What’s On Our Minds:

What’s on our minds this week is the same thing that’s on everyone’s minds this week. And on their screens every day. And their phones. And, maybe, in their data, rummaging around: Facebook. “Lax Data Policies Haunt Facebook.” “Data Blowback Pummels Facebook.” As of this writing, Facebook (FB) is down a hefty 22.1% from its February 1st high.

The trouble last week initially centered on the issue of how Cambridge Analytica used millions of users’ information that it collected over the years. It tied in with the Trump campaign, Russia, and raised hackles in Congress, where lawmakers called for CEO Mark Zuckerberg to explain himself. The ire spread across the pond, where British MPs similarly demanded an explanation. Each day, Facebook dropped precipitously.

At Tufton, we are watching carefully. Not because we own Facebook in spades- FB is a ticker that rarely passes over a value investor’s desk. But rather, we watch because the calls for regulation and oversight of how data is used will affect not just Facebook, but other big-tech names. Notably, Google. We expect that we’ll see if GOOGL’s “Don’t Be Evil” motto did, in fact, prevent data from being used improperly.

No company wants to see an article about itself that includes the phrase “The Federal Trade Commission is investigating…” If the FTC finds Facebook violated terms of a 2011 settlement, it will face large fines, to be sure, but it will also call into question its business model generally. Further, it will raise questions over the business practices of Silicon Valley generally.

The Technology team at Tufton continues to believe that the United States’ strength in the world is in its superior brainpower and knowledge in tech (the Technology team, who is writing this piece, also recognizes it may be biased). As the world moves away from manufacturing and toward automation and services as the highest value-add, superior technology will be integral throughout all of business. However, as with any major change, we do not expect there to be a smooth ride to get there.

Last Week’s Highlights:

Stocks were lower last week on sharpening fears of a trade war with China. And of course, as we detailed above, high-flier Facebook was pummeled.

Looking Ahead:

Tufton’s economic team will be interested in the GDP numbers released Wednesday. Otherwise, it will be a short and largely uneventful week with Good Friday leading into the holiday weekend.