Behind flashy IPO of Japan's Mercari lies a thriving thrift economy

TOKYO (Reuters) – When flea market app Mercari makes its market debut on Tuesday, it will mark the appearance of one of Japan’s rarest beasts: a tech unicorn.

FILE PHOTO: The logo of Mercari is displayed at the company’s Tokyo headquarters in Tokyo, Japan, June 15, 2018. REUTERS/Issei Kato

In most countries, a billion-dollar IPO might suggest the return of an equity boom. But in Japan, it sheds light on a “thrift economy” for second-hand items, which is thriving even as the Bank of Japan tries to stoke inflation.

Mercari’s app allows users to buy and sell from each other, swiping and tapping their way through items as diverse as designer clothes and toilet paper tubes.

It has been downloaded 71 million times as Japanese shoppers, faced with weak wage growth and armed with smartphones, have shed their inhibitions about used goods.

“The deflationary mindset is alive and well,” said Marcel Thieliant, senior Japan economist at Capital Economics, citing data showing that households expect incomes to keep falling in the year ahead.

Founded in 2013, Mercari and information technology startup Preferred Networks Inc are Japan’s only two unicorns – startups with valuations above $1 billion – according to data provider CB Insights.

Mercari joins a series of Japanese companies that have made their name by playing the counter-cyclical game. Uniqlo parent Fast Retailing Co Ltd and home furnishings chain Nitori Holdings Co Ltd, both known for affordable pricing, have seen years of expansion.

Mercari, however, reduces costs further by allowing consumers to deal directly with each other, cutting out shops altogether.

Novelty goods are displayed at Mercari’s Tokyo headquarters in Tokyo, Japan, June 15, 2018. REUTERS/Issei Kato

That’s bad news for the country’s retailers, who have been hammered by decades of weak consumption and falling prices despite the central bank’s aggressive efforts.

Jun Shimada, a senior executive at major Japanese fashion company Bay Crew’s Group, said the rise of Mercari could end up to be a bigger threat to retailers than internet retailers like Amazon. Second-hand clothing, except for rarer items sold as vintage, used to carry a stigma, he said.

“Young people in particular no longer have any resistance to buying items that do not fall into the vintage category,” he said.

One woman who bought an Italian leather handbag at one of Bay Crew’s stores turned to Mercari after having second thoughts, uploading Instagram-style shots with her smartphone.

“I made this impulse purchase because I fell in love with the bluish-green color of the leather, but ended up carrying it less than 10 times because it didn’t match any of my clothes,” she said, trying to resell it for around 10,000 yen ($90.56).

Other online businesses are following in Mercari’s steps, with Rakuten Inc’s Rakuma app and Start Today Co Ltd’s Zozoused offering used-goods services. And in February eBay Inc announced it was buying Giosis Pte Ltd’s Japanese operations, including the online shopping platform Qoo10.

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Economists say that in theory, sellers and buyers on such sites can spend the money they save. But users are also more likely to think twice about buying items at full price, pushing down the prices of new goods.

Consumers “can use the internet to compare the prices of goods and services nationwide or even globally,” Bank of Japan Governor Haruhiko Kuroda told reporters on Friday, adding that “recently some people say this is a reason why prices of goods and services are not rising that much.”

The BOJ has been aiming for 2 percent consumer inflation, but has struggled to achieve that despite five years of massive stimulus.

Core consumer inflation peaked at a 1 percent annual increase in February but has since slowed to a 0.7 percent annual increase in April, raising concern among economists inside and outside the central bank that inflationary pressure is waning.

In an effort to understand what is behind the weak numbers, the BOJ is likely to scrutinise several factors, including whether online shopping is driving down prices, according to sources familiar with the central bank’s thinking.

The bank is likely to reveal its findings at a policy meeting in July, when it issues fresh quarterly forecasts on growth and inflation.

It said in a quarterly report in April that “changes in distribution and deregulation have intensified competition for highly-commoditised goods and services.”

But Kentaro Arita, senior economist at Mizuho Research Institute, said that in the long run, Mercari would be a positive contributor to the economy. He said the company would foster innovation and efficiency, forcing retailers to raise their game.

“Mercari and companies like it force bricks-and-mortar retailers to focus more on strengthening their brand and offering something unique to distinguish themselves,” said Arita, who said he uses Mercari.

Reporting by Sam Nussey, Stanley White; and Leika Kihara; Editing by Gerry Doyle

How technology can help tackle the plastics pollution crisis

Lush Digital

The Lush Lens App in the Milan Naked Shop

Retailers are under increasing pressure to cut down on unnecessary packaging, and some shops are showing what a plastic-free, tech-enabled future could look like.

It’s a sad fact that plastic debris in our oceans is killing marine wildlife at a staggering rate. With plastics pollution spiralling out of control, shops are under pressure to cut down on their use of unnecessary packaging. Some of the greatest culprits in generating harmful waste that often ends up in the oceans or landfill are cosmetics companies – just think about how many bottles and pots of shampoo, conditioner, moisturiser, shower gels and other grooming products the average person keeps in their bathroom and it’s easy to see how it very quickly adds up.

The increased awareness of the problem among consumers means that this is a commercial opportunity for those offering environmentally friendly alternatives, however. And this is what UK handmade cosmetics company Lush has been doing for many years, making many products such as shampoo in solid form (which according to the company saves nearly 6 million plastic bottles a year) where they require neither packaging nor preservatives and are offered in what the company refers to as “naked” form (where at most buyers have the option to slip it into a small paper bag or have it wrapped in some greaseproof paper).

Currently over 40% of Lush’s product range is completely free of packaging, but in early June the company went a step further and opened a shop in Milan, Italy which is 100% packaging free, relying on technology to keep customers informed instead. The trial is currently running exclusively on Fairphone, and customers visiting the Milan shop have access to four devices, yet they hope to roll it out to global customers in the near future.

Powered by Tensorflow from Google, the Lush Lens app uses AI and product recognition to eliminate the need for packaging. In its current beta version, the information comes up as a simple text pop-up, but there are plans to explore more possibilities around immersive technologies such as Augmented Reality to provide more information about the sourcing of ingredients, the process of making products, provenance about who actually made each batch, and suggestions on how to use it. For those familiar with the company’s rather eclectic and unusual offerings, those features would all make a lot of sense.

With this prototype mobile app we’ve put new technologies such as AI to a good use in our mission to eliminate more packaging and further educate our customers on our unique cosmetics,” Says Adam Goswell, Technology R&D at Lush. “We believe in the ethical use of data, so all the information Lush has is secure and used in a transparent way. We’re increasingly part of the tech community, providing open source solutions where before only monopolies existed. This is in line with a company ethos that aims to give more than it takes, act transparently, push innovation and raise industry standards.

Lush is well-known for its activism, and have – if you’ll excuse the pun – recently got into hot water for one of their more controversial campaigns which was meant to raise awareness against abusive surveillance practices carried out by certain police force branches in the UK. Having spoken to its founders (Lush is very much a family business at its core in spite of its multimillion-pound global turnover) it is clear that politics and product are very much intertwined in their strategy.

In the past few years Jack Constantine – the son of Lush’s Founders Mark and Mo Constantine  has focused on developing in-house technology under the Lush Digital umbrella, including building an in-house R&D team called Tech Warriors. When we last spoke they were enthusiastic about the possibility of using image recognition and AR functionality to allow people to find out about the products in a shop simply by pointing their smartphone camera at them.

The company sees technology as playing a vital role in achieving their commercial-political goals, which translates not only in advocating for digital rights, embracing open-source technologies and adopting ethical sourcing of hardware, but also in their investment in new technologies such as 3D printing, artificial intelligence, image recognition, and immersive tech such as augmented reality.

Technology doesn’t have to be unethical. We believe tech can be built for the greater good and impact positive social change,” Constantine agrees. “Just like its approach to sourcing ingredients and testing products, Lush believes in continuously challenging norms and driving best practice when it comes to business ethics. One of those key principles is the ethical use of data and technology.

Gold Bullish On Fed Hike 3

Gold weathered the Federal Reserve’s 7th rate hike of this cycle this week. Gold-futures speculators and to a lesser extent gold investors have long feared Fed rate hikes, selling ahead of them. Higher rates are viewed as the nemesis of zero-yielding gold. But contrary to this popular belief, past Fed rate hikes have proven very bullish for gold. This latest hike once again leaves gold set up for a major rally in coming months.

The Fed’s Federal Open Market Committee meets 8 times per year to make monetary-policy decisions. These can really impact the financial markets, and thus are closely watched by gold-futures speculators. These elite traders wield wildly-outsized influence on short-term gold price action due to the truly extreme leverage inherent in gold-futures trading. What they do before and after FOMC decisions really impacts gold.

This week’s latest Fed rate hike was universally expected. Trading in the federal-funds-futures market effectively implies rate-hike odds. Way back in mid-April they shot up to 100% for this week’s meeting, then stayed there for 5 weeks. In the last several weeks they averaged 91%. So everyone knew another Fed rate hike was coming. That’s typical, as the FOMC doesn’t want to surprise the markets and ignite selloffs.

The big unknown going into the every-other FOMC meetings followed by press conferences from the Fed chairman is the future rate-hike outlooks. Top FOMC officials’ individual federal-funds-rate outlooks are summarized in a chart traders call the “dot plot”. That was hawkish this week, with 2018’s total expected rate hikes climbing from 3 to 4. More near-term rate hikes projected have really hammered gold in the past.

But on this week’s Fed Day gold didn’t plunge despite these hawkish dots and 7th rate hike of this cycle. Gold was around $1297 as the FOMC statement and dot plot were released that afternoon, and only fell modestly to $1293 after that. Then it started rallying back a half-hour later during Jerome Powell’s post-decision press conference. Gold closed that day at $1299, actually rallying 0.3% through a hawkish FOMC.

Gold-futures speculators usually sell leading into the every-other “live” FOMC meetings with dot plots and press conferences. Incidentally the first thing the new chairman Powell discussed this week is he is going to begin holding press conferences after all 8 FOMC meetings each year starting in January! So the gold-futures-driven gold volatility surrounding the Fed could very well become more frequent in 2019 and beyond.

All that gold-futures selling before FOMC meetings leaves speculators’ positions too bearish. And the Fed tries hard to never majorly surprise on the hawkish side anyway. So after FOMC decisions the very gold-futures speculators who sold aggressively leading into them often start buying back in. This trading dynamic forces gold lower leading into Fed Days, and then drives big rebound rallies coming out of them.

This week a single gold-futures contract controlling 100 troy ounces of gold worth about $130,000 had a maintenance-margin requirement of just $3100! So futures traders can run up to 41.9x leverage to gold, which is mind-boggling. The legal limit in the stock markets has been 2x for decades. At 40x each dollar deployed in gold futures has 40x the impact on the gold price as another dollar invested in gold outright.

So even if you don’t trade gold futures like the vast majority of gold investors, they are important to watch since they dominate short-term gold action. This first chart looks at gold and speculators’ total long and short positions in gold futures over this Fed-rate-hike cycle. Each of these 7 rate hikes is highlighted, showing how gold sells off into them before rallying out of them mostly driven by speculators’ gold-futures trading.

Back in late 2015, the FOMC hadn’t hiked its FFR for nearly a decade. At its late-October 2015 meeting, the FOMC statement warned the Fed was “determining whether it will be appropriate to raise the target range at its next meeting”. That hawkish signal shocked gold-futures traders and they started dumping long contracts while rapidly ramping short sales. Gold was crushed on that, falling 9.1% over the next 7 weeks.

On the eve of that fateful mid-December FOMC decision to start hiking rates again for the first time in 9.5 years, everyone was convinced that was bad news for gold. Gold yields nothing, so surely higher bond yields would divert investment away from gold. It sounds logical, but history has proven the opposite. So just days before that initial Fed rate hike, I wrote a bullish essay showing how gold thrived in past rate-hike cycles.

Gold surged 1.1% the day of that first hike, but plunged 2.1% to a 6.1-year secular low of $1051 the very next day. Foreign traders had fled overnight following that rate hike. But gold started powering higher right after that. By mid-February 2016 gold had roared back up 18.5% on all that post-FOMC-rebound spec long buying and short covering! Gold formally entered a new bull market at +20% a few weeks later.

The Fed’s second rate hike of this cycle came exactly a year after the first in mid-December 2016. Again the Fed telegraphed another hike, so again gold-futures speculators fled longs and ramped shorts. In the 5 weeks leading into that FOMC meeting, gold plunged 11.2%. That was really exacerbated by the extreme Trumphoria stock-market rally in the wake of Trump’s surprise election victory early in that same span.

While everyone saw that Fed hike coming, the dot-plot rate-hike outlook of top FOMC officials climbed from 2 additional rate hikes in 2017 to 3. So spec gold-futures selling exploded, battering gold 1.4% lower that day and another 1.2% to $1128 the next. That hawkish FOMC surprise of more rate hikes faster was the worst-case Fed-decision scenario for gold. The general gold bearishness was epically high.

But gold didn’t plunge from there like everyone expected. Instead it rebounded dramatically higher with an 11.4% rally over the next 10 weeks or so! When speculators’ gold-futures longs get too low and/or their shorts get too high heading into any FOMC decision, these excessive trades have to be reversed in its wake. Any pre-FOMC gold-futures selling directly translates into symmetrical post-FOMC buying.

Since the FOMC spaced out its initial couple hikes of this cycle by an entire year, there was rightfully a lot of skepticism about when the third would come. So up until just a couple weeks out from the mid-March-2017 FOMC meeting, the FF-futures-implied rate-hike odds were just 22%. But Fed officials jawboned them up to 95% by a couple days before that meeting. Gold was again hit on Fed-rate-hike fears, falling 4.7%.

But right after that third rate hike of this cycle, gold immediately caught a bid and surged 7.6% higher over the next 5 weeks or so. That dot plot kept the 2017 rate-hike outlook at 3 total, not upping it to 4 as the gold-futures speculators expected. So again they were forced to admit their pre-FOMC bearishness was way overdone and buy back in. Fed rate hikes aren’t bearish for gold despite traders’ irrational expectations.

After being wildly wrong for three Fed rate hikes in a row, some of the gold-futures speculators started to pay attention heading into this cycle’s 4th hike in mid-June 2017. But gold still fell 2.1% over several trading days leading into it. That hike too was universally expected like nearly all of them, and the dot plot was neutral staying at 3 total hikes in 2017. But the gold-futures selling broke precedent to continue that time.

In the first week or so after that 4th hike last summer, gold fell 1.9%. Those post-hike losses extended to 4.2% total by early July. That particular rate hike was unique to that point in that it came to pass early in gold’s summer doldrums. In June and early July, gold investment demand wanes so it usually just drifts sideways to lower. Thus this decades-old seasonal lull effectively delayed that post-FOMC gold reaction rally.

Once last year’s summer-doldrums low passed, gold again took off like a rocket as specs scrambled to normalize their excessively-bearish gold-futures bets. So gold surged 11.2% higher between early July and early September on heavy gold-futures buying. This gold reaction to last June’s 4th Fed rate hike may be the best template of what to expect after this June’s 7th one. Summer may again delay gold’s rebound.

But whether gold’s usual post-FOMC rally starts now or a few weeks from now is ultimately irrelevant in the grand scheme. The seasonally-weak summer doldrums don’t change the fact that speculators’ gold-futures bets get too extreme heading into telegraphed Fed rate hikes, so they have to be normalized in the FOMC’s wake. This gold-bullish pattern has held true to varying degrees after all 6 previous hikes of this cycle.

