Bill Gross Admonishes Public Pensions?

Pension Pulse

Bill Gross Admonishes Public Pensions?

Posted: 09 Aug 2016 01:36 PM PDT

Darrell Preston of Bloomberg reports, Bill Gross’s Admonishment Supported By Illinois Pension Fund:

Illinois’s largest public pension agrees with Bill Gross’s admonishment that it’s time to face up to the reality of lower returns and reduce assumptions about what funds can make off stocks and bonds.

Fund managers that have been counting on returns of 7 percent to 8 percent may need to adjust that to around 4 percent, Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund, said during an Aug. 5 interview on Bloomberg TV. Public pensions, including the California Public Employees’ Retirement System, the largest in the U.S., are reporting gains of less than 1 percent for the fiscal year ended June 30.

Illinois’s largest state pension, the $43.8 billion Teachers’ Retirement System, plans to take another look at how much it assumes it will make in the coming year as part of an asset allocation study, said Richard Ingram, executive director. Currently it assumes 7.5 percent, lowered from 8 percent in June 2014. Plans for the study were in place before Gross made his remarks.

“Anybody that doesn’t consider revisiting what their assumed rate of return is would be ignoring reality,” Ingram, whose pension is 41.5 percent funded, said in a phone interview. The fund has yet to report its June 30 return.

Lowering how much pensions assume they can earn from investment of assets could put many in the difficult position of having to cut benefits or ask for increased contributions from workers and state and local governments that sponsor them or risk seeing the amount of assets needed to pay future benefits shrink. The $3.55 trillion of assets now held by public pensions is about two-thirds the amount needed to pay retirees, according to Federal Reserve data.

Since the financial crisis, the interest rates earned on bonds have remained low as stock prices have brought strong returns some years and more modest returns in other years. Calpers earned 0.6 percent in the fiscal year ended June 30, with an average gain of 5.1 percent over 10 years.

Illinois is struggling with $111 billion of pension debt, and more than half of that, or about $62 billion, is for the Teachers’ Retirement System. The partisan gridlock that spurred the longest budget impasse in state history only exacerbated the problem. Governor Bruce Rauner and lawmakers have made no progress in finding a fix for the rising liabilities that helped sink Illinois’s credit rating to the lowest of all 50 states.

Lagging Returns

Others also have reported meager returns recently, including a 0.19 percent gain for New York state’s $178.1 billion retirement system and a 1.5 percent increase in New York City’s five pension funds with $163 billion of assets, the smallest gain since 2012.

Government-retirement systems have lagged return targets after U.S. stocks declined last year and bond yields hold near record lows, leaving little to be made from fixed-income investments. Large plans have an average of 46 percent of their money in equities, with 23 percent in bonds and 31 percent in other assets such as private equity, Moody’s Investors Service said in a July 26 report, citing its review of fund disclosures.

“If investment returns suffer, you have to look at reality until we return to a more normal investment environment,” said Chris Mier, a municipal strategist with Loop Capital Markets in Chicago. “Some pensions don’t like changing those assumptions because then their liabilities increase.”

Pensions’ push into stocks and other high-risk investments have exacerbated pressures on the funds because of the “significant volatility and risk of market value loss” at a time when governments have little ability to boost contributions if returns fall short, Moody’s said in its report.

Dialing Back

Public pensions over 30-year-or-so horizons traditionally could hit targets for returns of 7 percent to 8 percent. But that was in an era before the Fed began holding down interest rates to stimulate the economy and returns in the stock market were not high enough to offset lower fixed-income investments.

Public pensions have been reducing assumed rates of returns, cutting from a median of 8 percent six years ago to 7.5 percent currently, said Keith Brainard, who tracks pensions for the National Association of State Retirement Administrators. Now “more than a handful” are below 7 percent, he said.

“We’ve seen a pronounced decline in return assumptions,” said Brainard
.

Public pensions have been hurt by the Fed’s zero-rate policy that Gross says has led to “erosion at the margins of business models” such as the ones used for funding public pensions, which depend on assumptions about returns over time horizons of 30 years or more.

“Pensions have to adjust,” said Gross. “They have to have more contributions and they have to reduce benefit payments.”

Bill Gross is right, low returns are taking a toll on US pensions, especially delusional public pensions that refuse to acknowledge that ultra low and even negative rates are here to stay, and that necessarily means they need to assume lower returns ahead, cut benefits and increase contributions.

Of course, astute readers of this blog know my thoughts, cutting benefits and increasing contributions is the easy part. So is hiking property taxes and utility rates to fund unfunded public pensions, just like Chicago just did. Sure, it takes political courage to admit your public pensions are effectively bankrupt and require drastic measures to get them back to an acceptable funded status, but that isn’t the hard part.

It’s much harder introducing real change to US public pensions, change that I discussed in the New York Times three years ago when I wrote about the need for independent, qualified investment boards and governance rules that mimic what Canada’s large public pensions have done.

Importantly, apart from years of mismanagement, the lack of proper governance is a huge factor as to why so many US public pensions are in such dire straits yet very few politicians are discussing this topic openly and in a constructive manner.

And instead of cutting their assumed rate of return, what are US public pensions doing? What else, they’re taking more risks in alternative investments like private equity and hedge funds.

Unfortunately, that hasn’t panned out too well (shocking!). Private equity’s diminishing returns and hard times in Hedge Fundistan are hitting public pensions very hard.

In fact, Charles Stein of Bloomberg reports, Hedge Funds Make Last Place at $61 Billion Massachusetts Pension:

Public pension funds have soured on hedge funds.

The New Jersey Investment Council last week voted to cut its target allocation to hedge fund managers by 52 percent, following similar moves by pensions in California and New York. The institutions are disappointed by the combination of high fees and modest returns the hedge funds have delivered.

The chart below explains some of that unhappiness. In the 10-years ended June 30, the $60.6 billion Massachusetts public fund realized a 3.2 percent average annual return, net of fees, from the hedge funds in which it invests. That was the worst performance of seven asset classes the fund holds, according to data released last week for the Pension Reserves Investment Trust Fund. Private equity, with a 14.4 percent annual gain, was the top performer. The fund overall returned 5.7 percent a year.
It’s not that Massachusetts picked especially bad managers. Its hedge fund returns are roughly in line with industry averages. The fund weighted composite index created by Hedge Fund Research Inc. gained 3.6 percent a year over the same stretch.

