Saturday, February 6, 2016

Hillary Clinton is at her best when she's counted out, campaigning her heart out - Jill Abramson - The Guardian

There is a picture on the wall of the Espresso CafĂ© here in Portsmouth, New Hampshire, in a corner near the exit. Hillary Clinton is talking to voters, but it doesn’t show the famous “Hillary cried” moment from eight years ago, when the senator teared up on the eve of the presidential primary.
She was exhausted, and a loss to Barack Obama was predicted. Some pundits believed the unusual display of emotion was a turning point that helped show Clinton had a human side.
That was sexism. Why do powerful women need to show their softer side or shed tears to be considered fully human? 


The whole issue of Clinton’s likeability – now, on the verge of a potential defeat to Bernie Sanders, as then against Obama – rests on a long established, sexist double standard that many sociologists and business-school professors have studied: power and likeability have a negative corollary with powerful women. With men, that is not the case. If Clinton is judged too powerful and aggressive, she’s dinged for being unlikeable. If she’s too soft, she’s dismissed. Women, unlike men, are rarely perceived as warm and competent. This locks them in a classic double-bind. Certainly, I’ve seen it at points in my own career.
“Rand Paul may be coming Sunday,” one of the waitresses in the Portsmouth coffee shop told me the other day, hopefully. (I didn’t have the heart to tell her that he wasn’t coming because he had dropped out of the Republican field that morning.)
In her speeches and in debates with Sanders over the past week, Clinton vacillated between stressing her competence as a “progressive who gets things done” and talking more personally. Mostly, she got the equation right.
Chuck Campion, a Boston consultant who helped power Clinton’s come-back-from-the dead win in New Hampshire eight years ago, described her “amazing fortitude”. She campaigned “’til the last dog dies”, just as her husband famously said in 1992, when scandal almost led to loss in the Granite State. Turns out, Clintons are often at their best when they face defeat.
A wonderful part of the New Hampshire primary is that it is, in itself, personal. You can cover many campaign spots, some in small places, and see many candidates in a single day, by pure virtue that the state it is so small. It’s full of citizens who believe it’s their civic duty to see for themselves before the voting on Tuesday.
This is Hillary Clinton’s fourth New Hampshire primary, if you count Bill’s two. It might be her last, and it’s been poignant to see her up here, campaigning her heart out once again.
It was a bit nostalgic for me, too. My first New Hampshire primary reporting was in 1976. I was a college senior pining to be a real reporter. I remember going to the Sheraton Wayfarer hotel in Manchester after the votes were counted, gazing at the giants of political journalism at the time – the gonzo master Hunter S Thompson included. They were the famous boys on the bus. (Both Thompson and the author of that book, Timothy Crouse, worked for Rolling Stone.) I don’t remember seeing a woman anywhere, and I didn’t think I would ever get to sit on a barstool with the big boys. Still, it’s true, as Rolling Stone editor Jann Wenner recently emailed me: “Well, Jill, they is called ‘dem good ole days’. And the stakes weren’t as high and there was so much less media.”
On Wednesday, I went to two of Clinton’s get-out-the-vote rallies and watched her in a CNN candidate forum. Although she confessed it is hard for her, Clinton was more personal than I’ve seen her. In Manchester, she spoke of her mother’s hard life and resilience, which she obviously shares. “We may get knocked down, but we get back up,” Clinton said to cheers.
She talked about the people who come up to her after her appearances, who tell her their stories: about medicine that wasn’t affordable, about a son who died of a drug overdose, or the duress of caring for a family member with Alzheimer’s disease.
In Dover, she almost began to choke up when she said, “People share their hearts because they hope someone will respond.” At the CNN town hall, she gave her most thoughtful answer to a philosophical question posed by a rabbi in the audience. He asked her: “How do you cultivate the ego – the ego that we all know you must have, a person must have to be the leader of the free world – and also the humility to recognize that we know that you can’t be expected to be wise about all the things that the president has to be responsible for?”
“I think about this a lot,” Clinton answered. “Um, I feel very fortunate that I am a person of faith, that I was raised in my church and that I have had to deal and struggle with a lot of these issues about ambition and humility, about service and self-gratification – all of the human questions that all of us deal with. But when you put yourself out into the public arena, I think it’s incumbent upon you to be as self-conscious as possible.” She talked about her husband’s being more of a political natural than she is. She revealed that a minister, with whom she is close, emails her a piece of scripture every morning at 5am.
Then there was an addendum: “And the final thing I would say, because again, it’s not anything I’ve ever talked about this much publicly, everybody knows I – I have lived a very public life for the last 25 or so years. And so I’ve had to be in public dealing with some very difficult issues and personal issues – political, public issues. And I read a, um, a treatment of the prodigal son parable by the Jesuit Henri Nouwen, who I think is a magnificent writer of spiritual and theological concerns. And I – I read that parable and there was a line in it that became just a lifeline for me. And it basically is practice:
“The discipline of gratitude.”
It is odd that Hillary Clinton, one of the most familiar figures in American politics, has repeatedly felt the need to re-introduce herself in more personal terms. 
Although she’s been criticized for serving too much spinach, she delved into her platform, too, and no one is more impressive or knowledgeable on the issues. At each appearance I saw up-close-and-personal this week, she drew contrasts with Sanders on taxes, healthcare and guns. In Manchester, she was joined at a rally with former congresswoman Gabrielle Giffords, who was almost killed by a gunman in 2011.
By 8pm on Wednesday, she was still explaining the differences with her opponent over the Affordable Care Act; she was due at the televised CNN forum with Sanders an hour later. (Sanders would, she said, scrap Obamacare and start all over again with a pie-in-the-sky health reform plan that could never pass Congress.)
Clinton was once expected to trounce Sanders, but he has held a big lead in New Hampshire. So much for being the Anointed One. With the sudden rise of Marco Rubio on the Republican side, her campaign wasn’t getting as much attention as it did in 2008. Clinton’s nearly-down-but-not-out campaigning certainly didn’t feel like the high-wire act it was eight years ago.
Some of her advisers think an upset is still possible up here. Her campaign manager, Robby Mook, sought to lower expectations and said at a Thursday breakfast hosted by Bloomberg News that Clinton faced “significant head winds”. But, he added, “We are here – and we are all in.” Sanders’ huge following among young voters (he won 84% of them in Iowa) and surprisingly large campaign coffers will likely carry the Democratic nomination fight well into the spring. 
The Wayfarer hotel was torn down in March. These days, an anodyne bar and restaurant at the Radisson seems to be the press hangout in Manchester. The reporters are busy tweeting and doing TV interviews, rather than drinking and smoking, and plenty of them are female, from digital outfits that didn’t even exist back when “Hillary cried”. That was a long time ago now.

