Bill Smead, a Seattle money manager, knows firsthand that things can get out of hand during neighborhood basketball games. And he thinks it's time to crack down on Big Tech.
"We're dealing with a game of far too much importance to have the rules officiated by the players," Smead, the CEO of Smead Capital Management, told CNN Business.
"We are letting them call the fouls," Smead said, "and in the process it's ruining the competitive landscape that is so necessary in this democratic capitalist system."
Although that kind of critique of Silicon Valley is hard to find on Wall Street, it's becoming commonplace on the political left. In fact, some Democrats are running on it.
Senator Elizabeth Warren unveiled a plan earlier this month to break up tech giants like Amazon (AMZN), Google and Facebook (FB) that haul in $25 billion or more in revenue. The presidential candidate's plan would also aim to unwind landmark tech acquisitions, including Amazon's purchase of Whole Foods, Google's takeover of DoubleClick and Facebook's savvy deals for Instagram and WhatsApp
"Today's big tech companies have too much power -- too much power over our economy, our society, and our democracy," Warren wrote in a Medium post. "They've bulldozed competition, used our private information for profit, and tilted the playing field against everyone else."
Those words were met with eyerolls from some on Wall Street. But not Smead, who explained his position in a letter to clients (after first warning them to grab a "sturdy chair" to sit down on). The money manager supports rewriting the antitrust laws and then either breaking up or regulating Big Tech companies. He broadly supports Warren's plan.
"I love competition," Smead said. "But there are some things that are more important than just competing. And that is the survival of this wonderful system that has succeeded so well."
Smead specifically called out Amazon, Google and Facebook as the prime suspects. He said the problem is that while supply and demand is normally balanced by price, far too often that doesn't happen in today's tech world.
"They have taken price out of social media, search and delivery. How can supply and demand work when there is no price?" Smead said. "It's impossible."
Regulatory risk is rising
Of course, many would argue that the push to crack down on tech is an example of punishing success. Big doesn't have to be bad. And these tech giants were built on American ingenuity.
Nonetheless, Wall Street is starting to grow worried about a looming tech crackdown. Facebook, mired in countless scandals, has watched its stock decline 24% since peaking in July.
What happens next to Big Tech has broad implications. These companies have enormous sway over the stock market. Millions of Americans own them in their 401(k) plans and mutual funds.
Smead, recalling the bursting of the dot-com bubble, is warning his clients to cash in their tech winnings before the backlash arrives.
"Parabolic manias go until they don't," Smead said. "When the mania goes, they get crushed. They don't just go down."
2. Brexit next steps: The European Union has given the United Kingdom three weeks to solve a political riddle that has vexed politicians for nearly three years: Does Britain really want to leave the bloc? And if so, under what terms?
How parliament answers those questions this week could have major implications for financial markets and the UK economy. The potential outcomes remain the same: Leave the European Union with a deal that protects trade, crash out of the bloc or seek another delay to the process.
Brexit has already done major damage to the UK economy. The economy is now 2% smaller than it would have been if the United Kingdom had chosen to remain in the EU, according to the Bank of England.
3. Apple announcement: Apple (AAPL) has a press event scheduled for Monday. It's expected to focus on the launch of its rumored streaming service.
The company quietly launched new gadgets ahead of the event throughout last week. It debuted its next-generation wireless earbuds, as well as a refresh of its iMac line and new versions of the iPad Air and iPad mini.
Investors will watch the reveal closely. Apple's stock rose last week on positive analyst reports and in anticipation of the event.
4. Housing data: A trifecta of US real estate reports are expected Tuesday: US building permits, housing starts and S&P/Case-Shiller US home prices. US consumer confidence comes out the same day.
On Friday, the National Association of Realtors reported that existing US home sales rebounded in February after slipping in January. This was read as an optimistic sign about the health of the US economy.
Analysts will observe whether the pattern holds this week. Some expect the housing market to get a boost from the Federal Reserve's decision to keep interest rates steady.
5. Lyft goes public: Ride-hailing firm Lyft will make its long-anticipated debut on the Nasdaq this week. Lyft predicted investors would buy the stock for between $62 and $68 a share. The company expects to raise as much as $2.1 billion through the sale of stock.
6. Coming this week:
Monday — Apple event
Tuesday — US building permits; US housing starts; S&P/Case-Shiller home prices; McCormick (MKC) and Carnival (CCL) earnings
Wednesday — US balance of trade data; Lululemon (LULU) earnings
Thursday — UK consumer confidence; US final estimate Q4 GDP
Friday — Huawei earnings; Carmax (KMX) earnings
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