The Fed took a break from hiking in September 2017 to announce its wildly-unprecedented quantitative-tightening campaign to start to unwind long years and trillions of dollars of QE money printing. So the rate hikes resumed at that every-other-FOMC-meeting tempo in mid-December 2017. Again the goofy gold-futures traders started fearing another hawkish dot plot, so gold fell 4.0% in several weeks leading in to it.

But that 5th rate hike of this cycle was accompanied by a neutral dot plot forecasting 3 more rate hikes in 2018 instead of the 4 gold-futures traders expected. So again they had to admit their bearishness was way overdone and buy back in aggressively. So over the next 6 weeks after that FOMC meeting, gold shot 9.2% higher to $1358 nearing a major breakout! How can anyone believe rate hikes are bearish for gold?

The 6th hike of this cycle came right on schedule in late March this year, accompanied by a neutral dot plot still forecasting 3 total rate hikes in 2018. But again the gold-futures traders worried leading into that FOMC decision, pushing gold 3.2% lower over the prior month or so. They started buying back in that very Fed Day, so gold sharply rebounded 3.3% higher to $1353 within 4 trading days of that Fed rate hike.

This gold-futures-driven gold price action surrounding Fed rate hikes is crystal-clear. Gold falls leading into FOMC meetings with expected hikes on fears of hawkish rate-hike forecasts in the dot plots. All that pre-FOMC selling leaves speculators’ collective gold-futures bets way too bearish, with longs too low and/or shorts too high. Then once the Fed acts and specs realize gold isn’t collapsing, they quickly buy back in.

The Fed’s again-universally-expected 7th rate hike of this cycle came this Wednesday. And despite the gold-bullish examples of all the prior 6 hikes, gold-futures traders again sold leading into it. Starting back in mid-April, they embarked on a major long liquidation that pushed gold 4.0% lower by this week’s FOMC eve. In their defense that was mostly in response to a US dollar short squeeze, so maybe they are learning.

Gold-futures data is released weekly in the CFTC’s famous Commitments of Traders reports. These are published late Friday afternoons current to preceding Tuesday closes. So the latest data available when this essay was published is from the CoT week ending June 5th. Even then a week before this 7th Fed rate hike, total spec longs at 235.9k contracts were way down at a 2.3-year low! Speculators were all out.

The Fed indeed hiked as expected, and specs’ hawkish forecast seemed to be confirmed by this newest dot plot. Finally at this week’s FOMC meeting the collective rate-hike outlook rose from 3 total hikes in 2018 to 4. That was the perfect excuse for gold-futures traders irrationally terrified of higher rates to sell gold hard! Yet they couldn’t, with their longs among the lowest levels of this bull the selling was already exhausted.

So gold is once again set up with a very-bullish June-rate-hike scenario like last summer. Once again specs need to normalize their collective gold-futures bets after waxing too bearish leading into another Fed rate hike. That big gold-futures buying is inevitably coming, although it may once again be delayed for a few weeks by the summer doldrums. That would simply add to gold’s powerful seasonal autumn rally.

Gold’s resilience this week in the face of that hawkish dot plot was very impressive. Remember the last time the near-term FFR forecast added another hike in mid-December 2016, gold plunged 2.6% in only 2 trading days. The fact gold didn’t suffer another kneejerk plunge this week on adding another hike this year shows considerable strength! Speculators could’ve aggressively short sold gold futures, but refrained.

Thus gold’s post-rate-hike reaction after this 7th one is likely to mirror the strong rallies after the prior 6. They ranged from 3.3% to 18.5% in the weeks and months after hikes, averaging 10.2%. Given we’re in the heart of the summer doldrums, gold’s post-FOMC rally this summer could mirror last summer’s. It didn’t start until early July, but from there gold blasted 11.2% higher into early September. That’s a big deal.

Gold was trading at $1295 this Tuesday before this week’s FOMC decision. That’s a high base relative to gold’s bull-to-date peak of $1365 from early July 2016. A decisive 1% breakout above that happens at $1379. That would change everything for gold psychology, unleashing a major new wave of global gold investment demand. That critical breakout level for sentiment is only 6.4% above this week’s FOMC-eve close!

So there’s a good chance this coming 7th post-rate-hike rally of this gold bull will push gold’s price into major-breakout territory! As long as gold doesn’t slump too deep in the remaining summer doldrums of the next few weeks, that targets a potential breakout span in this year’s autumn rally. Those tend to peak by late September. With gold relatively high and spec gold-futures longs super-low, gold’s setup is very bullish.

For 7 Fed rate hikes in a row now, most traders have believed and argued that higher rates are bearish for gold. This rate-hike cycle is now 2.5 years old, plenty of time for that popular thesis to play out. Yet between the day before that first hike in mid-December 2015 and this week’s 7th hike, gold still rallied 22.4% higher! The US Dollar Index, which was supposed to soar on rate hikes, slipped 4.7% lower in that span.

Conventional wisdom on Fed rate hikes is obviously very wrong. That’s nothing new, as my extensive research has documented. Throughout all of modern history, gold has thrived during Fed-rate-hike cycles. Today’s cycle is the 12th since 1971. During the exact spans of all previous 11, gold averaged a solid 26.9% gain. During the 6 of these where gold rallied, its average rate-hike-cycle gain was a huge 61.0%!

The Fed’s last rate-hike cycle ran from June 2004 to June 2006, dwarfing today’s. The FOMC hiked in 17 consecutive meetings, totaling 425 basis points which more than quintupled the FFR to 5.25%. If rate hikes and higher rates are bad for gold, it should’ve plummeted at 5%+. But instead gold surged 49.6% higher over that exact span! Fed-rate-hike cycles are bullish for gold, regardless of what futures guys think.

Sadly their irrational and totally-wrong bearish psychology even infects gold investors. This next chart looks at gold and the physical gold bullion held in trust for GLD shareholders. That is the world’s largest and dominant gold ETF (GLD). Its holdings reflect gold investment trends, rising when capital is flowing into gold and falling when investors are leaving. That futures-driven gold action around rate hikes is affecting investment!

Unfortunately this essay would get far too long if I dive deeply into this chart. But I couldn’t exclude it from this discussion either. Because of that goofy gold-futures trading action surrounding Fed rate hikes in this cycle, investors have followed suit to varying degrees. They tend to sell gold leading into Fed rate hikes, and that downside momentum often continues in the weeks after hikes. That really weighs on gold.

But after a couple weeks of strong post-FOMC rallying driven by that gold-futures rebound buying, investors once again start warming to gold. They resume buying GLD shares faster than gold itself is being bought, and start amplifying gold’s post-rate-hike rallies after retarding them initially. It is disappointing that investors too are drinking the psychological tainted Kool-Aid poured by gold-futures speculators.

As a battle-hardened speculator myself and lifelong student of the markets, I don’t care which way they are going. We can trade them up or down and make money. But it’s very frustrating when the traders who dominate gold’s short-term price action continue to cling to a myth, distorting signals and misleading everyone else. History has proven over and over again that Fed-rate-hike cycles are very bullish for gold.

Gold has rallied strongly on average after 6 of the past 6 Fed rate hikes of this cycle! Last summer was the only quasi-exception, when gold’s weak seasonals delayed its post-hike rally for a few weeks. There is literally no reason not to expect gold to power higher again after this week’s 7th hike. And with gold at these levels, that next post-FOMC rally should see a major bull-market breakout that will bring investors back.

The last time investors flooded into gold in early 2016 after that initial December rate hike, gold powered 29.9% higher in 6.7 months. The beaten-down gold miners’ stocks greatly amplified those gains, with the leading HUI gold-stock index soaring 182.2% higher over roughly that same span! Gold stocks are again deeply undervalued relative to gold, a coiled spring ready to explode higher in this gold bull’s next major upleg.

The bottom line is Fed rate hikes are bullish for gold, and this week’s is no exception. Gold has not only powered higher on average in past Fed-rate-hike cycles, but has rallied nicely in this current one. Gold enjoyed big rebound surges after all 6 previous Fed rate hikes of this cycle. Gold-futures speculators who sold too aggressively leading into FOMC meetings had to buy back after to normalize their bearish positions.

And gold looks super-bullish in the coming months after this week’s 7th Fed rate hike of this cycle. Those gold-dominating futures traders sold their longs down to levels not seen since the initial months of this gold bull! So they’re going to have to do huge buying to reestablish normal positioning. While gold’s summer doldrums may delay that a few weeks, the coming gold-futures buying could drive a major upside breakout.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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: I own extensive long positions in gold stocks and silver stocks which have been recommended to our newsletter subscribers.

Four Reasons We Don’t Have Flying Cars—Yet

Electric, vertical-lift air-taxis may someday criss-cross the skies, but the timelines their advocates are proposing are ambitious, to say the least. Uber, for example, predicted at its Elevate conference last month that it would begin deploying its system, UberAIR, in 2023. That’s going to be a stretch: the autonomous control systems that will make such flight practical and affordable are in utero, the air traffic control integration necessary to make it safe and efficient are barely a twinkle in the FAA’s eye, and the regulatory blessing necessary from federal and city governments—well, let’s just say there’s nothing to bless yet.

Then there’s the issue of the aircraft themselves. Uber, the dominant player trying to bring this industry to life, insists that an electric vertical takeoff and landing (e-VTOL) aircraft is the way to go, arguing that nothing else can match it for efficiency, speed, reliability, safety, and quietness. (Picture monster drones, or multiblade insectoid contraptions with passenger pods slung underneath, as shown in Uber’s videos.) Such a craft won’t simply evolve from existing hardware, either. The aviation industry will have to develop entirely new classes of aircraft that fly in new ways, using new means of propulsion, flight control, and situational awareness.

It’s actually an opportunity to rework an industry that’s starting to look a bit crusty. “It’s time to rethink a lot about aviation,” says René Landry, an aviation systems researcher at ETS, a technical university in Montreal. “The avionics we use now are based on a general architecture that was developed during World War II. The hardware, for instance, is duplicated for redundancy, using huge, low-efficiency cables. We could use some game changers in there.”

As an example of one of these game changers, he notes that the software used for flight planning didn’t join the 21st century until the iPad came out. “Ten years ago we would have said the iPad would never be certified for cockpit use,” he says. “But within six months it was certified and more than 400 businesses that made electronic flight bag systems closed their doors. They were no longer necessary—it could all go on the iPad.” But something like flight-planning software, of course, is only the first challenge facing a potential flying-car network.

Challenge #1: Hand off the flying to computers

Our air taxis of tomorrow will have to do most of the piloting work themselves, using autonomous or at least highly automated systems. Uber has stated that it expects its service will start with human pilots, but given the extreme shortage of pilots anticipated by the airline industry over the coming decades, that’s not sustainable. Self-flying systems are already in the works, but they are nowhere close to being ready for widespread adoption.

One interim step, then, would to simply take the edge off. “Work at NASA has demonstrated the viability of what’s called simplified vehicle operation,” says aerospace engineer Brian German, an associate professor at the Georgia Institute of Technology. In this scenario, most of the systems that either manage the act of flying or the processes of navigation and communication are controlled by the computer, with the pilot essentially telling it what to do and where to go. “A pilot can’t be in control of 8 or 10 different rotors and expect to maintain any degree of situational awareness,” he says. “So when you push on the stick in this system, everything that happens to point the aircraft in the desired direction is automated.”

That sort of flying is within reach right now, and is how most drone flying (and certain aspects of many particularly advanced military and commercial aircraft) works. But a safety-certified, passenger-carrying version operated by truly minimally trained pilots in commercial airspace—the system that Uber will need—is still a long way off. This is especially true because the systems will also have to function perfectly in urban canyons and in inclement weather.

Autopilot systems also lack the kind of judgement possessed by human pilots. “It’s really hard for autonomous systems to understand different scenarios,” German says. “Maybe, for instance, you’re flying an airplane and you see a forest fire out of the left window. A human pilot knows immediately that’s it’s probably not a good idea to fly right over it. But how will an autonomous system know that? We’re going to run into ‘failures of creativity’ on the part of the system.”

Challenge #2: Electrify the aircraft

Though plenty of small aircraft—from two-seat helicopters like the Robinson R-22 to any number of conventional airplanes—could theoretically form a fleet of air taxis today, Uber and its partners think electric is the way to go. This is primarily because electric propulsion is simpler, more reliable, and more precisely controllable than combustion engines. Though scientists think that we’re still decades away from the kind of jump in battery energy density required to allow, say, regional aircraft to fly several hundred miles at a time, German thinks that the kinds of short hops an air taxi might make can actually be sustained with today’s technology.

For instance, Uber’s recently announced partnership with electric-aircraft startup Karem, which is developing variable-RPM rotors that can more efficiently modulate the power usage from existing batteries, is just one possible solution. And many aerospace and technology experts argue that short-haul flights of just 10 or 20 miles are possible even with current battery technology. The trick, though, will be achieving the kind of high-speed charging capabilities needed for quick-turnaround flights and overcoming the broader power-supply shortcomings endemic to dense urban environments.

Challenge #3: Build them cheap

Battery technology may not prove to be a limiting factor, but manufacturing likely will—particularly because a sustainable air taxi system that’s dependent on economies of scale will need thousands of aircraft flying as soon as possible. Other industries have solved such manufacturing challenges, but generally over very long periods. The automotive business, for example, has demonstrated in the past 20 to 30 years that modern manufacturing techniques can significantly reduce the costs of making even the most complex modern cars. This includes the integration of new high-tech composites and alloys that each have unique requirements during the manufacturing process. Achieving comparable production numbers in e-VTOL aircraft—i.e., hundreds of thousands per year, which may ultimately prove to be what’s needed to truly flesh out Uber’s global plan anyway—may be unrealistic, but transferring some volume-manufacturing techniques from automotive to aviation would be a start.

On the other hand, these are aircraft, not cars. Manufacturing lightweight, strong, crash-tested, and quiet aircraft made entirely out of composites, as opposed to merely containing composite components, presents yet another challenge. Building aircraft out of composite materials like carbon fiber remains a largely hand-executed process, because manufacturers still need skilled workers to lay up the materials, join elements together, and then scan for and eliminate the structural voids, air bubbles, and other weaknesses that might be acceptable for a car that has all four feet on the ground, so to speak, but not for a flying pod full of people hovering 1,000 feet in the air. “I’ve talked to composite manufacturers, and they don’t see a path to get to the kind of rates we’re talking about,” German says. It’s challenging and costly, and the aviation industry hasn’t been able to do it in significant volumes yet because the demand just hasn’t been there. The demand for hundreds of thousands of eVTOL aircraft might arrive eventually, and manufacturing techniques could very well continue to advance, but it will happen over decades, not a few years.

Challenge #4: Make them quiet

Finally, there’s noise. Air taxis will be operating in urban environments that are already tightly regulated when it comes to helicopter noise and the roar of airplanes at airports on the edge of town. If the vertiports that Uber imagines see hundreds of takeoffs and landings every hour, the aircraft will have to be exceptionally quiet. “Aviation is regulated federally, but a lot of issues are in urban air mobility are local,” German says.

