Facebook and Twitter are concerned about what is going to happen after Election Day


Securing democracy on social media may be hardest after Americans vote in the presidential election.

In what is shaping up as a newfangled nightmare in their efforts to stop election interference, Facebook Inc.
FB,
+3.47%

, Twitter Inc.
TWTR,
+0.14%

and others are as concerned about misinformation and other issues in days after the U.S. election as they are in the months preceding it, including Election Day.

“How do we ensure that voters have accurate information?” as election results are counted in the days following the Nov. 3 presidential election, Nathaniel Gleicher, Facebook’s head of security policy, asked during a Tuesday webinar on protecting the upcoming elections. He did not elaborate, but hinted there could be attempts by politically motivated groups to question the legitimacy of votes, including mail-in ballots.

President Donald Trump has endlessly claimed without evidence that voting by mail — expected to increase dramatically because of the pandemic — is susceptible to large-scale fraud. (Nearly one in four voters cast 2016 presidential ballots that way.)

Yoel Roth, head of site integrity at Twitter, echoed those concerns, but he added that social-media companies are better positioned this time around than four years ago. He said the micro-blogging service is promoting “credible, authoritative information” during political-party conventions, presidential and vice-presidential debates, and election results in November.

Gleicher added that Facebook is detecting more “bad actors” than in elections in 2018 and 2016, through a greater understanding of the risk, and through coordination with academia, media, and state and local officials.

Their fears come amid concerted efforts by Facebook, Twitter and others to tamp down on misinformation concerning the U.S. elections.

Facebook, which has repeatedly acknowledged its part in being exploited by foreign and domestic adversaries during the 2016 presidential election with fake news and misinformation, this month launched a Voting Information Center to help users with accurate, easy-to-find information about voting wherever they live.

Read more: Facebook hardens digital defense for misinformation ahead of elections

The addendum will link to a new voter information hub similar to one about COVID-19 that Facebook says has been seen by billions of people globally. The labels will read, “Visit the Voting Information Center for election resources and official updates.” Facebook expects the voter hub to reach at least 160 million people in the U.S. In July, the company began adding similar links to misleading posts by politicians, including Trump, about voting.

Twitter, meanwhile, has said it will roll out measures on new tools, policies and voting resources, as well as expand its “civic integrity policies” to address misrepresentations about mail-in voting. In January, the company created a feature that lets users report voter suppression and misinformation.

Among other companies, Snap Inc.
SNAP,
+1.19%

has unveiled a “Voter Registration Mini” tool so users can register to vote directly in Snapchat. It also posted a “Voter Guide” with information about topics such as voting by mail and voter registration.



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Facebook’s Mark Zuckerberg stoked Washington’s fears about TikTok


When Facebook Inc. Chief Executive Mark Zuckerberg delivered a speech about freedom of expression in Washington, D.C., last fall, there was also another agenda: to raise the alarm about the threat from Chinese tech companies and, more specifically, the popular video-sharing app TikTok.

Tucked into the speech was a line pointing to Facebook’s
FB,
-0.74%

rising rival: Zuckerberg told Georgetown students that TikTok doesn’t share Facebook’s commitment to freedom of expression, and represents a risk to American values and technological supremacy.

That was a message Zuckerberg hammered behind the scenes in meetings with officials and lawmakers during the October trip and a separate visit to Washington weeks earlier, according to people familiar with the matter. In a private dinner at the White House in late October, Zuckerberg made the case to President Donald Trump that the rise of Chinese internet companies threatens American business, and should be a bigger concern than reining in Facebook, some of the people said.

Zuckerberg discussed TikTok specifically in meetings with several senators, according to people familiar with the meetings. In late October, Sen. Tom Cotton, R- Ark. — who met with Zuckerberg in September — and Sen. Charles Schumer, D-N.Y., wrote a letter to intelligence officials demanding an inquiry into TikTok. The government began a national-security review of the company soon after, and by the spring, Trump began threatening to ban the app entirely. This month he signed an executive order demanding that TikTok’s Chinese owner, ByteDance Ltd., divest itself of its U.S. operations.

Few tech companies have as much to gain as Facebook from TikTok’s travails, and the social-media giant has taken an active role in raising concerns about the popular app and its Chinese owners.

In addition to Zuckerberg’s personal outreach and public statements about Chinese competition, Facebook has established an advocacy group, called American Edge, that has begun running ads extolling U.S. tech companies for their contributions to American economic might, national security and cultural influence. And Facebook overall in the first half of this year spent more on lobbying than any single company, according to data from the Center for Responsive Politics. In 2018, by contrast, it ranked eighth among companies, the center’s data show.

An expanded version of this report appears on WSJ.com.

