Facebook's hidden data haul troubles German cartel regulator

BONN, Germany (Reuters) – That the personal data of tens of millions of Facebook (FB.O) users fell into the wrong hands is troubling politicians, but Germany’s top competition regulator is questioning the sheer volume of information that the social network harvests.

Andreas Mundt, president of Germany’s Federal Cartel Office, is pictured during an interview with Reuters in Bonn, Germany April 17, 2018. REUTERS/Wolfgang Rattay

Andreas Mundt, president of the Federal Cartel Office, is awaiting Facebook’s response to his findings, published in December, that it abuses its market dominance by gathering data on people without their proper consent.

That includes tracking visitors to websites with an embedded Facebook ‘like’ or share button – and pages where it observes people even though there is no obvious sign the social network is present.

Mundt’s inquiry has gained new relevance since revelations that the data of 87 million Facebook users, gathered via an online personality quiz, was passed to Cambridge Analytica, a consultancy that advised Donald Trump’s presidential campaign.

“For Facebook to collect data when I as a user am on Facebook, that’s clear. The user knows this and has to expect it,” Mundt told Reuters in an interview.

“What is problematic is the collection of data in places and moments where the user can’t realistically expect that data is collected by Facebook.”

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CEO Mark Zuckerberg, in testimony before the U.S. Congress, said Facebook tracked people whether they have accounts or not – something the firm said was “fundamental to how the internet works”.

Facebook tracks an estimated 28.6 percent of web traffic across 59.5 percent of internet sites, making it the world’s fifth most prevalent behind several Google (GOOGL.O) properties, according to WhoTracks.me.

NOT POPULAR, BUT DOMINANT

Mundt’s case rests on his analysis that Facebook has a market share of social media in Germany of over 90 percent – he sees its only direct competitor as Google+ – making it dominant in anti-trust terms and not, as Facebook argues, merely popular.

“If Facebook has a dominant market position, then the consent that the user gives for his data to be used is no longer voluntary,” said Mundt, 57, a jurist who has headed the cartel office since 2013.

“That’s because he has no alternative – he has to use Facebook if he wants to use a social network.”

Facebook, which has more than 2 billion users worldwide, describes Mundt’s view as “inaccurate” but has said it will cooperate with the investigation, which would not result in fines but could lead to some practices being banned.

It is due to submit its response to Mundt’s findings soon. This will then lead to a dialogue on whether Facebook should change its practices voluntarily or, possibly, be ordered to do so.

Separately, the data protection commissioner for Hamburg, the city-state where Facebook has its German office, has launched a non-compliance procedure after being dissatisfied by the firm’s explanation over the Cambridge Analytica leak.

The scrutiny from German regulators enjoys the backing of lawmakers, reflecting broader hostility toward anything resembling surveillance that goes back to Germany’s history of Nazi and Communist rule in the 20th century.

Mundt pushed back against suggestions that, in taking on the case, he was encroaching on the domain of data protection authorities. He said there was a solid precedent in Germany for inappropriate terms of use to be treated as an anti-trust issue.

“The competitive connection is particularly strong from our point of view, because data are intrinsic to the business model,” he said.

“The entire business model relies ultimately on access to data and the reach of these platforms,” he said. “With the Facebook probe we are doing pioneering work – but in no way is this an experiment.”

Reporting by Douglas Busvine; Editing by Keith Weir

Think KFC Has Recovered Since Its 'No Chicken' Fiasco? Oh, No It Hasn't

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

They addressed it so well, right?

Two months ago, KFC’s UK arm had no wings.

No breasts and no legs either.

In fact, it had no chicken

The problem was caused by a move to a new distributor and a certain lack of distribution to the majority of its UK restaurants.

The Yum Brands-owned chain had a fine, um, Colonel of an idea with the way it addressed the problem through PR. Especially with its three-letter FCK tweet

So everything’s fine now, right? 

Not exactly.

As the Telegraph reports, fewer than half the KFC restaurants in the UK are now blessed with the full menu.

Yes, the chain rehired Bidvest, its former distributor — while also keeping the new ones, DHL and QSL — but there’s still a huge shortage of menu items.

The mini-fillet burger, for example.

To which KFC replied with as much grace as it could: “Laura, we’re so sorry. We promise we haven’t removed Mini Fillets from the menu permanently, it’s just a temporary measure whilst we get things running better. Our secret mini weapon will be back soon, we promise. Keep your eyes peeled.”

The Telegraph reports that there’s also a shortage of wraps and, in some cases, rice, salad, hash browns and sweetcorn.

Yes, KFC does appear to have a lot more chicken than it did, but there’s a lesson here for those who think PR is a solution to (almost) everything.

PR can steer you positively in the public eye. 

It can make your problem disappear from the media for a while.

It can even make people feel good about you again.

What it can’t do is fix the very systems upon which your business depends.

I contacted KFC in the UK to ask when the full menu might again be available again in all its restaurants. I’ll update, should a reply be delivered.

The company told the Telegraph that it was expecting something approximating 98 percent normality by the beginning of May.

So that will be three months to get something as fundamental as distribution right.

Many muttered at the time of KFC’s original switch of distributors that it was all driven by cost-saving.

Which might offer another lesson: A better price may not deliver better quality.

It’s a little like fast food, really. 

The cheapest isn’t often the best.

Toshiba eyes cancelling chip unit sale if no China approval by May: media

TOKYO (Reuters) – Japan’s Toshiba Corp has decided it will cancel the planned $18.6 billion sale of its memory chip unit if it does not get approval from China’s anti-monopoly regulator by May, the Mainichi newspaper said on Sunday.

The logo of Toshiba Corp is seen behind cherry blossoms at the company’s headquarters in Tokyo, Japan April 11, 2017. REUTERS/Toru Hanai

A consortium led by U.S. private equity firm Bain Capital last year won a long and highly contentious battle for the unit, which Toshiba put up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit plunged it into crisis.

But Toshiba was unable to complete the sale by the agreed deadline of March 31 as it was still waiting for approval from China’s antitrust authorities.

Toshiba raised $5.4 billion from a share issue to foreign investors late last year and it had now decided it did not need to go through with the sale, the Mainichi newspaper reported. It did not cite any source.

“Toshiba has come to a decision that there is little necessity for the sale as it is no longer in insolvency,” the newspaper reported, adding that Toshiba would consider listing the unit if the sale did not go ahead.

A Toshiba spokesman said the company was still aiming to complete the sale as soon as possible.

In early April, Toshiba Chief Executive Nobuaki Kurumatani said his company would not use the option of cancelling the sale unless there was any “major material change” in circumstances.

Reporting by Makiko Yamazaki, Kiyoshi Takenaka; Editing by Robert Birsel

AMD And Intel Had A Baby! And It's A Beast!

In early February of 2018 we published an article about the cooperation between AMD (AMD) and Intel (INTC), or as we dubbed it, AMD’s hidden strategy against Nvidia (NVDA). Please read the original article for more background, but we will summarize some of the key points here.

AMD is now cooperating with Intel. Yes, indeed, hell just may be frozen over at the moment. AMD is selling Intel its Vega GPUs in silicon form, no IP transfer. Intel then packages these Vega GPUs on the same substrate with one of its CPUs to make what AMD calls an Accelerated Processing Unit (APU).

(Image of Intel CPU and Vega GPU attached to a single CPU socket board from Intel.com.)

The GPU communicates with the CPU via an 8x PCI-E bridge and shares power circuitry to create better efficiency.

Ok, so that sounds good for Intel, but aside from shifting more GPU cores, which AMD already has no problems doing, what is the benefit for AMD? Ah, but that’s the “hidden strategy!” You see, one of the biggest hurdles AMD has to deal with at the moment is software support. Nvidia, AMD’s GPU rival, has a stranglehold on the higher end gaming market at the moment. As a result, most of the games coming out on the market are optimized for Nvidia’s GTX GPUs first, and are only later tweaked to perform well on AMD’s hardware.

By partnering with Intel, AMD is able to push Vega GPUs into more mainstream computers. The Intel-AMD APU uses standard AMD graphics drivers and software, though the software bit is skinned with Intel branding. The more AMD equipped computers are out there capable of playing AAA game titles, the more likely are those games to be optimized for AMD first. AAA is an informal classification for top tier games from major studios, and those studios are likely to go for the largest possible market first and foremost. Now it’s Nvidia, but in the future the market mix may shift to AMD thanks to the strategy outlined above.

We just recapped the strategy we think AMD is pursuing, now let’s take a look at the first fruit of that strategy.

AMD and Intel had a Baby, and it’s a Beast!

(Photo of Intel Hades Canyon NUC from cnet.com.)

Meet Intel’s Hades Canyon Next Unit of Computing, or NUC for short. Hades Canyon NUC is a follow up to Skull Canyon NUC released in 2016. Skull Canyon was a big success for Intel sparking many similar small form factor gaming oriented living room computers from other manufacturers. However, it’s biggest downside was its lack of dedicated graphics. Hades Canyon NUC addresses that shortcoming in a spectacular way.

Hades Canyon features Intel’s I7 CPU combined with Radeon RX Vega powered graphics from AMD, all on a single chip, communicating over an 8x PCI-E bridge built directly into the substrate. This gives Hades Canyon enough horsepower to play real VR games or drive up to six monitors. Here is a quote from Sean Hollister from CNET.com who had first hand experience with Hades Canyon at the 2018 CES.

I can attest to that, because I strapped on an Oculus Rift connected to the Hades Canyon myself. The game Echo Arena looked butter-smooth on the system I tried on the CES show floor. I even got Intel to open up the back of its demo station, to prove it was running on this tiny box instead of a hidden gaming rig. Sure enough. How is this sorcery possible? It’s thanks to one of the most surprising and unlikely pairings in silicon history: a new Intel processor with built-in AMD Radeon graphics inside.

Devindra Hardawar from Engadget tested Hades Canyon NUC with various game titles and found performance to be excellent for such a tiny device. According to the article:

Doom 3 ran between 50 and 60 frames per second with High graphics settings in 1080p. [..] It also had no trouble keeping up with a fast-paced game like Overwatch, where I saw between 60 and 90FPS in 1080p with Ultra settings. […] I was also blown away by how well it handled Hellblade: Senua’s Sacrifice, a cinematic indie game that really taxes the GPU. Even with very high settings, it ran between 30 and 40 FPS, which is still playable. Knocking that down to high-quality graphics boosted performance to a smoother 50 to 60 FPS. Overall, the Hades Canyon NUC proved to be a capable 1080p gaming machine.

Devindra also tested the Hades Canyon NUC with Oculus Rift and found that games like Superhot, Duck Season, and Serious Sam VR ran flawlessly with no lag or dropped frames. On top of being a very capable living room gaming PC Hades Canyon NUC might be perfect for large scale VR experiences where players put on backpacks that carry computing hardware for tether free gameplay.

(Photo of a WALKER VR Backpack from Play3r.net.)

Investor Takeaway

Above we described AMD’s hidden strategy of cooperating with Intel in order to further penetrate the gaming market and talked about the first fruit of that cooperation, the Hades Canyon NUC. According to CNET the new Intel-AMD APU is already slated to appear in the 15-inch HP Spectre X360 and Dell XPS 15 2-in-1 laptops later on this year, and we think it’s just a start. This might just be the beginning of AMD GPU domination in the laptop and small form factor market. As AMD penetrates the gaming market more and more games will be optimized for AMD architecture first and foremost which should lead to performance improvements for the discrete AMD GPUs as well.

At the time of writing AMD is trading right around $10.08 down 2.7% for the day on a completely unrelated news coming out of Taiwan Semiconductors Manufacturing Company (TSM). TSM reported weakness due to softer than expected high end cellphone market, but they also reported that they expect high-performance computing chips to make up 40% of the company’s growth over the next five years, from an initial estimate of 25%. TSM is a contract manufacturer for 7nm Vega GPUs and we believe that on a whole this is good news for AMD. We also think that panic selling exhibited today in Micron (MU) is completely unwarranted. If TSM sees growth in the high-performance computing market, that market will also need high performance memory to go along with those processors. But such is the market.

On a whole we are still very optimistic about AMD’s prospects in 2018 and 2019, and still have $20 price target for AMD. Our optimism is bolstered by the industry reception of Hades Canyon NUC. We believe that soon OEMs will recognize the performance and efficiency advantage of Intel-AMD APU, and then they just might start wondering, if Intel-AMD APU is so good, how good is an all AMD APU?

Disclosure: I am/we are long AMD,AAPL,MU.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

How Some New College Graduates Are Pulling Over $1 Million a Year (Courtesy of Elon Musk)

Artificial intelligence experts can command huge salaries and bonuses–even at a nonprofit.

OpenAI, a nonprofit research lab started by Tesla founder and CEO Elon Musk released the salary details of it’s employees–and they are striking. The organization’s top researcher was paid more than $1.9 million in 2016, and another leading researcher who was only recruited in March was paid $800,000 that year, according to a recent article in the New York Times.

Salaries for top A.I. researchers have skyrocketed because there is high demand for the skills–thousands of companies want to work with the technology–and few people have them. So even researchers at a nonprofit can make big money.

It likely has more to do with competition than interest in the field itself, however. The Times points out that both of the researchers employed by OpenAI used to work at Google. At DeepMind, a Google-owned A.I. lab in London, $138 million was spent on the salaries of 400 employees, translating to $345,000 per employee including researchers and other staff, the Times reports. 

OpenAI was started by Musk who recruited several engineers from Google and Facebook, two companies pushing the industry into artificial intelligence. People who work at major companies told the Times that while top names can expect compensation packages in the millions, even A.I. specialists with no industry experience can expect to make between $300,000 and $500,000 in salary and stock as demand for the skills continues to outstrip supply. 

Qualcomm Shares Tank Amid Layoffs

Qualcomm shares were down on Thursday after the semiconductor company began layoffs and is in the middle of a trade dispute between the U.S. and China over a planned acquisition.

Shares of the mobile chip manufacturer were down 4.6% in midday trading to $52.69 on Thursday.

Qualcomm plans to lay off around 1,500 employees in California as part of a broader push to reduce its expenses by $1 billion and improve its earnings, according to a Bloomberg News report on Wednesday, citing unnamed sources.

A Qualcomm spokesperson told Fortune in a statement that both full-time and temporary workers will be affected by the layoffs, without citing the specific number of full-time and contract workers that will be cut.

