Category: zerohedge

One quarter after Uber tumbled following its first report as a public company, Uber is plunging again, down 5%, after reporting a bigger than expected net loss.

For the third quarter, despite net revenue rising 23% Q/Q to $3.53 billion, and better than the estimated $3.39 billion, Uber reported a 3Q loss per share of 68c, bigger than the estimated loss of 63c, translating to a net loss of $1.162BN, 18% worse than the $986MM a year ago, if modestly better than the $1.45 billion expected.

Looking at the breakdown of the topline, Uber reported the following Q3 numbers:

• Gross Bookings $16.47 billion, up 29% Y/Y, and missing estimates of $16.70 billion. This is said to be the main reason why the stock is hurting after hours.
• Uber Eats bookings $3.66 billion, +8% Q/Q, up 73% Y/Y, and also below the estimate of $3.89 billion; in the aftermath of the recent disastrous earnings from GrubHub, investors will be especially worried about this business line.
• Ridesharing bookings $12.55 billion, +3% Q/Q, up 20% Y/Y, and slightly above the estimate of $12.51 billion

Looking ahead, Uber provided a glimmer of hope that the cash burn may moderate and the company “improved” its full year Adjusted EBITDA guidance by $250 million to a loss of $2.8-2.9 billion, from $2.9-$3.0 billion previously.

However, the biggest concern is that despite the sizable improvement in revenue, the company’s adjusted Ebitda loss of $585 million was still staggering, and while it was a modest 11% improvement quarterly, and better than the estimated EBITDA loss of $805.1 million, it was still 28% greater compared to a year ago, as the business refuses to scale.

As Bloomberg summarizes, “Eats bookings, gross bookings and total active users were all below estimates” and while financial discipline is beginning to assert itself, “investors want those forward-looking estimates to keep going strong.” Alas, so far they are not. And as a result, the stock tumbled as much as 7.5% after hours before recovering some losses.

Which brings us to the right question as the stock tumbles just shy of its post-IPO low: when will the analysts covering the company shift from Buy to, well, reality.

Do any of them think it’s a sell now? pic.twitter.com/nztNWrkflZ

— Hipster (@Hipster_Trader) November 4, 2019

Why are stocks soaring? Simple – it’s the fun-durr-mentals, stupid!

Source: Bloomberg

And everyone is chasing it now…

Chinese stocks all ended the day higher, but the afternoon session saw some giveback…

Source: Bloomberg

European stocks were all higher on the day, UK’s FTSE the laggard, Italy leader…

Source: Bloomberg

European equities surged to their highest level since August 2015 as miners to automakers advanced on optimism that U.S.-China trade talks are progressing.

Source: Bloomberg

Major US equities indices were all higher (Dow joining the party at record highs) with Trannies outperforming (NOTE – the indices basically did nothing from the US cash open onwards – except Trannies)…

 

Futures show the action a little better with the US-China deal headlines sparking a pre-open ramp to record highs and then once Europe closed, stocks faded…

Defensives were straight down from the open as Cyclicals gapped open (short-squeeze – see below)

Source: Bloomberg

Momo stocks were massacred, extending Friday’s plunge… this is the biggest 2-day drop since the peak of the quant quake in September…

Source: Bloomberg

As Michael Krause (@michaelbkrause) noted so succinctly: “Junk stock short squeeze day. L/S momentum falling apart, value not picking up the slack, and most volatile stocks killing it… The pious quants with a long-term research-driven view are off-sides today.”

