Apple chief Tim Cook finds himself alone in the land of tech giants.
Cook has decided to fight the Feds on a ruling that the company has to provide the FBI with a new technology to crack an iPhone to retrieve data from one of the San Bernardino attackers.
The FBI is citing the All Writs Act of 1789 as the basis for this request. It’s an act dating back to Constitution-era and seems a strange tact by the government to use.
But much easier than getting Congress to consider writing and passing an encryption law.
This case will ultimately wind up at the Supreme Court before any real verdict is rendered, since both sides will need to appeal all lower court rulings.
Cook is taking the mantle, while the rest of Silicon Valley is hiding behind an industry consortium as their mouthpiece. Google, Facebook and others are not out front supporting Apple on the perceived government overreach.
As a sidebar (pun intended), there is a case in Brooklyn, NY, which is further along on this issue of the FBI requesting Apple crack an iPhone for information in a drug case.
Briefs have been filed on the Writ motion, but the case was dropped when the defendant pled guilty to a reduce charge in a plea deal.
Both Apple and the Justice Department want the court to rule on the motion on the basis that the statute will be used again. And sure enough it has in the San Bernardino case.
Let’s hope by the time the High Court gets the case we will have the full nine jurists sitting so the case can be decided there and not have a split decision.
The most heavily shorted stocks in the US have had the largest run up in price over the last week. This tells me that large investors are covering the dogs in the belief that the Fed may change policy at the March meeting.
On the S&P the most-hated stocks were up 5% Wednesday while the rest of the index was up 2.25%. Similar upticks happen on Nasdaq.
The shorts did not become the darlings overnight, no these investors were caught in a short squeeze, where everyone was trying to cover at the same time causing the run up in price.
Northern Oil & Gas was up nearly 7% after being down 21% YTD prior, with 30% of the float shorted. Globalstar up 2% after being down 22% YTD with 12% of the float shorted. Lastly as an example Nobilis Health was down 71% since Feb. 10, on Wed. it rose 8.7%.
So why cover now. The stampede seems to be building on the backs of energy shares and healthcare wannabes. Profit taking or the need for cash. That’s the two options for the widespread covering.
In any event, it’s now a basis to build a thesis that stocks are coming back.