|Day's Range||0.2000 - 0.3000|
(Bloomberg Opinion) -- American technology products aren’t necessarily American.At least, that’s the conclusion some U.S. executives have come to. That loophole could explain why Micron Technology Inc. and Intel Corp. have resumed shipping to Huawei Technologies Co. after the Trump administration blocked U.S. companies from supplying the Chinese firm and some peers. During an earnings conference call Tuesday, Micron CEO Sanjay Mehrotra said:“To ensure compliance, Micron immediately suspended shipments to Huawei and began a review of Micron products sold to Huawei to determine whether they are subject to the imposed restrictions. Through this review, we determined that we could lawfully resume shipping a subset of current products because they are not subject to export administration regulations and entity list restrictions.”He didn’t elaborate on that “subset,” and noted that there’s ongoing uncertainty. In at least some cases, the U.S. Department of Commerce, which administers the ban, has been consulted about what can and can’t be sold, the New York Times reported. Meanwhile, officials at the Commerce Department and the White House are frustrated that companies have resumed Huawei shipments, Bloomberg reported.If one thing is clear about President Donald Trump’s May 15 Executive Order, it’s that the precise scope of the ban caused confusion throughout the global technology supply chain. Simple labels like “Made in the U.S.A.” aren’t so straightforward when you consider that a product’s conception, assembly and packaging can crisscross multiple borders. This reality complicates the president’s assault on foreign companies, and should serve as a warning that broad-stroke measures against Chinese firms can backfire on the U.S. At the same time, the very interconnected nature of manufacturing could wind up helping companies skirt restrictions. Consider Micron. According to its annual report, “a significant portion of our facilities are located outside the United States, including Taiwan, Singapore, Japan, and China.”That’s an understatement. Only 22% of its property, plants and equipment are in U.S. A third is in Taiwan, followed by 30% in Singapore. Less than 2% is in China. In other words, most of Micron’s product isn’t made in America. That might exempt a good portion of its product from Trump’s ban.The Commerce Department last week added another five Chinese companies to its Entity List. As this lineup grows, so too does the tally of missed revenue opportunities for U.S. companies.That makes the profits from finding clauses and exceptions to the ban even more enticing – because while executives hate uncertainty, they love loopholes. I can just imagine teams of lawyers throughout the U.S. poring over regulations and product lists searching for exploits in the same way hackers hunt for security vulnerabilities.Over time, companies weighing the risks and returns may opt to go ahead and ship to China, reasoning that any possible punishment from the U.S. government will pale in comparison to the revenue potential. Fines could end up being just a tax on business, in the same way that banking and environmental regulations are often flouted because complying is more costly than the penalties.In such cases, expect technology companies to realize that it’s a better deal to sell to China than not. And we all know that Trump loves a good deal.To contact the author of this story: Tim Culpan at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- If you’re reluctant to believe the latest round of media claims that alien spacecraft are lurking around our airspace and surprising Navy pilots, well, you are not alone.The New York Times leaned toward aliens as the reason Navy pilots have seen unexplained flying objects, and the Washington Post made a similar case in its news coverage followed by a guest editorial: “UFOs exist and everyone needs to adjust to that fact.” Others followed suit. Congress is getting classified briefings.But the pro-extraterrestrial visitation arguments rest on two serious errors. One is the confusion of observations with interpretations, and the other is a slight twist on an error called god of the gaps. The UFO sightings should be investigated in a scientific way, but the errors are undermining the effort.The first error made in most of the news coverage was to claim that Navy pilots observed craft that accelerated, rose upwards or turned faster than was physically possible. But pilots can’t know any object’s speed or acceleration without knowing whether these were little things, seen close up, or bigger things, that were farther away. It’s just one clue that the vocabulary is being blurred.James Oberg, a former NASA engineer turned space journalist, pointed out: “The bizarre events reported by Navy pilots are not ‘observations’; they are interpretations of what the raw observations might mean.” To start an investigation from a conclusion rather than from data is, he says, “a recipe for confusion and frustration and dead-ended detours.”(1)The other error cropped up many times when I wrote newspaper stories about evolution. Readers would sometimes write in to argue that if scientists couldn’t completely explain some phenomenon – say, the origin of DNA – then it must be an act of God. Theologians sometimes use the term “god of the gaps” to describe the erroneous use of supernatural explanations for natural phenomena that aren’t yet explained. The same thing is happening with UFOs, with alien visitors being used to fill gaps in our understanding of the latest detection technology, the sky and human vision.The arguments for extraterrestrial UFOs falsely equate the possibility that extraterrestrial life exists with the plausibility that it’s visiting us and lurking around, neither cloaking nor announcing itself. Yes, there are a bunch of other planets out there, and some might harbor life forms, but why should we assume they’d want to come here? Are we really that exciting? If we take the possibility of these visitors seriously, we should clean up this place.Extraterrestrial visitors and gods fall into the same category of unscientific explanation because they haven’t shown themselves to humanity in a coherent enough way for claims about them to be tested.Many UFOs have been explained scientifically. The Air Force conducted studies starting in 1947, and continuing through the 1960s, when, after a congressional hearing, the matter was turned over to a panel of civilian scientists headed by physicist Edward Condon at the University of Colorado.The committee investigated hundreds of cases, and explained most, but not all of them, as reflections, equipment glitches, balloons, astronomical phenomena and human-built craft. Len Finegold, a retired physics professor, had worked at the university during the Condon investigation and consulted on a few cases. One, he said, involved a woman whose car was mysteriously stopped, and then was found to be magnetized. It all sounded very mysterious, but it turned out that some degree of magnetization is a normal result of the manufacturing process.I asked him whether the lack of explanation for some cases worried him. There are plenty of unexplained phenomena left in physics, he said, “so we’re used to that.” Mysteries of life may or may not one day be solved, but in the meantime, let’s get comfortable with the gaps.