Thursday, February 4, 2016

Shell Reports a 44% Drop in Earnings Amid Oil Price Slump - Time Business

Posted: 04 Feb 2016 12:59 AM PST
More
Oil Giant BP Reports 91% Plunge in 4th Quarter EarningsSolar Industry Gets a Victory in CaliforniaEthanol Is No Longer the Third Rail of the Iowa Caucus(LONDON) — Royal Dutch Shell said fourth-quarter earnings tumbled 44% as the collapse in oil prices took its toll on another European oil company.
Profit adjusted for changes in the value of inventories and one-time items dropped to $1.83 billion from $3.26 billion in the same period a year earlier, the Anglo-Dutch energy giant said Thursday.
The results came days after Shell sealed a 47-billion-pound takeover of BG Group Plc, which will increase the company’s proven reserves of oil and natural gas by 25%. While critics questioned the deal because of the plummeting price of oil, CEO Ben Van Beurden compared it to the bold moves that have defined the industry and promised it would rejuvenate Shell.
The BG deal comes as Shell and other oil companies are slashing jobs and postponing investments to adjust the bottom line to the dramatic circumstances.
Jobs will also be eliminated in the Shell-BG deal. In a trading statement unveiled just before shareholders voted on the BG merger, Shell said last month that streamlining and integration from the deal would include the loss of 10,000 staff and contractor positions across both companies in 2015-2016.
“In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions,” Van Beurden said. “Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that.”
Oil prices have been plunging. Brent crude, the benchmark for international oil, fell 34% last year and hit a 12-year low of $27.10 a barrel in January. It traded at $33.54 on Wednesday, having been above $100 a barrel as recently as September 2014.
The company cut capital investment by $8.4 billion to $28.9 billion and slashed operating costs by 4.1 billion to $41.1 billion for 2015. The company expects another $3 billion in cuts this year.
Net income improved, rising 58% $939 million
The report comes amid sweeping changes for the company. Shell has exited from exploring in Alaska for the foreseeable future and cancelled the Carmon Creek heavy oil project.
Oil supplies are high even though consumption growth has tailed off, particularly in China. OPEC members, meanwhile, haven’t wanted to cut production — even at a time Iran wants to turn on the taps after decades of sanctions.
Campaign groups like Greenpeace suggest that it’s time that the oil giants changed and relied on other forms of energy for their profits, citing more electric cars, solar panels, and better-insulated homes.
“Shell and BP have bet heavily on the wrong energy sources, and now they’re losing big,” Greenpeace UK’s senior climate adviser Charlie Kronick said. “The problem is that with thousands of jobs, billions in investments and people’s pensions tied up with their companies’ fortunes, Big Oil’s bosses won’t be the only ones to pay for their shortsightedness.”

Wednesday, February 3, 2016

Google Overtakes Apple as the World’s Most Valuable Public Company - Time Business


Posted: 01 Feb 2016 01:58 PM PST
Alphabet, the holding company formed by Google last fall, handily beat analysts’ expectations in its quarterly earnings report Monday. The results sent the company’s stock soaring in after-hours trading, helping it topple Apple as the most valuable publicly traded company in the world.
The Mountain View, Calif. firm generated $21.3 billion in revenue, beating Wall Street estimates of $20.8 billion. Earnings were $8.67 per share, beating estimates of $8.09 per share. The company attributed its strong revenue growth to search ads, YouTube and programmatic advertising.
For the first time, Alphabet released separate financial information for Google (which includes search, YouTube and Android) as well as a cadre of so-called moonshots that Alphabet has lumped together as “Other Bets.” These include things like smart thermostat company Nest and innovation incubator Google X.
The new data reveal just how dependent Alphabet is on search as its core business. Google generated almost $75 billion in revenue for the year 2015 and had an operating profit of $23 billion. Other Bets generated just $448 million during the same period and posted a loss of $3.6 billion.
Still, investors rallied behind Alphabet’s stock thanks to the strength of search. Shares were up more than 5% in after-hours trading Monday, giving Alphabet a market capitalization of more than $570 billion, according to CNBC. The market cap of Apple, which has held the crown of most-valuable company since 2013, was around $535 billion at market close.

