NYT : Disney’s Big Bet on Streaming Relies on Little-Known Tech Company

Disney’s Big Bet on Streaming Relies on Little-Known Tech Company

For two days in late June, Disney’s board of directors gathered at Walt Disney World in Florida to wrestle with one topic: how technology was disrupting the company’s traditional movie, television and theme park businesses, and what to do about it?

The most startling presentation came from Disney’s biggest division — a $24 billion television operation anchored by ESPN and Disney Channel. Cord cutting was accelerating much faster than expected. Live viewing for some children’s programming was in free fall. At the same time, streaming services like Netflix were experiencing explosive growth.

With Disney’s board exhorting speedy action, Robert A. Iger, Disney’s chief executive and chairman, proposed a legacy-defining move. It was time for Disney to double down on streaming.

And that was how the Disney board, which includes Silicon Valley stars like Sheryl Sandberg of Facebook and Jack Dorsey of Twitter, came to bet the entertainment giant’s future on a wonky, little-known technology company housed in a former cookie factory: BamTech.

In August, Disney announced that it would introduce two subscription streaming services, both built by BamTech. One, focused on sports programming and made available through the ESPN app, would arrive in the spring. The other, centered on movies and television shows from Disney, Pixar, Marvel and Lucasfilm, would debut in late 2019.

“We’re going to launch big, and we’re going to launch hot,” Mr. Iger promised at a subsequent investor conference.

Disney had experimented with building a streaming platform on its own, to mixed results. It also toyed with the idea of buying Twitter.

But Mr. Iger was impressed with BamTech. Based in Manhattan’s Chelsea Market, a former factory for the National Biscuit Company, the 850-employee company has a strong track record — no serious glitches, even when delivering tens of millions of live streams at a time. BamTech also has impressive advertising technology (inserting ads in video based on viewer location) and a strong reputation for attracting and keeping viewers, not to mention billing them.

“BamTech really is as good as it gets,” said Mike Vorhaus, president of Magid Advisors, a media and technology consultant.

BamTech grew out of Major League Baseball Advanced Media, or Bam for short, which was founded in 2000 as a way to help teams create websites. By 2002, Bam was experimenting with streaming video as a way for out-of-town fans to watch games.

Soon, Bam developed technology that attracted outside clients, including the WWE, Fox Sports, PlayStation Vue and Hulu. HBO went to Bam in 2014 after failing to create a reliable stand-alone streaming service on its own. Could Bam get HBO up and running — in just a few months?

Bam built HBO Now for roughly $50 million, delivering it just in time for the Season 5 premiere of “Game of Thrones,” which went off flawlessly. “They were nothing short of herculean for us,” said Richard Plepler, HBO’s chief executive.

In 2015, Bam decided to spin off its streaming division, calling it BamTech. With an eye toward its own direct-to-consumer future, particularly with ESPN, Disney paid $1 billion in 2016 for a 33 percent stake and an option to buy a controlling interest in 2020. To run the stand-alone company, M.L.B. and Disney recruited Michael Paull, 46, from Amazon, where he oversaw the introduction of Prime Video.

Disney started talking about the inevitable shift toward streaming in 2006, according to Kevin Mayer, Disney’s chief strategy officer. But the world’s largest entertainment company had to be careful: It could not embrace a new business model at the expense of its still highly profitable existing one — at least not until it saw a tipping point.

So Disney, along with other television companies, first tried something called TV Everywhere. Introduced in 2010, it allowed people to watch television shows on mobile devices as long as they “authenticated” themselves as current cable or satellite subscribers. But that cable bundle-saving effort proved cumbersome and never completely caught on.

About three years ago, Disney started to look at streaming more aggressively. Disney experimented with going it alone, quietly developing an app called DisneyLife. Introduced in November 2015 in Britain, DisneyLife offered old Disney movies and television series, children’s e-books, games and music. Subscriptions cost about $13 a month.

The lesson from that was without new movies, or at least exclusive content, interest was limited. Disney soon cut the subscription price in half. After two years, analysts estimate that DisneyLife has only about 437,000 subscribers. (It was never introduced outside Britain.)

Disney also weighed a bid for Twitter. “We thought Twitter had global reach, a pretty interesting user interface and a compelling way that we might be able to present and sell the content that our company makes to the consumer,” Mr. Iger said at a Vanity Fair conference last Tuesday. Ultimately, though, Disney passed. Twitter’s growing reputation as a platform where hate speech can be disseminated would have posed a problem for the Disney brand.

