Tag: finance

In a surprisingly non-partsian take by Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, the California senator said that Congress should investigate whether, as we discussed previously following Comey’ dramatic testimony last Thursda, former Attorney General Loretta Lynch pressured former FBI Director James Comey to cover for Hillary Clinton’s presidential campaign.

“I think we need to know more about that,” Feinstein told Briana Keilar on CNN’s State of the Union, adding that “there’s only way to know about it, and that’s to have the Judiciary Committee take a look at that.”

As we noted last Thursday, Comey testified last Thursday that it gave him a “queasy” feeling after Lynch asked him to characterize his probe into Clinton’s emails as a “matter,” rather than an investigation. He told the Senate Intelligence Committee that such a request would match the wording of Clinton’s campaign.  Feinstein said she would’ve also felt queasy.

“I would have a queasy feeling, too, though, to be candid with you,” the longtime Senate Democrat said. She added that an investigation separate from the ongoing probe into Russian interference in the election is needed.

“I don’t think we should mix the two,” she added.

That said, when asked who do you believe, Trump or Comey, Feinstein said that “At this point, the FBI director”

Separately, Feinstein said she has not yet decided from Comey’s testimony whether Trump’s interactions with the ex-FBI director amount to obstruction of justice. “I don’t know whether it’s obstruction of justice. I don’t intend to draw any conclusions until investigations are finished,” she added.

Trump on Friday denied that he asked Comey to let “go” of his investigation into former national security adviser Michael Flynn and that he requested Comey pledge his loyalty to him prior to Comey’s dismissal.  The president added that he is “100 percent” willing to testify about his interactions with Comey under oath, while playing down reporters’ inquiries if he did in fact have “tapes” of his conversation with Comey.

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Former US Attorney Preet Bharara told George Stephanopoulos that there’s “absolutely” enough evidence to justify investigating President Donald Trump on charges that he committed obstruction of justice, in the latest attempt by a disgruntled ex-employee to join the "Comey parade" and speculate about Trump's ulterior motives when Bharara was terminated earlier in the year.

“I think there’s absolutely evidence to begin a case [of obstruction],” Bharara told Stephanopoulos during an appearance on ABC’s “This Week” on Sunday.

 

"I think it’s very important for all sorts of arm chair speculators in the law to be clear that no one knows right now whether there is a provable case of obstruction. It’s also true I think based on what I see as a third party that there’s no basis to say there’s no obstruction.”

Since his firing, Bharara has tried to position himself as a prominent figure in the anti-Trump “resistance.” In a dramatic op-ed penned back in March, Bharara questioned the judgment of lawmakers and appointees who cooperate with Trump.

Former US Attorney Preet Bharara to @ThisWeekABC: "There's absolutely evidence to begin a case" for obstruction of justice against Trump. http://pic.twitter.com/vLbGe2kyix

— ABC News (@ABC) June 11, 2017

As ProPublica reported, Bharara prosecuted two of the infamous “three men in a room” who ran New York state: Sheldon Silver, the Democratic speaker of the assembly and Dean Skelos, the Republican Senate majority leader. But Bharara was much less aggressive when it came to confronting Wall Street, choosing to go after easy targets – like pursuing insider trading cases against hedge funds – while dropping a probe into Lehman Brothers that he inherited when he was appointed by Obama in 2009.

As the Wall Street Journal noted, Bharara told Stephanopoulos that he was fired less than a day after declining to return the third in a series of phone calls from the president, two of which were made before the inauguration.

“The call came in, I got a message, we deliberated over it, thought it was inappropriate to return the call and 22 hours later I was asked to resign along with, you know, 45 other people.”

Bharara said he was hesitant to return Trump's calls because he believed it would be improper for him to have direct contact with the president, whose business Bharara was tasked with overseeing as the US attorney in the district where the Trump Organization is based.  “There has to be some kind of arm’s length relationship given the jurisdiction various people have.”

However, Bharara said he couldn’t draw a direct connection between the calls and his dismissal.

“To this day, I have no idea why I was fired,” he said.

Bharara was asked by Attorney General Jeff Sessions to resign in March, along with 45 other US attorneys who were Obama appointees. When he refused to resign, he was fired. While Bharara chose to make a stink about his firing on twitter, “it is common for U.S. attorneys to leave with a change in administration,” as WSJ noted.

