Weekend edition—#America’s moral ambivalence, eclipse addicts, Irish smugglers

Good morning, Quartz readers!

That American white supremacism once more reared its ugly head last weekend was not shocking; it’s been experiencing a resurgencefor several years. That president Donald Trump equivocated about condemning it was also, sadly, no surprise. What’s troubling is how ambivalent much of America has been about it.

That might not be your impression, if you read the mainstream media, which have relentlessly covered the liberal outrage at Trump’s remarks and the hasty attempts by business leaders, public intellectuals, and certain Republican politicians to distance themselves from him. But many Republican lawmakers have not spoken up, and 40% of Americans, according to one poll, agreed with Trump that both sides were equally responsible for the Charlottesville violence.

For the opponents of racism, this is a difficult moment. As a prominent Democratic strategist observed this week (paywall), a shrill focus on racial injustice risks making the party seem as if it cares only about ethnic minorities. Moreover, the intense public and media attention on what are, in fact, very small groups of extremists both amplifies their message and builds sympathy for them as underdogs. All this risks making that ambivalent 40% even more ambivalent.

And yet, what option is there but to take an unambiguous stand against racism? It’s precisely through tolerance for ambiguity, through the tacit acceptance of moral equivalence, and through the reluctance to challenge hatred that prejudice is normalized. That is how democratic societies accept fascism—not in a joyous embrace but with a quiet, what-can-you-do shrug.—Gideon Lichfield


Digging for digital gold in Inner Mongolia. At the heart of bitcoin are miners running massive computing operations to earn the $7 million up for grabs each day for solving complex mathematical equations. Zheping Huang and Joon Ian Wong got access to one of the world’s largest bitcoin mines, Bitmain, and offer a rare look at the lives of its workers, as does a photo essay for Quartz by Aurelien Foucault.

How to succeed at Nafta without even changing it. US border cities are indeed growing slower than their Mexican and Canadian counterparts. But contrary to US president Donald Trump’s rhetoric, the fault lies not with Nafta. Ana Campoy and Youyou Zhou dive into the economic data and find the problem is that US border towns are too often treated as solitary outposts, rather than part of the international hubs of economic activity to which they contribute.

Know your wine without being annoying about it. Transforming into a casual sommelier puts you at risk of becoming totally intolerable. Luckily, Jenni Avins is here to walk us through the journey of wine enlightenment by recounting her own experience, helped along by Marissa Ross’s book Wine All The Time. From ditching the grocer to learning the language of wine itself, see how to live your best wine life without becoming a snob.

There are hundreds of solar eclipse addicts. Eclipse chasers talk about the moon’s shadow the way some people might talk about falling in love. Now they structure their lives around seeing every single solar eclipse, whether it lands in Svalbard, Tahiti, or Antarctica. Zoe Schlanger reports on the people who give up everything for a few minutes of overwhelming awe. (If you’re in the band of totality on Monday, watch out—you might just catch the bug.)

The lessons of Charlottesville. A week after neo-fascists marched in a Virginia university town, millions of Americans are finding they still have a lot to learn about their country. Gwynn Guilford sheds light onhow the alt-right saw the events in Charlottesville; Tim Squirrell sifts through every comment ever made on Reddit—all 3 billion of them—to explain how right-wing trolls are finding a united language and identity; and Christopher Groskopf, David Yanofsky, and Youyou Zhou create a tool that shows where your nearest Confederate monuments are.


How the violent left enables the violent right. Peter Beinart in the Atlantic delves into the tactics of the “antifa” or anti-fascist movement, which uses violent tactics to prevent far-rightists from assembling.This is a slippery slope, Beinart argues; if mainstream leftists tacitly let antifa take on this role, it risks weakening the rule of law and strengthening the resolve of the far right.

“Screen time” is a useless term. Anxious parents are subjected to dire warnings about how too much screen time is bad for kids. But when reading, homework, and conversations with family can all take place on screens, demonizing them tout court is meaningless and unhelpful. At The Conversation, researchers Natalia Kucirkova and Sonia Livingstone argue that what children experience on a device is more significant than the time they spend doing it.

When gestures overpower words. German chancellor Angela Merkel’s body language speaks louder than everyone in German politics. She has vanquished male opponents for decades by allowing them to destroy themselves in a kind of political aikido. One opposition leader Andreas Kluth for Handelsblatt Global that “Merkel’s secret is that she has found a method against the men, but the men have found no method against her.”

In pursuit of the perfect score. The US economy is built on credit, and Suzanne Woolley of Bloomberg delves into the world of “super-prime” borrowers obsessed with maintaining a perfect credit score. Just over 1% of Americans have achieved this feat, which goes well beyond paying bills on time, and opens up a world of financial possibilities unavailable to the average consumer. “The only number that may be more important is your cholesterol count,” she writes.

