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North Korea's biggest trading partner is China — and it's not even close

Business Insider, 1/1/0001 12:00 AM PST

North KoreaThe United Nations Security Council adopted a US-drafted resolution to levy new sanctions on North Korea last week.

The latest sanctions cap North Korea's oil imports, ban textile exports, end additional overseas laborer contracts, suppress smuggling efforts, stop joint ventures with other nations, and sanction designated North Korea government entities, according to CNN.

China also previously announced a ban on imports of iron ore, iron, lead, coal, and seafood from North Korea.

Since the UN Security Council has been attempting to put economic pressure on North Korea, we decided to get a sense of how big some of the recently sanctioned sectors are based on trade data estimates.

The Observatory of Economic Complexity (OEC), a project conducted at the MIT Media Lab Macro Connections group, created an interactive visualization breaking down North Korean export using 2015 data from the UN Comtrade and the Center for International Trade at UC Davis.

Coal briquettes made up the largest percentage of North Korea's exports in 2015. They were followed by clothing articles, including coats and suits. Other commodities like iron, copper, and seafoods like mollusks and crabs also make up sizeable chunks of the exports.

You can play around with the visualization to get both more general and more detailed looks at the export data:

The OEC also created an interactive visualization breaking down North Korean imports.

Refined petroleum led the pack, followed by synthetic filament yarn woven fabric:

As for who has been doing business with North Korea, that's mostly been China. According to data from OEC and Statista, China was by far North Korea's largest trading partner in 2015.

north korea_s imports and exports_720

Check out the Observatory of Economic Complexity's data here.

SEE ALSO: 'Asia trades as if North Korea wasn’t a problem': How top bankers think about the Hermit kingdom

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The creator of Ethereum thinks blockchain tech could steal business from Visa in a 'couple of years'

Business Insider, 1/1/0001 12:00 AM PST

IMG_4068.JPG

The ethereum network could pose a real challenge to large financial institutions like Visa as soon as next year, according to Vitalik Buterin, the creator of the ethereum blockchain. 

In a Q&A with AngelList founder Naval Ravikant at TechCrunch Disrupt on Monday, Buterin said that security is the biggest challenge to bringing blockchain technologies into the mainstream, and that once it's sorted out blockchain tech could steal business or even replace financial institutions like Visa in a "couple of years." Despite the hype around blockchain, most of the current applications that use the technology aren't far enough along in development to be used widely, he said. 

But Buterin said that while he expects low-security prototypes to be introduced in the financial space by next year, it will be a few years before they have any weight. 

Blockchain technologies like Ethereum are widely believed to be the next big disrupter for industries ranging from law to shipping.

Often described as smart contracts, the technology uses a decentralized computer network to send messages which create a universally accessible ledger that can't be edited or modified. Theoretically, with blockchain technology, business and legal transactions can be executed with a lower risk of fraud. 

While Buterin was optimistic about the role Ethereum could play in replacing Visa, he was less certain about its impact on cloud computing giants like Amazon Web Services (AWS).  AWS sells space on Amazon servers to third party websites like Netflix, which host vast amounts of data on AWS servers. 

To disrupt the cloud industry, applications running on the Ethereum network would have to convince private companies that its decentralized structure is secure enough to host proprietary or otherwise sensitive content. Buterin doesn't see that happening anytime soon. 

"In general, there's always going to be this large set of applications where decentralized approaches don't work that well," Buter said. 

SEE ALSO: Just days after its harrowing user exodus, Coinbase has decided to add support for bitcoin cash by 2018

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STOCKS HIT RECORD HIGHS: Here's what you need to know

Business Insider, 1/1/0001 12:00 AM PST

wheelie jump fly

The Dow and S&P 500 touched record highs in early trading before suddenly giving back the gains near 2:30 p.m. ET and then rebounding in the final hour.

Here's the scoreboard:

  • Dow: 22,339.56, +71.22, (0.32%)
  • S&P 500: 2,504.28, +4.05, (0.16%)
  • Nasdaq: 6,457.16, +8.69, (0.13%)
  1. Bitcoin surged past $4,100 a coin, despite reports that Chinese authorities have decided on a plan for a wide-ranging crackdown on the cryptocurrency. The plan, which regulators revealed to cryptocurrency executives on Friday during a private meeting in Beijing, goes further than just a shutdown on exchanges, according to the Wall Street Journal.
  2. Retail investors have never been this hopeful that the stock market will continue to grind higher. The University of Michigan's preliminary survey of consumer sentiment for September showed a record 65% expected probability that stocks would rise in the next year.
  3. Roku hopes to raise as much as $252 in its IPO, a regulatory filing Monday showed. CEO and other insiders will control 98 percent of the company's voting power even after its IPO, a regulatory filing showed on Monday. 
  4. Toys R Us could file for bankruptcy this week, CNBC reported. Bloomberg reported that the filing could come as soon as Monday. Chapter 11 protection would allow the company to restructure $400 million in debt due in 2018 then renegotiate the rest.
  5. US defense contractor Northrop Grumman agreed to buy the missile and rocket maker Orbital ATK Inc. for about $7.8 billion in cash, with plans to establish a new, fourth business sector. Orbital has billion-dollar contracts with NASA and the US Army.
  6. The Justice Department has reportedly opened an insider-trading investigation at Equifax. Bloomberg reported that the DOJ is investigating whether top company officials violated insider-trading laws when they sold shares before the company disclosed the hack.

Additionally:

Traders are gearing up for Trump's tax cut plan

Trump is clinging to a tax-cut promise that almost no other Republican thinks will happen

A 36-year-old who manages $4 billion breaks down why Amazon is his most bullish bet

These charts show North Korea's major exports and imports

Nvidia hits a record high as Wall Street begins to understand its dominance of AI

Toys R Us made 2 fatal mistakes that led to a death spiral

Join the conversation about this story »

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Tesla hits an all-time high (TSLA)

Business Insider, 1/1/0001 12:00 AM PST

Tesla

Tesla hit an all-time high on Monday. The stock jumped 2.03% to $389.57 in mid-day trading, but it's now trading fractionally lower at $383.77.

Tesla's highest closing price was set on June 23, when it closed at $383.45.

The new high comes in the middle of the company's production ramp for the Model 3. Tesla has an estimated 500,000 backorders of its first mass-marketed vehicle and is increasing production to try and work through the glut.

The Gigafactory, Tesla's massive battery plant in the Nevada desert, seems to be coming along well. The factory is expected to be producing the equivalent of 1 million Model 3 batteries in 2018, at a time when the company hopes to be making 20,000 cars a month, according to Ben Kallo, an analyst at Baird.

Tesla also recently announced the reveal date for its new semi-truck. The semi is rumored to be aimed at the regional trucking market, with a range of between 200-300 miles. Details about the truck are unclear, but some estimates put its cost as high as $100,000. 

Tesla is up 78.43% this year, with a market cap of $62.51 billion as of Monday's open.

Click here to watch Tesla's stock trade in real time...

tesla stock price

SEE ALSO: BAIRD: Tesla's Gigafactory is ramping up — and it hands the carmaker a huge advantage

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Survey: Younger Americans More Likely to Invest in Bitcoin

CoinDesk, 1/1/0001 12:00 AM PST

New survey data from online student loan marketplace LendEDU suggests that younger consumers in the United States are more apt to invest in bitcoin.

GOLDMAN SACHS: Alibaba is reaping the rewards of China's 'robust' retail sector (BABA)

Business Insider, 1/1/0001 12:00 AM PST

Jack Ma

China’s retail environment should "remain robust," and ecommerce giant Alibaba stands to benefit from that strength, Goldman Sachs says. 

The bank estimates that retail revenues in China will keep improving thanks to an increase in consumer confidence and a higher click-through rate on online ads.

"We anticipate higher spending in lieu of competition in retail, rising content spending, and a step up in spending in Southeast Asia, with business-to-consumercustomer-to-customer, and payments falling in place for BABA in Indonesia," analyst Piyush Mubayi said in a note Monday.

"We lift our 12m SOTP-based target price 1% to US$211, mainly on higher revenues as higher near-term spending does not impact our longer-term view on segment margins."

Online sales only account for about 14% of retail sales in China, the bank says, so there is plenty of room left for Alibaba to grow. Here's full breakdown: 

China online sales penetration

"Recent strong growth in China’s retail industry and online consumption reinforced our bullish view on BABA’s China retail segment," said the bank. "We expect the company to continue to outperform."

Shares of Alibaba are up 74.55% over the past year, and are currently trading near $180 — 17% below Goldman Sach’s price target. 

Such astronomical growth has been met with some skepticism though. Alibaba is currently the most shorted stock in the world by a magnitude of two, and short sellers are refusing to throw in the towel despite losing billions of dollars.

They naysayers weren't helped by the company's most recent earnings report, which beat analyst's estimates with a 56% jump in first-quarter revenue.