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With roughly 50% of eligible voters expected to cast their votes in today’s first round of the French parliamentary election…

…  projections show Macron’s Republique en Marche party winning by a landslide, set to hold a giant majority with anywhere between 400 and 445 seats in the 577-member National Assembly.

As Reuters adds, according to two pollsters, IPSOS and Kantar Sofres, his Republic On the Move (LREM) party and its ally Modem were set to win well over 400 seats in the 577-seat National Assembly.

Kantar Sofres:

• REM (Macron) 33.5%
• The Republicans 20.8%
• National Front 13.1%
• France Unbowed 11.3%
• Socialists + allies 9.5%

IPSOS:

• REM (Macron) 32.2%
• The Republicans 21.5%
• National Front 14.0%
• France Unbowed 11.0%
• Socialists + allies 10.2%

As a result of the two pols, Macron will hold between 415 and 445 seats (Elabe) while a poll by Kantar Sofres put it at between 400 and 445.

A final round of voting to be held on June 18 will determine the actual number of seats Macron wins. Today’s round eliminates candidates who have gathered less than 12.5% of registered voters.

The ironic outcome of today’s vote is that France is set to have a far more stable government than the UK, where after last week’s loss, the countdown on Theresa May’s political career has begun.

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Authored by Eugen von Bohm-Bawerk via Bawerk.net,

Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees across the world. None of the econometrics models provide a solution for the growing gap in pension funding, other than unsustainable debt accumulation.

Creativity cascaded to the less sophisticated pension fund managers. In a desperate reach for yields they increased exposure to project finance.

Perceived higher returns, long-term investment horizon and inflation protection made it the perfect match for pension funds. However, like their central banker peers, pension fund managers were completely mistaken. Actual risks were largely underestimated. The binary nature of cashflow risks makes conventional risk measures meaningless.

This is best illustrated by looking at the cumulative default rates of project finance (1991-2011) in North America, which exceeded the default rate of the non-investment grade Ba bonds in the first 6 years and is more than triple that of investment grade default rates.

The European Investment Bank (EIB) decided to ride the wave of project finance and waste taxpayers’ money by providing loans and insurance on risks that EIB cannot remotely comprehend. They ignored the fact that mono-liners in the US did the same a decade ago and paid a hefty price when the bubble burst where almost all bond insurers went out of the market.

EIB did not find a better place to start its program other than Spain. A country with a remarkable record of failed PPP infrastructure projects and more than 30 bankrupt ghost airports for sale. The clueless EIB bureaucrats invested in the EUR 1.4 Billion Castor Gas Storage project.

A marvelous system that stores one third of Spain’s gas consumption but has a single problem. Operating the facility causes “minor” earthquakes.

In less than a year, it was permanently closed and EIB left the indebted Spanish government with an additional EUR 1 Billion to pay. Eventually, the next financial shock will catchup to EIB and no one knows if taxpayers will be able to bail them out.

In the meantime, retirees continue to bear the consequences of the compounded creativity of central bankers, pension fund managers and government bureaucrats with nothing left to do other than electing equally creative politicians.

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If there was any confusion on which side of the Qatar crisis Iran found itself, it was swept away today after Iran’s Tasnim news, cited by Turkey’s Anadolu Agency, reported that Iran plans to send two warships to Oman on Sunday. The two ships will depart using Iran’s southern waters off the port city of Bandar Abbas for an overseas mission to the Arab Peninsula state and then on to international waters.

On Sunday, the 47th flotilla, comprised of an Alborz destroyer and Bushehr logistic warship, set sail from the southern port city of Bandar Abbas, Tasnim reported. From Oman, the ships will then head to the Gulf of Aden and international waters north of the Indian Ocean. At the same time, Iran’s 46th flotilla consisting of a Sabalan destroyer and Lavan logistic warship, is due to return to Iran on Sunday after completing a two-month mission to secure naval routes and protect merchant vessels and oil tankers in the Gulf of Aden.

Separately, Reuters reported that amid food shortages after Qatar’s biggest suppliers severed ties with the import-dependent country, Iran has dispatched four cargo planes of food to Qatar and plans to provide 100 tonnes of fruit and vegetable every day. Qatar has been holding talks with Iran and Turkey to secure food and water supplies after Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut links, accusing Doha of supporting terrorism. Qatar, which has claimed the terrorism-funding allegations are lies, on Friday hired John Ashcroft to serve as a PR crisis mediator in the US and to defend against terrorism accusations, for which he will be paid $2.5 million for 90 days of his time.

