Thursday, February 28, 2019

IBD: "After Hours: These 7 Stocks Are Big Movers On Earnings"

From Investor's Business Daily:
6:37 PM ET
Dow Jones futures were little changed late Thursday, along with S&P 500 futures and Nasdaq futures. Top software stocks Splunk (SPLK), Autodesk (ADSK), Workday (WDAY), Zscaler (ZS) (ALRM) and VMware (VMW) reported earnings late Thursday. Splunk stock, Workday stock, Zscaler stock, VMware stock and Autodesk stock all rose late, while Alarm stock fell. Meanwhile, Tesla stock fell modestly as Elon Musk said the electric-car maker likely will lose money in Q1 as it opened orders for a long-awaited $35,000 base version of the Tesla Model 3

Many software stocks are highly rated, including these five from different niches. Splunk stock and Alarm stock boast the best-possible IBD Composite Rating of 99. Workday stock has a 98 Composite Rating. Autodesk stock has a 96 CR, with VMware stock at 95 and Zscaler at 94. Autodesk stock was added to IBD Leaderboard as an options play. Splunk stock and Zscaler stock are Leaderboard watch list stocks. Autodesk stock and Zscaler also are on IBD Swing Trader.
Tesla (TSLA), meanwhile, has a 46 Composite Rating.

Dow Jones Futures Today
Dow Jones futures were essentially flat vs. fair value. S&P 500 futures and Nasdaq 100 futures were too. Remember that overnight action in Dow futures, Tesla stock and elsewhere doesn't necessarily translate into actual trading in the next regular session....

Workday Beats, Stock up 1% After-Hours (WDAY)

From Reuters:

Workday beats revenue and profit estimates on higher subscription revenue
Workday Inc topped Wall Street estimates for quarterly profit and revenue on Thursday, as more companies signed up for the financial and human resources software maker’s cloud-based software, sending its shares up 2 percent.

Subscription services revenue, which accounts for more than 80 percent of the company’s total revenue, rose 37.5 percent to $673.5 million, beating estimates of $633 million, according to IBES data from Refinitiv.

Professional revenue grew about 24 percent to $115.1 million, above the average estimate of $111.9 million.

Workday has been benefiting as enterprises increasingly shift to cloud-based applications to manage their payroll and human resources....MORE
From the company:
Workday Announces Fourth Quarter and Full Fiscal Year 2019 Financial Results
The stock is up $2.33 (1.18%) at $200.25. If something dramatic happens on the conference call (à la Elon) someone will tell me. 
Ahead of Today's Earnings: "How Innovative Is Workday?" (WDAY)
...There's a rumor the Go-Go's may make an appearance after the report.... 

Ahead of Today's Earnings: "How Innovative Is Workday?" (WDAY)

On January 25th we noted:
IBD: "Dow Jones Rises 3,100 Points From Dec. 26 Low; 6 Top Stocks Break Out"
We've already thanked Santa and cut the risk profile, letting-go of the triple-leveraged index stuff and figuring basis on the S&P e-mini options. On to the individual issues and maybe a sinkhole of a Broadway production....
Among the individual names are Xilinx and First Solar—which despite a meh report has since been gaining in relative strength.
Another area that Investor's Business Daily has been cheerleading (hey, we're not proud, we get some of our very best ideas from journalists) is software/cloud stuff with Salesforce, Atlassian and Workday leading the pack. Here's a November 29 post ""Following The Salesforce Earnings Tour de Force: "Workday, VMware Signal Breakouts On Strong Earnings (CRM; VMW; WDAY)"
Software and cloud seems to be the new FAANG.

And on December 27, "After the Close: Futures Turn Lower, IBD Pitches Some Software Names (WDAY)".

A few days ago, from Motley Fool Feb. 25:

How Innovative Is Workday?
Powerful organic growth can indicate years of outperformance in young tech stocks. Here's how the online enterprise resource planning pioneer rates -- and what to look for next.
Organic innovation is hard enough. Creating products that help usher in entirely new categories is rare. The most innovative companies combine both qualities to disrupt incumbents and unleash massive wealth for early investors.

Is Workday (NASDAQ:WDAY), which helped bring the cloud revolution to large-scale enterprise resource planning (ERP) and human resources (HR) software, that sort of multibagger in the making? It's certainly growing fast enough: Revenue rose 36% in fiscal 2017 and 2018, and it's up another 30.8% over the trailing 12 months, according to S&P Global Market Intelligence.

Continued improvements in the underlying platform have contributed to those gains. For example, in August 2007, Workday unveiled the beta release of its financial management platform. Today, the company is signing big names every quarter and reports over 60% growth in annual contract value (ACV) for its financial management suite of products. Recent wins include FOX, H&R Block, and the Atlanta Braves baseball team.

Ambitious, effective innovation will be required to make continued gains in a tough category, so it's worth understanding how effective Workday's R&D efforts have been to date, and whether investors have reason to expect even better results in the future. Let's go under the hood and apply my four-question test....MORE

Today we have Bloomberg saying nice things:

Workday's $10 Billion Plan to Outsell Oracle in HR Software
Last December, in a large building resembling a warehouse in the Bay Area suburb of Pleasanton, California, 2,400 Workday Inc. employees or “workmates” gathered for a day of raucous festivities. An employee band, cheekily misspelled Wrok Day (as in Rock Day), played songs like Nirvana’s “Smells Like Teen Spirit,” and Hall & Oates’s “You Make My Dreams.” Some in the crowd waved glow sticks and cheered. But the most rapturous applause at the event was reserved for a number: $10 billion. In his speech to the troops, Aneel Bhusri, the co-founder and chief executive officer, said the 14-year-old upstart was targeting that annual sales milestone in as many as six years, up from $2 billion last year.

“We can get there,” he said as the crowd cheered. “It’s achievable under almost any scenario.”
Workday makes applications that help companies with mundane tasks like keeping payroll, plotting expenses, tracking employee absences and managing job candidates. It sounds unglamorous, but as in many of Silicon Valley’s business-focused software fields, there’s fierce drama behind the scenes. Workday co-founders Bhusri and David Duffield once had a human resources software company, PeopleSoft, that was taken over by Oracle Corp. in a famously hostile acquisition. Now they're back with a familiar rival: Oracle.

Most large companies still run older financial tools made by Oracle, the world’s second-largest software maker, or the German giant SAP SE. Workday has persuaded big corporate clients like Bank of America and Inc. to use its software, but the key to reaching that magical $10 billion number is getting more companies to switch their cloud-based accounting tools as well.
“The biggest challenge for Workday is inertia,” Anurag Rana, an analyst at Bloomberg Intelligence, said. Accounting systems are “the heart and lungs of your operation and people are reluctant to change that. It is very difficult to get rid of your SAP and Oracle systems and move to the cloud.” Workday’s customer service record may be its most valuable tool in growing its client list, he added.
Bhusri has tried to take on Oracle and SAP in part by cultivating a kinder, gentler image. Both of Workday’s larger rivals have accused customers of violating complex contracts, and asked for large financial penalties. Lawsuits have sometimes resulted, such as SAP’s suit with beverage maker Diageo, which was settled out of court in 2017. Oracle and SAP have also both been accused of pressuring clients to upgrade their software. An SAP spokeswoman declined to comment. Oracle didn’t respond to a request to comment.