For small vertical-lift aircraft, the challenge will not only be in decibel reduction, but in the acoustic signature as well—that is, how the noise blends in (or doesn’t) against the background of the city. Uber has been researching this, and argues that a reduction of 15 decibels will bring aircraft clatter down to acceptable levels, both in terms of sheer volume as well as its general detectability in urban environments. (Of course, most of the noise in urban environments comes from vehicular traffic, which itself could very well transition to mostly electric propulsion in the coming decades. So the challenges eVTOL aircraft face “blending in” might only get worse as a result.)

Achieving ultra-quiet electric aircraft will require significant innovation, given that the machines will still have to move the same volumes of air through the rotors in order to lift off and touch down. One approach is to reduce the tip speed of the rotor blades, since they get louder as they approach supersonic speeds. To do that, German says, engineers could add blades to each rotor, which would bring down the RPM while still maintaining the same lifting power. So-called distributed-rotor systems—that is, six or eight small rotors instead of, say, just two—will also help. German says he’s optimistic here, too. Indeed, Uber has played recordings comparing the systems at its industry conferences. German does add a final warning about “psychoacoustics.” That’s the tendency for people to find a sound disagreeable, not because it’s actually all that bad, but because it represents something yucky—in this case, wealthy elites flying over regular folk.

Five years doesn’t seem like enough time to conquer these challenges—which don’t even touch upon the broader economic and regulatory issues the plan faces, along with whatever enhancements will be required to integrate air taxis into the notoriously old-school commercial airspace system—but both Landry and German note that all the technology levels are within reach, as long as someone is willing to pay for them. “There is a degree of inevitability to this whole thing,” German says. “All these technologies are continuing to converge and mature. Even things like public perception can be overcome once people become aware of what the tech can do in their lives. Eventually it becomes a cultural phenomenon, where people suddenly rewire their lives around it.”

Kind of like, well, Uber.

More Great WIRED Stories

Puerto Rico's Observatory Is Still Recovering From Hurricane Maria

As Hurricane Maria approached Puerto Rico in late September 2017, planetary scientist Ed Rivera-Valentin knew he needed to get out. His apartment was near the coast, in Manatí, and some projections had the storm passing directly over. “I knew I couldn’t stay there because something bad was going to happen,” he says.

Some people stayed with inland family, or in shelters. But Rivera-Valentin went to work, driving an hour or so into the island’s karst formations, the knobby, tree-covered hills left as water dissolves limestone. Between the peaks sits Arecibo Observatory, the 1,000-foot-wide radio telescope where scientists have, since 1963, studied things up above. Rivera-Valentin grew up in the city of Arecibo, and as an adult, the telescope became his professional home: He got his dream job using Arecibo’s radar to study asteroids. As the hurricane approached, he also thought perhaps the observatory could be his bunker.

The telescope, though, was soon to meet with unusually strong forces of nature. Like the island itself—which was hit with some $90 billion of damage, hundreds or thousands of deaths, and infrastructural failings—the observatory took a beating from Hurricane Maria. Eight months later, with recovery money from the federal government newly available, Arecibo is just beginning to bounce back. While the hurricane didn’t knock Arecibo out, it did leave the telescope a fraction as effective as it once was. And it did so at the same time that the telescope faces decreased funding from the National Science Foundation and a disruptive change in management.

Rivera-Valentin wasn’t the only employee who had decided to retreat to the telescope. At the observatory, most of the employee-evacuees hunkered down in the visiting scientists’ quarters, meant for out-of-town astronomers, and the cafeteria. But Rivera-Valentin stayed in his office. As water seeped through every gap it could find, he put himself on mopping duty. Inside the control room and engineering building, where the main corridor was flooding, another scientist—Phil Perillat—protected the electronics.

As the calm eye of the storm passed over, Perillat snapped a photo of the telescope’s “line feed”—a 96-foot-long radio receiver that looks like a lightning rod. It hangs 500 feet above the dish, pointed toward the ground. You might remember it from Golden Eye, when James Bond dangles from the rod in an adrenaline-filled chase scene. But in Perillat’s picture, the line feed itself is dangling. It had snapped in the wind, which reached 110 miles per hour at the observatory site.

At some point, Rivera-Valentin heard a boom: The dangling line feed, he would later learn, had completely detached, falling hundreds of feet onto the dish and smashing through its surface panels like a meteorite.

After the storm had passed, on September 21, people were stuck at the observatory for days. The two roads leading down from the site were blocked by trees, landslides, and even a newly-formed lake. But observatories, in general, are meant to keep up operations when the grid goes down. They have generators, water. Angel Vazquez, director of telescope operations, was able to contact the outside world with his HAM radio, and let them know everyone was OK.

The radio telescope, however, was not. When employees first attempted to assess the damage, they went to the visitors’ center, where an observation platform overlooks the dish. They couldn’t get as up close as they usually could, by walking underneath it: An eight-foot-deep lake—which lingered till December—now lapped against the telescope’s undergirdle. Eventually, they paddled beneath the massive structure in kayaks, and saw damaged panels hanging below the surface, looking like roof metal twisted in a tornado.

Meanwhile, the observatory itself had morphed into a relief center. When one of the the roads finally opened, about two days after the hurricane’s landfall, local residents arrived for support. “Anyone who walked up to the observatory, they were getting water,” says Rivera-Valentin. “Anyone who came up and said we need to do laundry, they could do laundry.” FEMA helicoptered in supplies to pass out to the community.

On September 29, staff brought the dish back online with generator power. The observing run wasn’t much, just “passive” work; they just held the telescope’s pointing mechanisms in place and simply let the sky drift over as it watched for signals from pulsars. In part, they wanted the scientific data. But they also wanted to run a diagnostic on the scope’s performance.

“The shape of the dish itself had changed,” says Rivera-Valentin. It couldn’t quite focus, like if someone had warped your camera lens. All the receivers still worked—save the one that, you know, crashed into the telescope. The telescope could still function, but its sensitivity was hobbled.

Despite the dish difficulties, which continue today, the observatory slowly began to do more science, in low-power mode. In November, it tracked a fast radio burst, and did a run in cooperation with a Russian radio telescope. And then in December, the region’s electricity flickered on. With that, the observatory could use the diesel generators to run its power-sucking radar. They sent powerful radio waves streaming into space, waited for them to hit an asteroid millions of miles away, and then waited for them to bounce back to their battered antenna.

It worked.

On December 15, they observed the asteroid Phaeton. Rivera-Valentin was glad to have the data (and make little videos from it). It was a piece of normal.

But Arecibo has a long way to go before it’s all the way back. “They have started repairs,” says the National Science Foundation’s Joe Pesce, who until recently oversaw the Arecibo program. “But the vast majority of them are still underway.” It could take a couple of years.

Abel Mendez, who runs the Planetary Habitability Laboratory, has seen the change in the telescope’s performance firsthand. Mendez works at the University of Puerto Rico at Arecibo, training the telescope toward red dwarf star systems that have planets, to understand more about their habitability. After Maria, the telescope’s effectiveness dropped by about 50 percent in the high frequencies he uses, because of alignment, pointing, and panel issues. “Fortunately, the telescope was so sensitive before that that 50 percent—for what we’re doing—is not a big concern,” he says. At lower frequencies, the telescope was about 20 percent less effective post-hurricane. Still, some scientists need every bit of gain they can get. Much of the universe, after all, is far away, and hard to see.

The bipartisan budget act, made law in February, allocated $14.3 million to get the observatory back to full working order. The observatory just got its first allotment of that money, through the National Science Foundation, at the beginning of this month. Getting that federal money has been slow, but now that it’s in hand, the real work can begin.

The initial allowance—$2 million—is for the basics, like removing debris, fixing the fraying roofs, and giving CPR to the generators, three of four of which are having problems. “Work on those is up and going,” says Pesce. “Longer-term, there are the bigger fixes, like repairing the line feed.”

But in February, the NSF announced that Arecibo would soon be under new ownership, which means a leadership transition is taking place at the same time that a scientific rehab is starting. The NSF has historically funded much of Arecibo’s operations. But it had been looking for “partners” for a while. These partners would not only manage the facility, as the previous management team had, but would also pay for some of its operations, taking part of the financial burden from the NSF.

And so a three-organization consortium took over on April 1. The University of Central Florida, under the leadership of Florida Space Institute director Ray Lugo, is at the helm. Lugo used to manage operations and maintenance at Cape Canaveral, and in that role, he contracted with Yang Enterprises, a Central Florida company that provides technical, operational, and logistical services. Yang soon became the second part of the Arecibo partnership. The third entity is Universidad Metropolitana in San Juan, Puerto Rico. Together, the three will run the facility, expand its science, and search for new sources of funding. That hunt for cash comes because NSF is ramping down its funding, which will drop from $7.5 million to $5 million between the first and second years of the new project, and then down to $2 million by the fifth.

The NSF said—on a PowerPoint slide in a town hall meeting at a recent astronomy conference in Denver—that there are “some transition difficulties to be worked out.” Some employees, for instance, have left, which surely presents difficulties for them and for the observatory: For many people who have worked at Arecibo, it’s not just a job. It’s an identity, a home, a community, a place where everyone can do laundry when they need to. And a telescope needs people who have expertise on it.

Yan Fernandez, one of the university scientists leading the collaboration, says UCF will look to scientists beyond their consortium to figure out what cosmic questions Arecibo should pursue. “We want the scientific community to give us info about how Arecibo can keep its place as a cutting-edge observatory in the future,” he says. “The scientific priorities have to come from the scientists who know best.”

With the recovery money, the telescope should be fully restored and able to pursue those priorities, but it won’t ever be the same. And neither will the people who were there for it all. By the time Arecibo was first able to use its radar system in December, Rivera-Valentin had already left the island. His partner had gotten a promotion that took him to Texas, and Rivera-Valentin transferred to the Lunar and Planetary Institute in Texas, which is run by the same organization that co-managed Arecibo until April.

For a while, Rivera-Valentin was able to keep his affiliation with Arecibo Observatory. But when management changed, he became a passive observer. He still plans to use the telescope, as a guest. And while he’ll miss the island where he grew up, and the giant dish nestled into it, there are some positives. “The moment someone says the word ‘hurricane,’ I can drive all the way up to Canada,” he says.

More Great WIRED Stories

​Another day, another Intel CPU security hole: Lazy State

More security news

Once upon a time, when we worried about security, we worried about our software. These days, it’s our hardware, our CPUs, with problems like Meltdown and Spectre, which are out to get us. The latest Intel revelation, Lazy FP state restore, can theoretically pull data from your programs, including encryption software, from your computer regardless of your operating system.

Like its forebears, this is a speculative execution vulnerability. In an interview, Red Hat Computer Architect Jon Masters explained: “It affects Intel designs similar to variant 3-a of the previous stuff, but it’s NOT Meltdown.” Still, “It allows the floating point registers to be leaked from another process, but alas that means the same registers as used for crypto, etc.” Lazy State does not affect AMD processors.

This vulnerability exists because modern CPUs include many registers (internal memory) that represent the state of each running application. Saving and restoring this state when switching from one application to another takes time. As a performance optimization, this may be done “lazily” (i.e., when needed) and that is where the problem hides.

This vulnerability exploits “lazy state restore” by allowing an attacker to obtain information about the activity of other applications, including encryption operations. Thus, systems using Intel Core-based microprocessors, from Sandy Bridge on to today’s newest processors, may allow a local process to infer data using lazy floating point state restore from another process through a speculative-execution side channel. So, in this latest vulnerability, one process can read the floating point registers of other processes being lazily restored.

For some operating systems, the fix is already in. Red Hat Enterprise Linux (RHEL) 7 automatically defaults to (safe) “eager” floating point restore on all recent x86-64 microprocessors (approximately 2012 and later) implementing the “XSAVEOPT” extension. Therefore, most RHEL 7 users won’t need to take any corrective action.

Other operating systems believed to be safe are any Linux version using the 2016’s Linux 4.9 or newer kernel. The Linux kernel developers are patching older kernels. Most versions of Windows, including Server 2016 and Windows 10. are believed to be safe. If you’re still using Windows Server 2008, however, you will need a patch. The latest editions of OpenBSD and DragonflyBSD are immune, and there’s a fix available for FreeBSD.

The good news, according to Masters: “Impact is moderate because while it’s important to address, it’s hard to exploit and easy to fix.”

Better still, Masters said, “the fix will improve performance!”

Unlike the previous CPU security bugs, mitigating it will not require microcode updates. In most cases, RHEL 7 customers will not need to take action. RHEL 5 and 6 users will need to patch their servers.

This security problem was found by Julian Stecklina from Amazon Germany, Thomas Prescher from Cyberus Technology, and Zdenek Sojka from SYSGO AG.

So, while not a serious problem, it is a real one. If your system isn’t immune, patch it as soon as possible.

Related Stories:

Are Flags Just a Piece of Cloth, or Are They a Powerful Symbol of Something Greater?

This week is Flag Day, June 14. To Americans, the US Flag is an evocative image. It’s a symbol of our freedom, and of what others have sacrificed to ensure it. It can also be a symbol of protest. The US Supreme Court famously confirmed the right to burn the flag as an act of free speech, and nearly no one has missed the recent debate over standing versus kneeling during the national anthem at sporting events.

Non-national flags are powerful symbols, too. They represent ideals, movements, and aspirations. Even national flags can come to represent controversial issues, as the recent kneeling controversy in football reminded everyone.