“Following the sanctions … on Qatar, IranAir has so far transported food and vegetables to this country by four flights,” Shahrokh Noushabadi, head of public relations at Iran’s national airline, was quoted as saying by Fars news agency. The head of the industries, business and trade organization in the Fars province was also quoted by the Tasnim news agency as saying on Sunday the first planes carrying food to Qatar had flown from the southern city of Shiraz.

“Every day we will export 100 tonnes of fruits and vegetables to Qatar,” Ali Hemmati said, with Reuters providing more details:

An Iranian diplomat in Doha said three cargo planes from Iran were landing in Qatar each day, bringing mostly fruit and vegetables. The diplomat also said small boats were bringing some less perishable produce.

 

“Dozens of Iranian businesses are ready to help Qatar with more goods if they are needed,” the diplomat said.The head of Iran’s livestock exporters said on Sunday they had exported 66 tonnes of meat to Qatar in the last two days.

 

“We will also be sending 90 tonnes of meat in the coming week,” Fars quoted Mansour Pourian as saying.

Why the push by Iran and Turkey to prop up Qatar in the ongoing spat? According to Lebanon’s ex-parliamentary speaker Ili al Farzali, “If Qatar loses its influence in the Middle East, so will Turkey.”

Interviewed by Sputnik, Farzali said that Tte current crisis over Qatar is just the tip of the iceberg of the ongoing struggle for influence in the Sunni world.

“I see this conflict around Qatar also as a war against Turkey in the Sunni world. Assuming that Qatar is indeed a sponsor of terrorism, namely the Muslim Brotherhood, which is the most influential Sunni party both in and outside the Arab world. If Qatar stops supporting it, this would also have a negative impact on Turkey, which has until now been building up its influence in the Arab world,” Ili al Farzali said.

“The Americans want oil and money and they just don’t care about what is going on there. Trump has made this perfectly clear,” Ili al Farzali noted. Meanwhile, Turkish President Recep Tayyip Erdogan promised to expand his country’s cooperation with Qatar and pledged every effort to seek a diplomatic solution to the conflict.

Also commenting on the situation, Turkish ex-ambassador to the United States Faruk Logoglu said that Ankara should be careful not to take sides in the ongoing crisis.

Turkey has found itself in a very difficult situation as it maintains close ties with the countries, which have broken off diplomatic relations with Doha. Moreover, we have signed a defense pact with Qatar and are going to open our first overseas military base there. This means that much now depends on the policies Turkey is going to pursue under the circumstances,” Logoglu told Sputnik Turkey.

He said that Ankara should watch its step in this conflict because everything is it says or does could eventually backfire. “Despite its close ties to Qatar, Turkey should avoid taking sides and do what it needs to do if this crisis continues,” Faruk Logoglu noted.

So far the diplomatic fallout from the initial crisis has been contained, although with both Turkey and Iran taking hardline positions against the Saudi alliance by siding with Qatar, this may change quickly (and perhaps violently) in the coming days.

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There appeared to be a glimmer of hope for the restaurant industry last month, when despite ongoing negative restaurant sales and traffic performance in April, BlackBox Intelligence Executive Director, Victor Fernandez said that “there are some reasons to be cautiously optimistic about the second quarter, at least in terms of improvement over what we’ve seen in the recent past” adding that “the move of the Easter holiday meant that April’s results were likely softer than they would have been without this shift, meaning spending in restaurants was probably a little stronger than the numbers show.”

Alas, any trace of optimism was doused with the latest BlackBox snapshot report (based on weekly sales data from over 27,000 restaurant units, and 155 brands representing $67 billion dollars in annual revenue) which found that May was another disappointing month for chain restaurants by virtually all measures.

Same-store sales were down -1.1%, which represents a 0.1% decline from April. At the same time, same-store traffic “growth” also dropped by -3.0% in May, down 3.2% on a rolling 3 month basis. Although traffic results improved from prior month, the growth in check average was lower than it has been in recent months, causing the fall in sales growth vs. March and April.

More concerning is that the restaurant industry has not reported a month of positive sales since February of 2016, according to BlackBox.

The latest report from the National Restaurant Association found much of the same:as a result of softer sales and customer traffic levels and dampened optimism among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a sizable decline in April. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.3 in April, down 1.5 percent from a level of 101.8 in March.

