Donald Trump Launches Operation Midterms Diversion - The New Yorker

By early afternoon on Tuesday, Donald Trump's latest piece of political chicanery, Operation Midterms Diversion, could be considered a partial success. After a week in which the media narrative was focussed on pipe bombs, an alleged bomber who just happened to be an ardent supporter of Trump, and a racist massacre in a Pittsburgh synagogue, two of the three cable news channels—Fox and MSNBC—had reverted to subjects more to Trump's liking: immigration, the southern border, and the allotment of U.S. citizenship.

CNN, to its credit, was resisting the President's effort to dictate the news agenda and stayed focussed on Pittsburgh, where the funerals of some of the victims of Saturday's dreadful mass shooting were taking place, as the city was bracing for a visit from the President and his wife, Melania. The home pages of the New York Times and the Washington Post were both leading with the Pittsburgh story, too. But they were also featuring prominently Trump's pledge, in an interview with the news site Axios, to abolish the right to U.S. citizenship for children born in the United States to parents who aren't citizens.

It was no accident at all that this announcement was made just a week before the midterm elections. "We're the only country in the world where a person comes in and has a baby, and the baby is essentially a citizen of the United States for eighty-five years with all of those benefits," Trump told reporters from Axios. "It's ridiculous. It's ridiculous. And it has to end."

The first part of this statement was a Trump truth—that is, a blatant falsehood. Many other countries, including Canada, Brazil, Argentina, and Mexico, have birthright-citizenship laws. The second half of Trump's quote was merely a restatement of something he said to Fox News's Bill O'Reilly in August, 2015, shortly after he launched his Presidential campaign, when he invoked the derogatory term "anchor babies" and added, "Our country is going to hell."

The supposed news in the Axios story was that Trump also declared his intention to sign an executive order ending birthright citizenship, an option that most legal experts regard as a nonstarter because it would almost certainly violate the 14th Amendment, which states: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States." Even Paul Ryan, the Republican Speaker of the House, poured cold water on Trump's idea of issuing an executive order. "You obviously cannot do that," he told a Kentucky radio station. "I'm a believer in following the plain text of the Constitution, and I think, in this case, the 14th Amendment is pretty clear, and that would involve a very, very lengthy constitutional process." The floating of an executive order was a blatant election stunt on Trump's part, the second in twenty-four hours. On Monday, he announced he was sending more than five thousand active-duty troops to the southernmost reaches of Arizona and California, supposedly to protect the border with Mexico from a so-called "invasion" by Central American migrants. "This is an invasion of our Country and our Military is waiting for you!" Trump wrote in a Monday morning tweet heralding the troop movements.

Of course, there is no invasion, or even a threat of invasion. Despite an uptick in the last few months, the number of illegal border-crossings is only about a quarter of what it was back in 2000. (That's largely because the number of Mexican migrants has fallen sharply in the past decade.) And the caravan of migrants and would-be refugees that formed in Honduras and recently traversed into southern Mexico is still a long way away: about a thousand miles from the U.S. border.

If and when the caravan gets that far, there is every reason to believe that the U.S. Customs and Border Protection—a civilian agency with sixty thousand employees and almost a century of experience—will be able to deal with the challenge of intercepting and processing its members. As Gil Kerlikowske, who served as its commissioner from 2014 to 2017, noted in an interview with the Washington Post, "These are things that C.B.P. can actually handle quite well on their own." Even if the C.B.P. were to get stretched, the Administration could send in some additional National Guard units to provide backup, as has happened several times before. There is seemingly no need for active-duty troops; indeed there are big questions about what the fifty-two hundred of them will be doing once they arrive at the border to take part in what is officially called Operation Faithful Patriot.

The Posse Comitatus Act, which was passed in 1878, places strict limits on using the armed services as part of civilian law enforcement. In a briefing on Monday, Air Force General Terrence J. O'Shaughnessy, the head of U.S. Northern Command, said his troops would abide by the Posse Comitatus Act and concentrate on support duties, such as hardening border posts and transporting C.P.B. agents. But National Guard units could just as easily carry out these tasks. Nearly "all of the kinds of troops sought for Faithful Patriot exist in the Guard," the Post's Dan Lamothe and Nick Miroff noted on Monday.

Of course, the truth is that the launching a full-scale military operation had nothing to do with the requirements on the border and everything to do with the fact that the midterms are just seven days away. Desperate to shift the attention away from outbreaks of violence by right-wing extremists, and his own role in inciting such attacks, Trump doubled down on the 2016 playbook he had been holding handy all along: demonizing immigrants and inciting racial fears among his white supporters.

