Trump, Merkel Confirm That Iran Deal Talks Continue; Oil Drops

While she certainly didn’t display the same demonstrative warmth that French President Emmanuel Macron did during his meeting with President Trump early this week, German Chancellor Angela Merkel and Trump had what was by all accounts a productive meeting on Friday.

And if the press conference that followed their three-hour summit had a key takeaway, it would be that, despite Trump’s aggressive rhetoric, the Iran deal remains alive – for now, at least. This realization sent the price of WTI sinking in afternoon trade as oil bulls worried about Iranian supply, though WTI climbed 4.5% in April. 

WTI

Trump addressed the Iran deal in general terms, saying that the West must “ensure that this murderous regime does not even get close to a nuclear weapon.” Reiterating remarks from earlier this week, Trump said Iran would not be restarting its nuclear program, “you can bank on it.”

Merkel said that while the deal “isn’t perfect”, she said it’s “part of a bigger Middle Eastern picture” and added that the signatories would continue to be involved in “very close talks” to try and preserve the deal.

Merkel said the JCPOA was discussed, and that the two sides were working on forging a deal that would assuage US concerns.

Turning to the subject of North Korea, Trump reiterated remarks from a press conference earlier in the day, saying that while he’s looking forward to talks with North Korea, the US would not let the North “play” the Trump administration like the Kims have played previous administrations.

“I will be meeting with Kim Jong Un in the coming weeks, we look forward to that,” he said, thanking Merkel for her help in the “maximum pressure” campaign on North Korea.

The president said they will “not repeat” the mistakes of past administrations.

In a meeting with Merkel before lunch, Mr. Trump said he doesn’t think Kim is “playing,” although other administrations were “played like a fiddle” because the U.S. had different leaders.

Trump also touched on the need for NATO nations to pay their fair share for national security costs born by the bloc, and also commented on Germany’s trade surplus with the US.

Crucially, Merkel didn’t give a direct answer about whether the US would extend an exemption for aluminum and steel tariffs for the European Union, which is set to expire early next month.

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Another Pair of Dueling Reports Close Out the House Intelligence Committee’s Russia-Trump Investigation

President Donald TrumpToday the Republican-controlled House Intelligence Committee released its report on Russian meddling in the 2016 election.

As fully expected and essentially predetermined, the 253-page report concludes that there was no “collusion” between members of President Donald Trump’s election campaign and the Russian government. But the report does “find poor judgment and ill-considered actions” by both campaigns—Trump’s for meeting with Russians and praising WikiLeaks, Clinton’s for obscuring their role in the creation of the Steele dossier. The report seems to treat it as a fact that people connected to the Russian government were responsible for hacking into the Democratic National Committee and collecting its internal emails for distribution.

The committee is headed by Rep. Devin Nunes (R-Calif.), who was part of Trump’s transition team and is far from a neutral observer. The committee’s Democratic minority put out a 98-page response accusing the Republican majority of rushing to end the investigation, refusing to call important witnesses, and attempting to deflect attention from Trump.

So a good chunk of the dueling reports feel like political business as usual. They can now be used as validation for those who really, really need to feel validated, like President Trump, who has already tweeted about it:

Neither report is likely to change anything about the Justice Department investigation headed by Robert Mueller, though the Republican one will certainly be invoked rather transparently by those who want the probe shut down.

The majority report has a lengthy section of recommendations. Some of them are rather vague statements of the “we should have better cybersecurity and communication about breaches” variety. But one suggestion, seemingly out of nowhere, calls for repealing the federal Logan Act. The Logan Act is a terrible federal law that punishes free speech by making it a crime for American citizens to engage in communications with foreign governments intended to intervene in disputes with the U.S. government. Nobody has ever been convicted of violating the act, and its only real history has consisted of efforts to punish political speech.

There have been rumblings that the law could be invoked against members of Trump’s team for talking to Russian officials about reactions to sanctions prior to Trump’s election. So this recommendation is no doubt politically motivated to protect Trump. Nonetheless, the Logan Act is genuinely awful and should indeed be eliminated.

