Morgan Stanley Says Tesla Stock May Drop to $10 a Share

Wow, I thought I was tough on Tesla but others are really piling on. The consensus is that their stock is heading down to about $100 per share. However, Morgan Stanley is even more dire.

Morgan Stanley cut its bear (worst-case) forecast on Tesla’s stock from $97 to just $10 on Tuesday, citing concerns about the company’s increased debt load and geopolitical exposure.

“Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention,” the research team, which included analyst Adam Jonas, said in the note.

But it’s not just the Tesla bears making cautious calls. Financial services firm Baird also cut its Tesla estimates Tuesday, lowering the company’s stock to $340 from $400, while T. Rowe Price, for years one of Tesla’s biggest investors, sold around 81% of its holdings over the first three months of 2019.

Link: Tesla shares could drop to $10 in a worst-case scenario, Morgan Stanley says

The article also couches the story as Tesla can overcome all the adversity but they are hoping that Tesla can change. I don’t know about you, but the last guy selling hope and change was to total disaster.

Oh, there is a bright spot. Like Microsoft propping-up Apple in during the Clinton Administration to avoid accusations of a monopoly, other auto makers are paying money to Tesla so they can build cars that people want to buy and still meet the emission standards set by the government.

Carmakers across Europe are striving to meet a 2020 EU target of average car CO2 emissions of 95g per kilometer. To avoid the fines, the EU allows automakers to pool their fleets together and purchase credits from other automakers with a surplus. Last month, Financial Times revealed a deal between Tesla and Fiat-Chrysler (FCA) worth “hundreds of millions of euros”. According to the Financial Times, the understanding is now worth around €2 billion ($2.3 billion USD). The deal with FCA is expected to be an extremely great boost of money for Tesla but FCA should keep in mind that the sale of emission credits will not last forever. The new regulations while helping Tesla financially are pushing other carmakers to release their own all-electric vehicles as nobody in the industry is ready to keep dispensing billions to their own competitors.

Link: Fiat-Chrysler Is Ready To Pay Tesla Up To 2.3 Billion For Emissions Credits So It Can Meet European Car Emissions Standards For 2020

Elon Musk with the look that says, “It’s not personal, it’s business”

Tesla has also introduced another price cut for its cars. OK, actually they raised the price of their cheap cars by $400 and cut about $300 off the higher priced vehicles. Contained in the story are these choice words.

The moves come as Tesla’s stock is under pressure from investors who are becoming skeptical of CEO Elon Musk’s ability to turn a profit and keep the business growing, all while balancing demands of developing a self-driving ride system and building new products such as a small SUV, a pickup truck, a new roadster and an electric semi.


The business fundamentals of Tesla always have been shaky, but the stock price has been buoyed by the story that this is a company that was going to do huge things,” said Navigant Research analyst Sam Abuelsamid. “What we’ve seen in the last month or so is people are starting to recognize maybe that wasn’t really true.

Last quarter was among the worst for Tesla in the past two years. Sales tumbled 31% in the period. Musk predicted another loss in the second quarter but said Tesla would be profitable again by the third quarter.

Link: Tesla reduces prices on Models S and X amid stock slump

Tesla’s slide in value continues. The gap between what Elon Musk promises and what he can deliver is finally becoming apparent to more people. Investors took a risk on his out-of-the-box thinking but clearly he has failed to deliver on the promises. Once governments quit propping him up, the market will get to decide his fate.

Lastly, we have no word on anybody accepting the bet for $10K that Musk is right on his predictions even though it’s been out there for the better part of a week. Nevertheless, Mr. X has contacted me and is ready to serve Kool-Aid for whoever takes the wager.

Oh, the children in his neighborhood have offered their tea set and a bag of Chips Ahoy cookies for use at his Kool-Aid party.

Apple Reports Tesla Fire

Apple is having a bad week. First the US Supreme Court says their app store is likely a monopoly and can be sued in lower court as such (without specifically ruling on the merits of the case) and then China and the US are at loggerheads over trade and tariffs.

Supreme Court

The U.S. Supreme Court dealt Apple Inc. a major setback in an eight-year-old lawsuit over the App Store on Monday, but the bigger news is the big effect it could have on Big Tech.


The Supreme Court ruled Monday that plaintiffs have a right to sue Apple in a class-action lawsuit that alleges monopolistic behavior in the App Store resulted in overcharging. While the end result for Apple is uncertain for now, the ruling appears to be positive for consumers who buy services on platforms owned by Apple and other tech companies, because it gives them the ability to sue for alleged monopolistic pricing practices.


