Futures hit horizontal resistance yesterday and barely pierced though. Now this morning the appear ready to lose the rising trendline of support
MACD's rising on this 60 minute chart have made 3 lower highs, which is triple negative divergence
From the looks of the charts this morning we might have already topped yesterday and had a small wave 1 down after the close with the small wave 2 up this premarket morning. It's riding a rising trendline which also makes a triangle. The Apex (the ending point) of that triangle is around 1950 on this chart. If the wave count of a small 1 down and 2 up is incorrect then possibly we go up one last time toward that Apex today. But it really doesn't look like it's got the power to do that in my opinion.
Looking at the MACD's I see triple negative divergence on them with 3 lower highs. The 6 hour chart is flatlined up around +12 on it's MACD's and looks ready to drop as well. The 2 hour and 4 hour charts also look ready for a pullback. So a move over the 1940 level to at least retest the 1943.75 high yesterday, if not break it, would be a blessing for the bears to short at.
If it breaks through it overhead resistance there should be a stop run to get it up to that 1950 area, but once the stops are hit and taken out there's not anything left to keep it up there as the technical picture is too bearish. I would look to short that breakout if it happens today. However, just based on the technicals, the bulls need to do it today... otherwise there will likely be a small wave 3 down to around the gap fill area in the 1915 zone I'd guess. Possibly that turns out to be just a 3 wave pullback instead of a 5 wave and then the bulls try again on Wednesday, but they are running on air right now and need at least a 50% retrace of the entire rally up from the 1800 area lows to reset the charts if they really want to make a run for 2000 or higher.
Google Chief Executive Sundar Pichai received restricted stock worth about $199 million, according to a regulatory filing by Google parent company Alphabet.
Pichai, who took over in August, received a grant for 273,328 Class C Google stock units on Feb. 3. The valuation is based on the stock’s closing price on that date.
On the same day, Pichai sold 375 Class A common shares at a price of $786.28 each, and 3,625 Class C capital stock at a price of $768.84 each, the filing said.
It’s obvious that a $10-a-barrel tax on oil would translate into higher prices for gasoline at the pump. But how much higher?
The White House on Thursday said President Barack Obama will propose a $10-a-barrel tax on each barrel of oil to pay for clean transportation projects. The tax, which will be part of the budget request Obama sends to Capitol Hill next week, would be paid by oil companies and gradually phased in over five years. The measure, however, isn’t expected to go far.
But if it were to be enacted, it probably wouldn’t be the oil companies that feel the most pain.
“This proposal would trickle down and be a $10 per barrel tax on motorists—or 20 to 25 cents per gallon on refined fuels,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com. “To me it’s clear: this is not something oil companies are going to absorb.”
Opinion: Oil-tax proposal steps on White House jobs message.
And the impact of the tax would grow over time. DeHaan created a chart to show just how big a toll he expects the tax would take on gasoline consumers through 2023, if it were passed.
“As with almost every tax increase on fossil fuels, whether at the state or federal level, it will likely be completely passed to consumers in the years ahead,” he said.
And it won’t just impact gasoline prices, but also diesel, jet fuel, heating oil and others, DeHaan said. “It could stifle production to some degree, though to a lesser degree as long as the tax applies to imported oil as well.”
The proposal comes at the worst time for the oil market, which has already seen prices drop by more than 70% from their highs above $106 in June of 2014. On Friday, West Texas Intermediate crude CLH6, -2.27% settled at $30.89 a barrel.
Read: This is how the oil rout’s ‘endgame’ might play out.
A global glut of crude supplies cratered prices in the last year and a half, and global production has yet to show any significant declines as major oil producers play a game of “you cut first” with output amid a battle to retain market share.
Also see: Oil output barely dented despite crude’s plunge
It’s a “time of fierce competition in the global oil market and heavy job losses in the industry,” said Brian Milne, energy editor and product manager at Schneider Electric.
Earlier this month, BP PLC BP, -0.49% said it would cut another 3,000 jobs by the end of 2017 after reporting a full-year loss of $5.2 billion. Royal Dutch Shell RDS.A, +0.29% RDS.B, +0.25% this week reported its worst profits in over a decade.
For an industry that has already lost 60% of its gross income, it doesn’t make sense to “slap a tax on it that would take another 10% of their gross income,” said Charles Perry, chief executive officer of energy-consulting firm Perry Management.
That will eventually result in a “mass plugging of the many already marginal wells,” as well as the “need to expand the network of bankruptcy courts,” he said.
So why bring up the prospect of an oil tax right now?
Obama is adamant about the advantages the tax will create. “We’ll look back and say that was a smart investment. It’s right to do it now, when gas prices are really low,” he said Friday.
Read: Oil-tax proposal steps on White House jobs message
Milne said Obama may think he can “slip the tax through…without many realizing that they’re paying the government more to fuel their vehicles and warm their houses” because oil and gasoline prices are low right now.
On Friday afternoon, the average price for regular gasoline at pump stood at $1.747 a gallon, according to GasBuddy. That’s down 40.5 cents from last year’s average of $2.152. Gasoline futures RBH6, -3.78% also dropped below $1 a gallon on Friday for the first time since late 2008.
Read: Gasoline prices may be about to spike
The tax is “certainty a hot topic,” said DeHaan. “Motorists should be eyeing this carefully.”
Shares of satellite Internet outfit ViaSat surged nearly 12 percent Tuesday on speculation that American Airlines might use the Carlsbad company to supply in-flight Wi-Fi on some of its commercial jets.
The news stemmed from a contract dispute between American and its current in-flight Wi-Fi provider – Chicago-based Gogo – that could open the door for the Dallas-based airline to switch to ViaSat for some domestic flights.
Gogo’s stock price tumbled 27 percent on the news.
The contract spat is nuanced, but it highlights the growing importance of high speed Wi-Fi to airline passengers. According to a recent survey by Honeywell, two-thirds of passengers said the availability of Wi-Fi was a factor when they selected a flight. A study by the Airline Passenger Experience Association found that better in-flight connectivity was the second most desired upgrade that passengers want – trailing only more comfortable seats.
A relative newcomer to the market, ViaSat powers satellite in-flight Wi-Fi for JetBlue, Virgin America and some United Continental aircraft, with about 450 commercial jets in the sky. It delivers more bandwidth – up to 12 megabits per second to each seat – than older inflight Wi-Fi technology. That allows passengers to stream Netflix or Amazon Prime shows to their computers or tablets while in the air.
Carlsbad's ViaSat delivers high-speed in-flight Wi-Fi to JetBlue's fleet in North America. It also supplies satellite Wi-Fi to Virgin American and some United Continental Holdings aircraft.
Carlsbad's ViaSat delivers high-speed in-flight Wi-Fi to JetBlue's fleet in North America. It also supplies satellite Wi-Fi to Virgin American and some United Continental Holdings aircraft.
Gogo is the leading supplier of in-flight Wi-Fi, with more than 2,300 aircraft using its air-to-ground technology. Customers include Delta, United, Alaska Airlines, Air Canada and AeroMexico.
The air-to-ground system doesn’t deliver as much bandwidth as satellite systems. Gogo provides 3 megabits to 10 megabits per second to be shared between all passengers on the plane, which can lead to clunky Web surfing if too many devices hook up.
Gogo is rolling out a new satellite based service called 2Ku, which it says will match ViaSat’s performance. The system has been installed on one AeroMexico jet, with orders in the pipeline for 800 additional planes from various airlines, according to Gogo spokesman Steve Nolan.
Last week, American Airlines filed a legal action in a Texas state court saying under terms of its 2012 air-to-ground contract with Gogo, it had the right to terminate the deal before it expired "if an in-flight connectivity provider other than Gogo began offering a better service," according to court documents.
American named ViaSat as the company providing better Wi-Fi.
"We are always looking at what products we can provide our customers to meet their needs on-board our aircraft, and that includes connectivity," said Casey Norton, a spokesman for American Airlines. "We notified Gogo that a competitor has made an offering, and we will evaluate all of our options."
Gogo declined comment on the lawsuit. But it did say under the contract terms, it has the right to make a counter offer on the roughly 200 aircraft covered by the contract.
"We plan to submit a competing proposal to install our latest satellite technology — 2Ku — on this fleet,"Gogo said in a filing with securities regulators. "We believe that 2Ku is the best performing technology in the market and look forward to discussing our offer with American."
Gogo said it plans to utilize capacity on around 180 Ku-band satellites globally to deliver its 2Ku service.
ViaSat declined to comment on the dispute. But Keven Lippert, ViaSat’s head of satellite systems, said the company-owned satellites have the capacity to deliver exponentially more bandwidth than rival satellites.
For example, ViaSat-1, which was launched in 2011, has 150 gigabits per second maximum bandwidth. Today’s Ku-band Internet satellites have 1 to 3 gigabits maximum capacity, said Lippert.
ViaSat-2 is scheduled to launch next year. It will have close to 300 megabits per second maximum throughput.
"It boils down to math," said Lippert. "You can say you can provide 100 megabits per second, and you can do that for one aircraft. But when you have hundreds of aircraft and passengers video streaming, the capacity of your network becomes important. If you don’t have a lot of capacity, your service breaks down."
