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db3d2e9befc011fb69f2203132c678ed | https://www.cnbc.com/2017/04/06/icelands-genetic-goldmine-and-the-man-behind-it.html | Iceland's genetic goldmine, and the man behind it | Iceland's genetic goldmine, and the man behind it
VIDEO2:2502:25Why Iceland's unique properties make it a goldmine for genetics researchSquawk Box
A "simple man, living in a backwater country, with modest aspirations" — that's how Iceland's Kari Stefansson described himself this week from his office in Reykjavik. People who know him, or know of him, would describe him as anything but. Stefansson is chief executive and founder of deCODE Genetics, a Reykjavik-based company that set out in 1996 to mine the unique genetic makeup of Stefansson's native land. Two decades later, the United States and other nations and companies are seeking to follow suit, sequencing the genomes of millions of people to glean new avenues for medicine and drug development. Few places have the ideal conditions for genetic research provided by Iceland. "There happens to be a population founder effect" here, Stefansson explained. "That means there are relatively few ancestors that account for a large percent of the current-day population." And that means that rare genetic variants important in disease — either as culprits contributing to illness or as protectors against it — show themselves more readily in the genes of Icelanders than they would in "outbred" populations, as Stefansson puts it. The Nordic island country's homogeneity isn't the only thing going for it when it comes to genetic research. Iceland has also kept meticulous genealogical records — some natives can trace their roots back to the 9th century. "We have 44 kilometers of paper documents, and the oldest document is from 1185 or thereabouts," Eirikur Gudmundsson, director general at the National Archives of Iceland, said in an interview. "They are the memory of our nation, and without that we wouldn't know who we are." DeCODE digitized these records and others from private collections, a massive project, Stefansson said. The result: an online Book of Icelanders, or "Islendingabok" in the native tongue, a treasure trove of family trees tracing Icelanders back generations.
A collection of Icelandic genealogical records dating back to the 1700s.Jodi Gralnick | CNBC
Gudmundsson logged into Islendingabok this week from the National Archives in Reykjavik, tracing his roots back to ancestors listed in the world's oldest existing comprehensive census, taken in 1703 on the order of the King of Denmark to investigate reports of poor conditions on the island. The website also revealed Gudmundsson's lineage went back several hundred years further, to ancient ancestors mentioned in the Sagas, the famed medieval Icelandic stories. Upon request, the national archivist also demonstrated how closely he's related to current-day famous Icelanders — President Guðni Th. Jóhannesson (back to a common ancestor in the 1600s), and Bjork (a slightly closer connection, back to the 1700s). "It's often done when you are meeting people," Gudmundsson said. "Saying, 'Who's he?' And 'Who's she?' And 'Do you know her? Let's check on the book of Icelanders if he or she is related to you or me.'" Icelanders, on average, can trace a common ancestor seven generations back, Gudmundsson explained. But the likelihood of running into a closer relation can pose unique problems in romantic situations — so much so that many here check the Book of Icelanders for common ancestors before getting too serious with a potential romantic partner.
Iceland National Archivist Eirikur Gudmundsson shows Meg Tirrell the 1703 census.Jodi Gralnick | CNBC
The records are useful for more than avoiding accidentally dating a cousin; deCODE is able to marry such extensive knowledge about family connections with genetic information about disease to seek new clues for medicine in Iceland's DNA. That work has turned up new leads in Alzheimer's disease, type 2 diabetes, cardiovascular disease, schizophrenia and more. But deCODE's existence hasn't always been an easy one; the company filed for bankruptcy in 2009, as the whole country of Iceland was going through a financial crisis. The story is different now. In 2012, Amgen, the world's largest independent biotech company, paid $415 million to take deCODE in-house, providing funding to keep the research going, but leaving the Icelandic company "completely alone to indulge in exactly the same discovery as before they bought us," Stefansson said. For Amgen, the relationship appears to be working out as well, according to CEO Bob Bradway. "We've been thrilled with the progress of our collaboration with deCODE," Bradway said in an interview last week. "It's informed both projects that we've moved forward in our pipeline, as well as projects that we've concluded we need to stop based on information in the human genetics." Last spring, Amgen announced a deCODE discovery leading to a new effort in heart disease, a mutation in a gene called ASGR1 that appears to confer protection against heart attacks and coronary artery disease for certain lucky Icelanders. The plan now: develop drug candidates to mimic the protective effects of this mutation. It's the kind of work that governments and other companies around the world are hoping to emulate. In the U.S., there's former President Barack Obama's Precision Medicine Initiative, part of which aims to collect genomic and other health data from at least a million Americans to find new clues about disease. Despite a change in administration — to a president who's suggested cutting funding for the National Institutes of Health, which would drive the Precision Medicine Initiative, by 20 percent -- plans for the work are full-steam ahead, said NIH Director Francis Collins. "We are anxious to move as quickly as possible away from a 'one size fits all' approach to how to keep people healthy or manage chronic illness into something that's much more individualized," Collins said in an interview. "The 'All of Us' program has been working day and night to get all the pieces together." The NIH is planning a "beta test" of the program in the next few months, Collins said, ahead of a full launch in the fall. The goal is to make it easy for anyone in the U.S. to join in the research project by making a phone call or getting on the web. "You will be hearing a lot about it at that point, because we want lots of people to know about it and to take an interest in possibly signing up," Collins said. These kinds of projects are going on worldwide — from Genomics England's 100,000 Genomes Project, to a collaboration between drugmaker AbbVie and Genomics Medicine Ireland, to Qatar, Singapore, France, Estonia, China, and many others. "I did a little inventory about how many other programs like this around the world are getting underway," Collins said. "There are at least 50 programs that are enrolling at least 100,000 people in various countries around the world." Many of those programs have a connection back to deCODE — not just in their model, but in the technology being used to power the work. In 2013, deCODE spun off a technology arm called NextCODE, later acquired by China's WuXi. Now WuXi NextCODE is involved in many of the major population sequencing initiatives around the globe. "We have a fully integrated genomics platform company, starting with sample and ending with answers," WuXi NextCODE CEO Hannes Smarason said in an interview this week in the company's office in Reykjavik.
Decode Genetics CEO, Kari StefanssonIan Langsdon | Reuters
"In a way, what we aspire to do is in essence much like what Bloomberg did for financial data," he said. "Bring together the world's genomic data, put it onto a digital platform, and allow the user to query that information and interrogate it at scale." Back at deCODE, Stefansson is enamored by the potential to use the power of Iceland's genetic and genealogical data to unlock understandings about the brain, and the heritability of thoughts. "Science is well-suited to answer certain kinds of questions, but not all questions," Stefansson reflected. "We can solve the technical problems, but the epistemological problems are somewhat more difficult to answer." The brain, despite its mysteries, "is just an organ," Stefansson said. "You inherit the function of all your other organs; why shouldn't you inherit the function of your brain?" he demanded. "Tell me." Notoriously mercurial, Stefansson swung during a thirty-minute conversation from quoting T.S. Eliot's "The Love Song of J. Alfred Prufrock" to expressing fear for how much he takes after his father, whom he called "a nasty bastard." He's proud of what he's accomplished with deCODE, starting in 1996 in a country "with no know-how, nothing that allowed you to do biomedical research in a competitive way," he said. "We brought together a group of people, almost all of them Icelanders, who have been leading the world in cutting-edge science," Stefansson reflected. "I am very proud of what these kids have accomplished, and that is sort of at the top of my mind when I think back." As for himself, Stefansson said, "There is nothing [else] that I feel that I have to accomplish." "I just want to die sitting by this desk doing human genetics," he said. "Simple man, living in a backwater country, with modest aspirations."
VIDEO3:5403:54Why Iceland is a key player in genetic sequencingPower Lunch
More from Modern Medicine:
The land of the Vikings may hold the cure for cancer Could flashing light treat Alzheimer's? Fresh approaches to treating the disease Betting on the first disease to be treated by gene editing
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dcaca729593250426ad62a63ffd9f487 | https://www.cnbc.com/2017/04/06/iowa-obamacare-market-gets-hit-as-aetna-says-it-will-drop-out-in-2018.html | Iowa Obamacare market gets second big hit as insurer Aetna says it will drop out in 2018 | Iowa Obamacare market gets second big hit as insurer Aetna says it will drop out in 2018
VIDEO0:4000:40Iowa's Obamacare market gets hit a second time as Aetna says it will drop in 2018News Videos
A second big shoe just dropped on Iowa's Obamacare marketplace.
Three days after Wellmark Blue Cross & Blue Shield said it would not sell new individual health insurance plans in Iowa in 2018, Aetna on Thursday said it also will not offer new Obamacare plans next year, citing "financial risk."
The moves leave Iowa with just two other insurers that, as of now, sell Obamacare plans in the state.
A third Iowa insurer, Medica, told CNBC is has not yet decided whether to continue selling plans there next year. Medica is the only company to offer individual plans in all of the state's counties. The fourth insurer, Gundersen Health Plan, said that its current plan is to participate in the Obamacare marketplace in Iowa.
Aetna said it is "still evaluating" if it will sell Obamacare plans in the three other remaining states where it currently does so.
Aetna covers about 30,000 people in Iowa who buy plans through the federal Obamacare exchange, HealthCare.gov, according industry sources.
Slightly fewer than 52,000 Iowans signed up for coverage on HealthCare.gov during open enrollment for 2017.
Wellmark covers about 21,000 people through Obamacare plans. But a number of them bought those plans outside of the federal exchange.
Aetna spokesman T.J. Crawford said, "Earlier today we informed the appropriate federal and state regulators that Aetna will not participate in the Iowa individual public exchange for 2018 as a result of financial risk and an uncertain outlook for the marketplace."
"We are still evaluating Aetna's 2018 individual product presence in our remaining states," Crawford said.
The remaining states are Virginia, Nebraska and Delaware.
The situation in Iowa is mirrored in a number of other states where insurers are seriously considering whether to exit Obamacare marketplaces.
Some insurers are worried about remaining in markets where they have been unable to make money as a result of too many customers with high health needs, and not enough health customers to offset their costs. Wellmark blamed its departure from Iowa's Obamacare market on $90 million in loss over three years.
Insurers also are worried about the future of Obamacare, particularly because Republican leaders in Congress have been unable, as of yet, to pass replacement legislation for the health-care law.
Wellmark CEO John Forsyth earlier this week said, "Finding solutions to stabilize this market is in the best interest of all Iowans, including providers of health care and insurance carriers."
"No one really benefits from rising costs," he continued. "While there are many potential solutions, the timing and relative impact of those solutions is currently unclear. This makes it difficult to establish plans for 2018."
Wellmark and Aetna's departures were announced about a month before insurers in Iowa have to start submitting their proposed premium rates for 2018.
About one-third of the counties in the United States this year are served by just a single Obamacare insurer.
Health-care advocates have worried about markets that currently have just one insurer potentially being left with no insurer in 2018, due the uncertainty in Washington. Humana's announcement that it was leaving the Obamacare exchanges in 2018 now leaves Knoxville, Tennessee with the prospect of no Obamacare insurers next year.
But Iowa, which had four insurers on HealthCare.gov in 2017, was not one of the states that analysts had been eyeing for a major market disruption.
"Iowa would not have been on our radar of states where they were at risk, necessarily. But then you have to two companies leave within a space of a couple of days, and suddenly it is at risk," said Cynthia Cox, associate director at the Kaiser Family Foundation.
"I think this underscores how much the political uncertainty can cause markets that were otherwise appearing to be stable, to become at risk almost overnight," Cox said.
The U.S. House Energy and Commerce Committee, which is controlled by Republicans, put out a press release on the heels of Aetna's announcement that noted Wellmark's earlier departure as well.
"The insurer exodus continues [its] drip-drip-drip effect on patients, leaving them guessing on the future of the marketplace," the release said. "This year, Iowans had four insurers offering plans on the individual market. Next year they will have just one state-wide insurer. Patients deserve better – a health care system that puts them first and delivers on being more affordable and accessible."
Larry Bussey, a spokesman for Medica, when asked what that insurer planned to do in light of Aetna's decision, said, "At this point we're just looking at the situation and evaluating what our options are, and really looking at what we're going to do."
Medica covers about 14,000 people in Iowa who buy plans though HealthCare.gov.
CNBC has reached out to comment from the fourth Obamacare insurer in Iowa, Gunderson.
In a note Thursday, Evercore ISI said that "the decline in Iowa's exchange sign-ups this year was a bit larger (-6.4 percent) than the U.S. overall (-3.7 percent), and it also saw a bigger move towards higher-cost older members."
"But clearly the exit of 2 of 4 carriers from Iowa now raises the uncertainty for exchanges in general in 2018," Evercore ISI said.
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885eda2805eb2fd07960bb94c932ad82 | https://www.cnbc.com/2017/04/06/is-singapores-property-market-headed-for-a-quick-upswing.html | Is Singapore’s property market headed for a quick upswing? | Is Singapore’s property market headed for a quick upswing?
After a long, plodding downtrend, Singapore's housing market may be gathering forces for a rebound.
Sigrid Zialcita, managing director for Asia Pacific research at Cushman & Wakefield, told CNBC's "The Rundown" last week that she expected a turning point in prices "very soon."
She pointed to the government's recent move to ease some of its curbs on the sector as the reason for the market's changing fortunes.
"That actually boosted sentiment in the market. We've seen an increase in foot traffic and it's incentivizing a lot of buyers," she said.
Others also noted that the government's decision to loosen the reins may be spurring more property activity.
Hari Krishnan, CEO of website PropertyGuru, pointed to more optimism, with the number of property listings in the first quarter rising 2.0 percent on-year and 2.4 percent in March. "These increases could be indicative of an uplift in seller sentiment," he said via email this week.
That hasn't been reflected in prices yet. In the first quarter, overall private home prices fell 0.5 percent on-quarter, the 14th straight quarter of declines. This time around, however, the bulk of the decline was in relatively small landed property segment, while non-landed prices were steady.
The city-state's housing prices surged more than 60 percent from 2009 through 2013, propelled by rock-bottom global interest rates and quantitative easing in developed economies, even as the government enacted a series of cooling measures from 2011 to prevent a bubble from forming.
The measures, including an Additional Buyer's Stamp Duty which could add as much as an additional 15 percent to the price, appeared to have eventually met with some success, with the property price index falling around 11 percent from the peak in the third quarter of 2013 through the end of 2016, according to data from Deutsche Bank in January.
Now, the government may have a more sanguine view, taking moves in early March to scale back some of the curbs, including lowering the seller's stamp duty and shortening the minimum holding period to avoid it.
The Port of Singapore. Chris McGrath | Getty Images
In a note late week, analysts at Citi also pointed to a sudden "sentiment uplift" after the policy easing, although it added that the "exuberance" might be overdone.
Indeed, the note indicated that while it would be more economically rational for potential buyers to wait for more substantial policy easing or for further discounts from developers running up against government-mandated sales deadlines, "the market sentiment in Singapore tends to work the other way – sidelined buyers rush back to the market at the first hint of easing, for fear of losing out."
Citi noted it was "impossible" to determine how much of an impact the move had on recent sales volume, but it pointed to one launch last week, of Park Place Residences, which sold its entire phase one, initially set at 40 percent of the 429-unit total before being raised to 50 percent, within a day.
To be sure, the development boasted a strong location and was arguably priced competitively.
Other indicators also suggested the pickup in interest from potential buyers may pre-date the policy easing.
Data released by Singapore's central bank, the Monetary Authority of Singapore, last week showed that consumer housing and bridging loans in February, before the rules were relaxed, rose 4.0 percent on-year to 192.8 billion Singapore dollars, marking 12-straight months of on-month increases.
Property investor Alexander Karolik Shlaen, an economist and CEO of Panache Management, a luxury brands and investment adviser, said that while he'd noted sentiment toward the market had been improving for a while, he didn't expect the changes would affect most buyers.
But he noted that for a few buyers, specifically those who already hold a property and are looking to upgrade, only needing to wait three years, instead of four, to avoid the seller stamp duty may spur them into the market.
VIDEO1:3501:35Things are looking up for Tokyo property
Shlaen also noted that while the easing could help individuals, the government had also moved to tighten loopholes allowing bulk-buyers of properties to side-step some taxes.
That could take those buyers out of the market, he said.
It wasn't clear how much further any sentiment pickup could run.
Citi noted that buyers betting the government may further relax property-sector curbs could run up against a negative feedback loop: If the recent easing pushes up volumes and prices faster than economic fundamentals, that would dampen the chances of further policy easing.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
Follow CNBC International on Twitter and Facebook.
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e2d3c090c5cd5b9811567901cd0d59fe | https://www.cnbc.com/2017/04/06/microsoft-surface-tops-apple-ipad-in-jd-power-survey.html | It's official: People like Microsoft's tablets better than the iPad | It's official: People like Microsoft's tablets better than the iPad
VIDEO0:4600:46Microsoft's new version of Windows is open to the publicNews Videos
Consumers officially like Microsoft's Surface tablets more than they like the iPad.
J.D. Power released its 2017 U.S. Tablet Satisfaction Study on Thursday and noted that customers are more satisfied with Microsoft's Surface tablets than they are with Apple's iPad and tablets built by Samsung, LG, Amazon, Acer and Asus.
Microsoft topped J.D. Power's consumer survey in three key areas including internet connectivity, availability of official accessories and the variety of pre-installed applications. Microsoft also beat the iPad when it boiled down to consumer preference for tablet attractiveness, quality of materials and size of the tablet.
Here's something investors who have watched the decline in sales of Apple's iPad will want to note, too: 51 percent of Microsoft customers believe they're "among the first of their friends and colleagues to try new technology products."
VIDEO0:3900:39If you're in the market for an iPad, now is the time to waitNews Videos
In other words, people who want the newest technology — early adopters — are picking up Microsoft Surface tablets instead of iPads.
Overall, it appears that the large range of support for full Windows apps may have helped the Microsoft Surface's case, especially among consumers who wanted to get work done.
"The Microsoft Surface platform has expanded what tablets can do, and it sets the bar for customer satisfaction," J.D. Power's vice president of service industries, Jeff Conklin, said in Thursday's news release. "These tablet devices are just as capable as many laptops, yet they can still function as standard tablets. This versatility is central to their appeal and success."
Despite a decline in quarterly sales, Apple remains the king of the tablet market. Consumers are enjoying their Microsoft tablets more than iPads, though, and that could chip away at Apple's market share.
WATCH: Microsoft's after Apple users
VIDEO0:4500:45Microsoft after Apple usersNews Videos
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14f0009fa96d9e090a33687a068ba981 | https://www.cnbc.com/2017/04/06/private-equity-is-breaking-records-left-and-right-as-funds-rake-in-money.html | Private equity is breaking records left and right as funds rake in money | Private equity is breaking records left and right as funds rake in money
Koji Aok | Getty Images
Private equity is taking off, and breaking records along the way.
In some ways, private equity's gain comes at the expense of hedge funds' losses. In others, it is simply emblematic of the tremendous amount of capital sloshing around the world, with few other places to invest after almost a decade of low interest rates.
North American funds secured their highest first-quarter fundraising total ever, raising $62 billion, according to data compiled by Preqin, an alternative assets research firm. Worldwide, 253 private capital funds ended their fundraising process in the quarter, hauling in $156 billion, the data showed, which was the best first quarter since right before the financial crisis.
The momentum is likely to continue into the second quarter, with more than 3,000 funds currently marketing to investors, according to Preqin.
VIDEO2:2302:23BlackRock turns to the machines for new stock-picking strategySquawk Box
Apollo Global Management hopes to raise more than $23 billion in a fund that it is currently marketing to investors, according to three people with knowledge of the matter. That would be the largest private-equity fund ever, surpassing the nearly $22 billion fund raised by Blackstone in 2007. The closing could come as soon as next month, one of the people said.
Apollo declined to comment. Bloomberg reported last month that Apollo was fundraising.
For most investors in private equity, it all comes down to performance, at least in the long run. In the year 2016 through September, a Cambridge Associates index of private equity returns posted gains of 8.5 percent, which was about half that of any public stock index.
But in the long run — and for those investors expecting some sort of a decline in the public markets, it's all about the long run — private equity continues to outperform most equity benchmarks, with almost 11 percent returns over 10 years, according to Cambridge Associates.
Compare those private-equity inflows with hedge funds, which saw investors pull out $106 billion last year, the most since 2009, after posting returns about half that of the . Private equity's 8.5 percent gain net of fees surpasses hedge funds' 4.95 percent gain based on HFR's index over the same period.
Ironically, hedge funds also see value in the upswing in private equity. This week, fund manager Tiger Global bumped its passive stake in Apollo to 12.5 percent from a previously disclosed 7 percent, according to a filing.
Despite having plenty of capital to put to work, private equity firms have been muted when it comes to making acquisitions. Buyout activity fell in the first quarter to only 970 transactions, representing $53 billion, which was down from the 1,058 deals worth $89 billion during the previous quarter, according to Preqin data.
In some ways, this represents the double-edged sword of having so much capital in private equity. Plenty of managers are ready to deploy it, but as they chase assets, it can drive up prices, making them more expensive. Moreover, valuations in the public markets continue their upward climb.
As interest rates rise, however, private equity executives are hoping that the valuations will compress and they'll be able to become buyers again.
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89b42c09480a846476287e964ef363c1 | https://www.cnbc.com/2017/04/06/salesforce-tower-san-franciscos-tallest-building-views.html | Salesforce is celebrating the capping of the tallest building west of Chicago, and the views are astounding | Salesforce is celebrating the capping of the tallest building west of Chicago, and the views are astounding
Salesforce Tower, San Francisco, CAHarriet Taylor | CNBC
Salesforce CEO Marc Benioff and San Francisco officials are marking the laying of the final beam — a construction milestone known as "topping off" — at its new global headquarters in downtown San Francisco.
"They take the last structural beam and everybody signs it," Elizabeth Pinkham, Salesforce executive vice president of global real estate, said in advance of Thursday's planned ceremony. "Then they hoist it up to the top."
The building rises 1,070 feet high and is the tallest U.S. office building west of Chicago. Salesforce, a cloud-computing company that specializes in customer relationship management, is the "anchor tenant" and will occupy floors three to 30 and the top two levels, 60 and 61. Rather than designating the two top floors for executive offices, Salesforce will keep them open to all employees and their guests, Pinkham said.
Other tenants will include Salesforce partner Accenture, which wanted proximity to the enterprise tech company, CBRE and Bain & Company. Construction is set to be completed in July. The landlords are Boston Properties, which has a 95 percent stake in the building and Hines, which owns the rest.
Right now, the building still looks like a construction site — there is no trace yet of the fancy office furniture synonymous with tech company offices — and construction workers are in the process of building out the skeleton of the building and installing the windows.
"I'm used to being up there with no windows, so it's going to be weird with windows," said Pinkham.
Click ahead for a first look.
— By CNBC's Harriet Taylor Published 6 April 2017
Salesforce buildings in downtown San FranciscoHarriet Taylor | CNBC
Salesforce is the largest tech employer in San Francisco, with more than 6,000 local employees. The company has its name on all kinds of buildings downtown.
Harriet Taylor | CNBC
We visited this week and took a ride to the top. The elevator feels wobbly, but none of the construction workers seem concerned.
Touring Salesforce Tower's 60th floorHarriet Taylor | CNBC
Salesforce's Pinkham takes us on a tour around the 60th floor, which still has few windows, although there is a guard rail.
Windows ready for installation at Salesforce TowerHarriet Taylor | CNBC
These giant windows offer unobstructed 360-degree views.
South San Francisco and the San Francisco Giants AT&T ParkHarriet Taylor | CNBC
Here's the view south toward Silicon Valley.
Salesforce Tower view of the San Francisco Bay BridgeHarriet Taylor | CNBC
The Bay Bridge from 60 floors up.
Harriet Taylor | CNBC
We tower over everything else in downtown San Francisco.
Salesforce Tower San Francisco Bay viewHarriet Taylor | CNBC
At 1,070 feet, Salesforce Tower even dwarfs the iconic pyramid-shaped Transamerica Tower, which is 853 feet high.
There's one point in the city that's higher still: The top of the Sutro TV tower, located on top of a peak in the middle of town. The structure is 977 feet high, shorter than the Salesforce Tower, but it's sitting on a peak that's 834 feet above sea level.
Salesforce Tower windows
Here's how the windows look once they're installed.
Harriet Taylor | CNBC
Heading back down, we saw these construction workers hard at work on the 5th floor.
Construction workers building the park next to Salesforce TowerHarriet Taylor | CNBC
Workers are also building the park next to Salesforce Tower. Employees will be able to cross over to the park from the 5th floor.
Park by Salesforce Tower in downtown San FranciscoHarriet Taylor | CNBC
These trees, the first greenery to arrive, are waiting to be planted.
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c3860cd519a4aa1543e840280e81a6d1 | https://www.cnbc.com/2017/04/06/san-francisco-cost-of-living-pricing-out-tech-companies-workers.html?__source=OTS%7Cfinance%7Cinline%7Cstory%7C&par=OTS&doc=106805794 | San Francisco has gotten so expensive, some tech companies can't convince employees to move there | San Francisco has gotten so expensive, some tech companies can't convince employees to move there
StockRocket | Getty Images
When Australian digital media marketing and commerce company Rokt decided to start its U.S. outpost in 2014, it first headed where most tech startups find their footing: San Francisco.
But it struggled with the fierce competition for tech talent in Silicon Valley, and the lack of nearby advertising companies made it hard to find customers.
There was one other point of contention: employees didn't want to move overseas to go to San Francisco.
VIDEO1:0901:09A first look inside the new Salesforce Tower The Pulse @ 1 Market
"It's hard to get someone to want to come there," said Rokt CEO Bruce Buchanan.
"They're young and single, and want to be where people with a like-minded lifestyle want to be," like Chicago and New York. Rokt decided to make its existing office in New York its U.S. headquarters.
San Francisco's start-up culture makes it a hotbed for tech talent. It also means every company is competing for the same people, meaning higher salaries and more perks to stay competitive. But it's also getting harder and harder to convince candidates from outside San Francisco to move there.
"Consistently we would reach out to great candidates," said Vevo's chief people officer Colleen McCreary. "If I can't find them living here (San Francisco) already, we look for that great candidate in Kansas City or Idaho. Then, they run a cost of living calculator."
Pos. City Price (Studio) M/M % (Studio) Y/Y % (Studio) Price (1 Bedroom) M/M % (1 Bedroom) Y/Y % (1 Bedroom) Price (2 Bedrooms) M/M % (2 Bedrooms) Y/Y % (2 Bedrooms) 1New York, NY$2,5000.0%-5.7%$2,9400.3%-12.8%$3,4902.0%-12.3%1San Francisco, CA$2,5002.0%-3.8%$3,3201.5%-7.5%$4,430-1.6%-8.7%3Boston, MA$1,7500.0%0.0%$2,200-2.2%-4.8%$2,6000.0%-1.9%4San Jose, CA$1,7304.8%-2.3%$2,2603.7%-0.4%$2,8204.8%-2.8%5Washington, DC$1,7200.6%-5.5%$2,0401.5%-7.3%$2,9005.1%-3.3%6Oakland, CA$1,6603.8%-2.4%$2,0703.5%-11.5%$2,5503.2%-11.1%7Los Angeles, CA$1,5104.9%0.7%$2,0603.0%4.6%$2,9501.0%5.4%8Chicago, IL$1,4900.0%9.6%$1,7702.3%6.0%$2,260-0.9%3.7%9Seattle, WA$1,4304.4%1.4%$1,810-0.5%3.4%$2,400-0.8%-6.6%10Miami, FL$1,4000.0%-10.3%$1,8000.0%-5.3%$2,5000.0%-5.3%11Portland, OR$1,120-5.1%-6.7%$1,340-1.5%0.8%$1,6000.6%-0.6%12Austin, TX$9500.0%-2.1%$1,050-2.8%-8.7%$1,330-4.3%-11.3%13Omaha, NE$6504.8%-1.5%$7304.3%-5.2%$9000.0%-8.2%14Detroit, MI$530-1.9%-3.6%$5401.9%-1.8%$6504.8%0.0%
Data courtesy of Zumper
McCreary has first-hand experience with Silicon Valley's insane housing market. Before moving into her current Bay Area home, she lived in a two bedroom San Francisco condo she owned with her husband, son and sister. McCreary and her husband split their bedroom with their son, while her sister took the other room. They stayed in that set-up for two years.
"It's especially challenging for people with families," McCreary said. "If you are young and single, it's a lot easier to get out there and be in the center of technology. But if you are a more established person, that lifestyle is a little more difficult."
One alternative for tech companies is to build out in other cities like Seattle, Austin or Chicago that offer a fun lifestyle but might not be as expensive. Not only are salaries cheaper, office rent and other expectations are lower as well. (The only exception was New York, which was mostly on par with San Francisco according to the companies surveyed.)
Vevo is now expanding offices in cities like Portland. It's a highly educated market with high unemployment rates, McCreary said. It also has the added bonus of being in the same time zone as Vevo's San Francisco headquarters.
"I'm almost afraid to tell people," she joked.
Employment recruitment startup Purple Squirrel CEO Jon Silber, who used to be a strategist at Google, used the model-building skills he learned at Google to figure out whether he should move from San Francisco to Los Angeles.
He discovered that he could get 30 percent more house, spend 15 percent less on food and have a 20 percent lower overall cost of living in Southern California. Even Uber cost 30 to 40 percent less, he discovered. In addition, there were more universities in southern California producing computer engineers than in San Francisco.
VIDEO3:4803:48Fighting homelessness in San FranciscoClosing Bell
"We figured if we moved from San Francisco to Los Angeles, we could extend our company's runway by 30 percent because there were more engineers and rent was cheaper," Silber said.
Digital ad tech company Integral Ad Science is also building out offices in places like Seattle and Exeter, England. It found that relocation package costs to San Francisco were so high, it was easier to start offices where potential employees were. For instance, an Austin office was jump started after Ad Science hired one employee there, who knew eight other friends who he brought on board as well.
"No question you have to find people outside of San Francisco and New York if you want to scale," said CEO Scott Knoll.
Integral has found that there are not as many tech workers outside San Francisco, but it's possible to fill those roles by hiring people from other professions and retraining them, especially as data scientists. It's hired people who were previously working in biotech and finance, as well as astrophysicists, theoretical physicists and neuroscientists.
"One guy had spent six years understanding the movement of a mouse's whiskers," Knoll said. "He thought (ad tech) was really exciting because he could explain it to other people."
Plus, there's the refreshing change of pace from the culture of San Francisco.
"In Los Angeles, you don't have to have your entire life to be about tech," Purple Squirrel's Silber said. "Not every single conversation has to be about tech."
"San Francisco is almost like an insulated bubble," said employee training platform Grovo's vice president of people, Joris Luijke.
San FranciscoCompassandcamera | Getty Images
But some just can't give it up
Despite the higher costs and potential alienation of employees, some companies simply can't find who they want anywhere else.
San Francisco just has more senior level tech talent, admits Grovo's Luijke. The New York-based company just opened up its San Francisco outpost.
"I understand what those other companies are saying, but I'm focused on engineering and product leadership," said Luijke. "Our vice president of products, we had that job open for New York City for over a year. We extended to San Francisco, and we filled it in four months. They (interviewees) didn't want to leave San Francisco, and the pool was bigger there."
And while employees complain about San Francisco's high housing costs, the city's casual culture means they don't have to spend as much on clothing.
Vevo's McCreary said she has an unlimited Rent the Runway subscription to rent clothes to wear when she's in New York for work. She doesn't need them at the office in San Francisco.
Virtual reality media company Upload founder and CEO Taylor Freeman, who recently left San Francisco for Los Angeles, found that investors expected people to be a little more dressed up in southern California. It is opening a second, much larger location in Los Angeles.
"I have been urged to get a nice jacket like a cool Rag and Bone... If you don't believe in having nice shoes or a handbag, it still matters to the people you do business with (in L.A.)," he said.
But, Purple Squirrel's Silber said he carried over one piece of San Francsico's casual attire mentality to his Los Angeles office: No one wears shoes.
"I literally interviewed a guy and went boogie boarding with him," Silber said. "The guy showed up in board shorts, a tank top and sandals. He didn't get the job, but he's still allowed to come to all our parties."
Watch: Hot housing in San Francisco
VIDEO4:3404:34Hot housing in San Francisco Fast Money
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8a23d20cb5da5d09ce9bd109113cd4dc | https://www.cnbc.com/2017/04/06/spotify-may-go-public-without-ipo-report.html | Spotify is 'seriously considering' going public in 2017, but there's a twist | Spotify is 'seriously considering' going public in 2017, but there's a twist
VIDEO3:4303:43Spotify's not-quite-IPOPower Lunch
Spotify is "seriously considering" an unusual public listing of its shares, rather than a traditional IPO in which shares are sold to the public, sources told CNBC on Thursday.
Earlier, the Wall Street Journal reported that the music streaming service is considering a direct listing, in which the company would simply register its shares on a public exchange and let them trade freely.
With a typical initial public offering investors buy shares from the company prior to IPO. A direct listing differs in that investors buy shares off the open market, removing the need for underwriters to set the initial price.
The company will also no longer raise new money from investors, people familiar with the matter told WSJ. Spotify has raised over $1 billion dollars in equity and has been valued at $8.5 billion dollars, but the company is aiming to increase that value to $10 billion. Spotify's new deal with Universal Music Group, could bolster the streaming service's revenue and better position the company to compete against Apple music.
If Spotify's direct listing is successful, it could set the stage for other high-value tech companies to follow a similar path.
— CNBC's Leslie Picker contributed to this report
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88dcf2efecfc0e94abbf0176b7ab5eea | https://www.cnbc.com/2017/04/06/trumps-spending-agenda-could-be-a-recipe-for-disaster-says-nyu-business-professor.html | Trump’s spending agenda could be a ‘recipe for disaster’, says NYU finance professor | Trump’s spending agenda could be a ‘recipe for disaster’, says NYU finance professor
VIDEO2:5102:51The problem for President Trump is implementing his agenda: ExpertBusiness News
President Donald Trump's spending reform agenda could turn out to be a "recipe for disaster" and a significant risk to the U.S. economy if more attention is not paid to the implementation process, NYU finance professor Edward Altman has warned.
Describing the policies as "risky," Altman said that President Trump and some of his advisors are too reliant on as yet unrealized growth in order to fund proposed tax cuts, which could hurt the economy.
"We have to be careful, very much, of overheating the economy very quickly with infrastructure financing and lower taxes," Altman told CNBC Thursday.
"That, in many cases, could be a recipe for disaster if, in fact, the deficit financing and the amount of debt that has to be raised to finance it is excessive."
President Donald Trump speaks about the gas attack in Syria as he and Jordan's King Abdullah (not pictured) hold a joint news conference in the Rose Garden after their meeting at the White House in Washington, April 5, 2017.Yuri Gripas | Reuters
"I personally think that's going to be risky because the timing is not going to be coherent. You spend money quickly, you raise a lot of debt, but it takes time for that to permeate down into the economy."
The president, however, has a tough balance to strike, Altman noted. Failure to implement the proposed reforms could hurt markets, particularly in the near-term, after having been buoyed by the prospect of more accommodative business policies.
This pressure has become especially acute since the failure of the Republican's health-care bill – seen by many as a litmus test for other overhauls.
"I wish him luck – but so far his track record is not very good," Altman said.
"If that continues with tax policy, which is very complicated, then I think markets are going to say 'things aren't going to turn out as expected' and I think we're going to find that volatility that we were expecting," he continued.
Follow CNBC International on Twitter and Facebook.
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e4b0e5bba589ac2f6bd03250cff5887e | https://www.cnbc.com/2017/04/06/we-are-not-substituting-stock-picking-machines-for-humans-says-blackrocks-larry-fink.html | We are not substituting stock-picking machines for humans, says BlackRock's Larry Fink | We are not substituting stock-picking machines for humans, says BlackRock's Larry Fink
VIDEO2:5402:54Larry Fink: We are not substituting machines for human Squawk Box
Chairman and CEO Larry Fink told CNBC on Thursday it is not substituting stock-picking computers for humans.
Right now, machines do not outperform human analysts, Fink said.
Against the backdrop of a fiercely competitive trading environment, BlackRock its active management business by cutting jobs, reducing fees and increasing its use of computers to pick stocks.
BlackRock, the world's biggest money manager, has $5.1 trillion in assets under management.
Fink said on "Squawk Box" he was surprised by the media coverage of the reshuffling because it's only a small part of BlackRock's business.
"We are reorienting some of the humans' jobs in terms of doing more data science and data analysis," Fink said. "We'll have the same amount of employees in our equity division a year from now than we do today."
The move to incorporate more computing power into investment decisions is a recognition that there are so many sources of information that need to be analyzed quickly, Fink said.
"Very fast computers [can] analyze blogs, analyze all the feeds of the internet to come up with different nuances, different fields of information," he said. "It requires model analysis and deep-data analysis."
BlackRock is researching ways to use artificial intelligence, Fink said.
Fink said he believes in active management, but he personally invests in index funds because of all of the investment restrictions he is subject to as chief of BlackRock.
BlackRock has also been aggressive in lowering fees, Fink said.
Read more from Fink's interview:
US economy is being hurt by congressional gridlock and Trump's immigration policyStocks may see more turbulence if tax reform and deregulation stallsChina's relationship with North Korea worst it has ever been
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c95bdcfbabeb0ff02c915efd58385a3f | https://www.cnbc.com/2017/04/07/adidas-3d-printed-trainers-futurecraft-4d.html | Adidas is going to sell 100,000 sneakers with 3-D printed soles | Adidas is going to sell 100,000 sneakers with 3-D printed soles
Adidas unveiled a new sneaker on Friday with a 3-D printed sole and is aiming for mass production in the coming year.
The German sportswear giant has partnered with Silicon Valley start-up Carbon to produce the shoe – called the Futurecraft 4D – with 300 pairs being released this month for family and friends, followed by around 5,000 later this year and further scaling. Adidas said there will be more than 100,000 pairs by the end of 2018.
Sportswear makers have touted the potential of 3-D printing as being able to make increasingly customized designs. But so far, 3-D printing techniques have been expensive and lacked quality.
The Adidas Futurecraft 4D has a 3-D printed sole.Carbon | Adidas
Sneakers are traditionally made with an injection mold allowing companies to make them on a large scale. Carbon claims that its method known as "Digital Light Synthesis" will allow Adidas to get the scale for the shoe. The process works by using light to shape a liquid resin which is then heated to become solid.
Adidas said it analyzed a library of running data to come up with the perfect design for the sole. While Adidas is making one design of the shoe, it paves the way in the future for the company to tailor-make individual shoes to a specific person.
"Digital Light Synthesis allows Adidas to precisely address the needs of each athlete in regards to movement, cushioning, stability, and comfort with one single component," a press release issued by Carbon on Friday said.
Adidas did not say how much the sneaker would cost.
It's not the first time Adidas has experimented with 3-D printing. It began experimenting with the technology in 2015 and last year released a limited edition $333 sneaker called the 3-D Runner.
Rivals are also jumping onto the technology. Last year Nike struck a partnership with HP Inc to accelerate the prototyping and eventual manufacturing of 3-D printed clothing and footwear.