The case was filed in 2011 by four iPhone users who alleged Apple had unlawfully monopolized “the iPhone apps aftermarket” and that Apple locked iPhone users “into buying apps only from Apple and paying Apple’s 30% fee, even if ” the iPhone owners want to buy them elsewhere.

Link: Apple’s loss at the Supreme Court is ‘a big victory for consumers’ fighting Big Tech’s app and platform monopolies

Trade Wars

Apple closed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war.


China said on Monday that it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.
The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.


Apple is especially vulnerable to a trade war with China for two primary reasons.


First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent $60 billion on American suppliers in 2018 — iPhone assembly is done in mainland China.

The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.

Link: Here’s why Apple is so vulnerable to a trade war with China

Apple News: Tesla Burning

OK so what does Apple have to do with a Tesla fire? Well this story is from Apple Daily. No word on whether this is a subscription service offers by Tim Cook and company but here’s the story.

A Tesla Inc electric car caught fire in a parking lot in a Hong Kong shopping mall, the Apple Daily newspaper said on Tuesday, but no one was injured in the blaze, whose cause was not immediately known.


The electric car burst into flames 30 minutes after being parked in the city’s San Po Kong district on Sunday, the newspaper said, with three explosions seen on CCTV footage.


Firemen took 45 minutes to douse the fire.

Link: Tesla car catches fire in Hong Kong parking lot

OK, so pop quiz. What is the acceptable way to fight a Tesla fire? Can you just pour water on the burning battery or would this be an environmental offence, especially here in California? Do the synthetic materials used in its construction give off cancer causing fumes? This vehicle certainly must come with a Prop 65 warning label. When fully involved, is it a Class D fire? 45 minutes to burn may be normal if water is not allowed.

Apple crashing and Tesla burning, oh, what a week (and its only Tuesday).

Apple’s Sour Decline

For those not following Tim Cook’s tenure at Apple, things are still imploding at technology’s me too company.

5G

Remember Apple’s lack of 5G phones in 2019? The explanation finally came to light and Apple found a path forward. After being backed into the corner, Apple buried the proverbial hatchet with Qualcomm and as a result, Intel cancelled their research and development of 5G technology. So Apple will now be sporting the same Qualcomm 5G technology as Android phones only selling it for their usual high mark-up.

Apple’s settlement with chipmaker Qualcomm means it can fire up the engines on 5G iPhones.


Apple on Tuesday reached a settlement in its gnarly legal fight with Qualcomm. The dispute revolved around a royalty dispute over Qualcomm’s premium modem chips. The settlement included an undisclosed payout from Apple to the chipmaker.


Previously Wall Street analysts had voiced concerns that Apple was lagging in the race to faster 5G phones, in part due to its fight with Qualcomm.


Soon after news broke that the companies had settled, Apple’s chosen supplier for its future 5G smartphones, Intel, announced it was pulling out of the 5G modem race entirely. “It has become apparent that there is no clear path to profitability and positive returns,” said CEO Bob Swan.

Link: Apple’s blockbuster legal settlement paves the way for a 5G iPhone

Sales

Apple phone sales, year-over-year were down 30 percent. No wonder they don’t want to talk about phones any more.

Apple’s iPhone sales in China were down 30 percent during the first quarter of 2019, according to new shipment estimates shared today by Canalys.

Link: Apple’s iPhone Sales in China Down an Estimated 30% in Q1 2019, Huawei Continues to Dominate

Apple announced its financial results for its fiscal Q2 of 2019, the company’s revenue was down 5% over the previous year. Apple did not reveal how many iPhones it sold in the quarter.


According to a recent report from IDC, iPhone sales are down some 30% over the same time last year, with an estimated 36.4 million iPhones sold.

In its Mobile Phone Tracker for the first calendar quarter of 2019, IDC estimated that Apple only shipped 36.4 million iPhones, which it stated was a 30.2 percent annual drop, whittling down Apple’s share to just 11.7 percent of a total of 310.9 million global smartphones shipped in the quarter.


That figure put Apple in a distant third place behind Samsung’s nearly 72 million units and Huawei’s almost 60 million units. Because Apple sells only premium phones—as most analysts define as selling for about $400 or more—it’s not surprising that high-volume vendors of mostly lower-end phones would be outselling Apple in terms of unit sales.


