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Nothing’s Phone (2) will run on Qualcomm’s Snapdragon 8 series

Nothing’s presence stood in stark contrast to OnePlus at this year’s MWC. Whereas Carl Pei’s old company, OnePlus, put on a flashy launch event for…



Nothing’s presence stood in stark contrast to OnePlus at this year’s MWC. Whereas Carl Pei’s old company, OnePlus, put on a flashy launch event for a concept device yesterday, Nothing has largely used the event to meet with vendors and other big names in the industry.

We sat down with Pei yesterday, fittingly in a meeting room inside the Qualcomm booth. Among other things, the CEO confirmed that the Nothing (2) will be powered by the Snapdragon 8 series chip — not that the topic was ever up for much debate.

The conversation — which touches on the U.S. and India markets and the smartphone industry at large — began with a quick exchange about the OnePlus concept phone. Earlier teasers of the device drew comparisons to Nothing’s first handset, the Phone (1). “People were tagging me,” Pei says, while acknowledging that the device’s illuminated cooling liquid is a distinct approach from his phone’s Glyph lighting scheme.

CP: There’s [a] company at MWC called UniHertz. A very small company. They made a carbon copy of the Phone (1). I’m gonna go check it out.

TC: Congratulations. That’s a rite of passage.

We recently worked on our vision statement. It’s, “We want to make tech fun again.” So, if we can inspire our industry to start experimenting more, that still helps with the vision.

There’s experimenting and there’s copying. Are you going to go be litigious?

No. They’re so small. That doesn’t really help anybody.

It’s been half a year since the Phone (1) was released. That’s incredibly fast, so good for them. It might be too early, but have you seen the device design influencing the category?

Another company in our industry somehow got their hands on the engineering prototype that our engineers were using for the Phone (1), ahead of release. They studied it and went to our suppliers for the glyphs (lights). They also have a phone with their own light interface on the back. It doesn’t [look] like a copy. It’s just something different in the industry. I was in India and I visited this phone collector. He’s got phones from 20 years ago, so Nokia and Sony Ericsson.

A personal phone museum.

Yeah. Back then, phones were so different. Today, everything is the same. It was kind of sad seeing all the phones from the past. So, if we can inspire our competitors, why not?

The smartphone market was on the decline before the pandemic. It got a bump from 5G and then declined again. At some point 6G will happen, but I don’t see something like foldables driving the market in a profound way. Will the market rebound? And if so, how?

The smartphone market grew initially because there was a really innovative product that was useful to customers. Now it’s starting to shrink, because my phone is good enough. Why should I upgrade?

It’s also too expensive to upgrade every two years.

Yeah. I think it’s natural that unless there’s some really useful innovation, it’s going to steadily decline. Having said that, it’s still a really big industry. It’s still very lucrative from a business perspective.

So, you don’t see anything on the immediate horizon that will profoundly drive sales?

Not profoundly. For us, we’re trying to do more and more as we build up our engineering capabilities. We weren’t able to do too much on the software side the first year. But now that we have our own team, we can start doing more and more, but it’s not going to be game changing. I don’t think in the next generation, but we’re steadily introducing something new and useful, I think. But I don’t see that iPhone moment on the horizon moment anymore. Not in the next two to three years.

Image Credits: Brian Heater

There may not be one. That was the ur-moment for phones.

Yeah. I think something around AI might be the next iPhone, but I haven’t really figured out the application.

You’re talking about AI on the phone?

No, AI as a technology to help people in general.

Obviously there have been some applications for AI on the phone, mostly for photography.

Yeah. But AI on the smartphone has only given us like 10% improvement. The picture quality is 10% better, but it doesn’t change how we interact with technology.

What are your feelings on foldables?

I personally think foldables are supply chain-driven innovation and not consumer insights.

In terms of having that initial breakthrough and then building devices around it?

Think about it from a supply chain perspective. Somebody invents OLED, and they can make a lot of money, because it’s a great technology. Then after a few years, a lot more companies make that, so they need to lower their prices. So they need to figure out what else they can sell at a higher margin. They develop flexible OLEDs, which they can sell at a higher price. Then they go and pitch it to the smartphone vendors. “We have this nice foldable, please use it.”