In a business known for its egotistical characters – including Oracle Chairman Larry Ellison, who frequently rants against his rivals – Bhusri said in an interview he’s determined to compete as a “nice guy,” comparing himself with Stephen Curry, the point guard of the Golden State Warriors, who has a reputation for being amiable.

But Bhusri is just as likely to lob insults at his competitors, even if he feigns to soften the blow. “They’re both struggling making a transition. Someone called them dinosaurs,” he said to his employees about Oracle and SAP on stage in December. “Not me.”

In 2005, Oracle completed its hostile takeover of PeopleSoft, culminating a grueling 18-month affair that included an antitrust lawsuit with the U.S. government and PeopleSoft’s board rejecting no fewer than five Oracle bids. Duffield and Bhusri were powerless to stop it and left feeling disappointed. Later that year, they met for breakfast at a diner in Truckee, California, and plotted their next step, sketching on a napkin the first stages of what would become Workday, which would use newer technology than PeopleSoft – cloud computing....MUCH MORE
This is not an unknown name and unfortunately the stock reflects that:

WDAY Workday, Inc. daily Stock Chart
But as the old-times used to say: "The good ones always look expensive, and then they go higher."
There's a rumor the Go-Go's may make an appearance after the report.

Previously on leadership:
Nov. 30
China? Soybeans and Transport Stocks Are Up On a Meh Day
And cloud software....
If one can ascribe animal spirits to lines-on-chart I'd say soybeans are looking for a reason to trade higher.
Great. I am now anthropomorphizing inanimate objects.
Finally, software. Going back to IBD, November 29, evening:

Workday Stock Pops As Earnings Beat On Financial Software Growth
Workday (WDAY) late Thursday reported third-quarter revenue, profit and billings that topped expectations as the enterprise software maker signed bigger deals and gained more customers for financial management tools. Workday stock popped in after-hours trading....

...Billings growth, a sales metric, was a bright spot, said Piper Jaffray analyst Alex Zukin. He said calculated billings jumped 48% to $830 million.
"Workday has not seen this level of billings growth since fiscal Q2 2016, or 13 quarters ago," he said in a report....MORE
The stock is up  $19.78 (+13.61%) at $165.08.
Nov. 27 
"Dow Jones Futures: Salesforce Earnings Bullish For Stock Market Rally" (CRM) 
Nov. 20 
Dow Jones Falls 1,000 Points In 2 Days (Semiconductors Surge tho)
The stock that will signal a turn in sentiment is Salesforce which led the whole Software is Eating the World on the upmove and then, as the Russians say, The World Eats the SaaS. Or something....

Rhyme Time at the San Francisco Federal Reserve Bank: "Did the Yield Curve Flip? Will the Economy Dip?"

The curve is not yet important. We (possibly delusionally) think we'll be able to tell you when it is.

From the SF Fed blog:
As the yield curve has continued to flatten, worries about recession risk have increased. However, according to conventional metrics, the current yield curve is not inverted and therefore does not predict a recession in the near future.

Perhaps the single most reliable way to see into the economic future is the yield curve—the relationship between maturities and interest rates on government bonds. The yield curve captures the cost of borrowing money to finance consumption, investment, or government spending and thus is of central importance to the entire economy. Its shape turns out to be an excellent predictor of future economic activity.

Yield curves generally come in three different shapes—normal, flat, and inverted—which are characterized by long-term interest rates being above, similar to, or below short-term interest rates. In the United States and many other countries, an inverted yield curve invariably signals a future economic slowdown. In fact, every U.S. recession in the last 60 years was preceded by an inversion (Bauer and Mertens 2018a). While different theories could account for this empirical phenomenon, part of the explanation is undoubtedly the forward-looking nature of long-term interest rates, which incorporate investor expectations about the future economic outlook.

Recent shifts in the Treasury yield curve have prompted extensive discussion in the news about the possibility of a recession. Figure 1 shows the evolution of three different Treasury yield spreads since the beginning of 2018. The gradual downward trend in spreads turned into a more sudden decline since last November, as long-term Treasury yields fell due to downward revisions of the global growth outlook, uncertainty over global trade, and a perceived shift in communication from Fed officials, among other factors. In December, some yield spreads turned negative, including the difference between the five-year and one-year yields, which has remained between –5 and –10 basis points (hundredths of a percentage point) for most of 2019. Some commentators have viewed this as the beginning of a yield curve inversion and a signal of an impending recession.

Figure 1
Different yield spreads are sending mixed signals
Figure 1 shows the evolution of three different Treasury yield spreads since the beginning of 2018.

A yield curve inversion is defined as an episode when short-term interest rates, including the federal funds rate, rise above long-term rates. However, today’s yield curve still slopes upward, if only slightly so, with the ten-year Treasury yield about 20 to 30 basis points above the three-month yield and the federal funds rate.

Visual inspection may be the single best way to judge the shape of the yield curve. Figure 2 plots the recent Treasury yields in comparison to the levels in the beginning of 2018. The yield curve has shifted up, flattened somewhat, and now has a slight “dent” at maturities from one to five years, where yields decline with maturity. But it currently is not inverted according to the usual definition.

Figure 2
Yield curve has shifted in the past year
Figure 2 plots the recent Treasury yields in comparison to the levels in the beginning of 2018.

What single number best summarizes the shape of the yield curve? That is, which term spread (difference between interest rates of different “terms” or maturities) should we focus on?...
St. Louis Fed: Does the Yield Curve Really Forecast Recession?
Professor Damodaran Looks At Yield Curves

Finally, as noted in the outro from December 7's "Blackstone's Byron Wien Seems Chipper, Almost Jolly".
Remember early December? Everyone was talking yield curve around the clock. And so were we. Here's the outro:
note: the above was written before the 2's/5's or 3's/5's or whatever the fashionable bit of the curve that makes the inversion case, inverted.
At the moment the curve doesn't matter, if and when we think it does, you can rest assured we'll go "curve, curve, curve" 24-7.

For now, as a commenter—I forget where—said: "I think the pundits just like saying 'inversion'".
Inversion. It's almost soothing, in a paradoxical kind of way.
Personally, I like paradoxical. More consonants.

Startups That Want to Run Smart Cities

Right now money should probably be directed at the established companies, chips and other 'brains', IoT sensors, 5G networks, data center equipment and data center REITS etc.
Down the road some of the companies listed here or their competitors will be of interest but between now and then the shake-out will be brutal.

From Nanalyze:

Future City of Tomorrow To Be Powered by Smart Technology
We recently told you about the building boom behind spaceports, where sci-fi visions of high-tech rocket bases straight out of Star Wars are overlaid on existing airports or old industrial sites. Most of the “boom” is still on paper only, with spiffy illustrations of spaceports inked by artists likely taking a break from drawing oversexed warrior maidens for graphic novels. Let’s face it: Any self-respecting future city of tomorrow will need a spaceport, as part of its overall strategy of applying smart technologies and other innovations like flying cars to make the lives of its citizens better – or at least look cooler.

