Month: April 2017

Authored by Lance Roberts via RealInvestmentAdvice.com,

There is a really big crisis coming.

Think about it this way.

After 8 years and a 230% stock market advance the pension funds of Dallas, Chicago, and Houston are in severe trouble. But it isn’t just these municipalities that are in trouble, but also most of the public and private pensions that still operate in the country today.

Currently, many pension funds, like the one in Houston, are scrambling to slightly lower return rates, issue debt, raise taxes or increase contribution limits to fill some of the gaping holes of underfunded liabilities in their plans. The hope is such measures combined with an ongoing bull market, and increased participant contributions, will heal the plans in the future.

This is not likely to be the case.

This problem is not something born of the last “financial crisis,” but rather the culmination of 20-plus years of financial mismanagement.

An April 2016 Moody’s analysis pegged the total 75-year unfunded liability for all state and local pension plans at $3.5 trillion. That’s the amount not covered by current fund assets, future expected contributions, and investment returns at assumed rates ranging from 3.7% to 4.1%. Another calculation from the American Enterprise Institute comes up with $5.2 trillion, presuming that long-term bond yields average 2.6%.

With employee contribution requirements extremely low, averaging about 15% of payroll, the need to stretch for higher rates of return have put pensions in a precarious position and increases the underfunded status of pensions.

With pension funds already wrestling with largely underfunded liabilities, the shifting demographics are further complicating funding problems.

One of the primary problems continues to be the decline in the ratio of workers per retiree as retirees are living longer (increasing the relative number of retirees), and lower birth rates (decreasing the relative number of workers.) However, this “support ratio” is not only declining in the U.S. but also in much of the developed world. This is due to two demographic factors: increased life expectancy coupled with a fixed retirement age, and a decrease in the fertility rate. 

In 1950, there were 7.2 people aged 20–64 for every person of 65 or over in the OECD countries. By 1980, the support ratio dropped to 5.1 and by 2010 it was 4.1. It is projected to reach just 2.1 by 2050. The table below shows support ratios for selected countries in 1970, 2010, and projected for 2050:

Of course, as I have discussed previously, the problem is that while the “baby boom” generation may be heading towards retirement years, there is little indication a large majority of them will be actually retiring.  With a large majority of individuals being dependent on the pension systems in retirement, the burden will fall on those next in line.

Welcome to the “sandwich generation” when more individuals will be “sandwiched” between supporting both parents and children in the same household. It should be no surprise multi-generational households in the U.S. are at their highest levels since the “Great Depression.” 

Market’s Don’t Compound

However, let’s discuss the elephant in the room.

Pension computations are performed by actuaries using assumptions regarding current and future demographics, life expectancy, investment returns, levels of contributions or taxation, and payouts to beneficiaries, among other variables. The biggest problem, following two major bear markets and sub-par annualized returns since the turn of the century, is the expected investment return rate.

Using faulty assumptions is the lynchpin to the inability to meet future obligations. By over-estimating returns, it has artificially inflated future pension values and reduced the required contribution amounts by individuals and governments paying into the pension system.

It is the same problem for the average American who plans on getting 6-8% return a year on their 401k plan, so why save money. Which explains why 8-out-of-10 American’s are woefully underfunded for retirement.

As shown in the long-term, total return, inflation adjusted chart of the S&P 5oo below, the difference between actual and compounded (7% average annual rate) returns are two very different things. The market does NOT return an AVERAGE rate each year and one negative return compounds the future shortfall.

This is the problem that pension funds have run into and refuse to understand.

Pensions STILL have annual investment return assumptions ranging between 7–8% even after years of underperformance.

However, the reason assumptions remain high is simple. If these rates were lowered 1–2 percentage points, the required pension contributions from salaries, or via taxation, would increase dramatically. For each point reduction in the assumed rate of return would require roughly a 10% increase in contributions.