“We first evaluated non-headcount expense reductions, but we concluded that a workforce reduction is needed to support long-term growth and success, which will ultimately benefit all our stakeholders,” the Qualcomm spokesperson said of the layoffs in a statement.

Qualcomm (qcom) CEO Steve Mollenkopf revealed the company’s $1 billion cost-cutting initiative in January, but didn’t provide specific details. As Fortune’s Aaron Pressman explained, Qualcomm is under pressure to revive its shrinking, but crucial, core mobile business.

One of Qualcomm’s plans to revitalize its overall business includes its $47 billion bid for NXP Semiconductors, which makes computer chips for Internet-connected devices and autonomous vehicles. But that deal has faced a couple of roadblocks.

Qualcomm said on Thursday that it is withdrawing and refilling the acquisition notice related to NXP Semiconductors “at the request of the Ministry of Commerce in China.” By doing so, Qualcomm is pushing its acquisition deadline to July 25 from April 25, so that China could potentially approve the deal.

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The semiconductor giant is essentially caught in the middle of the current trade war between China and the United States, and Chinese regulators told Bloomberg News on Thursday that it is seeking unspecified additional concessions from Qualcomm before it clears the deal.

Meanwhile, Qualcomm is still recovering from a proposed hostile takeover by chipmaker Broadcom that President Donald Trump squashed in March via an executive order that cited unspecified national security concerns. If Broadcom were to have bought Qualcomm for about $117 billion, the deal would have created an enormous mobile computer chip giant worth more than $200 billion.

​Learn to use GitHub with GitHub Learning Lab

Video: GitHub: EU copyright crackdown could hurt open-source development

The most popular open-source development site in the world is GitHub. It’s used by tens of millions of developers to work on over 80 million projects.

It’s not just a site where people use Linus Torvalds’ Git open-source distributed version control system. It’s also an online home for collaboration, a sandbox for testing, a launchpad for deployment, and a platform for learning new skills. The GitHub Training Team has now released an app, GitHub Learning Lab, so you can join the programming party.

GitHub Learning Lab is not a tutorial or webcast. It’s an app that gives you a hands-on learning experience within GitHub. According to GitHub, “Our friendly bot will take you through a series of practical, fun labs that will give you the skills you need in no time–and share helpful feedback along the way.”

With GitHub Learning Lab, you’ll learn through issues opened by a bot in a GitHub repository. As you finish tasks, the bot will comment on your work and review your pull requests like a project collaborator would.

Read also: Google Fuchsia is not Linux: So, what is it and who will use it? | Perfectly legal ways you can still get Windows 7 cheap (or even free) | Google AI can pick out a single speaker in a crowd: Expect to see it in tons of products | Open source’s big German win: 300,000 users shift to Nextcloud for file sharing

If you have questions that come up while you complete a course, you can get answers in the GitHub Learning Lab Community Forum. This is a new way to get support from your fellow students and expert trainers, including members of the GitHub Training Team

The Lab is opening with five courses. These are:

  1. Introduction to GitHub: Get an introduction to the most common, collaborative workflow for developers around the world.
  2. Communicating using Markdown: Learn how to communicate on GitHub and beyond with Markdown’s simple syntax.
  3. GitHub Pages: Host a website or blog directly from your GitHub repository.
  4. Moving your project to GitHub: Get tips for migrating your code and contributors to GitHub.
  5. Managing merge conflict: Learn why merge conflicts happen and how to fix them.

GitHub will also release “Contributing to open source: Make your first open source contribution in a friendly mapping project,” soon.

Afterwards GitHub will add more classes to the app. It will also invite inviting new course authors and add more topics. You can add your own two cents on what should be offered on the Community Forum.

Related stories

Tesla aiming to build 6,000 Model 3 cars per week by end-June: report

SAN FRANCISCO (Reuters) – Tesla Inc (TSLA.O) is aiming to ramp up production to 6,000 Model 3 cars per week by the end of June to reach its weekly goal of 5,000 and allow for a margin of error, automotive news website Electrek reported on Tuesday, citing a letter to employees from Chief Executive Elon Musk.

FILE PHOTO: A Tesla Model 3 is seen in a showroom in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson/File Photo

Underscoring Tesla’s need to roll out cars quickly to customers and collect needed revenue, the company will also begin working around the clock on the Model 3 sedan, adding another shift within general assembly, and both the body and paint shops, Electrek quoted Musk as saying.

Tesla did not immediately respond to a Reuters request for comment.

The news comes a day after Tesla temporarily suspended its Model 3 assembly line in what the company said was a planned pause, its second since February, to improve automation and address bottlenecks that have delayed production.

“We will be stopping for three to five days to do a comprehensive set of upgrades. This should set us up for Model 3 production of 3,000 to 4,000 per week next month,” Electrek quoted Musk as saying.

“Another set of upgrades starting in late May should be enough to unlock production capacity of 6,000 Model 3 vehicles per week by the end of June,” he added.

Investors are closely watching to see if Tesla is able to meet long-delayed targets and quickly ramp up the Model 3, on which the company’s future profitability rests. Tesla is pressured on a host of fronts after a fatality in one of its vehicles using its Autopilot system, a downgrade by Moody’s, and a public spat between Musk and safety regulators.

Tesla’s use of robots to assemble Model 3s has led to more complexity and delays, which Musk acknowledged last week in a tweet: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

“Tesla’s been trying to run full tilt,” said Chaim Siegel, an analyst at Elazar Advisors, before Musk’s letter was published. “He’s sleeping overnight on the production floor. I don’t think there is any way they’d purposely want to slow production. It tells me something’s not quite right.”

In the letter to employees cited by Electrek, Musk said Tesla had built over 2000 Model 3s per week for three weeks, with 2250 made last week.

Tesla had previously targeted 2,500 Model 3s a week by the end of the first quarter and 5,000 by the end of the second quarter.

Missed deadlines threaten the money-losing company’s credibility with the market and its ability to raise cash. Musk has said no new funds are needed this year, although many analysts dispute that.

Musk rallied employees in the letter, while warning departments or suppliers who missed the mark, saying they would need a “very good explanation” and a plan for fixing the problem presented directly to him.

Shares of Tesla, which ended 1.2 percent lower on Tuesday, rose 1.4 percent in after-hours trading.

Reporting by Alexandria Sage in San Francisco and Aishwarya Venugopal, Supantha Mukherjee and Sonam Rai in Bengaluru; Editing by Sai Sachin Ravikumar and Rosalba O’Brien

IRS gives taxpayers one-day extension after computer glitch

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said it would give taxpayers an additional day to file their 2017 returns after computer problems prevented some people from filing or paying their taxes ahead of Tuesday’s midnight deadline.

A general view of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst

“Taxpayers do not need to do anything to receive this extra time,” the IRS said in a statement announcing the extension.

The agency said its processing systems were now back online.

Earlier, the agency said several systems were hit with the computer glitch, including one that handles some returns filed electronically and another that accepts online tax payments using a bank account.

The IRS said it believed the problem was a hardware issue and “not other factors.”

It was not clear how many taxpayers might have been affected, but the agency said it received 5 million tax returns on the final day of filing season last year.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” acting IRS Commissioner David Kautter said in a statement.

The agency said taxpayers should continue to file their taxes as normal on Tuesday evening – whether electronically or on paper.

Taxpayers could also ask for six-month extensions, as President Donald Trump did. The White House said on Tuesday that Trump, because of the complexity of his tax returns, would file his by Oct. 15.

Reporting by Eric Beech; Editing by Diane Craft and Chris Reese

After Intense Criticism, RSA Tech Conference Adds More Women to Top Speaking Slots

When organizers of this week’s RSA computer security conference in San Francisco revealed their initial keynote speaker list a month ago, one thing stood out: Of the 20 scheduled speakers, only one was a woman.

Critics immediately seized on the skewed gender ratio at the conference, among the most prominent in the tech industry, as just another example of sexism in tech. After all, for years, top conference speaking slots along with jobs at prominent tech firms have been filled largely by men.

To make matters worse, that one woman scheduled to speak at RSA—Monica Lewinsky, who has remade herself as an anti cyber-bullying advocate after playing the key role in President Bill Clinton’s impeachment —isn’t a technologist.

Under fire, the RSA’s organizers went back to the drawing board and came up with a final keynote lineup for their five-day event, which kicks off April 16, that is somewhat more gender balanced. Of the 23 speakers, 7 are women. They include Homeland Security Secretary Kirstjen Nielsen, prominent game developer Jane McGonigal, and Reshma Saujani, the founder of Girls Who Code, a group that focuses on teaching girls to create software.

“We’ve been working from the beginning to bring unique backgrounds and perspectives to the main stage, and are thrilled to deliver on that mission,” said Sandra Toms, vice president and curator of the RSA conference.

RSA’s speaker problem is hardly unique. In January, CES, another high-profile conference, faced similar complaints for the skewed gender makeup of its solo keynote speakers, all of whom were men.

When releasing its initial list of keynote speakers, RSA explained away the keynote criticism by saying that its speaker lineup was not yet final and that women accounted for a large number of women speakers outside of the keynotes (at last count, there are 141 women scheduled to speak during the conference in both keynotes and lower profile sessions). Organizers also laid some blame on the tech industry itself, saying that women fill only a fraction of its jobs, including in computer security.

Indeed, the tech industry’s gender makeup is heavily skewed. In so-called diversity reports detailing employee demographics, a number of major companies have confirmed that men vastly outnumber women at all levels.

For example, last year, Google said that women accounted for 31% of its workers, and just 21% of its tech workers. In leadership, women fill just one quarter of all the jobs.

At many tech conference, at least, the reality is even bleaker for women, whose only upside to their underrepresentation at the events is that they don’t have to wait in long lines like men do to use the restroom.

Renowned Gay Rights Lawyer Self-Immolates in Protest of Climate Policy

David Buckel, a lawyer who spent much of his life campaigning for gay rights, died after setting himself on fire in Brooklyn’s Prospect Park early Saturday. A pair of suicide notes from Buckel described the act as a “protest suicide” intended to “bring some attention to the need for expanded actions” on climate change policy and the use of fossil fuels.

According to eyewitnesses interviewed by the New York Daily News, Buckel’s burning body was near a main entrance to the park, highly visible to Saturday-morning joggers and cyclists. Witnesses described mistaking the burning body for a mannequin before emergency services arrived.

Buckel left two notes — one describing his suicide as a protest, and a second expanding on his motivations. In the second, a copy of which was sent to the Daily News, Buckel wrote that “my early death by fossil fuel reflects what we are doing to ourselves,” suggesting he had used gasoline or a similar fuel in his suicide.

“Polution ravages our planet, oozing inhabitability via air, soil, water and weather,” he wrote. “Our present grows more desperate, our future needs more than what we’ve been doing.”

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Recent years, and even recent days, have seen alarming signs that climate change is progressing even faster than scientists had previously projected. Climate scientists this week announced findings that an Atlantic Ocean current that helps equalize global temperatures has slowed drastically, in part because of human-caused climate change, potentially leading to disastrous climate shifts in Europe.

Meanwhile, U.S. political leadership has rolled back efforts to limit the carbon emissions that cause climate change. The Trump administration announced in June of last year that the U.S. would withdraw from the Paris climate accords. Earlier this month, Trump’s Environmental Protection Agency — led by the embattled, free-spending Scott Pruitt — announced that it would roll back fuel economy standards set under President Barack Obama.

Buckel, 60, had played a prominent role in the fight for gay rights in America for decades. He was the lead attorney in a lawsuit involving Brandon Teena, a transgender murder victim who was portrayed by Hilary Swank the film Boys Don’t Cry, as the Daily News reported.

He had led the push for gay marriage rights at Lambda Legal, a national organization devoted to LGBT issues. In a statement Saturday, Lambda executive Camilla Taylor described Buckel as a “brilliant legal visionary,” particularly praising his work on the cases Nabozny v. Podlesny, which in 1996 established that schools had a responsibility to protect gay students from harassment; and Lewis v. Harris, which helped expand gay marriage rights in the U.S.

In his suicide notes, Buckel compared his death to that of Tibetan monks who have committed suicide in a similar manner to protest Chinese rule over the region.

Apple Warns Employees to Stop Leaking Information to Media

Apple Inc. warned employees to stop leaking internal information on future plans and raised the specter of potential legal action and criminal charges, one of the most-aggressive moves by the world’s largest technology company to control information about its activities.

The Cupertino, California-based company said in a lengthy memo posted to its internal blog that it “caught 29 leakers,” last year and noted that 12 of those were arrested. “These people not only lose their jobs, they can face extreme difficulty finding employment elsewhere,” Apple added. The company declined to comment on Friday.

Apple outlined situations in which information was leaked to the media, including a meeting earlier this year where Apple’s software engineering head Craig Federighi told employees that some planned iPhone software features would be delayed. Apple also cited a yet-to-be-released software package that revealed details about the unreleased iPhone X and new Apple Watch.

Leaked information about a new product can negatively impact sales of current models, give rivals more time to begin on a competitive response, and lead to fewer sales when the new product launches, according to the memo. “We want the chance to tell our customers why the product is great, and not have that done poorly by someone else,” Greg Joswiak, an Apple product marketing executive, said in the memo.

The crackdown is part of broader and long-running attempts by Silicon Valley technology companies to track and limit what information their employees share publicly. Firms like Google and Facebook Inc. are pretty open with staff about their plans, but keep close tabs on their outside communications and sometime fire people when they find leaks.

Facebook executive Sheryl Sandberg last week talked about her disappointment with leakers. In 2016, Google fired an employee after the person shared internal posts criticizing an executive. The employee filed a lawsuit claiming their speech was protected under California law.

In messages to staff, tech companies sometimes conflate conversations employees are allowed to have, such as complaining about working conditions, with sharing trade secrets, said Chris Baker, an attorney with Baker Curtis and Schwartz, PC, who represents the fired Googler. “The overall broad definition of confidential information makes it so employees don’t say anything, even about issues they’re allowed to talk about,” he said. “That’s problematic.”

Apple is notoriously secretive about its product development. In 2012, Chief Executive Officer Tim Cook pledged to double down on keeping the company’s work under wraps. Despite that, the media has continued to report news on the firm to satisfy demand for information on a company that’s become a crucial part of investment portfolios, many of which support public retirement funds for teachers and other essential workers.

