(ZewroHedge) Goldman's Top Strategist Reveals The Biggest Risks To The Market To

Goldman's Top Strategist Reveals The Biggest Risks To The Market Today


The past few months have been a very nervous time at Goldman Sachs, and not just because Gary Cohn wasn't picked to replace Janet Yellen as next Fed chair.
Back in September, Goldman strategist Peter Oppenheimer wrote that the bank's Bear Market Risk Indicator had recently shot up to 67%, prompting Goldman to ask, rhetorically, "should we be worried now?" The simple answer, as shown in the chart below, is a resounding yes because the last two times Goldman's bear market risk indicator was here, was just before the dot com bubble and just before the global financial crisis of 2008.
One month later, and a decade after Black Monday, it was Goldman's clients' turn to be nervous. As chief equity strategist David Kostin wrote in his Weekly Kickstart report, "In the ninth year of economic expansion, with S&P 500 up 15% YTD, the most common question from clients is, “When will the rally end?” He was referring to the chart below which he prefaced thus:


Thursday marked the 30-year anniversary of Black Monday. On October 19, 1987, the S&P 500 plunged by 22%, its worst single-day return on record. Following the decline in global equity markets, it took the S&P 500 a full year (October 20, 1988) to regain its pre-crash level. This week also marked 20 months since the last 10% S&P 500 correction and 16 months since the last 5% drawdown. This ranks as the fourth longest streak in history (behind 17-19 months in 1965, 1994, and 1996) and at 332 trading days is well above the historical average of 92 days. In the ninth year of economic expansion, with S&P 500 up 15% YTD, the most common question from clients is, “When will the rally end?”

Fast forward to today, when Goldman has dedicated its entire Top of Mind periodical by Allison Nathan to just one question: "how late are we in the business cycle", and when does it end. As Nathan writes, "more than eight years into the US economic expansion, there are few signs that it will end anytime soon. But with US equity indices at record-highs, 10-year Treasury yields only moderately off their lows, and valuations for both looking stretched, whether “no recession” also means “no correction” is Top of Mind." To answer the question, she polls the opinions of Omega Advisors Vice Chairman Steve Einhorn, Sam Zell, and various of Goldman's own strategists.


All agree that recession risk is low today and unlikely to move substantially higher before late 2019 or 2020. But they disagree on the amount of market risk today—and what to do about it.
As for Goldman's own view, which we discussed last week in why "Goldman's Clients Are Becoming Increasingly Schizophrenic", the taxpayer-backed hedge fund advises clients "to stay invested rather than try to time the next equity downturn," even though as Goldman itself admits, valuations have never been higher and the Fed's tightening process introduces a major risk factor to the complacency of the status quo.
And while there are several truly informative interviews in the report, the one we found most striking was that with Goldman's Charlie Himmelberg, whose official title is Co-Chief Markets Economist at Goldman Sachs and, due to his focus on credit instead of equity, is widely seen as Goldman's top strategist. Among the topics he covers are the following:
  • Where are we in the US business cycle today
  • Can the bull market can continue
  • Is the business cycle and the market cycle the same thing
  • Where are the vulnerabilities today
  • Do stretched valuations necessarily imply that we are heading towards a market correction
  • Would a major correction would play out differently in this cycle than in the last one
  • What should investors own today
But the most interesting discussion was what Himmelberg believes are the biggest risks to the market today. His answer is below:



Allison Nathan: So what do you see as the biggest risks to the market today?

I would focus on two. One is the withdrawal of quantitative easing (QE). In principle, it should be a non-issue. But I see good reasons to be worried, which are rooted in the psychology of markets. From my recent discussions with investor clients in both Europe and the US, it’s clear that most market participants give QE a lot of credit for the current level of bond and equity valuations. Unless that QE narrative can be replaced with something else, I see a risk that withdrawing QE will significantly reduce investors’ willingness to own the market. So far, the Fed has deftly managed the unwinding of QE, with no major market impact. But other QE programs around the world have to unwind at some point. So I do think there is quite a bit of risk—not in the year ahead but over the next several years—that markets will struggle to reconcile stretched valuations with reduced support from central banks.

