Netflix Subscribers Will Pay Less (Or Possibly More) Depending on Where They Live, According to 2 Surprising Reports. Here Are the Details

It’s releasing 700 new shows this year. Think about that. It’s almost two new shows per day, counting new seasons of existing series.

And it turns out many subscribers absolutely love it. In fact, a new study by a Wall Street firm says a majority of U.S. Netflix users would be willing to pay a lot more for the service –40 percent or more than they currently pay.

That has to be tempting to Netlix, which simultaneously has spent $8 billion to produce and license new shows.

And it’s why the same Wall Street firm, Piper Jaffray, is predicting that Netflix will “bump pricing up across many of its markets in 2019,” according to Business Insider, because a “primary determinant in the ability of Netflix to raise price is subscriber perception of content quality.”

Or to put it a bit more plainly: people like it, so they’re willing to pay more, so you can expect Netflix to charge more.

That makes sense. But the news comes in the context of another report–one that says Netflix is actually playing around with an idea to charge less in other parts of the world.

Last week, a Malaysian news site called The Star Online reported that Netflix was trying a somewhat stripped down, mobile device-only subscription plan that goes for 17 Malaysian ringgit a month–which works out to about $4.25 in U.S. currency, and is less than half what a regular Netflix subscription costs in Malaysia.

Netflix confirmed to TechCrunch and USA Today that it’s running these cheaper, mobile-only subscriptions “in a few countries,” but didn’t provide further details. But it’s in keeping with what CEO Reed Hastings told Bloomberg last week, about want to experiment with different pricing strategies around teh world.

Of course, as Netflix users know, the content that you see in one part of the world isn’t always the same as what you’ll see in other parts of the planet. And Netflix has been emphasizing local content recently in Asia, where it faces stiff competition from lower-priced streaming services.

Besides meaning that Netflix, not Apple or Alphabet, keeps the customer data, it also means Netlix doesn’t have to pay a 15 or 30 percent cut to those companies to reach its own subscribers.

That could free up more opportunity to drive prices down in some markets. But not, analysts predict, in the United States and perhaps other wealthier countries. 

It might literally be a first world problem, but if these analysts’ predictions are right, we’ll likely be paying a bit more before long. Either way, you’ll probably keep watching.

By the way, I contacted Netflix via email to ask them for comment on these reported price fluctuations, but I haven’t heard anything back. If they do reply I’ll update this column. 

Amazon picks New York City, Washington D.C. area for new offices

SAN FRANCISCO/WASHINGTON (Reuters) – Inc (AMZN.O) picked America’s financial and political capitals for massive new offices on Tuesday, branching out from its home base in Seattle with plans to create more than 25,000 jobs in both New York City and an area just outside Washington, D.C.

The world’s largest online retailer plans to spend $5 billion on the two new developments in Long Island City and Arlington, Virginia, and expects to get more than $2 billion in tax credits and incentives with plans to apply for more.

The prize, which Amazon called HQ2, attracted hundreds of proposals from across North America in a year-long bidding war that garnered widespread publicity for the company. Amazon ended the frenzy by dividing the spoils between the two most powerful East Coast U.S. cities and offering a consolation prize of a 5,000-person center in Nashville, Tennessee, focused on technology and management for retail operations.

Losers said they learned from the process, while winners said it was costly but worthwhile.

“Either you are creating jobs or you are losing jobs,” New York Governor Andrew Cuomo told a news conference on Tuesday.

With more than 610,000 workers worldwide, Amazon is already one of the biggest employers in the United States and the world’s third-most valuable company, behind Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O).

Still, it faces fierce competition for talent from Alphabet Inc’s (GOOGL.O) Google and other companies working to build new technologies in the cloud. Those rivals routinely offer free food and perks in sunny California, seen by many as a better draw than Amazon’s relative frugality in rain-plagued Seattle. Google also has a growing footprint in New York City.

Already marketing its forthcoming location in the New York City borough of Queens, Amazon talked up Long Island City’s breweries, waterfront parks and easy transit access. Rents there are typically lower than in Midtown Manhattan, which is just across the East River. The former industrial area also has a clock counting down the hours until the end of U.S. President Donald Trump’s first term in office.

The choice of Arlington, Virginia, just across the Potomac River from downtown Washington D.C., could hand Amazon greater political influence in the U.S. capital, where it has one of the largest lobbying shops in town. Locating close to the Pentagon may also help Amazon win a $10 billion cloud-computing contract from the U.S. Department of Defense, said Michael Pachter, an analyst at Wedbush Securities.

Jeff Bezos, Amazon’s chief executive and the world’s richest person, privately owns the Washington Post, which has written critical articles about Trump. In turn, Bezos’s companies have been a frequent target of broadsides from the president. The newspaper maintains full editorial independence from its owner.

Amazon’s choice largely bypassed the middle of the United States, where many cities had hoped for an economic boost and bid for the new jobs. The company already had large corporate workforces in greater Washington and New York.

“My heart is broken today,” Dallas Mayor Mike Rawlings said.

A couple walk past an office building at 1851 S. Bell St. in Crystal City where Amazon may place some of its workforce after announcing its new headquarters would be based in Arlington, Virginia, U.S., November 13, 2018. REUTERS/Kevin Lamarque


At the outset of its search last year, Amazon said it was looking for a business-friendly environment. The company said it will receive performance-based incentives of $1.525 billion from the state of New York, including an average $48,000 for each job it creates.

It can also apply for other tax incentives, such as New York City’s Relocation and Employment Assistance Program that offers tax breaks potentially worth $900 million over 12 years. What benefit the company would actually get was unclear.

In Virginia, Amazon will receive performance-based incentives of $573 million, including an average $22,000 for each job it creates.

These rewards come on top of $1.6 billion in subsidies Amazon has received across the United States since 2000, according to a database from the Washington-based watchdog Good Jobs First.

Amazon says it has invested $160 billion in the country since 2010 and that the new offices will generate more than $14 billion in extra tax revenue for New York, Virginia and Tennessee over the next two decades.

It expects an average wage of more than $150,000 for employees in each new office.

Slideshow (8 Images)


Amazon’s emphasis on new, high-paying jobs earned publicity as it faced criticism for low wages in its sprawling warehouses.

The company got $148 million worth of media attention across the English-language press in the two months following the launch of its search last September, according to media measurement and analytics firm mediaQuant Inc.

Amazon received 238 proposals and New York and Virginia beat out 18 other finalists from a January short list, which included Los Angeles and Chicago.

New Jersey made headlines early in the contest by proposing $7 billion in potential credits against state and city taxes if Amazon located in Newark and stuck to hiring commitments.

Others with less money to offer took a more creative approach: the mayor of the Atlanta suburb of Stonecrest, Jason Lary, said he would create a new city from industrial land called Amazon and name Bezos its mayor for life.

In evaluating its options, Amazon looked at the quality of schools, meeting with superintendents to discuss education in science and math. Amazon also wanted helicopter landing pads for the new sites, documents it released on Tuesday show.

The company has already had to navigate community issues at its more than 45,000-person urban campus in Seattle. An affordable housing crisis there prompted the city council to adopt a head tax on businesses in May, which Amazon helped overturn in a subsequent city council vote.

Some critics had pushed for more transparency from cities and states in the bidding process, warning that the benefits of hosting a massive Amazon office may not offset the taxpayer-funded incentives and other costs.

“Our subways are crumbling, our children lack school seats, and too many of our neighbors lack adequate health care,” New York State Senator Michael Gianaris and City Council Member Jimmy Van Bramer said in a joint statement. “It is unfathomable that we would sign a $3 billion check to Amazon in the face of these challenges.”

Amazon shares closed down 0.3 percent at $1631.17, giving the company a market value of almost $800 billion.

Reporting by Jeffrey Dastin in San Francisco and David Shepardson in Washington; Additional reporting by Arjun Panchadar and Supantha Mukherjee in Bengaluru, Angela Moon, Hilary Russ and Laila Kearney in New York, Suzannah Gonzales and Karen Pierog in Chicago; Writing by Nick Zieminski; Editing by Meredith Mazzilli and Bill Rigby

​Red Hat blends Kubernetes into Red Hat OpenStack Platform 14

Featured stories

There was a bit of fear when IBM acquired Red Hat that Red Hat might abandon the OpenStack Infrastructure-as-a-Service (IaaS) cloud. Nah!

In Berlin at OpenStack Summit, Red Hat introduced its latest OpenStack distribution: Red Hat OpenStack Platform 14. It comes with a generous helping of Kubernetes container orchestration via Red Hat OpenShift Container Platform.

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Red Hat’s new OpenStack is built on top of the OpenStack “Rocky” community release. This version is noted for its significant bare-metal improvements in Ironic, its bare metal provisioning module, as well as in Nova, its compute instances provisioning program. Red Hat makes use of both improvements by automated provisioning of bare metal and virtual infrastructure resources in its OpenShift Container Platform.

To manage those containers, no matter if they’re on bare metal or in a Virtual Machine (VM), the new OpenStack Platform 14 is more tightly integrated than ever with Red Hat OpenShift Container Platform, Together, OpenStack Platform 14 aims to deliver a single infrastructure offering for traditional, virtualized, and cloud-native workloads.

This combination also provides new capabilities:

  • Automated deployment of production-ready, high-availability Red Hat OpenShift Container Platform clusters, helping to provide a path toward continuous operations without a single point of failure.
  • Integrated networking enabling OpenShift container-based and OpenStack virtual workloads from the same tenant to be connected to the same virtual network (Kuryr) increasing network performance.
  • Automated use of built-in OpenStack load balancer services to front-end container based workloads.
  • Use of built-in OpenStack object storage to more efficiently host container registries.
  • Director-based scale-out and scale-in Red Hat OpenShift nodes, enabling businesses to expand or retract resources as workload requirements change.

Red Hat OpenStack Platform 14 also extends its integration with Red Hat Ansible Automation, Red Hat’s DevOps tool. This makes deploying OpenStack — always tricky — much easier than in previous versions.

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The latest version also includes:

  • Processor scalability for emerging and extreme workloads like artificial intelligence (AI) and graphics rendering through a Technology Preview of NVIDIA GRID Virtual PC (vPC) capabilities. This enables the sharing of NVIDIA graphics processing units (GPUs) across virtual machines and applications, making it easier to scale resources to meet the demands of intensive applications.
  • Improved storage availability, management, data migration, and security through enhanced integration with Red Hat Ceph Storage including the ability to share the same Cinder storage volume across multiple VMs.
  • Inclusion of Skydive, a innovative, layer-independent network analysis tool that simplifies the validation, documentation, and troubleshooting of complex virtual network topologies as a Technology Preview.

Finally, Red Hat continues to support not only x86 processors, but IBM Power architecture as well. Yes, this means you could set up an OpenStack cloud, which could run across both Commercial off-the-shelf x86 servers and mainframes.

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In a statement Joe Fernandes, Red Hat’s Cloud Platforms vice president concluded:

“As the de facto standard in Linux container orchestration, Kubernetes adoption is often a key part of the technology mix for enterprise digital transformation, but this can require a scalable, flexible foundation for organizations to realize its full potential. By more tightly integrating the industry’s most comprehensive enterprise Kubernetes platform in OpenShift with the latest version of Red Hat OpenStack Platform, we’re providing a robust, more reliable foundation for cloud-native workloads.”

Red Hat OpenStack Platform 14 will be available in the coming weeks via the Red Hat Customer Portal and as a component of both Red Hat Cloud Infrastructure and Red Hat Cloud Suite.

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The US Is the Only Country Where There Are More Guns Than People

Americans could be forgiven for becoming numb to the swarm of stories reporting gun massacres. In the last five years, ordinary Americans have been murdered in mass shootings in a synagogue, in churches, at elementary and high schools, at a nightclub, at a bar, at a music festival, at a center for people with developmental disabilities, among countless others. After a shooting in Isla Vista, California, in 2014, The Onion wrote, “‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens.”

The Onion got it right—at least for the “only nation” bit. The US is the only country where this keeps happening. And the US also claims the dubious distinction of being the only rich nation to see so many deaths from firearms, as the chart below shows. (We kill ourselves even more than we kill each other: Worldwide, the US ranks second only to Greenland in the rate of suicides by firearm; when you remove suicides from the equation, the US falls to number 28 worldwide for deaths from firearms, both from violent acts and accidents. But even subtracting suicides, the US’s death rate from guns remains far ahead of every single European nation and nearly every Asian one.)

Most countries that see high rates of gun violence are also economically depressed; El Salvador, for example, which claims the world’s highest rate of deaths from gun violence, has a per capita GDP of around $4,000—roughly 7 percent of the earnings per citizen in the US. The chart below shows that, generally, it’s the poorer countries that see high rates of violence, while rich countries—Luxembourg tops the list—tend to lose very few residents to gunfire. The US, again, stands alone for having a relatively high GDP per capita (number 8 worldwide) and a high level of gun violence (number 12 worldwide).

Rich countries that see virtually no deaths from firearms include Japan, the United Kingdom, Singapore, and South Korea, according to data from the World Bank and the Institute for Health Metrics and Evaluation’s Global Burden of Disease survey.

Unsurprisingly, firearm deaths are correlated with firearm proliferation. American companies manufacture millions of guns each year and import many more. Domestic firearm manufacturing increased dramatically during President Barack Obama’s first term, in part because of fears that, after eight years of a Republican White House, a pro-gun-control president would take away citizens’ weapons.

That didn’t happen. By 2017 the number of handguns, shotguns, and rifles available in the United States was nearly three times higher than it was two decades earlier, according to the US Bureau of Alcohol, Tobacco, Firearms, and Explosives. Today, the US boasts more firearms than residents.

Canada, for its part, may have a lot of guns as well, as the chart below shows, but its citizens don’t often die from gunfire; the country ranks 72nd in the world for deaths from firearms. Despite having one firearm per every three Canadians, the country’s death rate from gun violence is about one-tenth that of the US (though still four times that of the UK). While mass shootings have been on the rise in Canada, only 223 Canadians died from firearm violence in 2016, compared with more than 14,000 in the US. Prospective gun buyers in Canada must pass a reference check, background check, and a gun-safety course before receiving a firearm license; the country also imposes a 28-day waiting period for new gun licensees. The AR-15 rifle—which was used to kill high school students in Parkland, Florida, moviegoers in Aurora, Colorado, and worshippers at a Pittsburgh synagogue, among many others—is a “restricted” firearm in Canada, meaning owners must pass an additional test and obtain a special license.