As if to show the partisan nature of these recommendations, the Republican report also calls for heavier criminal penalties for leakers, expansion of the surveillance authorities of the Foreign Intelligence Surveillance Act (powers used to snoop on Americans too), and expanded use of polygraph tests for political appointees—bad ideas all. The report insists that leaks linked to the Trump-Russia story have “damaged national security and potentially endangered lives,” but the section of the report explaining this claim is completely redacted.

If you’d like to wade through the two reports, the majority Republican version is here and the minority Democratic response is here.

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Uncle Sam Is “Biggest Brother”

Submitted via Michael Hart of The Economic Collapse Blog

Back in the 1770’s there was a collection of radicals, who were highly educated in the natural law and the errors and successes of past political and economic systems. They were American Colonists with names like John Hancock, Samuel Adams, Alexander Hamilton, James Madison, et. al. They believed that each man was uniquely created by God and could have a personal relationship with the Creator if he or she chose to do so. This mind-set also caused these men to reject the idea that God only spoke to men through either the Pope or the King, and that the political theory of the “Divine Right of Kings” was a scam used by kings to justify their dictatorial form of government. Claiming their divine right, kings would claim they represented God to the people and that all their policies were God ordained and therefore infallible.

Instead, these radicals reasoned that if each of them were uniquely created in God’s image, not only were they all equal before God in the spiritual sense, but that every man was also equal politically. Back in the 1700’s such thinking was radical compared to the status quo. They also believed that men were capable of governing themselves and writing their own laws.

In 1765, the “Divine Right of Kings” form of government clashed with the “all men are created equal” way of thinking when the King’s government imposed a tax on tea in the American Colonies. The amount of the overall tax burden was small, only about 2%, but the way the tax was imposed on Americans was highly offensive to them. American Colonists objected to any tax being imposed on them that they did not approve of through representation in the legislative body imposing the tax.

Americans further objected to being forced to purchase the taxed tea only through governmentally approved outlets. In fact, these passionate and thinking Americans were so opposed to this construct they successfully boycotted the entire scheme and the tax on tea had to be withdrawn. Finally in 1775 a war was fought over these conflicting political theories and much blood and treasure was expended in order to resolve the conflict. During the War of Independence, Americans would cry out “No Taxation without Representation”.

What replaced the “Divine Right of Kings” in the newly formed United States of America was a Constitution that recognized that every man had equal standing in the new government. This new governmental system utilized democratic processes, representing We the People, to run the government. The new system also recognized that men are fallible, as all men sin and fall short of the glory of God. One characteristic of this new Republic was that a citizen’s rights were more important than what might someday be the appetite of a mob.

The Declaration of Independence listed 27 grievances against an abusive King; and the new Constitution recognized that political leaders might be so bad that they might need to be removed from office through an impeachment process. Our system of reoccurring elections also allows bad actors to be removed from office. This was a huge change from the previous system where the King claimed he represented God and that his policies were therefore infallible.

Believing that all men are sinners, the founders of America chose to limit the power and size of government such that at the beginning America had a limited form of government, limited by what Thomas Jefferson referred to as “the chains of the Constitution”.

How is that working out for us today? Not so good I would say. Referring to the CIA’s World Fact Book (https://www.cia.gov/library/publications/the-world-factbook/), we see that the government of the United States is the biggest government in the world at $3.893 trillion in budgeted annual expenditures. China is second at $2.897 trillion. Japan is third at $1.931 trillion. And Germany is fourth at $1.484 trillion. Recently demonized Russia isn’t even in the top 10 at $286 billion per year, just one fourteenth the size of our budget.

In fact, in all of recorded history, the government of the United States is the biggest government the human race has ever seen on Planet Earth! Uncle Sam is Biggest Brother. How did this happen with a Constitution that guarantees us a limited form of government?