From the perspective of Trump and his like-minded Republican allies, the formation of the latest caravan from Honduras was a godsend. Last week, Trump suggested there were "Middle Easterners" among the migrants. On Monday, he claimed, "Gang Members and some very bad people are mixed into the Caravan." It barely needs saying that there is no evidence to support either of these assertions.

Last week, a New York Times report from Huixtla, Mexico, characterized the caravan as being made up of people of all ages who "seemed driven by a kind of blind faith, born of desperation, that this is their best chance to escape the poverty, violence and hardship they knew at home and to build better lives." In the city of Mapastepec, my colleague Jonathan Blitzer, interviewed a thirty-year-old man, Daniel Jimenez, who said he didn't even know if he'd make it as far as the U.S. border, or stay somewhere in Mexico and look for work, but he had felt he simply had to leave Honduras, because "you just can't live there anymore."

Trump doesn't give a fig about the accuracy of his claims, of course. He wants to increase Republican voter turnout next week. He has a low opinion of the party's voters. And he thinks the best way to get them to the polls is to raise the spectre of white America being swamped by non-white immigrants. So, with the support of Mike Pence, Lindsey Graham, and many other Republicans, he's going at it—pledging to send in the army, rewrite the Constitution, and who knows what else in the days ahead. As he said, there are some "very bad people." But they aren't in the caravan.

Surprise: Many Chinese Actually Like Trump, And Hope For His 'Great Deal' - Forbes

Trump is a top draw on Weibo, China's leading social network. Many Chinese people seem to like Trump and understand his brand of nationalism. They, too, are hoping for a "great deal." (Photo by Nicholas Kamm / AFP)

If you listen to the common Chinese citizen in Beijing and even in faraway places like Chengdu in Sichuan Province, they actually like Trump and hope for the "great deal" he mentioned in an interview on Fox News Monday night.

Maybe "like" is too strong a word. They understand him. They seem to get his brand of nationalism. And they like his crass comments in the press. On Tuesday, Trump was the 15th hottest topic overall on a day when populist novelist Louis Cha Leung-yung (pen name Jin Yong) passed away and dominated Chinese socials. Trump was the No. 1 non-Chinese story being shared on the massive social network because of his trade and immigration banter.

"I think that we will make a great deal with China," Trump told Laura Ingraham on Fox News yesterday before taking a swipe at China for helping dismantle much of the manufacturing labor in the country. He said he would like to make a deal before the end of the year, but said China was not ready for one.

More tariffs are in the works. Investors are warily moving from $250 billion in tariffs as a base-case scenario to tariffs on around $500 billion worth of goods.

Trump is often the No. 1 trending foreign news on Sina's Weibo social networking platform in China. His abrasiveness remains popular with many locals, despite his anti-China rhetoric. Photographer: Nelson Ching/Bloomberg

Word in China is that the U.S. is using the trade tariffs as a form of economic warfare. They believe the U.S. is behaving unilaterally. They prefer to settle things through the World Trade Organization, an organization Trump believes has done much to favor China and global corporations' love for abundant, low-cost labor and lackluster regulations.

The official view in Beijing is that they are being victimized by Trump. But much like Trump, government officials from the Foreign Affairs ministry use similar language in saying they want a "great deal for two great peoples."

For years, the U.S. China Business Council has pressured Washington to sign a bilateral trade agreement with Beijing. In a best-case scenario, Trump's end game is such a treaty. Meanwhile, U.S. companies on the ground largely feel like they are one step behind the Chinese and are forced to play by different rules. Companies have been willing to play by Beijing's rules due to the size of the Chinese market, a market that continues to grow quickly and does not resemble anything in any other developing nation.

China's A-shares (ASHR) were up around 1.3% on Tuesday morning.

"After yesterday afternoon's tape bomb on increasing tariffs cratered U.S. markets, a change of strategy isn't a bad idea," says Brendan Ahern, chief investment officer for KraneShares, a China-centric ETF firm.

A bilateral trade deal, if plausible, would be highly welcomed by investors and many corporations doing business in China. Photographer: Michael Nagle/Bloomberg

Trade Tensions Not Trade War

We are experiencing trade tensions, say the Chinese. Not a trade war.

America's international trade has accelerated, and the deficit with China is not going down. Savvy exporters are switching numbers on U.S. Commerce Department trade codes that identify the product type in order to make it look like something else and avoid tariffs. Steel is coming into the country and being made to look like it is coming from Vietnam, for instance, trade sources told me on Tuesday. Other workarounds are being employed, as well.

