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Venezuela’s Competing Presidents Upend Status Quo, Causing Markets to Move
Analysts have long predicted the collapse of the Maduro government, only to be proven wrong time and time again. Now, the rapid ascension of Juan Gauido to head of the National Assembly, and his self-declared, US-backed presidency could upend the status quo.
Commodity Trading
The Shutdown Is Giving Giant Agriculture Traders an Edge
Stock Dividends
The $1.8 Trillion Global Payout Ride Is Coming Back to Earth
Banks THEME ALERT
Metro Bank shares crash after loans blunder revealed
Brokers
Wall Street Braces for MiFID-Style Rules Descending on the U.S.
Firearms
Political Shifts, Sales Slump Cast Shadow Over Gun Industry
AVs
Boeing Is Turning This Sci-Fi Dream Into A Reality With First Flight Test
Renewables
Renewables In Britain To Overtake Fossil Fuels By 2020
CRISPR THEME ALERT
CRISPR Just Got More Powerful With an “On” Switch
Brexit
Pound Climbs As Labour Backs Measure To Delay Brexit
Brexit
U.K. Manufacturing Outlook Slumps to Worst Since Brexit Vote
US
White House Says U.S. Could See Zero Growth This Quarter With Shutdown
Streaming
Netflix’s price hike is a defensive strike in the battle over your wallet
Streaming
Hulu drops to just $5.99 per month after Netflix’s price hikes
Autonomation THEME ALERT
Edge Computing Meets 5G: Rethinking the Intelligent Supply Chain
Crops
China Is Said to Consider Buying Up to 7M Tons of U.S. Wheat
Oil THEME ALERT
Warning Signs Flash For U.S. Shale
Coal THEME ALERT
US Coal Retirements In 2019 To Hit At Least 6 Gigawatts
EU Housing
Spanish Existing-Home Prices Jump 7.8% in 2018, Most in a Decade
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Stocks and bonds have struggled over the last year as yields have risen strongly, but MRP believes this is only the beginning. Further tightening of monetary policy is expected to continue delivering upward pressure on yields as slowing earnings and GDP growth begin to bite.
Other Viewpoint Reports
Joe Mac’s Market Viewpoint: A Review of Our-Change Driven Themes →
Joe Mac’s Market Viewpoint: FX Matters →
Select a theme to see recent Featured Topics we’ve written about it
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1.
US House Prices Rise More than Expected: FHFA
The average prices of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac in the United States went up 0.4 percent month-over-month in November of 2018, following an upwardly revised 0.4 percent gain in October and higher than market expectations of a 0.2 percent increase. Year-on-year, house prices went up 5.8 percent, after a 5.7 percent rise in the previous month. TE
2.
US Mortgage Applications Fall in Latest Week: MBA
Mortgage applications in the United States dropped 2.7 percent in the week ended January 18th 2019, following a 13.5 percent gain in the previous week, data from the Mortgage Bankers Association showed. Refinance applications declined 5.3 percent and applications to purchase a home went down 2.2 percent. The average fixed 30-year mortgage rate edged up by 1bps to 4.75 percent. TE
3.
US Richmond Fed Manufacturing Index Beats Forecasts
The Manufacturing Activity Index in the US fifth district rose to -2 in January of 2019 from -8 in December which was the lowest reading since June of 2016. It compares with market expectations of -6. TE
4.
Sterling Breaks $1.3 as MPs Try to Stop No-Deal Brexit
The British pound rose 0.6% to 1.303 against the greenback Wednesday morning following news that Labour Party is likely to support the Cooper-Boles plan to delay Brexit and avoid no-deal if the Prime Minister’s revised withdrawal agreement is rejected by MPs. TE
Featured Topic
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Venezuela’s Competing Presidents Upend Status Quo, Causing Markets to Move →
Analysts have long predicted the collapse of the Maduro government, only to be proven wrong time and time again. Now, the rapid ascension of Juan Gauido to head of the National Assembly, and his self-declared, US-backed presidency could upend the status quo.
Nicolas Maduro is under unprecedented pressure. In the two weeks since his inauguration as Venezuela’s President, the United States, Canada and the vast majority of Latin American nations have called his second term illegitimate. In fact, more than 60 nations have refused to recognize his 2018 election, alleging that it was rigged.
