Former hedge fund star says this is what will trigger the next bear market.

Much of Wall Street expects easing inflation, but an overshoot could dash hopes of a May rate cut, curtailing the S&P 500’s
SPX
waltz with 5,000, warn some.

Read: Arm’s frenzied stock rally continues as AI chase trumps valuation.

What might take this market down eventually? Our call of the day from former hedge-fund manager Russell Clark points to Japan, an island nation whose central bank is one of the last holdouts of loose monetary policy.

Note, Clark bailed on his perma bear RC Global Fund back in 2021 after wrongly betting against stocks for much of a decade. But he’s got a whole theory on why Japan matters so much.

In his substack post, Clark argues that the real bear-market trigger will come when the Bank of Japan ends quantitative easing. For starters, he argues we’re in a “pro-labor world” where a few things should be playing out: higher wages and lower jobless levels and interest rates higher than expected. Lining up with his expectations, real assets started to surge in late 2023 when the Fed started to go dovish, and the yield curve began to steepen.

From that point, not everything has been matching up so easily. He thought higher short-term rates would siphon off money from speculative assets, but then money flowed into cryptos like Tether and the Nasdaq recovered completely from a 2022 rout.

“I have been toying with the idea that semiconductors are a the new oil – and hence have become a strategic asset. This explains the surge in the Nasdaq and the Nikkei to a degree, but does not really explain tether or bitcoin very well,” he said.

So back to Japan and his not so popular explanation for why financial/speculative assets continue to trade so well.

“The Fed had high interest rates all through the 1990s, and dot-com bubble developed anyway. But during that time, the Bank of Japan only finally raised interest rates in 1999 and then the bubble burst,” he said.

He notes that when Japan began to tighten rates in late 2006, “everything started to unwind,” adding that the BOJ’s brief attempts [to] raise rates in 1996 could be blamed for the Asian Financial Crisis.

In Clark’s view, markets seem to have moved more with the Japan’s bank balance sheet than the Fed’s. The BOJ “invented” quantitative easing in the early 2000s, and the subprime crisis started not long after it removed that liquidity from the market in 2006, he notes.

“For really old investors, loose Japanese monetary policy also explained the bubble economy of the 1980s. BOJ Balance Sheet and S&P 500 have decent correlation in my book,” he said, offering the below chart:


Capital Flows and Asset Markets, Russell Clark.

Clark says that also helps explains why higher bond yields haven’t really hurt assets. “As JGB 10 yields have risen, the BOJ has committed to unlimited purchases to keep it below 1%,” he notes.

The two big takeaways here? “BOJ is the only central bank that matters…and that we need to get bearish the U.S. when the BOJ raises interest rates. Given the moves in bond markets and food inflation, this is a matter of time,” said Clark who says in light of his plans for a new fund, “a bear market would be extremely useful for me.” He’s watching the BOJ closely.

The markets

Pre-data, stock futures
ES00,
-0.41%

NQ00,
-0.80%

are down, while Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
hold steady. Oil
CL.1,
+0.79%

and gold
GC00,
+0.46%

are both higher. The Nikkei 225 index
JP:NIK
tapped 38,000 for the first time since 1990.

Key asset performance

Last

5d

1m

YTD

1y

S&P 500

5,021.84

1.60%

4.98%

5.28%

21.38%

Nasdaq Composite

15,942.55

2.21%

6.48%

6.20%

34.06%

10 year Treasury

4.181

7.83

11.45

30.03

42.81

Gold

2,038.10

-0.17%

-0.75%

-1.63%

9.33%

Oil

77.14

5.96%

6.02%

8.15%

-2.55%

Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Due at 8:30 a.m., January headline consumer prices are expected to dip to 2.9% for January, down from 3.4% in December and the lowest since March 2021. Monthly inflation is seen at 0.3%.

Biogen
BIIB,
+1.56%

stock is down on disappointing results and a slow launch for its Alzheimer’s treatment. A miss is also hitting Krispy Kreme
DNUT,
+1.99%
,
Coca-Cola
KO,
+0.24%

is up on a revenue rise, with Hasbro
HAS,
+1.38%
,
Molson Coors
TAP,
+3.12%

and Marriott
MAR,
+0.74%

still to come, followed by Airbnb
ABNB,
+4.20%
,
Akamai
AKAM,
-0.13%

and MGM Resorts
MGM,
+0.60%

after the close. Hasbro stock is plunging on an earnings miss.

JetBlue
JBLU,
+2.19%

is surging after billionaire activist investor Carl Icahn disclosed a near 10% stake and said his firm is discussing possible board representation.

Tripadvisor stock
TRIP,
+3.04%

is up 10% after the travel-services platform said it was considering a possible sale.

In a first, Russia put Estonia’s prime minister on a “wanted” list. Meanwhile, the U.S. Senate approved aid for Ukraine, Israel and Taiwan.

Best of the web

Why chocolate lovers will pay more this Valentine’s Day than they have in years

A startup wants to harvest lithium from America’s biggest saltwater lake.

Online gambling transactions hit nearly 15,000 per second during the Super Bowl.

The chart

Deutsche Bank has taken a deep dive into the might of the Magnificent Seven, and why they will continue to matter for investors. One reason? Nearly 40% of the world still doesn’t have internet access as the bank’s chart shows:

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.

Ticker

Security name

TSLA,
-2.81%
Tesla

NVDA,
+0.16%
Nvidia

ARM,
+29.30%
Arm Holdings

PLTR,
+2.75%
Palantir Technologies

NIO,
+2.53%
Nio

AMC,
+4.11%
AMC Entertainment

AAPL,
-0.90%
Apple

AMZN,
-1.21%
Amazon.com

MARA,
+14.19%
Marathon Digital

TSM,
-1.99%
NIO

Random reads

Everyone wants this freak “It bag.”

Dumped over a text? Get your free dumplings.

Messi the dog steals Oscars’ limelight.

Love and millions of flowers stop in Miami.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching – and how that’s affecting the economy and your wallet.

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My Tinder match asked if I ‘rent or own’ my apartment. Is it gauche to ask financial questions before a first date?

I met a guy on Tinder
MTCH,
+0.75%

and had an introductory telephone conversation, which I always think is a good idea before making the effort to meet in person. During our 15-minute telephone conversation, he told me about his divorce, his job and his hobbies. He described himself as easygoing and outdoorsy, and someone who likes to socialize and play sports. 

He talked a lot about his children, for five minutes or longer. He said he owned a small house. He asked what I did for a living, when my last relationship was, what neighborhood I lived in and — this stuck in my craw — whether I rented or owned my apartment and if it was a studio, one- or two-bedroom apartment. I felt uncomfortable, but I answered.

I live in New York City, and I happen to own my apartment, but I felt like he was sizing me up and trying to get a picture of my finances before he decided to meet me. He also asked how long I’ve been in my apartment, probably to assess how much equity I had in it. I replied, “a while,” as I already felt like he was getting too into my finances for a first conversation.

Once he was satisfied with my answers to these questions, he suggested we meet. I am busy this weekend, so he suggested driving into the city during the week. Based on his job and profession, I can reasonably estimate that I earn about twice his salary, though this does not mean anything to me, and I could care less. But given his money-related questions, I find that ironic.

I asked some friends. Some did a spit take, while others felt such questions were fair game. What do you think?

Irritated Even Before Our First Date

Related: I want my father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this wise?

“Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked.”


MarketWatch illustration

Dear Irritated,

He is not your real-estate agent or financial adviser, so I agree that it’s strange for a virtual stranger to quiz you on your living arrangements.

Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked. It’s as simple as that. Similarly, if he were wealthy beyond his wildest dreams, he may care less than someone who has climbed partly up the property ladder. But do I think it’s a bit much to ask in a first conversation? Yes.

Don’t give the Greek chorus too much importance. Whether or not other people are comfortable with such questions in a first call is immaterial; if you are not comfortable, you have your answer. You, after all, are the person who will have to date him, and expect him to show a semblance of emotional intelligence and sensitivity. It’s imperative to be able to read the room.

Let there be no mistake: If he is asking a question about your real-estate holdings or finances, he’s interested in them as a way of assessing (or judging) your suitability as a partner. Maybe he romanticizes his relationship prospects based on first impressions, and wonders whether he could combine assets and live in splendor. But words and questions have meaning.

Social acceptability vs. social mobility 

In America, it may be seen as more acceptable than in some European countries to ask what you do for a living, and even whether you rent or own in a big city like New York. The U.S. is a country of immigrants, and has more immigrants than any other population in the world, according to the Pew Research Center

The idea is to strive, work hard, and do better than the previous generation, although a majority of Americans reportedly doubt the attainability of generation-to-generation upward mobility, and millions of people are reassessing their relationship to work-life balance in the wake of the pandemic.

Wealth and looks play a role in whether someone swipes left or right, but the former appears to become more important when a connection is made with a partner who is deemed attractive. “When long-term interest is considered, the physical attractiveness of the model appeared to serve as an initial hurdle that had to be cleared prior to any other factors being considered by the participants,” according to this 2020 study.

People do swipe right based on economic factors. It would be foolhardy or idealistic to suggest that they don’t. If, however, a man poses in sunglasses with two thumbs up next to a Lamborghini, listing bitcoin
BTCUSD,
+1.57%

trading as one of his pastimes, chances are he doesn’t own that Lamborghini and, in my estimation, may have “Tinder Swindler”-level intentions.

And if a potential partner is both attractive and wealthy? That seems to be an appealing combination. Female online daters are 10 times more likely to click on profiles with men who have higher incomes, at least according to this study published in the Journal of Economic Behavior and Organization, while male online daters are equally likely to click on women’s profiles, regardless of income. 

I don’t put too much stock in studies that say men are looking for attractive partners, while women are more interested in men who look wealthy. You could probably do an analysis of any online dating site and gather a sample that would give you conclusions that say pretty much anything you want them to say. It all depends on the individual: Someone who knows the exact size of their backyard and strives to keep up with the Joneses is more likely to ask whether you rent or own.

In other words, this fellow who grilled you over your own socioeconomic circumstances may still be a perfect match — for someone else.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.

My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

My brother lives in our parents’ home, which we’ll inherit 50/50. I want to keep it in the family for my children. How do I protect my interests?



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Sweetgreen wants to be the ‘McDonald’s of its generation.’ This rival salad chain could beat it

The drive-thru entrance to a Salad and Go location.

Source: Salad and Go

When Sweetgreen went public two years ago, co-founder and CEO Jonathan Neman said the salad chain aspired to be the “McDonald’s of its generation.”

But another salad rival could beat Sweetgreen to the punch: Salad and Go.

Founded in 2013, the upstart chain is nearing its publicly traded rival’s store count, with more than 100 locations and counting. With backing from private equity firm Volt Investment, it has ambitious expansion plans for 2024 beyond its roots in the Southwest.

Salad and Go’s appeal comes in no small part from its affordability. One of its 48 ounce salads costs less than $7 and comes with chicken or tofu, while a comparable salad from Sweetgreen costs about $12.

As the chain plots an ambitious expansion path, its C-suite is packed with restaurant industry veterans, including former Wingstop CEO Charlie Morrison. He joined Salad and Go’s board in 2020. Two years later, Morrison took over as chief executive, departing Wall Street’s favorite chicken wing chain after a decade in favor of a little-known salad chain that then had only 50 locations.

“The brand was designed around the idea of completely rebuilding the supply chain, and fixing what I believe is broken today,” Morrison said at the annual ICR Conference earlier this month.

Since Morrison became chief executive, Salad and Go has more than doubled its footprint, which is now around 130 locations across Arizona, Nevada, Oklahoma and Texas. Last year, the chain opened about a restaurant every week, and it plans to keep up that pace in 2024 and enter new markets such as Southern California. For reference, Sweetgreen has 220 open locations, as of Sept. 24.

Morrison said the company is currently profitable in “established mature markets.”

How Salad and Go works

A salad or wrap from Salad and Go starts at one of the chain’s commissary kitchens, where its produce is washed and its proteins are prepared. Those ingredients are then shipped to its 750-square-foot locations, which are roughly the same size as a typical restaurant kitchen. The restaurants have drive-thru lanes, but no indoor seating.

Its small footprint has helped the chain expand quickly with relatively low rent. Other industry disruptors, such as ghost kitchens and the coffee startup Blank Street Coffee, have used a similar real estate strategy to cut overhead costs.

Salad and Go customers order online or in those drive-thru lanes, and a team of two employees makes their customized salads and wraps.

The simplified restaurant kitchen features a walk-in cooler and cooling counters underneath the make lines where workers assemble orders. A few ingredients, such as the eggs for its breakfast burritos and avocados for its salads, are prepared on site, rather than in its commissaries.

But the Salad and Go locations lack the freezers, broilers, fryers, hoods and fire suppression systems that typical fast-food restaurants need — and are often a culprit for delays as locations wait on equipment inspections ahead of opening.

On average, a Salad and Go customer exits the drive-thru line in under four minutes, according to Morrison. Increasingly, its customers are picking up orders for more than just one meal.

“The unique thing about Salad and Go against any other [quick-service restaurant] brands out there is that we enjoy a two-daypart single occasion,” Morrison said. “You can show up at 6:30 in the morning and get your breakfast burrito, get your cold brew coffee or hot coffee, and get your salad for lunch during the same occasion.”

Replacing burgers, not salads

Charlie Morrison, CEO of Salad and Go, speaking on CNBC’s “Power Lunch” in Englewood Cliffs, New Jersey, on Dec. 5 2023.

Adam Jeffery | CNBC

As Salad and Go enters new territory, Morrison is confident that the chain’s salads have universal appeal.

“We’ve been able to put these stores in these differentiated markets, with different income levels, different levels of diversity, different focal points, and found that great performance quite consistent,” Morrison said.

Salad and Go’s first customers in a new market tend to be regular salad eaters anyway, but Morrison said the chain has also been able to attract other consumers because of its cheap prices and tasty food.

“What we see with our fans, with our guests, is this very strong loyalty and affinity,” Salad and Go Chief Marketing Officer Nicole Portwood told CNBC.

Portwood previously helped turn Tito’s Handmade Vodka from a craft distiller to the nation’s most popular vodka. Like Morrison, she started at Salad and Go as a member of its board before being tapped as its CMO in October.

Other salad players, such as Sweetgreen, Just Salad or Salata, are usually in the same markets as Salad and Go. Salad and Go isn’t the only chain to prioritize convenience for on-the-go customers. Sweetgreen has been opening restaurants with drive-thru lanes dedicated to digital orders.

But Morrison told CNBC that the chain doesn’t worry about those options, which usually charge at least double what his company does for their healthy fare.

“Our concept is not tailored to compete against them. It’s tailored to compete against eating occasions that are unhealthy for you, but otherwise you couldn’t afford to eat well,” he said.

In other words, Salad and Go is looking to take down fast-food restaurants such as McDonald’s, which pulled its salads off menus during the Covid-19 pandemic and hasn’t brought them back yet.