Alibaba stock price

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Bitcoin Exchange bitFlyer Hopes to Win Big With the Japanese Bankers Association

Bitcoin Magazine, 1/1/0001 12:00 AM PST

bitFlyer.jpg

While China tightens its grip on its cryptocurrency community, Japan is openly embracing cryptocurrencies and blockchain technology, legalizing bitcoin, and encouraging and funding blockchain research.

Even Japan’s banks are onboard, working collaboratively to develop a blockchain platform specifically for the financial sector. With its 120 member banks, the Japanese Bankers Association (JBA) is creating a Collaborative Blockchain Platform and is actively looking for a company to supply its blockchain technology on an ongoing basis.

Experimenting with the Collaborative Blockchain Platform, the JBA will initially determine which financial services best lend themselves to the new platform, likely including settlement/transfer services, know-your-customer (KYC) systems and financial infrastructure such as their Zengin System and Densai Net System.

Japanese bitcoin exchange bitFlyer is stepping up to the plate to take on tech giants including Fujitsu, Hitachi and NTT Data to be the supplier of the blockchain platform that will be used by Japan’s banks.

Although it is one of the largest cryptocurrency and blockchain startups in Japan, the Tokyo-based bitFlyer has its work cut out for it if it wants to upset these three corporate heavyweights and win the right to supply the bankers with a blockchain platform using its miyabi technology.

The company’s COO Bartek Ringwelski told Bitcoin Magazine:

“bitFlyer is the only startup in the event, and we have only raised $36mm since 2014, but we have deep expertise in blockchain technology through our virtual currency exchange (the largest in the world by volume, including margin trading) and our ‘miyabi’ product.”

By way of comparison, Hitachi posted $83 billion in revenue in 2016, Fujitsu posted $47 billion on 2015 and NTT Data posted $15 billion in 2016.

Acknowledging a sea change in Japan’s attitude to cryptocurrency, Ringwelski noted that Japan is actively encouraging and supporting both cryptocurrencies and blockchain technology:

“Japan is emerging as a leader in blockchain adoption. Japanese consumers are embracing virtual currencies, regulators are proactive, and banks are recognizing the power that blockchain, and specifically miyabi, can bring to the financial infrastructure.”

Miyabi Blockchain Technology

The name “miyabi” was first coined between the 9th to 12th centuries by Japanese aristocrats to refer to the theme of elegance and refinement.

According to Ringwelski, bitFlyer’s miyabi blockchain platform is the fastest in the world:

“Based on our research, ‘miyabi’ is the fastest enterprise-grade blockchain technology, delivering 1,500 - 2,000 transactions per second on average, and in some cases, even faster,” Ringwelski said.

Their processing speed of 1,500 to 2,000 transactions per second compares with Bitcoin’s two transactions per second and Ethereum’s seven transactions per second. They also estimate that among the other three competing companies, the maximum speed to beat is 1,000 transactions per second.

When it launched the competition, the JBA made it clear that security and immutability were their first priority. In their view, only a private, permissioned blockchain could satisfy this requirement.

Going Global

BitFlyer’s CEO Yuzo Kano has said he wants the company to go global in the near future and will start by expanding to the U.S. market this fall, initially offering bitcoin trading but expanding to other cryptocurrencies within the next year. The company says it has received approval to start trading from 34 U.S. states.

In the meantime, Ringwelski says that they are eagerly awaiting the decision of the JBA:

"The partner ultimately chosen by the JBA will stand to become part of the core Japanese banking infrastructure — it would be a big deal. Beyond the value of gaining the JBA as a new customer, securing a JBA contract would help spread miyabi to new enterprise blockchain applications and customers worldwide."

Investors in bitFlyer include SMBC Venture Capital, Mizuho Capital, Dai-ichi Life Insurance, Mitsubishi UFJ Capital, Mitsui Sumitomo Insurance Venture Capital, Recruit Strategic Partners, Dentsu Digital Holdings, SBI Investment, GMO Venture Partners, QUICK and Venture Labo Investment.

The post Bitcoin Exchange bitFlyer Hopes to Win Big With the Japanese Bankers Association appeared first on Bitcoin Magazine.

Op Ed: How Blockchain Technology Will Disrupt Digital Content Distribution

Bitcoin Magazine, 1/1/0001 12:00 AM PST

gp digital content.jpg

The way we consume media content has been on a continual overhaul for the past two decades. Every aspect of media distribution has become more streamlined from the razor-thin devices we use to consume media to the manner in which we purchase and store our coveted content. Books, music and movies have all seen their physical bodies and storage locations dissolve, to be replaced with on-demand downloads and digital copies.

The digital content revolution has done a lot for increasing access and visibility for artists and authors, but the current publishing giants have failed to adequately adjust to the times in a few crucial areas. While it's true that platforms such as YouTube and Medium have granted publishing access to the greater public and eliminated gatekeeping middlemen like talent agents and PR people, the current digital content sharing platforms have built their empires on the skeletons of the publishing giants’ templates that existed before and, unfortunately, have continued operating in ways that fundamentally undermine the artistic control and profits of their contributors.   

YouTube, for example, recently announced they will not allow users to earn any money until they reach 10 thousand views. Medium was recently very candid about the moral dilemmas and growing pains they have faced while trying to balance the selling of advertising space as well as respecting their contributing authors and readership. And it's no secret that Amazon and iTunes take a chunk out of authors’ and artists’ earnings, with iTunes currently pocketing 30 percent of its artists’ profits and Amazon taking a hefty 30–75 percent.

Though it’s easy to be critical, I am more interested in looking for a viable alternative to disrupt the existing system. This will require harnessing the decentralizing nature of emerging blockchain content distribution technologies. Here’s why:

Blockchain could be the solution to making micropayments a reality.

As media consumption has gone digital, a cost-effective way to charge per article or per song has been a limiting factor. Many platforms and publications have opted for subscription-based charging as high transaction costs make pay-per-use charging impossible. Amazon, for example, passes on its internal transaction costs to their clients, which currently equal 2.9 percent of the total transaction as well as a flat fee of 0.30 cents for every transaction.

The pricey transactions make processing small charges inefficient and not cost-effective, which has led many experts, such as editor of TechCrunch John Biggs, to predict that the future of digital publishing will depend on the adoption of micropayments.

Blockchain technologies allow for an incredible number of transactions to be processed at a low cost. Decentralized blockchain systems distribute the collective payment history across the entire network and don’t favor any single “auditor.” The network is maintained by all blockchain nodes as a whole.

Emerging blockchain transaction processing speeds have also recently shot past the leading blockchain currency, bitcoin, and would be capable of processing on a large scale. Where Bitcoin's transaction speeds average 7 transactions per second, new blockchain-based currencies are already approaching thousands of transactions per second; Bitshares claims they can process 100,000 per second.

In fact, a newspaper in Winnipeg, Canada, has already begun to use a micropayment system to charge per article for its news content and projects earning over $100,000 in digital revenue.

Blockchain could tilt the balance of power towards individuals, not publishing powerhouses.

As mentioned previously, YouTube and Medium have dramatically increased content creators’ access to audiences and established a more democratic, popularity-based promotional scheme. Unfortunately, they are both still centralized content distribution entities that can make arbitrary and unilateral decisions. YouTube and Medium both have the right to remove comments, content or entire channels or profiles without leaving a trace.

In contrast, a blockchain content distribution platform preserves an unchangeable record of all actions. The record produced by blockchain systems creates an environment of total transparency for both content creators and media consumers, and it also ensures that all views, comments and ratings reflect the real interactions the content has experienced, leaving no room for subjective, inflated ratings or deleted bad reviews.

With nothing deleted, content producers can create and post with the security that their work and reputation will remain intact, trolls can’t hide their past bad behavior and can easily be spotted via their comment history, and all content fairly reflects its actual popularity.

Blockchain technology could provide instant payouts and security.

Today, freelancers, authors and artists working with publishing platforms are accustomed to waiting multiple months to receive payment for their work. For big-name artists, this is just part of the business. But for smaller artists, it can be difficult to wait for reimbursement without any idea of how much they will eventually be paid. The financial uncertainty, prolonged waiting periods and lack of payment transparency in current digital content media sharing platforms could be discouraging potential artists and authors from seeing content creation as a viable source of income. Instead, the system encourages content creators to seek payment, not for the quality of their content, but through product sponsorships, PR and ad-focused content.

With blockchain-based content distribution, content creators can be paid within seconds of a consumer paying for a download. Consumers would also know their purchase was directly supporting the content creators they enjoy and effectively cut out the publishing middlemen eating up the content producer’s profits.

Though blockchain technology may, at times, sound a bit hard to conceptualize, digital media distribution really shouldn’t be rocket science. While the zeros and ones behind publishing platforms get more complex, the process for content creators and consumers has simplified and should continue to do so.

The bottom line is content creators who make good quality content that people are willing to pay for deserve a simple and transparent digital media sharing platform that fairly compensates them according to the consumer demand for their work. Media consumers equally deserve the ability to directly support the content creators they enjoy. And blockchain technologies may be the disruptive technology that digital media content distribution needs.