And sure enough, “most shorted” stocks ripped at the open, thanks to yet more trade deal rumors…

Source: Bloomberg

And as momo melts down, stocks soar to record highs but Bloomberg’s SMART money flow indicator signals the big boys are not playing along…

Source: Bloomberg

Treasury yields were all higher on the day with the long-end notably underperforming…

Source: Bloomberg

Which sent the yield curve notably steeper – erasing the post-Powell flattening…

Source: Bloomberg

30Y yields spiked 8bps today but if the quant quake is anything to go by, the yield should be soaring back near 3.00%…

Source: Bloomberg

Notably, the market expects just 1.2 more rate-cuts by the end of 2020 – dramatically less dovish than the 5 cuts expected in early September (2 of which have been delivered)…

Source: Bloomberg

The dollar surged back to the lows of FOMC day…

Source: Bloomberg

Bitcoin and Ethereum trod water since Friday with Bitcoin Cash and Litecoin outperforming…

Source: Bloomberg

PMs were lower on the day, copper and crude gained but the latter gave plenty back after Europe closed…

Source: Bloomberg

WTI held on to its $56 handle but couldn’t hold the $57 intraday…

And while gold slipped, it remains above $1500…

Gold/Oil is back at the upper end of its long-term rang again…

Source: Bloomberg

Since Powell’s dovish inflation comments, gold remains the leader – despite stocks surge today…

 

And finally, investors haven’t been this ‘Extremely Greedy’ since 2017…

Source: CNN

More than two years after President Trump infuriated the European Union (and particularly Germany and France) by declaring his intentions to pull the US out of the Paris Climate Accord, Secretary of State Mike Pompeo on Monday officially began the yearlong process, according to a statement released by his office.

“Today the United States began the process to withdraw from the Paris Agreement,” announces @SecPompeo in statement. pic.twitter.com/2koe8srxWu

— Steve Herman (@W7VOA) November 4, 2019

Trump made the initial announcement on June 1, 2017. The earliest possible withdrawal date is Nov. 4, 2018.

Greta Thunberg and her Hollywood comrades will undoubtedly have something to say about the decision.

Columnist E. Jean Carroll – who gave a bizarre series of interviews and wrote a book (which bombed) claiming that President Trump sexually assaulted her in a Bergdorf Goodman dressing room in the 1990’s, is back.

The 75-year-old Carroll, who stunned CNN‘s Anderson Cooper when she said “I think most people think of rape as being sexy,” is now suing Trump for defamation.

And while Carroll can’t remember if Trump penetrated her “halfway – or completely,” she refuses to use the term ‘rape’ for what she says happened.

“I am filing this on behalf of every woman who has ever been harassed, assaulted, silenced, or spoken up only to be shamed, fired, ridiculed and belittled,” said Carrol, who seeks unspecified compensatory and punitive damages, according to the Washington Post.

Responding to the news, White House Press Secretary Stephanie Grisham on Monday called the lawsuit “frivolous,” saying Carroll is a “fraud.”

“Let me get this straight – Ms. Carroll is suing the President for defending himself against false allegations?” she asked. “I guess since the book did not make any money she’s trying to get paid another way. The story she used to try and sell her trash book never happened, period. Her version of events is not even feasible if you’ve ever tried on clothing in a dressing room of a crowded department store. The lawsuit is frivolous and the story is a fraud – just like the author.”

Authored by James Howard Kunstler via Kunstler.com,

How Far Will They Go?

CBS-News carried another bucket of muddy water for the coup team Sunday night with a lead 60 Minutes agit-prop story on Maria Butina, an ambitious Russian cutie who worked the American NRA circuit in the most public manner imaginable to make herself into a sex-bomb celebrity at the exact the moment in history when the US Deep State wished to reinforce the fantasy, as Lesley Stahl put it, that “Russia was interfering in our electoral process.”

Of course, Ms. Stahl and her shifty producers left out half the story: how Maria Butina was manipulated by her FBI-handler and sometime-boyfriend, Patrick Byrne, the former Overstock.com CEO who had been employed by the Bureau over the years on other undercover assignments. They didn’t mention him or seek to understand his role in the operation. But they gave plenty of air-time to the DOJ lawyer, John C Demers, who prosecuted Ms. Butina, and never bothered to ask Demers why Butina was not charged with espionage — perhaps because nothing remotely like that occurred.