Mr. Maduro was first elected president of Venezuela in 2013 by a thin margin following the death of socialist leader Hugo Chavez. The country has not fared well under his aegis. Venezuela is now entering its sixth year of a recession that has halved the size of the economy, created ahumanitarian crisis, and forced 3 million people to emigrate to escape hyperinflation and rampant crime. The poverty rate is an astounding 90%, the country’s all-important oil production has spiraled downward, and its gold reserves have almost vanished.
To maintain his hold on power, Mr. Maduro has showered the top brass in the armed forces with perks and plum government ministries including control of the oil industry. Political opponents have been arrested or banned from running for office, and all branches of government, with the exception of the National Assembly, have fallen under the control if his PSUV party.
Venezuela’s National Assembly is the equivalent of the U.S. Congress. As the only branch of power still controlled by the opposition, they elected a new leader this year. That new leader is Juan Guaido, a hereto unknown charismatic 35-year old who was suddenly thrust into leadership after more prominent politicians were jailed or forced into exile.
It so happens that Venezuela’s constitution states that the head of congress takes over the top job should the presidency become vacant. With the opposition insisting that the presidency is indeed vacant due to Maduro’s “illegitimate presidency”, yesterday, Juan Guaido announced that he would assume the powers of head of state. Within minutes of that declaration, US President Donald Trump publicly recognized Mr. Guaido as the interim president of Venezuela.
Following President Trump’s statement, Brazil, Canada, and Colombia also recognized Guaido as Venezuela’s legitimate leader, as did Chile, Panama, and Peru. Expect more countries to follow their lead.
In the past, there have been periods of high internal pressure for a Maduro/PSUV ouster but low external pressure. This time, external pressures are catching up to internal ones, thus increasing the probability of regime change.
In a renewed effort to galvanize support against PSUV, Juan Guaido and other opposition leaders have been leading fresh rallies nationwide and are urging Venezuela’s powerful armed forces to withdraw support for Maduro. To convince officers to rebel, opposition lawmakers on Tuesday passed an amnesty bill for those who switch sides.
There’s already some evidence of internal frictions within the country’s armed forces and of the fragility of the PSUV government. More than 4,000 low-ranking officers deserted last year, and counterintelligence agents have reportedly squashed several internal coup plots before they were launched. Recently, some rank-and-file members of the National Guard published a video on social media calling for protests, although they were quickly arrested.
Still, Mr. Maduro is not without powerful allies. Throughout his troubles this past year, China has given his government loans and Russia has offered military aid. Yesterday, Venezuela’s Defense Minister Vladimir Padrino tweeted that the country’s armed forces wouldn’t accept a “self-proclaimed” president. In short, a regime collapse is likely, but it could take a little longer than recent developments suggest.
In the interim, the claims of leadership by Maduro and Guaido may lead to confusion, with both sides sending competing diplomatic representations abroad. At the United Nations, for example, Venezuelan allies on the Security Council such as Russia and China would almost certainly block moves by Guiado’s representatives. The US, in turn, could ignore Maduro’s reps at the UN or demand that they be stripped of their accreditation.
MARKET IMPACT
OIL: The Trump administration has stopped short of imposing sanctions on Venezuelan oil, thus far. Venezuela remains one of the U.S.’s top five suppliers of foreign oil, and refineries on the U.S. Gulf Coast depend heavily on crude from the South American nation. Oil companies have warned that sanctioning those oil exports could disadvantage Gulf and East Coast refiners designed to handle Venezuela’s heavy crude and cause U.S. gasoline prices to spike.
But increasing tensions between the US and Venezuela could push the US to add oil sanctions, which would trigger a rally in oil. White House officials already warned some U.S. refiners earlier this month that the Trump administration was considering sanctions on Venezuelan oil exports and advised them to seek out alternative sources of heavy crude.
On the other hand, the fall of Maduro’s regime could put downward pressure on the oil price, as the market would anticipate some restoration of Venezuela production capacity.
BONDS: Most of Venezuela’s dollar-denominated bonds are in default, including those issued by the government and by the state-owned oil company, Petróleos de Venezuela, S.A. (PDVSA). Current US sanctions bar holders of PDVSA and Venezuela bonds from negotiating a possible debt restructuring.
