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583ad0f2b16c5a52b2a508edc0a914b3 | https://www.forbes.com/sites/marshallshepherd/2019/05/29/climate-change-and-tornadoes-a-succinct-guide-to-what-we-know/ | Climate Change and Tornadoes - A Succinct Guide To What We Know | Climate Change and Tornadoes - A Succinct Guide To What We Know
Tornadoes have devastated the United States over the past few weeks. Rural and urban areas have not been spared from devastating spring storms. According to Weather.com writer Jonathan Erdman, "The United States is experiencing the most active prolonged period of tornadoes since the April 2011 Super Outbreak." With reports of tornadic storms dominating news cycles and social media, it was inevitable that questions linking (or denying linkage) to climate change would surface. Dr. Victor Gensini, a professor at Northern Illinois University, is one of the top tornado experts in the world. He provided succinct Twitter thread on the topic worth dissection.
Is tornadic activity linked to climate change. NOAA website
Before delving into the climate change question, some historical context for the current tornado activity is in order. Patrick Marsh is the Warning Coordination Meteorologist at the National Weather Service Storm Prediction Center. At the time Marsh tweeted the information below, there were approximately 500 filtered "eyewitness" tornado reports in the past 30 days. This number has likely increased given the widespread tornadic activity in Kansas and the Northeast U.S. yesterday.
Tweet from Patrick Marsh. Patrick Marsh via Twitter
Ok, what about climate change linkages? In 2016, The National Academy of Sciences released one of the most definitive reports to date on a new area of climate science called Attribution. The report, entitled "Attribution of Extreme Events in the Context of Climate Change," provided a critical analysis of what scientific studies say about this generic question: "Was it caused by climate change?" I always get nervous with that question because as I wrote previously in Forbes, this comes next:
Person X: "This event is clearly caused by climate change.....blah blah blah" Person Y: "See they say every extreme event is caused by climate change, but the climate changes naturally and there were always extreme events.....blah blah blah"
A better way of framing these discussion is in terms of how likely extreme events are increasing in frequency and intensity. If you review the findings of the 144-page report, it says scientific studies find that certain extreme events are more likely to have a climate change signal than others. The graphic below illustrates that contemporary heat waves, drought, extreme rainfall, and lack of cold events (relatively speaking) are natures versions of "home runs" that likely have "climate change steroids" on top of them based on historical data, model replication, and physical science understanding. It is important to point out that just because an event is low on the scale that doesn't mean there is no climate change influence. It simply means scientific evidence is not strong enough at this time to draw stronger conclusions. Severe convective storms, including tornadoes, falls into this category.
Level of understanding of attribution for specific events National Academy of Science
Dr. Gensini has been studying storms for nearly a decade and has even developed techniques to predict seasonal activity. His Twitter thread did a great job of conveying what we know about tornado-climate change linkages. Gensini starts with:
No, climate change did not cause the recent rash of US tornadoes. Climate change does not cause any given extreme weather event. It does alter background probabilities of the PDF curve.
He points out, using the baseball analogy, that it is hard to attribute any particular home run to steroids because that hitter could likely hit home runs without using a performance enhancing drug. However, it becomes easier to see the influence of steroids in seasonal home run averages, length, and so on. Gensini goes on to say:
Most of the literature has focused on severe convective storms in the aggregate sense due to the lack of a good discriminator among hazards using regional climate models....These studies suggest that severe weather environments and surrogate severe will increase in the spring and become more variable from year to year. This is not (yet) specific to any specific severe convective system.
In other words, smaller scale models feed with global climate model data suggests environments and associated proxies associated with severe weather (atmospheric stability, shear, jet stream patterns) will increase in the spring and exhibit variability from year to year. However, such studies do not predict a specific number of tornadoes or outbreaks as climate warms. Gensini conducted some of these studies as a part of his doctoral studies with Tom Mote at the University of Georgia.
Gensini also captures several other important points about natural variability and anthropogenic forcing:
@hebrooks87 and I have shown some interesting spatial trends in activity that could lead to increasing risk for more vulnerable populations. It is not clear if these trends are natural variability or climate change induced trends. (Link to the study here)
He also mentions work by his colleagues Walker Ashley and Stephen Strader. Their research suggests the expanding urban footprints inevitably means more tornado impacts in highly populated areas. Columbus, Dayton, New York, Jefferson City, Oklahoma City and Kansas City have all dealt with tornadoes in the past week. While such activity should dispel the myth that tornadoes avoid cities, the bigger concern the "expanding" urban "bull's eyes" all over the country.
Roger Pielke, Sr. injected an important reminder into the Twitterverse about the role of the Southern Oscillation on tornadic activity. Ashton Robinson, now with NOAA's Storm Prediction Center, published is doctoral research in the Journal of Applied Meteorology and Climatology, on the linkages between El Nino-Southern Oscillation and tornado activity. Robinson found that the La Nina phase tends to be most correlated with increased tornado activity. However, we are currently not in La Nina. Such climate processes affect jet stream patterns in the U.S. (teleconnections). Gensini's team analyzes sub-seasonal indicators and jet stream patterns to predict tornadic activity weeks in advance. He writes:
Finally, the recent period of intense severe weather with virtually no break was anticipated. Our team began discussing this possibility on April 20th, a month before this pattern emerged.
For more information on his methods for forecasting tornado activity (and it has its critics and supporters alike), I highlighted the technique in a 2016 Forbes piece.
Given the inevitable and often incorrect characterizations of climate change-tornado relationships, I thought this essay would be useful.
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e324f725a9aeb6ab37409846c03a3ce6 | https://www.forbes.com/sites/marshallshepherd/2019/07/08/3-familiar-things-revealed-by-flooding-in-washington-d-c/ | 3 Familiar Things Revealed By Flooding In Washington, D.C. | 3 Familiar Things Revealed By Flooding In Washington, D.C.
Flooding in the Washington D.C. area on July 8th was simply unbelievable. Traffic was snarled throughout the metropolitan Washington area and numerous water rescues were required. According the National Weather Service, Reagan National Airport recorded 3.3 inches of rainfall in one hour. The agency even declared a flash flood emergency for the region. Weather Channel Meteorologist Mike Seidel's Tweet provides further perspective on the flooding, "It only took one hour for Washington, DC to gain Top-10 daily July rainfall status: 3.30" fell, leading to widespread flash flooding across the metro." Meteorologist Ryan Maue added that "Based upon preliminary data, between 2 and 3 billion gallons of water fell on Washington D.C. 68 sq miles (1.5-2.0 inches) from the slow-moving deluge." With rain falling from the sky at that intensity, urban flooding was inevitable. However, I noticed 3 very familiar things about the flooding in Washington D.C. on Monday.
DC Fire and Rescue on the scene for a water rescue on July 8. DC Fire and Rescue Twitter Page
The atmosphere was "juiced" with excessive moisture. NOAA's Weather Predictions Center provides a good backdrop for the meteorological processes associated with the event:
A large, slow-moving convective cluster moved over the D.C. Metro Area this morning, with DCA measuring 3.3 inches of rain in an hour. This has an annual exceedance probability of less than 1 percent, and other mesonet sites have observed similar (3+ inch per hour) rain rates....A low level trough extended from near the mouth of Chesapeake Bay up into northern Virginia, and this coincided with an axis of maximum PW values.
PW stands for Precipitable Water. The American Meteorological Society Glossary of Meteorology defines PW as "the total atmospheric water vapor contained in a vertical column of unit cross-sectional area extending between any two specified levels, commonly expressed in terms of the height to which that water substance would stand if completely condensed and collected in a vessel of the same unit cross section." My former doctoral students Amanda Schroeder, currently a hydrometeorologist with the National Weather Service - Ft. Worth, studied large urban flooding events just like the one in the DC area for her dissertation research. She analyzed urban flood events over the past 40 years and discovered that extremely high Precipitable Water (PW), often in the top 1% of values for the location, were typically present. Of 40 flood cases in her study, PW values always exceeded 150% of climatological mean values.
Meteorological setup associated with DC area flooding on July 8th. NOAA WPC
In a Tweet earlier on Monday morning, I speculated that the DC flooding event was likely to have top 1%-level PW values. Climatologist Jordan McLeod responded that my hypothesis was correct:
Your suspicion is correct. The 12Z sounding at Dulles measured 2.06" of PWAT, which is only 0.01" shy of the daily record for all 12Z soundings going back to 1948. Highly anomalous for sure (graphic below).
When you couple excessive moisture values with an unstable air mass and a convergence zone providing a source of "lift," you get a scenario like the DC floods.
Precipitable water values at Dulles International Airport (black dot) relative to climatological... [+] value. Climatologist Jordan McLeod
Urbanized land amplifies flooding. Typically, we focus on rainfall rates and how fast the system was moving in the aftermath of a flood. However, one of the most important aspects of an urban flooding event is the presence of "impervious surfaces" like roadways, parking lots, and so forth. Brian Bledsoe is the director of the Institute for Resilient Infrastructure Systems at the University of Georgia. He is also a professor of civil and environmental engineering. Bledsoe opined in the Washington Post:
Most of us intuitively grasp that intense rainfall interacts with increases in impervious surfaces such as roads, sidewalks, parking lots and rooftops to amplify the volume and speed of storm runoff. We are less inclined to think about where the water goes from there — how flood mitigation measures like ponds and detention basins can become less effective over time or fail if not properly maintained, or how the ability of streams and rivers to carry runoff changes due to sediment movement and other natural processes. It’s not just the rain that can change. It’s the rain, the urban footprint and the drainage systems all changing together.
Scientific studies also continue to suggest that the intensity of rainfall is changing and that our engineered stormwater removal systems may be overwhelmed by current (and future) generation of rainstorms.
Storms over the urbanized Washington-Baltimore corridor NOAA
Bad decisions. The final thing that was familiar is also the most frustrating. As I browsed social media, numerous pictures and videos were shared of stranded cars in or driving through flooded roadways. To be fair, some of the rainfall rates were so intense that some motorists likely were stranded. However, there were several examples of people making deliberate decisions to drive through flooded roadways. I even saw a loaded school bus plow right through a flooded roadway. As bad as that decision was, I was equally concerned that the bridge could have washed out (video here). It's as if the "Turn Around, Don't Drown" slogan exists only as a cute saying. Senior Weather Channel hurricane expert Rick Knabb tweeted:
At least 43 have died in U.S. floods while driving in 2019. Today, more examples of why we should consider investing in automated and remotely operated barricades for flooded roads. Too many people, including a few school bus drivers, will never abide by Turn Around Don’t Drown.
Whether this solution is ultimately the right one, I agree with Rick that more has to be done.
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ee371b87a7ea4661424b2758a75e7e34 | https://www.forbes.com/sites/marshallshepherd/2019/08/02/robotic-underwater-gliders-could-improve-hurricane-forecasts/ | Robotic Underwater Gliders Could Improve Hurricane Forecasts | Robotic Underwater Gliders Could Improve Hurricane Forecasts
August is typically a transition month for the Atlantic hurricane season. While the peak of the season is in September, tropical cyclone formation starts migrating to the "Cape Verde" origin region off the coast of Africa in August. At the time of writing, the National Hurricane Center was keeping an eye on an area of low pressure over the central tropical Atlantic Ocean. Forecasters give the storm a 20-40 percent chance of further development over the next 5 days. The United States is still recovering from the 2018 Atlantic hurricane season. Hurricane Michael, a rare Category 5 storm, rapidly intensified before making landfall in the panhandle of Florida. Communities in Florida, Alabama, and Georgia were devastated, and the rapid intensification was surprising to many people in the path of the storm. Intensity forecasts continue to lag track forecasting (see link for a discussion in Forbes), but a new robotic underwater glider system could move the needle on improving hurricane forecasts.
Hurricane glider being launched by a research technician from the University of Georgia Skidaway ... [+] Institute. University of Georgia/MADLAWMEDIA)
Hurricane formation requires many ingredients. One of the most important factors is warm water. According to the National Oceanic and Atmospheric Administration (NOAA), water that is "at least 79 degrees F (26.5 degrees C) over a depth of 50 meters powers the storm." While it is common to see discussion of sea surface temperatures (SSTs) during hurricane season, the Oceanic Heat Content (OHC) is actually more important. A study published in 2018 revealed that the OHC associated with Hurricane Harvey was at record levels. According to an American Geophysical Union (AGU) press release:
"As hurricanes move over the ocean, their strong winds strafe the sea surface, making it easier for water to evaporate. The process of evaporation also requires energy from heat, and the warmer the temperatures are in the upper ocean and at the ocean surface, the more energy is available....So much heat was available in the upper layer of the ocean that, as the surface temperature was cooled from the storm (Harvey), heat from below welled up, rewarming the surface waters and continuing to feed the storm."
Satellite-derived rainfall associate with Hurricane Harvey. Rainfall is derived from the IMERG ... [+] project associated with the NASA GPM mission. NASA
The near surface temperatures were roughly 86 degrees F before the passage of Harvey and remained well above 80 degrees F after the storm passed. These findings suggest that knowledge of subsurface ocean temperatures are important for assessing hurricane intensity. New technology being tested by the University of Georgia (UGA) Skidaway Institute is promising. A university-issued media release points out:
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"....autonomous underwater vehicles, also known as gliders, can collect valuable information. Gliders are torpedo-shaped crafts that can be packed with sensors and sent on underwater missions to collect oceanographic data. The gliders measure temperature and salinity, among other parameters, as they profile up and down in the water. Equipped with satellite phones, the gliders surface periodically to transmit their recorded data during missions that can last from weeks to months."
As a meteorologist, I see data collected by the gliders as analogous to information from weather balloons in the atmosphere or dropsondes dispensed from airplanes within hurricanes. Catherine Edwards is a researcher and colleague at the UGA Skidaway Institute of Oceanography. She said, “satellite data provides a nice picture of where the surface ocean is warm, but the subsurface temperature field remains hidden.”
Gulf Stream and ocean heat associated with Hurricane Florence (2018) NASA
These robotic gliders are not just unproven, academic toys. They were evaluated during Hurricane Florence (2018). The UGA-based researchers and colleagues deployed two gliders and found according to Edwards "almost a 14-degree Celsius (approximately 25 degrees Fahrenheit) error that the glider corrects in the model. The ocean models that did not include glider data missed critical aspects of vertical temperature structure.. A third glider deployed in conjunction with researchers at the University of South Florida helped resolve a portion of the warm Gulf Stream ocean current, which can be a significant source of Ocean Heat Content for landfalling hurricanes.
As the 2019 hurricane season ramps up, new funding from NOAA will allow the researchers to continue evaluating the efficacy of the glider systems. Advances in hurricane intensity forecasts will only be realized when internal heat and ocean-atmosphere exchange processes associated with the hurricane are resolved. These robotic gliders offer another important piece to a complex puzzle.
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190f441e474898cf1d232e500122b33c | https://www.forbes.com/sites/marshallshepherd/2019/08/10/why-solar-activity-and-cosmic-rays-cant-explain-global-warming/ | Why Solar Activity And Cosmic Rays Can’t Explain Global Warming | Why Solar Activity And Cosmic Rays Can’t Explain Global Warming
As a climate scientist, I hear my share of myths about what is causing climate change or why it is a "hoax." I call them "zombie theories" because they just will not die. They persist in blogs, certain networks, and social media like zombies long after scientists have killed them off. I debunked 20 of them in a previous article in Forbes. The "sun and its variability" is one that makes the rounds. I am pretty sure I've had to spray "climate science repellent" on that nagging "mosquito" numerous times. This week I heard of a variation of this myth involving cosmic rays. Here is a science-based debunking of the solar-cosmic ray myth.
08 August 2019, Lower Saxony, Hanover: The sun sets behind the skyline of Hannover with the ... [+] Aegidienkirche. Photo: Christophe Gateau/dpa (Photo by Christophe Gateau/picture alliance via Getty Images) picture alliance via Getty Images
I won't spend time highlighting any particular zombie theory about the Sun or cosmic rays. It is more useful to "cut to the chase" on why the Sun doesn't explain climate warming. The graphic below from a NASA climate website is the basis for the discussion. Solar energy is a very important part of our weather-climate system, but I find that some people don't have a clear understanding of its role.
There is misconception that because we feel heat from the Sun and see it in the sky it represents how Earth's surface is warmed at all times. It is actually far more complicated. The Earth has an atmosphere with relatively small amounts of greenhouse gases like carbon dioxide, methane, and water vapor. However, don't be filled by "relatively small" because they are important. Colorado State University professor Scott Denning often says, "We survive every night because of the Greenhouse Effect." His point is that without the system of gases absorbing and re-emitting longwave radiation (heat) it would be too cold to survive. The shortwave radiation from the Sun is just part of the story (read more at this link at Forbes on how the Greenhouse Effect actually works).
Temperature vs solar activity NASA
The energy from the Sun varies, and the 11-year sunspot cycle is a primary driver. According to a NASA website,
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The total solar irradiance (TSI), improperly called “solar constant” until a few years ago, has been found to change about 0.1% in an 11-year solar sunspot activity. The current most accurate TSI values from the Total Irradiance Monitor (TIM) on NASA’s Solar Radiation and Climate Experiment ( SORCE ) is 1360.8 ± 0.5 Watts per meter squared during the 2008 solar minimum as compared to previous estimates of 1365.4 ± 1.3 W/m2 established in the 1990s. NASA Science and Research Portal
This variation in solar energy is well known but doesn't explain global temperature trends. NASA's Global Climate Change website points out two smoking guns that debunk the overused "it's the sun" myth:
One of the “smoking guns” that tells us the Sun is not causing global warming comes from looking at the amount of the Sun’s energy that hits the top of the atmosphere. Since 1978, scientists have been tracking this using sensors on satellites and what they tell us is that there has been no upward trend in the amount of the Sun’s energy reaching Earth. NASA Global Climate Change website
The other smoking gun is related to where the warming is taking place. The NASA website makes the point that "if the Sun were responsible for global warming, we would expect to see warming throughout all layers of the atmosphere, from the surface all the way up to the upper atmosphere (stratosphere)." In reality, warming is being observed at the surface, but there is cooling in the stratospheric region. To anyone that has studied climatology and not astrophysics, this is a "clear as a bell" signal that warming is related to greenhouse gases in the troposphere rather than the sun getting "hotter" or other hypotheses. Dr. Jeff Masters does a "masterful" job explaining why this happens at Weather Underground.
The galactic cosmic rays (GCRs) myth is our next "debunk" target. It argues that GCRSs "seed" clouds so if there are fewer cosmic rays then there will be less global cloud cover to reflect the Sun's energy. The Skeptical Science website, an excellent scientist-run effort, debunks climate myths. Here's what it says about the cosmic ray theory:
The body of scientific research has determined that GCRs are actually not very effective at seeding clouds. However, the hypothesis is also disproven just by examining the data. Over the past five decades, the number of GCRs reaching Earth has increased, and in recent years reached record high numbers. This means that if the GCR-warming hypothesis is correct, this increase in GCRs should actually be causing global cooling over the past five decades, and particularly cold temperatures in recent years. On the contrary, while GCRs are up, global temperatures are also way up, and temperatures in recent years reached record highs. Skeptical Science
Even in a 2017 article on this topic, scientists admitted that there was quite a bit of speculation in this GCR theory.
I often use an the analogy of an apple pie. Apples are the most important ingredient in the pie though some random person might argue for cinnamon or sugar. In the climate system, this well-understood climate graphic illustrates that greenhouse gases are the most important ingredient in the climate radiative pie.
Bon Appetit
The factors that warm or cool the climate system. EPA website
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6694754fccf23995282a8a0ab4106557 | https://www.forbes.com/sites/marshallshepherd/2019/08/12/why-doesnt-the-national-weather-service-have-a-weather-app/ | Why Doesn't The National Weather Service Have A Weather App? | Why Doesn't The National Weather Service Have A Weather App?
Weather information and dissemination have changed in recent decades. A survey conducted by Five Thirty Eight found that increasingly more people receive their weather information from an App on their smartphone. As a meteorologist, I often get questions about what App I typically use on my phone. It is often amusing when the person asking seems surprised or even disappointed when I give a rather mundane answer. My Forbes colleague Dennis Mersereau wrote a synopsis on some of his favorite weather Apps. He mentioned at the end of his piece that the U.S. National Weather Service (NWS) doesn't have an App. Why is that?
A National Weather Service office with weather radar in the background. NWS
If this was a Facebook or social media status update, I would probably start with "It's complicated." The question of why the NWS doesn't have a Weather App is even more timely since their Canadian counterpart, Environment Canada, recently unveiled its weather App, WeatherCan. The website for the App says,
Receive weather alert notifications in your area, as well as in your saved locations, wherever you are in Canada. Get your latest forecast information directly from Canada’s official weather source. Canadian government/Environment Canada
A quick browse of the Internet may leave you thinking NWS does have an App. The NWS website at this link provides information on an "App-like" functionality at mobile.weather.gov but it is not really a NWS App. Admittedly, it is quite useful if you give it a try though. Lifehacker.com documented a new NOAA (the parent agency of NWS) App call SOS Explorer. Emily Price wrote, "If you’ve ever looked at something like wind patterns on a massive globe projection in a museum, it was likely Science On a Sphere." SOS Explorer brings that experience to your tablet or smartphone. However, it is still not a weather App.
The weather App space has been dominated by the private sector of the weather enterprise. Before diving deeper into the App discussion, a brief "kudos" moment for NWS. It is one of the most important yet under appreciated federal agencies in the entire the entire governmental structure in my viewpoint. Virtually every single aspect of daily life (travel, agriculture, energy, health, commerce, and the recreation league soccer game) is affected by information delivered by the National Weather Service (NWS). During recent government shutdowns, NWS employees are deemed essential and work on the "promise of pay" or delayed pay. I would love to see how we all got by if NWS employees "really" shut down, but I digress. NWS has a budget of about $1 billion. By my math, that is equivalent to the cost of a cup of coffee for each member of the U.S. population. When I place that against the benefits of the NWS, that is a ridiculous value for the nation.
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The vast majority of weather model, satellite, observational, and radar data beneath every TV weathercast or your private-sector weather App comes from the NWS or NOAA. Private companies provide a variety of value-added services for the media, clients, and the broader public. The delicate dance between the role of the public and private sector is at the root of the answer to the question. Increasingly, private companies are running their own weather models, launching satellites, and even issuing warnings. I have explored this issue previously in Forbes, and it is at the heart of the App issue.
Andrew Freedman wrote this in the The Washington in 2012:
NOAA can’t be seen as overly competing with the private sector, since that would go against its longstanding policy support a vibrant private sector community that specializes in customized weather info, including companies such as the Weather Channel, whose free iPhone app is the most popular free weather app, according to iTunes. Andrew Freedman, Washington Post (2012)
However, the NWS employee's union argued that taxpayers have already paid for the weather information so why should they have to pay for an App. I reached out to the National Weather Service for more insight. NWS spokesperson Lauren Gaches responded:
NWS provides mobile.weather.gov so users can create a shortcut to access weather.gov forecast details and Doppler radar images in real time on their mobile devices. NWS also provides indirect mobile device services by providing data in an industry standard format so it is easily accessible by private sector companies for mobile app development. America’s private weather and climate industry provides a rich array of services based on NWS data, including alerts and general weather information and related forecasts tailored to the mobile community. NWS Spokesperson Lauren Gaches
For example, there is a basic but highly functional App called NWSNow. Apkpure.com describes the App as, "a FREE weather application with no advertising, no user tracking using the National Weather Service™ and National Oceanic and Atmospheric Administration™ public API."
HARWICH, MA - JULY 23: Tree damage after a tornado touched down in the area on July 23, 2019 in ... [+] Harwich, Massachusetts. A rare tornado brought 80 mph winds to parts of coastal Massachusetts, severely damaging a popular hotel and other nearby properties. (Photo by Scott Eisen/Getty Images) Getty Images
Bryan Norcross is a key voice in the weather enterprise and has spent much of his career in the weather communication sector of our field. He messaged this additional point to consider:
There's another factor. It's extremely expensive. You have to have infrastructure that can serve billions of forecasts a day, and scale up for big events. Also, just to deliver competitive daily weather, a very expensive development process is required. Private companies have spent many tens of millions of dollars to create a workable system. Bryan Norcros, WPLG-TV Channel 10
Reading between the lines of what Gaches said, the idea of preserving the roles of the private sector in value-added weather dissemination is implicit in her statement. My goal herein was not to advocate for or against an NWS App but rather to provide some updated context. I have several friends across the federal and private weather community. Many of them have told me that this question comes up almost weekly, "Why doesn't NWS have an App?" Another goal was to make you aware of some of the other NWS resources that I mentioned.
I certainly use them, but I don't rely heavily on weather Apps. I am a meteorologist so I like to make my own forecasts or nowcasts. Apps are useful in some regards but should be consumed properly. In dangerous or rapidly changing weather situations like the rare Massachusetts tornado last month (picture above), I encourage a variety of sources like the NWS, National Hurricane Center, Storm Prediction Center, and trusted private sector resources. For many evolving weather events, people still need to hear from a trusted, comforting voice not an algorithm.
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2d09ec0ea3b419b209acf9abe99aaab8 | https://www.forbes.com/sites/marshallshepherd/2019/09/03/why-hurricane-dorian-has-stalled-over-the-bahamas/ | Why Hurricane Dorian Has Stalled Over the Bahamas | Why Hurricane Dorian Has Stalled Over the Bahamas
I cannot express how horrified it was to awake Tuesday morning to see Hurricane Dorian (somewhat weakened but still very strong) still stalled and pummeling Grand Bahama Island. This is an island that I visited with my family. For a stunning satellite image of inundation on the island caused by Dorian, click this Twitter link. I literally feel sick for the people and their families. This will be an epic tragedy once the magnitude of destruction is ultimately revealed. An area just cannot take such sustained force that long from an essentially stationary major hurricane. Why has it stalled.
Satellite imagery of water vapor and Hurricane Dorian NOAA and Tropical Tidbits website
The answer lies in the Tuesday morning discussion issued by the National Hurricane Center. It reads:
Dorian has been nearly stationary for the past 18 hours, as steering currents in its vicinity have collapsed. The global models indicate that a weakness in the subtropical ridge will develop in response to a trough that will amplify along the east coast of the United States within the next day or so. Dorian should respond to these changes by beginning to move north-northwestward toward the weakness in the ridge a little later today. National Hurricane Center on the morning of September 3rd
The wonder and complexity of fluid dynamics, a branch of physics that governs much of what we do in meteorology, is on full display. The satellite image below is a snapshot of global precipitation on September 3rd from NASA's Global Precipitation Measurement Mission (GPM). I served as Deputy Project Scientist for this mission during my tenure at NASA. This image and the animated version show the "rainfall signature" of Hurricane Dorian near the Bahamas and other manifestations of atmospheric fluid dynamics that we try to predict days into the future while rotating on a planet.
Global precipitation on September 3rd, 2019 as depicted by the IMERG produce of the NASA GPM ... [+] mission. NASA
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The subtropical ridge mentioned by the National Hurricane Center discussion is an area of high pressure and the trough is an area of low pressure. Hurricane Dorian is a rotating system within a larger fluid system. Like a child's spinning toy, Dorian has been wobbling around without much movement because there is no atmospheric current to push it along. Since the ridge of high pressure has weakened and a trough of low pressure is trying to establish itself, Hurricane Dorian will respond to the physics and try to shoot through the "escape door" between the ridge and trough.
If you look carefully at the first satellite image in this article, it depicts water vapor in the mid-levels of the atmosphere this morning. I recently explained to my Satellite Meteorology class at the University of Georgia that water vapor imagery should be a staple of any good meteorologist. It is also useful for identifying the "dynamics" or motion of the atmosphere. Hurricane Dorian is evident in the image, but my eyes are also drawn to the dark curved region in the southeastern United States. This is the aforementioned trough of low pressure.
Unfortunately, stalling hurricanes seem to be a recurring theme recently. Hurricane Harvey (2017) stalled over Texas and produced record flooding.. More recently, Hurricane Florence (2018) did the same in the Carolinas. There is evidence in the scientific literature that stalling hurricanes will become more common. I refer you to a recent study published in the journal Nature entitled, "Hurricane stalling along the North American coast and implications for rainfall" for more information.
Expected position of Hurricane Dorian on early Thursday morning according to the American GFS model. ... [+] College of Dupage
The future track of Hurricane Dorian strongly depends on the interaction of that weakened ridge and the trough. Meteorologists like me and other officials will be watching anxiously for the expected turn. Once it makes the turn, the hurricane should move just off the coast of Florida, Georgia, and the Carolinas. It is certainly not out of the question that the storm will make landfall somewhere in the Carolinas. Even if the storm doesn't make landfall, it will certainly be close enough to the coast to cause impacts from surge, flooding, and tropical storm-level gusts. I think some coastal impacts will also be felt in Florida.
I wrote this article because people are undoubtedly curious about why the storm has stalled near Grand Bahama. As tropical weather expert Levi Cowan reminds us in the Tweet below, the slow down was expected. I would add to Cowan's point and mention that the official National Hurricane Center forecast has been pretty consistent the past several days. While there was some initial uncertainty last week about the eventual track, the careful observer will acknowledge how consistent my colleagues at the National Hurricane Center have been.
The consistency of the National Hurricane Center forecasts over the past several days. Levi Cowan via Twitter
Modern weather forecasting is a wonder of our time that is often taken for granted or even criticized. There is a powerful hurricane some 200 miles east of South Florida. Two decades ago that surely would have resulted in mass evacuations. Today, the confidence in the models allow for a more precise set of actions. While this is impressive, it does nothing for the human tragedy unfolding in the Bahamas. My thoughts and prayers are with the people there and their families.
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2469e284f62fbedf1ea95ca12ec31f53 | https://www.forbes.com/sites/marshallshepherd/2019/10/20/the-science-of-why-car-tires-deflate-when-it-is-cold/?sh=56cd83ab3b3f | The Science Of Why Car Tires Deflate When It Is Cold | The Science Of Why Car Tires Deflate When It Is Cold
Here is a quiz for you. How many times a year have you gotten to your car on a cold morning only to notice that your car tires look deflated? Even better, many modern cars have fancy digital displays that tell you exactly how much pressure has been lost. The temperature in parts of Georgia dropped into the forties overnight this week. It is not surprising that when I headed out to drop my son off at basketball tryouts that my tire pressure lights were illuminated. While a mild annoyance, this is a very common thing, and something that I suspect that you have experienced as well. Many people are curious about why this happens. Here’s an explanation that tries to make complex physics and meteorology accessible to the layperson.
14 October 2019, Bavaria, Nuremberg: A fitter in a tyre centre mounts a winter tyre on a car. Photo: ... [+] Daniel Karmann/dpa (Photo by Daniel Karmann/picture alliance via Getty Images) dpa/picture alliance via Getty Images
In order to really address this question, I have to introduce a few scientific concepts so stay with me. The Ideal Gas Law or the Equation of State is written as PV = nRT. The terms P, V, and T represent pressure, volume and temperature respectively. The term n is a representation of how many molecules of gas are present in the volume (for example, the tire). This law, according to Lumen Learning’s website, was “originally deduced from experimental measurements of Charles’ law (that volume occupied by a gas is proportional to temperature at a fixed pressure) and from Boyle’s law (that for a fixed temperature, the product PV is a constant).”
The University of California - Santa Barbra Science Line website says, “Now, while the air in our tires do not behave as "ideal gasses," they do still exhibit a proportionality between pressure in temperature.” This would suggest that as the temperature (T) decreases so does the pressure.University of Georgia physics professor Craig Wiegert added to the discussion. Wiegert, an associate professor and associate department head said,
At low temperatures, the tire might visually "look" a bit flatter, but this is primarily due to lower pressure. The force that the tire exerts on the road needs to match the force that the road exerts on the tire in order to support the car's weight. The area of contact between tire and road will increase as the pressure decreases, because force = pressure * contact area, and thus the bottom of the tire flattens a bit more. Incidentally, I wonder if there's a misconception that tires "lose air" at low temperatures, i.e., that somehow the cold causes the air to leave. We say that phrase colloquially, but really the mass of the air isn't decreasing. Dr. Craig Wiegert, University of Georgia Physics professor
Dr. Fred Bortz is a physicist and author of science books for young readers. He and I actually co-authored a weather book for kids called Dr. Fred’s Weather Watch. Bortz says the properties of the rubber may also depend on the pressure and temperature.
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One lesson from this little explainer is that you probably shouldn’t check your automobile tire pressure after driving the car. As you drive, the frictional effects of the road will cause heating. This can create an “over-inflation” bias. Proper tire inflation, however, is very important. According to TireSafety.com:
When you maintain proper tire pressure, you ensure that you’ll get more life of your tires. On the other hand, improper tire inflation may result in rapid or irregular wear, which can cause significant internal tire damage, and can lead to sudden tire failure and result in serious injury. TireSafety.com website
Tire pressure should be checked monthly, and many modern cars make that very easy with automatic pressure sensors. TireSafety.com goes on to say that for every 10 degrees F in temperature change, tire pressure changes by roughly 1 PSI (Pounds Per Square Inch).
You probably would be surprised at how these basic science principles come into play in meteorology. These are some of the first lessons that I teach in an introductory weather and climate class. In order to understand fronts or why temperature decreases with altitude, the Ideal Gas Law is relevant. Hmmmm....Maybe I will write an entire series of articles on the role of the Ideal Gas Law in weather....Stay tuned.
By the way, does anybody have 4 quarters for the air machine at the gas station (smile)?
The equation of state NASA
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013d17e2bdba2dd638d4533a4039b229 | https://www.forbes.com/sites/marshallshepherd/2019/11/10/6-questions-people-ask-meteorologistsand-ones-they-probably-should/ | 6 Questions People Ask Meteorologists - And Ones They Probably Should | 6 Questions People Ask Meteorologists - And Ones They Probably Should
It never fails. I can be at a school event for my kids or visiting family in my hometown. Inevitably, the weather is going to come up because I am a meteorologist. I have loved the weather since 6th grade so it is not a problem. However, there are a few things that I have noticed during my career as a scientist at NASA, professor at the University of Georgia, and former president of the American Meteorological Society (AMS). People tend to ask the same questions, and they are often steeped in misperceptions. I suspect that other meteorologists will be familiar with them. We love the questions, but I thought that it would be useful to deconstruct those questions and then offer better alternatives.
Visitors to the capital wearing identical plastic macs endure heavy rainfall on an autumn afternoon ... [+] in Trafalgar Square, on 24th October 2019, in Westminster, London, England. (Photo by Richard Baker / In Pictures via Getty Images) In Pictures via Getty Images
Why are meteorologists wrong all of the time? Honestly, this is the question that often forces me to adjust my face. It is such an inaccurate assumption, and one that often illustrates that the person asking the question may not understand things like % chance of rain, cones of uncertainties, hurricane track spaghetti plots, and the limits of forecasting. Numerous articles have been written on the impressive accuracy of this generation of weather forecasts. In a previous Forbes piece, I documented how accurate meteorologists are compared to other professions that predict the future. I closed that article with this statement: “Meteorologists are able to predict, with up to 90% or more accuracy within 2 to 5 days, how a complex fluid on a rotating planet with oceans, mountains, and varying heat distributions changes.” My observation has been that people misinterpret or misunderstand things like “20% chance of rain” or the limits of weather forecasting for a spot in their backyard at a specific time. I also think people tend to have a “memory bias” towards isolated cases in which the forecast was a “miss” or it negatively impacted them. They conveniently forget the more numerous days that forecasts were “spot on.” As people often say, “nobody notices a good sound engineer at a concert, but if the sound is bad, it is definitely noticed.” Here is a better set of questions that will make you appear informed (and prevent eye rolls): How much has weather forecasting improved over the years? What areas are still challenging? What does 20% chance of rain actually mean?
What channel are you on? This question really illustrates how much television shapes certain generations. Many people honestly believe that meteorologists only work on TV. A better alternative is “Oh, you are a meteorologist, what type are you and where do you work?” During my tenure as president of the AMS, I learned that only 8-10% of meteorologists work on TV, and candidly I often wonder if that number is shrinking. Younger generations are increasingly less inclined to watch television news or weather. For emerging generations of meteorology students, that part of our field may not be as appealing. As Director of an Atmospheric Sciences (a broader framing that includes meteorology) program at a major university, I can confirm that students now have broader interests within the field than when I was a student at Florida State University thirty years ago. In the social media era, demands on TV meteorologists have also increased significantly, which has made it less appealing for some colleagues. However, it is still a viable and potentially awesome career for those that are passionate about it.
Is it going to rain in 2 months in _____, I have to go to a ______? Ummmm, I don’t know. That’s honestly the answer that I give if asked such a question. I then explain that weather models have limitations beyond about 2 weeks due to the nature of how forecasts are made. In fact, a 2019 study published in the Journal of Atmospheric Sciences finds that 10 days is about the limit of useful predictability in the current computer model area. I know, I know. There are a lot of almanacs, groundhogs, and long-term weather forecasts out there. It is important to understand the intent of those efforts or those tendering them. At the end of the day, physics wins out on limiting our ability to deterministically say anything about the exact state of the atmospheric fluid 65 days from now. However, there is increasing skill with seasonal-to-subseasonal scale prediction based on our understand of things like El Nino and other aspects of climate variability. What this means is that I may not be able to tell you if it is going to rain at your daughter’s reception in 3 months, but I can give you some information on the climatological probabilities related to warm/cold or wet/dry. NOAA’s Climate Prediction Center website is a good place to go for seasonal and other types of outlooks. A better line of question for the meteorologist might be: How far out are forecasts reliable and why are there limitations? What type of information is in seasonal outlooks?
BEKASI, WEST JAVA, INDONESIA - 2019/08/27: Sheep seen in a dry paddy field. The Meteorology, ... [+] Climatology and Geophysics Agency has warned that the dry season may be drier and more intense than last year due to the El Niño phenomenon. The agency classified that West Java, Central Java, most parts of East Java, Yogyakarta, Bali and Nusa Tenggara as the areas most vulnerable to extreme drought, or more than 60 days without rain. (Photo by Agung Fatma Putra/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images
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Do you believe in climate change? This one is the relative “newbie” question. Science is not a belief system like the Tooth Fairy or Santa Claus. Once I establish that with the person asking the question, I proceed to explain the consensus science and assure them that scientists know that climate changes naturally and always has (we know that statement is coming). I then explain the concept of anthropogenic climate change on top of the naturally-varying climate system. It is not “either/or,” it is “and.” I also have to swat down myths or “zombie theories” summarized in one of my previous Forbes articles. For example, some people will use the answer to the question above about 10-day limits of predictability on a weather forecast to question climate models. When I hear that narrative (and it even comes from people that should know better), it is an opportunity to explain that weather modeling and climate prediction, though rooted in some of the same physics and math, are an “apples vs oranges” conversation. I highly recommend the website at this link for clarification on that topic. A better question to start a conversation about climate change might be: What is the current thinking on climate change based on actual published studies not opinions or ideological biases?
Why is the American model so bad? Ok, I admit it. This question somewhat annoys me, but I also use it as an opportunity to teach. Yes, the European model has been shown, on average, to be better than the American GFS model. However, there are several flaws to detangle. First, I mostly receive this question from people that don’t follow the weather closely but have seen things in social media. They honestly think the American GFS is terrible and orders of magnitude worse than the “Euro” model. It’s not. Both models are world class models used daily by weather forecasters in all parts of the world. There are also plenty of situations when the “Euro” struggles or even does worse than the American GFS. The “Euro” model, for example, was one of the models initially trending towards Hurricane Dorian heading to South Florida in 2019. My key message concerning the two models is that we are not talking about “paper airplane vs supersonic fighter jet” as some people perceive. The hyperventilation and allegiance banter that I see in social media is “breathtaking.” (See what I did there?) Additionally, those are just a few of the models that weather forecasters utilized. Alternative questions might be: Why has the GFS, on average, lagged behind the European model? What is needed to improve both models? What are some of the other models used by forecasters?
My son or daughter loves clouds, storm chasing, and hurricanes. Do you think he/she is going to be a meteorologist one day? This question makes me smile because I love that kids and adults are so fascinated by the weather. As mentioned earlier, I was bitten by the weather bug in 6th grade and have been “weather geeking out” ever since. My only caution when asked that question is to relay that being a meteorologist is more than about naming clouds or chasing a tornado. The AMS has very strict requirements for meteorology or atmospheric sciences curricula at universities (see this link). Many students are often caught off guard by the heavy physics, math, chemistry, and computational coursework. Meteorology or Atmospheric Sciences is often considered one of the most rigorous majors on a college campus. I sat in the same physics and math classes that engineers too. I also tell parent that there are certainly other ways for students to activate their weather passion in related majors, volunteer spotter programs, and so forth. Better questions might be: What is the typical meteorology curriculum? What things can my child do now if they want to prepare to be a meteorologist?
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f2c69f2c138778dedc1d465d3dc912d1 | https://www.forbes.com/sites/marshallshepherd/2019/12/30/20-experts-predict-the-most-significant-weather-and-climate-advances-of-the-next-decade/ | 20 Experts Predict The Most Significant Weather And Climate Advances Of The Next Decade | 20 Experts Predict The Most Significant Weather And Climate Advances Of The Next Decade
This will be the last thing that I write for Forbes in 2019 and this decade. Atmospheric sciences, the collective of meteorology and climate, have come along way over the past decade with new weather radars, modeling, satellites, and observation capabilities. Irrespective of misguided myths and perceptions, weather forecasts are the best they have ever been, and we have a solid grasp on how climate is changing. As we move into the next decade, I wanted to pull out a “crystal ball” and see what’s next on the horizon for the weather and climate community. I reached out to a cohort of 20 weather and climate experts for their projections.
NASA's ECOSTRESS is using AI and other advanced technology to study Earth. NASA
Before surveying the projections of my expert colleagues, I thought that it would be useful to offer my own thoughts first:
Messaging and its consumption will focus on impacts rather than category or rating levels. Communication, psychology, and sociology will be fully immersed in warning processes. Phased-array weather radar systems will also gain traction. Satellite systems will continue to evolve beyond “seeing” weather with new data available for model assimilation. On the forecasting front, we will see the fruit of the Earth Prediction Innovation Center (EPIC) and its community collaboration approach. Attribution of extreme weather events to climate change will become more reliable. I envision a percentage contribution (%) or likelihood metric attached to future forecasts or post-analyses. I also worry about continued trends in Arctic Sea Ice loss, sea level rise, and Greenland dynamics that, in some cases, are ahead of projections from decades ago. Dr. Marshall Shepherd, University of Georgia and 2013 AMS President
The experts that I queried span the public, private and academic sectors of the weather-climate enterprise. Key themes that emerged from their projections center around: Artificial Intelligence (AI) and Machine Learning, Advances in Prediction, Communication, Societal Risk, Health, and Evolving Technology.
Artificial Intelligence, Machine Learning and Forecasting
Victor Gensini, an atmospheric sciences professor at Northern Illinois University, shared his vision of the next decade, and it he has some interesting perspective on weather modeling and machine learning:
I see the next decade featuring a significant application of machine learning methods to numerical weather prediction output. Systems like MOS will likely be replaced by such algorithms making for even better local point forecasting. Think of it as using statistical downscaling on output with horizontal grid spacings likely 1km (by the end of the decade) for hyperlocal forecasts. I do wonder if we have the proper calibrated observations to train such models, but perhaps we will see improvements in this area over the next ten years too. We may also see the first “operational” convection permitting global climate model by the end of the decade. That would be a significant leap for the climate research community. Dr. Victor Gensini, Professor at Northern Illinois University
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University of Illinois professor Steve Nesbitt echoes some of Gensini’s thoughts but extends them to further elaborate on the emerging role of AI:
My thought is "artificial intelligence will revolutionize how we observe, simulate, and forecast weather and climate. It will improve the quality of observations for forecasters and models, improving how information and data is incorporated into model forecasts and decision support systems. It will also improve the mechanics of how computer models are run, reducing complexity and computational cost, enabling better accuracy and spatial resolution" Dr. Steve Nesbitt, Professor of Atmospheric Sciences, University of Illinois at Urbana-Champaign
Kevin Petty is head of science and forecasting at The Weather Company, an IBM business. He is also bullish on AI and machine learning. Like Gensini and Nesbitt, he believes we have only scratched the surface. He adds:
We must stop treating weather equally across the globe. It’s not. Some populations/businesses are more vulnerable than others. The democratization of data and analytics is something else that will give rise to more participation from individuals and groups not directly immersed in fundamental aspects of weather, water, and climate, but have the knowhow and interest to take advantage of weather-related data. In other words, data and analytics will become more accessible to the broader population, leading to new, innovative products and solutions. Dr. Kevin Petty, Head of science and forecasting at The Weather Company
Other experts that I queried like Dr. Jason Furtado at the University of Oklahoma (OU), CIRES postdoctoral Sam Lillo, and Brian Etherton at Maxar Technologies strongly affirmed the role of AI in weather - climate science in the next decade.
ANTALYA, TURKEY - NOVEMBER 30: A waterspout forms over the Mediterranean Sea close to Alanya ... [+] district of Antalya province in Turkey on November 30, 2019. (Photo by Orhan Cicek/Anadolu Agency via Getty Images) Anadolu Agency via Getty Images
Advances in Prediction
Texas TV meteorologist Richard “Heatwave” Berler evokes images of something common to all of us, the smartphone camera:
Like a camera with more megapixels, weather observations/forecast models will be taken/run at a higher resolution, be it from more satellite platforms, even from crowd sourcing citizen weather stations and vehicles at the surface. This, run on ever faster computers will lead to greater resolution of small detail in the first 12 hours of a forecast, and give us a longer horizon on the large scale weather features. I hope to see some skill (now seen 7 days out) extend to 10-12 days out by decade’s end. Richard “Heatwave” Berler, CBM#18 Chief Meteorologist KGNS TV, Laredo, Texas
Subseasonal-to-seasonal forecasting is increasingly critical for planning and operations related to industry, public safety, and agriculture. Barb Mayes Bousted is a meteorological trainer at the National Weather Service and the developer of the Winter Misery Index:
One thing that jumps to mind would be leaps in the subseasonal-to-seasonal forecasting of high-impact weather events, crossing those blurry lines between weather and climate. I could foresee advances in longer-range predictions of severe thunderstorms and tornadoes, hurricanes, floods, heat waves, cold snaps, untimely freezes, flash droughts - the range of extremes that can impact life, property, and ecosystems. We are on the path already with at least a few of those hazards, but we need - and, I believe, will achieve - greater understanding and communication of the links between global climate patterns and potential for hazardous/high-impact weather. Dr. Barb Mayes Bousted, Meteorological Trainer with the National Weather Service
Ashton Robinson Cook believes important advances in tornado prediction are on the near horizon. Referencing work by Gensini and others, he told me:
As far as tornado prediction goes I think the advancement of the high-resolution ensembles are the big advancement for severe local storms now but maybe only for the 2-4 year timeframe. For predicting tornadoes in the long range, coarser grid climate prediction models also seem to have demonstrated potential but those models will also need improving as well. AI will be the biggest player in improving forecast capabilities. Dr. Ashton Robinson Cook, Meteorologist, Founder/CEO of WeatherDeep
A car tries to srive down a flooded road near Harbridge, 2.5 miles north of Ringwood in Hampshire, ... [+] after the river Avon burst its banks. (Photo by Steve Parsons/PA Images via Getty Images) PA Images via Getty Images
Communication and Societal Risk
Legendary TV meteorologist Gene Norman is now a meteorological consultant and freelance broadcaster with CNN. He had an array of thoughts on the next decade:
Weather advances in the next decade: 1) more accurate and targeted weather alerts that incent safety action to cut down on the " we didn't know it would be this bad" reaction after a major weather event. 2) improved accuracy of forecasts due to greater computing abilities 3) better and more consistent communication (by the media) of the linkages between extreme weather events and climate change to eliminate skepticism and erroneous reporting. This likely also prompts intentional political action Gene Norman, freelance meteorologist with CNN and veteran of the broadcast meteorology industry
Towards a Weather Ready Nation NOAA
Susan Jasko was a candidate for President of the National Weather Association (NWA) in 2019 and a leading voice at the intersection of weather and communication. Her thoughts:
We seem to be at the edge of a transition from an idea about humans dominating nature and controlling the natural world to the notion that human life is dependent on a holistic understanding of the natural world. I think the weather and climate enterprise will make breakthroughs in ways to engage communities in using science to inform crucial decision-making and transform us into an environmentally resilient and wise nation. Of course, it will take the expertise of all of us - physical and social scientists, policy and resource experts, economists and artists, teachers and families- to make this transition successful. Dr. Susan Jasko, Senior Research Scientist, University of Alabama
Kim Klockow has a similar view. She is a research scientist and Societal Applications Coordinator with the Cooperative Institute for Mesoscale Meteorological Studies (CIMMS) at the University of Oklahoma and the National Severe Storms Laboratory (NSSL):
I think the next big advance will be more locally-focused weather communication & resilience activities. That’s the next big frontier for the social science side of our enterprise - what works in one community may be different from what works in another, and reaching people where they are will provide the best service. I see this as an integral part of the AMS Centennial Initiative focused on local action networks. All disasters are local, and so are the solutions to many of our most pressing weather and climate change-related problems! Research Scientist and Societal Applications Coordinator with the Cooperative Institute for Mesoscale Meteorological Studies (CIMMS) at the University of Oklahoma and the National Severe Storms Laboratory (NSSL)
Miri Marshall, a meteorologist at WUSA 9 in Washington D.C., is one of the most talented weather communicators that I have seen in recent years. She has a particular gift for making weather information accessible and relatable. Her thoughts come from participating in the cohort of the Yale Climate Change and Health Certificate Program:
I think we'll see a bigger emphasis on climate change and health impacts. Climate change is not just about chunks of melting ice, but about the potential for an increase in cases of heat stress, vibrio infections, and mosquito borne illnesses just to name a few. Climate and health are a package deal. It's all connected. Miri Marshall, Meteorologist at WUSA 9, Washington D.C.
Kevin Kloesel is also thinking about health but from a weather perspective. He thinks about everything from lightning safety to campus preparedness during severe weather at the University of Oklahoma. He has some forward-thinking ideas about the deadliest weather per annum in the U.S., heat.
With heat waves forecasted to become longer and more intense, heat illness will likely continue to be the leading cause of death from weather. Therefore, I can envision a day when biometric information from our smart watches are integrated with hyperlocal environmental information and personal health inputs such as nutrition, hydration, prescription medication consumption, metabolic rate, etc. to create a heat stress index that is customized for every person. Personalized early-warning heat advisories could then be issued via a person's smart device whether sedentary or in the midst of an athletic endeavor. Dr. Kevin Kloesel, Director, Oklahoma Climate Survey University Meteorologist, OU Department of Campus Safety Certified Emergency Manager, State of Oklahoma
ILULISSAT, GREENLAND - AUGUST 04: In this view from an airplane rivers of meltwater carve into the ... [+] Greenland ice sheet near Sermeq Avangnardleq glacier on August 04, 2019 near Ilulissat, Greenland. The Sahara heat wave that recently sent temperatures to record levels in parts of Europe has also reached Greenland. Climate change is having a profound effect in Greenland, where over the last several decades summers have become longer and the rate that glaciers and the Greenland ice cap are retreating has accelerated. (Photo by Sean Gallup/Getty Images) Getty Images
Evolving Technology
Gavin Schmidt is a climate scientist at NASA Goddard Institute for Space Studies. He is a leading voice in sounding the alarm with science (not opinions and innuendo) on climate change. He recently tweeted that 2019 will likely be the second warmest year on record. He made the following projection about forthcoming space missions:
When Plankton, Aerosol, Cloud, ocean Ecosystems (PACE) satellite mission launches we have the possibility of global scale aerosol composition, which will greatly constrain the total aerosol forcing. The James Webb Space Telescope might give a glimpse into exoplanet climates that might solidify (or demolish) the idea that we understand climate on a broader scale. Dr. Gavin Schmidt, climate scientist at NASA GISS
Recent episodes of the Weather Geeks podcast revealed several technologies to keep an eye on in the next decade. Phil Chillson, a professor at the University of Oklahoma, discussed unmanned aerial vehicles and drones as new sources of lower atmosphere data for weather networks and models. The Weather Channel’s Mike Chesterfield discussed the evolution of Immersive Mixed Reality (IMR) to better convey weather messaging and warning. Mark Powell introduced RMS HWind technology for unparalleled visualization of a hurricane wind field. Catherine Edwards, a researcher at the University of Georgia, has been using autonomous drones to sample water temperatures and other parameters in hurricane environments. Companies like ClimaCell are utilizing unconventional sources of information like cameras, cellular networks, and more of information to deliver pinpoint weather information.
For the last word, Deanna Hence, an assistant professor at the University of Illinois, sums things up nicely:
I believe the next great advances will be increasing sophistication in the merging of weather and climate science with the understanding of human systems. In all of the ways we are increasingly incorporating the connection between human decision making and weather and climate, breakthroughs in this area will improve not only any effort connected to weather and climate prediction, but any other science, engineering, technology, or industry that the atmosphere touches. Dr. Deanna Hence, assistant professor at the University of Illinois
There are far more advances not covered herein. Climate models will continue to evolve, and climate change will finally take a meaningful place in the 2020 (and beyond) election cycles.. NASA will continue to develop new missions in response to community guidance in the Decadal Survey that advance Earth System science. NOAA will forge into its Weather Ready Nation initiative. I also expect Smallsat and Cubesat systems to further find a footing in the weather-climate portfolio as well.
It is an exciting time to be a part of a rapidly maturing scientific field.
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965d7f29a9c247f91261b8113dc3662e | https://www.forbes.com/sites/marshallshepherd/2020/01/09/georgia-had-its-warmest-year-on-record-in-2019here-are-5-so-whats/ | Georgia Had Its Warmest Year On Record In 2019 - Here are 5 ‘So Whats?’ | Georgia Had Its Warmest Year On Record In 2019 - Here are 5 ‘So Whats?’
This week the National Oceanic and Atmospheric Administration (NOAA) released data confirming something that many climate scientists like me expected. Our climate continues to change. Early data suggests that 2019 will likely be the 2nd hottest year on record for the globe. NOAA’s data also reveals that it was the second wettest year on record in the United States, and many states saw their hottest year on record.
The average temperature measured across the contiguous U.S. in 2019 was 52.7 degrees F (0.7 of a degree above the 20th-century average)....There were some standouts in 2019, including Alaska, which had its hottest year ever recorded — 6.2 degrees F warmer than the long-term average. Georgia and North Carolina also saw their hottest year on record, while Michigan, Minnesota, North Dakota, South Dakota and Wisconsin each had their wettest year ever recorded. NOAA
My home state of Georgia was one of the states that broke a record. Candidly, I cringe when I see climate records reported this way. Many people think this means they can fire up the grill in January or enjoy more mild winters. Experience tells me that people understand extreme events but don’t grasp how a shifting distribution in temperature affects them and society (more on that later). Using the lens of Georgia, here are 5 “So Whats?” concerning record warm temperatures.
Mean temperatures in the United States NOAA
Agriculture, wildfires, and other extremes. I was born and raised in Georgia. I appreciate the hard-working agricultural base that helps make the state so great and vital to the nation. I was so heartbroken for farmers devastated by Hurricane Michael in 2018. If you eat anything with peanuts, pecans, blueberries, peaches, or chicken, there is a good chance that it came from Georgia. If you wear cotton clothing, the raw materials may have come from my state also. Crops are very sensitive to temperatures. The Georgia Climate Project, a project enabled by the Ray C. Anderson Foundation, is a non-partisan consortium of scholars and stakeholders that recently released the Georgia Climate Project Roadmap with 40 key questions and assessments of potential threats associated with climate change. The “Agriculture” section points out:
Agriculture, the single biggest industry in Georgia and which in 2015 contributed $74.9 billion in output (8% of Georgia’s $917.6 billion economy) (University of Georgia 2017), is particularly at risk. For instance, a 2007 drought caused an estimated $787 million in agricultural production losses (Flanders et al. 2007). In 2017, blueberries and peach crops were impacted by unusually early spring warming followed by atypical mid-March frost event. Georgia Climate Project Roadmap
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The aforementioned 2007 drought was also accompanied by very active wildfires in Georgia, which illustrates that effects extend beyond temperature change. Extreme events like hurricanes, drought, wildfires or flooding can also disrupt agricultural actives. In 2019, the United States experienced 14 $1+ billion weather or climate disasters (graphic below). Though not on the list this year, losses from Hurricane Michael, Irma, and Matthew are fresh on the minds of Georgians.
$1+ billion dollar extreme weather-climate events in the U.S. in 2019 NOAA
More extreme heat, less outside work day hours. A typical response that climate scientists often hear is “climate changes naturally or has cycles.” While somewhat amusing to assume that climate experts don’t understand that our climate changes naturally and has cyclical patterns, it is also an opportunity to explain that naturally-varying processes can be modified by human intervention. You modify naturally-growing grass every time you fertilize your lawn. Baseball players modify their natural home run hitting patterns with the use of steroids. Though changes in the “average” temperature are not as noticeable as 10 days with temperatures above 95 degrees F, a fundamental shift (graphic below from Climate Central) means you are “loading the dice” towards more extreme heat days and less extreme cold days. Yes, the natural cycle still exists, but it is fundamentally being adjusted. This also means the possibility of drier conditions (more drought) and a “confused ecosystem” manifested by longer pollen seasons, changes in bird migration patterns, and so forth.
Shifts in the average also affects extremes Climate Central
One example involving work hours may be useful. The Occupational Safety and Health Administration (OSHA) has very strict standards for outdoor worker safety. It uses Heat Index, Wet Bulb Globe Temperature and other metrics to establish safe temperature ranges. The Centers for Disease Control (CDC) recently evaluated exposure to heat stress by outdoor workers. Key findings from their analysis:
Whenever heat stress exceeds occupational exposure limits, workers should be protected by acclimatization programs, training about symptom recognition and first aid, and provision of rest breaks, shade, and water. A Heat Index of 85°F (29.4°C) could be used as a screening threshold to prevent heat-related illness. CDC
The 2018 National Climate Assessment report found that workers in forestry, outdoor recreation, construction, waste, and remediation services are extremely vulnerable to heat-related deaths in the United States (68% nationally). Sixty percent of the ten states with the highest rates are in the Southeast. The report also projected how changing climate will reduce safe work hours outside (graphic below). These same risks apply to outdoor sports activities like youth football on those Georgia August days (Disclaimer: I have a 12 year old son that plays football so I monitor these things closely).
Projected changes in outdoor work hours in the year 2090 under the most extreme climate model ... [+] projections (a worst-case scenario). NCA
We like seafood. My colleagues at the University of Georgia (UGA) believe warming waters are relative to the rise of black gill in Georgia shrimp over the past several decades. According to the UGA Skidaway Institute for Oceanography website, “Black gill is a condition in Georgia shrimp that shrimpers blame for reduced harvests.” Mark Frischer and colleagues believe that an annual cycle of shrimp with darkened gills is related to warming waters.
Black gill is a problem for Georgia shrimpers UGA Skidaway Institute of Oceanogrphy
Urban heat stress and energy use. Believe it or not, climate scientists are aware of the urban heat island. Pavement, buildings, and lack of trees in cities tend to cause warmer temperatures in cities. As background temperatures warm due to Greenhouse Gas emissions, city dwellers get a double-whammy. The combination of the urban heat island and climate warming will create heat-related challenges and increased energy usage for air conditioning. According to the Climate Institute, “Cooling makes up more than 70% of peak residential energy demand in parts of the United States.” Ironically, this cooling demand likely drives increased output from power plants. When you consider that a majority of global populations now live in cities, this compound threat should not be ignored.
Tropical diseases in Georgia. Vector-borne diseases are common to Georgia. Mosquitoes can be quite prevalent. However, exotic and tropical diseases like Dengue, Zika, and Malaria are not common in the state. A 2019 study published in PLOS Neglected Tropical Diseases suggests that as warmer temperatures creep out of the tropics, climates like Georgia could possibly host mosquitoes that carry some of these diseases. Bruce Snyder is mosquito expert at Georgia College and State University. He recently told WGXA- Macon, “So as those mosquitoes expand their range and start to move north as it gets warmer, as the climate gets warmer, there's the potential for that virus (Dengue) also to move northward with those mosquitoes.” I don’t know about you but as a parent, I have enough to worry about with my kids. Adding exotic diseases to the list was not part of my plan.
My neighbor Kevin Sokol sums it up best as we stare at the prospect of 70 degree temperatures in the Atlanta area this weekend:
My allergies are really confused this so called Winter....I have to spray for weeds in December that's a problem Kevin Sokol, Georgia resident
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150c79335cab5d3d54de5d1ccbbd7322 | https://www.forbes.com/sites/marshallshepherd/2020/04/24/the-ozone-layer-protects-us-from-uv-radiationcan-uv-protect-us-from-coronavirus/ | The Ozone Layer Protects Us From UV Radiation - Can UV Protect Us From Coronavirus? | The Ozone Layer Protects Us From UV Radiation - Can UV Protect Us From Coronavirus?
According to several reports, President Trump mentioned ultraviolet (UV) radiation as a possible treatment for coronavirus this week. Numerous experts were concerned about how the information was conveyed (bringing light inside the body) and the level of conclusiveness of recent studies. Scientists also strongly reacted to banter suggesting possible injections of disinfectants. In fact, the manufacturer of Lysol issued a statement warning people against internal ingestion of disinfectant products. As a scientist and a professor, I am going to steer clear of “piling on.” My objective is to use this teachable moment to shed “light” on what UV radiation is and introduce research that may have formed the basis for comments about UV radiation.
The Sun in UV NASA
It is very likely that you have heard of the ozone hole. Ozone is gas that occurs in the stratosphere that literally protects us and all other life from the Sun’s ultraviolet (UV) radiation. Scientists discovered several decades ago that chemicals in everyday products like aerosol cans and refrigerants were destroying the ozone layer. The so-called “ozone hole” still appears even though most of those damaging chemicals were banned or regulated by the Montreal Protocol. The graphic below shows the ozone hole in the fall of 2019. Without the protective stratospheric ozone, NASA’s website says, “the Sun’s intense UV radiation would sterilize the Earth’s surface.”
Ozone hole in Fall 2019 NASA
UV radiation is a part of something that you may faintly remember from your K-12 or collegiate years called the electromagnetic spectrum (below). Electromagnetic energy propagates in wave form and includes gamma rays, x-rays, ultraviolet radiation, visible light, heat (infrared), microwaves, radio waves. Our eyes detect the visible portion of the electromagnetic spectrum, but our skin feels the infrared energy that comes from the sun or a fireplace. The Sun emits UV, visible, infrared, and even special types of sound waves.
The electromagnetic spectrum NASA
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UV energy is at a shorter wavelength (higher frequency) on the spectrum than visible light. Humans cannot see UV waves, but according to NASA, certain insects like bumblebees can. UV radiation is often used in sunlamps and tanning beds. Sharon Miller, M.S.E.E. is a Food and Drug Administration (FDA) scientist and is an internationally-recognized expert on UV radiation and associated tanning practices. On the FDA website, she notes, “A tan is the skin’s reaction to exposure to UV rays..Recognizing exposure to the rays as an ‘insult,’ the skin acts in self-defense by producing more melanin, a pigment that darkens the skin.” The website goes on to warn that over time such activity can lead to skin cancer or prematurely aging skin.
Circling back to coronavirus, the idea of UV radiation as a treatment option is not as far-fetched as injections of disinfectant but still seems to be in the early stages. According to a news release issued by Columbia University this week, they are developing a process to attack SARS-CoV-2 using UV light. The news release says, “The technology, developed by Columbia University’s Center for Radiological Research, uses lamps that emit continuous, low doses of a particular wavelength of ultraviolent light, known as far-UVC, which can kill viruses and bacteria without harming human skin, eyes and other tissues, as is the problem with conventional UV light.” It has been known for years that UV radiation can kill certain microbes. It is used to sterilize medical equipment, and personal UV sterilizers can be purchased for home use. However, conventional UV can penetrate our flesh and cause health risks. According to Columbia researchers, far-UVC has a shorter wavelength so doesn’t damage human cells.
One thing that has come to “light” during this COVID-19 crisis is a general misuse and interpretation of science terms, tools, and expectations. I see people erroneously sharing perspectives and interpretations of isolated studies and trend lines all over social media. The public and policymakers must understand that science isn’t a microwave process. It is more like a slow simmer in a crockpot. New methods and medicines require proper evaluation and testing. This UV research is certainly worth keeping an eye on, but as one of my favorite singing groups, the Pet Shop Boys, once said, “sometimes the solution is worse than the problem.”
