Short Seller Steve Eisman Selling Two U.K Bank Stocks On Brexit Standoff

Brexit continues to cause jitters and concerns in the markets. However, some investors have sensed a window of opportunity that they are slowly taking advantage of. Steve Eisman believes that now is the right time to short two U.K banks as expectations of the U.K leaving Europe without a deal soars.

Eisman Short Stance

According to the Neuberger Berman Group money manager, the U.K is one of the biggest risks. While the high profile short seller expects the U.K government to agree to an exit deal, he remains pessimistic of parliament approving the deal. Eisman has also warned that he could short other stocks should Jeremy Corbyn become the next prime minister.

“I’m shorting two stocks in the U.K., but I’ve got a screen of about 50, and I might short all 50 if I think Jeremy Corbyn is going to be prime minister. Corbyn’s a Trotskyite. Now I know my Trotskyites well, and I know you don’t want to be invested in the U.K. if a Trotskyite is a prime minister,” Eisman said.

Eisman made a name for himself on predicting the collapse of the subprime mortgages as the financial crisis was just but starting. He now believes that the two unnamed banks would pay a hefty price on the U.K exiting the trading block.

While he is yet to give clues of the banks he is shorting, it is becoming increasingly clear that Metro Bank Plc. and CYBG Plc. could be the two unnamed banks. The two banks have continued to attract immense short selling pressure. The total number of shares shorted at Metro currently stands at 7.9% nearly double the ratio at CYBG.

Early in the year, Eisman did recommend shorting Deutsche Bank AG Shares over concerns about profitability issues at the German lender. The short seller has also raised concerns about the bank’s capital levels which he believes are quite low and may force the bank to raise some money next year. Canadian financial companies, as well as Wells Fargo, have also attracted short selling recommendation from the high profile investor.

Brexit Stand-Off

Five months to the deadline, Britain is yet to reach a deal with the European Union on how to go about Brexit. Negotiators are in heated discussions as both refuse to budge from their tough stance. Uncertainty as to whether or when Britain will reach an agreement appears to be fuelling concerns especially in the market.

The pound has come under immense pressure in recent weeks and continue to lose ground against the majors. More than 70 business leaders under the umbrella have already signed a letter arguing potential ramifications on companies, on the U.K failing to reach an agreement.

Separately Eisman has reiterated he remains short on Tesla stock, despite a recent price surge. Tesla stock has experienced wild price swings in recent weeks in the wake of CEO, Elon Musk failing on his bid to take the company private. The stock did plunge below the $280 a share level. However, it has since bounced back on exceeding expectations with a stellar third quarter financial report.

Growth Worry Weighs On Asia, Merkel To Step Aside, US Equities Up On Earnings

Asian markets were mixed at the close of their Monday session. The Shang Hai Composite led decliners with a loss greater than -2.0% followed the Kospi with a loss near -1.50% and the Nikkei with a loss near -0.15% but not all indices moved lower. The Australian ASX rebound more than 1.0% as election woe subsides and the Hong Kong Heng Seng posted a small gain near 0.40%.

News released after the close of the Asian session may have the region moving higher tomorrow. According to a report in Bloomberg, China is contemplating a reduction in the car tax from 10% to 5%. The move was requested by the China Automobile Dealer Association in an attempt to spur stronger car sales. The news had an effect on automakers around the world who are all having a hard time growing sales in China. Shares of GM (GM), Ford (F) advanced near 5% in the pre-market session while Tesla (TSLA) rose a more tepid 1.0%.

EU Market Up On Earnings, Merkel To Step Aside

EU markets were up in the early half of the day on earnings and edged higher on the news from China. Shares of Daimler and BMW were both up about 5.0% and leading the market on positive sentiment. Not only will lower car tax in China stimulate sales of vehicles around the world, but it may also aid with US trade frictions which is the largest fear underlying the market at this time.

In Germany, Angela Merkel’s coalition government saw heavy losses in a recent election. The results were so poor Merkel has decided to step aside as party leader come the December conference less than two months away. Germany’s Chancellor says she wants to remain the country’s leader until the next federal elections in 2021 but that may not happen if she can’t maintain the support of her party. The EUR/USD held steady on the news and traded within a very tight range as traders are more focused on this week deluge of data than they are German politics.

In the EU traders will be watching for the first read on third-quarter GDP as well as the all-important Consumer Price Index. Consumer prices are expected to hold steady from the last month at 1.0%, 2.0% YOY, a miss could have the EUR/USD moving lower. Also on tap for the EU is a meeting of the BoE. The bank is not expected to alter rates but could indicate a change of position regarding the outlook.

US Equities Up On Earnings 

The US futures indicated a positive open for the equities market on Monday morning. The broad market S&P 500 was indicated to open with a gain near 1.0% with automakers leading the way. While the peak of earnings season has passed there are still about 50% of the S&P 500 to report over the next few weeks. So far the reports have been better than expected. The blended rate of earnings growth is now 22.%, up to a full percent over the last week, and likely to continue expanding into the end of the season. There are 139 companies reporting this week, 27.8% of the index.

Asia Slumps, ECB Stands Pat, US Equities Rebound On Strong Earnings

Asia Falls Hard, Led By Tech

Asian indices fell hard in Thursday trading following a massive rout in the US. The Japanese Nikkei led with a loss of 3.72% and outpaced most other major indices in the region. The Nikkei created a large price gap at the open and fell from there, creating a large red candle and setting a new 9-month low. The is bearish and gaining momentum although price action is now approaching a key support level near 21,000.

The Australian ASX posted the second largest decline during the Asian session with a loss near 2.80%. The ASX was led by tech, but bloodshed was not limited to one sector. The energy, financial, and mining sectors all saw substantial losses with shares of Rio Tinto and BHP falling roughly 3.0%. Chinese indices were not immune to the selloff but fared much better than either the Nikkei or ASX. The Hong Kong Heng Seng led Chinese markets with a loss of -1.0%, the mainland Shang Hai index posted a gain of 0.02%.

The ECB Holds Rates Unchanged

In Europe attention was focused on earnings and the ECB. The ECB held their October policy meeting over the past two days and released their statement this morning. The bank decided to hold rates unchanged which was expected; the bank also maintained its outlook for tightening. The ECB says they are on track, barring unexpected data, to end their bond purchase program in December and to begin policy tightening mid to late 2019.

EU markets were mostly flat and mixed at midday. The UK FTSE was the only index to hug the flatline, trading in a tight range over and under 0.00%, while the DAX and CAC were both able to post gains. The CAC led advancing markets with a gain near 1.0% followed by a distant 0.35% for the DAX. Markets in the region were buoyed by earnings more than anything else. Automakers were strong performers as their results reveal dominance over US car makers like Ford (F) who reported sales decline for the region.

US Futures Point To Rebound, Earnings In Focus

In the US futures trading indicated a strong open. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite were all indicated to post a gain of near 1% led by tech. The NASDAQ was indicated to open with a gain near 1.5% as strong earnings from Microsoft (MSFT), VISA (V), and Tesla (TSLA) all blew past expectations for revenue and earnings growth.

Regarding earnings and earnings season; today is the single busiest day of the season with 66 S&P 500 companies reporting. Reports from Amazon, Google, Intel, Pricesmart, Mattel, and Chipotle Mexican Grill are all due after the bell. Based on reports so far there is a high likelihood this batch will produce better than expected results with a few outlying misses. What will matter to traders is the impact of tariffs and trade war on earnings and how they will affect the outlook for earnings growth over the next five quarters.

Is It Time To Short Tesla?

