Amazon Enlists Bond Market in Its Quest for Grocery Dominance

Jeff Bezos has an army full of bond investors ready to back Amazon.com Inc.’s conquest of the supermarket industry.

The world’s largest online retailer sold $16 billion of unsecured bonds in seven parts to fund its $13.7 billion acquisition of Whole Foods Market Inc. And in a sign of market interest, the longest portion of the offering, a 40-year security, was sold at a yield of 1.45 percentage points above Treasuries, down from initial talk of 1.6 percentage points to 1.65 percentage points, according to a person with knowledge of the matter.

Amazon is expected to reduce prices at the iconic yet struggling high-end supermarket chain, which is trying to lure more low- and middle-income shoppers. The deal, which rattled the grocery world when announced in June, could intensify a price war in an industry beset by razor-thin margins and persistent deflation.

The debt sale marks Amazon’s first bond-market foray since 2014. The company has more than $21 billion stashed away in cash and other short-term investments that could have been deployed as a bigger allocation in the acquisition financing. But Amazon needs to preserve cash, and now is an opportune time for issuers to take advantage of low interest rates, said Bloomberg Intelligence analyst Jitendra Waral.

“This route is cheaper and gives them flexibility,” Waral said. “The expansion plan Amazon has gotten on with buying Whole Foods is just the beginning, not the end.”

The bonds may be attractive to investors who want exposure to Amazon, but are reluctant to buy the stock, which has more than quadrupled in value over the past five years, while the S&P 500 hasn’t even doubled. The share price can be volatile with investors balancing their excitement over Amazon’s sales growth and dominance in e-commerce with the company’s slim profits and Bezos’s big spending ways. Shares have fallen about 7 percent from their July 26 record close.

Mega Deals

The e-commerce giant’s trip to the debt market follows mega bond deals from AT&T Inc. ($22.5 billion) and British American Tobacco Plc ($17.25 billion), and this deal is the year’s fourth biggest following a $17 billion offering from Microsoft Corp. It also comes at a time when tech companies have been active debt issuers, including a debut offering from Tesla Inc. on Aug. 11 as well as Apple Inc., which sold its first Canadian-dollar bond also on Tuesday.

Amazon, whose identity straddles between a tech and retail company, has been the source of the latter’s industry’s problems as consumer preferences have shifted to shopping online instead of in stores. That’s what makes this offering attractive and was expected to be “very well-received,” said Matt Brill, a money manager at Invesco Ltd.

“You don’t want to own retail because of Amazon — this is the the source of everyone’s problems,” said Brill, who planned to participate in the deal. “You get the chance to buy the category killer.”

Buy Recommendation

The bond sale also earned Amazon a higher analyst rating from CreditSights, which now rates the debt as outperform from underperform.

“We are comfortable buying Amazon’s bonds across the entire curve given its strong operating trends and competitive position in both its e-commerce and cloud computing businesses,” analysts led by Jordan Chalfin said in a report.

Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co. managed the bond sale, the person said.

Amazon has been an infrequent issuer in the investment-grade bond market, with only $7.8 billion of debt outstanding as of June 30. It’s rated Baa1 by Moody’s Investors Service and four notches higher by S&P Global Ratings.

“Despite the increase in debt, the Whole Foods acquisition is an immediate credit positive for the company on a variety of fronts,” Moody’s analyst Charlie O’Shea said in a report Monday, revising Amazon’s outlook to positive from stable. “Whole Foods provides Amazon with greater scale and a crucial brick-and-mortar presence in a segment where it has been trying to grow.”

Read more: http://www.bloomberg.com/news/articles/2017-08-15/amazon-is-said-to-sell-bonds-to-finance-whole-foods-acquisition

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Uber’s Former Self-Driving Chief Urged Calling Out Musk

The former engineer at the center of Uber’s self-driving car legal troubles urged ex-Chief Executive Officer Travis Kalanick to criticize Tesla Inc.’s Elon Musk and several of his claims about autonomous vehicles.

Anthony Levandowski, whom Uber fired in May, sent a text to Kalanick in September that criticized Musk for saying Tesla was unlikely to use lidar sensors for its cars. The message was among those released as part of the ongoing lawsuit against Uber Technologies Inc. by Alphabet Inc.’s Waymo, which has accused Levandowski of stealing trade secrets.

“We’ve got to start calling Elon on his sh-t,” Levandowski wrote in the texts, which were turned over by lawyers for Kalanick. “I’m not on social media but let’s start ‘faketesla’ and start give physics lessons about stupid sh-t Elon says like this.”

