The Lex Newsletter: Apple at $3tn and why jackboots are bad for business

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Dear reader,

Happy new year. This is the first Lex newsletter in 2022. I’m the head of the team, and I’ll be writing a regular Friday summary this year, spinning out a wider range of themes from this week’s press.If you have any thoughts or suggestions, please email me lexfeedback@ft.com..

This week reminds me of George Orwell’s pessimistic prediction that the future will consist of “boots that will be imprinted on the human face forever.” Russian President Vladimir Putin has sent troops to help subordinate Kazakhstan suppress civilian anxiety. This move is added to the combination of volatile energy prices and the flammability of East-West tensions, and is reflected in Ukraine’s military conflict with Russia.

At such times, newspapers sometimes print a picture of the relative strength of countries dotted with military, missile, and military aircraft symbols. They miss the trick of failing to include the achievements of capitalism in democratic countries. For example, this week we have millions of smartphones manufactured by Apple, an easy-to-use business. Equivalent to $ 3 trillion..

Russia’s economy and its authoritarian satellites have been unable to move far beyond natural resource development. Kazakhstan, a vast country in Central Asia with steep grasslands and mountains, is a good example. It produces about 40 percent of the world’s uranium. A leading supplier of petroleum, copper, nickel and zinc. Western groups such as Glencore own significant assets there.

Russian intervention has helped calm commodity prices.Rex warned Western traders and consumers: Pay attention to what they want.. President Kassym-Jomart Tokaev invited the bear to his parlor because the Kazakh army was unable or unwilling to calm the anxiety. Bears cannot leave with the same agility. If it offends the Kazakhs, peace and price declines may be temporary.

Soldiers are a visible proof of state power. Spies and advertisers work in the shadows. The Chinese spy army should be happy with the latest technical crackdowns.Rex New scrutiny of foreign list It was less important than the requirements for the technology group to disclose recommended algorithms and user search history.

Unlike Russia, China has evolved from commodities to low-cost manufacturing to more advanced technology. Its progress has been partially dependent on the acquisition of major Western techniques. The National Security Act introduced by Britain this week is part of a broader Western backlash.Rex, the main result is Other prerequisites About the inbound acquisition in the UK.

China also shows the ingenuity and organization that Russia lacks. Therefore, Rex was bullish on China’s tech stocks until the Chinese government began cracking down on the sector a few years ago. Political stocks have too many unpredictable risks. China Mobile, a major telecommunications carrier just listed on Shanghai, Good defensive bet.. Looks too dull to annoy politicians.

In contrast, if Apple were Chinese, there would be no doubt that jealous politicians would shake it. Rex has beef with anti-competitive behavior of American tech giants. But Apple sees it as a brilliant example of a progressive business that provides what people want and has changed the world in the process.

We continue to be fans, even with a valuation of nearly eight times our earnings. The group’s market capitalization had fallen to $ 2.8 trillion at the pixel time. However, we believe the $ 4 trillion threshold will sooner or later fall.

Dictators believe that authoritarianism and modern capitalism can be successfully combined. They are wrong because modern capitalism, best illustrated in the United States, relies on the principles of maintaining free and multiple societies. These include:

Democracy. Shareholders can challenge management in the same way that voters put pressure on the government or leave the government. For example, activist 3D has voted against Toshiba’s unimpressive management self-serving plan, calling for the Japanese conglomerate to be split into three separately listed businesses.Rex Back that call..

Freedom to fail — or just miss an opportunity. This important advantage of the free market has fled many people, especially in the judgmental UK. Free markets are sandboxes where entrepreneurs try their ideas, many of which do not perform well.

Lime, a startup of electric scooters in the United States, Never make money.. too bad. Beyond the meat that produces vegetarian food, Flagging The product is easy to copy. I don’t care. TPG is good at buyouts, but outperforms the diversified Blackstone. TPG Can still float For $ 9 billion in a lot Other US IPOs It is scheduled for this year.

Reach out for politicians. Kneeling interventions are frequent in China, and the frustration of party bosses over his son’s obsession with computer games can lead to national policy changes. Gentle ministerial tinkering is one of the reasons Europe and Britain are in financial slump. Storm tax What the British Liberal Democratic Party has proposed to defeat energy companies is one sign of that bad habit. Is there a better way to stop investment than to continually mess with the market structure?

Law rules. Technology entrepreneur Elizabeth Holmes has made strong friends with the establishment of the United States. Nonetheless, she has been convicted of fraud and makes people like Henry Kissinger and George Shultz look properly stupid. Her blood tester simply couldn’t complete the difficult task she claimed.Beware of charismatic entrepreneurs Beyond their abilities, Rex concludes. Apply scientific skepticism to scientific claims.

The UK is a little excited to see Apple’s rating above the entire FTSE 100 Index. This gave the London Stock Exchange description a new currency. “Jurassic Park” From Hedgepole Marshall.

Rex he It’s wrong to blame the income fund — Only 6% of the market on one narrow scale. But he was right to blame London for hidden risk aversion. See items 2 and 3 in bold above. In the United States, the freedom to fail helps create high-tech mammals and birds that are replacing business dinosaurs.

Regarding the top quartile

Jonathan Guthrie
Responsible for Lex

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