What is a Smart City?
We’ve profiled so-called smart city technologies before, especially for applications in transportation. While there’s not one official definition for the term “smart city,” we’ll defer to the bright minds of CB Insights with this concise explanation:
A city is considered to be ‘smart’ when it can collect and analyze mass quantities of data from a wide variety of industries, from urban planning to garbage collection. In a smart city, a complex network of interconnected sensors, devices, and software must be built and maintained.
About two-thirds of cities are investing in some sort of smart city technology, according to the National League of Cities. About a quarter of those cities still living in the Dark Ages are thinking about hiring some overpriced consultants to help them implement smart technology.
Hundreds of startups have emerged offering smart city solutions.
Hundreds of startups have emerged offering smart city solutions. Credit: CB Insights

This seems to be a particularly good time to dive back into the topic, as the looming introduction of 5G is expected to help connect smart cities like never before. Add in the power of artificial intelligence to analyze and detect patterns in all of that incoming data from sensors and devices, and we can start to see the future city of tomorrow beginning to take shape. Below we profile some of the key technological sectors of the smart city and a few recently funded startups behind them.

Smart City Management
Cities are complex organisms, with many moving parts. The person usually tasked with the day-to-day operations of overseeing the unruly beast is the city manager, a position with an average salary of more than $95,000. Sounds like a white-collar job just waiting to be replaced by artificial intelligence. Enter Atlantis, an AI-driven platform from San Francisco-based startup Quantela, which was founded in 2010. The company recently hauled in $10 million on a Series A round in November. Quantela bills Atlantis as a platform for “smarter urban infrastructure utilization decisions.”
Quantela smart solutions
Source: Quantela

Atlantis aggregates and integrates both historical and real-time data from millions of sensors and Internet of Things (IoT) devices. It then applies machine learning to help humans make better decisions about how to run their cities. For example, it can suggest the optimal time to schedule trash pickup in a neighborhood based on traffic patterns or even predict areas where pollution may be particularly bad. At least that’s what all the flashy, buzzword-filled marketing says. Still, the company claims offices in India, Europe, and the United States. It also recently entered into a partnership with the University of California, Berkeley, to incubate smart city startups by providing access to Atlantis.

Smart Mobility
We’ve often heard that the average commuter spends 42 hours a year stuck in traffic. While 42 might be the answer to the universe, that’s still a lot of time that could be better spent honing your esports skills. Fixing traffic congestion might just be job No. 1 when it comes to building the smart cities of the future. That’s why we see so much money being poured into technologies such as self-driving cars, electric scooters, and delivery robots.
Computer vision at a street intersection.
Gee, we don’t know why so many people die at this intersection. Credit: Numina
New York-based Numina – which claims support from a number of well-known accelerators and foundations, including the Clinton Foundation, as well as BMW – is all about driving less. Toward that goal, the startup has developed a sensor platform, mounted to street infrastructure such as light poles, that uses computer vision to measure how people and objects move throughout streets and public spaces. Numina’s platform counts each type of traveler or object, as well as their speeds, paths, directionality, proximities to one another, time spent in key locations, and more. City governments can then take that information to help unlock gridlock or improve bicycle networks, for example....

As Bank of America Drops the Merrill Lynch Name: "Goodbye Merrill Lynch - 'Shame, Shame, Shame' (Winthrop H. Smith: Address to the Shareholders of Merrill Lynch)"

The story at the Wall Street Journal a few days ago:

Bank of America to Drop Merrill Lynch Name From Some Businesses
Mother Merrill is fading away.

Bank of America Corp. said it would phase out the name Merrill Lynch from some businesses. Charlotte, N.C.-based Bank of America bought that storied Wall Street firm more than a decade ago.
Bank of America plans to remove the Merrill Lynch name from its trading and investment-banking operations....
is a good reason to reprise an April 2009 post:

Goodbye Merrill Lynch - 'Shame, Shame, Shame' (Winthrop H. Smith: Address to the Shareholders of Merrill Lynch)
The post immediately below on Richard Bernstein's departure from Mother Merrill reminded me of an article in 'Here is the City' back in December. I rarely copy out complete posts/articles/stories, figuring that good writing deserves the traffic/exposure but in this case I am going to, for fear that HITC might someday let the link expire. Here's a bit of history:
Below is an impassioned speech delivered Friday to shareholders Winthrop H. Smith, a long-time Merrill employee and son of one of the founders, as they gave the go-ahead to merge with Bank of America.
'Thank you for allowing me to say a few words on this most important morning. I will say more about you in a moment, but I just wanted to thank you up front for your leadership and all you have attempted to do this past year.

Fellow Shareholders, I speak to you today as a 28 year employee, a shareholder and the son of one of the founding fathers of Merrill Lynch.

On January 6th, 1914, Charlie Merrill opened a one man shop just a few blocks from where we are today. A year later he was joined by his friend, Eddie Lynch and the first Merrill, Lynch & Co. was launched. One year later, my father joined the firm straight out of Amherst College. Thus began a wonderful partnership and friendship that lasted a life time.

Like Merrill Magowan I have been privileged to know every CEO of Merrill Lynch from Charlie Merrill to John Thain. Most of them, including John, were principled leaders who never placed their interests ahead of those of the firm. Most of them valued and promoted the principles that Charlie Merrill created and most of them cared deeply for the welfare of their fellow colleagues.

Merrill Lynch grew and thrived through the tough as well as the good times. By 2001 we were one of the most successful and respected global financial firms in the world with a stock price that hit $80 early that year. The ROI to both our employees and shareholders was superb. $100,000 invested in the MER IPO was worth $2.3 million in early 2001,

But Merrill Lynch was more than a profitable company. It was a family. It was a culture. Merrill Lynch to so many of us was Mother Merrill, and it is so sad that the CEO who preceeded John Thain and the Board of Directors had no understanding of what that meant. Arthur Levitt, the former Chair of the SEC once commented that of all the Wall Street firms only Merrill Lynch had a soul. A soul ! Can you imagine someone; much less the Chair of the SEC, saying a company had a soul ? Well it did, because the tone, the culture, the ethics that we were all so proud of began that day, January 6th, 1914.

It began with Charlie Merrill's first rule that the Interests of the Customer always came first. It began with his partners' understanding that they were a Team and that no one's ego was more important than the team. It began with the knowledge that the primary assets of the firm went in and out of their door every day. They insisted on Respect for everyone. It began with an understanding that Merrill was part of a broader Community and that we had an obligation to support that community. It began with the simple belief that Integrity was everything and when a mistake was made, it was owned up to, corrected and never covered up. These principles of Charlie Merrill were passed to my father and then to Mike McCarthy, and subsequent CEOs and the culture endured because of the stories that were told to new Merrill Lynchers about our predecessors.

