WWN#23 – Wanted: New Uber CEO as Travis Kalanick Resigns

What’s Been Happening?

In February, a 3000 word blog post was written by former Uber engineer Susan Fowler which detailed Uber’s toxic company culture. It’s a story of a company that was portrayed as a global start up success in public but revealed as an organisation in complete, unrelenting chaos by the author. She alleged that there was constant harassment and discrimination and when she raised the issue with management, they were dismissed.

Around the same time, a video emerged of Mr Kalanick arguing with an Uber driver about lowering prices for its black car service. He later issued a profound apology in which he stated that he must “fundamentally change as a leader and grow up”. It was a bit too late though, as the damage was done.

In the wake of controversies, a number of senior Uber staff resigned in March, including Uber President Jeff Jones, SVP of engineering Amit Singhal and Uber VP product and growth Ed Baker.

Earlier this month, Mr Kalanick said that he was taking an indefinite leave of absence. One of the reasons cited was the loss of his mother in a recent boating accident. Another reason could have been to facilitate the transition of responsibilities from Kalanick to other members of senior management, in line with recommendations issued by US Attorney General Eric Holder in his report to Uber to overcome its ethics and leadership troubles.

What Now?

A shareholder revolt led by five of Uber’s most prominent investors has resulted in Kalanick agreeing to resign. In a letter titled, “Moving Uber Forward” the investors wrote to the CEO that he must immediately leave and the company needed a change in leadership. In addition, improved oversight was requested by filling two of the three empty board seats with independent directors and that a new CEO and experienced CFO be found immediately. Although Travis has resigned, he will remain on Uber’s board of directors and still hold a significant stake in the company.

What’s Next?

As the search for a new CEO commences so does speculation. One rumour is that US Ex-President Barack Obama may become the new CEO and may be just what Uber needs to stop the company from completely falling apart. There has already been speculation that Obama wanted to enter the tech industry and a connection between Obama and Uber is David Plouffe who was the campaign manager for his 2008 presidential campaign. Later on, he became a policy advisor for Uber.

Sheryl Sandberg is another name that is on the candidate list for CEO of Uber. Sandberg has extensive experience in the tech industry, having served nine years as COO at Facebook. Uber directors, including Arianna Huffington, are increasingly convinced that a woman at the helm would be well suited to fix Uber’s mess. However, sources close to Sandberg say that she’s not interested and will be staying with Facebook.

The search for the CEO and the CFO is more complicated than it would seem, as finding the right individual with experience leading a disruptive business model like Uber’s is far and few between. Once the leadership team has been restructured, Uber may have a chance of being in the spotlight again for all the right reasons instead.


WWN#22 – U.S. Federal Reserve Raises Interest Rate to 1.25%



Credits: Historical Federal Funds Rate

What’s Been Happening?

The Federal Reserve hiked up US interest rates by 25 basis points for the first time in March, its third upward move since the 2008 financial crisis. At the time, Janet Yellen who is the chair of the Board of Governors of the Federal Reserve System, expected rates to be increased twice more this year. Some economists are sceptical of this however, including global economist Anna Stupnytska from Fidelity International. She said that their base case is only for one more hike to occur this year, as a cyclical peak is being reached soon and the likelihood of a China slowdown weighing on “global inflation, markets and growth is fairly high”.


What Now?

At the latest Federal Reserve meeting on Wednesday, it seems Janet and policymakers were ‘feeling good’ about the economy and have forged ahead with an interest rate increase despite growing concerns of weak inflation. The target range for the federal funds rate is now between 1% – 1.25%.

A statement issued by the Federal Reserve indicated that “On a 12-month basis, inflation has declined recently and is expected to remain somewhat below 2 percent in the near term but to stabilise around the committee’s 2 percent objective over the medium term.”

One of the barometers that the Fed monitors is unemployment which dropped to a 16-year low at 4.3 percent in May. This may have given them the confidence to keep gradually lifting the low borrowing rates towards their historic norms.

Whilst the Federal Reserve maintains an accommodative stance on monetary policy, Yellen has said that it will be appropriate to move to a more neutral stance if they continue to move along the path [of interest rate rises].

What’s Next?

The journey is not over as the long-run interest rate is 3% which is the median estimate made by policymakers. According to 30-Day Fed Fund future prices, the probability of another rate hike later on in the year is currently at 2.5% for the July Federal Reserve meeting although this markedly increases to a probability of 30% by December. The timing of the interest rate increase would of course depend on the state of the US economy and its continued growth.