In 2017, Apple held a confidential meeting with employees in another bid to stop leaks. Since then, publications, including Bloomberg News, published details about the iPhone X, a new Apple TV video-streaming box, a new Apple Watch with LTE, the company’s upcoming augmented-reality headset, new iPad models, software enhancements, and details about the upcoming iPhones and AirPods headphones.

Here’s the memo:

Last month, Apple caught and fired the employee responsible for leaking details from an internal, confidential meeting about Apple’s software roadmap. Hundreds of software engineers were in attendance, and thousands more within the organization received details of its proceedings. One person betrayed their trust.

The employee who leaked the meeting to a reporter later told Apple investigators that he did it because he thought he wouldn’t be discovered. But people who leak — whether they’re Apple employees, contractors or suppliers — do get caught and they’re getting caught faster than ever.

In many cases, leakers don’t set out to leak. Instead, people who work for Apple are often targeted by press, analysts and bloggers who befriend them on professional and social networks like LinkedIn, Twitter and Facebook and begin to pry for information. While it may seem flattering to be approached, it’s important to remember that you’re getting played. The success of these outsiders is measured by obtaining Apple’s secrets from you and making them public. A scoop about an unreleased Apple product can generate massive traffic for a publication and financially benefit the blogger or reporter who broke it. But the Apple employee who leaks has everything to lose.

The impact of a leak goes far beyond the people who work on a project.

Leaking Apple’s work undermines everyone at Apple and the years they’ve invested in creating Apple products. “Thousands of people work tirelessly for months to deliver each major software release,” says UIKit lead Josh Shaffer, whose team’s work was part of the iOS 11 leak last fall. “Seeing it leak is devastating for all of us.”

The impact of a leak goes beyond the people who work on a particular project — it’s felt throughout the company. Leaked information about a new product can negatively impact sales of the current model; give rival companies more time to begin on a competitive response; and lead to fewer sales of that new product when it arrives. “We want the chance to tell our customers why the product is great, and not have that done poorly by someone else,” says Greg Joswiak of Product Marketing.

Investments by Apple have had an enormous impact on the company’s ability to identify and catch leakers. Just before last September’s special event, an employee leaked a link to the gold master of iOS 11 to the press, again believing he wouldn’t be caught. The unreleased OS detailed soon-to-be-announced software and hardware including iPhone X. Within days, the leaker was identified through an internal investigation and fired. Global Security’s digital forensics also helped catch several employees who were feeding confidential details about new products including iPhone X, iPad Pro and AirPods to a blogger at 9to5Mac.

Leakers in the supply chain are getting caught, too. Global Security has worked hand-in-hand with suppliers to prevent theft of Apple’s intellectual property as well as to identify individuals who try to exceed their access. They’ve also partnered with suppliers to identify vulnerabilities — both physical and technological — and ensure their security levels meet or exceed Apple’s expectations. These programs have nearly eliminated the theft of prototypes and products from factories, caught leakers and prevented many others from leaking in the first place.

Leakers do not simply lose their jobs at Apple. In some cases, they face jail time and massive fines for network intrusion and theft of trade secrets both classified as federal crimes. In 2017, Apple caught 29 leakers. 12 of those were arrested. Among those were Apple employees, contractors and some partners in Apple’s supply chain. These people not only lose their jobs, they can face extreme difficulty finding employment elsewhere. “The potential criminal consequences of leaking are real,” says Tom Moyer of Global Security, “and that can become part of your personal and professional identity forever.”

While they carry serious consequences, leaks are completely avoidable. They are the result of a decision by someone who may not have considered the impact of their actions. “Everyone comes to Apple to do the best work of their lives — work that matters and contributes to what all 135,000 people in this company are doing together,” says Joswiak. “The best way to honor those contributions is by not leaking.”

Photographing the Lights of America's Prisons—and the Lives Inside

Light is a symbol for life, as any night traveler knows. A warm glow up ahead means there’s a town full of people, with a gas station or possibly a McDonald’s where you can stretch your legs, use the john, maybe buy a Coke.

The lights in Stephen Tourlentes’ Of Lengths and Measures also represent life. Though here, there’s no friendly pit stop. Instead they beam from correctional facilities, the prisoners hidden from view behind miles of razor wire, cinder blocks, and electric fencing. It’s life many would prefer not think about.

“The prison system makes people invisible,” Tourlentes says. “It takes them, relocates them, makes them go away from the rest of us. But this light always spills back out onto the landscape.”

Related Stories

More than 1.5 million people are incarcerated in 1,800 prisons in the United States. That’s roughly 700 times the number of prisoners as in 1970. Harsh sentencing laws in the 1980s helped fuel this growth, leading to the construction of hundreds of correctional facilities and the establishment of the private-prison industry—often an economic boon to the struggling towns that received them.

That was certainly the case with Galesburg, the Illinois town where Tourlentes grew up. It had largely opposed the construction of the Hill Correctional Center until the mid-’80s, when two major sources of employment—a boat engine factory and the Galesburg State Research Hospital, which Tourlentes’ father directed—shut down. “We needed those 400 jobs,” then-mayor Fred Kimble told a reporter.

Tourlentes photographed the Hill Correctional Center while visiting his hometown in 1996. “The light given off by the prison had changed the landscape I had been familiar with,” he says. He hadn’t planned on documenting other prisons, but something about that first image haunted him. He started reading up on mass incarceration and the racial and social inequities it exposes. “It kept coming back to me, bothering me, sort of saying, ‘Pay attention to this,'” he says. “I became obsessed.”

That obsession fueled an extended, ongoing road trip. For two decades, Tourlentes traveled thousands of miles across 48 states by rental car with nothing but a marked-up atlas and the crackle of college radio for company. He’s visited more than 100 prisons—including notorious facilities like San Quentin State Prison in California, the federal supermax prison in Florence, Colorado, and Sing Sing Prison in New York—always arriving at night to gawk at the glow.

Tourlentes doesn’t step foot inside the prisons—other photographers have already covered that ground. Instead, he keeps his distance, shooting long exposures—anywhere from three to 20 minutes—with a large format camera from nearby roads, fields, and cul-de-sacs. His camera has a way of rousing suspicion and, though he’s rarely on government land, police still occasionally ask him to leave. “When I see them coming, if I can at least get the exposure started, I can sometimes stall them and explain what I’m doing while the picture is being made,” he says.

The perspective is powerful because it draws attention to the space prisons occupy on the peripheries of society. The bright wash of security lights amplifies their presence, bearing witness to the life locked away inside.

Instant Pot Cookbook Review: America's Test Kitchen's Multicooker Perfection Is Sure to Be an Instant Hit

A few years back, in that now-forgotten time before Instant Pots were a thing, I reviewed an electric pressure cooker and struggled mightily with it. It was supposed to be a safe, fast way to speed up cooking and promised to make slow-cooker style dinners appear in a heartbeat. Unfortunately, stovetop pressure cooker cookbooks didn’t really work for their slightly-less-powerful electric counterparts, and this one came with a mini-cookbook with recipes that tended to flop.

Flash forward to last fall when Instant Pot Mania was in full swing and I put the company’s Ultra cooker (a souped up version of their classic Duo) at the top of my Christmas list. Once I popped it out of the box, though, I quickly realized that sub-par manuals and not-so-great included recipes are par for the course.

Multicooker Perfection: Cook It Fast or Cook It Slow—You Decide by America’s Test Kitchen is out on April 17.

America’s Test Kitchen

Turns out that Instant Pot is notorious for this, so much so that it’s rumored to be reworking its manuals. The Instant Pot Community group on Facebook is too much of a jungle for beginners, and while my friend Lylah secured an invitation for me to Facebook’s secret Instant Pot for Indian Cooking group, it was clearly over my head.

While there is a mushrooming number of electric pressure cooker cookbooks out there (many with those awful, mansplainy covers), it’s hard to know which one will allow you to kick the tires and give you the foundation you need to bring this new tool into heavy rotation in your kitchen while making tested, tasty recipes.

Yet here we are with our own electric pressure cookers, or, more precisely, “multicookers” (they also do things like sauté and slow cook), and our excitement to make everything we can in them, and I was still missing the manual I needed.

All that to say that I was excited to see America’s Test Kitchen had a new book in the works.

I am a full-on cookbook devotee and faithful to my favorites: Simon Hopkinson’s Roast Chicken and Other Stories, Cook’s Illustrated’s Best Recipe, and almost any cookbook with Naomi Duguid’s or Julia Child’s name on it. If I were looking for common threads running between them, they would be trusted palates and fail-proof recipes. They may be simple or complicated, but follow them to the letter and you’re guaranteed success.

My short-term goals with the America’s Test Kitchen book were to find similar success making chicken stock, cooking a pot roast at warp speed, whipping up risotto for lunch, and understanding how to quick-cook dried chickpeas, beans, and lentils. From there, I hoped I’d have the hang of it well enough to wing it and pressure cook something adapted from Hugh Acheson’s The Chef and The Slow Cooker.

No Pressure

America’s Test Kitchen’s new Multicooker Perfection spends the first 15 pages of the book both educating users and setting expectations. It should also be pointed out straight off that the Instant Pot Duo is not ATK’s favorite. The fact that it’s “recommended with reservations” is a mighty blow to the hallowed brand. Instead, among the six multicookers reviewed, it’s in fourth place, behind two Fagor models and one by GoWISE USA.

One of the recipes in Multicooker Perfection is for rustic Italian braised short ribs.

America’s Test Kitchen

Everybody breathe. ATK’s big beef with the Duo is that it slow-cooks poorly. In short, the testers found that Instant Pot’s slow cooking temperature is so low that slow cooking becomes extra-slow cooking. In fact, ATK both customizes recipes for the Duo or it just says, “Do not use Instant Pot to slow cook this recipe.” Ouch!

It’s not the main reason you buy a pressure cooker, but slow cooking with a multicooker can be useful as it’s occasionally more practical to let something bubble away all day than to have to be around at the end of a short cook to let off the pressure.

Knowing this, I read all of those 15 first pages in Multicooker, picked out a few tasty-sounding recipes and started making tortilla soup. I sautéed tomatoes, onions, and garlic, added broth, whole chicken thighs, sealed the lid and set the pressure cooker function for five minutes.

Wait, what? Five minutes from onions to almost-done soup? Holy cow! All is forgiven!

It’s not quite that quick—multicooker users know that the countdown doesn’t begin until the unit is pressurized, which can be a couple minutes for meals without much liquid in there, or a while longer if you’re waiting for six cups of broth to heat up enough to build the pressure.

No matter. After those five minutes were up, I let the pressure out, shredded the thigh meat and put it back in the pot, sprinkling Cotija cheese and cilantro over my bowl, then adding a dollop of sour cream and a squeeze of lime. Along with some toasted tortillas, it made for a fantastic dinner.

I switched gears for the next meal, this time opting to understand the fuss around pressure cooker mac and cheese. The key here is that it’s not a quantum leap forward in macaroni technology, but it’s a dinner that allows you to dump uncooked pasta in cold water with some mustard powder and cayenne and hit start. After five minutes under pressure you stir in evaporated milk, cheddar, and Monterey Jack cheese, make sure the pasta is al dente, and Bob’s your uncle.

The more I cooked, the more I learned. Two keys I figured out were to get all the prep done ahead of time, and read the recipe all the way through before you do anything. Yes, you should do both of these anyway, but they’re more urgent with the pressure cooker. Things often move quickly from one step to the next in pressure cooker recipes, so it was particularly necessary to have everything ready for something like the Thai-braised eggplant, where you sauté several ingredients then add 1/2 cup of broth, which halts the browning and provides the liquid to make the steam and build pressure. If that half-cup isn’t measured out, you could end up with a scorching problem.

Cooking through these recipes also taught me what to watch out for and the limitations of multicookers. I learned to make extra sure to scrape all of the flavorful fond of of the bottom of the pot after sautéing or browning food, especially if it was a dish with a thicker sauce, otherwise I’d get an unwanted “burn” message on the Ultra’s screen during the pressure cycle.

Speaking of searing, temper your expectations. My Ultra, which has the same searing capability as the Duo, left me wanting more. It could capably sauté onions but browning something like chicken legs was slow enough that I asked the manufacturer to ship me another Ultra just to make sure it wasn’t just mine. Unfortunately, it wasn’t.

This isn’t just an Instant Pot problem. America’s Test Kitchen points out that some cookers have low, medium, and high sauté functions, while others have a “brown” option, and that you should use the hottest one. Regardless, an ATK spokesperson told me that “once you take that into account, the models all perform about the same.”

Now I know two things: it’s not my fault—yay!—and for a nice sear without a lot of waiting, I’ll use a skillet on my stove and transfer the browned food to the pot when it’s done.

I plowed on, picking up the pace, gaining confidence, and even riffing a bit. I made a pot roast from ATK’s 2013 Pressure Cooker Perfection, which hit the market before stovetop pressure cookers had been overtaken by the electric models. Since stovetop pressure cookers can build up a bit more pressure, they cook faster, so I cross-referenced what I was doing with Multicooker Perfection and it worked out very well. I also made Multicooker‘s chicken broth recipe, a classic of the pressure cooker genre, as it’s fast, flavorful and done in an hour. One very nice touch? After browning chicken wings and onions, the 12 cups of water that the recipe called for brought it right up to my six-quart pot’s fill line for pressure cooking.

Risotto was next, another pressure cooker classic since there’s no need for constant stirring. In fact, it goes so quickly that you can have the whole yummy shebang on the table in half an hour.

Instant Hit

My only quibble with Pressure Cooker Perfection is the curious omission of short sections for rice and grains, beans, and cuts of meat or vegetables cooked on their own. These were right up front in Pressure Cooker Perfection, and having that reference is a invaluable, especially for weeknight dinners.

Still, I’d run through enough recipes in the book that I felt comfortable enough to start spreading my wings. I had other recipes and cookbooks I wanted to explore, like the tamarind baby back ribs in Melissa Clark’s Dinner in an Instant. I also wanted to cross reference recipes in The Chef and The Slow Cooker, using the timing for similar food done in Multicooker.

You might find another book that does a great job getting you up to speed. For me, after making a host of recipes in ATK’s new book, the wilds of pressure cooking didn’t seem so wild anymore. I’d built the foundation I needed and was ready for more. So ready, in fact, that I logged into the secret Instant Pot for Indian Cooking group and looked up a recipe for dal makhani.