Ambitions for thousands of restaurants

Salad and Go is looking to emulate fast-food rivals in other ways, too.

“We have expansion plans that will carry us well into the thousands of restaurants,” Morrison said. “Ultimately, we believe this brand has the potential for a very large footprint.”

Similar to Sweetgreen, Salad and Go owns rather than franchises its restaurants. That approach requires more capital — so do its commissaries, or central kitchens, as Salad and Go calls them. But Morrison said the kitchens mitigate labor challenges, requiring less training for its workers and fewer employees in its actual restaurants.

Today, Salad and Go runs two commissary kitchens: one in Phoenix, and the other in Dallas. The Texas kitchen was Salad and Go’s original prototype, and the chain plans to upgrade to an improved facility by this spring that can service as many as 500 locations in the future, including potential restaurants as far away as Atlanta.

For now, Salad and Go’s goals for the future are focused on building more restaurants and spreading the word about its salads. When asked about long-term plans for the company, such as an initial public offering, Morrison said all options are in play.

“It’s less of a concern now. The concern for us is just expanding the footprint and getting into the market, fulfilling our mission,” he said. 

Don’t miss these stories from CNBC PRO:

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#Sweetgreen #McDonalds #generation #rival #salad #chain #beat

I don’t want to leave my financially irresponsible daughter my house. Is that unreasonable?

I am at my wit’s end and hope someone can recommend ways to help my daughter’s unwillingness to manage her money. When I am gone her chances are slim to none. I am a senior citizen and I’ve had cancer four times in the last three years, so I don’t know how much longer I have. 

I already told her I’d leave her a few thousand dollars from my retirement funds, but I know she’ll blow through whatever I give her. I don’t want to leave her my house in my will. Am I being unreasonable? The loan balance is only $28,000 and mortgage payments are very low. One reason: She’ll be even less motivated to manage her finances wisely if she knows she will get it.  

I’ve talked to my therapist and he has no solutions. All my daughter’s friends are similarly ill-equipped, and there is no adult that she would heed. My therapist said: “Why should I care?” But I do. Plus, she won’t be able to pay the ongoing taxes, insurance and maintenance because of her free-wheeling spending.  

I told her not to spend her modest retirement balance from a previous job. She did and her reason was that she said it was small. I let her use my car, and pay maintenance and insurance.  I pay for her phone. She pays no rent and nor does she do many chores. Oftentimes, she is short of money, and I have to give her a loan. She keeps getting credit cards, pays them off, then repeats the cycle.

When I try to talk to her calmly, she argues. I tried to get her to set up a budget. She won’t do it.  Earlier she agreed to pay the entire phone bill as her contribution. She simply auto-paid using her credit card. The card went into arrears so I had to make good on that, and resume responsibility.

I try to set up small goals for her, but she’s not receptive. Yet she buys plenty of snacks, cosmetics and goes on vacations. I’ve offered to have us meet an adviser of her choice to tackle these issues, but again she’s not interested. I’ve even suggested I’m going to take a home-equity loan to spend on myself and she’d have to pay it back but again, no response.

I love her very much, but don’t know what to do. My wife sabotaged my efforts in her misguided kindness when our daughter was younger. She no longer does that, but it’s too late.

In short, she’s not willing to manage her money properly. She is in school now, but worked several years full time, and is now working part time. I promised her I’d put money toward her degree, but I’m going to pay it directly to the school.

I have calmly told her of the dire consequences of her actions, but it doesn’t get through to her.

The Father 

“You may not realize it, but your daughter, your wife and your good self are all playing a game.”


MarketWatch illustration

Dear Father,

Think twice before disinheriting your daughter. If she is your only child, don’t allow your frustrations to posthumously punish her.

First things first: Take care of yourself. You have had recurring battles with cancer, and that may have taken a toll on your health. Your fears and concerns about your own mortality may be contributing to this laser focus on your daughter’s wellbeing. It could be that you believe you have a shorter period of time to ensure your daughter balances her books, and gets back on the right track, but the truth is that she is operating on her own timetable.

That said, the situation you describe sounds extremely dysfunctional. You are both the enabler and the avenger — paying her phone bill and rent, and threatening to cut her out of your will. What’s more, you and your wife — intentionally or not — are playing good cop/bad cop. This is a “Kramer vs. Kramer” situation where your daughter is able to play her parents off against each other. One rewards, the other chastises. 

It seems like your daughter’s cycle of taking out credit cards is mirrored by the cycle of cat-and-mouse you play with her, even if you do it without realizing it. You are all caught inside a long-running saga that is, perhaps, inherited from your own parents. Your daughter will never be who you want her to be. She can only be who she is, make mistakes, learn from them (or not) and hopefully grow and mature over time. 

You may not realize it, but your daughter, your wife and your good self are all playing a game. Your daughter rebels, you threaten to disinherit her, and your wife plays peacemaker. You are tough with your daughter, your wife shows her kindness, and your daughter plays you both off against each other. Not all games are fun, but they do form a pattern that is so embedded in the family dynamic that it’s hard to see it from the inside.

The ‘games’ people play

Eric Berne wrote a landmark book in 1964 entitled “Games People Play.” He defined these games as follows: “A game is an ongoing series of complementary ulterior transactions progressing to a well-defined, predictable outcome.” It could be “If It Weren’t For You” (perhaps a common one between unhappy spouses) or “Yes, but” (where one person cajoles another to take action, but the other person always has an excuse for inaction). 

Each game has a gimmick and a payoff. I’m not sure what game you’re playing, but it’s repetitive and everybody is getting some kind of reward, even if it is an unhappy one. That is something you will have to figure out. You get to be the leader who knows how the world works, your wife gets to be Switzerland (while surreptitiously fanning the flames) while your daughter gets to defy you and assert her independence, knowing it will provoke you to repeat the cycle.

My point is: You all need family therapy! Not just your daughter. Or you. Or your wife. You need to process this together. Whether or not you leave your daughter your house is, at this point, irrelevant. The threat that you will withhold a large part of your inheritance is the key part. Why would you do that? Would it really solve anything to make your daughter even more financially insecure? Is punishing her more practical and effective than rewarding her?

Elephant in the room

The other elephant in the room is what happens if you predecease your wife. You may wish for your daughter to be disinherited except for a few thousand dollars, but this game of good cop/bad cop and rebellious daughter may continue after you’re gone with your daughter convincing your wife to not act in accordance with your wishes. That may be the final denouement to this “game,” or perhaps a relative or lawyer would take your place.

Your daughter is, I suspect, being infantilized by the constant criticisms and interference in her finances. You don’t trust her enough to make her own decisions, so you interfere and get frustrated by all her bad habits and, as you see them, mistakes. But it also helps prevent her from standing on her own two feet and facing the music when things go wrong. Why? She knows you will step in to show (a) you care and (b) you told her so.

There are financial therapists who can help you analyze your emotional relationship to money and why you make the decisions we do. But it may be that you all have to make decisions that go against your instincts. Stop trying to change your daughter, and stop bailing her out. She may do her utmost to provoke you to lose your cool with her. No more loans. Let her go on vacation. Just don’t be around to pick up the bill.

You could set up a trust with stipulations: when your daughter receives certain amounts of money and how she is allowed to spend it. There is a balance between being too controlling and prescriptive enough to encourage her to make good choices. But ultimately that is out of your hands. As I said at the beginning of my response, I worry that your responses to her are exacerbated by your fears over your own health.

It would be a shame to waste these years sparring with your child when you could put all that aside, and enjoy each other for you are, instead.