(1) Oberg says it is telling that as our detection technology gets better, rather than seeing crystal-clear images of the fuzzy old 20th-century UFO observations, we are seeing “a new flavor of ‘anomalies’ that precisely match the limits of vision of new technologies.”To contact the author of this story: Faye Flam at firstname.lastname@example.orgTo contact the editor responsible for this story: Philip Gray at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Faye Flam is a Bloomberg Opinion columnist. She has written for the Economist, the New York Times, the Washington Post, Psychology Today, Science and other publications. She has a degree in geophysics from the California Institute of Technology.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- When Rex Tillerson was secretary of state, he came under criticism for saying that promoting human rights in other countries sometimes conflicts with U.S. economic and national-security interests. Much of the press portrayed Tillerson as being uninterested in human rights.Now Tillerson’s successor, Mike Pompeo, has started another controversy by being too interested in them. Pompeo is starting a commission on human rights to rethink what they are and how they should fit into U.S. foreign policy.There are two principal complaints, as related in the New York Times and The New Republic. The Trump administration is inconsistent on human rights, giving a pass to allies such as Saudi Arabia while coming down hard on adversaries such as Iran. And the commission will try to push a narrow theocratic conception of human rights, one that scants gay rights and the right to abortion.The first complaint is correct, but not distinctive to President Trump. No administration is or can be entirely consistent on human rights, because Tillerson was also right: The U.S. has a lot of interests and they cannot always be simultaneously pursued. The Barack Obama administration was softer than Trump on Iran and harder on Saudi Arabia, in keeping with its own larger foreign-policy aims. (Homosexual acts are punishable by death in both countries.) If the choice before our government were to advance human rights at all times and places or not to advance them at all, then the latter course would prevail.The second complaint buries a real disagreement below layers of confusion and distortion. The critics are fixated on Robert P. George, a professor of politics at Princeton University who has reportedly played a leading role in formulating the commission’s vision. He is a prominent social conservative and theorist of “natural law.”Yale law professor Harold Koh told the New York Times that natural law is a threat to modern concepts of human rights, which “are based on the dignity inherent in all human beings, not on God-given rights.” This is a false opposition. Natural-law theorists, including George, believe that people have rights because they all share a human nature. (Hence the “natural” in “natural law” and “natural rights.”) While most natural-law theorists believe in God, not all of them do. The theists believe that God created humans with reason and free will because He wants them to have dignity and rights. But non-theists need not share this view about why people have reason and free will to draw the conclusion that they have inherent worth and dignity.The Declaration of Independence compresses the thought by saying that all people “are endowed by their Creator with certain unalienable rights.” It’s not usually considered a theocratic document; and while Koh may consider its premise outmoded, the U.S. government has never officially taken that view.George has twice chaired the U.S. Commission on International Religious Freedom. He has been an outspoken defender of persecuted religious minorities from atheists to Zoroastrians, and has been involved in the fight against human trafficking. He does not advocate banning contraception, as some of his critics have ludicrously charged.It’s true, though, that social conservatives do not believe the U.S. should prod other countries to liberalize their abortion laws. They consider abortion to be itself a violation of human rights. And while the U.S. should speak up against persecuting people for their sexual proclivities, social conservatives don’t want us to push other countries to recognize same-sex marriage. In any case, the vision statement for the commission, which I have read, makes no reference one way or the other to abortion or gay rights, let alone to contraception.Whether a human-rights commission can be successful in this administration is another story. While inconsistency is a feature of every administration, Trump has been more rhetorically hostile to human rights than any other modern president. He has a long record of praising foreign dictators for their strength. During the presidential campaign, he advocated war crimes before reversing himself. Trump’s administration has separated migrant children from their parents in order to deter them from coming.These are among the reasons that George has been a tough critic of the president (while also praising him on some issues). They’re also why the more serious and thoughtful the commission’s work is, the more jarring it will be.To contact the author of this story: Ramesh Ponnuru at firstname.lastname@example.orgTo contact the editor responsible for this story: Tobin Harshaw at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- “I have an organization but it’s largely myself,” Donald Trump confided to the New York Times columnist Maureen Dowd in early 2016, acknowledging that his bare-bones presidential campaign was essentially a one-man show.Trump has always described his eponymous business as an “organization” too, even though it was a disorganized, bankruptcy-prone Tilt-a-Whirl ride catering to the whims and needs of him alone. And the Trump who ran a business and a campaign built on ego and intuition rather than teamwork and strategy wasn’t going to be transformed by the responsibilities and powers that enveloped him once he landed in the Oval Office.In a word, President Trump was never going to become “presidential.” It was inevitable instead that he would find himself most interested in frequenting the corridors of power that allowed him to operate independently. That’s not an uncommon phenomenon for presidents, but in Trump’s case it’s uniquely perilous because no president in the modern era has been as ill-informed, unhinged and undisciplined as the current one. None has been as needy, nor as willing to playact without remorse while making the most consequential of decisions.To help demonstrate the point, Trump has given the world a trifecta of sorts in recent