So when Mr. Iger decided in June that the time had come to reposition Disney’s television division for growth by offering its sports, movies and television programming directly to consumers, he asked BamTech to accelerate Disney’s option to take a controlling interest. By early August, Disney had agreed to spend an additional $1.58 billion to bring its BamTech stake to 75 percent.

Most analysts cheered Disney’s streaming plans, but some investors seem to be taking a wait-and-see approach. One reason is cost.

Start-up expenses are unknown, but Disney has signaled that they will be huge. (Analysts estimate that marketing alone could easily run $150 million annually.) Disney has also not announced how much it will charge for subscriptions to the still-unnamed services. (Analysts are guessing $5 to $9 a month.) What is certain: To stock its own offerings, Disney plans to pull content from other services — Disney, Pixar, Marvel and Lucasfilm movies will eventually disappear from Netflix — eliminating an enormous, reliable revenue stream.

Michael Nathanson, a media analyst, estimates that Netflix, for instance, pays Disney $325 million annually to license those films. Also moving to one of the services will be reruns of Disney Channel shows, which generate roughly $500 million annually in third-party licensing fees, according to Doug Mitchelson, an analyst at UBS.

At the same time, Disney has pledged to make original movies and series for its nonsports service, easily adding $150 million in costs.

There has also been some sniping about how much Disney paid for BamTech. Speaking at a Goldman Sachs conference last month, Leslie Moonves, chief executive of CBS, boasted that his company’s All Access and Showtime streaming services had been built internally.

“We didn’t go buy BamTech for a zillion dollars,” he said.

Disney contends that a big part of BamTech’s value has been overlooked. Down the road, as other media companies move toward streaming, BamTech intends to sign them up as clients.

“That’s going to be a massive business, and BamTech is going to be a massive winner in it,” Mr. Mayer, Disney’s chief strategist, said in an interview.

Still, by the end of next year, BamTech will lose one important customer: HBO, which is moving to a global platform built by its own tech team. “They understood from the very beginning that eventually we would grow our way to independence,” Mr. Plepler said.

For some, Disney’s track record with digital acquisitions is the biggest concern.

Whenever the company has wandered away from content-related mega-purchases (Pixar, Marvel), results have been disappointing. Misfires include the social media-focused game maker Playdom, purchased for $563 million in 2010, and the online video network Maker, bought for $500 million in 2014.

Disney.com has also given the company headaches, with managers trying a series of redesigns and strategic retrenchments.

This time may well be different, in part because failing isn’t an option. And, in a contrast to those smaller acquisitions, Mr. Iger has pledged to devote much of his time over the next 21 months — he insists he will retire in July 2019 — to the twin streaming initiatives. BamTech’s remaining minority owners, M.L.B. and the National Hockey League, also have an interest in the effort succeeding.

Mr. Paull, a Harvard M.B.A. with experience at Sony Music, will report to Mr. Mayer, who joined Disney in 1993 before leaving in 2000 to run Playboy.com. He soon returned to Disney to work on Go.com, a web portal that eventually failed, and other Disney websites, including ESPN.com, before moving to strategic planning.

Though BamTech has proved its streaming bona fides, it still lacks the algorithms and the personalization skills that have helped propel Netflix to success. To fill that gap, Mr. Paull recently hired the former chief technology officer of the F.B.I. to be the head of analytics.

BamTech’s headquarters are a massive sprawl. Inside the darkened “transmission operations center” on a recent afternoon, walls of monitors displayed hundreds of live events — baseball, golf, hockey, boxing, a speech by President Trump — being streamed to somewhere at that moment.

Outside the operations room, in a series of alcoves, including one that used to house an oven where Oreos were baked, employees monitor games and are the first line of defense if something goes wrong with a stream. They’re nicknamed the Night’s Watch, from HBO’s “Game of Thrones.”

The level of engineering required for that enormous volume of content is no small matter. Each bit of streamable content has to be made to fit a dizzying number of requirements. Start with web browsers, ranging from Safari to Chrome or Explorer, all of which have slightly different demands. It also has to fit every iPhone and Android phone. And then there are connected living room devices like Apple TV.

“The complexity there is incredible,” Mr. Paull said during a tour. “It’s thousands and thousands of different applications we need to build to support that entire ecosystem. Then you add in international and the complexities of languages, currencies, payment mechanisms.”