Irish smugglers’ Brexit bonanza. One of the thorniest issues looming over the divorce talks between the UK and EU is what to do about the border between Northern Ireland and the Republic of Ireland. In Politico, Naomi O’Leary explores how imposing a hard border could be a boon for the illicit trades that thrived before many restrictions were removed by the EU’s single market. “Locals say there is an overlap between republican paramilitary circles and those in charge of cross-border smuggling,” she notes, ominously.

Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, perfect credit scores, and body-language power moves to hi@qz.com. You can follow us on Twitter here for updates throughout the day, or download our apps for iPhone andAndroid.

CWS Market Review – August 18, 2017

CWS Market Review

August 18, 2017

“Good investment advice is repetitive and boring. There is nothing exciting about it.”
– D. Muthukrishnan

Volatility may slowly be creeping back into Wall Street. Last Thursday, the S&P 500 fell by 1.45%. As I explained in last week’s CWS Market Review, that’s not really that big a move in historical terms. But compared with how calm the market’s been this year, it was a jolt.

Some market watchers dismissed last week’s move due to jitters about North Korea. That’s right, but we got another downdraft this week, and again, it happened on Thursday. This time, the S&P 500 lost 1.54%. That’s the index’s biggest daily drop in three months. Not many other days have come close.

I’m not ready to say that this a major change for the market. It could be a false start, and the stock market may quickly return to its sleepy ways. But it’s something to notice. Trends can only last so long.

In this week’s CWS Market Review, I’ll highlight some of the market’s recent trends. Later on, I’ll discuss the very nice earnings report we got from Ross Stores. The deep-discounter is doing just fine against the great Amazon behemoth. Ross raised its full-year earnings guidance for the second time this year. I’ll also preview three more Buy List earnings reports coming our way next week. But first, let’s look at what’s shaking Wall Street.

The Slow-Moving Break-Up of the Baby-Step Rally

Three times in the last six trading sessions, the S&P 500 had a daily move of more than 1%. Normally, that’s no big deal, but in 2017, it’s enough to get your attention. Last year, the S&P 500 had 48 days in which it closed up or down by more than 1%. In 2015, there were 72. So far this year, there have been seven.

Here a remarkable stat: Not once since election day has there been a 3% drawdown for the market. In other words, from top to bottom, the S&P 500 has never been down by more than 3%. That’s the longest such streak on record. For more than nine months, it’s been a baby-step rally the whole way. However, there are a few disparate events that seem to be coming together all at once that could shake things up. Let me take them one at a time.

I was critical of the last Fed rate increase. Now it appears the market is starting to doubt the Fed’s commitment to more rate increases. The futures market had been expecting a third rate increase this year in December. Now the odds are slightly against it. Traders don’t give a 50% chance for another rate increase until March 2018. That’s actually more hawkish than a few days ago, when the next hike was pegged for June 2018. Whatever the case, traders think the Fed will be on hold for several more months. By the way, I should add that Janet Yellen’s term ends in February. President Trump may reappoint her.

Speaking of the president, many of the investing themes that took hold of the market after the election have quietly melted away. A good example is small-cap stocks. Last November, the Russell 2000 soared. There was a great deal of optimism that the new administration would be a boon for smaller companies. (Please note: I’m not making a political statement. I’m merely reflecting what traders believed at the time.)

But the sector soon started to lag the baby-step rally. In the last month, the Russell 2000 has been drifting lower in absolute terms. On Thursday, the index dropped below its 200-day moving average, which is often a bad omen. The Russell hasn’t traded below its 200-DMA in more than a year.

Watching the small-cap sector is important because it could be an early warning sign that investors are pulling back on riskier names. In a bull market, you want to see stable blue chips rally along side the up-and-comers. Whenever the score tilts heavily to one side, you know something’s up.

Along with small-caps, the energy sector is getting beaten up. Just like small-caps, energy stocks jumped last November on hopes of the incoming administration. But the Energy Sector ETF (XLE) has fallen for the last six days in a row, and 11 times in the last 13 days. There’s just no love for energy stocks at the moment.

Here’s what happening: On the surface, we’ve seen a baby-step rally. The S&P 500 is moving mostly upward, with very low volatility. But below the surface, investors have been quietly shunning riskier areas and fleeing to safety. Or rather, perceived safety. But this is unusual, because it’s the opposite of what we normally see in the late stages of a bull run. Typically, when investors exit safety and chase madly after risk, that’s a sign of a frothy market.

On top of that, we’ve seen pronounced weakness in the U.S. dollar all year. Mind you, that’s not all bad. In fact, the weak dollar probably bailed out the market this earnings season. But are all these trends separate or are they different expressions of the same event?

One possible explanation is that the economy simply isn’t as strong as people thought. That’s why investors are shifting toward safety. Despite a low unemployment rate, GDP isn’t moving so fast, and that could require more assistance from the Fed. Lower rates, or a slower increase in rates, would also make the U.S. dollar less attractive.

Going forward, I encourage investors to remain focused on high-quality stocks. Two Buy List stocks that look particularly good at the moment are Danaher (DHR) and Alliance Data Systems (ADS). As always, make sure your portfolio is well diversified. Now let’s look at the good news from Ross Stores.