This is a guest post by Matej Michalko, founder and CEO of DECENT. The opinions expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine. 

The post Op Ed: How Blockchain Technology Will Disrupt Digital Content Distribution appeared first on Bitcoin Magazine.

People thought they caught JPMorgan buying bitcoin after Jamie Dimon called it a 'fraud' - but that's not what happened

Business Insider, 1/1/0001 12:00 AM PST

Over the weekend, a tweet, which suggested JPMorgan was buying up a product tied to the success of bitcoin, sent shockwaves through the cryptocurrency community.

But like most outrage on the internet, it was unwarranted.

The screenshot, which was retweeted over 2,000 times, shows JPMorgan is among the largest buyers of a bitcoin exchange traded note trading on Nasdaq Stockholm. Here's the tweet:

Immediately Twitter erupted, lambasting JPMorgan CEO Jamie Dimon, who recently called bitcoin "a fraud" and said it was "worse than tulip bulbs," as a hypocrite. Some questioned whether Dimon, whose comments triggered a sell-off of the coin, purposely bashed the cryptocurrency so JPMorgan could "buy low."

Some wondered if Dimon would follow through on his promise to fire employees of the bank who traded the cryptocurrency. Here's one tweet:

Dimon probably won't be firing anyone, but not because he's behind some sort of bitcoin-related conspiracy. He won't be firing anyone at the bank, because the orders weren't placed by JPMorgan employees.

"They are not JPMorgan orders," a spokesman said in an email to Business Insider."These are clients purchasing third party products directly."

In other words, JPMorgan asset managers weren't buying this product for their clients. Rather, the bank's clients were using JPMorgan's pipes to buy it themselves.

SEE ALSO: JPMorgan Chase poached an executive from Amazon to lead its customer experience

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Blockchain Technology Plays a Critical Role in U.S. and International Open Government Initiatives

Bitcoin Magazine, 1/1/0001 12:00 AM PST

tech open door.jpg

On September 8, the U.S. government’s General Services Administration (GSA)’s program “Emerging Citizen Technology” hosted a workshop titled “Emerging Technology and Open Data for a More Open Government.” The participants in the workshop were directed to draft proposals that specifically use Artificial Intelligence (AI), blockchain technology and open data.

“Open data and emerging technologies — including artificial intelligence and distributed ledgers, such as blockchain — hold vast potential to transform public services held back by bureaucracy and outdated IT systems,” said Emerging Citizen Technology program manager Justin Herman. “We are opening the doors to bold, fresh ideas for government accountability, transparency and citizen participation by working with U.S. businesses, civil society groups and others to shape national goals for emerging technologies and open data in public services.”

At the workshop, several government agencies have indicated a strong government backing behind the development of blockchain technology. In particular, a representative of the White House Office of Management and Budget (OMB) stated that the Trump administration was serious about and committed to this technology, and would not be deterred.

The initiative is related to the fourth National Action Plan (NAP 4), which the U.S. government is releasing this year in the the framework of the multinational Open Government Partnership (OGP) and its Open Government Declaration. It is aimed at empowering citizens and advancing the ideals of an open and participatory government.

The September 8 workshop follows the first U.S. Federal Blockchain Forum, organized by the Emerging Citizen Technology program on July 18 to discuss blockchain use cases, limitations and solutions. Financial management, procurement, IT asset and supply chain management, smart contracts, patents, trademarks, copyrights, royalties, government-issued credentials, federal personnel workforce data, appropriated funds, federal assistance, and foreign aid delivery were among the government blockchain use cases discussed at the July 18 workshop. Participation was restricted to federal agencies’ managers.

The Government Blockchain Association participated in the September 8 workshop and shared details, reported by ETHNews, on the topics discussed. In particular, three priority areas were examined: a national identity system based on blockchain and biometric technologies and interoperable across different agencies; an open government innovation initiative aimed at improving the internal operations of government agencies through blockchain technology; and a blockchain open-interface framework to connect government blockchain pilots with external data systems.

The Government Blockchain Association, open to all interested individual, corporate and institutional members, was formed to explore blockchain-based solutions to problems typically faced by government entities.

"We are currently seeing deep and informed interest in blockchain [technology] across many levels of the public sector,” said Gerard Daché, Founder and President of the Government Blockchain Association. “This time next year, I would not be surprised to see dozens of pilots, legislative resolutions, and even funding spread across the various states and high up in the U.S. Federal Government specifically for piloting blockchain based innovation.”

The Association believes that blockchain technology, Bitcoin, distributed ledgers and cryptocurrencies will fundamentally transform how the government interacts with its constituents.

"We don’t believe blockchain adoption in the public sector needs to take over ten years as some suggest it might,” Daché added. "There is an excitement that is palpable so, our goal is to harness this enthusiasm and direct it into working groups that actually influence national, state and large city governmental policies."

The post Blockchain Technology Plays a Critical Role in U.S. and International Open Government Initiatives appeared first on Bitcoin Magazine.

Nvidia hits a record high as Wall Street begins to understand its dominance of AI (NVDA)

Business Insider, 1/1/0001 12:00 AM PST

nvidia ceo jensen huang

Nvidia hit an all-time high of $190.08 on Monday after another Wall Street bank took notice of its huge advantage in artificial intelligence.

AI is the hottest area of tech right now, and Nvidia is crushing its competition. Last week, Evercore analyst C.J. Muse said that not enough people are paying attention to Nvidia and AI right now and Vivek Arya of Bank of America Merril Lynch agrees.

Arya said Nvidia's transition to a chip maker and AI powerhouse is "underappreciated," according to a CNBC review of Arya's comments.

Muse also thinks the company is underappreciated and expects AI to be the main driver to $45 billion of growth at Nvidia. He said every computer will eventually have some AI component, representing a huge opportunity for chip makers like Nvidia.

Nvidia has the chance to dominate the competition because of its impressive graphics processing units. Their chips are the best for artificial intelligence work. Intel and AMD are Nvidia's strongest competitors, but their technology is behind Nvidia's, Markets Insider previously reported.

Nvidia's newest "Volta" chips are extremely powerful chips aimed at the data center market where a lot of AI processing power will live. The company is highly focused on this segment of its business, and BAML thinks it could grow 21% in 2018, according to CNBC, citing Arya. Nvidia started working on its AI programming platform in 2006, while other players have started their AI tech developments much more recently.

Shares of Nvidia are up 85.33% this year.

Click here to watch Nvidia move in real time...

nvidia stock price

SEE ALSO: Everyone 'severely underestimates the impact of AI' — here's why Nvidia could soar to $250

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NOW WATCH: Bitcoin's bubble swells with a new record high

China is clamping down on smaller bitcoin trading channels

Engadget, 1/1/0001 12:00 AM PST

China's crackdown on bitcoin could extend well past big commercial exchanges. Wall Street Journal sources claim that the country is leaning toward a "comprehensive" ban on bitcoin trading channels, such as over-the-counter platforms that help buyers...

What you need to know on Wall Street today

Business Insider, 1/1/0001 12:00 AM PST

donald trump arms outstretchedWelcome to Finance Insider, Business Insider's summary of the top stories of the past 24 hours. Sign up here to get the best of Business Insider delivered direct to your inbox.

Just when investors thought they were out, President Donald Trump is pulling them back in.

Months after the so-called "Trump trade" fizzled, traders are once again being enticed by the possibility of a pro-business policy overhaul — and piling into the areas of the market that could benefit the most from the president's plans.

In Wall Street news, Northrop Grumman is buying missile and rocket maker Orbital for $7.8 billion. Banks could earn $85 million from the deal.

JPMorgan Chase poached an executive from Amazon to lead its customer experience. And "headwinds could persist" for Wells Fargo, according to UBS. 

Equifax officials are reportedly being investigated by the US Justice Department after selling stock before the company revealed a data breach that exposed the personal information of millions of Americans.

Hedge fund giant Citadel is building out a new unit with big hires. A 32-year old portfolio manager from Paul Tudor Jones' hedge fund is setting off on his own. And a 36-year-old who manages $4 billion broke down why Amazon is his most bullish bet.

Retail investors have never been this hopeful that the stock market will continue to grind higher, according to a University of Michigan survey. And Wall Street alum Sallie Krawcheck just raised $34 million for her investing platform.

In markets news, the Federal Reserve is widely expected to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its meeting on Wednesday. It's a move that the Fed hopes will go smoothly but that has the potential to rattle financial markets long accustomed to the Fed's monetary largesse.

A biotech stock doubled after it got positive results on a drug to tackle the leading cause of infectious death in the US. And 23andMe is getting serious about drug development — and it could signal a fresh approach to finding new medicines.

In tech, Netflix lost the biggest Emmy to Hulu — but its customers couldn't care less. Slack has been valued at $5.1 billion after new funding led by SoftBank.

Tesla's Gigafactory is ramping up, according to Baird, handing the carmaker a huge advantage. Lastly, Porsche's stunning Tesla rival will arrive in 2019 and cost $85,000.

