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A senior official at asset management giant BlackRock said this week that he doesn't see the case for a bitcoin exchange-traded fund (ETF).

A pair of $2 billion markets are gearing up for some new therapies over the next few years. 

The drugs in development are to treat two major women's health conditions, endometriosis and uterine fibroids, which can cause a lot of pain for women and in some cases lead to infertility and surgical procedures.

An estimated 5 million Americans are living with endometriosis, a condition in which tissue from the uterus grows outside the uterus, leading to cysts, heavy bleeding, and scarring. Another 3 million women have uterine fibroids, Myovant Sciences CEO Lynn Seely told Business Insider. That condition involves benign tumors, called fibroids, growing in and around the uterus, causing heavy bleeding and pain in the women who do have symptoms. 

"Everybody knows somebody with endometriosis but nobody's talking about it." Seely said.

Myovant is among the companies working on new treatments for the two conditions along with other women's health disorders. With the new developments, analysts anticipate both the endometriosis and uterine fibroid markets to hit $2 billion over the next decade.

Potential new treatments in the works

Treating both endometriosis and uterine fibroids involves changing hormone levels in the body. Right now, there are a few drugs that can do this, including leuprolide, a hormone suppressant, and contraceptives are used as well, according to the Mayo Clinic. Some of these treatments come with major side effects, including bone density loss and hot flashes.

The conditions can also be treated via surgery, but the hope is to come out with new treatments that have fewer side effects and are less invasive. 

Here's what's in the works to treat uterine fibroids, endometriosis, and in some cases both: 

• Allergan is developing Esmya, a drug that's being investigated for use in uterine fibroids. The drug works by modulating progesterone, a key hormone for women relating to the uterus. It's a type of drug called a "selective progesterone receptor modulator." Bill Meury, Allergan's chief commercial officer told Business Insider he hopes to get results that can put the drug up for approval in 2018. 
• Bayer's drug, Vilaprisan, also works by modulating progesterone levels. Like Esmya, it's a "selective progesterone receptor modulator." In July, Bayer began a phase 3 trial studying the use of Vilaprisan to treat uterine fibroids. The trial's expected to take three years. 
• Myovant's drug, Relugolix, works by suppressing estrogen to low levels, and then reintroducing just enough so that it doesn't lead to bone density loss. That way, it won't be high enough to drive endometriosis and uterine fibroids, Seely said. It's a type of drug called "gonadotropin-releasing hormone receptor agonist." The US trials for Relugolix should wrap up in 2019, but a phase 3 trial conducted in Japan found that the drug wasn't inferior to leuprolide, one of the treatments currently available for uterine fibroids.
• AbbVie, in partnership with Neurocrine Biosciences, is working on Elagolix, a drug that also works by altering hormone levels in women with uterine fibroids and endometriosis to reduce the pain associated with the conditions. Like Relugolix, Elagolix is a gonadotropin-releasing hormone receptor agonist. In September, AbbVie submitted the drug to the FDA for approval in endometriosis. 

What still needs to be treated

But the treatments, while they'll ideally be able to treat endometriosis and uterine fibroids with fewer side effects than what's currently available, won't be the end of the road. The hope is that this wave of new treatments will spark more, Seely said. 

"When people see what a difference that we can make in the lives of women, others will follow," she said. But to get there, it'll take more basic research into diseases related to women's health. 

And there are still areas within women's health that need more attention. Allergan's also working on treatments to help with painful sexual intercourse, while Myovant's also working on a drug to treat infertility that's still in early stages. There are also areas related to mental health and postpardum depression that still need some innovation, Meury said. 

SEE ALSO: 2 giant drugmakers are racing to make a breakthrough in treating HIV, and there's $22 billion on the line

DON'T MISS: 5 reasons why you should absolutely get a flu shot this year

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NOW WATCH: Shiller says bitcoin is the best example of a bubble in the market today

This week:

• Business Insider CEO Henry Blodget discusses the stock market's ascent to yet another set of new highs, and drills down on high valuations. He cites investment manager John Hussman, who points out that the market is now the most expensive of all time, and predicts a 60% loss in the S&P 500 before the end of the current cycle. Blodget contrasts that view with the one expressed by billionaire investor Warren Buffett this week, who said valuations make sense right now, because of how low interest rates are.
• He then kicks the valuation discussion over to Business Insider executive editor Sara Silverstein, who argues that Hussman's valuation case adjusts for the below average profit margin during the tech bubble which may not be fair. Blodget offers a rebuttal to that, highlighting a chart showing historically elevated levels in a measure of US market cap to GDP, and says that while this doesn't signal an imminent downturn, one will come eventually. Silverstein responds by noting that being two years early in calling a market top makes you wrong. She stresses that timing is everything.
• Silverstein walks through the Fidelity Chart of the Week, which shows that stock market breadth is the lowest since the election, which could be a signal of weakness.
• Blodget and Silverstein check in on the debate raging around the red-hot bitcoin and cryptocurrency market. Blodget doubles down on prior comments that bitcoin is a perfect example of a speculative bubble, and lacks intrinsic value. Silverstein is a bit more enthusiastic about bitcoin's prospects, and says that many of the arguments against it can be applied to other assets, even gold. She also stresses that a great deal of bitcoin pessimism stems from a lack of understanding.
• Business Insider deputy executive editor Matt Turner speaks to David Hunt, president and CEO of PGIM, about where he sees investment opportunities. He mentions the search for yield, and says that interest rates in Japan and Europe are looking good right now. Hunt also says the firm has been successful finding real returns from real assets. In terms of the US, he thinks its economy is gradually improving, and sees a trend shifting towards corporate reinvestment in growth.
• Hunt checks in on the so-called Trump trade, which he says lost its footing after an initial surge. He notes that the market was boosted in the first two quarters of the year by an improving economy, and says Trump trade "animal spirits" are coming back into the market. Hunt also addresses the risks surrounding the Fed's ability to normalize its balance sheet, and says it's crucial for the market to watch the pace at which it happens. Beyond that, he says that on a forward P/E basis, the S&P 500 is fairly priced given the current low-interest rate environment.
• Hunt says that Japan is at the top of PGIM's list in terms of international opportunities. He notes that there are large institutional investors there looking to put money into high-yielding assets elsewhere in the world. He calls it a "search for yield 2.0," which is something we haven't seen in quite some time from the Japanese.
• Turner asks Hunt about the overall state of the money management industry, who highlights the huge focus on fees, how firms are indexing, and how many managers they should be working with. He notes the decline in management fees as passive investment grows, and says that firms who closely track benchmarks will suffer. Overall, he thinks that the competitive conditions are actually beneficial to investors. On an asset allocation basis, Hunt thinks that stocks and bonds have come into an equilibrium.

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Stocks climbed higher on Thursday ahead of the September jobs report.

All three indices once again hit new record highs.

The S&P 500 has climbed for eight consecutive sessions, the longest streak since summer 2013, according to Bloomberg's Joe Weisenthal.

First up, the scoreboard:

• Dow: 22,775.39, +113.75, (+0.50%)
• S&P 500: 2,552.07, +14.33, (+0.56%)
• Nasdaq: 6,585.36, +50.73, (+0.78%)
• US dollar index: 93.96, (+0.5%)

1. Wall Street hasn't been this unsure about America's jobs market in a long time. When the Bureau of Labor Statistics releases its jobs report for September on Friday, it's expected to show a significant slowdown in hiring. But the gap in expectations is much wider than normal, as economists wrestle with the impact of the recent hurricanes.

