FT : US health officials unveil e-cigarette restrictions

US health officials unveil e-cigarette restrictions
Critics complain policy does not go far enough

US regulators have unveiled long-awaited restrictions on flavoured e-cigarettes in an attempt to contain an “epidemic” of teenage vaping, but stopped short of an outright ban in a decision criticised by public health campaigners.

Companies have been given 30 days to cease the manufacture, distribution and sale of “cartridge-based” flavoured versions of the devices under a Food and Drug Administration policy laid down on Thursday.

But the plans, which will allow e-cigarettes with other delivery systems and tobacco and menthol-flavoured variants to remain on the market, are less far reaching than those the Trump administration put forward in September.

Since then, critics of the restrictions warned the plans would undermine individual choice and threaten jobs.

The decision cuts to the heart of a dilemma facing global health policymakers over how to treat e-cigarettes. Proponents highlight how the devices can wean smokers off traditional cigarettes while critics complain they are getting a new generation hooked on nicotine.

“This policy balances the urgency with which we must address the public health threat of youth use of e-cigarette products with the potential role that e-cigarettes may play in helping adult smokers transition completely away from combustible tobacco,” said Stephen Hahn, FDA commissioner, in a statement.

The watered down restrictions disappointed anti-vaping advocates who had called on the administration to follow through on a wider ban.

“President Trump and the FDA are going spineless in the face of corporate lobbying,” said Democratic Senator Jeff Merkley in a statement. “The health of millions of American children will continue to suffer because of today’s announcement.”

Matthew Myers, president of the Campaign for Tobacco-Free Kids, said the proposals gave “a green light to the e-cigarette industry to continue to target and addict kids”.

The policy was announced as the latest National Youth Tobacco Survey results showed more than 5m American middle and high school students currently use e-cigarettes. Almost 1m used them every day.

Alex Azar, President Donald Trump’s health secretary, said: “The United States has never seen an epidemic of substance use arise as quickly as our current epidemic of youth use of e-cigarettes.”

The FDA added that while it was targeting those versions of e-cigarettes that are popular among youngsters, it left the door open to broader restrictions. “The agency will take additional steps to address youth use of those [other] products if necessary.”

>>> US Close Dow +1.16% S&P +0.84% Nasdaq +1.33% Russell -0.10%

Closing Stock Market Summary

The large-cap indices climbed to new highs on this first trading day of 2020, as fresh stimulus out of China helped ignite a global equity rally. The Nasdaq Composite rose 1.3%, and the S&P 500 (+0.8%) and Dow Jones Industrial Average (+1.2%) following suit. The Russell 2000 (-0.1%) finished lower. 

China started the new year by announcing it will cut the reserve requirement ratio for small and large banks by 50 basis points on Jan. 6, providing about $115 billion in additional liquidity that can be lent out. China's Shanghai Composite rose 1.2%, and Europe Stoxx 600 rose 0.9% amid a view that the stimulus action could have global ripple effects.

In the U.S, the S&P 500 industrials sector (+1.8%) drew support from General Electric (GE 11.93, +0.77, +6.9%), and the Philadelphia Semiconductor Index (+2.1%) pushed to new highs amid strength in AMD (AMD 49.10, +3.24, +7.1%), which had its price target raised $58 from $40 at Nomura.

The mega-cap stocks in the S&P 500 information technology (+1.7%), communication services (+1.3%), and consumer discretionary (+1.3%) sectors continued to outperform, too. Apple (AAPL 300.35, +6.70, +2.3%), Amazon (AMZN 1898.01, +50.17, +2.7%), Alphabet (GOOG 1367.37, +30.35, +2.3%), and Facebook (FB 209.78, +4.53, +2.2%) each climbed more than 2.0%. 

Today was undoubtedly risk-on, but the weakness in the S&P 500 utilities (-1.4%), real estate (-1.3%), materials (-1.2%), and consumer staples (-0.8%) sectors, and the underperformance in the small-cap and even the mid-cap stocks, somewhat limited this sentiment to the market's most widely-held names.

The advance in longer-dated U.S. Treasuries, which caused some curve-flattening activity, was also another conflicting occurrence. The 2-yr yield was unchanged at 1.57%, and the 10-yr yield declined four basis points to 1.88%. The U.S. Dollar Index rose 0.4% to 96.81. WTI crude increased 0.1% (+0.05) to $61.15/bbl.

Two possible explanations for the interest in Treasuries included 1) the relatively soft manufacturing data out of China and Europe and 2) a view that the stock market was overbought and due for a pullback, thus leading to some defensive positioning in Treasuries. The latter view was not fully supported by the 9.5% drop in the CBOE Volatility Index (12.47, -1.31). 