We knew the story of Charlie Merrill telling his clients to sell before the crash of 1929, of Don Regan testifying in Congress and saying 'We goofed' and then making the clients whole for our mistake. We knew the story of Roger Birk realizing we erred in selling Baldwin United annuities to our clients and making them whole. We heard the story of Dan Tully facing down a CEO bully in his office when that person insulted one of Dan's teammates. Stories maintained the culture and created a bond between the founding partners and those who worked at Merrill 80 years later.

Merrill Lynch was a brand that we were so proud to wear on our heart and even our ties. We had a swagger, and we were damn proud to be part of "The Thundering Herd." We loved being the underdog and doing things others thought we couldn't accomplish. We were optimists that always knew we would get better and better and be number one in whatever we chose to pursue. People like Bill Schreyer reminded us that he had never met a rich pessimist.

We even took on Goldman Sachs in the 80's and 90's, and by the time I resigned in 2001 they were damned scared that we were competing with them successfully everywhere in the world. YPF, Shanghai Petrochemical, China Telecom, Indosat, CVRD, Telefonica D'Espana were only some of the highly sought after privatization mandates that we won around the world. Our private client assets totaled $1.5 Trillion We were proud of our founders, we were proud of our leaders, we were proud of our colleagues, we were proud of what Merrill Lynch was in 2001.We were proud to be the leader in private wealth management. We were proud of our unique global footprint. We were proud of our leadership in both debt and equity underwriting as well as M&A. We were proud of our asset management business. But most of all we were proud of our principles that we inherited from Charlie Merrill.

Many of us who have departed still get together. At one recent gathering a former senior executive of the Equity Division and now a successful executive elsewhere emailed this to the organizers. 'I thought the setting was terrific, but it paled in comparison to the people gathered. What a wonderful collection of character and talent.

Those years we had at Merrill were like catching lightening in a bottle'. Like catching lightening in a bottle! That captures so much of what our culture created and what we felt and why Merrill was so successful! We were not about brick and mortar and cold numbers. We were about character, spirit, leadership, ethics and pride. As one former CEO said to us when times got tough, 'Just remember, we are the only firm that doesn't have to compete against Merrill Lynch'.

At this point I want to make it very clear that I support the merger with Bank of America, and I am thankful for John Thain's clear and decisive leadership at that moment of crisis this fall. I am encouraged by the respect that Ken Lewis says he has for our great franchise and for the many thousands of fine professionals who are still part of the Merrill Lynch team. I do hope Ken and his colleagues at Bank of America will allow the firm that they bought to thrive under its new ownership, and that they will appreciate the strong culture that made Merrill what it was by 2001 and will also appreciate the many fine people who hung in and are still with Merrill Lynch, including members of my own family.

All of us want this new organization to succeed and become preeminent. We all know that what has occurred is the given reality and it is time to move forward. However, before we do. Some things need to be said for the record.

Today did not have to come. In the past it was Merrill Lynch that came to the rescue of Goodbody, White Weld and Becker. It was Merrill Lynch that strong and successful firms like Fenner & Beane, CJ Devine, Smith New Court, DSP in India, Midland Walwyn in Canada and Mercury Asset Management wanted to join. Merrill always thrived in times of turmoil and grew market share. Today did not have to come.

Today is not the result of the sub-prime mess or synthetic CDOs. They are the symptoms. This is the story of failed leadership and the failure of a Board of Directors to understand what was happening to this great company, and its failure to take action soon enough.

I stand here today and say shame to both the current as well as the former Directors who allowed this former CEO to wreak havoc on this great company.
Shame on them for allowing this former CEO to consciously and openly disparage Mother Merrill, throw our founding principles down a flight of stairs and tear out the soul of the firm.

In the fall of 2001, I was asked to remain as Vice Chairman of Merrill Lynch. But in a private meeting it was obvious that this CEO to be had no respect for our history, for our culture and for the five principles that had served us so well. I wanted to stay. My heart said stay. But I knew I could not. I would not have been able to look myself in the mirror each morning! That was a day I never thought could happen. Shame on members of the Board for never asking any of us who loved this firm, why we had to leave rather than remain part of something we could not in good conscience support. Some of us had the means to leave. Unfortunately many others did not and they will tell you how unpleasant it was. Just ask them.

Shame on these Directors for allowing this former CEO to rid the firm of thousands of years of experience. Shame of them for allowing this former CEO to surround himself with many people who did not have the perspective of other market cycles and the experience of time. Shame for allowing this CEO to surround himself with many people who did not share the same values that made us great and appreciate our winning culture. Shame on them for allowing this CEO to cut costs and businesses so severely and bluntly for the sake of short term earnings that he cut out future growth. Shame on them for allowing him to over leverage the firm and fill the balance sheet with toxic waste to create short term earnings.
Shame of them for allowing good people like Dan Bayly and a few others to be used as scapegoats to settle the US Government's Enron case against Merrill Lynch and for allowing these wonderful human beings and loyal Merrill Lynchers to go to Federal Prison unjustly. Fortunately, the Court of Appeals overturned the sentence. Shame on them for not knowing the Merrill Lynch helicopter and plane and other perquisites were being used irresponsibly.

Shame, shame, shame for allowing one man to consciously unwind a culture and rip out the soul of this great firm. Shame on them for allowing this former Stan O'Neal to retire with a $160 million retirement package and shame on them for not resigning themselves.

I am not alone in these sentiments. So many former and present Merrill Lynchers share this anger - this sadness about what was allowed to occur. Just this week a former Merrill Lynch senior women executive emailed me and said, 'It is heartbreaking to see what greed and the absence of principles did to MER, one of the finest companies in America'.

What breaks my heart even more is to see the financial damage that has been inflicted on so many families that devoted their life to the Firm and to all our stakeholders.

Where is the accountability ? No wonder that the Main Street that learned to trust Merrill Lynch in the 1940's has lost faith in Wall Street in 2008. Merrill Lynch is not alone in this. But in the past Merrill Lynch rose above the crowd and distanced itself from the greed that brought others down. Our principled leaders steered us through many challenges, and we emerged stronger because of them.

But I must give the Devil his due. I applaud the Board for selecting John Thain. John inherited a mess, but he did so many of the right things. He reached out to the past; he reached out to the people of Merrill Lynch around the world and showed them his humanity as well as his intelligence. John had the intellect, the experience, the humility, the common sense and the integrity to pull it off had not the markets melted down this past fall. Then he had the wisdom as Kenny Rogers sang to know when to fold them so that Merrill did not go the way of Lehman.

We thank you John not only for what you tried to do and what you did do. We thank you because we know you knew what Mother Merrill really stood for. As a competitor at Goldman Sachs you respected our past and our present and you were serious about restoring our valued principles once you became our leader.

I am personally pleased that you will be leading the new Merrill Lynch that will operate under the Bank of America umbrella. So many of us are hopeful that the brand will survive, that the strengths in Global Private Wealth Management and Global Investment Banking in particular will be recognized and maintained. We hope that you and your colleagues will continue to tell the stories that will maintain the principles and the culture that all began just down the block on January 6th, 1914 and enabled Merrill Lynch to be the firm it was in 2001.

