So Wall Street wizards are now presiding over the Big Tech miracle that is single-handedly saving the economy... Hmmm, maybe the New Economy isn't so new after all...
Markets are continuing the post-rate hike slump this week as the Dow Jones and S&P both started out the week in the red, reversing the rally that brought last week's trading to a close. The latest bad news for the markets comes on the back of more bad news from the oil and gas sector, with prices for March futures contract on crude down to $31.62 and March natural gas falling 14.6 cents to $2.152.
Not to worry, though. As we all know by now the American economy is no longer about such trivialities as commodity prices or actual manufacturing activity. It's about such important, backbone sectors as Big Tech companies that have never turned a profit and Hollywood box office receipts. So investors should be heartened by the latest news out of Silicon Valley: the battle of the tech giants is heating up once again as Google's newly-minted parent company, Alphabet, Inc., just surpassed long-time champ Apple as the world's “most valuable” company.
The appropriately named (CIA/NSA/FBI) Alphabet (Soup) Inc. just announced its earning for Q4 2015 and it busted past wildest expectations. The company earned $4.9 billion on revenue of $21.3 billion, or $8.67 per share, surpassing the $8.10 that analysts had been expecting. The news gave rise to a $36.88 rise in Alphabet's share price, pushing it to $807.65.
Apple, meanwhile, is suffering through a downturn in its stock prices as the once-mighty iPhone begins its first sales slide since its release eight years ago. As a result, Alphabet now enjoys a market value of $555 billion to Apple's lowly $534 billion.
The numbers break down in an interesting fashion: for the year Google itself earned $6.8 billion on total revenue of $17.1 billion. Alphabet's other subsidiaries, however, didn't fare so well. They lost $3.6 billion on total earnings of $448 million.
These earnings are the first good luck we've had at Google's financials since the company was formed. Before organizing itself under the Alphabet umbrella last October, Google notoriously played it close to their chest with their earnings, leaving analysts to guess at revenues from their core ad business. But all of that changed since the reorganization and the appointment of their new CFO, Ruth Porat.
So who is Ruth Porat? Oh, just a lifelong Wall Street crony who spent her career at Morgan Stanley. She was Vice President of Investment Banking there during the global financial crisis and then led the Morgan Stanley team advising the US Treasury on Fannie and Freddie in the wake of the collapse (and the NY Fed on AIG). She was even tipped for the Deputy Treasury Secretary position in 2013 but turned it down because her career was going well (and she didn't want to face a grueling confirmation process).
So Wall Street wizards are now presiding over the Big Tech miracle that is single-handedly saving the economy from the inexorable slide off the cliff of productive manufacturing? Hmmm, maybe the “New Economy” isn't so new after all...