China’s Communist Party Is Looking for Answers in Reaganomics - TIME Business

China’s Communist Party Is Looking for Answers in Reaganomics

Posted: 08 Mar 2016 08:59 AM PST

You’ve really got to give China’s Communist Party propagandists an A for effort.
As part of a new roll out of reforms designed to bolster falling growth, the Party PR team has launched a state-approved rap song that puts policy to a back beat. “Reform the supply side, upgrade the economy,” runs the tune. Maybe it looses something musical in translation. But the question is whether it makes any sense economically. “Supply side” economics, a term most associated with the tax cuts and deregulation of Reagan years in America, seems an unlikely reform slogan for China’s state-led economy. After all, the Reagan Revolution represented the kind of naked free-marketism Karl Marx bemoaned and the Chinese revolution claimed it would redress.
But a kind of supply side economics is what’s being pushed this week at the National People’s Congress in Beijing, as leaders acknowledge the existence of “zombie firms” that may require “bankruptcy liquidations.” Translation: policy makers are talking openly about the fact that large swaths of China’s economy are in meltdown, and trillions of dollars of government stimulus has done nothing to offset the fact.
Can supply side economics help China? It depends on how the concept is implemented. Though supply side theory has become synonymous with the laissez-faire, trickle-down Capitalism—which in an age of rising inequality have been largely discredited—the core idea was developed, ironically, by a French economist, Jean-Baptiste Say. Say said that supply—the creation of new goods, products, and services—created its own demand, by dispersing money into the economy in the form of wages and profits, which could then be spent by a rising consumer class. The key and often-forgetten caveat is that Say believed there could be supply and demand mismatches – powerful institutions like the state or large financial firms could distort the rules of the game. Wealth, in effect, didn’t always trickle down if it was being funneled off the side by vested interests.
That’s exactly what’s happening in China now. The Chinese economy has slowed because its outdated economic model, which is predicated on cheap capital and cheaper labor, has stopped working. This is a fact even top policy makers all-but-openly admit. When the U.S. and Europe stopped spending in the wake of the 2008 crisis, China’s export economy tanked, and the government stepped in to prop things up with a stimulus plan of unprecedented proportions. This resulted in a debt bubble that grew three times as fast as the ruinous American subprime bubble. Result: there’s so much debt in the Chinese economy now, that about half of new loans are going to pay off interest on existing ones. This creates a snowball effect of slower growth, which the government has desperately tried to buffer with more credit. This “self reinforcing relationship” is what’s caused the “large disruptions in the financial markets” recently, says Peking University economist Michael Pettis, a highly regarded China observer.
Traditional supply side theory is in compatible with the Middle Kingdom in the sense that it would assume that the government just needs to stimulate more production, and demand will follow. In fact, just the opposite has happened. China’s state-led construction boom has created to ghost cities and asset bubbles. But to the extent that supply siders acknowledge that powerful forces can distort the natural laws of supply and demand, they are on to something. The Chinese state desperately needs to move its economy from a government-led model in which cheap capital of consumers gets funneled into unnecessary and unproductive infrastructure projects. (This only bolsters the wealth of a small minority of very rich people and Party elites, a Venn diagram with considerable overlap.) The country has to find a way to, instead, boost household wages and consumer spending.
That is happening, but slowly. As Pettis points out, consumption has only been rising as a percentage of the Chinese economy since 2012—and only by about 1/5^th the amount that’s needed to really change the model. Meanwhile, debt continues to rise twice as fast as growth—a nosebleed rate that has market watchers worried about more stock crashes and bond defaults.
This means China’s policy makers could actually stand to take some lessons from the Reagan years. Despite all the political rhetoric about a smaller state and less spending, debt—both government and consumer—actually rose during the 1980s in the U.S. That’s because politicians used financial markets and easy money to buffer the fact that the American economy had actually been growing more slowly for years. The potential solutions to the real underlying problem—creating a true national competitiveness program for a more globalized world, reforming education, and figuring out a way to share corporate wealth more broadly—were too contentious to touch. It was basically a continuation of the “guns and butter” debate that began in the 1970s, and led politicians to cede control to the free markets, which proceeded to blow up every so often, a reminder that asset bubbles aren’t the same thing as real growth.
China is going through much the same thing now. (Indeed, the government has actually started repacking subprime type loans to try and offload some of its bad debts.) And so far, it’s unclear what “supply side” reform will really mean in the Chinese context. The government has called for policy proposals from think tanks, which run the gamut from closing down old coal fired power plants to liberalizing financial markets to focusing on creating more upscale goods and services. None of them are bad ideas, but they will only work in the context of fixing the real problem by shifting more of the society’s wealth from government- and state-run corporations to individuals.
It’s impossible to know how China’s version of Reaganomics might accomplish that. What we do know, it didn’t work in the US.

Fact-Checking Donald Trump on Free Trade - TIME Business

Fact-Checking Donald Trump on Free Trade

Posted: 11 Mar 2016 10:02 AM PST

Conversations about trade used to be so simple as to not need articles: free trade good, tariffs bad. But between the surging candidacies of Donald Trump and Bernie Sanders, that has changed radically. This campaign season has reopened the debate around how trade shapes our economy, in often-astonishing ways. And, to a certain extent, the conversation about trade has become a proxy for the one about globalization–is it good for Americans, or bad? The suspicion among voters that elites have been lying to them about the value of trade and globalization for decades is one of the things fueling voter anger and support for both Trump and Sanders.

The truth is mixed. Globalization and “free” trade—the term is a misnomer, really, since it’s never been free—have increased wealth and prosperity at a global level. But they have also increased the wealth divide within countries, in part because these forces created concentrated groups of economic losers in specific parts of our country. One of them, of course, is the Midwestern Rust Belt, where I grew up—that’s why the extent to which both Sanders’ and Trump’s messages resonated in Michigan was no surprise to me at all.
So does that mean that slapping 45% tariffs on American goods, as Trump again admitted might be necessary during the Mar. 10 GOP debate, is the way to go? No. Does it mean Donald Trump would be able to force Chinese president Xi Jinping to change the way his country’s currency is valued? Probably not. But I do think we are entering a new era for trade, because the low hanging fruit in many countries (not just the U.S.) has been plucked. Western elites are going to have to acknowledge something that most on the political right and many on the left have refused to say aloud: free trade doesn’t benefit everyone, all the time. There are winners and losers; the real question is how to properly protect the latter.
On that note, let me fact check some of the points that Trump has been making on the campaign trail, and offer alternates:

1. China’s trading strategy has not, as Trump says, represented the biggest “theft” in the history of the world.China has its own economic and political goals, which are centered around creating as many jobs as possible to avoid the social unrest that would collapse the Communist system. But the country hasn’t “stolen” the majority of U.S. manufacturing jobs. According to the McKinsey Global Institute, the U.S. lost about 1/3^rd of its manufacturing base between 2000 and 2010, some 6 million jobs. Only about 700,000 were lost to China, in “tradable” areas like apparel and electronics. The rest were lost because of decreasing consumer demand in the U.S. and elsewhere, largely as a result of economic downturns like the 2008 crisis.That demand loss particularly impacted areas like cars, white goods, machine tools, and lots of other things that U.S. businesses and consumers alike tend to buy at home. By the way, Americans make 73% of what they buy here at home, as BCG consultant Hal Sirkin recently reminded me, a point worth remembering in all this. On that note, there is a bit of good news: America brought back 1 million manufacturing jobs since 2010. That of course doesn’t alleviate the pain in the Rust Belt, but my article on the new American manufacturingexplains a bit about why the dynamics of the industry are changing in ways that smart U.S. policy could exploit. Unfortunately, none of them are being discussed by Trump. 
2. That doesn’t mean that the global trading system and economy isn’t screwed up and in desperate need of reform. As countries like China and other emerging markets have entered the global trading system, they’ve often not played by the rules of the game developed by the World Trade Organization, the chief referring body for the global economy. Its not just the far right and left that are concerned, but folks at places like the Council on Foreign Relations (see its report on the topic).This fact has many people on both sides of the aisle talking about why we might need to bring back a third rail word–industrial policy. That doesn’t mean the government picking winners, but it does move us toward the government helping connect the private sector and the public sector in new and innovative ways that will keep more good jobs at home. 
3. Bullying China to change its currency policy is of limited value. As Trump tells it, China devalues its currency to “steal” our jobs. There have certainly been some competitive devaluations of the RMB over the years, but overall, Chinese currency has appreciated against the dollar over the last decade. What’s more, when China takes actions to try and manage or manipulate its currency, you can bet there’s more than one thing in play. Recently, for instance, China has been desperate to try and prop up its currency to keep a flood money from leaving the country (a trillion bucks has already flooded out in the last year). That’s one reason why the Chinese react so badly when they are blamed for U.S. job losses: China is desperately trying to keep money and jobs at home, too, as it finds itself loosing both to other, cheaper, emerging markets. 
4. Huge tariffs aren’t the answer. Progressive labor policy is. Tariffs are a tax that everyone pays, while the losses from global trade remain concentrated amongst a smaller group. Helping those folks should be the priority. There are several ways to do that, but let me focus on one straightforward way here: When the next president visits China, he or she will have a big agenda—getting access to Chinese financial markets for U.S. banks, getting intellectual property protection for Silicon Valley companies, and discussing labor standards and wages.Labor rights, usually at the bottom of the list because it’s seen too often as just a human rights issue in faraway places, should go to the top. That’s the right way to show voters supporting Trump and Sanders, many of which are rightfully angry about not being well protected by their government, that the U.S. cares as much about working people as the 1 %. It would also help push China to push up its own wages, which would be a move in the right direction towards rebalancing its own economy. 

Global trade isn’t a zero sum game; it doesn’t have to feel like one. To the extent that Sanders and Trump have opened the debate up, they are doing a service to American workers and workers around the world. But to move forward, many—voters and candidates alike—will have to change, and deepen, their thinking on the topic.

These New Nest Features Could Change Smart Home Technology - Fortune

These New Nest Features Could Change Smart Home Technology

Posted: 10 Mar 2016 07:34 AM PST

Nest is adding two features that will help make its connected products a better fit for the connected home. The first feature uses data from users’ phones to contribute to their home and away settings, and the second lets them add more than one person to the Nest account.
This may seem small, but it represent a shift in thinking. For years the connected device industry has followed the trend of the mobile world, building links between a single person and their device. But with the smart home and the Internet of things, the challenge for device and app makers is to think about building links between a device and the home, which generally contains multiple people.

These two features are a start. The first, Family Account, lets users add up to 10 people to control their Nest devices. Originally, Nest users who wanted to remotely control their thermostat, camera, or smoke detector would log into their app on a mobile phone. But if your spouse was the person who installed and set up the Nest account, you’d have to share a password with him or her if you wanted to also access the device on your own phone.
One solution would be to give your home an email account and let anyone living there have the credentials, but this isn’t something many people will think about in their initial excitement of getting a new Nest product.
The second feature solves the challenge of having the Nest thermostat turn itself into Away mode even if someone is home. The Nest typically decided if people were home by using algorithms and a proximity sensor in the thermostat. But if the thermostat was located in a remote part of the house, it’s possible that people who were home wouldn’t trigger the sensor. At that point the Nest would decide that people were gone and would turn the air or heat off.
Several companies currently offer sensors that can tie into the Nest account to offer more granular information about who is in the home as a way to solve this problem, but Nest has decided to solve the problem for itself. The new feature adds geolocation on phones to determine if someone is home, so even if a person never triggers the sensor, the Nest product knows they are there.
For now this is a simple feature, but Nest could turn it into something far more powerful if it chooses. By using the combo of family accounts and geolocation, Nest can determine not only that someone is home, but who that person it is. That allows Nest to offer an interesting array of features such as setting individual temperature preferences.
If the Nest saw only I was at home, based on the cell phone information, it might set the temperature to my preferred setting. Thanks to integrations with other companies it might also change lighting preferences and more using the additional data. It’s a neat way to offer personalization if users opt in to these new features.
The Home/Away Assist and Family Accounts features are available by downloading the latest Nest update.
This article originally appeared on Fortune.com

Aung San Suu Kyi picks close aide to be Myanmar president - Financial Times

http://www.ft.com/cms/s/0/d642925c-e684-11e5-ac45-5c039e797d1c.html#ixzz42VFbqLai

March 10, 2016 6:29 am

Aung San Suu Kyi picks close aide to be Myanmar president

Michael Peel in Singapore

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Htin Kyaw, pictured with Aung San Suu Kyi in 2010

Aung San Suu Kyi has picked a long-time confidant to become Myanmar’s history-making new president, after failing to overturn a controversial constitutional clause that blocks her from the top job.

Htin Kyaw, a friend of 20 years who runs a charity for the veteran pro-democracy leader, was chosen for what she has said will be a proxy job to carry out her decisions.

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Thursday’s nomination by the lower house of parliament dominated by Ms Aung San Suu Kyi’s National League for Democracy will need to be approved by a vote of the full legislature, notching another landmark in the country’s long transition from military rule. The NLD has comfortable majorities in both houses of parliament, so it would be a big surprise were her choice to be rejected.

Mr Htin Kyaw, a 70-year-old author and Oxford university graduate, has been an adviser to Ms Aung San Suu Kyi since the 1990s and the start of her 15 years of house arrest. The new president will from 1 April lead a government to replace the military-backed administration, which has held power since the ruling junta of almost 50 years stepped down in 2011.

Mr Htin Kyaw’s nomination is final confirmation that Ms Aung San Suu Kyi will be denied the honour of leading the first administration since the 1960s to be chosen after a full, free and fair election. The NLD made a late effort to use its sweeping mandate from November’s poll to bargain with the still-powerful military for a change in the constitution, but talks broke down.

