m. start of regular trading hours. There were big gaps between the value of underlying indexes and the exchange-traded funds that track them, and many of the largest-cap stocks experienced brief swoons that were 10% or more below their previous close.

It’s not the first time the SEC looked into that day.

On Dec. 29 the SEC’s Division of Trading and Markets issued a research note that explains what happened without drawing conclusions about why the volatility and pricing dislocations occurred or what should be done to prevent such occurrences in the future. The report does discuss the opening process at primary listing exchanges, the triggering of trading pauses and the effects of the market volatility on trading in exchange-traded products, or ETPs.

The day started on a bearish tilt — global asset manager BlackRock, in an October research report, describes global market sentiment in late August “weighing bearishly” on stocks. Even before the markets opened in the U.S. that day, global equity markets were down 3% to 5% and the e-mini S&P 500 future was limit down 5% in pre-market trading. Investors responded to these global macro concerns with aggressive orders to sell, including four times the number of market orders observed on an average trading day, according to New York Stock Exchange data.

Some big names like J.P. Morgan Chase JPM, -0.89% , Ford Motor Co. F, -0.92%  , and General Electric GE, -0.91% experienced temporary price declines of more than 20%.

Many New York Stock Exchange-listed stocks opened for trading later than 9:30 a.m. on the NYSE even though they were traded at other exchanges and off-exchange venues before and after 9:30. Until NYSE-listed constituents of the S&P 500 index were opened on the NYSE, the S&P 500 index still reflected NYSE closing prices from August 21.

The index declined on the opening by 5.2% from the previous Friday close, according to the SEC report. It remained substantially higher than the prices of the SPDR S&P 500 ETF Trust SPY, -0.85% which declined 7.8%. The most actively traded equity-related futures contract, the E-Mini S&P 500, declined to its limit down price of 5% below the previous trading day’s closing price and was paused for trading from 9:25 to 9:30, the SEC report said.

The S&P 500 index is a reference point used by SEC’s rules to determine whether market-wide circuit breakers are triggered. Because it did not decline by 7%, the level required to trigger market-wide circuit breakers, there was no 15-minute trading pause.

In a note to clients, Themis Trading said they have raised this issue consistently over the past few years and even published a paper titled “Phantom Indexes” where they called on the index providers to change their calculation methodology. In October S&P’s Dow Jones Equity Indices team issued a “consultation” to the investment community, asking them to comment on whether it should change its methodology for calculating the index during market disruptions. A decision has not yet been made.

The disconnect between halts on underlying stocks within indices and the need to price the index resulted in the pricing volatility seen in exchange-traded products. In the October report BlackRock told clients that “a combination of factors impacted market makers,” on Aug. 24. “Seeing an absence of quotations or price indications on many ETP portfolio holdings, unable to effectively hedge due to [limit-up, limit-down] halts, and lacking clarity regarding erroneous trades, market makers were temporarily unable to participate in the ‘arbitrage mechanism’ to align prices properly for a number of ETPs.”

The limit-up, limit-down issues on August 24 were centered at the NYSE, according to the SEC’s report. More than half (51%) of NYSE’s 78 halts lasted more than 6 minutes, with one lasting over 18 minutes. There weren’t as many or as long on the Nasdaq NDAQ, +1.27% , and BATS only had three halts but one lasted 28 minutes.

A spokeswoman from the New York Stock Exchange did not respond to a request for comment.

Joe Saluzzi of Themis Trading says he thinks too much emphasis is being placed on this particular quick fix. “There’s a mistaken consensus that tweaking [limit up, limit down] will solve all our problems. That’s a smokescreen to avoid addressing tougher issues like market fragmentation. Another issue that should be addressed is index pricing. The index providers continue to use only primary market data for their calculations when they should be using the consolidated tape.”

Bloomberg reported that some of the world’s largest issuers of ETFs, including BlackRock Inc. BLK, -1.93% , Vanguard Group Inc. and State Street Corp. STT, +0.04% have held talks with stock exchanges on the issues raised by the Aug. 24 volatility.

BlackRock told its customers that market and stop-loss orders that demand “liquidity at any price” added to selling pressure and proved especially risky on the morning of Aug. 24.