The bottom line for American consumers is that there will be an increase in their borrowing costs which may strain some households.


WWN21# – The Qatar Crisis: Trump Talks & Saudi Arabia Listens


What’s Been Happening?

A few weeks ago, President Trump made his first overseas trip to Saudi Arabia where he delivered an address to at least dozens of Arab and Muslim-majority countries at the Arab Islamic American Summit.

His speech focused on the long-standing fight against extremists as he urged Middle East nations to do more. “Drive them out of your places of worship. Drive them out of your communities. Drive them out of your holy land. And drive them out of this Earth.”

Later on though, his speech turned to harsh criticism of Iran as a government that speaks openly of mass murder, with vows to destroy Israel, America and other nations in the room. The anti-Iran language is likely to resonate well with Saudi Arabia being a largely Sunni Muslim population as opposed to Iran who is the region’s Shia Muslim power.


What Now? Operation Isolate Qatar Commences

Trump’s speech seems to have successfully galvanized some Arab nations into action as Bahrain, Egypt, Saudi Arabia, the United Arab Emirates and Yemen simultaneously severed diplomatic ties with Qatar for supporting terrorism.

Some action points:

  • Saudi Arabia has closed its land border with Qatar through which the tiny nation imports most of its food.
  • All countries have ordered their citizens to leave Qatar and for Qataris abroad to return to their country within 14 days.
  • Diplomatic staff from the Arab nations will be withdrawn from Qatar and Qatar’s diplomats will be ejected.

All nations plan to cut air and sea traffic with some regional airlines having already announced that they would suspend services (e.g. Etihad, Emirates, Air Arabia, Bahrain’s Gulf Air).

Trump congratulated Saudi Arabia and himself, taking some credit for the action by tweeting on Twitter: “So good to see the Saudi Arabia visit with the King and 50 countries already paying off… they said they would take a hard line on funding extremism and all reference was pointing to Qatar”.

All of this however, is actually a big problem for the United States who happens to maintain its biggest concentration of military personnel in the Middle East,at Qatar’s Al Udeid Air Base in its fight against ISIS. It needs everyone getting along for its operations to continue smoothly. U.S Intelligence Officials have said that they believe the diplomatic crisis could instead be the result of a Russian hack involving the planting of a fake news story with Qatar’s State News Agency. The false news item reportedly carried false remarks from Qatar’s ruler that were friendly to Iran and Israel.

What’s Next?

Trump’s twitter messages is likely to worsen the dispute between Qatar and the other countries. In fact, it only adds further to his own credibility crisis as the messages seem to directly contradict his previous praise of Qatar during the summit as a strategic partner in the war on terrorism.

Meanwhile, the Saudis will certainly be hoping that Qatar acquiesces to its demands including: curb its State news agency Al-Jazeera, agree to Saudi positions on various conflicts in Eygpt, Israel-Palestine, Libya and Syria, and most importantly, take a harder stance towards Iran. The last one would be the most difficult to achieve as Qatar and Iran share the world’s largest independent gas field beneath the waters of the Persian Gulf and have played at being friendly neighbours with each other in the past.

In the case of Qatar, they are more than likely hoping for some help from the international community in defusing the dispute and restore diplomatic ties with everyone. It seems that much of it may be up to Trump – whether he will walk the talk or simply talk the talk.


WWN#20 – Manchester Bombing: UK Terrorism Threat Raised to Critical


Theresa May - UK Manchester Bombing.jpeg

Credits: Telegraph UK 

What’s Been Happening?

22 people were killed in an explosion that occurred in Manchester Arena in England after an Ariana Grande concert as people were leaving. Around 59 others were injured, with some in a critical condition.

This was Britain’s deadliest attack since four suicide bombers killed 52 London commuters on three subway trains and a bus in July 2005.

Authorities have identified the suicide bomber responsible as 22-year old Salman Abedi. Unverified images published by New York Times show various elements that were photographed at the scene suggest the bomb was designed for maximum impact. The bomb appeared to have been concealed in a backpack that contained a high velocity charge with carefully shrapnel. ISIS has claimed responsibility for the attack but has provided no evidence and neither U.S. nor British officials have corroborated that.

Police have so far arrested eight men who they believe may have been a part of Abedi’s “network”. Searches continue as detectives believe there could still be more people at large who are a part of a terrorist network as bomb-making materials have been uncovered through raids in the south of the city.

