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(Bloomberg) -- All eyes are on how fast Saudi Arabia can restore production after this weekend’s devastating strike on key facilities, which knocked out roughly 5% of global supply and triggered a record surge in oil prices.Significant volumes could come back within days, people familiar with the matter said over the weekend, adding that it could still take weeks to restore full capacity. Industry consultant Energy Aspects estimated that the country will be able to restore almost half the lost production as early as Monday. Saudi Aramco said Saturday that it would provide an update in about 48 hours. It didn’t immediately respond to requests for comment Monday.“We need to know if it’s a 48-hour outage or if it’s a four-week outage,” Ashley Peterson, a senior oil market analyst at Stratas Advisors, said on Bloomberg TV. “That’s really what’s going to drive prices.”The estimated 5.7 million barrels a day of lost Saudi oil is the single biggest sudden disruption ever, surpassing the loss of Kuwaiti and Iraqi supply in August 1990 and Iranian output in 1979 during the Islamic Revolution, according to data from the International Energy Agency.Here’s How Asian Governments Are Reacting to the Aramco AttackIn addition to the immediate loss of supply, the attack raised the specter of U.S. retaliation against Iran, which it blamed for the strike. While Iran-backed Houthi rebels in Yemen claimed responsibility for the strike, which they said was carried out by a swarm of 10 drones, several administration officials Sunday said they had substantial evidence Iran was directly responsible. President Donald Trump tweeted the U.S. is “locked and loaded depending on verification” that Iran was the real source.Brent oil, the global benchmark, jumped more than 19% when markets opened Monday. In dollar terms, the nearly $12 a barrel surge was the biggest intraday rise since trading began in 1988. Futures paired those gains to trade up $6.47, or 11%, at $66.69 a barrel as of 6:48 a.m. in London.“We expect oil to rise by more than 5% in the short term or more than 20% if impact is protracted,” analysts at Sanford C. Bernstein & Co. wrote in a note. “But much depends on what Aramco says around how quickly production can be restored.”The attack Saturday struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais, exposing a vulnerability at the heart of the global oil market.“No matter whether it takes Saudi Arabia five days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend’s drone attacks on the Kingdom’s infrastructure -- that infrastructure is highly vulnerable to attack, and the market has been persistently mispricing oil,” Citigroup Inc.’s Ed Morse wrote in a research note.Trump authorized the release of oil from the U.S. Strategic Petroleum Reserve, while the International Energy Agency, which helps coordinate industrialized countries’ emergency fuel stockpiles, said it was monitoring the situation.The attack is the most serious on Saudi Arabia’s oil infrastructure since Iraq’s Saddam Hussein fired Scud missiles into the kingdom during the first Gulf War.Saudi oil facilities as well as foreign tankers in and around the Persian Gulf have been the target of several attacks over the past year. The escalation coincided with the President Trump’s decision to pull the U.S. out of the 2015 nuclear agreement with Iran and re-imposed crippling economic sanctions against the Islamic Republic. The Houthis, who are fighting Saudi-backed forces in Yemen, have claimed responsibility for most of the strikes against Aramco installations.Aramco will be able to keep customers supplied for several weeks by drawing on a global storage network. The Saudis hold millions of barrels in tanks in the kingdom itself, plus three strategic locations around the world: Rotterdam in the Netherlands, Okinawa in Japan, and Sidi Kerir on the Mediterranean coast of Egypt.Before the attack, Saudi Arabia was pumping about 9.8 million barrels a day, almost 10% of global production. Aramco could consider declaring itself unable to fulfill contracts on some international shipments -- know as force majeure -- if the resumption of full capacity at Abqaiq takes weeks, people familiar with the matter said, asking not be identified before a public statement.Instead of supplying some customers with the usual crude oil grades of Arab Light or Arab Extra Light, the company may offer them Arab Heavy and Arab Medium as a replacement, according to a person familiar with the matter.A satellite picture from a NASA near real-time imaging system published early on Sunday, more than 24 hours after the attack, showed the huge smoke plume over Abqaiq had dissipated completely. But four additional plumes to the south-west, over the Ghawar oilfield, the world’s largest, were still clearly visible.While that field wasn’t attacked, its crude and gas is sent to Abqaiq for processing. The smoke most likely indicated flaring, the industry term for what happens when a facility stops suddenly and excess oil and natural gas is safely burned off.