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Putting politics aside to close the skills gap

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The Trump administration’s relationship with business has been fraught from the start, with disagreements over immigration and trade, punctuated by the breakdown of CEO advisory councils after the 2017 Charlottesville riots. But the White House is working closely with CEOs on one of the great challenges of our era: reskilling American workers for the ongoing technology revolution. 

The magnitude of that task was laid out by the McKinsey Global Institute at the Fortune Global Forum’s meeting at the Vatican in 2016, shortly after Trump’s election. McKinsey estimated that 23% of U.S. work could be automated by 2030. A massive training effort will be needed to prepare workers for the change.

White House senior adviser Ivanka Trump took up the challenge, cochairing an American Workforce Policy Advisory Board. She was joined by CEOs including Apple’s Tim Cook, IBM’s Ginni Rometty, and Salesforce’s Marc Benioff. In late February, the Ad Council will begin backing the board’s efforts with a campaign that stresses the pivotal idea that a four-year degree shouldn’t be the only path to a good career. 

Rometty has been a driver of the business–White House partnership, working with Congress to reauthorize vocational education funding, and with the Department of Labor to expand apprenticeships. Tackling the skills gap “takes the public and private sector working together jointly,” Cook tells Fortune, adding, “It’s a nonpartisan thing.”

CEOs praise the presidential daughter for keeping the effort moving. “She is the greatest cheerleader for the workforce maybe on the planet,” says Benioff, who doesn’t agree with the White House on much. “Administrations change. My values don’t change. I can work with anyone.”

The advisory board is focusing on four themes: “rebranding” education to stress the value of vocational training; improving systems for matching curriculums to job skills; focusing recruiting and hiring on skills rather than degrees; and challenging companies to invest more in education and training. 

Trump tells Fortune that the CEOs’ role is critical: “The people who know what jobs are going to be created and what jobs are going to be displaced need to be leading the effort.” 


Big Number

16 Million

Number of U.S. workers who are likely to change occupational categories by 2030 because of automation.

Source: McKinsey Global Institute; assumes a “midpoint” level of automation adoption.


Courtesy of the Ad Council

A version of this article appears in the March 2020 issue of Fortune.

More must-read stories from Fortune:

Why China is still so susceptible to disease outbreaks
The rich own stocks, the middle class own homes. How betting it all on real estate is a wealth gap problem
14,000 recalled baby carriers could drop infants on ground
—Stock scammers are using the coronavirus outbreak to dupe investors, SEC warns
—WATCH: Why CEOs are pessimistic about 2020 business outlook

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Remittances reach record in 2019

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MONEY sent home by overseas Filipino workers (OFWs) reached a record high in 2019 despite global uncertainties as higher inflows from other countries offset a decline in remittances from the Middle East.

Cash remittances grew by 4.1% to a record $30.133 billion in 2019 from the previous high of $28.943 billion in 2018, data from the Bangko Sentral ng Pilipinas (BSP) released on Monday showed.

The growth in cash remittances last year was well above the three percent projection of the BSP for 2019.

Inflows for December alone also grew by 1.9% to $2.902 billion from $2.849 billion in the same month in 2018. The month’s level likewise surged by 22.34% from the $2.372 billion recorded in November.

Meanwhile, personal remittances, which include inflows in kind, climbed 1.9% to $3.216 billion in December from $3.157 billion a year ago. The whole year saw personal remittances expand by 4.1% to $33.467 billion from the $32.213 billion logged in 2018.

“Notwithstanding pockets of political uncertainties across the globe, cash remittances in 2019 remained strong,” the BSP said in a statement.

“This is evident in inward remittances from Asia, the Americas, and Africa, where inflows grew annually by 12.3%, 10.6% and 4.8%, respectively. The growth of inflows in these regions more than made up for the 9.8% decline in remittances from the Middle East.”

Cash remittances from both land and sea-based OFWs went up by 3.5% and 6.5% last year to $23.6 billion and $6.5 billion, respectively.

The BSP said bulk of remittance inflows in 2019 came from the United States, which comprised more than a third or 37.6% of total inflows. This was followed by Saudi Arabia, Singapore, Japan, United Arab Emirates, the United Kingdom, Canada, Hong Kong, Germany, and Kuwait, which collectively were the source of 78.4% of the total cash remittances.

An analyst said strong growth in the US helped propel OFW remittances last year.

“This growth may be attributed to the consistent economic growth of the US, which accounts for about 37.6% of total remittances in 2019 and that has continuously experienced economic expansion since 2010,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

VIRUS MAY AFFECT INFLOWS
Analysts said remittances this year may be affected by the outbreak of the coronavirus disease 2019 (COVID-19) from Wuhan, China as it remains uncertain when the spread can be contained.

