Upstart fund to launch 'future car' ETF in Canada

TORONTO (Reuters) – A Canadian investment fund will launch the world’s first “future car” exchange-traded fund on Friday, giving investors one-stop access to companies involved in electric, autonomous and connected car supply chains, senior fund executives said.

The Evolve Funds Automobile Innovation Index ETF includes Tesla Inc and other automakers spending heavily on self-driving ambitions as well as battery makers, semiconductor companies and other players to help investors trade on the major changes affecting the automotive industry.

“Five years ago we didn’t have the blind-spot checker, the lane assist, and now you’ve got parking assist; technology has been getting integrated into vehicles to make them safer, it’s just going to intensify,” Evolve Funds Group Inc CEO Raj Lala said in a phone interview.

The 32 equally-weighted stocks that make up the fund’s initial cohort also includes suppliers such as Delphi Automotive Plc and Visteon Corp, semiconductor companies Cirrus Logic Inc, Infineon Technologies AG and Nvidia Corp, hydrogen fuel cell company Plug Power Inc and industrial battery maker EnerSys.

“We’re not trying to pick the one or two winners,” said Elliot Johnson, Evolve’s chief operating officer. “We wanted to make sure we’re making a bet that’s broad, but also specific to the activities that are going on.”

Many of the stocks included have jumped sharply over the last year as the portion of cars with internet connectivity jumps, China and others plan to ban cars than only run on gasoline or diesel, and ridesharing increases in popularity.

“That suggested to us that there’s a lot of investor appetite out there searching for ways to express their belief in the theme,” Johnson said.

Evolve Funds worked with German index provider Solactive AG to create the passively traded model, which will have hedged and unhedged versions priced in Canadian dollars. A U.S.-dollar denominated version will follow within several weeks.

The fund choose the five automakers with the highest research and development to sales ratio, which include Ford Motor Co, General Motors Co, Tesla Inc and Volkswagen AG (VOWG_p.DE).

The ETF is the third instrument Evolve has launched, days after launching cybersecurity and gender diversity products. The fund is also seeking Canadian regulatory approval for one to track bitcoin.

Reporting by Alastair Sharp; Editing by David Gregorio

Our Standards:The Thomson Reuters Trust Principles.

Tech

Exclusive: Royal Bank of Canada using blockchain for U.S./Canada payments – executive

TORONTO (Reuters) – Royal Bank of Canada (RY.TO) is experimenting with blockchain to help move payments between its U.S. and Canadian banks, one of the bank’s senior executives told Reuters on Thursday.

Martin Wildberger, RBC’s executive vice president for innovation and technology, said use of distributed ledger technology, or DLT, would improve the speed of payments, reduce complexity and lower costs.

The bank developed the system over the past six months at an RBC blockchain technology center in Toronto, deploying software developed by a cross-industry open-source blockchain consortium known as Hyperledger.

The technology was integrated into RBC’s existing systems several weeks ago as a “shadow” to RBC’s primary ledger, letting the bank monitor payments in real-time as they travel between the United States and Canada, he said.

“We wanted to set it up as a shadow ledger so that we can demonstrate our leadership in exploiting that technology while at the same time recognizing that the technology is still early in its adoption phase,” Wildberger said.

Blockchain emerged in 2009 as the system underpinning the cryptocurrency bitcoin, allowing people to quickly and anonymously exchange electronic currency. It is a shared ledger of transactions maintained by a network of computers rather than a central authority.

Investors have since put billions of dollars into developing blockchain, betting the technology could make banking operations faster, more efficient and more transparent.

Although concerns remain about the legitimacy of bitcoin, which JP Morgan (JP.N) Chief Executive Jamie Dimon described as a fraud earlier this month, the credibility of the blockchain technology itself has increased.

A growing number of senior bankers have said they believe it will eventually revolutionize the way payments are made across the industry, reducing complexity and costs of back-office processes.

“Everybody recognizes blockchain will be transformative and critical,” said Wildberger. “At the same point in time, I think everybody recognizes these are early days.”

RBC is looking to use blockchain to improve its rewards and loyalty offers and trade finance capabilities, he said.

Canada’s central bank said in May that it had decided against using blockchain to provide the underlying infrastructure for the country’s interbank payment system after a year-long investigation, saying “too many hurdles” had to be overcome to make the approach viable.

Reporting by Matt Scuffham; Editing by Jim Finkle

Our Standards:The Thomson Reuters Trust Principles.

Tech

SK Hynix set to invest in Toshiba chip unit, details consortium's plans

SEOUL (Reuters) – South Korea’s SK Hynix Inc said on Wednesday its board had approved its participation in a Bain Capital-led consortium that plans to purchase Toshiba Corp’s memory chip unit for 2 trillion yen ($ 17.7 billion).

