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Two top executives to leave Barclays after scandal involvement

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By Jasper Huang Across the pond in London, two top executives from Barclays announced they would be leaving the company. Barclays Finance Chief Chris Lucas and General Counsel Mark Harding will be leaving the firm. This is an attempt to “[sweep] out some of the last vestiges of its scandal-plagued prior management team,” according to [...]

American Airlines and US Airways on the brink of a merger

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By Lubo Svetiev There comes a point in time where most men and women out there decide to get married. It’s a lengthy process that includes purchasing rings, planning a ceremony and committing to a significant other. Eventually, the time will come for the honeymoon in some tropical location and you and your loved one [...]

Crisis in Cyprus is the latest in chain of Eurozone economic struggles

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By Alexander Grotevant In recent years, the Eurozone Crisis has brought several members of the Eurozone eerily close to bankruptcy. Cyprus, its most recent victim, has been receiving a great deal of attention over the course of the past few weeks due to their struggling economy and the temporary closing of their banks. While a [...]

Bitcoin: The increasingly popular roller coaster digital currency

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By Alexander Grotevant Back in 2009, the world’s first decentralized virtual currency was introduced. A mysterious developer, or group of developers, referred to as Satoshi Nakamoto, created bitcoins, which are bought and sold via peer-to-peer networks. Before discussing the latest news surrounding this currency, it is important to understand the general concept behind it. While [...]

Google accused of unfair competition with web browser Safari

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By Jasper Huang Google has been found to be one of several advertising companies that have been tracking iPhone and Apple product users through Apple’s Internet browser, Safari. Although the browser has safeguards built in to prevent this type of tracking from occurring, Google and other companies have managed to bypass this. Technical details aside, [...]

Changing the world one Serengetee at a time

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By Jasper Huang Stories of entrepreneurial college ventures crop up day in, day out – but the successful ones are far and few. One such success story goes by the name of Serengetee – a fashion brand that owes its roots to passion and compassion. According to Bentley’s own Serengetee representative Giana Manganaro, “[Serengetee] is [...]

Google enters the thermostat market with Nest

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By Stephanie Seputra Nest Labs daringly proclaims that an incorrectly programmed thermostat might cost a household around $173 a year. In comparison, a correctly programmed one can save you about 20 percent on your heating and cooling bill. With such statistics, one must wonder why most people refrain from setting up their thermostats properly. Well, [...]

Why January should be renamed the “golden month of stocks”

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BY USAMA SALIM Throughout the year, whenever we open the news, at some point or the other, we hear something like “The Yen today went up by six basis points,” or “Microsoft opened at an all-time high at $32.00 today.” All in all, every day of the year can be a golden day to invest [...]

Janet Yellen’s first congressional testimony as new Fed Chairwoman

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By Alex Grotevant On February 11, Janet Yellen, the new chairwoman of the Federal Reserve, appeared before Congress to present the semiannual monetary policy report. Following her testimony, Yellen spent nearly six hours answering questions raised by members of the House Committee of Financial Services. In this time, she discussed many of the most pressing [...]

Facebook buys WhatsApp for $19bn, are they crazy?

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By Jasper Huang $4 billion in cash, 12 billion in stock, and $3 billion in restricted stock units – a grand total of $19 billion. That is the astronomical amount that Facebook paid to acquire WhatsApp, a cross-platform messaging service for smartphones. Think WeChat, Viber, LINE, KakaoTalk, and the like. WhatsApp is headquartered in Mountain [...]

The Jos. A. Bank and Men’s Warehouse drama

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By Luke Heaney Going into a new marriage, One can only wonder what is going through the happy couple-to-be’s minds. Will they be able to live together? Will their lives come together as one? How will this change their futures? Well the tuxedo rental company that provided the outfit for the groom’s men is struggling [...]

