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A startup that raised $500 million in May at a $5 billion valuation misled its advertisers, The Wall Street Journal reports. 

Chicago-based Outcome Health delivers educational health footage alongside advertisements from pharmaceutical companies to doctors' offices and waiting rooms. There were more than 50 investors in the May round, including CapitalG, Alphabet's growth-equity fund; Pritzker Group; Goldman Sachs; and Leerink Transformation Partners.

Outcome Health has said it's in 40,000 healthcare practices and works with 20% of healthcare providers in the US. By 2020, CEO Rishi Shah said he hoped to be working with 70% of all healthcare providers. The company also has plans to hire 2,000 more employees by 2022. 

But according to the report from The Journal, between 2014 and 2016, Outcome charged for more screen installations than it actually performed. Employees reportedly also doctored screenshots that were meant to show that certain ads had run in a particular doctor's office. 

Outcome said in a statement sent to Business Insider:

"Outcome Health exists to activate the best health outcome possible for every person in the world. We are proud of the company we have built, helping doctors and patients make more informed decisions while having high rates of meeting our clients’ performance goals. We have rigorous policies and practices that deliver on contractual terms with transparency to our customers when campaigns experience issues.

"When we have a shortfall in media delivery, we strive to identify the issue as quickly as possible and address it with our client through “make-goods” or “bonus media” provisions, such as extending a campaign or increasing the number of doctors’ offices we reach for that campaign.

"We would also note that incidents that the Wall Street Journal identified occurred between 2014 and 2016. The company also strongly denies having a practice of misreporting campaign information to customers. The company's policy has always been to accurately report information to every customer on every program. If there was any misconduct by any employee, we will deal with it very strongly and take appropriate action." 

In October, Forbes reported that Outcome refunded Pfizer $4 million for its advertisement campaign after reportedly not getting the results from the campaign that it was looking for. 

Read the full report at The Wall Street Journal. 

SEE ALSO: Rahm Emanuel wants to make Chicago the center of a multibillion-dollar tech industry

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

Gavin Baker, a star stock-picker at Fidelity, was reportedly fired after he allegedly sexually harassed a junior female staffer, the Wall Street Journal reported, citing an attorney for the staffer and people familiar with the situation.

The female employee is a 26-year-old equity research associate who is currently on leave, the Journal reported.

A spokesman for Baker told the WSJ he “strenuously” denies any “supposed” allegations of sexual harassment.

“Gavin left Fidelity amicably a few weeks before planning to become engaged to his longtime girlfriend who is an analyst and fund manager there, as he believes his new fiancée and he should not work at the same firm. After a great 18 years at Fidelity that he’s very grateful to have experienced he’s excited to begin a new job later this month,” the spokesman told the WSJ in a statement.

Fidelity, in a statement to Business Insider, said: "We do not generally comment on current or former employees.  Speaking generally, however, when allegations of these sorts arise, we investigate them immediately and take prompt and appropriate action."

Read the full Wall Street Journal report here.

SEE ALSO: Maverick Capital, a $10.5 billion hedge fund, is jumping on one of the hottest trends in investing

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

Wall Street analyst Bernstein explored the question of whether bitcoin is money in a new note to clients this week.

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The post Hackers Use Amazon’s AWS Computing Resources to Mine Bitcoin appeared first on CryptoCoinsNews.

This week:

• Business Insider CEO Henry Blodget looks at President Donald Trump's claims that he's responsible for the record-setting stock market, and finds that the S&P 500 rose just as much over the first 11 months of Barack Obama's second term. Blodget also provides a bearish argument, which suggests that high valuations have historically preceded periods of market weakness. He also points out that prices are high across many different asset types, which means that diversification might not help investors out right now. He then highlights a chart cited by John Hussman, the president of the Hussman Investment Trust, which shows that the expected return on a diversified portfolio is low at the moment. Business Insider executive editor Sara Silverstein goes on to say that the search for yield across all asset classes worries her.
• In the Fidelity Insight of the week, Silverstein looks at Alibaba, which briefly overtook Amazon as the biggest company in the world, on a market cap basis. She calls back to Blodget's interview from a few months ago with portfolio manager Bill Kennedy, in which he said Alibaba is leapfrogging many brick-and-mortar retailers and taking advantage of the huge untapped growth potential in China.
• The discussion then shifts to bitcoin, which has seen mixed public comments from influential people lately. Blodget reiterates his long-standing view that bitcoin is the perfect example of a speculative bubble, because there's no plausible argument for how to value it. Silverstein mentions the future use of blockchain perhaps attracting a valuation, and says that bitcoin can be compared to gold.
• Silverstein interviews Scott Galloway, a marketing professor at NYU and author of the new book "The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google." Galloway says that the four have disarticulated who we are as people and reformulated that as for-profit companies. Speaking about Amazon, he says that whenever the company is bumping up against the other three juggernauts, it's winning. He cites how Alexa is beating Siri, and mentions the company's torrid pace of growth. Galloway thinks that Amazon's core confidence is storytelling, and mentions Amazon having access to the cheapest cost of capital in history — which allows them to overwhelm the competition with brute force.
• Galloway says that he doesn't understand Alibaba, which has some of the worst corporate governance in the world. Silverstein asks him about Tesla, and Galloway marvels at the market cap discrepancy between Ford and Tesla, saying that the company has painted an unbelievable vision, and that people are investing in the future, not anything tangible at the moment. He calls it incredible storytelling, and marvels at how the company has been able to overpromise and under-deliver, all because the vision is so intoxicating.
• Galloway then discusses Facebook, which he says has embraced many aspects of a media company, but seems allergic to many of the associated responsibilities. He worries that the youthful management at Facebook doesn't have the historical context for the importance media plays in our society, citing Russia's manipulation of it during the 2016 presidential election. He doesn't buy the excuse that Facebook can't possibly screen its advertisers, and says they don't want to do it because it would hurt their profitability.
• Galloway says that the only thing standing between Amazon, Apple, Facebook, and Google and $1 trillion valuations is government intervention. He thinks that the most likely source of government intervention will come from Europe, predicting that huge fines will start to come out of the European Union, which he says is fed up with the companies and doesn't have much downside to putting pressure on them.
• Galloway cites Uber as the best example for how poor corporate governance can destroy market value. He estimates that the board's tolerance and excuses for bad behavior probably took Uber's valuation down $20 billion to $30 billion. He also thinks that WeWork is massively overvalued, although he concedes that it's a great company. Galloway then highlights Snap and Twitter as also being overvalued.

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• If banks want to continue to cut costs, then they need to deploy nascent tech such as blockchain and machine learning. 
• Banks are partnering with fintechs to spread risk and cost, and building the tech that will differentiate themselves in-house. 

Technologies like AI, machine learning, and blockchain have become buzzwords on Wall Street, and for good reason. They have the potential to make financial services firms more efficient.

AI, for instance, could translate into productivity gains of 20% to 30%, according to the recently released "Pathways to Profit" report by Broadridge, the financial technology provider. 

The deployment of new technologies, however, will take place through a mixture of in-house development and fintech partnerships, according to the report. 

Banks can't go it alone

Building out new tech infrastructure requires money and talent. But getting that talent and money is easier said than done for some banks, which are already burdened with declining returns on equity and costly legacy systems.

"Overall, ROEs declined from 12% to 8% in 2016," the Broadridge report said. "ROE for the top 10 banks remained at 5% in 2016, but rebounded to 7% in the first half of 2017, with European institutions facing greater pressure."

Banks then are stuck between a rock and hard place. They are under pressure to cut costs, but if they don't put the necessary cash into new tech initiatives, then their cost problems intensify. That's where fintechs step in. 

"Given the imperative to cut costs and the opportunities offered by new technologies, many institutions are now actively seeking to embrace partners," the report said. "They are leveraging partnerships to add innovation in areas where they lack expertise or scale, or to enable them to focus the expertise they do have on their most differentiating areas."

Josh McIver, CEO of ULedger, a blockchain tech company that has partnered with one of the Big Four accounting firms, told Business Insider, partnerships between legacy firms and fintechs are important because it spreads out the risk of adopting new tech. 

"Even if you could spend the money to build a new blockchain platform, for instance, what happens if you build the wrong platform?" McIver said."You can't flick an off-switch."

Still, banks aren't just sitting on their hands and letting fintechs do all the work. JPMorgan, for instance, spends near $9.5 billion per year on technology, according to Brian Marchiony, a spokesman for the firm. Banks, according to Broadridge, are better suited focusing on the tech that "genuinely differentiate their firms from the competition." 

Collaboration is happening 

JPMorgan is one firm that has turned to tech providers for help digitizing its infrastructure. The bank notably partnered with Virtu, a high-frequency trading firm, to enhance its dealer-to-dealer trading operations for electronic treasury trading. But in this case JPMorgan is just partnering on the tech connected to their routing execution. The IP and client relationships remain under JPMorgan control.

"You cannot afford to not have the best technology in the organization," Daniel Pinto, CEO of JPMorgan's corporate investment bank said in an interview with Business Insider at the end of last year. "In my view, that is a mix of your internal resources and partnerships, either with vendors or with companies that you're going to partner with to deliver a product."