2. The House passed a budget resolution on Thursday that served as the first step toward Republicans passing a massive tax reform plan. The resolution, which passed by a vote of 219 to 206, included in it instructions for what is known as budget reconciliation. Reconciliation allows a bill to pass the Senate without being subject to a 60-vote filibuster, a crucial hurdle for the GOP to move eventual tax legislation.

3. Oil climbed higher as King Salman of Saudi Arabia made a historic visit to Russia. "The Saudi visit to Russia marks a remarkable turnaround in the relationship between the two countries that had been staunch Cold War adversaries," Helima Croft, head of commodity strategy at RBC Capital Markets, wrote in a note to clients.

4. Senior Saudi officials say Saudi Aramco's IPO is on track for 2018. The plan to float around 5% of Aramco in an initial public offering (IPO) is a centerpiece of Vision 2030, a wide-ranging reform plan to diversify the Saudi economy beyond oil which is being championed by Saudi Crown Prince Mohammad bin Salman.

5. Spain's Constitutional Court suspended the Catalan parliament session planned for next Monday during which regional officials were expected to possibly vote on independence. Meanwhile, Bloomberg's Esteban Duarte is reporting that "separatist leaders in Catalonia are seeking to avoid an immediate declaration of independence from Spain."

6. Investors once seen at risk of extinction are headed for their best year since the financial crisis. About 54% of large-cap mutual-fund managers are beating their benchmarks in 2017, the highest-ever success rate at this time of year, according to Bank of America Merrill Lynch data going back to 2009.

Thursday's economic data: Initial jobless claims fell more than expected to 260,000, down from 272,000. Factory orders rose 1.2% month-over-month in August, up from the prior month's reading of -3.3%.

ADDITIONALLY:

PIMCO: This is as good as it gets for the global economy, and it's time to get cautious.

The investment chief at a billion-dollar firm explains how to profit from a stock market that's been flipped upside down.

The group behind a brutal review of Trump's tax plan responds to Republicans calling its work "propaganda."

Wall Street doesn't understand Ferrari's business.

You probably missed the most important part of Google's hardware event.

There's a private Craigslist inside Bloomberg Terminals where Wall Streeters are selling everything from Ferraris to Italian castles.

SEE ALSO: North Korea exports $2.83 billion worth of goods — here's where it all goes

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NOW WATCH: THE BOTTOM LINE: The 'Trump trade' is back and Ray Dalio breaks down the bitcoin bubble

The post Central Banks and the IMF Warm Up to (Centralized) Digital Currencies appeared first on Bitcoin Magazine.

Last Thursday, Stephen Paddock checked into a $500 suite at the Mandalay Bay Resort and Casino in Las Vegas. 

Now, Mandalay Bay is irrevocably linked to the deadliest mass shooting in modern US history, after Paddock opened fire on a crowd of 22,000 people from the window of his hotel room. 

He killed 58 people and wounded nearly 500, police say.

Often, sites of tragedies become an area of mourning and remembrance. However, the room on the 32nd floor where Paddock executed his killing spree is unlikely to become so. 

"From my opinion, the room disappears," Anthony Melchiorri, host of Travel Channel's "Hotel Impossible," told Business Insider. 

Melchiorri said if he were running the hotel, he would reach out to victims and their families to see how he could best help them.

Then, the room in question — which has been identified as room 135 on the 32nd floor — would likely "disappear" and no longer be available for guests to book. Melchiorri said he would go so far as to have the doors sealed up, removing any trace of the suite's existence. 

Deanna Ting, hospitality editor at travel industry intelligence company Skift, agreed that the room would probably not be available to be booked — at least for a very long time. 

Beyond the room in question, both Ting and Melchiorri emphasized the importance of Mandalay Bay reestablishing the hotel as a safe and secure space for guests.

Housekeeping and other members of staff will be retrained to say something if they see something suspicious. Ting predicts that a very visible security presence — such as metal detectors, X-ray machines, and armed guards — will likely flood Vegas hotels, at least in the short term. 

Las Vegas hotels already have some of the best security in the country, with Melchiorri saying it has "more security per square foot" than any other city in the US.

Debra DeShong, a spokesperson for Mandalay Bay's parent company, MGM Resorts, told Business Insider in a statement that the company "works consistently with local and national law enforcement agencies to keep procedures at our resorts up to date, and are always improving and evolving."

However, for Mandalay Bay and other hotels in Las Vegas to convince guests of their safety, drastic and visible changes will be necessary. 

SEE ALSO: The Las Vegas shooter spent 3 days stockpiling weapons in a $500 suite on the 32nd floor — here's what the room is like

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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

Oil climbed higher on Thursday as King Salman of Saudi Arabia made the first ever visit by a Saudi monarch to Russia.

King Salman told Russian President Vladimir Putin in Moscow that the two countries will continue to work on stabilizing oil markets.

Brent crude oil, the international benchmark, was up by 2.0% at $56.91 per barrel and West Texas Intermediate, the US benchmark, was up by 1.6% at $50.80 per barrel at 12:51 p.m. ET.

"The Saudi visit to Russia marks a remarkable turnaround in the relationship between the two countries that had been staunch Cold War adversaries," Helima Croft, head of commodity strategy at RBC Capital Markets, wrote in a note to clients.

"Like many important policy developments in the Kingdom, Crown Prince Mohammad bin Salman seems to have been the driving force behind the relationship upgrade, having made Russia one of his foreign policy stops when his father ascended the throne," Croft said.

Saudi Arabia and Russia remain divided on several major issues, including the ongoing civil war in Syria, but have a mutual interest in seeing oil prices rise higher since both of their economies are highly dependent on the commodity. The two have cooperated on oil policy over the last year.

Russia, which is not a member of OPEC, joined the cartel-led production cut agreement, which aims to combat the world's oil glut that kept prices depressed for over two years, in November 2016. It was the first time Russia joined OPEC in a coordinated cut since 2001.

Then in May 2017, the two worked together to extend the cuts until the end of March 2018. Before the official OPEC meeting, Saudi Arabia and Russia together said they favored an extension.

Ahead of the king's visit, Putin said on Wednesday at the Russian Energy Week conference in Moscow that Russia is open to the possibility of extending the production cut deal with OPEC through the end of 2018. Saudi Energy Minister Khalid al-Falih, meanwhile, said the kingdom was "flexible" regarding that suggestion, according to Reuters.

"[C]oordination on oil policy has been perhaps the biggest deliverable, with Russia abandoning its longstanding aversion to cooperating with OPEC and essentially assuming the role of de facto co-president this year," Croft explained in the note. "Moreover, Putin signaled that he may not be looking to abandon this co-pilot role anytime soon, stating this week that Russia may be willing to extend the output agreement to the end of 2018."

SEE ALSO: The rise, fall, and comeback of the Chinese economy over the past 800 years

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NOW WATCH: THE BOTTOM LINE: The 'Trump trade' is back and Ray Dalio breaks down the bitcoin bubble

A handful of billionaire Wall Street titans are increasingly making life miserable for corporate boards of the largest companies in the world.

Activist investors are targeting fewer companies than in recent years, but the most powerful among them are setting their sights on ever larger trophies and deploying capital at a record clip in 2017.

Through the first three quarters, activists plowed $45 billion into 124 new campaigns targeting companies whose market capitalization exceeds $500 million, according to a report released this week by investment bank Lazard.

The number of targets is below the pace of 181 from 2015 and about even with 2016.