Tuesday, February 2, 2016

China January factory activity falls at fastest pace since 2012 - official PMI - Reuter



China January factory activity falls at fastest pace since 2012 - official PMI

SHANGHAI 
China's manufacturing activity contracted at its fastest pace in almost three-and-a-half years in January, an official survey showed, suggesting the world's second largest economy is off to a weak start in 2016 and adding to the case for near-term stimulus.
The official Purchasing Managers' Index (PMI) stood at 49.4 in January, compared with the previous month's reading of 49.7 and below the 50-point mark that separates growth from contraction on a monthly basis. It is the weakest index reading since August 2012 and below the median 49.6 forecast from a Reuters poll of economists.
The PMI marks the sixth consecutive month of factory activity contraction, highlighting a manufacturing complex under severe pressure from falling prices and overcapacity in key sectors including steel and energy.
"The electricity production remained sluggish and the crude steel output continued the weak trend in January, reflecting an ongoing deleveraging process in the industrial sectors," said Zhou Hao, an economist at Commerzbank. 
"In the meantime, China has started an aggressive capacity reduction in many sectors, which could add downward pressure on the bulk commodity prices over time." 
The Markit/Caixin factory PMI also showed activity deteriorating, although at a slower pace than in December. The index was 48.4, higher than economists' median forecast of 48.0, and above the December figure of 48.2.
The Markit report focuses more on small- and medium-sized firms as opposed to larger state-owned firms in the official survey. 
Both the official and private factory surveys showed domestic and export demand remained weak and companies continued to shed staff.
China's plan to cut its steel production capacity by 100-150 million tonnes will lead to the loss of up to 400,000 jobs, the official Xinhua news agency reported last week.
"To maintain growth above 6.5 percent this year the economy will need more policy support," said Ding Shuang, head of Greater China Economic Research at Standard Chartered bank in Hong Kong.
"The fiscal deficit is almost certain to exceed three percent now, and there could be additional support from the policy banks. There is less room now for expansionary monetary policy although we expect the central bank to remain accommodative."
Recent statements from central bank officials suggest they are reluctant to implement further broad-based easing measures like cutting bank reserve ratios while pressure on the yuan from capital outflows remain strong.
Meanwhile, the official non-manufacturing Purchasing Managers' Index (PMI) fell to 53.5 from December's 54.4, showing a slight slowdown in services activity growth.
With manufacturing decelerating quickly, services have been a crucial source of growth and jobs for China over the past year, and analysts have been watching closely to see if the sector can maintain momentum in 2016.
Analysts note headline PMI data in January might be distorted as activity tends to slow in the weeks leading into the Lunar New Year break, which begins this year on Feb. 8.
China's economic growth cooled to 6.9 percent in 2015, the slowest pace in 25 years, adding pressure to policymakers who are already struggling to restore the confidence of investors after a renewed plunge in stock markets and the yuan currency.

(Reporting By Nathaniel Taplin; Editing by Pete Sweeney and Sam Holmes

Monday, February 1, 2016

The EU May Investigate Britain’s Tax Deal With Google


Posted: 28 Jan 2016 08:07 AM PST
(LONDON) — The European Union could investigate the 130 million-pound ($186 million) deal for back taxes struck between Britain and Google, after furious opposition lawmakers suggested the Internet company should have paid more.
EU competition commissioner Margrethe Vestager told the BBC on Thursday it was too soon to say whether a probe would be launched. She said the EU “will take a look” if appropriate concerns are brought to her attention.
“If we find there is something to be concerned about, if someone writes to us and says this is maybe not as it should be, then we will take a look,” Vestager said.
The Scottish National Party asked for such an investigation on Wednesday, with deputy party leader Stewart Hosie arguing that the public was skeptical about the settlement.
“Considering the lack of transparency in the settlement reached between HMRC (the U.K. tax and customs authority) and Google, and the growing concerns of an opaque methodology having been employed, it is my view that an independent verification of this settlement would establish confidence that the settlement is within the boundaries of state aid regulations and is a fair deal for the taxpayers of the United Kingdom,” he wrote.

Vestager’s spokesman, Ricardo Cardoso, said later that “we will look into it and then decide where to move from there.”
Writing in the Financial Times, Google’s vice president of communications, Peter Barron, insisted the company paid tax at the standard corporate rate of 20 percent.
“Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law,” he wrote.
The anger of lawmakers has been stoked by reports that France and Italy were in talks to squeeze more out of the company.
In Italy, the financial police confirmed news reports Thursday that Google was under investigation for allegedly avoiding up to around 300 million euros ($326 million) in taxes. Italian daily La Repubblica reported that the investigation stems from Google activities in Italy from 2008-2013, when Google allegedly declared its fiscal headquarters in Ireland.
Italy has brought several cases against global technology companies that have headquarters in low-tax nations like Ireland to avoid paying higher taxes in other countries, like Italy. In December, Apple agreed to pay Italy 318 million euros in back taxes covering the same time period now contested against Google.
At the time of Apple’s settlement, Google said it was working with Italian tax authorities to determine what it might owe.
Google Inc. is based in Mountain View, California.