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10 stocks positioned for an ‘abrupt’ rebound when normalcy finally returns — none of them are tech


The stock market continues to buck the steady flow of troubling headlines and gloomy metrics in a stark disconnect with the economy that’s been hotly debated on Wall Street.

Read:Jim Cramer urges investors not to be fooled by new highs in the stock market

And while it might feel rather toppy and precarious, Thomas Hayes, founder and chairman of Great Hill Capital, a new phase in the bull market could be on the way.

“It is a Dickensonian, ‘Tale of Two Markets’ when you look under the surface,” he wrote in a blog post. “While it may be true that the general indices could be due for a rest in coming weeks, such a rest may be accompanied by ‘under the surface’ rallies in laggard/unloved sectors.”

In other words, developments that might weigh on the major indexes by taking down leaders like Apple
AAPL,
+5.15%

, Amazon
AMZN,
-0.38%

, Facebook
FB,
-0.74%

and the other big-name tech players, would actually provide a tailwind for beaten down names poised for a rebound.

“So, ‘what do you think of the market?’ is less interesting of a question than, ‘what do you think about banks, commodities, emerging markets, defense stocks, tech, etc?’” Hayes said.

He used this chart to illustrate just how much relative appetite there is for tech lately:

Some names he mentioned that could come screaming back in a post-pandemic world include: Bank of America
BAC,
-0.47%

, JPMorgan Chase
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-0.05%

, Apache
APA,
-3.25%

, Murphy Oil
MUR,
-2.89%

, Boeing
BA,
-1.22%

, Lockheed Martin
LMT,
+0.43%

, MGM
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+1.58%

, Las Vegas Sands
LVS,
+2.23%

, Southwest Airlines
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+0.66%

and United Airlines
UAL,
-2.96%

, to name just a few with compelling set-ups.

“Announcement of a vaccine, or major breakthrough that pointed to near certainty and timeline on vaccine/treatment… would shift consensus FROM slower recovery/growth (lower rates) — which benefits tech — TO faster recovery/growth (slightly higher rates) — which benefits cyclicals,” he explained in his post. “When these groups turn, it will be abrupt.”

Banks, in particular, should see a big move higher, he added.

“Most people will be chasing banks after they are trading at a 50-100% premium to book versus buying now — in many cases — at a discount to book,” Hayes said. “How do we know? Because it happens coming out of every single historical recession. There is no recovery without Banks/Cyclicals leading out of the gate (early/high growth stages). No credit growth, no recovery.”

Overall, he remains bullish on what lies ahead, particularly with the aforementioned laggards.

“The catalyst will likely come from science at this point. Don’t bet against science,” he said. “I would not be surprised to see a bit of volatility/chop over the next few weeks. For now, keep on dancing while the music is playing, but keep your feet on the floor.”

For now, the stock market is rather quiet, with the Dow Jones Industrial Average
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+0.68%

, tech-heavy Nasdaq Composite
COMP,
+0.41%

and S&P 500
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+0.34%

all hovering around the breakeven point in Thursday’s trading session.



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Gold rising to $4,000 an ounce ‘would not be an unreasonable move,’ fund manager says


Stocks and bonds may be in an asset bubble, as record-low interest rates and a tremendous increase in the money supply have sent prices soaring this year.

Add gold, which has risen 35% to $2,049 an ounce Aug. 5, to the list.

But Michael Cuggino, CEO of the Permanent Portfolio Family of Funds, says gold can move a lot higher. It would “not be an unreasonable move” for gold to breach $4,000, he said in an interview.

Cuggino manages the Permanent Portfolio
US:PRPFX,
a $1.9 billion mutual fund that is conservatively run and rated four stars by Morningstar in the fund-research firm’s “U.S. Fund Allocation — 30% to 50% Equity” category.

A long wait for a big move

First, take a look at this chart showing how monthly prices for an ounce of gold
US:GC00
(per continuous gold contracts on the New York Mercantile Exchange) have moved over the past 30 years:


FactSet

You can see the triple bottom from the end of 2015 through November 2018.

“Ever since then, it has been gradual move up, then some down. It moves sometimes in big chunks, gives some back, sits around and does nothing, reacts to stimulus, inflation, the value of dollar and euro … but it has had an aggressive move this year,” Cuggino said.

Gold may extend gains as money is being pumped into the U.S. economy, the dollar is declining, and investors are fearful that inflation may return, he said.

Cuggino warned of sharp pullbacks even during a long-term move up, as did Nigam Arora, who wrote that gold is an appropriate hedge against stocks. Still, “gold is a very small market, and it can be easily manipulated by the governments,” Arora wrote on MarketWatch.

The case for gold being relatively cheap

When looking back at how gold and stock prices have moved over the very long term, Cuggino said gold is still trading at an inexpensive level when compared with stocks. This chart shows monthly prices of gold divided by closing levels for the S&P 500 Index
US:SPX
over the past 30 years:

The S&P 500 was up 3% for 2020 through Aug. 5, but it was also up 49% from its closing low March 23.

