Daily Archives: January 27, 2021

Technology companies led a broad sell-off in stocks Wednesday, knocking more than 600 points off the Dow Jones Industrial Average and handing the market its worst day in nearly three months.

The S&P 500 fell 2.6%, its biggest single-day drop since it lost 3.5% on October 28. It had set a record high just two days earlier. The Dow and tech-heavy Nasdaq composite also fell more than 2%. The sell-off left the S&P 500 and Dow in the red for the year.

A measure of fear in the U.S. stock market, the VIX index, surged more than 60%. Treasury yields edged lower, a sign of caution in the market.

Facebook, Netflix and Google's parent company led the pullback, which started early in the day as investors sized up the latest batch of company earnings reports. The market's skid accelerated toward the end of the day, following the release of a largely expected interest rate policy and economic update by the Federal Reserve.

The sharp selling is a shift from the market's recent record-setting run and comes as investors focus on the outlook for the economy and corporate profits amid a still-raging coronavirus pandemic.

Expectations on Wall Street built up in recent weeks for a big economic financial boost from the Biden administration, which has proposed a $1.9 trillion stimulus plan. But Democrats' slim majority in the Senate has raised doubts about how soon more aid might arrive and whether such a package will end up being scaled back by spending-wary lawmakers.

"The reality is setting in that the package won't be quite as big and maybe a little bit delayed," said Sal Bruno, chief investment officer at IndexIQ.

The S&P 500 fell 98.85 points to 3,750.77. The Dow lost 633.87 points, or 2%, to 30,303.17. The Nasdaq slid 355.47 points, or 2.6%, to 13,270.60. The Russell 2000 index of smaller companies gave up 41.16 points, or 1.9%, to 2,108.70.

The Federal Reserve announced Wednesday that it would keep its low interest rate policies in place even well after the economy has sustained a recovery from the viral pandemic. In a statement after its latest policy meeting, Fed officials said they are keeping their benchmark short-term rate pegged near zero and said they would keep buying Treasury and mortgage bonds to restrain longer-term borrowing rates and support the economy.

Meanwhile, investors continued to focus on the profit prospects for Corporate America. This is the busiest week so far of quarterly earnings reporting season for U.S. companies. More than 100 companies in the S&P 500 are scheduled to tell investors this week how they fared during the last three months of 2020.

As a whole, analysts expect S&P 500 companies to say their fourth-quarter profit fell 5% from a year earlier. That's a milder drop than the 9.4% they were forecasting earlier this month, according to FactSet.

Shares of GameStop more than doubled as the money-losing video game retailer remains caught in a tug-of-war between Wall Street institutions and an activist community of online investors. Those investors have bet that hedge funds have put too much money betting against the stock, a concept known as selling "short." A pair of professional investment firms that placed big bets that GameStop's stock would crash have largely abandoned their positions.

Boeing dropped 4% after the aircraft manufacturer posted its largest annual loss in the company's history, mostly due to the grounding of Boeing's 737-MAX fleet.

Markets have meandered since last week as investors weighed solid corporate earnings results against renewed worries that troubles with COVID-19 vaccine rollouts and the spread of new variants of coronavirus might delay a recovery from the pandemic.

"The real economy isn't reflective of what's happening in financial markets and there really is a disconnect there," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "Investors have to be mindful of that gap."

The fate of President Joe Biden's stimulus plan, which includes $1,400 checks for most Americans and other support for the economy, remains a question for investors. On Tuesday, Senate Majority Leader Chuck Schumer said Democrats are prepared to push ahead with the relief package, even if it means using procedural tools to pass the legislation without Republicans.

"That's certainly one of the factors putting a little bit of pressure on markets," Ripley said. "Maybe that's just the realization that growth expectations built into market around fiscal stimulus may not come as expected."

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Stocks have their worst day since October as Big Tech sinks - Minneapolis Star Tribune

Big Tech companies have amassed more "power" than anyone could have imagined, especially as many people rely on social media platforms for news, Fox News contributor Joe Concha said on Wednesday.

