Icahn, Deason to jointly push Xerox to explore selling itself, other options: WSJ

(Reuters) – Investor Carl Icahn and Darwin Deason, the biggest- and third-largest shareholders of Xerox Corp, jointly plan to push the printer and photocopier maker to explore options, including a sale of the firm, the Wall Street Journal reported on Sunday.

Icahn and Deason, who together own 15.7 percent of the photocopier pioneer, have earlier separately called on the company to break off or renegotiate a joint venture with Fujifilm Holdings Corp, saying it was unfavorable to Xerox. Icahn has also called for Xerox CEO Jeff Jacobson to be replaced.

The two shareholders have now formed an alliance and plan to ask Xerox to explore options, including selling itself, breaking off its long-running joint venture with Fujifilm, and immediately firing Jacobson, the Journal reported, citing people familiar with the matter. on.wsj.com/2EYCRHd

The Journal had previously reported that Fujifilm and Xerox were discussing deals, including a change of control of Xerox, though not a full sale.

FILE PHOTO: The logo of Xerox company is seen on a building in Minsk, Belarus, March 21, 2016. REUTERS/Vasily Fedosenko/File Photo

In a statement, Xerox said: “The Xerox Board of Directors and management are confident with the strategic direction in which the Company is heading and we will continue to take action to achieve our common goal of creating value for all Xerox shareholders.”

Deason has been asking the company to make public the terms of its deal with Fujifilm, which he called “one-sided”. Xerox has described Deason’s criticism as “false and misleading”.

The five-decade-old joint venture, 75 percent owned by Fujifilm and 25 percent by Xerox, is a pillar of Fujifilm’s business, accounting for nearly half the group’s overall operating profit. It has limited prospects for future growth, however, because of declining demand for office printing.

The reported operating profit of the joint venture, called Fuji Xerox, was about $750 million on sales of $10 billion in the year ended last March.

Fujifilm declined to comment on the Journal report.

Reporting by Kanishka Singh in Bengaluru; Additional reporting by Makiko Yamazaki in TOKYO; Editing by Peter Cooney and Muralikumar Anantharaman

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Rocket Lab Test Flight Launches Three CubeSats to Orbit

The launch company Rocket Lab has amusing names for its missions. The first, in May, was called “It’s a Test” (it was). When the staff debated what to call the second launch of their diminutive Electron rocket, so sized (and priced) specifically to carry small satellites to space, they said, “Well, we’re still testing, aren’t we?”

They were. And so “Still Testing” became the name of Rocket Lab’s second launch, which took place on January 20, at around 8:45 pm Eastern Standard Time. In December, the company canceled multiple attempts before rescheduling the launch window for 2018. The livestreamed rocket lifted off from the Mahia Peninsula in New Zealand, headed for someplace with an even better view.

Despite the uncertainty surrounding the launch (or any test launch, for that matter), the rocket was carrying real payloads for real customers: three small satellites, one for a company that images Earth and two for one that monitors weather and ship traffic. But why on Earth would a satellite company choose a rocket-in-progress when there are so many reliable launchers out there? After all, even established rockets blow up sometimes.

Rocket Lab

The short answer is that smallsats—which the Electron was built to transport, exclusively—are by nature expendable. Smallsat makers like Planet and Spire, the two clients on this mission, have ever-growing, genetically similar populations of orbiters. So losing one or two in a less-than-successful test flight? Probably worth the risk. Smallsat companies are willing to put their hardware on this particular liftoff line because the Electron is poised to be the first commercially bookable rocket built specifically for small payloads, which typically have to piggyback on big, expensive rockets with big, expensive payloads that don’t launch often enough and aren’t always headed to their orbit of choice. In the next decade, 3,483 small satellites (between 1 and 100 kilograms) will go to space, generating just over $2 billion of launch revenue, according to the Small Satellite Markets, 4th edition report, which research and consulting firm Northern Sky Research released last month. In this future world where thousands more smallsats provide environmental, economic, and even political intelligence, as well as Earth-covering internet, the test-steps necessary to get on up to space quickly, cheaply, and precisely seem worth the risk not just to Planet and Spire but, perhaps, to you and me.

But boy, was there risk. While Rocket Lab’s first Electron didn’t explode and did reach space—and so gets at least an A- for its first attempt—“It’s a Test” didn’t quite get to orbit. After an investigation, Rocket Lab determined that, four minutes post-blastoff, ground equipment (provided by a third party) temporarily stopped talking to the rocket. When communication breaks down, Official Procedures demand that safety officials stop the flight. And so they did..

But the rocket itself, according to the same investigation, was sound—so the company moved on to a test delivery. “It’s really the next logical step,” says Peter Beck, Rocket Lab’s founder.

Beck seems uncannily logical about the risks his young company is taking. When asked about his feelings about launching actual stuff on “Still Testing,” he replied that doing so certainly involved extra actual tasks. “I’m not sure if you can become extra nervous or extra excited,” he said. That sentiment fits with the launches’ pragmatic names. And those fit with New Zealanders’ general pragmatic streak, says Beck (he cites some of the country’s names for flowing water: “River One,” “River Two,” “River Three”).

For their part, Planet and Spire are here for that no-nonsense-ness. Planet already has around 200 satellites in orbit, so adding one to its flock of so-called “Doves” would be good but not critical. Besides, says Mike Safyan, Planet’s director of launch, “we picked one we wouldn’t miss too much”: a sat named Pioneer. It’s a double meaning, says Safyan. First, it’s an homage to NASA’s old missions, on whose shoulders they stand.

Second meaning: They are pioneers. “There is this New Space wave that Planet is very much at the forefront of and Rocket Lab is very much at the forefront of,” says Safyan.

This is what the forefront looks like, by the way: You can book space on an Electron rocket online—just click the size of your smallsat!—the same basic way you’d book a bunk on Airbnb.

Spire, too, is into it. Jenny Barna met Peter Beck before she had her current job, as the director of launch at Spire, whose satellites aim to keep track of aeronautical and nautical-nautical traffic, as well as weather. Back in her days at SSL, which makes spacecraft and communications systems, a coworker invited her to a presentation Beck was giving on-site. She listened to Beck describe Rocket Lab’s technology, and his vision for a vehicle that provided frequent, affordable launches just for little guys—in an industry that caters to huge sats, and makes smallsats second-class passengers—and she was intrigued. “I remember sitting there thinking how lucky I am to be working at this industry at this time,” she says. And after she moved to Spire, she led the company to sign on as one of Rocket Lab’s first customers. It’s currently contracted for up to 12 launches.

That’s a lot! But Spire has to launch a lot. The company wants access to space every month, so they can produce their satellites in small batches, send them up, iterate, and launch the next generation. So far, counting today, Spire has launched 541 satellites. They’ve done it on the rockets of Russia (Soyuz and Dnepr), Japan (H-IIB), and India (PSLV), and the rockets of the US’s Orbital (Antares) and ULA (Atlas V). And now, they’ll ride with Rocket Lab, picking on a rocket of their own satellites’ size.

But that doesn’t mean they’ll ever only use Rocket Lab. Or Orbital. Or ULA. They plan to keep their eggs distributed—partly because even when it’s not just a test, rockets still blow up, the eggs breaking along with them. “It’s just part of the industry,” says Barna.

When Barna spoke of “Still Testing” a few days before the initial launch window, she was straight-up about the possibility that this particular rocket wouldn’t carry the eggs safely to space. “We know that a million things have to go perfectly for this to be successful,” she said. “We hope they make history.”

They did, and deployed the three-satellite payload into orbit. And pending analysis of this seemingly successful test, Rocket Lab will skip its planned third test and jump straight into official operations, in early 2018. “We’ve got a lot of customers that need to get on orbit,” says Beck.

Suggestion for the third flight’s name: “This Is Not a Test.”

1UPDATE 12:08 AM EST 1/21/2018: This story has been updated to include new satellites Rocket Lab launched recently.

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Canada's Hydro Quebec unable to meet demand from digital currency miners

MONTREAL (Reuters) – Canada’s largest utility, Hydro Quebec, is reviewing its commercial energy strategy after being inundated with demand from global digital currency miners rushing to the province to benefit from political stability and low energy prices.

Hydro Quebec will not have the long-term capacity to meet all the anticipated demand, a company spokesman said, after the utility’s potential mining projects more than doubled in a week to 70.

Bitcoin mining consumes large quantities of energy because it uses computers to solve complex math puzzles to validate transactions in the cryptocurrency, which are written to the blockchain, or digital ledger.

The first miner to solve the problem is rewarded in bitcoin and the transaction is added to the blockchain.

Expectations of a crackdown in China, one of the world’s biggest sources of cryptocurrency mining, on the sector has made energy-rich Quebec an attractive site for companies, and its chief executive is now receiving queries on his Linkedin profile.

Bitmain Technologies, operator of some of the largest mining farms in China, is among the companies searching for sites in Quebec. Others include Japan’s GMO Internet Inc (9449.T), but it has not yet taken a decision on whether to start operations in the province, a source familiar with the matter said. A GMO company spokeswoman declined to comment.

“We are receiving dozens of demands each day. This context is prompting us to clearly define our strategy,” said Hydro Quebec spokesman Marc-Antoine Pouliot by phone.

“We won’t be able to power all the projects that we’re receiving,” he said, while stressing that Hydro Quebec is not automatically refusing entrepreneurs. “This is evolving very rapidly so we have to be prudent.”

Hydro is also keen on attracting data centers, which generate more employment than bitcoin mines.

According to Hydro Quebec, the province estimates it will have an energy surplus equivalent to 100 terawatt hours over the next 10 years. One terawatt hour powers 60,000 homes in Quebec during a year.

A shortage of sites in Quebec with the necessary electric capacity has prompted several entrepreneurs to break down their projects into smaller investments, said Laurent Feral-Pierssens, executive director, emerging technologies at KPMG Canada.

“This is the tip of the iceberg, as only a fraction of the initiatives have reached out to Hydro Quebec yet,” said Feral-Pierssens, who works with digital currency miners that want to open operations in the province.

Reporting By Allison Lampert; Additional reporting by Hideyuki Sano in Tokyo; Editing by Denny Thomas and Susan Thomas

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Home security company ADT Inc's IPO priced at $14 per share

(Reuters) – ADT Inc, a provider of security monitoring services, said on Thursday that its initial public offering was priced at $14 per share, below the expected range of $17 to $19.

The 105 million share offering raised about $1.47 billion, the company said.

Even at the lower valuation, the IPO is likely one of the largest in the first part of 2018.

The company’s stock is expected to debut on Friday on the New York Stock Exchange under the symbol “ADT”.

ADT is backed by private equity firm Apollo Global Management LLC, which will own 84.87 percent of common equity after the offering.

ADT, which has about 7.2 million customers, makes security monitoring devices such as surveillance cameras and burglary alarms, apart from home automation products including digital door locks and thermostats.

Handling about 15 million alarms annually, the company is the largest player in the residential monitored security industry with about 30 percent market share in the United States and Canada. However, it faces growing competition from monitoring apps that work directly on smartphones and other personal devices.

The company reported revenue of $3.21 billion for the nine months ended Sept. 30, up 69 percent from the same period a year earlier.

More than 90 percent of ADT’s revenue comes from recurring monthly payments under customer contract terms that are generally three to five years in length, the company said in its IPO filing.

Morgan Stanley, Goldman Sachs, Barclays, Deutsche Bank Securities and RBC Capital Markets were among top underwriters to the offering.

Reporting by Nikhil Subba in Bengaluru; Editing by Maju Samuel

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Apple Plans to Hire 20,000 Workers Over the Next Five Years

Apple is going on a hiring spree and plans to recruit 20,000 workers over the next five years.

The consumer technology giant revealed its hiring push on Wednesday as part of the company’s plans to invest $30 billion in “capital expenditures” in the U.S. over the next five years.

Apple (aapl) did not specify the types of jobs that will be part of it its hiring push, such as if the majority will be sales staff at its various Apple stores or if they will be software engineers or technical workers.

The company also said that it plans to hire workers for a second Apple campus that will “initially house technical support for customers,” although Apple didn’t say where the facility will be located.

Apple also said it would spend $10 billion on data centers in the U.S., although it didn’t say if the money would be used to open new facilities or improve existing ones. The company also broke ground on a new data center on Wednesday in Reno, Nev., which CEO Tim Cook visited during a ceremony.

Apple also said that it would increase spending to various U.S.-based component suppliers and manufacturers from $1 billion to $5 billion.

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“Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the U.S. economy,” Cook said in a statement. “We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness.”

Apple’s public relations push to be perceived as a big contributor to the overall U.S. economy comes amid comments made by President Donald Trump during the 2016 presidential election. At the time, Trump criticized Apple for making the bulk of its popular products like the iPhone and Mac computers in China.

“We’re gonna get Apple to start building their damn computers and things in this country, instead of in other countries,” Trump reportedly said during a campaign speech.

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Apple Employees Reportedly Getting a $2,500 Stock Bonus This Year

Apple employees may be getting a big bonus this year.

The consumer technology giant plans to give its employees $2,500 in restricted stock units, which will vest at a later date, according to a Bloomberg News report published Wednesday that cites unnamed sources.

It’s unclear how many Apple (aapl) employees will receive the bonus, but the report said it would be given to “most employees worldwide.” Apple has over 120,000 global workers, with 84,000 based in the U.S.

News of the stock grants come on the same day that Apple said it would hire 20,000 new workers and build a new Apple campus in an unspecified location, part of what the company pitches as a $350 billion investment in the U.S. over the next five years.

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Apple’s planned bonus also comes shortly after President Trump signed tax legislation that lowers corporate taxes and gives companies like Apple a break on money that they bring back to the U.S. from overseas. Apple said on Wednesday that it would pay $38 billion in taxes this year on the money that it plans to repatriate from its overseas cash hoard of more than $250 billion.

