Air Force Requests Billions For F-15X Fighters
by Zero Hedge - February 21st, 2019 10:10 pm
Courtesy of ZeroHedge. View original post here.
The US Air Force is set to request funds to purchase F-15 fighter jets from Boeing, increasing its inventory with an upgraded version of the plane it last procured in 2001, even as the service pursues fifth-generation fighters from rival Lockheed Martin Corp.
The service’s fiscal year 2020 budget request will include eight of Boeing’s new F-15X, Bloomberg reports, the first installment of an 80-plane order over the next five years.
If the budget request is accepted, it will mark the first US purchase of the fighter jet since 2001.
Even though the request has the Trump administration support, skeptical lawmakers have questioned the Air Force’s move to obtain a 45-year-old fourth-generation fighter for almost the same costs compared to the F-35 fifth-generation fighter.
The reason could be due to its internal bomb bays; the F-35 cannot accommodate heavier weapons, such as hypersonic missiles.
The Air Force is expected to purchase the F-15X without reducing the fleet of 1,763 F-35s that it has long planned, Bloomberg said.
Lockheed told lawmakers and congressional members on why the F-35 is a better choice over the F-15X, including a “fact sheet” distributed in December.
Boeing has offered the F-15X with the price tag of $80 million per plane under a fixed-price contract with delivers in 2022. By comparison, the Lockheed F-35 is estimated to cost $89 million each, a mere $9 million difference between the fourth and fifth generation jets.
However, there seems to be a rift between the Air Force and lawmakers in Congress tasked with funding the new program. On Tuesday, five Republican senators sent a letter to President Donald Trump warning that an F-15 purchase would divert resources away from the F-35, thus jeopardizing national security.
“We are extremely concerned that, over the last few years, the DoD has underfunded the F-35 Program and relied on Congress to fund increases in production, sustainment, and modernization,” the lawmakers wrote. “In order to meet the overmatch and lethality goals laid out in the National Security Strategy, the DoD needs to make these investments in the F-35 to affordably deliver and operate this fifth-generation fighter fleet. The F-35 is the most affordable, lethal, and survivable air dominance fighter, and now is the time to double down on the program.”
“New versions of old F-15s designed in the 1970s-1980s cannot survive against the newest Russian and Chinese fifth-generation fighter and surface to air missile threats, not to mention rapidly developing future threats,” they added. “This action
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Why Startups Are Low-Balling Valuations When Assigning Employee Stock Options
by Zero Hedge - February 21st, 2019 9:30 pm
Courtesy of ZeroHedge. View original post here.
Start up companies become "conveniently" pessimistic about their valuations prior to going public when stock options are handed out to employees, according to a Wall Street Journal analysis. The lower valuations create a windfall for employees and can lower their tax burdens going forward.
The report analyzed recent initial public offerings and identified 68 companies that gave employees stock options to buy about $1.5 billion worth of stock during the 12 month run up to each respective company's IPO. The fair market value of those shares, however, was an estimated $2.2 billion at the time, based on a valuation model developed by academics. This is the equivalent of a 32% discount on shares for employees.
Will Gornall, an assistant finance professor at the University of British Columbia, said: “The Journal’s findings show that the valuations being reported by companies are significantly below what the shares are really worth—the price that investors would pay for them.”
This year, these types of valuations will be in focus as names like Uber and Pinterest prepare to go public. A good example of this "low-balling" was Blue Apron Holdings. The founders of the company received a total of $30 million in October 2015 from stock sales to outside investors at $13.33 a share. This is more than triple the $3.69 per share that the company would use four months later as it granted options to employees. Blue Apron shares now trade at about $1.54 per share.
Mukesh Bajaj, a financial economist who has testified in many valuation cases for the Internal Revenue Service said: "The law states employee-allocated stock should be priced at its fair value but doesn’t specify the basis of the pricing—which may give companies a tempting loophole to enrich their executives.”
Stock options are one of the best weapons for startups to attract talent, and these types of discounts on stock can be a profitable benefit. Being such early investors and having options before a company goes public makes it easier for employees to reap profits, even though public market participants may see the company's share price decline. In addition to getting stock cheap, these profits are taxed as capital gains instead of income, saving employees on taxes.
Robert Willens, a New…
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How The Left Is Using Corporations To Shut Down Conservative Speech
by Zero Hedge - February 21st, 2019 9:09 pm
Courtesy of ZeroHedge. View original post here.
Authored by Mark Hemmingway via RealClear Politics
On January 8, the restaurant chain Red Lobster became the 20th major advertiser to stop running ads on Tucker Carlson’s Fox News program. It’s not because advertising on Carlson’s show won’t get you in front of millions of viewers — Carlson has the highest ratings among cable news networks in his prime-time slot, and Fox News has been the highest rated basic cable network for over two years. Carlson has been the subject of a highly organized, and apparently effective, boycott campaign.