"Here is the bottom line. 70 percent of adults get their news from social media. It's like what radio and television was in the 20th century. That's how they get their news," Concha told "The Faulkner Focus."

Concha notedaround 1.82 billion daily users are on Facebook alone.

"Big Tech is more powerful than anybody ever could have imagined, more powerful than government, certainly in terms of speech," Concha said.

TRUMP'S YOUTUBE CHANNEL TO 'REMAIN SUSPENDED' AFTER CAPITOL RIOT DUE TO 'ONGOING POTENTIAL FOR VIOLENCE'

Concha remarks came following YouTube announcing former PresidentDonald Trump'schannel will "remain suspended," pointing to an "ongoing potential for violence" in the wake of the Capitol riot on Jan. 6.

YouTubesuspended Trump'schannel earlier this month, meaning it could not upload new videos or livestreams, afterFacebook,Twitter, Instagram and Snapchat banned the president's accounts from their platforms.

"In light of concerns about the ongoing potential for violence, the Donald J. Trump channel will remain suspended," a YouTube spokesperson told Fox News. "Our teams are staying vigilant and closely monitoring for any new developments."

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Concha pressed the seriousness of how "powerful" Big Tech has become.

"And we're seeing it now in terms of YouTube, which is owned by Google, is now basing their bans based on ... the potential of [Trump]possibly putting a video out there as opposed to an outright violation," Concha said.

Concha went on to say, "So now you have the ex-president of the United States, who had 89 million followers on Twitter, countless followers on Facebook, YouTube views, all that has been completely suppressed and shut down by Big Tech. That's how powerful they've become, Harris."

Fox News'Brooke Singmancontributed to this report.

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Joe Concha: 'Big Tech is more powerful' than government in terms of speech - Fox News

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SAN FRANCISCO Jack Dorsey, Twitters chief executive, publicly wrestled this month with the question of whether his social media service had exercised too much power by cutting off Donald J. Trumps account. Mr. Dorsey wondered aloud if the solution to that power imbalance was new technology inspired by the cryptocurrency Bitcoin.

When YouTube and Facebook barred tens of thousands of Mr. Trumps supporters and white supremacists this month, many flocked to alternative apps such as LBRY, Minds and Sessions. What those sites had in common was that they were also inspired by the design of Bitcoin.

The twin developments were part of a growing movement by technologists, investors and everyday users to replace some of the internets fundamental building blocks in ways that would be harder for tech giants like Facebook and Google to control.

To do so, they are increasingly focused on new technological ideas introduced by Bitcoin, which was built atop an online network designed, at the most basic level, to decentralize power.

Unlike other types of digital money, Bitcoin are created and moved around not by a central bank or financial institution but by a broad and disparate network of computers. Its similar to the way Wikipedia is edited by anyone who wants to help, rather than a single publishing house. That underlying technology is called the blockchain, a reference to the shared ledger on which all of Bitcoins records are kept.

Companies are now finding ways to use blockchains, and similar technology inspired by it, to create social media networks, store online content and host websites without any central authority in charge. Doing so makes it much harder for any government or company to ban accounts or delete content.

These experiments are newly relevant after the biggest tech companies recently exercised their clout in ways that have raised questions about their power.

Facebook and Twitter prevented Mr. Trump from posting online after the Capitol rampage on Jan. 6, saying he had broken their rules against inciting violence. Amazon, Apple and Google stopped working with Parler, a social networking site that had become popular with the far right, saying the app had not done enough to limit violent content.

While liberals and opponents of toxic content praised the companies actions, they were criticized by conservatives, First Amendment scholars and the American Civil Liberties Union for showing that private entities could decide who gets to stay online and who doesnt.

Even if you agree with the specific decisions, I do not for a second trust the people who are making the decisions to make universally good decisions, said Jeremy Kauffman, the founder of LBRY, which provides a decentralized service for streaming videos.

That has prompted a scramble for other options. Dozens of start-ups now offer alternatives to Facebook, Twitter, YouTube and Amazons web hosting services, all on top of decentralized networks and shared ledgers. Many have gained millions of new users over the past few weeks, according to the data company SimilarWeb.

