Sunday, January 22, 2017

Nikkei Is Reporting: "Foxconn considering $7bn US display facility with Apple"

From Nikkei's Asian Review, Jan. 22:

Company pledges China investment increases for Sharp products
Key iPhone assembler Hon Hai Precision Industry, better known as Foxconn Technology Group, is mulling a joint investment with Apple Inc. in an advanced, highly automated U.S. display facility, Chairman Terry Gou said Sunday.

"Apple is willing to invest in the facility together because they need the [panels] as well," Gou told reporters after the company's annual year-end party in the Nankang district of Taipei.
The Taiwanese tycoon added that the facility's cost would exceed $7 billion and would eventually create some 30,000-50,000 jobs.

The Nikkei Asian Review reported in November that Apple had asked Foxconn to look into making iPhones in the U.S., and earlier this month reported the company and Sharp Corporation, its Japanese subsidiary, were exploring the possible construction of a U.S. display plant.

Apple did not immediately respond to a request for comment on Sunday evening.
Gou told reporters that with the increase of demand for larger display panels, local production was a more optimal solution than shipping from China to the U.S. market.

In addition to the new display facility, Gou said that Foxconn was planning a new molding facility in the U.S., adding that the state of Pennsylvania was shaping up as a possible site following investment discussions with local officials. A representative from the Pennsylvania trade office was in attendance at Foxconn's Sunday party....MORE



China's HNA Group Co. Is This a Scam?

This is the company that bought Skybridge Capital from President Trump's advisor, Anthony Scaramucci.
A couple weeks before that announcement Gadfly had taken a quick look at the company which got my "something's not right" antennae twitching. I don't have anything concrete to base that instinct on other than the remarkable growth so see what you think.
From Bloomberg Gadfly, December 29, 2016:

HNA's Chen Feng Flies Close to the Sun
There's an old joke: How do you build a $100 million airline? Start off with a $1 billion airline.

Under founding Chairman Chen Feng, HNA Group Co. appears to have gone in the opposite direction. From its first flight in 1993, through a $25 million investment from George Soros in 1995 and a 2000 restructuring, the former Hainan Airlines has never stopped growing.

In December last year, gross assets of the aviation-focused conglomerate already amounted to 468.7 billion yuan ($67 billion) -- more than any U.S. carrier, and greater than the combined assets of Europe's market leaders Deutsche Lufthansa AG and International Consolidated Airlines Group SA. Then in 2016, things really got going.

On Jan. 8, it completed its then-biggest acquisition, the $2.5 billion takeover of Irish aircraft lessor Avolon Holdings Ltd. . A month later, it paid $6 billion for Ingram Micro Inc., the world's biggest electronics distributor, and completed the $2.8 billion purchase of ground cargo handling company Swissport Group. In October, HNA paid $10 billion for another lessor, CIT Commercial Air, and spent $6.5 billion on a quarter of the Hilton Worldwide Holdings Inc. hotel chain.

Big Deal
HNA and its associates announced or completed more than $34 billion in acquisitions in 2016... 
...Throw in smaller deals and the tally for 2016 should put gross asset value easily over $100 billion. That would be enough, were the closely held HNA listed, to make it one of the world's 100 biggest non-financial companies -- larger than Boeing Co., Walt Disney Co. or Coca-Cola Co.
...MORE

Saturday, January 21, 2017

"Russian Finance Minister Proposes to Return to Idea of Limiting Cash Transactions"

From Sputnik:

Finance Minister said that Russian Finance Ministry is proposing to revive the idea of limiting cash transactions in Russia in a bid to reduce shadow economy.
The Russian Finance Ministry is proposing to revive the idea of limiting cash transactions in Russia in a bid to reduce shadow economy, Finance Minister Anton Siluanov said on Saturday.

“Maybe we should think about limiting cash transactions. Many countries are following this path … That is very right as it is an element of reducing shadow economy. This instrument may give an opportunity to raise more taxes and make our economy more transparent,” Siluanov said at the congress of the United Russia party.

The implementation of the new rules should be done gradually, to avoid any inconveniences, especially in those Russian municipalities and regions that do not have the infrastructure for cashless operations, the minister added.

The Russian Central Bank and the Ministry of Finance started to discuss the prospects of limiting cash transactions in 2012....MORE



16 Famous Insurance Frauds

I know I'm violating BuzzFeed's first rule of listicle headlines*, use odd numbers in the header, but I had to add one as an introductory story. I suppose I could have gone with 1+(5x3) or something but that seems a bit obsessive.

First up, from Timeline:

Jumping in front of cars for insurance money helped some 1920s immigrants achieve the American Dream
Flopping was, and is, a lucrative business

https://cdn-images-1.medium.com/max/2000/1*s74g3dgajjBoQy0ANojbNQ.jpeg
A bus swerved to avoid a boy who had been ‘knocked down’ in the road in 1912. (Getty Images
America is the land of the free — and the home of people suing each other over frivolous lawsuits. This is the country where a woman once planted a severed human finger in a bowl of Wendy’s chili — and then tried to sue the fast food chain. The woman was later arrested — but initially thought she could get away with her ‘chili-finger’ scam, because suing people is such a way of American life. That’s why the culture of ‘floppers’ is a clever criminal enterprise.

As they’re known in the trade, floppers, flim-flam-floppers, or flop artists have been a thorn in the side of insurance companies since the 19th century. As mentioned in the book Accidentally, on Purpose, one of the first documented slip-and-fall artists was a woman known as Banana Anna, who would plant banana peels on steam trains, “slip” on them, and fake injuries to rake in insurance money.