Ross Stores Beats and Raises Guidance (Again)

After the closing bell on Thursday, Ross Stores (ROST) reported very good earnings for their fiscal second quarter. This came as a huge relief for traders, as folks who keep an eye on retail had been expecting the worst. Shares of Ross had been drifting lower for much of this year.

I’m glad we’ve stuck by Ross, because it’s an excellent firm. Ross is one of the few retailers that’s been able to withstand the great Amazon beast. For Q2, Ross earned 82 cents per share. That was well above the range of 73 to 76 cents per share that Ross had been expecting. Even as a Ross fan, this is more than I had anticipated.

Let’s dig into some of the numbers. Ross’s quarterly sales rose 8% to $3.432 billion. Their comp-store sales rose by 4%. That really impressed me. For Q2, Ross had been expecting an increase of 1% to 2%. A number great number is that their quarterly operating margin came in at 14.9%, which is very good for a retailer. This tells us that Ross is holding up well within its sector.

Now for guidance. Ross sees Q3 earnings ranging between 64 and 67 cents per share. In last week’s issue, I said I was looking for something like 65 to 68 cents per share, so that’s pretty close. Ross also gave Q4 guidance of 88 to 92 cents per share. Q4 is November, December and January.

If you add those two ranges together, plus the $1.64 per share Ross has already made in the first half of this year, that translates to a full-year range of $3.16 to $3.23 per share. That’s an increase over the previous full-year range of $3.07 to $3.17 per share. This is actually the second time Ross has increased its full-year guidance. Things are obviously going well for them.

Ross has also been using its cash flow to buy back tons of its own stock. I’m not wild about this practice, but at least Ross actually reduces the share count. Through Thursday, Ross was our worst-performing stock this year. That may soon change. Thanks to the earnings report, shares of Ross were up more than 10% in the after-hours session. A word of caution: the after-hours market doesn’t always line up with what the stock will do once the real trading starts the next morning.

This time, we can congratulate ourselves. In last week’s newsletter, I told you Ross Stores was “a good value here.” We stuck by a good company when others got scared and ran away. This week, I’m raising my Buy Below on Ross Stores to $61 per share.

Three Buy List Earnings Reports Next Week

We have three more Buy List earnings reports next week. But I promise you, after that, we’re going into a long earnings lull period. We won’t see another Buy List earnings report until early October. Let’s look at who’s reporting next week.

HEICO (HEI) plans to release their fiscal Q3 earnings after the closing bell on Wednesday, August 23. The company had a very good earnings report last May, but the stock market was not impressed. That is, it wasn’t impressed until several weeks later, when HEICO started a furious rally. Sure that doesn’t make a whole lot of sense, but welcome to Planet Wall Street.

Wall Street expects earnings of 53 cents per share. The company said it expects sales to rise by 8% to 10%, and net income to rise by 12% to 14%. Last year, HEICO made $1.86 per share. If we assume no change in shares outstanding, that implies 2017 EPS of $2.08 to $2.12.

One final note. Shares of HEICO took a 4% dip on Thursday after the stock was downgraded by Deutsche Bank. HEICO is up more than 32% for us this year.

Next Thursday, we’ll get earnings reports from Hormel Foods (HRL) and JM Smucker (SJM). Both companies will report results before the opening bell.

Unfortunately, Hormel has been one of our weaker stocks this year. Frankly, their last earnings report was kinda blah. The company faced a headwind of an oversupply of turkeys. The good news is that Hormel is standing by its full-year forecast of $1.65 to $1.17 per share. However, they now say they expect results to be at the low end of that range.

Hormel has missed the last three earnings reports—each time by one penny per share. This time, the consensus on Wall Street is for 37 cents per share. I think the losing streak will come to an end.

Next week’s report will be for Smucker’s fiscal Q1. For fiscal 2018, Smucker said they expect earnings to range between $7.85 and $8.05 per share. They beat earnings for Q4, but that was due to cost-cutting. I’m all for keeping costs down, but you need to grow the top line as well. Wall Street expects Q1 earnings of $1.63 per share.

That’s all for now. There’s not much on the calendar for next week except for the start of the big Jackson Hole conference. This is the big Fed shindig every August out in Wyoming. Several times, the Fed has used the occasion for important policy announcements. I doubt we’ll see much this year. The conference begins on Thursday. On Friday, I’ll be keeping an eye out for the latest report on durable goods. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
2223 Ontario Road NW, Washington, DC 20009, USA

#Barcelona terror attack, trouble at Mar-a-Lago, #France’s alien cults

Good morning, Quartz readers!


Donald Trump discusses Afghanistan strategy. The US president will meet with national security advisors at Camp David to flesh out a new “South Asia strategy” and reevaluate US involvement in the region. Currently about 8,400 US troops are deployed there.