SK Hynix said in a statement it will invest 395 billion yen, part of which will be in convertible bonds that could allow it to take an equity stake of up to 15 percent in the future.

Toshiba’s board agreed last week to sell the unit, the world’s second biggest producer of NAND chips, to the Bain group. However, the signing has been delayed because consortium member Apple Inc demanded new terms on chip supply in return for funding, sources familiar with the matter have said.

A Toshiba spokesman said the firm was aiming for a signed deal as soon as possible.

One person with knowledge of the deal, who declined to be identified due to the sensitivity of the matter, said that he did not expect the deal to be signed on Wednesday.

The Bain-led consortium will hold 49.9 percent of the voting rights in the chip unit, while Toshiba will hold 40.2 percent and Japan’s Hoya Corp, a medical technology firm that also makes parts for chip devices, will own 9.9 percent, the statement said.

Consortium members Apple, Dell Inc, Seagate Technology Plc and Kingston Technology, will invest in the form of non-convertible preferred shares, it said.

Pressure from the Japanese government, changing alliances among suitors and a slew of revised bids has drawn out the auction over nine months – heightening the risk that the deal may not close before the end of Japan’s financial year in March as regulatory reviews usually take at least six months.

If the deal does not close before then, Toshiba – hurt by liabilities at is now bankrupt nuclear unit Westinghouse – is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.

The sale also faces legal challenges from Western Digital, Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.

Western Digital, one of world’s leading makers of hard disk drives, paid some $ 16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers.

Toshiba has said the sale would improve its shareholders’ equity by 740 billion yen ($ 6.6 billion).

Reporting by Joyce Lee and Hyunjoo Jin; Additional reporting by Makiko Yamazaki; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.

Tech

​Mirantis launches multi-cloud Kubernetes with AWS Support

Kubernetes is continuing to become the default container orchestration program. The latest proof of this is Mirantis making it easier than ever to manage hybrid clouds across Amazon Web Services (AWS), OpenStack, and bare metal with Kubernetes in the latest version of its Mirantis Cloud Platform (MCP). With Kubernetes-enabled MCP, it can manage multi-cloud self-service Kubernetes clusters through its new Containers-as-a-Service (CaaS) functionality.

Specifically, MCP CaaS supports Kubernetes on private OpenStack clouds, public AWS clouds, or both. Mirantis, best known as an top-notch OpenStack consulting company, also promises it will soon support additional public cloud options. It is thought that these will be Microsoft Azure and Google Cloud.

Like all other MCP components, this new CaaS offering uses the DriveTrain lifecycle management (LCM). This is an an open-source, model-based configuration, deployment and lifecycle management toolchain. It’s designed for continuous integration and delivery (CI/CD). In MCP, it enables enterprises to standardize on Kubernetes.

The company has also upgraded DriveTrain with this MCP release. Besides supporting Kubernetes, DriveTrain enables new upgrades to OpenStack Ocata and OpenContrail, software-defined networks (SDN).

This release also includes enhancements to StackLight. This is Mirantis’s open-source consolidated control center for operations automation and distributed logging, monitoring and alerting, its toolchain for Lifecycle Management (LCM).

StackLight now includes a new DevOps portal that provides an overview of the MCP environment. Mirantis claims, this new aggregated toolset significantly reduces the complexity of Day 2 cloud operations through services and dashboards around a high degree of automation, availability statistics, resource utilization, capacity utilization, continuous testing, logs, metrics, and notifications.

The newly released MCP also includes an easy-to-use, web-based interface for managing Kubernetes clusters. This makes it simpler for developers to quickly create and control their own Kubernete-controlled containers.

“With many new open source tools constantly being introduced into the vibrant container ecosystem every month, CaaS platforms are becoming increasingly complex to operate,” said Boris Renski, Mirantis CMO and co-founder. “Building on our experience operating OpenStack for customers like AT&T and VW, we plan to continue introducing new container services to our managed open cloud portfolio as open source projects behind them become more mature.”

PREVIOUS AND RELATED COVERAGE

Mirantis enters the Kubernetes game and ups its OpenStack play

Besides managing OpenStack clouds, Mirantis is adding cloud container management to its skillset with Kubernetes.

How to get the Kubernetes help you need

As Kubernetes cloud container orchestration grows ever more important, so does the need for qualified Kubernetes administrators.

Enterprise container DevOps steps up its game with Kubernetes 1.6

The popular enterprise container DevOps program, Kubernetes, is now ready to handle up to 5,000 nodes in a single cluster.