The 1950 report Exposing the Fake Claim Racket described a flopper as someone who’d “scout certain parts of a city for openings or defects best suited for causing an ‘accident,’ such as an open cellar door, a broken step, a defective sidewalk coal chute cover, or a broken vault light. Locating such a spot, the flopper will purposely get his foot wedged in a jagged crevice and pretend to fall.”
Jim Quiggle, director of communications for the Coalition Against Insurance Fraud says, “Flops are so easy to create. It requires so little expertise. How much skill does it take to sit on the floor and cry bloody murder at the top of your lungs?”

In the early 20th century, when New York was the promised land for those who newly arrived via Ellis Island, the story of floppers reads like an immigrant American dream.

In fact, the 1920’s were the Golden Age of flopping. And one of the masters of the form was a man named Daniel Laulicht, who along with his brother Benjamin ran the biggest flopper ring in New York City. Laulicht grew up a poor immigrant in the Lower East Side. According to city records, Laulicht was first arrested for flopping back in 1918, but that was just the beginning. Laulicht eventually became a flopping tycoon. Like something out of Once Upon a Time in America, at the height of his flopper ring, Laulicht had more than 30 people on the payroll, ranging from rogue doctors and lawyers to taxi drivers and so-called “victims.” Together they orchestrated scams citywide, to the point that the actual flopping part wasn’t even necessary....MORE
And from Ideas, Inventions and Innovations: 

Insurance fraud seems like it might be an easy thing to do. Insurance companies are often so huge, one wonders how they might not even notice a few mistakes in your favor. But the fact is that insurance companies have people who make it their full time job to sniff out fraud, ensuring that they keep a tight bottom line. And while they may not catch every tiny little fudge, you can be sure they are on the hunt for major offenders such as the ones on this list. Check out these famous insurance fraud cases that surely carried a huge bounty.
  1. HCA/Medicare: In 2000 and 2002, HCA pleaded guilty to 14 felonies, including fraudulently billing Medicare as well as other programs. HCA had inflated the seriousness of diagnoses, filed false cost reports, and paid kickbacks to doctors to refer patients. HCA had to pay the US government $631 million plus interest, as well as $17.5 million to state Medicaid agencies, on top of $250 million already paid to Medicare for outstanding expense claims. It was the largest fraud settlement in US history, with law suits reaching $2 billion in total.
  2. John Darwin's Death: John Darwin faked his death in a canoeing accident, turning up five years later. He'd been secretly living in his house and the house next door, while his wife claimed the money on his life insurance. They were both sentenced to six years in prison, but released on probation. BBC created a TV drama about their story called Canoe Man.
  3. The horse murders scandal: Between the mid 1970s and mid 1990s many expensive horses were involved in insurance fraud. These expensive horses, often show jumpers, were placed on insurance for accident or death, and killed for the insurance money. The number of horses killed in this manner is believed to be at least 50 and possibly as high as 100. It was the biggest scandal in equestrian sports, resulting in the death of a whistleblower, Helen Brach, in addition to the horses.
  4. John Mango's fire: A Toronto businessman, John Mango hired someone to set fire to his business for the insurance money. Things got quite out of hand, killing one person during the fire and forcing many families to leave the area until the fire could be put out. Mango was charged with second degree murder on top of his fraud charges.
  5. Swoop and squat: In the 90s, car insurance fraud ran rampant. Cars would purposely get into accidents with innocent people on the road, hoping to score insurance money, and often, they did. These accidents frequently injured drivers, and some were even fatal. These accidents usually earned the orchestrators about $20,000 each.
  6. Michael Jackson's prescriptions: Lloyds of London has recently filed suit to invalidate an insurance policy taken out by Michael Jackson. The policy covered his "This Is It" tour in the event that it was not successful. The payout was to be $17.5 million, but Lloyds argues that it is invalid because Michael Jackson did not disclose prescription drugs on his application. As Jackson died from an overdose, Lloyds is claiming deception....
...MORE
 
*Not to be confused with the BuzzFeed Style Guide.

AIG's Hank Greenberg to Warren Buffet: "Call Me When You Have A Real Insurance Company!" (AIG; BRK)

From the Aleph Blog:
The title of the article comes from a comment Greenberg supposedly made to Buffett when AIG was much bigger than Berkshire Hathaway [BRK] — times change…

It’s come to this: AIG has sought out reinsurance from BRK to cap the amount of losses they will pay for prior business written.  It’s quite a statement when you are willing to pay $10 billion in order to have BRK pay 80% of claims over $25 billion, up to $20 billion in total.  At $50 Billion in claims AIG is on its own again.

So what business was covered?  A lot.  This is the one of the biggest deals of its type, ever:
The agreement covers 80% of substantially all of AIG’s U.S. Commercial long-tail exposures for accident years 2015 and prior, which includes the largest part of AIG’s U.S. casualty exposures during that period. AIG will retain sole authority to handle and resolve claims, and NICO has various access, association and consultation rights....
...MORE


Saudi-Led Coalition Intends To Join Fighting In Iraq, Syria

What a mess.
From the Baghdad Post:

Int'l coalition seeks to liberate Mosul, Raqqa - Saudi official
http://www.thebaghdadpost.com/Content/Upload/slider/1201715232228657131660.jpg
Major General Ahmed Assiri
The international coalition against terrorism seeks to liberate Iraq's Mosul and Syria's Raqqa from the control of Daesh terrorist group, said spokesman for the Saudi-led coalition Major General Ahmed Assiri.

The Arab coalition has coordinated military plans with the US Central Command (CENTCOM), Assiri said Sunday on the sidelines of a meeting held in Saudi Arabia and comprising the countries participating in the anti-Daesh coalition.

The conferees discussed means of upgrading coordination among representatives of the coalition countries and promoting the US-led coalition efforts to "paralyze" Daesh capabilities.