Unlike some of its peers, Massachusetts hasn’t reduced its roughly 10 percent allocation to hedge funds. Rather, the pension in 2015 began making investments in the asset class through managed accounts rather than co-mingled accounts. The strategy has resulted in fee discounts of 40 to 50 percent, said Eric Nierenberg, who runs hedge funds for Massachusetts’ pension.

“We are hedge fund skeptics,” he said in an e-mailed statement. The investments made through the new structure have performed “considerably better” than the pension’s legacy holdings, Nierenberg said.

[Note: If you are looking for a managed account platform for hedge funds, talk to the folks at Innocap here in Montreal. Ontario Teachers’ Pension Plan uses their platform for its external hedge funds and they know what they’re doing monitoring operational and investment risks on Teachers’ behalf.]

I guarantee you over the next ten years, returns on all these asset classes will be considerably lower, especially private equity. And the most important asset class for all pensions in ten years will likely be infrastructure, but even there, returns will come down as more and more pensions chase stable yield.

The crucial point I want to drive home is this:  Yields are coming down hard across the investment spectrum and all pensions need to adjust to the new reality. Low returns are taking a toll on all pensions, especially US public pensions, but it’s record low and negative yields that are really hurting them. There is no big illusion in the bond market; it’s sending an ominous warning to all investors, prepare for lower returns ahead.

On that note, back to trading my biotech shares because when they start running, they run fast and hard and I need to capitalize on these rallies (click on image):
Sometimes I wonder how are hedge funds commanding 2 & 20 for mediocre returns when I can’t get more large pensions to subscribe or donate to my blog? Oh well, go figure.

Below, once again, Bill Gross explains why bonds aren’t an asset, they’re a liability. I disagree with him and Gundlach on the risks of US bonds and continue to recommend them as they will remain the ultimate diversifier in a deflationary world.

Also, public pension plans from New Jersey to California are cutting their allocations to hedge funds as low returns and high fees combine to disappoint managers. Bloomberg’s Charles Stein reports on “Bloomberg Markets.”

 

How to Make a 5-Hour Workday Work

How to Make a 5-Hour Workday Work for You

workstation-405768_1920

The nine-to-five grind has created a cult of workaholics.

Unfortunately, the eight-hour workday hasn’t budged in 100 years. Never mind that the Information Age represents the biggest shift since the Industrial Revolution and that family structures have changed dramatically since the early 1900s.

Workers still get in their cars every morning and clog up the freeways and do it again at night. Mondays are dreaded. Wednesdays are “hump days.” Friday mornings bring relief because they’re the final push before the weekend.

The idea that workers are expected to endure 70 percent of their week so they can enjoy the other 30 percent is collective insanity.

Why My Company Moved to a Five-Hour Workday

My company decided to do things differently. I run a business that sells stand-up paddleboards, so a shorter workday that freed our employees’ afternoons for extraordinary living was a natural fit for our beach lifestyle brand.

We decided to move to a five-hour workday where everyone works from 8 a.m. to 1 p.m. By eliminating an hour-long lunch, we only reduced our work time by two hours. Our employees don’t get paid less, and I still expect them to be twice as productive as the average worker.

The results have been astounding. Last year, we were named the fastest-growing private company in San Diego. This year, our nine-person team will generate $9 million in revenue.

When I tell people my team only works five hours a day, their response is always, “That’s nice, but it won’t work for me.” The nine-to-five is so engrained in their minds that they can’t imagine anything else.

But you can reduce your hours by 30 percent and maintain the same level of productivity. Here’s why:

Humans are not machines. Just because you’re at your desk for eight hours doesn’t mean you’re being productive. Even the best employees probably only accomplish two to three hours of actual work. The five-hour day is about managing human energy more efficiently by working in bursts over a shorter period.

Happiness boosts productivity.

Studies show that happier workers are more productive, and it makes sense: Having time to pursue your passions, nurture your relationships, and stay active gives you more energy emotionally and physically.

Fewer hours create scarcity. In their book “Scarcity: Why Having Too Little Means So Much,” Sendhil Mullainathan and Eldar Shafir write that having less time creates periods of heightened productivity called “focus dividends.” A five-hour workday offers baked-in time management by forcing you to prioritize high-value activities.

How to Implement a Five-Hour Workday

The question I hear most often from people is: “Can a five-hour day work for everyone?”

Unfortunately, if your job looks the same as it did during the Industrial Revolution, the answer is probably not. Professions that require a 24-hour presence, such as law enforcement, emergency response, and nursing are not good candidates for the 5-hour workday. Nor are jobs that require working in unison with a large number of people (such as film production).

But for the vast majority of knowledge workers, clocking fewer hours that generate higher productivity is very manageable. Here’s how to get started:

1. Apply the 80-20 rule. ‘The 4-Hour Workweek’ is required reading for anyone looking to adopt a shorter workday. One of the most important ideas discussed is the Pareto Principle: 80 percent of production comes from 20 percent of efforts. Evaluate your workday to identify those 20 percent activities, and eliminate the rest.

2. Shift to a production mindset. People who dismiss the five-hour workday outright usually think it’s impossible because they measure work in hours rather than output. However, most knowledge workers aren’t paid by the hour. They’re paid a flat salary.

To help my team shift to a production mindset, I rolled out a profit-sharing plan where five percent of the profits are doled out to employees who demonstrate exemplary productivity.

3. Nix the “always available” attitude. One of my biggest objections to moving to a five-hour workday was reducing our customer service department’s hours. I worried that if we cut our open hours in half, we’d lose half our business.

But I realized that we didn’t run a convenience store. Our customers bought new paddleboards maybe once every five years. It didn’t matter when we were open as long as our customers knew our hours.

So we made the switch, and nothing fell apart. We still get roughly the same number of calls each day, and e-mails are usually answered within hours.

Understand that even in our instant-gratification society, being available all day isn’t necessary. You just need to communicate when you are available.

4. Use technology to boost efficiency. One of the unexpected benefits of the five-hour workday is that it exposed weaknesses in our company that had been hidden by man-hours. To allow our warehouse and customer service employees to work 30 percent less (without growing our staff), we had to figure out how to serve the same number of customers in less time.