ViaSat’s shares ended trading up $7.36 to $69.81 on the Nasdaq exchange.
The U.S. Department of Transportation opened bidding by American air carriers on as many as 110 U.S.-Cuba flights a day. (AP)
The United States and Cuba on Tuesday signed a deal restoring commercial air traffic for the first time in five decades, allowing of dozens of new daily flights to bring hundreds of thousands more American travelers a year to the island as early as this fall.
Immediately after the signing, the U.S. Department of Transportation opened bidding by American air carriers on as many as 110 U.S.-Cuba flights a day - more than five times the current number. All flights operating between the two countries today are charters.
Barring other major announcements, the restart of commercial flights will be the most significant development in U.S.-Cuba trade since Presidents Barack Obama and Raul Castro announced in late 2014 that they would begin normalizing ties after a half-century of Cold War opposition. The Obama administration is eager to make rapid progress on building trade and diplomatic ties with Cuba before the president leaves office. The coming weeks are seen as particularly crucial to building momentum ahead of a trip he hopes to make to Havana by the end of March.
"Today is a historic day in the relationship between Cuba and the U.S.," U.S. Transportation Secretary Anthony Foxx said after he and Transportation Minister Adel Yzquierdo Rodriguez signed the deal in a ceremony at Havana's Hotel Nacional. "It represents a critically important milestone in the U.S. effort to engage with Cuba."
The U.S. Department of Transportation expects to award the new routes by the summer. The winning airlines then must negotiate their own deals with Cuba.
Yzquierdo declined an interview request but Foxx said after meeting with the Cuban minister that he believed Cuba was eager to restore commercial air service as quickly as possible.
"Every indication I have in the conversations we've had today is that the Cubans want to move as fast as we're able to move," Foxx said. "People will actually be able to go buy a ticket and fly to Cuba on a commercial airline. That's a pretty big step. We haven't been able to do that in 50 years."
The agreement allows 20 regular daily U.S. flights to Havana, in addition to the current 10-15 charter flights a day. The rest would be to other Cuban cities.
Nearly 160,000 U.S. leisure travelers flew to Cuba last year, along with hundreds of thousands of Cuban-Americans visiting family, mostly on expensive, frequently chaotic charter flights out of Florida.
"The adoption of this memorandum is an important step that will soon permit the establishment of regular flights between the United States and Cuba," Yzquierdo Rodriguez at the signing ceremony.
Commercial flights make travel to Cuba far easier for U.S. travelers, with features such as online booking and 24-hour customer service that are largely absent in the charter industry.
U.S. visitors to Cuba will still have to qualify under one of the travel categories legally authorized by the U.S. government. Tourism is still barred by law, but the number of legal reasons to go to Cuba — from organizing professional meetings to distributing information to Cubans — has grown so large and loosely enforced that the distinction from tourism has blurred significantly.
Commercial travel will give travelers the ability to simply check an online box on a long list of authorized categories.
The deal does not contemplate flights by Cuba's national airline to the United States, where lawyers for families and businesses that have sued Havana over decades-old property confiscations are eager to freeze any of its assets that they can get their hands on.
American Airlines spokesman Matt Miller said the company plans to bid on routes from Miami and other unspecified "American hubs."
"We applaud the Administration for making commercial air service a priority," American chairman Doug Parker said in a written statement. "American looks forward to submitting a Cuba service proposal to the Department of Transportation in the coming weeks."
United Airlines is also looking to serve Havana from some of its hubs, spokesman Luke Punzenberger said. The carrier's major hubs include Chicago, Houston, Washington and Newark, New Jersey. It currently does not fly charters to Cuba.
"Assuming service is approved, United customers will benefit from United's expanded global route network and new opportunities for leisure and business travel to Cuba," the airline said.
JetBlue Airways said it was eager to offer service between "multiple" cities in the United States and the island, with spokesman Doug McGraw saying that "interest in Cuba has reached levels not seen for a generation."
DuPont Co. and Dow Chemical Co. plan to stick by their longtime hometowns as the chemical giants combine and then split into three separate companies, resolving some uncertainty that has loomed over the giant merger for employees and local officials.
Wilmington, Del., DuPont's home since its founding in 1802, will be the base for two planned companies, one handling agricultural products and the other electronic components and biosciences. Midland, Mich., Dow's home since 1897, will retain the material-sciences company, the companies said on Friday.
Dow and DuPont executives said that keeping corporate bases in Michigan and Delaware was the most efficient way to run the three businesses in the future, relying on employees and infrastructure already there. The deal, which would create a company with a combined market value of about $104 billion, aims to eliminate $3 billion in combined costs before separating into three publicly traded companies within three years.
The agricultural company's name will include DuPont, while the material sciences company's name will include Dow, according to the companies.
The headquarters decision is a victory for Wilmington, where DuPont and other big employers have slashed jobs and operations in recent decades. The merger deal raised concerns that DuPont's presence would be further reduced in the city of 72,000, and DuPont in late December announced plans to lay off 1,700 employees in Delaware as part of a plan to save $700 million before the Dow combination.
"It's welcome news because we really didn't know what was going to happen," said Richard Heffron, president of the Delaware State Chamber of Commerce. "A lot of people were pessimistic." Mr. Heffron credited efforts by Delaware Gov. Jack Markell and members of the U.S. Congress for successfully wooing Dow and DuPont.
Keeping the material sciences company in Midland, Mich., which the companies had signaled earlier, is "good news for us," said Maureen Donker, mayor of the city of 42,000. "As they go through this transformation, we'll continue to [work with them] to make sure we don't miss any opportunities that would arise," she said.
The governors of Iowa and Indiana said they welcomed the commitment from Dow and DuPont to keep major agricultural functions in their states. The Iowa Economic Development Authority on Friday approved a $2 million loan and $14 million in tax credits on the condition that the agricultural spinoff keep 500 research and development jobs in the Des Moines area.
The Indiana Economic Development Corp. is discussing job-related incentive packages with the companies, but hasn't yet finalized the terms, a spokeswoman for the group said.
T-Mobile has been rapidly improving its network since it started the Uncarrier marketing strategy by acquiring loads of low-frequency wireless spectrum.
T-Mobile is gobbling up low-frequency radio airwaves so that video of "The Walking Dead" playing on your phone doesn't stall when you walk into your basement.
T-Mobile on Wednesday said it had acquired more of the spectrum in the low-frequency 700 MHz band as it seeks to catch up to rivals Verizon Wireless and AT&T in coverage. The company plans to put the spectrum to use in the next 12 to 18 months, and said it would allow it to reach 48 million more people.
The additional spectrum should extend its coverage footprint and improve service indoors, two issues that long dogged T-Mobile subscribers. It's part of an arms race by the carriers in stocking up spectrum, all to ensure that your phone calls don't drop and your mobile videos stream stutter-free.
T-Mobile has been shaking up the wireless industry for more than two years, offering no-interest device financing, free international data, unlimited access to video streaming, and plans without service contracts. On Wednesday, it reported a fourth-quarter profit of $297 million, or 34 cents a share after adding 2.1 million new customers.
Historically, the Bellevue, Washington, company has offered poor coverage outside of urban areas as well as inside buildings. But the company has worked quickly to close the gap by acquiring low-frequency spectrum that allows signals to easily penetrate through obstacles like walls and offers wider coverage.
Executives say the low-frequency spectrum already in use has helped the company retain customers, catapulting it to the top of customer satisfaction surveys from companies like JD Power and Associates.
T-Mobile has made huge strides in the past several quarters reducing its so-called churn rate, or the rate at which customers drop its service. For the fourth quarter of 2015, this rate fell to 1.46 percent for is postpaid customers, or customers who pay their bills at the end of the month. A year ago, its churn rate was 1.74 percent.
"It's seems obvious, but this is one of the things that's driving up satisfaction and driving down churn," T-Mobile's CEO John Legere said on the company's earnings call Wednesday.
The latest purchase is part of T-Mobile's ongoing strategy to obtain as many spectrum licenses in this low-frequency range as it can to bolster its coverage and reliability. But T-Mobile executives admit that the deals it's been making on the secondary market won't be enough to keep up with demand and give consumers the coverage they need wherever they go.
"The strategy has been to leverage spectrum we already have and buy what we can on the secondary market," Neville Ray, T-Mobile's chief technology officer, said in an interview. "But there isn't much left to run at."
"We've always said whatever spectrum we get in the secondary market is an enhancement," Ray added. "That's why we have filed to participate in the upcoming auction."
T-Mobile lobbied aggressively for rules in the auction that favor smaller players such as itself. A few months ago, the company looked like it would dominate bidding on spectrum the FCC had carved out especially for smaller players. But now the company will likely face stiff competition from some deep-pocketed new rivals.
Cable giant Comcast confirmed earlier this month it plans to participate in the auction. There are also several investment firms that will be bidding on this spectrum.
T-Mobile has said previously it will go into the auction with a $10 billion budget. With additional bidders, prices are likely to be high, which may hamper how much spectrum T-Mobile is able to acquire.
Executives were unable to address specific questions about the auction, due to the FCC's quiet period rules. But chief financial officer Braxton Carter said in an interview that the company has a lot of experience bidding in competitive government spectrum auctions.