Sunday, January 31, 2016

The U.S. Economy Slowed Sharply in Final Months of 2015 - Time Business

Posted: 29 Jan 2016 06:53 AM PST
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(WASHINGTON) — The U.S. economy’s growth slowed sharply in the final three months of 2015 to a 0.7 percent annual rate. Consumers reduced spending, businesses cut back on investment and global problems trimmed exports.
The slowdown could renew doubts about the durability of the 6½-year-old economic expansion, though most economists expect growth to rebound in the current January-March quarter.
The government’s estimate Friday of the economy’s expansion in the October-December period was less than half the 2 percent annual growth rate in gross domestic product in the third quarter of 2015. It was the weakest showing since a severe winter reduced growth to a 0.6 percent annual rate in last year’s first quarter.
Much of the weakness last quarter reflected a slowdown in consumer spending, which grew at an annual rate of just 2.2 percent, compared with a 3 percent rate in the previous quarter. Spending on both durable goods, such as cars, and nondurable goods, such as clothing, slowed.
Consumer spending accounts for about two-thirds of economic activity, and analysts are counting on the strong employment growth to fuel a rebound in the current quarter. Some, however, worry that China’s economic troubles and sinking oil and stock prices could continue to dampen the U.S. expansion.
Friday’s estimate of fourth-quarter growth was the first of three that the government will issue.
Besides consumer spending, another source of weakness last quarter was a drop in exports. It reflected in part a stronger dollar, which has made U.S. goods pricier and therefore less competitive on overseas markets. Persistent weakness in such key export markets as China and Europe hurt, too. A wider U.S. trade deficit cut annual growth for the quarter by 0.5 percentage point.
Another drag came from cutbacks in business investment spending, which fell at a 1.8 percent annual rate, with spending on structures down 5.3 percent. That reflected a 38.7 percent plunge in spending in the oil and gas industry, which has slashed drilling and exploration in response to the plunge in oil prices.
In addition to their reduction in investment, businesses cut spending on stockpiles to try to pare unwanted inventories. That effort trimmed growth by 0.5 percentage point in the fourth quarter.
Home construction grew at a solid 8.1 percent annual rate. Government spending slowed to a growth rate of just 0.7 percent. Spending by the federal government grew by a 2.7 percent annual rate, while state and local governments cut back on spending at a rate of 0.6 percent.
For all of 2015, the economy grew 2.4 percent, matching the growth in 2014. Both years improved on a 1.5 percent increase in 2013. The 2015 growth continues the economy’s pattern of subpar growth since the Great Recession officially ended in June 2009.
For 2016, economists have forecast another year of modest growth of around 2 percent. At the same time, they have nudged up the likelihood of a recession this year. While still low, the likelihood is now put at around 20 percent, though most analysts still see an outright recession as unlikely.
This week, the Federal Reserve issued a cautious assessment of the economy. The Fed left interest rates unchanged after having raised its benchmark short-term rate in December from record lows. Many analysts think that economic weakness, subpar inflation and global pressures will cause the Fed to slow its pace of rate hikes this year from what had been expected to be four increases to perhaps only two.
Economists expect strength in the domestic economy this year to offset weakness in export sales and in the U.S. energy sector.
While economic growth was lackluster last year, hiring was not. The economy added an average of 284,000 jobs a month in the final quarter of last year. The unemployment rate ended the year at a low 5 percent.
Mark Zandi, chief economist at Moody’s Analytics, has said he expects strong job growth to keep lowering unemployment and to help boost wages, which have lagged in this recovery. He said the extra consumer spending, which will be aided by lower gas prices, will likely support economic growth of around 2.5 percent in 2015.
Growth at that level is above the economy’s potential right now, which many analysts put at around 2 percent, reflecting a slower pace of people entering the job market and slower productivity growth.

Saturday, January 30, 2016

These Companies Are Working on a Zika Vaccine - Fortune

Posted: 29 Jan 2016 07:59 AM PST
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The Zika virus has spread rapidly across the Americas, arriving in Brazil last May and creeping into 22 other countries and territories around the region. The virus’ spread has been accompanied by a steep increase in babies born with abnormally small heads and in cases of Guillain-Barre syndrome, an uncommon nervous system disease. This has raised the alarm among public health officials around the world—and launched the quest for a vaccine that could stop its spread.
The U.S. and international governments are pushing forward with programs for Zika vaccines, and at least three pharmaceutical companies are either considering or actively pursing programs, including giants GlaxoSmithKline, and Sanofi . But the company that appears to be the farthest along is a relatively small $500 million market cap biotech named Inovio Pharmacuetucals. Wall Street has shown interest in the company. Inovio’s stock was up about 8% today on news that it is entering clinical trials with its MERS vaccine, which could also hold promise for a future Zika vaccine.
Nonetheless, even Inovio is likely a ways off from developing a human Zika vaccine.
“It is important to understand that we will not have a widely available, safe, and effective Zika vaccine this year, and probably not even in the next few years,” Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), said in a press conference.
The advantage of Zika vaccine programs is that they can use similar mosquito-based diseases, part of a family called flaviviruses, like dengue, West Nile virus, and chikungunya as a “jumping off” point. While researchers are currently trying to learn more about the basics of the Zika virus and its effects on the human body given how new the disease is, they can already use past vaccine development platforms from other flaviviruses as a foundation since they spread in similar ways.
NIAID is already working on two approaches: a DNA-based vaccine, similar to a strategy used for West Nile virus, which has been found safe and effective in a phase one trial. It is also working on a more traditional killed virus-vaccine, similar to those already developed to prevent dengue.

Traditional killed-virus vaccines, also called live-attenuated vaccines, are what most of us are used to. They are grown in eggs using live viruses, and then made inactive by a chemical process, and are the basis for the vast majority of vaccines we take as children and annually to prevent the flu. They are time intensive to develop, typically requiring between 10 and 15 years before they are approved, according to GlaxoSmithKline.
DNA-based vaccines, on the other hand, can reduce that development time by creating a synthetic DNA sequence in a lab that can trigger the human body to create the same antigens as from a killed virus. This cuts development time since it doesn’t need to grow a live virus, which can have unpredictable development pathways.
Inovio Pharmaceuticals has also been working on a DNA-based vaccine for Zika since December. In that time, Inovio has created a DNA strand that can potentially prevent the virus, using its knowledge from its dengue virus program. It is now testing the vaccine in mice and plans to move into testing primates “in the next few weeks,” said Inovio CEO J. Joseph Kim. Once its safety is confirmed, the vaccine will move into phase one testing in humans—as soon as the end of 2016.
“The beauty of this technological platform is that the vaccine is simply a DNA sequence developed in water,” said Kim. “It cuts through all the difficult handling and complex development times of traditional vaccine approaches.”
Inovio has taken this same approach with an Ebola vaccine, going from “bench to clinic”—researcher terms, meaning from initial creation to human testing—in just over 18 months. That program attracted the interest of the U.S. Defense Advanced Research Projects Agency (DARPA), which gave the company $45 million to support the program’s ongoing development. The biotech is also working on a DNA-based vaccine for MERS, which has gone from its creation in a lab to a phase one trial at Walter Reed Army Institute of Research in just over a year.
Still, while animal applications of these preventatives have been approved in animals, DNA-based vaccines are one of the latest medical advancements, and one has yet to be approved for use in humans in the U.S. Even though Inovio has attracted fans on Wall Street, it still has a lot to prove.
This article originally appeared on Fortune.com