He added, “That’s one of the big, big barriers to entry if you want to have a scaled digital video service.”

FT : Scottish Power to act on controversial default energy tariffs

Scottish Power to act on controversial default energy tariffs
Utility plans to move households on to fixed-price deals when contracts expire

One of Britain’s six biggest utility companies has promised to tackle the expensive default energy tariffs that are in the sights of prime minister Theresa May by moving customers on to cheaper fixed-price deals when their current contracts expire. 

The commitment, from ScottishPower, comes as energy companies await a draft bill this week aimed at capping energy prices for millions of households on default energy deals, known as “standard variable tariffs” (SVTs). These tariffs have become a political football as they are generally more expensive than fixed deals and can be raised unexpectedly.

Neil Clitheroe, global retail director at ScottishPower, said his company planned to move all customers off default rates. Customers whose fixed-price energy deals expire next year will not automatically be moved on to an expensive SVT. Instead “we will default them on to new fixed-priced products”, he said.

An announcement by Mrs May at the Conservative party conference last week that she would legislate for a price cap sent shares in Centrica, Britain’s biggest domestic energy supplier, to a 14-year low.

It resurrected speculation among analysts that the owner of British Gas may have to cut its dividend, although Iain Conn, chief executive of Centrica, insisted in May that the company had other “levers” to pull, such as cost-cutting, to mitigate the impact of a price cap.

Several of the biggest energy providers pleaded with the Tories last week not to press ahead with a cap — which will help a further 12m households — and to allow more time to implement other measures to improve the market. 

The large utilities argue a cap will reduce customer choice as most companies will set their prices at, or near, the level of limit set by Ofgem, the regulator. A cap may also dissuade households from switching to better deals, they argue.

Centrica has also said it is open to a “market-wide ban” on SVTs in favour of a model where customers have to renew their energy deals in the same way as with home insurance.

Dermot Nolan, head of Ofgem, is due to meet business secretary Greg Clark early this week to discuss implementation of a price cap. Ofgem had been preparing to publish a consultation on price protections for only 2.2m “vulnerable” customers before the draft bill was announced. Energy groups still expect the regulator to press ahead with these measures if it takes time to push legislation through Parliament.

John Penrose, the Tory backbench MP who has been leading a campaign to crack down on SVTs, stressed that a price cap should last for only “2-3 years” until other reforms to help consumers are pushed through.

FT : A Catalan breakaway would make Brexit look like a cake walk

A Catalan breakaway would make Brexit look like a cake walk
Exiting the EU and currency union at the same time is an economic suicide mission

Catalonia remembered a grim anniversary on Friday. On October 6 1934, the then autonomous Catalan government staged an insurrection and proclaimed independence. It ended with the imprisonment of members of the Catalan government and the suspension of the statute of autonomy.

We are not quite at that point today, but we are not far from it. Carles Puigdemont, the Catalan leader, has decided to respect last week’s ban by Spain’s Constitutional Court on Monday’s session of the Catalan parliament, which was scheduled to declare independence. A session on Tuesday will have no such official agenda.

Mariano Rajoy, Spain’s prime minister, has said his government may invoke Article 155 of the Spanish constitution to withdraw Catalonia’s autonomy, bringing the region under direct control of Spain. This clearly has the potential to provoke a general insurrection and possibly violent conflict.

The Spanish government’s handling of the crisis has triggered a backlash in Catalonia and abroad, where people reacted with horror at pictures of police violence against voters. Catalonia was not on the radar of many international observers. It is also one of the least understood places in Europe.

I take no sides as to whether Catalonia is right, or wise, to seek independence. I can think of strong reasons to oppose it. Whether these are sufficient is for the Catalans to decide.

The main argument against independence is economic. Independence would constitute a shock of an order of magnitude larger than the hardest of Brexits.

It is the legal opinion of all EU institutions that regions that declare independence do not automatically become members of the union. The separatist argument is that the EU could ill-afford to lose a wealthy region that would rank 15th by population among member states.

The EU does not want to Catalonia to leave, but it can also not act against Spain. Independence really means third-country status — Catalexit.

In that case, Catalan citizens would lose their Spanish and EU citizenship because that privilege exists only in conjunction with the citizenship of a member state. The Catalan version of having your cake and eating it is to hope for dual citizenship. I think this is utterly unrealistic.