Apple shares were relatively flat in after-hours trading on Wednesday at $179.30 after rising 1.7% in regular trading to an all-time closing high.

Fortune contacted Apple for more information and will update this story if it responds.

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21 states sue to keep net neutrality as Senate Democrats reach 50 votes

(Reuters) – A group of 21 U.S. state attorneys general filed suit to challenge the Federal Communications Commission’s decision to do away with net neutrality on Tuesday while Democrats said they needed just one more vote in the Senate to repeal the FCC ruling.

The state attorneys, including those of California, New York and Virginia as well as the District of Columbia, filed a petition to challenge the action, calling it “arbitrary, capricious and an abuse of discretion” and saying that it violated federal laws and regulations.

The petition was filed with a federal appeals court in Washington as Senate Democrats said on Tuesday they had the backing of 50 members of the 100-person chamber for repeal, leaving them just one vote short of a majority.

Even if Democrats could win a majority in the Senate, a repeal would also require winning a vote in the House of Representatives, where Republicans hold a greater majority, and would still be subject to a likely veto by President Donald Trump.

Senator Ed Markey said in a statement that all 49 Democrats in the upper chamber backed the repeal. Earlier this month, Republican Senator Susan Collins said she would back the effort to overturn the FCC’s move. Democrats need 51 votes to win any proposal in the Republican-controlled Senate because Vice President Mike Pence can break any tie.

Trump backed the FCC action, the White House said last month, and overturning a presidential veto requires a two-thirds vote of both chambers.

States said the lawsuit was filed in an abundance of caution because, typically, a petition to challenge would not be filed until the rules legally take effect, which is expected later this year.

Internet advocacy group Free Press, the Open Technology Institute and Mozilla Corp filed similar protective petitions on Tuesday.

The FCC voted in December along party lines to reverse rules introduced in 2015 that barred internet service providers from blocking or throttling traffic or offering paid fast lanes, also known as paid prioritization. The new rules will not take effect for at least three months, the FCC has said.

Senate Democratic Leader Chuck Schumer said the issue would be a major motivating factor for the young voters the party is courting.

A trade group representing major tech companies including Facebook Inc, Alphabet Inc and Amazon.com Inc said it would support legal challenges to the reversal.

The FCC vote in December marked a victory for AT&T Inc, Comcast Corp and Verizon Communications Inc and handed them power over what content consumers can access on the internet. It was the biggest win for FCC Chairman Ajit Pai in his sweeping effort to undo many telecommunications regulations.

While the FCC order grants internet providers sweeping new powers it does require public disclosure of any blocking practices. Internet providers have vowed not to change how consumers obtain online content.

House Energy and Commerce Committee Chairman Greg Walden, a Republican, said in an interview on Tuesday he planned to hold a hearing on paid prioritization. He has urged Democrats to work constructively on a legislative solution to net neutrality “to bring certainty and clarity going forward and ban behaviors like blocking and throttling.”

He said he does not believe a vote to overturn the FCC decision would get a majority in the U.S. House. Representative Mike Doyle, a Democrat, said Tuesday that his bill to reverse the FCC decision had 80 co-sponsors.

Paid prioritization is part of American life, Walden said. “Where do you want to sit on the airplane? Where do you want to sit on Amtrak?” he said.

Reporting by David Shepardson; Editing by Cynthia Osterman and Leslie Adler

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BlackBerry launches cybersecurity software for self-driving cars

(Reuters) – Canadian software maker BlackBerry Ltd on Monday launched a new cybersecurity software, which identifies vulnerabilities in programs used in self-driving cars.

The product, called Blackberry Jarvis, is being marketed first to automakers – a group of customers the former smartphone maker is hoping will power its turnaround efforts – but could also have applications in healthcare and industrial automation.

BlackBerry said it was offering Jarvis on a pay-as-you-go basis.

Once initiated, automakers will have online access to Jarvis and can scan files at every stage of software development, the company said.

Last year, the global “ransomware” attack, dubbed WannaCry, helped raise awareness of BlackBerry’s security software business, which is largely focused on managing secure connections to mobile devices.

BlackBerry said it had already tested Jarvis with automaker Tata Motors’ Jaguar Land Rover unit, whose chief executive said Jarvis reduced the time needed to assess code from 30 days to seven minutes.

BlackBerry in September announced it would partner with auto supplier Delphi Automotive Plc on a software operating system for self-driving cars.

Earlier this month BlackBerry and Chinese internet search firm Baidu Inc signed a deal to jointly develop self-driving vehicle technology.

BlackBerry has also recently signed automotive-related deals with chipmaker Qualcomm, auto supplier Denso and Ford Motor Co.

Reporting by John Benny in Bengaluru and Alastair Sharp in Toronto; Editing by Lisa Shumaker

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Global carmakers to invest at least $90 billion in electric vehicles

DETROIT (Reuters) – Ford Motor Co’s plan to double its electrified vehicle spending is part of an investment tsunami in batteries and electric cars by global automakers that now totals $90 billion and is still growing, a Reuters analysis shows.

That money is pouring in to a tiny sector that amounts to less than 1 percent of the 90 million vehicles sold each year and where Elon Musk’s Tesla Inc, with sales of only three models totaling just over 100,000 vehicles in 2017, was a dominant player.

With the world’s top automakers poised to introduce dozens of new battery electric and hybrid gasoline-electric models over the next five years – many of them in China – executives continue to ask: Who will buy all those vehicles?

“We’re all in,” Ford Motor Executive Chairman Bill Ford Jr said of the company’s $11 billion investment, announced on Sunday at the North American International Auto Show in Detroit. “The only question is, will the customers be there with us?”

“Tesla faces real competition,” said Mike Jackson, chief executive of AutoNation Inc, the largest U.S. auto retailing chain. By 2030, Jackson said he expects electric vehicles could account for 15-20 percent of New vehicle sales in the United States.

Investments in electrified vehicles announced to date include at least $19 billion by automakers in the United States, $21 billion in China and $52 billion in Germany.

But U.S. and German auto executives said in interviews on the sidelines of the Detroit auto show that the bulk of those investments are earmarked for China, where the government has enacted escalating electric-vehicle quotas starting in 2019.

Mainstream automakers also are reacting in part to pressure from regulators in Europe and California to slash carbon emissions from fossil fuels. They are under pressure as well from Tesla’s success in creating electric sedans and SUVs that inspire would-be owners to flood the company with orders.

While Tesla is the most prominent electric car maker, “soon it will be everybody and his brother,” Daimler AG Chief Executive Dieter Zetsche told reporters on Monday at the Detroit show.

Daimler has said it will spend at least $11.7 billion to introduce 10 pure electric and 40 hybrid models, and that it intends to electrify its full range of vehicles, from minicompact commuters to heavy-duty trucks.

“We will see whether demand will drive our (electric vehicle) sales or whether we will all be trying to catch the last customer out there,” Zetsche said. “Ultimately, the customer will decide.”

A 1979 Mercedes G-Class SUV encased in 44.4 tons of synthetic resin greets guests as they arrive at the North American International Auto Show in Detroit, Michigan, U.S. January 15, 2018. REUTERS/Jonathan Ernst

For now, Nissan Motor Co Ltd’s 7-year-old Leaf remains the world’s top-selling electric vehicle and the company’s sole battery-only car – an offering soon to be swamped by new rivals bringing tougher competition that could add pressure to pricing.

“Everybody will find out that if you push you will have a lot of bad news on residual values,” Nissan Chief Performance Officer Jose Munoz told Reuters.

Jim Lentz, chief executive of Toyota Motor Corp’s North American operations, said it took Toyota 18 years for sales of hybrid vehicles to reach 3 percent share of the total market. And hybrids are less costly, do not require new charging infrastructure and are not burdened by the range limits of battery electric vehicles, he said.

“What’s it going to take to get to 4 to 5 percent” share for electric cars, Lentz said. “It’s going to be longer.”

The largest single investment is coming from Volkswagen AG (VOWG_p.DE), which plans to spend $40 billion by 2030 to build electrified versions of its 300-plus global models.

In the United States, General Motors Co has outlined plans to introduce 20 new battery and fuel cell electric vehicles by 2023, most of them built on a new dedicated, modular platform that will be introduced in 2021.

GM Chief Executive Mary Barra has not said how much the automaker will spend on electric vehicles. Much of the investment will be made in China, where GM’s Cadillac brand will help spearhead the company’s more aggressive move into electric vehicles, according to Cadillac President Johan de Nysschen.

In an interview on Monday at the Detroit show, de Nysschen said Cadillac would “play a central role” in GM’s electric vehicle strategy in China, and will introduce an unspecified number of models based on GM’s future electric-vehicle platform. Some of those Cadillacs could be assembled in China, de Nysschen said.

Chinese automakers, including local partners of Ford, VW and GM, all have publicized aggressive investment plans.

Not every multinational automaker is moving so aggressively into electric vehicles.

In Detroit on Monday, Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said it did not make sense to announce a specific number of new electric vehicles – and he said the company was not under pressure, but working to meet emissions requirements. “We do not have a gun to our head,” Marchionne said. He said EVs will likely become mandatory in Europe because of emissions rules.

Additional reporting by Joseph White, David Shepardson, Norihiko Shirouzu, Nick Carey, Laurence Frost, Alexandria Sage and Andreas Cremer in Detroit; Editing by Matthew Lewis

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The Bond Bull Market Is Over

The financial media headlines have been dominated over the past week by the latest bold declarations. Treasury yields are on the rise, and “the bond bull market is over!” Except that it’s not over. Not even close to starting to be over as a matter of fact. At least not yet. For despite its extraordinarily advanced age and recent fall coupled with the bold proclamations from some notable bond gurus, the 37-year old bond bull market still remains very much alive today.

Bonds Under Fire

Now it should be noted that the bond market has been very much under pressure as of late. Consider the following chart of the 10-Year U.S. Treasury yield (IEF). At the start of September, 10-Year U.S. Treasury yields have risen from a low of 2.05% to as high as 2.55% on Friday.

Knowing that as bond prices fall, bond yields rise, this chart looks bad, right?

Let’s continue by taking this recent rise in yields and put it in the context of the bond bull market. With the latest pullback in bond prices, 10-Year U.S. Treasury yields have inched above their long-term downward sloping trendline.

It’s official. The bond bull market is over, right!?! This sentiment was confirmed by none other than the Bond King himself just this past week.

“Gross: Bond bear market confirmed today. 25 year long-term trendlines broken in 5yr and 10yr maturity Treasuries.”

–Janus Henderson Advisors, Bill Gross, January 9, 2018

Sure, bonds have had a tough stretch as of late. But the bond bull market is not over. It’s going to take a whole lot more than the recent rise in yields to kill off today’s bond bull market.

Not So Fast

Let’s begin by pulling back and taking a look at the bond bull market through a much wider lense. The bond bull market first began in late 1981. This was the first year of the Reagan administration at a time not long after the first flight of the space shuttle Columbia. It was also a time when the then Cinderella story San Francisco 49ers were gearing up for their first Super Bowl run under then third year coach Bill Walsh and the Motor Trend Car of the Year was the Chrysler K Car (love those white wall tires!).

In short, the bond bull market has been going on for a long time now. So what about this upside break in Treasury yields in this longer term context? Pull out your microscopes and look at the following chart. See it? Right there in the bottom right corner? See it? Yeah, neither can I.

But what I can see is a number of other instances over the past 37 years where 10-Year U.S. Treasury yields moved more measurably above this downward sloping trendline in yields including late 1999 into early 2000 as well as all of 2006 into most of 2007. Yet despite these supposed trendline breaks, the bond bull market remains still alive today.

So what is the first key takeaway? That breaking a downward sloping trend line for a few minutes one trading day or for several months for that matter is simply not enough to declare a bull market in anything dead, particularly when it has lasted as long as the bond bull market. It takes a whole lot more.

But what about the proclamations of the Bond King? Shouldn’t he know what he is talking about? Don’t get me wrong. I have a ton of respect for Bill Gross and has listened to what he has to say for decades now. But as demonstrated by the tweet below from a few years back now, even the best of ‘em can miss the mark with their bold proclamations.

“Gross: The secular 30-yr bull market in bonds likely ended 4/29/2013.”

–PIMCO, Bill Gross, May 10, 2013

The same can be said of similar proclamations from other respected bond gurus, some of which were out in force in late 2016 declaring that 10-Year Treasury yields could top 6% in the next few years. Indeed, this outcome may very well come to pass, but A LOT of things need to happen between now and then to lead to this end result. And to date, many of these things remain decidedly elusive. Moreover, it is important to note that many of these very same bond gurus making bold calls such as declaring the bond bull market being over in 2012 also understandably maintain openness in their predictions. This includes suggesting that bond yields could fast track their way lower to 1% back at the start of 2015, only to see them turn and steadily rise throughout the rest of the calendar year.

As a result, while they remain worth respecting and listening to closely, remember that the bold prognostications by market gurus of any ilk are nothing more than pieces of worthwhile information that should be considered in a broader context when continuing to map out one’s own investment journey that takes place step-by-step over long-term periods of time.

Bond Bull Market – Alive And Well

When it comes to today’s bond bull market, sure it has struggled recently, but it remains very much alive and well today.

Bull markets do not die all of the sudden. Instead, they die a slow death over time. And the longer they have been in place, the longer it takes to kill them off. When it comes to bull market durations, 37-years is definitely on the very long side of the historical spectrum. As a result, the bond bull market is not going to simply end overnight. Instead, it is going to be a process that will take months if not years to fully play itself out.

In order to officially declare the bond bull market dead and the arrival of a new bond bear market to take its place, we are going to need to see A LOT of accompanying events take place along with it. And virtually none of these things exist today.