In Samsung’s case, they developed the technology in-house and built the device around it. As far as I can tell, they still own the vast majority of that market right now.

Foldables [don’t] come from solving customer pain points, but it’s getting better and better. That’s great, but it’s probably not going to be something we’re going to look at.

Image Credits: Brian Heater

So, we shouldn’t expect a foldable from Nothing?


There’s some talk of 6G at this year’s event, but it still feels pretty far off. What’s your sense on where the technology is?

I don’t know anything. I think for us it’s not where we need to leave. We just follow what the industry trend is on the network side. We need to lead where we can be different. If we ask our users why they bought the earphones and smartphone, the number one reason is design. So, how can we get stronger on that? Not just the hardware design, but to also adapt that to our software? So everything feels holistic. And then, how can we make our technology more useful? We have the Glyph interface on the back that looks quite nice, quite interesting. But we’ve got a lot of feedback that it wasn’t that functional. How can we build more and more functionality that’s actually usable?

In this case, you adopted a technology specifically for design reasons and then started looking for use cases?

It’s a mix, because we had a roadmap for features of the Glyph interface. But that roadmap has been executed on very slowly, because we didn’t have the engineering needed.

How big is the team now?

We’re 410. Still very small.

How many are in engineering?

Probably 350.

The vast majority.

Yeah, unfortunately, the smartphone is a very complicated product, so you need a lot of engineers.

Is Nothing profitable?
As a hardware business in a competitive market we have now sold 1,000,000 Nothing products and counting in just over two years.  Whilst Nothing won’t be profitable in its early days, our revenue grew tenfold from 2021 to 2022.

What can you tell me about the Phone (2)?

We’re going to be using the [Snapdragon] 8 series. Earlier, I said it was going to be a premium device. But we’ve never officially acknowledged whether it’s Qualcomm or MediaTek.

Was that ever up for debate? MediaTek is good, but Snapdragon is the clear choice for most flagships.

Qualcomm has been a really good partner. From the very beginning, when we were starting the business, there was a chipset shortage, and they gave us allocation at a good price. Today it’s different. There’s now an abundance of chipsets in the market, but they’ve been a strong supplier. And their product’s not bad, so we never really considered another option, especially for a more premium device.

Is there anything else you can share on the Nothing (2) front?

We’ll have a much stronger focus on software. With our engineering in-house, there’s a lot more we can do. We have a more robust roadmap, both in terms of design and how we can make it more useful.

Given the amount of time and money that went into R&D, will the design be similar to the Nothing (1)?

In terms of cost it will probably be similar.

And in terms of design language?

That I can’t really comment on.

How did the beta go in the U.S.?

It went very well. We’ve done over 2,000 already. We shut it down. It’s enough to get feedback for the beta. I think we did 2,500 before we closed it and it’s not even a new phone.

It’s half a year old, but it’s been much harder to get in the U.S.

Yeah, but it doesn’t really support all the bands in the U.S., either. So you sometimes get 4G, or sometimes you get no signal.

A limited release like that does serve the purpose of drumming up excitement. But given that the phone was already released in other parts of the world, what’s the purpose of the beta in the U.S.? Is it different from the feedback you get in Europe?

We wanted more users to give feedback, and U.S., Europe and India users are different. I think the U.S. consumer is more focused on the experience, whereas Indian consumers more focus on the functionality, the feature set and the specs.

Image Credits: Brian Heater

What’s the difference between experience and functionality?

U.S. users would be able to talk about user experience bugs, or what didn’t work, versus “Hey, why don’t we have this thing?”

Why didn’t it launch in the U.S.?

Engineering resources.

For the bands?

Okay, actually, two reasons. One is to add additional bands in the U.S. [but that] increases the cost of the product for all our regions around the world because we have a single SKU. So if we add everything we needed for the product, it became more expensive in Europe and India as well, but they had no benefit. And the second is our internal engineering. We just didn’t have enough engineering to support the different certifications that we needed to deal with some of the carriers.

Are the bands similar in India and the U.K.?

Yeah, basically.