Weeks before the text messages, Tesla unveiled an update to its Autopilot driver-assistance system that uses radar and a GPS database to guide its vehicles. Waymo and automakers including Ford Motor Co. have embraced lidar and argue the technology is crucial to safely deploying self-driving autos. Lidar uses lasers rather than radio waves to more precisely generate three-dimensional images of an environment.

In another text sent days earlier, Levandowski sent Kalanick a link to a video on Sina.com showing a fatal accident that the Chinese news outlet said involved Autopilot. Levandowski wrote that Musk had been lying about Tesla’s safety record and said he received the link from Ford.

Tesla and Ford declined to comment on the text messages. Levandowski’s lawyer didn’t immediately respond to a voice and email messages.

Autonomous Race

Waymo is citing Levandowski’s frequent contact with Kalanick — starting before the engineer left his job at the Alphabet unit — as proof that Uber colluded with him to steal prized technology in the heated race to commercialize autonomous vehicles. Uber has denied Waymo’s allegations. Levandowski, who wasn’t named as a defendant, has asserted his constitutional right to protect himself from self-incrimination.

Tesla has installed Autopilot hardware on every electric car coming off its production line since October 2014. The company deployed the software that enables consumers to use the driver-assist features while other companies were limiting testing of similar systems to their own engineers.

Federal regulators probed a separate fatal May 2016 crash involving an Ohio man who was using Autopilot when his Tesla slammed into the side of a tractor trailer in Florida. Neither the driver nor the Autopilot system noticed the white side of the tractor-trailer against a brightly lit sky, so brakes weren’t applied, according to the company.

The National Highway Traffic Safety Administration earlier this year said it didn’t find a defect with Tesla’s technology and wouldn’t issue a recall.

Read more: http://www.bloomberg.com/news/articles/2017-08-15/uber-texts-show-former-self-driving-chief-urged-calling-out-musk

Elon Musk: AI vastly more risky than North Korea

Tesla head warns of dangers of AI and pushes for regulation as OpenAI he backed beats best human players in online DotA 2 championship

Elon Musk has warned again about the dangers of artificial intelligence, saying that it poses vastly more risk than the apparent nuclear capabilities of North Korea does.

The Tesla and SpaceX chief executive took to Twitter to once again reiterate the need for concern around the development of AI, following the victory of Musk-led AI development over professional players of the Dota 2 online multiplayer battle game.

Elon Musk (@elonmusk)

If you’re not concerned about AI safety, you should be. Vastly more risk than North Korea. pic.twitter.com/2z0tiid0lc

August 12, 2017

This is not the first time Musk has stated that AI could potentially be one of the most dangerous international developments. He said in October 2014 that he considered it humanitys biggest existential threat, a view he has repeated several times while making investments in AI startups and organisations, including OpenAI, to keep an eye on whats going on.

Musk again called for regulation, previously doing so directly to US governors at their annual national meeting in Providence, Rhode Island.

Elon Musk (@elonmusk)

Nobody likes being regulated, but everything (cars, planes, food, drugs, etc) that’s a danger to the public is regulated. AI should be too.

August 12, 2017

Musks tweets coincide with the testing of an AI designed by OpenAI to play the multiplayer online battle arena (Moba) game Dota 2, which successfully managed to win all its 1-v-1 games at the International Dota 2 championships against many of the worlds best players competing for a $24.8m (19m) prize fund.

The AI displayed the ability to predict where human players would deploy forces and improvise on the spot, in a game where sheer speed of operation does not correlate with victory, meaning the AI was simply better, not just faster than the best human players.

Musk backed the non-profit AI research company OpenAI in December 2015, taking up a co-chair position. OpenAIs goal is to develop AI in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. But it is not the first group to take on human players in a gaming scenario. Googles Deepmind AI outfit, in which Musk was an early investor, beat the worlds best players in the board game Go and has its sights set on conquering the real-time strategy game StarCraft II.

Musks latest comments come after a public spat with Facebook chief executive Mark Zuckerberg over the dangers of AI, with Musk dismissing Zuckerberg as having limited understanding of the subject after the social networks head called out Musk for scaremongering over AI.

Read more: https://www.theguardian.com/technology/2017/aug/14/elon-musk-ai-vastly-more-risky-north-korea

Goldman Tops Banks Betting on a New Type of Hedging

A new type of hedging is sweeping Wall Street this year.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading big banks in plowing record funds into outside ventures trying to disrupt their industry, a role typically dominated by venture capital firms, according to a report from Opimas, a management consultancy.