Food writer Joe Ray (@joe_diner) is a Lowell Thomas Travel Journalist of The Year, a restaurant critic, and author of “Sea and Smoke” with chef Blaine Wetzel.


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Luminar's New Lidar Could Dominate the Self-Driving Car Market

Self-driving cars are nearly ready for primetime, and so are the laser sensors that help them see the world. Lidar, which builds a 3-D map of a car’s surroundings by firing millions of laser points a second and measuring how long they take to bounce back, has been in development since 2005, when a guy named Dave Hall made one for the Darpa Grand Challenge, an autonomous vehicle contest. In the decade-plus since then, if you wanted a lidar for your self-driving car, Velodyne was your only choice.

Yet Velodyne’s one-time monopoly has eroded in recent years, as dozens of lidar startups came to life, and robocar makers found their own way. Google’s sister company Waymo put years and millions of dollars into developing a proprietary system. General Motors bought a lidar startup called Strobe. Argo AI, which is making a robo-driving system for Ford, acquired one called Princeton Lightwave.

The latest challenger is Luminar, the Silicon Valley-based startup that already has a deal with Toyota, plus three more manufacturers it declines to name. Today, Luminar is announcing the introduction of its newest lidar unit, with a 120-degree field of view (that’s enough to see what’s ahead of the car, but you’d need a couple to get a 360-degree view). And after a first production run of just 100 units, it’s ready to start cranking them out by the thousand—more than enough to meet today’s demand. And maybe, enough to make self-driving cars cheaper for everybody.

“By the end of this year, we’ll have enough capacity to equip pretty much every autonomous test and development vehicle on the road, globally,” says CEO Austin Russell, who dropped out of Stanford in 2012 when he was 17 years old to make Luminar his full-time gig. “This is no longer being built by optics PhDs in a handcrafted process. This is a proper automotive serial product.”

In its 136,000 square foot facility in Orlando (an optics industry hub), the company has dropped the build time for a single unit from about a day, to eight minutes. In the past year, it has doubled its staff, to about 350. It hired Motorola product guru Jason Wojack to head its hardware team. Alejandro Garcia came over from major auto industry supplier Harman to run manufacturing.

Luminar is playing catch up here. Last year, Velodyne opened a “megafactory” to ramp up production and built 10,000 laser sensors. President Marta Hall says it could build a million a year if it wanted to. But the ability to build lots of lidars isn’t enough to win here.

Lidar is a fantastic sensor—it’s more precise than radar and works in more conditions than cameras do—but it’s way too expensive. Velodyne’s top shelf unit, which sees in 360 degrees with a 300-meter range, costs about $75,000 a piece. Buying in bulk will drop that cost, but that’s still a hard price tag to bear, even on a fleet vehicle that can amortize costs over years of service.

At its Orlando production facility, Luminar can now make a lidar unit in about eight minutes—it used to take a day.

Luminar

Luminar made the cost question harder by making its lidar’s receiver (the that acts like your eye’s retina) out of indium gallium arsenide (InGaAs) instead of silicon. Why is this important? Well, to make your lidar “see” farther, you have to fire more powerful pulses of light. They have to be powerful so they have the strength to hit faraway objects and make it all the way back. Most lidars use lasers at the 905 nanometer wavelength. That’s invisible to humans. But if it hits an actual eyeball, like yours, with enough power, it can damage the retina. If you want to fire more powerful pulses (and have your lidar “see” farther) without blinding actual people, you can use the 1550 nanometer wavelength, which is further into the infrared part of the spectrum, and thus can’t penetrate a human eyeball.

Which brings us back to silicon. Receivers made of silicon, which is cheap, can’t detect light at the 1550 wavelength. InGaAs can, but it’s far more expensive. So the industry standard is to use silicon, run at 905 nanometers, and accept you just can’t send your lasers all that far.

But Russell insisted on the extra power, which meant 1550 nanometers, which meant using a receiver made of InGaAs. As a result, he can fire pulses 40 times more powerful than what his competitors shoot, so his lidar can see objects extremely dark objects—like, the kind that can absorb 95 percent of light—even from 250 meters away. He says no one’s lidar can see so well at such distance.

But seriously, InGaAs, as the French say, coute la peus des fesses*. A receiver array about the size of a big potato chip can cost tens of thousands of dollars, Russell says. So Luminar built its own. The result, now in its seventh iteration, is about the size of a strawberry seed. (The entire unit, including the laser and accompanying electronics, is about half a foot square and three inches deep.) That includes the chip that calculates, down to the second, how long the photon has been out in the world. It costs a piddling $3, obliterating Luminar’s cost concerns while allowing for that extra range and resolution. Russell wouldn’t reveal an exact price for the lidar as a whole, but says his customers are quite pleased. And when they’re finally ready to start offering you rides in their robo-taxis, maybe they won’t have to charge you as much for that trip home from the bar.

Luminar’s R&D team also managed to increase the “dynamic range” of the receiver. Just like how your pupils dilate based on light conditions, lidar receivers are tuned to pick up pulses of a certain strength (the farther a photon goes before bouncing back, the weaker it becomes). If you set it to look for faint signals and it gets hit by a much stronger pulse, you can fry the receiver. “We have countless blown-up detectors,” Russell says. The current unit can handle a much greater range of pulse strengths, without even a wisp of smoke.

Meanwhile, Luminar’s already working on the next generation sensor. That one, Russell says, will be affordable enough to put in consumer cars—making the gift of sight little more than a commodity.


Rolling Toward Ready

China's SenseTime valued at $4.5 billion after Alibaba-led funding: sources

HONG KONG (Reuters) – Chinese facial recognition technology developer SenseTime Group Ltd has tripled its worth in less than a year after a funding round, led by Alibaba Group Holding Ltd, valued it at about $4.5 billion, people with knowledge of the matter said.

FILE PHOTO: SenseTime surveillance software identifying details about people and vehicles runs as a demonstration at the company’s office in Beijing, China, October 11, 2017. REUTERS/Thomas Peter/File Photo

The fundraising comes during a government push to make China an international leader in artificial intelligence (AI) by 2025, by which time it aims to grow core AI industries’ value to 400 billion yuan ($63.33 billion).

SenseTime raised $600 million in its series-C funding round having attracted investors including Chinese e-commerce company Suning.Com Co Ltd and Singapore state fund Temasek Holdings (Private) Ltd [TEM.UL], it said in a statement on Monday.

The company did not disclose its valuation, but said it is now the world’s most valuable AI platform. It also said it set a world record for the amount raised in a single funding round by an AI firm.

SenseTime was valued at $1.5 billion in July after it raised $410 million in its series-B funding round, led by China’s CDH Investments and state-backed fund Sailing Capital.

The two people who disclosed the current valuation declined to be identified as the matter was private. A SenseTime spokeswoman declined to comment on the valuation as the firm has moved into the series-C+ round of fundraising.

Dual-based in Beijing and Hong Kong, SenseTime develops applications for facial recognition, video analysis and other areas including autonomous driving. Existing investors include U.S. chipmaker Qualcomm Inc.

It is enjoying fast growth as both the private and public sectors upgrade to advanced technologies. It is engaged in as many as 14 sectors, and lists various police departments across China as major clients.

Alibaba Executive Vice Chairman Joe Tsai said in the statement, “We are especially impressed by their R&D capabilities in deep learning and visual computing. Our business at Alibaba is already seeing tangible benefits from our investments in AI and we are committed to further investment.”

Reporting by Sijia Jiang and Julie ZhuEditing by Christopher Cushing

S&P 500 Weekly Update: The Bull Market Is Over? Think Again

Things done well and with a care, exempt themselves from fear.

…… William Shakespeare

According to the pundits, the big story of the day this past week was the S&P closing below the 200 day moving average The streak of 442 days is over. When an index’s price crosses below its 200-day moving average, it is generally thought to have “broken” its long-term uptrend. This is considered a negative trading pattern, some technicians would tell you it’s a sell signal. History shows that this typical knee jerk reaction isn’t the way to proceed.

What we do know, is that past breaks below the 200 day moving average for the S&P 500 after long periods above it have not necessarily been bearish. As shown in the table below, one week returns after these breaks are somewhat weak, but after that the market normally bounces back.

Source: Bespoke

Contrary to popular belief, when the index closes below this level, it does not mean the long term trend has ended. The August 2015, and the January/February 2016 time frame saw the S&P seesaw below, then back above the support level numerous times. The bull market remained in place. This latest breach of the 200 day moving average lasted one day. That doesn’t mean the index can’t go back and retest that level once again, but the quick retake of that support is a positive.

I also take that sign along with the intraday reversal on Wednesday as more evidence to support the idea that we are likely getting closer to the end, or at least through the worst of the bottoming process that has been in place. No, this isn’t the beginning of a bear market.

We find ourselves in a negative feedback loop now. One issue after another is highlighted, then regurgitated. If anyone is wondering why they feel like a punching bag these days watching the markets, here is an observation that explains why. Jack Bogle the legendary founder of Vanguard, says this is the most volatility he has seen in the markets during his 66 years in the business. That is saying something. He then goes on to say, its all “noise” related.

U S economy.jpg

Economy

U.S. construction spending increased 0.1% in February versus the unchanged reading from January, while December was revised sharply higher to 1.6% (doubling the prior 0.8% gain). Spending on residential projected edged up 0.1% from 0.1% (revised from 0.2%, with December boosted to 1.5% from -0.5%). Nonresidential spending was up 0.1% too, from -0.1% (December was nudged down to 1.7% from 1.8%).

March ISM Manufacturing Index is on target as it comes in at 59.3 vs. consensus of 60.0.

ISM non-manufacturing index fell 0.7 points to 58.8 in March after slipping 0.4 points to 59.5 in February. These are down from the 59.9 reading in January which was a 12-year high.

Markit manufacturing PMI rose 0.3 points to 55.6 for the final March reading, versus the 55.3 in February. Highest reading since March 2015.

Chris Williamson, Chief Business Economist at IHS Markit;

“US factories reported a strong end to the first quarter, with the PMI advancing to a three-year high. The goods producing sector should therefore make a positive contribution to economic growth in the first quarter, as rising demand fueled further improvements in factory production. Optimism about the year ahead has meanwhile also risen to its highest for three years, generating yet another solid payroll gain and suggesting strong growth momentum will be sustained in the second quarter. Companies cited rising demand at home and abroad plus recent government policy announcements as helping shore up confidence in terms of their future production levels.”

Markit final services PMI dropped 1.9 points to 54 after rising 2.6 points to 55.9 in February, and compares to the 54.1 in the preliminary March print. Nevertheless, the index continues to point to a strong expansion in the service sector as it’s not far from the 56.0 print from August, which was the highest going back to November 2015. The index was 52.8 last year.

U.S. Factory orders increased 1.2% in February, largely erasing the 1.3% January drop. Durable goods orders were revised down slightly to a 3.0% gain from the 3.1% jump in the Advance report. Transportation orders climbed 7% after the 9.8% January decline (revised from -10.0%).

Liz Ann Sonders posted this graphic during the week. It shows GDP rebounding from the first quarter to the second quarter during this recovery.

Source: Factset, Federal Reserve Bank of Atlanta

Jobs.gif

March non farm payrolls increased 103k, with earnings up 0.3% and the unemployment rate at 4.1%. The 313k February jobs surge was revised higher to 326k, but January’s 239k knocked down to 176k for a net 50k decline. Analysts were “disappointed”. They shouldn’t be, Job growth was a paltry 73k back in March of last year.

U.S. vehicle sales totaled 17.48 M in March on an annualized basis, according to seasonally adjusted numbers, compared to 17.08 M in February. This report surprised analysts, and might be another indication that consumers are in good financial shape.

Housing.jpg

Cyclical housing peaks usually arrive when they reach the 800,000 level, The recent data stands at around a 500,000 pace, so there is plenty of runway left for expansion. This adds credibility to my views that the present recovery is not ‘overdue” for a recession. The recent results for one of the nation’s largest home builders, Lennar (LEN) seems to confirm that view.

The current Job, Housing and Auto Sales reports do not reflect a slowing economy.

Global Economy.jpg

Global Economy

J.P.Morgan Global Manufacturing PMI now sits at a five month low, coming in at 53.4 in March. The February reading was 54.1.

Eurozone.gif

Eurozone manufacturing PMI came in at 56.6 down from the prior month report of 58.6, an eight month low. Chris Williamson, Chief Business Economist at IHS Markit;

“March saw the biggest fall in the manufacturing PMI since June 2011 and the third successive slowing in the pace of expansion. We should not be too worried by the fall in the PMI as some moderation in the pace of growth from the surge seen at the turn of the year was inevitable, not least because short-term capacity constraints limit the economy’s ability to grow so quickly for long periods. This has been clearly evident in the recent lengthening of supply delivery times. Some of the slowdown has also been attributable to temporary factors such as bad weather.”


China.gif

Caixin China General Manufacturing PMI slipped to a four month low with a reading of 51, down form the February reading of 51.6. Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group;

“The Caixin China General Manufacturing PMI fell to 51.0 in March. The sub-indices of output and employment both fell from the previous month, while new orders increased at a slightly slower rate, highlighting that the deceleration in the manufacturing sector was mainly driven by the supply side and that demand has remained relatively stable. Output prices rose at a faster pace in March than in the previous month while the increase in input costs weakened markedly, which will help shore up manufacturers’ profits.”

Caixin China General Services PMI also fell from the February reading of 54.2 to 52.3 in March. Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group;

“ Both new business and employment grew at a slower rate last month, pointing to cooling demand. However, the ability of service providers to make a profit improved as input costs increased at a weaker pace while output prices edged up. The sub-index gauging service company’s expectations towards business activity over the next 12 months declined to the lowest reading since September, suggesting that weakening demand has affected firm’s confidence.”

“The headline Caixin China Composite PMI dropped to 51.8 in March, the lowest reading in four months but remaining in expansionary territory. The slowdown of output growth in the services sector was faster than that in the manufacturing industry. The increase in input costs slowed while that in output prices picked up, improving chances for companies to gain a profit. Overall, the growth momentum of the Chinese economy weakened in March.”