Let’s begin with the trendline break itself. Yes, we inched across the downward sloping trendline for the 10-Year U.S. Treasury yield. But we are not even close to seeing a confirmation in this trendline break for the 30-Year U.S. Treasury yield. In fact, this remains locked in the very middle of its long-term range. Bond bull market very much alive and well here.

With this point in mind, it is worthwhile to compare the path of the 10-Year and 30-Year bond yields (TLT) since early September. While the 10-Year yield has steadily risen, the 30-Year yields remains well below its highs from late October. This implies not that something is going on with the bond market more broadly, but instead that something may be taking place more specifically with 10-Year Treasury bonds.

Now consider the same 10-Year Treasury yields against their shorter dated brethren in 2-Year Treasury yields. Here we see 2-Year yields are rising even faster than 10-Year yields.

This, my friends, is further evidence of the yield curve flattening that we have been hearing so much about. This is shown differently in the chart below as the spread between the 10-Year U.S. Treasury yield and the 2-Year U.S. Treasury yield (the 2/10 spread), which has been falling like a rock since late October to new post crisis lows.

While the 2/10 spread increased marginally in recent days, the trend remains definitively lower. And most other spread readings across the yield curve including the 5/30 spread have not even moved marginally higher but instead have fallen to fresh new lows in recent days.

Why do these spreads matter? Because in order for the bond (AGG) bull market to end, we almost certainly need to see steadily rising inflation along with sustained economic growth. And the leading signal from the bond (BND) market that inflation is steadily on the rise and stronger economic growth is on its way is a steepening yield curve. Put more simply, we would expect to see 30-year yields rising faster than 10-year yields and 10-year yields rising faster than 2-year yields. But instead, we are continuing to see the exact opposite. The yield curve is flattening. And 2-year yields (SHY) are rising faster than 10-year yields, which are rising faster than 30-year yields. If anything this suggests signals of disinflation and a weaker economy, which is supportive of a bond bull market picking up steam in the next few years instead of coming to its demise today.

OK. So the trends in the bond market itself do not suggest the bull market is actually ending. But let’s take this a few steps further.

Let’s suppose the bond bull market was indeed ending and 10-Year U.S. Treasury yields were set to fast track their way to 6% in the next two years as some experts are suggesting. Now before going any further it should be noted that a move in 10-Year U.S. Treasury yields from today’s levels at 2.55% to 6% in two years means that we are going from current levels that are still roughly -1 standard deviations below the long-term historical average to +1 standard deviations above the long-term historical average. In other words, this suggests that something radical is about to happen in the U.S. economy in order to realize this outcome – either that economic growth is going to run so hot that it’s going to bring rapidly escalating inflation along with it, which is likely to cause the U.S. Federal Reserve to start slamming on the monetary policy breaks, or that we have a bond market riot that comes without U.S. economic growth. Either way, the outcome would be decidedly negative for capital markets in general across the board. So if this was indeed the case that such an outcome was nigh, we would expect to see commensurate ripple effects across the capital market landscape.

With this in mind, let’s consider high yield bonds (JNK). This is an asset class that has seen its absolute yields under 6% fall to their lowest levels on record and its yield spreads relative to comparably dated U.S. Treasuries at just over 3% also approaching their tightest levels in history last seen in 2007. Put more simply, high yield bonds are priced at a considerable premium today. Now recognizing the fact that investors are not likely to wish to receive a negative premium for the considerably greater default and liquidity risks that come with owning high yield bonds versus a comparably dated U.S. Treasuries (put more simply, investors are not going to own a high yield bond yielding 5.7% if they can get U.S. Treasuries with the same time to maturity yielding 6%), we should expect high yield bond prices to also be moving sharply lower in anticipation of this bond bull market coming to an end. But how have high yield bonds been doing lately amid these calls that the bond bull market is now over? Just fine as a matter of fact.

Either high yield bond (HYG) investors are absolutely oblivious, or something else is going on in the bond market other than a bull meeting its imminent demise. Even during the immediate aftermath of the U.S. Election, which was the last time that the bond gurus were out on the streets in force declaring the end of the bond bull market, we saw a reflexive action in high yield bonds to the downside that ultimately proved to be unfounded. And this same lack of response same thing can be said today for investment grade corporate bonds (LQD), emerging market debt (EMB), senior loans (BKLN), convertible bonds (CWB), or any other spread product whose valuation is directly or primarily reliant on U.S. Treasury yields including – wait for it – U.S. stocks (SPY). If the bond bull market has officially come to an end, apparently the rest of capital markets has not gotten the memo as of yet.

Now have we seen a rise in inflation expectations as of late? Sure, as the 5-year breakeven rate, which is a measure of expected inflation over the next five years derive by 5-year Treasuries (IEI) versus 5-year inflation indexed Treasuries (NYSEARCA:TIP), has risen from around 1.56% at the start of September to 1.89% as of Friday. This is notable and is a development worth monitoring in the days, weeks, and months ahead. But this same reading remains below the late January 2017 highs of 1.96% and is still well below the expectations toward 2.4% throughout much of the post crisis period up until a few years ago when the realization started to set in that the sustainably higher inflation anticipated from extraordinarily aggressive monetary policy might never actually materialize.

So while we do have some evidence of increased inflation expectations lately, they should still be considered marginal at best to date.

Let us take another step and consider U.S. Treasury (TLH) yields relative to their global counterparts. Much has been made about the corresponding rise in government bond yields from comparable global safe havens such as Japan (NYSEARCA:EWJ) and Germany (EWG) and how they are also supporting this end of bond bull market days theme. Yes, 10-Year government bond yields in Japan recently to as high as 0.09%, but this is still notably low and we have seen this script a few times before over the past year.

Same with German Bunds. We have seen 10-Year yields rise to 0.58% on Friday at a time when the European (VGK) economy is supposedly continuing to improve and the ECB is taking their foot away from the monetary policy accelerator. Yet we even higher yields touched back in July 2017 only to see them fall back again in the second half of last year.

And even with the recent rise in yields across the safe haven bond world, it is still important to note that the premium that global bond investors are getting paid to put their money in U.S. Treasuries remains about as attractive as it has been in recent history.

This relatively attractive valuation for U.S. Treasuries relative to their global safe haven counterparts suggests that a source of demand should remain to stem the onset of any bear market tide and hold the bull market in place at least for the time being.

But what about the blow out in the deficit and the increased U.S. Treasury issuance expected to result from recently passed tax legislation? The world has shown repeatedly in recent years including Japan over longer-term periods of time that governments can borrow like drunken sailors and still maintain historically low interest rates. This is an important issue worth monitoring, but we need to see evidence of such pressures actually showing up in bond prices and yields first before actually taking action on such expectations.

What about the fact that the Fed is set to increasingly shrink their balance sheet going forward as part of quantitative tightening, or QT? It is important to remember two things. First, the Fed to this point is shrinking its balance sheet by allowing some of its existing maturities to roll off without reinvesting the proceeds. Put simply, they are not selling, instead they are no longer repurchasing as much as they were before. This is an important difference. Moreover, even when they finally do start selling outright at some point in the future, it is critical to remember that they are only one participant in a large and vast global marketplace for U.S. Treasuries. And they will be one seller in a market that could be filled with many buyers along the way, particularly if the global economy is not doing so hot in the future. This helps explain why U.S. Treasury yields consistently rose throughout much of QE1, QE2 and QE3 despite the fact the Fed was buying massive sums of U.S. Treasuries all along the way.

Lastly, let’s come full circle and consider the technical aspect once again. In order for a bull market in anything to be over, we need to see a successive series of lower lows and lower highs. In the case of U.S. Treasury yields, this would be higher highs and higher lows. But when looking at 10-Year U.S. Treasury yields, we don’t even have the first higher high as of yet, as the 10-Year Treasury yield at 2.55% remains below the high of 2.62% from early 2017. We would need to see multiple higher highs and higher lows over the course of a year or more before we can even begin to conclude anything about a 37-year bull market in bonds being over.

And when considering the same chart for 30-Year U.S. Treasury yields, we don’t even have any signs of a reversal in trend, much less anything even resembling a higher high of which to speak.

I’m Still Alive

Putting all of this together, the recent talk of the bond bull market being over is grossly overblown. Could this be the very beginning of the end for the bond bull market? Sure, anything is possible. But we are going to need to see A LOT, and I mean A LOT, of confirmation not only from 10-Year U.S. Treasuries, not only from the U.S. Treasury market in general, not only from the broader bond market, but also from the capital markets and economic data spectrum as a whole before we can even begin to consider that the bond bull market that is running at 37-years and counting is even close to being over. If anything, it is the latest attractive buying opportunity in a long series of buying opportunities that have presented itself in the bond market over the past four decades.

What then explains the recent selling in the belly of the U.S. Treasury curve and the corresponding rise in yields? I will be interested as I have been in past years to take a look at the Treasury data on major foreign holders of Treasury securities when it is officially released in a few months, as I suspect we will be able to find our answers in this data has we have so many times in the past when the mainstream financial media is still talking about things like “taper tantrums”.

Of Stocks And Bonds And Bulls

Before closing, I am compelled to raise a related point. Just as I am writing in defense of the bond bull market still being alive today, I would almost certainly be writing something very similar about the U.S. stock market that closed on Friday at yet another new all-time high at 2786 on the S&P 500 Index (SPY) if it ended up falling sharply below 2200 in the coming months. And this comes from someone in myself that has been a proclaimed long-term stock market bear for many years now (just because I think something will ultimately end badly does not mean that this bad ending will arrive tomorrow and be fully felt overnight).

Some would be out proclaiming the start of a new bear market in stocks as supported by the fact that the S&P 500 Index (IVV) had fallen by more than -20% from its peaks. But just as long lived bond bull markets do not suddenly die with a simple short-term break in trend, long lived stock (NYSEARCA:VOO) bull markets such as our second longest in history today to date will not simply die with one sharp pullback to the downside even if it ends up being a fleeting drop of more than -20% from its all-time highs.

The bull market topping process in any asset class, whether it is stocks (DIA), bonds, or anything else, is something that takes place over extended periods of time and is filled with various escape routes along the way for those that need them. The key in navigating any such transitions is to be prepared and stand at the ready to take not only gradually evasive but potentially even countercyclical action when the time comes. And while their time will eventually come, when considering both the 37-year bond bull market and the 9-year stock bull market, we have yet to arrive today at such a junction for either asset class. At least not yet.

Disclosure: This article is for information purposes only. There are risks involved with investing including loss of principal. Gerring Capital Partners makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Gerring Capital Partners will be met.

Disclosure: I am/we are long RSP,TLT,TIP.

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.

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Meltdown, Spectre, Malicious Apps, and More of This Week's Security News

The fallout of the widespread Meltdown and Spectre processor vulnerabilities continued this week. WIRED took an in-depth look at the parallel sagas that caused four research teams to independently discover the bugs within months of each other. Dozens of patches are now floating around to try to defend devices against attacks that might exploit the vulnerabilities, but a significant amount of time and resources has gone into vetting and installing the patches, because they slow processors down and generally take a toll on systems in some situations.

On Thursday, Congress re-authorized warrantless surveillance initiatives under Section 702 of the 2008 FISA Amendments Act, rejecting reform proposals and instead expanding the scope of the dragnet for six years. In other secret surveillance news, a report by Human Rights Watch details legal techniques law enforcement officials use to avoid revealing some of their sketchier investigative tools.

Skype is going to start offering end-to-end encryption as an opt-in feature, which will bring the protection to the service’s 300 million users (though the security industry likely won’t be able to vet whether Skype’s encryption implementation is actually robust). But researchers found a flaw in WhatsApp, which is end-to-end encrypted by default, that would allow an attacker to join a private group chat and manipulate the notifications about their entrance so group members aren’t necessarily aware that they are an interloper.

Protests in Iran continue to be forcibly opposed by the government on numerous fronts, including through initiatives to disrupt Iranians’ internet connections and access to communication platforms like Instagram and Telegram. Researchers have developed a technique for catching spy drones in the act by analyzing their radio signals, and mobile pop-up ads are on the rise. Oh, and the Russian hacking group Fancy Bear is apparently gearing up to target the 2018 Winter Olympics, so there’s that.

And also there’s more. As always, we’ve rounded up all the news we didn’t break or cover in depth this week. Click on the headlines to read the full stories. And stay safe out there.

###Google Removes 60 Malicious Apps Downloaded Millions of Times from the Official Play StoreGoogle removed 60 supposed gaming apps from the Google Play Store on Friday after new research revealed that the apps were laced with malware designed to show pornographic ads and get users to make bogus in-app purchases. The findings from the security firm Check Point indicate that users downloaded the tainted apps three to seven million times. The malware is known as “AdultSwine,” and also has a mechanism to try to trick users into downloading phony security apps so attackers can gain even deeper access to victims’ devices and data.

The malware campaign is problematic in general, but is particularly noteworthy because it targets apps that might appeal to children, like one called “Paw Puppy Run Subway Surf.” The situation fits into a larger pattern of malicious apps sneaking into the official Google Play Store. Google has been working for years on tactics to try to catch and screen out bad apps.

FBI Reinforces Anti-Encryption Stance

FBI Director Christopher Wray renewed controversy about encryption on Tuesday when he said at a New York cybersecurity conference that the data protection protocols are an “urgent public safety issue.” Wray noted that the FBI failed to crack 7,800 devices last year that would have aided investigations. Wray said that encryption bars the FBI from extracting data in more than half the devices it tries to access. Digital data protections, namely encryption, have caused longstanding controversy about the balance between the public safety necessity of law enforcement and the separate safety issues that emerge when an encryption protocol is undermined by a government backdoor or other workaround. Echoing Wray’s remarks, FBI forensic expert Stephen Flatley said at a different New York cybersecurity event on Wednesday that people at Apple are “jerks,” and “evil geniuses” for adding strong data protection mechanisms to their products.

