China's Big Tech firms are sending congratulation notes for 'graduating' to employees they're laying off

Weilun Soon

Tue, March 29, 2022, 

Workers at JD.com and Bilibili are getting retrenchment notices disguised as congratulatory notes for them on having “graduated” from the companies. Here, a worker sorts packages for delivery ahead of the Singles Day shopping festival which falls on November 11, at a JD.com warehouse in Beijing on November 9, 2021.Jade Gao/AFP via Getty Images

• Chinese social media users are sharing images reportedly from two tech giants saluting laid-off workers for "graduating."

• The job cuts come as China's tech giants grapple with Beijing's crackdown on the sector.

• Experts said that the firms are trying to protect their reputation as more workers get axed.

China's most influential tech companies are laying off workers — and congratulating them on the job loss.

After news broke last week that e-commerce giant JD.com was axing workers, some social media users in China started sharing images of a cheery note titled "Graduation notice" reportedly issued by the company's human resources department.

The JD.com note, which has been verified to Insider by a source, is generically addressed to an unnamed employee, or "JDer." It reads: "Happy graduation! Congratulations for having graduated from JD.com! Thank you for the companionship!"

A similar note reportedly from video-streaming site Bilibili is titled "Bilibili Graduation Day", and writes: "We've prepared this to assist you in embarking on the next phase of your career."

Both notes then go on to list what the recipients can expect to facilitate their departure from their respective ex-employers.

A JD.com spokesperson declined to comment. Bilibili did not immediately respond to Insider's queries.

Some social media users in China expressed disbelief at how these companies are framing the layoffs.

"Isn't it ridiculous that you are congratulating someone that you've laid off?" a user wrote on China's Twitter-like Weibo.

In recent months, several major Chinese tech companies including JD.com's competitor Alibaba, gaming giant Tencent, and short-video app Kuaishou, have been axing thousands of employees.

Layoffs in the sector are common, but this round of job cuts comes amid Beijing's tightening scrutiny on its homegrown tech firms. Since late 2020, China's central government has been ratcheting up its scrutiny of labor and consumer rights issues in the sector, launched antitrust probes against tech companies, and increased oversight on data security.

"China's largest tech companies are now in fat-trimming mode. We've all been expecting these layoffs," said a Shenzhen-based tech-sector headhunter who did not wish to be named. Shenzhen has often been held up as China's Silicon Valley.

The tech firms may be looking to find any way to put a positive spin on mass layoffs, as younger Chinese workers wonder if a career in the tech sector is worth it, news site Sixth Tone reported.

Calling the layoffs "graduation" and congratulating affected employees "seem to be some form of damage control, especially to mitigate negative backlashes from potential disgruntled employees," said Adrian Goh, cofounder of Singapore-based recruitment portal NodeFlair which has been placing job seekers in roles at several internet companies.

"It's the harsh reality of job redundancy masquerading as something that's good and aspirational," said the Shenzhen-based recruiter.

WAIT, WHAT?!

New drug that prevents you from catching COVID-19 gets green light in Europe — but it’s been in the U.S. for months and hardly anyone knows about it

Sophie Mellor

Tue, March 29, 2022,

British-Swedish pharmaceutical company AstraZeneca announced on Monday its antibody drug Evusheld, which is taken pre-emptively to prevent COVID-19, has been approved in the European Union.

The treatment, administered in two injections, can be taken by adults and adolescents above the age of 12. In clinical trials, the drug reduced the risk of developing symptomatic COVID-19 by 77% compared to the placebo, the company said in a statement.

Unlike other antibody treatments, which are used after someone contracts COVID-19 to prevent severe illness, Evusheld would be used as an alternative vaccination for people who had a weak immune response to existing COVID-19 vaccines or for whom vaccination is not recommended, such as the immunocompromised.

In a second analysis six months into the Phase 3 trial of Evusheld—which includes a 150mg dose of tixagevimab and 150mg of cilgavimab administered as two separate sequential injections—those who took the drug saw their risk of developing symptomatic COVID-19 drop by 83% compared to those who'd taken a placebo.

The company also said Evusheld specifically targeted and neutralized antibodies from Omicron and its subsequent BA.2 variant, which is now dominant across Europe and the U.S.

Christoph D. Spinner, pandemic officer at the University Hospital Rechts der Isar, said, “the authorization of Evusheld for a broad population will allow health authorities in the EU to identify the populations who are most at-risk and need additional protection.”

Confusion overseas

Evusheld was authorized by the Food and Drug Administration on Feb. 2, 2022 for emergency use in the U.S. and has also been granted conditional marketing authorization in the U.K.

But while the protection it offers from getting COVID-19 is widely accepted, around 80% of the available Evusheld doses sit unused in warehouses, pharmacies and hospitals, according to the New York Times.