Japan.gif

Nikkei Japan Manufacturing PMI showed to a reading of 53.1 in March down from the february report of 54.1.Joe Hayes, Economist at IHS Markit;

“Latest survey data presented a second successive decline in the Manufacturing PMI for Japan. That said, the overall picture remains upbeat. The reading of 53.1 still indicates a fairly solid pace of improvement in business conditions. Moreover, the average across Q1 is consistent with a robust growth rate and bodes well for official data. On a further positive note, new orders have now expanded in each of the last 18 survey months. This sustained upturn in demand has appeared to impact supply chains, with delivery times slowing to the sharpest extent since the aftermath of the 2011 earthquake. This could create headwinds for the manufacturing economy if further capacity pressures begin to impact production capabilities.”

Nikkei Japan Services PMI declined to 50.9 in March from 51.7 in February, a 17 month low. Joe Hayes, Economist at IHS Markit, which compiles the survey;

“The Japanese service sector lost further momentum during March, with overall business activity growing at the weakest pace since October 2016. New order receipts rose, albeit only slightly and at the softest rate in a year-and-a-half. That said, despite PMI data signalling disappointing output and demand conditions, prospects appear upbeat. Incoming new business has grown for 20 successive survey periods, and firms expect this trend to continue, as indicated by a solid degree of optimism towards future activity. This sustained upturn in demand led to capacity pressures however, with backlogs of work rising for a third month running. In turn, recruitment picked up, further suggesting confidence among firms that new sales will continue to be secured over the coming months.”


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Canadian Manufacturing remained steady at 55.7 , up slightly from the 55.6 reading in the prior month.

Clearly the global data has leveled off in the last 3- 4 months. The growth spurt and trajectory that we saw in the latter half of last year was unsustainable. I believe the stock market has recognized that and this is a contributing factor to the overall market weakness lately. This should come as no surprise, I spoke to this very situation when I published my outlook for 2018;

“One issue that could help answer how long we might expect the fundamental data to provide support to the equity market is perception. How the investment community perceives the economic data going forward. There exists a possibility that the Macro data will under perform expectations. Why? Positive data is now the norm, it is expected. Some of the recent reports have indices at multi year highs, at some point there has to be a leveling off.

“When that does take place, it could also usher in a pause in the uptrend. The key will be to watch and see if a pause is just that, or the leading edge of a more serious issue, a downturn in growth. I always advise anyone to forget about trying to position for something like that; it can turn out to be a huge mistake. Watch, wait, then act.”

I see no reason to overreact now. Of the 30 countries which Markit reports a manufacturing PMI for, 21 declined month over month. However, let’s not jump to conclusions. It is important to keep in mind that 90% (27) of the PMI’s are above 50; in other words, the level of activity is rising almost everywhere. It’s also worth noting that only 12 of 30 Manufacturing PMI’s are down versus a year ago. So while PMI’s are starting to move lower from recent highs, they’re still indicating a relatively healthy global economy. That’s evidenced by an average reading for all 30 countries above 53. Remember any reading above 50 is considered expansionary.


Earnings Observations and Valuations

The chart posted below shows five sectors in the S&P 500 Index are trading with PEG ratios below 1.0, even the S&P 500 Index itself has a PEG less than 1.0. In July of last year, only one sector had a PEG ratio less than 1.0 and that was the Energy sector.

Ok, so the PEG ratio is not the “be all and end all’ measure, but it does provide a quick and dirty yardstick for identifying potentially under or overvalued securities. When only looking at earnings growth, vis-à-vis valuations or the P/E ratio, stocks broadly appear more attractive today than they did as recently as mid year last year. I also have noted the S&P forward P/E multiple has fallen to its lowest point since Brexit.

Factset Research weekly update;

  • Earnings Growth: For Q1 2018, the estimated earnings growth rate for the S&P 500 is 17.1%. If 17.1% is the actual growth rate for the quarter, it will mark the highest earnings growth since Q1 2011 (19.5%).

  • The estimated year-over-year revenue growth rate for Q1 2018 is 7.3%. All eleven sectors are expected to report year-over-year growth in revenues. Three sectors are predicted to report double-digit growth in revenues: Materials, Energy, and Information Technology.

  • Valuation: The forward 12-month P/E ratio for the S&P 500 is 16.5. This P/E ratio is above the 5-year average (16.1) and above the 10-year average (14.3).

  • Of the 105 companies that have issued EPS guidance for the first quarter, 52 have issued negative EPS guidance and 53 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 50%, which is well below the 5-year average of 74%. If 53 is the final number of companies issuing positive EPS guidance for the first quarter, it will mark the highest number of S&P 500 companies issuing positive EPS guidance for a quarter since FactSet began tracking EPS guidance in Q2 2006.

  • The number of companies issuing positive EPS guidance in the Information Technology sector for Q1 2018 is 26, which is well above the 5-year average (11) for the sector.

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The Political Scene

Stock traders woke up on Wednesday, read the headlines and hit the sell button. The U.S. announced plans for new tariffs on Chinese goods was met with a swift response from China as they announced tariffs of their own. These trade proposals may be opening salvos and are generally seen as leading to negotiations at some point. Well, that one way to look at it , the other way is to act, then put some thought into what you just did.

Friday saw a repeat of that action when it was announced that the U.S was going to look into another 100 billion in tariffs on China. That was the headline, here is the message.

Source: Chris Ciovacco

It’s always better to see the message and take in some of the details before acting. As an example, Bloomberg columnists David Fickling and Shuli Ren:

Boeing planes largely excluded from China’s tariffs.

“Details of China’s latest list of countervailing duties suggest a more moderate approach than at first glance. The duties on aircraft exclude all planes with an operating empty weight above 45 metric tons, a provision that “looks to spare every aircraft that matters”

Perhaps its better to quantify what the ENTIRE tariff situation means before making any portfolio decisions. You might be surprised what you are going to find. I suggest it will be more of what you just read regarding the Boeing situation.

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The Fed and Interest Rates

Ryan Detrick, Senior Market Strategist;

“One of the bigger conundrums we have seen during this recent cycle of higher rates is how both stocks and rates can trend higher at the same time. As we illustrated in a recent Weekly Market Commentary, bond yields and stocks tend to trade together until the 10-year Treasury yield gets up around 5%. Going back to the early 1960s shows that when the 10-year Treasury yield goes higher, stocks tend to follow along. In fact, out of 23 periods of rising rates, the S&P 500 Index gained 19 of those times. Things were even more pronounced recently. Since 1996, stocks gained all 11 times we saw higher rates.”

Cut and paste that, keep it near your keyboard the next time you hear someone tell you it’s time to lighten up on stocks because of rising interest rates.

I will now add, the current period of higher rates began in September 2017 and the S&P 500 is up another 11% since then. History suggests higher rates may be a good thing and should the 10 year Treasury yield break about the critical 3% area, this could be further support for the bull market.

The Fed made clear that it remains on a gradual course. So as long as core inflation does not pick up, the Fed should not be an issue for stocks. For those obsessed with the 10 year treasury yield, I maintain it is not signaling the end of the bull market.

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Sentiment

A recent post on twitter – April 3rd.

The AAII surveys individual investors on a weekly basis, and this week the bullish sentiment reading took a very small dip to 31.9%. At the same time, the AAII bearish sentiment ticked up very slightly to 36.64%. Given that sentiment readings are generally viewed as contrarian, it’s bullish to see more bears than bulls.

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Crude Oil

Crude Oil inventories saw a decline of 4.6 million barrels in the past week. The report also revealed that Gasoline inventories also dropped by 1.1 million barrels. The price of WTI drifted with the wind. On the days where traders thought the globe was going to stop rotating because of a potential trade war, the price of crude dropped to a fresh two week low in the $62 range. On the other days the price rallied to the $64 range. As long as the earth doesn’t stop revolving on its axis, we may see more consolidation before a run back to $70. WTI closed out the week at $62.05, down $2.86.

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The Technical Picture

We take a look at the daily chart to once again review the bottoming process and a search for a low that is occurring.

Chart courtesy of FreeStockCharts.com

Notice that the index broke the 200 day moving average (pink line) this week. Contrary to popular belief, when the index closes below this level, it does not mean the long term trend has ended. The August 2015, and the January/February 2016 time frame saw the S&P seesaw below, then back above the support level numerous times. The bull market remained in place. Could this time be different? Of course, but the preponderance of evidence, suggests that this time will not be different.

This latest breach of the 200 day moving average lasted one day. A quick retake of that support was a positive development. The index went right back and tested that level (2593) on Friday, and we can’t rule out that a retest of the February lows (2533) might also be in the cards.

It is all about S&P 2553 now, Monday’s S&P low. That is THE area that I will be watching. That level held on the subsequent tests this week. For the bulls its will be important for that “higher” low to hold. First resistance is around the 2700 level. If volatility wasn’t so high I might conclude that we could be caught in a range between the 100 and 200 day moving averages. S&P 2590- 2690. However, 100 point moves on the S&P can be achieved in two days now.

Forget the noise and watch the price action, it is telling us what to do now. The analysts are telling us that the market is saying there will be a trade war, interest rates are ready to spike. I suggest if one really steps back and looks at the price action, the market is telling us something very different. It tells me this is a simple bottoming process, during a corrective period. A period that has come after we saw the S&P increase from 2135 to 2870 in a matter of 15 months.

Ii is always best to keep an open mind. In a time where fear and emotion are calling the market moves, I remain open to the possibility that the February lows may not hold. In that event it could open the door to another 5% move lower. A decline that still would not violate the Long term trend. One day, one week at a time. We watch, assess, then reassess.


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Market Skeptics

Guggenheim is the latest to announce a stock market crash. They join what is now becoming a good sized marching band trumpeting the end of the bull market. Are they all going to be right ?


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Individual Stocks and Sectors

What is going on with Energy stocks? The S&P 500 Energy sector has diverged from the price of oil recently. In general they haven’t performed in line with the price of crude oil. For the year WTI is up 8%, the broad based Select Energy ETF (XLE) is down 7%.

Below is a chart that highlights price trends for the Energy sector (oil stocks) versus oil. Up until the stock market correction started at the end of January, the two were tracking relatively closely. Since the correction, though, oil stock prices have sold off hard and haven’t recovered, while the price of oil has bounced back to the very top end of its 52-week range.

Source: Bespoke


Major explorers and producer’s profits are now in line with what they were when oil was trading for $100 a barrel and more.

Does that mean the beaten down Energy sector is a buy? In select E&P companies with solid balance sheets and strong presence in productive areas here in the U.S., a resounding YES.


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There’s just not much positive news to help balance out the daily onslaught of fear-producing headlines about trade wars and Technology crises, especially since we are still currently in between earnings seasons. That starts to change next week. We see plenty of issues that concern investors, providing fodder for the naysayer arguments. When I look around now, the one issue that has been resolved in favor of more market appreciation is the valuation argument. Ironically anyone putting together a bearish thesis now conveniently forgets to mention this issue. Why? It blows up their narrative, and trumps a lot of their negatives.

I do not believe corporate growth is peaking here. Companies are just at the beginning of loosening purse strings. So on one hand we have issues that might occur, and maybe impact the economy and the stock market. The other hand holds corporate earnings which to date have shown real improvement. They are expected to be very strong. This entire issue was put on the shelf as investors grappled with the “noise” of the day. Now it gets resurfaced. The S&P is trading at P/E multiples of 16 and 15 on 2018 and 2019 forward earnings, respectively.

Economic data here in the U.S. has changed little from the Goldilocks scenario that has supported and maintained this bull market. Furthermore, the U.S. economy is doing better by growing more slowly but with greater stability. It is also has become much more diverse over time which has reduced its dependency on any specific industry.

With all of the headlines about financial Armageddon, the S&P was off 1.3% this week. That recent price action is telling me to remain in the camp that says the risk/reward continues to be to the upside. It has to be understood that will come with frustration and will require patience. The next few months will likely contain multiple “ups and downs”, as volatility remains in place. Each bump will feel like the fundamental backdrop is at risk, and if one looks around they will again realize that the tailwinds still exist.

I will follow the advice of Shakespeare. When we view the situation looking at all of the moving parts, and formulate a plan using common sense and care, that plan is exempt from fear.

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to all of the readers that contribute to this forum to make these articles a better experience for all.

Best of Luck to All !

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article contain my views of the equity market and what positioning is comfortable for me. Of course, it is not suited for everyone, there are far too many variables. Hopefully it sparks ideas, adds some common sense to the intricate investing process, and makes investors feel more calm, putting them in control. The opinions rendered here, are just that – opinions – and along with positions can change at any time. As always I encourage readers to use common sense when it comes to managing any ideas that I decide to share with the community. Nowhere is it implied that any stock should be bought and put away until you die. Periodic reviews are mandatory to adjust to changes in the macro backdrop that will take place over time.

Weighing The Week Ahead: Has The Trump Trade Reached The Tipping Point?

The economic calendar is normal, with an emphasis on inflation data and the Fed. The increased intra-day volatility, often driven by overnight comments in China news or a Presidential tweet, has everyone’s attention. Even Fed punditry will take a back seat. With an increased sense of urgency, many will be wondering:

Has the Trump Trade reached the tipping point?

Last Week Recap

In my last edition of WTWA I asked whether stock prices had veered from the fundamentals. That was a good guess, since the topic was popular in discussions all week.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. I always start my personal review of the week by looking at a great chart. I especially like the version updated each week by Jill Mislinski. She includes a lot of valuable information in a single visual. The full post has even more charts and analysis, so check it out.

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The loss this week was only 1.4%, but the dramatic daily moves made it seem like more. The trading range was 4.8% including 3% in a single day. I summarize actual and implied volatility each week in the Indicator Snapshot.

The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

Feel free to add items that I have missed. Please keep in mind that we are looking for current news, especially from the last week or so. WTWA is not about long-term concerns like debt. These are important, of course, but not our weekly subject unless there has been some major change.

The Good

  • High-frequency indicators, although softening a bit, remain solidly strong. Check out New Deal Democrat’s valuable weekly report.
  • March Auto sales were strong, especially at GM. (Automobilemag).
  • Earnings guidance has been strong, especially in tech. (FactSet).

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  • ADP private payrolls gained 241K, about the same as last month, but beating expectations of 203K.
  • February Factory orders rebounded to a gain of 1.2% from January’s 1.4% decline. This was still a little below expectations.
  • Rail traffic is up 5% year-over-year. (Steven Hansen, GEI). Truck shipments are also improving on a year-over-year basis.
  • Sentiment remains bearish, a contrarian indicator. Bespoke.