Tesla (NASDAQ:TSLA) finds itself in a tough spot as surging short selling pressure continues to evoke comparison to what befell Valeant a few years back. Since the start of August, the stock has lost more than 20% in market value amidst concerns that things are slowly getting out of hand.

Tesla has experienced wild price swings over the last three months. The unexpected swings have come amidst emerging concerns about the company’s long-term prospects. Management squabbles, regulatory pressures, supply chain disruption concerns as well as financial health woes have all but dealt the stock’s sentiments a big blow in the market.

Musk vs. SEC

The recent plunge below the $300 a share mark, stems from growing concerns about Elon Musk leadership at the helm. Ever since the charismatic CEO tweeted that he was planning to take the company private, things have gone south. The fact that the remarks were made on social made rather than using the proper channels did not go well with regulators.

The U.S Securities and Exchange Commission has since hit the executive with a$20 million fine. Musk was also forced to relinquish his role as the chairman of the board. The fact that the company was also hit with a $20 million fine because of the executive’s misdoings did not go well with investors.

This is in part because there was no indication that the board was involved in the privatization push even though Musk is the majority shareholder.

Supply Chain Woes

In addition, Tesla could struggle to meet its car delivery targets on supply chain disruptions. According to Fahmi Quadir, a good number of the electric car company suppliers are on the brink of filing for bankruptcy. According to the high profile short seller, most of the vendors are yet to receive paychecks even on making deliveries.

The fact that most of the components that Tesla uses to manufacture its cars are single sourced ultimately spells trouble should the vendors go bankrupt. The company could struggle to meet its production targets, something that could end up affecting its production capacity.

“We question the ability for Tesla to actually deliver on their promises to their customers when they’re on the brink of potentially a massive supply-chain disruption. We see very little contingency planning, and we also see executives from the supply chain department departing in recent weeks and months.,” said,” Quadir in a Bloomberg television interview

After betting on Valeant Implosion in 2015, Quadir believes the same fate could befall Tesla as it finds itself in a rock and hard place. The 28-year old and founder of SafKhet Capital Lp has already initiated a small short position in the electric car company stock.

Financial health Concern

Tesla according to the short sellers is grappling with weakening underlying fundamentals that don’t justify a premium price in the market. For starters, the company needs to raise money through equity or debt offering given that it is already struggling to pay its bills. According to the short seller, this is the same developments that Valeant struggled with before it imploded.

Quadir concerns about Tesla’s cash problems could have some truth given that the tech giant has continued to burn cash at an alarming rate since it went public. However, the CEO insists that the carmaker is on the verge of earning money and generating cash on the Model 3 production.

Whether it’s true or not is still a point of discussion given that Tesla ended the first half of the year with $2.2 billion in cash. In contrast, it had short-term debts amounting to more than $3 billion. In July, the company found itself in yet another scandal amidst claims it had asked suppliers to refund it some of the payments as it sought to register profit on its books. The state of Nevada is also pursuing the company over unpaid $655,000 in unemployment tax bill.

A Wall Street Journal in August provided a clear glimpse to some of the financial woes that the electric car company continues to grapple with. In the report, it emerged that Original Equipment Suppliers Association believed the automaker posted a significant financial risk to their businesses.

Some of the suppliers alleged that they had gone for months without receiving payments from the car maker. Tesla immediately refuted the claims insisting that it had strong partnerships with suppliers. It went on to suggest that more new supplier had already expressed interest in supplying some of the parts.

Surging Short Selling Pressure

The developments have only gone to attract short sellers to the Tesla stock. Short interest pressure currently hovers at around 26%, an indication of waning investors’ confidence. The stock, although had a strong move higher, is still hovering near 18 months low in what has turned out to be one of the worst performances in recent years.

Musk has already reacted to the soaring short selling pressure by placing part of the blame on the SEC. According to the executive, the SEC is purely a ‘Shortseller Enrichment Commission.’ The executive has also taken a swipe at Billionaire David Einhorn over his remarks comparing the electric company to the failed Lehman Brothers Holdings.

The back and forth backlash have all but continued to pile pressure on Tesla as investors remain wary of the company’s long-term prospects. However, Musk has sought to dispel the concerns and fear about Tesla long-term prospects. In what is seen as an attempt to strengthen investor confidence the executive says he will buy $20 million worth of common stock.

Amidst the $20 million stock purchase push, Tesla remains in a precarious position. The stock’s sentiments in the market have taken a significant hit amidst the ongoing tussle with regulators as well as Musk’s outbursts.

Bottom Line

The stock is already down for the year as short sellers appear to be gaining control. For the stock to bounce back, from the current lows, then the company will have to serve groundbreaking catalysts.  Beating estimates on production as well as car deliveries would go a long way in revitalizing investor’s sentiments. The company also needs to turn in some profit to shrug off cash burn rate concerns.

The Driverless CopyPortfolio Investment Strategy is Your Chance to Invest in the Future of the Automobile Industry

The “smart” revolution is all around us, as a growing number of common items are becoming highly technological. It happened with the telephone, it happened with TV, it happened in numerous fields of industry – and now it’s happening in the automotive industry. Self-driving cars are very much a reality, and we will be seeing them in rising numbers on the road within the next few years. This evolution of the personal car, which over the years incorporated more and more technology into it, has resulted in a vehicle that no longer needs a human driver – and the financial potential is incredible.

The driverless car will be one of the most tech-heavy products available to consumers, and as such, will combine numerous components from both automakers and high-tech companies. To learn more about the different aspects of the autonomous car industry, projected to become a $7 trillion market(1) eventually, read this blog post.

Being such an innovative field on the one hand, yet being developed by some of the world’s largest, and most recognizable, companies on the other, the driverless car industry presents an interesting thematic investment opportunity. However, since it involves companies from different industries, operating in various markets around the world, building a thematic investment portfolio to track the industry can be challenging. That is why, here at eToro, we are launching the Driverless investment strategy, through which the members of the eToro community can invest in this sector.

The Driverless CopyPortfolio: Composition

This managed portfolio strategy contains an array of global companies, ranging from automakers, through hardware manufacturers, to software companies developing computer vision, navigation systems and other solutions relevant to the sector. The companies span several industries and have an overall impressive global presence – and are all part of the trend that will make driverless cars a common part of our daily lives in the coming years:

Car Manufacturers

  • Tesla (TSLA) – Elon Musk’s electric car company has established itself as one of the most intriguing players in both the tech and automotive industries in the US. The company is developing driverless cars and trucks and is one of the pioneers in automotive innovation.
  • Fiat Chrysler (FCA.MI) – One of the largest automotive corporation in the world, Fiat Chrysler has a strong presence in both the North American and European automobile markets, and is working on its own self-driving car.
  • Toyota (TM) – The world’s largest automakers, Japanese Toyota is known to be a highly reliable carmaker, have a strong international presence, and pioneering innovative technologies, such as one of the world’s first mass-produced hybrid personal cars.
  • Honda (HMC) – Another Japanese carmaker, Honda’s name has also become synonymous with quality, for both family cars and high-end sports cars and luxury sedans. Honda is also working on a driverless car, declaring 2025 as the target year for a nearly fully-autonomous vehicle.
  • Ford (F) – The world’s first automotive company is still one of the most influential carmakers out there. The company has announced plans for robot cars for ride-hailing and delivery purposes and will be testing them in Miami in the near future.
  • Renault (RNO.PA) – The French car giant has taken great strides in the autonomous car department: Its Symbioz concept model has generated positive reviews, both for its extremely advanced artificial-intelligence-assisted driving and its innovative approach of including the smart car as an integral part of the smart home of the future, positioning it as a notable player in the industry.
  • BMW (BMW.DE) – The German luxury car maker is a prominent player in driver-assistance technology, such as self-parking systems, which exist in some of its high-end brands. Therefore, it is no wonder that the company has been very public about its plans for creating a completely autonomous vehicle in the future.
  • Volkswagen (VOW3.DE) – Pledging to add electric motors to all of its models by 2030(2), this German giant is also researching completely autonomous cars. The VW I.D. Vizzion concept model unveiled by the company is a fully self-driving car, that doesn’t even have a steering wheel or pedals – it is designed to do all of the driving for the passenger.
  • General Motors (GM) – The largest car manufacturer in the US, GM is no stranger to innovation. In the early 1990s, GM completed the development of the world’s first serial electric car, the EV1. Despite later being pulled from production, GM has proved that it is ready for big changes in serial manufacturing – a quality that will serve it well when the market tilts towards the driverless.
  • Tata Motors (TTM) – India’s largest car manufacturer, which is part of a $151 billion conglomerate, is actively testing autonomous micro-cars. According to Tata, it might be one of the first companies to roll out mass-produced self-driving cars.
  • Caterpillar (CAT) – One of the largest heavy industry vehicle manufacturers in the world, Caterpillar is developing driverless trucks that could revolutionize many industries. In fact, the company is no stranger to automation, as several of its products already include self-driving trucks and other heavy vehicles, used by mining and construction companies around the world.
  • Delphi (DLPH) – This auto parts company is one of the world leaders when it comes to electrical systems and software for vehicles. Its products could play an instrumental part in the linking of cars to advanced computer system required for autonomous driving.
  • Ferrari (RACE) – The Italian supercar’s name is synonymous with luxury and speed. While it has distanced itself from the autonomous car space, it did declare that it is working on a fully electric supercar, which will rival the likes of Tesla.
  • Volvo (VOLV-A.ST) – Swedish carmaker Volvo already has high-tech driver-assistance solutions in some of its models, which is a significant step in the direction of a fully autonomous vehicle.

Software Companies

  • Alphabet (GOOG) – Google’s parent company is also the owner of Waymo, a company who already has self-driving cars roaming the streets of Silicon Valley. Unlike some other tech companies, who’ve kept their progress under wraps, Waymo has been very public with its driverless car prototypes and their performance.
  • Alibaba (BABA) – The Chinese retail giant is known for its massive interest in technological innovation. Therefore, it is no wonder that the company has confirmed that it is also in the race for developing a self-driving car, alongside other tech companies.
  • Baidu (BIDU) – Perhaps one of the strongest competitors in the race of launching the first road-ready autonomous car, Baidu has enjoyed the support of the Chinese government and is manufacturing and testing autonomous cars and buses. According to the company’s Apollo project timeline, Baidu will have a fully autonomous car ready for mass production by 2021.
  • Microsoft (MSFT) – One of the largest tech corporations in the world, Microsoft is also heavily involved in implementing its technology in driverless cars. Some of the cars that use Microsoft’s technology are already being tested in several locations around the world.
  • Blackberry (BBRY) – The former smartphone giant has pivoted into other areas in recent years, including software development. Blackberry is developing software that will be used in the autonomous car industry and has a partnership in place with Chinese giant Baidu.
  • Intel (INTC) – According to the company, Intel has a chip in virtually every self-driving car that is being tested today. Moreover, the company strengthened its grip on the market by acquiring Mobileye, a startup which develops computer vision driver-assisting technology, for a whopping $15 billion.

Hardware Manufacturers

  • Apple (AAPL) – The world’s largest company has a strong presence in numerous fields of technology – and autonomous driving is no exception. Apple has been quite secretive about its driverless plans, but reports suggest the company is developing a brand new self-driving car of its own.
  • Nvidia (NVDA) – Since an autonomous car requires great computing power, it is in need of strong processors. Nvidia is one of the world’s leading manufacturers of processors for some of the most performance-based computer functions, such as the real-time rendering of graphics-heavy computer games. Therefore, it is only natural that the company will also be taking part in making processors for self-driving cars.
  • STMicroElectronics (STM.MI) – Europe’s largest semiconductor manufacturer, ST is also one of the companies taking part in creating the computerised “brains” that will steer the cars of the future.
  • Infineon (IFX.DE) – This German chipmaker is developing semiconductors used in both driver-assistance systems and driverless cars. Teaming up with leading car makers, such as German luxury brand Audi, Infineon could serve a major role in the future of the automotive industry.
  • Texas Instruments (TXN) – Developing semiconductors and various sensors for more than 80 years, Texas Instruments is making its way into the autonomous driving realm. In 2017, the company unveiled a new array of sensors that can be used for autonomous cars, drones and more(3).
  • Advanced Micro Devices Inc (AMD) – A power player in the microchip industry, AMD is known for offering computing solutions that are more affordable than its main competitors, without compromising on performance. The company started hiring personnel for its AMD automotive department, which strongly suggests it is venturing into the field.
  • Dialog Semiconductor (DLG.DE) – This German semiconductor manufacturer has reportedly been involved in the early stages of Apple’s self-driving cars. While currently it seems that Apple chose to go another way, Dialog does have the capability to become a leading developer of hardware for autonomous vehicles.
  • MaxLinear (MXL) – Developing hardware such as semiconductors and radio transmitters, this American company is directing some of its efforts into developing components to serve the self-driving car industry.
  • NXP Semiconductors (NXPI) – This Dutch semiconductor manufacturer already has a strong foothold in the autonomous car industry, as it is one of the companies chosen by Chinese Baidu to help construct its driverless cars.
  • Skyworks (SWKS) – Based in the US, Skyworks Solutions has manufactured some wireless transmitters that are being used for autonomous features in current cars. The company’s experience in the field could serve as a strong foundation for its future business in the driverless car space.
  • HELLA (HLE.DE) – A well-known supplier of parts and subsystems for the automotive industry, HELLA has announced that it is strategically entering the driverless space in 2018(4).
  • EnerSys (ENS) – This battery producer has its products powering numerous cars and aerospace vehicles. As the automobile market shifts towards being driverless and electric, EnerSys could be a dominant player, producing the batteries powering these vehicles.
  • Visteon (VC) – This car electronics and computing company spun off from Ford in the year 2000. Visteon has developed a unique platform for driverless cars, which enables the car’s computer to decipher its surroundings and drive itself.

Each stock within the investment strategy’s composition is given equal allocation, and it is rebalanced by the eToro Investment Committee periodically. The minimum investment using the Driverless investment strategy is $5,000.

Investing in the self-driving car industry

It is obvious that there are numerous players and various companies operating in the driverless car space. In coming years, it is likely that more companies, both existing and new, will join the industry, while the autonomous car becomes a mass-produced, global phenomenon. As the industry takes form, eToro enables you to become part of the first wave of investors to take part in this exciting new automotive/technology sector. Using the Driverless CopyPortfolio, you can access a fully allocated, managed investment portfolio and gain exposure to the autonomous car industry.

United States’ SEC Wants to Monitor Social Media Platforms

The U.S. Securities and Exchange Commission (SEC) is exploring options for a new software to detect and track market moving posts on social media platforms. The platforms would include Twitter, Facebook as well as others, and the purpose would be for the posts to be reported directly to the SEC.

Companies around the world use social media on a daily basis as an integral part of their marketing and communications strategies. However, the US regulator has only recently started to look into social media’s influence over companies’ stock prices, in light of the growing number of cases of whereby some companies have apparently misused social media posts to manipulate stock prices.