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49544a53c496efd487fb165dfb251ea5 | https://www.forbes.com/sites/marshallshepherd/2020/04/27/the-summer-of-2020-in-the-usabnormally-warm-and-coronavirus/ | The Summer Of 2020 In The U.S. Will Be Abnormally Warm. How Will That Impact The Coronavirus? | The Summer Of 2020 In The U.S. Will Be Abnormally Warm. How Will That Impact The Coronavirus?
In recent days, a new study was showcased by national leaders who suggested coronavirus may struggle under intense heat and ultraviolet radiation. Unfortunately, that study had not been evaluated by the scientific peer review, a gatekeeping process that prevents dissemination of bad, immature or quack science. However, it is certainly worth keeping an eye on. As I wrote in Forbes recently, such studies show promise concerning ultraviolet radiation (UV), which has long been known as an effective disinfectant on surfaces. However, these studies need more rigorous testing and review to reach a point of conclusiveness given the novelty of COVID-19.
The Centers For Disease Control and Prevention (CDC) is also “lukewarm” (right now) on the potential effect of seasonal warming temperatures and coronavirus. Specifically, the CDC website says, “It is not yet known whether weather and temperature affect the spread of COVID-19” because COVID-19 may not behave like other predominantly cold season viruses. Nevertheless, the National Oceanic and Atmospheric Administration (NOAA) is predicting warmer than normal temperatures this summer in much of the United States. I’ll explain.
3-month outlook for temperatures in the U.S. for June, July, and August NOAA
NOAA’s Climate Prediction Center (CPC) is responsible for monthly to seasonal forecasts. On April 16th, CPC issued its 3-month outlook for the United States valid for the period June to August. According to the CPC website, “The contours on the map (above) show the total probability (%) of three categories, above, indicated by the letter "A", below, indicated by the letter "B", and the middle category, indicated by the letter "N." For more details on how this map is generated, I highly recommend the website at this link.
From the map, a couple of key observations are noted. Parts of the western (including Alaska), eastern, and southern U.S. have decent odds of being warmer than normal this summer. If you have been following what is going on in Florida, they have already been getting a brutal preview. NOAA meteorologist Eric Blake tweeted the graphic below with the following statement: “It has been so ridiculously hot in #Miami this April, it is now tied for the hottest May in Miami history, and would even rank in the top quarter of warmest June’s.” You may have to read what he said twice to digest what he is saying about how unusually warm April has been in south Florida.
April 2020 in Miami has unusually warm and rivaled typical May and June temperatures according to ... [+] meteorologists. Eric Blake on Twitter
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Brian McNoldy is a meteorologist at the University of Miami. His Tweet on April 25th is a potent example of just how hot it has been in parts of Florida: “And not that it even raises eyebrows anymore, but today is the 14th day this year with a 91°+ high.” He goes on to point out that the previous record by that date as 6.
I certainly hope that heat and sunlight will be an ally in the fight against the virus. As note earlier, the studies are conflicting and inconclusive at this point. McNoldy also has a website that tracks coronavirus cases and deaths in the United States and Florida. By Mcnoldy’s estimation, the U.S. will likely reach 1,000,000 reported cases this week, and he argues that the number may be an undercount given testing shortcomings and reporting irregularities. His website metrics show that deaths in the U.S. and Florida are still rising as of this week (graphic below). Though the state has experienced abnormally hot conditions for weeks, COVID-19 has still been a significant challenge. Unfortunately, this dampens hopes that warm weather will be the “smoking gun” answer in our fight against coronavirus. However, we will certainly hope that it will be a factor along with our continued social distancing actions.
Stay safe.
Number of COVID-19 cases as of April 26th, 2020 Brian McNoldy, University of Miami
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1f724e903d3c556bb2e55fd1de3d6ff5 | https://www.forbes.com/sites/marshallshepherd/2020/05/22/misunderstanding-of-coronavirus-predictions-is-eerily-similar-to-weather-forecasting/ | People’s Misunderstandings Of Coronavirus Predictions Are Eerily Similar To Those About Weather Forecasts | People’s Misunderstandings Of Coronavirus Predictions Are Eerily Similar To Those About Weather Forecasts
One of the more frustrating things emerging from the coronavirus pandemic is a continued proliferation of the myth that weather models are always wrong. I have seen snarky comments about coronavirus models being unreliable like weather forecasts. Numerous articles have discussed reasons why the public perceives modern weather forecasting to be inaccurate when it is actually much better than people think.
At the same time, I have noticed that the public and some policymakers struggle to understand strengths, weaknesses, and uncertainties associated with the coronavirus models. People familiar with modeling are aware of the caveats and nuances that must be consumed with them, but the untrained user may mistakenly interpret forecasts as “set in stone” outcomes without any uncertainty.
Given various misinterpretations seen on social media and public discourse, let’s use the coronavirus pandemic to increase literacy about weather and infectious disease models.
Ensemble modeling techniques try to present the range of possibilities. ECMWF website
Weather models solve complex dynamic and thermodynamic equations describing the atmospheric fluid. Chris Robbins at iWEATHERNET.com wrote an excellent primer on numerical weather prediction. Weather model outcomes predict the future state of the physical fluid system (the atmosphere) containing weather processes. To account for uncertainty in the initial conditions fed into the model, the weather community employs something called ensembles. For example, the NOAA Global Ensemble Forecast System (GEFS) contains up to 21 separate forecasts, or ensemble members. Ensemble approaches allow us to capture uncertainty in weather observations and model assumptions. A NOAA website notes, “The proverbial butterfly flapping her wings can have a cascading effect leading to wind gusts thousands of miles away.”
No model will ever be perfect because of data errors, model resolution limitations, the non-linearity of atmospheric processes and computing power. Therefore, any forecast will have to be bounded by uncertainty. Weather forecasts are often delivered as “percent chance of rain,” or “spaghetti plots” of possible hurricane tracks. Here’s where it gets tricky. Studies show that the public struggles with concepts of probability and uncertainty. These probabilistic or uncertainty tools are often misinterpreted by the public leading to declarations that forecasts are often wrong.
For example, a person may assume that a precipitation forecast is wrong if a shower pops up on their cookout because they interpreted (or “wishcasted”) a “20% chance” as meaning no rainfall. However, a proper understanding of the “percent chance of rain” concept might change that perception. Additionally, human nature creates biases whereby people recall occasional bad forecasts while dismissing far more numerous correct forecasts. What’s the weather where you are right now? Chances are probably pretty good that the forecast was pretty accurate, but you won’t remember or speak about it.
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Atmospheric rivers NOAA
The coronavirus pandemic has further placed modeling in the spotlight. Model projections are often mentioned in White House or state briefings. People are tired of the “new coronavirus normal” and are hanging onto every model projections for their respective state. Unfortunately, these models have uncertainty too and are very dependent on what is going into them (assumptions about social distancing, relaxation of restrictions, social factors, and so on). Unlike weather models, these models are not really predicting a physical system such as a fluid or the atmosphere. I quickly perused the Centers for Disease Control and Prevention (CDC) website. Here are some of the words used to describe the underlying premise of coronavirus models being used:
“Ensembles of mechanistic transmission models, fit to different parameter assumptions” “Curve-fitting approach” “Statistical dynamical growth model accounting for population susceptibility” “Agent-based” “Exponential and linear statistical models fit to the recent growth rate of cumulative deaths”
The CDC-grouped set of model projections as of May 20th, 2020. CDC
These models are heavily anchored in statistical, mathematical and empirical relationships. At the time of writing, The National Ensemble Forecast was predicting over 100,000 cumulative reported deaths by June 1st (graphic above). The shading conveys the ensemble uncertainty though most people, as done with the hurricane cone of uncertainty, tend to focus on the centerline. One additional thing caught my eye on the CDC website: “CDC works with partners to bring together weekly forecasts for COVID-19 deaths in one place....These forecasts have been developed independently and shared publicly.” Various institutions essentially have their own models, and CDC brings them together as an “ensemble.”
Ryan Best and Jay Boice recently wrote in Five Thirty Eight that “looking at multiple models is better than looking at just one because it's difficult to know which model will match reality the closest.” They also point out that disagreements among the various models can provide valuable information on how to improve them. The University of Massachusetts-Amherst recently issued a press release about its new ensemble-based approach for infectious disease modeling communication. Nicholas Reich, director of the UMass Influenza Forecasting Center of Excellence, said “Some models are overly optimistic, and others may be overly pessimistic....The reality is likely in the middle.” A recent PBS News Hour report by my colleague Miles O’ Brien explored these challenges.
It is encouraging to see the infectious disease community embracing ensembles like the weather community. There may be other lessons from the weather community too. NOAA provides what many would consider the nation’s “official” weather models although increasingly private companies are developing their own models. The agency has recently proposed a community-developed weather modeling framework called EPIC. Is an integrated, federal modeling system a viable approach within the infectious disease community? Weather models also use sophisticated data assimilations techniques to leverage newly available information to nudge or improve model initial conditions. The center that produces the “Euro,” widely considered the best weather model in the world, has mastered these techniques.
In hindsight, many of the coronavirus models initially criticized as being to aggressive may turn out to be right. However, I always looked at criticism with a slight eye-roll because of my understanding of the need to consume models with certain nuances and caveats. By the way, articles have compared how meteorologists do against other professions that predict the future (financial brokers, doctors, sports analysts, etc.). You may be surprised.
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a36eb81c5313b9e8a206c696cf3e0a70 | https://www.forbes.com/sites/marshallshepherd/2020/06/22/saharan-dust-will-deliver-stunning-eye-candy-this-weekheres-why/ | Saharan Dust Will Deliver Stunning ‘Eye Candy’ This Week - Here’s Why | Saharan Dust Will Deliver Stunning ‘Eye Candy’ This Week - Here’s Why
I want to start with a shout out to my subdivision neighbor Tiffany Martin for inspiring this article. The educator sent my wife a message asking if African dust was really heading to the United States. I am usually the resource for our friends and family when there are questions about the Earth. My answer was “yes.” African dust plumes are actually pretty common each year, but I think University of Miami meteorologist Brian McNoldy captures it best in his Facebook post, “These ‘SAL Outbreaks’ (Saharan Air Layer) are very common this time of year, but this one is just more dense than normal, so also more noticeable.” It is likely that parts of the United States will be able to see the dust this week. Here’s why?
Saharan dust over the eastern Atlantic Ocean in recent days NASA
A few days ago NASA issued a press release discussing these outbreaks and how satellite data is used to detect them. The image above was captured by the VIIRS instrument aboard NASA-NOAA’s Suomi NPP satellite. A large plume of Saharan dust (light brown) is clearly evident. According NASA, “Normally, hundreds of millions of tons of dust are picked up from the deserts of Africa and blown across the Atlantic Ocean each year.” These dust plumes, like many things within the Earth system, have multiple implications such as:
Fortifying beaches in the Caribbean Fertilizing soils in the Amazon Degrading air quality (and complicating some health/respiratory ailments in North American, the Caribbean, and South America
There is even scientific evidence that the dust can impact hurricane formation. According to Jason Dunion, a NOAA researcher quoted on a NASA website, “a dust storm has three main components that can suppress a hurricane.” Those three components (really dry air, wind shear associated with strong mid-level winds, and the dust itself) hinder the development of clouds and in the case of the wind shear, can even destroy the structure of the storm. As the hurricane season advances to the peak season (August to October), meteorologists will continue to keep a close eye on Saharan dust.
SAL impacts on easterly waves and tropical cyclones NOAA
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There are other implications of these dust storms as well. My friend and colleague Dr. Gregory Jenkins, a professor at Pennsylvania State University, and colleagues have been working to understand how Saharan dust storms spread bacteria over very long distances and affect human health. Their work was recently highlighted in American Geophysical Union’s Eos. The study led by Kane Marone identifies these dust storms as possible transmission vectors (like mosquitos) transmission vectors that can carry harmful human pathogens. Professor Joseph Ortiz is a scientist at Kent State University who also studies Saharan Air Layer outbreaks. He told me that scientists can actually track past occurrences using deep sea sediment cores.
So what causes these outbreaks that move off the African coast every 3-5 days during late spring to early fall? Studies have shown that the Sahelian region is weathered during the short rainy season. The dust is transported westward by the easterly winds and becomes somewhat elevated as it ascends over cooler, moist oceanic air (the Saharan Air Layer). NOAA has an outstanding “101” website on the SAL.
Later in the week, the particularly in the southern tier of the U.S., evidence of the dust arrival will be apparent. As early as the middle of the week (Wednesday and Thursday), you may notice the more typical blue sky give way to a more hazy or milky sky. For many of you, the sunsets and sunrises will be particularly stunning too. This optical atmospheric “eye candy” is because dust particles cause sunlight to scatter in very interesting ways. For those of you that like to post pictures of sunsets and sunrises on social media, this is your week.
Track the dust in real-time here
Sunset over Nea Artaki with clouds, African Sahara dust and sea view. In Nea Artaki, Euboea on May ... [+] 22, 2019(Photo by Wassilios Aswestopoulos/NurPhoto via Getty Images) NurPhoto via Getty Images
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aa9ab63911bb0974646375229c622a56 | https://www.forbes.com/sites/marshallshepherd/2020/06/23/does-air-conditioning-relief-for-summer-heat-make-coronavirus-worse/ | Does Air Conditioning Relief For Summer Heat Make Coronavirus Worse? | Does Air Conditioning Relief For Summer Heat Make Coronavirus Worse?
All throughout the pandemic, there have been rumors and innuendo that summer heat would help reduce the COVID-19 health threat. The logic is obviously ground in our experiences with colds, influenza and other viruses that tend to wane during the warm season. Even as this assumption spread within the media and social media, the Centers for Disease Control and Prevention consistently and clearly articulated that the relationship between warm season heat and coronavirus was inconclusive. The CDC Frequently Asked Questions website notes, “It is not yet known whether weather and temperature affect the spread of COVID-19.” Candidly, if you look at the current trends in states with rapid growth in cases, they are states with hot and humid summertime climates: Texas, coastal South Carolina, Florida, and southern Louisiana. Could the confluence of warm season air conditioning usage and states reopening be contributing to the virus spread?
ZHENGZHOU, Feb. 12, 2020 -- Staff disinfect the filter of the air-conditioner of a train at ... [+] Zhengzhou high-speed railway maintenance station in Zhengzhou, central China's Henan Province, Feb. 12, 2020. Maintenance workers did the cleaning of the air-conditioning system on the high-speed trains at Zhengzhou high-speed railway maintenance station Wednesday to guarantee the clean air flow on the carriages during the fight against the novel coronavirus epidemic. As the number of people back to work has shown an upward trend, Zhengzhou high-speed railway system has increased the frequency of cleaning and disinfection of the air-conditioning system and other facilities. (photo by Li An/Xinhua via Getty) (Xinhua/Li An via Getty Images) Xinhua News Agency/Getty Images
My colleague Jason Furtado, a meteorology professor at the University of Oklahoma, casually mentioned on my Facebook page that studies were emerging concerning air conditioning use and COVID-19. I decided to explore this in greater detail. The CDC website actually pointed me to a new study just published in the journal Emerging Infectious Diseases (July 2020). The study documents a COVID-19 Outbreak that occurred in restaurant in Guangzhou, China. Scientists concluded in the study that the outbreak, which affected ten people from three families, was likely related to droplet transmission associated with air-conditioning within the space, particularly the airflow. The scholars recommended greater spacing between tables and better ventilation.
Before I continue, my usual “soap box reminder” to be cautious of “1-study mania” in science. We see media and policymakers latch on to the results of a single study far too often. I am a big proponent of consensus, replication, and consilience (arriving at the same results from multiple pathways). Having said all of that, another recent study entitled, “2019 Novel Coronavirus (COVID-19) Pandemic: Built Environment Considerations To Reduce Transmission,” recently appeared in mSystems (2020). This study recommended proper filtration and HVAC maintenance to reduce larger droplets, which are often associated with viruses. The authors also recommended that building administrators, when possible, institute window ventilation.
Maximum temperatures expected on June 23rd, 2020 NOAA WPC
As I reflect on the early months of the pandemic, places like Florida and Arizona were already experiencing record-breaking heat, and NOAA’s Climate Prediction Center predicted a warmer than normal summer for most of us. As an atmospheric scientist and professor, those early indications were not encouraging to me. The New York Times published a fascinating article this week showing places with rapid coronavirus case growth. Ironically, they are places firmly entrenched in early summer heat (see graphic above). For reference, I have included the most recent Johns Hopkins University Coronavirus Resource Center map (below) of confirmed cases by population in the United States. From my lens, the virus spread does not seem averse to heat. While studies continue to emerge, it probably is not a bad idea for public facilities to evaluate HVAC systems with some of the guidance issued in the aforementioned studies. Nothing is conclusive at this point, but it sure couldn’t hurt as states continue to “open up.”
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Confirmed cases by populations as of June 23rd, 2020 Johns Hopkins University Coronavirus Resource Center website
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8d865013adc6197bbe16b6c94b39c790 | https://www.forbes.com/sites/marshallshepherd/2020/06/26/african-dust-storms-are-the-latest-new-old-weather-phenomena/ | African Dust Storms Are The Latest ‘New’ Old Weather Phenomena | African Dust Storms Are The Latest ‘New’ Old Weather Phenomena
As I type this on Friday morning, there is a high likelihood that you have already seen social media posts of “African dust” sunrises or sunsets. You have also likely seen references to Godzilla or friends saying “wow, this has never happened before, right?” To be clear, this dust outbreak is certainly an anomaly event and poses potential health risks for people all along its pathway so it is important that the media and other stakeholders have picked up on it. Herein, I officially induct “African dust storms” into the “new” old weather phenomena Hall of Fame. Let me explain.
Dust interacting with cloud systems in the Gulf of Mexico NOAA
To illustrate just how extreme this current dust storm is, FEMA scientist Michael Lowry tweeted the following: “The ongoing Saharan #dust outbreak across the tropical Atlantic is *by far* the most extreme of the MODIS satellite record — our most detailed, continuous record of global dust back to 2002.” The graphic below shows a quantity called aerosol optical depth (AOD). AOD provides an indication of how much particulate matter or aerosols are in a column of the atmosphere. This event clearly exceeds other dust events of the past two decades.
Aerosol Optical Depth from the NASA Aqua satellite showing how anomalous this dust event is compared ... [+] to other dust storms over the past 2 decades. Michael Lowry (FEMA) and NASA MODIS Team
I wrote this piece because of the sheer volume of social media posts and questions from people saying, “I have never heard of dust storms like this making it to the U.S.” or “2020 strikes again, we now have dust coming from Africa.” Extreme events are newsworthy, and this event attracted the attention of the media. As an atmospheric scientist and professor at the University of Georgia, I am rather attentive to meteorological and climate phenomena on a daily basis. While certainly and dangerous from a respiratory ailment perspective, I knew that an African dust storm crossing the Atlantic Ocean was not, in itself, unusual. In fact, I discuss why it happens in a previous Forbes article.
African dust approaching the U.S. on June 25th, 2020 NOAA and University of Wisconsin SSEC
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At times in meteorology, we experience the coronation of “new” old things. Many terms that have been well-studied and observed in my field often take on new novelty or significance within the media or social media. Other examples that I have observed in recent years include Polar Vortex, derecho, and bombogenesis. All of these are relatively common meteorological terms that have been around for decades. To be fair, most people are not sitting around reading atmospheric sciences journals or going to meteorology conferences so these terms would not be familiar to many people. I am sure there are many medical, business, or engineering terms that I am not familiar with too. Within the past decade, the rise of social media, weather - climate journalism, and 24/7 news cycles have injected these terms into the lexicon of the general public. For many people, they are certainly “new.”
Oh, there is one more thing to mention while we are talking terminology. My friend and colleague Dr. Tom Gill is one of the foremost experts on atmospheric dust events in the world. Gill, a professor at the University of Texas - El Paso, posted a reminder on Twitter about the current dust storm: “But... it's not a Haboob. Don't let anyone conflate the two! #NotAllDustStormsAreHaboobs.” According to the Glossary of the American Meteorological Society, a haboob is “An intense sandstorm or duststorm caused by strong winds, with sand and/or dust often lofted to heights as high as 1500 m (~5000 ft), resulting in a “wall of dust” along the leading edge of the haboob that can be visually stunning.” They are quite common in arid regions and or of much smaller scale than African dust storms.
If you would like to track the African dust in real-time, I highly recommend this link.
Saharan dust leaving the African continent NOAA
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64499fead4c5219d567166408ca39cd0 | https://www.forbes.com/sites/marshallshepherd/2020/07/01/debunking-2-myths-toxic-coronavirus-masks-and-breathing-warms-the-climate/ | This Myth About Carbon Dioxide And Masks Is Similar To A Debunked Claim About Climate Change | This Myth About Carbon Dioxide And Masks Is Similar To A Debunked Claim About Climate Change
Coronavirus is still with us, and case numbers are spiking in many places. Ironically, many politicians and decision-makers are now promoting advice that medical experts and scientists have long been giving: Wear a face mask. My Forbes colleague Sarah Hansen wrote that a national mask policy could save the U.S. economy $1 trillion. It still baffles me that there has been political maneuvering or angst about doing something very simple to help stem the tide of the COVID-19 pandemic, but as the young folks say, “It is what it is.”
One of the more ridiculous assertions that I have seen are skeptic claims about the safety of masks because of carbon dioxide that we breathe. It reminds me of inaccurate narratives that I see in climate change denialism. Let’s discuss the misrepresentation of carbon dioxide in both instances.
BERLIN, GERMANY - JUNE 15: Supporters of Extinction Rebellion walk in front of the German ... [+] Chancellery before marching to the Ministry of Economy and Energy to launch their summer protest campaign on June 15, 2020 in Berlin, Germany. Extinction Rebellion, which demands policies to reduce climate change, has planned a variety of events of political engagement across Germany in June. (Photo by Maja Hitij/Getty Images) Getty Images
I will start by debunking the myth about carbon dioxide and wearing face masks. To do this, I will rely on medical and public health experts rather than the Dunning-Kruger effect (thinking I know more about a topic than topical experts) since my expertise lies within the field of atmospheric sciences. The Cleveland Clinic website debunks five myths about COVID-19 and face masks. One of the myths is that “wearing face masks will make you sick.” My first reaction when I hear this is to wonder how all of those doctors, nurses, race car drivers and other professions that routinely wear masks survived all of these years. The website gives a less sarcastic perspective. It says, “While inhaling high levels of carbon dioxide is dangerous, this is very unlikely to happen from wearing a cloth face mask — especially if you’re only wearing it for short periods of time.” The website does provide some precautions for safe use of masks that children or people with breathing problems should be aware of.
Carbon dioxide is formed as a waste byproduct in the body through the process of respiration. It is discarded by exhalation. According to studies, carbon dioxide is pretty harmless at low concentrations. At higher concentrations, however, it can lead to cardiac challenges, increased respiratory rate, or loss of consciousness. At extremely high concentrations, death or coma is possible. Carbon dioxide is all around us. It’s in the air. It’s in carbonate drinks. It’s in fire extinguishers.
UNITED STATES - JUNE 23: Dr. Anthony Fauci, director of the National Institute of Allergy and ... [+] Infectious Diseases, arrives to testify during the House Energy and Commerce Committee hearing titled Oversight of the Trump Administration's Response to the COVID-19 Pandemic, in Rayburn Building on Tuesday, June 23, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images) CQ-Roll Call, Inc via Getty Images
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In May USA Today published an excellent fact-checking article debunking the myths that wearing mask will cause hypoxia (insufficient oxygen supply in tissue), hypoxemia (reduced oxygen intake) or hypercapnia (carbon dioxide toxicity). OSF HealthCare pulmonologist Dr. Michael Peil, like the CDC, says that it is unlikely that dangerous levels of carbon dioxide will build up in a mask even over long periods of time. On the OSF Healthcare website, he says, “The carbon dioxide is going to pass right through the face mask, we are going to inhale fresh air through that, so there really is no opportunity for carbon dioxide to build up unnaturally.” Dr. Peil also said that carbon dioxide does not cling to the masks so that it is re-inhaled. He said, “And even if it did, it would be a very small amount. But the fact is, it just doesn’t happen that way.”
People create their own narratives when they are scared, lack information, or have preconceptions. The masks are restrictive and seem to impede airflow, which probably leads to some of the odd theories getting around in your Facebook feed. Another example of false narratives is related to climate change, carbon dioxide and breathing. It is clear that excessive carbon dioxide related to human activities is causing our climate system to warm at a rate beyond the naturally-varying cycle. And as a reminder, scientists are aware that climate changes naturally too.
The Carbon Cycle (simplified) NASA
One of the most absurd claims about climate change (and there are many) is that we are contributing to warming by breathing. According to an article written by Brian Palmer in Slate, “the human race breathes out about 8.5 percent as much carbon as we burn....(and) this figure is meaningless, since human respiration is part of a ‘closed loop cycle’ in which our carbon dioxide output is matched by the carbon dioxide taken in by the wheat, corn, celery, and Ugli fruit that we eat.” Palmer goes on to make the point that our body is actually a net carbon sequestration device (a sink) rather than a source. Narasimhan Santhanam wrote an outstanding “101” on this topic at Cleantech.Guide. The bottom line written in that piece was, “The carbon in the CO2 we breathe out is nothing more than the carbon captured by plants when they took in CO2 during their growth.” There is nothing extra.
Science is hard. People often make it easy for their own consumption or agendas. Unfortunately, what often seems to be a simplistic interpretation can often be quite wrong. Luckily there are several great sources of science information available so you don’t have to rely on your uncle’s theory posted on Facebook.
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84c9b84b42123e9a46d47a2227953db4 | https://www.forbes.com/sites/marshallshepherd/2020/08/17/why-repeating-false-science-information-doesnt-make-it-true/?sh=30f45e241ffd | Repeating Misinformation Doesn’t Make It True, But Does Make It More Likely To Be Believed | Repeating Misinformation Doesn’t Make It True, But Does Make It More Likely To Be Believed
One of the most frustrating aspects of the coronavirus pandemic is seeing all of the false information circulating around social media. I was inspired to write this article after reading unfortunate (and inaccurate) comments on a local Georgia school district’s Facebook page after they announced that three of its high schools were transitioning back to digital learning. It was breathtaking to see so many inaccurate claims about efficacy of face masks, fatality rates, or comparisons to the flu. My Forbes contributions are typically about weather and climate, but I am often inspired to make connections with other aspects of science too. There are striking similarities between repetitive false information about coronavirus and misinformation that I witness with weather and climate. I decided to explore something called the “illusory truth effect.”
TAMPA, FL - AUGUST 06: Bright Owens, a supporter calling for Hillsborough County schools to reopen ... [+] protests ahead of a meeting of the school board at the Hillsborough County Public Schools district office on August 6, 2020 in Tampa, Florida. The Hillsborough County School Board held a special meeting to decide if schools will reopen during the COVID-19 pandemic. (Photo by Octavio Jones/Getty Images) Getty Images
According to a 2015 study in the Journal of Experimental Psychology: General, the illusory truth effect is the notion that repeated statements are perceived to be more truthful than new statements. This effect is clearly something that marketing professionals, cult leaders, and politicians understand. In other words, you say something enough times, and people start to believe it. Temple University psychologist Dr. Lynn Hasher and colleagues published the first major study of the illusory truth effect. Some other interesting characteristics of the illusory truth effect detailed in Psychology Today by Dr. Joe Pierre include:
If repeated enough times, the information may be perceived to be true even if sources are not credible. The illusory truth effect is very evident on subject matter people perceive themselves to know about. The effect can happen even if someone had previous knowledge that the information was false.
I am no psychologist, but this effect sure has elements of brainwashing and indoctrination. The aforementioned 2015 study also points out that, for many people, repeated statements are easier to process than new information even if people know better.
Lightning strikes during a thunderstorm over Greater Lisbon in Portugal, on July 21, 2020. (Photo by ... [+] Pedro Fiúza/NurPhoto via Getty Images) NurPhoto via Getty Images
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Ok, let’s circle back and apply this effect in contemporary times. I am an atmospheric sciences professor at the University of Georgia, research meteorologist, and former president of the American Meteorological Society. Through these lenses, I have witnessed my share of illusory truth effect. In the realm of climate science, I have even called myths about climate change “Zombie Theories” because they get repeated over and over in social media, blogs, and editorials even though science experts have refuted them.
It happens in weather too. Many people are told that summertime flashes of lightning without thunder are caused by the hot air (so-called “heat lightning”). In reality, what people know as heat lightning is simply intra-cloud or cloud-to-cloud lightning that is too far away to hear the thunder. The National Weather Service website points out, “While many people incorrectly think that heat lightning is a specific type of lightning, it is simply the light produced by a distant thunderstorm.”
Because I was so familiar with receptive, false weather or climate claims that take on the perception of truth, the practice was immediately apparent to me with coronavirus. People often suffer from lapses in critical thinking, biases because of personal needs or desires (motivated reasoning), and psychological reactance (regaining control after a feeling that it has been lost). When you couple these things with confirmation biases (consuming information from sources aligning with one’s beliefs) or political tribalism, you get repeated statements like these:
The science is unproven on the effectiveness of masks. Only a small percentage of people are dying from COVID-19 so what’s the big deal. The flu kills more people every year. The media is hyping the pandemic.
I am sure you can add others to the list. I wrote this piece so that the next time you see one of them you will have some context on why they happen.
Be safe.
A woman holds out an anti-media sign as hundreds of people gather to protest the lockdown in spite ... [+] of shelter-in-place rules still being in effect at California's state capitol building in Sacramento, California on April 20, 2020. - Some people intentionally jammed roads while honking and holding out signs while others disrespected social distancing rules by gathering in close proximity, blaring Americana music and shouting to end the lockdown. (Photo by Josh Edelson / AFP) (Photo by JOSH EDELSON/AFP via Getty Images) AFP via Getty Images
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22ee94a435e008cd65e9124cd8e8c14b | https://www.forbes.com/sites/marshallshepherd/2020/10/08/5-things-to-know-about-hurricanes-and-climate-change-after-the-vice-presidential-debate/ | 5 Things To Know About Hurricanes And Climate Change After The Vice Presidential Debate | 5 Things To Know About Hurricanes And Climate Change After The Vice Presidential Debate
Like many Americans, I watched the debate between Vice President Mike Pence and Senator Kamala Harris. At the same, my atmospheric scientist eye was also monitoring Hurricane Delta, the 25th named storm of the year, as it makes its way to the U.S. Gulf Coast. For the second debate in a row, climate change received a respectable amount of discussion (and that is refreshing). The climate crisis impacts every “nook and cranny” of our lives including public health, the economy, agricultural productivity, civil rights, and infrastructure. In one exchange, a statement was made about whether we are experiencing more hurricanes in the United States in the past 100 years. Depending on the metrics used, the answer could be yes or no. However, focusing on frequency of the storms misses the point of climate change - hurricane connections.
Hurricane Delta (2020) approaches the U.S. Gulf Coast. NOAA and Tropical Tidbits website
Hurricanes are only part of the story. I co-authored a National Academies of Sciences, Engineering, and Medicine report on attribution of contemporary weather events to climate change. The subject of hurricanes and climate change was a key component of the report. Before I deal with the “frequency” and “intensity” question, it is important to remind readers that hurricanes (Atlantic basin and eastern Pacific) represent only a subset of global tropical cyclones. Climate change impacts are equally relevant to typhoons (western Pacific) and cyclones (Indian Ocean, Australia). I often see people utilize statistics about Atlantic hurricanes (or landfalling U.S. storms) to make broad statements about climate change and tropical cyclones. Such geographically-biased assessments are unfortunate because scientific studies have shown that activity varies as a function of the basin.
Tropical cyclone formation regions NWS
Frequency changes. It is very common to hear statements like “climate change is going to lead to more frequent and stronger hurricanes” in the media, public discourse, and so forth. It always makes me cringe because that is generally not what the scientific literature says, and climate scientists know it. The Geophysical Fluid Dynamics Laboratory (GFDL) of the National Oceanic and Atmospheric Administration (NOAA) has an outstanding and up-to-date website on global warming and climate change. It is a synthesis of the most current scientific knowledge on the topic.
Focusing on the Atlantic basin, the NOAA website notes, “Existing records of past Atlantic tropical storm or hurricane numbers (1878 to present) in fact do show a pronounced upward trend, which is also correlated with rising SSTs.” However, the website also points out that irregularities in reporting and sampling biases may have inflated these trends. Studies suggest short-lived storms likely not counted in earlier records account for some of the recent upward trends in the Atlantic basin. There is evidence that major hurricanes (category 3 or higher) have increased in the basin, but there are questions about data consistency. Studies in other basins also suggest that frequency has not changed significantly.
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Rising flood waters overtake a gas station in Lumberton, North Carolina, on September 15, 2018 in ... [+] the wake of Hurricane Florence. - Besides federal and state emergency crews, rescuers were being helped by volunteers from the "Cajun Navy" -- civilians equipped with light boats, canoes and air mattresses -- who also turned up in Houston during Hurricane Harvey to carry out water rescues. (Photo by Alex Edelman / AFP) (Photo credit should read ALEX EDELMAN/AFP via Getty Images) AFP via Getty Images
Intensity changes. While the information about frequency may be news to you, most credible climate scientists have known this. They also know that the scientific consensus is that we are likely to see stronger hurricanes (tropical cyclones) going forward. The NOAA synthesis page says, “it is likely that greenhouse warming will cause hurricanes in the coming century to be more intense globally and have higher rainfall rates than present-day hurricanes.” Numerous modeling studies support this conclusion. Recent studies also reveal trends in tropical cyclone intensification rates.
Storms like Hurricane Laura (2020), Delta (2020), and Michael (2018) have given us recent lessons about rapid intensification (increased wind speeds of roughly 35 mph in a 24-hour period). A 2019 study in the journal Nature calculated 24 hour wind speed changes over almost 30 years in the Atlantic basin. They found a detectable increase in intensification rates that could not be explained exclusively by natural climate variations. However, these results represent early-generation studies and need further corroboration.
Rain and forward speed. There is increasing evidence that anthropogenic climate change is causing heavier rainfall rates over land, but there is no attribution signal in hurricanes to this point. However, several studies have explored extreme rainfall in Hurricane Harvey (2017) and Hurricane Florence (2018). The studies conclude that available moisture associated with a warmer climate system enhances moisture convergence and rainfall rates in storms like Harvey. Professor Kevin Reed and colleagues at Stonybrook University actually predicted, using a model and assumptions about climate change, that Hurricane Florence would be 50 percent greater and that the storm would be about 80 kilometers larger due to the impacts of climate change on the atmosphere-ocean system.
James Kossin, an expert at the University of Wisconsin, and his colleagues have also recently found evidence in a 2018 study that tropical cyclones may be slowing down or stalling. Slow or stalling storms like Harvey or Dorian (2019) can be significant flooding and wind hazards. More recent studies have challenged the findings and at this point, there is still some debate about the anthropogenic connections.
NEW YORK, NY - OCTOBER 29: A woman walks her dog near new sand berms in the Bell Harbor ... [+] neighborhood which was heavily damaged during Hurricane Sandy on October 29, 2014 in New York City. Hurricane Sandy was recorded as the deadliest and most destructive hurricane of the 2012 Atlantic hurricane season. It caused over $68 billion in damages, and hundreds of people were killed along the path of the storm in seven countries. Today marks the two-year anniversary of its storm surge hitting New York City and the surrounding area which flooded streets, tunnels and subway lines and cut power in and around the city. (Photo by Spencer Platt/Getty Images) Getty Images
Location, Location, Location. Another concerning factor that I should place on the table involves the location of tropical cyclones. A 2020 study in the Proceedings of the National Academy of Sciences of the United States of America reveals that anthropogenic climate change is partially responsible for the spatial pattern of tropical cyclones more so than frequency changes. Since 1980, they find decreases in tropical cyclone activity in the southern Indian Ocean and western Pacific Ocean. However, they find increased activity in the North Atlantic and central Pacific. Studies have also found that hurricanes are attaining maximum intensity at higher latitudes. This is of particular concern as many populated centers are at higher latitudes. In the U.S., the memory of Hurricane Sandy (2012) lingers for people along the East Coast. Even in 2020, several tropical systems were at relatively high latitudes early in the season.
In summary, the consensus on climate change and hurricanes is that we will likely have fewer of them, but when they occur, they will be stronger (on average). There also may be changes in their forward speed, rainfall production, and latitudinal extent. I encourage the public, media, and policymakers to discuss hurricane - climate change connections properly.
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2ae2d4e5818ff5408eff7a082a76defc | https://www.forbes.com/sites/marshallshepherd/2020/10/23/zeta-may-be-forming-in-the-caribbeanwhy-thats-odd-and-not/?sh=504c6b913615 | Zeta May Be Forming In The Caribbean - Why That’s Odd (And Not) | Zeta May Be Forming In The Caribbean - Why That’s Odd (And Not)
The 2020 Atlantic hurricane season is still upon us. Hurricane Epsilon is heading off into the North Atlantic, but there is no rest for hurricane forecasters. The National Hurricane Center is now watching a new area of interest in the Caribbean Sea. If it develops into a tropical storm, it will be named Zeta. Would it be odd for this time of year? The answer is complicated.
The sun setting on Hurricane Epsilon as potential "Zeta" organizes in the Caribbean Sea. NOAA NHC
Before I delve into the answer, let’s take a look at the current status of Invest #95L, the technical name given to the storm system of interest by NOAA. According to the National Hurricane Center Friday afternoon update, “Satellite images and radar data indicate that the broad area of low pressure located just west of Grand Cayman Island is gradually becoming better defined.” Forecasters give the storm a 70% chance of further development within the next 2 to 5 days. Whether it becomes Zeta or not, significant rainfall will be possible over the weekend in Cuba, Jamaica, southern Florida, and parts of the Bahamas. The ultimate path of the storm (towards Florida or further into the Gulf of Mexico) will depend on how it interacts with a cold front sweeping eastward in the United States. If you live in Florida or along the eastern Gulf of Mexico, watch the forecast carefully over the weekend.
Weather map representative of Saturday October 24th - 25th, 2020. NOAA WPC
Ok, let’s get to the question about “odd.” It is certainly not odd to have tropical cyclones at this time of year. The map below shows a climatology of tropical cyclone origin points in late October over the period 1851 to 2015. If Zeta forms, it is within a region of the Atlantic basin where we tend to see development. However, here is where things get a bit more complicated.
If Zeta forms, it will be only the second time in history that we have used the name Zeta. That is odd. As you recall, when the hurricane name list is exhausted, the Greek alphabet is used. The only other time this was employed was 2005. That year, Zeta, which is not the last letter in the Greek Alphabet, was reached. There is one major difference between 2005 and 2020. In 2005, Tropical Storm Zeta was named on December 30th and dissipated in January. According to a Tweet by Colorado State University hurricane expert Phil Klotzbach, “Current record for earliest 27th Atlantic named storm formation is November 29, 2005” He goes on to explain that the previous record was for the 2005 version of Epsilon but an additional October storm was added after the season in 2005. This oddity explains why the 27th named storm was Epsilon in 2005. The 27th named storm in 2020 will be Zeta (if it develops).
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In a season of records for the 2020 Atlantic hurricane season, CIRES research scientist Sam Lillo points out another potential oddity. He tweeted, “Since 2000, there are 4 instances of two simultaneous tropical cyclones in the Atlantic after October 23rd.” That is not the punchline however, he went on to say, “There are zero instances between 1970 and 2000.”
Tropical cyclone origin points from 1851 to 2015. NOAA / CIRA
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c805a685a3a6f7b6db828574b31e003a | https://www.forbes.com/sites/marshallshepherd/2020/11/02/more-durable-weather-radars-are-needed-for-an-era-of-stronger-hurricanes/?ss=greentech&sh=58ff96323940 | More Durable Weather Radars Are Needed For An Era Of Stronger Hurricanes | More Durable Weather Radars Are Needed For An Era Of Stronger Hurricanes
I occasionally use this space for editorial commentary. This piece is one of those moments. During the record-setting 2020 Atlantic hurricane season, the state of Louisiana was within the hurricane cone for multiple weeks. According to University of Miami hurricane expert Brian Mcnoldy, Hurricane Zeta marked the fifth landfall during the state, three of which were hurricanes. In August, Hurricane Laura (2020) knocked out the National Weather Service radar at its Lake Charles office. Unfortunately, the same region faced threats from Hurricanes Delta (2020) and Zeta (2020), respectively, after Laura. As I sit at my computer tracking an unprecedented Hurricane Eta (yep, Eta), strong and rapidly intensifying storms in recent years raises the following question for me: Do we need more durable weather radar infrastructure for an era of stronger hurricanes?
NEXRAD Doppler radar in Puerto Rico after Hurricane Maria NOAA Climate.gov website
The answer, in my opinion as a former President of the American Meteorological Society and scientist within the field, is “yes.” Thankfully, a mobile Doppler radar system was made available to fill in gaps left by the loss of the Lake Charles radar. Other National Weather Service radars in the area were operational too. However, there is a reason the Lake Charles radar was placed in that location. Washington Post Capital Weather Gang’s Matthew Cappucci wrote in the days leading up to Hurricane Delta, “Without the main Lake Charles radar, forecasters wouldn’t be able to see weather features in the lower atmosphere, below about 12,500 feet in altitude, including potential tornadoes and flood-inducing rain bands....” Hurricane Laura reached Category 4 strength, which on the Saffir-Simpson scale means winds in the 130-156 mph range.
A university-based mobile Doppler radar system was deployed to Louisiana after the NWS Lake Charles ... [+] radar was destroyed by Hurricane Laura. NWS
During Hurricane Maria (2017), the National Weather Service San Juan weather radar was also destroyed. At the time, Maria was also a category 4 storm as it ravaged the island of Puerto Rico. It took nine months before the radar was restored. More recently, Super Typhoon Goni (2020) made landfall in the Philippines. Pictures surfaced on social media showing the remnants of a weather radar on one of the islands.
In 2018, the NEXRAD Radar Operations tweeted after Hurricane Maria, “In the history of the NEXRAD, only two radars have been lost to tropical systems: San Juan and the Dept of Defense's radar in Kadena Japan.” I suppose we can add Lake Charles now too. According to the NOAA Climate.gov website, the radar in Puerto Rico was designed to withstand maximum winds of 116 knots (133-134 miles per hour), which is on the lower end of a Category 4 storm. I actually started thinking about this question as a young graduate student at Florida State University after learning that Hurricane Andrew damaged the National Weather Service radar as it made its first landfall in south Florida. Is our radar infrastructure (and other weather observing capacity for that matter) ready for a generation of stronger storms?
Saffir-Simpson Scale NOAA Ocean Explorer website
There is a lot of misinformation on the impact of climate change on hurricanes. However, actual scientific studies have trended towards consensus. The NOAA Geophysical Fluid Dynamics Laboratory (GFDL) hosts an outstanding (and well updated) website on current thinking about climate change and hurricanes. Trust this site rather than your favorite Tweeter, Blogger or all-knowing Uncle. One finding is, “Tropical cyclone intensities globally will likely increase on average (by 1 to 10% according to model projections for a 2 degree Celsius global warming).” While the scientific studies are inconclusive on the frequency of storms (one of the misperceptions out there), it is increasingly clear that stronger storms are likely when they do happen (on average). According to the NOAA GFDL website, this “would imply an even larger percentage increase in the destructive potential per storm, assuming no reduction in storm size.”
If our current weather radar infrastructure is designed to withstand low-end Category 4 storms, then an era of stronger storms is likely to increase the probability of more radar damage or destruction. I am not naive so understand that there may be engineering limits at this point in time, but I have faith in very smart people. We can figure it out. With increasingly more people flocking to coastal regions, it is imperative that our weather radar infrastructure stand ready so that our forecasters are not “flying blind” during major hurricanes. To be clear, this is not a criticism of the National Weather Service. They do an amazing job keeping us safe with the resources that they are allocated. As I have written before, the ~$1 billion annual NWS budget is about the cost of a cup of coffee for every person in the U.S., which is huge return on investment to the nation. Instead, this is a cautionary note to our policymakers and leaders. We must move our planning mentality from “what is climate change going to do to our infrastructure?” to “what is it already doing to it?”
U.S. weather radar coverage NOAA
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1a201fcd4c55c95c245853ca73254553 | https://www.forbes.com/sites/marshallshepherd/2020/11/07/the-outcome-of-the-us-presidential-election-is-a-win-for-earth-too/ | The Outcome Of The U.S. Presidential Election Is A Win For Earth Too | The Outcome Of The U.S. Presidential Election Is A Win For Earth Too
The U.S. Presidential election has been settled, and the people have spoken. Joe Biden and Kamala Harris are the next President and Vice President of the United States. Candidly, I cannot think of an election outcome with so many immediate implications for the United States and global community on our climate crisis. Here is why Earth is also a winner in this election cycle.
Andy Katz/Getty Images
While everyone was monitoring or covering the election results, something else quietly happened on November 4th, 2020. The United States withdrew from the Paris Climate Agreement. President Trump announced the intentions to do this in 2019, but it could no become official until November 4th in accordance with Article 28 of the Agreement. Is the action permanent? I answered this question in a 2019 Forbes article by noting, “A different administration could rejoin the agreement or the current administration could reverse course although there is no evidence that would happen.” Joe Biden has already signaled that he plans to rejoin the Agreement, which seeks to reduce Greenhouse gas (GHG) emissions to cap warming beneath a 1.5 to 2.0 degree C threshold.
The Paris Agreement exists without the United States. However, it would be less effective at achieving its goals. This Agreement was better than previous actions because it included other big emitting countries like China and India. We have always known that climate action needed to be bigger than one country. However, the U.S. is the second leading emitter of GHGs in the world. The U.S. traditionally, until recent years, has also been viewed as a leader. Without our presence, other countries might be less inclined to meet targets, and climate policy engagement could be limited. Just this week, someone on social media tweeted the cliche “Don’t you think the Agreement was unfair to the U.S.?.” narrative. My response was that the Agreement was fair to the Earth. The last time I looked at a view of the planet from space there were no borders.
Emissios by country according to the EPA website EPA
Beyond the Paris Agreement, the Earth won the election because I foresee an era of actual science-based discussions and policy proposals on climate, including the Green New Deal. The 2020 Presidential campaign and debate cycle foreshadowed my prediction. I was surprised (but in a good way) at the number of times climate change appeared in the discussions. It is also likely that U.S. agencies dealing with climate science or policy like the National Oceanic and Atmospheric Administration (NOAA), EPA, and NASA will feel less constrained when participating in climate assessments, research, and other international activities. In recent weeks, potentially concerning information was revealed in Science magazine about personnel actions within NOAA’s senior leadership. By the way, let’s hope the Biden Administration will work diligently to have a permanent NOAA Administrator. The Trump administration had interim leadership in that position for the entire duration. NOAA is a critical player in the global challenge of climate change.
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Finally, a U.S. administration that will actually “listen to the scientists” is good for everyone. Joseph Ortiz is a Professor of Geology at Kent State University. The expert in climate change and environmental remote sensing told me, “a Biden-Harris Administration will recognize many issues require sound science-based policy....They will bring science expertise back to the White House.” Ortiz also expects to see economic development programs that will advance our energy infrastructure and improve sustainability. He closed by saying, “That will help Americans, provide future resilience and decrease the impending impact of climate change.” Geographer and climate expert Jennifer Collins at the University of South Florida echoed Ortiz. She said, “Our planet wins as the White House will respect scientists and their expertise so policies will once again be informed.”
We have some of the best scientists, engineers, and resources in the world. When that capacity is not hindered by political ideology and biases, it can be unleashed on grand challenges that we face like the climate crises and coronavirus. As I think more about the title of this article, it is really us that are the winners. The Earth will likely survive no matter how we harm it. We are the ones that will contend with the changes.
CHINO HILLS, CA - OCTOBER 27: Flames come close to houses during the Blue Ridge Fire on October 27, ... [+] 2020 in Chino Hills, California. Strong Santa Ana Winds gusting to more than 90 miles per hour have driven the Blue Ridge Fire and Silverado Fire across thousands of acres, grounding firefighting aircraft, forcing tens of thousands of people to flee and gravely injuring two firefighters. More than 8,200 wildfires have burned across a record 4 million-plus acres so far this year, more than double the previous record. (Photo by David McNew/Getty Images) Getty Images
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b8f3a3f3d739e0323d788103e2eecfd3 | https://www.forbes.com/sites/marshallshepherd/2020/11/16/hurricane-iota-is-one-of-the-strongest-storms-of-2020a-humanitarian-disaster-looms/?sh=32f31d7974ce | Hurricane Iota Is One Of The Strongest Storms Of 2020 - A Humanitarian Disaster Looms | Hurricane Iota Is One Of The Strongest Storms Of 2020 - A Humanitarian Disaster Looms
I have to admit it. As I analyzed the latest information this morning on Hurricane Iota, there was a feeling of solemn and gloom. Hurricane Iota is the 30th named storm of the Atlantic hurricane season. People like me who write articles often get accused of sensationalizing headlines. However, the headline chosen here is certainly not. Here is why I fear that an epic humanitarian disaster looms as Hurricane Iota approaches Central America.
Hurricane Iota on final approach to Central America on the morning of November 16th, 2020. The ... [+] classic pinhole eye is apparent I the major hurricane. NOAA / CIRA
A Tweet on Monday morning (November 16th, 2020) by the National Hurricane Centers tells part of the story of my concern, “#Hurricane #Iota rapidly strengthened overnight and now has 155 mph (245 km/h) sustained winds.” As I was writing this, Hurricane Hunter aircraft were investigating whether further intensification warranted another upgrade. If the storm is upgraded to Category 5 later today, it would be the latest into the calendar year on record according to Andy Hazelton, a tropical meteorology expert at the University of Miami and NOAA’s Hurricane Research Division. It could also end up being the strongest storm of the 2020 season and challenge a November pressure record. According to UNC-Charlotte graduate student Eric Webb, a dropsonde, which is an instrument dropped into a hurricane from a plane to collect data, measured a Mean Sea-level Pressure of 917 mb.
Candidly, the line between high-end Category 4 and Category 5 is more relevant to the meteorological and climatological records. The human story is one of potential tragedy either way. At such intensities, the bottom line is that Nicaragua and Honduras will experience 12-18+ feet storm surge, ferocious winds, intense rainfall, and landslides. If you have been paying attention, there are some ominously familiar attributes of Hurricane Iota, the thirteenth hurricane of the season and the sixth to reach Category 3 or greater.
Hurricane Iota will make landfall in a region of Central America that has been recently devastated by other storms. Only last week, the region suffered through Hurricane Eta, the strongest storm (for now) to impact that part of Central America since Hurricane Mitch (1998). Media reports already have the death toll at over 100 people, and that number could climb. Earlier in the season, Hurricane Nana (Category 1) impacted the region. Colorado State University hurricane expert Phil Klotzbach provides perspective on how taxing this season has been for Central America. He tweeted, “Prior to November 2020, only 4 Category 4+ Atlantic #hurricanes had made landfall in Nicaragua on record.” If Iota does so, as expected, that would be two storms within the past 14 days. NOAA/CIRES postdoctoral researcher Sam Lillo tweeted, “93 miles, 13 days, and 2 millibars separating Eta and Iota. Historic storms on their own. Together, a massive outlier.”
View of damages after the passage of Hurricane Eta at the Omonita neighborhood in El Progreso, Yoro ... [+] department, Honduras, On November 15 2020, before the arrival of Hurricane Iota. - Hurricane Iota is forecast to strengthen to an "extremely dangerous" Category Four by the time it makes landfall in Central America on Monday, the US National Hurricane Center warned, two weeks after powerful storm Eta devastated much of the region and left more than 200 people dead or missing. (Photo by Orlando SIERRA / AFP) (Photo by ORLANDO SIERRA/AFP via Getty Images) AFP via Getty Images
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The other commonality of Hurricane Iota with other storms this year is a worrisome. It is another storm that underwent rapid intensification. Rapid intensification (RI) is when a storm undergoes, “An increase in the maximum sustained winds of a tropical cyclone of at least 30 kt in a 24-h period,” according the National Hurricane Center website. For more on rapid intensification, Chris Robbins’ discussion at iWEATHERNET is worth a look. According to Weather.com, Iota is the 10th storm of 2020 to meet the criteria for RI and ties the year of 1995 for the record. Tomer Burg is a University of Oklahoma doctoral student. He further puts Iota and the 2020 season into perspective with this Tweet, “With Iota now likely a major hurricane, we’ve had more Greek letter major hurricanes than an average entire hurricane season.” If you need to read that last sentence again to drive home the “OMG” factor, please do so.
Unfortunately, the National Hurricane Center is monitoring yet another area that could develop by the end of the week in the same region. This weekend, I could very well be writing about a storm named Kappa. Sigh......
The expected path of Hurricane Iota NOAA NHC
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ec383ec2048fad7f6ca016918056c209 | https://www.forbes.com/sites/marshallshepherd/2020/12/01/can-hurricanes-form-in-december/ | Can Hurricanes Form In December? | Can Hurricanes Form In December?
I am sure many of you are tempted to say, “of course a hurricane form in December, it’s 2020.” The Atlantic hurricane season officially ended on November 30th, but this season has been anomalous and record-breaking in so many ways. As such, I decided to address that question about December hurricanes. The answer actually may surprise some of you.
The tracks of hurricanes and tropical storms in the Atlantic basin during the offseason months ... [+] (December to May) over the period 1851-2017. NOAA
I am writing this article on December 1st, which for meteorologists like me, is the start of winter. Meteorological winter begins on December 1st. If you think meteorologists at the National Hurricane Center have packed up their briefcases and flown off to the Southern Hemisphere for a vacation, think again. They are actually monitorng a system right now. In its last regularly scheduled Tropical Weather Outlook of the 2020 season, the National Hurricane Center wrote, “A gale-force, non-tropical low pressure system centered a couple of hundred miles north-northwest of the Madeira Islands continues to produce a broad area of showers and thunderstorms well to the east of the center.” Though only a 30% chance of further development in the next 2 to 5 days, a low is actually being monitoried by tropical experts on December 1st.
When tropical storms and hurricanes form in the Atlantic basin. NOAA NHC
Though rare, tropical systems and even hurricanes have formed in December. Nature doesn’t always abide by our artificial calendars. Roughly 3% of tropical systems have formed in off-season months (December to May) over the period 1851 to 2017. May is the most active of those months, but there are certainly storms that form in December. In December 2013, an unnamed system formed near the Azores. On December 11th, 2007, Tropical Storm Olga formed and ultimately impacted the Greater Antilles.
During the only other season besides 2020 to employ the Greek alphabet naming system, two tropical systems were active in December 2005. Epsilon formed on November 29th and became a hurricane during the early days of December. The storm dissipated on December 10th and never impacted land. According to NOAA, it was only the 6th hurricane on record in December. Tropical Storm Zeta formed on December 30th that same year and also rang in the New Year. It finally dissipated on January 7th, 2006. For a complete listing of off-season and December storms, this link is a good entryway into the NOAA climatological records.
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PROVIDENCIA ISLAND, COLOMBIA - NOVEMBER 21: General view of destroyed houses by Hurricane Iota in ... [+] the city center on November 21, 2020 in Providencia Island, Colombia. The islands of San Andres, Providencia and Santa Catalina were hit by Hurricane Iota in the early hours of Monday 16th as a category 5 storm, the strongest to affect the country since records are kept. The islands' economy depends on the tourism industry which has been suffering due to coronavirus restrictions since March. According to official sources, 98% of the Providencia Island infrastructure was destroyed by Iota's winds. President Duque, now visiting San Andres Island, contacted the US government for humanitarian help and assistance in hurricane crisis management. (Photo by Diego Cuevas/Getty Images) Getty Images
Though possible, why is it rare to have Atlantic Basin tropical cyclones in the winter season? Two simple reasons come to mind: 1. Significantly more wind shear and 2. ocean waters are cooling down. It is worth noting that there is a lag between peak air temperature (cooling) heating and ocean temperature changes. For example, air temperatures may start to cool significantly into November and December, but the higher specific heat of water causes oceans to cool (and warm) more slowly. If you look at current sea surface temperatures in the Atlantic Basin (below), there are several places (central Atlantic Ocean, southern Caribbean Sea, and parts of the Gulf of Mexico) that actually exceed the 26 degree Celsius threshold for tropical cyclone development.
Let’s hope nature has closed up hurricane shop for the winter, but if it has not, I know my colleagues at the National Hurricane Center will be ready with Special Tropical Weather Outlooks and alerts.
Late November (2020) sea surface temperatures NOAA
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93412d36f5075574f73665e40f633101 | https://www.forbes.com/sites/marshallshepherd/2020/12/08/4-downsides-of-virtual-science-conferences-during-a-pandemic/?sh=311012f042f2 | 4 Downsides Of Virtual Science Conferences During A Pandemic | 4 Downsides Of Virtual Science Conferences During A Pandemic
Coronavirus has disrupted our lives in so many ways personally and professionally. In my profession, scientific conferences have been forced into virtual settings. The irony is that before the pandemic there was a growing call for more online science conferences. Critics argued that in-person conferences were too expensive, cumbersome to execute, and detrimental to carbon emission reductions. In recent decades, I significantly limited my air travel, in part, because of these concerns as well as a general disdain for flying. However, pandemic realities have revealed many downsides of virtual science conferences too.
SAN FRANCISCO, CALIFORNIA - DECEMBER 11: Democratic presidential candidate former New York City ... [+] mayor Michael Bloomberg (L) and former California Gov. Jerry Brown (C) speak about climate change with AGU executive director and CEO Chris McEntee (R) during the American Geophysical Union Conference on December 11, 2019 in San Francisco, California. Democratic presidential candidate Michael Bloomberg is campaigning in California. (Photo by Justin Sullivan/Getty Images) Getty Images
This article was inspired by a Tweet from my colleague Jeff Basara, a meteorology professor at the University of Oklahoma. Basara is the Director of the Kessler Atmospheric and Ecological Field Station and the Executive Associate Director of the Hydrology and Water Security Program at the University of Oklahoma. He tweeted earlier in the week, “I recall the momentum that was building for online conferences, but the Covid world has taught us that (1) there is a right/wrong way to be virtual and (2) there is a need for in-person meetings.”
I am not here to torpedo virtual science conferences. They are absolutely necessary at a time when COVID-19 continues to ravage society. Virtual conferences:
Increase access to world-class science, Level the playing field for students and scholars that may not be able to afford the aggregate costs of a traditional conference, Reduce carbon emissions associated with travel, food, and other conference activities, Enable access to a wider range of conference proceedings and meetings, and Eliminate sprints and marathons across large convention halls.
These are all good things. I have attended several virtual meetings since the pandemic, and there have been some outstanding successes. There have also been some pretty bad experiences too. Here are four downsides of virtual science conferences that I have noticed during our shared 2020 circumstances.
POLAND - 2020/11/17: In this photo illustration a multiple exposure image shows a Zoom video logo ... [+] displayed on a smartphone with stock market percentages in the background. (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images
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The face-to-face interaction is missing. For me, the sidebar conversations, lobby meetings, exhibit hall banter, and dinners were some of the most productive aspects of meetings like the American Meteorological Society (AMS), which will be online in January 2021. I have literally recruited graduate students, forged research partnerships, engaged in science, and crafted societally-relevant policy or activities in the spaces. My current or former graduate students have heard me say many times that you can probably replay talks (at AMS) later - Don’t be so hamstrung by the presentation schedule that you miss opportunities to engage.
Community is lost. Online meetings are functional but can be impersonal. For example, the Color of Weather event at the AMS Annual meeting was an outstanding opportunity for diverse members of the weather enterprise to meet and engage with each other and key leaders. The AMS Student Conference allowed undergraduate students to sit at tables with the Director of the National Weather Service or a high profile broadcast meteorologist. Career fairs, university alumni gatherings, and exhibit hall events are great networking opportunities for all career stages. These opportunities are just not the same sitting in front of a computer screen.
Screen fatigue is real. The prospect of sitting in front of a laptop or computer for 8 to 12 hours is not appealing to me at all. I readily admit getting a bit antsy after a string of Zoom meetings. Many of the online conferences have a series of sessions and breakout rooms. Let’s keep it real, that can be exhausting. A recent National Geographic article by Julia Sklar documented how “Zoom Fatigue” wears on our psyche. A BBC article points out that online engagement requires more focus, creates insecurities about being on camera, and enables awkward periods of silence and technical difficulties. Further, Manyu Jiang writes about self-complexity theory, which explains the notion that having to juxtapose our social, work, and family life within the same space can be stressful. I am not surprised at all that kids (K-12 and collegiate) are struggling with performance in online learning environments. At the end of the day, we are social beings and already stressed out because of the coronavirus threat.
Eric Fournier, Director of Educational Development at Washington University, also makes a great point about distractions. He said, “For me one issue with online conferences has been multi-tasking—so having the presenter's window up in the corner of my screen while trying to listen and doing three other work-related things.”
Health of science organizations suffers . This last point may not resonate with most readers. In fact, many people complain about the costs of professional society membership and conference fees. However, as the former President of the AMS, it is a point worth making. Scientific organizations like AMS, the American Geophysical Union (AGU), or the American Association of Geographers (AAG) are vital. It often frustrated me that some people cannot see the bigger picture value of their relatively small investment in these organizations. They provide peer-reviewed journal access, platforms to break science news, guidance for policymakers, training resources for members, educational materials for K-16 communities, career access and advocacy for sound science (something that has been need in recent years as science was increasingly undermined). Here is a “bottom line” or “Is what it is” statement. These organizations depend, in part, on revenue from conferences. I am concerned about the health of our science organizations.
The pandemic has forced us all to adapt. We are good at it and usually find novel and more efficient ways to do things in times of crisis. This time will be no different. However, 2020 has revealed that I am not quite ready to dismiss face-to-face science meetings yet.
UNITED STATES - APRIL 07: Dr. Thomas Peterson, National Climatic Data Center, speaks at a seminar ... [+] held by The American Meteorological Society on climate change and how it effects transportation infrastructure. (Photo By Tom Williams/Roll Call/Getty Images) CQ-Roll Call, Inc via Getty Images
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1f6c9b914e6ba40094d50a3712d624cc | https://www.forbes.com/sites/marshallshepherd/2020/12/15/black-americans-and-the-coronavirus-vaccinesome-perspective/?sh=2415caad232c | Black Americans And The Coronavirus Vaccine - Some Perspective | Black Americans And The Coronavirus Vaccine - Some Perspective
Registered nurse La Tanya Forbes, right, is inoculated with the Pfizer-BioNTech COVID-19 vaccine by ... [+] RN Cheryl Birmingham, left, at Memorial Healthcare System, Monday, Dec. 14, 2020, in Miramar, Fla. AP Photo/Lynne Sladky
I am typically up before everyone in my house, and it is usually when I do my writing. I was scrolling through Instagram when I saw my friend and Alpha Phi Alpha fraternity brother Mayor Wayne Messam post a video of first responders receiving the Covid-19 vaccine. Messam, the first African American mayor of Miramar, Florida and a Democratic Presidential Candidate in 2019, triggered this article. There is a complex narrative and history centered around Black Americans, science, and the Covid-19 vaccine. Let’s explore it.
Black Americans are disproportionately vulnerable to the coronavirus. According to the National Urban League, Black Americans are 3 times more likely than White Americans to get the coronavirus, and twice as likely to die from it. The Centers for Disease Control and Prevention (CDC) numbers in the table below show slightly different numbers, but they are just as concerning. From my lens, I have seen responses in different communities that reflect this disparate reality. For example, most Historically Black Colleges and Universities (HBCUs) shuttered their fall sports, including football, while other institutions continued to play.
COVID-19 cases and race/ethnicity. CDC website
As vulnerable as our community is to the virus, there is also a strong thread of skepticism about the emerging vaccines. As a scientist, I have continually argued that science and technology would dig us out of this crisis. With the first round of vaccines being administered, I truly believe that “normalcy at the end of the virus tunnel is within sight.” I would take the vaccine if offered it, but a Pew Research Center poll taken in September (2020) tells a different story. While there is some skepticism irrespective of race, there are stark differences. Only 32% of Black adults responded that they would likely get a Covid-19 vaccine shot. This is about 20 percentage points lower than White and Hispanic adults. According to The Guardian, a study by the NAACP, Covid Collaborative, and UnidosUS found that only 14% of Black Americans think the vaccine will be safe.
For some of you reading this, it may be perplexing given the higher vulnerability that the Black community has to the virus. However life experiences vary and so do our histories. Many people in our community remember the Tuskegee Experiments of the early 1900s. In Tuskegee, Alabama, African Americans were basically guinea pigs and unethically studied to test a racist, flawed hypothesis that Black people were inferior. Government doctors from the U.S. Public Health Service deliberately infected Black men with Syphilis because it was believed to be a “Black” disease. Many of these infected patients were left untreated so that research could be conducted. Many of us were told about the heinous Tuskegee Experiments while some of you are likely just reading about them for the first time.