More from Quentin Fottrell:

Is it OK for my new boyfriend to ask me to split the bill? ‘I don’t want him to get used to me paying for my own meals.’

My stepdaughter is executor to her late father’s will, and believes she’s now on the deed to my home. Is that possible?

I inherited $246,000 from my late mother and used $142,000 to pay off our mortgage. If we divorce, can I claim this money?

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, or weigh in on the latest Moneyist columns.

By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.



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‘Like Waze, but for toilets’: The start-up hoping to solve Paris’s public urination problem

A new application that rewards businesses for making their toilets accessible to the public and helps users to find them is being rolled out in a Paris suburb. If everything goes to plan, the ICI Toilettes app could make its way into the capital – right in time for the Olympics. 

Public urination is high on the list of critiques of the French capital, along with rats, noise, and people not picking up their dogs’ business. Referred to in France as le pipi sauvage, or “wild peeing”, the propensity for public urination – which is technically illegal and mainly male – is explained by many factors, though a lack of available public toilets is a fundamental one. 

Over the years, Parisian leaders have proposed a number of innovative solutions but, so far, to no avail. In 2018, for instance, certain arrondissements (districts) introduced bright red, eco-friendly uritrottoirs, public installations whose name was a portmanteau of the French words for “urinal” and “sidewalk”. They were criticised for being too visible and only useful for men, and then vandalised by protesters.

The newest scheme to combat the ongoing problem comes from a start-up from the western city of Nantes called Urban Services.

ICI Toilettes (“Toilets HERE”) has two main functions. First, it is a geolocation application that helps users locate public toilets and allows them to update the status of the facility if it is in disrepair. This helps members of the public find the closest functional bathroom in real time and keeps local authorities informed about the state of the city’s sanitation infrastructure.

“It’s like Waze, but for toilets,” says founder and Urban Services CEO Thomas Herquin, referring to the crowd-sourced traffic app. 

The app’s second function is to create a network of local businesses that extend their facilities to the public, all of which are visible on the application. This expands the city’s sanitation capacity by making certain bars and restaurants de facto public toilets. These “partners” are given €100 each month by the local authorities for their participation – ICI Toilettes says this is one-twelfth the cost of setting up and maintaining a public restroom.

First launched in 2021 in Nantes, the application has now made it to the populous suburb of Montreuil on the eastern edge of the capital. The service is set to be rolled out in Grenoble and Urban Services is currently in talks with Saint-Denis, the municipality just north of Paris.

The big prize, Paris, is also in view, as France makes a big investment push before the 2024 Olympic Games. In late September, the start-up was awarded a conditional grant by the ministry of tourism. Urban Services stands to earn between €100,000 and €200,000 if it manages to set up a network of 100 partner retailers in Paris by June 15, 2024 – a number Herquin says will raise the capital’s public toilet capacity by 25%.    

The idea for the app came to Herquin when he was searching for ideas to enter a start-up competition in Nantes that he ended up winning. For market research, he surveyed people on what they thought were the biggest problems they face while commuting. The first was their ability to charge phones, the second, and much more difficult to resolve, was access to sanitary facilities.

Herquin maintains that the restaurants and bars that share their toilets should be considered “complementary” to what is already in place in the city. However, he adds, his application does provide its own benefits.

“According to our research, 85% of women do not use public toilet facilities for several reasons (like hygiene and comfort) so we offer them another option,” says Herquin.

Public urination, Herquin points out, is a serious issue with serious financial consequences. “In Paris alone, 56,000m2 of walls and doors are ruined by urine every month. That can be very costly,” he says.

On whether his business has the potential to help resolve the issue, he is less certain. “The main people who require our services are women. Men seem to have found a solution already, although it is not very clean,” Herquin says.

“But we do hope, with time we can help change the culture.”

What’s more, ICI Toilettes gives people the confidence to go and ask businesses to use their bathrooms, a feature that will particularly serve tourists who are unfamiliar with the French language or their customs related to restrooms. 

In Montreuil, finding the ICI Toilettes sticker is increasingly easy. The service has now been adopted by 10 businesses.

For Putsch café in central Montreuil, signing up with ICI Toilettes doesn’t seem to have changed much except for an extra €100 in the cash register each month. “I know some restaurants can be strict, but we’ve always been open,” says Laurine Ragot, a server at the café. “But we have seen an increase since the app, especially women and people with children desperate to pee.”

Putsch, a cafe in Montreuil that has signed up for ICI Toilettes, November 9, 2023. © Gregor Thompson, FRANCE 24

ICI Toilettes is a welcome change in a city where authorities have long been criticised for the lack of public sanitation infrastructure. Women’s association Maison des femmes de Montreuil recently described the situation as a “hygiene scandal” in French daily Le Parisien

Since signing on with Urban Services in June, “Montreuil has gone from seven public toilet facilities to 17,” says Montreuil’s Deputy Mayor Luc Di Gallo. 

For now, the businesses signed up to ICI Toilettes are concentrated in the city’s centre. The plan is to increase this number and distribute participating establishments more equally throughout the city. 

But ICI Toilettes is no silver bullet, says Di Gallo. People cannot access the app without a smartphone, and it wouldn’t be a viable option for businesses near busy areas like markets, which are unlikely to sign up because they could be inundated by the public.  

“For instances like this, it’s probably better to build public toilets that can [serve] significantly more people.” 

As part of a larger strategy, the response from the public has been “extremely positive”, says Di Gallo, adding that it makes the city more inclusive by meeting the needs of “women, the elderly and disabled people”, who have described the difficulties they encounter when out in public with no access to facilities.

“Of course, we also hope that those who degrade our public spaces will now be more inclined to use a toilet,” Di Gallo says. 

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#Waze #toilets #startup #hoping #solve #Pariss #public #urination #problem

Take a look inside the new Raffles hotel in London

History seeps from the walls of the Old War Office in Whitehall, London, Winston Churchill’s former workplace.

Once the beating heart of Britain’s military empire, the headquarters from which some of the most consequential decisions in modern U.K. history were made, the building is now forging a new future as one of the capital’s leading luxury hotels: Raffles London.

A painstaking eight-year renovation has seen the Grade II* listed Edwardian Baroque building — located on the site of the Palace of Whitehall and a stone’s throw from Downing Street — shake state secrets for mystique of another kind, as the first European location of the iconic Singaporean brand.

It’s the magic combination: the building, the location and the name, Raffles.

Fiona Harris

Communications director, Raffles London

“It’s the magic combination: the building, the location and the name, Raffles,” Fiona Harris, Raffles London’s communications director, told CNBC Travel.

The hotel’s opening last month marks a full circle moment for the Raffles brand, whose name and original location pay homage to Sir Stamford Raffles, the British diplomat who founded modern Singapore.

The building’s new owner, the Hinduja Group, which purchased a 250-year lease from the Ministry of Defense in 2016, started as a trading company in colonial India in 1914 and is now a global conglomerate.

CNBC Travel took a tour of the £1.4 billion ($1.7 billion) redevelopment — here’s a look at its 100-year transition from control center of the British empire to luxury stable for international visitors to the U.K.

An emblem of British history

Originally built for the British Army between 1899 and 1906, the vast OWO building served as an embodiment of imperial influence at its height.

At the time, more than 2,500 British army men and women worked within the building’s 1,100 rooms and two-and-a-half miles of corridors.

The Grade II listed Old War Office was built for the British Army in 1906 and is based on the site of the original Palace of Whitehall, home to several former British monarchs, including Henry VIII.

