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1. Trump's accusations about socialism should be taken seriously — because when it comes to business, he's a socialist (GM)18:06[−]

trump election car thumbs-up arizona

  • President Donald Trump attacked General Motors for idling a factory in Ohio, demanding that the carmaker reopen the plant.
  • GM idled the plant because it was producing a slow-selling car and running well below capacity. The company will figure out what to ultimately do with the factory after it renegotiates a contract with the United Automobile Workers later this year.
  • By imposing his political will on industrial companies, Trump is taking a page from the well-worn playbook of 20th-century socialism.

In the US, we actually have a long history with socialism. It isn't woolly, storm-the-barricades, hard-left stuff. Rather, it's democratic socialism, and for the most part, it has involved a long expansion of the welfare state.

FDR's New Deal of the 1930s is the best example, but we also have Lyndon Johnson's Great Society in the 1960s and, more recently, Obamacare.

The point is that the growth of this "socialist" side of the American experience hasn't really touched on more ideologically controversial aspects of proper economic socialism — you know, the awkward Marxist approaches that in the hands of various freedom-hating dictators over the past century have turned the means of industrial production into instruments of the state. Or worse, instruments to be used to bolster cults of personality, advancing the political aims of politicians.

That was until Trump became President and starting tweeting at the people who run major US companies to do what he says — or else.

Read more: Trump's possible national-security tariffs on autos would be socialism at its worst. Here's why they're bad for America.

Over the weekend, Trump blasted General Motors for idling a factory in Ohio that's smack in the middle of Trump country, a rich region of Trump voters whom the President will need to get reelected in 2020.

"Because the economy is so good, General Motors must get their Lordstown, Ohio, plant open, maybe in a different form or with a new owner, FAST!" Trump tweeted. "Toyota is investing 13.5 $Billion in U.S., others likewise. G.M. MUST ACT QUICKLY. Time is of the essence!"

The business logic of GM's decision

mary barra

Under CEO Mary Barra, GM has already acted on the plant, which was manufacturing a slow-selling compact sedan and running at 30% capacity. The vehicle, the Chevy Cruze, was "de-allocated" for production ahead of a contract negotiation with the United Automobile Workers (under the current contract, GM can't officially close a factory without making a deal with union).

The automaker has also sought to relocate workers to other plants, and in any case, the job hit is modest, about 1,500 positions.

In the auto industry, underutilized capacity is a money pit and needs to be brought offline in order for a carmaker's entire production system to function properly. Prior to the financial crisis, companies might have kept an underutilized factory going to avoid the expense and complexity of shuttering it, but under Barra, GM has been unflinching in maximizing its return on investment. Using one shift to build an unpopular sedan means that cash is being wasted where it could otherwise be productively employed.

This means nothing to Trump, who has never managed a vast global enterprise. Instead, he's taken a page from the well-worn playbook of 20th-century socialism to insist that GM prop up employment in Ohio, rather than accept that GM is responding to free-market signals. Consumers don't want the Cruze. Therefore, Lordstown has to be idled.

That sounds brutal, but in truth, GM probably isn't inclined to let a valuable asset rot. Lordstown Assembly has been around since 1966 and could certainly be revived. GM indicated as much in its official statement after Trump's tweet, stressing that it's doing everything it can to find workers new jobs.

"To be clear, under the terms of the UAW-GM National Agreement, the ultimate future of the unallocated plants will be resolved between GM and the UAW," the automaker said.

"We remain open to talking with all affected stakeholders, but our main focus remains on our employees and offering them jobs in our plants where we have growth opportunities. We have now placed over 1,000 employees from our unallocated plants to other GM locations, and we have opportunities available for virtually all impacted employees."

The socialist-in-chief

AOC Alexandria Ocasio-Cortez

Trump and much of the rest of the GOP is gearing up to clobber Democratic challengers in the coming years, accusing them of socialism, socialism, and more socialism. To be fair, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez haven't held back on pushing their somewhat exaggerated form of democratic socialism, and Ocasio-Cortez in particular really stepped into a problem when she started alluding to the labor theory of value in an interview at SXSW (the labor theory of value, a cornerstone of Marxist analysis, hasn't been taken seriously by economists since the 1890s).

But nobody on the left has been agitating for full-on state management of the means of production. That's been Trump's game — with the automakers since he was campaigning in 2016 and slamming Ford for a now-abandoned plan to build a factory in Mexico, and for over a year now with assorted tariffs and the kind of trade war that would have once horrified market-loving conservatives.

In fact, Ocasio-Cortez's welfare-state socialism pales by comparison with Trump's heavy-metal socialism — his is the hardcore, industrial-grade stuff, the kind of thing you see depicted in Stalinist art from the pre-war Soviet period. A workers' playland, men and women bent to the task of constructing big metal things in big modern factories. Who cares if there's anybody to buy the output? Keep that glorious machines running!

Trump has bungled into this deeply retrograde position not because he's some sort of closet Marxist. His enthusiasm for nationalistic socialism has been motivated by what he can get out of it politically. That ultimately means it's unlikely to morph into full-on collectivism, and he's offset the socialism with hyper-capitalist moves, such as a huge corporate tax cut.

Unfortunately, Trump's instincts here are pretty tin-pot. And the thing is, he isn't going up against corrupt, weak companies that owe him favors. GM is a gigantic, multinational firm that's run by 21st-century professionals, steeped in the kind of high-velocity management that Trump has quite literally never been exposed to in his entire life.

In that context, his socialism is predictable. It's easy, while modern business is hard.

But it's still socialism.

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2. Boeing and the FAA were reportedly told about issues with the 737 max software 4 days before the plane's second deadly crash (BA)18:01[−]

Boeing 737 Max

  • The Seattle Times presented internal safety analysis of the 737 Max's MCAS software to Boeing and the FAA four days before the plane's second fatal crash in five months.
  • According to the report, internal documents from Boeing showed significant problems with the software that's currently being investigated as a possible cause in both the Ethiopian Airlines crash and that of Lion Air in October.
  • MCAS is designed to pitch the plane's nose down if it detects a stall, but investigators think the system could be falsely triggered.

Safety issues in Boeing’s MCAS software — the program under scrutiny following a second 737 Max crash this month — were presented to both the company and the Federal Aviation Administration four days before the fatal Ethiopian Airlines crash last Sunday, The Seattle Times reported on Sunday.

The MCAS (Maneuvering Characteristics Augmentation System), a new software in place on 737 Max jets, is being looked at by investigators as a possible cause in both Ethiopian Airlines’ crash as well as that of Lion Air in October. MCAS is designed to counteract the plane's tendency to tip its nose upward during flight, which increases the likelihood of a stall, by pointing the nose downward. This was a by-product of the Max's larger, more fuel-efficient engines, which disrupted the plane's center of gravity.

The two crashes had “clear similarities,” Ethiopia’s transport minister said Monday.

According to The Seattle Times, the following safety analysis was presented to both Boeing and the FAA before the crash:

  • "Understated the power of the new flight control system, which was designed to swivel the horizontal tail to push the nose of the plane down to avert a stall. When the planes later entered service, MCAS was capable of moving the tail more than four times farther than was stated in the initial safety analysis document.
  • "Failed to account for how the system could reset itself each time a pilot responded, thereby missing the potential impact of the system repeatedly pushing the airplane’s nose downward.
  • "Assessed a failure of the system as one level below 'catastrophic.' But even that 'hazardous' danger level should have precluded activation of the system based on input from a single sensor — and yet that’s how it was designed.