Here's Ana Capella, managing director and head of strategic investments, in an email to my colleague Becky Peterson (emphasis ours):

"We utilize strategic investments in fintech companies to accelerate innovation and digital transformation across JPMorgan Chase. Key drivers for these investments include enhancing the customer experience with new and better products, improving control, compliance, and operational efficiency and protecting the bank’s assets.”

JPMorgan also launched a residency program for fintech firms in order to tackle strategic and security-related challenges using big data, blockchain technology, and machine learning. Such incumbency programs have taken off on Wall Street. Deutsche Bank in March announced a new innovation lab in New York City to facilitate exploration into "new technologies focused on several areas including artificial intelligence, cloud technology and cyber security."

The pay-off for such partnerships could be big, according to the Broadridge report. 

The firm's research suggests $2 to $4 billion of the total near $24 billion spent on trade processing costs could be "eliminated" for partnerships on non-differential tech, for instance.

It will also allow banks to focus internally on things that will set them apart. 

"By adopting a partnership approach to take advantage of the biggest technological advances in a generation, banks can free themselves to work on standing out from the competition, putting themselves on a stronger pathway to profit," the report said. 

SEE ALSO: This pie chart shows how Goldman Sachs is trying to become the Google of Wall Street

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

When Ben Swinburne joined Morgan Stanley’s equity research team in 1999, companies like Netflix, Amazon, Facebook and Google were in their infancy, if they existed at all.

Now, 18 years later, they're some of the most highly valued equities on stock markets.

We spoke with Swinburne, now a managing director and head of media research at the bank, about how cord-cutting and the rise of streaming are affecting all companies, from legacy cable providers like Altice to movie studios like Disney.

Here's what Swinburne says to expect this earnings season from Netflix, Disney, Pandora, and the other 29 companies he covers.

This interview has been edited for clarity and length.

Graham Rapier: What's on your radar as we approach earnings season?

Ben Swinburne: We're seeing an acceleration in consumer adoption of over-the-top content. That's showing up in a lot of different places. We're seeing significant growth in network usage, both wireless and wired, which is obviously helping the cable industry and leading the charge in terms of taking share in broadband business. We think it will also help drive value for DISH's stock because Dish owns a unique portfolio of spectrum assets.

And then on the content side, there are clearly businesses benefiting from that shift, Netflix being the most obvious. But there are other companies who either own unique intellectual property, like MSG, who own the Knicks and Rangers, where we're seeing the value of that unique IP grow in a market where you have more and more money funneling into over-the-top and trying to reach consumers.

Even on the traditional network side, there are businesses that clearly have some challenges but have really exciting opportunities in that shift. One of those names we tend to talk about is Lionsgate, which owns Starz. Starz and its fellow premium network, like HBO and Showtime, they've all typically always been sold at the top end of a pay-TV package that can run $80 to $120 per month. They're now able to reach the consumer and broadband-only homes in a way that they weren't before, so that's quite exciting. There are traditional companies that have easier and more challenging tidbits toward this skinnier bundle and OTT world that we're clearly moving toward even faster this year.

Rapier: You mentioned Netflix specifically. What will you be watching in its earnings report next week?

Swinburne: Obviously they're going to report subscriber results and guide to the fourth quarter, so that'll be a big focus. Longer term, we really believe the company has significant profit potential, and they're just starting to generate earnings today. We believe there's a path to significant margin for this business. The cost structure is largely fixed, and what I mean by that is there's no relationship really between how many customers they have, how much revenue they generate, and how much they're spending, particularly on content. To the extent that they can drive pricing or customer growth that will translate into greater and greater margin over time. So the fact that they've introduced some new price increases recently tells you that their path toward profitability is improving and accelerating more than the market has previously realized.

Rapier: Most of Netflix's growth in recent quarters has come from abroad while the US subscriber growth has decelerated. How do you see this playing out?

Swinburne: The US market is obviously the one where they've got furthest along in terms of penetration, but they've done really well in international markets as well, so I think the international opportunity is certainly significant. On the US side, there are 80 million paid TV households in the United States and a roughly similar number of broadband homes, so there is certainly room for Netflix to grow.

There are 80 million paid TV households in the United States and a roughly similar number of broadband homes, so there is certainly more room for Netflix to grow.

What I think Netflix is doing around distribution is quite smart. They have an agreement with T-Mobile, for example. They have an agreement with Comcast on the X1. So when you look at 2 hours or more of viewing a day in a Netflix home, that level of engagement would suggest this can be a fairly widely adopted, if not mass market product, in the United States.

What they've proved is that the model can be replicated in other markets. I'm not sure they'll get to US penetration and US profits in every market — there are markets that culturally don't watch as much television as we do and don't spend as much money as we do. I'm not sure that's going to dramatically change, but Netflix may be serving these markets in a way they haven't been served before from a product perspective.

The history would tell you that the company, if given time, can ramp in almost any kind of market. It's probably intuitive that a market with a relatively developed economy like the US and the UK, and certainly English language with a strong technology adoption curve, strong broadband networks, would be a successful one for Netflix.

Then you look at a market like Brazil — obviously an emerging market, with a much different income per capita, a much weaker broadband-network structure than what you typically see elsewhere, and the product has scaled to profitability and significant penetration rates that should give people confidence that they can scale in other kinds of markets.

Rapier: Will competing platforms eat into Netflix's potential market? Will they be successful on their own?

Swinburne: Over time you'll see more direct-to-consumer strategies come out of traditional TV businesses that have been wholesaled. You'll see studios — who also compete with Netflix — be very careful in licensing to Netflix. What Netflix has proven out so far is they have a nice strategy to hedge that risk.

For one, they've vertically integrated and are producing a lot of their new programming themselves. That also includes hiring showrunners who are exclusive to Netflix, like the Shonda Rhimes deal that was announced recently. They're attracting talent to their platform, and between their checkbook size and their global scale and subscribers, it's a unique place to go make TV shows and movies for.

The other piece is that when most traditional television studios make a show or produce a film, there are equity participants in those assets. Specific producers or directors may own equity in that show, and it's very important that that talent is happy with how the product is monetized and distributed. So if Netflix is the best place, financially and otherwise, for that show to end up, that's what will happen more often than not.

Rapier: What about Disney? Can its standalone service compete? What are you looking for in Disney's earnings on November 9?

Swinburne: On this next earnings call we'll get greater clarity on the near-term impact to earnings from this shift toward over-the-top. The biggest dilution in 2018 will probably come from their BAM tech acquisition, which closed in September. You'll start to see some licensing revenue go away because they will be pulling products back for themselves. We'll get a little more clarity on the impact of all that on the 2018 financials when they report. That obviously will be a big focus for people.

Bigger picture, though, what we have seen in the past several years is that there's tremendous demand for over-the-top content. It's not just Netflix, Amazon, and Hulu. We've seen lots of other services, traditional services like Starz or CBS All-Access, but also niche services like Japanese anime from Crunchyroll scale to 1 million-plus subscribers relatively quickly in a market that's very early.

Then we have these virtual MVPDs [multichannel video programming distributors], whether it's YouTube TV or Sling, that we think are going to reach 4 million subscribers by the end of this year. People are adopting and watching more than ever. When you think about Disney's brands — Disney, Pixar, Star Wars, Marvel — they've got a better chance than probably any other existing content and media company to take advantage of all this.

Now, that will take time, and it will take some initial investment, but we think particularly on the kids side and how important OTT is to kids viewing and families, there's a huge opportunity for them globally in a direct-to-consumer Disney environment. That's different for ESPN, but certainly for the Disney side of the house, the outlook long term is quite bullish.

Rapier: What's different with ESPN? What will you be watching for in that business segment?

Swinburne: Our eyes are all wide open. ESPN has probably benefited more than any other business in the existing bundle, from a profit perspective. They are facing a market where skinny bundles are the future, so they have to figure out a way to run their business in that environment. The good news there is that they are aware of these challenges. They are moving to an over-the-top product in 2018 that will give them a lot of insight into how sports can work — or not — in an OTT environment, which will inform them quite a bit in how they think about bidding for sports rights in three or four years, when the NFL, baseball, and other big sports deals are up.

The last piece would be that they just had a very successful renewal with Altice, the first distributor renewal in an upcoming cycle and very important to driving the earnings for that particular business in Disney going forward. I think investors should take some confidence out of the Altice renewal that the Disney portfolio of networks — which is not just ESPN but also ABC, Disney Channel — remain incredibly important assets in a competitive cable world.

Rapier: What's going on in the cable industry? Is there any upside potential in those service providers?

Swinburne: Absolutely. Whether you're talking about a Disney or Lionsgate, they certainly have value in this new ecosystem. Their content is being consumed at generally higher levels than before and there's a clear path at least for some of these businesses to build new profit pools in an OTT environment.

On the cable-specific side, Comcast and Charter are two stocks we like. The fact that they are cable businesses is almost a misnomer today. They're really ISPs.

The fact that they are cable businesses is almost a misnomer today. They're really ISPs.