In the U.S., there has been confusion surrounding the drug, with patients and doctors not knowing about the drug’s existence or where they can even find it. Some doctors and providers also don’t know how to prescribe the drug due to its confusing relationship to other antibody therapies that are usually taken after contracting COVID-19.

“The biggest problem is that there is absolutely no guidance or prioritization or any rollout in place at all, and it’s been a mess,” Dr. Dorry Segev, a transplant surgeon and epidemiologist at N.Y.U. Langone Health, said in the New York Times.

"For people who did everything they could but didn't have an adequate response to the vaccines, [Evusheld] is their only hope, and to deny them that because of a disorganized and chaotic distribution and education rollout is just terrible," Sergev said to CNN.

The Biden administration purchased 1.7 million doses of Evusheld in January—enough to fully treat 850,000 people—and made 650,000 doses ready for distribution to the states. But of those 1.7 million doses only 370,000 have been have been ordered by the states, and fewer than a quarter of those doses have been used.

A CNN investigation identified 59 pharmacies that had ordered Evusheld. Of the 5,372 boxes they had been delivered, only 1,376 boxes had been used.

Distributing Evusheld in the EU will likely require a smoother rollout to avoid the poor uptake it has experienced in the U.S. "We will continue to work with governments across Europe to make Evusheld available as quickly as possible," Mene Pangalos, executive vice president of biopharmaceuticals research and development at AstraZeneca said.

Otherwise, the immunocompromised waiting for a silver bullet may be left waiting.

This story was originally featured on Fortune.com

Trump speaks out during war in Ukraine to call on Putin to release Hunter Biden dirt


Andrew Feinberg
Tue, March 29, 2022

Five years and eight months after he asked Russia to release damaging information on former secretary of state Hillary Clinton, Donald Trump still hopes Russia is listening.

In an interview with right-wing publication Just the News, Mr Trump said Russian president Vladimir Putin should release information about a Russian widow’s investment into a company Republicans claim is connected to Hunter Biden, President Joe Biden’s younger and sole surviving son.

Mr Trump has long claimed Hunter Biden received a $3.5m payment from Elena Baturina, the widow of late Moscow mayor Yuri Luzhkov, and has suggested – without evidence – that such a payment was intended to curry favour with the elder Mr Biden for corrupt purposes.

Mr Trump told Just the News Mr Putin should release information the matter, which he also tried raising at his first debate with Joe Biden.

“She gave him $3.5 million so now I would think Putin would know the answer to that. I think he should release it,” he said. “I think we should know that answer.”

A report prepared by Senate Republicans to aid Mr Trump’s re-election campaign alleged Hunter Biden received the $3.5m pursuant to a “consultancy agreement” through a firm called Rosemont Seneca Thorton.

While Hunter Biden was a co-founder and CEO of an investment firm called Rosemont Seneca Advisors, his attorney, George Mesires, has said Mr Biden has no connection to Rosemont Seneca Thorton, and it’s not known what, if any, connection exists between the two companies.

Mr Trump has frequently sought foreign assistance to damage his perceived political enemies.

In July 2016, he infamously called on Russia’s government to release emails he claimed Ms Clinton was withholding to prevent discovery of damaging information about her.

Speaking at a press conference at his Doral, Florida golf resort, he said: "Russia, if you’re listening, I hope you’re able to find the 30,000 emails that are missing. I think you will probably be rewarded mightily by our press. Let’s see if that happens”.

Nearly three years later, he tried blackmailing Ukrainian president Volodymyr Zelensky into announcing a sham investigation into Hunter Biden’s work as a board member for Ukrainian energy company Burisma.

At the time, Mr Zelensky’s armed forces were battling against Russian-backed separatists in Eastern Ukraine, and the newly-elected Ukrainian president asked Mr Trump to sell Ukraine more Javelin anti-tank missiles to stop Russian tanks.

Mr Trump responded: “I would like you to do us a favour though,” and went on to tell Mr Zelensky to speak with then-attorney general Bill Barr about a conspiracy theory which posited that Joe Biden corruptly withheld US and EU-backed loan guarantees so Mr Zelensky’s predecessor would fire then-prosecutor-general Viktor Shokin because he was allegedly investigating Hunter Biden.

In reality, then-Vice President Biden was carrying out the wishes of the Obama administration as well as the EU and IMF in pushing for the firing of Mr Shokin, who was widely regarded as corrupt. Mr Trump’s attempt at blackmail was later reported to Congress by a whistle-blower, leading to the first of his two impeachment trials.

Mr Trump also told Just the News he would still like to have more information about Hunter Biden’s work with Burisma. The information he seeks may not exist, but he complained that none would be forthcoming because Mr Zelensky is unlikely to take any action to damage Joe Biden while the US is assisting Ukraine fight off the unprovoked invasion Mr Putin launched last month.

