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Market bubble ready to burst and stocks could plunge, strategist warns

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A trader (c) on the New York Stock Exchange looks at stock rates 19 October 1987 as stocks were devastated during one of the most frantic days in the exchange's history.

Maria Bastone | AFP | Getty Images

A trader (c) on the New York Stock Exchange looks at stock rates 19 October 1987 as stocks were devastated during one of the most frantic days in the exchange’s history.

Stock markets could see sharp falls before the end of year as valuations have hit disproportionate levels, one strategist told CNBC’s “Squawk Box Europe” Thursday.

In the wake of the 2008 financial crisis, central banks around the world have pumped trillions of dollars into the global economy to boost lending and encourage growth. However, this massive market intervention has led to a sharp increase in stock prices — taking them to “epic bubble levels,” according to Paul Gambles, the managing director at Thailand-based advisory firm MBMG Group.

“We had a policy response to the global financial crisis (and) at that point stocks were cheap and they had an enormous tailwind behind them in terms of fiscal support,” he said. “This is quite a dangerous situation and it is creating a bubble, and that bubble has just got bigger and bigger and bigger … There isn’t any doubt now (that) in valuation terms we’re in epic bubble proportions, probably the biggest bubble of all time.”

Gambles added that markets could be experiencing a moment similar to 2007, just before the historic market crash. “We now think that there are conditions out there that are prime for that bubble to actually be pricked,” he added.

These conditions include unsynchronized global growth, tighter monetary policy and “chaos” surrounding U.S. politics with the administration’s tougher stance on global trade, according to Gambles.

However, Gambles noted that there were a range of outcomes for markets that were “probably wider than it’s ever been at any time in history.” “We could have a good stock market year, we could have a 20, 30, 40 percent plus correction,” he added.

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Photos show rising tensions amid rocket attacks

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Flames and smoke rise during Israeli airstrikes amid a flare-up of Israeli-Palestinian violence, in the southern Gaza Strip May 11, 2021.

Ibraheem Abu | Reuters

Israeli Prime Minister Benjamin Netanyahu has warned that his country will increase its airstrikes against Gaza militants as tensions in the region continue to escalate.

Since Monday evening, some 26 Palestinians — 16 militants, nine children and a woman — have reportedly been killed in Gaza in Israelis strikes. Rockets fired by Gaza militants killed two Israeli civilians and wounded 10.

Netanyahu said the militant group Hamas, which rules in Gaza, would “receive blows now that it didn’t expect.”

On Monday, Palestinian protesters clashed with Israeli police outside Al-Aqsa mosque in Jerusalem, and the city has seen its worst violence in years. The increased tensions have come amid a confluence of factors, including a pending Israeli Supreme Court ruling in a case brought by right-wing Israelis seeking to evict some Palestinian residents of an east Jerusalem neighborhood.

A Palestinian demonstrator hurls rocks with a slingshot

A Palestinian demonstrator hurls rocks with a slingshot next to burning tires during a protest by the border with Israel, east of Rafah in the southern Gaza Strip, on May 10, 2021.

Said Khatib | AFP | Getty Images

Rockets are launched by Palestinian militants into Israel

Rockets are launched by Palestinian militants from Gaza into Israel, May 10, 2021.

Mohammed Salem | Reuters

A Palestinian man helps a wounded fellow protester amid clashes with Israeli security forces at Jerusalem’s Al-Aqsa mosque

A Palestinian man helps a wounded fellow protester amid clashes with Israeli security forces at Jerusalem’s Al-Aqsa mosque compound on May 10, 2021, ahead of a planned march to commemorate Israel’s takeover of Jerusalem in the 1967 Six-Day War.

Ahmad Gharabli | AFP | Getty Images

Smoke billows from Israeli air strikes in Gaza City

Smoke billows from Israeli air strikes in Gaza City, controlled by the Palestinian Hamas movement, on May 11, 2021.

Anas Aba | AFP | Getty Images

Rockets are fired from Gaza City, controlled by the Palestinian Hamas movement, toward Israel

Rockets are fired from Gaza City, controlled by the Palestinian Hamas movement, toward Israel on May 11, 2021.

