Specialist Anthony Rinaldi works on the trading floor of the New York Stock Exchange, adjacent to the post that handles Lumber Liquidators, Feb. 1, 2016. (Richard Drew/AP)
By Andrew Harris and Peter GaluszkaFebruary 1 at 7:31 PM
Lumber Liquidators must pay $10 million in fines and penalties for telling U.S. officials that timber for its wood flooring came from Germany rather than the actual source — the habitats of endangered Siberian tigers in southeast Asia.Shares of Lumber Liquidators jumped as much as 17 percent on the news, and trading volatility briefly triggering market circuit breakers.
U.S. District Judge Raymond Jackson in Norfolk on Monday accepted a plea agreement that the company reached last year with federal prosecutors. The deal also calls for five years’ probation and the appointment of an outside auditor.
Jackson warned of the consequences that would follow if the company fails to abide by its terms. “Lumber Liquidators will cease the importation of hardwood if they do not follow the plan,” the judge said.
After the hearing, company representatives left the court without speaking to reporters. In a statement, the company said, “Lumber Liquidators is pleased to put this legacy issue behind us.”
The Toano, Va.-based business pleaded guilty in October to five charges, conceding that some of its timber came from the east Asian habitat of endangered Siberian tigers and not from Germany as indicated on import paperwork. It agreed at the time to pay $13.2 million in sanctions, including forfeitures, the biggest fine ever imposed under the Lacey Act, which criminalizes the importation to the U.S. of timber taken in violation of another country’s laws.
Although that admission of wrongdoing ended a two-year federal probe, it left untouched dozens of federal lawsuits pending in Alexandria, Va., contending the company’s Chinese-made laminate flooring contained excessive levels of formaldehyde. Those allegations were sparked by a “60 Minutes” investigative news report aired in March.
The timber-sourcing problem also originated in China, where many of the company’s suppliers are located. Lumber purchased by the retailer was actually harvested in far eastern Russia and Burma, according to court papers filed by federal prosecutors on Oct. 7.
Lumber Liquidators was charged with making false statements — a felony — and four lesser offenses. The company has said it fully cooperated in the investigation and has since enhanced its sourcing and compliance practices.
The tigers hunt deer and wild boar that feed on Mongolian oak acorns. There are only about 450 of the great cats in existence, according to National Geographic. Amur leopards, which also hunt the east Asian forests, are also endangered, according to the World Wildlife Fund’s website.
As part of its agreement, Lumber Liquidators will pay the federally chartered National Fish and Wildlife Foundation $880,825. Another $380,825 will be dedicated to conservation of Amur leopards and their habitat. An additional $350,000 will be paid to the U.S. Fish and Wildlife Service’s Rhinoceros and Tiger Conservation Fund for the protection of wild tigers and their habitats.
Google's parent company, Alphabet, is encroaching on Apple's status as the most valuable company in the world, reports CNN. While Apple is currently on top, a surge in Alphabet shares today gave it a market valuation of $533.4 billion, briefly surpassing Apple's valuation of $532.7 billion on a 1 percent stock drop.
Alphabet shares dropped shortly after, leaving Apple at a higher valuation, but the numbers could shift again tomorrow following Alphabet's first financial earnings report this afternoon. Alphabet is expected to announce overall revenue growth of close to 15 percent with a 20 percent increase in earnings per share.
Over the course of the last several months, Apple shares have fallen steadily, dropping its peak valuation of $740 billion to ~$540 billion. Despite record earnings for the first fiscal quarter of 2016, with revenue of $75.9 billion and net quarterly profit of $18.4 billion, Apple has not bounced back from rumors that the iPhone 6s and the iPhone 6s are not selling well and concerns that the company has reached "peak iPhone" with no replacement product on the horizon.
Apple is in for a rough second quarter as the company is expected to announce its first ever decline in iPhone sales and its first year-over-year revenue drop in thirteen years. Currency headwinds caused by a strong U.S. dollar are costing Apple a significant percent of its earnings compared to the year-ago quarter.
Alphabet is up another 8 percent in after hours trading following a strong earnings report, meaning Alphabet will almost certainly open trading tomorrow at a higher valuation than Apple.
Fiat Chrysler Automobiles said Tuesday that sales of its cars and trucks rose 7% in January, bucking expectations that the auto industry is expected to report a slight sales decline following a massive snowstorm that blanketed the East Coast and shut down business in several states for about a week.
Total U.S. vehicle sales are expected to fall about 0.5% for January because of the snowstorm, according to three different industry forecasts, but that small dip has not tempered optimism for the year.
At FCA's, the red-hot Jeep brand and sales of Ram pickups helped the automaker keep its impressive monthly sales streak alive. The automaker has now reported year-over-year monthly sales increases for 70 straight months.
“Mother Nature was no match for our Jeep brand last month as we recorded our best January Jeep sales ever,” Reid Bigland, head of U.S. sales, said in a statement. “Overall, FCA US achieved its best January sales in nine years.”
By brand, sales rose 19% for Dodge, 15% for Jeep and 5% for Ram. However, Fiat sales fell 20% and Chrysler sales fell 22% as the company struggled to sell passenger cars.
Jessica Caldwell, director of industry analysis for Edmunds.com, said FCA is allowing customers to finance their cars over longer loan terms than competitors.
"It certainly doesn't hurt that the company is offering longer loan terms that drive down monthly payments. The average FCA loan term in January was 72.4 months, which was longer than any other major automaker, and exceeds the industry average of 68.4 months," Caldwell said in an email.
All other automakers are expected to report January sales results throughout the day today.
Typically, January is a slower month for car sales than most other months. Analysts also say the sales impact from snowstorm Jonas will merely delay vehicle purchases for many customers.
"Weather factors aside, this was still a pretty good month for car sales," Caldwell said. "If historic patterns hold, we're off to a healthy start for 2016."
LMC Automotive said its forecast for 17.8 million in industry sales for the year remains unchanged. That would top results from last year when automakers sold more than 17.47 million vehicles -- the most in U.S. history.
“We expect 2016 to be another record year, but all eyes will be tracking the expected slower growth rate as the year progresses,” Jeff Schuster, senior vice president of forecasting at LMC Automotive, said in a recent report. “All brands will not be able to grow as they have over the past few years, creating a higher level of competitive intensity and pressure on each brand.”
A BP refinery in Gelsenkirchen, Germany. The company said it would trim about 3,000 workers from its marketing and refining business by the end of 2017.
LONDON — The newest measure of the oil industry’s falling fortunes came on Tuesday in the form of a $3.3 billion fourth-quarter loss reported by BP.
For all of 2015, BP said it lost $6.48 billion, compared with a profit of $3.78 billion in 2014, before the plummeting price of oil began taking its full toll.
The stock of the British company plunged on the news, down more than 7 percent through midmorning trading in London. Petroleum futures were off, too, as investors and analysts awaited the fourth-quarter results later on Tuesday from ExxonMobil, the industry’s biggest player.
Despite oil’s per-barrel price being in the low $30s, down from levels above $65 as recently as May, ExxonMobil is still expected to post a profit for its fourth quarter. But analysts predict that ExxonMobil’s earnings for the period will be less than half the level of a year earlier, and for revenue to be down by about 40 percent.
The industry is reeling from the effects of a global glut of oil and slackening demand on worries of slower international economic growth. Longer term, there are questions about the value of oil still under the ground and the sea floor, as climate concerns prompt energy users of all size to seek alternatives to fossil fuels.
For big oil companies, the reduced prices translate directly into lower revenue and profitability, particularly in the units of big oil companies that find crude and produce petroleum.
BP, on Tuesday, repeated a commitment it made last month to cut 4,000 jobs this year in its exploration and production unit, which lost $728 million in the quarter. BP also said it would trim about 3,000 workers from its marketing and refining business by the end of 2017.
Before those cuts, BP had a global work force of about 80,000.
The company also said that, in response to plunging prices, it wrote down the value of its oil and gas assets by $1.6 billion in the quarter.
Hoping to keep more investors from fleeing, BP said on Tuesday that despite its financial losses it would keep its dividend unchanged at 10 cents per share.
“All of this underpins our commitment to sustaining our dividend,’’ the company’s chief executive, Robert W. Dudley, said in a news release.
BP has sought to streamline its operations by selling some businesses — a strategy in some ways forced by its need to raise money to help pay damages from its oil well blowout in the Gulf of Mexico in 2010. The company took a charge of $443 million in 2015 for that spill, bringing total provisions for the disaster to $55.5 billion.
Since 2010, the company has raised about $60 billion through sales of assets including stakes in three large Gulf of Mexico oil fields in 2012 and a Texas refinery in 2013.
Most of those sales were made when oil prices were much higher than today. Other companies, needing to scale back and increase efficiency in response to plunging oil prices, are finding it hard to find buyers for businesses or operations they might want to sell.
The American oil major Chevron, for example, cited that problem last week when it reported its first quarterly loss since 2002.
“It is a terrible market to be trying to sell most assets out there,” John S. Watson, the chairman and chief executive of Chevron, said on Friday during a conference call with analysts.
Chevron’s $588 million loss for the last quarter of 2015 compared with a $3.5 billion profit in the period a year earlier.
In a management move announced on Monday, BP has promoted Lamar McKay, the head of exploration and production, to deputy chief executive. Like BP’s chief executive, Mr. Dudley, Mr. McKay is an American who came to the company when BP acquired Amoco in 1998.
Uber drivers in New York City called Monday for a strike to protest the company's decision to cut fares by 15 percent, as drivers rallied at the ride-sharing app's New York headquarters.
Several hundred attended the protest, but it's not clear how many would heed the call for a shutdown. The company has roughly 30,000 registered vehicles in New York City.
Mohammed Rahman, a driver from the Bronx who's been in the business for two decades, said the cost cut is too deep. Drivers cover their own insurance, payments on vehicles and gas.
Ridesharing services such as Uber don’t have much effect on New York City traffic according to a recent study. Gridlock Guy, Mark Arum, doesn’t believe it has much effect on metro Atlanta traffic either. Photo courtesy of Uber
"Before, we made little, not much — but enough to feed the family," said the father of two. "But this is really, really bad."
The drivers behind the work stoppage were trying to get the word out to colleagues with fliers and social media. But thousands of cars still were on the road, many because they had not heard about the labor action. Uber drivers aren't unionized in New York.
"In order to change something with the low rates that Uber imposed on the drivers, we should cripple the city, so New Yorkers know what's happening to us," said Rajko Ljutica, a longtime driver who has worked for other limo companies he says are now being choked by Uber. "Uber is like a spreading cancer, killing the yellow cab industry and other car services."
This Friday, Nov. 21, 2014, photo taken in Newark, N.J., shows smartphones displaying Uber car availability in New York. Uber is offering car service in 250 cities in 50 countries now, up from 60 cities in 21 countries just a year ago. Uber hasn’t released its financial figures to the public, so valuing the company is pure guesswork. AP Photo / Julio Cortez
The popular ride-sharing app announced the price reduction Friday. A company spokesman said its data shows the fare reductions are actually helping drivers earn more money by drumming up business. The spokesman said if the lower prices don't work, they'll be rolled back.
"Every city has busy months and slow times. In New York things tend to be quieter after the holidays. So we lowered prices to get more people using Uber, which is good for drivers because it means less time waiting around for trips," said spokesman Matt Wing. "As we have always said, price cuts need to work for drivers."
Uber drivers, including Kalsang Tsering, right, chant and yell as people enter and leave an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers and their supporters hold signs during a rally at an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers and their supporters stand near signs during a rally at an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers, including Bikash Tamang, center, participate in a rally in front of an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers and their supporters hold signs during a rally at an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers and their supporters hold signs during a rally at an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
Uber drivers and their supporters hold signs and chant during a rally at an Uber office in New York, Monday, Feb. 1, 2016. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent. (AP Photo/Seth Wenig)
At the beginning of 2014, the world was marveling in surprise as the US returned as a petroleum superpower, a role it had relinquished in the early 1970s. It was pumping so much oil and gas that experts foresaw a new American industrial renaissance, with trillions of dollars in investment and millions of new jobs.
Two years later, faces are aghast as the same oil has instead unleashed world-class havoc: Just a month into the new year, the Dow Jones Industrial Average is down 5.5%. Japan’s Nikkei has dropped 8%, and the Stoxx Europe 600 is 6.4% lower. The blood on the floor even includes fuel-dependent industries that logic suggests should be prospering, such as airlines.
China’s slowing growth is one big reason. Another, according to analysts, is the direct or indirect fault of oil prices, which are still down 5% this year despite a week-long bullish run, and about 70% since their June 2014 peak, with much uncertainty how much they will rise from here in 2016.
The misread of the market again illustrates oil’s unfathomability—despite being studied microscopically for 140 years by some of the highest-paid quants and analysts on Earth, oil confounds with maddening regularity.
But it also reflects the tendency of analysts to eagerly embrace a new financial trend first, and only later examine what could happen should it proceed to its natural extremes before suffering the seemingly inevitable hit.
“The misread of the market again illustrates oil’s unfathomability.”Always in such situations, a few traders bet the other way, leading observers to declare them oracles. John Armitage, whose hedge fund made $1.5 billion last year betting on an oil bloodbath, hasn’t yet been crowned a sooth-sayer, though he could be at any time. On the other side, there are traders like Andrew John Hall, a long-time oil prophet who made a big bet starting in 2014 that oil prices were going back up, but they instead plunged; in 2015, he stayed with the bet, and by the end of the year, his hedge fund had reportedly lost more than a quarter of its value.
The analysts defend themselves by noting that they got this and that aspect of oil’s trajectory right, which is fair enough. But it seems all missed the big picture: First, they failed to see that from 2011 to 2014, a surge in shale oil production was going to become a big factor in global supplies; then, they did not anticipate that the same oil would create the mayhem before us now. In fact, in the case of the current turmoil, most forecast the precise opposite—economic nirvana. Interviews with the main institutions that made the bad calls reveal no crisis of confidence, and they are busy putting out analyses of the latest developments.
We live in a time of bad forecasting of all types. Examples include the failed predictions of political pollsters gauging a host of critical elections around the globe, and the delusionary thinking that led to the last American economic catastrophe wreaked on the world—the 2008 mortgage crisis. It’s hard to predict events, as Philip Tetlock described last year (paywall) in his book Superforecasting.
Even so, the sheer scale of what was not foreseen in oil (mea cupla: including by Quartz) is breathtaking.
Consumers have been big winners—gasoline prices have plummeted. That part has happened. But analysts failed to anticipate that the Saudis would refuse to cooperate with the shale gale, as it’s been dubbed, and in fact would declare war on it, even though the Saudis did precisely the same thing in the 1980s. The analysts did not foretell that, if shale oil production rose as they projected, it could drive down prices not only to the $80-a-barrel average that many forecast, but much lower—so low, for so long (see chart below), that companies would put on hold $380 billion (and counting) in oil and natural gas field investment, and fire 250,000 industry workers around the world last year (including around 90,000 in the US).