Ms Aung San Suu Kyi’s domestic and international supporters will be disappointed she has not managed to take the top job and fulfil what many people see as the legacy of her father, a murdered nationalist hero. But excluding her from the presidency has for years been the strategy of a military that has carefully controlled the political transition and still holds important positions in parliament, ministries and a committee with powers to overrule the legislature.

“The Myanmar story has never really veered far from the basic plot set 10 years ago,” tweeted Thant Myint-U, a historian and analyst, who advised the outgoing government on its internal peace process. “Observers looking for a dramatic climax miss the point.”

He added that Mr Htin Kyaw was “a stellar choice, well respected, unimpeachable integrity and a very nice man”.

Earlier on Thursday Ms Aung San Suu Kyi, who is banned from the presidency because her two sons hold foreign passports, called for people to be patient as the country seeks to shake off military rule. Her party has been waiting months since a landslide election victory in November, stoking already high expectations about what a government steered by the woman known to many simply as “The Lady” can achieve.

“I would like to appeal for people to support and stand by the NLD with wisdom and farsightedness,” she said. “The NLD is determined to meet people’s expectations and will do its best.”

Under Myanmar’s constitution, Mr Htin Kyaw is one of three people nominated — by each house of parliament and the military — to contest the presidency and two vice-presidential posts. The NLD has also chosen Henry Vantriu, a member of the Chin minority whose ancestral home is close to Myanmar’s borders with India and Bangladesh. The identity of the military’s pick is still not known.

As China’s NPC Meets, Here Are Four Danger Signs to Watch for in the Nation’s Economy - TIME Business

As China’s NPC Meets, Here Are Four Danger Signs to Watch for in the Nation’s Economy Posted: 07 Mar 2016 12:22 AM PST As China’s stock markets careen, global bourses follow in a punishing display of wave theory. With each 10th of a GDP percentage point shaved off of China’s growth figures, mines and mills across the world idle, sending some resource-rich nations into recession. China’s economic outlook affects not only the fates of 1.3 billion Chinese but also the fortunes of many nations across the planet. Little wonder, then, that as China’s National People’s Congress (NPC) got under way last weekend for its annual conclave in Beijing, the state of the world’s second largest economy was at the forefront of people’s minds. The nation’s propaganda department chose the meeting of the rubber-stamp body to introduce a curiously worded political slogan, “the four consciousnesses,” referring to President Xi Jinping’s order to highlight the primacy of the Communist Party in Chinese life. But it was Premier Li Keqiang’s announcement on Saturday that the government expected the economy to grow between 6.5% and 7% that made far bigger headlines. After all, last year, China narrowly missed its self-proclaimed target of 7% GDP expansion, recording the nation’s slowest economic uptick in 25 years with 6.9% growth. This year’s figure is the first time the government has set a goal below 7% in two decades. On Sunday, amid NPC meetings in Beijing, a top economic-planning official, Xu Shaoshi, dismissed fears of a hard landing in China, saying there was “no way” such a slowdown would ensue, according to the official Xinhua news agency. But here are four economic indicators to be concerned about in the year ahead: 1. Overcapacity China now has a lot of factories that make a lot of things that people no longer want. That’s bad news, not only for nations that supply the Chinese economic engine with natural resources but also for workers at home who haven’t been paid in months or who, equally concerning, keep churning out unneeded products. Last week, the Chinese government announced it would lay off 1.8 million workers in the state-owned steel and coal industries over an unspecified time period. Mass layoffs in the 1990s claimed more than 30 million jobs at state-owned enterprises. Back then, though, double-digit growth rates ensured alternative job creation. This time around, is China committed to eradicating so-called “zombie” enterprises, especially given the potential for worker unrest during an era of slower growth? “China has not followed through on the attempts it has made over the last decade to address overcapacity,” said Jörg Wuttke, president of the European Chamber of Commerce in China, as the business organization released a report on the overcapacity plaguing eight key industries. “Without a sustained effort to address it now, overcapacity may well seriously impede the effectiveness of China’s economic reform agenda.” 2. Market sentiment As President Xi’s anticorruption campaign kicks in and the business community gets used to a “new normal” of lower growth rates, worries have coalesced that people — along with dirty money — are beginning to flee China. That vague sense has gained more definitive contours with data showing surging capital outflows. Can the very people who profit most from China’s nexus of business and politics be losing confidence in the nation’s economy? Meanwhile, last month the Shanghai stock market hit its lowest point since 2014. In truth, a smaller proportion of Chinese are exposed to the stock market than are Americans. (Far more wealth is invested in China’s massive property market, which carries its own problems.) Still, stock-market sentiment counts for a lot, and the Chinese government’s response to last year’s free fall — ham-fisted and expensive attempts to order the market to turn around — didn’t do much for the reputation of the nation’s economic planners. Since then, the nation’s stock-market regulator has been sacked. But the stock-market woes, followed by clumsy efforts to stabilize the yuan, which have eaten up hundreds of billions of dollars in foreign-currency reserves — continue to raise questions about the stewardship of China’s economy. Speculators have bet that the yuan will continue its slide, which will, in all likelihood, lead to even more capital outflows as Chinese invest their money abroad before their yuan is worth less than it is now. 3. The innovation economy Premier Li has tied his economic plan to the economic buzzwords of the 21st century: green growth, IT investment, entrepreneurship. China does need to transition from a manufacturing-based economy to a more service-based one. Technocrats realize that the country’s punishing pollution — the air last week in Beijing spiked to toxic levels, even as thousands of political delegates descended on the capital — could drive away precisely the kind of young, educated citizens on whom the nation is counting. Already, the nation has made strides in alternative-energy development and digital innovation. Yet even as Beijing pledges itself to new economic drivers, politics seem at odds with the nation’s stated commitment to an innovation economy. Xi’s ideological campaign to force the Communist Party back into people’s lives works against the notion of global openness. The Internet beyond China’s borders is harder to access than before. The space for critical debate — often considered key in nurturing innovation — has narrowed. Fewer foreign companies are investing in a closing China. Li, who holds a doctorate in economics, also possesses less power than his predecessors Wen Jiabao and Zhu Rongji did. Instead, Xi, the country’s most powerful leader in decades, has deposited his trusted aides in economic-planning committees. The Chinese President has also taken personal charge of “leading small groups,” the powerful cliques that can direct policy more decisively than the bureaucracy supposedly in Li’s hands. 4. Numbers game About that 6.9% GDP growth from 2015: most independent economists place little faith in the numbers produced by China’s state-employed statisticians. Earlier this year, the chief of China’s National Statistics Bureau was sacked and is now being investigated for “serious disciplinary violations.” The question is, Just how inflated are China’s growth figures? There’s little doubt, however, in at least one figure — the nation’s growing debt burden. At the same time, now that China has committed to at least 6.5% GDP growth for 2016, some economists worry that efforts to meet even that target will undercut motivation to carry out badly needed reform. Earlier this month, Moody’s Investors Service downgraded its outlook for Chinese government credit ratings from “stable” to “negative.” One reason, according to the ratings agency? “Uncertainty about the authorities’ capacity to implement reforms — given the scale of reform challenges — to address imbalances in the economy.” But a brittle response from a state-linked researcher in the People’s Daily, the Chinese Communist Party’s mouthpiece, decried the Moody’s downgrade as a misjudgment “attributed to a poor understanding of the Chinese economy.” In China, politics are never far from economics.