weeks involving trade with Mexico, a military strike in Iran, and government raids on the homes of undocumented immigrants living in the U.S. Trump launched all three episodes with public threats and bravado showcased on Twitter, embroidered them with promises of imminent and decisive action, and tethered them to the notion that complex challenges can be solved with blunt force wielded by a single man. He then abruptly abandoned all three provocations just before they were to take effect.In early June, Trump threatened, via Twitter, to impose onerous tariffs on Mexico if it failed to help solve the immigration and humanitarian crisis spilling over from Central America and into the U.S. His own political party and the business community brought him to heel within a week and he abandoned the tariff threat on the eve of imposing it. Mexico didn’t agree to substantially change any new policing activities along the border. But in the few days that his threat stood, Trump managed to destabilize financial markets and nearly upended a global trade and supply chain that supported legions of businesses and millions of people on both sides of the border.Last Thursday, Trump noted on Twitter that “Iran made a very big mistake!” when it shot down a U.S. drone that Iran claimed had crossed into its airspace. Later that same day the president authorized a military strike against the country, only to call it off when, reportedly, he became aware that as many as 150 might be killed. While Trump is now embracing tougher economic sanctions against Iran, he has exposed deep divisions among his national security and military advisers. He’s also proven himself to be dangerously unpredictable to allies whose help he still needs if he wants to see substantial long-term changes gain traction in Iran and the rest of the Middle East.To top it off, Trump barely gave observers time to digest his abandoned military strikes before he engaged in a bit of Orwellian doublespeak. “I never called the strike against Iran ‘BACK,’ as people are incorrectly reporting,” he said on Twitter on Saturday. “I just stopped it from going forward at this time!”The same day – on Twitter, of course – Trump said he also had decided to postpone raids on the homes of about 2,000 undocumented immigrant families living in the U.S. who had already received deportation orders. This came on the heels of Trump’s threats earlier in the week – made just before he traveled to Florida to kick off his 2020 presidential campaign – to deport “millions” of immigrants (a figure that vastly overstated what his immigration officials were considering, but might have been reassuring for Trump’s political base to hear).Trump said he postponed the raids because Democrats had asked him to wait so they could discuss other policy options with him. But the postponement was also reportedly due, in part, to concerns that Trump’s telegraphing of specifics about the raids had jeopardized the safety of immigration officers and the welfare of children potentially caught up in the sweeps. In any event, the brinksmanship and escalation that marked Trump’s public blustering on tariffs and Iran had a decidedly more obscene quality when deployed against a population of migrants left vulnerable and rootless by the drug wars and economic uncertainty that have engulfed much of Central America. The president’s vacillating, set against a backdrop of an administration already under fire for separating migrant families at the southern border and jailing children and teenagers in squalid detention centers, may harden both sides in the border debate and prevent Congress from overhauling immigration laws in tandem with the White House.Expect Trump’s cartwheeling to continue. It’s who he is. The only real difference between what he’s doing now and what he was doing in his businesses decades ago is who it affects. Long ago, his bungling harmed his investors and employees and some of the communities in which he operated. It was troubling, but the damage was limited. Now Trump inhabits the presidency and the radius of potential wreckage is global.To contact the author of this story: Timothy L. O'Brien at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Timothy L. O’Brien is the executive editor of Bloomberg Opinion. He has been an editor and writer for the New York Times, the Wall Street Journal, HuffPost and Talk magazine. His books include “TrumpNation: The Art of Being The Donald.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- On a recent Wednesday afternoon in late May, roughly 30 Facebook Inc. employees gathered at the company’s Menlo Park, California, headquarters to talk about sexual harassment.The group was there to consider a single, controversial Facebook post: an unsubstantiated list of more than 70 academics accused of predatory behavior, which also encouraged people to submit more “sexual harassers” to the list. The Facebook employees were asked to decide: Should the post remain up?The reality is the group had no authority to determine the post’s fate – that had been decided years ago by Facebook’s content moderators, who decided to leave it up. The employees were instead gathered for a role-playing exercise, the latest in a series of simulations Facebook is running globally on its way to creating a new Content Oversight Board that will review controversial decisions made by the company’s content moderators. If someone believes their post was removed in error, or the general public takes issue with a post that was allowed to remain, the board may step in and provide a final ruling. The list of creepy academics is the kind of post the board may one day review.For more than two hours, the group grappled with the list, taking notes on floor-to-ceiling whiteboards. Were the allegations credible? How many people saw the post? How many people reported it? What did Facebook’s content policies stipulate?One employee posed a question to the group right before they adjourned. “These are evolving situations, right?” said the employee, who Bloomberg agreed to keep anonymous as part of observing the session. “[Pretend] one week later, two weeks later, someone on that list commits suicide. A week later another person commits suicide. Do we take it down? Do we say, no, we decided to keep it up?’” In the end, the group voted overwhelmingly that the list should remain up – 22 votes in favor, 4 against – though few employees seemed fully convicted in their decision. In a world where Facebook is deemed much too powerful, and where the company is constantly criticized by some for taking down too much, and by others for taking down too little, the new Oversight Board represents a potential solution to one of Facebook’s thorniest problems: Its control over global speech. This new board, which doesn’t yet exist, will make content decisions for a global network of 2.4 billion people, making it a de-facto Free Speech Supreme Court for one of the biggest communities on the internet.It undoubtedly comes with challenges. The board’s independence