Raffles London

That grandeur remains today under an extensive renovation by EPR Architects, through which much of the building’s original features have been restored.

Inside the grand lobby, an Italian marble imperial staircase and double-tier chandelier do justice to a building that served as the birthplace of the British Secret Service and the inspiration for Ian Fleming’s James Bond series.

A new Italian chandelier, whose design is said to symbolize international trade, was delicately installed by a company that typically handles nuclear equipment.

CNBC

Above it, the first floor features the balcony from which Churchill would address his staff, giving way to the former offices of various political and military heavyweights, including David Lloyd George and Lord Kitchener.

“This building would have been full of state secrets,” Harris said.

The Old War Office was occupied by various political and military leaders, including wartime Prime Minister Winston Churchill. A replica of his desk and a bust is displayed in the Churchill Suite.

CNBC

Churchill’s own office — dubbed by Harris as “the room where all the big decisions were made,” including the move to join World War II and the decision behind the D-Day landings — is no less grand in its new life as a suite, with a replica desk and bust of the former prime minister.

Pivot to the future

The Churchill suite is just one of the rooms reimaged in tribute to the building’s history by the late Thierry Despont, whose architectural accolades include the restoration of New York’s Statue of Liberty and the interior redesign of Manhattan’s residential skyscraper 220 Central Park South.

All in, the hotel houses 120 suites and rooms, including five heritage suites in the former offices of political and military leaders, and eight corner suites named after notable women and female spies.

Raffles London is home to 120 rooms and suites, including eight corner suites named after notable women and female spies.

Raffles London

Meanwhile, deep underground, a three-floor excavation expands the building’s area by more than a third to 800,000 square feet, making way for a ballroom, a 65-foot swimming pool, and a Guerlain spa.

The addition of nine new restaurants run by multi-Michelin star chefs, including three by Argentina’s Mauro Colagreco, aim to burnish the hotel’s credentials as a culinary epicenter for the city, while three new bars seek to showcase the building’s unique history and location.

A 65-foot subterranean swimming pool at the heart of Raffles London’s four-story spa, which includes nine Guerlain treatment rooms and a gym.

Raffles London

Guests at the Guards Bar and Lounge, for example, can enjoy a prime position from which to watch the famous changing of the guard ceremony while sipping a London Sling ($29), a gin and cherry cocktail inspired by its Singapore namesake.

Those seeking more discretion can opt for the subterranean spy bar, located in an old interrogation room, from where they can pay homage to the various spies whose secrets were held within its walls.

Saison, run by Argentine Michelin star chef Mauro Colagreco, is one of nine restaurants and three bars at Raffles London. It is housed in the former library where James Bond author Ian Fleming used to write.

Raffles London

And for non-paying guests, there is an opportunity to visit and tour the building on one of 11 annual open days — a part of the Ministry of Defense’s lease agreement.

“We’re flipping it on its head,” Harris said of the building that once required security clearance for admittance. “It doesn’t matter if you’re super rich or you just want to come for coffee with a friend. It’s open to everyone,” she said.

London’s new luxury wave

A stay at Raffles London is not without a significant price tag. A night in one of the hotel’s classic rooms costs around £1,100 ($1,340), while a stay in one of its five most exclusive suites will set guests back between £18,000 and £25,000 per night.

Those who prefer to stay forever can also do so, budgeting upward of £8 million for one of 85 Raffles branded OWO residences. At the time of writing, around half of those units have already sold — to buyers from the U.S., China and the Middle East — though a five-bedroom penthouse priced at £100 million remains there for the taking.

A roll top bath takes center stage in the opulent bathroom of the Granville Suite, named after British spy Christine Granville.

CNBC

The hefty sums come as Britain’s economy and much of its population remain under financial pressure amid high inflation. And yet Raffles is not alone in betting big on London’s luxury market.

In September, another £1 billion hotel, The Peninsula, opened on the corner of Hyde Park, and in the coming months, a Mandarin Oriental, a Rosewood and a new sister hotel to Claridge’s, The Emory, are all set to launch in exclusive pockets of the capital.

An art installation of suspended, fragmented poppies pays homage to the Royal British Legion, a charity for members and veterans of the British Armed Forces.

CNBC

OWO’s owner, Hinduja Group Chairman Gopichand Hinduja — who, incidentally, purchased the property in 2016 ahead of a Brexit-based downturn — said the investment showcased Britain’s long-term appeal as a luxury travel market.

“We don’t go on short-term,” Hinduja told CNBC in July. “The U.K. is an important country, and everyone loves to come to London whether it is for holiday or it is for business.”

“We have converted that place into peace and solace,” Hinduja added of The OWO building. “It is a unique, singular property. It is a place of destination.”

The Granville Suite is one of five heritage suites at Raffles London, each occupying rooms which previously served as offices for some of Britain’s leading politicians and military leaders.

CNBC

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Meta, Alphabet and 10 under-the-radar media stocks expected to soar

The media landscape is going through a difficult transition, and it isn’t only because streaming is such a tricky business.

Companies such as Walt Disney Co.
DIS,
Warner Bros. Discovery Inc.
WBD
and Paramount Global
PARA
have made heavy investments in streaming services as their traditional media businesses wither, only to find that it is harder than it looks to emulate Netflix Inc.’s
NFLX
ability to make money from streaming.

Some of the companies are also saddled by debt, in part resulting from mergers that don’t hold the same shine in the current media landscape.

Needless to say, this is the age of cost-cutting for Netflix’s streaming competitors and many others in the broader media landscape.

Below is a screen of U.S. media stocks, showing the ones that analysts favor the most over the next 12 months. But before that, we list the ones with the highest and lowest debt levels.

All the above-mentioned media companies are in the communications sector of the S&P 500
,
which also includes Alphabet Inc.
GOOGL

GOOG
and Meta Platforms Inc.
META,
as well as broadcasters, videogame developers and news providers.

But there are only 20 companies in the S&P 500 communications sector, which is tracked by the Communications Services Select Sector SPDR ETF
.

High debt

Before looking at the stock screen, you might be interested to see which of the 53 media companies are saddled with the highest levels of total debt relative to consensus estimates for earnings before interest and taxes (EBIT) for the next 12 months, among analysts polled by FactSet. This may be especially important at a time when long-term interest rates have been rising quickly. Dollar amounts are in millions.

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Dish Network Corp. Class A

DISH 1,245%

$24,556

$1,973

15%

-57%

$1,773

Madison Square Garden Sports Corp. Class A

MSGS 1,125%

$1,121

$100

-14%

-4%

$3,400

Paramount Global Class B

PARA 656%

$17,401

$2,654

-29%

-13%

$9,529

Consolidated Communications Holdings Inc.

CNSL 651%

$2,152

$331

-26%

6%

$441

TechTarget Inc.

TTGT 629%

$479

$76

16%

-36%

$788

Cinemark Holdings Inc.

CNK 616%

$3,630

$589

61%

81%

$1,908

Cogent Communications Holdings Inc.

CCOI 548%

$1,858

$339

-19%

27%

$3,388

E.W. Scripps Co. Class A

SSP 529%

$3,084

$583

80%

-42%

$552

AMC Networks Inc. Class A

AMCX 492%

$2,945

$599

26%

-29%

$357

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Source: FactSet

Click on the tickers for more about each company, including business profiles, financials and estimates.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The debt figures are as of the end of the companies’ most recently reported fiscal quarters. The debt service ratios are EBIT divided by total interest paid (excluding capitalized interest) for the most recently reported quarters, as calculated by FactSet. It is best to see this number above 100%. Then again, these service ratios cover only one quarter.