Mohammed Abed | AFP | Getty Images

Fire billows from Israeli airstrikes in Rafah, in the Gaza Strip

Fire billows from Israeli airstrikes in Rafah, in the southern Gaza Strip, on May 11, 2021. Israel launched deadly air strikes on Gaza on May 10 in response to a barrage of rockets fired by Hamas and other Palestinian militants, amid spiraling violence sparked by unrest at Jerusalem’s Al-Aqsa Mosque compound.

Said Khatib | AFP | Getty Images

An Israeli police bomb disposal expert looks out from the window of a residential building that was damaged after it was hit by a rocket 

An Israeli police bomb disposal expert looks out from the window of a residential building that was damaged after it was hit by a rocket launched from the Gaza Strip, in Ashkelon, southern Israel May 11, 2021.

Amir Cohen | Reuters

A Palestinian woman cries as civilians evacuate a building targeted by Israeli bombardment in Gaza City

A Palestinian woman cries as civilians evacuate a building targeted by Israeli bombardment in Gaza City on May 11, 2021.

Mahmud Hams | AFP | Getty Images

Israel’s Iron Dome aerial defense system intercepts rockets launched from the Gaza Strip

Israel’s Iron Dome aerial defense system intercepts rockets launched from the Gaza Strip, controlled by the Palestinian Islamist movement Hamas, above the southern Israeli city of Ashkelon, on May 10, 2021.

Jack Guez | AFP | Getty Images

Palestinians pray over the bodies of people who were killed by Israeli airstrikes

Palestinians pray over the bodies of people who were killed by Israeli airstrikes, during a funeral ceremony in Jabalia in the northern Gaza Strip on May 11, 2021.

Mohammed Abed | AFP | Getty Images

Palestinians stand on the rubble of an apartment destroyed by Israeli airstrikes

Palestinians stand on the rubble of an apartment destroyed by Israeli airstrikes in Gaza on May 11, 2021.

Mohammed Abed | AFP | Getty Images

A rabbi inspects the damage inside a torched religious school in the central Israeli city of Lod, near Tel Aviv

A rabbi inspects the damage inside a torched religious school in the central Israeli city of Lod, near Tel Aviv, on May 11, 2021, following night clashes between Arab Israelis and Israeli Jews.

Ahmad Gharabli | AFP | Getty Images

A Palestinian holds a Hamas flag atop a walk of the Al-Aqsa mosque following clashes with Israeli police 

A Palestinian holds a Hamas flag atop a walk of Al-Aqsa mosque following clashes with Israeli police in Jerusalem’s Old City May 10, 2021.

Ammar Awad | Reuters

An Israeli police officer holds his weapon as he stands in front of an injured Israeli driver

An Israeli police officer holds his weapon as he stands in front of an injured Israeli driver moments after witnesses said his car crashed into a Palestinian on a pavement during stone-throwing clashes near Lion’s Gate just outside Jerusalem’s Old City May 10, 2021.

Ilan Rosenberg | Reuters

An Israeli man takes a picture of a heavily damaged house in the southern Israeli city of Ashkelon

An Israeli man takes a picture of a heavily damaged house in the southern Israeli city of Ashkelon on May 11, 2021, as rockets are fired by the Hamas movement from the Gaza Strip toward Israel.

Jack Guez | AFP | Getty Images

Relatives mourn a Palestinian who was killed during an Israeli raid in Beit Hanoun in the Gaza Strip

Relatives of Palestinian Ahmed Al-Shenbari, who was killed during an Israeli raid in Beit Hanoun city on the northern Gaza Strip, mourn during his funeral on May 11, 2021 in Gaza City, Gaza.

Fatima Shbair | Getty Images

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Apple rejected nearly 1 million new apps in 2020: Here’s why

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Apple CEO Tim Cook speaks at Apple’s Worldwide Developer Conference (WWDC) at the San Jose Convention Center in San Jose, California on Monday, June 4, 2018.

Josh Edelson | AFP | Getty Images

Apple said Tuesday it rejected almost 1 million apps that were submitted to its App Store for the first time in 2020.

The announcement is the latest sign that Apple is becoming more transparent about how it approves and rejects iPhone apps in response to scrutiny including a lawsuit from Epic Games and regulatory attention from lawmakers.