• The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.1 in April – down 2.3% from a level of 101.4 in March. April represented the sixth time in the last seven months with a reading below 100, which signifies contraction in the current situation indicators.
• The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 101.5 in April – down 0.7 percent from March. Although the Expectations Index remained above 100 – signaling the anticipation of generally positive business conditions in the months ahead – it declined to its lowest level in six months.

April’s sharp decline in the RPI was the result of broadbased drops in both the current situation and expectations indicators. And, as BlackBox found, the Natl Restaurant Association confirmed that restaurant operators reported a net decline in same-store sales and customer traffic, which followed modestly stronger results in March. In addition, restaurant operators’ six-month outlook for both sales growth and the economy retrenched from more positive readings in recent months.

Restaurant operators reported a net decline in same-store sales for the sixth time in the last seven months. Only 34% of restaurant operators reported a same-store sales increase between April 2016 and April 2017, down sharply from 57% of operators who reported higher same-store sales in March. 47% of operators said their sales declined in April, up from 30 percent who reported similarly in March.

Restaurant operators also reported softer customer traffic levels in April. Only 26% of restaurant operators reported an increase in customer traffic between April 2016 and April 2017, down from 41 percent of  operators who reported higher traffic in March. Fifty-two percent of operators reported a decline in customer traffic in April, up from 38% in March.

* * *

Discussing the latest results, Fernandez said that “at this point, we believe the most likely scenario for the current quarter will be an improvement over recent quarters, while still suffering negative sales given the current consumer spending trends.” Or, as we would put it, no actual improvement.

Looking at the macro picture,  where there has recentlyy been an upturn in retail spending on most goods and services, adds to the confusion as it stands in stark contrast to the continued decline in sales growth at restaurants. Consumers appear to be maintaining their spending at restaurants – at a declining pace – but increasing it for other goods and services. This change in consumer spending patterns was identified about a year ago and how much longer it will continue is unclear.

Additionally, the restaurant operators’ outlook for the economy is not as bullish as it was in recent months. 22% of restaurant operators said they expect economic conditions to improve in six months, down 15% points from the reading in December 2016. 12% of operators expect economic conditions to worsen in six months, while about two-thirds think conditions in six months will be about the same as they are now.

The details:

• May sales were weak across all segments. Only the fine dining segment was able to achieve very small positive same-store sales growth during the month. The second best performing segment during May was quick service. That soft performance notwithstanding, the best performing segments continue to be those with the lowest and highest average guest checks. “Dining experience on one end and value and convenience on the other seem to continue to be key components of restaurant sales performance based on current consumer spending trends,” said Fernandez.
• The weakest performing segment in May was casual dining. This was a bit unexpected since the segment showed improved performance during the first four months of 2017 after lagging the industry for several years. Casual dining has added a modest number of new units, but same-store sales declines have contributed to its overall loss in market share.
• Despite weak sales results year-to-date, fast casual continues to win the market share battle. It gained the most share in the first quarter of 2017 compared with the same quarter a year ago. Aggressive expansion has driven total sales growth, but increased competition and market build-out have undoubtedly impacted same-store sales for the segment. The only other segment that gained market share year-over-year was quick service.

There is a silver lining: while overall sales continue to decline for most of the industry, there are pockets of opportunity that some brands have capitalized on to boost performance. Dine-in sales have been negative year-to-date, but to-go is up 2.9 percent, perhaps facilitated by recent introductions of smartphone-based ordering. Sales are also up in catering, delivery and drive-thru. From a day part perspective, breakfast and mid-afternoon sales offer continued opportunities for growth, while lunch and, especially, dinner sales continue to stumble.

Ironically, in addition to challenges from falling guest counts and consumer spending, strong challenges continue to confront restaurants in both staffing and retaining enough qualified workers. We say ironically, because as we showed after the latest jobs report, restaurant/fast food/waiter/bartender hiring remains the only strong spot in the US labor market. As the chart below shows, starting in March of 2010 and continuing through April of 2017, there have been 87 consecutive month of payroll gains for America’s waiters and bartenders, an unprecedented feat and an all time record for any job category. Putting this number in context, total job gains for the sector over the past 7 years have amounted to 2.378 million or just under 15% of the total 16.4 million in new jobs created by the US over the past 87 months

And yet, according to BlackBox, restaurant operators are pessimistic regarding the difficulty of recruiting in the upcoming quarters. Part of the problem is that hiring for new restaurant positions has started to pick up again. The number of employees in the chain restaurant sector increased by 1.9 percent during April compared with a year ago, up from 1.5 percent growth recorded in March. The other issue affecting staffing is rising turnover. Turnover rates for both hourly employees and management staff increased again during April. “The turnover numbers that we are reporting are stunning”, said Joni Thomas Doolin, CEO of TDn2K. “Many of the brands that we track are already facing unsustainable levels of staffing vacancies. Most alarming is the fact that over 70% of employees are leaving voluntarily as opportunities for better work increase”.