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ef7129512ad4742e8214c0fe307e77e0 | https://www.cnbc.com/2017/04/07/china-tech-investment-flying-under-the-radar-pentagon-warns.html | China Tech Investment Flying Under the Radar, Pentagon Warns | China Tech Investment Flying Under the Radar, Pentagon Warns
Jasper James | Getty Images
China is investing in Silicon Valley start-ups with military applications at such a rapid rate that the United States government needs tougher controls to stem the transfer of some of America's most promising technologies, a Pentagon report says.
There are few restrictions on investing in American start-ups that focus on artificial intelligence, self-driving vehicles and robotics, the report contends, and China has taken advantage. Beijing, the report says, is encouraging its companies to invest for the purpose of pushing the country ahead in its strategic competition with the United States.
In some instances, Chinese companies have made under-the-radar investments intended to dodge the oversight of a government agency, the Committee on Foreign Investment in the United States, known as Cfius.
"If we allow China access to these same technologies concurrently, then not only may we lose our technological superiority, but we may even be facilitating China's technological superiority," the report says.
Such concerns show that China is looming in America's rearview mirror after a decades-long campaign by Beijing to close the technological gap between the two countries. Although the race is often cast in an economic light, the Pentagon report underlines the national security threat.
In recent years, China has combined domestic subsidies with aggressive investment overseas to build its own technological know-how. A government plan, "Made in China 2025," that proposes lavishing state funds on 10 important industries has raised concerns from American and European business groups. Meanwhile, the global semiconductor industry has been shaken by Beijing-backed investment aimed at acquiring new microchip knowledge.
President Trump has said he would resist Chinese trade tactics that put American companies at a disadvantage, though it is unclear whether the topic has come up in meetings with President Xi Jinping of China that began on Thursday and continue Friday.
The report found that increasingly sophisticated commercial technology had blurred the lines between what was available to military consumers and civilian ones. Often start-ups and leading internet companies like Facebook and Google are working on products as sophisticated as anything the military has at its disposal.
"For example, V.R. for gaming is at a similar level of sophistication as the V.R. used in simulators for our armed forces," the report said, referring to virtual reality. "Facial recognition and image detection for social networking and online shopping has real application in tracking terrorists or other threats to national security," the report continued, which added that much of the autonomous vehicle and drone technology of today was developed using grants from the Pentagon.
In some cases, companies aided by those grants have since raised money from Chinese investors. Velodyne, for example, started developing light sensors for driverless cars after participating in a competition set up by the Defense Advanced Research Projects Agency, a unit of the Pentagon, in 2005. Since then, those sensors have been used on the United States Navy's unmanned surface vehicles.
Last summer, the company received a $150 million joint investment from Ford and the Chinese internet giant Baidu. Baidu declined to comment on the investment.
A Velodyne spokeswoman said the round represented its first outside investment.
"The company obtained all necessary government clearances relating to the investment as part of the funding process," the spokeswoman wrote in an email. "Notably, the investments were designed to make advanced LiDAR sensors more accessible to the broader industry, resulting in the development of safer, less expensive autonomous vehicles."
Ashton B. Carter, the former secretary of defense, commissioned the report as an urgent review of what senior Pentagon officials have considered China's alarming penetration of Silicon Valley, particularly in deals that finance nascent technology that has military applications.
The report found that American private industry was mostly unaware of Beijing's efforts — many of the deals involve relatively small amounts of money — and that Washington did not have a strong understanding of the scale of the issue.
"The U.S. government does not have a holistic view of how fast this technology transfer is occurring, the level of Chinese investment in U.S. technology, or what technologies we should be protecting," the report said.
Michael A. Brown, the former chief executive of Symantec, led the study, called "How Chinese Investments in Emerging Technology Enable a Strategic Competitor to Access the Crown Jewels of U.S. Innovation." The New York Times reviewed a copy of the unclassified report.
Mr. Carter declined to comment on the final document issued to cabinet officials last month.
The report does not offer examples of American companies that have accepted Chinese investment and then found that their sensitive technologies were transferred to China.
But it does take exception to tactics that it says Chinese funds have used to skirt government oversight. For example, it singles out Canyon Bridge, a venture capital firm that it says was formed to buy Lattice Semiconductor, an American microchip company. The firm has Chinese capital and American management expertise. The purpose of creating Canyon Bridge was to obscure the source of capital to "enhance the possibility" that the transaction would be approved by Cfius, the report said.
Peter Kuo, a partner at Canyon Bridge, said that the there was never any intention to obscure the source of the fund's capital, as shown by meetings it had with Cfius before the deal was signed.
Chinese investors plowed about $30 billion into early-stage technology through more than 1,000 funding deals between 2010 and 2016. During that time, participation from China rose to about 10 percent of total venture deals, with investment in crucial industries like artificial intelligence, robotics and augmented reality accelerating in 2016, according to the report.
Among the investors identified in the report are well-known private firms and funds like Alibaba and Baidu. It also points to government-sponsored investors like Westlake Ventures, a fund in Redwood City, Calif., that is owned by the Hangzhou government, and ZGC Capital, an investor owned by 17 state-owned enterprises with an office in Santa Clara, Calif.
The rising trend in venture capital investments has occurred alongside state-directed industrial espionage and online theft, which the American government has been unable to slow, the report says. In the Federal Bureau of Investigation's Silicon Valley field office, only 10 people are dedicated to counterespionage, and F.B.I. officials said in interviews for the report that it "has very limited resources relative to the threat."
"The scale of the espionage continues to increase," the authors say. "Despite the rise in convictions, there is no way to know how big this problem really is."
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715bfc239b3d5daf091abcc186380786 | https://www.cnbc.com/2017/04/07/cramer-remix-why-im-standing-alone-on-coca-cola.html | Cramer Remix: Why I'm standing alone on Coca-Cola | Cramer Remix: Why I'm standing alone on Coca-Cola
VIDEO1:0401:04Cramer Remix: Why I'm standing alone on Coca-ColaCramer Remix
The rest of Wall Street may have lost faith in Coca Cola's struggling stock, but Jim Cramer is fearlessly standing behind the ubiquitous multinational.
"I've got to tell you, I have been watching this stock like a hawk," the "Mad Money" host said. "I am telling you it's bottomed. You've got a new CEO. KO is a buy, buy, buy. And I know that I am alone on that and I don't care."
With the market unexpectedly maintaining its strength in light of U.S. airstrikes in Syria, President Donald Trump's tense meeting with Chinese President Xi Jinping, and a weak jobs report, Cramer nodded to the economic and corporate news he is keeping an eye on next week.
On Monday, the bulls will be itching to see oil break out of its $47 to $52 range into the $53 to $54 area, and would also do well to see the 10-year Treasury's rates rise from 2.3 percent up to 2.4 or 2.5 percent.
Cramer also expects some takeover action in the biotechnology, consumer packaged goods, and oils sectors.
Tuesday's Purchasing Managers' indices from China and the United Kingdom concern Cramer, because if China's is weak, leaders there could insist on stimulus via U.S. business involvement, and post-Brexit inflation in the United Kingdom could push the country's central bank to raise rates.
Wednesday brings mortgage application data, which Cramer thinks "is going to be the most important number about what's going on right now in the economy."
Airline Delta also reports earnings ahead of Wednesday's market open, and Cramer is worried about the effects of a slowdown in travel, though he does not expect any major bombshells.
An analyst meeting at fertilizer company Mosaic could bring a strong story and some upgrades for the lagging agriculture play. "I would actually like to own the stock ahead of that meeting," Cramer said.
A flurry of earnings reports on Thursday includes JPMorgan, Citigroup, and Wells Fargo, and Cramer is paying attention to net interest margins, or the "free money" banks make from deposits, loan growth, which he hopes has not slowed from the first quarter, and expenses in the midst of regulatory rollbacks.
Cramer is also watching smaller banks PNC and First Horizon, as the companies' Thursday earnings reports could reveal whether commercial construction has slowed due to recent impasses in Washington.
If chipmaker Taiwan Semiconductor's Thursday earnings report shows that $171 billion company is spending, Cramer says investors should pick up shares of Lam Research or Applied Materials, as they will be the direct beneficiaries of Taiwan Semiconductor's capital outflows.
Getty Images
Cramer compared two food-handling equipment companies to see if Welbilt, which has gained 40 percent since it was spun off by Manitowoc a year ago, held up against its competition.
Its biggest competitor is John Bean Technologies Corporation, or JBT Corp, a massive player that not only deals in food technology but also airport equipment.
While Welbilt's revenue has declined in recent years and its net margins have withered, JBT's revenue growth is accelerating year-to-year, despite slightly slacking margins.
"Could JBT's strength be because its food equipment is better, is more the kind of stuff used by farmers and food processors, while Welbilt's focused on restaurants? Yeah, that's it," Cramer said.
Restaurant chains are struggling, and Cramer said Welbilt is feeling the pressure as shuttering locations do not need new kitchen equipment. JBT, on the other hand, is tied to agriculture, which has seen a spending boost of late, and its other products like frozen food are consistently in demand.
"I think it deserves a bigger premium and I'd be a buyer of JBT right here," Cramer said.
Bob Wyatt, who has driven more than 4 million miles over four decades for truck firm Schneider National, is pictured outside the company's headquarters in Green Bay, Wisconsin.Nick Carey | Reuters
Schneider National's Thursday IPO caught Cramer's eye as a cyclical trucking play poised to become a good gauge of the U.S. economy and this administration.
Schneider is a large-scale transporter and that ships items all over North America via truck and rail. The company, which raised $550 million in its IPO, has benefited from e-commerce and its logistics business, which includes freight brokerage, supply chain, and import-export services.
The company is growing its revenue and net income despite concerns about the effect of a order tax on imports on its business and heavy regulation at both the federal and state levels.
"That's why Schneider National could end up being a major Trump stock," Cramer said.
Cramer also interviewed Mike Tuchen, the CEO of software integration company Talend, to hear how the company is achieving its massive 100 percent growth.
"Well, right now, the entire industry is moving to cloud and big data, so that part of our business is just exploding. Those two product lines are just like a freight train right now. And it's true for us, but it's really true industry-wide," Tuchen told Cramer on Friday.
When asked how competition like Microsoft and Oracle is unable to tackle Talend, Tuchen acknowledged that it was in part because the smaller operator offers its customers better deals.
"But if it were just that, then the competitors would just go and cut their price and be able to compete on a deal-for-deal basis. But it's the combination of simply being better technically at these new scenarios as well as, of course, being a better deal. That's why we're growing at 100 percent there and that's why our customers are coming to us," Tuchen said.
A trader works on the floor of the New York Stock Exchange (NYSE).Michael Nagle | Bloomberg | Getty Images
A trifecta of bad news hit the market today, and one group of stocks — the semiconductor plays — rallied anyway, so Cramer tracked a signature pattern that boosts stocks even in troubled times.
Despite negative reports of Syrian airstrikes, allegedly tense U.S.-China talks, and weaker-than-expected employment numbers, chipmakers' stocks, especially of those serving Apple devices, roared to new highs.
"We call it 'the bid underneath,'" the "Mad Money" host said. "It's a key part of the amazing sector resilience that explains this market's ability to hang in there even on days like today with a lot of bad news. And frankly, I find the bid underneath in this market astonishing."
In Cramer's lightning round, he sped through his take on a few caller favorite stocks:
Valeant Pharmaceuticals International, Inc.: "No, no. Please don't buy. I mean, on any lift I want you to sell because that's just a call option. You've got to look at the debt side. The debt side's really hideous. Even though they don't have a lot of debt coming to you right now, I am concerned."
Toro Co.: "The weather better be good or Toro's going to be bad. That's why I prefer to stick with Home Depot, then I don't have to worry so much about the weather."
Questions for Cramer? Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up! Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine
Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com
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194cf7e350ec135e8021bd1f5a3ec70f | https://www.cnbc.com/2017/04/07/ignore-these-2016-tax-lessons-at-your-peril.html | Ignore these 2016 tax lessons at your peril | Ignore these 2016 tax lessons at your peril
Whether you got a giant refund or a big bill from the IRS this season, now is prime time to save on taxes for the remainder of the year.
Getty Images
It's tempting to put away your completed tax forms once you get them back from your accountant, but if you take a moment to review your results, you'll find plenty of tax planning opportunities.
"It's right in front of you, especially for people who owe money," said Barry C. Picker, co-founder of Picker & Auerbach CPAs in Brooklyn, New York.
"You're looking for ways to avoid that, but the answer is that you need to sit down and do your tax planning this time of year and not in December."
Do you owe the IRS money, or did you get back a gigantic refund?
The answer is likely based on your withholding for income taxes at work. Look at your W-4.
Close to 60 percent of taxpayers have no idea what a W-4 is, according to a NerdWallet quiz of 2,223 adults in January.
Here's a hint: It's a document you fill out so that your employer knows how much federal income tax to withhold from your paycheck.
Your input on this form helps determine whether you end up with a refund or a tax bill at the end of filing season.
"You should always look at your W-4 during open enrollment because you'll have the complete attention of your HR department," said Cari Weston, director of tax practice and ethics at the American Institute of Certified Public Accountants.
"Do it after you file your return," she said. "If you find yourself saying, 'Wow, I got way too much money back' or 'How will I pay this tax bill?' then it's a good time to revisit."
Picker points out that filers miss out on the win-win of increasing their savings in a workplace retirement plan. The maximum you can contribute in 2017 is $18,000, plus $6,000 if you're 50 and over.
Wages you contribute to your retirement plan are not counted in your taxable income, which can lighten your tax load.
Jamie Grill | Getty Images
Filers sometimes shy away from large contributions because they need those salary dollars. However, if you have other sources of income that are available — interest and dividends, for instance — you may want to sock away more in your retirement plan.
"You're rethinking your cash flow in order to get more money into the 401(k)," Picker said.
Were you scrambling for receipts to cover your itemized deductions this season? If you prepare now, you can avoid the panic next year.
For charitable deductions, employee expenses and business-related costs, try to keep a diary of these expenditures as they take place, said Picker.
More from Your Money Your Future:Surprise medical bills eat up tax refundsFive ways to bulletproof your estate planTake this secret to the grave, and it'll cost you
You can also do this electronically, too.
Apps like Shoeboxed and Expensify track your business expenses, while ItsDeductible tracks your charitable donations throughout the year.
Separately, if you're charitably inclined and you happen to be retired, review the required minimum distributions out of your IRA for 2016.
A woman(R) makes a donation into a Salvation Army kettle outside a Giant grocery store in Clifton, Virgina.Paul J. Richards | AFP | Getty Images
"A lot of retirees are taking required minimum distributions, but they don't know about the qualified charitable distribution, where you can satisfy charitable goals by using your IRA," said Gavin Morrissey, managing partner at Financial Strategy Associates in Needham, Massachusetts.
In this strategy, money coming out of your IRA to meet the required minimum distribution will go directly to a qualified charity instead.
The benefit is twofold: You support your charitable cause and the distribution doesn't inflate your adjusted gross income.
Think about this now, rather than pushing it back until December.
"This is a good time to take another look and see what we can do differently next year," Morrissey said.
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ada0c34af9a523eac97d0d0efe67b9af | https://www.cnbc.com/2017/04/07/kremlin-says-strikes-do-significant-damage-to-us-russia-ties.html | Kremlin says Syria strikes do significant damage to US-Russia ties | Kremlin says Syria strikes do significant damage to US-Russia ties
VIDEO2:0002:00US military launches missile attack on Syrian govt airfieldSquawk Box Europe
American military action against a Syria-government airfield late Thursday will do significant damage to relations between Russia and the U.S., according to the Kremlin quoted by the Interfax news agency.
The missiles targeted the Shayrat Airfield near Homs, and were in response to a chemical weapons attack on Tuesday. Officially announcing the strike, President Donald Trump said that the targeted airfield had launched the chemical attack on a rebel-held area, and he called on other nations to oppose Syria's embattled leader.
Sasha Mordovets | Getty Images Europe | Getty Images
The Russian response on Friday morning claimed that the strikes violated international law. The Russian news agency Interfax reported comments from the Kremlin which said the strikes had happened under a "far-fetched pretext".
A quote from Kremlin spokesman Dmitry Peskov also said that President Vladimir Putin believed the U.S. attacks on Syria showed aggression against a sovereign state. Further comments from Peskov indicated that Putin sees the U.S. strikes on Syria as an attempt to divert the international community's attention from civilian casualties in Iraq.
"President Putin considers the U.S. strikes against Syria an act of aggression against a sovereign country violating the norms of international law, and under a trumped-up pretext at that," the Russian Tass news agency reported Peskov as saying.
Meanwhile later on Friday morning, the Russian Foreign ministry called for an urgent UN Security Council meeting to discuss the aftermath of U.S. missile strike, according to Russian news agencies. It also suspended a Syria air safety agreement with the States and said the "thoughtless" attack was intended as a show of force against a country engaged in fighting terrorism.
VIDEO3:0903:09Trump: Vital to prevent and deter use of chemical weaponsSquawk Box Europe
The ministry claimed that it was obvious the missile launch had been prepared before Tuesday's alleged chemical attack. Adding to these comments, Russia's Foreign Minister Sergei Lavrov said he would demand an explanation from the U.S. on the strikes and said they reminded him of the Western attack on Iraq in 2003, which were condemned by the UN as they did not conform to its charter.
"I hope this provocation will not lead to irreparable damage (to U.S.-Russian ties)," Lavrov told a news conference in Tashkent, Uzbekistan, according to Reuters.
Other voices from inside the Kremlin on Friday confirmed that no Russians had been injured in the U.S. strike on the Shayrat Airfield. Leonid Slutsky, a Russian politician and the deputy of the State Duma, said that the strike undermined in the the most serious way the opportunity for anti-terrorism cooperation with Russia and ruined efforts to achieve a truce, according to Interfax.
He also said the attack would lead to further escalation in Syria and would negatively affect Russian-U.S. dialogue in general.
VIDEO3:0903:09Putin: Will support Trump's efforts on terrorismSquawk on the Street
—CNBC's Everett Rosenfeld and Reuters contributed to this report.
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3175252181009976cea8e63a883f9f95 | https://www.cnbc.com/2017/04/07/syria-attack-is-trumps-way-of-saying-to-north-korea-when-i-make-a-threat-i-am-serious.html | Syria attack is Trump’s way of saying to North Korea: 'When I make a threat, I am serious' | Syria attack is Trump’s way of saying to North Korea: 'When I make a threat, I am serious'
VIDEO2:0802:08Syria strike a 'quick political win by Trump'Street Signs Asia
The U.S. missile attack on a Syrian air base can be read as President Donald Trump sending this message about North Korea: "When I make a threat, I am serious about it."
North Korea, which fired a ballistic missile into the sea one day before Trump's summit meeting with China's President Xi Jinping, was a top agenda for the first meeting between the leaders of the world's two largest economies.
Analysts told CNBC after the attack on Syria that while the latest development replaced North Korea as the immediate security risk, it elevates concerns about the hermit nation.
"I think it actually raises the importance of the North Korea issue. Remember Kim Jung Un recently used a nerve agent to assassinate his half brother, allegedly, in Malaysia, showing the U.S. it is willing to do military action unilaterally. … I think it definitely raises the stakes for China in looking at what the states might do about North Korea," David Dollar, senior fellow at the Brookings Institute, said on CNBC's "Street Signs."
"I don't think it's deliberately aimed at China but obviously the U.S. felt it didn't need to wait until after that summit. They didn't hesitate to do it in the middle of the summit so that's sending a certain kind of message to Xi Jinping," he added.
Reva Goujon, vice president of global analysis at Stratfor, said the Tomahawk missile attack signaled that Trump is "willing to take action" after wide speculation that he is a president who "is all bark and no action."
"This is Trump saying, 'No, I am a man of my words. When I make a threat, I will follow through.' That's certainly something the Chinese and North Koreans will be thinking about," she said on CNBC's "Street Signs."
Republican president-elect Donald Trump delivers his acceptance speech as Vice president-elect Mike Pence looks on during his election night event.Chip Somodevilla | Getty Images
Goujon said the biggest risk in the military action is having any Russian casualties on the battlefield, which will further strain Washington's relations with Moscow.
Sharing her sentiment, Dollar said the attack has resulted in a "very interesting twist" in the relationship between U.S. and Russia.
"Just a couple of weeks ago we were thinking that Trump might be building a better relationship with Russia and he was saying all kinds of very hostile things to China. And now, in the initial press reports out of Florida, he's talking about his friendship with Xi Jinping and clearly this action in Syria is making [Russia's Vladimir] Putin and Russia unhappy," he said.
"The U.S. did warn the Russians about this. I think [the] U.S. went out of its way not to hit any Russian forces but still, this is the kind of intervention that the Russians will be unhappy about."
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56acbecf2b3391bc3d03aab9e39d6083 | https://www.cnbc.com/2017/04/07/the-trump-rally-is-on-its-last-legs--heres-what-that-means-for-the-market.html | The 'Trump rally' is on its last legs — here’s what that means for the market | The 'Trump rally' is on its last legs — here’s what that means for the market
VIDEO2:4902:49Trump agenda back on track?Fast Money
The "Trump trade" narrative is dying in the stock market.
The election of President Donald Trump and a Republican-majority in Congress was supposed to lead to Obamacare's end, tax reform, deregulation, an infrastructure build-out and a healthy increase in inflation accompanied by a rise in long-depressed interest rates.
But after the failure of Trump's Obamacare replacement at the end of last month followed by a weaker-than-expected jobs report Friday, the market clearly has its doubts about this premise.
Let's take the Trump trade point by point and see where it stands in the market's eyes.
1. Health-care reform — market saying, "Not likely"
On March 24, House Speaker Paul Ryan and Trump pulled the Republican bill after failing to win votes from the farther-right faction of the party. But Ryan was back this week proposing a new version of the bill that addresses persons with pre-existing conditions.
Does the market think he has a chance?
Take a look at a chart of Universal Health Services, an operator of acute care and behavioral health facilities which makes it among the most vulnerable health-care stocks if Obamacare goes away and a more strict Republican plan wins.
The stock has steadily climbed back to near where it was before the election. It would be going down if investors thought the Republicans had a chance.
2. Reflation — market saying, "Maybe"
The 10-year Treasury yield is back to levels not seen since just after Trump was elected. The decline has occurred even after the Fed raised rates last month. If investors really believed that Trump's plans are happening and that they will unleash a second-half economic growth boom, investors would be selling Treasurys and boosting that yield.
3. Infrastructure plan — market saying, "Maybe"
The market got excited a bit last week when it was reported Trump may be moving up his infrastructure plans and linking them to tax reform. But other than referencing this week a strange flow chart describing the process for getting a government building project approved, he has said little in detail about the plan, which officials have said will total $1 trillion.
If investors thought infrastructure was happening this chart of Martin Marietta, a maker of heavy building materials, would be pointing higher, but instead it has been stalling since January.
4. Tax reform — Market saying, "Maybe"
After the health-care debacle, investors are starting to doubt whether tax reform will happen in this year or at all. It didn't help when Ryan said this week that the two chambers of Congress and the White House are currently farther apart on tax reform than they were initially on the health-care plan that ultimately failed.
Still, many investors believe Trump and Congress can mess up many parts of tax reform as long as they get the part right about lowering the repatriation tax for companies with big stashes of foreign profits overseas.
Strategas Research Partners is keeping a great list of the companies that stand to benefit the most from a repatriation tax because of the amount of foreign cash they have relative to their market capitalization. The mock portfolio is still up since the election but the chart below shows that it is in a serious downtrend and back to levels where it started the year.
Source: Strategas Research Partners
It shows doubt that even a repatriation tax break can get done.
5. Deregulation — market saying, "Probably"
No one will benefit more from possible financial deregulation than the regional banks, who have had to devote a significant part of their relatively smaller resources to compliance. The SPDR S&P Regional Banking ETF is still up big since the election, but it is well off the all-time high reached at the end of last month.
And as far that wall on the border with Mexico? Even the Mexican Peso has given up most of its losses since the election. (Chart below is the U.S. dollar vs the MXN, so lower value means peso gaining in value.)
So that's where we are as far as the "Trump trade" is concerned.
So where are we headed?
The catch is that the Trump trade can fail and the market can still do OK if one thing happens: earnings grow.
"The combination of planned tax cuts (both corporate and personal), light-handed regulation, a repatriation tax holiday on overseas cash and possible infrastructure spending has buoyed hopes for faster economic activity in 2H17 into 2018. However, earnings have been more crucial for stock prices," wrote Tobias Levkovich, Citigroup's chief U.S. equity strategist, in a note to clients Friday.
First-quarter earnings season kicks of with the major banks on Thursday. Right now, analysts expect the S&P 500 to post 9.9 percent earnings growth for the period, according to S&P Global Market Intelligence.
Citigroup predicts 9 percent earnings growth for the full year, but admits a portion of that is banking on lower tax rates coming in the fourth quarter. That kind of earnings growth will justify the trailing P/E of 22 currently for the index, which is above a five-year average of 18.
Bottom line: If we get this kind of earnings growth, it validates the market at current levels, but for stocks to keep going the president needs to revive the Trump trade by taking action that indicates that at least tax reform is on the way before the year is out.
Watch: Defense stocks rally following Syria airstrikes
VIDEO2:4102:41Defense stocks rally following US airstrikes in SyriaHalftime Report
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a01b6be3085af96e88d27e289d4c9df7 | https://www.cnbc.com/2017/04/07/trump-syria-airstrikes-pentagon-letta-assad-chemical.html | Trump’s attack on Syria rushed and influenced by emotional swings, former Italian PM says | Trump’s attack on Syria rushed and influenced by emotional swings, former Italian PM says
U.S. President Donald Trump's decision to launch airstrikes on Syria seems rushed and influenced by emotional swings, according to the former Italian Prime Minister Enrico Letta.
In an interview with CNBC Friday, Letta said Trump reacted without correct preparation, allies or relationship with international organizations.
"It seems to be a little bit rushed and we have to know what will be the consequences and what will be the next steps. Is it tit for tat? Is it a one off? Maybe it is too early to say," Letta said.Letta further added that the move seems to be a very unilateral initiative and is another example of this new "zigzag foreign policy" that Trump is starting to apply.
"In the first two months of his Presidency we were there seeing and watching changes in each week with a different angle and a different point of view. So in the last few days, my feeling is that the decision was influenced, the emotional swings were very important to influence the decisions, pictures and so on."
Italy's former prime minister, Enrico LettaFilippo Monteforte | AFP | Getty Images
The United States launched a missile attack on a Syrian-government controlled airfield near the city of Homs. Two US warships in the Eastern Mediterranean fired 59 tomahawk missiles at the target. Speaking in Mar-a-lago, President Trump said the strike was made in response to the Assad government's use of chemical weapons earlier in the week.
The Syrian Army has said that 6 people have been killed.
The Kremlin says the strikes deal a significant blow to Russian-U.S. relations, calling them an aggression against a sovereign state which violates international law. It added that the move will do significant damage to U.S. Russia ties and will deal a serious obstacle to an attempt to create an international coalition to fight terrorism.
A Pentagon spokesman said the attack represented a "proportional response", and was intended to stop the regime from using chemical weapons in the future.
The Pentagon confirmed the US military gave Russia advance notice of the strike and did not target specific sections of the airfield where Russian forces were believed to be present
Speaking to reporters after the strike, US Secretary of State Rex Tillerson said Russia has failed to uphold its responsibility to locate and secure Syria's chemical weapons, as agreed upon in a 2013 resolution.
U.S. Secretary of State Rex Tillerson makes a statement about the visit of China's President Xi Jinping and about the situation in Syria, at Palm Beach International Airport in West Palm Beach, Florida, U.S., April 6, 2017.Joe Skipper | Reuters
Letta told CNBC that Syrian President Bashar al- Assad was guilty in this situation. "What happened with the gas attacks was terrible and the unique guilty is Assad. But I repeat, to have a foreign policy military policy you need to have a comprehensive strategy and not to have a zigzag foreign policy that worries me."
Letta further explained that is important for other world leaders, especially in Europe, to help in shaping Trump's foreign policy in order to strengthen the Transatlantic Alliance.
"We cannot eliminate this tie that is the most important tie in terms of global security so I hope the meeting in May in Sicily will be an important push for strengthening the Transatlantic Alliance," Letta said.
He however warned that the meeting depends on Trump because of his stance on the alliance.
"Europeans are ready to strengthen the alliance and to have a comprehensive approach to global security and strategy. I hope European leaders help in shaping Trump's foreign policy because we need to strengthen the Transatlantic Alliance."
Letta also said that Europe needs to grow up in terms of being strong in security and defense related measures.
"I think it is the next mission for the European leaders and the European Union as a whole to be an adult on issues such as security and defense on a global stage. It is an important topic also in the French and German elections and the reaction of the next French and German leaders will for Europe on security. "
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35c8e73f051e82f8f4c3c2fca302333d | https://www.cnbc.com/2017/04/08/diakonts-robot-could-help-prevent-oil-and-gas-pipeline-spills.html | This high-tech robot is helping energy companies prevent oil and gas pipeline spills | This high-tech robot is helping energy companies prevent oil and gas pipeline spills
It turns out that America's 2.5 million miles of pipeline are not all that safe.
Since 2010, according to the Pipeline and Hazardous Materials Safety Administration, operators have reported an average of 200 oil spills per year from pipelines. That equals 9 million gallons of oil spilled from pipelines in the U.S. since 2010.
Though the controversial Dakota Access Pipeline and Keystone Pipeline face vocal opposition, the new pipelines aren't the biggest concern. The old pipelines installed decades ago are falling apart, and they are far more challenging to inspect because older pipes were not designed for inspections.
Energy companies are required by law to inspect their pipelines and they use a variety of technology to do so, including devices known as smart pigs. But these pigs can only inspect certain portions of the pipes, leaving thousands of miles of pipeline that have never been inspected.
Diakont, a Russian company with a hub in San Diego, thinks it has a solution. It's developed a robot that can crawl into "unpiggable" parts of a pipeline.
Diakont’s robot recently inspected a major pipeline that runs under the Hudson River.Jeniece Pettitt | CNBC
The RODIS crawler is connected to a truck with an operator who steers it through the pipe. It changes shape and sizes and can maneuver around curves and bends in the pipe, and uses ultrasound, lasers and cameras to deliver comprehensive data about where there is corrosion, cracks or dents. The energy company can then decide whether to replace or repair the flaws in the pipe.
Diakont says it's has inspected hundreds of miles of oil and gas pipelines around the world for major energy companies. The company's managing director, Edward Petit de Mange, said that inspecting pipelines is a growing part of their business.
"We have been inspecting pipelines for in the U.S. for four years now," managing director Petit de Mange told CNBC.
Diakont's robot inspection service costs "tens of thousands of dollars a day," according to Petit de Mange. Expensive, but much cheaper than dealing with a major spill.
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72ac1823b89908cf86023d4dbd77d7cf | https://www.cnbc.com/2017/04/08/sweden-identifies-truck-attack-suspect-as-uzbek-native-39.html | Sweden identifies truck attack suspect as Uzbek native, 39 | Sweden identifies truck attack suspect as Uzbek native, 39
People were killed when a truck crashed into department store Ahlens on Drottninggatan, in central Stockholm, Sweden April 7, 2017.Fredrik Sandberg | News Agency | Reuters
The suspect in Stockholm's deadly beer truck attack is a 39-year-old native of Uzbekistan who had been on authorities' radar previously, Swedish authorities said Saturday. The prime minister urged citizens to "get through this" and strolled through the streets of the capital to chat with residents.
Swedes flew flags at half-staff Saturday to commemorate the four people killed and 15 wounded when the hijacked truck plowed into a crowd of shoppers Friday afternoon in Stockholm. Prime Minister Stefan Lofven declared Monday a national day of mourning, with a minute of silence at noon.
Sweden's police chief said authorities were confident they had detained the man who carried out the attack.
"There is nothing that tells us that we have the wrong person," Dan Eliason told a news conference Saturday, but added he did not know whether others were involved in the attack. "We cannot exclude this."
Eliason also said police found something in the truck that "could be a bomb or an incendiary object, we are still investigating it."
Prosecutor Hans Ihrman said the suspect has not yet spoken to authorities and could not confirm whether he was a legal resident of Sweden. Anders Thornberg, head of the Swedish Security Service, said security services were working with other nations' security agencies to investigate the attack, but declined to elaborate.
Police declined to comment on media reports about overnight police raids around Stockholm or if they were hunting any more suspects in the case. They said the suspect had been on their radar before but not recently, and did not explain why authorities apparently had not considered him a serious threat.
Eliason told reporters the suspect was "a more marginal character."
Sweden's health service said 10 people were still hospitalized for wounds from the attack and four of them were seriously injured.
VIDEO0:4700:47Three dead in Stockholm after truck plows into department store: ReportSquawk on the Street
Many in Sweden were shocked by the attack, questioning whether Swedish society — considered democratic and egalitarian — had failed in some way.
Visiting the attack site at an upscale department store, Sweden's Crown Princess Victoria laid roses on the ground Saturday and wiped away a tear.
"We must show a huge force, we must go against this," she told reporters.
The stolen beer truck traveled for more than 500 yards (meters) along Drottninggatan, a main pedestrian street, before smashing into a crowd outside the popular Ahlens department store.
The crash was near the site of a December 2010 attack in which Taimour Abdulwahab, a Swedish citizen who lived in Britain, detonated a suicide bomb, killing himself and injuring two others. He had rigged a car with explosives but the car bomb never went off. Abdulwahab died when one of his devices exploded among panicked Christmas shoppers.
Steve Eklund, 35, who works in an office nearby, said "maniacs can't be stopped."
"It's very simple. Things like this will always happen in an open society," Eklund said. "Sweden is not a totalitarian society."
People were killed when a truck crashed into department store Ahlens on Drottninggatan, in central Stockholm, Sweden April 7, 2017.Anders Wiklund | Reuters
In February, U.S. President Donald Trump suggested that Sweden could be the next European country to suffer the kind of extremist attacks that have devastated France, Belgium and Germany. Two days after his remarks, a riot broke out in predominantly immigrant suburb of Stockholm where police opened fire on rioters, a surprise to many Swedes who aren't used to officers using guns.
"We must get through this. Life must go on," Lofven said Saturday after again laying flowers near the crash site. "We in Sweden want an open society."
Lofven also made a point of walking around Stockholm, including along the Drottninggatan, chatting with people having coffee outside a cafe.
The prime minister says said the aim of terrorism is to undermine democracy.
"But such a goal will never be achieved in Sweden," he said.
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9ea7d7a89fcdb8e0409b847a6e8652c6 | https://www.cnbc.com/2017/04/09/heres-why-hong-kong-housing-is-so-expensive.html | Here's why Hong Kong housing is so expensive | Here's why Hong Kong housing is so expensive
VIDEO3:4703:47Why is Hong Kong housing so expensive?CNBC Explains
Hong Kong was recently ranked the most expensive housing market in the world for the seventh consecutive year, according to the annual Demographia International Housing Affordability Survey.
The survey, which divides median house prices by gross annual median household income, found Hong Kong to clock in at 18.1. So, on average, if someone makes $50,000 in annual income, the cost of their home would be $900,000.
The 18.1 multiple soars above other markets around the world. The second least affordable city is Sydney which scored a multiple of 12.1. Even financial hubs London and New York pale in comparison coming in at multiples of 8.5 and 5.9 respectively.
So what makes Hong Kong so expensive?
Low Supply, High Demand
On one hand, Hong Kong's housing astronomical costs area a simple case of supply and demand. The city ranks as the fourth most densely populated among sovereign states or territories , with more than seven million residents spread across 1,106 square kilometers (427 sq miles).
Meanwhile, there's high demand to live and work in one of the world's financial hubs and the de-facto access point into the world's most populous country, China.
Apartments in Hong KongGetty Images
Added to that, there's very little developable land left in Hong Kong, as liveable land is squeezed between bodies of water and soaring mountains.
Mainland developers are driving up costs
The land that is able to be developed is mostly controlled by the government, which offers land to developers behind the scenes by tender.
The land is selling for record amounts, increasingly to Chinese mainland developers, which in turn are likely to command record high prices for buyers for apartments and rental spaces built.
Recently, two Chinese developers paid a record $2.17 billion for a plot of residential land, which exceeded market valuations by almost 50-percent, according to South China Morning Post.
Meanwhile, Hong Kong's government controls nearly half of the total supply or housing through public housing rentals and assisted home ownership purchase programs, which are intended for lower-income families. Meaning, just about half of the housing market is available on the private market.
Land sales and revenue
It's no secret Hong Kong is one of the most tax-friendly economies in the world. One of the reasons the government can keep taxes so low is because a large chunk of its revenues come from land sales.
If property values drop, the government can't generate as much revenue, meaning there's little incentive to seriously curb Hong Kong's cost of housing.
In fact, if property values dropped too much, the government could even have to rethink its tax revenue system.
The silver lining may be this: While Hong Kong's housing prices aren't likely to decrease anytime soon, the multiple of cost of housing to gross annual median income actually declined from 2015 to 2016, going from 19 to 18.1, according to Demographia.
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6f12c7172931fccd9ada4de9dae18e73 | https://www.cnbc.com/2017/04/09/survey-shows-what-teens-like-chic-fil-a-starbucks-amazon-and-nike.html | Piper Jaffray survey shows what teens like: Chick-fil-A, Amazon, and athleisure | Piper Jaffray survey shows what teens like: Chick-fil-A, Amazon, and athleisure
VIDEO0:0000:00A new survey shows what teens like, and fast-food and athleisure are coming out on topNews Videos
Millennials move over. Generation Z outnumbers you by around a million, making the group the largest cohort of American consumers — a valuable demographic for brands to capture early.
Unfortunately for brands targeting the group, spending is down 2.4 percent compared to this time last year, as parents are contributing 63 percent of teen spend this year, down from an average 68 percent. Those figures come from a bi-annual survey conducted by research firm Piper Jaffray.
According to the survey, 5,500 teens with an average age of 16 from across the country shared information on their preferences and spending related to fashion, food, media and more.
FOOD > FASHION
Teens are spending slightly more on food outside the home than a year ago, with almost a quarter of spending now going to grub — which trumped the amount spent on clothing by 5 percentage points.
But Gen Z isn't crazy about full-service restaurants. In fact, teens prefer limited service establishments two times to one, Piper Jaffray found, marking the highest preference for limited service since at least 2009.
Chick-fil-A took the top spot as the most preferred restaurant, while Starbucks fell to second. The coffee chain has been number one 12 times out of the last 14 surveys. (Chipotle snagged the lead those two other times, and now ranks third.)
Piper Jaffray analyst Nicole Miller Regan noted the McDonald's brand "remains generally strong" but cautions teens' brand preference for the Golden Arches' "remains below peak levels seen in prior survey periods, and also saw strong moves from Five Guys and Red Robin."
WHAT'S HOT AND WHAT'S NOT
Nike sneaker on displayJustin Solomon | CNBC
There's no sign of waning preference for athleisure, with athletic wear predominating among teens, according to the survey. Some 41 percent of teens name an athletic apparel brand as their preferred apparel brand, 15 percentage points higher than last year and 6 percentage points higher than in the fall.
