Month: September 2016

Outflows From Active Funds Surpass A Record $200 Billion

Following 7 years of underperformance, 2016 is the year where hedge funds and other active managers have been finally been hit with the long predicted mass withdrawals – leading to a spike in prominent hedge fund closures, most recently that of Perry Capital – which in recent months have spiked to the highest level since the financial crisis, paradoxically just as the market is on the verge of making new all time highs again.

And with activist central banks doing everything in their power to prevent any substantial risk-asset declines in order to avoid failing on the “weath effect” mandate, it was only logical that as money flowed out of active funds it would enter passive: something which has not only been happening for the past several years, but which according to BofA has now hit a record level.

As BofA’s Savita Subramanian reports, over the last several years, we have observed an accelerating trend of flows out of active funds and into passive vehicles. Price sensitivity of investors to fees, coupled with poor performance trends, have conspired against active funds, and year-to-date flows out of active have reached a post-crisis high.

As the chart below shows, the current year outflows from active funds have now surpassed a record $200 billion, with the bulk of cash outflows shifting to much cheaper (and better performing) passive funds, though as BofA notes, flows have slowed since last year suggesting that there may be a broader cash outflow from the equity asset class, as increasingly more Americans retire and pull out of the market entirely.

So what is the best way to trade this ongoing rotation? As we first pointed out in 2013, and subsequently reaffirmed in June, doing the opposite of what the few remaining active investors continues to be a winning strategy.  BofA confirms:

Amid this trend, a strategy of buying the 10 most underweight stocks by active funds and selling the 10 most overweight stocks at the beginning of the year has generated 13ppt YTD (following 13ppt and 18ppt of alpha in ‘15 and ‘14, respectively). Admittedly, returns from positioning have been muted in recent months, but with two-thirds of US AUM still in actively-managed funds, we see more to go in the active to passive rotation. Positioning will likely continue to matter.

Here is the proof that year after year, going short the most loved and short the move popular stocks, generated incremental alpha.

Finally, for those who wish to test out this strategy, here is the list of Top 10 most and least exposed stocks to active funds. Remember: go short the left column, and long the right one.

One last observation: this accelerating transition from active to passive management will end in tears, as passive management only works as long as the rising tide keeps lifting all boats. Once that ends, the party is over, and as Julian Robertson warned yesterday, there will be a need for someone who knows how to, gasp, short. By then, however, such anachronistic individuals may no longer exist. For those looking for the culprit for this uniform levitation across all asset classes, look no further than those who continue to inject some $200 billion in liquidity every month, making sure that everything goes up at the same time, and worse, keeps zombie companies alive and kicking, in the process crushing countless shorts.

via http://ift.tt/2cElMUo Tyler Durden

Major Dollar Shortage Exposed In Europe As Deutsche Bank Contagion Spreads

"Storm in a teacup" this is not.

While global markets remain calm(ish), distracted by OPEC headlines, US election 'entertainment', and Middle East proxy wars, the reality is, something very ugly is accelerating in Europe. With the collapse of the "most systemically dangerous bank in the world" we should hardly be surprised, but Deutsche Bank's crash is being shrugged off by average joes on mainstream media… and besides, the central banks will save us, right?

Well, Deutsche contagion is spreading… rapidly.

Since Deutsche's recent highs, the short-end of the EUR-USD basis swap curve has collapsed…

Simplifying – this chart measures the degree of USD shortage (willingness to spend money just to get USD now) across time – the lower the level, the more desperate for USDs.

And no, it's not a quarter-end issue…

 

Still not sure… Then explain why European banks just increased their demand for USDs from The ECB's 7-day lending facility by over 2000%…

As @Landonthomasjr notes, since 2009: DB shareholders put up 13.5 billion euros in equity. DB has paid 19.3 billion euro in bonuses. Perhaps they should have saved some of that cash eh?

