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It found that 47 percent of small businesses reported that they had one attack in 2017, and 44 percent said they had two to four attacks.
The invasions included ransomware, which makes a computer’s files unusable unless the device’s user or owner pays a ransom, and phishing, in which emails that look legitimate are used to steals information. The invasions also include what are called drive-by attacks, which infect websites and in turn the computers that visit them.
Despite the prevalence of the data invasions, only about half of small businesses said they had a clear cybersecurity strategy, the report found. And nearly two-thirds said they didn’t bolster their security after an attack.
Hiscox estimates that seven out of 10 businesses aren’t prepared to handle cyber attacks, although they can cost a company thousands of dollars or more and ransomware can shut down operations. Cybersecurity tends to get pushed to the back burner while owners are busy developing products and services and working with clients and employees. Or owners may see it as an expense they can’t afford right now.
Some basic cybersecurity advice:
–Back up all of a company’s data securely. This means paying for a service that keeps a duplicate of all files on an ongoing basis. The best backups keep creating versions of a company’s files that can be accessed in the event of ransomware — eliminating the need to pay data thieves. Some backups cost just a few hundred dollars a year.
–Install software that searches for and immobilizes viruses, malware and other harmful programs. Also install firewalls and data encryption programs.
–Make sure you have all the updates and patches for your operating systems for all your devices. They often include security programs.
–If you have a website, learn how to protect it from hackers, using software including firewalls. But you might be better off hiring a service that will monitor your site with sophisticated tools that detect and disable intruders.
–Tell your staffers, and keep reminding them, about the dangers of clicking on links or attachments in emails unless they’re completely sure the emails are from a legitimate source. Educate your employees about phishing attacks and the tricks they use. Phishers are becoming increasingly sophisticated and are creating emails that look like they really could have come from your bank or a company you do business with.
–Hire an information technology consultant who will regularly look at your systems to be sure you have the tools you need to keep your data safe.
–The Associated Press
WASHINGTON (Reuters) – The head of the U.S. Justice Department’s antitrust division, Makan Delrahim, declined on Friday to support the Obama administration’s firm backing of the need for four U.S. wireless carriers.
Asked about T-Mobile’s plan to buy Sprint for $ 26 billion, Delrahim declined to reiterate the view of President Barack Obama’s enforcers, who had said that four wireless carriers were needed.
Instead, Delrahim told reporters, “I don’t think there’s any magical number that I’m smart enough to glean.”
He also said the department would look at the companies’ arguments that the proposed merger was needed for them to build the next generation of wireless, referred to as 5G, but that they had to prove their case.
Bill Baer, a former head of the antitrust division, had told the New York Times in 2014: “It’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers.”
Reporting by Diane Bartz; Editing by Dan Grebler
So, Solo: A Star Wars Story is finally in theaters. It’s fun! It might not be blowing up the box office, but folks are still seeing it in droves and when they do they’re in for a really nice time. (Alden Ehrenreich is a fun, swaggering Han Solo; Donald Glover is a sexy, swaggering Lando Calrissian; Phoebe Waller-Bridge is a smartass, swaggering droid.) They’re also in for at least one big surprise—and a few slightly smaller delights. But we’ll get to all of that in a second. First we need to give folks afraid of spoilers a chance to show themselves out. OK, everyone’s been warned. From here on out it’s just WIRED writers and editors Brendan Nystedt, Jason Parham, and Angela Watercutter dissecting Solo in detail. Make like Chewie and join us.
Angela Watercutter, Senior Associate Editor: Alright guys, I’m going to go out on a limb here (OK, not a crazy limb; like the kind of limb some ambitious dad turned into a tree bench, or put a swing on…): I liked Solo. Maybe that was the result of low expectations, maybe I just really love Glover’s Lando—I dunno. I just thought it was fun. It’s not going in my Top 5 Star Wars films, but I at least thought it was better than Rogue One. (Rotten Tomatoes disagrees with me here. That’s their problem.)
What about y’all? Did you like Pansexual Lando as much as me? Did you enjoy seeing the Millennium Falcon when it still had that new-ship smell? Did you have cognitive dissonance watching the Mother of Dragons (aka Game of Thrones’ Emilia Clarke) play Han Solo’s childhood girlfriend Qi’ra? Tell me things!
Brendan Nystedt, Market Editor: I would totally agree with you—I think it’s better than Rogue. I love that movie, but think it has some struggles getting off the ground at first. Solo kicked in and didn’t let up. I had heard the first act was slow, but for me, the movie never dragged. I went into it knowing a little more than the average bear, but it still kept me on my toes with its double-crosses and reveals. That’s not even digging into the endless references.
If I can give this movie props for one thing it would be that it made me love a bunch of stuff that sounds cringeworthy on paper. Did I want to know where Han’s name comes from? No, but in the moment, I bought it. I knew we were going to probably see Han and Chewie meet for the first time and I thought it added to their relationship. The card game where Han won the Falcon from Lando? Had me grinning. I thought Alden Ehrenreich and Donald Glover were about as good in the roles as you could ask for—not too much of an impression of the originals, but also imbued with their essences. Did anyone not click with these two dudes?
Also, as a non-GoT human, I thought Emilia Clarke was a standout. I was worried she’d be a prop for Han, someone who dies tragically and turns him into the embittered guy we see in A New Hope. Giving Qi’ra her own arc and giving her agency made me greatly appreciate the storytelling at work here. My other faves were Enfys Nest (let’s see her Cloud Riders in some ancillary materials, Disney!), Rio Durant (RIP), and, of course, L3 (Bridge).