The meeting was held at the level of Chiefs of General Staff of 14 countries, namely Saudi Arabia, Kuwait, the UAE, Jordan, Bahrain, the US, Turkey, Oman, Qatar, Lebanon, Tunisia, Morocco, Nigeria and Malaysia. 
If interested see also al-Arabiya:    

And in 2016: 
Pakistan Threatens To Wipe Iran Off the Face of The Earth If Saudi Arabia Threatened

There are quite a few more but you get the point. In the words of the eminent philosopher-analyst Eeyore:
"It's snowing still," said Eeyore gloomily.
"So it is."
"And freezing."
"Is it?"
"Yes," said Eeyore. "However," he said, brightening up a little, "we haven't had an earthquake lately."

Barron's Roundtable 2017, Part 2: Jeffrey Gundlach

From Barron's:
The Trump rally looks to be fading, even as the presidency of Donald Trump begins. But if some investors have lost their enthusiasm for stocks following a postelection surge, not so the members of the Barron’s Roundtable. These nine market mavens confessed at our annual get-together, held on Jan. 9 in Manhattan, that they expect the major indexes to post muted gains, if any, in 2017, given today’s rich valuations and a likely rise in interest rates. But they insist the outlook for their picks couldn’t be brighter. That could be especially true if Trumponomics translates into lower tax rates for corporations, less burdensome regulations, and a more robust economy. 

Last week, Barron’s featured the big-picture views of all our panelists—on equities, interest rates, economics, geopolitics, and more—and the specific investment recommendations of Zulauf Asset Management’s Felix Zulauf and Epoch Investment Partners’ William Priest. This week, we turn the mic over to Scott Black, Jeffrey Gundlach, Meryl Witmer, and Mario Gabelli, whose best bets for the new year range from commodity producers to auto-parts suppliers to closed-end funds to companies bearing the indelible fingerprints of yet another investment maestro, John Malone.

Scott, a numbers whiz who runs the show at Boston’s Delphi Management, favors companies with a high return on equity and lots of free cash flow, particularly if he can scoop up their shares at a discount.
Jeffrey calls himself “a bond guy who thinks about macro stuff,” which doesn’t begin to hint at the enormous success of DoubleLine Capital, the Los Angeles-based fixed-income firm he founded in 2009 and grew to more than $100 billion in assets.

Meryl, a general partner at New York’s Eagle Capital Partners, and a member of the Berkshire Hathaway (ticker: BRK.A) board, has earned a sterling reputation for uncovering value among lesser-known companies in unglamorous businesses, whose financials she masters better than any CFO.

Mario, head of Gabelli Funds and its parent firm, is a Wall Street legend, for good reason. He’s a shrewd thematic investor with a love of deals, an eye for steals, and an encyclopedic knowledge of multiple businesses and the people who built them.

To learn what this quartet likes now, please read on....

...Thanks, Scott. Let’s move on to Jeffrey.
Gundlach: One of the best indicators of the direction of bond yields is the ratio of copper prices to gold prices. It signaled the selloff in bonds that started in July. The copper/gold ratio has come down a little, which supports the recent bond rally. The yield on the 10-year Treasury got as high as 2.64% late last year, and has since fallen back to 2.37%. [Bond prices move inversely to yields.] We expect the yield to fall below 2.25%.

Why is the ratio such a good indicator?
Gundlach: Copper is an industrial metal. A higher ratio suggests more manufacturing activity, and that implies an uptick in inflation and yields. As I explained this morning, I expect interest rates to rise later this year. One way to position yourself for further rate increases is to look for things that don’t have much interest-rate risk. Last year, I recommended the Brookfield Total Return fund [HTR], which invests in mortgage-backed securities. It was trading at a steep discount to net asset value. As luck would have it, it got merged into a new fund at its net asset value, producing a total return of 21.7% on a bond-like investment in a 2%-type year. This year, I am recommending something a little less juicy— Putnam Premier Income Trust [PPT], launched in February 1988. Its longevity is a good sign.

Putnam Premium Income is a one-stop-shopping, low-risk bond-portfolio investment with a decent yield. And it is trading at an 11% discount to net asset value. Unlike the Brookfield fund, there is little chance the price will rise sharply and converge with net asset value, as this closed-end fund has been hanging around with a 10% discount to NAV for a long time. Last year, the discount narrowed to 8%.

What are your return expectations?
Gundlach: You might get a capital gain of 3% this year, and the dividend yield is 6.3%. The portfolio is 80% invested in the U.S. The other 20% is a little spicy, and includes Greek, Russian, and Brazilian bonds. While the higher-risk holdings account for less than 10% of the portfolio, they are probably the source of much of the rich yield.

The duration of the fund is 0.3, according to Putnam, which means the fund holds allocations to assets, probably floating-rate or lower-credit securities, that dampen interest-rate-related volatility. But almost a third of the portfolio is invested in something liquid and easy to price: Fannie Mae mortgage-backed securities. Given the discount to NAV, you are buying Fannie Mae 3’s [the coupon is about 3%], basically the current coupon mortgage-backed security, at a price 11% below the actual market price, which translates to a yield about 150 basis points above market yields. It is an unequivocal bargain—kind of like buying a 10-year Treasury today at 4% instead of 2.37%. It is a great starting point.

Does the fund use leverage?
Gundlach: The Putnam fact sheet reports no leverage, but when I add up the numbers, leverage looks to be 20% to 25% of net assets. But leverage doesn’t increase your interest-rate risk because you don’t really have much risk. There is a small risk of your spread [between the yield on assets and the cost of borrowed funds used for leverage] shrinking. Maybe the fund is earning a 4% or 5% spread, which is contributing about a percentage point to the yield. If LIBOR [the London Interbank Offered Rate] goes up 100 basis points [one percentage point], you might lose 25 basis points on the yield. But you are still comfortably at 6% in a world where a total-bond-market index fund would have a net yield of around 2½%.The fund has about $600 million in assets. If someone wants to own one bond investment after this rally is over, this is a good one to have.
BKLN, or PowerShares Senior Loan Portfolio, is an exchange-traded fund. It holds bank loans, which have credit risk, but are at the top of the capital structure in bank debt. There isn’t a lot to worry about, even if oil prices fall. I agree with the consensus that oil will hang around the mid-$40s to high-$50s. Energy-company debt represents only 5% to 6% of the bank-loan market.