If Barack Obama had succeeded in passing stronger gun laws, would it have helped save lives? Maybe. On a state-by-state basis, there’s a general correlation between stronger gun laws and lower rates of firearm deaths. A May 2018 paper in JAMA Internal Medicine that sought to evaluate whether strong gun laws resulted in fewer deaths concluded, “Strengthening state firearm policies may prevent firearm suicide and homicide, with benefits that may extend beyond state lines.” Still, a February 2018 analysis by The New York Times found that most weapons used in mass shootings had been obtained legally.

The Giffords Law Center to Prevent Gun Violence gives the states of Alaska and Louisiana a failing grade for their gun-safety laws; those states also claim the nation’s highest per capita rate of deaths from firearms. Massachusetts, New York, and New Jersey all receive higher marks for their laws and have comparatively lower death rates from guns.

But as long as it’s easy for firearms to be transported from, say, a gun-friendly state (like Nevada) to a state with strong gun laws (like California), as long as lawmakers fail to enact strong policies to restrict sales to people with mental illnesses or a history of violence, as long politicians continue to take money from the gun industry, as long as the gun lobby continues to pressure medical doctors to stop advocating for their patients with bullet wounds, and as long as a box of ammunition for an AR-15 rifle costs $20 for 50 rounds, the shootings will no doubt continue.

More Great WIRED Stories

Weighing The Week Ahead: Market Storm Averted?

We have another normal economic calendar. The election is behind us. The Fed decision is behind us. What next?

Some of the punditry convened after Wednesday’s rally to say that it was time to get “back to reality.” Others are wondering about a year-end rally. Since everyone keys off what happened the day before (!) the preponderance of commentary might go either way.

In either case, I expect pundits to look back at recent volatility, technical support levels, and headline risk. They will be asking:

Has the stock market storm been averted?

Last Week Recap

In my last edition of WTWA I guessed that the punditry focus on the continuing market pressures and warning technical signals. There was some validity in this until Wednesday. My suggestion that the end of the election would be a market positive proved to be correct. We do not know, of course, the exact reason. Some insisted on a “gridlock” interpretation, but the outcome was in line with expectations. My guess was “OK, but not great.” It was a tough week to call and we stayed on the right side of the trade.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski. She includes a lot of relevant information in a single picture – worth more than a thousand words. Read the full post for more great charts and background analysis

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The market gained 2.1% (added to last week’s 2.7%) and the weekly trading range was 3.4%. The range was lower than in recent weeks, but it did not feel that way for those closely watching the market. I summarize actual and implied volatility each week in our Indicator Snapshot section below.


Will a robot take your job? Jenny Scribani at Visual Capitalist pulls together the evidence.

The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

New Deal Democrat’s high frequency indicators are an important part of our regular research. This week reflects some softening in the long leading indicators, although his rating remains “neutral.”

When relevant, I include expectations (E) and the prior reading (P).

The Good

  • Earnings forecasts are showing surprising strength. Brian Gilmartin tracks the quarter-by-quarter changes, generally not showing the declines we often see. Company reports are also mentioning tariffs less frequently on earnings calls. John Butters illustrates the pattern, sector by sector. See also Avondale’s excellent article summarizing conference call notes.

  • Initial jobless claims dipped to 214K, continuing the streak of low readings (Bespoke).

  • The Fed decision of no policy change was expected by all and the accompanying language was not worrisome.
  • Foreclosure inventory falls to the pre-recession average. (Calculated Risk).
  • ISM non-manufacturing registered 60.3 E 58.8 P 61.6.
  • Rail traffic improved but the pace of improvement is decelerating. Steven Hansen does a comprehensive analysis with special emphasis on what he calls the “economically intuitive sectors.” This is a valuable element, not seen in other sources.
  • Mortgage credit availability is increasing. “Davidson” (via Todd Sullivan) explains why this is significant for the economy, construction, and lenders.
  • The JOLTS Report continues to reflect employment strength. I especially like the chart below from Jill Mislinski. It shows the improvement of all key elements of the series, compared with a flat line for layoffs. This interesting survey only goes back to 2001, so we do not have many business cycles to analyze. Read the entire post for a collection of other charts and interesting business cycle analysis. Hint: No sign of labor market weakness.

But a look at JOLTS requires examining the Beveridge Curve!

The Bad

  • Individual investor sentiment becomes more bullish, viewed as a contrary indicator. (Bespoke)

  • Hotel occupancy declined a bit. Calculated Risk analyzes the seasonal components and comparisons with prior year. YTD 2018 is slightly ahead of the record in 2017.
  • PPI ran hot with core final demand up 0.5% MoM. (Jill Mislinski).

The Ugly

Forgetting veterans. Some Chicago politicians are proposing raising desperately needed cash by selling naming rights to various public holdings. I don’t mind City Hall, if they can find a buyer, but the airport idea is repugnant.

O’Hare Airport began as a military installation, Orchard Field. It is still designated as ORD, but was renamed for Edward “Butch” O’Hare, the Navy’s first flying ace and the first WWII naval recipient of the Medal of Honor.

Midway Airport opened in 1926 and was originally called Chicago Municipal Airport. It was renamed for the Battle of Midway in 1949.

These names should be untouchable.

The Week Ahead

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.

The Calendar

The calendar is normal in significance. The CPI will be watched closely, especially after the PPI report. Retail sales are expected to show a sharp rebound – important to confirming economic strength. The Philly Fed attracts interest as the early read on November data.

And of course – continued tweets, leaks, and speeches. has a good U.S. economic calendar for the week. Here are the main U.S. releases.

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Next Week’s Theme

Last week I opined, “It will require a major surprise for a market reaction to the election.” Unless many were surprised by the expected result, that was a bad call! Eddy Elfenbein always provides a simple, concise, and meaningful interpretation of such events. He writes:

On Tuesday, Americans went to the polls and they voted for gridlock. Or more accurately, the Democrats won control of the House of Representatives while the Republicans increased their Senate majority.

What does this mean for us as investors? Eh… not much, really. Sure, I know how partisans like to jump and holler, but the long-term impact on the markets is pretty small. Historically, bull markets have done just fine while there’s been gridlock in Washington. If anything, Wall Street seems pleased that the uncertainty of the election has passed.

But Eddy is not willing to signal “all clear” and neither am I.

We were on the edge of a storm, with many danger signals. Last week’s trading has improved the technical picture. This shifts the question to the headline risk, referred to as “the fundamentals” by some who are uncomfortable with math. I expect pundits of all stripes to be wondering:

Has the storm been averted?

I have recently offered some bearish viewpoints and suggested some flaws. This week, let’s try it the other way around, starting with a list of what might go right. publishes both stock and bond commentary, part of their free services. Patrick J. O’Hare’s market assessment, “From the Midterm to the Final Exam,” is interesting and balanced. I will take a closer look, once again intermingling my comments in cases where there is something important to add. I’ll put my thoughts in italics. While data-based, these represent my own conclusions. I act on them, but you should make your own decisions!

There are a number of reasons the punditry is making a case for the stock market to finish this year with a bang:

• The uncertainty surrounding the midterm election is over and investors can feel good that a split Congress means there won’t be a legislative unwinding of market-friendly policies. [The split Congress has little effect on market-friendly policies. Nothing was going to be repealed over a veto. What it means is no tax-cut 2.0 and a likely fight over debt limits.]

• November marks the start of the best six-month return period for the stock market, so this is typically a seasonally strong time. [True, but the seasonal effects have not been very important in recent years. The end of the year does encourage everyone to start thinking about next year’s earnings, so stocks seem a bit cheaper. They should, of course, always be looking forward, but most do not.]

• There is going to be performance-chasing by fund managers who have underperformed their benchmark. [There is not much to chase so far! Lagging results have come mostly from under-owned FAANG stocks. I don’t see how “chasing” will help the overall market.]

• Corporate share buyback activity will pick up in earnest now that the third-quarter reporting period is mostly behind the market. [True.]

• Valuation is more attractive in the wake of the October correction. The S&P 500 trades at 16.1x forward 12-month estimates – a slight discount to the five-year historical average and versus 18.3x at the start of the year. [This is the biggest factor, reflecting improved fundamentals. Eventually, attractive pricing trumps negative sentiment.]

• They expect President Trump and President Xi to convey some trade tension detente after meeting at the G20 Leaders’ Summit Nov. 30-Dec. 1. [This is the single biggest factor. Most do not realize how much trade negativity is reflected in current stock prices. My estimate is 10% in the overall market, and much more if you own the right stocks. Saying that it is important is quite different some “expecting” some policy shift.]

• The Federal Reserve could signal that it might not raise interest rates as much as it currently projects. [Don’t hold your breath. It would take a real economic reversal at this point.]

Possible catalysts?

Mr. O’Hare sees two possible catalysts – a trade agreement with China and a Fed decision to slow the planned rate of rate hikes. He does not see either as especially likely, leaving the outlook uncertain.

[I continue to see trade negotiations as the most important catalyst. The tariff impact has been important throughout GOP states, including the Trump base. His key contributors and congressional supporters will be feeling some pain. Some of the asserted executive power is subject to legislative challenge. The real-time economics lesson is playing out. The intra-party pressures could not surface before the election, but I expect to see some signs of change.]

There is a third possible catalyst – the breaking of the bogus recession narrative. This has a surprising grip, even among sophisticated investors. So many believe that Mr. Market wisely forecasts recessions and they should take cover. This is precisely backwards.

Urban Carmel, in an economic assessment packed with charts and data, concludes as follows:

Equity prices typically fall ahead of the next recession, but the macro indictors highlighted above weaken even earlier and help distinguish a 10% correction from an oncoming bear market. On balance, these indicators are not hinting at an imminent recession; new home sales is the only potential warning flag (its most recent peak was 11 months ago) but it has the longest lead time to the next recession of all the indicators (a recent post on this is here).

This is an excellent, comprehensive article. It addresses many of the skeptical points often raised by the “reliably bearish” pundits.

I have included most of my key ideas, but the Final Thought will focus on some scenarios for investor planning.

Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

I have a rule for my investment clients: Think first about your risk. Only then should you consider possible rewards. I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot

Short-term trading conditions remain at high alert. The identification as “very bearish” is a reaction to volatility, not a prediction of market movement. There is always a risk/reward balance to consider in your trading. When conditions are technically challenged, we watch trading positions even more closely. Each of our models has a specific exit strategy. The technical health rating may drop enough for a complete trading exit. It got close to that level twice in the last two months, but has now improved slightly.

Long-term trading has improved a notch on a technical basis. The big post-election rebound helped the technical picture – for us, and for others. Our methods did not “stop out” at the bottom, an important consideration. When your approach tells you to exit on a technical basis, a key question is when to get back in.

Fundamental analysis remains strongly bullish. Earnings are great, prices are lower, and there is even less competition from bonds. We reduce fundamental positions (as we did in 2011) when we get a warning from the recession or financial stress indicators, not merely as a reaction to technical signals.

The Featured Sources:

Bob Dieli: Business cycle analysis via the “C Score.”

Brian Gilmartin: All things earnings, for the overall market as well as many individual companies.

RecessionAlert: Strong quantitative indicators for both economic and market analysis.

Doug Short and Jill Mislinski: Regular updating of an array of indicators. Great charts and analysis.

Georg Vrba: Business cycle indicator and market timing tools. None of Georg’s indicators signal recession. Here is the latest chart on the Business Cycle Index.

Guest Commentary

Nick Maggiulli explains how stock touts convince you of their prowess, finding winners week after week. Hint: There are some other letters to non-winners!

He then enlightens us with this valuable analysis of whether McRib is available. I recommend reading the full post before trading on these results.

Insight for Traders

Check out our weekly “Stock Exchange”. We combine links to important posts about trading, themes of current interest, and ideas from our trading models. This week we asked traders: Do you trade binary events? One inspiration for this was the election, of course, although it was not completely binary. Drug trials are another good example. As usual, we also shared advice by top trading experts and discussed some recent picks from our trading models. Our ringleader and editor, Blue Harbinger, provided fundamental counterpoint for the models, all of which are technically-based.

Insight for Investors

Investors should have a long-term horizon. They can often exploit trading volatility.

Best of the Week

If I had to pick a single most important source for investors to read this week it would be Ben Carlson’s valuable and delightful account, “Things You See During Every Market Correction.” It takes special skill to achieve the simultaneous goals of informing and entertaining. Ben provides an accurate list of what you can expect to hear from so many pundits. Here is one of my favorites (but choose your own):

…people will start making recession predictions even though the stock market is a poor predictor of recessions because no one remembers that when stocks are in the midst of a downfall. Eventually, someone will be right about this but most of the time these predictions are based on luck.

And then he has the list of clichés from professional investors on TV. Each is designed to portray the speaker as both informed and properly positioned for what just happened. Here are two of my favorites:

• We see Dow 26,104.3487 as a key level of support. If it breaks that level, watch out below. …

• The technical damage to the stock market is much worse than investors realize.

Victor Niederhoffer’s site, Daily Speculations, is also a source of humor and inspiration. The commentators are quite good, but this one is “Anonymous.”

Peter Schiff was the first one where I realized there is an actual gloom-and-doom industry full of people who consistently predict disaster, and then every X years there is a big market downturn, and they can claim to have been right all along, and the cycle starts again.

Stock Ideas

Chuck Carnevale provides a cornucopia of twenty high-quality, attractive dividend growth stocks – diversified by sector. This is a great list of ideas. I am including the list to whet your appetite, but it is no substitute for reading the full post and watching the video.

Continuing my series on boosting your dividend yield, I described how the system could be used with General Mills (GIS). This is a good approach for those whose principal need is income.

Ray Merola provides a thorough analysis of Royal Dutch Shell (RDS.A) (NYSE:RDS.B), which he likes very much. This article is another good combination of an idea and a lesson on how to do your homework.

Can Celgene (CELG) rebound from the biotech sector doldrums? Stone Fox Capital sees a buy signal.

Delta Air Lines (DAL) reported earnings a week ago, encouraging D.M. Martins Research.

Volkswagen? The company with the Beetle and the emissions problems? Barron’s thinks the “stock is cheap and has lots of horsepower.”