Jason Parham, Senior Writer: I’m going to have to agree with WIRED colleague Brian Raftery on this one—I found Solo mostly inessential as a film. I’m of the belief that prequels are, by design, tougher canvases to experiment on. There’s always room for depth and context, but the Star Wars universe has already been dreamed up in spectacular, revolutionary fashion. For me, George Lucas’ original holy trinity is a near perfect symphony of love and loss and intergalactic repression. History also tells us that Star Wars prequels don’t fare too well. Just look at The Phantom Menace, Attack of the Clones, and Revenge of the Sith. Still, Solo did get a handful of things right—one of which was its easy, untangled plot. Sometimes a film just needs to move from point A to B to C without taking detours or overthinking its next step. Especially in the case of origin stories. For me, Solo felt like the least complicated movie in the franchise. There was plenty of action and humor and cooly-imagined characters—I appreciated getting a view into Han and Chewy’s genesis; and loved L3’s zero-fucks attitude, though I do wonder if Ron Howard’s team hyper-feminized her look. Do robots have hips?
What the film lacked—and what every successful Star Wars film requires—was what Brian got at in his review: the intoxication of surprise. There were no truly satisfying reveals, maybe except for Darth Maul’s cameo near the close of the film. I would consider it a fun, but forgettable romp in the franchise’s treasure chest. A better play for Disney, if they’re going to make prequels an ongoing habit [And it seems that they are. —Ed.], would be to shed light on its side players. A stand-alone Lando Calrissian movie would be a real treat—which, according to Glover, would be “Frasier in space.” Sign me up!
Watercutter: Jason, I’m pretty sure you and I would both be in line on opening night for a Lando movie. Call me simple, but I just want to see more capes. And, yeah, more Glover.
I’m also wondering what folks thought of the look of Solo. One of the other smart things Brian brought up in his review were the films it resembled—shades of Paths of Glory, Runaway Train, and even a bit of the Mad Max movies. I think it even had a bit of Snowpiercer in there, too. But more than that, it felt just a tinge more stylish than, say, The Force Awakens. I was perhaps looking for this because I like the work of cinematographer Bradford Young (Selma, Arrival), but I really think there was something inviting about the environments in Solo. And frankly, since Young stayed on during the transition from directors Phil Lord and Chris Miller to Ron Howard, his visual signature might be the thing that helped the whole film feel unified. Brendan, you’re a Star Wars encyclopedia, what do you think? Am I nuts?
Nystedt: I totally agree, Angela. Rogue One’s cinematography was done in landscapes, and this felt tighter and more personal. Young did some terrific work here in spite of the rocky production. Personally, I think Rogue has the more stunning vistas, but this had a unified look that worked at all times, and helped the world come alive. From the muddy, foggy Mimban to the dusty mines of Kessel, it felt Star Wars-y through and through.
I’d like to take Jason to task for a sec. I fundamentally disagree with his premise: I think Star Wars should have surprises, but not every film needs revelations. If the franchise is going to survive, audiences can’t expect a crazy twist in each and every film. How exhausting would that be? By Episode XX, the dialogue from Spaceballs—”I am your father’s, brother’s, nephew’s, cousin’s, former roommate!”—wouldn’t seem so outlandish. Snoke can be Snoke, Rey can be a nobody from Jakku. Though it’s still the highlight of the franchise, not every film needs to ape The Empire Strikes Back to be good, or even great.
I think this was a film with surprises and one that knew it didn’t need to have huge galaxy-on-the-brink stakes to keep people engaged. I want more Star Wars like this—movies that push the Jedi and the Force to the margins, dive into the underworld, and keep the stakes relatable.
OK, now that the cat’s out of the bag—who wants to talk more about Maul? Do we think this will confuse the heck out of audiences?
Parham: That’s fair, Brendan—a subtler, quieter, more relatable Star Wars could rightfully usher the franchise into a more deserving phase. I will say this: The Enfys Nest twist was probably the most rewarding surprise for me, though by the time we realize that they’re actually the good guys, the film is hurtling toward its end. I would’ve loved a little more screen time from them. As space Westerns go, Young did a standup job—each setting more visually alluring than the last. Westerns are often hypnotic in that way: bright, dusty, full of gunfire and promise. Young’s stellar cinematic patchwork made the film especially more radiant in those small ways. I’ve got one final question, which brings us back to Brendan’s point—is Solo deserving of a sequel or should Disney dive deeper into the underworld and into the lives of other space bandits next? Where do we go from here?
Watercutter: Oh man, OK, those are some big questions. First of all, Brendan, as you know from my Slack messages to you following the Solo screening I saw, I was a little confused by the Maul thing (mostly because he didn’t look like I’d remembered from the prequels). That said, I think audiences will like seeing him. Of all the final-act twists Lucasfilm could’ve thrown in there, that one felt the most unexpected. If you would’ve told me a month ago that Solo would have a callback to The Phantom Menace (and other expanded universe properties) I wouldn’t have believed you.
Now, to answer Jason’s question, I think it’s actually the Maul cameo that helps Solo earn a sequel—though I don’t think it’ll be one dedicated to Han. I know there’s already been talk, most of it debunked, of a Lando movie, but after Solo what I really wanted to see was a movie that dealt more with Crimson Dawn. And, like Jason said, Enfys Nest. Like if there’s a film that’s a Solo sequel in name only that becomes Qi’ra, Maul, and Crimson Dawn vs. Enfys Nest and the Cloud-Raiders, then I’m totally onboard. Brendan, do you agree?
