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Disney CEO Bob Iger resigns from Apple board

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Bob Iger, chief executive officer of The Walt Disney Company, walks with Tim Cook, chief executive officer of Apple.

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Disney CEO Bob Iger has resigned from Apple’s board of directors, Apple said in an SEC filing on Friday.

Apple and Disney stock were unchanged on the news.

Disney is launching streaming video service Disney+ on Nov. 12, which will compete with Apple’s Apple TV+ service, scheduled to become available on Nov. 1.

Iger resigned on Sept. 10, the day Apple announced the price and release date for its streaming service. The two streaming services will increasingly come into conflict in the future as both compete for original content.

“It has been an extraordinary privilege to have served on the Apple board for 8 years, and I have the utmost respect for Tim Cook, his team at Apple, and for my fellow board members,” Iger said in a statement. “Apple is one of the world’s most admired companies, known for the quality and integrity of its products and its people, and I am forever grateful to have served as a member of the company’s board.”

Apple said in a statement, “Bob has been an exemplary board member for nearly eight years, and for as long as he has led Disney he has been one of Apple’s most trusted business partners. He is a dedicated, visionary CEO and a role model for an entire generation of business leaders. More than anything, Bob is our friend. He leads with his heart and he has always been generous with his time and advice. While we will greatly miss his contributions as a board member, we respect his decision and we have every expectation that our relationship with both Bob and Disney will continue far into the future.”

Apple downplayed potential conflicts in a financial filing earlier this year. “Apple enters into arms-length commercial dealings with The Walt Disney Company, including sales arrangements, digital services content licensing agreements, and similar arrangements,” Apple said in its proxy filing. “Apple does not believe that Mr. Iger has a material direct or indirect interest in any of such commercial dealings.”

Iger was personal friends with late Apple cofounder Steve Jobs. Disney bought Jobs’ other company, Pixar, in 2006, and Jobs was on Disney’s board until his death in 2011. Jobs asked Iger to take his place on the Apple board when he died, according to Fortune, and Iger joined the board that year. Iger was the chair of Apple’s corporate governance committee and on Apple’s compensation board, according to the company’s proxy filing earlier this year.

Disney and Apple have had a close corporate relationship over the years. Disney was one of the first major companies to develop apps for iPhones and iPads, and shortly after Iger took over as Disney CEO in 2005, he appeared on stage with Jobs to announce ABC content for iTunes. Disney has announced that it will distribute its streaming service on Apple’s platforms.

More recently, Iger has been photographed chatting with current Apple CEO Tim Cook at an annual retreat in Sun Valley, Idaho.

Iger has been CEO of Disney since 2005 and is its chairman. He is not on any other public company boards.

This isn’t the first time that a director has left Apple’s board because of competition concerns. In 2009, then-Google CEO Eric Schmidt resigned from Apple’s board when it became clear that Google’s Android would directly compete with Apple’s iPhone.

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Investors are flocking to the largest US growth stocks as concerns rise over the global economy

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The way markets have been acting this year, treating high-quality American assets as a haven, makes sense. But even a sensible move can reach extremes and create distortions.

The trick is trying to figure out when rational activity takes conditions to a riskier place. It’s unclear we’re there yet.

That’s right — even though the coronavirus outbreak upended expectations for an early-2020 economic reacceleration led by trade and manufacturing — the fact the S&P 500 is at a record high, and the manner it got there, are not illogical.

Government bond yields have rushed toward last summer’s lows, investor cash has hurried into bond funds, credit markets remain generous, the U.S. economy offers more stable growth and American securities promise more secure cash flows and yield.

In response to the vast uncertainty of Chinese economic performance, the U.S. has outperformed the rest of the world, and within the U.S. market, secular growth and defensive stocks have propelled the gains and had their valuations expand.

The winners and losers

The year-to-date performance of S&P 500 sectors line up just as one might expect, given these dynamics. At the top: utilities, technology, real estate and consumer discretionary. Lagging the benchmark are energy, financials (thanks to those low yields) and industrials.

More thematically, the largest companies viewed as having the most reliable future growth and profitability are attracting more than their share of the world’s capital.