\--With assistance from Mahmoud Habboush, Verity Ratcliffe, Manus Cranny, Giovanni Prati and Anthony DiPaola.To contact the reporters on this story: Nayla Razzouk in Dubai at firstname.lastname@example.org;Javier Blas in London at email@example.com;James Thornhill in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Nayla Razzouk at email@example.com, Ramsey Al-Rikabi, Ben SharplesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil posted its biggest ever intraday jump to more than $71 a barrel after a strike on a Saudi Arabian oil facility removed about 5% of global supplies, an attack the U.S. has blamed on Iran.In an extraordinary start to trading on Monday, London’s Brent futures leapt almost $12 in the seconds after the open, the most in dollar terms since they were launched in 1988. Prices have since pulled back about half of that initial surge of almost 20%, but were still heading for the biggest advance in more than three years.“We have never seen a supply disruption and price response like this in the oil market,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Political risk premium are now back on the oil market agenda.”On the New York Mercantile Exchange, West Texas Intermediate futures were frozen for about two minutes after the scale of the move delayed the market open. They were 9.5% higher at $60.06 a barrel as of 1:39 p.m. in Singapore.The dramatic move in oil reverberated around financial markets. Haven assets including gold, the yen and Treasuries surged on concern over the geopolitical fallout from the attacks. Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. U.S. gasoline futures jumped almost 13% before paring their increase to around 9%.State energy producer Saudi Aramco lost about 5.7 million barrels per day of output on Saturday after 10 unmanned aerial vehicles struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais.For oil markets, it’s the single worst sudden disruption ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to the International Energy Agency.“The vulnerability of Saudi infrastructure to attacks, historically seen as a stable source of crude to the market, is a new paradigm the market will need to deal with,” said Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd. “At present, it is not known how long crude will be offline for.”Saudi Arabia can restart a significant volume of the halted oil production within days, but needs weeks to restore full output capacity, people familiar with the matter said. The kingdom -- or its customers -- may use stockpiles to keep oil supplies flowing in the short term. Aramco could consider declaring itself unable to fulfill contracts on some international shipments -- known as force majeure -- if the resumption of full capacity at Abqaiq takes weeks.That would rattle oil markets further and cast a shadow on Aramco’s preparations for what could be the world’s biggest initial public offering. It’s also set to escalate a showdown pitting Saudi Arabia and the U.S. against Iran, which backs proxy groups in Yemen, Syria and Lebanon. Iran-backed Houthi rebels in Yemen claimed credit for the attack, but U.S. President Donald Trump and Secretary of State Mike Pompeo have already pointed the finger directly at Iran.Trump Vows U.S. ‘Locked and Loaded’ If Iran Was Behind AttacksTrump, who said the U.S. is “locked and loaded depending on verification” that Iran staged the attack, earlier authorized the release of oil from the nation’s emergency reserves. The IEA, which helps coordinate industrialized countries’ emergency fuel stockpiles, said it was monitoring the situation.“No matter whether it takes Saudi Arabia five days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend’s drone attacks on the Kingdom’s infrastructure -- that infrastructure is highly vulnerable to attack, and the market has been persistently mispricing oil,” Ed Morse, Citigroup Inc.’s global head of commodities research, wrote in a research note.Brent jumped more than 19% to $71.95 a barrel on ICE Futures Europe, its biggest gain in percentage terms since 1991. In the ensuing hours, it pared that advance to trade 10.7% higher at $66.66 a barrel. The global benchmark crude could rise above $75 a barrel if the outage at Abqaiq lasts more than six weeks, Goldman Sachs Group Inc. said in a note.Trading in WTI was frozen for a few minutes because of a so-called circuit breaker, which is triggered by a gain of more than 7%. When they finally opened, futures jumped as much as 15.5% to $63.34, the most since 2008.The attacks “set the stage for a Monday morning mini-massacre of any market participants holding short positions or bearish expectations,” said John Driscoll, chief strategist at JTD Energy Services Ltd. in Singapore. The “price move was exacerbated by the unprecedented magnitude of the outage on the world’s key supplier and the potential for escalation of geopolitical skirmishes involving the U.S., Saudi and Iran.”The drama wasn’t limited to flat prices. The spread between Brent and WTI widened as much as 37%, showing that the oil spike will affect global prices more than those in the U.S., where shale output and ample supplies provide more of a buffer.Brent’s 6-month backwardation jumped to the highest level since September 2013 as the outage raises concerns about obtaining near-term supplies. And the call-put skew flipped into positive territory for the first time since 2018, indicating that options traders are willing to pay more to place a bet on prices rising rather than falling.