"In the past, we've have been smart and prudent in how we tackle auctions," he said. "And we haven't allowed ourselves to bid irrationally."
Apple says the fight is about security and privacy for everyone, about the US government trying to compel a public company, using a 227-year-old law, to compromise its most important products, and about setting a "dangerous precedent" that gives the US authority to ask it and other businesses to change their products in the future.
The FBI and the Department of Justice say it's about making sure Americans aren't in jeopardy, about fighting terrorists who are using increasingly sophisticated communication tools, and about a reasonable request to gain evidence from a single iPhone.
Apple CEO Tim Cook says the FBI wants to build a 'master key' that could be used to unlock hundreds of millions of iPhones. The FBI says it's fighting terrorism and Apple just wants to protect its brand.
Unless Apple CEO Tim Cook gives in or the government backs down, a February 16 court order requiring that Apple build a custom version of its iOS software for the iPhone may turn into one of the most important legal battles over the future of security -- digital security and US national security. Apple has until February 26 to challenge the court's order and says it will fight all the way to the Supreme Court if necessary. Cook argues the "very freedoms and liberty our government is meant to protect" are at stake. The FBI and DOJ counter that all Apple cares about is protecting its business model and brand.
The fight has raised a lot of questions about what's at stake, which technologies are involved and why complying with the government's request is harder than you might think. We've put this FAQ together to help you get up to speed, and we'll keep updating it with new questions and answers. Feel free to add your questions to the comments section below.
Can you recap how we got here?
Earlier this week, US Magistrate Sheri Pym ordered Apple to unlock an iPhone 5C used by Syed Farook, one of two terrorists who gunned down 14 people at a party in San Bernardino, California, in December. Apple, which was cooperating with the FBI to help the agency access data on Farook's work phone, refused. Cook argues that the order goes too far and that bypassing the password means creating a "backdoor" in its iOS mobile operating system that could be used to access every other iPhone.
Why is this particular iPhone so important to the FBI?
The FBI wants to know who Farook was communicating with and which websites he might have visited in the days leading up to the December 2 massacre. Access to computers and personal phones owned by Farook and his wife would help, but the couple smashed their personal phones and removed the hard drive from their computer. Farook's iPhone 5C, given to him by his employers at San Bernardino County in southern California, may be one of their last options.
What's the iPhone 5C?
Introduced in 2013, it was Apple's lowest-priced iPhone, starting at $99 on contract. Though it initially came in models with up to 32 gigabytes of storage, Farook had the least expensive model: an 8GB version that was often given away for free with a paid, two-year wireless contract.
Unlike the higher-end iPhone 5S announced the same year, the iPhone 5C doesn't include a fingerprint sensor that you can use instead of typing in a passcode.
Apple already gave the FBI data that was backed up from Farook's phone to the company's iCloud online storage service. What's the FBI hoping to find now?
Apple was able to give the FBI backups only through October 19, when Farook apparently stopped backing up the phone. That leaves a one-and-a-half month gap in the data between October 19 and December 2, when the massacre occurred. The FBI believes Farook might have intentionally stopped the automatic backups to hide something.
What's stopping the FBI from just browsing through the phone?
It's locked with a passcode. The FBI doesn't have the code, and neither does Apple. The passcode is stored only on the device itself. Because of Apple's built-in security, you have up to 10 tries to enter a passcode. After that, the iPhone wipes itself -- that is, removes all the data stored on the device.
Why can't the FBI just pop out the memory card or hard drive, or use the fingerprint scanner to unlock the phone?
The iPhone 5C doesn't have any of those things. Data is stored on a memory chip that's soldered to the phone's motherboard. And the iPhone 5C doesn't have a fingerprint sensor.
Why can't the FBI just use a supercomputer to crack the password or get data off the memory chip?
It's not that simple. iPhones running 2014's iOS 8 software or the newer iOS 9 protect their data using 256-bit AES encryption. That's the same standard that protects US government computers against brute-force attacks intended to crack into a device. It could take years to recover data by attacking the iPhone's memory chip, Stratechery's Ben Thompson explains.
It's important to note, adds Thompson, that "Apple is not being asked to break the encryption on the iPhone in question...but rather to disable the functionality that wipes the memory when multiple wrong passcodes are entered in a row."
What is encryption? Did Apple create 256-bit AES encryption?
Encryption simply means that information isn't stored in a way that people or computer programs can easily read. It's in code, and to decode it, you need a decryption key. AES, short for Advanced Encryption Standard, is a particularly robust form of encryption that the US government recommends companies use, and one that's been broadly adopted worldwide since it was introduced by the National Institute of Standards and Technology (NIST) in 2002.
Why can't the FBI crack the passcode on the iPhone?
Farook's iPhone was set to automatically erase itself after 10 wrong passcodes were entered in a row. That's a commonly enabled feature on work-issued phones.
Even if the FBI could disable the auto-wipe function, breaking the passcode could take a long time -- a very long time. The iPhone requires a minimum delay of 80 milliseconds between each passcode entry, and wrong entries can extend the delay by minutes at a time. Assuming Farook used a six-digit passcode, Apple estimates it could take 5.5 years to guess. But he might have used a custom combination of letters and numbers. We could die of old age waiting for that.
Besides, there's also the issue of connecting the supercomputer to the iPhone. A unique key built into the iPhone means you can enter passcodes only on the phone itself.
What exactly does the FBI want Apple to do?
The court order asks Apple to create a new, custom version of iOS that runs only on this specific iPhone and that makes three changes to the software. The first two changes would bypass or disable the auto-wipe function and the delay that limits how quickly new passcodes can be entered. The court also asks Apple to add a way to attach a cable or wirelessly connect to the iPhone so the FBI can automatically enter passcodes. That way, the FBI can use a supercomputer to bombard the phone with passcode guesses until it finds the right one.
Is it even possible for Apple to comply with the order?
Security consultant Dan Guido thinks so. But that's not the point, says Apple's CEO. Cook argues that Apple can't just bypass those protections for a single phone and expect other phones to stay safe and secure. "Once created, the technique could be used over and over again, on any number of devices," Cook wrote in an open letter to customers earlier this week. "In the physical world, it would be the equivalent of a master key, capable of opening hundreds of millions of locks."
Even if Apple did produce a version of iOS that could be used only with Farook's phone, it might be easy for bad actors, like malicious hackers and governments, to use or rewrite that code for other phones, senior Apple executives told us Friday.
If only the FBI and Apple have access to the custom version of iOS, how can bad actors get it?
Senior Apple executives believe that if Apple made a "master key" for the iPhone, it would be an irresistible prize for hackers, and that its own servers would inevitably be hacked. They referenced a joke often attributed to former Cisco CEO John Chambers: "There are two types of companies: those that have been hacked, and those who don't know they have been hacked."
Apple also worries that employees inside law enforcement, or inside Apple itself, could steal the technology.
Could the software be used on newer iPhones, which have added security features?
According to Apple, yes. Though all iPhones newer than the iPhone 5C (and the iPhone 5S) have a protection called the Secure Enclave, senior Apple executives told us the Secure Enclave could be disabled or bypassed using a custom version of iOS.
Apple's also worried it will create a precedent if it complies with the government's request; that the government might ask it to defeat any security feature that keeps law enforcement from accessing a newer model of iPhone. If you give a mouse a cookie...
Hasn't Apple complied with requests to unlock phones before?
Apple did help law enforcement officials by allowing them to bypass the lockscreen -- as long as there was a valid subpoena or a search warrant. It had data extraction technology that let the company's engineers bypass a user's passcode and pull information like contacts, calls and messages. And it did so without having to unlock the phone.
But the release of iOS 8 in 2014 changed that. The new software came encrypted by default, which means Apple no longer had the ability to extract data "because the files to be extracted are protected by an encryption key that is tied to the user's passcode, which Apple does not possess," the company wrote in a privacy statement on its website.
The bottom line is that to decrypt the data from Farook's iPhone 5C, you'd need his passcode.
Does the court order let Apple look for another way to get the info the FBI wants?
Yes, it specifically lets Apple find "an alternate technological means" to help the FBI break into the phone. But that alternative doesn't have much wiggle room. It still requires that Apple disable the auto-wipe and passcode delay and create the ability for the FBI to remotely enter passcodes into the phone. Apple believes introducing those security weaknesses could jeopardize other iPhones as well.
Apple had another possible solution: If the FBI placed Farook's phone near a known Wi-Fi network (like the one at his home or his workplace), it might automatically create a new iCloud backup with the missing information. That idea was foiled when investigators reset Farook's iCloud password. Senior Apple executives said Friday that was their best idea for helping the FBI get what it wanted. But now we'll never know if it could have worked.
Apple and the FBI also discussed checking to see if the iPhone was backed up to any other computers, and looking over Verizon call records to see who else Farook might have called. But the government determined Farook's phone hadn't been synced with other computers, and the FBI wanted more data than the carrier's call logs could provide. (This is detailed in footnote 7, page 18, of the DOJ's filing on Friday, which we've posted here.)
What kind of data could the FBI get from Farook's iPhone if it defeats the passcode?