But deployed capital beats the $41.5 billion mark through the first three quarters in 2015 and more than doubles the $19.3 billion pace from 2016. 

"Activism is as busy as we've ever seen it, " said Jim Rossman, managing director of Lazard's shareholder advisory business. "It is in full bloom."

Just a handful of firms account for $20.8 billion in new positions, nearly half of the the total. 

These funds are run by four of the most powerful titans of Wall Street: Paul Singer of Elliott Management, Bill Ackman of Pershing Square Capital, Dan Loeb of Third Point Capital, and Nelson Peltz of Trian Fund Management.

These billionaire investors are coordinating battles with ever-larger corporations, increasingly shifting their gaze toward Europe. Nearly 20% of the capital deployed in 2017 targeted European companies — up from 10% in prior years.

That includes Dan Loeb's campaign against $264 billion Swiss food and beverage company Nestle — his fund's largest ever bet — as well as Paul Singer's against $23.2 billion Dutch conglomerate Akzo Nobel. 

The trend toward Europe is due in part to the global nature of the assets these conglomerates own, according to Rossman, as well as the fact that the companies are increasingly owned by players hedge funds are familiar working with: colossal asset managers like BlackRock, Vanguard, and State Street.

Singer's Elliott Management stands out above the rest. His firm has deployed $9.9 billion in capital over 12 campaigns, more than double second-place Bill Ackman's Pershing Square. That includes waging — and winning — a bidding war against Warren Buffett for bankrupt power company Oncor. 

The firm manages about $33 billion and its flagship fund has a compounded annual return of 13.5% since launching on February 1, 1977, according to investor documents previously reported by Business Insider.

Check out the rest of the funds that have been the most aggressive so far in 2017:

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NOW WATCH: Shiller says bitcoin is the best example of a bubble in the market today

By many measures, 2017 appears to be the year of cryptocurrency, but Wall Street's most powerful players are not on board with the craze. 

The market for cryptocurrencies, digital coins powered by so-called blockchain technology, is up by more than 720% since the beginning of this year, at $145 billion. 

Bitcoin, the first and largest cryptocurrency, is up more than 450% since the beginning of the year. It is seen as the most crowded trade to a pool of 214 fund managers overseeing $629 billion, according to a survey conducted by Bank of America Merrill Lynch.

At the same time, initial coin offerings, a cryptocurrency-based fundraising method, have taken off with hundreds of startups using the method to raise, in some instances, millions of dollars in a matter of seconds. 

On top of that, over 75 crypto "hedge funds" have popped up to invest in the more than 1,000 cryptocurrencies on the market and initial coin offerings. 

The massive growth of the market has piqued the interest of folks from Main Street to Wall Street, but Wall Street's top execs — who have seen their fair share of bubbles — are concerned. 

Since the beginning of the month, a number of top Wall Streeters have weighed in on the bitcoin debate. Here's what six of them have had to say: 

SEE ALSO: A manager at a $6 billion quant fund gives the best intro to cryptocurrencies we've heard

Jamie Dimon, CEO of JPMorgan

Jamie Dimon, CEO of JPMorgan, got the bitcoin conversation among top Wall Streeters this year going when he bashed it at the Barclays Financial Services Conference on September 12.

Dimon called it "a fraud" and said it was "worse than the tulip bulbs."

He added that he would fire any banker at the firm who traded the red-hot digital currency. 

The morning after Dimon's remarks, the price of bitcoin tanked 11%. 

Ray Dalio, co-CIO of Bridgewater Associates

Ray Dalio, the founder of the world's largest hedge fund, echoed Dimon's criticisms of bitcoin on September 19. 

The billionaire founder of Bridgewater Associates said bitcoin "is a bubble" during an appearance on CNBC's Squawk Box. 

Dalio's beef with bitcoin, specifically, is that it isn't a good store of value and it's hard to make transactions with, the two criteria Dalio sees as essential for a currency. 

"Bitcoin, today, you can't make much transactions in it," Dalio said."You can't spend it very easily."

Dimon (Part II)

Dimon doubled down on his anti-bitcoin position on September 22, saying cryptocurrencies like bitcoin and ether "are a kind of novelty."

While talking to CNBC India, the banker went after cryptocurrencies and initial coin offerings, a red-hot cryptocurrency-based fundraising method.

"It's creating something out of nothing. That to me is worth nothing," Dimon said of ICOs. "It'll end when people lose a lot of money."

To raise money through an ICO, companies create their own digital coin or token. Investors have poured into ICOs this year, with some companies raising millions of dollars in a matter of seconds from a token sale.

In total, more than $2 billion has been raised via ICOs, according to Autonomous NEXT, a financial technology analytics firm. 

Welcome 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.

There's a ton of investing news today, so let's jump right in. 

Brevan Howard's flagship fund, run by billionaire Alan Howard, is down for the year as the firm continues to lose money. The Brevan Howard master fund fell 4.61% this year through September, according to a client update seen by Business Insider. 

Elsewhere in hedge fund news, Carlson Capital's Black Diamond Thematic fund has added to its losses this year, and is down 19% after fees this year through September 30, according to a client update seen by Business Insider.

In contrast, about 54% of large-cap mutual-fund managers are beating their benchmarks in 2017, the highest-ever success rate at this time of year, according to Bank of America Merrill Lynch data going back to 2009.

PIMCO is stressing caution to its clients. The $1.6 trillion asset manager doesn't see another economic recession happening just yet. But with low market volatility and many economies around the world growing steadily, there's an open door for complacency to creep in. 

We talked to Dennis Ruhl, chief investment officer of the US behavioral finance equity group at JPMorgan, about what keeps him up at night, and one trade that is overhyped. And Bill Schultz, who oversees $1.2 billion as chief investment officer of McQueen, Ball & Associates, told Business Insider about how to play the ongoing stock market rotation, and how he sees Amazon affecting its competitors.

In Wall Street news, Bloomberg is fighting back against the startup that wants to steal its lucrative Wall Street business, and Deutsche Bank is pulling a Silicon Valley move and unleashing its code onto Wall Street.

The US Senate has confirmed Randall Quarles, a former Wall Street lawyer and Treasury official, to the position of Federal Reserve Vice Chair for Regulation, a post created after the financial crisis to address gaps in bank supervision. 

Business Insider on Wednesday published its list of Rising Stars on Wall Street age 35 and under. Here are the rockstar Wall Streeters in trading.

Lastly, a hedge funder once paid nearly $800,000 in rent to stay at this fashion mogul's home in the Hamptons — and now you can buy it for $45 million.

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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

Google announced a slew of new hardware products including the newest Pixel phones and a couple new smart speakers on Wednesday. The most important part of the event was not the new hardware products, though.

"Google... provided an update on its artificial intelligence & Machine Learning efforts, underlining Google's long-term strategic ambitions to expand its core search capabilities across a growing array of platforms & use cases," Eric Sheridan, an analyst at UBS, said in a note to clients.

For Sheridan, one of the most important parts of the event was seeing Google's powerful approach to artificial intelligence, and what that means for the future of the business.

Check out: Google is using its biggest advantage as a weapon to totally embarrass Apple

As the company's event wandered from new product to new product, the AI theme was evident in all of them. Google's new phones incorporate AI into the camera for better image stabilization and object recognition. The smart speakers can tell users voices apart and pull music requests from the library of the individual talking. The company's new headphones can translate a conversation between two different languages in real time. And that's just the highlights.