GrooveBoston Cohesion Tour booked for Bentley

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By Melisa Kocarlsan After an amazing fall concert with Timeflies, Bentley students can look forward to another great upcoming event. GrooveBoston is coming back to Bentley this year with their

Age discrimination in the workplace in South Korea

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By Jasper Huang Age in the corporate world is always a sensitive topic, especially when it comes to corporate politics. What happens when a manager is younger than his subordinates?

Advent of NFC in the US – Google Wallet and Apple Pay

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By Jasper Huang Apple’s recent release of its iPhone 6 and 6 Plus, as well as it’s refreshed and revamped operating system iOS 8, introduced a slew of new features

Google enters the thermostat market with Nest

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By Stephanie Seputra

Nest Labs daringly proclaims that an incorrectly programmed thermostat might cost a household around $173 a year. In comparison, a correctly programmed one can save you about 20 percent on your heating and cooling bill. With such statistics, one must wonder why most people refrain from setting up their thermostats properly. Well, the answer is simple: to start off, many don’t know what thermostats really do and what they are capable of; furthermore – and this is why Nest decided to revolutionize the common thermostat – is the fact that programming the device can be a little too complicated.

If you are like me and don’t know what a thermostat does, here’s a basic definition: a thermostat is a device that automatically regulates temperature, or it might also refer to something that activates a device when the temperature reaches a certain point. Quite frankly, before Nest’s gorgeous thermostat surfaced on the market, the device was just one of those things that apparently come packaged with your room. Something that you know exists, but don’t really pay attention to.

As of today, the Learning Thermostat along with the Protect Smoke Detector are Nest’s only two products that are widely sold to the public. But watching the firm’s strides since its conception in 2010, one can tell that the company is going to continue and turn a previously unattractive industry, into something that is not only sexy but also profitable. One of the major reasons why it was smart for Google to invest in Nest is Tony Fadell, the company’s co-founder and CEO. Before founding Nest, Fadell was an Apple executive who not only helped design the iPod but also ran the iPod and iPhone divisions for years. His track record demonstrates Fadell’s knack for bringing innovative improvement to a previously stagnant industry.

Another reason is the fact that acquiring Nest provides Google with access to “connected home” type systems, an industry that the Silicon Valley giant has been trying to get into for some time now, through the introduction of products like Chromecast among other things. With this, some privacy concerns were voiced about Nest’s customer data being opened up to Google for advertising and or other purposes. Especially because Nest’s products not only have the capability to track a home’s temperature and the presence of smoke but also the ability to know when people wake up, leave and return home. That, combined with complex sensors and algorithms allows the devices to program themselves in such a way that would result in better energy saving. Matt Rogers – Nest’s other co-founder – confidently addressed this concern, “Our privacy policy clearly limits the use of customer information to providing and improving nest’s products and services. We’ve always taken privacy seriously and this will not change.” This is a sentiment that was often repeated in Nest’s marketing, as they vowed to continue and operate independently from Google despite the $3.2 billion deal.

The reason for Google’s interest in Nest is clear. But what are the founders’ reasons for selling Nest to the technology powerhouse? Fadell reasoned that, “Google will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to do it alone – we’ve had great momentum, but this is a rocket ship.” Rogers seemed to echo similar sentiment. Additionally, Google’s acquisition of Nest created quite a ruckus in the stock market. Apparently Nestor, a company with the ticker NEST saw its stock rises by 1900 percent as it was confused by the general public with Nest Labs. With Nest being Google’s second biggest acquisition to date – it will be fascinating to see if the investment pays off.

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Why January should be renamed the “golden month of stocks”

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BY USAMA SALIM

Throughout the year, whenever we open the news, at some point or the other, we hear something like “The Yen today went up by six basis points,” or “Microsoft opened at an all-time high at $32.00 today.” All in all, every day of the year can be a golden day to invest and make a lot of money by trading on any of the markets, be it OTC, the NASDAQ, Forex or any of the other markets out there.

But that’s all they are, golden days. You will rarely ever find golden weeks, but January has claimed the title to be the golden month of money making in stocks. Out of all the reasons there are to invest in January, this piece will focus on three.