India is a huge market — the number two in the world. Is that why it was one of your first countries?

There was a strong affinity for OnePlus in India. From a consumer side, we knew there was interest in what we were going to build, and from the partner side, from the sales channel side, they believe in our team based on what we did in the past, so they will support us again on this new journey.

I see a good long-term potential, yeah. And then the market this year, India’s economy is going to grow by 6%. And a lot of economies are shrinking. They still have a lot of growth ahead of them as a nation. And also they have a very young population, and I think the middle class . . . will keep growing in size, whereas maybe in Europe, it will decrease in size.

Apple and others focus their budget devices on the Indian market.  Did you consider doing a second variant?

We did but I think that’s the easy way, but it also has long-term negative repercussions. For yourself as a company, if consumers only buy you because you’re cheap, then what’s your business model? A company needs to be profitable. So if you’re cheap today, then tomorrow somebody else can be even cheaper. And then this is like the fight for whoever makes the least amount of money or even loses money. So I think we’re taking a much more difficult route; we need to make our products different. And we need to create things that are useful for the customer. And we’ll know if it’s useful if they want to pay for it. It’ll be slower this way, but I think we’ll have a much stronger brand and much stronger product in the long-term if we do this, and also a healthier company, in terms of profitability.

Do you have any operations in India?

We have manufacturing in India. About half of the phones are made in India, and half in China. We’re building a manufacturing team in India to manage the factory. We have sales and marketing over there. And we have testing for some of our software and aftersales.

The U.S. is looking to move more U.S. product manufacturing back to its own market. Is that something you would pursue at some point as a U.K. company, manufacturing in the U.K.?

Probably not. I think this would need government policy support, and I don’t think the U.K. government has a plan there.

The U.S. seems to be injecting a ton of money into that.

I think India has a Made in India program, and the Middle East is starting to look at how they can diversify away from oil. I don’t think Europe in general has a plan for where they’re going.

Pricing is obviously a big part of it. I see companies moving from Shenzhen to Vietnam or Mexico.

I think the U.S. is not that expensive. Real estate for manufacturing is cheap compared to other places. The labor cost is higher, but the efficiency is also higher. So it kind of evens out.

How aggressively are you looking at APAC?

I think the China market is very competitive in an unhealthy way, as in it’s like a race to the bottom who can deliver the most amount of specs and features at the lowest possible price. And I think a majority are losing money in China.

And you’d be competing with these huge companies with so many resources.

I think, long-term, all the companies will become rational. When people are rational, we can consider entering the market. But it’s very irrational now. And also, if you want to operate in China, you need to have another software team because Google services are not there, so you need to build your own services. We just can’t think about all those things right now.

Image Credits: Brian Heater

What does your roadmap look like? OnePlus started small and has gradually grown its scope. Are you looking to ramp up the product release cadence for Nothing, too?

Not very aggressively, because we want to create iconic products, and we want to support the products well, in terms of software. If you make like 10 or 20 phones a year, then it’s really hard to provide that level of support. It’s almost like you get a round of consumer interest for every new product. Like that always comes. So it’s kind of like a drug that you’re addicted to. You want to keep releasing stuff. But I think if you take the harder route, the more healthy route, they really figure out the product itself.

Phone-wise, a yearly cadence makes sense.

I can’t really comment on that right now. But I think if you look at the Phone (1), there’s actually still a sustained level of consumer interest, half a year after the launch. That’s becoming more and more rare in this industry.

Any new product categories this year?


Read more about MWC 2023 on TechCrunch

Nothing’s Phone (2) will run on Qualcomm’s Snapdragon 8 series by Brian Heater originally published on TechCrunch

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‘The Official Truth’: The End Of Free Speech That Will End America

‘The Official Truth’: The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations…



'The Official Truth': The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations fail to report that large majorities of the American public now view their journalistic product as straight-up propaganda, does that make it any less true?

According to a survey by Rasmussen Reports, 59% of likely voters in the United States view the corporate news media as "truly the enemy of the people." This is a majority view, held regardless of race: "58% of whites, 51% of black voters, and 68% of other minorities" — all agree that the mainstream media has become their "enemy."

