Mid session comment

Most global equity markets down ~2.5% or more. MA down on earnings miss. Social media and Google stocks down because of congressional hearing. This is the sort of market where everything that can be sold is sold. The FAANG stocks are all faltering, but they have a long way to go. Don’t take my word for this. David Einhorn believes the same. You can read his Q3 letter here.

Cartelisation of FAANG services

What is weird about the FAANG is that they don’t seriously compete with each other:

• Amazon Prime and YouTube offer movies, but they are not serious competitors to Netflix,
• Google makes the odd pixel handset but doesn’t seriously compete with the iPhone,
• Google Pay is a thing, but nobody uses it, and it doesn’t really work in the UK (or it didn’t last time I checked).
• Bing is a search engine, but well: do you use it?
• Google Hangouts works, but doesn’t seem to seriously compete with MS Teams or Facetime or Skype or Whatsapp,
• Google shut down Google Plus,
• Google makes ChromeOS, but doesn’t make a serious competitor to Windows. None of the main players make any effort to support Ubuntu,
• Google pay squillions of dollars to Apple to use its search engine as the iPhone default,
• Azure now seems a viable competitor to AWS, and Google Cloud Platform is becoming a thing, but they all left Amazon alone for an amazing amount of time.

I could go on, but this looks suspiciously like a profit maximizing strategy for the (small number of) players and a not very good deal for the consumer. What is weird is that rather than secretly agreeing to rig the price, this cooperation seems to be an agreement to carve up the market to allow each participant to gain a monopoly in one service. Because the services are often free at the point of consumption (actually paid for by the hard work of the users who supply the providers with valuable training for their machine learning algorithms), the US competition authories choose not to get involved, because they wrongly assume that consumption of a service which carries no monetary price cannot be harmful.

There are various proposals for fixing this problem, notably by Posner and Weyl. Unfortunately, our idiot politicians are unlikely to understand the problem, let alone the solution. And will certainly not be willing to campaign on a platform of implementing the solution (especially given the power of these companies in determining the outcome of elections).

Biden good for oil?

This article suggests that, ultimately, Biden will be good for oil prices.

Certainly, regulation is nearly always good for producers, and there is such a total consensus that oil producers are going the way of linotype machine manufacturers.