Tech

'Star Trek: Discovery' Is Worth the Price of CBS All Access—Maybe

Last night, CBS finally took the wraps off its oft-delayed new show, Star Trek: Discovery. The two-part debut (“The Vulcan Hello” and “Battle at the Binary Stars”) gave fans the first new TV Trek since Star Trek: Enterprise ceased subspace transmission in 2005. And they were ready for it—last night’s premiere set a single-day record for new signups for CBS’ All Access streaming service. Those who ponied up for an account got both parts of the debut; those who didn’t only got the first episode, which aired on broadcast like something from the 1990s.

Is it worth the money? Was it worth the wait? WIRED writers Adam Rogers and Brendan Nystedt, two life-long Trek fans, boldly agreed to discuss the newest venture. Shields up! Red alert! Spoilers ahead!

Related Stories

Adam Rogers: All right, Brendan. My mind to your mind; my thoughts to your thoughts. How are we feeling? On the one hand, I am glad to have some Star Trek to watch, and while I got all aflutter watching a Klingon armada get #disruptive on the United Federation of Planets, some part of my brain was definitely spinning on the story problems and possible solutions I wrote about last week. Like, it spent two hours on the kind of character deployment and story set-up that Deep Space Nine could’ve knocked out in a single cold open. And this definitely wasn’t explore-strange-new-worlds-seek-out-new-life Trek. This was dark Starfleet at war, with a captain who meets her Kobayashi Maru and a promising officer who ends up sentenced to life in the stockade for mutiny.

Hey, relatedly, there is no piece of culture I can embrace wholly where Michelle Yeoh dies an ignominious death. I didn’t like it in Sunshine and I don’t like it here. She was in Heroic Trio, for pete’s sake. She coulda taken that Klingon.

Brendan Nystedt: I saw it coming from a lightyear away but still, ouch. What I didn’t see coming was that they’d also kill the Klingon cult leader, T’Kuvma.

Overall, even with my quibbles over the first two episodes, I’m still holding off judging it entirely. I think the two-parter backstory was an intriguing way to open this new show but it also worries me that the CBS All Access “first taste is free” thing means we don’t have a sense of what the bulk of the story will involve because the network is putting a lot of window dressing in the episodes people can watch for free. Maybe fans who didn’t like the introduction would learn to love where it pivots to next.

Was the opening dark? Yeah, it was. I appreciated that Michael Burnham wanted to get out there and check out the OUO (object of unknown origin) and that they bring up the balance between exploration and war. I think that darkness is something this time period can exploit more since we’re firmly in the “cowboy diplomacy” days of Kirk.

Even with my Star Trek brain fully engaged (heh), I was surprised that the drama worked on me. When Burnham disables the captain with a perfectly-executed Vulcan Nerve Pinch, I was stunned. When that Klingon ship took out the USS Europa while de-cloaking, I recoiled. As much as I was scrutinizing the uniforms and the Klingon makeup, the show worked for me on a basic level.

Rogers: Yes, yes. Me too.

But be honest. If the set up for this show was that it is set 100 years after Voyager rather than a decade before TOS, would it be any different? In what sense is this a prequel? The Klingons do not look like Klingons we have seen. The instrumentation on the ships is new. The uniforms are new. The pew-pew of the phasers and photon torpedoes are new. The Federation starships don’t look anything like the ships of the era—were no Constitution-class starships deployed at that point? Why don’t the Bussard collectors have the light-up pinwheel spinny effect? Why don’t the warp nacelles have to be as far from the crewed parts of the ships? What are these Star Wars communications holograms doing here?

Flip side, I loved seeing the rethought handheld phasers and communicators; they really are elegant. And I liked the bridge noises being the TOS bridge noises. But other than knowing Sarek is Spock’s dad, what’s prequel-y about this?

This isn’t necessarily a complaint. I like the story so far. I just feel about it the same way I did about the reboot movies’ alternate timeline. As a fan, I don’t need it. I dunno; maybe it’s all a set up for the last shot of the season being a TOS-authentic Constitution-class Enterprise heading off on Captain Pike’s five-year mission.

Nystedt: The look of the show is something I’m still reconciling, but Trek has been here before. Whether it’s the retcons of Star Trek: Enterprise or especially the 1979 Motion Picture, designs and tech change a bit to suit the time. I’ve never believed that the movie Enterprise was the same Enterprise as the TV show, and yet it’s known to be a “refit.” Unless it’s the ship of Theseus, the movie Enterprise just can’t logically be the same as the one from the show!

I digress … I’m also unsure why they decided to make this a prequel, especially if it’s going to try to do its own thing. I’d understand if it were for the sake of fanservice but as of yet there have been a limited number of references to the universe. I’m hoping they’ll at least hint at conforming to a style closer to what we know from TOS, but I’d be OK if that were a reinterpretation, too.