Merrill Lynch has always been Bullish on America. Now we hope that you, John, and Ken Lewis will make sure that Bank of America will not only be Bullish on Merrill Lynch but will carry forward the Merrill Lynch principles along with those of Bank of America and continue a 'Tradition of Trust' that will help to restore Main Street trust in Wall Street once again.

There are many parallels today with the world and the economy that existed in 1940 when Charlie Merrill and my dad and their talented teammates set upon the course of taking Wall Street to Main Street.

In 1999, Warren Bennis and Dan Heenan, two distinguished professors of business wrote a book called 'Co-Leaders'. One chapter was about the remarkable partnership and friendship that existed between Charlie Merrill and my father.

The closing two paragraphs read as follows:

'When Charlie Merrill and Winthrop Smith entered Wall Street, Americans were wary stock buyers. At most only 15% of households were in the market. Today almost half of the adult population has money socked away in equities. The financial world has changed, in large part because of these farsighted co-leaders. Investor confidence is at an all-time high. More people have money in the stock marker than every before.

Working together, Merrill and Smith made ordinary people bullish on America. Thanks to them, people's capitalism is a reality. Besides democratizing investing, they helped provide the US industry with much-needed capital for expansion. In tandem they were truly, in Merrill Lynch's famous catch phrase, 'a breed apart'.

Now new co-leaders in the form of Ken Lewis and John Thain have that same golden opportunity - in fact the responsibility - to restore the trust and the confidence that Main Street must have in Wall Street as this time of turmoil. There is no reason why this new partnership of Bank of America and Merrill Lynch and its co-leaders of 2008 can not achieve for America and the World what Charlie Merrill and my father did 68 years ago.

While today did not have to come and should not have come, it did! So, I wish all at Merrill Lynch and their colleagues at Bank of America the best of fortune in the years ahead. This new firm can and should be the leading global investment firm in the years ahead. It should be great and make all of you who will be part of it as proud as we were of the Merrill Lynch we knew and loved!

I will end by saying to my many Merrill Lynch friends, my extended Merrill Lynch family around the World. Thanks for the memories.

No one can ever take those away.

It was a Hell of a run!
Here's the Notice of Special Meeting of Stockholders, December 5, 2008.
The homepage of Here is the City.

The Leap Baby Crime Loophole

Like the Yellowstone "zone of death' where you can supposedly get away with murder because, due to an oddity of the timing of the National Park and the admittance to the Union of the three states it resides in, there is no jurisdiction to prosecute, the leap baby loophole is easily solved. More after the jump.
Via Metafilter:
If a Leap Baby born in 2000 commits a crime on February 28, 2018, should they be tried as a minor or an adult? One girl challenged the Australian courts with just this conundrum when she chose February 28, 2018 for her crime, resulting in incredibly complicated discussions of what exactly a "month" is and an initial ruling overturned on appeal....
The comments are as interesting as the learned legal discussion:
"This is a stock image of a woman looking confused, not the teenager from the court judgement."
"This is another stock image of the same woman, who is not the teenager from the court judgement, looking confused."
BuzzFeed: thank you.
posted by zachlipton at 4:01 PM on September 15, 2018 [26 favorites]

I propose a compromise. We can go by strict birthdays, like in Pirates of Penzance. So she's off the hook for the crime, but she can't drink until 2072.
posted by J.K. Seazer at 4:09 PM on September 15, 2018 [35 favorites]

Clearly this means that for those specific babies, they have one day in their life when they don't exist legally, and as such are immune to all prosecution for crimes committed on that day.
posted by CrystalDave at 4:15 PM on September 15, 2018 [3 favorites]

In the Yellowstone situation, popularized most recently by Vox (here via ScienceAlert) the one time a defendant attempted to use the defense (in this case for killing a bison) the judge said he wouldn't allow such nonsense and the defendant could appeal his ruling all the way to the U.S. Supreme Court if he wished. The great buffalo hunter entered into a plea agreement with the prosecutors.

In both these situations, if the case concerned a capital crime, I would think some aggrieved local would take an Alexander-deals-with-the-knot-of Gordias approach and just shoot the perp.

Capital Markets: "Trump Walks Away from North Korea. Should Beijing Worry?"

And it appears the pound is going back to $4.80.
Might be time to dust off the history books and do a post on old man Morgan's gold-point arbitrage.

From Marc to Market:
Overview: News that the US-North Korean summit ended abruptly without an agreement spurred losses in equities and gains in the Swiss franc and Japanese yen. US President Trump willingness to walk away from the talks is important in and of itself, but it also sends a warning not to go all in on a US-China trade agreement that could also sour at the last minute. North Korea may express its displeasure by renewing missile tests. In addition, the tension between India and Pakistan remains in a heightened state. Equities in Asia Pacific (with the notable exception of India and Australia) and Europe are lower, and US shares are trading softer in Europe. Gold is firm, though below yesterday's high ($1333). Oil is paring yesterday's ~2.5% gain helped by the biggest drawdown of US inventories (8.65 mln barrels), which snaps a five-week build and offsets in full the past three weeks of stock building. The dollar is mixed, with the dollar-bloc currencies and sterling lag, while Sweden's strong Q4 GDP (1.2% quarter-over-quarter rather than 0.6% median forecast in the Bloomberg survey) has lifted the krona to the top of the boards with around a 0.8% gain.

Asia Pacific
Japan reported disappointing data that cannot simply be dismissed due to the usual distortions at the start of the year. January industrial output tumbled 3.7%. Economists expected something closer to a 2.5% decline. The data may be exaggerated, but the direction is clear. It is the third consecutive month that industrial output fell. Moreover, the decline over the past three months is the largest in eight years. The same general pattern is seen in retail sales, which Japan reported fell 2.3% in January. It was three times larger a decline than economists expected. It is the second decline in three months, during which time retail sales have fallen most in two years.

China disappointed. If the official PMI is manipulated by the government as some suspect, they are not doing a good job. The official manufacturing PMI fell further into contraction territory at 49.2 (from 49.5). This is a three-year low. The output component fell below the 50 boom/bust level for the first time since 2009. The non-manufacturing PMI slipped to 54.3 (from 54.7). Construction was notably weak. Investors seemed to look past disappointment, perhaps persuaded as we, that Chinese officials are committed to doing whatever it takes strengthen the economy, which avoids the further estrangement of the people from the Party and illustrates its resolve in the face of a foreign threat.