Most recently, Elon Musk, the “erratic” (as many call him) CEO of the electric car maker Tesla tweeted he wants to take the company private at 420 USD and that he had secured funding for this move to happen. Tesla’s shares rose by around 12% afterward from 340 USD to 380 USD. At the time of writing, the stock was trading at 279 USD.

Elon Musk came under a lot of scrutiny after this tweet and investors wanted him to reveal the organization he implied would fund the company, as it would have been the largest delisting in the US history. Shortly after, Elon Musk said (this time in a blog post) that Tesla would remain a public company. The stock price dropped back below 300 USD in a couple of days.

Moreover, the SEC is now investigating Elon Musk as to whether his information was misleading at the time of his first tweet regarding his claim of funding having been “secured”. If found guilty of stock fraud, he could lose billions in lawsuits or potentially end up in prison.

In light of such actions, the SEC has decided to try to “regulate” social media posts of influential business leaders and to determine, whether they are market moving. The US regulator is willing to pay 27.5 million USD for the desired software, but the SEC wants a finished product (ready to use) as they don’t have time for developing it from a scratch.

The SEC made a brief description of what they are looking for: “a complete, web-based tool to scrape the major sites for keywords on relevant topics. When a keyword pops, the tool should send an email alerting the appropriate SEC staff.”

It seems that manipulating stock prices will be a bit tougher in the near future.

This article was written by Peter Bukov, one of TeleTrade’s leading analysts. 

Major Institutional Investor Says Tesla Stock Price Could Hit $4000 in 5 Years

An institutional investor with a $164 million stake in Tesla (TSLA), held through 158,000 of the electric car manufacturer’s Nasdaq-listed shares, has publically pleaded with CEO Elon Musk to re-think his move to privatize the company.

Representatives of ARK Investment Management, the investor in question, have urged the reassessment through an open letter to Musk, on the grounds that they believe that Tesla’s stock price has the potential to reach $4000 within 5 years. On that basis, ARK argues that Musk’s stated intent to take the company private at a valuation of $420 a share.

Why Did Musk Want to Take Tesla Private?

Elon Musk has grown frustrated in recent months with what he considers the short-termism of capital markets. The entrepreneur, who first rose to prominence as co-founder of the online payments platform PayPal, has never quite fit the mold of a Wall Street CEO. Breaking that mold has been a huge part of his success in managing to sell his grand vision for Tesla to investors and achieving a capitalization and resources far beyond what the company’s revenue would suggest should be possible.

Tesla’s lofty valuation, higher than both traditional auto manufacturers Ford and GM with a fraction of their revenues and none of their profits, has been achieved to a large extent through the force of Musk’s personality and his ability to sell a long-term vision. However, despite the fact that the Tesla stock price (TSLA) has for years marched to a different tune than that of companies many analysts argue should be considered its peers (auto manufacturers rather than tech companies), capital markets still have their demands. Patience with Tesla continuingly missing Musk’s usually overambitious targets and timelines, and the amount of cash the company burns through, has recently grown thin. Tensions recently surfaced when Musk refused to answer fairly standard financial questions put to him by an analyst at a recent quarterly earnings report, dismissing them as ‘boring’.

While subsequently apologizing for what Wall Street media described as a ‘meltdown’, the event seems to have crystallized Musk’s growing suspicion that being a public company might not be the most conducive way for Tesla to reach its goals. Capital markets demand quarterly improvement in specific growth metrics and Musk’s argument for taking the company private is that this creates a short-term mentality that is hindering achieving longer-term ambitions.

The Argument Against Tesla (TSLA) Going Private

ARK’s representatives argue that being a public company provides Tesla with more advantages than disadvantages. The public letter signed by the investment firm’s founder and chief executive, Cathie Wood lists these as:

  • More ‘rapid’ ability to capitalize on competitive advantages – argued as key to network effects and natural geographic monopolies that will characterize autonomous taxi and truck networks.
  • Increased public profile – argued as key to launching an autonomous taxi network.

The investor also believes that the proposed buy-back of Tesla (TSLA) stock at $420, with a $100 a share premium on current price, denies investors who have backed the company the opportunity of realizing huge future returns. The ambitious $4000 a share target ARK argues Tesla can achieve within 5 years, is built on the high-margin future business model of Tesla offering driverless taxi and truck services.

It has been reported that Musk has hired Morgan Stanley to manage the reprivatization process of Tesla. However, as much as the idea to privatize Tesla was appealing, Musk and the Tesla’a management realized that “the better path is for Tesla to remain public”. Tesla shares dropped and did not yet recover after Musk’s decision to keep the electric car maker public.

This article was written by eToro

Elon Musk’s Twitter Account Gets Hacked, Ernst & Young Dive into Blockchain and Cryptos

Elon Musk Hacked and Free Cryptocurrency Offered

Elon Musk Twitter account was hacked. Musk, the controversial head of Tesla, is a frequent target of hackers due to his tendency to stand in the limelight regarding his many companies and projects like Tesla, the electric car manufacturer, and SpaceX which builds rockets for NASA.

The hackers who took over Musk’s Twitter account (perhaps his fake Twitter account) offered free Bitcoin and Ethereum as part of a ‘plan’ to take Tesla private. Being a hack the offer was obviously a scam, but the hackers took advantage of Musk’s recent bantering about potentially taking Tesla private may have been able to fool some of the 22.4 million followers Elon Musk has on Twitter. Since then, Musk abandoned his plan to take Tesla private and announced that the company remains public.

The fallout from the hack has not been able to be tracked yet via individuals who may have fallen prey to the criminal hack. However, Twitter quickly responded to the hack on Musk by issuing a statement essentially warning its users once again that any offers of free cryptocurrencies should be viewed with extreme skepticism.

The hacker (or hackers) certainly played into the recent news when Musk ‘threatened’ to take Tesla private.

A few weeks ago during one of his many loud pronouncements to the media and shareholders who question his handling of Tesla and its cash liquidity problems, which have surfaced and raised concerns, Musk said he was seriously considering taking Tesla private and could raise the funds to make this happen.

Musk raised the ire of many, including shareholders with this statement and a legion of people who have become part of an ‘anti-Musk’ vanguard warned lawsuits would greet him. The SEC is also taking a look into Musk’s pronouncements.

However, Musk has made it known this past week that he is not going to attempt to take Tesla private. And the company will remain public. Skeptics surrounding Musk, of which there are many, said it would likely be impossible for Tesla to go private.

A huge amount of money would have been needed to take Tesla private, approximately 80 plus billion U.S Dollars. And it has been suggested, serious questions exist about Tesla’s current cash liquidity situation which is under heavy scrutiny, and those who would have thought about funding the company going private would have likely balked upon seeing the auditing.

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Ernst & Young Interest in Cryptos Growing

Ernst & Young have moved deeper into blockchain and digital assets with the announcement they are buying cryptocurrency software. Ernst & Young is one of the Big 4 global accounting companies.

The purchase of this software will allow Ernst & Young to expand its cryptocurrency services. The software purchased is from a Silicon Valley company called Elevated Consciousness.

Ernst & Young’s is keen on offering its hedge funds and institutional investors who are clients’ a host of full cryptocurrency auditing procedures.

Hedge funds and institutional investors are focusing an increasing amount of attention on the cryptocurrency and blockchain sector with an eye towards finding profitable avenues of investment for their clients.

They are making direct investments into certain digital assets, finding ways to invest in growing infrastructure projects surrounding blockchain, engaging in trade for clients, and looking at the creation of Indexes and ETFs.