What does the fund yield?
Gundlach: It yields 4.1%. If you combine PPT and BKLN, you’ll have a 5%-plus yield and little interest-rate risk. Your total return for the year could be as high as 7% or 7.5%.

Next, like Felix, I would short German Bunds. They are yielding 0.27%, and Germany’s inflation rate is 1.7%. Historically, it is very rare to have a Bund yield below the inflation rate. The current gap is a record. The Bund yield is unsustainably low.

Schafer: What is the best way for an individual to short German Bunds?

Gundlach: Short the futures. I agree with Felix that the Italian bond market is deeply troubled. Shorting Italian bonds could potentially produce a massive home run; they are yielding 47 basis points less than 10-year U.S. Treasuries, which represents a full buy-in on the idea that the euro zone will last forever. If the euro zone breaks up, a possibility we have discussed, and Italy has to go it alone, sovereign bonds could yield 1.9%. The current yield is insanely low. But shorting German Bunds appeals more. They are more vulnerable at this point than U.S. bonds.

One argument for U.S. bonds when yields hit a low last July was that they yielded more than German Bunds, which had negative yields. In other words, U.S. bonds were better than something really terrible, but that didn’t make them good. Underlying the argument was the notion that German yields would stay negative forever. Well, forever lasted about a month. Since then, Treasury yields have risen more than German rates, but Bunds could underperform in the next leg of the bond bear market. 

Zulauf:In 2012, there were widespread fears about the euro zone breaking apart. Back then, money flowed from the southern countries to the northern countries, and into Bunds. The next time the euro zone looks endangered, money will flow out of the euro completely and into another currency, primarily the U.S. dollar....MUCH MORE
Part 1, January 14:
Stocks Could Post Limited Gains in 2017 as Yields Rise

Friday, January 20, 2017

The Color of the Sky In the White House Twitter Account Profile Picture Has Changed

From blue to orange:
https://pbs.twimg.com/profile_images/822251886988267520/28GpoRsy.jpg
@WhiteHouse

HT: Ned Donovan

"Trump Picks Fellow NYC Developers to Oversee Infrastructure Spending"

From Curbed, January 17:

From luxury residential to $1 trillion worth of roads, trains, and bridges

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The view from Vornado’s 220 Central Park South, one of the most expensive buildings in New York City
Photo by Viktor Thomas/@vic.invades
Although the names Richard LeFrak and Steven Roth may not be recognizable to those outside of the New York real estate bubble, they are two of the U.S.’s most powerful developers with projects in cities all over the country. Now LeFrak and Roth are teaming up to execute President-elect Trump’s $1 trillion infrastructure plan.

According to the Wall Street Journal, LeFrak and Roth will manage a “council of 15 to 20 builders and engineers” convened by Trump’s team to advise the as-yet-unannounced infrastructure program. (Like the infrastructure plan, details on both the council and the developers’ roles are vague.) Both longtime Trump friends, LeFrak and Roth have a long history of managing giant developments in New York—including several of Trump’s own properties.

“They’re pros,” Trump told the Wall Street Journal. “That’s what they do. All their lives, they build. They build under-budget, ahead of schedule.”

The fact that LeFrak and Roth are professionals is not up for debate: The developers have amassed fortunes working in real estate. Very expensive real estate.

LeFrak is known, most recently, for his giant planned communities like the SoLe Mia, a $4-billion luxury development in North Miami with giant artificial swimmable lakes. He’s also responsible for hundreds of projects throughout Florida, New York, New Jersey, and California, including two dozen towers in Jersey City that are transforming the city’s waterfront as part of the $10-billion Newport development. 

New York residents may have noticed the Prospect Park ice skating rink is named for his parents. Like Trump, LeFrak’s father was also in real estate. Among his luxury projects, he built an affordable housing development, LeFrak City, in Queens, which has been sued for alleged discrimination by Orthodox Jewish tenants and a woman living with AIDS.

Roth is CEO of Vornado, one of the most powerful developers in the country, with residential and commercial properties that include 220 Central Park South, which is on track to become the most expensive building in New York City. The 66-floor, $1.3 billion tower cost a mind-boggling $5,000 per square foot to build and is home to a $250 million condo that could become the priciest apartment in New York City. He also has stakes in Trump’s Manhattan and San Francisco office buildings, properties which Trump has not yet revealed how he plans to divest from....MORE

 Frances Fox Piven On President Trump: "Throw Sand In the Gears of Everything"

You may remember her name if you studied political science or the history of the U.S. in the 1960's.
She and fellow Columbia U. professor Richard Cloward proposed a plan to achieve their political goals, including universal basic income, that became known as the Cloward-Piven Strategy.

The strategy was laid out in the May 2, 1966 issue of The Nation magazine in an article titled "The Weight of the Poor: A Strategy to End Poverty" about which the copy hosted at Common Dreams says "The theory here, to force change through chaos, was among the most provocative of the 1960s."

A few years ago The Nation commissioned a new introduction from Ms. Piven, her husband Mr. Cloward having died in 2001, which the magazine published as part of their 150th anniversary issue.

Here's her latest, again at The Nation, January 18, 2017:

Throw Sand in the Gears of Everything
When it comes to stopping Trump, petitions aren’t going to do it.


https://www.thenation.com/wp-content/uploads/2017/01/FoxPiven-20170206_img.jpg
As many are saying, we woke from a nightmare to find it was our new reality. A gaggle of inflated far-right self-promoters and operatives, big businessmen and their toadies, and homegrown fascists will control the presidency and determine the Supreme Court majority, maybe for a generation or more. The Congress is firmly in Republican hands, save for the uncertain possibility that Senate Democrats will muster the gumption to filibuster. And that possibility could also evaporate with the 2018 midterm elections, when as many as 20 or more Democrats will have to defend their seats. No wonder that everyone I speak with searches for someone to blame—Clinton or Comey or white women or the white working class or the Bernie troops—and then asks plaintively: What do we do now?