The whole spectacle started with a dedicated look at the advances Google has made in artificial intelligence. Sundar Pichai, CEO of Google, took to the stage to show how the company's researchers are building AI into the very fabric of the company's new products.

Pichai talked about the company's research efforts, which, in a somewhat meta-move, even include using AI to build AI image-recognition systems which are already more accurate and faster than human-generated systems.

Pichai's AI introduction was easy to ignore if you tuned in for new phones or speakers, but it was an important look at how Google is shifting its focus from "Mobile First," to "AI first."

While companies like Amazon and Apple are also building AI products, their strategies seem to focus on pursuing the best voice assistant to put in their speakers or phones, while Google is more closely integrating AI into the soul of its products. The company put up a slide that said "AI + software + hardware" during the presentation, which not only adds AI to its competitors' list of advantages but also puts it first.

Google has it's own voice assistant too, and it's often rated as one of the best in the industry right now. But Pichai's AI intro barely mentioned the assistant because there were so many more AI advances to highlight.

"We are very confident about our approach here," Pichai said onstage. "Because we are at the forefront of driving the shifts with AI.

In Google's event, the new devices definitely stole the show, but they also underlined the company's focus on AI. The question now, Sheridan asks, is how well the new AI-powered devices sell and how they affect the company's bottom line in the future.

Google is up 21.02% this year, and fell slightly after the company's Wednesday event.

NOW READ: Google is using its biggest advantage as a weapon to totally embarrass Apple

SEE ALSO: Walmart is offering a surprising perk for customers buying the new Google Home devices

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NOW WATCH: THE BOTTOM LINE: The 'Trump trade' is back and Ray Dalio breaks down the bitcoin bubble

As the stock market grinds its way to yet another series of record highs, it's easy to assume that it's just been business as usual, with tech companies blazing the trail.

But under the surface, the leaders of the market have been churning, with the dominant forces in the benchmark S&P 500 giving way to lesser-loved areas.

And as the market has turned over, dislocations have popped up, creating opportunities for investors in an environment that's been largely starved of price swings.

Bill Schultz, who oversees $1.2 billion as chief investment officer of McQueen, Ball & Associates, told Business Insider he thinks traders should ride the newfound wave higher in energy and telecom — the more attractively-valued industries that have enjoyed a reversal of fortune after underperforming over the first eight months of the year.

In an interview with Business Insider, Schultz spoke about how to play the ongoing stock market rotation, how he sees Amazon affecting its competitors, the impact of the Fed's upcoming balance sheet unwinding and the near-record low volatility environment.

This interview has been edited for clarity and length.

Joe Ciolli: What does the rotation we've seen since the start of September tell you about the market?

Bill Schultz: What you’re seeing are valuations coming into play, for energy in particular, where they're much more reasonable than other areas. It’s seeing the fundamentals of the energy market improve, whether it be on the supply side, or the demand side out of China. You’re starting to see a firming of what was concerning the energy market, which was a lack of demand going forward. All of that is helping to propel that sector of the market.

From a telecom standpoint, you’re seeing a similar phenomenon develop. They’ve been laggards, and haven’t really moved with the market much this year. But now you’re seeing consolidation on the T-Mobile and Sprint side helping AT&T and Verizon, in particular. You’re seeing a reduction in the number of players out there, and more of a concentration on the real business lines of those that will be the survivors in the sector.

On the other side of things, we saw tech get a little heavy, as far as valuations go, so they were probably due for a bit of a pullback.

Ciolli: So with that considered, what areas of the market do you personally like right now?

Schultz: You have to look at energy, just because of the valuation side of things. If they can do anything to fortify the fundamentals — which they seem to be doing — there seems to be lower risk there right now.

Consumer staples have also not been the best performers so far this year, so there could be opportunity there. For now, the more defensive names might be preferable, at least until we get a better view of what’s going to happen on the tax reform and economic side of things. They’re a reasonable place to hang on to your dividends and wait and see what the next catalyst higher is.

Ciolli: What part of the market are you staying away from?

Schultz: You have to watch consumer discretionary, as you see Amazon taking over so many businesses. That’s an area where it’d be advisable to be careful, but not necessarily get out completely.

Ciolli: Going off that Amazon effect — are there any companies or areas of the market best positioned to withstand the pressure?

Schultz: Within the discretionary sector itself, you need to look at names where Amazon would have trouble invading their turf — companies like CVS and Walgreens, where it may be tougher for them.

Also probably some of the convenience store names. Places that sell time-sensitive things people need immediately. Casey’s General Store could be an example of that.

Ciolli: From a political perspective, we’ve seen a resurgence in some of the Trump trades related to tax reform that soared right after the election. How are you looking at tax reform and the role it’ll play going forward?

Schultz: Clearly cuts to corporate taxes are going to be a surviving piece of reform, and that will certainly add to the bottom line for a number of companies, especially international ones. Given the earnings growth that you can get just from tax rate reduction, that helps the valuations for some of these stocks over which there’s been some debate about overvaluation. It’s going to be a clear tailwind for them.

Ciolli: What about what's going on at the Fed? I’ve been hearing increasingly loud rumblings that the Fed balance sheet unwind is a major worry for investors. Do you agree?

Schultz: It’s going to be the pace of the unwinding that really dictates the concern. Yes, there’s uncertainty associated with that, but if they do it at a more gradual pace, the market is expecting that. If that ends up being the case, it probably won’t be as much of a headwind as the market fears. But still, the faster the pace of unwinding and Fed rate hikes, the bigger risk it poses.

Ciolli: How does the transition to a new Fed chair affect your outlook on this?

Schultz: If you put in a hawk such as [former Fed governor Kevin] Warsh, the possibility of a quicker pace of Fed funds rate hikes will increase. What we’ve seen on the equity side is that they’ve been boosted by this low-rate environment, and the current slow pace. If you add any uncertainty to that, it could cause a bit of a pause in the market.

But if someone like [Fed governor Jerome] Powell gets in, with policies similar to [current Fed chair Janet] Yellen’s, that would appease the stock market and create a better environment for them going forward. There’s also still a chance Yellen stays on board. Those are the less volatile choices, and the ones the market would like to see most.

Ciolli: What are your thoughts on volatility being stuck near record lows for so long? Is it something that worries you?

Schultz: The low volatility reflects the current environment. While there are things out there that could disrupt the market, inflation expectations are pretty muted and economic growth isn’t particularly robust, but not weak. That’s all keep swings low. The low-interest-rate environment is not one conducive to high volatility.

One possible risk would be a sharp decline in economic growth, but that doesn’t currently look to be on the near-term horizon.

Ciolli: More philosophically, what's the best piece of advice you can give to an investor just starting out right now?

Schultz: The best thing to do is to save as much as you can, and not try to be a trader in the names that you hold. Look for companies and business models that are going to be long-term. Seek out household names that you know, and products and services that you already use. Put your own thought process and your particular needs to use. Don’t get too caught on flipping back and forth. Buy what you use.

SEE ALSO: Hedge funds are turning their backs on tech stocks

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What Is a Distributed Ledger?

Blockchain has gotten a lot of attention recently thanks largely to Bitcoin and other cryptocurrencies, but distributed ledgers have not received the same level of focus.

In fact, there appears to be a great deal of confusion on the differences between the two. And then we add Bitcoin to the mix, and the situation gets even more muddled. But as we'll explain below, distributed ledger technology is actually relatively easy to understand.

A distributed ledger is simply a database that exists across several locations or among multiple participants. Most companies use a centralized database that exists in a fixed location. But a distributed ledger removes third parties from the process, which makes them quite attractive.