Looking at the most indebted company by quarter-end debt to its 12-month EBIT estimate, it would take more than 10 years of Dish Network Corp.’s
DISH
operating income to pay off its total debt, excluding interest.

Shares of Dish have lost more than half their value during 2023, and the stock got booted from the S&P 500 earlier this year. The company has seen its satellite-TV business erode while it pursues a costly wireless build-out that won’t necessarily drive success in that competitive market. Dish plans to merge with satellite-communications company EchoStar Corp.
SATS
in a move seen as an attempt to improve balance sheet flexibility.

It is fascinating to see that for six of these companies, including Paramount, debt even exceeds the market capitalizations for their stocks. Paramount lowered its dividend by nearly 80% earlier this year as it continued its push toward streaming profitability, and Chief Executive Bob Bakish recently called the company’s planned sale of Simon & Schuster “an important step in our delevering plan.”

You are probably curious about debt levels for the largest U.S. media companies. Here they are for the biggest 10 by market cap:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Comcast Corp. Class A

CMCSA 266%

$102,669

$38,539

77%

33%

$187,140

Netflix Inc.

NFLX 197%

$16,994

$8,641

192%

41%

$184,362

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Walt Disney Co.

DIS 263%

$47,189

$17,975

88%

-4%

$152,324

Verizon Communications Inc.

VZ 370%

$177,654

$48,031

36%

-11%

$140,205

AT&T Inc.

T 378%

$165,106

$43,681

31%

-20%

$100,872

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Charter Communications Inc. Class A

CHTR 434%

$98,263

$22,651

89%

23%

$62,380

Source: FactSet

Among the largest 10 companies in the S&P Composite 1500 communications sector by market cap, Charter Communications Inc.
CHTR
has the highest ratio of debt to estimated EBIT, while its debt service ratio of 89% shows it was close to covering its interest payments with operating income during its most recent reported quarter. Disney also came close, with a debt service ratio of 88%.

Charter Chief Financial Officer Jessica Fischer said at an investor day late last year that “delevering would only make sense if the market valuation of our shares fully reflected the intrinsic value of the cash-flow opportunity, if debt capacity in the market were limited or if our expectations of cash-flow growth, excluding the impact of our expansion were significantly impaired.”

Meanwhile, Kevin Lansberry, Disney’s interim CFO, said during the company’s latest earnings call that it had “made significant progress deleveraging coming out of the pandemic” and that it would “approach capital allocation in a disciplined and balanced manner.”

Disney’s debt increased when it bought 21st Century Fox assets in 2019, and the company suspended its dividend in 2020 in a bid to preserve cash during the pandemic.

When Disney announced its quarterly results on Aug. 9, it unveiled a plan to raise streaming prices in October. Several analysts reacted positively to the price increase and other operational moves.

Read: The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

The largest companies in the sector, Alphabet and Meta, have relatively low debt-to-estimated EBIT and very high debt-service ratios. Netflix has debt of nearly twice the estimated EBIT, but a high debt-service ratio. For all three companies, debt levels are low relative to market cap.

Low debt

Among the 52 companies in the S&P Composite 1500 communications sector, these 10 companies had the lowest total debt, relative to estimated EBIT, as of their most recent reported fiscal quarter-ends:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

New York Times Co. Class A

NYT 0%

$0

$414

N/A

32%

$6,968

QuinStreet Inc.

QNST 18%

$5

$26

-153%

-35%

$513

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Shutterstock Inc.

SSTK 26%

$63

$241

39%

-20%

$1,502

Yelp Inc.

YELP 31%

$106

$344

78%

55%

$2,909

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Scholastic Corp.

SCHL 54%

$108

$201

319%

12%

$1,314

Electronic Arts Inc.

EA 73%

$1,951

$2,678

605%

-2%

$32,425

World Wrestling Entertainment Inc. Class A

WWE 93%

$415

$448

479%

66%

$9,455

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Source: FactSet

New York Times Co.
NYT
takes the prize, with no debt.

Wall Street’s favorite media companies

Starting again with the 52 companies in the sector, 46 are covered by at least five analysts polled by FactSet. Among these companies, 12 are rated “buy” or the equivalent by at least 70% of the analysts:

Company

Ticker

Share “buy” ratings

Aug. 25 price

Consensus price target

Implied 12-month upside potential

Thryv Holdings Inc.

THRY 100%

$21.11

$35.50

68%

T-Mobile US Inc.

TMUS 90%

$133.35

$174.96

31%

Nexstar Media Group Inc.

NXST 90%

$157.08

$212.56

35%

Meta Platforms Inc. Class A

META 88%

$285.50

$375.27

31%

Cars.com Inc.

CARS 86%

$18.85

$23.79

26%

Alphabet Inc. Class A

GOOGL 82%

$129.88

$150.04

16%

Iridium Communications Inc.

IRDM 80%

$47.80

$66.00

38%

News Corp. Class A

NWSA 78%

$20.74

$26.42

27%

Take-Two Interactive Software Inc.

TTWO 74%

$141.42

$155.96

10%

Live Nation Entertainment Inc.

LYV 74%

$84.79

$109.94

30%

Frontier Communications Parent Inc.

FYBR 73%

$15.24

$31.36

106%

Match Group Inc.

MTCH 70%

$43.79

$56.90

30%

Source: FactSet

News Corp.
NWSA
is the parent company of MarketWatch.

Finally, here are the debt figures for these 12 media companies favored by the analysts:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Thryv Holdings Inc.

THRY 227%

$433

$191

53%

11%

$730

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Nexstar Media Group Inc.

NXST 358%

$7,183

$2,009

63%

-8%

$5,511

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Cars.com Inc.

CARS 223%

$451

$202

41%

37%

$1,253

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Iridium Communications Inc.

IRDM 306%

$1,481

$483

54%

-7%

$5,977

News Corp. Class A

NWSA 261%

$4,207

$1,611

109%

15%

$11,940

Take-Two Interactive Software Inc.

TTWO 272%

$3,492

$1,283

-40%

36%

$24,017

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Frontier Communications Parent Inc.

FYBR 453%

$9,844

$2,173

85%

-40%

$3,745

Match Group Inc.

MTCH 287%

$3,839

$1,337

540%

6%

$12,177

Source: FactSet

In case you are wondering about how the analysts feel about debt-free New York Times, it appears the analysts believe the shares are fairly priced at $42.60. Among eight analysts polled by FactSet, three rated NYT a buy, while the rest had neutral ratings. The consensus price target was $43.93. The stock trades at a forward price-to-earnings ratio of 27.7, which is high when compared with the forward P/E of 21.7 for the S&P 500
.

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#Meta #Alphabet #undertheradar #media #stocks #expected #soar

Lukas Gage’s viral video audition haunts the ‘hot labor summer’ actors’ strike sweeping Hollywood

In November 2020, the actor Lukas Gage was auditioning for a role via video link when he heard the producer make some disparaging remarks about the size of his apartment. 

“These poor people who live in these tiny apartments,” the producer said. “I’m looking at his background and he’s got his TV and …”

Gage, who at that time had had a four-episode arc on HBO’s “Euphoria” among other small roles, interrupted the producer — British director Tristram Shapeero, who later apologized for his remarks — to let him know that he was not muted and that Gage could, in fact, hear him. 

“Yeah, I know it’s a sh—y apartment,” Gage said. “That’s why — give me this job so I can get a better one.”

Shapeero replied, “Oh my god, I am so, so sorry … I am absolutely mortified.”

Putting together an audition tape can often take up an entire day and involve setting up a studio space for sound and lighting.