Labor Market Strong as Economy Adds 242,000 Jobs - Associated Press

Labor Market Strong as Economy Adds 242,000 Jobs

Posted: 04 Mar 2016 06:11 AM PST

WASHINGTON (AP) — U.S. employers added a robust 242,000 workers in February as retailers, restaurants and health care providers drove another solid month for the resilient American job market.
The Labor Department said Friday that the unemployment rate held steady at 4.9 percent.
The pickup in job gains shows that the U.S. economy has largely weathered a broader global slowdown without suffering much blowback. Worker pay slipped last month after accelerating in January. But more Americans who had been sitting on the sidelines began searching for jobs and found them.
Employers expect solid consumer demand in the months ahead even though the stock market has turned turbulent, oil prices have hurt energy industry jobs and a stronger dollar has reduced export sales.
Retailers added 54,900 jobs last month. Restaurants and bars added 40,200.
Hiring by construction companies, retailers and health care providers has offset layoffs at manufacturers and fossil fuel companies — two sectors squeezed by the pressures of uncertainty in China, sluggishness in Europe, declining oil prices and a stronger dollar.
Job losses for the mining sector — an area that includes the battered energy industry — have totaled 140,400 in the past 12 months. And manufacturing has added just 12,000 jobs over that time.
Consumers have provided the foundation for much of the job market’s improvement in what’s become something of a self-sustaining cycle. More than 2.7 million workers hired over the past 12 months have bolstered spending on autos, housing and meals out. As unemployment has dropped, more companies have begun to raise pay to attract workers, thereby fueling more hiring as people’s ability to spend, invest and save has increased.
Friday’s jobs report is sure to be closely monitored by the Federal Reserve and presidential candidates as a gauge of how well the economy is extending its 6½-year rebound from the Great Recession.
Recent reports have pointed to continued improvement. Over the past 12 months, average hourly earnings have risen 2.5 percent. Annual pay growth has perked up after having increased at a roughly 2 percent pace in the previous few years. The wage acceleration has fed optimism among many economists despite the difficulties worldwide.
The hiring and rising incomes have translated into more consumer spending in several key sectors. Auto sales rose 7 percent over last February to 1.3 million vehicles, according to Autodata Corp.
Purchases of existing homes rose 0.4 percent last month to a seasonally adjusted annual rate of 5.47 million, according to the National Association of Realtors. That improvement followed a solid 2015, when sales achieved their highest level in nine years.
And spending at restaurants has risen 6.1 percent over the past 12 months.
Still, troubles abroad have tempered U.S. economic growth. China, the world’s second-largest economy, is struggling with high corporate debts and slower growth. Oil prices have tumbled amid relatively low demand. The strong dollar has crushed exports, while the stock market has dropped in an extended bout of volatility this year.
Mining companies, including oil and gas drillers, have shed 130,600 jobs in the past 12 months. Factories have hired just 45,000 workers from a year ago as job gains in the manufacturing sector have slowed after a strong 2014.
The Fed is looking for further wage growth. The central bank is considering whether to raise interest rates again in the face of global risks that could imperil broader economic growth. In December, the Fed raised rates from record lows — its first increase in nearly a decade.
Investors have largely dismissed the likelihood of another rate hike at the upcoming Fed meeting March 16-17.

Chinese Firm Makes $1.1B Deal to Become America’s Biggest Movie Chain - TIME Business

Chinese Firm Makes $1.1B Deal to Become America’s Biggest Movie Chain

Posted: 04 Mar 2016 09:06 AM PST

LOS ANGELES (AP) — AMC Entertainment is acquiring rival Carmike Cinemas to create the world’s largest movie theater chain.
AMC, which Chinese conglomerate Dalian Wanda Group bought in 2012, said Thursday it is paying $1.1 billion including debt for Carmike.
The combined company will be the dominant theater chain in North American and signals Wanda’s further expansion into the entertainment industry. Just two months ago, it said it would spend $3.5 billion to acquire mid-level studio Legendary Entertainment, the co-financier of blockbusters like “Jurassic World” and “The Dark Knight.”
Wanda is also behind a multibillion-dollar studio complex being built in eastern China that was used to shoot the upcoming movie, “The Great Wall.”
AMC will pay $30 in cash per share, about 19 percent higher than the $25.11 Carmike shares closed at Thursday.
The acquisition will boost AMC’s theater locations by more than 70 percent to well over 600 and increase its screen count by half to nearly 8,400. Regal Entertainment Group, the current leader, runs nearly 7,400 screens in about 570 theaters.
The boards of both companies approved the deal, which is expected to close by the end of the year following a review by government competition authorities.
AMC CEO Adam Aron said he hopes the combination will boost profits in 2017 and enable about $35 million in annual savings, while bringing upscale amenities like alcohol service, reclining chairs, and expanded food offerings to more venues.
He said the cost of upgrading would be “reasonable” and profitable. He also said Wanda, which owns 75 percent of AMC, was supportive of the deal, but he declined to speak on behalf of Wanda.
“Clearly, they are supportive of what AMC is doing, and what AMC is doing is we’re growing our business,” Aron said.
Aron said any possible theater closures would “depend on a conversation with the Justice Department.”
He noted there are only a few markets where the companies’ theaters overlap and where closures might occur. AMC is focused on larger cities while Carmike is in smaller markets.
AMC Entertainment Holdings Inc. is based in Leawood, Kansas, which will be the combined company’s new headquarters. Carmike Cinemas Inc. is headquartered in Columbus, Georgia.

Inside China’s National People’s Congress - Financial Times

http://www.ft.com/intl/cms/s/0/c4eddaf6-e108-11e5-9217-6ae3733a2cd1.html#axzz41wEMxggf

March 3, 2016 9:13 am

Inside China’s National People’s Congress

Lucy Hornby

Thousands of delegates from around China are gathering in Beijing this week for the National People’s Congress, an annual conclave that is the closest the ruling Communist party gets to seeking broader public input on its decisions. 

What is the NPC?
China’s version of the legislative branch of government, the NPC meets once a year for about 10 days in March. The meeting opens with pomp and ceremony at the Great Hall of the People, a temple to communist architecture built in the 1950s. The interior features thick red carpets, marble columns and lush decorations that aim to reflect the diversity of China’s provinces. The 2,943 delegates range from meek “model workers” and token ethnic minorities in colorful costumes to ministers and provincial party secretaries or captains of state-owned industry. The latter have been thinned by a two-year anti-corruption probe.

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Is the NPC a rubber-stamp parliament?
Yes — every law that goes up before the NPC is passed and every ministerial appointment approved. But the body is not as supine as it appears on the surface. Many draft laws never make it to the NPC for a final vote, either because they have been blocked by industrial lobbies, are too socially controversial or because party backers realise opposition within the ranks is too high. Similarly, China’s tea-leaf readers love to count the votes on ministerial approval as a clue to who is genuinely popular and who is held in relative disregard.