Blockchain vs. Distributed Ledger

Think of blockchain and distributed ledger in the same way you might think of Kleenex and facial tissues. The former is a type of the latter, but it has become so popular that it becomes engrained in people's minds as what the product actually is.

Blockchain tech is essentially a shared database filled with entries that must be confirmed and encrypted. An easy way to understand it is as a type of highly secure and verified shared Google Document, in which each entry in the sheet depends on a logical relationship to all its predecessors.

The name blockchain refers to the "blocks" that get added to the chain of transaction records. To facilitate this, the blockchain uses a cryptographic signatures called a hash.

Advantages of Using a Distributed Ledger Like Blockchain

Blockchain tech offers a way to securely and efficiently create a tamper-proof log of sensitive activity (anything from international money transfers to shareholder records). The conceptual framework and underlying code of blockchain is useful for a several financial processes because of the potential it has to give companies a secure, digital alternative to banking processes that are often bureaucratic, time-consuming, paper-heavy, and expensive.

Distributed ledgers such as blockchain are exceedingly useful for financial transactions because they cut down on operational inefficiencies (which ultimately saves money). They also provide greater security due to their decentralized nature, as well as the fact that the ledgers are immutable.

We've laid out dozens of use cases for blockchain here.

Distributed Ledger Technology Beyond Blockchain

Blockchain may be the most widely-known distributed ledger technology (DLT), but the future of DLTs will depend on collaborative efforts. James Wallis, Vice President of Blockchain Markets and Engagements for IBM, told the Association for Financial Professionals that "you'll see uses for DLT that you can’t even think of today" but that this will involve "a level of sharing that hasn’t really existed before."

Should DLTs become standard, they could revolutionize "Know Your Customer (KYC)," the process through which a business identifies and verifies the identity of its clients. Broader identity management would also become much simpler.

More to Learn

The technological potential of distributed ledgers, specifically blockchain, is immense, and those uses will only grow with time. That's why BI Intelligence has put together two detailed reports on the blockchain: The Blockchain in the IoT Report and The Blockchain in Banking Report.

To get the full reports, subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

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The US Senate has confirmed Randall Quarles, a former Wall Street lawyer and Treasury official, to the position of Federal Reserve Vice Chair for Regulation, a post created after the financial crisis to address gaps in bank supervision. 

Donald Trump promised to reverse post-crisis financial rules known as Dodd-Frank during the campaign, and Quarles is seen as the man who will be leading that effort. Not much is known about his views on monetary policy and interest rates. 

His confirmation is the start of a long string of Fed board appointments facing the Republican president, including the possible replacement of Fed Chair Janet Yellen when her term expires in February. 

Quarles started his career as a banking lawyer for Davis Polk but, having been an acolyte of President George H. W. Bush, eventually served in the Bush administration on international Treasury matters. He later served under President George W. Bush as Treasury undersecretary for domestic finance, a position he held for about a year. Most recently, Quarles started his own investment firm, The Cynosure Croup.

For many years, he worked at the Bush-linked private-equity powerhouse Carlyle Group. 

Quarles has spoken publicly on Dodd-Frank before. In a 2015 interview with Bloomberg TV, he said that repealing the law would be "politically very difficult" but that lawmakers should consider significant alterations.

Weak bank regulation and enforcement is widely seen as having played a primary role in the worst financial crisis in generations, one that crippled the economy and cost millions of jobs.

In the same interview, Quarles hinted that he could have hawkish inclinations on monetary policy. "An important element of Republican thinking about monetary policy currently is that it ought to be more rules based," he said, referring to monetary policy rules such as the Taylor rule, which if followed strictly would have already guided official rates substantially higher.

SEE ALSO: Meet Trump's designated driver of Wall Street deregulation

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NOW WATCH: Watch billionaire CEO Jack Ma dance to Michael Jackson in full costume

Stripe and PayPal are going to be just fine.

Spain's Constitutional Court suspended the Catalan parliament session planned for next Monday during which regional officials were expected to possibly vote on independence.

The parliament session's suspension is noteworthy because parliament enacts the independence law, according to Bloomberg's Maria Tadeo, who is based in Madrid.

The opposition Socialist bloc in Catalan's regional parliament called for Monday's session to be blocked, according to the AP. The separatist parties have a slim majority in the parliament.

Meanwhile, Bloomberg's Esteban Duarte is reporting that "Catalan separatists are trying to find a way to put off a definitive declaration of independence to create space for a negotiated settlement with Spain, according to two people familiar with their plans."

Duarte reports that the leaders of the separatist movement are "divided over their next step." Hardliners are reportedly pushing for the Catalan government to continue with their plans for declaring independence, while the regional president's "mainstream separatist" group worries that would lead to immediate negative economic consequences.

Tensions rose in Spain over the weekend as Catalonia attempted to vote on independence in a referendum that was ruled illegal by Spanish authorities. Spanish police cracked down during the vote over the weekend. According to data from BBC, about 900 people were hurt.

Spain's Constitutional Court ruled that the referendum violated the country's constitution because it "does not recognize the right to self-determination and establishes that sovereignty resides with Spanish citizens collectively," according to the Washington Post.

Catalonia said 2.26 million Catalans voted Sunday and about 90% were in favor of splitting from the rest of the country. The Financial Times reports that the number of people voting and voting for session has been "broadly stable" since 2014, and that a "clear majority" did not endorse secession on Sunday.

Catalonia, which has its own language and culture, is one of Spain's economic powerhouses. It contributes nearly one-fifth of the country's total GDP and has an economy larger than that of Portugal.

SEE ALSO: North Korea exports $2.83 billion worth of goods — here's where it all goes

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Online shopping now accounts for over 10% of all retail sales in the US, and it's no secret that it's affecting retail jobs across the country.

Department stores, which have been declaring bankruptcy at an alarming rate, have been one of the hardest-hit segments.

According to a new report on the Federal Reserve of New York's Liberty Street Economics blog, jobs at department stores — such as salespeople and cashiers — have fallen to their lowest levels in decades.

At the same time, non-store retail jobs —like back-office functions and warehouse employees for companies like Amazon — are at record levels.

While the overall jobs situation in the US is doing relatively okay — the unemployment rate was 4.4% in August — this seismic shift in retail isn't exactly equitable, the Fed says.

"Why should this be a concern? One reason is that the geographic distribution of jobs is very different for online retailers versus brick-and-mortar outfits," New York Fed researchers Jason Bram and Nicole Gorton wrote. "In other words, areas that are losing a lot of department store jobs may not be the ones gaining online retail jobs."

Department stores are almost universal. They have incentive to be located wherever their customers are. E-commerce companies, like Amazon, tend to be much more concentrated in a few hubs, rather than spread out across the country. As a result, places losing department stores may not be replacing those jobs. 

There is hope, though. The bank says that the shift to non-store retail jobs will actually open up some other industries to job growth.

"It is important to remember that the labor market effects of online retailing go well beyond the retail sector," wrote the Fed.

"A more thorough analysis would consider the indirect effects of e-commerce on warehousing, local freight trucking, and couriers and messengers--three industries that have seen fairly robust job growth in recent years."

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LONDON — The pound is falling against the dollar and the euro on Thursday, amid speculation that Theresa May could be ousted at British Prime Minister.