Friday, January 29, 2016

The One Economic Book You Must Read Now - Time Business

Posted: 28 Jan 2016 05:39 AM PST
One of the most disturbing things about our economic era is its juxtapositions. Wages are flat, yet corporations are flush. Interest rates remain at nearly unprecedented lows, yet investment lags. Growth is there – barely – yet it’s not coming from the places that we expected (the emerging markets) and is slower than expected in the U.S. and Europe, despite unthinkable money dumps by governments since the financial crisis. The economic gap between Main Street and the markets, which are increasingly volatile, is as big as it’s ever been.
If you want to understand this bifurcated world and where it’s headed, there is no better interpreter than Mohamed El-Erian. El-Erian is the former CEO of PIMCO, the world’s largest bond trading firm, and now the chief strategist for insurance giant Allianz. His new book, “The Only Game In Town: Central Banks, Instability and Avoiding the Next Collapse” (Random House), is an excellent primer on how we got here. It’s also a guide on what to expect as the world struggles to cope with slower, less equal growth and the resulting populism, nationalism and ugly partisan politics that we see in countries from the U.S. to France to China.
At the center of it all is an unglamorous institution: The central bank. Central banks are in charge of controlling the world’s money supply and how quickly and easily it can move between countries, companies and the pockets of consumers. In the wake of the 2008 financial crisis and Great Recession, they were forced, in large part thanks to political gridlock in many countries that made larger fiscal stimulus plans impossible, to pump unthinkable amounts of cash into the global system—around $22 trillion in total ($4 trillion from the U.S. Federal Reserve alone)—and slash interest rates to zero. It worked, in the sense that rather than a Great Depression, we got a “new normal” of slower growth. But hey, at least it was growth.
But that New Normal—a term that El-Erian himself coined while at PIMCO—is coming to an end. What replaces it will likely be a period of economic and political volatility. That, along with instability of the sort that we have only just begun to see, with roller coaster markets rising and falling on the latest jittery news from China or the oil markets, and formerly unimaginable politicians like Donald Trump or Marine Le Pen taking advantage of people’s fears that tomorrow will be worse than today.
How did we get here? In a phrase, too much finance — a topic near and dear to my heart, and the subject of my own upcoming book, “Makers and Takers: The Rise of Finance and the Fall of American Business” (Crown, May). In the 40 or so years leading up to the 2008 financial crisis, the economic policy makers and powers that be focused way too much on promoting and encouraging the financial sector – and the growth of credit – to the detriment of Main Street and society as a whole.
As El-Erian writes, “Even the common labeling of the industry itself changed—from “financial services” to just “finance.” Instead of seeing Wall Street for what it is and should be – a helpmate to business – it became the tail that wagged the dog. “Suddenly, the highest level of capitalistic achievement involved finance,” writes El-Erian.
There are many important and growth-hindering ramifications of this. But the one El-Erian focuses on most closely is the growing power of global central bankers over the last several decades. From Alan Greenspan onwards, they’ve lowered interest rates, eased and smoothed the business cycles, and lulled us all into thinking that markets should go in only one direction: Up. But it’s been a sugar high. Investment into the real economy has lagged. Now, the disconnect between markets and Main Street has become so disconcerting that, in El-Erian’s view, businesses are scared to invest and consumers are scared to spend. Nobody knows what the future will bring. So we are all, in some sense, turning Chinese – saving for not just a rainy day, but the prospect of another economic hurricane.
What can get us back on the right track? There are some positive developments. New technologies in the energy sector, the sharing economy, innovations in healthcare and biotech, as well as the industrial Internet all offer hope of a higher growth future. But harnessing their power will require political will. In order for prosperity to be shared, governments have to figure out a way to train a 21st century workforce, rebuild trust in global institutions, create legislative frameworks that spread wealth more equitability (think major tax reform, for example), and so on. As El-Erian admits, policymakers have shown almost no ability to do so over the last few years. That’s why his most likely new “New Normal” is an ongoing era of rocky markets and unpredictable growth.
Market geeks will appreciate the investment tips for navigating this world that he presents at the end of his book. But one of the most interesting and insightful bits of advice he offers to corporate leaders is to, in the words of Steve Jobs, “think different.” In a world in which old economic and political paradigms are no longer relevant, companies will need to overcome the decision biases that lead them to follow the same old path, again and again, to their demise, in a new economic era. Success in the New New Normal will come from unexpected places. That means corporations need much, much more diversity in their workforces – in terms of gender, nationality, educational and economic background and so on. El-Erian cites companies like Google, which have taken diversity hiring to a new level, focusing more on passion, intellect and character than the schools and workplaces on a rĂ©sumĂ©. If more firms follow, then the age of volatility will have at least one upside.