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UNITED STATES - MAY 21: Historic buildings in Tuskegee, Alabama (Photo by Carol M. ... [+] Highsmith/Buyenlarge/Getty Images) Getty Images
A 2010 study, however, revealed that mistrust is not exclusively defined by the Tuskegee Experiments. A general mistrust of the broader healthcare system was identified within the study group as justification for not participating in medical research. Numerous reports discussed the lack of African American participation in Covid-19 trials.
I am an African-American scientist that works within the discipline of climate change. I often encounter barriers to conveying vulnerabilities that our communities face and the solutions needed to overcome the crisis. People are skeptical or scared of things that are not familiar to them. Sadly, I think this drives a lot of the “isms” in our society today, but I digress. One thing that may help is this statement by Dr. Anthony Fauci when responding to the trust issue in the Black community. He said, “So, the first thing you might want to say to my African American brothers and sisters is that the vaccine that you’re going to be taking was developed by an African American woman. And that is just a fact.” Kizzmekia Corbett, a Black woman, is one of the lead scientists involved in the vaccine development.
While you might be tempted to say, “why are you focusing on her race, Dr. Shepherd?” Trust me, it matters. As a kid, I never saw a scientist who had the same complexion as me. In most science, technology, engineering, and math (STEM) fields, there is severe underrepresentation of certain racial groups. Studies show that imagery and mentors are critical. That’s why Dr. Fauci’s statement about Dr. Corbett is important. There may be some child, Black or White, inspired by her.
Full coverage and live updates on the Coronavirus
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567571a3802b73e20951796e7b1b0e60 | https://www.forbes.com/sites/marshallshepherd/2020/12/21/the-fascinating-and-critical-role-of-a-meteorologist-embedded-with-the-red-cross/?sh=469ce829304b | The Fascinating And Critical Role Of A Meteorologist Embedded With The Red Cross | The Fascinating And Critical Role Of A Meteorologist Embedded With The Red Cross
I recently gave a lecture, virtually of course, on extreme weather - climate change connections at Columbia University. During the course of my interactions with colleagues, I learned about the work of Andrew Kruczkiewicz, a Senior Staff Associate Researcher at the International Research Institute for Climate and Society. He wears many hats including Faculty Lecturer at Columbia University and Principal Investigator of the Global Flood Risk program. However, his role as Science Adviser for the Red Cross Red Crescent Climate Centre grabbed my interest. Why is a meteorologist embedded with the Red Cross?
TOPSHOT - A member a Guatemalan Red Cross wades through a flooded street due to the heavy rains ... [+] caused by Hurricane Eta, now degraded to a tropical storm, in Puerto Barrios, Izabal 310 km north Guatemala City on November 5, 2020. - At least four people, including two children, died in landslides as tropical storm Eta swept through Guatemala, civil protection officials said Thursday. The deaths brought the toll in Central America to eight after Eta tore into northern Nicaragua as a Category 4 hurricane on Tuesday causing mudslides that killed two miners, as well as two young girls in neighboring Honduras. (Photo by Johan ORDONEZ / AFP) (Photo by JOHAN ORDONEZ/AFP via Getty Images) AFP via Getty Images
By training Kruczkiewicz is a meteorologist so when he mentioned a connection to the Red Cross, many questions came to mind. Over the course of the past several weeks, I interviewed him to learn more about his fascinating role.
Marshall Shepherd: Why is a meteorologist embedded with the Red Cross?
Andrew Kruczkiewicz: The Red Cross is a large organization, with functions that go well beyond disaster response and blood donation. I am part of the Red Cross Red Crescent Climate Centre (RCCC) – which is a Reference Centre to the International Federation of Red Cross Red Crescent Societies. The RCCC supports various Red Cross and Red Crescent entities (such as National Societies of Red Cross) and partners in reducing the impacts of climate and extreme weather events on vulnerable people. This includes support in integrating climate and weather information to improve response and preparedness, advocacy for inclusion of underrepresented communities within decision making and policy development informed by the most up to date and appropriate data.
His work is increasingly important because extreme weather-climate events like tropical cyclones, drought, floods and heatwaves do not understand things like political ideology, borders, or income inequalities. In 2020 alone, the National Oceanic and Atmospheric Administration (NOAA) reported that as of October 7th, 16 weather-climate disaster events, exceeding $1 billion each in losses, have affected the United States. For context, NOAA’s climate repository website says, “The 1980–2019 annual average is 6.6 events (CPI-adjusted); the annual average for the most recent 5 years (2015–2019) is 13.8 events (CPI-adjusted).”
U.S. Billion-Dollar Weather and Climate Disasters from January to September 2020 NOAA
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Marshall Shepherd: I am sure people have an image of what the Red Cross does. I suspect meteorologists and Earth Scientists are not first in their minds so expand on your exact role.
Andrew Kruczkiewicz: RCCC has people that have a background in meteorology, climate science and/or other geophysical sciences involved in humanitarian decision making on various timescales – including decisions related to both short to medium lead time preparedness when there is likely to be impact from extreme events, and on longer lead times in developing anticipatory action planning based on risk assessments to inform standard operating procedures (for example, on seasonal and inter-annual timescales). In addition to having meteorologists ‘on call’ during periods of increased risk of disasters (for example, when a tropical cyclone may impact a populated area), It is also important for humanitarian organizations to build partnerships with the climate and meteorological research community. A sustainable scientist + humanitarian relationship is mutually beneficial.
Kruckiewicz says that his roles are varied and can include:
Translating climate and meteorological data Brokering relationships between data providers and humanitarian organizations Integrating climate and meteorological data into decision making, including standard operating procedures and policy – mostly related to disaster risk management, but also more broadly related to climate policy Providing ‘on call’ and in person support for disaster response Conducting meteorological and climate research (many times through the use of Earth observations) motivated by specific concerns and questions from the humanitarian community.
A girl fetches water from a river created by flood water near Nsusa Village Island camp for ... [+] displaced people due to the floods in the Nsanje district of southern Malawi, on March 15, 2019. - At least 56 people have died in flood-hit areas as of March 13, according to the government, while 577 had been injured and almost 83,000 people have been displaced. (Photo by AMOS GUMULIRA / AFP) (Photo credit should read AMOS GUMULIRA/AFP via Getty Images) AFP via Getty Images
In 2015, he supported the IFRC Field Assessment Coordination Team (FACT) in Malawi after the large scale (and multi-type) floods led to a complex pattern of socioeconomic impact from both riverine and flash floods. Kruckiewicz reflected, “I remember being deployed on short notice and downloading all the flood maps I could find to ensure we would have data to make decisions, however I was very surprised that when I arrived there were already too many maps, and not enough time to properly vet them.”
Marshall Shepherd: What have been particular challenges?
Andrew Kruczkiewicz: Providing forecasts for high-stress and high-risk humanitarian situations is not the same for reviewing the statistical model output data and flipping back and forth between model runs to find the 540 mb line to delineate the rain/snow line for public awareness. I am not to say that doing so is not important and that it can’t impact lives and livelihoods – it certainty can. However one challenge that I face is the knowledge that in many cases almost all of the people that will be impacted by the action that I inform are considered “the most vulnerable” by global standards. For example, when I worked with decision makers in the Rohingya refugee camp, there are decisions being made to prioritize some camps over others, and this will be done (at least in part) based on my influence. In this case, we are referring to one million of the most vulnerable people in the world. Everyone is at extremely high risk of impact from a tropical cyclone (for example)– and in this situation it is extremely stressful and humbling to be involved in these decisions.
Kruczkiewicz also says that there are challenges that are more structural than operational. For example, in many humanitarian operations, especially during protracted situations, key staff may rotate in and out. Additionally, legitimacy and respect are some of the primary challenges because both the climate/meteorological and humanitarian/disaster risk management communities are built on trust and respect. He goes on to say, “And in operating in between these communities, it is important to retain a level of trust and respect from both sides, however it is not easy.”
Marshall Shepherd: What are you concerned about as a lecturer and a Red Cross advocate concerning the climate crisis?
Andrew Kruczkiewicz: I am concerned that we are not fully recognizing the opportunities to develop science, policy and practice driven strategies for disaster resilience for the most vulnerable...I am concerned that we do not have the monitoring and evaluation capacity needed to increase the likelihood that these funds are being used in the best way possible – to address risks for populations that are (and have been) systematically deprioritized, consciously and unconsciously...I am concerned that at this critical moment, we are not sufficiently reflecting on some of the opportunities we have to review or rethink how policies and actions enabled by climate/weather data have led to or created disproportionate impacts on traditionally underserved communities...I am concerned that the rapid increase in data availability and number of “easy to use” tools and products are ‘smoothing over’ important details that allow for disproportionalities to persist and potentially expand...I am concerned that we are not leveraging this moment to reflect on opportunities to create a new career path for translators/brokers/integrators - roles that both sides have identified the value of, one that is not auxiliary to one end or another (decision maker and data developer), and is rather its own role. And with the privilege that comes with developing a new career, we can get the right people at the table to do so....I am concerned that the disaster risk management community can do more, however the incentive structures may not exist to promote the additional activities needed...I am concerned that as someone supervising students, I do not have an answer for my students when they ask about how to prioritize the translation/brokering/integration work that I do as their career path.
Marshall Shepherd: Any final thoughts?
Andrew Kruczkiewicz: As the COVID-19 situation is demonstrating, geophysical and geophysical-related disasters don’t stop during other shocks and stressors. The value of translators/brokers/integrators has been elevated during 2020, adding urgency to the overarching opportunity to better describe this role and career path. The Red Cross is one of various humanitarian organizations that have increasingly brought on meteorologists and climate scientists as both staff and advisors (and there are other organizations that I have supported. I encourage more meteorology students to consider becoming a translator/broker/integrator – and it is an exciting time to do so as this role is still emerging and has yet to be defined. However, from my privileged position acting within (and between) both sectors, we should better define the career path and necessary education? Are we missing the opportunity to stay proactive in doing so? What would the argument be against developing, at the most a undergraduate and/or graduate degree in translation/brokering/integration, and at the least, a specialization attached to existing geophysical science programs?”
A tourist view the majestic Victoria Falls, a tourism attraction for Zimbabwe, Victoria Falls, on ... [+] November 13, 2019. - A series of heat waves has dried most of the vegetation surrounding the UNESCO world heritage site measuring 108 metres high and almost 2km wide in a severe drought. (Photo by ZINYANGE AUNTONY / AFP) (Photo by ZINYANGE AUNTONY/AFP via Getty Images) AFP via Getty Images
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c6c58fe0dcb7894cc4367a668b6f4851 | https://www.forbes.com/sites/marshallshepherd/2021/01/12/vaccines-are-evaluated-with-clinical-trialsclimate-science-uses-peer-review/ | Vaccines Are Evaluated With Clinical Trials - Climate Science Uses Peer Review | Vaccines Are Evaluated With Clinical Trials - Climate Science Uses Peer Review
The Washington Post is reporting that a recent Trump appointee to the National Oceanic and Atmospheric Administration (NOAA) released unauthorized climate papers bearing the imprint of the Executive Office of the President. These papers, called the “Climate Change Flyers,” questioned the seriousness of climate change. After my eyes rolled back into place, my first thought was disbelief that narrative is still out there. It is 2021. The Earth is sending obvious signals, and a clear consensus exists in the scientific literature. Speaking of peer review literature, it is our version of a “clinical trial” in the science world.
IN SPACE - SEPTEMBER 12: In this NASA handout image taken from aboard the International Space ... [+] Station, shows Hurricane Florence as it travels west in the Atlantic Ocean off the coast of the U.S. on September 12, 2018. Coastal cities in North Carolina, South Carolina and Virginia are under evacuation orders as the Category 2 hurricane approaches the United States. (Photo by NASA via Getty Images) Getty Images
According to Jason Samenow and Andrew Freedman of the Washington Post Capitol Weather Gang, who published this story after scientist Peter Gleick tweeted about it, the papers issued by the NOAA officials and other scientists claim, “that human-caused global warming “involves a large measure of faith” and that computer models are “too small and slow” to produce meaningful climate simulations.” There were concerns about late term appointments to NOAA as the agency geared up for the National Climate Assessment report. However, I leave it to others to discuss that part of the story. My goal is to make you aware of caution flags when consuming science reports.
I use the context of clinical trials because we are all struggling through the coronavirus pandemic. COVID-19 has ravaged lives, lifestyles and our economy. The ray of hope is the rapid development and distribution of vaccines. However, those vaccines had to go through clinical trials. What are clinical trials? According to the National Institutes of Health (NIH) website, they are the, “primary way that researchers find out if a new treatment, like a new drug or diet or medical device (for example, a pacemaker) is safe and effective in people.” In other words, the U.S. government was not going to allow COVID-19 vaccines to be administered to people until their efficacy and side effects were evaluated.
09 January 2021, Berlin: In the vaccination centre at the Velodrom, extras sit in vaccination booths ... [+] during a trial run. A vaccination centre has been set up in the Velodrom where vaccinations against the coronavirus can be given. Photo: Christophe Gateau/dpa (Photo by Christophe Gateau/picture alliance via Getty Images) dpa/picture alliance via Getty Images
We have a process in other corners of science too. It is called peer review. Angelo State University’s website has a great definition: “Articles are written by experts and are reviewed by several other experts in the field before the article is published in the journal in order to ensure the article’s quality.” In many cases, this process happens through an anonymous process. The process is designed to prevent untested, opinionated, or flawed methods from being published. Most scientific journals also have a mechanism, using the same peer review process, to dissent or debate scientific results.
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In the world of climate science, I am often amused by contrarian attacks on the peer review process. Yet, when a single paper found in the very peer-reviewed literature they just criticized supports their narrative, it is shared and cited with vigor. The process certainly has room for improvement, but most experts agree that it is still the most effective barrier to bad science.
There are other published outlets that may look “official” or “vetted” but exercise caution with them. Here are some of the most common ones:
Blogs. Blogs, like the one you are currently reading, can be factual (or not), provocative, and clarifying but should not be taken as a replacement for a peer-reviewed article. Grey Literature. Grey literature, as defined by a Duke University website, is “manifold document types produced on all levels of government, academics, business and industry in print and electronic formats that are protected by intellectual property rights, of sufficient quality to be collected and preserved by libraries and institutional repositories, but not controlled by commercial publishers; i.e. where publishing is not the primary activity of the producing body." These reports may not be vigorously reviewed by peers or if so, by a “friendly” set of reviewers. Opinion pieces. This type of writing is very prevalent, and it’s pretty obvious what they are designed to do. Tweets and Posts. I am a huge fan of social media, and good science discourse can often be found in a credible “Tweet storm” or Post. The Internet has “democratized” the ability to share science data, information, and opinions. However, I consider material on social media to be “digital grey literature” (at best) unless anchored in peer review.
My advice when consuming science information is to be cautious of the packaging. Focus more on the content, how it was evaluated, and intent. To be clear, my goal herein was not to slight these other formats. Heck, I am using one of them right now. The goal was to increase your literacy on the “wild, wild, West” of science information out there. You wouldn’t take a COVID-19 virus researched and developed by some guy in his basement with Wikipedia. We have to think this way about all science information.
By the way, the Washington Post reports that the Office of Science and Technology Policy did not clear or approve the aforementioned papers even though they claim to be copyrighted by the office.
25 September 2019, Berlin: Ulrich Scharlack (l-r), Press Officer at the Federal Environment ... [+] Ministry, Anja Karliczek (CDU), Federal Minister of Education and Research, Svenja Schulze (SPD), Federal Environment Minister, and Matthias Garschagen, Professor of Anthropogeography at the LMU Munich, leave a press conference at the Federal Ministry of Research and Education on the Special Report of the Intergovernmental Panel on Climate Change (IPCC), which was presented in Monaco on Wednesday. Researchers address the impact of climate change on oceans and ice areas and the consequences for human society. Photo: Arne Immanuel Bänsch/dpa (Photo by Arne Immanuel Bänsch/picture alliance via Getty Images) dpa/picture alliance via Getty Images
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9bf675ac166e723b0c90f3505d965442 | https://www.forbes.com/sites/marshallshepherd/2021/01/14/3-things-to-know-about-inauguration-day-weathersome-history-too/ | 3 Things To Know About Inauguration Day Weather - Some History Too | 3 Things To Know About Inauguration Day Weather - Some History Too
The United States is on the verge of inaugurating a new President. On January 20th, 2020, Joe Biden becomes the 46th President of the United States, and Kamala Harris becomes the first woman to serve as Vice President. Unfortunately, things in Washington, D.C. have been very unsettled from a civil and political standpoint. Given the recent bad news in our nation’s capital, I began to wonder how the weather for Inauguration Day looked with six days to go. As a meteorologist, here’s what I see as well as a little bit of Inauguration Day weather history.
WASHINGTON, DC - DECEMBER 11: The stage for the Presidential inauguration is prepared outside the ... [+] U.S. Capitol on December 11, 2020 in Washington, DC. More than 100 Republicans in the House of Representatives voiced their support for a pro-Trump election lawsuit in Texas as the state calls for the Supreme Court to delay the certification of election results in four battleground states that Vice President-elect Joe Biden won. (Photo by Stefani Reynolds/Getty Images) Getty Images
First, I will explore the history of Inauguration Day weather. For that information I turned to the National Weather Service. Here are some facts about the climatology of January Inauguration Days:
The normal high temperature: 43°F. The normal low temperature: 28°F. The normal weather conditions at 12 pm EST: A temperature of 37°F with partly cloudy skies and a 10 mph wind (which results in a wind chill of 31°F). Chance for measurable precipitation during the day: ~33%. Chance for measurable precipitation during the ceremony: 1 in 6. Chance of snow: 1 in 10 (for the day) and 1 in 20 (during the ceremony)
There is also a 1 in 6 chance that snow will already be on the ground.
With about six days to go, the current forecast for Inauguration Day according to the National Weather Service -Sterling, Virginia is “Partly sunny, with a high near 46.” At this time, this suggests that temperatures could be slightly warmer than normal, and there is also no indication of snow in the days leading up to Inauguration Day.
It is nowhere close to the warmest Inauguration Day. For the January 20th date, it was 55°F and cloudy during Ronald Reagan’s 1981 inauguration. For the March 4th date (which was used prior to Franklin D. Roosevelt’s second inauguration), it was also 55°F during Woodrow Wilson’s 1913 inauguration though unofficial records suggest that temperatures were near 61°F in Philadelphia for George Washington in 1793. Gerald Ford was actually inaugurated on August 9th, 1974. It was 89°F.
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The coldest Inauguration Day happened in 1985 for Ronald Reagan’s second ceremony. The temperature was 7°F and the morning low was near -4°F. Wind chills were also negative, which forced the ceremony to be moved indoors and the parade to be canceled.
Precipitation forecast on Inauguration Day morning. Washington, D.C. is expected to be precipitation ... [+] free (at the time of writing). NOAA and Tropical Tidbits website
The National Weather Service website provides some fascinating weather-related stories about Inauguration Day. In 1841, President William Henry Harrison was sworn in on a very cold, blustery day and gave a rather lengthy speech before riding coatless (and hatless) from the Capitol on a horse. He died from Pneumonia roughly a month later. In 1853, outgoing First Lady Abigail Fillmore caught a cold and pneumonia after enduring a cold, wet ceremony and died shortly thereafter.
William Taft’s inauguration is generally viewed as the worst weather day. According to the NWS website, “(the) ceremony was forced indoors due to a storm that dropped 10 inches of snow over the Capital city...Strong winds toppled trees and telephone poles.” Franklin D. Roosevelt’s second inauguration was the first time that the ceremony was held on January 20th. Almost 2 inches of rain fell on that day. It also rained in 2016 during the ceremony for Donald J. Trump.
Though the forecast for President-Elect Biden’s inauguration looks good at this time, my advice as a meteorologist is to always watch the evolving information. Do not anchor decisionmaking in stale weather information.
UNITED STATES - JANUARY 20: Colin Pena of California, waits for Donald J. Trump to be sworn in as ... [+] the 45th President of the United States on the West Front of the Capitol, January 20, 2017. (Photo By Tom Williams/CQ Roll Call) CQ-Roll Call, Inc via Getty Images
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3b920d2a605c3eaf2546480ef6a4b246 | https://www.forbes.com/sites/marshallshepherd/2021/12/30/a-nurse-got-coronavirus-after-being-vaccinatedwhy-reactions-are-familiar-to-meteorologists/?sh=80ae09a2f14f | A Nurse Got Coronavirus After Being Vaccinated - Why Reactions Are Familiar To Meteorologists | A Nurse Got Coronavirus After Being Vaccinated - Why Reactions Are Familiar To Meteorologists
A big headline seems to have triggered the viral panic button on social media this week. Throughout my timelines and newsfeed, I am seeing reports of a nurse who got COVID-19 more than a week after receiving one of the vaccines. Of more concern, this news has been followed by questions from people wondering about the efficacy of the vaccine and whether they should get it. As the former president of the American Meteorological Society (AMS) and an atmospheric sciences professor at the University of Georgia, I could not help but notice similarities between how this story is playing out and what we deal with as meteorologists. Let me explain.
Registered nurse Patricia Cummings administers the COVID-19 vaccine to Vice President-elect Kamala ... [+] Harris December 29, 2020 at the United Medical Center in Washington, DC. (Photo by Alex Edelman / AFP) (Photo by ALEX EDELMAN/AFP via Getty Images) AFP via Getty Images
I am no medical or infectious disease expert, but I am attentive to most science matters. The first thing that came to mind are the following questions:
Weren’t the two vaccines on the market said to have a 90 to 95% effective rate? Aren’t two doses required? Isn’t there a lag time after the dosage before the vaccine is effective? Even with vaccination, isn’t there a chance that you can get the virus but perhaps experience a milder case because of it?
These questions triggered familiar situations that I experience often in our attempt to convey weather forecasts and warnings.
For example, people often ask why it rained when the forecast was only a 20% chance of precipitation. I usually politely remind them that 20% is not 0%. Probability of precipitation, which I have attempted to explain in previous articles, is a very confusing concept for the public, Like the rain probability example, it seems that people have forgotten that neither vaccine was advertised at a 100% effective rate at preventing the virus. Additionally, two doses separated by several days are also required for the Pfizer and Modern vaccines. The Hill reports that experts believe the first vaccine dosage is about 50% effective and that almost two weeks (10 to 14 days) are required before protection is established according to clinical trials.
Pedestrians protect themselves from the rain in downtown Sao Paulo, in Brazil, on December 29, 2020. ... [+] (Photo by Cris Faga/NurPhoto via Getty Images) NurPhoto via Getty Images
I get it. People are exhausted by this pandemic and want the vaccines to be the end of this thing. This may cause something else that I often see with weather forecasts - wishcasting. Snow lovers, particularly here in the South, may consume a weather forecast with that bias or motivated reasoning. I cannot express how many times someone told me meteorologists were wrong because “only” 3 inches of snow fell when the forecast was expressed as “3 to 6 inches are possible throughout the region.” People often focus on the higher end of the forecast as their reference point or disregard contextual information. A more recent challenge that meteorologists face is weather Apps icons. An App icon may show a snowflake for a given day. However, the snowflake icon could convey flurries, a slight chance, or a significant snow event depending on the App. It is important with forecasts or vaccines to consume information about them objectively and without biases or wishful thinking.
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After a tornado that caused damage in Astromeritis village in Nicosia on Dec 14, 2020. (Photo by ... [+] George Christophorou/NurPhoto via Getty Images) NurPhoto via Getty Images
While it is true that the pandemic and vaccine rollout have revealed math-science literacy or interpretation challenges often seen in meteorology. there is something else common to meteorology in this latest viral pandemic moment. It is rare that a region is not under some type of tornado warning or weather radar coverage these days. Yet, it is quite common to see headlines after a tornado that reads, “It came without warning.” To be fair, if someone didn’t see the tornado watches/warnings, hear an outdoor siren, or go to sleep with an exception of possible severe weather, then it certainly “came without warning” to an individual. However, the meteorological community is actually quite skilled at providing the big picture conditions for severe weather threats. Jason Furtado is a meteorology professor at the University of Oklahoma. He sees some similarities with the story about the nurse. He said on social media, “It's poor form for news agencies to use misleading headlines to explain issues like this.” Furtado believes that it is not fair to simply blame misinformation on science or math literacy exclusively. He believes that relevant stakeholder communities and media organizations must consider audience perceptions carefully when disseminating information. Unfortunately, Professor Furtado is correct. Many people never bother to read the full article to gain the proper context. They simply read the headline, say “OMG”, and share it to their social media feeds.
The U.S. Centers for Disease Control and Prevention (CDC) maintains an excellent website on COVID-19 vaccines and their effectiveness. It is important, particularly as we are all on edge about coronavirus, to consume and spread information in a credible manner rather than one that gets the most “likes” or “shares.”
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728d52f275dff55644f249820de083d4 | https://www.forbes.com/sites/martijngrooten/2018/07/08/brave-move-good-for-tor-and-privacy/ | Brave Move Good For Tor And Privacy | Brave Move Good For Tor And Privacy
A private browsing tab in the Brave browser with Tor enabled. Forbes
In its latest version, Brave, a privacy focused desktop browser, has introduced the ability to enable Tor in private tabs, an important move both for private browsing and for Tor itself.
A recent research paper (pdf) showed that many people don't have a good idea of what private browser mode really means: they tend to think that it hides their geographical location from the website they are visiting and their Internet activity from their ISP or employer.
Though accssing the Internet via Tor doesn't protect one's privacy in all cases, it does in general do a pretty good job of living up to expectations of privacy, such as hiding one's location and making the browsing activity invsible to anyone listening in on the network. This makes this a rather important move and one that would hopefully be followed by other browsers: it simply makes "private browsing" live up to the promises it makes in the eyes of many user.
But making Tor available inside a regular browser may also help Tor itself.
Tor is designed to protect against the most advanced adversaries, such as government agencies, and its users include opposition activists living under oppressive regimes for whom the protection of their privacy may literally be a matter of life and death. But it is also commonly used for various malicious activities, from dealing in illicit goods to commiting online crimes.
As a consequence of the prevalence of this latter group of users, various barriers are put in place to make it harder to browse the Internet over Tor: from outright blocking those accessing a service via the Tor network, to the requirement to solve one or more CAPTCHAs.
By design, Tor can't prevent 'bad actors' from using its network, even if it wanted to. But it can increase the number of 'ordinary' users, thus making it less attractive for services to put those barriers in place. Making Tor available in private mode in a regular browser, rather than in the dedicated Tor Browser, is one way to increase the user base.
Of course, most people don't need the extreme protections Tor offers, not even in private mode; for them, a simple VPN would be good enough. But Tor is also that and could thus serve as a quick, easy and free way to anonymously do a search on a competitor's website, or to check if a web store doesn't charge you a higher price.
Of course, Brave's market share is really small and it is likely that most of those using the browser are already using Tor in some way. But other browser makers may follow suit, to make private browser mode live up to its promise, and see Tor benefit as a consequence.
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30902cc7e9fd1c62b642fa622cceb548 | https://www.forbes.com/sites/martijngrooten/2018/11/12/cinema-chain-sees-bad-movie-script-play-out-as-it-loses-millions-in-email-scam/ | Cinema Chain Sees Bad Movie Script Play Out As It Loses Millions In Email Scam | Cinema Chain Sees Bad Movie Script Play Out As It Loses Millions In Email Scam
Pathe Sign At Tuschinski Amsterdam The Netherlands 2018 Getty
It was not a good week for the Pathé cinema chains. First, their UK branch's Twitter account was hacked and used in a cryptocurrency scam and then it became known that their Dutch branch had lost more than 19 million euros (US$21.5m) trough a business email compromise (BEC) scam.
The scam began in March with an email to the company's CFO, allegedly from Pathé's French parent firm, which told him to transfer more than 800,000 euros as part of a "strictly confidential" acquisition, Dutch business site Quote reports.
Though the CFO and the CEO did discuss among themselves that the request was rather strange, they did not appear to have considered that it might actually have been a fraud. Nor did they consider this possibility when several more requests followed, which again struck them as highly unusual, but to which they nevertheless dutifully obliged.
Only when the head office asked about the payments did they realise they had been a victim of a BEC scam. By that time, more than 19 million euros had been wired to the perpetrators.
BEC scams (also known as CEO or CFO fraud, as often the supposed sender of the emails is a company executive) have become one of the most profitable kinds of online scams. In June 2016, the FBI reported that by that time, more than 3 billion US dollars had been lost to them, making them likely successful than 419 scams (also known as Nigerian Prince scams) to which they are a natural successor and which were often performed by the same actors.
The scams often go unreported: the Pathé incident only made the news after the CFO, who together with the CEO was fired following the incident, took the company to court for unfair dismissal. It is unknown what the success rate of such scams is, but with the odd 19 million euros in profit, a scammer can afford many wasted hours of failed social engineering attempts.
The court documents suggest that the scammers had used an email address that to an untrained eye looked to be the hosted on the pathe.com domain. The use of tailored domain names is part of the thorough research of the targeted company that often precede such scams.
Of course, the company directors should have found a way to verify the authenticity of the emails without jeopardising the alleged confidentiality of the transfers, for example by requesting the name of a contact with knowledge of the acquisition and contacting them directly. But in the end, it will have boiled down to whether their alertness was stronger than the scammers' social engineering skills and determination. And that may be a very high bar.
The judge appears to have agreed. They ruled the CFO's dismissal was unfair (even though he had previously been debarred as an accountant) and that the company will have to pay his wages until 1 December 2018.
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bde655937735f45ec63004f4f062c54d | https://www.forbes.com/sites/martineparis/2019/10/30/the-smart-portfolio-of-rob-coneybeer/ | The Smart Portfolio of Rob Coneybeer | The Smart Portfolio of Rob Coneybeer
Shashta Ventures co-founder Robert Coneybeer Robert Coneybeer
An aerospace engineer by background and race car enthusiast, veteran venture capitalist Rob Coneybeer has an affinity for anything that moves, and his portfolio of investments in autonomous vehicles, drones, robots and rockets reflects that.
In 2004, Coneybeer co-founded Shasta Ventures with his partners, Ravi Mohan and Tod Francis, to fund disruptive enterprise and consumer tech startups. Together they have backed some of the world’s most recognizable consumer brands including Nest, (acquired by Google in 2014 for $3.2 billion) and Dollar Shave Club (acquired by Unilever in 2016 for $1 billion). Today, Shasta Ventures has more than $1 billion under management, and a brand new $325 million fund to give life to the next big thing.
Since everything he touches leverages data, artificial intelligence and machine learning, I had a chance to chat with him about his current portfolio, his philosophy on success and failure, and his thoughts on how new founders can get it right. What follows is an edited transcript of our discussion:
What areas are you investing in these days?
Coneybeer: We focus on early stage investments. Our portfolio is two thirds enterprise, one third consumer and within each of those areas we have specific themes. We do a lot of software. My particular focus areas are robotics and the future of transportation. Some of our investments include:
Turo, a peer to peer car sharing platform that’s like an Airbnb for cars. It was founded by Shelby Clark in 2009 as RelayRides and rebranded more recently. It's now in multiple countries and 49 states, and growing rapidly with a partnership with Mercedes Benz. Stage: Series E unicorn Starsky Robotics, an autonomous trucking company operating in Florida and some other states. With their platform, you can add an autonomy kit to a standard 18 wheeler and turn it into an autonomous vehicle. They have a tightly incorporated tele-operation so the vehicles don’t have to be fully autonomous all the time. Human operators can control trucks remotely from an operation center like when moving from a distribution center to the highway or sitting on the highway and pulling into a gas station. The great thing is they don't have to have autonomy that's good for 99.9999999% of the time. With supervised autonomy, they get all the benefits of labor savings but don't have to do the extraordinarily expensive autonomy required with LIDAR and tons of different sensors, They can operate with just visible wavelength cameras and radar. We find the use of tele-operation a really interesting opportunity in our future of transportation investing and like this company very much. They’re serious and young, founded in 2016 and based in San Francisco. Stage: Series A $20.3 million Starship Technologies, a network of low-cost autonomous sidewalk delivery robots that are tightly coupled with tele-operation. They’re based in Estonia and operate on college campuses across the United States, a model which a big business could be built upon. If you were at George Mason University you would see close to 40 robots providing services to students, bringing meals to dorms and classrooms. It’s a very clever startup that integrates supervised autonomy. You might have one operator for every 10 robots so you could bring your labor costs way down rapidly and provide a service that's cost effective where unit economics are working. The robots run at about three to four miles an hour which is why they're sidewalk delivery robots, not meant for the street. Stage: Series A $82.2 million Fetch robotics, autonomous mobile robots (AMR) used to pull carts around warehouses. They’ve been doing production deployments for over a year now, have mapped millions of square feet, and are scaling well. Founded in 2014, they’re a young company with a phenomenal CEO, Melonee Wise, who is a world-renowned expert in robotics. We’re very excited about them. Stage: Series C $94 million
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For the space race, where are you placing your bets?
Coneybeer: We’ve invested in these four companies:
Spire Global, builds small launch vehicles for small payloads to low Earth orbit. Stage: Series D, $198.7 million SpeQtral (formerly known as S15 Space Systems), deploys small satellites directly to people that want unbreakable keys. Stage: Seed, $1.9 million Accion Systems, a proprietary ionic beam technology that helps satellites and spacecraft stay in orbit with highly efficient space propulsion. Natalia Bailey is the CEO and she’s awesome. They’re based in Boston. Stage: Series A $15.5 million Analytical Space, a very early stage communications backhaul constellation company that distributes satellites with unbreakable keys. Stage: Seed, $4 million
Did you buy a ticket on SpaceX?
Coneybeer: No. Within a few feet on the ground up I’m happy but if I was it about 10 feet above the ground I'm not a very happy camper.
Are there other areas you’re interested in?
Coneybeer: We have the Shasta Camera Fund for AR, VR and computer vision investments and personally, I’m very excited about Oculus Quest.
What advice would you have for funders just starting out?
Coneybeer: I’d tell them to start with a great idea, then build a strong team. Understand their customer and the product that they’re building. Then find advisors who come from the industry they’re in who want to help them out. Build advocates for what they’re doing, refine the business plan and understand the market. That’s how you raise money.
What associations or conferences should they be attending to meet potential co-founders and early employees?
Forget the conference sessions and just get to know people there. Whether you move to San Francisco or Boston or New York or you hang out at Carnegie Mellon - get to know people even if you're not a student - go where there's interesting stuff going on in tech, go to the local meetups and network your way in. It’s also a good idea to first work at a tech company and get to know the industry before trying to start your own business.
What’s you’re philosophy on failure?
It's a roadmap for success but you need to fail right. Mini failures are best. You can't succeed unless you succeed over and over.
This conversation has been edited and condensed for clarity.
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3eff11950165922a3e695a056c1c80e7 | https://www.forbes.com/sites/martineparis/2020/06/01/virgin-hyperloop-is-designing-travel-that-will-enable-you-to-work-from-anywhere/ | Virgin Hyperloop Is Designing Travel That Will Enable You To Work From Anywhere | Virgin Hyperloop Is Designing Travel That Will Enable You To Work From Anywhere
Virgin Hyperloop connecting vast distances (concept art) Virgin Hyperloop One
You’re hurtling through space and time at 670 mph, destination San Francisco. An hour ago, you were on your farm in Oregon, meeting with your team on Zoom. There’s something wrong in the data center and they need you to troubleshoot in person, so you book a ticket on Hyperloop and head over to the nearest portal. As you enter, your biometrics, body temperature, and luggage are scanned. Your phone then directs you to your pod where your amenities await. No one is next to you. No one is serving you. No one is driving the train.
Checking in on the Virgin Hyperloop app Virgin Hyperloop One
Pod designed with social distancing in mind Virgin Hyperloop One
Comparative travel times door-to-door from San Francisco to Portland Virgin Hyperloop One
This is the future of travel being reimagined by Virgin Hyperloop One, a startup founded by serial investor Shervin Pishevar with space engineers Josh Giegel from Virgin Galactic and Brogan BamBrogan from SpaceX. In 2014, the trio set out to build faster, cheaper, and greener transportation based on Elon Musk’s seminal Hyperloop white paper. What they created was an autonomous, zero emissions mass transit system with passenger pods propelled by electromagnetic levitation that race through low-pressure vacuum tubes at speeds that rival flight.
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To date the Series B venture has raised $368.4 million from over 80 investors including DP World, Virgin Group, Sherpa Capital, and GE Ventures. Sir Richard Branson chaired the startup from December 2017 through October 2018, then turned reigns over to the current chair, DP World’s Sultan Ahmed Sulayem, CEO Jay Walder and CTO Josh Giegel.
Sir Richard Branson rallying the troops Virgin Hyperloop One
The company has projects in Mumbai, Dubai, and across America, with headquarters in Los Angeles and a test track in Las Vegas. Its competitors include Hyperloop TT, DGWHyperloop, rloop, TransPod, and The Boring Company. Although there are no commercial systems that the public can ride yet, according to Virgin Hyperloop’s VP of Marketing Ryan Kelly, Hyperloop One is expected to be fully operational by 2030 with certification in the next few years.
As businesses look for ways to thrive in the age of coronavirus, Virgin Hyperloop finds itself uniquely positioned to answer a critical need no one anticipated. With tech powerhouses like Facebook and Twitter encouraging employees to work from anywhere, and Airbnb pivoting to provide longer term rentals for digital nomads, Hyperloop provides intelligent transportation that can move a distributed workforce across vast distances in a way that aims to be safer, cleaner, cheaper, easier and faster than the airlines.
They’ve been collaborating with renowned architects, Bjarke Ingels Group, on creating a physical prototype of their Mumbai pod for the public to explore at the Dubai World’s Fair. Upon the show being rescheduled for October 1, 2021, Virgin Hyperloop’s Director of Passenger Experience Sara Luchian shared with me concepts they’re integrating to address COVID-19 concerns.
“We’ve been looking at how to prioritize safety, comfort and convenience. Some of the system’s features already have the ability to ensure social distancing. Being on demand and direct-to-destination means the pod arrives as scheduled. There are no wait times so there’s less congregating and more spacing. There are also no weather delays because the pods travel in an enclosed tube. The pods themselves are fully customizable, designed to hold 16-28 passengers, and can be reconfigured for any need, including hauling cargo,” said Luchian.
With Level 4+ autonomy, the system uses dynamic scheduling to scale capacity real time, explained Jerome Wei, Virgin Hyperloop’s Director of Machine Intelligence and Analytics. He provided this first look at how their proprietary adaptive AI works.
AI powering the trip (concept art) Virgin Hyperloop One
Hyperloop autonomously moving cargo (concept art) Virgin Hyperloop One
“To give passengers greater peace of mind and create a sanitary environment, we’re looking at antimicrobial copper and silver surfaces to kill pathogens, ultraviolet lighting to disinfect lavatories, and multi-sensory experiences with organic elements (including ambient scents and sounds) to connect passengers to nature and help them relax,” Luchian explained. “The entire experience is being designed to be touchless using technology like facial recognition to confirm identity and thermal scanners to conduct wellness checks.” Human assistants are being integrated into the system but will be remote.
“We’re seeking to create a better tomorrow, not a dystopian one,” said Luchian. “One that complies with privacy laws, is least invasive, and builds something no one has ever seen before.”
Last mile delivery drone carrying cargo from Hyperloop (concept art) Virgin Hyperloop One | DP World Cargo Speed
Despite the dark days of 2020, a renaissance in travel is coming, with SpaceX launching what could become the golden era of space tourism, and here on Earth, as new modes of transportation make it possible to connect dense urban areas to remote locales where innovation hubs can flourish, talent can diversify, and wealth can spread more equitably.
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8e2664eb99d16800f5ce7df0ae864827 | https://www.forbes.com/sites/martineparis/2020/09/23/how-to-dress-for-the-pandemic-surprising-trends-from-the-stitch-fix-ai-fashion-forecast/?sh=3cc5af414077 | How To Dress For The Pandemic, Stitch Fix AI Reports Surprising Fashion Trends | How To Dress For The Pandemic, Stitch Fix AI Reports Surprising Fashion Trends
Photo credit: Chris Clor, Getty Images getty
Fashion forecasting has become all the rage as clothing retailers race to meet the changing habits of consumers who have been locked down for months. As we head into the holiday season, many are pivoting to direct-to-consumer e-commerce by leveraging AI.
Stitch Fix which reported a $44.5 million Q4 loss on September 22 is doubling down on its algorithms to capture $30 billion of retail market share they expect to move online over the next 12 to 18 months. In particular, growth is expected in women’s plus sizes which founder and CEO Katrina Lake says now comprises 40% of its addressable market.
I had a chance to talk with Stitch Fix’s Chief Algorithms Officer Emeritus, Eric Colson, who led the team that created the models that power the company’s personalized recommendations engine. I asked for a forecast of Fall fashions based upon the millions of data points Stitch Fix has on its 3.5 million clients. Colson shared with me the following trends of how people are dressing up and dressing down after seven months of working from home and socializing at a distance.
What’s hot in fashion right now?
For women, we’ve seen a huge surge in requests for Work From Home attire, as high as 10x from March to May, tapering to 7x when compared with the same time last year. Athleisure active wear and stylish house dresses top the list. For men, there’s been a dramatic increase in golf attire, presumably it’s the one activity you can do while social distancing. This reflects the many phases of the pandemic where people first thought it was temporary, then no one was sure how long it was going to last, and now there’s a general sense we’re going to be in it for awhile. There’s still a desire to look nice at home, even if for a limited audience. At the same time, we’re seeing a decline in vacation and wedding attire. Vacation requests were less than half the peak of July 2019.
Jump in US demand for women's Work From Home attire, 2019-2020 Stitch Fix
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Jump in US demand for men's golf attire, 2019-2020 Stitch Fix
Decrease in US demand for women's wedding attire, 2019-2020 Stitch Fix
Decrease in US demand for women's vacation attire, 2019-2020 Stitch Fix
Do you monitor social media for trends like the Lirika Matoshi Strawberry Midi Dress which went viral across TikTok, Instagram and Twitter last month?
If there is a sudden uptick in something that is popular, our algorithms will respond. For example, we’ve seen a lot of interest in the clothing worn by the fictional character Nina Proudman in the Netflix show Offspring.
Can Stitch Fix create celebrity looks like Kim Kardashian or Taylor Swift? Can you find Zendaya’s Armani dress?
Yes, when a customer tells us what they’re looking for, our stylist is able to look for similar items out of the ones our algorithms have recommended.
Can I upload a photo to say this is what I’m looking for?
Not yet, but you can link to Pinterest boards.
Stitch Fix categorizes women and men separately and doesn’t seem to have a non-binary option. Since your site is driven by preferences why classify by gender? Why not just offer skirts, dresses and tights alongside jackets and jeans to enable your clients to develop the look they want?
Stitch Fix app helps AI learn preferences of clients Stitch Fix
Initially we started with women only, then added men, and later kids, so it’s been an evolution. There are people that are agnostic to “men's” and “women's” and just want something that's right for them. We recognize that and are working on it. Right now clients are able to request non-binary options in their Fix Request Notes where they can provide details on exactly what they’re looking for.
In my interview with New York Times bestselling author Cory Doctorow, he argued that much of the AI touted in Silicon Valley is pure hype and not intelligent at all. Do you agree?
It's a distinction with vocabulary that has morphed over the years. Back in the 1980s, it had one meaning, then fell out of favor. Now AI is back as an umbrella term that encapsulates anything we can do with data science.
An algorithm is nothing more than a set of instructions to produce a calculation. Here is a tour of our algorithms.
If we want to find out what’s going to make someone buy something, we can write out a math equation using intuition to weight factors like price, fit and quality, then train the model to learn the parameters to determine which matters most. That’s machine learning, sometimes called statistical learning.
True AI is deep learning which is more of a complex blackbox where the machine frames the problem and we lose the ability to explain it, like deep neural networks where there are hidden layers you can't inspect to find out what’s important in the model. We can’t explain why we like chocolate, we just do. In an analogous way, we accept deep learning.
Where does Stitch Fix apply machine learning versus deep learning?
When we're predicting how much value a consumer will get from sending them a piece of clothing, we prefer transparent models where we can look at it to see how it's working. That would be statistical learning or machine learning.
For other problems, we're okay with the opacity of deep learning if it's achieving the results we want. Last year we began using Natural Language Processing (NLP) to spot trends and refine product recommendations by analyzing comments in client’s Fix Request Notes such as “I don’t like pink shirts” or “I want a flowered dress.” So when a stylist compiles the client’s order, NLP has already automatically added a flower dress to the initial recommendation or purposefully removed pink shirts. We use deep learning algorithms to process these requests.
What are the greatest advancements you’re seeing right now?
I’m impressed by where we’re going with identifying nuances in image processing and training for things that are very similar, such as aesthetics. I saw a demo by industry pioneer Andrew Ng using AI to write descriptions and it was able to distinguish between a man riding a bike and a handsome man riding a bike. It’s so subjective, what attributes need to be present before the “handsome” label goes on there?
Where do you see AI heading?
A bit out there is AGI, artificial general intelligence, which is similar to how humans think and learn. It’s a generalized intelligence that allows us to adapt and learn different things, not just one thing which is what AI currently does well. It will be a game changer when AI can figure out on its own the right method to use for different tasks. I’d like to see it combine designers Ralph Lauren and Trina Turk to create something that's never been there before. That would be very exciting.
This conversation has been edited and condensed for clarity
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9af6df30f9d3c0da4374e840fffd9922 | https://www.forbes.com/sites/martineparis/2020/11/19/how-the-rick-and-morty-butter-robot-is-cooking-up-chaos-this-thanksgiving/?sh=3946ce6f62d5 | How The Rick And Morty Butter Robot Is Cooking Up Chaos This Thanksgiving | How The Rick And Morty Butter Robot Is Cooking Up Chaos This Thanksgiving
Rick and Morty Butter Robot Jarrod Mancilla | Digital Dream Labs
When Butter Robot asked Rick, “What is my purpose?” and Rick replied “You pass butter, welcome to the club pal!” who would have ever thought the despondent robot from Season 1, Episode 9 of the Emmy-winning show Rick and Morty would ever be making its way to a kitchen table near you.
But hey, it’s 2020, where anything is possible.
Adult Swim is bringing their animation to life with a toy that promises to be both sentient and hilarious. Their Limited Edition Butter Robot, which will be numbered and signed by Rick and Morty co-creator Justin Roiland, is vowing to parrot phrases heard around the house, express emotion as it reacts to its environment, surveil residents with its camera, become self aware while rebelling against commands, dance, and of course, pass butter.
Available for holiday preorder for $147 through November 30, then $197 through December 25. Expect to ship May 15, 2021.
Roiland unboxed his creation at the Adult Swim Festival as he warned “it has a tendency to malfunction in the most eerie and spectacular way, Using AI neural networks and other cutting edge technology, this toy is way more than it seems."
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To find out more, I checked in with the mad scientist behind the project, Dr. Jacob Hanchar, co-founder and CEO of Digital Dream Labs.
Founded by Carnegie Mellon alums on a mission to make robots more fun, the scrappy startup acquired the assets of the defunct toy company Anki in January and launched a Kickstarter campaign to resurrect the platform for its two million Cozmo robots and 250,000 Vector robots.
Roiland, a Cozmo owner, was ecstatic.
“Justin contacted us out of the blue in April and said, I saw what you did to rescue Anki and I really like what you’re doing. Would you make Butter Robot for us?” Thrilled by the challenge, Hanchar gave an enthusiastic yes. “It usually takes two years of development time to do this. We got it done in just six months. I’m really proud of my team.”
Since sentience is still years away on the AI roadmap according to industry experts, I pressed Hanchar to explain how they’re programming Butter Robot to be self aware. He responded, “We’ve loaded animations onto a chip with things he can do. When someone asks for the butter, he will hear them with his microphone, use object recognition in the camera to find the long rectangle, then use his seven servos mini-motors to bend down, move and grab the butter dish. Remembering the direction and proximity of the voice that requested the butter, he will drag it to them or fling it, depending on his mood.”
That’s right, depending on its interactions with others, this robot has the ability to choose to misbehave. “Most robots do exactly what they’re told, but Butter Robot is not going to be your companion, he’s going to be the guy that gets your butter, that’s his basic function. As he becomes more sentient, he’s going to do whatever he wants.” Hanchar laughed. “Using a random engine generator, there are going to be various actions he can take that aren’t linear, for example, if triggered by an angry face, he might become an antagonistic and recite Sun Tzu's Art of War.”
Describing Butter Robot’s emotion engine, Hanchar said, “Through machine learning, your mood affects his mood which then affects which logic gates he’s going to open and that’s going to then present various outcomes.” This means if you’re upset, best not to confide in Butter Robot, Hanchar warned, “If he senses you’re sad, you’re not likely to get empathy from him and he might actually get depressed to the point where he stops responding. He might also tell someone what you said about them.”
This begs the question, can Butter Robot be trusted with a camera? After all, he can take photos while patroling your home. Hanchar gave assurances, “For speed and privacy, all image processing is on device, not in the cloud.”
If you’re starting to get a bit freaked out, it might be comforting to know that Butter Robot is about the size of a hamster, eight inches tall, 18 ounces light. He’s powered by AA rechargeable batteries, not tethered to an electric cord, and has been trained to recognize pets so he can roll a ball to a dog, bring toilet paper to those who need it, and move anything his size with a barcode.”
No one knows if Butter Robot will be making a return to Rick and Morty for Season 5, but one things fans can count on is come this Spring, TikTok is going to be flooded with tons of Butter Robot Gone Rogue videos. TikTok account coming soon.
Rick and Morty Butter Robot Jarrod Mancilla | Digital Design Labs
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2a7db804d365fdfc5fef8dac652446cf | https://www.forbes.com/sites/martingiles/2019/11/04/microsoft-cloud-computing-and-quantum-computers/ | Microsoft’s New Cloud Service Lets Users Try Other Companies’ Quantum Computers | Microsoft’s New Cloud Service Lets Users Try Other Companies’ Quantum Computers
Microsoft CEO Satya Nadella has unveiled a new offering from its Azure cloud computing business that ... [+] taps growing interest in quantum computing. 2016 Getty Images
Microsoft has unveiled a new service called Azure Quantum that pits it against companies like IBM and Canada’s D-Wave, which already offer access to quantum machines via the cloud.
Microsoft’s offering is distinctive because it gives customers access to computers from three other companies—Honeywell, IonQ and Quantum Circuits Inc. Neither IBM nor D-Wave provide access to a range of other companies’ hardware. Speaking at Microsoft’s Ignite conference in Orlando, CEO Satya Nadella said its new “full-stack, open-cloud ecosystem” would give a significant boost to the company’s drive for quantum leadership.
No details were made available about the cost of the service, which will be rolled out over the next few months. A company spokesman says it wants to get feedback from early users before finalizing a pricing strategy.
The overall cloud business has been a star performer for the company, though revenue growth at the unit slowed to 59% in its latest fiscal quarter, down from 64% in the prior period. It recently scored a significant victory when it was awarded a coveted contract to provide a cloud storage system for the U.S. military that could be worth up to $10 billion.
The company’s decision to create its new cloud service comes as more and more businesses are looking to experiment with quantum machines, which tap the properties of quantum mechanics to achieve exponential leaps in processing power. The computers are still in their infancy, but the hope is they will eventually help businesses uncover things such as new materials and pharmaceuticals.
Unlike conventional computers, which encode information in bits that are either a 1 or a 0, quantum machines use quantum bits, or qubits, which are subatomic particles such as photons or electrons that can be in a kind of combination of 1 and 0 at the same time. Qubits can also influence one another at a distance via a process known as “entanglement.”
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These exotic phenomena combine to make quantum machines faster than conventional ones at certain kinds of tasks. Google, which is also said to be planning a quantum cloud computing service, recently claimed it had demonstrated for the first time that a quantum computer could perform a calculation beyond the reach of even the most powerful conventional supercomputer—a milestone known as “quantum supremacy.”
Azure Quantum will use programming tools that Microsoft had already made available via the cloud and that have been downloaded more than 200,000 times. Customers will be able to run experiments on quantum simulators or on the computers of its partners, who have taken different approaches to developing qubits.
Both Honeywell and IonQ, a startup out of the University of Maryland, use individual ions trapped in electromagnetic fields, while Quantum Circuits, whose founders are from Yale, uses superconducting circuits that are cooled to temperatures colder than deep space.
Microsoft has yet to publicly unveil a working computer of its own, though it has multiple research initiatives under way in various labs around the world. It’s also working on other parts of the quantum technology stack, including things like quantum algorithms and systems for controlling qubits.
Researchers at a Microsoft lab at the University of Sydney in Australia have developed a new system ... [+] that can control tens of thousands of qubits with a few wires. Microsoft
These control systems can be complex to build and operate. “The result often looks like a bird’s nest of wires,” says Krysta Svore, general manager of quantum software at Microsoft. This makes scaling machines beyond a few hundred qubits a challenge.
As part of its Azure Quantum announcement, Microsoft revealed researchers at its lab at the University of Sydney in Australia have developed a new approach that uses three wires to control tens of thousands of qubits generated using a specialized silicon chip.
Professor David Reilly, who masterminded the innovation at the university, claimed in a news release that the chip involved is “one of the most sophisticated micro-devices ever made” and could be key to scaling up quantum machines to tackle meaningful tasks.
Corrections & Clarifications: This story has been updated to clarify that neither IBM nor D-Wave offer access to a range of other companies’ quantum hardware via the cloud.
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77456b425e5964918383158e19cbf606 | https://www.forbes.com/sites/martingiles/2019/11/20/home-depot-digital-transformation-speed-bump/ | Home Depot’s $11 Billion Digital Rebuild Hits A Legacy-Tech Speed Bump | Home Depot’s $11 Billion Digital Rebuild Hits A Legacy-Tech Speed Bump
A Home Depot store in Burbank, California Robyn Beck / AFP via Getty Images
Announcing Home Depot’s third-quarter 2019 results on November 19, CEO Craig Menear admitted the home improvement/DIY retailer hadn’t seen as much of a lift in sales as it had hoped for because of issues with legacy technology.
The company reported net income of $2.8 billion on revenue of $27.2 billion for the third quarter, up 3.5% from the prior year. It also projected overall sales growth of 1.8% for 2019 compared with a previous projection of 2.3%. In an analyst conference call, Menear said Home Depot’s digital plans were on track and delivering hoped-for benefits, but that returns from the investment would “take longer to realize than our initial assumptions.”
It’s a setback for one of the most high-profile digital transformation initiatives in an industry whose economics have been turned upside down by the rise of online commerce.
At the end of 2017, Home Depot unveiled a bold strategy to invest $11.1 billion over the following three years to transform itself into a more digital-centric retailer, with a goal of lifting revenues to $115 billion-$120 billion in 2020, up from $101 billion in 2017. Since then, it’s pushed forward on multiple fronts with its “One Home Depot” digital transformation strategy.
The goal is to create a seamless experience for customers across its digital offerings and its 2,000-plus physical stores; break down internal data silos to get a clearer picture of customer activity; and create an even more efficient supply chain for the business. To speed up its digital shift, the company has committed to hiring 1,000 additional IT staff, including software engineers, user-experience designers and product managers.
Almost two years in, Home Depot has made substantial progress, but older tech infrastructure is clearly proving a drag on its efforts. The company didn’t return a request for comment, but in the analyst conference call Menear said that unwinding legacy technology “has proven more complex than originally anticipated.”
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Home Depot’s revamped B2B website, which targets professionals rather than part-time DIYers, is a notable area that’s been affected. The site’s ability to create more personalized experiences for users has helped boost Home Depot’s B2B sales, but further efforts to tailor the site’s offerings for the largest building contractors have been delayed because of unspecified problems with legacy systems.
Allen Bonde, who heads digital transformation research at Forrester, says it’s not uncommon for large transformation projects that span several years to hit “bumps in the road” caused by legacy systems. Bonde adds that Home Depot deserves credit for taking a careful, multistage approach to turning itself into a more digital-centric retailer, starting with smaller projects like building a highly regarded mobile app for customers and then gradually scaling up to its latest mega-plan.
Menear’s message that benefits from this strategy are coming, if somewhat later than expected, nevertheless failed to reassure investors, who sent Home Depot’s shares down 5.4% after its results were announced.
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c3f02b9bd390d22df8f84765dd7b5630 | https://www.forbes.com/sites/martingiles/2020/01/03/cloud-computing-security-cloud-hopper/?ss=cio-network | 5 Key Security Lessons From The Cloud Hopper Mega Hack | 5 Key Security Lessons From The Cloud Hopper Mega Hack
US Department of Homeland Security building, Washington DC AFP via Getty Images
In December 2019, the U.S. government issued indictments against two Chinese hackers who were allegedly involved in a multiyear effort to penetrate the systems of companies managing data and applications for customers via the computing cloud. The men, who remain at large, are thought to be part of a Chinese hacking collective known as APT10.
A recently published investigation by the Wall Street Journal revealed that the hacking campaign, dubbed “Cloud Hopper” by security researchers, impacted a wider set of cloud companies than was previously thought. The hackers used their access to these firms to target some of their customers in what has became one of the biggest corporate espionage efforts in history.
The latest news is unlikely to deter businesses from entrusting more of their data and applications to the computing cloud as they seek to drive down costs and boost efficiency. But the affair holds some important security lessons for CIOs and other senior tech executives overseeing cloud projects:
Nation-state hackers are now the biggest threat to cloud security
CIOs have long counted on the fact that managed service providers (MSPs), who hold data and manage applications for businesses via the cloud, can invest far more in cybersecurity defenses than most companies. By handing over management of data and applications to MSPs, customers receive a higher level of protection in return. Bruce Schneier, a well-known security expert, has described this arrangement as “feudal security.”
In reality, responsibility for cybersecurity is shared between cloud providers and their customers, but the fundamental belief has been that cloud businesses are far less likely to be targeted by hackers because of their ability to spend so heavily on defenses. This spending was enough to deter cybercriminals and other hackers, but the rise of nation-state hackers has created a new group with the means and patience to take on even the big-spending cloud companies.
The Cloud Hopper attackers, who had been at work for a number of years before they were discovered, reportedly targeted at least a dozen MSPs, including IBM and DXC Technology in the U.S., and CGI in Canada. If they found weaknesses in cloud companies’ defenses, they exploited them to hop across different customers’ networks, stealing intellectual property, security clearances and other data as they went.
Cloud companies can still get basic cyber hygiene wrong
Cloud companies are investing heavily in the latest and greatest security automation tools. But these are of little value if basic security practices aren’t effective. The attackers behind Cloud Hopper were able to get hold of security credentials by sending spoof emails to workers at cloud businesses. They then leveraged the access these “spear-phishing” attacks gave them to install malware that let them steal security credentials and conduct reconnaissance.
Once inside cloud companies’ systems, the hackers were able to find so-called “jump servers” that let them access different customers’ networks. They were certainly highly skilled, managing to make their activity appear like normal traffic, but better network segmentation and monitoring would almost certainly have helped limit the damage. The lesson here is for CIOs and their security teams to put even more focus on basic cyber hygiene as part of their due diligence efforts when sizing up cloud providers.
Shared infrastructure inevitably creates hidden risks
There is a hidden level of risk in cloud services that isn’t visible to customers using them. Even if a company has done robust due diligence on an MSP, there’s always a risk that hackers can breach another of its customers with relatively weak security and then use the access as a jumping off point to the cloud company. From there, they can then attack customers using its services in the same way that the Cloud Hopper hackers did. Preventing this from happening is hard, but one important step is to ensure that use of “jump servers” is subject to especially tight security.
The cloud must be treated as an extension of a company’s network
Shifting workloads and data to cloud providers can lull companies into a false sense of security. “You think you can set it and forget it, but you can’t,” says Ed Cabrera, chief cybersecurity officer of Trend Micro and a former chief information security officer of the U.S. Secret Service.
The same practices CIOs would apply to their companies’ on-premise systems should guide how they approach the cloud, too. These include things like ensuring strong encryption is used for intellectual property and other sensitive data residing in cloud services and ensuring that things such as digital keys for application programming interfaces are held securely. When companies set up cloud deals, they often think they can save money on security, but cutting too deep could leave them more vulnerable.
Getting information about suspected breaches can be a challenge
Investigators from the U.S. Department of Homeland Security (DHS) trying to uncover the full extent of the Cloud Hopper campaign have found it hard to get a clear picture of this because MSPs have sometimes been reluctant to share information with their customers, according to the Wall Street Journal’s investigation.
Cloud companies such as IBM and DXC have repeatedly claimed they have worked closely with any client concerned about the attacks and that there have been no material adverse impacts on customers.
The Cloud Hopper campaign nevertheless raises important questions about whether more can be done to improve collaboration in future. The DHS is reportedly keen to add clauses to cloud contracts that would compel providers to participate fully in any future breach investigations. Companies may want to review their own contracts too. “Transparency will not emerge on its own,” says Matt Butkovic, technical director of cyber risk and resilience at Carnegie Mellon University’s Software Engineering Institute. “It’s going to require direct action by the consumers of cloud services.”
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106e18a4a4f14ff18aeea55758c3df55 | https://www.forbes.com/sites/martingiles/2020/01/21/ibm-sales-rise-mainframes-open-source-software/ | IBM’s Quarterly Sales Finally Rose—But Not By Much | IBM’s Quarterly Sales Finally Rose—But Not By Much
IBM CEO Ginni Rometty Getty Images
On the (tiny) rebound: IBM’s shares rose by around 5% on January 21 after it said its fourth-quarter revenues had increased by 0.1%, to $21.8 billion, after five quarters in a row of year-over-year sales declines.
Big Blue’s fortunes were boosted by a new mainframe product line and revenues from open-source software giant Red Hat, which it acquired in July 2019 for around $34 billion. Adjusted net income for the quarter fell about 5%, to $4.2 billion, while the company reported earnings per share of $4.71 compared with analysts’ consensus estimates of $4.69. IBM saw its full-year 2019 revenue fall 3.1%, to $77.1 billion, and its net income drop by 10%, to $11.4 billion.
Mini mainframes: Although computing has been steadily shifting to the cloud—a trend IBM was initially slow to embrace—companies are still buying mainframes for a range of processing tasks. IBM’s systems segment revenue grew 16% in its latest quarter, to $3 billion, thanks largely to the success of the IBM Z mainframe, which has a smaller space footprint than previous machines. Over the past few months the company has been shipping a new mainframe model, the z15.
Big Blue’s Red bet: IBM’s latest quarterly numbers also include revenues from Red Hat, which it initially bid for in 2018. It swept up Red Hat, which provides support and training services for open-source code, because it believes such code will be a key pillar of a hybrid computing future in which companies both buy cloud-computing services and continue to run their own “on-premise” systems.
That bet may already be starting to pay off. Revenue from IBM’s cloud and cognitive software business, which includes Red Hat, rose 8.7% in the latest quarter, to $7.2 billion. Adjusted revenue from Red Hat itself grew by 24%.
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Fixer-downer: IBM is still struggling to fix its Global Technology Services business, which includes infrastructure and some cloud services. This segment saw revenue fall 5% in the quarter, to $6.95 billion. James Kavanaugh, IBM’s CFO, said IBM would take “aggressive structural actions” to reposition the business over the next few months, though he didn’t reveal just how far-reaching these would be.
False dawn? Big Blue’s clearly feeling more bullish about the future. Reviewing its latest results, CEO Ginni Rometty claimed IBM is now positioned for “sustained growth” and the company forecast earnings per share of at least $13.35 for this year, up from $12.81 in 2019. While some analysts share Rometty’s optimism, others are more circumspect. In a research note published last week, Morgan Stanley warned IT budgets could grow more slowly this year and that could hurt various IBM businesses, including outsourcing services and on-premise infrastructure.
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6be33973f7eb240c94279c19bb919740 | https://www.forbes.com/sites/martingiles/2020/02/04/iowa-caucus-software-app-election-risk/ | The Iowa Caucus App Debacle Highlights The Hidden Software Risks Behind U.S. Elections | The Iowa Caucus App Debacle Highlights The Hidden Software Risks Behind U.S. Elections
Participants hold Presidential Preference Cards during the first-in-the-nation Iowa caucus in Des ... [+] Moines, Iowa. © 2020 Bloomberg Finance LP
(Updated 1.35:p.m. Pacific Time to include statement from Nevada Democratic Party.)
Silicon Valley loves to boast that software is eating everything, but a bout of code indigestion just caused one of the most high-profile tech glitches in living memory.