However, IDC’s portrayal of more than a 30 percent drop in iPhone units over the previous year is nothing short of shocking. It’s also, as Cybart noted on Twitter, not just “embarrassing” but “impossible to achieve given Apple’s stated iPhone revenue.” Cybart stated that “IDC isn’t close with their iPhone unit sales estimate for the quarter that Apple just reported.”

Link: Editorial: Latest IDC estimate of Q1 2019 iPhone sales ‘highly inaccurate’ to the point of ’embarrassing’

Battery

In addition to being busted throttling battery life in their old phones, Apple has now been busted overstating the battery capabilities of their new phones.

Link: Apple’s 11 million replaced iPhone batteries demonstrates impact of iPhone planned obsolescence

Link: Apple exaggerating iPhone battery life by up to 51 percent, report says

Summary

Living for the 90-day cycle has its drawbacks and they are on full display for anyone willing to open their eyes. Clearly excellence and innovation take a backseat when you are a slave to churning-out dividends every quarter just to stay alive for the next financial report.

The Farce of Tesla

Sales

Tesla sold 244,920 vehicles in 2018 and some on Wall Street said they were the number two US automaker–up until Ford’s quarterly financial report was released this week. What a crock.

Over the same period—2018—Ford sold 5,982,000 vehicles.

The math is this; Tesla sold four percent as many vehicles as Ford and people said Ford was the number three automaker.

Folks, we don’t even know if Tesla is selling their vehicles at cost let alone making a profit. Ford is outselling Tesla by a huge amount. Ford sold 5,737,080 more vehicles than Tesla and somehow Elon Musk is our role model?

Tesla is tethered technology.

Both my buddy with the Chevy Volt and my future son-in-law who owns a Tesla, have the same problem. Namely, where to charge the vehicles.

My buddy with the Volt says he tried to go to Oregon with his Volt and found that he was stuck near the I-5 corridor because there was no place to charge the car once you got away from the Interstate.

Tesla is s finicky vehicle. It has three charging modes: super-fast, medium, and super slow. My son-in-law candidate drives to Elk Grove from the S.F. Bay Area to see the daughter. Before going home, he must drive to the Arden Fair Mall because that is the only fast charging station in the area. After charging the Tesla for 45 minutes to an hour, he can then go home. Please understand that this means that he drives over an hour further to get to the mall and back for the privilege of charging his car. This charging evolution adds two hours to every visit that he makes here for the privilege of driving an electric car.

If you fail to use the Tesla installed charging stations, then plan to wait several hours—like six or more—to get a decent charge on the car. Lest you think I exaggerate, check out this story of a guy in New York that took his son to camp in a demonstration Tesla Model S given to members of the media. Here are excerpts of his travelogue.

I’ve screwed up my range calculations. We don’t have enough to make the closest partner charging station. The car was warning us of this, but we needed to get the boys dropped off on time. So we took a chance and ended up ALMOST RUNNING OUT OF GAS, er … ELECTRICITY!


There’s a cable in the truck of every Tesla that enables you to charge on the fly. But there are no high-speed charging options up here in the middle of nowhere in the Catskills. So we had to resort to the slowest option, good old 120-volt, wall-socket-level rejuicing.


You plug into this small charging port at the left rear of the Model S.

Tesla charging in BFE via 110 VAC

Photo by Matthew DeBord

… but we’ll be getting only 1 mile per hour of charging! That’s mega-slow.


A few hours, a few more miles in the battery, and we have enough to head back through the lovely scenery to find lodging — and charging — for the night.

Tesla charging at one mile per hour

Photo by Matthew DeBord

By the next morning, at a charging rate of 3 miles per hour, we have enough juice to make the closest partner charging location.
We’re plugged in …


… and drawing power again.


But this time, we’re charging much faster. In a few hours, we’ll have enough power to get to the closest Supercharger location.

Link: A year ago, I had an epic adventure in a Tesla Model S — here’s what happened

Short version was that failing to charge the car resulted in an additional day of travel because it charged so slow.

Tesla = Tax Opportunities

Many early adopters of electric vehicles think that one big advantage is avoiding paying gasoline taxes. I’m here to tell you now thatBig Brother” is completely aware that you aren’t paying your fair share for road maintenance and has plans to remedy the situation. Soon Tesla owners will be introduced to the long-rumored mileage tax. Yep, you will be billed for each mile travelled by the electric vehicle that you drive.

Thanks to folks like the Chinese; government now has the power to track electric vehicles (and probably internal combustion powered ones too) via GPS. So, you won’t even have to do paperwork, you will be issued a mileage bill from government each billing cycle. Oh, I’m sure they will be happy to receive their funds via autopay.