For example, if a pension program reduced its investment return rate assumption from 8% to 7%, a person contributing $100 per month to their pension would be required to contribute $110. Since, for many plan participants, particularly unionized workers, increases in contributions are a hard thing to obtain. Therefore, pension managers are pushed to sustain better-than-market return assumptions which requires them to take on more risk.

But therein lies the problem.

The chart below is the S&P 500 TOTAL return from 1995 to present. I have then projected for using variable rates of market returns with cycling bull and bear markets, out to 2060. I have then run projections of 8%, 7%, 6%, 5% and 4% average rates of return from 1995 out to 2060. (I have made some estimates for slightly lower forward returns due to demographic issues.)

Given real world return assumptions going forward pension funds SHOULD lower their return estimates to roughly 3-4% in order to potentially meet future obligations and regain some solvency.

But we won’t get there.

1. This would require a 40% increase in contributions by plan participants which they simply can not afford.
2. Given that many plan participants will retire LONG before 2060 there simply isn’t enough time to solve the issues, and;
3. The next bear market, as shown, will devastate the plans abilities to meet future obligations without massive reforms immediately. 

In a recent note by my friend John Mauldin, he discussed an email Rob Arnott, of Research Affiliates, sent regarding this specific issue.

“Quoting from his letter (in which he assumes the typical 60% equities/40% bonds ratio that most pension funds use), here’s the math:

40% Bonds. Yield is 2% for the US aggregate bond market. 
60% Stocks. Our base case is 5.4% for US stocks, but we think valuations are too high, so we trim this to 3.3% for the coming decade. 

Here’s our logic:

• The yield is 2%.
• Earnings growth over the past century has been 4.5%, of which 3.1% was inflation (real growth of 1.4% … far less than most people realize).
• Inflation expectations are about 2%, so perhaps we should trim this forecast by 1.1%.
• This gives us a base-case of 5.4%.
• Valuation multiples are stretched, with the stock market priced at 25 times the 10-year average earnings, against a historical norm of 16.8x. If we’re back to historical norms in 10 years, that costs us another 4.2%. Since valuation multiples could (a) return to historical norms, or (b) remain at today’s lofty multiples, let’s split the difference, and trim our return expectations another 2.1%.
• This gives us a likely outcome of 3.3% from stocks.

If our logic is sound, we earn 0.8% from our bonds (40% allocation x 2% return) and 2% to 3.2% from our stocks (60% x 3.3%, or 60% x 5.4%). Add up the return from stocks and the return from bonds, and we get 2.8% to 4% from our balanced portfolio.

Bottom line … US public service pensions are toast. One of three constituencies gets nailed: 

• The taxpayer (keeping in mind that the affluent are mobile!),
• The current and/or future pensioners (keep in mind that private-sector pensions are now far less generous than public pensions … there’s an inequity here!), or;
• The public services that are on offer to our citizenry, net of sunk costs from servicing past generations.

Most likely, it’ll be a blend of the three.”

Exactly right, and the chart above of projected stock market returns agrees with that assumption.

But, we are running out of time.

Currently, 75.4 million Baby Boomers in America—about 26% of the U.S. population—have reached or will reach retirement age between 2011 and 2030. And many of them are public-sector employees. In a 2015 study of public-sector organizations, nearly half of the responding organizations stated that they could lose 20% or more of their employees to retirement within the next five years. Local governments are particularly vulnerable: a full 37% of local-government employees were at least 50 years of age in 2015.

It is no surprise that public pension funds are completely overwhelmed, but they still have not come to the realization that markets do not compound at an annual return of 8% annually. This has led to a continued degradation of funding levels as liabilities continue to pile up. 

“A bear market is coming which will be the match that lights the fuse.”

If the numbers above are right, the unfunded obligations of approximately $4-$5.6 trillion, depending on the estimates, would have to be set aside today such that the principal and interest would cover the program’s shortfall between tax revenues and payouts over the next 75 years.

Again, that ain’t gonna happen.