Read more: Pilots experienced these 6 problems with the Boeing 737 Max 8 in the months before its second deadly crash

Boeing and federal officials have denied reports that a software update to the MCAS, now set to be released as soon as April, was delayed due to the government shutdown earlier this year.

"While investigators continue to work to establish definitive conclusions, Boeing is finalizing its development of a previously-announced software update and pilot training revision that will address the MCAS flight control law's behavior in response to erroneous sensor inputs," CEO Dennis Muilenburg said in a statement Sunday.

The company did not immediately respond to question from Business Insider about the timing of the Seattle Times' questions. In a statement to the paper, Boeing said that" there are some significant mischaracterizations" of the reported flaws in MCAS.

The FAA declined to comment.

Read the Seattle Times' full investigation here>>

More about the investigation into Boeing's 737 Max aircraft:

SEE ALSO: Boeing could get hit with a subpoena over its 2 deadly 737 Max 8 crashes

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3. Boeing slides after authorities say Ethiopian Airlines and Lion Air crashes have 'clear similarities' (BA)17:43[−]

Boeing 737 Max

  • The March 10 Ethiopian Airlines crash that killed all 157 people on board has parallels to the October Lion Air crash of the same Boeing model that killed 189 people, according to Ethiopia's transport minister.
  • The two crashes have resulted in the worldwide grounding of the Boeing 737 Max aircraft.
  • Watch Boeing trade live.

Boeing shares slid 2.89% to $368.02 apiece early Monday after Ethiopian authorities pointed to parallels between the Ethiopian Airlines crash earlier this month and the Lion Air crash in October. Both incidents involved the Boeing 737 Max aircraft, which represents the bulk of the plane maker's 5,000-strong aircraft orders.

"Clear similarities were noted between Ethiopian Air Flight 302 and Indonesian Lion Air Flight 610, which will be the subject of further study during the investigation," Ethiopian transport minister Dagmawit Moge said Sunday in a statement seen by The Wall Street Journal.

The March 10 Ethiopian Airlines crash killed all 157 people on board came about five months after a Lion Air crash killed 189 people. The series of crashes has resulted in an international investigation, and the grounding of the Boeing 737 Max aircraft worldwide.

On Friday, Reuters reported that investigators found a piece of equipment called a jackscrew at the Ethiopian crash site. According to two sources who spoke to The New York Times, the evidence suggests that the jet's stabilizers were tilted upward, which would have then forced the nose of the plane downward. Jackscrews control the horizontal angle of the stabilizers. According to Reuters, sources said this resembled evidence from the Lion Air crash.

Boeing shares have fallen 13% since the Ethiopian Airlines crash. But despite the recent sell-off, Boeing was still up 14% this year as the company's fourth-quarter-earnings report highlighted strong fundamentals and positive expectations surrounding the rollout of the 777X, its 747 replacement.

Benjamin Goggin contributed to the post


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4. What surprised the creators of Showtime's 'Billions' the most about the world of hedge funds17:30[−]

billions showtime

  • "Billions" is back for its fourth season on Showtime, airing Sundays at 9 p.m.
  • The show is a favorite on Wall Street because of how well it depicts the finance world and hedge funds specifically.
  • Co-creator Brian Koppelman told Business Insider last year that the thing that most surprised him in his research was the "exact level of rigor" that people who work at hedge funds need to employ.

Showtime’s "Billions" — currently airing its fourth season Sundays at 9 p.m. — has become a favorite on Wall Street because of its attention to detail and charming ( and morally compromised) characters.

Creators Brian Koppelman and David Levien have tackled insular communities since writing the hit movie “Rounders” about high-stakes poker in 1998. And to nail the hedge fund world depicted in "Billions," the pair started researching eight or nine years before the show went on the air, they told Business Insider in an interview last year.

Because of where Koppelman and Levien lived — Manhattan and Greenwich, Connecticut — the pair knew many people in the finance world not just from headlines, but socially as well. Levien said that was what first motivated them to start digging in.

But as they were doing research, they learned quite a bit more about how the world of finance, and hedge funds in particular, operates.

Koppelman said what surprised him the most about hedge funds was the “exact level of rigor that these people have to apply to solving these problems.”

“If you're an analyst at a powerful hedge fund, it’s not just the hours you work,” he continued. “You are forced to work at a level of intelligence and rigor that is so high,” he said, and the pressure is constant.

Koppelman said before they started working on "Billions," he was aware of how much a hedge fund manager had to perform at that high level, but not the extent to which even a lower-level analyst also had to synthesize information intelligently in such a high-stress environment.

Read Business Insider's full interview with Koppelman and Levien from last year.

SEE ALSO: HBO's 'Silicon Valley' is better without TJ Miller — and the show weaves in his absence in a clever way

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5. Prada's profits sank after Paris riots, trade, and growth fears hit Chinese demand16:59[−]

model falling on runway

  • Prada's shares slumped 11% after the luxury brand posted lower earnings for the fourth year in a row.
  • Its challenges included the US-China trade war, protests in France, a "blackface" scandal, and slowing growth in China.

Prada's shares slumped 11% on Monday after the Italian fashion house posted its fourth full-year earnings decline in four years.

The Hong-Kong listed group's operating profits shrunk by a tenth to €323 million ($366 million) in 2018. Sales in China flatlined in the second half of the year, after jumping 17% in the first six months. Prada earns about a third of its revenue in Asia Pacific, according to Walter Woo, an analyst at CMB International Securities.

Prada blamed a weaker yuan for tepid demand from Chinese tourists in Hong Kong and Macau. Falling asset prices and slowing economic growth in China and Hong Kong have also tempered consumer confidence, Woo said.

Other tailwinds include China's ongoing trade war with the US, protests in France that deterred tourists and shuttered Prada stores, fears of a US downturn, and pressure on US sales after Prada was accused of employing racist "blackface" imagery in its Pradamalia trinkets, Woo added.

Prada is still adapting to Chinese tastes as well.

"The Chinese market has become more selective than it used to be in the past," CEO Patrizio Bertelli said on the company's earnings call. "We'll have to work on that market more and more intensively."

Prada's constant-currency sales climbed 6% in 2018 as new handbags and cheaper options in black nylon proved popular with shoppers. However, the group reduced markdowns from 12% to 7% in a bid to bolster its brand image and lift margins.

Marketing costs also swelled by 12% as it plowed cash into e-commerce, social media, pop-up shops and parties, according to Bloomberg.

Woo forecasts a 4.4% rise in Prada's sales this year. But given the brand's issues and the challenging outlook for the luxury sector, he slashed his earnings-per-share forecasts by more than 16% this year, and downgraded his recommendation to "Hold."

SEE ALSO: Global luxury brands again chase China's young, rich and spendthrift

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6. MORGAN STANLEY: These 9 stocks are going to be winners over the long run16:42[−]

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 7, 2019. REUTERS/Brendan McDermid

  • Morgan Stanley highlights the stocks you want to own even if markets head for a slowdown.
  • The firm highlights companies based on enduring competitive advantages, not just valuation.
  • Business Insider has highlighted Morgan Stanley's top stock pick for each industry sector.

Morgan Stanley thinks the longest bull market in history may be coming to a close, and that stock-picking is going to become more important if markets head for a slowdown.

To help investors make better decisions, the firm highlighted a list of stocks that it believes will be winners in the long-term.

The companies are picked not because they are the best-valued stocks, but because they have enduring competitive advantages based on several criteria — including competitive advantage, business model, pricing power, cost efficiency, and growth.