\--With assistance from Nayla Razzouk, Javier Blas, Anthony DiPaola, David Marino, James Thornhill, Michael Roschnotti, Tina Davis, Stephen Stapczynski, Sharon Cho, Ann Koh, Heesu Lee, Sarah Chen and Ramsey Al-Rikabi.To contact the reporters on this story: Serene Cheong in Singapore at firstname.lastname@example.org;Dan Murtaugh in Singapore at email@example.comTo contact the editors responsible for this story: Tina Davis at firstname.lastname@example.org, Alexander Kwiatkowski, Andrew JanesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. China’s slowdown is deepening just as risks for the global economy mount, piling pressure on the authorities to do more to support growth.Industrial output rose 4.4% from a year earlier in August, the lowest for a single month since 2002, while retail sales came in below expectations. Fixed-asset investment slowed to 5.5% in the first eight months, with the private sector lagging state investment for the 6th month.The data add support to the argument that policy makers’ efforts to brake the slowing economy aren’t sufficient as the nation grapples with structural downward pressure at home, the risk of yet-higher tariffs on exports to the U.S. and now surging oil prices. Nomura International Ltd. said this all raises the likelihood that the People’s Bank of China will cut its medium-term lending rate on Tuesday.“In terms of policy room, we still think there’s quite a lot for both the Ministry of Finance and the PBOC, but now it’s a matter of whether they want to use it,” Helen Qiao, chief Greater China economist at Bank of America Merrill Lynch said on Bloomberg television. “What I worry about is that policy makers are hesitating at the moment because of the potential implications on the long term impact, so they’re really fallen behind the curve.”The Shanghai Composite swung between gains and losses before closing for lunch up 0.1%. Futures contracts on China’s 10-year government bond erased loss of 0.28% to trade 0.09% higher.The slowdown in output was almost across the board, with food processing and general equipment manufacturing unchanged from last year. Car output rose after declining for four months. Growth in sales of consumer goods slowed to 7.2%, the lowest since April this year, but there was an increase in food sales. The unemployment rate fell to 5.2% from 5.3% in July, within the narrow band it has occupied all year even amid the slowdown.The record oil price surge after a strike on a Saudi Arabian oil facility couldn’t have come at a worse time for China and a world economy already in the grip of a deepening downturn. While the severity of the impact will depend on how long the oil price spike endures, it risks further eroding fragile business and consumer confidence amid the ongoing U.S.-China dispute and already slowing global demand.Saudi Arabia is the largest single source of China’s crude oil imports, which in turn supply about 70% of total demand.After China’s data release on Monday by the National Bureau of Statistics, Citigroup Inc. lowered its growth forecast for the world’s second-biggest economy to 6.2% for this year from 6.3% previously, and to 5.8% from 6% for 2020.“We don’t expect a growth rebound in the fourth quarter anymore, with the new forecast flat at 6.1% year on year,” wrote Yu Xiangrong, a Hong Kong-based economist with Citigroup, referring to the quarterly outlook. “In particular, we now hold a more cautious view on the recovery of infrastructure investment and retail sales.”The People’s Bank of China cut the amount of cash banks must hold as reserves this month to the lowest level since 2007, though it’s still holding off on cutting borrowing costs more broadly.Some 265 billion yuan ($37.5 billion) of 1-year loans from the PBOC to banks will mature on Tuesday. The central bank will likely roll-over at least some of these, giving it an opportunity to cut the rate it charges.Analysts are divided on whether the PBOC would actually take the chance to cut. Some see the need for more significant easing while the other argue the authorities would like to avoid announcing multiple stimulus at once, and they’ll watch the U.S. Federal Reserve before taking any actions themselves. The Fed is expected to cut rates this week.What Bloomberg’s Economists Say..“We expect policy support to continue at a measured pace as Chinese authorities strive to put a floor under the slowing economy. Yet, officials are bracing for a long war, and are careful not to deplete their policy ammunition.”-- Chang Shu and David Qu, Bloomberg EconomicsFor the full note click hereIt’s getting more difficult to “safeguard 6%” expansion in the third quarter and growth will likely slow further from the pace in the second quarter, China International Capital Corp. economists led by Eva Yi wrote in a note. Not only is it necessary, but there is room to step up the intensity of counter-cyclical adjustment in a timely manner to make sure economic growth won’t slip below the targeted growth range of 6-6.5%, Yi said.There are likely to be more easing measures including cuts to banks’ reserve ratios and the PBOC’s mid-term lending rate, although that cut probably wouldn’t happen this week, said Peiqian Liu, China economist at Natwest Markets Plc in Singapore. The pace of economic slowdown is faster than expected and the impact of the trade war on Chinese manufacturers has been relatively big, she said.Goodwill TalksNegotiators from China and the U.S. plan to have two rounds of face-to-face negotiations in coming weeks. Both sides have taken steps to show goodwill, and U.S. officials are considering an interim deal to delay tariffs with China, people familiar with the matter told Bloomberg.However, even if those talks do go well and get the negotiations back on track, it may not be enough.