The border between Spain and Catalonia would become a heavily guarded external border of the EU and the Schengen zone of passport-free travel. Catalans would have to apply for visas if they want travel to Spain or the EU. As a non-member of the World Trade Organization, Catalonia would have no automatic right to reduced WTO tariffs.

What makes Catalan independence much worse than the most extreme version of Brexit is the immediate forced exit from the eurozone.

Catalexit would constitute a dramatic sudden return of the eurozone crisis. The banking system in one of the world’s wealthiest regions could collapse.

This is why two Catalan banks decided last week to shift headquarters to Spain. They want to ensure continued access to funding by the European Central Bank and the Bank of Spain.

Catalonia could, in theory, emulate the example of Montenegro, and unilaterally adopt the euro as its currency. But Montenegro is a tiny country with gross domestic product of just over €3bn. Catalonia’s GDP was €224bn last year, larger than Portugal’s.

Catalonia is also unprepared to introduce its own currency on independence day. It would be mad to try to run such a large developed economy without a central banking infrastructure.

Extricating yourself from the EU is difficult enough, as we can see with the UK. To extricate yourself from a currency union at the same time is an economic suicide mission. The single strongest argument against Catalan independence at this stage is an utter lack of preparation.

I would go further and argue that the presence of a monetary union makes a regional independence movement impossible.

We know that at least one-third of the Catalan electorate are pro-unionists. More might join their ranks when they realise the threat of economic perdition, especially if it became clear that the EU is not bluffing.

The worst option of all is to use force to prevent independence. This strengthens the separatists, and risks bringing about the economic calamity Spain, Catalonia and the EU should all seek to avoid.

FT : Wolfgang Schäuble warns of another global financial crisis

Wolfgang Schäuble warns of another global financial crisis
Outgoing German finance chief says central bank policies risk forming ‘new bubbles’

Wolfgang Schäuble has warned that spiralling levels of global debt and liquidity present a major risk to the world economy, in his parting shot as Germany’s finance minister.

In an interview with the Financial Times, the Europhile who has steered one of the world’s largest economies for the past eight years, said there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets.

Mr Schäuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans.

A strong advocate of fiscal rectitude, Mr Schäuble dominated Europe’s policy response to the eurozone debt crisis and has been vilified in countries such as Greece as an architect of austerity.

But he will mainly be remembered as the most ardently pro-European politician in German chancellor Angela Merkel’s cabinet, skilled at selling the benefits of the euro and of deeper European integration to an often sceptical German public.

Mr Schäuble told the FT that the Brexit vote last year had demonstrated how “foolish” it was to listen to “demagogues who say . . . we’re paying too much for Europe”.

“In that respect they made a great contribution to European integration,” he said. “Though in the short term that doesn’t really help Britain.”

Mr Schäuble is to move to a new job as Speaker of the German Bundestag, amid widespread concern about how the legislature will be affected by the arrival of 92 MPs from the Alternative for Germany (AfD), a rightwing populist party that stunned the country’s political establishment by winning 12.6 per cent in last month’s election.

Mr Schäuble, who will attend his last meeting of the eurogroup finance ministers on Monday, sought to reassure Germany’s allies that the AfD’s surprise success would not in any way affect the country’s commitment to liberal democracy.

“There’s no chance Germany will ever relapse into nationalism,” he said.

The AfD’s voters were dissatisfied, felt excluded, were angry about perceived injustice and worried about how the world was changing. “But there’s no reason to believe that democracy and the rule of law are in danger,” he said.

However, he warned that the world was in danger of “encouraging new bubbles to form”.

“Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said.

His comments come a day after Christine Lagarde, head of the International Monetary Fund, said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”.

Mr Schäuble’s views also chime with those of the Bank for International Settlements, which has long argued that aggressive monetary easing by central banks was fuelling bubbles in asset prices.

The BIS warned last month that the world had become so used to cheap credit that higher interest rates could derail the global economic recovery.

Mr Schäuble defended austerity, saying the word was, “strictly speaking, an Anglo-Saxon way of describing a solid financial policy which doesn’t necessarily see more, or higher deficits as a good thing”.

He said Germany’s current economic boom, with rising domestic demand and investment and the lowest unemployment rate since reunification, was a vindication of an economic policy that prioritised “sticking to the rules” and avoiding deficits. Under his stewardship the country has run balanced budgets since 2014.