US pro-wrestling launches in China. Chinese viewers will be able to subscribe to a video-on-demand service for all World Wrestling Entertainment events, exclusively through local partner PPTV.

Infosys considers a share buyback. The Indian tech giant’s board will meet on Saturday to discuss a possible purchase of its stock, following similar moves by Wipro and Tata Consulting Services.

Taiwan hosts a major sporting event. The Universiade, the university version of the Olympics, will kick off on Saturday in the capital Taipei. Long squeezed by China in the international arena, the games are seen as a coming out moment for Taiwan—but it still has to host them under the unpopular moniker Chinese Taipei.


A terrorist attack killed 13 people in Barcelona. A van drove into a crowd in the shopping street Las Ramblas in the heart of the city’s tourist district, in an attack claimed by ISIL. Spanish police later killed five people in the town of Cambrils, south of Barcelona, to thwart a potential second attack.

Charities distanced themselves from Mar-a-Lago… The American Cancer Society, the American Friends of Magen David Adom, and the Cleveland Clinic pulled fundraising events from Trump’s Florida resort, as the fallout from Trump’s handling of Charlottesville continues.

…And Rupert Murdoch’s son will donate $1 million to the Anti-Defamation League. James Murdoch, CEO of Twenty-First Century Fox, said in an email: “I can’t even believe I have to write this: standing up to Nazis is essential; there are no good Nazis. Or Klansmen, or terrorists.”

The ACLU will no longer defend hate groups marching with firearms. The American Civil Liberties Union Virginia branch had defended the right (paywall) of white-supremacist groups to protest against the removal of a Confederate statue. “The events of Charlottesville require any… legal group to look at the facts of any white-supremacy protests with a much finer comb,” said the ACLU’s executive director Anthony Romero.


Zheping Huang and Joon Ian Wong on bitcoin mines in Inner Mongolia. “Each building is surrounded by two fine-wire mesh fences. They are designed to keep out the dust of Inner Mongolia, which can, and often does, cause the machines to break down… In the spring, the fences also guard against a flurry of fuzzy, bullet-sized catkins, shed by the willow trees common across China.” Read more here.


The world of business / awaits his conscience. This is / Gary Cohn’s crisis


Renewable energy is paying for itself. The widely criticized government subsidies have saved up to $220 billion in health care and climate costs.

Robots are already changing childhood. The benefits of having “computers as servants” will probably outweigh the negatives.

Surgeons may be psychopaths, but in a good way. Emotional detachment leads to better choices in life-and-death scenarios.


Alien cults are making a comeback in France. Despite a 1995 government crackdown, more than 600 sects exist today.

In the US, you’re never far from a Confederate monument. Click here to find out just how close you are.

Some AI systems can’t understand African-Americans. One popular algorithm concluded that common slang and vernacular was actually Danish.

In the future, dead bodies will be turned to goo. A chemical mixture is being used to dissolve the corpses, which smell like “steamed clams” when liquified.

Polish doctors used science to hoodwink Nazis. They gave patients injections that created a false positive for a deadly infectious disease.

Our best wishes for a productive day. Please send any news, comments, futuristic burial techniques, and emotionally detached doctors to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

#Brexit’s tricky border, #Trump’s Nazi backtrack, $70 space robots

Good morning, Quartz readers!


The British government addresses the land border with the EU that Brexit will create. In a paper to be released today, it says thereshould be no border posts between Ireland and Northern Ireland. Currently about 30,000 people cross it every day without customs or immigration checks. The border is considered one of the trickiestBrexit challenges.

NAFTA talks kick off in Washington. Delegates from Canada, Mexico, and the US will revisit the North American Free Trade Agreement, aiming to get a new deal in place by early next year. US president Donald Trump repeatedly threatened to ditch the pact during his presidential campaign.

The US Federal Reserve releases the minutes of its July meeting. Fed watchers will look for hints about interest-rate rises and plans to reduce the central bank’s massive holdings of bonds. Last month policymakers signaled it could start to slowly unwind the holdings as soon as September.


Donald Trump backtracked on his condemnation of Nazis and white separatists… The US president said “there is blame on both sides” for the deadly unrest in Charlottesville, Virginia, including “alt-left” groups that were “very, very violent.” His comments, welcomed by white nationalists, could exacerbate the rising criticism from business leaders and fellow Republicans.

…And the CEO of Walmart joined other business leaders in criticizing him. Doug McMillon said that Trump “missed a critical opportunity to help bring our country together” by reacting the way he did to the Charlottesville tragedy. Richard Trumka, head of the AFL-CIO labor union, quit Trump’s manufacturing council, following three CEOs who did so earlier.

Tech giants turned to the bond market. Apple sold C$2.5 billion(US$2 billion) in bonds in Canada, with the proceeds going to “general corporate purchases,” and Amazon is offering up to $16 billion in bonds to finance its acquisition of Whole Foods. The news follows a series of large bond deals this year, including a debut offering from Tesla last week.