Nike remains the top apparel and footwear brand, up sharply from last year for both males and females by a very wide margin.
Adidas is the fastest growing brand in the survey, Piper Jaffray found, with the company's apparel jumping to fifth favorite from tenth last year. Adidas footwear preference hits an all-time high for females and a decade high for males. The German athletic brand is also unseating Nike as the top "new brand" worn by males.
Lululemon is also on the rise with teens, landing as the fourth most desired apparel brand and sneaking into the top ten as a fashion trend for males for the first time. Privately-held Patagonia cracked the top five.
VIDEO3:3303:33What teens want from retailPower Lunch
However, there's trouble in teenland for Under Armour: It wasn't named by enough teens to land in the top ten favorite apparel or footwear brands. Preference for Under Armour is flat for males, and not a single upper income female named it as favorite apparel brand.
In fact, when it comes naming a brands teens no longer wear, Under Armour jumped to number one for males from third in Piper Jaffray's fall survey.
When it comes to what else teens say is trending in fashion, it's mainly athletic-related. New additions to the guys' trending list included ripped jeans, jeans, and the aforementioned Lululemon. Meanwhile, Ralph Lauren and Vineyard Vines were among the names that fell off their trend list.
For females, non-athletic preferences included chokers, which moved into second place from tenth; while bralettes and Birkenstock have fallen off the top ten list from the fall. Crop tops and Michael Kors also lost ground since last spring.
Michael Kors still holds the top spot for handbags, but its losing share. Coach, Kate Spade and Vera Bradley remain in second, third and fourth respectively. Target handbags appeared in the top ten for upper-income females, and move up a spot for average income females.
MALLRATS NO MORE
The sign outside Amazon’s event space at the SXSW Festival in Austin, Texas on March 12, 2016.Michelle Castillo | CNBC
Historically, older Americans adopted online shopping a bit quicker than teens, a group that seemingly enjoyed the social aspect of hitting the stores more, but that's been changing. Online-only brands or retailers hit a survey peak for shopping channel preference at 17 percent, with pure-play ecommerce showing big growth as compared to last spring's survey.
Amazon and Nike have held the number one and two spots respectively as favorite websites for at least the last four surveys. Amazon cemented its top position with 43 percent market share, compared to 40 percent share in the fall, while Nike sits at number two with a distant 5 percent share, down from 8 percent in the fall.
Piper Jaffray estimated Amazon's soft line dollars grew from $12.4 billion to $21.7 billion between 2014 and 2016, representing 56 percent of overall softline industry growth.
Amazon may very well hold teens attention because of their household's Prime membership, particularly for those with higher-income. The survey suggests 69 million U.S. households have a Prime memberships, with 63 percent of new Prime members coming from the top two quintiles of household income.
TEENS SOCIAL MEDIA HABITS
It not entirely surprising that Snapchat continues to reign supreme as teen's social platform of choice. The survey indicates 81 percent of this Gen Z group checks it at least once per month (likely much more often), topping Instagram at 79 percent. However, Snapchat's popularity hasn't necessarily come at Facebook's expense, which held fairly steady over recent surveys.
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cb63ef81fa0fb591a71d5efb7d96ef6a | https://www.cnbc.com/2017/04/10/att-to-buy-straight-path-communications.html | AT&T bets on 5G with Straight Path Communications buy for $1.25 billion | AT&T bets on 5G with Straight Path Communications buy for $1.25 billion
Kena Betancur | AFP | Getty Images
AT&T said on Monday it would buy Straight Path Communications, a holder of licenses to wireless spectrum, for $1.25 billion in an all-stock deal as it aims to accumulate the airwaves it needs for a next generation network.
The deal shows how wireless carriers may be increasingly willing to pay lofty prices for assets that they view as critical to 5G, which is expected to boast higher speeds and more capacity.
The network is widely considered to be a multibillion-dollar opportunity, and wireless carriers do not have many options in terms of acquisition targets that would give them the right type of spectrum for a next generation network. Straight Path is one of the largest holders of 28 GHz and 39 GHz millimeter wave spectrum used in mobile communications.
The No.2 U.S. wireless carrier said it would offer $95.63 per share, a premium of 162.1 percent to Straight Path's close on Friday.
Straight Path's shares leaped 150 percent to near $91 a share in afternoon trade, while AT&T's shares were marginally lower.
Millimeter wave spectrum is expected to play a large role in 5G. Earlier this year, AT&T said it was acquiring privately held FiberTower and its millimeter wave spectrum rights. In February, competitor Verizon Communications, the No. 1 U.S. wireless carrier, said it had closed on its acquisition of XO Communications' fiber-optic network business for about $1.8 billion, giving it access to millimeter wave spectrum.
Between FiberTower and Straight Path, AT&T should have a similar amount of spectrum as Verizon if not more, said Wells Fargo analyst Jennifer Fritzsche, in a note on Monday.
Other companies in the industry rose after the news as investors are expecting a wave of mergers and acquisitions in telecom this year. Sprint earlier rose 1.5 percent to $8.49, while Dish Network rose 2.3 percent to $64.01.
Straight Path had said in January it was hiring investment bank Evercore Partners to help explore strategic alternatives, including a sale of assets.
The company had also agreed in January to pay the U.S. Federal Communications Commission (FCC) $15 million to settle a federal probe of claims that Straight Path had submitted false data to renew airwave licenses.
The tax-free deal, valued at $1.6 billion in total, includes liabilities and amounts to be remitted to the FCC, according to the January settlement terms.
The deal with AT&T is supported by Straight Path's majority shareholder, Howard Jonas, who has entered into a voting agreement with the carrier in support of the transaction.
Evercore advised Straight Path on the deal and Weil, Gotshal & Manges provided legal counsel, while AT&T was advised by Moelis & Co. and Kilpatrick Townsend & Stockton.
— CNBC contributed to this report.
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f6f7face4a2b4cd3bfb4d2e10b92e7fd | https://www.cnbc.com/2017/04/10/banks-may-be-behind-the-mysterious-drop-off-in-car-sales.html | Banks may be behind the mysterious drop-off in car sales | Banks may be behind the mysterious drop-off in car sales
VIDEO0:3800:38Lenders may have helped put the brakes on car sales last monthNews Videos
Lenders may have helped put the brakes on car sales last month.
March's sudden slowdown in vehicle sales surprised economists, who are now watching to see if the trend continues and whether it is also foreshadowing a weakening of the consumer. Auto sales are an important economic barometer, and while not a big part of the economy, the industry can create a much larger ripple effect.
"If the next few months reveals a further decline in auto sales, we need to pay attention to that because it will feed back to the economy directly. The bigger risk is that it's a sign of broad-based weakness of the consumer. At this point, we can't make that case," said Michelle Meyer, head of U.S. economics at Bank of America Merrill Lynch.
Auto loan delinquencies have been on the rise in all categories, and lenders, after an extended period of low rates and easy money, have been tightening loan standards. The trend picked up in the second half of last year, but accelerated in the first quarter of this year.
Auto delinquencies, percent of balance of auto loans from the NY Fed's credit panel.
Source: Bank of America Merrill Lynch
Some of the focus has been on subprime loans, but Meyer said all loan types have seen delinquencies. "It's possible the fact the delinquencies are picking up, it's leading to a tightening of lending standards, which is feeding back to the demand," she said, noting that the Federal Reserve's senior loan officer survey has been highlighting the trend.
She said, for now, the tightening appears to be a normal reaction, not a more dire concern.
Net percent of banks tightening standards for auto loans. 11.7 percent Q1, 2017
Source: Bank of America Merrill Lynch
March vehicle sales fell to an annualized pace of just 16.5 million, below expectations of 17.3 million and the weakest rate since February 2015. Economists say they are watching to see if sales have peaked, after the annualized selling pace touched 18 million late last year.
"It's possible sales just increased much faster than broader consumer spending. That was partly because of finance, aging of stock and low gas prices," she said.
For now, economists are looking at other factors too.
Meyer said Bank of America Merrill Lynch analysts are concerned about bloated inventories, especially for used cars, a factor already weighing on prices.
BofA's auto analyst John Murphy expects auto sales to total 17.9 million annualized selling pace this year, and that means autos could provide a 0.1 percent point bump to growth. Murphy has said there are downside risks to his forecast but he has not changed it.
Meyer said if sales fall to a lower level, however, it could be a small hit to GDP. Based on worst case scenario of 15 million, GDP would be hit by 0.4 points and there would also be an impact on auto parts, trade and transportation. A big drop in sales would be the result of a downturn in consumer sentiment which would also ripple through other parts of the economy.
Goldman Sachs economists also studied the slowdown in vehicle sales, which they see as the beginning of a bigger trend. The economists say they expect the annualized selling pace could ultimately settle at 15 million, based on a trend of declining demand and other factors.
The economists point to a drop in licensed drivers, particularly among younger drivers, plus a decline in the number of vehicles per driver. The number of vehicles per driver fell to under 1.2 from about 1.25 in the early 2000s, according to Goldman.
"Our central estimate depends on a range of assumptions, including an annual 0.1-0.2pp decline in the adult population driver share and a flat number of autos per driver," they wrote.
Another trend is also emerging that could dampen car sales to even lower than 15 million. "Longer term, the risks to these estimates are probably on the downside, especially if the 'sharing economy' — exemplified by companies such as Zipcar, Uber, Lyft and Via — makes deeper inroads into the transportation sector," the economists wrote.
The Goldman economists said the impact on GDP would be small. Consumer spending on vehicles and parts is about 2.6 percent of GDP, but only half of that is from domestically produced vehicles, while the rest is imports or used vehicles. If the decline occurs over two to three years, the drag on annualized GDP growth would be about 0.05 to 0.1 percentage points per year, they added.
Meyer said the pace of auto sales is manageable for the economy, and the sector could go from a slight positive for growth to a neutral or slight negative. The inventory to sales ratio has been rising, and if sales slide further, inventories will rise, pressuring prices and resulting in production cutbacks.
BofA says autos make up 3 percent of U.S. GDP, much smaller than the 4.2 percent back in the late 1970s. When looking just at consumers, autos are 3.7 percent of personal consumption expenditures, a measure of overall consumer spending. Auto prices also play a role in the consumer price index, at 6.5 percent of the headline CPI.
"Historically you get very big swings in the inventories. Even though it's a small share of the economy, it matters a lot in terms of the swings can have a lot of impact," Meyer said.
"There's risk of greater disruptions to the economy through the indirect channels. Potentially it could impact credit creation if we are seeing further increases in delinquency rates. That could weigh more broadly on the flow of credit," said Meyer.
Watch: Why auto sales have declined
VIDEO2:1102:11Why auto sales have declined
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f8594675cb83c65cbff7c760bb282543 | https://www.cnbc.com/2017/04/10/best-used-cars-for-teens.html | Best used cars for teens | Best used cars for teens
These used cars are safe and affordable choices for a teenager
Teens don't need a fancy car, they just need a safe car. We browsed through our used car rankings to find the best overall midsize and large sedans, which, according to experts, are the safest vehicles for teen drivers, focusing on models with high safety and reliability scores. Though we chose the highest-rated year for each model (according to our rankings), in most cases, you'll still get good results if you expand your search within the surrounding model years. This list highlights vehicles that fit a variety of budgets, perfect for your teen driver (and the rest of the family).
A customer looks over a Ford Fusion parked on the lot at a dealership in Colma, Calif.Getty Images
U.S. News Safety Score: 9.6 out of 10
The 2010 Ford Fusion is one of the highest-rated affordable sedans in our used car rankings. Thanks to its spacious trunk and roomy cabin, the Fusion is a good car for students who need to carry sports equipment or other bulky extracurricular gear, and its high reliability and safety scores mean that it can even see your teen clear through college.
Average Price Paid: $8,850 - $12,606
Critics say the Fusion is comfortable to drive, too. The available Fusion Hybrid is another smart choice for buyers who are interested in saving fuel.
2011-2012 Toyota AvalonSource: Toyota Motors
U.S. News Safety Score: 9.7 out of 10
When the 2011 Toyota Avalon was new, critics praised the smoothness and acceleration of its standard V6 engine. Granted, a powerful engine might not be the best thing for a teen's car, but Toyota's V6s are also reliable and reasonably fuel efficient.
Average Price Paid: $16,559 - $18,335
This large sedan offers plenty of space inside, and has good safety scores, too. The 2011 Avalon got a few minor updates, such as a styling refresh and standard Bluetooth and USB integration.
2010 Chevrolet MalibuChevrolet
U.S. News Safety Score: 9.3 out of 10
Critics liked the 2012 Chevy Malibu thanks to its driver-centric interior and balanced handling, two factors that help make it easy to focus on the road (which is particularly important for new or inexperienced drivers). If a used Malibu from this era has a noteworthy downside, it's the mediocre fuel economy in V6 models.
Average Price Paid: $11,635 - $14,403
The Malibu was fully redesigned in 2013 (and suffered a slight decline in reliability), but it might be worth comparing the two generations to see which you prefer, although the 2012 is No. 1 in our 2012 affordable midsize car rankings.
Toyota PriusSource: Consumer Reports
U.S. News Safety Score: 8.9 out of 10
When the 2010 Toyota Prius was new, its looks were a point of contention among reviewers. Regardless of how your teen feels about its styling, it's simply one of the best used cars out there for a high school student.
Average Price Paid: $10,348 - $12,495
The Prius has a functional shape with lots of cargo room, it's safe and reliable, and it's great on gas. The 2010 Prius also packs less than 100 horsepower, so there's little temptation for your teen to test its limits.
Elaine Thompson | AP
U.S. News Safety Score: 9.3 out of 10
The Taurus, a large sedan, is one of the most basic options in Ford's lineup, which is a good thing when you're looking for an affordable used car for your teen. The 2011 Taurus places high in our used car rankings thanks to its good safety and reliability scores, and its low cost of ownership.
Average Price Paid: $12,044 - $16,202
The Taurus' V6 engine checks in with 263 horsepower, but this is a heavy car to haul around, so don't worry — it'll keep your teen in check.
2011 Buick LaCrosseBuick
U.S. News Safety Score: 9.7 out of 10
The 2011 Buick LaCrosse has some of the best safety scores in our used car rankings, and it's a big and comfortable car that will do just fine for your teen.
Average Price Paid: $12,935 - $16,871
The base LaCrosse comes with a four-cylinder engine, and reviewers at the time said that the optional V6 upgrade was nice, but not necessary. In other words, an entry-level LaCrosse will get the job done.
2009 Hyundai Sonata.Getty Images
U.S. News Safety Score: 9.1 out of 10
The 2010 Hyundai Sonata is one of the more affordable options on our list of the best used cars for teenagers. If it takes some effort to convince your teen that this mundane-looking midsize sedan is the one, just mention that it comes with more (and more advanced) tech features than many of its competitors.
Average Price Paid: $8,304 - $11,201
The Sonata has a comfortable ride and plenty of space inside. The 2011 model, which marked a new generation of the Sonata, is worth consideration, too.
The 2007 Saturn Aura at the North American International Auto Show at Cobo Hall in Detroit.Getty Images
U.S. News Safety Score: 9.2 out of 10
Don't be deterred by the fact that the Saturn brand disappeared shortly after the 2009 Aura midsize sedan went on sale — it's still a GM, and there are plenty of 8-year-old GM vehicles around.
Average Price Paid: $7,242 - $8,589
The Aura, when new, received relatively poor marks in regards to its cheaply-finished cabin, but it fares pretty well in other areas like safety and reliability. Even better, it's one of the most affordable cars on this list. It also has some of the best fuel economy ratings for the class.
2012 Honda AccordHonda
U.S. News Safety Score: 10 out of 10
It should be clear by now that our list of the best used cars for teens doesn't exactly prioritize an enjoyable driving experience, but the 2012 Honda Accord is a notable exception. Surprisingly, it is one of the most fun-to-drive used cars in its class (due mostly to its swift and accurate handling), yet it still delivers on all the key characteristics of a good vehicle for a new driver.
Average Price Paid: $12,707 - $17,670
If you want your teen to learn the importance and value of a car that responds to the driver's commands, the Accord is a safe, responsible and affordable choice.
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1e7e66beb8a857f8e05fcb5a3779c03e | https://www.cnbc.com/2017/04/10/breakingviews-wells-fargo-boards-report-is-too-kind-to-itself.html | Breakingviews: Wells Fargo board’s report is too kind to itself | Breakingviews: Wells Fargo board’s report is too kind to itself
Stephen Sanger, Wells Fargo ChairmanScott Mlyn | CNBC
Coming clean after a scandal is never easy. Wells Fargo's board has clawed back an additional $75 million in pay from former retail boss Carrie Tolstedt and ex-Chief Executive John Stumpf, who are being held responsible for aggressive sales practices that led to the $270 billion bank's embarrassing fake-accounts scandal. But an internal report released on Monday suggests there were red flags directors should have focused on earlier.
The report, conducted by independent directors with the assistance of law firm Shearman & Sterling, details a flawed management system and a warped sales culture. Wells gave wide leeway to business heads under the mantra "run it like you own it." Although the buck theoretically stopped with Stumpf, he was not perceived "as someone who wanted to hear bad news or deal with conflict," the report states. That mindset filtered down.
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2a9decd5948509c8a85963d126e4d9c7 | https://www.cnbc.com/2017/04/10/eni-shell-deny-wrongdoing-in-nigeria-after-allegations-of-improper-payment.html | Eni, Shell deny wrongdoing in Nigeria after allegations of improper payment | Eni, Shell deny wrongdoing in Nigeria after allegations of improper payment
Royal Dutch Shell products in Torzhok, Russia.Andrey Rudakov | Bloomberg | Getty Images
Oil majors Royal Dutch Shell and Eni reiterated on Monday that neither they nor their personnel had been involved in any wrongdoing in Nigeria, including improper payments to Nigerian officials.
The comments follow media reports alleging how hundreds of millions of dollars from the two companies were used for illicit payments.
A joint investigation by BuzzFeed News and Italian newspaper Il Sole 24 Ore on Sunday claims to show transactions worth $1.3 billion made in 2010-2011 that Shell and Eni paid to acquire an exploration licence for an offshore oil block known as OPL 245.
The money was paid to the Nigerian government, but BuzzFeed and Il Sole said documents showed Shell's top executives at the time knew those sums would go to Malabu Oil and Gas, a front company connected to former Nigerian oil minister Dan Etete.
Attempts by Reuters to contact Etete have been unsuccessful.
In emailed comments, an Eni spokesman said the allegations in the reports were not supported by the facts, the underlying agreements or the independent investigations conducted to date.
"Neither Eni nor Shell paid any monies other than as contemplated and recorded by the Block Resolution Agreement and did not pay to Malabu, to Chief Dan Etete or to any public officer," the spokesman said.
Shell said that "based on our review of the Prosecutor of Milan's file and all of the information and facts available to Shell, we do not believe that there is a basis to prosecute Shell. Furthermore, we are not aware of any evidence to support a case against any former or current Shell employee".
In an emailed statement, Shell added that if the evidence proves improper payments were made, "it is Shell's position that none of those payments were made with its knowledge, authorization or on its behalf".
Courts in Nigeria and Milan are investigating the 2011 purchase of the block, which industry figures suggest could hold more than 9 billion barrels of oil.
Italian prosecutors are working with an anti-fraud team in the Netherlands that raided Shell's The Hague headquarters in February 2016 in relation to the investigation. A Nigerian court ordered the asset temporarily seized in January at the request of Nigeria's Economic and Financial Crimes Commission, but the seizure was later overturned.
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1fa60256c0927277c936fa3d7c17fa19 | https://www.cnbc.com/2017/04/10/facebook-now-has-5-million-active-advertisers.html | Facebook now has 5 million active advertisers, up from 4 million in September | Facebook now has 5 million active advertisers, up from 4 million in September
VIDEO1:2101:21Facebook now has 5 million active advertisers, up from 4 million in SeptemberTech
Facebook now has 5 million active advertisers, up from 4 million in September, the company announced on Monday.
The company has also said the number of businesses with mobile pages has reached 65 million, and 8 million businesses now have profiles on Instagram. As mobile usage continues to increase the shift is essential for the network to remain competitive.
Facebook is also introducing new tools that will help brands target and measure the performance of their ads — an important move in light of recent measurement mishaps.
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1aecd6901c5f4e5944f35950e0451fc3 | https://www.cnbc.com/2017/04/10/google-offers-at-least-880-mln-to-lg-display-for-oled-investment-electronic-times.html | Google offers at least $880 million to LG display for OLED investment: Electronic Times | Google offers at least $880 million to LG display for OLED investment: Electronic Times
Members of the media examine Google's Pixel phone during an event to introduce Google hardware products on October 4, 2016 in San Francisco, California.Getty Images
Google Inc has offered to invest at least 1 trillion won ($880.29 million) to help South Korea's LG Display Co Ltd boost output of organic light-emitting diode (OLED) screens for smartphones, the Electronic Times reported on Monday citing unnamed sources. The paper said Google offered the investment to secure a stable supply of flexible OLED screens for its next Pixel smartphones. Samsung Electronics Co Ltd's flagship Galaxy smartphones use the bendable displays, while Apple Inc is expected to start using them in at least some of its next iPhones. LG Display declined to comment, while Google could not be immediately reached for comment.
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33f6d08df1b7d1b1ebe7879803a5551e | https://www.cnbc.com/2017/04/10/how-tax-reform-can-reinvigorate-main-street--and-boost-the-economy.html | 4 tax reforms that can reinvigorate Main Street — and boost the economy | 4 tax reforms that can reinvigorate Main Street — and boost the economy
John Greim | LightRocket | Getty Images
President Trump and congressional Republicans have vowed to cut taxes, simplify returns and stimulate business growth. With many details to be fleshed out and negotiated, entrepreneurs are hoping for tax changes to encourage business start-ups, which have been sluggish.
The Bureau of Labor Statistics says creation of new businesses hit about 679,000 in 2015, up from the Great Recession low of 561,000 in 2010 but still shy of the record 716,000 in 2006. Even worse, jobs created by businesses less than one year old, though rising in recent years, have lagged, hitting about 3 million in 2015 compared to more than 4.7 million a year in 1998 and 1999.
In fact, many "new businesses" created in recent years are really just one-person shops set up by individuals who have lost their jobs, says Enrolled Agent Steven J. Weil, president of RMS Accounting in Fort Lauderdale, Florida. With no employees, they're not helping to build employment.
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"While these independent contractors are, in effect, in business for themselves, they are not truly in (a growing) business, since their primary interest is merely replacing the employment income they can't seem to find in a job," Weil says.
Many factors account for sagging new-business formation — from slow economic growth, to a widespread belief that starting a new company is just too difficult, to regulations and tight lending standards. But tax policies are culprits, too, according to start-up experts.
So what's on their tax wish list?
All sorts of things, of course, ranging from eliminating the alternative minimum tax and estate tax that hit many small-business owners, to offering tax credits for new hires, to eliminating the IRS's ability to judge whether executive compensation is appropriate. But here are the four broad categories that come up most.
Most start-up experts endorse Trump's campaign proposal to cut the business tax rate to 15 percent. Currently, corporations face a top rate of 35 percent, while owners of many small businesses — typically set up as sole proprietorships, limited liability companies, partnerships or S corporations — pay income-tax rates topping out at 39.6 percent, plus a 3.8 percent Medicare surtax to fund Obamacare.
Slashing business taxes could spur start-ups by raising after-tax earnings, making it worthwhile for prospective entrepreneurs to give up regular salaries to strike out on their own, says accountant Dominique Molina, founder of the American Institute of Certified Tax Planners.
VIDEO1:3601:36Speaker Ryan: House & Senate not on same page for tax reform yetClosing Bell
The self-employment tax is another obstacle to start-ups, since an entrepreneur has to pay both the employer and employee's share, says Tom Wheelwright, CEO of ProVision Wealth of Tempe, Arizona.
"An employee pays 7.65 percent in Social Security tax. As soon as she becomes self-employed, that rate doubles to 15.3 percent, and when she starts earning real income, Obamacare raises that rate to 16.2 percent," he says. "Reducing or eliminating that extra self-employment tax would be huge for new entrepreneurs."
Molina and others interviewed would also like businesses large and small to be able to deduct the cost of new assets, like equipment in the year they are purchased instead of spreading them over decades through depreciation allowances.
The tax code, she says, is not kind to start-up costs, like feasibility studies and expenses for things like professional advice.
"Under the current guidelines, just $5,000 of (this type of ) expense can be deducted in the year incurred, while the remainder is deducted over a 15-year period," she says. "In the event costs exceed $50,000, taxpayers may not even be able to deduct the entire $5,000 of first-year expenses."
Start-ups typically have little or no track record and may lose money for years, making it hard to borrow significant sums. So many raise money instead by selling stock. The tax code allows deductions for interest paid on debt but nothing comparable for stock, putting the stock-dependent start-up at a disadvantage.
The Tax Policy Center, a think tank devoted to tax issues, has found that partnerships, S corporations and other tax structures commonly used by start-ups face an effective marginal tax rate of 20 percent on stock, while a corporation using debt has a rate of –6 percent, meaning the tax code effectively subsidizes companies using debt.
Currently, deductions for investments and losses are not all treated equally. The tax code "favors investments in equipment, software and intellectual property over those in structures and inventories," according to the Ewing Marion Kauffman Foundation, which studies entrepreneurship and business start-ups.
R&D expenses are deductible in the year incurred, for example, while spending on equipment and structures is deducted over many years through depreciation.
This makes it harder, for example, for wholesale or retail start-ups that have little to write off. In fact, the Tax Policy Center found that a retail business faces an effective tax rate of 31 percent, while a chemical or pharmaceutical company would pay 9 percent to 11 percent. The higher rate is a stiff headwind for someone trying to open a store on Main Street.
Also, the Tax Policy Center says that a start-up that has yet to book profits doesn't get as much tax benefit from its losses and other write-offs as an established firm. Losses can be "carried forward" to offset future profits, but that doesn't provide much relief for a start-up struggling in the present.
"Such carry-forwards provide less value than immediate tax savings because of the time value of money, as well as the possibility that the firm will never report sufficient income to take advantage of them," the Tax Foundation says.
No one expects tax reform to be easy, given entrenched interest groups and the government's enormous appetite for tax revenue, but start-up advocates feel reform would pay off through more business and job creation.
"Our results illustrate the need for thoughtful tax reform," the Kauffman Foundation says. "There is no reason to favor debt over equity, for example, and many differences across assets and industries appear difficult to justify. In addition, the inconsistent value of tax incentives for investment and R&D, especially among start-ups and fast-growing young firms, deserves a close look."
— By Jeff Brown, special to CNBC.com
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71e9272076313c5ce422388f8f264236 | https://www.cnbc.com/2017/04/10/more-trouble-for-restaurants-loyal-customers-are-cutting-back.html | More trouble for restaurants: Loyal customers are cutting back | More trouble for restaurants: Loyal customers are cutting back
A waitress delivers sushi orders at Masa Hibachi Steakhouse & Sushi in Silver Spring, Maryland.Bill O'Leary | The Washington Post | Getty Images
The restaurant industry could be headed for an even greater funk this year, as more consumers opt to save their money rather than dine out.
Diners who typically eat at least twice weekly at a fast-food chain told AlixPartners, a New York-based consulting firm, that they plan to cut back on their restaurant visits by 8 percent over the next 12 months.
The news is even worse for fast-casual chains — think Chipotle Mexican Grill, Panera Bread, and like — where diners who typically eat out at these places least twice weekly plan to cut back their visits by about 13 percent.
AlixPartners polled more than 1,000 U.S. consumers from Feb. 14-16, found that half of the respondents hoped to save money by eating out less. Some still wanted to spend, but not on dining; 32 percent said they would spend the money on travel and 31 percent planned to use that cash on "personal services" like hair or nail care, dry cleaning or housekeeping, among other things.
Baby Boomers, in particular, were more likely to ditch dining out to put away money for retirement. Millennials, on the other hand, are more inclined to spend their restaurant funds on other experiences, personal services or on their education or student loans.
Kurt Schnaubelt, a managing director at AlixPartners, said that having these two spending groups looking to deploy their money differently will be "painful" for the restaurant industry.
"Never doubt the frugality of the American consumer," he said.
While consumers tend to be aspirational in their goals for saving and spending, Schnaubelt said that "the American consumer has an incredible grasp on their spending habits."
Which could mean more trouble for restaurants. The industry struggled with weak sales and traffic throughout 2016 and has been slated for limited growth in 2017.
In January, Technomic analysts expected that sales at full-service restaurants would grow about 3.5 percent for 2016 and 2017. Adjusted for inflation, the real growth was estimated to be about 0.8 percent.
Similarly, analysts at The NPD Group expected quick-service chains to see traffic grow by about 1 percent, while visits to full-service chains are anticipated to fall 2 percent.
"The industry is fairly overbuilt," Schnaubelt told CNBC. "There are just too many seats. There are a lot of empty seats in the restaurant industry with a lot of capital put into those buildings and that equipment and they're just not getting the sales out of it."
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24e217cd765f84c6c617552340ef4dc6 | https://www.cnbc.com/2017/04/10/sales-for-this-luxury-yacht-maker-are-booming-after-brexit.html | Sales for this luxury yacht maker are booming after Brexit vote | Sales for this luxury yacht maker are booming after Brexit vote
VIDEO0:5900:59This U.K. yacht maker is seeing a boost from Brexit
Princess Yachts, a luxury yacht maker based in Plymouth, U.K., said its retail sales rate had increased 25 percent over the past year, thanks largely to the decline in the British pound after the U.K. voted to leave the EU.
"Brexit has given many of our customers to buy at a more favorable price in their local currency," Antony Sheriff, executive chairman of Princess Yachts told CNBC while at the Singapore Yacht Show. "But we don't count on that. We assume exchange rates at some point will even out."
Princess Yachts says its production is entirely conducted in and around Plymouth, while competitors use a variety of global suppliers. The domestic production, coupled with the majority of its buyers being outside the U.K., has made for a beneficial combination. The pound is down about 17 percent against the dollar since the U.K. voted to leave the E.U.
The majority of buyers of Princess Yachts come from Europe and the U.S., meaning the prices are now very attractive.
Production facility of Princess Yachts in Plymouth, U.K.Princess Yachts
According to the company, its yachts are now sold out through 2018, with some orders confirmed for 2019.
Sheriff said the surge in sales actually began a few months prior to Brexit as a result of newly designed offerings, but it was then reinforced by currency moves.
Recently, Article 50 was triggered in the U.K., which is the formal two-year process governing Britain's departure from the E.U.
Still, a lot of uncertainty remains, which Sheriff said makes it challenging to navigate the business.
"Nobody really knows how to plan for the future," he said. "If there's one thing that would be useful for the government is to give us some degree of certainty as to what the plan is on the Brexit side and some degree of certainty that border taxes will not distort the market."
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ea2d21c44bba6cfdaf21b70ef1bdfce1 | https://www.cnbc.com/2017/04/10/tesla-passes-general-motors-to-become-the-most-valuable-us-automaker.html | Tesla passes General Motors to become the most valuable US automaker | Tesla passes General Motors to become the most valuable US automaker
VIDEO0:4100:41Tesla is the most valuable US automakerNews Videos
Tesla's market capitalization is now bigger than General Motors', making it the largest U.S. based automaker by that metric.
Investors are clearly betting on Tesla's potential, and are undeterred by factors such as Tesla's loss of $773 million in 2016, and the fact that it sells only a tiny fraction of the cars delivered annually by established competitors.
General Motors sold about 10 million cars in 2016 compared with Tesla's roughly 76,000.
Tesla has only had two profitable quarters in its history as a public company, while GM earned a profit of more than $9 billion last year.
Tesla shares rose more than 3 percent to reach a fresh all-time high of $313.73 in midafternoon trading Monday, after receiving the highest price forecast ever issued for the stock by an analyst at a major firm.
The stock closed up over 3 percent at $312.39 per share.
On Monday, PiperJaffray analyst Alexander Potter published a note upgrading his rating on the stock from neutral to overweight and raising his price target from $223 to $368.
In his note, Potter said Tesla has a "captivating impact on consumers and shareholders alike" that will be difficult for competitors to replicate, and that although bears may have rational arguments against the stock, those "probably won't matter."
"In many ways, TSLA seems to play by its own rules," Potter wrote. For instance, the company burns through cash at a rate "better-established companies would likely be crucified for," devises "unreasonably fast" production timelines and "spurns industry norms," by doing things such as choosing to sell directly to customers, rather than through dealers.
Even before Monday's surge, when Tesla overtook Ford in market cap on April 3, some were saying Tesla was overvalued.
Responding to the criticism at that time, Tesla CEO Elon Musk wrote on Twitter that while Tesla could be considered "absurdly overvalued," based on past performance, the company's share price reflects what Tesla could achieve in the future.
Elon
Barclays analyst Brian Johnson said in a note on Thursday that while he does not see any reason Tesla shares should lose value in the short term, he does not think the company will necessarily emerge as the kind of industry leader some investors expect it to become.
But Tesla's current technology and businesses may leave it well-positioned to enter other markets that could further boost its value.
Morgan Stanley analyst Adam Jonas said in a note published Wednesday that the company could potentially enter markets collectively worth trillions of dollars. These include a car-sharing business with a value Jonas estimates at around $10 trillion, a $1 trillion logistics market, and a $2 trillion to $3 trillion energy storage market.
Read more: Tesla just got its most bullish price forecast ever from a major Wall Street analyst
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3bca3f4cc55911c8654669f93c3a2b36 | https://www.cnbc.com/2017/04/10/theres-more-than-60-chance-of-a-global-recession-within-the-next-18-months-economist-says.html | There’s more than 60% chance of a global recession within the next 18 months, economist says | There’s more than 60% chance of a global recession within the next 18 months, economist says
Global growth is expected to slow down significantly in the coming months as borrowing levels dominate in both China and Europe and "Trump-mania" is set to fade, a chief economist at Danish investment firm Saxo Bank told CNBC on Monday.
"Our main global macro outlook still maintains that recession is more likely than not in the near future (12 to 18 months) based on the global credit impulse having peaked simultaneously with global inflation," Steen Jakobsen, chief economist at Saxo Bank, said.
In a recent note, Jakobsen explained that the biggest "perception-versus-reality gap" in the market currently remains this risk of recession. He added that his company is not predicting a recession, but that its economic model does indicate a significant slowdown as "the large credit impulse from China and Europe in the early part of 2016 has not reversed to negative", which it says should make the market conservative, risk averse push investors into U.S. fixed income.
"While the market at large sees less than a 10 percent chance of recession, we at Saxo – together with our friends at South Africa's Nedbank – see more than a 60 percent chance," he added in the note.
Europe is seen as the main region driving global growth, according to Jakobsen, beating the U.S. in the second and third quarters of this year. Jakobsen is not alone in this thesis, with a number of investment houses recently upgrading their outlooks on European stocks as fears recede on the rise of populism and polls indicate that centrist candidate Emmanuel Macron is likely to do well at the upcoming French elections.
Mike Bell, global market strategist at JPMorgan Asset Management, told CNBC Monday that European stocks "look pretty cheap" compared to U.S. stocks. "What you're starting to see now is that underperformance of earnings that you've seen since the financial crisis is disappearing," he said. There's been a fundamental acceleration in the euro zone economy, he also noted.
But, according to Jakobsen, Europe's momentum is not followed in other parts of the globe.
"One thing is absolutely clear: Asia is not going to contribute anything in 2017 to growth. China is on total standstill," Jakobsen said Monday.
"They don't know what to do with (President Donald) Trump and I think Trump again showed his hand over the weekend that he is not to be relied on in terms of a set-out path for how they conducted themselves," he added.
Trump and Chinese President Xi Jinping agreed during a summit last week to develop trade talks during the next 100 days to reduce the Chinese trade surplus with the U.S. They also agreed to increase cooperation to curb North Korea's nuclear program.
Shortly after the meeting, Trump sent 100,000-ton USS Carl Vinson and U.S. Navy support ships to the Pacific as a show of force amid rising fears that North Korea will launch an intercontinental ballistic missile test in the coming days. Last week, Trump approved a missile strike on Syria, after an alleged chemical attack. Such a decision overshadowed the summit with his Chinese counterpart.
Furthermore, the main driver of U.S. equities seems to be hope, Jacobson added. has reached historic highs since the new president took office on expectations that he will deliver massive tax cuts and infrastructure investments.
"A dominant part of the equity analysts sees a significantly higher S&P but it's based on hope. Hope to me belongs in church on a Sunday," Jakobsen said.
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fff9bda3cc505d9fbfc9226863fcb978 | https://www.cnbc.com/2017/04/10/trump-xi-meeting-concluded-without-gaffe-but-criticism-soon-followed.html | Trump-Xi meeting concluded without gaffe, but criticism soon followed | Trump-Xi meeting concluded without gaffe, but criticism soon followed
VIDEO2:1602:16Assessing the Xi-Trump meeting Street Signs Asia
Chinese President Xi Jinping and U.S. President Donald Trump concluded their first in-person meeting, striking a friendly tone, avoiding political gaffes and even agreeing to tackle trade imbalances. But soon after the meeting ended, Chinese state media scolded Trump for his military action in Syria.
China will make concessions to give the U.S. better market access in two areas — financial sector investments and beef exports — in efforts to avoid a trade war, the Financial Times reported. This is part of a wider 100-day plan to be hashed out between the two sides.
The Trump-Xi meeting spotlighted trade tensions between the two countries, and other items high on the agenda included discussing a response to an increased nuclear threat out of North Korea. Although the talks were overshadowed by a U.S. strike in Syria, experts have said the meeting was a success given that both sides remained cordial, and took a step toward tackling the trade issue by increasing China's imports from the U.S.
President Donald Trump welcomes Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida, U.S., April 6, 2017.Carlos Barria | Reuters
"This is the 'good' way to close the bilateral trade gap," wrote Carl Weinberg, chief economist of High Frequency Economics, in a note about the meeting and 100-day plan. "U.S. consumers' access to less expensive imported goods will be unaffected, but incremental jobs will be created by incremental production."
Trump has long accused China of unfair trade practices, leading to a trade deficit of more than $300 billion. The Chinese argument has been that the relationship has benefited American consumers in the form of cheaper goods, and increased China investment in the U.S.
For now, the threat of a trade war is on ice, but how things shake out will depend on negotiations regarding the 100-day plan.
"If we don't get some tangible results within the first 100 days, I think we'll have to examine whether it's worthwhile continuing them," Secretary of Commerce Wilbur Ross said on Fox News. Before the meeting, the Commerce Department did say it was undertaking a review of U.S. trade deficits by product, due out in late June.
On the China side, however, no public comments have yet been made regarding the trade plan.
Whether or not the U.S. will label China a currency manipulator also remains to be seen. This was a Trump campaign promise, but he has yet to make good on that call, and the term was absent from official comments recapping the meeting.
On the whole, the U.S. and China both sounded an optimistic tone — Trump even accepted Xi's invitation to visit China later this year.
"We have a thousand reasons to get China-U.S. relations right, and not one reason to spoil the China-US relationship," Xi said, according to state media.
Trump said an "outstanding" relationship was developing, and that "goodwill and friendship were formed, but only time will tell on trade."