The dollar is trading a little softer against the yen but remains in the upper end of yesterday's trading range. Recall the high for the week was recorded on Monday near JPY111.25. Yesterday, the low for the week was recorded near JPY110.35, which coincided with the 20-day moving average, which the dollar has not closed below this month. There is a $500 mln option at JPY110.40 that expires today. The Australian dollar posted an outside down day yesterday by trading on both sides of Tuesday's range and closing below its low. However, there has been no follow-through selling today, and the Aussie is consolidating mostly in a narrow range of $0.7130-$0.7150. There is an expiring option for A$935 mln struck at the upper end of that range that may be reinforcing the cap....MORE
So what happened in Hanoi?
It started out on a promising note:
And then it all went bad:

Shipping/LNG: "Novatek Wants Arctic Sea Route Open Year Round"

That may be a tall order over the next few years.
Despite the return of the troubling thin ice in the Bering and Chukchi seas—top center in this DMI map:

the overall ice sheet is still recovering from the lows earlier this decade, see after the jump.
(we use volume rather than extent as a better measure of what the weather and melt physics are acting upon)
From gCaptain:
Russian gas producer Novatek wants to use nuclear icebreakers to keep the Northern Sea Route, a shipping path traversing the Arctic to Asia, open all year long for its liquefied natural gas (LNG), a top executive said on Wednesday.

“Our plan is to keep the Northern Sea Route open twelve months a year in 2023 to 25 with 100-megawatt-hour nuclear icebreakers,”...MORE
The recovery does not mean that the trend has reversed, just that for now the odds that you'll need a big icebreaker are going up. The Russians seem to know this and are building some next-generation ships that will be the most powerful ever.
Via the Pan-Arctic Ice Ocean Modeling and Assimilation System:

Plans Change for the Salvage of Norway's Sunken Frigate, the Helge Ingstad

First up, Marine Executive, Feb. 26, 2019:

Photos: Operation to Raise Norwegian Frigate Underway 
The operation to raise the partially sunken frigate HNoMS Helge Ingstad started early morning on Tuesday 26 February. The operation is estimated to take five to six days.

The frigate was involved in a collision with the oil tanker Sola TS just outside the coast northwest of Bergen in western Norway on November 8, 2018.

The operation to raise the ship out of the water has been complex, and it has been postponed several times due to rough weather conditions. In order to raise the frigate safely, wind and waves must be calm for the duration of the operartion. Maximum wave height must not exceed 0.5 meters....MORE

And from Views and News From Norway, the headline story, February 27:
After a day of slowly raising the sunken frigate KNM Helge Ingstad out of the Hjelte Fjord, there’s been a change of plan. Fears of rougher seas and weather are prompting salvage crews to now move the wreckage 30 kilometers south to the other side of the fjord, where waters are expected to be calmer.

The frigate is now off the seabed and secured by chains from the heavy-lift ships used to raise it in an operation that finally began this week, nearly four months after the frigate collided with a tanker and sank while returning from NATO exercises.

Swells were too strong, navy officials announced Wednesday morning, to continue the operation at the site of the sinking. The frigate was high enough in the water to start pumping water out of it, and start moving it to a more protected area of the fjord off the south side of Hanøytangen on the island of Askøy....MORE
 Cranes raise the Norwegian navy frigate KNM Helge Ingstad, in a harbor north of Bergen, Norway, on Tuesday. 
The operation has begun to raise a Norwegian frigate that sank last year in a harbor north of Bergen following a collision with an oil tanker. 
(Pool via NTB Scanpix via AP)
Nov. 8 
Norway's Equinor Announced They Restarted Operations at the Kollsnes Gas Facility, Britain Will Get Its Methane (and the ship that wouldn't sink)
Nov. 14
Norway Getting Ready to Lift Sinking Frigate
Fortunately, what with the offshore oil platforms and everything, Norway has some experience lifting and moving heavy stuff....

Note the date. That report proved to be a bit optimistic.

Wednesday, February 27, 2019

Shipping: "Electric Container Ships Are Stuck on the Horizon"—Vaclav Smil

Vaclav Smil is known in some circles as the guy who taught Bill Gates about energy.
Some prior posts after the jump

From IEEE Spectrum:

Batteries still can’t scale up to power the world’s biggest vessels

Just about everything you wear or use around the house once sat in steel boxes on ships whose diesel engines propel them from Asia, emitting particulates and carbon dioxide. Surely, you would think, we can do better.

After all, we’ve had electric locomotives for more than a century and high-speed electric trains for more than half a century, and recently we have been expanding the global fleet of electric cars. Why not get electric container ships? Actually, the first one should begin to operate this year: the Yara Birkeland, built by Marin Teknikk, in Norway, is not only the world’s first electric-powered, zero-emissions container ship but also the first autonomous commercial vessel.

But don’t write off giant diesel-powered container ships and their critical role in a globalized economy just yet. Here is a back-of-the-envelope calculation that explains why.

Containers come in different sizes, but most are the standard twenty-foot equivalent units (TEU)—rectangular prisms 6.1 meters (20 feet) long and 2.4 meters wide. The first small container ships of the 1960s carried mere hundreds of TEUs; now Maersk’s Triple-E class ships load 18,000 TEUs, and OOCL Hong Kong holds the record, at 21,413. At the “super slow steaming,” fuel-saving speed of 16 knots, these ships can make the journey from Hong Kong to Hamburg in 31 days.

Now look at the Yara Birkeland. It will carry just 120 TEU, its service speed will be 6 knots, its longest intended operation will be 30 nautical miles—between Herøya and Larvik, in Norway—and its batteries will deliver 7 to 9 megawatt hours. Today’s state-of-the-art diesel container vessels thus carry 150 times as many boxes over distances 400 times as long at speeds three to four times as fast as the pioneering electric ship can handle.

What would it take to make an electric ship that can carry 18,000 TEUs? In a 31-day trip, today’s efficient diesel vessel burns 4,650 metric tons of fuel (bunker or diesel), each ton packing 42 gigajoules. That’s an energy density of about 11,700 watt-hours per kilogram, versus 300 Wh/kg for today’s lithium-ion batteries, a nearly 40-fold difference.

The total fuel demand for the trip is about 195 terajoules, or 54 gigawatt-hours. Large diesels (and those in the ships are the largest we have) are about 50 percent efficient, hence their useful propulsive energy demand is about 27 GWh. To match that demand, large electric motors operating at 90 percent efficiency would need about 30 GWh of electricity.

Load the ship with today’s best commercial Li-ion batteries (300 Wh/kg) and still it would have to carry about 100,000 metric tons of them to go nonstop from Asia to Europe in 31 days....MORE
Although it is the now sadly deceased David J.C. Mackay (Cavendish Lab, Regius Prof, polymath, probable genius etc.) I mention if someone wants to talk to me about energy i.e. "have you read his book?", Vaclav Smil is almost in the same league.

Previously on Smil:
Meet The Guy Who Taught Bill Gates About Energy
"Vaclav Smil Takes on Jeremy Grantham Over Peak Fertilizer"
Vaclav Smil: Planet of the Cows
Our readers may know Mr. Smil as a big deal in the Thinking-about-Energy biz. Here he is thinking about bovines....