Taiwan’s president apologized for a massive blackout. The outage left over 6 million households without electricity. In addition toTsai Ing-wen saying sorry, economy minister Lee Chih-kungresigned. Local media questioned the Tsai administration’s competence, noting the repeated warnings of a possible blackout amid a sustained heatwave.


Alison Griswold on everything VCs used to love about Travis Kalanick. “Uber has never bothered with asking permission or even begging forgiveness—it simply does what it wants. That was just fine with investors when Uber was growing faster than they’d ever thought possible and pairing fiery regulatory skirmishes with PR-friendly deliveries of kittens and ice cream.” Read more here.


It’s an awesome time / to be retailing. Unless / you’re a retailer


Who owns the rights to art created by AI? Courts and copyright officials can no longer presume that authorship is a human phenomenon.

Don’t let fascists hide behind “free speech.” Defending the civil rights of bigots can, in some cases, leave us all less free.

“Founder-friendly investing” is on the wane. Blue Apron, Snap, and Uber are cautionary tales for wary VCs.


Strata Business Summit is the missing MBA for data-driven business. Join us on September 26-28 at the Javits Center in New York to learn about how leading companies are building modern data strategies. Register here.


A Swiss supermarket is selling bug burgers. A revamped food law also allows the sale of “insect balls” in a push for sustainable agriculture.

Gamekeepers are breeding rare colors of wildlife for hunters.Golden wildebeests and pure white springboks command premium prices in South Africa.

A $70 robot that mimics a sea turtle may eventually reach Mars. It consists mostly of cardboard plus an inexpensive Raspberry Pi computer.

Facebook is turning pizza makers into tech companies. Online ordering, bots, and e-commerce are paramount for Domino’s and Papa John’s.

Scientists have figured out how magic mushrooms’ active ingredient is made. It may set the stage for the “biotechnological production” of psilocybin.

Our best wishes for a productive day. Please send any news, comments, bug burgers, and AI art to hi@qz.com. You can follow uson Twitter for updates throughout the day or download our apps for iPhone and Android.

#Japan’s surge, #bitcoin’s new high, banned soy sauce

Good morning, Quartz readers!


The US’s top general reassures South Korea. Joseph Dunford, chairman of the US Joint Chiefs of Staff, will discuss the threat of North Korea with president Moon Jae-in before visiting Japan and China. The meeting follows a war of words between North Korean leader Kim Jong-un and US president Donald Trump, who threatened to unleash “fire and fury,” rattling markets in the process.

Trump ramps up trade pressure on China. The US president will order his top trade adviser, Robert Lighthizer, to determine whether an investigation into China’s trade practices is warranted. Among the issues: foreign companies in China being forced to transfer technology. An investigation, which could take up to year, could ultimately lead to steep tariffs.

Euro zone industrial production figures for June are released.In May they fell more than expected on a monthly basis, showing the economic recovery remained modest and vulnerable to setbacks.


The FBI investigated violence at a white nationalist rally turned deadly. A 32-year-old woman was killed after a car plowed into a crowd of counter-protesters at a white supremacist rally in Charlottesville, Virginia. About 35 people were injured and two police troopers also lost their lives in a helicopter accident. Trump is being criticized for his weak response to the chaos, after failing to condemn neo-Nazi violence.

Japan’s quarterly growth exceeded all expectations. Extending the longest expansion in more than a decade, the nation’s economygrew for the sixth consecutive quarter. GDP increased by an annualized 4% in the three months ended June 30, compared to estimates of 2.5%, with improvements in private consumption and business spending making up for softer exports.

Bitcoin hit a new high. The cryptocurrency surged to over $4,000this weekend. As global geopolitical tensions rise, bitcoin is acting like a disaster hedge, much like gold. It’s also moving into the mainstream: Fidelity Investments announced last week that clients could use its website to view their digital-currency holdings.

The US insisted that war with North Korea isn’t imminent. CIA director Mike Pompeo and national security adviser H.R. McMaster hit the Sunday talk shows to soften Trump’s narrative that the US military is “locked and loaded” should North Korea decide to take military action.

Latin America condemned Trump’s military threat against Venezuela. Regional leaders denounced the US president’s bellicose rhetoric, saying it actually helped Nicolas Maduro, the nation’s increasingly dictatorial leader, by supporting his portrayal of the US as an aggressive imperialist. US vice president Mike Pencewill tour the region this week.

Heartbreak at a hospital in India. The head of a government hospital was fired on Sunday, after 60 children died in five days, reportedly from lack of oxygen. The hospital’s supply of liquid oxygen was disrupted by a vendor because of an unpaid bill. Parents who lost children said they they were given self-inflating bags as the oxygen ran out.


Adam Epstein on the Family Guy creator’s mission to bring back optimistic sci-fi. “‘I miss the forward-thinking, aspirational, optimistic place in science fiction that Star Trek used to occupy,’” Seth MacFarlane told a group of TV critics. ‘I’m tired of being told that everything is going to be grim and dystopian and people are going to be murdering each other for food.’” Read more here.