Meanwhile the overall labor market nearing full employment doesn’t hint at relief for operators any time soon. The consequences of turnover are well documented by TDn2K. Not only does it impact service levels and guest satisfaction, which correlate to traffic and sales, but it is also a huge source of additional costs hurting the bottom line. According to a recent study by People Report, it costs on average about $2,200 to replace a single restaurant hourly employee, while the cost of turnover for all levels of restaurant management is on average about $15,000 per manager.

“The companies who are leading in the marketplace are starting by winning in the workplace. Being a great employer has never been more important,” stressed Doolin.

The summary: after 14 months of continuous declines for the restaurant industry, the end of the tunnel is nowhere in sight.

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Authored by Kevin Muir via The Macro Tourist blog,

I know just enough about the palladium market to get myself into some serious trouble – which means, I don’t know much. But this morning, the popular trader Kid Dynamite tweeted about a surprising development in the palladium futures market.

Usually, metals’ futures markets trade in contangos. The future price is higher than the spot price to account for the opportunity cost of holding (or financing) the long position in the underlying metal.

There is also a cost of storage which needs to be incorporated into this calculation. Arbitrageurs keep the prices in line, and whenever the futures price rises too much, they sell the future, buy the spot, finance the position and arrange for storage. On expiry, they deliver into the futures contract, earning their profit. If the future prices are too cheap, then either arbitrageurs unwind, or might even borrow the metal short to sell in the spot market, and cover by taking delivery for their futures long position. Also natural long buyers who are willing to wait, could buy the forward contract, content to own their metal at a discount to spot later. Assuming there is a properly functioning metals market, the futures price should not deviate too far from the cost of carry.

Which is why today’s action in the palladium market is so interesting. Buyers are willing to pay a large premium for the contracts that expire earlier (which is the exact opposite of what should occur).

Have a look at the prices for the different palladium contracts.

The volumes are small at the front end of the curve, so I can already hear the complaints – that’s not a real market, someone just got squeezed on delivery.

Yet, if there was simply a problem with the June delivery, then we would see the June contract trading at a big premium, and the rest of the curve would be in contango. Instead, the whole curve has inverted.

Here is the chart of the September 2017 versus December 2017 palladium spread.

This is a real spread market that you can trade. So right now, you can enter into a contract to sell palladium in September, receive it back in December, and pocket $24 extra dollars for your work. It’s not just a June delivery problem, the whole curve is inverted.

So what’s going on? Well, let’s take a peek of the spot price of palladium.

It’s up on a stick and breaking out to new highs. Not only that, it’s doing this as the rest of the precious metals are sucking wind.

I realize palladium is more of an industrial metal than a pure precious metal, but not only is it breaking to new highs for this move, but it is actually pushing up against the highs that were hit during the great precious metals bull market of 2011.

One of my trading buddies, the always insightful Ari Pine trades a ton of precious metals, and has been encouraging me to watch the palladium/platinum spread for some time now.

I wish I had listened. Ari was spot on correct that something was happening in the palladium market that deserved our attention (for Ari’s views on gold, click here for his interview on the great Futures Radio Show Podcast).

Palladium has been gaining versus platinum for the past year. Why do we care about this spread? Well, palladium and platinum’s main use is in the fabrication of catalytic converters for automobiles.

And maybe this offers a clue as to why palladium is soaring. I grabbed this palladium FAQ off the web that explains the two metals’ use in cars.

Palladium is mainly used in gasoline engines, while platinum plays a larger role in diesel cars. The Volkswagen emissions scandal effectively killed diesel’s future in passenger vehicles, so maybe this palladium outperformance can be explained by the dramatic switch from diesel to gasoline.

Combine this extra demand with the fact that palladium is a small market that was already suffering from challenging global supply, you had the recipe for a squeeze.

This slide is from North American Palladium’s website presentation from 2015 (it’s tough to find up to date information about palladium):

When I was discussing palladium with Ari this morning, he wryly commented, “now that we have noticed the big curve inversion, the move is probably over.” That’s part of the reason I enjoy talking with him. Ari is probably even more cynical than me.