This scorching indictment of the Fourth Estate piggybacks similar polling from Harvard-Harris showing that Americans hold almost diametrically opposing viewpoints from those that news corporations predominantly broadcast as the official "truth."

Drawing attention to the divergence between the public's perceived reality and the news media's prevailing "narratives," independent journalist Glenn Greenwald dissected the Harvard-Harris poll to highlight just how differently some of the most important issues of the last few years have been understood. While corporate news fixated on purported Trump-Russia collusion since 2016, majorities of Americans now see this story "as a hoax and a fraud."

While the news media hid behind the Intelligence Community's claims that Hunter Biden's potentially incriminating laptop (allegedly containing evidence of his family's influence-peddling) was a product of "Russian disinformation" and consequently enforced an information blackout on the explosive story during the final weeks of the 2020 presidential election, strong majorities of Americans currently believe the laptop's contents are "real." In other words, Americans have correctly concluded that journalists and spies advanced a "fraud" on voters as part of an effort to censor a damaging story and "help Biden win." Nevertheless, The New York Times and The Washington Post have yet to return the Pulitzer Prizes they received for reporting totally discredited "fake news."

Similarly, majorities of Americans suspect that President Joe Biden has used the powers of his various offices to profit from influence-peddling schemes and that the FBI has intentionally refrained from investigating any possible Biden crimes. Huge majorities of Americans, in fact, seem not at all surprised to learn that the FBI has been caught abusing its own powers to influence elections, and are strongly convinced that "sweeping reform" is needed. Likewise, large majorities of Americans have "serious doubts about Biden's mental fitness to be president" and suspect that others behind the scenes are "puppeteers" running the nation.

Few, if any, of these poll results have been widely reported. In a seemingly-authoritarian disconnect with the American people, corporate news media continue to ignore the public's majority opinion and instead "relentlessly advocate" those viewpoints that Americans "reject." When journalists fail to investigate facts and deliberately distort stories so that they fit snugly within preconceived worldviews, reporters act as propagandists.

Constitutional law scholar Jonathan Turley recently asked, "Do we have a de facto state media?" In answering his own question, he notes that the news blackout surrounding congressional investigations into Biden family members who have allegedly received more than ten million dollars in suspicious payments from foreign entities "fits the past standards used to denounce Russian propaganda patterns and practices." After Republican members of Congress traced funds to nine Biden family members "from corrupt figures in Romania, China, and other countries," Turley writes, "The New Republic quickly ran a story headlined 'Republicans Finally Admit They Have No Incriminating Evidence on Joe Biden.'"

Excoriating the news media's penchant for mindlessly embracing stories that hurt former President Donald Trump while simultaneously ignoring stories that might damage President Biden, Turley concludes:

"Under the current approach to journalism, it is the New York Times that receives a Pulitzer for a now debunked Russian collusion story rather than the New York Post for a now proven Hunter Biden laptop story."

Americans now evidently view the major sources for their news and information as part of a larger political machine pushing particular points of view, unconstrained by any ethical obligation to report facts objectively or dispassionately seek truth. That Americans now see the news media in their country as serving a similar role as Pravda did for the Soviet Union's Communist Party is a significant departure from the country's historic embrace of free speech and traditional fondness for a skeptical, adversarial press.

Rather than taking a step back to consider the implications such a shift in public perception will have for America's future stability, some officials appear even more committed to expanding government control over what can be said and debated online. After the Department of Homeland Security (DHS), in the wake of public backlash over First Amendment concerns, halted its efforts to construct an official "disinformation governance board" last year, the question remained whether other government attempts to silence or shape online information would rear their head. The wait for that answer did not take long.

The government apparently took the public's censorship concerns so seriously that it quietly moved on from the collapse of its plans for a "disinformation governance board" within the DHS and proceeded within the space of a month to create a new "disinformation" office known as the Foreign Malign Influence Center, which now operates from within the Office of the Director of National Intelligence. Although ostensibly geared toward countering information warfare arising from "foreign" threats, one of its principal objectives is to monitor and control "public opinion and behaviors."