First off, the yearly sales results come out. It doesn’t really matter if Apple’s fiscal year ends on September 31st; it’s the yearly sales that really matter. Why? Because the 31st of January allows investors to compare the firm and all of its competitors, and then make a decision on who to invest more in and who to pull out of. Investors would rather compare the difference between Apple’s 2012 sales and 2013 sales to Samsung’s sales in the same time period, than to compare Apple’s September 2012 to September 2013 to Samsung’s 2012-2013 sales. Trades happen over the time period of seconds, investors typically do not hold on for 4 months to compare sales results and put off potential gains/or make potential losses. The time gap between the two is just too long for investors to hold; decisions have to be made within those seconds when the trades happen.

Investors also get to compare targets that they had set earlier during the year and see if they were right about them. These targets include the previously mentioned sales targets, along with any asset changes they had predicted, or any goals they had set for a company’s stock price to reach. These comparisons are game changers for companies. Exceeding the sales target by 3% or a loss by the same amount can electrocute the company’s stock price; rise to the point where the sky’s the limit or drop dead.

The other reason why it’s the perfect time to invest in January is that most companies chose 31st December to be their fiscal year end. All the K-10s (annual reports) therefore come out in January, and usually in quick succession of each other. Q-10s aren’t as important as K-10s. Given that quarterly sales results are important to see if the company is on track or not, but the K-10 is the game changer for many companies. Penny stocks have seen 100% to 3,000% increases over the span of a few days, and in some cases, even over the span of a few minutes. Normal stocks have changed anywhere between 4% to 16% over days after their reports were released.

What does this all mean to an investor? It means that they should be ready to go either way. Anyone who was smart enough to short Apple’s stock would’ve ended up making a nice little profit for themselves. Anyone who would’ve bought Google would’ve made a nice little profit too. In the most basic terms, you need to day trade in January. There is no holding period, there is no make money in the long term. There are the two polar extremes: buy all you can, or sell all you can.

What does this all mean for an investor? Well, because we attend business school, we should start gearing up for the next golden month – this way, when January comes around, again we will be ready to be smart and make some money.

Disclaimer: The writer of this article and the Vanguard do not take any responsibility for any decisions made based on this article. Any investments made/not made are a personal choice of any investor.

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Janet Yellen’s first congressional testimony as new Fed Chairwoman

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By Alex Grotevant

On February 11, Janet Yellen, the new chairwoman of the Federal Reserve, appeared before Congress to present the semiannual monetary policy report. Following her testimony, Yellen spent nearly six hours answering questions raised by members of the House Committee of Financial Services. In this time, she discussed many of the most pressing matters surrounding the American economy including monetary policy and unemployment.

Perhaps the most notable takeaway from the testimony, however, was her obvious support of her predecessor, Ben Bernanke and her intention to continue with many of his policies.

Yellen praised Bernanke for his accomplishments as Federal Reserve Chair, explaining, “His leadership helped make our economy and financial system stronger and ensured that the Federal Reserve is transparent and accountable.” With regard to monetary policy, she added, “I expect a great deal of continuity” from the Bernanke regime.

Among the first orders of business Yellen must deal with as she transitions into her new position is monetary tightening. If labor markets and inflation continue to show signs of improvement, Yellen confirmed the Federal Open Market Committee will continue with the tapering process. This process, which began under the leadership of Bernanke, will cut back the Fed’s purchases of Treasury bonds and mortgage-backed securities by $10 billion per month. In turn, interest rates are expected to return to a more normal level that has not been experienced in nearly five years.

The pace of the monetary tightening, however, will have direct implications on inflation. For example, if inflation begins to increase at a faster pace, this would mean the labor market is at a new normal in which wage and inflation concerns are linked to higher unemployment. If the Fed is faced with this situation, monetary tightening would need to occur sooner and at a faster pace than is currently expected. Ultimately, Yellen will need to adjust the pace of monetary normalization based on how the economy reacts as a whole.