The FBI should be able to access Farook's text messages, iMessages, photos, videos, contact list and call history, plus any audio recordings he might have made. That's the type of data that Apple has agreed to help law enforcement recover (PDF).
Separately, the FBI may be able to see if Farook had any additional email accounts or social-networking accounts. Then the government would have to subpoena the relevant companies for that data.
Why did Apple turn on encryption in the first place?
There are several theories. The New York Times suggests that Cook personally believes it's part of his civic duty to do the right thing by customers where privacy is involved.
The same NYT report says Apple was growing tired of complying with law enforcement requests to hack into its own phones, and decided encryption would "put the keys squarely in the hands of the customer, not the company."
There's also money at stake. After Edward Snowden revealed the extent of government surveillance in 2013, many tech companies were under pressure to show customers that they hadn't been selling their data to the government. As sociology professor Kieran Healy notes, Apple is in a strong position to do that, because the primary thing Apple sells is hardware -- not information. That might get people to buy phones from Apple instead of the competition.
What's the 227-year-old law the government is relying on in its case?
It's using the All Writs Act, which was signed into law by President George Washington in 1789, to get Apple to change its software. The act helped establish the judiciary system in the US, giving federal courts the power to issue orders, which were known as "writs" at the time.
Though the law was drafted with quill pens, it's been used in recent times. In analyzing the current standoff, lawyers and commentators often cite a 1977 case in which law enforcement asked for the help of the New York Telephone Company to monitor phone calls made by suspected gamblers. The Supreme Court ruled for law enforcement in that case.
Over time, use of the All Writs Act has been more or less limited to situations where no other law, statute or provision can be applied, usually because it's extraordinary. As Popular Mechanics notes in an explainer, "the shooter's iPhone passcode is certainly an extraordinary situation, which explains why a law from 1789 is at play in a case about smartphones."
Some also believe the government has been waiting for the right opportunity to force Apple to give it access to iPhone data. "The law operates on precedent, so the fundamental question here isn't whether the FBI gets access to this particular phone," Julian Sanchez, a surveillance law expert at the libertarian-leaning Cato Institute in Washington, DC, told The Guardian earlier this week. "It's whether a catch-all law from 1789 can be used to effectively conscript technology companies into producing hacking tools and spyware for the government."
Where can I read the court order and the DOJ's 40-page request for myself?
We've posted those documents in two stories. You can find the three-page court order here and the DOJ's February 16 request here.
What's next?
Apple had five business days from February 16 to challenge the court's order, but it asked for a three-day extension. Now it reportedly has until February 26 to file. There may well be a lot of legal back and forth, as you'd expect, and the case could even go through the federal court system all the way up to the US Supreme Court. It's up to Apple and the government to decide if they want to appeal, but Apple said it will pursue the case as far as it needs to go, because it's not backing down.
Following the U.S. government's declaration that hoverboards currently being sold are unsafe, Swagway, one of the most high profile hoverboard brands, is telling consumers to stop using its device.
"In complying with the CPSC's requirements, we ask customers who have purchased a Swagway to refrain from using their boards in the interim," a Swagway spokesperson told Mashable on Saturday.
Although the advisory from Swagway doesn't constitute an official recall of the product (something the CPSC is urging all hoverboard manufacturers to consider), the stunning move on Swagway's part is a major step toward acknowledging the U.S. government's safety concerns. Although, at this point, the company has not offered any details on possible refunds to customers who purchased the device.
"We will issue a recall if necessary, as soon as we fully understand the exact specifics that need to be addressed according to the CPSC requirements and will offer a remedy for our customers accordingly," says Swagway's spokesperson.
Friday's news that all hoverboards now on the market are deemed unsafe by the federal government took many by surprise, despite the rash of fire incidents linked to a number of hoverboards. In most of those incidents, the specific brand of the exploding hoverboard was unclear. However, at least one incident in New York was linked to a Swagway by Michael Brown in Chappaqua, who filed a class action lawsuit against the company after his device burst into flames soon after charging.
The status of that particular lawsuit is unclear, but with the CPSC's official safety notice now a matter of public record, it's possible that other hoverboard manufacturers and retailers could find themselves the target of legal actions by unhappy hoverboard customers.
At present, there are no official sales numbers for hoverboards in the U.S. (there are simply too many brands that aren't being tracked). But the product was one of the most popular electronic devices this past Christmas shopping season.
The hoverboard involved in the Chappaqua incident.
As for Swagway, when directly asked if it planned to order a recall of the device, the company's response referenced Swagways "in transit" rather than the devices that have already been sold.
"We believe our products in transit exceed the new safety standard and are confident that we've addressed any safety concerns as expressed by the CPSC," says Swagway's spokesperson. Nevertheless, until the company receives official safety certification from UL, as advised by the CPSC, it doesn't matter what claims Swagway makes with regard to safety. When and if that happens, the change would be notable. In January, UL singled out Swagway as one of the companies using counterfeit UL marks on its products.
Hours after the news about the CPSC's safety enforcement broke nationally on Friday, Swagway was still sending messages on social media touting its products. And, as of this writing, the company's Facebook and Twitter feeds include no advisory regarding the use of its products, which may be confusing to some customers.
Despite that, for now, Swagway's stance is pretty clear: If you own a Swagway, the company is asking you to stop using it.
"Once we receive feedback on our application to the new safety standards," says Swagway, "we will at that time be able to provide more direction at that time."
MACD's rising on this 60 minute chart but are making a lower high, which is a negative divergence.
The futures are at a critical level of resistance right now and if they breakthrough they could run another 20 points just hitting the bears' "buy stops". However, the market is making some negative divergences on various short term chart, from the 60 minute up to the 6 hour chart. I'd love to see them run those stops before rolling over but time is running out as they need to do it today or risk a deeper pullback to reset those charts and allow for another attempt later this week.
It's not an easy call here to know what they have planned for today. But if I were SkyNet I'd do one of the following... I'd rollover and start a move down that looks like a small pullback that gets the bulls buying the dip but each attempt at a breakout that followed on the move back up would fail making a lower high. It would scare the bears out thinking it's going to scream higher with each pullback and then lower high rally. Then I'd just roll it over and start dropping to never look back (well, down to make a new "lower low" at least).
Or the 2nd scenario is to do a quick squeeze up about 10 points or so over the horizontal resistance level to runs most of the stops and then fall back to put in a topping tail for the day, but holding the former resistance level as new support. Then I think most bulls would be expecting another higher high the next day or so, maybe up to 1960-1970? But instead I'd just drop the market back below that new support line after hours and start a series of lower lows and lower highs all week until it's clear that the high was already put in on Monday (today) and the market is headed south again. This should trick both bulls and bears with the up's and down's confusing them as they both were expecting 1960-1970 or higher before rolling over, but instead got tricked with a high in the low 1950's.
I do think that once we top this week the next several weeks into March will be down, so missing the exact high to short at won't be the end of the world if the right trading strategy is used. I think taking small shorts today, tomorrow, etc... might be the best plan as it should either go up a little higher to get a better shorting opportunity or go down and then you would be happy to have caught the top.
Jewel-Osco no longer sells Essential Everyday Parmesan Cheese. The U.S. supermarket chain took the product known as Essential Everyday 100% Parmesan Cheese off the shelves as one independent investigation conducted by Bloomberg found it contains 8.8 percent cellulose or wood pulp.
The Bloomberg investigation was published on February 16th and covered parmesan cheese from several brands and producers. According to the experts in the industry, the results of the Bloomberg investigation mirror concerns voiced nationwide. It’s possible that 20 percent of the parmesan cheese produced in the U.S. is mislabeled as it contains various percentages of cellulose. None of the parmesan cheese labels mentioned the wood pulp.
Cellulose is an additive commonly used in foods such as parmesan cheese to prevent it from clotting. The wood pulp derived additive is used predominantly in grated parmesan cheese such as the Essential Everyday 100% Parmesan Cheese. As a result of the Bloomberg investigation, Jewel-Osco no longer sells Essential Everyday Parmesan Cheese.
According to Dean Sommer who is a cheese technologist with the Center for Dairy Research (Madison, Wisconsin), it is sufficient to use 2 to 4 percent cellulose to prevent grated parmesan cheese from clumping. However, more than enough producers use well above 4 percent cellulose in an unjustified manner. Moreover, cellulose doesn’t appear on the products’ labels.
Jewel-Osco no longer sells Essential Everyday Parmesan Cheese with the supermarket chain recalling the product from all the 185 stores nationwide this Wednesday. Mary Frances Trucco with Jewel-Osco declared for Bloomberg that:
“Our supplier of the parmesan cheese is aware of the issue, and we look forward to learning more about their investigation”.
Meanwhile, the U.S. supermarket chain is replacing the Essential Everyday 100% Parmesan Cheese with the company’s Signature Brand. The Bloomberg investigation was sparked by concerns of the U.S. Food and Drug Administration. The federal regulator looked into Castle Cheese for similarly high levels of cellulose or wood pulp.
The Bloomberg investigation conducted independent tests on other grated parmesan cheese as well. Among them, Walmart’s Great Value Brand, Whole Foods 365 and Kraft’s grated parmesan cheese were under scrutiny.