As independent journalist Matt Taibbi concludes of the government's resurrected Ministry of Truth:

"It's the basic rhetorical trick of the censorship age: raise a fuss about a foreign threat, using it as a battering ram to get everyone from Congress to the tech companies to submit to increased regulation and surveillance. Then, slowly, adjust your aim to domestic targets."

If it were not jarring enough to learn that the Office of the Director of National Intelligence has picked up the government's speech police baton right where the DHS set it down, there is ample evidence to suggest that officials are eager to go much further in the near future. Democrat Senator Michael Bennet has already proposed a bill that would create a Federal Digital Platform Commission with "the authority to promulgate rules, impose civil penalties, hold hearings, conduct investigations, and support research."

Filled with "disinformation" specialists empowered to create "enforceable behavioral codes" for online communication — and generously paid for by the Biden Administration with taxpayers' money — the special commission would also "designate 'systemically important digital platforms' subject to extra oversight, reporting, and regulation" requirements. Effectively, a small number of unelected commissioners would have de facto power to monitor and police online communication.

Should any particular website or platform run afoul of the government's First Amendment Star Chamber, it would immediately place itself within the commission's crosshairs for greater oversight, regulation, and punishment.

Will this new creation become an American KGB, Stasi or CCP — empowered to target half the population for disagreeing with current government policies, promoting "wrongthink," or merely going to church? Will a small secretive body decide which Americans are actually "domestic terrorists" in the making? US Attorney General Merrick Garland has gone after traditional Catholics who attend Latin mass, but why would government suspicions end with the Latin language? When small commissions exist to decide which Americans are the "enemy," there is no telling who will be designated as a "threat" and punished next.

It is not difficult to see the dangers that lie ahead. Now that the government has fully inserted itself into the news and information industry, the criminalization of free speech is a very real threat. This has always been a chief complaint against international institutions such as the World Economic Forum that spend a great deal of time, power, and money promoting the thoughts and opinions of an insular cabal of global leaders, while showing negligible respect for the personal rights and liberties of the billions of ordinary citizens they claim to represent.

WEF Chairman Klaus Schwab has gone so far as to hire hundreds of thousands of "information warriors" whose mission is to "control the Internet" by "policing social media," eliminating dissent, disrupting the public square, and "covertly seed[ing] support" for the WEF's "Great Reset." If Schwab's online army were not execrable enough, advocates for free speech must also gird themselves for the repercussions of Elon Musk's appointment of Linda Yaccarino, reportedly a "neo-liberal wokeist" with strong WEF affiliations, as the new CEO of Twitter.

Throughout much of the West, unfortunately, free speech has been only weakly protected when those with power find its defense inconvenient or messages a nuisance. It is therefore of little surprise to learn that French authorities are now prosecuting government protesters for "flipping-off" President Emmanuel Macron. It does not seem particularly astonishing that a German man has been sentenced to three years in prison for engaging in "pro-Russian" political speech regarding the war in Ukraine. It also no longer appears shocking to read that UK Technology and Science Secretary Michelle Donelan reportedly seeks to imprison social media executives who fail to censor online speech that the government might subjectively adjudge "harmful." Sadly, as Ireland continues to find new ways to punish citizens for expressing certain points of view, its movement toward criminalizing not just speech but also "hateful" thoughts should have been predictable.

From an American's perspective, these overseas encroachments against free speech — especially within the borders of closely-allied lands — have seemed sinister yet entirely foreign. Now, however, what was once observed from some distance has made its way home; it feels as if a faraway communist enemy has finally stormed America's beaches and come ashore in force.

Not a day seems to go by without some new battlefront opening up in the war on free speech and free thought. The Richard Stengel of the Council on Foreign Relations has been increasingly vocal about the importance of journalists and think tanks to act as "primary provocateurs" and "propagandists" who "have to" manipulate the American population and shape the public's perception of world events. Senator Rand Paul has alleged that the DHS uses at least 12 separate programs to "track what Americans say online," as well as to engage in social media censorship.

