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Anthony Scaramucci, founder and co-managing partner of SkyBridge Capital.

Jared Siskin/Patrick McMullan | Getty Images

You might not know this, but Goldilocks and the Three Bears is actually a story about the debate currently surrounding regulation of the blockchain and crypto industries.

Some people say there’s too little regulation. Some people say there’s too much. Some people think somewhere in the middle is just right.

But nobody can agree about where that “somewhere” is, we argue about it for years, and Goldilocks gets on Twitter to angrily threaten to move to another country where the soup is more to her taste.

Fortunately, “Too little, too much, or just right” is just one of the many ways we can have a civil conversation about how to regulate this industry. And it happens to be a terribly oversimplified one. A more nuanced framework that deserves much more attention than it receives: “Stop bad, support good.”

For a long time now, Gary Gensler’s SEC has been the (de facto, not de jure) most prominent and outspoken regulator of cryptocurrencies.

The agency nearly doubled the size of its crypto assets enforcement unit last May. It demanded over a million dollars from Kim Kardashian for her role in pumping crypto last October (big score for everyone who had the foresight to put “SEC publishes a press release with Kim K’s name in the headline” on their 2022 bingo card). It cracked down on Kraken’s staking program with a big fat (for Kraken) $30 million fine last month.

The fanbase cheering on these moves isn’t exactly huge.

Even from within, other commissioners—like Hester Peirce—have publicly criticized the agency’s approach. Its tug-of-war with other agencies, including but not limited to the CFTC, continues despite President Biden’s call for harmony in his executive order on crypto last March. And, of course, industry executives are happy to offer their two (non-interest bearing, of course) cents.

Many in the crypto industry want this “regulation by enforcement” to stop. But as Alison Frankel at Reuters and former SEC Office of Internet Enforcement Chief John Reed Stark both suggested earlier this year, there’s probably no end in sight.

Why? Because this is what the SEC does best. Enforcement is in its DNA.

The SEC is a weed killer. We can’t get mad at a weed killer for not growing fruit. At best, we can argue about what does or doesn’t constitute a weed, and whether or not the thing that just got sprayed should’ve been.

The approach the U.S. federal government has taken to regulating this industry is a bit like spray coating your entire garden with Weed B Gon (not an endorsement) and then, waiting for the harvest.

This is exactly why “Too little, too much, just right” isn’t sufficient. But “Stop bad, support good” helps us realize that we are missing half the puzzle.

Well-crafted government policy doesn’t just stop bad actors. It also promotes progress and prosperity. It’s as much of a trellis for good plants as it is a weed killer. That’s what we’ve lost sight of.

That’s why it can’t be just the SEC. We need a more holistic approach at the federal level.

That’s why we need to advocate for public-private partnerships like Abu Dhabi’s recently announced $2B initiative to back blockchain and Web3 startups or the older UNICEF Venture Fund launched in collaboration with Giga to make investments with crypto in early-stage tech startups.

That’s why we need to raise awareness about big grants supporting research and education at the university level like Ripple’s University Blockchain Research Initiative, the Wyoming Advanced Blockchain Lab made possible by a donation from IOHK at the University of Wyoming or the Algorand Foundation’s ACE program.

And that’s why we need government officials to balance the narrative, helping the American public to see that it’s about keeping the baby as much as it is about throwing out the bathwater—whether that’s making financial services inclusive and more frictionless, financing new and exciting applications of blockchain tech or simply supporting the spirit of American innovation.

Scaramucci is the founder and managing partner of SkyBridge Capital, an alternative asset manager and SEC-registered investment adviser. The author’s firm, Skybridge Capital, has multiple investments in cryptocurrencies, including the Algorand Foundation’s ALGO token, and crypto and blockchain-related companies, including Kraken.

Anthony Scaramucci says the U.S. needs stronger leadership and better direction

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Apple’s falling iPhone sales don’t bother Wall Street so long as margins, buybacks are increasing

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May 3, 2024

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Apple's falling iPhone sales don't bother Wall Street so long as margins, buybacks are increasing

A 10% decline in iPhone sales sounds like a problem for Apple, considering the company counts on the devices for half its revenue.