###Apple Patches a Small, But Glaring Bug in macOSA new bug discovered in macOS High Sierra would allow an attacker to change your App Store system preferences without knowing your account password. That doesn’t get an attacker…all that much, and the bug only exists when a device is logged into the administrator account, but it’s another misstep on the ever-growing list of security gaffes in Apple’s most recent operating system release. A fix for the bug is coming in the next High Sierra release.

###US Customs and Boarder Patrol Updates Its Electronic Device Search Policy

The United States Customs and Border Protection agency updated 2009 guidelines last week to include new protocols for searching electronic devices at the border. CBP says it searched 19,051 devices in 2016 and 30,200 devices in 2017. The new documents lay out the difference between a Basic Search, in which agents can ask anyone to submit a device for local inspection (data stored in the operating system and local apps), and an Advanced Search, in which border agents can connect a device to a special CBP analysis system that scans it and can copy data off of it. The guidelines stipulate that agents can only do Advanced Searches when they have reasonable suspicion that an individual has participated in criminal activity or is a threat to national security in some way. CBP agents are limited to devices and can’t search an individual’s cloud data. Despite these and other limitations outlined in the procedures, privacy advocates note that these CBP assessments are still warrantless searches, and the new guidelines more specifically and extensively outline what agents can do in addition to describing boundaries.

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How an Apple MacBook Air Kept the ‘Star Wars: The Last Jedi’ Script Secret

Next time you look over at someone typing away on a computer at the coffee shop, you might be looking at someone creating the next big Star Wars script.

In a piece published in The Wall Street Journal on Thursday, Rian Johnson, the writer and director for last year’s blockbuster Star Wars: The Last Jedi, revealed that he wrote the entire film on Apple’s thin and lightweight notebook, the MacBook Air. But in a world overrun with security threats and people lusting after early access to a Star Wars script, Johnson needed to take some extreme measures to keep the script safe.

Johnshon explained in his Journal article that he kept the MacBook Air “air-gapped,” a term used to define a computer that never accesses the Internet. He also only used the MacBook Air for writing the script and when done, would turn it off and kept it hidden away in a safe at the studio.

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“I think my producer was constantly horrified I would leave it in a coffee shop,” he wrote.

Star Wars: The Last Jedi hit theaters to widespread fanfare in December. While the film has proven to be a blockbuster hit, it’s also been polarizing among Star Wars fans, with some loving the film’s direction and others taking issue with it. Still, with box office earnings in excess of $1 billion, the film has earned its place as one of the most popular Star Wars films ever.

And who knew the whole time it was just hiding on a MacBook Air?

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Agilent Technologies: An Assessment

Agilent (A) continues to outpace the market, after more than doubling the return of the S&P 500 in 2017.

Chart
A data by YCharts

A main driver of the outperformance largely comes from multiple expansion, as shares continue to trade at a lofty 33 times GAAP earnings.

Valuations

Management over at Agilent also provides “non-GAAP” earnings-per-share numbers (as well as guidance) that it thinks better reflects the firm’s true underlying earnings power. Using the non-GAAP EPS numbers still leaves shares looking quite rich, however, at roughly 30.5 times earnings.

The above chart (and all others, unless otherwise noted) was created by the author using data from Agilent’s 10-K forms.

This compares to the five-year average multiple of 26.7 times earnings, and the thirteen-year median multiple of only 16.83 times earnings. So not only are shares expensive today relative to history, but multiple expansion appears to be an ongoing trend over the last five years in general. I think this trend needs to be examined further.

For one thing, Agilent has focused on transforming its business, especially over the past three years, and achieved the “highest growth rate since the 2014 launch of the New Agilent” according to CEO Mike McMullen, who continued explaining that, “2017 revenues of $4.47 billion are up 6.7% on the core basis.” The company’s non-GAAP operating margins also hit 22%, a 410 basis point jump from fiscal 2014’s adjusted operating margin – and it’s guiding for further expansion in fiscal 2018 to 22.4%.

Agilent has multiple levers it’s pulling to optimize efficiency, focus on quality growth markets, and boost overall margins.

Source: Agilent 2017 Q4 earnings call slides

Analysts expect (non-GAAP) EPS growth of roughly 9.32% in fiscal 2018 and then another 10.85% from 2018 through 2019. With this in mind, we can stack up these growth rates against what’s currently being implied in the share price.

Assuming a discount rate of 10% to 12%, there’s only about 6.5% to 8.5% of EPS growth baked into the company’s share price at present. This also assumes the adjusted EPS figures are accurate reflections of true economic reality.

An analysis of return on equity and capital allocation

Looking at Agilent’s ROE by breaking it down into five analyzable pieces also provides further insight.

We can see margin expansion taking form when analyzing the GAAP numbers as well, with operating margins increasing sequentially over the last three years. The company also continues to generate more revenues in relation to its assets, as illustrated by its improving asset turnover. These two improvements have led to significantly better GAAP ROE for shareholders, despite the deflating effects of declining leverage. All signs so far point to improvement, backing up management’s claims.

Taking the entire capital structure into account, we can also examine management’s capital allocation skills through the lens of return on invested capital.

Agilent likely either came close to earning its cost of capital or earned it (depending on the true cost of equity) in fiscal 2017, indicating adequate profits but nothing exceptional. Due to the extreme difficulty in estimating a true cost of equity, below I will include a range of different equity costs, as well as their impact on overall WACC.

Agilent could theoretically be eking out slim economic profits if its true cost of equity is closer to 8% or 10%, but I like to err on the side of caution.

If we use adjusted operating profit provided by management of $974 (in millions) and hold everything else constant, ROIC would be closer to 12.77%. While the company doesn’t earn wide excess profits (where ROIC greatly exceeds WACC), it could in the future if margin expansion and increased efficiency in the firm’s capital structure continues at a decent pace.

Conclusion: I can empathize with both the bull and bear cases – but there’s likely no margin of safety here either way

There’s little doubt that Agilent is improving the quality of its overall business, while also growing both its top and bottom-lines at an above-average rate. While it appears there could be a valid justification for the firm’s current lofty valuations based on its growth (and assuming a best-case scenario), there doesn’t appear to be any margin of safety.

The worst-case scenario involves a drop in growth and/or failure to continue to expand margins. If that’s the case, a “reversion to the mean” back to more historical valuation multiples could mean potentially ugly downside risks, in my opinion. Downside risk appears to significantly outweigh any upside potential, therefore, and despite my interest in the business improvement and growth potential, I’ll remain on the sidelines.

If you enjoyed this article and would like to receive further updates and articles in the future, please feel free to hit the “Follow” button at the top of the page next to the author’s name.

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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Articles I write for Seeking Alpha represent my own personal opinion and should not be taken as professional investment advice. I am not a registered financial adviser. Due diligence and/or consultation with your investment adviser should be undertaken before making any financial decisions, as these decisions are an individual’s personal responsibility.

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Britain fines Carphone Warehouse 400,000 pounds over data breach

LONDON (Reuters) – Britain’s information regulator said on Wednesday it had fined Carphone Warehouse 400,000 pounds ($539,400) after a 2015 cyber attack exposed the personal data of more than 3 million customers.

The Information Commissioner’s Office (ICO) said the electrical goods and mobile phone retailer, owned by Dixons Carphone, left its systems vulnerable by failing to update its software and carry out routine testing.

“A company as large, well-resourced and established as Carphone Warehouse should have been actively assessing its data security systems, and ensuring systems were robust and not vulnerable to such attacks,” Information Commissioner Elizabeth Denham said in a statement, adding that the fine was one of the biggest that the ICO had issued.

“Carphone Warehouse should be at the top of its game when it comes to cyber-security and it is concerning that the systemic failures we found related to rudimentary, commonplace measures.”

Cyberattackers used valid login details to access Carphone Warehouse’s system through an out-of-date version of content platform WordPress, the ICO said.

The compromised personal data included names, addresses, phone numbers, dates of birth, marital status and, for more than 18,000 customers, their historical payment card details.

Records for some employees of the retailer were also compromised, although the Commissioner said there was no evidence of identity theft as a result of the attack.

A spokesman for Carphone Warehouse said the company had co-operated fully with the investigation and accepted the ICO’s decision.

“We moved quickly at the time to secure our systems, to put in place additional security measures and to inform the ICO and potentially affected customers and colleagues,” the spokesman said.

“Since the attack in 2015 we have worked extensively with cyber security experts to improve and upgrade our security systems and processes.”

Reporting by Kate Holton and Alistair Smout, Editing by Stephen Addison

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Microsoft halts some AMD chip Meltdown patches after PCs freeze

FRANKFURT (Reuters) – Microsoft Corp (MSFT.O) said on Tuesday it had suspended patches to guard against Meltdown and Spectre security threats for computers running AMD (AMD.O) chipsets after complaints by AMD customers that the software updates froze their machines.

Microsoft said in a support blog that it was working with AMD to resolve the issues and would resume Windows operating system software updates to affected AMD devices via its Windows Update process as soon as possible.

AMD shares dipped 1.3 percent in pre-market U.S. trading. Last week the stock rose nearly 20 percent as investors speculated AMD could wrest market share from Intel, whose chips are exposed to risks from possible Meltdown and Spectre attacks.

“To prevent AMD customers from getting into an unbootable state, Microsoft will temporarily pause sending the following Windows operating system updates to devices with impacted AMD processors at this time,” Microsoft said in its statement.

Microsoft said it had received complaints from AMD customers that their machines stopped loading the Start menu or taskbar after installing Windows operating system security updates.

Upon investigation, Microsoft said some AMD chipsets did not conform to technical documentation the chipmaker had provided, preventing Microsoft from successfully patching affected machines.

In its blog post, the software giant said the patches had caused computer screens to freeze up, or have so-called “blue screen errors” on Windows 10, Windows 8.1 and Windows 7.

Meltdown and Spectre are two memory corruption flaws which could allow hackers bypass operating systems and other security software to steal passwords or encryption keys, on most types of computers, phones and cloud-based servers.

AMD said last week that differences in its chip designs from rival Intel Corp meant its products were at “zero risk” from Meltdown flaw but that one variant of the Spectre bug could be resolved by software updates from vendors such as Microsoft.

AMD was not immediately available for further comment.

Reporting by Eric Auchard; Editing by Georgina Prodhan and Edmund Blair

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SpaceX’s Mysterious Zuma Mission Might Not Have Been so Successful After All

A military satellite launched by Elon Musk’s Space Exploration Technologies appears to have crashed into the sea following a malfunction in the latter stages of its ascent, representing a potential setback for the billionaire’s rocket program.

The mission — referred to by the code name Zuma — took off from Cape Canaveral Air Force Station in Florida Sunday on a SpaceX Falcon 9 rocket. But the Strategic Command, which monitors more than 23,000 man-made objects in space, said it is not tracking any new satellites since the launch.

“We have nothing to add to the satellite catalog at this time,” Navy Captain Brook DeWalt, a spokesman for the command, said in an email when asked if the new satellite was in orbit.

A U.S. official and two congressional aides, all familiar with the launch, said on condition of anonymity that the second-stage of SpaceX’s Falcon 9 booster rocket failed. The satellite was lost, one of the aides said, and the other said both the satellite and second-stage rocket fell into the ocean.

“We do not comment on missions of this nature; but as of right now reviews of the data indicate Falcon 9 performed nominally,” James Gleeson, a spokesman for SpaceX, said in an email.

Read: Look at These Incredible Photos of the SpaceX Falcon Heavy Rocket

It’s also possible that the Zuma satellite failed to properly separate, meaning the fault may not have been with the launch system, according to discussions on SpaceX’s twitter feed. Commentary during a webcast of the launch appeared to confirm that the fairings housing the payload were successfully deployed.

Tim Paynter, a spokesman for Northrop Grumman (noc), which was commissioned by the Defense Department to choose the launch contractor, said “we cannot comment on classified missions.” Army Lieutenant Colonel Jamie Davis, the Pentagon’s spokesman for space policy, referred questions to SpaceX.

The launch is SpaceX’s first in what was expected to be a busy year. The company has said it plans to launch about 30 missions in 2018 after completing a record 18 last year. The launch had been pushed back several times since late 2017, with the past week’s extreme weather on the East Coast contributing to the most recent delay.

The Zuma mission was a clear success on at least one count: SpaceX successfully landed the rocket’s first stage for reuse in a future launch, a key step in its goal to drive down the cost of access to space.

SpaceX’s 23-minute webcast of the Zuma launch Sunday evening included the Falcon 9 launch, confirmation that the fairings deployed, and the rocket’s first-stage recovery on land in Florida. Cheers from employees could be heard from Mission Control at the company’s headquarters in Hawthorne, Calif.

The webcast then concluded. During missions for commercial satellite customers, SpaceX typically returns to the webcast to confirm that the payload has separated from the second stage, but Zuma was a classified mission so the lack of further messages wasn’t surprising.

Falcon Heavy

SpaceX, the closely held company founded and led by chief executive officer Elon Musk — who also heads the electric auto manufacturer Tesla (tsla) — is slated to demonstrate the maiden flight of Falcon Heavy, a larger and more powerful rocket, later this month. SpaceX, along with Boeing (ba), also has a contract with NASA to fly astronauts to the International Space Station as part of the “Commercial Crew” program, with the first crucial test flight slated for the second quarter.

SpaceX competes for military launches with United Launch Alliance, a joint venture of Boeing and Lockheed Martin (lmt), which was the sole provider for the Pentagon until Musk launched a campaign in Congress and the courts challenging what he called an unfair monopoly. After a rigorous Air Force review, SpaceX was certified in 2015 to compete for military launches.

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Is The SKY The Limit?

How about this:

A 48% rally in a single day on very heavy volume in the shares of Skyline Corporation (SKY), we wonder whether that is sustainable.