Previous Smil at Spectrum:
Vaclav Smil: "Advanced Economies Must Still Make Things"
Vaclav Smil: "Cellphones as a fifth-order elaboration of Maxwell’s theory"
Calories In, Kilowatts Out: Apparently Sweating Is Important
"Happy Birthday to Moore’s Law" (plus party pooper Vaclav Smil)
And non-Spectrum Smil:
Vaclav Smil On Energy: "Revolution? More like a crawl"
Bill Gates on The Most Astounding Statistic In Vaclav Smil's New Book
Bill Gates Summer Reading List (Vaclav Smil has two entries)
Energy--'Vaclav Smil is Correct: Never Forecast'
Energy: "The man who’s tutoring Bill Gates … "
Vaclav Smil: "In energy matters, what goes around, comes around—but perhaps should go away"
Vaclav Smil: "The Manufacturing of Decline"
Serious Thinking on Energy: An Interview With Dr. Vaclav Smil
A Major Piece: "Why the tech revolution isn’t a template for an energy revolution"
Bill Gates Reviews Vaclav Smil's "Prime Movers of Globalization: The History and Impact of Diesel Engines and Gas Turbines"

Elon Musk's Boring Co. Chicago Tunnel Project Is Dead

From the Chicago Tribune:
Elon Musk O'Hare express project is likely dead: Here's where Lightfoot and Preckwinkle stand on transportation issues

Whoever ends up winning the mayoral runoff election on April 2, Elon Musk’s plan to build an underground express transit link from downtown to O’Hare Airport is probably dead.

Former federal prosecutor Lori Lightfoot and Cook County Board President Toni Preckwinkle will face each other in the runoff — but neither has embraced the technology billionaire’s proposal.

Mayor Rahm Emanuel has been enthusiastic about Musk’s $1 billion plan to dig a hole from the Loop to O’Hare and run passenger vehicles that go more than 100 mph. The Chicago Infrastructure Trust, the organization charged with negotiating the contract on behalf of the city, has not announced a contract with Musk, who had promised to pay all costs. An Emanuel spokeswoman said Wednesday there were no updates.

Lightfoot has called the idea that the project could be built without public funds “a fiction,” and did not include it in her extensive transportation plan for the city.

Preckwinkle also expressed reservations, saying at a candidate forum it was “definitely something I would put on pause.” She said if the city was going to make investments in transit, they should be in the CTA and Metra....MORE

San Francisco: "Warren Buffett discusses ‘disaster’ contributing to Bay Area exodus in CNBC interview"

Mr. Buffett, through his insurance companies, guarantees a few of the country's municipal bonds. Muni holders are often in conflict with public employee unions and/or public employee pension overseers, especially in the event of a municipal bankruptcy.

These guarantees usually take the form of credit default swaps.

In addition Berkshire Hathaway carries a small amount of munis as an asset on the consolidated balance sheet.
Warren pays attention to this stuff. His 2008 Letter to Shareholders is a mini-masters course in moral hazard in the muni biz. Some copied out after the jump

And the headline story from the San Francisco Business Times:
Warren Buffett described unfunded public pensions as a “disaster” that companies and individuals must consider when deciding where to expand or move.

While corporate America’s traditional, defined-benefit pension plans are no longer the problem they were 10 or 20 years ago, “in the public sector, you know, it’s a disaster,” Buffett told CNBC this week in discussing Amazon’s (NASDAQ: AMZN) decision to ditch New York City for a major expansion.

California’s unfunded public pensions are a hot topic, with taxpayers on the hook for making up any shortfalls in employee contributions or investment returns.
“If I were relocating into some state that had a huge unfunded pension plan, I'm walking into liabilities," Buffett said. "'Cause I mean, who knows whether they're gonna get it from the corporate income tax or my employees — you know, with personal income taxes or what. That liability isn't gonna — you can't ship it offshore or anything like that. And those are big numbers, really big numbers.
“The politicians are the ones that really haven't attacked it in a good many states. And when you see what they would have to do, I say to myself, ‘Why do I wanna build a plant there that has to sit there for 30 or 40 years?’” he said. “They will come after corporations, they'll come after individuals. They're gonna have to raise a lotta money.”...MORE

The class begins on page 13 of the 2008 letter. The following is from page 14:
...The rationale behind very low premium rates for insuring tax-exempts has been that defaults have historically been few. But that record largely reflects the experience of entities that issued uninsured bonds. Insurance of tax-exempt bonds didn’t exist before 1971, and even after that most bonds remained uninsured.

A universe of tax-exempts fully covered by insurance would be certain to have a somewhat different loss experience from a group of uninsured, but otherwise similar bonds, the only question being how different.To understand why, let’s go back to 1975 when New York City was on the edge of bankruptcy. At the time its bonds – virtually all uninsured – were heavily held by the city’s wealthier residents as well as by New York banks and other institutions. These local bondholders deeply desired to solve the city’s fiscal problems. So before long, concessions and cooperation from a host of involved constituencies produced a solution. Without one, it was apparent to all that New York’s citizens and businesses would have experienced widespread and severe financial losses from their bond holdings.

Now, imagine that all of the city’s bonds had instead been insured by Berkshire. Would similar belt-tightening, tax increases, labor concessions, etc. have been forthcoming? Of course not. At a minimum, Berkshire would have been asked to “share” in the required sacrifices. And, considering our deep pockets, the required contribution would most certainly have been substantial.
Local governments are going to face far tougher fiscal problems in the future than they have to date.The pension liabilities I talked about in last year’s report will be a huge contributor to these woes. Many cities and states were surely horrified when they inspected the status of their funding at year end 2008.

The gap between assets and a realistic actuarial valuation of present liabilities is simply staggering.When faced with large revenue shortfalls, communities that have all of their bonds insured will be more prone to develop “solutions” less favorable to bondholders than those communities that have uninsured bonds held by local banks and residents. Losses in the tax-exempt arena, when they come, are also likely to be highly correlated among issuers.
If a few communities stiff their creditors and get away with it, the chance that others will follow in their footsteps will grow. What mayor or city council is going to choose pain to local citizens in the form of major tax increases over pain to a far-away bond insurer?
Insuring tax-exempts, therefore, has the look today of a dangerous business – one with similarities, in fact, to the insuring of natural catastrophes. In both cases, a string of loss-free years can be followed by a devastating experience that more than wipes out all earlier profits. We will try, therefore, to proceed carefully in this business, eschewing many classes of bonds that other monolines regularly embrace....MUCH MORE
Considering the apparent acceleration of muni bankruptcies in California, Vallejo in 2008 and then  Stockton, Mammoth Lakes and San Bernardino, combined with talk of "strategic bankruptcy" Berkshire saw the problem and acted, fast.

"Amazon backs out of massive Seattle office tower as questions swirl about growth plans"

From GeekWire:

Updated with Amazon’s confirmation below.
Amazon has placed a high-profile Seattle office project on the sublease market, signaling plans to scale down its growth in its hometown.
A flier marketing Amazon’s space in the Rainer Square project. (JLL Images.)
A marketing flier obtained by GeekWire confirms that the tech giant is seeking new tenants for its office space in Rainier Square, a building under construction that will one day be the city’s second-tallest skyscraper. Amazon had leased all 30 floors of office space in the building. After weeks of rumors, the listing was made official over the weekend, according to real estate brokers familiar with the marketing efforts. Amazon will make all of the office space it leased in Rainier Square available to other companies.