“Even a reprieve on the trade front, with U.S. and Chinese negotiators back at the table, will not in itself cure China’s growth malaise,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. “There is a growing risk that keeping the reins too tight may push growth much lower.”\--With assistance from Amanda Wang, Tian Chen, Yinan Zhao, Enda Curran, Dan Murtaugh and Claire Che.To contact Bloomberg News staff for this story: Miao Han in Beijing at email@example.com;Tomoko Sato in Tokyo at firstname.lastname@example.org;Kevin Hamlin in Beijing at email@example.comTo contact the editors responsible for this story: Jeffrey Black at firstname.lastname@example.org, James MaygerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The UK’s Competition and Markets Authority back in February managed to get a handful of brands owned by Expedia Group and Booking Holdings to change how they displayed information to consumers searching for accommodation online. Essentially it was concerned about hate-selling through techniques such as hidden charges, and ordered them to sort it out. The […]
(Bloomberg) -- As bankers discussed Saudi Aramco’s initial public offering at the Ritz Carlton hotel in Dubai last week, a drone attack was being planned to hit the heart of its operations over the weekend. It caused Saudi Arabia to halve its oil output and may cut the valuation of Aramco’s milestone deal.The giant oil producer has accelerated preparations for a share sale that could happen as soon as November in Riyadh. Dozens of bankers from Citigroup Inc. to JPMorgan Chase & Co. met last week to work on the deal, with analyst presentations scheduled for Sept. 22, people familiar with the matter have said.“Crown Prince Mohammed bin Salman will push the company to demonstrate that it can effectively tackle terrorism or war challenges,” analysts led by Ayham Kamel, head of Middle East and North Africa research at the Eurasia Group, said in a report. “The attacks could complicate Aramco’s IPO plans.”In an attack blamed by the U.S. on Iran, a swarm of drones laden with explosives set the world’s biggest crude-processing plant ablaze. Floating a minority stake of the oil giant, officially known as Saudi Arabian Oil Co., is part of Prince Mohammed’s efforts to modernize and diversify the economy.The attacks underscored geopolitical tensions in the region. Iran denied responsibility, which was instead claimed by Iranian-backed Houthi rebels in Yemen.Oil prices surged by the most on record to more than $71 a barrel after the strike removed about 5% of global supplies. The main Saudi stock index Sunday fell as much as 3.1%, leading losses in the Gulf. Back in 2017, investors suspected that Saudi government-related funds swooped in to support the market after the imprisonment of local billionaires at the Ritz-Carlton in Riyadh. That also happened amid the international crisis following columnist Jamal Khashoggi’s murder at the Saudi consulate in Istanbul.Here’s more from analysts and investors:Eurasia“The latest attack on Aramco facilities will have only a limited impact on interest in Aramco shares as the first stage of the IPO will be local. The international component of the sale would be more sensitive to geopolitical risks”Current valuation estimates for Aramco and its assets might not fully account for geopolitical risksNOTE: Prince Mohammed, the architect of the IPO, has said he expects Aramco to be valued at over $2 trillion, but analysts see $1.5 trillion as more realisticAl Dhabi Capital, Mohammed Ali Yasin“I think this attack may delay the IPO even on the local exchange, and could affect the valuation negatively, as the investors have seen a live demonstration of the risk levels of the future revenues and business of the company. That was very low prior to this weekend attack”“Aramco has one main source of revenue, oil. That is its strength, but now it is becoming its biggest weakness if it gets disrupted”United Securities, Joice MathewThis “will force investors to go back to the drawing board and re-evaluate their risk models on Aramco”“Even though this is a rare event, which could be potentially categorized as 4 or 6 sigma levels, the geopolitical risk premium on Aramco’s valuation model would show a sharp increase”“As far as the pricing is concerned, my view is that there may not be much of an impact if the government is contemplating a 1% listing on the Tadawul. I think the government has the power and ability to influence the decisions of anchor investors there”Tellimer, Hasnain Malik“Ultimately the security risk is not so acute that it outweighs oil price, oil output and free float drivers of the valuation”This attack “also provides an opportunity for Aramco to demonstrate the redundancy and resilience of its supply chain by minimizing disruption to customers and thereby helping to mitigate the valuation impact of this risk”Qamar Energy, Robin Mills“It will be all but impossible to proceed with the IPO if there are ongoing attacks”“Valuing Aramco like Shell or ExxonMobil gets us to about $1.2-1.4 trillion. But that would drop significantly if we apply company-specific risk factors”Al Ramz Capital, Marwan Shurrab"The attacks could impact foreign sentiment for the IPO, but I don’t see a substantial hit to the valuation at this stage""Geopolitical risk has always been an important factor for valuations across the Middle East region. Aramco will have to demonstrate its financial resilience toward such incidences to gain investors confidence”\--With assistance