A stop order is an order to buy or sell a stock when it passes a certain price. It then becomes a market order, but it may or may not execute at exactly the stop price. If the order is “good till canceled” it remains open until an investor cancels it or a trade is executed. If a trader put in a market sell order on Aug. 24 they may have been shocked to discover later that it sold down 10 or 20%.

The NYSE has become the latest exchange, after BATS and Nasdaq, to announce plans to no longer accept stop orders and good-till-canceled orders, beginning Feb. 26. From its statement: “Many retail investors use stop orders as a potential method of protection but don’t fully understand the risk profile associated with the order type. We expect our elimination of stop orders will help raise awareness around the potential risks during volatile trading.” Some brokers may continue to take stop orders, but those will be executed by internalizers like Citadel not at the major exchanges.
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Stock market heads into the negative after morning rebound – Washington Post

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Stock market heads into the negative after morning rebound – Washington Post

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People walk by the New York Stock Exchange in New York City. Markets have been rocky since the start of the year. (Spencer Platt/Getty Images)

Stock markets started the day in the positive Tuesday, in a sign that investors might be ready to shake off some of the worries over low oil prices and a slowdown in China.

But the optimism didn’t last.

All major U.S. indices rose by about 1 percent at the open, but those gains began to taper off as the day went on. By early afternoon, all three indices were in the negative.  By 3 p.m., the Dow Jones industrial average was down 56 points, or 0.35 percent. The Standard & Poor’s 500 stock index, a broader measure of the largest companies, slid 0.64 percent. And the Nasdaq tech index had lost 1 percent.

The quick reversal could be a sign that many investors are still skittish after watching U.S. stock markets dive last week — closing their worst-ever two-week start for a year.

[As growth slows, China is digging itself an even bigger hole]

Some investors may be looking to buy stocks while they’re cheap, analysts say. But markets might continue to slide until investors get more clarity about how the domestic economy will be able to handle any ripple effects of slower economic growth in China.

“People are trying to time this market, and they don’t want to buy in when stocks are falling,” said David Kelly, chief global strategist for JP Morgan Funds. “I think there’s a lot of nervousness about getting in too early when markets could correct some more.”

China reported Tuesday that its economy expanded by 6.9 percent in 2015, the slowest pace in nearly 25 years. Still, the numbers may not have been as bad as some economists and analysts had feared. The Shanghai Composite index, a benchmark index in China, rose 3.2 percent Tuesday and is down 15 percent for the year.

[IMF downgrades outlook for world economy]

The International Monetary Fund also announced a lower forecast for global economic growth. It now predicts the economy will expand by 3.4 percent this year, down 0.2 percentage points from what it expected in the fall.

For investors in the United States, the uncertainty over global growth raises questions about whether the Federal Reserve acted too soon late last year when it raised short-term rates for the first time in nearly a decade.

When Fed officials meet next week, some investors may be looking for reassurance that the Fed will move cautiously in the wake of the increased volatility, said Phil Orlando, chief equity market strategist for Federated Investors. “Investors have to know that the Fed is not going to blindly hike rates in this environment,” he said.

Investors will also scour corporate balance sheets for hints on whether the domestic economy may be able to stand on its own even as growth slows in China. Both Bank of America and Morgan Stanley reported fourth-quarter profits Tuesday morning, contributing to the initial rally.

Read more:

The do’s and don’ts of a market crash

These are the only people who should be worried about stock volatility right now

Jonnelle Marte is a reporter covering personal finance. She was previously a writer for MarketWatch and the Wall Street Journal.

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The Margin: Wealth inequality is 100 times worse than income inequality

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The Margin: Wealth inequality is 100 times worse than income inequality

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As the world’s elite gather in the Swiss Alps at the World Economic Forum in Davos this week to press the flesh and discuss critical global issues, the increasing divide between the haves and have-nots promises to remain a hot topic.

On Monday, Oxfam published a report on how rising inequality continues to pose a profound challenge for political leaders. Last year, just 62 people held wealth equivalent to the amount owned by 3.6 billion, about half the world’s population, according to the anti-poverty charity.