Thursday, January 28, 2016

China’s GDP Growth Could Be as Low as 4.3%, Top Economist Says - TIME

Posted: 27 Jan 2016 12:46 AM PST
Official data last week showing that China’s economy is growing at its slowest rate in a quarter of a century has investors worldwide concerned.
But one Chinese economist reckons the figures provided by the country’s National Statistics Bureau — which have long been treated with some suspicion — could be inflated by almost 3 percentage points, the Wall Street Journal reports. That would make the outlook even gloomier.
Xu Dianqing, an author of several books on China’s economy and economics professor at Beijing Normal University and the University of Western Ontario in Canada, has been sifting through data on the country’s manufacturing sector, which accounts for some 40.5% of the world’s second largest economy.
The sector officially grew by 6% during 2015, but Xu believes that number could be wrong “no matter how the number is counted,” the Wall Street Journal quoted him as saying. Monthly figures released by the government that include the output of thermal power stations and factories making railway freight, iron ore, plate glass and steel suggest that many industries contracted significantly, according to Xu.
Xu argues that China’s overall GDP growth — barring any other gaps in the official data — was in fact between 4.3% and 5.2% in 2015, compared with the official year-on-year growth rate of 6.9%.
After the release of the latest data, the National Statistics Bureau was quick to head off any suggestion that the the growth figures might be overoptimistic, with an official giving a “warning that the use of unofficial methods and incomplete data fail to give a complete picture.”
In a possibly unrelated — but still intriguing — twist, the head of the National Statistics Bureau, Wang Baoan, is now being investigated for a “severe disciplinary violation,” Chinese state media said Tuesday, using the Communist Party terminology normally used to refer to corruption probes.

Wednesday, January 27, 2016

Has Apple Peaked? - TIME

Posted: 26 Jan 2016 03:00 AM PST
When Apple reports its earnings on Tuesday, it’s virtually certain that the tech giant will report record quarterly profits. Apple almost always does.
The question is, are overall iPhone sales growing or shrinking? And if they’re on the rise, will the pace of that growth be enough to cheer Wall Street and stem the recent drop in Apple’s stock, which has tumbled nearly 5% this year and 25% from its all-time highs?
Despite the recent slump, Apple APPLE INC. AAPL -1.29% is still trading at around $100 per share, and investors have made the consumer electronics giant—with a total market value of $562 billion—the most valuable company on earth.
That doesn’t mean they quite believe in it, though.
For one thing, Apple now faces stiff competition for the title of world’s most valuable company. Thanks to Apple’s decline and the 40% gain in shares of Alphabet ALPHABET INC. GOOGL -1.59% since the start of 2015, Google’s parent company is closing in on Apple, with a total market value of $507 billion.
Moreover, the stock’s price is less than 11 times the earnings analysts expect for next year. That compares with a P/E ratio of 16 for the S&P 500, and 19 for rival Microsoft. In other words, the “E” in Apple’s P/E is so high that its total value must be similarly stratospheric, but investors are skeptical that Apple’s profits can grow quickly from here.
Apple does have enormous strength.
The iPhone, which represents two-thirds of the company’s revenues, grew sales 52% over the past year. Continuous upgrades give Apple a regular source of huge cash flow, plus it can still set a premium price “despite a deflationary environment for smartphone prices,” says Motley Fool Asset Management portfolio manager Dave Meier, who holds the stock.
 MoneyOn the other hand, smartphones are a maturing business, and it’s hard for new products to move the needle at a company of Apple’s size.
“There is no next big thing at Apple that will suddenly dwarf the iPhone,” concedes Michael Sansoterra, portfolio manager of RidgeWorth Large Cap Growth, another Apple owner. Sales of the iPad and digital music have been soft, and the Apple Watch wasn’t the massive hit Apple fans were hoping for. Retailers were offering steep discounts on the watches over the holidays.
What to do: The iPhone-driven corporate leap that brought Apple from about $30 a share six years ago to triple digits today won’t be repeated. But the stock could be compelling for investors seeking tech exposure with a bit less drama.
Apple’s comparatively modest P/E means it doesn’t have to keep shooting out the light to keep its share price rising. And its enormous cash stake — some $200 billion — means investors can expect to steadily get paid back in dividends and stock buybacks. It’s also a business you can get your arms around conceptually.
“It’s not like Microsoft, with lots of different businesses,” says Lamar Villere of Villere Balanced Fund. “It’s straightforward, high-cash, and high-profit margin, and yet it’s valued as though it’s going to be shrinking.”

Tuesday, January 26, 2016

Tesla CEO Elon Musk Says Cheap Oil Will Hurt Electric Cars - Fortune

Cheap oil—and in turn, lower gas prices—usually means costs savings for drivers, a lower U.S. trade deficit, and increased sales of gas-guzzling trucks and SUVs. But not everyone—or industry—is a winner.
Electric vehicle sales have already slowed as oil prices have dropped nearly a third in the past 12 months. The average price for regular has fallen from $2.74 per gallon in June to $1.85 a gallon as of Monday, according to the U.S. Energy Information Administration.
Elon Musk, the CEO of electric carmaker Tesla  TSLA -3.05% , expects the suffering to continue. The electric car industry, as a whole, will take a hit from lower oil prices, Musk told CNN’s Kristie Lu Stout in an interview Monday. “It just makes economic sense.”
But Musk argued that Tesla’s luxury, higher-priced electric vehicles will better withstand the effect of cheap oil prices than its lower-priced rivals. Musk didn’t elaborate, but the assumption is that consumers of his high-priced luxury cars—they start at $70,000 before incentives—aren’t buying them just for fuel savings.
Automakers that produce models that come in gas or electric will be hardest hit, Musk predicted. Under that scenario, consumers have no compelling economic reason to pick the electric vehicle over the gas-powered one.
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Major automakers such as Ford and General Motors  GM -0.17%  are adding more plug-in hybrid and all-electric cars to their portfolio. And while, electric vehicle sales may slow, it’s not exactly hurting their bottom line.
GM delivered a 8% more vehicles in 2015 than the year prior largely because of the high demand for SUVs, crossovers, and trucks. A similar story played out at Ford  F -1.32% .
“Overall low gas prices are good for our business” because pickups are a big part of Ford’s business, Ford CEO Mark Fields said during a Fortune Brainstorm Tech event in January. However, he did add an important caveat: Consumers know that gas prices will eventually rise, so Ford’s aim is to have the best fuel economy in every segment it’s in.
Unlike Tesla, which is a pure all-electric business, major automakers are investing in both fuel sources, some more heavily than others. GM, Ford, Volvo, and now Volkswagen have all made public commitments and investments in developing electric vehicles.
GM CEO Mary Barra unveiled the new Chevrolet Bolt EVat CES, the annual consumer electronics trade show held in Las Vegas in early January. By this time next year, the hatchback will be in full production and sitting in showrooms across the U.S. Audi introduced its first all-electric car, the A3 Sportback e-tron, to U.S. markets this year and has plans to produce an all-electric SUV by 2018.