Every cable operator has more broadband customers than video customers today. The earnings contribution from broadband is growing rapidly, while the earnings contribution from video is declining. Their exposure to television and cord-cutting is probably a lot lower than people realize. You'll see the number of devices people have in the home, the data they're consuming, has been growing 30%, 40%, 50% year-on-year, a trend that's going to continue. That really plays to the cable industry's strengths.

Rapier: Is there any competition to these incumbent service providers? Is Google Fiber or something like that even on their radar?

Swinburne: They really have a unique product position in the marketplace; they've got the best mousetrap. The cable plant is the most flexible plant in adding capacity inexpensively, where they compete with twisted pair, DSL, they offer much faster speeds. It's incredibly expensive to build a scaled fiber business across the United States. Google Fiber has essentially stopped adding any new footprint.

Rapier: What haven't we talked about that's on your radar?

Swinburne: We're quite bullish on the music business. There are not a lot of ways to play that in the public markets today. We have an overweight on Pandora; we think they are in a position to disrupt and take share from the traditional radio market from an advertising perspective. That's a part of media that, after 15 years of declines in spending, has really started to take off with growth in subscription streaming. We think it's a business that's going to grow rapidly for a long time.

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Maverick Capital is starting two quant funds, according to documents seen by Business Insider.

The Maverick Fundamental Quant Funds will accept money starting January 1, 2018 and will close once assets reach $1 billion in each, the documents show. The funds will prioritize existing Maverick investors.

Traditional stock pickers have been venturing into quant strategies over the past few years. And quant strategies have been hoovering up assets.

"Data science and quantitative analysis continue to hold the attention of the fundamental managers," Carlos Meija, managing partner at recruiting firm Options Group, said in a recent report. "On the one hand, they are eager to explore the ways in which big data can fuel idea generation and position management; and on the other hand, they are worried about how to compete with quantitative/systematic investors and HFT firms. As a result, equity hedge funds are hiring data strategists, scientists and engineers."

Dallas-based Maverick's flagship fund, meanwhile, had made no money as of mid-year, Business Insider earlier reported.

Dallas-based Maverick, which as of mid-year managed about $10.5 billion firmwide, primarily blamed its short book.

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Stocks declined after hitting a record high on Wednesday as traders weighed the possibility of tax reform and speculated on the Federal Reserve's next action.

The S&P 500 fell 0.2%. Meanwhile, the Dow slid 0.2% and the more tech-heavy Nasdaq decreased 0.1%.

First up, the scoreboard:

• Dow: 22,826.96, -45.93, (-0.20%)
• S&P 500: 2,549.30, -6.30, (-0.25%)
• Nasdaq: 6,587.92, -14.64, (-0.23%)
• US 10-year yield: 2.32%, -0.02
• WTI crude oil: $50.65, -0.65, -1.27%

1. Trump's claim that he's given stocks an 'unprecedented' boost is dead wrong. There have been multiple post-election periods where the S&P 500 was higher through Oct. 11 of the next year, according to a Business Insider analysis.

2. Bank of America says 'this is not your parents' tech bubble.' The firm argues that market conditions are much more stable this time around, and that the influence of the sector is smaller.

3. JPMorgan beats, shrugs off tough trading quarter. The firm posted earnings of $1.76 a share, above the $1.65 consensus, with the consumer and community banking and corporate and investment banking units topping forecasts.

4. Citigroup beats on earnings results as its bread-and-butter business shines. The firm reported third-quarter earnings of $1.42 per share, a nearly 8% beat.

5. More and more stocks are doing the market's heavy lifting. Morgan Stanley finds that the earnings and sales growth contribution of the market's biggest companies has been falling since 2010.

ADDITIONALLY:

Fed president James Bullard tells us why he disagrees with his colleagues about the need for more rate hikes

Snap spikes to its best level in more than 3 months

ROSENBERG: This may be 'one of the most bullish, and underappreciated, charts on the planet right now'

Bitcoin passes $5,000 to hit fresh all-time high

Here's how easy it is for anyone — including Russian operatives — to target you with ads on Facebook

Under Armour isn't cool with teens anymore — and it's becoming a huge problem for the brand

Another Republican senator is sending a massive warning signal on Trump's tax plan

Jamie Dimon says he's done talking about bitcoin

A hedge fund started by a pioneering female investor has lost more than half its assets in two years

SEE ALSO: BANK OF AMERICA: 'This is not your parents' tech bubble'

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NOW WATCH: Traders are gearing up for Trump's tax cut plan

Bitcoin soared past $5,000 for the first time early Thursday morning and it continued to hit to new heights throughout the trading day. 

The red-hot digital currency, which is up more than 400% this year, blew past $5,300 to $5,382 just after 12 p.m. ET. Sell-off pressure has since pushed the coin back down below $5,300. 

It is still up near 10% Thursday. 

The $5,000 mark has long been a threshold of high-anticipation in the bitcoin community. Traders got a taste of it in early September when bitcoin hit a high of $4,921, according to data from Bloomberg.

Soon after that, its price declined amid news of a crackdown in China and regulatory uncertainty around initial coin offerings, a cryptocurrency-based fundraising method. After bottoming out near $2,900 per coin on September 15, it has since rallied.

That has come as no surprise to folks in the bitcoin community, who say government regulations and crackdowns on the coin have little impact on its underpinning technology or its price. 

“Bitcoin was designed to operate outside of the influence of governments and central banks, and is doing exactly that," said Iqbal V. Gandham, a managing director at eToro UK. "So to us, this bounce back in price is no surprise."

Josh Olszwicz, a bitcoin trader, told Business Insider during an interview in mid-September that the markets ignored news out of China because it didn't impact on the coin's actual blockchain technology.

"If it doesn't affect the protocol, then it's not a real problem," he told Business Insider."The bitcoin cash shakeup was much more worrisome from my perspective, but even then the core bitcoin protocol remained unaffected."

Bitcoin has seen its value increase by more than $1,000 per coin in the past week alone, with a rally that coincides with renewed interest in the currency from investment banks. The Wall Street Journal last week reported that Goldman Sachs was looking at setting up a bitcoin trading operation, and Morgan Stanley CEO James Gorman said recently that the cryptocurrency was "certainly more than just a fad."

The day's rise comes "as bulls returned to the market with a vengeance," according to Neil Wilson, a senior analyst at ETX Capital.

SEE ALSO: Jamie Dimon says he's done talking about bitcoin

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NOW WATCH: Traders are gearing up for Trump's tax cut plan

WASHINGTON, DC - The Federal Reserve may not need to raise interest rates much further, if at all, given an economy that remains wobbly and an inflation rate that has fallen short of the central bank’s target for five years running, St. Louis Fed President James Bullard said.

In an interview with Business Insider, Bullard expressed concern about the prospects for US economic growth after repeated disappointments in recent years.

Unlike many of his colleagues, who are forecasting several interest rate increases in 2018 and 2019, Bullard wonders whether the Fed’s monetary tightening might actually be complete after just four one-quarter point interest rate hikes.

"Interest rates probably don’t have to change much from where they are today," Bullard said. "We’re below target on inflation, it has surprised down this year, we don’t have to be in any hurry to raise rates in that environment." That view puts Bullard much closer to the implicit forecast in financial markets, which casts serious doubt on the Fed’s official estimates for as many as three rate increases per year over the next two years.

The Fed’s preferred inflation measure has slipped this year, and stood at 1.4% in August.

"Growth has been slower during this recovery than we expected, certainly than I expected, and the slow growth is a concern," added Bullard, who became St. Louis Fed President in 2008, at the height of the worst financial meltdown in modern history.

"You’re getting so far away now from the crisis that you might have thought growth would have gotten back to normal by now — I’m not sure it really has."

The US economy has struggled to maintain a 2% growth rate in recent years, although the unemployment rate has fallen sharply from a 2009 peak of 10% to a historically low 4.4%. However, some economists believe the job market is far from fully healed, given a lack of wage growth, widespread underemployment and the prevalence of part-time and contract work. 

That could explain why US inflation has chronically undershot the Fed’s 2% target — if the economy is running below its full potential, companies will find it hard to raise prices because consumers are struggling. Low inflation sounds like a great thing on paper, but not when it comes to a person’s paycheck. When inflation stays too low for too long, it can contribute to a cycle of economic stagnation as people delay purchases for fear of job loss or hopes of future price declines.

Another possible factor keeping inflation at bay is the increase of technology’s share of the economy, Bullard said.

"I am open to ideas of technology being a driving force here," he said. "Technology is becoming a more important part of the economy, a bigger share of the economy, and we know something about tech prices, they decline over time, they’ve been declining for decades. I could see that as a disinflationary force."

Uncertain future at the Fed’s board

Minutes from the Fed’s September meeting released October 11 showed Bullard is not alone in his concern about low inflation and economic weakness. "Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent," the report said.

Clouding the outlook, a number of vacancies on the Fed’s board mean a number of leadership changes are afoot, including the likely replacement of Janet Yellen as central bank chair. The Federal Open Market Committee, which sets monetary policy, is comprised of seven board members (although it has not been fully staffed for some time because of political acrimony over appointments) and 12 district bank presidents. 

