Apple ($AAPL) has seen a 30% drop in sales, year-on-year, in 2019.
I wouldn’t blame you for thinking this might lead to a similar drop in its share price – it’s an entirely reasonable assumption. But I’m afraid that’s not how things work around here.
There has not been a better year this decade to own Apple stock: the shares are up an incredible 77% year to date.
Steve Jobs himself could only get the shares up 53% in 2010. Who needs a genius in charge, and sales growth, when you have share buybacks?
Few things are as obvious as they seem these days, and the deceptive fog obscuring the truth covers more than just markets…
Missing propaganda
I’ve been re-watching some of the Bond movies recently, mostly trying to figure out how Quantum of Solace ended being such garbage after the success of Casino Royale two years prior (2008 was a punishing year in more ways than one).
But I was also wondering if or when we will see a Chinese bond villain in the future. Movies were a major propaganda effort throughout the first Cold War, with the Rocky movies featuring a Russian antagonist, and films like Red Dawn featuring a Soviet invasion of the US. Bond films were no exception, with a Soviet antagonist in Licence to Kill and The Living Daylights. So, with China now engaging in “great power competition” with the US, it stood to reason we would see some kind of repeat.
But the thing about sequels is that they’re never the same as the original, and China has no intention of being antagonised in Western media like the Soviets were.
Chinese enterprises have poured over $8.6 billion since 2012 into Hollywood, buying up film production companies and cinema chains, and major films portraying China in a way thought of as negative by the propaganda office are prevented from being made.
Chinese censorship has led to some amusing consequences in the movie industry: when The Karate Kid was released in China, it was called The Kung Fu Kid (Karate is Japanese), and had several scenes cut in which the lead character is bullied by Chinese kids. As a result of cutting those scenes, when the main character beats those kids up later in the film, it appears entirely unprovoked.
We mentioned earlier this year how the Taiwanese and Japanese flags present on Tom Cruise’s jacket in Top Gun have been removed for the sequel coming out in 2021. And when Red Dawn was rebooted a few years back, the original script’s idea of a Chinese invasion of the US was scrapped in favour of an even more unlikely North Korean invasion.
As many Hollywood films now make more money in China than they do in the US, any movie concepts which might offend the propaganda wing of the Chinese Communist Party are disincentivised from the get-go.
Will the next James Bond be Chinese? I’ve no connection with the movie industry so I’ve no idea, but while the second Cold War amps up, it’s unlikely Hollywood will be exaggerating and glorifying its intrigue. Or at least, not until the US government begins expanding its own propaganda wing…
When is blowing people up not an act of war?
The late great comedian Bill Hicks once claimed on stage that the first Gulf War was not actually a war at all.
A war, he joked, is when two armies are fighting – not a bunch of US soldiers trying out kit from a new weapons catalogue on a dismally armed adversary.
I was reminded of him after reading a recent article recently published in the Wall Street Journal – or more specifically, the reaction to it from the DC establishment. From the piece, titled “The infinity war”:
“We didn’t have the foggiest notion of what we were undertaking,” said Douglas Lute, the Army three-star general who oversaw [the war in Afghanistan] from the White House during the administrations of George W. Bush and Barack Obama.
And yet the war ground on, as if on autopilot. Obama inherited a conflict of which Bush had grown weary, and victory drew no closer after Obama’s troop “surge” than when Bush pursued a small-footprint conflict…
Somehow, despite waging near-perpetual war, the leaders of the most powerful country on Earth have convinced themselves that America is always on the brink of turning “isolationist,” a peril against which every president since Ronald Reagan has warned as their terms wound down. Trump is likely to deviate from that rhetorical tradition, but the rest of the establishment carries on and doubles down.
Today, it is military withdrawals, not destructive deployments, that freak out pundits and spur Cabinet members to resign, as Jim Mattis did last year over Trump’s vow to pull troops from Syria. Abandoning the Kurds there this fall was Trump’s “great betrayal,” lamented Council on Foreign Relations President Richard Haass, who did not appear to lose sleep over our past military incursions…
Bill Hicks, it seems, has more fans in the DC establishment than he would have thought. As one Washington think tank director will have you know, blowing people up with drones is not an act of war at all – in fact, it’s actually the opposite!
“This ersatz war doesn’t taste anything like Real War. Remember when anyone could just buy Real War at the store? You don’t know what you’ve got till it’s gone, I guess…”
Source: Twitter
We have to be near the peak of outrage culture when politicos are being offended on behalf of “Real War”.
Interestingly, the US has engaged in more military interventions after the Cold War ended than during it. One of the my key predictions for 2020, which I detailed in the latest issue of The Fleet Street Letter Monthly Alert was that the US will declare the War on Terror over, in order to focus on winning the Second Cold War. You need only look at what the US military has begun buying and stopped buying in recent years to see that the Pentagon already has this in mind…
But what I’m trying to illustrate in today’s letter, from $AAPL’s self-contradictory performance… to the lack of a Chinese Communist Party Hollywood villains in the face of an anti-Chinese Communist Party US government… to the idea that blowing someone up isn’t an act of war… is to illustrate the broad, multi-layered layered fog of deceptive, conflicting narratives which lingers over seemingly everything these days.
What to believe, who to trust, what is motivating actors to behave in the way they are… all have been flung in the air, leaving all of us on the ground distinctly uneasy about almost everything. And that makes investing pretty tricky.
Follow the North Star
One of the highlights for me this year for me was having the opportunity to speak with Simon Mikhailovich, an incredibly wise man formerly in the hedge fund business and now a prominent gold investor. Not long ago, he opined on what was causing much of this Great Unease, and summed it up with a metaphor I cannot resist but share with you.
From an interview he gave with Real Vision a couple of months back:
What’s so special about the North Star? It’s not the best star in the sky. It’s not particularly a pretty star, just a star, just one of the stars.
It has one unique feature in the Northern Hemisphere that no other star possesses and that is it’s always in the same place. It’s above the North Pole. As the Earth rotates, the North Star stays in the same place. The North Star has been used by humans from the dawn of civilization as a navigational beacon to find their way in this world.
In the same way, gold essentially for a millennia, has served as the North Star of the financial system. People say it’s inert, it doesn’t do anything. That’s right. It doesn’t do anything. It’s the same thing. It doesn’t change. It’s an immutable thing that’s in the same place, and against which everything else rotates. It’s something by which you can navigate.
Now, for the past 48 years, if my math is correct, from 1971, we have been without a navigational beacon. We’re essentially sailing in a fog on a ship, where many people say we’re in uncharted waters, and then they proceed to tell you exactly where we are. No, no – when you say you’re in uncharted waters, it means you don’t know where you are.
When you don’t know where you are, and when you don’t know where financially you are, because you’re not seeing any stationary targets, the values of everything, the values of all the assets, the prices of all the securities, they are real in this fog that we’re in. They can be monetized and exchanged in the fog that we’re in. What we don’t know when the fog clears and we do see the stationary navigation beacon, only then will we find out where we actually are. Are we on the rocks, actually, or are we three feet away from the rocks, or are we in clear water and smooth sailing? We just don’t know…
I believe all investors should own some gold. How much is up to you, but at least have a little bit. I show you how to get some for free here.
There’s no catch – we have no business connections with the guys that are handing it out. And you don’t even have to pay postage and packing, or give anyone your banking details. It’s straight-up free gold – and that’s about as close a remedy to the Great Unease as you can get.
Back tomorrow,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates