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Police suspect Netanyahu associate of trying to bribe judge

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Israeli police on Tuesday said they suspect a close confidant of Prime Minister Benjamin Netanyahu of offering a sitting judge a top posting in exchange for dropping a corruption case against Netanyahu’s wife.

The development marks the latest scandal to engulf the beleaguered Israeli leader’s inner circle. Netanyahu already stands accused of bribery in two other cases.

Nir Hefetz, a former spokesman of the Netanyahu family, is suspected of suggesting to Judge Hila Gerstel that she could be appointed attorney general if she killed a pending case against Sara Netanyahu’s excessive household spending.

The offer never materialized.

Earlier, police named Hefetz as one of two Netanyahu associates under arrest for their suspected role in a separate wide-ranging corruption probe.

Netanyahu denies any wrongdoing and says the latest charges against him were merely a continuation of a wider media orchestrated witch hunt against him and his family.

“Nir Hefetz never presented this ludicrous offer to the prime minister and his wife, he was never asked by them to make such an offer and we can’t imagine that Hefetz would even imagine such a thing,” Netanyahu said.

Earlier Tuesday, with an initial gag order lifted, police identified Hefetz and Shlomo Filber, the former director of the communications ministry under Netanyahu, as the two suspects in promoting regulation worth hundreds of millions of dollars to Israel’s Bezeq telecom company, in return for favorable coverage of Netanyahu in a highly popular subsidiary news site.

Netanyahu, who held the communications portfolio until last year, has not yet been named as a suspect in the case but is expected to be questioned.

Bezeq’s controlling shareholder Shaul Elovitch is also in custody, along with his wife, son and other top Bezeq executives. Former journalists at the Walla news site have attested to being pressured to refrain from negative reporting of Netanyahu.

The new probe comes days after police announced there was sufficient evidence to indict Netanyahu for bribery, fraud and breach of trust in two separate cases.

Netanyahu is accused of receiving lavish gifts from Hollywood mogul Arnon Milchan and Australian billionaire James Packer. In return, police say Netanyahu had operated on Milchan’s behalf on U.S. visa matters, legislated a tax break and connected him with an Indian businessman.

In the second case, Netanyahu is accused of offering a newspaper publisher legislation that would weaken his paper’s main rival in return for more favorable coverage.

Netanyahu has long accused the Israeli press corps of being biased against him and has taken steps to counter it by promoting more sympathetic outlets to him.

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Tesla drivers can request FSD Beta with a button press, despite safety concerns

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Electric vehicle maker Tesla rolled out a long-awaited software update Friday night that allows customers to request access to its controversial Full Self-Driving Beta (FSD Beta) software.

The move delighted fans of CEO Elon Musk and Tesla, but it risks drawing the ire of federal vehicle safety authorities who are already investigating the automaker for possible safety defects in its driver-assistance systems.

FSD Beta is an unfinished version of Tesla’s premium driver-assistance software, FSD, which the company sells in the U.S. for $10,000 upfront, or $199 a month.

FSD is marketed with the promise of enabling a Tesla to automatically change lanes, navigate on the highway, move into a parking spot, or roll out from a parking spot to drive a small distance at a slow pace without anyone behind the wheel.

FSD Beta gives drivers access to an “autosteer on city streets” feature, which has yet to be perfected and enables drivers to automatically navigate around urban environments alongside other vehicles, pedestrians, bicyclists and pets without moving the steering wheel with their own hands. Drivers are supposed to remain attentive, however, with both hands on the wheel and prepared to take over driving at any time.

None of Tesla’s driver assistance systems — including the company’s standard Autopilot package, premium Full Self-Driving option, or FSD Beta — make Teslas autonomous.

The company previously made FSD Beta available to about 2,000 people, a mix of mostly employees and some customers, who test it out on public roads even though the software hasn’t been debugged.

The new download button could ostensibly lead to a rapid expansion in the number of participants who are not trained regulatory officials.

Government response

Tesla CEO Elon Musk gestures as he visits the construction site of Tesla’s Gigafactory in Gruenheide near Berlin, Germany, August 13, 2021.

Patrick Pleul | Reuters

Last week, when CEO Musk announced new details about the FSD beta button, Jennifer Homendy, the head of the National Transporation Safety Board, voiced concern over the company’s plans in an interview with The Wall Street Journal.

Homendy said, “Basic safety issues have to be addressed,” before Tesla expands FSD Beta to other city streets and regions. The NTSB chief was also displeased that the company was conducting testing of the unfinished product with untrained drivers on public roads in lieu of safety professionals.

Homendy also remarked — and in interviews with Autonocast, an industry podcast, and the Washington Post — that Tesla’s use of the term Full Self-Driving for a “level 2” driver assistance system is misleading and confusing.

Musk himself said last week in a tweet that FSD Beta now seems so good it can give drivers the wrong idea that they don’t need to pay attention to driving while FSD Beta is engaged, even though they are supposed to remain attentive and at the wheel at all times.

On Saturday, after Tesla enabled the “request full self-driving beta” feature in its vehicles — a fan blog named Teslarati shared a post on Twitter asking, “Does Tesla have a fair chance after NTSB Chief comments?”

Musk replied to them on Twitter with a link to the Wikipedia biography of Homendy. While Musk has previously urged his tens of millions of followers on Twitter to alter a description of his own career on Wikipedia, he shared this link to Homendy’s bio there without comment.

CNBC reached out to Tesla and the NTSB — neither was immediately available to comment on Saturday.

Safety score

Musk has been promising Tesla owners an FSD beta download button for months. In March 2021, he wrote in a tweet that the forthcoming button would give users access to the latest FSD Beta build as soon as their car connected to Wi-Fi.

He changed that approach, however. Now, Tesla has a calculator it uses to give drivers a “safety score,” and determine who will be allowed to get and use FSD Beta software.

Screen-shots shared with CNBC by Tesla owners with FSD indicate that the company’s “safety score” is akin to an insurance risk factor score.

Tesla’s systems tabulate a drivers’: “Predicted Collision Frequency, Forward Collision Warning per 1,000 Miles, Hard Braking, Aggressive Turning, Unsafe Following Time, and Forced Autopilot Disengagements,” according to correspondence and screenshots viewed by CNBC.

Tesla’s system does not, at this time, appear to measure and account for how often drivers fail to keep their hands on the wheel, how quickly they take over driving when prompted, or how consistently they keep their eyes on the road.

Only users who have a great driving record for a full week, in Tesla’s view, may gain access to FSD Beta.

Before Tesla released its FSD Beta button (and the 10.1 version of FSD Beta, which is expected this weekend, too) CNBC asked the California DMV Autonomous Vehicles Branch how pervasive and safe FSD Beta-equipped vehicles have been in use in the state so far.

The DMV declined an interview request but said, in an e-mailed statement:

“Based on information the information Tesla has provided the DMV, the feature does not make the vehicle an autonomous vehicle per California regulations. The DMV continues to gather information from Tesla on its beta release – including any expansion of the program and features.  If the capabilities of the feature change such that it meets the definition of an autonomous vehicle per California’s law and regulations, Tesla will need to operate under the appropriate regulatory authorization. Regardless of the level of vehicle autonomy, the DMV has reminded Tesla that clear and effective communication to the driver about the technology’s capabilities, limitations and intended use is necessary. The DMV is reviewing the company’s use of the term ‘Full Self-Driving’ for its technology. Because it is ongoing, the DMV cannot discuss the review until it is complete.”

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China, Hong Kong bitcoin holders scramble to protect their crypto assets

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A Bitcoin ATM in Hong Kong.

S3studio | Getty Images

Some crypto holders in China and Hong Kong are scrambling to find a way to safeguard their bitcoin and other tokens after China’s central bank published a new document Friday spelling out tougher measures in its wider crypto crackdown, including souped-up systems to monitor crypto-related transactions.

Bitcoin was down as much as 6% and ether sunk as much as 10%, amid a wider sell-off early Friday, as investors digested the news.

“Since the announcement less than two hours ago, I have already received over a dozen messages – email, phone and encrypted app – from Chinese crypto holders looking for solutions on how to access and protect their crypto holdings in foreign exchanges and cold wallets,” David Lesperance, a Toronto-based attorney who specializes in relocating wealthy crypto holders to other countries to save on taxes, told CNBC early Friday.