Nor did they foresee that many of the companies themselves would be at risk of bankruptcy (42 already filed as of last year). Of 155 US oil and gas companies studied by Standard & Poor’s, one third are rated B- or less, meaning they are a high risk of default. These companies’ debt is selling at just 56 cents on the dollar, below even the level during the financial crash. As a measure of this vulnerability, the 60 leading US independent oil and gas companies have accumulated $200 billion in debt.
In the bigger picture, none took account of the emerging markets’ addiction to investment from OPEC, whose billions of dollars today are either being withdrawn or simply no longer sent. This, along with an evaporation of recycled petrodollars from Europe, is consigning those emerging nations to recession, as reported first by Izabella Kaminska and her Financial Times colleagues.
“Unfortunately, we are all slaves to history,” said Robin Mann, an energy analyst with Deloitte. “We kind of fall back to what historically has happened.”
What is that history?
Since the 1970s, OPEC, the Saudi-led oil cartel, has governed oil prices by artificially restricting production in its members’ oilfields; there was never a global shortage, but OPEC’s market behavior created the illusion of one. Petroleum production in the US—once the world’s largest supplier—peaked in 1971 (see chart below), and it went on a slow decline, resulting in higher and higher imports, and an evolving shortage of natural gas, too. By 2008, the industry mantra was that cheap oil and gas were history; the only question was how high oil prices could go.
(AEI)
As an illustration of OPEC’s power, in the mid-1980s, Saudi Arabia became fed up with losing market share—its production dropped to as low as 3 million barrels a day (compared with 10.5 million today). So it flooded the market with oil, driving down the price to as low as $13 a barrel. In the process, a number of rivals were crushed, most harshly the Soviet Union, which collapsed entirely. But the Saudis recovered their market share.
By the early 2000s, oil demand from China, India, and elsewhere began to exceed supply—conditions for the so-called “superspike,” the famous rise of commodity prices—and oil’s long climb over $100 a barrel began.
Then, unpredicted and seemingly overnight, starting in the late 2000s, the US went from natural gas shortage to an enormous, 100-year overhang of the fuel. And there was a surge in US oil production that reached 4.4 million barrels a day by 2015. At once, the US was challenging the 1971 oil production peak.
The trigger was a boom in hydraulic fracturing—fracking—a drilling method that had opened up American shale fields, previously regarded as uneconomic. The catalyst for all of it was technology that lowered the cost of extraction, but also the incentive of high prices—US oil prices briefly went over $113 a barrel in April 2011, and stayed high.
With that rise in production came a Hallelujah Chorus.
Daniel Yergin, the oil industry champion and author of the 1990 Pulitzer-winning history The Prize, coined the expression “shale gale” to describe the impact he and his firm, IHS, forecast from fracking.
“’This is probably the best economic news the US has had since 2008.’”The US, Yergin said, was poised for an “industrial renaissance.” In an October 2012 report, IHS catalogued $5.1 trillion in spending from shale oil and gas production by 2035. In a December 2012 sequel, the firm went state by US state and detailed how, by 2015, fracking would employ some 500,000 workers. By 2020, the employment number would rise to 600,000 workers, and jobs supported by fracking would grow to 3 million, IHS said.
That was on top of the lower gasoline prices that would benefit all American consumers.
“This is probably the best economic news the US has had since 2008,” Yergin said.
One of the specific industries to gain from the boom would be steel, forecast Deloitte, the consulting firm, in a 2014 report. Given the expected demand from the oil industry as it built out its infrastructure, American steel companies could now compete head to head with rivals including China, despite the latter’s lower labor costs.
Adding to the growing glee, another major consulting firm, PwC, said that not only would shale be a big bonanza for the US, but it would drive a full percentage point increase in global GDP by 2016, and an extra 2.3% to 3.7% by 2032 (see chart below). In February 2013 (pdf), the firm did warn drillers that they should prepare for lower oil prices. But how low? If fracking spread around the world and began to produce 14 million barrels of oil a day—PwC’s estimate of the potential by 2035—oil prices would drop as low as $83 a barrel, the firm said.
On the shale patch itself, the politics were decidedly pro-fracking. When the Texas city of Denton voted to bar fracking within municipal limits, the industry came down hard, with the help of state politicians: the Texas legislature overturned the move by barring towns from regulating oil and gas drilling. Signing the bill, governor Greg Abbott said he was acting in the interest of “protecting private property rights.”
That’s when Saudi Arabia became unhappy
In summer 2014, Citigroup’s Edward Morse noticed that Saudi Arabia was offering its oil at lower prices than usual. Others reported the same, and it was inferred that, as OPEC’s leader, Saudi Arabia was suddenly out to push down the global price. And that is where it went—inexorably down. It was not clear how low it could go, although Morse had been forecasting for some time that it would average in the range of $65 to $80 a barrel by the end of the decade; now the plunge he foresaw seemed to be coming much, much sooner.
In effect, the Saudis had declared war on US shale. Then, in November 2014, the situation bode worse for the US-produced oil: The Saudis, meeting with fellow OPEC cartel members in Vienna, declared that US and other non-OPEC oil had to be driven out of the marketplace—the cartel as a whole had to go on a war footing. So it was that, led by the Saudis, OPEC, along with Russia, flooded the market with oil, leading prices to as low as $27 a barrel in January, a 77% drop from their peak in June 2014.
“In effect, the Saudis had declared war on US shale.”As Quartz has noted before, Morse has amassed a formidable record for getting big things right: Against the consensus, he forecast both of the most recent oil price plunges (in 2008 and in 2014). In both cases, he was subject to doubt often bordering on ridicule by his peers. There is no major oil analyst more oracular than Morse.
This time, though, while getting the plunge in prices right, Morse was less far-sighted about the rest. Like others, he forecast a US economic renaissance. Morse also missed Saudi Arabia’s war on shale. On not foreseeing the global economic mayhem, he told Quartz, “nobody got that right.”
Deloitte, too, got its steel forecast wrong: Instead of a bonanza for US steel, there was a plunge in demand, as the drop in oil prices prompted oil companies to cancel their projects. Chinese imports, meanwhile, continued to undercut the now-struggling American steelmakers. On Jan. 26, US Steel reported that it lost $1 billion in the fourth quarter of 2015.
This left analysts asking what went wrong
With the collapse in oil prices came the crash of employment in US cities across Louisiana, North Dakota, and Texas, and in Canadian towns reliant on the oil sands boom in Alberta. North Dakota has lost an estimated 13,500 roughnecks and oil engineers, not to mention drivers, restaurant cooks, barbers, and grocery store cashiers in service businesses that sprouted up around them. The Canadian province of Alberta has lost some 20,000 jobs, the most in any industry downturn since the early 1980s.
Oilpatch vacancy in Dickenson, North Dakota.(Reuters/Andrew Cullen)
A lot of Americans bought houses based on confidence in the boom, and now can’t make their payments—Texas has seen a 15% rise in foreclosures, and Oklahoma a whopping 36% increase, according to estimates from RealtyTrac. Morningstar, the rating agency, has put a third of some $340 million in mortgage-backed securities tied to North Dakota apartment buildings and other commercial properties on its watch list for possible default.