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The Bad

  • ISM index for March registered 59.3 declining from the prior 60.8 and missing expectations of 60.0. Scott Grannis takes a deeper look and sees strong numbers.
  • ISM services for March registered 58.8 narrowly missing expectations of 59.
  • Construction spending for February gained only 0.1% v expectations of 0.5%.
  • Initial jobless claims spiked to 242K from last week’s 218K.
  • Nonfarm payroll employment increased by only 102K net jobs, missing expectations of 175K. The prior two months were revised lower by 50K. The Household survey was also weaker than expected, although other metrics were unchanged. James Picerno combines the headline data in this chart:

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The Ugly

An unwanted Korean war? Foreign Affairs explains how it could happen. Secret direct talks suggest that there is some progress in mitigating this threat. The planned summit between President Donald Trump and North Korea leader Kim Jong Un should be watched closely. Stratfor (via GEI) has a deeper look about why the current

The Week Ahead

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.

The Calendar

We have a normal economic calendar, featuring inflation data and the FOMC minutes. The JOLTs report will also contribute to the normal tendency for a focus on the Fed.

Briefing.com has a good U.S. economic calendar for the week (and many other good features which I monitor each day). Here are the main U.S. releases.

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Next Week’s Theme

The economic calendar includes the FOMC minutes, inflation data, and the JOLTs report. All of these are of interest to Fed-watchers. Normally that would be our theme for the week.

Instead, there is a sense of unease among many. Those closely following stocks are observing wild daily swings – as much as 1000 Dow points in slightly over one trading day. The trading swings are not driven by “real” news about earnings or the economy. Instead we get a statement from China affecting futures trading while US markets are closed. Then there are surprise tweets and announcements during the trading day.

When a surprise hits the wire, algorithms apply recent computer learning, human traders react, support and resistance levels are hit, and moves can become larger. My younger blogging colleagues would say, “What the heck (TM OldProf euphemism) is going on?”

For the punditry, the volatility combined with the loss of the early gains for the year has them wondering. I expect many to be asking:

Is this the tipping point for the Trump Trade?

Usually I offer a range of viewpoints in this section. There are certainly many who expect an imminent market decline, and some expect a large one. Others question the underpinnings of the “Trump Trade.”

You can find such viewpoints easily enough. In doing my research this week I was struck by how many colleagues whom I respect shared my current attitude: Solid fundamentals for stocks, but continuing, unsettling threats. Here is a review of some experts and thought leaders.

I can list a number of additional potential negative issues with any single one being a headwind for the equity market: rising interest rates and consequent flattening yield curve, growth in deficit spending out of Washington and more. All but the interest rate factor are mainly political events and I would say business fundamentals and economic fundamentals remain more important variables for the market right now. Given some of the negative factors cited, just maybe the market will climb the proverbial wall of worry.

  • Urban Camel, The Fat Pitch, does a comprehensive summary of indicators, concluding as follows:

In summary, the major macro data so far suggest positive but modest growth. This is consistent with corporate sales growth. SPX sales growth in 2018 is expected to only be about 6-7% (nominal).

Valuations are back their 25 year average. The consensus expects earnings to grow about 18% in 2018 and 10% in 2019. Equity appreciation can therefore be driven by both corporate growth as well as valuation expansion (chart from JPM).

FANG issues are responsible for most of the current correction. Investors typically sell other issues a little lower as well. Seeking Alpha published a note on new FANG futures last fall. The chart of this group is below.

Economic activity continues to be strong. Once the FANG correction is over, I expect markets to rise to new highs.

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  • Eddy Elfenbein notes the decline below the 200-day moving average of the S&P 500. He uses the ratio of the equal-weighted S&P 500 to the cap weighted version as a measure of the opportunity for stock picking. Read the entire post for his typically clear explanation of how the rotation from high-fliers provides opportunity.

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  • Dr. Ed Yardeni sees no slowdown in global economic stats. Check out his thorough review.

As usual, I’ll save my own conclusions for today’s Final Thought.

Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

I have a rule for my investment clients. Think first about your risk. Only then should you consider possible rewards. I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot

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Short-term trading conditions worsened this week. In mildly bearish conditions our trading approaches can still be profitable, but that might not be true for everyone. We continue to monitor the technical health measures on a daily basis. If this indicator goes to fullish bearish, we liquidate trading (not investment) positions. We are not quite at that point, but I have rounded the result to “5.” This is not a forecast that the market will decline. It indicates increased difficulty in trading profitably.

The long-term fundamentals and outlook are little changed. Based upon historical data for this indicator, I have increased the 9-month recession probability to the 18% range. I am monitoring, but not yet especially worried. The long-term technical health is 1.5, but I rounded it up to reflect the change.

The Featured Sources:

Bob Dieli: Business cycle analysis via the “C Score.

RecessionAlert: Strong quantitative indicators for both economic and market analysis.

Brian Gilmartin: All things earnings, for the overall market as well as many individual companies.

Georg Vrba: Business cycle indicator and market timing tools. None of Georg’s indicators signal recession.

Doug Short: Regular updating of an array of indicators. Great charts and analysis.

Insight for Traders

Our discussion of trading ideas has moved to the weekly Stock Exchange post. The coverage is bigger and better than ever. We combine links to trading articles, topical themes, and ideas from our trading models. Each week we explore a topic of current interest, drawing upon trading experts. This week we asked, “Are you a contrarian trend follower?” As usual, we discussed some stock ideas and updated the ratings lists for Felix and Oscar, this week featuring midcap stocks. Blue Harbinger has taken the lead role on this post, using information both from me and from the models. He is doing a great job, presenting a wealth of new ideas and information each week.

While my intent is to focus on traders, long-term investors may also benefit. That was especially true in this week’s post.

Insight for Investors

Investors should have a long-term horizon. They can often exploit trading volatility! I remind investors of this each week, but now is the time to pay attention.

Best of the Week

If I had to pick a single most important source for investors to read this week it would be Scott Grannis’s review of Fed policy, the QE effects, and where things stand now. This misunderstood topic serves to prevent many financial analysts from a clear view of the fundamentals. The charts and explanations can help you avoid this trap.

To this day there are still legions of observers who argue that what the Fed did starting in late 2008 was simply a massive amount of money-printing, a desperate monetary stimulus that was necessary to avoid a depression, and the economy has been running on fumes ever since.

Others, myself included, believe that what the Fed did was not monetary stimulus at all. It was simply a rational response to an unprecedented increase in the public’s demand for money and money equivalents, which in turn was the result of the near-collapse of the global financial system and the worst global recession in modern memory. The world was running very scared, so the demand for safe monetary assets was nearly insatiable. Unfortunately, there were not enough T-bills (the classic monetary safe haven) to go around. By deciding to pay interest on bank reserves, the Fed effectively made bank reserves equivalent to T-bills, and that was exactly what the world wanted: trillions more of safe, default-free, interest-bearing assets, and the Fed had the ability to create bank reserves with abandon if need be.

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Stock Ideas

Chuck Carnevale combines the key elements of interest for many investors: Dividend growth and reasonable valuations. He has 50 (count ‘em) ideas! As usual, the candidates come with a video lesson. You can learn while you earn.

General Motors (NYSE:GM)? Valentum highlights the attractions.

Artificial intelligence stocks? Barron’s has a cover story on this theme.

Personal Finance

Seeking Alpha Senior Editor Gil Weinreich is taking some well-deserved time off, as is Abnormal Returns. Tadas invited a group of financial bloggers to comment on a series of interesting questions. This sparked everyone, including me, to consider some topics we might not have mentioned otherwise. I especially liked the post on what we have learned in the last ten years, but the whole series is valuable.

Final Thoughts

When confronted with an economic threat, it is always wise to consider the worst-case possibility. You can then modify the possible outcomes a bit, changing with the evidence. I have reached the following conclusions:

  • Expected earnings are at attractive levels and growing quickly.
  • The near-term recession odds are very low.
  • The investing alternatives remain relatively unattractive.
  • Market volatility has increased, back to normal historic levels or even a little above.
  • The volatility centers on the every-changing trade war story.

What is the worst case from a trade war? Estimates suggest it would lower world GDP growth from about 3.5% to 2.5% in China and the US – a reasonable level, but not the fuel for a big rally in stocks.

Since none of the US or China proposals will take effect for two months, there is plenty of time to negotiate and modify positions. On the US side there is evidence that this is already happening with close allies.

But there is a reason for additional worry – the loss of business confidence. And also, the question about how much earnings growth is already anticipated. (Brian Gilmartin).

One can be more philosophical about the worst case when it is happening to someone else!

The loss of confidence for expansion and investment could be more of a tipping point than the trade war itself. This earnings season is important beyond the numbers. What will companies say about trade effects on their future plans?

I’m more worried about:

  • Escalating trade rhetoric. This issue rises and falls on the worry list with greater and greater frequency.
  • Trader frustration. It is not so much the higher volatility, but the causes. Market participants always have surprises from Washington, but usually it is possible to follow the issues. That reduces the chance of being caught “offsides.”

I’m less worried about:

  • North Korea. There are signs of some real progress.
  • The Fed. There is no reason to expect accelerated action that would worry markets.

[Do the economic challenges seem complicated and threatening? You might find help in my paper on getting back in the market, the top investor pitfalls, or my suggestions about managing risk. Just write for our free information on these topics. While they describe what I am doing, the do-it-yourself investor can apply the same principles. These are available for free from main at newarc dot com].

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Feds Seize Backpage.com, Site Linked to Sex Trafficking

Federal and state authorities Friday seized Backpage.com, an online classifieds site frequently accused of facilitating sex trafficking, and reportedly indicted seven people. A notice on Backpage’s website said the site had been seized by the FBI and other agencies.

Nicole Navas Oxman, a spokesperson for the Department of Justice, said Friday afternoon that the agency would issue a press release after charges are unsealed, but things did not go as expected. “The Court has ruled that the case remains sealed and we have nothing to report today,” she wrote in an email Friday evening.

The banner states that the enforcement action was a collaborative effort between the FBI, US Postal Inspection Service, the criminal division of the IRS, the Department of Justice’s child exploitation and obscenity division, as well as attorneys general from Arizona, California, and Texas.

CBS News reported that an indictment had been unsealed against seven people allegedly involved in running Backpage, containing 93 criminal counts including money laundering and running a website to facilitate prostitution. The indictment, which was filed in Arizona where Backpage is maintained, names 17 victims, both adults and children, who were allegedly trafficked, according to CBS News.

On Friday morning, the FBI raided the home of Backpage cofounder Michael Lacey, and there was some activity at the home of cofounder Jim Larkin as well, according to the The Republic, a newspaper in Arizona. A year ago, the paper reported that a federal grand jury had been convened in Arizona to hear evidence against Backpage.

The move against Backpage came just days before President Trump is expected to sign a new anti-sex-trafficking bill that passed both houses of Congress with overwhelming support. The bill initially was controversial because it alters a key internet law that protects tech companies from liability for user-generated content on their platforms.

Previous criminal and civil charges against Backpage had mostly been derailed by that law, the Communications Decency Act. The bill Trump is expected to sign creates an exception for sites that “knowingly” facilitate or support online sex trafficking and explicitly grants states and victims the right to bring criminal and civil action against websites like Backpage. The bill faced opposition from tech companies, free speech advocates, and sex workers, and has already prompted online forums like Craigslist’s personal section and Reddit sections like Escorts and Sugar Daddies to shut down, rather than risk liability. Advocates for sex workers say the closures will endanger those workers, who relied on the sites to share bad date lists and verify clients.

It’s unclear why the federal agencies acted now. The Communications Decency Act did not apply to federal law enforcement agencies, said Eric Goldman, a law professor at Santa Clara University who testified against the recently passed bill. “The question is why today and why not two weeks ago before the Senate voted?” Goldman said. “The DOJ can’t turn on or off a federal prosecution on a dime, so that seems unlikely, but still the timing is so perplexing.” On Twitter, Goldman said, “It’s almost as if the government is trying to prove that all the anti-Backpage rhetoric fueling #SESTA & #FOSTA was just political theater.” (SESTA and FOSTA are acronyms for versions of the anti-sex-trafficking bill.)

Senator Richard Blumenthal (D-Conn.), who cosponsored the bill, called the DOJ’s action to shut down Backpage “long overdue.”

A January 2017 Senate report accused Backpage of facilitating online sex trafficking by stripping words like “lolita,” “little girl,” and “amber alert” from ads in order to hide illegal activity before publishing the ad, as well as coaching customers on how to post “clean” ads for illegal transactions. Judges in California and Massachusetts previously cited Section 230 in dismissing cases against Backpage.

Still, some sex workers said the seizure could endanger them. “If the people who run Backpage have knowingly harmed people, they deserve to be held accountable, but the most immediate impact of the seizure of an entire website will be felt by independent consensual sex workers,” Liara Roux, a sex worker, political organizer, and adult-media producer and director, wrote to WIRED. “Without safe online advertising, which studies seem to show reduced female homicide rates nationally by 17 percent, sex workers are unable to screen clients based on emails and decide who is safe to see.”

Backpage was invoked frequently in the debate around SESTA and FOSTA. Members of the Senate were particularly moved by testimony from Yvonne Ambrose, whose 16-year-old daughter, Desiree Robinson, was killed after she was repeatedly advertised for sex on Backpage. Last year, Ambrose sued Backpage for facilitating child sex trafficking. The documentary “I Am Jane Doe,” followed families in their quest to hold Backpage accountable.

Berin Szóka, president of TechFreedom, a nonprofit that has received funding from Google, says, the timing of the enforcement shows that the vetting process for the bill was rushed. “The argument for SESTA was a sham all along.”

Free Speech or Human Trafficking?

  • Within days of the bill’s passage, Craigslist, Reddit, and others shut personals forums, as sex workers had feared.
  • The bill could have encourage tech companies to either stop moderating or censor content, opening the door to further attacks on Section 230.
  • The backlash against big tech played a role in the passage of the bill.

Japan's cryptocurrency exchanges face shortage of engineers

TOKYO (Reuters) – When cryptocurrency exchange Coincheck Inc explained how hackers made off with $530 million in digital money, it said part of the problem was beyond its control: Japan’s lack of software engineers.