But I told him that this palladium move was a high standard deviation event. And I reminded him of one of my favourite lines. You know the problem with fading a 4 standard deviation move? It’s almost always right, but not before it becomes a 6 or 7 standard deviation move…

*  *  *

P.S.: For those gold bugs out there, some day I envision this same inversion occurring in the gold futures market, and this palladium episode should be filed away in the playbook for what to expect.

 

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The uber implosion at Uber continues.

Two days after it emerged that Uber CEO Travis Kalanick had fired off a bizarre email in 2013 to hundreds of employees where he listed the conditions under which they could have sex with each other at a company outing in Miami, the WSJ reports that not only is Uber Chief Business Officer Emil Michael said to resign on Monday, just two days after it was reported that Uber’s head of finance Gautam Gupta was departing to take a position at OpenDoor, but that embattled Chief Executive Travis Kalanick “will discuss taking a possible leave of absence when the board of directors of the embattled ride-hailing company meets Sunday morning.”

From the WSJ:

Uber Technologies Inc. executive Emil Michael, one of Chief Executive Travis Kalanick’s closest confidants, is planning to resign as soon as Monday amid an ongoing investigation into the company’s workplace culture, according to people familiar with matter.

 

Mr. Michael, as chief business officer, helped oversee broad strategy initiatives including mergers and acquisitions and fundraising. He joined Uber in 2013 from Klout Inc., which rates users’ online reputation, and had worked as an adviser to technology companies.

Also on the agenda of today’s meeting of the seven-person board is a vote on a series of recommendations from a report prepared by former U.S. Attorney General Eric Holder regarding its workplace.

It was uncertain whether Mr. Kalanick would ultimately take the leave or whether the board would approve of such a measure, which would require finding a temporary replacement in short order.?

Following  a wave of “setbacks and scandals” that have besieged the ride-hailing service earlier this year, many executives have left the company. Uber has been trying to hire a deputy for Mr. Kalanick after a leaked video in February showed Mr. Kalanick berating an Uber driver. Uber is also seeking a CFO.

As noted recently, here is a snapshot of some of the most notable scandals that have emerged, involving the world’s most valuable private company:

1. Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it’s at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.
2. Uber’s newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here’s more on the difficult position of former employers in this case.
3. A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. “I need leadership help,” Kalanick said in an apology he issued shortly after.
4. Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she’s hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who’s leading the investigation.
5. Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars’ registrations were revoked in December because it refused to get the permit.
6. Charlie Miller, one of the two famous car hackers who joined Uber’s Advanced Technology Center in August 2015, announced he’s leaving the company.
7. The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.
8. Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company’s problematic culture isn’t limited to the men who work there.
9. Ed Baker, Uber’s head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.
10. A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.
11. California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.
12. A new report says Uber used a secret program dubbed “Hell’ to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.
13. Waymo sued Uber in civil court, claiming that Uber was using trade secrets stolen from Google to develop Uber’s self-driving vehicles.
14. Uber fires Anthony Levandowski, a star engineer brought in to lead the company’s self-driving automobile efforts who was accused of stealing trade secrets when he left a job at Google.
15. Uber said Tuesday that it had made a mistake in the way it calculated its commissions, at a cost of tens of millions of dollars to its New York drivers, and the company vowed to correct the practice and make the drivers whole for the lost earnings.
16. Uber fires over 20 staff following the release of a report about sexual harrassment in the workplace.
17. Reports emerge that Uber CEO Travis Kalanick fired off a bizarre email in 2013 to hundreds of employees where he listed the conditions under which they could have sex with each other at a company outing in Miami

This list is by no means comprehensive.

According to the WSJ, if the board approves Mr. Kalanick’s leave, “it will mark a huge shift for the embattled CEO who developed a reputation for sharp elbows, a relentless work ethic and a willingness to push the limits of legality to achieve success. Chief of the ride-hailing firm since 2010, Mr. Kalanick has been the face of Uber amid its ascent to the world’s most valuable private company, pegged by investors at $68 billion.”

The seven-member board includes private-equity billionaire David Bonderman ; media mogul Arianna Huffington ; venture capitalist Bill Gurley of Benchmark; an official from a Saudi Arabian government investment fund; co-founder Garrett Camp, who is chairman; early employee Ryan Graves ; and Mr. Kalanick himself.