from Mahmoud Habboush.To contact the reporters on this story: Shaji Mathew in Dubai at email@example.com;Filipe Pacheco in Dubai at firstname.lastname@example.org;Sarah Algethami in Riyadh at email@example.comTo contact the editors responsible for this story: Shaji Mathew at firstname.lastname@example.org, Paul Wallace, Claudia MaedlerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- A House panel investigating big tech companies for potential antitrust violations is seeking information from customers of Amazon, Apple, Google and Facebook about the state of competition in digital markets and the adequacy of existing enforcement, according to documents reviewed by Bloomberg.It’s the latest development in the bipartisan congressional investigation being conducted by House antitrust subcommittee chair David Cicilline, a Democrat from Rhode Island.The eight-page survey doesn’t mention any companies by name, but it seeks information about the industries they dominate such as mobile apps and app stores, search engines, digital advertising, social media, messaging, online commerce and logistics as well as cloud computing.The survey asks respondents to identify the top five providers for the various digital services and how much it paid each of those providers since Jan. 1 2016. It also asks for any allegations of antitrust violations or business practices that hurt competition. The committee offered respondents the possibility of confidentiality if they desired.The panel has asked for responses to its survey by mid-October.Assessing AntitrustThe survey appears geared toward businesses that pay the big technology companies for services such as cloud computing, digital advertising and help selling mobile apps and products online. It doesn’t appear to focus on general retail consumers that buy products from Amazon or iPhones from Apple.It also shows how regulators are relying on customers and competitors of Big Tech to help them better understand digital markets and and how dominant players can stifle competition. The Federal Trade Commission has been quietly interviewing online merchants that sell goods on Amazon to better understand the business.The questionnaire shows the House panel trying to assess the grip big technology companies have in various markets, a first step in probing for antitrust violations. If the panel finds competition is so scant that the customers of big technology companies have no viable alternatives, it justifies further scrutiny of business practices as well as mergers and acquisitions.The questions also suggest the panel is open to examining how antitrust laws are applied in digital markets and if enforcement and laws need to be updated.A Google spokesman declined to comment. Apple didn’t immediately respond to requests for comment. Amazon and Facebook both declined to comment, but pointed to previous comments by executives in which both companies said they welcomed government scrutiny and maintain they exist in markets with healthy competition. Emails to representatives for the House committee weren’t immediately answered.The survey sent to customers follows the public disclosure of letters the House antitrust subcommittee sent to Google parent Alphabet Inc., Amazon.com Inc., Facebook Inc. and Apple Inc. Those letters, posted online, seek detailed information about acquisitions, business practices, executive communications, previous probes and lawsuits. The letters followed a July hearing in which lawmakers grilled tech executives.The House panel has been the most visible of various probes of technology companies. Representative Cicilline has been a vocal critic.Speaking at an antitrust conference in Washington, D.C. last week, he said, “you would be amazed” at the number of companies that have come forward with concerns about the potentially unfair way that big tech companies compete. Some have even expressed fear that the tech giants will respond with economic retaliation if the smaller companies’ concerns are made public, Cicilline said, without providing more detail.The House panel’s probe is part of a broader examination of the control companies such as Amazon, Google and Facebook have over the U.S. economy. The FTC is investigating Amazon and Facebook while the Justice Department is probing Google. Separately, 50 state attorneys general have announced an antitrust probe of Google.(Adds requested date for survey responses in fifth paragraph. An earlier version corrected the spelling of David Cicilline.)\--With assistance from Naomi Nix and Ben Brody.To contact the reporter on this story: Spencer Soper in Seattle at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Ian FisherFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Growth stocks like Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) and Shopify Inc. (TSX:SHOP)(NYSE:SHOP) can provide valuable lessons that help you avoid big losses.
The Federal Reserve meeting is scheduled for September 17-18. At its last policy meeting in July, the Fed lowered rates by 25 basis points.
Last year, Apple (AAPL) was the first publicly listed company to be valued at a trillion dollars. The tech giant has been an innovator since its inception.
Apple Arcade (AAPL) is a subscription gaming service that was unveiled at Apple’s annual event last week. The service will launch on September 19.
Google has agreed to make a one-time settlement of over $945 million euros to the French ministry. The ministry accused Google of evading taxes.