Here is Morgan Stanley's top pick in each sector, listed in ascending order of their potential upsides when compared to the firm's price target:


Ticker: WELL

Sector: Real Estate

Market Cap: $29.7 billion

Revenue Growth CAGR ('16-'21e): +5%

EPS Growth CAGR ('16-'21e): 0%

Price target: $77

Potential upside: 0%

Morgan Stanley comment:

"Beneficiary of the aging demographic," analyst Vikram Malhotra said. "Starting in 2020, an aging demographic should serve as a boon for senior housing demand as growth in the 85+ year old cohort is expected to accelerate to 1.7% from 0.9% in 2019, with annually growth rising to 2.3% by 2023."

Source: Morgan Stanley

NextEra Energy

Ticker: NEE

Sector: Utilities

Market Cap: $91.3 billion

Revenue Growth CAGR ('16-'21e): +4%

EPS Growth CAGR ('16-'21e): +10%

Price target: $191

Upside potential: 0%

Morgan Stanley comment:

"Best-in-class utility coupled with a premier renewable energy business," analyst Stephen Byrd said. "We believe NextEra has the largest set of growth opportunities, a strong balance sheet, and the best competitive position among the US utilities we cover."

Source: Morgan Stanley

Estee Lauder

Ticker: EL

Market Cap: $57.5 billion

Sector: Consumer Staples

Revenue Growth CAGR ('16-'21e): +8%

EPS Growth CAGR ('16-'21e): +15%

Price target: $166

Potential upside: +2%

Morgan Stanley comment:

"The global middle class is expected to expand 50% by 2028 and increasingly aspires to prestige brands," said analyst Dara Mohsenian. "We view premiumization as a sustainable trend as consumers are seeking the high level of service offered by prestige brands, and younger consumers are more focused on beauty, influenced by social media."

Source: Morgan Stanley

See the rest of the story at Business Insider

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7. Google's ambitious plan to push into video games is about to be unveiled this week: Here's what we're expecting (GOOG, GOOGL)16:42[−]

Sundar Pichai

  • Google is one day away from unveiling its big push into video games.
  • The initiative assuredly involves Google's Netflix-like video game streaming service, Project Stream.
  • Reports point to Google making a game console as well, though it's not clear how powerful it will be.

Google is about to make a major push into the world of video games.

Unlike gaming heavyweights Nintendo, Sony, and Microsoft, Google isn't likely to create a device that powers games. Instead, the company's focus seems to be on a Netflix-like game streaming service.

From reports and Google's own announcements, we already have a surprisingly clear picture of the company's gaming plans ahead of a big announcement scheduled for March 19.

Here's everything we know about Google's ambitious push into video games:

SEE ALSO: Microsoft is on the verge of announcing a new Xbox — here are 5 crucial components it needs to compete with Sony's huge lead

The core of Google's gaming service is a Netflix-style, on-demand game streaming service. It was already announced and publicly tested as "Project Stream."

Near the end of 2018, and for much of January 2019, Google ran a limited test for its video game streaming service. That service, fittingly enough, is named "Project Stream."

During the test, users could play 2018's "Assassin's Creed Odyssey" for free in a browser tab on their computer. You could even use a Bluetooth controller to control the game.

It was little more than a proof of concept test, and it confirmed that — yes— Google's service is indeed capable of streaming a blockbuster game to a web browser. It was impressive, easy to use, and quick.

Google has yet to make any official announcements about the future of Project Stream. What we do know is that Project Stream actually works, which is more than can be said for many of the previous efforts at creating a video game streaming service.

Google is also expected to make a game console, though it's unlikely to directly compete with home game consoles in terms of horsepower.

Google isn't likely to make a game console as powerful as the Xbox One or PlayStation 4, or even one as powerful as the Nintendo Switch, but it does need to make some form of hardware for its service to function on TVs.

What's most likely is Google releases a very inexpensive piece of hardware that acts as a means of accessing a game streaming library — a bare-bones Chromecast-like device rather than a brawny PS4-like device.

That device could potentially serve as a means of enabling Bluetooth gamepads to function on a television, and as a means of accessing Google's game streaming service. It could be as small as a Chromecast or as big as a cable box. It could come with a Google-made gamepad, or something else, or nothing at all!

We simply don't know just yet. Google has yet to confirm that a hardware device is even in the works.

We can, however, assume that Google isn't making a powerful gaming console to compete with home consoles. Why's that? We'd have heard about it! Between research and development costs, associated business deals with game makers, and hardware production, these things leak.

Look no further than the current crop of home game consoles from Nintendo, Sony, and Microsoft — all of which leaked heavily before launch, like so many "secret" hardware projects before them.

Google has reportedly been courting game developers and publishers to build a library for its game streaming service.

When Google tested Project Stream, it collaborated with Ubisoft to use "Assassin's Creed Odyssey" as the test game. Ubisoft has a long history of being the first publisher to work on new gaming platforms.

Given that, it would be unsurprising to see Ubisoft — and its game franchises, from "Assassin's Creed" to "Splinter Cell" and "Rayman" — show up as one of the first publishers on Google's streaming service.

Ultimately, Google's gaming push lives and dies based on its game library.

Given that, Google is expected to announce various partnerships when its service gets officially unveiled in mid-March. The company has reportedly been courting developers and publishers since some point in 2018, and perhaps even earlier, according to Kotaku.

See the rest of the story at Business Insider

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8. Netflix's biggest bull and bear agree on one thing about its key growth measure during an economic slowdown (NFLX)16:07[−]

Netflix ceo reed Hastings

  • The biggest Netflix bull and bear on Wall Street can find plenty to disagree on.
  • But there's some commonality in how they view the platform's future subscriber growth.
  • Watch Netflix trade live.

Investing in the world's largest online-subscription video platform can be an inherently polarizing discussion.

Netflix bulls and bears tend to disagree on whether the stock's valuation is justified, if the company is too quickly burning through cash, and if it's adequately prepared for an increasingly competitive streaming environment.

Then there's subscriber growth, a metric that was praised by many on Wall Street following Netflix's fourth-quarter earnings report. During the quarter, the company added a record 8.8 million paid memberships. That was on top of the record 7 million new streaming subscribers in Q3, a big rebound from a disappointing showing last July.

Earlier this month, Markets Insider asked Wall Street's biggest Netflix bull and bear how concerned they were they about the the sustainability of Netflix's subscriber growth during an economic downturn — especially after Netflix announced its biggest price hike for US subscribers in January.

The analysts' responses were notably similar. In short: Netflix's subscriber growth would probably be okay in the case of a recession.

Read more: We asked the biggest Netflix bull and bear on Wall Street the same 5 questions. Here's what they said about the streaming giant's cash burn and competition as well as what the other side is getting wrong.

"Netflix is a super cheap entertainment alternative. It just is," Pivotal Research founder Jeffrey Wlodarczak, who has a $500 price target — the highest on Wall Street, told Business Insider.

"A cable bill, DirecTV, could be $100, so if anything, I think you see an increased migration to something like Netflix because it's such an inexpensive alternative. In an economic downturn, I think there probably is an element of increased password-sharing."

Hed added: "I think in a time of economic weakness, I would think, if you're the cheapest entertainment alternative, you're going to be fine. If anything, it will accelerate the decline of paid-TV."

And Morningstar analyst Neil Macker, who has a $135 price target — the lowest on Wall Street — also thinks Netflix's subscriber growth would hold up during an economic slowdown.

"Netflix, like the cable subscriptions that we've seen in the past, is one of those things that, it's a relatively cheap thing to hold onto," Macker told Markets Insider in an interview.

"I'm not necessarily worried about that in a downturn. You still need entertainment in a downturn, and Netflix, or the paid-TV subscriptions or Hulu or Amazon, is a relatively cheap version of that versus going out to dinner or going to the movie theater these days."