Chinese state media also trumpeted the meeting as a success, but waited until after it concluded to blast the U.S. for its strike in Syria. State outlet Xinhua was critical of the move, calling it the actions of a weak politician who was attempting to flex his muscles, and to deter rumors of ties to Russia, an ally of the Syrian government.
Given that government officials rarely speak to foreign press, commentary in Chinese state media is closely watched for clues into Communist Party thinking.
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d2fb9fad1794a572b86187bdf7d13ff9 | https://www.cnbc.com/2017/04/10/ukraine-death-threats-central-bank-recession-imf-kiev.html | Ukraine's central bank chief resigns after death threats and hate campaign | Ukraine's central bank chief resigns after death threats and hate campaign
STR | NurPhoto via Getty Images
Ukraine's central bank Governor Valeria Gontareva tendered her resignation on Monday following years of intense political pressure, a hate campaign and even death threats at a time when the country is enduring a deep recession.
Gontareva had been championed by the International Monetary Fund (IMF) and investors for stringently imposing anti-crisis measures in Kiev. Although some lawmakers and domestic businesses had adjudged the same policies as deplorable.
"I believe my successor will be professional and independent from political currents… But the political pressure will be (there) for anyone in this position," Gontareva told reporters at a press conference on Monday, shortly after submitting her resignation to President Petro Poroshenko.
On March 1, Ukraine's central bank chief had hinted she may not continue in the post for too much longer after a hate campaign had culminated in protestors leaving a coffin outside the main entrance of the central bank.
Under Gontareva's three-year stewardship, Ukraine switched from a pegged to a floating currency and launched a clean-up of the country's banking system. The latter resulted in more than 80 banks, used by vested interests to launder money and pocket bank operations, being shut down.
SERGEI SUPINSKY | AFP | Getty Images
The IMF, which is currently supporting Kiev with a $17.5 billion bailout package, had recently praised Gontareva and her team for "skillfully" managing monetary policy throughout a "very challenging period".
However, the institution led by Christine Lagarde warned at the start of the month that domestic politics could unsettle vital reforms such as increasing the pension age for citizens and lifting a suspension on land sales.
"There is no change in the policy of the central bank," Gontareva declared.
"A floating exchange rate, inflation targeting, modern central bank – all those things that my team and I struggled for so long, remains unchanged. … The (central) bank will continue consistent implementation of the policy that you have seen throughout my presidency," she added.
Gontareva's successor has not yet been identified though both the president and Ukraine's parliament are required to approve the resignation.
Should Gontareva's resignation letter receive approval, the central bank governor appears likely to become another name on the list of pro-reformers to have either quit or have been forced out of their jobs. Economy Minister Aivaras Abromavicius, the head of the national police and the technocrat finance minister had all lost their respective positions before Monday.
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a4c347a2c915240054946915053839bd | https://www.cnbc.com/2017/04/11/banks-scramble-to-fix-old-systems-as-it-cowboys-ride-into-sunset.html | Banks scramble to fix old systems as IT 'cowboys' ride into sunset | Banks scramble to fix old systems as IT 'cowboys' ride into sunset
Bill Hinshaw is not a typical 75-year-old. He divides his time between his family – he has 32 grandchildren and great-grandchildren – and helping U.S. companies avert crippling computer meltdowns.
Hinshaw, who got into programming in the 1960s when computers took up entire rooms and programmers used punch cards, is a member of a dwindling community of IT veterans who specialize in a vintage programming language called COBOL.
The Common Business-Oriented Language was developed nearly 60 years ago and has been gradually replaced by newer, more versatile languages such as Java, C and Python. Although few universities still offer COBOL courses, the language remains crucial to businesses and institutions around the world.
In the United States, the financial sector, major corporations, and parts of the federal government still largely rely on it because it underpins powerful systems that were built in the 70s or 80s and never fully replaced.
And here lies the problem: if something goes wrong, few people know how to fix it.
The stakes are especially high for the financial industry, where an estimated $3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.
The industry's aggressive push into digital banking makes it even more important to solve the COBOL dilemma. Mobile apps and other new tools are written in modern languages that need to work seamlessly with old underlying systems.
That is where Hinshaw and fellow COBOL specialists come in. A few years ago, the north Texas resident planned to shutter his IT firm and retire after decades of working with financial and public institutions, but calls from former clients just kept coming.
In 2013, Hinshaw launched a new company COBOL Cowboys, which connects companies to programmers like himself. His wife Eileen came up with the name in a reference to "Space Cowboys," a 2000 movie about a group of retired Air Force pilots called in for a trouble-shooting mission in space. The company's slogan? "Not our first rodeo."
Of the 20 "Cowboys" that work as part-time consultants many have reached retirement age, though there are some "youngsters," Hinshaw said.
"Well, I call them youngsters, but they're in their 40s, early 50s."
Experienced COBOL programmers can earn more than $100 an hour when they get called in to patch up glitches, rewrite coding manuals or make new systems work with old.
For their customers such expenses pale in comparison with what it would cost to replace the old systems altogether, not to mention the risks involved.
Antony Jenkins, the former chief executive of Barclays, said for big financial institutions – many of them created through multiple mergers over decades – the problems banks face when looking to replace their old technology goes beyond a shrinking pool of experts.
"It is immensely complex," said Jenkins, who now heads startup 10x Future Technologies, which sells new IT infrastructure to banks. "Legacy systems from different generations are layered and often heavily intertwined."
Some bank executives describe a nightmare scenario in which a switch-over fails and account data for millions of customers vanishes.
The industry is aware, however, that it cannot keep relying on a generation of specialists who inevitably will be gone.
The risk is "not so much that an individual may have retired," Andrew Starrs, group technology officer at consulting firm Accenture, said. "He may have expired, so there is no option to get him or her to come back."
International Business Machines, which sells the mainframe computers that run on COBOL, argues the future is not so bleak. It has launched fellowships and training programs in the old code for young IT specialists, and says it has trained more than 180,000 developers in 12 years.
"Just because a language is 50 years old, doesn't mean that it isn't good," said Donna Dillenberger, an IBM Fellow.
But COBOL veterans say it takes more than just knowing the language itself. COBOL-based systems vary widely and original programmers rarely wrote handbooks, making trouble-shooting difficult for others.
"Some of the software I wrote for banks in the 1970s is still being used," said Hinshaw.
That is why calls from stressed executives keep coming.
"You better believe they are nice since they have a problem only you can fix," he said. Hinshaw said the callers seem willing to pay almost any price and some even offer full-time jobs.
Oliver Bussmann, former chief information officer of UBS, said banks usually tap into their networks of former employees to find COBOL experts. Accenture's Starrs said they go through a "black book" of programmer contacts, especially those laid off during or after the 2008 financial crisis.
The industry appears to be reaching an inflection point, though. In the United States, banks are slowly shifting toward newer languages taking a cue from overseas rivals who have already made the switch-over.
Commonwealth Bank of Australia, for instance, replaced its core banking platform in 2012 with the help of Accenture and software company SAP. The job ultimately took five years and cost more than 1 billion Australian dollars ($749.9 million).
Accenture is also working with software vendor Temenos Group to help Swedish bank Nordea make a similar transition by 2020. IBM is also setting itself up to profit from the changes, despite its defense of COBOL's relevance. It recently acquired EzSource, a company that helps programmers figure out how old COBOL programs work.
In the meantime, banks' scramble has revived careers of those who retired or were let go, and whose expertise, until recently, was considered obsolete.
One COBOL programmer, now in his 60s, said his bank laid him off in mid-2012 as it turned to younger, less expensive employees trained in new languages.
In 2014, the programmer, who declined to be named to avoid jeopardizing current professional relationships, was brought in as a contractor to the same bank to fix issues management had not anticipated.
"The call back to the bank was something of a personal vindication for me," he said.
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89d8cc2a5cf5d7c99447b3baa90ca0e4 | https://www.cnbc.com/2017/04/11/brazilian-airline-azul-begins-trading-at-the-nyse-shoots-8-percent-higher.html | Brazilian airline Azul begins trading at the NYSE, shoots 8% higher | Brazilian airline Azul begins trading at the NYSE, shoots 8% higher
VIDEO4:3804:38JetBlue founder on his new Brazilian airline's IPOSquawk on the Street
Brazilian airline Azul opened at $22 per share in its market debut on Tuesday, rising as much as 8 percent intraday.
The debut came as the allure of Brazilian airlines has grown among foreign investors. The government has eased foreign ownership of carriers and the economy begins to show signs of emerging from a deep recession.
The company raised 2.021 billion reals ($645 million) in a dual initial public offering in Sao Paulo and New York on Monday, as soaring investor demand led Brazil's No. 3 airline to boost the size of the deal by almost one-fifth.
Azul signage at the New York Stock Exchange, April 11, 2017.Source: NYSE
Azul founder and former JetBlue CEO David Neeleman told CNBC on Tuesday traffic in Brazil has doubled and the company has taken about half of that new traffic.
"The challenges in Brazil are big, but the opportunity is bigger," Neeleman, who launched Azul in 2008, said on "Squawk on the Street."
"We are an airline today that does 26 percent of all the domestic air revenue in Brazil. That's from zero to 26 in eight years," he said.
The company has made repeated efforts at an IPO since 2013. Azul eventually raised new capital through private stake sales in 2015 to United Continental and China's HNA Group.
"Brazil is a pretty volatile economy but during the time as things were going in Brazil, we were just building our business, building our business, adding more and more cities and building a stronger route network so the company is much stronger today than back then," Neeleman said.
— Reuters contributed to this report.
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04b9b04cff70b1daf264c4e669b4c6f3 | https://www.cnbc.com/2017/04/11/chinese-firm-halves-worker-costs-by-hiring-army-of-robots-to-sort-out-200000-packages-a-day.html | Chinese firm halves worker costs by hiring army of robots to sort out 200,000 packages a day | Chinese firm halves worker costs by hiring army of robots to sort out 200,000 packages a day
Staff of STO Express sort packages for delivery on November 12, 2015 in Wenzhou, Zhejiang Province of China.VCG | Getty Images
A viral video showing an army of little orange robots sorting out packages in a warehouse in eastern China is the latest example of how machines are increasingly taking over menial factory work on the mainland.
The behind-the-scenes footage of the self-charging robot army in a sorting centre of Chinese delivery powerhouse Shentong (STO) Express was shared on People's Daily's social media accounts on Sunday.
The video showed dozens of round orange Hikvision robots – each the size of a seat cushion – swivelling across the floor of the large warehouse in Hangzhou, Zhejiang province.
More from the South China Morning Post:China, South Korea warn Pyongyang of tougher action US and North Korea 'closer to brink' of accidental conflict Rise of the robots: 60,000 workers culled from just one factory as China's struggling electronics hub turns to artificial intelligence
A worker was seen feeding each robot with a package before the machines carried the parcels away to different areas around the sorting centre, then flipping their lids to deposit them into chutes beneath the floor.
The robots identified the destination of each package by scanning a code on the parcel, thus minimising sorting mistakes, according to the video.
VIDEO1:4801:48The robots are coming: How the rise of robots will change future jobs reportsTech
The machines can sort up to 200,000 packages a day and are self-charging, meaning they can operate around the clock.
An STO Express spokesman told the South China Morning Post on Monday that the robots had helped the company save half the costs it typically required to use human workers.
They also improved efficiency by around 30 per cent and maximised sorting accuracy, he said.
"We use these robots in two of our centres in Hangzhou right now," the spokesman said. "We want to start using these across the country, especially in our bigger centres."
Although the machines could run around the clock, they were presently used only for about six or seven hours each time from 6pm, he said.
VIDEO4:5204:52Are robots a jobs killer?Power Lunch
Manufacturers across China have been increasingly replacing human workers with machines.
The output of industrial robots in the country grew 30.4 per cent last year.
In the country's latest five-year plan, the central government set a target aiming for annual production of these robots to reach 100,000 by 2020.
Apple's supplier Foxconn last year replaced 60,000 factory workers with robots, according to a Chinese government official in Kunshan, eastern Jiangsu province.
The Taiwanese smartphone maker has several factories across China.
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0a465eb3abcc4c5a6709b73d7b0466d9 | https://www.cnbc.com/2017/04/11/chinese-social-media-continues-to-rage-at-united-and-the-airline-may-face-real-fallout.html | Chinese social media continues to rage at United, and the airline may face real fallout | Chinese social media continues to rage at United, and the airline may face real fallout
Chinese social media has exploded with outrage after a video went viral showing a passenger who appeared to be of Asian ethnicity being dragged off an overbooked United Airlines flight with a bloodied nose.
The topic, #UnitedAirlinesforcespassengeroffplane, has held strong as a top trending topic over the last two days on Weibo, China's answer to Twitter.
"The boycott starts with me," posted one online user, BJ Shizilu, along with a photo of his shredded Mileage Plus card. Another said, "Whether the passenger is Asian or not, this is abominable," according to a post by Koukou Liang.
Another Weibo user said, "No need to apologize or explain...please sue United Airlines till it collapses. Boycott fully."
In a post on his verified Weibo account that generated some 50,000 likes in over three hours, Chinese American comedian Joe Wong said the passenger who reportedly said he was selected for being Chinese deserves a "thumbs up" as many Chinese who feel discriminated against don't say it out loud so as not to lose face.
VIDEO1:5701:57How should United have responded?Squawk Box Asia
"This results in the Western mainstream media and public not taking discrimination against Asians seriously," he added.
A Chinese social media account for Richard Liu, the CEO of e-commerce firm JD.com, complained about United's service, describing it as the worst in the world.
The giant avalanche of virulent comments against United could mean a big headache for the airline, as it has a lot at stake in China. United is the largest U.S. carrier operating in China, accounting for 20 percent of all flights between the two countries — that amounts to nearly 100 flights a week.
Airlines have raced to get into the world's largest consumer market, as more middle class Chinese seek more business and holiday travel. China is expected to the topple the U.S. as the largest market by passenger volume by around 2024, according to the International Air Transport Association.
United is now struggling to contain a giant public relations crisis.
On Monday evening, CEO Oscar Munoz said in a letter to employees obtained by CNBC that employees "followed established procedures" when removing a passenger from a plane because it was overbooked, and calling the passenger "disruptive and belligerent."
Munoz did issue an apology on Tuesday, saying "we will work to make it right."
VIDEO3:3503:35Former Continental CEO: Denied boarding usually handled with more maturitySquawk on the Street
But it may be too little, too late.
"Airlines have been very slowly adapting to the new communication environment," said John Bailey, managing director of public relations firm Ketchum. "Even now, they are struggling to get it right – quickly enough."
The man dragged off the plane has since been identified as Dr. David Dao, who is now undergoing treatment in a Chicago hospital for his injuries, according to a statement from two Chicago lawyers representing the Dao family.
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b1b94f030df0fff363198ff95895d424 | https://www.cnbc.com/2017/04/11/cnbc-survey-trump-agenda-is-popular-until-he-acts-on-it.html?__source=newsletter%7Cyourmoneyyourvote | CNBC survey: Trump's agenda is popular, until he acts on it | CNBC survey: Trump's agenda is popular, until he acts on it
VIDEO2:0502:05All-America Economic Survey: 39% approve of Trump's job as presidentSquawk Box
The CNBC All-America Survey shows President Donald Trump's economic agenda polling well — until he actually acts on it.
The survey of 804 Americans, conducted April 3-6, before the Syrian airstrikes, shows strong support for his plans to rebuild the nation's infrastructure, cut individual taxes and renegotiate trade deals. But the poll, with a margin of error of plus or minus 3.5 percentage points, shows majorities disapprove of his agenda in places where he's actually taken action: climate change, the immigration ban, and repealing and replacing Obamacare.
"Things [poll] a lot better before he touches it," said Micah Roberts, the Republican pollster on the survey with Public Opinion Strategies. Jay Campbell from Hart Research served as the Democratic pollster.
The survey shows another important split. Just 39 percent of the public approve of how he's doing his job, 48 percent disapprove and 13 percent say they don't know or are unsure. President Trump enjoys overwhelming approval from Republicans, but Democrats overwhelmingly disapprove of his job so far. Only 34 percent of independents approve of the job Trump is doing, while 46 percent disapprove.
Indeed, despite the president's low approval ratings, the survey is recording some of the highest levels of economic optimism in its decadelong existence: 38 percent of the public say the economy is good or excellent, up 4 points from December and a record for the survey. Forty percent expect the economy to improve in the next year, close to the record. Of those who believe the economy will improve, 67 percent say it's because of Trump's policies. And the 47 percent of Americans who say now is a good time to invest in stocks represents the most bullish sentiment in the country since 2007. The president's handling of the economy is seen favorably, with 44 percent approving and 41 percent disapproving.
"It's a positive picture for the administration when focused on the economy," said Roberts. "The survey suggests a new era of optimism."
But Campbell believes the survey is more worrisome for the administration. "If you look under the hood things are more precarious," he said. "Nearly all of those superlative numbers are borne aloft by extraordinary Republican optimism. This can give a false sense that everything looks great, when in fact the majority of the public (Democrats and independents) are very leery."
The survey provides a blueprint of how Trump, if he's looking to form a consensus, should prioritize his agenda. Thirty-four percent of those surveyed said "keeping U.S. jobs from going overseas" is one of their top two issues. Individual tax cuts, funding infrastructure and reducing the deficit followed as the next-highest priorities. Cutting business regulations and business taxes were near the bottom of the list — two areas the president has prioritized.
There were vast differences by party, however. The top priority for Republicans is repealing and replacing the Affordable Care Act, also known as Obamacare. It's near the bottom of the list for Democrats. Meanwhile, the top priority for Democrats, rebuilding infrastructure, is close to the bottom of the list for Republicans.
In an apparent rejection of the tactics of the House Freedom Caucus, whose hard line blocked the House health-care reform bill, Republicans want their party to compromise to enact Trump's agenda. By a 51-to-33 majority, Republicans surveyed said they want their party to "work to pass Trump's agenda" rather than "hold the line on conservative positions." Democrats are divided, 41 to 40, on whether their party should compromise with the president.
Meanwhile, Americans are deeply divided over the benefit of free trade to the U.S., with 34 percent saying it helps the country and 31 percent saying it hurts. That's a sharp drop from the February NBC/Wall Street Journal poll, when 43 percent expressed support for trade.
Divisions on trade cut across nearly every demographic line: North vs. South, old vs. young and poor vs. rich. For example, just 24 percent of those with incomes under $30,000 believe free trade helps the U.S., compared with 39 percent of those with incomes of $100,000 or greater.
But by a 58 percent to 26 percent margin, Americans support Trump's efforts to renegotiate trade deals. That includes greater percentages of those who think trade helps the U.S., suggesting that they may support free trade but are not opposed to efforts by the president to cut a better deal.
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0683c3af96b2153ae97a7669552f68ae | https://www.cnbc.com/2017/04/11/cramer-remix-why-a-slew-of-ipos-might-not-be-a-good-thing.html | Cramer Remix: Why a slew of IPOs might not be a good thing | Cramer Remix: Why a slew of IPOs might not be a good thing
VIDEO1:0601:06Cramer Remix: Why a slew of IPOs might not be a good thingCramer Remix
Jim Cramer is not a fan of the flurry of initial public offerings that hit the market this week, and not only because the offerings themselves are, as he put it, "suboptimal."
"This is a holiday-shortened week with not a lot of room for any deals. Instead, we have seven. That's far too much and it makes me a little more pessimistic than I'd like to be, because my discipline says don't trust a tape where there's too much supply and it's jammed into the market without enough demand," the "Mad Money" host said.
From a Brazilian airline to a special purpose acquisition vehicle raising money for assets in oil and gas to a coal company to a clinical-stage biotechnology play, Cramer was generally dissatisfied with the week's offerings, seeing most of them as tricky, risky investments.
And, though the IPO market picking up speed is often seen as a good sign, Cramer worries that a flood of subpar names will only result in a short-lived peak.
President Donald TrumpT.J. Kirkpatrick | Bloomberg | Getty Images
Still, while businesses are strong and the economy is doing well, Cramer found that Trump trades have evolved drastically since they came to fruition after November's election.
"These days, they're more likely to hurt the bull than help, even though so many companies are doing well," the "Mad Money" host said.
Cramer began with Tuesday's example, straight from President Donald Trump's morning tweet:
"North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A," Trump tweeted.
"The Trump trade? Buy Gold! Buy Randgold! Buy bullion! Stow it in Switzerland! Hard assets like gold retain their value in times of geopolitical turmoil," Cramer said.
Another approaching Trump trade may also seem unexpected to investors: the April 28 deadline for Congress to raise the debt ceiling.
"The problem is that as much as Wall Street likes Trump's pro-business policies, their potential is already baked into the stock market," Cramer said.
A Whole Foods employee stocks produce in Oakland, Calif. David Paul Morris | Bloomberg | Getty Images
Meanwhile, as the market buzzes about Monday's news that activist investor Jana Partners took up an almost 9 percent stake in Whole Foods, Cramer seems to be the only one asking, "What happens now?"
To many investors, taking profits now may sound tempting, despite Whole Foods stock's 10 percent jump on the Jana news. Competitors like Wal-Mart and Kroger have encroached on he high-end grocery chain's turf by bringing cheaper organic and natural options to their shelves.
Cramer said the best hope for a turnaround — and Jana's possible next move — is "a foreign buyer who wants to take on German Trader Joe's."
The "Mad Money" host also looked into one Cramer fan's stock pick, a surgical guidance systems manufacturer called Mazor Robotics.
Cramer said the Israeli company, whose products help hospitals and surgeons reduce risk, lower costs, and save time, has a "solid growth story," but wondered whether the stock, which has run up massively over the past year including a 30 percent boost year-to-date, can keep delivering.
Although the "Mad Money" host harbored some concern about Mazor's marketing know-how, he could not ignore its position as the only true player in a lucrative business.
"While there are some real risks here … I think Mazor has what it takes, and I am willing to recommend this stock — for speculation, of course — at least until someone else comes up with a better mousetrap. For now, though, that sure hasn't happened," Cramer said.
Jeff Jonas, CEO of Sage Therapeutics.Adam Jeffery | CNBC
As Wall Street froths at the prospect of Washington officials cracking down on drug pricing, Cramer took to the charts to sift some promising biotech winners from the noise.
Using the charts of ExplosiveOptions.net founder and TheStreet technician Bob Lang, Cramer unearthed four strong stocks that seem poised to rise above political threats to their business.
The charts of Sage Therapeutics, Celgene, Allergan and Kite Pharma showed the stocks consolidating their gains at higher-than-usual levels, a pattern that suggests they are each building a base.
Cramer's take? "I think the drug pricing issue is a total political red herring, and the charts, as interpreted by Bob Lang, suggest that smoking-hot biotechs like Sage Therapeutics, Celgene, Allergan and Kite Pharma could have a lot more room to run," he said.
In Cramer's lightning round, he flew through his take on some caller favorite stocks:
Valley National Bancorp: "Yes, they did [always use to be buying banks]. They were very acquisitive, and I have to tell you, I happen to like Valley. I think it's a good situation, New Jersey bank, done some business with them at one point, and I think that they are a good buy and I would hold on to that understanding that the banks are under a great deal of pressure because interest rates are so low."
AxoGen: "That's regenerative medicine, and I've got to tell you, that stock has had a major, major move and that is an incredibly difficult area. That's why I would say ka-ching, ka-ching on at least half."
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Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com
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af61a67ba4fc61fec0e03aade3011055 | https://www.cnbc.com/2017/04/11/fitch-flips-trump-isnt-a-threat-to-the-world-economy-after-all.html?__source=newsletter%7Cyourmoneyyourvote | Fitch changes its mind: Trump isn't a threat to the world economy after all | Fitch changes its mind: Trump isn't a threat to the world economy after all
VIDEO2:2702:27Trump still has potential to boost the economy: SocGenSquawk Box Europe
Just two months ago, Fitch Ratings viewed President Donald Trump as a threat to economic stability — not only in the United States, but for the world.
Now, things appear to have changed.
One of the three major ratings services issued a mostly glowing report Tuesday about the state of domestic finances. Fitch, in a far cry from its dire warnings in February, both reaffirmed the sterling AAA credit rating for the U.S. and raised its outlook for gross domestic product growth.
The firm now expects the U.S. to grow at a 2.3 percent rate in 2017 and 2.6 percent in 2018 — not exactly breakout just yet, but a good deal better than the 1.6 percent average GDP rate under President Barack Obama.
Fitch attributed its outlook in part to the pro-growth Trump agenda.
"The new administration's focus on deregulation and tax cuts has spurred higher businessconfidence and would be positive for growth if carried through," Fitch analyst Charles Seville and others said in a report for clients. "Tax cuts are unlikely to generate a lasting and substantial boost to growth, in Fitch's view."
President Donald Trump speaks during a strategic and policy discussion with CEOs in the State Department Library in the Eisenhower Executive Office Building (EEOB) on April 11, 2017 in Washington, DC.Getty Images
Despite some lingering reservations, it was still quite a change in tone compared with a warning Fitch sent out in early February.
Back then, the agency declared that the nascent Trump administration "presents a risk to international economic conditions and global sovereign credit fundamentals."
The new president had hurt "policy predictability" while "established international communication channels and relationship norms" had been "set aside" creating the threat of "sudden unanticipated changes in U.S. policies with potential global implications."
All of the disruptions could pose credit-downgrade threats to U.S. trading partners, though Fitch did concede then that "a lot can change."
The agency was worried primarily that Trump would establish a protectionist agenda with tariffs that would start an international trade war. However, the president has softened a lot of that rhetoric since, and even last week met with his Chinese counterpart, Xi Jinping, in what had the air of a mostly cordial gathering of world leaders.
Fitch did on Tuesday issue some cautionary warnings about trade, and again pointed out that U.S. public debt was reaching dangerous levels.
"Increased trade protectionism and curbs on immigration would be negative for growth over themedium-term," Seville added.
Seville said he does not anticipate a future downgrade of U.S. debt.
Fitch was not alone in its warnings about the Trump agenda. During the campaign, Mark Zandi, chief economist at Moody's Analytics, warned that the new president's plans as outlined would lead to a substantial recession.
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eb30697f95981b8bf514df5f9c923323 | https://www.cnbc.com/2017/04/11/how-technology-will-used-to-in-the-us-mexico-border-wall.html | How technology will be used in the US-Mexico border wall | How technology will be used in the US-Mexico border wall
VIDEO3:0603:06The sophisticated technology behind President Trump's 'great, great wall' Power Lunch
Today Attorney General Jeff Sessions is touring the U.S.-Mexico border in Nogales, Arizona where he is speaking with law enforcement and military personnel. Known for his hardline position against illegal immigration — as well as restricting legal immigration — this will be his first trip in office visiting the wall.
Though bidding for companies vying for the chance to build the estimated $15 billion wall has closed, experts still say that technology has and will continue to play an important role in securing the border. The executive order on border security emphasizes urgency to achieve complete operational control of the southern border.
FLIR, a company that specializes in the production of thermal imaging cameras as well as components and imaging sensors already has a presence on the border wall. The company is a supplier into the integrated fixed tower program outfitted with long range thermal cameras.
"DHS has been a long time user of technologies to help detect and identify border incursions. Thermal imaging technology has been recognized as a very powerful tool in that mission in that it operates day or night" outgoing FLIR CEO Andrew Teich said to CNBC in an interview.
While he wouldn't say how many miles exactly, the range is several miles, giving border control agents the ability to see activity with enough time to react.
The U.S. Customs and Border Patrol officials announced this week that "technology alone would not meet the requirements of the solicitations" in an amended request for proposals. Proposals submitted by the deadline date were required to include physical barriers in addition to technology in their proposals.
"A lot of those questions are really our elected officials," said Elbit Americas CEO "but, what I can tell you is from our experience, an effective order security technology consists both of technology and physical elements."
Elbit Americas is contracted by the U.S. custom and border protection to deploy a combination of technology from integrated fixed towers to sensors, radars and cameras.
"The border itself is not homogenous, there are different areas, different topographies, different geographies in some cases closer to urban areas, in some closer to rural areas." said Horowitz "What you have to do is allow for the flexibility of selecting and integrating the right mixture," he said.
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4baa0959961198d5bcd8184b446be99c | https://www.cnbc.com/2017/04/11/international-stock-market-bets-us-investors-wont-touch.html | International stock market bets US investors won’t touch | International stock market bets US investors won’t touch
American investors have always been provincial. When you have the largest and most reliable stock market in the world, that's a luxury you can afford.
But a U.S.-centric view — loading up on Apple to the exclusion of any overseas tech stocks, or chasing the Snap IPO while ignoring the IPO market abroad — is hurting investors, say experts. It's leaving valuable growth stocks headquartered outside the country off the table. It's an investing prejudice that has led many investors to miss out on an overseas equities market that has outpaced the S&P 500 this year. In fact, the ETF to garner the most new assets this year through the end of March was the iShares Core MSCI Emerging Markets ETF (IEMG).
An employee inspects a wafer at the Infineon Technologies AG microchip and sensor manufacturing facility in Regensburg, Germany. Shares of the company are up 15 percent in 2017.Krisztian Bocsi | Bloomberg | Getty Images
Two of the top international ETFs this year have an even more surprising overseas focus: international tech and foreign IPOs. Even when U.S. investors use tactical sector strategies, "they're overweighting the U.S.," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA.
Take international technology. The SPDR S&P International Technology Sector ETF (IPK) has its biggest holding in Samsung, and for all of its missteps — from the notorious Note battery fire to a corruption scandal that took down South Korea's president — the stock has recovered. That has helped the international tech ETF to a 28 percent gain in the past year, through April 10, according to Morningstar data. But assets are small: only $29 million.
The US-centric Technology Select Sector SPDR ETF (XLK) has $17 billion (with a B) in assets. The U.S. tech ETF includes investor favorites like Microsoft, Apple and Facebook, which derive a significant amount of revenue from outside the United States. Some famed investors, such as Warren Buffett and Jack Bogle, have consistently maintained that getting overseas exposure through U.S.-based multinational corporations, held in indexes like the S&P 500, is enough.
"But investors are wrong in not looking internationally," Rosenbluth said.
Performance speaks for itself: The 28 percent gain in IPK beats the 23 percent return of XLK and compares favorably to the 22 percent gain in the past year for the PowerShares QQQ ETF (QQQ) that tracks the Nasdaq 100.
"The fund gives investors exposure to excellent technology companies that happen to be outside the U.S.," Rosenbluth said. "These are strong global brands." The fund's expense ratio of 40 basis points is also "pretty cheap," according to David Nadig, CEO of ETF.com, especially since it provides efficient exposure to other corners of the world.
Top 5 holdings in the International Technology ETF
SamsungSAPASMLCanonKeyence
Rosenbluth said using U.S. and international technology portfolios together is the only way to get true global technology exposure. "Investors should think of the overall allocation," he said. "The global economy will be a tailwind for large-cap technology stocks like SAP and Samsung," he said. "And they're also more stable than smaller stocks."
Investing through a global portfolio doesn't bridge the gap nearly as much, since global technology funds tend to be heavily U.S.-weighted. The iShares Global Technology ETF (IXN) does own Samsung. But three-quarters of the fund's huge assets are invested in U.S. stocks like Apple, Facebook, Microsoft and Alphabet. Nadig described the portfolio as having diluted international exposure.
Outside the United States, IPOs are also notching double-digit gains — also unseen to most domestic investors. First Trust International IPO ETF (FPXI) is up over 13 percent so far this year, according to Morningstar data through April 10. First Trust's U.S.-focused IPO ETF, U.S. Equities Opportunities (FPX) is up 5.5 percent this year, according to Morningstar, and has near-$700 million in assets. The Renaissance IPO ETF (IPO), which is predominantly U.S. deals, is up 10 percent this year but has only $14 million in assets.
The First Trust International IPO ETF, meanwhile, is tiny — only $1.4 million in assets.
"Large and liquid IPOs are represented in the fund," said Ryan Issakainen, exchange-traded fund strategist at First Trust Portfolios. "It's a way to get exposure early on before institutions start buying."
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A primary reason to invest in an international IPO fund is the same as for a U.S.-focused one: access to stocks that indexes tend to drag their feet on adding, said Kathleen Smith, partner at Renaissance Capital. It took Facebook two years to make it into the S&P 500. Core international funds, such as MSCI EAFE and MSCI Emerging Markets Index ETFs, suffer from the same approach. Many investors take an approach that is the polar opposite, without even realizing it: Owning big-name tech stocks like Apple and index funds in which Apple is among the largest holdings.
The First Trust ETF is 61 percent exposed to Asia — with 33 percent specifically in emerging Asian stocks. Developed market Europe is 29 percent of the portfolio.Holdings, mostly in Japan and China, are big names like Alibaba and JD.com, along with lesser known stocks like Japan Post Holdings. Financials (40 percent) and consumer stocks (19 percent between cyclicals and defensives) are the biggest positions; technology is only 12 percent of the ETF, according to Morningstar data, which is below the benchmark and peer fund tech weighing.
Stocks are held for 1,000 days before they're sold. So they have potential for long-term growth. "IPOs can pop the first day and then have negative returns for the next year," Issakainen said.
Top 5 holdings in the First Trust International IPO ETF
AlibabaJapan Post Holdings and Japan Post BankPostal Savings Bank of ChinaJD.comRecruit Holdings
Foreign IPO markets are generating high-quality companies, says Josef Schuster, founder at the financial services company IPOX Schuster in Chicago, which manages the index that First Trust's ETF is based on. In Europe, companies taken to market are often less speculative and there are no big defaults, he said, but added that China is a mixed bag.
Globally, IPOs have been off to a buoyant start this year, led by Asia, and marking the highest first-quarter number of share sales since before the financial crisis, according to EY.
VIDEO2:5902:59Uncertainty remains about new US industrial, trade policies: EYSquawk Box Europe
"Good performance is here to stay due to stable company offerings and strong investor appetite," Schuster said. There's a large pipeline of deals, especially from Europe and China, supported by recent international IPO performance. For example, Siemens is expected to have a blockbuster IPO when it spins off its health care unit as Healthineers this year, which could be the biggest German offering of 2017.
Renaissance Capital's International IPO ETF (IPOS) flips the exposure — it is 61 percent developed European markets and 35 percent Asia, with that split evenly between Japan and emerging markets. The less risky profile has resulted in a lower gain than the First Trust international IPO ETF, but it is still up 9 percent this year, according to Morningstar. There's also a significant difference in the holding requirements for the international IPO ETFs: The First Trust ETF holds stocks for 1,000 days; the Renaissance ETF holds stocks for two years.
The Renaissance IPO has trailed the MSCI ACWI world index in the past one-year period, but year-to-date it and the First Trust international IPO ETF are beating the benchmark, according to Morningstar.
Smith said the U.S. IPO market also tends to be more volatile than the overseas IPO market, and investor fear of valuations, especially for tech stocks, can lead to dramatic selloffs. "There is no reason why the performance of the international IPO market can't accelerate," Smith said. "This is a conservative approach to owning an area that can be volatile," she said, noting that the two sectors weighted most heavily in the Renaissance ETF are financials and industrials.
Top 5 holdings in the Renaissance International IPO ETF
AenaABN AmroJapan Post Holdings and Japan Post BankWorldpayKyushu Railway
The Renaissance ETF is tiny, like First Trust's, at $2 million in assets. Smith said one reason the international IPO ETFs have struggled to gain assets in the lack of long-term track records. The Renaissance ETF will have a three-year track record in October, and three years of performance is considered a minimum for many investors to consider a fund.
Nadig and others worry that for all the opportunity to be had in overseas IPOs, the ETFs are too small. "Buyer beware because of small trades," he said. Rosenbluth added that the ETF's size makes it more at risk for being closed, though the companies held in the fund are liquid and will be around long-term.
Zacks Investment Research director of ETF Research Neena Mishra also worries that the fund's expense ratio of 70 basis points is too high (the Renaissance International IPO ETF has an expense ratio of 80 basis points). "IPOs are risky in general too," she said.
But Mishra acknowledged that the global economy is picking up. And that means good news for technology stocks and IPOs — no matter where they are based.
— By Constance Gustke, special to CNBC.com
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7240303f7c82cfc3cfbc49f75da14a1e | https://www.cnbc.com/2017/04/11/iphone-8-buzz-hurting-smartphone-sales-trendforce-says.html | The buzz around the iPhone 8 is already hurting sales of rival smartphones | The buzz around the iPhone 8 is already hurting sales of rival smartphones
Tim CookAndrew Burton | Getty Images
Apple doesn't even need to have a new phone on the market to affect sales from its competitors.
A report from TrendForce published on Tuesday says that buzz around the iPhone 8 is already negatively affecting pre-orders for Samsung's new Galaxy S8 and Galaxy S8+.
"Samsung has also released its flagship device for the year Galaxy S8 this second quarter," TrendForce said. "However, the high-end model is expected to make limited sales contribution because the buzz surrounding the next-generation iPhone devices is dampening demand for products from non-Apple vendors."
TrendForce said it expects Samsung to post flat growth as a result.
On Monday, however, Samsung said that preorders for the Galaxy S8 and Galaxy S8+ are already outpacing early orders for the Galaxy S7 and Galaxy S7+, which were launched before Samsung's ill-fated Galaxy Note 7 last summer.
The company said its Galaxy S8+ is clearly the more popular model among early buyers in the United States. The Galaxy S8 may be an early success, but TrendForce doesn't see how Samsung can maintain that momentum with the iPhone 8 looming.
"The market demand going into the second quarter is expected to remain relatively weak as consumers are holding off their purchases in anticipation of the 10th anniversary iPhone devices that will arrive in the third quarter," TrendForce said.
"Smartphone sales will be fairly lackluster until the second half of this year. TrendForce estimates that the global smartphone production volume for this second quarter will register a modest single-digit growth versus the preceding three-month period."
TrendForce still ranks Samsung as the world's top smartphone brand by market share, with a 26.1 percent slice of the pie, followed by Apple with 16.9 percent of the global smartphone market. Huawei, Oppo, BBK/Vivo and LG round out the top six makers by market share.
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f87efd1efcd8999df9b1ecd093b5e56e | https://www.cnbc.com/2017/04/11/mattis-no-doubt-syrian-regime-was-responsible-for-chemical-attack.html | Mattis says 'there is no doubt' the Syrian government was responsible for chemical attack | Mattis says 'there is no doubt' the Syrian government was responsible for chemical attack
VIDEO0:3800:38Putin says watch out for a "fake" gas attack in SyriaNews Videos
Defense Secretary James Mattis said Tuesday "there is no doubt" the Syrian government led by President Bashar Assad is responsible for chemical weapons last week that killed more than 100 people.
"This military action demonstrates that the United States will not passively stand by while Assad blithely ignores international law and employs chemical weapons he had declared destroyed," said Mattis, speaking at a briefing at the Pentagon. "The Syrian regime should think long and hard before it again acts so recklessly in violation of international law against the use of chemical weapons."
Last week, the U.S. military launched a missile strike against a Syrian government airfield in response to the chemical weapons used against civilians. Mattis said the U.S. was aware there were Russians at the Syrian base so the U.S. military "took appropriate actions to ensure no Russians were injured in the attack."
"We have gone back through and looked at all the evidence we can and it's very clear who planned this attack, who authorized this attack and who conducted this attack itself," said Mattis. But he stopped short of saying the Russians had advance notice of the chemical weapons attack.