No one can deny that flags are powerful symbols. Here are quotes that reflect on the power of flags to rouse passions, one way or another:

1. “The stars and stripes were fluttering bright against the rain, clear blue overhead, and their minds were saying the words before their ears heard them.” ― Laura Ingalls Wilder

2. “I see Americans of every party, every background, every faith who believe that we are stronger together: black, white, Latino, Asian, Native American; young, old; gay, straight; men, women, folks with disabilities, all pledging allegiance under the same proud flag to this big, bold country that we love.” ― President Barack Obama

3. “I believe our flag is more than just cloth and ink. It is a universally recognized symbol that stands for liberty, and freedom. It is the history of our nation, and it’s marked by the blood of those who died defending it.” ― Senator John Thune

4. “A true flag is not something you can really design. A true flag is torn from the soul of the people. A flag is something that everyone owns, and that’s why they work. The Rainbow Flag is like other flags in that sense: it belongs to the people.” ― Gilbert Baker

5. “I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color.” ― Colin Kaepernick

6. “Every red stripe in that flag represents the black man’s blood that has been shed.” ― Fannie Lou Hamer

7. “I long to be in the Field again, doing my part to keep the old flag up, with all its stars.” ― Joshua Chamberlain

8. “I prefer a man who will burn the flag and then wrap himself in the Constitution to a man who will burn the Constitution and then wrap himself in the flag.” ― Craig Washington

9. “The American flag represents all of us and all the values we hold sacred.” ― Adrian Cronauer

10. “Standing as I do, with my hand upon this staff, and under the folds of the American flag, I ask you to stand by me so long as I stand by it.” ― President Abraham Lincoln

11. “I don’t judge others. I say if you feel good with what you’re doing, let your freak flag fly.” ― Sarah Jessica Parker

12. “There is a strong tendency in the United States to rally round the flag and their troops, no matter how mistaken the war.” ― George McGovern

13. “America has been the country of my fond election from the age of thirteen, when I first saw it. I had the honour to hoist with my own hands the flag of freedom, the first time it was displayed, on the Delaware; and I have attended it with veneration ever since on the ocean.” ― John Paul Jones

14. “I just bought a Jeep painted like an American flag. No one better question how patriotic I am.” ― Blake Anderson

15. “When I see the Confederate flag, I see the attempt to raise an empire in slavery. It really, really is that simple. I don’t understand how anybody with any sort of education on the Civil War can see anything else.” ― Ta-Nehisi Coates

16. “I’m proud of the U.S.A. We’ve done some amazing things. To wear our flag in the Olympics is an honor.” ― Shaun White

17. “Burning the flag is a form of expression. Speech doesn’t just mean written words or oral words. It could be semaphore. And burning a flag is a symbol that expresses an idea – I hate the government, the government is unjust, whatever.” ― Antonin Scalia

18. “I can understand if you think that I’m disrespecting the flag by kneeling, but it is because of my utmost respect for the flag and the promise it represents that I have chosen to demonstrate in this way.” ― Megan Rapinoe

19. “If a jerk burns the flag, America is not threatened, democracy is not under siege, freedom is not at risk.” ― Gary Ackerman

20. “I savored my time on top of the podium by watching the American flag rise up out of the crowd as the anthem played, thinking about how every single second of training I’ve done was for this minute and how many people played a role in my achievement.” ― Hannah Kearney

21. “In most countries, you have a monarch or some other principal person to whom its officers and its military swear their allegiance. Our officials in this country and our military swear allegiance to the Constitution. We say that when we say the Pledge of Allegiance to the Flag”. ― Edwin Meese

22. “For any athlete growing up, the Olympics is the one thing you watch with your family, and it’s the one thing you dream about. Seeing your country’s flag go up as you get a gold medal is the best thing you can achieve.” ― Abby Wambach

23. “I can take the steel guitars and fiddles off, we can make it a little more pop, cover ideas that are a little less cowboy. But you got to look at yourself in the mirror and ask, whose flag you are under? For Garth Brooks, I’m steel, fiddles, red, white and blue.” ― Garth Brooks

24. “If anyone, then, asks me the meaning of our flag, I say to him – it means just what Concord and Lexington meant; what Bunker Hill meant; which was, in short, the rising up of a valiant young people against an old tyranny to establish the most momentous doctrine that the world had ever known – the right of men to their own selves and to their liberties.” ― Henry Ward Beecher

25. “Our flag means all that our fathers meant in the Revolutionary War. It means all that the Declaration of Independence meant. It means justice. It means liberty. It means happiness…. Every color means liberty. Every thread means liberty. Every star and stripe means liberty.” ― Henry Ward Beecher

26. “There is not a thread in it but scorns self-indulgence, weakness and rapacity.” ― Charles Evans Hughes

27. “We identify the flag with almost everything we hold dear on earth, peace, security, liberty, our family, our friends, our home… But when we look at our flag and behold it emblazoned with all our rights we must remember that it is equally a symbol of our duties. Every glory that we associate with it is the result of duty done.” ― Calvin Coolidge

28. “‘Shoot, if you must, this old gray head, But spare your country’s flag,’” she said. ― John Greenleaf Whittier

My Oh My, 4 Strong Buys

Around two months ago, I wrote an article titled “My Oh My, 4 Strong Buys” that generated a record of 173,000 page views. In that article, I explained that my definition of a “Strong Buy” means that “I am recommending a high-quality REIT that is trading at a wider margin of safety. Recognizing principal preservation is critical, my recommendation is telegraphing readers that the company is a blue chip on sale.”

It’s true, messaging is critical to the writing process and one thing that I have learned over the years (writing on Seeking Alpha) is to engage with readers so that they can benefit from the research that I’m providing. My goal with the use of the “Strong Buy” terms is to distinguish between a regular BUY and STRONG BUY.

In order to make that distinction, I screen for companies that have enhanced price appreciation catalysts that support my annual total return requirement of 25% or higher (in 12-24 months).

Around two years ago, I had just two or three STRONG BUYs recommended, but as of today, I have 17 (recently added UMH).

Keep in mind, a STRONG BUY does not necessarily suggest that shares in these REITs will immediately rebound. Sometimes catalysts could be driven by macroeconomic forces (such as tax reform) or headwinds that could take quarters to play out.

Regardless, my “stepped-up” BUY recommendation is based on fundamental analysis in which I believe there is a good chance that the particular stock will outperform the regular BUY basket. In this article, I will explain four of my top Strong Buy picks, and if you don’t mind, I’ll do a quick victory lap!

Photo Credit

My Oh My, The 4 Strongest Buys

EPR Properties (EPR), based in Kansas City, MO, is a uniquely positioned triple net lease REIT, centered on three key industries – entertainment, recreation, and education. It’s a niche approach with rigorous underwriting and investing criteria – yielding a competitive advantage and potential for higher growth & better returns. EPR’s total investments exceed $6.8 billion, with 400 properties and over 250 tenants, across 43 states, District of Columbia, and Canada.

First quarter results: $155 million in total revenue, 20% over the same quarter in 2017. Adjusted funds from operations (AFFO) were $94 million or $1.26 per diluted common share, an increase of 6% over last year.

The company’s investment portfolio (excluding development): Entertainment segment (about 43% of assets) included 149 megaplex theatre properties, seven entertainment retail centers, and 11 family entertainment centers, totaling 13.2 million square feet, 99% leased.

Recreation segment (33%) included 25 ski areas, 20 attractions, 31 golf entertainment complexes, and ten other recreation facilities, all 100% leased. The Education segment (21%) included 65 public charter schools, 67 early education centers, and 14 private schools, over 4.7 million square feet and 98% leased. (The “other” 3% was primarily land underground lease, property under development, and land related to a casino and resort project in NY’s Sullivan County.)

Latest quarter investment spending totaled $108.6 million: Entertainment $25.5 million, Recreation $62 million, and Education $21.1 million. Net debt to adjusted EBITDA was 5.80x – and EPR is reducing its net debt, anticipating additional dispositions this year. The Company had $24.5 million in unrestricted cash and $570.0 million outstanding under its $1.0 billion unsecured revolving credit facility at quarter end.

The AFFO payout ratio was 86%, and in January, EPR increased its regular monthly cash dividend almost 6% over the prior year – the eighth consecutive year with a significant dividend increase. The annual yield is 6.90%.

Source: F.A.S.T. Graphs

LTC Properties, Inc. (LTC) is a REIT that primarily invests in senior housing and health care properties through joint ventures, sale-leaseback transactions, mortgage financing, preferred equity, and mezzanine lending. All leases are triple net.

The company has been around for over 25 years and began operations in August 1992.

As of March 31, LTC had an enterprise value of over $2.1 billion and a nearly balanced capital allocation among skilled nursing properties (49.7%) and assisted living properties (47.9%).

LTC holds 203 investments, in assisted living communities (105), skilled nursing centers (97) and a behavioral health care hospital, across 29 states. (Assisted Living communities include combinations of assisted living, independent living, and memory care facilities.)

First quarter net income was $20.3 million or $0.51 per diluted share ($21.4 million or $0.54 per diluted share for the same period in 2017). FFO was $29.7 million (compared with $30.8 million for the comparable 2017 period). FFO per diluted common share was $0.75 and $0.78, respectively. The decreases in results were primarily due to a reduction in rental income from properties sold in 2017, a defaulted master lease placed on a cash basis and higher interest expenses from net borrowings.

During the first quarter, LTC funded $7.4 million under an existing mortgage loan, for purchase of a 112-bed skilled nursing center in Michigan. Prior to quarter-end, the company sold a portfolio of six assisted living and memory care communities for $67.5 million – the Sunrise Portfolio, spanning 320 units and five locations in Ohio and Pennsylvania – from which LTC expects to show a net gain of approximately $48.0 million in the second quarter.

LTC’s dividend was last increased in October 2016 and has a current annual yield of 5.48%.

Source: F.A.S.T. Graphs

Ladder Capital (LADR) just increased their quarterly dividend last month, to $0.325, for an 8.30% annual yield. Since becoming a REIT January 1, 2015 (founded 2008), the dividend has increased by 30% in four separate increases.

The internally-managed company focuses on senior secured assets and provides fixed- and floating-rate commercial mortgages, mezzanine financing, and preferred and direct equity to partners. LADR is one of the largest non-bank contributors of loans to CMBS (commercial mortgage-backed securities) securitizations in the U.S.

First quarter GAAP income before taxes was $71.7 million with diluted EPS $0.53 (up from $18.3 million and $0.18, first quarter 2017), due to higher net income from loan portfolio interest & real estate investment rentals and sales gains on loans and real estate – Ladder’s highest quarterly earnings since the IPO. The company is strongly aligned with shareholders – management and directors own over $185 million of stock (over 12% total equity market cap).

Ladder has increased investor appeal and its shareholder base. The top 4 pre-IPO holders held around 51% of the shares, now reduced to around 10%. One shareholder, Related Companies, sought to purchase all the outstanding shares at $15 each. Shares spiked over $15 and Related withdrew its offer – and Ladder refused to provide more information to boost the bid.

It’s a good reminder how price & value are not always the same. Ladder shares are undervalued based on my NAV analysis and the latest earnings. The dividend, already super-sized, could get fatter.

Source: F.A.S.T. Graphs

Park Hotels & Resorts Inc. (PK) is the second-largest publicly traded lodging REIT, with a diverse portfolio of 54 premium-branded hotels and resorts with significant underlying real estate value and over 32,000 rooms, primarily in key U.S. markets with high barriers to entry.

The company was formed in January 2017 when Hilton Worldwide (HLT) spun off most of its owned real estate into a separate public REIT.

Park’s top 10 hotels accounted for about 70% of earnings, including the Hilton Hawaiian Village Waikiki Beach Resort, New York Hilton Midtown, Hilton San Francisco Union Square/Parc 55 San Francisco – a Hilton Hotel, Hilton Waikoloa Village, Hilton New Orleans Riverside, and Hilton Chicago.

Last month, the company completed the sale of the joint venture Hilton Berlin in Germany, with Park’s share approximately $140 million. It was the 13th hotel Park has sold this year and the 10th international market property, as Park recycles capital out of non-core assets and reduces exposure to non-U.S. markets and joint venture interests. Park now has ownership in four hotels outside the U.S.

First quarter 2018 comparable RevPAR was $165.57, an increase of 1.1% from the same period in 2017. AFFO was $137 million, a decrease of 0.7% over 2017. Park’s sale of 12 hotels for $379 million (gross) went toward repurchasing and retiring 14 million shares of common stock from an affiliate of Chinese conglomerate HNA Tourism Group.

Park has an attractive and well-covered dividend, which pays a current annualized yield of 5.56%, not including a special cash dividend of $0.45 per share next month (totaling about $90 million), from the sale of the Berlin property.

Park represents one of the best lodging REITs – especially given the association with Hilton.

Source: F.A.S.T. Graphs

In summary, in the June 2018 edition of the Forbes Real Estate Investor, there were 17 Strong Buy REITs that make up the companies in the New Money Portfolio. These four REITs (EPR, LTC, LADR, and PK) were the best performers in May, generating an average return of 10.6%.

The New Money Portfolio generated an equal-weight return of 3.9% in May and thus far in June, the portfolio is on track to deliver sound results. There is no doubt that the first three months of 2018 were brutal for the REIT sector, but investors can now see daylight as the absolute weakest segments of the market have all lifted above the “worst three” buckets, as illustrated by the graphic below (provided by BMO):

Source: BMO

U.S. Retail REIT relative strength, which was diving this time last year, has been in a much less severe downtrend this year, suggesting that the “retail apocalypse” story is more fiction than fact.

Don’t worry, you won’t see me buying shares in CBL (CBL) or Washington Prime (WPG), I’m sticking with the quality names that generate steady and reliable dividend growth. Stay tuned for my next Strong Buy update as I focus on the Retail REITs. Happy SWAN investing!

Latest Articles: EPR, LTC, LADR, and PK.

All Strong Buy picks can be viewed in my Marketplace service (The Intelligent REIT Investor).

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Toyota to invest $1 billion in Southeast Asian ride-hailing firm Grab

SINGAPORE (Reuters) – Toyota Motor Corp has agreed to invest $1 billion in Southeast Asian ride-hailing firm Grab as a lead investor in the company’s ongoing financing round, which was launched after it bought the regional business of Uber Technologies Inc [UBER.UL].

FILE PHOTO: A logo of Toyota Motor Corp is seen at the company’s showroom in Tokyo, Japan June 14, 2016. REUTERS/Toru Hanai/File Photo

The investment by Toyota is the largest-ever by an automaker in the global ride-hailing sector, the six-year old start-up said in a statement on Wednesday.

It is also the latest collaboration between a global vehicle maker and a technology firm as ride-hailing companies dominate the fast-growing field of mobility services, raising the risk of a future where car ownership declines in favor of such services.

Japan’s SoftBank Group Corp last month announced it would invest $2.25 billion in the Cruise autonomous vehicle unit of General Motors Co, while Fiat Chrysler Automobiles NV and Jaguar Land Rover Automotive PLC [TAMOJL.UL] have agreed to supply vehicles for Alphabet Inc’s self-driving car subsidiary Waymo.

Toyota’s investment will allow Grab, which counts peer Didi and Japan’s SoftBank Group Corp as investors, to further expand its range of online to offline services, such as food delivery and digital payments, deeper into the region.

Grab will be valued at just over $10 billion after Toyota’s investment, said a person familiar with the matter.

A Toyota executive will be appointed to Grab’s board of directors and a dedicated Toyota team member will be seconded to Grab as an executive officer, the ride-hailing firm said.

Wednesday’s announcement deepens Toyota’s partnership with Grab, following an earlier, undisclosed investment by the automaker’s trading arm last year.

FILE PHOTO: A man walks past a Grab office in Singapore March 26, 2018. REUTERS/Edgar Su/File Photo

Toyota has installed its driving recorder devices in some vehicles operated by Grab, using the collected data stored in its mobility services platform to analyze driving patterns and develop vehicle services.

The automaker on Wednesday said by deepening the partnership, it hoped to achieve connectivity for Grab’s rental car fleet across Southeast Asia and offer financing, insurance and maintenance services to drivers based on data collected on its platform.

“Going forward, together with Grab, we will develop services that are more attractive, safe and secure for our customers in Southeast Asia,” Toyota executive Shigeki Tomoyama said in a statement.

Data collected from the recorders could also help Toyota in its own development of next-generation mobility services, including a self-driving electric vehicle it plans to develop for companies to use for tasks such as ride hailing, package delivery and mobile shops.

South Korea’s Hyundai Motor Co and Japan’s Honda Motor Co Ltd have also previously funded Grab, which said it has achieved run-rate revenue of over $1 billion. The company’s app has been downloaded onto over 100 million mobile devices and the firm logs over 6 million rides per day.

Earlier this year, Uber exchanged its Southeast Asian operations for 27.5 percent of Singapore-headquartered grab, ending a battle between the two for regional dominance.

Southeast Asia, home to about 640 million people, is a major arena for tech firms offering services from digital payments and ride-hailing to e-commerce.

Last month, Indonesian ride-hailing and online payment firm Go-Jek said it would enter Vietnam, Thailand, Singapore and the Philippines in the next few months, investing $500 million in its international push.

Reporting by Aradhana Aravindan in SINGAPORE and Naomi Tajitsu in TOKYO; Editing by Himani Sarkar and Christopher Cushing

Craigslist Founder Donates $20 Million To Endow Journalism Program

Craig Newmark, founder of the online classifieds site Craigslist, donated $20 million to the endowment of the graduate journalism school at the City University of New York (CUNY), which is changing its name to the Craig Newmark Graduate School of Journalism at CUNY.