The other risk I worry about is the possibility of a downturn in corporate profitability despite the continued economic expansion. That’s actually a fairly typical late-cycle pattern. Profit margins tend to fall much sooner than GDP growth, partly because the labor market puts pressure on wages at a time when companies don’t have as much pricing power, and have already exhausted the productivity gains from redeploying spare capacity. Given that we expect the unemployment rate to fall to 3.8%—with risks skewed to the downside—I think the pace of wage growth only picks up speed from here. And it isn’t obvious to me that companies can offset that. In addition to the usual competitive considerations, price inflation has been weak, and—again—stable inflation expectations have likely weighed on pricing power. So I have much higher conviction in wage inflation gaining traction in a tight labor market than in price inflation picking up in a world with such well-anchored expectations. So unless you’re quite optimistic about productivity gains to offset that wage growth, it’s hard to feel optimistic about the risks to profit margins over the next year.

Allison Nathan: These both look like longer-run risks to watch. What are you worried about nearer-term?

Charlie Himmelberg: If you told me six months from now that the market had sold off by 15%, I would say it was probably due to a shift in market psychology (like an over-reaction to the failure of tax reform or the end of QE) or some sort of marketglitch (like the 1987 crash). Market structure is very different today given the changes to broker-dealer balance sheet capacity since the financial crisis. We’ve also seen a growing allocation of retail and institutional money into “premium chasing” quant strategies, including, for example, ETFs that sell equity vol. I think many of these developments are positive, but the associated market structure remains largely untested. So I would not rule out the risk of a glitch that triggers, say, a 5-10% correction.
Want more? Below we excerpt the full interview with Charlie Himmelberg, Co-Chief Markets Economist at Goldman Sachs.



Allison Nathan: Where are we in the US business cycle today?

Charlie Himmelberg: There are many ways to date an economic expansion. Chronologically, the US economy is clearly late in the cycle. But when it comes to identifying the types of imbalances that could signal the end of the expansion, we seem to be coming up short. The labor market has arguably tightened beyond the level of full employment, but imbalances there still seem mild. And it’s hard to pinpoint any areas of excessive or unsustainable credit growth like what we saw in the last cycle. The household sector has actually been deleveraging in this expansion. Given that we’re in such a low-rate environment, this means that the debt burden on households is remarkably low today. In the corporate sector, while there has been significant re-leveraging, companies have been able to finance themselves at extremely low rates, and lock in those rates at long maturities. So even though we should be mindful of today’s high corporate leverage ratios, it’s hard to see how a slowdown in corporate credit creation would bring an end to this expansion, either. Finally, any fiscal headwinds that we might expect from deleveraging in the public sector are probably more behind us than they are ahead of us, especially if tax reform provides some tailwinds. This lack of imbalances suggests to me that the expansion has more room to run.

That said, what may be even more important to the longevity of the current cycle—and may not be as appreciated by investors—is the extent to which inflation expectations are anchored. This significantly reduces the risk that Fed actions pose to the expansion. More often than not, at least in postwar history, recessions were preceded by monetary tightening. That’s arguably because central banks did not always have the luxury of well-anchored inflation expectations. If you think back to the Volcker era, for example, central banks weren’t just fighting cyclical inflation; they were fighting the movement of inflation expectations. And once those inflation expectations get built up, it typically takes a tremendous amount of economic pain to bring them back down. As a result, policymakers have historically been inclined to hike out of the mere fear of inflation, which raises the risk of stopping an expansion prematurely.

But today, well-anchored inflation expectations allow the Fed to move gradually and test whether we are actually at an inflationary point of capacity utilization. We may be forecasting more Fed hikes than the market is pricing, but we expect them to happen at roughly half the pace of past hiking cycles. It therefore seems much less likely this time around that the Fed will precipitate a recession.

Allison Nathan: Does that imply that the bull market can continue? Should we think about the business cycle and the market cycle as one and the same?

Charlie Himmelberg: Not quite. There has been a pretty close correlation over the last 50-60 years between the stock market and the real economy. The stock market tends to lead the business cycle by about eight months on average. But at the same time, asset markets experience a lot of volatility that doesn’t always signal an impending economic slowdown. As the economist Paul Samuelson liked to say, the stock market has forecasted “nine of the last five recessions.” My view is that the conditions today are actually pretty ripe for a market correction, but not a recession. Again, it’s very hard to tell a story where the real economy rolls over. It’s easier to tell a story where the market cracks on some other catalyst.

Allison Nathan: Where do you see vulnerabilities today?

Charlie Himmelberg: Equity and bond market valuations look extreme by any metric. While there are some good fundamental reasons for that, it’s hard not to worry that the risk premium in risky assets has fallen to unsustainable levels.

Allison Nathan: But on the equity side, aren’t valuations justified by low interest rates?