The independent lab results showed that Walmart’s Great Value 100% Grated Parmesan Cheese contained 7.8 percent cellulose. Kraft’s product contained 3.8 percent cellulose, while Whole Foods contained 0.3 percent cellulose.
Following the U.S. government's declaration that hoverboards currently being sold are unsafe, Swagway, one of the most high profile hoverboard brands, is telling consumers to stop using its device.
"In complying with the CPSC's requirements, we ask customers who have purchased a Swagway to refrain from using their boards in the interim," a Swagway spokesperson told Mashable on Saturday.
Although the advisory from Swagway doesn't constitute an official recall of the product (something the CPSC is urging all hoverboard manufacturers to consider), the stunning move on Swagway's part is a major step toward acknowledging the U.S. government's safety concerns. Although, at this point, the company has not offered any details on possible refunds to customers who purchased the device.
"We will issue a recall if necessary, as soon as we fully understand the exact specifics that need to be addressed according to the CPSC requirements and will offer a remedy for our customers accordingly," says Swagway's spokesperson.
Friday's news that all hoverboards now on the market are deemed unsafe by the federal government took many by surprise, despite the rash of fire incidents linked to a number of hoverboards. In most of those incidents, the specific brand of the exploding hoverboard was unclear. However, at least one incident in New York was linked to a Swagway by Michael Brown in Chappaqua, who filed a class action lawsuit against the company after his device burst into flames soon after charging.
The status of that particular lawsuit is unclear, but with the CPSC's official safety notice now a matter of public record, it's possible that other hoverboard manufacturers and retailers could find themselves the target of legal actions by unhappy hoverboard customers.
At present, there are no official sales numbers for hoverboards in the U.S. (there are simply too many brands that aren't being tracked). But the product was one of the most popular electronic devices this past Christmas shopping season.The hoverboard involved in the Chappaqua incident.
As for Swagway, when directly asked if it planned to order a recall of the device, the company's response referenced Swagways "in transit" rather than the devices that have already been sold.
"We believe our products in transit exceed the new safety standard and are confident that we've addressed any safety concerns as expressed by the CPSC," says Swagway's spokesperson. Nevertheless, until the company receives official safety certification from UL, as advised by the CPSC, it doesn't matter what claims Swagway makes with regard to safety. When and if that happens, the change would be notable. In January, UL singled out Swagway as one of the companies using counterfeit UL marks on its products.
Hours after the news about the CPSC's safety enforcement broke nationally on Friday, Swagway was still sending messages on social media touting its products. And, as of this writing, the company's Facebook and Twitter feeds include no advisory regarding the use of its products, which may be confusing to some customers.
Despite that, for now, Swagway's stance is pretty clear: If you own a Swagway, the company is asking you to stop using it.
"Once we receive feedback on our application to the new safety standards," says Swagway, "we will at that time be able to provide more direction at that time."
Xiao Gang, China’s top securities regulator, in 2012.
HONG KONG — As China’s economic woes intensified, the nation’s top securities regulator appeared to have the support of the Communist Party leadership, even when his efforts to stabilize the stock markets faltered and in some cases made matters worse. Just weeks ago, he issued a lengthy defense of his record and the securities agency aggressively denied reports he had offered to resign.
But on Saturday, with no warning, Beijing abruptly fired the securities chief, bowing to criticism of the country’s bungled attempts to stem a market rout that started last summer. The dismissal of Xiao Gang, coming in the form of a terse statement from state-run media, represents a rare public reversal for the Communist Party — and a gamble by its leader, Xi Jinping, whose management of the economy has come under growing scrutiny.
Underperforming officials in China often get shuffled to other less-influential jobs or are allowed to resign quietly. Most officials who have been fired of late have been ensnared by the broad crackdown on corruption by Mr. Xi.
Mr. Xi appears to be betting now that in heeding public opinion and replacing Mr. Xiao in such a high-profile fashion he can buy time to limit damage to the party’s reputation from the stock market mess and the broader economic slowdown. But if the problems continue, he risks further undermining faith in his leadership and his government’s ability to navigate a difficult economic transition.
For decades, the party oversaw spectacular growth, buttressing its authoritarian rule and cementing China’s role in the global economic hierarchy. Now growth has fallen to its slowest pace in a quarter-century and the party’s failed attempts to control the markets and the currency are unnerving investors around the world. Mr. Xiao’s dismissal came days before global finance ministers are to meet in Shanghai, expecting answers from China’s leaders on how they will restore global confidence in their ability to competently manage the economy.
Replacing Mr. Xiao is only a first step to cleaning up the mess in the markets. His successor will need to follow up with swift action, to improve the functioning of China’s equity markets and wean them off state intervention, without doing further damage to the economy
“This will be a positive for the stock market, but the key will be the economic policies issued by the government in the next few months,” said Chen Bo, an Beijing-based investor and independent political scholar. Without them, he said, the “short term gains in the stock market in the next couple of months could be followed by another serious slump.”
But Mr. Xiao’s replacement, Liu Shiyu, may not necessarily offer the bold change the markets need. Mr. Liu, the chairman of Agriculture Bank of China chairman, has little experience in equity markets.
The shake-up also does little to solve the underlying problem: a government increasingly under the control of one man, President Xi, who is trying to subdue economic turbulence that has increasingly defied its controls. It is this penchant for control, say investors and analysts, that is driving talent away from the technocratic bureaucracy and rewarding officials who fall in line.
“That’s the problem of a very top-down policy style that’s emerging in China now,” said Victor Shih, a professor at the University of California, San Diego, who studies the confluence of finance and politics in China. “No one dares to challenge whatever preconceived notion the top leadership has.”
China has a wealth of talented financial professionals, many educated at top universities in the United States, who are now entering the prime of their careers. But unlike in the United States, where talented people rotate in and out of government, few of them may be willing to take jobs in the China Securities Regulatory Commission, China’s equivalent of the Securities and Exchange Commission.
The pay is too low and the risks are too high. Mr. Xi’s anticorruption drive in recent months has focused on the financial sector and the securities regulator itself, making it a difficult environment even for officials free of graft, said Mr. Chen, an independent, Beijing-based investor and political scholar.
“The professional makeup of the C.S.R.C. is really not even up close to that of the big brokerages,” Mr. Chen said. “This problem isn’t found only in the equities sector. It’s much more widespread than that.”
Mr. Liu is typical for a top financial official. He spent his career working in government committees and at the central bank.
Fred Hu, the chairman of Primavera Capital Group and the former chairman of Goldman Sachs for China, called Mr. Liu a “highly experienced and results-oriented financial official,” but said he would “find himself in a challenging position,” like his predecessor.
”Over and time again the regulators have struggled to meet some of the difficult tasks — modernizing securities markets, engineering rising equity prices, while protecting investors and ensuring market stability,” Mr. Hu said in an email.
While Mr. Liu has little experience with markets, he does have connections. In the mid-1990s, he worked the state-owned China Construction Bank. The bank, at the time, was was headed by Wang Qishan, who is now overseeing the anticorruption campaign as one of seven members of the Communist Party’s ruling Politburo Standing Committee.
“He’s definitely not a bold reformer,” Mr. Shih said of Mr. Liu.
The new securities chief may be in an impossible position, expected to control inherently uncontrollable markets and take the blame if the efforts fail. The push by Mr. Xi’s government to assert state control over the markets and the economy go against the philosophy of China’s early reformers under Deng Xiaoping, the paramount leader who sought to give more space to the market.
“The approach that they took toward the stock market is telling me that they are not willing to let go control,” Yasheng Huang, a professor of political economy and international Management at M.I.T., said of China’s current leaders in a December interview.
One former Chinese financial official, who requested anonymity so he could freely discuss personnel issues, said Mr. Xiao, the former securities chief, might be heading to a new post to help oversee economic policy under China’s cabinet. The influential magazine Caijing also reported on Saturday that Mr. Xiao may be moving to a new government position.
The shake-up at the securities regulator is also likely to result in renewed questions about the eventual retirement of Zhou Xiaochuan, the head of China’s central bank since 2002.
When Prime Minister Li Keqiang criticized the government’s handling of financial markets at a meeting last Monday of the State Council, China’s cabinet, he cited the government’s management of the currency. The currency falls under the direct purview of the People’s Bank of China.
Mr. Zhou, 68, was widely revered as the man who spearheaded considerable financial deregulation. He also led the country’s currency, the renminbi, to recognition by the International Monetary Fund last November as one of the world’s main reserve currencies.
But Mr. Zhou’s stature suffered following an abrupt 4 percent currency devaluation last August, and continued weakness at the end of the year and into the next. The currency situation greatly alarmed financial markets. Economists and other monetary specialists around the world, including Christine Lagarde, the managing director of the International Monetary Fund, publicly called for the Chinese central bank to communicate better with financial markets.
“He would be a good scapegoat now,” said Minxin Pei, a specialist in Chinese politics at Claremont McKenna College. “Three years ago, it would have been ungrateful” for anyone to suggest that he retire.
Deere & Co. trimmed its revenue and earnings forecast for 2016 as the world's largest supplier of farming machinery continues to trudge through the worst drought in U.S. demand in 15 years.