But investors didn’t seem to mind Thursday, when Apple revealed the year-over-year drop in its fiscal second-quarter earnings report. The stock rose more than 6% after the market close, a rally that would be the steepest since November 2022 should it continue into regular trading Friday.

Instead of glaring too much at iPhone revenue, Wall Street chose to focus on the positive. Apple’s gross margin expanded to 46.6%, continuing an upward trajectory that reflects the company’s growing services business, which brings with it stout profits.

Apple also signaled overall revenue growth in the current quarter will be in the low single digits, after a 4% decline in the second period. Analysts were looking for third-quarter growth of 1.3%, according to LSEG.

Deepwater Asset Management’s Gene Munster described the guidance as a “relief” given the recent trajectory of the business.

“I was expecting this was going to be flat, some investors were saying it was going to be down a few percent in June,” Munster told CNBC’s “Fast Money” after the report. “I think that was a big part of this move higher.”

But perhaps the biggest catalyst for the pop was Apple’s announcement that it had approved $110 billion of share buybacks, the most ever for a public company. For the past three years, Apple has authorized $90 billion in annual repurchases.

The after-hours jump shows how much investors are valuing Apple’s massive cash flow and the company’s willingness to return more of it to shareholders. It’s a shift in the way Apple has been viewed by Wall Street over the years, away from a hits-driven gadgets business and toward a financial powerhouse.

“Our free cash flow generation has been very strong over the years, particularly the last few years,” Apple CFO Luca Maestri said on an earnings call.

Apple revealed earlier this year that it has 2.2 billion active devices, illustrating the mammoth reach of its customer base as the company rolls out new subscription services. Despite the 4% drop in revenue, Apple still recorded nearly $24 billion in profit, a slip of just over 2% from a year earlier.

Apple said iPhone sales suffered from a difficult comparison to last year, when sales were elevated after previous shortages. Still, investors are looking for future iPhone growth, and many analysts say a potential iPhone with artificial intelligence features could do the trick and help the company snag customers from Android. Annual iPhone revenue peaked in Apple’s fiscal 2022.

While Apple provided some guidance for total revenue, it avoided offering any sort of forecast for iPhone sales.

That’s a change, even for a company that’s been giving less forward guidance since the pandemic. Maestri typically provides trends on iPhone sales, and had for the past four quarters.

There’s no guarantee investors will be able to continue counting on increased buybacks from a company that’s been more aggressive in that department than any other. Apple says it’s trying to draw down its huge cash pile, which stood at $162 billion at the end of the quarter. When its debt is roughly equal to its cash balance — meaning the company is net cash neutral — Apple will evaluate what to do next, executives said Thursday.

As of the end of 2023, Apple had spent $658 billion on buybacks over the past 10 years, far ahead of second-place Microsoft, according to S&P Dow Jones Indices.

“For the last couple of years we were doing $90 billion and now we’re doing $110 billion,” Maestri said on the call.

In terms of what happens when Apple gets to net cash neutral, Maestri said, “let’s get there first. It’s going to take a while still.”

“And then when we are there,” he said, “we’re going to reassess and see what is the optimum capital structure for the company at that point in time.”

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Don’t rate Tesla’s Full Self Driving too highly, tech investor says: ‘By no means autonomous driving’

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May 3, 2024

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Don't rate Tesla's Full Self Driving too highly, tech investor says: 'By no means autonomous driving'

People are shopping at a Tesla store in Shanghai, China, on Feb. 17, 2024.

Costfoto | Nurphoto | Getty Images

News of electric car giant Tesla’s progress toward rolling out its advanced driver-assistance feature in China isn’t as groundbreaking as investors are treating it, according to a top tech investor.

Mark Hawtin, GAM Investment Management’s investment director focused on investing in disruptive growth and technology stocks, told CNBC’ “Squawk Box Europe” Thursday that such expectations were misleading — not least because Tesla’s Full Self Driving service doesn’t offer full autonomous driving.

“We should say what they’re doing — everyone’s talking about this full self-driving capability,” Hawtin told CNBC. “What they’re going to be able to do in China is what they already do in the U.S. or U.K., which is sort of this assisted-driver capability.”

On Monday, shares of Tesla rose sharply, notching their best day since March 2021, after it passed a significant milestone toward the launch of FSD in China. Local Chinese authorities removed restrictions on its cars after passing the country’s data security requirements, Tesla said Sunday.