The rally is the result of a merger with (or acquisition of, if you like) the two subsidiaries of Champion Home Builders. From the company PR:

Champion will contribute 100% of the shares of its operating subsidiaries, Champion Home Builders, Inc. and CHB International B.V., to Skyline. In exchange, Skyline is currently expected to issue approximately 47.8 million shares to Champion, representing 84.5% of the common stock of the combined company on a fully-diluted basis. Prior to closing, Skyline expects to declare a dividend to its existing shareholders of its excess net cash available for distribution under the agreement after certain transactional expenses.

We’ll look at the merger below, first here is Skyline’s business:

After a history of losses, the company had only just turned profitable, albeit barely. It is also generating cash, albeit not really in copious amounts:

The improvement in 2015 has led to a (belated) rally in the share price:

2017 brought a distinctly mixed result as the shares crashed back from $15 to $5 in fairly short order, only to rally again. And now they seem off to the races with the merger (or acquisition of Champion by Skyline, depending on your view).

Both companies operate in the pre-fabricated housing segment. Together, they operate 36 manufacturing centers in the US, and another 21 factory-direct retail locations and 10 logistical hubs.

The acquisition cost Skyline $621.4M, all issued in shares (47.8M at $13 per share). Before the acquisition, Skyline only had 8.25M shares outstanding, so the total is now 56.05M. Which brings the market cap of the new company to $1,065M, roughly at the combined revenue of the company at $1B+. The rationale:

It is anticipated that the transaction will generate significant annual synergies to be achieved through direct cost savings, reduced overhead costs and operational improvement opportunities. Additional synergies also are expected through cross-selling and distribution optimization by leveraging the combined company’s owned and independent dealer network.

That does make sense. The PR also argues that the combined company has revenue greater than $1B over the past 12 months and that the pro forma balance sheet is strong generating “significant cash flow.”

Champion Home Builders is a private company so we have little to go on in terms of finances, profitability and cash generation. It exited Chapter 11 in 2010 and at that time it had about $500M in revenue and 3700 employees worldwide. But three years later, according to then CEO Jack Lawless (Corp Magazine):

Today, Champion is on track to double that revenue to nearly $1 billion, Lawless said.

It also had 4300 employees worldwide, 3200 of which in the US. Lawless, back in 2013:

Generally, the manufactured-home industry reports that its products provide quality and performance at prices ranging from 10 to 20 percent less per square foot than conventional site-built homes.

“Through our modular building process, Champion is able to save time and labor costs throughout the building timeline. Without sacrificing quality, modular building takes approximately 50 percent the time of traditional building,” Lawless said.

The company not only produces modular homes, but also commercial buildings like hotels and college dorms.

We’ll have to await the publication of the proxy statement for more details, but the thing we noted was that if Champion was already well on its way to $1B in revenues in 2013, they appear not to have made much progress since as the combined company is said to generate $1B+ in revenues today.

This seems odd to us as there has been considerable growth in the most important segment (manufactured housing). From the latest Skyline 10-Q:

These are units, not dollars. Skyline’s Q3 sales were actually down 4% from Q3 2016. Skyline, whilst much smaller, still produces well over $200K in revenues a year.

So, if Champion’s revenues were already close to $1B in 2013 and the combined revenue today is $1B+, given Skyline’s $230M or so revenues, it looks like Champion has stagnated from 2013 onwards.

That is a little worrying at first sight although we lack the exact figures to arrive at hard conclusions.

Apparently, shareholders of Skyline have no such qualms, given the more than enthusiastic welcome the acquisition has received on the market. Or, given that the 47.8M shares that Skyline is issuing for the acquisition is representing 84.5% of the combined company (according to the PR), that is, Skyline itself is just 15.5% of the new company with some $230M in revenues.

So it looks like Skyline is valuing Champion at a considerable premium based on revenues, but it is entirely possible that the latter is more profitable or generates more cash (or both).

Skyline also noted that they will return excess cash to shareholders. At the end of the last quarter they had $12M in cash. This works out nearly $1.50 in special dividend if all of that is paid out but acquisitions usually come with costs as well, so that remains to be seen. They are apparently not too worried about cash levels after the acquisition.

Conclusion

Given the lack of hard financial data, the strong rally in the shares seems a little odd. At first sight, the acquisition looks like making a lot of economic sense, and the return to shareholders of excess cash is a confidence booster.

However, there are signs that despite considerable industry growth, Champion might not have made much progress and whether the deal makes financial sense is impossible to judge with so little info.

We would stay clear until the dust settles.

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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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Bitcoin Boom: Why Gain Capital Is Likely Going Much Higher In 2018

Source: techjuice.com

Bitcoin Boom: Why Gain Capital Is Going Significantly Higher In 2018

Gain Capital Holdings Inc. (GCAP), a relatively small investment brokerage firm based out of the U.S. has seen an unusual uptick in volume the past few sessions. The increased interest in the stock is due to the company’s recent announcement that it has rolled out Bitcoin (COIN) trading on City Index, its FCA regulated service in the U.K. This allows Gain Capital to capitalize on the booming Bitcoin trading market not only in England and in Europe but also in Asia, Middle East, as well as other regions worldwide.

Regardless whether the price of Bitcoin is going to continue to skyrocket, trade sideways, or decline, it appears that BTC trading is here to stay for the foreseeable future. It is a social phenomenon, a mania of sorts, possibly even a bubble, but with its increasing popularity Bitcoin trading represents an enormous opportunity for Gain Capital. The firm appears to be in a prime position to capitalize on the “Bitcoin Boom”, and have its share price gain significant value in the process.

Of course, as Bitcoin trading ensues at Gain Capital the company will benefit more if BTC’s price continues to appreciate over the long-term. Recent price action in Bitcoin suggest just that, and appears very encouraging. The price recently broke above $15,500, and is currently flirting with the $17,000 level. Once Bitcoin successfully penetrates the $17,000 mark it is likely to retest the $20,000 resistance level, after which a breakout to new highs appears imminent.

Bitcoin 10-Day Chart
Source: Bitcoincharts.com

Bitcoin 2-Month Chart

Gain Capital should benefit greatly from the growing price and increasing optimism surround Bitcoin, as it should continue to drive traffic to its alternative trading platform.

Do You Believe that the “Bitcoin Boom” Will End Any Time Soon?

I want to address one crucial point that is likely to ultimately validate the Gain Capital argument. Does anyone really believe that popularity of BTC trading will somehow go away in the immediate future? Yes, it’s possible the price may fall, but it is also very plausible that the price could continue to go higher for years. Bitcoin is everywhere, and one thing seems certain, its popularity is in an upward trajectory, not in a downward slope.

Sure, things can quite down for a while, like in the period we’re having now, post the futures trading launch, but there will be plenty of opportunities for Bitcoin to come alive going forward. There is the introduction of the Lightning Network sometime this year, a Bitcoin ETF is very likely to be launched this year, and many other favorable developments for Bitcoin appear set to materialize in 2018.

These developments will help propel BTC further into the mainstream and are likely to drive popularity, demand, and the thirst for trading Bitcoin to new extremes. The important thing to keep in mind is that people in the U.S. have access to multiple BTC exchanges, Bitcoin futures contracts, the Bitcoin Investment Trust (OTCQX:GBTC), and may even have Bitcoin ETFs soon, but countless people in China, in South Korea, and in many other parts of the world do not.

This is primarily why Gain Capital is so well positioned right now. It is a regulated entity that has offices and offers BTC trading in many different parts of the world, including Asia and the Middle East, where much of the crackdown is occurring. The authorities, by cracking down on unregulated cryptocurrency exchanges are forcing individuals to seek out trading platforms such as Gain Capital’s that offer BTC trading, and this phenomenon is likely to drive a lot more trading revenue for the firm going forward.

Cryptocurrency Exchanges Around the World Face Crackdowns

China, South Korea, and many other nations around the globe are cracking down on cryptocurrency exchanges for various reasons. China introduced a slew of damaging regulations and shut down many of its exchanges in 2017. This made traditional Bitcoin trading increasingly more difficult in the world’s most populated nation.

Source: CNN.com

Also, South Korea, one of the world’s largest markets for Bitcoin trading has recently launched its own assault on traditional bitcoin trading. The country has moved to ban new accounts from being opened, is about to introduce a ban on anonymous accounts, and is making the overall Bitcoin trading atmosphere more difficult for traders and traditional exchanges alike. As it is becoming increasingly more difficult to trade BTC on traditional exchanges, consumers are beginning to seek out alternative ways to trade Bitcoin and one excellent solution comes from Gain Capital.

Gain Capital Vs Traditional Exchanges

Many cryptocurrency exchanges are unregulated, charge exorbitant fees, require users to open wallets, have terrible customer service, offer poor liquidity and huge spreads, sometimes get shutdown, collapse, or get hacked. There have been numerous cases when exchanges such as Youbit, NiceHash, and many others get hacked and investors’ Bitcoins simply go poof.

With Gain Capital, such risks and inconveniences are largely illuminated. Gain Capital is a regulated U.S. financial firm that has been in business for roughly 20 years. Moreover, investors get extremely favorable terms when trading Bitcoin, far more so than vast majority of cryptocurrency exchanges offer.

Why Bitcoin Futures Aren’t for Everyone

Bitcoin futures may be a great advent for those living in the U.S. but these trading instruments are not available to many individuals around the globe. For instance, South Korea recently banned local finance firms from offering bitcoin futures in the country. Many other nations and regions are facing similar issues in respect to futures trading.

Moreover, futures contracts aren’t for everyone. Many firms require significant account minimums, only allow full contracts to be traded, and require increased margin to short BTC. Whereas Gain Capital offers 4 times leverage in regards to Bitcoin trading, long or short, irrespective of position size, coupled with low fees, tight spreads, and high liquidity.

The Winner: Gain Capital

The winner in all this appears to be Gain Capital. The company is extremely well positioned with regional offices present in Tokyo, Beijing, Shanghai, Hong Kong, Singapore and other key areas. The company doesn’t need to develop, launch, or do anything aside from continue to improve its existing platform. Gain Capital already offers BTC trading, so while big banks such as Bank of America (BAC), JPMorgan (JPM), and others are shunning the explosive Bitcoin phenomenon, Gain Capital is embracing it and is very likely to profit greatly from it in the process.

Source: financemagnates.com

After all, how much new business does Gain Capital need to attract to significantly move its stock price higher? This is a $400 million company with about $350 million in revenues, that also produces an income. Any influx of new business due to Bitcoin trading is likely to reflect very positively on the company’s share price.

Why isn’t the Price Up a Lot More Already?

My view is that investors in the U.S. and other areas who own and trade GCAP are still not fully aware of how the “Bitcoin Boom” is going to affect GCAP’s business. However, judging from the recent movements in the stock it appears that some market participants are beginning to take notice. As more market participants catch on to the facts surrounding GCAP the more the price is likely to appreciate going forward.

What About Competition?

Naturally, Gain Capital is not the only company that is going to offer a comparable service. However, it is important to mention that a lot of the larger brokers appear to be late to the party, or are absent altogether for whatever reason. Moreover, Gain Capital already has offices and operations in many of the key areas in Asia and in the Middle East, regions that represent the greatest potential going forward. Furthermore, GCAP already launched its BTC platform, and while many other companies are still planning their launches, working out the details, or are debating whether the Bitcoin game is for them or not, Gain Capital is likely to capitalize on the opportunity due to its early start and apparent leadership in this space.

Fundamental, Valuation View

It’s important to point out that GCAP is a legitimate U.S. company with nearly a 20-year track record of providing quality service to its customers worldwide. This is not a Bitcoin play that added blockchain to its name and is now exploding to the upside. To the contrary, GCAP did not alter its name, but instead added a legitimate growth generating Bitcoin segment to its business, and the stock has not yet exploded higher (dramatically). Moreover, the fundamental elements and valuation metrics concerning GCAP appear quite favorable and make the company appear somewhat cheap, independent of the Bitcoin segment.

Market Cap: $438 million
Trailing P/E: 31.66
Forward P/E: 12.46
Price to Sales: 1.27
Price to Book: 1.52
Profit Margin: 3.84%
Quarterly Revenue Growth yoy: 12.5%
Total Cash: $1.19 billion
Total Debt: $130 million
52 Week Change: 39%
Short %: roughly 10%

We can see that GCAP is not a grossly overpriced Bitcoin related stock. In fact, many of the valuation metrics appear more than fair. The stock has a very low forward multiple, a low price to sales value, an attractive price to book valuation, has a pristine looking balance sheet with lots of cash and very little debt. Moreover, the company has a healthy double digit quarterly yoy revenue growth rate.

The 10% short rate seems normal for a volatile small cap stock such as GCAP. Furthermore, the roughly 20% short % of float suggests GCAP could see significant upside once a short squeeze materializes. The profit margin of nearly 4% appears fair, however, should increase as GCAP captures additional trading revenues.

Technical View

We see that GCAP has had several legs up since the Bitcoin trading announcement was made in late October. GCAP has now become a heavily traded day-trading stock. Volume has greatly increased over the past few months, along with interest. The stock is also often taken down by shorts during the day and then the shares recover as shorts cover their positions and buyers step in.

GCAP 1-Year Chart
Source: stockcharts.com

GCAP 5-Year Chart

Regardless of the short-term manipulations in the stock the trend seems clear. The stock pops, then consolidates, and then surges again. With Bitcoin optimism intertwined with GCAP now, there is no reason to think this trend will stop any time soon.

Bottom Line

With offices in major locations such as Tokyo, Beijing, Shanghai, Hong Kong Singapore and other key locations coupled with Bitcoin trading operations already available on GCAP’s platform, Gain Capital appears to be in a prime spot to capitalize on the “Bitcoin Boom” going forward.

Gain Capital’s trading platform offers numerous advantages over traditional cryptocurrency exchanges and Bitcoin futures trading. In addition, many traders in Asia and in other areas of the world are being forced off traditional Bitcoin exchanges, and don’t have access to BTC futures. This phenomenon makes GCAP an ideal solution for consumers looking to fulfill their Bitcoin trading needs.