It’s true that he has made some controversial statements in the past year, but it’s also impossible to argue that he’s not one of the more interesting and essential pundits of the Trump era. The same week Red Lobster announced it was abandoning his show, Carlson delivered a monologue arguing that conservatives placed too much faith in their conception of the “free market” and needed to question whether the economy was rigged to benefit elites. The monologue touched off a fascinating conversation among intellectuals across the political spectrum.
Washington Post columnist Christine Emba found herself reassessing the caricature of Carlson and asking, “What happens when Tucker Carlson makes sense?” The left-wing publication Vox declared, “Tucker Carlson has sparked the most interesting debate in conservative politics.” The New York Times’ right-leaning columnist Ross Douthat declared the “Fox News host amplifies a debate the right needs to have.” Meanwhile, conservative pundits David French and Ben Shapiro offered sharp criticisms of Carlson’s monologue from the right.
There are numerous other instances of Carlson contributing positively to the public dialogue that should be weighed against a handful of controversial remarks. Further, there’s little reason to believe that anything Carlson has said is outside the bounds of acceptable discourse.
There is, however, pervasive evidence showing that left-wing activists are quite content using every tool at their disposal to silence influential voices on the right. The question is whether they’d thought through the disastrous consequences of normalizing politically motivated boycotts.
Even as thinkers and journalists were having an illuminating and productive debate over Carlson’s monologue on the role of the free market, others were busy stoking the boycott against him. “The Tucker Carlson advertiser boycott continues, and what’s wrong with that?” asked Pulitzer-winning Los Angeles Times columnist Michael Hiltzik in a column last month.…
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NYT Exposes Conflicts Of Interest At McKinsey’s Secretive In-House Hedge Fund
by Zero Hedge - February 21st, 2019 8:45 pm
Courtesy of ZeroHedge. View original post here.
Did you know legendary American consulting firm McKinsey ran an in-house hedge fund? Apparently, neither did many of the firm's clients.
According to a report in the New York Times, the fund has recently attracted a series of lawsuits and scrutiny from the DOJ and Congress over its failure to disclose conflicts of interest between investments held by its $4 billion in-house fund, McKinsey Investment Office, and its clients.
McKinsey launched the fund in the 1990s in the midst of a brutal war for talent with Wall Street firms. The fund was intended to incentivize high performing employees to stay with the firm. But though the firm defended its refusal to disclose these conflicts by claiming there maintains that there's is a wall between the two businesses, lawmakers, judges and others are beginning to question whether or not this is true, particularly after it was revealed that senior employees in McKinsey's consulting business sit on the fund's board.
Virginia bankruptcy court where a judge reopened a case involving a coal company after discovering the MIO was one of the bankrupt firm's secured creditors.
After the NYT published its report, the DOJ announced that it had reached a settlement with McKinsey over cases involving its disclosure of conflicts in bankruptcy advisory cases. As part of the settlement, McKinsey agreed to pay out $15 million to creditors it represented in these bankruptcy cases, and stated that if McKinsey doesn't remedy its disclosure practices, DOJ could seek further penalties.
Former employees of MIO confirmed to the Times that one reason the in-house hedge fund has been so secretive is that McKinsey doesn't want anybody "connecting the dots" between its investments and its clients. Instead of housing its money at its headquarters in NYC, McKinsey stashes its $4 billion on the English Channel island of Guernsey.
Here are a few other highlights from the sprawling NYT report:
A fund in which MIO has invested is a creditor to China's highest-profile fugitive.
The McKinsey fund took stakes in two China-focused PAG funds. In a 2010 London exchange filing, PAG disclosed that MIO had a
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Which Car Color Is Most Popular In Your State?
by Zero Hedge - February 21st, 2019 8:20 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Priceonomics
There are several ways you could decide on a car color. Do you look for a color that reflects your personality? Maybe you want a color that says, “Look at me!” Perhaps you like a certain color for your commuter car and another for your weekend pickup. Would you rather blend in with the crowd or stand out in a crowded parking lot?
No matter what your motivation is, when it comes to choosing the best color for your next car, you have a rainbow of options. Interestingly, the most popular colors aren’t associated with a typical rainbow. No offense to red, orange, yellow, green, blue, indigo, or violet, but most car buyers prefer neutral car colors, according to our data. In fact, if you’re looking for the best-selling colors, the answer is right here in black and white.
***
We found that nearly half of cars sold at CarMax nationwide from December 1, 2017, through November 30, 2018, were black or white. Add silver and gray, and Americans’ taste for middle-of-the-road colors becomes even more apparent. More than half of cars sold were black, white, silver, or gray.