But the echo has also been heard far from the US shale patch. In the once-booming, toughly run petro-state of Azerbaijan, for instance, people have been been in the streets to protest higher prices and lost jobs; the International Monetary Fund, worried about Azerbaijan’s possible collapse, is speaking with government officials about a $3 billion bailout. Soup kitchens are surfacing in Moscow, notwithstanding Russian president Vladimir Putin’s assertions that the country is coping fine, and that things will improve this year. African producers also have felt the pain. Like stock bourses around the world, Nigeria’s has tanked along with oil prices.
Reid Morrison, an executive with PwC’s energy practice, acknowledged that the firm erred in its forecasts. He said that PwC, like a lot of analysts, thought that OPEC was already producing at its maximum output, so that shale would satisfy whatever demand developed on top of that. The firm also thought that, when any surplus developed, OPEC would cut production.
But he said that PwC fast caught on to what was happening once the facts changed. The firm went to clients with the changed circumstances. At a time when oil was selling for $95 a barrel, PwC now forecast the possibility of $50-a-barrel oil. But it was simply not believed. “The reaction we got from everyone was dismissive,” Morrison said. “They would say, ‘$80 a barrel is the new floor, so why are you being overly dramatic by talking bout $50?’”
Yergin did not respond to an email seeking comment. An IHS spokesman declined to comment.
“Warning of $50-a-barrel oil, he was more or less laughed out of the room.”Not all the analysts missed the clues. In 2012, with oil north of $100 a barrel, where the consensus said the price had to be in order to incentivize sufficient production to feed demand, oil economist Michael Lynch told an OPEC conference that the sustainable price of petroleum was $50 to $60 a barrel. He was more or less laughed out of the room.
Around the same time, Philip Verleger, an oil economist who runs a consulting firm out of Colorado, predicted Saudi’s war—in a May 2012 note to clients, he forecast a “Lehman event,” referring to the pivotal role of the 2008 collapse of Lehman Brothers in the financial crash.
Verleger is a ribald iconoclast with an encyclopedic knowledge of industry history, and a penchant for deriding the judgment of seemingly everyone else analyzing the market. In the Lehman note, he predicted that Saudi Arabia would do as it did in 1985—flood the market—and he timed it for later in 2012. Prices would plunge, he said. Even though the bull run went another two years, Verleger arguably still had more clarity than his peers.
What comes next?
In February 2015, Saudi energy minister Ali Naimi pondered aloud whether petro-states might suffer a black swan event, with oil demand drying up entirely by 2050. And then what would the Saudis do? It seemed like an off-the-cuff philosophical contemplation.
But Verleger suggests that it wasn’t—that the larger message of the current bedlam is that we are watching the autumn of the oil industry.
“Producing countries understand that oil not produced today may never be produced,” Verleger told Quartz. “Saudi Arabia was the first nation to come to this understanding. In response, they and other countries have acted to make sure their low-cost oil is produced first while the high-cost oil in nations such as Venezuela and Canada are left permanently in the ground.”
The notion sounds slightly wacky—does Saudi Arabia seriously believe the oil age is coming to an end? Saudi Aramco chairman Khalid al-Falih did say recently that the country intends to maintain its strategy, and keep producing oil at maximum production.
As for oil analysts, they are at odds over what that will mean for prices.
Americans are making more money, finding more jobs and enjoying cheap gas prices.
But they're not spending much...not even during the holiday season.
Concerns are rising that the American shopper won't be able to save the U.S. from heading into a recession. It's a big worry given that consumers make up about 70% of the U.S. economy and lately they haven't been opening their wallets much.
Spending fell in December compared to November even though incomes rose a bit, the Commerce Department reported Monday.
"The sum of all recession fears is whether or not the current slowdown in the industrial complex will spill over to the consumer, dragging the economy into recession," says David Kostin, chief U.S. equity strategist at Goldman Sachs.
U.S. manufacturing is already in a recession. The sector contracted for the fourth straight month in January, according to the key ISM index, which track's the industry's growth.
All of this presents a complicated picture of the economy.
Some parts of the economy are thriving. Last year, Americans bought a record number of cars. And there was evidence that shoppers are spending on their homes, particularly on big ticket items like kitchen counter tops, dish washers and roofs.
The fact that gas has fallen below $2 a gallon and Americans still haven't been spending is worrisome.
In fact, people are just saving more. Americans collectively saved $753 billion in December, up from $653 billion in December 2014, according to Commerce Department.
At the same time, personal spending, excluding the volatile things like gas and food, grew at a tepid 1.3%, slower than the 1.5% rate in 2014.
"Spending momentum slowed as 2015 drew to a close and enters the year on a weaker note," said Jennifer Lee, senior economist at BMO Capital Markets.
Get ready to enjoy your stroopwafels, United customers. Or your rice crackers and mini pretzel sticks. Free snacks returned to the economy cabin of United Airlines’ flights Monday.
And, soon, free snacks will be back for American Airlines’ coach-class customers, too.
American, the nation’s biggest carrier, announced Monday that it will restore complimentary snacks and add more free in-flight entertainment options in the coach-class cabin.
The moves by United and American – Delta never removed its complimentary snacks – come as the airline industry has found stable financial footing after a tumultuous run from 2001 into the early 2010s. U.S. carriers lost money by the billions last decade. But a wave of consolidation subsequently swept over the industry, producing several mega-mergers that has left the U.S. with four giant airlines that control about 80% of the passenger traffic here.
Some consumer advocates have bemoaned that development, arguing that fewer airlines means less competition. On the flipside, U.S. airlines are now reporting record profits. And they’ve begun to use at least some of those profits to improve passengers’ flying experiences.
"What has changed is that the airlines have been able to fix our core business and be able to reinvest in our customers," Fernand Fernandez, American’s VP – Global Marketing, says to The Associated Press,
The free snacks in coach class may not mark a sea-change in how airlines operate, but it does signal competition among the biggest carriers. And it may be a shot across the bow to an emerging breed of “ultra” low-cost carriers that are increasingly expanding at the hubs of major airlines like American, Delta and United.
Those discount carriers – Spirit and Frontier are the biggest in the USA – make their mark by offering rock-bottom fares but charge extra for almost everything else. Even seat reservations are not free.
"We know that we have customers who select our airline based on price and we're really excited to offer them a product that is superior to choosing an ultra-low cost carrier," Fernandez says to AP.
It also allows American and United to keep up with Delta, says Henry Harteveldt, founder of travel consultancy Atmosphere Research Group. Even Southwest, which offers only coach class seats, has continued to offer basic complimentary snacks.
"These are token investments in the passenger experience that will not cost airlines a lot of money but are small ways to make passengers a little bit happier," Harteveld adds to AP. "American and United realized: We don't let other airlines have an advantage on price, why let them have one on pretzels."
As for American, its free snacks will be available this month on its transcontinental flights connecting New York JFK to both Los Angeles and San Francisco. The carrier says all other domestic flights will have “an assortment of complimentary snacks … by April.”
“We want customers to choose American every time they fly,” American's Fernandez says in a statement announcing the change. “We are giving our customer more choices to enhance their personal flying experience by offering new service and new entertainment options in all cabins.”
American's customers on flights departing prior to 9:45 a.m. local time will receive Biscoff cookies. Passengers on later flights will get either Biscoff cookies or pretzels. American’s heartier “Food for Sale” items will continue to be sold on its flights.
Starting in May, however, American’s coach-class customers will get complimentary meal service on all flights between Hawaii and Dallas/Fort Worth International Airport (DFW). DFW is American’s busiest hub.
Beyond snacks, American says it will expand its selection of free in-flight entertainment choices on domestic flights with in-seat entertainment.