Goldman Sachs has invested in about 15 so-called fintech firms focusing on capital markets businesses this year, while JPMorgan has bet on nine, the report shows. Altogether, banks and other established companies will probably pump a record $1.7 billion into the sector through 44 deals in 2017, Opimas estimated. That may turn would-be challengers into allies.

Read more: Reinsurers seek growth through fintech investments

VC firms, meantime, are relatively reluctant to target the industry, despite its potential to yield a big payoff. Wall Street ventures drew only 2.6 percent of their funding last year.

“Capital markets fintech should attract more than its fair share of venture capital and private equity investment. Instead, we see precisely the opposite,” the authors including Opimas CEO Octavio Marenzi wrote in the report. “Many VCs have shied away from these markets, since they frequently require highly specialized knowledge of markets, their micro-structure, and competitive dynamics.”

While banks have long trumpeted their technological prowess, cheap computing power and fears of losing clients to startups are ushering in a new era of automation and other tech-driven platforms. Almost 50 percent of financial services firms around the world plan to acquire fintech startups in the next three to five years, PricewaterhouseCoopers LLP said in an April report.

A QuickTake explainer on Fintech

Still, for banks, the money they entrust to fintech ventures is a tiny slice of what they spend on tech — most of which they keep in-house. Financial institutions are on track to dedicate more than $127 billion to technology this year, focusing on areas such as execution management, post-trade transaction processing and analytics.

Read more: http://www.bloomberg.com/news/articles/2017-08-14/goldman-tops-banks-betting-hardest-on-capital-markets-disruptors

Bitcoin Surges Past $4,000 on Speed Breakthrough

Bitcoin soared past $4,000 for the first time on growing optimism faster transaction times will hasten the spread of the cryptocurrency.

The largest digital tender jumped to a peak of $4,298 Monday, a gain of nearly 20 percent since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week. The solution — termed SegWit2x — had been so contentious that a new version of the asset called Bitcoin Cash was spun off earlier this month in opposition.

The split grew out of the tension between growing demand for the virtual currency and some of the design features that had fueled that popularity — the decentralized verification procedures that ensured against hacking and government oversight. While this month’s confrontation ended up as little more than a speed bump in bitcoin’s more than 300 percent rally in 2017, concerns remain around the capacity to increase transaction volumes.

“Up until now a lot of people didn’t really believe bitcoin could go any higher until the scaling issue is resolved,” said Arthur Hayes, Hong Kong-based founder of bitcoin exchange BitMEX. “With this actually being implemented on protocol, theoretically the amount of transactions that can be processed at a reasonable speed is going to be much higher, so a lot of people are very bullish about bitcoin now.”

Because of a cap on the amount of data processed by bitcoin’s blockchain, transactions started to slow as its popularity boomed. The community was then divided between the SegWit2x solution backed by a group of developers and another supported by miners that sought a larger increase in the block size. The latter then became Bitcoin Cash.

Bitcoin Cash, whose price has retreated since peaking right after its birth, has neither disrupted its progenitor’s operations nor undercut its appeal.

Click here for a QuickTake Q&A on bitcoin’s split.

While SegWit2x has garnered enough support for activation, challenges remain. Its next stage involves doubling the block size to 2 megabytes some time in November, a possibility that’s still mired in debate. Reduced support could thwart this step, with some arguing that Bitcoin Cash — with a block size of 8 megabytes — has obviated the need for another “hard fork” to upgrade the bitcoin again, Hayes said.

The cryptocurrency’s staggering price surge has bolstered related businesses. Digital currency exchange Coinbase Inc. announced Thursday it’s received a $100 million investment. The supply of bitcoin is capped at 21 million, compared with 16.5 million that had been mined as of Saturday, according to blockchain.info.

“People are starting to price in the consumer demand from Coinbase’s $100 million fund-raising round,” said Justin Short, London-based founder of trading platform Nous. “That’s a lot of advertising budget. Every $1 million of marketing brings new demand, which increases the price as the supply is limited by design.”

Read more on how bitcoin and blockchain work

Goldman Sachs technical analyst Sheba Jafari wrote in a note to clients Sunday that bitcoin could reach as high as $4,827 before entering a correction, which could erase around 40 percent of the cryptocurrency’s gains.

“This can last at least one third of the time it took to complete the preceding advance and retrace at least 38.2 percent of the entire move,” Jafari said. “From current levels, that would measure out to $2,221” prior to today’s surge.