“Now, you won't get the answer from Ukraine,” he said.

GOOD NEWS

Exxon Brazil prospect found dry, partner says, in latest setback


Mon, March 28, 2022
By Sabrina Valle and Gabriel Araujo

SAO PAULO, March 28 (Reuters) - Exxon Mobil Corp failed to find oil in its first well in a new exploration area off Brazil's Northeast coast, its partner Enauta Participacoes SA said on Monday, the latest in a series of setbacks for the U.S. producer in the country.

Exxon had hoped the prospect could become its first discovery as an operator in Brazil, one of its key three bets for future production growth, along with Guyana and the U.S. Permian basin.

The disappointing news about the the so-called Cutthroat prospect in Sergipe-Alagoas Basin came just a week after Exxon's second minority partner in the venture, Houston-based oil producer Murphy Oil Corp, trumpeted its potential to yield as much as 1 billion barrels of oil and gas.

Murphy didn't immediately comment on Enauta's disclosure. Last week, Murphy said the drilling prospect had relatively low costs. Shares of Enauta fell nearly 6% following the statement saying no hydrocarbons were found at the 1-EMEB-3-SES well.

Exxon said it remains committed to its operations in Brazil, which include an interest in 28 offshore blocks.

"While we didn’t encounter hydrocarbons at this particular exploration well (Cutthroat-1), ExxonMobil will continue to integrate the data from our findings into regional subsurface interpretation efforts in order to better understand the block’s exploration potential," Exxon's spokesperson Meghan Macdonald said.

Exxon made a comeback to Brazil last year as an operator after a decade without drilling. Its first two exploratory wells in an area located 120 miles off Brazil’s southeast coast - dubbed Opal and Tita - didn't show enough potential to justify installing a platform, it told Brazil's oil operator last year.

Another block - Uirapuru - in which Exxon holds a minority stake, also came with poor results recently, according to Brazil's state-controlled oil firm Petrobras, the lead operator.

The company characterized Brazil as one of its "highest-quality growth projects" in its most recent earnings report.

The largest U.S. oil producer has been having better results in Brazil in its partnership with Norwegian oil firm Equinor ASA. Last year, it committed to investing 40% of the $8 billion https://www.reuters.com/business/energy/equinor-exxon-develop-8-bln-brazilian-oilfield-2021-06-01 needed to develop the Bacalhau offshore field. Equinor's field is set to deliver Exxon's first oil from Brazil in 2024, with an estimated 220,000 barrels of oil and gas per day.

Enauta holds a 30% stake in a total of nine clusters in Sergipe-Alagoas, while Exxon Mobil has 50% and Murphy 20% of such assets. (Reporting by Gabriel Araujo; Writing by Steven Grattan Editing by Mark Potter)

ON THE FLAM

Flamingo that escaped Kansas zoo in 2005 spotted in Texas

Tue, March 29, 2022,

WICHITA, Kan. (AP) — One of two flamingos that escaped from a Kansas zoo during a storm 17 years ago has been spotted on the coast of Texas, wildlife officials said.

The Coastal Fisheries division of Texas Parks and Wildlife confirmed Tuesday to The Associated Press that the African flamingo — known as No. 492 because of the number on its leg band — was captured on video shot March 10 by an environmental activist near Port Lavaca, Texas, at Rhodes Point in Cox Bay. Officials were able to make out the bird's leg band on the video.

The bird and another flamingo escaped from the Sedgwick County Zoo in Wichita on a stormy night in June 2005. Employees had not yet clipped the birds' wings to prevent them from flying, which facilitated their escape.

While the other flamingo was never seen again, No. 492 has been spotted several times in Wisconsin, Louisiana and Texas, sometimes with other wild flamingos. But it had been years since its last reported sighting — until this month.

Zoo officials have never made plans to recapture No. 492, despite the sightings, saying there is no easy way to do so without disturbing other wildlife.

The escaped flamingos, known for their distinctive pink feathers and long legs and necks, were born in Africa then shipped to the Kansas zoo in 2004 with 39 other flamingos.

NOT A FLAMINGO DESPITE BEING PINK 

CALIFORNIA
‘Why was no one held accountable?’ Gray calls for state audit over water loss


Kent Porter/Press Democrat file

Madeline Shannon
Tue, March 29, 2022


Assemblyman Adam Gray says he has asked California’s Legislative Audit Committee to audit the Department of Water Resources and State Water Resources Control Board after the state miscalculated Sierra Nevada water.

According to a news release from Gray’s office, the loss of 700,000 acre-feet of water last year prompted his audit request. Gray said the water could have supplied 1.4 million California homes for a year.

“Why was no one held accountable after the state grossly miscalculated how much moisture was actually stored in the Sierras last year?” Gray, D-Merced, said in the release.