Kim Jong-un is acting like a CEO. The North Korean leader isimplementing his vision (paywall) and treating the country like a corporation.

Arm wrestling is a legitimate sport. Dating back to ancient Egypt, it’s experiencing a pro-sports renaissance for a reason.

Skyscrapers have made China more beautiful. A photographer makes his case with 17 drone photos.


We haven’t found a cure for cancer yet, but we have built algorithms that could help treat it. Walk through the entire pipeline of cancer treatment, from diagnosis to drug generation and treatment planning, and see how AI is transforming the process.


A immigration algorithm decided Irish isn’t English. An Irish woman failed to convince a machine she could speak English fluently while seeking permanent residency in Australia.

Alcohol helps goldfish survive long winters. Higher blood-alcohol content helps them live in oxygen-free waters for months.

Harry Potter fans in Asia are endangering owls. More than 13,000 wild-caught owls were sold as pets in Indonesia in 2016, compared to few hundred when the first film was released.

Human poop could be a sustainable cooking fuel. A Kenyan company is transforming fecal waste into charcoal-like briquettes.

The UAE banned a brand of soy sauce for its alcohol content.Some products may be about 2% alcohol due to the natural fermentation process.

Our best wishes for a productive day. Please send any news, comments, tipsy fish, and skyscraper pics to hi@qz.com. You can follow us on Twitter for updates throughout the day or download our apps for iPhone and Android.

Weekend edition—Tech culture war, sex with robots, Afghanistan’s secret weapon

Good morning, Quartz readers!

Anything you’ve read about James Damore, the Google engineer fired this week over his memo criticizing the company’s diversity policies, almost certainly falls into one of two camps. Damore is either an entitled tech bro who cloaked his rank misogyny in pseudo-science to further perpetuate the patriarchy, or a fearless thinker who spoke truth to power and was suppressed by a liberal monoculture incapable of hearing dissent. Those in the first camp feel vindicated by the fact that since his firing he’s buddied up with right-wing YouTube hosts; partisans of the second celebrated his “Goolag” t-shirt.

The much less popular middle ground is that while Damore may havea tenuous grip on evolutionary psychology, be blind to his privilege, and be deluded to claim he’s “pro-diversity,” he was misguided rather than evil and raised questions that were at least somewhat legitimate. By excommunicating him instead of confronting and debunking his heresy, Google gave the far right a cause célèbre and drove those employees who share his views deeper underground.

I predict we will hear more of Damore. There used to be little connection between the persistent sexism scandals of Silicon Valley and America’s wider culture war, but his firing has bridged the gap(paywall). He will focus the right’s attention on the tech industry, where it will find no shortage of fodder for its campaign against political correctness. And as the right increasingly argues that white men are just another oppressed minority, adopting the identity-politics language of the left, Damore—bright, highly articulate (paywall), and armed with a tech geek’s credibility and language—makes the perfect poster boy.

Add to that the Trump administration’s plans to tighten immigration policy while trying (misguidedly) to bring back manufacturing, and we can expect the question of who gets to work, and under what conditions, to be an underlying theme of American politics for the foreseeable future.—Gideon Lichfield


The ethics of sex with robots. Customizable sex dolls already exist as “utensils” of sexual gratification, but the advent of AI changes the equation. Cassie Werber interviews Aimee van Wynsberghe, a professor of robotics and ethics, on the dilemmas this creates—for instance, should people be allowed to have sex robots that look like children?

Lush is helping its workers leave Brexit Britain. The British cosmetics company responded to the UK’s vote by asserting its belief in “freedom of movement” and has since made its “first, second, and third” priority to protect EU workers. Aamna Mohdin takes us from the CEO’s office to the factory floor, chronicling the extraordinary steps Lush is taking to relocate its staff before Brexit hits.

The psychological cost of multilevel marketing. Fed the fantasy of achieving the all-elusive American dream, many people in suburban and rural areas are being wooed by MLMs; 99% of sellers lose money. Of these second-wave MLMs masquerading as women’s empowerment, LuLaRoe is queen. Alden Wicker spent nine months deep inside LuLaRoe’s community to report this investigative feature, which gets at the core of America’s economic inequalities and the women trying to claw their way out.

Do you come with instructions for use? A personal “user manual” with explicit descriptions of your values and how you work best with other has helped CEOs work better with their teams. Leah Fessler decided to make one of her own, and concluded that half an hour spent writing a personal user manual can save hours of analyzing and predicting what your colleagues like and hate.

Amazon’s secret collection of brands. From lingerie to frozen foods, the e-commerce giant has been peddling a host of brands that don’t exist outside amazon.com, but fail to make clear that they are Amazon-made. Mike Murphy discovered 19 of these brands through a patent search, revealing another dimension of Amazon’s ambitions for world domination.


Singers like Adele keep losing their voice—and it’s Verdi’s fault. The pop star has undergone risky surgery to repair damage to her vocal chords. The Guardian’s Bernhard Warner finds thatchanges in how singers are trained—beginning with the full-throated, high-volume style of 19th-century opera—are probably to blame.