Read more: http://www.bloomberg.com/news/articles/2017-08-14/bitcoin-surges-past-4-000-as-speed-breakthrough-to-fuel-spread

Uber’s Seattle woes: union battle could see company leave another major city

The $70bn company is locked in a legal fight with drivers who want to unionize, and has hinted it might do what it did in Austin: pack up and go

Uber is threatening to leave Seattle if it cannot stop a potential union election, and some Uber drivers could not be happier.

Uber came and killed my business, said Tewodros Ashene, an Ethiopian immigrant who is proud to display the 7,588 five-star trips he has earned on the Uber platform. Before the ride-hail company came to town, Ashene owned a limousine company and made a good living. Now, he is working 16 hours a day to make the same amount of money he used to make in eight.

If Uber leaves Seattle, its good, he said. I can restart my limo business.

Ubers future in the Pacific northwest city has been thrown into question by a 2015 law passed by the Seattle city council that allows app-based drivers to bargain collectively. The first-of-its-kind law is an existential threat to a key aspect of Ubers business model: classifying its army of drivers as independent contractors and thereby avoiding laws that allows workers to unionize.

Uber has fought hard to have the bill overthrown, and on Tuesday it received a reprieve when a judge temporarily blocked the law to allow the latest legal challenge to proceed.But if Uber doesnt end up getting its way in court, the $70bn company has hinted that it might do in Seattle what it did in Austin, Texas: pack up its bags and go home. Withdrawing from a second major US city would only add to the embattled companys current woes, which include a video of the CEO berating an Uber driver, allegations of widespread sexual harassment and gender discrimination, and a major legal battle with Google.

Were unsure of the future of Uber in Seattle, Uber Pacific northwest general manager Brooke Steger said at an event last month. We dont know if we will be able to continue to operate here.

In a statement to the Guardian, Steger promised to bargain in good faithbut warned: If we are forced to adhere to the old taxi way of doing business, then all options are on the table.

If they leave, itll be better

While the threat of Ubers departure may seem like a nightmare to the citys passengers, among the scores of drivers waiting for a fare at the Seattle-Tacoma Airport on a recent afternoon, it was almost universally welcomed. Drivers left their cars and mingled amid the Priuses in small groups. Conversations revolved around the various iniquities and indignities of driving for Uber.

If they leave, itll be better, said Navneet Singh, who was a taxi driver for 15 years before he began driving for Uber two years ago. Singh was furious about a recent Uber Pool trip from the airport to Olympia, Washington, (more than 50 miles) for which hed been paid just $15.88.


Navneet
Navneet Singh, a pro-union Uber driver in Seattle, at the airport parking lot. Photograph: Julia Carrie Wong for the Guardian

Francis, another Uber driver who asked not to be identified by his last name out of fear of retaliation, likened the situation with Uber and the union to that of a family argument. If a child asks her mother for something she needs, and the mother ignores her, he explained, the mother cant complain when the child goes to her father for help.

Let Uber know we are not happy to take the union, but Uber forced us to, Francis said. If they treated us better, no one would want the union.

Union organizing 2.0

A traditional union campaign plays out on the shop floor, with pro-union and anti-union factions attempting to woo their co-workers in break-rooms and cafeterias. But with an app-based workforce comes an app-based union campaign, and both sides of the fight are attempting to leverage technology to make their case.

Uber uses its app to communicate its anti-union message to drivers daily. When drivers login to work, they are prompted to listen to an Uber-produced podcast featuring Steger in discussion with anti-union drivers. (The drivers who participate in the podcasts are compensated for their time off the road, confirmed an Uber spokesperson.) Drivers regularly receive text messages, emails, and phone calls from the company, as well as invitations to in-person meetings about unionization.

Dawn Gearhart, an organizer for the union who is frequently mentioned by name in Ubers anti-union messaging, claims that Uber is also using subtler technological tactics to discourage driver interest in the union. The company has a pattern of turning on surge pricing during the hours that the union is holding meetings for drivers, she alleged, even if its early afternoon and demand is low. Once, she said, they even sent a message to drivers offering free fried chicken from Ezells (a famous Seattle institution known as Oprahs favorite) right before a union meeting.

Uber denied that its incentives for drivers were timed to coincide with union activities.

Meanwhile, the union has adjusted to an app-based workforce as well.

Were using platforms to communicate instead of bulletin boards and leaflets, Gearhart said.

At a union meeting for drivers on Saturday, one driver encouraged the other 70 attendees to join his Telegraph encrypted-messaging group so they could easily communicate. If one single driver has an issue, you can put your issue in there and get the support of each other, he explained.