Despite that action, and this year’s 35% climb for gold, the metal was trading at 0.6 times the level of the S&P 500. It hasn’t been above 0.7 since 2014, and you can see looking further back that it was close to 1.7 times the S&P 500 in August 2011.

Different crisis, different response

Cuggino said the quick and tremendous reaction to the COVID-19 pandemic by the federal government and the Federal Reserve was completely different from the actions taken during and after the 2008 credit crisis.

“In 2008, the fiscal policies didn’t matter much for economic gain. GDP didn’t grow because of stimuli. Monetary assistance from the Fed basically stayed in the banking system,” he said.

But now, because of programs meant to help small business, the payments made to individuals and families through the CARES Act and the loan payment deferral programs, stimulus is “much more targeted to get money out to consumers,” Cuggino said.

This points to a long-term concern and bullish possibilities for gold.

“Even though we have deflation now, [eventually] with excess raw materials, in a growing economy, the velocity of all that money can produce inflation risk,” he concluded.

Permanent Portfolio

The Permanent Portfolio
US:PRPFX
is designed to provide good long-term performance regardless of the economic environment, and to complement (and partially hedge) a broad portfolio by bouncing back more quickly during periods of market turmoil.

Here’s the fund’s broad asset allocation as of June 30:

Gold and silver made up more than 27% of the portfolio. Equities made up about 21%, with top holdings in that bucket including Texas Pacific Land Trust
US:TPL,
Freeport-McMoRan Inc.
US:FCX,
Facebook Inc.
US:FB
and Twilio Inc.
US:TWLO.

So the fund cannot be expected to outperform the S&P 500 over long periods. But because it bounces back more quickly, and because of the nature of the portfolio, it has outperformed the index so far this year:


FactSet

From a closing peak Feb. 21 through its trough March 20, the fund was down 21%. From its record closing high Feb. 19 through its closing low March 23, the S&P 500 was down 34%.

Here are long-term returns for the fund, compared with those of the S&P 500 — you’ll have to scroll to the right to see all the data:

Total return – 2020 through Aug. 5

Average return – 3 years

Average return – 5 years

Average return – 10 years

Average return – 15 years

Average return – 20 years

Permanent Portfolio Class I

11.7%

8.5%

7.9%

5.3%

6.6%

7.7%

S&P 500

3.0%

12.5%

11.9%

13.8%

9.1%

6.3%

Source: FactSet

So the fund didn’t capture the S&P 500’s extraordinary gains, led by the large tech companies that make up a major portion of its market capitalization. But if you go back 20 years, its average return has beaten that of the index.

Don’t miss:This $20 billion bond fund produced outsized returns by capitalizing on market turmoil, and is set to do it again



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Facebook’s TikTok rival comes as Chinese company’s future is in limbo


Facebook Inc. on Wednesday announced its alternative to popular teen social-media app TikTok at a time when the future of its Chinese corporate owner is in limbo.

The unveiling of Instagram Reels continues a long Facebook
FB,
-0.28%

tradition of rolling out features that have been popularized by competing platforms like Snap Inc.
SNAP,
-0.27%

and making them available to Facebook’s billions of users worldwide to grab market share. In the case of Reels, it includes a video distribution algorithm similar to TikTok’s that lets consumers see the most popular videos at the moment.

The key, killer feature is the ability to create 15-second videos with editing tools embedded in Instagram’s camera.

“Facebook has a mixed track record when it comes to copying other companies’ features. Many of its attempts over the years have failed,” eMarketer analyst Debra Aho Williamson said. “Instagram did it extremely well with Stories, which it copied from Snapchat. I believe Instagram has a similar opportunity with Reels, but it’s not a guaranteed success.”

In ordinary times, the prospect of Facebook diving into the shallow end of the pool would be daunting but the social-networking behemoth is the least of worries for ByteDance, the Chinese company that owns TikTok. It not only is navigating a possible sale of its operations in the U.S. and several other countries to Microsoft Corp.
MSFT,
-0.16%

but enduring the wrath of the Trump Administration.

Read more: Opinion: Trump has no right to demand money from Microsoft-TikTok deal

President Donald Trump on Monday said he was ready to approve a deal but only if the U.S. government gets a cut of the sale price.

This led to howls of protest from lawyers, who said there was no precedent for such a request. James Lewis, senior vice president at the Center for Strategic and International Studies in Washington, D.C., told MarketWatch. “Of course we aren’t going to get a cut on the deal”. Lewis said. “It’s just not how it works. The government doesn’t get cuts from a deal.”

Shares of Facebook and Microsoft are flat in early-afternoon trading on Wednesday.





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