The school has focused on ways to instill more trust in journalism, including a program Newmark helped underwrite, the News Integrity Initiative, to which he gave $1.5 million, and which ultimately raised $14 million. The school will continue to pursue that initiative, as well as hire more faculty, and create new programs. The school says Newmark will not be involved in choosing how money is spent. A relatively new school, it can’t yet rely on donations from alumni.

This may seem like an ironic gift for a man who newspaper publishers once railed against as the destroyer of classified ads, a high-margin pillar in broadsheet and tabloid profits. Craigslist, founded in 1995, gained steam as the decade progressed, and a 2013 report in the journal Management Science estimated papers lost $5 billion to Craigslist between 2000 and 2007.

Newmark, however, has nourished an interest dating back a decade in better understanding the future of journalism, partly by funding investigations into that topic, and by underwriting non-profit reporting organizations and academic institutions and publications. In recent years, he has donated millions to investigative news site ProPublica, the Sunlight Foundation, the Columbia Journalism Review, Data & Society Research Institute, and others. In 2015, Newmark founded Craig Newmark Philanthropies, through which these gifts now flow.

His operational involvement with Craigslist has been minimal for many years, though he remains a key shareholder in the privately held firm. Some estimates suggest the site nets hundreds of millions of dollars a year from charging small fees for jobs, apartments, and a few other categories. Forbes lists him as a billionaire, but Newmark hasn’t commented precisely on his wealth.

Though Newmark has no direct history with CUNY, he does with Jeff Jarvis, a professor at and director of the Tow-Knight Center for Entrepreneurial Journalism at the CUNY journalism school, as a key influence in guiding his understanding of the field. The center focuses on researching a viable financial future for journalism and training students in creating sustainable editorial ventures.

Newmark has credited Jarvis, a veteran journalist and editor, and at CUNY since 2005, with providing an education for him as newspapers faltered following the rise of Internet-based advertising and information sources. Jarvis, in a blog post today, knocked the idea to the side that Newmark deserved blame (or credit) for the shift in cost for short ads and its impact on the news business: “Craig didn’t invent the internet. He created the most prominent example of what the internet could do in directly connecting buyers and sellers, reducing inefficiency in a market.”

New Microsoft Surface Leak Reveals 'Secret' Codenames

More evidence of Microsoft’s move into lower-cost tablets has come to light, as codenames for both the tablet and the attachable keyboard have been reported. The USB-C equipped tablet is ‘Lex’, while the keyboard cover attachments will be ‘Gibs’.

Ewan Spence

Microsoft’s previous lower-range tablet, the Surface 3 (Image: Ewan Spence)

Microsoft’s Surface range has always allowed the Redmond-based company to not only experiment with form and factor, but to also use the brand as a visual signpost to manufacturers on what it would like to see in the market. It also shows off the Windows 10 environment in a ‘pure’ format. In that sense the Surface range’s closes association is that of the Nexus and Pixel smartphones from Google.

As I noted the last month in Forbes, the move towards a lower-cost Surface tablet challenges Apple’s iPad in the educational market, but with the benefits of a much more open operating system.

While Windows 10 in its many variants also maintains a connection to Microsoft’s cloud based services, these potential new Surface machines will have a significant advantage – they will be open to third-party programs outside of a walled garden, huge amounts of legacy support, and the machines will be easily transferable between users.

As Apple moves towards narrowing the options on the tablet front, Microsoft is using its Surface line-up to promote a similarly priced product that takes a more open look at the ecosystem.

All of this requires a low-priced Surface tablet – similar to the Surface 3 – to exist. The initial reports of such a unit came from Bloomberg, and have now been followed up with details on the internal builds and codenames. Mayank Parmar reports:

We already know that Microsoft’s affordable Surface tablet will target Apple iPads in the tablet market, and now a new report provides us with a closer look at the device.Today, Microsoft enthusiast Walking Cat discovered that the affordable Surface device is internally codenamed Lex, and Microsoft is also working on a type-cover codenamed, Gibs.

As well as Apple’s iPad, the other educational comparison that an affordable Surface/Keyboard combination will draw is with the various Google-powered Chromebooks from a number of manufacturers. Just like Microsoft ties Windows 10 to its cloud, so does Google with ChromeOS. The hardware is the on-ramp to services, and Microsoft’s focus on education is a late arrival… but one that could have significant impact if played correctly.

Now read more about another lightweight portable Windows 10 design from Microsoft… the Surface Laptop…

iPhone Exclusive: Apple's Radical Design 'Confirmed'

In May my exclusive story confirmed Apple’s new iPhone line-up and one cancellation. Now, I can reveal the designs of the most exciting models and the radical move Apple will make… 

Working in collaboration with popular accessories maker Ghostek, a partnership which previously saw me leak Samsung’s final Galaxy S9 design in December, I have obtained schematics for both the so-called ‘budget iPhone X’ and the super-sized iPhone X Plus. And while I expect the former to be the bestseller, it is the latter which will shake-up the smartphone world.

Let’s break them down.

Ghostek, Gordon Kelly

iPhone X Plus schematics show a triple rear camera

iPhone X Plus – A Triple Threat

The headline news is the schematics show iPhone X Plus will introduce triple rear camera. Huawei beat Apple to market with this technology in the excellent P20 Pro, the iPhone X Plus will be the handset to bring it to the masses.

Apple’s triple lens setup is currently unknown, but it would make sense to copy Huawei’s approach of a monochrome camera aiding the primary and telephoto modules. This produced class-leading low light photography. Low light is also an area where Apple has struggled against rivals (one in particular) over recent years.

Interestingly, I understand the second generation iPhone X will stick to two cameras so – once again – Apple will save its flagship photography for the largest (and most expensive) model.

In addition to this, the schematics show Apple has managed to cram a massive 6.5-inch display into the iPhone X Plus yet kept its footprint smaller than the 5.5-inch iPhone 8 Plus: 157.2 x 77.1 mm (6.18 x 3.03-inches) compared to 158.4 x 78.1 mm (6.24 x 3.07-inches). That said, its steel chassis means it should weigh more than the 202g aluminium iPhone 8 Plus.

‘Budget’ iPhone X – Goodbye Mini iPhone X

In my May exclusive, I revealed there would be no ‘mini-iPhone X’ and again these schematics show Apple is thinking big.

Ghostek, Gordon Kelly

‘Budget’ iPhone X schematics confirm size and a single rear camera

The budget iPhone X (which I believe will simply be called ‘iPhone’), will measure 147.12 x 71.52 mm (5.79 x 2.81-inches) which is longer and wider than the current 5.8-inch iPhone: 143.6 x 70.9 mm (5.65 x 2.79-inch).

Yes, as widely rumoured, this will be a 6.1-inch phone.

Its budget roots can be seen in the single rear camera (it will also lose 3D Touch), while you’ll note the notch looks more pronounced.

To this end, I have been told the budget iPhone X will have first generation Face ID technology while the new iPhone X and iPhone X Plus have gen two. But take that with a pinch of salt as it comes from an unproven source.

Of course, the real appeal of the budget iPhone X will be the cost with Apple expected to slash prices across the range by as much as $300 compared to last year.

Needless to say, this far out it is possible for designs to change but with mass production taking several months to ramp up there would be no time for anything other than the most minor of tweaks.

So, ladies and gentlemen, you are indeed looking at two of Apple’s most exciting iPhones in years…


Follow Gordon on Twitter, Facebook and Google+

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It Is Mind-Bogglingly Easy to Rope Apple’s Siri into Phishing Scams

A month ago I was milling about a hotel room in New Orleans, procrastinating my prep for on-stage sessions at a tech conference, when I received a startling iMessage. “It’s Alan Murray,” the note said, referring to my boss’ boss’ boss.

Not in the habit of having Mr. Murray text my phone, I sat up straighter. “Please post your latest story here,” he wrote, including a link to a site purporting to be related to Microsoft 365, replete with Microsoft’s official corporate logo and everything. In the header of the iMessage thread, Apple’s virtual assistant Siri offered a suggestion: “Maybe: Alan Murray.”

The sight made me stagger, if momentarily. Then I remembered: A week or so earlier I had granted a cybersecurity startup, Wandera, permission to demonstrate a phishing attack on me. They called it, “Call Me Maybe.”

Alan Murray had not messaged me. The culprit was James Mack, a wily sales engineer at Wandera. When Mack rang me from a phone number that Siri presented as “Maybe: Bob Marley,” all doubt subsided. Jig, up.

There are two ways to pull off this social engineering trick, Mack told me. The first involves an attacker sending someone a spoofed email from a fake or impersonated account, like “Acme Financial.” This note must include a phone number; say, in the signature of the email. If the target responds—even with an automatic, out-of-office reply—then that contact should appear as “Maybe: Acme Financial” whenever the fraudster texts or calls next.

The subterfuge is even simpler via text messaging. If an unknown entity identifies itself as Some Proper Noun in an iMessage, then the iPhone’s suggested contacts feature should show the entity as “Maybe: [Whoever].” Attackers can use this disguise to their advantage when phishing for sensitive information. The next step involves either calling a target to supposedly “confirm account details” or sending along a phishing link. If a victim takes the bait, the swindler is in.

The tactic apparently does not work with certain phrases, like “bank” or “credit union.” However, other terms, like “Wells Fargo,” “Acme Financial,” the names of various dead celebrities—or my topmost boss!—have worked in Wandera’s tests, Mack said. Wandera reported the problem as a security issue to Apple on April 25th. Apple sent a preliminary response a week later, and a few days after that said it did not consider the issue to be a “security vulnerability,” and that it had reclassified the bug as a software issue “to help get it resolved.”

What’s alarming about the ploy is how little effort it takes to pull off. “We didn’t do anything crazy here like jailbreak a phone or a Hollywood style attack—we’re not hacking into cell towers,” said Dan Cuddeford, Wandera’s director of engineering. “But it’s something that your layman hacker or social engineer might be able to do.”

To Cuddeford, the research exposes two bigger issues. The first is that Apple doesn’t reveal enough about how its software works. “This is a huge black box system,” he said. “Unless you work for Apple, no one knows how or why Siri does what it does.”

The second concern is more philosophical. “We’re not Elon Musk saying AI is about to take over the world, but it’s one example of how AI itself is not being evil, but can be abused by someone with malicious intent,” Cuddeford said. As we let machines guide our lives, we should be sure we know how they’re making decisions.

This article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter. Sign up here.

Facebook Debuts New Service to Capitalize on Growth in Video Games as a Spectator Sport

Facebook has introduced a new service for watching people play video games.

The new hub,, is trying to capitalize on the growing audience for watching others play games. The service includes live and pre-recorded video streams.

In addition, Facebook plans to fund content from gamers and e-sports that can be viewed through the new platform. It’s also working on helping elevate streaming through a new program, called Level Up. That program is meant to help new gamers get started and build a fanbase through by allowing players to earn money through what it calls its “fan support feature” that allows viewers to donate to the streamers. Level Up gamers will also be able to access new livestreaming features that Facebook announced earlier in January.

Invitations to the Level Up program will go out in waves over the next few months, according to Facebook.

The new streaming service is an addition to the gaming creator program Facebook launched in January. It also comes shortly after Facebook announced it was partnering with news publishers to provide video programming through what it calls Facebook Watch.

How Intel May Have Mislead Video Gamers With a New Chip Demonstration

Intel used a bit of misdirection and what it’s calling an accidental omission to combat new product announcements from rival Advanced Micro Devices an important trade show this week.

Intel showed off a new super-chip that, on the surface, seemed like a huge breakthrough for video gamers and other consumers who push their PCs hard. But in fact, after the applause died down, later reports showed that the chip wouldn’t be within reach of most PC users, even those consumers who want extremely high performance hardware.

The dustup started when Intel, the world’s leading chipmaker, gave a keynote address at the Computex trade show in Taiwan Tuesday, just a few hours before AMD took the stage. Leaks and hints had already indicated that AMD was planning to update its high performing line up of Ryzen chips introduced last year, including its 16-core Ryzen Threadripper.

So the pressure was on Intel to match the excitement. But in end the presentation only created confusion and controversy.

The episode comes as Intel is locked in an increasingly competitive battle with AMD, which revamped its entire chip line up last year to better match Intel’s offerings. And it also follows scrutiny of a demo Google did at its I/O developer conference last month showing off an AI assistant making appointments over the phone.

At Tuesday’s keynote, Intel started with one new offering that was straight ahead and clear. The company said it would make a “limited edition” of its Core i7 desktop processors dubbed the i7-8086K in honor of the 40th anniversary of Intel’s groundbreaking 8086 chip that helped launch the PC revolution. The new $425, six-core chip’s claim to fame was a maximum top speed of 5 GHz. To be made available in limited quantities and based on existing designs, it wasn’t exactly a headline grabber.

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So Intel finished up its keynote with what it described as a “preview” of a new “incredibly high performing” chip–a “beast” according to Intel’s Greg Bryant–that would be available by year end.

Intel demonstrates a new chip with 28 cores at the Computex computer show on June 5, 2018.

Intel demonstrates a new chip with 28 cores at the Computex computer show on June 5, 2018.

[/caption]A picture displayed above the stage showed a typical teenage video gamer wearing a bulky headset and pumping his fist. Without much explanation, Intel said it had created a monster 28 core CPU that could run all of those internal processing units at a speed of 5 GHz.

Most multi-core chips must slow their clock speed to much slower rates when they use many cores at the same time to avoid overheating. And Intel also name-checked Asus and Gigabyte as making compatible hardware, two popular suppliers for video gaming PCs. Intel then ran one of the most strenuous software benchmarks, called Cinebench, which measures performance for 3D scene rendering. It showed a phenomenal result about double that of the fastest consumer desktop PC chips.

All of that led many in the audience, including many journalists, to conclude that the new super chip would be for the millions of customers who play high-end video games or do a lot of video editing or 3D rendering. PC Worldcompared the chip to AMD’s Threadripper line, as did The Verge and ExtremeTech. When, as rumored, AMD (amd) introduced its second generation Threadripper, now with 32 cores, a few hours later nearly every publication also mentioned Intel’s upcoming 28 core model as well.

The problem is that the two chips aren’t remotely comparable. The new Threadripper chip fits in the same socket as current AMD consumer chips and is expected to cost around $1,000. That puts it at the high end of the consumer PC gaming market.

By contrast, when a few tech news sites got to go behind the scenes of Intel’s demo later, they discovered that the mysterious 28-core chip only fit in a PC with a high-end socket called LGA 3647 that is reserved for server computers and very high-end workstations. That meant it was likely a variant of Intel’s Xeon Scalable line for corporations that costs up to $10,000, or five times what its most expensive consumer and “prosumer” chips cost.

It also turned out, as Intel discreetly admitted later, that the 5 GHz clock speed for all the cores on the new chip was only achievable because the computer was connected to a hidden 68-pound water chiller meant for large home aquariums to keeps its temperature down. Intel said the presenter accidentally forgot to mention that the system was boosted above its normal speed, or overclocked. Intel wouldn’t say what speed the new chip will run out of the box, or under overclocking using more typical cooling set ups.

In a statement, Intel (intc) emphasized that the new chip was not a phony demo, but a real product, and that it cited a commercial benchmark, Cinebench, not a video gaming test. “The 28C demo at the keynote is a real product in development targeted at the high end prosumer and enthusiast audience,” Intel said. “Intel continues to optimize design and process across its products and the demo showcased an upcoming Intel product having the capability of 5.0 GHz overclocking across all 28 cores.”