Cheap oil has already forced the Obama Administration to reexamine its electric vehicle goals. U.S. Energy Secretary Ernest Moniz said Thursday that sales of electric vehicles in the United States may not top one million until 2020, in part due to low gas prices.
President Barack Obama set a goal in 2008—when gas prices hovered round $4 a gallon and he was still just a candidate—to have one million plug-in electric vehicles on the roads by 2015. He repeated that goal during his 2011 State of the Union address. But only 400,000 electric vehicles have been sold in the U.S. to date.

Monday, January 25, 2016

Three Top Executives Are Leaving Twitter, Reports Say - Fortune

Posted: 25 Jan 2016 03:37 AM PST
The executives in charge of Twitter’s product, engineering, and media divisions are on their way out, according to multiple reports published on Sunday.
Alex Roetter, Twitter’s senior vice president of engineering, Kevin Weil, the company’s senior vice president of product, and Katie Jacobs Stanton, its vice president of global media, are leaving the company, according to reports in the New York Times and technology website Re/code.
Together, that’s three of 10 executives that comprise Twitter’s leadership team.
Twitter is expected to announce their replacements on Monday, according to the reports, in addition to two new board members—one a “high-profile media personality,” according to the Times.
Twitter also is expected to appoint a new chief marketing officer. (The company has not yet responded to the reports.)
The social media company has struggled since co-founder Jack Dorsey became CEO in October 2015, replacing Dick Costolo. Dorsey, who also serves as chief executive of newly public payments company Square, was expected to give the challenged company a stronger sense of vision, particularly with regard to its product.
Thought it has made some changes—it announced “Moments,” an aggregation of thematically similar tweets about current events, a day after Dorsey took the top job—investors continue to penalize the company.
Twitter stock most recently closed at $17.83, down considerably from Dorsey’s first day as CEO ($28.15) and drastically since its first day as a public company in 2013 ($41.65), let alone from its all-time high of $69 two years ago this month. Through it all the company has battled criticism that its service will never see adoption as wide as rival Facebook—.
All three executives—Roetter, Weil, and Stanton—are well-regarded in the industry.
Roetter is responsible for software and hardware engineering, analytics, and operations. He joined Twitter in 2010 and was previously director of engineering at the Laufer Wind Group, which develops radar technology for renewable energy applications.
Weil is responsible for product development and design. He joined Twitter in 2009, led Twitter’s analytics team and later product development for Twitter’s advertising platform. He previously worked at web media startup Cooliris.
Stanton is responsible for Twitter’s partnerships with news, television, sports, music organizations around the world. She joined Twitter in 2010 and ran the group responsible for establishing overseas offices—the UK, Germany, Japan, Brazil, Australia, and India, among others, opened during her watch. Before Twitter she worked for the White House.

Sunday, January 24, 2016

Does Coca-Cola Contain Cocaine? - Living Science

Does Coca-Cola Contain Cocaine?

There's nothing quite like the sugary rush that accompanies a cold glass of Coca-Cola — but did you know that the aptly named Coke used to deliver an even bigger kick? Until 1903, the world-famous soft drink contained a significant dose of cocaine.
While the Coca-Cola Company officially denies the presence of cocaine in any of its products — past or present — historical evidence suggests that the original Coca-Cola did, in fact, contain cocaine.
Coca-Cola was first created in 1886 by Atlanta pharmacist John Pemberton, who modeled his beverage after a then-popular French refreshment, coca wine, made by mixing coca-leaf extract with Bordeaux wine. To avoid liquor regulations, Pemberton chose to mix his coca-leaf extract with sugar syrup instead of wine. He also added kola-nut extract, lending Coca-Cola the second half of its name, as well as an extra jolt of caffeine. [6 Party Drugs That May Have Health Benefits]