Bullard said this layered structure should ensure that the next Fed chair and additional board governors will not veer too far from the current policy course — or at least not the way the Fed reacts to incoming economic data.

"The Fed is a big institution, it’s a sprawling institution, and you do have a lot of institutional memory among the regional bank presidents in particular and the governors that are staying and you have a very competent staff that has a lot of experience," he said.

"It’s like a supertanker — you can change direction, but it’s going to only change direction slowly. For that reason, there’ll be a lot of continuity in policy no matter who is named. and I think that’s good for the US economy and the global economy."

Asked whether he was worried about the Fed’s independence under a president who has appeared to value "loyalty" in his appointees, Bullard said he’s not too preoccupied.

"I don’t think [Donald Trump] is going to be able to try to micro manage," the Fed, he said. "Usually White Houses have not tried to do that."

Shrinking the balance sheet

The Fed announced in September that it would begin shrinking its $4.4 trillion balance sheet, which expanded sharply during the recession as the Fed embarked on several rounds of bond purchases, also known as quantitative easing.

Bullard said it was wise for the Fed to separate balance sheet policy from interest rates as part of its withdrawal of monetary stimulus, because it should allow the Fed’s portfolio to shrink passively, without signaling anything in particular about the future path of monetary policy itself. That will help prevent any adverse market reaction, he said.

When the Fed first embarked on its policy of bond buys or quantitative easing during the recession, Bullard was a big advocate for selling those securities first before embarking on interest rate hikes.

Today, he still believes that would have been the preferable option, but he’s happy the central bank has come around to the idea that a smaller reserve base will make it easier for the Fed to focus solely on the tried-and-true policy of raising and lowering official interest rates. It could not do so during the crisis because the federal funds rate was already at zero starting in December 2008, where it remained for exactly seven years.

Since then, the Fed has raised rates four times to a range of 1% to 1.25%, and markets see a decent chance of a December rate increase.

Bullard is not convinced: "The main news this year in the monetary policy world has been the low inflation in the US, with surprise to the downside," he said.

"I can appreciate that people tell me 'don’t worry it’s going to recover' but why not wait and see?" he added. "I wouldn’t make a policy move betting on that recovery I would just stay where we are, then if it does come back we’re still below target anyway."

SEE ALSO: The Fed is putting too much faith in dubious economic models — and American jobs are at stake

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• Jamie Zimmerman is one of the few, and first, female investors to run a hedge fund. She started Litespeed Partners in 2000.
• The fund has had a tough run of late, and now manages less than half of what it did two years ago.
• Hedge funds running similar investment strategies have also struggled. Some have shut.

NEW YORK – A hedge fund started by a pioneering female investor has posted slight gains this year after suffering a steep drop in assets.

Jamie Zimmerman's Litespeed Partners now manages about $725 million, less than half of what the fund managed in October 2015 when it had around $1.9 billion, according to a person familiar with the figures who requested anonymity because the information is private. The fund managed about $3.24 billion at the start of 2015, according to a Reuters report from the time.

Litespeed, which makes bets on distressed companies and company events such as mergers and acquisitions, is not alone. Last year, investors pulled $38 billion from event-driven funds – those that bet on company activity – and investors have yet to re-up, according to data from Hedge Fund Research.

Bigger hedge funds have also recently shut, notably Perry Capital and Eton Park, as have smaller peers, such as Chesapeake Partners.

Litespeed's performance has been in line with competitors this year, meanwhile. The fund gained about 5.9% after fees through September this year, according to the person familiar. So-called event-driven funds also gained 5.9% over the same period, per data tracker HFR.

Litespeed gained +1.9% last year, and dropped -11.5% in 2015 and -5.31% in 2014, according to people familiar with the numbers. That's compared to event-driven peers, which posted +10.5% last year, -3.5% in 2015 and +1.08% in 2014, per HFR.

Zimmerman, who opened Litespeed in 2000 with $4 million, is one of the few women to run a hedge fund business. Meanwhile, across the industry, only 3% of senior investment roles were held by women in 2012, according to trade publication CIO.

Zimmerman graduated from Amherst College in 1981 and went on to earn a law degree from the University of Michigan. She started her career as an attorney focusing on bankruptcy, where she learned to analyze to dissect the US bankruptcy code and creditors before switching into finance, according to a 2005 profile in the Wall Street Journal.

She told the paper that her gender had not hampered her career.

"It's irrelevant," she said at the time. "It just wasn't a factor in anything I did in my life."

By and large, few women hedge fund managers exist. Reasons include a lack of recruitment efforts from disproportionately male execs to broken pipelines and networking opportunities.

SEE ALSO: Balyasny, a $12 billion hedge fund that's trailing its peers, is ramping up for a critical few weeks

MUST READ: Why men dominate the hedge fund industry

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

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.

JPMorgan Chase and Citigroup both reported third-quarter earnings on Thursday, and both beat Wall Street estimates.

JPMorgan posted earnings of $1.76 a share, above the $1.65 consensus, with the consumer and community banking and corporate and investment banking units topping forecasts. You can read up on the key numbers here. And here are the key points from the memo JPMorgan's investment bank chief just sent to staff.

Citigroup handily beat analysts' expectations, reporting third-quarter earnings of $1.42 per share, a nearly 8% beat. You can read up on the key details here.

Elsewhere on Wall Street, BlackRock is making a killing on the hottest investment product around. Goldman Sachs and JPMorgan are pitching a way to profit from the next financial collapse. HSBC named bank veteran John Flint as its new CEO. And Virtu, the "ultimate play" on volatility on Wall Street, is set for a rough quarter.

We asked dozens of young bankers to name their biggest Wall Street concern — and one answer came up over and over.

In deal news, a small Minnesota-based investment bank you've never heard of got in on a $3.6 billion Wall Street deal. Justice Department staff are likely to try and block a potential T-Mobile-Sprint mega deal. And Scott Galloway correctly predicted Amazon would buy Whole Foods — here's who he thinks Amazon should acquire next.

In markets, President Trump's claim that he's given stocks an "unprecedented" boost is dead wrong, according to Business Insider's Joe Ciolli. And traders are cranking up bets against the nation's biggest wine company as California wildfires rage.

And in economics, many Federal Reserve officials are concerned that inflation will remain lower for longer, according to minutes of the policy meeting they held in September. Meanwhile, the IMF says the super-wealthy aren't paying their fair share of taxes — and there could be terrible consequences.

Lastly, a quaint, family-run pub in the UK was just voted the best restaurant in the world by travelers.

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

Big stock market returns are usually powered by a handful of large companies. Lately, that's been the so-called FAANGs: large tech companies like Facebook and Alphabet. 

But the biggest companies' contribution to earnings and sales growth — the most important drivers of the bull market — has been falling since 2010, Morgan Stanley found. Instead, earnings growth is becoming spread out among more stocks.

The implication of lower concentrations for earnings and earnings growth is positive for investors: one big company's miss is less likely to send a shockwave through the rest of the market.

"Fewer stocks are doing the heavy lifting as more stocks have meaningful contributions to these metrics," wrote Brian Hayes, the head of equity quantitative research, in a note Thursday. "This is positive from a risk perspective; the market is becoming less dependent on a small group of stocks to drive earnings and revenue growth numbers."

Large tech and bank stocks have made the largest percent contribution to positive earnings over the last five years. Hayes forecasts that Micron Technology, Apple, and Chevron would add the most this year. Hayes expects Apple to be the biggest contributor to S&P 500 earnings growth in 2018, adding 7.6%. But that would be down from 9.1% in 2015. 

Earnings-growth concentration is falling as investors sell shares of companies that miss on earnings and revenue more aggressively than they buy shares of companies that beat. In other words, the risks are high for individual companies, but lower for the overall market.   

The earnings slowdown that mostly hit energy and material stocks in 2015 marked a turning point for growth concentration, Hayes said. That's because earnings growth tends to become more concentrated as the number of stocks contributing to positive earnings declines. Hayes' analysis only included companies with positive earnings growth.

Lower earnings concentration doesn't eliminate the short-term risk that investors who have crowded a well-performing sector like tech are vulnerable to steep losses when the direction turns. Tech's overweight in actively managed fund holdings, at 25%, is at a record high today, up from just 5% three years ago, according to Bank of America Merrill Lynch. In fact, Hayes noted that the more common question from investors is whether returns, not earnings growth, have become too concentrated in one sector.

SEE ALSO: Trump's claim that he's given stocks an 'unprecedented' boost is dead wrong

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

The Swedish government is to hold a week-long bitcoin auction, starting today, with 0.6 BTC for up for grabs.

Netflix said last week it would raise prices for the US and a few other European countries. The company's stock took a small hit the day of the announcement, but any adverse effects will be negligible, according to research firm Bernstein, and the extra cash will balance out any subscriber loss.

"For anyone who still questions whether Netflix has pricing power, consider this: since 2014, the U.S. price of Netflix's standard plan has increased at a 10% CAGR (for new subs), and during that timeframe, Netflix U.S. subs have grown at a 12% CAGR, from 34mm to 50mm,” analyst Todd Juenger said in a note Thursday. “How many businesses can you name that have done that?"