The skyscraper project, once an emblem of Amazon’s ambitions in Seattle’s urban core, now becomes a symbol of its uncertain future in its hometown. The move follows Amazon’s decision to back out of its HQ2 project in New York City after opposition there, amid signs that the company will focus its Seattle-area growth in nearby Bellevue, Wash.

Real estate company JLL is listing the space on the company’s behalf, according to the flier.

Earlier this month, a real estate broker who represents tenants in downtown Seattle told GeekWire that Apple, Dropbox, and Oracle were “circling” as possible tenants for Rainier Square, which is located at 4th and Union Street.

Amazon pulling out of Rainier Square follows the company’s surprise decision to nix plans to open a 25,000-person office in New York. Earlier this month, Amazon canceled its New York “HQ2,” blaming elected officials who vowed to fight the deal....MORE
Related at GeekWire:
Amazon’s future in Seattle uncertain as neighboring city looks more and more like HQ2

UPDATED "Sharing economy as an anti-concept"

Updated with link.
Original post:
From First Monday journal
The “sharing economy”, a term often used interchangeably with the “collaborative economy” and “collaborative consumption”, is a recurrent topic both in public and academic debate on new Web-based services characterized by forms of peer-to-peer or business-to-peer sharing. This paper investigates it theoretically as an “anti-concept”, that is, an unnecessary and rationally unusable label forged to replace a concept endowed with greater legitimacy. A critique of the sharing economy as a common-sense construct is carried out in order to suggest its rejection as an analytical and interpretative category and to question any unconditioned cultural legitimacy of the sharing economy under its promoters’ economic interests. Four main critical issues are discussed: (a) the contradiction between the relational and the commercial dimension; (b) regulatory challenges related to the dimensions of labour, trust, risk and agency; (c) the injunction to share; and (d) the consequences of the sharing economy in terms of social change. The notion of neoliberal entanglement economy is proposed to replace that of sharing economy.
1. Introduction
2. “I think we’re in the midst of a revolution”
3. Genesis of a successful subject
4. Discussion: Critical issues
5. Breaking with common sense
6. Conclusion

1. Introduction
The lack of a generally endorsed definition of “sharing economy” is a recurrent issue in the literature on the subject (Botsman, 2013; Schor, 2014). The notion is used interchangeably with (or alongside) “collaborative economy” and “collaborative consumption” and has the function of cataloguing both for-profit and non-profit schemes characterized by forms of peer-to-peer or business-to-peer sharing. The intersection of these dimensions and the rapid entrepreneurial growth of the sharing economy have generated numerous kinds of practices (Pais and Provasi, 2015), whose similarities cannot conceal the considerable differences among forms of the sharing economy.
This article investigates the sharing economy theoretically as an “anti-concept”. According to Ayn Rand (1988; 1979), an anti-concept is an unnecessary and rationally unusable label forged to replace a concept endowed with greater legitimacy. The use of the anti-concept generates a sense of approximative comprehension and has a function more rhetorical-descriptive than scientific as a cognitive barrier to understanding a phenomenon and its consequences.
The paper conducts a critique of the sharing economy as a common-sense construct in order to suggest its rejection as an analytical and interpretative category and to question any unconditioned cultural legitimacy of the sharing economy under its promoters’ economic interests. There are various possible starting points to challenge the validity of this lemma, for example by questioning its political, economic or social legitimacy [1]. The choice to focus on its cultural legitimacy is based on a social construction perspective (Berger and Luckmann, 1990): sharing economy is explored as a social construct whose meaning and definition comes as a result of a process of negotiation among different actors, leading to the institutionalisation of a “fabricated” concept and its anchorage in both the intellectual domain and the common sense.
Accordingly, the text deconstructs the anti-concept of sharing economy through a survey of the literature concerned with the contradictions of the phenomenon. Consideration will also be made of articles in the international press that treat the topic in a non-celebratory manner.
It will be shown that this anti-concept has the rhetorical function of concealing the neoliberal mechanisms connected with the labour exploitation practices activated by the new collaborative technology platforms.
The next section analyses an example of the celebration of the sharing economy by the companies that are its protagonists. Section 3 will review the definitions of sharing tout court and the sharing economy. Section 4 will consider critical approaches to the subject. Finally, Section 5 will discuss the sharing economy as an anti-concept by underlining how the notions of communicative capitalism, infoliberism, and entanglement may best illuminate the understanding of collaborative practices enhanced by peer-to-peer technologies.

2. “I think we’re in the midst of a revolution”
It is almost impossible to read a scientific or press article on the sharing economy which does not mention Airbnb and TaskRabbit, the two cases most frequently cited as emblematic of the “revolution” [2] based on collaborative consumption. The same holds for the Forbes list of the sharing economy pioneers [3], which also includes services for car borrowing (RelayRides and Getaround) and ride sharing (Lyft and SideCar), bike renting (Liquid), as well as a peer-to-peer marketplace where services for others are exchanged (Zaarly). But users will not be disappointed on looking for a host who will take care of their dog (DogVacay), clothes to be bought and sold (PoshMark), home Wi-Fi networks to be shared (Fon), “stuff” to share with their neighbours and friends (NeighborGoods), even vulgar cash to be borrowed (LendingClub).
One may even be tempted to welcome enthusiastically this heterogeneous assortment of Web sites and apps under the umbrella term of sharing economy when reading the activist language employed by, an organisation founded in 2013 as an advocacy group enhancing awareness about regulations and laws that influence the growth of the sharing economy.
When launching, the head of Community and e-staff member at Airbnb, Douglas Atkin, referred to it as a “movement for sharing economy” consisting in “huge numbers of people, with a shared identity, mobilized to take action to do two things: to grow the peer sharing economy, and to fight for their collective interests against unfair and unreasonable obstacles” [4]. Depicted as a grassroots organisation, even if supported by 40 corporate partners including the billionaire giants of the sharing economy [5], Atkin extolled the movement as “not just people sharing their skills, or their apartment, or their car”, but as an expression of “peer power” described with a counter-hegemonic language typical of a revolution breaking outdated schemes (“the old economy has largely failed us”) and promising new opportunities of democratisation for common people (“the peer sharing economy is a new model, which distributes power, wealth, and control to everyone else”); a language imbued with Silicon Valley values (“economic independence, entrepreneurialism, community, individuality, happiness”) and anti-establishment ideology where an (apparently) anti-capitalistic rhetoric is used to promote commercial goods and services (Lee, 2015). In short,’s thesis is that citizens have a strong interest in defending the sharing economy against the unfair limitations (e.g., laws protecting workers and consumers) imposed by the institutions. Curiously enough, such a people’s voice is disseminated by for-profit companies: “Vive la Révolution”, said Atkin, on concluding his speech.

3. Genesis of a successful subject
From a scholarly perspective, the triumphant affirmation of the sharing economy as a label to legitimize new online platforms as drivers of innovation (within an economic context characterised by a persistent crisis) raises several issues, and solicits a critical approach aimed at understanding what “sharing” means, how it connects with profit activities, and what contribution it makes to social change beyond the obvious benefits for investors, companies and consumers....MORE
Previously from First Monday:
"China’s long game in techno-nationalism"