Which means that when the next major bear market comes growling, the real crisis won’t be secluded to just subprime auto loans, student loans, and commercial real estate. The real crisis comes when there is a “run on pensions” when “fear” prevails benefits will be lost entirely.

It’s an unsolvable problem. It will happen. And it will devastate many Americans.

It is just a function of time.

As George Will recently wrote:

“The problems of state and local pensions are cumulatively huge. The problems of Social Security and Medicare are each huge, but in 2016 neither candidate addressed them, and today’s White House chief of staff vows that the administration will not ‘meddle’ with either program. Demography, however, is destiny for entitlements, so arithmetic will do the meddling.”

Whatever amount you are saving for retirement is probably not enough.

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Today’s China-U.S. summit meeting is an event that could also have enormous implications – in both directions. As Bloomberg's Richard Breslow notes, one can't help but be intrigued by the fact that while everyone is looking at the S&P 500, this morning the Shanghai composite traded at its highest level of the year.

Notably, the Dollar relationship to China's currency relative to the rest of the world's relationship to the Yuan is following a very similar pattern to last year's 'Shanghai Accord' – stronger Yuan vs USD as China weakens its basket against all majors. Fooling Trump et al. that China is 'not' devaluing?

There doesn't appear to be any scheduled press conferences just yet but, as Deutsche Bank's Jim Reid notes, it’s worth keeping an eye on the headlines as the next two days progress. Clearly North Korea will be a subject near to the top of the agenda. Importantly though the meeting is the start of a new China-US bilateral relationship so the rhetoric which follows from the leaders will be closely scrutinised and debated one would imagine.

The stage is set for a carefully choreographed dinners with family and displays of bonhomie, but beneath the facade runs a wary, almost palpable, anxiety — as the men face a make or break moment. As AFP reports, Xi is arriving at the resort with a gift-basket of "tweetable deliverables", sources say, peace offerings on Trump's signature issues — trade and jobs — that he hopes will smooth over a relationship that began on shaky ground following disagreements over Taiwan. In return, he hopes to get assurances from Trump on American sales of arms to the island, as well as trade. But what Trump wants is less clear.

Although his comments during a Fox New interview this morning offer some visibility:

• *TRUMP: WE HAVEN'T BEEN TREATED FAIRLY ON TRADE WITH CHINA
• *TRUMP SAYS WILL DO REALLY WELL IN MEETINGS WITH CHINA'S XI

So, what's at stake as President Trump sits down with China’s Xi?

Greg Wright (via The Conversation) explains…

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Having slowly drifted to the highest levels since before Christmas, initial jobless claims collapsed last week by 25,000 to 234k – near 44 year lows. This is the biggest weekly drop since April 2015…

 

A sudden panic hiring spree?

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Today’s post-European open ramp in the USDJPY may have boosted risk sentiment after yesterday’s sharp selloff, and lifted global equities off session lows, but for many this is “too little, too late”, with Bloomberg’s commentator Marc Breslow noting earlier that at this point “it’s a matter of when not if markets break down”, a sentiment which was shared overnight by SocGen’s FX strategist Kit Juckes, who in a note writes that “The wider Fed debate is about the impact on risk assets of shrinking the balance sheet. If near-zero rates and central bank buying of bonds have been the fundamental driver of global capital towards higher-yielding assets, then reversing both parts of this can’t be helpful. Which is how markets have reacted overnight. “

Below are key excerpts from his overnight note:

The focus of FOMC Minutes was on when/how to start the process of reducing the Fed’s balance sheet. There was nothing to change the view that 2017 will see three rate hikes, but if rate hikes happen concurrently with a shrinking Fed balance sheet, that may have an impact on the terminal Funds rate. 1yr rates in 5 years’ time are now priced at 2.55%, 30bp below their highs for the year and the sense is that the Fed isn’t that bothered about a market which prices a lower terminal rate than the ‘dot-plot’ suggests. This matters for two reasons. Firstly, what matters for the dollar now that the rate-hiking cycle is underway is not how many hikes we get this year (or next) but where the Fed’s going in the longer run. And secondly, it’s important for the path of longer-dated Treasury yields. The dollar gets not help from the Fed if we’re collectively tempted to revise terminal Funds down rather than up. And with 10s still flirting furiously with the bottom of their 4-month range, the danger of a break lower’s clear.