Tech and security experts had warned the Iowa Democratic Party (IDP) against introducing a vote reporting app, but it went ahead and used it anyway—with unfortunate results. The software that was supposed to convey caucus results to the party failed to function properly yesterday, leaving officials scrambling to get information about voters’ preferences.
The app was developed by a Washington, D.C.-based outfit called Shadow that is linked to a non-profit digital strategy firm called Acronym. (Acronym put out a statement late Monday saying it is one of a number of investors in Shadow and didn’t directly provide technology to the IDP.) The IDP paid Shadow $63,000 to develop the app according to a report in the Wall Street Journal, spread over two payments late last year, and also received payments from campaigns who used the app for campaign work.
According to multiple reports, election officials had problems getting connectivity via the app and in some cases accessing it from their phones. The backup plan system using telephones to call in results was quickly overwhelmed, leading to long delays. In a statement issued on Tuesday, IDP chairman Troy Price blamed the problem on a “coding issue” and added that the underlying data collected by the app was “sound” but that it caused data that had been collected to be only partially reported. Price said the problem has since been fixed.
Shadow sent out a tweet apologizing to the Democratic presidential candidates, their campaigns and caucus-goers in Iowa for the problems its app has caused.
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In a statement also issued on Tuesday, Senator Mark Warner (D–Va.), the vice-chairman of the Senate Select Committee on Intelligence, reiterated a message from the Department of Homeland Security that the problems with the app were not due to a cyberattack, but warned that “the continuing chaos in Iowa is illustrative of our overall failure to take sufficient steps to protect the integrity of our election systems.” That chaos, he added, “has created an environment where misinformation is now running rampant online, further undermining confidence in the democratic process.”
The events are a stark reminder of just how dependent the U.S. electoral system remains on the proper functioning of software. The odd glitch here and there may be tolerable in a shopping or travel app, but failures in code can be disastrous for confidence in the outcome of elections. While results have finally been filtering through, some campaigns have already been raising questions about the integrity of the technology and the reporting process. On Tuesday, the Nevada Democratic Party said it would not use the Shadow app after multiple reports had indicated it would.
Since the 2016 U.S. presidential vote, security experts and parties have been working to shore up the technologies used to manage the U.S. electoral process. These have been designated “critical infrastructure” by the government, putting them on a par with software used in things like nuclear power plants and mass transit systems.
The idea behind this label is that the classic “ship it fast, patch it later” approach to software development isn’t acceptable. Instead, code needs to be developed carefully and robustly tested before being deployed. It also needs to be thoroughly vetted for potential cybersecurity vulnerabilities. Backup systems are supposed to get the same level of attention.
The use of internet-connected devices to tally votes—and sometimes to cast them—is still very rare in the U.S. West Virginia, for instance, has trialed an app using blockchain technology to accept absentee ballots from overseas voters. Proponents of the technology say it’s more secure than returning ballots by other systems that have also been tried, including email. It also offers advantages in terms of convenience and efficiency.
But Iowa is a stark reminder of the downsides that can overshadow such benefits. As well as triggering a review of the app’s implementation, the problems in Iowa will likely reinforce scrutiny of other code that’s going to be crucial to this year’s electoral process. In his comments, Warner called for a holistic look at all aspects of election security and emphasized the importance of physical paper trails to back up electronic systems.
While massive online disinformation campaigns stole the headlines during the 2016 presidential campaign, the threat to electronic voting infrastructure was shown to be very real. Since that race, evidence has emerged that Russian hackers targeted election infrastructure in all 50 states. They and other cyberattackers are likely to do so again, testing the defenses of everything from voter registration databases to the machines used to check people at polling stations.
Electronic voting machines may well be another target, as will systems that, like the Iowa app, are used to collate and report results. The good news is that the IDP appears to have a trail of good old-fashioned paper that it has been using to verify the results from the Shadow app. The bad news is that millions of Americans will still cast their votes this year on electronic machines that can’t claim the same thing.
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c00987a775d0d344dfd2e8c387b0eb7a | https://www.forbes.com/sites/martingiles/2020/02/25/salesforce-co-ceo-keith-block-leaving-marc-benioff-in-sole-charge/ | Co-CEO Keith Block Is Departing Salesforce, Leaving Marc Benioff In Sole Charge | Co-CEO Keith Block Is Departing Salesforce, Leaving Marc Benioff In Sole Charge
Keith Block, former co-CEO of Salesforce © 2018 Bloomberg Finance LP
Salesforce stock fell about 3% before rebounding slightly on Tuesday as the software company announced a shake-up in its top leadership. Its co-CEO, Keith Block, is leaving, which means Marc Benioff, the other co-CEO and Salesforce’s founder and chairman, will be the sole leader of the business going forward. Salesforce also announced fourth-quarter earnings that exceeded market expectations and the $1.33 billion purchase of Vlocity, a provider of cloud and mobile software to companies.
Block, who joined Salesforce from Oracle in 2013, was promoted to operating chief three years later and became co-CEO alongside Benioff in August 2018. The two appeared to be a good fit, with Block’s expertise in driving growth and operational excellence complementing Benioff’s focus on innovation and overall strategy. Now Benioff will once again be riding solo at the helm.
“It’s been my greatest honor to lead the team with Marc that has more than quadrupled Salesforce from $4 billion of revenue when I joined in 2013 to over $17 billion last year,” said Block in a statement released by Salesforce. “Being side-by-side with Marc has been amazing and I’m forever grateful for our friendship and proud of the trajectory the company is on.” In a conference call with analysts, Benioff lauded his former co-leader, saying their time together had been “amazing”. Block will stay on as an adviser to Benioff for the next 12 months.
Block’s elevation allowed Benioff to focus more of his time on his philanthropic and political interests, which have included funding medical centers and lobbying for legislation to help the homeless in San Francisco. His departure is likely to mean Benioff will find it harder to juggle those activities with his responsibilities as a CEO. Although the company isn’t replacing Block, it said Gavin Patterson would become the president and CEO of Salesforce International, which oversees the company’s business in areas including Europe, Latin America and Asia. Patterson, who joined Salesforce last year, is the former CEO of telecoms company BT Group.
The challenge facing Salesforce is to keep powering forward in a world in which smaller firms are occupying more market niches and big cloud companies such as Amazon and Google are constantly broadening their own offerings. One strategic response has been to buy businesses to add capabilities: Over the past couple of years, Salesforce has made a couple of huge purchases, paying $15.7 billion for data-visualization company Tableau and $6.5 billion for Mulesoft, which makes software that integrates data and applications.
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Marc Benioff, Salesforce founder and CEO © 2016 Bloomberg Finance LP
Its latest deal will help Salesforce expand the footprint of its cloud offerings in industries such as financial services and healthcare, where Vlocity, which has featured on past Forbes Next Billion Dollar Startup lists and Forbes Cloud 100 lists, has built up strong customer lists. In the conference call with analysts, Benioff said he didn’t expect Salesforce would make any further acquisitions in the short term.
On the earnings front, Salesforce announced revenue of $4.85 billion for its fiscal fourth quarter and adjusted earnings per share of 66 cents—both of which exceeded analysts’ forecasts. Revenue for the full fiscal year hit $17.1 billion, a 29% increase. The company raised its guidance for its new fiscal year, forecasting $3.16 to $3.18 in adjusted revenue per share on revenues of between $21 billion and $21.1 billion.
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0fde5e5dddc788ea4b4326fed3bcf48d | https://www.forbes.com/sites/martingiles/2020/03/30/microsoft-cloud-service-775-percent-rise-covid-19/ | Microsoft Teams Has Seen A 775% Rise In Users In Italy Because Of COVID-19 | Microsoft Teams Has Seen A 775% Rise In Users In Italy Because Of COVID-19
Microsoft storefront in New York City. Corbis via Getty Images
Updated March 30, 2020 7.10pm PT
Topline: With many millions of people now suddenly working from home because of COVID-19’s impact, cloud services are seeing huge spikes in demand. In a blog post, Microsoft revealed its Microsoft Teams collaboration and communication service has seen a 775% increase in monthly users in Italy, where social-distancing measures or shelter-in-place orders have been enforced. The sharp rise in cloud computing usage is reflected in several other statistics, too:
Microsoft Teams has seen a total of over 900 million meeting and calling minutes a day generated by 44 million daily users over the space of a single week. Microsoft also provides virtual desktop software, which lets workers replicate their desktops on their home computers and other devices. Usage of this has more than tripled since the coronavirus crisis began. In the past week, demand for the company’s Power BI data-visualization software shot up by 42%. Microsoft says government agencies have been increasing their use of the service to share graphs and other visuals that depict information about COVID-19. The company’s Skype video and audio calling service now has 40 million users, a 70% month-over-month increase, and calling minutes are up 220%.
Balancing act: Microsoft has tweaked some of the rules for using its Azure cloud services in order to manage the unprecedented demand it’s seeing. Among other things, it has placed limits on usage for some of the free offers it has been publicizing during the crisis and it’s imposed limits on some of the resources available for new subscribers, though customers can apply to have those quotas lifted if necessary.
If an issue with capacity does arise, the Azure team has made clear it will prioritize support for first responders and emergency services. Microsoft’s also been taking steps elsewhere to curb stresses on its cloud infrastructure by, for instance, asking game developers to shift updates of games for its Xbox service to off-peak hours.
Homing in: Microsoft is keeping its foot firmly down on the cloud accelerator pedal, in spite of the recent surge. On March 30, 2020, it announced a revamp of its consumer-focused cloud offerings.
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Office 365, which includes access to the company’s popular productivity tools such as Word and Excel, is being renamed Microsoft 365 and will have some new, AI-powered capabilities and offer a terabyte of cloud storage per person for families (up to a total of six people). The company also unveiled a consumer version of Microsoft for Teams, which will let people toggle easily between sharing stuff with co-workers or with other family members. The new services will launch on April 21, 2020.
Update: Microsoft’s blog post initially said it had seen a 775% increase in its cloud services in regions enforcing COVID-19-related restrictions. It subsequently corrected this to say it had seen a 775% increase in monthly users of its Teams service in Italy. This article have been updated to reflect the change.
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708215d5ea94ba5e85e8da5fdd54f195 | https://www.forbes.com/sites/martinrivers/2016/01/13/etihads-backdoor-access-to-europe-slammed-shut-as-germany-axes-air-berlin-codeshares/ | Etihad's Backdoor Access To Europe Slammed Shut As Germany Axes Air Berlin Codeshares | Etihad's Backdoor Access To Europe Slammed Shut As Germany Axes Air Berlin Codeshares
It is a strategy that has won James Hogan, the chief executive of Etihad Airways, plaudits from the across the airline industry.
Shackled by restrictive traffic-rights agreements, Abu Dhabi's Etihad has in recent years gone on a shopping spree across Europe. Equity stakes in Alitalia (49%), Air Serbia (49%), Switzerland's Darwin Airline (33%) and Germany's Air Berlin (29%) have allowed the Gulf carrier to pursue backdoor expansion across the continent, swapping traffic with local partners and restructuring their networks to feed Abu Dhabi.
The investment model has narrowed the gap between Etihad and its two older, larger Gulf rivals – Dubai's Emirates Airline and Qatar Airways – contributing an estimated $1.1 billion to the newcomer's top line in 2014.
A flight attendant for Etihad, the flag-carrier of Abu Dhabi, shows off the First Class suite on its... [+] new Airbus A380s. The Gulf carriers have won universal acclaim for their on-board products, but not everyone is happy with the government subsidies that have fuelled their growth. (Photo by KARIM SAHIB/AFP/Getty Images)
All three of these so-called Gulf super-connectors are growing their businesses off the back of intercontinental transfer traffic – poaching market share from European hubs that were long considered the default stopovers on East-to-West journeys. Relentless double-digit growth by Emirates has allowed Dubai to overtake London Heathrow Airport as the world's busiest international hub.
But the Gulf's gain could be Europe's loss, and German authorities are now pulling down the shutters on one of Etihad's most cherished investments: Air Berlin, the perennially loss-making (but operationally mature) German carrier.
In December, the Administrative Court of Braunschweig upheld a decision by Germany's Transport Ministry to revoke 29 codeshare agreements between Etihad and Air Berlin. Those accords, which allow Etihad to book passengers onto Air Berlin-operated flights, will expire on January 15th (notwithstanding ongoing legal action by both carriers). Their loss will nearly halve the number of services that Air Berlin operates in conjunction with Etihad, significantly curbing the potential for traffic swapping at its Berlin and Dusseldorf hubs.
The bone of contention between Germany and Abu Dhabi is the ambiguously-worded bilateral air services agreement that both governments have signed.
Under the terms of the agreement, Etihad is permitted to fly from to four destinations in Germany with its own metal, while also placing its code on three other services. Two of those existing codeshare entitlements – Abu Dhabi-Berlin and Abu Dhabi-Stuttgart, both operated by Air Berlin – have now been revoked, purportedly because they are not explicitly named in the bilateral treaty. The remainder of the canceled codeshares are connecting services over Germany; lucrative intra-European flights that the partners use to synergistically grow revenues.
Etihad, of course, is crying foul, accusing Germany of stifling competition to protect flag-carrier Lufthansa. It warns that the travelling public and the German economy will suffer as a consequence.
The argument is a familiar one: by growing its presence on the continent, Etihad claims to be creating jobs, boosting tourism and fostering trade. If local carriers aren't providing adequate air links, it contends, why should foreign ones be stopped from filling the gap? Many stakeholders within Europe have bought into the narrative: Berlin's former mayor, for example, and Airports Council International Europe, the continent's main trade group for airports.
On the other side of the debate are Europe's flag-carriers. Lufthansa is the most vocal of the bunch, incessantly lobbying against its Gulf rivals on the basis that they use unfair state support to skew the competitive landscape. Its stance gained momentum last year when a grouping of US aviation interests published evidence of Gulf-carrier subsidies totaling $42 billion.
Etihad's hitherto-secret financial statements were particularly eye-opening. The flag-carrier of Abu Dhabi has received $4.6 billion of interest-free loans since 2004, the documents show, on top of $6.3 billion of capital injections. (Small wonder that Hogan has been on a shopping spree!)
These massive subsidies are not available to European flag-carriers under EU law, as demonstrated by the collapse of Hungary's Malév, Cyprus Airways and Estonian Air – all of which hit the wall after being instructed by Brussels to pay back illegal state aid. Citing this higher standard of commercial accountability, Lufthansa thus claims to operate with a financial handicap to its Gulf counterparts. One method of levelling the playing field, it suggests, is to curtail Gulf-carrier expansion through bilateral agreements. Failure to do so, it insists, will cause irreparable long-term damage to Europe's domestic aviation sectors.
Cyprus Airways planes sit on the tarmac at Larnaca airport in the Cypriot southern port city on... [+] January 10, 2015. The flag-carrier suspended operations after being ordered to repay 65 million Euro of state aid - subsidies which are prohibited under EU law, but which continue to be distributed in the Gulf. (Photo by HASAN MROUE/AFP/Getty Images)
The cull of codeshares at Air Berlin suggests that these arguments are finally resonating with German politicians.
Swiss regulators had already put the spotlight on another of Etihad's investments, Darwin Airline, which is being used to pull regional feeder traffic into Abu Dhabi on two-stage journeys (Darwin-operated flight to Milan, for example, followed by Etihad-operated or Alitalia-operated flights to Abu Dhabi). That tie-up was ultimately approved after Etihad made several concessions.
But with Hogan insisting that codeshares were a "key reason" for investing in Air Berlin, Etihad must now reassess the value of a more constrained German tie-up. Air Berlin has dubious appeal on a purely commercial basis, having lost money every year since 2007. (Its audited net profit in 2012 merely reflected the sale of frequent-flyer program topbonus to Etihad.)
More fundamentally, Hogan's overarching strategy ought now to be closely scrutinized by Abu Dhabi. Unless Etihad can demonstrate that it benefits European aviation as a whole, and not merely its chosen partners, other governments may follow Germany's lead.
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efeb66f0c7825a6c42af089a7fdf4c17 | https://www.forbes.com/sites/martinrivers/2016/04/18/norwegian-air-is-no-threat-to-americas-open-and-fair-skies-unlike-etihad-and-qatar-airways/ | Norwegian Air Poses No Threat To 'Open And Fair' Skies -- Unlike Etihad And Qatar Airways | Norwegian Air Poses No Threat To 'Open And Fair' Skies -- Unlike Etihad And Qatar Airways
This picture taken on January 8, 2014 shows a Boeing 787 operated by Norwegian Air arriving at Oslo... [+] Airport after a flight from New York. Despite operating transatlantic services for several years, Norwegian has only just received a foreign permit from the U.S. for its Irish subsidiary, which has a lower cost-base and expanded traffic rights. (Photo by Cornelius Poppe/AFP/Getty Images)
The Partnership for Open and Fair Skies, a lobby group representing three major U.S. airlines and other industry groups, chose its name well when it entered the scene last year.
By incorporating a variant of the term "open-skies" into its brand, the Partnership explicitly affirmed its support for aero-political deregulation – the removal of bilateral traffic rights and the expansion of cross-border competition between airlines.
To do anything less would be foolhardy given the overwhelming body of evidence that open-skies accords – of which America has signed more than 100 – create vast economic benefits.
Yet, interposing this widely-acclaimed term, the lobbyists snuck in the most subjective and malleable of conditions: "fair".
What is "fair"? Defining the concept at an abstract level is easy enough – "equitable treatment," let's say – but how do we apply an abstract idea in the real world? To be truly "fair" to several parties, we have to understand, quantify and counter-balance the "benefits" and "opportunities" that each has been afforded. That is an impossible task with any degree of mathematical precision.
Regulators, in truth, are no more capable of being "fair" than journalists are capable of being "objective". The best that any of us can do is muddle along with noble intentions and a sincere commitment to impartiality.
Which brings me, in a roundabout way, to the subject of Norwegian Air and its long overdue green-light for transatlantic expansion.
Norwegian's flag of convenience
America's Department of Transportation (DoT) announced on Friday that Norwegian, one of Europe's largest low-cost carriers, has at long last received tentative approval for a foreign-air-carrier permit. Norwegian waited more than two years for this provisional nod, which will allow it to operate more transatlantic flights under the open-skies treaty between the European Union and the United States.
The promise of cheaper transatlantic fares will be music to the ears of the travelling public. But, in pursuit of fairness, the DoT had to weigh up their lot with the competing interests of all involved parties.
Let's start with Norwegian itself. It currently provides less than 2% of scheduled transatlantic seats between Europe and America. That compares with 17% for Delta Air Lines ; 16% for American Airlines; and 12% for United Airlines. Management have long wanted to grow operations across the Atlantic, but have been hamstrung by Norway's high labor costs and limited traffic rights (the country is only a member of the European Economic Area -- not the E.U.). Its solution was to create an Irish subsidiary, Norwegian Air International.
By seeking to grow market share across the transatlantic, Norwegian poses a competitive threat to the U.S. majors and, in turn, their myriad related trade unions.
But is the threat a "fair" one? The Air Line Pilots Association (ALPA) says not, calling the Irish license a "flag-of-convenience" and warning: "DoT is proposing to allow a foreign airline to compete directly with U.S. airlines on long-haul international routes with unfair economic advantages." It previously claimed that Norwegian would hire Asian employees at a fraction of the cost of western staff, although the airline has promised not to do this.
While acknowledging that the case presents "novel and complex issues," the DoT ultimately concluded that there is "no legal basis to deny" Norwegian's application. It reached its decision after consulting with both the Department of Justice and the Department of State .
Though undeniably a victory for Norwegian, the ruling should not necessarily be considered a defeat for U.S. aviation interests.
To the contrary, it could spur the Partnership's members to refocus their energies toward more justifiable lobbying efforts. Instead of haranguing a European competitor with an impressive cost-base and a transparent balance-sheet, Delta, American and United can now double-down their focus on two of the fast-expanding Persian Gulf carriers.
Gulf-carrier state subsidies
The U.S. majors began lobbying against three Gulf carriers – Dubai's Emirates Airline, Abu Dhabi's Etihad, and Qatar Airways – last year, accusing them of receiving $42 billion of "unfair benefits" over the past decade.
Acting through the Partnership, the airlines and their related trade unions are urging Washington to curtail or revoke America's open-skies treaties with the United Arab Emirates and Qatar. They contend that subsidies enable the Gulf carriers to operate loss-leading flights, in turn stealing market share from commercially-constrained U.S. airlines. "We are not competing against air carriers," says United. "We are competing with governments."
Proponents on both sides of the fence have been quick to rally behind their cause, flinging accusations of protectionism and subsidization back and forth to no avail.
Dismiss the naïve notion that either party is really concerned with "fairness," though, and the path forward is clear.
Emirates, the largest and oldest of the Gulf carriers, is a futile target. Most of the evidence against Emirates relates to lax labor laws, non-arms-length contracts, and pro-aviation governmental policies. These benefits – which even the Partnership avoids calling subsidies – occupy a grey area in the debate. Much like Norwegian's employment practices, they are too abstract and subjective an advantage to compel Washington to act.
As Dubai's flag-carrier correctly notes, bilateral agreements "do not attempt to harmonize company establishment laws, labor rules or other domestic legislation, since these are outside the competency of aeronautical authorities".
Lobbying against Emirates – like lobbying against Norwegian – is doomed to fail because rectifying their perceived "unfair advantages" falls beyond the DoT's remit.
When it comes to Etihad and Qatar Airways, however, the financial mandate for regulatory intervention is clear-cut. Filings unearthed by the Partnership show that Etihad has received $4.6 billion of interest-free loans – liabilities which the airline has "no contractual obligations to repay" – plus $6.3 billion of capital injections. Qatar Airways has received $7.8 billion in interest-free loans and $6.8 billion in government loan guarantees, with repayment "neither planned nor likely".
These are cold hard figures – tacitly acknowledged by the airlines themselves – which contravene both the letter and the spirit of America's open-skies treaties.
If the Partnership is serious about living up to its name, its members need to pick their fights carefully. Going after a commercially successful, state-owned airline like Emirates that happens to enjoy benign government policies is pointless. Going after an innovative, privately-owned airline like Norwegian is downright unjustified.
Etihad and Qatar Airways are the ones openly flouting "fair competition". It's time to turn up the heat on them.
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d55c50659dd26948e833ecd959a41a1e | https://www.forbes.com/sites/martinrivers/2017/11/15/exclusive-air-senegal-orders-two-airbus-a330-900neos-at-dubai-airshow/ | Exclusive: Air Senegal Orders Two Airbus A330-900neos At Dubai Airshow | Exclusive: Air Senegal Orders Two Airbus A330-900neos At Dubai Airshow
The tailfin of one of Air Senegal's new ATRs. (Photo credit: Air Senegal) Air Senegal
Air Senegal, the new flag-carrier of the west African nation of Senegal, has signed an order for two Airbus A330-900neos plus two options at the Dubai Airshow.
Sources with knowledge of the transaction said that Senegal's Transport Minister will announce the order tomorrow, 16 November, shortly before the airshow draws to a close.
It is believed the wide-bodies will be used to launch long-haul services to Paris in early 2019.
Air Senegal was established in 2016 as a replacement for seven-year-old predecessor Senegal Airlines, which had in turn been a successor to Air Senegal International, the country’s decades-old flag-carrier.
The state-owned airline is poised to take delivery of two ATR 72-600 turboprops later this year, allowing it to launch regional West African services.
It is headed up by Philippe Bohn, the former head of business development at Airbus.
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b6e1d495d81c2a0b76aa9a6cc5b697e2 | https://www.forbes.com/sites/martinrivers/2018/06/14/etihad-hemorrhages-another-1-5bn-in-2017/ | Etihad Airways Hemorrhages Another $1.5B In 2017 | Etihad Airways Hemorrhages Another $1.5B In 2017
Attendees walk passed an Airbus SE A380 passenger aircraft, operated by Etihad Airways PJSC, as it... [+] stands on the tarmac during the 15th Dubai Air Show at Dubai World Central (DWC) in Dubai, United Arab Emirates, on Monday, Nov. 13, 2017. The biennial Dubai expo is an important venue for both manufacturers to secure deals for their biggest and most expensive jetliners. (Photo by Natalie Naccache/Bloomberg)
Abu Dhabi's Etihad Airways has posted a loss of $1.52 billion for 2017, while also revising its 2016 loss up to $1.95 billion.
The disastrous performance comes one year after the state-owned Gulf airline removed James Hogan as its chief executive, slamming the brakes on his strategy of growing non-organically by investing in loss-making overseas airlines.
New chief executive Peter Baumgartner says the result amounts to a "significant improvement" as the airline was contending with higher fuel costs in 2017, as well as one-off costs associated with the failures of Air Berlin and Alitalia – Hogan’s worst-performing investments.
Unit costs at the airline fell 7.3% over the year, while passenger numbers inched up slightly from 18.5 million to 18.6 million.
Etihad and two other Gulf super-connectors – Dubai’s Emirates Airline and Qatar Airways – have grown at a double-digit rate almost every year in the past decade, fueling accusations of anti-competitive behavior by their American rivals. The other two Gulf carriers both slowed their expansion rate in 2017, albeit to a lesser degree than Etihad.
As well as winding down its Air Berlin and Alitalia investments, Etihad last year sold its shareholding in Switzerland’s Darwin Airline.
Media outlets in Australia and India have since reported that Etihad is looking to offload its stakes in Virgin Australia and Jet Airways. However, the Gulf carrier has denied those reports and reaffirmed its commitment to both partners.
Air Serbia and Air Seychelles are the other two airline members of the equity alliance created by Hogan.
The Gulf carriers ended a long-running dispute with their US counterparts this year by agreeing to publish more detailed financial reports - a measure designed to ease concerns about unfair state subsidies. Qatar Airways subsequently announced that it will post a “very large loss” for 2017, blaming the result on the Saudi-led blockade against Qatar.
The size of its loss has not yet been disclosed.
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fe172aba36e94a27efc1a87a9fb38663 | https://www.forbes.com/sites/martinrivers/2018/09/26/double-whammy-for-edinburgh-airport-as-norwegian-emirates-cut-flights/ | Double Whammy For Edinburgh Airport As Norwegian, Emirates Cut Flights | Double Whammy For Edinburgh Airport As Norwegian, Emirates Cut Flights
The Scottish capital is losing some connectivity with the United States and Dubai. (Photograph by... [+] Mike Wilkinson/Bloomberg)
Scotland’s busiest airport is facing cutbacks by two of its most coveted airlines in a blow to the gateway’s long-haul expansion plans.
Emirates Airline disclosed on Monday that frequencies for its soon-to-be-launched Edinburgh route will be reduced from seven to five times daily. Dubai’s flag-carrier is axing its flights on Tuesdays and Wednesdays between October 28th and June 1st, 2019 (not including the peak festive period).
The announcement came days after low-cost long-haul pioneer Norwegian Air confirmed that it was dropping the last of its three transatlantic routes from the capital – to Stewart in New York State – having already grounded Providence in Rhode Island, and Bradley in Connecticut. The airline blamed the Scottish government’s backtracking of plans to halve Air Passenger Duty (APD).
Taxation has a disproportionately heavy impact on the viability of low-cost flights, though many airlines also scapegoat taxes for the failure of routes that have underperformed in their own right.
That appears to be the case here given that Norwegian simultaneously cancelled both of its transatlantic flights from Belfast Airport, which is exempt from long-haul APD charges.
Emirates did not mention APD when announcing its frequency reduction. The big three Persian Gulf carriers – Emirates, Etihad Airways and Qatar Airways – have hit turbulence in recent years due to regional instability, lower oil prices and the emergence of low-cost long-haul business models. But cannibalization of demand for Emirates’ existing twice-daily service to Glasgow is likely to have been the main factor in its Edinburgh revision.
The Dubai flag-carrier says it expects to resume daily services to Edinburgh in summer 2019.
As previously announced, Etihad will next month stop linking the Scottish capital with Abu Dhabi as part of a wide-ranging restructuring.
Notwithstanding the recent pullback by long-haul operators, 2018 has been a year of growth for Edinburgh Airport. The gateway achieved its busiest ever month in July – handling more than 1.5 million passengers – and in June it opened its first direct link to East Asia: a four-times weekly flight from Beijing operated by Hainan Airlines.
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9d1d9241d65946dc0bcb730a4bd47085 | https://www.forbes.com/sites/martinrivers/2019/02/28/zambias-mahogany-air-eyes-regional-expansion-via-northern-towns/ | Zambia's Mahogany Air Eyes Regional Expansion Via Northern Towns | Zambia's Mahogany Air Eyes Regional Expansion Via Northern Towns
The Zambian airline currently deploys one Embraer EMB-120 and one Beechcraft 1900 on an exclusively... [+] domestic network. Mahogany Air
Mahogany Air is looking to turn Zambia’s northern border towns of Mbala and Nakonde into transit points for Burundi and Tanzania as part of a new push into international markets.
“What we are trying to do is to fly to northern Zambia and connect to the neighbouring countries,” founder and chief executive Jim Belemu told me in a telephone interview.
“So we will fly to northern Zambia, Mbala, and then from Mbala we can connect to Bujumbura [in Burundi]. There is traffic which is so untapped there. Then we are also trying to fly to the Zambian border town of Nakonde and connect from there to Dar es Salaam [in Tanzania]."
Belemu admitted that Mbala and Nakonde are fledgling markets – Nakonde, in particular, has no functioning airport – but, with unpaved runways still common in Zambia, he said the towns are “worth developing”.
“If you look at the southern part of Zambia you’ve got Livingstone, which connects with Botswana. You’ve got Namibia. You’ve got South Africa. These areas are well covered,” the airline boss said.
“Our whole strategy, rather, is to go northward and see how we can tap into that market. We think that it will open up … It makes sense because these are highly populated areas. There is a lot of business that goes around these areas, but the connectivity is a problem. For us, as an airline, we think investing in such routes is worthwhile.”
Mahogany has not yet secured foreign operator’s certificates from Burundi or Tanzania. But it has been certified by the Democratic Republic of the Congo and will launch flights to the southern city of Lubumbashi in late March.
Flights to Solwezi in north-western Zambia will also begin next month.
Mahogany currently operates an exclusively domestic route network, linking capital city Lusaka with Ndola in the Copperbelt Province; Livingstone in the south of the country by Victoria Falls; and Mansa in the north. It resumed operations in July 2017 with backing from Gulf investors after being grounded for most of its three-year history.
Asked about the airline’s false-start in 2014, Belemu described the suspension of flights shortly after launching as a “very bold step” that averted Mahogany’s permanent closure.
“Our aim in suspending the operation was to really fine-tune and come back,” he said. “We knew that, once you close the airline, most people in Zambia would definitely think that is the end. We knew that perception. But we didn’t want to continue when we knew we were going in a direction … that we may not be able to sustain.”
He credited several factors for putting Mahogany on a better footing this time around, including more thorough route analyses; lower leasing costs and airport charges; and $23 million of funding from a consortium of Zambian and Gulf investors.
The airline currently deploys one Embraer EMB-120 (30 seats) and one Beechcraft 1900 (19 seats) – both now fully owned – and is negotiating a long-term lease for another EMB-120 from Sahara African Aviation.
It plans to induct its first jet aircraft “within a year or two” to support the international expansion. Embraer's ERJ-145 and Bombardier’s CRJ family will both be considered.
“The end result is that we are going international, so in that respect it would just be prudent to use a more efficient, competitive type of aircraft,” Belemu said of the jet, which will be fully owned. “But we will still need [the turboprops] because we still have a lot of work to develop the routes domestically.”
He added that he welcomes the government’s plan to revive Zambia Airways, the historic flag carrier, and expressed hope that Mahogany can serve as a “feeder airline” for its network.
“We don’t want to take a huge risk to come and compete with [Zambia Airways on] … the regional routes,” he insisted.
“It is just prudent that as they come in we give each other support [rather] than competing, because all of us – Mahogany, Proflight [another private carrier] – would be Zambian airlines … It is only good that we work as a team. We promote the bringing of passengers from outlying areas, and then they come onto the regional routes.
“That is why we have slowed down on our plans for [flights from Lusaka to] Johannesburg, and probably Dar es Salaam.”
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2b82ec039867b92a96f38e1072f09a6d | https://www.forbes.com/sites/martinrivers/2019/08/12/revealed-how-norwegian-air-is-giving-wings-to-bitcoin/ | How Bitcoin Is Taking Flight With Norwegian Air | How Bitcoin Is Taking Flight With Norwegian Air
Not quite there yet... Alexazc
When Norwegian Air Shuttle launched budget flights to America in 2013, it forced the airline industry to look again at a market segment dismissed by many pundits as commercially fanciful: low-cost long-haul flying.
Six years on, it’s hard to say whether the gamble has paid off. The airline’s balance sheet is weaker than when it only served short-haul markets. Early competitors like WOW Air and Primera Air have collapsed. Yet Norwegian’s Boeing 787 Dreamliners still criss-cross the Atlantic daily – holding their own against a new breed of low-cost long-haul services run by Europe’s legacy carriers.
The decision by Norwegian’s founder, Bjørn Kjos, to relinquish financial and managerial control of the company has meanwhile put a younger generation of executives – including his son, Lars Ola Kjos – in charge of strategic planning.
And their opening gambit appears no less ambitious or transformative than the elder Kjos’s foray into long-haul operations.
A world away from the business of flight, Norwegian has invested in a cryptocurrency exchange, Norwegian Block Exchange (NBX), which is due to open its virtual doors next month. NBX will make cryptocurrency the most attractive payment channel for Norwegian’s flights – offering discounted fares and blockchain-encoded perks in a bid to hasten what management see as the inevitable decline of the old-world banking system.
More immediately, the airline believes this shift to digital currencies will cut costs and release it from the stranglehold of financial middlemen.
“Now that we have made the exchange, we see that it could be the heart of a complete new ecosystem,” Stig Aleksander Kjos-Mathisen, NBX’s managing director and the son-in-law of Bjørn Kjos, told me in an interview at Norwegian’s headquarters in Oslo.
NBX will launch as a standalone marketplace in September, enabling users to exchange fiat currencies (initially NOK, followed by SEK, DKK, EUR and USD) for digital ones (initially Bitcoin, Ethereum and US Dollar Coin, a USD-pegged stablecoin). Its creation might not have been necessary if a reputable trading platform already existed in Scandinavia, Kjos-Mathisen said, but by building it from scratch the airline has gained “at least a left hand on the steering wheel” of its cryptocurrency future.
New financial horizons
“We can set the standards ourselves now,” he explained. “We can decide the threshold for security, for KYC [Know Your Customer identity checks].
“This positions Norwegian to … be a leader on the technology that is chosen [by the industry]. Also, by owning NBX, we can easily integrate [it with Norwegian’s sales channels] so that the transition between the fiat world and the virtual world is frictionless for us.”
By the fourth quarter of this year, merchant solution NBXPay will allow customers to buy flight tickets directly with cryptocurrency. Norwegian will either convert the funds to NOK instantly – minimizing its exposure to cryptocurrency volatility – or it will maintain a USDC balance sheet as working capital. Its stablecoin reserves could then be used for B2B transactions with suppliers that follow its lead into the sphere.
“We have discussed with partners if they are willing to look into accepting US Dollar Coin as a way to pay instead of using traditional settlements,” Kjos-Mathisen said, adding that “positive” responses have been received from several “big” suppliers.
Norwegian's liquidity has been hampered by credit card acquirers. Norwegian Air
Side-lining payment processing companies and financial clearing houses in this way has obvious advantages for Norwegian.
Airlines typically pay transaction fees of between 1.5% and 2.5% on bookings placed with a credit card. Intermediary acquiring banks then hold back a percentage of revenue to cover the risk of chargeback claims arising from insolvencies. In Norwegian’s case, the amount held back has risen steadily due to concerns about the airline’s financial health – forcing it to issue interest-paying bonds to cover the shortfall.
“Why should we wait for our revenues, and then have the credit card acquirers and the credit card companies make a lot of interest just sitting on that money,” asked Lasse Sandaker-Nielsen, Norwegian’s head of communications. “That's why the airline is really interested in this: because it will give us the opportunity to get the liquidity immediately.”
Norwegian is not alone in developing blockchain solutions for the aviation industry.
Last month, Russia’s S7 Airlines processed more than $1 million worth of payments through a private blockchain being developed with Alfa-Bank. It said the technology speeds up transactions and removes the need for third-party guarantees. Ticketing facilitator ARC has invested in another blockchain, Blockskye, that promises to “increase efficiency, transparency and security” across the multi-party airfare distribution chain.
Looking beyond payment settlements, IATA, the airline industry’s main trade group, has identified numerous areas ripe for blockchain innovation. It said the technology’s core strength – immutable data records that provide a single source of trust – has far-reaching implications for tracking of baggage, cargo and spare parts, as well as passenger and crew identity verification.
Other sub-sectors such as aircraft financing and maintenance also stand to benefit from blockchain-powered predictive analytics.
Yet even as interest across the industry grows, the number of passengers actually willing or able to pay in cryptocurrency remains low. Less than one third of one per cent of the global population is currently believed to own bitcoin.
That makes incentivizing the payment channel a top priority for Norwegian and NBX.
“At some point, when the technology matures, you'll be using [blockchain] and you won't really notice that you're using it,” Kjos-Mathisen said. “But right now, in the beginning, you will definitely be aware … So you need to incentivize people in the beginning. And then they will start using it because they see it's convenient.”
Pay less with bitcoin
Passing on savings to customers who pay with cryptocurrency is the most obvious way of building traction. “You can sell the ticket for less and still earn more,” he insisted.
Smart contracts that enhance the travel experience will also be marketed heavily. Kjos-Mathisen cited AXA’s flight delay and cancelation insurance product Fizzy as one “very smooth” solution that can influence buying behavior. Fizzy cuts the time it takes to receive payouts by using a smart contract that plugs into global air traffic databases and automatically approves claims.
Bitcoin's abstract nature is an obstacle to mainstream adoption. Zach Copley
“You put the equivalent of €5 from your wallet into the smart contract. The insurer, AXA in this case, puts in let’s say €40. And then it's written [in code] that if the flight is canceled, the €45 pot will go to you,” he explained. “When you land, you will have the funds in your wallet … The beauty of this is when you have tokens like US Dollar Coin on the Ethereum blockchain, you can actually get [payouts] denominated in dollars. That makes it graspable for most travelers.”
Norwegian may also offer people paying in cryptocurrency a higher earning rate for CashPoints, its frequent flyer program. The reward scheme is already being integrated with NBX through a ‘Trade and Fly’ promotion that refunds 10% of trading fees on the exchange to customers’ CashPoints accounts.
In all cases, the aim is to bridge the gap between Norwegian’s real-world flight network and NBX’s virtual-world financial services.
“NBX is going to be global, so one of the strategies is basically to follow in the footsteps of the airline,” Kjos-Mathisen concluded. “The airline is big in Europe – especially in Scandinavia – but it's starting to become quite big also in the US. It has a presence in South America, and obviously Asia. So we will try to on-board customers wherever the airline is, because those are the ones that could be incentivized with CashPoints.”
While NBX will not be seeking a formal banking license, it also “definitely” plans to roll out interest-bearing wallets – tapping into the growing popularity of decentralized finance services that use smart contracts to issue crowdfunded loans.
What does 73-year-old Bjørn Kjos make of his airline’s leap into the cryptocurrency world?
“He believes that the banks and the credit card companies are the next Kodaks,” Sandaker-Nielsen said with a smile. Coming from a man who built an empire on the rubble of Europe’s legacy airlines, the analogy should not be taken lightly.
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c3194cc30c49b47f805005a5d3db23c2 | https://www.forbes.com/sites/martinshenkman/2018/12/18/how-to-ruin-your-estate-plan-by-signing-a-stupid-standard-form/ | How To Ruin Your Estate Plan By Signing A Stupid "Standard" Form | How To Ruin Your Estate Plan By Signing A Stupid "Standard" Form
Revocable trusts are about as common to estate planning as peanuts at a ballgame. These are contractual agreements between you (called the Settlor or Grantor) and the Trustee who manages the trust (which is typically you initially, and then a successor if you become incapacity). But look at the grief that using this common tool can provide when a revocable trust butts heads with silly legalese in other common legal documents. The problem is caused by poor lawyering that is overreaching, unnecessary, and which most folks sign without thinking about.
So, we’re going to run you through the estate planning prudent consumer test and see if you pass. Ready, set, go!
You set up a revocable trust to avoid probate, facilitate management of your assets as you age, and other good purposes. Good move and a common planning step (although most folks really don’t do them optimally and we’ll talk about that in a future column).
You are buying a new cooperative apartment to live in. Being a dutiful client, you heed your estate planner’s advice and recommendations to the real estate attorney handling your closing that the new coop is bought in the name of your revocable trust. So far, you’re doing pretty good.
Coops have lawyers too and lawyers
Read before you sign especially if you're told its "standard." Getty
lawyers love to create long legal forms, with provisions that extend beyond what might be reasonably necessary, for people to sign. So, the form agreement your coop requires you sign to approve your new apartment being held in your revocable trust has the following clause in it:
“No change, amendment, modification or revocation of the Trust Agreement shall be effective unless same is authorized by the Trust Agreement and this Agreement and until the Cooperative consents thereto in writing and receives and acknowledges receipt of any such change, amendment, modification or revocation by Certified Mail, Return Receipt Requested to the then Managing Agent for the Cooperative with a copy sent in the same manner to Tough Lawyer, Esq. at 123 Main Street, USA.”
The coop lawyer says they can’t change the agreement, it’s a “standard” legal form [a good sign there’s a problem] and “Everyone else has signed it so why are you complaining?” She’s probably right. Most consumers sign whatever “standard” form is put in front of them ‘cause its “standard!”
So, here’s the test…What are the consequences of this clause (other than wordiness)?
The provisions of the documents the coop provided restrict your ability to amend your revocable trust which has nothing to do with the coop management, protecting the coop, or anything that the Coop should care about. The agreement could and should provide that if you change your revocable trust any provision in the amended trust that contradicts or supersedes the agreements you made with the coop are void. That would seem reasonable to protect them. But this provision goes way further and prevents you from amending your revocable trust without their permission (it’s not effective). If you want to add a $10,000 bequest to your alma-mater, Go Blue, you need coop permission! And permission must be approved by the formalistic and assuredly time-consuming approach of getting coop approval and having that sent via certified mail to both the managing agent and the attorney for the coop.
Example: You’re on your death bed. A particular charity has made incredible efforts helping you with the health challenges you have. You want to leave 10% of your estate to that charity to thank and acknowledge their efforts and to enable them to help others. You call your lawyer and ask her to rush to the hospital to make the change and have you amend and restate your revocable trust to include the desired charity. The only problem is unless your lawyer must get the coop’s consent and that consent must be mailed to both the co-op's managing agent and lawyer. While waiting for all these formalities, you die. The charity loses out. Hey, it could be worse.
Example: Say you broke up a year ago with your boyfriend, the bum, who you had left your entire estate to. You realize this and want to instead update your revocable trust and bequeath your estate to your nieces and nephews. Your lawyer, who is unaware of the quirky document you signed many years earlier with your coop has you sign an amended and restated revocable trust with the new dispositive scheme. Years later, after you pass, your former boyfriend discovers that the approval process was not complied with and uses the clause in the coop form to challenge the new distribution plan since the agreement you signed expressly said that no modification could be effective if the process mandated by the coop were not adhered to. No one adhered to it because no one remembered it and you have a new lawyer who had no idea.
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2560e2301f6c5fe2aa5d1df59bca0ce9 | https://www.forbes.com/sites/martinshenkman/2018/12/24/estate-planning-new-years-resolutions-by-an-estate-planner/ | Estate Planning New Year's Resolutions By An Estate Planner | Estate Planning New Year's Resolutions By An Estate Planner
Make your New Year's resolutions to address your estate, financial, charitable, insurance, retirement planning.
Make Your Estate, Charitable, Financial and other Planning New Year 2019 Resolutions. photo credit:... [+] Getty Getty
So, we estate planners have perfect estate and financial plans and nary a worry. Not!
Most professionals are like the proverbial shoemaker with the barefoot children. I presented a trust planning lecture in New York City a few weeks ago. As everyone knows there are lots of smart lawyers, CPAs and financial advisers in the Big Apple. So, I polled the illustrious group asking how many had SLATs or DAPTs to protect themselves? The only hands that were raised were mine and my co-speakers, Jonathan Blattmachr, Esq. Why is that? Shouldn’t we practitioners practice what we preach? We should.
So, just like you, after practicing up on auld lang syne, and buying official CNN cardboard cut-outs of Anderson Cooper and Andy Cohen to properly celebrate the New Year, I paused to take stock of some of the steps I might take for the coming year, and resolutions I might make for my planning.
First, let’s translate the alphabet soup above for you mere estate planning neophytes. A SLAT is a spousal lifetime access trust and is common asset protection and tax planning technique for married couples. A DAPT is a domestic asset protection trust and a type of trust you can create in 18 states that might remove assets from your estate and the reach of your creditors but permit you to benefit from them. In many cases, variations of each technique might be used to perhaps enhance the likelihood of success or to achieve other goals. For example, SLATs can be structured as non-grantor trusts so that you can garner an array of income tax benefits under the new tax laws. For a video explaining this in more detail click here. DAPTs come in many flavors, e.g. so-called “hybrid-DAPTs” where you have not initially named a beneficiary but added in the future.
You don’t need to be a zillionaire to need SLATs and DAPTs. Doctors looking to protect assets from malpractice claims might use them. Anyone sweating the loss of itemized deductions under the new tax laws might benefit handsomely.
If you’re wealthy enough that you might be subject to an estate tax SLATs DAPTs are great tools (among other techniques, you might consider). If you’re not that wealthy but could be subject to an estate tax if the Blue Wave continues in the next election you might well want to use SLATs and/or DAPTs to use some of the current high but temporary estate tax exemption. Ultra-high net worth folks can use a combination of these types of trusts in sophisticated plans to shift billions of wealth. But that, unfortunately, is not relevant to my New Year’s resolutions.
So, what benefit is it for an adviser to share some of his New Year’s planning resolutions?
Perhaps, if nothing else, it will make everyone else feel better knowing even the folks that do this stuff for a living have “to do” lists and New Year’s resolutions. Realizing that might make it less stressful for you to tackle your own list. We all have lists.
The second key point is that my list is unique to me, but your list should be unique to you. Everyone is different and copying a financial planning New Year’s resolution list off a website is rather unlikely to suit anyone’s goals. Those lists at most might be a starting point to determine what you need for you and your loved ones. Since my list might not do much for you, I’ll explain broader lessons from what I’m trying to tackle.
If you have professional advisers get your team together and develop your 2019 resolution list. If you don’t have a team but should, then that should be resolution number 1. If you are young and starting out and cannot afford professional advisers, get friends or family to vet your list because it is difficult to be objective about your own planning “stuff.” The key is getting other opinions, and where possible and affordable, professional input on what you should be doing in 2019.
My Resolution: So that leads into my first resolution. I intend to have a meeting with our CPA (Hal call me), insurance consultant, fiduciaries, and others important to our plan. We need to explore bringing children into this meeting, or at least to understand more of what we’ve done and why (kids are you reading this?).
General Resolution: You should resolve to inform, or even involve, heirs and others to the extent appropriate in the coming year. If you don’t have a team, form one. Include the functional expertise your plan needs (and you may not know that until you start meeting with the team). The newest member of many teams for aging clients or those with a health challenge is a care manager. So, your team perhaps should not just be limited your CPA and wealth adviser.
My Resolution: Let’s try an easy one; A buddy named Ron, insisted I buy RFID blocking sleeves for my credit cards. These are supposed to shield credit cards from electronic pickpocketing. Since credit cards, passports, and driver's licenses may have embedded radio frequency identification chips, protecting them from RFID skimming. This is worthy of a New Year’s resolution to get some momentum going. Also, we all tend to neglect the little things and shouldn’t. Small planning steps can be important.
General Resolution: Is your laptop encrypted? If you have your financial data and estate planning documents on it, it should be. That might sound like a little thing too but is in theme with RFID sleeves. You should resolve in the coming year to address several security steps for your planning, even the little ones.
My Resolution: While we’re on easy ones, I need to get my estate planning documents in a cloud-based portal that is easily accessible. We use a cloud service from Sharefile to hold PDFs of client documents in a private vault that the client can set a password for and share with appropriate family members and advisers. It also has an App that enables you to access your documents anywhere. Think emergency room at the hospital. How do you get your health care proxy fast at 2 am Christmas eve? And of course, while we’ve done this for clients, … did I mention something about shoemakers with barefoot children?
General Resolution: Do you have copies of all key estate and financial planning (e.g. beneficiary designations) accessible in an emergency? Do you know the location of your original documents (hint – a safe deposit box is not a great place)? Resolve to have electronic copies of all key documents disseminated to appropriate advisers, family, and fiduciaries. And yes, this presumes you have all key documents in place and that they have been updated to reflect the changes of the 2017 tax act. You do, don’t you?
My Resolution: Decant our irrevocable trusts into newer trusts. My trusts are getting old and creaky, kinda like me, and they could use a facelift. Laws change, planning techniques get more sophisticated. There are lots of new drafting and safety features that can be added since my trusts were last addressed in 2012. I want to form a new LLC to house the trust protectors. Also, to the extent feasible, we’ll explore changing the people we’ve named in various capacities to minimize or eliminate contacts in my home state. These steps might enhance the likelihood of the laws of the states where the trusts are located applying.
General Resolution: It is common planning to create trusts in states with more favorable laws. Delaware, Alaska, South Dakota and Nevada might be the most popular, but there are others. If your trusts are all in your home state you might be losing income tax benefits, asset protection benefits, and more. If you have any trusts that are more than a few years old, resolve in the coming year to meet with your advisers and explore the options to enhance them. If you’re wealthy and have not used your exemption amount, resolve to talk to your advisers in 2019 about estate tax planning steps to do so. 2019 is the year to plan in case the 2020 election results in harsher revisions to the estate tax.
My Resolution: Revisit our estate plan, and in particular trustees. We have a blended family like so many of you, and balancing the myriad of factors, the pros/cons of integrating institutional trustees into the mix, weighing what is best for everyone, is not only a Solomon-like task, but one that must be revisited periodically. We’re exploring the idea of replacing a single trust protector (a person who holds certain powers, such as the right to remove and replace trustees) with a committee of three to provide better checks and balances.
General Resolution: Modern trust drafting can provide an array of options for structuring trusts to best meet your needs. Document generation software makes these permutations both possible and affordable. Given the complexity of family structures, liability exposure, and so many other planning variables, getting a more tailored option for your planning documents can accomplish your goals and protect those you love. Resolve in the coming year to revisit your planning and make it work for you. Think outside the trust box.
My Resolution: Property, casualty, and liability coverage review. This stuff should be reviewed every few years, and like most of you, it’s been longer. I’m not sure some of the coverage limits make sense. I want to review my excess liability coverage. Periodically, I like to evaluate the cost/benefits of increasing deductibles.
General Resolution: As an adviser, I find that for far too many people neglect property, casualty and liability insurance. That should not be the case. Inadequate coverage can decimate everything you’ve spent a lifetime working towards. Resolve to review your all your coverage.
My Resolution: We’ll again look at converting another slice of IRA to Roth. But with the recent tax law changes we’ll be sure to preserve some regular IRA funds to deploy as Qualified Charitable Distributions (QDCs) when we get to age 70.5 unless of course, the tax laws change before then.
General Resolution: Resolve to review the status of your retirement accounts, charitable giving, etc., under the new tax law to preserve deductions (consider non-grantor trusts, QCDs, bunching with donor-advised funds), etc.
My Resolution: We need to review and analyze our budget. While most people view a budget as a four-letter word, or something beneath them if they are wealthy (it’s not), it’s a critical part of every plan. It’s been a few too many years but with one exception I’m sure we are on target. The exception and we all have something, is that my wife has multiple sclerosis. We worry what might become of health care coverage. The many discussions in Washington about pre-existing conditions are nerve-racking. If we had to bear the full cost of all drug therapies and medical care, it would be an incredible burden. We’ve yet to find an answer to plan for the uncertain and perhaps impossible. Unfortunately, some of the really tough planning questions just don’t have good answers. That’s reality. But dwelling on that one issue, to the exclusion of getting everything else in order, would be counterproductive.
General Resolution: Resolve to create a budget and financial forecast. If you have a good wealth adviser this is where they can shine. Could financial modeling, fine-tuned by astute “what-if” questions, help you get your planning on track. Be sure to model out to age 95 or 100 so that longevity doesn’t get the better of you. If you’ve met your financial targets, increase your current giving to family and charity. So, forecasting is vital to everyone anywhere on the net worth ladder. It just has different uses and implications depending which rung you ’re on (and which one you might be one!).
There are a lot of things that might seem missing from our list, but we’ve tried to keep after our planning most years, and to step back to reflect most years on what we need to address. So many of the more common steps like reviewing life insurance, backing up key data, being sure we have the basic documents, and so on, we've already done. But like you, we all have things to do and improve every year. And it will stay that way, because planning is an ongoing process, not signing a will.
General Resolution: Accept that estate, financial, charitable, insurance, retirement, and other planning is a process. Not an end game. Resolve to stick with it, revisit it, and periodically address and improve whatever your plan is.
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0625b3bce48cd4d2eca590f504de81a3 | https://www.forbes.com/sites/martinshenkman/2021/01/10/after-the-georgia-runoff-what-tax-planning-should-you-do-now/ | After The Georgia Runoff What Tax Planning Should You Do NOW? | After The Georgia Runoff What Tax Planning Should You Do NOW?
Yellow paper with text 2021 tax laws,concept getty
Plan Now
With the results of the Georgia runoff election in the Democrats Control the House, the Senate and the White House. So, the potential for harsh tax legislation increasing taxation of the wealthy, along the lines of prior Democratic proposals, might be likely to happen. What might those changes be? When might they be effective? What planning might you want to do now?
How Do the Dems “Control” the Senate?
The Senate is 50/50 Dem/Republican so that does not sound like control. But Kamala Harris will cast the tie-breaking vote and that equates to control. Might that suffice to push through major tax legislation? Certainly, and it would not be the first time. In 2001 Vice President Chaney cast deciding vote and pushed through significant tax changes, and we may face similar situation this year
Be Wary of Retroactive Estate Tax Changes
That is not fair. How can Congress retroactively change the tax rules? Well, it may feel unfair, but it is legal to do and Congress might choose to do it! One of the tax changes that some commentators suspect might be retroactive is the reduction in the transfer tax exemption (the amount you can gift or bequeath without incurring a gift, estate or generation skipping transfer tax without trigger tax). While nothing can be known, there have been several cases holding that retroactive changes are legal.
For a retroactive change in the law to be respected, it must be rationally related to a legitimate legislative purpose. Raising revenue in the midst of a pandemic with historic bailout packages would seem easily sufficient to meet this requirement. Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717 (1984); United States v. Carlton, 512 U.S. 26 (1994).
So, when planning what type of wealth transfers you might complete this year, in hopes of beating any future tax legislation effective dates, you need to consider the risk of some changes being enacted retroactively. That is important, as it can and perhaps should, affect how you make wealth transfers in 2021. That will be described below.
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Be Wary of Retroactive Income Tax Changes
Retroactive tax changes could also affect income tax changes. That might be less likely than estate tax changes being retroactive. That could be because of the complexity a retroactive income tax change might create (but do not read that as implying it cannot happen). Income taxes are paid in quarterly through estimates. A retroactive change could adversely affect the amounts taxpayers paid in through withholding taxes and estimated taxes all based on prior law. In contrast, estate taxes are due nine months following death so that a retroactive change might be a tad cleaner.
Example: You own commercial real estate and are considering a Code Section 1031 so-called “like-kind” exchange. This is where you swap or exchange an investment property for another real estate investment property and do not trigger gain recognized currently for income tax purposes. Under current law you can exchange real estate instead of selling it and avoid any current income tax costs. A repeal of section 1031 may be on the tax agenda. It has been talked about before. So, if you plan a 1031 like kind exchange you might be careful as Congress might enact a repeal (or restriction) and might make the change retroactive to January 1, 2021. So, you might wish to discuss with your real estate attorney whether it is feasible to incorporate into the contract documents that the transaction will be automatically void if the law changes before the transaction is consummated.
Some of the Possible Income Tax Changes
There could be a myriad of income tax law changes that the new administration will enact. The discussion below summarizes a few of the likely changes a Biden Administration might try to enact. Some of these changes could have a profound impact on estate, charitable and other planning as well. The tax increase changes will generally if not exclusively be targeted at higher income and higher net worth taxpayers. Several of the changes might be targeted at those earning $400,000 plus, some at $1 million plus.
Capital Gains Tax
Capital gains could be raised substantially. They have discussed doubling the tax on capital gains by taxing capital gains as ordinary income. It could even be worse as those gains could be subject to the 3.8% net investment income tax. Add to that state income tax if you live in a high tax state. So, the effective tax on capital gains over $1 million could exceed 50%. If this is enacted prospectively expect a tremendous amount of sales of assets before the effective date of that change.
Some commentators have speculated that a capital gains tax could also be made retroactive to January 1, 2021, but many think that is unlikely. Others suggest that such a change might be made effective January 1, 2022. Or there could be an effective date based on the date of enactment of the tax legislation. This will affect planning dramatically. It might prove to be advantageous to sell appreciated assets now and lock in the current capital gains tax rate.
If you sell assets on the installment basis you would pay tax when the proceeds received. You might instead prefer to elect out of the installment sale treatment for income tax purposes so that you have a gain recognized at the current and perhaps lower capital gains rate.
If capital gains rates are increased on gains over $1 million then consider the use of charitable remainder trusts (“CRTs”) to smooth out or reduce income. CRTs are exempt from tax. So, if you gift appreciated stock into the CRT and the CRT sells it no gain is recognized at that time. If you use a NIMCRUT you can postpone gain for up to 20 years. Perhaps rates may be lowered again in the future.
Another common income (and estate) tax planning technique is the use of a charitable remainder trust or “CRT.” With a CRT you can donate appreciated stock to a CRT. The CRT can sell the stock without realizing gain since CRTs are tax exempt. As you receive your periodic payments from the CRT (e.g., a unitrust payment) the payments to you will flow out income from the CRT to you. In other words, the cash flow distributed by the CRT to you as part of your periodic payments will be characterized based on the income earned by the CRT. So, if your CRT sold appreciated stock and realized a capital gain, that gain would flow out to you over many future years. If the capital gains tax rate is increased in those future years, using a CRT today might effectively defer your realization of capital gains income to later years when the tax rate is higher.
Should You Sell Assets Before Capital Gains Rates Increase?
It may prove advantageous to sell some of those appreciated assets in 2021 if the law change increasing capital gains to ordinary income tax rates only takes effect in 2022. When evaluating the guesstimated cost/benefits of selling now versus waiting also consider possible state income tax costs and planning. It may be advantageous to shift assets into an intentionally non-grantor (“ING”) trust in a trust friendly (i.e., no tax) jurisdiction so that state income tax can be deferred or avoided. You might for example, provide in such a non-grantor trust that distributions can only be made to a spouse with the consent of an adverse party. That mechanism may permit a spouse to benefit from trust assets, not undermine characterization as a non-grantor trust, and still permit avoiding state income tax on a large sale to avoid an increase in the capital gains tax. Note that in Rev Proc. 2021-3 the IRS will no longer rule on ING trusts so caution is in order. A non-grantor trust can be structured as a completed gift or incomplete gift. You can transfer assets to an incomplete gift trust if you have used all exemption, and still create a structure to avoid the state income tax on the sale. If you have exemption remaining that you want to try to use you can structure the non-grantor trust as a completed gift. Lots of options, but keep in mind the uncertainty, risk of retractive change, etc.
Charitable Giving
Charitable and other deductions might continue to be allowed under a Biden tax proposal, but the benefit may be less than initially perceived because of some of the limitations discussed later. Under current law you may receive a 50-100% charitable deduction, but all deductions are proposed to be limited to a 28% maximum benefit. In other words, if you are in a 39.6% the benefit of the contribution deduction might be capped at 28%. The Pease rule, discussed below, might also be reintroduced.
Social Security Base May Increase: If you earn compensation income of up to $142,800 under current law you would pay 12.4% Social Security tax on that income. But Biden proposals might leave a gap from that amount up to $400,000 on which no Social Security tax is paid. But once you reach $400,000 of income the 12.4% Social Security would again apply. So, under one Democrat proposal, if enacted, If you earned $1 million there would be another $74,000 of just Social Security taxes on those earnings (combined with the 39.6% income tax and state income tax). One approach to reduce this tax burden has been to organize as an S corporation and take some portion of earnings as salary subject to Social Security, and the remaining portion as S corporation dividends. But the IRS has been very successful in attacking many of these plans under a “reasonable compensation” approach. The taxpayer will have to take out a reasonable salary of what a similar executive might earn. Congress might close this planning technique down by saying if you are a personal service provider, e.g., a doctor, lawyer, architect, etc. you may not be able to do this.
Marginal Tax Rates May Increase: How might rates look? Today’s maximum income tax rate is 37%. President elect Biden’s proposal might increase this to 39.6% marginal rate. But also consider that certain investment income might still be subject to the net investment income tax (“NIIT”) of 3.8% making the effective rate higher still. Income tax rates have not generally been made effective retroactively as it makes tremendous complications with withholding and estimated taxes. So, the end of 2021 Roth conversions, accelerating gains, etc. may become commonplace.
Pension and Retirement Plans: Consider what might happen with pensions? They might restrict benefit of deduction to 28%. Consider that if you put money into a pension and can only get 28% benefit but when you retire and take income out it will be taxed at 39.6% will it make any sense? One problem is it is very tough to project what marginal tax rates will be in the future. Also note that qualified plan assets and IRAs (depending on state law) may provide asset protection from creditor claims. Thus, some taxpayers who are particularly concerned about liability issues might opt to maximize pension contributions even if not optimal from an income tax perspective.
Pease Limitation: May further restrict itemized deductions.
199A: This special deduction that permits a deduction to reduce the taxation of many businesses might be restricted. One possibility is that when you hit $400,000 of income the deduction may be reduced.
Corporate Tax Rates: These may jump from 21% to 28%. That might change the calculus of when to create a C corporation versus using a pass-through entity, what format to hold assets in, etc.
Roth Conversions: If income tax rates will increase, perhaps it is advantageous to convert a regular IRA to a Roth IRA and pay the tax now at lower rates. Consider charitable contributions, loss carryforwards and other ways to offset some of the gain if you convert an IRA to a Roth IRA. Many people do their own tax returns and get their advice on planning for IRA custodians that provide packaged investments. These taxpayers may not be able to get the sophisticated advice that is customized to their unique situation. Consider the impact of state income tax on a Roth conversion. That could also have an impact. There is no NIIT on a conversion. You also want to use funds outside the plan to pay the income tax. Roth’s provide tax free compounding which can be very valuable. Whatever you do with your retirement plan assets review your beneficiary designations in light of the Secure Act that was enacted in 2019 if you have not already done so. Most beneficiaries will no longer qualify for the so-called “stretch” payout so you need to evaluate the new options and perhaps update trusts and beneficiary designations.
Other Possible Income Tax Changes
There are many other changes that have been noted in various Democrat proposals, and no doubt the sausage making process that tax legislation is will result in a unique mix of many impacted income tax rules.
Step-Up In Income Tax Basis on Death
When you die most assets you own, under current law, have their income tax basis adjusted to equal the fair market value of the asset at the date of your death (or in certain circumstances 9 months later). So, if you purchased stock for $1,000 that is now worth $100,000, the step up would eliminate the entire capita gain if your heirs later sell it.
President Elect Biden has indicated he might eliminate the step up in income tax basis on death under Code Section 1014. That might revert to the tax system to what is referred to as a “carry over basis” system. So, the $1,000 you paid for the $100,000 of stock would carry over as the basis to your heirs. Worse, there is the possibility that a Biden administration might try to enact in the alternative a system analogous to the Canadian estate taxation regime where there is a capital gain tax assessed on death. There might be a combination of approaches, perhaps giving taxpayers an option to choose to remain subject to an estate tax and thereby also obtain a step up in income tax basis, or to instead face the loss of step up and avoid a capital gains tax on death. A recognition of gain at death would a be very far-reaching change that will have a significant impact on planning.
Consider that under current law many who are elderly or infirm intentionally hold highly appreciated assets until death to obtain a basis step up. In some instances, taxpayers create lines of credit to borrow against appreciated securities to avoid selling them. If a capital gains cost will be triggered on death that may eliminate the incentive to hold assets changing many estate planning, investment and other decisions.