The simple answer is that our government ignores our Constitution. More accurately, what it does is lure us away from our God-given rights as guaranteed in our Constitution with benefits and privileges such that we leave our common law and constitutional rights behind in the rear view mirror in exchange for cradle to grave governmental security.

We have come full circle and have made government our God through a modern version of the Divine Right of Kings. However, instead of being up front about this new scheme, instead we are tricked into joining a new political overlay that uses familiar sounding terms, like “citizen of the United States,” which is a statutorily created entity subject to Congress’ authority and unable to object to the rules and regulations pertaining to the benefits and privileges being sought after. This constitutes a political overlay that has caused the original Republic and its Constitution to go into hibernation.

All of us have left the jurisdiction of the Several States, where Congress’ authority is limited, and instead joined the “public rights” jurisdiction where Congress has plenary power. Most of us have no clue as to how all of this works.

Instead of relying on our God-given natural rights, memorialized in our Constitution and our Bill of Rights, we chase after “public rights” created by a bleeding heart Congress anxious to make us subject to its authority as we indulge in tax payer funded benefits. Congress has created a “right to food stamps”, a “right to unemployment benefits”, a “right to low interest loans” if you are a student, a farmer, and first-time home buyer. There are rights to farm subsidies, grants, and of course bailouts for those too big to fail and too big to jail. (For a discussion of “public rights” see Kuretski v. C.I.R., 755 F.3d 929, (D.C. Cir. 2014.))

In reality, these “public rights” are not rights at all, but government granted privileges. The United States Supreme Court has ruled many times that those who chase after a privilege have no standing to complain , object or otherwise defend any right, as there is no such thing as a “right” in the universe of privileges.

A big government, who takes care of us from cradle to grave, is also a government that has become a defacto god. We are now right back to where we were before the War of Independence, except the tax rate and the size of government has increased an order of magnitude compared to that of 1775. The ancient Divine Right of Kings is very much alive and well today.

(Authored by Phil Hart – candidate for state representative in Idaho’s 7th legislative district)

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‘Black People Don’t Have To Be Democrats’

There’s a fascinating and important story about moribund political alliances playing out adjacent to the spectacle of rap god Kanye West controversially tweeting “love,” if not actual support, for President Donald Trump.

One of West’s proteges, Chance The Rapper, initially supported his “mentor” and “big homie” with several tweets, including this one:

But that was Wednesday. Earlier today, Chance mostly recanted his apostasy, writing:

I’d never support someone [such as Trump] who’d talk about Chicago as if it’s hell on earth and then take steps to make life harder for the most disenfranchised among us….My statement about black folk not having to be democrats (though true) was a deflection from the real conversation and stemmed from a personal issue with the fact that Chicago has had generations of democratic officials with no investment or regard for black schools, neighborhood, or black lives. But again, said that shit at the wrongest time.

Chance is certainly right about his hometown’s longstanding Democratic rule—the last time the Windy City had a Republican mayor was back in 1931. (As with many industrial cities, control there flipped from Prohibition-supporting GOP machines to Democratic machines due to changing demographics and shifting attitudes toward Catholic and Jewish immigrants.) And as he grudgingly acknowledges, Democratic rule in Chicago hasn’t been good for African Americans. The city’s police department routinely violates the rights of black and Latino residents, according to a scathing Department of Justice report issued last year. Massively powerful unions have blocked reforms not just of police but of awful schools, while extorting generous pensions and benefits that have brought the city to the edge of bankruptcy and kept it from providing basic services. Chance himself has donated $1 million to Chicago’s schools, which have been deemed the country’s worst at least since 1987.

Chance was immediately called out as a hypocrite for defending Kanye West. It’s not difficult to understand why he felt a need to separate himself from his comments about blacks not needing to be Democrats. Over the past 70 years, no voting bloc has been more identified with the Democratic Party than blacks. Since 1948, when the Democrats inserted a civil rights plank in their platform, a majority of blacks have identified as Democrats. No Republican presidential candidate has pulled more than 15 percent of the African-American vote since 1960, when Nixon received 32 percent against John F. Kennedy.