This is the biggest wave Ive ever seen, said Emmi Bevensee, a data scientist and the author of The Decentralized Web of Hate, a publication about the move of right-wing groups to decentralized technology. This has been discussed in niche communities, but now we are having a conversation with the broader world about how these emerging technologies may impact the world at quite large scales.

Bitcoin first emerged in 2009. Its creator, a shadowy figure known as Satoshi Nakamoto, has said its central idea was to allow anyone to open a digital bank account and hold the money in a way that no government could prevent or regulate.

Business & Economy

Jan. 27, 2021, 4:55 p.m. ET

For several years, Bitcoin gained little traction beyond a small coterie of online admirers and people who wanted to pay for illegal drugs online. But as its price rose over time, more people in Silicon Valley took notice of the unusual technical qualities underlying the cryptocurrency. Some promised that the technology could be used to redesign everything from produce tracking to online games.

The hype fell flat over the years as the underlying technology proved to be slow, prone to error and not easily accessible. But more investments and time have begun to result in software that people can actually use.

Last year, Arweave, a blockchain-based project for permanently storing and displaying websites, created an archive of sites and documents from the protests in Hong Kong that angered the Chinese government.

Minds, a blockchain-based replacement for Facebook founded in 2015, also became an online home to some of the right-wing personalities and neo-Nazis who were booted from mainstream social networks, along with fringe groups, in other countries, that have been targeted by their governments. Minds and other similar start-ups are funded by prominent venture capital firms like Andreessen Horowitz and Union Square Ventures.

One of the biggest proponents of the trend has been Mr. Dorsey, 44, who has talked about the promise of decentralized social networks through Twitter and has promoted Bitcoin through the other company he runs, Square, a financial technology provider.

His public support for Bitcoin and Bitcoin-related designs dates to around 2017. In late 2019, Mr. Dorsey announced Blue Sky, a project to develop technology aimed at giving Twitter less influence over who could and could not use the service.

After shutting down Mr. Trumps account this month, Mr. Dorsey said he would hire a team for Blue Sky to address his discomfort with Twitters power by pursuing the vision set out by Bitcoin. On Thursday, Blue Sky published the findings of a task force that has been considering potential designs.

Twitter declined to make Mr. Dorsey available for an interview but said it intended to share more soon.

Blockchains are not the only solution for those in search of alternatives to Big Techs power. Many people have recently migrated to the encrypted messaging apps Signal and Telegram, which have no need for a blockchain. Moxie Marlinspike, the creator of Signal, has said decentralization made it hard to build good software.

The experimentation with decentralized systems has nonetheless ramped up over the last month. Brave, a new browser, announced last week that it would begin integrating a blockchain-based system, known as IPFS, into its software to make web content more reliable in case big service providers went down or tried to ban sites.

The IPFS network gives access to content even if it has been censored by corporations and nation-states, Brian Bondy, a co-founder of Brave, said.

At LBRY, the blockchain-based alternative to YouTube, the number of people signing up daily has surged 250 percent from December, the company said. The newcomers appear to have largely been a motley crew of Trump fans, white supremacists and gun rights advocates who violated YouTubes rules.

When YouTube removed the latest videos from the white supremacist video blogger Way of the World last week, he tweeted: Why do we waste our time on this globalist scum? Come to LBRY for all my videos in HD quality, censorship free!

Megan Squires, a professor at Elon University who studies new computer networks, said blockchain-based networks faced hurdles because the underlying technology made it hard to exercise any control over content.

As a technology it is very cool, but you cant just sit there and be a Pollyanna and think that all information will be free, she said. There will be racists, and people will shoot each other. Its going to be the total package.

Mr. Kauffman said LBRY had prepared for these situations. While anyone will be able to create an account and register content on the LBRY blockchain that the company cannot delete similar to the way anyone can create an email address and send emails most people will get access to videos through a site on top of it. That allows LBRY to enforce moderation policies, much as Google can filter out spam and illegal content in email, he said.