Investors believe a regime change could usher in plans to fix the economy and restructure the debt, which is why some of those bonds have rallied as much as five points this year as pressure has mounted on President Maduro. One analyst believes PDVSA bonds could jump to 30 cents in the event of a regime change.
CURRENCY: Venezuela’s currency has been crippled by a collapsing economy, a severe dollar shortage and hyperinflation which is currently running at about 80,000% per annum. In August, 2018, President Maduro tried to fight the extreme inflation by devaluing the bolivar by 95% and pegging it to the petro, a state-issued, oil-backed cryptocurrency. But without the requisite monetary and fiscal reforms, the problem has persisted. In December 2018, the bolivar traded at a rate of 46,974 bolivars per 1 US dollar on the black market. Just three years ago, the black market exchange rate was 700 bolivars for 1 US dollar.
To end the inflationary spiral, experts believe the bolivar will have to be temporarily replaced by a hard currency such as the US dollar, a solution that Maduro has deemed unacceptable. Once he is out of office, however, Venezuela’s new government may opt for dollarization.
We’ve also summarized the following articles related to this topic in the Economics & Tradesection of today’s report.
Venezuela
- Venezuela gold holdings in Bank of England soar on Deutsche deal
- Regime change hopes bolster Venezuela bonds
- Venezuela’s PDVSA, in default, says total debt fell in 2018
- Could The Socialists United Of Venezuela Finally Be Falling Apart?
- Ahead of fresh protests, Venezuela’s opposition urges military to rise up against President Maduro
- Inflation in Venezuela will hit 10m per cent this year – so why are speculators buying up its banknotes?
- Trump Recognizes Guaido as Venezuela Leader, Rebuking Maduro
Venezuela Crude Oil Production vs Gold Reserves
Featured Topic Updates
Markets
Commodity Trading
The Shutdown Is Giving Giant Agriculture Traders an Edge
For the world’s largest agricultural-commodity traders, the longest-ever U.S. government shutdown feels like a flashback.
In the absence of crucial government crop reports, the likes of Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc. and Louis Dreyfus Co., known collectively as the ABCDs, are tapping their wide networks and in-depth research to navigate markets. That’s giving them an edge, bringing back memories of when information didn’t travel as fast and they had a bigger advantage over rivals.
Agriculture markets have been mostly in the dark since the U.S. Department of Agriculture ceased issuing reports that set the tone for trading in livestock and crops. Data including U.S. wheat plantings and the agency’s monthly “World Agricultural Supply and Demand Estimates,” typically a market-moving global benchmark, have already been delayed.
“You look at an ADM, Bunge or Cargill, they know the trades, they know the sales and those of us who are not inside don’t,” Stephen Nicholson, senior analyst for grains and oilseeds for Rabobank, said in an interview in Chicago last week. “It’s not that it’s wrong or right, that’s just the reality of it.” B
Stock Dividends
The $1.8 Trillion Global Payout Ride Is Coming Back to Earth
For Lode Devlaminck, it was the turning point — the moment corporate titans and their shareholders had to pay for the excesses of the credit cycle. In October, Anheuser-Busch InBev NV halved its dividend after the world’s largest brewer confronted mounting fears over a $109 billion debt burden. Just days later, General Electric Co. slashed quarterly payments to a penny a share in a dramatic bid by the leverage-laden behemoth to bolster its balance sheet.
“Those two were like, holy cow, what’s going on?” said Devlaminck, managing director of global equities at DuPont Capital Management. “And then people started looking and screening for other companies that might be at risk next year.”
As the sugar high from U.S. tax cuts fades and earnings growth eases, Wall Street is sounding more conservative on one of the bull market’s sure-fire ways to outperformance: Corporate payouts. In the new era of prudence, shareholders who’ve enjoyed fatter and fatter dividend checks can rest easy no longer.