How media giants like Ms. Stahl can keep mouthing this malarkey designed to stoke a new cold war is one of the great mysteries of our national psychology these days. You’d think they’d learned something from the train wreck of the Mueller Investigation, the Brett Kavanaugh fiasco, and the current debacle of Adam Schiff’s imploding Ukraine whistleblower caper — namely, that spouting lies will eventually get you found-out and disgraced.

But the coup team is now dangerously stuck tripling and quadrupling down on its fairy tale narrative as the reckoning of its dark deeds approaches and its star players await their turns on the witness stand. Half the country has been waiting patiently for authorities-of-standing to put an end to this Hitchcockian campaign of seditious fog that has driven us close to the brink of a second civil war. That half of the country has actually been reading the evidence of this treason and sedition — underwritten by Hillary Clinton and her allies — on the back-channels of the Internet. None of that evidence has been posted through the main media outlets wholly owned by the coup team, gospel to the other half of America, and soon millions of credulous bystanders who got high on three years of CIA-issued RussiaGate Kool-Aid will get the surprise of their lives when they discover how deeply they were played.

The CIA and the FBI are in a fight for their lives now. The evidence shows pretty clearly that these rogue agencies conducted all the election “meddling” of 2016 and that the RussiaGate hysteria was an engineered smokescreen to hide their tracks and cover their asses when the certainty of a Hillary election triumph nauseatingly resolved unfavorably in the cold, gray dawn of 11/8/16. Despite the chatter about an “insurance policy,” they were quite unprepared for the exposure that loomed.

They also badly underestimated the resources of what is now a very sturdy alt.media which has managed to weave the real story of what happened over the past three years into a shocking tapestry of massive subversion and treachery. A big part of the true story is how amazingly incompetent the RussiaGate coupsters were. Did they really believe they could conceal the ties between their agencies and Glenn Simpson’s Fusion GPS operation, and its feckless front man, British ex-spy Christopher Steele, and the whole outfit’s connection to Hillary Clinton and the Democratic National Committee? Did they suppose they could pass off Stephan Halper and Joseph Mifsud as Russian agents when the two have consorted with US and allied intelligence for decades? The US Department of Defense even holds Mr. Halper’s million-dollar pay stubs and Mr. Mifsud appears in photographs of every Western cloak-and-dagger cocktail get-together of spook officialdom for the last twenty years.

The latest, and most desperate gambit is the UkraineGate whistleblower, a CIA employee blatantly playing errand-boy for his mentor John Brennan and deeply tied to 2016 election shenanigans emanating from Ukraine, featuring his former employee, ex-Vice-President Joe Biden. This shadowy figure, pegged as Eric Ciaramella, 33, may shortly find himself in a grand jury chamber answering for his role in this charade. Ciaramella has just been hung out to dry by his sponsor, Rep. Adam Schiff in a desperate attempt to dissociate himself from the huggermugger within his House Intel Committee that preceded the falsely blown whistle.

It’s not an overstatement to say that many of the figures behind this gigantic web of lies and deceit ought to answer charges up to and including treason. The question is whether Messers Barr & Durham have the cojones to cater the banquet of consequences that this huge cast of characters should be made to feast from. Another question is whether these desperate characters and the agencies they represent will go all the way now and attempt to enlist the military brass in an outright overthrow of the executive. There are already intimations of this. It would be answered by the kind of civil violence that has broken out in other parts of world where other Deep States have worn out their welcome — and their legitimacy.

Shortly after our latest discussion how JPM’s drain of liquidity via Money Markets and reserves parked at the Fed may have prompted the September repo crisis and subsequent repo and “Not QE” in order to reduce its at risk capital and potentially lower its G-SIB charge currently the highest of all major US banks, we not only got confirmation that the biggest US bank has been quietly rotating out of cash, but was also busy repositioning its balance sheet in another major way.

According to an overnight report from the FT, one which confirms what we already disclosed previously, namely that JPMorgan pushed more than $130bn of excess cash away from reserves in the process significantly tightening overall liquidity in the interbank market , the bulk of this money was allocated to long-dated bonds while cutting the amount of loans it holds, in what the FT dubbed was a “major shift in how the largest US bank by assets manages its enormous balance sheet.”