Other public agencies, including a federal agency that measures the snowpack and local irrigation districts, didn’t make similar mistakes, according to Gray’s office.


The Department of Water Resources released an unknown quantity of water before the spring runoff last year, just before last year’s drought that saw some domestic wells go dry and some cities run out of water completely.

Juvenile salmon in the Sacramento River and its tributaries were also victims of the water loss, Gray’s office said.

“The water is long gone,” Gray wrote in an opinion column published Monday on CalMatters. “All we are left with is questions.”

The announcement of the audit comes the same day as new restrictions ordered by Gov. Gavin Newsom, who mandated that cities and local water agencies reduce their water usage and tighten conservation rules.

While he didn’t agree to institute mandatory urban water use statewide, he ordered urban water agencies to follow through on the second phase of their water shortage contingency plans. Those plans are meant to take effect when water shortages approach 20%.

Just last month, the Department of Water Resources released nearly three times the normal water flows from Lake Oroville, the largest state-operated reservoir despite climatologists all over the country warning of a resumption of the drought, according to the news release.

“Until we understand what has gone wrong with the agencies charged with managing California’s water, we cannot understand how to fix the problem,” Gray wrote.
Drought concerns linger

The announcement comes just weeks after the state announced a cutback to 5% in water deliveries from the State Water Project, citing continuing dry weather. That in itself was a reversal from its previous allocation increase in January, signaling how much state officials are grappling with California’s characteristic wild swings in weather.

Amid the state’s water woes, Merced Irrigation District officials are doing their best to deliver water to local growers despite the challenges from the state.

MID officials just announced last week the completion of a $6 million main canal rehabilitation to bolster water delivery to Merced-area farmers, although surface water allocations from the district were reduced while costs went up.

The latest effort by the state to mitigate the effects of the drought might come too little, too late for many growers here, especially since officials with MID worried in a recent board meeting that the wet season wasn’t wet enough to yield more than one acre-foot of water in the dry season for many of the farmers it serves.

The Bay Delta plan, which was introduced by the state several years ago and will divert 50% of Merced County’s share of Lake McClure water, exacerbate those woes.

Giant sinkholes found forming on the seafloor in northern Canada



Isabella O'Malley, M.Env.Sc
Sun, March 27, 2022

Deploying autonomous robots to scour the seafloor can bring a lot of surprises. For one team of scientists conducting research in Canada, their robot fleet discovered “sinkhole-like depressions” the size of an entire city block of six-story buildings — an alarming discovery that could have serious implications for the global climate.

A team of international researchers affiliated with the Monterey Bay Aquarium Research Institute (MBARI) has been collecting data from the Canadian Beaufort Sea since 2003 to learn more about this extremely remote region. The “sinkholes” that the researchers discovered were actually regions of thawing permafrost.

Permafrost is defined as any type of ground that stays continuously frozen for at least two years. Thawing permafrost has been widely documented across many parts of the Arctic in recent years, but the researchers’ study states this is the first time that permafrost thawing on the seafloor has been observed.

Data collected from 2010 to 2019 revealed that there were “extraordinarily rapid” changes to the seafloor along an area of permafrost that formed between 2,580,000 to 11,700 years ago. The largest sinkhole had an oval shape that measured 28 meters (92 feet) deep, 225 meters (738 feet) long, and 95 meters (312 feet) wide.

This massive sinkhole in the Canadian Beaufort Sea developed in just nine years. 

(Eve Lundsten © 2022 MBARI)

The driving force behind the formation of the sinkholes in the Canadian Beaufort Sea is attributed to permafrost sediment gradually warming up since the last Ice Age due to brackish groundwater flowing across regions of ancient permafrost, which has a warming effect on the ice and eventually causes a collapse.

The researchers note these sinkholes started forming before humans began warming the planet with greenhouse gas emissions, but note that the accelerated warm-up the Arctic is experiencing due to these emissions can hinder our ability to understand how this frozen environment functions without the influence on human activity.

“These rapid changes to the seafloor demand our attention. We need to understand how the decay of relict submarine permafrost will impact the vast areas underlying the Arctic continental shelves. This groundbreaking research has revealed how the thawing of submarine permafrost can be detected, and then monitored once baselines are established,” Charlie Paull, a geologist at MBARI and one of the lead authors of the study, stated in a press release.

2017 Arctic mapping AUV launch Roberto Gwiazda (Charlie Paull © 2016 MBARI)

In 2022, MBARI will join collaborators from the Geological Survey of Canada, the Department of Fisheries and Oceans Canada, the Korean Polar Research Institute, and the United States Naval Research Laboratory for an expedition aboard the Korean icebreaker Araon (pictured) for further research on the thawing submarine permafrost in the Canadian Beaufort Sea. (Roberto Gwiazda © 2017 MBARI)

Crater formations found on land have also given scientists clues about the changing nature of permafrost in a warming world. A number of enormous sinkholes, including one that measured 20 metres in length, have appeared in Siberia and are linked to eruptions of methane gas that built up underneath the Earth’s surface.