Personal Finance

Seeking Alpha Senior Editor Gil Weinreich’s Asset Allocation Daily is consistently both interesting and informative. Each week he highlights stories of interest for both advisors and investors. He also provides insightful commentary on important topics. Be prepared for something that cuts against the grain!

My favorite this week was his discussion over the supposed “oil bear market.” Most people are accepting this uncritically. Gil urges a deeper look and nudges us in that direction.

Abnormal Returns is an important daily source for all of us following investment news. I read it religiously. His Wednesday Personal Finance Post is especially helpful for individual investors. As always, this week there are several great choices. My favorite was Tony Isola’s analysis of the effect of inflation on retirement plans. This is not something you can ignore!

Watch out for…

Square (SQ). Stone Fox Capital is concerned about elevated valuation and “exploding” share counts.

Emerging markets. “Not yet” says Eric Basmajian. [Jeff: I agree with his conclusion, but I’d like to chat with him about some of the argument. For one thing, I don’t trust global PMIs.]

Final Thought

Here are a few ideas about the election aftermath and near-term trading. In each case I have more confidence in what I expect to happen than in the market reaction.

Scenario One: Escalation of the Trump Investigation

This is a near-certainty. Democratic committee chairs will have subpoena and investigative power. Trump is threatening that use of these powers threatens policy compromise. Even if the Democratic leadership bought that argument (and they won’t) they cannot control all the individual Committee Chairs – all fiefdoms. In my class on legislative behavior I cited a source saying that it was nearly always right to refer to someone as “Mr. Chairman” (in those days they were nearly all men) because the number of subcommittees awarded a chairmanship to nearly everyone.

The Democrats will launch various investigations. If the Mueller probe is threatened, it will become even more aggressive.

Investment implications:

  • Cooperation on an infrastructure bill is unlikely.
  • The President may need to reach out more to supporters already in office instead of voters.

Scenario Two: Death to Initiatives Requiring Cooperation

Democrats are unlikely to accede on any key proposal requiring Congressional support. This raises the implementation of the NAFTA replacement is a key worry. We might also see another round of debt-limit debates, with a possible bad ending. Expect the partisan roles to be reversed. The Trump-led GOP has not demonstrated a successful record of reaching across the aisle. That will now be essential on the budget and debt issues.

Investment Implications:

  • A crisis of confidence like what we saw in 2011. The economy runs on confidence.
  • A delay in the crucial North American trade agreements would affect many industries and have a ripple effect.

Scenario Three: Impeachment and/or Constitutional Crisis

This still seems unlikely, but Democrats will not accept firing of Mueller. Some Republicans will agree. I don’t want to get into what substance there is behind the various allegations but suppressing whatever it is will not work.

Investment implications:

  • Another type of crisis of confidence. The US would be weakened in global affairs and development of fresh domestic policies would halt.
  • The specific effects would depend upon which policies – Iran, tariff, immigration, debt ceiling, etc. – had already been implemented.
  • The market will not like uncertainty, but it should not rival 1974.

[There is a lot resting on your current investment decisions – risk, traps, assuring income, and seizing opportunity. Write to us for my free papers on each of these topics.]

I’m more worried about:

• The gradual effect of the trade war. As I have often noted, it is a real-time econ lesson. The effects are more obvious each week – lower growth, higher inflation.

• Additional crippling of compromise.

I’m less worried about:

• Earnings growth. It is a strong positive, supported by a strong economy.

• Debt issues. This is a staple complaint of those struggling to find something wrong. I have often said that this is an important problem, but not currently urgent. It must be addressed, but not right now. Read this piece from David Kotok.

We have another normal economic calendar. The election is behind us. The Fed decision is behind us. What next?

Some of the punditry convened after Wednesday’s rally to say that it was time to get “back to reality.” Others are wondering about a year-end rally. Since everyone keys off what happened the day before (!) the preponderance of commentary might go either way.

In either case, I expect pundits to look back at recent volatility, technical support levels, and headline risk. They will be asking:

Has the stock market storm been averted?

Disclosure: I am/we are long GIS, CELG.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: GIS vs short calls

How Amazon's Marketplace Supercharged Its Private Label Growth

In 2009, Amazon launched its first private label brand AmazonBasic. Today, Amazon has 100+ private label brands that offer over 4,600 products. That explosive growth has been supported by rich data that Amazon mines from its marketplace. The modern monopoly’s control over search results on its website, mobile app, and Alexa voice queries further exacerbates the problem by giving its own brands premium listing space (or in the case of some voice searches, the only listing).

Reinventing the private label game

To be clear, Amazon is a late comer to the private label game. For decades large retailers such as Walmart, BJ’s, and CVS have placed private labels on their shelves at a cheaper price than other brands.

In the decades before the rise of online marketplaces, retailers stocked their shelves by making deals with big manufacturers like Proctor & Gamble or Nestlé. Those big consumer good conglomerates wielded the power to shove out smaller brands, demand premium shelf space, and trade for other perks as part of their deals with big retailers like Walmart. Consequently, Walmart could, and did, use the data it gathered in its stores to build its own private label brands.

On its face, Amazon’s approach looks no different – that is, it gathers data on products sold of the website and builds out a private label strategy with that data. However, Amazon’s platform business and market share gives it advantages that brick-and-mortar retailers could only ever dream of.

Predatory pricing in Amazon’s private label brands

The proliferation of Amazon’s private label brands has consumer good sellers squirming. Because Amazon prioritizes growth over profits, the tech giant has been able to move quickly across many product categories from electronics to fashion to home and kitchen, pet products, cosmetics, health and beyond. Like the private label brands of traditional retailers, Amazon’s products often sell for cheaper than other brands on its own market, and often (though not always) at a loss.

As Lina M. Khan wrote in the Yale Law Review in an article discussing antitrust issues with Amazon, “The economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational.”

Amazon’s multi-channel revenue, including the revenue it makes from third-party sellers on its marketplaces, subsidizes its private label experimentation and dominance. But Amazon’s platform has done more than provide financial cover for Amazon’s private label brands, it has also provided the right data.

Data richness and search results

Amazon’s marketplace catalog dwarfs even the largest traditional retailers, such as Walmart’s catalog (especially pre-marketplace). Amazon democratized access to the consumer for sellers. Soon small brands and living room product startups could open shop on a marketplace that commanded over half of online sales.

That boon cut both ways. Amazon gained access to all the data for itself, and the quality of the data is much richer and more granular than any data collected by traditional retailers at their stores.

The combination of granular data and the democratization of access has quickly benefited Amazon in a matter of years. Consider Anker, a smaller brand of portable battery packs, speakers, and other electronic goods. Before 2017 they were sold almost exclusively on Amazon’s marketplace. Compare and contrast Anker’s portable bluetooth speaker with Amazon. Anker’s is $40 and Amazon’s is $20.

Both even come in black, blue, and red! Notice Amazon is out of stock of its blue speaker. Most of its private label brands carry a limited stock of each item to test their performance.

In addition to hyper specific data mining, Amazon also accounts for 49% of online product searches, while another 36% of product searches start on Google and point to Amazon first (according to research firm Survata). Amazon can, and does, list its items before competitors. In the case of voice shopping via Alexa using generic product terms such as ‘batteries’, the smart speaker chooses an Amazon brand for the consumer (a practice that, among others, is inviting antitrust scrutiny).

How manufacturers and resellers should respond

Given Amazon’s monopolistic advantage, what can product sellers do? In the short term, pulling your product from Amazon simply isn’t practical. Amazon accounts for over half of all online sales. They have the consumer goods retail market by the wallet.

Rather than just hoping that antitrust regulation is successfully brought against Amazon, product vendors should build or acquire a marketplace of their own. Listing stock on competing marketplaces is a good idea, but it isn’t enough. The publishing industry tried that approach with books, and it found little success. By building or buying a competing marketplace, product companies can scale niche, specialized marketplaces that can serve as a competitive moat against Amazon.

This Woman Walked 7,000 Miles to Discover the Secrets to Happiness. Here's What She Learned

How far would you travel to uncover the secret to happiness?

Vermont-born Paula Francis has already walked nearly 7,000 miles on behalf of Gross National Happiness USA, a nonprofit dedicated to changing how we measure success. She recently told a CBS affiliate that her research thus far points to caring, compassion, and listening as the key ingredients to a happier life.

You may not be ready to wear out your tennis shoes like Francis (she’s going on 14 pairs), but that doesn’t mean you can’t improve your own happiness factor.

When Francis studies people, she absorbs their stories, a technique that combats self-focused negativity. It’s tough to be hard on yourself when you’re concentrating on being in the moment with another person. Plus, learning about someone else’s personal journey can put your own woes into perspective.

Does it take intention to forge a better life? Of course, but making a few smart choices will go a long way. For me, it’s simply a matter of switching up my attitudes and routines.

1. Choose nontoxic friends.

We’ve all had the experience of dealing with an emotional vampire at work, someone who sucks our soul dry of energy and happiness. You may not be able to fully cut ties with this person, but you can keep your distance.

As one long-time Harvard study indicated, being happy for the long haul has more to do with positive relationships than anything else. The stronger the connections between family members, co-workers, and friends, the greater the sense of joy. So ditch the folks who bring you down and find ones who pick you up.

2. Ghost your phone sometimes.

When Tim Cook, the CEO of Apple, says he needs to take a step back from his phone, it’s a wake-up call for all of us. So much screen time leads to bad sleeping habits, missed opportunities to deepen human connections, and fear of missing out (FOMO) stress.

You can add some joy to your life by breaking an unhealthy routine. If you spend too much time in the virtual world and not enough in the real one, keep your phone out of the bedroom for a week. You might wind up like the study participants who reported more happiness, less stress, and improved relationships when they stopped sleeping with their phones.

3. Give to get.

Lending a helping hand is a surefire way to feel happier and get more enjoyment out of your day. After all, our brains experience the same rush when helping someone as we get from a nice meal. If a co-worker is swamped, ask what you can take off his plate. Doing someone a solid will make you feel good, too.

Outside of work, pick causes you’re passionate about and volunteer occasionally. Alternatively, you may want to give money or items to an individual or organization. As long as you do it with altruistic intentions, you can expect a positive return in the form of adrenaline and happiness.

4. Follow the “benefit of the doubt” rule.

Not everyone is out to get you, no matter what you’ve heard. When you start to tell yourself that a co-worker is trying to use you, ask yourself why you feel that way. Is there a historical reason? Or are you just assuming the worst about human nature?

Our biases can lead us to misjudge actions and words. Instead of convincing yourself that you’re the target of a conspiracy, let yourself accept the possibility that you’re not being mistreated by those around you. It may give you a freeing lift.

5. Push yourself just enough.

Happiness comes from exceeding expectations, so put a bit of pressure on. Try out for the company softball team. Add a yoga class to your weekly schedule. Tackle a big project for the head honcho.

You’ll feel some stress, but it’s the kind that lends happiness based on a sense of accomplishment. Even if you don’t succeed in doing a Tough Mudder or snagging the corner office, you can celebrate the progress you made along the way–and feel happy with how far you’ve come.

6. Celebrate others’ successes.

Why be stingy when you can share some good vibes? Look for opportunities to support those around you when they succeed. For instance, when your colleague receives a bonus, be happy for her rather than feeling like you deserved it more.

By being able to remove yourself from the center of the universe, you savor the happiness of connecting with others. Plus, you set the stage for the people in your life to see you as a trove of optimism.

I didn’t have to travel across the U.S. to boost my happiness, and you don’t, either. You can raise your happiness quotient with just these few tweaks in perspective.

How Alibaba Made Singles’ Day the World’s Largest Shopping Festival

Valentine’s Day can be a lonely time if you don’t have a partner. But, at least in China, there’s a holiday that celebrates singledom too. Aptly named Singles’ Day, the unofficial holiday is a multi-billion dollar sales event bigger than Black Friday and Cyber Monday combined, and it’s happening this weekend.

The annual celebration is always on November 11 – or 11/11, a date chosen for its likeness to “bare sticks”, which is Chinese slang for bachelors. Although it was conceived in the 1990s by a group of college students protesting traditional couple-centric festivals, the event’s exponential growth is all down to China’s number one e-commerce site, Alibaba.

In 2009 the retail giant took Singles’ Day and promoted it as an opportunity for consumers to splurge on gifts to themselves, offering steep discounts through its consumer shopping site, Tmall.

That first year, the gross merchandise value (GMV) of goods ordered during the sales period clocked in at $7.5 million. Even though GMV is a questionable metric, since it doesn’t necessarily reflect net revenues, the figure’s sensational growth is worth noting.

Within eight years, Singles’ Day GMV had ballooned to over 3,000 times its 2009 level, hitting $25.3 billion in 2017 with Chinese consumers racking up $1 billion of purchases in just the first two minutes of Singles’ Day. For comparison, it took Amazon 30 hours to cinch that same value during its Amazon Prime Day sales the same year.

Alibaba combines online shopping discounts with offline entertainment to give its Singles’ Day sales a boost. Since 2015, it has hosted extravagant annual galas to launch the day’s festivities. These televised events draw in an audience of around 200 million viewers, who tune in to catch product launches, win prizes, and witness A-list celebrities make bewildering appearances.

Highlights from last year’s gala include Pharrell Williams performing an original ode to Singles’ Day, Jessie J offering an unironic rendition of her hit song Price Tag, and Nicole Kidman introducing a short kung-fu film starring Alibaba co-founder Jack Ma. That film itself was bursting with martial arts royalty, with Ma sparring against opponents like Jet Li and Donnie Chen.

Underpinning the festival’s success is Alibaba’s logistics network, Cainiao, which boldly handles the deluge of orders surging throughout the day. In 2017 over 331 million boxes were dispatched on Singles’ Day, with the first order taking just 13 minutes to reach its destination (a customer in Shanghai had bought some snacks).

Achieving such fluidity in a nationwide logistics network is certainly a marvel. Last month Cainiao unveiled an almost fully automated warehouse in preparation for another blockbuster Singles’ Day. The warehouse can supposedly process orders 50% quicker than entirely-manned facilities.

But each additional package processed adds strain on the environment. Last year parcels from Singles’ Day generated an estimated 160,000 tons of packaging waste, only 10% of which is recyclable.

Also, for all its bluster, the sales event is not necessarily a windfall for merchants. Sellers have complained of being pressured into offering excessive discounts during the event, slashing prices over 50% and occasionally shipping items at a loss.