The morning after Yellen delivered her testimony to Congress, major market indexes experienced an increase of nearly one percent. Wall Street was relieved to find out that the new leader of the Fed was interested in continuing with many of Bernanke’s policies. Specifically, stock traders may benefit from the continued tapering of the Fed’s bond-buying program, which has impacted investment into stock markets and ultimately share prices.

While Yellen acknowledged concerns such as slow economic growth, high unemployment and inflation, she emphasized the optimistic outlook for the economy. “The economic recovery gained greater traction in the second half of last year,” she said. “Economic activity will expand at a moderate pace this year and next.” Yellen referenced the 3.5 percent growth in gross domestic product during the third and fourth quarters of 2013 compared to the 1.75 percent growth in the first and second quarters. She also mentioned progress within the labor market, citing that 3.25 million jobs have been created since August 2012 when the Fed began a new round of asset purchasing.

Ultimately, Janet Yellen and the rest of the Federal Reserve have their work cut out for them in order to achieve the objectives they have set for the American economy. Developments within recent months have created a sense of optimism that Yellen hopes to maintain. After the delivery of her testimony to Congress, it will be interesting to see how effective Yellen is in her approach to improving the economy, which seemingly draws many parallels to the way Bernanke acted as Chairman of the Fed.

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Volkswagen Caught Engaging in Emissions Scandal

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BY ADAM HAIDERMOTA

The entire world was shocked when reports came out implicating Volkswagen Group in a huge scandal, where they allegedly installed software into their diesel cars to cheat emissions tests. Volkswagen’s stock price plummeted, resulting in huge losses for investors, but the impact of the scandal doesn’t stop there. Due to the immense size and reputation of Volkswagen, the news has impeded on the global market. Even at Bentley’s recent Raytheon lecture in Business Ethics, a member of the audience brought up the scandal when asking a question. So far, Volkswagen has admitted to fitting 482,000 cars in the United States, and about 11 million cars worldwide with the illegitimate software. The sheer enormity of deceit and fraud by Volkswagen has the world reeling.

Early this September, the Environmental Protection Agency found that diesel car models being sold by Volkswagen had devices built into their engines that could detect when they were being tested. As a result, when the cars underwent testing, the engine would change its performance to match EPA standards. This deceitful software is so intricate that it can sense monitoring speed, engine operation, air pressure, and the position of the steering wheel to detect whether the car is in a controlled laboratory setting or not. If the vehicle detects a laboratory, it will switch into a safety mode in which the car operates under EPA standards. When the engines operate normally, they emit nitrogen oxide pollutants up to 40 times higher than what is allowed by US Federal laws.

Volkswagen’s American boss, Michael Horn, has acknowledged the company’s mistake and their CEO, Martin Winterkorn, has since been replaced by Matthias Mueller, the former chief executive of one of Volkswagen’s many subsidiaries, Porsche. The carmaker has set aside funds to cover costs for when it begins to recall cars in January of 2016. The EPA can fine automobile manufacturers up to $37,500 for each vehicle that breaches standards. It is expected that the US Justice Department, as well as shareholders, may file legal action against the company.

The world is waiting to see who else was involved in the humiliation of the company. Management at Volkswagen purposefully misled authorities through the use of this software, and it will be interesting to see whether they will be implicated.

So what does all of this mean?

For one, it calls into question the competency of European regulators to control the market efficiently, considering they were unable to detect the software themselves until alerted by the US. European Union regulators need to be stricter.

Secondly, it implies a certain desperation from within the diesel market that seems to stem from the slow of diesel sales worldwide. The diesel car market in the US contains only 1% of all new car sales and this is not expected to increase. Ironically, Volkswagen’s deceit will slow the diesel market, rather than help to fuel it. The entire diesel market is going to come into question, and probes are expected to be launched into other automobile manufacturers. Also, it is important to note that Volkswagen is Germany’s largest automotive manufacturer, which means that any major blows to Volkswagen can have serious implications for the German economy as a whole.