The moves saw the bank’s bond portfolio soar by 50%, and were prompted by capital rules that treat loans as riskier than bonds. And since JPM has been aggressively returning billions of dollars to shareholders in dividends and share buybacks each year, JPMorgan has far less room than most rivals to hold riskier assets, explaining its substantially higher G-SIB surcharge.

An executive at a large institutional investors told the FT that what JPM did “is incredible”, adding that “the scale of what JPMorgan is doing is mind-boggling . . . migrating out of cash into securities while loans are flat.”

The dramatic change, which occurred gradually over the year, and which may have catalyzed the spike in repo rates in September, was first flagged by JPMorgan at an investor event back in February. Then CFO Marianne Lake said that, after years of industry-leading loan growth, “we have to recognize the reality of the capital regime that we live in”.

So what exactly did JPMorgan do?

The biggest US bank by assets shrank its loans portfolio by 4%, or about $40bn, year to date; at the same time as selling off mortgages, the bank has reduced the amount of cash on its balance sheet and used it to buy long-dated bonds.

And in what may perhaps be a bet that sooner or later the Fed will launch a full-blown QE which again targets mortgage-backed securities, the FT notes that MBS account for the bulk of securities growth; an alternative regulatory reason is that banks can hold much less capital against mortgage bonds than the underlying home loans themselves.

Commenting on JPM’s strategist capital reallocation, Jeffery Harte of Sandler O’Neill said that JPMorgan’s revisewd approach “comes down to an economic decision: they can make more money selling [loans] than buying them.”

As the FT notes, Bank of America, JPM’s closest competitor, has more headroom under the Federal Reserve’s capital rules and continues to grow its loan portfolio. It has added $43bn in loans so far in 2019, largely but not exclusively mortgages. The contrasting strategy, analysts said, reflects its larger cushion under the Federal Reserve’s stress-testing regime.

And while JPMorgan continues to generate strong profits “and could add more risk to its balance sheet if it wanted to” it prefers to send the ample money it generates back to its shareholders. As a reminder, as disclosed during the latest stress test, JPM’s plans for the year ahead include $32bn in buybacks and dividends, more than the total net income the bank earned last year.

Steven Chubak of Wolfe Research said that JPMorgan “is doing the right thing given its idiosyncratic capital constraints,”  but the greater freedom afforded to BofA means it has “more capacity to grow loans which typically generate a higher spread” — and as such more room for profit growth.

Others are more skeptical: according to Charles Peabody of Portales Partners, who projects a bleak outlook for the banking industry, sees JPMorgan’s balance sheet choices as part of a larger risk-reduction strategy. The bank, he said, was “acting like the [next] recession is here — everything the bank is doing points that way.”

That’s certainly true, but the bigger picture here is just as fascinating: in order to boost interbank funding, and to force the Fed to inject more liquidity into the system, JPM first drained reserves and hit money markets…

… which in turn forced the Fed to boost its balance sheet by a whopping $250 billion in just the past 7 weeks as we noted earlier.

In other words, to ensure that JPM’s tens of billions in buybacks and divdends continue smoothly, Jamie Dimon may have held the entire US financial system hostage, forcing the Fed’s hand to restart “Not QE.”

In a development that doesn’t bode well for the future of public safety in America’s largest city, veteran NYPD Commissioner James O’Neill is reportedly expected to resign his post as soon as Monday, according to a report in the New York Post.

James O’Neill

The city’s top police official has been rumored to be on the cusp of resigning for months now, and it’s likely that he will make it official during a press briefing scheduled for Monday afternoon. His departure comes just over three years into his tenure.