The research firm has raised its price target for shares of Netflix to $230 from $203, 17% above the stock’s $195 price Thursday morning.

Bernstein estimates that the price increase will result in at least $600 million extra annual cash flow, provided everything else — like a 3.8% average subscriber growth rate — remains.

"The magnitude of the good far outweighs the bad. We don't believe even the most hardcore bears believe that a 10% price increase will result in a 10% loss of subs," said Bernstein. "In fact, looking at the history of past Netflix price increases, the impact on the pace of net sub additions has not been severe, and has been decidedly temporary."

However, Netflix doesn’t exist in a non-competitive bubble. When the company announced the price hikes, its competitor Hulu announced a decrease in subscription pricing. The move could also affect how Disney prices its recently announced streaming service.

"While Netflix's price increase may give Disney some more room to competitively price its product, we believe that strategies around Disney's ESPN-OTT product are more related to the price of sports-focused OTT bundles," said Bernstein. "Disney-branded entertainment OTT service is more aligned, but the launch isn't until late 2019."

Shares of Netflix took a slight hit when the company announced the price hikes last week, but the stock is still up 53.58% so far this year. Netflix will announce earnings — and subscriber numbers — next week on October 16. 

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

For stock enthusiasts, drawing parallels between the current market and the dotcom bubble is a pretty common activity.

But Bank of America Merrill Lynch doesn't buy into those comparisons at all.

In their mind, the tech-driven stock rally is far more stable this time around — and the reason stretches far beyond valuation.

"This is not your parents' tech bubble," BAML chief US equity and quantitative strategist Savita Subramanian wrote in a client note.

The firm cites the robust levels of cash held by tech companies, which should only grow if President Donald Trump's proposed repatriation tax holiday goes into effect. In fact, tech is the only sector in the S&P 500 index that carries more cash than debt on corporate balance sheets.

In another contrast to the 90s bubble, the proportion of investment funds with a tech focus is half of what it was around 2000. Further, tech IPOs now make up a far smaller portion of public offerings in the market, according to BAML.

A side-by-side analysis in BAML's table below provides more data showing that the S&P 500 is less reliant on tech than it was in 2000, and that the sector is more profitable and less debt-laden nowadays.

That's not to say everything is totally perfect for tech stocks. BAML recognizes that there are still some major risks to the sector's red-hot rally, and holds just an equalweight — or neutral — rating on the space.

First and foremost, tech is an extremely crowded sector. It's almost been a victim of its own success in that sense, as investors have piled into proven winners. BAML finds that long-only relative tech exposure is the highest it's ever been, dating back to 2008.

Because of this, "institutional investors may be more likely to sell than to buy," Subramanian said.

And while tech's weighting is smaller than it was in 2000, it recently crossed a key threshold. It sits at roughly 24% of the S&P 500, which is above the 20% level that's historically preceded underperformance over the following 12 months, BAML data show.

Another element to consider is that hedge funds have started to turn their backs on tech — to a degree. While the industry remains crowded, they've turned the most bearish in more than 16 months on the sector. It's worth noting that they're still net positive, and that this decline in sentiment is just relative to recent history.

Overall, it's clear that the debate over whether to keep buying tech stocks will rage on for some time. What should also be clear, however, is that existing conditions are far from as scary as they were in the tech bubble.

SEE ALSO: Traders are cranking up bets against the nation's biggest wine company as California wildfires rage

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NOW WATCH: Is bitcoin a bubble or the future of everything?

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The post Newsflash: Bitcoin Price Tears Past $5,400 appeared first on CryptoCoinsNews.

 This morning Bitcoin shot past $5,000, and is now hovering around $5,300 – up nearly 10% from yesterday. It’s the first time the cryptocurrency has confidently shot past $5,000. Some exchanges saw the price hit $5,000 for a few minutes in September, but it only lasted for about 10 minutes, making today the first sustained movement past the historic milestone. Interestingly, not… Read More

If you haven't watched one of SpaceX's live rocket launches, and subsequent landings, you are really missing out.

Elon Musk, CEO of SpaceX and Tesla, started the company in 2002 with the eventual mission of colonizing Mars. It's a lofty goal, and one that's hard to totally comprehend. But, as SpaceX continues to defy expectations, land reusable rockets and complete mission after improbable mission, the value of the company continues to rise.

Right now, SpaceX is a private company. Unlike Musk's Tesla, which went public in 2010 and is now worth about $59.3 billion, SpaceX's value is hard to determine. It's also said that it doesn't plan on going public anytime soon, which means it will probably be some time before we get a detailed look at its books. In light of that, one analyst took a stab at uncovering what an IPO for the company could look like.

"We note that [SpaceX] has recently denied that it was preparing for an IPO, and we have no knowledge of any specific transactions," Adam Jonas, an analyst at Morgan Stanley, wrote in a recent note. "However, with upcoming projects that require significant amounts of capital, it seems reasonable to consider whether the company could look to access capital in the public markets."

Jonas laid out his case for what SpaceX would look like if it were to go public in the near term. His base case values the company at about $46 billion, which is on par with Tesla. His range is pretty wide, though, and spans between $5 billion and $120 billion.

Most of the value of SpaceX, in Jonas' view, would come from a satellite-based broadband business. Jonas sees SpaceX launching lots of satellites into space that would blanket the globe in wireless, high-speed internet. He said that satellite broadband could represent as much as 50% of the total value of space. As the cost of getting a satellite into orbit falls, and the demand for broadband increases, it makes sense to move our internet operations skyward.

SpaceX has already laid out its plan for satellite-based broadband in a Senate hearing earlier this year. The company is in the testing phase now but hopes to begin launching its first satellites in 2019 and its global network in 2024.

Jonas said that the net present value of this satellite internet business is about $43 billion.

On top of its satellite internet plan, Jonas sees about a billion dollars of value in SpaceX's current satellite launch program. Companies without their own ability to launch rockets into space currently pay SpaceX to send their satellites. Right now, the price that SpaceX is charging for one of these launches is relatively low compared to the cost of the operation.

"While SpaceX has managed to reduce the cost to launch a satellite, the business generates limited operating income," Jonas said. "We believe the reason for this is that SpaceX is willing to pass through the cost savings to its customers in order to gather data on the launch, to perfect the process, and, eventually, go to Mars."

Combining its launch and internet business, along with some cash laying around at the company, leads Jonas to his $46.018 billion valuation. If the company's satellite-internet business doesn't take off, the company could be valued at a smaller $5 billion. Jonas said that if both businesses do better than expected, the company could be worth as much as $120.6 billion.

Mars is an eventual goal for SpaceX. The company recently laid out its plans for its first martian-aimed rocket launch in 2022, though plans for how it would fund the mission are fuzzy. If SpaceX has to spend like crazy to make its Mars plans succeed, it could put a dent in the total valuation. 

It's worth reiterating that this is all speculative. Because SpaceX is privately held, it's hard to determine exactly how much the company is worth. SpaceX has also said that it doesn't plan on going public soon. But despite that, Jonas' predictions are interesting.

Read more about SpaceX's Mars plan here

SEE ALSO: Elon Musk revealed a new plan to colonize Mars with giant reusable spaceships — here are the highlights

Join the conversation about this story »

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

If you haven't watched one of SpaceX's live rocket launches, and subsequent landings, you are really missing out.

Elon Musk, CEO of SpaceX and Tesla, started the company in 2002 with the eventual mission of colonizing Mars. It's a lofty goal, and one that's hard to totally comprehend. But, as SpaceX continues to defy expectations, land reusable rockets and complete mission after improbable mission, the value of the company continues to rise.

Right now, SpaceX is a private company. Unlike Musk's Tesla, which went public in 2010 and is now worth about $59.3 billion, SpaceX's value is hard to determine. It's also said that it doesn't plan on going public anytime soon, which means it will probably be some time before we get a detailed look at its books. In light of that, one analyst took a stab at uncovering what an IPO for the company could look like.

"We note that [SpaceX] has recently denied that it was preparing for an IPO, and we have no knowledge of any specific transactions," Adam Jonas, an analyst at Morgan Stanley, wrote in a recent note. "However, with upcoming projects that require significant amounts of capital, it seems reasonable to consider whether the company could look to access capital in the public markets."

Jonas laid out his case for what SpaceX would look like if it were to go public in the near term. His base case values the company at about $46 billion, which is on par with Tesla. His range is pretty wide, though, and spans between $5 billion and $120 billion.

Most of the value of SpaceX, in Jonas' view, would come from a satellite-based broadband business. Jonas sees SpaceX launching lots of satellites into space that would blanket the globe in wireless, high-speed internet. He said that satellite broadband could represent as much as 50% of the total value of space. As the cost of getting a satellite into orbit falls, and the demand for broadband increases, it makes sense to move our internet operations skyward.

SpaceX has already laid out its plan for satellite-based broadband in a Senate hearing earlier this year. The company is in the testing phase now but hopes to begin launching its first satellites in 2019 and its global network in 2024.

Jonas said that the net present value of this satellite internet business is about $43 billion.

