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Why an American Tech Company Should Buy TikTok

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Buy TikTok

American Tech companies should buy TikTok. The countdown to the September 15 deadline is nearing. Social media app TikTok has less than a month to get an American tech company to save its US operations. And there is no shortage of buyers. Google, Facebook, and even Twitter have shown interest earlier. President Donald Trump even endorsed Oracle as a potential buyer.  At present, there is a buzz that Microsoft is nearing a   buyout. But what is TikTok? And why does it need an American company to buy its operations?

RELATED: TikTok Picks Oracle As US Partner

Why is America worried about TikTok?

TikTok is a popular social media app that took China by storm in 2016, and the rest of the world by 2018. The app itself seems harmless as it promotes self-expression. Users record a few seconds’ clips of themselves singing, dancing, or any other activity. Afterward, they can upload the video to share with others. The popularity of the app skyrocketed when celebrities began using it for promotion. Using artificial intelligence, TikTok analyzes user interests via reactions and provides personalized content.

With its active data gathering, US officials have shown concern over data collection. More specifically, the government worries where the data will end up. ByteDance, which owns the app, is a Chinese company with headquarters in the mainland. Officials worry that TikTok can share the data of 100 million American users to Beijing.

The Wall Street Journal reported that the app might be skirting privacy laws by collecting MAC addresses. TikTok has said they have ended that practice.

China is also notorious for monitoring and censoring internet content within its borders. There is concern that similar policies might find their way here, as well as propaganda.

Citing these concerns, President Trump threatened to ban TikTok in the United States. Unless ByteDance agrees to sell its US operations to a US tech company, the ban will start on September 15.

High Tech Suitors

Microsoft immediately offered to buy TikTok’s US, Canada, Australia, and New Zealand operations. For the software giant, this could mean becoming a major player in the social media arena.  This also makes the lucrative digital ad business available to Microsoft. At present, Google, Facebook, and Amazon share 70% of the business.

Trump earlier dismissed Microsoft as a buyer, but later warmed up to the idea if a complete deal happens in 45 days. 

Other companies who showed interest in acquiring TikTok include Twitter and Oracle. Trump even endorsed an Oracle buyout of Twitter earlier this month. 

“A Threat to American Tech”

ByteDance founder Zhang Yiming supported the sale of some of TikTok’s offshore operations. In a letter to the ByteDance staff, he said that “As a company, we have to abide by the laws of the markets where we operate.” It feels like the goal was not necessarily a forced sale, but given the current macro situation, a ban, or even more.”

Meanwhile, China did not take kindly the pressure to sell off ByteDance or its operations. Chinese state media stated that such pressure amounts to “theft”. Zhang himself got branded as a “traitor.” The Global Times accused the US of “killing China’s most competitive companies.”  It also said that the US is doing so out of cowardice, as TikTok poses a threat to American tech companies. China Daily likened the order as “tantamount to inviting potential U.S. purchasers to participate in an officially sanctioned ‘steal’ of Chinese technology.”

In a recent development, TikTok sued the government last Monday. The suit challenges the Trump order to sell US operations to an American buyer. TikTok claims it already protects its users’ data, especially US user data. The company also insisted that it presented security measures to the federal government. The complaint stated: “By banning TikTok with no notice or opportunity to be heard (whether before or after the fact), the executive order violates the due process protections of the Fifth Amendment.” It asked the court to invalidate the president’s order. Both the White House and the Justice Department have yet to comment.

With about 20 days remaining, the suit may have bought TikTok more time. Although, Microsoft has earlier said they will back out of any deals if nothing gets done by September 15.

To Sell or Not To Sell? 

In a way, the sale of TikTok’s US operations to a local company may be a better option than outright banning the app. TikTok will become subject to local laws, especially in data collection and security. The government will also get a definite answer on what data gets collected and where it goes. Analysts fear that it may be a precedent to a growing tech divide between China and the US. If this escalated further, the rest of the world may have to choose sides.

Watch this as White House economic advisor Larry Kudlow discusses the potential purchase of TikTok’s U.S. operations by an American tech company such as Microsoft:

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Do you use TikTok? Whether yes or no, would you prefer an American owned or managed company for an app that collects user data? Do you find all this too much, considering it’s about a program that shows videos with short attention spans? Let us know what you think about this TikTok conundrum in the comments section below.