YouTube's Slow-Mo Guys Break Down Their Quick Thinking

High-speed cameras, commonly known as slow motion cameras, imbue milliseconds with the weight they’re so rarely granted. A balloon pops, with the water inside it still holding its shape; a bullet shot underwater leaves an attenuated cone of air in its wake. Daniel Gruchy and Gavin Free, known on YouTube as The Slow Mo Guys, have captured these moments and more than 150 others in painstakingly slow detail. (In one personal favorite, the duo recorded the fracture pattern in glass that was heated and then rapidly cooled. At 343,000 frames per second, five seconds of IRL action resulted in 19 hours of footage.)

“Everything looks cooler in slow mo,” says Free, who aside from his involvement in multiple RoosterTeeth productions also works as a slow-motion cinematographer on big-budget features (Dredd, Snow White and the Huntsman).

Since November 2010, the Slow Mo Guys channel has amassed millions of subscribers and nearly 1.5 billion views—which is a lot of frames, feats, and stories to share. In this Tech Support, the guys answer viewers questions about where they get all of the food they blow up, and which stunts were the messiest, the hardest and the most painful (like having a soccer ball thrown against your face). Gruchy shares that he’s tried much of that exploded food, and Free reveals his sound design technique for filling lapses in sound during the videos.

Watch the video to learn more. Don’t worry, it plays at regular speed.

More Great WIRED Stories

An Encryption Upgrade Could Upend Online Payments

At the end of June, digital credit card transactions are getting a mandatory encryption upgrade. It’s good news—but not if you have an old device, or depend on a retailer that hasn’t completed the transition.

When data moves from one device to another, it needs to protection so it isn’t intercepted and manipulated along the way. This defense is especially crucial, as you might imagine, for sensitive communications like financial transactions. And with credit card fraud booming, the Payment Card Industry Security Standards Council announced last year that it would phase out an old, buggy encryption scheme used for processing digital credit card transactions, called Transport Layer Security 1.0, in favor of more secure options. The deadline: June 30.

Though there are exceptions for merchants that run their own payment processing servers, organizations that use PCI-compliant commerce platforms—almost everyone—need to upgrade the encryption protocols on their websites and payment terminals if they haven’t already. Running these updates should be pretty easy for a small business that has a couple of credit card readers and a website, but merchants need to know to do it in the first place. Large companies with thousands of payment terminals and a massive web presence face a more significant update challenge. With the deadline just weeks away, some are still scrambling. In the worst-case scenarios, those credit card transactions will simply stop going through.

“This update is a big deal in the e-commerce platform world, because every merchant is using unique integrations and needs to be up to date so transactions don’t fail,” says Jack Cravy, vice president of operations at the software provider AmeriCommerce, which has been working with customers to prepare for the transition. “A lot of these platforms that haven’t updated yet need to get on the ball pretty soon, or they’re going to be in hot water.”

In addition to potential problems on the merchant side, older software and devices may not support the improved encryption protocols, meaning that transactions could fail on the user side as well. Independent of the push to secure credit card transactions, many sites [have transitioned](( to more secure encryption in the past few years; if your device is that old, you’ve likely noticed it by now already. And even if you’re running an ancient or poorly forked version of Android, or a musty iOS, you may be able to get around the problem if your device can run a fairly current browser that supports TLS 1.1 and 1.2.

If you’re concerned that your device might not be ready for the shift, you can check what your browser supports with this tool from the cloud security firm Qualys.

The push in e-commerce to update encryption protocols mirrors broader efforts across the tech industry to standardize this type of data protection. The little green padlock in your browser, for instance, uses Transport Layer Security to connect web servers and your browser, authenticate both sides, and then prevent eavesdropping as data goes through the channel. Until now, digital payments could be processed with TLS 1.0, 1.1, or 1.2. But TLS 1.0, codified in 1999, has shown its age, and has known vulnerabilities to numerous attacks, including the not-cute POODLE bug. TLS 1.1 from 2006 and the popular TLS 1.2 from 2008 have their own problems, but at least eliminate some of the worst exposures of 1.0.

“In the winter of 2014 to 2015, there were a number of vulnerabilities discovered that allowed attackers to fully decrypt network traffic protected by TLS 1.0,” says Kenn White, director of the Open Crypto Audit Project. “The problems are fundamental protocol design issues, not something that can be easily fixed.”

Many merchants proactively upgraded past TLS 1.0 years ago, and the industry has had more than a year to prepare for the transition, which the PCI Security Standards Council describes as “critically important.” Platform providers like PayPal and AmeriCommerce have offered support to customers, and have been running “smokescreens” for months in which they shut off TLS 1.0 support for an hour or so at a time to help merchants that still haven’t upgraded realize the severity of the problem. As a result of this industry-wide push, customers likely won’t experience problems transacting with the bulk of mainstream retailers, but there could still be issues with more peripheral organizations or those that don’t have digital transactions at the core of their work.

“It will mostly just be a few stragglers that are using 1.0, but they may still do a lot of volume, so it’s hard to say that they’re not important and we’ve just been trying to warn them,” AmeriCommerce’s Cravy says. “It’s a weak protocol, there are known exploits for it, so it becomes a risk for fraud and information theft if you’re using it. It’s a big deal.”

As with any transition, observers expect some problems at first, but note that the move away from TLS 1.0 is worth it and long, long overdue—especially for web traffic where money’s involved.

More Great WIRED Stories

Does It Matter If China Beats the US to Build a 5G Network?

Technical standards for the next generation of wireless services aren’t even finalized, yet the US and China are already locked in a crucial race to be the first country to deploy a so-called 5G network.

Or at least that’s what both the US government and the wireless industry say. “The United States will not get a second chance to win the global 5G race,” Meredith Attwell Baker, president and CEO of the wireless industry group CTIA, warned in April, when the group released a report concluding that the US trails China and South Korea in preparing for 5G (fifth generation) networks. If that doesn’t change, the report warns, the US economy will suffer.

The report echoed a leaked National Security Council document that suggested the US government consider building a 5G network. If China dominates the telecommunications network industry, the document said, it “will win politically, economically, and militarily.”

Democrats are worried too. The Federal Communications Commission’s lone Democrat, Jessica Rosenworcel, penned an op-ed for TechCrunch earlier this year calling for a renewed 5G strategy to head off China.

The first specifications for the 5G standard were released last year, but the rest of the standard isn’t expected until later this month. Carriers don’t expect national availability in the US until 2020. The wireless industry promises that 5G will bring enormous boosts in speed and reliability to mobile devices, bridge the gap between wireline and wireless broadband speeds, and enable a new wave of technologies and applications that we can’t even imagine yet.

But why exactly is it so important for the US to build 5G networks before China? The benefits of 5G are obvious, but today the US doesn’t have the fastest home broadband speeds, nor the fastest or most widely available 4G networks, and often lags countries such as Finland, Japan, and South Korea in such metrics. Why would the US’s economic strength erode if it’s a bit late to the 5G party?

A widely cited 2016 report by consulting firm Accenture estimates that the construction and maintenance of 5G networks in the US could result in 3 million jobs and a $500 billion boost to GDP. But would all those jobs end up overseas if China is the first country with a nationwide 5G network?

Not necessarily says Sanjay Dhar, a managing director at Accenture who worked on the report. “Even if China wins the race to build various 5G technologies, it won’t be a zero-sum game,” he says.

Telecommunications industry analyst Jeff Kagan says the competition between the US and China keeps the US motivated to push 5G forward, but he doesn’t believe that it will make a big difference to the US economy in the long term if the US is second or third. “I don’t think it’s ever been more than a battle over the ego over which country is first,” he says.

For one thing, the two countries’ economies remain dependent on one another. Chinese telecommunications company ZTE nearly collapsed after the US barred American companies from selling components to it. Even if China “wins,” US companies will benefit by selling technology to China.

Roger Entner, a founder of Recon Analytics and coauthor of the CTIA report, concedes that it might not matter much if the US introduces 5G a few months later than China. Europe was quicker to roll out 2G, and Japan was the first with 3G, but that hardly deterred Apple and Google from dominating the smartphone market. But Entner argues that if China beats the US by a year or two, it could damage the US’s ability to compete in the global technology market.

3G, which began rolling out in the US in 2002, made possible the iPhone, which debuted in 2007, and the app market, which drove enormous investment in mobile computing, says mobile industry consultant Chetan Sharma. 4G, which made its commercial debut in the US in 2011, made smartphones and mobile apps even more appealing. Apps like Instagram, Uber, and Lyft were able to reach critical mass before competitors from other countries, giving the US an edge.

Ultimately, it’s the decisions of consumers and the private sector that determine the winners and losers in technology. The US “beat” Europe and Japan because Apple created a product that took smartphones mainstream, Google built a popular mobile operating system and gave it away for free, and Facebook built a platform that keeps people glued to their phones. The concern is that if China delivers widespread access to 5G first, its companies will get a head start on creating the next generation of high-tech products and services.

That’s less of a concern with smaller countries such as South Korea, Entner says, because Korean companies won’t have as large a market to test and refine ideas. But China’s 1.4 billion population provides the perfect place for a company to grow a business before exporting to other countries. Consider the WeChat instant messaging app, which offers mobile payments, online banking, car services, and more. Western companies have been trying to emulate its success and functionality for years. Huawei, now the world’s largest provider of telecommunications infrastructure equipment, initially grew by serving the domestic market.

Gaining a lead in 5G could have other benefits for Chinese tech as well. 5G enables not just increased speeds, but the increased capacity that could help support growth of the Internet of Things. All those connected cars and other gadgets will produce data. Lots of it. That could help put China ahead in cutting-edge developments, like self-driving cars and artificial intelligence. “The massive amounts of data that 5G will enable will also be critical for training AI algorithms,” says Paul Triolo, who focuses on technology for the political risk consulting firm Eurasia Group. “So being a leader in both developing equipment and applications will be a major economic advantage to the country or countries that seize the baton.”

Providing Wireless Spectrum

The odds of China beating the US by more than a year are real, Entner says, because the US hasn’t yet allocated enough wireless spectrum for the new networks. Thus far, most development of 5G technologies has focused on “millimeter wave spectrum,” a very high frequency range that enables extremely fast speeds, but only over a very short range. That would require carriers to deploy an enormous number of small cellular antennas to blanket the US with 5G.

Carriers are pushing the FCC to open more of what’s known as the midband of the spectrum for 5G, which would allow them to use large cell towers, much as they do now. That could make it faster to deploy 5G. The fear is that if enough of this midband spectrum isn’t made available to carriers, the 5G networks launched by the 2020 start date won’t actually cover the whole country. The FCC plans an auction to sell access to some of the midband spectrum to carriers in November, and last month it formally began the process to make another big chunk available.

But the longer this takes, the longer it will take US carriers to build real 5G networks. Entner says that in the US, it has historically taken years to launch the first networks after a new portion of spectrum has been identified for a particular use.

By contrast, the Chinese government has opened up more midband spectrum for use with 5G. That’s a big part of why the CTIA report suggests that China, along with South Korea, are “ahead” of the US.

National Security Concerns

Concerns about China’s lead in 5G spill into national security. Huawei’s products are now used by carriers around the world. But the US government has long worried that Huawei could help the Chinese government spy on US citizens, businesses, or political leaders. Huawei is effectively blocked from the US market. But if telecommunications equipment companies in the US and allied countries exit the market, US carriers might be left without any option.

Security experts say the government is right to be concerned. Although there would be serious political fallout if Huawei or another Chinese company were caught spying, equipment makers are in a position to deliberately build vulnerabilities into their products and hand the details of those problems to the Chinese government, says Ryan Kalember, senior vice president of cybersecurity strategy of the security company Proofpoint. Alternately, the companies could hand over the details of newly discovered security flaws to the Chinese government before fixing them.

US buyers will almost certainly continue to shun Huawei products in favor of equipment from US companies such as Cisco and Juniper, or Europe’s Ericsson and Nokia. But that won’t do much to challenge Huawei’s role globally.

Much the same can be said of the whole race to 5G. Even if the US wins the 5G race, it won’t stop China.

More Great WIRED Stories

LG OLED Dolby Vision Bug Gets Fixed – By Sony

At long, long last, it seems that the Dolby Vision ‘raised black levels’ bug (detailed here) that’s been driving LG OLED owners mad for months now has been resolved. Though in an unexpected twist, the resolution hasn’t actually come from LG.

Since posting a story revealing that Sony’s X700 4K Blu-ray player has received a (in many ways rather borked) new firmware update enabling it to play Dolby Vision discs, a number of people have contacted me to report that when they play Dolby Vision discs from an updated X700 into their 2017 and even 2016 LG OLED TVs, the old raised black level problem has disappeared.

Photo: LG Electronics

Sort yourself out with a Sony X700 4K Blu-ray player with its latest Dolby Vision firmware, and you can finally enjoy Dolby Vision 4K Blu-rays on 2016 OLED TVs like the OLED65C6 without being distracted by sudden raised black levels.

This holds true, moreover, with both 4K Blu-rays and the X700’s built-in Dolby Vision-supporting apps.

These startling reports have been backed up in recent hours by a growing number of posts on various AV-based forums.

I’ve asked LG if it can confirm that the X700 update does indeed solve the Dolby Vision over HDMI bug on its OLED TVs, but have received no reply yet.

I noted in my article about the X700 update that after applying it, I couldn’t see any trace of the tell-tale greyness suddenly infusing the black bars around wide aspect ratio Dolby Vision content on a 2018 LG OLED77C8. But the growing body of evidence to show that the X700’s new Dolby Vision profile fixes the Dolby Vision black level bug on older LG sets too is much more remarkable.

Photo: Sony

Sony’s X700 4K Blu-ray player’s Dolby Vision update might be a bit of a mess in some ways, but it’s looking like it may still be the answer to many OLED TV owners’ prayers.

Let’s not forget, after all, that when Dolby admitted to me at the CES in January that the raised black level Dolby Vision bug over HDMI existed, it stated unequivocally that the only way to fix the issue was to apply a software update to displays.

Yet here we have a Dolby Vision SOURCE seemingly fixing the problem, while we’re still waiting impatiently for LG to provide its displays with a full fix (or any sort of fix when it comes to its 2016 models).

Even more bizarrely, the latest Dolby Vision profile the X700 4K Blu-ray player has received was ostensibly designed to benefit Sony, not other brands. The thing is, Sony TVs with X1 Extreme processors that have received their Dolby Vision update still can’t ‘see’ Dolby Vision from external devices unless those devices have received their own compatibility update.

Yet somehow, as well as finally closing the Sony Dolby Vision source-to-screen circle, the latest Dolby Vision source profile also seems to have solved a much wider problem.

Photo: Oppo

The Oppo UDP-203 is about to receive a Sony TV-friendly Dolby Vision update too. Will this also solve LG OLED raised black level problem?

The bizarreness of the situation doesn’t end there, either. The thing is, the first external device to receive a firmware update that let it deliver Dolby Vision to Sony TVs was the Apple TV 4K. Yet this update did not fix the raised black level issue with LG OLEDs.

So is the implementation Sony has applied to the X700 different to the profile applied to the Apple TV 4K? Or is Sony handling the same profile differently, somehow?