Reduction in Gift, Estate and GST Exemption Amount
The exemption is an amount that you can transfer without incurring a gift, estate or generation skipping transfer (“GST”) tax cost. The current exemption for all three of these taxes is the same at $11.7 million in 2021. There are Democrat proposals to reduce the estate and GST tax exemption from $11.7 million to $3.5 million or $5 million (perhaps inflation adjusted or not). It is not clear what might occur, but a reduction seems likely according to many commentators. It might even be reduced lower. Will this be made retroactive? No one knows. While it certainly seems inherently unfair to make such a change retroactive (you made a gift thinking it was tax free then a retractive change might make it taxable) that might occur. Of all changes to the estate tax rules that might be retroactive this is suggested by some commentators to be one of the more likely. Such a change will profoundly change estate planning and subject millions of taxpayers now unaffected by estate tax, to the tax. The critical and urgent planning message of this possibility is that for those taxpayers that did not consummate estate tax transfer planning before the end of 2020, or who did not do as much as perhaps they should have, they should act immediately. There is no assurance that planning will succeed given the uncertainty about the effective date of any such changes. It would also seem that the longer you wait in 2021 to plan, the greater the risk that a change in the law may become effective before you complete your planning.
How to Use Exemption Now While You Can (Maybe!)
What is the efficient way to use exemption now? Gifts to irrevocable trusts are the preferable way to give. A robust trust can provide considerable flexibility. For example, the trust may include a disclaimer provision that could be used to unravel the gift if it is determined to be undesirable, the law does not change or that there is a retroactive change in the law rendering a non-taxable gift taxable. The trust might also provide flexibility to shift income among a class of beneficiaries which could be useful depending on the other income tax changes that are enacted. Be certain to carefully consider how much access you can directly or indirectly have to assets transferred to a trust. On one hand, you want sufficient access so that you do not face financial hardship. But any means of access, on the other hand, needs to be balanced against the increased risk of IRS challenge to the plan or a creditor being able to reach the transferred assets. Means to access assets in an irrevocable trust might include making a spouse a beneficiary, creating a self-settled domestic asset protection trust (“DAPT”) that you are a beneficiary of, creating a so-called “hybrid-DAPT” which is a trust for heirs (e.g., for spouse and descendants) for which you are not a current beneficiary but to which someone acting in a non-fiduciary capacity can add you as a beneficiary), etc.
What do taxpayers do that cannot easily transfer “assets” to use the exemption now? It may be possible to borrow against the assets and gift the cash borrowed to a trust. That may shift value out of your estate using exemption and the asset that could not be transferred (e.g., because of legal restrictions) remains in your estate but is reduced by the amount of the borrowing, thus lowering your taxable estate.
Grantor Trusts
Grantor trusts are the foundation for many estate planning techniques. Grantor trust are trusts for which the income is attributable to the settlor so that the settlor not the trust pays income tax on trust income. Revenue Ruling 85-13. Thus, you can sell assets to a trust that is a grantor trust as to you, and not recognize gain for income tax purposes on that sale. There are Democrat proposals to include assets held in grantor trusts asset in the settlor’s estate on death, or to subject assets in such a trust to immediate gift tax if the tax status of the trust is changed.
Planning to Address Possible Retroactive Change in Exemption: What if you make a gift and Congress retroactively changes the exemption? The exemption today is $11.7 million. You gift that amount, to safeguard and preserve your entire exemption, to a trust. In June Congress passes new tax legislation and makes the gift exemption a mere $1 million retractive to January 1, 2021. Did you just make a $10.7 million taxable gift? Seems that way. What can you do to avoid or mitigate this possible risk of an unintended gift tax consequence? There are a number of options that you might consider for any 2021 gifts given this uncertainty. You could make a gift to a martial-type trust (QTIP-like trust) if you are married and make a QTIP election on the gift tax return reporting that gift. That would avoid a taxable gift. You could, for example, make a marital QTIP election for $10.7 million of the gift leaving the $1 million taxable gift to be offset by your new reduced exemption. If your estate is large enough for you and your spouse to each do this type of $11.7 million transfer you have another issue to consider. If both spouses do this similar plan it could be problematic under the reciprocal trust doctrine. That doctrine could “uncross” two too similar trusts and unravel the plan. So, this approach might be safer if used by only one spouse to transfer $11.7 million.
Make a Formula Gift: Another approach to use is to make a gift to a trust using a formula. The transfer documentation transferring assets to the trust could gift that fractional share of the asset the numerator of which is your available gift tax exemption, and the denominator of which is the full value of the gift as finally determined for gift tax purposes. You could contribute assets into a limited liability company (“LLC”) and make a transfer of a fractional interest in the LLC to the trust. The Numerator should consider the possibility of retroactive changes in exemption amount. So, it might be worded to be your gift tax exemption, reflecting a retroactive tax law change, if any. This concept is based in part on the Wandry case which respected a formula gift. Wandry v. Commissioner, T.C. Memo 2012-88. Also, be certain to use appropriate language in the formula “as finally determined for federal estate and gift tax purposes.” In the Nelson case the taxpayer did not use the appropriate terminology and lost. Nelson v. Commissioner, T.C. Memo 2020-81. Also, consider how to tailor this type of formula clause. What if the GST tax exemption is different then the gift tax exemption? Do you need to have different formula clauses for each tax? If you are gifting a group of assets, you should also consider ordering. Which gift should exemption be allocated to and which should it not be allocated to? A prioritization of allocations might be advisable to include in such instances.
Disclaimer Strategy: There is yet another approach you might consider in planning 2021 gifts to perhaps address the risk of a retroactive tax change. If you make the gift transfer of assets into a family trust and provide in that trust instrument that your spouse (for example) shall be treated as the principal beneficiary of the trust. And if your spouse disclaims (renounces) all his or her interest in the trust, and to the extent the spouse disclaims it does not move down to other beneficiaries as if the spouse died (the typical result of a disclaimer), but rather the asset reverts back to you as the donor. This might avoid an inadvertent gift tax if there is a retroactive change in exemption amounts. You might you are your spouse disclaim to the extent the transfer exceeds the exemption amount if the exemption amount is changed. That disclaimer must be filed before the end of nine months. Be certain spouse does not accept any benefit from the trust before exercising the disclaimer. Disclaimers are governed by Code Section 2518.
Rates: Consider that under Sanders tax proposal estate tax rates were to increase. So, higher estate, gift and GST rates may be a possibility.
Discounts: When an asset is valued for gift and estate tax purposes, the value may be reduced if you transfer (for gift tax purposes) of if you own (for estate tax purposes) a non-controlling interest in an entity. For example, if you own 25% of a family business worth $10 million, your 25% might be valued at less than the pro-rata $2.5 million because you have no ability to control the enterprise, distributions, liquidation, etc. These so-called valuation discounts may be eliminated in Democratic tax legislation. So, it may be advisable to engage in transactions now to lock in discounts.
Example: If your spouse died and left you valuable assets in a marital trust (or outright) those assets may be taxed on your death. It might be advantageous to consummate transfers now, while discounts remain possible. You might consummate a sale from a marital trust (a “QTIP” trust) to lock in the low interest rate and discounts which may be eliminated. What should you consider on a sale from a QTIP trust to a non-grantor trust? What about Code Section 2519? This Code Section says if the surviving spouse relinquishes any of her income interests in a QTIP trust, she will be deemed to have made a gift of the entirety of the trust. Estate of Kite v. Comm'r, 2013 T.C. Memo. 43, 105 T.C.M. 1277, 2013 Tax Ct. Memo LEXIS 43. Instead, perhaps you should invade the trust and have the surviving spouse make the sale. That might be safer. But be certain that if you make a principal distribution the trust permits that. Consider bifurcating the QTIP. If the QTIP is divided into two QTIP trusts and only the portion holding the stock to be sold consummates the sale perhaps the second QTIP will be insulated from an IRS 2519 attack. Note, however, that the Kite case included rather extreme facts and how and to what extent it may be applied in lesser situations is not certain.
GRATs: Grantor retained annuity trusts (“GRATs”) are a technique in which you gift assets to a trust in exchange for an annuity. Any growth in the value of trust assets above the annuity amount can inure to your heirs (or preferably a trust for them) gift tax free. This technique may become extinct because they may require 25% of the transfer as a taxable gift which might make the technique impractical to use.
Generation Skipping Transfer (“GST”) Tax: The Democrats have discussed assessing a GST tax on long term trusts every 50 or 90 years. This proposal is not a revenue raiser for the government, but it is primarily a social objective of minimizing the concentration of wealth.
Annual Exclusions: There is a proposal to cap these at $20,000/donor. Presently it is $15,000 per donee.
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c98e69d7b7b1be681ef1488f9af54069 | https://www.forbes.com/sites/martinsosnoff/2011/06/14/is-your-portfolio-1961-chateau-latour/ | Is Your Portfolio 1961 Château Latour? | Is Your Portfolio 1961 Château Latour?
It's good...will it last?
At our Memorial Day dinner, chez moi, good friends, Arthur and Kathy, brought along a single bottle of ’61 Château Latour. Now 1961 is a great year, the Latour still holds its fruit, no residue of tannin with a beautiful nose, sort of tobacco-like and cedary. This can be a three-dimensional experience, but don’t spend $2,500, what Latour ’61 auctions off for nowadays.
I grilled Arthur on his bottle. A friend had presented this gem 30 years ago, but he’d stored it upright in his closet since then.
“You’re a moron, Arthur,” I told him. “This wine can’t possibly be good. It’s pure vinegar by now. You’ve committed fratricide, infanticide, even moneycide.”
“I forgot I had it,” Arthur gulped.
“This wine died 20 years ago, alone in your closet, probably at 80 degrees and no humidity.” I showed him the disintegrated dried out cork and then decanted his bottle.
Surprise! When I sniffed, sniffed, sniffed, the bouquet came through as pure cedar closet with the hint of a Siglo 6 Havana.
“This is impossible,” I said. “The wine may have survived your stupidity.” I poured a dash in my wine glass swirled it around and sipped. The wine was a survivor, a hundred to one shot in the Kentucky Derby, gamely holding off the closing favorite, The Closet, at the finish line.
“Luck of the Irish,” I told Kathy, a shiksa – from the Texas Panhandle. “This is one for the record books. I’ll consult my wine library to see if there’s a precedent for this miracle.”
First, I scanned Robert Parker’s opus “Bordeaux.” Parker agreed with me or better I agree with Parker: “A remarkably viscous, huge, intense wine that is one of the biggest and richest wines I have ever tasted from Latour… A phenomenal bouquet of walnuts, cassis and cedar inundates the nose…. The 1961 Latour has the potential to last a hundred years. Anticipated maturity 2000-2050.”
Finally, I grasped why Arthur and his shiksa couldn’t destroy their lone treasure held in bondage in a stuffy closet. It was too muscular to smother, even in a stale dungeon.
Then, I turned to Michael Broadbent’s “Vintage Wine.” Broadbent and Parker have my respect above all other wine meisters. Broadbent is a weather freak who points out that both the 1945 and 1961 Bordeaux vintage were subjected to frosts and heavy rains, respectively, thereby reducing crops to small, thick skinned grapes producing deeply colored, concentrated and tannic vintages. Broadbent, in my dated 2002 edition, last tasted this beauty in September of 2000. He noted, “It will go on.”
“So, Arthur, learn something from your carelessness," I admonished. "You probably took 40 years off the life of your ‘61 Latour bottle, but got away with it. Don’t do it again.”
My lesson is something else. Never be too dogmatic and definitive about wine or even financial markets. In the worst of times survivors pop up. Resiliency is one of the dominant themes in developed countries. I’m not sure about Greece, but the U.S. won’t sink into the mud for more than a handful of years.
I looked at my portfolio and asked myself is it possibly comparable with a 1961 bottle of Latour carelessly stored in a hostile setting? Could it last 100 years?
In the junk bond sector, my decision was to avoid duration risk with a few exceptions. Average duration is seven years. I assume all my callable preferred stocks will be called sooner or later at $25, but they are mainly bank preferreds bought at the bottom of the market in April of 2009, in single digits. They yield seven percent.
I’ve learned a painful lesson. The Bank of America preferred was bought at the same time I bought the common stock, both at $7.50. Today, the preferred trades near $24, but the common has withered to below $11 from $19. If the bank stayed in business the preferred had to trade up near its call price. The common stock needed an earnings story to match the preferred’s trajectory.
So far, no earnings story in Bank of America. Its mortgage portfolio is a long-term workout and the bank will be sued until the “twelfth of never.” Litigation reserves even for JP Morgan are measured in multi-billion dollar traunches, destined to be fully tapped next couple of years.
In the junk bond portfolio, two positions doubled. Continental Airlines and Florida Power & Light’s hybrid issue that converts in seven years to yield LIBOR plus some 333 basis points. The airline position was analogous to a shaky bank preferred. Bought at the bottom of the cycle, the only variable was its survival. Continental’s income statement showed it was cash flow neutral even in the recession setting, a good indicator.
The FPL Capital investment was a curious anomaly. Institutional investors turned up their noses on hybrid bonds, hesitant to take the interest rate risk if LIBOR remained minimal. I checked a long-term chart on LIBOR and drew a trendline through the 3 percent level. This was good enough to postulate that this bond would yield 6.5 percent in its outer years. Trading at $105, there are no offerings today.
In 2009 you could inventory at par bonds like Valero, Altria, Lubrizol and Rio Tinto, all carrying 9 percent coupons. This B paper now trades above $130, yielding 4 percent. The country remains yield starved. You need to go down to single B rated paper with a 10-year duration to obtain a 6.5 percent return. My B paper could be the best asset class in 2011, bar none, worldwide. You don’t need a three-day seminar to figure it out or worry about how many iPads and iPhones Apple ships.
My equity portfolio continues to evolve towards a defensive construct. The Bank of America position is gone and I banged out brother ragamuffins in financials. But, I’ve added to my MetLife holding. This is a conservative but soundly managed property with $5 a share in earning power selling at eight times earnings. As a potential 13 percent return on equity company, it should sell at 12 times earnings in a couple of years. We’ll see. The only prospective negative is long term interest rates remain low for more than a couple of years.
The HMO’s have gotten my money, namely Wellpoint and UnitedHealth. Fundamentals are sound and they sell at 10 times free cash flow which foretells share buybacks, deals and rising dividends. Eventually, when interest rates elevate their multi-billion dollar investment portfolios, state mandated reserves, must throw off a higher rate of return.
My tech stocks rest properly aged but obviously volatile. They include Apple, Baidu (the Google of China) EMC, Oracle, Juniper, Amazon and QualComm. If a recession is coming, not my call, I shoulda sold them months ago.
As for growth stocks, their trajectory towards maturity normally last no more than five years. Ten at most. Maturity, for a first growth vintage wine is 25 years or so, but then it plateaus for a couple more decades. Inventorying wine is a one-decision endeavor. Sadly, one-decision investing is forever a life-threatening construct.
Martin T. Sosnoff is chairman and founder of Atalanta Sosnoff Capital, a private investment management company with more than $11 billion in assets under management. Sosnoff has published two books about his experiences on Wall Street: Humble on Wall Street and Silent Investor, Silent Loser. He was a columnist for many years at Forbes magazine and for three years at the New York Post. Sosnoff owns personally and Atalanta Sosnoff Capital owns for clients the following stocks cited in this commentary: Bank of America, Continental Airlines, Florida Power & Light, Valero, Altria, Lubrizol, Rio Tinto, Apple, MetLife, Wellpoint, UnitedHealth, Baidu, EMC, Oracle, Juniper, Amazon and Qualcomm.
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f34d137e7643bcce099ae038af4cc89f | https://www.forbes.com/sites/martinsosnoff/2011/08/10/winning-hands-in-the-battle-for-investment-survival/ | Winning Hands In The Battle For Investment Survival | Winning Hands In The Battle For Investment Survival
The sky is not falling
The bare bones numbers adumbrate deflation and tensions. Swiss francs, gold and 10-year Treasuries put away all other investment categories inclusive of corporate bonds, municipals and of course, equities, worldwide. Leave aside Swiss francs. All of us coulda leveraged ourselves in gold and played volleyball on the beach.
This is another way of saying just be right on your macro calls; keep it simple and preserve liquidity. Invest in strong currencies and buy bonds in deflationary economies like the USA, just so long as they’re unlikely to implode from too much debt service and credit downgrades.
After last Thursday’s sinking spell on the Big Board and then this Monday, stocks fell into painfully negative territory, down 10 percent year to date as financials and industrials imploded. Many of us feel recession lurks around the corner, or if not recession, near zero GDP momentum. Iconic industrials like Ford, Caterpillar, Cummins and US Steel are either making new lows or sank 25 percent or more from highs made this past spring.
Long only stock market operators found nowhere to hide either in domestic markets or abroad. The emerging market index is down 13 percent, with the Russell 2000 Index of small capitalization properties off 16 percent. Greece stands down 80 percent from its high water mark as recently as 2008.
Coincidentally, our NASDAQ Index from its bubble high in 2000 dropped 80 percent before recovery, now standing down 50 percent from its peak. Overvaluation sooner or later bites you. I am turning allergic to cloud computing properties selling at 25 times forward 12 month earnings. Conversely, I’m adding to cheap but viable properties like MetLife, Microsoft and News Corp. – all below 10 times current earnings power. MetLife, actually is at 7 times my $5 a share projection. Forget deals, fellas, buy back your stock, gobs of it.
Value properties suck. The disparity between growth and value indices widened to over 400 basis points, reflecting doubts about energy prices, banks and industrials in a stop ‘n’ go economic setting. Oil stands below my $90 a barrel projection for this year while banks can’t muster any revenue momentum while the net interest margin on loans outstanding remains flattish.
There is a deeper basic for the market which relates to where profit margins stand currently for major corporations. My work suggests margins are above trend relative to normalized profits for where we are in the economic cycle.
The disparity is nowhere near as great as it was in 2006 and neither are price - earnings ratios, but nevertheless, the market already senses this could be the pivotal variable in the S&P 500 Index earnings. The Street is at $95 this year and over $100 for 2012, but I expect the consensus shortly comes in with downward revisions. I’m OK with the $95 a share number, but next year I shade this projection to a tentative $90 a share.
Not the end of the world for the market. We’ll remain in a super low interest rate setting. With the collapse in commodity prices, inflation mirrors the cellophane man, near invisible. The big plus is real inflation, inclusive of food and energy, comes in. This bolsters real disposable income for consumers, something we don’t have now. It’s why savings rates are rising and personal consumption expenditures turned flat in the second quarter.
Unless you believe in major Federal initiatives to create employment, it’s hard to move my GDP number for 2012 past the 2 percent level. So, Republicans will pray for a short recession and an election victory. I assume the suits throw their bodies in front of any stimulus initiatives unless unemployment breaches the 10 percent level. The most I see is an extension of the payroll tax abatement and the safety net for the jobless, but even such minimal gestures are not a certainty.
Indirectly, the pugnacious gridlock in Washington impacts price-earnings ratios negatively. Nothing gets done in time to have any impact on the country’s stall-out time. I don’t care how low interest rates and inflation go, equity valuation remains under pressure.
Euroland is a near disaster with no final fix possible without massive write-downs in national debt covering Greece and probably Spain, Italy, Portugal and Ireland. The bill could reach a trillion Euros with major European banks needing massive equity infusions to cover write-offs and remain solvent.
Is it any wonder the Swiss franc rose 25 percent? The financial world craves the stability of low debt encumbered countries no matter how small. You don’t need to grow GDP just don’t run fiscal deficits of any size.
As for the bond market, the biggest surprise and disappointment is my portfolio of high yield paper stands upstaged by 10-year Treasuries and AA municipals which require no serious due diligence. High yield corporate debentures need scrutiny as to EBITDA coverage of the underlying debt.
My BB rated doggies with 5-year duration year to date returned about 6 percent which is better than the Barclay’s high yield index of 5.0 percent. There are material divergences among high yield indices. BB paper did better than the single B category by almost 100 basis points despite a big yield disparity favoring the single B’s, yielding to worst call at 7.36 percent vs. 6 percent for BB’s.
When I compared rates of return for muni paper and Treasuries with comparable duration, I came in second. Barclay’s main index of muni bonds rose 6.95 percent year to date, better than my trash and tax adjusted, far better. Meantime, Treasuries with comparable 5-year duration came in over 7 percent while paper with 7.67 year duration rose 8.26 percent, far exceeding corporates and muni bonds with comparable duration as well as emerging market debt.
Depending on where you sit, conclusions from all this ciphering can be exhilarating or depressing. If you’re a pure long equity player the disparity in your performance vs. any fixed income sector just widened markedly in favor of bonds. The S&P 500 Index, quarter to date, is negative by 14 percent while the 10-year Treasury yield, recently 3 percent now stands at 2.4 percent, a level not seen since Eisenhower was our President in the early fifties.
In the bond sector, quality beat junk and Treasuries beat munis, but not tax adjusted. Long duration paper, always dangerous, outshone the 5-year duration players (me). With the pot boiling over in Euroland, gold of course topped everything with maybe a few esoteric exceptions somewhere in the world, like Swiss francs.
Keep your investment schemata as simplistic as possible. If right on the money with your hypothesis stay the course. It bothers me that I coulda bought 10-year Treasuries instead of working like a dog doping out junk bond paper. Sisyphus, anyone?
Ironies abound. Standard & Poor’s downgrades the USA after abetting the collateralized debt obligation fiasco by rating toxic paper as AAA goods. Treasuries rise despite the downgrade. Wars in Iraq and Afghanistan cost over a trillion. Obama’s trillion dollar healthcare initiative stands ill timed. Absent these abominations, the country would have boasted the wherewithal for major infrastructure initiatives that create jobs and sugar stream GDP momentum.
Credit rating houses like S&P should stay out of the ratings game for countries. Markets do it better. Let’s indict these mothers for complicity in the financial meltdown in 2008 – ’09. Managements at Moody’s and Standard & Poor’s should stand jail time for their dirty ratings on mortgage derivatives. I’m serious. Italian and Spanish national debt sells to yield over 5 percent which is what a BB corporate bond yields here. There’s no contest between U.S. corporates and any of the weak euro sisters’ 10-year paper. Buy America!
Corporate America is in better shape financially and competitively, worldwide, then I’ve seen it in decades, even GM. Compared with bonds, stocks act like doggy playthings but in the long run outperform bonds. When does the long run begin? Maybe from the 1100 level after the market finishes discounting everything that can go wrong. Let the long run start sooner rather than later. At my back I hear Keynes quip. “In the long run we’re all dead.”
Martin T. Sosnoff is chairman and founder of Atalanta Sosnoff Capital, LLC, a private investment management company with $10 billion in assets under management. Sosnoff has published two books about his experiences on Wall Street, Humble on Wall Street and Silent Investor, Silent Loser. He was a columnist for many years at Forbes Magazine and for three years at The New York Post. Sosnoff owns personally and / or Atalanta Sosnoff Capital owns for clients the following investments cited in this commentary: Ford, MetLife, Microsoft, News Corp. and General Motors.
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17b0b7da07bf1f9a0b359b2aefa59f05 | https://www.forbes.com/sites/martinsosnoff/2018/12/26/gimme-a-10-discount-for-trump/ | Gimme A 10% Discount For Trump | Gimme A 10% Discount For Trump
President Donald Trump. Photo credit: Associated Press Royalty Free.
For certain, the Prince of Swine who bestrides the White House has carved a snake pit out of our majestic Capitol. Don’t despair! Our country’s amply broad-based with a competitive industrial heartland and Silicon Valley, still viable, holding technological primacy, worldwide.
Sadly, we’re saddled with one dumb-bunny Federal Reserve Board. They don’t get it. The country’s problem is impending deflation, not galloping inflation. Start with home prices, then move down to depressed oil and gas quotes. Demand weakness for steel, aluminum and copper - all basic materials - awaits tariff settlement with China. But, worldwide overcapacity is a given for raw materials for years to come.
In the Western world, fiscal health becomes a nostalgic memory. Sluggish gdp numbers plague England, France and Germany. Same goes for Japan and now China where too much debt is their precarious way of life. Interest rates for 10-year paper dwell near 20 basis points for England, Germany and elsewhere, even near zero in Japan. You don’t find this pattern in our entire financial history.
Consider, fiscal spend in socialist countries like Norway and Denmark takes the cake with a national ratio above 60%. Over here, personal consumption expenditures range into high 60s relative to gdp. Unlike France, we can avoid a sizable value added tax to fund our budget. The argument over allocating $5 billion for a start on Trump’s wall resonates politically, but is a nominal number, not much more than the cost of an F-15 squadron.
Conflicting ideologies, not the coming budget deficit’s growth separate both our parties. The conceit of shuttering the government disturbs me because it adumbrates brittle minds at work. After all, the French Revolution was triggered by a bad wheat harvest in France. The price of bread in Paris doubled practically overnight. King Louis XVI had provided no grain storage facilities for a rainy day. The nobility paid no taxes so heads rolled. Even in biblical times, the Egyptian pharaohs built grain storage facilities. Ask Moses.
Mid-80s, in the streets of Copenhagen, I recall a silent demonstration by bicyclists. The issue was nationwide unemployment. Thousands pedaled by, sporting impeccable double files. I needed to street cross so I breached the convoy and got the finger from a gray-bearded Dane. Over there, they dwell in neat white-washed cottages, window frames trimmed bright red. Square footage is forever tight so night time, downstairs living rooms get flip-flopped into bedrooms.
This is the most enlightenment socialism delivers, even 35 years later. Over here, the market is sniffing the air, sensing presidential power peaking. Does Pinocchio get his comeuppance? Nobody of any stature may opt to join his cabinet; others may resign and go public with their grievances.
I thought of all this while at my Bloomberg terminal. A bunch of proud triple-digit stocks, starting with Apple, were busy bouncing off new lows for 2018. A once proud Goldman Sachs now sells at book value and 10 times earnings. I bought some. UnitedHealth Group is wobbly along with bank stocks. The great franchise in aerospace known as Boeing now sports a bad chart. (I bought more.)
Schlumberger has become a yield stock, over 5%, but nobody cares. Investors fear AT&T’s fundamentals despite its 7% yield. Better than a single B debenture. What holds up Berkshire Hathaway with 40% of its stock portfolio in banks, another 25% or so in Apple, whose coterie of analysts sticks with a $250 price point. Hopefully, Apple has new toys to sell, not just add-ons.
The latest punditry survey covering the Street’s major houses disturbs me with forecasts of a 3,000 Standard & Poor’s Index in sight. In other words, they expect the market to gain 20% in 2019. Let them show me how to get there. The price-earnings multiplier even at 15 is tough to rationalize.
Using sector to sector analysis on the S&P 500 I come up short. The concept of buying companies with great franchises stopped working. I’m not talking just about Apple. AT&T, even Microsoft and Goldman Sachs have wilted. Old-line industrials like United Technologies, DowDuPont and Caterpillar got trashed along with big energy names starting with Exxon Mobil, then Schlumberger. Unless energy quotes show late foot and gdp accelerates, they’re iffy plays here. Problem for industrials is they’re still too highly priced.
Chances are, earnings forecasts for the S&P 500 at over $170 a share fall short in 2019. Where’s the dream in Wells Fargo, Citigroup, even JPMorgan Chase? If the market is efficiently priced, currently, assume on any new whiff of fish, a takedown of 10% rests in the cards.
But, don’t get too invested in an unfolding bearish scenario. When companies with primacy in their sector get trashed, I reexamine their fundamentals. Not just book value, yield and historic price-earnings ratios. I’m partial to metrics like the multiple of operating cash flow and corporate free cash flow yields. Unless a company’s earnings history is viciously cyclical or it's losing market share, take a look-see.
Relatively safe yields over 5% get my attention. When an historically good operator like Goldman Sachs sells at 10 times earnings, I’m interested, too. Schlumberger got cut in half but yields 5%, No trigger pulling as yet. If Facebook holds onto operating cash flow numbers approximating its third quarter level, the stock cries out as statistically cheap. Who dares model this enigma today? How many more shoes drop on their brazen monetization of users? I dug down to the bottom of my shoes and tore off a block.
Reviewing my short list of beaten-down stocks, probes cover Microsoft, Goldman Sachs, Facebook and Boeing. Destruction of materials stocks like U.S. Steel, Alcoa and Freeport-McMoRan don’t tempt me because they still flounder in a slowing gdp setting. Dividend payout ratios forever stand meager.
The Street must absorb its residual optimism pounded out of it. This can put the S&P 500 Index closer to 2,200, at 13 times forward 12 months’ earnings power. Nobody’s call as yet, but mine. Once I whiff revived speculation in the air, I’d put 10% of assets in the NASDAQ 100 Index. Axiomatically, what seems so foolish at the time and hardest to press the button on, makes you the most money. True for real estate, contemporary art, even oil futures.
I’d be happy to give Trump credit for the next bull market. He’ll take it, anyhow.
Sosnoff and / or his managed accounts own: Goldman Sachs, UnitedHealth Group, Boeing, AT&T, Microsoft, Wells Fargo preferreds and Facebook.
msosnoff@gmail.com
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e67b250a2f34e7d2fb26a8257744dd75 | https://www.forbes.com/sites/martinsosnoff/2019/01/07/dont-dare-wannabe-smartest-guy-in-the-room/ | Don't Dare Wannabe Smartest Guy In The Room | Don't Dare Wannabe Smartest Guy In The Room
Apple logo. Photo credit: AP Royalty Free.
Smartest guy in the room owns bank stocks coming out of his ears. He sits, Warren Buffett, with an Apple position worth $28 billion at its high, equivalent to Berkshire Hathaway’s outsized Wells Fargo holding. Both dismal performers past six months. Apple traced the right side of a sombrero formation, down from $230 to $142, nearly a 40% wipe-out. Wells Fargo fell a polite 20%.
Stepping back for a wide-angle shot on the market’s range for 2019, first consider the extraordinary bullishness of The Street’s pundits on S&P 500 earnings power. Despite mute forecasts for gdp, not much more than 2% growth, The Street has the S&P 500 median earnings at $175 on which they put at 17 price-earnings ratio.
There is no backup for a 17 multiplier for the market. Even with low inflation, low interest rates and some earnings growth the market rarely sustains a multiple of more than 15. In their business hats, they press to sustain share volume, attract money management assets and keep the pot boiling for deals and underwritings. Wall Street holds to a brave face for 2019.
I can’t find any leftover bulls in bank stocks, but the busload of the analysts who follow Apple still wax unflappably constructive. This is Stupidsville-on-the-Hudson. Many held to a price target of $225, just marked down by 20% to $180, Apple ticking at $146.
I put Apple at $120, trading at 10 times earnings power, like an appliance manufacturer sporting a strong balance sheet. No specific new toys, but add-ons, like an innovative Japanese producer of color TV sets.
Too early for bottom fishing. Forget about $2 stocks like Chesapeake Energy. Single digit paper like Ford leaves me cold along with Freeport-McMoRan. Materials plays like U.S. Steel and Alcoa float dead in the water, when the overriding theme for the country is deflation, not inflation. Tell the dumb bunnies at the FRB.
As for growthies, Apple’s iPhone numbers look toppy with dozens of analysts still pounding the table with a price point at $225 or better. Amazon holds its territory as the premiere e-commerce play, but too pricey for my tastes. I’m probing Facebook and Alphabet, but nobody’s forecast of quarterly earnings is ever on the money. We’re in No Man’s Land.
Still disinterested in heartland stocks like Caterpillar, DowDuPont, 3M and United Technologies. My exception is aerospace where I’m committed to Boeing whose aircraft backlog rests in sold out territory for years to come at good prices. The free cash flow yield is enormous, maybe 9% barring a worldwide recession and order cancellations. Any property with a free cash flow yield over 5% gets plenty of attention sooner or later.
I’ve a handful of value stocks too cheap to sell out. (The value investor’s dilemma.) My ragamuffins embrace AT&T, General Motors and Plains Group Holdings. All high yielders in a world starved for income producing paper. My call is flattish interest rates worldwide, at least through 2019. AT&T yields almost 7% with Plains over 6%, comfortably secured by its distributable cash flow.
Nothing’s a lay-up. If AT&T’s acquisition of Time Warner is overturned by the courts, it becomes a wasting asset as disconnects in cable are accelerating. They badly need streaming capacity and product to compete with Netflix.
Destruction in energy plays is profound. Schlumberger cut in half, yielding over 5%. Halliburton, a train wreck, while staid properties like Exxon Mobil trade near long-term lows. Shale oil proliferation in the Permian Basin makes the U.S. into a net exporter of oil and LNG. We are talking millions of barrels. Hard to see Brent crude futures in more than a trading range for years to come.
Other sizable sectors of the S&P 500 Index leave me skeptical, but not disinterested. Start with financials, victimized by the flattened yield curve driven by the Federal Reserve Board. They relentlessly quarter pointed ‘em to death warmed over. Price-earnings ratios rose to mid-teens early in 2018, but now dwell closer to 10 times earnings power. Historically speaking, bank paper selling at 60% of the market’s multiplier is the right ratio so any good news drives them north.
Goldman Sachs is so beat up, selling at book and 10 times earnings that I’ve taken more than a probe. Assume their fraud caper ends up costing them between $5 billion and $7.5 billion. This is manageable on a $75 billion equity base.
Other sectors of the market leave me disinterested. Not because earnings aren’t sustainable, but because price-earnings multipliers rest too high. This covers healthcare, consumer staples and consumer discretionary sectors, one-third of the market’s valuation. Let somebody else own Coca-Cola.
Hard to see utilities, telecom services and materials leading the market. Dividend bumps are in pennies per share. You could make the argument that AT&T’s dividend is already too high considering its highly leveraged capital structure.
The big unanswered question is whether technology, the major market sector, over 20%, can continue to show sizable earnings momentum in a diminished setting for gdp here and rest of world. I’ve cut back to a 50% market weighting for tech which now stands in “show me” space.
The tech bubble of 2000 still is a fresh memory, at least for money managers. Large cap tech houses then sold at over two times the S&P 500 Index which traded over 20 times earnings. It took the Nasdaq Composite Index over 15 years to recover to its peak of 2000. Microsoft sold at 14 times price-to-sales with Qualcomm at 19.5 times and Oracle at nine. Utter insanity!
By comparison, today, Facebook with a revenue run rate of say $60 billion sells at 6.3 times revenues. No longer in the clouds, but pricey enough. Nobody can calculate the operating profit margin take-down to earnings as management restructures to eliminate gross abuse of its user base.
In investing, you are what you do, not what you say. Here goes: I’m some 35% invested in the market, the remainder in fixed income plays. No Treasuries. Just high-yield bonds with average duration of five years or so. Quality of paper is BB so I’m getting a 6% return. I don’t figure recession is around the corner, just slow growth. Worry over fixed charges coverage for BB paper is dissipating even in a 2% gdp setting.
My biggest position is Boeing with Facebook, AT&T, Goldman Sachs, Microsoft and Alphabet runners-up. If necessary, I could check out in about 30 seconds, electronically. Wouldn’t surprise me if I do better in high-yield paper than in equities this year.
Biggest existential risks in the market no longer the Fed or our president. Rather, murky overvaluation stemming from irresponsible 2019 earnings forecasts. Wall Street can be its own worst enemy.
2019s Critical Insights:
Market P/E still 10% pricey. Shorter duration BB debentures best S&P 500 Index by 10 percentage points. Deflation, not inflation, surfaces as core issue. No comprehensive remedies forthcoming. Contrary investing pays off big. Buy Boeing, Goldman Sachs, Facebook and AT&T. Oil hangs in oversupply with Brent crude averaging $60 a barrel. Energy plays languish, even high yielders like Schlumberger and Occidental Petroleum.
Sosnoff and / or his managed accounts own: Wells Fargo preferreds, Chesapeake Energy bonds, Freeport-McMoRan bonds, Amazon, Facebook, Alphabet, Boeing, AT&T, Plains Group Holdings and Microsoft.
msosnoff@gmail.com
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40f72e4c119296b8bcd039ee23ac4b41 | https://www.forbes.com/sites/martinsosnoff/2019/01/15/thirst-for-yield-quenchable-with-bb-rated-paper/ | Thirst For Yield Quenchable With BB-Rated Paper | Thirst For Yield Quenchable With BB-Rated Paper
AT&T logo. Photocredit: © 2018 Bloomberg Finance LP Royalty Free © 2018 Bloomberg Finance LP
Tight spreads, what we now have, can last for years. Spreads contract when GDP accelerates because nobody is concerned with declining fixed-charges coverage. BB corporates rose over 14% in 2014, the best return for all U.S. asset categories excepting the Nasdaq 100 Index.
I sense we’re facing a comparable situation today. Don’t despair. Economists, even traders rarely catch inflection points. I’ve learned to do all the work but then follow my gut feel. This tells me that risk aversion now is overdone. Buying quality bond paper won’t do.
Same goes for stocks. Five years ago, Exxon Mobil stock traded at par. Then, retracement began in a declining head and shoulders chart, a most bearish picture. Of late, Exxon probably touched bottom at $65. Present dividend yield, 4.4%, is double the Big Board’s median, but it doesn’t compete with AT&T at 6.5% or even Schlumberger’s 5%.
The thirst for yield is quenchable but not with a Coca-Cola or PepsiCo. Turn down money market funds at 2% and say no to brokerage house offers of “guaranteed” funds, some even below 2%. Ten-year Treasuries yield 2.5%.
The Street just got busy marking down yield projections on 10-year Treasuries to 3% by year-end, not 3.25%. Fewer bumps coming from the FRB— maybe, none. Corporate debentures key off yield expectations on 10-year Treasuries. When you refer to historical spreads in a benign setting, bedrock findings resonate.
First, focus on the real yield for 30-year Treasuries. This determines not only attractiveness of the stock market, but whether the bond market is playable. When such paper sticks below a real yield of 4%, the market multiplier does range as high as 18 times earnings, sometimes 20, like this past September. But, as the business cycle ebbs and flows, multiples of 20 never last for long. Witness the past four months’ correction.
For bonds at a real yield of 5% much depends upon perception of the players. When inflationary numbers percolate the market turns unattractive. In 1982, Paul Volcker tightened interest rates in an inflationary environment of 7% to 8%. Yields on all maturities of bonds zipped to 15%. This was a one-time painful event. The S&P 500 Index reverted to book value and yielded 5%, just like early 2009.
In a more normalized environment, what we have today, at least pertaining to earnings, interest rates and inflation, The Street sees the market at 3,000, nearly 20% above where we tick now. This of course is pie-in-the-sky optimism, but if you believed it, capital allocation to bonds would be zero. Bonds wouldn’t earn more than their coupon, somewhere between 3% and 5%, probably zero as inflationary expectations percolate.
Today, nobody’s more than tentative on whether GDP accelerates from a 2% pace. The analysis changes into a spread-game situation. Now, most players are afraid of high-yield paper, anything below investment grade. But, that’s where yields of 6% dwell. The fear of declining fixed-charges coverage has moved to the foreground, unreasonably.
If you feel as I do that inflation is contained with no recession in sight, below investment-grade bond paper beckons. I’ve more capital in BB debentures than I do in equities. The spread between 10-year Treasuries and BB paper with durations of at least five years approximates 300 basis points. At least historically this spread is okay for investment. Just be right about trend and direction.
In the sixties, I remember visiting Sidney Homer, a senior Salomon Brothers partner whose book on the history of interest rates is a must read. It covers 5,000 years. What happened when the wheat crop failed in Egypt in biblical times reminds me of the bread riots in Paris, 1789.
Sidney’s office perimeter was decked with charts showing monthly changes in spreads for Treasuries and corporates. Any violent swing called for a trading decision. Not that Solly’s traders religiously listened to Sidney or to their economists like Henry Kaufman, whose annual study on the supply and demand for funds was a must-read for all of us.
Currently, I have no use for investment-grade corporates where the yield spread to 30-year Treasuries is a skimpy 100 basis points at best. Consider, even BAA bond yields minus 10-year Treasury paper normally runs at 250 basis points, but today is closer to 100. Polite investors condemn themselves to yield-starvation bonds.
Unless you can go below investment-grade paper, best stick to the money market or two-year Treasuries with yields of 2.5%. No reason to buy corporate-commercial paper. While yields on non-investment-grade leveraged commercial loans are tied to money market rates, loan quality is indecipherable so I don’t play therein.
I play mainly in BB corporates with average duration of five years. Speculative exceptions like Chesapeake’s bonds got my money, too. If you believe banks avoid serious trouble in the next couple of years, their preferred stock selling at little premium over call prices offer yields up to 6%, but little or no appreciation possibilities because of call provisions in their indentures.
Enormous swings in sentiment for even BAA-rated bonds show how crazily corporates do trade during a business cycle when real GDP is shuffling along between 3% and 4%. These bonds can trade as low as a 150 basis point premium to 10-year Treasuries. When the bond players sniff recession in the air, premiums widen to as much as 350 basis points.
During the financial market meltdown of 2008-2009, yield premiums spiked to 650 basis points. Hysteria is built into the corporate debenture market. Even in the tech-bubble-induced recession of 2001, yield premiums on BAA corporates zipped up from 150 to 350 basis points and then declined steadily for the next five years. All this happened while 10-year Treasury yields ticked at 2.2% with the Fed Funds rate a minimal 25 basis points.
Typical Fed Funds historically average closer to 4%. Now, nobody sees much tightening coming. If it does, professional panics in the bond crowd get compressed into a couple of months. When I looked at a 30-year chart on Fed Funds, I was surprised to see a trendline closer to 6% when the economy was in a growthy condition. In a weakening state, junk bond yields can range easily between 500 and 700 basis points above five-year Treasuries.
Not so long ago, Chesapeake Energy’s bonds traded at $60, now $97, while its common stock advanced 40% in the past couple of weeks (oil futures spiked). To be a player you gotta crave volatility in junk and go against the grain of prevailing junk market sentiment. With more deflation than inflation in the air, I’m a player. The Fed is finally on hold, but nobody’s pushing BB or below rated paper yet.
Finally, you’ll never like quotes dealers give you on high-yield paper, going in or coming out. I tell them I don’t mind being taken for quarters, even halves. But if they stretch for full points, I’ll barge onto their trading floor and snip off their manhood. Ya!
Sosnoff and / or his managed accounts own: AT&T and Chesapeake Energy bonds.
msosnoff@gmail.com
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81f551fbe49fd5cc6546bb4894bb3114 | https://www.forbes.com/sites/martinsosnoff/2019/01/23/time-now-for-gut-plays/ | Time Now For Gut Plays | Time Now For Gut Plays
New York Yankees' Babe Ruth hits a home run. Photocredit: Associated Press
Day after Black Monday, I remember Larry Tisch remaining uncharacteristically mum at lunch with a bunch of us bearish operators. We were puzzled by the market plunge, its amplitude and that traders weren’t picking up phones and making markets in 100,000 share blocks.
Later on, Larry admitted he was a hungry buyer of equities, day after. Probably, his best junk peddler’s bullish gut play until oil majors like Exxon Mobil were shedding mothballed, even floating supertankers at scrap value. We’re talking here of 700-foot jobs offered for $5 million. Maybe they stretched 1,000 feet. “Can you imagine,” Larry said. “You get all that for $5 million.”
Periodically, the market does sell like surplus supertankers, but not for very long. In 1999, the book Dow 36,000 argued the risk premium for equities rested too high. Why any risk premium? Because stocks long term outperform bonds and sport dividends that grow. The authors insanely capitalized future earnings of the S&P 500 Index at 100 times. This was seven times what the index sold for mid-2014. Consider, the Dow Jones Index dropped under 10,000 early in 2001, (a recession) fulsomely volatile. During 2009 it based at 6,649, but by year-end 2014 breached 1,800. We’re at 24,665 today.
Stocks normally run twice as volatile as bonds, so an equity risk premium of zero is foolishly optimistic except when interest rates are minimal and the perception percolates that they rest low enough in years to come. This is my perception, my working hypothesis. I’ve added to an extensive portfolio of BB debentures. (See last week’s column.)
Secondly, I’m partial to high-yielding stocks that nobody cares for, like AT&T and General Motors, which 49 analysts disdained when it was selling at six times earnings with a free cash flow yield of 10%. GM printed year-end numbers sky-high relative to the dumb-bunny consensus. It popped 10% overnight and has ticked up 25% from its 12-month low of $30 and change.
AT&T, as yet, trades near its 12-month low. Everyone’s afraid of the trend in cable disconnects and an overturn possibility of the Time Warner acquisition. This deal is crucial for AT&T to attain viability in the entertainment world. There’re Trumpian political overtones. After all, Trump has learned to hate CNN, part of Time Warner. I’m sure the feeling is mutual. Chances are the deal is upheld in the appellate court, a decision coming in the weeks ahead. My AT&T holding is disproportionately huge. If wrong, I’ll be pushing pasta in a Hoboken, New Jersey, joint to make ends meet.
I have no tolerance for lazy security analysts who conjure up earnings numbers and put heady valuations on properties. Almost all quarterly earnings projections on internet and e-commerce stocks repeatedly fall wide of the mark as did Apple’s numbers despite field reports of weakening iPhone demand. The issue of Apple overpricing new phone offerings never came up. Apple, today, is one low-price earnings stock I shy away from.
Conversely, I sense reaction to Facebook’s operating mufti-pufti has been overdone. Facebook’s franchise ain’t going to crumble to dust. I expect solid operating cash flow numbers coming in its year-end report. This is my focused metric for determining operational viability and wherewithal to grow the business. The stock is saying I could be wrong.
My other metric stock is Boeing, which reacted violently when one of its new model 737s crashed in flight. Boeing sells for 10 times next year’s free cash flow. It’s a rare opportunity to buy into a company with a commanding industry position after a foolish mini-panic.
After studying year-end bank reports, Citigroup stands out as the value play. Selling at 10 times earnings power with tangible book value at no premium, Citigroup was the best fourth-quarter operator, better than JPMorgan Chase and Wells Fargo by far. Same goes for Goldman Sachs. Banking now is a cost containment business in a flattish yield curve environment that nobody saw coming—quite the opposite.
George Soros understood linkage better than most of us. The consensus, he knew, forever is wrong. It misses pivotal variables in each phase of unfolding financial markets. Then, it congeals into a new consensus once it recognizes rats are multiplying, but fails to understand how the Pied Piper is going to corner all the rats and exterminate them. Think of the past 12 months.
What the current consensus fails to see, doesn’t want to anticipate, is that the price-earnings ratio for the market is much too high by historic comparisons. Even in a low-inflation, low-interest-rate setting, the price-earnings ratio rarely sticks above 15 for very long. Because the world’s growth rate runs below average and still is wishy-washy here, in Europe and China. Heady earnings projections seem pie-in-the-sky wish fulfillment.
Consensus earnings for the S&P 500 this year is $175 a share. Pundits see the market at 3,000. I’m below $170 with a multiplier of 15 just so long as interest rates and inflation remain contained. With the S&P 500 ticking over 2,600, this level for me is a gift that probably won’t sustain itself. I’m at 2,500, but hope I’m wrong. Maybe 2,250 if earnings weaken. Conversely, I expect BB-rated bonds to earn their coupon and appreciate 3% to 5%. So, put my high-yield bond return at least 800 basis points better than equities. I’ve taken minimal duration risk, too, averaging five years, few exceptions.
Now’s time to act out as the tortoise, not the hare.
If I’ve got it right, Goldman Sachs, Citigroup, Boeing, Facebook and AT&T appreciate 20% and still look cheap on their numbers, supertankers selling near scrap value. Neither a growth nor a value player, I own what I think are inefficiently priced pieces of paper. Can’t analyze Amazon, so I don’t play.
Ironically, Warren Buffett unveiled corporate America’s foolishness about stock splitting down to $50. This was supposed to suck in new investors. Now everyone is concentrated in stocks selling into hundreds, even thousands. I miss the four-buck ragamuffins. Somehow, I can’t see myself going to the moon with Amazon ticking at $1,696.
Then there’s Chesapeake Energy, up from two bucks to almost three practically overnight on the rally in oil futures. I do own their debentures, bought at $60 not so long ago. Courage! Courage! You can’t hide out forever in AT&T. Why is it easier to buy the numero uno or dos market cap Amazon at $1,696? It is unanalyzable.
The best you can say is Amazon shows sizable operating cash flow and sports a conservative balance sheet. Employees don’t garner a huge amount of stock grants, either, while its forklift-truck jockeys work for peanuts and often indulge in work stoppages.
More ironies: The smartest guy in the room, Buffett, owns a ton of Apple, now below his cost. Apple is an analyzable piece of paper. Probably why Warren bought it instead of Amazon.
Chesapeake Energy was my failure in execution. Capacity to think abstractly separates men from boys. I shoulda conceptualized the impact from a snapback in Brent oil futures. For certain, this would lift shadows of insolvency hanging over Chesapeake. This two-buck number had to spike. So it did, pulling along the depressed sector of MLPs.
Unless you can go against the grain, forget about four-baggers.
Sosnoff and / or his managed accounts own: AT&T, Facebook, Boeing, Citigroup, Wells Fargo preferreds, Goldman Sachs and Chesapeake Energy.
msosnoff@gmail.com
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d8e7b139bdbbf284cd7a59c3cec0ac14 | https://www.forbes.com/sites/martinsosnoff/2019/01/29/have-the-nifty-fifty-become-the-nifty-half-dozen/ | Have The Nifty Fifty Become The Nifty Half-Dozen? | Have The Nifty Fifty Become The Nifty Half-Dozen?
There’s no period in financial history comparable with today. The $700 billion to $800 billion stocks like Amazon, Apple, Alphabet and Microsoft stand difficult to model. Earnings surprises, up and down, occur practically quarterly. Bank stock volatility isn’t far behind, and their metrics vary widely, quarter after quarter, too.
Go back to the 1972 Nifty Fifty portfolio at Morgan Guaranty Trust and you’d find gross overvaluation, but the top 10 goods are analyzable: IBM, Eastman Kodak, Avon Products, Sears Roebuck, Xerox, Procter & Gamble, Walt Disney, Polaroid and Schlumberger. Premiums over the market ranged from 100% for IBM to over 300% for Polaroid and Walt Disney. Gimme a break!
These babies were one-decision stocks. You bought and held. The analogy with internet and e-commerce paper today runs scary. I sense comparable awe and reverence today with disregard of conventional valuation yardsticks.
Maybe, we’ll get away with it for a couple more years. I am betting it’s so, but my sense of historical valuation going back 50 years says better be lucky than wise. The market is precariously perched. I’m 50% invested in equities, but volatility’s adjusted higher when you factor in Citigroup, Facebook and my ragamuffins like Chesapeake Energy.
So much has changed! Back in 2001, General Electric held the numero uno post with a market capitalization of $416 billion. Today, $75 billion. Microsoft near $300 billion held the follow-up placement. IBM and Intel made the top 10, which included two drug houses, Merck and Pfizer. Bank of America, JPMorgan Chase, Citigroup and Wells Fargo made the top 25 list. Exxon Mobil with a $282 billion market cap, filled the number three slot.
Consider, Exxon went through all the motions of being a world player in energy, but their market cap today is not much above $300 billion. Even four years ago, Apple, Microsoft and Exxon Mobil held the top three spots with Berkshire Hathaway a proxy for bank stocks now number five. Alphabet and Facebook made the top 25 list, but no Amazon popped up.
Many sectors like materials and industrials stagnated. Stocks like General Motors and General Electric are irrelevant today. I was shocked to see market caps of Alcoa and U.S. Steel now trade for petty cash, sporting $5 billion valuations.
Today, even properties like Netflix at $160 billion get as much financial press coverage as Amazon, Apple and Alphabet, all four times larger in dollars. High-flying industrials like Boeing just $200 billion jobs. Major banks range from $200 billion to over $300 billion for JPMorgan Chase, Bank of America and Wells Fargo. Citigroup showed amplitude of price range from its high over $80 a year ago to the recent nadir under $50. (It’s still too cheap ticking at $64.)
Aside from heightened volatility of the stock market, it’s dominated largely by technology and financials. Their volatility runs double that of the S&P 500 Index, both ways up or down. I ignore drug houses and oils as well as the Coca-Colas of the world and basic industrials. They are surely irrelevant.
I can’t deal with Amazon, which sells at $1,600. If Amazon’s revenues come in up 19% for the quarter instead of analysts’ consensus of 21%, the stock would drop a snappy 5% to 10%, overnight. This is insanity but expresses the market’s fallibility. We saw this not only in Apple, but periodically in $500 billion to $800 billion market caps like Facebook, Alphabet and Microsoft. Oil majors like Exxon Mobil and polite financials like American Express and JPMorgan Chase do swoon too, 20% or more in a couple of months, not years.
The 40-year trend line for price-earnings ratios is 15, not 18 to 20 times the numbers. The exception was the 2000-01 tech bubble when insanity pushed by outlandish analytical yardsticks, like multiples of revenues, led to a psychotic market a year later but then full payback. It took over a decade for Nasdaq to recover. Disbelief in growth surfaced again in 2013-14 when stocks like Apple, Microsoft and Cisco Systems sold at discounts to stock market valuation. The premium for Google (Alphabet) was just 10%, same as Coca-Cola.
Why so many bargains then? Chalk it up to negative earnings surprises. Gross operating margins for tech houses traced a downward slope. Today, nobody, including me, is projecting a downward slope in tech operating margins. They look pretty solid, but valuation is too heady, even using enterprise value rather than earnings as your basic metric.
If you believe in some discount for excessive options issuance (over 20% of revenues) it’s difficult to rationalize most big-cap tech houses. Microsoft started this aggressive options award methodology going back to 1986. Usage got out of hand by the internet houses. The SEC has never taken a stand on the non-GAAP earnings report methodology. I believe like Warren Buffett, it’s a recurring expense and should be debited as such.
All this reminds me why quality California Cabernet has become so pricey. Not because vintages now are far superior than say 1975. It’s because the price of wine-growing land has soared from $7,500 an acre to $750,000 currently. So the cost of doing business is exponentially higher.
Same goes for costs of attracting computer engineering talent to Silicon Valley. All this should be reflected in lower rather than higher price-earnings valuations for internet and e-commerce operators. So far, The Street ignores this issue. My critical metric for valuation in tech focuses on operating cash flow. This earthy number shows wherewithal that management has to work with to grow their footprint. Keeps me attached to Facebook and Alphabet but not Amazon.
Without a sense of historic valuation, don’t even dream of becoming a contrarian. Prices for basic industrials and materials stocks like Alcoa, U.S. Steel, Ford, General Motors, even DowDuPont and Boeing show 12-month amplitude ranging up to 50%. Boeing dropped like a stone when one of its new model 737s crashed into the sea. A new altitude sensor bore some responsibility. From $390 to below $300, it was time to step in.
Same goes for Goldman Sachs, which wilted last month to book value, down 20%. No impact on intrinsic earnings power, this stock sat at 10 times earnings. Goldie is my bruised ego play. Citigroup is now an expense-driven management, not the old acquisition-hungry house. Stocks like Netflix and Tesla turned flopsy-whopsy on pared revenue expectations so you stay far away. Maybe, they’re not so open-ended as analysts’ projections say.
The market swings on a handful of stocks. Scroll past the top five names and individual weightings drop to 1.5% positions or lower. JPMorgan Chase, Johnson & Johnson, Exxon Mobil and AT&T have been around practically forever. New-face exceptions include Home Depot and Boeing. But, the likes of Microsoft, Amazon, Apple, Facebook, Alphabet and Berkshire Hathaway tot up to 16% of index weighting.
Berkshire Hathaway shows you the power of compounding good stock picking over 60 years. The other five demonstrate the magic of technological leverage, which foreshortens the time it takes for companies like Amazon, Apple and Facebook to emerge as mega-caps. Amazon is the sole name I can think of that became numero uno on revenue growth, not earnings power on e-commerce revenues. We’ll see.
By sector, financials are weightier than energy and healthcare. Boeing remains the lonely growth industrial. This says a lot about the locus of the country, namely technology and financials—not Ford and Exxon, which date back over a century. Think about your portfolio in such terms. You may be obsolete, an incurable collector with dead paper in hand. Sears Roebuck won’t renew itself very much.
In 1972, Sears, Xerox, Avon Products, Polaroid and Eastman Kodak made the top 10 names in Morgan Guaranty’s Nifty Fifty portfolio. Gone, but not forgotten. Who holds staying power today? Good question you should ask yourself, periodically. Citigroup, depths of the 2008-09 meltdown, traded near zero, practically a ward of the state. It now ticks at $63, but the high, set late 2006, could stand forever, namely, $570.
Sosnoff and / or his managed accounts own: Amazon, Alphabet, Microsoft, Citigroup, Facebook, Chesapeake Energy, Wells Fargo preferreds, Boeing, Ford bonds, Goldman Sachs and AT&T.
msosnoff@gmail.com
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9c31c0665c0ba37073d1eea7622c208c | https://www.forbes.com/sites/martinsosnoff/2019/02/06/letter-to-mark-zuckerberg/ | Letter To Mark Zuckerberg | Letter To Mark Zuckerberg
Mark Zuckerberg, CEO and founder of Facebook. Photocredit: Marlene Awaad/Bloomberg © 2018 Bloomberg... [+] Finance LP © 2018 Bloomberg Finance LP
Dear Zuck,
Hopefully, the best is yet to come. From a bare-bones dorm room to encompassing a third of the world’s population, Facebook in 15 years is the stellar only-in-America story. You’ve eclipsed Apple and made Polaroid and Xerox, which made me rich, look like has-beens that couldn’t renew themselves no matter how big the research spend.
Zuck, your hubris, treating Facebook users like dumb bunnies, hopefully, is yesterday’s news. Instagram is a home run which none of us understood fully when you bought it. Very few buyers make good acquisitions. Sellers forever know more than buyers. Look at the embarrassing acquisition of AOL by Time Warner, which turned out to be nearly worthless.
Zuck, I’m too old for analyst guidance meetings quarterly. They are surely near worthless as typified by Jeff Bezos’ toying with his followers, putting out guidance numbers you can drive a truck through. How ironic that nobody can model with any precision your numbers—Amazon’s and Alphabet, too. Despite Bezos referring to all the investment spending ahead, the dumb-bunny fraternity of analysts stubbornly adhere to forward year projections of $2,200 to $2,400 for Amazon.
I remember the quarterly meetings held by Xerox where its headman, Joe Wilson, moderated. He wouldn’t suffer foolish analysts. Just told them their questions were dumb and to do their own homework. This was the fifties and sixties, when Xerox was still Xerox. No spoon-fed guidance. Street meetings ran like a presidential press conference.
Zuck, don’t ever fine-tune your numbers like Coca-Cola does. Here, five dozen analysts come within pennies of each other after absorbing management’s minute guidance. Management then exceeds guidance numbers by a couple of pennies and lives happily ever after. Coke levitates on “beating” quarterly numbers.
In America, at least in the long run, optimism pays. Despite Black Mondays, decade-to-decade the market does outperform all other assets. Warren Buffett proved that staying invested is more fruitful than moving into or out of markets, particularly if you’re running tens of billions. It’s better to seek out companies and businesses with good management that you believe are going into phase and stay with ’em for five years, sometimes longer. Average life of a growth stock is five years. You’ve exceeded this timespan, so bonne chance.
I never fall in love with the stock that goes up and makes me feel smart, like the old Xerox. When I need more love and admiration I add to our poodles. We’ve bred and exhibited toys and standards for decades, living with half a dozen at a time. If you need a pet, lemme know. There’s a wait list at $3,500. Twenty-five years ago, the going rate was $300, no wait list. You just had to pass an intensive interview from the missus.
Late fifties, early sixties, good operators scored with Polaroid, Xerox, Syntex and Fairchild Camera—all big-cap growthies, easy to analyze and model on semi-log paper. So, let’s face the facts. Facebook is not analyzable, nor is Alphabet, Amazon and Alibaba, either. I consider your financial reports and theirs simplistic documents designed to drown shareholders. Your numbers obfuscate what’s really going on, keeping us guessing quarter after quarter.
All your stats get equal billing. No comment on critical variables. Facebook burns an enormous spread for R&D. Why not tell us about research priorities, goals, short and long term?
I don’t care to hear you opine on what happens to your numbers when recession hits. That’s my job. Advertising demand invariably would ease, maybe 10% or more. I’m not smart enough to see the next downturn coming. Interest rates hang low, and corporations show comfortable balance sheets. Everyone keeps a lid on their capital spending except internet and e-commerce operators.
In my day as a securities analyst, it was gauche to ask for earnings guidance. You concentrated on drivers of revenues and made horseback calculations. The Street did show its crazy side in the sixties, but never so extreme as present-day valuation of e-commerce and internet paper. Growthies sold at 40 times earnings, about two times the S&P 500 Index.
This is as good a yardstick as any, but many growthies today don’t have earnings, rather non-GAAP earnings and EBITDA. After all, while your share count holds steady, the variance between GAAP and non-GAAP numbers is significant, running at 20% for many tech houses. Anything above 20% doesn’t get my money, because this is a recurring expense, year after year. Ask Warren Buffett.
Let me get to Facebook’s numbers. What I look for and what I don’t find any reference to anywhere in your quarterly condensed consolidated statements of income. First, my working hypothesis. I expect no diminution of advertising revenue growth and see Instagramming surging ahead. Facebook would hold onto its billions of users.
I bought Facebook from $160 down to $140. It looked undervalued at 13 times enterprise value to EBITDA and even on a simplistic price-earnings ratio with the stock at $160 a share and a market capitalization approaching $500 billion. This was way below where Amazon and Alphabet ticked, Alibaba ticks near your capitalization. I’m there.
How often do you get the opportunity to buy into a viable growthie at the market’s multiplier today, at 17 to 18 times earnings? Practically, never. But, there’s more supporting evidence. Facebook is selling at 15 times operating cash flow. I find this metric most compelling because it’s the wherewithal to expand your business footprint. The free cash flow multiplier is 25 times and you coulda noted the outsized capital expenditure budget.
Why do you make no reference to the research and development budget, over $10 billion, and 18% of revenues? Compared even with other internet operators, this is an enormous spend. Consider Apple’s spend as chicken feed.
I was floored by the ramp-up in head count, some 42%, over 35,000 people. How do you integrate such an influx and how fast do they turn productive? What about capital expenditures running over $15 billion? Where’s the money allocated—mainly software?
For 2019, I’m assuming $28 billion in net income with no share count increase. Tots up to approximately $10 a share. So, your stock at 17 times earnings still carries the burden of residual disbelief. If my projections are anywhere close, and Facebook later on sells near a 50% premium to the market, at 25 times earnings, we are looking at a $250 piece of paper. Money managers know how to dream.
I may be getting ahead of myself, but when I see industrials like Caterpillar and United Technologies selling at mid-teens or higher price-earnings ratios and struggling against decelerating worldwide product demand, I’m comfortable with some premium for Facebook.
In conclusion, operators like me thirst for more interpretive candor from you. How are the pivotal variables of your business shaping up? Why not talk about the driver of advertising momentum and how you see the rate structure ahead? How long can you take market share from print media?
Luck and pesetas, Mark.
Yours truly,
Martin Sosnoff
Sosnoff and / or his managed accounts own: Facebook, Amazon, Alphabet and Alibaba.
msosnoff@gmail.com
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6ace132a12629a7a27cb8c361f3c94a8 | https://www.forbes.com/sites/martinsosnoff/2019/02/20/13f-filings-flashing-yellow-is-buffett-now-a-gunslinger/ | 13F Filings Flashing Yellow. Is Buffett Now A Gunslinger? | 13F Filings Flashing Yellow. Is Buffett Now A Gunslinger?
Boeing 787-10 Dreamliner. (AP Photo/Mic Smith) Photocredit: Associated Press
Quarterly, I read couple of dozen 13F portfolio filings, particularly focused on high metabolic wannabe overachievers. You never know where to pick up a good stock to research or even go against the grain.
Lemme cite Berkshire Hathaway’s portfolio which dropped 20%, 1.5 times the market in the December quarter, thanks to swooning bank stocks and Apple which has rallied but hangs 20% below its October high.
What didn’t I see in dozens of scanned reports? Well, there’s plenty of tech and e-commerce represented. Lots of mid-cap oil plays by Carl Icahn and others. Nobody cares about utilities, either electric or telecommunications properties like AT&T where I find the 6.7% yield irresistible. Big-cap energy like Exxon Mobil is absent. Aside from Warren Buffett, I don’t see any aggressive overweighting of financials.
Buffett’s the sole owner of Coca-Cola. There’s scant interest in healthcare with few exceptions. Nobody inventories much in the industrial heartland, in automobile paper or even non-cyclical consumer nondurables where valuations rest high. Procter & Gamble bucked the trend, a good acting stock. Materials stocks like Alcoa and U.S. Steel float dead in the water. Nobody wants to inventory them, but the chart on copper ain’t bad so Freeport-McMoRan is drawing in some players.