Nystedt: ZOMG that’d be an awesome movie! I’d love for Enfys and her gang to get together with the rest of the Rebels, too. As for Maul, I also hope we get to see more of him in live action. We’ve seen him die already in Star Wars: Rebels but I wanna know where he’s been hanging out since the end of the Clone Wars. A sequel with him and Qi’ra (especially if we get a glimpse of Maul’s homeworld Dathomir, where he told her to meet him) could answer that question and finally give us more of Ray Park’s unmatched lightsaber acrobatics to boot. Fans have been waiting almost 20 years to see more Maul on the big screen.
As much of a Maul stan as I am, I’d also love more of Glover’s Lando. If his spin-off is “Frasier in space,” does that mean Lobot is Niles? That I’d pay good money to watch!
More Great WIRED Stories
I’m a baseball fan. When I lived in the Bay Area, I was a season ticket holder to the San Francisco Giants. And every baseball fan knows about Pete Rose, the preternaturally talented player who scandalized his sport when it was revealed he bet on baseball, including games involving his own team. Now, no one is contemplating allowing players or managers to bet on games in their own sport. But the Pete Rose story serves as a grim reminder of what can happen with sports gambling.
The trouble is that sports gambling is fun! The thrill of making some dough on your team just adds to the excitement of the sport. It’s also hugely profitable for business and government. So when the Supreme Court of the United States released their decision on Murphy vs. NCAA last week, the gambling-loving world rejoiced. SCOTUS determined that the 1992 federal law called Professional and Amateur Sports Protection Act (PAPSA) violated the Constitution’s anti-commandeering clause, thus striking down the law.
Mark Conrad is a professor of law and ethics at Fordham University, where he has taught in the School of Law and in the Gabelli School of Business. He’s also the director of Gabelli’s Sports Business Concentration, and is the author of The Business of Sports -; Off the Field, In the Office, On the News. Professor Conrad was kind enough to share with me some of his thoughts on this landmark decision.
1. Nothing’s Actually Changed…Yet.
The Court’s decision caused an avalanche of news and commentary, but, “At the moment, not much has changed,” says Conrad. The decision opened the door to huge change, but nothing is actually different yet. Conrad explains, “The court declared unconstitutional the Federal law that prohibits sports gambling. It did not sanction or permit sports gambling.” So what happens now? Conrad says no one really knows: “It is now up to the states, or the federal government, to decide.” Here’s where it get interesting!
2. The Devil Is in the Details.
“This story is only beginning,” says Conrad, who also has a degree from Columbia’s School of Journalism. “No state has enact a gambling scheme, although New Jersey may soon,” he says. The question is what happens next. For starters, Conrad asks, “Will states legalize it? And if so, which ones, and when?” Next comes the what. Conrad wants to know, “Will it apply to all sports or just pro sports?” And finally, the how. Conrad ponders: “What will be the license fees for companies wishing to do business in the state? Taxes? Anti-corruption measures?” The potential complexities are endless.
3. Congress May Not Be Done.
The Court may have struck down Congress’ PAPSA law, but that doesn’t mean Congress can’t still have the final word. Conrad explains, “The problem with PAPSA was it prevented states from exercising their powers. The law did not mandate a ban on sports gambling – rather, it told the states they were not allowed to enact laws ‘authorizing’ such gambling schemes.” The problem was the way this law was structured, but not the idea behind the law. In fact, Conrad says, “The decision did state that Congress has the power to enact a ban on gambling.” It’s possible Congress could throw some very cold water on all the excitement.
4. Integrity May Be an Issue…Or May Not.
The potential implications for the integrity of sport are fascinating. As with any gambling, there’s risk of corruption. Conrad recalls, “It has occurred in the past, notably in point-shaving in college sports.” But cheating isn’t a given. “In fact, the risk of corruption may decrease with a properly regulated integrity oversight,” Conrad explains. There are examples the US could look to for inspiration. Conrad says, “The UK model has worked well. The betting companies engage in analytics and metric systems to police suspicious gambling patterns and report these anomalies.” The key is not to over-regulate or over-tax it, which may push otherwise legal gambling underground.
5. This Decision Could Have Major Implications for State Versus Federal Authority.
“This is the underlying constitutional issue in this ruling,” Conrad explains. “Ultimately, it is a constitutional law case regarding state powers under the Tenth Amendment.” Here’s his plain-English explanation of the finer constitutional points: “PAPSA was problematic because it ‘commandeered’ states rights. Instead of banning sports gambling, it said could not enact laws authorizing gambling. It’s a subtle difference, but a constitutionally defective one.” This is an important decision in part of a greater shift. According to Conrad, “It continues a trend to give greater deference to state sovereignty.” It will be fascinating to watch as the complexities continue to develop.
If I had a dollar every time an older person said something disparaging about a Millennial, I’d be talking to you from my own private island. What I have found, is that working with them (or managing them) can be rewarding as long as you treat them accordingly.
For example, I understand that in managing Millennials I have to offer a flexible work schedule to accommodate their juggling act of responsibilities, such as continuing their education and pursuing entrepreneurial side projects. All employees have different skill sets to offer and work at differing paces, so if in 2018 you’re blanketing how you expect your coworkers to perform, you may be setting yourself up for failure.
A study of nearly 10,000 adults aged 18-67 by Ernest & Young Global Limited, shows that Millennials are having a harder time balancing work and life than their predecessors. It proves that Millennials are as almost twice as likely to have a spouse working at least full-time compared to Boomers. Baby Boomers and Generation Xers don’t actually work harder than Millennials, and studies are showing that younger generations really do face a more difficult time of balancing it all.
Here are three things that might surprise you about Millennials and their older colleagues.