The impetus for his departure is obvious: He refused to fire Officer Daniel Pantaleo, the cop who killed Staten Island resident Eric Garner back in 2014 as officers were trying to subdue him while placing him under arrest for selling untaxed cigarettes. Pantaleo was finally fired in August for allegedly placing Garner in an illegal chokehold that led to his death. Pantaleo is now suing the city, and O’Neill’s decision to go along with a judge’s recommendation to fire Pantaleo – who was acquitted on murder charges stemming from the killing – badly damaged his support among rank-and-file cops.

O’Neill’s departure caps off a career in policing that began more than 30 years ago when the East Flatbush native joined the NYC Transit Police at the age of 25 back in 1983. The transit police merged with the NYPD in 1995, and O’Neill subsequently worked his way up the ranks in the department, serving as a commanding officer in three districts.

O’Neill’s decision comes at a difficult time for the NYPD. NYC residents who have been incensed by the rash of police shootings that helped launched the “Black Lives Matter” movement are becoming increasingly hostile to the NYPD, often treating them more like an occupying force than the public servants responsible for a staggering drop in the city’s crime rate since it peaked in the early 1990s. Under O’Neill’s leadership, the city’s murder rate hit an all-time low during the first half of this year.

Without the work of the NYPD, the many “hip” Brooklyn neighborhoods that have been caught up in the wave of gentrification in the borough over the past 15 years would still be too dangerous for all the young, white twentysomethings who migrated there to find work (or to waste their rich parents’ money).

New York’s CBS News affiliate reported last week that an NYPD vehicle was vandalized on Halloween Night. A small group of residents were seen laughing and taunting two police officers cleaning up the vehicle in a brazen show of disrespect.

Still, the officers at the scene showed tremendous restraint while cleaning the broken eggs, rotten food and cardboard covering their vehicle. The officers were responding to a domestic dispute call nearby when the incident occurred.

Over the summer, a similar incident garnered national attention when gang members dumped buckets of water on an NYPD officer’s head.

With Mayor Bill de Blasio still in power, finding a replacement for O’Neill could prove difficult: De Blasio has developed a reputation for being hostile to his own police force, often taking the side of SJW activists over his own top police officials. Given the utter lack of support he has been shown during his tenure, the only surprising thing about O’Neill’s departure is that he managed to hang on for this long.

As anti-corruption protests in Lebanon and Iraq have raged and quickly turned into massive anti-government protests, with the latter much fiercer and more violent, now with over 250 Iraqis killed and nearly 10,000 wounded, there’s growing fears that in both countries a Syria-style broader proxy war could emerge. 

Iran has accused the US and Israel for stoking unrest, while Washington and Tel Aviv officials see ‘Iranian expansion’ and meddling as the true culprit. It appears that some Iraqis agree, given the Iranian consulate in the city of Karbala came under attack Sunday, in the latest sign of public backlash over perceived Iranian control of Baghdad political leaders. 

“Protesters scaled the consulate’s walls late Sunday while hauling an Iraqi flag. Security forces fired rubber bullets to disperse protesters who were throwing Molotov cocktails over the wall,” The Wall Street Journal reported based on local video of the attack. 

It came after last week Ayatollah Ali Khamenei blamed foreign powers for unrest gripping Iraq and Lebanon. “I recommend those who care in Iraq and Lebanon remedy the insecurity and turmoil created in their countries by the US, the Zionist regime, some western countries, and the money of some reactionary countries,” Khamenei stated using his official social media accounts.  

This also as Iran has been blamed for intervening to prevent the ouster, via forced resignation, of Iraq’s Prime Minister Adil Abdul-Mahdi amid the popular protests and mayhem. 

We reported last week that during a surprise visit by Qassem Soleimani, the head of the IRGC international offshot Quds Force, the powerful military chief intervened by asking al-Amiri and his Iranian-backed militias to continue supporting Abdul Mahdi. Several senior Iraqi officials have told reporters that Soleimani showed up at a secret meeting in Baghdad on Wednesday that was supposed to be run by Abdul Mahdi, according to Israeli newspaper Haaretz.