The obvious solution was leveraging automation. In the warehouse, we reduced our packing and shipping time using software. In customer service, we overhauled our frequently asked questions page and created video tutorials to help customers help themselves.

Once you put a time constraint on work, it forces you to consider how you can get technology to do the heavy lifting to increase your output. Make use of e-mail auto responders, set up automatic trigger-based tasks, and learn to use keyboard macros.

5. Don’t restrict yourself to a 25-hour week. My employees know they can always walk out of the office guilt-free, but top performers still put in the occasional 12-hour day.

Just as with a 9-to-5 job, recognize that there will be times when you want or need to work an extra-long day. But when you can leave the office at 1 p.m. to go surfing or pick your kids up from school, work isn’t separate from life; it’s all just living.

Moving my staff to a five-hour workday was one of the hardest decisions I’ve ever made, but today my employees are happier, more productive, and invested in the business.

You can make the leap to a five-hour workday, too. You just have to shift to a production mindset and let go of the fear. You’ll be amazed by the productivity and freedom you can achieve when you stop mindlessly punching the clock.

Kaspersky Lab Launches Bug Bounty Program

Kaspersky Lab Launches Bug Bounty Program With HackerOne

By Sean Michael Kerner

bug bounty program

The security firm allocates $50,000 to pay security researchers for responsibly disclosing flaws in its security products.

Kaspersky Lab is no stranger to the world of vulnerability research, but the company is now opening up and enabling third-party security researchers to disclose vulnerabilities about Kaspersky’s own software.The new effort is being conducted as a bug bounty program on the HackerOne platform. Kaspersky Lab is initially providing a total of $50,000 in bug bounties and is starting off with its Kaspersky Internet Security and Kaspersky Endpoint Security products as targets for researchers.”The initial phase will last six months, and based on the results of this first phase, we will revise our offering in terms of budget, scope of products and types of vulnerabilities covered moving forward,” Ryan Naraine, director of the Global Research & Analysis Team, U.S., at Kaspersky Lab, told eWEEK.Cyber-security companies have a higher level of responsibility to make sure their products are secure and their customers remain protected, and a bug bounty program is one of the tools that can help vendors strengthen their products, according to Naraine. He noted that Kaspersky conducted a successful invite-only beta bug bounty program and has now decided to make its program open for everyone.

 

“The bug bounty program will supplement our overall internal strategy aimed at making our software products more secure,” Naraine said.

Kaspersky Lab isn’t the only cyber-security vendor using HackerOne to run a bug bounty program. HackerOne also hosts public bug bounty programs for Cylance and Glasswire and helped the U.S. Department of Defense with the Hack the Pentagon program earlier this year.”Several other security vendors are still earlier in their programs with private, invitation-only programs on the platform,” Alex Rice, CTO and co-founder of HackerOne, told eWEEK.The market for bug bounty platforms is competitive, with several options beyond HackerOne available, including Bugcrowd and Synack. Rice said that Kaspersky Lab started out like most of its customers by running a private, or invitation-only, pilot with a select group of hackers. Following the success of this initial private pilot, Kaspersky’s program and security team are ready for a public program.Rice noted that HackerOne has more than 550 customers, yet only about quarter of those customers are running public programs. According to Rice, the fact that Kaspersky is now running a public program speaks to Kaspersky’s maturity and ability to handle an increased volume of vulnerability reports.In addition, Rice said that Kaspersky Lab has had a long-standing Vulnerability Reporting and Disclosure policy that has enabled it to build a positive relationship with the security community.”When talking with the Kaspersky team, you are greeted with a genuine belief that security software should be held to a higher standard,” he said. “They want to learn about as many weaknesses as possible so that they can be quickly eliminated and the bar raised.”Kaspersky has been the target of third-party researchers in the past, including Google Project Zero researcher Tavis Ormandy in 2015.  One of the incredible strengths of the security research community is the diversity of motivations behind their work, Rice said.”While many researchers—including Project Zero—are motivated primarily by the intellectual challenge and altruism, providing additional incentives to attract the broadest set of eyeballs is just good common sense,” he said. “We look forward to working with any researchers who have identified a vulnerability.”

Uber and Didi Chuxing Merger

Apple Wins in the Uber and Didi Chuxing Merger (AAPL) By Richard Saintvilus | August 1, 2016 — 9:44 PM EDT

“If you can’t beat them, join them,” the saying goes. Global ride-sharing giant Uber Technologies Inc has decided to sell its Chinese operations to Didi Chuxing, China’s major ride-sharing company, the Wall Street Journal reported early Monday. But Uber and Didi are not the only winners in this deal.

Investors in Uber China will take a 20% stake in Didi Chuxing, which was valued at $28 billion. The deal values the combined company at $35 billion, when factoring Uber’s $7 billion valuation in China. Didi is reportedly also making a $1 billion investment in Uber, which gives it a valuation of around $68 billion. This is a sound deal for both companies, especially since they can now preserve their capital for investment rather than fighting each other for market share. (See also: Uber to Sell Chinese Business to Didi Chuxing.)

But the deal can have long-term implications for another tech giant: Apple Inc. (AAPL), which poured in $1 billion into Didi Chuxing in May. What was seen then as a subtle political gesture, aimed at strengthening Apple’s relationship with the Chinese government, has immediately become a shrewd investment. Beyond the fact that Didi Chuxing shares would have likely skyrocketed on the announced merger with Uber, Apple — by virtue of its stake in Didi — is now a shareholder in Uber.

What’s more, at the time of the $1 billion investment, Apple CEO Tim Cook explained the reason for the investment, saying Didi will allow the company to “learn a lot about the business and the Chinese market even beyond what we currently know.” And that, perhaps, is the biggest takeaway here. Beyond gaining access to the Chinese ride-hailing market, Apple also has electric car ambitions of its own. (See also: Uber Will Invest $500M to Develop Google-Like Map .)

Codenamed project Titan, Apple’s car, which was originally scheduled to roll out by 2020, continues to run into speed bumps. Aside from departures of key executives, the project has faced numerous technical problems. But thanks to Didi’s merger with Uber, Apple’s $1 billion investment has bought it some time to learn from Uber’s technology. And who knows what sort of inspiration Apple may derive from that and pour into Titan?
Read more: Apple Wins in the Uber and Didi Chuxing Merger (AAPL) | Investopedia http://www.investopedia.com/news/apple-wins-uber-and-didi-chuxing-merger-aapl/#ixzz4GCskOMQy
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Employees are ‘exhausted’ by the constant need to check email after hours

Employees are ‘exhausted’ by the constant need to check email after hours, study finds

Julie Bort

It’s almost considered sacrilegious today to leave work at the end of your workday or (for shame!) on a Friday and simply not check your work email again until you return the office during normal working hours.