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NOW WATCH: THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one

WALL STREET PAYDAY: Banks could earn $85 million from $7.8 billion Northrop deal (NOC, C)

Business Insider, 1/1/0001 12:00 AM PST

celebration

Two Wall Street banks are set to earn a big payday from defense contractor Northrop Grumman's $7.8 billion acquisition of rocket manufacturer Orbital ATK.

Independent investment bank Perella Weinberg Partners and Citigroup will share in as much as $85 million in fees for advising on the deal, according to Jeffrey Nassof, director of consulting firm Freeman & Co.

Northrop will pay Perella Weinberg an estimated $30 million to $40 million, according to Nassof.

Citigroup will make an estimated $35 million to $45 million for advising Orbital, which generates $4.5 billion in revenue thanks to lucrative contracts with NASA and the Army.

The deal is expected to close in the first half of 2018 and will create a company on pace for a combined $30 billion in sales in 2017.  

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Traders are gearing up for Trump's tax cut plan

Business Insider, 1/1/0001 12:00 AM PST

donald trump arms outstretched

Just when investors thought they were out, President Donald Trump is pulling them back in.

Months after the so-called "Trump trade" fizzled, traders are once again being enticed by the possibility of a pro-business policy overhaul — and piling into the areas of the market that could benefit the most from the new president's plans.

The latest trigger is a tax proposal that's set to be released on September 25 — one that's expected to reveal specifics around a lowering of the corporate tax rate, as well as a one-time repatriation tax holiday for companies holding trillions of dollars overseas.

The renewed willingness to trade on this is a big change of sentiment for investors. After pumping up stock prices on the hopes that Trump and a Republican legislature would push through tax cuts and infrastructure spending to boost economic growth and fill corporate coffers, they were eventually worn out as the promises repeatedly failed to materialize.

Once able to create or erase billions of dollars of market value with a single tweet, the president's influence looked to be waning.

Investors are now snapping back to attention, seduced by the possibility of further gains, even with major US stock indexes already resting confidently at record highs. But it must be noted that the Trump trade's recovery is still in its early stages, perhaps indicating greater reservations this time around.

Here are two areas drawing the most renewed interest. We'll be tracking these to see how investors feel about the plan's prospects as it approaches and after it is unveiled next week.

The companies paying the most taxes

Since 2015, Trump has been adamant about cutting the federal corporate tax rate from its current 35% to 15%. While he doesn't appear to have much support from his fellow Republicans, who have called a decrease all the way to 15% unworkable, there's no denying that investors are feeling increasingly confident about the most highly-taxed companies, which would benefit most from such a measure.

As indicated by the chart below, a Goldman Sachs index tracking the group saw all of its post-election gains relative to the broader market erased by mid-March. Now, amid rising optimism around some sort of tax cut, it's been ticking up in recent weeks.

high tax vs spx v2

It's important to note that even if Trump's desired 15% rate ends up being slightly higher, these companies will still see a material benefit to their bottom line. JPMorgan estimates that if the statutory tax rate is cut just 10 percentage points to 25%, that would boost the S&P 500's earnings per share by $11.40 to $143.40 — and add more than 150 points to the index, which closed at a record high of 2,500.23 on Friday.

"Investors were initially sanguine on tax reform post-election but optimism quickly faded as political focus was diverted to other issues," Dubravko Lakos-Bujas, JPMorgan's head of US equity strategy, wrote in a client note. "As long as headlines continue to indicate political traction, we believe investors are likely to start pricing in higher probability of tax reform."

The companies holding the most cash overseas

Another area of the Trump tax agenda that's expected to be included in the upcoming tax plan is a repatriation tax holiday. The measure would incentivize multinational companies who make a large portion of their earnings overseas, and then hold that cash internationally, to bring it back into the US.

Strategists at Citigroup estimate that US corporations are holding a whopping $2.5 trillion of cash overseas.

As the chart below shows, investors who were initially enticed by the prospect of a repatriation tax holiday gave up on the trade midway through January. The subsequent recovery over several months can be more attributed to the fundamental performance of large US multinationals who do big business internationally — Google, Facebook, Amazon — than to anything relating to tax measures.

However, the recent spike in a Goldman Sachs-maintained index of companies with high overseas earnings is best explained by policy optimism.

high overseas earnings vs spx v2

So how exactly would the influx of cash drive share appreciation? Equity strategists at both Goldman and Citigroup are forecasting that high cash balances for corporations will lead to share repurchases. While stock buybacks have slowed in recent quarters, they still remain a good way to push shares higher absent other positive drivers, making them a safety net of sorts for a continued bull market.

While stock performance can serve as a handy signaling device for the likelihood of policies being introduced, JPMorgan also sees areas of the bond market vulnerable to new political developments.

"Tax reform that repatriates foreign cash and eliminates interest deductibility would greatly reduce US corporate bond supply and should thus on net tighten credit spreads," analysts led by Jan Loeys, the firm's head of global asset allocation wrote in a client note.

SEE ALSO: The stock market's secret weapon may be vanishing

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Bitcoin 'Double Taxation' Relief Bill Introduced in Australia

CoinDesk, 1/1/0001 12:00 AM PST

Australia has introduced a new bill that, if passed, would end the country's bitcoin "double taxation" issue.

Mark Carney just summed up Brexit's impact on the economy in a few short sentences

Business Insider, 1/1/0001 12:00 AM PST

Mark Carney

LONDON — Bank of England Governor Mark Carney on Monday neatly summed up the impact the vote to leave the European Union has had on Britain's economy.

Speaking at the International Monetary Fund in Washington DC, Carney said: "UK households, businesses and financial markets have reacted at different speeds and to varying degrees to the prospects for the UK’s departure from the EU."

"Households looked through Brexit-related uncertainties initially. But more recently, as the consequences of sterling’s fall have shown up in the shops and squeezed their real incomes, they have cut back on spending, slowing the economy."

Carney's comments reflect the fact that UK inflation — which pre-referendum had ticked along at less than half of 1% — has jumped due to the pound's depreciation against both the dollar and the euro after the vote. At the last reading, inflation was 2.9%. Many expect it to pass above 3% before the end of the year.

By contrast, wage growth was just 2.1% when measured as part of the Office for National Statistics' latest job market figures released in August. That creates a situation where average Brits are now earning less than they were prior to the referendum and seeing an their disposable incomes shrink.

Slowing consumer spending and overall household consumption are widely acknowledged to have driven the UK's economic slowdown this year, which has seen the UK sink to the bottom in terms of GDP growth among major economies.

Business investment has also slowed. Carney said: "Businesses have been somewhere in between. Since the referendum, they have invested much less aggressively than usual in response to an otherwise very favourable environment (strong external environment, low cost of capital, favourable rates of profitability and limited spare capacity)."

"The balance of these effects has lead overall UK growth to slow in the first half of 2017, even as growth in the rest of the G7 was picking up, and UK growth looks set to remain weaker than the G7 average until mid- 2018," Carney added.

"The UK has experienced underperformance only twice in the past three decades: once in the depths of the financial crisis and once following the collapse of the Lawson Boom of the late 1980s."

Carney also reiterated the message delivered by the Bank of England's Monetary Policy Committee after its September meeting: interest rates are likely to move higher in the near future as a way of holding back rising inflation.

"As the Committee stated last week, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target," he said.

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BAIRD: Tesla's Gigafactory is ramping up — and it hands the carmaker a huge advantage (TSLA)

Business Insider, 1/1/0001 12:00 AM PST

tesla gigafactory

Tesla began constructing its Gigafactory in 2014, and says that to reach its end-of-2018 goal, it would require the factory's output to equal what is produced worldwide today. That's a lot of batteries and a big bet on the future of cars.

According to Ben Kallo, an analyst at Baird, the Gigafactory bet is paying off though, and Tesla's battery-producing Gigafactory is "on track" to hit its production targets for the year. 

The Gigafactory is in the process of ramping up its production to meet the huge demand for Tesla's Model 3. Right now, the factory is only 30-35% complete, according to Kallo's estimates. The company hopes to produce 50 gigawatt hours worth of batteries in 2018, which would be the rough equivalent of 1 million 50 kilowatt hour batteries which power the entry-level Model 3.

"Activity at the Gigafactory has increased since our tour in January, and we believe cost reduction and capacity expansion efforts are on track," Kallo said in a note to clients. "Tesla will continue to have a battery cost advantage over competitors given its scale of production [of the Gigafactory] in Nevada."

By the end of the year, Tesla has said it hopes to be producing 20,000 vehicles a month and has backorders of around 500,000 for the Model 3. Ordering a Model 3 today comes with an expected delivery date well into 2018.

The company recently set a date for the launch of its new semi-truck. The vehicle is expected to be more suitable for regional trucking and is expected to have a range of about 200-300 miles, though details about the battery are unknown. 

Tesla is trading 1.80% higher after Kallo's note, at about $386.39. Kallo calls Tesla a buy with a price target of $411.

Tesla is up 80.06% this year.

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Tesla stock price

 

SEE ALSO: Tesla is climbing after announcing its semi truck launch date

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MUFG CEO on Dimon Remarks: Bank Cryptocurrencies Have 'Nothing to Do With Bitcoin'

CoinDesk, 1/1/0001 12:00 AM PST

The CEO of Japanese finance group MUFG said today that big bank-issued digital currencies aren't quite the same as bitcoin.

Small investors have never been this bullish

Business Insider, 1/1/0001 12:00 AM PST

etrade babies

Retail investors have never been this hopeful that the stock market will continue to grind higher, according to a University of Michigan survey.  

The preliminary survey of consumer sentiment for September showed a record 65% expected probability that stocks would rise in the next year. The data goes back to 2002. 

A report in February showed a minor increase in expectations for a sustained rally after President Donald Trump's election. But several record closing highs later — 39 this year for the Dow as of Friday — individual investors are a lot more expectant. 

The February report noted that people who were most bullish for the year ahead and could invest more in stocks were in the top third of income distribution and in the top tier of stock ownership. In other words, the respondents to this survey have reaped strong gains on a riskier asset class in a short period of time and are hoping this continues. 

But this may be a sign that the opposite is about to happen, said David Rosenberg, the chief economist at Gluskin Sheff. 

"For an investment community that typically lives in the moment and extrapolates the most recent experience into the future, it would only fall on deaf ears to suggest that peak confidence like this and peak market pricing tend to coincide with each other," he said in note Monday.

Screen Shot 2017 09 18 at 9.53.17 AM

SEE ALSO: A 36-year-old who manages $4 billion breaks down why Amazon is his most bullish bet

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JPMorgan Chase poached an executive from Amazon to lead its customer experience (JPM, AMZN)

Business Insider, 1/1/0001 12:00 AM PST

Marbue Brown JPMogan Chase

JPMorgan Chase poached an executive from Amazon to help the bank improve the customer experience.

Chase on Monday announced the hire of Marbue Brown as its head of customer experience for Consumer Banking and Wealth Management. He'll report directly to Thasunda Duckett, CEO of Chase's Consumer Bank. 

"Marbue will partner with my leadership team and other Chase senior leaders to help us define the vision for a world-class customer experience," Duckett wrote in a memo seen by Business Insider. "He'll help guide our Chase customer journey with a focus on deepening relationships."

Brown joins the country's largest bank by assets from Amazon, where he served as global lead of the company's "Andon Cord" customer experience team, a group that focused on monitoring products that consistently disappointed customers and rooting out the problem. Andon Cord is a manufacturing process originally developed by Toyota to solve assembly line quality issues. 

Hiring an exec from one of the world's foremost tech giants is another sign of JPMorgan's efforts to boost its own technology chops. At Chase, Brown will be tasked with improving customer engagement across platforms — branches, call centers, online, and mobile. 

He'll start off from a nice foundation. In June, JD Power ranked Chase fourth of the 23 large and mid-sized banks for customer satisfaction — the top performer of the big-five banks for the fifth year in a row.

In in the second quarter, Chase reported deposits were up 10% year-over-year to $507 billion. The company also reported 45 million active digital users, up 14% from the previous year. 

Prior to Amazon, Brown, who is originally from Liberia, spent nearly a decade at Microsoft. 

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Netflix lost the biggest Emmy to Hulu — but its customers couldn't care less (NFLX)

Business Insider, 1/1/0001 12:00 AM PST

Reed Hastings, co-founder and CEO of Netflix, delivers a keynote address at the 2016 CES trade show in Las Vegas, Nevada January 6, 2016.  REUTERS/Steve Marcus

Sunday night at the Emmy Awards, Netflix again missed out on the biggest prize of the evening. But, according to Mark Mahaney, an analyst at RBC, Netflix is still crushing its streaming competition across the globe with its content.

Hulu's set a record as the first video streaming service to walk away with the Emmy for best drama series for "The Handmaid's Tale," which won four total awards. Though it didn't win the headline prize, Netflix raked in 20 awards, second only to HBO's 29. Hulu won 10.

Mahaney said that Netflix's content is some of the strongest globally and it's giving the company a key advantage over its competitors.

"We continue to believe that Netflix can grow its subscriber base in the U.S. by continuing to improve its content offerings and proving out its value proposition to users – all the while increasing its profitability," Mahaney wrote. Mahaney said that the company's strong content offerings are what is driving the high penetration percentages.

Netflix's content is loved by its customers, with 67% of subscribers saying they are "extremely" or "very" satisfied with Netflix. Subscribers were surveyed by Mahaney and RBC, and a record 36% of those surveyed said that Netflix's content is improving over its already strong position. The group also found that 53% of those surveyed said they had used Netflix in the past year, which was 28 points ahead of Hulu, 36 points higher than HBO Now and 21 points ahead of Amazon.

Even though Netflix doesn't have the hottest show of the year, its customers are still happy with its award-winning content and are not likely to switch to one of its competitors, according to Mahaney.

Netflix is up 0.73% on Monday and has gained 44.03% this year.

Click here to watch Netflix's stock price move in real time...

netflix stock price

SEE ALSO: Hulu pulled off something Netflix has never been able to do at the Emmys

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The Justice Department has reportedly opened an insider-trading investigation at Equifax (EFX)

Business Insider, 1/1/0001 12:00 AM PST

Equifax trading floor

Equifax officials are reportedly being investigated by the US Justice Department after selling stock before the company revealed a data breach that exposed the personal information of millions of Americans.

Bloomberg's Tom Schoenberg and Anders Melin on Monday reported that the Justice Department was investigating whether top company officials violated insider-trading laws when they sold Equifax shares before the company disclosed the hack.

According to Bloomberg, the department is looking at sales by Equifax's CFO, John Gamble; president of US information solutions, Joseph Loughran; and president of workforce solutions, Rodolfo Ploder. The three senior executives dumped almost $2 million worth of stock days after the company learned of the breach, Securities and Exchange Commission filings show. An emailed statement from the credit-monitoring agency said the executives "had no knowledge" of the breach beforehand.

All of the executives still owned thousands of shares of the company after the sales were completed, filings show.

Bloomberg cited "people familiar with the investigation" who asked not to be named because it was confidential.

Equifax did not immediately respond to a request for comment on the DOJ investigation.

Equifax last week reported a massive data breach, saying hackers may have accessed the personal details, including names and Social Security numbers, of more than 143 million consumers from mid-May to July. Equifax, which said it learned of the breach in late July, said credit-card numbers for about 209,000 people and certain documents for another 182,000 were also accessed.

The disclosure was swiftly met with criticism because of the delay in alerting the public to the hack as well as problems with the website Equifax set up for people to check whether their details were at risk.

The hack is also being investigated by the Federal Trade Commission and has prompted promises for inquiries in both the Senate and House of Representatives.

Equifax's stock was little changed at 10:41 a.m. ET on Monday. Shares have tumbled by nearly 35% since the news of the hack broke.

Check out the full story at Bloomberg here.

equifax

SEE ALSO: The FTC says it's investigating the Equifax hack (EFX)

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Ford jumps after announcing it's looking into a partnership aimed at the Indian car market (F)

Business Insider, 1/1/0001 12:00 AM PST

Ford CEO jim hackett

Ford shares are trading up 0.95% at $11.73 a piece after the company announced it's looking into a strategic alliance with Indian auto maker Mahindra & Mahindra.

The agreement would last three years and includes a number of areas beyond simple manufacturing. If an agreement is reached, the companies will cooperate on electrification, distribution in India and mobility programs.

"The enormous growth potential in the utility market and the growing importance of mobility and affordable battery electric vehicles are all aligned with our strategic priorities,” Jim Farley, Ford's executive vice president, said in the company's release.

Ford has previously earmarked $4.5 billion for "electrification," but has thus far let Tesla and Chevy run away with the electric car markets. The company's new CEO, Jim Hackett, recently finished a 100-day review of the company as he looks to turn around its struggling stock price.

Ford is down 6.83% this year.

Click here to watch Ford trade in real time...

ford stock price

SEE ALSO: MORGAN STANLEY: Ford’s new CEO will make the company 'exciting, but delicate'

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$4,000: Bitcoin's Price Shrugs Off China Exchange News

CoinDesk, 1/1/0001 12:00 AM PST

Bitcoin's price has bounced back above $4,000 following market losses linked to the recent regulatory crackdown in China.

Bitcoin surges past $4,000 despite reports of a wide-ranging crackdown on trading in China

Business Insider, 1/1/0001 12:00 AM PST

Bitcoin mining computers are pictured in Bitmain's mining farm near Keflavik, Iceland, June 4, 2016. Picture taken June 4, 2016. REUTERS/Jemima Kelly

NEW YORK - Bitcoin has surged over $4,000 a coin on Monday, despite reports that Chinese authorities have decided on a plan for a wide-ranging crackdown on the cryptocurrency.

The plan, which regulators revealed to cryptocurrency executives on Friday, goes further than just a shutdown on exchanges, according to reporting by the Wall Street Journal's Chao Deng.