There are lots of answers floating about. State governments should band together to pass laws that bind their representatives in the Electoral College to support the winner of the popular vote. Or we should begin the hard work of reconstructing the Democratic Party, finally purging the influence of the Democratic Leadership Council and its Wall Street allies, so that it speaks more convincingly to the aspirations of working people and minorities. Or we should push for the reforms that will somehow prevent gerrymandered districts after the 2020 Census. Or we should restore the Voting Rights Act and push for automatic voter registration. And of course—again, somehow—we should restrict the role of big money in elections.

I support all of these efforts, needless to say, and I sign the petitions and respond to the fund-raising appeals that their advocates generate. But I am not very hopeful that any of them can succeed, at least not in the limited time we have to protect the planet from global warming or nuclear catastrophe or both.

There is another impulse evident in the spontaneous reactions that followed Trump’s election in the streets of New York City, Los Angeles, San Francisco, Oakland, Baltimore, Kansas City, Milwaukee, Miami, Portland, and elsewhere. Lots of people—especially young people—gathered, made speeches, marched, shouted, and held up signs and banners. All of us who participated can report the lift to our morale the experience offered. We were performing the elementary rites of a social movement, rites that the influential historian Charles Tilly labeled “WUNC”—meaning that people gather together to demonstrate their worthiness, unity, numbers, and commitment.

Chanting crowds are the familiar insignia of movements. And I think movement politics may even make resistance to a Trump regime possible. But while the great movements of American history were the crucial determinant of our most important democratic reforms—from the basic electoral elements of representative democracy, to Emancipation, to labor rights, to women’s and LGBTQ rights—none of these movements achieved their successes simply through the gathering of people to show their commitment. People gathered, of course, but what makes movements a force—when they are a force—is the deployment of a distinctive power that arises from the ability of angry and indignant people to at times defy the rules that usually ensure their cooperation and quiescence.

Movements can mobilize people to refuse, to disobey, in effect to strike. In other words, people in motion, in movements, can throw sand in the gears of the institutions that depend on their cooperation. It therefore follows that movements need numbers, but they also need a strategy that maps the impact of their defiance and the ensuing disruptions on the authority of decision-makers.

The repercussions of such mass refusals can be far-reaching, simply because social life depends on systems of intricate cooperation. So does our system of governance. Perhaps the US government, with its famous separation of powers on the national level and its decentralized federal structure, is especially vulnerable to collective defiance. To be sure, the right wing has now taken over many of the veto points in the national government, and it dominates half of the state governments as well (although that could change in 2018, when many hard-right Republican governors will be defending their seats). But the big cities, where a majority of the population lives, have not been captured. Center-left mayors preside over cities like New York, Los Angeles, Boston, Seattle, and San Francisco, for example. And that fact can nourish urban resistance movements.

People don’t easily break the rules of institutional life, and especially not collectively and publicly, if only because of the punishments that can be visited on rule-breakers. Think of the possible responses of a Trump administration! And, in fact, movements from the lower reaches of society—whose members are often the most marginalized and vulnerable—usually don’t emerge if people think they’ll have no influence over the regime in power. People are much likelier to risk defiant collective action if leading politicians appear accountable to movement constituencies. The great strike movement among industrial workers arose under Franklin Roosevelt, who promised to speak for “the forgotten man” in the midst of the Great Depression. The civil-rights movement escalated at least partly because of the reluctant encouragement of Democratic presidents newly concerned about the loyalty of urban black voters, and it triumphed under a president who felt it strategic to echo the words of the civil-rights anthem “We Shall Overcome.
* * *
There’s a slogan among organizers to the effect that all organizing is local, meaning that people come together in local workplaces and communities to articulate their grievances and their hopes, and to develop the muscle to act. Local organizing against Trump’s initiatives will be bolstered by the support of local politicians, and movement organizing in turn can stiffen the backs of local politicians when the Trump administration threatens to cut funding to city governments. There would be many opportunities to play a role: Even ordinary householders can take in and shield immigrants. And all of us can render registries useless by insisting on registering ourselves as Muslims or Mexicans or Moldovians. A sanctuary movement gives lots of people a role that matters. Most important, in our complex federal system, where the policies of the national government depend on cooperation by state and local authorities, these local movements have the potential to block initiatives by the incoming Trump regime. ...MUCH MORE

Shipping: "Following Hanjin’s Collapse, Heavily Indebted Yang Ming at Risk of Financial Trouble"

From gCaptain:
Following the bankruptcy of Hanjin, Taiwan’s Yang Ming is now the container line in the greatest financial danger, according to a research paper published today.

Drewry Financial Research Services (DFRS) says the line has the industry’s most leveraged balance sheet, with a net gearing of a massive 437% at the end of Q3.

The figure soars above the industry average of 124% and is nearly five times that of its closest regional peer, Evergreen.

The report says: “Yang Ming’s high debt is a great cause for concern for us, given the heightened financial risks. Even with recovery in the underlying freight market, the debt burden without a restructuring is a red flag and a clear sell signal for us.”

DFRS noted that Yang Ming had accumulated NTD38.4bn ($1.2bn) in losses since 2009, with its net loss for 2016 at around $400,000 by the end of the third quarter.

The analyst believes the carrier’s high cost structure, combined with its debt mountain, will “keep Yang Ming in the red in 2017”, despite an improved outlook for freight rates.

In November, the Yang Ming board announced it would slash executives’ pay by 50% and the salaries of senior line managers by 30%, among a raft of desperate measures to stop the rush of red ink.