No interest in telecommunications or media, but T-Mobile is a good piece of paper with rising numbers. Few players, excepting Trian Partners, were caught in the General Electric wipeout. I was surprised to see little in healthcare, but valuations seem stretched. After its bounce off a 5% yield, Schlumberger gets no new money. I can’t remember last when Schlumberger was a yield stock. Tech players mainly passed on Cisco Systems and Microsoft which are outperforming Facebook, Alphabet and Amazon, still widely held, but everyone’s nervous.
Deep down, I sense the price-earnings ratio of the S&P 500 Index is full at 17 times, unless you see a surge in profitability. Nobody’s call. Actually, The Street’s pundits are drawing in their horns on yearend earnings projections.
I’m not prepared to overweight tech or financials, but contrary opinion stocks like Citigroup and Goldman Sachs get my money. Both room for improvement stories selling near 10 times forward earnings power. But, 13F honchos as yet aren’t buying in. I consider Boeing the greatest example of a long-cycle industrial with primacy on the board. Operating profit margins should levitate for years to come. Only an impending recession, not my call, would prompt me to bang it out.
Analytically, many hedge fund portfolios are surrogates of the NASDAQ 100 in terms of stock concentration and selection. Investors pretty much could duplicate such portfolios for a minimal fee, 20 basis points or less.
The other side of the coin is many of the super-rich with trust funds award management contracts to JPMorgan Chase and other broadly-based wealth managers. Their modus operandi is pie chart investment. Client assets are spread throughout the world in stocks, commodities, gold, emerging market debt, hedge funds - whatever.
What I find so perplexing is passive-conservative investors worship at the feet of Warren Buffett and Berkshire Hathaway. Yes! Nobody sports his 60-year record in stock picking. But, I think the locus of his interest today is in deals, investment banking and rounding out his empire of operating companies that reflect the heartland of our country, like railroads.
What I found so telling about Berkshire’s 13F report is not what they traded, but what they held onto. First, consider their overconcentration in stocks is incomparable. Positions in banks and now Apple are solid properties that are at least subject to security analysis and ready valuation. Actually, Apple was trimmed in the December quarter, but not by much. Still 21.5% of assets at a valuation of $39 billion at yearend. Give Warren a medal for courage.
Note Bank of America and Wells Fargo together outweigh Apple at $42 billion. Lump in Coca-Cola which Buffett has owned forever and these four properties comprise over half of top 10 asset positions. So far, Buffett gets away with such extremism. His static ratio is a high 67%. Berkshire’s portfolio of financials tots up to half of portfolio assets. Conceptually, such concentration is iffy in a world setting of slowing gdp momentum and low interest rates. Bank earnings are leveraged to net interest margins on loans outstanding, a fillip of 10% when it happens.
If the country lapses into recession, banks become walking wounded. Think of 2008-09's meltdown. Citigroup sold down to a buck a share early in 2009. They effected a reverse split to kick their stock back into double digits. This baby may not see the old 2007 high for the next 20 years. The five-year chart on Wells Fargo defines a rollercoaster ride, returning to where it started in 2013.
I’m agnostic on Berkshire’s Apple position. Yes, I know. There’s over $200 billion in liquid assets and a moderate price-earnings ratio, but where are their new toys? Edwin Land at Polaroid used to boast that everyone in the world would tote a Polaroid Swinger. Well, everyone owns an updated cell phone. Apple should double its R&D budget to internet house levels, mid-teens at Facebook and Alphabet. I’d like to see Buffett plunge $20 billion into AT&T, a contrary opinion stock yielding 6.7%. Practically nobody seems interested as yet.
At least, Carl Icahn holds to his valuation construct with low turnover, quarter-after-quarter. CVR Energy, Herbalife and Cheniere Energy comprise 25% of this $20 billion asset base, down from $25 billion in the September quarter. Icahn’s Xerox has ranged between $20 and $40, past 20 years, but shows late foot past 12 months. I’d bet serious money that Carl outperforms any value index, but, he’s not my cup of tea.
Pershing Square, forever an outspoken player with $5 billion, normally concentrates in half-a-dozen properties accounting for 80% of assets. But, where’s the staying power? Its static ratio is a lowly 11%. Almost half of assets rest in Restaurant Brands, Lowe’s and Chipotle Mexican Grill, a big winner. I prefer Home Depot to Lowe’s and Boeing rather than its 10% position in United Technologies. At least, holdings are definable and don’t trade in the clouds.
Tiger Global Management peaked at $21 billion in assets last September, $15 billion at yearend. Still, a high static ratio of 40.9%. Notable is the Amazon holding halved, Alibaba eliminated. Spotify, 10% of assets, now ranks as top holding, rallied, but still 30% off its 12-month high. I’d rather own the Nasdaq 100 Index. Preferring Alibaba, not Amazon and Alphabet over Facebook. The question herein is are you buying stock picking or just hyper-beta?
T. Rowe Price Associates is a growth house going back to the fifties when they made their reputation on big oil stocks. Then, oil was a growth business based on discoveries of big fields. Turnover today approaches 100%, quarterly, for what used to be a buy and hold house. With $700 billion in assets, why make brokers richer?
Top 10 positions comprise 20% of assets with the big five Amazon, Microsoft, Facebook, Alphabet and Boeing. Why not make love in the primary position? I’ve got Boeing as my numero uno, 10% of assets invested. Boeing, incidentally, because of its elevated price, over $400, comprises 9% of the Dow Jones Industrials. Curiously, I’m not seeing Apple in most growth portfolios. Buffett’s outsized play is a no guts, no glory statement, hopefully moon bound (without me).
Take away? The market remains the Great Humbler. Starting with Buffett, there’s no monopoly on brains. Never fall into a hole you can’t climb out of.
Sosnoff and / or his managed accounts own: AT&T, Freeport-McMoRan bonds, T-Mobile bonds, Microsoft, Facebook, Alphabet, Amazon, Citigroup, Goldman Sachs, Boeing, Wells Fargo preferreds and Home Depot.
msosnoff@gmail.com
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01cb7ac780620e5347e7a032ba682e12 | https://www.forbes.com/sites/martinsosnoff/2020/05/12/heroic-vs-custodial-managerspit-warren-buffett-vs-jpmorgan-chase/ | Heroic Vs. Custodial Managers - Pit Warren Buffett Vs. JPMorgan Chase | Heroic Vs. Custodial Managers - Pit Warren Buffett Vs. JPMorgan Chase
Warren Buffett. Photo by Doug Murray/Icon Sportswire via Getty Images. Icon Sportswire via Getty Images
I’ve great respect for Warren Buffett. After all, he’s made more money than I, these past 60 years. But, his performance has faltered past decade relative to his self-imposed benchmark, the S&P 500 Index. I’ve done better of late, but let’s give him credit for flaunting traditional money-management prescripts as followed by major banks. They manage trillions of assets for the wealthy with indifferent results. Nobody complains too loudly because conservative self-imposed benchmarks are easy to keep pace with most years.
Buffett, forever, goes his own way. Any other money manager who followed in his footsteps would be gently pushed out the window of his 42nd floor office. After all, JPMorgan Chase JPM for example, follows the traditional pie-chart investment construct - 60% allocated to equities with 40% to fixed income investments. Wealth management is a major profit center for banks. Quarterly net-revenues for Morgan run at a $3.6 billion clip. Earnings power in a good year runs over $3 billion. This is high-margined business that benefits from scale on a $2.2 trillion asset base. From client to client, everyone’s portfolio is analogous if not duplicated.
Berkshire sells at a premium over book value. Last time I looked it sat near 20%. What happens when Buffett, who’s pushing 89, takes early retirement? I dunno, but this premium can shrink, markedly on poor performance results, alone.
I remember when personal holding companies invariably sold at steep discounts to asset value. The market busily marked down idiosyncrasies of the high metabolic achiever who controlled his company and deemed capable of jumping off the “deep end” with foolish plays.
Has Buffett gone off the “deep end”? Maybe, yes, maybe, no, but for sure I don’t like his major holdings, excepting Apple AAPL . Don’t mark him down for having owned airlines, IBM XOM , even Exxon Mobil in past years. Everyone’s entitled to a few bad picks. Warren did miss great five-year plays in internet and e-commerce paper – namely Facebook, Alphabet, Amazon AMZN , Alibaba BABA and Microsoft MSFT .
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Obviously, this paper rested outside Buffett’s comfort zone of security analysis. Why pay a huge premium for a property that isn’t analyzable using traditional security analysis? Apple was his perfect pick. You could juggle with its metrics and if you liked its product offerings, Apple’s price-earnings ratio was comparable with the market, within the zone of 15 to 18 times forward 12-month numbers.
After all the hype, Amazon remains an unanalyzable property. Forty-two analysts love it with but one nay and two neutrals. This is a dangerous consensus. How many years ahead do you construe the price of Amazon to its Ebitda ratio? Full disclosure, I’ve carried a 5% position but twice that in Microsoft.
Berkshire’s huge overconcentration in the financial sector is difficult to rationalize except that it happened over decades and became a great play in a sector with a low price-earnings ratio. End of March, 2020, financials comprised 35% of his portfolio, compared with a sector weighting of 10% in the S&P 500 Index.
The Berkshire list sustained a severe quarterly bruising. Yearend 2019, financials comprised 40% of portfolio assets. Adjusting for shrinkage in the equity portfolio, March 2020, shareholder equity marked-to-market dropped $40 billion, a heavy cross to bear. Shareholder equity stood at $375 billion on a market capitalization of $440 billion end of quarter. The premium over book value had shrunk below 20%.
Conceptually, anyone could buy Apple and a couple of bank stocks, say JPMorgan Chase and Citigroup C to eliminate the “Buffett premium” in Berkshire’s stock. Why not?
Apple at 30% of assets stands as a successful play, truly gutsy.
Additionally, Berkshire carried a $10 billion position in Occidental Petroleum’s preferred stock and 26% of Kraft Heinz, carried at $13.6 billion but marked to market, just $8 billion. Financials comprised $102 billion of the $248 billion portfolio, some 40% at yearend, 2019. Apple stands out as a successful 30% position. Shrinkage on investments, pretax, in the March quarter totaled $70 billion or nearly 30% of assets.
Everyone managing equity money, unhedged, also sustained serious markdowns. My mind doesn’t dwell on losses because I assume the market owes me back whatever I’m down. I applaud Buffett for singling out American Express and Coca-Cola early on, while Wall Street was asleep on the potency of their franchises, five decades ago.
In the interest of full disclosure, I’ve listed my top five holdings as of May, 2020. Conceptually, it’s a barbell of ragamuffins on one end and super growth, other end:
I’ve got 42% of assets in five stocks. This is fairly aggressive, unhedged money management, but I don’t report results to anyone but myself. I’m sole owner. Microsoft was a double over 12 months. Initial positions normally 5% to 7% of assets, not 14.5%.
Conceptually, I hate bank stocks because they use tons of leverage which periodically gets them in deep trouble, like 2008 – 2009. As of May, 2020, they’ve gotten cheap - little premium over book value, excepting JPMorgan Chase. Banks are selling near 10 times average mid-cycle earnings power. This is a fair entry point, even with minimal interest rates an earnings depressant.
Morgan’s clients with comparable goals and risk management tolerances end up with identical portfolios. Why not? The embedded risk-tolerance standard for all major asset managers rests in the 60/40 ratio. Stocks, worldwide, are allocated up to 60% of assets while bonds and assorted asset plays like gold, oil and emerging market debt and equity sectors are allocated no more than 2% to 5% each, of total assets in each category that’s judged playable.
I call this the “pie-chart” investment schema. Clients never get badly misused. Results rarely outperform or underperform by more than a couple of percentage points. Sitting on investment committees of a couple of endowment funds, I’ve found myself less than collegial. Past couple of years, Morgan, for example, has underperformed by a couple of percentage points. They used index funds for a percentage of their equity composite and retained a few independent money managers who go for higher rates of return.
Why pay an additional fee here? Conspicuously, Morgan prefers this to allocating say 10% of assets to the Nasdaq NDAQ 100 which has outperformed almost all asset classes by a wide margin. It rested just 8% below its 52-week high, March 2020, while the S&P 500 declined almost 15%. I never hear anyone talking about Nasdaq, like it’s a dirty word. If Morgan had placed 10% of client portfolios in Nasdaq 100 past couple of years, they woulda outperformed their benchmarks, but they didn’t.
Intricate division of client portfolios raises questions like what is the central idea in a portfolio: Growth, income, inflation or deflation? Whose currency is likely to be stronger for longer? Perhaps passive clients with limited experience in financial markets feel secure that their capital rests in good hands and undergoes intensive management.
Can you carry the battle for investment survival? If a passive player, your biggest decision isn’t which bank or brokerage house you choose to manage your assets. It’s portfolio structure as to fixed income assets and equities, not whether the yen is a better play than the dollar or pound.
Finally, Microsoft can take me to the moon, not emerging market debt paper.
Sosnoff and / or his managed accounts own: Facebook, Alphabet, Amazon, Alibaba, Microsoft, Citigroup bonds, Wells Fargo preferreds, Halliburton and Freeport-McMoRan.
msosnoff@gmail.com
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d71e05c03fd266ad55fbec8e49ff8fc6 | https://www.forbes.com/sites/martinsosnoff/2020/08/18/13fs-high-intensity-honchos-slow-to-shift-gears/ | 13Fs: High-Intensity Honchos Slow To Shift Gears | 13Fs: High-Intensity Honchos Slow To Shift Gears
Two gunslingers. getty
Even Carl Icahn and Warren Buffett, whose portfolio turnover normally runs low, waxed proactive past couple of months. And why not? The market bottomed end of March and then sprinted. Carl exited Freeport-McMoRan FCX , my copper and gold play which remains buoyant.
He’s still wedded to energy in Cheniere Energy and Occidental Petroleum OXY . Both need much higher oil quotes, even north of $50 a barrel to lift off the mid-teens level. Occidental traded at $50 a year ago.
Buffett still perplexes me (see last week’s column). Warren exited from a $5 billion play in airlines and sold Occidental Petroleum. I regard Buffett’s high position in bank stocks as death row. Berkshire’s huge position in Wells Fargo WFC stands cut in half by the market, barely off its 52-week low of $22.
Checking other high-profile banks like Citigroup C and JPMorgan Chase JPM you find enormous performance gaps this year. JPMorgan’s December peak was $140, now ticking below par. Citigroup reached $80 but at its March low traded well under $40. Valuation disparity between these two is eye-catching. Citigroup trades over a 30% discount to book value and at 10 times normalized earnings power. JPMorgan sells at a 20% premium over book and above 13 times my projection of earnings this year of $7.50 a share. You would think these two properties were in different businesses, but not so.
Currently, Berkshire’s two largest bank holdings are Bank of America BAC and Wells Fargo. Bank of America was a near basket case in the 2008 - 2009 meltdown. Buffett threw them a lifeline and took back billions in options grants that made Berkshire several billion. Same goes for Goldman Sachs GS where he exercised options and just sold out the stock. In my book, Buffett is a better investment banker than money manager.
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Bill Ackman, Pershing Square’s honcho, exited his Berkshire position. Berkshire’s huge overconcentration in financials is hard to rationalize. It happened over decades, now at $52 billion, but overshadowed by the homerun in Apple AAPL , worth some $112 billion currently.
No problem betting on banks today as a macro play on reflation, but so far it’s a nonstarter. Let’s see whether loan-loss reserves prove adequate. If not, subtract 20% from bank stock valuation. Before you buy a bank stock check what happened to it in the 2008 - 2009 financial meltdown. Citigroup traded near zero before its reverse stock split.
JPMorgan touched down under $20, and didn’t recover to its previous $60 high in 2000 until 2015. Gimme a break! Apple past five years has whooshed over 350%. Curiously, sorting through a couple of dozen 13Fs, nobody pounced on Apple like Buffett did. What are all you guys doing in Occidental Petroleum? Carl Icahn sold out his major position in Apple years ago.
Before looking at specific portfolio holdings, check the manager’s static ratio which reveals turnover activity. Appaloosa Management’s static ratio was zero, a full turnover. Now, it’s pretty much a Nasdaq NDAQ 100 Index tech portfolio. The usual suspects - Microsoft MSFT , Facebook and Amazon AMZN . Investors could avoid any management fee content herein, just buying the Nasdaq 100 Index.
Same goes for Coatue Management which at yearend also ran a near-zero static ratio. Neither house owned Apple. Walt Disney DIS popped up as a 9% holding. This is a great “look over the valley” piece of paper, but I’m not ready for it as yet. Same goes for Boeing BA .
T. Rowe Price Associates TROW surprised me, also with a near-zero static ratio. This is a diversified high-tech portfolio. Apple’s at 2.6%, sandwiched between Facebook and Alphabet. Tiger Global Management, over $25 billion in assets, but a very-high static ratio of 70%, coasts along with its mainly tech-house portfolio, but no Apple as yet.
Berkshire’s static ratio for the quarter stayed relatively high at 65.9%. Portfolio eliminations ran at a high 22.7% vs. buys of 9%. Berkshire still is swimming in cash, some $140 billion. Why? It sold out some 60% of its portfolio. Why so? Mistakes, like airlines got eliminated.
Pershing Square continues to run a relatively-high static ratio, near 60%, Berkshire, a 14% holding, was eliminated. Lowe’s LOW , a huge winner is now a 22% position, up from 15.7%. I’m impressed. Bill Ackman added to positions in Starbucks SBUX , Hilton International, Howard Hughes and Lowe’s, a gutsy macro call on a reviving economic setting. I like the way Ackman runs money. The portfolio is conceptually coherent and aggressively concentrated in several one-off kind of stocks. The right way to go to the moon.
Walt Disney is popping up more often. A post-Covid-19 play, is top position in Third Point, edging out Amazon. Baxter International BAX was numero uno, now cut back from 16% of the list to a 4.7% position. This is a less-defensive portfolio but not tech laden and doesn’t make a strong statement – pro-recovery but maybe not enough.
The Duquesne Family Office portfolio looks like mine with Microsoft numero uno, followed by Amazon. JPMorgan Chase 4.6% of the portfolio, still leaves me cold. Static ratio is low at 10%, but this list looks like it fully captured the 2nd quarter’s zippy recovery.
In Citadel, a $68 billion house, Apple pops up, a 1% position, but Amazon is at 3%. I see T-Mobile here, my favorite media property. Again, almost a total portfolio remake from yearend, but hasn’t gone far enough if macro recovery kicks in next next quarter or two.
When I step back from these portfolios, my feeling is many high-intensity players don’t believe in a more-zippy market lead by tech and internet houses. Almost all missed Apple and coulda had more Amazon. Facebook is light, and not enough Microsoft, anywhere.
Hardly anyone is carrying large-capitalization energy plays, or drug houses, a good call, but why allergic to oil-service stocks like Halliburton HAL which bottomed at $4.25 and now ticks at $16? Likewise, Freeport-McMoRan more than doubled from its March low under $6. Non-durables stocks like Coca-Cola KO and Proctor & Gamble PG did rally but not eye-catching.
Overall, I’m surprised that so few money managers pushed their chips into the pot. Consider, the Nasdaq 100 Index powered to a 40% gain for the quarter. Incidentally, these houses should be rated against Nasdaq, not the S&P 500. Simply, they mainly run compressed portfolios with stocks of above-average volatility. I’m surprised limited partners ignore this issue.
Anyone who missed big tech in the June quarter should be called on the carpet for an explanation.
Sosnoff and / or his managed accounts own: Freeport-McMoRan, Wells Fargo preferreds, Citigroup bonds, Apple, Microsoft, Facebook, Amazon, Walt Disney, T-Mobile bonds and Halliburton.
msosnoff@gmail.com
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70aae583585b527e36b74fa5f95b4178 | https://www.forbes.com/sites/martinsosnoff/2020/10/30/obfuscation-and-legerdemain-practiced-by-jamie-dimon-others/ | Obfuscation And Legerdemain, Practiced By Jamie Dimon, Others | Obfuscation And Legerdemain, Practiced By Jamie Dimon, Others
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase. Photo by Matthew Stockman/Getty ... [+] Images. Getty Images
Lemme kick around JPMorgan JPM Chase, the world’s numero uno in banking. I expected Citigroup C to issue a quarterly report that’s incomprehensible, but Jamie Dimon gets the palm.
In a Covid-19 economic setting, there can be no talk about what’s normalized for banks. How project loan charge-offs and net interest margins? ¿Quién Sabe? Can underwriting revenues hang in and what about trading profits? Do they hold up?
Normally, in bank stock analysis, you compare quarterly results with year ago numbers as well as the previous quarter. You do this exercise for each profit center as to revenues, operating profit margins and loss charge-offs. Then, you come up with an earnings number for the next quarter and for succeeding 12 months. Ask what is normalized earnings power and dividend paying capacity. Finally, slap a price-earnings ratio on the bank in question and come up with a buy, hold or sell decision.
Consider book value as a weighted metric and then tap your memory bank. During the financial meltdown of 2008 - 2009, Citigroup sold into low-single digits and then employed a reverse split to get back into the respectable teens. Bank of America’s BAC $25 preferred stock sold down to $5 a share. I bought a bunch, but management didn’t offer me newly issued warrants, like they did for Warren Buffett who threw them a multibillion-dollar lifeline.
To Jamie Dimon’s credit, JPMorgan sailed through this financial hailstorm comparatively intact. It’s why his bank sells at a premium to book value while Citigroup ticks at a deep discount. An enormous gap in price-earnings ratios exists, too.
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Even on normalized earnings, today, perhaps a nonexistent concept, Citigroup sells under 10 times earnings and JPMorgan in low teens. Such variance reflects as well the different constructs of their business, particularly offshore earnings concentration.
Critical variance in Citigroup’s September quarter was in loan loss reserving at $2.26 billion vs. reserves of $7 billion, quarterly, previous two quarters. Still, the quarterly reserve covered actual loan charge-offs of $1.9 billion. Investment and corporate banking numbers bettered the consumer sector which saw card revenues down 18%. Citigroup’s return on equity is a subpar 7.9% vs. an industry norm near 13%. Expenses for controlling risk management, prompted by the Federal Reserve Board could add a billion to Citigroup’s cost structure.
Stepping back from such variables, it won’t be before 2022 that analysts, anyone, can more than stab at Citigroup’s normalized earnings power. As a horseback number, let’s slap a 10% ROE on net tangible book value. You’d approximate at least $6 a share. The major variable could be loan loss reserving which is unpredictable.
Broad-brush, if you believe in a robust economic setting emerging next 12 months consider Citigroup peaked at $80 a share as little as nine months ago. Bank stock investors then saw nothing but blue sky: Healthy net interest margins and good numbers for investment banking, trading and their investment advisory sector.
Investing in banks, all said, is the reciprocal of owning e-commerce and internet paper like Amazon AMZN , Facebook and Alibaba BABA . They swim in redundant capital surplus and cash flow, beneficiaries of Covid-19 depressants on shut in consumers.
I rationalize heady valuations for such growthies easier than I can figure out what is average earnings power for our major banking properties. My probe into Citigroup cost 5% intraday. Looking for more trouble, I stutter-stepped over to JPMorgan Chase, the prestige property in banking selling at a 20% premium over book value.
JPMorgan is a massive construct with some $235 billion in book and a market capitalization of $280 billion. This is under one-third of Facebook’s market capitalization. Jamie discarded his tie, but I wanna see him in a gray T-shirt and long hair.
JPMorgan does sell at a comfortable premium over book, but its numbers are no easier to unscramble than poor Citigroup. There’s something grating for me in this disparity. I’ve an eerie feeling that Jamie first decided on what his bottom line should look like and then scrambled his numbers as to loan losses, reserving conventions and quarterly charge-offs.
There’s no way for outsiders to challenge numbers, specifically quarter-by-quarter. It’s ludicrous to multiply by four JPMorgan’s September quarter’s earnings. If you did so, the stock would be selling around 12 times earnings, an historically low valuation for a property that historically sells at a premium to other bank stocks and closer to the market’s multiplier of earnings. On book value JPMorgan’s premium is about 50%, tops for financial properties.
Quarterly numbers stunned me into bewilderment. How go from a second quarter’s loan loss provision of $10.4 billion to $610 million in the September quarter? What’s normal? Good question! Go back to the third quarter of 2019, pre-Covid-19 when the loss provision was $1.5 billion. I’d consider $10 a share, a 15% ROE as a fairly normal number.
Markets are right not to believe normality prevails in banking. If you believed so at yearend, 2019, when the stock peaked around $140, you rode this paper down to par. Amazon ticked around 2,000, yearend 2019, now at $3,000, nearly a snappy 50% advance. For JPMorgan, there were sizable reserve releases September quarter in commercial banking and the corporate and investment bank.
The most stable business sector is asset and wealth management, also helped by reserve releases. On one of the boards I sit on, JPMorgan’s portfolio performance past couple of years stands mediocre. Not enough emphasis on high-yield bonds and pretty much missing the bull market in technology. Wealthy investors accept some underperformance because they believe the bank won’t grossly underperform in its traditional 60 / 40 equity, bond construct.
I pass on JPMorgan as too efficiently priced with its built-in premium over the entire banking universe. Citigroup, in the throes of an operational makeover, has possibilities, but the dust needs to settle. I can’t construe as yet average earnings power over a full cycle - good year, normal year and down year. Financials, near a 10% sector weighting in the S&P 500 Index, suffer in a low-interest rate setting.
When I turn to technology, the leading market sector at 25% of the S&P 500, I’m still overweighted and so far, comfortable.
Back in the sixties, I remember what Morris Shapiro told me. Morris was the leading trader in bank stocks which then all sold OTC. “Martin. There are more banks than bankers in the world.”
Sosnoff and/or his managed accounts own Citigroup, Amazon, Facebook and Alibaba.
msosnoff@gmail.com
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fb45fcffbfac5a3a4b0da917ea4467bb | https://www.forbes.com/sites/martinsosnoff/2020/11/24/13fs-reveal-players-hiding-in-polite-paper-gold-pharma/ | 13Fs Reveal Players Hiding In Polite Paper, Gold, Pharma | 13Fs Reveal Players Hiding In Polite Paper, Gold, Pharma
Crap table in Las Vegas. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images) Universal Images Group via Getty Images
Conspicuously missing from portfolios of high-metabolic overachievers is any serious reallocation of assets to more leveraged sectors of the market. Nobody’s selling internet and e-commerce paper, but nobody’s buying cyclical industrials, reserve city banks and broad-based energy names like Exxon Mobil XOM .
There’s unstated skepticism in dozens of 13F portfolios I scanned. Few believe that the country is on the cusp of broad-based recovery. If anything, more money is directed to noncyclicals, particularly healthcare.
I’m seeing an increase in turnover at Greenlight Capital, Lone Pine Capital, Jana Partners and others, but no new themes exploited. Horizon Therapeutics, a mid-cap biotechnology house scored with its drug Tepezza, but without my participation. I don’t follow many mid-cap stocks.
I’m more attracted to under $10 paper that trades nearly 100 million shares per diem, Macy’s M and General Electric GE , for example. There’s a different crowd of players here, but what’s wrong with Goldman Sachs GS near book value at 10 times earnings? I’m comfortable with it. Citigroup C acts much better than JPMorgan Chase JPM which is relatively more expensive at 13 times earnings.
Nobody owns automobile stocks, but General Motors GM is a big winner year-to-date. I’m seeing more gold and pharma plays in many portfolios. Even Warren Buffett put 2% of Berkshire Hathaway’s assets in big pharma, selling down bank stocks. But, the chart on Pfizer PFE with all its good news, looks like a classic head and shoulders formation. The stock ticked in mid-thirties back in June 2016. Feh! The big issue for Buffett is what to do with $140 billion in liquid assets.
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It looks as if Glenview Capital Management has completed total migration into healthcare plays with a complete portfolio turnover. Biggest position is Tenet Healthcare THC , 15% of the portfolio. Focus is on hospital management and pharmaceuticals distribution. Bausch Health, Cigna CI and HCA Healthcare along with McKesson MCK account for over 25% of portfolio assets.
Renaissance Technologies with its $100 billion asset boodle continues with high-intensity turnover, fighting for eighths and quarters, but it’s out of phase, dropping $15 billion during the September quarter. It carries a broadly diversified list. Biggest position is Zoom Video Communications at 2.4%. But, pharma is an obvious theme. I’m seeing AbbVie ABBV here. Everyone likes it at 10 times earnings with a yield of 4.7%. This is a value name to take seriously, but note its leveraged capital structure, unusual for big pharma.
Is technology’s five-year run ending? Too many value names like AbbVie, General Motors and Citigroup act better than the averages. The 50% run in General Motors happened without me. But, first time ever, I own General Electric with aerospace due to recover.
My post-Covid-19 plays include the American Airlines AAL convertibles, Macy’s and a bunch of MLPs finally acting like winners. These names still missing from 13F portfolios. But, a major theme for everyone should be low price-earnings ratio stocks. If I’m wrong on the economy approaching normality by mid-2021, I’m going to be dead wrong. You want to buy into strong-operating leverage and prospects for high-dividend payouts.
I avoid huge pharma properties like Merck MRK and Pfizer. Yes, they’re reasonably valued but these U.S. based houses are ripping us off. Prices for identical drugs sold abroad are discounted as much as 50%. When is this obnoxious practice going to cease, Joe?
Pershing Square Holdings, which I respect, still carries Lowe’s LOW and Restaurant Brands International at 40% of assets. Its top names all recognizable, low-pressure plays like Hilton Worldwide Holdings and Starbucks SBUX . If I had to go with a value stock picker, I’d go with them. Nothing crazy here or esoteric, just long-cycle plays. No financials, no tech houses, it’s plain bread ‘n’ butter. Why not? Nice appreciation in the September period.
Berkshire Hathaway had a busy quarter. Its static ratio at 61%. Apple AAPL still 47% of assets, but the financial sector finally got pared with sales of Wells Fargo WFC (long overdue) and JPMorgan Chase which I regard as the most-pricey bank. Big premium over book value and a price-earnings ratio in low teens. Citigroup’s at least 30% cheaper, selling at a discount to book and under 10 times earnings. Financial sector here is still double weighted to the S&P 500 Index.
The move into pharmaceuticals is sort of old-maidish with big names and minimal weighting of assets. Berkshire is carrying too much cash, well over $100 billion. Its industrial properties barely holding their own while the insurance business, Geico, goes nowhere. Buffett’s living on his reputation, but could end up selling at a discount to book value before long.
No surprises in Carl Icahn’s portfolio structure. Very little turnover here with energy plays like Occidental Petroleum OXY and Cheniere Energy likely to participate in any further snapback for the sector. I’m sticking with MLPs which have come to life, at last.
No guts, no glory. On the first dozen portfolios perused, the only one that makes a statement is Glenview Capital Management, a $3 billion asset house totally committed to healthcare, but not big pharma. Tenet and Takeda Pharmaceutical comprise 25% of assets.
I don’t see any under $10 paper anywhere. No General Electric or low-priced oil service plays like Halliburton HAL or copper activity like Freeport-McMoRan FCX - all big percentage movers. No MLPs, anywhere. Nobody’s taking a fling on Macy’s, U.S. Steel or airlines, even Ford Motor F . It’s like rank speculation is dead in the water.
The Duquesne Family Office holds 24% of assets in Microsoft MSFT and Amazon AMZN . I’m close, but feel captive to my low cost-basis. I’ve diversified with a bunch of ragamuffins like General Electric, Macy’s and American Airlines convertibles. Halliburton and Citigroup, too. So far, so good. Daily moves of 5% to 10% take my breath away.
A big-quarterly performer, Coatue Management, rode Tesla TSLA and PayPal Holdings which zoomed up from March lows. This is a high-beta list structured for a bull market. All its stocks, inclusive of Snowflake have great stories attached to them. If I were solely a buyer of story stocks, Coatue would qualify for financial risk and plenty of volatility’s attached to their inventory.
When I looked at Appaloosa and Iridian Asset Management, they were 180° apart. Appaloosa is like a pure play on the Nasdaq 100 Index inventory, excepting its PG&E holding at 13% of assets. Iridian’s list showed no mainstream investments. Pretty diversified but I never heard of its three top-of-the-list properties: Terminix Global Holding, Laboratory Corp. of America Holdings and Post Holdings POST . It’s a big world out there, but for better or worse, I’m a confirmed player in big cap goods that are definable.
Conspicuously missing throughout are sectors like basic industrials, financials and big energy names. No automobile stocks, few retailers or industrials like Caterpillar CAT . Gold and pharma are a strongly recurring theme that leaves me cold. I ran out and bought more General Electric and Macy’s.
Sosnoff and/or his managed accounts own Macy’s, General Electric, Goldman Sachs, Citigroup, AbbVie, American Airlines bonds, Apple, Wells Fargo preferreds, Halliburton, Freeport-McMoRan, Ford Motor bonds, Microsoft and Amazon.
msosnoff@gmail.com
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ac488f31dd73ae88e632ebd58349fdb1 | https://www.forbes.com/sites/martinsosnoff/2020/12/01/raise-high-the-roof-beams-ragamuffins/ | Raise High The Roof Beams, Ragamuffins | Raise High The Roof Beams, Ragamuffins
The Empire State Building in New York City (Photo by Gary Hershorn/Getty Images). Getty Images
In roiling markets nobody ever catches absolute bottoms or tops for stocks. Range of amplitude for a diverse bunch of unwanted goods this year is breathtaking. From its March low, the S&P 500 Index rose 65%, but cyclicals like Halliburton HAL and Freeport-McMoRan FCX soared 300% and 400%, respectively. Waz you there, Charlie?
When I looked at Macy’s M five-year chart, I was surprised it ranged above $50 before commencing a declining head and shoulders formation. This once-proud merchant, anchor tenant at many first-class regional shopping centers is struggling for air.
As for General Electric GE , it was numero uno in the S&P 500 Index with a market capitalization of $415 billion in 2001. But, by 2014 it dropped to seventh place, market cap pared to $262 billion. Presently, we’re around $60 billion. Jack Welch, its long-revered headman, leveraged and then nearly destroyed his company with foolish acquisitions.
Let’s hope Macy’s joyous parade on Thanksgiving Day stays perpetual. Santa Claus in his reindeer driven chariot waves up to me in my apartment windows facing Central Park. It’s my leading indicator for a buoyant stock market. I wave back at Santa, reassured.
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When stocks sink to five bucks and below, they are shunned by the Street’s houses, their analysts and most traders. Nobody dares recommend a piece of paper that can wallow into bankruptcy. After all, the Street’s memory is indelible.
Everyone remembers the once-proud Lehman Brothers blow up in 2009 while Merrill Lynch needed to be merged out at $4 a share. What about the demise of Sears, Roebuck and high flyers like Polaroid and Xerox XRX ? Bankruptcies in leveraged businesses like banks and retailers are recurrent phenomena cycle-after-cycle. General Motors GM needed serious bail-out capital along with American International Group AIG in 2009.
When a stock ebbs into single digits, only courageous players who don’t report to committees deal in such junk. Balance sheet analysis rather than income statement perusal takes over. My analysis of Halliburton suggested the balance sheet was strong enough to withstand the cyclicality of the oil service business for couple of years.
The ratio of the market value of the stock relative to the market value of its debt approximated one to one. Halliburton wasn’t about to succumb. This is Mike Milken’s MAD ratio which he explained to me when we bought Chrysler after Lee Iacocca took over as headman. Management counts. Years later Iacocca even demanded that the government sell back warrants it held at book value rather than market value. Lee was told to take a walk.
Warren Buffett’s original investment in Geico was imperiled by management’s overly aggressive rate cutting, going for market share. I remember buying a block of $4 Geico from Goldman Sachs GS before Pennsylvania’s insurance commissioner had decided he wouldn’t preside on Geico’s demise.
If companies like Geico, Sears, Roebuck, General Motors and AIG do encounter gut-wrenching financial pressures, a fair question is what valuation yardsticks are appropriate? Should airlines ever sell at more than 10 times earnings? For me, not by much more. I’d use average earnings power over a full cycle for industrials and oil sector paper. Same goes for materials plays like copper, steel and aluminum. As I write this piece, U.S Steel and Alcoa AA , intraday bounced nearly 10% (without me).
Halliburton and Freeport-McMoRan carried potential to earn maybe $2 a share, in a good cycle, even more. So, these babies currently ticking near $20 are reflecting average earnings power multipliers. Unless you believe they’re headed for at least a couple of good years, you’re too late to the game.
Macy’s, General Electric and American Airlines AAL are more blatant specs where it’s difficult to construe an earnings model going out a couple of years. All you can say is there’s latent earnings power of a couple of bucks a share based on the history and configuration of their businesses. My assumption is the country approaches normalcy in the industrial, energy and consumer sectors by mid-2021. The market already has discounted that much resiliency.
Other side of the coin, is internet and e-commerce houses wallowing in free cash flow, spending enormous sums on R&D and allocating as much as 20% of operating earnings on stock awards to key employees. Everyone, starting with Microsoft MSFT and Facebook, carries excess balance sheet liquidity. Nobody, excepting Apple AAPL , adopted aggressive stock buyback programs.
Apple sells under 20 times earnings, while big tech operators tick at 30 times operating earnings and above. Facebook sells at seven times book value. Why buy back your stock at such a premium? Why not boost spend for R&D, hopefully to build out your operating footprint?
Trillion-dollar market capitalizations barely held their own during this market rally in unwanted sectors like financials, materials and energy that were so badly wounded earlier on. I’m in my barbell construct with tech at one end and financials, oil services, copper, aerospace and retailing on the other end. So far, I can’t find fundamental reasons to sell down internet and e-commerce paper, but valuation is pricey. Let it stay so pricey.
Back of mind, I hear a voice disclaiming on GDP recovery to normalcy by mid-year, 2021. The market already has discounted as much, selling at 19 times what it thinks is next year’s earnings power for the S&P 500 Index. This pricey number’s solely explainable by near zero interest rates and minimal inflation. Let’s hope the next chairman of the FRB has very little to do but pray for some inflation.
Why not sell your AT&T T and get your hands dirty? Ragamuffins stand for a newly emerging algorithm on leveraged speculation. Where’s your moxie? Think of George Soros shorting the pound with serious money decades ago. All this in the face of Bank of England avowing it would never, ever devalue the pound.
Our FRB chairman just proclaimed he’ll keep interest rates near zero next three years. Don’t count on such nonsense, either.
Sosnoff and/or his managed accounts own Halliburton, Freeport-McMoRan, Macy’s, Citigroup C , Enterprise Products Partners EPD , Goldman Sachs, General Electric, American Airlines convertibles, Microsoft and Facebook.
msosnoff@gmail.com
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d0697a3d8bfd388e05be75b2512b7744 | https://www.forbes.com/sites/martinwhittaker/2019/06/14/debunking-the-myths-of-just-investing/ | Debunking The Myths Of Just Investing | Debunking The Myths Of Just Investing
“I've come to the conclusion that mythology is really a form of archaeological psychology. Mythology gives you a sense of what a people believes, what they fear.” – George Lucas
On Wednesday, JUST Capital and Bloomberg convened business and investment leaders to ask how markets can work better for more Americans. Or more specifically, to pose the question, what is the role of the investment community in tackling the country’s pressing social, health, economic, and environmental challenges?
The issue is a definitive one for the country and strikes to the heart of political economic theory. What’s the best way to tackle, say, wealth inequality? Government policy or free market economics? Our belief is that a more just form of capitalism is a key part of the solution, and with 40% of Americans lacking enough savings to cover a $400 emergency, the situation is urgent to say the least. We can and must do better.
One of the biggest barriers to investor action that I’ve encountered on my travels is the mythology surrounding socially responsible, ESG, sustainable, and “just” investing – that it is somehow soft, non-serious, liberal, and requires financial sacrifice. These myths may not be coming from a place of fear, as George Lucas suggests, but they certainly represent a dogma that impedes progress or even serious discussion. I’ve made a start on debunking some of them below, and encourage others to follow suit:
Myth #1: The American people are hopelessly divided and can’t agree on anything.
False. Since 2015, we’ve surveyed more than 90,000 Americans – across all ages, political affiliation, and economic status, as well as geographic, racial, and gender lines – to ask them what matters most when it comes to just business. Their responses form the basis of our Rankings. The vast majority of us are in agreement each and every year, that we want companies to balance the needs of all key stakeholders and not simply focus on maximizing return to shareholders. And that companies should prioritize their workers above all else. It may be one of the few things we do agree on, but I’ll take it.
Myth #2: Being just means lower returns, lower profits, and lower valuations.
Also false. Our ongoing financial analysis – JUST Alpha – explores the connection between just corporate behavior and investor returns. We’ve found that the top companies in our Rankings (1) generated an ROE 6.4 percentage points higher than their peers in 2018, (2) display higher operating margins, and (3) have higher market valuations. There are no guarantees, obviously, but the notion that just business necessarily leads to lower returns is simply wrong.
Myth #3: Raising wages will kill share price and destroy value.
Not true! Companies that have raised wages – even in the retail industry where low-wage jobs abound – may have taken an immediate hit, but they’ve quickly recovered and many go on to thrive. In September 2017, Target announced that it would raise its minimum wage to $15/hour. Sure, shares dropped 0.7% that day, but since then they’ve been on a tear, and are up 59% at the time of writing.
Similarly,
Walmart
stock was hit 3.2% the day it announced its wage increases in February 2015, but is up 44% since then.
And then of course there is
Costco
, which has based its entire strategy around paying workers more, making customers happier and NOT advertising. It has become one of the most successful retail franchises in history. Just saying.
Myth #4: You can’t have measurable impact and superior returns.
False. False. False. Our flagship index – the JULCD – which tracks the top 50% of Russell 1000 companies we rank by industry, has consistently outperformed its benchmark since inception in 2016 AND its constituent companies pay their median worker 7% more, recycle 9 times more of their waste, give 4 times more to charity, and have a 3% higher ROE. This is not an industry sector effect either, since we are taking the top 50% of companies in every sector according to the JUST Rankings.
Students of sustainable investing will know that there is a lot of credible research out there to support these viewpoints stretching back over the last 20 years at least. There have also been very many sustainable funds that have consistently outperformed their benchmarks (and many that have not). However, citing numbers, producing hard data, and showing track records sometimes isn’t enough to change mindsets, especially in such a politically divisive climate.
One of the most interesting things to come out of the meeting at Bloomberg was in fact the need for a shift in perceptions. Corporate leaders and pension fund CIOs present were adamant that the connection between financial performance and “justness” is real, but often plagued by misconceptions and misunderstandings about what this means, not to mention poor data, inconsistent standards, lack of measurement rigor, and more. With investor interest in these themes burgeoning, and the need for a more inclusive marketplace intensifying, the onus is on the believers to win hearts and minds.
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0edac5ca3e0a71480c364e8f642038c5 | https://www.forbes.com/sites/martinwhittaker/2020/10/22/the-idea-that-raising-wages-destroys-value-is-a-fallacy/ | The Idea That Raising Wages Destroys Value Is A Fallacy | The Idea That Raising Wages Destroys Value Is A Fallacy
A Costco employee sprays disinfectant on customers shopping carts amid the coronavirus pandemic in ... [+] Arlington, Virginia on May 24, 2020. (Photo by Daniel SLIM / AFP) (Photo by DANIEL SLIM/AFP via Getty Images) AFP via Getty Images
Its predictability doesn’t make it any less perplexing. Time and again Wall Street analysts will criticize a company for raising wages at the alleged expense of shareholders, and the stock will take a hit. Shortly thereafter, as the benefits of the wage increase begin to pay off – in the form of more engaged and productive employees, happier customers, better retention, etc. – the stock recovers and goes on a tear. Fears of margin compression subside. The returns on that investment in human capital become clear. Shareholders are satisfied.
The myth that lifting wages, especially of the lowest paid and most financially vulnerable employees, is somehow harmful to the interests of a company’s shareholders, is one that we at JUST Capital are pushing back against with the Worker Financial Wellness Initiative.
Take Costco, for instance. The day after last month’s earnings call, in which it announced it had beaten both revenue and earnings growth expectations, the stock fell 1.27%. Analysts expressed concern over the $281 million invested in worker pay and safety measures during the Covid-19 pandemic, and some traders were spooked. CNBC’s Jim Cramer called the sell-off “absurd” and another example of a recurring cycle, where the company is briefly punished for smart management before being rewarded for it.
As Cramer noted, Costco has been there before. Back in 2004, a Deutsche Bank analyst derisively said the warehouse retailer’s exceptional investments in worker wages and benefits (and low prices) meant “it’s better to be an employee or a customer than a shareholder.” Not quite. From 2005 to 2020, Costco’s stock price increased 724%, to the S&P 500’s 174%; and over the past decade, that price increased 492% to the index’s 195%. I’m not sure what that analyst is doing now.
Consider also the country’s largest private employer, Walmart WMT , which took a hit in February 2015 after it announced pay raises. The stock began to rebound that fall, and from the announcement through last month, has performed in line with industry peers and outperformed the S&P 500 by 295 basis points. Walmart has remained steadfast in its internal investments, and recently announced another salary increase.
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It isn’t difficult to understand why the market reacts this way. Finance 101 teaches us that rising wages are a sign the economy is heating up, which makes it more likely the Fed will follow through on interest rate hikes, and that employers will eventually have to raise prices to keep up with the cost of labor. As interest rates go up, stocks tend to deflate.
But there is also a more insidious and wrong-headed assumption baked into the equation which holds that raising wages will destroy shareholder value – that it is a zero sum game between investing in workers and returning capital to investors, and that paying workers a fair, living wage is somehow bad for business and anathema to smart, disciplined financial management.
It is a narrative that makes a mockery of the American Dream. It puts upwards economic mobility out of reach for millions and undermines faith in our economic system of free enterprise and a fair day’s pay for a fair day’s work.
Part of the problem is a mismatch in time horizons. Costco cofounder Jim Sinegal captured it perfectly back in 2005, shortly after that analyst pushback to an investment in workers, when he told the New York Times NYT , “This is not altruistic. This is good business. … On Wall Street, they're in the business of making money between now and next Thursday. I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now.”
Another key element is awareness. I would wager that most CEOs and board members of Fortune 500 corporations believe that they have few if any full time workers earning below a local living wage threshold. Certainly, PayPal PYPL CEO Dan Schulman and former Aetna AET CEO Mark Bertolini assumed that – until they actually did the work internally to find out that, in fact, there were many workers experiencing acute financial hardship every month.
This is one of the reasons we launched the Worker Financial Wellness Initiative alongside PayPal and in collaboration with the Good Jobs Institute and the Financial Health Network. The goal is simple – to encourage companies to evaluate the financial health of their workforce, determining whether employees are earning enough to not only get by each month but also plan and save for the future. The Initiative is rooted in the belief that if CEOs know this information, they can make better decisions about their business and workforce.
Of course, in a global pandemic and a concomitant recession, these economic pressures are intensified, both from the perspective of the company itself, and the worker. The survival of both has been at stake, literally in some cases. Yet even today, some analysts would still consider any investments in workers’ health, benefits or compensation to be unnecessary and indicative of poor leadership at the expense of shareholders.
Our own research supports the business case for proactive worker investment. Companies scoring in the top 20% on JUST Capital’s Workers stakeholder category, across all 33 industries we cover, outperformed the Russell 1000 over the year ending August 30 by 4.7%, while those in the bottom 20% underperformed by 4.3%. Companies that score highest on the Workers stakeholder prioritize a range of metrics such as implementing fair pay, paying a living wage, and creating a diverse and inclusive workplace.
At its root, this disconnect is a systemic problem. We’ve created a race to the bottom – and it’s worked so well that real earnings for the bottom 90% have been effectively stagnant for the past 40 years, with no clear path to upwards mobility, and millions of full-time workers at Fortune 500 corporations (companies returning billions to investors) rely on government assistance to put food on the table. Wage increases are greeted with skepticism and hostility by the Street. CEOs wishing to lift wages for their workers are met with resistance from activist investors.
We need to change the narrative on wages in America. Our polling shows it’s the single most important issue for Americans right now when it comes to what they want corporate America to do. The first step on that journey is for CEOs and corporate boards to simply ask the question, how many of our workers are financially vulnerable, so they can develop the right strategies and plans to take action.
Visit JUST Capital’s Worker Financial Wellness Initiative resource page for more information. Good Jobs Institute executive director Sarah Kalloch contributed to this article.
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141d09d66f0a571949374f6844e3f8ef | https://www.forbes.com/sites/martinzwilling/2011/04/09/ten-steps-to-build-real-startup-team-engagement/ | Ten Steps to Build Real Startup Team Engagement | Ten Steps to Build Real Startup Team Engagement
Success in a startup is not possible as a “one-man show.” An entrepreneur has to engage with team members, partners, investors, vendors, and customers. In my experience, the joy of positive engagement is sometimes the only pay you get in an early startup. Amazingly, many successful startups are built on this basis alone, with almost no money.
I will talk here primarily about building the internal team of a startup, but the same principles apply outside to your “extended team” and customers. I like the ten practical and transformative steps outlined by Bob Kelleher, in his new book “Louder Than Words,” from his many years of experience in corporate environments. These are easily adaptable to the startup environment:
Link high engagement to high performance. Don’t confuse engagement with satisfaction. The last thing you want is a team of satisfied but underperforming people. Kelleher defines engagement as “the unlocking of employee potential to drive high performance.” Set and reinforce high performance goals. Demonstrate engagement at the top. Leaders must demonstrate support for an engaged culture by personally living their company’s values. Then engage team members in tough decisions. In today’s recessionary times, leaders have large shadows – and team members are watching everything they do! Engage operational leaders first. Studies show that if one’s line manager is disengaged, his/her employees are four times more likely to be disengaged themselves. To stay engaged, I always practiced “management by walking around.” There is no better way to find out how engaged the rest of the team really is. It works at all levels. Focus on communication at all levels. If you neglect to articulate a clear vision of the future, expect only a minimum of energy to make it happen. Successful leaders provide robust communication, built on clarity, consistency, and repetition. It always amazed me as a leader how many repetitions were required before everyone heard the message. Individualize your engagement. Today’s leaders must tailor their communication approaches, rewards, and recognition programs to the unique motivational drivers of each employee. Communication must be tuned to the different generations, diverse groups, and each individual. Create a motivational culture. Long-term motivation comes from people motivating themselves, but you have to create the right culture. Leaders are more apt to get the discretionary extra effort of their team when they create a culture of empathy and concern about team members as real people! Facilitate and use feedback. For open and honest communication, your practices must include the means for that to happen. Entrepreneurs need to ask team members what they think, and then act on the feedback. The bases of feedback may be a suggestion box, social media, town hall meetings, or “open doors” all the way to the top. Reinforce and reward the right behaviors. Employees are incredibly motivated by achievement and recognition, more than money. Money can cause disengagement if team members perceive unfairness. On the other end of the performance spectrum, there must be consequences if you expect behavior to change. Track and communicate progress. Leaders need to reinforce progress real time and frequently, by telling their team members what is expected, how they’re performing, and where they fit in. These are key both for alignment of priorities and engagement. Hire and promote the right behaviors. Sometimes teams don’t have an engagement issue, so much as a hiring issue – hiring the wrong behaviors and traits to succeed in the startup culture. Also, promote only people who exemplify the behaviors that are most important to your success.
Always remember that your actions speak louder than your words or any written policies. Maximizing team engagement is the key to capturing that extra discretionary effort that separates winning startups from losing ones. This is a never ending responsibility that starts on day one. Are you living these steps today and every day?
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8a81a5d74bb58d3a95f05fe5116a55ff | https://www.forbes.com/sites/martinzwilling/2011/09/16/top-10-ways-entrepreneurs-pivot-a-lean-startup/ | Top 10 Ways Entrepreneurs Pivot a Lean Startup | Top 10 Ways Entrepreneurs Pivot a Lean Startup
Image by via @daylife
The popular view of a real entrepreneur is someone with a big vision, and a stubborn determination to charge straight ahead through any obstacle and make it happen. The vision part is fine, but successful entrepreneurs have found that the extreme uncertainty of a new product or service usually requires many course corrections, or “pivots” to find a successful formula.
This reality has fostered a popular new startup approach which dramatically improves the efficiency and speed of these corrections, pioneered by Silicon Valley entrepreneur and author Eric Ries. His new book on this subject, “The Lean Startup,” lays out how today's entrepreneurs use continuous innovation to create radically successful businesses.
Eric espouses designing products with the smallest set of features to please a customer base, and moving products into the marketplace quickly to test reaction, then iterating. He does a great job in the book of making the case for management systems, rather than gut-level reactions, to make required course corrections (pivots), to dramatically improve the odds for success.
Pivots come in many different flavors, each designed to test the viability of a different hypothesis about the product, business model, and engine of growth. I agree with Eric’s summary of the top ten types of pivots to consider:
Zoom-in pivot. In this case, what previously was considered a single feature in a product becomes the whole product. This highlights the value of “focus” and “minimum viable product” (MVP), delivered quickly and efficiently. Zoom-out pivot. In the reverse situation, sometimes a single feature is insufficient to support a customer set. In this type of pivot, what was considered the whole product becomes a single feature of a much larger product. Customer segment pivot. Your product may attract real customers, but not the ones in the original vision. In other words, it solves a real problem, but needs to be positioned for a more appreciative segment, and optimized for that segment. Customer need pivot. Early customer feedback indicates that the problem solved is not very important, or money isn’t available to buy. This requires repositioning, or a completely new product, to find a problem worth solving. Platform pivot. This refers to a change from an application to a platform, or vice versa. Many founders envision their solution as a platform for future products, but don’t have a single killer application just yet. Most customers buy solutions, not platforms. Business architecture pivot. Geoffrey Moore, many years ago, observed that there are two major business architectures: high margin, low volume (complex systems model), or low margin, high volume (volume operations model). You can’t do both at the same time. Value capture pivot. This refers to the monetization or revenue model. Changes to the way a startup captures value can have far-reaching consequences for business, product, and marketing strategies. The “free” model doesn’t capture much value. Engine of growth pivot. Most startups these days use one of three primary growth engines: the viral, sticky, and paid growth models. Picking the right model can dramatically affect the speed and profitability of growth. Channel pivot. In sales terminology, the mechanism by which a company delivers it product to customers is called the sales channel or distribution channel. Channel pivots usually require unique pricing, feature, and competitive positioning adjustments. Technology pivot. Sometimes a startup discovers a way to achieve the same solution by using a completely different technology. This is most relevant if the new technology can provide superior price and/or performance to improve competitive posture.
Every entrepreneur faces the challenge in developing a product of deciding when to pivot and when to persevere. Ask most entrepreneurs who have decided to pivot and they will tell you that they wish they had made the decision sooner. In fact, a startup’s runway is really not money, but the number of pivots they can still make. What are you doing to get to the required pivots faster?
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cc532a39e5b34e1a734796e9ef2c370e | https://www.forbes.com/sites/martinzwilling/2011/10/04/smart-entrepreneurs-follow-the-zig-zag-principle/ | Smart Entrepreneurs Follow the Zig Zag Principle | Smart Entrepreneurs Follow the Zig Zag Principle
Logo via Rich Christiansen
It would be no fun if starting a business was simply plotting a straight line between your idea and success, with no challenges along the way. Zigging and zagging amongst the obstacles is the fun part of being an entrepreneur, and it’s what sets you apart from the average worker who knows exactly what he or she has to do every day to get paid. Relish it, or if it scares you, don’t try it.
That doesn’t mean that starting a business should be a random walk into the unknown. There are certain foundational elements that every entrepreneur must build on to succeed, as well as some critical tools we all need. I found these tried-and-true principles summarized very well in a new book “The Zigzag Principle” by serial entrepreneur Rich Christiansen:
Assess your resources. At some point financial capital if usually needed to meet business goals. But it’s not a substitute for the other critical resources, mental capital (domain knowledge, skills, and passions), plus relationship capital (friends and advisors). Money results from mental and relationship capital, not the other way around. Identify your beacon in the fog. Start with a big audacious goal to guide you, so that every once in a while you can hit a smaller goal, to provide a break in the fog and catch sight of the beacon before those next steps into the darkness. Goals need to be written down, measurable, and realistic. Expect your fair share of zigzagging to get there. Create a catalyzing statement. This is a key element of every elevator pitch, with enough specificity and fuel to keep you and everyone around you moving toward the beacon in the fog. This quantified big dream should be a long-term goal that your short-term zigzags are all leading to. Use your values as the foundation. Drive your startup to profitability. A first zig of getting to profitability is important to every business, because being broke and always fighting for funding can cause a lot of pain. More importantly, profitability can drive you to find hidden assets, zag to interim revenue sources, and force you to pace yourself in getting to that final destination. Define processes and add resources. After the initial zigs and zags to get profitable, it is time to formalize and document the processes that worked. Only then can you expand those things that led to your initial success. It also means that it’s time to stop micro-managing, hire some of the right people, and start giving up some control. Scale the business. This is implementing a model that you can replicate, to get your product or service out across the country, and around the world. Scaling models charge by the transaction, or subscriptions, or have digital assets with no cost to reproduce. Switch to a mindset of working “on” your business, rather than “in” your business. Stay within your guardrails. Set up some rules to constrain your zigs and zags to prevent “out of control” situations. Common controls include some spending limits, time commitment limits, financial milestones. These guardrails should be closely aligned with your values. Practice the art of saying “no,” and the discipline of delegating. Develop reward systems. To keep you and your team from burning out, you need to define a simple system of motivators and rewards. Too much reward leads to an entitlement mentality. As you hit each zig, you need to take a break from the intensity, celebrate, and enjoy the fruits of your labor.
The alternatives to planned zigzags are a planned straight line, or a planned random walk. Neither of these are realistic for an entrepreneur seeking success, but I still see them every day, and I see the pain that results. Smart entrepreneurs are nimble and flexile, bootstrap to the maximum degree possible, and pivot for emerging opportunities. Be one.
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74258057e0384347070a60786ff1435b | https://www.forbes.com/sites/martinzwilling/2011/11/13/10-clues-that-its-time-to-start-your-own-business/ | 10 Clues That It's Time to Start Your Own Business | 10 Clues That It's Time to Start Your Own Business
Image via Sourceworld
Many budding entrepreneurs struggle mightily with that first step – out of their comfort zone and into the unknown. They keep asking people like me whether the time is right, and the truth is that there’s never an ideal time to start your own business. It’s like starting a personal relationship, if you wait for exactly the right time, you’ll never do it.
I’ve talked to many experts, and everyone has his own view of the right personal attributes, and the right business conditions to jump in. In my own view, the recovering economy is ripe for new startups, but successful startups are more about the right person, than the right idea or the right climate. So the real challenge is looking inward to check your alignment with these clues:
Running a business is a passion you crave. This is a necessary, but not sufficient reason to start a business now. It’s not the same as “I want to change the world (volunteer for a good cause)” or “I’m tired of the corporate grind (take a vacation).” It does mean you have a compelling new business idea, and a willingness to face risk. You know what needs to be done, and not afraid to make the decisions. This is the right context for being your own boss. You get great satisfaction from overcoming all obstacles, and you have no problem with living or dying by your own decisions. You have never had a problem putting together a plan and making it happen. The opportunity to make real money excites you. You have read all the stories of Google and Apple hitting on a great idea, beating the odds, and being worth millions in just a couple of years. You like the idea that most of the money you make will be yours, not just merged into corporate profits. You believe the economy has tilted the odds in your favor. The recent recession has definitely opened up opportunities for new products, and skilled people at lower costs are abundant. Many of the great entrepreneurs of the past started their companies near business recessions and depressions. You get to set the deadlines, and manage your own priorities. You have always felt that you can do more than expected by current bosses, if allowed to do it on your own schedule with your own milestones. Your self-motivation is more effective for you than any arbitrary rewards and even salary increases. You get to do the interesting things, for a change. First of all, the business you intend to set up is your dream, not someone else’s. Within that context, you can delegate or find partners for things that bore you, like marketing, rather than feel that you have been assigned to do the least interesting work. A variety of challenges stretches your abilities to the maximum. If you love to learn new things, and are stimulated by change, you will love the new business environment. Every day is different, from dealing with creative elements, to financial challenges, marketing and sales, and customers of every type. Your office is where you want it. Many entrepreneurs enjoy working from their home, where they are more comfortable, and can interact better with their family. Some like an old eclectic loft downtown, or a local coffee shop to minimize the commute. In these days of global links, you can actually run the business from halfway around the world. What you envision doesn’t seem all that hard to you. In fact, the cost of entry into most businesses has come down greatly in the last twenty years. You can now start an e-commerce site for $100, or develop software applications for smart phones for a few thousand. The right reason to start a business is because you have done your homework, and are convinced that you have the skills and knowledge to do it easily. You are really ready for a second career. This is especially applicable to Boomers and anyone who has had a successful career, but now ready for a new challenge, with a little time on their hands. The good part of having your own business is that you don’t even have to give up your first job to start the second.
If a few of these reasons are calling your name, now is the time to start building your business. There's no better time, especially if people around you are hesitating due to an apparent fit to my other list. It means you'll be facing a lot less competition. What are you waiting for?
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e44c46d321bccfdf4b08524c2087f919 | https://www.forbes.com/sites/martinzwilling/2012/03/20/effective-business-mentoring-is-a-relationship/ | How to Make a Business Mentoring Relationship Work | How to Make a Business Mentoring Relationship Work
Image by Brian Tracy
I’m a big fan of mentoring in business, and have been at different times on both the contributing and receiving end of the process. These days, I seem to often hear from entrepreneurs who are struggling to find a mentor, or complaining about their lack of effectiveness. Like any other relationship, it takes work on both sides to make mentoring work.
Most entrepreneurs view a mentor as someone older and more experienced who takes the time to personally give guidance, advice, and takes an emotional investment in your success. They don’t think about this process requiring an investment on their part, both in nurturing the relationship, and really listening, without being defensive, to advice given.
Brian Tracy, in his new book, “Earn What You’re Really Worth,” solidifies my ideas on how mentoring, as well as other personal development activities, can quickly increase anyone’s value and income in business. Here are some key points on how to find and utilize the right mentor, which I have adapted specifically for entrepreneurs:
Set clear objectives for yourself in your business growth. Decide exactly what it is you need mentoring on before you start thinking of the ideal person to work with. A successful financial executive probably isn’t a good mentor for building and executing a great marketing strategy. If you don’t have an objective, you won’t know when you arrive.
Work, study, and practice continually to solidify the guidance. The very best mentors are the most interested in helping someone who is willing to learn and grow quickly. That doesn’t mean you should accept any guidance blindly, but it does mean no time making excuses, and an honest effort to understand and implement action items.
Don’t ask for too much time or make a nuisance of yourself. Remember, the best mentors are busy people, and they may be opposed to someone trying to take up a lot of their time. The best approach is to ask for small focused blocks of time, maybe just ten minutes, in private, and be prepared with real issues to discuss.
When you meet with a mentor, you should lead the discussion. Your mentor should not be driving your business, or expected to provide critical feedback on actions taken or missed. It’s most effective if the entrepreneur proposes the agenda and drives for specific insights, but never forgets to press the mentor for broader or related implications.
Remember the difference between a mentor, a friend, and a coach. Expect a mentor to tell you what you need to hear, not like a friend who may tell you what you want to hear. A business coach is focused on helping you with generic skills, whereas a mentor’s aim is to teach you based on specific situations. The same person can’t be all of these.
On a regular basis, send a note to communicate progress and current tasks. There is nothing that makes a potential mentor more open to helping you than your making it clear that you are following through, and the help is doing you some good. This is also a good way to hand out and follow up on assignments to your mentor.
Keep the relationship positive and productive. If a mentor proves to be unresponsive or on a different wavelength, bow out of the relationship immediately. Be aware that mentors are usually in a business position that can hurt you as well as help you, so don’t waste their time or antagonize them.
When you consciously and deliberately seek out a mentor, you must look for someone who genuinely cares about you as a person and who really wants you to be successful in your venture or your career. That emotional involvement and genuine concern for you are the keys to real mentor contributions.
Some people will say that they need to make all their own mistakes, in order to learn from them. Yet there is plenty of evidence that the fastest way to business success is by piggybacking on the counsel of men and women who have already spent years learning how to succeed. If you can’t make a mentor relationship work, I worry about the rest of your business as well.
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aa4e1d7182ff9d72b51b987dc9696742 | https://www.forbes.com/sites/martinzwilling/2012/06/07/7-success-principles-from-internet-millionaires/ | 7 Success Principles From Internet Millionaires | 7 Success Principles From Internet Millionaires
Image of Scott Fox via Amazon.com
Many aspiring entrepreneurs are looking to the Internet as an opportunity to get rich quick, instead of a place where you can start a business you love, for very little capital and minimal technical expertise. The reality is that if you build a business you love, you may in fact make big money, but if you start a business to get rich, you will probably fail.