 

The most immediate direct impact of this is on USD/JPY. If I’m a long-standing long-term USD/JPY bull, then I’m a short-term rabbit. 110 won’t hold if 2.30 breaks in 10s and nor will 109, and so on…

 

 

 

The wider Fed debate is about the impact on risk assets of shrinking the balance sheet. If near-zero rates and central bank buying of bonds have been the fundamental driver of global capital towards higher-yielding assets, then reversing both parts of this can’t be helpful. Which is how markets have reacted overnight. The caveat though, is that the FOMC Minutes got to great pains to stress that any move will be gradual and predictable, and accomplished mainly by phasing out reinvestment of maturing bonds. If I weigh a low terminal Funds rate against a super-cautious and very drawn-out normalisation of the Fed’s balance sheet, I can’t really see reason to worry about crowding-out of capital from emerging markets. I still worry much more about over-accommodative policy and ever-rising debt. So, a risk wobble today but no change in trend.

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With global sentiment turning against Syria again, and even president Trump yesterday saying his opinion on Syrian policy has changed (it was not immediately clear just how), on Thursday Syria’s foreign minister dismissed allegations that the Syrian Army deployed chemical weapons in the city of Idlib, saying the military will never use such weapons against its own people or even terrorists.

As reported by AP, Syria’s Foreign Minister Walid Muallem denied claims that the military used chemical weapons in the western city of Idlib. Speaking at a news conference on Thursday, Muallem said an airstrike by Syrian military had targeted an arms depot where chemical weapons stockpiles were stored by Islamic State and Al-Nusra Front militants. He said it’s impossible that the army – which has been making significant gains in almost all theaters of the Syrian war – would use banned chemical weapons against its “own people” and even terrorists.

Asked if Damascus would allow a fact-finding mission into the Idlib incident, Muallem said past experience of similar investigations was “not encouraging.” He also said that he could not predict “the reality of US intentions” in Syria. Muallem added that such a mission must not be politicized and must start its operations “from Damascus, not Turkey,” apparently referring to the latest statements by Ankara condemning the incident, as well as the fact that some victims were taken to Turkey for autopsy.

Meanwhile, the Kremlin on Thursday called the attack in Syria’s Idlib province earlier this week a “monstrous crime,” but said Washington’s conclusions about the incident were not based on objective data.

“This was a dangerous and monstrous crime, but it would be incorrect to hang labels (to identify those who did it),” Kremlin spokesman Dmitry Peskov told reporters on a conference call. The use of chemical weapons was “unacceptable,” he said, urging the Syrian army to ensure such arms did not fall into the hands of terrorists.

Peskov said evidence about the incident provided by the White Helmets civil defense group could not be considered reliable and added: “We do not agree with these conclusions.”

“Immediately after the tragedy no one had access to this region … any data which the U.S. side or our colleagues from other countries might have had access to could not have been based on objective facts,” Peskov told reporters. The disagreement was unlikely to change the nature of ties between Russia and the United States, Peskov added.

Russia’s Foreign Ministry said earlier on Thursday it was too early to accuse the Syrian government of being responsible for the attack in Idlib and said a proper investigation was needed, the RIA news agency reported.

“Immediately after the tragedy no one had access to this area, so no one could have hard verifiable data. Consequently, any information which the US side or our colleagues from other countries might have had access to, could not be based on objective facts,” Peskov told reporters.

Though Peskov rejected “hasty assessments” of the alleged use of chemical weapons, he emphasized that there are always disagreements between Moscow and Washington, but mutual discords over the Idlib incident are unlikely to affect “the spirit of our cooperation.”