He added: "I wouldn't be concerned about that in terms of, people still need entertainment, and I think Netflix or your cable sub, given the amount of hours of entertainment on both of those, are one of the last things to get cut."

Netflix was up 35% this year.

Now read more Netflix coverage from Markets Insider and Business Insider:

Netflix shares.

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9. MoviePass is bringing back an unlimited plan, but there's a catch15:59[−]


  • MoviePass is likely to bring back a $9.95-a-month unlimited plan in the coming days, a source with knowledge of the decision told Business Insider.
  • But the unlimited plan will have restrictions for those MoviePass deems to have "excessive individual usage," a staging webpage with details of the plan indicated.
  • The company recently said it would restructure its business model to work more closely with MoviePass Films, its production unit.

MoviePass is bringing back an unlimited plan.

Despite a recent exodus of executives and managers, the movie-ticket subscription service has been working to bring back a plan similar to the one that got it so many subscribers two summers ago: a $9.95-a-month unlimited plan.

The launch has been delayed for weeks, according to a source with knowledge of the decision, who told Business Insider that it would most likely be set live in the coming days.

There are other signs that MoviePass is on the cusp of bringing back the unlimited option.

A staging webpage showing details of the plan was posted on StockTwits over the weekend. By Sunday afternoon, the link had been taken down.

MoviePass 1
Details on the staging page indicated the unlimited plan would be available to new subscribers for a limited time for any 2D movie.

But there's a catch: In a clear move to limit power users, MoviePass said it would restrict subscribers' choices in response to what it deems "excessive individual usage."

For further explanation of what that means, MoviePass pointed to a section in its terms of use:

MoviePass 3

There, MoviePass said that it "makes no guarantee on the availability to any particular theater, showtime, or title that is presented in our app" and that it may use its algorithms to restrict users "based on their location, day of movie, time of movie, title, and the individual user's historical usage."

These restrictions are similar to existing MoviePass restrictions that remove some popular showtimes and movies from the app.

That's not the only catch in the new plan. MoviePass said subscribers would get the $9.95-a-month price if they paid on an annual basis through an e-check or an automated clearinghouse.

With MoviePass' recent management turmoil and heavy losses, some subscribers might be wary of paying for a full year up front, especially before they know how much MoviePass will restrict movies and showtimes. The ACH option would also require subscribers to provide their bank account information.

MoviePass 2

MoviePass currently offers a three-tier pricing plan, ranging from $9.95 to $19.95 a month, depending on where you live in the US. MoviePass abandoned the unlimited plan last August after gaining millions of subscribers and burning through hundreds of millions of dollars to pay for their tickets.

Read more: The CFO of MoviePass' parent company has resigned, as the executive exodus continues

MoviePass recently said it planned to "create a more closely connected relationship between our subscription service and original content production unit, MoviePass Films."

So why go back to an unlimited plan? The move has some inside the company baffled and has contributed to recent management turnover, a source close to MoviePass told Business Insider.

Last week, Business Insider reported that Khalid Itum, the executive vice president in charge of day-to-day operations, had resigned along with three other management-level staff members.

MoviePass declined to comment for this story.

SEE ALSO: "Billions" star Asia Kate Dillion on how the show led to a revelation about the actor's own gender identity, and an emotional moment with a fan

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NOW WATCH: Netflix copycats are changing the streaming game and making viewers pay the price

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10. Lyft is seeking a valuation of up to $23 billion as it embarks on its IPO road show (LYFT)15:23[−]


  • Lyft is seeking a valuation of up to $23 billion as it embarks on its initial-public-offering road show this week.
  • The company wants to raise as much as $2 billion from the road show, it said Monday in an updated filing.
  • Lyft is the first ride-hailing firm to go public and is expected to spark a slew of tech IPOs this year.

Lyft says it will launch the investor road show for its initial public offering on Monday, seeking a valuation of up to $23 billion.

Shares are expected to price between $62 and $68 when they hit the Nasdaq exchange, valuing Lyft between $21 billion and $23 billion, the ride-hailing company said Monday in a press release. Lyft's trading symbol will be LYFT.

Reports that emerged before Lyft issued an updated filing with the Securities and Exchange Commission indicated it would be seeking to persuade investors to make large commitments to its IPO rather than hold out for its larger rival Uber, which is planning to launch its own public offering next month.

The company will be pitching itself to investors as a more focused bet on ride hailing to differentiate itself from Uber, which has diversified to areas such as food delivery and freight hauling and expanded around the world, The Wall Street Journal reported.

Lyft has also branded itself in recent years as a more driver-friendly alternative to Uber. In its first S-1 filing earlier in March, the company said it got a big boost from the "Delete Uber" campaign, which surged across social media amid Uber's struggles under its founder and former CEO Travis Kalanick.

That reputation has come under fire lately, however, as the company fights new minimum-wage rules in New York City — the US's largest and most lucrative ride-hailing market. Lyft told a judge that the rules unfairly benefited Uber and that demand had dropped as prices increased to cover the higher payments.

Uber is seeking a valuation as high as $120 billion at its IPO, though some analysts have pegged it closer to $100 billion based on selected financial figures it has disclosed. Neither Uber nor Lyft is profitable.

Lyft's IPO will provide a funding boost as it continues to subsidize rides with promotions to attract passengers. The windfall from the IPO will also help finance investments in areas such as autonomous driving, according to sources.

After a quiet start to the year, technology companies are lining up for public listings as public equity markets hover near historic highs but remain vulnerable to geopolitical concerns, including tensions over trade agreements and a slowdown in economies such as in Europe and China.

Other Silicon Valley unicorns — startup companies with valuations of at least $1 billion — including the business-messaging company Slack and the image-sharing company Pinterest, are waiting in the wings to go public later in 2019, sources have said.

Lyft the first ride-hailing firm to go public

Lyft's IPO will mark the first time a ride-hailing company has debuted on the US public markets. Lyft launched in 2012 and is led by its founders, Logan Green and John Zimmer.

The ride-hailing industry, which touted $36.5 billion in sales globally in 2017, is expected to grow rapidly but is fraught with questions about the future of automated driving, regulatory pushback, and legal challenges over drivers' pay and benefits.

Lyft is expected to emphasize to investors its rapid growth in the United States and its relatively uncomplicated business model, which focuses on selling rides in cars, bikes, and scooters.

In its IPO filing, Lyft said its US market share had risen to 39%, from 35% early in 2018, gaining some ground on long-dominant Uber. Unlike Uber, Lyft operates only in North America.

Lyft's revenue was $2.16 billion for 2018, double that of the previous year and up 528% from $343 million in 2016. But Lyft posted a loss of $911 million for 2018, which climbed from $688 million in 2017 and $682 million in 2016, according to its IPO filing.

Losses could continue to mount, Lyft cautioned, as it continues to invest and eye a broader international expansion, and it could be forced to increase driver pay.

Uber's revenue last year was $11.3 billion, while its gross bookings from rides were $50 billion. But the company lost $3.3 billion, excluding gains from the sale of its overseas business units in Russia and Southeast Asia.

SoftBank's Vision Fund and Toyota Motor Corp. are part of a consortium of investors in talks to invest $1 billion in Uber's self-driving-car unit, Reuters reported Wednesday. Taking on large investors who will influence a key business is an unusual move for a company so close to an IPO.