One last interesting twist in all this is the news I broke last night that Oppo is about to add the Sony TV-friendly Dolby Vision profile to its 4K Blu-ray players. Will this also fix the LG OLED raised black level bug? We should know soon enough.

The bad news in all this for LG OLED TV owners, of course, is that with LG still unable to deliver a display-based fix for the Dolby Vision over HDMI bug, at least to its 2016 OLED models, LG owners may be faced with the prospect of having to spend extra money on a new 4K Blu-ray player to solve the issue. So let’s hope LG doesn’t use this Sony X700 development as an excuse to stop working on its own display-based solution.

Nonetheless, with LG’s ability to deliver its own fix to the Dolby Vision OLED bug problem looking more and more uncertain with every passing day, the fact that any solution exists at all will probably come as a relief to many long-suffering LG OLED owners.

If you liked this story, you might also like these:

Sony’s UBP-X700 Now Plays Dolby Vision 4K Blu-ray Discs. But It’s All A Bit Of A Mess

Oppo 4K Blu-ray Players To Get Sony TV Dolby Vision Update This Week

Apple TV 4K’s Dolby Vision Problem: A Fix Is On Its Way

LG OLED65E8 OLED TV Review: What A Difference A Brain Makes

LG OLED TV Update: LG Responds To Ongoing Gaming, Dolby Vision And Contrast Performance Issues

SoftBank's ARM cedes control of China ops to consortium for $775 million

TOKYO/HONG KONG (Reuters) – British chipmaker Arm Holdings, a unit of SoftBank Group Corp, will cede control of its Chinese business to a group of local investors in a $775 million deal.

FILE PHOTO: Shop employees of SoftBank Corp work outside its branch in Tokyo, Japan, August 6, 2015. REUTERS/Yuya Shino/File Photo

Arm will be selling the 51 percent of Arm Technology China to a consortium led by Hou An Innovation Fund, which is jointly managed by ARM and Chinese private equity firm Hopu Investments, a source close to the deal told Reuters.

The chipmaker will then form a joint venture (JV) with the consortium, the source added.

The deal will help boost opportunities for Arm in China, SoftBank said in a statement on Tuesday.

“Arm believes this joint venture, which will license Arm semiconductor technology to Chinese companies and locally develop Arm technology in China, will expand Arm’s opportunities in the Chinese market,” SoftBank said.

According to the source, the consortium led by Hou An will be a controlling shareholder in the JV.

Backers of Hou An include sovereign wealth fund China Investment Corporation, Silk Road Fund, Singapore’s Temasek Holdings, Shenzhen’s Shum Yip Group and Hopu, according to China’s Ministry of Science and Technology.

Arm will, however, continue to get a significant proportion of all license, royalty, software and services revenue earned by Arm China’s licensing of its chips, SoftBank said.

Arm’s China semiconductor technology IP business accounted for about a fifth of its revenue in the year ended March 2018.

SoftBank acquired ARM, Britain’s most valuable technology company, for $32 billion in 2016 in an all-equity deal.

The Nikkei newspaper reported last month that Arm was planning to sign over control of its Chinese operations to a new JV involving itself and Chinese partners.

Reporting by Sam Nussey and Julie Zhu; Editing by Sayantani Ghosh and Himani Sarkar

eBay could end up with 5 percent stake in Dutch fintech firm Adyen: report

AMSTERDAM (Reuters) – eBay Inc could end up with a stake of up to 5 percent in Adyen as part of a deal the two companies agreed in January that will see the Dutch fintech company become eBay’s primary payment processor, a Dutch newspaper reported on Monday.

FILE PHOTO: The eBay app is seen on a mobile phone in this illustration photo October 16, 2017. REUTERS/Thomas White/Illustration/File Photo

“Warrants will be given to eBay in four tranches, on the condition that the auction site routes a substantial portion of its payments via Adyen,” the Het Financieele Dagblad newspaper reported, citing sources familiar with the matter.

A spokesman for Adyen declined to comment on the report. eBay could not immediately be reached for comment.

Adyen this month plans to sell a 15 percent stake in an initial public offering in Amsterdam expected to value the company at $7 billion to $11 billion.

Shares in eBay rose by 15 percent on Feb. 1 after it announced the Adyen deal, which it said would add $500 million to operating profit when it goes into effect in mid-2020. Shares in eBay’s former in-house service PayPal, which eBay spun off three years ago, fell 8 percent.

Adyen is due to publish its prospectus on Tuesday, with listing to follow at mid-month.

Reporting by Toby Sterling; editing by Jason Neely

Cybersecurity firm Palo Alto Networks reports smaller quarterly loss

(Reuters) – Cybersecurity company Palo Alto Networks Inc reported a smaller quarterly loss on Monday, driven by strong growth in its cloud security business.

FILE PHOTO – Mark McLaughlin, president and chief executive officer of Palo Alto Networks speaks during an interview in New York, March 19, 2013. REUTERS/Brendan McDermid

Net loss narrowed to $46.7 million, or 51 cents per share, in the third-quarter ended April 30, from $60.9 million, or 67 cents per share, a year earlier.

Total revenue rose to $567.1 million from $431.8 million.

Reporting by Laharee Chatterjee in Bengaluru; Editing by Arun Koyyur

Global Energy, Food Giants Make Bets On Israeli Tech

Innovative ideas from the Israeli tech ecosystem, from the people who make it happen. Opinions expressed by Forbes Contributors are their own.

Jenny Sotnik-Talisman Jenny Sotnik-Talisman , Contributor

Tyson Foods. (Photo by Bryan Steffy/Getty Images for Barcelona Enterprises)

</div> </div>

<ul> <li>Tyson Ventures, the venture capital arm of Tyson Foods, one of the world’s largest food producers, <a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">led a $2.2M Seed</a> round in &nbsp;Jerusalem-based <a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">Future Meat Technologies</a>. Future Meat produces non-GMO meat from animal cells without the need to raise or harvest animals. The technique is thought by many to represent a fundamental shift in future meat production and its effect on the environment. Other big name backers include one of the largest food conglomerates in Israel, the Neto Group, China’s food technology venture capital fund BitsXBites, US-based S2G Ventures, HB Ventures, and Agrinnovation, an Israeli investment fund founded by <a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">Yissum, the Technology Transfer Company of The Hebrew University</a>.</li> </ul> <p><span>&nbsp;</span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><span data-ga-track="ExternalLink:">Future Meat Technologies</span></a><span> was founded in February 2018.</span></p> <p><span>The food-tech ecosystem in Israel is heating up. </span><span>According to data from Start-Up Nation Finder, there are some 250 currently active food-tech (including Food e-commerce) companies in Israel now, up from 164 in 2013. Just over a quarter of those (27.5%) have raised their Seed rounds, so there’s plenty of innovation in the pipeline.</span></p> <ol start="2"> <li><span> The other big food-technology related deal: International Flavors &amp; Fragrances Inc. agreed to buy</span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><span data-ga-track="ExternalLink:"> Israeli flavors and ingredients maker</span></a> <a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><span data-ga-track="ExternalLink:">Frutarom </span></a><span>for $7.1 billion in cash and stock.</span></li> <li><span><strong> Energy giant BP made its first foray into Israel</strong> with a </span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><span data-ga-track="ExternalLink:">$20 million investment</span></a><span> in quick-charging battery firm </span><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"><span data-ga-track="ExternalLink:">StoreDot</span></a><span>. BP is among a host of energy giants hunting for clean fuel as the industry pivots away from oil, Bloomberg reports. StoreDot </span><span>was founded in 2013 and raised &nbsp;$146M fromDaimler AG ,Samsung Ventures, Norma Investments, Lucion Venture Capital, and TDK (Japan).</span></li> </ol>

A BP gas station. (Photo by Joe Raedle/Getty Images)

</div> </div> <p><strong>Other deals of interest:</strong></p> <p><b>Big Data for Enterprises</b></p>” readability=”26.5139643134″>

Every month, Start-Up Nation Central’s channel on Forbes will highlight a handful of startups that have recently raised funding, signed major contracts, been involved in M&A, or have released other significant news –and that we think are important to keep an eye on.

This could be because:

  1. Their technology is breakthrough and could disrupt important markets
  2. They have an innovative business model or product/service with big market potential
  3. They have big/important founders/CEOs/board directors
  4. Their investors are strategic [big names in VC/Corporate VC]
  5. All or some of the above together

See the lists from March, February and April.

Throughout May, Israeli startups raised $275.4M in 37 deals. Three deals stood out in particular:

Tyson Foods. (Photo by Bryan Steffy/Getty Images for Barcelona Enterprises)

  • Tyson Ventures, the venture capital arm of Tyson Foods, one of the world’s largest food producers, led a $2.2M Seed round in  Jerusalem-based Future Meat Technologies. Future Meat produces non-GMO meat from animal cells without the need to raise or harvest animals. The technique is thought by many to represent a fundamental shift in future meat production and its effect on the environment. Other big name backers include one of the largest food conglomerates in Israel, the Neto Group, China’s food technology venture capital fund BitsXBites, US-based S2G Ventures, HB Ventures, and Agrinnovation, an Israeli investment fund founded by Yissum, the Technology Transfer Company of The Hebrew University.

 Future Meat Technologies was founded in February 2018.

The food-tech ecosystem in Israel is heating up. According to data from Start-Up Nation Finder, there are some 250 currently active food-tech (including Food e-commerce) companies in Israel now, up from 164 in 2013. Just over a quarter of those (27.5%) have raised their Seed rounds, so there’s plenty of innovation in the pipeline.

  1. The other big food-technology related deal: International Flavors & Fragrances Inc. agreed to buy Israeli flavors and ingredients maker Frutarom for $7.1 billion in cash and stock.
  2. Energy giant BP made its first foray into Israel with a $20 million investment in quick-charging battery firm StoreDot. BP is among a host of energy giants hunting for clean fuel as the industry pivots away from oil, Bloomberg reports. StoreDot was founded in 2013 and raised  $146M fromDaimler AG ,Samsung Ventures, Norma Investments, Lucion Venture Capital, and TDK (Japan).

A BP gas station. (Photo by Joe Raedle/Getty Images)

Other deals of interest:

Big Data for Enterprises

Page 1 / 2

General Electric: Strong Buy

The drop in General Electric‘s (GE) share price is yet another buying opportunity in my opinion. The industrial company has seen a considerable rebound in investor sentiment after the release of better-than-expected first quarter results, and the recent sale of General Electric’s rail business to Wabtec puts the company on the right track. GE will likely continue to shred more assets in the next several years and apply a laser-sharp focus on the restructuring of its power business. I see General Electric as an appealing contrarian rebound play with up to 40 percent upside potential over the next twelve months.

Rebounding Investor Sentiment…Until The Last Week Of May

General Electric’s shares started to rebound in April and May, after falling rather consistently throughout the first three months of 2018. Concerns over weak cash flow, a struggling power unit, and uncertainty after the dividend cut in Q4-2017 have weighed on investor sentiment at the beginning of the year.

That being said, though, investor sentiment is improving after the industrial company reported better-than-expected results for Q1-2018. Most recently, however, GE’s share price has dipped again on concerns that the power restructuring will take longer than expected.

Year-to-date, General Electric’s share price has dropped ~19 percent.

Source: StockCharts

The recovery in General Electric’s share price looked fine, until May 23, 2018 when John Flannery, Chief Executive Officer and Chairman of General Electric, said that he expects GE’s power division to continue to struggle in the near future. Further, the CEO cast some doubt on its dividend, which made investors ditch the stock yet again. GE’s stock, meanwhile, tumbled more than seven percent.

Investors were quickly rattled by the CEO’s remarks about the restructuring of its power division, but there were few things that were actually new. The power division, as all investors know, has been a drag on GE’s earnings and margins, including the first quarter of 2018.

Source: General Electric Q1-18 Earnings Release

General Electric is running a hard restructuring, laying off people and reducing overhead costs. The company has guided for $1 billion in segment cost reductions in 2018, and has put a set of measures in place aimed at boosting performance, including driving better execution, taking margin actions, and selling non-core assets.

Source: General Electric Investor Presentation

I think General Electric is doing the right things as far as the power restructuring is concerned, and investors should give the industrial company some time to turn the ship around.

Are There Risks To The Dividend?

General Electric slashed its quarterly dividend payout 50 percent from $0.24/share to $0.12/share in November 2017, which was the second time since the financial crisis that the company slashed its dividend.

Is the dividend sustainable?

Frankly, that depends to a large degree on whether General Electric can engineer a cash flow turnaround.

Here’s GE’s industrial cash flow from 2012-2017.

Source: Achilles Research

Asset sales, however, could play a major role in boosting GE’s cash flow, at least over the short haul. General Electric recently sold its 111-year old rail transportation unit to Wabtec in an $11.1 billion deal. The industrial company will receive a $2.9 billion cash payment associated with the deal.

What To Expect Over The Next 12 Months

Obviously, General Electric will be tempted to sell more assets and raise its cash levels. I don’t think that management will want to cut the dividend again unless cash flow unexpectedly and significantly deteriorates.

Further, General Electric is strongly focused on driving the power restructuring home, but it may take a couple of quarters for investors to see meaningful results. That being said, GE’s laser focus on improving margins in the power business through cost controls and asset sales will likely lead to an incremental improvement in cash flow throughout the year. GE certainly deserves the benefit of the doubt.


General Electric’s shares are cheap, selling for less than 14x next year’s estimated profits while investor sentiment is probably still near multi-year lows.

I am still positive on General Electric’s ability to turn things around in the power business in 2018/9. Hence, I reaffirm my $20 price target on GE, implying ~40 percent upside.


GE data by YCharts

Your Takeaway

General Electric’s share price slumped after Flannery’s comments at an industry conference last month, and the drop is a promising opportunity to consider a speculative long position in my opinion. General Electric will likely sell more non-core assets in 2018 and drive a hard, cost-centered restructuring in the power business. GE’s shares are relatively cheap on a forward P/E-basis, and there is room for improvement in investor sentiment, especially if the restructuring yields cash flow gains. Strong speculative Buy.

If you like to read more of my articles, and like to be kept up to date with the companies I cover, I kindly ask you that you scroll to the top of this page and click ‘follow‘. I am largely investing in dividend paying stocks, but also venture out occasionally and cover special situations that offer appealing reward-to-risk ratios and have potential for significant capital appreciation. Above all, my immediate investment goal is to achieve financial independence.

Disclosure: I am/we are long GE.

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.

Hulu Exec Joel Stillerman Departs in Management Shakeup

A year ago, Hulu announced that it had hired Joel Stillerman away from AMC to expand the streaming platform’s slate of original programming.

On Friday, Hulu announced that the chief content officer was leaving the company.

The departure of Stillerman, who worked on The Walking Dead and Better Call Saul while at AMC, was part of a broader reorganization at the Santa Monica company. There has been some tumult in the upper ranks at Hulu, which saw its chief executive, Mike Hopkins, depart in October to become the head of Sony’s television division. Randy Freer, the former COO of Fox Networks Group, replaced Hopkins—who had hired Stillerman—and recent reports suggest that Freer and Stillerman didn’t get along.

Following Stillerman’s departure from Hulu, the company’s chief content officer role will disappear. Craig Erwich, Hulu’s senior vice president of content, will oversee original programming. Tim Connolly, Hulu’s SVP of partnerships and distribution, and Ben Smith, SVP of experience, will also depart the company. Additionally, CMO Kelly Campbell will assume more responsibility, Jaya Kolhatkar will become Chief Data Officer, and Dan Phillips will become CTO.