With Alibaba suffering one of its worst performing years, whether Singles’ Day continues its strong performance this weekend will be closely watched. The company’s stock has crashed 21% since January and reports from the previous two quarters have been troubling, warning of weaker sales to come.

But there’s a bigger picture too. Analysts see Alibaba’s performance as a bellwether for the Chinese economy, which is driven by consumption. A weak Singles’ Day could signal a loss of confidence in the economy as China is battered by tariffs and burdened with debt. So whether it’s for the razzle-dazzle of the gala or the data behind the sales, all eyes will be on Alibaba this November 11.

Camp Fire: The Terrifying Science Behind California’s Massive Blaze

Editor’s note: This is a developing story about California’s Camp Fire, Hill Fire, and Woolsey Fire. We will update it as more information becomes available.

At 6:30 Thursday morning, a wildfire of astounding proportions and speed broke out in Northern California. Dubbed the Camp Fire, it covered 11 miles in its first 11 hours of life. A mile an hour might not seem fast in human terms, but it’s an extreme rate of speed as far as fires are concerned. At one point it was burning 80 acres a minute. When it hit the town of Paradise, home to 27,000 people, those buildings became yet more fuel to power the blaze.

“It appears that the town was either wiped out or severely damaged,” says Stephen Pyne, a wildfire expert at Arizona State University. “We’re seeing urban conflagrations, and that’s the real phase change in recent years.”

It used to be that fires destroyed exurbs or scattered enclaves. “But what’s remarkable is the way they’re plowing over cities,” Pyne says, “which we thought was something that had been banished a century ago.”

The Camp Fire horrorshow, which burned 70,000 acres in 24 hours, is a confluence of factors. The first is wind—lots of it, blasting in from the east. “We have a weather event, in this case a downslope windstorm, where as opposed to the normal westerly winds, we get easterly winds that are cascading off the crest of the Sierra Nevada,” says Neil Lareau, an atmospheric scientist at the University of Nevada, Reno.

A windstorm barreling from the east just set the stage for this week’s burning disaster. It’s a normal phenomenon that comes from the jetstream, which this time of year grows stronger. North and south “meanders” in the jetstream, known as troughs and ridges, get amplified. These cold air masses travel through the Great Basin in Nevada and spill over the Sierra Mountains in eastern California. Big meanders set up very high pressure areas that accelerate winds.

“Then they get local accelerations on top of that as they flow down the mountain ranges, kind of like water over a dam,” Lareau adds. Some areas in California are particularly prone to downsloping winds. “Unfortunately, right where the Camp Fire is is one of those places.”

“I always like to say nothing good comes from an east wind in California,” Lareau adds.

As the air descends at an accelerating pace, it warms up and drives the relative humidity down. Which brings us to our second factor in the horrorshow: fuel—lots of it. It may be November, but California is still extremely dry, which means plenty of vegetation that’s primed to go up in flames.

The east winds further dehydrate the vegetation. This is where something called the evaporative demand drought index comes in. “You can think about it as how thirsty the atmosphere is,” says Lareau. “How strongly does the atmosphere want to pull water out of the vegetation and out of the ground?”

Very strongly, in the case of the Camp Fire and those downslope winds. So it isn’t just a matter of things being generally dry for the season in Northern California—ground and vegetation moisture fluctuates day to day, too. Scientists can calculate this in part by going out and cutting vegetation, weighing it, drying it out, and weighing it again.

“This tells us those fuels have been drying out really, really rapidly over the past few days and into this event,” says Lareau. Just take a look at the eerily prescient tweet below from meteorologist Rob Elvington the day before the Camp Fire broke out.

So you’ve got hot, dry gusts of 40 or 50 miles per hour from the northeast pushing the fire, and the fire is itself creating wind, further accelerating the conflagration. As it moves along, embers fly out of the front of the fire. “As the fuels get dryer, a smaller and smaller spark can leapfrog the fire through the landscape,” says Lareau. “That’s just another way this thing comes up and bites you.”

“It’s hot, dry and windy, are your ingredients,” he adds. “We checked off all three here.”

That’s probably why the city of Paradise appears to have suffered such astonishing losses. Urban areas aren’t supposed to burn, at least they haven’t been supposed to since San Francisco in 1906. They’ve been designed and built with better materials (read: a whole city isn’t made of wood alone anymore) and more defensible spaces. But with a conflagration like the Camp Fire, it can overwhelm an urban area by setting off hundreds or thousands of tiny fires, perhaps miles ahead of the conflagration itself. There’s no single line to put up a fight, so firefighters are overwhelmed.

“It looks like it’s another case where you’ve got billions and billions of embers riding with the wind,” says Pyne. “It only takes one ember to take out a house or a hospital. If there’s any point of vulnerability, all those embers will find it.”

As the Camp Fire raged Thursday, the Hill Fire broke out in Southern California, burning 10,000 acres so far. And yet another, the Woolsey Fire, has forced the evacuation of Malibu.

It was no coincidence that these fires landed all at once. “Literally the same air mass is what’s causing the beginnings of a strong Santa Ana event ongoing now, as this air mass sags south through California,” says Lareau.

North or south, the state is extremely dry already. But these warm winds ripping through the Sierras are only making matters worse, siphoning what little moisture California’s vegetation has left. While the winds will likely die down a bit over the next few days, they’re due to pick back up again Sunday, which could bring still more fires.

This is what a climate change reckoning looks like. “All of it is embedded in the background trend of things getting warmer,” says Lareau. “The atmosphere as it gets warmer is thirstier.” Like a giant atmospheric mosquito, climate change is sucking California dry.

The consequence is fires of unprecedented, almost unimaginable scale. Just over a year ago, the Tubbs Fire raged through the city of Santa Rosa, north of San Francisco, becoming the most destructive wildfire in state history. California cities are no longer safe from fire, and with climate change, things are only bound to get worse from here.

“Mass shootings and mass burnings,” says Pyne. “Welcome to the new America.”

More Great WIRED Stories

5 Leadership Blind Spots That Limit Your Ability to Keep Up With Change

While the willingness and ability to change is recognized and espoused by every business owner or founder I am asked to advise, far too many of you seem to be stuck in a rut, or very slow to actually decide what changes are necessary to survive and thrive.

You may not be blind to the changing market and technology, but being blind to internal traps that can be just as devastating.

I saw this challenge of inertia described very well in a new book Transforming the Clunky Organization by Samuel B. Bacharach. From his leadership consulting with a host of companies, clunky and innovative, he explains why owners and executives fall into traps of inertia and he details the critical pragmatic leadership skills needed to regain the required momentum.

Here is our joint list of some common traps that you and your company leaders must avoid at all costs:

1. Too satisfied with how things are going, or status quo.

The status quo trap is set when things have gone well for a while, and you are too busy to look ahead to see what’s around the corner, or commit time and resources into developing the next generation of innovative ideas.

Then when market demand slows, you are not able to react in time.

For example, Blockbuster was so busy expanding its hugely profitable video rental business, adding stores at a breakneck rate, that it failed to really take notice of new entrants like Netflix with no late fees, Redbox’s automated kiosks, and video-on-demand.

The result was a major change in the industry, and Blockbuster disappeared.

2. Throw money into a sinking project, hoping to save it.

This bailing-too-late trap is when you make a big investment in a venture that doesn’t take off, but you refuse to abandon it or pivot because of sunk costs, with the hope of success just over the horizon.

The result is a business damaged past the point of recovery, instead of just dented.

I see this often as an angel investor, approached by desperate entrepreneurs who have spent all their resources over a period of years on a failing solution, but are still convinced that one more cash infusion will turn the curve from down to up.

At this stage, investors won’t believe that more money for sales and marketing will turn the tide, so we all lose.

3. Tackle a new market or technology you don’t know.

When you propose to enter a new market or technology without the requisite resources or skills to compete, you may be triggering the overreaching trap.

Although paradigm shifts and disruptive technologies imply huge new opportunities, they may require more time and risk than you can tolerate.

The Pebble smart watch is an example of overreaching, especially for a startup with limited resources. Even though the original Pebble became the most-funded Kickstarter product of all time, tech giants Apple and Samsung quickly overran them, and they were forced to disappear into Fitbit.

4. Focus on short-term gains, ignoring long-term risks.

Short-term wins are great, but if you pursue them at the expense of long-term success, then it’s a trap. Companies caught by the short-term trap often miss new bigger opportunities.

Thinking short-term requires satisfying customer change with more already existing products, skills, and resources.

Kodak is famous for falling prey to the short-term trap. At one time Kodak was a leading innovative company centered around film photography. Their short-term focus did not allow them to see the long-term benefits of digital photography, cost them their leadership position, and ultimately resulted in their filing for Chapter 11.

5. Let your company be a victim of analysis paralysis.

If you lead your business on endless journeys of analyzing, discussing, researching, and testing new ideas without getting anything off the ground, you are a part of the overthinking trap.

You are guilty of wasting precious time and money, and throwing away the opportunity of real innovation.

The result of any of these traps is an inertia that prevents recognition of the need to change, and a sluggishness in implementing the necessary change actions before it is too late.

If you sense these symptoms in your domain, or hear them highlighted by your advisors, the time to take action is now. I advise initiating a change in your leadership style, before the market moves on without you.

Tesla taps director Denholm as chair after Musk rows

(Reuters) – Tesla Inc director Robyn Denholm, a telecoms executive who has worked for Toyota, has been promoted to chairwoman of the electric car company and tasked with regulating billionaire Elon Musk’s regime after months of turbulence.

An Australian accountant, Denholm is currently finance chief at telecoms firm Telstra Corp Ltd and replaces Musk after he was forced to relinquish the role as part of a deal to head off charges of fraud by the Securities and Exchange Commission.

The change in structure at the Silicon Valley company, agreed to by Musk in a September court settlement, is supported by many on Wall Street who worry that his record of erratic behavior is undermining the company’s progress.

While she will resign from Telstra to take the role full-time, some analysts expressed concern that she may not be far enough removed from Musk to rein in the billionaire’s public outbursts and bring more order to Tesla.

Denholm, 55, has been an independent director of Tesla since 2014 and the head of its audit committee. She was paid almost $5 million, mainly in stock options, by the company last year, making her the highest remunerated of its board members.

Musk, who remains Tesla’s biggest shareholder and the driving force behind its ambitious plans to reshape electric battery technology and car transport, tweeted here his approval of the appointment.

“Musk, I believe has a ton to do with the selection and he wants to be sure that they can see eye-to-eye,” said Elazar Capital analyst Chaim Siegel.

Tesla’s court-approved settlement agreement with the SEC requires the company to appoint an “independent” chairman, although it does not define what it considers to be so.

The regulator declined to say on Thursday if it had approved the appointment of Denholm.

Stephen Diamond, a professor of corporate governance at Santa Clara University, said in general the definition of “independent” is relaxed and that as a result he believed the SEC would not object.

“But it does violate the spirit of the settlement, which was to change the culture of the board so there was a check on Musk’s worst instincts,” he added.

Top proxy advisers Institutional Shareholder Services and Glass, Lewis & Co had each classified Denholm as an “independent” director of Tesla in reports to the carmaker’s investors earlier this year.


Denholm pumped petrol at her parents’ filling station before going on to study at Sydney University and joining accountancy firm Arthur Andersen.

Since then, she has worked at Swiss power grid maker ABB Ltd, network gear firm Juniper Networks and 1980s and 90s computing giant Sun Microsystems.

Telstra CEO, Andy Penn, said when he appointed her: “Robyn has a proven track record as a global COO in a business focused on telecommunications networks.”

“She has overseen business model transformation, supply chain and broader business process re-engineering. She has been a senior executive and director in a range of complex technology environments which make her ideally qualified for the role.”

Executive recruiter Patricia Lenkov, however, said that Denholm likely was not the right pick for the job, arguing Tesla needed a figure with more experience dealing with strong founders.

“There might be an element of risk here. She’s not a proven entity in this kind of work,” she said.

While Tesla is finally starting to make good on Musk’s promises on production of the Model 3 sedan, seen as crucial to the company’s future, it has lost senior executives for sales, human resources, manufacturing and finance in recent months.

Its vice president for manufacturing Gilbert Passin was reported last month to have left.

“We view the fact that Denholm has prior industry experience with Toyota positively,” said CFRA Research analyst Garrett Nelson, adding it made sense that Tesla should seek to avoid the risk of a genuine outsider clashing with Musk.

The Silicon Valley billionaire’s gift for self-promotion has made Tesla one of the world’s most talked-about businesses but also caused public spats with journalists, analysts, Wall Street investors and rapper Azealia Banks.

He is being sued for calling one of the divers behind this year’s Thai cave rescue a “pedo”.

Robyn Denholm and Elon Musk. REUTERS/Files

According to The Australian newspaper, Denholm said the only things that really disappoint her are rudeness and waste.

“Politeness costs you absolutely nothing. It doesn’t matter whether you are the most senior person in the room, or the most junior,” she told the paper in an interview a few years ago.

Tesla shares were up 1.4 percent in morning trading.

Additional reporting by Akanksha Rana and Philip George in Bengaluru, Melanie Burton in Melbourne, and Michelle Price and Jan Wolfe in Washington; Editing by Patrick Graham, Bernard Orr

A.I. Has the Power to Change the Future. But Are People Prepared?

A.I. has the potential to add $16 trillion globally to the GDP, but only has an adoption rate of about 4% so far.

In addition to the learning curve, there are plenty of steps that need to be taken before A.I. can even become usable in a business. A company would need to have the rights to accessible data, as well as infrastructure to access it reliably 24/7, Solmaz Shahalizadeh, vice president of data science and engineering at Shopify, said during a discussion at Fortune‘s Most Powerful Women International Summit in Montreal Tuesday.

Ellyn Shook, chief leadership and human resources officer at Accenture, notes that it’s easier than some think to train a workforce to utilize A.I. In fact, Accenture offered its employees a deal: If your work becomes automated, we’ll train you in something else. However, in some areas, employers are finding their problems are two-fold—workers aren’t interested in changing their skill set and their strengths are no longer as useful as they once were.

“We think that there’s really only two essential ingredients to be able to train people to use these technologies. The first is aspiration, and from our research we know that about two-thirds do have a high aspiration to use the technology. The second is learning agility. If you have those two things you can really invest in people to train them how to use the information and the data. Even if they’re people you wouldn’t normally think are digital native,” Shook said.