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11. The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years14:55[−]
  • John Rogers — the CEO, chief investment officer, and lead portfolio manager at $12 billion Ariel Investments — spoke with Business Insider to break down his top fund's outsized success since the financial crisis.
  • The $1.8 billion flagship Ariel Fund was No. 1 in Lipper's mid-cap core universe of funds in the period from the stock market's bottom on March 9, 2009 through Dec. 31, 2018.
  • Rogers also discussed what Ariel does differently than other firms, his views on the stock market's future, and whether he thinks an economic recession is imminent.

John Rogers — the CEO, chief investment officer, and lead portfolio manager at $12 billion Ariel Investments — spoke with Business Insider senior investing editor Joe Ciolli.

They chatted about his fund's market-beating performance since the financial crisis, what Ariel does differently than others, the stock market's future, and the possibility of a recession.

Following is a transcript of the video.

Joe Ciolli: John, your fund has really outperformed peers over the last decade, and I wanted to see if you could maybe distill that success down to one specific strategy or behavior that you guys do better than anyone else.

John Rogers: I think what was really, really important is that we are long-term investors, so we are always looking out over the horizon and making sure that we're not getting caught up in the short-term noise, short-term emotions of the market. We're able to say, 'Hey, three to five years from now, what will these companies look like?'

So during that financial crisis, we were able to look out over the horizon, take a long-term perspective, and try not to let all the fear stymie us during that tough, tough time.

Ciolli: So I wanted to see what your best call might be over the last 10 years. Is there any sector call or specific allocation that you made that you think really contributed to your success more than other things?

Rogers: There are a couple sectors that we worked on, but the one that really comes to mind is the real estate services companies. Jones Lang LaSalle (JLL) and CB Richard Ellis (CBRE). They are both real estate services companies known for leasing. They have businesses that do the capital markets business. They have outsourcing real estate services.

They really are worldwide companies in terms of real estate servicing, and those stocks got crushed during the financial crisis. CBRE got under $5 a share, and got to be extraordinarily cheap, everyone hated it, and now it's bumping up toward $50 a share. So that was a sector that was really great for us.

Another one was the leisure-oriented companies. Companies like Royal Caribbean that do a wonderful job of creating cruises for American consumers primarily. But they're also global, they're all over the world. That stock got under $10, and now it's well over $100. People were very fearful during the crisis that people wouldn't cruise again.

In both cases, we looked out over that horizon and took that long-term perspective that we believe that real estate will be here forever and that people would love being able to get away on a cruise down the road.

Ciolli: Is there anything in particular that you think you do differently that kind of sets you apart? I know that you're traditional value investors, but value has not done so well over the last decade, but you have. What wrinkle have you added to the value investing playbook that's allowed you to continue to succeed where others have failed?

Rogers: I think, on the one hand, the thing that we do that has worked well for us is to follow Warren Buffett's playbook. He always says, 'You wanna be greedy when others are fearful.' And so during the financial crisis when there was maximum pessimism, we were buying our favored names.

Same thing happened this last December. Stocks got crushed as we moved up toward Christmas. We were in there buying our favored stocks like Mattel and US Silica right before Christmas Day, and those stocks are up now over 50%, just through this period, through the end of February and early March. So being able to truly buy when there's that kind of fear in the marketplace is something that distinguishes us from our peers.

And then finally, we worked hard to improve our debt analysis. We think often value-oriented firms — and we learned this during the financial crisis — we didn't spend enough time doing our own independent work on making sure that our balance sheets were exceedingly strong, and that's something that I think we've worked really hard on improving, and it's helped our performance these last 10 years.

Ciolli: So does that help you avoid these so-called value traps, where a company's cheap just because it's not that great of a company and maybe it's saddled with debt? Does that sort of allow you to avoid that minefield somewhat and pick the cream of the crop?

Rogers: Well, I think it helps us that if you make a mistake, if you don't have an overleveraged balance sheet, you can live through mistakes, and you can build a business for the long run. If you don't have the right type of balance sheet, when things get tough, that business can go away. You can have a permanent loss of capital, which we're trying to really protect our customers from.

We think that waiting to make sure we have these bulletproof balance sheets has helped to protect capital for us during the ups and downs that are inevitable in the market, and the volatility that's gotten greater and greater than I've ever seen in my career. There's been so much volatility.

Ciolli: You mentioned the big uptick in volatility in recent months. Is there anything strategy-wise that you're doing to sort of take advantage of that, or to avoid the downside of that?

Rogers: Well, we're trying to make volatility our friend. And when we see stocks that are gapping down maybe where there's no fundamental change in the long-term economic outlook of that business, well, that creates an opportunity, and I think that's an important thing. So volatility should be something that helps you. On the other hand, when stocks spike higher and maybe get overpriced, that can be an opportunity for us to trim, take some profits, and move into cheaper companies.

So volatility doesn't scare us, and we think that in this environment where everyone's been in this flight to safety, more and more investment communities have gotten more and more conservative. So they're moving money to the safe parts of the marketplace. That means the stocks that are left out can be truly orphaned and be really cheap. So we're trying to find those cheap orphans in this type of environment.

Ciolli: So you mentioned that you're looking more at company credit profiles. Is there anything else that you're doing on a stock-selection basis to sort of insulate yourself from the next downturn? Any other types of strategies that you're using to protect yourself?

Rogers: One of the things that Charlie Bobrinskoy — the head of our investment group — has helped us work on is that we are big believers in behavioral finance, and we're in Chicago, and the University of Chicago's there. I'm actually vice chairman of the board. Professor Dick Thaler just won the Nobel Prize in behavioral finance. They've had some other great behavioral finance professors there. So we've been trying to use that to help us.

One of the things that we think that helps protect you against behavioral biases is to have a devil's advocate. Someone in your investment group who challenges the perspectives and points of view of our various reports that we put together on the companies and industries we follow. So I think the devil's advocate's been a big improvement. It's created better dialog, better discussion for us to challenge each other in our weekly portfolio management meetings.

Ciolli: I know that you like to look way beyond the short term, so perhaps this is too nearsighted of a question, but I'm gonna ask it anyway. What do you think the future holds for the bull market, how much longer can it go?

It sounds like the way your portfolio is built that you're insulated from any downturn. But it's still helpful to get an idea from an expert like yourself how long we have to go in the current cycle.

Rogers: As you know, you never know quite where we are in the cycle. I always tell people we invest for the long run so that in case there is a downturn that's inevitable, we know that downturn will end, and that stocks will march back up. We think that if you get too caught up in the short-term emotions and try to predict the short term, it's really, really hard to do and often doesn't lead to good decision-making.

But overall, our perspective is right now is things are steady as she goes. Market multiples are reasonable, the S&P at 17 times next year's earnings is reasonable. If you look at the kind of interest-rate environment we're in, we have historically low rates. So you put reasonable valuations with low rates, we think that means stocks are not overpriced. I think that's really a big deal.

Also, there's so much money in private equity, so much cash sloshing around out there. If stocks get beaten up and get cheap, private equity can come in and bid those companies up and take advantage of those opportunities. So we're still quite optimistic. As we talk to our management teams these days, people are telling us cash flows are strong, the economy's reasonably strong, and it gives us confidence that things are gonna chug along here. It's a good environment to invest in common stocks.

Ciolli: One last one. A recession, people seem to be thinking that there could be one coming by the end of this year, or end of next year. Opinions really vary, but it's on the radar. What's your take on it?

Rogers: No one knows when the next recession's going to come. And we just believe you've got to look out over the horizon. Warren Buffett always talks about the fact that last century the Dow started at around 66, and ended at over 11,000. We had two world wars. We had a Great Depression. We had all kinds of challenges that faced our country.