The Klingons were another sticking point: I was cool with showing this rogue gang of Kahless-worshippers but when the rest of the house leadership Skypes in to T’Kuvma’s sarcophagus ship I was disappointed. Enterprise tried to give the makeup and characterization changes of past Klingons some kind of sense, but I felt like even that explanation couldn’t remotely cover for why all these Klingons looked different. At least they were completely subtitled—that I really dug.

Rogers: I liked hearing all that Klingon, too—and then seeing the universal translator kick in when T’Kuvma called the Shenzhou. Cool starship names all around, actually. I loved the references to a USS Yeager.

Speaking of, though, you make a good point that we don’t even really know what the story of this show will be. We haven’t yet discovered the Discovery, presumably the ship we’ll spend the bulk of the season on. And despite my gripes, I’m psyched for it. I don’t know if a lot of people will spring for this show, but I’m glad it exists, and I’m looking forward to the season. Glad there’s more Star Trek in my life.

Can I tell you a separate story? I know that the first ep did great in the ratings, 9.6 million people. And CBS is staying that it got a big pulse of new subscribers to All Access, but not giving out numbers. So OK. Last night I watched the first ep on my DVR and then went to subscribe to All Access to watch the second.

First I tried to do that via Apple TV, but apparently my Apple TV is so old that it doesn’t really know how to do two-factor authentication. You have to get a verification code from your phone and then type it in along with your password, apparently, but timed with the deftness of a longtime gamer, which I am not. I gave up.

I went to the app on my iPad, which seemed ready to let me sign up, until it decided that my zip code was invalid. Several times. (Narrator: It was not invalid.) Finally I logged all the way out and then logged in with Google, which somehow convinced the app my zip code was real. At which point I learned that payment was going via my Apple account, which makes me wonder why I’m paying CBS instead of just Apple. This all took about 45 minutes to figure out, by the way.

This is not an onboarding process anyone should be proud of, is my point.

Nystedt: That’s a huge bummer! I had signed up for my All Access account earlier in the day through the website, but that wasn’t ideal either. Like, I’m happy to give my money over to Trek, but I wish it were more streamlined. One disappointment for me is that even though Discovery is a launch title for the service, the rest of the Star Trek offerings are a mix of HD and non-HD. Voyager and DS9 haven’t been restored (and they might not ever be) but only about a half of The Next Generation and none of the original show appear in their HD incarnations.

And so, even though we get a new show, Trek continues to get dissed. It’s a treasure of global popular culture but it just doesn’t get the respect it deserves, whether it’s from CBS or Paramount. I’d go so far as to say that MGM is giving Stargate better treatment with its upcoming streaming service, offering up just that show’s back catalog (and movies!) for a flat rate plus the promise of new content to come.

And when you have to look to Stargate to find a decent single-franchise online service, you know it’s gonna be a long road… But, I got faith of the hearrrttttt!!!

Rogers: No Sto’vo’Kor for you, pal. Eesh. Anyway, no matter what these streaming services show or don’t show, they can’t take the sky from me.

Nystedt: Awww man I was looking forward to seeing my ancestors in the afterlife. One thing I enjoyed seeing yesterday was how fandom reacted to the show. Definitely check Twitter for #OnFleet—some excellent, funny commentary there, particularly from nerds of color and women fans.

So, next Sunday, we finally get to see the titular ship. Somehow, Burnham gets out of her life sentence, and I guess we’ll get more Saru, too. I’m on the Discovery train, are you feeling optimistic?

Rogers: I’m with Ambassador Spock. There are always possibilities.

Nystedt: LLAP and tune in next week.

Tech

Linux distributor Red Hat reports 20.6 percent rise in revenue

(Reuters) – Red Hat Inc (RHT.N) reported a 20.6 percent rise in quarterly revenue as the Linux operating system distributor benefited from higher demand for its products targeting hybrid cloud.

Net income rose to $ 96.9 million, or 53 cents per share, in the second quarter ended Aug. 31, from $ 58.8 million, or 32 cents per share, a year earlier.

The company’s revenue rose to $ 723.4 million from $ 599.8 million.

Reporting by Munsif Vengattil in Bengaluru; Editing by Maju Samuel

Our Standards:The Thomson Reuters Trust Principles.

Tech

Mike's Hard Lemonade: Measuring Digital That Drives Retail Sales

It’s refreshing when the head of marketing for a Consumer Packaged Goods (CPG) brand opens up and shares his insights on best practices around tracking and measuring the impact of digital marketing that drive in-store sales. For years, this has been a challenge as the ecosystem between retailers, data providers and manufacturers has been relatively immature.