Simply put – trust in the European Banking system is faltering, counterparty risk hedging is accelerating…

 

And liquidity concerns are exploding… ahead of Germany's bank holiday on Monday.

Mint's Bill Blain – in his Morning Porridge note – had some more 'market realist' thoughts…

Meanwhile, Mario Draghi was in “robust” form yesterday telling Europe’s languid political classes about the need to do more in terms of structural reform – yada, yada, heard that one before – but also the need for other policies to boost recovery in Europe. Optimal fiscal policy? That’s an interesting call.

 

The likelihood of banking embarrassment in Germany means his comments about banks being able to operate successfully in zero interest rate environments were particularly elucidating.

 

Let’s see.. if interest rates are zero, then borrowers don’t pay any interest and can extend their loans indefinitely? Then banks can’t have any NPLs, and will therefore be absolutely default free?

 

Suddenly I understand.

 

ECB NIRP is absolute genius. European banking is fixed and nothing to worry about. (US Readers – massive sarcasm alert!)

 

My day started in the Bloomberg studio where I was somewhat surprised to read a comment from Man’s CEO that Deutsche Bank is “healthy”. Right….

 

I’m not sure I buy that.

 

Banks are enormously complex beasts. They are not simple businesses. To turn around a bank is complex. To reinvent a bank – which is what Deutsche Bank, UBS, CS, and others are desperately trying to do, is one level below impossible.

 

Earlier this year we had commodities firm Glencore teeter on the edge of disaster. Swift action, clear plan, and it’s back from the brink. That is not going to happen with banks. In my 30 years of markets I can’t think of a single bank that’s got in trouble that has staged anything like a similar comeback. Once bank’s catch a cold, it often develops into dangerous pneumonia.

 

Deutsche – and the others – are anything but healthy. The need to reinvent. The news flow yesterday was positive-ish. Rumours of a SWF capital injection, rumours of a domestic rescue plan, but the reality is more likely to be further deterioration. If that develops into a full crisis any rescue will come at the cost of contingent capital deals being triggered (which will send shock-waves around banking confidence) and the strong/inevitable bail-in of senior debt holders.

 

Others say the senior debt is safe. Delighted they think so. Call me and tell me how much you want to buy?

Confirming there is a problem:

  • *DIJSSELBLOEM REPEATS DEUTSCHE BANK MEETS CAPITAL REQUIREMENTS

The denials continue… and so does the blame-mongery…

The U.S. Department of Justice fine imposed on Deutsche Bank is very high and “damaging for financial stability,” Dutch Finance Minister Jeroen Dijsselbloem tells lawmakers in The Hague Thursday.

 

U.S. fines against European banks are “repeatedly so high that all the money European banks tap on the international markets, also from U.S. investors, is skimmed by the U.S. government. That’s a risk for the financial stability and that worries me sincerely.”

 

If Deutsche Bank has to pay the $14b fine, it will reduce capital, then it will have to raise new capital.

 

Deutsche Bank will have to bring things "back in order."

Add another to the list of 'elites' distancing their actions from Deutsche's demise. And one more denial…

Deutsche Bank's troubles are not Europe's Lehman Brothers moment, Austria's finance minister said on Thursday, although he warned the region's lenders were facing a broader profitability crisis.

 

"After the financial crisis we haven’t quite worked through the banking issues….but what I am very convinced of is that we don’t have a banking crisis, we have a profitability crisis in our banks,"

via http://ift.tt/2dnsYbX Tyler Durden

Humans Are Naturally Murderous, Says New Study

ChimpGunquoraViolence is a pervasive theme in human society; it fills our news broadcasts, our movies, our novels, and, most especially, our histories. Why are people (mostly men) so prone to murder? Many anthropologists and even philosophers like Jean-Jacques Rousseau have chiefly blamed the corruptions of living in mass society. Not so, argues a new study, “The phylogenetic roots of human lethal violence,” published in Nature by Spanish evolutionary biologists. They claim instead that natural selection has endowed us with our violent tendencies. The researchers’ strategy is to survey intra-species violence in over 1,000 mammalian species in an effort to trace how violence arose. They also look at databases that compile rates of violence among human hunter-gatherer bands and ancient civilizations. While we are not the most violent species (meerkats are), we are pretty high up there on the list. From the study:

By compiling sources of mortality from a comprehensive sample of mammals, we assessed the percentage of deaths due to conspecifics and, using phylogenetic comparative tools, predicted this value for humans. The proportion of human deaths phylogenetically predicted to be caused by interpersonal violence stood at 2%. This value was similar to the one phylogenetically inferred for the evolutionary ancestor of primates and apes, indicating that a certain level of lethal violence arises owing to our position within the phylogeny of mammals. It was also similar to the percentage seen in prehistoric bands and tribes, indicating that we were as lethally violent then as common mammalian evolutionary history would predict.

ScienceAlert further reports…

…the team looked at our evolutionary history – usually, the closer two species are on the evolutionary tree, the more similar levels of inter-species murder they display. Based on that, Gómez predicted how violent humans should be, and then looked at causes of death in 600 humans population between 50,000 BC and today, to figure out how violent we actually are.

What they found was that, humans were around six times more murderous than the average mammal when we originated.

So, when our species first arose, around 2 percent of people (or one in 50) would have been murdered by other humans.

But that rate didn’t stay the same – during Palaeolithic times, more than 10,000 years ago, the rate of lethal violence increased to around 3.9 percent.

Then, during the Medieval period, between 400 and 1400 AD, that rate rose to around 12 percent, before dropping over the last few centuries so that we’re now far less violent than we were in our prehistoric past – most likely due to being more organised, and having stricter laws in place.

Not all mammals are violent, however. The study showed that around 40 percent of the 1,024 mammal species studied killed each other – and the primates were particularly bloodthirsty.

Interestingly, this study basically backs up the work reported by Harvard psychologist Steven Pinker in his insightful book, The Better Angels of Our Nature: Why Violence Has Declined. Pinker persuasively marshalls evidence showing that you are less likely to die a violent death today than at any other time in human history. When Pinker first proposed that violence has declined in modern times, he got a furious push-back from many intellectuals who are devoted to the idea that modern capitalism particularly incited people to murder. The authors of the new Nature study argue that the rise of modern social institutions have greatly reduced violence in contemporary societies. Their research basically vindicates Pinker’s work.

Go here to read Reason’s interview with Pinker and learn about the Capitalist Peace.

from Hit & Run http://ift.tt/2ddJNnF
via IFTTT

Gary Johnson Has an ‘Aleppo Moment’ (His Unfortunate Words) on MSNBC

Right before I interviewed him at the Libertarian National Convention in May and again before his CNN townhall in June, Gary Johnson made the same odd comment to me (this is a paraphrase): “Matt, I’m so sorry that it’s me up there defending libertarian ideas instead of you people who have been speaking about it so eloquently for so long!” He made a similar comment to longtime Libertarian activists just after accepting their nomination in Orlando. Aside from being an expression of his endearing-for-a-politician humility, the pre-apologies pointed to a central paradox of the Johnson campaign: His strategy has been laser-focused on getting into the presidential debates, and yet as a communicator, he is uneven, goofy around the edges, and prone to the occasional WTF moment.

Like this:

Oh sure, you can come up with some caveats and whataboutisms here. I don’t know who my favorite foreign leader is either! NPR and Salon and all the rest are unfairly mischaracterizing this as Johnson being “unable to name a foreign leader“! There’s scant evidence that the voting public cares about foreign-policy gotcha moments, particularly in this of all campaign seasons! Also, what about Hillary Clinton’s warmongering and Donald Trump’s incoherent Mideast bluster!