will most certainly be an issue, and it’s unlikely the board will move at the speed necessary to keep up with the internet’s viral tendencies. But Facebook is on an elaborate listening tour in hopes of turning this Supreme Court vision into a reality that people can trust. The idea for Facebook’s Supreme Court originated with Noah Feldman, an author and Harvard law professor who pitched the concept of a “Supreme Court of Facebook” to Chief Operating Officer Sheryl Sandberg in January 2018. (Feldman is also a columnist for Bloomberg Opinion.) Feldman’s pitch outlined the need for an independent, transparent committee to help regulate the company’s content decisions. It was passed along to Zuckerberg, and Facebook ultimately hired Feldman to write a white paper about the idea and stay on as an adviser. The first time the idea was floated publicly was on a podcast that Zuckerberg did with Vox’s Ezra Klein, where he mentioned the idea for an independent appeals process “almost like a Supreme Court.” It's been more than a year since that podcast, and more than seven months since Zuckerberg formally announced plans to build an Oversight Board, and the company is still trying to agree on its fundamental structure. Basic decisions like how many members it should have, how those members should be picked, and how many posts the board will review, are all still undecided. Facebook’s tentative plan is outlined in a draft charter. The company will create a global 40-person board made up of people appointed by Facebook. It’s unclear how many content cases the board will review, though Facebook envisions each case will be reviewed by 3 to 5 members. Once a decision is made, it’s final, and the ruling board members will then write a public explanation, and could even suggest that Facebook tweak its policies.About the only thing that has been decided is that the board should be independent. Critics have slammed Facebook for having too much control over what people are allowed to share online. For years, conservative politicians and media personalities have accused the company of bias against conservative ideas and opinions. Facebook co-founder Chris Hughes criticized Zuckerberg’s power in a recent New York Times op-ed, saying that it was “unprecedented and un-American.” The board is intended to take some of that power. Zuckerberg has promised these decision makers will be free of influence by Facebook and its leaders – though getting to true independence will be the company’s first big challenge. “It’s all well and good for people on the outside to kind of prescribe that, yeah, Facebook needs to cede some of its power to outsiders,” said Nate Persily, a Stanford law professor and expert in election law. “But when you start unpacking how to do that, it becomes extremely complicated very fast.”Persily has already seen a version of the board come together. At Stanford, he just completed a two-month course with a dozen law school students who created their own version of the Facebook Oversight Board. The class presented their findings to Facebook employees at the end of May, suggesting that the board be much larger than the 40 part-time members Facebook outlined in its draft charter.“If they’re going to do any reasonable slice of the cases that are going to go through the appeals process, it’s going to have to be much larger or it’s going to have to be full-time,” Persily said.These kind of suggestions are why Facebook says it’s been running these simulations with academics, researchers and employees all over the world. Each serves as an elaborate survey. Since the start of the year, Facebook has hosted board simulations in Nairobi, Mexico City, Delhi, New York City, and Singapore.It also opened the process to public feedback. During a recent open comment period, Facebook received more than 1,200 proposals from outside individuals and organizations with recommendations on what the company should build. Responses came from established groups like the media advocacy organization Free Press, and also concerned individuals from Argentina, France and Israel. Others like the Electronic Frontier Foundation and the Bonavero Institute of Human Rights at Oxford, provided Facebook with input through their own papers and blog posts.The Bonavero Institute summarized its suggestions in a 13-page report, which included everything from different ways Facebook could pick cases for the board to review, to recommendations on how the board should be compensated. Both the EFF and the Bonavero Institute hammered home the importance of keeping the board independent.“But our biggest concern is that social media councils will end up either legitimating a profoundly broken system (while doing too little to fix it) or becoming a kind of global speech police, setting standards for what is and is not allowed online whether or not that content is legal,” Corynne McSherry, EFF’s legal director, wrote on its blog. “We are hard-pressed to decide which is worse.”Facebook is expected to publicly release a new report with findings from its simulations later this week. Achieving real independence will be tricky given Facebook plans to appoint the initial board members, who will serve three-year terms. It will also pay them, though through a trust. Then the plan is for the board to self-select its replacement members as terms expire. The idea is that, while Facebook may appoint the initial group, future generations of the board will be free of Facebook’s influence.“It isn’t just the people who we’re picking, but the process in which we’re picking them,” said McKenzie Thomas, a Facebook program manager helping lead the Oversight Board project. She emphasized the importance of having the board self-select its own replacement members as a key element of its independence. “This is a starting off point,” she added.Then there’s the speed problem. It’s unrealistic to expect that the board’s decisions will happen with the speed necessary to police the internet. That means the board will likely serve more as a post-mortem – a way to review decisions that have already been made, and if needed, issue a ruling that could impact how future posts are handled by moderators.It won’t, however, be a very efficient way to police Facebook in the moment, which is when content can usually cause the most damage. Facebook’s virality can mean that troubling content reaches millions of people in a matter of hours, if not minutes. The board won’t be necessary to make decisions on extreme violence, like the shooter who livestreamed his killing spree in New Zealand. Facebook already has strict policies in place for that kind of material. But borderline content, like deciding whether a post includes hate speech or just a strong opinion, could remain up for weeks until the board gets to it.