Thursday's economic data was limited to the weekly Initial and Continuing Claims report:

  • Initial claims for the week ending December 28 decreased by 2,000 to 222,000 consensus 225,000) while continuing claims for the week ending December 21 increased by 5,000 to 1.728 million.
    • These headline results were not that intriguing, yet the key takeaway from the report -- and what is intriguing -- is that the four-week moving average for initial claims, which are a leading indicator, increased by 4,750 to 233,250. That is the highest four-week moving average since January 27, 2018.

Looking ahead, investors will receive the ISM Manufacturing Index for December, the FOMC Minutes from the Dec. 10-11 meeting, the Construction Spending report for November, and auto and truck sales throughout the day on Friday. 

  • Nasdaq Composite +1.3% YTD
  • Dow Jones Industrial Average +1.2% YTD
  • S&P 500 +0.8% YTD
  • Russell 2000 -0.1% YTD

FT : Why breakout consumer tech hits have become harder to find

Why breakout consumer tech hits have become harder to find
The main forces behind today’s must-have products are services and ecosystems

The Consumer Electronics Show, which takes place in Las Vegas next week, is an annual orgy of technology and gadgets. It also provides a fascinating glimpse of new categories of tech struggling to be born.

More than 10 years ago, one of the hits at the show was an LG “watch phone”, complete with a music player and built-in camera for video conferencing. Throwing these capabilities together turned out to be harder than it looked, and it took the genius of Apple to produce the first coherent packaging of wristwear technology in the shape of its Watch.

As a new decade dawns, the gadget enthusiasts will be out in force once again. But the factors animating the consumer electronics world have changed. Rather than technology and devices, the main forces behind today’s must-have products are services and ecosystems. Often, it is powerful companies from the tech and media worlds, operating in the background, who are pulling the strings.

One sign of this change is the way that breakout hits — the things that CES-goers most hope to find — have become few and far between. In the new world of connected devices, a standalone device capable of breaking the mould is now a rarity. When new things do break through — like GoPro’s wearable cameras — they struggle to maintain a lead without the motor of a compelling service to keep consumers interested and buying more.

A trail of disappointments from CE start-ups in 2019 make the point. One of the most technically accomplished companies in the field of personal robotics, Anki, failed after its run of well-received robotic toys ran out. Fitbit, which has been struggling to turn its fitness trackers into more useful health devices, sold itself to Google. And fans of augmented reality spent another year waiting in vain for Magic Leap, which has raised more than $2.5bn, to kick-start a new AR ecosystem of gadgets and content.

No wonder start-up investors have gone cold on the sector. According to figures from Crunchbase, US investors put $1.74bn into CE start-ups last year, down nearly 30 per cent from 2018 and the lowest level for four years. It was always hard to launch a company in the low-margin, hit-driven hardware world, but making it in the world of connected devices is even harder.

Exercise equipment maker Peloton beat the odds with its successful IPO last June, thanks to its built-in service and subscription revenue stream. But it is still far too soon to tell if it can go the distance, and this year’s CES will be full of copies, as well as people trying to apply the Peloton model to other areas of personal tech.

Services are now a vital force driving personal tech. Video streaming, for instance, was one of the biggest stories of 2019, as media and entertainment companies lined up to launch premium services. Voice assistants — led by Amazon’s Alexa and Google’s Assistant — have become the animating force behind many gadgets, making it more difficult for hardware makers to differentiate their products.

This year’s show is also likely to provide glimpses of the next cloud services lining up to disrupt consumer tech. These include cloud gaming, where Google’s recent entry into the market points to a world where much of the computing power that was once at consumers’ fingertips disappears into the data centre, even as a new generation of gaming consoles is about to be launched.

All of these services drive demand for more digital gadgets — but the subscription streams and other new business models they support are likely to yield higher returns for the services companies than the hardware makers.

The second force at work behind the scenes is the power of consumer tech ecosystems. Brand and technology integration are the factors that hold these together, along with a growing reliance on personal data. In the field of smart home devices, these factors are making Amazon and Google formidable competitors.

The most effective consumer tech ecosystem company, Apple, will not be at CES. Its impact will be felt everywhere — for instance, in the large number of companies trying to copy the success of its wireless AirPods. For consumers already living in Apple’s world, these will hold little appeal.

None of this will prevent the race to build the next breakout hit products. “Smart” and “connected” have been the watchwords that defined the frontiers of consumer electronics over the past few years. A technology revolution is now in the offing, as 5G connectivity and AI that can work at the level of the individual device bring a new impetus.