The constant need to check email is the trade-off the modern workforce has made for the ability to work anytime, anywhere, thanks to smartphones and tablets that keep us always connected.

But three university researchers have found that it’s not just doing a bit of work after hours that causes burnout. The true culprit is actually the constant worrying about off hour email.

A new study, “Exhausted But Unable to Disconnect,” by Lehigh University’s Liuba Belkin, Virginia Tech’s William Becker and Colorado State University’s Samantha Conroy shows that employees are growing exhausted by the expectation that they will always be available, never knowing what kind of work requests will be asked of them off hours.

Typically, companies don’t mean to stress employees out like that. Most companies don’t have formal policies that say people must answer work emails after-hours, (except, perhaps, in cases where an employee is on call during specific times).
But policies and culture tend to be two different things.

If supervisors routinely email employees after hours and expect a fast response (often because their supervisors are doing the same to them), then the message is clear: whenever the boss emails, the employee is expected to be available.

The solution is for bosses to tell employees that an after-hours email doesn’t necessarily require a response before the next work day, and to also set some times when after-hours emailing is considered acceptable and prohibited, such as no emails via the dinner hour, on weekends, or after 10 p.m., the researchers say.

Intel Core i7-6900K

Intel Core i7-6900K Review and Ratings

EDITORS’ RATING:

Matt SaffordReviewer

Our Verdict: For content creators and enthusiasts who don’t need the absolute best performance, Intel’s eight-core “Broadwell-E” chip makes more sense than the $600-pricier Extreme Edition alternative. But those looking for the best bang for their silicon buck should look even further down the stack. Read More…

What We Liked…
  • Nearly as powerful as the 10-core Extreme Edition, at a much lower price
  • Will work with most existing X99 Socket 2011 v3 motherboards (after a BIOS update)
What We Didn’t…
  • Still quite expensive
  • Comparatively low clock speed means much cheaper chips will outrun it on some mainstream tasks

Intel Core i7-6900K Review

By Matt Safford, reviewed July 22, 2016

How many processing cores can you convince yourself that you need? If the answer is a resolute “all of them,” then be prepared to spend a whole lot of money.

Intel’s current top-end Broadwell Extreme Edition (a.k.a. “Broadwell-E”) processor chip, the Core i7-6950X Extreme Edition$1,649.99 at Amazon, packs 10 cores and can handle up to 20 simultaneous operations via the company’s thread-doubling Hyper-Threading technology. The result is a stunning level of performance for tasks—and more specifically, software—that can take advantage of all those cores and threads. But that chip also costs a stomach-clenching $1,700, or thereabouts.

Intel Core i7-6900K (Box)

If you’re a well-paid media-crunching professional, or a research scientist churning through massive amounts of data in the pursuit of curing a debilitating disease, it could be well worth the money. But for the rest of us (gamers, performance tweakers/enthusiasts, and those who just want a doggone fast PC), there are better options that are nearly as fast—and in some ways, faster—available at a significantly lower price.

With eight cores (and 16 available threads), the Intel Core i7-6900K that we’re looking at here is one step down from Intel’s 10-core 6950X Extreme Edition chip that we reviewed back in May at its luanch time. But it’s cut from the same silicon as that chip, and it actually has a higher base clock of 3.2GHz (compared to the 3GHz-even of the Core i7-6950X). That means in tests that can’t take advantage of all available cores, the Core i7-6900K can actually be faster, as we’ll see later in testing. And it’s not far behind its deca-core counterpart in some of our demanding media-crunching tests, either.

That makes the eight-core Core i7-6900K a much better value for most users than the Extreme Edition 10-core option. But that idea of value is very, very relative, as the asking price for this part is still about $1,100. That’s a hefty savings of $600 for shaving off 20 percent of your cores and not losing a whole lot in the way of performance under most circumstances.

But unless you’re a professional who needs loads of cores and threads, or an enthusiast who will make use of the 40 PCI Express lanes built into this chip, you’re better off stepping further down Intel’s CPU ladder. The entry-level six-core Broadwell-E chip, the Core i7-6800K, sells for “just” $430, and the current top-end 6th-Generation Core/”Skylake” chip, the Core i7-6700K is cheaper still, yet powerful enough for most folks. The latter chip may have only four cores and eight threads, but it’s clocked much higher, with a base clock of 4GHz. Also, on occasion it goes on sale for as low as $300, and in some cases still manages to outperform the Core i7-6900K and even the $1,700 Core i7-6950X.


Broadwell-E Features & Chip Models

As we noted up top, the Core i7-6900K is one notch down from the 10-core Core i7-6950X Extreme Edition, but it still offers up an impressive eight physical cores and the ability to tackle up to 16 threads at once via Intel’s familiar Hyper-Threading technology. Hyper-Threading allows each actual core to work on two threads at the same time.

All of the new Broadwell-E chips will be backward-compatible with most X99-based Socket LGA 2011-v3 motherboards, provided that the motherboard maker offers up a BIOS update to support Intel’s latest chips. In fact, we used the same Asus X99 Deluxe motherboard for our testing that we did to test the previous-generation Core i7-5960X in 2014. A BIOS update for that board was available, quick, and easy. So upgraders who invested in the previous generation’s high-end platform should be able to save some money by using an existing motherboard. Note that earlier, non-“v3” Socket 2011 motherboards will not work. So if you’re rocking an “Ivy Bridge-E” or “Sandy Bridge-E” from a few years back, it’s new-motherboard time.

Here’s a look at the specs for the Core i7-6900K, as well as the trio of other Broadwell-E parts, direct from Intel.

Core i7-6950X (Chips Comparison)

Note that nearly all the new Broadwell-E chips will have an impressive 40 PCI Express 3.0 lanes leading directly to the CPU. That’s not an upgrade from the previous-generation “Haswell-E” platform, but having those lanes is arguably more important today, now that super-fast PCI Express/NVMe-equipped solid-state drives (SSDs) such as Samsung’s SSD 950 Pro$317.99 at Amazon are readily available and munch lanes, too.