This summer, I had the opportunity to speak with Sanjiv Gajiwala, VP of Marketing at Mike’s Hard Lemonade and I asked him about how he had effectively streamlined his company’s ability to directly measure the effectiveness of their digital marketing efforts. In addition to this article, you’re welcome to watch the full interview on YouTube.

Matching Facebook Ads to Credit Card Purchase Data

“We work with Oracle and their data provider, Datalogix which actually looks at our Facebook ads and the users that are exposed to those Facebook ads and connects that back to their credit card and purchase behavior,” says Gajiwala. “Datalogix has a way of matching users to their actual purchasing and what we’ve really been able to learn from that has been incredible.”

Gajiwala explains that Datalogix fits within Mike’s Hard Lemonade’s social listening ecosystem. “We’re looking at brand health and what people are saying, but it helps us complete the picture with their purchase behavior,” he says.

Key Learning From This Purchase Behavior Data Layer

“We’ve learned some really incredible things,” says Gajiwala, “People who are exposed to our [Facebook] ads that are Mike’s users are spending 5% more. And 84% of people exposed to Facebook ads on Mike’s definitely would or are very interested in purchase Mike’s after seeing the ad or our content we’re promoting. You start to see that both of these numbers start to synch up, which helps validate what we’re seeing in the soft data versus through the register data.”

Digging in a bit further, Gajiwala acknowledges that this work with Datalogix does not allow Mike’s Hard Lemonade to segment by individual retail store since the data provided is driven by credit card purchases. “Instead of looking at [individual] retailers, we are able to look at the segments of our consumers between heavy, medium and light users and understand what kind of content and what kind of behaviors we can expect from that different type of consumer.”

Breaking Down Geographical Relevance

As Mike’s Hard Lemonade is sold nationally, I asked Gajiwala about how they review the geographical relevance of the sales data driven by their digital marketing efforts. “Datalogix and Oracle are doing the mashination including geographic and penetration data,” he said, with the understanding that some of these insights are a combination of Facebook geographic data and credit card transactional data.

This gives Mike’s Hard Lemonade an additional layer of insights that help with better understanding purchase habits by consumer segmentation (i.e. heavy to light) overlaid with geographical penetration insights to help with better understanding geographical flavor profile preferences and where marketing budgets are best spent on a local geographical level.

Insights Leading to Incremental Investments in Social Strategy

“Through this work we uncovered that there were a whole group of people that, profile-wise, were like our Mike’s heavy users that we weren’t reaching,” Gajiwala said. “They were heavy [Flavored Malt Beverage] users, but they weren’t really engaging with Mike’s. That lead to an incremental investment in our social strategy.”

This allowed Mike’s Hard Lemonade to then track back to see if they are getting the same sort of lift from this new target of previously ignored heavy non-Mike’s users and determine if the incremental investment is performing in a similar fashion to their core marketing investments.

“Our prospecting and our farming strategies are both different on social but just as measurable,” Gajiwala said. That is to say, with a relatively small team, everyone at Mike’s Hard Lemonade is accountable to the data.

What Gets Measured, Gets Managed

The bottom line here is that with the addition of the Datalogix reporting, Mike’s Hard Lemonade is finding new opportunities that it had previously ignored while, at the same time, seeing the direct impact on retail sales from its digital marketing efforts. This is the growing trend at retail. With a growing number of options to track and measure marketing impact, your ability to interpret data gives you a competitive edge. The most effective content and social media ads will receive increased and even incremental budget to ensure brand health and continued sales growth at retail.

For more on this topic, see these two related articles: What It Takes to Exceed Shopper Expectations and Empower Retail Employees and Not All Retailers are Contracting. Here’s the Secret From One That’s expanding.

Tech

Retirement Strategy: Why Is Bank Of America In TARP II?

I’ve been getting some feedback as to why I would place Bank of America (NYSE:BAC) in the heart of the new model portfolio. Let me remind you that I have been a BAC bull for a few months now and have been pounding the table about its growth potential. Read this piece for a little background.

As most of you know, I personally own a bunch of shares, model portfolio TARP has plenty of shares, and now it is tucked away with a starting position in TARP II. I am considering adding more shares for myself as well as for TARP II.

Many dividend growth investors will turn their collective noses up at the 2.00% yield as it just would not throw off enough income immediately. Well, the two reasons NOT to have purchased BAC when I started yakking about it were as follows:

  • BAC does not increase its dividend by 60%.
  • Buffett changes his mind and dumps 700 million shares of BAC stock.