Next week will see the usual creative attempts to package these into the next must-have gadgets. But when the dust settles, most will have joined LG’s watch phone on the digital scrapheap.

WSJ : Recession Rises on List of CEO Fears for 2020

Recession Rises on List of CEO Fears for 2020
Economic slowdown and trade uncertainty are top concerns in survey of global business leaders

U.S. chief executives are getting worried about a recession.

Fear of an economic decline topped the list of their concerns going into 2020, according to a survey from the Conference Board, a business research group. The year prior, recession fears ranked third for U.S. chiefs, though first overall for CEOs around the world—as is again the case for 2020. Going into 2018, the topic was barely a blip in the survey data.

Last year, growth in gross domestic product globally slipped to 2.3% from 3% in 2018, and executives felt the pressure, said Bart van Ark, chief economist at the Conference Board. Uncertainty around a host of issues, from trade to climate change, has exacerbated their anxiety.

“Business leaders are like normal people. We just don’t quite understand where this all will be going,” Mr. van Ark said.

The Conference Board projects that global growth will accelerate slightly this year to 2.5%. The organization’s report accompanying the CEO survey warned that executive fears, justified or not, can have consequences for the economy.

“One real risk of this recession mindset is that it can become a self-fulfilling prophecy,” the report warned. The U.S. stock market ended 2019 near its highs.

Concerns about global trade linger, even after the announcement last month that China and the U.S. had reached a first-stage trade deal. Chinese CEOs surveyed by the Conference Board ranked the issue first among their external concerns, tied with recession risk. American CEOs ranked trade fourth, tied with global political instability.

The Conference Board conducted its survey of 740 CEOs in September and October, but Mr. van Ark said he believes December’s trade developments injected only so much confidence into the business world.

“As long as we don’t have any guidance about where it’s going to go next, it’s very hard to make big investments,” Mr. van Ark said. “I don’t think the stress of this is going to go away.”

The manufacturing sector feels the uncertainty acutely, he said, but the trade issue has ripple effects for all kinds of companies.

Speaking at Salesforce.com Inc. ’s annual investor day on Nov. 20, co-CEO Marc Benioff said trade was top of mind for the more than 100 CEOs he had spoken to recently.

“Because that issue is on the table, then everybody has a question mark around in some part of their business,” he said. “I mean, we’re in this strange economic time, we all know that.”

James Dimon of JPMorgan Chase & Co. and Miles White of Abbott Laboratories are among CEOs who have underscored the challenges of trade in recent months.

“Are we nervous about China? Are we nervous about all this? I think you can’t help but be nervous about it,” Mr. White told analysts and investors during Abbott’s earnings call in October.

Other top concerns for U.S. CEOs as the new decade dawns include more intense competition, the tight labor market and global political instability. Tension and unrest have been bubbling up in such places as Latin America, Hong Kong and the Middle East. The uncertainty over Brexit has eased a bit, but it will likely ramp up when trade negotiations really get under way, Mr. van Ark said.

“People feel like the deal is done, but the hard part is going to start,” he said.

When it comes to internal pressures, global CEOs ranked attracting and retaining top talent as their chief concern, followed by creating new business models because of disruptive technologies, fostering a more innovative culture and developing leaders.

Companies are struggling to find workers with the skills they want in the areas they want them, said Rebecca Ray, who leads the Conference Board’s human-capital center, and people are becoming more hesitant to uproot themselves for a job.

“It’s no longer the company-first kind of attitude that we had seen,” she said.

WSJ : Japanese, Turkish Prosecutors Begin Probes Into Ghosn’s Escape

Japanese, Turkish Prosecutors Begin Probes Into Ghosn’s Escape
Officials from both countries are trying to figure out how the former Nissan chairman got away

Japanese and Turkish authorities have started the early stages of probes in both countries into the circumstances of former auto executive Carlos Ghosn’s flight from bail in Tokyo to Lebanon.

Japanese prosecutors went through the house where Mr. Ghosn had been living in Tokyo before fleeing the country. The visit, though, was one of the few outward signs that officials there were trying to figure out how he got away.

As of Thursday, no Japanese government official responsible for the Ghosn case had issued any public statement on the matter. Prosecutors didn’t answer the phone, a foreign ministry official declined to comment and Prime Minister Shinzo Abe was on vacation.

Turkish prosecutors, meanwhile, have launched an investigation into how Mr. Ghosn made a stopover at Istanbul’s Atatürk Airport unbeknown to Turkish authorities, according to Turkish officials.

Turkish prosecutors have detained seven people in connection with the investigation, the officials said, including four pilots, an airline manager and two ground personnel.

