FT : Apple/5G: speed freaks

Apple/5G: speed freaks
Smartphone makers will need to raise prices to really benefit from the 5G revolution

This is supposed to be a banner year for fifth-generation wireless technology. At the annual Consumer Electronics Show in Las Vegas this week, 5G overtook blockchain as the transformative technology mentioned by companies most often.

Tech visionaries are promising smart cities, remote services and interconnected everything. Speed, capacity and connectivity will jump. Download whatever you like in seconds. Home systems will analyse data from your fridge, radiator and door camera in real time. In the next 15 years, 5G will drive an extra $12tn in annual sales, IHS Markit estimates.

Roll it out and they will come? In China, 5G installation has already begun in earnest. In the US, the process is patchier. AT&T has switched on 5G services in a few cities and Motorola has released a 5G phone. Apple has yet to show its hand — including its handset.

When Apple releases a 5G iPhone, demand will be a litmus test for the uptake of ultrafast broadband by consumers. With mobile data speeds up to 100 times quicker than 4G, the hope is that users will finally upgrade their old handsets and put an end to the smartphone sales slump. If they succumb to temptation, a gaggle of businesses would benefit. They include Verizon, AT&T, Samsung, Qualcomm and Applied Materials.

The shift will take a few years. Yet even if 5G devices replace 4G forerunners, they will not reverse the long-term trend in slowing smartphone sales, according to estimates from the Consumer Technology Association.

This year, 20m 5G-enabled handsets are expected to be shipped in the US. By 2023, this figure should rise to 133m, completely outstripping 4G handset sales. Even so, total sales growth will be slower. The CTA estimates that 164m phones will be sold in 2023. This is 1m fewer phones than in 2018. To really benefit from the 5G revolution, smartphone makers will still need to raise prices. Expect phones costing more than $1,000 to be the norm. Apple will, once again, test the elasticity of demand for its products.

FT : Why I love and deplore the French welfare state

Why I love and deplore the French welfare state
‘Paying towards world-class healthcare and the Métro makes me feel there’s a moral purpose to my working life’

Early in the French transport strike, I went into a Parisian hospital for a minor operation. I lay on a stretcher in a cramped pre-op room among a dozen or so men and women, each of us wearing only a backless paper hospital gown. An orderly walked in and gaped at the crush: “It’s like the Métro here!”

In fact, the Métro is worse. The few trains still running are jam-packed, as the rail workers’ strike over pensions enters its second month. Suburban trains are worse still: commuters can spend an hour shuffling through dangerously overcrowded stations just to reach the platform. (The strike is an almost entirely Parisian phenomenon. Most people in other French regions drive to work or use public transport run by private companies, whose employees aren’t striking.)

Ostensibly, the strike opposes Emmanuel Macron’s attempts to reform pensions and end the “special regimes” that allow some workers to retire early (including train drivers at age 52). But as with the gilets jaunes’ protests, there’s a deeper issue at stake: the French welfare state.

Rightwing foreign critics think that the French state, from trains to hospitals, needs shrinking. French leftists think Macron is shrinking it too much. After 18 years in Paris, I disagree with both sides: I both love and deplore the French system.

I’m very familiar with the leftwing narrative, because I live on the boulevard where protest marches are held. During a march last month, a communist bookshop set up literally on our doorstep. In the French left’s view, Macron is Thatcher reincarnated, a neoliberal ex-banker trying to deprive French workers of their traditional right to a long third age of wine, yoga and boules.

The problem with this narrative is that France today is about as far as any society gets from a neoliberal wasteland. In 2018, after Macron’s first year of reforms, French government spending was still 56 per cent of gross domestic product, the highest for any country in the OECD, the rich-nation club.

Moreover, French pensions are now longer than ever before. In 1970 — the zenith of the postwar decades remembered here as les trente glorieuses, “the glorious thirty” — the effective average age of retirement was 67. The average life expectancy for French men (who made up the vast majority of the workforce back then) was 68.

Today, the effective French average retirement age is just 60.8, or 4.5 years below the OECD average, while life expectancy has reached 83, according to OECD data. French lifespans have been rising by about two years a decade, so even if Macron manages to raise the legal age for a full pension from 62 to 64, there’ll still be time for boules. As the writer Sylvain Tesson says, exaggerating only slightly: “France is a paradise inhabited by people who think they’re in hell.”

This near-paradise is funded by taxes. Many poorer workers pay a hefty slice of their incomes in social charges. Gilets jaunes protesting about their weak purchasing power and workers marching for their pensions are two sides of the same coin: the former are funding the latter’s retirements.