Lesperance said the move is an attempt to freeze crypto assets so that holders can’t legally do anything with them. “Along with not being able to do anything with an extremely volatile asset, my suspicion is that like with Roosevelt and gold, the Chinese government will ‘offer’ them in the future to convert it to e-yuan at a fixed market price,” he said of President Franklin Roosevelt’s policy around the private ownership of gold, which was later repealed.

“I have been predicting this for a while as part of the Chinese government’s moves to close out all potential competition to the incoming digital yuan,” said Lesperance.

The People’s Bank of China said on its website Friday that all cryptocurrency-related transactions in China are illegal, including services provided by offshore exchanges. Services offering trades, order matching, token issuance and derivatives for virtual currencies are all strictly prohibited, according to the PBOC.

The directive will take aim at over-the-counter platforms like OKEx, which allows users in China to exchange fiat currencies for crypto tokens. An OKEx spokesperson told CNBC the company is looking into the news and will let CNBC know once it has decided on the next steps.

Lesperance claims some of his clients are also worried about their safety.

“They are concerned about themselves personally, as they suspect that the Chinese government is well aware of their prior crypto activities, and they do not want to become the next Jack Ma, like ‘common prosperity’ target,” said Lesperance, who has helped clients to expatriate in order to avoid taxes, amid a rising crypto crackdown in the U.S.

That said, it’s common for the authoritarian state to lash out against digital currencies.

In 2013, the country ordered third-party payment providers to stop using bitcoin. Chinese authorities put a stop to token sales in 2017 and pledged to continue to target crypto exchanges in 2019. And earlier this year, China’s takedown of its crypto mining industry led to half the global bitcoin network going dark for a few months.

“Today’s notice isn’t exactly new, and it isn’t a change in policy,” said Boaz Sobrado, a London-based fintech data analyst.

But this time, the crypto announcement involves 10 agencies, including key departments such as the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security, in a show of greater unity among the country’s top brass. The State Administration of Foreign Exchange also participated, which could be a sign that enforcement in this space might increase.

Signs of coordination

There are other signs of early government coordination in China. The PBOC document was first announced Sept. 15, and a document banning all crypto mining by China’s National Development and Reform Commission was released Sept. 3. Both were published on official government platforms on Friday, suggesting a collaboration between all participating agencies.

And unlike past government statements that refer to cryptos under the same umbrella language, this document specifically calls out bitcoin, ethereum and tether, as stablecoins begin to enter the lexicon of regulators in China.

Bespoke Growth Partners CEO Mark Peikin thinks that this is the start of widespread, near-term pressure on the price of bitcoin and other cryptocurrencies and that “the risks facing Chinese investors will have a significant spillover effect, leading to an immediate risk-off trade in the U.S. crypto market.”

“Chinese investors, many of whom continued to turn a cold shoulder to the Chinese government’s latest and largest crackdown on cryptocurrency trading the last several months, may no longer remain bellicose,” Peikin told CNBC.

“Chinese investors thus far largely skirted the ban by decoupling transactions – using domestic OTC platforms or increasingly of late, offshore outlets, to reach agreement on trade price, and then using banks or fintech platforms to transfer yuan in settlement,” Peikin said.

But given the PBOC has improved its capabilities to monitor crypto transactions – and the recent order that fintech companies, including the Ant Group, not provide crypto-related services – Peikin said this workaround used by Chinese investors will become a progressively narrow tunnel.

Friday’s statement from the PBOC adds to other news out of China this week, which has roiled crypto markets. A liquidity crisis at property developer Evergrande raised concerns over a growing property bubble in China. That fear rippled across the global economy, sending the price of many cryptocurrencies into the red.

However, not all are convinced this downward pressure on the crypto market will last.

Sobrado thinks the market is overreacting to Friday’s announcement from the PBOC, given that a lot of the exchange volume in China is decentralized and conducted peer-to-peer – increasingly the most telling metric of crypto adoption. While exchanging tokens P2P doesn’t evade regulatory scrutiny, Sobrado said those crypto exchanges are harder to track down.

Lesperance also points out that Friday’s news might actually strengthen the business case for cryptos as an asset class, given they are a hedge against sovereign risk.