Sterling is down close to 0.80% against the dollar, a four week low, at 3.30 p.m. BST (8.30 a.m. ET) and down 0.50% against the euro.Kathleen Brooks, research director at City Index, says in an email on Thursday: "The market seems to be ignoring some fairly solid economic data, progress, albeit slow, in the Brexit talks, and a weaker dollar and euro in favour of politics.

"After Theresa May’s speech at the Tory party conference on Wednesday, there are rumours that she will be asked (forced) to step down by her own party. The prospect of a leaderless UK in the middle of the Brexit process, or even worse, a Prime Minister Boris, are right to unnerve sterling traders."

David Madden, an analyst at CMC Markets, says: "Downing Street declared that resignation is not an issue for Mrs May. The fact the government had to make that statement says a lot."

You can read more about May's disastrous party speech and speculation that she may be ousted here.

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Netflix's stock is popping, along with the price of its subscriptions.

The company's stock is up 2.69% to about $189.53 on Thursday, following the news that Netflix will be increasing the price of its subscription services to help cover its increasing content production budget.

On Thursday, Mashable reported that Netflix will be raising the prices of its middle- and highest-tier plans for the US by $1 and $2 respectively. The previously priced $9.99 plan will increase to $10.99 and the premium tier will increase from $11.99 to $13.99, according to Mashable. Subscribers to the lowest, $7.99 plan will not see an increase in price, according to Mashable's report.

Netflix confirmed the price increase plan to Business Insider's Nathan McAlone in a statement.

Netflix plans to roll out the price increase in November for existing subscribers and is set to publicly announce the price increase to customers later this month. Netflix told Mashable that it occasionally raises prices in order to add more content and features to the platform.

Netflix reported 51.92 million US streaming subscribers in its last earnings report. While the company doesn't release details on the breakdown of those subscribers among the three plans, an average price increase of $1 per subscriber (based on a $0, $1, and $2 increase respectively for each of the three tiers) would mean an estimated $623 million a year in additional revenue a year for Netflix.

The price increases come as the streaming video space is heating up. Big names in the movie and TV space are starting to pull their content into siloed streaming platforms, which place a higher importance on original content for companies like Netflix as licensed content moves to those proprietary sites and apps. Wall Street has regularly pointed to good original content as one of the biggest subscriber growth drivers for the company, and Netflix recently said it plans on spending $7 billion on creating its own content next year.

Netflix is up 47.69% on Thursday.

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

SEE ALSO: Netflix is raising its prices starting this month

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LONDON — Chancellor Philip Hammond faces a "bloodbath" in the next Budget, according to the Financial Times, with official forecasts expected to show that growth has been much slower than thought in recent years.

According to the FT, the independent Office for Budget Responsibility (OBR) will next Tuesday release new analysis showing that it has drastically overestimated productivity in recent years, which in turn will lead it to offer more pessimistic than expected forecasts of growth at November's budget.

This will wipe out Hammond's ability to set aside money to smooth Britain's exit from the EU. Hammond last year pledged to build up a £27 billion war chest to help boost growth during Brexit. But if growth is slower, there will be less money collected in tax receipts and therefore less to set aside.

The OBR's revisions will reduce Hammond's war chest by as much as two-thirds, leaving Hammond with just "single digits of billions" to work with, according to Treasury officials cited by the FT.

Hammond and the Treasury are committed to cutting the deficit to just 2% of GDP by the fiscal year 2020-21. If the Chancellor wishes to stick to his current deficit reduction schedule he will have to slash the amount of money set aside for Brexit in light of the OBR's revised forecasts.

Until now the OBR has been significantly more optimistic about the prospects for the British economy than the likes of the Bank of England and the OECD. The new forecasts are likely to bring it closer to par with these institutions.

The OBR forecast GDP growth of 2% in 2017 at the Spring Budget and forecast 1.6% growth in 2018. That compares to the Bank of England's most recent forecast of just 1.7% growth in 2017 and 1.6% in 2018.

You can read the Financial Times full story here.

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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

Bitcoin is showing signs its price is on the up, but analysis suggests there are more hurdles on the charts before it can push to new highs.

LONDON — "Cash is not in decline," according to the Bank of England's Chief Cashier Victoria Cleland.

Speaking at the Future of Cash Conference in Vienna, Austria, on Thursday Cleland said that while the number of non-cash transactions in the UK is increasing, the amount of physical money in circulation is actually rising too.

"Very notable in the UK is the rise in the use of contactless cards, which tripled in 2016 accounting for 7% of payments," Cleland said. "The shift in consumer preferences is also evident in online spending, where average weekly online shopping in the UK was £1.1 billion in August 2017.

"But the numbers show a different story. In 2016 the value of Bank of England notes in circulation increased by 10%, reaching over £70 billion in the run-up to Christmas: the fastest growth in a decade."

Some commentators have believe cash faces an interminable decline due to the rise of payment methods like contactless cards and Apple Pay. Last year, for example, MasterCard's UK and Ireland boss Mark Barnett told Business Insider that handling physical money will seem as old-fashioned as the horse and cart in 30 years. Cash rates in countries like Sweden are also in decline.

But Cleland argued in her speech: "Cash continues to play a key role for many, and a crucial role for some."

"2.7 million people in the UK rely almost entirely on cash transactions – a number that has increased by 0.5 million since 2015," she said.

One of the main drivers of cash's continued popularity is its so-called "tangibility" — the fact that it is physically there, and will never fail to work. If you've got some cash in your pocket, you know you can pay for things.

"It can be a useful budgeting tool, and it is a quick and easy payment method which works even when, for example, card terminals do not," Cleland said.

Cleland's view backs up that of Ian Bright, a senior economist with Dutch bank ING, who found that almost 80% of Brits don't see society ever being cashless and argued in an extensive report earlier this year argues that society will never end up being truly cashless.

"There are aspects of things that people prefer about cash," Bright told Business Insider in an interview in April. "It was fairly clear in our survey that people note cash carries more degree of privacy over non-cash items. And that was one of the key reasons people said they will continue to use cash in their transactions."

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Even amid the rise of so-called robo-investors and passive strategies, good old-fashioned stock pickers are continuing to prove their worth.

About 54% of large-cap mutual-fund managers are beating their benchmarks in 2017, the highest-ever success rate at this time of year, according to Bank of America Merrill Lynch data going back to 2009. If they keep up the pace through the end of the quarter, it would be the first year since 2007 — right around the time of the financial crisis — that more than half of them outperformed benchmarks, according to the data.

It's been an impressive stretch by any measure for investors who make their living analyzing company fundamentals and betting on single stocks. And it's been a somewhat surprising development amid the rapid growth of passive investment — which often involves computerized and price-insensitive trading.

It wasn't supposed to be like this. To hear doomsayers tell it over the past several years, the rise of the machines was supposed to hurt active managers. Exchange-traded funds were supposed to homogenize the market, causing stocks to trade increasingly in lockstep.

In reality, the opposite has happened.

At the root of the resilience has been the average pair-wise correlation of stocks in major indexes — which measures the degree to which they trade in tandem. For the benchmark S&P 500, the measure sits at its lowest since the tech bubble, while companies in the Russell 2000 gauge of small-cap stocks are trading the most independently since 2003, according to BAML data.

BAML attributes active mutual fund managers' outperformance to their being overweight the right sectors. The firm points out that those investors are 96% overweight internet and direct marketing retail stocks, relative to the S&P 500 — and that area has surged year-to-date.

SEE ALSO: Hedge funds are turning their backs on tech stocks

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Two government employees in Crimea have been fired after getting caught mining bitcoins on official computers.