1. Baby Boomers are finally winding down.
Baby Boomers have the reputation for going at their work hard and fast, but there’s a season for everything and everyone. With Boomers born in the late 1940s to 1950s, they are retiring now. Even if they aren’t retiring, they are slowing down their careers to enjoy the beginning of their twilight years. In the meantime, Millennials are the ones that are hired to take their place.
2. Millennials are great with technology.
You know that computer program or new app or gadget that’s been giving you trouble? The newer, the more high-tech, and the more out there something is, the better. They’ve grown up with this kind of technology, so they learn fast, and working these kinds of gadgets is just intuitive to them.
3. Millennials are energetic, and want to carve a place for themselves in the world.
Some people say that Millennials are entitled and don’t know the value of a dollar. Not so! The ones I have met are often go-getters who are ambitious, have dreams to pursue, and want to really make a difference. The way they see it, everything has already been said, written and done, so they want to do something different with their lives, even if that means working long hours for it.
Growing up with major FOMO (fear of missing out) has lit a proverbial fire under their butts to be successful enough to live their dreams. In true Millennial fashion, that’s the reason I decided to start my own company four years ago–to be able to afford a lifestyle that would allow me to travel the world and have free time.
4. Gen-Xers and Millennials are better adapted to problem solving.
Everyone has their strengths. While Baby Boomers are known for being independent, goal-oriented and competitive, Millennials are known for their skills in problem solving, technology use and management, and teamwork.
These may be all skills that their predecessors have too, but the reason why Gen X-ers are so great at them is because that was the focus of their education. They were taught to work in teams and they grew up with the technology that they now excel at.
I recall a time in my freshmen year of college when a professor didn’t take too kindly to me problem solving in my own way. One of the tasks on a test called for me to locate a folder on and save a file to it. Having grown up using computers I found a much quicker way to get the task done than by using his detailed instructions, which I patted myself on the back for.
However, the professor didn’t take too kindly to my doing things my own way, and actually deducted points from my final score for doing so. I was blown away, and explained to him that if anything I should earn bonus points for being more efficient and finding a better way to complete the work, which only made the situation worse.
What this has led to, is my appreciation of employees who are able to think critically on their own and rewarding them for it. As a manager I know that I don’t have the answer to everything, and I look to my team to ensure that collectively we’re doing our best. Do not forget to consider the valuable traits of other employees as well as your team should be well rounded. Don’t get stuck with too many Chiefs and not enough Indians.
This means that the market has now retraced to its previous low, something I warned was historically likely to happen.
But still investors are understandably worried about the return of such volatility, after 2017’s freakishly calm and bullish year. In fact, according to CNN’s Fear & Greed Index, a meta analysis of seven different market indicators, investors are not just afraid but are petrified right now.
But since the root cause of fear is uncertainty and doubt, let’s take a look at what caused the stock market’s latest freakout. More importantly discover why these fears are likely overblown, and why the you shouldn’t be racing for the exits.
What The Market Is Freaking Out Over Now
On Thursday, President Trump announced that he would be imposing 25% tariffs on $ 50 billion to $ 60 billion worth of Chinese imports covering 1,300 products including: aerospace, information and communication technology, and machinery. This was in retaliation for years of Chinese intellectual property theft against foreign companies, including US firms.
The Chinese responded with calls for America to “cease and desist” and the Chinese embassy said:
“If a trade war were initiated by the US, China would fight to the end to defend its own legitimate interests with all necessary measures.” -Chinese Embassy
Thus far, Chinese retaliation has been modest, just $ 3 billion against 128 US imports including: pork, aluminum pipes, steel and wine. However, according to Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, those $ 3 billion in tariffs appear to be in response to Trump’s earlier steel and aluminum tariffs.
Those only affected $ 29 billion in US imports, before Trump began exempting most US allies.
The Wall Street Journal is reporting that China will now ratchet up its own counter tariffs, specifically against, “U.S. agricultural exports from Farm Belt states.” Specifically, this means tariffs on U.S. exports of soybeans, sorghum and live hogs, most of which come from states that voted for Trump.
Apparently, the Chinese began planning for a potential US trade dispute last month when the Chinese Commerce Ministry met with major Chinese food importers to discuss lining up alternatives sources of major US agricultural products. For example, China is considering switching its soy imports to Brazil, Argentina and Poland.
The concern that many people have is that during the announcement on the Chinese tariffs, which cover just 10% of all US imports from that country, Trump stated that this was just the first in a series of upcoming tariffs against China.
So many are worried that if the President truly believes that “trade wars are good and easy to win”, then he could potentially escalate this trade tiff into a full blown trade war. Something that history shows is never a good thing, and sometimes has disastrous consequences.
How Bad Would A Full Blown US/China Trade War Be?
The White House has stated that it wants to reduce the US/China trade deficit by $ 100 billion a year, or about 20%. Theoretically, that could mean that Trump might impose tariffs on all Chinese goods, in order to make them more expensive and less competitive with either US goods or those from non-tariffed countries.
So what effects would this have on the US? Well, first of all prices will increase initially, since companies like Walmart (WMT) have complex supply chains with contracts for sourcing for its stores. So in the likely case a 25% tariff on $ 50 billion to $ 60 billion in Chinese imports represents a $ 12.5 billion to $ 15 billion increase in US input costs.
Or to put another way Trump’s China tariffs are likely to boost inflation by 0.08%, and drive core PCE from 1.5% to 1.6%. Now that isn’t the total negative affect to the US economy. After all, China has already retaliated in response to steel tariffs, and is likely to now ratchet up its own counter tariffs.