“Listen, I’m living in a four-by-four box, just give me the job and we’ll be fine,” Gage responded. 

Gage kept his sense of humor, but he also decided to post the video on his Twitter account to show how actors are sometimes treated from the moment they audition for a role — and perhaps to remind people to make sure you’re on mute if you’re trash-talking someone on a Zoom
ZM,
+1.76%

call.

It’s three years later, and members of the Writers Guild and Screen Actors Guild are on strike, looking for more pay, better working conditions and stricter rules around things like the use of actors’ images in the age of artificial intelligence and the lack of residuals from streaming networks. 

The perils of the online audition

Meanwhile, Gage’s 2020 online audition is resonating again. 

For a working actor — who, like the majority of SAG-AFTRA members who may not be an A-list star — simply getting in front of a producer as Gage did can be a long and difficult process. And since the start of the pandemic, the nature of auditions has changed dramatically. This has come to symbolize the uphill struggle actors face from the moment they hear about a role. 

In May, Ezra Knight, New York local president of SAG-AFTRA, asked members to authorize strike action, saying contracts needed to be renegotiated to reflect dramatic changes in the industry. Knight cited the need to address artificial intelligence, pay, benefits, reduced residuals in streaming and “unregulated and burdensome self-taped auditions.”

In the days of live auditions, actors would read for a role with a casting director. But several actors told MarketWatch that it’s become harder to make a living in recent years, and that it all starts with the audition tape, which has now become standard in the industry. 

By the time Gage got in front of producers, for instance, he had likely either already delivered a tape and was put on a shortlist to read in front of a producer, or the casting director was already familiar with his work and wanted him to read for the part. 

But an audition tape can often take up an entire day to put together, actors say. When the opportunity to audition arrives, actors typically have to drop everything they’re doing — whether they’re working a side hustle or taking time off or even enjoying a vacation.

Cadden Jones: “All the financial responsibilities have fallen on us. The onus is on us to create our auditions.”


Cadden Jones

They need to arrange good lighting and a clean backdrop — Gage’s TV set became a distraction for the producer during his audition — set up the camera, and scramble to find a “reader” — someone to read the other roles in the scene, preferably another actor. 

Then the actor has to edit the audition to highlight their strongest take and upload it. There are currently no regulations on the amount of pages a casting director can send to a candidate, and actors say there’s often not enough time to properly prepare.

“Unfortunately, it’s been going in this direction for some time now,” said Cadden Jones, an actor based in New York who has credits on shows including Showtime’s
PARAA,
-1.47%

“Billions” and Amazon Prime’s
AMZN,
+0.03%

“The Marvelous Mrs. Maisel.” 

“This was the first year I did not qualify for health insurance in decades,” she told MarketWatch. “I just started teaching.”

To put that into perspective: Members of SAG-AFTRA must earn $26,470 in a 12-month base period to qualify for health insurance. The median annual wage in the U.S. hovers at around $57,000, based on the weekly median as calculated by the Bureau of Labor Statistics.

Jones and her partner, Michael Schantz, an actor who works mostly in theater, are starting a communications consulting company to increase their income.

“Most if not all of my actor friends have had to supplement their income since the pandemic,” she said. “We’re in trouble as a community of actors who used to make a good living doing what we do. It’s not like any of us lost our talent overnight. I, for one, am very glad that we’re striking.”

But Jones said that, with the auditioning process taking place mostly online since the onset of the pandemic, casting agents — who work for producers — are able to see more people for a given role, making the competition for roles even more intense.

‘This was the first year I did not qualify for health insurance in decades.’


— Cadden Jones, an actor based in New York

“We don’t go into casting offices anymore,” Jones said. “All the financial responsibilities have fallen on us. The onus is on us to create our auditions. It’s harder to know what they want, and you don’t have the luxury to work with a casting director in a physical space to get adjustments, which was personally my favorite part of the process — that collaboration.”

She added: “Because the audition rate accelerated, the booking rate went down dramatically for everybody. But don’t get me wrong. Once the strike is officially over, I want all the auditions I can get.”

SAG-AFTRA has proposed rules and expectations to address some of the burden and costs actors bear when it comes to casting, including providing a minimum amount of time for actors to send in self-taped auditions; disclosing whether an offer has been made for the role or it has already been cast; and limiting the number of pages for a “first call” or first round of auditions.

Before the negotiations broke down with the actors’ union, the Alliance of Motion Picture and Television Producers, which represents over 350 television and production companies, said it offered SAG-AFTRA $1 billion in wage increases, pension and health contributions and residual increases as part of a range of proposals related to pay and working conditions.

Those proposals included limitations on requests for audition tapes, including page, time and technology requirements, as well as options for virtual or in-person auditions, AMPTP said. The producers’ group characterized their offer as “the most lucrative deal we have ever negotiated.”

Michael Schantz: “How does the broader culture value storytelling and the people who make stories?”


Michael Schantz

Jones said she doesn’t blame the casting directors. It’s up to the producers, she said, to be more mindful of how the changes in the industry since the advent of streaming, the decline in wages adjusted for inflation, and poor residuals from streaming services have taken a toll on working actors.

Bruce Faulk, who has been a member of SAG-AFTRA since 1992, said that for work on a one-off character part or a recurring role on a network show, he might receive a check for hundreds or even thousands of dollars in residuals. And — crucially — he knows how many times a particular show has aired. 

Residuals are fees paid to actors each time a TV show or film is broadcast on cable or network television. They are based on the size of the role and the budget of the production, among other things. For shows that air on streaming services, however, residuals are far harder to track. 

What’s more, residuals decline over time and can often amount to just a few cents per broadcast. 

Actor Kimiko Glenn, who appeared on episodes of Netflix’s
NFLX,
-2.27%

“Orange Is the New Black,” recently shared a video on TikTok showing $27 in residuals from her work on that show.

Faulk sympathizes. “A lot of checks from HBO
WBD,
-1.37%

for ‘The Sopranos’ or ‘Gossip Girl’ I get are for $33,” he said. “I never know how many people watched me on ‘Gossip Girl’ in the three episodes I’m in. All we know is whatever the streaming services decided to announce as their subscriber numbers.”

Like Jones, Faulk said this will be the first year he won’t qualify for SAG-AFTRA health insurance, which covers him, his wife and his son. This is despite him having worked enough over the past 10 years to qualify for a pension when he turns 67. “Mine is up to $1,000 a month now,” he said, noting that the pension will keep increasing if he keeps getting acting work.

Schantz, who had a three-episode arc on NBC’s
CMCSA,
-0.74%

“The Blacklist” in addition to his other TV, film and theater credits, finds the recent shifts in the landscape for actors somewhat difficult to reconcile with the way people turned to TV and film during the loneliest days of the pandemic.

“One of the most concerning things I can think of right now is the conversation around value. How does the broader culture value storytelling and the people who make stories?” he said. “The arts always tend to fall to the wayside in many ways, but it was striking during the pandemic that so much of our attention went to watching movies and television. There’s obviously something inside of us that feels like we’re part of the human story.”

Actors battle other technology

While big companies like Disney
DIS,
+1.13%
,
HBO, Apple
AAPL,
-0.62%
,
Amazon and Netflix make millions of dollars from films and TV series that are watched again and again, Schantz said that actors are unable to make a living. “No one wants to go on strike,” he said. 

Those five companies have not responded to requests for comment from MarketWatch on these issues.