Reality Shares of the U.S, an asset management company, has recently announced that it is launching an ETF based in China. And Reality Shares has also said it will start a cryptocurrency hedge fund using up to 100 million USD as a starting point.

Also, Northern Trust which is a custodian bank is assisting hedge funds to enter the world of cryptocurrency. Northern Trust is a U.S based financial institution with its headquarters in Chicago.

The bank via administrative technology based on an integration of data storage capabilities with the accounting firm PriceWaterhouseCoopers is looking to offer its clients’ full digital asset services.

PwC, which is among the top 4 accounting firms along with Ernst & Young, and is considered among the best top accounting firms consistently.

The news of these two top international accounting and auditing firms getting active within the blockchain and cryptocurrency sectors is another sign of genuine interest is strong as global corporations examine blockchain innovation and its potential benefits.

In the midst of the downturn in value in 2018 which has taken place since the beginning of January, after over-exuberance sending cryptocurrencies sky high in values subsided, hedge funds and institutions are still clearly attracted to the multitude of potential revenue streams blockchain and cryptocurrencies are capable of producing.

Yaron Mazor is a senior analyst at DX.Exchange and Private Equity Manager

Here’s How Blockchain is Changing the Way the Automotive Industry Works

End of the year 2017 saw Bitcoin and other cryptocurrencies at their all-time highs. It caught the eye of the public and resulted in much-needed awareness about bitcoin and the blockchain technology.

It has also paved the way for many projects like the Autoblock and is set to revolutionize several industries all over the world, and all at once.

What has previously considered mere imagination is now a reality. Many companies such as Tesla, Volvo, and Nissan are working to get self-driving cars on the road and make them available to the public.

These self-driving cars will be able to communicate with each other using the Internet of Things (IoT) and share information about traffic and the weather. The blockchain is not just limited to the financial and banking sector but can be beneficial for every industry. Let’s look at how blockchain will impact the automotive industry:

Introduction of Blockchain to Cars

All leading companies in the world spend tons of money to keep themselves competent in the rapidly evolving technological environment by conducting R&D. Which is why the automotive industry is testing the blockchain technology these days.

Porsche claims to be the first one in the industry to conduct feasibility tests of blockchain technology on cars. Earlier this year, they announced a partnership with Xain, a Berlin-based, to test blockchain application in cars. They also claim to be the first automobile company to test and implement blockchain in a vehicle.

Any transaction done on the blockchain is secure and can be processed much faster than traditional systems. Porsche tested how the blockchain technology can be used to lock and unlock a car.

After deployment, it allowed the owner to share access to the car temporarily. Moreover, using this application, users were able to unlock a car in 1.6 seconds, which is six times faster than the current pace.

Furthermore, whenever someone locks or unlocks a car, the data is logged on the blockchain and no one can edit or modify it, making it easy to keep track of who used a vehicle at a given point in time.

Also, all the data is encrypted which makes it 100% secure. It also allows you to remotely access the car or monitor its status using the app.

CarVertical Rooting for Transparency

CarVertical is a startup working on providing solutions based on blockchain for transparent access to a car’s data. At the moment, the data about a car exists in the form of registers and separate databases.

The problem is that the data isn’t publicly available. To get it, you must pay a significant fee to a company who in return will get you access to a small portion of that data. Only a car’s first owner can be sure about its history; all the rest rely on channels that are not 100% reliable.

For example, if a car on average had five different owners in its lifetime, only 20% of them know everything about the vehicle. If you’re purchasing a second-hand car, it is highly probable that the car may have had troubles in the past. Maybe someone tampered with the odometer to cut down some miles or hide airbag deployment.

There is also the possibility that the car was involved in an accident. Now such a piece of information will be available with the insurance company, but since their data is not public, the buyer will never know the full car history.

car verticle

CarVertical raised 15,000 Ethereum in their ICO for their project which aimed at providing a platform that logs every single piece of information about a car on the blockchain so that data is secure, accessible and cannot be manipulated.

The team revealed that they would gather information about the car from different sources and integrate it with the blockchain registry. It is great for people who want to buy used cars but are afraid that they might be conned.

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Future Implications

There will come a time when everything will be based on the blockchain. If you want to buy a car, the owner will give you a token that will represent the car. Whoever has the token will own the car.

So, if you want to sell your vehicle to someone else, you will send that token to the new buyer. The token will also be used to unlock and then use the car. Each car will have just one token – allowing the holder to be the only one to have access.

If you ever visit the garage for repairs or anything, it will all be recorded on the blockchain. So, if ever the ownership changes or if anyone wants to see how frequently the car has visited the garage, everything will be logged on the blockchain ensuring transparency.

The new owner can check the history of the car since blockchain ensures information access for everyone. Tampering with the mileage of the car will be an old tale as blockchain will have all the records and the owner can’t manipulate the potential new owner.

Autonomous self-driving driverless ca

Since the blockchain is immutable, it protects data from tampering and removes intermediaries from the process. All these elements are equally important for other industries as well and make blockchain the next big thing.

In all reality, the automotive industry is changing, and among many variables, blockchain has a significant role to play in how the automotive industry will move forward into the future.

This article was written by Andrea Bell

What To Expect Ahead of A Busy Earnings Week?

Major U.S Benchmark indices finished the week on the red as investors reacted to mixed earnings reports. Alphabet Inc. (NASDAQ: GOOGL) and, Inc. (NASDAQ: AMZN) led the foray in beating earnings estimates as Facebook, Inc. (NASDAQ: FB) Imploded on missing estimates and providing guidance that fell short of expectations.

It yet again promises to be a busy week as a string of high profile companies is expected to post their quarterly earnings results.

Earnings Report expectations

Apple Inc. (NASDAQ: AAPL)

In the wake of Google and Amazon beating estimates, focus this week shifts towards Apple Inc. (NASDAQ: AAPL) given the amount of market cap it commands. The iPhone maker is to post its second earnings report after market close on July 31, 2018.  Analysts expect the company to post revenue of $61.14 billion representing a 15% year-over-year increase. Earnings per share, on the other hand, are projected at $2.16 a share.

Wall Street will also pay close attention to the number of iPhones the company sold in the second quarter, after a disappointing first quarter whereby unit sales rose by only 1.5 million. In the March quarter, service revenue rose 31% to $9.19 billion thereby helping the company beat sales and EPS expectations.

For the June quarter, Wall Street expects service revenue to come in at $9.21 billion representing a 21% increase. Investors will also pay close attention to other products sales made up of headphones, Apple TV Set-tops, as well as Apple Watch. Expectations are that the company will report a 34% increase in revenues in this segment at $3.68 billion.

Tesla Inc. (NASDAQ: TSLA)

Tesla Inc. (NASDAQ: TSLA) needs to post stellar second-quarter earnings report to avert a further implosion of the stock. After initially rising to highs of $373 a share, the stock has come down tumbling to below the $300 share mark.

Tesla reports on August 1, 2018, having achieved a significant milestone in the production of 5,000 Model 3s, a week. However, the company is expected to report a net loss of $3.49 a share. Investors will focus their attention on the number of Model 3 units the company delivered in the quarter.

The expectation is high that the company did deliver 10,000 more units in Q2 compared to Q1. Revenue, on the other hand, is expected at $4 billion on the sale of the additional cars. Attention will also be on the company’s expenditure, a headwind that has clobbered the company for years preventing it from turning in a profit.

Q3 Guidance will also have to come overboard to prevent further slide of the stock. Given that the company has hit 5,000 a week production milestone investors expect the company to provide a pathway to profitability in Q3.