For some folks, Elon Musk can do no wrong; however, I’m not a believer. America flirted with electric vehicles over 100 hundred years ago and the internal combustion engine won. In a free market, I think that same outcome would happen today, but our markets are anything but free.

Government is willing to put their thumb on the scale to help Musk, but I don’t think that gets this technology over the finish line. They just give him an unfair advantage in the short run.

Until electric power is plentiful and readily available, such technology is a novelty. Sadly, California is moving away from readily available energy and towards limited options at higher prices. They are restricting the market not unleashing it. Socialist utopias are like that.

If I had the money, I would buy a Tesla, disconnect the battery, wrap the car in plastic and hide it in a non-descript barn for 150 years, then it might be worth owning; otherwise, I’m sitting this revolution out.

The Darkside of Digital Content Strikes Again

In our age of technology, many are used to streaming videos, music, and other content. Amazon has been selling eBooks for its Kindle devices for many years. Folks like the convenience of content being delivered to their electronic devices; however, there are some drawbacks. I have mentioned some of these before but two more examples have surfaced lately that are worth noting.

If you have ever bought a Blu-ray or DVD movie, you often will see a sticker on the box that says free digital copy included. OK, so what happens when the digital copy company goes away?

The go to service for many years has been UltraViolet but UltraViolet is going away in July. So you can either transfer your digital content to one of three other providers or let your library expire. Since the physical disks have DRAM encryption on them, you can’t just rip your own copy to your computer.

If this is true of physical media with a digital counterpart, what about people that purchased a digital only copy of something? What happens when your eBook company draws its last breath or decides to get out of the business?

Enter exhibit number two, Microsoft.

It will come as little surprise to our readers that Microsoft is exiting another consumer market.
Today Microsoft posted a rather brutal announcement regarding the US-only ebook Store which they launched in 2017, saying “The books category is closing.”
Microsoft is not giving users a lot of time to ponder – the decision is effective today, with Microsoft writing “Starting April 2, 2019, the books category in Microsoft Store will be closing.”
More worrying is the second bit, however.
“Unfortunately, this means that starting July 2019 your ebooks will no longer be available to read, but you’ll get a full refund for all book purchases.”
Presumably, due to some DRM scheme, Microsoft will be remotely deactivating books readers already purchased and downloaded.
Microsoft says they will be giving full refunds, and if you used Microsoft’s much-touted inking feature to make notes, Microsoft will still be burning your book, but will give you a $25 store credit.

So just like that, the “velvet sweatshop” as its employees call Microsoft, just clicks a button and kills all you digital content. What if Apple or Amazon decides to kill your music library or eBooks?

If you dig into the terms of use and legal nonsense for such things, you paid money for the content but surprise, you don’t really own your copy! Thus they can keep your money and kill your content later. Please note that this is not just a matter of killing future downloads but they can click a mouse and kill the existing content of all your devices.

The truth is that Amazon has done this in the past with certain eBook titles. Just because something is on your phone, PC, or Kindle does not mean that it stays there. Oh this also means that existing eBook content can be edited on the fly to add, alter, or remove content. Talk about ‘Big Brother.”

So next time you think I’m old fashioned because I actually prefer physical media, at least I own what I paid for.

Tesla Cars Hacked Again

For the second time in less than a month, media reports have surfaced of Tesla cars have been hacked. This time the autopilot—which isn’t really an autopilot—got hacked.

One series of hacks was with stickers. Yes, stickers like your children like to use instead of crayons in those kid’s meal booklets. Here’s the story:

Autopilot Hack #1

Elite hackers from China have found a way to trick a Tesla Model S into going into the wrong lane by strategically placing some simple stickers on the road.
Keen Labs, widely regarded as one of the most technically ingenious cybersecurity research groups in the world, developed two kinds of attack to mess with the Tesla autopilot’s lane-recognition tech.
First, the researchers sought to make alterations to lane markings, first by adding a large number of patches to the line to make it appear blurred. It worked, but as the patches looked much too conspicuous, the Keen hackers decided that it’d be too difficult to carry out in the real world.

Autopilot Hack #2

So the researchers tried to create a “fake lane.” They discovered that Tesla’s autopilot would detect a lane where there were just three inconspicuous tiny squares strategically placed on the road. When they left small stickers at an intersection, the hackers believed they would trick the Tesla into thinking the patches marked out the continuation of the right lane. On a test track, their theory was proved correct, as the autopilot took the car into the real left lane.