Max Galka of the Metrocosm blog, using government data, added some visual context in a post entitled, “Income inequality is big, wealth inequality is 100 times bigger.” He said much of the focus tends to be on the growing disparity between incomes, when the real measure is wealth.



Galka then drilled down to focus on just the tip-top of the rich list, showing that the combined net worth of four U.S. billionaires is almost as much as the total wealth of the bottom 40% of U.S. households, which amounts to about 128 million people.



Galka also pointed out that his post isn’t an indictment against the wealthy. “In fact, there are few people I have more respect for than Bill Gates,” he said. “The world would be a very different place if it weren’t for entrepreneurs like him. And on top of it, he is now using his money to help others.”

Curious about where you stand among the global rich? You might be surprised. Enter your numbers here and see how you stack up.
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ES Morning Update January 19th, 2016

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ES Morning Update January 19th, 2016

d426dbcb-eeec-43d9-a4aa-c9018fad2c1fFutures are hitting the falling trendline of resistance again this morning.  Next resistance is the other falling trendline.

Futures are hitting the falling trendline of resistance again this morning.  Next resistance is the other falling trendline.

The 4 hour and 6 hour are still in negative territory with more room to go up.

Last week we rallied up on the 13th strongly to hit the falling trendline and then rolled back over and erased it all the next day (and more).  Will this time be the same?  Tough question of course as we know how SkyNet mixes it up a little from time to time.  Once us sheep finally see a pattern it is quickly changed and doesn't work the next time around.  This leads me to believe that we won't drop to a new low today like we did the last time.  Possibly we make an "inverted head and shoulders" pattern today by pulling back to make the right shoulder?

My thoughts are that while I don't think the low is in yet for this move down we could have a small rally early this week.  Traders are just coming back from the MLK holiday, which should lead to light volume today.  I don't see any clear edge for taking a long or a short today.  Right now the charts are mixed.

The SPX Cash is still buried in the dirt and really should come up for air some today, which leads to the theory that the futures won't drop to another lower low today as well.  The SPX wants to come up while this 60 minute ES Futures chart wants to go down.  Hence the word "mixed" charts today.  Since we have been going down for several weeks now it suggests the bears will again pounce at the open.  For me though, I'd be more excited to short from that 2nd falling trendline... maybe tomorrow or Thursday?  But without a clear edge one way or the other today it's just a gamble to trade... which I'll leave to the day traders.

Airbus to Supply Helicopters to Uber – Nasdaq

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Airbus to Supply Helicopters to Uber – Nasdaq

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MUNICH—Airbus Group SE will provide helicopters to Uber Technologies Inc. for its on-demand services, the European plane maker's chief executive said Sunday.

"Its a pilot project, we'll see where it goes—but it's pretty exciting," Airbus Chief Executive Tom Enders said in an interview with The Wall Street Journal at the Digital Life Design conference here.

The project will launch at the Sundance Film Festival in Utah this week, he said. Airbus didn't provide financial details of the agreement.

The U.S. tech firm first tested its UberChopper service between Manhattan and the Hamptons in 2013. The company also has experimented with the helicopter rides for special events, such as at the Cannes Film Festival in May or the Bonnaroo Music and Arts Festival in June.

Uber has charged between several hundred and several thousands of dollars for those rides.

The company will offer Airbus H125 and H130 helicopters for the Sundance project and has partnered with Air Resources, a Utah-based operator of H125 helicopters, an Airbus spokesman said.

Uber will dispatch a car to pick up clients for the chopper rides, the Airbus spokesman said. Uber couldn't immediately be reached for comment.

The move signals Airbus is expanding its search for helicopter customers as demand from some of its traditional clients has been hurt by low oil prices.

Oil and gas companies traditionally have been a key market for Airbus's most expensive commercial helicopters, but low commodity prices has caused them to cut back on the purchase and use of choppers.

The helicopter-sales business struggled in 2014 and slumped further last year, Mr. Enders said in December.

Airbus's relationship with Uber comes as Europe's largest aerospace company is trying to expand its ties to Silicon Valley in California.