The Taiwan government owns a 33% stake in Yang Ming and will need to support the debt-ridden carrier, suggests DFRS....MORE

Kraft Heinz, Warren Buffet and the Packaged Food Business

From Fortune:
In Madison, they still struggle to accept that it’s really happening. On a not-yet-specified day before the end of March, a Kraft Heinz employee will turn off the lights in the sprawling Oscar Mayer plant, and for the first time in 98 years, no one will be coming back to work.

The facility was once the city’s largest employer, with over 4,000 workers transforming hogs, 900 an hour, into Oscar Mayer hot dogs, bacon, sliced ham, and more. Employment was down to about 1,000 when Kraft Heinz announced in 2015 that it would close the plant, and recently the workers had dwindled to about 400; the products still being made include an item called liver cheese, which few consumers under age 80 are clamoring for. No one knows what happens after March.

— - - —
Because the 50-acre site will need environmental remediation, its “value” is estimated at negative $10 million to negative $20 million. The city is scrambling to drum up interest in the site but was caught flat-footed; planners never imagined that Oscar Mayer would leave. Redeveloping so many acres won’t be easy. Madison Mayor Paul Soglin told a local publication, “It’s possible that given its size, it will take a decade or more to develop.”

So what happened? Why is a plant that provided good jobs to 1,000 people just 15 months ago being shut down? (Other than the liver cheese.) The answer explains a lot more than the fate of a Midwestern processed-meat factory. It also illustrates Kraft Heinz’s iconoclastic strategy under the hard-driving management of 3G Capital, the private equity firm overseen by Brazil’s richest man, 77-year-old Jorge Paulo Lemann. The answer even hints at the future of the U.S. food industry—and perhaps has global implications—because all evidence suggests that 3G is just getting started in an effort to transform this whole vast sector. But evidence also suggests that the 3G playbook, which has worked spectacularly well over the past 30 years, may not prove so effective this time.


You can be forgiven if you’re not up to speed on the intertwined corporate marriages and divorces in the world of Big Food. Kraft Heinz came into being 18 months ago when Heinz bought Kraft Foods Group, a mostly U.S. grocery manufacturer that in 2012 had separated itself from a collection of mostly non-U.S. snack businesses now known as Mondelez Interna­tional, an independent, publicly traded company that could reenter this saga before long. Heinz had been bought and taken private in 2013 by 3G Capital, with considerable financing from Warren Buffett. When it then bought Kraft and merged it with Heinz in 2015, 3G took the combined business public as Kraft Heinz. Buffett’s Berkshire Hathaway owns about 27% of the stock; 3G, about 24%.

Got that? While Buffett is the largest shareholder by a slight margin and has three seats on the board of directors, including one for himself, he’s happy to let 3G run the show. Back before they bought Kraft, he said, “I’m not embarrassed to admit that Heinz is run far better under [3G] than would be the case if I were in charge.”

The 3G management model that Buffett so admires is worth a close look because it’s on track to eat the food industry. At its heart is meritocracy, broadly defined. Every employee must justify his existence every day. That’s great news for the very best performers; they are promoted with speed that’s unheard-of in lumbering old food companies. Kraft Heinz CEO Ber­nardo Hees, for example, first became a CEO in 2005 at a company called All America Latina Logistica, owned by a 3G predecessor. He was then made CEO of Burger King, a 3G holding since 2010. He moved up to be CEO of Heinz in 2013 and now of Kraft Heinz. He’s only 46.
Underperformers get fired with the same alacrity. Budgeted costs also are evaluated unsparingly every year, or more often, and are eliminated if they’re no longer judged worth incurring. After all, Hees (pronounced “Hess”) and other top executives are 3G partners. Their own money is tied up in each venture, and they can’t afford to be sentimental about it.

Which brings us back to the Oscar Mayer plant in Madison. The truth is, that plant should have been closed long ago, and everybody knew it. “The Madison plant was a terrible plant,” says John Ruff, a retired Kraft executive who spent much of his career in food-processing plants worldwide. “It had good people, but it was an old plant that had been added to over the years. It was never meant to be run as it was being run. Closing it was probably the right thing
to do.” So why hadn’t Kraft closed it long before 3G came along? The reason is a classic problem for big, old businesses: People loved that plant. It was a treasured part of the company’s history. But not to 3G. “[Kraft] had trouble making tough choices,” says Credit Suisse analyst Robert Moskow. “3G has forced them to make tough choices, like closing the Oscar Mayer facility. It was very emotional.” Ruff agrees: “3G got rid of a lot of remaining emotional ties.”

Now project that philosophy across a $26 billion company. Step 1 in the 3G management model is a wholesale replacement of the top team and a blitzkrieg of cost cutting. At Heinz, 3G cashiered 11 of the top 12 executives in one day (as this publication chronicled in a 2013 story headlined “Squeezing Heinz”). When Heinz bought Kraft, 10 top executives were quickly dismissed. Of Kraft Heinz’s top 10 leaders today, eight are Brazilians from 3G who know the playbook. “If you don’t speak Portuguese, you’re at a bit of a disadvantage,” says a former Heinz director.

As with every 3G takeover, cost-cutting measures were imposed immediately after the takeover of Kraft. Office refrigerators long stocked with free Kraft products (cheese, Jell-O) were wheeled out within days of the merger’s closing. Corporate aircraft were ditched, and everyone from the CEO down was made to fly coach. And today employees on the road are sometimes required to double up in hotel rooms. More important than the actual savings is the message. “We think and act like owners of our business, treating every dollar as if it were our own,” the company tells prospective employees....MUCH MORE

Uber Will Pay $20 Million To Settle FTC Lawsuit Claiming it Misled Drivers about Pay

From TechCrunch:
Uber settled a lawsuit filed by the Federal Trade Commission today for $20 million. The lawsuit alleged that the ride-hailing app recruited drivers by misleading them about the amount of money they could earn through the app and the auto financing deals they could get through Uber’s Vehicle Solutions Program.