Apple argues that by having a system where the company approves each of the 1.8 million apps on the store and their updates, checking the apps against a lengthy list of App Store rules, it can keep iPhone users safe from scams, malware, and poor-quality user experiences.

Apple offered a number of statistics about its app rejection process in 2020.

  • It rejected almost 1 million apps that were submitted for the first time
  • It rejected almost 1 million app updates.
  • 48,000 apps were removed for using “hidden or undocumented features,” often software tools that Apple uses internally for its own apps.
  • 150,000 apps were removed because they were spam or copied another app.
  • 215,000 apps were removed because they collected too much user data or other privacy violations.
  • 95,000 apps were removed for fraud, often because they changed after Apple’s review to become a different kind of app, including gambling apps or pornography.
  • Apple booted 470,000 accounts from its developer program because of fraud.

In addition, Apple said that last month, it rejected 3.2 million installations of apps that use an enterprise certificate, which is a way to evade the App Store with a tool that big companies use to install internal-use apps on company iPhones.

The disclosure comes as Epic Games’ antitrust case against Apple has focused on App Store’s failures. The maker of Fortnite is seeking to force Apple to let it offer its own app store for iPhones and bypass Apple’s 30% App Store fee for in-app purchases.

Epic’s lawyers have argued that Apple’s App Store is a “walled garden” that hampers competing software makers and that Apple’s rules are applied unevenly to different developers.

Epic also said Apple’s process is imperfect, sometimes allowing malicious software to be approved for the store, and that Apple’s own employees sometimes say its process is not good enough to prevent fraud. In the trial, Epic Games questioned Apple senior director Trystan Kosmynka, who runs Apple’s App Review department, and got him to concede that Apple does make mistakes on some apps it approves or rejects.

Apple said in a slide deck presented in the trial that it has used a combination of 500 human reviewers and automated checks to review roughly 5 million apps per year, including updates, between 2017 and 2019, with rejection rates ranging from 33% to 36%. Apple employees argued at the trial that the number of mistakes it makes is tiny in comparison with the scale of its App Store.

Apple has defended the App Store as an essential and indivisible part of its business, saying it’s the only way for consumers to install software on an iPhone.

Last week, an Apple lawyer argued that allowing users to install software from outside the App Store, as Android does, would create security risks and that Apple does not want to be Android.

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Google Pay now lets U.S. users send money to India and Singapore

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The Google Pay app now lets U.S. users make money transfers to India and Singapore thanks to integrations with Wise and Western Union.

Google

Google is jumping into the massive remittances market.

The tech giant’s mobile payments service Google Pay announced Tuesday that users in the U.S. will now be able to send money to India and Singapore.

The company has teamed up money transfer firms Wise and Western Union on the feature, integrating their platforms into the Google Pay app. Users can choose between Wise or Western Union to move their money abroad. Google will take a small cut of the cross-border transactions made through its app.

Google Pay launched a new version of its app in the U.S. last year, marking a push into banking services with the addition of checking accounts from lenders like Citi, as well as rewards and budgeting insights.

Google is one of many large tech firms pushing deeper into the financial world. Apple launched its own credit card in partnership with Goldman Sachs in 2019. Facebook is making a number of moves in digital currency and payments. In China, Alibaba affiliate Ant Financial and Tencent have become formidable players in the digital payments space.

Still, these Big Tech companies have no apparent ambitions to become banks.

“We’re not planning to become a bank or a remittance provider,” Josh Woodward, Google Pay’s director of product management, said in an interview with CNBC. “We work with the ecosystem that already exists to build these products.”

Google’s latest financial services push will see it enter the huge remittances market. The World Bank forecasts that remittances into low- and middle-income countries were worth $508 billion in 2020. That’s actually down 7% from 2019, a decrease the bank attributed to the Covid pandemic’s impact on migration.

The news is a big win for Wise. The London-based fintech firm, formerly known as TransferWise, is increasingly selling its platform as a service to banks like France’s Groupe BPCE, Britain’s Monzo and Germany’s N26. Rival Western Union has been upping its digital strategy lately to ward off upstarts like Wise and WorldRemit.

Going forward, Google wants to expand its remittances feature into the 80 countries Wise operates in and, eventually, the 200 nations Western Union covers.

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