The BSP expects remittances to climb 4% this year.

“The coronavirus is particularly worrisome as nearly a quarter of remittances come from Asia, with around one in six of total remittances coming from Macau and mainland China alone. As of now, remittance growth risk hinge on the duration and containment of COVID-19,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail.

ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said the virus has forced people into quarantine, which could hit consumption patterns and, in turn, affect the services industry, where most OFWs are employed.

“The recent plight of the cruise ships around the world will likely put pressure on cruise liners and the hospitality industry as a whole, making it difficult for Filipinos to send home remittances should their salaries be curtailed or they lose their jobs altogether,” Mr. Mapa said in a note sent to reporters.

He, however, noted that OFW remittances have remained strong over the years even amid global recessions or events that have affected Filipinos’ host countries.

“OFWs are deployed across the globe in several jurisdictions and in several diversified services professions, making them more able to sidestep economic downturns,” Mr. Mapa said. “Case in point, remittances from the Middle East, a mainstay source of OF remittances, have remained in contraction for last year and yet overall remittance flows have remained largely positive.”

Meanwhile, UnionBank’s Mr. Asuncion said the impact of the virus will likely be minimal as remittances from China are “relatively small compared to other source countries such as the US and Saudi Arabia.”

“The biggest downside would be the decline of inflows coming from Singapore, that has a bigger portion of inflows contribution among hosts economies. But, overall, the impact may be minimal and recovery may be quick,” Mr. Asuncion said.

He, however, warned of other risks to remittances, such as geopolitical turmoil in key remittance sources and a slowdown in US growth due to trade issues. — L.W.T. Noble



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These 3 Chip Giants Keep Hitting New Highs: Are They Still Buys?