The U.S and China are the engines of global trade.

Total trade between them expanded 13.5% in the 12 months to August 31 versus 2016 to reach $4.16 trillion, according to Panjiva Research, the trade-data unit of S&P Global Market Intelligence. U.S. companies are building inventory to avoid imports in the event of a worsening trade war.

U.S. goods and services trade with China totaled an estimated $710.4 billion in 2017. Exports were $187.5 billion and imports were $522.9 billion, according to the Office of the U.S. Trade Representative. The U.S. goods and services trade deficit with China was $335.4 billion in 2017, but most of that is due to goods. China is the U.S.' largest goods trading partner with $635.4 billion in total two-way trade last year. It will be even higher this year thanks to a stronger U.S. economy and inventory build.

Goods exports to China totaled $129.9 billion while goods imports totaled $505.5 billion, which is what Trump wants to hit in full.

The trade deficit has been one of Trump's key reasons for going after China.

Containers sit stacked next to gantry cranes at the Yangshan Deep Water Port in Shanghai on July 10, 2018. China has the biggest ports in the world and has benefited greatly from globalization or, as China says, its "opening up." Photographer: Qilai Shen/Bloomberg

China likes to point out that Trump misleads on the trade gap. They say that the services trade is growing with the U.S. and China has a deficit there. But last year, trade in services—exports and imports both—totaled around $75 billion. last year compared to a goods trade deficit of more than $370 billion. The two are light years apart.

Despite the relatively mousey approach to Trump, China continues to retaliate, and Beijing plans to to retaliate further if Trump imposes more duties.

China could shift to export controls and currency devaluation. This last option is less likely as it would violate their agreements with the International Monetary Fund. The Chinese yuan is part of the IMF's Special Drawing Rights currency basket along with the major free-floating currencies of the advanced economies.

Some investment banks worry that China's central bank will adopt a competitive monetary devaluation policy in retaliation to tariffs on all Chinese exports to the U.S. Photographer: SeongJoon Cho/Bloomberg

BNP Paribas estimates that full-blown tariffs would knock as much as 0.4 percentage points off U.S. GDP growth with the possibility of a sharp correction in the stock market. A one percentage point decline is plausible in China.

Trump's "America First" campaign prioritizes protecting domestic labor related to trade, investment, intellectual property and core infrastructure (think ports).

On the other side of the Pacific Ocean, Xi Jinping's Made in China 2025 policy emphasizes domestic content of core materials (think high-tech properties and robotics), and developing advanced systems such as 5G telecom.  Gone are the days when China made your Happy Meal toys and there were sew-and-stitch factories for Nike and Ralph Lauren.

The risks to the baseline scenario of no full-blown tariffs are about 50-50 at this point, BNP Paribas economists led by Bricklin Dwyer in New York and chief China strategist Xingdong Chen in Paris wrote in a ten-page report titled "The Long Haul, published on October 15.

A potential meeting between Trump and Xi at the G20 Summit in Buenos Aires next month could help restore some trust. The perception that the two leaders are still "friends," as Trump claims, could either give investors hope for a "great deal" or have them shelve the idea for a while longer.

President Donald Trump may have met his match when it comes to US citizenship: the 14th Amendment - USA TODAY

President Donald Trump wants to change the 14th Amendment, which guarantees citizenship to anyone born on U.S. soil. USA TODAY

Brett Kavanaugh thumbed through a well-worn, pocket-sized copy of the Constitution during his Supreme Court confirmation hearing last month. President Trump is taking on the Constitution and federal law in his effort to end birthright citizenship.(Photo: Chip Somodevilla, Getty Images)

WASHINGTON – President Donald Trump may have met his match Tuesday: the 14th Amendment to the U.S. Constitution.

"All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside," the 1868 amendment begins.

"It's ridiculous," Trump said 150 years later, on the eve of midterm elections that could erode his power, perhaps for the rest of his presidency. "And it has to end." 

So began the 45th president's latest legal, policy and political battle, neatly contained in a history lesson dating to Reconstruction.

As the administration vowed to block a migrant caravan heading toward the southern border and delay a trial next week on its plan to ask about citizenship on the 2020 Census, Trump turned his focus on generations of American-born citizens.

In doing so, he took on both the Constitution and federal law. Title 8, Section 1401 of the U.S. Code lists those people deemed to be citizens of the United States, starting with "a person born in the United States and subject to the jurisdiction thereof."