Methane is a greenhouse gas that is 84 times more powerful than carbon dioxide at warming the Earth over a 20-year period. In addition to the direct impacts that the thawing landscape has on individuals in the Arctic, such as those that have homes built on top of permafrost, scientists are concerned about the widespread release of methane as the frozen environments warm.

Melting permafrost on land in the Arctic has been correlated with increasing global temperatures, which raises questions about how human-induced climate change could affect permafrost underneath the ocean. The researchers say there is much to be learned about how thawing permafrost can restructure the Arctic seafloor and that their discovery can help set baselines that will help the monitoring and analysis of future data.

“The Government of Canada and the Inuvialuit people who live on the coast of the Beaufort Sea highly value this research as the complex processes described have implications for the assessment of geohazards, creation of unique marine habitat, and our understanding of biogeochemical processes,” stated Scott Dallimore from the Geological Survey of Canada, who is also one of the study’s lead authors.

Thumbnail credit: Eve Lundsten © 2022 MBARI

Coca Cola and Pepsi Control the Global Beverage Industry

By 

J.B. MAVERICK

 

Updated March 29, 2022

Table of Contents

What Is the Power Make-Up of the Global Soft Drink Industry?

Understanding the Carbonated Soft Drinks (CSD) Industry

Market Share and Market Cap

FAQs

The Bottom Line

What Is the Power Make-Up of the Global Soft Drink Industry?

Two powerhouses control the market share of the carbonated soft drink and beverage industry: PepsiCo. Inc. (PEP) and The Coca-Cola Corporation (KO).

Since 2004, Coca-Cola Company has been the market leader. Coca-Cola, despite a brand value decline of 13% in 2021, remained the world’s most valued soft drink brand at $33.2 billion in 2021, according to Brand Finance. PepsiCo. takes second at $18.4 billion. Dr. Pepper-Snapple was the fastest growing soft drink brand with a 40% brand value increase, followed by Red Bull’s 15% increase.1

KEY TAKEAWAYS:

• PepsiCo. Inc. and The Coca-Cola Corporation are the two powerhouses controlling the bulk of the carbonated soft drink (CSD) and beverage industry.
• Both companies have a large global presence, controlling several hundred brand names each.
• Since 2004, Coca-Cola Company has been the market leader, according to industry statistics.
• Pepsi ranks second, followed by Dr. Pepper-Snapple.
• In Q1 2022, PepsiCo had a market cap of $229.3 billion while Coca-Cola had a market cap of $268.4 billion.

Understanding the Carbonated Soft Drinks (CSD) Industry

Carbonated soft drinks belong to the non-alcoholic beverage industry. This industry produces regular and diet fizzy drinks, juice, bottled water, sports and energy drinks, and hot and iced coffee and tea. The market leaders in this industry are The Coca-Cola Corporation, PepsiCo. Inc. and Dr. Pepper Snapple.

The Coca-Cola Corporation and PepsiCo have been long-term competitors. Pepsi has been using the famous "Pepsi challenge" as a promotional slogan since 1975. The challenge was originally a taste experiment where consumers were invited to try beverages out of two blank cups—one filled with Pepsi Cola and one containing Coca-Cola. Consumers were asked to compare the two drinks and pick the one that they preferred. Pepsi Cola was the winner

Top Selling CSDs

The top-selling CSDs in the U.S. in 2021 were:2

1. Coca-Cola Classic
2. Pepsi Cola
3. Diet Coke
4. Dr. Pepper
5. Mountain Dew (a Pepsi brand)
6. Sprite (a Coca-Cola brand)
7. Diet Pepsi
8. Coke Zero
9. Fanta (a Coca-Cola brand)
10. Diet Mountain Dew (a Pepsi brand)

Market Share and Market Cap

Both Coca-Cola, Inc. and PepsiCo have risen by around 14.5% over the trailing twelve months through Q1 21022. Coca-Cola had a market cap of $268.4 billion and PepsiCo a market cap of $229.3 billion.3

KO vs PEP.