The investigations come as authorities in Lebanon received an Interpol arrest notice for the former Nissan Motor chairman, according to a justice ministry statement posted on the official Lebanese state news agency.

An Interpol Red Notice isn’t an international arrest warrant, and member countries aren’t required to arrest an individual under notice. But the alert could impede Mr. Ghosn’s ability to travel, as other Interpol member states could provisionally arrest him on their soil. In that case, Japan might seek to extradite Mr. Ghosn if it holds an extradition treaty with the country in which he’s arrested.

At a three-story, cream-colored house in one of Tokyo’s highest-priced areas, two blocks away from a French bakery Mr. Ghosn patronized, authorities holed up inside for several hours and, when they came out, declined to say what they were looking for.

The trial Mr. Ghosn had been expected to face in Tokyo this year now looks as if it will never happen because Lebanon has no extradition treaty with Japan.

One reason for Tokyo’s official silence is Mr. Ghosn’s timing. The first word of his escape came on the morning of Dec. 31 Japan time, just as the nation was entering its most important holiday, the New Year’s break. The nation mostly shuts down for the first few days of the year, with people traveling to visit family and enjoy special New Year’s dishes.

There were signs authorities weren’t in a hurry to interrupt their vacations for the sake of Ghosn postmortems. A spokesman for Kansai International Airport near Osaka said on Thursday that prosecutors and police hadn’t contacted the airport to seek its cooperation, although he said he didn’t know whether employees were individually contacted. The Wall Street Journal and some Japanese media reported that a long-range Bombardier business jet left the Kansai airport on Sunday night and landed in Turkey Monday morning—matching what is known of Mr. Ghosn’s movements en route to Lebanon.

The airport itself hasn’t checked with employees who were on duty on Sunday because it hasn’t been confirmed that Mr. Ghosn was on the plane headed for Turkey, said spokesman Kenji Takanishi. He said passengers and crew of private jets must go through immigration and customs inspections. “We are all puzzled about how he could go through the checks,” Mr. Takanishi said.

Mr. Ghosn’s abrupt departure carries some advantages for Japan. A lengthy trial would have distracted Nissan and dredged up old disputes at a time when the car maker is trying to move on and recover from a severe business downturn.

Although Japanese prosecutors enjoy a conviction rate of more than 99%, this case was looking harder than most. Mr. Ghosn denied all wrongdoing, and in Junichiro Hironaka he had found one of the country’s most tenacious and successful defense lawyers. Many of the key witnesses were overseas—an unusual situation for Japanese prosecutors—and at least one key witness in Oman told prosecutors he didn’t know of any wrongdoing by Mr. Ghosn, according to people familiar with the matter.

Mr. Ghosn’s escape in violation of his bail terms—he is forfeiting nearly $14 million in bail money—allows prosecutors to argue he must have been guilty without having to prove it in court. “The defendant has of his own volition thrown away the opportunity to prove his innocence and restore his honor,” said the conservative Yomiuri newspaper in a commentary. For his part, Mr. Ghosn said he wasn’t escaping justice but rather an unjust and biased prosecution. Mr. Ghosn has French, Brazilian and Lebanese nationality and holds passports for all three countries.

Mr. Hironaka, the defense lawyer, expressed understanding for his client’s impatience to be free. He said Mr. Ghosn was frustrated at prosecutors’ tactics in the case, such as refusing to share potentially exculpatory Nissan emails.

Even Japanese media didn’t necessarily view the case as top news. The Asahi newspaper, one of the top national dailies, led its Jan. 1 edition with a report on another legal case, involving a lawmaker accused of taking bribes from a would-be casino operator, relegating the Ghosn case to No. 2 status. Mr. Ghosn also got second billing in the Nikkei business daily, which made its top story an analysis of capitalism’s troubles.

Among the seven people detained by Turkish authorities is a manager of MNG Jet Havacilik AS, the business-jet company that allegedly transported Mr. Ghosn from Japan to Lebanon via Istanbul, according to Turkish officials. Calls to MNG Jet weren’t answered on Thursday. An official at MNG Jet’s parent company, MNG Sirketler Grubu Holding AS, declined to comment.

Turkish government officials have said they found no trace in official records of Mr. Ghosn making a recent stopover in Turkey. It couldn’t be determined whether Mr. Ghosn traveled under an alias or eluded customs clearance when he transited through Istanbul.

FT : ‘Ethical vegan’ begins legal battle to protect veganism in law

‘Ethical vegan’ begins legal battle to protect veganism in law
Landmark UK case involves the claim he was discriminated against because of his beliefs

An “ethical vegan”, who claims he was sacked for his beliefs, has begun a landmark legal battle this week to try to protect veganism in law.