“The UK always made fun of Rhineland capitalism,” he said, contrasting Germany’s consensus-driven, social market model with Anglo-American free markets and deregulation. “[But] we have seen that the tools of the social market economy were more effective at dealing with the [financial] crisis . . . than in the places where the crisis arose.”

Mr Schäuble praised Emmanuel Macron’s “vigorous initiatives” for overhauling the EU, without directly addressing the French president’s proposals for eurozone reform. He said only that the key task facing the single currency area was to “reduce the risks, which are still too high — think of the bank balance sheets in many EU member states”.

“We have to ensure that we will be resilient enough if we ever face a new economic crisis,” he added. “We won’t always have such positive economic times as we have now.”

FT : Jean-François van Boxmeer, Heineken CEO, on its M&A strategy

Jean-François van Boxmeer, Heineken CEO, on its M&A strategy
The brewery chief has staved off decline with emerging market acquisitions

Had events taken a different turn, Jean-François van Boxmeer might have ended up as head of Unilever. The Anglo-Dutch multinational turned down the economics graduate for his first job. Heineken, however, hired him.

That was 33 years ago and for the past 12, Mr van Boxmeer has been chief executive of the family-controlled Dutch brewer, arguably best-known for its 1970s and 1980s advertising tagline: “Heineken refreshes the parts other beers cannot reach.”

“In those days, companies like Heineken and Unilever were aspirational; they were very international and that’s what attracted me,” says Mr van Boxmeer, sitting in his Amsterdam office overlooking a leafy canal.

Building on the heritage of Freddy Heineken, the legendary magnate who turned a Dutch brewer into a European one, the 56-year-old has taken the company into parts of the world it had previously never reached.

The Belgian has spent more than $30bn on 65 acquisitions since taking over in 2005, which have expanded the company’s brewing operations from 39 countries to 70, and include China, Mexico, Brazil, Ethiopia, Vietnam and, most recently, Ivory Coast.

This strategy has served the company well — reducing its dependence on mature European countries and almost doubling its share of profits from emerging markets since 2009. Mexico and Vietnam alone have grown rapidly to account for more than a quarter of group profits, according to analysts’ estimates. The group’s beers include Amstel, Affligem, Sol and Tiger.

It is now the world’s second-biggest brewer by market share. A decade ago, it was fourth. Heineken’s eponymous brand is sold in more countries than any other beer brand, but that position is under threat from the global ambitions of Anheuser-Busch InBev for its own Budweiser brand.

Last year, Budweiser’s international sales by volume overtook those of Heineken for the first time in 30 years, according to Plato Logic, the consultancy. This was mainly driven by Budweiser’s expansion in a single country: China. Though Budweiser is sold in fewer than half the number of countries in which Heineken is available, AB InBev is set to give Heineken a run for its money in Africa once it starts introducing its brands there, following its £79bn takeover last year of SABMiller.

Mr van Boxmeer appears relaxed about the gulf that separates Heineken from its larger rival: Heineken accounts for 10 per cent of the global industry’s profits but AB InBev takes 45 per cent, according to Bernstein Research. “It’s not necessary to be the number one to be a successful company,” he says.

The opportunity to rival AB InBev as the world’s joint-biggest brewer evaporated when the Heineken family turned down an approach from SAB in 2014, details of which were never disclosed. “The elephant in the room has always been SAB,” says Mr van Boxmeer. “The offer was, in the condition it was presented, totally unacceptable for us.”

Heineken describes itself as a “proud independent brewer”. That independence is safeguarded by the family, now in its fourth generation and represented by Charlene de Carvalho-Heineken — Freddy Heineken’s only child — who sits on Heineken’s holding company with her husband, Michel de Carvalho and their son, Alexander.

Last year the family nominated Mr van Boxmeer for a fourth four-year term as chief executive. His offices are in what used to be the Heineken family home, a five-storey townhouse that is now the group’s global headquarters. Family control has its advantages. “If the family has the same vision — which is the case — then you can build for the longer term.”

There are “informal contacts which you build over the years because you have one particular shareholder who has been there for 154 years. I have to serve the company first, and then all the shareholders afterwards.” He pauses. “Perhaps there is one more equal than the other, which is the family because of their longstanding holding,” he adds. What happens when he and the family disagree? “I don’t know, I’ve never experienced it. Not really,” he says. Certainly the family stood by him when Heineken and Carlsberg teamed up to buy Scottish & Newcastle, the UK brewer, for £7.8bn in 2008 as the British economy slid into recession.