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Gold ‘Frenzy’ To Build Around Election, Platinum Could Soar 50% By Year-End

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Gold ‘Frenzy’ To Build Around Election, Platinum Could Soar 50% By Year End

Peter Hug, head of the precious metal division at Kitco, believes the Fed’s decision to hold interest rates at near-zero through at least 2023 is bullish for precious metals and particularly gold. He also mentioned the road platinum can head to by the year’s end.

“About three Fed meetings ago they indicated they would hold rates at pretty much zero through the end of 2021 into early ‘22, today they’ve extended that by an additional year, there have been some analysts that are suspecting they will keep rates at zero right through 2024, so we’ve got another almost four years of zero interest rates to look forward to,” said Hug.

“The Fed being a bit more accommodative on inflation indicates to me that it’s a very positive environment for hard assets in general but I think the metals as well will continue to move higher over the next period of time based on the dovishness of the Fed, global central banks and the uncertainty of the US election coming up in about six weeks.”

The State of the Gold and Silver Markets

Hug said the current consolidation phase is a great sign of the overall health of the gold and silver markets. This comes after the frenzy in the gold and silver markets about a month ago.

“The market has been consolidating, which is a very good sign, especially for gold. Gold has been consolidating between our support level of 1925 and 1975 for the better part of two weeks. Silver seems to be between $26.50 – $27.50 range and consolidating as well. The fact that people are not selling into a market that is as frenetic as it was a month or six weeks ago, indicates to me that this market is setting up for the next leg higher once we get through this consolidation phase.”

Availability and Premiums

The gold and silver markets are taking a bit of a breather and the mania has slowed a bit. With this, Hug said the availability of gold and silver coins is getting better. He said premiums are coming down as well.

“On the gold and silver side, dealers are starting to show inventory. That’s not a result of increased production, it’s more a result because of this consolidation phase, retail investors have started to pull back on the markets so there’s not as much buying frenzy in the physical space right now, I think that changes if gold gets north of $2,000 again. But this consolidation of $50 range in gold and the $1, $1.50 range in silver has basically dried up the demand at these levels.”

“So production is still coming on board and dealers are starting to build inventory. And because of that you are seeing premiums come down. Silver maple leafs you can get, again, depending on quantity, somewhere between $5-6 over spot, Eagles are down somewhere between $5-7 over spot, so you are starting to see as this market stays sideways and we don’t see another rush into the buying side from the retail investor, you give it another 2-4 weeks and I think there will be reasonable inventory on the market and premiums should come down.”

Volatility to Return Soon?

Hug said that if you are looking to acquire gold and silver coins, you shouldn’t wait long as we could see volatility return very soon.

“I caution that past October 15 the market is going to be very volatile as we go into the election.”

Other than gold or silver, Hug sees a huge opportunity in the platinum space. There, he expects prices to climb 50% by the end of the year.

“I’m constructive platinum. It is also consolidating in the $900-950 range, but I do anticipate platinum to be north of $1000 and then look to $1200 possibly $1400 before year end.”

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US Billionaires Got Richer During Pandemic by $845 Billion

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US Billionaires-featured

US billionaires got richer during the pandemic by a tune of $845 billion. This represents a 29% increase from the time the Covid-19 lockdowns started until now. While the stock market crashed during the early days of the pandemic, it has since recovered. Along with recovery are net worth increases for America’s billionaire. Among the pandemic’s big winners of 2020 were Jeff Bezos, Elon Musk, and Mark Zuckerberg. Also in the list were investor Warren Buffett, Oracle CEO Larry Ellison, and ex-NY Mayor Michael Bloomberg.

RELATED: Jeff Bezos Is Now Worth $200 Billion

In a report released Thursday, the Institute for Policy Studies and the Americans for Tax Fairness (ATF) said the total net worth of 643 of the nation’s richest people rose from $2.95 trillion to $3.8 trillion.  

This is equal to a 29% increase between March to September. The report based the numbers on Forbes’ annual billionaire’s report and real-time data. 

Big Winners

Jeff Bezos, the founder, and CEO online retail giant Amazon is now the world’s richest man. The pandemic forced people indoors and played right into Amazon’s online strategy. As millions switched to online shopping, demand for Amazon’s services skyrocketed. Amazon shares zoomed along with 40% in 2020, as the company racked up billions in orders. People bought groceries, medicine, household products, and entertainment items on Amazon’s sites. As the company grew richer, so did its CEO and majority stockholder. On August 19, as stock prices of Amazon went up, his net worth exceeded $200 billion. As of September, Amazon stock has fluctuated and Bezos’ current worth is $184 billion. 