This could tie in with the lack of adoption by companies at large. And there’s worry that the problem won’t be solved any time soon as a shortage of A.I. educators is reported. Canada is investing in the effort, but it could be years before A.I. needs are met.

You’ll Soon Have 10 Minutes to Unsend Facebook Messages

We’ve all experienced the instant regret of sending a Facebook message to the wrong person or wishing we’d worded things better. But once you hit “send,” there’s no retrieving it. That’s all about to change, though.

A line in the newest version of Messenger on Apple’s App store lists the ability to remove messages from a chat thread after they’ve been sent as a “coming soon” feature. You’ll have 10 minutes to delete the message.

“Coming soon: Remove a message from a chat thread after it’s been sent,” the update reads. “If you accidentally send the wrong photo, incorrect information or message the wrong thread, you can easily correct it by removing the message within ten minutes of sending it.”

Facebook started hinting at the functionality since April, when it became public that CEO Mark Zuckerberg was quietly using an early version of the feature. The ability to erase messages reportedly was developed after the Sony Corp. data hack in 2014, which exposed a trove of sensitive internal communications. Facebook created a capability that let executives expunge their app messages after a period of time.

The new functionality comes a little over two years after Facebook began testing full encryption on the Messenger app with the “Secret Conversations” feature. Those messages can only be read on one device of the person you’re talking with.

Ford Truck Sales Slowing

Many economic data points have been tapping the brakes recently indicating slower economic activity. One data point that we like to look at is Ford (NYSE:F) truck sales. Trucks are typically purchased by small businesses and contractors, so they provide a good read on the health of the small business sector. Based on these sales totals for October, small businesses took a little bit of a step back.

Last month, sales of Ford F-series trucks totaled 70,438, which was down over 7% from last October’s total of 75,974. Although one caveat to this decline is that in 2017 sales totals were boosted by repurchases of vehicles flooded in the hurricanes making for a tough y/y comparison. Outside of 2017, this October’s sales were the highest since 2004, which also lends some credence to that argument even if this year did have an extra day of selling compared to last October (26 vs. 25).

On a YTD basis, sales of F-Series trucks have totaled 749.5K, which is still up slightly from last year’s pace and is the strongest YTD reading through the first ten months of the year since 2004.

Should You Buy Or Sell Apple For No Longer Disclosing iPhone Sales Numbers?

Apple (NASDAQ:AAPL) released its Q4 results on Thursday, beating analysts’ estimates in earnings, revenue and iPhone average selling price. In the company’s conference call, CFO Luca Maestri made the shocking revelation that Apple will no longer be providing iPhone, iMac and iPad numbers.

The news caused the stock price to drop from $222.22 at Thursday’s close to as low as $206.08 after-hours.

Apple stock price Q4

Source: Google

Although Apple left the announcement until the conference call, the significance of the decision is huge. Over 60% of the company’s revenue in 2018 has come from iPhone sales alone, meaning that the smartphone device is by far its most important product.

iPhone sales share of Apple’s total revenue worldwide

iPhone sales

Source: Statista

Whilst most public companies try to warm to their investors, Apple’s decision to withhold information that was previously provided could be perceived as giving investors a cold shoulder. I wouldn’t go as far as to say that Apple has burned a bridge here, but the company certainly has not strengthened its relationship with the shareholders. Nonetheless, shareholders are partnered with Apple to ride their coattails and reap the benefits of their financial success, not to make friends.

In order to decide how we should react to Apple’s new shady stance, we must consider why the tech giant has made the move. Is it obfuscating information to deceive investors from a much darker truth here? I would argue not. Apple is far from being in dire straits and has been demonstrating strength in a time when the stock market bears are winning.

Taking a look at its Q4 earnings, it would seem that the company is doing well too. EPS came in at $2.91, versus analysts’ expectations of $2.78. Revenue hit $62.9 billion, higher than the $61.57 billion expected. The average iPhone selling price demolished expectations of $750.78, coming in at $793.

The only area that Apple fell short was on iPhone sales, coming in at 46.89 million, not 47.5 million as forecasted. So, the only area that the company failed to meet expectations is the only area that it is now hiding. What should we make of this?

Well, this is not the first time Apple has missed analysts’ targets of iPhone numbers. In 2014, 2016, 2017 and, of course, 2018, it fell short on analysts’ expectations of iPhone sales. Nonetheless, the company continued to prove analysts wrong and excel in all other areas. Just because Apple missed analysts’ iPhone sales expectations does not mean it failed.

I don’t like analysts anyway

Leading up to Q1, anxiety about how well the iPhone X would or would not sell shook Apple stock price. When the company eventually announced on February 1st that its 10-year-anniversary, industry-shifting flagship failed to meet sales expectations in Q1, the stock price slipped to its lowest in 2018.

Apple Q1

I saw this as an immediate buying opportunity. Apple sold 77.3 million iPhones instead of 80 million as expected by analysts. Was it now a lousy company because it sold just under 3 million iPhones than some Wall Street nerd had predicted? Of course not. 77.3 million is a gargantuan number of anything, and selling 77.3 million of your main product is unquestionably an impressive feat. Thus, analysts’ predictions in terms of iPhone sales actually mattered very little to me – all it did was bring down Apple stock price for me to buy more.

However, from Apple’s perspective, analysts’ predictions matter, as they are damaging to the stock price. Apple missing the numbers, which eventually prove to be somewhat unfounded and arbitrary, makes for great headline stealers, but this is not an accurate reflection of the company’s achievements.

Whilst the company continues to outperform financially, Apple suffers far too much from analysts’ expectations. By hiding these numbers, the stock price won’t be as vulnerable any more.

CFO Luca Maestri said in the conference call that the number of units Apple sells each quarter is “not necessarily representative of the underlying strength of our business.” He added that “a unit of sale is less relevant for us today than it was in the past, given our breadth of our portfolio and the wider sales price dispersion within any given product line.”

Maestri also reminded shareholders that “top competitors in smartphones, in tablets, in computers do not provide quarterly unit sales information, either.” It’s true – Google (NASDAQ:GOOG) doesn’t reveal Pixel numbers. Apple also doesn’t reveal Apple Watch numbers, and its increasingly popular AirPods are listed in “other products”.

Source: Apple 10-K 2017

The bottom line here is: does Apple’s decision to hide iPhone sales change the fundamental structure of the business? Absolutely not. Will the average consumer who has their eye on a new iPhone be affected at all by this news? Definitely not. The reasons why people are buying Apple products have not changed in the slightest.

Therefore, shareholders who believe in Apple should not be deterred by the company’s new decision. If anything, this could be one of the last chances to buy an analyst-iPhone-expectation-related dip.

Disclosure: I am/we are long AAPL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Don’t Be Duped by Voting Misinformation Before the Midterms

The midterm elections are just a few days away. Though historically the president’s party takes a beating in the House and Senate, that’s far from assured this year. Will the midterms be a rebuke or an endorsement of the Trump administration? On November 6, you will decide.

As 2016 emphatically demonstrated, elections are also a major battleground for information warfare. Coordinated misinformation campaigns focus not just on individual candidates but also the electoral system itself. And though political operatives have used misleading tactics for years, the amplification and network efforts of social media have been like gasoline to a fire. Misinformation now spreads farther, faster, and ensnares unwitting accomplices who share bad information without realizing it.

Tech companies and governments are slowly beginning to realize that the information war is on and they need to respond. But you still need to be aware, and be informed.

The Facts

The balance of the House and the Senate will be decided on Tuesday, along with 36 governorships, 30 state attorneys general, many state legislative seats, and crucial local ballot initiatives on everything from a new tax to fight homelessness in San Francisco to recreational marijuana to climate change to drug sentencing reform.

To find out accurate information about where you can vote, whether you can still register, and who and what is on the ballot in your area, you can consult your local election officials. The US Election Assistance Commission lists the phone numbers and websites for every state and US territory on its website. There are also third-party tools supported by nonpartisan organizations like Ballotopedia, Democracy Works, and, which allow you to input your address and receive individualized voter information for your area.

What People Are Saying

There’s a ton of misinformation out there, and it’s always evolving, but there are a few general themes that come up every election cycle.

Voter Fraud

Voter fraud is a constant boogeyman. In the months leading up to the 2016 election, for instance, President Trump warned that millions of undocumented immigrants would vote. After he won the presidency but lost the popular vote to Hillary Clinton, he said that voter fraud was the reason. None of this, said the state authorities whose job it is to maintain the integrity of elections in the US, was true. In fact, when all the votes had been tallied—137.7 million of them—states investigating claims of voter fraud found “next to none,” according to Tthe New York Times.

Still, months into his first term, President Trump created a commission explicitly to study voter fraud. After intense criticism from experts who called it unnecessary, as well as legal challenges, it was dissolved in January, having released no evidence to substantiate the president’s allegations that millions of people voted illegally in the 2016 election. That hasn’t stopped people from claiming it’s a major issue, or from imposing restrictions like voter ID.

To support claims for widespread voter fraud, many point to states and counties where there are more registered voters than eligible adults. In California, for example, the claim that 11 counties have more people registered than are eligible to vote has spread from a conservative activist group called Judicial Watch to Alex Jones to Breitbart all the way to secretary of state candidate Mark Meuser, who regularly records and tweets out videos alleging widespread registration fraud in the state. This argument is misleading, as The Sacramento Bee, the Los Angeles Times, and The San Diego Union Tribune have all reported, because they combine “inactive” and “active” voters lists. In California, inactive voters—who, for example, may have moved but not returned an address confirmation notice—are still eligible to vote, according to state law; they just need to show proof of residency when they arrive at the polls. A January report from the California secretary of state noted that only 75 percent of eligible voters in the state are registered.

Fraudulent claims of voter fraud don’t always come in the form of misleading numbers; they can be photos, too. Doctored or out-of-context photos and videos that purport to show voter fraud taking place were shared during the 2016 election—such as one Photoshopped image that combined two separate photos to make it look like ICE was arresting people in line to vote—and as recently as last week during the presidential election in Brazil. As with other misinformation campaigns, real images taken out of context are often used as fake “proof.”

What makes this kind of misinformation so intractable is how it has the trappings of verisimilitude—a lawsuit from a Washington, DC-based group, the buy-in of political candidates and mainstream-adjacent news organizations. It also feels right to many people, who have been primed for years to suspect that fraudulent votes are a huge problem.

It’s not that voter fraud never happens; it does. But very rarely, and nowhere near the levels suggested by right-wing conspiracy theories or the president. Here’s where you can find these numbers yourself: The nonpartisan Brennan Center for Justice, run by the New York University School of Law, has put together lots of research on the persistent myth of voter fraud.

Voter Suppression

Under the National Voter Registration Act of 1993, states are required to accurately maintain their voter rolls. The rules by which states purge voters vary by jurisdiction, and they are incredibly confusing. Errors in the process and inaccurate data have led to the disenfranchisement of thousands of eligible voters. And some states have become far more aggressive in purging voter rolls since the Supreme Court struck down aspects of the Voting Rights Act in Shelby County v. Holder.

Georgia, in particular, is facing ongoing lawsuits for voter suppression over its practices. Other states have drawn national scrutiny for moving polling places miles out of town or implementing voter ID laws that disproportionately affect certain communities.

But the issue of voter rolls can be complicated and varies by state, making it a perfect topic to sow confusion along party lines. For instance, one viral stat going around says that 700,000 voters have been removed from the voter rolls in Colorado; some have suggested this is part of the nationwide effort to purge legitimate voters. The Colorado government has pushed back, pointing out that these voters were purged over the course of a decade, according to the Republican secretary of state, Wayne Williams, for legitimate reasons.

Voting Machines

There’s also misinformation swirling around the actual hardware we use to vote. Again, this is nothing new. In the 2016 election, a video that purported to show a “rigged” machine not allowing a vote for Trump in Pennsylvania went viral, at least in part after being promoted by Russian operatives. The malfunction turned out to be user error, but it was shared as proof of voting fraud by thousands of people.

During early voting for this year’s midterms, reports emerged of machines in parts of Texas switching US senate race votes if people vote the straight party ticket. This is actually happening; according to the Texas secretary of state’s office, only 20 or so people have reported such a problem, and the government and the voting machine company blame the issues on user error. But voting experts say the problem lies with the machines themselves, which have been known to be unreliable when voting a straight party ticket for years. And while experts have also said that the machines are insecure, there does not appear to have been hacking in this case. Nevertheless, claims that this is the work of hackers or a coordinated conspiracy by Republicans have flourished.

Stories about voting machines are ripe for misinformation. After 2016, the US is on high alert for election interference: More than half of Americans say they are not too confident or not at all confident that the US election system is secure from hacking or other technological threats, according to a recent Pew survey. In both of the above cases, though, quirks of the voting machines themselves turned out to provide the more likely explanation—something to remember before drawing quick conclusions. And while progress has been uneven, it’s worth noting that election officials have taken steps to shore up the electoral system in the past few years.

Bad-Faith Campaign Messaging

Spreading misinformation and uncertainty about elections is another unfortunate electoral tradition, whether it’s by candidates, parties, or more anonymous actors. Historically, these tactics often target specific communities, such as robocall campaigns intended to suppress the black vote or fake flyers distributed on college campuses or in communities of color. This week, North Dakota’s state Democratic Party affiliate posted on its website and Facebook a warning to hunters that they may lose their licenses in other states if they vote in the election.

Politicians and their campaigns are engaged in direct disinformation targeting people likely to vote for their opponents, as The New York Times notes. This includes everything from the wrong date for election day being sent out to voters, to text messages that seem to come directly from the president. These texts are made to look like the presidential alert that went out a few weeks ago, though in this case they are telling voters that their early vote has not been recorded. The purpose seems to be merely to confuse, as the Daily Beast reported, noting that state governments aren’t sure the messages are illegal but are looking into it. Fake text messages have also popped up this campaign season, too.

Why It Matters

Voting in America is hard. It happens on a work day. People aren’t automatically registered when they hit voting age or even when they get a driver’s license in most states. The early voting process is different in every state. All of this contributes to low voter turnout, particularly in non-presidential elections.