Ariana Grande has reportedly returned to her hometown in Florida, United States following the terror attack with the remaining two concerts scheduled in London being cancelled.

What Now?

The UK has raised its threat level from severe to the highest level of “critical” for the first time since 2007. UK Prime Minister Theresa May concluded on the basis of investigations following the attack, the assessment is that “not only an attack remains highly likely, but that an attack may be imminent”.

Armed police officers will be replaced by members of the armed forces which will allow deployment of increased police presence at key locations. Military personnel will also be at public events such as concerts and sports matches to keep the community safe. This well-established plan is known as Operation Temperer.

What’s Next?

Further arrests are likely to be made over the Manchester terror attack as investigations and raids continue. The intelligence leaks to the US media (e.g. New York Times) is likely to have complicated ongoing investigations and Theresa May has vowed to raise these concerns with Donald Trump when they meet at the Nato summit. May has said that she would “make clear to President Trump that intelligence which is shared between our law enforcement agencies must remain secure”.

The UK Prime Minister and her opposition Jeremy Corbyn both agreed to have their general election campaigning suspended until further notice following the tragedy but the deadline is fast approaching – June 8. It’s expected that the focus will inevitably shift from this event to the election that is taking place in next few weeks.

At this stage, it is also uncertain whether Ariana Grande will resume her “Dangerous Woman” tour. A shortened schedule is expected for the pop star and the tour to resume in Paris on June 7.


WWN #19 – Undeterred by French Open Snub, Maria Sharapova Continues Her Comeback

What’s Been Happening?

On the 26th of January 2016, Maria Sharapova had a drug test at the 2016 Australian Open which came back with positive results. As a result, she was initially banned for 2 years by the International Tennis Federation (ITF) which was later reduced to 15 months.

She returned this year in April to the WTA tour and was given wild cards to compete in the Women’s Stuttgart Open, Madrid Open and Italian Open. She has successfully used those wildcard entries to get her world ranking up to a level where she can automatically enter anywhere again.

What Now?

Unfortunately, she was refused a wild card into the French Open on Thursday last week. Two hours later on the same day, a left thigh injury forced her to retire early out of the Italian Open.

The French Tennis Federation president Giudicelli announced the decision was made by him as it is his “duty to protect the high standards of the tournament, the high standards of the game”. He further said that “there can be a wild card for return from injuries, (but) there cannot be a wild card from doping”.

Sharapova reacted positively to the news, despite not being given the wild card –

What’s Next?

Wimbledon is coming up in late June and the tennis star has already made it clear that she will not be requesting for a wild card into the main draw. Some say that is because she has no chance of getting one. In any case, she is currently ranked World No.171 with 310 ranking points. Any player ranked up to 110 automatically go into the main Wimbledon draw whereas the next 88 win a place in qualifying.

Sharapova has reacted positively despite Despite not being given a French Open wildcard

Key Considerations for Sharapova:

  • How quickly she can recover from her thigh injury as she has a bit over a month before Wimbledon qualifying starts on June 26.
  • Unlikely but possible withdrawal from her next tournament which is immediately before Wimbledon: the Aegon Classic in Birmingham, England. The tournament starts on the 17th of June and it recently awarded her a wild card entry as well.

WWN #18 – The Not-So Super Saver Scheme

What’s been happening? The First Attempt

Labour Party’s First Home Saver Account (FHSA) was a 2007 election policy of the Australian Labour Party. It offered benefits such as a variable interest rate, a tax rate of 15% and tax-free withdrawal.

The scheme only lasted until 2014 when the Federal Government decided to abolish it due to the slow uptake by the public. The problem with the scheme was that in order to close the account and access the funds, you had abide by the cumbersome “four year rule” – deposit at least $1,000 every year into the account for at least four financial years. At the time, there was 47,400 accounts with an average balance of about $12,800 each. It was expected that more than 750,000 accounts would be opened but this was never realised.

What Now? Let’s Try Again

On Tuesday night, the 2017 Federal Budget was released and the First Home Super Saver Scheme (FHSSS) was announced. The scheme allows people to put away a maximum of $15,000 per year into their super before tax, up to a total of $30,000.

Contributions paid into super this way will be taxed at just 15% instead of the usual marginal income tax rates (e.g. 32.5% for someone earning over $37,000). Any returns generated on the funds while they are held in super will also be taxed at the low rate of 15%.