For those who don’t need all those available lanes for storage and/or multiple graphics cards, the Core i7-6800K looks like it will be a nice alternative option on the lower end of the Broadwell-E platform, as something of a “bargain” chip, comparatively speaking, in the $400 range.

That chip is especially relevant seeing as the appeal of multiple-card Nvidia SLI and AMD CrossFireX support was somewhat in limbo when we wrote this. SLI and CrossFireX aren’t heavily supported for either the new DirectX 12 API or for virtual-reality setups (with either the HTC Vive or the Oculus Rift). And Nvidia is expressly not recommending anything more than two-way SLI for its GeForce GTX 1080, the company’s new top-end graphics card. So the Core i7-6800K may hold a lot of appeal with budget-minded enthusiasts, as its 28 lanes of PCI Express are still enough for a couple of high-end graphics cards and a fast PCI Express-based SSD (or two).


Turbo Boost Max Technology 3.0

Aside from the the new architecture carried over to the Broadwell-E family (borrowed from the 5th-Generation “Broadwell” chips we saw throughout 2015 in mainstream laptops, and to a much lesser extent, desktops), the primary new feature within the new lineup is something Intel calls “Turbo Boost Max Technology 3.0.” It’s available on all four of the new chips in this line.

Previously, Intel’s Turbo Boost technology allowed for individual CPU cores to ramp up to higher speeds under ideal thermal conditions when a given task wasn’t pegging all available cores. But which core was chosen to jump up to these higher speeds was arbitrary.

Intel Core i7-6900K (Box)

That’s fine if all cores are equal. But Intel says that some of its cores have the ability to ramp higher than others. So you might not always get the best performance that’s technically possible from your processor if the chip doesn’t know which core or cores have the highest possible frequency ceiling. That’s where Turbo Boost Max 3.0 comes in. The Broadwell-E chips, when combined with an Intel driver/utility, are able to automatically determine the best core for these types of tasks and shove it to the front of the line whenever a lightly threaded workload arises.

It’s an interesting idea that should let you squeeze some extra performance from your processor, and one that’s arguably more important in a chip like the Core i7-6900K, which has more than just a few cores to choose among. But of course, how much extra performance you might get depends on whether or not you happen to get a chip with a particularly overachieving core or two. So, just like overclockability, much of the potential benefit of Turbo Boost Max 3.0 is likely down to the luck of the draw—or a roll of the (silicon) die, as it were.

Intel, though, does claim that using Turbo Boost Max 3.0 allows these chips to achieve higher top clock speeds. And it somewhat confusingly sprinkles both spec numbers with and without Turbo Boost Max 3.0 in its own product pages and materials. For instance, the Core i7-6900K is listed in the Intel-provided chart above as having a top clock speed of 3.7GHz (without overclocking), and that number is also listed on this Intel ARK product page for the 6900-series chips. It also lists the Core i7-6950X has having a top speed of 3.5GHz. But if you click through to either one of the links to the actual specification pages for these chips, they’re both listed as having a “Max Turbo Frequency” of 4GHz.

Intel Core i7-6900K (Front Back)

An Intel rep told us the more conservative numbers are the top stock frequencies for Turbo Boost 2.0, so the 4GHz speed is likely the maximum possible with Turbo Boost Max 3.0. It’s confusing, though, that Intel lists two different sets of stock frequency ranges for these chips, and it muddies the waters for those evaluating the two. That’s because, on the one hand, Intel says there’s a 300MHz top-end clock difference between them, but then on the actual product pages, the company says the maximum frequency is the same: 4GHz.

We suspect part of the reason for Intel’s number-juggling is that, at least according to ZDNet, there is no Linux support (and none seemingly forthcoming any time soon) for the 3.0 version of Turbo Boost. So, at least for now, you’ll only be able hit the highest clock speeds here (again, without overclocking) by running these chips in Windows.

Speaking of Windows, Turbo Boost Max 3.0 is the kind of feature that, ideally, should be baked into the operating system itself. But at the moment, that’s not the case. Intel provided us with a piece of software (the company calls it a driver, but it also includes a user interface for tweaking features) that needs to be installed and running for Turbo Boost Max 3.0 to work. Here’s what the software looks like. It’s visually simple, and thankfully was completely stable while we used it.

Intel Turbo Max 3.0 Utility

The software lists all available cores, and it positions the fastest at the top. When running, the software should assign tasks that most benefit from fast clock speeds to the fastest core (or cores) automatically. You can also choose to pin specific programs to a core or cores, so they get assigned to them even if the program is running in the background while you’re doing something else.

This all sounds promising, and it may show serious benefit for some chips and in some specific cases. But the fact that you need to make sure the software is running to make Turbo Core Max 3.0 work makes the feature feel a bit cumbersome. We hope Microsoft and other operating-system developers will bake the feature into future OS updates to make the process invisible, or at least less hands-on.

Also, while we didn’t spend loads of time testing the feature and trying to find an ideal case where it make a significant difference, just as we saw with the Core-i7-6950X, we didn’t see any noticeable real-world benefit with Turbo Core 3.0. We tested the Core i7-6900K both with and without the software running, and performance remained either exactly the same, or so close that the difference could be put down to the standard 2 to 3 percent margin of error. With workloads that specifically push a single core, we might see more benefit from the technology. Or, we may have just gotten a test chip with cores that are all fairly evenly matched.


Performance

The Core i7-6900’s 3.2GHz base clock speed is 200MHz faster than that of the previous-generation top-end, eight-core Core i7-5960X Extreme Edition, as well the current-gen 10-core Core i7-6950X. So it can be seen as a sort of middle-ground chip between the 2014- and 2016-era flagship Intel enthusiast processors. Given that, we were eager to see how it would perform.

Our prediction? On fully threaded tests, the Core i7-6900K should outpace the last-generation Extreme Edition chip, while sticking at least fairly close to the new 10-core Core i7-6950X. But in areas where higher clock speeds are more beneficial, and where software hasn’t been optimized for massive core counts, Intel’s more mainstream chips—such as the Core i7-6700K and even the Core i5-6600K$243.99 at Amazon—might fare better. In a general sense, that’s pretty much what we saw.