(Bloomberg Opinion) -- Vinyl records, paper books, glossy magazines – all should be long dead, but they’re refusing to go away and even showing some surprising growth. It’s probably safe to assume that people will always consume content in some kind of physical shell – not just because we instinctively attach more value to physical goods than to digital ones, but because there’ll always be demand for independence from the huge corporations that push digital content on us.According to the Recording Industry Association of America, vinyl album sales grew 12.9% in dollar terms to $224 million and 6% in unit terms to 8.6 million in the first half of 2019, compared with the first six months of 2018. Compact disc sales held steady, and if the current dynamic holds, old-fashioned records will overtake CDs soon, offsetting the decline in other physical music sales. Streaming revenue grew faster for obvious reasons: It’s cheaper and more convenient. But people are clearly not about to give up a technology that hasn’t changed much since the 1960s.In 2018, hardcover book sales in the U.S. increased by 6.9%, paperback sales went up 1.1% and eBook sales dropped 3.6%. The number of print magazine titles published in the U.S. rose to 7,218 from 7,176, according to the Association of Magazine Media. That’s more magazines than the U.S. had in 2009. For all the havoc the digital revolution is wreaking on newsrooms, people are still starting new titles – and 96% of the magazine industry’s subscription revenue still came from the print editions, with digital providing the rest.One explanation could be that, as Ozgun Atasoy from the University of Basel and Carey Morewedge from Boston University wrote in a paper based on a series of experiments, people are more willing to buy physical goods than equivalent digital ones, and they’re likely to pay a higher price for them. Offered an easy choice, people would rather have a vinyl LP than its digital image in the cloud somewhere; it’s just that the choice isn’t there most of the time. Atasoy and Morewedge wrote that the effect is mostly explained by “psychological ownership”: It’s hard for people to feel they own something they can’t physically touch.They wrote, however, that other, unidentified factors were also at play, since psychological ownership didn’t fully explain the difference in people’s willingness to pay for the two kinds of products. I think Michael Palm from University of North Carolina-Chapel Hill put a finger on those factors in a paper published earlier this year. He suggested that physical vs. digital, or new vs. old, could be a less relevant differentiation point than corporate culture vs. independent culture.The record industry got rid of vinyl fabrication when CDs appeared. Big store chains stopped selling LPs. But small producers and record stores that also function as community centers have kept the culture and the format alive. Now, the big companies see a commercial potential again – but they’re ordering vinyl records from independent producers, who can’t always keep up with the orders, and distributing to small stores, not just to giant chains like Best Buy, which are also stocking vinyl records again.“To combat the corporate incursion into vinyl markets, some independent labels are vertically integrating and beginning to manufacture as well as distribute and sell their own records,” Palm wrote. “The stakes of vinyl’s future involve the viability of an independent supply chain for popular music, and these stakes are raised in a media landscape dominated by online access to content controlled by corporate gatekeepers.”A similar logic applies to books. According to the American Booksellers’ Association, independent bookstores’ sales went up about 5% in 2018. These stores are where people hang out, discuss their discoveries, receive recommendations and advice. They are also where the products of small publishing houses can get more attention than they do in major bookstores or on Amazon.The increase in the number of print magazines also isn’t occurring thanks to major launches by big industrial publishers. There’s space in this industry for niche publications that want intimate contact with readers, not a tiny share of the attention squandered on the internet. The Association of Magazine Media claims the average time to read an issue of a magazine published in the U.S. is almost 50 minutes. A magazine is the same kind of alternative to Instagram or Twitter as a vinyl record is to Spotify or Apple Music.This may be the last line of defense for old content formats – a line they could be able to hold forever: The preserve for independent creation, manufacturing and distribution in a world that belongs to giant corporations that mass-produce content and mass-distribute it through the cloud. The old-new dichotomy may well turn out to be misleading; there's nothing “old” about trying to go beyond the mass market.To contact the author of this story: Leonid Bershidsky at email@example.comTo contact the editor responsible for this story: Tobin Harshaw at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Goldman Sachs Group Inc. is throwing everything but the kitchen sink at boosting its share of the $4 trillion U.S. market for exchange-traded funds -- even mimicking one of its Wall Street foes.The bank is adopting an approach pioneered by JPMorgan Chase & Co., filing for a line of broad-based index products that could start trading at rock-bottom prices as early as next week, regulatory records show.After getting off to a blistering start four years ago on the back of a dirt-cheap factor ETF, Goldman dropped behind its Wall Street competitor, which has ridden a strategy dubbed “bring your own assets” to a $29 billion business.Essentially cloning popular ETFs and moving client cash from those products into its own, the controversial approach may be Wall Street’s best hope for challenging the dominance of State Street Corp., BlackRock Inc. and Vanguard Group.