Tesla Hacked, Vehicle Operated By Remote Control

In other attacks, the Keen crew claimed to have the ability to remotely control the steering wheel and start up the windscreen wipers. In the former, via a complex series of steps that broke through some of the security barriers put up around the onboard network, Keen discovered a way to control the steering wheel with a gamepad, though they were in the vehicle at the time. While that initially sounds serious, the attack didn’t work when a car had been taken manually from reverse to drive mode at any speed above 8 km per hour. However, when in cruise control, the attack worked “without limitations.”

Link: Hackers Use Little Stickers To Trick Tesla Autopilot Into The Wrong Lane

Tesla Display Hacked

Two weeks ago, Tesla was hacked in a much different way.

Pwn2Own is a competition aiming to highlight the vulnerabilities of modern day systems and products, and since the Model 3 is one of the most digitally advanced cars in the world, it was a natural target for the organizers of the event and the hackers attending it.

Most of the goals set by the organizers were not met by the competing teams, but one of them reached their goal: Fluoroacetate, a duo comprising hackers Richard Zhu and Amat Cama.
To get the prize, the two had to launch the attack from inside the car and “achieve code execution by browsing to malicious content.”
Zhu and Kama were able to hack into the car’s Internet browser and have it display a message of their choice on the car’s screen: pwned by Fluoroacetate.
For their achievement, Richard Zhu and Amat Cama were awarded a $35,000 prize, but most importantly got to drive away in the Model 3, complete with the hacked browser.

Link: Duo Hacks Tesla Model 3, Walk Away with the Car and $35,000

Folks what you need to understand about hacking the display of the Tesla is this, there are no instrument panels or gauges in this particular car. The display screen (liquid crystal touch screen) is the only information that the driver has on the car. This is also where everything is controlled by the driver. If the screen can be hacked, it can be used to trick the driver by providing false info to the driver. Could this be used for malicious purposes? It may only be proof of concept for now but…

Facebook Fights to Track Non-users

Folks I’m just gonna excerpt two paragraphs and commend that you look at the source article for more.

The social network is heading to court in Belgium on Wednesday, Bloomberg reports. Its goal is to fight a court order that would force it to stop using cookies and other tracking technology to follow its users as they navigate around the internet to serve them ads–at least until Facebook explains exactly how and why it collects data and what it does with the information. The original court order required the social media giant to stop tracking users, delete all data it had gathered illegally on Belgian citizens–including people who were not Facebook users themselves–or face fines of up to €250,000 ($281,625) a day.
It may be a tough slog, as Facebook’s tracking technology is applied not only to people who willingly signed up for the site, but also to millions of people who aren’t signed up or have closed their accounts. Belgium’s court order, meanwhile, may be bolstered by the EU’s General Data Protection Regulation (GDPR), which allows penalties as large as 4% of a company’s annual revenue.

Link: Facebook fights for the right to follow users–and nonusers–around the web

Facebook Rot Continues

More bad news following a very bad week, last week which was capped-off with a live Facebook broadcast of the shooting in New Zealand

Link: Zuckerberg’s bad week gets worse with FB live of Christchurch shooting

now emerges a story that Facebook has stored your password in plain text available to any employee and anyone with access to the house that Mark built. This has been their practice since 2012 and at least 600,000,000 passwords are involved.

“Security rule 101 dictates that under no circumstances passwords should be stored in plain text and at all times must be encrypted,” said cybersecurity expert Andrei Barysevich of Recorded Future. “There is no valid reason why anyone in an organization, especially the size of Facebook, needs to have access to users’ passwords in plain text.”
Facebook said there is no evidence its employees abused access to this data. But thousands of employees could have searched them. The company said the passwords were stored on internal company servers, where no outsiders could access them. But the incident reveals a huge oversight for the company amid a slew of bruises and stumbles in the last couple of years.
The security blog KrebsOnSecurity said some 600 million Facebook users may have had their passwords stored in plain text. Facebook said in a blog post Thursday it will likely notify “hundreds of millions”…

Facebook leaves millions of passwords readable by employees

Apple’s 5G Problem Revealed

Apple has no plans for a 5G phone in 2019. We have reported that several times on this blog but recently more information has come to light. The truth is Apple has no supplier for the technology. Why, because they have burned bridges with everyone.

Apple has four choices for 5G

  1. Qualcomm – Apple has disputes with this competitor. Source
  2. Intel – Apple is dropping Intel as chip supplier. Source
  3. Samsung – Apple’s direct competitor in cell phone mfg. Samsung #1 in the world, Apple #3
  4. Make their own – starting from scratch and not running afoul of existing intellectual property and patents is problematic and years from concept to production

As we have documented elsewhere, Apple has already bought folding screen prototypes from Samsung and now they might need their 5G chips too; and you wonder why I say Apple is the Me Too company?