 

Uber has been conducting its own workplace investigation, including so-called listening sessions and focus groups led by human-resources chief Liane Hornsey and Ms. Huffington. Employees have also been summoned to the law firms’ offices for interviews.

 

The ride-hailing company had planned to release an executive summary for Mr. Holder’s findings to employees and the media, though some investors have called for a full version of the report to be made public.

And then there is the biggest problem of all: Uber’s chronic cash burn.

Uber lost $708 million in the first quarter, despite another rise in revenues. Last year, Uber managed to burn through almost as much cash as NASA’s $4.8 billion budget last quarter. Previously, Bloomberg reported that Uber has burned through at least $8 billion in its lifetime through the end of 2016. While the company had $7 billion of cash on hand as of March 31, along with an untapped $2.3 billion credit facility, inevitably questions will emerge if and when the world’s most previous “unicorn” will ever turn a profit. The company was most recently valued at $68 billion, although in light of the recent turmoil in the C-suite that number will likely be revised significantlly lower.

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Authored by Don Quijones via WolfStreet.com, 

Stockholders and junior bondholders fear another “bail-in.”

After its most tumultuous week since the bailout days of 2012, Spain’s banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers; they took risks in order to make a buck, and they bore the consequences. That’s how it should be. But bank investors don’t like not getting bailed out.

Now they’re worrying it could happen again. As Popular’s final days showed, once confidence and trust in a bank vanishes, it’s almost impossible to restore them. The fear has now spread to Spain’s eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria.

This creature’s shares were sold to the public in May 2013 at an IPO price of €0.40. By April 2014, they were trading above €2, a massive 400% gain. But by April 2015, shares started sinking. By May 2017, they were trading at around €1.20.

But since the bail-in of Popular, Liberbank’s shares have seriously crashed as panicked investors fled. Scenting fresh blood, short sellers were piling in. On Friday alone, shares plunged another 17%. At one point, they were down 38% before bouncing at the close of trading, much of it driven by the bank’s own share buybacks:

In the last three weeks a whole year’s worth of steadily rising gains on the stock market have been completely wiped out. The main causes of concern are the bank’s high risk profile and low coverage rate. By the close of the first quarter of 2017, Liberbank’s default rate had reached 13%, over three percentage points higher than the national average (9.8%), while its unproductive asset coverage rate was just 42.1%, compared to 47% for Banco Sabadell, 48% for Bankia, 50% for CaixaBank and 55% for Unicaja.

Worse still, the vast bulk of the bank’s unproductive assets are real estate investments. After Popular, it is the Spanish entity with most exposure to toxic real estate assets, according to the financial daily El Confidencial — a remarkable feat given the bank already had the lion’s share of its impaired real estate assets transferred onto the balance sheets of Spain’s “bad bank,” Sareb.

It’s not just the bank’s shares that are feeling the pressure. With the memory of what happened to holders of Popular’s junior, subordinate and convertible debt still fresh in their mind, investors are divesting their exposure to Liberbank’s subordinate debt. On Friday alone the bank’s most recent issuance, dating back to March 2017, generated losses of 9.8%.

Liberbank’s management has responded the only way it can — with a slew of denials. The bank is nothing like Popular, it says. It is solidly solvent and its deposits are safe, which is probably true: even the deposits of Popular’s customers are now safe despite the fact the bank had hemmorhaged €18 billion of deposits in the last few weeks of its truncated existence. It was this frantic run on deposits that ultimately sealed its fate, prompting the ECB to conclude that the bank was “failing or likely to fail.”

Banco Popular’s demise is a stark reminder that Europe’s banking woes are far from resolved, despite the trillions of euros thrown at them. “The message the market is sending is that you have to buy solvent banks and stay away from those that pose high risks,” said Rafael Alonso, an analyst at Bankinter, one of Spain’s more solvent banks.

Another Spanish bank that could be considered to pose high risks is Unicaja, the product of another merger of failed cajas that is (or at least was) scheduled to launch its IPO some time in June or July. As things currently stand, the timing could not be worse. The greater the uncertainty over Liberbank’s future, the lower the projected valuation of Unicaja’s IPO falls. Before Popular’s forced bail-in and acquisition, the Unicaja was valued at around €2.3 billion; now, just days later, it’s valued at less than €1.9 billion. If the trend continues, the IPO will almost certainly be shelved.