Why do Chinese refer to the ‘two meetings’?
The NPC meets at the same time as the Chinese People’s Political Consultative Congress, an advisory body made up of 2,220 representatives from business, academia and the eight powerless “dwarf” parties that allied with the Communists during the Chinese civil war. While lacking formal power, CPPCC delegates tend to bring views from a broader segment of society. Some are also very active in organising fact-finding tours to explore social and economic issues, the results of which can influence national policy. The CPPCC’s fortunes waned under the absolute rule of Chairman Mao Zedong but the body was revived and expanded under Jiang Zemin in the 1990s, during a time of rapid economic opening.

So what do they do during those 10 days?
Delegates spend most of the time broken into groups, either by province or by affinity group, in the case of the CPPCC. Every delegate has to read a statement reflecting on the premier’s work report presented at the first session and senior leaders rotate among the delegations. The slogan-filled meetings may drone on but many delegates manage to inject their own priorities into their statements. Others come armed with dozens of proposals for how China can be better governed, many of which get an enthusiastic airing in the Chinese press. Some make their way into future policy initiatives.

Do the ‘two meetings’ ever change?
The openness of the meetings and the degree of genuine discussion as oposed to parrotting slogans varies considerably with the political climate. Since unusually lively meetings in 2007 and 2008, a power consolidation under Xi Jinping, China’s president and general secretary of the Communist party, has been reflected in much more stilted and closed NPC sessions.

Facebook Executive Released After Arrest for Withholding Information - TIME

Facebook Executive Released After Arrest for Withholding Information

Posted: 02 Mar 2016 10:05 AM PST

(RIO DE JANEIRO) — A Facebook executive arrested for refusing to give information about the company’s users to law enforcement was released from jail on Wednesday.
Diego Dzodan, Facebook’s most senior representative in Latin America, left a jail in Sao Paulo after one night in custody on a warrant issued by a judge in the northeastern state of Sergipe.
The warrant says Dzodan repeatedly failed to comply with a judicial order to cooperate with an investigation into drug trafficking and organized crime. The company had ignored requests to surrender user information from the WhatsApp messaging service, an application bought by Facebook in 2014.
According to police, investigators first contacted the company four months ago, but received no response. Starting two months ago, the company was fined 50,000 Brazilian reais ($12,700) for every day it ignored the order, an amount which rose to 1 million Brazilian reais ($250,000) in recent weeks.
Brazilian police argue that Facebook’s stance is at odds with those of Yahoo, Google and local telecommunications companies, which have been willing to hand over user information to help investigations.
WhatsApp insists that is it unable to provide information that it does not have to the authorities. In a statement released on Wednesday, the company said, “arresting people with no connection to pending law enforcement investigation is a capricious step and we are concerned about the effects for the people of Brazil and innovation in the country.”
The Brazilian authorities’ tussle with Facebook has drawn comparisons to the FBI’s battle with Apple following its request that the company unlock the iPhone belonging to one of the terrorists who carried out the San Bernardino killings.
“The Apple vs FBI case and the WhatsApp case are in many ways exactly the same thing,” said Zaki Manian, a cryptography engineer and privacy activist. “The encryption systems employed by these companies is such that they do not have access to encrypted data. The only way the company could access the data would be to employ a malicious update to allow access.”

While some companies have been willing to design systems in which intercepts were possible, many tech companies are taking the opposite approach in the wake of the outraged reaction to the U.S. National Security Agency’s mass-surveillance program revealed by the whistleblower Edward Snowden.
“After the Snowden disclosures, my understanding was that the Brazilians were very upset to learn how easy it was for the NSA to spy on their communications,” said Chris Soghoian, the principle technologist of the American Civil Liberties Union. “What the Brazilians apparently want is something that cannot exist. There is no way to design a service that is secure from the NSA that allows local law enforcement access.”
Dzodan’s arrest is not the first time the Brazilian authorities have come into conflict with Facebook. In December a judicial order forced Brazil’s telecommunications companies to block WhatsApp over its refusal to cooperate with a police inquiry. The move snarled communications for many of its 100 million users in Brazil for around 12 hours. Facebook CEO Mark Zuckerberg at the time said he was “stunned” by the “extreme decision.”

3 Leadership Lessons From Warren Buffett - Fortune

3 Leadership Lessons From Warren Buffett Posted: 29 Feb 2016 11:42 AM PST Warren Buffett’s annual letter to Berkshire Hathaway shareholders, released last Saturday, is scrutinized worldwide for economic and investing insights. Understandably so; in 2015 Berkshire had, guess what, another knockout year. Yet I can’t recall ever seeing it read as a leadership document. That’s what it is, though, and this year’s letter shows why Buffett has been so extraordinarily successful not just as in investor but also as a business leader. Three traits stand out. -He’s optimistic. What comes through most strongly, as it does almost every year, is a powerfully upbeat attitude. No one has ever answered the call of someone who says, “Our situation is hopeless. Follow me.” Effective leaders have figured out how to be optimistic while simultaneously confronting reality, regardless of the circumstances. Buffett does that this year by responding to the presidential candidates, who “can’t stop speaking about our country’s problems (which, of course, only theycan solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.” Nonsense, Buffett says: “The babies being born in America today are the luckiest crop in history.” Unfounded wishful thinking? Through simple math – this is the confronting reality part – Buffett supports his argument. He shows that even “the much-lamented 2%” annual growth of America’s economy in recent years “delivers astounding gains” in just one generation. And he’s right. At that rate, and if America’s population continues to expand as it’s doing now, real per-capita GDP will grow 34.4% in 25 years. That is indeed a giant increase, and Buffett explains its full meaning at some length. By the time he’s done, it’s hard to dispute his conclusion, based on hard facts, that “America’s kids will live far better than their parents did.” -He explains what he’s doing so that anyone can understand it. Trusting leaders is important, but we all feel more comfortable knowing what they’re doing and why. Part of Buffett’s genius has long been his ability to explain the financial workings of a massive conglomerate in language that real people use. This year he devotes most of the letter to explaining just how each of Berkshire’s main businesses operates and how each performed. I defy anyone who reads those pages to come away confused. On the contrary, you come away thinking, “This guy knows what he’s doing.” Because he doesn’t ask you to trust him, you trust him more. -He admits mistakes and makes no attempt to sugarcoat them. I’m not aware of any other leader who every year acknowledges his errors as openly as Buffett does. Again this year he admits “serious errors I made in my job of capital allocation” and mistakes “in evaluating either the fidelity or the ability of incumbent managers or ones I later appointed.” And then, as usual, he goes further: “I will commit more errors; you can count on that.” Again, this makes you more confident in him, not less. Yet most leaders haven’t learned that lesson. American Express CEO Ken Chenault, a leader whom Buffett admires greatly – Berkshire owns almost 16% of Amex – says “The role of a leader is to define reality and give hope.” You won’t find that done any better than Buffett does it in this year’s letter. This article originally appeared on Fortune.com