Ryo Fukuda, a software engineer at Next Currency Inc, a company seeking to launch a cryptocurrency exchange, poses for a photo after an interview with Reuters at the company’s headquarters in Tokyo, Japan, March 30, 2018. REUTERS/Toru Hanai

Coincheck said that no matter how hard it tried, it simply couldn’t hire workers with the skills to seal gaps in security.

“We were aware we didn’t have enough people working on internal checks, management and system risk,” chief executive Koichiro Wada told reporters last month. “We strived to expand using headhunters and agencies, but ended up in this situation.”

Coincheck isn’t alone. Companies across Japan’s booming cryptocurrency industry are scrambling to hire engineers, including cybersecurity experts and specialists in blockchain, the computer code that underpins bitcoin.

Financial regulators are pressing exchanges to tighten security after the Coincheck heist even as a host of companies try to enter the booming market.

The resulting shortage risks blunting Japanese exchanges’ competitive edge as the country’s cryptocurrency industry matures, experts say. And it could leave the industry exposed to more thefts.

“It could put the brakes on everything,” said Alexander Jenner, a headhunter at Computer Futures in Tokyo. “The sector’s growing so quickly, and the better exchanges are surviving. But many of them will fail.”

HIRING TO SURVIVE

There are 32 exchanges operating in Japan. About 100 other companies have approached the watchdog that oversees the sector about applying for a license, a senior Financial Services Agency official told Reuters.

Demand is particularly high for engineers with skills that could help growth, from designing user-friendly interfaces to writing code that helps withdrawals of digital coins, as well as the security expertise needed to better protect consumers.

A man stands near an advertisement of a cryptocurrency exchange in Tokyo, Japan March 30, 2018. REUTERS/Toru Hanai

“The FSA is breathing down necks on security, compliance and risk,” said Mike Kayamori, chief executive of cryptocurrency exchange Quoine. “And if you don’t hire, you won’t be able to survive.”

Japan doesn’t compile data on blockchain or software engineers. In 2016, though, there was a shortfall of more than 15,000 workers in big data and artificial intelligence, which rely on software engineers, according to the Ministry of Economy, Trade and Industry. That number will rise to 50,000 by 2020, the ministry projects.

Headhunters specializing in cryptocurrency and blockchain say the supply of labor can’t keep up with demand. Hiring in the sector accounted for nearly six in ten placements at information technology recruiter Descartes Search in the year to March, company director Pascal Hideki Hamonic said, up from 15 percent a year earlier.

And exchanges are prepared to pay. Many are ramping up salaries and offering guaranteed bonuses to poach engineers from other businesses, two recruiters said. Base pay is up 20 to 30 percent from last year, they said, pushing salaries for engineers with five years’ experience to 11 million yen ($102,720).

“Exchanges are looking for people who can do the creative, thinking work – to create the architecture, not just do basic tasks,” said Mark Pink, founder of topmoneyjobs.com.

MARKET VALUE

One such engineer is Ryo Fukuda. A 21-year-old who taught himself how to code via YouTube, Fukuda in July joined Next Currency, a unit of online content and financial firm DMM.com that is seeking a cryptocurrency exchange license.

“I’d been doing nothing but crypto and my own projects, so I had the experience other engineers and companies couldn’t get,” he told Reuters. “Now the market has really taken off and there’s a shortage of engineers. That was when my value to the market soared.”

Slideshow (2 Images)

Fukuda said he got “many, many offers” before opting for Next Currency, where he develops web applications.

To be sure, Japan isn’t alone in lacking workers like Fukuda. Demand is high across the world, industry insiders say, as exchanges slug it out with financial firms to recruit skilled engineers.

In Hong Kong, for example, a spate of banks and insurance companies are looking at how to put blockchain to use in their own businesses, said Lawrence Ma, president of the Hong Kong Blockchain Society.

But structural factors elsewhere have helped exchanges secure the talent they need.

In Britain, cryptocurrency-related companies said a strong research sector produces enough specialists in fields central to blockchain like cryptography, while an ample supply of international workers also helps.

“The UK has quite a good environment for research, so we were able to pull people from universities,” said Nick Gregory, chief executive of London-based blockchain firm Commerceblock.

Other major cryptocurrency centers like San Francisco and New York have been able to hire from major concentrations of engineers well-versed in blockchain, said Jonathan Underwood of Tokyo cryptocurrency exchange Bitbank Inc.

Complicating matters in Japan is a culturally rigid labor market, where mid-career moves are rare, recruiters and exchanges said.

“The majority of Japanese that do understand blockchain and cryptocurrency already work for companies as lifetime employment, and have never considered the thought of changing jobs,” said Underwood, who is also head dean of Blockchain Daigakko, a firm that trains engineers.

Until that changes, the skills crunch will most likely deepen, recruiters say.

“It’s going to get worse before it gets better,” said Jenner of Computer Futures. “It’s a land grab – whoever comes out ascendant in the next year will win the market.”

Reporting by Thomas Wilson; Additional reporting by Taiga Uranaka in Tokyo and Fanny Potkin in London; Editing by Gerry Doyle

Australia begins privacy investigation into Facebook

SYDNEY (Reuters) – Australia on Thursday said it had begun an investigation to decide whether social media giant Facebook Inc breached its privacy laws, after the company confirmed data from 300,000 Australian users may have been used without authorization.

A 3D-printed Facebook logo is seen in front of displayed stock graph in this illustration photo, March 20, 2018. Picture taken March 20. REUTERS/Dado Ruvic

Personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, Facebook said on Wednesday, exceeding a media estimate of more than 50 million.

In a statement, Australia’s privacy commissioner, Angelene Falk, said her office would “confer with regulatory authorities internationally”, given the global nature of the matter.

A Facebook spokeswoman in Australia said the company would be “fully responsive” to the investigation and had recently updated some privacy settings.

Facebook’s chief executive, Mark Zuckerberg, told reporters during a conference call that he accepted blame for the data leak.

Zuckerberg is due to testify about the matter next week during two U.S. congressional hearings, and the data breach has drawn criticism from lawmakers and regulators around the world.

London-based Cambridge Analytica, which has counted U.S. President Donald Trump’s 2016 campaign among its clients, disputed Facebook’s estimate of affected users.

It said in a tweet on Wednesday that it received no more than 30 million records from a researcher it hired to collect data about people on Facebook.

Australia’s investigation follows comments by New Zealand’s privacy commissioner last week that Facebook had broken laws in that country, a charge the company called disappointing.

Australia’s competition regulator is already investigating whether Facebook and Alphabet Inc’s Google had disrupted the news media to the detriment of publishers and consumers.

Reporting by Tom Westbrook; Editing by Michael Perry and Clarence Fernandez

Smart cities need the cloud—and vice versa

“Smart city” priorities and use cases are all over the place. Nonethless, IDC expects spending to accelerate over the 2016-2021 forecast period, reaching $45.3 billion in 2021.

So, what is a smart city and what does it have to do with cloud computing?  Everything.

Smart cities are cities that have embraced both the internet of things and the cloud technology to do what cities should do better. This includes intelligent traffic and transit management, surveillance such as body cams and GPS locators for police, intelligent water and power usage, and anything else that is automated and uses cloud-based procedural computing, cognitive computing, data retention, and analysis.

The real advantage of using mostly public clouds to create and run smart cities is not the capabilities of the various clouds to host basic compute and storage in support of city automation. It’s the ability to reuse common smart city services across cities, services that will be sold and managed by the public cloud providers.

The fundamental larger role of public cloud providers is to create sets of cloud services that will deliver best practices via services to all cities that want to become smart cities. The public cloud providers will essentially be the vehicle for sharing this technology. And they need cities to help define those services.

The larger piece of the puzzle is cost reduction. There is no real reason to become a smart city unless it’s going to reduce city operations costs, as well as deliver citizen services better than you did before. In other words, it’s not enough to become “smart”; you need to spend tax dollars in more effective ways.

Some cities are now successfully evolving into smart cities, paving the way for other city governments to follow. Of course, this is going to be an evolutionary process, with aspects of automation showing up at different times. After all not much happens fast with city governments.

Related videos: Smart cities

Panera Bread's website leaks customer records: KrebsOnSecurity

(Reuters) – Bakery-cafe chain Panera Bread’s website leaked customer records for at least eight months, cyber security blog KrebsOnSecurity reported on Monday.

The sign on the hood of a delivery truck for Panera Bread Co. is seen in Westminster, Colorado February 11, 2015. REUTERS/Rick Wilking

The blog post here said the data leak included names, email and physical addresses, birthdays and the last four digits of credit card number of “millions” of customers who ordered food online on the company’s website, panerabread.com.

Panera Bread told Reuters the issue was resolved.  

“Our investigation is continuing, but there is no evidence of payment card information nor a large number of records being accessed or retrieved,” Panera Bread’s Chief Information Officer John Meister said in a statement.

Meister also said the company’s investigation into the matter to date indicated that fewer than 10,000 consumers had been potentially affected and it was working to finalize the investigation and take the appropriate next steps.

The St. Louis-based company, which competes with Chipotle Mexican Grill Inc (CMG.N), was acquired by privately owned German conglomerate JAB Holding in 2017.

Reporting by Nivedita Balu and Arjun Panchadar in Bengaluru; Editing by Anil D’Silva and Diane Craft

Asia's cryptocurrency arbitrage boom fizzles, but profits persist

SHANGHAI/SINGAPORE (Reuters) – When China closed its local cryptocurrency exchanges late last year, an underground ecosystem of bitcoin “mules” and peer-to-peer platforms sprung up to allow bitcoin trading to thrive, away from regulators’ watchful eyes.

FILE PHOTO: A token of the virtual currency Bitcoin is seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic/Illustration/File Photo

Li, a Canada-based Chinese banker in his 20s, is one of these underground traders. He buys cryptocurrencies in other markets and sells them at a premium to investors in China, who cannot otherwise get them.

At the height of the frenzied demand for bitcoins in January, when prices of the digital currency were hovering close to $20,000 after a 20-fold jump during 2017, Li and other traders were able to sell bitcoins in China for 30 to 40 percent more than they cost elsewhere.

But in a matter of months, the premium for bitcoins in China has fallen to around 7 percent or less as a flood of bitcoin mules, who physically carry cash across borders for the trades, has swamped the arbitrage business. Cryptocurrency funds and individual computer-assisted traders have also piled into the market.

The boom has eaten away the spreads and shown how fast the galloping cryptocurrency markets can change course.

“The market’s kind of taken a downturn; there is less general appetite in this space,” said John DeCleene, an assistant fund manager running the fintech and cryptocurrency investments at Overseas Chinese Investment Management.

“It is too many players entering this market, but also less of the hype we saw in December-January, when people were paying a 30 percent premium because they expected 10 times gains overnight.”

DeCleene launched a $5 million Singapore-based global fund in November to invest in cryptocurrencies, blockchain-related equities and some exploratory arbitrage trading. He said it has generated a 58 percent return so far.

BITCOIN MULES

Bitcoin arbitrage thrived last year as the cryptocurrency grew more volatile and some governments stepped in with rules to curtail trading.

The simplest geographical arbitrage involved buying bitcoin in unregulated markets such as Thailand, or ones that have legalised bitcoin trading such as Japan, and selling them in banned markets such as South Korea, China or India.

A second form occurred between exchanges, when nimble-footed traders bought cryptocurrencies cheaply on lesser-known exchanges and sold them for a profit on more liquid and widely used platforms.

There were huge price differences to exploit.

In early January, when the price of bitcoin was $17,600 on Bitstamp, the Luxembourg-based digital currency exchange, it was being quoted at 25 million won ($23,630) in South Korea, implying a 34 percent “kimchi premium”.

As China’s ban expanded from an initial prohibition on issuing new cryptocurrency to a shutdown of exchanges, premiums rose and traders quickly found new ways of doing business.

At first, it was limited to closed groups on the popular messaging platform WeChat and meetings at bars, where potential bitcoin buyers could meet sellers.

Then peer-to-peer platforms such as CoinCola, websites belonging to former Chinese exchanges Huobi and OKCoin, and even the retail platform Taobao became hubs for “over-the-counter” (OTC) cryptocurrency trading, conducted outside of formal exchanges and far more difficult for regulators to police.

“The big Chinese traders are all using CoinCola or going direct to each other through other OTC platforms,” like WeChat or AliPay, said Christian Grewell, a professor of business and interactive media arts at NYU in Shanghai who has lectured extensively on cryptocurrencies and blockchain technology.

AliPay is China’s leading online payment platform.

Another option, bank transfers between buyers and sellers, is “almost untraceable”, Grewell added, as it is difficult to prove that a transfer is related to a cryptocurrency transaction.

A trader in her 20s in Shanghai said she buys bitcoins in the United States to sell over the counter in China. On each trip to the U.S., she illegally carries $30,000 to $40,000 in cash, she added.

“Selling and buying bitcoins on those OTC websites is the same as shopping on Taobao,” said the trader.

BIG COMPETITION

Hedge funds that can execute arbitrage trades quickly and at a fraction of the cost are squeezing individual traders, said Ramani Ramachandran, the chief executive of digital exchange Zenprivex.

Peter Kim of KIT Trading, part of Vulpes Investment Management, manages a $10 million cryptocurrency arbitrage operation.

“In the beginning, when there is 30 percent arbitrage, obviously you can travel to Thailand, buy bitcoins, send them to China, Japan, Korea and sell them. That’s easy,” said Kim, who was formerly an options arbitrage trader.

“But that opportunity is not going to last very long. And even though it is not as blatantly there, there are still many ways to profit from it, especially for someone like me who is used to making 3 basis points on a trade,” he added.

The arbitrage funds operate much like retail traders, buying and selling cryptocurrencies simultaneously on two different platforms, but on a much larger scale. That allows them to profit from smaller spreads.

Some retail traders, including Li, have turned to lesser-known cryptocurrencies such as Tether, which bills itself as being pegged to the U.S. dollar.

Tether is popular with Chinese seeking to move their cash discreetly overseas, as it is not volatile. That demand means it trades at a 2.5 percent to 3.5 percent premium in China, although the number was as high as 10 percent in January.

Li said his arbitrage activity nets him about $18,000 a month on a trading volume of about half a million dollars.

Although that is a tidy sum, it is far less than what frantic traders made late last year.

“The easy arbitrage is going to be much less prevalent now than it used to be,” Kim said.