On top of its satellite internet plan, Jonas sees about a billion dollars of value in SpaceX's current satellite launch program. Companies without their own ability to launch rockets into space currently pay SpaceX to send their satellites. Right now, the price that SpaceX is charging for one of these launches is relatively low compared to the cost of the operation.

"While SpaceX has managed to reduce the cost to launch a satellite, the business generates limited operating income," Jonas said. "We believe the reason for this is that SpaceX is willing to pass through the cost savings to its customers in order to gather data on the launch, to perfect the process, and, eventually, go to Mars."

Combining its launch and internet business, along with some cash laying around at the company, leads Jonas to his $46.018 billion valuation. If the company's satellite-internet business doesn't take off, the company could be valued at a smaller $5 billion. Jonas said that if both businesses do better than expected, the company could be worth as much as $120.6 billion.

Mars is an eventual goal for SpaceX. The company recently laid out its plans for its first martian-aimed rocket launch in 2022, though plans for how it would fund the mission are fuzzy. If SpaceX has to spend like crazy to make its Mars plans succeed, it could put a dent in the total valuation. 

It's worth reiterating that this is all speculative. Because SpaceX is privately held, it's hard to determine exactly how much the company is worth. SpaceX has also said that it doesn't plan on going public soon. But despite that, Jonas' predictions are interesting.

Read more about SpaceX's Mars plan here

SEE ALSO: Elon Musk revealed a new plan to colonize Mars with giant reusable spaceships — here are the highlights

Join the conversation about this story »

NOW WATCH: Is bitcoin a bubble or the future of everything?

Think of Minnesota, and the first thing that probably comes to mind is the state's 10,000 lakes. Not multi-billion dollar pharma deals.

But that's exactly what's on the mind of the 50-plus financiers at TripleTree, a Minneapolis-based investment bank focusing on healthcare and healthcare tech deals. 

The boutique investment bank, which was founded in 1997, is slated to split $15 million to $20 million with Lazard, a New York-based investment bank, for its role advising Express Scripts in its $3.6 billion acquisition of eviCore healthcare, according to estimates from Freeman & Co, the consultancy. The deal was announced on Tuesday. 

Business Insider caught up with TripleTree president Dawn Owens to discuss the firm's strategy for winning roles on big deals in healthcare. She told Business Insider that it's deeply connected to the firm's history as a group of professionals with a "deadly insightful" and "exclusive focus" on the healthcare industry. 

She said ten years ago that expertise had many large companies coming to the firm asking them for help understanding the healthcare market. 

"So what we decided to do to support this demand was start a buyer briefing program to help give these companies perspectives on the healthcare industry," Owens said. 

The point of the program is to help companies explore topics in healthcare that they're evaluating. In one sense, TripleTree acts as a sort of strategic adviser. In another sense, however, the program is best thought of as a stepping stone. The logic is: If the bank can show off its smarts to big companies, then they'll come to them for investment banking services. 

Express Scripts worked with TripleTree's buyer briefing program. 

Owens said the firm's value proposition is in its specificity. She said the investment bank possesses a depth of knowledge that is very specialized compared to banks like JPMorgan. Of course, JPMorgan and other large investment banks have big banking teams focusing solely on healthcare and pharma. 

Still, Owens was adamant that TripleTree is a crust above the rest. 

"The knowledge our bankers have is deeper than what you would see at a bulge bracket bank," she said."We are not wading in the water. We are in the deep end."

As for the deals the firm goes after, Owens said the firm is not a "one-trick pony." As such, they are going after all pharma and healthcare deals, no matter the size. 

Boutique firms like TripleTree, which typically go after small-to-medium sized deals, have done well since the financial crisis. These smaller firms, along with much larger independent advisory firms like Lazard and Rothschild, have gained ground on their big bank rivals, with three independent firms ranked in the top ten for global M&A fees in 2017. In total, these firms have picked up an extra 11% in market share since 2007, according to data from Thomson Reuters. Meanwhile, the top five big banks have seen their share of fees drop from 37% to 33%. 

JPMorgan and Morgan Stanley advised eviCore in the deal. Sell-side fees to the two banks should be around $20 to 30 million, according to estimates from Freeman & Co.  

SEE ALSO: A small investment bank you've probably never heard of is killing it in dealmaking

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

LONDON — The FTSE 100 hit a record high on Thursday, boosted by the weaker pound on the day.

Britain's benchmark share index ended the day at an all-time closing peak of 7,558 points, up 0.32% from the day's open, to push it into uncharted territory.

Sterling dropped sharply earlier in the day after the EU's chief Brexit negotiator Michel Barnier said talks between Britain and the bloc have reached a "deadlock."

Appearing at a press conference in Brussels, Barnier said that the lack of progress in talks was "very disturbing."

"We’ve reached a state of deadlock, which is very disturbing. We are not asking the UK to make concessions," he said.

Generally speaking, when the pound goes down, the FTSE rises. That is because it is contains miners, oil firms, and pharmaceutical giants, with 70% of all revenues for companies on the index derived from abroad, meaning a weak pound makes them more profitable.

Here's the chart:

"The UK stock market continues its winning streak despite concerns over economic performance and the unfolding Brexit process. The question is whether the market’s strong run means it’s fit to burst," Laith Khalaf, senior analyst at Hargreaves Lansdown said in an email.

"To that end, it’s vital to recognise that the level of the Footsie is not a measure of the value in UK stocks, seeing as it doesn’t take account of the level of earnings of companies in the index."

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Cryptocurrency exchange Coinbase has announced that purchases of bitcoin, ethereum and litecoin will now be instant – for some customers.

Cryptocurrency exchange Coinbase has announced that purchases of bitcoin, ethereum and litecoin will now be instant – for some customers.

 Coinbase just announced that users can instantly purchase cryptocurrency and have it be funded from a U.S bank account. Until now these types of purchases took between 3-5 days to complete, as Coinbase waited for funds to transfer via ACH before they credited your purchase. This wait meant that users would often get frustrated because of bitcoin’s inherent volatility – the price… Read More

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The price of bitcoin is back above $5,000 – but while this is a slight month-over-month gain, the delta in that time may be one worth analyzing.

BlackRock, the world's largest money manager with $5.69 trillion in assets under management, reported better-than-expected earnings on Wednesday, which sent its stock to a record high. 

And shares could go even higher, according to Credit Suisse. "Following 3Q17 results, BLK remains our top traditional asset manager Outperform as we forecast strong net flows in 2018/19 and EPS growth of 15-20%," analyst Craig Siegenthaler said in a note Thursday.

The Swiss bank has raised its price target for shares of BlackRock to $612 from $597, 28% above the current stock price of $477. 

Most of the company's growth has come from its wildly successful exchange-traded fund business, known as iShares, which Credit Suisse estimates now accounts for half of all US investments in the products.

"We continue to see strong demand for iShares's ETFs driven by the evolution of the US retail channel (from commission-based to fee-based), increased adoption by institutional clients and pricing reductions in its core series. Year to date, iShares accounted for ~50% of total ETF flows in the US," the bank said.

"In only twelve months, BLK has been able to recapture more than 100% of the lost revenue resulting from the October 2016 price cuts (reduced fees on 15 ETFs with ~$85M of annual revs) via increased net flows and market share gains."

Passive investments, like ETFs and other products that track a weighted index rather than a single equity, have steadily eaten away at active managers' portfolios in recent years.

In an interview with Business Insider last week, BlackRock COO Rob Goldstein said ETF's rise in popularity doesn't change how the company views growth, and that even a so-called passive investment, is still an active decision.

"That's interesting is that, in many regards, if you look at something like an ETF, it is a technology to just give you very efficient, cost-effective exposures," he said. "But even the way that people use ETFs are in the context of making active decisions."

Shares of BlackRock are well ahead of the S&P 500 benchmark this year, up 21.5% compared to the index's 14%. 

SEE ALSO: LARRY FINK: Cryptocurrencies are proof of 'how much money laundering there is being done in the world'

Join the conversation about this story »

NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

LONDON — Goldman Sachs and JPMorgan are offering clients a new investment product that gives them a chance to bet on the next banking crisis.

Both Wall Street giants are now making a market for derivatives which offer investors the chance to bet on or against bank bonds known as Additional Tier 1 notes, according to a Bloomberg report.

Additional Tier 1 notes (or AT1 notes) are securities issued by major lenders in the aftermath of the Eurozone debt crisis as a means to protect taxpayers from expensive bail outs in the event of another crisis, with the risk instead borne by investors.

The bonds yield an average of around 4.7%, according to Bloomberg's story. Generally speaking the yield on normal, long-dated debt issued by major banks is less than 1% in the current climate. 

As such, AT1s are seen a good way to make a solid return from a pretty safe asset, in a world where low interest rates and huge central bank bond buying programmes have driven down yields. Consequently, AT1s have attracted huge amounts of investment, with a global market of around $150 billion.

That ballooning value has prompted Goldman and JPMorgan's creation of the new derivative which comes in the form of a so-called "total return swap" — which gives investors the ability to hedge increases or decreases in the value of a basket of AT1s from numerous banks.

A trader using the derivatives to bet against AT1s would potentially win big in the event of a financial collapse, as these bonds are tied to the health of European lenders.