Coca-Cola’s top brands also generally outperformed PepsiCo’s over the past several years. It is difficult to reach a consensus on which company controls more of the market without drilling down to a specific type of drink, for example, diet versus regular. Beverage Digest reports that Coca-Cola’s key diet sodas fared better than PepsiCo’s core diets.4

Both companies face competition from the growing market of healthier alternatives to sugary soda drinks, such as energy and nutritional drinks. This has reduced Coca-Colas's operating margin from about 25% to approximately 20% since the year 2000. To adjust to these changing market conditions, both Coca-Cola and PepsiCo have developed their own alternative beverages but still face competition and market share erosion from other competitors.1

Coca-Cola owns upwards of 500 global brands, with just 21 of which generate approximately $1 billion each, per year, in revenue.5 PepsiCo also, has a wide variety of leading brand-name food and beverage products with 22 of those brands generating more than $1 billion each, per year, in revenue.6

Both companies span the globe, having a leading presence in over 200 countries. The companies and their respective primary brands are household names recognized worldwide, but are possibly most famous for the rivalry between them, which is typically known as the “cola wars.” Regarding longevity, targeted marketing campaigns, and different marketing tricks, this commercial war is considered one of the most epic in history.

Does Coca-Cola or Pepsi Make More Money?

Coca-Cola outpaces PepsiCo in terms of market share. In 2021, Coca-Cola also brought in more revenue: $38.7 billion compared to PepsiCo's $25.3 billion. This translated into $9.8 billion of net income for KO and $7.6 billion for PEP.78

What Percentage of the Market Does Pepsi Have?

In 2020, PepsiCo controlled around 26% of the U.S. carbonated beverage market, down from 30.5% in the mid-2000s.9 Coca-Cola had around 44% of the U.S. market share.10

How Much of the Carbonated Soft Drink Industry Is Controlled by Coca-Cola and Pepsi?

In the U.S., around three-quarters of the carbonated soft drink and beverage industry is controlled by Coca-Cola and Pepsi alone.109

The Bottom Line

Times have changed since the development of carbonated beverages. Consumers have begun to seek out healthier alternatives. Both cola brands have seen a recent decline amid increased competition, and analysts foresee a continued downward trend for the two main brands. However, these two companies are expected to continue to dominate the overall beverage market

Analysis-U.S. mulls shaking up stock trading rules to aid small investors


FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C.

Mon, March 28, 2022, 
By Katanga Johnson and John McCrank

WASHINGTON/NEW YORK (Reuters) - Wall Street's regulator is considering changes to stock market rules to increase competition for orders and improve deals for retail investors, according to its top official Gary Gensler and industry executives.

The U.S. Securities and Exchange Commission (SEC) is scrutinizing the practice of payment-for-order-flow (PFOF), in which wholesale market-markers pay brokers like TD Ameritrade, Robinhood Markets and E*Trade to route retail customer orders to them instead of to exchanges. The SEC review could lead to the biggest shake-up of U.S. equity market rules in over a decade.

Robinhood makes around 75% of its revenue from PFOF. The trading app and others say the practice on average gives retail investors a fractionally better deal than exchanges, allowing them to drop commissions and democratize investing.

Critics say payment for order flow can create conflicts of interest, and also encourages brokers to add video game-like bells and whistles to their apps and websites that prompt investors to trade more, which boosts the broker's profit but is rarely the best investment strategy. Britain, Canada and Australia have banned PFOF and Gensler suggested in August that the SEC could go that route.

PFOF drew new scrutiny last year when an army of retail investors went on a buying spree of "meme stocks" like GameStop and AMC, squeezing hedge funds that had shorted the shares. Many purchased the shares using commission-free brokers like Robinhood that accept PFOF from a few powerful market-makers.

The largest, Citadel Securities, says it controls 35% to 40% of all U.S. retail order flow. Virtu Financial controls about 25%, according to an analysis of SEC data by BestEx Research.

The SEC is exploring whether retail brokers are sending PFOF customer orders to the wholesaler paying them the most, rather than the venue that offers the best deal.

"When one party is paying a platform for the order flow, that can be in conflict with a retail customer getting best execution," SEC chair Gensler said in an interview. "They're not getting order-by-order competition."

Some brokers, like Fidelity, say they can get good stock prices for customers and offer free stock trading without accepting PFOF.

A Robinhood spokeswoman pointed to a study by two Massachusetts Institute of Technology professors who found Robinhood customers enjoyed more than $8 billion in price improvements from 2020-2021 thanks to PFOF.

A spokesperson for TD Ameritrade said the current market structure delivers "great outcomes" for investors and the company supports efforts to make it even better.

A PFOF ban is on the table, Gensler told Reuters, but he said the practice is also just a symptom of a broader problem: exchanges are not competing on an equal footing with the off-exchange market, where around 40%-50% of trading takes place.

The national benchmark for measuring the best deal is flawed because it does not include these off-exchange trades, he added.

"Here's the focus around new market structure rules: How might we promote a more level playing field?," Gensler said.

The SEC is also mulling making it easier for exchanges to compete with market-makers for orders by allowing exchanges to offer sub-penny pricing, and by changing the definition of "best execution," said Gensler and other industry executives.