Caterpillar Inc. (NYSE: CAT)

Caterpillar Inc. (NYSE: CAT) will report its earnings report on July 30, 2018, before the earnings bell. After delivering a 120% year-over-year improvement in earnings in Q1, expectations are high that the trajectory continued in Q2.  Investors expect the company to report a 22% increase in total sales, projected at $13.8 billion.

Earnings per share, on the other hand, should tickle in at $2.66 a share, representing a 79% year-over-year increase. The earnings beat is what Caterpillar needs if the stock is to bounce back after underperforming the market in the first half of the year.

Loews Corporation (NYSE: L)

Just like Caterpillar, Loews Corporation (NYSE: L) is scheduled to report on July 30, 2018, before the market opens. In Q1, the company reported a 14% surprise earnings beat. Expectations are high that the company beat estimates in Q2 on the strong performance of its CAN financials and Loews Hotels units Consensus estimates indicate the company could post earnings of 0.73 cents a share representing 3.9% year-over-year decrease.

AK Steel Holding Corporation (NYSE: AKS)

AK Steel Holding Corporation (NYSE: AKS) will report earnings on July 30, 2018, with expectations high that the company will beat estimates. The stock has already broken out of a critical resistance level in the wake of other steel companies reporting stellar quarterly financial results.

The consensus forecast for the quarter is that the company will report earnings of 23 cents a share, an increase from 19 cents a share reported a year earlier. Steel stocks are expected to continue powering high, the sector has emerged as a bright spot in the economy.

Procter & Gamble Co (NYSE: PG)

The owner of blockbuster brands like Gillett Razors and Pampers Diapers, Procter & Gamble Co (NYSE: PG) is to report its fourth-quarter and full year financial results on July 31, 2018. At the start of the year, the company forecasted organic sales gains of 2.5% up from an initial estimate of 2%.

For the current quarter, Wall Street expects the company to report revenues of $16.55 billion. Full-year sales, on the other hand, are expected at $66.87 billion. Investors will also want to hear what the company is doing as part of its cost-cutting drive. Cost cuts are expected to allow the company to venture into other growth areas.

Pfizer Inc. (NYSE: PFE)

Pharmaceutical giant Pfizer Inc. (NYSE: PFE) is to report its second-quarter earnings report before market open on July 31, 2018. The focus will be on whether the company maintained the positive earning streak in the quarter, after a positive earnings surprise of 4.05% in Q1.

Consensus estimates indicate the company could report EPS of $0.74 a share on revenues of $13.31 billion.

DowDuPont Inc. (NYSE: DWDP)

DowDuPont Inc. (NYSE: DWDP) is to report its recent quarterly earnings on August 2, 2018, before market open. Last year same quarter, the company reported earnings per share of $1.12, beating analyst’s expectations of $1.1 share. For the current quarter, investors expect the company to post EPS of $1.3 a share. Revenues, on the other hand, should come in at $23.6 billion.

Baidu Inc. (ADR) (NASDAQ: BIDU)

Investor’s sentiments are high on Chinese internet giant Baidu Inc. (ADR) (NASDAQ: BIDU) posting impressive quarterly results after the market close on July 31, 2018. Consensus estimates indicate the company could post a 30.2% year over year increase in sales that could come in at $4.01 billion. For the full year, the search giant is expected to post sales of $16.09 billion. Analysts expect the company to issue a sales guidance of $19.46 billion for next year.

Sprint Corp (NYSE: S)

Sprint Corp (NYSE: S) is to report its Q1 financial results on July 30, 2018. Wall Street expects the company to report earnings per share of $0.01 a share compared to $0.05 reported last year. Total revenue is poised to decline 0.7% year over year to $8.1 billion.

Teva Pharmaceutical Industries Ltd (ADR) ADR (NYSE: TEVA)

Teva Pharmaceutical Industries Ltd (ADR) ADR (NYSE: TEVA) is to report on its recent quarterly earnings report before the market opens on August 2nd, 2018. The expectation is high that the company will post sales of $4.75 billion down from $5.69 billion reported last year. Earnings per share, on the other hand, should come in at $0.67 a share.

Shake Shack Inc. (NYSE: SHAK)

Shake Shack Inc. (NYSE: SHAK) is expected to post sales of $110.20 million for the recent quarter after market close on August 2, 2018. Earnings per share are expected at $0.17 a share. The company is also expected to maintain full-year sales estimates of $451.32 million.

Kraft Heinz Co (NASDAQ: KHC)

Kraft Heinz Co (NASDAQ: KHC) will report earnings before markets open on August 3, 2018. Investors expect the company to post EPS of $0.92 a share up from $0.89 a share reported in the previous quarter. Revenue, on the other hand, is expected at $6.59 billion.

More Than 3,000 Workers To Be Laid Off By Electric Carmaker Tesla

Employees of electric carmaker Tesla Inc (NASDAQ:TSLA) have been informed that around 9% of the company’s workforce will be laid off. This is the largest layoff in the history of Tesla and it comes as the car maker burns through cash with a view of meeting production goals for the Model 3 sedan. Around 3,600 employees are expected to be declared redundant out of a total workforce of 40,000.

According to the founder and chief executive officer of Tesla, Elon Musk, the staff cuts will not compromise the ability of the automaker with regards to meeting the company’s goals. No factory workers will be affected. Per Musk there has been a duplication of some job functions and roles and while this could have been justified in the past that is not the case presently. Tesla did not however reveal the amount of money that would be saved by the layoffs.

No annual profit

In the one and a half decades that Tesla has been in existence the electric car maker has not turned an annual profit and it is only in two quarters that it has registered a net profit. Tesla has focused on investing heavily in an extensive EV-charging network, manufacturing plants and technology. During an annual shareholder meeting which was held earlier in the month the CEO of Tesla indicated that the firm would post a profit for the July to September quarter.

This is not the first time that Tesla is laying off employees. Last fall Tesla sent home between 400 and 700 employees following annual performance reviews. A decade ago Tesla also declared a smaller number of employees redundant. According to Musk it would be impossible for the electric car maker to promote the adoption of cleaner energy across the globe if it couldn’t become sustainably profitable.

Flat management structure

The reorganization at Tesla was first telegraphed last month when Musk indicated that the management structure of the company would be flattened. Among the employees who are expected to be affected include those who are based at Home Depot and who are involved in Tesla’s solar business which came into being after the acquisition of SolarCity. Some of these workers will get a soft landing as they will be offered a chance to work in the retail business of Tesla.

According to an analyst at CFRA, Efraim Levy, the announcement of the impending layoffs at Tesla is a sign that the electric car maker is maturing and making profitability a priority.

“There is a normal ebb and flow of hiring and firing in a business. Nine percent is a big chunk to do at once, but there comes a time when a company grows up and they have to cut out the fat to become more efficient,” said Levy.

In the recent past Tesla has faced a lot of criticisms for failing to meet production targets despite revising the goals severally. At the moment the electric car maker has set a target of producing 5,000 Model 3 vehicles per week before this month ends. Some analysts are of the view that Tesla needs to raise additional capital before next year’s first quarter.

Wild Trading Yesterday and More to Come, Asian and European Shares Rise as Trade Tensions Ease

A possibility of negotiations between China and U.S regarding their trade feud has helped sentiment short term in the broad markets. Tomorrow’s inflation data from the U.S will be an important factor in forex.