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The semiconductor industry is turning around. It’s no secret that chip stocks lost heavily in 2H18, and had difficulty regaining traction through much of 2019. But in recent months, many of the big chip makers have seen sharp gains.While individual companies will show idiosyncratic reasons for gains, the sector as a whole has been positively impacted by three major factors starting in 2H19. First, and probably most important, is the continuing expansion of 5G mobile networks. The wireless switchover requires new types of modem chips to handle the new signal bands, and chipmakers are seeing increased orders from the original equipment manufacturers (OEMs). Wireless handsets, routers, modems, transmitters, towers – all of these will need the new chips.The next main factor is continued demand for memory chips. Data centers are expanding, meeting an urgent need in the digital economy, and the chip makers are seeing orders for new, more powerful, memory and processing chips. Those same chips are also finding customers in the online gaming community. The memory and processing requirements for business and gaming applications frequently overlap, and gamers are notorious for wanting the best systems they can afford.Finally, on the geopolitical front, the US and Chinese governments signed off on the Phase 1 agreement of a trade deal, an important development that promises to defuse the long-running trade and tariff disputes between the world’s two largest economies. Chip makers were exposed to the ‘trade war’ on multiple fronts – as exporters from both the US and China, as suppliers of parts to reexported Chinese electronic goods, and as components in goods imported to the US. Reduced trade tensions in 2020 promises to boost the chip industry.So, we should expect to see several interesting points among the major chip stocks. They are likely to carry Buy ratings, on mixed reviews from analysts; they are likely to show modest upside, as the analysts have not yet adjusted their outlooks; and they are likely to have recent strong reviews. We’ve pulled up the data on three of the larger chip stocks, and looked at them through the TipRanks Stock Comparison tool. Here are the results.Advanced Micro Devices (AMD)AMD, the first stock on our chip list, has gained 43% in the past three months. The company is a leader in both the graphics processors and motherboard chipset segments, and its x86 microprocessors are major competitors to industry giant Intel. AMD can boast that strong sales are fueling growing revenues, despite lower guidance for Q1 2020.Did the lower forward guidance really merit a 4% share price drop at the end of January? We can get an idea by looking at the Q4 numbers. AMD reported EPS at 32 cents against a 31-cent forecast. Revenue was $2.13 billion, beating expectations, growing 18% sequentially, and showing an impressive 50% gain year-over-year. For fiscal 2019, total revenue grew $6.73 billion, or 4%.So, Q4 was strong. Looking ahead, the company guided for $1.8 billion in Q1 revenue (matching Q3 results) against an expectation of … $1.86. That 3% difference was it. And AMD shares have, since the earnings report, regained the 4% loss.One measure of AMD’s strength comes from Mitch Steves, a 5-star analyst with RBC Capital. Steves released two notes on the stock last week – and he raised his price target in both. In the first, on February 10, he bumped his target from $53 to $64, writing, “We raise our 2021 EPS estimate to $2.10 as we think share gains in PCs will continue to move into the mid-20 percent market share range and we have higher conviction in server units in both 2020 and 2021.”In the second note, on February 13, Steves revised his opinion after Nvidia (more below) released strong quarterly results. Nvidia’s results imply a healthy gaming sector, and AMD is well-positioned to capitalize on gaming sales. Steves’ current price target on AMD, backing his buy rating, is $66, implying an upside of 19%. (To watch Steve’s track record, click here)AMD’s recent sharp gains have pushed the stock’s share price well above the average price target, and analysts have not yet readjusted their outlook. As Steves’ double target upgrade show, events in the chip industry are moving quickly. AMD’s Moderate Buy consensus rating is based on mixed reviews, and includes 11 Buy and 13 Holds. (See AMD stock analysis at TipRanks)Nvidia Corporation (NVDA)In an interconnected sector like semiconductor chips, nothing happens in a vacuum. We mentioned Nvidia above, in relation to gaming chips. This company is a market leader in graphics processing units (GPUs), a key component in both professional and gaming computing systems. The memory and performance requirements of the graphic design industry run parallel to those of high-end gamers. Nvidia’s expertise with high performance memory chips has also made its products valuable in the data center market.With its foundations firm in several markets – professional designers, data centers, and gamers – Nvidia has built up a $186 billion market cap and an annual sales base near $12 billion. With that strong base, NVDA reported both earnings and revenue beats in Q4 2019.On the top line, revenue came in at $3.11 billion, up 3% sequentially, an impressive 41% year-over-year, and beating the forecast by 5%. EPS was reported at $1.89, a solid 14% over the estimate – and an eye-popping 136% year-over-year gain. The GPU segment rose 40% annually, and gaming revenues were up 56%. Nvidia’s data center business showed a 33% sequential gain and a 43% annual gain. It was good news all around, even for a stock that has seen 42% growth in the last three months, on top of 76% gains in calendar 2019.Nvidia’s strong quarter impressed Cowen analyst Matt Ramsay. Ramsay, who rates 5-stars by TipRanks and is ranked 37 overall in the analyst database, reiterated his Buy rating for Nvidia and raised his price target on the stock by 35%, to $325. His new price target implies an upside potential to the stock of 12%.In his note on NVDA, Ramsay wrote, “[We] believe the results and guidance are driven by a cloud CapEx recovery and the driving force of real-time conversational AI with the scaled ramp of Ampers still to come.” (To watch Ramsay’s track record, click here)All in all, NVDA shares hold a Strong Buy rating from the analyst consensus, based on 23 Buys and 6 Holds given in recent weeks. Shares are not cheap, selling for $289.79. The average price target is $308.85 which suggests room for a modest upside of nearly 7%. (See Nvidia stock analysis at TipRanks)Micron Technology (MU)Last on our chip list Micron, the chip industry’s fifth largest player by sales volume, with over $30 billion in annual sales. The company saw its supply chains – both for manufacturing components and finished products – highly impacted by the US-China trade dispute, but the recent Phase 1 agreement relieved that pressure. Micron compensated by lowering guidance on fiscal Q1, and now the results are in.Micron cleared the lower bar. EPS met the estimates, while revenues beat. The top line number was $5.144 billion for the quarter, 2.3% over the forecast – but, down 35% year-over-year. The annualized drop reflects the lower demand and higher costs in 2019, due to industry pressures related above. EPS, at 48 cents, was as expected, but also showed a steep yoy decline. Still Micron met the analysts expectations for the quarter, investors were satisfied, and the stock is up 7.2% since the earnings release.Micron’s position leading the DRAM chip segment gives the company a clear path to profit from the 5G switchover as the new networks expand nation- and worldwide. And, as with Nvidia and AMD, Micron boasts profitable business in the gamine and data center markets. The company’s diverse customer base should allow it to weather a period of lower earnings, while it adjusts to the new market’s new demands.In the last few days, MU shares have received two upgrades from Wall Street analysts. The first, on February 6, came from 4-star analyst Chris Caso of Raymond James. Caso sees the demand for DRAM memory chips as “likely to improve further at the year progresses.”With that in mind, Caso raised his outlook on the stock from Neutral to Buy and set a $70 price target. Caso’s target implies an upside of 19% to MU shares. (To watch Caso’s track record, click here.)The second upgrade came on February 16, from Timothy Arcuri, 5-star analyst with UBS. Arcuri also raised his outlook from Neutral to Buy, and went further with the price target. He bumped that up by 59%, from $47 to $75. The new price target indicates real confidence in the stock, along with a robust 28% upside potential.Supporting his upgrade, Arcuri writes, “After only modestly outperforming the S&P 500 over the past two years, we believe the time has finally come when Micron can materially outperform over a sustained period of time… Micron is in a much stronger position in a structurally better industry on the cusp of a cyclical upswing that, for DRAM, should last deep into C2021.” (To watch Arcuri’s track record, click here)Micron shares are selling for $58.50, and the average price target of $66.96 suggests that there is room for a 14% upside to the stock. The Strong Buy analyst consensus rating is based on no fewer than 22 Buys, against just 2 Holds and 2 Sells. (See Micron stock analysis at TipRanks)