United’s free snacks will be offered on all of United's flights in North America, the Caribbean and between Honolulu and Guam that did not already have a complimentary meal or snack option in coach class. The move comes as new United CEO Oscar Munoz has tried to put customer service in the spotlight at the carrier, acknowledging earlier this fall that "the implementation of the United and Continental merger has been rocky for customers and employees."
United says coach-class customers on flights that depart before 9:45 a.m. will receive a morning stroopwafel, which the carrier describes as “a Dutch, caramel-filled waffle that pairs perfectly with coffee or tea.”
For flights that depart after 9:45 a.m., economy customers will get “packaged savory snacks, such as an Asian-style snack mix of rice crackers, sesame sticks and wasabi peas or a zesty-ranch mix of mini pretzel sticks, Cajun corn sticks and ranch soy nuts.”
The free snacks will be offered in tandem with United’s for-pay “Choice Menu” items. Those items range from small snacks like Chex Mex ($3.99) and Pringles ($3.99) to more robust breakfast, lunch and dinner options that cost up to $9.99. The availability of the Choice Menu options varies by flight.
United's Latin America flights that already had free meals in coach will not receive the new snacks since the airline will retain its current complimentary offerings in those markets.
The locked door of Ezubao in Hangzhou, China, in December. Officials quoted by the official Xinhua news agency said Ezubao, a Chinese online finance company, was a “Ponzi scheme.” HONG KONG — A Chinese online finance company bilked investors for more than $7.6 billion, spent lavishly on gifts and salaries and buried the evidence, according to local authorities who described it as a massive Ponzi scheme.
The accusations throw a shadow over China’s online finance industry, a lucrative area that has nurtured global leaders but that the authorities say also has been the scene of a growing number of frauds and flameouts.
Chinese officials say Ezubao, an erstwhile dynamo of the industry, offered mostly fake investment products to its nearly 1 million investors, according to China’s official Xinhua news agency. It said authorities had arrested 21 people in Anhui, the eastern Chinese province where Ezubao is based, and closed down some of the platform’s operations.
“Ezubao is a Ponzi scheme,” Xinhua quoted Zhang Min, a former executive at the company, as saying. Company officials could not be reached for comment.
A slew of Chinese companies has emerged in recent years to do for customers what the country’s state-owned banks will not. Chinese customers widely use their smartphones to buy groceries or transfer money, while new types of finances companies are offering loans to small businesses, students and others that state banks traditionally ignore.
Ezubao told investors it was a peer-to-peer lender, which matches investors with potential borrowers over the Internet. China’s growth in peer to peer, or P2P, lending has been strong, with Morgan Stanley estimating volumes last year totaled $33.2 billion, surpassing the United States. Morgan Stanley estimates the Chinese market is highly fragmented, with more than 1,500 such lending platforms.
But cases of illegal fund-raising related to peer-to-peer lending have been growing quickly in the past two years, according to local authorities, and officials in December pledged to tighten regulation of the industry. Because of the enormous amounts of funds involved and the large investor base, the collapse of a major online-financing platform could raise concerns over confidence in the security of such investments.
Ezubao has been under official scrutiny for weeks. In December, Xinhua said it was under investigation for suspected illegal business activities.
On Sunday, Xinhua said an investigation by local authorities found that most of the investment products being marketed by the company were fake. Some offered investors annual interest payments of as much as 15 percent.
Instead, the platform, which was set up by Anhui’s Yucheng Group in of July 2014, was used to enrich the top executives that ran it, Xinhua said.
That included more than 1 billion renminbi, or around $150 million, that Ding Ning, the chairman of Yucheng, allegedly spent on items and gifts including real estate, cars and luxury goods, according to the report.
The report added that the salary paid to Ding’s brother, Ding Dian, was increased to 1 million renminbi per month, from 18,000 renminbi, while the company spent as much as 800 million renminbi for payroll in the month of November.
Another executive in charge of risk management at a company affiliated with Yucheng Group said that more than 95 percent of the investment products marketed on the platform were fake, according to the report.
The alleged fraudsters appeared to have gone to considerable lengths to conceal their ruse — literally attempting to bury it from scrutiny.
The Xinhua report said police suspects placed some 1,200 documents or other pieces of evidence related to the scheme in 80 bags and buried them six meters, or nearly 20 feet, underground at a site on the outskirts of Hefei, the capital city of Anhui province.
The police had to deploy two excavators to the site, and it took them 20 hours to unearth the evidence, the report said. According to Xinhua, police described the case as “extremely difficult.”
Chipotle shares surged 5% in premarket trading Monday following reports that the Centers for Disease Control and Prevention may soon declare that the E. coli outbreak at the popular Mexican food chain is over.
The Wall Street Journal reported that the CDC may make such an announcement as early as Monday. But according to report, the cause of the outbreak is still unknown. Chipotle and the CDC were not immediately available for comment.
Chipotle has been reeling as a result of the E. coli outbreak. The company will report is fourth quarter results on Tuesday -- and they will not be good.
Chipotle(CMG) has already warned that same-store sales plummeted in the fourth quarter as the E. coli outbreak -- which has affected 53 customers in nine states since the end of October -- caused some customers to stay away.
Wall Street is expecting that overall sales fell 6% in the fourth quarter and that earnings per share plunged more than 50%.
Chipotle's stock is down nearly 30% since the initial reports of the outbreak and is trading 40% below last summer's all-time high.
The company was already faced with slowing sales before the E. coli outbreak -- partly due to separate health incidents.
More than 200 customers became sick as a result of a norovirus in Simi Valley, California in August. A salmonella outbreak tied to tomatoes in Minnesota in August and September made more than 60 customers ill as well. Then there was another norovirus episode at a restaurant in Boston in December -- at the height of the E. coli concerns.
But shares have bounced back about 15% from their lows in recent weeks. Chipotle has taken several steps to address food safety problems.
The company is even planning to close down all its restaurants on Monday Feb. 8 for a few hours to have meetings about the issue with employees.
Now Chipotle needs to convince customers that it's time to come back for its trademark burrito bowls. Chipotle is planning big discounts for Super Bowl parties this weekend.
But some analysts feel that it will take some time before Chipotle truly regains the trust of consumers.
Wall Street is predicting another sizeable drop in sales and profits for the first quarter.
Chipotle also faces tough competition from the likes of Mexican food rival Qdoba -- which is owned by hamburger chain Jack in the Box (JACK) -- fast casual king Panera (PNRA) and even a resurgent McDonald's (MCD). Mickey D's used to own a stake in Chipotle.
Futures broke rising support and now look like they are headed down to around 1900 where the next support is.
MACD's on this 2 hour chart could bottom and turn back up soon, possibly at the 1900 area support.
The futures most likely topped yesterday and we should start an ABC move down. First support is around 1900 area from the horizontal breakout level. If we get a bounce there it could go back up to a "possible" FP level on the SPY this morning (could just be a late fill as it matches a prior days' closing price) of 193.65... but I wouldn't bet on it being accurate. However, the level we open at this morning should provide a bounce as it looks to be good support. So, if one was short from yesterday you could take profits at the open and see if the bounce plays out.
Not only is the 1900 area support on the ES Futures, but I can see a nice rising wedge on the SPX chart, and again... I think we'll hit it at the open. Assuming it holds we should turn back up after the morning selling pressure dries up. That's another reason to exit shorts.
The U.S. has long been heralded as a land of opportunity -- a place where anyone can succeed regardless of the economic class they were born into.But a new report released Monday by Stanford University's Center on Poverty and Inequality calls that into question.