“As we continue to grow and build out our ETF business, along with our recent acquisitions, it just makes sense in some areas for us to have the building blocks that fuel those portfolios,” said Steve Sachs, head of capital markets for ETFs at Goldman.Even before this latest chapter, the race between the Wall Street giants had enough twists and turns to power a thriller.Goldman emerged in 2015, establishing itself as a leader in factor investing with its ActiveBeta U.S. Large Cap Equity fund, ticker GSLC. The product wowed the ETF industry with a fee of just 9 basis points, unheard-of for smart beta strategies -- but newer ventures have stumbled. This year, it introduced a handful of thematic strategies, but they’ve collected less than $50 million.JPMorgan was relatively quiet until June 2018, when it kickstarted its business with a suite of vanilla ETFs called BetaBuilders. Unlike the more specialized products the bank was hawking up until then, the funds tracked broad developed-market benchmarks -- at thrift-store prices.It was an inspired play, tripling JPMorgan’s ETF assets to near $30 billion within a 14-month span and powering it ahead of Goldman.“JPMorgan saw this as a smart move ahead of anyone,” said Bloomberg Intelligence analyst Eric Balchunas. “We’ve seen how hard it is to get any assets. But bringing your own assets gets you mojo, and mojo gets people in the door and investors on the phone.”The bank made smart moves elsewhere, winning a foothold in the nascent but growing fixed-income ETF market, and planting a flag early in Europe, whose industry is around half the size of the U.S. but growing rapidly.Goldman has yet to list an ETF in the region despite some high-profile hires, though it plans to commence the business before year-end, a spokesman in London said. That puts it several years behind JPMorgan, which has $2.8 billion in assets there.Now Goldman hopes to turn the tables on its investment-banking rival by embracing the bring-your-own-assets strategy. The firm already has some experience in the area as the largest owner of GSLC, and its latest foray is fueled by a recent acquisition spree. The bank scooped up S&P’s model portfolio business and United Capital this year, giving it fresh pipelines for flows into its own funds.However, the approach isn’t without its critics, who argue there are conflicts in directing wealthy clients to a bank’s own ETFs.“We have internal affiliates in our products, but they are institutional clients and we treat them as such with their own due diligence,” said Jillian DelSignore, head of ETF distribution for JPMorgan’s asset management arm.The bank’s transfers into BetaBuilders have saved clients about $42 million a year thanks to their low price tag, according to an analysis by Bloomberg Intelligence.Ironically, if Goldman succeeds in moving wealthy clients to its in-house products, BlackRock may turn out to be the biggest loser, according to an analysis of regulatory filings.United Capital’s clients hold some $4 billion in the firm’s iShares line, which could be redeployed into Goldman’s new products. That’s especially true if the funds are cheap.“The advisers -- by being so brutal with cost obsession -- have created this monster of cost migration,” said Balchunas. “By making moves like this, the banks are able to own the end client and the flows. It’s brutal out there.”\--With assistance from Morgan Tarrant.To contact the reporters on this story: Carolina Wilson in New York City at email@example.com;Ksenia Galouchko in London at firstname.lastname@example.org;Elizabeth Rembert in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Yakob Peterseil, Rachel EvansFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The next generation of telecommunications technology could be the key to ending years of stagnation in the industry. But it’s also set to create a difficult dilemma for European phone companies.Carriers shelled out $80 billion to power the world’s antennas last year, according to Nokia Oyj. The prospect of having to raise spending on electricity – energy demand could triple with the introduction of 5G equipment, according to industry body GSMA – won’t sit well with phone companies that are already struggling to pay their dividends. At the same time, firms such as BT Group Plc and Vodafone Group Plc have pledged to slash emissions, and that will require a rapid shift to renewable energy.Just as carriers are about to roll out vast quantities of power-hungry gear, they’re also promising to save the planet. And funds are tight. Accomplishing everything at the same time could be a tall order.“If they have set up ambitious targets for overall power consumption and CO2 emissions, those could potentially be in conflict when they start to roll out 5G,” said Jerker Berglund, industry consultant at JB Sustainable Approach AB. “Reducing total power consumption is going to be a challenge.”5G could unleash a 1,000-fold jump in data demand for connecting factories and cars and supercharging mobile devices, according to the GSMA. That’s an irresistible sales prospect for a telecom industry whose revenues have yet to recover from a slump that started in 2015.Next-generation antennas and masts can be 10 times more energy efficient than 4G’s. However, these power savings could get swamped by the surge in demand for new applications. 5G will link up billions of things that have never been connected before. To accommodate all these new connections, masts might have as many as 128 antennas, versus just four or eight on a typical 4G mast. Bouncing signals through cities may require thousands of transmitters and receivers to be bolted onto rooftops and street furniture. This looks like it will all require a lot more bandwidth, and a lot more power.What’s more, carriers can’t afford the cost of swapping out all their equipment at once, Berglund said. The rollout will have to happen gradually, so many masts will still carry less efficient 4G, 3G and 2G antennas alongside 5G ones. This situation could last for years – some 3G kit is still in place 18 years after that technology was introduced.This article is part of Covering Climate Now, a global collaboration of more than 250 news outlets to highlight the climate change story.Electricity already makes up about a third of carriers’ average operational costs, according to Nokia, and raising this will pressure balance sheets when the industry isn’t in a good place to cope. Vodafone has cut its dividend to conserve cash to pay for spectrum and capital investment. Bank of America Merrill Lynch analysts said Monday they expect BT to slash its dividend by as much as 40% to fund capital expenditure and price cuts.