IHS Markit Ltd. last week projected a “significant slowdown” in global dividend growth this year, at 5.9 percent, totaling $1.8 trillion, according to a bottom-up analysis of over 9,500 firms. Thanks in part to mounting geopolitical risks, that’s a shift from the 14.3 percent boom in 2018 and 9.4 percent the year before. B
Economics & Trade
Venezuela
Venezuela gold holdings in Bank of England soar on Deutsche deal
Venezuela’s gold holdings in the Bank of England have jumped after it closed out a gold swap deal with Deutsche Bank, according to two sources, as Britain remains reluctant to release gold held for the troubled OPEC nation. The government of Nicolas Maduro has since last year been seeking to repatriate about $550 million in gold from the Bank of England on fears it could be caught up in international sanctions on the country.
Its holdings at the bank more than doubled in December to 31 tonnes, or around $1.2 billion, after Venezuela returned funds it had borrowed from Deutsche Bank AG through a financing arrangement that uses gold as collateral, known as a swap, one of the sources said. Under the deal struck with Deutsche Bank in 2015, Venezuela put up 17 tonnes of gold in exchange for a loan, according to one of the sources who asked not to be identified because it is not authorized to speak publicly about the issue.
The country’s gold holdings fell to 134 tonnes in November compared with 150 tonnes at the start of 2018, according to central bank statistics. R
Venezuela
Regime change hopes bolster Venezuela bonds
Venezuela bonds have been outperforming on hopes that President Nicolas Maduro may soon fall from power, leading to an easing of US sanctions and potential talks on defaulted debt. Some bonds issued by state-owned oil firm PDVSA and the sovereign have bounced up to five points since the start of the year.
Analysts have long predicted the collapse of the Maduro government, only to be proven wrong time and time again. But some past sceptics have been changing their views. “I would be surprised if Maduro is president this time in a year,” said a hedge fund manager. “This is the year when things start finally moving.”
Pressure has been mounting on Maduro after his inauguration on January 10 when the US, Canada and the vast majority of Latin American nations called his second term illegitimate. And cracks in the president’s inner circle are appearing amid defections and talk of some sort of amnesty for military officers who have helped prop up the government.
But the speed at which the 35-year old leader of the National Assembly Juan Guaido has garnered support has also taken the market by surprise. “Part of the rally is the more bullish sentiment in EM,” a hedge fund analyst told IFR. “But it can mostly be explained by optimism that Guaido can finally unite the different opposition factions and provide an alternative to Maduro, which could lead to regime change.” N
Venezuela
Venezuela’s PDVSA, in default, says total debt fell in 2018
Venezuela’s state-run oil company PDVSA [PDVSA.UL] said on Tuesday its debt fell 5 percent in 2018 from a year ago to $34.6 billion, though it remains in default on most of its bonds as crude output has slumped to 70-year lows in an economic crisis.
PDVSA, which is short for Petróleos de Venezuela, S.A., has not paid interest on most of its bonds since the end of 2017, and together with Venezuela’s government has accumulated nearly $8 billion in late interest payments. It has remained current on its 2020 bond, whose collateral is its U.S. oil refining subsidiary Citgo.
Venezuela blames U.S. sanctions for the payment problems. But critics of the socialist government say President Nicolas Maduro’s mismanagement of the economy and the OPEC nation’s oil reserves are the root of the country’s financial crisis.
PDVSA’s announcement, in the form of an advisory in a local newspaper, said it owed $24.7 billion to bondholders, down from $25.1 billion in 2017. Two subsidiaries accounted for most of the decline: PDV Holding, which owns Citgo; and the Venezuelan Petroleum Corporation (CVP), which manages PDVSA’s joint ventures with foreign companies.
While U.S. sanctions bar holders of PDVSA and Venezuela bonds from negotiating a possible debt restructuring, some investors are moving toward legal action to get the two parties to pay. Last month, a group of creditors demanded Venezuela make $1.5 billion in payments on its 2034 bond. R
Venezuela
Could The Socialists United Of Venezuela Finally Be Falling Apart?
Venezuela is officially a dictatorship. The Organization of American States does not recognize Nicolas Maduro as its president. Nor does nearly all of Latin America, with the exception of maybe three governments: Cuba, Bolivia, and Nicaragua. If the ruling Socialists United of Venezuela (PSUV) has nine lives, they’re lived eight of them.
Vice President Mike Pence released a video message on Tuesday in support of the Venezuelan opposition and recent protests in Caracas. He also called Maduro a “dictator,” meaning Washington now views this guy through a 1980s Cold War lens.