Black was the top choice among CarMax buyers, with 22.25% of all sales. White was a close second, with 19.34% of sales. Gray (17.63%) and silver (14.64%) rounded out the top four most popular colors.1 The chart below shows the national best-selling vehicle colors at CarMax.
While black and white were the most popular car colors, we used our data to find out if other colors were more popular in certain vehicle body types. Consider sports cars, for instance. Surely the best-selling sports car color was candy apple red, right? Wrong.
Whether you look at sales of two-door coupes, four-door sedans, convertibles, or yes, even sports cars, the most popular color choice was black. White was the most popular color for trucks, minivans/vans, and wagons. The chart below shows the best-selling colors of vehicles by body type at CarMax.
Though…
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China Introduces Disturbingly Real Female AI News Anchor
by Zero Hedge - February 21st, 2019 7:55 pm
Courtesy of ZeroHedge. View original post here.
Three months after China unveiled its first disturbingly realistic AI male anchor, state-run news agency, Xinhua, unveiled "the world's first female AI news anchor" to compliment her male predecessor, according to The National. No word if she'll shoot him knowing glares as he flirts with the weather girl.
Xinhua unveils world's first female #AI news anchor pic.twitter.com/Faj3Mk69y1
— China Xinhua News (@XHNews) February 20, 2019
Her name is Xin Xiaomeng – and was developed in a joint collaboration between Xinhua and search engine company Sogu.
Aside from a few seemingly stiff facial muscles, Xiaomeng is remarkably life-like, complete with hand adjustments during piece-to-cameras, and just enough on-cue blinking.
The computer-generated journalist was modelled after real-life Xinhua news anchor Qu Meng, whose voice and image provided inspiration for developers. -The National
Xinhua's male #AI anchor can now broadcast news in a standing position, with more body language pic.twitter.com/2YZLouhYnN
— China Xinhua News (@XHNews) February 20, 2019
Xin showed off his new human-like body language, bragging: "Henceforth, rather than working behind the desk, I'll be broadcasting the news in front of the desk. Instead, I'll be broadcasting from a standing position. I can make more hand gestures and facial expressions," he said, adding: "Now I have my own name, Xin Xiaohao. Thanks to this upgrade, I'll be able to conduct better broadcasts."
We hear they have perfect social credit scores and recommend complying with all government directives.
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Bursting Of Australia’s Housing Bubble Could Topple The Government
by Zero Hedge - February 21st, 2019 7:30 pm
Courtesy of ZeroHedge. View original post here.
In one of the world's most developed economies, soaring costs for housing and education are rapidly widening the wealth-distribution gap between the younger and older generations amid the backdrop of one of the longest economic expansions in the country's history. As younger workers grapple with the notion that they may never be able to afford a home, a backlash is stirring in the political arena, as younger voters embrace progressive (some would say "socialist") politicians.
No, we're not talking about the US. We're talking about Australia.
After six years of tumultuous Liberal rule, the Labour Party is hoping to wrest back control of the government during elections later this year. And it sees tackling this intergenerational divide as the best way to do it. And combating the country's increasingly unaffordable housing bubble is a key plank of its proposals. The party has pledged to curb tax breaks for property investors that helped drive up home prices (alongside an influx of foreign capital).
Labor leader Bill Shorten has promised to scrap tax refunds worth A$5 billion ($3.6 billion) a year for share investors. The benefits are already being seen in the polls, where Labour is seeing a slight advantage.
After 27 years of uninterrupted economic growth, Australians are struggling with the fact that the wealthy have enjoyed the bulk of the economic benefits.
While Australia has avoided recession for 27 years, the spoils have not been shared evenly as older people capture a greater share of the nation’s wealth. According to the Grattan Institute, households headed by people aged 65-74 were on average A$566,000 wealthier in 2015-16 than the same age group was 12 years earlier. That far outstrips growth in other bands and compares with just A$38,000 for the 25-34 age group.
And economists are worried that such an extreme concentration of wealth among older Australians…
…could hurt the country's economy.
Such a concentration of wealth among older Australians can hurt the real economy, according to Danielle Wood, an economist at the Melbourne-based think tank. Younger Australians priced out of the property market, for instance, are forced to live further from cities
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Animation: The Entire History of Tesla in 5 Minutes
by ilene - February 21st, 2019 7:02 pm
Animation: The Entire History of Tesla in 5 Minutes
Courtesy of JEFF DESJARDINS, Visual Capitalist
How did Tesla accelerate from 0-60 mph in such a short period of time?
Today’s five-minute-long animation is presented in association with Global Energy Metals, and it tells you everything you need to know about the history of Tesla, including Elon Musk’s vision for the future of the iconic electric car company.