All of that may be interesting, but it doesn’t change the fact that Gary Johnson screwed up bigly here, because this is who Gary Johnson is. A partial list of self-inflicted errors in this exchange:

1) If you don’t like or can’t answer a question in a live broadcast situation, don’t answer the damned question. The English language is filled with little sidestepping phrases like, “Well, the most important thing is,” or “When you step back and take the broader view….” Also available are the Pushback (“Chris, I’m not playing your foreign policy trivia game”), the Shutdown (“It’s not appropriate for a presidential aspirant to pre-emptively name international favorites”), and the Redirect (“I’m more focused on rolling back our friendship with dictatorships, like Saudi Arabia!”). Not a viable option for a potential commander in chief? Stammering out loud about your own inability to answer a question.

2) The phrase “Aleppo moment” is wrong for several obvious reasons. Starting with, Aleppo is a city where a lot of people are dying—imagine someone using terminology such as “Sarajevo moment,” or “Darfur moment”; feels icky and wrong. Also, it’s a self-inflicted callback to one of the campaign’s lower points.

3) Neither “Vincente Fox” nor “Angela Merkel” are good answers, either. If you’re gonna go former office-holder, there are no shortage of legitimate heroes to choose from (I would start with Václav Havel, who served contemporaneously with Fox). As for Merkel, she hasn’t had what you would call a particularly good year.

Look, you can rage that the questioning was somehow unfair, or at least that the way people will seize on it will be. But part of running for president is showing people—live, on TV, constantly, to the point of mental and physical exhaustion—that you are nimble enough on your feet to deal with a brainfart without saying “Hey look, we’re having a brainfart over here!” Libertarians and other marginalized groups have a weird man’s burden in which they are frequently held to even higher standards than the two-party dolts who actually hold power, but the response to that is to gratefully accept the challenge and then rise to the occasion, not be resigned to your own flaws.

After the first Aleppo moment, Gary Johnson warned that it wouldn’t be the last one. He was right on the prediction, but wrong on the expectation. It sucks being interviewed and put on the spot all day long, and it must be hard for a small-state governor to grapple with the overlapping policy implications of a messed-up globe. But no one put a gun to Johnson’s head and said “Run for president!” There’s no reason not to do better than this.

ICYMI, here’s my shaky-cam video (thankfully cleaned up and clarified by my colleagues) of Johnson going ballistic on his foreign policy expertise just minutes before the first presidential debate:

from Hit & Run http://ift.tt/2cNYVJv
via IFTTT

Stanley Fischer’s Novel Idea: “We’d Be Better Off With A Price For Using Money”

Submitted by David Stockman via Contra Corner blog,

The end game of central bank lunacy is surely near. Even the Fed heads appear to be mumbling bits and pieces of truth in public.

Former Philly Fed President Charles Plosser, for example, told Bloomberg TV this morning that central bankers “wring their hands all the time,” are very “concerned about credibility,” and are “pretty good at conjuring up reasons not to act.”

Having screwed up his mutinous courage, he then let loose with words that haven’t been heard from a central banker in decades, if ever:

The Fed “shouldn’t be afraid a recession might come,” he exclaimed, “there’s a real problem here”.

Then again, Plosser recently retired and perhaps it wasn’t all that voluntary. By contrast, Stanley Fischer is in line to takeover the joint, and perhaps soon.

That’s because Janet Yellen is surely finished whether the Donald wins or loses. Her dithering and double-talk have become a laughingstock even in the Wall Street casino.

So you might have thought the good professor from MIT—-by way of the IMF and Bank Of Israel—– would be carefully parsing his words. Instead, he was apparently moved during a speech to economics students to confess that he is more or less flummoxed by his own policies:

WASHINGTON—Federal Reserve Vice Chairman Stanley Fischer on Tuesday expressed frustration with ultralow interest rates, saying they should rise over time.

 

“It bothers me, it really bothers me,” he said when asked about low rates at an event for economics students at Howard University in Washington…….I don’t like it, but I don’t want to raise the interest rate too much. I think we should at some point. I don’t know when,” he said. “The interest rate I believe is not at zero at a normal level and it should be [normal] at some point, not immediately.”