The Supreme Court ruled in United States v. Wong Kim Ark, an 1898 case, that a man born on U.S. soil to parents who were Chinese nationals was a citizen. As part of a 1982 decision, Plyler v. Doe, the high court said that even if someone enters the country illegally, they are within U.S. jurisdiction, and their children born in the U.S. are entitled to the protections of the 14th Amendment. 

Trump said he has been advised he can reverse both the Constitution and the law and end birthright citizenship by executive order. He has some support.

Michael Anton, former spokesman for the National Security Council, wrote in The Washington Post recently that the 14th Amendment was written so as not to apply to undocumented immigrants. 

Michael Anton, National Security Adviser, waits in the East Room of the White House in Washington of the start of President Donald Trump's news conference Feb. 16, 2017. (Photo: Pablo Martinez Monsivais, AP)

Because the amendment addresses people subject to U.S. jurisdiction, Anton wrote, it distinguishes between "people to whom the United States owes citizenship and those to whom it does not.

"Freed slaves definitely qualified," Anton said. "The children of immigrants who came here illegally clearly don't."

Other conservatives contend that at least Congress, if not the president, can end birthright citizenship by legislation. John Eastman, director of Claremont Institute's Center for Constitutional Jurisprudence, has written that the 1898 ruling applied only to the children of legal immigrants.

"It is long past time to clarify that the 14th Amendment does not grant U.S. citizenship to the children of anyone just because they can manage to give birth on U.S. soil," Eastman wrote in The New York Times. 

Most legal scholars disagree. In testimony before Congress in 1995, assistant attorney general Walter Dellinger said even congressional efforts to deny citizenship to some children born in the U.S. were non-starters. 

"No discretion should be exercised by public officials on this question – there should be no inquiry into whether or not one came from the right caste, or race, or lineage or bloodline in establishing American citizenship," Dellinger said. "In America, a country that rejected monarchy, each person is born equal, with no curse of infirmity, and with no exalted status, arising from the circumstance of his or her parentage."

On Tuesday, Dellinger noted that Trump's proposal would question even the citizenship of people whose parents or grandparents had birthright citizenship.

Dellinger is a liberal, but many conservatives agree with his assessment. James Ho, named by Trump to the U.S. Court of Appeals for the 5th Circuit last year, wrote in 2011 that states' efforts to rewrite U.S. citizenship law was unconstitutional.

"Opponents of illegal immigration cannot claim to champion the rule of law and then, in the same breath, propose policies that violate our Constitution," Ho wrote. "Birthright citizenship is a constitutional right, no less for the children of undocumented persons than for descendants of passengers of the Mayflower."

Dred Scott brought the first lawsuit in which the Supreme Court denied blacks citizenship. Scott sued for his freedom when he was enslaved after living free in Missouri. His owners eventually freed him. (Photo: Library of Congress/USA TODAY)

Before the Civil War, the Constitution did not define explicitly what made someone a U.S. citizen, leading to decades of disputes, according to legal scholars Akhil Reed Amar and John C. Harrison. The Supreme Court had ruled in 1857's Dred Scott v. Sandford decision that people of African descent, whether slave or free, were not entitled to full citizenship. 

"At the simplest level, the 14th Amendment's Citizenship Clause was meant to repudiate Dred Scott," Amar wrote. "However, it was also meant to root post-Civil War America – America's Second Founding – in an inspiring Lincolnian reinterpretation of one of our nation's Founding truths, that we're all created/born free and equal." 

Amar, a Yale University law professor, said the amendment's citizenship clause "marked an important shift in American identity" and "established a simple national rule for citizenship: If you're born in America under our flag, you're a U.S. citizen." 

More: Back to the future: A week before Election Day, Trump targets birthright citizenship, inflaming both sides

More: Far from U.S.-Mexico border, immigration debate dominates many 2018 House races

More: Midterms: Trump focuses on preserving a GOP-run Senate in rally-filled sprint to the election

 

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Anger, controversy follow Trump on visit to grieving Pittsburgh - USA TODAY

President Donald Trump has been greeted by some protests as he visits Pittsburgh to pay respects to the 11 people killed by a gunman Saturday during services at a local synagogue. (Oct. 30) AP

President Trump walks with Melania, Ivanka and son-in-law Jared Kushner, alongside Tree of Life Synagogue rabbi Jeffrey Myers, near the memorial site to the 11 victims in Pittsburgh. (Photo: Mykal McEldowney, Indianapolis Star via USA TODAY Network)

WASHINGTON – Tragedies like the massacre that took place in a Pittsburgh synagogue over the weekend usually move people to put politics aside. 

