Sommeliers push back at decision to strip ‘master’ titles after incident of cheating

After revelations of cheating led the country’s most prestigious wine industry certification body to invalidate the 2018 master sommeliers tasting exams, the somms are pushing back.

In case you missed it, on Tuesday, the Court of Master Sommeliers, Americas, invalidated the master sommelier titles awarded to 2018’s batch of newly passed sommeliers. The move was a reaction to the discovery that a master sommelier (who was also an exam proctor) leaked answers to an unnamed candidate who was taking the test; the board annulled the titles of all 23 master sommeliers because the extent to which the answers were leaked remains unknown. In the wake of the discovery, the Court of Master Sommeliers, Americas, is creating opportunities for candidates to retake the portion of the exam called into question.

Nineteen of the 23 candidates whose titles were stripped away do not find this a fitting solution and have communicated their umbrage to the Court in a letter obtained by the Chicago Tribune.

“As your colleagues and as members of the Court of Master Sommeliers, we feel the decision reached by the Board of Directors of the Court of Master Sommeliers (the “Board”) was done in haste and did not follow appropriate due process in redacting the status of the Class of 2018, as outlined by the Bylaws of the Court of Master Sommeliers, Americas,” the letter reads in part.

Tellingly, the 19 sommeliers signed the letters with the abbreviation for master sommeliers, “MS.”

The letter from the 19 sommeliers specifically named a board member currently listed on the Court of Master Sommeliers website, saying the person “broke the Code of Ethics and Conduct set forth by the Court,” but stopped short of accusing the person of leaking information to candidates. As of publication, messages to the Court’s Executive Director Kathleen Lewis and Chairman Devon Broglie had not been returned to confirm or deny this person’s involvement.

In a separate email titled “Fellow Masters — A Call to Action” appealing to Court members, the sommeliers write: “Can we all be certain that this breach hasn’t happened before with this same individual on the Board? We ask that a thorough investigation be conducted to clear the names of those of us who passed fairly, and who have been unjustly grouped under an umbrella of those who may have compromised the examination.”

The Court has communicated that proceedings have started to bar this person’s participation in Court events and even terminate the person’s membership.

The candidates have also seemingly closed ranks. Messages to Chicago-area candidate Jill Zimorski remain unanswered, and candidate Dan Pilkey refused to offer comment to the Tribune. (Both Pilkey and Zimorski are among the sommeliers listed on the letter to the Court. The letter states, “Many of us have already incurred the public spattering of our names across the press, associated with words like “scandal,” “cheating” and “shame,” citing previous reporting by the Tribune, San Francisco Chronicle and Daily Beast.)

The letter addresses what many in the industry deem the unfairness of invalidating the entire Class of 2018’s tasting portion of the notoriously difficult exam; it also questions the Court’s retesting protocol, made public Wednesday.

The board’s unanimous decision includes: refunding all fees collected for the tasting portion of the 2018 Master Sommelier Diploma Exam; creating two retesting opportunities, as well as retesting during 2019’s regularly scheduled examination program; waiving associated exam fees; and offering travel cost assistance to retest. (The retest is available to all 54 candidates who took the tasting portion of the exam, including the 23 affected sommelier candidates who ostensibly passed.)

For their part, the affected somms wrote, “to retest the 54 candidates as a whole, effectively exonerates the guilty parties, and at the very least rewards their lack of moral courage. … The onus lies with the Board to conduct a full investigation into the scope of the cheating and issue an apology clearing those not involved in the allegations, fully reinstating their status as Master Sommeliers.”

The Master Sommelier examination is broken into three parts: theory, practical service and tasting. Books like “Cork Dork” by Bianca Bosker and films like “Somm” have highlighted the notoriously difficult examination, which can take years to complete. The tasting portion, alone, requires candidates to taste six wines and, in 25 minutes, “identify, where appropriate, grape varieties, country of origin, district and appellation of origin, and vintages of the wines tasted.”

Each portion of the test costs $995 ($1,775 if a candidate takes both the practical and tasting at the same time), not to mention the cost of buying wine to taste and practice with. Sommeliers create tasting groups not only for the fellowship that comes with studying, but also to mitigate many of these costs and to try as many wines as possible during tasting sessions.