Charlie Himmelberg: That is a common refrain, but the devil is in the details. Much of the decline in long-term rates is due to factors that have nothing to do with how one should value future dividends for equities. I would argue that the single biggest reason for the decline in ten-year bond yields over the last 30 years is the decline in inflation. Since the early 1980s, estimates of the term premium have declined roughly five percentage points, which is tied not only to the lower levels of inflation, but also to the lower risk of inflation. In theory, these factors should play no role in the discounting of dividends for equities. Adjusted for these factors, rates have not declined by nearly as much as ten-year bond yields. That means that the equity risk premium has not fallen nearly as much as the decline in 10-year yields would seem to imply. So in my view, the equity market can’t use the decline in bond yields as justification for current valuations; valuations are just high.

Allison Nathan: Do stretched valuations necessarily imply that we are heading towards a market correction?

Charlie Himmelberg: No. That’s the tricky part—the pain trade, so to speak. If you look historically at the effects of high valuations on tactical returns, say, one or two years ahead, it’s surprisingly difficult to get bearish readings off of valuations. Now, over a longer horizon, the current level of equity valuations does imply very low expected returns. In fact, by my estimates, they imply expected returns on the order of zero over the next five years. That is obviously far below historical averages, suggesting that at some point in the next five years, we are indeed going to see some kind of correction. But how much edge do valuations give you in predicting the timing of that correction? Statistically, the answer is disappointingly little.

Allison Nathan: So what do you see as the biggest risks to the market today?

Charlie Himmelberg: I would focus on two. One is the withdrawal of quantitative easing (QE). In principle, it should be a non-issue. But I see good reasons to be worried, which are rooted in the psychology of markets. From my recent discussions with investor clients in both Europe and the US, it’s clear that most market participants give QE a lot of credit for the current level of bond and equity valuations. Unless that QE narrative can be replaced with something else, I see a risk that withdrawing QE will significantly reduce investors’ willingness to own the market. So far, the Fed has deftly managed the unwinding of QE, with no major market impact. But other QE programs around the world have to unwind at some point. So I do think there is quite a bit of risk—not in the year ahead but over the next several years—that markets will struggle to reconcile stretched valuations with reduced support from central banks.

The other risk I worry about is the possibility of a downturn in corporate profitability despite the continued economic expansion. That’s actually a fairly typical late-cycle pattern. Profit margins tend to fall much sooner than GDP growth, partly because the labor market puts pressure on wages at a time when companies don’t have as much pricing power, and have already exhausted the productivity gains from redeploying spare capacity. Given that we expect the unemployment rate to fall to 3.8%—with risks skewed to the downside—I think the pace of wage growth only picks up speed from here. And it isn’t obvious to me that companies can offset that. In addition to the usual competitive considerations, price inflation has been weak, and—again—stable inflation expectations have likely weighed on pricing power. So I have much higher conviction in wage inflation gaining traction in a tight labor market than in price inflation picking up in a world with such well-anchored expectations. So unless you’re quite optimistic about productivity gains to offset that wage growth, it’s hard to feel optimistic about the risks to profit margins over the next year.

Allison Nathan: These both look like longer-run risks to watch. What are you worried about nearer-term?

Charlie Himmelberg: If you told me six months from now that the market had sold off by 15%, I would say it was probably due to a shift in market psychology (like an over-reaction to the failure of tax reform or the end of QE) or some sort of market glitch (like the 1987 crash). Market structure is very different today given the changes to broker-dealer balance sheet capacity since the financial crisis. We’ve also seen a growing allocation of retail and institutional money into “premium chasing” quant strategies, including, for example, ETFs that sell equity vol. I think many of these developments are positive, but the associated market structure remains largely untested. So I would not rule out the risk of a glitch that triggers, say, a 5-10% correction.

Allison Nathan: Do you think a major correction would play out differently in this cycle than in the last one?

Charlie Himmelberg: Yes, because the search for yield in the current cycle has evolved differently. In the run-up to the last crisis, the search for yield went off the tracks by applying high leverage to structures that featured some pretty dramatic mismatches between maturity and liquidity. When that came apart, it resulted in forced liquidations and a downward spiral in prices. In the current expansion, the search for yield has probably been at least as intense, but I think the lessons learned in the crisis have discouraged a repeat of these mistakes. Instead, I think illiquidity is the new leverage. With so much competition for assets at increasingly high prices, many investors—especially long-duration investors like insurers and pensions—seem to be putting as much of their portfolio as possible into illiquid assets. That includes private equity, private debt, direct lending, and commercial real estate (CRE), among others. You can see this shift in the differential between the rate of return on CRE and real yields on Treasuries, which is closing in on 30-year lows. So the premium required to sacrifice liquidity has compressed.