The report assessed poverty levels, income and wealth inequality, economic mobility and unemployment levels among 10 wealthy countries with social welfare programs.
Among its key findings: the class you're born into matters much more in the U.S. than many of the other countries.
As the report states: "[T]he birth lottery matters more in the U.S. than in most well-off countries."
But this wasn't the only finding that suggests the U.S. isn't quite living up to its reputation as a country where everyone has an equal chance to get ahead through sheer will and hard work.
The report also suggested the U.S. might not be the "jobs machine" it thinks it is, when compared to other countries.
It ranked near the bottom of the pack based on the levels of unemployment among men and women of prime working age. The study determined this by taking the ratio of employed men and women between the ages of 25 and 54 compared to the total population of each country.
The overall rankings of the countries were as follows: 1. Finland 2. Norway 3. Australia 4. Canada 5. Germany 6. France 7. United Kingdom 8. Italy 9. Spain 10. United States
The low ranking the U.S. received was due to its extreme levels of wealth and income inequality and the ineffectiveness of its "safety net" -- social programs aimed at reducing poverty.
The report concluded that the American safety net was ineffective because it provides only half the financial help people need. Additionally, the levels of assistance in the U.S. are generally lower than in other countries.
SFX Entertainment’s Electric Zoo music festival last September in New York. According to an announcement, the company’s many festivals will go on as planned. Credit
Krista Schlueter for The New York Times
SFX Entertainment, the company created four years ago to capitalize on the popularity of dance music festivals, declared bankruptcy on Monday, after a troubled year in which the company’s founder abandoned a takeover bid and its stock plunged by more than 95 percent.
The bankruptcy reorganization will take the company private, eliminate more than $300 million in debt from its balance sheet and install a new chief executive to replace Robert F.X. Sillerman, who founded SFX in 2012 with a dream of creating a media empire around dance music.
As part of the deal, a group of the company’s bondholders will convert their debt into equity and provide $115 million in financing. According to an announcement, the company’s many festivals around the world, including Electric Zoo, Tomorrowland, Mysteryland and Stereosonic, will go on as planned, and other businesses, like its digital music store Beatport, will remain operational.
“This expression of confidence from our lenders is testimonial to the vibrancy and potential of our business,” Mr. Sillerman said in a statement. “Of course this was not where we thought we’d be, but with this restructuring we have the opportunity to achieve all that SFX can and will be.”
Mr. Sillerman, who owns about 40 percent of the company’s shares according to his most recent filings, said that he would remain the chairman of SFX and that the company would begin searching for a new chief executive immediately.
The bankruptcy, which in recent weeks had been the subject of speculation in the music world and on Wall Street, brings to an end a painful stretch for SFX and Mr. Sillerman, who hoped to repeat the success he had two decades ago with an earlier incarnation of SFX Entertainment. In that company, he combined concert promoters around the country and in 2000 sold the enterprise to the broadcaster Clear Channel — now known as iHeartMedia — for $4.4 billion. That network of promoters and theaters remains the basis of Live Nation Entertainment’s concert division.
But the new version of SFX has been much more troubled. The company raised $260 million in an initial public offering in late 2013, but investors grew impatient with its efforts to build a profitable business by attracting corporate sponsors. Events like a Las Vegas edition of the Brazilian festival Rock in Rio also had disappointing results.
Last year, Mr. Sillerman offered to take the company private at $5.25 a share, valuing the company at $774 million, including its debt. But investors doubted that Mr. Sillerman had lined up the proper financing, and the company’s shares began to plunge. By August, Mr. Sillerman abandoned his bid, and problems continued to mount through the fall. Last month the company disclosed that it was in default because it had failed to make a $3 million payment on a $10.8 million promissory note.
SFX’s reorganization raises questions about the future of the company, including whether pieces of it will be bought by rivals in the concert and live-entertainment businesses. Last year, while Mr. Sillerman’s takeover bid was being considered by the board, the company disclosed that it received interest from bidders for parts of its business, but did not identify the parties.
Despite SFX’s problems, the dance-music world has largely remained strong. Festivals like Coachella, which involve many dance acts as headliners, are still popular, and by one estimate the global market for dance music, including recordings, live performances, endorsements and other deals, is worth $6.9 billion a year.
Saudi Arabia has successfully defended its share of the U.S. oil market even as rising domestic production from shale and growing pipeline imports from Canada have cut seaborne imports from other countries.
Saudi crude exports to the United States have remained relatively constant at around 1.2 million barrels per day since 2009, even as tanker arrivals from other countries have halved from 6 million to 3 million bpd (tmsnrt.rs/1Kf7s4t).
The Saudis have defended their market share through a combination of luck, strategic relationships and skilful marketing, a model the kingdom is now seeking to replicate in fast-growing fuel markets such as China.
CRUDE OIL QUALITY
Saudi Arabia has been fortunate in that the oil produced from shale is not in direct competition with its own crude exports (tmsnrt.rs/1Kf7sBx).
Shale oils are very light with a density of only 780-825 kg per cubic metre. The crude Saudi Arabia exports to the United States is much heavier, with an average density of around 860 kg per cubic metre.
Refineries are highly selective about the crude they process since it has a big impact on how efficiently and profitably they can operate as well as problems with equipment fouling and product quality.
Most U.S. refineries have therefore opted to make space for increasing shale production by cutting the amount of other light crudes they buy from countries in West Africa and Latin America.
Imports of medium and heavy crudes from Saudi Arabia and other countries around the Persian Gulf have not been affected to anything like the same extent (tmsnrt.rs/1Kfet5k).
MOTIVA ENTERPRISES
Saudi Arabia’s oil exports have also been protected by the long-standing strategic relationships the country has with refiners and marketers in the United States.
Saudi Aramco, which handles the marketing of Saudi Arabia’s crude, is the successor to the Arabian American Oil Company, a partnership between Chevron, Texaco, Exxon and Mobil established in the 1930s and 1940s.
Chevron (which later acquired Texaco) and Exxon (which acquired Mobil) remain some of the largest importers of Saudi crude into the United States, according to customs records.
In 1988, Saudi Aramco bought a 50 percent stake in Texaco’s refining and marketing operations in the eastern United States and on the Gulf Coast, which was named Star Enterprises (“Saudi Arabia, Texaco join forces” Los Angeles Times, 1988).
In 1997, Royal Dutch Shell joined the joint venture, subsequently renamed Motiva. When Chevron merged with Texaco in 2001, Texaco’s interest in the combined refining and marketing operations was sold to Shell and Saudi Aramco and reorganised as a 50:50 joint venture between them.
Motiva operates three large refineries in Louisiana and Texas (Convent, Norco and Port Arthur) with a combined refining capacity of 1.1 million bpd.
Motiva also as a network of refined product storage terminals across the eastern United States and markets gasoline, diesel and other refined products in 26 states and the District of Columbia under the Shell brand as well as through unbranded wholesalers.
Motiva’s refineries have been optimised to run on the medium-density crude oils Saudi Arabia exports, and the joint venture remains one of the largest importers of Saudi oil, according to the U.S. Energy Information Administration.
Saudi Aramco is hoping to replicate the same sort of strategic downstream integration in China’s fuel market.
The company’s chairman told reporters earlier this month that Saudi Aramco is in advanced talks to invest in refineries in China and the company is also in talks with CNPC and Sinopec about joint investment opportunities in refining, marketing and petrochemicals (“Saudi Aramco in advanced talks to buy china refinery stakes” Reuters, Jan. 20).