Mr. Enders has moved in that direction to ensure that Airbus remains innovative at a time when technology giants such as entrepreneur Elon Musk, Google-parent Alphabet Inc. and Facebook Inc. embark on aerospace projects ranging from building rockets to beaming Internet from high-altitude aircraft.

Airbus last year established a $150 million fund in Silicon Valley to make technology investments. The unit, Airbus Group Ventures, last week announced its first investment, putting money into collaborative engineering company Local Motors.

In discussing the situation in Iran, Mr. Enders said the country presented a "tremendous opportunity" for many industries. His comments came a day after Iran's transport minister signaled the country would buy 114 Airbus airliners after sanctions that prohibited such deals were removed.

The European Union and Iran said Saturday many of sanctions imposed by the U.S., the EU and the United Nations would be lifted immediately after Iran completed the steps needed to implement July's nuclear deal.

"It's a huge market and I really hope that those who are party to this agreement really don't screw it up," Mr. Enders cautioned.

He said the Iranians are flying "very old aircraft" and current assessments shows the country will need between 400 and 500 aircraft in the coming years. Iran also generates a lot of engineering talent, he noted.

"We are studying our way forward in view of this new environment in full compliance with all international laws," an Airbus spokesman said Sunday.

Mr. Enders also expressed optimism about the future of China's economy, despite recent turbulence with the country's stock market. The aerospace industry, he said, faces high entry barriers due to technology and enormous development costs. "But if you want to bet on somebody—bet on the Chinese," he added.

Robert Wall in London contributed to this article.

Write to Rebecca Blumenstein at rebecca.blumenstein@wsj.com and Natalia Drozdiak at natalia.drozdiak@wsj.com

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Semiconductors: 2015 in Review; Where to Bet Your Chips in 2016

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Semiconductors: 2015 in Review; Where to Bet Your Chips in 2016

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Editor's Pick: Originally Published Tuesday, Dec. 22.

It would seem "eat or be eaten" was the strategy of the year for semiconductor companies in 2015. Led by Apple (AAPL - Get Report) supplier Avago Technologies (AVGO - Get Report) , which paid $37 billion for chip giant Broadcom (BRCM - Get Report) -- creating a combined entity that was the world's third-largest wireless technology company by revenue -- companies with big bankrolls and and small growth prospects went shopping for growth engines that would have otherwise taken years to build.

It was likely Avago's deal-making that accelerated talks between rivals Intel (INTC - Get Report) (down 3.87% thus far in 2015) and Altera (ALTR) , and ultimately convinced them -- after weeks of rumors -- that their $16.7 billion merger was in their best interest. Will there be more deals in 2016? You can bet on it. Before we dive into some possibilities, let's take a look at where things stand today, and which stocks look like solid buys for long-term gains.

Although the Philadelphia Semiconductor Index  (SOX) (down 3.87% in 2015) may end year off its 2015 lows, it's still down some 9% over the past six months, against year-to-date declines of 1.83% for the S&P 500 (SPX) index. And the SOX has been a huge disappointment when compared its 2014 gains of almost 30%. Take a look at the chart. SOXX Year to Date Total Returns (Daily) Chart
SOXX Year to Date Total Returns (Daily) data by YCharts

The struggles of the SOX mirror the declines of some prominent names like Intel and Advanced Micro Devices (AMD) (down 8.24% in 2015). But few beaten-down chip stocks offer the appeal of Qualcomm (QCOM) . With its shares off about 36% in 2015, QCOM stock should be bought now as a possible bounce-back candidate.

Must Read: 2 Hot Stocks in Taiwan's Booming Tech Sector That Deliver Both Value and Growth

It's true, owing to struggles in its wireless chip business and being left out of Samsung's (SSNLF) Galaxy S6 phones, the San Diego-based semiconductor giant hasn't had a good year. But it does pay a strong 48-cent quarterly dividend that yields about 4% annually based on its current trading price in the neighborhood of $48.50. Qualcomm's yield is twice the 2% yield paid out by the average stock in the S&P 500 index. And based on fiscal 2016 consensus estimates of $4.18 a share, QCOM stock is trading at less than 12 times forward earnings, compared to the forward P/E of 17 the S&P 500. This makes QCOM, which has a consensus buy rating and an average analyst 12-month target of $60 -- around 24% above current levels -- a great buying opportunity today.