WATCH THE VIDEO:
The video primarily keys in on Tesla’s successes and the setbacks the company has faced along the way – it also shows that Tesla was able to pass Ford in market value just seven years after the company’s IPO.
THE RISE OF TESLA SERIES
The above video is the culmination of our Rise of Tesla Series, which also includes three full-length infographics that tell a more in-depth story about the history of Tesla, and what the company aspires to:
1. Tesla’s Origin Story (View infographic)
- What was the vision behind the founding of Tesla?
- Early hurdles faced by the company, including its near escape from the brink of bankruptcy
- Elon Musk’s takeover of the company, and the dramatic actions taken to keep it alive
- A timeline showing the development of the Roadster, and why this first car matters
2. Tesla’s Journey: How it Passed Ford in Value (View Infographic)
- The company’s plan to parlay the Roadster’s success into a viable long-term company strategy
- Introducing the Tesla Model S and Model X
- How the company would use the Gigafactory concept to bring economies of scale to battery production
- Other milestones: Powerwall, Autopilot, and Tesla’s growing Supercharger network
- The announcement of the Model 3
3. Elon Musk’s Vision for the Future of Tesla (View Infographic)
- Detailing Tesla’s ambitions for the future, including how it plans to productize the factory
- Other vehicles Tesla plans to release, including the Tesla Semi and a future ultra low cost model
- How Tesla plans to combine fully autonomous cars with the future sharing economy
- Exploding demand for lithium-ion batteries, and why Tesla is planning on building additional Gigafactories
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Kraft Shares Plunge To Record Low After Company Discloses SEC Subpoena
by Zero Hedge - February 21st, 2019 6:37 pm
Courtesy of ZeroHedge. View original post here.
Kraft Heinz shares plunged more than 18% in after-hours trading on Thursday after the company disclosed that it had received a subpoena from the SEC. The whiff of the accounting scandal drove the company’s shares below $40 a share, to their lowest level ever.
Kraft said the subpoena was part of an investigation into the company’s procurement accounting policies, and that, after it received the subpoena, it launched an internal investigation and as a result posted a $25 million increase to the cost of products sold after determining it was “immaterial to the fourth quarter of 2018 and its previously reported 2018 and 2017 interim and year to date periods.” It also posted a $15.4 billion impairment charge, as the company cautioned that “the fair values of certain goodwill and intangible assets” were “below their carrying amount.”
Kraft added that it was cooperating in the probe and has been taking steps to improve its internal controls and procedures. The subpoena, which was disclosed in the company’s Q4 earnings report, isn’t expected to have a material impact on its financial statements, the company said, according to CNBC.
Kraft Heinz cautioned that “the fair values of certain goodwill and intangible assets” was “below their carrying amount.”
On top of the subpoena, Kraft Heinz posted a miss on its earnings, reporting EPS of 84 cents on $6.89 billion in revenue. Those results fell short of Wall Street expectations for EPS of 94 cents on revenue of $6.93 billion, according to Refinitiv consensus estimates.
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What A Difference A Year Doesn’t Make
by ValueWalk - February 21st, 2019 5:19 pm
By Michelle Jones. Originally published at ValueWalk.
In general, the markets seemed to be shaping up to be similar to what they looked like a year ago performance-wise. January was a month of strong returns, and now that we’re into February, we’re suddenly seeing a steep pullback. It remains to be seen whether the rest of the month will be as tumultuous as last February was.
However, a bit of good news is that even though the market performance is looking a lot like it did last year, the setup is quite a bit different, according to one firm. As a result, it’s possible this February won’t be as bad as last February.
Q4 hedge fund letters, conference, scoops etc
Similarities in performance
In their recent “Hedge Fund Update,” Morgan Stanley analyst John Schlegel and team focused on the performance and setup of the early-year markets in 2018 and 2019. They noted that many of the markets are on a “very similar trajectory” as they were last year. Many of the major market indices were up in the mid-high single digits in January, including the S&P 500′s and MSCI AC World’s 6% to 7% gains each.
Hedge fund performance finally started to bounce back as well, which is welcome relief for an industry that could do little more in Q4 but remark on how strange and difficult the quarter had been. According to Morgan Stanley, average hedge fund returns were up “a similar amount” in January as they were a year ago.
U.S. hedge funds are doing “a bit better,” and they cite strong performance of crowded stocks as a key reason for this. This means the handful of hedge funds which managed exceptional performances by avoiding crowded stocks in Q4 probably saw a reversal of their fortunes in January. Morgan Stanley also noted that small-cap stocks outperformed as well.
However, Asia hedge funds have lagged their counterparts from other parts of the world, and the firm chalks this up to much lower net positioning this year compared to last year.
Here’s why the markets may not sell off as steeply this month
The Morgan Stanley team also explained why they think the steep selloff observed in February 2018 may not…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