Hulu is co-owned by Comcast, Time Warner, Disney, and 21st Century Fox, which itself agreed to be acquired by Disney earlier this year. (If Disney prevails, it would become Hulu’s majority owner.) That complicated ownership structure, rather unlike rival Netflix, has been characterized as a drag on the company’s ability to make decisions.

Hulu now reaches more than 20 million subscribers, and its service has expanded to include live television, more original programming (e.g. The Handmaid’s Tale), and deeper reserves of popular TV shows including 30 Rock and E.R. But Hulu remains unprofitable—almost $1 billion in the red last year—as it battles Netflix, Amazon, Google, and Time Warner-owned HBO for market share.

“Hulu has an enormous opportunity to lead the media and advertising industries into the future,” Freer said in a statement.

How Much Money Do You Need to Be Happy?

Money doesn’t buy happiness–at least, that’s what the old adage says. But with the plethora of data analytics tools at our disposal, and access to decades of salary and happiness data, we’re closer to coming to a definitive conclusion on the age-old question.

So let’s try to answer the question: how much money do you really need to be happy?

The 2010 Princeton Study

One of the most widely-cited studies on the matter comes from Princeton University, circa 2010. In the study, researchers took measurements of U.S. citizens’ annual salaries and self-reported feelings of happiness. As you might suspect, the higher your annual salary is, the more likely you are to feel both kinds of happiness–the day-to-day mood-based happiness you might feel in response to a specific event, and the long-term stable happiness you feel when you’re satisfied with your life–but only up to a certain point ($75,000 a year). People who made more than $75,000 experienced some increases in overall life satisfaction, but almost no increases in daily moods.

There are a few problems with this finding, which I’ll delve into later on, but it’s important to note that 85 percent of Americans–regardless of income–felt happy each day. It’s also important to note that a lack of money didn’t necessarily make people sad, but complicated the problems they were already experiencing, such as making doctor visits more stressful because of financial concerns.

Skandia International Wealth Sentiment Monitor

A slightly more recent analysis by Skandia International found the results to be higher. The study revealed that as many as 80 percent of people, worldwide, believe money is capable of bringing them happiness–though individual countries vary from 68 percent (in Germany) to 93 percent (in Brazil). The survey sample indicated they wanted a salary equivalent to US $161,000 a year to feel wealthy–which is a staggering 15 times the global average income.

This study is interesting not only because it targets a wider audience, but because it also asks people how much money they think they would need to feel happy–rather than taking objective measurements of people who already make it. If you combine the results of this study with the results from the Princeton study, you could glean the conclusion that people think they need $161,000 a year to be happy, but any more than $75,000 probably isn’t going to do much.

Complicating Factors

There are, of course, some complicating factors here:

  • The source of money. The source of your acquired money matters. Earning your money in a solid career is much different than effortlessly gaining all your money through an inheritance; the latter can result in silver spoon syndrome, or the inability to lead a “normal” life or have a strong sense of purpose. Making the money gradually over the course of a long career, filled with hard work, will inevitably fill you with satisfaction and a sense of purpose. If you’ve grown up wealthy and have never known any different, the money won’t mean anything to you.
  • Lifestyle factors. We also need to consider lifestyle factors. For starters, differences in cost of living can play a role: a two-bedroom apartment in San Francisco, for example, costs an average $4,650 a month in rent–a $75,000 salary, when nearly 75 percent of it is spent on rent, is going to feel very different than it does to someone in rural Texas, where the cost of living is much lower. People may also have individual lifestyle preferences that affect their happiness; for example, is it important to you to be able to go out to a nice dinner a few times a week?
  • Individual differences. Everyone has different values and different personalities that affect how money influences their happiness. Person A may be highly extroverted and social, and care far more about having a close network of friends than making lots of money. Person B may be highly self-motivated, and feel more fulfilled accomplishing personal goals than bonding with others. Person B’s happiness will obviously be more influenced by their income than Person A.
  • Other happiness indicators. Of course, we also need to remember that money is only one part of the equation of happiness. For example, what’s your family life like? Do you have close friends? Are you in good health? Do you like your job? Do you have a hobby you’re passionate about? Money alone won’t influence you if all these other factors are already in place.

So how much money do you really need to be happy? Despite the average predicted salaries that researchers have calculated, the answer to that question is almost entirely dependent on your personality and history.

How are you making that money? What else do you have in your life? And perhaps most importantly, do you believe that money will make you happier?

Toshiba completes $18 billion sale of chip unit to Bain consortium

TOKYO (Reuters) – Japan’s Toshiba Corp said on Friday it had completed the $18 billion sale of its chip unit to a consortium led by U.S. private equity firm Bain Capital.

FILE PHOTO: A logo of Toshiba Corp is seen outside an electronics retail store in Tokyo, Japan, February 14, 2017. REUTERS/Toru Hanai/File Photo

The completion of the deal, initially aimed for by end-March, had been delayed due to a prolonged review by Chinese antitrust authorities. China approved the deal last month.

The Bain consortium last year won a long and highly contentious battle for Toshiba Memory, the world’s No. 2 producer of NAND chips. Toshiba put the business up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit had plunged it into crisis.

The consortium includes South Korean chipmaker SK Hynix, Apple Inc, Dell Technologies, Seagate Technology and Kingston Technology.

Under the deal with Bain, Toshiba repurchased 40 percent of the unit, it said in a statement.

Reporting by Makiko Yamazaki; Editing by Sunil Nair

Galaxy S10 Leak Reveals Samsung's Radical Breakthrough

, Opinions expressed by Forbes Contributors are their own.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9 mobile phone during the Samsung Galaxy S9 Unpacked event (Photo:Lluis Gene/AFP/Getty Images)

</div> </div> <p> </p> <p>The inclusion of the technology in the tenth major Galaxy S handset would be a strong statement of intent that the Galaxy brand is still one that can have an impact in the smartphone world. The Galaxy S9 (and arguably the S8 family before it) have been iterative builds, improving the specifications and techniques used in previous flagships without breaking any genuine new ground.</p> <p><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">While Chinese manufacturer Vivo might scoff</a>, Samsung would be seen as the first to bring this to the mainstream. And there;s every chance that the launch of the Galaxy S10 will be one of the big smartphone firsts of 2019 if &nbsp;Samsung brings the reveal forwards to CES in January. The early display of the S10 would see the company anointed as one of change, and leave Mobile World Congress open for the foldable Galaxy X to confirm that role.</p>

<p><a href="" target="_self"><em>Now read more about Samsung’s accelerated launch schedule for the Note9, S10, and Galaxy X…</em></a></p>” readability=”36.0338835795″>

While the upcoming Galaxy Note9 phablet is not expected to be anything more than an iterative update on the existing hardware, the real leap forward according to all reports is going to come with the Galaxy S10. The latest reports out of South Korea suggest one of the advanced technologies is now finally ready for widespread consumer adoption.

That technology is the oft-discussed under-the-screen fingerprint reader. While a number of small-run handsets have demonstrated this biometric ability, Samsung has been seen to shy away from putting it in its handsets which have much larger production runs and demand far higher yield rates at scale. As SamMobile reports, the go/no-go point has been reached, and all the indications are that the South Korean company has decided to make the call:

The impression we get from recent reports is that the company has made a final decision on the matter.

The latest report claims that Samsung has “confirmed” to its industry partners that it has decided to adopt the in-display fingerprint sensor for the Galaxy S10. The display panel will be supplied by Samsung Display whereas Qualcomm is said to be supplying the ultrasonic fingerprint sensor.

Samsung president of mobile communications business DJ Koh presents the new Samsung Galaxy S9 mobile phone during the Samsung Galaxy S9 Unpacked event (Photo:Lluis Gene/AFP/Getty Images)

The inclusion of the technology in the tenth major Galaxy S handset would be a strong statement of intent that the Galaxy brand is still one that can have an impact in the smartphone world. The Galaxy S9 (and arguably the S8 family before it) have been iterative builds, improving the specifications and techniques used in previous flagships without breaking any genuine new ground.

While Chinese manufacturer Vivo might scoff, Samsung would be seen as the first to bring this to the mainstream. And there;s every chance that the launch of the Galaxy S10 will be one of the big smartphone firsts of 2019 if  Samsung brings the reveal forwards to CES in January. The early display of the S10 would see the company anointed as one of change, and leave Mobile World Congress open for the foldable Galaxy X to confirm that role.

Now read more about Samsung’s accelerated launch schedule for the Note9, S10, and Galaxy X…

Study: Eating Meals Earlier In The Day Can Cut Diabetes Risk And Lower Blood Pressure


In our ongoing dieting dialogue we spend a lot of time talking about what to eat, but what if we’re leaving out something just as important? What if changing when we eat could significantly improve our health? For the first time, a study offers hard data supporting precisely that argument, showing that eating earlier in the day could affect our health as much as what we’re eating.

Animal studies have found that time-restricted diets can reduce diabetes risk by stabilizing blood sugar. To see if the same holds true for humans, a research team from the University of Alabama at Birmingham (UAB) recruited a group of overweight men, all nearly diabetic, to participate in a controlled 10-week study. Half of the group ate three meals a day within a six-hour period starting around 6:30 am and ending by 3 pm (in effect, they fasted for 18 hours a day). The other half ate three meals during a typical 12-hour day. The groups swapped eating regimens at the end of the first five weeks.

By the end of the study, it was clear that eating within a six-hour window versus a 12-hour window produced three big benefits. First, the participants’ insulin sensitivity increased, resulting in better blood sugar control (insulin is the hormone that keeps blood sugar in check; reduced sensitivity to insulin is a hallmark of prediabetes and diabetes). Their blood pressure also improved as much as if they’d been taking an average dose of blood pressure medication. And their appetite was reduced (a paradoxical outcome considering how many hours a day they weren’t eating, but predictable because their blood sugar had leveled out).

The researchers think that the results come from aligning eating times with natural circadian rhythms.

“If you eat late at night, it’s bad for your metabolism,” said lead study author Courtney Petersen, assistant professor in the UAB Department of Nutrition Sciences. “Our bodies are optimized to do certain things at certain times of the day, and eating in sync with our circadian rhythms seem to improve our health in multiple ways.”

Importantly, the benefits didn’t come from weight loss, because all of the participants ate enough calories to maintain their bodyweight. Rather, the results seemed to come directly from changing when they consumed the same amount of calories.

“Our body’s ability to keep our blood sugar under control is better in the morning than it is in the afternoon and evening,” added Petersen, “so it makes sense to eat most of our food in the morning and early afternoon.”

This was a small study of just eight participants and far from the last word on this topic, but as an initial proof-of-concept, the results are important. As diabetes continues to explode across an increasingly obese population, strategies like shifting eating times to stabilize blood sugar could make a big difference. Same for blood pressure – reducing the amount of medication patients take by changing when they eat is an approach that makes sense.

Having said that, time-restricted diets aren’t easy to follow. Compressing every meal between 6:30 am and 3 pm takes commitment and more than a little willingness to endure stomach grumbles, at least initially before blood sugar spikes level out. We’re accustomed to eating dinner in the 5 – 7 pm window, often followed by a snack or two later at night. Changing that mindset takes work.

Further complicating matters is the growing popularity of fasting diets, mostly unsupported by evidence-based science, but fueled, as all diet fads are, by public demand to conquer our bodies’ worst tendencies. The latest study uses a fasting method (since the participants didn’t eat for 18 hours instead of a typical 10 or 12), but the focus wasn’t on restricting calories via fasting, but rather shifting when they’re eaten.

More research with more participants is needed, no doubt, but these preliminary findings are worth some attention. Food choices matter, but when we consume the food we choose may matter just as much.

The study was published in the journal Cell Metabolism.

You can find David DiSalvo on Twitter, FacebookGoogle Plus, and at his website,

The Amazing Ways Samsung Is Using Big Data, Artificial Intelligence And Robots To Drive Performance

, Opinions expressed by Forbes Contributors are their own.
Adobe Stock

Adobe Stock

</div> </div> <p><strong>Bringing innovators together</strong></p> <p>Samsung started 2018 with intention to be an artificial intelligence leader by organizing the<a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"> Artificial Intelligence (AI) Summit</a> and brought together 300 university students, technical experts and leading academics to explore ways to accelerate AI research and to develop the best commercial applications of AI.</p> <p>Samsung has Dr. Larry Heck, world-renowned AI and voice recognition leader, on their AI research team. At the summit, Dr. Heck emphasized the need for collaboration within the AI industry so that there would be a higher level of confidence and adoption by consumers and to allow AI to flourish. Samsung announced plans to host more AI-related events as well as the creation of a new<a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow"> AI Research Center</a> dedicated to AI research and development. The research center will bolster Samsung’s expertise in artificial intelligence.</p> <p> </p> <p><strong>Bixby: Samsung’s AI Assistant</strong></p> <p><a href="" target="_blank" data-ga-track="ExternalLink:" rel="nofollow">Bixby</a>, Samsung’s artificial intelligence system designed to make device interaction easier, debuted with the Samsung Galaxy S8. The latest version, 2.0, is a “fundamental leap forward for digital assistants.” Bixby 2.0 allows the AI system to be available on all devices including TVs, refrigerators, washers, smartphones and other connected devices. It’s also open to developers so that it will be more likely to integrate with other products and services.</p> <p>Bixby is contextually aware and understands natural language to help users interact with increasingly complex devices. Samsung plans to introduce a Bixby speaker to compete with Google Home and Amazon Alexa.</p>

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Until recently, Korean company Samsung was said to behind its competitors in terms of researching and developing artificial intelligence (AI) technology, but the company’s recent strategy suggests that it’s committed to closing the gap and even competing for the top spot. Since 70 percent of the world’s data is produced and stored on Samsung’s products, the company is the leading provider of data storage products in the world. By revenue, Samsung is the largest consumer electronics company in the world—yes, it has even overtaken Apple and sells 500 million connected devices a year. From industry events to setting goals with AI at the forefront to updating products to use artificial intelligence, Samsung seems to have gone full throttle in preparing for the 4th industrial revolution.

Adobe Stock

Adobe Stock

Bringing innovators together

Samsung started 2018 with intention to be an artificial intelligence leader by organizing the Artificial Intelligence (AI) Summit and brought together 300 university students, technical experts and leading academics to explore ways to accelerate AI research and to develop the best commercial applications of AI.

Samsung has Dr. Larry Heck, world-renowned AI and voice recognition leader, on their AI research team. At the summit, Dr. Heck emphasized the need for collaboration within the AI industry so that there would be a higher level of confidence and adoption by consumers and to allow AI to flourish. Samsung announced plans to host more AI-related events as well as the creation of a new AI Research Center dedicated to AI research and development. The research center will bolster Samsung’s expertise in artificial intelligence.

Bixby: Samsung’s AI Assistant

Bixby, Samsung’s artificial intelligence system designed to make device interaction easier, debuted with the Samsung Galaxy S8. The latest version, 2.0, is a “fundamental leap forward for digital assistants.” Bixby 2.0 allows the AI system to be available on all devices including TVs, refrigerators, washers, smartphones and other connected devices. It’s also open to developers so that it will be more likely to integrate with other products and services.

Bixby is contextually aware and understands natural language to help users interact with increasingly complex devices. Samsung plans to introduce a Bixby speaker to compete with Google Home and Amazon Alexa.

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