Another chip name to love in 2016 is Skyworks Solutions (SWKS) , which makes high performance analog chips that connect people, places and things. While its stock -- at around $78 a share -- has done well in 2015, up some 5%, the shares have fallen more than 30% since reaching their 52-week high of $112.88 in June. And I would put Skyworks at the top of the list at potential takeout targets in 2016.

Why? Aside from being a well-positioned player in the realm of the Internet of Things, Skyworks -- like Avago -- is key parts supplier to Apple -- its products are prominent within iPhones and iPads. So what's good for Apple is likely good for Skyworks, and with sales estimates for the iPhone 6 and 6 Plus for the quarter  ending in January at 75 million devices, it would seem Skyworks' stock has tons of runway left. And that doesn't even include its growth prospects in IoT.

From my vantage point, Skyworks would make a great target for Qualcomm, which has tons of cash (roughly $17 billion on its balance sheet) and slowing growth. Qualcomm should consider a deal for Skyworks to expand its product portfolio and better diversifying its wireless businesses.

Finally, there's Atmel (ATML) , which is an industry leader in touch controllers and sensors. Headquartered in San Jose, Calif., Atmel wants to revolutionize touch in non-traditional products, including automotive applications. Some of its key platforms include its latest maXTouch solution and its new XSense technology -- both used in various types of touch screens. And these products are seeing better-than-expected demand.

What's more, in 2015 Atmel initiated a 4-cent per share dividend -- the company's first cash dividend in its 30-year history. With ATML stock down 20% from the 52-week high it hit six months ago, now is a good time to place a long-term bet. Assuming Atmel can grow fiscal 2016 earnings at a 15% annual rate, these shares -- trading around $8.70 today -- can reach $10 to $11 in 2016.

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Twitter and 7 Other Large-Cap Tech Stocks That Will Kill Your Portfolio in 2016

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Twitter and 7 Other Large-Cap Tech Stocks That Will Kill Your Portfolio in 2016

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Editor's Pick: Originally Published Tuesday, Dec. 22.

The year is quickly coming to a close, which means it's time to clear your investment portfolio of underperforming stocks.

That means selling these eight technology stocks now. Sounds counterintuitive given that that the tech sector has widely outperformed the S&P 500 this year, up 9.5% vs. 0.15%, respectively, but the large-cap stocks below are all rated "sell" by TheStreet Ratings, TheStreet's proprietary ratings tool. So if you're holding onto these stocks, get out of them now.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Here's the list of tech stocks to sell. When you're done check out the tech stocks to buy for 2016.

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Saudi stocks lead regional market crash – Press TV

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Saudi stocks lead regional market crash – Press TV

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Saudi Arabia leads a collapse of stock markets across the Middle East a day after Iran emerges from decades of sanctions, allowing the country to ramp up oil production.

Saudi index on Saturday slumped to its lowest level in five years as it sank 7 percent after Brent oil fell below $29 a barrel.

The kingdom is adopting a raft of austerity measures to adjust state finances amid fears of a recession in a country which is long used to surplus oil revenues.

Saudi Arabia’s current budget is reportedly based on an average oil price of about $40. Analysts say if oil stays at current levels, the country’s rulers will have to slash spending further which could lead to a recession.

Ironically, Riyadh is behind the price collapse after raising output to record levels in a bid to put the shale oil out of the market or possibly pressure Iran and Russia with their balance sheets.

On Saturday, while all seven stock markets in Persian Gulf states tumbled, the Iranian stock index gained one percent, making it one of the best performing markets in the world with gains of six percent since the start of the year.

The dramatic moves came after the US, the UN and Europe removed sanctions on Iran, allowing the country to move ahead with its bid to redeem its share of the oil market with stepped-up production.

In a televised address on Saturday, President Hassan Rouhani said Iran plans to attract at least $30 billion in foreign direct investment over the next five years.

Saudi stocks slump to their lowest levels in five years.