COMPETITIVE MARKETING
Saudi Aramco has also defended its market share through skilful and competitive marketing of crude to independent refiners in the United States, including Valero, Phillips 66 and PBF Energy.
Aramco prices competitively via monthly adjustments to official selling prices linked to regional benchmarks designed to protect market share and target sales volumes.
The company also stresses its importance as a reliable supplier and strategic partner for refiners. Unlike some rivals, Aramco does not rely on the spot market to place its oil.
Exports are almost all sold to refiners on term contracts and protected by destination clauses which limit secondary trading in Aramco crude.
Historic ties, downstream integration, strategic marketing relationships and competitive pricing have all helped Saudi Arabia to maintain its share in the U.S. market, which is important for both commercial and political reasons (“Texas refinery is Saudi foothold in U.S. market”, New York Times, 2013).
The company has also benefited from a good dose of luck in that its crude is quite distinct from shale, a good fortune that has not been shared by producers in West Africa.
Saudi Aramco has similar strategic ties to refineries in Japan and South Korea. Now it wants to build them in China as well to protect the company’s long-term future.
The importance of these relationships is one reason why Saudi officials continue to stress their determination to protect their market share and refuse to cut production to support prices unless rivals follow suit.
Russia, Iran and Iraq are the most direct competitors for the crude grades that Saudi Arabia markets so their willingness to match output cuts as part of any agreement is a priority for the kingdom.
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A report found why Uber was becoming increasingly popular. Source: Supplied
AUSTRALIANS can save 800,000 hours a year just by catching an Uber instead of a taxi.
A new study found people wasted an extra three minutes waiting for a taxi, with most uberX passengers picked up in about 4.5 minutes as opposed to eight minutes with a taxi.
The report by Deloitte Access Economics, commissioned by Uber, looked into why ridesharing was starting to overtake the taxi industry.
However, Australian Taxi Industry Association chief executive Blair Davies believes the research is a “marketing document” that slams taxis and glosses over the things wrong with Uber.
“On a busy night it might take a taxi 45 minutes to get to you but at least you get the service,” he said.
“If Uber does not have a car in your location, you’re not allowed to make a booking, so in that case their average wait times are down.”
Uber has been operating illegally in Australia, without regulations, but now the government is starting to embrace it.
It does not yet have government approval in Victoria but it has been legalised in the ACT and NSW.
UberX will soon be legalised in Western Australia and a review of the ridesharing service in Queensland will wrap up later this year.
Where UberX is legalised, drivers must follow certain regulations and are banned from cab ranks and from picking up those hailing on the street, which keeps taxis competitive.
There have been more than 10 million UberX rides ordered through the smartphone app since the ridesharing service was launched in Australia in 2014 and the new report looks at the great Uber vs taxi debate, and finds the ridesharing service is cheaper, safer and will be more economical in the future.
People are catching taxis less now Uber is available.Source:AAP
COST
UBER is cheaper than taxis, a main reason for the ridesharing service’s growing popularity.
The Deloitte report found Uber trips in August last year were almost 20 per cent cheaper than similar rides in taxis.
An UberX trip in Sydney that was $22.44, cost almost $6 more in a cab.
By catching UberX, passengers saved about $4 per trip in Melbourne, about $7.50 in Brisbane and about $5 in Perth.
The report found these cheaper costs enticed more people to switch from taxis to the ridesharing service.
The total saving for Australian passengers who choose UberX over taxis is $31 million a year.
Mr Davies did not believe UberX would be saving that much money a year.
“It doesn’t seem as though this report has factored in what is the cost of the service not being as accessible as taxis,” he said.
“Taxis are more expensive but we need to provide fully accessible services and 10 per cent of our fleet needs to have wheelchair access.”
Mr Davies said it was also important not to forget the price hike during public holidays, with people on New Year’s Eve complaining about paying nine times more for the ridesharing service.
Catching an Uber will cost you 20 per cent less than a taxi.Source:News Limited
SAFETY
ONE of the major dangers of catching a taxi is the anonymity between passengers and drivers.
The report found Uber has reduced the risks associated with getting from A to B because both passengers and drivers have profiles that can be checked before pick-up.
“The Uber application may remove anonymity, thus reducing an incentive to commit crime and allowing ease of reporting of any incidents,” the report said.
Another safety measure is the “share my ETA” feature.
Riders are able to share their journey in real time with friends and family, which is vital in case there is an emergency.
There are actually also really stringent rules for people wanting to become Uber drivers and there are a number of vehicle and personal requirements people have to meet.
To be an UberX driver you must be 21 and have a full driver’s licence.
You must not have had three minor offences, three demerit points or less, in the past three years, and no major offences, four demerit points or more, in the past three years.
Any drug or alcohol offences or a prior police record will cross you off the list of suitable UberX drivers.
Rules are also strict for vehicles used to pick up paying customers.
They must have four doors or more, be less than nine years old, be registered and not have decal or commercial branding.
Mr Davies however did not believe taxis were unsafe.
“I think it’s peculiar talking about Uber being safer than taxis when UberX vehicles don’t have security systems to protect drivers and passengers,” he said.
“For an innovative service, why wouldn’t you be using a technological system that is proven to make an experience safer?”
A report found Uber could alleviate traffic congestion in future years.Source:News Corp Australia
FUTURE GROWTH
THE report found Uber could actually benefit the government, providing it with data that would show where more public transport was needed.
More than 60 per cent of Uber rides start in “transport deserts”, locations that are not within an 800-metre radius of public transport.
The report found Uber could also reduce environmental problems if UberPOOL was introduced to Australia.
UberPOOL is a carpooling service, where at least two passengers in the same area are picked up and dropped at their destinations.
The report states this service would decrease traffic congestion.
“One analysis has suggested that if taxi and ridesharing services were to decrease, the number of motor vehicles owned in Australia by 10 per cent, or by 1.8 million mid-sized cars, families would save approximately $14.4 billion, based on a cost of $8000 per car per year,” the report said.
“Uber estimated that relying on ridesharing as opposed to public vehicle transportation would mean an average person could afford up to 882 UberX rides per year with the savings.”
Other data provided to the government could help it identify a need for new roads or road upgrades.
Mr Davies said however UberX vehicles were a detriment to the environment.
“They can be mum and dad vehicles up to nine years old and are not fuel efficient,” he said.
“You look at taxis and a high proportion of them are hybrid and a number of the cars are using LPG, which is a much cleaner fuel.”
Shortly after 4 a.m., the Benjamin Franklin starts to pull away from port in Xiamen, southeastern China, en route to Los Angeles.
At just over 398 meters (435 yards) long, it's one of the biggest vessels in the world. Standing on its end, it would dwarf the Eiffel Tower.
It's also the biggest container ship ever to dock in a U.S. port.
Built in Shanghai for the French shipping company CMA CGM, the vessel is one of a new generation of mega ships that can carry a staggering 18,000 containers on board.
"In the shipping industry, size matters," says Ludovic Renou, the general manager for CMA CGM in southern China.
The port in Los Angeles has been modified to accommodate the Benjamin Franklin ahead of its expected arrival later this month.
But the infrastructure is still not ready to bring in the colossal ship if it's fully loaded. That means the floating behemoth will only be able to fill up to about three-quarters of its capacity as it stops at ports like Hong Kong along the journey.
With U.S.-China trade worth hundreds of billions of dollars a year, shipping companies are hoping huge container vessels like the Benjamin Franklin won't have to hold back in the future.
"This is a test," Renou says. "We want to show our commitment to the U.S. route and hope that there is an understanding, that America needs this kind of ship."
