Missing: $2.1 Billion

  • Payment Firm Misplaces $2.1 Billion
  • Apple Gives Intel the Fashionably Minimalist Boot
  • US Coronavirus Numbers Surge to Record Highs
  • Busting Investing’s Biggest Myth

 BUSINESS 

Payment Firm Misplaces $2.1 Billion

Shares of German payment service Wirecard plunged after the company reported a missing $2.1 billion from its balance sheets.

(It’s generally frowned upon when any company misplaces billions of dollars, but when your whole deal is tracking and sending money, there’s a not unreasonable expectation to know where the money’s at.)

The payments firm made a brief statement last week saying auditors had been unable to find more than €1.9 billion (or $2.1 billion) of the company’s cold-hard green (incidentally, three words you do not want to hear your doctor say).

Auditors from Ernst & Young reportedly checked all the usual places: down the side of the couch, in the pockets of the pants the company was wearing last week, and the Philippines.

According to internal documents, the money was held in two banks in the Philippines, BDO Unibank and Bank of Philippine Islands. Both of those banks have released statements saying “lol no.”

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Amidst the chaos, the company’s longtime CEO, Markus Braun, unceremoniously peaced out last week, leaving the company in the capable hands of some guy the board hired the day before.

James Freis, a former compliance officer at Germany’s stock exchange, was slated to join Wirecard’s management team in a new compliance role. But I guess now he’s dealing with this dumpster fire instead.

The company’s stock (WDI) plummeted 80% last week, as news of the scandal emerged. The price per share continued to tumble this morning after the company bashfully announced it was assessing a “prevailing likelihood” that the missing $2.1 billion “[does] not exist.”

(In other news, my wife and I are currently assessing the “prevailing likelihood” that her missing anniversary gift “[does] not exist” and I “will be sleeping in the dog’s room tonight.”)

All of this probably doesn’t come as a huge surprise to the folks over at the Financial Times, who reported in October that the company’s employees were conspiring to inflate sales and profit and mislead the company’s auditors.

Wirecard sued the Times for daring to suggest that a large portion of its cash was fabricated, accusing the paper of conspiring with short sellers.

As it turns out, about a quarter of the company’s entire balance sheet was make-believe money, only recognized as legal tender at toddler’s tea parties and major financial institutions that can’t do math.

Wirecard said it’s in “constructive discussions” with lenders to access credit, but the future of the company is starting to look like a wet loaf of bread in a mosh pit.

 TECH 

Apple Gives Intel the Fashionably Minimalist Boot

Apple is planning to replace the Intel chips in all Macs by 2021, according to a top Apple analyst (which is like a PC analyst but it looks cooler and doesn’t do as much work).

Apple’s iPads and iPhones are already powered by the company’s proprietary ARM processors. But its laptops and desktop computers depend on Intel to power cutting edge design programs and video games about dating monsters.

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How far we have fallen from the grace of God.

Rumors of a proprietary Mac chip have been circulating for months. But according to Ming-Chi Kuo, “the most accurate Apple analyst in the world,” we can expect to see Apple’s ARM processors in all new Macs by 2021.

Bringing chip production in-house would give Apple more control over its supply chain, which would have been nice to have during a global pandemic. And Kuo predicts the ARM Mac models will make the Intel Mac look like a cardboard box with a crayon drawing bunch of horny monsters on it.

“We expect that ARM Mac models outperform Intel Mac models by over 50%-100%,” Kuo said in the note this weekend.

The changeover is not without problems, however, given that all of the Mac’s apps were designed to run on Intel Chips.

Without apps, the Mac is just an expensive monsterless reading light. Presumably, Apple has some sort of strategy to port its existing library of apps over but for now, it’s unclear what its plan is or how much involvement it will require from app developers.

Hopefully we’ll find out more during Apple’s Worldwide Developers Conference, which kicks off today and is coming to you virtually for the first time ever because, you know, things suck right now.

Kuo says the first of Apple’s all new home-brewed computers will hit the market as soon as Q4 of 2020.

 HEALTH 

US Coronavirus Numbers Surge to Record Highs

The US reported more than 30,000 new coronavirus cases for two days running, as states relax stay-at-home orders and hordes of sexually pent up youngsters descend on the nation’s bars.