One Day Until Super Tuesday, When Some Clarity (Maybe) Moves In - New York Times

One Day Until Super Tuesday, When Some Clarity (Maybe) Moves In  By MAGGIE HABERMAN Monday, February 29, 2016 Good Monday morning. A raucous Republican race could gain clarity this week, and Senator Bernie Sanders of Vermont could face a dwindling opportunity to prove he can develop support beyond his coalition of younger, whiter voters, as the parallel primaries head into Super Tuesday.   With roughly a dozen nominating contests in both primaries, the Republican votes present an opportunity for Donald J. Trump to amass a plurality of the 595 delegates available, and to put that much more distance between him and Senators Ted Cruz of Texas and Marco Rubio of Florida. Mr. Cruz is fighting to win his home state of Texas, which votes on Tuesday, while Mr. Rubio is looking to increase his vote totals in congressional districts and to bolster his delegate count.   But it also appears that those in the Republican Party who do not back Mr. Trump are realizing that he could be their problem through the fall. And in the last two days, Mr. Trump has given his opponents a lot of ammunition — by initially refusing to disavow support from the former Ku Klux Klan leader David Duke, who has praised Mr. Trump’s ascent in the primaries, and by retweeting a famous quote from Mussolini.   Mr. Trump has proved Teflon-like in the campaign so far. But he is now facing the first sustained attacks in the form of television advertisements, and he is doing little to counter them with his own spending. And Mr. Rubio and Mr. Cruz are unloading their opposition research files, including mentions that Mr. Trump avoided the military draft as a younger man and that some news accounts have claimed his businesses had reported ties to organized crime. But the biggest charge that Mr. Rubio hopes will stick is the one in which he has called Mr. Trump a “con man” over and over. With lesser schoolyard taunts, like discussing the size of Mr. Trump’s fingers, he is trying to get in the real estate billionaire’s head.  As for the Democrats, Mr. Sanders is looking to rebound after a deeply lopsided loss to Hillary Clinton in the South Carolina primary, where more than half the voters were African-American. Mrs. Clinton overwhelmingly won black voters. And while it is hard to translate the results from one state to others, Mr. Sanders had a number of paid staff members in South Carolina and worked hard — raising questions about where he will next find success.

What We’re Watching Today

•  On the day before 11 states participate in Super Tuesday, where are the candidates choosing to make their final appeals? On the Democratic side, both Mrs. Clinton and Mr. Sanders will be in Massachusetts, where 116 delegates are at stake and where polls show Mrs. Clinton with a slight edge. Mr. Sanders will also be in Minnesota, 93 delegates, and Mrs. Clinton will be in Virginia, 110.  •  Mr. Rubio will appear in several of the states, including Georgia, 76 delegates; Tennessee, 58; Arkansas, 40; and Oklahoma, 43. Mr. Trump and Ben Carsonwill be in Virginia, 49. Gov. John R. Kasich of Ohio will be in Massachusetts, 42 delegates, and Vermont, 16. Mr. Cruz will be in Minnesota, 38, and Texas, his home state and, with its 155 Republican delegates, the contest on which he is staking his strategy.

Warren Buffett: U.S. Economy Better Than Presidential Hopefuls Say - TIME

Warren Buffett: U.S. Economy Better Than Presidential Hopefuls Say

Posted: 27 Feb 2016 07:33 AM PST

(OMAHA, Neb.) — The United States’ economy is in better shape than the presidential candidates make it seem, investor Warren Buffett said Saturday, even though businesses like his still face challenges.
In his annual letter to Berkshire Hathaway shareholders, Buffett didn’t name specific candidates or issues, but noted that the negative drumbeat about the economy, health care reform and income inequality may get voters down about the future.
“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” he said, adding later, “that view is dead wrong: The babies being born in America today are the luckiest crop in history.”
Buffett noted that there will still be economic troubles as business evolves, but that the country needs to make sure it has a solid safety net to help people who lose jobs.
“The answer in such disruptions is not the restraining or outlawing of actions that increase productivity. Americans would not be living nearly as well as we do if we had mandated that 11 million people should forever be employed in farming,” he wrote.
Buffett pointed out that change also creates challenges for Berkshire’s businesses. For instance, its BNSF railroad is certain to haul less coal in the future and Geico insurance could be hurt by driverless cars.
He assured shareholders that Berkshire’s businesses will adapt just as the company did when its original Berkshire Hathaway textile operation failed.
Buffett’s letter is one of the most well-read documents the business world each year because of his successful track record and his knack for explaining complicated subjects in simple terms.
Buffett said the book value of Berkshire’s businesses improved 6.4 percent last year even as its stock price fell 12.5 percent. When dividends are factored in, the S&P 500 gained 1.4 percent by comparison. Buffett has warned that it will be increasingly hard for Berkshire to continue beating the market because the company is so large.
Berkshire Hathaway employs more than 360,000 people at its eclectic mix of companies, including insurance, utilities, railroad, manufacturing and retail firms. Berkshire also holds significant stakes in Coca-Cola, Wells Fargo, American Express, IBM and other companies.

U.S. Economy’s Year-End Slowdown Not as Bad as Expected - TIME Business

Mark Zuckerberg Has Some Pretty Smart Advice For Twitter Posted: 26 Feb 2016 01:17 PM PST Twitter has spent its entire existence, especially since becoming a public company, in the shadow of Facebook. So maybe it shouldn’t come as a shock that someone asked Facebook CEO Mark Zuckerberg what he would do if he was CEO of Twitter, which has suffered stalled user growth and a slumping stock price in recent months. Zuckerberg fielded the question at a town hall Q&A session in Berlin, according to VentureBeat. Though he initially said he didn’t know how to answer the question, he eventually pivoted to crow about Facebook’s own successes, especially the rapid growth of Instagram. The photo-sharing network is similar to Twitter in that many people flock to it in order to keep up with public figures, according to Zuckerberg. But Instagram has now exceeded Twitter by many major metrics. Instagram has more than 400 million users compared to Twitter’s 320 million and it has 200,000 advertisers compared to Twitter’s 130,000. The next big development in this relationship between public figures and their followers will be live broadcasting, Zuckerberg predicts. Facebook has been heavily pushing live video and is now rolling out live-streaming to its Android users. Twitter, meanwhile, bought the live-streaming app Periscope in March. “‘Live’ is going to be an awesome thing for public figures… imagine your favorite public figure or politician having the power to broadcast from their pocket, go live, have an audience of thousands of people,” Zuckerberg said. “I think you’re going to see a lot of that on Instagram and Facebook, and if the Twitter folks do a good job, I think you’ll see a lot more of that on Twitter too.” The challenge for Twitter, of course, will be to figure out how to effectively fit live video into the core user experience before Zuckerberg and his employees do.