After a strong run that began last decade for farm equipment and was aided by U.S. tax breaks for equipment, farmers have scaled back their purchases amid lower prices for corn, soybeans and other commodities. Deere's overseas sales also have been hurt by the strong dollar and by economic and political turmoil in Brazil, which had been a strong market for
Deere.
Moline, Ill.-based Deere predicted its equipment sales will fall a steeper 10% this year to more than $23 billion after previously forecasting a 7% decline. The weaker sales outlook followed fiscal first-quarter equipment sales that fell 15% from a year earlier to $4.8 billion. Analysts were looking for $4.9 billion in sales after the company forecast an 11% decline in November.
The company also shaved its net income outlook for the year to $1.3 billion from $1.4 billion previously. The revision implies per-share earnings of about $4.10, according to analysts, who on average had expected the company to earn $4.24 this year.
Deere's stock was recently trading down 4% at $77.02 a share.
Deere is trying to break its profit fall this year with margin-boosting strategies that include cutting equipment inventories and overhead costs, rising prices on equipment and increasing sales of replacement parts and services. Deere acknowledged Friday that executing the plan is becoming more difficult in the face of steep drops in farm and construction equipment. Even with an 11% reduction in first-quarter overhead, Deere's operating profit margin contracted to 7.4% in the quarter ended Jan. 31 from 10.1% a year earlier.
"Our ability to pull costs out relative to any further sales declines will be more challenging," said Tony Huegel, director of investor relations, during a call with analysts on Friday.
Its fiscal first-quarter farm machinery revenue declined 12% from a year earlier to $3.6 billion as operating income from the farm business plunged 46% to $144 million. Deere widened its forecast decline in farm equipment sales for 2016 to a 10% from an 8% decline previously.
The company left its industrywide outlook for retail sales of farm machinery in the U.S. and Canada unchanged at down between 15% and 20% compared with 2015.
Deere's construction and forestry equipment sales during the quarter fell 23% compared with the same period last year to $1.2 billion. Profit from the construction unit plunged 52% to $70 million. Deere now expects construction sales to drop 11% this year from 2015, more than double the decline it had predicted.
"Construction was worse than expected," said Lawrence De Maria, an analyst for William Blair & Co. "We give Deere credit for operating well in a challenging time, but there is little reason for optimism in the next couple of years."
Deere reported a quarterly profit of $254.4 million, or 80 cents a share, down 34% from $386.8 million, or $1.12 a share, a year earlier. Per-share results were helped by lower taxes. Total revenue, including from Deere's finance business, fell 13% to $5.53 billion.
With those words delivered by physicist Stephen Hawking, and the break of a baby's milk bottle across its bow, Virgin Galactic on Friday (Feb. 19) christened the VSS Unity, the second of its SpaceShipTwo sub-orbital spacecraft, during a ceremony at the Mojave Air and Space Port in California.
The first vehicle to be entirely built and assembled by The Spaceship Company, Virgin Galactic's manufacturing arm, the VSS Unity emerged from behind a black curtain inside FAITH, the company's final assembly, integration and test hangar. The space plane, featuring a new silver and white livery, was towed into position by a Range Rover provided by Virgin Galactic's automotive partner, Land Rover.
"Now I'm pretty sure a one-year old has never christened a spaceship before, so we really are in 'virgin' territory," said Richard Branson, Virgin Galactic's founder, referring to his granddaughter, Eva-Deia. "But today seems to be the right time to change that, as we are after all celebrating the birth of two gorgeous babies."
"Clearly, champagne would be inappropriate, [although] it never did me any harm, and certainly hasn't done my wife any harm, so do we have any milk?" asked Branson, who soon after watched on as Eva-Deia, helped by her mother and father, smashed the milk bottle across the nose of the newly-named spaceship.
"I've always believed that having the best looking planes and trains in the world, while not a guarantee of success, is a good start," said Branson. "But our new spaceship has taken that concept to a new level. Isn't she quite beautiful? She is quite stunning."
A better and safer system
Under construction for four years, the VSS Unity succeeds and replaces Virgin Galactic's original SpaceShipTwo, the "VSS Enterprise," which was rolled out in December 2009 and was destroyed during a fatal accident in 2014.
"It has now been 16 months since our flight test accident. That was a hard day," said George Whitesides, the CEO of Virgin Galactic. "It was a moment when years of hard work were put into public doubt and the life of a brave test pilot, a family man and a friend to many of us was lost."
Thomson ReutersA 'Wall St' sign is seen above two 'One Way' signs in New York By Olivia Oran and Anjuli Davies
NEW YORK/LONDON (Reuters) - When the U.S. Federal Reserve's newest policymaker Neel Kashkari dropped a bombshell with a call to break up big banks on Tuesday, it was met with a predictably indignant response from their lobbyists. One described his comments as "blind." But while no one in the executive suites of major global banks would want authorities to force them to split up or downsize, many top bankers acknowledge that their institutions might be better off smaller and simpler. They just worry that any major restructuring could go all wrong because of the way post-financial crisis regulations are applied.
In interviews with Reuters, six senior bankers said they are struggling with the costs and restrictions they face as a result of new regulations, as well as a weak global economy and troubled financial markets. The bankers, who are or recently were in positions ranging from business division head to CEO, spoke on the condition of anonymity so they could be candid without upsetting regulators or investors.
"Fundamentally, the business has to change," said one veteran banker who was on the executive committee of a major European bank until recently. Big banks' shareholder returns have sunk "too low," he said.
These problems are not new, but they have fresh relevance as Deutsche Bank AG confronts questions about its capital adequacy, Barclays PLC faces pressure to break up and CEOs of big U.S. banks struggle with a loss of investor confidence in their stocks.
(For a graphic of U.S. banks' price-to-book ratios, see http://reut.rs/1SG0NDL)
Management teams in the U.S. and Europe are now taking a hard look at dramatic business model changes, but none of the options are particularly attractive, the bankers said.
Merging to cut costs and improve margins is out of the question, given the hurdles banks would likely face from regulators who do not want "too-big-to-fail" institutions getting any bigger. Splitting apart is complicated by capital requirements that would make standalone trading businesses economically unfeasible — and by the fact that there are few, if any, buyers for the assets banks want least.
Some top bankers say they are left with little choice but to muddle through what they fear will be a long, dark period of weak earnings, angry shareholders and gradual shrinkage.
The problem has gotten so bad that Deutsche Bank CEO John Cryan recently said on a public conference call that he'd much rather be CEO of a simpler, retail-focused bank like Wells Fargo & Co , which has only a modest investment banking operation.
"Unfortunately," he said, "there are lots of things I wish for that are not going to come true."
RATCHETING UP CAPITAL
Kashkari's comments, in his first speech as head of the Minneapolis Fed, were surprising because he is a former Goldman Sachs banker, a Republican, and was a senior Treasury official in President George W. Bush's administration during the financial crisis.
They partly echoed the stance of Bernie Sanders, who has also called for big bank breakups and criticized Hillary Clinton, his rival in the struggle to be the Democratic presidential candidate, for being too close to Wall Street. Some of those vying for the Republican nomination have also criticized regulations brought in after the crisis, saying they would repeal the Dodd-Frank reform law.
In an interview with Reuters on Wednesday, Kashkari criticized Dodd-Frank's so-called "living will" rule, which requires banks to show how they can be dismantled in an orderly way if they fail, without creating risk to the broader financial system. Kashkari said he believes the rule would not work in a crisis scenario – that banks would simply be bailed out again.
"I challenge anybody who thinks, in a stressed time, we would put these banks through resolution," he said. "I really don't think it will happen."
One way to force large financial firms to break up is to "aggressively ratchet up" their capital or leverage requirements, Kashkari said. He warned, though, that banks would likely fight hard against any such proposal.
Indeed, Tony Fratto, who worked with Kashkari at the Treasury Department and is now a bank lobbyist at Hamilton Place Strategies, said his former colleague's comments were out of touch with reality.
"This is something like re-opening the barn door after the horse is in the stable," Fratto said. "Love or hate Dodd-Frank, it's simply blind to say that it hasn't significantly improved safety and soundness."
OUT OF ARROWS
Securities analysts and consultants say that banks are in an unenviable position because moves they might have made in the past to improve profitability have been hindered by regulation. As a result, they have struggled unsuccessfully for years to get their returns on equity above single digits.
"In some ways, banks have become bad utilities," said Fred Cannon, a bank stock analyst with KBW. "With utilities, you have strict regulation in what you can do and charge, but in the end investors get a reasonable return. With banks, that last piece hasn't happened."
Bank executives have long argued that weak returns are a "cyclical" issue that should go away when markets begin to flourish again. But as the industry approaches the eighth anniversary of the financial crisis's nadir, questions about whether they face a secular rather than a cyclical profit problem have only grown louder. And top bankers are now wondering how they can possibly grow revenue under a sprawling set of global financial regulations that limit what they do, and sometimes conflict with one another.
(For a graphic showing bank earnings and share price performance, see http://tmsnrt.rs/1mZb4h8)
One common example raised is how new capital rules can penalize banks for being big but also discourage them from getting smaller.