The potential tax saving is reduced if you earn more than $250,000 per year where the tax rate rises from 15% to 30%.Earnings can be withdrawn along with the contributions when home is purchased. The withdrawal will be taxed at the individual’s marginal tax rate less 30%. This measure is estimated to have a cost to revenue of $250 million to the government.

Mortgage Choice CEO John Flavell remains sceptical that this scheme will succeed based on past experiences of the similar FHSA scheme. The new scheme has some great incentives but its main failing is that it doesn’t allow home buyers to save a big enough deposit. The ever-rising prices in the nation’s capitals means that a $30,000 deposit is not going to enough. According to Superfund Partners director Mark Beveridge, the average person would only save about $2500 extra a year. If you are a couple and save the maximum amount over two years, the total benefit is still less than $10,000.

On the other hand, some prospective buyers have backed the idea on the basis that it was better than another suggestion to allow first home owners to directly draw out funds from their existing super for a deposit.

For an indication of the potential benefit of the FHSSS to you, the government has prepared a handy estimator – click here.

First Home Super Saver Scheme (FHSSS) – Key Facts
Maximum contribution amount $15,000/year reaching a total of $30,000
Maximum term Unrestricted
Contribution Tax Rate on Deposits and Related Earnings 15%
Effective Start Date (Contributions) July 1, 2017
Effective Start Date (Withdrawals) July 1, 2018
Withdrawal Tax Rate Marginal Income Tax Rate Less 30%

What’s Next?

The FHSSS appears to be one of many “crowd-pleasers” in the budget – politically friendly measures that are not particularly meaningful.

As noted earlier, initial feedback is critical of the new scheme’s success and the potential benefit in tax savings may not be significant enough to convince many prospective first home buyers to implement the scheme. It is also argued that putting more money into borrowers’ pockets without increasing supply will likely to add to home price pressures.

There is a great deal of uncertainty ahead as any changes outlined in the Federal Budget (including this measure) must be passed by both the House of Representatives which is controlled by the government and the Senate. This means that any proposed changes may not necessarily become law.


WWN #17 – Telstra: Big win in Mobile after a Big Loss

What’s Been Happening?

In the 2nd half of 2016, the Australian Competition and Consumer Commission (ACCC) asked for feedback on a discussion paper about declaring mobile services, which would force Telstra to let competitors’ customers onto its network in regional areas. The purpose behind the discussion paper was to determine if increased competition between telecommunication companies (telcos) could deliver better coverage to people across the country.

There were approximately 120 submissions made in response and most supported the status quo out of fear that Telstra’s coverage would shrink if it could not operate an exclusive network.

Telstra and Optus were opposed to the changes as both have been investing heavily in mobile infrastructure and argued that it was fundamentally at odds with the principle of “infrastructure competition”. On the other hand, Vodafone submitted hundreds of pages in favour of the declaration as it sought to bring an end to Telstra’s market dominance.

What Now?

The ACCC has released a draft decision today proposing that it will not declare a wholesale domestic mobile roaming service. In other words, it will not force Telstra and Optus to give other telcos access to use their infrastructure and roam on their network.

It has found that mobile roaming would not necessarily reduce Telstra’s retail mobile prices for users in regional, rural and remote areas and “could well result in overall higher prices if other service providers raise their retail prices to reflect the cost of roaming access prices, for example”. – Media Release by ACCC.

Telstra welcomed the draft decision with CEO Andrew Penn saying that it was the correct decision for the people of Australia as it would continue to encourage telecommunications investments and competition. Once the decision is confirmed, he said that the 4G coverage will be expanded to reach 99% of the population by later this year.

Vodafone issued a strongly worded statement to voice their disagreement with the decision, where “too many Australians will continue to be held hostage to Telstra” and was disappointed that a “scare campaign with no facts or substance has succeeded”.

The news has sent Telstra shares soaring by 4-5% to around $4.42 which was a much needed boost to its share price after falling by more than 7.5% in mid-April following its rival TPG’s announcement that it plans to build its own mobile network after having paid $AUD 1.26 billion for mobile spectrum.

Telstra Share Price 5th May.png

Credits: Yahoo Finance Charts, Telstra’s Share Price between April 12 and May 5 2017


What’s Next?

The ACCC has invited submissions on the draft decision until 2 June 2017 after which it is expected to hand down its final decision.