If the leftwing narrative about France is unconvincing, so is the rightwing one. This says that France needs a Thatcher to “tame” unions and slash the state. In fact, the unions have done a lot to help France maintain its relatively low inequality and generous welfare state. Crush unions, and the more isolated French regions might end up as deprived as post-Thatcherite northern England.

I say this as someone who pays more than half my income to the French state. On the one hand, this mildly disincentivises me from doing extra paid work. On the upside, it’s oddly relaxing: since there is little point maximising your earnings here, you can devote your life to something more interesting.

At the risk of sounding insane, paying towards world-class universal healthcare and the construction of 68 Métro stations in Paris’s suburbs (Europe’s biggest public-transport project) makes me feel there’s some moral purpose to my working life. I’m especially happy to pay because I owe the French welfare state.

In 2011, my wife was diagnosed with an aggressive cancer. We walked through the hospital courtyard discussing how I’d raise our children if she died. A fantastic Parisian hospital saved her. I’d like everyone to have such good care. However, I’m not happy to pay for train drivers to retire at 52.

Much of the left-v-right argument about France is based on a false dichotomy. The notion is that either France retains the imagined big-state paradise of the trente glorieuses or it embraces le capitalisme anglo-saxon red in tooth and claw. But there’s a third alternative: the social democracy of France’s northern European neighbours, where strong trade unions almost never need to strike because they work together with the state and business.

Once at a conference I watched the main Dutch union leader and the head of the employers’ federation chatting at their own breakfast table like old mates. When that becomes the norm here, France really will be paradise.

FT : US airlines rush to secure 737 Max simulators Bottleneck expected after Boe

US airlines rush to secure 737 Max simulators
Bottleneck expected after Boeing says pilots need more training before jet returns to skies

US airlines are struggling to secure flight simulators for the 737 Max after Boeing said extra training will be needed for pilots before the aircraft returns to service.

There are only 34 simulators worldwide for the jet, creating a potential bottleneck as airlines vie to schedule training time for thousands of pilots and causing further delays to its return, even after aviation regulators lift the grounding.

Boeing said for months that pilots would only need to train on a computer in order to qualify to fly the Max, which has been grounded since March following two fatal crashes, only to reverse course earlier this week.

Among the three major US airlines with Max aircraft in their fleet, Southwest Airlines said the company had three simulators that it ordered in 2018 with “minimal” work remaining until the US Federal Aviation Administration certified them for use. It has three more set to be delivered at the end of this year.

Although they were not previously required, “we ordered the simulators so the pilots would have the option” of training on the Max model, a Southwest spokeswoman said.


United Airlines said it already had one working simulator, with three more set for delivery by March. American Airlines said it “continues to work with the FAA and Boeing throughout the recertification process”, but a company spokesman offered no details on simulator training for its pilots.

Part of Boeing’s original sales pitch to airlines was that the Max would not require simulator training. It was a factor in Boeing’s decision to update the 737 rather than design a wholly new aircraft, which led to the use of heavier engines and then a flight-control system to counteract their effect. That system was later implicated in the crashes in Indonesia and Ethiopia which killed 346 people.

The FAA and other regulators are yet to approve Boeing’s proposed changes to that flight-control system and to pilot training, which will be required before the Max is certified as safe and the grounding is lifted.

A Ukraine International Airlines Boeing 737-800 — a different model to the Max — crashed in Iran on Wednesday killing all 176 people onboard and adding to the problems faced by Boeing which has been criticised for its response to the earlier Max crashes.

Boeing wants to rebuild confidence in the Max among customers and flyers and that likely influenced the company’s decision to recommend simulator training, said John Cox, an American crash investigator and retired airline pilot.

A person familiar with the matter said Boeing decided to recommend simulator training after pilots participating in the recertification process failed to follow proper cockpit procedures and checklists.

Simulators cost between $6m and $8m each, and then another $400 to $500 an hour to operate because of labour and maintenance costs.

CAE, a Canadian company that supplies 80 per cent of the world market for flight simulators, has been anticipating a rise in customer demand for Max simulators since November, said Hélène Gagnon, the company’s vice-president for public affairs.

Sales and deliveries of Max simulators are doing well, chief executive Marc Parent said during a November 13 earnings call. There had been five orders and nine deliveries in the first half of the company’s fiscal year — almost 10 per cent of the 48 orders in the product’s history. Chief financial officer Sonya Branco said a similar number of orders and deliveries were expected in the second half of the fiscal year.