How bad could that be for American exporters? Well, China supplies just 2% of US steel, meaning that the steel tariffs represent a $ 580 million loss of export revenue. In response, they slapped tariffs on US goods (with apparent plans to completely replace them with foreign alternatives) of $ 3 billion. That’s a retaliation tariff ratio of 5.2, meaning for every $ 1 in export revenue threatened by US tariffs, China appears to be willing to cut its US imports by as much as $ 5.20.
However, in 2017, Chinese imports of US goods totaled $ 130 billion, so there is no way this retaliatory ratio could hold. However, theoretically, if the US and China were to get into a full blown trade war, China could cease importing up to $ 130 billion of US products.
That worst case scenario would likely require Trump imposing similar (25%) tariffs on all Chinese imports to the US, which totaled $ 506 billion last year. In the worst case scenario, that could temporarily raise US prices by $ 127 billion.
Worst Case US/China Trade War Costs
Cost To US Economy
% Decrease In Real GDP Growth
Increase In Inflation
Higher US Prices
$ 127 billion
Lost US Exports
$ 130 billion
$ 257 billion
Sources: thebalance.com, CNN, Marketplace, Bureau of Economic Analysis
Nominal US GDP would not fall due to rising prices; in fact, it would increase. However, GDP is reported as inflation adjusted, meaning that price increases would not have an measured affect on economic growth since they are by definition excluded.
However, they do represent a true cost to the economy, since it means consumer pay more and have less money to spend on other things. The effect on GDP would potentially be seen via China’s replacement of potentially $ 130 billion in US exports with those from other nations. That would knock off 0.7% from US economic growth. Currently, the Federal Reserve is projecting 2.7% growth in 2018, so in our worst case scenario that would fall to 2.0%.
Meanwhile, the higher US prices would represent about 0.7% increase in inflation, pushing the core, (ex-food & fuel), personal consumption expenditure index to 2.2%. Core PCE is the Fed’s preferred inflation metric because it’s a survey of what people actually buy, taking into account rising prices, (switching to cheaper alternatives).
The bottom line is that a full blown US/China trade war has the potential to do significant damage to America. It could potentially lower economic growth 25% over a year, and raise inflation by nearly 50%. But just above the Fed’s stated 2.0% target. Fortunately, this worst case scenario is unlikely to actually happen.
Trade Wars Are Terrible But This “Tariff” Isn’t Likely To Become One
First understand these tariffs are not immediate. US Trade Representative Robert Lighthizer’s office will have 15 days to publish a list of the goods, which will be followed by a 30-day comment period before they go into effect. Tariffs and retaliatory tariffs are not a light switch, but a slow moving regulatory process.
This means that it will likely be six weeks (early May) before any US tariffs on Chinese imports begin. Chinese retaliation in terms of decreased exports would likely start by late June/early July at the earliest. Or to put another way, half of the impact of the worst case scenario would be eliminated by timing.
And time is our friend here because most trade disputes, even threatened tariffs, are merely negotiating tactics. Most of the time tariffs get called off relatively quickly as both sides seek some kind of resolution.
After all, China potentially could take a 3.8% hit to GDP if it lost its US export market, cutting its economic growth in half. That’s something it has no interest in. Meanwhile, the sharp hit to Trump’s constituency (states that helped elect him), plus slower US economic growth, would certainly not help the President’s re-election efforts in 2020.
We’ve already seen that the President’s threatened tariffs can get walked back. For example, the steel and aluminum tariffs that freaked out the market a few weeks ago. Trump has since “temporarily” exempted: The European Union, Canada, Mexico, Brazil, Australia, New Zealand and South Korea. These countries actually are responsible for 2/3 of all US steel imports while China represents just 2%.
In early March, China’s Supreme Court vowed to strengthen China’s protection of intellectual property rights, something that Chinese tech firms have been calling for. This means that the trigger for these tariffs might already be fading. It also means that both China and the US have a relatively easy way out, in which no one loses face, because each side can claim some kind of victory.
What The Fed Did To Potentially Spook The Markets
The other potential partial factor for this week’s sharp drop is the Federal Reserve’s March meeting in which it hiked the Federal Funds rate by 25 basis points to 1.5% to 1.75%. This was already priced in by the bond market and was a surprise to no one. The Fed said that, “The economic outlook has strengthened in recent months” and boosted its economic growth forecasts:
- 2018: 2.7% (from 2.5%)
- 2019: 2.4% (from 2.1%)
- 2020: 2.0% (from 1.8%)
- Long-Term: 1.8% – unchanged
The Fed also updated its core PCE projections:
- 2018: 1.9%
- 2019: 2.1%
- 2020: 2.1%
Meanwhile the Fed’s new unemployment forecast is:
- 2018: 3.8%
- 2019: 3.6%
- 2020: 3.6%
Now none of these upgraded projections are significant, since they basically mean the Fed is just more bullish on the economy. But what potentially concerned the market is the Fed’s slightly more hawkish stance on interest rates.
(Source: CME Group)
Basically, this revised plan from the Fed calls for:
- 2018: two more hikes (same as before)
- 2019: three hikes (same as before)
- 2020: two hikes (one more than before)
The Fed basically expects to raise its Fed Fund rate, which is the overnight interbank lending rate, to 3.5% by the end of 2020. Of course, that’s assuming the US economy keeps growing as quickly as predicted.
3.5% is still far below the historical norm (4% to 6%), so why should that have concerned investors? Simply put because it indicates that the Fed might end up triggering a recession.
Yes You Should Fear An Inverted Yield Curve…
While the Fed Funds rate has no direct link to the bond markets that actually control US corporate borrowing costs, most US banks do benchmark their prime rate off it. The prime rate is how much they charge their most creditworthy and favored clients.