Everyone except those three aforementioned countries now recognizes National Assembly president Juan Guaidó as the democratically elected leader of the country. He has been leading rallies nationwide in an effort to galvanize public support to oust PSUV from power.
“Against all odds, over the last 10 to 12 days, we’ve seen a growing sense of enthusiasm,” said Dimitris Pantaoulas, a Caracas-based political analyst and consultant was quoted saying in today’s Miami Herald.“Guaido as an opposition leader is relatively new, and you can’t say that his positions are particularly clear … but he’s become a symbol of hope and energy.” Forbes
Venezuela
Ahead of fresh protests, Venezuela’s opposition urges military to rise up against President Maduro
Opposition leaders are urging Venezuela’s powerful armed forces to withdraw their support for Maduro. And they are taking their campaign abroad by lobbying foreign governments to cut diplomatic and economic ties with Caracas. On Tuesday, U.S. Vice-President Mike Pence said that Washington would support any effort by the opposition to form a provisional government to replace Maduro.
So far, the bulk of the armed forces has remained loyal to Maduro, who has showered the top brass with perks and placed officers in charge of several government ministries and the oil industry. There have been a few cracks in military solidarity. Counterintelligence agents have reportedly squashed several coup plots before they were launched. On Monday, a small group of National Guard troops raided an arms depot in Caracas and called on Venezuelans to support their uprising. They were quickly arrested.
To convince officers to rebel, opposition lawmakers on Tuesday passed an amnesty bill for those who switch sides. CBC
Venezuela
Inflation in Venezuela will hit 10m per cent this year – so why are speculators buying up its banknotes?
Speculators are already buying up Venezuela’s currency in the hope it becomes a collectors’ item of the future. Money printing pushed inflation to over 1,000,000pc last year, the International Monetary Fund estimates. In 2019, prices are on course to rise a staggering 10,000,000pc. The devaluation of the bolívar means locals are better off turning banknotes into trinkets to sell to tourists.
Abdullah Beydoun, of California-based Banknote World, travelled to Latin America to acquire great wads of bank notes being printed by Venezuela’s panicking leaders in 2017 and 2018. Mr Beydoun has already made up to 45 times his investment in these technically worthless notes.Telegraph
Venezuela
Trump Recognizes Guaido as Venezuela Leader, Rebuking Maduro
Venezuelan President Nicolas Maduro is under unprecedented pressure after the U.S. and other nations recognized opposition leader Juan Guaido as the country’s rightful head of state and protests against the ruling regime expanded.
Since taking the helm of the legislature on Jan. 5, Guaido has aggressively pushed the military and the international community to recognize him as the rightful head of state. He invoked a constitutional amendment that allows for the head of the legislature to lead a caretaker government until new elections can be held.
Trump formally recognized Guaido minutes after the 35-year-old president of the Venezuela National Assembly declared himself the head of state. Countries including Canada, Argentina, Brazil, Colombia, and Panama quickly followed the U.S. lead.
Maduro responded by breaking diplomatic relations with the U.S., giving American diplomats 72 hours to leave the country. Guaido said the diplomats are free to stay in the country. B
Brexit
Pound Climbs As Labour Backs Measure To Delay Brexit
The pound has continued its ascent on headlines affirming that Labour intends to back the Cooper amendment, which would push the government to try and delay Brexit Day if Prime Minister May fails to pass a deal by late February.
Meanwhile, Michel Barnier, the EU’s chief Brexit negotiator, said during an interview with the Luxembourg Times that the EU would only back extending the Brexit dealine if there is a “stable majority” for a deal. He also said that if the UK believes the backstop is an insurmountable obstacle, they could likely secure another deal if they tack to a softer Brexit (which would presumably include remaining in the customs union and/or the single market).
The British pound vaulted back above $1.30 Wednesday morning as it rose for a third day, returning to its highs from November, on reports that the Labour Party was on the cusp of backing a proposal put forth by one of its members that would force the government to seek a delay of Brexit until the end of the year.