As part of its efforts to silence dissenting arguments, the Biden administration is pursuing a policy that would make it unlawful to use data and datasets that reflect accurate information yet lead to "discriminatory outcomes" for "protected classes." In other words, if the data is perceived to be "racist," it must be expunged. At the same time, the Department of Justice has indicted four radical black leftists for having somehow "weaponized" their free speech rights in support of Russian "disinformation." So, objective datasets can be deemed "discriminatory" against minorities, while actual discrimination against minorities' free speech is excused when that speech contradicts official government policy.

Meanwhile, the DHS has been exposed for paying tens of millions of dollars to third-party "anti-terrorism" programs that have not so coincidentally equated Christians, Republicans, and philosophical conservatives to Germany's Nazi Party. Similarly, California Governor Gavin Newsom has set up a Soviet-style "snitch line" that encourages neighbors to report on each other's public or private displays of "hate."

Finally, ABC News proudly admits that it has censored parts of Robert F. Kennedy Jr.'s interviews because some of his answers include "false claims about the COVID-19 vaccines." Essentially, the corporate news media have deemed Kennedy's viewpoints unworthy of being transmitted and heard, even though the 2024 presidential candidate is running a strong second behind Joe Biden in the Democrat primary, with around 20% support from the electorate.

Taken all together, it is clear that not only has the war on free speech come to America, but also that it is clobbering Americans in a relentless campaign of "shock and awe." And why not? In a litigation battle presently being waged over the federal government's extensive censorship programs, the Biden administration has defended its inherent authority to control Americans' thoughts as an instrumental component of "government infrastructure." What Americans think and believe is openly referred to as part of the nation's "cognitive infrastructure" — as if the Matrix movies were simply reflecting real life.

Today, America's mainstream news corporations are already viewed as processing plants that manufacture political propaganda. That is an unbelievably searing indictment of a once-vibrant free press in the United States. It is also, unfortunately, only the first heavy shoe to drop in the war against free speech. Many Chinese-Americans who survived the Cultural Revolution look around the country today and see similarities everywhere. During that totalitarian "reign of terror," everything a person did was monitored, including what was said while asleep.

In an America now plagued with the stench of official "snitch lines," censorship of certain presidential candidates, widespread online surveillance, a resurrected "disinformation governance board," and increasingly frequent criminal prosecutions targeting Americans who exercise their free speech, the question is not whether what we inaudibly think or say in our sleep will someday be used against us, but rather how soon that day will come unless we stop it. After all, with smartphones, smart TVs, "smart" appliances, video-recording doorbells, and the rise of artificial intelligence, somebody, somewhere is always listening.

Tyler Durden Sun, 05/28/2023 - 23:00

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Never Short a Dull Market; AI is Sexy, But Everyone Hates Oil

There’s an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about…



There's an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about as dull as it gets. This, of course, brings the energy sector to the top of my contrarian alert list.

This is not to say that I'm buying oil-related assets with both hands. It just means that, at this point, it makes more sense to look at energy as a value asset, as it is oversold and ripe for a move up whenever the right set of variables required to deliver such a move line up just right.

In the current world, the variables could line up just right as early as today.

There are No Oil Bulls Left

Nobody loves oil.

The level of bearishness expressed by futures traders is at least equal to where it was during the pandemic, and after the Silicon Valley Bank (SIVB) collapse. The International Energy Agency (IEA), forecasts that, of the expected $2.8 trillion in energy investments for 2023, roughly $1.7 trillion will be allocated to low carbon energy sources, including nuclear, solar, and other potential sources. Only $1.1 trillion will be invested in fossil fuels.

And according to the Financial Times, auctioneers in Texas are trying to unload two brand new fracking rigs, which together cost $70 million, for a starting combined bid of just below $17 million.

Supply is the Primary Influence on Oil Prices

Meanwhile, oil companies are quietly merging with competitors, and exploration outside the United States is continuing aggressively, with new discoveries being frequently announced. 

Simultaneously, the U.S. active rig count is slowly falling, led by natural gas. The price of gasoline is steadily rising, as the market begins to price in future supply reductions. Just in my neck of the woods, regular unleaded is up some $0.32 in the last week alone.

That doesn't sound like an industry that's planning on fading away. It sounds like an industry that's hunkering down and waiting for better times and preparing to squeeze supply in order to boost prices.