Well, both of these risks were eliminated when BAC announced its intention to increase its dividend and Buffett quickly decided to exchange his warrants for 700 million shares. Risk off, right? Now shareholders were going to get a nice pop in the dividend, even with its small yield, and also have Warren Buffett as the largest single shareholder! Nice company to be with I would say and the information was given to all of us well before everything happened! So IF you bought the shares when I first started talking about it, this is where you would be in both growth and income: about 10% capital appreciation and a dividend increase of roughly 60%. Not bad for a few months of waiting right?

Now There Are Even More Reasons To Consider BAC

First, review this article, then let’s take a quick look at the new model TARP II chart as it stands now:

The new model TARP II consists of the following stocks as of today: Altria (MO), PepsiCo (PEP) Hormel (HRL), Lowe’s (LOW), Lockheed Martin (LMT), Williams-Sonoma (WSM), Realty Income (O), Omega Healthcare (OHI), LTC Properties (LTC), Community Healthcare (CHCT), Apple (AAPL), Gilead (GILD), Walgreens Boots Alliance (WBA), Visa (V), Microsoft (MSFT), Novartis (NVS), Bank of America (BAC), AT&T (T), Facebook (FB), NextEra Energy (NEE), Consolidated Edison (ED) Qualcomm (QCOM), and Bed Bath & Beyond (NASDAQ:BBBY)

Since the price of BAC was $ 24.38/share when added to the model, the price as of right now is $ 25.16, so an increase of about 4-5% in value has been added and that 2.10% yield is now down to 1.96%. Not to worry, though; there is more good news to come, AND we have 20+ years to let this stock “bake”. If we avoid another banking crisis, who knows, BAC might become a dividend champ, but in the very least, we can dump it and move the dollars into a dividend aristocrat eventually!

The reasons I am even more optimistic about the share price appreciation are quite simple.

1. A probable Moody’s credit rating upgrade:

The bank’s A1 rating has been put on review for upgrade at Moody’s, with the agency noting improvements to profitability and management’s commitment to a conservative risk profile.

Moody’s also likes Bank of America’s more conservative than peers capital return policy (shareholders may feel differently).

2. The Fed becoming more hawkish than everyone expected, so another rate hike is likely this year, and the Fed’s balance sheet will be trimmed:

Taking a closer look at the economic projections, core PCE inflation is seen at just 1.5% this year, down 20 basis points from the June guess. Inflation is seen at 1.9% next year, down from 2% previously.

The median forecast for the Fed Funds rate at year-end stays at 1.4%, suggesting one more rate hike is in the cards. The median for 2018 is still 2.1%, pointing to roughly three rate hikes next year. 2019 is lowered to 2.7% from 2.9%.

Yields have moved a bit higher since the news hit, with the 10-year yield up 2.75 basis points to 2.276%. TLT -0.3%, TBT +0.6%. The two-year yield has risen to 1.43, its highest since July.

Gold (NYSEARCA:GLD) has lost a few dollars per ounce, now flat on the session at $ 1,311.

The dollar (UUP +0.4%) has strengthened a bit. …

… balance sheet trim starts in Oct. (Sept. 20)

The markets have been sloppy this last week, but BAC moved higher, which is normal when interest rates are set to rise, and lending becomes more profitable. As far as I am concerned, capital appreciation has just begun.

OK, So How About Dividend Growth

This is sort of easy as well. Let’s just look at the basic metrics:

It isn’t that much of a stretch to say BAC will more than likely continue growing the dividend, so getting in when the share price is reasonable will give the yield a kick every time the bank announces a dividend increase. Obviously, I have no idea what the amount of the dividend might be in 20 years, but even if it just doubles to around $ 1.00 annually, at a share price of roughly $ 25, the yield on cost would be a rather sound 4%! Of course, if we wait and the share price rises even more before we add more, then that YOC would be lower. Given the fact that the stars seem to be aligned with the Fed, and the bank is making lots of money, tell me why I shouldn’t add more shares to TARP II, as well as my own personal account!

Look at these fundamentals:

It is VERY undervalued according to S&P Capital, as well as being EXTREMELY financially healthy. I like to get in BEFORE those 2 other metrics move higher, and I like riding the coattails of Warren Buffett!

Growth is headed in the right direction as well as cash flow (great for larger dividend raises) and even book value is up. It sits at $ 27.43/share as of June 30th, so in all likelihood that metric has ticked up a bit Let me be conservative and say it’s now about $ 28/share. That translates into a growth potential of 11-12%, and it will possibly happen sooner than later because of the rising interest rates. Rising interest rates mean rising profits on loans at higher interest rates. That spells EPS, earnings per share, which keeps the upward trend going our way!