To give a broad sense of how the new Extreme Edition processor stacks up to a wide sample of current processors, we benchmarked the chip against the above CPUs, as well as the low-end Core i3-6100$117.99 at Amazon, and a few AMD parts: the high-end, eight-core AMD FX-8370$220.75 at Amazon; the company’s current top CPU/GPU, the AMD A10-7890K (it includes impressive on-chip graphics); and the Athlon X4 880K$111.81 at Amazon, a chip that’s of most interest to budget-minded gamers, because of its four physical cores and low cost (under $100).

Cinebench R15

In Cinebench R15, an industry-standard benchmark test that taxes all available cores of a processor to measure raw CPU muscle, the Core i7-6900K stuck reasonably close to its 10-core counterpart.

Intel Core i7-6900K (Cinebench)

Falling just 6 percent behind the Core i7-6950X, the eight-core Core i7-6900K impresses here, given the $600 price difference between those two chips. The difference between the current-gen and last-gen eight-core chips was much more significant, with the Core i7-5960X falling more than 20 percent behind the 6900K. The new eight-core Intel chip also turned in a score here that’s more than 2.5 times that of the closest AMD part. Of course, that AMD chip currently sells for about a fifth of the price of Intel’s part.

iTunes 10.6 Encoding Test

We then switched over to our venerable iTunes Encoding Test, using version 10.6 of iTunes. This test taxes only a single CPU core, as much legacy software does.

Intel Core i7-6900K (iTnues)

After its excellent showing our initial test, the Core i7-6900K didn’t look quite so hot here, though it wasn’t unexpected. It managed to easily best all the AMD chips and outpace the previous Extreme Edition part, as well as the much pricier Core i7-6950X. But all three of the lesser 4th-Generation/”Haswell”-based Core chips scored nearly as well or better on this timed test—even the sub-$150 Core i3-6100!

To be fair, single-threaded performance has never been a strong point for Intel’s high-core-count chips, and such software is growing increasingly less common. This isn’t any indicator of how the Core i7-6900K will perform on professional software designed for high-end hardware like this. But it’s still tough to see a chip this expensive get outrun on a common computing task by a part—specifically, the Core i7-6700K—that costs about a third the price.

Handbrake 0.9.9

These days, our older Handbrake test (run under version 0.9.8) now takes less than a minute to complete with high-end chips. (It involves the rendering of a 5-minute video, Pixar’s Dug’s Special Mission, to an iPhone-friendly format.) So, we’ve switched to a much more taxing (and time-consuming) 4K video-crunching test.

We’ve now switched to Handbrake version 0.9.9 and tasked the CPUs to convert a 12-minute-and-14-second 4K .MOV file (the 4K showcase short film Tears of Steel) into a 1080p MPEG-4 video…

Intel Core i7-6900K (Handbrake)

Here once again, the Core i7-6900K looked quite good, returning to its spot just behind the Core i7-6950X, near the top of the CPU heap. In this timed test, the new eight-core CPU lagged just 16 seconds behind its 10-core counterpart, and about 18 percent ahead of the previous-generation top-end Core i7-5960X. It also managed to finish this test in less than half the time of the Core i5-6600K.

This is a better indication of why serious content creators might want to invest in a CPU like this. If you’re constantly editing hours of 4K video or stitching together footage from individual cameras for VR-friendly 360-degree video, a chip like the Core i7-6900K could save you hours of rendering time per day compared to a more mainstream chip—even the Core i7-6700K.

Photoshop CS6

Next up is our Photoshop CS6 test, which taxes the processor to apply a series of complex filters to a large image.

Intel Core i7-6900K (Photoshop)

Once again, the 6900K chip, while no slouch, wasn’t quite as impressive here as you might have expected. This test applies 11 filters, and the fact is that some filters (just like some stand-alone software programs) benefit more from multiple cores and threads than others. The eight-core Broadwell-E chip once again bested the previous (“Haswell-E”) Extreme Edition CPU here, and it even pulled ahead of its 10-core sibling slice of silicon, but it couldn’t outpace the Core i7 and Core i5 6000-series “Skylake” chips, which benefit from architecture that’s a generation ahead of the Broadwell-based Core i7-6900K.

POV Ray 3.7

Next, we ran the POV Ray benchmark using the “All CPUs” setting. This test challenges all available cores to render a complex photo-realistic image using ray tracing.

Intel Core i7-6900K (POV Ray)

The Core i7-6900K climbed back near the top of the performance heap here. Like Handbrake, this test is a good indication of the benefits you’ll see with this chip running professional software in time-consuming workloads. If you do this kind of thing day-in, day-out, there would be a lot less waiting around for tasks to finish with the 6900K. And while the 10-core Extreme Edition part may let you finish a little faster, it doesn’t seem that the benefit warrants the $600 price hike, unless you absolutely have to finish your workloads in the shortest possible time.


Overclocking

Intel Core i7-6900K (Front Back)

Given the fairly generous overclocking we were able to achieve with the Core i7-6950X (bumping up to a top speed of 4.06GHz), we wondered what our Core i7-6900K would be able to hit, given its higher stock clock speeds but two fewer cores. We didn’t spend as much time tweaking as someone might who has invested the $1,100 asking price. But in our limited time overclocking, we settled on a stable clock speed of 4.2GHz. That’s not a whole lot more than the rated top Turbo Boost Max 3.0 speed of 4GHz for this chip. But every attempt to get above that resulted in either a lockup, or the sad-face Windows 10 blue screen.

At 4.2GHz, our Cinebench score jumped from 1,687 to 1,723 (a tiny bump of just over two percent), and we shaved 4 seconds off our iTunes Conversion Test time, getting down to 1 minute and 38 seconds. That’s not a huge improvement, but it does put the Core i7-6900K just 2 seconds behind the higher-clocked (but much lower priced) Core i7-6700K.

Our overclocked chip also finished our 4K Handbrake 0.9.9 conversion test 10 seconds sooner than at stock speeds, in 6 minutes and 34 seconds. It still can’t quite catch the 10-core Core i7-6950X, but that chip only landed 6 seconds ahead, which isn’t much of a win given the $600 price difference.