For instance, due to their size, the eight largest U.S. banks must collectively hold $200 billion in extra capital, which weighs on shareholder returns. Included in the capital requirement is a fixed amount each bank must hold to represent "operational risk."
Although the Fed does not explain exactly how it comes up with that figure, it is not just a function of size: Bank of America Corp must hold 25 percent more operational risk capital than JPMorgan Chase & Co , the biggest bank in the country.
Bank of America has said it's taken steps to address the Fed's concerns by cutting back on certain revenue-producing activities that created operational risk. Nonetheless, the bank says it has so far been unable to persuade the Fed to reduce that capital requirement. Its shareholder returns suffer as a result, because revenue is dropping faster than capital costs.
"Every bank is trying to figure out, with bigger capital requirements and profit pressure, how can they create acceptable returns for their shareholders," said John Weisel, an Ernst & Young executive who advises global banks on business strategy.
After years of cost-cutting, he said, CEOs are asking themselves: "We've used all the arrows in our quiver, so what are we going to do next?"
BREAK-UP DEMANDS
European banks are behind their U.S. competitors in addressing a more regulated environment and, in some cases, are flailing around for answers.
Last week, Deutsche Bank shares hit an all-time low on worries that it won't be able to buy back some bonds that can convert into equity. Deutsche regained some value after it outlined plans to repurchase $5.38 billion worth of other bonds, but investors' concerns don't seem to have been entirely assuaged.
Meanwhile, Barclays has come under pressure after a Bernstein analyst wrote an open letter on Feb. 5 imploring CEO Jes Staley to break up the bank.
Rob McDonough, who advises financial institutions on risk management at Angel Oak Consulting Group, says megabanks may have little choice but to get significantly smaller.
"It's too expensive," he said, "for banks to be big."
(Additional reporting by Pamela Barbaglia, Sinead Cruise, Dan Freed and David Henry; Writing by Lauren Tara LaCapra; Editing by Carmel Crimmins and Martin Howell)
Virgin Galactic returns to the scene with the unveiling of its SpaceShipTwo. The launch came more than a year after the tragic 2014 crash during one of the company's test flights.
Virgin Galactic is determined to bring humans on commercial space flights with the launch of its SpaceShipTwo on Friday at Mojave Air & Space Port in California.
The announcement came 16 months after the tragic 2014 crash during a test flight of the Virgin Space Ship (VSS) Enterprise, the current spaceship's predecessor. The question is, is the company completely ready this time around?
The Grand Return
There is no absolute guarantee for success but by the looks of the unveiling ceremony, the company apears to be determined for triumph.
The event was more than just a launch, it was also a grand party with blasting music, blue party lights and raining cocktails. What's more, Virgin Galactic's founder Richard Branson entered the scene riding atop an SUV.
Even famous astrophysicists Stephen Hawking was part of the launch as his voice was heard over the background as the brand-new commercial spaceship called VSS Unity was revealed.
"It's almost too good to be true," says Branson. He recalls feeling a lump on his throat as tears swelled in his eyes. Overall, he describes the experience as completely overwhelming.
The Fatal Past
Virgin Galactic's past is nothing short of misadventures. After all, errors and unfavorable outcomes are part of ambitious goals, and people cannot expect a company to bring humans to space on commercial flights in just a one-time perfect execution.
The first mishap Virgin Galactic encountered was the explosion of a rocket engine, which caused the lives of three people and injured several others. The project was then put on hold as concerns about the safety of an engine designed to carry people rose. Experts investigated on the matter and made necessary changes to the engine.
Seven years later, Virgin Galactic fell to yet another letdown as one of its pilots named Michael Alsbury died during a test flight. Investigators found that Alsbury deployed a feathering system earlier than necessary on the way down, causing the spacecraft to break apart. Once again, this incident caused the public to question the safety of commercial space flights in general.
Charge It To Experience
The company has vowed to take keen and step-by-step testing before they allow passengers to travel in its spaceship. This is the reason why the company is yet to unveil the official starting date of operations of the VSS Unity.
"When we are confident we can safely carry our customers to space, we will start doing so," says Virgin Galactic.
The company also says there is no other group of people more eager to complete the project as much as its employees. However, the firm reminds the public that this is not a race. It has already exhibited its commitment to perform in-depth testing as it is the correct thing to do and is a key part of success.
Ultimately, Virgin Galactic says there is no easy way to reach the stars, but there is a way and the company is here to find it.
[ad_1]In this Sept. 25, 2013, file photo, British entrepreneur Richard Branson poses with the first SpaceShipTwo at a Virgin Galactic hangar at Mojave Air and Space Port in Mojave, Calif. Virgin Galactic will roll out a new copy of its space tourism rocket Friday, Feb. 19, 2016, as it prepares to resume flight testing for the first time since a 2014 accident destroyed the original and killed one of its two pilots.
Virgin Galactic will roll out a new version of its SpaceShipTwo space tourism rocket Friday as it prepares to return to flight testing for the first time since a 2014 accident destroyed the original, killed one of its pilots and set back the nascent industry.
The space line founded by Sir Richard Branson will unveil the craft at California's Mojave Air & Space Port, where it was assembled.SpaceShipTwo is designed to be flown by a crew of two and carry up to six passengers on a high-speed suborbital flight to the fringes of space. At an altitude above 62 miles, passengers will experience a few minutes of weightlessness and see the Earth below.After years of development, Virgin Galactic appeared to be nearing the goal of turning ordinary civilians into astronauts when the first SpaceShipTwo broke apart on Oct. 31, 2014, during its fourth rocket-powered flight. Wreckage fell to the Mojave Desert floor."When we had the accident, for about 24 hours we were wondering whether it was worth continuing, whether we should call it a day," Branson told The Associated Press. He said engineers, astronauts and members of the public helped convince him that space travel is too important to give up on.The crash investigation found that co-pilot Michael Alsbury prematurely unlocked the so-called feathering system that is intended to slow and stabilize the craft as it re-enters the atmosphere. Alsbury was killed, but pilot Peter Siebold, although seriously injured, parachuted to safety.
In this Sept. 25, 2013, file photo, the first SpaceShipTwo is seen suspended at center beneath its twin-fuselage mother ship at the Virgin Galactic hangar at Mojave Air and Space Port in Mojave, Calif. Virgin Galactic will roll out a new copy of its space tourism rocket Friday, Feb. 19, 2016, as it prepares to resume flight testing for the first time since a 2014 accident destroyed the original and killed one of its two pilots.
The "feathers"—a term derived from the design of a badminton shuttlecock—are tail structures that extend rearward from each wingtip. They are designed to swivel upward at an angle to create drag, preventing a buildup of speed and heat, and then rotate back down to normal flying position as the craft descends into the thickening atmosphere.
A National Transportation Safety Board investigation found that Scaled Composites, a company that was developing SpaceShipTwo with Virgin Galactic and was responsible for its test program, should have had systems to compensate for human error. The NTSB chairman, Christopher Hart, said it wasn't a matter of shortcuts but of not considering a crew member would make the mistake that occurred.
Virgin Galactic subsequently assumed full responsibility to complete the test program.
The company stressed in a statement Thursday its commitment to testing from the level of individual parts on up to the complete craft.
In this Nov. 1, 2014 file photo, wreckage lies near the site where a Virgin Galactic space tourism rocket, SpaceShipTwo, crashed in the desert near Mojave, Calif. One of the two pilots aboard was killed. Virgin Galactic will roll out a new copy of its space tourism rocket as it prepares to resume flight testing for the first time since the 2014 accident destroyed the original. The new spacecraft will be unveiled at Mojave Air and Space Port in Mojave Friday, Feb. 19, 2016.(AP Photo/Ringo H.W. Chiu, File)
"Our team's job is to plan out not just the obvious tests but also the strange and inventive ones, to conduct those tests, and to use the data from those tests to re-examine everything about our vehicle to ensure we can take the next step forward," it said.
The company did not project a timeline for actually carrying space tourists, noting that "our new vehicle will remain on the ground for a while after her unveiling, as we run her through full-vehicle tests of her electrical systems and all of her moving parts."
SpaceShipTwo is the successor to SpaceShipOne, the winged rocket plane that won the $10 million Ansari X Prize in 2004 by demonstrating a reusable spacecraft capable of carrying three people could make two flights within two weeks to at an altitude of least 62 miles.
The prize announced in 1996 was intended to spur the development of private manned spaceflight in the same way the Orteig Prize offered in 1919 fostered trans-Atlantic aviation. Charles Lindbergh won that prize with his nonstop flight from New York to Paris in 1927.
Like SpaceShipOne, SpaceShipTwo is carried aloft beneath the wing of a mother ship—a special jet aircraft that releases it at an altitude of about 45,000 feet. After gliding for a few moments, SpaceShipTwo's pilots ignite the rocket engine to send the craft hurtling toward space.
After reaching the top of its suborbital trajectory, the spacecraft begins falling back toward Earth and glides to a landing on a runway.
WASHINGTON — Iowa lost in its bid to secure the agricultural headquarters following the merger between DuPont and Dow Chemical, the culmination of a months-long push to retain a business synonymous with the state's dominant role in U.S. agriculture.