The silver lining is that not only have investors deployed far less leverage than in the last cycle; in many cases, they’re also sitting on a lot more cash. So if a market dip reaches fairly sizeable levels—say, 10% or 15%—there is money on the sidelines that could step in to seize those opportunities. So there is limited leverage to fuel a fire, and maybe even a little water to help douse the flames.

Allison Nathan: Given everything we have discussed, what should investors own today?

Charlie Himmelberg: Investors will have to strike a difficult balance. On the one hand, this recovery can probably power through 2018 and even a couple of years beyond that. Even if investors knew with perfect foresight that a recession would start in two years’ time, history suggests they would want to stay fully invested; the year prior to a recession has historically been the best year to own equities, and it has not made sense to rotate out of them until the recession was practically upon us. That said, it’s hard not to want to be defensive, given where current valuations are.

I would describe my own view as “reluctantly bullish,” which in practice means I’m bullish on economic growth, but cautious on valuations. So, for example, if you want to own equities today, I think you want to own “growth betas,” like global industrials. I think it also means you want to own emerging market equities, many of which are further behind in the cycle, and companies in developed markets that can keep up rapid sales growth. I also think that 10-year Treasury yields in the mid-2% range are not as over-valued as many assume, since growth risks skew toward recession beyond the next one to two years. If we do find ourselves in a recession, markets will know that policy rates are going back to zero, in which case duration should provide a valuable hedge to risk portfolios.
Finally, here is a chart from Goldman that puts over 160 years of the US business cycle, including booms and busts in context:

>>> Crayon in preliminary talks with targets as it sets eyes on European M&A fol

Crayon in preliminary talks with targets as it sets eyes on European M&A following IPO - CEO
10 NOV 2017
Crayon Group [OBX:CRAYON], a Norwegian software asset management (SAM) consultancy is in preliminary talks with potential targets as it seeks to strengthen its presence across its international markets, CEO Torgrim Takle said.
Crayon, which raised NOK 340m (EUR 35.6m) from its listing on the Oslo Stock Exchange on 8 November, has an active pipeline of approximately 15 potential targets, he said. Its main focus for the near future, however, is to ensure the profitability and build up of all its international operations, he added. M&A will become more important in the next two to three years, but the company could make acquisitions sooner, he said.
Crayon has previously sought assistance from financial advisers to identify targets, but has not found a suitable adviser that has knowledge of the sector in all the different markets it is interested in, Takle said. For this reason, it is conducting the target identification process internally, but would welcome advisory pitches on potential targets as long as they fit its criteria, he said.
It may use a financial adviser in executing M&A deals but this will depend on the target size, he said.
It is interested in software and digital services businesses in the c. USD 10m – USD 50m revenue range, particularly in the UK, the Benelux region, France, Spain, Portugal, and the US, where it wants to strengthen its existing presence, he said. It is not interested in entering any new markets, he added.
Cloud-based solutions such as systems monitoring, software optimisation, predictive analytics, and machine learning are interesting areas in which Crayon could acquire, Takle said.
A competitive market environment means that valuations become more attractive, he said, adding that it would ideally pay between 3x – 5x EBITDA for targets. There are plenty of targets in the IT services sector, in which local markets are highly competitive with over-representation of players that do not have sufficient scale, Takle said.
It prefers targets with a maximum of 100 employees as the bigger the staff, the more complex the integration process, Takle said.
Crayon prefers to buy majority stakes, but owning 100% is not critical and it likes to keep local management that maintains a minority ownership in the company, in place, he said.
It favours an earn-out acquisition structure, Takle said adding that most of its past acquisitions have been done this way and it intends to use this model in future purchases.
It also receives approaches from companies looking to sell, he said declining to elaborate.
Crayon will look at acquisition financing case-by-case but could use a combination of cash and own shares, Takle said.
Crayon reported NOK 6bn FY16 revenue and NOK 103m EBITDA, compared to FY15 NOK 4.7bn and NOK 114m, respectively. It recorded NOK 3.76bn 1H17 revenue and NOK 82.24m Adjusted EBITDA, compared to NOK 3.2bn and NOK 52.98m in the same period last year, respectively.
The company was established in 2002 and was previously listed, until acquired by Norwegian private equity firm Norvestor in 2012. Norvestor remains the largest shareholder with approximately 22% holding following the IPO.
Crayon operates in 21 countries across the world, and has approximately 1,000 employees. It offers software asset management, cloud and volume licensing, and associated consulting services.
Its competitors include Switzerland-headquartered SoftwareONE, and the big four consultancies EY, KPMG, PwC and Deloitte, as well as numerous local players in its operating markets, including Norwegian Atea [OBX:ATEA], Takle said.