Conclusion

For media professionals and researchers who run time-consuming and fully threaded workloads day-in, day-out, the Core i7-6900K is arguably a much better value than its 10-core counterpart, which costs so many hundred dollars more. It won’t quite give you the highest performance possible from a single consumer-focused chip. But in our testing, at least, it gets close enough that the extra cores aren’t worth paying for, unless time is absolutely of the essence and your budget is wide open and a mile deep.

Intel Core i7-6900K (Box)

But for the vast majority of users, be they gamers, media prosumers, or those who just want a powerful processor that you won’t likely need to upgrade for several years to come, the Core i7-6900K is still a couple steps above the best-value chips in Intel’s Broadwell-E stack. Those who plan to connect lots of graphics cards and fast PCIe storage will want to look at the six-core Core i7-6850K, which has 40 PCIe 3.0 lanes baked in, costs not much more than half the price of the Core i7-6900K, and has the highest base clock speed of this lineup, at 3.6GHz. But those looking for the best bang for their Broadwell-E buck should strongly consider the Core i7-6800K. It also has six cores, and a higher base clock speed than the 6900K, at 3.4GHz, and currently sells for about $430.

That chip makes do with “only” 28 lanes of PCIe, but eight lanes is generally enough to handle current graphics-card bandwidth. So even if you drop in two cards (the maximum recommended for Nvidia’s current GeForce GTX 1080 and GTX 1070 monster cards), you’ll still have 12 lanes left over for fast storage, be that an internal drive like Samsung’s SSD 950 Pro, external storage and video via Thunderbolt 3, or both.

MasterCard buys UK paytech

MasterCard buys company underpinning core UK paytech for £700m

voxa

MasterCard has bought Vocalink for £700m ($920m) in a deal that has been rumoured for months, with Sky reporting back in April it could fetch as much as £1bn.

The deal gives the credit card company 92.4% of the business giving Vocalink shareholders a potential pay out of £169m according to the press release, with the transaction subject to regulatory approval. Most shareholders will retain a 7.6% ownership for at least three years according to the statement.

The regulator is, of course, the reason this deal is happening at all with the Payments Systems Regulator (PSR) publishing a report earlier this year saying ownership of core paymentes technology by the big banks was having a negative impact on competition in the market.

VocaLink (formed from a merger of two separate pay tech companies Voca and Link nearly 10 years ago) is owned by a group of banks including the UK “big four” (Barclays, RBS, Lloyds and HSBC) as well as Santander. The consortium was told by the PSR in February to sell their stakes to boost competition and drive a more open payments industry.

“MasterCard’s acquisition of Vocalink represents a win-win for both companies,” says Tom Hay, head of payments at Icon Solutions. “Vocalink knows that payments processing is a scale game, and the only way to drive further scale is for it to pick up volumes in mainland Europe and beyond.

“As real-time payments become “the new normal” we may finally be seeing the convergence of card payment networks with non-card payment networks. A global MasterCard network offering real-time payments of both types is a force to be reckoned with.”

For a refresher, Vocalink operates payment tech platforms that most of us touch every day in the shape of BACS, Faster Payments and LINK, as well as mobile payments service ZAPP. The firm also licensed its Fast ACH tech in countries like Sweden, Singapore and the US. The firm reportedly made £182m in revenues across 11bn transactions in 2015.

> BACS – the Automated Clearing House (ACH) enabling direct credit and direct debit payments between bank accounts
> Faster Payments – the real-time account-to-account service enabling payments via mobile, internet and telephone
> LINK – the UK ATM network

For a deeper dive and an explainer on what all that means, check out our recent podcast with Tom Hays, head of payments at Icon Solutions.

VocaLink by more numbers
> It processes more than 90% salaries in the UK
> 70% household bills in the UK and almost all benefits handled by VocaLink
> VocaLink enables Bacs credit and debit schemes (more than 2bn direct credits per year)
> 100m direct debit transactions move through Vocalink data centres on a peak day

MasterCard, which is bracing itself for a £19 billion class-action lawsuit over processing fees, says the deal will help grow its footprint in electronic payments and payment flows, as well as “play a more strategic role in the UK payments ecosystem”.

“We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us,” says Ajay Banga, president and CEO at MasterCard. “VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximising the technology, and embedding it in our products and solutions, both in the UK and around the world.”

Through this deal, MasterCard gains access to non-card payments infrastructure, while Vocalink  can piggyback on Mastercard’s global reach.

The acquisition will help MasterCard gain an edge on rival Visa – especially in the UK debit space where Visa is more powerful. Visa bought its European subsidiary last year, creating one single company in a deal that added 3,000 issuers, 500m accounts and EUR1.5 trillion in payments volumes to its portfolio. Visa’s amendment to that deal to appease regulators serves as a reminder that this deal will come under close scrutiny from regulators to make sure a deal is indeed boosting competition and helping open up the industry, rather than compounding existing issues in the global payment systems space.

“For MasterCard the rationale is twofold,” says Hay. “Vocalink’s Immediate Payments System gives MasterCard a presence in non-card payments, and with its global reach and network of banks, would drive a level of market penetration that Vocalink could never achieve alone. The second reason is the Zapp system. Zapp has been struggling to achieve ignition, and MasterCard’s backing could provide the boost that it needs and provide MasterCard with a new route into UK debit payments, which Visa has dominated for years now.”

VocaLink history at a glance
> 2007 – Formed from merger between Voca Ltd and LINK Interchange Network
> 2008 – Delivered Faster Payments Service in 2008 for Faster Payments Scheme
> 2014 – Paym mobile banking tool launched, powered by VocaLink
> 2015 – PSR launches review into VocaLink ownership
> 2015 – Private equity buyers including CVC Capital Partners and Permira linked to M&A talks
> 2016 – February: the PSR says banks should sell their stake in VocaLink to boost competition

This comes amid growing merger and acquisition activity in the payments industry, with Nets snapped up from a group of Nordic banks including Danske Bank, Nordea and DNB by Advent International and Bain Capital last year alongside Danish pension fund ATP for USD3.1bn.

Bain and Advent also own WorldPay, which they bought back in 2010 from RBS and which went public in London’s biggest fintech IPO to date. Consolidation is only expected to continue around financial software systems providers in the coming years.

British people use mobile banking apps

British people use mobile banking apps 4 billion times a year

Man holding smartphone iphone social media commerce coffee new york

Similar to what’s happening in America at the moment, mobile banking in the UK being described as a “consumer-led revolution” and that’s not a surprise given that customers are using them 7,610 times every minute – four billion times a year, according to a new report by the British Bankers’ Association.