Our capitalist democracy is the best system ever invented. So if we do have a recession, which is inevitable, we'll recover from it, and it'll bounce right back. So I think investors shouldn't try to time the market to move in and out on a short-term basis. I don't think that's a successful formula.

Now read:

The world's biggest and best firms pay Rob Arnott for advice. He shared his top investing idea for the next 10 years — and gave us a peek inside his unique thought process.

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'Obscenely overvalued': Stocks are far more fragile than most people realize — and one expert says traders are making the same mistake they did before the past 2 crashes

Join the conversation about this story »

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12. IT’S OFFICIAL: Deutsche Bank and Commerzbank are holding merger talks — but critics worry about job cuts and patchy past deals14:35[−]

deutsche bank

  • Deutsche Bank and Commerzbank have agreed to hold formal talks about merging to create Europe's fourth-largest lender.
  • Critics have highlighted up to 20,000 job losses, the pair's bad deals in the past, and existing challenges for both banks.

After months of speculation, Deutsche Bank and Commerzbank have agreed to hold formal talks about a merger. However, a tie-up of Germany's two largest lenders has raised eyebrows as it could lead to tens of thousands of job losses, the pair's previous deals haven't always impressed, and it may not address underlying problems at both banks.

A tie-up promises to create Europe's fourth-largest lender, with north of €1.8 trillion in assets and a market value of about €25 billion, according to Bloomberg.

Analysts think the combined group could slash its annual costs by more than 2.2 billion ($2.5 billion) and command one-fifth of Germany's high-street banking business. Investors cheered the news, sending Deutsche Bank shares up 4% and Commerzbank shares up 7% on Monday morning.

Read more: Deutsche Bank's malaise goes deeper than its tumbling share price

However, the deal could result in the elimination of up to 20,000 jobs — more than 13% of the two companies' combined workforces — says the chief of Germany's Verdi labour union, according to Reuters. The union says there's overlap between the firms' retail and business customer segments, arguing international deals would suit both firms better.

Both Deutsche Bank and Commerzbank have patchy deal histories. Deutsche Bank struggled to integrate Postbank, which it bought for €6.5 billion euros in 2010.

Commerzbank's troubled takeover of Dresdner Bank in 2008 meant the financial crisis hit it harder, leading to two government bailouts. Yet mergers are to be expected in a nation with close to 1,600 banks, according to The Economist.

The mega-deal also comes at a difficult time. Both banks are navigating an economic slowdown in Germany — which nearly fell into recession at the end of last year — as well as the broader eurozone. A depressed backdrop could make it harder for the firms to satisfy Germany's tough unions and comply with its strict labour laws.

Deutsche Bank's sales fell and borrowing costs rose in the final quarter of 2018, and German officials raided its headquarters. It's unclear how absorbing Commerzbank will help Deutsche Bank's ailing investment banking arm, its main earnings driver.

Financing the merger and appeasing regulators could also mean selling off assets such as DWS Group, Deutsche Bank's asset management business that has reportedly caught the eye of Allianz. Analysts think Deutsche Bank may need to raise about €8 billion to pull off the deal.

Deutsche Bank

SEE ALSO: Merger of Deutsche Bank, Commerzbank could cost 20,000 jobs: union chief

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13. A Canadian investment bank is quietly pursuing a critical regulatory approval that would solve one of the biggest pain points for the US marijuana industry14:29[−]

Canada Marijuana

One of the biggest pain points preventing multibillion-dollar institutions from investing in the US cannabis industry may soon be solved.

Canaccord Genuity, a mid-size Canadian investment bank, is seeking approval from the Financial Industry Regulatory Authority (FINRA) to act as a custodian for US investors, according to a source familiar with the matter.

A custodian bank holds stock and settles trades for funds that invest in publicly traded stocks. Think of them like the plumbing that allows investors to safely buy stock in public companies.

Cannabis industry sources speculate that the bank, which is already very active working with cannabis companies, will use the FINRA approval to act as a middleman between big asset managers like Fidelity, JP Morgan, and BlackRock and Canadian Securities Exchange-listed US marijuana companies like Curaleaf and Green Thumb Industries.

This could potentially pave the way for billions of dollars of investment from US asset managers.

BlackRock president Rob Kapito said at a Toronto conference last year that the firm "will be getting in" to the cannabis industry once custodians are able to clear cannabis stocks.

Representatives for Canaccord and FINRA declined to comment.

Canaccord has built up a lucrative practice advising cannabis companies in recent years. The bank has advised on $5.9 billion worth of cannabis deals since 2017 and has helped bring 64 cannabis companies public in Canada — amounting to $1.86 billion — over the same time period, according to data provider Dealogic.

Read more: ' My lips are wet, my mouth is watering to get a piece of that': A war is brewing between US and Canadian marijuana companies to claim a $75 billion market

While Canaccord is one of the most active Canadian investment banks, it has doesn't yet have a large US presence.

Because cannabis is federally illegal in the US, the government could, in theory, prosecute banks that work with US cannabis companies under federal money laundering laws. That situation poses a big problem for investors who want exposure to publicly traded marijuana companies that operate in the US: most banks won't touch the industry.

That's severely limited the amount of capital US cannabis companies, known as multi-state operators, can raise, according to many senior cannabis executives Business Insider has spoken with. It also means raising money is more expensive — and in an industry in a rapid phase of growth and consolidation, that can make or break a company.

But investors and banks are strategizing around how to get into cannabis. Business Insider previously reported that senior executives at Citigroup have held talks about how closely it should work with cannabis companies or clients in other industries who want a loan to invest in the marijuana market.

The potential upside for investors is huge: According to some Wall Street analysts, the US cannabis market could skyrocket to $75 billion by 2030. For comparison, the cigarette industry in the US is worth roughly $80 billion, according to the investment bank Cowen.

Join the conversation about this story »

NOW WATCH: Scientists completed one of the most detailed explorations inside the Great Blue Hole. Here's what they found at the bottom of the giant, mysterious sinkhole.

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14. The US is set to become the world's biggest oil exporter thanks to the fracking revolution14:11[−]

oil worker

  • US energy production has reached record levels in recent years following a boom in shale production.
  • The International Energy Agency's (IEA) latest five-year outlook sees the US overtaking Russia and potentially Saudi Arabia as an oil exporter by 2024.
  • “The US has emerged as a major energy exporting country and as such, will be very influential in terms of the flows of trade of energy in the next years to come with several implications for the geopolitics of energy," said Fatih Birol, the IEA's executive director.

The US shale revolution has made it to one of the world's largest energy producers and potentially the largest oil exporter globally within five years.

A five-year outlook from the International Energy Agency (IEA) sees the US potentially overtaking energy giants such as Russia and even Saudi Arabia, the current largest exporter, by 2024.

"The US has emerged as a major energy exporting country and as such, will be very influential in terms of the flows of trade of energy in the next years to come with several implications for the geopolitics of energy," said Fatih Birol, the IEA's executive director.

OPEC-led output cuts have stabilized the energy markets since a drop in prices in October 2018, but markets have remained under pressure from a glut in US supply. For context, until last year, the US was a net importer of energy products.

"The United States will lead oil-supply growth over the next six years, thanks to the incredible strength of its shale industry, triggering a rapid transformation of global oil markets," said the IEA.

The US is set to become a net energy exporter by 2021, with its shale production rising by a record 2.2 million barrels per day (bpd) in 2018. It comes at a time where shale and liquefied natural gas (LNG) is increasingly in demand with Asian countries, particularly China.

SEE ALSO: Venezuela's falling oil supply is a major 'challenge' to global energy markets

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15. 10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, TSLA, F, WP, FIS)13:51[−]

Gatorade bath

Here is what you need to know.

