Morning Commentary
By Charles Payne, CEO & Principal Analyst
2/22/2016 6:10 AM
Last week, the S&P 500 rallied 2.8% for its best week of 2016. There is a general sense this is a pause and not a turn, so this week will be a major test. If momentum is to maintain, there are certain areas that must participate, including transportation. I have long been a fan of the Dow Theory, where one tenant is that transportation stocks must be higher to give market rallies legitimacy.
The Dow Jones Transportation Index (DJTI) turned in early January and has picked up even more momentum. Still, the index has its challenges, including truckers and railroads. Airlines in the index took off as crude broke under $30 a barrel again. In fact, most of the stocks traded the way one would expect with the exception of Kansas City Southern (KSU) that upgraded at Credit Suisse. When Trinity Industries (TRN) crashed, I was sure rails would all collapse in unison.
Trinity isn’t a bellwether; the magnitude of its sell-off should have had implications for rails. For years, I loved Kansas City Southern (made money each time we built a position in 2006, 2009, 2012, and 2014 when we last sold on October 1, 2014 at $117). Before the new Panama Canal opens, we want to get back long, but its strong session (Union Pacific higher, too) is encouraging as a proxy on the U.S. economy now. For now, the DJT has to find a way to close above 7,500.
This Week’s Highlights
It’s going to be an interesting week marked by an avalanche of Federal Reserve speakers that could either:
- A) Corroborate no rate hike in March
- B) Or make things more confusing
We also get a bunch of data on housing, which continues to come up short despite historically low rates. The lack of supply excuse has worn thin; it’s time to see a real and consistent traction. We also have the pulse of consumers; in addition to surveys, we get income, spending, and savings data.
Once again, the Dow faces a big challenge to climb through 16,500 and the Street will not wait long for that to happen.
The oil-stocks relationship is fading a bit, but oil stocks could help in a rally attempt. Watch for SPDR Select Sector Fund (XLE) to climb above 58, then breakout on a closing basis above 60.
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Question of the Week - Apple iPhone The Apple plot thickens today with the Department of Justice filing a motion to compel the tech giant to comply with the request by the FBI to help build software that would un-lock the cell phone used by Syed Farook, the killer of 14 co-workers in San Bernardino, California back in December. Apple CEO Tim Cook pledges to resist providing any assistance, calling this whole thing an “overreach by the U.S. government.” Instead, he wants a public discussion. The issue looms largely within Apple, as there are several reasons for its belligerence, including its lineage. The company burst onto the scene with its now iconic “1984-themed” commercial during Super Bowl XV111. Its message echoed the Big Brother warnings of Orwell and established Steve Jobs & co as rebels looking out only for the people. Since then, the U.S. government actually attempted to force phone makers to install back door features inside the so-called Clipper chip. The experiment lasted from 1993 to 1996. Fast forward to the Edward Snowden saga, which supposedly inspired Silicon Valley to create lockdown and self-destruct features. Those features sparked outrage among law enforcement. A group of Chicago PD officers said that the features make it “the phone of choice for pedophiles.” These days, people are saying iPhone is the phone of choice for ISIS and other terrorist groups, and demand that Apple looks out for its customer’s lives, and not just embarrassing texts and photos. I get that Tim Cook is looking for libertarian street cred, but no one believes a solution is not possible. I am a fan of George Orwell, but there is no way Apple can convince me that there isn’t a way to fix this problem. If Tim Cook wants to carry the Apple baton from his successor, he should remember this quote from Steve Jobs: Innovation distinguishes between a leader and a follower It’s time for Cook to be a leader and to unlock this phone. What are your thoughts? Please take the poll or post your opinion below. |
| Comments |
| If Apple builds a back door all our Apple devices will be more easily hacked, more popups, more virus, Randy on 2/22/2016 9:41:33 AM |
| One thing that I do support about Apple's stance on unlocking this phone is that they are at least forcing the FBI (aka the government) to use the courts to force Apple to unlock this phone in the same way that a police service has to obtain a warrant before they can search one's premises. I believe that we as citizens need this type of check/balance for our own protection from the government's ever more prying eyes. Doug S on 2/22/2016 9:48:20 AM |
| Completely agree. There is a way to handle this technically without giving up the rights of individuals. Scott Heck on 2/22/2016 9:57:13 AM |
| Railroads are taking it on the chin right now, downturn in coal is part of problem, but cutting back on production and equipment impacts rail traffic, and the lack of growth is alarming. The railroads will be very careful this year, with the R word hanging over the country again, thanks to crushing government policies. American ingenuity has provided any growth their is, Pres. Obama's policies and Obamacare are now showing their full impact. Lots of talk about infrastructure problems, but all that stimulus money was supposed to be for shovel ready jobs, what a waste and what a joke...the money went to unions and activists, let us not kid ourselves. Back to big railroads, they are parking equipment and locomotives, and that means jobs, and the evidence is all over the country...see TRAINS magazine March 2013, page 13 and 40... Don and Patti Woolley on 2/22/2016 10:08:16 AM |
| Apple could have already provided all info contained on this terrorist's phone. The issue of creating software for the FBI to do so with all Apple phones is another conversation for another day. Kathryn Napier on 2/22/2016 10:17:05 AM |
| Let Apple deliver the government the contents of the cell phone without giving the FBI a backdoor. Juan Aroix on 2/22/2016 10:24:38 AM |