When investors buy bonds as aggressively as they are now – with Bank of America saying last week set a record for fixed-income fund inflows – it means they are flocking to “duration,” or long-lived cash flows. Huge-cap growth stocks are, in a sense, long-duration assets as well, existing somewhere adjacent to corporate bonds on the spectrum of assets.

And so, we see the liftoff of the Vanguard Mega-Cap Growth ETF versus the Global Dow. The latter is a roster of multinationals that has stalled, while the glamour stocks of the Nasdaq carry the MGK skyward.

Tom Lee of FundStrat Global Advisors, says U.S. equities represent a “safety trade trifecta.” That is, the U.S. has better growth; the S&P 500 is a more growth-geared/large-cap index; and there is, in the current context, a perceived scarcity of S&P 500 market value to go around in a world of $300 trillion household liquid assets.

It’s become commonplace to argue that the stock and bond markets are sending conflicting messages, with the 10-year Treasury yield back under 1.6% and the S&P 500 grinding out fresh records. Yet the 10-year Treasury is flat over the past four years, during which the S&P 500 has gained some 80%. And in recent years when the 10-year yield was much above 2.5%, equities have made essentially no net progress.

Both stocks and bonds seem to be saying this is a low-growth, tame-inflation, high-liquidity environment, until proven otherwise.

Real investment-grade corporate bond yields are scarcely above zero. The Chicago Fed National Financial Conditions Index shows the liquidity backdrop is as loose as it’s been this cycle, matching its most-accommodative readings from late 2017 and mid-2019.

A clear majority of S&P 500 stocks have dividend yields exceeding the 10-year Treasury yield. While no perfect relative-value indicator, this tends to provide a buffer underneath equity valuation.

Overvalued?

Still, in absolute terms, those valuations are starting to get pretty stretched. The forward price/earnings ratio of the S&P 500 now exceeds 19, the high for this bull market, while the expected rebound in profit growth keeps getting pushed ahead into the future by the global industrial slowdown.

The P/E of that Vanguard mega-cap growth basket that so many investors are hiding in is now 30, leaving a diminishing margin for error.

A cluster of what might be called “idiosyncratic speculative-growth” stocks are also acting quite frisky this year, a sign that investors are grasping aggressively for the next big thing (or perhaps just the next quick buck). You know about Tesla, up 91% in the six weeks of 2020. But there’s also Beyond Meat, up 52%, Virgin Galactic, ahead by 134%, and Shopify, up 35%.

Further along the investor-mood front, Friday’s University of Michigan consumer sentiment survey, the percentage of respondents who said the stock market would be higher in a year reached its second-highest reading since 2002, only exceeded by the peak at the start of 2018. Stocks had a stiff gut check not long afterward.

Bank of America global strategist Michael Hartnett, who has been correct in calling for a strong run in risk assets into early 2020, continues to recommend playing this trend until investors grow more clearly “euphoric,” which he expects will mark the moment of “peak positioning and peak liquidity.”

More specifically, he says, this would come when the S&P 500 surpasses 20-times forward earnings and when the bond and U.S. dollar rallies become “disorderly.”

The general idea: Respect the markets’ message, but also respect the markets’ tendency to get carried away. Sound advice. If only it were easy to tell when untenable extremes have been reached.

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France confirms first death outside of Asia

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A train attendant gesturing to medical staff leaving for Wuhan in Nanchang, China’s central Jiangxi province on Feb. 13, 2020.

Stringer | AFP | Getty Images

This is a live blog. Please check back for updates.

All times below are in U.S. Eastern Standard Time.

Chinese officials on Saturday reported 2,641 new coronavirus cases and 143 additional deaths in the last 24 hours.

7:12 am: China announces policies to support businesses impacted by virus

The China Banking and Insurance Regulatory Commission (CBIRC) released a notice on Saturday that encouraged banks to strengthen loans to the manufacturing sector at better rates, and give better financial services for businesses producing protective gear to combat the virus.

5:00 am: First coronavirus death confirmed in Europe

An 80-year-old Chinese tourist died of the virus in France, French Health Minister Agnes Buzyn said on Saturday. The man was from the Chinese province of Hubei, the center of the outbreak, and arrived in France on Jan. 16. He was hospitalized since Jan. 25.