* * *

Also on Thursday, the WSJ reported that autopsy results of three victims of the gas attack in Syria show evidence their deaths were linked to chemical weapons, according to Turkey’s justice minister. Specialists from the World Heath Organization and the United Nations joined Turkish forensics teams in an examination of three Syrians who died after being brought to Turkey for treatment following the attack on the village of Khan Sheikhoun in Idlib province this week.

After the attack, Turkey joined an immediate international emergency response. Dozens of injured Syrians were brought by ambulance to Turkish medical facilities close to the Syrian border. The autopsies took place in the city of Adana. It was not immediately clear why Turkey – which has had a clear conflict of interest in the Syria conflict and has repeatedly stated its desire to remove the Assad administration – had been tasked with this fact-ficning mission.

Biological samples from the victims were taken during autopsies that started late Wednesday and continued until Thursday morning, according to the Turkish state Anadolu news agency. Justice Minister Bekir Bozdag didn’t immediately provide further details on the results or what chemical substance was allegedly used.

Bozdag told Anadolu that the teams are continuing to examine the samples, but his view is the evidence shows forces loyal to Syrian President Bashar al-Assad were behind the attack.

“The autopsies’ results establish that chemical weapons were used. The forensic report presents this in a very clear way,” Anadolu quoted Mr. Bozdag as saying, adding that “Assad’s use of chemical weapons is established through this scientific examination.”

 

The Syrian army has denied using any chemical or toxic substances in air strikes launched Tuesday, according to state media, and blamed “terrorist groups and those behind them.” The Syrian government routinely refers to most opponents of the regime as terrorists.

In any case, the results from Turkish autopsies on the victims of a suspected poison gas attack in northwest Syria will be sent to the Dutch capital of The Hague for an additional examination, Turkish Health Minister Recep Akdag said on Thursday. The suspected chemical attack believed to have been carried out by Syrian government forces killed at least 70 people in the rebel-held Idlib province on Tuesday. Thirty-two victims have been brought to Turkey and three have subsequently died during treatment.

That said, while the presence of sarin gas will almost surely be confirmed, the question remains how the west will prove whose sarin gas it was, although since like in 2013 the “chemical attack” appears to have been a goalseeked event intended to result in a goalseeked outcome, namely to get the US involved in the Syria conflict once again with the intent of removing Assad, we have little doubt that the narrative of Assad – who had little to gain and everything to lose from the alleged gas release – being behind the attack will hardly be challenged in the legacy press.

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Invest In Gold and Silver – Now Is The Time – Schroders 

Schroders is one of the leading investment managers in the world. It is a global asset management company, founded in 1804 and based in the UK. The company employs over 4,100 people worldwide across 37 offices in 27 different countries around Europe, America, Asia, Africa and the Middle East and manages ove £400 billion in assets.

by David Thorpe of What Investment

James Luke, Commodities fund manager at Schroders, believes now is a good time to invest in gold and silver.

He said, ‘The primary reason for investing in commodities, and especially gold and silver, should always be as an inflation hedge. Given the printing of money by the world’s central banks through quantitative easing, there is every reason to argue that higher inflation is coming in the future.

Gold and silver investments in particular remain very under-owned. Some investors fear the prospect of an increasing base interest rate in the US is reason alone to avoid these types of investments.

However, although past performance is not a reliable indicator of future results, the gold price has tended to rise from the beginning to the end of Federal Reserve (Fed) hiking cycles. In the last four instances when the Fed embarked on a hiking cycle, in three of the four instances gold saw +10 per cent to +20 per cent returns from beginning to end.’

He continued, ‘The environment for gold investments remains positive. In the background, global record debt burdens have not magically vanished. These make global growth highly sensitive to any real increase in interest rates and the cost of servicing these debts.

This is a key reason to expect that central banks will be highly wary of raising interest rates too quickly and that real interest rates (a key driver of gold prices) should continue to remain very low and have the possibility of being negative as inflation accelerates.’