• Bank of England's Sam Woods says Britain and EU need to agree on transition deal before Christmas to avoid worst-case Brexit scenario of banks relocating.
• Banks need at least a year to set up new EU entities so could start executing Brexit contingencies at the start of 2018 if they do not receive clarity.
• Woods gave a speech in the City of London just as Goldman Sachs confirms it has leased a large new office space in German financial centre Frankfurt.

LONDON — One of the Bank of England's most senior staff in charge of banking regulation has warned that Britain and the EU need to make progress on a Brexit transition deal by Christmas or risk seeing banks and financial firms leave.

"I struggle to see an outcome in which banks and insurers do not get harder to supervise and harder to resolve for all involved," Sam Woods, the chief executive of the Prudential Regulation Authority (PRA), an arm of the BoE, said in a speech on Wednesday evening.

"If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in. Firms would start discounting the likelihood of a transition in the central case of their planning," Woods told the audience at the City Banquet at Mansion House.

"Some form of transition or implementation period" is the "most important" outcome of Brexit discussions for the PRA, he said.

Concern over securing a transition deal is driven by the fact that banks need to make final decisions about moving staff by the first quarter of next year at the latest. Banks need at least a year, if not longer, to set up fully functioning branches and subsidiaries in Europe to maintain uninterrupted EU activities.

Without some clarity over future arrangements, banks will look to their worst case contingency plans, which are generally believed to involve large scale staff moves.

Goldman's Frankfurt 'contingency plan'

Woods' speech coincided with an announcement from Goldman Sachs late on Wednesday that it has taken new office space in the German financial centre of Frankfurt to prepare for Brexit.

"Goldman Sachs has signed a lease agreement for the upper floors of the Marienturm in Frankfurt, a new office tower currently under construction,” the bank said in a statement.

"This expanded office space will allow us to grow our operations in Germany to continue serving our clients, as well as provide us with the space to execute on our Brexit contingency plan as needed."

The added space means that Goldman will be able to increase the number of staff it has in the German capital from around 200 now to roughly 1,000. The bank currently employs around 6,500 people in the UK.

Goldman has been one of the most vocal banks lobbying British authorities for a long-term Brexit transitional deal that would allow financial firms time to adjust to the likely substantial changes in the regulatory framework.

Woods said the Bank of England is concerned about regulating two areas of the financial services sector — derivatives and information sharing. He told the audience of bankers and politicians:

"We are also engaging with financial institutions, trade bodies, the FCA and the government to unpick cross-sectoral problems. The two uppermost in our mind are the need to ensure that existing insurance and derivatives contracts can continue post-Brexit, and that data can be shared within groups across the UK/EU27 border."

Woods went on to say that it would be "messy and difficult for all firms to try to self-solve for these risks and I hope that we can find suitable fixes as the Brexit negotiations progress."

Woods' words came just a day after the Bank of England's Financial Policy Committee — of which Woods is a member — warned of the "significant risks" posed if the EU mandates that the clearing of derivatives and other financial instruments is moved out of London after Brexit.

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LONDON — Aviva has bought a majority stake in "robo" investment startup Wealthify for an undisclosed sum.

Insurance and investment giant Aviva has become the majority shareholder in Cardiff-based Wealthify, which lets people make low-cost investments online. The product will be integrated into Aviva's online portal MyAviva.

Blair Turnbull, Managing Director of Aviva UK Digital, said in a statement: "It is remarkably easy to use, with no complicated jargon, no expensive fees, and you can start investing with as little as £1.

"It is particularly aimed at traditional cash savers, who are seeking to diversify their investments, and also at millennials who appreciate an effortless and straightforward digital experience."

• READ MORE: Aviva on the hunt for acquisitions as CEO says: 'We want to turn Aviva into a fintech'

Wealthify only launched in April 2016. The startup raised £1.1 million through crowdfunding last year at a pre-money valuation of £9.7 million. It is one of a number of so-called "robo-advisors" that use technology to give people low-cost investment advice and services.

"Robo-advisors" have become one of the hottest areas of fintech over the last 18 months, with BlackRock and Allianz investing in startups in the space. HSBC has announced plans to launch its own in-house product, while UBS has already launched its own platform.

Richard Theo, Co-founder and CEO of Wealthify, said in a statement announcing the Aviva deal: "This significant investment in the emerging ‘robo’ market, by one of the world’s largest and most recognised financial services brands, is validation of the vision we set out to achieve three years ago to change investing for the better.

"Aviva’s investment and access to their millions of UK customers gives us confidence that we can become the leader in this market in the UK and beyond."

Aviva has set up a venture capital fund, Aviva Ventures, with £100 million to invest by 2020 but Business Insider understands that the Wealthify deal was done directly with Aviva, rather than its VC arm.

CEO Mark Wilson told Business Insider in May: "We want to turn Aviva into a fintech. We will do acquisitions in this space."

Turnbull said: "This is another important step in Aviva’s digital strategy. It underlines our commitment to invest in
and partner with leading digital businesses, allowing our customers to benefit from new technology and making insurance and investments simpler, easier and more convenient."

Aviva is one of a number of financial services giants looking to invest in fintech startups in a bit to "future proof" its business. German insurance giant Allianz invested in rival robo-advisor Moneyfarm last October and Legal & General this week also announced a £40 million investment in SalaryFinance, a lending startup.

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• Three former Tesco executives on trial for fraud over supermarket's £250 million accounting hole.
• The whistleblower told court there was an environment of 'anxiety' and 'tension' in the company at the time.
• The whistleblower said he was 'relieved' when former CEO Philip Clarke, who is not implicated in the case, left.

LONDON — Senior Tesco directors feared being jailed and worked in an environment of "anxiety" and "tension" in the weeks before the retailer announced a £250 million ($331 million) black hole in its accounts in 2014, a court heard on Wednesday.

Three former Tesco executives are standing trial for fraud for their alleged involvement in overstating the firm's profits. All three deny guilt.

Amit Soni, a senior member of Tesco's finance team who allegedly acted as a whistleblower in the case, gave evidence on the fourth day of the trial at Southwark Crown Court in London on Wednesday.

He said defendant Chris Bush, former Tesco UK managing director, arranged meetings with Tesco's commercial directors in August 2014 — the month before the company restated its profits — at which the directors voiced concerns about the practice of "pulling forward" income from future accounting periods and booking it ahead of time.

•READ MORE: Tesco accounting scandal 'compromised' staff and sparked resignations

One of the commercial directors, George Wright, told Bush that he was uncomfortable with conversations with suppliers relating to "pull-forward" and said he felt uncomfortable with using the practice to plug gaps in accounts.

Wright is said to have told Bush: "I don't want to go to jail for this."

Soni said that his team had prepared a document for the meetings, which suggested Tesco's budget could fall £240 million short of the overall target for the first half of Tesco's financial year. Soni said the gap began "looking insurmountable."

He said Chris Bush's told commercial directors who were worried about the figure "to go back and make plans to hit the numbers rather than come out with gaps."

Philip Clarke leaving was 'a relief'

Soni also told the court that he was relieved to learn that former Tesco CEO Philip Clarke was leaving in 2014 because he felt he was responsible for the company's faltering strategy.

Clarke is not charged with any wrongdoing, nor implicated in the case. He was interviewed by the Serious Fraud Office who decided not to press any charges.

Soni said Tesco UK was under financial pressure when he joined in 2013, both because of external factors, such as competition from discounters Lidl and Aldi, and because of internal pressures to meet targets.