As for Liberbank, if things don’t improve soon and investor nerves aren’t steadied, it too could find itself on the ECB’s Single Resolution Board’s chopping board. Perhaps it too will be sold for €1 to a much larger bank that, like Santander, is able to raise billions of euros of new funds at the drop of a hat, with other too-big-to-fail banks like UBS and Citibank more than happy to lend a helping hand. And just like that, another smaller bank would bite the dust while the biggest banks get bigger and ever more dominating in the market.

Many Banco Popular investors wiped out. Taxpayers off the hook. What it means for Italy. Read…  “Bail-In” Era for Europe’s Banking Crisis Begins

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

While the world waits with bated breath to see if Trump will strike Syria or North Korea first in the next planned geopolitical diversion, overnight the Pentagon carried out an air strike on al-Shabaab in Somalia on Sunday, and Somalia said its special forces had joined in the attack to destroy one of the jihadist insurgent group’s main training and command posts.

The office of President Mohamed Abdullahi said the base was located on Sakow, in the Middle Juba region in southern Somalia, according to VoA.

Somalia’s President Mohamed Abdullahi Farmajo said Sunday he authorized the country’s special forces with support from international partners to conduct a pre-dawn strike against an al-Shabab training camp near Sakow. He said the strike destroyed a key al-Shabab command and supply hub, which will “disrupt the enemy’s ability to conduct new attacks within Somalia.”

“Earlier today, I authorised our special forces with the support of our international partners to conduct a strike against an al Shabaab training camp near Sakow,” his statement said. “This was a successful strike that destroyed a key al Shabaab command and supply hub. This will ultimately disrupt the enemy’s ability to conduct new attacks within Somalia.”

Masked Somali national army (SNA) soldiers search through homes for al-Shabab
fighters, during an operation in Ealsha Biyaha, Somalia, June, 2, 2012.

The Somali president reiterated his call to al-Shabab to take advantage of his amnesty issued on April 6. “To the members of al-Shabab, I tell you that we are bringing the fight to you. If you, however take advantage of my amnesty offer and denounce violence, we will integrate you into our reform program,” he said. “You have no future with the terrorists, but you can still be a part of Somalia’s future; a peaceful and prosperous future.”

The U.S. military confirmed it participated “as a direct response to al-Shabab actions,” including recent attacks on Somali and African Union forces. It says eight al-Shabab militants were killed in the strike.

Since being pushed out of the capital Mogadishu in 2011, al Shabaab has lost control of most of Somalia’s cities and towns. But it still retains a strong presence in swathes of the south and center and still carries out major gun and bomb attacks, Reuters adds. The group aims to topple Somalia’s government, drive out African Union peacekeeping troops and impose its own harsh interpretation of Islamic law.

The strike, which apparently was conducted by drones, was in response to an attack conducted on Thursday by the al Qaeda-linked group which struck a military base on Thursday in Somalia’s semi-autonomous Puntland region, killing 59, a Somali military officer said on Saturday.

According to VoA’s Carla Babb, the alleged target of the strike was al Shabaab military commander Mahad Karate, although there has been no official confirmation from the Pentagon.

1 source tells @HarunMaruf #alShabaab deputy commander Mahad Karate was possible target but 1 Pentagon official could not confirm this to us

— Carla Babb (@CarlaBabbVOA) June 11, 2017

In recent years U.S. drone strikes have targeted a number of key al-Shabab commanders, including former leader Ahmed Abdi Godane who was killed on September 1, 2014.

In a statement, the DOD said that “U.S. forces conducted a strike operation against al-Shabab in Somalia, approximately 185 miles southwest of Mogadishu, according to a statement issued by chief Pentagon spokesperson Dana W. White.”

The United States conducted this operation in coordination with its regional partners as a direct response to al-Shabab actions, including recent attacks on Somali forces, the Pentagon spokesperson said. 

 

This strike was conducted with the authorities approved by the president in March, which allows the Defense Department to conduct legal action against al-Shabab within a geographically-defined area of active hostilities in support of partner forces in Somalia, White said in the statement.

Considering the complete lack of press coverage of this latest strike by the US, the Pentago may have to aim a little higher (and to the north-east) next time, if Trump is to drop from the front pages.

And the full statement from the Pentagon:

Strike was against #AlShabaab command & logistics node in camp in #Somalia – 8 militants killed, says @USAfricaCommand #breaking http://pic.twitter.com/f3fk7QM1sW

— Carla Babb (@CarlaBabbVOA) June 11, 2017

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