>>> Qualcomm between rock and hard place

Qualcomm between rock and hard place (MergerMArket)

Dealspeak is a weekly snapshot of the latest trends driving global M&A. To view the newsletter, click here.

Broadcom’s [NASDAQ:AVGO] USD 130bn unsolicited approach to buy Qualcomm [NASDAQ: QCOM] could be considered one of two things: either the first move of creating a hugely complimentary combination, creating a more comprehensive, ‘stickier’ business for smartphone manufacturer licensees, or a non-starter.
Qualcomm could reasonably reject the approach, citing price and regulatory risk. Yet even if it does, Broadcom is reportedly open to pursuing a hostile takeover – although a lack of co-operation could mean a smooth process is far from likely.
Preliminary analysis of regulatory risks suggests the merger control process will be lengthy and challenging. To begin with, the deal would require filing in the EU, US, China, Taiwan, Japan and Korea such is the global reach of each company.
Broadcom’s USD 70 per share move comes at a time when Qualcomm’s share price is suffering due to an ongoing intellectual property and royalty dispute with Apple [NASDAQ:AAPL]. The dispute negatively impacted the company’s Q4 results, with net income falling 89% year-on-year.
Broadcom has duly pounced.

WSJ : The Workplace After Harvey Weinstein: Harassment Scandals Prompt Rapid Cha

The Workplace After Harvey Weinstein: Harassment Scandals Prompt Rapid Changes
Sexual-misconduct claims in Hollywood and beyond prompt firms to scrutinize how employees work together.

Top brass at advertising giant Interpublic Group of Co s. told its 20,000 U.S. employees last week they had until year’s end to complete sexual-harassment training. The session quizzes employees on what to do when a co-worker discusses weekend sexual exploits at work or comes on to a colleague’s girlfriend after hours.

IPG doesn’t have a harassment scandal. Chief Executive Michael Roth told his board he fast-tracked announcing the mandatory training, a board member says, in response to high-profile harassment allegations in Hollywood and media.

“Women are crucial to our business and our workforce,” says Mr. Roth. “We need our environment to be safe for all.”

The wave of misconduct allegations has abruptly shifted the climate in American workplaces, prompting companies to scrutinize how employees work with one another, in one of the most rapid changes in corporate behavior in generations.

Vox Media says it tapped an outside firm to examine its procedures following the dismissal of an executive for inappropriate behavior. Uber Technologies Inc. says it added staff to examine worker concerns including reports of inappropriate conduct, following female employees’ allegations of harassment and mistreatment.

At a growing number of companies that haven’t had public allegations of sexual harassment, including Dell Inc., Rockwell Automation Inc. and Facebook Inc., some employees have attended training sessions meant to detect biases that can lead to harassment. House Speaker Paul Ryan last week called upon members of Congress to provide sexual-harassment training for their staffers.

The dam broke with the October revelation in New York Times and New Yorker articles that Hollywood producer Harvey Weinstein for decades allegedly engaged in sexual misconduct. His namesake studio fired him, citing the allegations as cause. A spokeswoman for Mr. Weinstein said he “unequivocally” denies “allegations of nonconsensual sex.”

Since the October reports, more reports of workplace sexual harassment have emerged from individual women and men, and from news accounts and companies. As accusations pile up, they are sparking public and private workplace conversations about how men and women work together, and how companies deal with same-sex harassment.

Managers describe a clear epochal shift: Before Weinstein to After Weinstein.

“This is a moment where people will not turn their heads when something is wrong,” says Pamela Craig, a former Accenture PLC finance chief who sits on the boards of Merck & Co. and Akamai Technologies Inc. and is foundation chair at C200, a women’s leadership organization. “We need to make it a watershed.”

Some liken the moment to the early 1990s, when Anita Hill testified that Clarence Thomas, then U.S. Supreme Court nominee, had sexually harassed her when he was her boss, igniting a national conversation about workplace harassment. He denied her allegations. Mr. Thomas’s supporters questioned Ms. Hill’s credibility and motives, and he was confirmed to the court in a 52-to-48 vote.

Support for women’s issues swelled—a flood of new female members of Congress were elected in 1992, dubbed “The Anita Hill Class”—but workplace changes were limited.


The speed and sweep of the consequences this time around show how shifting social values, given a catalyst, can abruptly force change in the social-media era—a phenomenon also seen in rapid policy shifts toward same-sex marriage.