>>> What to look at today - 9th of January 2020

Stocks in Asia extended a rally that began in America after the U.S. and Iran appeared to be stepping back from a deeper military conflict. Havens from the yen to Treasuries held losses and oil steadied after its slide.
Japan shares outperformed. Equities in Hong Kong and South Korea also advanced, with stocks in Australia higher along with bond yields. European futures climbed. The S&P 500 Index earlier rose as President Donald Trump’s measured remarks on Iran suggested tensions were easing. Traders remained wary of developments after reports of a rocket attack in Baghdad took the edge off a positive Wall Street session late Wednesday.

Nikkei +2.31% Hang Seng +1.47% CSI +1.27% Shanghai +0.91% Shenzen +1.75%

S&P +0.33% EuroStoxx +0.72% Dax +0.96% SMI +0.72%

Macro :
- Trump Backs Away From Conflict With Iran After Harmless Attack
- China Says Liu to Visit Washington From Jan. 13 for Deal Signing
- U.S. Investor Bull-Bear Spread 3.18: AAII

Keep an eye on :
- ABN NA : ABN Amro to Name Robert Swaak as New CEO
- AB FP : AB Science Says FDA Clears Application for Masitinib Phase 3
- ABI BB : Budweiser Brewer to Buy Green Power From BayWa in Germany
- AGFB BB : Agfa-Gevaert Names Frenchman Juery CEO to Replace Reinaudo
- AF FP : Air France-KLM December Group Passenger Traffic Rises 3.5%
- MT NA : ArcelorMittal Raises Steel Prices Sold in U.S. by $40/Ton
- ATL IM : Italy Minister Favors Revoking Autostrade Concession: Ansa
- ATL IM : Italy Transport Minister Seeks More From Autostrade: Repubblica
- AIXA GY : Aixtron to Profit From New Growth Drivers, OLED Decision: Lampe
- BAYN GY : Bayer, Evotec Form New 5-Year Polycystic Ovary Syndrome Alliance
- COK GY : Cancom CEO Leaves Company Due to Differing Opinions on Growth
- DHER GY : GrubHub Spikes After Report the Company Is Considering Options
- EDF FP : France Is Assessing Cost of Switching to 100% Renewable Power
- EURN BB : Euronav Targets 80% of Net Shareholder Return From 2019 Results
- IPH FP : *INNATE PHARMA SAYS FDA PLACED TELLOMAK TRIAL ON PARTIAL HOLD
- ITX SM : Uniqlo Owner Cuts Profit View 11% as Unrest Hits Overseas Drive
- MKS LN : M&S 3Q LFL UK Sales +0.2%; Sees FY Gross Margins at Lower End
- NICL LN : Nichols Full Year Revenue Misses Lowest Estimate
- RAT LN : Rathbone Brothers FY FUMA GBP50.4b vs GBP44.1b; Est GBP49.1b
- SAN FP : Bristol-Myers, Sanofi Sue Hawaii Over Plavix Marketing (Correct)
- GLE FP : Societe Generale Wants to Reinforce Cost Discipline: Les Echos
- SIKA SW : Sika FY Sales Meet Estimates; Confirms Views (1)
- SW FP : Sodexo Focus is Internal Growth But Has Some Acquisition Targets
- SZU GY : Commodity Trader ED&F Man Signals Third Straight Annual Loss
- STLN SW : Schmolz + Bickenbach Net Proceeds of Share Capital Raise EU292m
- TSCO LN : Tesco 3Q Like-for-like U.K. Sales -0.2%; No Decision on Asia (1)

>>> Europe : Brokers Upgrades & Downgrades - 9th of January 2020

>>> Up
* Aixtron Raised to Buy at Bankhaus Lampe; PT 12.50 euros
* BMW Raised to Outperform at Exane; PT 87 euros
* Breedon PT Raised to 105 pence from 85 pence at Berenberg
* Danone Raised to Neutral at Goldman; PT 75 euros
* DBV Tech ADRs Raised to Buy at Stifel; PT $18
* EnQuest Raised to Overweight at Barclays; PT 40 pence
* MorphoSys Raised to Buy at Commerzbank; PT 160 euros
* PSA Raised to Outperform at Exane; PT 27 euros
* Plastic Omnium Raised to Neutral at Exane; PT 26 euros
* UCB Raised to Buy at Jefferies; PT 95 euros