The intent of the Syrian attack was "to stop the cycle of violence into an area," said the Defense secretary, adding that "even in World War II chemical weapons were not used on battlefields. Even in the Korean War, they were not used on battlefields."
The U.S. military policy in Syria hasn't changed and the priority remains the defeat of ISIS, or the Islamic State.
"ISIS represents a clear and present danger and immediate threat to Europe and ultimately a threat to the United States homeland," he said.
Army Gen. Joseph Votel, commander of the U.S. Central Command, provided detail at the presser on the Syrian strike at the Shayrat airfield and said the goal was to eliminate the chemical weapons capability, including aircraft, fuel and supplies that provided offensive military capacity for the Assad regime. "We did not deliberately target personnel in these strikes," Votel said.
According to Votel, the U.S. military targeted 59 locations at the Syrian government's Shayrat airfield and struck 57 of those targets. He said the U.S. believes the airfield was the launching point for last week's chemical attack.
Votel wouldn't comment on plans for any additional troop strength in the region. There are already believed to be at least 900 U.S. troops in Syria fighting ISIS, which includes the addition of around 400 troops added last month.
Watch: Strategy should include 'safe zones'
VIDEO3:2403:24Trump's Syria strategy should strive for 'safe zones': ExpertSquawk Box
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f8eaa07160677eb67c73ce0f911fd455 | https://www.cnbc.com/2017/04/11/north-korea-calls-us-aircraft-carrier-dispatch-outrageous.html | North Korea state media warns of nuclear strike if provoked as US warships approach | North Korea state media warns of nuclear strike if provoked as US warships approach
VIDEO0:3700:37North Korea is warning the US of a nuclear strikeNews Videos
North Korean state media on Tuesday warned of a nuclear attack on the United States at any sign of a U.S. pre-emptive strike as a U.S. Navy strike group led by a nuclear-powered aircraft steamed towards the western Pacific.
Tension has escalated sharply on the Korean peninsula with talk of military action by the United States gaining traction following its strikes last week against Syria and amid concerns the reclusive North may soon conduct a sixth nuclear test.
North Korea's official Rodong Sinmun newspaper said the country was prepared to respond to any aggression by the United States.
"Our revolutionary strong army is keenly watching every move by enemy elements with our nuclear sight focused on the U.S. invasionary bases not only in South Korea and the Pacific operation theater but also in the U.S. mainland," it said.
South Korean acting President Hwang Kyo-ahn warned of "greater provocations" by North Korea and ordered the military to intensify monitoring and to ensure close communication with the United States.
"It is possible the North may wage greater provocations such as a nuclear test timed with various anniversaries including the Supreme People's Assembly," said Hwang, acting leader since former president Park Geun-hye was removed amid a graft scandal.
VIDEO2:1702:17'The era of strategic patience with North Korea is over'Street Signs Asia
The North convened a Supreme People's Assembly session on Tuesday, one of its twice-yearly sessions in which major appointments are announced and national policy goals are formally approved.
But South Korean officials took pains to quell talk in social media of an impending security crisis or outbreak of war.
"We'd like to ask precaution so as not to get blinded by exaggerated assessment about the security situation on the Korean peninsula," Defense Ministry spokesman Moon Sang-kyun said.
Saturday is the 105th anniversary of the birth of Kim Il Sung, the country's founding father and grandfather of current ruler, Kim Jong Un.
A military parade is expected in the North's capital, Pyongyang, to mark the day. North Korea often also marks important anniversaries with tests of its nuclear or missile capabilities in breach of U.N. Security Council resolutions.
Syrian President Bashar al-Assad sent a message of congratulations to mark the event, lambasting "big powers" for their "expansionist" policy.
"The friendly two countries are celebrating this anniversary and, at the same time, conducting a war against big powers' wild ambition to subject all countries to their expansionist and dominationist policy and deprive them of their rights to self-determination," Russian news agency Tass quote the message as saying.
The North's foreign ministry, in a statement carried by its KCNA news agency, said the U.S. navy strike group's approach showed America's "reckless moves for invading had reached a serious phase."
"We never beg for peace but we will take the toughest counteraction against the provocateurs in order to defend ourselves by powerful force of arms and keep to the road chosen by ourselves," an unidentified ministry spokesman said.
North Korea and the rich, democratic South are technically still at war because their 1950-53 conflict ended in a truce, not a peace treaty. The North regularly threatens to destroy the South and its main ally, the United States.
Delegates from around the North have been arriving in Pyongyang ahead of the assembly session. They visited statues of previous leaders Kim Il Sung and his son, Kim Jong Il, state media reported.
North Korea is emerging as one of the most pressing foreign policy problems facing the administration of U.S. President Donald Trump. It has conducted five nuclear tests, two of them last year, and is working to develop nuclear-tipped missiles that can reach the United States.
The Trump administration is reviewing its policy towards North Korea and has said all options are on the table, including military strikes, but U.S. officials said non-military action appears to be at the top of the list if any action were to be taken.
The U.S. Navy strike group Carl Vinson was diverted from planned port calls to Australia and would move toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters over the weekend.
U.S. officials said it would still take the strike group more than a week to arrive near the Korean peninsula.
Trump and his Chinese counterpart, Xi Jinping, met in Florida last week and Trump pressed Xi to do more to curb North Korea's nuclear program.
China and South Korea agreed on Monday to impose tougher sanctions on North Korea if it carried out nuclear or long-range missile tests, a senior official in Seoul said.
On Tuesday, a fleet of North Korean cargo ships was heading home to the port of Nampo, the majority of it fully laden, after China ordered its trading companies to return coal from the isolated state to curb coal traffic, sources with direct knowledge said.
The order was given on April 7, just as the U.S. and Chinese leaders were set for the summit where the two agreed the North Korean nuclear advances had reached a "very serious stage," U.S. Secretary of State Rex Tillerson said.
Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on Feb. 26, cutting off the country's most important export product.
As well as the anniversary of Kim Il Sung's birth, there are several other North Korean anniversaries in April that could be opportunities for weapon tests, South Korean officials have said.
The North is seen ready to conduct its sixth nuclear test at any time, with movements detected by satellites at its Punggye-ri nuclear test site.
VIDEO1:1501:15This former defense secretary is terrified of nuclear catastrophePolitics
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b47f4d27ee3127d63f9463330c96831e | https://www.cnbc.com/2017/04/11/north-korean-ships-head-home-after-china-orders-coal-returned.html | North Korean ships head home after China orders coal returned | North Korean ships head home after China orders coal returned
REUTERS | Yuri Maltsev
A fleet of North Korean cargo ships is heading home to the port of Nampo, the majority of it fully laden, after China ordered its trading companies to return coal from the isolated country, shipping data shows.
Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on Feb. 26, cutting off the country's most important export product.
To curb coal traffic between the two countries, China's customs department issued an official order on April 7 telling trading companies to return their North Korean coal cargoes, said three trading sources with direct knowledge of the order.
U.S. President Donald Trump and Chinese President Xi Jinping were discussingNorth Korea at Trump's Mar-a-Lago resort on April 7.
Shipping data on Thomson Reuters Eikon, a financial information and analytics platform, shows a dozen cargo ships on their way to North Korea's main west coast port of Nampo, almost all carrying cargoes from China.
Chinese authorities did not respond to requests for official comment.
The Trump administration has been pressuring China to do more to rein in North Korea, which sends the vast majority of its exports to its giant neighbour across the Yellow Sea.
But U.S. Secretary of State Rex Tillerson has said last week's U.S. military strike against Syria over its alleged use of chemical weapons was a warning to other countries, including North Korea, that "a response is likely" if they pose a danger.
As a U.S. Navy strike group headed to the region in a show of force, China and South Korea agreed on Monday to slap tougher sanctions on North Korea if it carries out nuclear or long-range missile tests, a senior official in Seoul said.
North Korea marks several major anniversaries this month and often marks theoccasions with major tests of military hardware.
A source at Dandong Chengtai, one of China's biggest buyers of North Korean coal, said the company had 600,000 tonnes of North Korean coal sitting at various ports, and a total of 2 million tonnes was stranded at Chinese ports.
Eikon data shows that most of these ships have recently left Chinese coal ports, including Weihai and Peng Lai, returning to North Korea full or mostly filled with cargo.
Last month, Reuters reported that Malaysia briefly prevented a North Korean ship carrying coal from China from entering its port in Penang because of a suspected breach in sanctions. The ship was eventually allowed to unload its 6,300 metric tonnes of anthracite coal.
North Korea is a significant supplier of coal to China, especially of the type used for steel making, known as coking coal.
To make up for the shortfall from North Korea, China has ramped up imports from the United States in an unexpected boon for U.S. President Donald Trump, who has declared he wants to revive his country's struggling coal sector.
Eikon data shows no U.S. coking coal was exported to China between late 2014 and 2016, but shipments soared to over 400,000 tonnes by late February.
This trend was exacerbated after cyclone Debbie knocked out supplies from the world's top coking coal region in Australia's state of Queensland, forcing Chinese steel makers to buy even more U.S. cargoes.
The other big coking coal supplier that has ramped up exports to China since the ban on North Korean cargoes is Russia.
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7d42c8b5d221f57048353a9f687d2167 | https://www.cnbc.com/2017/04/11/pr-nightmare-catches-up-with-united-investors-as-shares-slide.html | United shares slide as PR nightmare catches up with investors | United shares slide as PR nightmare catches up with investors
VIDEO1:1901:19Man forcibly removed from United Airlines flight Digital Original
Shares of United Continental fell by 2 percent Tuesday as outrage over Dr. David Dao of Kentucky being dragged off an overbooked flight finally caught up to the stock. The shares were among the worst performers in the S&P 500.
The airline's stock, however, climbed nearly 1 percent Monday, not reacting much initially to the internet's response.
Videos of the incident went viral on social media and prompted CEO Oscar Munoz to apologize for having to "re-accommodate" customers after a two-hour delay. The confrontation happened on a United Express flight operated by Republic Airways.
Munoz issued a second apology Tuesday afternoon in which he said the company "will fix this." "It's never too late to do the right thing. I have committed to our customers and our employees that we are going to fix what's broken so this never happens again," he said. The company's stock traded off the lows of the day amid the second Munoz apology.
Overnight, though, even more graphic videos showing Dao being dragged off the flight, covered in blood, triggered further outrage on social media on China.
Although the doctor's identification as ethnic Chinese has not be confirmed, the top trending topic on Tuesday on microblog Weibo, China's take on Twitter, was #UnitedAirlinesforcespassengeroffplane.
"This went to the next level when the CEO and the [United] executives began to respond," said Andy Swan of LikeFolio, which monitors social media for financial applications. "They threw gasoline on a fire."
VIDEO2:4502:45Social media 'tears apart' United's response to passenger's rough treatmentSquawk on the Street
Instead of viewing what transpired on a United plane Sunday evening as a "one-off" incident, now United's shareholders are questioning the competence of management in handling crisis scenarios, Swan said, hence why the stock is starting to drop.
"This is an enormous deal for shareholders," he said.
The apology note issued by CEO Munoz on Monday and then his letter to employees that evening almost "restarted the crisis," Swan added, saying he watched mentions of United skyrocket on social media for a second and a third time.
Munoz doubled down in the letter to employees, saying those involved "followed established procedures." He called the passenger "disruptive and belligerent." In one of the videos, the passenger said he was a doctor and had to return home to treat patients on Monday.
"When management stepped out — and [they did it] in most offensive way possible — you started to see negative mentions surge," he said. "[United] invited some really negative stuff on themselves."
—CNBC's Huileng Tan contributed to this report.
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b0703aafbcdaf36ac9abdae5644f475c | https://www.cnbc.com/2017/04/11/this-is-where-the-smart-money-is-going-trader-says.html | This is where the 'smart money' is going, trader says | This is where the 'smart money' is going, trader says
VIDEO3:2703:27Closing Bell Exchange: There is volatility buildingClosing Bell
Now is a good time to be looking at emerging markets since their valuations are attractive relative to the U.S. market, strategist Luciano Siracusano told CNBC on Tuesday.
It's a trade that's been picking up steam — with more than $11 billion flowing into emerging markets ETFs in the first quarter, he pointed out.
"People are hedging because if you don't get a Trump fiscal plan, the other side of that trade really is emerging markets," the chief investment strategist for WisdomTree Investments said in an interview with "Closing Bell."
"It means likely interest rates don't go higher in the U.S., dollar doesn't get stronger. EM currencies are likely to continue to rally in that kind of environment and that's good for EM equity."
An man counts U.S. dollar notes as he poses for a picture at the local currency exchange shop in Mumbai, India on June 26, 2013.Punit Paranjpe | AFP | Getty Images
Trader Peter Costa, president of Empire Executions and a CNBC contributor, said that would be his play.
"That's where money is going — and smart money. It's not the dumb money. There's dumb money out there. The dumb money was the money that was buying a couple of weeks ago," he told "Closing Bell."
In fact, he has been saying for months the market needs to correct. And he thinks geopolitical risks, like tensions with North Korea, are still an issue.
"You look at the news overnight … they're all saying there's more and more tension. The geopolitical risk is expanding, it's growing. And I still think it is. I still that's going to be something we're going to have to watch," Costa warned.
U.S. stocks closed lower on Tuesday as those geopolitical concerns weighed on investors, who pushed safe-haven assets higher.
— CNBC's Fred Imbert contributed to this report.
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7bab92bd9097cff77da241f3f8e79124 | https://www.cnbc.com/2017/04/11/three-charts-that-show-why-airlines-overbook-flights.html | Three charts that show why airlines overbook flights | Three charts that show why airlines overbook flights
Robert Alexander | Getty Images
It all started with a crowded flight in Chicago, but the ensuing controversy may have many asking why airlines overbook their flights, risking the ire of their customers.
On Monday, a video began circulating of a passenger being forcibly removed from an overbooked United Express flight operated by Republic Airways. The reaction was a storm of criticism that has now shaved as much as 4 percent from United Continental shares Tuesday.
Watch: Business community weighs in on United's PR blunder
VIDEO1:3601:36The business community weighs in on United's latest PR blunderDigital Original
There are good reasons for the industry practice, and as the following charts from the Bespoke Investment Group show, it's likely to continue.
Overbooking flights is fairly standard in the airline industry and completely legal. Airlines often engage in this practice to make up for customers who do not show up for their scheduled flight, trying to ensure that their flights are as close to full capacity as possible.
As shown in the chart above, the percentage of seats filled — or the load factor — for domestic flights has remained fairly flat at 85 percent in recent years, Bespoke said. This means that most planes within the U.S. fly close to their full capacity.
This strong demand has helped to boost airline ticket prices — especially compared with other consumer goods, as depicted above.
The chart shows that airlines had struggled for three decades as increased competition and deregulation weakened airline fares. However, post- 9/11, the dynamics began to shift and ticket prices rose faster than the rate of inflation as demand for the seats increased and the industry was reorganized.
The primary reason for this phenomena is the reduction in capital expenditures by the airline industry, Bespoke said. Airlines simply do not want to spend money on new equipment to then only have flights that are half full. The companies would rather wait to add to their fleets until they are sure that there is enough demand to fill the seats.
"In other words: crowded flights and occasional conflict over seats is likely here to stay. Bad for travelers, but good for the airlines," Bespoke said in a note on Tuesday.
Watch: DoT investigating how United handled situation
VIDEO3:0603:06DoT investigating how United handled bumpingSquawk Alley
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a38ee9e7522103b5725582726f26daf9 | https://www.cnbc.com/2017/04/11/toshiba-files-earnings-without-auditor-endorsement.html | Toshiba will do utmost to avoid Tokyo delisting: CEO | Toshiba will do utmost to avoid Tokyo delisting: CEO
Signage for Toshiba is displayed atop the company's headquarters as a red traffic light stands illuminated in Tokyo.Kiyoshi Ota | Bloomberg | Getty Images
Japan's Toshiba Corp will make every effort to avoid being delisted by the Tokyo Stock Exchange, the company's CEO said on Tuesday, after releasing delayed third-quarter results with a disclaimer from its auditor.
"The decision on any delisting is for the stock exchange to make," Satoshi Tsunakawa said at a press briefing in Tokyo. "We will do our utmost to avoid it."
Toshiba filed twice-delayed business results on Tuesday without an endorsement from its auditor, increasing the likelihood that the nuclear-to-TVs conglomerate will be delisted.
The filing carried a disclaimer from auditor PricewaterhouseCoopers (PwC) Aarata that it was unable to form an opinion of the results. The move is unprecedented for a major Tokyo-based firm and puts the Tokyo Stock Exchange center stage as it weighs the pros and cons of forcing Toshiba to delist.
Failing to act tough with Toshiba would bring into question authorities' credibility in maintaining standards for investors but a delisting would complicate the crisis engulfing the firm, increasingfinancing costs and exposing it to further lawsuits from angry shareholders.
Accountants have been questioning the numbers at U.S. nuclear subsidiary Westinghouse Electric, where massive cost overruns at four nuclear reactors under construction in the Southeastern United States have forced its Japanese parent to estimate a $9 billion annual net loss and take drastic measures.
PwC is questioning not only recent results but also probing the books at Westinghouse for the business year through March 2016, sources have said, declining to be identified as they were not authorised to speak on the matter publicly.
Toshiba has put up its prized memory chip unit and other assets for sale, Westinghouse has filed for Chapter 11 protection from creditors and may also be sold.
The company also said on Tuesday it was considering an initial public offering for smart meter group Landis+Gyr. Reuters last month reported that it was preparing a potential $2 billion divestment of the Swiss-based business.
The decision on whether to delist Toshiba or not now rests with the bourse. Toshiba has been on its supervision list since mid-March after failing to clear up concerns about its internal controls a year and a half after a 2015 accounting scandal.
There are no set rules governing how long the bourse should take to come to a conclusion.
Separately, Taiwan's Foxconn has offered up to 3 trillion yen ($27 billion) for the chip business, nearly $10 billion higher than Toshiba's own estimate, The Wall Street Journal reported, citing people familiar with the matter.
Such a proposal by Foxconn would also put Japanese regulators in a tough position as they have vowed to vet bidders to block a sale to investors it deems a risk to national security. Foxconn is considered such a risk because of its close ties to China.
Japan's trade minister Hiroshige Seko repeated on Tuesday that Toshiba's chip technology was important, not only for Japan's growth strategy, but also in terms of jobs and information security.
"For those reasons, we continue to carefully monitor Toshiba's business conditions and sale of its chip business," Seko said.
Toshiba declined to comment on its chips business and Foxconn, formally known as Hon Hai Precision Industry, also declined to comment.
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e6a187be882d329e53c47a0855452ac5 | https://www.cnbc.com/2017/04/11/united-ceo-munoz-apologizes-in-response-to-dragged-passenger.html | United CEO Munoz apologizes in response to dragged passenger | United CEO Munoz apologizes in response to dragged passenger
VIDEO4:0904:09United CEO: I'm sorry. We will fix this.Closing Bell
United Airlines CEO Oscar Munoz issued an apology on Tuesday amid outrage over passenger Dr. David Dao of Kentucky being dragged off an overbooked flight.
In his latest statement Tuesday, Munoz expressed his sympathies and apologized, saying that a "thorough review" of the situation and their policies will take place, the results of which will be shared by Apr. 30.
"The truly horrific event that occurred on this flight has elicited many responses from all of us: outrage, anger, disappointment. I share all of those sentiments, and one above all: my deepest apologies for what happened. Like you, I continue to be disturbed by what happened on this flight and I deeply apologize to the customer forcibly removed and to all the customers aboard. No one should ever be mistreated this way," Munoz said in a statement.
"I want you to know that we take full responsibility and we will work to make it right," he added.
Also Tuesday, attorneys for Dao issued a statement on behalf of the doctor and his family.
"The family of Dr. Dao wants the world to know that they are very appreciative of the outpouring of prayers, concern and support they have received. Currently, they are focused only on Dr. Dao's medical care and treatment," said Chicago attorney Stephen Golan of Golan Christie Taglia, adding that Dao's family has asked for privacy.
Dao, who is being treated for his injuries at a Chicago hospital, is also represented by Chicago aviation attorney Thomas Demetrio of Corboy & Demetrio.
VIDEO1:1901:19Man forcibly removed from United Airlines flight Digital Original
Videos of the incident went viral on social media and prompted Munoz to apologize for having to "re-accommodate" customers after a two-hour delay. The confrontation happened on a United Express flight operated by Republic Airways.
The Senate Commerce Committee sent the United Airlines CEO a letter late Tuesday, asking the company to supply them with "a full accounting of this incident" and answers to detailed questions by April 20. The committee also sent a similar letter to the commissioner of the Chicago Department of Aviation, Ginger Evans.
"We recognize the importance of having passengers comply with lawful crew instructions, but it is hard to believe that some combination of better planning, training, communication, or additional incentives would not have mitigated this incident or avoided it altogether," the senators wrote to Munoz.
"To date, United Airlines' (UA) explanation of the incident has been unsatisfactory, and appears to underestimate the public anger about this incident," the letter added.
Rep. Bill Shuster, a Republican who chairs the House Transportation and Infrastructure Committee, released a statement on Tuesday expressing his concern over the situation.
"I am troubled by the incident in Chicago in which a paying customer was forcefully removed from a flight without apparent just cause. This entire situation was poorly managed and avoidable," Shuster said. "No one should ever be treated this way. Our committee is actively monitoring the situation and is in regular contact with the Department of Transportation."
Shares of United closed down more than one percent Tuesday. Earlier, the shares were among the worst performers in the S&P 500.
Watch: Senate & Commerce Committee seek info on United situation
VIDEO1:1301:13Senate Commerce Committee seeks info on United situationFast Money
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ef87cec0940c07895188204964614cd4 | https://www.cnbc.com/2017/04/12/bitcoin-price-rises-japan-russia-regulation.html | Bitcoin value rises over $1 billion as Japan, Russia move to legitimize cryptocurrency | Bitcoin value rises over $1 billion as Japan, Russia move to legitimize cryptocurrency
VIDEO0:4200:42Bitcoin prices are on the riseNews Videos
is up nearly $100 in the past week, hitting levels not seen since mid-March after Japan legalized the cryptocurrency as a payment method and Russia is seeking to regulate it too.
The digital currency was trading at around $1,223.04 at the time of publication, up from highs of $1,124.88 on April 5, and hitting prices not seen since March 16, according to Coindesk data. Bitcoin's market capitalization has risen from $18.34 billion on April 5, to $19.5 billion on Wednesday, according to Coinmarketcap.com data.
Bitcoin has suffered a recent dip in price thanks to a debate over the future of its underlying technology, but the recent support appears to have come from Japan.
VIDEO4:4404:44What is Blockchain?CNBC Explains
Earlier this month, Japan began accepting bitcoin as legal currency with major retailers backing the new law. Consumer electronics retailing giant Bic Camera began accepting bitcoin last week.
Bitcoin trading in Japanese yen is the second-most liquid market globally, according to data compiled by cryptocurrency trading platform Gatecoin.
"The Japan virtual currency act has likely had a major impact, as there has been a lot of buzz in Japanese media over the ruling over the last few months," Aurélien Menant, founder and CEO of Gatecoin, told CNBC by email.
A bitcoin token stands next to a collection of U.S. one dollar bills in this arranged photograph in London, U.K., on Wednesday, Jan. 4, 2017.Chris Ratcliffe | Bloomberg | Getty Images
At the same time, Russia, one of the strongest opponents of bitcoin is seeking to regulate the digital currency. Russian Deputy Finance Minister Alexey Moiseev told Bloomberg in an interview this week that the authorities hope to recognize bitcoin and other cryptocurrencies as a legal financial instrument in 2018 in a bid to tackle money laundering.
"The state needs to know who at every moment of time stands on both sides of the financial chain," Moiseev told Bloomberg.
"If there's a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations."
Increasing state regulation around bitcoin could make the cryptocurrency an attractive investment for investors who previously shied away from it due to the high risk and price swings.
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6ae288df324de177e8c962755a0384c1 | https://www.cnbc.com/2017/04/12/cramer-sums-up-the-6-things-causing-the-markets-spring-slowdown.html | VIDEO3:5503:556 things causing the spring slowdownMad Money with Jim Cramer
For Jim Cramer, Thursday's big bank earnings reports could not be more important to this ailing market.
For over 36 years, the stock market has edged up, resulting in overall higher prices and an eight-year streak of bullish sentiment.
"But every big move, every move that had really any impact, always had the banks as one of the major leadership groups," the "Mad Money" host said.
Bank stocks exploded after the election, but since March, weak employment numbers and the GOP's health care defeat dragged the big banks' shares down.
Watch the full segment here:
VIDEO11:5911:59Cramer sums up the 6 things causing the market's spring slowdownMad Money with Jim Cramer
"Once people got their head[s] around the idea that the president's economic agenda was coming slower than we'd like ... I think that directly contributed to a decrease in lending," Cramer said. "I wouldn't be surprised if it hurts the banks tomorrow when they report."
Interest rates also tanked, a signal that the economy was indeed slowing and that the Federal Reserve could hold off on raising rates again, a major headwind for bank earnings.
So reason No. 1 for a slumping market is the loss of bank stocks' leadership, an effect stemming from stasis in Washington and contingent on Thursday's earnings reports.
"What business can really make a plan for the future if it doesn't even know what health care is going to cost them, let alone repatriation and corporate taxes?" Cramer asked.
Reason No. 2 is turmoil on the foreign policy front, a surefire path to putting the brakes on economic growth. Cramer said that while straining relations with Russia over Syria and with China over North Korea are significant issues, they are obstacles to President Donald Trump's pro-growth mission.
"Don't get me wrong. These are really important issues," Cramer said. "[But] foreign policy seems to be trumping 'America First.'"
Reason No. 3 is that stocks are pricey, which could obstruct future earnings reports, Cramer said.
"We may be on incredibly uncertain footing. Why? Because stocks are historically quite expensive, meaning if you compare where they stand versus how the companies are supposed to do, their price-to-earnings multiples, which is what we use to compare apples to apples, might be too high," he said.
Reason No. 4 reflects a rapidly changing domestic economy, even though overall global expansion can help U.S. multinationals even in a stateside slowdown.
"Brick-and-mortar retailers are being crushed by Amazon and the prospect of Paul Ryan's fascination with a regressive national sales tax on goods from overseas, which means pretty much everything that we buy at retail," Cramer said.
Reason No. 5? Autos. Cramer referenced a USA Today piece that lists the car industry's biggest hindrances, including a pileup of unsold cars, discounts wreaking havoc on companies' bottom lines, and loans getting longer even as production continues.
"Automobiles are a gigantic part of the economy. Looks like they've peaked," Cramer said.
Finally, reason No. 6 is a case of oversupply in stocks. A deluge of IPOs is clogging this holiday-shortened week, and the market now has more sellers than buyers, which leads to widespread markdowns, now a daily practice.
So whether strong earnings reports from JP Morgan, Wells Fargo and Citigroup or progress coming from Washington lift the market's spirits, this inflection point needs resolution.
"For the moment, we're at a level where things need to go very right for stocks to move higher, and those long odds make for a, yes, suboptimal start to earnings season," Cramer said.
Questions for Cramer? Call Cramer: 1-800-743-CNBC
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Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com
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1e22aa16e5a4cf8f2e040336bffde5b5 | https://www.cnbc.com/2017/04/12/immigrant-households-impact-success-of-real-estate-market-says-report.html | Immigrant households impact success of real estate market, says report | Immigrant households impact success of real estate market, says report
A contractor works on the basement of a home under construction in the Toll Brothers Regency at Palisades community in Charlotte, North Carolina.Luke Sharrett | Bloomberg | Getty Images
The United States is famously a nation built by immigrants. And according to a new study by the Urban Land Institute, Home in America: Immigrant Housing Demand, they are poised to play an increasingly large role in the real estate and housing industry in the next few decades.
The study analyzes nationwide data from the U.S. Census Bureau's American Community Survey to provide broad, national trends as well as deep dives into five different cities (San Francisco, Buffalo, Houston, Minneapolis, and Charlotte). It makes that case that, due to the steady growth in immigration, immigrants and the success of the housing market are intertwined.
As the report cites, the Harvard Joint Center for Housing Studies estimated that between 2015 and 2025, the United States will add nearly 12.5 million households total; if trends hold, that means 3.5 million new immigrant households. Without sustained immigration, the report notes, "the housing market could weaken, and in many markets the impact could be dramatic."
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Here are some other key takeaways from the report, and how the immigrant population may impact real estate trends.
Immigrants could one day be "the primary driver of demand"
While the desire for immigrants to buy a home and achieve the American Dream has always been part of the stereotypical American story, stats on recent immigrant homeownership show a significant impact. According to ULI research, over the last two decades, 28 percent of all household growth in the United States, and nearly all the growth in households headed by someone under 45 comes from immigrant families.
Immigrants have also been crucial to the housing market's recovery after the 2008 downturn. Even more telling, a 2014 study by the Bipartisan Policy Commission, a D.C. think tank, concluded that "if current birth rate trends continue, immigrants and their children will be the source of almost all U.S. population growth and, by extension, the primary driver of demand for new residential construction."
Immigrants are increasingly moving to the suburbs
Since 2000, the shift in settlement patterns away from cities and towards jobs and more affordable housing in the suburbs, has been noteworthy. In 2000, just about half of the country's foreign-born population lived in the suburbs. In 2013, it was 61 percent nationally, and in 20 major metropolitan areas, the suburban immigrant population has doubled.
According to the ULI, some of the regions with the fastest-growing immigrant populations were "remerging gateways," which they defined as cities seeing a recent resurgence in new arrivals after a 20th century lull. Examples include Baltimore, Denver, Minneapolis, Seattle, and Tampa Bay.
The reports posits that new arrivals, and communities that seek to attract new immigrants, could be key to fueling the revitalization of economically challenged suburbs. The declaration that the suburbs are deadcould be premature.
Homeownership is growing among the immigrant population
Immigrants do have a significantly lower rate of homeownership, 50.5 percent compared to 65.9 shown by the native-born population. But that gap continues to close, with the homeownership among foreign-born Americans increasing by 2.3 percent between 1994 and 2015 (the rate was unchanged for native-born Americans).
Cities should plan for growth
With a new influx of immigrants, especially in suburbs, municipal planning can be challenging, especially in areas with few supports in place [what does this mean?], or little history as immigrant centers. Investing in housing, retail, recreational, and cultural amenities now, including social and educational programs, can help areas benefit from the potential of their inevitable new neighbors.
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967193157bf5870744a60ea80c27f0d8 | https://www.cnbc.com/2017/04/12/tesco-recovery-gains-momentum-with-profit-jump.html | Tesco recovery now ahead of target with board unanimous over Booker deal, says CFO | Tesco recovery now ahead of target with board unanimous over Booker deal, says CFO
VIDEO0:4700:47We’ve made a good recovery: Tesco CFO Squawk Box Europe
Tesco, Britain's biggest retailer, beat forecasts for full-year profit, showing its recovery is picking up pace and potentially giving a boost to its stuttering campaign to win investor backing for a takeover of wholesaler Booker.
The supermarket group said on Wednesday it made an operating profit before exceptional items of 1.28 billion pounds ($1.60 billion) in the year to Feb. 25 2017.That was ahead of analysts' average forecast of 1.26 billion pounds, according to Reuters data, and an increase of 30 percent on the 944 million pounds made in 2015-16. Alan Stewart, chief financial officer (CFO) at Tesco, told CNBC Wednesday that the U.K.-based firm had made "a good step" on its road to recovery and was now "slightly ahead of target".The stronger-than-expected results could help soothe concern from Tesco's shareholders. Last month, two of the U.K. grocer's biggest shareholders urged the supermarket group to drop its attempt to buy Booker, saying it was overpaying and the deal would be a distraction from its turnaround plan."We will talk with all of our shareholders, we'll go through the competition process and we're actively engaged with that ... Once we get clarification of what that means we will then go to our shareholders and ask them to approve the merger," Stewart told CNBC.Board is unanimously in favour of Booker deal
VIDEO1:5901:59Tesco 'fully respects' Cousins decision to depart: CFOSquawk Box Europe
The surprise takeover bid for Booker is arguably Tesco CEO Dave Lewis's most audacious move since joining the supermarket group shortly before an accounting scandal plunged the firm into its worst crisis in its near 100-year history.Tesco's attempted acquisition of Booker occurred in conjunction with the resignation of Richard Cousins, the former senior independent director of the company who reportedly disagreed with the takeover."Richard made his own decision ... The clarity with which he formed his views and communicated those is one which everybody is now able to see but the board is unanimously in favor of the transaction and we will take it from here as it develops," Stewart said.Meanwhile, Tesco's shares hit the bottom of the European benchmark shortly after Wednesday's open as details of a regulatory fine seemed to hamper profits for the U.K. grocer.
VIDEO3:2203:22Tesco: Confident in progress towards reducing our costs by £1.5 billionSquawk Box Europe
The supermarket group said U.K. sales at stores open over a year rose 0.7 percent in the 13 weeks to Feb. 25, its fiscal fourth quarter - a fifth straight quarter of underlying growth.
"We are confident that we can build on this strong performance in the year ahead," said Chief Executive Dave Lewis.By 2020, Lewis has said he wants Tesco to earn between 3.5 pence and 4 pence of operating profit for every 1 pound spent by shoppers. The U.K. grocer would need to witness an increase from 2.3 pence in 2016 to achieve this aim though, as sales increase and £1.5 billion of costs are taken out of the business. Stewart argued the group were ahead of schedule.
—Reuters contributed to this report.
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93f038c9af4c3de0d9e86a011c77dd31 | https://www.cnbc.com/2017/04/12/trump-calls-united-incident-horrible.html | Trump calls United incident 'horrible' | Trump calls United incident 'horrible'
VIDEO1:1701:17Trump: Airlines shouldn't be prevented from oversellingClosing Bell
President Donald Trump called the forced removal of a passenger from a United Airlines flight "horrible," according to a report from The Wall Street Journal.
Trump said there shouldn't be a cap on the amount of incentives airlines offer to persuade passengers to volunteer their seats on overbooked flights.
"You know, there's a point at which I'm getting off the plane — seriously," Trump said according to the Journal.
"They should have gone up higher. But to just randomly say, 'You're getting off the plane,' that was terrible," he added.
Trump's remarks on the incident come after United CEO Oscar Munoz vowed earlier Wednesday that the situation would "never happen again."
Meanwhile, the passenger in question, Dr. David Dao, began legal proceedings over the incident, while the Chicago Department of Aviation said it placed two more of its officers on leave.Read more on this report at The Wall Street Journal.
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1619076bf5392d9e320fff192792493b | https://www.cnbc.com/2017/04/12/trump-just-changed-his-mind-on-several-major-issues-including-nato.html | Trump just changed his mind on several major issues, including NATO | Trump just changed his mind on several major issues, including NATO
VIDEO1:4601:46Trump: NATO is no longer obsolete Closing Bell
President Donald Trump backtracked on a handful of major issues Wednesday, from his opinion of the North Atlantic Treaty Organization to the status of Fed Chair Janet Yellen, adding to markets' anxieties and prompting swift criticism by a top Democrat.
In a joint press conference with Jens Stoltenberg, the secretary general of NATO, Trump reversed his position on the group, saying it is no longer obsolete. Trump acknowledged that he had previously complained that NATO didn't do more in the fight against terrorism.
"They made a change and now they do fight terrorism. I said it was obsolete. It's no longer obsolete," Trump said.
But that wasn't the president's only about-face on Wednesday.
He told The Wall Street Journal he won't label China a currency manipulator — a drastic change from his previous stance.
In turn, Chuck Schumer, the leading Democrat in the Senate, slammed Trump for his reversal on currency manipulation, lobbing many of the same criticisms the president once made of Barack Obama.
"China steals our intellectual property, doesn't let American companies compete in China, and has manipulated their currency causing the loss of millions of jobs," the New York senator said.
In 2012, Trump tweeted that Obama enabled China to "steal even more jobs and money from us" by not calling out currency manipulation.
@realDonaldTrump: Once again Obama fails to classify China as a currency manipulator. He just helped China steal even more jobs and money from us.
While China isn't currently manipulating its currency, Schumer maintained that the country would "as soon as the tide turns."
He said: "When the President fails to label them a currency manipulator, he gives them a green light to steal our jobs and wealth time and time again."
On the first page of Trump's 100-day action plan, the president pledged to direct Treasury Secretary Steve Mnuchin to label China a currency manipulator.
In the same interview with the WSJ, Trump said that he believed the dollar was getting "too strong." His remark sent the currency to session lows.
Trump also told the Journal that he likes and respects Yellen and that she may hold onto her role. The president said "it's very early" in his decision process on whether he would renominate her. Previously, he said she should be "ashamed" of keeping interest rates low.
Trump also told the newspaper that the U.S. Export-Import Bank is a "very good thing," echoing comments he made to Democratic senators in February that indicated he'd support the bank. He previously said he would shut it down.
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dbbe05121b9fd5c6463b89d8d8a62685 | https://www.cnbc.com/2017/04/12/united-airlines-isnt-alone-here-are-some-of-the-worst-pr-disasters.html | Marketing.Media.Money | Marketing.Media.Money
Oscar Munoz, CEO of United Airlines.Adam Jeffery | CNBC
The United Airlines PR fail is one that has prompted the question of whether CEO Oscar Munoz (pictured) should himself be re-accommodated after a passenger was dragged off an overbooked plane and resulted in a stock price fall for parent company United Continental. But it's not the first time a major corporation has found itself in the middle of a publicity nightmare.
Tony Hayward, then CEO of BP, speaks to reporters at Port Fourchon, Louisiana, during the Gulf of Mexico oil disasterJohn Moore | Getty Images
The sinking of oil platform Deepwater Horizon was the worst oil spill ever to hit the U.S. It killed 11, and the share price sank 26 percent between the explosion on April 20 2010 and the same time in 2011. During the crisis, then chief executive Tony Hayward (pictured, center) told reporters: "I want my life back," for which he subsequently apologized.
Gerald Ratner speaks at the Institute of Directors annual convention at the Albert Hall in London, Wednesday, April 27, 2005Graham Barclay | Blomberg News | Getty Images
When Gerald Ratner addressed the U.K.'s Institute of Directors Annual Convention in 1991, he spoke of a retail recession that his jewelry company seemed to be avoiding, with profits of £120 million ($150 million). He told the audience to go ahead and use his tips for success, as long as they didn't try to compete with him.
But he then went on to describe a sherry decanter with glasses and a tray, on sale for £4.95 at his Ratners jewelry shop.
"People say to me, 'how can you sell this for such a low price? I say, 'because it's total crap,'" he went on to state. His comments wiped an estimated £500 million off the value of the business, and Ratner left the following year. The video of his speech is here and the comment comes at three minutes 30.
Travis Kalanick.David Orrell | CNBC
In February, Uber Chief Executive Travis Kalanick had an argument while in the back of…an Uber, telling the driver: "Some people don't like to take responsibility for their own s---. They blame everything in their life on somebody else. Good luck."
Then he apologized, saying on the company's website: "It's clear this video is a reflection of me—and the criticism we've received is a stark reminder that I must fundamentally change as a leader and grow up. This is the first time I've been willing to admit that I need leadership help and I intend to get it."