The Bottom Line

I might not be the sharpest knife in the drawer, but I think buying more shares of BAC makes sense. I would really like to know the reasons YOU have for NOT owning BAC here. Convince me I am wrong!

Not To Bore You, But…

Knowledge is power, and many folks shy away from the investing world because that very world makes it more confusing each and every day in an effort to sell you something: stock picks, technical strategies, books, videos, subscriptions with “secret ideas,” gadgets, and even snake oil.

My promise to you is that my work here will remain free to all of my followers, with the hope of giving to you some of the things that took years for me to learn myself. That being said, let me reach out to you with my usual ending:

**One final note: The only favor I ask is that you click the “Follow” button so I can grow my Seeking Alpha friendships. That is my personal blessing in doing this and how I can offer my experiences to as many regular folks as possible, who might not otherwise receive it.

Disclaimer: The opinions and the strategies of the author are not intended to ever be a recommendation to buy or sell a security. The strategy the author uses has worked for him and it is for you to decide if it could benefit your financial future. Please remember to do your own research and know your risk tolerance. The long positions held are based upon what the model portfolio holds and I personally could have held all of the stocks noted at one time or another.

Disclosure: I am/we are long BAC CHCT ED FB GILD GLD HRL LMT LOW LTC MO MSFT NEE NVS O OHI PEP QCOM T TBT TLT UUP V WBA WSM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The portfolio is for educational purposes only, and not an actual portfolio. The long positions are based on the model portfolio.

Tech

This Time It Matters: Why Apple Is Falling

Preface
Apple Inc (NASDAQ:AAPL) is dropping hard after its event to announce the new series of hardware, in particular the new iPhone 8, 8 Plus and X as well as the Apple Watch 3.

It’s Different This Time
Normally when Apple stock dives on lukewarm product reviews we stand firmly in our position that the stock market reaction is over blown. Our simple thesis for that response is to look at demand, which is hypnotically strong, every time. That is not the case this time.

A New Risk is Not Obvious But is Enormous
Apple announced a more complicated lineup of iPhones this time around. It introduced the iPhone 8 series which is an upgrade to the iPhone 7, and then it announced the highly anticipated iPhone X (pronounced iPhone Ten).

Then the company made the iPhone 8 available this month, but pushed delivery of iPhone X to early November, which pre-orders stating in late October. That has created a risk.

It turns out that Apple hyped the iPhone X so much, and poured so much new technology into it, that it has left the demand for iPhone 8 lackluster in Apple terms. Here’s what we mean.

If you go to the Apple Store, and try to purchase an iPhone 8, the wait time is essentially 1-3 days for the smaller memory version. Here is an image:

That is for the iPhone 8, in Los Angeles, on Verizon’s (NYSE:VZ) network. The other networks are essentially the same. A normal wait time for a new iPhone release is usually several weeks, let’s say 2-4 depending on where you are in the world.

There are also reports that in store lines are much smaller than before, with one report pinpointing Sydney Australia, where only 30 people were camped out for the new release. Reports from China are similar.

Here are links to two stories:

Turnout for iPhone 8 Launch in Australia “Bleak” as Customers Hold Out for Upcoming iPhone X
The iPhone 8 launch in Sydney saw “a bleak turnout,” reports Reuters, with fewer than 30 people lining up outside of the Sydney Apple Store on George Street. In past years, hundreds of people have lined up for new iPhones on release day.

Apple Falls After Analyst Report Indicates Weak iPhone 8 Demand
Consumers pre-ordered about 1.5 million handsets on Chinese retail website JD.com in the first three days, compared with about 3.5 million for the comparable period of iPhone 7 orders.

Tim Cook just said he “couldn’t be happier” with the iPhone release (and Apple Watch 3). While sales are lower than prior models, there is one reason, a big reason, that he may actually be telling the truth.

Is There a Plan?
One of the headlines that surfaced from the Apple Event was that the iPhone X was very expensive, starting at $ 999 and climbing to $ 1,200 based on the configuration.

It’s possible, maybe even likely, that Apple decided to release the iPhone 8 for less to make it appear that it was not forcing Apple loyalists to buy a far more expensive phone by offering a reduced priced new model (iPhone 8).

In fact, it does appear that even in the bearish analyst notes, each tends to comment on the fact that demand reduction for the iPhone 8 is simply a reflection of the outsized demand for the iPhone X.

If that’s true, then Apple will have an average selling price significantly higher than in prior times, and if demand is in fact to the point where Apple also sells more units, then that would bring a windfall of profits larger than any company has ever seen in one quarter. If that sound overly bullish, it’s just the choice of words — Apple already has the largest earnings ever in one quarter, so this would be a breaking of its own record — also known more simply as, “growth.”