“Though I stand with the court’s decisions, I know they didn’t come to their conclusions lightly,” said Alpana Singh, a master sommelier and the owner of Terra & Vine restaurant in Evanston. “I also know what the sommeliers feel — they’re entitled to feel rage, confusion, all of it right now. I personally still have panic attacks and dreams, thinking about my own test. At the end of the day, the Court is a brother- and sisterhood of professionals, and they’re experiencing it all together.”

Singh said the events of this week are especially “heavy, because it’s unprecedented. I’ve been a master sommelier since 2003 and a court member since 1995 — this is the first I’ve heard of anything at this level.”

“I know whatever was decided in (the boardroom), it was done with a heavy heart.”

Twitter @joeybear85

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Newsweek’s parent company pleads not guilty to fraud

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Newsweek’s parent company IBT Media pleaded not guilty in New York on Thursday to charges that it manipulated finances in an effort to keep the magazine operational.

The charges from the Manhattan District Attorney’s office include fraud, money laundering and falsifying records, and detail a scheme to borrow money for computer equipment that was then funneled to Newsweek.

The indictment accuses two individuals — William Anderson, the CEO of Christian Media Corporation, and Etienne Uzac, the co-owner and chairman of IBT Media — of having hatched a fraudulent plan that included an auditor named Karen Smith, whom the indictment said authorities could find no evidence of.

TIME Magazine Cover With President Donald Trump - Newsweek Magazine Cover With President Vladimir Putin
Copies of TIME and Newsweek magazines sit in a rack at a Hudson News bookstore April 23, 2018 at Raleigh International Airport.Robert Nickelsberg / Getty Images file

The lawsuit also names Christian Media Corporation, which allegedly tried to obtain loans for company servers, and Oikos Networks, the firm used to acquire the servers.

Uzac defended himself in an a post to his Twitter account.

“I believe this very aggressive investigation is fueled by retaliation against me and my news media company for having uncovered that that Manhattan District Attorney Cyrus Vance Jr. declined to press charges against Harvey Weinstein after his attorney paid Vance money,” Uzac wrote.

Marc Agnifilo, a lawyer for Uzac, said his client denies the allegations and that the loan in question had been paid back.

A call to Anderson’s lawyer was not immediately returned.

Newsweek laid off staff this earlier year, including an editor who oversaw an investigation into why the news company’s servers had been seized by the federal officials. IBT Media has since spun off Newsweek into a separate company.

The Wall Street Journal was first to report the news of the charges.

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Watch Boston Dynamics’ humanoid robot leap up massive steps like it’s nothing

Two years ago, Boston Dynamics’ humanoid robot Atlas needed a big ol’ safety tether to shuffle its way down a flat hiking trail. Five years ago it needed a big, bolted-down support structure to keep itself upright.

Now it’s casually leaping up and over obstacles that would leave many humans huffing and puffing.

The company demonstrated Atlas’ newly found hops in a video published this morning:

It starts with a lil’ leap over a log before Atlas bounds its way right up a set of 40 cm (1.3 ft) steps.

While just getting a massive, heavy robot to walk on two feet is a feat few companies have cracked, there’s a whole set of new challenges at play here. Getting Atlas’ limbs up and over the step, while appropriately shifting the weight and momentum onto one foot without the whole thing face-planting… it’s a complicated set of mechanics. Notice the sideways leaps, and — particularly in the slow motion cut at the 9-second mark — the way the hips/feet seem to angle a bit to compensate.

(For the curious: Atlas weighs around 180 lbs, as of the last time Boston Dynamics disclosed the numbers.)

At this point, we’ve gone from “Haha, neat, look at the funny robot running like a human,” to “I’m pretty sure that robot could beat me up.”

Wondering what the company is up to here? We talked with Boston Dynamics’ founder Marc Raibert about the hows and whys a few months back at our robotics event in Berkeley. The video is below:

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Nikkei drops about 4% as Asian markets follow Wall Street’s plunge

Asian stocks plummeted in early trading Thursday following the skid on Wall Street.