Even so, Mr. Kauffman said, no one would lose basic access to online conversation.

Id be proud of almost any kind of marginalized voice using it, no matter how much I disagreed with it, he said.

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They Found a Way to Limit Big Techs Power: Using the Design of Bitcoin - The New York Times

But the court shifted again, Lakier says, toward interpreting the First Amendment as a grant of almost total freedom for private owners to decide who could speak through their outlets. In 1974, it struck down a Florida law requiring newspapers that criticized the character of political candidates to offer them space to reply. Chief Justice Warren Burger, in his opinion for the majority, recognized that barriers to entry in the newspaper market meant this placed the power to shape public opinion in few hands. But in his view, there was little the government could do about it.

Traditionally, conservatives have favored that libertarian approach: Let owners decide how their property is used. Thats changing now that they find their speech running afoul of tech-company rules. Listen to me, America, we were wiped out, the right-wing podcaster Dan Bongino, an investor in Parler, said in a Fox News interview after Amazon pulled its services. And to all the geniuses out there, too, saying this is a private company, its not a First Amendment fight really, its not? The law that prevents the government from censoring speech should still apply, he said, because these companies are more powerful than a de facto government. You neednt sympathize with him to see the hit Parler took as the modern equivalent of, in Burgers terms, disliking one newspaper and taking the trouble to start your own, only to find no one will sell you ink to print it.

One problem with private companies holding the ability to deplatform any speaker is that theyre in no way insulated from politics from accusations of bias to advertiser boycotts to employee walkouts. Facebook is a business, driven by profit and with no legal obligation to explain its decisions the way a court or regulatory body would. Why, for example, hasnt Facebook suspended the accounts of other leaders who have used the platform to spread lies and bolster their power, like the president of the Philippines, Rodrigo Duterte? A spokesman said suspending Trump was a response to a specific situation based on risk but so is every decision, and the risks can be just as high overseas.

Its really media and public pressure that is the difference between Trump coming down and Duterte staying up, says Evelyn Douek, a lecturer at Harvard Law School. But the winds of public opinion are a terrible basis for free-speech decisions! Maybe it seems like its working right now. But in the longer run, how do you think unpopular dissidents and minorities will fare?

Deplatforming works, at least in the short term. There are indications that in the weeks after the platforms cleaned house with Twitter suspending not just Trump but some 70,000 accounts, including many QAnon influencers conversations about election fraud decreased significantly across several sites. After Facebook reintroduced a scoring system to promote news sources based on its judgment of their quality, the list of top performers, usually filled by hyperpartisan sources, featured CNN, NPR and local news outlets.

But theres no reason to think the healthier information climate will last. The very features that make social media so potent work both to the benefit and the detriment of democracy. YouTube, for instance, changed its recommendation algorithm in 2019, after researchers and reporters (including Kevin Roose at The New York Times) showed how it pushed some users toward radicalizing content. Its also telling that, since the election, Facebook has stopped recommending civic groups for people to join. After Jan. 6, the researcher Aric Toler at Bellingcat surfaced a cheery video, automatically created by Facebook to promote its groups, which imposed the tagline community means a lot over images of a militia brandishing weapons and a photo of Robert Gieswein, who has since been charged in the assault on the Capitol. Im afraid that the technology has upended the possibility of a well-functioning, responsible speech environment, the Harvard law professor Jack Goldsmith says. It used to be we had masses of speech in a reasonable range, and some extreme speech we could tolerate. Now we have a lot more extreme speech coming from lots of outlets and mouthpieces, and its more injurious and harder to regulate.

For decades, tech companies mostly responded to such criticism with proud free-speech absolutism. But external pressures, and the absence of any other force to contain users, gradually dragged them into the expensive and burdensome role of policing their domains. Facebook, for one, now has legions of low-paid workers reviewing posts flagged as harmful, a task gruesome enough that the company has agreed to pay $52 million in mental-health compensation to settle a lawsuit by more than 10,000 moderators.

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Why Is Big Tech Policing Speech? Because the Government Isnt - The New York Times