The rally in GBP “reflects building optimism that a ‘no-deal’ Brexit will be avoided,” said Lee Hardman, an analyst at MUFG. “There have been some encouraging signs that the risk of delaying Brexit could prompt rebel Conservative MPs and the DUP to consider backing an amended version of PM May’s deal.” zero
Brexit
U.K. Manufacturing Outlook Slumps to Worst Since Brexit Vote
U.K. manufacturers are more pessimistic than at any time since the Brexit referendum, according to the Confederation of British Industry. The lobby group’s index of confidence slumped to minus 23 this month, the weakest level since the aftermath of the 2016 vote to leave the European Union, a survey published Wednesday showed. Export prospects hit their lowest since the financial crisis and firms plan to spend less on investment than they did in 2018.
The bleak outlook comes amid heightened fears that Britain is heading out of the EU without a deal and days after the International Monetary Fund downgraded its global outlook. Demand is softening in Europe, the biggest market for U.K. exports, and the giant Chinese economy grew at its slowest pace since 2009 last quarter.
“Notably, the number of firms citing political/economic conditions abroad as a factor likely to limit export orders in the next three months was at its highest since July 2016,” the CBI said.
Pessimism was most acute in the building-materials sector and textiles and clothing, according to the survey, which was based on responses from 326 firms questioned between Dec. 17 and Jan. 11. B
US
White House Says U.S. Could See Zero Growth This Quarter With Shutdown
White House Council of Economic Advisers Chairman Kevin Hassett said that if the partial government shutdown extends through March, there’s a chance of zero economic expansion this quarter, though “humongous” growth would follow once federal agencies reopen.
Asked in a CNN interview Wednesday if the U.S. could see zero growth with the shutdown, Hassett responded, “Yes, we could, if it extended for the whole quarter.” “It is true that if we get a typically weak first quarter and extended shutdown that we could end up with a number that is very low,” or “very close to zero,” Hassett said. He added that he sees the chance of a recession in 2020 as “very, very close to zero.” Growth could rebound to “4 or 5 percent” in the second quarter if the government reopens, he said.
Analysts surveyed by Bloomberg News last week said that if the shutdown lasts through the end of March, it would subtract 0.8 percentage point from first-quarter growth, which would end up at 1.5 percent, based on median responses. Estimates for GDP, based on an annualized pace, ranged from a contraction of 2 percent to growth of 3.3 percent. B
Finance
Banks
Metro Bank shares crash after loans blunder revealed
Metro Bank has revealed a major blunder in how it classifies its loan book, an admission that drove its share price down by nearly 40% on Wednesday, wiping £800m off the value of the company.
The bank, which has been opening new branches as established rivals cut back, revealed that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk-weighted assets” (RWAs).
After the blunder emerged, Metro’s shares plummeted 39% from £22 to close at £13.45 as analysts feared the bank might have to raise fresh capital, just six months after tapping shareholders for £300m to finance its rapid expansion plans. When a bank has higher risk-weighted assets, regulators require higher amounts of capital to be set aside.
Metro launched in 2010 and has opened new banking halls in city centres across the south of England. It floated on the stock market in March 2016 at £20 a share, which rose to more than £40 a share in March last year, but has since been falling. Guardian
Brokers
Wall Street Braces for MiFID-Style Rules Descending on the U.S.
The firewall that Wall Street hoped would protect its U.S. stock and bond analysts from tough European rules is starting to crack. At issue are European Union regulations that took effect last year that forced banks to start charging clients separately for trading and research, rather than bundling the services into one bill. In October 2017, U.S. brokers scored a major win when the Securities and Exchange Commission issued a legal reprieve that at least temporarily kept the rules from spreading to America.
But in the ensuing months, some of the brokers’ most important customers — big fund managers — have grown frustrated with having to pay a single tab for everything in the U.S. and then write multiple checks in Europe. At the same time, money managers are facing pressure from their own clients, who ultimately pay the fees that brokers charge mutual funds.
“Investors would be best served if asset managers were able to choose a payment arrangement for investment research that makes sense based on the individual circumstances,” the Sifma group wrote to SEC Chairman Jay Clayton in a letter that hasn’t previously been made public. B
Services
Streaming
Netflix’s price hike is a defensive strike in the battle over your wallet
Netflix’s newest US price hike could be bad news for its competitors. At $9 to $16 per month in the US, Netflix is still a bargain, considering the amount and quality of the content it’s putting out each month, analysts say. A few extra bucks a month won’t drive most people away, as long as consumers are consistently finding movies like Bird Box and series like Stranger Things that they want to watch. Last year, Netflix added nearly 1,500 hours of original programming in the US, Quartz estimated.