Japan’s Nikkei

NIK, -3.89%

  fell about 4% as stocks got added pressure from the yen’s overnight bounce. The dollar was just above ¥112, versus ¥112.36 in late New York trade and ¥113 Wednesday morning. Through Wednesday, the dollar had fallen five straight days versus the yen

USDJPY, -0.02%

  and logged the biggest week-long drop since February, at 2%. And with a late drop in Treasury yields during U.S. trade, 10-year JGB yields were down a basis point at 0.14% and 30-years were down two basis points at 0.92%. Losses were widespread across all sectors, with SoftBank Group

9984, -5.83%

  and robotics company Fanuc

6954, -6.84%

  down around 7%, while export-reliant companies such as Toyota

7203, -2.41%

 , Nintendo

7974, -3.13%

  and Sony

6758, -4.28%

  posted steep losses as well.

Chinese stocks were down more than 3%, putting mainland indexes at fresh multiyear lows, extending the woes which have made Chinese equities among the world’s worst performers this year. The Shanghai Composite Index

SHCOMP, -4.94%

is now down 20% for 2018.

In Hong Kong, the Hang Seng

HSI, -3.85%

  slid more than 3%, a day after snapping a six-session losing streak, and was on pace to close at a new 15-month low. Tech stocks took a beating, with Sunny Optical

2382, -6.91%

 , AAC Technologies

2018, -7.22%

  and Tencent

0700, -6.91%

  falling more than 5%. Automaker Geely

0175, -6.10%

 , casino operator Galaxy Entertainment

0027, -5.23%

  and oil company CNOOC

0883, -5.12%

 also plunged.

Taiwan stocks fared even worse, with the Taiex

Y9999, -6.31%

  down 5.7%, putting it at its lowest levels since May 2017. Heavyweights were down across the board with tech stocks hurting the most, as lens maker Largan

3008, -9.89%

  fell 9% and capacitor maker Yageo

2327, -8.38%

  sank almost 7%.

Australia’s ASX 200

XJO, -2.74%

  dropped to levels last seen in late April and New Zealand’s NZX 50

NZ50GR, -3.64%

  is set to log its first nine-day losing streak since July 2011. Korea’s Kospi

SEU, -4.03%

  was off 2.8%, with Samsung

005930, -4.30%

  down more than 2%. Singapore’s stock benchmark

STI, -2.76%

  skidded to 20-month lows while Malaysia’s benchmark

FBMKLCI, -2.03%

  hit three-month lows

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China, Aiming to Borrow as Cheaply as Apple and Microsoft, Launches US Dollar Debt Offering

China has launched a multibillion-dollar bond offering to investors outside the country, seeking to borrow money as cheaply as some of America’s strongest companies at a time of heightened tensions with its largest trading partner.

The sovereign-bond sale—China’s second U.S. dollar bond sale in a year and only its third since 2004—includes securities maturing in five, 10 and 30 years. Bankers told investors that China expects to raise a total of $3 billion.

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Nearly $13 billion wiped off of cryptocurrency market as major coins plunge

“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” the International Monetary Fund said in a recent report.

Many cryptocurrency enthusiasts hoped 2018 would be a year that regulators warmed up to the idea of professionalizing the trading of digital assets through new financial products like exchange-traded funds. But the U.S. Securities and Exchange Commission has rejected several ETFs including a highly anticipated one planned by the Winklevoss twins. Other countries, including China, have come down hard on cryptocurrencies.

At the same time, the year has been marked by high-profile hacks on cryptocurrency exchanges as well as a number of scams tied to people carrying out so-called initial coin offerings.

All of those factors have meant that bitcoin, XRP and ethereum have not recovered to the record highs seen toward the end of 2017 and beginning of this year. On Thursday, bitcoin was more than 68 percent off of its record high of $19,783.21, which it hit on Dec. 17 of last year.

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Newsweek’s Former Owner Faces Fraud Charges

Newsweek magazine, the onetime media powerhouse, was at the center of a multimillion-dollar fraud and money-laundering conspiracy, according to an indictment by Manhattan prosecutors that was unsealed Wednesday.