The move toward bigger ships is an industry trend that has already taken hold in Asia and Europe.
"Thirty of these larger vessels are already in use worldwide, and 75 more are on order," Renou says.
Making a huge investment in these giant ships may seem like a risky strategy for an industry suffering the effects of weakening global economic growth. In particular, shipping firms face challenges from China's slowing economy as Beijing tries to steer it away from a reliance on exports.
But industry experts say buying big actually saves money in the longer term because the increase in size -- and potential profit -- far exceeds the relatively incremental increase in overheads. For example, staffing on board usually only increases by a few crew members for a ship that's twice as big as a smaller vessel.
"The larger the ship you have, the more containers you can carry," says Velibor Krpan, the captain of the Benjamin Franklin. "It's cheaper to have bigger ships, containing more products, because you have fewer things to pay for. It's more efficient in every aspect."
But right now, as global demand slows, moves to expand are helping to fuel a capacity glut.
"Currently in the container shipping industry, there is overcapacity of vessels," Krpan says. "Many of these vessels around the world, they are laid up, they are waiting for cargo."
Deloitte says the average waiting time for an uberX ride is sharply lower than a taxi.
UBER’S ride-sharing service is delivering benefits of more than $80 million to Australian consumers as users flock to the new and cheaper travel service.
uberX — the basic ride-sharing service that was launched in Australia in April 2014 — has boosted the market for commuting to a specific destination via a third party driver by 61 per cent.
The jump is mainly because consumers are switching from driving their own car, using public transport, walking or simply choosing to travel, according to a new report by Deloitte Access Economics.
UberX is also just under 20 per cent cheaper on average than equivalent taxi fares, according to the report, which was commissioned by Uber.
Deloitte Access Economics director Dr Ric Simes said uberX’s local launch is “playing out as one of our most compelling sharing economy stories.” “uberX is both transforming and growing the point to point transport market, offering an additional option for consumers,” he said in a statement.
Uber — which was launched in 2009 and operates various ride-sharing services in 68 countries- connects riders to drivers through its apps. All fares are processed online, and after the journey a user can rate the driver.
The average waiting time for an uberX ride is also sharply lower at 4.46 minutes, compared to 7.79 minutes for taxis, according to the report.
The futures are pulling back to the rising support area for a "possible" wave 4 down with the big squeeze up Friday being a wave 3 up. This suggests a wave 5 up yet to come to finish the move up from the 1800 area low.
This MACD suggests it will turn back up later today/tomorrow from being overbought and make a lower high on it, which the market makes a higher high.
As you can see the market is in a rising channel now, and "should" go up one more time into either later today on Tuesday. But as we all know SkyNet loves to trick us sheep. Meaning that it's possible that the high was put in on Friday and the move up I'm guessing will be a final 5th wave won't happen. Instead you'll look at today's drop as the first wave 1 down and the rally back up later today or Tuesday as the wave 2 up, which would then make a lower high, and be followed by a wave 3 down. Elliottwave is subjective but still helpful as every count I can come up with says we'll pullback. Some counts suggests a lower low and others suggest a higher low. So it's just a matter of picking the right shorting spot and riding it out until my forecast low is hit, which again is the 11th or 12th of February.
Stocks managed to log solid gains last week but remain sharply lower since the beginning of 2016. The Dow Jones Industrial Average(DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) are each down over 5% year-to-date and nearly 10% from 2015 highs.
The major economic news of the coming week is due out Friday when the government releases its jobs report for the month of January. Payrolls are expected to rise by about 200,000, marking a slowdown from December's 300,000 job gain. This announcement is especially important as it will inform the Federal Reserve's decision on whether to keep up its projected pace of interest rate hikes.
But earnings updates will likely hold the market's attention ahead of that report. Critical fourth quarter announcements are on deck from Alphabet(NASDAQ:GOOGL)(NASDAQ:GOOG), Exxon(NYSE:XOM) and Chipotle(NYSE:CMG) this week.
Monday, Feb. 1 -- Alphabet as the world's most valuable company
Google parent Alphabet kicks things off on Monday when the search giant is expected to post 15% higher sales and a 20% earnings pop to $8.10 per share. Alphabet shares are up over the last three months, bucking the negative market trend and putting it in position to steal Apple's crown as the world's most valuable company.
But what really matters are improving operating results, and Alphabet has delivered those in spades. Paid clicks rose 23% year-over-year in the third quarter on strength in mobile search advertising and the YouTube business. The company's operating margin also rose to 33% from 32%, despite significant foreign currency headwinds .
Given the global surge of mobile browsing and digital content consumption evident in Facebook's blockbuster results last week, Alphabet appears to have the wind at its back and should post significant sales and profit gains for its fourth quarter.
Tuesday, Feb. 2 -- How Exxon is adjusting to the oil price plunge
In contrast, Exxon is likely to post an epic operating slump when it announces earnings results on Tuesday morning. Consensus estimates call for the energy giant's sales to have plummeted by 41% as profit sinks 52% to $0.64 per share.
Image source: Exxon.
Sharply lower oil and gas prices combined to remove $5.1 billion of profit from Exxon's upstream earnings last quarter, and that's likely to be a major factor in the upcoming results. Oil prices fell 18% in fourth quarter 2015, from $45 per barrel down to $37. Investors will be listening for how Exxon intends to adjust to that sharply weakening operating environment -- especially considering that oil has dipped below $30 per barrel in the past few weeks.
Tuesday, Feb. 2 -- Chipotle's first-ever sales decline Chipotle is due to announce something that shareholders haven't seen since its IPO in 2006: shrinking revenue. The restaurant chain is expected to post a 6% overall sales decline as customer traffic slumped in the wake of its food safety crisis.
Source: Chipotle
The numbers will be sobering. Chipotle announced in early January that fourth quarter comparable-store sales were likely down 15% after peaking at down 37% at one point in December. Profit was likely cut in half to $1.86 per share .
Management may forecast a lost year of profit this week as the company works to regain consumer trust while bulking up its food safety standards.
Investors have seen indications from executives that they believe Chipotle will overcome this crisis and get back to strong growth. These include bulked up stock buyback spending and no change in the company's aggressive plans for new store openings. We'll find out on Tuesday whether that long-term optimism is backed up by improving customer traffic trends over the last several weeks.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Chipotle Mexican Grill. The Motley Fool owns shares of ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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GREENEVILLE, S.C. (WSPA) – Facebook has made a new policy cracking down on gun sales and it isn’t sitting well with some gun owners.
The social media site wants to stop private sellers from doing business through their accounts. The policy would keep private gun sellers from Facebook and Instagram.
They are banning advertising and selling from unlicensed people to buyers without the right paperwork. They made the announcement Friday.
Facebook has become a big source for gun owners, but several gun store sellers were not convinced the new policy will change much. One Facebook page creator, where guns are sold and traded, says he wouldn’t be happy to see his site go.
“If they want to choose what the rules will be, we have to abide by it,” said Devon Kelly, the creator of a gun trade and buyer Facebook page. “Most, you can definitely see the fear and kind of the anger coming out from them being restricted on being able to buy and sell what they choose and what they please.”
Devon says he’s already seen heated posts from gun owners opposing the new policy. And he says even if his site is taken down, people will find other sites to buy and sell guns.
“its not negative. It can be a stress reliever for some,” Kelly said.” People knowing how to use their firearms is key.”
Licensed gun retailers can still promote their business on Facebook, but they still don’t want them to accept orders or make the sale on their site.
In 2014, Facebook made restrictions on gun sales blocking posts that reached minors.