Yet Chance’s comments—however fleeting and quickly countermanded—point to the fact that Democrats do not and should not have a lock on the black vote. The party is able to get by partly because of its longstanding defense of civil rights and its welcoming attitude to minorities. Such comity is mostly missing among Republicans, who at best ignored blacks when not accusing them of criminality and massive welfare fraud while offering a soft landing for former segregationists such as South Carolina’s Strom Thurmond.

But absent concrete steps to address such urgent issues as criminal justice reform, school choice, occupational licensing, and the drug war, all of which disproportionately affect minority populations, there’s no reason to assume that black support for Democrats will continue, any more than publicly regulated taxicabs, postwar shopping malls, or old Fortune 500 companies can hope to persist. Political parties are contingent organizations whose meanings and commitments need to change over time and in reaction to customer demands. Most Americans are increasingly alienated from the current iterations of either party for the simple reason that the Democratic and Republican coalitions were designed to appeal to political realities that made sense back in the late 20th century. The car you drive, the food you eat, the music you listen to—none of these things are the same as they were back in 1978, 1988, or 1998. So why should the political party you vote for?

On Wednesday, Chance also tweeted this:

In many ways, Donald Trump ran in 2016 as an independent. Not only did he openly attack the leaders and infrastructure of the GOP, he shredded its dogma on free trade and other issues. Chance’s timeline might be a bit optimistic, but there’s no question that he’s pointing in the right general direction, not simply for the presidency but the future of American politics, too.

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Clapper Busted Leaking Dossier Details To CNN’s Jake Tapper, Lying To Congress About It

Former Director of National Intelligence (DNI) turned CNN commentator James Clapper not only leaked information related to the infamous “Steele dossier” to CNN’s Jake Tapper while Clapper was in office – it appears he also lied about it to Congress, under oath.

Clapper was one of the “two national security officials” cited in CNN’s report -published minutes after Buzzfeed released the full Steele dossier.

The revelation that Clapper was responsible for leaking details of both the dossier and briefings to two presidents on the matter is significant, because former Federal Bureau of Investigation (FBI) director James Comey wrote in one of four memos that he leaked that the briefing of Trump on salacious and unverified allegations from the dossier was necessary because “CNN had them and were looking for a news hook.”The Federalist

So Comey said that Trump needed to be briefed on the Dossier’s allegations since CNN “had them” – because James Clapper, the Director of National Intelligence at the time, provided that information to the same network he now works for.

And who’s idea was it to brief Trump on the dossier? JAMES CLAPPER – according to former FBI Director James Comey’s memos: 

“I said there was something that Clapper wanted me to speak to the [president-elect] about alone or in a very small group,” Comey wrote. 

The revelations detailing Clapper’s leak to CNN can be found in a 253-page report by the House Intelligence Committee majority released on Friday – which also found “no evidence that the Trump campaign colluded, coordinated, or conspired with the Russian government.”

As Sean Davis of The Federalist bluntly states: “Clapper leaked details of a dossier briefing given to then-President-elect Donald Trump to CNN’s Jake Tapper, lied to Congress about the leak, and was rewarded with a CNN contract a few months later.”

From Clapper’s Congressional testimony: 

MR. ROONEY: Did you discuss the dossier or any other intelligence related to Russia hacking of the 2016 election with journalists?

MR. CLAPPER: No.

Clapper later changed his tune after he was confronted about his communications with Tapper: 

“Clapper subsequently acknowledged discussing the ‘dossier with CNN journalist Jake Tapper,’ and admitted that he might have spoken with other journalists about the same topic,” the report reads. “Clapper’s discussion with Tapper took place in early January 2017, around the time IC leaders briefed President Obama and President-elect Trump, on ‘the Christopher Steele information,’ a two-page summary of which was ‘enclosed in’ the highly-classified version of the ICA,” or intelligence community assessment. 