Soleimani and many of the militia leaders who are loyal to Amiri raised concerns at the meeting that ousting Abdul Mahdi could weaken the Popular Mobilization Forces, an umbrella group of mostly Iran-backed Shiite militias who have allies in the Iraq’s parliament and government.

Watch as the Iranian consulate in the central Iraqi city of Karbala, south of Baghdad is torched:

And now, with his position firmly in place for now, PM Abdul Mahdi on Sunday issued a public message calling on demonstrators to “return the country to normal” — but made no mention of plans to step down. 

“Threatening the oil interests and blocking roads leading to Iraq’s ports is causing big losses exceeding billions of dollars,” he said, according to the WSJ. 

Anti-Iran anger has been particularly fierce in the restive southern provinces, given the important Shia pilgrimage centers in places like Karbala, where it’s believed Iran’s influence is felt most strongly and directly.  

Indeed the ‘proxy war’ nature of what’s unfolding in Iraq is increasingly tanking center stage, as President Trump himself tweeted about Monday morning:

Donald Trump is retweeting Saudi regime propaganda cheering over an attack on the Iranian consulate in Iraq.

Trump obviously doesn’t read Arabic, so it’s clear someone sent him this tweet from a Saudi monarchy-funded anti-Iran propaganda outlet so he could amplify it pic.twitter.com/hmpTFWF2sD

— Ben Norton (@BenjaminNorton) November 4, 2019

For example the Iranian consulate in Basra was torched by a mob last year, in events very similar to Sunday’s incident. During Sunday night’s unrest which saw the consulate in Karbala set ablaze, at least three protesters were killed by security forces.

Iran-backed Iraqi Shia militias have reportedly been increasingly involved in assisting security forces in putting down the popular unrest which has swept the country – by some accounts even deploying snipers.

Authored by Mike Shedlock via MishTalk,

After more than a decade, Waymo’s driverless ride-hailing service is open to customers. For now, it’s free.

TechCrunch discusses Hailing a Waymo Driverless Taxi.

“Congrats! This car is all yours, with no one up front,” the pop-up notification from the Waymo app reads. “This ride will be different. With no one else in the car, Waymo will do all the driving. Enjoy this free ride on us!”

It marks the beginning of a driverless ride-hailing service that is now being used by members of its early rider program and eventually the public.

Limitations

• The company’s driverless rides are currently free and only taking place in a geofenced area that includes parts of Chandler, Mesa and Tempe.

• Even Waymo vehicles with safety drivers don’t yet take riders to one of the most popular ride-hailing destinations: the airport.

• The everyday interactions between a passenger and an Uber or Lyft driver, such as conversations about pick-up and drop-offs as well as sudden changes in plans, become more complex when the driver is a computer. It’s an area that Waymo’s user experience research (UXR) team admits it is still figuring out.

• Computers and sensors may already be better than humans at specific driving capabilities, like staying in lanes or avoiding obstacles (especially over long periods of time), but they lack the human flexibility and adaptability needed to be a good mobility provider.

Pooh Poohs Coming

I expect many readers will pooh-pooh this story with the usual nonsense about weather, old men on roller skates veering into traffic, liability issues, theft, and other silliness.

The fact of the matter is this is 2019.

I expected trucks, not taxis would be far in front. And they likely still are.

City driving where riders might change their minds is far more complex that point-to-point trucking from interstate hub to hub. Taxi adoption is likely to be slower.

The primary thing holding up hub-to-hub trucking is national regulation. I expect to see that next year.

Once allowed, interstate truck driving will quickly adopt. Commercial taxis will have a longer adoption period.

Personal Anecdote

The limo service I typically take to the airport just got rid of all its limos and drivers. The drivers are now contractors and must own their own vehicles. Those who refused were fired.

With that change, the owner’s business model morphed into taking a percentage of the fare for scheduling rides rather than owning any vehicles and hiring drivers.

Within five years or less, those jobs will be gone.

Driverless Has Arrived

Driverless is here. The only debate is how fast it ramps up.

I suggest that within a 2-3 years of federal regulation, the majority of truck on the interstates will be driverless.