Since his audition tape went viral, Gage has booked regular work, and he found even greater fame when he went on to star in Season 1 of HBO’s “White Lotus.” In 2023, he will star in nine episodes of “You,” now streaming on Netflix, and in the latest season of FX’s “Fargo.” 

Earlier this year, he told the New York Times: “I had never judged my apartment until that day.” He added, “I remember having this weird feeling in the pit of my stomach afterward, like, why am I judging where I’m at in my 20s, at the beginning of my career?”

‘There’s enough Bruce out there where you could take my likeness and my voice and put me in the scene.’


— Bruce Falk, a member of SAG-AFTRA since 1992

But advances in technology are not just hurting actors in the audition process. A debate is raging over the use of AI and whether actors should be expected to sign away the rights to their image in perpetuity, especially when they might only be getting paid for half a day’s work.

“AI is the next big thing,” Falk said. The industry is concerned about companies taking actors’ likenesses and using AI to generate crowd scenes. 

“Even an actor at my level — that guy on that show — there’s enough Bruce out there where you could take my likeness and my voice and put me in the scene: the lieutenant who gives you the overview of what happened to the dead body,” he said. “At this point, I could be technically replaced. We have to get down on paper, in very clear terms, that that can’t be done.”

The Alliance of Motion Picture and Television Producers also said it agrees with SAG-AFTRA and had proposed — before the actors’ strike — “that use of a performer’s likeness to generate a new performance requires consent and compensation.” The AMPTP said that would mean no digital version of a performer should be created without the performer’s written consent and a description of the intended use in the film, and that later digital replicas without that performer’s consent would be prohibited.  

“Companies that are publicly traded obviously have a fiduciary responsibility to their shareholders, and whatever they can use, they will use it — and they are using AI,” Schantz said. “Yes, there are some immediate concerns. Whether or not the technology is advanced enough to fully replace actors is an open question, but some people think it’s an inevitability now.

“To let companies have free rein with these technologies is obviously creating a problem,” he added. “I can’t go show up, do a day’s work, have my performance be captured, and have that content create revenue for a company unless I’m being property compensated for it.”

Schantz said he believes there’s still time to address these technological issues before they become a widespread problem that makes all auditions — however cumbersome — obsolete. 

“We haven’t crossed this bridge as a society, but God only knows how far along they are in their plans,” he said. “All I know is it has to be a choice for the actors. There has to be a contract, and we have to be protected. Otherwise, actors will no longer be able to make a living doing this work.”



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Franchising industry holds its breath as FTC takes a closer look at regulations

The franchising industry is bracing to see whether the U.S. will change how it regulates a structure that fuels brands from McDonald’s to Marriott.

Last month, the Federal Trade Commission wrapped up a public comment period in response to its request for information on the sector and its business practices. The agency sought input from stakeholders, including franchise operators, workers and parent corporations, as it scrutinizes franchising practices.

The move suggested the FTC is potentially considering closer regulation of the sector — with big implications for some of the largest restaurant and hospitality companies in the U.S. and their employees. The agency declined to comment on any potential changes or when they could come.

Now the industry awaits an outcome. 

The FTC told CNBC it received more than 5,500 comments on the inquiry, indicating “broad interest in ensuring fairness in franchising.”

“We are thoroughly reviewing each comment and are assessing next steps. All options are on the table,” an FTC spokesperson said in a statement. The agency’s statement earlier this year on its request for information said it “would begin to unravel how the unequal bargaining power inherent in [franchise] contracts is impacting franchisees, workers, and consumers.”

Franchising is a major contributor to the U.S. economy. The International Franchise Association, the industry’s leading advocate, says its membership covers more than 300 business format categories and some 800,000 businesses in the country that employ millions of workers.

A potential change to franchise regulations fits into the FTC’s broader oversight agenda, as the agency proposes banning noncompete clauses and considers whether the policy should apply to clauses between franchisors and franchisees. FTC Chair Lina Khan’s regulatory push has also targeted corporate giants like Microsoft and Activision, Twitter and Amazon.

Aside from potential rulemaking shifts at the FTC, the industry is also watching for changes to joint employer rules and local regulations like AB 1228 in California, both of which stand to shift more liability to parent companies of franchised businesses. 

Industry watchers say an initial proposal from the FTC on franchise rule amendments could come as soon as the end of year. In its submission to the FTC, the IFA raised concerns about how the FTC could use the public comments to shape new rules.

“We are particularly troubled that the Commission might rely on those anecdotal accounts, including many made anonymously, to engage in a formal rulemaking process that would halt the growth of franchised businesses with overly restrictive regulation of franchise relationships, to the detriment of consumers, business owners and workers,” the advocacy group said.

IFA President and CEO Matt Haller said the group is concerned about “one-size-fits-all” regulatory changes. Customers want a consistent experience, but also one that evolves to meet their needs, he said.

“If the FTC limits the ability for franchisors to evolve their systems to meet customers’ demands, then that’s negatively going to impact franchisees, because customers will stop patronizing these businesses if they’re not able to get the products and services they want in a consistent and convenient fashion,” Haller said in an interview, pointing to successful operating changes that franchisors made during the pandemic as an example.

Some labor advocates hope potential oversight changes improve working conditions for franchised employees. In its submission, the Service Employees International Union and the Strategic Organizing Center had pointed words about franchising and worker relationships.

“The extractive franchise model, based on franchisors having meticulous control over – but virtually no responsibility for – numerous small businesses, results in lowmargin businesses under constant pressure to reduce costs and cut corners, in which labor costs are almost the only cost variable the franchisees control. Our evidence of worker harm demonstrates that workers ultimately bear the brunt of this exploitative system designed primarily to enrich the firm at the top – the franchisor,” the groups’ comments said.

Major brands that use the model including Marriott, Hilton, Yum! Brands and Sport Clips, along with franchisees, submitted commentary highlighting the positive aspects of franchising. Some urged the FTC not to make regulatory changes or treat the industry as one, as many concepts operate under the broader sector’s umbrella.

McDonald’s was among the large restaurant brands that saw comments submitted to the FTC from both operators and the corporation. The National Owners Association, an advocacy group of over 1,000 McDonald’s franchisees, encouraged its membership to submit comments to the FTC on both franchising and noncompete clauses found in its contracts.

Some owners have clashed with the fast food giant over changes its made over the last year to how restaurants are graded and how franchise contracts are renewed.

The NOA’s public submission said, “The McDonald’s system was, and could again be, the gold standard for the franchise business model. The comments and examples provided here by members of the NOA are meant to illustrate how time has not made the franchisee-franchisor model stronger, but sadly more adversarial, less cooperative, and severely fractured.”

In a statement to CNBC on the FTC’s request for public comment, McDonald’s highlighted the role its franchise system plays in boosting small business owners and creating jobs. McDonald’s said it shares the agency’s view that the model should benefit “everyone: customers, franchisees, workers, suppliers, franchisors, and local communities,” adding, “that’s precisely what our franchise system has done for over six decades.” 

“Our franchise model thrives on having a common set of standards and requirements that ensure equitable treatment of franchisees, protection of franchisee investments and secured value for the McDonald’s brand,” the company said. “A one-size-fits-all regulation threatens the successful investments these small business owners have made in themselves and their communities.”

The National Franchisee Leadership Alliance’s Chair Danielle Marasco echoed that sentiment in a statement shared with CNBC.

“The NFLA, the only elected representative voice of McDonald’s franchisee organizations across the U.S., is opposed to any regulation that would undermine our franchise system and threaten our independent ownership rights,” Marasco said. “Since McDonald’s founding in 1955, our franchising model has successfully served the brand, franchisees, employees and the local communities we operate in.”

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