In my experience, there are good reasons for starting a business, and good ways to go about it in the new online world, but even entrepreneurs with good intentions often don’t have a clue on key principles to follow for this rapidly changing platform.
The best place to learn is by scouting around the Internet today. See what other people are offering, and think about a niche where you could be unique, and have some fun at the same time. There are also many other good sources of guidance, including the new book “Click Millionaires” by Scott Fox.
He addresses the dream of many to be a dot.com (click) millionaire, but emphasizes the need to start with an assessment of your own goals and interests. Starting an Internet business is a new lifestyle, so you need to understand the implications. On the business side, I am adapting here his seven success principles, too often overlooked by people who leap before they look:
Find a niche to help real people. Look for real problems to solve, like losing weight, staying healthy, or gaps in a popular product line. “Nice to have” sites like Facebook and Twitter look attractive, but they are much higher risk, and a thousand fail for every one that succeeds. Position yourself as an expert. People tend to buy from people they perceive as “experts.” Expert status is no longer a formal degree or certification. Today it more often means a “trusted friend” who seems real, visible, and doesn’t “push” products. Don’t hide behind a website with no address, picture, or direct contact information. Automate to the max. Take advantage of software tools to automate routine business functions, like taking and delivering orders. Provide website forums to help customers solve their own problems. Use free e-commerce software and services like PayPal before building an expensive customized solution. Generate revenue around the clock. Use the Internet to outsource staff. Hiring virtual assistants for each specific project can be a lot more efficient and cheaper than hiring and managing employees. Start with sites like Elance.com and Guru.com for specialized tasks you can’t do yourself. Pay others to handle small stuff, and keep your time available for bigger priorities. Let your audience help with content creation. Audience contributions, like product reviews, discussion board conversations, and comments on your blog are invaluable because they create more credible content and attract more money from advertisers. Even more valuable are success case studies and testimonials. Define a business that is scalable. First, pick an opportunity that has a worldwide appeal, like eco-friendly products. Then implement automation on production and tracking so you don’t need hours of manual work on each order. Finally, use customer feedback or promotions to attract more and more customers with less and less effort. Focus on recurring revenues. A great way to make more money more easily online is to replace one-time sales with automatically renewing subscriptions. With a stable base of subscribers, this can mean a continuing revenue stream from newsletters, support, or advice on demand.
Even with all this, don’t expect it to be easy. Unreasonable expectations lead to frustration and giving up too soon. Remember, being an entrepreneur is a lifestyle, one that requires constant learning and problem solving, and that’s half the fun. The other half is doing what you love to do, possibly even making lots of money.
There are more and more Internet millionaires (and billionaires) out there every day. Most are not as visible and well-known as Mark Zuckerberg, but their money spends the same way. Can you be the next one?
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1e8c067b3f545b34e34fc9d7734adefb | https://www.forbes.com/sites/martinzwilling/2012/09/09/dont-let-lifestyle-entrepreneurs-be-a-dying-breed/ | Don't Let Lifestyle Entrepreneurs Be a Dying Breed | Don't Let Lifestyle Entrepreneurs Be a Dying Breed
SAN FRANCISCO - NOVEMBER 15: Facebook founder and CEO Mark Zuckerberg speaks during a special event... [+] (Image credit: Getty Images via @daylife)
Until the recent recession, market research indicated that as many as 90 percent of the roughly 20 million American small business owners were motivated more by lifestyle than growth and money. Since 2008, the desire for profits has trumped passion in 54 percent of new startups, according to a recent study. It seems that everyone wants to make a quick buck these days.
Being called a lifestyle entrepreneur should be a point of pride, not an insult. The term applies to anyone who places passion before profit, and intends to combine personal interests and talent with the ability to earn a living. This usually means not taking money from equity investors, since investors want fast growth, high profits, and an exit event, to allow investments to be recouped.
Of course, even lifestyle entrepreneurs want to be happy, and want their business to be “successful.” According to a recent book by William R. Cobb and M. L. Johnson, “Business Alchemy: Turning Ideas Into Gold,” these different success expectations are what separates a lifestyle entrepreneur from a growth entrepreneur:
Owner is the only one “in charge.” Every lifestyle entrepreneur starts their business to be their own boss and follow their passion, so they don’t even think about having investors, a board of directors, or going public. If you think corporate bosses are tough, wait till you start spending investor money, or try satisfying Wall Street and stockholders.
Insist on being engaged at the transaction level. If you are living your passion, you want to interact with customers, and “touch and feel” the product every day. Growth entrepreneurs find that this fun world quickly changes to managing personnel problems, tuning organizational structures, and dealing with testy investors.
Income generated is part of the owner’s personal income. The legal structure of these startups is usually a sole proprietorship, a Limited Liability Corporation (LLC), or a sub-chapter “S” Corporation. Under all of these, net income flows easily into your personal income. Corporate versus personal growth really becomes a lifestyle decision.
Startup funding comes from personal savings and family. There is no free lunch for money. Non-equity funding has to come from personal sources, or government grants, or bank loans. Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options.
Business model to maintain lifestyle is the primary driver. The lifestyle entrepreneur chooses a business model to make a long-term, sustainable and viable living, working in a field where they have a particular interest, passion, and talent. They operate the business to sustain a minimal level of cash flow necessary to support the lifestyle.
Maximizes owner personal tax privileges. This means that owners can look for every opportunity to get a personal tax advantage from the business, like charging vehicle operating costs to the business, renting facilities from themselves, or managing business and personal travel.
Enjoy being visible and active in the local community. Lifestyle business owners usually benefit and enjoy being a part of the local Chamber of Commerce, Rotary, and other civic organizations. These can become part of balancing your lifestyle, rather than part of the stress of business-driven networking.
No exit planned until retirement. A lifestyle business becomes an integral part of an entrepreneur’s identity and their life. If, and when, the time should come to “exit” from the business, they will often seek to transfer it to a family member, or simply close it down.
In my view, lifestyle entrepreneurship should be growing in popularity, rather than shrinking, as technology provides startups with the cheap digital platforms needed to reach a large global market. Also, more women have been jumping into entrepreneurship, and they have long wanted to make their business and personal lives and aspirations work more in harmony.
Younger Gen-Y entrepreneurs also tend to be more passionate, idealistic and not driven by money, so I would expect to see them trend up in lifestyle entrepreneurship. I’m told that Mark Zuckerberg of Facebook started out as a lifestyle entrepreneur. I’m betting that about now he wishes he had stayed on that path. What do you think?
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8e39ba94c005a1d892e00517aededca5 | https://www.forbes.com/sites/martinzwilling/2013/03/01/how-many-more-online-dating-sites-do-we-need/ | How Many More Online Dating Sites Do We Need? | How Many More Online Dating Sites Do We Need?
Image via EliteDaily.com
Online dating sites usually fail because online dating usually fails. The simple reason is that everyone expects quick results, no one can make that happen, and users get very unhappy very quickly. Even the main industry rag, Online Dating Magazine, admits that the success rate is a mere one percent, compared to an estimated fifty percent for startups in general.
I certainly understand why everyone wants to take a shot at it – the “need” is huge. In the U.S. alone, the target demographic for these services is 90 million singles that are between 19 and 45. Then there are the forty percent of frequent users that are already married. Some say that’s a billion dollar “recession proof” opportunity. The spend is still going up.
But make no mistake about it, this is a tough and oversaturated market to enter at this stage. Here are six key reasons, from a business perspective:
Direct competition is huge. There is no opportunity for “first mover” advantage here. The same Online Dating Magazine estimates that there are more than 2,500 online dating services online in the U.S. alone, with 1,000 new online dating services opening every year. Some estimates say there are 8.000 competitors worldwide.
Online dating fraud is on the rise. Online dating fraud rose by 150% percent in the last couple of years as scammers and hucksters turned up the false charm and predatory trolling, according to a recent article on Mashable. Lawsuit claims and Nigerian con artists are up, and disillusionment is growing. The honeymoon is over.
Entry cost is very high. This business suffers from what Paul Graham calls the ‘chicken and the egg problem‘ – no one wants to use a dating site with only a few users. So sites have to invest heavily in viral marketing to achieve critical mass, which competes with current social networks, while users expect to join both for free.
Intellectual property is tough. It’s hard to invent and patent more “scientific” methods on how to match people. Most people, especially women, don’t even want to feel like they can be ‘matched’ by a computer. E-harmony.com has already defined the 29 DIMENSIONS® of compatibility, how many more could there be?
Social networks. “Social networking” is really the new term for dating, with mega-sites like Facebook, and the hyperlocal site Foursquare. After all, isn’t dating all about making new “friends,” and finding them in all the right places? The latest is Facebook Graph Search, unveiled last month, to help you find the perfect match on the social network.
Sophisticated search engines. I’m already seeing search engine parameters that can match image features, so singles will soon be able to search cyberspace for their ideal partner, without the need to join any dating site. How about the next generation search engine, answering the question, “Who is my ultimate soul mate?”
Perhaps I shouldn’t suggest that no one can win in this space. However, because 99 out of 100 fail, and because some have an unsavory reputation, you won’t find many Angel or VC investors who are interested. Plan to focus on that other popular tier of investors – founders, family, friends, and fools.
Certainly if you expect to get any traction in this market, you need some real innovation. The trend is to more mobile and niche markets. But you better hurry, because potential winners like Dating.Mobi, Herpes-Date.com, and DateMyPet are already taken.
So please don’t send me any more business plans along these lines, looking for investor funding, with no marketing budget, and promising huge returns. Investors are looking for real innovation, not copycats with more bells and whistles. So are customers. Let’s give it to them.
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9d74fb36c170f6f0dbd6c646df3dce17 | https://www.forbes.com/sites/martinzwilling/2014/12/02/how-to-squeeze-productivity-from-employee-happiness/ | How To Increase Productivity By Employee Happiness | How To Increase Productivity By Employee Happiness
Whether you are an entrepreneur managing a startup, or a corporate executive with thousands of employees, it’s hard to ignore the evidence of big value from happy employees. For example, the Harvard Business Review a while back included an analysis of hundreds of studies showing an average of 31% higher productivity, 37% higher sales, with creativity three times higher.
The challenge is to find the best way to keep everyone on your team happy and productive. Google, which was ranked by Fortune magazine as the world’s best place to work, seems to put a lot of stock in providing a free food source to every employee, within three minutes from each office, via many micro-kitchens open 24/7 throughout their campus.
Unfortunately, I suspect it’s a little more complicated than that for most companies. Most experts agree that workplace happiness is hard to find, partially because we as humans are not particularly good at staying happy. Psychologist Ron Friedman, in his new book “The Best Place To Work,” explores this problem in detail, and I like the insights he offers to maximize your efforts:
Reward frequency is more important than size. Business feedback indicates that smaller frequent positive feedback and rewards will keep people happy longer than a single large infrequent happy event. Even the biggest awards or raises “wear out” in less than a year, with most employees responding better to small doses every few days. Positive event variety prevents adaptation. People tend to discount events that happen repeatedly, no matter how positive. The value of going away on vacation is that it breaks the routine of everyday life, as well as making you recognize the pleasures of being back home. At work, variety could mean unique events or awards each month. Unexpected positive experiences deliver a bigger impact. When something surprising happens, our brains automatically pay closer attention, lending these events greater emotional weight. Thus you must make positive surprises more frequent, like special lunches or activities, to override the occasional unavoidable bad news. New life experiences have more impact than reward objects. Evidence indicates that providing new positive life experiences (for example, a hot-air balloon ride, wine-tasting class, or vacation to Italy) tends to provide a greater happiness boost than spending a comparable amount on material objects (flat-screen television, fancy suit, or purse). Happiness can be triggered outside of conscious awareness. Relaxing music can lift employee moods unconsciously, as can pleasing scents (nearby bakery, candles, or coffee). Stores and casinos use “aroma marketing” to put customers in positive moods, not for productivity, but to increase their optimism and willingness to spend. Focus on achievements leads to better job appreciation. Businesses need to spend more effort asking and listening to employee achievements, rather than a continuous focus on what’s broken or not done. Asking about achievements in a group setting encourages recognition of co-workers and gratitude expression, which catches on.
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Research also shows that when team members are happy at work, they are better collaborators, work to common goals, and are more innovative. That means it pays to elevate people’s mood at the start of a team effort by using refreshments, good news, or an interactive activity. The trick is to promote a mindset that benefits the activities that you are asking them to undertake.
Managers and executives should never confuse recognition events and group lunches with unproductive time. All interactions that bring employees together in a positive way extend productivity in the long run. In a similar vein, don’t confuse people presence with productivity. Productive employees are the ones who are passionate, focused, and excited to be there.
Believe it or not, it is possible for employees in business, as well as entrepreneurs, to be both happy and productive. As a business, happy employees lead to success, more than success leads to happiness. If you want to emulate Google’s success as a great place to work, and as a successful company, maybe it’s time to think more like they do about employee happiness.
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8c8dfda70516cbcac8bf0df5a71fa314 | https://www.forbes.com/sites/martinzwilling/2015/12/01/7-keys-to-a-new-business-model-for-todays-economy/ | 7 Keys To A New Business Model For Today's Economy | 7 Keys To A New Business Model For Today's Economy
Since the financial downturn of 2008, I have seen a new business model emerging which embodies a greater focus on social and environmental responsibility, and a new requirement for trust and sharing, as well as customer and community collaboration. Companies like Airbnb, Uber, Zappos, and Whole Foods are setting the example, and leading the way in profitability and purpose.
In her new book, “We-Commerce: How to Create, Collaborate, and Succeed in the Sharing Economy,” veteran marketing strategist Billee Howard calls this movement an economy centered on the power of “we” instead of “me.” She presents a roadmap to help us navigate this new business landscape, retaining the best of the old, while innovating the path to success.
In my work with many entrepreneurs and investors, I also see and support the strong movement to this new business model, which can be characterized by the following attributes she outlines:
Deliver value to the greater community, as well as customers and insiders. Provide real value and give-back to the global community and employees, generating trust and loyalty, which in turn brings in more customers. The result is a win-win situation, with more profits for the business, satisfied customers, and happy employees at all levels. Develop a personal-engagement extraordinary service mentality. The days of mass production and commodity pricing as an asset are gone. The new customer generation wants to provide input, and wants to be treated as one-of-a-kind in their solution, delivery, and service. Being good in business now looks like an art, with creativity and innovation. Customers and team members must be inspired, rather than pushed. Companies that offer value beyond their product or service, for social and environmental good, are seen as leading the way forward to a shared future abundance. This results in a new loyalty inside the organization, as well as outside, building momentum and profit. Grow bigger by thinking smaller in the beginning. Start with a niche that you want to be known for, and knock it out of the ballpark by being the best. Narrowing your focus actually broadens your appeal and allows you to charge a premium because you are “the expert.” This give you the credibility to expand to other niches and grow the market. Make innovation, creativity, and artistry your core competency. This requires team members who’ve been taught to think like innovators, and a reward system that fosters creativity. It requires actively listening to customers, and a culture of change. Most of all, it requires leadership and communication from the top on purpose and shared goals. Tell your purpose story for engagement and improved recollection. Stories have been an essential driver of change and engagement throughout human history. Good stories make us think and make us feel. They stick in our minds and help us remember ideas and concepts in a way that numbers and text on a slide with a bar graph won’t. Bridge the physical and digital worlds for your customers. Make sure all relevant customer interaction data, regardless of channel or source, is immediately available at every step of the customer’s journey. Empower all team members and customers, both in-store and online, with the right information they need in order facilitate a buy decision.
On top of the financial downturn, the business world has been forever altered by the growth of the world-wide Internet and global telecommunications. The customer and business universes are now globally and totally connected. This means that all customers see social needs and the environment as part of their own world, and expect these to be part of every business focus.
Thus, as the new sharing economy challengers continue to evolve their new business models, the traditional incumbents will be forced to change, or forced out of the marketplace. It’s time to take a reading on where you are in this spectrum. Is your company innovating a path to success, or riding an old wave into a cliff?
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54f0b41fe5643afd783a553e805d360a | https://www.forbes.com/sites/martinzwilling/2016/03/05/7-ways-to-sustain-top-performers-in-your-business/ | 7 Ways To Sustain Top Performers In Your Business | 7 Ways To Sustain Top Performers In Your Business
Every business wants and needs top performers, but most entrepreneurs and executives assume that if they hire and train the smartest and most experienced people, they will get exceptional performance. They forget that top performance is a two-way street, requiring comparable initiative and responsiveness on the part of the leader, as well as contribution from each team member.
In other words, under-performing employees can be just as much a function of leaders not doing their job as employees not doing their job. In fact, there are initiatives that leaders can and must do to even enable high performance on their team. I saw the key ones outlined well in a recent book, “Creating High Performers,” by William Dann, a leading coach to experienced CEOs.
In my own role as advisor and mentor to many entrepreneurs and startups, I was struck by how relevant and critical these same initiatives are to even the earliest stage businesses. Thus, I have converted here Dann’s seven questions for direct reports, to responsibilities that every aspiring entrepreneur should keep high on their own personal priority list:
Constantly communicate what is expected of the team as a whole. Only a few team members will ever be able to figure out what is expected of them on a regular basis. As the team grows, and the business pivots, communication of expectations becomes more and more critical. Your startup’s survival, as well as people performance, is at stake. Set the standards for good performance in each role. New team members in a new startup, coming from different backgrounds, may have quite different benchmarks of excellent performance. Your standards for product quality, sales growth, and customer satisfaction must be documented and reviewed prior to results and performance reviews. Provide regular feedback on results seen and measured. Inadequate feedback, good or bad, will result in lowered motivation and a decline in performance, even with the best people. Informal feedback should be provided weekly or daily, with more formal sessions scheduled at least semi-annually. Surprises are expensive for employees and leaders, Top performers need authority to carry out their responsibilities. Team members who lack sufficient authority tend to avoid responsibility rather than rising up to meet it, primarily due to fear of failure. Giving authority also implies patient coaching on early mistakes, letting go of control, and positive recognition of team member initiatives. Provide timely decisions in areas where they don’t have authority. People measure your responsiveness as a leader, just as you measure theirs. Top performers expect to be surrounded by top leaders, who monitor and supportively respond to situations that go beyond their domain. The goal is to have no employee action impeded by leader inaction. Make sure required data, resources, and tools are provided early. Top performance is more than skills and effort. It requires the right tools and information to get the job done. The leader’s responsibility is to anticipate these requirements, listen carefully to the needs of their team, and be responsive in providing these needs. Acknowledge and reward the results that you desire. Showing your appreciation on a person-to-person basis and in front of peer team members is usually more valuable than financial awards. Yet in the long run, you get what you pay for. Thus paying only for sales volume, when you desire high customer satisfaction, is not productive.
It’s only when leaders live up to their responsibilities outlined here, that entrepreneurs can separate the “can’t do” from the “won’t do” of team member performers. These initiatives on goal setting, coaching, providing resources, and supporting good results should eliminate the “can’t do.” The rest have to be dealt with more directly and moved out before they drag down everyone.
Don’t assume that traditional techniques for assessing performance, including the annual performance evaluation, will create top performers. They can actually do damage, primarily because they are tied to changes in compensation rather than changes in performance. Thus the major burden of your team’s performance is on you, the leader. Are you being the top performer you expect of everyone else?
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cfa97e54c0bebab97188d9e7f3d35445 | https://www.forbes.com/sites/martinzwilling/2016/07/22/8-initiatives-to-increase-your-business-growth-curve/ | 8 Initiatives To Increase Your Business Growth Curve | 8 Initiatives To Increase Your Business Growth Curve
Pets. Com April 27, 2000 Photo Scott Gries/ImageDirect
A common pain of startups after an exhilarating first surge of early adopters is a long and frustrating plateau of slow growth, where it seems like nothing you do will get your business to profitability. Too many entrepreneurs don’t know what to do at this point, largely accounting for that disappointing 50 percent of startups that fail in the first five years, according to Gallup.
Some make big mistakes, such as Webvan expanding too fast with a huge infrastructure, and Pets.com, trying to grow the business with a negative margin, under the mistaken assumption that winning customers is more important than making a profit. Others do far too little, assuming the viral effect and word-of-mouth will soon kick in, and sales will suddenly grow exponentially.
In any case, it’s no fun to be stuck in this stage, struggling to make payroll, and dealing with impatient creditors and unhappy investors. First you need to take consolation from the fact that you are not alone, and more importantly you need to implement an active growth and marketing plan to include the following initiatives:
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Ramp-up visibility and strategic alliances. It’s easy to get so pre-occupied with handling the business rollout that you forget to maintain and increase your social media interactions, search engine optimization efforts, and highlighting positive customer reviews on your website. Continually add new marketing and distribution partners. Real growth always requires real marketing. Word-of-mouth and social media may get you started, but there is no substitute these days for special promotions, webinars, presence at trade shows, and actively calling on decision makers. There is no magic lever for growth, so several initiatives are required, with metrics to assess value returned. Ask every employee to focus on sales. This starts with multiple messages from the top that growth is now the highest job priority, and key to survival. Openly reward employees who make the extra effort, champion cost-cutting issues, and enhance the sales process. Ask everyone to be an advocate of the business to their friends and connections. Personally optimize every cash flow transaction. Resist the urge to delegate accounting decisions, under the assumption that incoming revenue takes the pressure off. Now is the time to take advantage of volume discounts and deferred payment plans. Many entrepreneurs forget that the growth phase may be your tightest squeeze on cash. Increase the pipeline and the conversion rate. Now is the time to formalize lead-generation efforts, and initiate efforts to maximize the conversion rate to sales closure. Real growth requires new and innovative ways to find customers, as well as old-fashioned advertising and email blasts. Shorten the close cycle to grow faster. Introduce automation consistent with growth rates. Manual processes and people are always the most expensive to scale, so every process needs metrics to determine when automation is appropriate. Some startups hire more people to delay automation, or spend money wildly on new tools for the future. Both are strategies for business failure. Introduce new products and enhancements every month. One of your best sources of growth is existing customers, who are always looking for more opportunities to buy, and new offerings. Capitalize on competitor weaknesses that you can fill with minimal new investment. Actively listen to customer feedback, and don’t be a one-trick pony. Aggressively enter new markets and sales channels. If your local market isn’t giving you the growth you expected, it may be time to expedite your expansion to new major cities or export opportunities. If your website isn’t pulling in the growth you need, expand to Amazon and other channels. Growth requires market innovation as well as product.
An entrepreneur who has struggled to fund and build a dream solution may think they can relax when the first wave of customers come in. Unfortunately, the challenges of scaling a business, and making it profitable, often last longer than the product development phase. The good news is these challenges are not rocket science, so anyone can do it. Don’t give up your dream too early.
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ef6a85ccf45bbb9de758a4d3779827d0 | https://www.forbes.com/sites/martyswant/2019/08/15/people-are-becoming-more-reluctant-to-share-personal-data-survey-reveals/?sh=5955bb801ed1 | People Are Becoming More Reluctant To Share Personal Data, Survey Reveals | People Are Becoming More Reluctant To Share Personal Data, Survey Reveals
A new survey conducted the Advertising Research Federation found that U.S. consumers are becoming ... [+] less likely to share personal data. (Photo by Jaap Arriens/NurPhoto via Getty Images) NurPhoto via Getty Images
A new report suggests Americans are increasingly less likely to share their data with companies—perhaps a sign that marketers should focus not just on regulatory compliance but also on explaining how and why data is collected in the first place.
Results of a 1,000-person survey, released on Wednesday by the Advertising Research Foundation, found that U.S. consumers are less likely in 2019 to share personal information than they were in a previous study conducted a year ago. That includes some of the most basic personal information. According to the ARF, the number of people willing to share their home address fell from 41% to 31% from 2018 to 2019, while those willing to share the name of their spouse fell from 41% to 33%. Meanwhile, only 54% said they were willing to share their email address—down from 61% last year.
The findings could have implications for agencies and brands that rely on consumer data for everything from personalized ads to loyalty programs and online sales.
“I think the industry basically really needs to communicate the benefits to the consumer of more relevant advertising,” said ARF Chief Research Officer Paul Donato. “If that becomes one of the mechanisms that people elect into sharing their data.”
Even though marketers might think consumers would give up data for better ads, that's not the case for everyone. Respondents were less likely in some categories to share data in exchange for more personalized advertising. This year, the total people willing to disclose their race or ethnicity fell from 91% to 85%, while those willing to share their first and last name fell from 63% to 59%.
The public sentiment might also be enlightening to lawmakers at the state and national level as they consider legislation to address how brands and internet companies use consumer data. According to the International Association of Privacy Professionals, more than dozen states have introduced bills this year that address issues of data privacy. Meanwhile, California is still ironing out the details of the state's new data privacy law—the California Consumer Privacy Act—which goes into effect in January and will give consumers more control over how their data is collected, shared, stored, and used.
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Consumers are sometimes reluctant to share information because they don’t always even understand how data is used, Donato said. To better understand consumer comprehension of ad-tech terms, the ARF asked respondents to color-code words that show up in privacy policies and other parts of a company’s website and learned that only 30% of people understand the term “third party.”
“If you look at people’s privacy statements, ‘third party’ is everywhere,” Donato said.
The dollar amount that consumers put on their data also varies. While about a third of respondents said they’d give info away for free, nearly half said they would sell it for less than $10. Another 13% said they’d sell info for between $11 and $20, while about 4% said they’d require at least $20 for each piece of data.
The value of consumer data is also the subject of at least one bill waiting for consideration in Congress. Bi-partisan legislation introduced in June would require Internet giants to disclose what they think user data is worth. The bill would also empower the Securities and Exchange Commission to make its own calculations based on each company's business model.
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287d4b245ff9d7e2a97fd27aef8e2871 | https://www.forbes.com/sites/martyswant/2019/10/30/twitter-plans-to-halt-all-political-advertising-next-month/ | Twitter Plans to Halt All Political Advertising Next Month | Twitter Plans to Halt All Political Advertising Next Month
Twitter plans to remove political ads on the platform next month. SOPA Images/LightRocket via Getty Images
Twitter plans to ban political advertising on the platform next month, according to the company.
The ban–which include both issues-based ads and ads from specific candidates–is a major change in policy for the social media company, which has been a longtime destination for both political news and political discussion over the past decade. In a tweet on Wednesday afternoon, Twitter CEO Jack Dorsey said the company will halt all political ads globally starting on Nov. 22, explaining that “political message reach should be earned, not bought.”
“A political message earns reach when people decide to follow an account or retweet,” Dorsey wrote in a tweet. “Paying for reach removes that decision, forcing highly optimized and targeted political messages on people. We believe this decision should not be compromised by money.”
He added: “While internet advertising is incredibly powerful and very effective for commercial advertisers, that power brings significant risks to politics, where it can be used to influence votes to affect the lives of millions.”
Political spending only accounts for a fraction of Twitter’s overall ad revenue. The company had previously disclosed that political ad spend during the 2018 U.S. mid-term elections totaled less than $3 million. (For comparison, last week Twitter reported $702 million in ad revenue during the third quarter of 2019.) Twitter Chief Financial Officer Ned Segal said the decision to ban political ads was “based on principle, not money,” adding in a tweet that there will be “no change” to the company’s fourth-quarter earnings guidance.
Because of the data-driven nature of targeted political ads on the internet and how machine-learning algorithms often increase the velocity of how information spreads, Dorsey said political ads on the internet are also “entirely new challenges to civic discourse.”
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Twitter had considered banning only ads bought by specific candidates. However, Dorsey said issues-based advertising would have made it too easy for candidates to still get around the company’s new policy, which will be published on Nov. 15 before going into effect a week later. He also called for more “forward-looking political ad-regulation,” which he acknowledged is something that’s “very difficult to do.” In the past two years, some U.S. lawmakers have introduced legislation to make online political ads more transparent, but so far the bills have received little traction in Congress.
The timing of the news is especially timely given that rival Facebook has faced widespread criticism both inside and outside of the company for refusing to remove false political ads from its own platform. Facebook CEO Mark Zuckerberg has defended the decision by saying the company doesn’t want to be responsible for defining truth.
Despite an internal letter signed by hundreds of Facebook employees protesting Facebook’s decision avoid moderating political ads, the company has continued to defend its position. In a Facebook post earlier today, Campbell Brown, Facebook’s head of news partnerships, wrote that it’s the role of the media to fact check political ads and not Facebook’s.
“I strongly believe it should be the role of the press to dissect the truth or lies found in political ads - not engineers at a tech company,” she wrote. “I also believe that in building out a destination for news on Facebook, we should include content from ideological publishers on both the left and the right - as long as that content meets our integrity standards for misinformation.”
Some lawmakers have expressed frustration with Facebook’s decision, too. In a letter to Zuckerberg yesterday, U.S. Sen. Mark Warner, D-Virginia, urged Facebook to reverse its decision. He also asked Facebook to clarify how it defines a “politician,” and asked what measures the company has in place to prevent abuse of the definition.
“In making strides not to continue contributing to the coarsening of our political debate, and the undermining of our public institutions, at a minimum, Facebook should at least adhere to the same norms of other traditional media companies when it comes to political advertising,” Warner wrote.
In explaining the decision to remove political ads on Twitter, Dorsey also pointed out that “this isn’t about free expression.”
“This is about paying for reach,” he wrote. “And paying to increase the reach of political speech has significant ramifications that today’s democratic infrastructure may not be prepared to handle. It’s worth stepping back in order to address.”
After Dorsey announced plans to remove political ads, Twitter’s share price fell nearly 2% before partially rebounding soon after. Around the same time, Facebook reported revenue and user growth in its third-quarter earnings, prompting its own stock price to increase nearly 3% in after-hours trading.
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43ea1821fc99b59f2c8a7220764c822e | https://www.forbes.com/sites/martyswant/2019/12/12/in-move-to-new-role-at-jpmorgan-chase-kristin-lemkau-builds-on-growth-priority-as-cmo/ | In Move To New Role At JPMorgan Chase, Kristin Lemkau Builds On Growth Priority As CMO | In Move To New Role At JPMorgan Chase, Kristin Lemkau Builds On Growth Priority As CMO
JPMorgan Chase CMO Kristin Lemkauat Web Summit in November in Lisbon. Sportsfile for Web Summit via Getty Images
JPMorgan Chase & Co. Chief Marketing Officer Kirstin Lemkau has been named CEO of the bank’s wealth division.
CMO of the New York-based financial services company since 2014, Lemkau confirmed to Forbes on Wednesday evening that she will lead several divisions coming together as the company looks to overhaul the wealth-management part of the business. Chase Wealth Management, which had been part of the bank’s consumer-banking practice, will be combined with JPMorgan Securities along with the self-directed and robo divisions of the digital wealth management.
“They are incredible businesses, and they’re growing,” Lemkau tells Forbes. “If we want to accelerate how to grow, they would be better aligned as one business unit focused on accelerating the growth that we have.”
Growth has been an area of focus for Lemkau, who has been one of the top 10 marketing leaders on the Forbes list of the World’s Most Influential CMOs for the past few years. She says the role of CMO isn’t just about advertising and branding, but also about building a business beyond marketing. Just last month at the Web Summit tech conference in Lisbon, she gave a talk about the importance of growth for CMOs.
In a previous interview with Forbes, Lemkau talked about how company is being “hit with disruption twice.”
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“Financial services is being disrupted at an accelerated pace like we’ve never seen, and marketing is being disrupted faster,” she said. “And you have to keep up with both paces of change.”
During her tenure as CMO, Lemkau has become a voice not just for growth but also for women’s empowerment and diversity within marketing and across the workforce, such as with the #ThisMama campaign starring tennis star Serena Williams that showcased balancing motherhood and career success. JPMorgan Chase has also sought to innovate within advertising and technology. Earlier this year, the company announced five-year deal with the marketing-technology firm Persado to expand its use of artificial intelligence to power optimized digital ads. Lemkau has also sought to create less interruptive advertising, such as the company’s branded content interview series called Kneading Dough that features professional athletes talking about their careers and what they do with their finances.
“I hope it’s a good signal for the CMO role in that there’s been a fair amount of attention on some high-profile CMO jobs that have been turned over quickly or called other things,” she says. “And so a number of us in the CMO job, we have thought this job needs to be rebranded in a way. It’s a growth job, in any way.”
News of her departure as CMO and into the role of CEO comes the same day as a report by the New York Times that details a history of racial discrimination within JPMorgan Chase’s banking business. Lemkau was not immediately available to respond on Thursday morning to how she plans to address the issues when she takes over.
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ac4314e59f258fb6ed3ca2aefe15a846 | https://www.forbes.com/sites/martyswant/2020/01/07/despite-criticism-ivanka-trump-talks-jobs-training-at-ces/ | Despite Criticism, Ivanka Trump Talks Jobs Training at CES | Despite Criticism, Ivanka Trump Talks Jobs Training at CES
Ivanka Trump, daughter of U.S. President Donald Trump and White House advisor, speaks at the ... [+] technology fair CES on Tuesday. dpa/picture alliance via Getty Images
The U.S. government is working on creating a yearlong advertising campaign to help drive innovation and job training for pathways other than four-year college.
According to Ivanka Trump, an advisor and daughter to U.S. President Donald Trump, the government is working with The Ad Council on an initiative that “celebrates these other pathways” such as apprenticeships and alternative programs.
Speaking about the “Future of Work” today at the CES technology conference in Las Vegas, Trump—who co-chairs the American Workforce Policy Advisory Board that was created last year—didn’t provide many details as to what the ad campaign will entail. However, she said companies need to “open the aperture and raise awareness that other options exist.”
"I think one of the challenges we have in this country is there’s a belief in this country that there’s one (path), which is a four-year college,” she said on stage during a conversation with Consumer Technology Association CEO Gary Shapiro. "And while it’s a great path for many Americans, most Americans don’t take that path. And it’s not the right path for some Americans.”
Inviting Trump as a keynote speaker at one of the largest tech conference led many to criticize the CTA for not choosing a woman with deeper credentials in the tech industry. In the past, the CTA has been criticized for not having enough women on stage to lead discussions around the future of tech. However, conference organizers defended the decision to invite Trump, citing her work on workforce development and her role within the Trump administration.
Despite the president’s recent impeachment by the U.S. House and impending trial in the Senate, the discussion stuck mostly to workforce development issues. Ivanka Trump said existing federal government training programs "don’t work,” citing programs like Siemens in Germany, which she said has an apprenticeship program that’s worth exploring.
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"These are wildly successful programs,” she said. “But it’s just not part of the American DNA outside of the skills trades.”
During her 40-minute discussion, Trump name-checked a variety of prominent tech CEOs including Salesforce CEO Marc Benioff—who was spotted in the audience during the keynote—and IBM CEO Ginni Rometty. (Rometty and Apple CEO Tim Cook are among the executives that are on Trump’s workforce board.)
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f3836ebb63c9b09c101b3713b7e1a15e | https://www.forbes.com/sites/martyswant/2020/03/11/amid-covid-19-concerns-marketers-large-and-small-are-trying-to-think-ahead/?sh=5163704f2da5 | Amid COVID-19 Concerns, Marketers Large And Small Are Trying To Think Ahead | Amid COVID-19 Concerns, Marketers Large And Small Are Trying To Think Ahead
Despite being canceled due to fears of the coronavirus, South by Southwest 2020 banners still ... [+] festoon the streets. Gary Miller/Getty Images
As CMOs scramble to cancel or postpone events and travel plans amid the COVID-19 outbreak, they have also begun to grapple with the more far-reaching implications of the emerging health crisis: How long will it take to get back to normal—or is this the new normal?
Key platforms for brand engagement, in-person events have been falling like dominoes. Cannes Lions International Festival of Creativity organizers just announced October contingency plans should they need to postpone the June confab. Massive tech, music and film festival SXSW announced its cancelation on Friday, and, just prior, marketers had been pulling their own planned events: Adobe, Facebook, Google and others all nixed their own in-person conferences in favor of virtual replacements. (Other tech companies such as LinkedIn, Amazon and Twitter abandoned their plans in Austin even before the city officially stepped in to call it off.)
Just today, YouTube said it would only livestream its annual Brandcast event in New York—which in the past has featured big-time musicians and YouTubers performing for media buyers at Radio City Music Hall—and the Interactive Advertising Bureau plans to offer a livestream alternative for presenters the same week as part of the Digital Content Newfronts in late April and early May.
Whether the trend continues—and how CMOs should pivot—remains uncertain.
“You’re living in a time when it is all about agility because things are changing on the dime,” said Maryam Banikarim, marketing chief at the neighborhood-focused social media company Nextdoor, which had planned on having a presence at SXSW.
It’s no surprise that events have become a stalwart component of many marketers’ overall brand strategy—particularly business-to-business companies. That’s because they’re effective. Even in the time of social media and digital platforms, in-person events account for massive spending on the part of marketers. According to a survey conducted last year by Bizzabo, marketers allocate at least 21% of their marketing budgets to in-person events. Of this budget, most survey respondents prioritize their marketing spend for hosting events rather than attending, sponsoring or exhibiting at events.
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In terms of event-budget allocation, nearly half of businesses are spending 21% or more of their total events budget on hosting events, followed by sponsoring/exhibiting at events (30%) and attending events (19%), according to the survey, which also spotlighted a rise in investment in live events increased between 2017 to 2018. In 2018, 36% of companies were allocating more than 20% of their marketing budgets toward organizing events; last year, 50% of companies were allocating more than 21% of their marketing budgets toward events for a 39% increase, the survey found. Indeed, a majority of businesses responding to the survey—62%—planned to increase their event budgets in 2019.
That’s led to a boom in the events industry. Research firm Allied Market Research estimates that the events industry globally across industries was worth $1.1 trillion in 2018 and could balloon to $2.3 trillion by 2026—if the estimated compound annual growth rate continues at 10.3%.
SAP had planned an events-loaded March, including a presence at SXSW, but in the face of the outbreak, CMO Alicia Tillman has been grappling with contingency plans. Avoiding risks to employees, customers and the communities where the events were supposed to take place became paramount. The company added cleaning measures, but, after monitoring health officials’ guidance, they ultimately decided to cut all events this month.
A large event in Las Vegas for its procurement business, Ariba, has now been switched to a “virtual experience” later next week, and its Fusion conference for its expense software, Concur, with an expected 2,000 in attendance, also has been switched to a virtual version.
To inform its decision making, SAP used its own data to better understand how various industries were approaching travel. For example, the company reviewed data for January and February in Concur, which showed an overall volume of cancellations that was steady through January. Tillman said SAP also saw a spike in air travel cancellations in the fourth week of last month, while flight bookings decreased 20% year-over-year.
"Travel is absolutely a leading economic indicator, so our ability to have access through that allows you to see this immediate heat map,” she said. “It was quite extraordinary.”
SAP also used customer data to decide if was better to cancel or postpone certain events. For its X4 conference with Qualtrics customers, scheduled for this week in Salt Lake City, the company surveyed around 16,000 confirmed attendees earlier this month to see if they would rather get a refund or simply reschedule. Within 24 hours, 85% of 1,800 responses said they’d prefer to move it back to a later date. As a result, it’s now been tentatively rescheduled for the fall.
"I think people are fearful in the short term,” Tillman said. “But to me, that doesn’t necessarily signal that they’re concerned over the long term if you have the vast majority saying hold on to my investment.”
In the past week, other events—and the CMOs who invest in them—also have quickly pivoted to digital. Even before SXSW made its official decision to cancel, The Female Quotient—an organization aimed at improving gender equality—decided to have a three-day online event this week with the same lineup of speakers. According to FQ Founder Shelley Zalis, partners and sponsors like Adobe, Google Cloud (and others) had already begun canceling their in-person operations but were interested in sponsoring something digitally. She also saw some benefits to a virtual discussion, such as making it global rather than only for people at SXSW.
“We realized that the equality conversation can’t stop,” Zalis said. “It just keeps going and needs to continue, so we decided to do it before South By (Southwest) canceled and talked to all of our partners about it."
That doesn’t mean The FQ and others aren’t hoping to get some money back.
"I think this is a big hit for everybody, and it’s an uncontrollable moment,” she said. "I think South By will do the right thing and help everyone that has supported SXSW from sponsoring. And (we’re) hoping all the deposits that were put down on location, they will work with us as well in some way—whether it's pushing it toward next year or doing the refund.”
Earlier this week, The One Club also announced plans to alter its annual awards show and Creative Week 2020, where 1,000 were expected to attend. According to CEO Kevin Swanepoel, the organization ended 2019 with “the best year we ever had with entries and participation.” But after an emergency board meeting last Friday, it decided to change plans as well. The awards will still take place—thanks to the help of a production company that will livestream them—but The One Club is now working through how to take presentations from Creative Week and show them online. And like Zalis, he said it could also be a good thing for getting out the work and ideas to a broader audience by making it more consumer-facing.
“We will see a hit to the bottom line,” Swanepoel said. “But The One Club is a nonprofit, and putting people over profit is more important for us; the creative community are our constituents.”
Kenny Nguyen, founder and CEO of the 25-person agency ThreeSixtyEight, said some experiential marketing clients have been pulling away “because there are so many unknowns” about when the worry will subside. While only about 15% to 20% of the Baton Rouge, Louisiana-based agency work is experiential marketing—Nguyen said much of that is focused on longer-term projects. Meanwhile, Nguyen said ThreeSixtyEight is looking for other ways to support clients, because “if you’re good at experiential, you’re good at content in general.”
“We don’t put our eggs in the experiential basket,” he said. “But if we did, I’d be sweating.”
Other experiential agencies are also helping clients to fill gaps left by the loss of in-person interactions. While brands are losing out on live events, so are consumers, noted Victoria Wells, a strategy director at Dotdotdash. She said the Portland, Oregon-based firm has been advising clients to look at online communities such as Twitch, and noted that the Italian fashion brand Armani recently held a fashion show in an empty theater to engage with consumers without putting them at risk.
“One thing I think brands should step up more with their consumers in addressing that need,” she said. “You can’t connect when you’re not hanging out with your friends.”
Other agencies are looking to do smaller, regional events. WPP, the London-based agency holding company, is looking to host a series of smaller events in key U.S. marketers such as New York, Atlanta, Chicago and Los Angeles, said WPP CMO Laurent Ezekiel. He said the agency is “not redeploying our efforts, but we’re redeploying our focus in the short term.”
While some CMOs are busy planning—or now, in many cases, unplanning—events, others are trying to calm wary travelers. In an email to customers on Monday, SVP and CMO Ryan Green addressed flight concerns and explained how airplanes are cleaned. He wrote that the crews spend six or seven hours each night cleaning aircraft but have begun using “EPA-approved, hospital-grade disinfectant in the lavatories and an interior cleaner in the cabin.” Green added that each plane is also equipped with a “High Efficiency Particulate Air filter, which extracts recirculated air onboard each plane to remove airborne particles. HEPA filters are also used in hospitals to provide patients with clean air.”
Other top marketers paying close attention to supply chains and other operations to see how it impacts each industry as a macro level. According to Joyce Kim, CMO and chief digital officer of semiconductor maker Arm, the industry is “sort of waiting to see when the signs of normality come back.”
At Procter & Gamble, Chief Brand Officer Marc Pritchard said the company is following what experts suggest. And while the CPG behemoth didn’t plan to have a big presence at SXSW, the company is keeping close watch on the 2020 Tokyo Olympics, where it will have a much bigger marketing presence both on the ground in Japan and through various commercial campaigns. But for now, Pritchard said, the company is letting employees decide what they feel comfortable with when it comes to travel.
“What we’re looking at is really taking it on a day-by-day basis, a country-by-country basis and, in some cases, a city-by-city and event-by-event basis,” he said.
For Momentum, an agency that creates experiences for brands, global clients where travel bans are in place are pushing to postpone—not cancel—their events. The company had been with clients not just on work for SXSW but also for the tennis tournament Indian Wells and for Premier League soccer. However, Momentum CMO Kevin McNulty brought up a different point: If COVID-19 concerns clear up, will everyone create a “mad rush” to engage with consumers? He thinks that could happen, suggesting that marketers eager to reach consumers before the end of 2020 might lead to a land grab in the fourth quarter.
“It’s a nice, quiet collaborative calendar when everything is fine,” he said. “But when you throw something like coronavirus in, what happens?”
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This week, Lowe's is debuting a new TV spot encouraging people to make thank-you signs honoring ... [+] health care workers during the COVID-19 crisis. Lowe's
Last update: April 30, 2020, at 10:22am EDT.
Chief marketing officers around the U.S. have spent the past few weeks navigating the world’s “new normal” and what the coronavirus pandemic means for their brands. That includes both how to strike the right tone with advertising or other marketing efforts while also helping out when and where they can.
The Forbes CMO Network will continue to update this list with thoughts and quotes from various CMOs and how they’re responding to the COVID-19 pandemic.
Gayle Troberman, CMO, iHeartMedia
With more than 850 radio stations across the country, iHeartMedia has been scrambling to keep various hosts on the air even while they’re at home. And it’s a good thing it did: iHeart’s listener base is going up while everyone is home. According to stats the company released at the end of March, podcast streams and downloads were up 78% week-over-week, while some top personalities’ shows increased 9%. And for the first time, “true crime” shows were flat or declined, while educational podcasts were up 21%. Listening to iHeart stations is also up on smart devices, with an 11% increase on smart speakers and a 40% increase on smart TVs. (And while some rival platforms saw an immediate decline in listening earlier in the lockdown, the numbers seem to be back on the rise.)
“All the signs are people are moving from what they would listen to in the car and they’re keeping their regular habit and keeping their morning or afternoon appointments for their regular shows,” said iHeartMedia CMO Gayle Troberman.
To help distribute cause-marketing messages from various brands, iHeartMedia created a program called “Businesses Doing Good,” which leverages radio stations across the country to inform listeners with what they need to know about the pandemic and also what brands are doing to help. The program, which began earlier this month, has broadcast more than 50,000 spots from brands including T-Mobile, Taco Bell, Facebook, Netflix and Lowe’s. According to Troberman, the program led to “hundreds and hundreds of millions of impressions” in the first few weeks with ads from nearly 100 brands. For example, an ad from CVS talked about free prescription delivery while ads from Hilton and Amex talked about how the brands were donating hotel rooms to healthcare workers.
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“Sometimes, when you’re doing good work, it’s hard to shout about it yourself,” Troberman said.
Michelle Harmon-Madsen, CMO, AccuWeather
AccuWeather launched a weather school for kids at home to assist parents with homeschooling efforts while normal classrooms are closed. The informal program, which launched earlier this month, is a daily digest of weather information but also promotes science, technology, engineering and math (STEM) subjects. So far, lessons have included information about clouds, hail and thunderstorms.
“So many in our team have grown up being fans of weather,” said AccuWeather CMO Michelle Harmon-Madsen. “So it’s an opportunity for us to talk about that, but also an opportunity to help families who are in need not just of entertainment but also education while they’re at home.”
The company also donated its premium weather services to hospitals and other medical facilities in hard-hit areas to give them tools such as advanced warnings when weather might impact temporary hospitals that are vulnerable as they tend to patients with the coronavirus. According to Harmon-Madsen, this is important for staffing and other critical decisions, especially at a localized level, and so far, 250 facilities have signed up for the free offering.
Minjae Ormes, CMO, Visible
According to Visible CMO Minjae Ormes, the Verizon-owned, digital-only wireless provider had budgets set for experiential marketing and other efforts, but decided instead to use that money as a way to engage its existing community and spark goodwill. To see how it could best help during the crisis, Visible surveyed members to see what they’d most like to have the brand do and within 48 hours realized that half of people were asking for help with bills while the other half wanted to help others.
“That just speaks volumes to people’s desire to be comforted and see more of the goodness that’s already out there,” Ormes said.
In response, Visible launched a social campaign earlier this month called #VisibleActsofKindness, which has been used to donate $250,000 to people in the form of Amazon gift cards in exchange for consumers sharing their stories of how they’ve helped others. To get out the word, it partnered with a variety of celebrities such as chefs Padma Lakshmi and Emeril Lagasse and comedian Dan Levy to drive conversation and find or share stories. Visible, which is based in Denver, has also donated $25,000 to the Colorado Restaurant Association to help chefs that are out of work during the shutdown.
Shiv Singh, CMO, Eargo
For the many Americans suffering from hearing loss, the hearing aids startup wanted to do something to help even while hearing clinics are closed during the pandemic. Along with offering free remote hearing checks regardless of whether someone’s a customer, Eargo is offering special financing and a 45-day free trial. The option for remote assistance could be especially useful for older generations that are most at risk of serious illness from COVID-19.
To help get the word out, Nasdaq offered Eargo and other groups such as the Centers for Disease Control and Prevention rotating billboards above its headquarters in Times Square. According to Eargo CMO Shiv Singh, Eargo has also been increasing media spend with TV, print and some digital channels.
“When it comes to hearing, it’s such a major thing,” Singh said. “All of a sudden your entire life is about Zoom calls and hearing people that are 6 feet away versus right in front of you, it takes on a greater challenge in a time like this. And for older folks, isolation can lead to all sorts of other problems.”
Joy Howard, CMO, Dashlane
The password manager had been doing a lot of mass media such as out-of-home and linear TV, but it cut that right away when the crisis hit, said Dashlane CMO Joy Howard. Instead, it’s been going through all of its existing creative to gauge what’s still relevant and which parts need to change. (Howard said the company plans to lean into more humor.) Dashlane is also making its premium product—which comes with features like a VPN and dark web monitoring—available for free to new customers and small businesses for three months instead of the usual one-month trial. Another new initiative is piloting an “internet self-defense” course through The Wing to help keep women safe online. The class includes walking people through how to update their social media privacy settings and how to “clean up” their online identity so it’s harder to track.
"It actually really matters not only to keep your account secure, but if you know anything about digital media, it’s that login that people begin to exchange their privacy for the sake of convenience,” she said.
Angela Zepeda, CMO, Hyundai Motor America
According to Angela Zepeda, CMO of Hyundai Motor America, the company hasn’t gone “full throttle like we normally do” with marketing, but it also didn’t want to go fully silent. For example, Hyundai dropped media buys on sports—where the brand usually spends a lot of money—and increased spending for daytime TV, while everyone is at home. Digital spending also increased.
“We’re not necessarily cutting,” Zepeda said. “I would say we’re delaying and just being smart with how we’re spending our money now, and when things get back to normal, we’ll move that money.”
To help children with cancer receive the COVID-19 testing they might need, Hyundai late last month donated $2.2 million to support drive-through testing at ten children’s hospitals across the U.S. The company also relaunched its Hyundai Assurance job-loss program, which first debuted in 2009 after the 2008 financial crisis and accompanying recession. While the original program allowed buyers to return a car without hurting their credit score, the new version includes Hyundai offering to make up to six months of payments for new owners if they lose their jobs and purchased a car between mid-March and April when financed through Hyundai.
Marisa Thalberg, Chief Brand And Marketing Officer, Lowe’s
To go along with its $170 million commitment to COVID-19 relief, Lowe’s today announced a new campaign inviting people to make their own thank-you signs for healthcare workers to place outside their homes. Lowe’s Chief Brand and Marketing Officer Marisa Thalberg—who just joined the company earlier this year—said her team saw the signs showing up organically across the country and wanted to “fan the flames of that positivity.”
One of the first things the company did as the crisis unfolded was to audit all of its messaging to see what needs to be removed or adjusted. Thalberg and her team then started rolling out relevant content first on social media even before developing a TV spot that will begin airing on Wednesday.
“Home has never mattered more, and we can’t begin to unpack the new emotional importance of home,” Thalberg said. “Right now we want to evolve our messaging to speak with a different level of connection and empathy.”
David Zucker, SVP of E-commerce and CMO, Perdue Farms
Before the crisis hit, the chicken company had been working on a national campaign focused on how it processes chicken. However, it decided to shelve that for now and focus instead on a low-fi video of CEO Jim Perdue that was shot on an iPhone in a parking lot. The video, which will be aired over the next few weeks using millions of dollars in repurposed TV time, features Perdue holding the phone in selfie mode with a Perdue truck in the background thanking workers for their service like farmers, truck drivers, restaurant workers, and shelf stockers.
“We just felt it was not the right time,” David Zucker, SVP of Ecommerce and CMO at Perdue Farms, said of the shelved campaign. “The message was fine and we think it’s a great message for consumers to hear and it’s very supportive of our product, but honestly thinking about what consumers are going through right now and the whole society is going though, the things we were talking about there were just not the right tone that we as an organization wanted to set.”
To further support and highlight workers, Zucker said the company has been asking production workers to submit photos and videos that are then posted on social media channels so that Perdue can “really celebrate the heroes that are on the front lines every day.”
The company is also helping retailers with packaging to make some packages a little smaller than normal and also helping with ads within the stores so people can quickly get in and out while shopping. It also opened its new e-commerce website just a few months ago, which Zucker said has been a “really good solution” for older people or at-risk groups that want to stay away from crowds.
Marcel Marcondes, CMO, Anheuser-Busch Inbev U.S
According to Anheuser-Busch Inbev U.S. CMO Marcel Marcondes, the company’s efforts are aimed at addressing the fears that people have in three areas: fear of getting the virus, fear of financial difficulty as a result of the economic downturn, and fear of what to even do with all the downtime. That includes custom content sponsored by various brands. For example, Bud Light has a new concert series and a tracker for which bars and restaurants have take-out service. Others are sponsoring classes, like a new celebrity chef cooking series from Stella Artois and a workout series from Michelob Ultra.
“Although everybody is scared and getting used to the new routines,” he said, “everybody wants to have a moment at the end of the day to decompress, to relax a little bit, to be as social as possible—although everyone is applying social distancing.”
To combat the virus itself, AB InBev, like many other brewers and distilleries, first of all converted its breweries to make hand sanitizer for healthcare workers. Then last week, it teamed up with the Red Cross to donate $5 million for converting 20 stadiums across the country into blood drive donation centers. This was a part of ABI’s One Team approach that’s a collaboration with teams and leagues alike.
“We're not in advertising mode right now,” Marcondes said. “That’s the most important thing. We’re acting on a relevance and action kind of mode.”
Mayur Gupta, CMO, Freshly
The delivery meal subscription startup has seen rapid growth as people opt for pre-made meals rather than worrying about takeout or cooking at home. And that’s led to more demand than the company is able to handle. While it had expected to deliver 50 million meals in 2020, the company was on track in mid-March to hit 5 million for a single month.
According to CMO Mayur Gupta, the company has pulled back on a lot of its usual marketing and is instead relying on organic traffic and word of mouth while also switching from a top-of-funnel strategy to something more focused on partnerships and customer engagement. Last month, it also partnered with Nestlé to donate $500,000 to Meals On Wheels to serve senior citizens across the country.
“We felt that during this time even though we’re still a growth-stage company, we had the responsibility to take care of people who are highest at risk,” Gupta said.
Dara Treseder, CMO, Carbon
Along with working with existing customers, Carbon is helping to build shields, masks and other materials with its 3D printers to supply much-needed healthcare gear. According to Carbon CMO Dara Treseder, the 3D printing company has been focused on three areas since mid-March: employee morale, navigating pipeline issues and canceled events, and developing a “business continuity plan” to adjust for the unexpected year.
"If brand reflects culture and culture reflects brand, in this time it’s really important how that brand becomes expressed through internal communications, through actions the company is taking to support the workforce,” Treseder said.
Eric Edge, CMO, Postmates
With more and more people opting for deliveries during social distancing, Postmates has been one of the companies that’s been especially busy. Along with adding new features such as contactless deliveries, Postmates also launched the Postmates Fleet Relief Fund, which helps with co-pays and medical expenses related to COVID-19 and working with the company’s Civid Labs to help restaurants donate excess food to local shelters.
Last week, Postmates launched a new campaigned called #OrderLocal, which features a number of celebrities praising their favorite local restaurants.
"Postmates is, and always has been, local first, and we wanted to call attention to the hundreds of thousands of small businesses on our platform,” said CMO Eric Edge. "Since we are the #1 delivery platform in Los Angeles, we approached a few of our most loyal celebrity customers who immediately agreed to be a part of this effort. They jumped at the chance to highlight some of their favorite restaurants and encourage others to order from their own favorites, helping remind people to support local businesses during these challenging times. #OrderLocal is one way to encourage people across the country to support their favorite neighborhood restaurants.”
Andrew Moers, CMO, Talkspace
When the virtual therapy app saw a major growth in volume in mid-February (up 65%), CMO Andrew Moers and his team began implementing a number of initiatives to help people take care of their mental health. Along with giving frontline medical workers 1,000 free hours of therapy, Talkspace has been calling on therapists across the county to donate months that the company will then match. So far, there have been another 300 months of additional therapy donated, which Talkspace has expanded to help beyond doctors and nurses to EMTs and police and firefighters. Talkspace also started a Facebook support group led by therapists to facilitate a forum along with public and private groups focused on issues like social isolation, parenting and financial stress.
Talkspace also launched a new 16-day program on top of its usual subscription service that helps people deal specially with COVID-19 concerns. All of these efforts have led to seeing 100% year-over-year growth, and he said there’s no sign of it slowing down.
“We’re saddened that it’s come to this, and we see these stories every day of people who are going through extreme stress and emotions but we’re humbled to be here to help see people through it,” Moers said. “Everyone in the world is going through this, which is crazy to think about.”
Lindsey Lurie, CMO, IBM Security and Cognitive Applications
Along with offering the use of its supercomputers to help fight COVID-19, IBM has been recruiting developers for a hackathon focused on finding solutions for the crisis.
Lindsey Lurie, CMO of IBM Security and Cognitive Applications, said the company’s annual hackathon was going to be focused this year on climate change. (Past hackathons have focused on the California fires and rebuilding Puerto Rico after the hurricane.) IBM also is using its Weather Company subsidiary to track the spread of COVID-19. By using data from the World Heath Organization and data from local and national governments, anyone who logs in can see down to the county level how many cases are in their area.
Another area of focus has been to improve cybersecurity issues. Lurie said IBM has been educating remote employees about the importance of cybersecurity, especially when working from home.
“Threat actors unfortunately don’t slow down, even in a pandemic,” she said.
Chris Stadler, CMO, Tonal
With so many gyms closed, in-home workouts have been increasingly popular. According to Chris Stadler, CMO of Tonal, the home fitness category usually peaks around the holidays and then declines in the spring, but this year “we’re not seeing that.”
“Not only are people interested in the category and sales are very strong, but usage has also reached peak levels,” he said.
Using the tagline “workout from home,” the company has been doubling down on TV and OTT advertising while also during their closed showrooms into places to do live virtual demos for potential customers. while also leveraging the staff to do videos from home. Tonal is also donating $1 for every workout to the CDC Foundation. (Updated April 8: A previous version of this story reported Tonal was waiving its $250 delivery and installation fee, but the company has discontinued that offer.)
Jay Sethi, CMO, Diageo Beer
If you’re a marketer at Guinness, St. Patrick’s Day is like the Super Bowl. However, with the coronavirus forcing bars and parades around the world to close or cancel, Jay Sethi, the CMO of Diageo Beer, which owns the Irish beer brand, had to pivot. In order to put health and safety first, Guinness decided to cancel its scheduled plans for St. Patrick’s Day and find ways to help the bartenders and other service industry workers whose paychecks have suffered as the pandemic continues to cause uncertainty. As part of the plan to help out, Guinness committed $500,000 with more efforts set to be announced after the holiday.
One of the first things Sethi and his team did last week was shoot a new commercial aimed at both raising the spirits of workers and patrons alike. The spot never actually mentions COVID-19 or coronavirus, but it’s easy to read between the lines of the script.
According to Sethi, the ad is meant to be a message “that we hope would bring bit of comfort to both Guinness drinkers and also to everybody.”
Rachel Porges, CMO, Levain Bakery
The New York-based cookie company proactively switched to takeout and delivery only even before the city mandated it for restaurants. According to CMO Rachel Porges, the company is trying to find the balance between making sure it’s taking care of its employees first while also being part of the community. Part of that balance is switching up some of its social media messaging.
“They just have to pass the smell test for us and it’s tough,” she’s said. “On the one hand, you can shut everything down but that doesn’t make sense on a multitude of levels. Some of our employees are happy to have a place to go because it is scary to be stuck in a house by yourself.”
Hanneke Willenborg, CMO, Seventh Generation
Seventh Generation has been donating its desperately needed cleaning products across its home state of Vermont and elsewhere in the U.S while also making financial contributions to the state’s COVID-19 response funds.
“We’re in a unique situation with Seventh Generation experiencing unparalleled demand, as people are looking for products that keep their family safe and cared for at home more than ever,” said CMO Hanneke Willenborg. “Our sales and supply team are working diligently to ensure that product is available on the shelf and online as soon as possible.”
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133c41bbd1ddbd08b81bbfb1e725d27e | https://www.forbes.com/sites/martyswant/2020/04/21/as-sprint-cmo-roger-sol-joins-wework-as-cmo-opportunities-could-exist-amid-major-setbacks/?via=indexdotco | As Sprint CMO Roger Solé Joins WeWork As CMO, Opportunities Could Exist Amid Major Setbacks | As Sprint CMO Roger Solé Joins WeWork As CMO, Opportunities Could Exist Amid Major Setbacks
Sprint Chief Marketing Officer Roger Solé has joined WeWork as its new CMO. Wework
On Monday, WeWork named Sprint Chief Marketing Officer Roger Solé as its new CMO, giving the embattled company a new top marketer tasked with a turnaround in the midst of the COVID-19 crisis. And despite major setbacks over the past year, some say the post-pandemic return to offices could create new opportunities—if the co-working company can re-imagine its brand identity and win back trust.
Solé’s hiring follows the February departure of Maurice Levy, the former CEO of Publicis Groupe who had served as WeWork’s interim CMO since late last year. In a statement, WeWork CEO Sandeep Mathrani described Solé as a “seasoned brand marketing executive, having led numerous renowned consumer-facing brands.”
“We are thrilled Roger is joining the WeWork leadership team,” Mathrani said. “When I first met Roger, I was captivated by his innate ability to connect customer desires with business needs. Roger joins as the newest member of our company’s leadership team committed to WeWork’s mission to change the future of work and transform our business.”
As Sprint’s CMO since 2015, Solé was part of the team that helped with the telecom’s turnaround before helping it navigate the merger with T-Mobile that closed earlier this month.
“This will be a defining era across many industries, and WeWork is in a unique position to, once again, redefine how people work and help businesses succeed,” Solé said in a statement. “WeWork’s mission really resonated with me, and I am honored to work with this team during such a huge moment for the WeWork brand.”
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A new CMO is the latest part of SoftBank’s turnaround efforts since it began putting in a new leadership team after taking majority control of WeWork in the fall. Mathrani comes from the real estate world and is known as a mall-turnaround expert. Prior to joining WeWork in February, he was CEO of Brookfield Properties and before that was CEO of General Growth Properties. It’s also worth noting that Solé also isn’t the only Sprint executive to become a part of the WeWork turnaround. Former Sprint CEO Marcelo Claure is now the COO of Softbank, which owned the telecom until Sprint’s merger with T-Mobile. In an interview with Forbes back in March, Claure—now the executive chairman of WeWork—said that he and SoftBank made a new management team a priority after he drilled into the business in the fall of 2019 and "didn't like what I saw.”
Marketing WeWork in the middle of a pandemic has some key short-term challenges. After all, how do you sell space when nobody can go to their office?
It’s been a difficult past year for WeWork. Following its failed IPO last fall, the company has faced a number of other issues since the COVID-19 crisis began. For example, as the virus spread around the world, WeWork had a number of employees and members the fall ill. Meanwhile, some tenants have complained about having to pay rent during the lockdown. And earlier this month, it endured another setback when SoftBank—citing regulatory probes against WeWork—terminated its $3 billion offer to buy out WeWork's minority shareholders.
Despite the variety of challenges, some say the economic recovery following the global shutdown of many states and countries could actually create some new opportunities for WeWork. For example, as companies look to downsize their offices and more employees opt to work remotely even after the crisis, WeWork could be in a position to win over a whole different type of officer worker.
“They’re at this pretty critical juncture in their history as a company right now where they need to fix public perception,” said Alexander Snyder, an analyst at CenterSquare Investment Management, a global investment manager focused on real estate and infrastructure. “They need to create trust again not just in WeWork itself but co-working as a whole. And as a behemoth and leader in that space, people associate WeWork with working itself much like Kleenex and a tissue.”
According to Snyder, WeWork for starters should explain what it’s doing to make spaces safe and to show that the sharing economy is still worth engaging in despite any potential risks. Snyder said that could also include exploring the potential of merging with other co-working companies which could help “make the argument that they are stronger together.” Another idea along those same lines is to “pump up” the networking effect that it claims to have.
That’s also something suggested by Keith Ferrazzi, co-founder and CEO of the research and consulting firm Ferrazzi Greenlight and former CMO of Deloitte Consulting and Starwood Hotels. He said WeWork hasn’t focused enough in the past on findings ways to “co-elevate” members.