Full article on What Investment

Gold and Silver Bullion – News and Commentary

PRECIOUS-Gold firm as dollar, equities fall ahead of Trump-Xi meeting (Reuters.com)

Gold firm as dollar, equities slip ahead of Trump-Xi meeting (Reuters.com)

U.S. Stocks, Dollar Fall as Minutes Spark Caution (Bloomberg.com)

Fed plans to reduce its $4.5 trillion balance sheet this year, minutes show (MarketWatch.com)

Silver Coins Lead US Mint Weekly Sales (SilverCoinsToday.com)

China Lingbao Gold’s 2016 bullion output down 11% on year at 547,591 oz (Platts.com)

Why now is the time to invest in gold – Schroders (WhatInvestment.co.uk)

What’s coming next – inflation, deflation or more muddling through? (MoneyWeek.com)

The Walls Close in on Team Obama (DailyReckoning.com)

Gold, Silver Score Strong Quarterly Increases | Coin News (CoinNews.net)

For Gundlach, These Are The Three Key Charts To Watch (ZeroHedge.com)

Gold Prices (LBMA AM)

06 Apr: USD 1,253.75, GBP 1,004.88 & EUR 1,175.27 per ounce
05 Apr: USD 1,252.50, GBP 1,003.88 & EUR 1,174.47 per ounce
04 Apr: USD 1,258.65, GBP 1,011.07 & EUR 1,181.49 per ounce
03 Apr: USD 1,246.25, GBP 997.25 & EUR 1,168.48 per ounce
31 Mar: USD 1,241.70, GBP 996.46 & EUR 1,161.98 per ounce
30 Mar: USD 1,250.90, GBP 1,005.72 & EUR 1,165.34 per ounce
29 Mar: USD 1,252.90, GBP 1,007.71 & EUR 1,161.19 per ounce

Silver Prices (LBMA)

06 Apr: USD 18.22, GBP 14.63 & EUR 17.09 per ounce
05 Apr: USD 18.26, GBP 14.63 & EUR 17.11 per ounce
04 Apr: USD 18.34, GBP 14.73 & EUR 17.23 per ounce
03 Apr: USD 18.16, GBP 14.52 & EUR 17.05 per ounce
31 Mar: USD 18.06, GBP 14.50 & EUR 16.91 per ounce
30 Mar: USD 18.10, GBP 14.53 & EUR 16.85 per ounce
29 Mar: USD 18.13, GBP 14.58 & EUR 16.81 per ounce

Recent Market Updates

– Heraeus Gold Refinery Buys Swiss Refiner Argor-Heraeus
– Invest In Gold – 46 Trillion Reasons Why
– Gold and Silver Best Performing Assets In Q1, 2017
– Irish Government To Issue Free Gold Coin To Protect Citizens From Brexit’s Impact On Euro and EU
– ‘Three Wise Men’ Warn Crash Coming, Own Gold
– Brexit Gold Buying – UK Demand for Gold Bars Surges 39%
– ‘Most Secure Coin In the World’ ?
– Gold Bullion Coin Worth $4 Million, Stolen in Berlin Museum Heist
– Gold, Silver Rise 2.5% and 3.2% As ‘Trump Trade’ Fades
– Gold ETFs or Physical Gold? Hidden Dangers In GLD
– Gold Prices See Seventh Day Of Gains After Terrorist Attack In London
– Peak Gold – Biggest Gold Story Not Being Reported
– Silver 1/ 70th The Price of Gold – Silver Eagles Sales Jump