“One of the things we need to figure out is…what is a version of a more urgent [board] session?” said Brent Harris, director of governance and global affairs at Facebook. “Does that make sense, and what does that look like?”Kate Klonick, a professor at St. John’s Law School, has written extensively about free speech, including an op-ed about Facebook’s oversight board in the New York Times. She’s observing the board’s creation for a law journal article she’s writing, and already spent one week embedded with the company.The board, she says, may not move quick enough to solve all of Facebook’s content problems, but at least it should provide an outside voice so that Facebook alone isn’t responsible for free speech rules online. “I see this [oversight board] as a solution for maybe that problem,” she added, “and unfortunately, not for the problem of the outrage machine.”In a best case scenario, Klonick thinks Facebook’s oversight board could inspire similar organizations at other private companies. But she’s also prepared for an alternative outcome.“Part of me is terrified [and] totally not delusional to the fact that...there’s just a really big chance that this just flops,” she said.To contact the author of this story: Kurt Wagner in San Francisco at firstname.lastname@example.orgTo contact the editor responsible for this story: Emily Biuso at email@example.com, Jillian WardFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
In response to Iran shooting down a U.S. drone on Thursday, U.S. President Donald Trump approved a military strike against Iranian targets, but called off the operation late on Thursday,
(Bloomberg Opinion) -- Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, wrote a provocative op-ed in the New York Times last weekend. Titled “When Dead Companies Don’t Die,” it argues that unprecedented monetary stimulus from global central banks created a “fat and slow” world, dominated by large companies and plagued by a swarm of “zombie firms” — those that should be out of business but survive because of rock-bottom borrowing costs.I would add that central bankers are creating a horde of zombie investors as well.By now, bond markets have adjusted to the unabashedly dovish shift from European Central Bank President Mario Draghi and Federal Reserve Chair Jerome Powell. In the U.S., benchmark 10-year Treasury yields fell below 2% for the first time since Donald Trump was elected president, and some Wall Street strategists expect it’ll reach a record low around this time in 2020. Across the Atlantic, 10-year German bund yields plumbed new lows of negative 0.33%, French 10-year yields hit zero for the first time, and the entire yield curve in Denmark was on the cusp of turning negative.With any sort of risk-free yield largely zapped worldwide on the prospect of further monetary easing, is it any surprise what happened next? Investors turned to the tried-and-true playbook of grabbing anything risky. No matter that the global recovery has lasted nearly a decade, trade concerns abound and central banks see economic weakness — the S&P 500 Index promptly rose to a record high as investors mindlessly plowed in. And in a more specific example highlighted by my Bloomberg Opinion colleagues Marcus Ashworth and Elisa Martinuzzi, bond buyers were all-too-eager to snap up subordinated Greek bank debt from Piraeus Bank SA, which tapped European capital markets for the first time since the financial crisis. “The offer would have been unthinkable a year ago,” they wrote.Are these really the characteristics of healthy financial markets? It hardly seems ideal that individual investors, pensions and insurers are effectively forced into owning lower-rated bonds, equities or even alternative assets like timber to meet their return targets. In fact, that sounds like the textbook definition of a bubble. But as Sharma points out, permanently easy policy aims to create an environment in which those bubbles can’t pop.“Government stimulus programs were conceived as a way to revive economies in recession, not to keep growth alive indefinitely. A world without recessions may sound like progress, but recessions can be like forest fires, purging the economy of dead brush so that new shoots can grow. Lately, the cycle of regeneration has been suspended, as governments douse the first flicker of a coming recession with buckets of easy money and new spending. Now experiments in permanent stimulus are sapping the process of creative destruction at the heart of any capitalist system and breeding oversize zombies faster than start-ups.To assume that central banks can hold the next recession at bay indefinitely represents a dangerous complacency.”Time and again, market watchers will warn that the credit cycle is on the verge of turning. “The future looks pretty bleak,” Bob Michele, JPMorgan Asset Management’s head of global fixed income, said this week as he advocated selling into high-yield rallies. “We have probably the riskiest credit market that we have ever had,” Scott Mather, chief investment officer of U.S. core strategies at Pacific Investment Management Co., said last month. Morningstar Inc. just suspended its rating on a fund owned by French bank Natixis SA because of concerns about the “liquidity and appropriateness” of some corporate bond holdings, adding to jitters about a broader liquidity mismatch in the money-management industry.It’s hard to take this fretting too seriously when central banks persistently come to the rescue. What’s more, in many ways it’s in the best interest of all involved not to get too worked up about those risks.U.S. households and nonprofits had a combined net worth of $109 trillion in the first quarter of 2019, a record, according to Fed data. Dig a bit deeper, and it’s clear that a surge in the value of their equity holdings plays a crucial role. They directly owned $17.5 trillion of stocks, which represents 110% of their disposable personal income. That ratio reached 120% in the third quarter of 2018, very nearly topping the all-time high of 121.2% set just before the dot-com crash. Add in “indirectly held” stocks, and individuals look as exposed to equities as ever. At $12.3 trillion, those holdings were worth 78.6% of DPI in the third quarter, compared with 69.5% at the dot-com peak.To put it more plainly, since the start of the economic recovery in mid-2009, their total assets have increased by almost 70%. Financial assets(1) have appreciated 76%. Stock holdings have soared by more than 140%.Effectively, the sharp rally in equities has turbocharged a resurgence in the overall wealth of Americans. The prospect of losing those gains is almost too painful to think about. Perhaps that’s why, as DoubleLine Capital’s Jeffrey Gundlach pointed out in January, investors were “panicking into stocks, not out of stocks” during the late-2018 sell-off. “People have been so programmed” to buy the dip, he said, that it reminded him a bit of how the financial crisis developed. Call investors programmed; call them zombies — it’s the same thing.The Fed, for its part, argues that it’s doing good by sustaining the expansion. Notably, Powell said the economic recovery is starting to reach segments of the U.S. population that had been largely left out thus far — communities that “haven’t had a