Ultimately, the biggest question is whether this latest directive from Beijing has teeth. “The running joke in crypto is that China has banned crypto hundreds of times,” Sobrado said. “I’d be willing to wager people will be trading bitcoin in China a year from now.”

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Nike can turn its snarled supply chain to its advantage

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A pedestrian walks past American multinational sport clothing brand, Nike store and its logo seen in Hong Kong.

Budrul Chukrut | SOPA Images | LightRocket | Getty Images

A lower sales forecast, slowing growth in China and a bottlenecked supply channel — the news coming out of Nike’s fiscal first-quarter earnings report wasn’t good.

Shares were down more than 6% on Friday afternoon following the report. Ahead of the results, shares had already tumbled roughly 9% from an all-time high of $174.38, which it hit in August.

Amid the sell-off some analysts see an opportunity for Nike to position its business — and its stock — for greater growth. Nike’s supply chain struggles are providing it with cover to accelerate its direct-to-consumer strategy, which has been a key driver of profitability in recent quarters.

It now takes Nike roughly 80 days to get goods from Asia to North America, which is double pre-pandemic transit times. Manufacturing facilities across Vietnam are beginning to reopen, but Nike has lost about 10 weeks of production due to pandemic shutdowns. About 43% of its total footwear and apparel units are made in the country.

For the next few quarters, Nike predicts consumer demand will outweigh supply. This means Nike will need to be much more strategic about where it’s stocking running shoes and workout tops. It will likely opt for its own stores, over wholesale partners.

“As long as inventory is constrained, it’s fair to assume the pivot to direct will be accelerated,” BMO Capital Markets analyst Simeon Siegel said. “They’re prioritizing their own channels with product first.”

Before the Covid pandemic struck, Nike was on a path to grow its direct-to-consumer business. It has been cutting partnerships with some wholesale retailers, while building its online business and opening Nike stores around the world. Over the past three years, Nike has pulled out of about 50% of its wholesale accounts.

Nike calls the transition a “consumer direct offense,” a play on sports terminology. In fiscal 2021, Nike’s direct revenue represented roughly 39% of sales for the Nike brand, up from 35% in the prior year. Selling more goods at full price has also been aiding profits. Nike’s gross margins for fiscal 2021 grew to 44.8%, from 43.4% in 2020.

Industrywide supply-chain havoc could accelerate Nike’s DTC push at an even faster clip and in turn drive profitability higher.

Nike ‘still has the demand’

“This means Nike now gets a free excuse to accelerate its DTC transition and say, ‘We don’t have the supplies to get to our wholesalers,'” said Stacey Widlitz, president of SW Retail Advisors, in an interview. “This is a major opportunity, because you’re seeing all of these other brands cut wholesale, but they don’t have the top line like Nike. Nike still has the demand.”

And even if Nike’s shelves are a bit bare in the coming months compared with normal times, Widlitz said, she doesn’t think it will permanently drive shoppers away to other retailers.

“People are always going to be drawn back to the big brands,” she said. “It’s the greatest pent-up demand, because they are basically telling the consumer, ‘You can’t have it right now.’ You’re creating FOMO [fear of missing out] by not having supply. It’s a no-brainer to take advantage of that.”

On Thursday’s earnings call, Nike’s management team said it is prioritizing its direct channels.

Nike’s top partners include Foot Locker, Dick’s Sporting Goods and Nordstrom, and investors in these stocks are concerned about what Nike’s troubles will mean for their businesses. On Friday, Foot Locker shares were down more than 6%, while Dick’s shares shed nearly 2%. Nordstrom’s stock was about flat.

Chief Financial Officer Matt Friend said temporary supply chain disruptions will “likely trigger an even greater acceleration in the transformation of the marketplace — toward Nike and our most important wholesale partners.”

“We’re going to have lean inventory,” he said. But he added, “Strong brands get stronger in this environment.”

And according to Citi analyst Paul Lejuez, a temporary supply chain problem is a much better issue to have than a demand problem. He doesn’t see Nike as having a demand problem.

“We view these supply chain disruptions as transitory … and [the delays] are impacting the athletic footwear space broadly,” Lejuez said in a research note. “The most significant impacts from Vietnam factory closures should happen post-holiday.”

Another way to shore up growth

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