According to Deng, Beijing regulators plan to shutdown all channels for exchanging the cryptocurrency, not just commercial ones.

"The crackdown on the bitcoin ecosystem represents Beijing’s possibly biggest effort so far to limit expansion of a system to rival the yuan," Deng wrote.

Bitcoin collapsed spectacularly last week as news of a regulatory crackdown in China broke. 

The cryptocurrency dropped 16% against the dollar on Thursday after Chinese media reported that the country's regulators were moving closer to shutting down exchanges. Bitcoin recouped most of those losses on Friday even after two of the largest exchanges in China, OKCoin and Huobi, released statements saying they would shutdown all trading between yuan and bitcoin on their exchanges.

The digital coin continued to prove its resiliency on Monday, trading up near 10% at $4,080. It briefly dipped below $3,000 on Friday. 

Bitcoin is up about 325% this year. 

Read the full report over at the WSJ.

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SEE ALSO: JPMorgan's quant guru says cryptocurrencies have 'some parallels to fraudulent pyramid schemes'

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Here's a super-quick guide to what traders are talking about right now

Business Insider, 1/1/0001 12:00 AM PST

Traders stand outside the New York Stock Exchange prior to the opening bell October 31, 2012. .  REUTERS/Brendan McDermid

Dave Lutz, head of ETFs at JonesTrading, has an overview of today's markets.

Here's Lutz:

Morning! US Futures are adding to S&P’s record close, with DJIA up 30bp on More Aerospace/Defense M&A, while QQQs lag due to Divvy payout.   European markets are all higher, with the DAX adding 40bp as the Fins are up nearly 1% - but the Airlines weaker on Ryanair cut.   The FTSE is lagging slightly, but seeing a rebound as Sterling stops ripping higher with every sector but Staples moving higher.   Volumes are still in Holiday mode, with Germany’s turnover 40% below 20d averages.   Strong overnight in Asia - Hang Seng leaps 1.3% led by Chinese Property stocks - Shanghai up 30bp on brokerage shares - KOSPI adds 1.3% as Samsung leaps 4% - Aussie up 45bp as Banks jumped, and Japan was closed for Holiday

Ahead of the Fed Weds, Fed Funds rest at a 47% chance of a December hike, but all eyes are on details of the Balance Sheet winddown.   10YY getting upside 2.2% as Bunds get sold – while eyes are Portugal’s 10YY collapsing as they get a upgrade from S&P.   DXY is off small as the Pound drifts under $1.36 - Euro up small, and the Commodity Currencies like A$ and C$ are all lurching higher.   Ore lost 3% before recovering to unch overnight, and Copper is seeing a rebound from last week’s weakness, adding nearly 1%, while a haven retreat sees Gold and Silver under pressure. WTI holding 5month peaks as producers eyeball Maria’s track, while Natty Gas is jumping 2% as NOAA predicts warmer than usual temperatures across the Eastern USA

SEE ALSO: 10 things you need to know about the markets today

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The dollar is 'teetering' near its recent lows

Business Insider, 1/1/0001 12:00 AM PST

us dollar dxy

The dollar is hovering near recent lows as markets gear up for this week's Federal Reserve meeting.

The US dollar index was little changed near 91.85 at 7:52 a.m. ET.

"The DXY is teetering near the recent lows, and many market participants will keep an eye on the key pivot level of 91," said Mark McCormick, the North American Head of FX Strategy at TD Securities, in a note.

"We could see some profit taking early in the week but look to fade dollar rallies into this week's FOMC meeting."

The Federal Open Market Committee is meeting on Tuesday and Wednesday. For the most part, Fed watchers expect the committee to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its two-day meeting on September 20. 

The market sees a 47.7% chance the Fed hikes rates again in 2017, according to Bloomberg data.

The US dollar index has fallen about about 11% against a basket of currencies since US President Donald Trump's inauguration. 

As for the rest of the world, here was the scoreboard at 8:01 a.m. ET:

  • The euro was little changed at 1.1944 against the dollar after CPI for the euro area rose 1.5% year-over-year in August, in line with expectations.
  • The British pound was down 0.4% at 1.3544 against the dollar. Bank of England governor Mark Carney will be speaking later on Monday.
  • The Japanese yen was weaker by 0.5% at 111.40 per dollar.
  • The Russian ruble was lower by 0.2% at 57.7371 per dollar.

SEE ALSO: The 27 scariest moments of the financial crisis

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Bitcoin Is Back Near $4,000 as Price Recovery Proves Staying Power

CoinDesk, 1/1/0001 12:00 AM PST

The price of bitcoin continued to recover into Monday as consolidation in pricing helped the cryptocurrency recovery Friday's steep losses.

Someone in Geneva is cutting up €500 banknotes and flushing them down toilets

Business Insider, 1/1/0001 12:00 AM PST

guggenheim toilet

Someone in the Swiss city of Geneva has been trying to flush tens of thousands of euros down toilets.

Swiss prosecutors opened an investgation after the first €500 euro note was found several months ago in a bathroom close to a bank vault at the Geneva branch of financial company UBS, Bloomberg reported.

More notes were found a few days later in toilets at three nearby restaurants — and thousands of Swiss francs have now been spent on unclogging pipes filled with notes.

Police have so far recovered tens of thousands of euros, many of which seem to have been cut before being flushed.

Destroying banknotes is not a crime in Switzerland, but Swiss prosecutors are intrigued. "There must be something behind this story," Henri Della Casa, a spokesperson for the Geneva Prosecutor's Office told Bloomberg, "that's why we started an investigation."

The European Central Bank is in the process of phasing out the €500 note, which will officially go out of circulation by the end of 2018. The move is down to concerns that the notes are largely being used for illegal activities like money laundering and smuggling.

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10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, NOC)

Business Insider, 1/1/0001 12:00 AM PST

Hurricane Irma boat in a house

Here is what you need to know. Sign up here to get "10 Things" delivered directly to your inbox.

The S&P 500 hits a record. The benchmark index ticked above 2,500 for the first time just ahead of Friday's closing bell.

The Fed is getting ready for its 'biggest meeting of the year.' The Federal Reserve is widely expected to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its meeting Wednesday.

Another Fed rate hike this year is a coin flip. The market sees a 47.7% chance the Fed hikes rates again in 2017, according to Bloomberg data.

Euro-area inflation picks up. Consumer prices in the euro area rose 1.5% year-over-year in August, up from a 1.3% advance in July, data released on Monday by Eurostat shows.

Beijing bans winter construction. China's capital is planning to ban major construction projects during the winter in an effort to improve air quality, Reuters reports, citing official media.

Bitcoin is making a big comeback. Bitcoin trades up almost 6% at $3,943 a coin on Monday, after briefly sliding below $3,000 early Friday morning on word China was planning to shut down cryptocurrency exchanges.

Northrop Grumman is buying Orbital. The defense contractor will pay $7.8 billion, or $134.50 a share, a 22% premium over Friday's closing price, for the missile and rocket maker Orbital, Reuters reports, citing a person familiar with the transaction.

Slack scores a $5.1 billion valuation. The enterprise messaging operator raised $250 million from a group led by the Japanese conglomerate SoftBank, boosting its valuation to $5.1 billion, Reuters says.

Stock markets around the world trade mixed. China's Shanghai Composite (-0.53%) trailed in Asia, and Germany's DAX (+0.55%) leads in Europe. The S&P 500 is set to open up 0.2% near 2,505.

US economic data trickles out. NAHB home prices will be released at 10 a.m. ET. The US 10-year yield is up 1 basis point at 2.21%.

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10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, NOC)

Business Insider, 1/1/0001 12:00 AM PST

Hurricane Irma boat in a house

Here is what you need to know. Sign up here to get "10 Things" delivered directly to your inbox.

The S&P 500 hits a recordThe benchmark index ticked above 2,500 for the first time just ahead of Friday's closing bell. 

The Fed is getting ready for its 'biggest meeting of the year.' The Fed is widely expected to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its meeting on Wednesday, September 20.

Another Fed rate hike this year is a coin flip. The market sees a 47.7% chance the Fed hikes rates again in 2017, Bloomberg data shows. 

Euro area inflation picks upConsumer prices in the euro area rose 1.5% year-over-year in August, up from a 1.3% advance in July, data released on Monday by Eurostat shows. 

Beijing bans winter construction. China's capital is planning to ban major construction projects during the winter in an effort to improve air quality, Reuters reports, citing official media.

Bitcoin is making a big comebackBitcoin trades up almost 6% at $3,943 a coin on Monday, after briefly sliding below $3,000 early Friday morning on word China is planning to shut down cryptocurrency exchanges. 

Northrop Grumman is nearing a deal for OrbitalThe defense contractor is closing in on a deal for missile and rocket maker Orbital ATK likely worth more $7.7 billion, Reuters reports, citing a personal familiar with the transaction.  

Slack scores a $5.1 billion valuationThe enterprise messaging operator raised $250 million from a group led by Japanese conglomerate SoftBank, boosting its valuation to $5.1 billion, Reuters says. 