Citing Max Ruscher, the director of credit indexes at IHS Markit, Bloomberg said that other lenders are also set to start offering the products in the coming weeks.

The derivatives — which Goldman's co-head of European credit flow trading Manav Gupta told Bloomberg offer "a very useful addition to the toolkit that our clients use in managing risk and taking broad-based exposure to the AT1 market" — have been compared to the credit default swaps linked to the US sub-prime mortgage market which played a large role in the 2007 financial crisis.

The trading of those swaps was famously portrayed in Michael Lewis' book "The Big Short" and a subsequent film.

You can read Bloomberg's full article on AT1 derivatives here.

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Snap's stock price spiked to its highest level in more than three months on Thursday morning, hitting a high of $16.69 a share. Currently it's trading up 0.44% at $16.05. The last time the stock price was above $16 was on July 11.

Snap finally looks like it could be turning a corner following a brutal six months of trading. The company's initial public offering priced at $17 and spiked to more than $29 just a couple of days later. But, a slew of downgrades, word that rival Facebook was copying its every move, and a massive share unlock pushed shares below $12 in the middle of August.  

Thursday's advance comes after the social media company received a pair of favorable bank write ups on Wednesday. Credit Suisse raised its price target on the stock to $20 a share and said advertisers were finally warming up to the platform's unique vertical platform. While Piper Jaffray kept its target at $12.50, it said Snap was destroying rival Facebook in winning over teenagers. 

Shares are still down 5.6% from their March IPO. 

Snap is set to report third-quarter earnings on November 15. 

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One of the core aspects of Japanese Prime Minister Shinzo Abe's Abenomics has been "womenomics," which aims to put more women into the labor force in the hopes of increasing Japan's growth potential.

Since Abe took the helm as prime minister in 2012, Japan's female labor force participation rate has ticked up, climbing nearly 5 percentage points for those in the 25-54 age bracket over the past 5 years.

The basic thinking behind this strategy is that more women working means an increase in potential output and improvement in women's income, which, theoretically, means that they will be able to spend more as consumers. (Not to mention the potential social benefits associated with greater financial independence.)

To illustrate how this push has played out, David Rosenberg, chief economist and strategist at Gluskin Sheff, recently shared a chart showing the total female participation rate and the 25-54 year old female participation rate. As you can see below, both rates have climbed since Abe took office.

"This may be one of the most bullish, and underappreciated, charts on the planet right now," Rosenberg said in a note to clients. "[W]e are talking about the boom in the female participation rate in Japan here."

"Bringing these individuals off the sidelines has underpinned a revival in aggregate income and helped buoy domestic demand," he continued. "To give you an idea of just how important this has been, consider that had the 25-54 year old female participation rate held at 2011’s level of 71.5%, this segment of the labor force would have fallen by 601,000 workers instead of rising by 530,000...that’s a big swing! This delta of 1.13 million employees equates to roughly $44 billion in GDP (using per capita figures of $38,894 from the World Bank)."

Japan is generally seen as a country with an unfavorable demographic trend, given its large, aging population. Prime age women entering the workforce could, theoretically, help offset some of the looming pain.

Rosenberg is not alone in singling out Japan's female workers. Other analysts have also argued that the growing female participation rate in Japan is a positive, and underrated, sign of life in the country's economy.

"They were doomed demographically" but "the amazing thing is in the last year or so, they brought a ton of women into the workforce," Jeff Kleintop, chief investment strategist at Charles Schwab, told Business Insider last year.

"That's a silver lining that is technically part of Abenomics' plans, but didn't expect that to be the most effective part of what they're doing," he added. "They expected it to be monetary policy or some of the spending programs, but that may actually be something that can really help them through all this."

That being said, although adding more women into the workforce is a smart idea economically, its implementation hasn't been exactly perfect.

A recent survey by the Nippon Omni-Management Association of 400 women on the managerial track in government and business found that most saw little progress in women's advancement in the workforce about one year and a half after legislation was put in place to support these efforts. 53.5% of respondents said they saw no change.

Having to put careers on hold to have and raise children was cited as a "hindrance" to professional life by many respondents in their 30s and younger, according to the survey.

SEE ALSO: KEN ROGOFF: Bitcoin will eventually collapse

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NOW WATCH: The secret to Steve Jobs' and Elon Musk's success, according to a former Apple and Tesla executive

Jamie Dimon, head of Wall Street banking giant JPMorgan Chase, has said he won't be talking about bitcoin following his controversial "fraud" comment.

Cryptocurrency and blockchain technology are here to stay.

Constellation Brands, the biggest wine company in the US and a major producer of brands like Robert Mondavi, has a lot at stake right now as wildfires decimate California's wine country.

And that fact is not lost on stock traders. Their nervousness around the situation has caused a surge in hedging costs on the stock.

The measure in question looks at the cost of options protecting against a 10% decline over the next month, relative to wagers on a 10% increase. This indicator has spiked as the wildfires recently began spreading through Northern California's wine country.

Constellation Brands, which operates 18 different wineries, closed its tasting rooms in Napa Valley and Sonoma earlier this week.

Another complicating factor is that Constellation Brands is the third-most popular S&P 500 stock for hedge funds, according to data compiled by Bloomberg. With 27.7% of its outstanding float owned by them, weakness in the company's shares could affect quarterly results for some firms.

The negative shift in investor sentiment could also quickly derail the positive effect of Constellation Brands' better-than-expected earnings report last week. The company, which also sells imported Mexican beers like Corona and boasts a growing craft beer business, saw its stock climb 4% in a single day. This week, the stock has dropped more than 1%.

It remains to be seen whether the other areas of Constellation Brands' vast alcoholic empire can offset the pressures felt in the company's wine business. At this point, it's safe to say traders aren't taking any chances.

SEE ALSO: Trump's claim that he's given stocks an 'unprecedented' boost is dead wrong

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The CEO of JPMorgan's corporate and investment bank sent a note out to employees on Thursday to highlight the firm's earnings report. 

JPMorgan Thursday morning posted earnings of $1.76 per share, above the $1.65 consensus, with the corporate and investment banking unit topping forecasts. 

"Last year’s record third quarter somewhat overshadows year-over- year comparisons, but this quarter was quite
good in its own right, with solid underlying performances across the businesses," Daniel Pinto, CEO of JPMorgan's corporate and investment bank, wrote in a memo seen by Business Insider. 

Trading, however, was a weak spot. Trading revenue for the third quarter was down 21% from the same period last year at $4.5 billion, with fixed income revenues down 27%. Pinto pointed to muted markets to explain the weaker quarter for the business. 

"Low volatility and the lack of market-moving events produced revenue more in line with an average third quarter," Pinto wrote. "Despite the quieter markets, strong M&A and corporate finance activity drove revenue in corporate derivatives and we continued to gain market share and revenue in both prime and cash equities, with particular strength internationally."

JPMorgan's trading business isn't the only one under pressure, of course. At Citigroup, fixed-income trading took a 16% hit year-over-year, dropping to $2.9 billion from $3.4 billion. The blame for the decline in trading has largely been ascribed to record-low market volatility. 2017 just hasn't had the surprising whipsaw market moments that 2016 did, such as Brexit and the election of President Donald Trump.

Still, JPMorgan's Q3 results were quite good outside of trading.

"While attention is often placed on comparative trading revenue, the overall CIB produced a very healthy quarter," Pinto said. 

He added:

"Global investment banking fees of $1.8 billion nearly tied a third quarter record set last year. Advisory revenue was the highest in ten years and revenue in debt underwriting was the second highest in a decade."

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Bitcoin’s appeal as an investment could diminish its effectiveness as a currency, and alternative models should be tested, writes Michael Casey.

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

• JPMorgan beat on earnings but is trading slightly lower after reporting big declines in trading and fixed income revenues.
• Citi handily beat expectations and is up early on Thursday.
• Most global markets are trading higher Thursday morning.
• The expectation of a rate hike slipped slightly after the Fed released its meeting minutes.

Here's Lutz:

Good Morning!  Spoos, Nasdaq and Industrials all roaming around all-time highs as we await JPM and Citi this AM.  Across the Atlantic, Euro markets drifting around unch, with Tech shares finally taking a breather and the Kickoff of US Earnings and Lower Sov Yields weigh on Banks.   DAX is flat in average volume, while Spain’s IBEX continues to rally, but volumes have collapsed on the periphery.  In London, FTSE up 15bp as Miners and Consumer show some life.   Lot of Green in Asia - TOPIX up 20bp despite a Yen rally overnight as Tech led gains - Hang Seng added 25bp as Fins and Property stocks saw their dip bought - Shanghai off small - KOSPI up70bp - Aussie up 40bp despite Miners getting hit on China Production Cuts

The Dollar is under broad pressure on “dovish” Fed Minutes, while Fed Funds at 82%, down from 87% yesterday and the 2YY is off 2bp and 10YY trying to hold the 200d as we await 3 FOMC speakers today.   The Euro is up 1% on the week as it nears $1.19 on better Industrial Production, while Sterling weaker as Brexit talks have reached a “deadlock” – all the blogs are chattering about Bitcoin thru $5,000.  In China, Ore lost another 3% - but all Industrial metals are slightly higher, and Gold on 2week highs as they enjoy a tailwind from a falling $.   Energy mostly weaker, as Brent is getting rejected from 2Y highs near $59 while API showed a big Oil build, coupled with a surprise gasoline draw – but Gas contracts stateside are falling none-the-less.