Furthermore, Gain Capital is a reputable company, with seemingly solid fundamentals, sporting an attractive valuation, coupled with a favorable technical setup in the stock. It appears very likely that Gain Capital will benefit greatly from the ensuing “Bitcoin Boom”, and its stock looks poised to move significantly higher in 2018.

Disclaimer: Despite my bullish position on GCAP, anything cryptocurrency related comes with inherent risks. There is always the possibility that something doesn’t materialize as suggested and this stock could lose a significant portion of its value. GCAP is a speculative investment capable of producing high returns, which can also lead to a loss of principal.

This article expresses solely my opinions, is produced for informational purposes only, and is not a recommendation to buy or sell any securities. Investing comes with risk to loss of principal. Please always conduct your own research and consider your investment decisions very carefully.

Disclosure: I am/we are long GCAP.

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.

Additional disclosure: I am long Bitcoin

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Crispr Therapeutics: Assessing The Recent Capital Financing

The reason why the growth stocks do so much better is that they seem to show gains in value in the hundreds of percent each decade. In contrast, it is an unusual bargain that is as much as 50 percent undervalued. The cumulative effect of this simple arithmetic should be obvious. – Philip Fisher (the Father of Growth Investing)

On Jan 05, 2018, the share price of Crispr Therapeutics (NASDAQ:CRSP), a bioscience focusing on gene-editing and CAR-T to treat serious conditions such as cancers and genetic diseases, continued its rally. The stock added another $2.90 (over 12% profits) to value at $26.81 for the said trading session. Since we recommended the company on Nov. 27, 2017 (just over a month) to subscribers of Integrated BioSci Investing, the stock added another $7.26 (or 37% in capital appreciation). This robust run-up is interesting because, on Jan. 04, 2018, the company announced that the 5M additional common shares issued on Jan 03 will be priced at $22.75.

Figure 1: Crispr stock chart. (Source: Stockcharts).

At Integrated BioSci Investing (“IBI”), we have much success in finding robust performers. For instance, Nektar Therapeutics (NASDAQ:NKTR) appreciated over 200% for subscribers. Exelixis Inc procured over 50% profits. In this report, we’ll assess the ramifications of the recent financing and to reaffirm the investment thesis on Crispr.

Fundamentals Analysis

Back in 2017, there were several stellar medical breakthroughs that have ramifications that can be as far reaching as the introduction of chemotherapy more than a decade prior. Accordingly, the US FDA approved Yescarta (a CAR-T indicated for the treatment of non-Hodgkin lymphoma). The said molecule was innovated by Kite Pharma (NASDAQ:KITE) – a firm acquired by Gilead Sciences(NASDAQ:GILD). Moreover, the agency also approved the first gene therapy, Luxturna (voretigene neparvovec-rzyl), a molecule innovated by Sparks Therapeutics (NASDAQ:ONCE). It is a one-time treatment for patients afflicted with biallelic RPE65 mutation-associated retinal dystrophy.

In the midst of the aforesaid favorable regulatory environment for medical breakthroughs, the Switzerland-based company, Crispr Therapeutics is also brewing a revolutionary method of treating cancers and rare genetic diseases. As follows, CRISPR/Cas9 is a form of gene-editing currently being investigated in various conditions (as shown in the enriched pipeline in figure 2). The company also has a gene-editing enhanced form of CAR-T in development for various cancers. Of most interest is the lead molecule, CTX-001 (also a gene-editing therapeutic) that can be potentially used for the management of serious blood disorders: beta-thalassemia and sickle cell disease (“SCD”).

Figure 2: Therapeutic pipeline. (Source: Crispr).

Final Remarks

As alluded, Crispr recently issued another 5M common shares at the price of $22.75. The company also granted the underwriters a 30-day option to purchase up to 750K of its common shares. The expected gross proceeds from this offering are roughly $113.75M (excluding any exercise of the underwriters’ option to purchase additional shares). Moreover, the offering is expected to close on Jan. 09. The company employed Goldman Sachs (NYSE:GS), Piper Jaffray (NYSE:PJC), Barclays Capital (NYSE:BCS), and Guggenheim Securities as joint book-running managers for the said offerings. We strongly believe that the aforesaid capital financing is both strategic and prudent, as substantial capital (in the ballpark of over a billion dollars) is needed to fund a molecule from bench research to commercialization. With the share price appreciating, it is wise that the firm issued new shares to strengthen its capital for further pipeline innovation. There is an in-depth Integrated BioSci version of this research, which is available in advanced to subscribers of Integrated BioSci Investing.

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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Walgreens' Surprise Earnings Sell-Off Could Be Just The Beginning

Walgreens Boots Alliance (WBA) recently reported earnings, which I covered and predicted in Exposing Earnings. I predicted WBA would sell off on earnings, taking a short position and recommending my subscribers do the same. I urged my subscribers to take their profit at the end of the day, Jan 4, as my algorithms pointed to the gap filling:

Just as WBA’s earnings brought a down gap to the stock chart, questions came in about the gap – could it be played after earnings? That is both a technical and a fundamenta question. I wrote this article to address the fundamental side: Whether the earnings report was truly negative or whether the selloff was an overreaction (the technical side will be answered in my newsletter).

I will quickly spit out my fundamental conclusion, which is that the earnings report for WBA was truly bearish, though not as bearish as it was previously. If that sounds confusing, we best look into WBA’s earnings call, which holds the only important information – that is, the only novel “news” that has been incorporated into the stock price. The earnings call has been shown a myriad or times and via myriad research means to have predictive power over the stock for roughly one month after the earnings report. An algorithm that I recently developed on the back of said research reads the earnings calls and withdraws from them sentiment scores and flagged comments that could help investors decide whether to interpret the call as bearish, bullish, or misaligned with the post-earnings stock reaction.

WBA fell on earnings, so we should expect a rather weak earnings call. The most recent earnings call, Q4, 2018, was quite weak but not as weak as the previous earnings calls. Recent earnings calls have been bearish for WBA, but the pattern is pointing a return to the average quite shortly.

Specifically, WBA’s recent sentiment scores (excluding the most recent report) were 23% below average. Yet this quarter’s brought a 17% gain in sentiment, nearly pulling WBA back to its baseline. Because of this, it is hard to claim the current earnings call was truly bearish, although the numbers technically would label it as such.

As sentiment score or tone is a rather generic term for earnings calls or other text-based analyses, it’s important we dive into the data itself to understand the reason for low or high sentiment scores. Sentiment is built on many types of statements:

  1. Surface statements: E.g., “We are building a defensive strategy against the coming headwinds.”
  2. Implied statements: E.g., “Instability is a matter of fact, but we are optimistic we will return to stability soon,” which does not outright specify bearishness but does imply it.
  3. Tertiary statements: E.g., “This was due to the fantastic team in our marketing division, and I cannot express my gratitude enough,” showing two factors that have been positively linked to rising stock prices – emphasis on teamwork and politeness.

As a sentence-by-sentence review of the algorithm’s scoring would defeat the purpose of using the algorithm, I instead will pull up some of the flagged statements. These marked sentences attributed to the overall sentiment score and have strong implications on what investors should be watching, going forward. Take a look:

“Both transactions (the GuoDa acquisition and Guangzhou Pharm sale) are, of course, subject to regulatory approval and customary closing conditions.”

-A sweeping statement of uncertainty on the part of management that these two large – arguably largest – current events in the stock’s news stream. Because the statement made was one of common sense, the fact that it was stated implies excess uncertainly on management’s part. Uncertainly spoken in such press releases often spill into the market, causing risk-averse investors to reduce position sizes.

“GAAP operating income was $1.3 billion, down 8.6% versus the comparable quarter.”

-Several bearish fundamental statements were made throughout this earnings call, decreasing the overall sentiment score.

“This quarter, GAAP operating income was adversely impacted by our share of AmerisourceBergen’s litigation accrual as reported in their last quarter results and by the hurricane-related storm damage and store closures, which I highlighted back in October.”

-Unexpected losses that cannot be controlled or compensated for. This is a net loss for the company and investors. Although it says little about the characteristics of the management or company, it still has an impact on the valuation of the company.

“As I say, you will be hearing more from us over time about all of these areas, but behind all of these is a recognition that our best opportunity to grow our business is also our best defense against new competition or changes in our marketplace.”

-Mixed statements like these are weighted appropriately. Specifically, this is more bearish than bullish, as it not only mentions more potential problems than advantages. Market newcomers and a changing industry add to the headwinds of the company, increasing the perceived risk for the stock.

“And so other than sort of our normal anti-dilutive program that, obviously, is something that continues on an ongoing basis, we have no authorizations out at the moment for additional share repurchase programs.”

-Repurchasing of shares by the company has undoubtedly led to a net upward drift – all things being equal – of the price of an individual share. That the company has ended the buyback program and has no intentions of beginning another should be taken as a highly bearish statement. The bearishness here is best understood as an analogy: Their boat is no longer floating downstream but in a stale pond, with no other streams in sight; the natural upward drift of the stock has been ceased indefinitely.

“…this big fluctuation and big depreciation has created an environment which was a little difficult to control. Now these things are coming back slowly into normality, and all the business will come back to normality.”

-To only highlight the negative statements would be unfair. The earnings sentiment, as previously stated, was roughly average, meaning it had its share of positive statements. The positive statements, however, were more of the “returning to normal” ilk than they were of the growth ilk. Also, you can see implications of shirking responsibility (could currency issues not have been hedged?), blaming other markets or the macro economy, and far-out (not immediate – e.g., “slowly”) optimism – all factors that count more as negative sentiment.

I hope this has given you a better feel of the novel information the earnings report and call has added to the market so that you understand the reasons behind the current price discovery swings. The result of my earnings sentiment analysis is a bearish one, but it also shows a relative improvement in this current phase of sub-optimal WBA. I leave you with a couple possible routes to continue the investigation, as both are relevant and could be useful, depending on your style of investing:

  1. Is the up gap in CVS Health Corporation (CVS) that occurred simultaneously with WBA’s down gap related to WBA’s earnings report or mere coincidence? Is there a possible pair trade here?
  2. Does the bearish earnings sentiment predict lower valuations for the stock? Or should we be optimistic about the bearishness weakening, disregarding the direction of the sentiment to instead emphasize the magnitude?

Note: All unlabeled figures were created by me. I used R to pull data directly from Yahoo and ADVN. Charts with blue backgrounds or options data are from Etrade Pro. Fundamental charts from a paid subscription at simplywall.st.

Note: As many have asked about the differences between my two services: Individual trade alerts (my personal trades) sent via Copy My Trades; urgent earnings trade alerts, top 5 monthly trades, and in-depth earnings predictions sent via Exposing Earnings.

Disclosure: I am/we are short WBA.

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.

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December Jobs Report: Late Cycle Mediocre Growth Reasserts Itself

By New Deal Democrat

Headlines

  • +143,000 jobs added
  • U3 unemployment rate unchanged at 4.1%
  • U6 underemployment rate rose +0.1% from 8.0% to 8.1%

Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

  • Not in Labor Force but Want a Job Now: Rose +43,000 from 5.265 million to 5.308 million
  • Part Time for Economic Reasons: Rose +64,000 from 4.851 million to 4.915 million
  • Employment/Population Ratio ages 25-54: Rose +0.1% from 79.0% to 79.1%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: Rose $.0.07 from $22.23 to $22.30, up +2.3% YoY. (Note: You may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel to come closer to the situation for ordinary workers).

Holding Trump accountable on manufacturing and mining jobs

Trump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping this promise?

  • Manufacturing jobs rose by +25,000 for an average of +17,500 a month vs. the last seven years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs fell -400 for an average of -63 a month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month.

October was revised downward by -33,000. November was revised upward by +24,000, for a net change of -9,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed.

  • The average manufacturing workweek fell -0.1 hour from 40.9 hours to 40.8 hours. This is one of the 10 components of the LEI.
  • Construction jobs increased by +30,000. YoY construction jobs are up +210,000.
  • Temporary jobs increased by +7,000.
  • The number of people unemployed for five weeks or less decreased by -18,000 from 2,253,000 to 2,235,000. The post-recession low was set over two years ago at 2,095,000.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime was unchanged at 3.5 hours.
  • Professional and business employment (generally higher-paying jobs) increased by +19,000 and is up +488,000 YoY.
  • The index of aggregate hours worked in the economy rose by 0.1% from 115.9 to 116.0.
  • The index of aggregate payrolls rose by 0.7% from 172.2 to 172.9.

Other news included:

  • The alternate jobs number contained in the more volatile household survey increased by +104,000 jobs. This represents an increase of 1,267,000 jobs YoY vs. 2,055,000 in the establishment survey.
  • Government jobs rose by 2,000.
  • The overall employment to population ratio for all ages 16 and up was unchanged at 60.1 m/m and is up + 0.3% YoY.
  • The labor force participation rate was unchanged m/m and is also unchanged YoY at 62.7%

Summary

This was a mediocre but not bad report. There was growth in almost all sectors of employment. Participation measures were positive. Aggregate payrolls and hours increased.

But there were concerning signs of late cycle deceleration as well. The underemployment rate increased for the second month in a row, and the unemployment rate is up from two months ago. Involuntary part-time employment and those outside of the workforce who want a job now both increased. And wage growth is actually declining.

Bottom line: After several months of post-hurricane bounces, we are back to a late cycle dynamic.

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Apple Will Issue a Fix for Flawed Chips ‘In the Coming Days’

Apple (aapl) will release a patch for the Safari web browser on its iPhones, iPads and Macs within days, it said on Thursday, after major chipmakers disclosed flaws that leave nearly every modern computing device vulnerable to hackers.