Stock markets around the world trade mixedChina's Shanghai Composite (-0.53%) trailed in Asia and Germany's DAX (+0.55%) leads in Europe. The S&P 500 is set to open up 0.2% near 2,505.

US economic trickles outNAHB home prices will be released at 10 a.m. ET. The US 10-year yield is up 1 basis point at 2.21%. 

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HSBC: 'We were wrong' to think the pound would stay weak in 2017

Business Insider, 1/1/0001 12:00 AM PST

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  • Europe's largest bank by assets reverses direction on the pound and admits being wrong about sterling in 2017.
  • The bank argues that rather than being driven by Brexit developments as expected, cyclical factors have been more important.
  • Rising expectations of a Bank of England rate hike have helped push the pound higher.
  • HSBC had forecast that sterling would fall as low as $1.20. It now believes the pound will end the year at $1.35.

LONDON — "We were wrong."

That is HSBC's blunt, unusually contrite assessment of its call earlier this year that the pound would fall as low as 1.20 against the dollar in 2017, driven down by Brexit uncertainties and the prospect of the UK failing to negotiate a good Brexit deal — or in fact, any Brexit deal.

"We expected 2017 to be a difficult year for GBP, one in which the currency would succumb to the uncertainties that the Brexit vote had unleashed and where politics would remain the dominant driver," HSBC's David Bloom and Daragh Maher wrote in a note circulated to clients on Monday.

"It was the year when a lack of progress in Brexit negotiations would cause a fretful GBP to ponder a 'no deal' cliff-edge conclusion to the Article 50 machinations. Heightened political uncertainty would in turn highlight the UK’s structural frailties. The current account deficit would remain stubbornly wide, encouraging additional GBP downside."

In short, none of that has happened. The pound is now trading at its highest level since the referendum, climbing above $1.35 last week, and gaining more than 10% on the greenback since the beginning of the year, as the chart below illustrates:

pound year to date 2017

Rather than trading on Brexit developments — as it did in second half of 2016 after the vote — the pound has behaved like a normal, cyclical currency, moving after things like data events and Bank of England announcements that have the ability to influence the next interest rate move from the central bank.

"This year GBP has slavishly and exclusively followed only cyclical drivers not the political ones," Bloom and Maher argue, citing the chart below:

Pound movements v rate expectations

Here's the bank's analysis (emphasis ours):

"Chart 1 shows GBP-USD plotted against expectations for 1Y rates a year ahead in the UK compared to those in the US. Prior to the Brexit vote in June 2016, the relationship was neat. During H2 16, the power of political drivers to disrupt this relationship is evident. Yet in 2017, GBP reverted to being a cyclical slave, once again tracking those rate expectations. It’s as though the market has a set and stable idea of the Brexit negotiations."

A perfect example of the pound's cyclical shift came on Friday last week when it gained more than 1% on the dollar after the Bank of England's Gertjan Vlieghe — probably its most dovish policymaker — said a rate hike could come in "months."

Speaking at the annual conference of the Society of Business Economists, Vlieghe said that if the current "data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth" continue as they are, the bank could raise rates in the short term.

Vlieghe's words were probably his most hawkish since he joined the bank's Monetary Policy Committee, and reinforced the bank's words from the previous day, in which it strongly signalled that markets are underestimating the potential for an increase in interest rates in the coming months.

The bank's Monetary Policy Committee said that "some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target." In central bank-ese, that was as clear of a hint as it gets.

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UBS: 'Headwinds could persist' for Wells Fargo after the fake account scandal killed its stock last year

Business Insider, 1/1/0001 12:00 AM PST

Wells FargoWells Fargo's troubles keep getting worse.

So far, the bank has agreed to pay a $190 million settlement, return $2.8 million to at least 1.4 million additional customers, and lost its CEO.

Despite the cooperation with regulators and reparations payments, Swiss bank UBS says its analysis "suggests revenue headwinds could persist," and has lowered its price target by $3 to $56.

"The data does not yet suggest a recovery in customer engagement," analysts Saul Martinez and David Eads said in a note Friday. "We do not think that cost reduction and capital management benefit EPS momentum in '19. Nonetheless, tangible evidence than an earnings recovery is forthcoming is needed for the current valuation discount to narrow."

Beyond the scandals that have plagued the California-based bank for over a year now, its digital game is struggling too, failing to keep up with competitors like Chase and Bank of America.

"Wells’ app download share has not shown signs of recovery vs Chase and Bank of America after declining meaningfully in 2H16 (though recent news flow has seemingly not had a negative impact either)," the bank said.  "Somewhat more encouragingly, employee satisfaction scores have recovered since early '17 and now stand moderately above the peer group average."

Wells Fargo's stock took a substantial hit when the fake accounts were first made public, hitting a 52-week low of $43.55 last year.

"Fallout from the sales fraud/other missteps created above average uncertainty about the financial outlook," UBS said.

Shares of Wells Fargo rose 0.72% in trading Friday, closing at $51.66 — 8.4% below UBS’ target.

Wells Fargo stock price

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A 36-year old who manages $4 billion breaks down why Amazon is his most bullish bet (PRWAX, AMZN)

Business Insider, 1/1/0001 12:00 AM PST

amazon worker

It's been smooth sailing this year for anyone in the stock market that bet on big tech companies. 

The so-called FAANGs, including Facebook, Alphabet, and Netflix, have earned their stripes in 2017 by outperforming the broader stock market, and being responsible for much of its gains. 

That's partly why stock pickers are having a strong year — they held a record overweight position in tech

And so, for fund managers heavily weighted in the so-called growth sectors, 2017 has been a good year. They include Justin White, who manages the T.Rowe Price New America Growth Fund. It was up 25% as of Thursday, a stronger performance than the Lipper Multi-Cap Growth Funds average.

His biggest bet right now is on Amazon, even after he reduced the fund's stake in tech stocks as the sector continued to leap higher this year. 

"Their competitive position in both the core retail business and in their cloud business is just so unassailable," he told Business Insider. "The market they're targeting is so large that they're just going to keep winning. They just keep gaining share at a healthy clip in this enormous market, and they'll replicate the strategy in more markets across the world as they can."

As for the biggest criticism leveled against Amazon's strategy — that it prioritizes growth over profits — White believes that Amazon would easily and quickly silence skeptics if it turned around to focus on net income.

"Jeff Bezos just sees so many things he wants to do, and his batting average on large investments is sufficiently high that it sure feels to me that the right decision is to keep investing capital," he said.  

The obvious casualty of Amazon's reach is brick-and-mortar retail, where companies are losing their share of total sales to online shopping and being compelled to make big investments in ecommerce. 

"There's probably hundreds of publicly traded companies where the number one bear case on them is Amazon disrupting their business," White said.

"I think that it has the deepest moat [or competitive advantage] of any business model out there, neck-and-neck with Google," White said. Google-parent Alphabet, Apple, Facebook, and Intuit were among his fund's largest holdings as of the end of the August.  

White said there were "only a few battles" in established, physical retail that he's chosen to fight. But otherwise, it feels like those companies are heading in the other direction over the long term. 

"Brand equity is not what it used to be," White said. "You can see that across the consumer-staples environment where the revenue growth from a lot of historically steady, slow-growing consumer-staple companies has deteriorated. I think a lot of that is the fact that consumers don't really value brands as much."

SEE ALSO: A CEO that helped rescue his company from near bankruptcy shares a key mistake people make with money

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Barclays: Wetherspoons is performing surprisingly well, but avoids mentioning Brexit

Business Insider, 1/1/0001 12:00 AM PST

Wetherspoon Chairman Tim Martin

One of Britain's largest pub chains is performing surprisingly well and bucking the trend many other pubs are experiencing of reduced business and cash flow, according to Barclays analysts.

After Wetherspoons posted strong annual results last week, with a 15.6% jump in pre-tax profit, Barclays raised its estimate for the group's earnings for the 2018 financial year by 11%, and predicted it would continue to perform well.

Barclays said it was "surprised to see" sales growth of 6.1% for the financial year so far, but that the strong performance would benefit shareholders, whether used to "build new pubs, buy back shares, freehold assets, or to reduce debt."

Last week ratings agency Moody's warned that pubs may suffer over the next 12-18 months, as earnings are hit by a decline in demand for beer, a weak pound and rises in the national living wage and inflation. Moody's said reduced cash flow meant pubs were struggling to service their debt, and noted total beer sales in the UK had fallen 23.5% between 2000 and 2016.

The agency said a move towards selling food had helped offset this problem, but that converting pubs to include restaurants often required substantial upfront costs, which had limited free cash flow growth.

In comparison, Wetherspoons' pubs have long had food available all day: Wetherspoons is the fourth most visited brand in the UK for breakfast, according to Barclays, behind only McDonald's, Costa and Greggs. The group is also close to spending a record high on pub upkeep, said the note, but could reduce this significantly if sales begin to fall — providing a "huge cushion for profits."