The lawsuit claims that Uber made “false, misleading, or unsubstantiated claims regarding driver earnings and its Vehicle Solutions Program.” The FTC says that, although Uber advertised that drivers could earn between $16 and $29 per hour depending on the city in which they drove, only a fraction of drivers actually earned the advertised amount.
https://fast-company-res.cloudinary.com/image/upload/w_623,c_fill,g_face/v1484867337/fastconews/zywzosqvabnocxwttkpo.jpg
In Boston, Minneapolis and Philadelphia, fewer than 10 percent of drivers earned the advertised amount, according to the FTC. In several other cities, the rate was a bit higher — fewer than 30 percent of drivers earned the advertised rate in Dallas, Phoenix and Seattle.

Uber also promoted the Vehicle Solutions Program as a low-cost way for drivers to buy a vehicle, saying drivers would get the “best financing options available” and have “unlimited miles.” The FTC suit claims this wasn’t the case at all — in fact, Uber had “no basis” for these statements. The rates offered by Uber were often higher than those commercially available, the FTC says.

By settling the lawsuit, Uber did not admit to the allegations. An Uber spokesperson told TechCrunch, “We’re pleased to have reached an agreement with the FTC. We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.”...MORE
 Here's the Federal Trade Commission press release:
Uber Agrees to Pay $20 Million to Settle FTC Charges That it Recruited Prospective Drivers with Exaggerated Earnings Claims

Thursday, January 19, 2017

"Snapchat Advertisers Can Now Target the App's Users Based on Offline Sales Data"

From AdWeek:
Snapchat advertisers are about to find out if offline data can drive better campaigns on the app. After forging measurement partnerships and data partnerships with companies like Moat, Nielsen and Millward Brown over the past year, Snap Inc. has now signed a deal with Oracle Data Cloud (formerly Datalogix) to arm marketers with more intelligence.

The partnership entails Oracle's data from offline purchases—like stats from a loyalty card program—that will be used to target consumers with relevant Snapchat ads based on products that they've purchased. Using hashed email addresses and anonymous files of mobile IDs, Snapchat matches up the data with Oracle's audiences of past purchase behavior.

Honda, STX Entertainment, Kia and The Honest Company are testing the new ad-targeting tool. STX Entertainment, for example, is zeroing in on sales from movie theater tickets.

"STX Entertainment continues to be impressed by how aggressive Snapchat has been in looking to solve our business challenges," said Amy Elkins, svp of media and marketing innovation at STX Entertainment in a statement. "Onboarding ODC moviegoer data eliminates marketing waste by allowing us to reach an audience that we know visits movie theaters."

Meanwhile, Snapchat's bigger push is to prove that its advertising creates revenue....MORE
See also: 

And from the "with-great-power-comes-great-corruption dept" (techdirt):

An Artificial Intelligence Model Has Been Created That Performs at Human Levels on Standard Intelligence Test

Northwestern University via R&D Magazine:
A Northwestern University team developed a new computational model that performs at human levels on a standard intelligence test. This work is an important step toward making artificial intelligence systems that see and understand the world as humans do.

"The model performs in the 75th percentile for American adults, making it better than average," said Northwestern Engineering's Ken Forbus. "The problems that are hard for people are also hard for the model, providing additional evidence that its operation is capturing some important properties of human cognition."

The new computational model is built on CogSketch, an artificial intelligence platform previously developed in Forbus' laboratory. The platform has the ability to solve visual problems and understand sketches in order to give immediate, interactive feedback. CogSketch also incorporates a computational model of analogy, based on Northwestern psychology professor Dedre Gentner's structure-mapping theory. (Gentner received the 2016 David E. Rumelhart Prize for her work on this theory.)

Forbus, Walter P. Murphy Professor of Electrical Engineering and Computer Science at Northwestern's McCormick School of Engineering, developed the model with Andrew Lovett, a former Northwestern postdoctoral researcher in psychology. Their research was published online this month in the journal Psychological Review.

The ability to solve complex visual problems is one of the hallmarks of human intelligence. Developing artificial intelligence systems that have this ability not only provides new evidence for the importance of symbolic representations and analogy in visual reasoning, but it could potentially shrink the gap between computer and human cognition....MORE
And in other news:
AI software is figuring out how to best humans at designing new AI software
at TechCrunch.

As noted in the intro to 2013's "Researcher Dreams Up Machines That Learn Without Humans":
Uh oh.

"Obama: 'My instinct is everybody hates media right now…that has to be an opportunity'"

Interesting on a few different levels.

From NiemanLab:
President Obama appeared on the latest episode of the new podcast Pod Save America, in what was billed as his last interview as president of the United States before Donald Trump’s inauguration on Friday. (Pod Save America is the new project from the Keepin’ It 1600 guys, former Obama staffers who broke from their podcast home at The Ringer and started the new media company Crooked Media partly in response to Trump’s election.) 

In his final days in office, Obama has in a variety of contexts highlighted his views on the problematic ways news is distributed and consumed today — from calling out what he sees as the way social media bubbles have degraded our democracy to warning of the dangers of “fake news” stories.

“For too many of us, it’s become safer to retreat into our own bubbles, whether in our neighborhoods or on college campuses, or places of worship, or especially our social media feeds, surrounded by people who look like us and share the same political outlook and never challenge our assumptions,” he said in his farewell speech in Chicago on January 10. “The rise of naked partisanship, and increasing economic and regional stratification, the splintering of our media into a channel for every taste — all this makes this great sorting seem natural, even inevitable.”