 

“I think there’s also a problem in going to a zero interest rate in the sense that it says that capital isn’t very productive, there’s not much going on in the economy,” Mr. Fischer said, adding that “we would be better off if there was a price for using money.”

Well, now. Imagine exactly that!

Apparently, the day traders and robo machines, who are back gunning for the all-time high chart points again this week, wouldn’t be caught dead even trying. Indeed, at 2171 or 24.95X  LTM earnings, the S&P 500 is hanging by a thread. That is, its priced for permanent paralysis at the Fed—even when its presumptive leader wants to raise rates but just doesn’t exactly “know when”.

The reason for Fischer’s confusion, of course, is that like all Keynesian economists he is desperately searching for some evidence that the nation’s GDP bathtub is near to being filled to the brim. At that point, presumably, it would be time to declare full-employment victory and begin to normalize rates.

In fact, in the same speech the Fed vice-chairman averred that the US is  “beginning to see the fruits of a higher pressure labor market” and that “we think of 3% as a rate that’s consistent with a reasonable rate of inflation.”

The man has a keen sense for rounding errors. During the last four years, the hourly wage rate for private non-supervisory employees has increased at a 2.32% annual rate, while in the most recent 12 months that has accelerated to 2.51%. Apparently, 19 bps on the average rate of wage gain means that the “slack” is nearly drained out of the US labor market.

Oh, c’mon. The truth is, there are about 180 billion annual labor hours attributable to the adult population under 68 years of age not employed in the monetized economy and only about 240 billion hours that are. You could call that a 43% unemployment rate and be done with it.

On the other hand, you could recognize that 75 billion hours are accounted for by unmonetized homemakers, 40 billion by debt-mules called “students” and 18 billion by working age adults who profess to have back pain and psychic anxieties that warrant disability payments rather than shouldering their share of society’s work requirement.

Beyond that, there are tens of billions of potential labor hours that have been off-shored owing to the China Price for goods and the India Price for services; and tens of billions more among adults under 35 who are still in mom and pop’s basement playing video games between part-time gigs at McDonald’s.

Yet any and all of these endless hours of “slack” labor could be pulled into paid employment. It just depends upon an endless array of factors—such as anti-dumping cases, student loan rules, day care costs, Obamacare coverage regulations and much more—–that are beyond Stanley Fischer’s ability to impact or to even imagine.

At the end of the day, this blithering academic fool is apparently willing to deprive Wall Street indefinitely of the very thing upon which a capitalist economy depends to remain stable, healthy and productive. That is, an honest price for money and capital.

So after 94 months of no price at all for “using money”,  the great and mighty Stanley Fischer still does not espy a sufficient fraction of gain in the rate of wage inflation. While he is waiting, of course, the robo-machines rage and the mother of all financial bubbles keeps on inflating.

In the Trumpian vernacular: pathetic!

via http://ift.tt/2cEgpEO Tyler Durden

Gary Johnson Has an ‘Aleppo Moment’ (His Unfortunate Words) on MSNBC

Right before I interviewed him at the Libertarian National Convention in May and again before his CNN townhall in June, Gary Johnson made the same odd comment to me (this is a paraphrase): “Matt, I’m so sorry that it’s me up there defending libertarian ideas instead of you people who have been speaking about it so eloquently for so long!” He made a similar comment to longtime Libertarian activists just after accepting their nomination in Orlando. Aside from being an expression of his endearing-for-a-politician humility, the pre-apologies pointed to a central paradox of the Johnson campaign: His strategy has been laser-focused on getting into the presidential debates, and yet as a communicator, he is uneven, goofy around the edges, and prone to the occasional WTF moment.