In the case of Mr. Weinstein, the fact that some of his accusers were well-known actresses forced people to take notice and emboldened millions more women to share their stories online, using the hashtag #MeToo.

Boardrooms typically don’t address the topic of sexual harassment unless a lawsuit has been filed against the company or a complaint involves a named executive. Now, some directors say they can no longer sit on the sidelines.

“Just as boards should not wait for the Equifax breach to put in place proper cyberdefense and data-security policies, similarly they shouldn’t require a grotesque Harvey Weinstein example to suddenly say, ‘oh, gee, we better check how our own culture is,’ ” says Tom Glocer, former Thomson Reuters CEO, who sits on several corporate boards including Morgan Stanley and Publicis Groupe SA .

More allegations are certain to emerge, business leaders say. But the treatment of women in the workplace is getting better, many say, not worse. Kathleen Peratis, a partner with the law firm Outten & Golden who handles harassment cases, says she believes there is somewhat less harassment today than there was 25 years ago, largely because women have more power at work and are expressing more outrage.

“Women feel they aren’t going to be sent to Siberia, and that’s giving them courage to speak out,” says Maggie Wilderotter, former Frontier Communications Corp. CEO and a director at Costco Wholesale Corp. , Juno Therapeutics Inc., Hewlett Packard Enterprise Co. and Cadence Design Systems Inc. Women now possess greater visibility and power in business, she says, coupled with a belief that they have strong career options.

Ms. Wilderotter has noticed a generational change. At a recent dinner gathering of about 30 senior executive women, “practically all said they had to fend for themselves” in the past with unwanted sexual advances at work. The new generation of working women, she says, is less willing to sweep things under the rug and knows employers are more likely to take action and investigate.

Though a large number of the women coming forward are white-collar employees, harassment is equally if not more prevalent in the hourly workforce, workplace experts say, but a similar groundswell is unlikely because the risk of speaking up and losing income may be too great.

Before Weinstein
Even Before Weinstein, recent high-profile scandals in media and entertainment were beginning to draw more attention to sexual misconduct in the workplace.

At Fox News, Roger Ailes was ousted as the network’s boss following allegations against him that led the company to pay out millions in settlements to alleged victims. Top Fox host Bill O’Reilly also departed following revelations that he and the company paid settlements to women who had accused him of harassment. Mr. O’Reilly denies all wrongdoing. Mr. Ailes, who denied wrongdoing, died this year.

Fox News parent 21st Century Fox Inc., which shares common ownership with Wall Street Journal parent News Corp, says it has “directed its businesses to accelerate the pace of live training on workplace behavior” and “continued to strengthen reporting practices.”

Walt Disney Co.’s ESPN, which has been through intense periods of self-examination about men and women at work, continues to tackle internal culture issues. On Oct. 23, it canceled a show made in partnership with Barstool Sports after Sam Ponder, a female ESPN host, tweeted that Barstool’s president, David Portnoy, made sexist statements about her, calling her a “slut” in a 2014 blog post, among other comments.

ESPN knew of those statements at the time it chose to proceed with launching the show, believing there was enough distance between Barstool’s on-air staff and the company’s president, people familiar with the matter say. Before the first episode aired, executives spoke with Ms. Ponder, who expressed confusion and frustration, they say.

Still, the network was surprised by Ms. Ponder’s tweets and feedback from other employees, one of the people said. Some asked whether the company would continue with the Barstool show if the offensive comment had been a racist one, rather than a sexist one. That resonated with top ESPN executives, who canceled the show after a single episode. Barstool didn’t respond to a request for comment. In a statement streamed online after the show was canceled, Mr. Portnoy said: “I get why ESPN canceled the show. The executives there were put in a box.”

After Amazon.com Inc.’s Hollywood studio head, Roy Price, resigned after a sexual-harassment allegation against him was made public, Senior Vice President Jeffrey Blackburn sent Amazon Studios a memo saying “we will use these events as an opportunity to review our sexual-harassment policy and processes to ensure they are doing their job to provide a harassment-free workplace. And if they are not, we will make the necessary changes.”

Amazon declined to comment. A spokesman for Mr. Price referred inquiries to an earlier statement to the Journal by Mr. Price’s lawyer contesting the allegation.

The latest controversies have left employees wondering what relationships, communications and interactions are appropriate at work. Complicating matters is the always-on work culture in sectors such as tech, finance, law and media, where long hours and constant communications blur the line between work and life.

Reaction has been remarkably swift at many companies, even when some of the alleged offenses were decades old.