Wall Street Reverses Higher, Broad Market Sentiment Being Tested

U.S equities opened Wednesday’s trading with declines and appeared headed for additional poor results. However, reports circulating about China and the U.S showing signs of willingness to negotiate regarding their trade disagreements reversed sentiment quickly in the broad markets. And Wall Street was able to turn in a winning session. And Japan has produced gains today. The broad markets remain fragile and there are other concerns generating headwinds for investors. Facebook and Tesla have been two of the big stories this week, but Deutsche Bank in Germany is also being watched. China equities are closed today and tomorrow – including the Shanghai Shenzhen and Hang Seng composites. Investors will continue to have their sentiment tested in the coming days.

Wage Data from States on Friday a Key, U.S Dollar Slightly Weaker

The U.S Dollar has weakened moderately versus the Pound and Euro as risk appetite has improved in the broad markets short term. However, tomorrow’s inflation report from the U.S via the Average Hourly Earnings remains a centerpiece for traders. And until the results are known, most short-term positions will be purely speculative. If the results from the wage numbers are weaker than expected the U.S Dollar could lose additional value. However, if there is a strong outcome, the Euro and Pound could decline. The Yen should be watched closely as it trades near resistance.

Commodities Hit by Trade Noise, U.S Crude Oil Climbs on Momentum

The commodity markets have seen fast results within a wide range of products as the trade battle between China and the U.S has caused ramifications. U.S Crude Oil, however, is still within a known range and did see valued added yesterday. In the coming days, Crude Oil may gather additional momentum and test resistance near 65.00 U.S Dollars a barrel.

U.K Services Numbers Coming Today, U.S Earnings Data Tomorrow

The U.K’s Services Purchasing Managers Index will be the highlight today at 8:30 GMT. And tomorrow’s Average Hourly Earnings at 12:30 from the U.S will be a focal point for investors.

  • Thursday 8:30 AM GMT, U.K, Services PMI
  • Thursday 12:30 PM GMT, Canada, Trade Balance
  • Friday 12:30 PM GMT, U.S, Average Hourly Earnings
  • Friday 12:30 PM GMT, U.S, Non-Farm Employment Change

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.

European Shares Follow U.S. Sharp Declines on Trade War and Tech Sector Concerns

Tesla has continued to see bad news mount. Full trading volumes will be seen in Forex today.

NASDAQ Leads the Charge Downward, Problems for Tesla Mounting

Upon their return to the equity markets on Monday, U.S investors produced another wave of massive selling. The NASDAQ once again led the charge downwards, and the Dow Jones Industrials and S&P both suffered too. Manufacturing numbers stayed robust in the U.S but missed the estimated results. Total Vehicle Sales will be released from the major U.S carmakers today. And Tesla should be watched, the auto manufacturer has released less than promising news regarding its output, and analysts are pointing to potential money shortfalls as its problems mount. Asian markets have sold off this morning and the Nikkei Index has led the declines.

Full Trading Volumes Expected in Forex, U.S Dollar Relatively Strong

Forex will see produce full volume trading for the first time since last Thursday and this could create fireworks. The U.S Dollar has remained within its stronger realms the past few trading sessions. The Euro is near the 1.23 level and the Pound is around 1.4050 versus the U.S Dollar. The Yen has gained slightly this morning however as Asian equity markets have lost value. And traders should keep in mind that Friday’s Average Hourly Earnings outcome from the U.S could cause a shakeup in forex.

Gold Getting Banged Around, Dynamic Conditions for Precious Metal

Gold saw its value climb as Wall Street’s vicious declines spurred on risk adverse buying. The commodity is near 1338.00 U.S Dollars with fast conditions dominating. If global equities remain nervous Gold will remain dynamic, but the U.S Dollar should be watched for correlations because of its inverse relationship to the precious metal.

Manufacturing Readings from E.U & U.S, Vehicle Sales from States

Manufacturing data from the U.K will be a highlight for traders early at 8:30 GMT.

  • 8:00 AM GMT E.U, Final Manufacturing PMI
  • 8:30 AM GMT U.K, Manufacturing PMI
  • All Day, U.S, Total Vehicle Sales

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.

Watch Out: What Do Elon Musk and Bill Gates Know about Artificial Intelligence

The talk of robotics and artificial intelligence is nothing new, with the world having been exposed to sci-fi movies for decades, the most lifelike robots in films such as The Blade Runner, which was certainly ahead of its time and now, a more reasonable image of what lies ahead. And let’s not forget C3PO and R2DT, George Lucas’s creation.

Artificial Intelligence is not just down to robotics, however, but any form of intelligence that is exhibited by machine, rather than natural life form, the intelligence element being the machine’s ability to demonstrate cognitive functions akin to those of human minds, including learning and problem-solving.

As of today, according to Forbes, 10 powerful examples of artificial intelligence used today include Google’s DeepMind, but more common AI forms in existence today are:

Siri: Apple’s personal assistant, which is computer voice-activated, uses machine-learning technology to get smarter and therefore more adept at predicting and understanding questions and requests.

Alexa: Introduced by Amazon, is able to decipher speech from anywhere in the room, helping users to search the web for information, shop online, schedule appointments, set alarms, etc.., not to mention create a smart home environment.

Tesla: Self-driving a key feature, Tesla also has predictive capabilities, with the vehicles getting smarter and smarter.

Cogito: Considered to be one of the most powerful A.I. forms in existence today, is able to improve the emotional intelligence of customer support reps in the market. Cogito is a fusion of machine learning and behavioral science.

Boxever: Emphasis is on machine learning to improve customer experience within the travel industry.

John Paul: Predictive algorithms for client interactions, allows John Paul to determine the needs and desires of travelers at an extreme level, the company providing concierge services for millions of customers across the globe, including Visa.

Amazon: Perhaps little surprise that appears twice on the list, with the company becoming exceptionally good at predicting what buyers are interested in buying based on online behavioral patterns.

Netflix: Another successful example of predictive technology, which analyses billions of records to then be able to suggest appropriate movie choices based on previous selections and ratings.

Pandora: Music technology that is being labeled as music DNA, recommending songs based on 400 musical characteristics.

Nest: This is a learning thermostat acquired by Google back in 2014 and can now be voice-controlled by Alexa. Nest uses behavioral algorithms to learn the heating and cooling needs, managing the internal temperatures at home and in the office.

Considering where we are today on A.I., the pace of advancement is likely to accelerate, as we see smart cars, smartphones, smart watches turn into pretty much smart anything, taking the necessary control away from the user.

We will expect A.I. to evolve to such an extent that by the time robotics are beyond the manufacturing industry and ever-present within the services industry, the combination of the above 10 and more will likely be just a small component of the capabilities of modern tech.

Who needs to remember an anniversary or a birthday and struggle with selecting the right gifts, when our home robots will already have analyzed and assessed the most suitable gift and purchased it online without even a word from the less, but naturally intelligent buyer.

Bill Gates, Stephan Hawking and Elon Musk Warn us about AI

There is a pretty mixed view on the advancement of artificial intelligence and like anything new, there are the scaremongers and those who embrace.

Elon Musk has perhaps been the most vocal anti-A.I. figurehead in recent times, despite being amongst the most forward-thinking CEOs of modern times, Tesla certainly not from the dark ages and likely to make further advancements in A.I. than many of its competitors.

Musk sees Silicon Valley’s thirst for artificial intelligence as a scary one and believes that everyone should be afraid of what’s on the horizon, a possible take-over by machine-learning overlords.

One of the more well-known creators of A.I. is Demis Hassabis, the co-founder of London Laboratory DeepMind.

The two were sitting at Musk’s SpaceX rocket factory, with Musk talking about what he considered to be the most important global project, facilitating interplanetary colonization.