Several executives said they doubted the SEC would actually ban PFOF. Virtu Financial CEO Doug Cifu said his firm would be one of many to challenge such a move in court.

"PFOF and rebates have really fostered incredible innovation and competition in the marketplace," Cifu told Reuters, adding that if the SEC bans the practice "they are looking at a very long fight."

He and other industry executives said the SEC should enhance retail brokers' disclosures so small investors are better informed on the pros and cons of PFOF. Gensler said the SEC was also reviewing disclosures.

"As long as it is transparent and disclosed, I don't see a conflict," said Kirsten Wegner, CEO of the Modern Markets Initiative which represents automated trading firms.

COMPETITIVE BOOST

Investor advocates support better disclosures and also want to boost exchanges' competitiveness to improve the reliability of the national pricing benchmark, known as the National Best Bid and Offer (NBBO).

Current "best execution" rules require retail brokers to route customer orders to a venue offering the best price displayed on the exchange, or better, and market-makers typically improve on the best price by a fraction of a cent.

Exchanges cannot offer sub-penny quotes, but the SEC is considering allowing it. It is also mulling a rule, similar to one in Canada, requiring retail brokers to execute orders on an exchange unless the off-exchange price is significantly better, said Dave Lauer, CEO of financial platform Urvin Finance, and one other industry source with knowledge of the SEC's thinking.

Wholesalers provide a 15% improvement on the NBBO spread, but moving retail flow to exchanges would narrow NBBO spreads by 25%, according to research by Hitesh Mittal, CEO of BestEx Research.

"Institutional investors and market makers would better compete with exchanges for retail flow by narrowing the bid offer spread," he said.

Ty Gellasch, executive director of investor trade Healthy Markets who has also discussed the issue with the SEC, said he expects the agency to clarify that "best execution" requires brokers to obtain the best available price rather than a fractional price improvement.

"I expect it will say to the industry: 'you have to give the customers the best prices,'" he said.

(Reporting by Katanga Johnson in Washington and John McCrank in New York; Editing by Michelle Price and David Gregorio)

USA

Opinion: Social Security benefits should not be cut

Raising the Full Retirement Age from 67 to 70 would be the worst way to cut them

Published: March 29, 2022 
By Alicia H. Munnell

GETTY IMAGES

The American Academy of Actuaries — a group of usually sober and sensible people — recently issued a brief making the case for “Raising the Social Security Retirement Age.”

Their argument is straightforward. Social Security is running a 75-year deficit equal to 3.5% of taxable payrolls. The only way to fix the problem is to raise revenues or cut benefits. Life expectancy at 65 has increased, and is projected to continue to increase, which pushes up program costs. Therefore, Congress should make people work longer and postpone claiming their benefits. Raising the full age to 70 could cut the long-run deficit by about a third.

Just to be absolutely clear, increasing Social Security’s Full Retirement Age is not just a question of “postponing” claiming; it is a benefit cut. Those who are able to delay retirement receive one less year of benefits. Those who cannot adjust their retirement behavior get lower benefits due to the increased actuarial adjustment — an adjustment made to keep lifetime benefits constant regardless of claiming age. Currently, those claiming at age 62 receive only 70% of the benefit available at 67. If the Full Retirement Age were increased to 70, that amount falls to 55%.

I’m against any form of benefit cut, because the rest of the U.S. retirement system seems quite wobbly to me. At any moment, only about half of private sector workers are covered by any type of workplace retirement plan. That means some people never are covered and are totally reliant on Social Security, while others move in and out of coverage and end up with modest balances.

Read: Do I need to file a tax return if most of my income is from Social Security?

We actually know how much people have in their retirement accounts from the detailed financial data in the Federal Reserve’s Survey of Consumer Finances. As of 2019 — the date of the latest survey — households (with a 401(k)) approaching retirement (ages 55-64) had $144,000 in 401(k)/IRA balances (see Table 1). That may sound like a lot but if they buy a joint-and-survivor annuity, they will receive only about $600 per month. And this amount is likely to be their only source of retirement income beyond Social Security because the typical household holds no other financial assets. Cutting Social Security benefits would be a disaster for most Americans.



Moreover, increasing the Full Retirement Age is the most pernicious form of benefit cut, because it hurts the most vulnerable who are forced to claim early. And it’s clear who these people are.

Read: You could be getting the wrong Social Security benefit check — here’s how to fix it

In a recent study, my colleagues examined “working life expectancy” for all individuals and by race and education. They looked at individuals who are expected to be working at 62 and calculated the probability that they will still be capable of work if Social Security’s Full Retirement Age were increased to 70 (see Figure 1). The exercise showed that while age 70 might be possible for a large majority of high-education whites, it is out of the question for many men and women with low education — particularly Blacks — and even for many high-education Black workers. These individuals would end up with grossly inadequate benefits.