Back to Risk
While there is a rather bullish narrative to wrap around this odd iPhone selection, there is also, in earnest this time, a reasonable bearish thesis.

Apple won’t be delivering its iPhone X until well into November, and if demand is very strong, it might not even be able to deliver before the holiday season in the United States. And while, certainly, if all of those sales simply occur later in the year (or early 2018), then that’s fine, but to consider that a foregone conclusion is a step we are not willing to take with blind faith.

Some consumers, perhaps many consumers, will not wait. And while Apple loyalists may stick around for a later date, the all-important “Android switchers” (those smartphone Android owners that switch to Apple) may not — and that is a real risk and worthy of a stock drop, until proven otherwise.

Apple’s market share in the United States is jumping as Android loses market share — an under reported but critical phenomenon. On January 11th, 2017, 9TO5Mac wrote iPhone market share grows 6.4% in USA, takes share from Android in most markets.

Apple gained 9.1% in the UK, mostly at the expense of Windows phones.

The iPhone grew its market share in Australia, France, Italy, Japan, Spain, the UK and USA, with Android seeing its own share drop in all of these countries bar Italy, where its growth was less than half that of iOS.

Those are Android switchers and Apple may have just put that group, or at least that trend, in serious jeopardy.

Now What?
We believe the iPhone X is going to be a knock-down drag-out mega hit, and the elevated price will make it yet an even larger success. But, the risk that Apple took, as of right now, is hurting the company both with iPhone 8 sales, and potentially, with Android switchers. And that is not a false narrative — it is accurate.

That risk means the stock should drop, and is dropping.

But, we’re not done yet. What we did not show you, and is easily missed unless you are really looking, is how hard Apple is focusing consumers on the iPhone X over the iPhone 8 — in our opinion.

I recorded a 45 second video arriving on the Apple Store and looking at iPhones. I have turned to video to allow you to make your own decision, as opposed to snapshots, which are too selective and an be used to weave any narrative the author likes.

When you watch this video (below), decide for yourself if you feel that Apple is purposefully pointing people to the iPhone X over the iPhone 8. Here we go:

That’s hardly headline grabbing footage, but we found it noteworthy.

Apple Watch 3
There have been some pretty poor reviews of the Apple Watch 3 surrounding its LTE connectivity and its battery life. This is one of those times where the reviews are meaningless. Demand is strong and that’s all that matters.

Here is a snapshot from the Apple Store for that product:

We see the Watch becoming a runaway success as people learn to use that wearable device as a standalone product — leaving the phone at home on runs, meetings, swims, hikes, and whatever other times such a convenience could be desired.

Conclusion
We maintain our Top Pick status on Apple, but have certainly tempered our bullishness with an undeniable new risk. It might work out very well, but, it might not, and that is a new risk to Apple stock.

The author is long shares of Apple Inc (NASDAQ:AAPL).

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Tech

Wal-Mart tests direct-to-fridge; Amazon ups restaurant game

(Reuters) – Wal-Mart Stores Inc is testing a service to stock groceries directly to customers’ refrigerators as it seeks to take on e-commerce giant Amazon.com.

The delivery of groceries and meal kits is emerging as the next frontier of competition among retailers.

The world’s biggest brick-and-mortar retailer said on Friday it is partnering with August Home, a provider of smart locks and home accessories, to test the service with certain customers in the Silicon Valley. (bit.ly/2ffqqvT)

The grocery business is set to be upended through Amazon’s acquisition of upmarket grocer Whole Foods last month and the online retailer is also entrenching itself more deeply in the restaurants business.

Amazon Restaurants on Friday teamed up with online food ordering company Olo whose network of restaurants includes Applebee’s and Chipotle.

A Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/Rick Wilking

The partnership will help Olo’s restaurant customers connect with Amazon’s delivery services.

The competition in the meal-kits business is also heating up. Supermarket operator Albertsons Cos Inc said it would buy meal-kit delivery service Plated while rival Kroger-owned Ralphs started selling meal kits in stores this week.

ONE-TIME PASSCODE DELIVERY

As part of the test, Wal-Mart delivery persons gain access to a customer’s house using a pre-authorized one-time passcode and put away groceries in the fridge and other items in the foyer.

Homeowners would receive notifications when the delivery is in progress and could also watch the real-time process from their home security cameras through the August Home app.

The Bentonville, Arkansas-based retailer has been exploring new methods of delivery and in June said it was testing using its own store employees to deliver packages ordered online.

Reporting by Vibhuti Sharma and Sruthi Ramakrishnan in Bengaluru; Editing by Martina D’Couto

Our Standards:The Thomson Reuters Trust Principles.

Tech