“The day after, the company imploded — there were tax increases, a smoking ban, everything. We closed 15,000 pubs in the following four years. And of course I had these comments: ‘You’re the CEO, you must be stupid’ . . . with hindsight, that’s easy to say. It was embarrassing, of course, but we changed the business model in the UK and made it the most profitable of our European operations.” S&N made Heineken the biggest UK brewer, gave it Strongbow and Bulmers cider, and a stake in United Breweries of India.

Heineken has been buying craft brewers, such as Lagunitas, though its small market share in the US means it has been less affected than other big brewers by the craft beer movement, which has taken 12 per cent of the US market. Nevertheless in North America the Heineken brand faces pressure from AB InBev’s Stella Artois and has recently been losing share of the Mexican import market to Constellation Brands. In Europe, however, beer sales are picking up after a decade of falling volumes.

“For 10 years, I’ve heard: ‘Why are you in Europe? Total losers’; now, they’re all writing: ‘Fantastic!’.” He has stopped listening to analysts. “We have to build the brands. What sustains our market is urban populations that have economic prospects and good demographic prospects. That is where the growth is.”

FT : Spain’s Rajoy renews threat to suspend Catalan autonomy

Spain’s Rajoy renews threat to suspend Catalan autonomy
Prime minister vows to dissolve regional government to stop independence

Spanish prime minister Mariano Rajoy has said he is prepared to suspend Catalonia’s autonomy if the region declares independence in a sign that Madrid has no intention of backing down from a potential conflict with the separatists.

Mr Rajoy said he was willing to trigger Article 155 of the constitution, which enables him to take command of the local police force, dissolve the regional government and call a fresh local election, if the Catalan government tries to break away from Spain.

In an interview with El País published over the weekend, he said that ideally, “it should not be necessary to implement extreme solutions”, but “things would have to be changed” in the region, that is, Catalonia would have to drop its plans to declare independence.

“I don’t rule out absolutely anything that is within the law,” he said, when asked about Article 155. “We are going to stop independence from taking place. As such I can say to you with complete candour that it is not going to happen.”

The comments come as tens of thousands took to the streets this weekend to call for a return to political dialogue. People from both sides of the political divide dressed in white and gathered in Madrid and Barcelona to demand talks about the crisis.

But Madrid has seemingly no intention of returning to talks as long as the Catalan government keeps up its threat to declare itself independent from Spain, something the Spanish courts have ruled illegal and unconstitutional.

A Catalan declaration of independence, seen increasingly likely after a chaotic vote on independence in Catalonia on October 1, could plunge Spain into a political and constitutional crisis.

Turnout in the referendum was only about 40 per cent because many stayed home, but the overwhelming majority of those that turned out supported a split from Spain. Many in the Catalan government see this as a mandate to declare independence in the coming days.

The Catalan president Carles Puigdemont has requested to speak to the Catalan parliament on Tuesday, where he could potentially make a declaration of independence.

Some in his government, however, are pushing him to delay a declaration and return to talks or call new regional elections. Others argue he should go for a so-called “lite” version, announcing an independence that would happen at some point in the future.

Santi Vila, Catalonia’s regional chief for business, on Friday said he is pushing for “a new opportunity for dialogue” under “a ceasefire” with Spanish authorities. Mr Vila said he is against Catalonia unilaterally declaring independence at the moment and wants a committee of experts from both sides to work towards a solution to the political crisis.

Hardliners from Catalan’s far-left Popular Unity Candidacy (CUP) party, however, want a quick break with Spain. Many in the party see the break as an opportunity to create a new and better society. But their vision is at odds with those of some pro-independence moderates.

Mr Rajoy, in the El País interview, said he would not accept negotiations with the Catalan government under an “independence lite” scenario, where the Catalan government merely delays a declaration of independence. “Nothing can be constructed under the threat of blackmail,” he said.

Commenting on widely criticised police violence during the referendum on October 1, Mr Rajoy said that “some mistakes were made” but that the fundamental error had been committed by his adversaries, who have put “national sovereignty” in danger.

Mr Rajoy’s government mobilised thousands of national police to stop last week’s vote, leading to clashes with voters. In the El País interview, Mr Rajoy said the approximately 4,000 extra police shipped in to the region would stay until the conflict had been resolved.

Mr Rajoy also warned that as long as the Catalan government is set on independence, then negotiations would be hard. “It is very difficult to negotiate with someone who doesn’t have more than one objective and is unable to move a single centimetre.”