This raised expectations that Tesla’s FSD would soon be available in China. Tesla shares are up 6.7% in the last five trading days, largely on the back of buzz surrounding its roadmap to bringing FSD to China — plus, comments from CEO Elon Musk about plans to start production of more affordable models in early 2025.

But Hawtin said that the company’s so-called Full Self Driving service lacks the qualities that would make it an example of truly self-driving technology.

“It’s by no means autonomous driving yet,” he told CNBC. He thinks that a version of Tesla FSD capable of “true autonomy” is still five to 10 years away.

Hawtin said that Tesla’s reported deal with China’s Baidu is a bigger short-term win for Baidu than Tesla, adding that competition is intense in China with names like BYD, Huawei, Xpeng, Li Auto, and Xiaomi all supplying technology capable of Level 2 autonomy.

Tesla reportedly scored a deal with Baidu that would allow Musk’s firm to tap into Baidu’s mapping service license, a key requirement for offering FSD on Chinese public roads, per Reuters.

Tesla was not immediately available for comment when contacted by CNBC.

Full Self Driving, or FSD, is an upgrade to Tesla’s Autopilot driver assistant. Tesla doesn’t yet make or sell cars capable of full autonomous driving. It sells “Level 2” driver-assistance systems, marketed under the brand name FSD.

“Level 3” assisted driving, otherwise known as “conditional automation,” entails systems that handle all aspects of driving, but a driver still must be present, according to the SAE standards-setting organization.

Tesla has offered its FSD technology in China for years, but with a restricted feature set that limits it to operations like automated lane changing.

GAM does not own shares of Tesla, and Hawtin said he doesn’t personally own shares either.

– CNBC’s Lora Kolodny and Evelyn Cheng contributed to this report

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Apple on pace for best day since 2022 after earnings beat, $110 billion stock buyback

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May 3, 2024

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Apple on pace for best day since 2022 after earnings beat, 0 billion stock buyback

Apple’s Chief Executive Officer Tim Cook attends the China Development Forum in Beijing on March 24, 2024. 

Pedro Pardo | AFP  | Getty Images

Apple shares popped more than 6% on Friday morning after the company reported better-than-expected second-quarter earnings and the largest-ever stock buyback program. If the gains hold until the market closes, it will be the best day for Apple shares since Nov. 30, 2022.

The iPhone maker announced on Thursday it would repurchase $110 billion of its shares, the biggest buyback in U.S. history, surpassing Apple’s prior repurchases. The company posted earnings of $1.53 per share on revenue of $90.75 billion, exceeding analysts’ estimates of earnings of $1.50 per share on revenue of $90.01 billion, according to LSEG.

But overall sales decreased 4% and iPhone sales dropped 10% year over year during the quarter, indicating flagging demand for the smartphone’s latest generation. Apple CEO Tim Cook told CNBC that quarterly sales suffered from a difficult comparison to the year-earlier period.

Analysts at Bank of America reiterated their buy rating of Apple stock — calling it a top pick — and raised their price target to $230 from $225 in a Friday investor note, writing that they expect the company to roll out generative artificial intelligence features for the iPhone this year.

“Apple is growing iPhones in Mainland China, estimate revisions are turning positive and GenAI features will drive a strong upgrade cycle,” they wrote.

JPMorgan analysts, maintaining an overweight rating, lifted their price target for Apple to $225 from $210 on Thursday, pointing to “resilient” year-over-year iPhone revenues and “expectations of an upgrade cycle-led tailwind in iPads” ahead of Apple’s product launch event next week.

“All in all, while modest revenue growth year-over-year might not be the ideal outcome,” they wrote, “it now provides visibility into higher revenue opportunities in the coming years with tailwinds from product cycles across hardware devices as well as an AI-led smartphone cycle further boosting growth.”

Morgan Stanley analysts retained their overweight rating of Apple and hiked their price target to $216 from $210 on Friday, citing the company’s quarterly performance, year-over-year growth in iPhone shipments to China in March, stock buyback and hints at AI updates to come.

“It’s hard not to get more bullish here,” they wrote.

CNBC’s Michael Bloom contributed to this report.

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