Smartphones are ruining teenagerhood. The first generation to grow up with smartphones are physically safer than ever, but less interested in driving, dating, or having sex, and far more lonely and depressed. In The Atlantic, Jean Twenge, who has studied generational differences for decades, describes the fundamental shift making teens today unlike any generation before.

Why foreign powers always fail in Afghanistan. Trump has mulled sending more troops, or maybe mercenaries, to Afghanistan. Gunnar Heinsohn of the NATO Defense College explains in the Weekly Standard how the Afghans defeated the Soviet superpower not through firepower, but through demographics: large numbers of extremely driven young men. And their advantage, he says, has only grown since then.

Why magic mushrooms might cure depression. Researchers are finding evidence that psychedelics can help with intractable mental-health problems. But why? In Aeon, Philip Gerrans and Chris Letheby explore an emerging theory: that a drug trip dissolves one’s model of the self, and thus breaks harmful patterns and assumptions about themselves that keep people locked in self-destructive habits.

How to survive a nuclear attack. After looking at the kind of nuclear attacks that can happen in the 21st century, a US scientist created a guide to surviving it. Annalee Newitz in io9 walks us through in a guide published in 2014 that, in a week of nuclear saber-rattling, suddenly feels very relevant.

Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, personal user manuals, and secret Amazon brands to hi@qz.com. You can follow us on Twitter here for updates throughout the day, or download our apps for iPhone andAndroid.

CWS Market Review – August 11, 2017

CWS Market Review

August 11, 2017

“The only perfect hedge is a Japanese garden.” – Eugene Rotberg

On Thursday, the S&P 500 dropped by 1.45% to close at 2,438.21. This was the index’s biggest drop in nearly three months. I should restate that—this was the biggest drop by far in the last three months. Put it this way: Since May 18, Thursday’s drop was five times greater than the damage of the sixth-largest loss.

The point is that in historical terms, Thursday’s loss really ain’t that big a deal. But in terms of 2017’s volatility, Thursday was an earthquake inside a hurricane next to shark attack.

The reason behind Wall Street’s fearfulness isn’t hard to miss. Wall Street and the world are increasingly concerned by the behavior of North Korea. The United Nations Security Council voted unanimously to impose sanctions on North Korea. Bear in mind that the UNSC is rarely unified on anything. Despite Thursday’s bout of selling, defense stocks like Lockheed Martin, Northrop Grumman and Raytheon all made new 52-week highs.

In this week’s CWS Market Review, I’ll bring you up to speed on the latest happenings on Wall Street. I’ll also cover Cinemark’s reassuring earnings report. Plus, I’ll preview next week’s earnings report from Ross Stores. We also had some good news for the Buy List. Snap-on is spending $500 million to buy back shares. But first, let’s look at how Kim Jong Un has spooked the U.S. stock market.

Should We Worry About North Korea?

On Tuesday, the Dow snapped a 10-day winning streak. This streak got a lot of attention in the financial media, but I can’t say I was terribly impressed. For one thing, most of the increases were very small. In the history of the Dow, there have been 17 win streaks of 10 or more days. This last has smallest cumulative gain of all of them.

We also have to remember that the Dow is a price-weighted index. As a result, a company like Goldman Sachs has the second-highest weighting in the index, even though it has the fifth-smallest market value. The S&P 500 is weighted by market value, and it barely budged during the Dow’s winning streak. In fact, the S&P 500 fell four times in those 10 days. It was precisely companies like Goldman Sachs and JP Morgan that helped power the Dow to its new highs.

With the recent war of words over North Korea, investors are starting to feel anxious. The South Korean economy punches above its weight in the world economy. There are several prominent Korean corporations like Samsung and Hyundai. But in the last two weeks, the South Korea ETF (EWY) has lost more than 7%.

Over the past several months, Wall Street has brought back its old habit of freaking out in the short-term over something that turned out to be nothing major. Remember the Brexit panic? The S&P 500 had its biggest daily drop in nearly a year. But shortly after that, cooler heads prevailed and doomsayers were—yet again—proven wrong.

Nearly the same thing happened after last year’s election. At one point on election night, the Dow futures were down more than 800 points. The end of the world never came, and the Dow is sitting on a nice 20% gain since the election.

My point isn’t to defend or criticize any of these political events. Rather, I’m encouraging you not be swept up by unreasonable fears. Stock prices are like a global blood-pressure machine. Historically, the U.S. stock market has been able to rally during highly unsettling times for the country and the world. Any drop in U.S. equity prices is good for stock-pickers.

On our Buy List, there are a few stocks I like in particular. Ross Stores (ROST), which reports next week, is a good value here. I also like Danaher (DHR), which was has been quite weak lately. DHR looks particularly good below $80 per share. I also like Alliance Data Systems (ADS). The stock is currently going for a little more than 10 times the company’s estimate for next year’s earnings. ADS has also increased its buyback program by $500 million. That’s an impressive sign of confidence. Now let’s take a look at last Friday’s earnings report from Cinemark.