Charting the Oil Sector

The price chart for West Texas Intermediate Crude, the U.S. benchmark (WTIC), shows the depressed price picture which has led investors to walk away. And, until proven otherwise, there are plenty of sellers at the $75-$80 price area, where a sizeable Volume by Price bar highlights the point of resistance.

At first glance, there little difference in the general price behavior for Brent Crude, the European benchmark. (BRENT) where there is a resistance band defined by VBP bars between $80 and $90. A closer look reveals an uptick in Accumulation Distribution (ADI) and the semblance of some nibbling in On Balance Volume (OBV). It's subtle, but it's there.

The oil stocks are far from a bull trend. The Energy Select Sector SPDR ETF (XLE) is trading below its 200-day moving average, facing resistance put from $78 to $90 (VBP bars).

So why bother? Simply stated, OPEC has an upcoming meeting on June 3-4. The cartel is not happy about the prices and the way things are evolving. The Saudi oil minister recently warned bearish speculators to "watch out." And my gut is doing flips when I think about oil, as I see gasoline prices creep up when I drive to work.

But mostly, it's because there are no oil bulls left. This is what we saw in the technology sector a few months ago before its current rally. In early 2023, the tech sector was pronounced dead. The stories were all about the technology sector shuddering as the economy slowed. How about this one, from March 2023, which breathlessly announced a 5.2% decrease in semiconductor sales on a month to month basis and an 18.5% year to year drop?

Yet, as validated by the recent AI-fueled rally, the bad news first marked a bottom, while preceding a significant move up in tech shares.

Never short a dull market.

I've recently recommended several energy sector picks. You can have a look at them with a free trial to my service. In addition, I've posted a Special Report on the oil market which you can gain access to here.

Bond and Mortgage Roller Coaster Reverses Course

Expect negative news about the effect of rising mortgage rates on the homebuilder industry. That's because, as the chart below illustrates, there is a tight and very close correlation between rising bond yields, mortgage rates, and the homebuilder stocks (SPHB).

Moreover, the rise above 3.75% on the U.S. Ten Year Note yield (TNX) has triggered headlines about mortgage rates climbing above 7%. What the news isn't reporting is that, once bond yields roll over, which they are likely to do at some point in the future when the economy shows more signs of slowing and the Fed finally admits that they must pause, is that mortgage rates will drop and demand for new homes will once again pick up. Thus, we will see the homebuilders pick up where they left off.

As things stood last week, SPHB seems to have made a short term bottom.

For now, expect a continuation of the backing and filling in the homebuilder stocks. But, if I'm right and bond yields reverse course, the homebuilders are likely to rally again.

For an in-depth comprehensive outlook on the homebuilder sector click here.

NYAD Holds Above 200-Day Moving Average. SPX Joins NDX in Breaking Out. Liquidity is Shrinking.

The New York Stock Exchange Advance Decline line (NYAD) tested its 200-day moving average on an intra-week basis but did not break below the key technical level. On the other hand, NYAD remained below its 50-day moving average, which is still an intermediate-term negative.

Moreover, with the major indexes (see below) breaking out to new highs, we remain in a technical divergence as the market's breadth is lagging the action in the indexes. This is of some concern, given the fade in the market's liquidity, as I point out below.

The Nasdaq 100 Index (NDX) extended its recent breakout, closing the week well above 14,200. The current move is unsustainable, so some sort of pullback and consolidation are likely over the next few days to weeks. Both ADI and OBV remain encouraging.

What's more bullish is that the S&P 500 (SPX) finally broke out above the 4100–4200 trading range on 5/24/23. On Balance Volume (OBV) is perking up while the Accumulation Distribution (ADI) indicator is very encouraging.

We may be seeing a shift from a short-covering rally to a fear-of-missing-out buyer's rally.

VIX Holds Steady

The CBOE Volatility Index (VIX) remained below 20, as it has since March 2023. This remains a positive for the markets, as it shows short sellers are staying away at the moment.

When the VIX rises, stocks tend to fall, as rising put volume is a sign that market makers are selling stock index futures to hedge their put sales to the public. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying, which causes market makers to hedge by buying stock index futures. This raises the odds of higher stock prices.