The third annual The Way We Bank Now report, supported by EY, shows that the number of people using digital banking is rising, and fast.

statistic from british bankers association that says spending on contactless cards has increased by 250 per cent

Mobile apps up, internet login down

Payments using mobile apps in 2015 were 347 million, up 54% or 122 million from the year before. It won’t be long before mobile app payments overtake payments being made using internet banking, which hit 417 million last year, only a 2% increase from 2014. With more than 13.8 million apps being downloaded in 2015 – a 25 per cent rise on 2014, it could even be as early as next year.

In fact, the number of internet banking logins dropped last year 4.3 million a day in 2015 compared with 4.4 million in 2014.

Contactless cards growing

The report also reinforced the dominance of contactless cards, with their usage surging by 250% and spending topping £1.1 billion a month in March. They entered the £1 billion-a-month-club back in January 2016. Banks issued 15 million cards with contactless technology in 2015, up 54 per cent on the year before.

Anthony Browne, BBA CEO said:

We are in the midst of a consumer-led revolution in the way we do our day-to-day banking. Customers love the new technology that is allowing us to bank round the clock.

You can set up standing orders while standing in the queue for the bus and check your balance while checking in at the airport. The choice now on offer from banks, from state-of-the-art branches to cutting edge apps, has put customers firmly in the driving seat on the way we bank.

Physical bank branch visits down

The report also references new CACI that highlights a drop in visits to bank branches, from 476 million in 2011 to 278 million in 2016, and it expects this trend to continue for the next five years.

Other figures show average visits per branch a day have fallen from 104 in 2011, to 71 in 2016 and 51 in 2021. The average visits to a branch per customer per year has also declined from 13.7 in 2011 to 8.1 in 2016, and is forecast to drop to 5.3 in 2021.

However, these potential interactions aren’t just disappearing into thin air since the number of customer interactions with their bank overall has increased since 2011. That’s because it includes phone, internet, mobile app interactions. This trend is expected to continue all the way up to 2021, from 2.3 times a month to 6.3 times respectively.

Smartwatch Shipments Declined Last Quarter

Smartwatch Shipments Declined Last Quarter (AAPL)

By Rakesh Sharma

The times are bad for smartwatches.

According to International Data Corporation, smartwatch shipments declined to 3.5 million units, down 41.6% from the same period a year ago. “Consumers have held off on smartwatch purchases since early 2016 in anticipation of a hardware refresh,” said Jitesh Ubrani, senior research analyst at the firm. “Though we expect improvements next year, growth in the remainder of 2016 will likely be muted.” (See also: Is It Time For the Next Apple Watch?)

Apple Inc. (AAPL), whose entry ignited the market, maintained the top position among vendors by selling 1.6 million units. However, that number masked a decline in actual number of shipments as compared to the previous year. “A decline for Apple leads to a decline for the entire market,” said Ubrani.

With shipments of 0.6 million and 0.3 million (reflecting increases of 51% and 75%, respectively), Samsung (005930.KS) and Lenovo completed the list of top three vendors.

During its earnings call in April, Apple said unit sales of its watch during its first year exceeded those of the iPhone during its first year. The Cupertino-based company compared the watch’s sales seasonality to that of the iPod, which makes most of its sales during the December quarter.

But last December was not particularly a good one for Apple. In addition to commentators who are already skeptical of the product’s utility, the global economy is in the midst of a slow-growth period. This has had an adverse effect on China, which is expected to become Apple’s largest market in the near future. (See Also: Did China Stop Buying iPhones?)

The IDC team also pointed to the absence of traditional watchmakers such as Casio and Fossil Inc. in the smartwatch sweepstakes as a reason for its tepid performance. “Participation from traditional watchmaker brands is imperative to deliver some of the most important qualities of a smartwatch sought after by end-users, namely design, fit, and functionality. Combine these with the brand recognition and distribution these brands already have, and it’s reasonable to expect the smartwatch market to grow from here,” said Ramon T. Llamas, research manager for IDC’s Wearables team. According to him, continued platform development, cellular connectivity, and an increasing number of applications will fuel growth for smartwatches in 2017.

Alibaba will let consumers shop via virtual reality

Alibaba will let consumers shop the world’s stores via virtual reality

Chinese e-commerce giant Alibaba plans to open a demonstration shop this month and could roll out the technology broadly by the end of the year.

Alibaba Group Holding Ltd is working on introducing virtual reality technology, or simply VR, into online shopping. The ecommerce giant’s 400 million customers will soon be able to buy products from stores all over the world, by wearing a VR helmet or glasses designed to simulate being in a physical store.

Alibaba says it plans to launch a demonstration VR store by the end of this month and could launch a large-scale rollout by the end of this year.

At a press briefing in Shanghai last week, an Alibaba representative wearing a Vive VR helmet from HTC Corp. of Taiwan showed how a shopper could take a tour of a three-dimensional digital store. The demonstration showed a robotic store associate talking to the visitor and recommending new products. Shoppers can rotate products they see in the virtual store by moving the controller that connects to the Vive helmet and even ask for a model to show how the product works or is worn. Users can also use the controller to click the buy button to purchase the item in the digital store.

“VR is a great way to demonstrate products or services, especially for some categories, like furniture and travel products.” Zhuang Zhuoran, senior director of mobile at Alibaba, said at the briefing. “It also adds more fun to shopping.”

Alibaba has set up a facility, its Gnome Magic Lab, in March, to develop software that would enable merchants to build virtual stores more easily.

“Converting a real product to its digital, three-dimensional equivalent today may cost several hundred yuan (about $50). The cost is high, and we hope to reduce it to several yuan (about $1) in the future.” Zhuang says.

A shopper who wants to test the virtual reality will need VR gear, which ranges in price from $20 to $1,000. VR products are hot at the moment, with consumers buying 300,000 units of VR gear on Alibaba’s Chinese online marketplaces each month, Alibaba says.

Zhuang says in the future Alibaba may send consumers VR gear for free so that they can try out the new way of shopping.

Alibaba also has invested in VR technology startups. For example, earlier this year Alibaba led the $794 million funding round for U.S.-based startup Magic Leap Inc.