The Daily Caller’s Chuck Ross notes that Clapper also denied speaking to the media in a March conversation with CNN’s Don Lemon. 

And let’s not forget, Jake Tapper has been participating in the lie.

Indeed it is Don – as The Federalist’s Mollie Hemmingway wrote in January – Comey’s account of Trump’s briefing on the dossier suggested that it was a setup from the beginning – and that it was only done in order to legitimize the story and justify leaking the unverified and salacious details to journalists.

Let’s bring it home with Mollie Hemmingway’s summary from January which hits the nail on the head: 

So Comey, at Clapper’s expressed behest, told Trump that CNN was “looking for a news hook” to publish dossier allegations. He said this in the briefing of Trump that almost immediately leaked to CNN, which provided them the very news hook they sought and needed.

This briefing, and the leaking of it, legitimized the dossier, which touched off the Russia hysteria. That hysteria led to a full-fledged media freakout. During the freakout, Comey deliberately refused to say in public what he acknowledged repeatedly in private — that the President of the United States was not under investigation. He even noted in his memos that he told the president at least three times that he was not under investigation. Comey’s refusal to admit publicly what he kept telling people privately led to his firing. –The Federalist

We look forward to James Clapper talking his way out of this on CNN during carefully scripted conversations with fellow talking heads.

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Does Fractional Reserve Banking Endanger the Economy? New at Reason

Two free market economists debated a topic that has long divided libertarians. Fractional reserve banking refers to banks’ standard practice of keeping only a portion of their depositors’ money on hand and loaning out the rest. In The Mystery of Banking (1983), the anarcho-capitalist economist Murray Rothbard called fractional reserve banking “a shell game, a Ponzi scheme, a fraud in which fake warehouse receipts are issued and circulate as equivalent to the cash supposedly represented by the receipts.” Other libertarian economists, such as Larry White and Steve Horwitz, have argued that the practice is perfectly defensible.

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America’s Dumbest Companies Repeat Their Biggest Mistakes

Submitted by John Rubino of The Dollar Collapse

Back in 2005 a reporter took a tour of General Motors’ headquarters, and in the resulting article one thing stood out: The executives and engineers the reporter interviewed were only modestly enthused about their sedans and sub-compacts. But they really liked talking about their expanded line of Hummers.

Then oil spiked and gas prices hit records. And GM’s bet on massive gas guzzlers blew up in its face. In 2009:

GM bankruptcy: End of an era

(CNNMoney – General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable that became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months.

The bankruptcy is likely to lead to major changes and job cuts at the battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy.

In the end, even $19.4 billion in federal help wasn’t enough to keep the nation’s largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.

GM will shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That could result in more than 100,000 additional job losses if those dealerships are forced to close.

Assembly lines at a plant in Pontiac, Mich., which make full-size pickup trucks, will be closed later this year. A Wilmington, Del.-based facility that makes roadsters for the Pontiac and Saturn brands will also close later this year.

Pain for retirees, investors
More than 650,000 retirees and their family members who depend on the company for health insurance will experience cutbacks in their coverage, although their pension benefits are unaffected for now.

Investors in $27 billion worth of GM bonds, including mutual funds and thousands of individual investors, will end up with new stock in a reorganized GM worth a fraction of their original investment.

Owners of current GM (GM, Fortune 500) shares, which closed at just 75 cents a share on Friday, will have their investments essentially wiped out.

Now fast forward to this week, when conditions are similar to those of 2005. Gas has been relatively cheap for a few years and Americans – always ready to extrapolate short-term trends into the indefinite future – only want SUVs and pickups. So Ford is adopting the GM strategy of betting its corporate future on continued cheap gas and profligate customers.

Ford Will Be A Truck Company By 2020

(CNN Money) — Car buyers these days love SUVs. They don’t, however, love actual cars like hatchbacks and sedans – as Ford has learned.