bull market” and “haven’t had just a booming economy.” Overall, he said officials don’t see signals that the U.S. is at maximum employment. Morgan Stanley’s Sharma argues wage growth is sluggish because bigger companies have more power to suppress worker pay, given that they crowd out (or acquire) startups and other competition.There are no easy answers to these large-scale problems. That includes central banks simply lowering interest rates or purchasing more government bonds. Powell said as much, noting “we have the tools we have.” But at least he has some room to maneuver toward a soft landing. The ECB, which has pushed yields on some corporate bonds in the region below zero, and the Bank of Japan, which owns large swaths of local exchange-traded funds, have done virtually no tightening and may soon need to ease even further.The most troubling part of this heavy-handed approach among central banks is that it eliminates the option for investors to earn any sort of return above inflation on safe assets. This delicate balance seems as if it can only last as long as business and consumer sentiment allows. It has been more than a decade since the Fed last cut interest rates, and during that period, it paid handsomely to be a zombie investor throwing money at the S&P 500. With the next easing cycle upon us, much is riding on the status quo prevailing.(1) Aside from stocks, this includes deposits, direct-benefit promises, non-corporate businesses and other financial assets.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
In an op-ed published late Wednesday by the Wall Street Journal, Arthur G. Sulzberger said Trump has “gone from misrepresenting our business, to assaulting our integrity, to demonizing our journalists,” and the next step could be a dangerous one.
(Bloomberg Opinion) -- A report in the New York Times that the U.S. Cyber Command has intensified secret efforts to hack the Russian power grid is less interesting for its content than because of U.S. officials’ apparent cooperation in publicizing the activity. Like any power grid undergoing a digital transformation, the Russian one is quite hackable – but why would the U.S. want public discussion of the matter?The New York Times story talks about “implants” – the placement of malware in networks involved in managing the Russian power grid that could be activated in case of a major conflict. It’s careful to avoid any detail, but Russians know better than many others how vulnerable power grids are to attack.Kaspersky Lab JSC, the cybersecurity firm, has been running grid equipment hacking contests for years. In 2016, a hacking group from Yekaterinburg described in a blog post how it won points in the competition by taking over a substation and causing a short circuit on a power transmission line, without any prior knowledge of the specific industrial system or even much general understanding about how substations work. Russian researchers have identified numerous vulnerabilities in so-called smart grid equipment, which constantly analyzes consumption data and helps manage systems flexibly and efficiently. Many elements of electrical grids are accessible from the internet. A relatively successful, and likely Russian, attack that shut down 27 substations in Ukraine in 2015 showed that primitive methods like sending spear-phishing emails to employees of regional energy companies are effective in getting hackers into parts of national grids.The Russian grid is particularly vulnerable for several reasons. First, it’s vast. Russian Grids PJSC runs 2.35 million kilometers of transmission lines and 507,000 substations. Second, it’s in the process of an ambitious digital transformation. The state-controlled company’s digitization plan, adopted last year, is meant to achieve major cuts in transmission losses and breakdown numbers by 2030. The plan talks about creating a cybersecurity unit, but that’s a work in progress. As my colleague David Fickling has pointed out, making a grid “smart” creates new avenues of attack, and big technology rollouts can be messy and increase the risks. In the case of Russia, the problem is exacerbated by the Western origin of three quarters of all the equipment and pretty much all of the software. If U.S. intelligence puts in the implants before the equipment is supplied or en route, there’s no guarantee they can be detected.In other words, securing the Russian grid is a mammoth task even with Russians’ superior expertise when it comes to detecting (and likely exploiting) vulnerabilities. U.S. cyberattacks are certainly possible. How crippling they can be is another matter. The 2015 attack on the Ukrainian regional energy companies left some 225,000 customers without electricity for a few hours; that’s not a lot of damage given the wide array of techniques involved (the attackers even flooded an energy company’s call center with automated calls to make it impossible for customers to report outages). Unless critical equipment is irreparably damaged, it’s usually possible to switch to manual mode, which is what the Ukrainians did.It would be naive, however, to think the Russian government hasn’t been worried about U.S. cyberattacks on the country's critical infrastructure. So President Donald Trump’s vehement reaction to the New York Times story – he called publishing it “a virtual act of treason” in a tweet – is a little overdone. What’s more telling, though, is the newspaper’s response: It says the Times “described the article to the government” before publication and got no objections.This raises the question what purpose the article might serve for the government officials who talked to the newspaper and those who vetted the publication. My theory is that they wanted to send a message to the Kremlin – but not specifically that the Cyber Command has increased its activity in the Russian power grid. The Russian political leadership, intelligence and cybersecurity professionals are already aware of these efforts. Rather, the message concerns the approval procedure for the offensive efforts. The Times story says they occur under new, obscure legislation passed by Congress last summer that allows the defense secretary to authorize “clandestine military activity” in cyberspace without going to the president for approval. It’s one thing for the Russians to know the U.S. is working to infiltrate their country’s infrastructure, but quite another to be aware that intrusions and attacks don’t require White House approval and can happen routinely and without much ado. The U.S. officials are effectively telling Russian President Vladimir Putin not to remonstrate with Trump in case of attack – the U.S. president may not even know what’s happening, and it’ll be perfectly legal.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Tobin Harshaw at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The New York Times Company (NYT) has been contemplating new avenues of revenue generation. The company is fast acclimatizing to the changing face of the multiplatform media universe.