According to Ferrazzi, WeWork will need a “saving grace” such as a formal program such as peer-to-peer coaching and other ways to create “true inter-dependency” that will make people want to work from a WeWork rather than their current setup at home.
“I actually feel that WeWork had the patina of intimacy and connection associated with it because of the diplomacy of the office space,” he said.
If WeWork can get the brand positioning right, some think the company could benefit from the post-pandemic shift beyond WeWork’s usual member base of startups and independent workers. Cal Lee, the founder of WorkThere—a digital platform that lists more than 5,000 cowering spaces—suggested people might choose to split time between WeWork and home or WeWork and their usual office. And because many companies might be facing liquidity challenges, some might not want to sign expensive and long-term leases—a trend he’s already seeing in parts of Europe and Asia.
“The brand has taken a bit of a battering from many different corners,” Lee said. “And now it’s important to reinvest in that and for them to think about where they want to position it and where to take it forward for their customers.”
Jonathan Wasserstrum, CEO and co-founder of the commercial real estate startup SquareFoot, said WeWork should decide what it might “want to be when they grow up.” And like Lee, Wasserstrum also sees potential for flexible office space post-pandemic.
“I do not see organizations full-scale saying, ‘You know what we don’t need any more office space,” Wasserstrum said. “What I do see companies saying is I don’t think it’s the best idea but it’s not the worse thing.”
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30098836c8868ef321a393f8ff351163 | https://www.forbes.com/sites/martyswant/2020/06/09/how-bozoma-saint-john-is-amplifying-black-voices-through-white-celebrities-instagram-accounts/ | How Bozoma Saint John Is Amplifying Black Voices Through White Celebrities’ Instagram Accounts | How Bozoma Saint John Is Amplifying Black Voices Through White Celebrities’ Instagram Accounts
Bozoma Saint John, left, and Luvvie Ajayi Jones are two of the co-founders of a new social campaign ... [+] to amplify the voices of black women on Instagram. ASSOCIATED PRESS
As the nation grapples with how to address systemic racism, a new social media campaign aims to amplify the voices of black women on Instagram.
On Wednesday, 50 white celebrity women including soccer star Abby Wambach, actresses Brie Larson and Gwyneth Paltrow, and musician Sara Bareilles will hand over their Instagram accounts to 50 black women for the day to foster dialogue and reach new audiences. The campaign, called #sharethemicnow, was co-created by Endeavor Chief Marketing Officer Bozoma Saint John, writers Luvvie Ajayi Jones and Glennon Doyle, and Alice and Olivia founder Stacey Bendet.
According to Saint John, the idea came about last week when she was talking with Jones about “Blackout Tuesday.” Celebrities and others were posting black squares to their Instagram accounts to mute themselves while pointing people to where they could instead hear from black Instagram users. Around that same time, Doyle also sent Saint John a private message offering up her platform if they wanted to reach Doyle’s audience of nearly 1 million Instagram followers.
That offer helped Saint John to see the opportunity to expand dialogues about race to people who maybe wouldn’t otherwise hear about it or think about it in the same way.
“What I thought was really interesting is I think all of us, right or wrong, we have our Instagram feeds and our social media feeds are very much the same,” Saint John says. “We’re usually talking to people who look like us, who think like us, who agree with us. I’m not excluded from that. None of us are.”
The social campaign comes as marketers navigate how to address issues of race in their own messaging. While some brands like Nike, Ben & Jerry’s and McDonald’s have spoken out against racism, Saint John says one of the biggest challenges for marketers is knowing what to say. She says marketers should ask themselves: “What would you say to your black friend if you were talking to them personally in your home? If you would say it at home, say it to the public.” She added that companies are better off speaking out than staying silent. Brands are no longer exempt from conversations about racism because “the world is demanding it.”
“As marketers and as CMOs, our entire jobs are to create narratives,” she says. “We probably have the most power in creating the kinds of messaging that mass audiences hear, even more so than Hollywood or the studios do. We’re creating messages that people are seeing constantly, and we feel the responsibility of that, the weight of that.”
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In the past two weeks, discussions around race have flooded the internet. According to an analysis of social media data conducted by Sprinklr, posts mentioning Black Lives Matter totaled 42.3 million between May 28 and June 4—eclipsing talk about coronavirus and Covid-19, which were only mentioned 25 million times. And so far this month, use of the #BlackLivesMatter hashtag spiked on June 2 when there were 9.2 million global mentions.
According to a recent survey of 1,000 Americans conducted by the data insights firm Dynata, 62% of respondents under the age of 35 say they’ll be researching brands based on their inclusivity practices “in light of recent events.” And among the Black Lives Matter supporters surveyed, 58% want to see brands encourage people to vote, while 36% want brands to make donations to causes.
“One of our biggest challenges as marketers right now is we are so fearful of cancel culture that it gives us a paralysis of perfection,” Saint John says. “We don’t move because we’re so afraid that what we say is going to be taken the wrong way or it’s not going to be interpreted with the intention that we set. That causes us not to do anything at all, and that’s actually the mistake the brands would make right now.”
The list of participants for this week is expansive. For example, Saint John will take over Kourtney Kardashian’s account, Black Lives Matter cofounder Opal Tometi will appear on the model Ashley Graham’s and beauty editor Kahlana Barfield Brown will take over the account of actress Julia Roberts. Other pairs include Angelica Ross and Hillary Swank, Ibtihaj Muhammad and Alex Morgan, and Lindsay Peoples Wagner and Diane von Furstenberg.
The pairings themselves were chosen “a little bit arbitrarily,” Saint John says. In some cases, it was based on thinking through who might not normally show up in someone’s feed based on their existing followers while others were based on two women being in similar industries. According to the organizers, the total social media reach of the campaign totals 300 million. However, they’re hoping others will take part as well and engage with their own followers and contacts.
Among the participants is Katie Couric, who recently launched a podcast with Saint John. The two women, who both lost their husbands to cancer, met a few years ago and became friends. And while the podcast was initially about business, they changed the focus from business leaders in general to how leaders are managing their companies during the Covid-19 crisis. They’d only done one episode when discussions around racial inequality began this spring, and Saint John says Couric called her suggesting they do an episode about the issues.
“If I’m being totally honest, I was really exhausted,” Saint John says. “I was tired of talking. I felt defeated and anger and sadness and just a little helplessness. It was like oh my gosh how much more do I have to say about what this world can be and the inequality I even feel in my own spaces? But she was really encouraging and said we should probably have a conversation about it. And I was like, ‘Okay I should call my friends, too.’”
As a result, Saint John and Couric interviewed Bishop T.D. Jakes along with Tometi. They talked about how with advocacy and allyship, some people don’t know if they’re allowed to talk about a problem if they’re not part of the group that’s being hurt.
“When Katie asked (Jakes) ‘what can I do as a white American,’ I just thought his answer was so brilliant in contextualizing what it is: ‘You don’t have to be a child to speak up against child abuse, you don’t have to be a women to speak out against rape, and you don’t have to be black to speak up against racism.’”
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5b26804b640d07b362a882353029d19f | https://www.forbes.com/sites/martyswant/2020/08/06/snap-cmo-kenny-mitchell-says-new-b2b-campaign-targeting-advertisers-highlights-the-snapchat-generation/ | Snap CMO Kenny Mitchell Says New B2B Campaign Targeting Advertisers Highlights The ‘Snapchat Generation’ | Snap CMO Kenny Mitchell Says New B2B Campaign Targeting Advertisers Highlights The ‘Snapchat Generation’
Kenny Mitchell is Snap Inc.'s CMO. Snap
A year after launching its first consumer campaign, Snap Inc.’s next effort is to focus its marketing on advertisers.
This week, the social media company released a new B2B campaign aimed at articulating what the company calls the “Snapchat Generation,” featuring stats around the platform’s user base along with endorsements from some existing advertisers. The campaign will continue in the U.S. through mid-August before moving on to the United Kingdom and other parts of Europe and then extending to the Middle East and Africa.
Snap’s latest initiative comes at a time when some of the company’s rivals are facing new pressure: While Facebook faces a major advertiser boycott, TikTok is facing regulatory scrutiny.
“We think of this as a timely opportunity to support our advertising partners that we’ve been talking so much to—as the world is beginning to open up in many places and everyone is starting to make their move to the road to recovery,” Snap Chief Marketing Officer Kenny Mitchell said.
As part of the campaign, Snap also released new stats about its user base. For example, 82% of U.S. users “believe they have a personal responsibility to create the change they want to see in the world” while 34% were more likely than non-Snapchatters to “buy from brands that support a local community.” According to Mitchell, the campaign focuses on key user behaviors. For example, he said “being happy” and “finding love” are the types of words the company frequently finds on the platform. (Friends are four times as influential on purchase decisions than celebrities.)
In some ways, the campaign feels reminiscent of the way YouTube pitches itself every year at its annual BrandCast, where popular YouTubers talk about the diversity of the platform’s audience both for content creation and consumption. Snap’s campaign also features endorsements from a variety of brand-marketers including execs from Frito-Lay and the NFL.
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This year, Snap also joined the IAB Digital Content Newfronts for the first time, taking its turn virtually pitching its slate of advertising offerings to media buyers. Snap faces new competition for Gen-Z attention as TikTok continues to grow—and as the video app builds out its own advertising capabilities even while facing recent regulatory scrutiny. When asked about how it sets itself apart, Mitchell said Snapchat has a “very different use case in the grand scheme of things.”
Before he was selling Snap ads, Mitchell was buying them. While working on marketing teams at McDonald’s and Gatorade, he was an early adopter of Snapchat’s earlier ad formats including AR lenses and an acclaimed animated long-form campaign featuring Olympic runner Usain Bolt.
“The founding insight around Snap was just this notion around communicating visually and quickly with your close friends and family and sharing a moment doing it in a way that you feel free to express yourselves because we’re delete-by-default,” Mitchell said.
So far this year, Snap has seen better-than-expected growth. According to the company’s second-quarter earnings, released last month, revenue increased 17% year-over-year to $454 million. Meanwhile, total daily active users grew 17% year-over-year to $238 million with the average Snapchat user opening the app 30 times a day. The company’s seeing a great deal of growth in Europe, where revenue increased 30% year-over-year in the second quarter.
Snap has also increased its own marketing budget over 2019, spending $254 million in the first six months of 2020 compared to $209 million during the same period last year. Mitchell wouldn’t provide many details about the company’s marketing expenses. However, during the company’s second quarter earnings call, Snap Chief Financial Officer Derek Andersen said the recent investments were “partially offset” by saving from lower budgets for travel and events during the lockdown.
Like many CMOs, Mitchell has also spent the past several months working remotely. In order to encourage communication while apart. He said the company has created more forums to “keep us together” and build transparency across the business. Mitchell, for example, said he holds weekly Q&A sessions with his team.
“We have a variety of rhythms that we’ve established as a team across the week to ensure visibility and connectivity of the different programs that we have going,” he said.
Snap also sees some room to use the advertisers July boycott of Facebook as a way to spark new conversations with media buyers. When asked about the issue on the same earnings call, Snap Chief Business Officer Jeremi Gorman said “this conversation has opened the door for us to do that extremely frequently at the CEO and CMO level.”
“And in particular, we've been designed in a brand-safe, hand-curated way since the beginning,” she said. “There is no town hall or ability for an unvetted user to post to our whole community. And as advertisers evaluate platforms, which align with their values, these deliberate decisions made years ago are of paramount importance.”
In the past few months, Snap has released a number of new features for advertisers. On recent addition, called Brand Profiles, lets brands including Target, Dior and Universal Pictures, have their own “permanent home.” Other new features include a tool for brands to reserve the first commercial a user sees each day and a way to help advertisers reach different audiences on its Discover tab through specific content verticals. It’s also added new analytics tools that app and web attribution related to video ad performance as well as a new online portal for learning about various advertising offerings.
A pioneer in creating and selling augmented reality (AR) features for brands and users alike, Snap continues to see growth in the space. For example, it recently released a new “stoppable” AR lens with Gucci that lets people see the shoes on their feet before buying through through the lens itself on the platform. In the second quarter, Snap said an average of 180 million users engaged with AR each day.
“We’re seeing success with brand that are using the variety of ad products that help tell their story. They’re combining the notion of snap ads and video ads with creative tools such as AR and other digital creative tools like stickers and filters to make a nice surround sound.”
While touting the diversity of Snapchat users, Snap Inc. is still working to better diversity itself. Last month, the company released its first diversity report, which revealed that only 4% of the company is Black or African American and another 6.8% is Hispanic or Latinx. Women now make up nearly a third of all employees, a .9%-increase from a year ago.
To improve diversity, the company has begun linking executive leaders’ performance outcomes to contributing to goals related to diversity, equity and inclusion. The company is also planning a first-ever audit of its Discover platform’s content in order to measure representation. And in April, Snap launched a new analytics tool that provides data for each leader on gender and race in terms of hiring, leadership and attrition. And in terms of concrete goals, Snap’s report says the company aims to double the number of women in tech at Snap by 2023 and double the number of underrepresented U.S. racial and ethnic minorities by 2025.
“It’s something that has been critically important to our business and candidly to our leadership, something that’s been very important to me and something that I know has been important to (Snap CEO Evan Spiegel) as well,” he said. “I think we feel like we have a tremendous opportunity, both as a business in supporting the communities that we serve, our partners and broader society. Some of the goals we’ve set are intended to reflect our intention.”
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edb7e98277eab1cfa27c41b05e9dd789 | https://www.forbes.com/sites/martyswant/2020/11/24/ford-hires-former-ebay-cmo-suzy-deering-as-its-new-top-marketer/ | Ford Hires Former Ebay CMO Suzy Deering As Its New Top Marketer | Ford Hires Former Ebay CMO Suzy Deering As Its New Top Marketer
Suzy Deering, who was most recently the chief marketing officer for eBay, will become Ford's new CMO ... [+] in January. Ford
Ford has named the former global chief marketing officer of eBay as its new CMO, putting an e-commerce veteran at the helm of the auto manufacturer’s marketing function.
The company announced today that Suzy Deering will join in January to modernize the company’s marketing, as well as lead the company’s customer intelligence and product and consumer marketing strategies.
“Technology will be a powerful part of Ford’s transformation and how we enhance and release the huge value of our iconic brands,” Deering said in a statement. “My team will be involved from end-to-end on behalf of customers—better connecting with them, using data to foresee and deliver what they need, and earning and keeping their trust.”
Before her five-year tenure at eBay, Deering—who announced her departure in September—spent several years as CEO of the marketing agency Moxie and before that worked on media teams at brands such as The Home Depot and Verizon.
When she begins on January 4, Deering will replace Joy Falotico, who has been playing a dual role of both CMO of Ford and president of Lincoln Motor Company. Deering will report to Ford Americas and International Markets Group President Kumar Galhotra, who previously held the CMO role at Ford from 2017 to 2018.
Deering’s appointment to Ford's C-suite is the third that CEO Jim Farley has made since taking over last month. In a statement today, Ford cited Deering’s track record of “using technology, data and analytics to anticipate customer needs and fulfill them with human-centered products and services.”
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“We’re putting more decision-making in the hands of our people who are closest to customers,” Galhotra said in a statement. “That makes marketing more important than ever and Suzy’s world-class background will be vital to modernizing our approach, dialing-up our understanding of customer ambitions and redefining our brands to help us grow.”
Deering is one of many notable CMOs to switch industries during the pandemic. In June, Fiona Carter left AT&T to become the first CMO of Goldman Sachs, and in August, Lilian Tomovich left MGM Resorts to become the CMO of e-commerce company Grove. A few weeks ago, former L’Oreal U.S. CMO Gretchen Saegh-Fleming joined the at-home fitness startup Hydrow as chief commercial officer.
Other auto brands have also recently made changes to their marketing leadership: Earlier this month, Audi named Tara Rush as its new senior vice president and CMO, and last year, Hyundai appointed Angela Zepeda as its new CMO, while Cadillac promoted Melissa Grady to the top marketing role.
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7f306b0ad2ba8487be8f192288b24356 | https://www.forbes.com/sites/martyswant/2021/01/14/after-pausing-advertising-during-us-capitol-attacks-marketers-cautiously-resume-spending/ | After Pausing Advertising During U.S. Capitol Attacks, Marketers Cautiously Resume Spending | After Pausing Advertising During U.S. Capitol Attacks, Marketers Cautiously Resume Spending
Presidential Inauguration is prepared outside the U.S. Capitol on January 12, 2021 in Washington, ... [+] DC. Yasin Ozturk/Anadolu Agency via Getty Images
After the January 6 attack on the U.S. Capitol, many ad agencies and their clients paused spending on social media and digital news content. And while marketers are resuming ad campaigns this week, many advertisers are in “wait and see” mode as they balance business goals navigating the current political climate, especially ahead of the presidential inauguration.
Deborah Wahl, global CMO of GM—which debuted a new logo last week—says the company temporarily paused all activity until it had a better understanding of what was happening, adding that “it was an emotional time for everyone.”
“We’re following it very closely and on a daily basis,” Wahl says. “I think two things at our company came to forefront over the past year. And as we went though this crisis—not just the pandemic but also social injustice and all these different phases—people in the company became very certain about who we were and what role we should play.”
Last week, performance marketing agency Tinuiti—which manages $2 billion in ad spend and works with clients such as Rite Aid, Bombas, Terminix and Nestle—reported that 27% of the brands it works with halted social media spending. That’s slightly more than the 26% that paused spending in July during the Facebook advertising boycott. And while the summer pause was focused on a single social network, last week’s changes had an expanded scope including shifting spending to paid search and display or to newer platforms like Pinterest and TikTok.
Meanwhile, some advertisers working with Tinuiti adjusted their exclusion lists—or lists of words and phrases related to content topics that brands don’t want to run ads against—to include "storm the capital,” ”storm the capitol,” "patriot party,” “riot,” “protest” and ”mob.” Another blocked phrase was ”Camp Auschwitz,” which was seen on a sweatshirt worn by one of the rioters in a viral photo. Even before last week’s attack, marketers had been averse to appearing next to political content. The Interactive Advertising Bureau, a digital advertising trade organization, has been surveying publishers every month to see which topics are blocked the most, and “President Trump” and politics in general have consistently been the most common.
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“This summer, it really called into question if brands continue to act more like people—which they’ve been tiptoeing into for years—you have to actually start to taking stances on different situations,” says Obele Brown-West, EVP for Media at Tinuiti. “A lot of brands had to make that call, and because they made that call on how they defined who they are as a brand, it makes situations like Wednesday very easy to make a decision on.”
Pausing advertising isn’t a decision that advertisers take lightly. Carrie Dino, head of media at the creative agency Mekanism notes that going dark for even just a few days can affect both sales and insights when it comes to optimizing campaigns on a daily basis.
“I think for brand that have very specific direct response goals on social where they are relying on the traffic and conversion that comes through the cost-effective social channels to drive their bottom line, more thought needs to go into that decision,” Dino says. “Because if you have 20% of your site traffic coming in through Facebook, Instagram and Twitter through any given day and 5% convert to a sale, you’re losing out on those sales on the days you have those campaigns paused.”
According to Dino, about 50% of the brands she works with paused their social media spending last week. However, even those that didn’t still evaluated their content to make sure it wasn’t tone deaf during the crisis. And while Facebook and Twitter were the biggest immediate concerns, some also evaluated their programmatic advertising since there’s less control over where those automated ads show up online.
“I think just in general, we’ve all been acutely aware of whenever there is a change in the political environment,” she says. “It’s hard to predict what the outcome of that will be in terms of consumer sentiment and what kinds of conversation might pop up.”
Tim Calkins, a marketing professor at the Kellogg School of Management, says because most companies operate on a fiscal year, the first few months are important for gaining momentum, and pulling back in January and February could create longer term growth problems through the rest of 2021.
Calkins also notes that it’s not always easy to quickly create new ads to match the tone of the moment. That’s especially true in a month as mercurial as this one: January is a critical time for marketers looking to advertise in the Super Bowl, which takes place just a few weeks after the inauguration of President-Elect Joe Biden and Vice President-Elect Kamala Harris.
Beyond looking at ad campaigns and spending, countless other companies were already gearing up for a wide range of announcements and events around CES, which is taking place virtually this week. Car tech and audio giant Harman, for example, held its annual showcase on January 7, which was scheduled months in advance. According to Harman CMO Ralph Santana, the showcase “supports a key business objective for us — sharing our latest products and cutting-edge innovations with key stakeholders and tech audiences.”
“Quite honestly, you do the math on it, the 7th was when we had this, and it was the day after everything happened,” Santana says, noting that Harman didn’t run any paid media campaigns to support the event. “We were aware that everything happened but we made the decision to go straight ahead because the scale and impact of what had happened wasn’t fully realized yet either.”
Procter & Gamble, one of the world’s largest advertisers, wouldn’t disclose any changes to its spending due to the sheer volume and variety of the thousands of platforms on which its brands advertise. However, when asked about any changes, global chief brand officer Marc Pritchard said the company is focused on “making sure we’re meeting the needs of consumers around the world regardless of what’s happening.”
“When it comes to advertising, we’re in a constant review across every platform and broadcasters to ensure that we’re not advertising in a place that’s not appropriate,” Pritchard said. “We’re looking to build a responsible media supply chain and the includes we’re not anywhere on or near hateful content whether it’s online or with broadcasters.”
While advertising may seem like a trivial thing to worry about in the context of a terrorist attack, it paints a picture of the struggle many businesses face when it comes to the ripple effects of world events. For example, companies like Burger King, General Motors and Pfizer all debuted new logos last week around the same time as the events at the Capitol were unfolding.
“We don’t normally have media buy on typical news shows/channels,” says Fernando Machado, global CMO of Restaurant Brands International, which owns Burger King. “So this one doesn’t affect us as much. We are trying as much as possible to keep the ball rolling. Sometimes people/media need topics which are more normal (like our visual identity relaunch) else things become all doom and gloom. So we ended up gathering a lot of interest on the visual identity relaunch despite the difficult context outside.”
Orlando Baeza, CMO of the education platform Kajabi, which just launched a new marketing program at the beginning of the year, decided not to cut off ad spend. That decision turned into a “record-breaking week from us from a new trials standpoint.” However, he says the company did cut back drastically on social media, scaling effort back as much as 80% on unpaid social media and elsewhere.
“We wanted to be thoughtful and respectful of what was happening in our country and allow for people to have the space to receive information, express themselves, and find community without the need of another brand interrupting that,” he says. “We will continue to monitor closely and when the time feels right, we'll go back to our normal cadence of activity with our social media efforts.”
David Cohen, CEO of the IAB, says that while some marketers paused everything, the most common action was to pause social media and programmatic advertising. However, he expects advertisers to return to advertising alongside news content after January 20, “once the rhetoric and temperature goes down.”
“I would say I’ve talked to probably two dozen agencies (last week) and a whole host of marketers they work with. It’s all over the board,” he says. “There's no easy answer to what people are doing. It’s a wide spectrum.”
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c657d6fb526db526740c35588e0c8e86 | https://www.forbes.com/sites/marvinkrislov/2020/11/06/celebrating-first-generation-college-day-and-beyond/?sh=38ae424621d6 | Celebrating First-Generation College Day And Beyond | Celebrating First-Generation College Day And Beyond
Nicole Ojeda is the president of our Student Government Association on Pace University’s New York City campus. In fact, she’s a born leader. She has been executive secretary of our Latin American student organization and the founding executive vice president of our hip hop dance team, Urban Sound.
Nicole is also a first-generation college student, the first in her family to attend college.
Nicole Ojeda, President of Pace University's NYC Student Government Association Pace University
Sunday, November 8, is National First-Generation College Celebration Day. Scheduled for the anniversary of the day President Lyndon Johnson signed the landmark Higher Education Act in 1965, National First-Generation Celebration Day is an opportunity to honor first-generation students on our campuses, celebrate their successes, and work together toward better ways to support them. At Pace, it’s a chance to honor students like Nicole. And it is a time to recognize that helping first-generation students — a community most impacted by the pandemic — to succeed and thrive in college and beyond is critical for American economic strength and for American families.
There are differing definitions for what constitutes a first-generation student. But however you slice it, there are a lot of them. The Center for First-Generation Student Success reports that 56 percent of American colleges have parents who did not earn a bachelor’s degree. Some 24 percent have parents with no post-secondary education at all.
And the evidence shows that these first-gen students often need extra support. They’re likely to need more financial aid. They’re less likely to have mentors. Perhaps most important, they simply don’t have parents at home who have been through the college experience and can help guide them. Through no fault of their own or their families, first-gen kids can’t lean on parents who know how to build a resume for college, how to navigate the sometimes grueling application process, how to apply for financial aid, or how to transition into college life, or how to network for jobs after they graduate. The data shows that the pandemic is hitting first-gen and minority students hardest, creating roadblocks to success and discouraging some of them from applying to school or continuing work toward their degrees.
That’s where the rest of us come in. We have an obligation to make sure that all qualified students, regardless of their economic or cultural background, have the opportunity to apply for and succeed in college, which is a key driver of professional success in life. First-gen students are no less smart, ambitious, or dedicated than other students, but they need our help. We must do the work to help first-gen students navigate the tough transition into college, and we must help them build the networks they will need to thrive through school and after they graduate.
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College access programs are a great start. At Pace, we work closely with Latino U College Access, a group doing great work in Westchester County, New York. College access programs provide training and support, in a culturally sensitive way, for high-achieving, first-generation, low-income high school students. The National College Access Network has hundreds of member organizations across the country. They offer information sessions on how to prepare for college, how to apply for college, and how to pay for college. They offer boot camps on SAT and ACT prep, on essay writing, on completing the FAFSA. They help expose students to options and opportunities that they might never have known about, and help them start building their networks..
Colleges and universities have a role to play, too. Partnering with college access groups is a great way for higher education institutions to ensure that the student pipeline is diverse and robust. Latino U was born on our Westchester campus at Pace, developed from a Master of Public Administration project completed by founder Shirley Acevedo Buontempo, a two-time Pace alum.
We also need to do local outreach, and we need to partner with institutions in our communities to make sure college is accessible to all. In New York City, we work directly with high school students, like those at the Pace University High School in Lower Manhattan, a New York City Department of Education empowerment school, with a focus on college preparedness and a curriculum customized for its low-income community. And just this fall we’ve started working with our neighbors at Trinity Church Wall Street to offer free online college prep workshops to high school students in our area.
Corporations and communities can play a role, too, by supporting college access programs, partnering with local institutions to provide mentorship or tutoring, and doing whatever we can to make sure all students get the support they need to get to — and successfully through — college.
Nicole Ojeda will graduate from Pace in the spring with a bachelor’s degree in business management and minors in finance and economics. She’s one of thousands of first-generation students on our campus — and millions across the country — who will achieve their dreams and receive their diplomas. Like so many of them, Nicole is hard-working, she’s charismatic, and she’ll be ready to take on the world. It’s our job to make sure all first-gen students can succeed like she will.
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6195644dbbf39023955032c2d04f018d | https://www.forbes.com/sites/maryabbajay/2020/01/20/9-ways-to-make-your-meetings-matter/ | 9 Ways To Make Your Meetings Matter | 9 Ways To Make Your Meetings Matter
Everyone attends them, most people hate them, and few are done well. What are we talking about? Meetings! Studies show that poorly-run meetings are a multi-billion-dollar problem in U.S. organizations. Meetings are supposed to be an engine of collaboration and productivity, yet studies show that less than 50% of time spent in meetings is considered effective and useful. This rampant misuse of people’s time and energy can be prevented if we all learn how to better design, run, and participate in meetings.
Effective meetings produce useful results. Effective meetings have high participation, good energy, constructive collaboration, and meaningful conversations. In short, effective meetings are those which tap into the wisdom, expertise, and energy of the group. Effective meetings are interactive and valuable to both the meeting leader and the meeting attendees. Effective meetings stay on topic and use people’s time and energy well.
Leading effective meetings—meetings that matter–is part science and part art. The science is in taking care of the essential elements that go into the meeting structure. The art is in the way we think about designing our meetings and promoting positive engagement of participants. The following nine tools and techniques are essential building blocks that will help you lead meetings that get results – meetings that are positive, engaging, and efficient. Your next meeting participants will thank you!
1. Have a Purpose
Most people begin planning their meetings by creating an agenda; this is a serious mistake. The first step should always be defining the purpose of the meeting. Everything else follows the purpose. Ask yourself:
· Why are we meeting?
· What do we need to accomplish?
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· What are the meeting’s goals and objectives?
· What are the meeting deliverables?
· What will be different for us as a result of our meeting?
2. Design an Agenda
Once you have clearly articulated the meeting’s purpose and objectives, it is time to design the agenda. The key word here is design. Creating a meeting that is engaging and productive requires more than simply jotting down a few topic areas—it requires being creative and thoughtful about the “what” needs to be discussed and the “how” to discuss them. Think of meetings as a series of conversations in which the participants must engage in order to accomplish the purpose. Ask yourself:
· What conversations need to take place in order to accomplish our purpose?
· In what order do we need to have these conversations?
· What is the goal of each conversation?
· What is the best way to conduct each conversation?
This is where a little “art” comes in. Be creative about how you conduct the conversations. Don’t just rely on introducing the topic and waiting for folks to chime in. There are many tools and techniques you can use to tap into the wisdom of your participants—all your participants, not just the most vocal ones. Techniques can range from simple “round-robins” where you go around the room and hear from everyone, to pair-shares, to more elaborate conversation structures like SWOT Analysis where participants identify Strengths, Weaknesses, Opportunities, and Threats. Specific tools and techniques are readily available online. Here are a few to get you started:
SessionLabFacilitation Techniques and Workshop Activities | Library
ProjectmanagementProcess
Finally, create a meeting timeline based on the conversations you intend to facilitate. Keep your meeting tight, focused, and as short and as efficient as possible.
3. Invite the Right People
Not having the right people in the room is one of the top ten complaints people have about wasted meetings. Many organizations have a bad habit of including everybody and their sister on meeting invites. This just wastes time and dilutes engagement. Don’t let this happen. Go back to the purpose of the meeting. Ask yourself:
· In order to accomplish our purpose, who needs to be in the room?
· Whose input, support, knowledge, or expertise is needed to reach the meeting goals?
Then, make sure those people are invited, available, and committed. If possible, try to limit the attendance of people who aren’t needed. Do what you can to invite the right people, and only the right people.
4. Open Effectively
Take the time to open your meeting properly. How meetings are opened portend how they proceed. A strong and clear opening sets the meeting up for success, while a weak opening invites disengagement, confusion, and disorder. As a meeting leader, it is essential that you graciously take control right from the start. People need to feel that they are in competent hands and that the leader is going to use their time well. It is your job as meeting leader to set the tone up front.
Meeting openings need to include:
· Opening Welcome: Officially open the meeting. Thank the participants for attending.
· Goals and objectives: Clearly state the meeting’s purpose, goals, and objectives. All too often people skip this critical piece which leaves participants either guessing at the objectives or bringing their own agenda to bear. Everybody needs to be super clear about the why and the what of this meeting!
· Motivate and Inspire: After you express the goal, take a moment to motivate the people in the room to participate. You chose them for a reason. Let them know you need their expertise, input, and wisdom to accomplish the goal. Let them know right from the start that they are the right people needed to accomplish the goal. Get them energized to participate.
· Introductions: Make sure people know who is “at the table.” Unless you are in a regular standing meeting or a team meeting, take the time to have participants introduce themselves. This not only helps build trust and relationships, but also helps participants discover the expertise in the room.
· Introduce Ground Rules: If you aren’t using ground rules, shame on you. (See #5 below!) Ground Rules (or meeting norms, participation agreements, etc.) are a critical element for effective meetings. Make sure everyone is clear about the ground rules.
· Review the Agenda: Take a moment to review the agenda and disclose the road map for the meeting. This will help participants stay on topic and focused.
· Icebreakers: Icebreakers are used when leaders need to energize and warm up participants. Like every conversation on the agenda, icebreakers need to have a purpose. The icebreaker should support accomplishing the meeting’s objective. For example, if you need to build relationship and trust among the group, then choose an icebreaker that is focused on that. But if your meeting is about problem-solving or brainstorming, then choose an icebreaker that gets the creative juices flowing. Bottom line: icebreakers with no purpose will fall flat and may alienate participants right from the start.
5. Use Ground Rules
Ground rules spell out the rules of the road for how to behave and interact in your meeting. Ground rules clearly articulate and encourage the desired behaviors and discourage the undesired behaviors that derail meetings. Properly communicated and enforced ground rules will take care of 99% of dysfunctional meeting behavior. Ground rules give you and other participants the “permission” to redirect derailing behavior. Customize your ground rules to the meeting at hand. Ground rules need to be clearly articulated and agreed upon at the start of the meeting. Make sure that participants know that it is EVERYBODY’S JOB to enforce the ground rules. A few all-purpose ground rules include:
· One conversation at a time: We listen to who is speaking, and we don’t carry on sidebar conversations.
· One topic at a time: If we are talking about “X,” we don’t go on tangents to talk about “Y” until we are done with “X”.
· Land the plane/Bottom lining: We try to be succinct and to the point.
· Don’t beat a dead horse: We don’t keep repeating ourselves or revisiting decisions already made.
· E-etiquette: We agree on how we are using (or not using!) electronic devices in our meeting.
· Full engagement: We agree to be fully invested and engaged.
· Timeliness: We agree to show up on time, start on time, and end on time.
· Share the air: We consciously try to make space for everybody to contribute (e.g., extroverts make space for introverts!) below!) Ground Rules (or meeting norms, participation agreements, etc.) are a critical element for effective meetings. Make sure everyone is clear about the ground rules.
6. Park Things in a Parking Lot
A parking lot (or bike rack, holding tank, etc.) is a metaphorical place to record important ideas, conversations, etc. that need to be addressed—but not at this meeting. This is a technique that helps keep the meeting from being derailed by conversations that are important, but not germane to the meeting at hand. When the group starts to discuss something that may be connected to the topic, but not essential to this meeting, simply redirect it to the parking lot. It is helpful to record parking lot items on flip charts or whiteboards, making them visible to participants. Be sure to address next steps for parking lot items at the end of the meeting.
7. Manage Participant Behavior
This 1864 vintage illustration features a female lion tamer. Getty
It is your job as meeting leader to intervene on behaviors that derail meetings. It is your job to set the climate for engagement by encouraging productive behavior and discouraging unproductive behavior. Nothing thwarts engagement like letting bothersome behavior run rampant in your meeting. To make matters worse, allowing unproductive behaviors to go unchecked breeds more unproductive behaviors. For example, letting one participant dominate the conversation creates fertile ground for others to disengage, drop out, or disappear into their electronics. If you have ground rules, this is when you and others enforce them. Need help in finding the right words? These resources can help:
meeteorPost | meeteor
FacilitatoruDealing With Difficult Behaviors
8. Recap and Follow Up
One of the biggest blunders people make when leading meetings is failing to record, recap, and follow-up on action items, next steps and important meeting outcomes. Because most meetings create work and action items for the participants, it is the responsibility of the meeting leader to ensure all action items are actionable and understood. Simply put, every action item needs to be articulated, recorded, and confirmed. Every action item needs three things: 1) Clear deliverable; 2) Owner; and 3) Due date. A simple chart like the one below can help track these items.
Meeting Recap Template Mary Abbajay
It is the meeting leader’s responsibility to follow up on action items! While the meeting leader may delegate this responsibility, it is her job to make sure follow-up happens. Follow-up memos, email, telephone messages, and other forms of reminders are helpful. Sometimes it is useful to schedule a check-in meeting after a few days or weeks, depending on the cycle-times involved, to have people report on their progress in completing agreed upon work. Check-in and follow-up activities help enforce deadlines for deliverables.
9. Close and Appreciate
Congratulations! You’ve just run an effective and productive meeting. Make sure you end it on a high note. Take the time to officially close the meeting and thank your attendees for their participation, input, and collaboration. Time is our most valuable resource; be sure to show your appreciation to the people who gave you their time. Reinforce that you value their contributions.
Bonus Tip: If you want to make sure you are leading effective meetings, take five minutes at the end of your meeting to do a quick evaluation. Try doing a quick plus/delta with your participants. Simply ask the attendees:
· Plus: What worked well with this meeting?
· Delta: What could we do differently next time to make it even better?
Getting input and feedback from your meeting participants helps you ensure your meetings are effective and engages participants in future meeting design.
The ability to lead effective meetings from wherever one sits is an indispensable leadership skill in every industry. It’s time to stop throwing away time and money and learn how to lead meetings that matter.
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dde97a044a4061351e52a64995dc0440 | https://www.forbes.com/sites/maryabbajay/2020/04/20/best-practices-for-virtual-presentations-15-expert-tips-that-work-for-everyone/ | Best Practices For Virtual Presentations: 15 Expert Tips That Work For Everyone | Best Practices For Virtual Presentations: 15 Expert Tips That Work For Everyone
In today’s COVID-19 world, virtual meetings and presentations have become the norm. While many presentation skills and best practices apply to both in-person and virtual presentations, expert virtual presenters understand the importance of adjusting their approach to match the medium. With in-person presentations, you more or less have a captive audience — you still need be engaging, but your audience is kind of stuck with you for the duration. But with virtual presentations, your audience has a greater opportunity to stray. You now have to compete for their eyes, ears, hearts, and minds against diminished attention spans, increased home and work life distractions, and conflicting priorities.
Here are 15 expert tips to set you up for success in your next virtual presentation:
1. Get the Lighting Right: As a presenter, it is essential that people can see you well. Make sure you have good front light—meaning the light shines brightly on your face. If your back is to a window, close the shades. While natural light is often the best choice, if your home office doesn’t have natural light and you do a lot of virtual presentations, consider purchasing supplemental lighting to enhance your image.
2. Choose the Right Background: Try to use a background that enhances your professional image and is aligned with your message. Avoid a cluttered background or anything that can be distracting. Learn whether your presentation platform enables you to use virtual backgrounds (like Zoom) or whether you can blur your background (like Microsoft Teams). Your background can either add to your professional presence or detract from it.
3. Know the Technology: Nothing kills a presentation faster than a presenter who fumbles with the technology. This is a performance, so make sure you know how to make it work. A dry run is essential so that you’re comfortable with the platform features. It’s best to have a co-host (or producer or moderator) assist you with the technology so that you can focus on your presentation. Make sure you practice with the same technical set up (computer and internet connection) that you will use when you deliver the presentation.
4. Play to the Camera: When you are the one speaking, look directly into your computer’s camera, not on the screen or at the other participants. This takes some practice, but it makes the viewer feel as if you are looking right at them. Some presenters turn off their self-view so that they aren’t distracted by their own image. Put the camera at eye level. Try not to have your camera too far above or below you. If it’s too low, then you run the risk of creating a double chin. A camera too high makes it difficult to maintain eye contact, as you may find your gaze dropping as you speak. If you are part of a panel or a team of presenters, make sure you are aware of when your camera is on. If you are not speaking but your camera is on, make sure you look like you are paying attention! Powerful presenters understand the importance of making eye contact with their audience, so this means you have to simulate the same effect virtually.
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5. Get Close (But Not Too Close). You want the camera to frame your face, neck, and shoulders. People are drawn to faces, so you don’t want to lose that connection by being too far away, but you also don’t want your face to take over the whole screen like a dismembered head because, well, that looks weird. Practice your positioning and distance.
6. Stand Up: If possible, use a standing desk or position your laptop so you can stand at eye level with your computer. Standing up provides a higher energy level and forces us to put our body in a more presentation-like mode. If you have to sit, lean forward as you would if you were presenting at a real meeting or as if you were a TV news anchor. Avoid slouching away from the camera, as that sends a signal that you are disconnected from the audience.
7. Be Animated: Just like in a live presentation, you want to present with a little energy and animation. Too slow or too monotone in your voice makes it easy for folks to disengage and tune out. Keeping people engaged virtually requires you to actually be engaging.
8. Pace Yourself: Without real-time visual audience feedback cues, getting the pacing right can be difficult. Even though you want to infuse some animation and energy into your presentation don’t pump up the speed too much. If you tend to be a fast talker in real life, practice slowing down just a bit. If you’re a slow talker, you may want to speed up just a bit.
9. Do A Sound Check: If your sound is garbled, people will tune out. While people may forgive less than perfect video, if they can’t clearly hear you, they will leave. Practice with someone on the other end of the presentation platform. Make sure your sound emits clearly. Sometimes headphones or external microphones work better than the computer audio, sometimes not. Every platform is different, so make sure your sound quality is excellent every time. And again, you should practice with the same technical configurations and location that you will use for your presentation.
10. Plug into Your Modem: If possible, plug your computer directly into your modem using an Ethernet cable. This will give you the strongest signal and most stable internet connection. The last thing you want to happen during your presentation is to have a weak or unstable internet signal.
11. Incorporate Redundant Systems. If using slides, make sure someone else (another webinar co-host or producer) also has a copy of the slides just in case your internet goes wonky and you have to present by calling in. If you are using slides, make them visually appealing. Use high-quality graphics and limit the amount of text on each slide. It’s your job as presenter to deliver the content. The slides are meant to enhance your spoken words, not replace them.
12. Engage Your Participants. Just as if you were doing an in-person presentation, craft your presentation to engage the audience. Incorporate chats, polls, raised hand features, etc. Try not to speak for more than ten minutes without some sort of audience engagement. Use the participant list to interact with your participants by name. Have people chat or raise a hand if they want to speak. Keep track of the order of people and then call on them to invite them to turn on their mics or cameras.
13. Let Someone Else Check the Chats. Don’t get sidetracked by the chats during your presentation. You’ll be shocked at how distracting it is to your train of thought if you attempt to read the chats while speaking. Instead, have your co-host or producer monitor the chats. If you ask people to chat you answers or comments to a question you’ve posed, then pause your talking and engage directly with the chats by acknowledging them, reading them out loud, and commenting on them.
14. Evaluate and Enhance: If possible, record the session and take the time to play back and look for areas that worked well and areas that you might want to improve upon. Great presenters, whether virtual or in person, understand the value of continually honing their craft. Be sure to acknowledge your strengths as well as your areas of improvement.
15. Be Yourself and Have Fun: Again, just like in face-to-face presentations, audiences connect to authenticity, so be yourself! Let your personality show through. Have fun. If you look like you’re enjoying the presentation so will others. Research shows that happy people retain information better than bored or disinterested people, so model the energy that you want to create. The audience takes its cue from you.
Remember, whether you are presenting in-person or virtually, all presentations are performances. And all performances are in service to your audience. Their time is valuable, so honor that time by delivering the best presentation you can. No matter what kind of presentation you are giving, you must find ways to create authentic audience connection, engagement, and value.
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f9d361dc8f03d194296a6211d3f89bc1 | https://www.forbes.com/sites/maryannazevedo/2020/02/27/faced-with-a-bay-area-labor-shortage-tech-companies-increasingly-leasing-on-the-east-coast/ | Faced With A Bay Area Labor Shortage, Tech Companies Increasingly Leasing On The East Coast | Faced With A Bay Area Labor Shortage, Tech Companies Increasingly Leasing On The East Coast
(Photo by John Gress/Corbis via Getty Images) Corbis via Getty Images
The San Francisco Bay Area may be considered the largest tech hub in the U.S. right now, but the number of tech companies signing large leases in the region declined by more than one third in 2019, according to a recent CBRE report.
One might automatically assume that’s due to the expensive office rental costs and high cost of living. But ironically, the two cities that saw big increases in large tech leases last year were not inexpensive markets: Manhattan and Washington, D.C.
To be clear, the San Francisco Bay Area remained the capital of huge tech leases with 6.9 million square feet newly leased last year, according to Colin Yasukochi, executive director of CBRE’s Tech Insights Center.
That’s no surprise. But what was startling was that the Bay Area’s share of square footage in the largest 100 leases declined by 37% in 2019 from 10.8 million square feet leased in 2018 “as tech companies expanded to other markets, largely in search of talent,” Yasukochi says. That kind of decline is large and notable. (Note that the San Francisco Bay Area encompasses the city of San Francisco, Silicon Valley, the peninsula and East Bay).
Meanwhile, square-footage gains registered in markets such as Manhattan (up 148%), Seattle (up 63%), and Washington, D.C. (up 37%). In conducting this research Yasukochi specifically looked at the top 100 tech leases of 2019, which made up about 50 percent of all tech leases last year, he says.
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“Growth is so strong for many of the tech companies headquartered in the Bay Area and the region can’t accomodate all of that growth,” Yasukochi says. “It’s more and more difficult to attract and retain talent in the Bay Area because of the short supply of labor.”
The 100 deals comprised 24.6 million square feet, ranged in size from 110,000 to 1.3 million square feet. and were largely concentrated in the San Francisco Bay Area, Manhattan and Seattle, as you can see below.
Screen Shot 2020-02-27 at 8.23.41 AM CBRE Research
Looking east
Despite being a pricey place to do business and live, Manhattan was the biggest beneficiary of San Francisco’s losses. That’s in part due to the large supply of tech degree graduates, Yasukochi believes.
“Many of the large tech companies are comfortable going there, because they know they will have the ability to hire people,” he says. “In particular, there are a number of tech-degree producing universities in the area that will continue to produce talent as individuals graduate.”
Still, cost is a factor as evidenced by the fact of the number of lower-cost markets ranking in the top 10 when it came to large tech leases signed last year. Namely, Phoenix and Nashville were new entrants, joining other markets such as Dallas-Fort Worth and Chicago. I expressed surprise that tech darling Austin did not make the list, but Yasukochi tells me it was a close No. 11. He said the Texas capital is similarly constrained like the Bay Area, needing a larger supply of talent to grow.
Hot sectors
Looking ahead, Yasukochi expects the tech migration away from the Bay Area and places like Seattle to the East Coast trend to continue in 2020.
“The tech industry in of itself overall continues to grow faster than most other industries. And the Bay Area labor market and supply isn’t growing fast enough to keep pace with that,” he says. “Tech companies have been forced to expand to other markets, and we expect that to continue. Given the tight labor supply and cost pressures in the Bay Area and Seattle – the two largest U.S. tech markets – the diversification trend can be expected to continue.”
When it comes to industries, software, search and e-commerce companies were among the biggest signers of big leases in 2019, accounting for a combined 62% of the square footage in last year’s largest 100 tech office leases, according to CBRE’s report. That’s up from a collective 41% share in 2018.
Screen Shot 2020-02-27 at 8.26.35 AM CBRE Research
The gains made by those three tech sectors came as large-scale leasing activity by companies involved in social media, hardware, business services, cloud and media & entertainment industries, lessened compared to previous years, according to CBRE.
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e26b6c61b0566ce9525a1bdc8e7bc840 | https://www.forbes.com/sites/maryannazevedo/2020/03/20/lennar-launches-digital-homebuying-in-response-to-covid-19-pandemic/ | Lennar Launches Digital Homebuying In Response To COVID-19 Pandemic | Lennar Launches Digital Homebuying In Response To COVID-19 Pandemic
As the COVID-19 pandemic continues to impact every industry, the nation’s largest homebuilder is taking steps to help minimize the impact on its business.
Miami-based Lennar Corp. said yesterday that it’s now allowing people to purchase a home completely remotely with the option for “a personal and private tour” prior to closing.
The move comes just weeks after one of the company’s employees, a Seattle-based customer care representative, died from the coronavirus.
Lennar CEO Rick Beckwitt says the company has accelerated its digital platform to accommodate customers’ desires to close on their home “without risk or contact.”
These measures include the implementation of a virtual new home orientation process by which homebuyers can walk and review their completed home from anywhere via FaceTime. Lennar’s title company has also upped the number of digital closings and created an express drive-thru for customers to get documents notarized from their vehicles.
“During the home closing, there is no physical contact with our customer and our closing associates use hand sanitizer, and give our customer a brand new sterile pen to execute the closings documents,” he says.
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Lennar actually began shifting to an overall more digital approach several years ago, according to Beckwitt.
It started by enhancing its website and including relevant content such as community details, pricing, video tours, interior and exterior images, and floor plans.
“With the current situation we have taken that a step further by using the technology we have available such as Skype and Docusign to connect the customers to our New Home Consultants and loan officers moving buyers through the sales funnel more conveniently, digitally and seamlessly,” Beckwitt says. “So, it’s essentially taking that digital approach we already had and amplifying it with additional technology we already have at our fingertips.”
He notes that in recent years, Lennar has also invested in several fintech partnerships with companies such as Blend, Hippo, Notarize and States Title “that will provide a digital experience for the resale market.”
“We have also created a digital mortgage lending platform that gets the mortgage process started with one touch of the smartphone app,” Beckwitt adds.
How it works
People interested in potentially purchasing a home remotely start out by contacting an Internet Sales Concierge with Lennar to schedule a meeting. They then meet remotely with a new home consultant. The potential home buyers then can take digital home tours and ask questions. (Here’s an example of one of their virtual home tours). They have the opportunity to purchase the home with a private tour before closing.
I asked Beckwitt if this process applied to both new and existing homes, and he says that while resales will likely use similar technology, “new homes are much better situated to deliver better results because they are much more consistently delivered, whereas a virtual tour of a resale may not identify prominent flaws.” Plus, as Beckwitt points out, Lennar only builds new homes.
A home purchase seems too big for many people to want to make without actually seeing the home first. But Lennar is confident homebuyers will come around and be more open to the idea.
“We have seen a more digital shift prior to the virus,” Beckwitt says. “Our customers like the simplicity, convenience and safety that come with new digital technologies.”
Stock impact
Lennar became the largest homebuilder (by revenue) in the United States following a merger with CalAtlantic in February 2018, according to Benzinga Newsdesk. The company's homebuilding operations target demographic are “first-time, move-up, and active adult homebuyers,” says Benzinga.
So far, its stock is holding up.
On March 19, Barron’s reported that Lennar reported strong first-quarter earnings of $398.5 million, or $1.27 per share, heartily beating both guidance and analyst estimates. Previous guidance was $0.80-$0.85 per share, while analyst consensus was $0.84 a share, according to FactSet. Its stock was up 7.6% Thursday afternoon and closed up by another 7.8% on March 20 to $34.08 as a result of the robust performance. But it was still down significantly from its 52-week-high of $71.38.
The company also announced yesterday it was suspending guidance “as the world resets and finds its way forward,” in the wake of the impact of the coronavirus pandemic.
Meanwhile, a number of startups are looking at ways to use technology to creatively solve traditional homebuilding challenges. Forbes staff writer Samantha Sharf in January profiled Homebound, a Santa Rosa, Calif.-based founded by tech executive Nikki Pechet and venture capital investor Jack Abraham. The pair, impacted by the California wildfires, set out to reinvent home building with software designed to cut the delays and cost overruns that plague the industry.
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e5da64430d356afb078519c24520f02d | https://www.forbes.com/sites/maryannkeller/2020/04/14/used-car-market-signals-delayed-recovery-for-auto-industry/ | Used Car Market Signals Delayed Recovery For Auto Industry | Used Car Market Signals Delayed Recovery For Auto Industry
New vehicles sit in a lot in front of the idled General Motors Co. Flint Assembly plant in Flint, ... [+] Michigan, U.S., on Monday, March 23, 2020. The auto industry is escalating its push for U.S. assistance to help weather the impact of a global pandemic that has halted or will soon stop production at 42 out of 44 plants that assemble vehicles in the country. Photographer: Anthony Lanzilote/Bloomberg © 2020 Bloomberg Finance LP
Economists typically view monthly new car sales as a barometer of the economy’s consumer sector. After all, a car is the second most expensive purchase after a home, so undertaking this multi-year financial liability is evidence of buyers’ confidence that they can afford the car and pay off the loan. We rarely think about used car sales and how they influence the overall economy and the new car market itself. In fact, during my early years on Wall Street, U.S. automakers paid little attention to the used car market until the 1990s, when they recognized that faster domestic model depreciation had become a major competitive disadvantage in terms of consumer perception and their own profits.
At the retail level, annual used car sales are estimated between 40 and 45 million units, compared to about 17 million new cars in recent years. Whereas franchised dealers and Tesla are the only sellers of new cars, used cars are sold by both franchised and independent dealers with about one-third of all used car transactions being between two private parties. All used car sellers, including private individuals, rely on valuations and appraisals derived from actual sales data in the vast and efficient whole vehicle auction industry.
At the wholesale level, physical and online whole car and salvage auctions determine a vehicle’s value, irrespective of its condition, title status, make, or model. International bidders often participate in these auctions, and the pricing data generated by millions of wholesale transactions enables dealers and third parties to provide appraisals on an individual’s current car, insurance companies to determine if a damaged car should be totaled, and financial institutions to set loan terms based on the value of their collateral. When used cars are in high demand, as they’ve been for several years, vehicles don’t depreciate as fast as anticipated. Similarly, when demand unexpectedly drops for particular models or the market overall, depreciation accelerates above forecasts.
Under normal circumstances, valuation changes take place over many months as supply and demand adjust. However, in a perfect storm of economic events, as we had in 2008 and 2009, the used car market can behave more like the Dow Jones’ performance in March. In fact, there are significant parallels between the stock and the used car markets when supply exceeds demand. Both operate on a simple, efficient proposition: prices rise when there are more buyers than sellers and fall when the opposite occurs. Beginning in March, nearly every passenger vehicle on the road lost value and will likely continue to lose value until a supply–demand equilibrium is established.
Used car values are plummeting, just as they did in 2007 and 2008, because of an excessive supply of cars at auction. The problem is exacerbated by hesitant bidders, who doubt they can resell what they buy and are, instead, waiting for prices to drop further. Besides a dearth of bidders, excess supply exists. Cash-strapped rental car companies and commercial fleets are defleeting due to reduced demand. Dealers are losing their floorplan credit lines, which has forced lenders to move their collateralized vehicles to auction. Off-lease volume, which is estimated at a record-high 4 million units this year, means that lenders have significant off-lease inventory to unload in the wholesale market. And given record unemployment, there are likely to be more loan defaults, which will contribute to the wholesale inventory buildup. Over the next few months, anxious sellers will have to accept lower values for their vehicles, but other pressures indicate this issue will continue in the fourth quarter of 2020.
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Less obvious pressures on used car values come from the simple fact that every vehicle on the road will celebrate a birthday in the fall when the 2021 models fill showrooms. This additional year of age means lower values for car owners and less trade-in value toward the purchase of new or newer used cars. Prior to the COVID-19 pandemic, trade values were already hampered by loan terms as long as 84 months, putting many borrowers into negative equity (owing more than the car is worth). Another pressure that will come into play later this year is the likelihood that automakers will incentivize new car purchases, especially to help their dealers get rid of 2020 models sitting on their lots. Automakers will use zero percent loans and highly subvented lease deals to move this inventory, and that could briefly shift some payment-sensitive used car buyers into new vehicles.
In 2009, excessive used-vehicle supply was eventually absorbed but at much lower prices. Interestingly, in the years that followed the 2009 crash, used car values rose dramatically because a lack of supply resulted after the excess was depleted. We may see a similar trend after this crisis as a delay in consumer confidence will slow down new car buying, thus keeping used-car trade-in inventory constrained. Additional slowdowns in rental company and commercial fleet defleeting and a decrease in lender inventory from fewer lease returns and defaults are also expected. While used car prices may recover in 2021, the current excess supply must first be absorbed. So long as the relationship between demand and supply remain out of balance, used car prices will suffer.
Valuation trends in the used car market are often among the leading indicators of the auto industry’s overall strength. Right now, it looks like the meaningful recovery of car buying will wait until next year.
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1b0e2e374277f38353430faee2f7d143 | https://www.forbes.com/sites/maryannreid/2018/02/22/6-success-habits-top-female-entrepreneurs/ | 6 Habits For Success From Top Female Entrepreneurs | 6 Habits For Success From Top Female Entrepreneurs
Books. Apps. Conferences.
There are a myriad of ways to achieve success starting with little or nothing. The growth and range of online courses, audiobooks, and "masterminds" are helping those that want to achieve success to do that in their pajamas. Yet, tried and true methods of pen and paper, meditation, and reflection are tell-tale tactics of some top female entrepreneurs. Whether one has the cash for a personal coach or not, practicing daily habits that lead to success is accessible to almost anyone.
Practicing these habits without a purpose doesn't guarantee success. These successful entrepreneurs have both. The ability to stay consistent with a practice, and apply it to meet a goal and take action in their lives. Often, these practices are private with special meaning, or customized to help ground and focus a busy, hectic life that needs to be managed.
MaryBeth Hyland, Founder, SparkVision
MaryBeth Hyland Stephanie Lane of Stephanie Lane Studios
One of the best daily habits that I have is not having any screen time for the first hour of the day. I used to wake up, check my phone, turn on the news and respond to emails within minutes of being awake. With this new policy of no screen time until I've been awake for at least an hour, it's given me the space to start each morning with gratitude and allow my thoughts to dance however they desire. It's created a new sense of balance and centeredness for having a successful and productive day ahead.
Koereyelle DuBose, Founder, WERKPraySlay
Koereyelle DuBose B. Alyssa Trofort Photography
Everyday I dedicate at least 1 hour to my WERK. The work with an E is the time, energy, effort and resources spent on your own dreams, independent of anyone else’s needs. One hour is only 4% of the day so I make sure I’m investing in myself along with all of the other work I finish for everyone else. During this time, I work on both personal and professional goals. It could be anything from writing blogs to sending emails to listening to Michael Beckwith sermons.
Carrie Sheffield, Founder, Bold
Carrie Sheffield Patrick Ryan
Each morning, I meditate and set the intention for the day. I have a personal mission statement that I read or mentally repeat to myself to keep my purpose and vision fresh. Since each day can get crazy and unpredictable, I try to start the day by staying grounded through music, yoga, journaling and reading books like Meditations by Marcus Aurelius, The 7 Habits of Highly Effective People by Stephen Covey, Mastery by Robert Greene, The Power of Positive Thinking by Norman Vincent Peale, Markings by Dag Hammarskjold, etc. After that I read the WSJ print edition. Yes, I'm a grandma Millennial, and I still love me some physical newspapers. That way I'm stimulated in body/mind/spirit before my ordinary workday begins.
Christa Freeland, Managing Director, Powershift Group
Credit: Logan Crable
I’ll envision myself carrying out a goal through in an even bigger way than imagined. I get this special type of energy from visualizing these scenarios, and it’s really helped me realistically think positively and add fuel to whatever I need to accomplish on a daily basis to get me to the long-term goal.
Katie Sanders, Director of Content, Jopwell
Katie Sanders Kelechi Mpamaugo
I recently discovered the TED Talk channel and have been watching one a day around top of mind topics. And I use a free daily text service called Shine Text that sends an inspirational mantra/related article and GIF each morning.
DeeAnn Sims, Founder, Creator of SPBX Los Angles
DeeAnn Sims SPBX | soapbox
I have found that by waking up 30 minutes to an hour earlier than usual, I'm able to carve out space for myself that I likely won't be able to get back as the day goes on. From the moment I wake up, I turn to my bedside table and jot down at least three things I'm grateful for right now.
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bdd8d002e7d38b134285b1aca0b86619 | https://www.forbes.com/sites/maryannreid/2019/02/25/how-this-nonprofit-is-changing-the-way-minorities-get-in-commercial-real-estate/ | How This Nonprofit Is Changing The Way Minorities 'Get In' Commercial Real Estate | How This Nonprofit Is Changing The Way Minorities 'Get In' Commercial Real Estate
REAP NYC 2017 Class Carlos Escobar
According to statistics, there are less than 1% of minorities in commercial real estate management roles. REAP (Real Estate Associate Program), a nonprofit based in New York City, wants to change that.
Launched in 1997 in Washington, D.C., by then president of real estate at Giant Foods, Mike Bush, REAP connects minority talent to a thriving, multibillion dollar commercial real estate sector by answering one simple question: "How do I get in?" Other than D.C., and New York City, REAP has chapters in Atlanta, Chicago, Los Angeles, Cleveland, Columbus, Dallas and Kansas City. The REAP program includes a classroom portion consisting of a 10-week academy where students receive foundational knowledge on a range of commercial real estate topics from financial analysis to market selection with a mix of exclusive networking receptions with top industry leaders.
REAP Executive Director Ken McIntyre and Program Director Osayamen Bartholomew share more about what they wish to accomplish.
Maryann Reid: What problem is REAP solving with its program?
Ken McIntyre: The problem REAP is seeking to 'solve' is the disparity between the percentages of minorities participating in the CRE industry vs. their respective percentages in the population. REAP supplements the academy with events in each of our local markets which promote networking, continued education in CRE topics, mentorship and professional development. With over 1,100 graduates of REAP academies over the past 20 years, REAP is seeking to create multicultural communities of CRE professionals across the country.
Reid: Can you share a recent success story?
McIntyre: REAP graduates hold many senior positions including: head of real estate in the U.S. for IKEA, head of studio real estate for Netflix, regional managers of real estate for Nike, Shake Shack, Target, McDonald's, Starbucks and Walmart.
Specifically, a 2018 graduate of the New York academy joined Nuveen (formerly TIAA Real Estate) as an Asset Management Investment Analyst in Washington, DC.
Osayamen Bartholomew: We recently attended a meeting at a sponsor’s office and upon walking into the room, we were surprised to be greeted by three of their newest employees – all REAP graduates. It was a testament to the success of our program, and the ability to source talented individuals for our sponsors.
Reid: What new initiatives or partnerships are you creating to spread the word about REAP?
McIntyre: We presently are in discussions with several organizations to create strategic alliances which will enable REAP to maintain a consistent presence in multiple markets. One such alliance is with JP Morgan Chase, who has supported REAP in multiple markets with venues for events, instructors for our academies and has hired several REAP graduates either directly or indirectly. Also, over the past 3 years over 10 JPMC employees have participated and graduated from REAP academies. Another alliance underway is with WeWork who anticipates having a need for hundreds of real estate professionals as they grow over the next few years. WeWork views supporting REAP as a way to access talent to meet their growth plans.
Reid: What are the goals of having more minorities in commercial real estate?
McIntyre: There are multiple goals: 1. In order for real estate companies to improve their ability to relate to the increasingly diverse population of the U.S., it is important and a best practice to have representatives of the diverse populations providing input to decisions and connecting the firm to its constituents. 2. Giving people of color knowledge about commercial real estate provides them with the tools to make better decisions about real estate uses in their communities, either as participants in land use discussions, as entrepreneurs and as employees of real estate companies. 3. Commercial real estate has been a tremendous wealth generator and introducing more people of color to the opportunities of careers in CRE can be a step towards closing the wealth gaps that exist.
Reid: What is a memorable moment you can recall from a REAP student?
Bartholomew: In one of our recent classes, we had one candidate who applied for the New York City academy, but currently lived in California. He was so determined to participate in the program that upon acceptance, he rented an Airbnb for 10 weeks, just so he could attend all of his courses. In that same class, we had another student commute from Philadelphia two days a week, and another commute from Washington, DC. It showed the value of REAP in attracting dedicated professionals, and also why it’s the most successful diversity initiative in the commercial real estate industry.
Reid: What is a deal breaker for anyone considering REAP?
McIntyre: Although REAP's mission is focused on diversity, the 'secret sauce' to REAP's existence is talent. If REAP were not successful in sourcing talented individuals seeking to enter the CRE industry, REAP's value would be greatly diminished. Candidates without a track record of success and/or without significant enthusiasm for CRE need not apply.
Reid: What's next for REAP?
McIntyre: REAP's strategic plan includes: more local programming; offering modified academies that provide greater depth in specific disciplines like development or property management; a structured mentorship program; and more networking across markets. Additionally, REAP seeks to develop a pipeline of diverse talent by having outreach to colleges and universities to introduce undergraduates to the possibilities of careers in CRE earlier in their college experience.
Reid: Are more cities in the works?
McIntyre: Specifically, we are in discussions with Starbucks and JLL to bring REAP to Seattle and we have been offered a strategic partnership with Jefferson University to bring REAP to Philadelphia. Beyond those two, we have seven other markets that we've targeted for expansion over the next 5 years.
Reid: What other efforts is REAP doing to connect with minority professionals?
Bartholomew: Our core focus is targeting the community of minority professionals, which includes both men and women, and through our relationships with many organizations including alumni associations of graduate programs, Council of Urban Real Estate (CURE), Management Leadership for Tomorrow (MLT), and several minority real estate associations, we have been able to successfully recruit a diverse group of candidates.
Reid: Anything else you'd like to say?
McIntyre: There is much talk about diversity & inclusion in the CRE industry and in many other industries. Despite this talk the pace of change is very slow. REAP has the capability to significantly increase the pool of talent available to the CRE industry, train them for productive careers, and mentor and support them throughout their careers. Executing these capabilities on increasing numbers will result in meaningful increases in diverse talent in the CRE industry.
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