Even faster would not be a surprise.

Just hours after McDonalds unexpectedly fired its CEO late on Sunday because of his relationship with an employee, the company also announced that its top human-resources executive also left the company.

McDonald’s said its Chief People Officer David Fairhurst had left the company on Monday, without providing any details. Fairhurst, a 15-year veteran of the company, had worked with Easterbrook for McDonald’s in the U.K. and was promoted to the top human-resources job soon after Easterbrook became CEO in 2015, the WSJ first reported.

The company declined to comment on the nature of Fairhurst’s departure. Mason Smoot, an SVP who oversees strategic alignment and staff, will replace Fairhurst on an interim basis.

Earlier this year and following an inquiry from U.S. Senator Tammy Duckworth, McDonald’s said it was training workers to deal with harassment and starting a hotline for victims. In a response to Duckworth, an Illinois Democrat, Easterbrook said the company’s new strategy creates “a clear message that we are committed to creating and sustaining a culture of trust where employees feel safe, valued and respected.”

Separately, McDonalds reported in a Monday 8K that it would pay now former CEO Easterbrook six months in severance, and would grant him 18 months of health benefits. It wasn’t clear if Easterbrook would also get free hamburgers for life to make sure he uses those health benefits ASAP.

McDonalds also said the agreement absolved the company of any liability resulting from Easterbrook’s termination and barred him from working for another fast-food company for two years.

As part of the agreement, the former CEO will also will keep stock awards vesting within three years of his firing and forfeit later awards. He will be eligible for a prorated bonus for the current fiscal year determined by the company’s performance. This means that Easterbrook will get to keep unvested stock options worth about $23.5 million and possibly benefit from grants of restricted shares tied to the company’s performance that are worth roughly $13.8 million at their target payouts, according to calculations by Bloomberg. He’s also eligible for a pro-rated bonus for his work in fiscal 2019.

In return Easterbrook agreed to refrain from making disparaging comments about the company and would cooperate with any investigations or litigation arising from matters he has knowledge about.

As Bloomberg notes, not all CEOs who lose their jobs under similar circumstances fare so well. Brian Krzanich, who was fired by Intel last year after the board learned he had a consensual relationship with an employee, surrendered equity awards worth tens of millions of dollars and received no severance. A McDonald’s representative didn’t immediately respond to a request for comment about why the board opted against terminating Easterbrook “for cause.”

Easterbrook, who received $15.9 million in total compensation last year, will receive the severance six months after his termination date, Nov. 1. McDonald’s said on Sunday that it had appointed Chris Kempczinski, its former head of U.S. operations, to succeed Easterbrook immediately.

As the WSJ notes, Kempczinski, 51, and Easterbrook, 52, worked closely on a strategy in recent years to try to boost traffic at US restaurants through spending on new technology and menu items with fresher ingredients. As MCD’s recent press release showed, the company’s sales had risen thanks to those efforts and price increases, but traffic in the U.S. has remained largely flat and franchisees have pushed back at the costs of renovating restaurants and changing operations. Kempczinski said in an interview on Sunday that he would stick with the strategy and continue to discuss it with franchisees.

McDonald’s said Monday that it set Mr. Kempczinski’s base salary at $1.25 million. Mr. Easterbrook’s base salary last year was $1.35 million.

While investors were displeased with the unexpected CEO departure, pushing MCD stock lower on Monday, the burger chain faces other, more pressing problems: as traffic to burger chains slows generally in the US, McDonald’s is also facing threats to other parts of its business such as breakfast. A part of the day it once dominated with Egg McMuffins and hash browns has seen rival chains pile in as they also hunt for growth. The chain has still posted same-store sales growth in the U.S. and globally under Easterbrook’s watch.

As we reported last month, McDonald struck a number of technology deals to try to boost sales and improve operations. Those deals are driving up expenses. Kempczinski said in an interview Sunday that he expects them to eventually pay off, and he intends to keep Mr. Easterbrook’s focus on technology.