The man’s daughter also has the virus and was also hospitalized in Paris, but will be discharged soon, the health minister said.

It’s the first death that’s been confirmed in Europe and the fourth from the virus outside of mainland China. France has 11 confirmed cases of the virus.

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China taps blockchain tech to help firns hit by virus

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Giant letters, reading the word ‘blockchain’, are displayed at the blockchain centre, which aims at boosting start-ups, on February 7, 2018 in Lithuania’s capital Vilnius.

Petras Malukas | AFP | Getty Images

BEIJING – As Chinese authorities rush to support businesses struggling to survive the effects of the new coronavirus, blockchain technology is showing its potential in an archaic financing system.

Since the Lunar New Year holiday, 87 China-based businesses have received more than $200 million in loans through a cross-border, pilot blockchain finance platform, Xuan Changneng, vice director of the State Administration of Foreign Exchange, disclosed at a press conference on Saturday. He did not specify a date.

The holiday, also known as the Spring Festival, was extended by three days to Feb. 2 in an effort to limit the spread of a pneumonia-causing virus that has now killed more than 1,500 people. More than half of China further delayed the shutdown by at least a week and many parts of the country are still far from operating normally.

“(Due to the impact of the virus), the negative effects of previous pain points such as lack of trust in business, verification inefficiency, lack of information sharing and difficulty of timely supervision have been further amplified,” Henry Ma, chief information officer at Tencent-backed online lender WeBank, said, according to a CNBC translation of his Chinese-language statement.

“The cross-border, financial blockchain services platform can play a bigger role, and help medium and small-sized enterprises improve the efficiency and convenience of getting export trade financing and other financial credit support,” Ma said.

Privately-run, smaller businesses are among the hardest hit by the virus’ disruptions. In the last few weeks, central and local governments have made a flurry of announcements to support these smaller businesses, which contribute to more than half of national economic growth and employment.

It’s a step up from the national government’s efforts of the last few years — to try to improve privately-run businesses’ access to financing in a state-dominated system with no established credit score records and a preference for state-run enterprises.

As of noon on Friday, banks and financial institutions have supplied more than 537 billion yuan ($76.9 billion) in credit to fight the virus, Liang Tao, deputy head of the China Banking and Insurance Regulatory Commission, said Saturday morning at the same press conference in Beijing.

Blockchain is the same technology behind cryptocurrencies such as bitcoin. Trading of the digital currencies is officially banned in China, but the country has been rapidly pressing ahead with the development of blockchain. In October, Chinese President Xi Jinping emphasized the need for the country to become a leader in the technology.

In theory, a blockchain-based system allows users to create a permanent record of key documents that is easily accessible. This gives lenders a basis of trust and allows them to quickly assess how much money they can safely loan someone. For the Chinese platform pilot, a state media report said it can take just a day to apply for and receive a loan on it. In contrast, traditional loan applications in China can take days or weeks.

WeBank’s Ma also pointed out that with blockchain, regulators can better scrutinize transactions and respond more quickly to fraud or risks.

China’s foreign exchange regulator launched the “cross-border finance blockchain services platform pilot” in March 2019. As of Feb. 3, it had processed $15.9 billion in loans to nearly 2,500 businesses, three-fourths of which were medium and mid-sized enterprises, Xuan said. He noted more than 170 corporate banks have joined, along with 22 provinces, autonomous regions and municipalities.

In addition to building trust, blockchain allows for rapid exchanges of different currencies. The Chinese platform is already handling foreign currencies, and Xuan noted on Saturday that since Hubei province joined the platform in January, foreign businesses located there can benefit from greater efficiency in areas such as export trade financing.

Alex Yang, CEO of blockchain development company V.Systems, pointed out that the blockchain system implemented here is a closed one, in which one entity retains control. That removes some technical hurdles that open source “public” and “decentralized” financial blockchain systems face in achieving the same goal, he said, according to a CNBC translation of his Mandarin-language remarks.

Still, Yang noted that, “if there are more and more applications, and more financial institutions pay attention, then it will be good for the development of blockchain.”

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