Cinemark Is a Buy up to $43 per Share

Last Friday, Cinemark (CNK) became our final Buy List stock to report earnings for the second-quarter earnings season. The movie-theater chain said they earned 44 cents per share last quarter. That was one penny below estimates.

What’s interesting is that shares of CNK dropped sharply going into Friday’s earnings report. That’s largely because a competitor, namely AMC, completely bombed its earnings report. Traders naturally think that whatever’s hurting one company in a sector, must necessarily be hurting its competitors as well.

For Cinemark, that’s not the case. So even though they missed earnings by a penny per share, last Friday’s results relieved investors who feared the worst. Looking at the details, Cinemark´s quarterly sales rose by 0.9%. Concession revenue per person, which is the real moneymaker for CNK, rose by 8.9%. Cinemark’s screen count is up to 5,926.

“We continue to be pleased with the consistency of our financial performance, including our second quarter’s global revenue growth, record food and beverage per caps, and year-over-year box-office results that again exceeded the North American industry,” stated Mark Zoradi, Cinemark’s CEO. “We remain optimistic about film content for the remainder of the year, as well as the future growth potential that our strong foundation and strategic initiatives provide for our Company.”

Cinemark’s screen count is up to 5,926. I’m keeping CNK’s Buy Below at $43 per share.

Earnings Preview for Ross Stores

Ross Stores (ROST) will report its fiscal Q2 earnings after the closing bell on Thursday, August 17. Ross is one of my favorite retailers, but the shares have been struggling this year. It’s actually our single-worst performer YTD, with a loss of 14%. Part of the reason isn’t so much about Ross, but the impact of online shopping on the entire retail sector. There have been countless stories this year about how Amazon is devouring the retail world. In fact, others retailers like Macy’s and Target have been hit worse than Ross.

Still, I’m an optimist on Ross. If you understand Ross’s business model, you see that Amazon isn’t much of a direct competitor. For their Q2 report, which ended on July 29, Ross sees earnings ranging between 73 and 76 cents per share. That’s compared with 71 cents per share for last year’s Q2. That sounds about right. For comparable-store sales growth, Ross sees an increase of 1% to 2%.

I’ve been particularly impressed with Ross’s operating margins. Retail is all about keeping control of costs, especially for a deep discounter like Ross. In May, Ross raised its full-year earnings forecast. The company now projects 2017 earnings between $3.07 and $3.17 per share. The previous range was $3.02 to $3.15 per share. For context, Ross made $2.83 per share last year; however, this year will include an extra business week. Ross estimates that will add eight cents per share.

I’ll be paying close attention to Ross’s guidance for Q3. I’m expecting something around 65 to 68 cents per share. There’s a good chance I’ll raise my Buy Below on Ross, but I want to see their guidance first. Don’t give up on Ross!

I wanted to follow up on Continental Building Products (CBPX). Last week, the wallboard folks missed on their earnings report by three cents. The stock, however, reacted rather dramatically. Last Friday, CBPX jumped 8.4%. Then on Monday, it dropped by 5.4%. This is unusual but not unheard of. The stock seems have to calmed down lately. This week, I’m dropping my Buy Below on CBPX down to $23 per share.

A few weeks ago, Snap-on (SNA) beat earnings, yet the stock fell after the report. The earnings looked fine to me. Apparently, the company is trying to take advantage of the reduced share price. This week, Snap-on announced a new buyback plan worth $500 million. That’s worth about 5.6% of the SNA’s current market value.

Good news for CR Bard (BCR). This week, shareholders voted to approve Bard’s merger with Becton Dickinson (BDX). According to Bard, “approximately 99%” of the vote was in favor of the merger. There wasn’t much doubt about the outcome, but it’s nice to see such a strong vote.

As a reminder, the deal calls for BCR shareholders to get $222.93 per share in cash plus 0.5077 shares of BDX. That currently values BCR at $323.57 per share. The stock is currently going for a slight discount (about 1.4%) relative to the deal’s price. That’s common because there’s always a chance the deal could fall apart. It’s highly unlikely but not impossible. The discount has gradually diminished since the deal was announced in April. Bard said the merger will officially take place sometime in Q4.

HEICO (HEI) has been very strong recently. Over the last six weeks, the shares are up 21%. If you recall, HEICO had a very good earnings report in May. The company has already raised guidance twice this year. I’m raising my Buy Below on HEICO to $90 per share.

That’s all for now. We’ll get some key economic reports next week. On Tuesday, the July retail-sales report comes out. The June report was not very good, so I’ll be curious to see if there’s been any improvement. On Wednesday, we’ll get the minutes from the last Federal Reserve meeting. Then on Thursday, the next industrial-production report comes out. This data series has been improving in recent months. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 eight times in the last ten years. This email was sent by Eddy Elfenbein through Crossing Wall Street.
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