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Stock market crash: Once-dominant tech stocks vulnerable to meltdown

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Don’t let Friday’s torrid rally fool you. Tech stocks are in a whole heap of trouble.

Sure, the tech-heavy Nasdaq Composite index soared as much as 5% on Friday, but it’s still down a whopping 17% from a record high reached in late August.

The reasons are plentiful. The most recent shot across tech’s bow came this past week, when Apple shockingly cut its sales forecast, citing an economic slowdown in China and lingering trade-war tensions. That dragged Apple’s stock down as much as 10% in a single day, bringing it almost 40% from all-time highs.

Facebook experienced a growth scare of its own back in mid-2018, when the company also warned of a significant slowdown in revenue expansion. That whole ordeal set Facebook shares back 19% in a single trading session. And have yet to recover, still down 37% from those July levels.

Those are just the sector’s two lightning rods. They both have entire ecosystems of smaller firms that depend on their continued strength for their own sustainability.

Not to mention other tech companies are exposed to the exact same risks as Apple and Facebook. At this point it’s just a matter of when they issue their own slowdown warnings, and then receive the subsequent market beatdown.

And then there’s the matter of the sector’s valuations, which have come down from eye-bleeding territory, but still remain elevated relative to history. No matter how you slice it, tech is vulnerable.

Read more: We interviewed Wall Street’s 8 top-performing investors to get their best ideas for 2019

Unfortunately for those still holding out hope, one expert sees the damage in tech getting even worse. That would be Vincent Deluard, a macro strategist at INTL FCStone. In a recent report entitled “The Age of Technology Is Over,” he argues that tech’s long-running stretch of dominance will soon be over.

He traces tech’s alleged fall from grace back to Sept. 28, 2018, which the “information technology” sector was split between “consumer discretionary” (eBay, Netflix) and “telecommunications services” (Facebook, Google).

“Portfolio re-balancing may have destabilized markets, but I think the more important consequence of the Global Industry Classification Standard (GICS) change was the public admission that technology is no longer special,” Deluard wrote in a recent note to clients.

Deluard attributes tech’s loss of luster to the incorporation of technology into long-standing, “old economy” businesses. That means a company like Walmart, which has adapted admirably to the e-commerce era, and now generates roughly the same level of sales online as Apple.

He also questions why Netflix is trading at a price-to-earnings (P/E) ratio that’s nearly six times that of Disney, since both companies “use technology to tell stories.” The same skepticism expands to the auto industry, where Deluard shakes his head at Tesla‘s outsized valuation when compared to other luxury automakers like BMW.

But perhaps the most damning attribute of tech stocks is that — even after briefly tumbling into a bear market — they’re still commanding a 16% premium over the S&P 500 on a forward price-to-earnings basis. Sure, that figure has come way down, but it’s still a major leg up. The chart below shows this dynamic in action.

Deluard expects this ongoing repricing to continue in earnest throughout 2019, which would mean more deep selling across the tech sector. In his concluding remarks, he pulls no punches.

“If technology is everywhere, the tech sector no longer exists,” Deluard said. “If the tech sector no longer exists, its premium is no longer justified.”

INTL FCStone

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More groups join in support of women in STEM program at Carleton

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OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

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VR tech to revolutionize commercial driver training

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Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

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Next-Gen Tech Company Pops on New Cover Detection Test

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While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

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