Reporting and writing by Vidya Ranganathan; Additional reporting by Cynthia Kim in SEOUL; Editing by Gerry Doyle

U.S. safety agency criticizes Tesla crash data release

WASHINGTON (Reuters) – The U.S. National Transportation Safety Board said on Sunday it was “unhappy” that electric car maker Tesla Inc (TSLA.O) made public information about the crash of its Model X vehicle on Autopilot that killed the driver last month.

Rescue workers attend the scene where a Tesla electric SUV crashed into a barrier on U.S. Highway 101 in Mountain View, California, March 25, 2018. Picture taken March 25, 2018. KTVU FOX 2/via REUTERS

The agency “needs the cooperation of Tesla to decode the data the vehicle recorded,” NTSB spokesman Chris O’Neil said in a statement. “In each of our investigations involving a Tesla vehicle, Tesla has been extremely cooperative on assisting with the vehicle data.”

“However, the NTSB is unhappy with the release of investigative information by Tesla,” he added.

A Tesla spokesperson declined to comment.

The board’s reaction to Tesla was first reported by the Washington Post Sunday evening.

O’Neil was responding to Tesla’s announcement on Friday that the Tesla Model X involved in the crash had activated its Autopilot system moments before the March 23 mishap.

The driver, 38, died at a nearby hospital shortly after the vehicle hit a concrete highway divider near Mountain View, California. The mishap involved two other vehicles.

“The NTSB is looking into all aspects of this crash including the driver’s previous concerns about the autopilot,” said O’Neil. “We will work to determine the probable cause of the crash and our next update of information about our investigation will likely be when we publish a preliminary report, which generally occurs within a few weeks of completion of field work.”

Last week, the company said that a search of its service records did not “find anything suggesting that the customer ever complained to Tesla about the performance of Autopilot. There was a concern raised once about navigation not working correctly, but Autopilot’s performance is unrelated to navigation.”

In its announcement on Friday, the company said that shortly before the crash, the vehicle’s “Autopilot was engaged with the adaptive cruise control follow-distance set to minimum.”

Autopilot allows drivers to take their hands off the wheel for extended periods under certain conditions. Tesla requires users to agree to keep their hands on the wheel at all times before they can use Autopilot. Users, however, routinely brag they can use the system to drive hands-free.

In its Friday statement, Tesla also said vehicle logs from the accident showed no action had been taken by the driver right before the crash and that he had received earlier warnings to put his hands on the wheel.

The statement did not say why the Autopilot system apparently did not detect the concrete divider.

Reporting by Jonathan Landay. Editing by Damon Darlin and Richard Chang

This New Way of Relieving Your Stress is Literally All the Rage (And Only $35)

Have you ever been so angry that you wanted to smash something? You wouldn’t be alone. Hundreds of people want to do the same. Entrepreneur Donna Alexander capitalized on this trend in 2011 with her novel idea: the anger room (also known as the ‘rage room’).

Anger / Rage Rooms

For a mere $25, you can take a weapon and break as many things as you want. Participants can choose bats, golf clubs, and pipes to destroy dishes, lamps, printers, plates, and other items. Plus, it only usually takes a few minutes.

According to Alexander, most people only last about two or three minutes. She says she offers up to 25 minutes, but that nobody has gone for that long.

The business started out as five-minute sessions for $5 in her garage. The room’s popularity grew thanks to word-of-mouth, and Alexander kept relocating to larger spaces. It’s become a big hit in Dallas, Texas with people who need to vent their frustrations.

Most people have a lot of bottled up stress in their daily lives – terrible bosses, long commutes, faulty technology, student loans, marital problems – the list goes on. Alexander said the service was especially popular during holidays and elections. She made sure to stock the much-requested Donald Trump and Hillary Clinton mannequins (come on, that’s pretty funny…)

However, any civilized adult can’t just throw a temper tantrum in public lest you want to be remembered like Bob Knight. Someone might slam their fist on the desk or hit a wall, but these small acts hardly feel satisfying. Letting loose your inner rage can make a significant difference.

Science Support it, Too

It might seem unhealthy at first, but so is bottling up anger. One meta-analysis of 22 studies and over 6,000 subjects found that repressing emotions led to greater stress and anxiety. Patients who bottled their feelings saw increases in heart rate, blood pressure, and cortisol.

Similarly, couples who argue healthily are likelier to stay together. Spouses who suppress their feelings suffer from a higher mortality rate.

Some psychologists worry that an anger room might reinforce bad habits and that people should seek healthier alternatives such as meditation or exercise. It’s true that smashing objects isn’t as healthy as going for a run, but one can’t deny how useful it is to blow off steam. Just make sure that breaking things isn’t your go-to option every time you feel frustrated.

Pent-up rage isn’t something that can always be resolved rationally. Sometimes you need to let it all out. 

Alexander says she never sees people leave angrier than they came. She says that sometimes people need a safe space to release their emotions without fear of being judged.

So, get out there and go break something. Your brain will thank you for it. 

Facebook Employees Are Reportedly Deleting Controversial Internal Messages

Facebook employees are deleting potentially controversial comments and messages from the company’s internal communications systems, after the leak of a 2016 memo in which Vice President Andrew Bosworth appeared to place growth priorities ahead of public safety concerns.

According to Facebook employees who spoke with the New York Times, staffers are also urging the company to hunt down the leakers who released the Bosworth memo.

If the report is accurate, the deletion of internal communications could have legal implications, including in an ongoing Federal Trade Commission investigation into the company’s data-handling practices. Destruction of internal documents was a partial focus of the FTC’s recent investigation of Volkswagen.

Bosworth’s memo continued catastrophic PR fallout following findings that the Facebook data of as many as 50 million users was wrongly harvested by the election consulting firm Cambridge Analytica. In the memo leaked Thursday, Bosworth wrote that “connecting people” should be the company’s driving goal, even if “it costs someone a life by exposing someone to bullies” or “someone dies in a terrorist attack coordinated on our tools.”

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Facebook executives have defended the memo as merely provocative, and not actually intended to deny Facebook’s responsibility to try to prevent bullying or terrorism. Bosworth issued a statement via Twitter Thursday night saying he “didn’t agree with [the post] even when I wrote it” and cares “deeply about how our product affects people.” He further wrote that “this was one of the most unpopular things I’ve ever written internally and the ensuing debate helped shape our tools for the better.”

While some parts of Bosworth’s message may be defensible as pot-stirring hyperbole, others are more difficult to rationalize. For instance, Bosworth wrote about “questionable contact importing practices.” That phrase shows high-level internal awareness about choices including the collection of detailed call logs from many Facebook users, which reached public attention last week. That news contributed to growing signs that users no longer trust the social network to protect their personal data.

Goldcorp deposits 3,000 ounces of gold in blockchain 'milestone'

TORONTO (Reuters) – Goldcorp Inc made the first gold deposit on Tradewind Markets’ new digitized trading platform, the companies said on Thursday, with 3,000 ounces of bullion from its Red Lake mine complex in Ontario.

As old-school gold trading increasingly moves into the digital era, the deposit represents a “milestone” as the genesis block, or first step in the blockchain on Tradewind’s newly launched VaultChain, the companies said.

“The combination of blockchain and gold is really the first way for investors to directly own gold in a financial instrument with no ongoing administration and storage costs…that eat away at the value of the gold that you own,” Goldcorp vice president, David Stephens, told Reuters.

“We think that can have a big impact on the institutional market for gold investment.”

New York-based Tradewind uses blockchain, a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms, as part of a system tailored to precious metals that securely identifies participants, registers gold and settles transactions.

Financially backed and spun off from U.S. stock exchange operator IEX Group, Tradewind says the current gold market takes too long to settle trades, gives an opaque ownership record and has potential for errors that require manual reconciliation.

Other gold blockchain services for trade and supply chain tracking have been developed, including the recent partnership of California’s Emergent Technology Holdings with Canadian miner Yamana Gold.

Goldcorp said its deposit is the first to use blockchain in the recording and managing of gold in an institution. The Vancouver-based company said it will use VaultChain to directly sell gold to dealers and banks and work with Tradewind to add new services.

“There’s now a base from which gold is digitized and that creates all kinds of opportunities for increases in the usage of gold,” Stephens said. “Anything that gives gold more utility has to be beneficial for the price.”

Tradewind, whose investors include Goldcorp and investment firm Sprott Inc, will store gold at the Royal Canadian Mint.

“We believe that our technology will enable gold producers like Goldcorp to overcome existing limitations and move into the electronic age,” said Tradewind President Matt Trudeau in a statement.

Blockchain is currently used in the diamond industry and planned for cobalt mined in the Democratic Republic of Congo.

Diamonds get digital fingerprints that are tracked by blockchain as gems are sold, providing a forgery-proof record of the gems’ origin.

Reporting by Susan Taylor; Editing by Bernadette Baum

Tesla shares dive again, stung by fatal crash, credit downgrade

NEW YORK (Reuters) – Tesla Inc shares fell sharply again on Wednesday, reeling from a credit downgrade of the electric car maker by Moody’s Investors Service, federal probes of a fatal crash and concerns about Model 3 production.

A Tesla dealership is seen in West Drayton, just outside London, Britain, February 7, 2018. REUTERS/Hannah McKay

Shares tumbled 9 percent, then bounced off the session low to trade at $260.80, down about 6.5 percent. On Tuesday, Tesla tumbled 8.2 percent to its lowest close in almost a year after the U.S. National Transportation Safety Board (NTSB) opened a field investigation into a fatal crash and vehicle fire in California on March 23.

On Wednesday, a second federal regulator, the National Highway Transportation Safety Administration (NHTSA), said it was sending a team to California to investigate the crash.

Late on Tuesday, Moody’s Investors Service downgraded Tesla’s credit rating to B3 from B2, citing “the significant shortfall in the production rate of the company’s Model 3 electric vehicle.” It also noted “liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds.”

Tesla has $230 million in convertible bonds maturing in November 2018 and $920 million in March 2019.

Moody’s said its negative outlook “reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall.”

It said Tesla’s weekly production target is now 2,500 Model 3 vehicles by the end of March, down sharply from its year-earlier target of 5,000 per week by the end of 2017. Tesla’s weekly target for the end of June is 5,000.

Tesla declined to comment on the downgrade. The company plans to provide an update on Model 3 production next week.

Tesla shares have experienced big swings in the past, as worries about losses have vied with enthusiasm for Chief Executive Officer Elon Musk’s ambitious plans.

The selloff has left Tesla’s stock market value at $44 billion, below General Motors Co’s $49 billion. Palo Alto, California-based Tesla has at times had a larger market value than GM, the largest U.S. automaker by vehicle sales.

Since the end of February, the median analyst price target for Tesla has dipped by $10 to $356, about 37 percent higher than Wednesday’s price, according to Thomson Reuters data. Nomura Securities analyst Romit Shah has the highest Tesla price target, $500, or nearly double the current price. All the targets were set before the March 23 crash.

In last week’s accident in which the Tesla struck a highway median, it was unclear if the vehicle’s automated control system called Autopilot was driving, the NTSB and police said.

The 38-year-old driver of the Tesla died at a nearby hospital shortly after the crash.

Late Tuesday, Tesla said in a blog post it does “not yet know what happened in the moments leading up to the crash,” but added that data shows Tesla owners have driven the same stretch of highway with Autopilot engaged “roughly 85,000 times… and there has never been an accident that we know of.” The statement did not say if the crashed vehicle was in Autopilot mode.

Reporting by David Shepardson in Washington and Alexandria Sage and Noel Randewich in San Francisco; Editing by Dan Grebler and David Gregorio

Is GE Now A Good Value?

About a month ago, I talked about 4.00% being the magic number for General Electric (GE) in a number of ways. One of those ways was the annual dividend yield, because the stock’s fall was putting this number in play. Despite a huge market rally on Monday, GE shares actually declined, with the stock less than 75 cents from this key dividend level at the day’s low. Will this be the point at which investors see value from the name again?

Last September, the board declared a $0.24 quarterly dividend, at which point the forward yield was 3.95%. Unfortunately, this became a misleading number for GE because as the stock fell, more and more concerns built up about a dividend cut, so it was hard to use that payout rate to project a yield. Things reset in early December, when the current rate of $0.12 was declared, and the chart below shows how that yield has fared on a closing basis since.

(Data sourced from Yahoo Finance. Last data point on chart is for Monday, March 26th close of $12.90)

With shares hitting a low of $12.73 on Monday, the annual yield was up to 3.77%. As you can see below, even after GE shares bounced a little into Monday’s close, the current yield is well above even the longest dated US Treasury. Looking purely at income potential, GE represents a better play moving forward if you believe the payout remains at its current level.

(Source: cnbc.com)

The odd part about Monday’s decline for the stock was that the market soared, with the Dow up almost 670 points on the day. There wasn’t a major catalyst that sent GE shares lower, outside of the Wall Street Journal worrying a little about about risks left over from the company’s once massive lending business. Even names like Facebook (FB) and Tesla (TSLA) that have seen plenty of negative news recently managed to go positive by the close, something that didn’t happen with GE.

With the stock doing so poorly lately, and nobody sure of what will happen with the business moving forward, it might not be a surprise that JPMorgan slapped a street low $11 price target on the name a few weeks ago. This was based on the notion that normalized free cash flow per share looks to be well below the street consensus, and we’re not even at a trough. On the flip side, there are those arguing for plenty of upside for the beaten down name, with Melius Capital stating that a breakup likely undervalues the business by 25% or more than previously estimated.

The question for investors is does GE now become a value play? Well, that likely depends on what you think of potential earnings. If you think that the street’s projection of $1.06 in 2019 is fair or even low, then a forward P/E a little north of 12 with a dividend yield of 3.7% seems like a decent value at roughly half of the S&P 500’s current trailing P/E ratio. However, if you think the situation will get much worse and earnings per share could fall as low as say 80 cents next year (a bit worse than street low of $0.85), a P/E above 16 currently is a bit harder to stomach in a declining revenue/earnings scenario.

With GE shares hitting another low on Monday despite a tremendous market rally, I’m wondering today at what point investors will consider the name a value. Will it be the 4.00% annual yield that the stock is fast approaching? With a forward P/E in the low teens, the name is certainly not expensive if you think management can get the business going again, but again, a cheap stock can always get cheaper if the situation worsens. Do you see value in General Electric currently? I look forward to your comments below.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.