  1. Theresa May could cancel a 3rd vote on her Brexit deal. A vote will happen only if the government is "confident" May's proposal will pass, according to Chancellor Phillip Hammond.
  2. Car-loan payments hit a 10-year high. America's love for sport-utility vehicles and trucks has helped propel the average vehicle price to more than $36,000.
  3. There are 'clear similarities' between the 2 Boeing 737 Max planes that crashed. Data from the black boxes of the doomed Lion Air and Ethiopian Airlines flights show "clear similarities," Ethiopia's transport minister, Dagmawit Moge, said.
  4. Worldpay is getting bought by FIS in a $43 billion deal. The deal will pay Worldpay shareholders a combination of cash and stock and includes debt.
  5. Lyft kicks off its IPO road show. The ride-hailing company is seeking a $23 billion valuation as it pitches investors its initial public offering this week, Reuters reports, citing people familiar with the matter.
  6. Tesla isn't trading as it used to. "For the past several years Tesla's stock has behaved like an emerging growth company, where mgmt can invent their own milestones, meet these, and the stock would behave positively," the Roth Partners analyst Craig Irwin wrote. "Investors have now appropriately shifted focus to unit volumes, margins, and a practical assessment of the addressable market, in our view."
  7. Ford's CEO raked in $17.7 million in 2018. Ford CEO Jim Hackett took home $17.7 million of compensation in 2018, up 6% year-over-year, despite the automaker's profits dropping by more than 50%.
  8. Stock markets around the world are higher. China's Shanghai Composite (+2.85%) led the gains in Asia, and Britain's FTSE (+0.63%) was out front in Europe. The S&P 500 was set to open up 0.13% near 2,826.
  9. Earnings reporting is light. Overstock reports ahead of the opening bell, and Tilray releases its quarterly results after markets close.
  10. US economic data trickles out. NAHB home prices will be released at 10 a.m. ET. The US 10-year yield was little changed near 2.59%.

Join the conversation about this story »

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16. Payment processing company Worldpay is getting bought by US firm FIS in $43 billion deal12:32[−]

worldpay booth

  • The combination of stock and cash values the deal at about $43 billion including debt.
  • "Scale matters in our rapidly changing industry," says FIS CEO Gary Norcross.
  • Worldpay, once part of RBS, allows secure card payments online, via card processing machines or by phone.

Worldpay agreed to be bought by Florida firm Fidelity National Information Services, valuing the combined companies at about $43 billion.

The companies announced the deal on Monday. Worldpay shares surged more than 10% in US premarket trading.

Worldpay, which was once part of RBS, allows secure card payments via online, card processing machines or over the phone.

The combination of stock and cash values the deal at about $43 billion including debt, the companies said. FIS shareholders will own about 53% and those of Worldpay will own about 47% of the merged firm.

The combined company, which will keep the name FIS and will be headquartered in Jacksonville, Florida, will have about $12 billion in annual revenue.

"Scale matters in our rapidly changing industry," Gary Norcross, chairman, president and CEO of FIS, said in a statement. "Upon closing later this year, our two powerhouse organizations will combine forces to offer a customer-driven combination of scale, global presence and the industry’s broadest range of global financial solutions."

FIS said it expects to refinance Worldpay's debt.

SEE ALSO: China just overtook the US in global leadership approval

Join the conversation about this story »

NOW WATCH: Everything we know about Samsung’s foldable phone

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17. Ford paid its CEO a $17.7 million salary despite profits slumping by half in 201812:30[−]

Ford CEO jim hackett

  • Ford CEO Jim Hackett's compensation rose 6% to $17.75 million, from $16.7 million in 2017, despite the company's difficult 2018 results which saw profits drop by more than 50%.
  • The automaker struggled in Europe and Asia last year as it attempts to complete a major overhaul of its strategy.
  • In an internal memo last week, Hackett described Ford's performance as "mediocre by any standard," according to Bloomberg.

Ford's CEO Jim Hackett boosted his salary by over a million dollars last year despite the automaker's poor results.

Hackett's compensation rose 6% to $17.75 million, from $16.7 million in 2017 according to an SEC filing, despite the company's difficult 2018 results which saw profits drop by more than 50%.

Ford's share price fell 40% last year but Hackett earned $1.3 million in basic pay, a $1 million bonus, $10.3 million in stock awards plus $3.6 million from the company's incentive plan.

Ford struggled outside of the North American market last year. The carmaker cut thousands of jobs in Europe as part of its $11 billion restructuring plan and showed considerable weakness in Asia, particularly China, where it lost $515 million in the fourth quarter.

"Certainly, it was a challenging year, in that we were hit by some headwinds outside of our control and frankly, poor performance in some parts of the business which we have now taken action to address," Hacket said in the company's fourth quarter results.

Hackett also told employees in that email that it was “time to bury (2018) ... in a deep grave," according to Reuters.

Ford recently announced a partnership with German carmaker Volkswagen, whose CEO is also under the spotlight, to jointly develop electric and self driving vehicles in a cost cutting exercise.

SEE ALSO: The CEO of Volkswagen says sorry after quoting the Holocaust phrase 'Work sets you free'

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18. Here's the pitch deck this Austin, Texas, entrepreneur used to raise millions for a startup inspired by Mark Zuckerberg's congressional testimony (FB)Вс., 17 марта[−]

Arlo Gilbert

  • When Facebook CEO Mark Zuckerberg testified before Congress last April, many in the tech industry joked about the out-of-touch questions he fielded from lawmakers.
  • Serial entrepreneur Arlo Gilbert, however, saw a big opportunity and created Osano.
  • Most people don’t really understand the basics of what happens when they sign up for a service such as Facebook or Google, he said.
  • Osano consolidates online companies' terms of service and privacy policies into a simple score, similar to ones used to rate consumers' credit risks.
  • Below is the pitch deck that Gilbert used to raise $3 million for Osano in a seed round.

When Facebook CEO Mark Zuckerberg testified before Congress last April, many in the tech industry joked about the out-of-touch questions directed at him by lawmakers.

Serial entrepreneur Arlo Gilbert, however, saw a business opportunity.

"They were asking, 'Do you still track me after I log out of Facebook,'" Gilbert said in a recent interview with Business Insider. "And I'm like, 'Of course they do! They cookied you. They're tracking you everywhere you go!"

But he realized from the questions that most people don’t really understand what they're agreeing to when they sign up for a service like Facebook or Google, particularly about what the service will do with their data.

That's because "all that information is buried in like a 28-page legal document," he said.

So, he created Osano to help consumers out. The Austin, Texas, startup distills terms of service and privacy policies of various online companies into simple, easy-to-understand scores. The ratings are similar to FICO scores, which assess consumers' individual credit risks. So far, Osano has issued scores for about 400 services.

"The companies that you might expect to be best actors are sometimes the worst," said Gilbert, who started his first multi-million dollar tech company in his University of Texas dorm room nearly 20 years ago. "Sometimes the ones you hear most about, like the Facebooks and the Googles of the world, they kind of fall in the middle."

Osano offers its scores to consumers for free through Privacy Monitor, a browser plugin and smartphone app that's available for the Chrome, Firefox, and Safari browsers and for Android devices. The company has developed a version of the app for iPhones and iPads that's awaiting approval and release by Apple. Osano also plans to release a paid service targeted at enterprise customers later this year.

"The internet is getting wrecked, not only by companies burying stuff, but also by people not understanding what they're signing up for," Gilbert said. "Our mission is to create transparency with data."