Saudi stocks slump to their lowest levels in five years.

Iran's Minister of Petroleum Bijan Zangeneh (L) ushers former German Chancellor Gerhard Schroeder to a meeting in Tehran, Jan. 12, 2016. ©Shana

Deputy Petroleum Minister Amir-Hossein Zamaninia said the country is ready to increase its crude oil exports by 500,000 barrels a day (bpd).

"With consideration to global market conditions and the surplus that exists, Iran is ready to raise its crude oil exports by 500,000 barrels a day," he said.

In the Persian Gulf states, panic gripped traders in response to a fresh tumble of oil and global equity prices.

Qatar’s index fell 6.7%, while Abu Dhabi’s stocks tumbled 4.5% to the lowest level since November 2013. Kuwaiti stocks lost 3.2%, plunging to the lowest level since May 2004, and Bahraini equities edged 0.5% down.

Across the wider Middle East, Egypt's index slumped 5.2%.

With prices at a 12-year low, oil dependent economies of Saudi Arabia, Kuwait, Oman, Qatar and the United Arab Emirates could see more spending cuts in 2016.

The stock markets in Dubai and Saudi Arabia have lost 42% and 38% respectively, ever since Saudi Arabia decided to ramp up oil production in November 2014.

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Can Alphabet Take on Facebook With This Messaging App? — Tech Roundup

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Can Alphabet Take on Facebook With This Messaging App? — Tech Roundup

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Alphabet (GOOGL - Get Report) is reportedly working on a mobile-messaging service, which could be aimed at market taking share from messaging-dominating companies such as  Facebook's (FB - Get Report) WhatsApp and Messenger service, as well as others Snapchat and Tencent's  (TCEHY) WeChat.

The former Google has entered new arenas before, only to be met with more resistance than it probably hoped for. The company's foray into social media, with its Google+ platform, was no match for the likes of Facebook, Twitter (TWTR - Get Report) and even LinkedIn (LNKD - Get Report) .

However, Alphabet is looking to create more than just a messaging service for its users -- this time it is looking to tap into its artificial intelligence technology. The company plans to use chatbots, which can provide answers for users who type questions into the messaging service. Of course, users will still be able to message friends, too, not just the chatbots.

The company has been working on the service for more than a year, but a launch date and even a name are still unknown.

Shares of Alphabet closed flat Wednesday at $768.51.

Yeah, yeah, yeah! Beatles fans around the world are singing that now because the Fab Four are available for streaming. Although true fans have found many different ways to listen to the band over the years, music lovers in general should be happy about the news.

The Beatles will be available on most major streaming platforms such as Apple's (AAPL - Get Report) Apple Music, Alphabet's Google Play, Spotify and Amazon (AMZN) Prime, among others. Service will begin on Christmas Eve.

Perhaps most notably not on the list is Pandora (P) , but this can be explained. The music streaming service does not do direct deals with artists for on-demand listening. However, but the Beatles' music can be found streaming on its radio service.

Most investors have heard about Amazon CEO Jeff Bezo's futuristic plans to have packages and items delivered to customers via drones. And while the idea sound pretty cool, most of us are aware that for now, Amazon will need to stick to traditional shipping methods.

However, thanks to increased volume and higher costs, Amazon is starting to look into alternative methods -- which could put a direct squeeze on UPS (UPS) , which relies on Amazon as its biggest customer. Aside from using its own delivery drivers, Amazon is looking into leasing cargo jets.

Shipping costs continue to rise for Amazon, ballooning to 11.7% of revenue in the most recent quarter, up from 10.4% just one year ago. Although UPS and Amazon have worked together for years, Amazon has shown that it's willing to do whatever it takes to win.

Bezos & Company has never sought to be mediocre. Instead, the company has continued its rapid expansion, growing from an e-commerce site to now offering video and audio entertainment via Amazon Prime, as well a cloud storage solutions company with its Amazon Web Services business, among other ventures.

So investors shouldn't be too surprised the company is looking at building out its own logistics and delivery network -- with or without drones.

For his part, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said the news makes him somewhat concerned about shares of UPS, adding, "a spat with Amazon is not what you want right here."