But as President Donald Trump touched down Tuesday in a city still reeling from the most deadly anti-Semitic attack in American history, he was greeted by hundreds of protesters singing softly in Hebrew or holding signs – underscoring how controversy tends to follow Trump even on the most solemn of occasions.

Days after a gunman burst into Tree of Life Synagogue killing 11, Trump was once against thrust into the uneasy role of consoling a deeply divided nation even as he has relied on increasingly sharp rhetoric to define Democrats ahead of the midterm election.

Joined by first lady Melania Trump, the president honored a Jewish custom by placing stones on memorials outside the synagogue. Inside, the first couple lit candles in honor of each of the slain worshipers, the White House said.  

A difficult task for any president, the job of uniting a grieving nation has proven especially daunting at times for Trump, a combative former businessman who relishes  sharp-elbowed rhetoric often aimed at defining his opponents as "evil."

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"As he himself has said, he's effective at driving people into a rage," said Republican strategist Liz Mair. Trump's not good "at sympathizing and commiserating and making people feel better, except in the purely cathartic vent-and-spleen sense."

Less than two years into his first term, Trump has had to step into the role that some have described as consoler-in-chief many times, occasionally drawing criticism for a response that brought new controversy to the crisis. 

Critics pointed to his comments following last year's deadly racial violence in Charlottesville, Virginia, where he laid blame on "both sides."

Others blasted his handling of Hurricane Maria in Puerto Rico, from the decision to lob rolls of paper towels, basketball-style, at victims while touring the island last year to his more recent dismissal of higher storm-death estimates as a politically motivated attack.

Over a thousand protesters march through the Squirrel Hill Neighborhood of Pittsburgh on Tuesday. (Photo: CARA OWSLEY/USA TODAY NETWORK)

In this case, the events in Pittsburgh took place days from a pivotal midterm election that will decide control of Congress. The raised stakes have put Trump on the campaign trail more than at any time since before his own election, providing a stage where he often amps up his rhetoric to tweak opponents or draw distinctions with Democrats. 

The president has embraced the word "nationalist" in recent weeks to describe his foreign policy, a term critics read as a dog whistle to "white nationalism" but that Trump says he means as a counter to "globalist." He has described Democrats as "evil" and as a "mob," bent on open borders and increased crime.

More: 'I am a nationalist': Trump's embrace of controversial label sparks uproar

Even before he landed in Pittsburgh there were signs of tension. A group of Jewish leaders penned an open letter, signed by tens of thousands, indicating the president was not welcome in the city unless he firmly denounced white nationalists. Others, including Tree of Life Rabbi Jeffrey Myers, welcomed the president's visit. 

As his motorcade wound through the city, most bystanders barely took notice. Some gave him a thumbs down, or stuck up their middle finger.

"We didn't invite you here," a man holding a baby shouted at the president.  

Some cried "Leave Pittsburgh, leave Pennsylvania." Others sang softly, or held signs that read "Stop Hate."

President Donald Trump, first lady Melania, Ivanka and Jared Kushner were met with protestors on their visit to the Tree of Life synagogue in Pittsburgh, Pennsylvania. USA TODAY

A year ago, many praised Trump for his visit to Las Vegas after the Oct. 1, 2017, massacre at the Mandalay Bay resort in which dozens of concertgoers were killed. In understated remarks, Trump contemplated the sudden loss of a family member at the hands of a gunman.

He also has been lauded for his speeches recognizing the anniversaries of the 9/11 terrorist attacks.

Since taking office, a pattern has emerged in Trump's handling of national tragedies and disasters. The president's moving and emphatic statements of grief and consolation are often followed with a tweet or offhand remark that undercuts his message. 

After several prominent Democrats began receiving bombs in the mail last week, Trump called for unity and denounced the politics of division at a rally in Wisconsin. Hours later he blamed the story for eroding Republican momentum in the midterm election and said unfair media coverage is the culprit of the nation's divisions.  

"He can fake sympathy for very short periods, but his true character always emerges," said John J. Pitney Jr., a government professor at Claremont McKenna College.

Trump's roughly three-hour visit to Pittsburgh was subdued, scripted and free of drama. The White House limited the number of reporters trailing the president to a small coterie, and several of his interactions took place out of view – keeping with a longstanding practice of shielding victims from the glare of cameras that accompany the president.

Trump, followed by his daughter Ivanka Trump and son-in-law Jared Kushner, visited the UPMC Presbyterian hospital where several wounded are recovering. 