Domino's Pizza delivery carJoe Raedle | Getty Images
In 2009, a Domino's worker pulled a prank: He put cheese up his nose and waved salami by his butt, with some of the cheese ending up in a sandwich. This was all filmed by a colleague who was encouraging him, and ended up on YouTube.
Not great for Domino's at the time, but both workers were fired and Chief Executive Patrick Doyle had to post a video in response, saying: "We're re-examining all our hiring practices to make sure that people like this don't make it into our stores."
The Volkswagen logo is displayed at Serramonte Volkswagen on November 18, 2016 in Colma, California.Justin Sullivan | Getty Images
The car manufacturer admitted it had used software to manipulate emissions in September 2015, which forced Chief Executive Martin Winterkorn , wiped billions of euros from its market value and saw sales fall 5 percent that year and 8 percent in 2016. VW has had to spend up to $25 billion in the US on claims from owners, dealers and regulators and is now trying to convince Americans to buy its cars with a six-year warranty.
Glazed Krispy Kreme doughnuts.Getty Images
A franchise store in Hull, U.K. advertised an event called "KKK Wednesday," in February 2015. It was meant to stand for Krispy Kreme Klub, but understandably it evoked comparisons to the white supremacist organization. It quickly removed the promotion, apologized, and a spokesperson said: "We do believe this was a completely unintentional oversight on the part of our longtime franchise partners in the U.K."
Ryan LochteTom Pennington | Getty Images
Twelve-time Olympic medalist Ryan Lochte was in bonuses and was banned from competitions until June 2017 after he lied about the extent of a robbery in Rio last year. Local police accused him of making it up as a cover story for the vandalism of a gas station, and the incident caused speculation that he could lose sponsorship deals.
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4482e0afdd7f41a130abfccc808c99ff | https://www.cnbc.com/2017/04/12/where-is-indonesian-e-commerce-headed.html | Where is Indonesian e-commerce headed? | Where is Indonesian e-commerce headed?
VIDEO3:1403:14Indonesia's e-commerce space is looking good, this entrepreneur saysSquawk Box Asia
With a population of over 250 million and rapidly growing internet adoption, the Indonesian archipelago could offer a booming market for online shopping — and current projections say it will reach $130 billion by 2020.
"The great thing is that there are a lot of investments… There are choices for consumers that love innovative solutions that are coming out from Indonesia itself," William Gondokusumo, the CEO of Campaign.com and director of Tororo.com told CNBC's "Squawk Box" on Tuesday.
Recently, the Indonesian government altered regulations to allow more foreign investment in the sector. Indonesia's investment service agency only recently allowed 100-percent foreign ownership for investments above 100 billion Indonesian rupiah ($7.53 million) for the establishment of an e-commerce company in the country.
However, even with "big boys" such as Alibaba and JD.com coming in — and Amazon soon following with a reported $600 million investment — Gondokusumo predicted that domestic e-commerce firms won't be pushed out as they are "more community focused."
The slowing Indonesian retail growth numbers of February, and indications that price pressure will continue over the next few months do not affect Gondokusumo's bullish view on the retail and e-commerce in the country.
"The way we see it," he said. "All retail and media companies will eventually become [their] own social network."
On the contrary, Ken Dean Lawadinata, former CEO and chairman of Kaskus Networks, who invested alongside Gondokusumo in Tororo, held a less optimistic attitude.
"At the moment, I have a more bearish attitude towards the IT industry, where I believe most investors and owners are pushing their company to a quick sell or short term mentality. This is not sustainable and bad for the industry itself," he told CNBC in an email.
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12208428d968e0de3474c3853b6c1e33 | https://www.cnbc.com/2017/04/12/why-the-global-aerospace-industry-may-see-a-start-up-boom.html | Why the global aerospace industry may see a start-up boom | Why the global aerospace industry may see a start-up boom
VIDEO2:2702:27Space industry is seeing a renaissance
The global aerospace industry is fast becoming venture capitalists' new frontier, according to Francois Chopard, the CEO of aerospace accelerator Starburst Accelerator.
Speaking to CNBC's "The Rundown" on Wednesday, Chopard said, "We've seen a couple of announcements for start-ups willing to build electric commercial aircraft, so it's not only space that is booming, but more the global aerospace sector that is looking for disruptions."
With Jeff Bezos announcing his plans to sell $1 billion in Amazon stock each year to finance his space venture, Blue Origin, as well as the recent successful launches of Elon Musk's SpaceX rocket, Chopard said he's bullish on the global aerospace sector as a whole.
"We just realized recently that with the success of SpaceX and a couple of others, it was feasible for entrepreneurs with great ideas and great technologies to bring satellites with rockets and send them to space," he said.
April 12 marks the International Day of Human Space Flight, commemorating the first human space flight by Soviet cosmonaut Yuri Gagarin in 1961. So in the spirit of space exploration, Chopard said the aerospace industry is seeing more tech-driven breakthroughs globally.
"We've seen from the last five years dozens and dozens of start-ups, not only from the U.S., but also from Europe and Asia," he said.
VIDEO1:3401:34SpaceX releases new video of reused rocket landingClosing Bell
His company, Starburst Accelerator, was founded in 2012 and has accelerated over 160 start-ups, with a $5 million average funding target. The company has innovation hubs in Paris, Los Angeles, Munich and Singapore.
Starburst Accelerator launched a new venture called Starburst Ventures late last year. It raised $200 million to back aerospace tech start-ups over the next three years. Chopard said the venture is an essential push to help those companies in an increasingly competitive industry.
"It has been very difficult in the past, but we've seen a couple of deals mainly happening in Silicon Valley, so we wanted to leverage that start with more investors and with more focus on the aviation and aerospace."
Despite geopolitical tensions like those between the U.S. and Russia, Chopard said he is optimistic about the future of the industry.
"Space collaboration between the U.S. and Russia is not new, it's been going on for the last 20 years and they have achieved amazing things together, like the International Space Station," he said, adding that the aerospace industry as a whole may have "the capability of making millions."
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1b939165ecd4d212de2b2dda87726884 | https://www.cnbc.com/2017/04/13/bill-gross-says-stock-market-priced-for-too-much-hope.html | Bill Gross says stock market 'priced for too much hope' | Bill Gross says stock market 'priced for too much hope'
VIDEO2:4802:48Gross: High growth rates are of a bygone eraPower Lunch
Bond investor Bill Gross warns a global slowdown in productivity as a result of the financial crisis will make it impossible for President Donald Trump to get economic growth back above 3 percent and will reveal financial markets as overvalued.
"Equity markets are priced for too much hope, high yield bond markets for too much growth, and all asset prices elevated to artificial levels that only a model driven, historically biased investor would believe could lead to returns resembling the past six years, or the decades predating Lehman," wrote the Janus portfolio manager in his monthly investment outlook. "High rates of growth, and the productivity that drives it, are likely distant memories from a bygone era."
Economists including Federal Reserve Chair Janet Yellen seem puzzled as to why productivity over the last five years has averaged just 0.5 percent, when it totaled 2-percent-plus before the financial crisis, Gross said. The answer was made pretty clear to Gross, however, in a report from the International Monetary Fund (IMF).
VIDEO0:3900:39Bill Gross says the market is 'priced for too much hope'News Videos
"Slowing business investment/trade and an ongoing level of low to negative interest rates have resulted in a misallocation of capital to low-risk projects and a slowdown in small business creation. Longer-term secular demographic factors such as an aging population also play a significant part since older consumers consume less of almost everything except health care," Gross' outlook states, in reference to the IMF report.
Gross also implies President Trump's agenda and other populist movements popping up around the world — with tenets like higher tariffs and curbs on immigration — could make the productivity slowdown worse.
The is up 13 percent over the last year and more than 4 percent so far this year, although the market has tread water the last two months on concerns over valuation. The iShares High Yield Corporate Bond ETF, which tracks the junk bond market referenced by Gross, is up 6 percent over the last 12 months, but is little changed this year.
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06b1dac108ec6ac1af6b6bd41b576e6d | https://www.cnbc.com/2017/04/13/citigroup-earnings-q1-2017.html | Citigroup earnings: $1.35 per share, vs. expected EPS of $1.24 | Citigroup earnings: $1.35 per share, vs. expected EPS of $1.24
VIDEO1:5301:53Citi beats Street, WFC reports mixed resultsSquawk Box
Citigroup reported first-quarter earnings on Thursday that beat on both the top and bottom line, helped by a jump in bond trading.
Net income rose 17 percent year over year to $4.1 billion, boosted by increased revenue and lower cost of credit. Expenses changed little.
Revenue from fixed income trading jumped 19 percent from the same period last year to $3.62 billion. Equity trading revenue rose 10 percent.
Here's how the results came in versus what Wall Street was expecting:
EPS: $1.35 a share vs. $1.24 expected by Thomson Reuters analysts' consensus.Revenue: $18.120 billion vs. $17.758 billion expected by Thomson Reuters analysts' consensus.
In the first quarter of 2016, Citi posted earnings of $1.10 per diluted share, on revenue of $17.555 billion.
Citi shares climbed more than 1 percent in morning trade.
"The momentum we saw across many of our businesses towards the end of last year carried into the first quarter, resulting in significantly better overall performance than a year ago," Citi CEO Michael Corbat said in a release.
"Revenues increased in both our consumer and institutional lines of business, most notably in areas where we have been investing such as equities, U.S. cards, and Mexico," he said.
Michael Corbat, CEO of CitigroupSimon Dawson | Bloomberg | Getty Images
For the institutional clients group, revenue rose double digits across all regions except Asia, which saw a 3 percent decline year on year. Asia accounts for about one-fifth of total revenue in the institutional clients group.
Loans rose 2 percent to $629 billion at the end of the period, while deposits were up 2 percent at $950 billion.
The firm's CET 1 capital ratio increased to 12.8 percent, helped primarily by earnings. Return on tangible common equity rose to 8.5 percent.
Net interest margin declined to 2.74 percent.
In response to reporter questions on a media call about views on the Trump administration, Citi CFO John C. Gerspach said he believes the president will stick to promises of "looking to catalyze growth in the economy."
President Donald Trump has promised deregulation and tax reform in an effort to increase U.S. growth.
Financials remain the top-performing sector since the U.S. presidential election. However, the category has struggled this year as Treasury yields have fallen. Financials are little changed for the year so far, while Citi shares are more than 1 percent lower over that time.
Wells Fargo also reported earnings Thursday, but its results were mixed. Earlier in the day, JPMorgan Chase posted earnings and revenue that easily topped expectations.
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26f3d1f9be8faa24484e90d188a1f54b | https://www.cnbc.com/2017/04/13/gold-just-hit-a-five-month-high-and-has-the-chance-to-go-further.html | Gold just surged to a five-month high—and 'has the chance to go further' | Gold just surged to a five-month high—and 'has the chance to go further'
VIDEO2:2602:26Trading Nation: Gold rises to 5-month highTrading Nation
Some strategists see further upside for a commodity that typically trends higher in times of geopolitical and economic unrest. Gold rallied to its highest level in five months in Wednesday trading, gaining over $9 per ounce in the session as tension mounted around the world. Secretary of State Rex Tillerson said Wednesday at a joint news conference with Russian Foreign Minister Sergey Lavrov that U.S.-Russia relations were "at a low point," and called for improvement after the U.S. missile astrikes in Syria last week. "As a flight to safety into U.S. Treasurys comes in and yields continue to compress, gold becomes a lot more attractive," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said Wednesday on CNBC's "Power Lunch." He added about the traditionally safe haven asset: "I do think with the Trump administration and with the militarization that's going on right now, the risk is very high, so gold does have the chance to go further." Indeed, the yield on the 10-year U.S. Treasury note fell to a five-month low on Wednesday, while the also declined, along with the value of the Udollar. Bullion is highly sensitive to U.S. interest rates, which raise the opportunity cost of holding nonyielding, dollar-denominated gold. Gold will likely gain 4 to 5 percent in the next six months, said Chad Morganlander, portfolio manager at Washington Crossing Advisors. "We think risk is going to elevate, financial conditions will tighten; one is geopolitical risk, not only internationally, but with domestic policy uncertainty on the tax bill," he said Wednesday on "Power Lunch." Gold is up nearly 12 percent year to date.
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e25b3120c1e97ea5c6e3dca292469427 | https://www.cnbc.com/2017/04/13/jpmorgan-chase-earnings-q1-2017.html | JPMorgan Chase earnings: $1.65 per share, vs. expected EPS of $1.52 | JPMorgan Chase earnings: $1.65 per share, vs. expected EPS of $1.52
VIDEO2:0302:03JPM beats Street on top and bottom lineSquawk Box
JPMorgan Chase reported first-quarter earnings and revenue that easily topped estimates, lifted by better-than-expected loan growth and trading sales.
"We are off to a good start for the year with all of our businesses performing well and building on their momentum from last year," CEO Jamie Dimon said in a statement.
"U.S. consumers and businesses are healthy overall and with pro-growth initiatives and improving collaboration between government and business, the U.S. economy can continue toimprove," he said.
EPS: $1.65 versus $1.52 expected by Thomson Reuters analysts' consensusRevenue: $25.586 billion versus $24.877 billion expected by Thomson Reuters analysts' consensusTrading revenue: $6.515 billion versus $5.51 billion expected by StreetAccount analysts' consensusAverage core loans: up 9 percent year over year versus an expected uptick of 2 percent
Jamie Dimon, chairman and chief executive officer of JPMorgan ChaseLaura McDermott | Bloomberg | Getty Images
JPMorgan reported earnings per share of $1.35 on sales of $24.08 billion in the year-earlier period.
The company's shares rose more than 1 percent in the premarket after the results were released.
"The investment banking business was very strong year over year and up slightly from the fourth quarter" of 2016, said Ken Leon, global director of industry and equity research at CFRA. He also recognized the company's loan growth remains strong. "There really weren't any major blemishes in this report."
The company's trading revenue was largely bolstered by strong sales in its "markets" segment, which rose 13 percent. Trading revenue totaled $6.515 billion in the first quarter, more than a billion above StreetAccount's estimate.
Bond trading was also one of the main drivers behind the results, rising 17 percent from the same quarter a year ago. "Rates improved, with increased market activity, particularly in Europe in advance of upcoming elections and in reaction to central bank actions," JPMorgan said in a statement.
The banking giant's stock has surged more than 20 percent since the election amid hopes for a revamp of financial regulations and lower corporate taxes coming from Trump administration policies.
JPMorgan shares are down 1 percent for the year, however, as investors see the implementation of such moves as being further off.
Dimon said in his annual letter to investors that businesses are being weighed down by regulations, adding high U.S. corporate taxes are making companies less competitive. The U.S. had one of the highest corporate tax rates in the world last year at 40 percent.
Dimon also said "too big to fail" fears have been eradicated, lessening the need for current regulations like Dodd-Frank.
JPMorgan shares in 2017
Source: FactSet
Wells Fargo and Citigroup also reported quarterly results on Thursday.
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0ae88df4364dc38b603e2bf19eb0c2b6 | https://www.cnbc.com/2017/04/13/najarian-options-trader-makes-big-bet-on-a-rapid-market-drop-in-the-next-week.html | Najarian: Options trader makes big bet on a rapid market drop in the next week | Najarian: Options trader makes big bet on a rapid market drop in the next week
VIDEO2:2902:29Options market says volatility set to pop & moreHalftime Report
The iPath S&P 500 VIX Short-Term Futures ETN (VXX) is an exchange traded note that was constructed to provide investors exposure to the CBOE's VIX index, which is also known as "the fear index."
This is because the VIX and corresponding VIX futures reflect the demand for protection in options on the S&P 500. That demand for protection manifests itself in higher prices for both VIX and VIX futures. For this reason, the VIX is known as an inversely correlated index, moving up when the S&P 500 moves down, and moving down when the S&P 500 moves higher.
Thus, when there's a large trade in VIX options or futures, it expresses either the fear or confidence of a sophisticated investment manager and can foretell future movements in the markets.
Today, our HeatSeeker algorithm picked up on a large trade in the VXX calls, as 30,000 of the May 18 calls were bought for $1.53, and 30,000 of the September 24 calls were sold for $1.55 with that ETN trading at $17.72.
This trade is known as a diagonal, as the expiration of the options contracts are in separate months. The size (30,000 contracts) means the trader controls 3,000,000 share equivalent of the VXX between $18 and $24, and thus could turn a volatility burst into millions of dollars in profit. Conversely, if nothing happens and or the VXX drops over the next week, the long May calls will decay far more rapidly than the September calls, which could result in some painful losses.
You would do a trade like this if you wanted protection in the short-term against a big surge in volatility over the next couple weeks. Potential catalysts include North Korea, Syria, Russia or Thursday's use of the "mother of all bombs."
What we know about these volatility pops is that the shelf life is getting shorter and shorter. Volatility barely held one full session after Brexit and it held less than 12 hours after the Trump victory.
So be aware of what the player establishing this trade is no doubt cognizant of, and that's that a surge in VIX would likely be met with extremely aggressive selling in just hours. I share this to make sure any of you that have not previously traded these volatility contracts don't think of them as traditional investments. These are trades, and/or quick hedges, not investment vehicles.
Watch:
VIDEO0:1600:16This usually happens after the VIX jumps 25%+ in one week Kensho Video
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df67aca65fc0ec4dad32f7e12e1589c0 | https://www.cnbc.com/2017/04/13/scorpion-stings-man-on-united-flight-to-calgary.html | Scorpion stings man on United flight to Calgary | Scorpion stings man on United flight to Calgary
VIDEO0:4000:40A scorpion stung a United Airlines passenger mid-flightNews Videos
A creature that appeared to be a scorpion fell from an overhead bin and stung a man on a United Airlines flight, the company confirmed to CNBC on Thursday.
According to multiple reports, passenger Richard Bell was on a United flight from Houston to Calgary on Sunday, when the creature fell from an overhead bin and stung him.
United told CNBC the airline crew immediately consulted with a physician on the ground who provided guidance throughout the incident. The company said the man's injuries were non-life threatening.
"Medical personnel met the aircraft after it arrived in Calgary," United spokesman Charles Hobart told CNBC.
The news came after United sparked outrage earlier this week when a video surfaced of a passenger being dragged off an overbooked United Express flight.
United CEO Oscar Munoz at first supported the action. Later, he apologized "for having to re-accommodate these customers." On Tuesday, he issued a detailed apology.
Watch: The latest on United's very bad week
VIDEO5:2805:28More turbulence for United?Fast Money
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d22a65350a45ac96338f661849c3231b | https://www.cnbc.com/2017/04/13/us-markets.html | Dow falls 135 points, closes at session lows after US drops mega-bomb | Dow falls 135 points, closes at session lows after US drops mega-bomb
VIDEO1:2001:20Pisani: The Trump agenda is sort of sideways right nowClosing Bell
Stocks fell on Thursday after the U.S. dropped "the mother of all bombs" in Afghanistan while bank stocks dropped despite strong earnings from JPMorgan Chase and Citigroup.
The U.S. used GBU-43 bomb on a cave complex believed to have ISIS fighters, according to the Associated Press. The bomb had never been used in combat, according to Adam Stump, the Pentagon spokesman.
Stocks extended losses shortly after news of the bombing broke. The Dow Jones industrial average closed about 135 points lower, at session lows, with Chevron contributing the most losses. The S&P 500 fell 0.68 percent, with energy and financials leading decliners. The Nasdaq composite dropped 0.5 percent.
Defense stock General Dynamics remained in the money. Investors were also nervous ahead of a potential North Korean nuclear bomb test, which could come as early as Saturday.
"People are nervous in front of the long weekend," said Art Cashin, director of NYSE floor operations for UBS. "I would give that about a quarter of the move. The rest of its worries about the financials." The U.S. stock market is closed Friday due to a holiday.
The Financials Select Sector SPDR Fund ETF (XLF) gave back initial gains to close 1.3 percent lower. The ETF has also fallen more than 2 percent this week and gave up its gain for the year on Wednesday.
So-called risk-off trades have been in vogue this week, with gold, Treasurys and the Japanese yen were posting. The three major U.S. indexes, meanwhile, were on pace to end the week slightly lower.
Yen and gold this week
Source: FactSet
Gold futures for June delivery rose $10.40 settle at $1,288.50 per ounce and had gained more than 2 percent for the week. Meanwhile, the benchmark 10-year note yield hit its lowest level since mid-November.
Also, Wall Street grew jittery as it gauged where the Trump administration's priorities were. On Wednesday, President Donald Trump told Fox Business he wanted to repeal and replace Obamacare before moving on to tax reform.
Trump told the Wall Street Journal later on Wednesday he thought the dollar was getting "too strong."
"I'm a proponent of neither a strong nor weak currency but a stable one and believe that we should be careful here in hoping for a weak currency (or just not a strong one which I get) Mr. President," said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
"Just look at the experience of Japan where consumer spending remains punk and the weak currency hasn't led to any noticeable impact on export volumes," he said.
The comment sent the dollar index to its lowest level of the month against a basket of currencies; it last traded 0.2 percent lower at 100.55.
In this U.S. Air Force handout, a GBU-43/B bomb, or Massive Ordnance Air Blast (MOAB) bomb, is launched November 21, 2003 at Eglin Air Force Base, Florida.DoD | Getty Images
"That was a surprise because presidents don't usually comment on monetary policy and the dollar. They usually leave that to the appropriate agencies," said Peter Ng, senior FX trader at Silicon Valley Bank.
Also, some prominent investors have come out this week saying the stock market may be overvalued.
ValueAct Capital's Jeff Ubben said Wednesday he is "skeptical" of the market's valuation, adding the firm is returning $1.25 billion to investors. Janus' Bill Gross wrote in his monthly investment outlook that the stock market has "priced for too much hope."
That said, equities have managed to hold their ground somewhat, as they have avoided a major sell-off recently.
"There's been a lot of news over the past few days and we're still in a holding pattern," said Scott Clemons, chief investment strategist at Brown Brothers Harriman. "I think investors are more focused on earnings."
JPMorgan Chase, Citigroup and Wells Fargo all reported quarterly results on Thursday. JPMorgan easily topped expectations, while Citigroup also posted better-than-expected results. Wells Fargo posted mixed results.
"It sort of gives investors some comfort that the high valuations and earnings expectations may be correct," Brown Brothers Harriman's Clemons said.
In economic news, jobless claims came in at 234,000, below expectations, while March PPI declined 0.1 percent. Consumer sentiment came in at 98, beating expectations.
Major U.S. Indexes
The Dow Jones industrial average fell 138.61 points, or 0.67 percent, to close at 20,453.25, with Chevron leading decliners and Visa the top advancer.
The pulled back 15.98 points, or 0.68 percent, to end at 2,328.95, with energy leading all 11 sectors lower.
The Nasdaq declined 31.01 points, or 0.53 percent, to close at 5,805.15.
About three stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 778.57 million and a composite volume of 3.131 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 16.
—CNBC's Patti Domm and Reuters contributed to this report.
On tap this week:
Friday
U.S. markets closed
8:30 a.m. Retail sales
8:30 a.m. CPI
10:00 a.m. Consumer sentiment
10:00 a.m. Business inventories
Watch: We dropped a very large bomb, says Colonel
VIDEO4:5804:58Ret. Army Col.: This is a very large bomb designed to take out exactly the kind of target it went after Closing Bell
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c0dc428abd800b68df9f97fdc08147dc | https://www.cnbc.com/2017/04/13/wells-fargo-earnings-q1-2017.html | Wells Fargo shares slide 2% after earnings come in mixed | Wells Fargo shares slide 2% after earnings come in mixed
VIDEO1:5301:53Citi beats Street, WFC reports mixed resultsSquawk Box
Wells Fargo on Thursday reported first-quarter earnings that topped analysts' expectation, but revenue came in light.
The third-largest U.S. bank by assets reported essentially a flat profit, due to in part higher costs and weaker mortgage banking revenue.
The bank's shares were down more than 2 percent in premarket trading following the announcement. In early trading the stock was down less than 1 percent.
Here's what the Street was expecting:
EPS: $1 versus 97 cents expected by Thomson Reuters analysts' consensus.Revenue: $22 billion versus $22.32 billion expected by Thomson Reuters analysts' consensus, a nearly 1 percent decline.
The bank earned 99 cents per share in the same period last year.
"Wells Fargo continued to make meaningful progress in the first quarter in rebuilding trust with customers and other important stakeholders, while producing solid financial results," Wells Fargo CEO Tim Sloan said in a statement.
The bank said total average loans were $963.6 billion in the quarter, down $502 million from the fourth quarter. Mortgage banking revenue fell 23 percent to $1.23 billion.
The earnings report came three days after the bank's independent directors decided to initiate corporate pay clawbacks, following a six-month investigation into the scrutinized institution's retail banking sales practices.
The board review indicated that former Wells Fargo Chairman and CEO John Stumpf acknowledged that he made significant mistakes and helped create a culture at the bank that resulted in abuses.
"The findings are valuable to us and beneficial in helping to identify areas for further improvement. While we have more work to do, I am pleased with all we have accomplished thus far," Sloan said in the earnings release Thursday.
On Wednesday, Warren Buffett's Berkshire Hathaway said it is selling 9 million shares of Wells Fargo due to possible Federal Reserve regulations.
Wells Fargo directors are likely to receive the support of Berkshire Hathaway, according to The Wall Street Journal.
Citigroup also reported earnings on Thursday, beating expectations on the top and bottom line. Earlier in the day, JPMorgan Chase reported first-quarter earnings that easily beat Wall Street's expectations.
— CNBC's Wilfred Frost and Reuters contributed to this report.
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1055ce4319a6ed937da850de71790052 | https://www.cnbc.com/2017/04/13/worlds-cheapest-etf-portfolio-just-got-cheaper.html | ETF Strategist | ETF Strategist
In November 2015, the last time I updated my World's Cheapest ETF Portfolio, I laid out a challenge to the ETF industry: "If someone would just launch a commodity fund priced at 0.25 percent," I wrote, "we'd really be in business."
Harvesting winter wheat in Kirkland, Illinois.Daniel Acker | Bloomberg | Getty Images
My portfolio tracks the lowest-cost ETF in each of six different asset classes: U.S. stocks, international stocks, emerging markets stocks, bonds, REITs and commodities — and the commodities fund always stuck out like a sore thumb. While I could get complete U.S. equity exposure for just 0.03 percent/year in fees, the cheapest commodity product out there charged 0.50 percent!
Not anymore.
More from ETF.com:How to pick a sector ETFWorst-performing ETFs of the yearHow to beat bond ETF returns without more risk
Last Friday, ETF Securities launched a trio of commodity ETFs, including two priced at just 0.29 percent. The ETFS Bloomberg All Commodity Strategy K-1 Free ETF (BCI) and the ETFS Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD) both track diversified portfolios of 22 commodities and use an offshore structure to avoid issuing K-1s.
0.29 percent is not quite 0.25 percent, but I'll take it!
Between the two, I'm choosing the longer-dated BCD for the portfolio. Rather than holding front-month futures as BCI does, BCD holds futures dated out four to six months in an effort to combat contango. I generally think this is a better approach for long-term investors.
Be careful trading new funds
It's worth noting that, as a new fund, BCD barely trades. That will probably change over time as money tilts toward low-cost products, but for now, anyone trading it should do so using limit orders and extreme care. The portfolio's intended as a proof of concept, and the fees only capture the funds' expense ratios, not the total cost of ownership.
Still, what a proof of concept it is. With the addition of BCD — plus a number of expense ratio reductions for other products in the portfolio — the new blended expense ratio is just 0.06 percent.
VIDEO1:3201:32No going back on fees now: Expert Capital Connection
That's down from 0.08 percent in 2015 and 0.16 percent when I started tracking it in 2008, an incredible deal for such a massively diversified, institutional-quality portfolio. It's one of the greatest deals in financial history and a symbol of the power of the ETF revolution.
The World's Cheapest ETF PortfolioAsset ClassWeightFundTickerExpense RatioU.S. Equity40%iShares Core S&P Total U.S. Market ETFITOT0.03%Developed Markets Equity30%Schwab International Equity ETFSCHF0.06%Emerging Markets Equity5%Schwab Emerging Markets EquitySCHE0.13%Fixed Income15%Schwab U.S. Aggregate BondSCHZ0.04%REITs5%Schwab U.S. REIT ETFSCHH0.07%Commodities5%ETFS Bloomberg All Commodity Longer Dated Strategy K-1 Free ETFBCD0.29%
— By Matt Hougan, CEO of Inside ETFs
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f11419b6d2c34516e7d0132ef87f3d77 | https://www.cnbc.com/2017/04/15/tax-day-protesters-demand-trump-release-his-returns.html | Tax Day protesters demand Trump release his returns | Tax Day protesters demand Trump release his returns
Protestors participate in a Tax Day March in Center City Philadelphia, on April 15, 2017.Bastiaan Slabbers | NurPhoto | Getty Images
Hundreds of protesters streamed onto the Capitol lawn Saturday carrying signs demanding that President Trump release his tax returns in one of more than 150 Tax Day rallies and marches planned nationwide.
Protesters in the nation's capital came from as far away as North Carolina and New York. Most carried signs and some wore the signature pink hats from the Jan. 21 Women's March that drew millions and helped spawn the Tax Day protest. Others carried plastic chickens and a few wore Russian-themed hats.
"My message for the president is short enough to tweet. Today across America we are taking the gloves off," said Sen. Ron Wyden, of Oregon, the top Democrat on the Senate Finance Committee and a keynote speaker. "It's time to knock off the tax rip offs. No more Cayman Island accounts for the insiders. No more tax breaks for shipping jobs overseas. No more special breaks for Wall Street."
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Wyden then tore into Trump's failure to release his tax returns, highlighting legislation he's sponsoring to require any U.S. president to release his returns annually. "President Trump has tossed this great American tradition in the trash can like a teenager trying to hide a lousy report card," he said.
Trump is the first U.S. president in modern history not to release his returns – every president since Richard Nixon has done so. Recent polling shows 74% of Americans want to see Trump's returns.
"Knock off the secrecy, Mr. President, and publicly release your own tax returns," Wyden said. "Disclosing tax returns is the very lowest ethical bar for a president and we are going to insist that he clear it."
Ezra Levin, executive director of Indivisible, among the major protest groups that's formed in the past few months, said the Tax Day protest was about more than just seeing someone's 1040s.
"It's about whether or not the president of the United States is acting in the interest of the American people or whether he's lining his own pockets or serving another master," Levin said. "Congress has the power to find out and they've used it before," including on Nixon.
A number of marchers drew parallels between Trump's recent bomb strikes in Syria and against ISIS in Afghanistan. One protester carried a sign reading "1 Airstrike Doesn't Erase Trump's Lies and Russia Ties."
"There's a lot of dots connecting him to Putin, and I think his taxes would reveal the final dot," said Leslie Thiel, 58, who drove from Jackson Springs, N.C. "It's wag the dog all over again. It's just trying to divert attention."
With Tax March, Democrats become party of revolt amid rising inequality
Rallies were also scheduled in nearly 150 cities, including New York, Boston, Sacramento, Calif., and San Francisco. Activists in West Palm Beach, Fla., will hold the "March a Lago" near the resort where Trump is spending the Easter weekend.
Rep. Jan Schakowsky, D-Ill., attended at a rally in Chicago. "What you saw beginning the day after the inauguration has not let up," Schakowsky said. "We're talking about intensity. The only question any of us get now is: What can I do?"
The idea for the march grew out of the success of a women's march on Washington that drew millions of people. Jennifer Taub, who teaches law at Vermont Law School, got the ball rolling with a tweet calling for a #showusyourtaxes protest. Taub has testified before Congress and written a book about the 2008 financial crisis.
"I'm just a law professor who sent out a tweet," said Taub, according to the Associated Press. "I'm psyched, and I think lots of people are psyched about this. We shall see."
"I'm all about 'follow the money,'" Taub said. "It tells us the story about people's priorities."
Through the march, the Democratic Party and progressives are attempting to reroute the grassroots energy that helped derail Trump's bid to overhaul the Affordable Care Act toward their next goal: forcing a release of his tax returns and drawing the battle lines for the upcoming debate over U.S. tax reform.
More broadly, the coalition of almost 70 progressive groups is trying to take ownership of an issue — taxes — which Republicans have championed for the past 25 years, culminating in the formation of the conservative Tea Party.
In fact, Saturday is also the eighth anniversary of hundreds of Tax Day protests that marked the emergence of the Republican-aligned Tea Party. Although the Tea Party gathered steam around opposition to Obamacare, its roots are in a backlash to former President Obama's $787 billion stimulus program.
In a Facebook page for the Tax Day marches, organizers said the events focus on government transparency, conflicts of interest and an unfair tax system. They called on supporters to "show Donald Trump that he owes us transparency."
"We're marching on Washington, D.C., and around the country to ask Donald Trump: WHAT ARE YOU HIDING?" the organizers said on their website. "We need a president who works for all Americans, and a tax system that does, too. Release your tax returns and commit to a fair tax system for the American people."
As a candidate, Trump said he would not release his taxes while they were being audited. After the election, he said that only the news media cared about seeing the documents. "I won," he said.
Sean Spicer said Tuesday: "We filed our financial disclosure forms the other day in a way that allows everyone to understand."
While April 15 is normally deemed Tax Day, this year it is Tuesday, April 18, because it falls on the weekend and there a holiday in Washington, D.C., on Monday.
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b77699606d5b3b9745dcde2af5b6583b | https://www.cnbc.com/2017/04/16/china-infrastructure-spending-is-a-boon-to-consumer-businesses.html | China’s infrastructure spending is a boon to consumer businesses, says Yum China CEO | China’s infrastructure spending is a boon to consumer businesses, says Yum China CEO
VIDEO6:4906:49Yum China: "We built over 130 restaurants in two months"Squawk Box Asia
Rising consumer spending in China has boosted sales of retailers, but it is the country's infrastructure spending that gives businesses opportunities to expand, said the chief executive of China's largest publicly held restaurant operator.
Micky Pant, chief executive of Yum China, told CNBC's "Squawk Box" Monday that infrastructure is a reason why the company — which operates brands such as KFC and Pizza Hut — is aiming to open 600 new stores this year.
"For us, what's very important is infrastructure spending because that's how we get new malls, new trade zones, new high speed rail stations, new airports and that's continuing at the fastest rate in China compared to any other country in the world. That's how we build 600 restaurants a year because these opportunities are emerging," he said.
Pant's comments came ahead of the release of China's latest economic data. Official statistics showed Monday that retail sales in the world's second largest economy grew 10.9 percent year-on-year in March, beating Reuters forecast of 9.6 percent.
The better consumer consumption growth was behind Yum China's surprise first quarter performance as well. The company reported earlier this month a 1 percent rise in same-store sales, beating analysts' estimate of a 0.7 percent fall.
Pant said China's economic transition into a consumer-led growth model, and the government's continued reforms, will boost the company's prospects in the years to come.
He singled out the country's tax system overhaul in May last year, which replaced a revenue-based tax with a levy on the business' value-add, such as the difference between wholesale and final sales prices. The move will help stabilize China's economic growth and help the country's rebalancing efforts, China's finance ministry said when the shift was announced last year.
"It actually simplified things for us dramatically and given us a lot of operating relief and margin relief as well. It's been very good for the industry. So steps like that, I think, will continue to stimulate the consumer economy," said Pant.
"We have 7,500 restaurants (in China) but I keep reminding people that we have double that number in the United States. And the U.S. is a smaller country than China in terms of population and future GDP."
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b2296346b2929fa4af4be485b5883863 | https://www.cnbc.com/2017/04/17/forget-the-positives-netflix-is-a-greater-fool-stock-says-this-analyst.html | Forget the positives, Netflix is a 'greater fool' stock, says this analyst | Forget the positives, Netflix is a 'greater fool' stock, says this analyst
Reed Hastings, chief executive officer of Netflix Inc.Akio Kon | Bloomberg | Getty Images
Despite the fact that Netflix has mastered the flow of its customers, reduced churn and consistently pushes out "really big shows" that keeps subscribers coming back, analyst Michael Pachter of Wedbush Securities told CNBC on Monday that it is a "greater fool stock."
"And the greater fool has this belief that's wrong that they are going to grow [subscribers] forever and one day jack up price and keep the excess price increase," said Pachter.
"The truth is their content costs will rise as they choose to raise prices," he said.
On Power Lunch, Pachter said an inevitable increase in competition will also make it harder for the company to justify its elevated stock price. "I think that's going to attract more competition, they are never going to make the profits that justify a $145 stock," he said.
But he says as "long as investors will pay for subscriber growth and as long as Netflix delivers it, the stock will go up."
Still, Pachter isn't confident the company will be able to recoup its losses. "The negative free cash flow will be $500 million this quarter and probably get worse throughout the year." Netflix reports earnings after the bell Monday.
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4bd1e89b1fc8e102ed152f9ba4177cf5 | https://www.cnbc.com/2017/04/17/intel-cloudera-investment-big-loser-pre-ipo.html | Intel is taking a bath on its Cloudera investment heading into IPO | Intel is taking a bath on its Cloudera investment heading into IPO
VIDEO0:5600:56Intel is taking a bath on its Cloudera investment News Videos
Three years ago Intel placed a $742 million wager on Cloudera and labeled it the company's "single largest data center technology investment in its history."
Thus far, it's produced a lot of red ink.
Cloudera set its preliminary IPO price on Monday at $12 to $14 a share, well below half of Intel's May 2014 purchase price of $30.92.
All told, Intel invested $766.5 million in Cloudera, a stake that at the high end of the IPO range would be worth $348.2 million. Had the chipmaker just buried that cash in the S&P 500, it would now be worth about $925 million.
Founded in 2008, Cloudera is one of several Silicon Valley companies that's commercializing an open source programming framework called Hadoop, which helps businesses process large amounts of disparate data.
Intel invested in Cloudera as part of a strategic partnership at a time when private market valuations for hot start-ups were in the stratosphere. Hortonworks, Cloudera's top competitor, went public in December 2014, and has since gotten pummeled, dropping from $16 a share at its debut to $10.67 at Monday's close.
Cloudera's pricing "is largely due to Hortonworks' discounted valuation levels and growing perceived risk from public cloud players, such as Amazon and Google," wrote Rohit Kulkarni, managing director and head of research at SharesPost.
At $14 a share, Cloudera would be worth $1.79 billion, down from $4.1 billion when Intel invested.
Cloudera is also burning cash as it ramps up spending to reach large prospective customers. While revenue in the fiscal year ended January climbed 57 percent to $261 million, the company spent over $200 million on sales and marketing, resulting in a net loss of $187.3 million.
Intel could still make money on its Cloudera bet if it holds on to its shares and the stock rallies following the offering. And while a loss of a few hundred million dollars would sink many venture funds, Intel has a healthy $17.1 billion in cash on its balance sheet.
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c5c05c8d075ee996bdaf483cd35fdada | https://www.cnbc.com/2017/04/17/steve-wozniak-silicon-valley-comic-con-over-ai-fears.html | Apple co-founder Steve Wozniak has gotten over his fear of artificial intelligence | Apple co-founder Steve Wozniak has gotten over his fear of artificial intelligence
VIDEO1:2601:26Apple co-founder: Changed my mind on artificial intelligencePower Lunch
Apple co-founder Steve Wozniak has done a complete about-face on the fear that artificial intelligence could "take over" humanity, he told CNBC's "Power Lunch" on Monday.