Michael Oreskes, a top NPR news executive, resigned last week following reports he made unwelcome physical contact with two women when he was the New York Times’s Washington bureau chief in the late 1990s. Mr. Oreskes, who described the behavior as “inexcusable” in a statement, didn’t respond to requests for comment.

NPR says it has brought in an outside law firm to review how it handled the matter. The Times says it has reviewed its files and interviewed managers from the time in question and found no formal complaints about Mr. Oreskes’s behavior. It has announced additional mandatory training for its managers on appropriate conduct in the workplace and how to respond to allegations of abuse.

‘Tipping point’
“We are in an appropriately hypersensitive time,” says a prominent media executive who sits on multiple industry boards. “We’ve crossed a tipping point and people are taking this much more seriously now.”

Vox Media took rapid action after a former web developer, Eden Rohatensky, published a long post on Medium, a blogging platform, on Oct. 12 alleging sexually harassment and assault by colleagues at a number of places she had worked, without naming people or workplaces. One incident she described, in which an unnamed vice president kissed her neck in the back seat of a taxi, got the attention of executives at Vox, where she had once worked, says a Vox spokeswoman.

A week later, CEO Jim Bankoff announced that editorial director Lockhart Steele had been fired after he “admitted engaging in conduct that is inconsistent with our core values.” An outside law firm was brought in to help with an “ongoing” probe. Mr. Steele and Ms. Rohatensky didn’t respond to messages seeking comment.

“There are multiple investigations happening,” Mr. Bankoff told staffers the following day, according to Vox’s spokeswoman. “This is something that is extraordinarily serious but also extraordinarily new to us.”

The intense focus on workplace sexual harassment, while overdue, may lead to unintended consequences, says Michael Welp, whose consultancy, White Men as Diversity Partners, has worked with large employers including Rockwell Automation and Dell. Some men in Mr. Welp’s corporate workshops describe avoiding conversations and teamwork with women colleagues, he says, “afraid that if they do one thing wrong, they’ll get labeled a harasser and sent to HR.”

That leaves women out of the conversations and collegial relationships that could help them advance, he says. “Companies have to grapple with all sides of this.”

Some men who believe women’s stock is rising at work find it hard to accept that harassment may be a problem in their firms. At a workshop that his company held recently with managers at the Stockholm office of a U.S. technology company, Mr. Welp says, the men present said “we don’t have these issues, so we don’t have to deal with this.”

But a female human-resource manager told the group she had been trying to deal with a male manager who brought a scale to work and weighed and measured the women on his team. “Our question to the group,” Mr. Welp says, “was ‘why weren’t other men here intervening and stopping that, and what about this culture enabled this to occur?’ ”

Similar questions have echoed in the venture-capital world following a series of news reports detailing alleged harassment of female entrepreneurs by several male venture capitalists. Emotions ran high at an August emergency board session called by the National Venture Capital Association to address the reports and discuss fixes, says Kate Mitchell, co-founder and partner at Scale Venture Partners, of Foster City, Calif., and former chairwoman of the group, which represents hundreds of top venture firms.

The group has held subsequent workshops and meetings with the affected women and others. “More men began to say ‘first of all, this is no longer somebody doing something on their own and it’s a one time guy with too much money and too much alcohol,’ ” Ms. Mitchell says.

Rather, she says, their view was: “This is now becoming more systemic, it’s impacting the way we do business, it’s bleeding back into the way we interact inside our firms.”

Reuters - ADP, FDJ: state agency denies hiring Credit Suisse and BNP Paribas for

ADP, FDJ: state agency denies hiring Credit Suisse and BNP Paribas for privatisation

French state-owned agency Agence des Participations de l’Etat (APE) has denied previous reports that it had appointed Credit Suisse to advise on the privatisation of listed French airports operator Aeroports de Paris [EPA:ADP], according to a newswire. Reuters cited yesterday (Thursday) a spokesperson for APE as saying that the agency did not mandate Credit Suisse, nor did it appoint BNP Paribas to advise on the privatisation of French lottery and gaming specialist Française des Jeux (FDJ).
The French government owns via APE 72% of FDJ and 50.6% of ADP. The spokesperson said that the information appeared in the press were rumours without any basis, adding that the government had yet to take a decision regarding a modification of ADP’s and FDJ’s shareholder capital.


>>> Apple supplier eyes smart speakers with facial recognition --> +ve STM...