Yes, it is possible, as the actuaries suggest, that some of the pain created by increasing the Full Retirement Age could be offset by expanding Disability Insurance. But I have no confidence this would happen. So, don’t cut Social Security benefits. And, if for some reason we decide to do so, don’t do it by raising the Full Retirement Age.

Retirement-Reform Bill Could Slash Taxes

The House is ready to vote on H.R. 2954, also known as SECURE 2.0 -- a major revamp to the landmark 2019 law that overhauled retirement tax rules for older Americans – and the changes could mean even bigger savings for your investment portfolio and nest egg.

ROBERT POWELL
2 HOURS AGO

Congress is working on some major revisions to the 2019 law that overhauled retirement tax rules for older Americans – and the changes could mean big savings for your investment portfolio and nest egg.

The U.S. The House of Representatives was expected to vote Tuesday on H.R. 2954, also known as SECURE 2.0.

The first SECURE Act, also known as the Setting Every Community Up for Retirement Enhancement Act of 2019, included major provisions designed to increase access to tax-advantaged accounts and prevent retirees from outliving their assets.
Bigger Changes for RMDs

Under SECURE 1.0, the age for required minimum distributions, known as RMDs, increased from 70½ to 72. The new legislation, SECURE 2.0, would increase the age for RMDs to 73 in 2023, 74 in 2030 and 75 in 2033.

(RMDs? Once you reach a certain age, the IRS wants you to start withdrawing from your retirement account and pay taxes, whether you need the money or not.)

See: What Are Required Minimum Distributions and How Are They Calculated?

That’s just one of the changes being considered. Should SECURE 2.0 be signed into law, Americans’ retirement accounts – and their retirement planning – could be changed substantially, said Lisa Featherngill, the national director of wealth planning at Comerica Bank, in an interview with Bob Powell on TheStreet’s Retirement Daily.

According to Featherngill, increasing the age at which RMDs begin would likely increase the amount of RMDs one might take but it would also increase the number of years in which a retirement account holder would enjoy tax-deferred growth.

“The RMD is based on the value of the account and life expectancy,” she said. “So, assuming there's no change in the life expectancy tables, the distribution would be higher if you wait to 75 versus if you took it at 72. But you have additional years of deferred tax.”
Catch-up Contributions and Inflation

Another provision would Increase catch-up contributions to employer retirement plans for individuals ages 62, 63 and 64 from $6,500 to $10,000. And what’s notable about this provision is the catch-up contribution index for inflation, she said. So, it might be $10,000 in 2023 but for someone who is now age 50 it could be quite higher, say $14,250 if inflation runs at 3%, by the time that person turns 62.
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Another provision would provide an option for employer matching contributions to be made into the Roth portion of the retirement plans. Typically, the employer’s contribution goes into the employee’s pre-tax 401(k) account. So, for someone who is young and in a low tax bracket today but expects to be in a higher tax bracket in the future, this option could be “incredibly powerful,” said Featherngill.

“If you could afford to pay the tax on the employer match in the Roth today, then that money builds up tax-free for the rest of your life,” she said.

Employer Contributions, Charitable Contributions

SECURE 2.0 would also allow an employer contribution to an employee retirement plan based on the employee’s student loan payments. “If you've got an employee who's paying back student loans, the student loan payments can qualify as contributions to the retirement plan only for purposes of the employer match,” she said. “That could be really significant to help (workers) save for retirement while at the same time taking care of debt from college.”

SECURE 2.0 would also allow individuals age 70½ and older to make a one-time charitable distribution, up to $50,000, from an IRA to a split-interest trust such as a charitable remainder trust. “Most of my clients love qualified charitable distributions or QCDs,” she said.

Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity.

The caveat, however, has always been that it has to be a public charity, said Featherngill. “It can't be your remainder trust or anything else where you have an interest,” she said. But SECURE 2.0 would allow an account owner to give up to $50,000 into a split interest trust, a charitable remainder trust. A charitable remainder trust allows a grantor to create a trust that generates revenue for a few years and then transfers the assets to a charity, according to the Legal Information Institute.

The proposed bill, HR 2954, would also allow domestic abuse survivors to take a distribution of the lesser of $10,000 or 50% of the plan balance without penalty for one year following the abuse. “This gives access to additional funds if somebody needs it,” she said.

Of note, there's a version of SECURE 2.0, the Retirement Security and Savings Act, in the Senate. That proposed legislation features many provisions included in the House's Securing a Strong Retirement Act but there are differences as well.

“It will be interesting to see if (the House and Senate) combine these bills,” said Featherngill.

And, of course, any proposed legislation must be signed into law by the President, she noted.

And until then, retirees and would-be retirees should keep an eye on Congress. “Let's see what happens and then we can plan for next year,” she said.