The following are the top stories on the New York Times business pages. - Boeing Co Chief Executive Officer Dennis Muilenburg said on Sunday that the company made a "mistake" in how it handled a cockpit warning light on the 737 Max. Muilenburg made the comments while addressing reporters on the eve of the Paris Air Show, one of the most important sales events for aircraft manufacturers around the world. - Food delivery has become a multibillion-euro business as the American ride-hailing giant Uber Technologies Inc, the London-based delivery platform Deliveroo and ambitious rivals battle to capture markets and consumers.
New York Times Co NYSE:NYTView full report here! Summary * Perception of the company's creditworthiness is neutral * ETFs holding this stock have seen outflows over the last one-month * Bearish sentiment is moderate and declining * Economic output in this company's sector is contracting Bearish sentimentShort interest | PositiveShort interest is moderate for NYT with between 5 and 10% of shares outstanding currently on loan. However, this was an improvement in sentiment as investors who seek to profit from falling equity prices reduced their short positions on May 23. Money flowETF/Index ownership | NegativeETF activity is negative. Over the last one-month, outflows of investor capital in ETFs holding NYT totaled $69.13 billion. Additionally, the rate of outflows appears to be accelerating. Economic sentimentPMI by IHS Markit | NegativeAccording to the latest IHS Markit Purchasing Managersâ€™ Index (PMI) data, output in the Consumer Servicesis falling. The rate of decline is significant relative to the trend shown over the past year, and is accelerating. Credit worthinessCredit default swap | NeutralThe current level displays a neutral indicator. NYT credit default swap spreads are within the middle of their range for the last three years.Please send all inquiries related to the report to firstname.lastname@example.org.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
(Bloomberg) -- Makan Delrahim, the chief of the Justice Department’s antitrust division, gave a speech on Tuesday arguing that his department had everything it needed to pursue legal action against technology companies who wield their market power in nefarious ways. “Those who say we need new or amended antitrust laws to address monopoly concerns should look to history and take heart,” he said. Several hours later, Representative David Cicilline, a Democrat from Rhode Island, seemed to brush Delrahim back. “Congress — not the courts, agencies, or private companies — enacted the antitrust laws,” said Cicilline, at a hearing of the House Judiciary subcommittee focused on competitive issues in the digital economy. "And Congress must be responsible for determining whether they are equipped for the competition problems of our modern economy.” The jostling for position shows how much the politics of antitrust, which have basically been a non-issue throughout the digital age, have shifted. Anger at Silicon Valley may now be the only significant area of bipartisan agreement in Washington. Federal regulators recently divided responsibility for antitrust investigations into technology companies, and state attorneys general have been laying the groundwork for their own investigations. Democratic presidential hopefuls, most prominently Senator Elizabeth Warren, have been taking an increasingly hard line on Silicon Valley. President Donald Trump’s continued attacks on the industry, meanwhile, create political space for Republican lawmakers to do the same. Cicilline, chair of the House Judiciary’s subcommittee on antitrust, is emerging as a key player in the fight against big tech. Now 57, Cicilline was elected to Congress in 2011 after serving as the mayor of Providence, his hometown. He became the ranking member of the antitrust subcommittee in 2017, and began pushing for stronger action on the issue. He gained little traction at first; he couldn't convince Congress to hold hearings on Amazon's $14 billion of Whole Foods later that year. But he kept at it. In March, he wrote an essay in the New York Times calling on the Federal Trade Commission to investigate Facebook for antitrust violations. He wrote that Facebook has already “repeatedly shown contempt for its legal commitments,” and that the commission should consider forcing the company to replace executives or board members, and to make changes to its business model. In an interview this week with CNN, Cicilline disputed the suggestion that he had called to break up the company. Cicilline doesn’t seem inclined to wait and see what happens. On Tuesday, he told a group of reporters that he hadn’t heard Delrahim’s speech, but added he hadn’t been impressed so far with what he described as the “enthusiasm of the antitrust agencies.” Cicilline says he hasn’t formed a clear idea of what changes should be made to the law, but he doesn’t share Delrahim’s sanguine view of the rules as they currently stand. “It’s hard for me to believe there won’t be some ways to improve an antitrust statute that was written more than 100 years ago,” he said. One way that a congressional antitrust inquiry will be distinct will be in its volume. Cicilline says he plans to pull together a record of the damage wrought by anti-competitive behavior, by gathering documentary evidence and holding numerous public hearings through next year. While he hasn’t yet requested that any company executives appear, he says he’s leaving the option open. Facebook Inc. and Google both worry that Cicilline’s hearings will be embarrassing in a way regulatory proceedings will not be, according to three people familiar with the thinking at those companies. This could build momentum for new policies forcing real changes to their business models. Neither Facebook nor Alphabet Inc.’s Google responded to a request for comment. Groups that want aggressive action against tech companies basically agree. “This investigation provides a channel for uncovering so much material that makes clear those kinds of solutions are necessary,” said Sarah Miller of the Open Markets Institute, a group pushing for a wholesale reconsideration of antitrust enforcement. As he ramped up his criticism of the tech industry, Cicilline hired Lina Khan, a recent graduate of Yale Law School who has become an unlikely darling in antitrust circles. (She also