Samsung Wins Appeal in $120M Patent Fight With Apple Posted: 26 Feb 2016 11:49 AM PST Put one in the win column for Samsung. The U.S. Court of Appeals for the Federal Circuit on Friday ruled (PDF) in favor of Samsung in a long-fought patent battle with Apple. The court’s ruling means Samsung will not be required to pay $120 million in patent-infringement damages, nor will it need to alter any product designs, dealing a blow to Apple’s argument that Samsung has “slavishly” stolen its intellectual property. In its ruling, the U.S. Court of Appeals said that Samsung did not in fact violate patents Apple holds related to turning alphanumeric characters, such as phone numbers, into links, as well as the iPhone’s slide-to-unlock feature. The court also reversed an earlier jury decision that Samsung violated an Apple patent on auto-correction. The court was particularly scathing in its comments about Apple’s patents, calling them “obvious”—a term used to describe technologies that are not deserving of patents. The court added that Apple’s slide-to-unlock and auto-correct patents are “invalid.” Apple and Samsung have been battling over patents since 2011. Both companies have said that the other has violated patents they own related to mobile technology and design. As the patent-infringement cases extended across the U.S. and Europe, neither Apple nor Samsung won a significant case until 2012, when Apple won a landmark ruling in California that awarded the company more than $1 billion in damages. Since then, the companies decided to scuttle their international disputes and focus solely on the U.S., but the patent-infringement cases have continued to fly. Over the last couple of years, a series of appeals, rulings, and trials whittled down Apple’s $1 billion in damages to $548 million. Samsung has appealed that case to the U.S. Supreme Court in hopes of ultimately dealing a final blow and retrieving its cash from Apple, which is currently holding it until the Supreme Court decides whether to hear the case. The case in question on Friday is the other big battle between Apple and Samsung. Like the other case, Apple and Samsung sued each other over alleged patent infringement across a slew of mobile devices. Apple had initially sought $2 billion on the patents cited in the case, but was awarded just $120 million by a jury in 2014. At that time, the jury also awarded Samsung over $158,000 for Apple’s alleged infringement of a patent related to the way photos and videos are organized in folders. Interestingly, the U.S. Court of Appeals sided with the jury on Friday, meaning Samsung will still be able to collect that small sum of cash if Apple doesn’t appeal the ruling. Samsung argument in the case centered on the idea that Apple’s patents are invalid and obvious, and should not be a legitimate means by which the company could collect damages. The court’s agreement calls into question the validity of Apple’s patents and whether the company could (and should) hold patents related to so-called “obvious” technologies like slide-to-unlock—a software mechanism that allows users to unlock their smartphones. Given that, it’s possible the issue could ultimately find its way to the U.S. Patent and Trademark Office (USPTO), which awarded the patents to Apple. The USPTO has reviewed the legitimacy and validity of Apple patents in the past, most recently examining whether the so-called ‘915 patent, which describes how the pinch-to-zoom feature works on touch devices, is “patentable.” The USPTO has on separate occasions determined that the ‘915 patent should not have been awarded, forcing Apple to file an appeal last year to the Federal Circuit in hopes of keeping its patent and the damages associated with it. With the latest ruling now in, Apple has effectively lost $120 million in damages it would have otherwise received from Samsung and will now need to pay out a little over $158,000. The company can either accept the ruling or appeal it, though it hasn’t said what its next move will be. An Apple spokesperson declined to comment on the ruling. In addition to Samsung, several industry giants, including Google, Facebook, and eBay, may be pleased by today’s ruling. In July, those companies, along with others in the industry, filed a brief with the Federal Circuit Court supporting Samsung’s fight with Apple. The companies argued that if Apple’s victories are allowed to stand, it could unleash a series of subsequent patent lawsuits utilizing the same intellectual property to target other device makers. Those lawsuits, the coalition said, would negatively affect the development of “useful modern technologies” and “have a devastating impact on companies.” Samsung did not respond to a request for comment. This article originally appeared on Fortune.com

Tim Cook Just Gave Another Tantalizing Hint About the Apple Car Posted: 26 Feb 2016 11:40 AM PST The extent of Apple’s ambitions in the automobile market have taken centerstage—previously occupied by rumblings of a tablet or television set—in the canon of long-running rumors about the company’s future plans. CEO Tim Cook again addressed the issue Feb. 26 during the company’s annual shareholder’s meeting in Cupertino, Calif. Asked about the potential for an iCar of sorts, Business Insider reported he said: Do you remember when you were a kid, and Christmas Eve, it was so exciting, you weren’t sure what was going to be downstairs? Well, it’s going to be Christmas Eve for a while. Before answering, Cook kidded his questioner “maybe I should have called on someone else.” In a recent interview with Fortune, he addressed the spate of hires in the car space many have taken as confirmation of the firm’s interest in challenging locals Google and Tesla, not to mention potential competitors in Detroit. “The great thing about being here is we’re curious people. We explore technologies, and we explore products,” Cook told the magazine. “And we’re always thinking about ways that Apple can make great products that people love, that help them in some way. And we don’t go into very many categories, as you know. We edit very much. We talk about a lot of things and do fewer. We debate many things and do a lot fewer.” Tesla CEO Elon Musk has called Apple’s plans around building a car an “open secret,” something Apple itself has never confirmed. Reports about the project, supposedly called “Project Titan” internally, claim that some 600 employees are attached. Steve Zadesky, the executive many think in charge of Titan, recently left the company.

Facebook Ads Are About to Look Much Different Posted: 26 Feb 2016 08:28 AM PST The next time you actually click a Facebook ad, you may not get shuttled over to a marketer’s website. The social network announced Feb. 25 that it’s opening up Canvas, its full-screen multimedia ad format, to all advertisers. The goal of Canvas is to show users more engaging ads that load much faster than the external webpages to which ads often point. Canvas ads reside in the News Feed just like traditional ads, but when clicked they expand into a full-screen ad that can include images, text and video. A big problem with mobile advertising is that it’s harder for marketers to really grab a user’s attention with such a small amount of visual real estate. These new ads, like the vertical ads on Snapchat, are likely to leave a bigger impression than banner ads or other types of mobile marketing. Major brands like Coca-Cola and Burberry have already used the format and, according to Facebook, found it effective. In Coke’s case, people who viewed the ad watched it for 18 seconds on average, which is a long time in the battle for attention on mobile devices. The ad format is the latest initiative in Facebook’s ongoing plan to move more Internet activity to its own apps. The social network recently launched Instant Articles, which let news organizations load their content directly into the Facebook app for faster loading.

Apparently Even Oprah Can’t Save Weight Watchers Posted: 26 Feb 2016 07:38 AM PST Weight Watchers sales declined rapidly in the last quarter, despite media celebrity Oprah Winfrey’s investment and advertising campaign. Weight Watchers reported a 21% drop in quarterly revenue down to $259.2 million, and active subscriber membership dipped 4.8% during the fourth quarter ending Jan. 2, Reuters reports. Winfrey joined the weight-loss company in October 2015 after it had experienced a nearly three-year decline in sales. She made a $43.2 million investment for a 10% stake and was added to the company’s board; its stock more than doubled on the day her involvement was announced.