"There was a sense that there was a lot of hard work that was going on internally but it was not showing anywhere in the results," he told the jury.

Soni said that it was a "relief" when the departure of former Tesco CEO Philip Clarke was announced.

"I felt, personally, that the pressures in the business were due to in part the strategy that Clarke had for the company," Soni said.

Former Tesco UK managing director Christopher Bush, former UK finance director Carl Rogberg, and former food commercial director John Scouler are all charged with fraud by false accounting and of fraud by abuse of position.

The trio were formally charged by the Senior Fraud Office last year. Lawyers acting for the trio have already pleaded not guilty.

The trial continues.

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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

Good Morning! Here's what you need to know on Thursday.

1. Theresa May said she is "sorry" for the general election result in a chaotic Conservative Party conference speech on Wednesday. On the final day of the party's Autumn conference in Manchester, the prime minister paid tribute to activists who campaigned for her in the run-up to the June election, and apologised for running a campaign that was "too scripted, too presidential."

2. Shares in UK energy companies plunged to multi-year lows on Wednesday after May announced plans to cap prices in the near future. During her conference speech, May said she plans to write a law that will prevent energy companies hiking prices aggressively, saying current rules punish loyal customers. "We will always take on monopolies and vested interests when they are holding people back," May told the conference.

3. The CEO of Tesco says the former head of rival Sainsbury's is wrong to suggest Brexit will lead to "higher prices, less choice, and poorer quality" at supermarkets. However, Tesco boss Dave Lewis admitted that the Brexit-driven collapse in the pound is pushing up prices and warned that failure to secure a deal with the EU by the March 2019 Brexit deadline could lead to higher food prices across the UK.

4. The UK's top banking supervisor Sam Woods urged his counterparts in Europe and beyond to work together, as he warned that Brexit would make British banks more complex — and therefore more risky. "I struggle to see an outcome in which banks and insurers do not get harder to supervise and harder to resolve for all involved," Woods said.

5. Hedge funds are turning their backs on tech stocks. Until recently, the industry was viewed as the indispensable driver of the equity market. Companies like the so-called FANG group — which includes Facebook, Amazon, Netflix and Google — received loads of credit for pushing stock indexes to new records. Now the shoe is on the other foot, with hedge funds and other large speculators the most bearish in 16 months on the tech sector, Commodity Futures Trading Commission data show.

6. Goldman Sachs has agreed to lease offices at a new building in Frankfurt as it looks for extra floor space in the European Union ahead of Britain's exit from the bloc. Goldman is taking around 10,000 square metres of space in the new Marienturm tower, enough to house as many as 1,000 employees, the bank said in a statement on Wednesday evening.

7. Brevan Howard's flagship fund, run by billionaire Alan Howard, is down for the year as the firm continues to lose money. The Brevan Howard master fund fell 4.61% this year through September, according to a client update seen by Business Insider. The fund managed $6.8 billion at the end of August, according to a person familiar with the situation – a far drop from years earlier.

8. A benchmark Puerto Rico bond fell to record lows after President Donald Trump said the US territory's debt would have to be written off. "You know they owe a lot of money to your friends on Wall Street," Trump said in an interview with Fox News on Tuesday. "We're gonna have to wipe that out ... You can say goodbye to that. I don't know if it's Goldman Sachs, but whoever it is, you can wave goodbye to that." The general-obligation bond due in 2035 fell to a record low price of 34 cents on the dollar, down from 44 cents on Tuesday.

9. Japan's Nikkei share average was nearly flat on Thursday morning after hitting fresh two-year highs in the previous session, while investors await major economic data such as U.S. jobs report due later this week. The Nikkei was flat at 20,624.61 in midmorning trade after opening a tad higher. On Wednesday, the index rose to 20,689.08, its highest level since August 2015.

10. The head of a private investment firm came one step closer to leading the Federal Reserve's regulatory efforts, a key post as President Donald Trump endeavors to trim regulations to boost economic growth. The U.S. Senate voted 62-33 to limit debate on Randal Quarles' nomination to join the Fed's Board of Governors, guaranteeing opponents could not delay his confirmation. Quarles is eventually expected to fill the role of vice chair for supervision at the Fed, making him the top official at the central bank in charge of regulatory issues.

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• Ex-Sainsbury's CEO Justin King said Brexit will lead to "higher prices, less choice, and poorer quality" at supermarkets.
• Tesco CEO Dave Lewis says EU exit won't affect choice or quality but says prices are being squeezed.
• Lewis says: "A no deal scenario, if there were to be tariffs, then actually that could impact the price of food."

LONDON — The CEO of Tesco says the former head of rival Sainsbury's is wrong to suggest Brexit will lead to "higher prices, less choice, and poorer quality" at supermarkets.

However, Tesco boss Dave Lewis admitted that the Brexit-driven collapse in the pound is pushing up prices and warned that failure to secure a deal with the EU by the March 2019 Brexit deadline could lead to higher food prices across the UK.

Justin King, who was in charge of Sainsbury's for a decade until 2014, told BBC's Panorama in July that shoppers are "completely in the dark" about what Brexit will mean for supermarkets.

King said: "One can say very clearly what the direction will be: higher prices, less choice, and poorer quality because all of those dimensions have been improved by these open trading relationships that we've had over the last 40 years."

Asked at a press conference on Wednesday if he agreed, Tesco CEO Lewis told Business Insider simply: "No."

Prompted for more, Lewis said: "I know Justin very well and I appreciated his comment.

"The point about higher prices, I think he has a point. Currency changes — we've seen inflation coming from a 10% move versus the dollar and a 15% move versus the euro. We've had three years of deflation, we've now got some inflation in the market. Are prices higher? Yes, they are."

Inflation is currently running at 2.9%, its joint-highest level since the vote to leave the European Union last year.

But Lewis said: "I don't believe it will lead to less choice and poorer quality — we won't let it do that. At the moment, as a UK retailer, we have a much deeper and richer supply chain than all our competitive set. We don't see any reason why currency changes should change that. What we have to do is try and find ways of mitigating and offsetting some of the costs from currency to try and maintain that, and that's what we've been doing.

"It won't be that we suddenly say because of any political changes the range is going to be less or we'll accept a lower quality — we won't do that."

Lewis was speaking at a press conference following the release of Tesco's half-year results, which showed sales up by 3.3% and operating profit up 27.4%. Prices rose in the period but Lewis was quick to point out that price rises were around 1% lower than competitors.

'We've been very clear with the civil service and policymakers'

However, while Lewis disagreed with King's assessment of Brexit, he admitted that price rises could get worse if Britain fails to reach a deal with the EU on trading terms before the March 2019 leaving deadline.

"In a no deal scenario, if there were to be tariffs, then actually that could impact the price of food," Lewis said. "That's clear, everybody knows that, we've been very clear and we've shared with the civil service and policymakers how that actually works."

Prime Minister Theresa May admitted last weekend that Britain could end up with no deal with the EU at the end of negotiations but has said her government is preparing for the possibility.

Three leading UK food academics warned in August that warns Brexit could disrupt supply and prices for food in the UK on a scale "unprecedented for an advanced economy outside of wartime" and the British Retail Consortium has warned of possible shortages on shelves unless the government does more to prepare for post-Brexit trade with the EU.

Lewis also echoed concerns about a possible shortage of EU labour needed to pick crops in England. The Food and Drink Federation warned earlier this year that 36% of its members said they would be unable to adapt if they did not have access to EU labour after Brexit.

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