For Volkswagen itself, they are due to suffer huge financial losses related to recalls, fines, and legal fees. Forbes estimates that the total cost of the entire scandal including the above factors and estimated loss of sales could amount up to $34.5 billion. It will be a while before they regain the trust of the public at large. Their business is bound to suffer due to their treachery, and consumers will be significantly more wary of doing business with them.

Although the deception was discovered in the United States, the majority of cars that have the cheating software are elsewhere in the world, particularly in Europe. As a result, investigations into Volkswagen’s practices are opening up everywhere. The company has also only announced recalls for the United States, which accounts for a small percentage of the fraudulent cars. The worst for Volkswagen is far from over.

Ferrari Shifts Into Sixth Gear With Launch of IPO

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BY ADAM HAIDERMOTA

RACE. The word symbolizes speed, excitement, competition and more; it is also the new ticker symbol for Ferrari NV, as it recently launched the latest phase of its exhilarating history. On Wednesday, October 21, 2015, Ferrari NV launched its Initial Public Offering on the New York Stock Exchange, marking a historic day in the company’s prestigious history. Its IPO price was declared as $52, it opened at $60, and finally ended the day strong at a 5.77% mark up of its IPO price at a clean $55.

But why the change? Prior to Ferrari’s IPO, Fiat Chrysler Automobiles held a 90% stake in Ferrari with the other 10% belonging to Piero Ferrari, son of legendary founder, Enzo Ferrari himself. Ferrari’s bid to go public is a result of Fiat Chrysler deciding to spin off the company in order to finance expansion plans for its other subsidiaries. Fiat Chrysler CEO, Sergio Marchionne after selling 4.6 million cars in 2014 is still falling short of the 6 to 7 million car benchmark that he has set for the company. As a result, Fiat Chrysler has plans to expand its Jeep, Chrysler, Dodge, Fiat and Ram models in order to meet its goals. And the first step to financing these goals was to sell off Ferrari. The company expects to earn close to $1 billion from the IPO itself and is expected to distribute its remaining 80% stake in Ferrari to its shareholders sometime in 2016.

The IPO market in 2015 has been shockingly weak. Just in the first week of October, only 5 of the 11 IPOs that were scheduled to price made it out the door. These five were also priced 19% under the midpoint of the price range. However, despite the recent downcast, this might just be the perfect time for Ferrari to have launched its offering. Amidst a weak IPO market and after a turbulent couple of months due to China missing forecasted growth, the IPO market seems to be stabilizing. More recently, strong companies such as First Data, the payment processor and Albertson’s, the 3rd largest food retailer in the US have released intentions to have IPOs of their own, signaling greater confidence in the market.

Then there’s also the question of what to expect. For an exclusive luxury carmaker like Ferrari, growth is a daunting prospect. The company has a very niche target market that is increasingly seeing more and more competitors. One place to look is in Asia where there are many emerging markets, most notably in China, whose economy has been booming in recent years. However, Ferrari seems to have been unable to gain a stronghold in China, despite the potential for some serious demand. Many of Ferrari’s rivals sell close to a third of their cars in China, whereas they only sell 9% of their cars in the same market. Ferrari’s ability to grow and build value for their shareholders might depend on their ability to expand into these markets and gain a steady foothold.

It’s also important to note that Ferrari’s sources of revenue are not limited to its supercars. In the first quarter of 2015, 17.6% of Ferrari’s revenue came from merchandising, licensing and royalty income. The corporation generates income from the magnificent Ferrari World theme park in Abu Dhabi, luxury watches by Hublot and Movado, Puma sportswear and apparel and even Ferrari Lego sets. The list continues. Currently there are 32 Ferrari licensed stores selling themed goods out of which nine are owned and operated by Ferrari. Despite going public and seeking growth in their automobile sales, Ferrari cannot propel their growth too much, or else they would risk sacrificing their exclusivity. Ferrari’s already relative success in these areas coupled with their powerful brand indicates that Ferrari could and should potentially look to merchandising, licensing and other related sectors for growth.