On Wednesday, Alphabet Inc’s Google (goog) and other security researchers disclosed two major chip flaws, one called Meltdown affecting only Intel Corp (intc) chips and one called Spectre affecting nearly all computer chips made in the last decade. The news sparked a sell-off in Intel’s stock as investors tried to gauge the costs to the chipmaker.

In a statement on its website, Apple said all Mac and iOS devices are affected by both Meltdown and Spectre. But the most recent operating system updates for Mac computers, Apple TVs, iPhones and iPads protect users against the Meltdown attack and do not slow down the devices, it added, and Meltdown does not affect the Apple Watch.

Macs and iOS devices are vulnerable to Spectre attacks through code that can run in web browsers. Apple said it would issue a patch to its Safari web browser for those devices “in the coming days.”

Shortly after the researchers disclosed the chip flaws Wednesday, Google and Microsoft Corp released statements telling users which of their products were affected. Google said its users of Android phones — more than 80% of the global market — were protected if they had the latest security updates.

For more on Apple, watch Fortune’s video:

Apple remained silent for more than a day about the fate of the hundreds of millions of users of its iPhones and iPads. Ben Johnson, co-founder and chief strategist for cyber security firm Carbon Black, said the delay in updating customers about whether Apple’s devices are at risk could affect Apple’s drive to get more business customers to adopt its hardware.

“Something this severe gets the attention of all the employees and executives at a company, and when they go asking the IT and security people about it and security doesn’t have an answer for iPhones and iPads, it just doesn’t give a whole lot of confidence,” Johnson said.

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Code crackdown: China payments restrictions to hit profits

BEIJING (Reuters) – A decision by China’s central bank to rein in reserve funds held by payment firms could cost the industry upwards of $689 million a year, spur consolidation and alter the way Asia’s biggest tech firms move money.

Mobile payments using in-app QR or bar-codes have become ubiquitous for everything from taxis to grocery shopping and bike rental in China in recent years, with customers making 19 trillion yuan ($2.9 trillion) in transactions in 2016, according to iResearch.

The rapid uptake has spurred fears that mobile payment firms, without oversight, could misuse funds held while transactions between users and merchants clear.

Regulations unveiled by the People’s Bank of China (PBOC) on Saturday require firms to allocate 42 to 50 percent of their total client funds in regulated interest-free reserve accounts by April, up from a current rate of 12 to 20 percent.

The move will hit services backed by Tencent Group Holdings Ltd (0700.HK) and Alibaba Group Holding Ltd (BABA.N) affiliate Ant Financial, which together make up over 93 percent of China’s online payments market, according to research firm Analysys International.

It’s part of a two-year government crackdown on financial risks in the country’s fast growing and loosely regulated online finance sector, aimed at limiting the activities of third-party payment services, online asset managers, micro lenders and others.

The central bank has said it will eventually raise the ratio to 100 percent but hasn’t given a timeline.

The moves will impact a major source of profit for online payment firms, particularly those that relied on the interest income for fast growth during the early boom years.

“From an industry perspective, these changes will alter the economics underlying certain revenue streams,” said James Lloyd, Asia-Pacific Fintech lead at EY.

“Clearly the PBOC is increasingly considering the potential financial stability risks associated with large-scale mass-market non-traditional players.”

INTEREST INCOME

China’s e-commerce and mobile payments market has enjoyed explosive growth in recent years with Alipay and Tencent’s Tenpay each accumulating over 500 million users.

Client reserve funds are prepaid sums from buyers that are held temporarily by payment companies before they are transferred to merchants. Payment firms typically deposit them into bank accounts where they earn interest.

Interest income earned on those reserve funds accounted for 11 percent of total income for internet-based payment companies, data from Zhongtai Securities shows.

Slideshow (2 Images)

The latest hike in reserves will slash more than 4.48 billion yuan ($689 million) in annual interest earnings from the industry, according to Reuters calculations, under the assumption that payment companies could have earned 3 percent annualized interest rate on those funds.

Analysts say large, diversified firms such as Ant Financial and Tencent will be able to absorb the costs, and seek to replace revenue with income from other products, including wealth management tools and micro-loans.

The move puts extra pressure on the two top firms, however, who are facing barriers at home and abroad as regulators balk at the technical and financial implications of their rapid expansion.

Ant Financial on Wednesday announced it has withdrawn a $1.2 billion acquisition bid for U.S. money transfer firm Moneygram International Inc (MGI.O) after U.S. government panel rejected the bid over national security concerns.

Ant Financial said it was supportive of the PBOC’s move. Tencent did not respond to a request for comment.

Smaller payment firms could face consolidation as their margins slide. There are currently more than 200 companies licensed to provide such services.

Shanghai-based All In Pay Network Service, which has 1.7 million merchants, said it would adjust its business to comply with the central bank’s new policy.

“In terms of the actual impact it will have on our company, that still remains to be seen,” it said.

GREATER REGULATORY OVERSIGHT

The move will allow China’s central bank to gain more insight into capital flows within the industry as it seeks to quell financial risks associated with the massive funds now kept by third-party payment companies.

The rules on reserve funds also pave the way for the establishment of a new government-directed clearing house for third-party payment companies, which is expected to launch in June. The new entity will enable the central bank to track all online financial transaction data and the flow of funds in the industry, analysts say.

In August, the regulator instructed third-party payment firms to route all of their transactions through the centralized clearing house, in which its affiliated companies own largest stakes.

In addition to new rules on reserve funds and clearing, last week the PBOC also announced plans to cap barcode payments to as low as 500 yuan to rein in risks arising from the popular service.

“Preventing risks remains the core theme in 2018,” CITIC Securities said in a research note. “Payment giants are likely to slow down their aggressive marketing deployed in the early stages of development and pay more attention to compliance.”

Additional Reporting by SHANGHAI Newsroom; Editing by Lincoln Feast

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This 1 Simple Habit Is the Only Financial Resolution You'll Need to Save Money in 2018

Let’s face it. New Year’s resolutions generally don’t work. We are motivated for a couple weeks and then life gets in the way. We go back to our old habits.

I am a fan of establishing big, audacious goals. But when it comes to New Year’s resolutions, we are typically setting ourselves up for failure.

Money is stressful.

It’s no wonder that many New Year’s resolutions are financial related. Money is a major cause of stress for Americans and a big cause of divorce. Poor financial habits are a big cause for concern.

But when we speak of improving our finances, we speak in terms of things we need to do. Just consider the following typical New Year’s resolutions:

  1. Cut up our credit cards (and make a commitment to not using them again)
  2. Get a new higher paying job
  3. Save money and build an emergency fund
  4. Pay down consumer debt
  5. Buy a house
  6. Start a business

While these may be great accomplishments, they are all actions you must take. But I am not talking about actions. I am looking to change your mindset. That’s why your only financial goal for the new year should be to — live below your means.

You see as a nation we have a spending problem. In my decades as a CPA, I have advised people from all income levels. One thing is for sure, we tend to spend what we make. The client who makes $1 million a year tends to spend all of it, just like the client who makes $50,000 a year.

In fact, I have a client who makes over $1 million a year and always complains to me that she can’t put food on the table. I know that she is exaggerating a bit, but you get my point.

So how far is enough?

How far below your means should you live? I recommend starting with 10 percent, but I have clients that save in excess of 50 percent. Whatever your goal is, you must make that commitment. Make sure that after you pay your bills you have this minimum amount left over.

This one rule will address all the other financial resolutions. For example, this extra amount may allow you to pay off credit cards, start an emergency fund, buy a rental home, build your investments, start a business, etc.

Unfortunately, we often believe that if our income goes up our spending should go up as well. If we get a raise at work or our business is doing well then we should turn around and buy a new car or a larger house. I, for example, have been living in my house for almost 16 years even though my income has increased over that period of time. Should I have bought a larger home because I “deserved” it? I think not.

Focus on your net worth.

We focus too much on our income and expenses and too little on our assets and liabilities. Net worth is what really matters. Assets are all of the things that you own (your home, furniture, investments, retirement accounts, etc) and your liabilities are what you owe (student loans, mortgage, credit cards, etc.). Subtract your assets from your liabilities and hopefully this is a positive number. If it’s not, living below your means will help.

I admit it. Changing your financial mindset can be really tough. But in order to accomplish what you want financially it is critical. If you live below your means the rest will take care of itself. Make it your one and only financial resolution.

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Navigating the Uncanny Valley of Food 

A quarter century ago, Steven Spielberg created velociraptors that were viscerally compelling enough to toe-claw tap dance straight into our nightmares. Last year, the VFX team behind Rogue One gave us a posthumously CGI-reanimated Peter Cushing as Grand Moff Tarkin, and that inspired a different and unintended kind of unease. Japanese roboticist Masahiro Mori’s famous Uncanny Valley hypothesis proposes that near-perfect human replicas elicit a specific form of revulsion—we’re simultaneously intrigued by something seemingly human enough to deserve empathy, and yet repulsed by the realization that something is off.

Now, we usually cut fake dinosaurs some slack because humanity’s social code doesn’t depend on interpreting T. rex eyebrow tics. But our finely calibrated facial lie detectors are critical when it comes to recognizing and assessing threats, rivals, allies, and potential mates. And, as it turns out, we have similar systems in place to monitor another intimate element of our survival: eating.

From birth, we are wired to seek sweetness and avoid bitterness, two points on an intricate flavor compass used by our ancestors to navigate between easy calories and potential poisons. We no longer lean heavily on flavor for life-and-death guidance, it’s true. But those instinctual flavor-tracking systems continue to operate in the background of our daily lives, even as the food landscape changes dramatically. Fervent foodie tribes who demand low-sugar, grain-free, and especially animal-free alternatives to our favorite foods are pushing food industry innovation deeper into the realm of imitation. And as this pressure mounts, food companies should be wary of stumbling into the unsettling pit of another uncanny valley.

Creating food is an intricate balancing act of battling senses. Salt, for example, suppresses bitterness and enhances sweetness, while indole, a single aroma compound, can give us either the aroma of jasmine or barnyard feces, depending on its concentration. Our ears act like amplifiers to turn up the crunchy texture of potato chips, and our eyes gobble up tasteless yellow food coloring to boost the apparent fruitiness of canary-colored banana pudding. And even our memories and moods can warp and twist flavor perception. If I share a bite of what I think is perfectly cooked and seasoned barbecue brisket with a 65-year-old Japanese winemaker, I might hear that it was too soft, undersalted, and oversmoked.

So building food from the ground up to hit a rigidly specified flavor target, it should seem obvious, is nothing short of a cosmic achievement. Especially if you hope to scale that innovation to the level of commercial food production, as companies like Hampton Creek, Ripple, and Memphis Meats have attempted in the last few years.

Like the clunky claymation effects that predated Phantom Peter Cushing, the first commercial food analogues aimed slightly lower than sensory parity. Success for the first butter substitutes and tofu-based “deli meats” was defined primarily by whether the material could be spread on toast or stacked under lettuce and tomatoes. These first steps were far enough from the uncanny valley that they were an exciting novelty for health-conscious diners or vegetarians. For the rest of us, they were a blip on the radar.

But as consumers have gotten more discerning, the ambition and investment in imitations have grown. In the past half-decade, we’ve seen millions of dollars put towards developing sophisticated, animal-free renditions of dairy, meat, poultry, eggs, and seafood, transitioning the movement out of the test kitchen and into the mainstream. Hampton Creek is making strides to expand their egg-free empire beyond mayonnaise and into our morning breakfast routine with plant-based, scramble-able eggs. Memphis Meats looks to go straight to the source, culturing animal muscles in vitro to build chicken wings and beef steaks cell by cell. The food scientists leading this charge are armed with sensitive gas chromatographs to map the volatile composition of yogurt as it ferments, texture analyzers to quantify the snappiness of a sausage casing or the gooeyness of a perfectly poached egg, and massive, searchable libraries of taste and aroma compound descriptors to aid in the architecture of new flavors.

We can now translate real food reference points into data-based flavor blueprints with better resolution than ever before. But the data is still incomplete—miniscule quantities of aroma compounds that barely register on a gas chromatograph readout can scream into our nostrils, for instance—and that can leave us with some truly unnatural eating experiences.

The Bay Area beverage company Ava Winery believes that we can use these blueprints to cobble pure ethanol and a cocktail of the right taste and aroma compounds into cheaper, ostensibly more sustainable imitations of our favorite wines. In a vacuum, Ava’s Moscato d’Asti is delicious, with more sophisticated depth and nuance than any soda you’ll find on the market. But if you’ve ever had wine before, then the Ava product tastes like it was poured through a funhouse mirror. Even a faint food memory is enough to prime our brains for nitpicking, exposing all of the details and higher-order interactions between our senses that even the best analytical equipment fails to capture.

Food analogue companies have made some staggeringly impressive leaps. But with a long, arduous road to perfection still ahead, it’s worth considering the option of avoiding Mori’s valley altogether through the creativity of chefs. Chefs are opportunistic creators: Without a set target to imitate, they are free to explore infinite variations on a flavor theme. They can nimbly veer away from potential hurdles in pursuit of freeform deliciousness. When a chef makes a miso from coffee beans or cures butternut squash in the style of parmesan, she’s not aiming for perfect re-creations of soy and dairy products; she just wants a super savory sauce base with the roasty depth of good coffee or a grateable topping to enhance a squash ravioli. By embracing the natural character of their source ingredients, chefs expand the spectrum of craveable experiences that plant foods can offer beyond mere imitation of animal products.

The food companies attempting to navigate the uncanny valley of food are striving to achieve unprecedented technological feats in the name of a more humane, sustainable future. I want them to succeed for the sake of the environment, because I’ve been lucky enough to work with some of them, and so that we can move on from simple imitation. Biochemically speaking, the abundant variety of tastes, aromas, colors, textures, and flavor-generating enzymes offered by plant foods dwarfs that which we can find in animals—so forcing plants to act like meat actually undersells their potential. The whole point of creating CGI humans in movies is so they can do amazing things normal people can’t, and I look forward to the day when we can expect that same thrill from the snacks we eat at the theater.