Like this:

Oh sure, you can come up with some caveats and whataboutisms here. I don’t know who my favorite foreign leader is either! NPR and Salon and all the rest are unfairly mischaracterizing this as Johnson being “unable to name a foreign leader“! There’s scant evidence that the voting public cares about foreign-policy gotcha moments, particularly in this of all campaign seasons! Also, what about Hillary Clinton’s warmongering and Donald Trump’s incoherent Mideast bluster!

All of that may be interesting, but it doesn’t change the fact that Gary Johnson screwed up bigly here, because this is who Gary Johnson is. A partial list of self-inflicted errors in this exchange:

1) If you don’t like or can’t answer a question in a live broadcast situation, don’t answer the damned question. The English language is filled with little sidestepping phrases like, “Well, the most important thing is,” or “When you step back and take the broader view….” Also available are the Pushback (“Chris, I’m not playing your foreign policy trivia game”), the Shutdown (“It’s not appropriate for a presidential aspirant to pre-emptively name international favorites”), and the Redirect (“I’m more focused on rolling back our friendship with dictatorships, like Saudi Arabia!”). Not a viable option for a potential commander in chief? Stammering out loud about your own inability to answer a question.

2) The phrase “Aleppo moment” is wrong for several obvious reasons. Starting with, Aleppo is a city where a lot of people are dying—imagine someone using terminology such as “Sarajevo moment,” or “Darfur moment”; feels icky and wrong. Also, it’s a self-inflicted callback to one of the campaign’s lower points.

3) Neither “Vincente Fox” nor “Angela Merkel” are good answers, either. If you’re gonna go former office-holder, there are no shortage of legitimate heroes to choose from (I would start with Václav Havel, who served contemporaneously with Fox). As for Merkel, she hasn’t had what you would call a particularly good year.

Look, you can rage that the questioning was somehow unfair, or at least that the way people will seize on it will be. But part of running for president is showing people—live, on TV, constantly, to the point of mental and physical exhaustion—that you are nimble enough on your feet to deal with a brainfart without saying “Hey look, we’re having a brainfart over here!” Libertarians and other marginalized groups have a weird man’s burden in which they are frequently held to even higher standards than the two-party dolts who actually hold power, but the response to that is to gratefully accept the challenge and then rise to the occasion, not be resigned to your own flaws.

After the first Aleppo moment, Gary Johnson warned that it wouldn’t be the last one. He was right on the prediction, but wrong on the expectation. It sucks being interviewed and put on the spot all day long, and it must be hard for a small-state governor to grapple with the overlapping policy implications of a messed-up globe. But no one put a gun to Johnson’s head and said “Run for president!” There’s no reason not to do better than this.

ICYMI, here’s my shaky-cam video (thankfully cleaned up and clarified by my colleagues) of Johnson going ballistic on his foreign policy expertise just minutes before the first presidential debate:

from Hit & Run http://ift.tt/2cNYVJv
via IFTTT

Shiftless in Seattle: Lawmakers Pass Onerous New Scheduling Ordinance

Munitions workersThe Seattle City Council last Monday passed a sweeping “secure scheduling” ordinance by a unanimous vote, making it only the second city in the nation to take a direct role in regulating how businesses set employee schedules.

Under the new ordinance—effective July 1, 2017—certain employers will be required to tell their workers two weeks in advance which shifts they will be working.

Should an employee be called in for extra hours, say, to replace a sick co-worker, the employer will have to pay him added “predictability pay.” Should an employee be sent home early—maybe because business is slow or a delivery is late—the employer must compensate him for half the hours he was scheduled to work.

In addition, on-call staff will earn half pay for shifts when they are not called into work, while those employees that have less than 10 hours between two shifts will receive time and a half. Managers will also be required to offer any additional hours to current employees before taking on new hires.

The stated purpose of the ordinance—aside from creating more predictable schedules—is to provide employees with “secure incomes” by ensuring them adequate hours.

Not getting as much work as they would like is a source of frustration for many Seattle workers. In a recent study commissioned by the city, some 30 percent of workers reported wanting more hours, and 10 percent reported difficulty in paying bills due to a lack of hours.