"I've totally changed my mind — We aren't talking about artificial intelligence that sits down and says, 'What is my life in the world? What do I have as obstacles? How do I solve them? What should I solve?'," Wozniak said. "Only humans do that."
Wozniak's position is a reversal from his comments a couple of years ago, when he told The Australian Financial Review that there was "no question" that computers would take over from humans, and that such a prospect would be "scary and very bad."
"What we are talking about for artificial intelligence hasn't gotten to that level of brain functionality yet," Wozniak told CNBC on Monday, calling it more like "semi-intelligence."
Despite swelling popularity of artificial intelligence, Apple hasn't made the splash with Siri that Amazon has made with Alexa, its artificially intelligent assistant. But Wozniak said Apple may be playing its cards close to the vest.
"A lot of other companies like Google have been more forthcoming and talking about what they're doing, Apple's tendency is to be quiet and shock you with what they come up with," Wozniak said. "These are going to be very important things in our future."
Wozniak — who founded Apple in a garage with Steve Jobs in 41 years ago — believes that the company will continue to grow larger and more dominant until at least 2075, according to an interview with USA Today. Wozniak is headlining the upcoming Silicon Valley Comic Con, an event that aims to unite pop culture and technology.
"It would be ridiculous to not expect them to be around (in 2075). The same goes for Google and Facebook," Wozniak told USA Today on Friday.
One example of Apple's future with artificial intelligence could be in self-driving cars, Wozniak told CNBC on Monday. Apple has reportedly received a permit to test autonomous vehicles in California.
"Apple is such a large company it has to go after big markets," Wozniak said. "And self-driving cars is one that we're all reading about every day, and almost every car company in the world is working toward that. I go back and think about what made Apple successful and as big as it is. Look at the iPhone... you know, it was questionable at first but that was the way everyone wanted to go...So I'm hoping Apple goes the same way with autonomous cars. That you have one car —that can be sold without a steering wheel maybe — that is so perfect that everyone goes, 'Oh my gosh, I want this.'"
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62b96a0c2b35783ddb9490612885d05a | https://www.cnbc.com/2017/04/17/united-air-removes-couple-traveling-to-wedding-from-plane.html | United Air removes couple traveling to wedding from plane | United Air removes couple traveling to wedding from plane
VIDEO0:5500:55A couple headed toward their wedding was booted off a United flightNews Videos
An engaged couple were removed from a United Airlines flight to Costa Rica on Saturday, as the airline remained under scrutiny following outrage caused by a video last week of a passenger being forcibly removed from a flight.
According to the couple, who said they were en route to get married, a federal marshal had escorted them from the plane before take-off from Houston, Texas, but United denied this on Sunday, saying in a statement that neither a marshal nor other authorities was involved.
The couple "repeatedly attempted to sit in upgraded seating which they did not purchase and they would not follow crew instructions to return to their assigned seats," United said in a statement, adding, "They were asked to leave the plane by our staff and complied."
The statement from a United spokeswoman said the airline offered the couple a discounted hotel rate for the night, and rebooked them on a Sunday morning flight.
But Michael Hohl and his fiancée, Amber Maxwell, told KHOU they tried to pay for upgraded seating and were denied, after finding another passenger sleeping across their seats when they were the last to board.
After moving within the economy cabin a few rows up, flight crew denied their request to pay a supplement for the seats, which United sells as "economy plus," and told them to move back to their original seats, Hohl said.
"We thought not a big deal, it's not like we are trying to jump up into a first-class seat," Hohl told KHOU. "We were simply in an economy row a few rows above our economy seat."
The airline suffered a public relations disaster after a video emerged a week ago showing security officers dragging a bloodied passenger off an overbooked United Express flight in Chicago.
VIDEO1:4901:49Video shows man being forcibly removed from United Airlines flightSquawk Box
Shares in United's owner, United Continental, were hammered, dropping 4 percent last week to close at $69 on Thursday, reducing the company's market cap by $770 million to $21.5 billion. Markets were closed on Friday.
Dr. David Dao, the 69-year-old Vietnamese-American doctor who was seen in video being dragged off a United flight a week ago, will likely sue the airline, his attorney said on Thursday.
After the incident triggered international outrage, United Chief Executive Oscar Munoz apologized to Dao, his family and its customers, saying the carrier would no longer use law enforcement officers to remove passengers from overbooked flights.
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50deb021be6ab96841255eef51b184e3 | https://www.cnbc.com/2017/04/18/a-decade-from-now-we-wont-remember-what-flying-without-wi-fi-feels-like-says-honeywell-exec.html | A decade from now, we won't remember what flying without Wi-Fi feels like, says Honeywell exec | A decade from now, we won't remember what flying without Wi-Fi feels like, says Honeywell exec
VIDEO4:2204:22How Asia's middle class is helping Honeywell
The global market for interconnected aircraft is set to exceed $20 billion by 2020, and Honeywell is focusing on leading that trend, according to its Southeast Asia President, Briand Greer.
"Five or 10 years from now, people get on an aircraft and forget what it was like to not be completely seamlessly connected. You'll be able to get on board, you will be able to download files or do emails, stream movies, all of those things as our world becomes more connected," Greer told CNBC's "The Rundown" on Tuesday.
Honeywell's position as a software solutions company for various markets from commercial to consumer puts it at a strong position to lead the charge toward hyper-connectivity, according to Greer.
"We're in the home and buildings industry, we're in mobility, we're in industrial safety and all of these physical products will start getting sensors in them. It will all be connected to a whole ecosystem that allows [Honeywell] to be able to drive the efficiency that people want — and the connectedness that we crave frankly," Greer said.
Honeywell’s Boeing 757 test plane.Source: Boeing
One reason behind the shift to software is to generate an alternative stream of revenue as the demand for helicopters is suffering due to a slowdown in the oil and gas industry — in which they're regularly used.
Greer, however, was bullish about the aviation industry in Southeast Asia in the long term.
"As the middle class grows in this region, with the rise of all the incomes and everything, then business jets is just a natural outcome of that, we've seen that in the West and that's what's happening here in Asia also," he said.
He added that, despite the reduced demand for helicopters in the oil and gas industry, Honeywell foresaw a rise in demand for emergency medical services as the middle class in the region prospers from a maturing economy.
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8ece729bd45d88f60a5ab4379a1a0651 | https://www.cnbc.com/2017/04/18/alibabas-ant-financial-merges-with-payment-platform-making-alipay-for-singapore-and-more.html | Alibaba affiliate merges with payment platform, making Alipay for Singapore and more | Alibaba affiliate merges with payment platform, making Alipay for Singapore and more
Starting Wednesday, the helloPay payment platform on Southeast Asian e-commerce site Lazada will be rebranded in each country it operates as a version of Alipay.
This comes as Alibaba-affiliate Ant Financial merges with helloPay Group, according to a joint statement from the two companies. Alipay is the payments service from Ant Financial, and it has over 450 million active users, according to the company.
HelloPay, which was created in 2014 by Lazada to facilitate payments on its e-commerce platform, will now be known as Alipay Singapore, Alipay Malaysia, Alipay Indonesia and Alipay Philippines in the respective countries in which it operates.
Despite the merger, the two companies said helloPay's features and services would remain unchanged and would stay separate from the main Alipay app.
In 2016, Alibaba agreed to buy a controlling stake in Lazada, which is often referred to as the "Amazon of Southeast Asia" for its dominance in the region.
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eb69cf58336354cd28c701984e243b81 | https://www.cnbc.com/2017/04/18/alphabet-verily-project-baseline-longitudinal-health-study.html | Alphabet will track health data of 10,000 volunteers to 'create a map of human health' | Alphabet will track health data of 10,000 volunteers to 'create a map of human health'
Dr. Jessica Mega, Verily's chief medical officer
Verily, formerly Google's life sciences arm, is launching today a four-year study called Project Baseline to find out why people transition from being generally healthy to getting sick.
The Silicon Valley-based company is working with its partners, Duke University and Stanford Medicine, to enroll 10,000 participants from diverse backgrounds at half a dozen study sites in California and North Carolina.
The researchers are recruiting some people in good health, and others who are at high risk of chronic diseases like diabetes and heart disease, and outfitting them with sophisticated health trackers and sequencing their genomes, among other things.
The goal for the study, said Verily's chief medical officer Jessica Mega, is to "create a map of human health."
As Mega explained, most doctors will treat symptoms as they arise, but have little indication into how the patient was faring in the years leading up to the illness. The Baseline researchers are hoping to find early warning signs for disease from all the data it is collecting, including on sleep, activity, heart rate, genomics and more, which might translate into new lifestyle or therapeutic interventions.
That could eventually mean big business for Verily, a company in the Alphabet umbrella, which is already working with pharmaceutical companies ranging from Johnson & Johnson to Novartis, on a variety of life sciences initiatives.
"With the exploding number of wearable trackers, we're gathering all these digital vital signs," says Daniel Kraft, faculty chair for the Medicine and Exponential Medicine program at Singularity University, and a practicing physician. "We don't know what to do with all this data yet."
According to Kraft, Verily is building a "Google Maps for health care," as it is connecting the dots in a similar fashion that the various mapping applications compiled street data, traffic, nearby restaurants, and so on.
Part of Verily's role is to use its engineering talent to develop sensor-based technologies to capture a huge volume of health data.
To that end, it recently developed its own smartwatch, called Study Watch, which participants will be asked to wear on a daily basis. The watch, which is not intended for consumers, includes features like an electrocardiagram, which might indicate abnormal heart rhythms, plus week-long battery life and large internal storage.
Each participant will also get their whole genome sequenced, which costs several thousand dollars. The researchers are also aiming to study other molecular indicators, like the microbiome and proteomics (meaning the analysis of sets of proteins). This fields are still extremely nascent, and it remains to be seen whether such tests will benefit healthy people.
These results will be returned to patients over the course of the study, said Adrian Hernandez, professor of medicine at Duke and a lead investigator for Baseline, especially if they require medical care. But Hernandez said it will be "at least five years" before the insights gleaned from the study are useful to the general population.
The Baseline Project is modeling itself on prior efforts, like the Framingham Heart Study, which kicked off in the late 1940s with more than 5,000 participants. The results of that study showed the importance of regular exercise and a healthy diet in maintaining good health, as well as the deleterious effects of smoking.
The new tools and datasets Verily is developing might prove attractive to the broader research community. Both Mega and Hernandez said they are already getting interest from outside researchers about the Study Watch.
If it builds such tools for researchers, that would be in line with the plan outlined by Verily CEO Andy Conrad: A "Google for medical information."
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12113eacfee8510d0cc0a9b5f9a44e99 | https://www.cnbc.com/2017/04/18/goldman-sachs-q1-earnings.html | Goldman Sachs stock sinks to 4½-month low after rare earnings miss | Goldman Sachs stock sinks to 4½-month low after rare earnings miss
VIDEO1:2801:28Goldman Sachs posts big miss on top and bottom lineSquawk Box
Goldman Sachs stock fell to its lowest level in nearly five months Tuesday after the premiere Wall Street firm reported first-quarter earnings that missed on the top and bottom lines.
Here are some highlights of the earnings:
EPS of $5.15 a share vs. $5.31 a share expected by Thomson Reuters analysts' consensus.Revenue of $8.026 billion vs. $8.446 billion expected by Thomson Reuters analysts' consensus.Net revenues from bond, currency and commodities trading was little changed from the same period last year at $1.69 billion.Equities trading revenue fell 6 percent year over year.
Heading into Tuesday's report, Goldman had topped Wall Street's earnings estimates 90 percent of the time when reporting quarterly results over its history as a public company, according to Bespoke Investment Group. The last time Goldman reported a miss on earnings per share was the fourth quarter of 2015.
Shares skidded 4.5 percent in the first hour of trading, falling to $216.02 at one point before regaining some lost ground. It was the lowest intraday price since it traded at 214.97 on Nov. 30. In anticipation of the earnings announcement Tuesday, the share price had gained more than 1 percent.
"The operating environment was mixed, with client activity challenged in certain market-making businesses and a more attractive backdrop for underwriting in our investment banking franchise," Chairman and CEO Lloyd C. Blankfein said in a release.
VIDEO5:1905:19Dick Bove: Change in management key at Goldman SachsClosing Bell
Goldman said "significantly" lower net revenues from commodities and currencies offset "significantly" higher net revenues in mortgage products. Stock trading revenue was hit by declines in commissions and fees, reflecting lower volumes in the U.S.
A jump in trading revenue boosted major bank earnings in the last few quarters and continued to help the earnings of Citigroup and JPMorgan Chase in the first quarter. Bank of America also reported earnings Tuesday, beating or meeting Wall Street expectations on almost every single metric.
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"What we have is a contrast between Goldman being a broker-dealer that's kind of moved into being categorized as a bank, and Bank of America which is a traditional commercial bank which gets a lot more benefit from higher interest rates, especially on the short end of the curve," Marty Mosby, director of bank and equity strategies at Vining Sparks, said on CNBC's "Squawk Box."
Earlier this year, the U.S. 2-year Treasury yield hit fresh highs going back to the financial crisis, just ahead of the Federal Reserve's interest rate hike in March, the second in three months. Treasury yields have since fallen to lows not seen in at least a month as concerns about economic growth and supportive fiscal policy have increased.
Goldman said its net interest income fell 42 percent year on year. Bank of America said its net interest income rose 5 percent from the same quarter last year.
Goldman Sachs also announced the repurchase of an addition 50 million shares of common stock and raised its quarterly dividend to 75 cents from 65 cents per common share. The dividend will be paid on June 29 to common shareholders as of June 1.
Extended-hours performance of Goldman shares
Source: FactSet
Goldman said the Standardized Common Equity Tier 1 ratio — a measure of financial strength watched by regulators— fell to 14.2 percent in the first quarter, down from 14.5 percent in the fourth quarter of 2016.
For the first quarter of 2016, the financial giant reported diluted earnings per share of $2.68 on revenue of $6.34 billion.
The financial stocks have led the U.S. stock market rally since the presidential election, but have struggled more recently.
Goldman shares hit an all-time high in the first quarter and are up more than 30 percent since the election but were lower by a little more than 5 percent for the year, as of Monday's close.
— CNBC's Juan Aruego contributed to this report.
Watch: BAC's big beat over GS
VIDEO1:5401:54BAC's big beat over GSSquawk on the Street
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2d44ee33ce5e49456a958b71573701a8 | https://www.cnbc.com/2017/04/18/how-does-north-korea-get-money-to-build-nuclear-weapons.html | Five ways North Korea gets money to build nuclear weapons | Five ways North Korea gets money to build nuclear weapons
VIDEO1:1101:11North Korea is funding their nuclear program with global resourcesNews Videos
North Korea has surprisingly managed to draw on global resources to develop its nuclear weapons program, despite being a tiny country that's isolated from most the world.
North Korea's economic clout is small — South Korea's central bank estimates its neighbor had a gross national income in 2015 of 34.5 trillion South Korean won ($30 billion), just 2.2 percent that of South Korea. But North Korea spends an estimated 25 percent of its gross domestic product on weapons.
"This is basically a brutal dictator who doesn't really put a lot of stock in the safety, health, education of his people. It wouldn't surprise me at all he would pour resources into nuclear weapons that I hope will never be used," said Sharon Squassoni, director of the Proliferation Prevention Program at the Center for Strategic and International Studies.
Here are five sources of North Korea's funding, according to analysts:
1. China
About three-fourths of North Korea's trade is with its communist neighbor China, according to the U.S. Central Intelligence Agency. Other estimates put the percentage even higher.
"China has enormous leverage to influence stability in North Korea, but most of it they feel they cannot use because of adverse consequences for China interests in North Korea," said Scott Snyder, director of the Program on U.S.-Korea policy at the Council on Foreign Relations. Beijing has the ability to shut down food and energy supply for North Korea, he said.
However, a North Korean collapse would likely send refugees flooding over the border into the economically weak northeastern region of China, a situation Beijing wants to avoid.
2. Overseas slave labor
Forced North Korean laborers in China and Russia give Pyongyang desperately needed cash, said Robert Manning, senior fellow at the Atlantic Council. Other exports such as coal and minerals also bring in hard currency, in the form of Chinese yuan, U.S. dollars and euros.
"I think a lot of this fuels their nuclear missile companies," he said.
North Korean dictator Kim Jong Un can also use those funds to buy the support of other leaders in North Korea, Manning said. "If we can take away his hard currency, his hard cash, I think that will create a new political dynamic in North Korea. He can't buy off the political elites," Manning said.
3. Weapons sales
"The North Korean economy is basically being run by its arms deals," said Anwita Basu, The Economist Intelligence Unit's lead analyst for Indonesia, the Philippines and North Korea.
She pointed to export deals North Korea has made with African countries; other political analysts have speculated that there is cooperation between North Korea and Iran on nuclear weapons development.
North Korea "continues to trade in arms and related materiel, exploiting markets and procurement services in Asia, Africa and the Middle East," said a February report from the U.N. Security Council's Panel of Experts.
The report added that North Korea uses its construction companies in Africa to build arms-related, military and security facilities. Last summer, Egypt intercepted a ship from North Korea carrying 30,000 PG-7 rocket-propelled grenades and other weapons parts, the study said.
4. Drugs
North Korea has "a large illicit drug industry," the Atlantic Council's Manning said. "I've seen samples of North Korean pirated Viagra that looks very authentic. It has been a significant source of hard currency."
5. Cybercrime
North Korea was reportedly behind a $81 million cybertheft of funds from Bangladesh's account at the New York Federal Reserve last year. Prosecutors believe Chinese middlemen helped North Korea with the theft, The Wall Street Journal said, citing people familiar with the matter.
Some Chinese financial firms also appear to serve as channels for funds to North Korea.
In February, six U.S. senators — including former presidential candidates Ted Cruz and Marco Rubio — sent a letter to U.S. Treasury Secretary Steven Mnuchin that urged him to restrict North Korean banks' access to Chinese banks.
United Nations sanctions against North Korea "have been very modest compared to what we do vis-a-vis Iran or Cuba," Manning said. "The degree to which China is prepared to cooperate will determine how successful we are in imposing pressure on North Korea."
Correction: Egypt intercepted a ship from North Korea carrying rocket-propelled grenades and other weapons parts in 2016. An earlier version misstated the timing.
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80555c1bc99edaeb5f245a65f8e3e7e8 | https://www.cnbc.com/2017/04/18/messenger-ceo-david-marcus-at-f8-more-bots-announced.html | Facebook unveils a big push into bots at F8 | Facebook unveils a big push into bots at F8
David MarcusSimon Dawson | Bloomberg | Getty Images
Messenger CEO David Marcus unveiled what he calls Messenger 2.0 at developer conference, F8. Last year at this same conference Marcus unveiled bots on the Messenger platform to automate interactions between businesses and consumers without needing to leave the app. Today, Marcus announced that there are 100,000 bots on the platform, up from 33,000 in September, and 100,000 developers working on the platform. The number of messages sent between consumers and businesses has now hit 2 billion a month.
Marcus said ahead of his on-stage presentation that the goal is for Messenger — which hit 1.2 billion users last week — to be "the new social living room for the world, where people can hang out, share, chat, play games or buy things, while being able to reach nearly everyone, wherever they are."
"Last year we set the foundation to create an ecosystem of developers, learned and iterated our way into finding what works," says Marcus. "Now that we have enough developers and enough businesses responding to messages — 65 million businesses and pages, nearly 20 million of them responding to messages every month — it's about scale and getting those experiences in the hands of the many more people."
The key piece of that is a discover tab for users to browse and find bot experiences. "Right now if you know what you're looking for you can find it through search, but you couldn't browse all the experiences, there hasn't been a way for you to do that," says Marcus. "That's one thing that will change. You as a user will spend more time interacting with brands and services in the next 12 months than the last 12."
Part of that is an announcement that was expected: Extending bots to groups, to enable group chats. Marcus cited the example of a group of friends wanting to collaborate on a playlist for a party; now the group will be able to use Spotify, and eventually Apple Music, to share music directly into a threat, and listen to music without ever leaving the Messenger app.
Messenger's AI assistant, called "M," will play a bigger role as well, making suggestions for everything from sending or requesting payments to scheduling plans. Messenger is also building off the success of games on the platform., saying over 1.5 billion games have been played in the last 90 days, and they're adding features to encourage even more game playing. A click on the games tab will allow users to challenge a friend to a game, and will support games where players take turns, rather than just those where they play simultaneously.
The goal of Facebook — and Messenger — in all these announcements seems to be to make the experience within Messenger so useful and all-encompassing that there's never a reason to swipe away to another app. The more useful Messenger can become for businesses, the more they're likely to invest in their presence on Messenger and its sister apps. Messenger doesn't just want to replace the phone book, it seems to be positioning itself as an alternative to the Internet -- everything you want to do, you can do on the platform.
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813f1c2a92d06701b86cb4bde7a18073 | https://www.cnbc.com/2017/04/18/petsmart-buys-chewy.html | PetSmart is acquiring Chewy.com for $3.35 billion in largest e-commerce acquisition | PetSmart is acquiring Chewy.com for $3.35 billion in largest e-commerce acquisition
A Petsmart pet groomer combs the hair of a teacup poodle.Getty Images
PetSmart has made the biggest e-commerce acquisition in history, snatching up fast-growing pet food and product site Chewy.com for $3.35 billion, according to multiple sources familiar with the deal.
The deal is a huge one by any standard — bigger than Walmart's $3.3 billion deal for Jet.com last year — and especially for a retail company like PetSmart that was itself valued at only $8.7 billion when private-equity investors took it over in 2015.
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But Chewy.com has been one of the fastest-growing e-commerce sites on the planet, registering nearly $900 million in revenue last year in what was only its fifth year in operation. The company had been a potential IPO candidate for this year or next, but was taken out by its brick-and-mortar competitor before that.
Chewy was founded in 2011 by Ryan Cohen and Michael Day and built a cult following for its excellent customer service, large selection and fast shipping. It had quietly raised at least $236 million in venture capital from investors including Volition Capital, T. Rowe Price and BlackRock.
Its under-the-radar status was probably aided by the fact that it was headquartered in Fort Lauderdale, Fla. and not a big e-commerce market like New York, Los Angeles or Seattle. But it did have a big name in the industry as chairman: Mark Vadon, who also co-founded Blue Nile and Zulily.
The deal is the type of bet-the-company acquisition by a traditional retailer that commerce-focused venture capitalists have been betting on for some time.
PetSmart had announced its intention to acquire Chewy on Tuesday morning, but didn't disclose a price. PetSmart is owned by a group of private-equity investors led by BC Partners.
—By JASON DEL RAY, Recode.net.
CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.
Watch: PetSmart goes private
VIDEO5:0205:02PetSmart goes private
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22ff972c0a7e3508e2dee37fdfb5a038 | https://www.cnbc.com/2017/04/18/president-trumps-first-100-days-offer-some-stock-market-surprises.html | Trump's first 100 days still looking pretty good for stocks | Trump's first 100 days still looking pretty good for stocks
Getty Images
The first 100 days of President Donald J. Trump's term are on track to work out pretty well for stocks. That's better than modern White House history would suggest.
Stocks have not done that well at the outset of new presidential terms. When the market has done well, it's been more often for the Democrats. So while the Trump presidency has produced some big missteps — and disappointments for Trump supporters — barring a major meltdown in the next two weeks, the first 100 days are on track for sizable gains for the market.
Even after posting negative returns in the past month, the primary S&P 500 ETF (SPY) is up 2.9 percent since Jan. 20, and the primary Dow Jones Industrial Average ETF (DIA) is up by 3.6 percent, according to Morningstar. The primary Nasdaq 100 ETF (QQQ), meanwhile, has been the best, with a return of 6 percent.
The 45th U.S. president still has his work cut out for him if he wants to match a nemesis: The S&P 500 posted positive performance during the first 100 days of both of President Barack Obama's terms in office. Going back as far as the Eisenhower years, Democratic administrations have had much stronger stock markets at the beginning of new terms, according to CFRA data.
President S&P 500 (1st term) S&P 500 (2nd term) Obama8.47.5Clinton1.63.2Carter-3.9N/AJohnson2.9N/AKennedy8.7N/ADemocrat avg.3.55.3
President S&P 500 (1st term) S&P 500 (2nd term) Bush (43)-6.9-1.6Bush (41)7.8N/AReagan0.95Nixon2-9.9Eisenhower-5.82.5Republican avg.-0.4-1
(Source: CFRA)
The data on presidents and markets is clearly not statistically significant — it's about as small as a sample gets. And the torrid pace set by stocks directly after Trump's win on Nov. 8 complicated market pricing efforts. So the first 100 days' data is probably best considered as something between a sound bite and data point in the final analysis. But it's worth reviewing what has been expected and what has been surprising about the direction in the stock market during Trump's first 100 days, especially at the sector level.
Energy had outshone nearly every sector during the early days of the past five presidential administrations. And when presidents are more energy-centric than others, it has helped. Not in Trump's case. While energy stocks rose 11.4 percent in the first 14 weeks of President Bush's new administration in 2001, and 11.3 percent in 2005, the Energy Select Sector SPDR (XLE) is down more than 6 percent since Jan. 20.
S&P 500 sectors Average Clinton, 2nd term Bush, 1st term Bush, 2nd term Obama, 1st term Obama, 2nd term Energy3.2-3.411.411.3-4.51.3Financials3.1-0.6-1.2-3.813.18.1Materials3-6.314.6-1.910.1-1.4Utilities2.8-11.1149.1-12.614.6Consumer Discretionary2.71.20.9-7.810.68.8S&P 500-0.1-1.4-6.7-0.91.96.5
(Source: CFRA)
Trump's administration still looks to be positive for energy — especially traditional sources, including oil and gas. But oil prices — after a big recovery in 2016 — have been the culprit in a falloff for the sector. For investors who think the sector is attractive, CFRA recommends XLE as the broadest way to catch any energy gains. It invests more than 46 percent of assets in what Morningstar classifies as "giant" stocks, including global oil players like Exxon Mobil and Chevron. The fund is low-cost and highly liquid.
"If you are a believer in patterns based on past performance, then diversified sector ETFs are a good way to get exposure," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA. Vanguard Energy (VDE) is another broad energy ETF featuring the same top three oil stocks, but assets are also diversified among exploration companies.
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Given that Trump wants to drill for more oil, the iShares U.S. Oil and Gas Exploration and Production ETF (IEO) could still be a beneficiary of the new administration. It includes more U.S.-focused drillers, like ConocoPhillips and EOG Resources, as well as refining plays like Phillips 66.
Neena Mishra, director of ETF research at Zacks Investment Research, said the SPDR S&P Oil and Gas Exploration & Production ETF (XOP) is similar to IEO, with a mix between exploration stocks and refining stocks that is about 75 percent to 80 percent/15 percent to 20 percent, but it has lots of smaller-cap stocks, so it's more volatile. XOP has near-30 percent of its holdings in small-cap names, while for IOE the percentage of exposure to small-cap stocks is under 10 percent.
The price-to-earnings ratio of IEO is 17.43; for XOP the P/E ratio is 25. Five of XOP's top 10 holdings have a market cap of roughly $5 billion or below, including Chesapeake Energy, currently its largest holding. None of IEO's top 10 holding have a market cap less than roughly $19 billion.
The materials sector — which includes chemicals, paper and mining — has been another of the more consistent sector winners in recent history of new administrations. Materials stocks were strong performers in 2016, too. Rosenbluth pointed to the broad materials ETF that represents the S&P 500 materials subsector, the Materials Select Sector SPDR Fund (XLB). Its main holdings include high-profile merger targets Dow Chemical, DuPont and Monsanto. "Company consolidation is taking place and driving prices higher," he said.
And it has done OK, though the sector has trailed the broader market, up close to 1.3 percent since Jan. 20, according to Morningstar.
The smaller, SPDR S&P Metals and Mining ETF (XME) mainly owns steel companies, like U.S. Steel, ripped after Trump's election, but since he actually assumed office, it has declined by near-9 percent. U.S. Steel is down 13 percent since Jan. 20 — though its near-50 percent gain in the past year still looks good.
"It could be a beneficiary of increased steel demand from U.S. companies," Rosenbluth said.
Mishra also likes the smaller, Van Eck Vectors Steel (SLX), which has international holdings like Rio Tinto. "Trump is talking about building infrastructure," she said, "so materials companies will do well." It is also down more than 9 percent since Jan. 20.
S&P 500 sectors Average Clinton, 2nd term Bush, 1st term Bush, 2nd term Obama, 1st term Obama, 2nd term Information Technology-4-3.5-29.4-4.817.10.3Telecom-0.3-4.6-12.4-2.23.314.3Consumer Staples0.92.3-1.6-1.3-6.711.8Industrials0.9-0.74.1-0.1-2.13.2Health Care1.61.8-2.75.2-912.7S&P 500-0.1-1.4-6.7-0.91.96.5
(Source: CFRA)
Technology has historically lagged other sectors at the beginning of new term — with Obama's first term as an exception. Many pundits expected tech to trail under Trump as a global manufacturing and trade war rattled supply chains. That hasn't happened — Trump has even toned down talk about NAFTA revisions and did not follow through on campaign rhetoric calling China a currency manipulator.
Trump did make overtures to tech CEOs under the guidance of his Silicon Valley backer, venture capitalist Peter Thiel. Technology stocks would also benefit if corporate profits held offshore, were allowed to be brought back to the U.S. on a preferential tax basis. Many big technology companies are big dividend payers. That would help explain tech stocks being up so much since Jan. 20, though there are indications tax reform will take longer than initially expected.
The Vanguard Information Technology (VGT) has generated a return of more than 6 percent since Trump took office, according to Morningstar. Its biggest holdings include stocks like Apple and Microsoft, which are among the tech companies that have had rising dividend payouts.
VIDEO5:4705:47Trump trade in trouble?Fast Money
Market analysts were more positive on health care after Trump's win because Hillary Clinton had been more vocal about drug pricing. While Trump made plenty of comments about drug costs and at his first press conference in six months, on Jan. 11, the then-president-elect even said drug companies have been getting away with murder, investors haven't been fazed.
As for Obamacare and the health sector, also lots of talk and a major Trump failure, but little negative effect on stocks. The Health Care SPDR (XLV) is also up near 6 percent since Jan. 20.
Keith Lerner, chief market strategist for SunTrust, said health care will continue to be faced with headline risk that can result in price swings for the sector, but he pointed out that health care was the worst performing sector in 2016. He thinks any additional headline risks will create opportunities to buy on the dip. He is also favoring large-cap biotech, which came into Trump's term trading at its largest discount to the broad-based market — on a price-to-earnings basis — in the past 20 years.
— By Constance Gustke, special to CNBC.com
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36aa0f04d96525a16b232d3359593f32 | https://www.cnbc.com/2017/04/18/trump-companies-dont-always-buy-american-hire-american.html | Trump companies don't always follow his 'buy American, hire American' pledge | Trump companies don't always follow his 'buy American, hire American' pledge
VIDEO2:5602:56Trump: Will enforce rules to end visa abusesClosing Bell
President Donald Trump promoted his "buy American, hire American" policy again Tuesday — but his family's companies haven't always followed that pledge themselves.
After touring a Snap-on tools plant in Wisconsin on Tuesday afternoon, Trump signed an executive order pushing the hiring of domestic workers by American companies.
The measure will aim to make it more difficult for businesses to hire lower-wage foreign workers, particularly through changes to the H-1B program favored by technology companies, The New York Times reported. The order will also direct a review of government rules related to the use of American companies for federal contracts.
"We are sending a powerful signal to the world. We are going to protect our workers, defend our jobs and finally put America first," Trump said Tuesday.
But businesses owned by Trump and his family members don't always favor American workers.
President Donald Trump delivers opening remarks during a meeting with (L-R) Wendell Weeks of Corning, Alex Gorsky of Johnson & Johnson, Michael Dell of Dell Technologies, Mario Longhi of US Steel, and other business leaders and administration staff in the Roosevelt Room at the White House, Jan. 23, 2017 in Washington, DC.Getty Images
Last year, Trump got approval to hire 64 foreign workers for his Mar-a-Lago resort in Florida through the government's H-2B visa program, according to the Palm Beach Post. Trump has heavily criticized the H-1B program, but not the H-2B, which applies to seasonal or temporary workers.
Trump defended the hiring move in a presidential debate last March, saying it is "very, very hard" to find workers to fill those jobs — which included positions for waiters, cooks and housekeepers, according to the Post report.
Trump Winery, owned by the president's son Eric, also applied for foreign workers through the H-2A visa program, which applies to agricultural workers, according to NBC4 in Washington. That business has also said it is difficult to find American workers.
NBC News found that shipments of Chinese-made dresses bearing the brand of Trump's daughter Ivanka have continued to be shipped into the United States since Trump took office. Ivanka Trump, who recently took a White House job, has said she no longer has a management role in the brand.
The White House and Trump Organization did not respond to CNBC requests for comment.
Tuesday's executive order comes as part of Trump's push to prod U.S. businesses to invest more money domestically and create jobs for American workers — issues that helped propel the businessman to the White House. He has repeatedly attacked U.S. companies, particularly automakers, that produce products or components abroad. He slams trade deals that he says have led companies to abandon American workers.
"We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams. ... We will follow two simple rules: Buy American and hire American," Trump said at his inaugural address in January.
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134a576a50b3268acfd27b18bbec4bdc | https://www.cnbc.com/2017/04/18/wall-street-on-goldman-whiff-what-the-heck-is-going-on.html | Wall Street on Goldman whiff: 'What the heck is going on?' | Wall Street on Goldman whiff: 'What the heck is going on?'
VIDEO3:1103:11Goldman slip 'short term': ProSquawk Box
Goldman Sachs' stunning first-quarter profit disappointment immediately set off some serious head-scratching on Wall Street.
The fifth-largest bank by assets in the U.S. reported earnings that missed on both top-line revenue and bottom-line profits, a rarity for a bank that historically has beaten Wall Street earnings targets 9 out of 10 times.
Time will tell if the first three months of 2017 were a one-off miss or a sign of a more fundamental decline in the bank's operations. But for now, the letdown was palpable and set off a wave of investor worry, particularly because Goldman's competitors posted almost universally strong earnings.
The bank's shares tumbled more than 3 percent at the market open and were down 4.5 percent at one point, falling to $216.02. It was the lowest intraday price since it traded at 214.97 on Nov. 30.
"Given what you're seeing out of Bank of America, JPMorgan and Citigroup, this is a quarter which makes me wonder what the heck is going on," said Dick Bove, vice president of equity research at Rafferty Capital Markets. "Hopefully, it's just an aberrant quarter."
Bove later on Tuesday cut his rating on Goldman from a "buy" to a "hold."
Goldman's biggest area of worry was in trading, where revenues in the vital fixed income, commodities and currencies business were essentially flat year over year and down about 16 percent from the fourth quarter of 2016.
The new year has been slow for equities trading, but other big institutions on the Street are making due with strong business in bonds and related debt instruments.
"The big one that is glaring and sticks out is the decline in FICC. That was totally unexpected and totally aberrant as to what its competitors are doing," Bove said.
One of the big problems for Wall Street in general and Goldman Sachs in particular has been the absence of deals.
Mergers and acquisitions volume plunged 55 percent in the first quarter from Q4 in 2016, according to data provider Dealogic. While initial public offering volume surged in the quarter, much of it came via the Snap IPO that generated $3.9 billion of the total $13.4 billion in revenue raised during the quarter.
Ramin Talaie | Getty Images
"Look at the equity markets — there's nothing going on. The IPO pipeline is small and as unremarkable as I can remember," said Christopher Whalen, head of Whalen Global Advisors. "We're not funding acquisitions or deals. It's simply the Street refinancing the debt they're using to buy back their stock."
The competition for deals is intense, and the benefits are skewing toward bigger firms that have dominated and smaller ones that are willing to compete for down-market business.
"Goldman's been good at trading, but you're not going to hit that every quarter and you can't predict it. One or two trades can seriously affect your results every quarter," Whalen said. "It's Jurassic Park — that's what you've got, and the big dinosaurs win."
The long-term damage for Goldman is hard to predict as well.
Shares are down more than 9 percent in 2017, sharply underperforming an industry that is off about 5 percent as measured by the SPDR S&P Bank exchange-traded fund.
Goldman CEO Lloyd Blankfein told investors Tuesday that the bank is "well-positioned" to meet the challenges ahead.
"I don't think it's worrisome. It's probably just a one-off kind of a quarter. You'll probably see it improve at least to the extent that volatility begets more client activity over the next few quarters," said Justin Fuller, senior director at Fitch Ratings. "I don't think it's a bad quarter by any means."
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21f0cc8a84ba761f4efa865466c77de2 | https://www.cnbc.com/2017/04/18/wall-street-thinks-netflix-may-be-lowballing-its-subscriber-numbers.html | Wall Street thinks Netflix may be lowballing its subscriber numbers | Wall Street thinks Netflix may be lowballing its subscriber numbers
VIDEO3:2803:28Netflix beats Street but subscribers lagSquawk Box
Is Netflix doing even better than it's letting on? Wall Street thinks so.
The video streaming company offered a better-than-expected subscriber forecast for the current quarter when it reported results Monday evening, saying it expects to add a combined 3.2 million customers domestically and internationally in the period. But according to the first notes to clients Tuesday morning, analysts believes Netflix is being conservative, even with that better-than-expected forecast.
Here's why:
The company also revealed Monday it is on the verge of surpassing 100 million subscribers globally, and it could reach that number as soon as this weekend. If that amazing milestone is true, then Netflix executives just tipped their hand that the subscriber guidance they gave for this quarter may be too low.
Scott Devitt of Stifel explains:
"Netflix ended 1Q:17 with 98.75mm subscribers and noted it expects to eclipse the 100mm subscriber mark this weekend, giving the company around 40% of its expected quarterly net adds in just three weeks."
Are you following?
If Netflix reaches 100 million subscribers this weekend, that means it's already added 1.25 million subscribers — or nearly 40 percent — so far this quarter, well on its way to making its guidance of 3.2 million adds.
Devitt raised his 12-month price target to $170 from $155 in part because of this.
Even bearish analysts noticed this point.
"The disclosure that Netflix is going to pass the 100mn subscriber count this weekend suggests it is trending ahead of schedule towards its sub guidance for 2Q17," wrote Mark May of Citi Research, who has a neutral rating. "Considering the new seasons of House of Cards and Orange is the New Black are scheduled for release later this quarter as well, we believe guidance could prove conservative."
To be sure, Netflix executives may be privy to a reason why subscriber growth could slow in the second half of this quarter, making their guidance just right.
Shares of the company closed down over 2 percent at $143.36 per share on Tuesday.
Netflix did not immediately return CNBC requests for comment.
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df566591a3b6409dc721f1ac4e35463b | https://www.cnbc.com/2017/04/19/10-european-countries-that-are-going-big-on-renewable-energy.html | Sustainable Energy | Sustainable Energy
Olivier Morin | AFP | Getty Images
CNBC's Sustainable Energy takes a look at 10 countries where renewables are becoming an increasingly important part of the energy mix.