Researchers trying to understand why people don’t vote point to myriad factors, including confusion about how to vote and whether people are eligible. It’s this problem that misinformation can so easily exacerbate. In 2007, then senator Barack Obama and Senator Chuck Schumer introduced the Deceptive Practices and Voter Intimidation Prevention Act, after high-profile cases of misleading voter tactics in the 2006 midterms. It didn’t pass, and subsequent attempts haven’t been any more successful. California recently passed a law creating an Office of Elections Cybersecurity to explicitly counter online misinformation intended to discourage voting. Facebook also recently announced a new policy to try to address misinformation on its platform that is intended to suppress the vote.

To help you recognize fact from fiction, familiarize yourself with the many sites and sources devoted to identifying misinformation. There are fact-checking sites like Snopes, where you can look up specific stories. The nonprofit investigative news organization ProPublica runs a coalition of newsrooms called Electionland dedicated to accurate reporting on the midterms, which is a fantastic resource for finding real news that matters. (WIRED is a partner on ProPublica’s Political Ads Collector project.) You can also arm yourself with tools, such as the new bot-catching Chrome extension BotCheck, which will reveal bots in your social feeds, and reverse-image-search tools, which let you figure out where an image actually originates.

With voter turnout during midterms historically low, each vote can have a large impact—particularly when it comes to local elections, which can be decided by a handful of votes. If misinformation, intentional or otherwise, can dissuade one person from showing up, that matters.

More Election Coverage from WIRED

Trump’s ‘Game of Thrones’ Tweet Is Odd, but Trademark-Infringing? Probably Not

Of all the apparatuses presidents have at their disposal for making pronouncements—press secretaries, official statements, televised addresses from the Oval Office—the one President Trump used to trumpet forthcoming sanctions on Iran is by far the strangest: a Game of Thrones meme.

On Friday morning the president posted the image below on Twitter. It’s a picture of himself emblazoned with the phrase “Sanctions Are Coming” in a typeface not that dissimilar from the one used in the Game of Thrones logo along with the date “November 5.” Subtle, it was not.

As soon as it went up, and as soon as it was clarified by the White House that the sanctions in question were indeed the ones that had been relaxed during the Obama administration and which Trump had been seeking to reimpose, Twitter went nuts. Folks began responding with memes of their own—”Indictments Are Coming” etc.—and even the show’s cast got involved. Sophie Turner, who plays Sansa Stark, replied “Ew,” and Maisie Williams (Arya Stark), in perhaps the best Twitter drag of the day, retweeted the president and just added “Not today.” (“Not today,” for those who don’t remember, is what Arya Stark’s swordfighting instructor, Syrio Forel, told her is what she should say to the god of death.)

Then HBO got in on the action, sending out a tweet reading, “How do you say trademark misuse in Dothraki?” Reached for comment the network added, “We were not aware of this messaging and would prefer our trademark not be misappropriated for political purposes.” Trump evoking the show’s logo and slogan, it seems, doesn’t sit very well with the people who actually make the show.

But could the network or creators successfully sue? Probably not. First off, it doesn’t seem likely that HBO actually wants to make a legal claim of trademark infringement. At most, the network is playing along. Trump referenced the show; they responded. Simple as that. But the response, and subsequent online chatter, did raise some questions about whether or not the president went too far.

Most likely, he didn’t.

Related Stories

If HBO were to bring a claim, it would probably be for what’s known as trademark dilution, says Daniel Nazer, a staff attorney for the Electronic Frontier Foundation’s intellectual property team. Typically, these are the kinds of claims companies make when they feel their very-famous trademarks are being used in ways that deplete the uniqueness, or dilute, their intended message. A company can’t, say, put something that looks like the Nike “swoosh” logo on the side of a commercial plane or use “Just do it.” to sell condoms.

A dilution claim also generally requires that the entity claiming infringement be able to prove the public was genuinely confused. Because Trump’s tweet wasn’t being used in commerce, and because it’s unlikely anyone thought he was legit affiliated with Game of Thrones, dilution would be a hard argument to make. “I think this would be a tough, a tough case,” Nazer says. “No one is likely to be confused that HBO is endorsing this tweet or sponsoring sanctions against Iran. My view is that this shouldn’t be a viable suit.”

Instead, Nazer says, Trump’s tweet would be treated more like a parody—legally speaking. If, for example, Saturday Night Live did a sketch about waiting for a train in New York titled “The G Train Is Coming” that pokes fun at MTA tardiness and references Game of Thrones, that’s not an infringing use. (It’s also a funny idea, SNL. Please make that sketch and credit Nazer.) As for Trump’s use of the Thrones font, the files used in typefaces can be protected, as is (presumably) the actual logo, but because Trump just uses a script that looks like the GoT emblem, the image the president tweeted is likely not infringing. It’s ironic, but the bottom line is that the man who likes to take shots at the media is protected here by the First Amendment.

The parody aspect, though, is compelling, because the metaphor doesn’t quite align. In Game of Thrones, “winter is coming” is a call to remain vigilant, and a warning that White Walkers could come and threaten the living when winter arrives. Yet winter has been coming on the show since the pilot; it’s a slow march that’s taken seven years. Trump’s “November 5” warning promises something he intends to do in a matter of days. Also, one presumes, Trump thinks the sanctions are a good idea, but the coming of winter in Game of Thrones is something most sane people in Westeros fear. It’s possible Trump wants Iran to be afraid of the sanctions, but the wordplay still doesn’t quite land.

“It’s kind of riffing on it, but it’s hard to know what the satirical or parodic intent is here,” Nazer says. “Winter in the Game of Thrones universe is kind of terrible, so I’m not sure if they really thought it through. There’s probably nothing much beyond it looks cool.”

Half an idea without any sense of its viability? Sounds about right.

More Great WIRED Stories

HBO Disappears From Dish as Monopoly Concerns Mount

When AT&T announced plans to acquire HBO’s parent company Time Warner, competitors, consumer groups, and the Department of Justice argued that the combined company would harm competition. Now those critics say their concerns are being validated.

HBO and Cinemax went dark on pay television provider Dish’s satellite and video streaming customers after Dish and HBO failed to reach a deal to replace a contract that expired at midnight on Wednesday night. It’s the first time in HBO’s history that its channels have been “blacked out” as the result of a failure to reach a deal with a television provider.

Dish and HBO offered conflicting accounts of the dispute. Dish said in a statement that AT&T wants it to “pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO.”

But HBO president Simon Sutton tells WIRED that Dish already had a similar deal to pay for a set number of subscribers, and that such deals are common in the industry. “We had proposed various changes to that going forward,” Sutton says. “We offered them lower rates, a deal that would have allowed them to pay substantially less.”

Both companies say they gave the other party the option to extend the expiring contract while negotiating a new contract. Dish claims to have offered to continue under the old contract, then settle the difference between the old and new contracts once a new agreement had been made, an offer the company claims HBO refused. Sutton says HBO offered to simply continue the old contract until a new one was finalized and that Dish declined.

Pricing disputes between content providers and distributors are common, and Dish has at times blacked out other channels—including the Spanish language network Univision, which is currently dark. What makes the conflict between HBO and Dish particularly controversial is that in addition to HBO, AT&T owns rival satellite service DirecTV and rival streaming service DirecTV Now.

When the DOJ unsuccessfully sued to block AT&T’s purchase of Time Warner last year, it warned that AT&T could use its role as a pay TV provider with national reach to pressure other providers into paying more for Time Warner programming. If a cable or satellite provider such as Dish couldn’t carry HBO, the department argued, customers could turn to DirecTV instead.

The DOJ, which is appealing a federal judge’s decision to allow the merger, says that’s what’s happening now. “This behavior, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” a DOJ spokesperson said in a statement. “We are hopeful the Court of Appeals will correct the errors of the District Court.”

The consumer group Public Knowledge agrees. “This is another reason the DC Court of Appeals should reverse the decision allowing the merger,” the organization’s senior council, John Bergmayer, said in a statement.

Sutton denies that AT&T had any influence over the negotiations with Dish, and says Dish didn’t seem interested in reaching a deal. “I think they had decided to go dark with us a long time ago,” Sutton says.

In other words, Dish’s decision to black out the channels could be a publicity stunt calculated to make AT&T look bad ahead of DOJ’s appeal.

Nonetheless, HBO has already responded to the blackout with a website suggesting other ways Dish subscribers can access HBO, including DirecTV.

More Great WIRED Stories

Learn to Fly Sikorsky's New Helicopter in Just 45 Minutes

With the possible exception of Tom Cruise, learning to fly a helicopter demands months of classroom, simulator, and in-air training. The controls feature all the logic of Bop It: Twist one hand, move the other to the left. Push one foot, then the other. Watch the instruments, but don’t forget to look at the horizon. I once spent a full day working with Airbus’ top instructors, and by the end couldn’t even keep the chopper in level flight. I was nowhere near pulling off a low hover, a move that looks simple but requires extraordinary coordination and concentration.

But last month, a group from the US Army, including one person who’d never even been in a helicopter, flew a Sikorsky S-76B helicopter up and over a small watching crowd in Fort Eustis, Virginia, hovered over an adjoining field, dropped down, adjusted their position to dodge another vehicle, then safely landed. And they did it all after as little as 45 minutes of training.

“It’s pretty neat to see the transformation from ‘I have no idea what this system does’ to ‘I can now control this system,’” says Sikorsky helicopter pilot Mark Ward, who put the newbies through their minimalist training. “This is not to say that they’re combat-ready, hardened, ready to go. But it is a testament to the ease with which they can now adapt to a nonlogical control system like a helicopter,” he says.

It’s not like these people are aeronautical savants (no offense) or leather-clad Carrie-Anne Mosses. But computers are key, as given away by the retro blocky graphic on the chopper: “Matrix Technology.” This, as you may have guessed, is no ordinary helicopter. It’s controlled by a hand-held tablet that lets wannabe pilots fly about using familiar gestures and movements, like they would to play a game or fly a quadcopter drone.

Matrix Technology is the name of Sikorsky’s program for rotorcraft that minimize, or even eliminate, the role of the human pilot. It’s part Darpa’s Alias program (that’s the Aircrew Labor In-Cockpit Automation System). Just as some automakers are approaching self-driving cars with gradually more capable driver assistance tech, the idea here is that making a chopper easier to fly is a step toward letting a computer take control.

The human on board controls the flight using a tablet and a couple of joystick-like controllers called interceptors. “It allows the onboard crew members to rapidly communicate their intent to the autonomy system, which kind of becomes like a copilot,” says Igor Cherepinsky, director of Sikorsky’s autonomy program.


Instead of learning the steps of the complicated throttle and pedal dance, the human onboard controls the flight using a tablet and a couple of joystick-like controllers called interceptors. The tablet is used for inputting mission changes, like changing the destination. The interceptors are for more immediate inputs, like a push to the right or a quick climb. But unlike in conventional flight, adjusting any of these controls leads to an input into the computer controlling the flight, requesting a change, rather than a direct movement of a flight control surface. This is fully fly-by-wire, under the control of an algorithm.

“It allows the onboard crew members to rapidly communicate their intent to the autonomy system, which kind of becomes like a copilot,” says Igor Cherepinsky, director of Sikorsky’s autonomy program. The human gives orders, the computer executes them.

Although Sikorsky put the humans in the helicopter for this demo, the system could work just as efficiently as a kind of remote control, says Cherepinsky, with the human on the ground below holding the tablet, or in a remote center, dialing in and supervising. Those applications could be useful for first responders like firefighters, who could direct aircraft over forest blazes from a safe distance.

For the military, automating more aspects of flight could help make missions safer. “Really, we want the pilot’s eyes and mind on the fight rather than holding an altitude,” says Graham Drozeski, the Darpa program manager for Alias. For Darpa, Sikorsky is now integrating its system into a UH-60 Black Hawk helicopter, for more mission-driven demonstrations next year.

In the civilian world, increased autonomy, and smarter helicopters in particular, could be a useful stepping stone on the way to fully autonomous air taxis, whisking commuters from building top to building top in Dallas and LA by 2023— if Uber has its way. At the same time, startups like SkyRyse are betting that helicopters with sensors and smarts will show that air trips can be cheaper, quicker to dispatch, and ultimately more useful than they are now. Even before they become fully autonomous, which could take years of technological and regulatory overhauls, they would lower the bar for human pilots.

Sikorsky’s system is all about augmenting the human, at least for now, Cherepinsky says. “We are all marching toward the holy grail of pushing one button on the screen saying ‘get me here,‘ point A to point B.”

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Why Is Steve Bannon a Keynote Speaker for a Gaming Conference?

The International Conference on Advances in Computer Entertainment Technology, a relatively niche academic symposium in its 15th year, is embroiled in a white-hot controversy over its keynote speaker: Steve Bannon, the former White House Chief Strategist and founding member of the right-wing publication Breitbart. According to the conference organizer, Bannon—who has no academic background in computer science or interactive design but whose policy ideas have been embraced by white nationalists—will give a speech about how he believes “economic nationalism” will allow for a higher number of minorities to get jobs in sectors like computer science and gaming. The conference, also known as ACE, is scheduled to take place at the University of Montana in December.

Since Bannon was added to the conference’s roster last week, academics, scholarly associations, and university departments around the world have called for boycotting the conference, including the Milieux Institute for Arts, Culture and Technology at Concordia University, the Canadian Game Studies Association, and the Australian Digital Games Research Association.

“Nothing of what Bannon can say represents the ACE community, or the games research community at large. His is a marginal discourse that should stay where it is, marginalized. And that’s why we ask our community to #boycottACE,” Miguel Angel Sicart, a games, art and interactive design researcher at the IT University of Copenhagen, told WIRED in an email. Bannon did not immediately return a request for comment.

Another keynote speaker, Peter Gray, also dropped out of the conference. “I have appeared, happily, on the same stage with libertarians and others with whom I disagree on many issues,” Gray, a retired Boston College psychology professor and author who studies children’s play, told WIRED in an email. “But Bannon’s alt-right brand is personally odious to me and, more importantly, by association would work against my credibility and that of the causes to which I am passionately devoted.”

While he was in the White House, Bannon reportedly helped craft a number of the Trump administration’s anti-immigrant policies, including the 2017 so-called Muslim ban. Breitbart, where Bannon was executive chairman, also played an instrumental role in GamerGate, the years’ long harassment campaign against progressive figures in tech journalism and video games. People identifying as GamerGate supporters often railed against the inclusion of more women in the games industry. “It’s stunning to me that this very wide conference would so openly take a political stance on something that seems to be fighting a huge wave of the future—which is female and non-male voices in technology,” says Carolyn Saund, a PhD student at the University of Glasgow who studies social robotics.