Ford said on Wednesday the only passenger car models it plans to keep on the market in North America will be the Mustang and the upcoming Ford Focus Active, a crossover-like hatchback that’s slated to debut in 2019.

That means the Fiesta, Taurus, Fusion and the regular Focus will disappear in the United States and Canada.

Ford will, however, continue to offer its full gamut of trucks, SUVs and crossovers.

By 2020, “almost 90 percent of the Ford portfolio in North America will be trucks, utilities and commercial vehicles,” the press release says.

Ford has hinted it might decide to retire much of its sedan portfolio. Earlier this year, James Farley, the company’s president of global markets, said Ford is “shifting from cars to utilities,” which have been a bigger profit driver. It also reallocated $7 billion of research funds from cars to SUVs and trucks.

And it’s not just Ford. Fiat Chrysler did away with the Dodge Dart and Chrysler 200 more than a year ago. And General Motors decided to scale back production of the Chevy Cruze, Chevy Impala, Buick LaCrosse and the Cadillac ATS and CTS.

Meanwhile, out in the real world:

The conclusion: Detroit may have handed short sellers yet another sure thing.

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Vintage Radio Propaganda of the Korean War

The most welcome world news this week is the budding rapprochement between North and South Korea—a serious peace push in a place that less than a year ago seemed ready to erupt into nuclear war. Among other things, this includes a pledge to take a step beyond the ceasefire that ended the Korean War of 1950–53 and sign a treaty that brings the war to a formal close.

As that conflict hopefully moves toward a full termination, here’s an artifact from the days when it was a shooting war. Not long after U.S. troops arrived in Korea, a woman nicknamed Seoul City Sue started transmitting radio propaganda to the Americans. “In these broadcasts,” Paul Edwards writes in Unusual Footnotes to the Korean War, “she would quietly talk to the American GIs suggesting that they would be better off at home where they could have clean sheets and eat ice cream. She also continually suggested that their girlfriends at home would not wait very long before they sought other men to comfort them. At times she would read off the names from dog tags taken from dead Americans, and would warn the listeners that their names would soon be read on the broadcast.”

Here’s a snippet from one of her shows, coupled with some film footage from the war:

Seoul City Sue was apparently Ann Wallis Suh, a former Methodist missionary from Arkansas; it is unclear whether she made the broadcasts willingly or unwillingly. Soldiers sometimes compared her to the World War II propaganda broadcaster Tokyo Rose—usually unfavorably, since Tokyo Rose mixed her taunts with western music. Seoul City Sue did not, unless a Sousa march counts.

Writing in September of 1950, UPI war correspondent H.D. Quigg gave the broadcaster a scathing review:

She talks in a monotone. Her voice is icy. She exudes the passion of a well boiled vegetable. What in the name of Lenin she thin[k]s she is going to accomplish and who in tarnation she expects to impress with her type of spiel beats the living daylights out of me….

She can’t kid the GI. He’s been kidded by experts in all sorts of propaganda since childhood. Also he’s accustomed to getting some entertainment when he turns on the radio. Seoul City Sue gives him amateur kidding and no entertainment at all.

Cynics might note that if soldiers found themselves fantasizing about the feminine voice on their radios, that detail would not necessarily make it into the American press. But boiled vegetable or not, it seems rather doubtful that Suh had much impact on the troops’ morale. Even when she talked truthfully about how lousy life could be at the front, she wasn’t telling her listeners anything they didn’t already know.

Charles Robert Jenkins, an American soldier who defected to North Korea in 1965 and left the country four decades later, writes in his memoir The Reluctant Communist that he encountered Suh shortly after he arrived in Pyongyang:

In met her in 1965 when I went to the “foreigners only” section of the No. 2 Department Store. I was by myself. (Our leader at the time had just said, “Yeah, go on; go ahead,” when I asked to go to the store and let me go alone.) I recognized her from [a propaganda pamphlet], so I walked up to her and said, “Hello, Suhr Anna-senseng” (senseng is the Korean word for “teacher”). It was winter, and she was wearing a black leather overcoat, very put-together. She looked surprised and turned, looked at me, and said, “Oh, you must be the American who just came over.” I said, “Uh-huh,” but she was spooked. The second we met, she wanted to get the hell out of there. She excused herself, saying she really needed to be going, and was gone.