Liquidity is Getting Squeezed

The market's liquidity is now in a downtrend. The Eurodollar Index (XED) is now below 94.5, and looks weak. A move above 95 will be a bullish development. Usually, a stable or rising XED is very bullish for stocks.

To get the latest up-to-date information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

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Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

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Costco Tells Americans the Truth About Inflation and Price Increases

The warehouse club has seen some troubling trends but it’s also trumpeting something positive that most retailers wouldn’t share.



Costco has been a refuge for customers during both the pandemic and during the period when supply chain and inflation issues have driven prices higher. In the worst days of the covid pandemic, the membership-based warehouse club not only had the key household items people needed, it also kept selling them at fair prices.

With inflation -- no matter what the reason for it -- Costco  (COST) - Get Free Report worked aggressively to keep prices down. During that period (and really always) CFO Richard Galanti talked about how his company leaned on vendors to provide better prices while sometimes also eating some of the increase rather than passing it onto customers.

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That wasn't an altruistic move. Costco plays the long game, and it focuses on doing whatever is needed to keep its members happy in order to keep them renewing their memberships.

It's a model that has worked spectacularly well, according to Galanti.

"In terms of renewal rates, at third quarter end, our US and Canada renewal rate was 92.6%, and our worldwide rate came in at 90.5%. These figures are the same all-time high renewal rates that were achieved in the second quarter, just 12 weeks ago here," he said during the company's third-quarter earnings call.

Galanti, however, did report some news that suggests that significant problems remain in the economy.

Costco has done an incredibly good job at holding onto members.

Image source: Xinhua/Ting Shen via Getty Images

Costco Does See Some Economic Weakness

When people worry about the economy, they sometimes trade down when it comes to retailers. Walmart executives (WMT) - Get Free Report, for example, have talked about seeing more customers that earn six figures shopping in their stores.

Costco has always had a diverse customer base, but one weakness in its business may be a warning sign for its rivals like Target (TGT) - Get Free Report, Best Buy (BBY) - Get Free Report, and Amazon (AMZN) - Get Free Report. Galanti broke down some of the numbers during the call.

"Traffic or shopping frequency remains pretty good, increasing 4.8% worldwide and 3.5% in the U.S. during the quarter," he shared.

People shopped more, but they were also spending less, according to the CFO.

"Our average daily transaction or ticket was down 4.2% worldwide and down 3.5% in the U.S., impacted, in large part, from weakness in bigger-ticket nonfood discretionary items," he shared.

Now, not buying a new TV, jewelry, or other big-ticket items could just be a sign that consumers are being cautious. But, if they're not buying those items at Costco (generally the lowest-cost option) that does not bode well for other retailers.

Galanti laid out the numbers as well as how they broke down between digital and warehouse.

"You saw in the release that e-commerce was a minus 10% sales decline on a comp basis," he said. "As I discussed on our second quarter call and in our monthly sales recordings, in Q3, big-ticket discretionary departments, notably majors, home furnishings, small electrics, jewelry, and hardware, were down about 20% in e-com and made up 55% of e-com sales. These same departments were down about 17% in warehouse, but they only make up 8% in warehouse sales."

Costco's CFO Also Had Good News For Shoppers

Galanti has been very open about sharing information about the prices Costco has seen from vendors. He has shared in the past, for example, that the chain does not pass on gas price increases as fast as they happen nor does it lower prices as quick as they sometimes fall.

In the most recent call, he shared some very good news on inflation (that also puts pressure on Target, Walmart, and Amazon to lower prices).

"A few comments on inflation. Inflation continues to abate somewhat. If you go back a year ago to the fourth quarter of '22 last summer, we had estimated that year-over-year inflation at the time was up 8%. And by Q1 and Q2, it was down to 6% and 7% and then 5% and 6%," he shared. "In this quarter, we're estimating the year-over-year inflation in the 3% to 4% range."

The CFO also explained that he sees prices dropping on some very key consumer staples.

"We continue to see improvements in many items, notably food items like nuts, eggs and meat, as well as items that include, as part of their components, commodities like steel and resins on the nonfood side," he added.


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