Access Award Winning Daily and Weekly Updates Here

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• Senate Set to Vote to Eliminate Supreme Court Filibuster (WSJ)
• Trump’s Xi Summit Tests Promises on Trade, North Korea  (BBG)
• Is North Korea putting a nuclear-tipped bargaining chip on the table? (Reuters)
• Why Xi Jinping Must Tread Carefully When He Meets Trump  (BBG)
• China Market Access in Spotlight as Meeting Nears  (BBG)
• Trump Rethinks Foreign Policy After Syria, North Korea Crises (WSJ)
• Congress Waits for Trump Tax Overhaul as Questions Pile Up  (BBG)
• Elizabeth Holmes Owes Theranos $25 Million (WSJ)
• A Quant ‘Alpha Factory’ Hunts for Investing Edge (WSJ)
• Draghi Draws Line Under ECB Rate Debate and Warns on Prices (BBG)
• Traders Bet the Fed Will Slow Rate Hikes to Shrink Balance Sheet (BBG)
• Assad tells paper he sees no ‘option except victory’ in Syria (Reuters)
• Syria Deaths Linked to Chemical Weapons, Autopsies Show (WSJ)
• Cohn Backs Wall Street Split of Lending, Investment Banks (BBG)
• Bezos is selling $1 billion of Amazon stock a year to fund rocket venture (Reuters)
• Spotify Finally Readies an IPO…That’s Not an IPO (WSJ)
• Kraft’s Failed Bid Jolts Unilever Chief Into Protective Revamp  (BBG)
• Amazon to Add 30,000 Part-Time U.S. Jobs (WSJ)
• Deutsche Bank not thinking about mergers, has other things to do: CEO (Reuters)
• The New Sears Home Is an Affordable Apartment  (BBG)

 

Overnight Media Digest

WSJ

– President Donald Trump said a suspected chemical attack by the Assad regime was “a terrible affront to humanity” that changed his mind about the Syrian strongman, signaling a more aggressive U.S. policy toward Syria. http://on.wsj.com/2nZZy6q

– Federal Reserve officials agreed at their March policy meeting they would likely begin shrinking a $4.5 trillion portfolio of Treasury and mortgage securities later this year, though they remained undecided on how quickly to reduce the holdings and to what level, according to minutes released Wednesday. http://on.wsj.com/2o0a5yv

– The Trump administration, stung by its failure to advance a health-care overhaul through Congress last month, is trying to lay a stronger foundation for a tax-code rewrite by taking a lead role in shaping the legislative push, according to interviews with several senior administration officials. http://on.wsj.com/2o091e5

– General Electric Co. is weighing a sale of its consumer-lighting business, which for decades defined the company following its co-founding 125 years ago by Thomas Edison, the inventor of the first viable incandescent lamp. http://on.wsj.com/2nZZTWM

– Theranos Inc. founder Elizabeth Holmes, whose once-$5 billion stake in her blood-testing firm has shriveled amid regulatory and legal challenges, also owes her company about $25 million. http://on.wsj.com/2o0ahhd

– MGM Holdings Inc is taking full ownership of pay-television network Epix, buying out partners Viacom Inc. and Lions Gate Entertainment in a more than $1.03 billion deal. http://on.wsj.com/2o09lJP

– Australia’s consumer watchdog is suing Apple Inc. over software which disabled iPhones and iPads that had been serviced outside Apple stores after users downloaded updates. http://on.wsj.com/2nZUWgB

– BlackRock Inc has nominated Cisco Systems Inc. leader Chuck Robbins as a director, making him the first technology chief executive on the board of the world’s largest money manager. http://on.wsj.com/2nZWHuv

 

FT

* U.S. President Donald Trump removed his chief strategist Steve Bannon from the National Security Council on Wednesday, reversing his controversial decision early this year to give a political adviser an unprecedented role in security discussions.

* U.S. President Donald Trump on Wednesday accused Syrian President Bashar al-Assad’s government of going “beyond a red line” with a poison gas attack on civilians, but he declined to spell out how or whether his administration would respond.

* PepsiCo pulled a commercial featuring model Kendall Jenner on Wednesday after the ad prompted outrage and ridicule from those who said it trivialized rights protests and public unrest in the United States.