Years later, Jenkins heard that in 1969 the North Korean government accused the former Seoul City Sue of spying for the South, and shot her. “I have no idea is any of this is true,” he reports, “but that is what they told me, and we certainly never saw her again or heard from anyone who had.”

(For past editions of the Friday A/V Club, go here. For another installment involving the Korean War, go here. For another installment involving North Korean propaganda, go here.)

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“Doubts Grow At Apple” That A $1,000 Smartphone May Not Have Been A Winning Idea

iPhone X demand – which was already looking soft – could be even worse than some of the most pessimistic estimates.

While analyst expectations have mostly been negative for Apple heading into its next quarterly earnings report on May 1, it looks as though the iPhone X may have performed worse than most analysts have estimated. With a smartphone market that is globally becoming heavily saturated, it turns out that there may not be as many people as originally thought that get excited about the idea of shelling out $1000+ for a smartphone with features that have already become ubiquitous.

As Fast Company becomes the latest to report, Apple overshot the mark with the amount of iPhone inventory it had produced, and is now trying to “burn off” the rest… at a time when demand has “stalled”: 

The narrative is growing that demand for the $1,000 iPhone X has stalled in the first part of 2018. It’s further bolstered by new information from a supply chain source with direct knowledge of Apple’s plans saying the company has ordered the production of only 8 million iPhone X units in calendar Q2 of 2018.

This source says Apple ordered the production of too many units of the iPhone X in the last calendar quarter of 2017, and is now trying to “burn off” the inventory that has piled up at its resellers.

Apple sold 77.3 million total iPhones during the 2017 holiday quarter. Apple CEO Tim Cook said the X outsold all other iPhone models every week of the first quarter after the device’s launch on November 3, 2017, launch. And a high average sale price of $796 across all iPhone models suggested that the X, Apple’s most expensive phone, was indeed a heavy seller. Above Avalon analyst Neil Cybart says that the X contributed about 35% of total phone sales during the holiday quarter, which works out to about 27 million phones.

But as the global smartphone market has ceased to grow, and as smartphone owners hold on to their current devices longer, consumers may be less apt to part with more than a grand for a phone.

Our source says Apple is disappointed with sales of the iPhone X, and doubts have grown within the company that releasing a $1,000-plus smartphone in the current global smartphone market was a winning idea.

Hardly coming as a surprise in light of poor earnings reports by Apple semiconductor suppliers , the article goes on to confirm that iPhone X channel checks suggest a collapse in both demand and channel checks.

The new Q2 production data point comes on the heels of Samsung’s quarterly earnings, in which the company reported soft demand for its OLED displays. Samsung makes the OLED display used in the iPhone X. The South Korean company said it expects this slow demand to continue through the second calendar quarter. The softness isn’t entirely attributable to Apple; Samsung uses its OLED displays in its own smartphones, sales of which were impacted by competition in the high-end phone market, the company said.

Earlier this week the iPhone X supplier TSMC warned investors about slow demand for its smartphone chips. Analysts had been expecting $8.8 billion in revenues from the chip maker, but Taiwan-based TSMC dropped its second quarter guidance to between $7.8 billion and $7.9 billion.

The Austrian laser tech company AMS, which supplies components used in the iPhone’s facial recognition system, also ratcheted down its revenue expectations, stating it expected revenues in its second quarter to be half of what they were in the first.