According to data compiled by Johns Hopkins University, new cases of coronavirus in the US are surging faster than ever before.

Health officials warn that clusters of infections seem to be centered on younger people, partying hard in crowded bars, and “doing the big kiss.” (CDC’s words, not mine.)

Cases are still falling in 20 states and the District of Colombia, where horny youths are somehow managing to keep a lid on it. But severe outbreaks in the South, West, and Midwest are driving national figures to highs we haven’t seen since May 1.

Seven states hit record highs of new cases this weekend, including Missouri, Montana, Utah, Florida, Nevada, Arizona, and South Carolina (known collectively as the scenic MMUFLANS).

Some critics believe the spike in cases is due to increased testing, but the data shows that hospitalizations, which would be unaffected by testing, are also spiking dramatically.

Either that or there’s an entirely separate deadly and contagious disease driving hospitalizations. Which seems unlikely but given how crappy this year has been so far, yeah, why the heck not?

Bring on Super Diarrhea or whatever it is, I guess.


In Other News

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ONE LAST THING

Busting Investing’s Biggest Myth

The US economy is experiencing one of its sharpest, most severe collapses in history.

It’s a real last ten minutes of Quentin Tarantino movie out there. And yet, stocks keep roaring higher.

It’s almost as if, despite everything we’ve been told, the stock market and the economy are completely disconnected.

Macroeconomist Graham Summers pulls back the curtain on one of the biggest myths in investing in today’s one last thing.

How to Avoid One of the Biggest Mistakes Investors Make

By Graham Summers

First and foremost, we need to dispel the myth that the stock market and the economy are closely related.

Case in point: Between 1972 and 1982, the US economy nearly tripled in size from $1.2 trillion to $3.2 trillion. And yet, throughout that entire period the stock market traded sideways for ZERO GAINS!

Chart: 1972-1982: Economy Grew, Stocks Traded Sideways

In contrast, from 1982 to 2000, the US economy again nearly tripled in size from $3.2 trillion to $10 trillion. But during this particular time, the stock market exploded higher rising nearly 1,500%!

Chart: 1982-2000: Economy Grew, Stocks Exploded Higher

So, we have two time periods in which the economy nearly tripled in size.

During one of them, the stock market went nowhere. During the other, the stock market rose nearly 1,500%.

Again, stocks have little if any correlation to the economy.

There are times when stocks will care a lot about the economy, but those time periods are usually short and due to an unexpected surprise – like the surprise of the economy being shut down to deal with the COVID-19 pandemic.

So, what do stocks care about?

Liquidity.

Stocks Respond to Money Printing

Historically, whenever central banks start printing money at a rapid clip, stocks do well.

A great example of this is the time period from 2008 to 2016. The economy was weak at best and flatlining at worst. But because the Fed printed over $3.5 trillion during this time period, socks soared, rising over 100%.

Which brings us to today. Stocks are rallying hard yet again – despite the economy being extremely weak.

The reason for this is because of the TSUNAMI of liquidity that policymakers are throwing at the financial system.

Central banks alone have printed over $5 trillion in the last three months. Much of this money has found its way into the stock market.

On top of this, G-10 governments have implemented fiscal stimulus programs ranging from 5% (Norway) to over 35% of (Germany and Italy) of their historic revenue and spending budgets!

Put another way, trillions upon trillions of world currencies have been printed and funneled into the financial system. This is sending stocks through the roof. And unless we get another nasty economic shock to the downside, this trend will likely continue.

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MARKET MOVEMENTS

Closing Data for Today

DJIA$26,024.96 0.59%
S&P Index 500$3,117.500.63%
NASDAQ$10,056.48 1.11%
Gold$1,766.400.75%
Silver$17.84↓ 0.04%
Bitcoin$9,591.00↑ 2.49%

  • US home sales tumbled to their lowest level in more than 9.5 years in May.
  • New York City entered phase 2 of its reopening strategy, allowing companies to reopen offices and restaurants to begin outdoor dining.
  • Outdoor apparel brand The North Face is boycotting ad spend on Facebook over its content moderation policies.

Cheers,

Shane Ormond
Editor, One Last Thing

Shane Ormond

Written By Shane Ormond

Shane Ormond is the managing editor for One Last Thing. In a previous life, he wrote and edited copy for International Living in Waterford, Ireland.