Saturday, January 23, 2016

7 Numbers That Put This Market Madness In Perspective - TIME

Posted: 21 Jan 2016 08:20 AM PST
If you’ve been paying attention to the frantic stock market headlines—or doing your best to ignore them—you know about the recent carnage on Wall Street.
Both the Dow Jones industrial average and Standard & Poor’s 500 index were down more than 9% so far this year when trading began today. And both major U.S. stock indexes were off around 13% from their May 2015 highs, which means that domestic equities are officially in a “correction,” defined as a loss of at least 10%.
But here are some important numbers that may be less familiar—and can help you put the market’s wild gyrations into perspective.
14,650
This is the level that the Dow Jones industrial average would have to fall below to trigger an official bear market, which is defined as a drop of 20% or more. As of Wednesday’s close, the Dow stood at 15,766.
The last time the Dow traded below 14,650 was in 2013, when the economy was still working through the aftermath of the global financial crisis.
1,705
This is the level the S&P 500 would have to sink to for it to be snared by the bear. The benchmark index closed on Wednesday at 1,859. The last time the S&P 500 fell to these levels was in 2014.
1.67%
This was the lowest yield for 10-year Treasuries last year; right now it’s 1.97%. Why look at bonds when the stock market is sinking? Often, stock investors look to what the bond market is doing to seek confirmation of their own fears.
If the 10-year Treasury yield dips below its 2015 lows, that would suggest that fixed-income investors are more scared than they were during last year’s worst panic — a sign this could be the bear market everyone is waiting for.
$36
Crude oil prices dipped to below $27 a barrel on Wednesday, triggering the panic on Wall Street. A good deal of the drop has to do with the glut of oil on the market, especially now that economic sanctions on Iran have been lifted, potentially adding to supplies. But economists are equally worried about the state of future demand for oil, especially as China’s economic growth slows more quickly than expected.
In the U.S., it costs roughly $36 a barrel to produce a barrel of crude oil, compared to more than $40 a barrel in Canada and nearly $50 a barrel in Brazil. If crude oil were to climb back above $36, it would support the prospects of the U.S. energy sector, which has been a drag to corporate profit growth in the S&P 500. Oil above $36 would also go a long way toward reassuring U.S. investors that the domestic economy is unlikely to slip into recession anytime soon.
2
Heading into the year, the Federal Reserve looked as if it might raise short-term interest rates modestly four times this year, as part of its gradual effort to “normalize” interest rates given the expanding U.S. economy.
But the market sell-off may put a crimp in the Fed’s plans. “The stock market clearly views four rate hikes as too much too fast,” noted Ed Yardeni, president and chief investment strategist at Yardeni Research. Fed officials “should be starting to have second thoughts about hiking rates again,” he added, “especially given the unrelenting rout in stock prices and the free-falling price of oil.”
A January survey by Bank of America Merrill Lynch found that a majority of fund managers now think that the Fed will hike rates only twice this year, and a growing number think there could be only one rate increase in 2016.
If the Fed were to telegraph that change in mindset, it could help the markets recover. European Central Bank president Mario Draghi hinted at the possibility of yet more stimulus for the Eurozone, lifting the European markets.
12%
The $64,000 question is whether the U.S. is headed for a recession or not. Why? In most cases, bear markets in stocks foreshadow a recession in the real economy that’s either begun or is about to start in the coming weeks or months.
Yet only 12% of fund managers surveyed by Bank of America Merrill Lynch believe this economy is likely to go into reverse in the next 12 months.
That’s key. Major sell-offs that didn’t precede recessions have averaged losses of around 20%. That pales in comparison to the 50% or greater losses in the last two bear markets. And bear markets that don’t foreshadow a recession typically last only seven months, far shorter than most bears.
40
In past market panics, the CBOE Volatility Index approaches or climbs above a reading of 40. That’s roughly double the historic level. But on Wednesday, when the Dow fell as much as 566 points at one point in the day, the so-called “fear index” closed at less than 28.
So there’s hope yet.

Friday, January 22, 2016

North Korea Says It Has Arrested an American University Student for ‘Anti-State Acts’ - Associated Press

(SEOUL, South Korea) — North Korea said Friday that it had arrested an American university student for alleged anti-state acts.
Pyongyang’s Korean Central News Agency reported that authorities are investigating the student who it says entered the North as a tourist with a plot to undermine a unity among the North Koreans. It said the student has links to the U.S. government.
KCNA identified the person as Warmbier Otto Frederick, a student at Virginia University. North Korea has sometimes listed English-language surnames first.
The announcement came as Washington, Seoul and others are pushing hard to slap North Korea with tougher sanctions for its recent nuclear test. In the past, North Korea often announced the arrests of foreign detainees in times of tension with the outside world in an apparent attempt to wrest concessions.
Earlier this month, CNN reported that North Korea had detained another U.S. citizen on suspicion of spying. It said a man identified as Kim Dong Chul was being held by the Pyongyang government and said authorities had accused him of engaging in spying and stealing state secrets.
The U.S. State Department said it could not confirm the CNN report. It declined to discuss the issue further or confirm whether the U.S. was consulting with Sweden, which handles U.S. consular issues in North Korea because Washington and Pyongyang do not have diplomatic relations.
The United States and North Korea are in a technical state of war because the 1950-53 Korean War ended with an armistice, not a peace treaty. About 28,500 American troops are stationed in South Korea.

Thursday, January 21, 2016

Federal Budget Deficit Will Rise to $544 Billion This Year - Time Business

Posted: 19 Jan 2016 08:34 AM PST
(WASHINGTON)—A government report released Tuesday estimates that this year’s budget deficit will rise to $544 billion, an increase over prior estimates that can be attributed largely to tax cuts and spending increases passed by Congress last month.
The estimate from the Congressional Budget Office also sees the economy growing at a slower pace this year than it predicted just a few months ago. It projects the economic growth will slow to 2.7 percent this year; it foresaw 3.0 percent growth in 2016 in last summer’s prediction.
Over the coming decade, CBO predicts deficits totaling $9.4 trillion. That’s up $1.5 trillion from its August estimate, with much of the increase mostly due to last month’s tax legislation, which permanently extended several tax cuts that Congress had typically renewed temporarily.
Last year’s deficit registered $439 billion, the lowest of President Barack Obama’s term in office.
The deficit increase to $544 billion is due to several factors, CBO said, particularly the retroactive extension of tax cuts that had expired at the beginning of last year and additional spending for the Pentagon and domestic agencies that’s a result of last year’s budget deal. A timing shift are large payments is also at work. The current budget year ends Sept. 30.
The deficit issue has largely fallen in prominence in Washington in recent years, due in large part to its fall from record highs and a sense of resignation that Obama and congressional Republicans simply can’t agree on ways to cut it after some failed attempts in recent years. At 2.9 percent of the size of the economy, most economists don’t believe the deficit is very worrisome in the short term.
But the picture over the long run is more dire, CBO says in its report. As deficits rise over the decade and the national debt grows, interest rates are likely to be forced up, economic growth could slow, and policymakers may have no choice but to raise taxes and cut spending more sharply than if they acted now.
Deficits would rise to about 5 percent of gross domestic product within 10 years, CBO expects, and the resulting debt could cause big economic problems.
“Such high and rising debt would have serious negative consequences for the nation,” CBO said.