--> +ve for STM...
Apple supplier eyes smart speakers with facial recognition
Taiwan's Inventec Appliances to ship first HomePod batch before holiday season

TAIPEI -- Apple HomePod maker Inventec Appliances said on Friday that it expects future voice assistant products to offer 3-D sensing features, including facial and image recognition.


"We see trends that engineers are designing smart speakers that will not only come with voice recognition but also incorporate features such as facial and image recognition," President David Ho told reporters after the company's earnings conference. "Such AI-related features are set to make people's lives more convenient and to make the product easier to use." He added, however, that he was unsure at the moment whether smart speakers with more AI features in the future would become a hit in the market.
Ho did not specify which product he was talking about, but analysts said he is likely referring to the next generation of Apple's HomePod, the $349 voice-activated speaker that will compete with Amazon Echo and Google Home.
Inventec Appliances, a subsidiary of Taiwanese electronic contract manufacturer Inventec, currently monopolizes orders for the HomePod as well as AirPods, Apple's wireless earbuds, according to analysts. It also makes smartphones for China-based Xiaomi, wearable products for America's Fitbit and smart speakers for U.S.-based Sonos and others.
Jeff Pu, an analyst at Yuanta Investment Consulting, said Apple could roll out HomePods with 3D-sensing cameras in 2019.
Apple's recently released iPhone X is its first product to come with a 3D-sensing facial recognition feature that allows users to unlock phones and make payments, as well as  so-called animojis, or emojis that mirror users' own facial expressions through the front camera.
Meanwhile, Ho confirms that his company will ship a "new voice-enabled smart speaker" by the end of the year to meet the holiday season demand. He added that his company makes smart speakers for more than one client and some of them already shipped in mid-2017.
Apple said earlier this year that HomePod will be available in December, initially in Australia, the U.S. and the U.K. Inventec Appliances will only ship about 50,000 units of the device by the end of this year, said Arthur Liao, an analyst at Taipei-based Fubon Securities.
"According to supply-chain checking, Apple is set to make 4 million units of HomePod in 2018, but we are currently a bit conservative about whether the demand would be that good," said Liao.
For 2018, company officials said Inventec Appliances' total shipments of smart and connected devices would likely grow single digits from this year's estimated level of around 70 million units. They did not break down shipments among smartphones, Apple products and others, but said demand for audio wearable gadgets will continue to swell.

Fubon's Liao said shipments of AirPods would total around 20 million units this year and could increase to around 30 million units in 2018.
China-based Luxshare Precision Industry is working hard to procure orders to make AirPods for Apple in 2018, while Inventec will also need to split orders with major iPhone assembler Hon Hai Precision Industry for manufacturing the HomePod next year, according to industry sources.

Reuters - Amazon seeks staff in European insurance push

Amazon seeks staff in European insurance push

LONDON (Reuters) - Amazon.com Inc is expanding its nascent European product insurance business, according to recent job adverts, which industry watchers say could signal the start of broader ambitions in insurance.

Amazon Protect, which provides extensions to manufacturers’ warranties for items like mobile phones or washing machines bought on Amazon’s website, launched last year in Europe.

It is Amazon’s only insurance business globally.

Recent job advertisements for the EU product insurance division described “launching a new business” and “creating a new palette of services”.

“This is a sure sign disruption is on the way for the UK insurance market,” said Patricia Davies, financial services analyst at data and analytics firm GlobalData.

An Amazon UK spokesman declined to comment.

Specialist insurers are concerned that Amazon and other online players will encroach on their territory, and are looking to partner with them.

Investment in insurtech firms in Europe has risen sharply in the first half of 2017, often with the backing of big insurers.

Amazon Protect launched in Britain in April 2016, quickly expanding to the firm’s main European markets of France, Germany, Italy and Spain.

Its policies give customers an extension on manufacturers’ two-year warranties for up to five years, insuring against accidental damage, breakdown and theft.

The Warranty Group, which underwrites Amazon Protect policies, did not respond to a request for comment.

Amazon posted the jobs on LinkedIn and “Where Women Work” in recent weeks.

“Along with internal and external partners, we are re-defining the warranties and product insurance experience, disrupting the way traditional product insurance services are acquired and delivered and creating a new palette of services,” one job ad, which is no longer accepting applications, said.

Another asked: “Would you like to take part in launching a new business?”

Insurers have been looking at ways of tapping into the so-called connected home, for instance by offering home insurance cover which will alert you if your pipes have sprung a leak.

Amazon’s launch of voice-activated home personal assistant Alexa could give an opportunity for it to expand into this area of home insurance, Davies said.

“I don’t expect them to come up with traditional insurance products,” she said.