But it will keep 2,600 jobs that are part of DuPont Pioneer in Johnston, Iowa, after signing off on a $17 million incentive package for the chemical giants.
Dow-DuPont announced Friday that the corporate headquarters for the agriculture company it will spin off from the merger will be in Wilmington, Del. The site was selected in large part because of its close ties to the 214-year old DuPont company and deep roots in product discovery.
Wilmington, where DuPont now has its corporate headquarters, would house the agriculture business' chief executive and other key corporate support positions. In addition to Johnston, the agricultural operations will retain a presence in Indianapolis, Ind., which is home to Dow Agrosciences, part of Dow Chemical.
Despite Iowa losing out on the ag headquarters, a DuPont executive pledged that the new agriculture unit will be a "positive" for the state. It won't result in any further job cuts beyond the 10 percent layoffs that have already happened.
Johnston and Indianapolis will both maintain research and development, sales and marketing teams, and business support functions, among other capabilities, officials said.
Dow and DuPont, which are expected to complete their $130 billion merger later this year, plan to then split into three companies within two years — agriculture, material sciences and specialty products.
"There will be some disappointment" in not getting the headquarters, Paul Schickler, president of DuPont Pioneer acknowledged in an interview.
He said by keeping a presence in Iowa, “it’s really a celebration and preservation of those roots as we position ourselves for the future. Similar to 90 years when we started (Pioneer), we were at the birth of an agricultural company and we're able to utilize the same attributes that Henry A. Wallace used to grow into the future.”
Schickler said the new Dow-DuPont agriculture unit "is a great opportunity for Des Moines." By keeping a local presence, the company will be able it to tap into the area's rich background of science, innovation and close relationship with Iowa's farmers, many of whom who are customers of the hometown Pioneer.
As the world's population demands more and healthier food, the result of a growing population, burgeoning middle class and improved dietary and nutritional standards, he pronounced that there is "no doubt about it, growth is going to be in front of this agricultural company."
While Dow and DuPont contemplated the location of the ag headquarters, lawmakers in Iowa and Indiana mounted a full press to boost their odds, with Gov. Terry Branstad, Sen. Chuck Grassley and others talking with executives of both companies.
In a letter last month to DuPont CEO Ed Breen and Dow CEO Andrew Liveris, Iowa’s six lawmakers in Washington touted Iowa’s role in agriculture, the World Food Prize and local universities among the reasons Iowa should be selected.
The announcement Friday from Dow and DuPont drew mixed reviews from Iowa lawmakers.
Branstad said he was "proud" that executives recognized what Iowa has to offer and selected the state for a part of its newly formed agriculture company.
"We are anxious to help DowDuPont experience success in Iowa by providing a foundation to build on and a business climate that nurtures growth,” he said.
But Sen. Joni Ernst called the decision "disappointing for our state and also difficult, particularly for the hard working Iowans who were laid off and their families." She was hopeful that despite not having the headquarters, the new company will spur job creation in Iowa.
The Iowa Economic Development Authority moved approved $16 million in incentives for the new company Friday. The state offered a $2 million forgivable loan and up to $14 million in research activities tax credits.
The city of Johnston is expected to vote on its own $1 million incentive package at a specially called meeting Friday afternoon. And Polk County is expected to provide a $238,000 forgivable loan.
All told, the company will receive more than $17 million in state and local incentives, which IEDA Director Debi Durham characterized as "extremely modest."
While she and other officials competed for the global headquarters, she said Iowa still wins in maintaining its seed and bio-science presence in Johnston. Though executives will be based in Delaware, she said "key leadership decision-makers" will be in Iowa alongside research and development teams.
"And I don’t see that that changes today, right?" she said. "I believe that decision making as it relates to research and decision making, that connection to the farmer is still going to be here in our backyard."
The state's tax credits apply for the 250 to 500 research and development jobs the company expects to retain in Johnston, though it must keep 500 positions to cash in on the full incentive package from the state.
"They can't be below that or obviously they jeopardize the incentives on the cash side," she said. "We believe right now we’re at a point of stabilization, and now we’re at a point poised for growth."
The new agriculture company would create the nation’s largest agricultural business, surpassing Monsanto Co., the world’s largest seed operation. The ag business would be worth nearly $20 billion, based on the units’ combined 2014 revenue.
Chad Hart, an Iowa State University agricultural economist, said many in the state lobbying for the headquarters expected Dow and DuPont to pick between Indianapolis or Johnston.
“The company went a third direction that I don’t think ether Iowa or Indiana expected,” he said. “We lost to somebody we didn’t know was even in the race.”
The biggest change for Iowa, Hart said, is that for decades the state has grown accustomed to having both the corporate headquarters and the research and development arm of Pioneer in one location.
While the location of the headquarters out of state might not mean a lot in terms of jobs, it increases the chance that corporate executives in Delaware could decide to make changes that may not have been made if both operations were located together in Iowa.
“It brings more uncertainty into the future,” he said.
Pioneer, purchased by DuPont in 1999, has been an important Iowa company since Henry A. Wallace founded it in 1926. DuPont Pioneer employs about 3,400 workers in Iowa, and has been an important cog in the Iowa economy and symbolic of the state’s dominant position as a major U.S. producer of corn, soybeans, ethanol and other commodities.
The seed and chemical industry has been undergoing a broad wave of consolidation amid a backdrop of a slumping agricultural economy that has squeezed farm income and forced producers to cut back on seed, fertilizer, equipment and other inputs for their operations.
Monsanto, Deere & Co. and Pioneer have all announced job cuts as a result of the downturn.
For its part, Iowa documents show DuPont Pioneer has cut about 175 jobs since December, the majority of which have come because of the farm economy and not the merger, according to DuPont. The company has not determined whether further cuts will come locally as a result of the merger.
Farmers and ranchers are expected to see income fall 3 percent to $54.8 billion in 2016, the Agriculture Department said last week. That would drop net farm income to its lowest level since 2002, tumbling 56 percent from its recent high of $123.3 billion just three years ago, when tight supplies and strong global demand for commodities led to record profits.
Faced with falling revenues and growing pressure to cut costs while finding the next big breakthrough, agribusiness companies such as Dow and DuPont have looked to mergers as a way to save money and spur innovation. Earlier this month, government-owned China National Chemical Corp. announced it was buying seed and pesticide maker Syngenta AG for $43 billion, a deal that came about five months after Monsanto dropped its own bid to take over the Swiss-based company.
WASHINGTON — One the world's largest telecommunications company's and its subsidiary agreed to fines and forfeitures with U.S. and Dutch authorities totaling more than $800 million to resolve a long-running bribery scheme involving a government official in Uzbekistan, Justice Department officials announced Thursday.
Manhattan U.S. Attorney Preet Bharara said VimpelCom, headquartered in Amsterdam, and its Uzbek-based subsidiary Unitel LLC, made "bribery a foundation of their business model” throughout Uzbekistan.
More than $114 million in bribes, according to federal prosecutors, was funneled to the Uzbek official during a six-year period by the firm, which issues publicly-traded securities in the U.S. The companies concealed the bribes through various payments to a shell company that some VimpelCom and Unitel officials knew was owned by the recipient of the bribe payments.
"The bribes were paid on multiple occasions between approximately 2006 and 2012 so that VimpelCom could enter the Uzbek market and Unitel could gain valuable telecom assets and continue operating in Uzbekistan,'' according to the agreement.
The case, brought under the Foreign Corrupt Practices Act, represents one of the largest such efforts to recover proceeds from a foreign government official, Assistant Attorney General Leslie Caldwell said.
Federal prosecutors said VimpelCom admitted that it falsified its books and attempted to conceal the bribery by classifying payments as equity transactions, consulting fees another transactions. When the company's board of directors sought to assess the firm's corruption vulnerability by hiring outside legal counsel, some company officials withheld information rendering the assessment "worthless.''
VimpelCom CEO Jean-Yves Charlier said resolution of the matter has been a "top priority.''
"While this has been a very challenging experience for our business and our employees, we are pleased to have now reached settlements with the authorities,'' Charlier said. "The wrongdoing, which we deeply regret, is unacceptable. We have taken, and will continue to take, strong measures to embed a culture of integrity across the group.''
Futures hit horizontal resistance yesterday and barely pierced though. Now this morning the appear ready to lose the rising trendline of support
In this Sept. 25, 2013, file photo, the first SpaceShipTwo is seen suspended at center beneath its twin-fuselage mother ship at the Virgin Galactic hangar at Mojave Air and Space Port in Mojave, Calif. Virgin Galactic will roll out a new copy of its space tourism rocket Friday, Feb. 19, 2016, as it prepares to resume flight testing for the first time since a 2014 accident destroyed the original and killed one of its two pilots.
In this Nov. 1, 2014 file photo, wreckage lies near the site where a Virgin Galactic space tourism rocket, SpaceShipTwo, crashed in the desert near Mojave, Calif. One of the two pilots aboard was killed. Virgin Galactic will roll out a new copy of its space tourism rocket as it prepares to resume flight testing for the first time since the 2014 accident destroyed the original. The new spacecraft will be unveiled at Mojave Air and Space Port in Mojave Friday, Feb. 19, 2016.(AP Photo/Ringo H.W. Chiu, File)