>>> Fed's Rosengren : Fed has to respond to very tight labor markets or may dama

Fed's Rosengren (moderate, non-voter): Fed has to respond to very tight labor markets or may damage the economy - comments from Montreal 
- Failing to respond to very tight labor markets with rates remaining negative in real terms could potentially risk unnecessarily shortening the economic recovery
- Prudent risk management would argue for the continued gradual removal of monetary policy accommodation in order to minimize the risk of outcomes that might prematurely shorten the current economic recovery
- Expect US labor market will continue to improve

>>> Barrons weekend summary: Positive features on WMT, RH, CTSH, MTCH; Cautious

Barrons weekend summary: Positive features on WMT, RH, CTSH, MTCH; Cautious on CHL 

* Cover story: Barron’s list of the top-performing sustainable funds, of which 37% beat the S&P 500 during the past year, is topped by CGM Focus, Vanguard Capital Opportunity, MassMutal Select Equity Opportunities, Putnam Multi-Cap Core, and Pioneer Core Equity. 

* Features: 1) Positive on WMT: The company’s acquisition of Jet.com has boosted its e-commerce efforts and brought fresh thinking and innovators such as Jet founder Marc Lore, now Wal-Mart’s e-commerce chief; 2) Cautious on RH: The upscale furniture company’s shares are fully priced, but if it fails to keep growing amid competition from ETH, WSM’s West Elm, W, Houzz.com, and AMZN, the shares could lose a third of their value; 3) Cautious on CHL: Chinese telecom has the industry’s best balance sheet, with $60B of net cash, but while that’s a source of strength and a draw for investors, some worry Beijing may divert the money to other state-owned enterprises; 4) Positive on CTSH: Cognizant is increasingly moving into digital consulting and making other changes at the urging of activist investor Elliott Management; shares could rise another 15% as earnings growth reaccelerates; 5) Positive on MTCH: Online dating company’s shares are up because of the success of a new paid feature, Tinder Gold, which has made Tinder among the highest-grossing apps in the AAPL App Store. 

* Tech Trader: Positive on ATVI, EA, TTWO: Gaming companies have seen an increase in recurring spending from users, providing revenue streams for older games or new titles that don’t meet sales expectations—and the money flows straight to the bottom line. 

* Trader: Wellington Shields technical analyst Frank Gretz says bull markets generally see a “blowoff” move from at least one sector before they end, and recommends watching the FANGs and financials; COST continues to face challenges in a changing retail sector, and nobody knows how its new grocery deliver services will affect in-store traffic; One of the biggest conundrums of the recovery is why wages aren’t rising faster if the U.S. economy is at full employment. 

* Mutual Fund Quarterly: “More mutual funds that use social and environmental criteria are outperforming the market, and moving the style into the mainstream”; Interview with investor Jeremy Grantham, whose involvement in environmental causes is closely tied to his thinking on risk and opportunity in investing; Bond funds such as PAXHX, TSBRX, CONAX, CULAX, and GRNB may be better than stocks for investors looking to leverage ESG criteria in their portfolios; Funds that combine ESG and smart beta approaches will start to gain steam as more become available in the market; ESG funds are starting to use their size to change corporate behavior; All major fund categories except one had positive returns in the third quarter, with international stock funds outperforming U.S. counterparts; A list of the best and worst performers in the third quarter. 

* Follow-Up: Positive on GM: Story says the automaker “is well-placed to make self-driving, shared, battery-powered cars of the future”; investors should hang onto shares, which have more upside and a 3.4% dividend yield. 

* European Trader: Investors may want to be careful with Spanish stocks, because Catalonia—which accounts for 19% of Spain’s GDP—could succeed in its independence effort. 

* Asian Trader: The Indian stock market remains one Asia’s best performers this year, but some investors think it has moved too far, too fast—though this is probably not a long-term concern. 

* Emerging Market: The U.S. is in the late stages of a bull market and investors should seek out emerging market funds with handpicked stocks, says Ruchir Sharma of Morgan Stanley Investment Management. 

* Commodities: For the first time in 16 years, palladium has made the biggest gains in the commodity sector, but platinum should bypass it in price by the end of the year. 

* Streetwise: With the prospect of significant new federal gun legislation low, gun stocks appear to be more trading vehicles than long-term investments, and some—including RGR and AOBC—appear overpriced.