Jordi Casamitjana claimed he was dismissed from animal charity the League Against Cruel Sports in 2018 after telling colleagues their pension funds were invested in companies involved in animal testing, in a decision he said was discriminatory.

The organisation sacked him for “gross misconduct” after alleging he had given his colleagues biased financial advice in relation to their workplace pensions, against management’s instructions.

But Mr Casamitjana is pursuing a claim that he was discriminated against because of his veganism and unlawful dismissal on the basis of his ethical beliefs.

The former head of policy and research at the League Against Cruel Sports will first attempt to persuade a Norwich employment tribunal that veganism should be protected as a “philosophical belief” under the Equality Act 2010.

The two-day tribunal, which started on Thursday, will have 90 days to consider its decision. It is the first of a two-stage hearing: the tribunal will subsequently hear Mr Casamitjana’s claim for unlawful dismissal

The hearing follows an earlier, similar case brought by vegetarian George Conisbee, which was dismissed by a tribunal last year.

In that hearing Mr Conisbee, who had resigned his job as a hotel waiter, claimed he was discriminated against by his colleagues because of his vegetarianism. But the tribunal ruled that vegetarianism was an opinion, not a belief, and not worthy of protection under the 2010 Act.

The tribunal left the door open for a different finding for veganism, however, ruling that while vegetarians often cited different factors for their lifestyle choice “the reasons for being a vegan appear to be largely the same”.

Richard Fox, an employment partner at law firm Kingsley Napley, said that if Mr Casamitjana was successful it would establish new case law and give vegans recourse to call on the 2010 Act if they felt they were being discriminated against in the workplace. But Mr Fox added that he expected any ruling to be appealed.

“This is a big issue so it seems likely it will be appealed, particularly if what is decided is seen as unpopular and there is an outcry,” he said.

Ethical vegans avoid all forms of animal harm and exploitation, for example by eschewing leather clothing and products derived from animal testing. Mr Casamitjana uses vegan friendly toothpaste and sleeps on bedding made of synthetic fibres, linen or bamboo. He also tries to avoid public transport in case any animals or insects are killed during his journey.

Mr Casamitjana’s lawyers are using previous case law in an attempt to prove that ethical veganism is “worthy of respect in a democratic society . . . [and] compatible with human dignity and not in conflict with the rights of others”, according to documents filed with the tribunal.

His former employer does not dispute that veganism should have protected status, but is disputing his claim that he was unlawfully dismissed.

In a statement the charity said: “The League Against Cruel Sports is an inclusive employer and as this is a hearing to decide whether veganism should be a protected status, something which the League does not contest, it would be inappropriate for us to comment further.”

FT : Airbus: fight risk

Airbus: fight risk
If Boeing scraps the 737 Max, it could be the worst-case scenario for both manufacturers

Airbus shareholders are revelling in malheur d’autrui at arch rival Boeing’s decision to halt production of its 737 Max. Deliveries in 2019 for the European aerospace giant beat expectations with 863 planes, according to reports. Boeing only managed to deliver 345 in the year to November. While that may suggest a period of dominance for Airbus in the years ahead, it cannot so easily expand to fill any space left by its arch rival. 

The majority of Airbus deliveries have been for its A320neo jets, those that compete directly with Boeing's grounded aircraft. But just when air traffic growth shows signs of moderating, Airbus shares remain close to record highs. That should not last.

Airbus and Boeing have delivered a record of more than 15,000 aircraft between them since 2010. Shareholders in both companies have prospered and returns, once currency movements are accounted for, are similar. Boeing’s bad year puts Airbus holders shareholders ahead with share price and dividend gains close to 1,000 per cent over that period.


The fate of the 737 Max remains unknown, but Boeing scrapping the model could be the worst-case scenario for both manufacturers. That decision would lead to a race to spend billions on developing a new generation of narrow bodied jets, in which Airbus would be obliged to participate. Add to this possibility, growing pressure from environmental campaigners. That could result in higher investment in lower-carbon aircraft. High carbon taxes on kerosene would be an even more potent threat.

The market’s anticipation of free cash flow of almost €20bn from Airbus over the next three years therefore looks optimistic, says Jefferies. Analysts have been forecasting a doubling of dividends per share to €3.30 by 2022. The dividend yield is a modest 2 per cent.

Greater spending on research and development plus new equipment could curtail any shareholder largesse. Airbus shareholders can celebrate its lead over Boeing for now, but do not expect another decade like the last.