“As we consume more, power’s going up, and the industry is trying to bring that down as much as possible,” said Henry Calvert, head of future networks at the GSMA, the mobile industry trade body. “There’s a lot of activity in the industry about making the power we use more efficient.”But whatever fixes carriers make to lower energy bills – sharing networks, getting masts to autonomously power down at times of low data demand, introducing “beam-forming’’ so smart antennas can pinpoint devices instead of pumping out data indiscriminately – the surge in power usage creates a challenge for meeting emissions goals.Deutsche Telekom AG, for example, pledged a 90% reduction in carbon emissions between 2017 and 2030. In total, European carriers will have to reduce carbon dioxide emissions by 6 million metric tons within 11 years to achieve their carbon targets, BloombergNEF analyst Kyle Harrison said in a research note.One solution is for the telecom companies to shift their power supply to renewables, but this can’t be done at the flick of a switch. Clean-energy contracts are complicated and can take years to negotiate.Carriers will be under pressure to sign new ones quickly to cope with 5G’s power demands, Harrison said. They’ll be vulnerable to striking bad deals, and price fluctuations in energy markets can turn some arrangements that initially look good into losers in the longer term. “The switch to 5G is going to put more pressure on telecoms to purchase clean energy and reduce their emissions,” he said. “Many clean energy deals can result in losses for corporations. Telecoms will need to put extra consideration into this as their power demand goes up, especially if losses will impact their investments into 5G.”To contact the author of this story: Thomas Seal in London at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Stanford University received a $50,000 donation from a foundation funded by deceased sex offender Jeffrey Epstein, a spokesman said Friday.The donation came in 2004, two years before allegations involving Epstein’s sexual conduct with young girls started making news. The gift went to the university’s physics department. “The funds were expended shortly thereafter and we have no record of any other gifts to the university from him or his foundations,” a Stanford University spokesman said in an email. News of the donation emerges as educational institutions are coming to grips with their relationship with the disgraced financier, who committed suicide last month in a Manhattan jail while awaiting trial on sex trafficking and conspiracy charges. Epstein, who was 66, cultivated relationships with scientists and technologists, holding conferences and attending events with leading thinkers such as the late cosmologist Stephen Hawking and LinkedIn co-founder Reid Hoffman. Last month, Stanford was among institutions that told BuzzFeed that they had searched financial records and couldn’t find evidence of an Epstein donation. A Stanford spokesman said BuzzFeed had requested information about gifts after 2006, when Epstein was charged for the first time. The school said it also told the reporter of the 2004 donation.On Thursday, Harvard University President Lawrence Bacow said the university was reviewing millions of dollars in Epstein donations, all of which came before his 2008 guilty plea in Florida. Also on Thursday, Massachusetts Institute of Technology President Rafael Reif said he signed a 2012 thank-you letter to Epstein for a donation, but has no memory of it. MIT launched its own review into Epstein donations last month.Joi Ito, the director of the MIT Media Lab, resigned from his post on Sept. 7 after the New Yorker reported that the Media Lab’s ties to Epstein ran deeper than Ito had disclosed. In August, Reif said MIT had received $800,000 from Epstein-linked foundations. In early September Ito said he had also received $1.2 million from Epstein for outside investment funds he controlled. In an email to Axios on Thursday, Hoffman said he last interacted with Epstein in 2015, and that all his few interactions came at the request of Ito, with the goal of fundraising for the Media Lab. Hoffman said Ito had told him that MIT had vetted Epstein.“By agreeing to participate in any fundraising activity where Epstein was present, I helped to repair his reputation and perpetuate injustice,” Hoffman told Axios. “For this, I am deeply regretful.”Since Epstein’s arrest in July, many technology figures have rushed to distance themselves from the financier. Stanford, in the heart of Silicon Valley, has become the breeding ground for tech titans from Hewlett-Packard to Google. This year, it was caught up in a bribery scandal alleging rich parents could pay a middleman for admission to a handful of elite schools. Federal prosecutors alleged that a now-fired sailing coach accepted donations for the sailing program in exchange for smoothing the application process for some students.Epstein’s COUQ Foundation Inc. made the donation to Stanford. The same charity gave to a wide variety of causes, including the Clinton Foundation, the Martha Graham Dance Company and the Save Darfur Coalition, according to filings.To contact the author of this story: Sarah McBride in San Francisco at email@example.comTo contact the editor responsible for this story: Anne VanderMey at firstname.lastname@example.org, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Apple Inc struck out at a Goldman Sachs Group Inc analyst on Friday in a relatively rare public dust-up between a blue chip Wall Street firm and its client. The disagreement came after Goldman Sachs analyst Rod Hall criticized Apple's accounting methods for the tech giant's new TV+ product, saying in a research note that it may result in lower gross margins and profits. A Goldman spokeswoman declined to comment or to make the analyst available for interview.
Jim Chanos, the founder and president of Kynikos Associates, is a long-time short-seller of Tesla stock. Tesla stock has fallen 17.5% in the last year.