Hassabis had an altogether different view, this project being the most important project in the world, not just artificial intelligence, but artificial superintelligence.

If there are any doubters on Musk’s view on Artificial Intelligence, his response was clear. Interplanetary colonization was all the more important to provide humans a plan B in case A.I. goes rogue and turns on the human race. Hassabis may have been joking, but retorted with “A.I would simply follow humans to Mars.”

Hassabis is considered the Yoda of A.I., so how quickly progress is made will have little to do with whether the concept is embraced, artificial intelligence creeping into everyday life with few aware of where we are today and where we will be tomorrow.

It’s pretty obvious that Musk is afraid of what lies ahead. Perhaps the doomsday outlook akin to The Terminator, where Artificial Intelligence started World War III and took over the world, is where Musk sees things going and let’s face it, if we get to the point where machines are capable of self-teaching, there’s little hope for natural intelligence and its limitations.

Shane Legg, who is Hassabis’s partner at DeepMind has a more simplistic view, believing that human extinction will probably occur, with technology likely to play its part.

It may sound like headline-grabbing egotism, but if you think about it, it’s a more reasonable view than suggesting global warming will bring the ecosystem to an end.

Musk was an investor in DeepMind before it was acquired by Google back in 2014 and when asked why he had invested, he saw it as an opportunity to keep an eye on the development of A.I. The CEO of Tesla may want to reconsider developing self-driving cars that may decide it’s better for you to go home than go for a drink with friends on a Friday night, or worse yet, attend an anti-A.I strategy meeting.

Musk is not the only modern CEO to listen to, however, with Bill Gates certainly up there when it comes to technological advancements.

As the former richest man on the planet, there’s good cause for the Microsoft co-founder to want control of planet earth to remain in the hands of mankind. Surprisingly, Gates has a different view and of all the things he would like to see advance the most in his lifetime, he simply stated that he would like to see A.I. develop to the point where computers can read and understand information in the same way as humans.

While Gates would like to see A.I.’s advancement, he did elaborate saying that humans should be worried about the threat of Artificial Intelligence, adding that he was somewhat perplexed as to why people were not more concerned with the possibility that A.I. could eventually become too advanced for humans to control.

Gates says that he agrees with Elon Musk, concerned over how Artificial Super-Intelligence will eventually take over.

If Gates and Musk are not high profile enough to raise some red flags over what lies ahead, not for our generation, but perhaps the next, Professor Stephen Hawking has also expressed concern, saying that he believed machines with A.I. could “spell the end of the human race.”

Microsoft’s Mr. Horvits, who runs Microsoft Research Lab, disagrees with Musk, Gates, and Hawking, seeing only the advantages and there are plenty, but as always, there’s always a price tag.

The Next Battle? Man vs Artificial Intelligence

Man vs Machine has been a battle of the ages, with the continued advancement of computers having already impacted multiple sectors, leading to less need for human involvement.

In recent times, perhaps the biggest loss to the machine has been automation in the manufacturing industry as robotics evolved in the last few decades and some companies looked to reduce fixed costs in the world of ever decreasing margins.

Well-known manufacturer Foxconn announced at the end of 2016 that the Company has a 3-phased plan in place to automate its Chinese factories, using software and in-house robotic units, known as Foxbots.

  • Phase 1 involves replacing the work that is either dangerous or involves repetitious labor that humans are willing to do.
  • Phase 3 involves automation of entire factories with only a minimal number of workers assigned to production, logistics, testing and inspection processes.
  • Projections are for 30% automation by 2020 at Chinese factories.
  • Foxconn can produce 10,000 Foxbots per annum and in March announced that the company had automated away 60,000 jobs at one of its factories.

The initial investment may be expensive, but as production costs for robots soften through greater demand and competition for market share, we expect automation to accelerate.

  • Worldwide annual supply of industrial robots is forecasted to have an annual increase of 15% between 2009 – 2018.
  • Supply of automated machines to Asia / Australasia is forecasted to see the largest growth rates.

In the last 6-years, the use of industrial robots has nearly tripled, the growth attributed to the Asian market where there are less social pressures.

The numbers are certainly telling and this is just the tip of the iceberg as robotics begins to stretch beyond manufacturing into Medicine, Transportation, and many other sectors.

While we have continued to be comforted with the knowledge that not all jobs can be given away to the machine, artificial intelligence evolution in the coming years may well question whether there are any jobs out there that a machine would not do better. Humans still have higher qualities than machines.

The Good, the Bad and the Scary

Taking a step back, we could consider the good, the bad and the scary from an A.I perspective and with governments more interested in controlling other sectors such as medical advancements. For now, at least, all three scenarios are more than just possibilities, in what is likely to be a 3 phase process, the human race expected to initially embrace the advancement of A.I. and all the benefits, before A.I. just gets too intelligent.

Obviously, the benefits are endless when we consider all of the menial tasks, but the key advantage considered by many is the expectation that A.I. will replicate human decision and actions, whilst eliminating the failings of mankind, these being fatigue and emotion.

We’ve seen the development and advancement that has given companies more consistent performance through the use of machines in place of man, the only errors in production apparently coming from human error, in the decision-making process rather than the actual production process itself.

You only need to see the hours worked by doctors and surgeons. Would you prefer to be under the knife in a lifesaving operation, with a fatigued surgeon at the table or a fully charged Robot?

With robotics also creating the possibilities of replacing humans in more dangerous jobs such as mining, some may view this as a positive, whilst others will perhaps be anxious over the fact that machines have continued to replace man in recent decades and, the smarter they get, the more rapid the pace of displacement will become.

We’ve talked about the fears of some over the advancement of A.I. and there are of course the ethical and moral values to consider, but ultimately the most negative element of Artificial Intelligence must be the fact that machines are able to store massive amounts of data. If A.I eventually reaches the realms of the unthinkable, why would companies even consider hiring humans, when robots are able to work for free and 24-7, without the world of Human Resources, pay rises and bonuses, the only cost to the company being the purchase, development, and servicing of the robots.

Once the world falls into mass unemployment, anarchy will undoubtedly prevail and if A.I is given the free reign that its developers crave for, it would only be a matter of time before the creators become the victim of their own success, losing control, with mankind ruled by the kind that is not voted into office.

Human nature has a self-destructive element to it, human life fallible to the creation of mankind. Artificial Intelligence has been seen as a way to address the weaknesses of mankind, but in the end, A.I is more than likely going to identify the very weaknesses and take over than to sit back and be dominated. John Connor and the human resistance against the machine, with Skynet to blame. Which company will be Skynet’s reality is yet unclear, but a reality it will likely be and Gates, Musk or Hawking will have very little influence over it.

Stepping away from the fear of machine and the realities of what lies ahead, we have seen plenty of evidence with algorithms on the financial markets, with flash crashes and inexplicable market movements becoming the norm. Trading is electronic and worse yet, if you look towards cryptocurrencies, there’s not even a hard copy certificate of ownership. Do certain individuals merit wealth and who decides? Today it’s the regulators on the developed markets, not quite yet on Bitcoin or other digital currency. A shutdown of the world wide web with the evolution of machine domination and the prospect of humans sending viruses would not be completely farfetched. What value would cryptocurrencies have in should there be an end to the internet as we know it? The days of analysts scouring macroeconomic reports are at peril, with it only being a matter of time before machines know best, but it will ultimately be an implosion of the markets as we know it today, with a return to physical and more importantly, Cash being King…

Afterall, if machines are ruling the world, who will be left to invest?