Two publishing companies, IBT Media, which owned the magazine, and Christian Media, a faith-based online publisher in Washington, were charged with trying to defraud lenders by pretending to borrow money for sophisticated computing services.

Instead, most of the money was funneled back to accounts controlled by the two media companies and their principals — Etienne Uzac, a co-founder of IBT, and William Anderson, Christian Media’s former chief executive and publisher — and unnamed co-conspirators, the indictment said. It said some of the money had been used to cover the magazine’s operating expenses.

The men were charged with misrepresenting Newsweek’s financial health and creating a fictitious accounting firm, Karen Smith L.L.P., along with a series of fake financial statements to dupe lenders into putting up millions of dollars in 2015 and 2016. Oikos Networks, a computer company, was also named in the indictment, charged with providing fewer, lower-quality computers than the expensive ones on invoices.

The Manhattan district attorney’s office brought the charges after an extended investigation into the companies’ financial dealings that included a raid of IBT’s Manhattan offices in January. Top editors and reporters at Newsweek were fired after they, too, started delving into the company’s accounts and the owners’ connections to Olivet University, an evangelical Christian college in New York. Several other magazine employees soon resigned.

Mr. Uzac defended himself on Wednesday on IBT’s website, accusing the Manhattan district attorney, Cyrus R. Vance Jr., of retaliating against his news organization for reporting last fall on a campaign contribution to Mr. Vance from the lawyer for Harvey Weinstein, the powerful film producer.

Mr. Uzac added: “The firestorm that ensued badly bruised the D.A.’s office, led to his office to be investigated by the New York attorney general and almost cost him his re-election.”

In May, Mr. Vance brought charges of rape and criminal sexual acts against Mr. Weinstein in cases involving two women.

Mr. Uzac’s lawyer, Marc A. Agnifilo, said in a statement that his client “strongly denies these baseless charges.”

“It is undisputed that no one lost money,” he added. “We contend no one was defrauded and the D.A.’s case is made up, untrue and will be soundly repudiated.”

Mr. Anderson’s lawyer, Andrew Lanker, denied that his client had engaged in wrongdoing.

“We are disturbed that once again, the Manhattan district attorney’s office is initiating a case where the victim has suffered no financial harm — it is Abacus all over again,” he said, referring to a mortgage fraud case that the office brought in 2012 and that resulted in the acquittal of two bank officials.

“The notion that my client has engaged in conspiratorial or money-laundering behavior is absurd,” Mr. Lanker added. “We will vigorously defend these charges.”

IBT bought Newsweek in 2013. Last year, the company changed its name to Newsweek Media Group.

After the indictment was unsealed late Wednesday afternoon, the magazine issued a statement noting that Newsweek Media Group had split into two separate companies — Newsweek, which controls the print and digital versions, and IBT Media, which runs the International Business Times, Fashion Times, Medical Daily and other publications.

Mr. Uzac and Mr. Anderson were scheduled to be arraigned in court on Thursday.

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Why the stock market tumbled Wednesday, ushering in its worst start to a quarter in about 2 years

It has been an ugly stretch for U.S. stocks, which was capped by Wednesday’s more-than-830-point tumble for the Dow Jones Industrial Average.

To recap: The Dow

DJIA, -3.15%

and the S&P 500 index

SPX, -3.29%

booked their worst one-day slumps since Feb. 8, while the Nasdaq Composite Index

COMP, -4.08%

put in its worst single-session skid since Brexit, when the U.K. voted to exit from the European Union, roiling global markets in 2016.

Wednesday’s action wasn’t as severe as Brexit, but the downbeat action cast a pall over a rally that has mostly been driven by domestic economic strength and earnings that have been buoyed by corporate tax cuts.

So, what’s next? And what has led to an apparent broad-based unraveling of stock benchmarks that were testing new heights about a week ago?