ACE is run by Adrian David Cheok, the director of an independent research lab called the Imagineering Institute in Malaysia and a professor at City, University of London. Cheok says he chose to invite Bannon to speak after seeing his talk on YouTube at the Black Enterprise Entrepreneurs Summit last year, which had similar economic nationalism and anti-immigration themes. As number of researchers pointed out, ACE is not a political, or even industry conference—it’s a scholarly venue meant to provide a place for academics to share their work.

“For a conference like this, the keynote is either a leading academic researcher, or someone from industry who does relevant work,” says Katharine Neil, a French game developer who holds a doctorate in computer science games research. “This is like inviting Ed Sheeran to keynote a microbiology conference. It’s unfathomable.”

One academic pointed out the only tangentially related experience Bannon possesses is his involvement with Internet Gaming Entertainment, which made a profit by having low-wage video game players in China earn virtual credits that were then sold to wealthier players in other parts of the world. “The business practices of that company alone ought to disqualify Bannon from being presented as anything other than a cynical operator,” says Jeff Watson, a professor of interactive media and games at the University of Southern California School of Cinematic Arts.

Even before its organizer invited a notorious alt-right figurehead to speak, ACE has been experiencing a series of bizarre issues this year. The website for the 2018 conference originally featured “famous Montanans” including Theodore J. Raczynski, also known as the Unabomber, a terrorist who killed three people and injured 23 others. The ACE website has since been updated to feature pictures of prominent women who worked in computing.

“People have very little sense of humor,” says Cheok. “The very first website, which was just a draft, we said, you know, who is the most famous person from Montana? And if you did a Google search it’s the Unabomber.”

Starting this the summer, the conference had issues far more serious than an offensive website. All three members of the steering committee quit in early August, after they discovered Cheok had merged ACE with another conference he chaired, the Congress on Love and Sex With Robots, without telling anyone. The committee also worried the academic standards of the event were deteriorating. “There was technically no proper review committee, we couldn’t guarantee the quality,” says one of the three departed committee members, Yoram Chisik, a human-computer interaction researcher who helped organize ACE since 2012. Several of the members on the new, larger steering committee work for Cheok’s research institute in Malaysia.

After Bannon was announced as the keynote speaker, Chisik emailed everyone listed on ACE’s website as a member of the program committee to alert them, as he wrote, to “their present association with the conference and thus however remotely with Steve Bannon and what he stands for.” He says that 10 academics responded to his email saying they had not been aware their names were being advertised as associated with ACE this year. Since October 26, four names have been removed from the program committee list on ACE’s webpage, according to a screenshot captured by the Internet Archive. Cheok personally attacked Chisik on Twitter for sending the emails.

It’s not the first time Cheok has gone after his critics on social media this way. Last year, Cheok delivered a controversial keynote address titled “Sex and Love with Robots” at the Foundations of Digital Games conference, an event originally started by Microsoft in 2006. After Cheok targeted another researcher on Twitter with personal attacks for criticizing his lecture, the Society for the Advancement of the Science of Digital Games issued a statement condemning his behavior.

Meanwhile, ACE’s Facebook page has been filled with angry comments related an entirely separate controversy. Several years ago, Steven Levy, a researcher known for his work on computer chess, started an Indiegogo campaign to create a handheld version of the classic British ZX Spectrum computer. The crowdfunding campaign has yet to deliver its product, which it originally promised would materialize over two years ago. Levy is helping to plan ACE this year, and people have flooded ACE’s page to accuse Levy of swindling them out of money.

The publishing house Springer, which has published the technical proceedings of ACE in its Lecture Notes in Computer Science series since 2012, says it will no longer be involved in the event.

“The number of submissions to ACE 2018 compared to previous years is extremely low and remains well behind expectations,” Renate Bayaz, the director of communications for Springer, wrote in a statement. “Moreover, the decision to withdraw has been made following a number of irregularities reported to us regarding the paper reviewing and selection process and regarding the organization of the ACE 2018 conference. These procedures do not comply with our publishing guidelines which require a transparent and competitive article selection and thorough peer review process.” The conference also lists as sponsors Samsung and Tencent; neither company returned requests for comment.

Cheok says things are going great. “Although you see a lot of people online saying a lot of things, negative things, the conference is still going ahead,” says Cheok. “People are still registering and actually a lot of people have said they are very keen to see Steve Bannon talk.”

Even after all the increased attention, though, there’s some evidence that ACE and its nationally recognized keynote speaker might not draw much of a crowd. Pricing for tickets to a recent Republican fundraiser with Bannon reportedly dropped from $20,000 for ten seats to free. At a political rally in Kansas Tuesday, just 17 people showed up to see Bannon speak.

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Hyper-converged backup appliances bring flexibility benefits

Data protection is in a state of evolution, transitioning to a service that offers the business more than simply backup.

Leading the charge in this move are scale-out backup appliances – purpose-built hyper-converged (HCI) hardware solutions that perform all the tasks of data protection, and more.

But why use an HCI-style appliance-based solution over traditional data protection? What can these solutions provide in addition to backup and restore?

In recent years, mainstream IT has moved through converged and on to hyper-converged infrastructure. At each stage, the benefit to the user or customer has been to provide simplification and remove complexity when building IT solutions.

We can see parallels in data protection, as suppliers have delivered products to eliminate the headache of building, managing and scaling backup solutions by developing backup appliances.

Appliances provide the same level of simplicity that IT departments love about hyper-converged infrastructure. Typically, this means taking the effort out of designing a solution that will scale with customer needs and fully exploit the hardware on which it is deployed.

Where hyper-converged meets data protection, we see appliances that look and act a lot like hyper-converged infrastructure. This provides the capability to meet backup needs and to add more value than a traditional backup design can offer.

Hyper-converged features

One aspect of hyper-converged that evolves the technology from simply packaged hardware is the integration of storage natively into the platform.

The three main hyper-converged backup appliance suppliers (discussed below) all integrate a scale-out file system within their solutions.

As HCI scales primary storage and compute capacity by adding new nodes, scale-out backup works in the same way by providing more storage capacity and throughput to a backup cluster.

Having the ability to easily scale backup is a strong operational benefit for IT organisations. Typically, backup would be reviewed and scaled only when capacity was constrained, because the overhead of extending a backup solution was time consuming and arduous.

With the scale-out appliance model, as primary capacity is increased backup capacity can be added in lockstep just by racking a new node, powering it on and connecting to the existing backup cluster. The new capacity is then instantly available for use.

As hardware ages, removing nodes from a cluster is also easy to achieve, removing the headache of either recycling offline media or moving data from deduplication appliances.

Hyper-converged licensing

The HCI model provides greater clarity around backup license charges. Suppliers typically license per node, making it easy to quantify the costs of expanding data protection capacity.

If chargeback is in use a simplified backup cost structure makes it easier to pass these costs onto the business – the cost of backup can be aligned and built into the cost of primary storage.

Extending usage

All data protection software solutions deliver added value by providing access to metadata that can be used to search backup archives. With scale-out solutions, the ability to place this metadata in one place becomes much easier and provides a single search endpoint for compliance or e-discovery.

As a storage platform in their own right, HCI backup clusters can be used for instant restores, as secondary storage for test/development environments or as the platform for object and file storage (in the case of Cohesity).

HCI backup appliance limitations

Since we last wrote about HCI backup appliances, the limitations of solutions are slowly being eroded. Suppliers are increasing their support for a broader range of applications and platforms, including bare-metal servers, eventually consistent databases and public cloud (including SaaS offerings).

One area that still hasn’t been addressed is the ability to ingest historical backups from other platforms. Many IT organisations choose to simply allow older backup environments to scale down over time, but many have data that can’t be discarded.

The first supplier to offer the mass import of backups from traditional backup media and products will make their solution much more attractive for large-scale enterprise customers.

Divergent data models

As more data is created and retained at the edge and in public cloud, so backup solutions need to cater for a divergent data model.

All of the vendors covered here offer either software-based and/or public cloud instances of their platforms. In doing this, they still need to offer a common interface for search.

As a result, we’ve seen SaaS platforms emerge, such as Rubrik’s Polaris and Cohesity’s Helios that place a management umbrella over distributed or multiple appliance clusters.

HCI backup vendor roundup

Cohesity has extended its C2000 series appliances with the introduction of the C3000 platform. The C3500 (currently the only model available) is a high-density solution, with 176TB of hard disk capacity, 7.68TB of flash and double the memory (128GB) of the C2000 series, all in a 2U server.

As Cohesity offers file and object storage in addition to backup, the C3500 meets the needs of customers looking to create archives or large-scale data repositories.

DataPlatform, the software driving the Cohesity solution, is also available as a cloud and virtual edition for public cloud and remote/branch offices respectively.

Commvault recently updated its range of HyperScale backup appliances that were originally introduced in 2017. New additions provide greater scalability at the high end and also meet the requirements of remote/branch offices.

The HS3300 offers from 174TB to 262TB of usable capacity using the same three-node architecture as the existing mid-range HS1300. The new Commvault Remote Office HS1100 appliance provides either 5TB or 15TB of usable capacity in a single 1U server, running Microsoft Windows 2016 Server. The hardware uses a combination of M.2 flash, SSDs and hard drives.

Commvault HyperScale is also available as a software solution that can be purchased to run on a wide range of server platforms, where customers want consistency in their hardware choices.

Rubrik has updated the previous 3000-series with the new 6000-series appliances. The changes are incremental between the two ranges of products, with slight increases in processor cores per CPU (8 to 10) and more memory on the high-end models. The 6000-series now benefits from support for 25GbE networking for greater throughput. Node storage capacities remain the same.

Customers can also deploy the Rubrik software on self-sourced HPE, Cisco and Dell hardware. The Rubrik platform is also available as a virtual edge appliance and as a virtual instance in public cloud.

Signal's "Sealed Sender" Is a Clever New Way to Shield Your Identity

A key part of what makes Signal the leading encrypted messaging app is its effort to minimize the amount of data or metadata each message leaves behind. The messages themselves are fully encrypted as they move across Signal’s infrastructure, and the service doesn’t store logs of information like who sends messages to each other, or when. On Monday, the nonprofit that develops Signal announced a new initiative to take those protections even further. Now, it hopes to encrypt even information about which users are messaging each other on the platform.

As much as it values privacy, Signal still needs to see where messages are going so that it can deliver them to the right account. The service has also relied on seeing what account a message came from to help verify that the sender is legit, limit the number of messages an account sends in a period of time to prevent it from spewing spam, and offer other types of anti-abuse checks.

But having access to metadata about the sender and recipient—essentially the address and return address on the outside of letters—offers a lot of information about how people use Signal and with whom they associate. Think of it as the address and return address on the envelope of a physical letter. So Signal’s developers created workarounds that will now allow the app to encrypt not just the contents of messages, but the identity of the sender.

“While the service always needs to know where a message should be delivered, ideally it shouldn’t need to know who the sender is,” Moxie Marlinspike, the creator of Signal, wrote on Monday. “It would be better if the service could handle packages where only the destination is written on the outside, with a blank space where the ‘from’ address used to be.”

Currently, Signal is testing this “sealed sender” feature in its beta release. Since the mechanism removes Signal’s ability to validate senders, the service is adding workarounds that still let users verify who sent incoming messages, and reduce their chance of receiving abusive content. Most importantly, Signal will only allow “sealed sender” messages to go between accounts that have already established trust, particularly by being in each others’ contact lists. If you block someone Signal has made cryptographic tweaks so they will still be barred from messaging you—even if you are in each others’ contacts.

Thanks to the change, if Signal is compromised, an attacker sitting inside the service will only see encrypted messages going to their destinations, and won’t be able to see where they came from. As “sealed sender” rolls out, users will be able to turn on a status icon if they want an indication of when messages have been sent using the scheme.

Sort of like open DMs on Twitter, Signal will also provide an option to receive sealed sender messages from anyone on the service, not just trusted accounts and contacts. “This comes at the increased risk of abuse, but allows for every incoming message to be sent with ‘sealed sender,'” Marlinspike writes.

“It’s a real step up,” says Johns Hopkins cryptographer Matthew Green. “The service will still reveal IP addresses, but those are probably not logged by Signal, whereas sender usernames probably were, at least for undelivered messages.”

Signal uses Amazon Web Services for hosting, and says that it is still working on finding a viable way to encrypt IP addresses and other metadata that could theoretically allow an attacker to perform certain types of user traffic analysis. And encrypted messaging still isn’t a magic bullet, especially if you leave message threads on your device. But Green emphasizes that every incremental step is valuable. The difficulty of developing the technical frameworks for these steps is one reason WhatsApp cofounder Brian Acton donated $50 million in February to support Signal’s development. The more of a barren data wasteland it is inside of Signal, the better.

More Great WIRED Stories

Intel says more women, blacks in workforce after diversity push

FILE PHOTO: The Intel logo is shown at E3, the world’s largest video game industry convention in Los Angeles, California, U.S. June 12, 2018. REUTERS/Mike Blake/File Photo

SAN FRANCISCO (Reuters) – Intel Corp has increased the ratio of women and African-Americans in its workforce after three years of a high-profile effort to improve diversity, the U.S. microchip maker said in a report released on Monday.

Intel still lags behind several large U.S. technology companies in terms of women and ahead of many for African Americans and Hispanics, the report showed. Chronic underrepresentation of minorities has been a source of concern for years at tech companies.

Overall, women comprised 26.8 percent of Intel’s U.S. workforce in 2018, up from 24.7 percent in 2015. Women in leadership positions grew to 20.7 percent from 17.7 percent.

The percentage of African Americans at Intel has risen to nearly 5 percent from 3.5 percent in 2015 and Hispanics rose to 9.2 percent from 8.3 percent.

“Although we are among the leaders in African American representation in the tech industry, we are still not satisfied,” Barbara Whye, Intel’s chief diversity and inclusion officer said by email. The company will continue to work with historically black colleges and the Oakland Unified School District in California, she added.

Without providing figures, Intel said it had reached “full representation” two years ahead of its goal based on skilled minorities in the available workforce.

In 2015, Intel established a $300 million fund to be used by 2020 to improve diversity. Whites make up 46.2 percent of the workforce at the company, and Asians 38.9 percent, according to Intel.

Intel’s African American 2018 representation was better than at Facebook Inc, Alphabet Inc, and Microsoft Corp, according to the companies’ latest data.