The streaming-video giant, which boasts 139 million paying members globally, raised prices in the US this month, primarily so it could continue investing more in original programming and new technology, like the choose-your-own-adventure format showcased in Black Mirror‘s “Bandersnatch.”
“Consumers have more stomach for the price of Netflix changing because of what is provided,” Brice Clinton, senior engineer at media software and services firm CSG told Quartz. “That price hike is really being used to create more original programming, and invest in larger shows… versus just putting money in shareholder’s pockets.” QZ
Streaming
Hulu drops to just $5.99 per month after Netflix’s price hikes
Hulu just announced that it will lower the price of its base, ad-supported subscription plan to $5.99 per month — down from the current $7.99 — beginning on February 26th. Hulu has offered its service at $5.99 previously on a promotional basis, and it clearly makes enough of a difference at pulling in subscribers to justify a price drop for the standard rate.
In case you were concerned, customers will not see an increase in ad volume because of the reduced pricing. The $11.99-per-month “no commercials” plan will stay at its current price, as will the $12.99 Hulu/Spotify combo subscription, which Spotify handles billing for.
The price drop comes only days after rival Netflix announced increased subscription fees across all of its plans. The most popular plan (with HD streaming) is now $13 per month. Netflix’s content is, of course, ad-free, but Hulu is now creating enough of a cost divide that consumers might find its commercials easier to put up with.
Hulu revealed earlier this month that it ended 2018 with over 25 million subscribers. That’s less than half of Netflix’s 58 million US-based customers, but it represents an impressive 48 percent increase in subscribers compared to where its subscriber count stood at the end of 2017. Verge
Manufacturing & Logistics
Firearms
Political Shifts, Sales Slump Cast Shadow Over Gun Industry
When gunmakers and dealers gather this week in Las Vegas for the industry’s largest annual conference, they will be grappling with slumping sales and a shift in politics that many didn’t envision two years ago when gun-friendly Donald Trump and a GOP-controlled Congress took office.
Some of the top priorities for the industry — expanding the reach of concealed carry permits and easing restrictions on so-called “silencers” — remain in limbo, and prospects for expanding gun rights are nil for the foreseeable future.
Instead, fueled by the deadliest mass shooting in modern U.S. history, the federal government banned bump stocks and newly in-charge U.S. House Democrats introduced legislation that would require background checks for virtually every firearm sale, regardless of whether it’s from a gun dealer or a private sale.
Even without Democrats’ gains in November’s midterm elections, the industry was facing a so-called “Trump slump,” a plummet in sales that happens amid gun rights-friendly administrations. Background checks were at an all-time high in 2016, President Barack Obama’s last full year in office, numbering more than 27.5 million; since then, background checks have been at about 25 million each year. MNet
Technology
Autonomation
Edge Computing Meets 5G: Rethinking the Intelligent Supply Chain
Edge computing is transforming the manufacturing landscape from a traditional, centrally controlled environment to one where data is increasingly gathered and processed in real time, at the network edge—where manufacturing work is performed.
Now, edge computing is poised to get another shot in the arm with the impending realization of private 5G networks. Improvements in networking will also make private networks more accessible, introducing exciting new possibilities for connecting and automating the extended supply chain for smaller manufacturers.
An interesting development in recent years has been the distinction between the “near edge” and the “far edge.” While the near edge is focused on automating processes or performing analytics within a facility, the emerging far edge extends its reach to interact with business partners or even, in some cases, with end consumers in the case of “smart” consumer products (for example, a printer that autonomously orders new ink consumables as they are depleted).
To achieve the full potential of edge computing to optimize the supply chain, connectivity is essential. Yet many of the far-flung and/or remote locations where edge computing is required may not be easily accessible to existing connectivity options. Or those options may not provide the bandwidth, latency and security required for mission-critical operations at the far edge. Private, wireless 5G networks can fill that void. MNet
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