Although Fiat Chrysler is giving up their stake in Ferrari, through Maserati they can ensure that they continue to have a foot in the door. Engine sales in the first quarter of this year accounted for 10.3% of net revenue and a large portion of their sales come from Maserati which happens to be a subsidiary of Fiat Chrysler. Maserati’s success could therefore be a significant variable in determining prospects for Ferrari’s growth. Adversely, any decline in sales for Maserati could negatively impact Ferrari’s new shareholders substantially through the loss of engine sales.

At the moment, it’s all excitement as Ferrari is accelerating at the start but it’ll be interesting to see what happens once the hype dies down and it integrates into the daily ups and downs of the market. For now one can only wait and guess as to how Ferrari will manage once it gets out of the dealership and onto the road.

Q3 Results: Growth Remains Weak

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BY ADAM HAIDERMOTA

Last week was an exciting and rather volatile one as companies across the United States reported their earnings. Investors had their anticipation quashed with disappointment, but they were also surprised with the growth. Many blue chip companies on the market missed their earnings, resulting in harsh consequences, whereas there were some market leaders that exceeded earnings. Although the NASDAQ went back above 5000 and the Dow Jones began to close into 17,600, one wonders about the anomalies in the market. What should investors think? To begin with, let’s take a look at a few of the successes and failures of last week.

Technology shares rallied substantially allowing the S & P 500 to erase its losses from 2015. Microsoft stocks went up 10.1% to their highest price in 15 years after they continued to beat expectations. Alphabet (formerly Google), Amazon, Facebook and Twitter all recorded substantial gains as well. Amazon recorded intraday highs and Alphabet beat expectations, despite certain concerns about the sector. Even McDonald’s, a company that has been struggling recently, exceeded earnings expectations and gained a whopping 8.1%. Coming off a third quarter that included China’s mini crisis and a terribly volatile market, the results sound almost too good. However, when one looks at the companies that missed targets, questions are raised.

Tesla’s market price tanked last week when they again missed targets that they publicly and confidently declared they would meet. Their deficiencies from last year have continued, and the Model X, which was supposed to boost sales and dig Tesla out of its slump, failed to generate a great enough number of orders. In spite of the huge hype, there have only been 25,000 orders for it so far. Another big company that missed targets was Netflix, who blamed lower earnings on problems related to EMV card reissuances which interfered with their subscription payments. However, considering the extent of Netflix’s losses, many analysts are suggesting that this is just a sordid excuse. Yahoo, too, had to cut spending on its workforce and decided to narrow its product going forward after an 8% loss on its stock price.

This is all good and well, but let’s take it a step further to see what is truly going on. Although the indexes managed to regain their point losses, they still have a ways to go. When aggregating all members of the S & P 500 that have released earnings so far, though there is growth in earnings, it is almost insignificant growth, up by just 0.4%. And although earnings exceeded expectations amongst many companies, there was widespread revenue weakness around the board. Few companies have been able to expand revenue, which is not surprising since there were similar misses last quarter as well.

One important indicator as to the market’s performance is that analysts have already started downgrading their estimates for the fourth quarter of this year. Growth expectations for the year are almost non-existent and analysts believe that growth will only start to pick up well into 2016. The sharp decline of fourth quarter estimates point to a lack of faith in companies’ abilities to generate more revenue, meet earnings, and generate growth.

Perhaps the harsh lowering of fourth quarter estimates will benefit the market. Lowering expectations is more likely to prepare investors for what to expect in the coming months and may give companies some breathing room in what is expected to be a relatively non-growth year. However, if the successful tech giants of the quarter can keep it up, and the losers can manage to turn earnings around, then perhaps the market will be in for a surprise.

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