| In a nation of self-governing people who elect officials, including judges, to represent them when managing public business under the United States Constitution, law enforcement must seek a warrant to assure that their obtaining evidence that is otherwise protected and private, comports with the laws established by our society. Up until last September, law enforcement (LE) could take a warrant to Apple HQ and a cell phone and Apple would use their "key" to extract the data for LE. This is the orderly process in The Civilized Society, which although struggling, we remain to be. So the questions are: 1) What has changed at Apple? 2) If Apple changed their software to make it impossible to "key" it open, does the Constitution provide grounds for government to impose a change-of-design in the iPhones, etc. produced by a private entity? 3) If the answer to #2 is "yes," will Apple move offshore? Given Apple's capitulation to the Communist Chinese Government, and defiance of the USA (along with massive cash hoards abroad), hasn't Apple already expatriated materially and philosophically? Considering these serious questions and Apple's behavior, what's your next cell phone going to be? How about, "Not a RED cell phone?" Bill on 2/22/2016 10:35:41 AM |
| Since Apple was asked to unlock just this one phone, how would if=t jeopardize the privacy of all other phones? Apple has cooperated with the government in the past. If they don't cooperate, it will be black eye for Apple wince they will be regarded as siding with terrorists. Bernie on 2/22/2016 10:37:17 AM |
| This is going to be an ongoing problem. Maybe the big Silicon Valley guys should meet with the big Federal intelligence guys and find an answer. It should be solvable; but it must also address other governments that will want to get access under their laws. Consider our current presidents new best friends - Iran and Cuba! SRBeckham on 2/22/2016 10:58:03 AM |
| As i understand it - this backdoor doesn't exist and Apple would need to modify their OS to allow. Once that is done, does anyone believe that we can keep it from falling into the wrong hands. I believe that Apple has provided all cloud data to the FBI Lori S on 2/22/2016 11:18:12 AM |
| "There is a way to handle this technically without giving up the rights of individuals." - No there is not. That is the whole point. Chris Nystrom on 2/22/2016 11:21:04 AM |
| I fail to see the concern of Apple & its users. FBI is not asking for a back door but just find out what the contents of the phone are so further terrorist attacks may be prevented. Jon Lewis on 2/22/2016 11:33:58 AM |
| Seems simple--give phone to Apple, they extract contents and give to FBI but Apple gets to keep the phone--so this is truly a "one time thing". Giving a "use anytime" backdoor to any govt agency is NOT a good thing. Dick on 2/22/2016 11:52:51 AM |
| If the Federal Gov. had been doing it's only REAL JOB ---- keeping the country safe----this would not be a question.KISS john on 2/22/2016 12:02:06 PM |
| Apple should be given the phone to unlock the phone and not disclose how they did it and return the unlocked phone to the FBI. Rodman Johnson on 2/22/2016 12:07:47 PM |
| The FBI should send an agent with the phone to Apple HQ and Apple should unlock only that phone while the FBI agent watches. (To maintain the chain of custody for any court cases.) Mark Scriven on 2/22/2016 12:07:49 PM |
| Wouldn't a true detective tell you that after this amount of time and publicity all the contacts and calls made, all of the info on this phone, is now of no use? Imagine that you're on this sob's call list; haven't you ditched your phone by now? Bob on 2/22/2016 12:10:50 PM |
| FBI and Apple should use the back door to resolve this and keep it out of the public discussion especially if its about security. They are both grown up and need to do what right for its citizens/customers. My jewish mom would have had that resolved long ago, let alone never have made the mistake of reseting the password once the phone was in the FBI possessions (government at work) iris g on 2/22/2016 12:34:03 PM |
| Apple should comply with gov't request for this phone only and if successful destroy the software so others cannot have access. Also gov't must use NSA meta data info to see what phone calls were made to the phone and investigate using that information. I realize this program supposedly is shut down but there was a time they were collecting data. Why don't they use it???? Russell Gilbert on 2/22/2016 12:50:52 PM |
| Because there is no current back door, and apple is concerned because the FBI wants it to create one, and if it does, that back door can get out into the general populace and be used on any phone. right now, there isnt a method to open the door, If apple creates one, what will stop the government from demanding a copy of the key to use without warrants. One step at a time. peter on 2/22/2016 2:01:25 PM |
| If federal agencies can arbitrarily demand actions which whittle away at our constitutional rights, what's the point of our clinging to our notions of freedom and democracy anymore? Technology is certainly moving forward faster than our ability to harness its impact on our rights, security and freedom. Patricia Flynn on 2/22/2016 3:44:17 PM |
| I just don't understand why they can't get the phone to Apple and then have them tell the FBI what it says VS giving them access to Apple's encryption. As messed up as hte Gov't is I would not give them anything either. Will on 2/22/2016 6:46:23 PM |
| Guess Apple doesn't trust the government. Who does? Marilyn on 2/22/2016 8:02:20 PM |
| The whole argument is ridiculous. For the government to go hat in hand to Apple to get software to open a phone is utterly past comprehension. If they won't help then I pose the argument - is Apple the only software developer in the country? Heck no. There are people in our think tanks that have probably already done it. Call IBM. One phone does not expose everyone. Besides, the message sent to the terrorists is that it can and will be done. Just take care of business and quit making a spectacle of yourself Cook. The FBI doesn't have to have the code and it shouldn't. Period. connie h on 2/22/2016 8:07:53 PM |
| There is no freedom without security. Shell on 2/22/2016 10:30:32 PM |
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