The prime rate has now been raised to 4.75%. The prime lending rate is what most non mortgage consumer loans are benchmarked off. So this means that US consumer borrowing costs are rising, and could rise another 1.75% by the end of 2020. That could certainly slow the pace of consumer borrowing, and potentially increase the US savings rate. While a good thing in the long term, it would potentially cause consumer spending to slow. Since 65% to 70% of US GDP is driven by consumer spending that might in turn slow US economic growth and, more importantly to Wall Street, corporate profit growth.
But here is the real reason that investors should worry about the Fed Funds rate potentially rising another 1.75%. Because under current economic conditions, it would almost certainly cause a recession. That’s based on the single best recession predictor we have, the yield curve. This is the difference between short-term and long-term treasury rates.
The yield curve is 5/5 in predicting the last five recessions. If the curve gets inverted, meaning short-term rates rise above long-term rates, a recession follows relatively soon (usually within one to two years).
Why is this? Two reasons. First, if short-term rates are equal to or above long-term rates, the bond market is signaling that it expects little economic growth and inflation ahead.
More fundamentally, it’s because financial institutions borrow short term to lend long term, at a higher interest. This net margin spread is what creates lending profits and is why loans get made in the first place. So if short-term borrowing rates rise higher than long-term rates, it can decrease the profitability of lending, and result in fewer loans. Thus, consumer spending can fall, businesses invest less, and the economy slides into a recession.
And while the Fed Funds Rate has no direct link to the interest rates that companies care about (long-term rates that benchmark corporate bond rates), studies show that the short-term treasury bonds track closely with the Fed Funds Rate. But long-term rates, such as the 10-year Treasury yield, do not, as they are set by the bond market based mostly on long-term inflation expectations.
This is why the market freaked out over January’s labor report that showed wages rising 2.9%. The fear is that if the labor market is too hot, then rising wages trigger faster inflation which forces the Fed to hike rates high enough to trigger a yield curve inversion. This is what occurred before the last three recessions.
Basically, this means that if the Fed were to proceed with its revised rate hike schedule, then short-term rates would likely rise by 1.75% or so. Long-term rates, on the other hand, are set by inflation expectations and the 10-year yield of 2.83% is currently pricing in 2.1% inflation.
(Source: Bureau Of Economic Analysis)
However, inflation has been stuck at 1.5% for the last four months, and so far shows no signs of rising to those long-term expectations. Which means that 10-year yields are not likely to rise 1.75% by 2020, in line with rising short-term rates.
That in effect indicates that seven rate hikes would almost certainly invert the yield curve, heralding the next recession. The good news? The Fed isn’t likely to keep hiking if inflation remains low and threatens to invert the yield curve.
…But The Fed Isn’t Likely To Invert The Curve
So if the Fed’s current forecast calls for low inflation, but enough rate hikes to likely trigger a yield curve inversion and possible recession, why am I not freaking out? Two main reasons. First, Jerome Powell, the new Fed Chairman, is not an economist, but a veteran of Wall Street. Over his career, he’s been:
- Managing director for Bankers Trust – a US bank
- Partner at The Carlyle Group – a private equity firm
- Founded Severn Capital – a private equity fund specializing in industrial investments
- Managing partner for the Global Environment Fund – a private equity fund specializing in renewable power
Here is why this matters. Economists are big fans of economic models, such as the Phillips Curve. This says that as unemployment falls below a certain, (full employment), wages and thus inflation, must rise.
Powell has indicated that he’s willing to go where the data takes him, and not just assume the models are correct. In other words, Powell doesn’t buy into the fears of the Fed’s more hawkish members.
In fact, take a look at what he said during the last Fed post meeting press conference:
“There is no sense in the data that we are on the cusp of an acceleration of inflation. We have seen moderate increases in wages and price inflation, and we seem to be seeing more of that… The theory would be if you get below the sustainable rate of unemployment for a sustained period, you would see an acceleration of inflation. We are very alert to it. But it’s not something we observe at the present… We will know that the labor market is getting tight when we see a more meaningful upward move in wages… Wages should reflect inflation plus productivity increases … so these low wage increases do make sense in a certain sense… That is a sign of improvement (rising labor participation rate), given that the aging of our population is putting downward pressure on the participation rate… It’s true that yield curves have tended to predict recessions … a lot of that was when inflation was allowed to get out of control.” -Jerome Powell
What we see in these quotes is a man who understands finance and understands that the world is more complex than simplified models would indicate. He seems to realize that we are NOT at full employment. So until wages start rising there is no reason to assume we are and that inflation is about to accelerate to dangerous levels.
Powell has also indicated that he expects tax cuts to fuel more investment, boosting productivity, which would allow wages to rise without triggering higher inflation. This is something that I expect as well and the key reason that I’m personally so bullish on the economy, and expect the current expansion to continue for many years.
The bottom line is that Powell seems to be a man who will, for the sake of expectations, make a forecast. But he seems more than willing to ultimately alter monetary policy as the economic data indicates is necessary, not raising rates just because the Phillips Curve says to.
And as a former Wall Street banker who is well aware of the yield curve and its importance, I don’t consider it likely that he’ll blindly keep hiking rates based on a plan from a few years ago. When the facts change, Jerome Powell changes his mind.
Which brings me to the biggest reason to shake off and ignore this last terrible week in the stock market.
US Economic Fundamentals Remain Strong And That’s All That Matters
The stock market may be a forward looking instrument, but it’s also prone to fits of violent pessimism whenever anything bad happens. The market often takes a worst case scenario like “sell first, ask questions later” approach.