More: Pittsburgh gripped by sadness, shadowed by controversy

More: Ceremony to honor 9/11 victims puts Trump in rare role of consoler-in-chief

Aides said Trump understands his role.

"Certainly, the president wants – in moments where our country is hurting, like we've seen in the last several days – to find ways to bring our country together, and we've seen him do exactly that," White House press secretary Sarah Sanders said.

Trump, she said, has found "those moments to bring our country together, and certainly focus on some of the things that all of us can support, and all of us can condemn, as well."

Frank Luntz, a longtime Republican consultant, said he didn't see the president's visit to Pittsburgh having any measurable impact on the midterms. Despite some fluctuations, Trump's approval rating has hovered in the low- to mid-40s for most of the year.  

"You need it for the soul of the country," Luntz said of Trump's visit to Pittsburgh. "You don't need it for the votes of the country." 

President Donald Trump and First Lady Melania Trump paid tribute to the 11 people killed at a Pittsburgh synagogue by placing rocks and flowers on a makeshift memorial (Oct. 30) AP

Contributing: William Cummings. 

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How IBM And Red Hat, Plus Microsoft, Are Driving Cloud Transformation 2.0 - Forbes

IBM and Red Hat are bullish on the $1-trillion hybrid-cloud market opportunity, says IBM CEO Ginni Rometty.IBM

(Note: After an award-winning career in the media business covering the tech industry, Bob Evans was VP of Strategic Communications at SAP in 2011, and Chief Communications Officer at Oracle from 2012 to 2016. He now runs his own firm, Evans Strategic Communications LLC.)

CLOUD WARS -- IBM's blockbuster acquisition of Red Hat for $33.4 billion to create a hybrid-cloud powerhouse signals a massive shift in the cloud-computing industry away from vendor-driven technology-first approaches and toward a customer-centric model that offers C-level execs strategic and high-value digital-business capabilities.

Just as Henry Ford is rumored to have said more than 100 years ago that car-buyers can have any color they want as long as it's black, too many cloud providers in today's world have boxed corporate customers into closed and proprietary cloud systems that also are unable to offer simple connections into traditional on-premises technology.

That's because most first-generation cloud services were quite intentionally set up in isolation from not only those on-premises systems but also from other cloud services, partly in a land-grab effort and partly because the nature of first-gen solutions are by nature narrow, specific and fragmented.

But at some point, all those Balkanized clouds, and all that "old" on-premises stuff (that still runs most of the world's business processes and manages most of its data), and all the competing new cloud technologies, and all that fragmentation exposed an underlying disaster for corporate customers: too much complexity, too much cost, too many limited views of their operations, and too much time wasted in trying to make all that incompatible stuff work together.

But the hybrid cloud approach pushed very aggressively by IBM and Red Hat as part of their announcement has the promise to take business leaders beyond all that waste and frustration because, as its very name implies, the hybrid cloud is specifically intended to operate across diverse platforms by deploying open solutions and technologies.

Cloud-market leader Microsoft has to date been the most-bullish and visible proponent of the hybrid cloud. More than a year ago, here's how CEO Satya Nadella described the unified-architecture approach that underscores the hybrid cloud:

"We don't think of our servers as distinct from our cloud," Nadella said on an earnings call earlier this year. "In other words, this intelligent cloud and the intelligent edge is the architectural pattern for which we are building. Whether it's SQL Server 2017 or it's Windows Server, or the container service, everything that we do assumes the distributed computing will actually remain distributed.

"And it turns out that it's helpful to think about it that way, both for customers who are rationalizing their portfolios of apps that the lift-shift modernizes to what they run in their data centers, or in our data centers, but also forward-looking new workloads."

And I believe that business leaders are going to become extremely bullish on this hybrid concept because it very directly addresses their primary objectives and pain points—what's the best way to move our applications and workloads to the cloud rapidly, cost-effectively and securely?—without asking them to spend a few more years and many millions more dollars untangling the series of Gordian Knots confounding their efforts to move rapidly into the world of digital business.

IBM CEO Ginni Rometty went so far as to bill the hybrid cloud "an emerging $1 trillion market," noting that on average businesses are running 1,000 applications and that disconnected clouds—in some cases as many as 16—have sprung up within companies whose objectives are simplicity and speed, not endless complexity and fragmentation.

"We have 90,000 cloud architects to accelerate this movement," Rometty said in a conference call with financial analysts that also featured Red Hat CEO Jim Whitehurst.