Another rich guy that got even richer was Tesla’s founder and CEO Elon Musk. Tesla’s value grew five times its January price. By August, the company’s stock split pushed his personal shares to $104 billion. This allowed him to join the coveted centibillionaire club. Compared to his March net worth of $24.6 billion, he’s now over four times that. As of September, with Tesla dropping value, Musk’s worth has dropped as well to $88 billion. 

Facebook’s Mark Zuckerberg, who was worth $107.6 billion in August (now down to $93.7 billion). Facebook stock rose from $209 in Jan to $303 in August, making his 13% stake worth over $100 billion. Like Musk, he also joined the centibillionaire club this year. 

“COVID crisis supercharges inequalities”

Chuck Collins, director of the Institute for Policy Studies’ Program on Inequality, and co-author of the report said he was somewhat shocked by the figures. He added that the COVID crisis is “supercharging America’s existing inequalities.” He said, “I would have thought maybe six months into this that things would have shaken out – that everybody would take a hit.” 

“The difference is stark between profits for billionaires and the widespread economic misery in our nation. It sort of dramatizes the unequal sacrifice and profiteering element of the wealth accumulation at the top.”

Meanwhile, Covid-19 infected 6 million Americans and killed more than 200,000. As businesses collapse, the economy outside of Wall Street is in recession. More than 50 million jobs vanished in the pandemic. At present, 14 million Americans remain unemployed. Even those lucky enough to still have jobs got hit. Average work income fell by 4.4.%, per Bureau of Labor Statistics data. Outbreaks are still prevalent, even as a vaccine remains under development. 

As such, the economy’s reopening remains slow. 

Even local governments are feeling the pressure. States and cities are hamstrung with crippling deficits. California declared a $54 billion deficit, while New York City is looking at a $9 billion loss in revenue. From now until 2022, state budgets face a $555 billion deficit. This is according to the Center on Budget and Policy Priorities.

COVID-19’s unique effect made those with better plans during the pandemic fares better than most. In the case of Amazon, people flocked to their site when going out posed safety issues. For the others, the rise in stock reflected more on how they handled their business during the crisis. Some people are just quicker to seize on opportunities, even those coming from a crisis.

Watch this as Bloomberg reported last July 2020 on how billionaires got $637 billion richer during the pandemic:

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Fed Keeps Rates At Zero, Powell Says More Fiscal Support Needed

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Fed Keeps Rates At Zero, Powell Says More Fiscal Support Needed

The Federal Reserve wrapped up its last meeting before the November elections. It announced that it would keep rates at essentially zero until at least 2023. This serves as a signal that it doesn’t see inflation as an issue at all for the foreseeable future.

Fed Chairman Jerome Powell said, “We’re going to continue to monitor developments, and we’re prepared to adjust our plans as appropriate.”

“With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the Fed’s post-meeting statement said.

Uncertainty and the Stock Market

However, the Fed’s latest projections have core inflation staying below their 2% target until 2023. This leaves many observers unsure of the Fed’s actual plan to spur the inflation they desire. This uncertainty caused the stock market to drop after the announcement.

“He noted that targeting an inflation overshoot for ‘some time’ as the statement says, means that they are not targeting a ‘sustained’ overshoot. So how long is ‘some time’ if it isn’t sustained?'” asked AB economist Eric Winograd. “That imprecision is a problem that the committee is going to have to solve to reap the full benefits of the framework shift. It’s not a coincidence that the stock market, which had been in positive territory, flipped negative after the chair’s comments.”

“He’s the great and powerful Oz. Investors got duped. They thought enhanced forward guidance meant something, but when they peeked behind the curtain they realized the Fed didn’t do anything, and the market rolled over,” said Michael Arone, chief investment strategist at State Street Global Advisors.

Jon Hill, a senior fixed-income strategist at BMO, added “This is dovish – lower rates for longer, higher equities, weaker dollar. The Fed is saying we’re not hiking in 2023, maybe in 2024 … What they’re saying is these are our goals. We expect to have just barely met them and even then, they’re not raising rates.”

Stimulus and Economic Recovery

Stepping ever-so-slightly into the political realm, Powell said that Congress should pass another stimulus package to support the economic recovery. He then identified unemployment aid, small business relief and funding for state and local governments as three key areas.

“More fiscal support is likely to be needed,” Powell said. “The details of that are for Congress, not the Fed.”

Republicans have repeatedly stated that they won’t provide additional funding to bailout poorly managed cities and states as part of any additional stimulus bills.

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