worked at the Open Markets Institute for a time.) In 2017 Khan published an article in the Yale Law Journal called “Amazon’s Antitrust Paradox.” The name was a play on the title of a 1978 book by Robert Bork that became the foundational text for a looser approach to antitrust enforcement that has continued until today. Khan used Amazon to argue that this approach had failed.It was a compelling idea that came at just the right time. Khan became a near-instant celebrity — at least by the standards of antitrust lawyers. At the same time, detractors questioned the rigor or novelty of her theories. The term “hipster antitrust” quickly emerged as a shorthand way to signal disapproval with Khan’s ideas. The hearing this week focused on tech’s relationships with the news industry. The subject also featured in a paper Khan published recently in the Columbia Law Review, where she used Google and Facebook’s sway over news publishers to illustrate what she sees as a key problem of monopoly power in the digital economy: the way that tech companies have created platforms for other businesses, while also competing on those platforms. Publishers rely on Google and Facebook as a key way to distribute their content. But they also compete with the technology companies for advertising dollars. It’s been a pretty one-sided battle, largely because tech companies have such granular information about customers they can use to help target ads. The tech companies have visibility into practically all news consumption online, even on news publications’ own websites, through the code publishers place there to allow readers to share articles and videos on social media. Matt Schruers, vice president of law and policy for the Computer & Communications Industry Association, a trade group whose members include Facebook and Google, said in Tuesday’s hearing that the collapse of local news businesses was an unfortunate but organic result of technological changes, not the result of explicit action by technology companies. News consumption has never been higher, and revenues began declining long before Google and Facebook became their primary concerns. In Khan’s view, publishers relying on Google and Facebook don’t have a chance. She doesn’t make a specific argument about how best to address this imbalance of power in the news industry. But she does draw a distinction between behavioral remedies (where government forbids companies from using power in one market for leverage in another) and structural remedies (where businesses aren’t allowed to operate in markets where the potential to act abusively). She says trying to install behavioral remedies will inevitably push enforcement agencies into conflicts in which they are vastly outgunned. “Targeting the firm’s incentives, rather than attempting to police its behavior, may make more sense,” wrote Khan, who declined an interview request. “It’s not clear that anything short of a full structural separation would be sufficient.”Just before Cicilline began questioning witnesses on Tuesday, Khan walked up to him and spent a minute or two whispering in his ear, while he nodded along. Then she returned to her seat, while Cicilline peppered Schruers with questions. Cicilline wanted an acknowledgement that Google dominated the search market, asked Schruers to assess the potential for abuse when a company that distributes products for other businesses also made products to compete with those partners. Schruers declined to oblige. “I would be concerned about a rule that says, for example, a grocery store can’t put its own grocery store brand products at eye level in the store — ” he said. Cicilline cut him off. “I don’t think anyone is contemplating a rule that does that,” he said. He added that he wasn’t sure what actions made sense, but that Congress wasn’t just going to continue doing nothing. “You encouraged caution when enforcing antitrust against big tech platforms,” he told Schruers. “But in many ways our caution is what we’ve had for the last decade, which has resulted in the emergence of advertising monopolies. I think many of us think it’s time to try something different.” \--With assistance from Kurt Wagner, Naomi Nix and Ben Brody.To contact the author of this story: Joshua Brustein in New York at email@example.comTo contact the editor responsible for this story: Emily Biuso at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The following are the top stories on the New York Times business pages. - A network of computers in China bombarded Telegram, a secure messaging app used by many of the Hong Kong protesters, with a huge volume of traffic that disrupted service. The app's founder, Pavel Durov, said the attack coincided with the Hong Kong protests, a phenomenon that Telegram had seen before.
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will...
New Front in Trade War Over Hong Kong? The Trump Administration appears to be getting involved in the Hong Kong-China extradition crisis. Yesterday the U.S. expressed “grave concern” over legislation that would allow extradition from Hong Kong to China. Hong Kong’s Chief Executive Carrie Lam, whose leadership is stamped by Beijing, says the bill is […]The post Market Morning: US Concerned on Hong Kong, Beyond Meat Beyond Stratosphere, Times Ditches Cartoons appeared first on Market Exclusive.
Scores of technology, media and fashion executives took out a full-page advertisement in the New York Times on Monday to denounce restricting access to abortion and other reproductive healthcare. The advertisement follows a string of company executives in recent weeks who threatened to pull investments in states enacting new laws that limit abortion rights. Nine states, including Alabama, Georgia and Missouri have passed abortion laws this year that all but ban the procedure.
We at Insider Monkey have gone over 738 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of The New York Times Company (NYSE:NYT) based […]
New York Times (NYT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
The New York Times reports that Deutsche Bank, still tangled in the financial dealings of the Trump family empire, is being investigated by U.S. authorities for potential money-laundering lapses regarding transactions linked to President Donald Trump, and son-in-law and advisor, Jared Kushner. Yahoo Finance's Jennifer Rogers, Myles Udland, and Dan Roberts discuss.