While such calls with financial analysts are often dry and tightly scripted, Rometty and Whitehurst were almost effusive in emphasizing the various benefits of the deal:

• It's not about "cost synergy, but about growth synergy";
• There's no overlap in product lines;
• Red Hat will retain the Switzerland-like posture of objective independence for its many partners and the 8,000,000 developers that Rometty said use the Red Hat Linux platform;
• IBM's massive Services business will drive both scale and industry expertise for Red Hat's hybrid-cloud, container and related technologies; and
• "There is something in here for every part of IBM," said Rometty in framing out the widespread impact Red Hat will have on IBM.

One large customer of both IBM and Red Hat was also quite bullish on the deal.

"RBC views technology as a strategic enable in creating great customer experiences so we've been keen investors in technology and have been aggressively pursuing our cloud strategy," said Royal Bank of Canada CIO and group head of technology and operations Bruce Ross.

"We have long relationships with both IBM and Red Hat and both relationships have been vital for us, and we see this deal as very good for the cloud marketplace because it allows IBM to deliver more effectively on the hybrid cloud."

The IBM-Red Hat deal is "really important for our bank because it creates more choices for us," says Royal Bank of Canada CIO Bruce Ross.RBC

Ross emphasized RBC's need for speed in getting advanced digital capabilities to market more rapidly—RBC does about 10 upgrades per year to its mobile app, called NOMI—and said Red Hat would help IBM become "more of a player in DevOps" and compete more aggressively with the big guys like Amazon and [Microsoft] Azure and Google.

"That's really important for our bank because it creates more choices for us," Ross said. "And for IBM and Red Hat, both companies get a lot out of it."

For IBM, its unmatched legacy and expertise in enterprise software of every kind has been a powerful force in building its $19-billion cloud business, $7.5 billion of which comes from what I call its "cloud conversion" business that helps big global companies convert legacy systems to private clouds that can operate elegantly with public clouds as well as older technology.

And as IBM and Red Hat continue to aggressively make the case for the hybrid cloud—and perhaps flesh out Rometty's eye-popping claim that it represents a $1-trillion market—Microsoft will continue to add its full support to the effort to make hybrid cloud the dominant and highest-value model for businesses to pursue as the core of their digital transformations.

Microsoft opened the year with an acquisition to expand its capabilities in the hybrid cloud, a sector that I wrote had become "the centerpiece of Microsoft's strategy" in an article called Microsoft Intensifies Focus On White-Hot Hybrid Cloud Market With First Acquisition Of 2018.

Six months later, in Microsoft's earnings call with financial analysts in late July, CEO Nadella cited the hybrid cloud as absolutely indispensable within not only the company's "real competitive advantage" but also its "best-kept secret," both of which I described in this excerpt from my Forbes.com article headlined Why Amazon Can't Match Microsoft In The Cloud: 10 Insights From Satya Nadella:

"The vision we have always had is that distributed computing in some sense will remain distributed. So, we don't split this into, over there is an edge computing, and over here is cloud computing." And that concept of a single unified approach and architecture is central to everything Microsoft is doing in the cloud, Nadella said: "So if you think about what our real competitive advantage and differentiation is, we have one programming model, one identity model, security, management, etc, so that modern developers as well as IT can use the compute available from Azure Sphere to Azure. And the reality is these modern workloads in fact use it all."

He later added this about the company's "best-kept secret," a service called Azure Hybrid Benefit, a licensing model that allows customers to shift dollars committed to on-premises versions of Windows Server Standard and Datacenter Editions to the Azure cloud. From that article: Saying he doesn't think Microsoft has done a good job at promoting this initiative, Nadella put it this way: "I actually think that these Hybrid use benefits are being sort of our best-kept secrets. So, I'm actually hoping that going into this next fiscal year, we do a much better job... because of the Hybrid use benefits across the entire workload are pretty phenomenal." Nadella went on to say the opportunity has not "really played out" and he expects significant growth to occur around this program in the future.

Microsoft's hybrid strategy is also explored in detail in another Forbes.com article called 10 Powerful Examples Of Microsoft CEO Satya Nadella's Transformative Vision.

So to IBM and Red Hat, kudos for what looks like an exceptional deal that's predicated on delivering huge new value for customers, a dynamic that is likely to translate into significant growth for the combined companies.

And with Microsoft also driving home the value of the hybrid-cloud model, I think we can all be confident in the coming demise of the old vendor-centered model of endless streams of disparate and hard-to-integrate cloud services and technologies, and the rise of new customer-centric cloud solutions built around open technologies.

If IBM and Red Hat can maintain their focus on making this a huge win for customers, they stand a very good chance of generating an outsized victory for themselves as well.