The percentage figures are for European Union member states in 2015 -- the latest available year -- and reflect the share of energy from renewable sources in a country's gross final energy consumption.
The figures are from Eurostat, the European Union's statistical office.
Daniel Mihailescu | AFP | Getty Images
Nearly a quarter of Romania's gross final consumption comes from renewable energy, beating its national target of 24 percent and far exceeding the European target of 20 percent.
White_bcgrd | iStock | Getty Images
Lithuania's ministry of Energy says that the sustainable development of energy from renewables is "an important pillar" of its energy policy.
In January 2017, the ministry said that Lithuania was home to more than 2,500 power plants holding permits to produce electricity from renewable sources such as wind, solar and hydro.
Discovod | iStock | Getty Images
In 2016, the International Energy Agency (IEA) said that renewable energy in Portugal had made "strong progress" over the past decade and that the country had become "one of Europe's leaders in terms of use of renewable energy sources … Such as wind and micro-generation."
Arsty | iStock | Getty Images
According to Estonia's ministry of Economic Affairs and Communications, the country's energy needs are, in large part, met by oil shale and renewable fuels.
The ministry has said that as renewable energy technologies develop and become cheaper, a range of "renewable energy generation plants are becoming more competitive and available."
Lumi Images | Romulic-Stojcic | Getty Images
At more than 2.1 gigawatts, hydropower represents a large chunk of Croatia's installed renewable capacity, according to the World Energy Council, with wind and solar following on behind.
Walter Bibikow | Photolibrary | Getty Images
Denmark is a big player when it comes to wind energy. According to the Danish Wind Industry Association, more than 31,000 people worked in the industry in 2015.
Walter Geiersperger | Corbis Documentary | Getty Images
Hydropower is a big deal in Austria. According to the World Energy Council, it is home to more than 13 gigawatts of installed hydropower capacity.
Austria is also home to more than 2.4 gigawatts of installed wind capacity and 900 megawatts of installed solar capacity.
grebcha | iStock | Getty Images
A 2015 report from the Investment and Development Agency of Latvia stated that hydropower and gas were providing the majority of domestic electricity supply, with wind and biomass also "contributing to the mix in recent years."
Hydroelectric plants produced 39 percent of the country's total electricity generation in 2014.
veger | iStock | Getty Images
Finland's ministry of Economic Affairs and Employment says that bioenergy, hydropower, wind power and ground heat are among its most important sources of renewable energy.
Henrik Trygg | Corbis Documentary | Getty Images
Sweden leads the way with over half its energy coming from renewables in its gross final consumption.
According to Swedish authorities, in 1970 oil accounted for over 75 percent of its energy supplies, with that figure falling to roughly 20 percent today.
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574cbe744575922139902e5708f42bbe | https://www.cnbc.com/2017/04/19/5-key-risks-for-uk-leader-theresa-may-as-snap-election-called.html | 5 key risks for UK leader Theresa May as snap election called | 5 key risks for UK leader Theresa May as snap election called
Prime Minister Theresa May makes a statement to the nation in front of 10 Downing Street on April 18, 2017 in London.Getty Images
U.K. Prime Minister Theresa May blindsided political opposition and international spectators Tuesday with a surprise move to call a snap general election for June 8 in a bid to form a unified government ahead of advancing Brexit negotiations.
With May's Conservative party currently dominating opinion polls with a 21 point lead, the move has been widely perceived as an opportunity to garner a greater number of parliamentary seats, giving May a mandate to drive ahead with her intended 'hard Brexit'. However, recent history indicates that opinion polls should be watched with extreme caution and May's decision may have in fact thrown Britain's political path into greater uncertainty.
Judgement day for May
May's 'reluctant' decision to call an early election was a rare departure from her otherwise decisive 'Brexit means Brexit' approach and will be seen as her moment of reckoning.
The prime minister, who had previously said that there would be no snap election ahead of that scheduled for 2020, was elected last year not by the public but by her party after David Cameron's resignation.
A win in June is therefore significant not only for securing greater Conservative power but also validation from the British public, which would allow her to drive ahead with her Brexit vision with renewed confidence. Currently the Conservatives hold a slim majority with 330 of 550 seats. A loss, however, would mark a scathing review of her short time in office and her decision to renege on her previously pro-EU principles.
"The main political risk is that May is taking a massive bet on her own popularity," a research note from Teneo Intelligence said Wednesday.
The most recent YouGov poll suggests that May's Conservatives would emerge from the election in the lead with 42 percent of votes. Labour, the next biggest party but one which is mired with internal divisions, is seen emerging with 23 percent while the Liberal Democrats would likely garner 12 percent and UKIP 10 percent. Other parties are expected to amass 10 percent.
'Hard Brexit' faces turmoil
U.K. parties now have 50 days in which to formulate their campaigns and convince voters that they can offer the best future for Britain.
While May has already triggered Article 50 of the Lisbon Treaty, which formally commences the U.K.'s exit from the EU, pro-European parties may seek to appeal to those who voted to remain – and indeed those who have since changed their stance on the union – by pledging to overhaul Brexit proceedings.
The Conservatives and Labour have both said that they would follow the will of the British public, who voted to leave by a 51.9 percent majority, however, it is anticipated that Labour would aim for a less heavy-handed interpretation of May's hard Brexit.
Meanwhile, the smaller Liberal Democrats and the Green Party, who have opposed May's hard-line stance, could have an opportunity to significantly advance their positions if they focus their campaigning on a pro-EU agenda.
Shifting political landscape
The British public have reason to be disillusioned by the U.K. political system, which has undergone more upheaval in recent months than some previous decades.
Although May leads current polls, this election is far from a shoo-in with indications suggesting that Britons could divert from their traditional party and shift their support – or even place defiance votes. Indeed, the Liberal Democrats, which lost popularity after forming a coalition government with the Conservatives in 2010, gained 5,000 new members in the hours after May's announcement.
This shifting landscape leaves the path open for an entirely new government. While internal divisions within the Labour party suggest that leader Jeremy Corbyn would be unlikely to secure a win, a coalition agreement could throw the Conservatives off course from another five year term.
The co-leaders of the Green party announced Wednesday that they had approached Corbyn and the Lib Dems' Tim Farron about the possibility of forming a "progressive alliance" between the three centre-left parties.
Getty Images
Further frustration for Europe
The newly scheduled election will add greater turmoil to the U.K.'s Brexit negotiations and, with elections already taking place in France and Germany, will further eat into the two-year time frame instigated at the end of March.
The surprise announcement will also have created greater uncertainty among European leaders, with the President of the European Council Donald Tusk likening the continued saga to an Alfred Hitchcock thriller.
"It was (Alfred) Hitchcock, who directed Brexit: first an earthquake and the tension rises," he said on Twitter.
However, commentators from Europe have insisted that the decision will not derail the EU's plans to continue with its scheduled talks, which will focus first on Britain's withdrawal and, later, its renewed deal.
Increased uncertainty for markets
The final risk will, of course, be for markets, which have suffered a bumpy ride since Britain's leave vote on June 23, 2016.
Sterling jumped to a six and a half month high against the dollar Tuesday, trading at around $1.28, after May's announcement. Meanwhile the FTSE 100 fell to almost three-month lows.
According to Dean Turner, economist at UBS Wealth Management, the reaction was expected but the coming weeks of campaigning will be somewhat less predictable.
"Market reaction we saw yesterday is probably well judged but we'll have to see what the next 50 days bring," he told CNBC Monday.
In the longer term, however, he expects the impact on the economy to be "minimal", with earnings likely to play a more significant role.
Citibank has said that its base case continues to be a hard Brexit, defined as an eventual single market exit (to control immigration) with a long transition period, which will reduce the impact of a "chaotic Brexit". Meanwhile J.P. Morgan Asset Management's global market strategist, Alex Dryden, told CNBC that he expects a greater Conservative majority could allow the party to soften its Brexit stance.
"For us, for U.K. investors, it certainly adds to the short-term noise, but what it might lead to is a softer Brexit. A bigger majority for the Conservatives in the House of Commons might allow Theresa May to talk a softer Brexit stance which is why we've seen the pound nose up since the election announcement," said Dryden.
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f89b7c803e171e07544e075b0f86f4d9 | https://www.cnbc.com/2017/04/19/baidu-driverless-cars-open-source-technology.html | Chinese tech titan Baidu is opening up its driverless car tech to challenge Google, Tesla | Chinese tech titan Baidu is opening up its driverless car tech to challenge Google, Tesla
Baidu has opened up its driverless car technology for auto makers to use as it aims to be the default platform for autonomous driving in a bid to challenge the likes of Google and Tesla.
The Chinese internet giant said on Wednesday that the new project named Apollo, will provide the tools carmakers would need to make autonomous vehicles. There would be reference designs and a complete software solution that includes cloud data services.
Essentially, Baidu is trying to become to cars what Google's Android has become to smartphones – an operating system that will power a number of driverless vehicles.
Baidu's self-driving car during a test in December 2015.Baidu
Baidu will open its autonomous driving technology for restricted environment driving in July and then share it for driverless cars running in simple urban road conditions towards the end of the year. By 2020, the company said that the technology will have the capabilities to allow cars to autonomously drive on highways and open city roads.
The technology giant has been investing heavily in this area since 2015 and that same year and roads in Beijing. But the company has also expanded to the U.S. where it received a driverless car test permit for California last year.
"An open, innovative industry ecosystem initiated by Baidu will accelerate the development of autonomous driving in the US and other developed automotive markets," Qi Lu, chief operating officer at Baidu, said in a press release.
Baidu's move pits it against the likes of Waymo, Alphabet's driverless car company, Tesla and even Uber which is developing its own autonomous vehicles. By offering a suite of tools for carmakers to develop vehicles more easily, Baidu could become widespread in the industry.
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8c42d9f3893e2ffb7a34677795213ac9 | https://www.cnbc.com/2017/04/19/coke-puts-vacation-destinations-on-labels-in-share-a-coke-update.html | Coca-Cola puts vacation destinations on labels in update of ‘Share a Coke’ names on bottles campaign | Coca-Cola puts vacation destinations on labels in update of ‘Share a Coke’ names on bottles campaign
Coca-Coca first ran its "Share a Coke" campaign back in 2011, where people could personalize a bottle of soda with their name, replacing the brand's iconic logo. Originating in Sydney, Australia, the company wanted an idea that would create impact and get picked up on social media.
Since then, more than 70 countries have run the campaign, and it won seven awards at the 2012 Cannes Lions advertising festival. Coke saw a surge in sales after it ran the campaign in the U.S. in 2014, and ran it again in 2015, with machines that could personalize bottles.
Coca-Cola U.K will use popular vacation destinations on its labelsCoca Cola
Now, as the Coca-Cola Company prepares for incoming chief executive James Quincey to succeed Muhtar Kent on May 1, it has revamped the campaign, putting popular vacation destinations on bottles in the U.K. from next month.
Holiday hotspots featuring on the packaging include Hawaii, Bali, Ibiza and Miami, and Coke will also give away 11 million samples of its Zero variant at cities and festivals. People will also have a chance to win a holiday, in the initiative which is "designed to remind people of the refreshment and great taste that only an ice-cold Coke can bring on a hot summer day," according to an online statement.
A "significant" marketing spend will push the new bottles, including a TV commercial, digital billboards, social media and "influencer" marketing, according to the statement.
"'Share a Coke' was a global phenomenon which took product personalization to the next level. The 2014 campaign earned a number of awards and mass-scale engagement with our customers online and in-store," said Aedamar Howlett, the company's marketing director Great Britain.
"This year, we are building on its success by reminding people in the U.K. why Coke makes summer more special; while giving them the opportunity to share a Coke with loved ones in some of the most desirable locations across the world."
Coke's "Pool Boy" ad, showing a young woman and her brother admiring a male swimming pool attendant, will launch on TV and cinema on May 19. It is currently running online, and has been viewed 3.7 million times.
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2018d89daf06fe9b46b8a169e35e71dd | https://www.cnbc.com/2017/04/19/former-education-minister-anies-baswedan-wins-jakarta-election.html | Former education minister Anies Baswedan wins Jakarta election | Former education minister Anies Baswedan wins Jakarta election
A former Indonesian education minister won the race for Jakarta governor on Wednesday after a polarizing campaign that cast a shadow over Indonesia's reputation for practicing a tolerant form of Islam.
Anies Baswedan won with 58 percent of the votes versus 42 percent for Basuki Tjahaja Purnama, known by his Chinese nickname as "Ahok", based on 100 percent of the votes in an unofficial "quick count" by Indikator Politik. Other pollsters showed similar results.
Jakarta governor-elect Anis Baswedan (R) and his deputy governor-elect Sandiaga Una (L) hold hands during a press conference in Jakarta on April 19, 2017.Adek Berry | AFP | Getty Images
The national elections commission will announce official results in early May.
The turbulent campaign featured mass rallies led by a hardline Islamist movement, which has strengthened in recent years in a country long dominated by a moderate form of Islam.
More than 80 percent of Indonesia's population professes Islam.
"Going forward, the politics of religion is going to be a potent force," said Keith Loveard, an analyst at Jakarta-based Concord Consulting and an author of books about Indonesian politics.
Baswedan's huge margin of victory was surprising since opinion polls in the run-up to the election had pointed to a dead-heat. Purnama won the first round of voting for governor in February in a three-way race.
Indonesian social media users likened the election outcome to the shock results of the U.S. presidential vote and the Brexit vote of last year.
One Twitter user, @fuadhn, said Indonesians "can feel what US and British citizens feel now. Welcome populism..."
The election came on the eve of a visit by U.S. Vice President Mike Pence, as the Trump administration seeks to engage the world's fourth-largest nation and largest Muslim-majority country as an emerging regional power.
Pence is scheduled on Thursday to visit the biggest mosque in Southeast Asia, Jakarta's Istiqlal Mosque.
The Jakarta election will be seen as a barometer for the 2019 presidential election, given the city's outsized importance as both the nation's capital and commercial centre.
Purnama is backed by President Joko Widodo's ruling party. Baswedan is supported by a retired general, Prabowo Subianto, who narrowly lost to Widodo in a 2014 presidential vote and is expected to challenge him again.
VIDEO1:2101:21Ahok good for investment in Jakarta: EconomistSquawk Box Asia
Police said 15 people were detained following reports of disturbances at several polling stations in the city of 10 million people, after what the Jakarta Post this week dubbed "the dirtiest, most polarizing and most divisive" election campaign the nation had ever seen.
Security appeared light at several polling stations, though police said 66,000 personnel were deployed across the city.
Religious tensions have been an undercurrent in the campaign, with Purnama on trial for blasphemy over comments he made last year that many took to be insulting to Islam.
Hundreds of thousands of Muslims took to the streets late last year to call for his sacking and to urge voters not to elect a non-Muslim leader. One person died and more than 100 were injured after one protest turned violent.
Some voters may have been reluctant to vote for Purnama because of worries about "five more years of protests on the streets by Muslim hardliners," Loveard said in a telephone interview.
Ismail Yusanto, spokesman for one of the groups, Hizbut Tahrir Indonesia, said the election showed that Jakarta voters didn't want a non-Muslim leader.
"It is forbidden under Islamic law, to have an infidel leader," he told Reuters.
Members of hardline groups, including the Islamic Defenders Front (FPI), celebrated the election result at Istiqlal mosque in central Jakarta on Wednesday evening, praying and cheering for the governor-elect.
Baswedan and Prabowo were also expected at grand mosque to join the prayers, according to media reports.
Baswedan, a respected scholar who many viewed as moderate, drew widespread criticism during the campaign when he aggressively courted the conservative Islamic vote, appearing publicly with hardline Islamic leaders during anti-Purnama rallies.
Baswedan, surrounded by his political patrons including Prabowo, struck a conciliatory tone at a news conference after unofficial results came in, pledging to "safeguard diversity and unity".
VIDEO1:5501:55Jakarta's extraordinary electionStreet Signs Asia
His platform has focused on improving public education, providing no-deposit home loans for low income groups and opposing a giant seawall in Jakarta Bay that Purnama has advocated. Baswedan has denied he plans to implement Islamic sharia law in Jakarta if elected.
Baswedan will officially take over as governor in October. Purnama congratulated his rival in a news conference.
"We still have six months (in office) until the new governor is inaugurated and we will finish up our homework," Purnama said. "We hope that in the future everyone can forget the campaign period."
Purnama's blasphemy trial resumes on Thursday and he faces up to five years in jail if convicted.
Investors in Indonesian markets are likely to return to fundamentals such as corporate earnings, now that the political uncertainties surrounding the divisive Jakarta election have diminished, analysts said.
"As long as there are no security issues, the election outcome should not significantly stall the reform programme of the national government, in our view," Citigroup said in a note.
It maintained its year-end target of 6,150 points for the Jakarta stock exchange, which represents an 8 percent upside.
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f674213b9b19ad7c54ddc8dc4710b810 | https://www.cnbc.com/2017/04/19/how-hackers-dug-song-and-jono-oberhide-teamed-up-to-start-duo-security.html | How a high schooler hacked into a security company and ended up with a job | How a high schooler hacked into a security company and ended up with a job
Dug Song, left, and Jon Oberheide of Duo SecuritySource: Duo Security
When internet security specialist Dug Song found out the company he worked for got hacked by a 17-year-old high school student, he didn't alert the authorities.
Instead, he hired him.
Song and highschooler-turned-hacker Jon Oberheide eventually co-founded an information security company called Duo Security in 2010, based in Ann Arbor, MI. The company now counts Facebook, Etsy, Yelp, and Twitter among its clients, and Benchmark, Google Ventures, Radar Partners, Redbpoint Ventures and True Ventures as investors.
"Some of the best hackers don't come with credentials or an Internet degree," Song said. "A lot of this is driven by curiosity and a longing to learn more about systems."
Song had been a member of top hacker group W00W00, which counts the creator of WhatsApp and co-founder of Napster as members. It hacks not out of malice, but to test the security of networks, and calls itself "the largest nonprofit security team in the world."
As a result of that membership, Song was tapped as a security expert, at one point becoming the chief security architect at Arbor Networks. To test if the company's protocols were secure, Song added a fake company inside its system. The "honeypot" was intended to lure hackers to see if they could break in.
"It was like a burglar alarm accessible through the wireless network," said Song. "We wanted it to be interesting enough so it could be our canary in the coal mine."
Meanwhile, Oberheide was a high school student who started a web hosting business with some friends. To get prospective clients, they would "scrape" the internet for email addresses.
"We would send them promotional materials," Oberheide said. "Okay, it was spam."
One of the places that Oberheide used to work was the Starbucks located under Arbor Networks' offices. He would often hack the unsecure wireless networks just to see if he could. While people enjoyed their coffee and surfed the internet, Oberheide could see their conversations and passwords on his screen.
"We weren't looking to do anything malicious," he said. "That's how most hackers are. They're curious about the networks around them."
When he saw the fake Arbor Network company, he took it as a challenge and broke in. But instead of being upset, Song was impressed. Although Oberheide was only 17, he didn't let the fact that he was thwarted by a teen phase him. During the first meet up at an annual DefCon conference, Song discovered that the main organizer of the group was a 15-year-old Mormon kid from Salt Lake City.
"Nothing phases me anymore," he said laughing.
Security engineering isn't like traditional engineering in that people have to consider what other people are not thinking about, he added.
"That kind of divergent thinking is exemplified by the hacker mindset," he said.
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989a19aaac6eb3fc1a5089dc03d6ce84 | https://www.cnbc.com/2017/04/19/japans-scmaglev-super-train-what-its-like-to-ride.html | What it's like to hold Japan's super train golden ticket | What it's like to hold Japan's super train golden ticket
VIDEO2:3302:33Blink and you'll miss it: The world's fastest train
YAMANASHI, Japan — It's become one of the main attractions in this sleepy town, just southwest of Tokyo.
Several times a day, crowds gather atop an observation deck built specifically to view the world's fastest train. They climb three flights of stairs, sit and wait hours, only to catch a few seconds of the superconducting magnetic levitation train, or SCMaglev — a cutting edge "super" train that uses powerful magnets and ground coil to reach speeds topping 300 mph.
"Most of the Yamanashi Maglev is in a tunnel, so you only have a few seconds to see the outside," said Tomoaki Seki, manager of the Central Japan Railway Company, which conducts the tests. "I think you'll be amazed by the speed."
Akiko Fujita | CNBC
I visited Yamanashi, to take the SCMaglev for a test run, unaware of the demand for tickets to get on board. With the train only open to the public roughly 40 days out of the year, rail fanatics consider the ride a golden ticket of sorts. The Central Japan Railway Company has been conducting tests along the same 40 kilometer track for the past 20 years, but interest has skyrocketed, since the SCMaglev reached speeds of 375 miles per hour in 2015, setting a world record.
The limited slots are determined by a nationwide lottery. The unlucky ones, are relegated to the overlook and the Yamanashi Prefectural Maglev Exhibition Center, where every SCMaglev sighting is heralded on a public speaker system, The preboarding process itself is an event, with music blaring, and passengers lining up for photos with a maglev cut-out. On board, the SCMaglev looks and feels like any other high-speed rail. That is, until the train starts to reach speeds of 310 mph. The floor starts to vibrate. The cabin sways slightly.By the time the wheels retract, lifting the train off the tracks, it feels like a plane taking off.
"There really isn't much of a view, but you can just feel how fast it's going," said Takashi Yoshiba, who brought his 4-year-old son Ryouma and his 1-year-old son Keima for the ride. "When we reached speeds of 500 kmph, you could hear the passengers cheering."
Once complete, the train will connect the 215 mile stretch between Tokyo and Nagoya in 40 minutes, slashing the current travel time by more than half. Engineers don't expect the project to be completed for another decade, but with the country's population rapidly aging, the JRC already has its eyes set on exporting the technology to the U.S.
"If they adopt this system, then the volume that the manufacturer produces will be bigger, and hopefully they can reduce the cost and that might affect the profit," Seki said.
Specifically, JRC is eyeing the Northeast Corridor — the 220 mile stretch between New York and Washington.
It's a route that currently takes nearly three hours on Amtrak's Acela Line. The SCMaglev promises to slash it to just one.
Wayne Rogers, chairman and CEO of The Northeast Maglev (TNEM), the private company promoting high speed rail, says any maglev system would require brand new infrastructure, separate from the existing tracks.
A JR Central L0 series 5-car maglev train undergoing test-running on the Yamanashi Test Track.Saruno Hirobano | Wikimedia Commons
"In the Northeast Corridor, we have nine passenger railroads and four freight railroads all using the same 100-year-old infrastructure," Rogers said. "When we look at that, the ability to actually implement a new solution is really constrained."
That may be, but implementing a new high-speed rail system comes with a big price tag. Construction for the first leg that connects Baltimore to Washington is estimated to cost $10 billion, while the entire northeast corridor is estimated at $100 billion.
Japanese Prime Minister Shinzo Abe has vowed to contribute significant funds to build high-speed rail, as part of a broader $150 billion Japanese investment package presented to President Donald Trump during the bilateral meeting in Washington earlier this year. TNEM has already secured a $28 million federal grant to carry an environmental impact study for the first phase, but Rogers acknowledged that convincing taxpayers to pitch in will be a high hurdle.
"You'd say you are a generation behind, but we're two to three generations behind," Rogers said. "Some of the obstacles going forward is people just being able to envision the ability to build a brand new system on a congested corridor."
It's a system Japan has already built up, with the most extensive high-speed rail systems in the world. Now, it's hoping to take the technology beyond its borders, to keep the Japanese economy moving.
Correction: This story was revised to correct that Japan's high-speed rail systems are among the world's most extensive but are not the most extensive. It also was corrected to reflect that The Northeast Maglev secured a $28 million federal grant.
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268720c6c690a36f82eb374599d398f6 | https://www.cnbc.com/2017/04/19/judge-approves-motion-to-sever-shkrelis-case-from-his-co-defendant-greebel.html | Pharma bro Martin Shkreli wins bid for separate trial from co-defendant on securities fraud charges | Pharma bro Martin Shkreli wins bid for separate trial from co-defendant on securities fraud charges
Martin Shkreli (C), former chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals, departs following a hearing at a U.S. federal court in New York City on June 6, 2016.Lucas Jackson | Reuters
Pharma bro Martin Shkreli will be tried separately from his former business lawyer on securities fraud charges, a federal judge ruled Wednesday.
Brooklyn U.S. District Court Judge Kiyo Matsumoto said that Shkreli's constitutional right to a fair trial would be at "serious risk" if he was tried side by side with co-defendant Evan Greebel, since Greebel's criminal defense attorney had threatened to act as "a second prosecutor" against Shkreli.
Shkreli, 34, will go on trial first, beginning June 26.
Greebel will be tried at a later date to be determined.
Matsumoto's decision came less than two weeks after a hearing where lawyers for both Shkreli and Greebel requested their cases be tried separately.
At that hearing, Greebel's lawyer Reed Brodsky warned Matsumoto that in addition to proclaiming Greebel's innocence, he would attack Shkreli as "a liar and a deceiver" who was guilty not only of the charged conduct, but also of other alleged crimes.
"We will be duty-bound to destroy Mr. Shkreli's credibility," Brodsky said at the time. "We are going to be an echo chamber with the government in terms of Mr. Shkreli's lies."
In turn, Shkreli's lawyer, Benjamin Brafman, has indicated that he will use a so-called reliance on counsel defense, which would effectively argue that Shkreli's alleged conduct was done in the belief that it was legal because his attorney, Greebel, had said so.
Prosecutors accuse Shkreli, with Greebel's assistance, of looting a pharmaceuticals firm he had founded, Retrophin, out of millions of dollars to pay off investors he was accused of defrauding at hedge funds he had operated. Both men have pleaded not guilty to the charges.
VIDEO3:3703:37Martin Shkreli trial set for JuneFast Money
Matsumoto, in her ruling Wednesday, said, "Although the court finds that the defendants have not shown that their defenses are mutually antagonistic, or that the risk of spillover prejudice is so great that severance is warranted, the court has serious concerns that under the unique circumstances presented, trying the defendants together would present a serious risk that Shkreli will not receive a constitutionally fair trial."
The judge went on to say that, "A joint trial would place on Shkreli an unfair and heavy burden in defending himself against both the government and Greebel."
"Severance is granted because of the stated intention of Greebel's counsel, in his declaration ... and at oral argument, that Greebel's defense team will act as a second prosecutor against Shkreli, by arguing that Shkreli is guilty and that Greebel is, himself, just another victim of Shkreli's fraud."
Matsumoto noted that Greebel's lawyers had said they planned to introduce evidence, even if prosecutors did not, "that Shkreli lied to Greebel and other attorneys and investors."
Shkreli's lawyers, in a prepared statement issued after the severance motion was granted Wednesday, said, "We are very pleased by the court's decision."
"While severance is very rarely granted, we believe that Judge Matsumoto did exactly what the law required in this very unique prosecution, where Mr. Shkreli was to be tried together with the lawyer whose advice he relied on during the period charged in the indictment," Shkreli's lawyers said. "A severance is the only way Martin Shkreli could receive a fair trial."
Greebel's lawyer Brodsky declined to comment.
The U.S. attorney's office for the Eastern District of New York, which is prosecuting the cases, had no comment.
The accusations in the pending criminal case are unrelated to the controversy that first brought Shkreli national notoriety: his having hiked the price of an antiparasite drug by more than 5,000 percent after acquiring it for his other company, Turing Pharmaceuticals.
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01d89d3198362f7d2dc3dd7ad2a599cb | https://www.cnbc.com/2017/04/19/lack-of-tax-reform-breathes-new-life-into-this-anti-trump-trade.html | Municipal bond market boosted when the Trump trade went into reverse | Municipal bond market boosted when the Trump trade went into reverse
Construction crews work along Highway 101 in Novato, Calif.Getty Images
With tax reform up in the air, no-tax or low-tax investments look a whole lot more appealing.
That's part of what's driving the surge in buying in the $3.7 trillion municipal bond market, which saw the largest inflows into mutual funds last week in more than seven years.
"This is the unwinding of the Trump trade or the Trump trade re-do," said Jeff Lipton, head of municipal research and strategy at Oppenheimer. The state and local bonds, in fact, have been outperforming Treasurys since the beginning of the year, with a total return of 2.75 percent, compared with 1.93 percent, he said.
Lipton notes that $1.63 billion went into municipal bond funds for the week ended April 12, the best since October 2009.
Municipal bonds are tax exempt, in that investors do not pay federal taxes on their returns, nor do they pay state income taxes if they buy certain bonds that are exempt in their home localities. The state and local bonds fund everything from schools to bridges and roads to public works projects.
In the days after President Donald Trump was elected, interest rates zipped higher as investors dumped bonds and investors loaded up on stocks. The bet was that there would be a reflation trade from his tax and stimulus programs, and bonds would weaken, with yields moving inversely higher on rising interest rates and inflation.
"Between Nov. 8 and Nov. 29, municipal bonds plunged relative to taxable bonds," said Jack Ablin, CIO of BMO Private Bank. "Since that time, the end of November and by the end of the year, they rallied back to where they were. Now they're holding their own against taxables, which would suggest there's no disadvantage, meaning no tax break."
"The bigger the tax, the bigger the advantage. The smaller the tax, the smaller the advantage," he said. Ablin pointed to the performance of munis in the iShares National Muni Bond ETF versus, which have held their own this year against the taxable bonds in ETF.
VIDEO4:1004:10The bull case for munis Halftime Report
Treasurys and other fixed income investments have been pricing out tax reform in recent weeks, particularly since Congress and Trump failed to bring a bill to replace Obamacare to a vote on March 24. Stocks have become range bound, yet the is still up more than 9.5 percent since the election.
"I think the bond market had become very much oversold very, very quickly [late last year], and a lot of that sentiment was really based on expectations as opposed to reality, and now we are seeing expectations are being pulled back," Lipton said. "I think the desire for haven assets is likely to be more pronounced through the foreseeable future."
Lipton points out that municipal bond flows have been both positive and negative this year after weeks of positive flows last year.
The Trump administration has been pushing back expectations for a 2017 tax bill. Last week, Trump said health care comes before tax reform, and Treasury Secretary Steve Mnuchin said his original target of August for tax reform was too aggressive.
Goldman Sachs economists, in a note Wednesday, said it appears the timing of tax reform is slipping again. "If the legislative focus remains on health legislation through May, a vote on tax reform at the committee level might not occur in the House until July, which could make final enactment of tax legislation before year-end challenging. At this point, we expect that enactment is more likely in Q1 2018 than Q4 2017," they wrote.
But that could quickly reverse, if Washington pushes through health care or switches over to taxes.
"If we come into a scenario where the tax reform rhetoric picks up, and it seems like the president and Congress are more in sync, then investors will get to thinking about tax reform more as it relates to municipal demand," Lipton said.
The market for municipal bonds is dominated by retail investors, with 44 percent held by individual investors and another 17.5 percent in mutual funds. Banks hold about 12 percent and the balance is held by other institutions like life insurers and foreign entities, Lipton said.
To the muni market, both individual and corporate tax reform are important. The House tax plan reduces the corporate tax rate to 20 percent from 35 percent, though there is no agreement with the White House on how revenues would be generated to cover the reduction in taxes.
That difference between the current and anticipated tax rate affects the desirability of tax-exempt investments.
"If they go from 36 to 33 percent, most individual buyers of municipal securities are in the 25 to 28 percent, maybe a little higher, bracket, so you're not going to see a sharp dilution in demand. ... On the corporate tax side, I don't think the corporate tax rate is going to go to 15 percent. If it goes to 20, maybe 25 percent, I think that could impact demand from certain institutional buyers of municipal securities," said Lipton.
He said equivalent munis are trading at 91 percent of the 10-year Treasury. "We've richened up since last week. ... As those numbers increase, it means there's greater relative value buying munis versus Treasurys," Lipton said.
"As the tax reform debate heats up we could conceivably see these ratios go higher, meaning munis become cheaper relative to Treasurys. If you have lower tax rates that theoretically impact the demand of the asset class. It could also result in a shift in muni valuation. I think if we have a dramatic decrease in the corporate tax rate, that could result in a repricing of the muni curve," said Lipton.
Watch: Pro says muni's beginning to look rich
VIDEO2:2502:25Munis beginning to look rich: ProClosing Bell
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ea4b32afd0d458817cd06d1a2f8943f2 | https://www.cnbc.com/2017/04/19/makeup-guru-bobbi-browns-new-chapter-get-customers-back-in-department-stores.html | Makeup guru Bobbi Brown's new chapter: Get customers back in department stores | Makeup guru Bobbi Brown's new chapter: Get customers back in department stores
VIDEO3:0103:01Bobbi Brown's beauty evolution is more than skin-deepSquawk Box
Bobbi Brown, who left her namesake cosmetics company late last year, is taking on a new challenge that's been baffling a retail industry ravaged by e-commerce: how to create compelling reasons to bring shoppers back to brick-and-mortar stores. The founder of Bobbi Brown Cosmetics was appointed creative consultant at Lord & Taylor this week, kicking off the partnership with a concept store-within-a-store called justBOBBI. "It's basically a creative pop-up shop that really talks more about lifestyle. There's beauty in there. There's beauty tools. There's great health supplements," Brown told CNBC's "Squawk Box" on Wednesday. "We are all buying online. There's no question," Brown acknowledged. But justBOBBI is a "way to bring people into the store," she said. Retailers have to be creative "in order to bring the customer back," she said, hoping to be that catalyst at Lord & Taylor. "Right now, it's on LordandTaylor.com and we're in five stores. And there are plans for growth and new things." Even with the pressure from online shopping, Brown believes retailers should not abandon physical stores. "People still want to touch and feel things," she said. "We need talented people hanging around to give a reason for people to come into a store."
Makeup artist Bobbi Brown (L) attends the Jenny Packham fashion show during September 2016 New York Fashion Week.Michael Stewart | WireImage | Getty Images
Brown started her cosmetics company in 1991. Estee Lauder Cos. bought the brand in 1995. She left Bobbi Brown Cosmetics in December after 25 years. "I'm not the first founder that has left a company. There's Calvin Klein. There's Donna Karan," she told CNBC. "I love the company. I love the company I created. I love the products. I still these products I love." "But now I have an open slate" and a new challenge at Lord & Taylor, she said. Brown, who built a global brand that started with selling lipsticks shipped in manila envelopes, said entrepreneurs could benefit from guidance she got from Leonard Lauder, the 84-year-old chairman emeritus of Estee Lauder. "As Leonard Lauder once told me, 'never ask for permission, beg for forgiveness.' That was great advice," she said.
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395f030781d41b57c4a6b9cdf13b4c59 | https://www.cnbc.com/2017/04/19/qualcomm-earnings-q2-2017.html | Qualcomm earnings: $1.34 a share vs. $1.19 per share expected | Qualcomm earnings: $1.34 a share vs. $1.19 per share expected
Qualcomm reported earnings for the second fiscal quarter that beat analyst expectations on Wednesday, as well as revenue that topped estimates amid better-than-expected sales in its technology division.
Shares rose less than 2 percent after hours.
Adjusted EPS: $1.34 a share, ex-items vs. $1.19 per share expected by Thomson Reuters consensusRevenue: $5.99 billion vs. $5.89 billion expected by Thomson Reuters consensus
Adjusted earnings were up 29 percent from the $1.04 per share reported a year ago, while adjusted revenues were up 8 percent from the $5.5 billion reported this time last year.
Q3 adjusted EPS guidance: Range of 90 cents a share to $1.15 a share vs. $1.09 a share expected by Thomson Reuters consensusQ3 revenue guidance: Range of $5.3 billion to $6.1 billion vs. $5.94 billion expected Thomson Reuters consensus
Steve Mollenkopf, CEO of Qualcomm, at the Mobile World Congress in Barcelona on Feb. 23, 2016.Brad Quick | CNBC
Qualcomm's widely used chips and designs are getting beefed up for the adoption of new technology and 5G connections. The flagship Samsung Galaxy S8, for instance, used one of Qualcomm's most high-end chips, and the company benefitted from higher-than-expected average prices during the quarter, executives said during a conference call with analysts.
During the quarter, Qualcomm saw revenue in its licensing division grow 5 percent from a year ago, to $2.25 billion. Revenues for its technology division grew 10 percent from a year ago, to $3.68 billion. Analysts surveyed by StreetAccount expected the licensing division to report $2.24 billion in revenue, and the technology division to report $3.56 billion.
But the company's sales bump comes amid intense scrutiny of the semiconductor company's business model.
Qualcomm's earnings guidance range for next quarter fell around analyst expectations. But the company warned that a tiff with Apple could affect its outlook, as it expects underpayments from manufacturers:
Apple's contract manufacturers reported, but underpaid, royalties in the second quarter of fiscal 2017. However, our revenues were not negatively impacted as the contract manufacturers acknowledged the amounts are due and the underpayment was equal to the amounts that Qualcomm has not paid Apple under our Cooperation Agreement that are currently in dispute. The Cooperation Agreement expired December 31, 2016. It is not clear whether Apple's contract manufacturers will underpay royalties owed under their contracts with us in the third quarter of fiscal 2017, which could have a negative impact on our financial results. Our guidance range for fiscal third quarter EPS is wider than our typical practice primarily due to this uncertainty.
The remarks likely refer to $1 billion lawsuit from one of the world's most powerful companies, Apple, which argues that Qualcomm charges "at least five times more in payments than all the other cellular patent licensors we have agreements with combined." Qualcomm has filed a counterclaim against Apple for breaching agreements and throttling its processors in the iPhone 7.
The "Apple situation" is not the only battle for Qualcomm.
Qualcomm is fighting a fine of $868 million in South Korea, over high patent fees and refusing to offer licenses to some chip manufacturers. The earnings report also reflected a $974 million reduction to revenues over a dispute with BlackBerry.
New processors and wider internet "pipes" have the promise to push forward technologies like virtual reality, cloud computing and video streaming, Qualcomm CEO Steven Mollenkopf said earlier this year. Plus there's the burgeoning self-driving car industry, which Qualcomm hopes to enter with its $38 billion agreement to acquire NXP Semiconductors.
Qualcomm unveiled a new 835 Snapdragon processor, the first ever under 10 nanometers, earlier this year. The Snapdragon 820 and 821 are found in high-end Android smartphones like the Google Pixel, Samsung Galaxy S7 Edge, LGV20, HTC 10, and BlackBerry's Android device.
Executives told analysts that demand for 10 nanometer chips is exceeding supply.
"We will continue to protect the value of our technologies, which enables today's robust mobile communications ecosystem, and invest in R&D that will drive the leading edge of mobile computing and connectivity for decades to come — focusing on areas where our technologies will have the most impact and generate the best returns," Mollenkopf said in a statement on Wednesday.
But up just 1.5 percent over the last year, Qualcomm shares have lagged the gains of rivals Intel and Nvidia. The company's China business also continues to be in focus, after softness in the region
"The licensing business had a strong quarter ... the stronger market and improved licensing in China offset the impact of a new dispute with a licensee," Mollenkopf said during the conference call. President Derek Aberle added that the strength reflected "significantly increased" gains from a year ago in China.
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