But its female representation was behind Facebook, Alphabet, Inc, Apple Inc , and only ahead of Microsoft.

Reporting By Jane Lanhee Lee; Editing by Richard Chang

IBM acquires Red Hat

IBM has agreed to acquire Red Hat for $190 per share in cash. The total value of the deal is approximately $34 billion, making this the biggest Linux or open-source business deal ever.

Red Hat is the leading corporate Linux company. Prior to this deal, Red Hat had a market capitalization of about $20.5 billion.

The market hasn’t loved Red Hat recently. Red Hat missed its most recent revenue estimates and its guidance fell below Wall Street targets. That said, the company subscription revenue was still at 20 percent year over year to $722 million. Red Hat was still on pace to become the first Linux or open-source company to break the billion-dollar-a-quarter barrier.

IBM CEO Ginni Rometty focused on the cloud benefits of IBM acquiring Red Hat rather than Linux. “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. IBM will become the world’s number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

Rometty continued:

“Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs. The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

“Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, Red Hat’s CEO. “Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience–all while preserving our unique culture and unwavering commitment to open source innovation.”

In the 2000s, there were rumors that Oracle, Microsoft, and, yes, IBM might acquire Red Hat. Nothing came of these stories. Today is a different story, which reshapes the Linux, open-source, and cloud worlds.

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Tesla's Elon Musk says tweet that led to $20 million fine 'Worth It'

FILE PHOTO: Tesla Motors CEO Elon Musk speaks during the National Governors Association Summer Meeting in Providence, Rhode Island, U.S., July 15, 2017. REUTERS/Brian Snyder/File Photo

(Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk said the tweet that cost him and the company $20 million in fines each by the U.S. Securities and Exchange Commision was “Worth It”.

The tweet, sent late Friday evening less than an hour before Musk tweeted that he would take a break from Twitter “for a few days,” was in response to a question from a Twitter follower.

The SEC in September charged Musk, 47, with misleading investors with tweets on Aug. 7 that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuing market chaos hurt investors, regulators claimed.

Tesla Inc and Elon Musk have agreed to pay $20 million each to financial regulators and the billionaire will step down as the company’s chairman but remain as chief executive, under a settlement.

Under the settlement agreement, Tesla needs to appoint an independent chairman by Nov. 13.

Reporting by Kenneth Li; Editing by Chizu Nomiyama

3 Ways to Help Your Brand Achieve 'Verb' Status

In March of 2014, Zillow made it onto Jeopardy with the answer: “Zestimate -; the value of your home at this website.” When a history professor named Babu Srinivasan asked the question, “What is Zillow?” I knew that we’d entered pop culture in a big way. Babu probably had no idea how pumped we all were when he said those three words.

We had bigger moments, like when we made our first acquisition, launched our first app or went public in 2011. But making Jeopardy was a big deal because it signaled that we’d entered the vernacular of our audience. We’d become a verb synonymous with home. Companies like Uber, Netflix and Venmo have all entered our everyday vernacular too.

Becoming a verb gives you an incredible leg up on the competition because your brand becomes synonymous with an entire category. What steps can you take to put your brand on the path to verb status?

1. Know who you are as a company.

One factor that largely contributed to Zillow reaching verb status was communication. From the moment we founded the company, we valued comms as a core competency. Some businesses don’t get how vital communication is until they run into some sort of trouble that only comms can help them out of. Just like the HR department, the PR function should be a strategic differentiator, not just a risk mitigator.

Think hard about how to message your brand, how to pitch it and if there are interesting ways to package your data or insights for your target audiences. It’s not enough to make great stuff; you have to deliver it in an attention-getting way that people can understand and follow.

Admittedly, great communication is easier when you have something with mainstream appeal. It’s harder to make a compelling case for a B2B service, but that’s where communication becomes vital. For example, I love when I get email from founders with a 100-word description of their company. It’s really smart because the brevity forces you to articulate your value proposition. You need to be good at that throughout your life as a company, so valuing it from the start is a good muscle to build.

2. Provide a new way of doing something.

Looking for real estate data used to be like searching for something in a dark room. You had to look across multiple resources like tax records at the county registrar’s office and resources like MLS books (printed weekly with listings). It was disparate and complicated, reserved for the computational geniuses and Nancy Drews of the world. Zillow turned on the lights for consumers, converting complex data on every home into insights even kids could understand. Because we were the first to do this, people began to associate the action of looking up info on a home with Zillow.

Other “verb” companies have gotten this right too. Consider Venmo. While banks have allowed people to transfer cash for decades, the process had been clunky and mostly offline. Venmo provided a new way: a peer-to-peer transaction platform that’s fun and social, not cumbersome. To become a verb, you have to dramatically improve an existing service or create a new one. That’s where innovation comes in.

3. Keep proving it.

When you’re on the path to becoming a verb, you can’t get too comfortable. Others will try to follow in your footsteps, and you have to keep innovating.  

In Zillow’s case, we still need to be the best at what we do when it comes to search and insights, and we need to continue to be the most trusted resource out there. And that requires incremental innovation — harnessing the latest technology and consumer insights to give people what they want and expect. Continuing to hone what you’ve been known for is crucial, but to get your business to the next level you also need to expand your definition.

That requires transformational innovation. Netflix, for example, began by mailing DVDs to consumers and evolved to become a streaming platform with original content. Today, when we think of content streaming services, Netflix is the dominant player thanks to its constant evolution.

Stay focused on your mission.

But innovation needs a focal point. It needs a mission so you always know who you’re “proving it” to. Our mission is to build the largest, most trusted and vibrant home-related marketplace in the world, and to do that we have to continually prove our value to the consumer.

If we start innovating on behalf of anyone’s interest but the consumer’s, we lose our ability to prove it. Always ask who you are proving yourself to with the decisions you make; the answer should always be your audience.  

Microsoft overtakes Amazon as second most valuable U.S. company

SAN FRANCISCO (Reuters) – Microsoft Corp (MSFT.O) regained its spot as the second most valuable U.S. company on Friday after a disappointing quarterly report from (AMZN.O) wiped $65 billion off the online retailer’s market capitalization.

A Microsoft store is pictured in New York City, New York, U.S., August 21, 2018. REUTERS/Carlo Allegri

Apple Inc (AAPL.O) tops the list at over $1 trillion after crossing that threshold in September. Microsoft’s market capitalization was Wall Street’s highest in late 1998 through early 2000 before the dot-com bubble burst.

Amazon’s shares dropped 7 percent, the most in nearly three years after its holiday season sales outlook missed targets, fanning concerns that Wall Street’s tech darlings are finally starting to face stronger competition.

Microsoft fell a more modest 2 percent in a broad technology sell-off that was also driven by a weaker-than-expected report from Google-parent Alphabet Inc (GOOGL.O), leaving the Nasdaq down 2.1 percent at midday.

(Graphic: Market cap – Apple, Amazon and Microsoft –

Shares of Microsoft remain up nearly 4 percent from Wednesday, when the four-decade-old software company beat quarterly profit expectations, driven by its cloud computing business that competes with Amazon’s.

Its stock market value on Friday stood at $823 billion, on track to close above Amazon’s for the first time since April, when it gave up its spot as second largest company by market capitalization.

Amazon was worth $805 billion on Friday, after falling below Microsoft’s in extended trade on Thursday. The drop was equivalent to the combined values of Target Corp (TGT.N) and Corning Inc (GLW.N).

Amazon’s tumble left it up around 40 percent year to date, while Microsoft has gained about 25 percent in 2018. On Wednesday, Amazon’s stock traded at the equivalent of 70 times expected earnings, its lowest level since 2011.

The average analyst price target for Microsoft puts its market cap at $963 billion, while the average price target for Amazon values it at $1.068 trillion.

Apple will report quarterly results on Thursday.

Reporting by Noel Randewich in San Francisco; Editing by Richard Chang

Shopify posts surprise third-quarter profit

(Reuters) – Canada’s Shopify Inc reported a surprise quarterly profit on Thursday as more subscribers and merchants signed up to use its platform, sending its U.S. listed shares up 4 percent before the bell.

The logo of Shopify is seen outside its headquarters in Ottawa, Ontario, Canada, September 28, 2018. REUTERS/Chris Wattie

The Ottawa-based company, whose software enables merchants to sell everything from infant formula to cosmetics online, said total subscription revenue in the quarter rose 46 percent to $121 million.

Expenses jumped 61 percent to $181.1 million as Shopify spent heavily to boost its market share in a competitive e-commerce industry, even opening its first bric-and-mortar store to sign up more entrepreneurs.

The company said gross merchandising volume (GMV), or the total sales by all vendors using Shopify’s software, rose 55 percent in the third quarter compared with the prior year. However, it is lower than the 56 percent jump in the second quarter.

The company, which helps e-commerce companies build their online stores, said net loss widened to $23.2 million, or 22 cents per share, in the third quarter ended Sept. 30, from $9.4 million, or 9 cents per share, a year earlier.

Excluding items, the company posted a profit of 4 cents per share, compared with a loss of 2 cents per share that analysts were expecting, according to Refinitiv data.

Revenue rose to $270.1 million from $171.5 million.

Reporting by Shanti S Nair in Bengaluru; Editing by Supriya Kurane

Wary of crypto, UK government blocks Royal Mint's digital gold

LONDON (Reuters) – Britain’s Royal Mint has frozen plans to launch a digital gold token after a partnership with U.S. exchange group CME failed and the government vetoed a plan to have the tokens trade on a cryptocurrency exchange, three sources told Reuters.

FILE PHOTO: A tray of bullion grade 2017 Sovereigns are seen at The Royal Mint, in Llantrisant, Wales, Britain, January 25, 2017. REUTERS/Rebecca Naden/File Photo

The demise of the potentially ground-breaking project, named Royal Mint Gold (RMG), highlights the wariness of governments to become involved in the largely unregulated world of cyptocurrencies, which exploded into the public eye last year with the stellar rise of bitcoin.

As other mints and fintech startups race to set up similar products, it could squander the chances of Britain’s Mint leading the field to build gold into a multi-billion dollar digital asset class.

It also reflects a cooling of enthusiasm towards digital assets at the CME, three sources said.

The project would have been the first time a government of a developed economy had become directly involved with a crypto currency exchange, analysts and traders said.

The 1,100-year old Mint announced its plan to issue tokens worth up to $1 billion on a blockchain-based trading platform run by CME in 2016, saying they would give investors an easy way to buy and trade physical gold held in its vaults.

Royal Mint Gold was to launch in the autumn of 2017, but CME decided at the last minute to pull out, leaving the Mint without a trading venue, sources said.

“CME’s management changed, and they walked away, didn’t want to get involved,” one of the sources said.

When a blindsided Mint sought to save the project by partnering with a cryptocurrency exchange, Britain’s finance ministry in early 2018 refused to permit it, seeing the union as too big a gamble with the reputation of the government and the Mint, the sources added.

The Mint is 100 percent owned by the government.

Asked for comment, the Mint said its digital gold had been due to launch in spring this year. “Sadly, due to market conditions this did not prove possible at this time, but we will revisit this if and when market conditions are right,” it said.

A Treasury spokesman referred Reuters’ questions to the Mint. CME said it was “continuing to assess client demand with our partner and have nothing new to report at this time.”

Governments are wary of cryptocurrencies, and few international standards have emerged to tame extreme price volatility, regular thefts from exchanges and the risk that digital currencies could be used to launder money or finance terrorism.

In Britain cryptocurrency exchanges remain unregulated. Its finance ministry, central bank and financial watchdog are looking at whether rules are needed for cryptocurrencies and the use of blockchain technology in finance.


Gold is seen as a natural fit with cryptocurrencies because both assets attract investors looking for alternatives to state-sponsored monetary systems which they distrust.

The Mint’s plan was similar to a type of digital money known as stable coins that are pegged to major currencies or other assets to avoid the volatility suffered by bitcoin and others.

The Mint had hoped to appeal to investors wanting digital assets but with the reassurance of a trusted issuer and to create a new revenue stream as use of mass circulation coins, its core business for more than a millennium, dwindles.

Royal Mint Gold also fit into a push by CME to develop digital asset classes and blockchain technologies. CME launched bitcoin futures contracts last year, one of the first to do so, and has invested in digital technology startups through a ventures arm.

But CME’s priorities shifted after CEO Phupinder Gill retired in late 2016 and Sandra Ro, CME’s head of digitization, left in July 2017, sources said.

“There was a change in strategy,” said one source, adding that digitization was de-emphasized.

Asked to comment, CME said: “It is not correct to say we have ‘de-emphasised’ digitization and remain committed to pursuing our digitization strategy.”

After the government vetoed the plan to trade Royal Mint Gold on a crypto exchange, the Mint’s new chief executive Anne Jessop, appointed in February 2018, decided to shut the project down, the sources said.

Around four staff in London were fired in March and a further 7-8 were made redundant in Wales, where the Mint is also based, in May. The project is now frozen, the sources said.

Meanwhile, others are launching rival products.

Australia’s Perth Mint and the Royal Canadian Mint are involved with digital gold products that launched this year and trade using technology supplied by fintech startups. Both mints declined to say how much gold had been bought through these platforms.

Gold-backed cryptocurrencies have also proliferated, though none has yet achieved the success of cryptos such as bitcoin, Etherium and Ripple, which have attracted hundreds of billions of dollars in investment.

Reporting by Peter Hobson; Additional reporting by Thomas Wilson; Editing by Veronica Brown and David Evans

Toshiba Memory to go public as soon as next autumn: Kyodo

TOKYO (Reuters) – Toshiba Memory Corp, the world’s No. 2 producer of NAND flash memory chips, will go public as soon as the autumn of next year, Kyodo News reported on Wednesday.

Toshiba Corp sold Toshiba Memory in June to a consortium led by Bain Capital LP, which also included Apple Inc, South Korean chipmaker SK Hynix, Dell Technologies and Seagate Technology.

When asked about the Kyodo News report, a spokesman from Toshiba Memory said there is no change to its plans to go public in the next two to three years and that it has not made a decision on when specifically it will launch its initial public offering.

The sale of the chip unit helped save Toshiba Corp from years of financial crisis brought about by accounting scandals and billions of dollars in cost-overruns at its U.S. nuclear unit Westinghouse.

Reporting by Yoshiyasu Shida, writing by Stanley White; Editing by Vyas Mohan