Helping eager employees work more and earn more is a laudable goal for the Seattle City Council. It is also a bizarre one, given how many disincentives it has created to businesses giving employees extra hours.

In 2012 Seattle passed a bill requiring businesses to provide one hour of sick leave for every 40 hours an employee works, raising the hourly cost of each worker. Then in 2015, the city passed its notorious $15-an-hour minimum wage law, raising that hourly cost still further. Indeed, a July study put out by the University of Washington (UW) found that the mandated wage increase has led to fewer hours worked per-employee and slightly less overall employment for Seattle’s lowest-paid workers, compared to similar earners in other parts of the state.

The Affordable Care Act (ACA) also bears some of the blame for the lack of hours, says John Vigdora, the UW economist who authored the July study on the city’s new wage floor. Many employees have found their hours cut by employers looking to avoid the employer-provided-insurance mandate in the ACA, which kicks in only when someone works hours over a certain threshold, he explains.

Whether the new scheduling regulation will help workers get these hours back remains an open question, and Vigdor speculates that employers that are particularly concerned with their level of customer service may choose to absorb the costs of the new law, maintaining current staffing levels. Businesses in a more precarious financial situation, on the other hand, or less reliant on offering good customer service, are likely to respond by cutting hours.

In San Francisco—the only other city to adopt secure scheduling legislation—many businesses have indeed cut back on staff. A study conducted six months after the law went into effect found that “in response to the ordinance, 1 in 5 surveyed businesses had cut back on the number of part-time hires, and a similar number were scheduling fewer employees per shift,” according to the San Francisco Chronicle.

Reason queried each member of the Seattle City Council on whether they thought Seattle businesses might behave similiarly. Tim Burgess and Mike O’Brian declined to comment; the rest did not respond to multiple requests for comment.

from Hit & Run http://ift.tt/2cEdxYp
via IFTTT

Apple, Nasdaq Slide On Report Of Exploding iPhone 7

First it was Samsung, now it’s Apple’s turn. According to a just released report by Boy Genius Report, an iPhone 7 did what its main South Korean competitor has seemingly mastered: it exploded.

From BGR:

The world’s leading smartphone makers just can’t stop copying each other. While the company has certainly improved its image over the past few years, Samsung is likely most famous for being an Apple copycat. After all, the company was sued repeatedly by Apple for stealing its technology and designs. And as we all learned, things got so crazy at one point that Samsung even created a 132-page internal document to help its engineers copy the iPhone pixel by pixel. Of course, Apple is hardly innocent in all this. The iPhone maker has aped plenty of features from Android in recent years, and it probably never would have made iPhones with large displays if Samsung hadn’t paved the way.

 

But now, things have gone way too far…

 

So what’s the latest feature Apple ripped off from its top smartphone rival Samsung? Apparently, Apple was jealous that Samsung’s exploding Galaxy Note 7 is stealing some of the iPhone 7’s airtime, so it built an exploding smartphone of its own. Behold:

 

 

All joking aside — and before other sites catch wind of this story and go crazy with it — this clearly appears to be an isolated incident, at least for the time being.

 

The image above was posted by Reddit user “kroopthesnoop” on Wednesday, and it shows a matte black iPhone 7 that certainly looks like it exploded. Unlike Samsung’s somewhat widespread Galaxy Note 7 problem that was due to a battery defect, however, this iPhone exploded while in transit, according to the phone’s owner. When he received the iPhone 7 he ordered and took it out of the box, this is what he found.

 

Details are scarce for the time being. “Something happened between the factory and delivery,” is all the phone’s owner had to say in his thread on Reddit. Apple hasn’t commented publicly and neither has UPS, but one or both companies will likely have to investigate the matter when the phone’s owner contacts Apple for a replacement.

AAPL stock is not happy, and neither is the Nasdaq.

via http://ift.tt/2duapA9 Tyler Durden