Trump announces tariffs? It MUST mean we’re headed for a full blown global trade war that will trigger massive inflation, a shrinking economy, and a bear market! Sell everything!
The truth is that while sometimes the worst case scenario happens (such as the Financial Crisis), 99% of the time negative effects of anything are not as bad as people fear. Or to put another way very seldom is it true that “this time is different.”
So let’s take a page of out Jerome Powell’s playbook and look at the data. I’ve already covered why the last jobs report was darn near perfect.
Meanwhile, the risk of a recession is the lowest I’ve seen since I discovered Jeff Miller’s excellent weekly economic report 18 months ago.
(Source: Jeff Miller)
Specifically, according to a collection of meta analyses of leading indicators and economic reports, the four- and nine-month recession risk is 0.39% and 15%, respectively. Of course, these can and do change over time as new data comes in. But the point is that based on the most recent evidence there is no reason to fear a recession.
Finally, the New York Fed’s Nowcast (real time GDP growth estimator) is saying that Q1 and Q2 GDP growth is likely to come in at 2.9%, and 3.0%, respectively.
Now that also changes with economic reports as they come in, but if true then this is how US economic growth is trending:
- 2016: 1.5%
- 2017: 2.3%
- Q1 2018: 2.9%
- Q2 2018: 3.0%
Does this portend doom and gloom for the economy, labor market, or corporate earnings growth? No it does not.
I’m not saying stick your head in the sand and ignore all risks. But rather than freak out over POTENTIAL worst case scenarios to the economy we focus on the facts as best we know them. Right now those facts are:
- low and stable inflation
- strong job market but not at full employment (otherwise wages would be rising)
- accelerating economic growth
- strong and accelerating corporate profits
- stock market trading sideways = valuation multiples falling = less risk of a bubble and crash
Bottom Line: Markets Are Driven By Short-Term Emotions, Your Portfolio Decisions Shouldn’t Be
Don’t get me wrong a full blown trade war with China would be a terrible thing. It would undoubtedly significantly increase inflation, slow the economy, and potentially force the Fed to raise rates to dangerous levels. These are things that could certainly trigger a bear market or even a recession.
However while all those risks are real, the probability of such a worst case scenario remains remote and speculative. What we do know for sure is what the economic data shows. Which is that the fundamentals underpinning the current economic expansion and bull market remain strong. More importantly, in an economy this large, it would take a large and protracted negative shock to derail those fundamentals and trigger the kind of market crash that many now fear is imminent.
That doesn’t mean that you shouldn’t protect yourself. I myself am continuing to de-risk my high-yield retirement portfolio with a strong focus on quality, undervalued, low volatility, and defensive stocks. But my point is that I’ve been doing that for several months now, back when the market was still roaring higher, and before fears of a trade war surfaced. That’s because I believe in building a bunker while the sun is shining so you never have to fear any market storm.
My recommendation to investors remains the same. Stay calm, focus on your long-term strategy, and don’t let the market’s knee-jerk reactions to likely overblown speculative fears cause you to make costly short-term mistakes.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
BUENOS AIRES (Reuters) – Financial policymakers gathering in Buenos Aires on Tuesday agreed cryptocurrencies posed some risks but should not be banned altogether, the head of Italy’s central bank said on Tuesday after the meeting.
“My understanding is that there was an acceptance of continuing to work also on the stability side with the idea that this doesn’t imply barring it,” Ignazio Visco told reporters on the sidelines of the G20 meeting.
He added the G20 had not asked international regulators to craft new rules for these crytpotokens but added he expected this to happen at a later stage.
Reporting By Francesco Canepa
Video: IBM’s new tool to develop serverless applications
OK, so we’ll always need some servers.
But with the rise of virtual machines (VM)s and container technologies such as Docker, combined with DevOps and cloud orchestration to automatically manage ever-larger numbers of server applications, serverless computing is becoming real.
We’re a long, long way from the idea that you need one server to run one application.
Serverless computing refers to the concept of building and running applications that do not require server management. It describes a finer-grained deployment model where applications, bundled as one or more functions, are uploaded to a platform and then executed, scaled, and billed in response to the exact demand needed at the moment.
CNCF created the WG to “explore the intersection of cloud native and serverless technology.” The first output of the group was a summary of serverless computing projects. These include Apache OpenWhisk, AWS Lambda, Google Cloud Functions, and Azure Cloud Functions. In short, all the major public cloud players are investing in serverless architectures. The vast majority of these are using Kubernetes to orchestrate their activities.
It’s an idea that is gaining fans. In a survey at KubeCon Austin, the most recent of an international series of conferences for Kubernetes users, the CNCF found 41 percent of respondents are already using serverless technology. An additional 28 percent are planning on using it within the next 12 to 18 months. Of the respondents currently using serverless technology, 70 percent are using AWS Lambda, followed by much smaller numbers deploying with Google Cloud Functions, Apache OpenWhisk, and Azure Functions.
Why are they investing in this approach? According to the recently released CNCF WG-Serverless Whitepaper, “Serverless computing does not mean that we no longer use servers to host and run code; nor does it mean that operations engineers are no longer required.” But “consumers of serverless computing no longer need to spend time and resources on server provisioning, maintenance, updates, scaling, and capacity planning. Instead, all of these tasks and capabilities are handled by a serverless platform and are completely abstracted away from the developers and IT/operations teams. As a result, developers focus on writing their applications’ business logic. Operations engineers are able to elevate their focus to more business critical tasks.”