He's already convinced some investors about Osano's potential. Earlier this month, Gilbert announced he had raised $3 million in a seed-funding round. LiveOak Venture Partners led the round, joined by Indeed co-founder Rony Kahan and other notable angel investors.

Here is the pitch deck that helped Gilbert and Osano raise their $3 million seed round, updated for a pitch competition that took place just after they closed (some sensitive information has been redacted):

SEE ALSO: Here's the pitch deck this 29-year-old Russian-born VC used to convince investors to contribute millions to her fund

See the rest of the story at Business Insider

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19. Facebook is on the lookout for foreign spies trying to infiltrate the company (FB)Вс., 17 марта[−]

Mark Zuckerberg

On a day-to-day basis, Facebook's security team has its hands full dealing with the hoards of people that turn up at the company's offices to complain about their accounts, attempt to meet Mark Zuckerberg, or just try to look around.

But the California social-networking giant also has to consider the possibility of more serious threats — among them, the risk that foreign spies might try to insinuate themselves into its workforce.

Facebook has never "detected or identified" any foreign spies attempting to infiltrate the company, Nick Lovrien, the tech behemoth's chief global security officer, said in an interview with Business Insider. But Facebook actively prepares for that possibility and has plans in place to try and mitigate the risk it would pose, he said.

"We work to protect intellectual property in many ways, and that's everything from making sure [employees'] computer screens on airplanes are covered so people don’t accidentally share information they're not supposed to, to accidentally leaving things on the printers ... to white boards being cleaned at night," Lovrien said, adding that Facebook has additional systems in place "that identify if people are inappropriately accessing information they shouldn't have."

Concerns are growing about state-sponsored industrial espionage

That's not just a theoretical risk. In the last six months, two Chinese Apple employees working on the company's secretive self-driving car project have been charged with stealing the iPhone maker's trade secrets. Meanwhile, the US government has alleged that tech giant Huawei — which has been been accused of having close ties to the Chinese government — offers bonuses to employees for stealing confidential information from other companies. Such reports have sparked global concerns about intellectual-property theft and state-sanctioned spying.

Facebook, then, is by no means unique among big-tech companies in having to prepare for that kind of threat. But Lovrien's remarks highlight how, when it comes to securing Facebook from foreign interference, the company and its security chief need to consider both the safety of its social network and the the security of its physical premises.

"That's something that [all US-based companies] are concerned about — nation-state actors — and that is something that we absolutely are concerned about," Lovrien said, adding that "we implement many measures that work to mitigate those potential risks."

Business Insider has spoken with numerous current and former employees and reviewed internal documents for an in-depth investigation into how Facebook handles its corporate security.

Sources described a hidden world of stalkers, stolen prototypes, state-sponsored espionage concerns, secret armed guards, car-bomb concerns, and more. Today, there are a staggering 6,000 people in Facebook's global security organization, working to safeguard the company's 80,000-strong workforce of employees and contractors around the world.

Read Business Insider's full investigation into Facebook's corporate security »

Got a tip? Contact this reporter via Signal or WhatsApp at +1 (650) 636-6268 using a non-work phone, email at, Telegram or WeChat at robaeprice, or Twitter DM at @robaeprice. (PR pitches by email only please.) You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Facebook has armed guards covertly patrolling its idyllic Silicon Valley headquarters

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20. Investors focused on themes are making 5 big mistakes. Here's how UBS says they can be avoided.Вс., 17 марта[−]

Wall Street

  • UBS says there are five common mistakes that thematic investors need to avoid for their strategies to work.
  • Laura Kane, the firm's head of Americas thematic research, offers advice mostly centered around the patience investors should exhibit when deciding when to buy or sell.
  • She also lays out how investors can avoid each of the five pitfalls she outlines.

Investing based on themes requires patience and confidence, according to one of UBS's top researchers. But actually abiding by those principles is easier said than done.

Laura Kane — the head of Americas thematic research for the firm's chief investment office — recognizes this, and has compiled a list of five common mistakes made by thematic investors of all types. She also lays out how investors can avoid each pitfall.

1) Chasing fads

Kane says it's vital to understand the difference between a long-term trend that's going to endure, and a fad that attracts tremendous hype and then fades almost as fast. Bitcoin, she says, is a fad. Meanwhile, changes in global demographics are an important trend in her view.

Kane writes that as the global population is growing rapidly and concentrating in cities, while the populations in developed countries are aging. Those have major investing consequences.

"We will see the need for healthcare technologies to cope with an aging population, as well as demand for more energy-efficient infrastructure in growing emerging cities," she wrote.

How UBS says investors can avoid this pitfall:

Investors should focus on the three main "inescapable forces" that should transpire, regardless of the business cycle:

  • Population growth — By 2050, the global population will have surged to 10 billion from 7.5 billion at present time.
  • Aging — By 2030, individuals older than 60 will outnumber those 25 or younger in developed countries.
  • Urbanization — By 2050, UBS expects that 68% of the world's population will live in cities.

2) Being too early

Everyone wants to be the first to identify a trend or a great trade, but there is often no advantage in being the first company to disrupt an industry. That means that, as an investor, you may not want to bet on a company that is shaking up a field because it might ultimately be beaten out by later competitors.

After all, Amazon wasn't the first online bookseller, and if you'd invested in MySpace and passed on Facebook, you've probably been dealing with some regrets. Kane says that should be on investors' minds as they consider investing in ride-hailing companies ahead of the expected IPOs of Uber and Lyft in the next few months.

"The shape of the ride-hailing industry is still being defined, as many variables continue to evolve," she wrote. "Until we get greater clarity on regulatory, liability, and even tax consequences, it will be difficult to choose winners in this space."

How UBS says investors can avoid this pitfall:

UBS says traders should let the dust settle in fledgling industries before making any specific decisions.

3) Making just one bet

An investor might be overwhelmingly confident about or interested in one single theme, but Kane says they shouldn't put all their eggs in one basket because that's likely to lead to volatility. If a trader insists upon a single theme, Kane recommends they be careful with the rest of their your portfolio to make sure its risks and rewards are well-balanced.

How UBS says investors can avoid this pitfall:

UBS says traders should diversify holdings so as not to get caught with outsized exposure to a failing idea.

4) Not looking under the hood

Thematic investors sometimes buy into any company that fits into their favored idea. But Kane says they need to look carefully at every company — especially if they're new.

"A company could be exposed to an attractive theme, but that does not automatically mean it is a good investment," she writes.

In addition, Kane advises investors to look hard at issues like corporate governance and culture as well as financial measurements.

How UBS says investors can avoid this pitfall:

UBS said traders should do exhaustive homework on new entrants to industries and themes they're pursuing.

5) Selling too soon

Kane writes that investors often sell too quickly because they're afraid of future pain. But that haste can cause them to miss out on eventual gains that might dwarf their present losses.

"The temptation is high to walk away from long-term ideas that temporarily underperform," she says. "We advise against trying to jump in and out of long-term thematic investments."

Kane adds that over the last six decades, a buy-and-hold strategy for the S&P 500 has worked much better than trying to time market highs and lows. That's illustrated by the chart below.

Jeremy Grantham, the widely respected investor who successfully predicted the last two financial bubbles, has made a similar point: In a market bubble, getting out of too soon can be just as bad as getting out too late.

How UBS says investors can avoid this pitfall:

UBS says traders shouldn't abandon a long-term theme because of modest setbacks. It could hurt them just as much to get out too early than wait too long to exit.

Screen Shot 2019 03 15 at 3.46.16 PM

SEE ALSO: The threat to bust up big tech is giving some experts painful flashbacks to the financial crisis — and one has stopped buying those stocks entirely

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