Here’s Why Kohl’s Is Closing So Many Stores Posted: 26 Feb 2016 07:38 AM PST Kohl’s will close 18 stores in 2016 in anticipation of another year of meager sales gains. The number may not sound huge, but it’s the first time the retailer has had a store-closing campaign. Earlier this month, Kohl’s reported comparable sales rose a modest 0.4% during the holiday season. Now the department store expects comparable sales, which exclude recently closed or opened stores, to range from unchanged to rising 1% for most in 2016. Total sales may even fall, Kohl’s warned investors on Thursday. So now the retailer has decided to pare some of its 1,160-store fleet. (Macy’s has also announced store closings because of weak sales.) “While the decision to close stores is a difficult one, we evaluated all of the elements that contribute to making a store successful, and we were thoughtful and strategic in our approach. We are committed to leveraging our resources on our more productive assets,” Kohl’s CEO Kevin Mansell said in an interview. While the planned closings represent not even 1% of square footage, they represent a shift in Kohl’s strategy toward smaller stores and outlets. As first reported by Fortune in October, Kohl’s will open seven smaller stores of 35,000 square feet each, or just under half the size of a regular Kohl’s store, in 2016. The retailer will also expand its new chain of outlets called Off-Aisle, adding two locations to the pilot stores. What’s more, Kohl’s will open 12 Fila outlet stores to showcase that sportswear brand. The shift comes as Kohl’s turnaround plan, launched in 2014 and called the “Greatness Agenda,” has helped it avoid sales declines that have hurt Macy’s, but they still have yet to significantly boost sales. The chain has reported five straight quarters of comparable sales growth, but the pace of gains has been modest. Kohl’s had promised investors that sales would go from $19 billion in 2014 to $21 billion by 2017. But with the company forecasting total sales from down 0.5% to up 0.5% from 2015’s $19.2 billion levels, Kohl’s is clearly not on track. This article originally appeared on Fortune.com

Subway’s Latest Sandwich Is Totally Different Posted: 26 Feb 2016 07:38 AM PST Subway, the world’s biggest fast-food restauranteur, will next month add a new chicken sandwich to its menu, one that will feature antibiotic-free meat for the first time in the chain’s history. The new sandwich, which Subway showcased at a media event in Manhattan this week, will debut on March 1 at U.S. restaurants. Subway says the new rotisserie-style chicken sandwich also features no artificial colors, flavors, or preservatives. The menu addition is part of a broader plan by Subway to transition to only serving chicken raised without antibiotics, with a promise to make the transition for all chicken it serves in the U.S. by the end of 2016. It will also transition to turkey raised without antibiotics over the next two to three years, while the pork and beef phase will be completed in 2025. The longer delay for those meats is because it takes longer for those animals to mature, and thus the change takes more time for suppliers to implement. “We are looking at all our menu items and ingredients and looking at how we can make those ingredient lists cleaner so customers can understand what’s in their food,” Lanette Kovachi, Subway’s global dietitian, told members of the media at a Subway store in New York City. She added that by the end of this year, Subway will have removed all artificial colors and flavors across the entire menu. Quick-service restaurant (QSR) concepts like Subway have made public strides to source ingredients that consumers have deemed healthier or come from more humane practices. Subway, like McDonald’s, Dunkin Brands and several others, has vowed to switch to cage-free eggs. In Subway’s case, that change is set to be completed by 2025. Subway, which opened its first store in 1965, says it has been on this journey for many years. It points to past initiatives to fortify bread with calcium and vitamin D; reduce sodium; and provide clearer details about the nutritional information for items on Subway’s menus. The restaurant chain, along with many of the industry’s largest brands, including McDonald’s and Burger King, have faced challenging sales trends as consumers have shifted their spending patterns. Fast-casual concepts with more focused menus are winning business away from the QSR concept. Consumers are also increasingly visiting convenience stores and supermarkets, which are offering more freshly made grab-and-go menu items. So Subway, like many of its competitors, is responding to a consumer-driven trend. And it are leaning on its suppliers to change their manufacturing process so Subway can offer antibiotic-free meats and other healthier fare. Will the fresher and cleaner image Subway espouses boost sales? Only time will tell. “Today’s consumer is ever more mindful of what they are eating, and we’ve been making changes to address what they are looking for,” Dennis Clabby, executive vice president of Subway’s Independent Purchasing Cooperative (IPC), said in a statement last year. This article originally appeared on Fortune.com

U.S. Economy’s Year-End Slowdown Not as Bad as Expected Posted: 26 Feb 2016 07:14 AM PST (WASHINGTON) — The U.S. economy’s slowdown in the final three months of 2015 wasn’t quite as bad as initially thought. The gross domestic product, the broadest measure of economic health, grew at an annual rate of 1 percent in the fourth quarter, the Commerce Department reported Friday. That’s an improvement from the first estimate of 0.7 percent, though just half the 2 percent growth posted in the third quarter. The revision was made because the downturn in business stockpiling was less severe than the government’s first estimate. That helped offset slightly weaker consumer spending. The latest figure, however, does little to change the fact that growth in the final months of 2015 was modest. Since then, global weakness and financial market turbulence have triggered worries about the potential fallout on the U.S. economy. Still, economists are confident that GDP is poised to accelerate this quarter. Steady job gains and faster wage growth are boosting consumer spending, which accounts for more than two-thirds of the economy. “First-quarter GDP growth is on track to rebound to a very healthy 2.5 percent (rate) which should dampen any concerns about an imminent recession,” said Paul Ashworth, chief U.S. economist at Capital Economics. The fourth-quarter figure marks the slowest growth in six months, since the economy skidded to a weak 0.6 percent showing in the first quarter last year. That was followed by a solid rebound to 3.9 percent in the second quarter and then the 2 percent gain in the summer. Friday’s upward revision stems from a tweak in the government’s data for business stockpiles. That translated into a 0.1 percentage point drag on growth, rather than a 0.5 percentage point drag initially reported. This change could weigh on first quarter activity if businesses are reluctant to add to their stockpiles. In addition, the trade deficit subtracted 0.3 percentage point from growth, rather than the 0.5 percentage point drag in the first report. Exports still suffered, reflecting the struggle American manufacturers are having from a stronger dollar. But the country imported less than first thought. Consumer spending grew at a 2 percent rate in the fourth quarter, down from an initial estimate of 2.2 percent. Spending had surged at a 3 percent rate in the third quarter, and economists are counting on a rebound in the current quarter. Also weighing on growth in the fourth quarter was a downward revision to government spending, which fell at a 0.1 percent rate instead of a 0.7 percent rise first reported. All the changes in the fourth quarter left GDP growth for the year unchanged at 2.4 percent, the same as 2014. While some economists have boosted the odds of a recession because of the declines in stock prices this year, Gus Faucher, senior economist at PNC Financial Corp., said he believe the economy will keep growing. He forecasts GDP will expand 2.3 percent this year, little changed from the past two years. “The decline in stock prices is something to watch out for, but consumer spending is being helped by rising home prices that are boosting household wealth, continued solid job growth and increased wage growth,” Faucher said. In addition, economists view the big decline in energy prices as the equivalent of a tax cut, giving consumers more money to spend on other items.