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Facebook CEO Zuckerberg looks to calm ‘tech lash’ with call for government rules on political ads and data

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For years, Facebook Inc. lobbied governments against imposing tough regulations, warning in some cases that they could harm the company’s business model. Now, it’s pleading for new rules for the good of its business.

“If we don’t create standards that people feel are legitimate, they won’t trust institutions or technology,” Facebook’s Chief Executive Officer Mark Zuckerberg said in an op-ed in the Financial Times on Monday. It coincided with a visit to Brussels, home of the European Union’s institutions that have crafted some of the toughest rules in recent years.

Silicon Valley firms have suffered from what’s been dubbed as a “tech lash,” with users frustrated over how web platforms profit from their data. Facebook has borne the brunt of that disenchantment following a series of missteps including privacy breaches and accusations it didn’t do enough to stop election manipulation on its platform. Meanwhile, Facebook’s user growth is stagnating in the U.S. and Canada – its most important markets.

“I believe good regulation may hurt Facebook’s business in the near term but it will be better for everyone, including us, over the long term,” Zuckerberg said in the op-ed, echoing comments he made over the weekend at the Munich Security Conference.

In Brussels, Zuckerberg is due to meet with European Union tech czar Margrethe Vestager and other senior EU officials as the bloc prepares new legislation in areas including artificial intelligence, gate-keeping tech platforms and liability for users’ posts, all of which could impact Facebook’s business.

Zuckerberg has previously called for global regulation covering election integrity, harmful content, privacy and data portability. He said Facebook will publish a white paper on Monday raising questions it hopes new regulation will address.

Political Ads

In the op-ed, Zuckerberg said Facebook was hoping for clarity around what constitutes a political ad — especially if paid for a group not directly affiliated with a political party, such as a non-governmental organization. Companies also need clearer lines around data ownership to enable users to move their information between services, he said.

In addition, the Facebook chief said the company would look into opening up its content moderation systems for external audit to help governments design regulation in areas like hate speech.

Zuckerberg reiterated that private companies like Facebook shouldn’t be in charge of making decisions that balance social values, and hopes that regulation will draw cleaner lines to help companies navigate those decisions, even as regulators in Europe are also investigating Facebook over its compliance with existing privacy and antitrust rules.

“People need to feel that global technology platforms answer to someone,” Zuckerberg said, but also stressed that the plea “isn’t about passing off responsibility.” He said that Facebook is continuing to make progress on some of the issues on its own.

Brussels Visits

Zuckerberg’s Brussels visit follows a recent trip by Alphabet Inc. Chief Executive Officer Sundar Pichai in January who came to discuss regulating artificial intelligence ahead of the EU’s plans to be unveiled this week, when it’s also likely to spell out proposed liability rules for tech platforms later this year.

It’s not a coincidence that the chief executives of tech firms like Facebook and Google are making the pitch for regulation in the EU capital. They have seen before that, when the EU sets sweeping laws on tech, like the General Data Protection Regulation, the impact can reverberate far beyond its borders.

When it comes to liability for what users post on its platform, Zuckerberg said over the weekend that a third regulatory system should be created — somewhere between newspaper publishers, who can be sued for what journalists write in their pages, and telecommunications companies, who aren’t liable for customer conversations.

More must-read stories from Fortune:

Business’s coronavirus conundrum: What’s the best alternative to a handshake?
—Bernard Arnault was briefly the world’s richest man. Then coronavirus struck
Why China is still so susceptible to disease outbreaks
Contagion writer, scientific adviser reflect on film’s newfound relevance
—Fortune Explains: Tariffs and trade wars

Catch up with Data Sheet, Fortune’s daily digest on the business of tech.



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