Ali Bouzari is a culinary scientist, author, educator, and co-founder of Pilot R&D, a culinary research and development company, and Render, a new food company that collaborates with the best restaurant chefs in the country to reinvent the way food lovers eat. As a chef with a PhD in food biochemistry, Ali has helped to lead the charge in changing the way we think about cooking by teaching and developing curriculum at top universities and collaborating with the country’s most innovative restaurants.

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Bitcoin Is Already Having a Bad Year

Bitcoin is already having a bad year.

For the first time since 2015, the cryptocurrency began a new year by tumbling, extending its slide from a record $19,511 reached on Dec. 18.

The virtual coin traded at $13,440 as of 3:55 p.m. in New York, down 6.1 percent from Friday, according to data compiled by Bloomberg. That’s also a fall from the $14,156 it hit Sunday, according to coinmarketcap.com, which tracks daily prices.

Bitcoin got off to a much stronger start last year, and then kept that momentum going, eventually creating a global frenzy for cryptocurrencies. In a sign of its phenomenal price gain in 2017, it rose 3.6 percent on the first day of 2017 to $998, data from coinmarketcap.com show. It ended the year up more than 1,300 percent.

That rally drew a growing number of competitors and last month brought bitcoin to Wall Street in the form of futures contracts. It reached the Dec. 18 peak hours after CME Group Inc. debuted its derivatives agreements, which some traders said would encourage short position-taking.

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Blockchain Takes a Shot at Redefining the Sports Betting Experience

In 2018, hundreds of sports betting sites and apps allow bettors to gamble discretely from just about anywhere through their smartphones. This convenience has attracted more users to participate in the action.

Traditional payment services like banks and digital wallets have been wary of supporting online gambling, leaving room for specialized payments gateways to facilitate bankroll funding and payouts. There’s also no shortage of handicapper sites and services that offer paid analyses to less savvy gamblers.

Unfortunately, the involvement of these parties brings enhanced risk of fraud and failure. Gambling payment gateways are constantly under threat from cyber-criminals. Handicappers also don’t quite produce the wins that they promise to bettors. As such, there are opportunities for blockchain – a technology that promotes shared trust – to address these issues.

Several blockchain efforts have set their sights on bettors’ needs. For example, emerging digital currency Electroneum envisions its token to be used by online gambling services. BlitzPredict provides bettors trustworthy insights through its aggregation service. Platforms like HEROcoin even aim to decentralize sports betting.

Success of these efforts could all help create better betting experiences. Here are three ways how these blockchain services can accomplish that goal.

1 – Easier Funding and Payouts

Payments using blockchain can be completed quicker compared to traditional means. Tokens do not have to be routed through different financial institutions and clearing houses. Winnings can either be readily credited to the user’s bankroll or to a token wallet. Since tokens are now fungible assets, bettors also have the option to transfer tokens to exchanges and trade them for other crypto or fiat currencies.

However, crypto tokens aren’t without their quirks. For instance, it can be hard to tell how much a bet made in Bitcoin is actually worth in fiat currency. For ordinary people, it’s easier to discern the value of “$50” compared to “0.003 BTC.” Interestingly, Electroneum addresses this by limiting its token to two decimal places just like fiat currencies. This way, users could have an easier time estimating or converting mentally making use of crypto tokens for gambling more bettor friendly.

2 – Trustworthy Insights

Blockchain startup BlitzPredict aims to provide insights by aggregating sportsbooks and prediction markets much like a stock market ticker. This helps bettors determine which sportsbook provides them with the best possible outcomes for a given bet. The platform also enables bettors to use blockchain smart contracts to automatically place bets when certain conditions are met.

Alternatively, bettors can subscribe to handicapper services that could supposedly point them to better odds. However, the credibility of many of these so-called sports “experts” have been called to question. Many offer tips and promise sure wins for a fee even if they don’t have the credentials to back their “expertise” or the data to support their picks.

In order to promote quality insights, BlitzPredict also allows analytics enthusiasts to share their prediction models to other users. High-performing models are rewarded with the platform’s own token which could then be used to place bets using the platform. Such a rewards mechanism encourages bettors to make data-driven decisions rather than settle for hunches or bad advice.

3 – Transparent Betting

Sportsbooks are often set up so that the house always wins. Even the reputable ones will have to make money by taking a cut from transactions. Without aggregation and advanced analytics, bettors are not only likely to lose in the long term, but they may also have to absorb the cost of these cuts and fees for all the transactions they conduct.

Platforms such as HEROcoin challenge this system by offering decentralized peer-to-peer betting. Through smart contracts, bettors are free to define the conditions of wagers. Blockchain’s transparency lets users trace the flow of money and the terms.

Fair Wagers

Sports betting is still a growing market and the expansion of betting to other segments such as esports is bringing in new participants. In esports alone, studies predict that more than $23 billion will be wagered by 2020. New services should strive to create easier and more positive experiences for the benefit of these new bettors joining the scene.

Fortunately, blockchain startups are already bringing transparency and trust into such activities. The use of crypto tokens could help address the lengthy and costly funding and payout processes. Better analytics and aggregation could also aid discerning bettors in making effective picks. Smart contracts can provide secure mechanisms for parties to enter and execute wagers.

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How to Watch the 2018 New Year’s Countdown and Ball Drop for Free

It’s New Year’s Eve 2017, and people are saying, “Out with the old and in with the new.” If you’re one of the millions who cut the cord on their cable television this past year, you might find yourself unable to watch the 2018 countdown. But you don’t need cable to watch the ball drop in New York City or to see Mariah Carey make her ‘New Year’s Rockin’ Eve’ comeback on ABC. That’s because 2017 was finally the year streaming television arrived. Here’s how to live stream the New Year’s Eve countdown and ball drop for free — for auld lang syne.

DirecTV Now

You can watch Ryan Seacrest host ‘New Year’s Rockin’ Eve’ — and a whole lot more — using DirecTV Now‘s free seven-day free trial. The service costs $35 per month for a package of at least 60 live channels after the trial ends, but that stretch can get you in on should help you through the holiday and more. DirecTV Now’s basic-level plan packs local affiliates for CBS, FOX, and NBC. But before you sign up, check your local channel availability here, because not every market includes every station.

Hulu with Live TV

FOX’s New Year’s Eve coverage is hosted by Steve Harvey this year, and you can catch it on Hulu with Live TV which also offers CBS and NBC. The service also packs a big on-demand library, which could be good if you get bored of all that confetti and kissing and you just want to binge, instead. Like DirecTV Now, Hulu with Live TV is free for a week, but it runs $39 per month after the trial is up. One nice thing about Hulu’s offering is that it has an option to add on a cloud DVR service, which might be a smart long-run investment if you want to keep the service for 2018 and beyond.

Sling TV

Depending upon which television channel you want to ring in the new year with, Sling TV might be the choice for you. The service also offers a seven-day free preview as well as Univision and FOX, but you can only get those channels in select markets and on its higher-tiered “Blue” plan, which costs $25 per month after the trial. If you want to watch CNN’s Anderson Cooper count it down, Sling’s lower tiered “Orange” plan costs just $20 per month, and offers the cable news giant, but it doesn’t have the local networks. But while Sling TV Blue does have the NFL Network, so it might be a worthwhile investment, if you’re going to watch all the games on Sunday before the festivities begin.

PlayStation Vue

If you’ve got a PlayStation 4 under your TV, PlayStation Vue might be a good choice for you. The live streaming television service offers a five-day free trial and starts at $39 per month after the promotional period ends. The base plan caters to popular live programming (other packages focus on sports and movies), so that’s probably a safe bet for streaming New Year’s programming. But like the others, channels vary by zip code, so check their availability before you sign up.

YouTube TV

Google’s YouTube TV isn’t just a portal to its popular video-hosting website. It is also a live streaming television service that offers a seven-day free trial with 40 channels and cloud DVR capability for $35 per month (once the promotion ends). YouTube TV includes all the major networks, including CBS, FOX, and NBC — where host Carson Daly does his yearly thing — but the catch the service only available in select markets (though, there are quite a few).

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Here Are 3 Things That Perpetuate Dishonesty, and 3 Ways to Thwart It

It’s a dog-eat-dog world out there. In the race to make it to the top, some values often get dropped along the way. Among these stands out one; namely, honesty.

Car salesmen. Stock investors. Overzealous entrepreneurs. We all know the cliches, and we’ve all heard the stories of scams and cover-ups.

But what is it that drives people to cross boundaries to the point of deceiving customers, employees, and the world at large? Additionally, knowing all the risks associated, why would anyone resort to fraud or cheating to succeed in business?

The answer is that people don’t think too much. We’d prefer to remain blind and be able to follow temptations. But do a bit of investigation, and you’ll quickly learn how to re-frame your mind to stay on the straight path of honesty. Below are a few points to get your gears turning.

1. We think honesty slows us down.

Come on, when was the last time anyone actually read all the terms and conditions? This world runs on a fast pace, and people simply don’t have patience to go through the motions of every task. When we can cut corners, we will.

But when you’re running a company, your decisions have a ripple effect on the market you’re serving. According to an October 2014 study by Cohn & Wolfe, a global communications and public relations firm, honesty is the number one thing consumers want from brands.

So if you don’t want your startup to become a statistic of the 90 percent that fail, on average, make sure to stick to the truth when it comes to your brand. It’ll set you up for success in the long run!

2.  We think we won’t get caught.

It’s midnight on a desolate rural road — who will see you run through a red light? Similarly, who would notice if you slipped an extra unlisted ingredient into a product, or told a customer half the truth, being that they wouldn’t be shrewd enough to pick up on it anyway?

These moral quandaries can be paralleled to the famous riddle: “If a tree falls in a forest where no one is around, does it make a sound?” Perhaps it makes a sound, perhaps it doesn’t, depending on who you ask.

But the tree fell, that’s for sure.

We’re beyond kindergarten. We shouldn’t be living our lives in fear of punishment from legal authorities; and conversely, in celebration of victories acquired through dishonest means. That’s a pretty juvenile mindset, and no corporation can stand on the feet of those tenets for long.

Maybe you won’t get caught at first. But repeat dishonest practices will ultimately stain your reputation, because people aren’t stupid and eventually things come to light. All it takes is one small suspicion and you’re doomed. At best, you lose a customer; at worst, you’ll wind up in jail, like Martha Stewart did in 2004.

3.  It’s the norm.

It’s the sad truth, According to a University of Massachusetts study led by psychologist Robert S. Feldman, 60% of people lied at least once during a 10-minute conversation and told an average of two to three lies.

However, just because everyone else is doing it doesn’t mean it’s right. Everyone can hold themselves up to higher standards — it just takes a conscious awareness, and a lot of effort to train oneself to be honest.

Honesty is (indeed) the best policy.

But refreshingly, it’s also quite common to find businesses that run according to the principle of honesty as the best policy.

Companies all over the world are starting to not just recognize the values of honesty, but live by them. “In our business, honesty and transparency is the oxygen of our existence,” states Mati Cohen of Pesach in Vallarta, a holiday hotel program.

This echoes of the founding principles of Buffer, a social media company that embraces the coined term ‘radical transparency’; all its salaries are public and there are no secrets amongst employees, which eliminates much of the animosity that is ever-present in many workplaces.

Tirath Kamdar, co-founder and CEO of jewelry and watch company TrueFacet, says that his company runs by these standards. “The alarmingly opaque nature of the luxury watch and jewelry market motivated us to create TrueFacet. Our goal is to bring transparency back to consumers. We set the standard for jewelry and watches at market value, allowing customers to obtain these products for the most fair price. This is why our customers return time and again.”

Developing Honesty.

Nurturing this character trait requires hard work and patience. Make it a point to recognize how often you utter even little white lies, and correct yourself when you slip.

Because, after all, honesty is the best policy.

***Liba Rimler contributed to this article

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3 New Year’s resolutions for the cloud in 2018

I’m one of those people who takes time at the new year to define personal objectives for the forthcoming year, some of which I actually achieve. Enterprise IT should be doing the same thing for cloud computing.

Here are my three suggestions for IT’s cloud resolutions for 2018.

2018 cloud resolution No. 1:
Look at your cloud security approach and technology

When I find issues with enterprise cloud deployments in my consulting work, it’s most often around security. Clients often leave aspects of their cloud deployments unprotected or underprotected, and things that should be encrypted are not, while things that should not be encrypted are.  

While I’m not recommending that you gut your cloud security and replace it with what’s cool and new, I am recommending that you take some time to walk through the security solution architecture and ask yourself about where you can improve. Moreover, consider all the security technology in place, what needs to be updated?   What should be replaced?

2018 cloud resolution No. 2:
Look at your cloud training plan

There are two categories of cloud training:

  • Provider training that’s focused on a specific provider such as Amazon Web Services, Microsoft, or Google.
  • General training that provides a good overview of how to make cloud work in enterprises, and all that is involved with that.

You should have a mix of both, as well as some paths for your staff defined to get the skills of a cloud architect, cloud developer, cloud operations specialist, and cloud devops specialist, just to name a few roles. There should be training paths through both vendor and nonvendor  courses to get your staff members the skills they need to perform their duties (which of course must be clearly defined). 

2018 cloud resolution No. 3:
Evaluate your databases

Databases are sticky, and once enterprises have used a specific database, they are not likely to change it. Indeed, what many enterprises have done is just rehost their data on public clouds using the same database they used on premises.

Today we have many options in the cloud, including SQL and non-SQL databases. While there are native databases in public clouds such as AWS’s RedShift and DynamoDB, there are many other options from databases providers that support the public cloud and traditional platforms. Are you using the optimal solution?  

These are just a few suggestions; I suspect that you can name more. Whatever they are, pick a few and follow up. Have a great new year!

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