Apple unveils new iPad Pro, MacBook Air and Mac Mini - CNN

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Marvel fans are still trying to figure out this 'Avengers 4' photo - Herald-Mail Media

With Solid Fundamentals, Netflix Stock Looks Tasty at Prices Below $280 - Yahoo Finance

Two weeks ago, streaming giant Netflix (NASDAQ:NFLX) reported robust double-beat-and-raise third quarter numbers which impressed Wall Street and sparked a huge rally in Netflix stock.

It seems like the market has entirely forgotten about that quarter. Since the post-earnings pop, Netflix has done nothing but grind lower. In after-hours trade following Q3 results, Netflix stock broke above $400. Today, it sits at $280, a mind-boggling 30% drop in two weeks for one of the world's strongest, most innovative, and fastest growing companies.

Is the drop warranted?

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Somewhat. At $400, NFLX was simply overvalued. Even the rosiest growth and valuation assumptions don't support that kind of price this year.

But, at $280, the opposite seems true. Netflix simply is undervalued. Even reasonable growth and valuation assumptions support a 2018 price target for Netflix stock of of $280.

As such, while the market backdrop remains a mess, Netflix is materially undervalued as it drops below $280. If this sell-off persists to levels well below $280, then Netflix becomes a screaming buy, regardless of broader market noise.

Netflix's Fundamentals Remain Strong

To be sure, the recent sell-off in Netflix has nothing to do with a deterioration in the fundamentals.

When you look at the fundamentals underlying Netflix stock, there are nothing but positive signs. The linear to internet TV shift has taken over the U.S. as cord cutting is only accelerating and Netflix's domestic subscriber growth isn't slowing despite having 50%-plus penetration among U.S. TV households.

Meanwhile, that same shift is going global with exceptional pace. Overall, net adds growth has consistently accelerated over the past five years.

Netflix is also hiking prices, and doing so without churn. That means higher average revenue per user. But, average costs per user aren't going up by all that much. Unit revenue growth greatly outpacing unit cost growth has allowed margins to zoom higher. A few years ago, Netflix was looking at 3% and under profit margins. Now, we are talking about profit margins of 10% and up.

The growth outlook remains just as promising as the trailing growth trajectory. Netflix will end the year with about 150 million subscribers. There are 4.2 billion internet users in the world. Assuming an average household size of three people, that equates to 1.4 billion internet households. Thus, Netflix is tapping into just 10% of its addressable market.

Meanwhile, Netflix is still just $11 per month. Linear TV costs run north of $70 per month. From this perspective, Netflix still has a long ways to go before its becomes "expensive."

In total, Netflix's fundamentals are rock solid. This company is the leader in a secular growth market that is only accelerating in its growth trajectory, further differentiating itself from the pack, and rapidly ramping up the profit engine. Thus, so long as the valuation is reasonable, Netflix stock is a must-own for the long haul.

Reasonable Assumptions Support a $280 Price Tag

While the growth narrative supporting Netflix stock is stellar, the valuation still needs to remain within reason. At $400, the valuation on NFLX stock was not within reason. But, down at $280, Netflix actually looks like a good price considering secular growth drivers.

I've always looked at Netflix as a streaming platform with the potential to get 350 million households globally paying $15 per month for the Netflix service. Under those assumptions, we are talking about $63 billion in revenue at maturation.

Also at that point in time, I expect operating margins to stabilize around 30%. Putting those two together and factoring in higher debt costs, I reasonably see Netflix doing about $30 in earnings-per-share at maturation (by fiscal 2027).

Growth stocks normally trade around 20X forward earnings. That is where Netflix stock should trade at maturation. A 20 forward multiple on $30 in EPS implies a fiscal 2026 price target of $600. Discounted back by 10% per year, that equates to fiscal 2018 price target of roughly $280.

Thus, the valuation on Netflix is starting to look very reasonable, even under relatively conservative growth assumptions. Also, this stock could very easily hit 350 million subs before 2027, or very easily hike prices to $20 per month without much churn, or get a bigger multiple at maturation than 20.

In other words, this company has many levers it can pull which would warrant a fiscal 2018 price target above $280.

As such, I look at $280 as a baseline 2018 price target for Netflix. From this perspective, I think dips below $280 are compelling long-term entry points.

Bottom Line on Netflix Stock

This is a secular growth stock which has been whacked recently due to macro equity risks. But, not much has changed regarding the core fundamentals. As such, recent weakness in Netflix is a "buy the dip" opportunity when the price is right. Below $280, the price is right.

As of this writing, Luke Lango was long NFLX. 

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