Rising rates are hurting

Rapidly climbing bond yields, which gain as prices fall, have fueled fears that profit margins of U.S. corporations may be squeezed by higher labor costs and loftier borrowing expenses. The 10-year Treasury note

TMUBMUSD10Y, -0.42%

a government bond that is used to price mortgages, auto loans and other debt, has seen its yields climb toward a seven-year peak (rates retreated somewhat amid Wednesday’s stock fall).

“Today’s equity selloff is a reaction from investors finally realizing we are in a higher interest-rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell. Higher interest rates typically bring on tighter financial conditions which could dampen growth going forward and equity markets are reacting to that,” said Charlie Ripley, senior strategist at Allianz Investment Management.

Check out: 3 reasons why U.S. government bond yields are soaring

FANG stocks get dumped

Escalating costs of borrowing have had a more pronounced effect on megacapitalization companies like Inc.

AMZN, -6.15%

 and Netflix Inc.

NFLX, -8.38%

, part of a cadre of so-called FANG constituents (also including Google-parent Alphabet Inc.

GOOGL, -4.63%

and Facebook Inc.

FB, -4.13%

), which have had an outsize influence on the broader market by dint of their market values. On Wednesday, Amazon lost 6.2%, marking its worst day since February 2016 and has nearly erased all of its gains of the past three months, according to FactSet data. Shares of Netflix sank 8.4% on Wednesday, representing its worst daily slump since July 19, 2016.

That said, Amazon’s stock is up 50% so far this year and those for Netflix are boasting a 70% year-to-date return, even factoring Wednesday’s unraveling of gains.

Recent action suggests that investors may be dumping winners and moving money elsewhere, some market participants say.

October volatility

In the first eight sessions of the fourth quarter, the Nasdaq is down nearly 8%, which would represent its worst start to a quarter since the first three months of 2016 and the worst start to a fourth quarter since 2008, according to Dow Jones Market Data. The Dow is off 3.3%, which would reflect its worst kickoff to a fourth quarter since it dropped 22% to start the last three months of 2008.

Seasonally, October has been a bad period for markets.

Read: Opinion: Fasten your seat belt for stocks: October is almost here

Industrial and material stocks tank

Some of the negative sentiment has been attributed to a warning from PPG Industries Inc.

PPG, +1.06%

, which said Monday that the paint and coatings company was increasing prices on all automotive original equipment manufacturers products by an average of 10% as it works to combat rising inflationary pressures.

CNBC’s Jim Cramer said PPG’s earnings warning could indicate wider weakness in an industrials and materials sector that has already been whacked by fears about trade clashes between the U.S. and China.

Technical breakdown

On top of that, the benchmarks experienced a number of so-called technical breakdowns or near breakdowns. The S&P 500 snapped a 74-session string without a 1% move, reflecting the longest such streak since the period ended January. The S&P 500 also tumbled below its 50-day moving average at 2,879.39 and is hovering above its 200-day average at 2,765.51. Technical analysts watch moving averages to help determine bullish and bearish trends in an asset, with a breach below a trend line typically signaling that optimism has ended — at least momentarily.

Meanwhile, the Nasdaq knifed below its 200-day average at 7,4988.59.

Source: FactSet

The Dow held above its 200-day trend line but closed below its 50-day at 25,995.09.


Some market participants argue that investors are shifting from growth-fueled strategies to value shares, which have been out of favor as shares of growthy, techy companies have soared. Investors tend to turn to overlooked value companies in the later stages of an economic cycle, before a recession, market participants say.

That shift could be taken hold presently.

“There is no planet where a rate-sensitive sector outperforms AS RATES RISE. Tech being taken to the woodshed daily does makes sense: Value has ticked up vs. growth and in general people sell their big winners in a panic. You don’t get +60% a year in NFLX without a few -15% weeks here and there,” wrote Michael Antonelli, equity sales trader at R.W. Baird & Co., in a Wednesday note.

The Russell 1000 Growth index

RLG, -4.02%

a proxy for growth (represented in green in the chart below) and Russell 1000 Value Index

RLV, -2.54%

have both been declining, but a sharper drop has played out for so-called growth names.

Moreover, the value index has traded roughly flat over the past three months, while growth has declined by 1.7% over the same period.