Uber
Uber is using its app to communicate its anti-union message with drivers. Photograph: Anindito Mukherjee / Reuters/Reuters

WhatsApp is also a popular communication tool for drivers (Singh boasted that he had two WhatsApp group chats with 70 and 100 drivers to communicate about the union.)

The union has even been taking advantage of Ubers own platform. Instead of going to a shop and asking who works where, you can open the app and see where theres a congregation, she said. Its a map that leads you to where people are.

Talk to us and solve the problem

As the ordinance works its way through the courts,all sides will likely continue pushing their message, leaving some drivers confused about whom to trust.

Alkarim Elmi, who belonged to a taxi driver union in Los Angeles before moving to Seattle and working for Uber, said he didnt know who to believe. He had a bad experience with the union in LA, but also doesnt trust Uber.

Uber should have direct communication with the drivers, not just through the app, he said. Talk to us and solve the problem.

The attitudes of Uber drivers at the airport parking lot, where the workforce was predominantly full-time immigrant workers who previously drove taxis professionally, are likely different from the many part-time workers who drive for ride-hail companies for extra income.

All the white people working part-time are against the union, said Singh. Theyre just doing it for fun.

But for full time drivers, who have invested in the company by buying cars, the question of Ubers future in the city and whether they will have a chance to negotiate a better deal is urgent.

If Uber leaves, said Peter Kuel, a South Sudanese driver, well do our own app and one of us will be CEO.

Read more: https://www.theguardian.com/technology/2017/apr/05/uber-drivers-union-seattle-legal-battle

‘186m needless emails’: NHS-wide test message (and replies) crash system

Some users prevented from accessing email system after IT contractor at Croydon NHS messages all 1.2 million employees

Sending an email to everyone in the company is usually a guaranteed way of making yourself unpopular, but the potential for annoyance is even greater if you have 1.2 million colleagues.

On Monday, NHS staff complained on Twitter about a test email sent by an IT contractor at Croydon NHS to everyone in the organisation, as well as replies to all in response to the message, leading to claims that the entire email system had crashed.

One health service statistician estimated that at least 186m emails, including replies to all asking to be taken off the distribution list, had been sent, clogging up peoples inboxes. NHS digital said 840,000 accounts were affected.

Gavin (@68_gavin)

Another waste of a working day due to some pillick in #nhsmail sending email to entire directory, unable to connect and do my job #epicfail

November 14, 2016

James Andrews (@aptaim)

Hmmmm… wonder if this is why I can’t log in to #NHSmail at the moment ?! https://t.co/wBvuREsB6X

November 14, 2016

Project iHypE (@PIhype)

If you’re trying to get in touch with us today, please be patient, it seems #NHSmail has gone down for the time being. We’ll reply ASAP. A

November 14, 2016

Colin McDonnell (@Malignanthero)

Slow handclap for the individual that sent a test email to the entire NHSMail user base, and bravo to those that “replied to all”… pic.twitter.com/zkg5uG7t2M

November 14, 2016

Graham Hyde (@GrahamHyde)

#nhsmail 1.2 million people have received approx 151 emails in error this morning. That’s 186 million needless emails so far today.

November 14, 2016

A message to NHSmail users described the global email as a high severity service incident. It said: An issue with a distribution list has meant that several test emails have been widely received by users. This has been exacerbated by recipients replying in response and increasing the volume of emails associated with the list.

The impact of this issue has meant that some users are unable to access OWA [Outlook web access] due to the volume of emails being circulated. The distribution list has been removed and associated emails are being traced and cleared. In the meantime, users will experience slow performance with OWA and email delivery delays from internal and external sources to nhs.net addresses.

In a statement dictated over the phone due to the problems with the email system, an NHS Digital spokeswoman said: Some users have experienced short delays in the NHSmail system this morning. Action has been taken to resolve this issue.

A number of email accounts have been operating slower than normal due to an NHSmail user setting up an email distribution list which inadvertently included everyone on the NHSmail system. As soon as we became aware of the issue, we deleted the distribution list so that no one else could respond to it. We anticipate that the issue will be rectified very soon.

Complaints to the NHSmail helpdesk have trebled since the email system was introduced in May. The secure email service is approved by the Department of Health for sharing patient-identifiable and sensitive information.

Read more: https://www.theguardian.com/society/2016/nov/14/186m-needless-emails-nhs-wide-test-message-and-replies-to-all-crash-system