And as we reported previously, analysts’ targets for Apple’s upcoming quarter have become increasingly pessimistic, and the company is widely expected to put up numbers that aren’t going to impress:

Some analysts won’t be very surprised by Apple’s low Q3 X production. Last month Nomura’s Anne Lee reduced her estimate of iPhone X calendar Q1 sales to between 8 million and 12 million. Citi analystsbelieve Apple will sell 14 million iPhone X units in calendar Q2 and just 7 million in calendar Q3. Both of the analyst reports cited consumer hesitation at the X’s high price tag as the likely cause.

In a time when virtually all smartphones, including prepaid 7-Eleven “specials”, have much of the same core functions, Apple’s iPhone is no longer far ahead of the pack; in fact compared to recent Samsung offerings, it has been years behind in some cases. Competition in mobile phones has driven quality higher and prices lower – something one would expect in an efficient industry when the government isn’t insuring or subsidizing preferred providers – consumers can get actually get a better product for much less money

We previously reported earlier this week, that one of Apple’s key suppliers had what analysts dubbed was a “spectacular miss” and that this likely painted an ugly picture for iPhone demand. It was another day, another flashing red warning that sales of the iPhone X are far worse than Tim Cook had ever expected; courtesy of Austrian chipmaker AMS AG – which makes the optical sensors that control brightness and color  – which just days after a similar warning from semiconductor giant Taiwan Semi, became the latest Apple-supplier to cast doubt over the iPhone’s chilled reception.

AMS shares plunged as much as 14% several days ago, the most this year, after warning on negative operating margins because of low production capacity at its Singapore factories, and after its guidance for sequential revenue drop in 2Q missed the lowest estimate among analysts in a Bloomberg survey, adding to the recent negative datapoints in the iPhone X supply chain.

Mirabaud analyst Neil Campling said AMS’ “spectacular miss on guidance” was so bad, “it’s surprising the company didn’t preannounce.” Campling also said that major product changes and product transitions blamed are “all Apple, specifically iPhone X” and added that “phasing down iPhone X has taken the supply chain by surprise.”

Apple will report Q1 earnings on May 1, and investors and analysts will be watching very closely to see if the iPhone glut is as bad as it reports suggest. The good news, for Apple, is that courtesy of its quarter trilion in cash, the company will just end up buying back more stock to make up for any material shortfall. The problem is that unless it can also hand over billions to consumers around the globe to buy its products, Tim Cook may have no choice but to sharply lower prices in a field that is becoming increasingly commoditized as Apple joins Amazon in the hunt for the lowest profitable margin, even if Cook appears to have lost the race to become the world’s first $1 trillion market cap company prematurely.

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Letting The Chips Fall Where They May

Submitted by Dana Lyons’ Tumblr

After an apparent breakout to all-time highs just 6 weeks ago, the semiconductor sector is now breaking key uptrend support.

In early March, we highlighted one of the sectors demonstrating the strongest recovery efforts following the post-January correction. The sector was the semiconductors, which was not a surprise since the group has been a leader for much of the bull market, especially in recent years. At the time of the March post, the big news was that the benchmark PHLX Semiconductor Index (SOX) had not only recovered its entire correction loss, but it was actually breaking out to new highs. Not only that, but its January highs also lay in the vicinity of its prior all-time highs, set 18 years ago in the 2000 dotcom bubble. Here is the chart highlighted in that post.

The breakout, if sustained, portended good things for the “chip” sector. It was not sustained. And that sound you hear are semiconductor investors’ “chips” being sent back across the table because, as they say, from failed moves come fast moves. Indeed, it has not been a pretty course for the chips since as they have fallen hard. So hard, in fact, that if we fast forward to today, we see that the SOX has actually broken down below its post-2016 Up trendline.

Needless to say, this is not a welcomed development for the semiconductor group. The break of the trendline undermines the sustainability of the 2-year SOX rally – or at a minimum, slows considerably the pace of advance. But how much of the potential damage is already done – or, how much potential risk do we see here still? And is there any hope for semiconductor investors of the group regaining its leadership role.

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