>>> Down
* ADO Properties Cut to Underweight at Barclays; PT 26 euros
* Aeffe Cut to Neutral at Mediobanca SpA
* Ageas Cut to Sector Perform at RBC; PT 47 euros
* Arnoldo Mondadori Editore Cut to Neutral at Mediobanca SpA
* Atlantia Cut to Neutral at Mediobanca SpA
* Boliden Cut to Hold at Deutsche Bank
* Brembo Cut to Neutral at Mediobanca SpA
* CRH Cut to Equal-Weight at Morgan Stanley; PT 39 euros
* DSM Cut to Underperform at Credit Suisse; PT 107 euros
* Dometic Cut to Hold at Pareto Securities; PT 100 kronor
* Essity Cut to Sell at Goldman; PT 270 kronor
* Fincantieri Cut to Neutral at Mediobanca SpA
* GEDI Gruppo Cut to Neutral at Mediobanca SpA
* HeidelbergCement Cut to Underweight at Morgan Stanley on Jan. 8
* Ipsen Cut to Hold at Jefferies; PT 90 euros
* Intl Petroleum Cut to Underweight at Barclays; PT 43 kronor
* Ontex Cut to Sell at Goldman; PT 14.90 euros
* Orkla Cut to Sell at Goldman; PT 79 kroner
* RAI Way Cut to Neutral at Mediobanca SpA
* Renault Cut to Underperform at Exane; PT 36 euros
* Saras Cut to Neutral at Mediobanca SpA
* TFF Group Cut to Neutral at Oddo BHF; PT 37 euros
* Tullow Cut to Equal-Weight at Barclays; PT 75 pence
* Umicore Cut to Hold at HSBC; PT 46 euros
* Valeo Cut to Underperform at Exane; PT 29 euros

>>> Initiation
* ASTM SpA Re-Initiated Outperform at Mediobanca SpA
* Grand City Properties Rated New Equal-Weight at Barclays
* Impact Healthcare Rated New Outperform at RBC; PT 145 pence
* LEG Immobilien Rated New Underweight at Barclays; PT 100 euros

>>> Call
* Ageas Cut at RBC With Asia Potential Priced In, U.K. Headwinds
* Jefferies Positive on EU Biotech; UCB Upgraded, Ipsen Reduced
* Market Under-Appreciating Lloyds’ Scottish Widows Unit, MS Says

>>> TradeGate Pre Market indication

  • DAX:
    • BMW (BMW TH) +1.9%
      • BMW Raised to Outperform at Exane; PT 87 euros
    • Adidas (ADS TH) +1.6%
      • Buyout Firm Navis Said to Weigh Sale of Nike Supplier Texon
    • Bayer (BAYN TH) +1.3%
      • Bayer, Evotec Form New 5-Year Polycystic Ovary Syndrome Alliance
    • Wirecard (WDI TH) +1.2%
    • BASF (BAS TH) +1.1%
    MDAX:
    • Evotec SE (EVT TH) +3.6%
      • Bayer, Evotec Form New 5-Year Polycystic Ovary Syndrome Alliance
    • TeamViewer (1UD TH) +2.8%
    • MorphoSys (MOR TH) +1.5%
      • MorphoSys Raised to Buy at Commerzbank; PT 160 euros
    • United Internet (UTDI TH) +1.5%
    • Varta (VAR1 TH) +1.4%
    • Cancom (COK TH) -3.2%
      • Cancom CEO Leaves Company Due to Differing Opinions on Growth
    SDAX:
    • Wacker Neuson (WAC TH) +2.6%
    • Aixtron (AIXA TH) +2.2%
      • Aixtron Raised to Buy at Bankhaus Lampe; PT 12.50 euros
    • Nordex (NDX1 TH) +2.1%
    • SGL (SGL TH) +1.9%
    • Deutz (DEZ TH) +1.6%
    • DIC Asset (DIC TH) +1%

>>> Stoxx 600 Pre Market indication

  • Evotec SE (EVT TH) +3.1%
    • Bayer, Evotec Form New 5-Year Polycystic Ovary Syndrome Alliance
  • TUI (TUI1 TH) +1.7%
  • BMW (BMW TH) +1.7%
    • BMW Raised to Outperform at Exane; PT 87 euros
  • MorphoSys (MOR TH) +1.5%
    • MorphoSys Raised to Buy at Commerzbank; PT 160 euros
  • Orsted (D2G TH) +1.5%
    • Orsted Fell for 6th Days; Longest Loss Streak in 13 Months
  • Adidas (ADS TH) +1.4%
  • LVMH (MOH TH) +1.2%
  • Vestas (VWS TH) +1.2%
  • MTU Aero (MTX TH) +1.2%
  • LEG Immobilien (LEG TH) -0.2%
    • LEG Immobilien Rated New Underweight at Barclays; PT 100 euros
  • Grenke (GLJ TH) -1.3%