Source: FactSet

Fed policy error

President Donald Trump on Wednesday partly blamed the Federal Reserve for headwinds in the market. “I think the Fed is making a mistake. It’s so tight, I think the Fed has gone crazy,” he said, reiterating criticisms that he has harbored about the central bank’s intent to normalize interest rates from crisis-era levels and prevent an overheat of the economy.

CNBC’s Cramer and others also are making the case that a policy mistake by the Fed may be the market’s undoing.

Is it time to panic yet?

Some market participants say it isn’t quite time to panic, but advise caution.

“My expectation is that selloff will be similar to what we saw earlier in the year and ultimately this will turn out to be a good buying opportunity for those investors that have a longer time horizon and have a portfolio that suits their risk tolerance,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

“How long could this little correction last? Well, the one in late 2015 lasted about seven months but that was a full-on earnings recession, I don’t think we’re facing that right now,” wrote Antonelli in a note, referring to the 2015 downturn in markets partly sparked by concerns about a slowdown in China’s economy.

“These kind of moves are also good for one thing: Making a shopping list of all the names you wanted to own lower and saying ‘here’s my chance, lemme do some homework and see if I still like it.’ Opportunity always abounds, my friends, you just gotta find it,” he said.

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“Tesla Is Having Difficulties Paying Their Bills”: Is Wall Street Ready to Punish Elon Musk for His Shenanigans?

You’ve got to hand it to Elon Musk. The multi-billionaire knows how to get media attention, albeit in a Michael Avenatti kind of way. Whether tweeting that he had “secured” funding to take Tesla private at $420 a share, being sued by the Securities and Exchange Commission when he said funding didn’t materialize, mocking the agency after it agreed to settle allegations of securities fraud against him (but before a judge has approved the deal), or smoking a spliff on an Internet radio show, the guy is a bona fide hornets’ nest for shareholders.

In an age when we are all on input overload, as my colleague Nick Bilton has noted, Musk’s ability to cut through the piles of gibberish with his own version of it has probably been quite effective at bringing attention to Tesla, his $40 billion cutting-edge electric-car manufacturer; Space X, his rocket-ship company; and to the Boring Company, his business that is building an underground tunnel in California. (Good luck to James Murdoch, a board member who is rumored to be ascending to chairman, to curb this behavior.)

But is Wall Street getting sick of his shtick? Just as there seems to be widespread agreement in the canyons of finance that, all things considered, it would be better if the 47-year-old Musk stopped acting like an impetuous teenager and more like a corporate C.E.O., there is still widespread disagreement about which direction Tesla is going. Is it headed into bankruptcy, soon to be owned by stiffed creditors, or is it on its way to being the next Amazon-lite? That seems to be the burning question at the moment among Wall Street analysts.

Some, like Maynard Um, at Macquarie Research, started his coverage of Tesla on Tuesday with an “outperform” rating and a price target for the stock of $430 per share, a coy $10 per share higher than the marijuana-inspired price at which Musk said he was going take the company private in August. Um wrote that Tesla is a “disruptive technology growth company” in the “equally disruptive markets of electric cars, energy storage, and energy generation.” He predicted Tesla would reach “profitability” in the second half of 2018, a point that definitely remains to be seen, given that Tesla had an operating loss of $1.7 billion in the first six months of the year. Tesla’s stock price is around $250 these days, so Um, and any investors who take his advice to buy the stock, could be in for a long wait until $430.

Then there is Berenberg Bank, which in the great tradition of Henry Blodget and Amazon from once upon a time, has a $500 price target on Tesla. The market, the small 428-year-old German investment bank observed, “underestimates the full extent of Tesla’s technological advantage . . . which manifests in the entire electronic architecture of the vehicle as well as the battery-management system.”

Perhaps, instead, the market is actually focused on Tesla’s production problems, its ongoing operating losses, its looming debt payments—$1.8 billion of Tesla’s some $11 billion in debt is coming due in the next 13 months—and its dwindling cash balances. Fahmi Quadir, the founder of the tiny Safkhet Capital, is famous for making an early call that Valeant Pharmaceuticals would have its day of reckoning. Hedge-fund manager Bill Ackman equally famously lost more than $4 billion betting the opposite would be true. In July, Quadir started betting that Tesla’s stock price would fall.