Shares of Amazon ended Wednesday's session at $663.54, virtually flat.

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Economic Preview: Home buyers may get helping hand from stock meltdown

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Economic Preview: Home buyers may get helping hand from stock meltdown

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Bloomberg


Sales of new and previously owned homes continue a steady march higher.

The Federal Reserve recently raised interest rates, U.S. stocks are tumbling and new worries about the Chinese economy seem to emerge daily. So go ahead and buy that house you’ve been looking at.

Well, not necessarily. But consider: all the worries about China that have battered the U.S. stock market in early 2016 have done the opposite for bonds. More money pouring into Treasurys has driven mortgage rates to a two-month low. A 30-year mortgage slipped to 3.92% in mid-January.

The housing market had already been steadily gaining ground even before the latest drop in rates. Indeed, it’s been one of the strongest parts of the economy over the past year. Sales of new and previously owned homes are likely to finish 2015 at the highest level since before the Great Recession.

What’s more, the number of permits to build additional homes is on track to reach an eight-year high.

The final housing numbers for 2015 will start to trickle in this week.

Work on new construction, known as housing starts, is forecast to rise to a 1.19 million annual rate in December from 1.17 million in the prior month. Starts will top the 1 million mark for the second straight year.

Six years ago, builders were producing fewer than 600,000 new homes a year.

Sales of existing homes, meanwhile, are expected to hit a 5.15 million annual rate in December and finish the year about 25% higher compared to the post-recession low.

Most economists predict new construction and sales will increase again in 2016, aided by a much improved labor market. Barring, of course, China bringing the rest of the world to a crashing halt.

“The U.S. economy added more than 200,000 jobs per month on average in 2015, and wage growth is picking up,” noted Stuart Hoffman, chief economist of PNC Financial Services.

In the past three years, the U.S. has produced 8.2 million new jobs to give more people entering their prime earning years the ability to buy a home.

The big wild cards are mortgage rates and home prices, both of which could deter buyers.

The Fed raised a key short-term rate in December for the first time in nearly a decade, and the central bank is widely expected to push rates even higher in 2016. Yet so far that hasn’t translated into upward pressure on long-term Treasurys or home mortgages. Right now investors are more worried about whether a slowing Chinese economy will hurt the rest of the world.

The higher cost of buying a home could act as another repellent. Prices rose in 2015 to levels last seen shortly before the onset of the Great Recession in late 2007.

An expected increase in home construction could make it easier for buyers, though. Permits for new construction in November, for instance, were almost 20% higher compared to the same month in 2014. A greater supply of homes for sale would help hold the line on prices.

While home builders remain optimistic, the same can’t be said for American manufacturers. Sales and profits have softened over the past year because of a strong dollar, weak global economy and a slump among energy firms that are among the biggest buyers of manufactured goods.

A monthly Philadelphia Federal Reserve report on the state of manufacturing is likely to show an industry still under siege in January.

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Heart Transplant for United Airlines President Oscar Munoz – Lighthouse News Daily

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Heart Transplant for United Airlines President Oscar Munoz – Lighthouse News Daily

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United Airlines PresidentThe newly appointed United Airlines president and chief executive officer Oscar Munoz has had to undergo a heart transplant, and has so far impressed doctors with his unusually speedy recovery.

Oscar Munoz started his prestigious career working for Pepsico, and afterwards served as regional vice-president in Coca Cola’s Finance & Administration department.

He continued his upward trajectory as senior vice-president for US WEST, proceeding as chief financial officer at AT&T’s Consumer Services branch.

From May 2003, he began working for transportation giant CSX, occupying increasingly more high-ranking positions such as executive vice president, chief financial officer, chief operating officer and president.

Starting from 2004, he has also shown an interest in United Airline’s operations, serving as board member of United Continental Holdings, which owns the popular carrier.

On September 8, 2015, Munoz was finally appointed as chief executive officer and president at United Continental Holdings, following Jeff Smisek’s resignation, but the sacrifices and efforts required for climbing so high up the corporate ladder must have taken their toll on the executive’s health.