Indeed, according to a Pew study released Wednesday, Clinton and Trump supporters relied on predominantly different news sources — but for 54 percent of voters surveyed, it was television, not online news sources, that served as their primary source of election news. (Fox News was the main campaign news source among 40 percent of Trump voters; sources were more varied among Clinton voters.)

Asked on Pod Save America what advice he would have given to his 2009 self just before taking office, Obama suggested that he should’ve devoted more effort to finding “new ways of communicating with the American people”:
I would tell him that you have to spend more time thinking about new ways of communicating with the American people. You can’t be so intimidated by the way things have always been done in the White House, because the communications landscape has been shifting…
As Lincoln said, with public opinion, there’s nothing you can’t do, and without it, there’s nothing much you can do. We were going to get clobbered in 2010, probably no matter what we did, just because on my watch people were really hurting. I’d think about how I got here and spend that same effort and energy touching people directly, instead of standing behind a podium and giving a bunch of grim lectures…that’s where the impression arose that Obama is really Spock-like....
...MORE

"New Patents Hint That Amazon and Google Each Have Plans to Compete with Uber" (AMZN; GOOG)

From MIT's Technology Review, Jan. 18:

The tech giants both want a slice of the ride-hailer’s automated taxi and trucking vision, and they have their own ideas to prove it.
Uber appears to be leading the charge to develop autonomous taxis and delivery vehicles. But a pair of patents show that tech giants like Amazon and Google have no intention of being left behind.

Both patents were only recently published, but both were originally filed in 2015. That means that although Uber has been making headlines for many of its innovations over the past 12 months, other companies haven’t necessarily been slouching.

While Google is already trialing a small ride-sharing service in San Francisco, one of the new patents describes how it plans to pair self-driving vehicles with ride-hailing apps. The problem it tries to overcome: how to negotiate a pickup location if an autonomous car can’t safely or accurately navigate to the passenger like a human driver could.

Alphabet’s autonomous car division, Waymo, is now targeting commercial applications of its technology by working with automakers, which means it no longer plans to build its own vehicles. But the company does plan to start trials of robotic Chrysler Pacifica taxis this year.

In doing so, it will be squaring up directly with Uber, which is testing autonomous taxis in Pittsburgh (along with a brief experiment in San Francisco that got shut down). Waymo may even make use of the technology described in the Google patent to help the test along....MORE
Previously:
Let's Get Ready To Rumble: Amazon Vs. Uber In the Delivery Wars
Uber Say Uber Good, Amazon Bad
Amazon Goes All Uber In Boston (with a twist) AMZN 

"El Chapo" Guzman Being Sexually Harrased In Prison-Report

The people who put this blog together literally risk their lives with each word they publish.
We try to link at least once per month.
From Borderland Beat:

Reports of El Chapo claiming he is being sexually harassed
Ok folks….at first I thought this story must have been created from poor translating, but when several mainstream media sites posting the same story, and giving source credit to one of El Chapo’s attorney’s, I thought I would post it, if nothing else perhaps for a good laugh.

Joaquin Guzman Loera aka “El Chapo”, imprisoned leader of the Sinaloa cartel, has been complaining of his treatment and accommodations since “go”, and now his list of complaints supposedly includes, “sexual harassment”.

His attorney, Sylvia Delgado reports, that her client says he is being harassed by a prison guard who “squeezes” him and touches him in a manner that makes him feel “uncomfortable” and “embarrassed”....MORE

Sometimes Snark Is Funny, Sometimes It Just Exposes Laziness and/or Ignorance

This morning Matt Yglesias tweeted:
On May 27, 2013 the World Socialist Web Site had this to say about the current Secretary of Commerce:

Senators forgive Penny Pritzker’s $80 million “mistake”
On the eve of her confirmation hearing, President Obama’s nominee for commerce secretary, Penny Pritzker, admitted that she had underreported her 2012 income to the tune of $80 million, blaming a clerical error. Pritzker is worth an estimated $1.85 billion and would become the wealthiest US cabinet member in history.... MORE
Published by the International Committee of the Fourth International (ICFI)
The good news is, despite misplacing the $80 mil. Secretary Pritzker's share of PSP Capital Partners and Pritzker Realty Group is now worth an estimated $2.4-2.5 billion.

The 2013 story was originally reported by Bloomberg but the outrage at the WSWS was funnier, although BBG was briefly in contention with this quote from Ms. Pritzker's assistant and spokeswoman:
...“It is a substantial amount and we moved to correct the mistake as soon as it was discovered,”...
Yes, yes $80 million is substantial. 

Corn vs. Beans: Strong Incentive to Plant Soybeans




Last Chg
Corn 363-4-1-4
Soybeans 1067-4-7-4
Wheat 425-6-5-2

From Agrimoney:

Bull markets in grains need feeding, they say.
That is, escalating futures need a daily dose of price-supportive news to keep them on an upward path.
And the apparent lack of much fresh on Argentina's weather woes, the catalyst to the rally over the past week in prices of soybeans and of soymeal (of which the country is the world's top exporter), allowed a touch of profit-taking in early deals on Thursday....
...
China, US considerations
Still, what the apparent, if temporary, ceasefire by Argentina's weather Gods does allow is a focus on some of the other factors in the soybean market.
Such as, for instance, the potential dent to demand of prices which set a six-month high in Chicago in the last session, up 6.3% in a week, for spot March futures.
China, the top soybean importer, "thus far, is showing no interest in chasing the rally," said Richard Feltes at Chicago broker RJ O'Brien, if adding that this dearth of interest "may change after crushers return from Chinese new year".
And then there is the enhanced potential for huge US spring sowings of soybeans being encouraged by the elevated prices.
The ratio of November soybean futures: December corn futures, at 2.63, is well into territory incentivising plantings of the oilseed over the grain.
This "historically high" ratio is "providing a strong incentive for US farmers to increase 2017 US soy acreage, with private sector analysts looking for a 5m-7m acre gain" in the country's soybean area....
...MORE