Quadir told Bloomberg yesterday that Tesla was “between a rock and a hard place” because it needs more capital—some say as much as $2 billion more before long—and it will likely be forced to raise new capital in either the equity markets, likely at a discounted price, or in the debt markets, which is already choking on Tesla debt. If Musk goes the debt route, he will likely have to pay up for it. The company’s $1.8 billion senior notes, issued at an interest rate of 5.3 percent last year, now yield 8.65 percent, meaning Musk will likely have pay investors at least 8.65 percent, and probably more, to convince them to buy a new issue of Tesla debt. “It’s becoming more and more apparent that Tesla is having difficulties paying their bills,” Quadir said. “I saw a lot of the same with Valeant.”

Another indicator of trouble is the increasing cost to investors who want to insure the risk that Tesla will default on its debt. The premium required—up front—to insure $10 million of Tesla’s bonds in case they default sometime in the next five years is now $2 million. Two months ago that cost was below $1.3 million. In other words, the market is telling investors that the risk of a debt default at Tesla is increasing, and if you want to do something about it, whether you own the Tesla bonds or not, it’ll cost you $700,000 more today to make that bet than it would have cost two months ago. Part of what the debt market worries about with Tesla are three looming convertible-debt payments that are coming due in the next 13 months. If the Tesla stock were trading higher than the current price, the debt holders would convert the debt into equity and the problem would disappear. But, for instance, the $920 million convertible-debt maturity due in March will have to be repaid using some of Tesla’s around $2 billion in cash—about half of what it had a year ago—unless the Tesla stock is trading at $360 per share, and that seems increasingly unlikely.

If Musk is concerned in the least about any of this, he’s not letting on. Last week, in an e-mail to employees, he said Tesla was “very close to achieving profitability and proving the naysayers wrong.” He’s been tweeting lately about Tesla’s Model 3 having the “lowest probability of injury” of any vehicle ever tested, whatever that means, and he’s been retweeting the news that the Model 3 is the top-selling American-made car in the country. On Sunday, he was also trumpeting the latest successful launch, and landing, of one of his Space X rockets, from an Air Force base in California.

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Bezos’ Blue Origin and others get $2.3 billion in US Air Force rocket contracts

ORLANDO, Fl. (Reuters) – The U.S. Air Force on Wednesday said that it had awarded a total $2.3 billion in contracts to develop rocket launch systems for national security missions.

FILE PHOTO: Amazon and Blue Origin founder Jeff Bezos addresses the media about the New Shepard rocket booster and Crew Capsule mockup at the 33rd Space Symposium in Colorado Springs, Colorado, U.S., April 5, 2017. REUTERS/Isaiah J. Downing/File Photo

The awards go to billionaire Jeff Bezos’ Blue Origin; United Launch Services, part of the United Launch Alliance (ULA) joint venture between Boeing Co and Lockheed Martin Corp; and Northrop Grumman Innovation Systems.

The three contracts are part of a Department of Defense initiative to assure constant military access to space and curb reliance on foreign-made rocket engines, like ULA’s flagship Atlas V rocket that uses Russian-made RD-180 boosters. The contracts are to develop rockets and carry defense payloads into space.

Centennial, Colorado-based United Launch Services received $967 million to develop its Vulcan rocket; Kent, Washington-based Blue Origin was awarded $500 million to build its New Glenn booster, and Northrop Grumman of Arizona received $791.6 million for its OmegA rocket. 

Blue Origin’s and Northrop’s prototype vehicles for military launches are expected to be ready to fly by late 2024 and ULA’s Vulcan rocket development should be completed by March 2025.

Blue Origin said in a statement following Wednesday’s announcement that it will build a launch site at the Vandenberg Air Force Base in California, although it did not say what rockets would launch from the site. ULA announced in September that its Vulcan rocket will be powered by Blue’s BE-4 liquid rocket engines. 

Reporting by Joey Roulette, Editing By Peter Henderson and Rosalba O’Brien

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