What this means to your executive suite is you’ll be spending less on operations and getting more productive work from your IT staff.
In practice, this approach can work in two different ways:
- Functions-as-a-Service (FaaS) typically provides event-driven computing. Developers run and manage application code with functions that are triggered by events or HTTP requests. Developers deploy small units of code to the FaaS, which are executed as needed as discrete actions, scaling without the need to manage servers or any other underlying infrastructure.
- Backend-as-a-Service (BaaS) are third-party API-based services that replace core subsets of functionality in an application. Because those APIs are provided as a service that auto-scales and operates transparently, this appears to the developer to be serverless.
By the CNCF WG’s analysis, this delivers the following benefits to developers:
- Zero Server Ops: Serverless dramatically changes the cost model of running software applications through eliminating the overhead involved in the maintenance of server resources. Without provisioning, updating, or managing server infrastructure, a company can save significant overhead costs. In addition, since a serverless FaaS or BaaS can instantly and precisely scale to handle each individual incoming request, the serverless approach automatically scales down the compute resources so that there is never idle capacity.
- No Compute Cost When Idle: One of the greatest benefits of the serverless approach from a consumer perspective is that there are no costs resulting from idle capacity. For example, serverless compute services do not charge for idle VM or containers. When there’s no work being done, there are no charges being racked up.
Even more important to the immediate bottom-line savings though, wrote Satwikeshwar Reddy, an AWS architect, is “the biggest advantage of Serverless Architecture (SA) and often over-shadowed by the operational cost savings is the developer time. More accurately, time it takes from an idea to a production ready feature.”
That all sounds grand, but does it work?
Serverless computing, while new as a broadly accepted concept, isn’t new in production. This “pay as you go” model can be traced back to 2006’s short-lived Zimki company. Later, Iron.io, with its Worker container-based distributed work-on-demand platform, enabled customers to realize profits from a serverless approach. Since then, other companies have adopted this approach successfully.
Will a serverless approach work for your company? It’s time to find out and an excellent place to start is with the CNCF white paper. And, who knows, maybe you will be able to say, “Servers? We don’t need no stinkin’ servers!” in your next IT planning meeting.
The business of e-commerce is booming. And considering how easy it is to build a website, starting an online business has become very competitive. Right from identifying a product with the right target audience, then analyzing its potential, and making a strategic business plan, it involves making many decisions.
A recent report on e-commerce trends revealed more about the growth of e-commerce sales, and insights into the behavior of online shoppers, including:
- E-commerce is growing at a rate of 23 percent every year. Still, 46 percent of small businesses in America do not have a website
51 percent of Americans shop online, while 49 percent prefer to shop at physical stores
Online orders increased 8.9 percent in the third quarter of 2016, while the average order value increased only 0.2 percent.
Of all online shoppers, only 23 percent are swayed by social media references.
Do you notice anything here? Although online sales are increasing, there are many people who still rely on offline shopping. And of those who do shop online, very few are influenced by social media.
So what does it take to convert your website into a highly profitable e-commerce business?
There is no denying the fact that starting an e-commerce business is easy. But scaling up, and making it more profitable than your competitors can be difficult. Here’s a multiple choice question: What do you think is needed to set up a highly profitable e-commerce store?
Directing more traffic to your site,
Improving your conversion rate,
Increasing customer loyalty.
An effective growth strategy actually includes all three of these. And so, that one thing you need to build a more profitable e-commerce business is an effective growth strategy. Let’s take a closer look.
Increase traffic to your website to get noticed.
In the ever-growing space of e-commerce, it can be difficult to get noticed. But there are a number of ways organic traffic techniques that can help drive traffic to your website, including:
Search engine optimization (SEO) – increase your ranking in search engines like Google for more visibility.
Social media marketing – post on Instagram, Facebook, and Twitter, and create YouTube tutorials to reach a wider audience.
Email marketing – drive traffic to your website with email newsletters to keep your subscribers informed about new products and promotions.
Another option is paid ads, which may include:
- Buying ads on Facebook
- Marketing with influencers
- Advertising on Instagram
Improve the conversion rate of your website to increase sales.
If you’ve used the above two techniques effectively, your conversion rate will automatically improve. However, there are some other easy things that you need to take care of in order to increase your e-commerce conversion rate, like:
Make your website mobile friendly and ensuring minimal loading time.
Stop making assumptions about your customer’s needs. Instead use A/B testing to know what they actually need.
Use high quality product images to attract more and more customers to convert them.
Build a user-friendly interface which should include an easy checkout and navigation system.
Use customer retention tools to boost your customer loyalty.
Building a positive user experience isn’t enough. You also need to retain your customers. Acquiring new customers is always a priority for brands. And yes, it is important. But can you afford to lose your existing customer base? No, right?
So once you have customers who have shopped on your website, concentrate on retaining them. No matter how awesome your product or service is, it is your job to make sure your customers are happy and satisfied so that they continue to choose you over your competitors.
A few customer retention strategies that can work for your e-commerce business include:
Introduce loyalty programs and give reward points for repeated sales.
Offer support systems to resolve customer issues and handle their grievances.
Use a customer relationship management (CRM) tool to keep a track of the entire journey of your customers.
An effective growth strategy is key to building a more profitable e-commerce business. In addition to the three main components above, you should keep a track of your performance data to help you make improvements when needed.
As George R.R. Martin and HBO try to figure out which (and how many!) of the five Game of Thrones spin-offs they’re working on a small group of indie filmmaker in Belfast have taken it upon themselves to make their own prequel, titled “The Wild Wolf,” a short depicting Ned’s doomed brother Brandon Stark and Catelyn…