 

NYT

– JAB Holding Company, the investment arm of the Reimann family of Germany, said it would add restaurant chain Panera Bread Co to its growing empire of American coffee and food favorites for $7.5 billion, including debt. http://nyti.ms/2p3JXlH

– Standing against the backdrop of his New Shepard rocket booster and a full-scale mock capsule for carrying humans into space, Jeff Bezos revealed on Wednesday that he was selling about $1 billion in Amazon.com Inc stock a year to finance his Blue Origin rocket company. http://nyti.ms/2ockJnZ

– PepsiCo Inc has apologized for a controversial advertisement that borrowed imagery from the Black Lives Matter movement, after a day of intense criticism from people who said it trivialized the widespread protests against the killings of black people by the police. http://nyti.ms/2nGilSB

– Facebook Inc on Wednesday announced new artificial intelligence tools intended to address a uniquely modern and pernicious form of harassment, often but not exclusively aimed at women, that has attracted increasing attention. Victims of such nonconsensual posts, often referred to as “revenge porn,” now have some help in preventing their spread. The tools are designed to keep such content, once flagged, off its site for good. http://nyti.ms/2ocuhQ7

 

Canada

THE GLOBE AND MAIL

** Ottawa and the provinces are poised to unveil a sweeping agreement to liberalize interprovincial trade. https://tgam.ca/2nGHsop

** The Canadian Pension Plan Investment Board said on Wednesday it would launch a partnership to buy and build retail-focused developments across India. https://tgam.ca/2nGVPsV

** Hudson’s Bay Co is looking to further slash costs and spending in what it says will be a major reinvention of its business as it steels itself for more tough times in the department-store sector. https://tgam.ca/2nH6tQr

NATIONAL POST

** Pamir Hakimzadah is to appear in Ontario court on Thursday to face a single count of leaving Canada to join the Islamic State of Iraq and the Levant. http://bit.ly/2nGCOH0

 

Britain

The Times

– Increases of up to 20,000 pounds ($24,970) in probate fees were thrown into doubt yesterday after a parliamentary panel of experts in the United Kingdom said that they were unlawful. http://bit.ly/2oDnM9Y

– A parliamentary inquiry in the United Kingdom into the gig economy has accused companies such as Uber Technologies Inc , Deliveroo and Amazon.com Inc of tricking or forcing drivers and couriers into signing away their employment rights, with an MP describing the ride-hailing group’s contract as “gibberish”. http://bit.ly/2oDiueu

The Guardian

– Tesco Plc is cutting night shifts for shelf stackers in some of its biggest supermarkets in a fresh shakeup that puts 3,000 jobs at risk. http://bit.ly/2oDltUd

– The British international trade secretary, Liam Fox, has told an Australian parliamentary committee the May government wants to expedite a free trade deal with Australia, and wants to work with Canberra to champion trade liberalisation globally after the United Kingdom’s exit from the European Union. http://bit.ly/2oDyk91

The Telegraph

– Britain’s workers are at last producing more in each hour of work than they were at the end of 2007, after almost 10 years of poor productivity, according to the Office for National Statistics. http://bit.ly/2oDyf5j

– Series of strikes at BMW AG’s British manufacturing plants have been announced by unions as staff battle to protect their pension schemes. Workers at the German car giant’s four UK factories plan to stage eight 24-hour stoppages unless the company goes back on its intention to close the final-salary pension scheme. http://bit.ly/2oDiCdR

Sky News

– British Prime Minister Theresa May has warned internet giants they are failing to deal with the scourge of online extremist material. http://bit.ly/2oDvO2i

– Deliveroo is embarking on a new food delivery venture it hopes will create 1,000 jobs. The technology firm, which currently operates an app-based delivery service from established restaurants, said it was to create 30 sites across the UK from which a partner business could provide meals for delivery only. http://bit.ly/2oDfXRw

The Independent

– Lloyds Banking Group Plc has announced the locations of 100 branch closures that will lead to 325 job losses. http://ind.pn/2oDmM5q

 

via http://ift.tt/2nH4nju Tyler Durden