90-Day Calendar Mentality

Once upon a time, many in the West were fond of quoting the proverb, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” A biblical admonition also comes to mind “without a vision, the people perish.” Both proverbs contrast the idea of a life with immediate gratification versus long term goals.

Likewise, once upon a time, American companies spent a considerable amount of money in research and development. These businesses thought in terms of years into the future and what they could contribute to the betterment of their fellow man and make a profit by providing goods and services that made our lives better.

Sadly this is no longer the case. Modern corporations are only concerned with hitting their numbers for the next quarterly report. Should they miss the estimates of Wall Street there is financial hell to pay. No company has any real investment in or vision of the future. Business is only concerned with immediate cash flow.

I like technology but I get frustrated by the number of projects that get prototyped and cancelled because the idea can’t be monetized in the next quarter or two. Anything beyond that window of time is deemed risky and not viable for investment.

Here’s a few examples:

Microsoft
Microsoft has been toying with foldable phones and tablets for at least five years but every project they attempted has been cancelled. All they have to show for their efforts is a large portfolio of patents. Microsoft is playing the 90-day game and anything that might be on a longer time horizon is likely to get cut as a risky investment.

Apple
Apple under Steve Jobs wasn’t an innovator in hardware. Jobs took existing stuff, tweaked it and found ways of marketing it to the masses. In a sense, he sold “the sizzle”. Jobs could look at an idea and see a future benefit worth investing in and bring it to fruition. Under Tim Cook, Apple is playing the 90-day game like everyone else. Apple has ceased being a leader in technology, they can’t risk being wrong about the next big thing.

Google
Google too is cutting long term R & D.

Google admits that its hardware business is not profitable enough to accommodate a large number of employees and therefore has decided to trim the fat. Google told dozens of employees working on its hardware division to find new jobs.

An internal source close to Business Insider told that Google is currently going through “roadmap cutbacks” and hence the decision. This will have a massive impact on Google’s hardware business as BI reports that projects on which the company was actively working on are now cancelled.

It’s more like the search giant wants to put a full stop to its long-term projects that were in development.

Everywhere you turn, it’s the same story. Long term projects are toxic in today’s business environment and nobody wants to spend on them. Instead, there is constant pressure to cut, trim, and reduce both employees and products. This is not just free market forces at work, something else is afoot.

But why?

Two big reasons come to mind.

First, Wall Street is the only place that most people can put their money and get a return on their investment. Wall Street is geared around getting an immediate return on dividends each quarter. The measure of a company is cash flow to investors. The way to attract and maintain investors is via immediate return. The so called “Blue Chip Stocks” don’t really exist anymore. The Wall Street logic is this: no return, no investors, then no company.

Second is the high burden of government. Companies must take baby steps to keep from getting crushed by all the rules and regulations that they are required to follow. This makes them risk averse. Making a profit is no longer enough motivation to pursue a project. If the return is not immediate and drastic, the project will never see the light of day. This stifles innovation. In a sense, corporations are trading security for freedom.

This 90-day cycle mentality is destructive to the market but in order for businesses to survive, they are forced into this attitude. People instinctively know this is true but often don’t perceive why.

Elon Musk seems to transcend this lethargy of innovation that people sense in the marketplace. The attraction of Musk is that he is unencumbered by the baggage that besets others. He talks of what should be and rejects the status quo. The problem is that Musk’s business model can’t succeed on an even playing field, he needs the heavy hand of government to intervene on his behalf with taxpayer money in the form of investments from public retirement funds, tax breaks, and rebates to consumers. However, government can’t really pick winners and losers in the market, when it tries it fails. Socialism always loses at the point where promises far surpass declining resources and productivity.

The 90-day cycle is an interesting phenomenon to watch but only in the same way that people will invariably slow down to stare at a traffic accident. It is an aberration to the normal way of markets and finance. The problem is that the longer this continues, the less that people remember or perceive the deviance from the ideal of what the market should be.

In our current environment, both business owners and consumers have lowered expectations of market capability. The farther from free markets that we get the better that the lie of socialism looks.

The business cycle has been reduced to the minimal form necessary for survival. The 90-day cycle is the sum total of management concern. Thought of the future is hard to envision when you don’t know if you’ll be here tomorrow. First world companies with third world values are a harbinger of bad tidings for all of us.