However, Barclays' note does not mention the impact Brexit may have on Wetherspoons' future trading. Moody's cited this as a significant concern, since a high proportion of the food and drink sold at pubs is imported from the EU.

Wetherspoons chairman and Founder Tim Martin is a prominent Brexiteer. Commenting on the company's strong profits last week, he denied that leaving the EU would pose problems for the company or for the UK, despite the fact that the chain relies on a large number of low-skilled migrant workers.

He said EU negotiators' "current posturing and threats" were forcing British companies to "look elsewhere for supplies," although said he would be "very reluctant" to do so. He said EU negotiators needed to "take a wise-up pill" to retain British business and avoid causing "further economic damage to struggling economies like Greece, Portugal, Spain and Italy."

According to Moody's, the rise of the national living wage — which went up to £7.50 per hour in April 2017 — has also negatively impacted pubs' profits, as has the rise in inflation and a weaker pound Barclays conceded Wetherspoons is "highly sensitive to the UK economy," and said ongoing increases in the national living wage "could be hard for the group to fully digest without suffering margin hit, or cash profit headwinds."

On Monday, Barclays raised Wetherspoons' price target to 1250p, up from 1150p.

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Split on Forks? Blockchain Leaders Learn Tough Lessons from Bitcoin Scaling

CoinDesk, 1/1/0001 12:00 AM PST

The chaos of bitcoin's scaling debate has pushed other public protocol's consensus mechanisms into a more strict and orderly framework.

Bitcoin bounces up more than $900 from the week's low

Business Insider, 1/1/0001 12:00 AM PST

LONDON — The price of Bitcoin is surging on Monday after a week in which it lost more than $1,000 in value and dropped below $3,000 per coin for the first time in over a month.

Bitcoin collapsed spectacularly last week as news of a regulatory crackdown in China broke. The cryptocurrency dropped 16% against the dollar on Thursday after Chinese media reported that the country's regulators were moving closer to shutting down exchanges.

But Bitcoin is now surging again. By 9.00 a.m. BST (4.00 a.m. ET), Bitcoin is up by more than 6% against the dollar — its key pairing in the currency markets — to trade at $3,950 per coin, just below the psychologically significant $4,000 mark, as the chart below illustrates:

bitcoin monday 18 september 1

Bitcoin is notoriously volatile, frequently swinging wildly between positive and negative during trading sessions.

Bitcoin's rise coincides with a report from the Bank of International Settlements which argues that global central banks must think seriously about their approach to the growing cryptocurrency markets.

"Central banks will have to consider not only consumer preferences for privacy and possible efficiency gains — in terms of payments, clearing and settlements — but also the risks it may entail for the financial system and the wider economy, as well as any implications for monetary policy," the BIS said.

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The world's central banks need to start thinking seriously about Bitcoin

Business Insider, 1/1/0001 12:00 AM PST

A sign announces a proprieter's loyalty to Bitcoins, where they are also accepted for payment, at a pub on April 11, 2013 in Berlin, Germany. Bitcoins are a digital currency traded on the MTGox exchange, and the value of the virtual money fluctuated from USD 260 per bitcoin down to USD 130 per bitcoin yesterday and recovered somewhat in trading today. (Photo by )

LONDON – Global central banks must think seriously about their approach to the growing cryptocurrency markets, the Bank of International Settlements (BIS) said.

The BIS — often known as the central banks' central bank — used its quarterly report to discuss cryptocurrencies such as Bitcoin and Ethereum, saying that central banks must consider whether or not to issue their own digital currencies in the near future.

"In less than a decade, bitcoin has gone from being an obscure curiosity to a household name. Its value has risen - with ups and downs - from a few cents per coin to over $4,000. In the meantime, hundreds of other cryptocurrencies — equalling bitcoin in market value - have emerged," the report said.

BIS argues that central banks must look at questions of both privacy and efficiency when assessing digital currencies, as well as the financial stability implications that arise from those currencies.

"Central banks will have to consider not only consumer preferences for privacy and possible efficiency gains — in terms of payments, clearing and settlements — but also the risks it may entail for the financial system and the wider economy, as well as any implications for monetary policy," the BIS said.

Cryptocurrencies have entered the consciousness of central banks and their most senior officials over the course of the last couple of years. Earlier this year, for example, Jens Weidmann, the head of Germany's Bundesbank warned that digital currencies like bitcoin have the potential to make financial crises in the future even more devastating.

Weidmann said he believes that central banks will eventually create their own digital currencies to reassure average citizens that such currencies are safe and stable, but in doing so could increase the risk of bank runs in future crises.

"Allowing the public to hold claims on the central bank might make their liquid assets safer, because a central bank cannot become insolvent," he said in a speech in June.

Cryptocurrency regulation has also come into sharp focus in recent weeks, with regulators around the world starting to crack down on the market for so-called Initial Coin Offerings — where startups issue new digital coins to fund projects.

Regulators around the world have been cracking down on the cryptocurrency space since the start of the month. Regulators in China, South Korea, Hong Kong, and Britain have all moved to either ban or rein in activity in ICOs.

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REPORT: Saudi Arabia may raise petrol prices by 80% this year — to just under 30p per litre

Business Insider, 1/1/0001 12:00 AM PST

oil

LONDON – Saudi Arabia is considering raising domestic prices for gasoline and jet fuel by around 80% this year, Bloomberg reported, citing a person with knowledge of the plan.

The government is planning to raise prices to be roughly in line with varying international prices, Bloomberg reported, saying the decision could take effect as early as November.

By current prices, this could result of an increase of 80% for octane-91 grade gas, from 0.75 riyals per litre to 1.35 riyals per litre — although this is still only about 26p.

Bloomberg said the government is planning to delay increases in other energy prices until 2018.

Saudi Arabia is the world's biggest oil exporter, but has been forced to diversify its economy away from oil, as global prices have fallen and oil's long-term future looks uncertain.

The drop in prices, caused the country to announce public spending cuts and rises in fuel and energy taxes in 2015. 

According to Bloomberg, the person said the government was planning to increase other fuel prices gradually between 2018 and 2021, but that gasoline and jet fuel would only be subject to a one-time raise before the end of this year.

Since diesel and heavy fuel oil are used to generate power and for industrial production, the person said, the government may cap increases in these fuels.

Screen Shot 2017 09 18 at 08.30.27

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10 things you need to know before European markets open

Business Insider, 1/1/0001 12:00 AM PST

st. louis police shooting protest

Good morning! Here's what you need to know.

1. The first far-right party set to enter Germany's parliament for more than a half a century says it will press for Chancellor Angela Merkel to be "severely punished" for opening the door to refugees and migrants. The Alternative for Germany (AfD) could become the third largest party with up to 12% of the vote on Sept. 24, polls show.

2. Startup bank Monzo is doing away with one of its most popular features — unlimited free ATM withdrawals overseas. The company, which offers a prepaid money card and is rolling out current accounts, is asking its customers to choose the best new charging option for ATM fees abroad, saying its existing policy has become simply too costly to continue.

3. Qatar's defense minister has signed a letter of intent to purchase 24 Typhoon jets from British defense group BAE Systems, in a move that could anger other Gulf countries boycotting Doha. Saudi Arabia, the UAE, Egypt and Bahrain cut diplomatic and trade links with Qatar on June 5.

4. Former Prime Minister Silvio Berlusconi, 81, marked a formal return to Italy's political stage, portraying himself as a pro-European moderate. Speaking at a meeting of his Forza Italia (Go Italy) party, Berlusconi said he wanted to lead the group into the national ballot, which is expected by next March.

5. Volkswagen is a "second mover" in electrified commercial vehicles, after lagging companies such as Tesla in putting them on the road, the head of VW's trucks business told a German newspaper. He said Volkswagen had emissions-free alternatives to conventional trucks and buses on offer.

6. Home Secretary Amber Rudd said on Sunday that Boris Johnson was not starting a leadership bid by setting out his plans for Brexit in a newspaper article, adding that his intervention was "absolutely fine". A week before Prime Minister Theresa May sets out her vision for Brexit in a speech in the Italian city of Florence, Johnson, the foreign secretary, published a newspaper article that roamed well beyond his ministerial brief.

7. Beijing will suspend construction of major public projects in the city this winter in an effort to improve the capital's notorious air quality. All construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15 within the city's six major districts and surrounding suburbs, said the Xinhua report.

8. Spain's paramilitary national police force says its agents have confiscated more than 1.3 million posters, flyers and pamphlets promoting the planned independence referendum by Catalonia's regional government. The Civil Guard said the campaign literature was seized on Sunday during raids of an unnamed business in Barcelona province that distributes advertising material.

9. Dirk Jeschke, a former portfolio manager at Paul Tudor Jones' hedge fund firm, is prepping a hedge fund in London for early next year. Jeschke, 32, is planning a macro fund that will, among other things, emphasize medium- to long-term systematic macro strategies. He plans to launch the fund in the first or second quarter of next year.

10. China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday. China has cracked down this year on "irrational" overseas investment which it suspected was one way of disguising capital flight as the yuan currency weakened.

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