On October 15, Munoz had to be admitted to a Chicago hospital, after experiencing a heart attack. The news regarding this life-threatening medical emergency came as a shock to those who knew the highly resourceful and energetic CEO.

Following a decision taken by the executive board, Brett J. Hart replaced Munoz, taking charge of United Airlines in his absence.

But now it appears cardiovascular problems won’t stop Munoz from resuming his job duties. After having received a heart transplant at the Northwestern Memorial Hospital in Chicago less than two weeks ago, on January 6, the 57-year old University of Southern California business graduate appears to have already made an unexpected recovery.

On Friday, January 15, Munoz issued an employee letter, in which he declares that he feels “as strong as ever”, and that he’s eagerly awaiting to be discharged from hospital.

The note was accompanied by a photograph showing the patient with a broad smile on his face, in the presence of a couple of the surgery team members whose expertise resulted in such a successful transplant.

Following a brief period of recovery and rehabilitation, during which he will continue to be actively involved in the company’s strategic decisions and planning, Munoz is expected to resume work at full capacity, starting from the beginning of 2016’s second quarter.

Meanwhile, during his medical leave, his job responsibilities will continue to be fulfilled by Brett Hart, United Airlines’ former general counsel and executive vice president.

It is hoped that this news will relieve investors’ fears, after Munoz’ surprise heart attack, which was initially kept under wraps by his entourage. After the medical emergency was eventually revealed, share prices were sent crashing down, and caused many to worry about the company’s future.

Despite the fact that United Airlines remains the country’s third-largest carrier by traffic, and the second largest by capacity, it has experienced a slew of problems in the last few years, following its merger with Continental Airlines, which was finalized in March 2013.

As a result, ever since his appointment, Munoz has emphasized his plans to boost employee morale and revamp the company’s reputation, by improving the on-time performance of its flights, and by increasing customer satisfaction, which is currently at an all-time low.

Image Source: Aviation Gazette

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What Will It Take for 21st Century Fox to Flourish in 2016?

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What Will It Take for 21st Century Fox to Flourish in 2016?

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Rupert Murdoch's 21st Century Fox (FOXA - Get Report) is a sprawling, global empire that encompasses, movies, networks and sports in addition to cable-TV systems throughout Europe and India. Yet, sheer size doesn't guarantee success, and it may seem that the bigger the company, the bigger its challenges.

For the year to date, Fox shares, at around $28, are down nearly 28% as the Fox broadcast network suffered a decline in advertising revenue amid lower ratings. CEO James Murdoch has pledged to improve operations at the network as the company seeks to grow its international cable-TV operations, most notably in India.

"Star (India) is one of the more important growth factors along with domestic affiliate fee growth," Brian Wieser, a media analyst at Pivotal Research, said in a phone interview. "Perhaps an improvement at their core broadcast network as well, but in each case this will be based on groundwork already well in place. A favorable turnaround in currencies will help, too, although that's out of their hands."

Fox has beaten long odds throughout its successful history. Over the years the company has made a reputation by challenging entrenched media networks. But while Fox News Channel leads Time Warner's (TWX - Get Report) CNN in total viewers, Fox Business has yet to beat Comcast's (CMCSA - Get Report) CNBC. Fox Sports1, meanwhile, may not have anywhere near the viewership of Disney's (DIS - Get Report) ESPN, but its go-slow approach to sports rights contracts has the network in an enviable position.

Must Read: Media Industry Executives Focused on Mergers, Streaming for 2016

With business booming at the Fox News Channel, the highest-rated cable news operation for many years, the parent made a dramatic move. Two years ago, 21st Century was created when the original News Corp. spun off Dow Jones, the New York Post and its other media operations.

"After the spinoff of its publishing businesses, our risk assessment reflects a vast portfolio of leading entertainment brands that offers an enhanced business mix and geographic diversification, and a continued strong balance sheet with ample financial flexibility," Standard & Poor's noted.

Today, the media industry remains as competitive as ever -- perhaps more so. Media and tech companies have become fierce rivals, with such forces as Apple (AAPL - Get Report) and Netflix (NFLX) flexing their media-minded muscles. Plus, new companies can't be overlooked.

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