SEE ALSO: 10 things you need to know before the opening bell

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

• JPMorgan beat on earnings but is trading slightly lower after reporting big declines in trading and fixed income revenues.
• Citi handily beat expectations and is up early on Thursday.
• Most global markets are trading higher Thursday morning.
• The expectation of a rate hike slipped slightly after the Fed released its meeting minutes.

Here's Lutz:

Good Morning!  Spoos, Nasdaq and Industrials all roaming around all-time highs as we await JPM and Citi this AM.  Across the Atlantic, Euro markets drifting around unch, with Tech shares finally taking a breather and the Kickoff of US Earnings and Lower Sov Yields weigh on Banks.   DAX is flat in average volume, while Spain’s IBEX continues to rally, but volumes have collapsed on the periphery.  In London, FTSE up 15bp as Miners and Consumer show some life.   Lot of Green in Asia - TOPIX up 20bp despite a Yen rally overnight as Tech led gains - Hang Seng added 25bp as Fins and Property stocks saw their dip bought - Shanghai off small - KOSPI up70bp - Aussie up 40bp despite Miners getting hit on China Production Cuts

The Dollar is under broad pressure on “dovish” Fed Minutes, while Fed Funds at 82%, down from 87% yesterday and the 2YY is off 2bp and 10YY trying to hold the 200d as we await 3 FOMC speakers today.   The Euro is up 1% on the week as it nears $1.19 on better Industrial Production, while Sterling weaker as Brexit talks have reached a “deadlock” – all the blogs are chattering about Bitcoin thru $5,000.  In China, Ore lost another 3% - but all Industrial metals are slightly higher, and Gold on 2week highs as they enjoy a tailwind from a falling $.   Energy mostly weaker, as Brent is getting rejected from 2Y highs near $59 while API showed a big Oil build, coupled with a surprise gasoline draw – but Gas contracts stateside are falling none-the-less.

SEE ALSO: 10 things you need to know before the opening bell

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Citigroup is set to announce third-quarter earnings Thursday at 8 a.m. 

Wall Street estimates the firm will announce earnings of $1.32 per share, up from $1.28 the previous quarter. 

Here's what else analysts are expecting:

• Revenues of $17.86 billion, down slightly from $17.9 billion in the second quarter. 
• Net income of $3.6 billion, up from $3.55 billion in the second quarter.
• A hit to trading: CFO John Gerspach said in September that trading revenues could drop 15%.

Citi and JPMorgan are kicking off the earnings cycle for US banks, which have for weeks been preparing investors for a blow to trading results. Bank of America, Citi, and JPMorgan are bracing for 15% and 20% hits to trading revenues.

Analysts are also expecting total loan growth to have stalled amid economic and political uncertainty.

Citi has beaten its EPS estimates every quarter since the start of 2014.

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NOW WATCH: Gary Shilling calls bitcoin a black box and says he doesn't invest in things he doesn't understand

Business Insider recently compiled a list of the top talent on Wall Street age 35 and under, interviewing dozens of bankers, asset managers, and traders in the process.

We asked the crop of dealmaker candidates currently making waves in investment banks and private equity shops the same question: What's your biggest concern about the industry?

While responses varied — some bemoaned market trends, like record-low volatility and sky-high valuations — a strong current ran through the vast majority of answers that underscores Wall Street's challenge in keeping up with Silicon Valley.

Most notably, bankers are concerned with Wall Street's ability to recruit and retain young talent given the competition from tech giants and start-ups that offer juicy perks, a more relaxed lifestyle, and an exciting, entrepreneurial environment. 

There's a reason Goldman Sachs is rebranding itself as a tech company and trying to hire engineers in droves. 

The industry has changed swiftly since the financial crisis, and the stable, predictable career trajectory calcified over decades on Wall Street has largely been thrown out the window.

"When I joined the industry 10 years ago, if you were smart and had an interest in business, chances are you were coming into finance and consulting. We were able to get the best and brightest undergrads," one private equity standout told us. "With the advent of startups and tech — Google, Snapchat, or entrepreneurs — we're finding it more difficult to recruit that top tier."

A handful noted that banks, despite marked improvements in recent years, still struggled to offer a healthy work-life balance. Many of the people we spoke with in their early 30s had recently become parents, mixing that daunting responsibility into the cocktail of one of the most competitive, high-pressure career tracks out there. 

Here's what a couple others had to say:

• "There’s been a shift in terms of talent and rigor — it's hard to get people who are super, super committed," a banker told us. "Work-life balance is very tough. People glamorize tech startup life."
• "There's kind of a lost generation from 2007 to now … for a lot of reasons they don’t want to work in banks," another banker told us. "This 10 year gap of people that should be in banking that instead chose to go to venture or startup or charity."

And in the same vein, young financiers are concerned that the technologies coming out of Silicon Valley might further drain the pool of opportunities. 

"There's a lot of fear about how much technology can replace day-to-day tasks," one banker told us. 

Former Citigroup CEO Vikram Pandit said last month that 30% of banking jobs could be gone within the next five years from the threat of automation and artificial intelligence, though relationship-based practices like investment banking face less risk than trading operations.

"I do think we need to be better coordinated about how Wall Street will protect itself against outsiders who are going to be encroaching on the banks' turf," another rising banker told us, highlighting Apple Pay, Paypal, and blockchain as emerging threats. 

Banks may continue to struggle to lure talent back from Silicon Valley, but they're awake to technology threats.

Investments in private tech companies by banks have soared in recent years. Goldman Sachs is leading the charge, but Citigroup, JPMorgan Chase, and Morgan Stanley are all very much in the game as well.  

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Bitcoin is has reached a new all-time high today, with prices hitting a record $5,161.

LONDON — The pound has dived late on Thursday morning after the EU's chief Brexit negotiator Michel Barnier said that talks between Britain and the bloc have reached "deadlock."

Appearing at a press conference in Brussels, Barnier said that the lack of progress in talks was "very disturbing." 

"We’ve reached a state of deadlock which is very disturbing. We are not asking the UK to make concessions," he said.

Those words caused a sharp drop in the pound against all major currencies, with sterling losing roughly 0.3% from its starting point on the day, and falling to just $1.3185, as the chart below shows:

"The pound reacted poorly to what Barnier had to say, the European Chief Negotiator for Brexit stating that the two sides had reached a ‘very disturbing’ ‘deadlock’ over the issue of the UK’s payments to the EU," Connor Campbell, analyst at Spreadex said in an email.

"These comments overshadowed Barnier’s claim that ‘decisive progress is within our grasp over the next two months’, as well as the news that an agreement had been reached over Ireland."

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LONDON — HSBC has confirmed that John Flint will become its new Group CEO.

In a statement to the stock market on Thursday morning, the bank confirmed reports about potential Flint's appointment.

"I am humbled by the responsibility and enormously excited by the opportunity to lead HSBC as Group CEO," Flint said in a statement.

"The bank is very well-positioned for the future but we must continue to innovate and accelerate the pace of change required to meet the expectations of our shareholders, customers, employees, and society at large."

Flint, who is no relation to outgoing chairman Douglas Flint, is the current head of the bank's retail and wealth management businesses. He joined HSBC in 1989 and spent 14 years in Asia at the start of his HSBC career.

He will take over from current boss Stuart Gulliver on 21 February 2018, following Gulliver's retirement.

Mark Tucker, HSBC's new chairman, said Flint "has broad and deep banking experience across regions, businesses and functions."

"He has a great understanding and regard for HSBC's heritage, and the passion to build the bank for the next generation," Tucker said in a statement.

"Through the search process, John has developed with myself and the Board a clear sense of the opportunities and priorities that lie ahead."

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Here is what you need to know.

The Fed is worried it won't achieve one of its key objectives for a while. Minutes from the September Federal Open Market Committee meeting released Wednesday show that many members of the committee believe inflation will remain below the Federal Reserve's 2% target for longer.

Rate-hike odds were unfazed. The market sees a 76.7% chance the Fed hikes again before the end of the year, according to Bloomberg World Interest Rate Probability data.

Earnings season kicks off. Citigroup and JPMorgan report ahead of the opening bell.

Goldman Sachs has a simple plan to make a killing during earnings season. The bank combed through 25,000 earnings reports since 1996 and found that buying straddles (buying both a put and a call) that cost less than the implied earnings-related stock move netted an average profit of 24%, with a success rate of 56%.

Bitcoin passes $5,000. The cryptocurrency hit an all-time high of $5,136 a coin in early action on Thursday.

The Justice Department will most likely try to block a Sprint-T-Mobile deal. A merger between the two mobile carriers would create a company that controls more than half of the market for prepaid plans, favored by people with little or poor credit, Reuters says.

Tech giants are blaming Chinese regulations for breaching intellectual-property rights. US industry groups representing Apple, IBM, and others say China's rules on inbound investment infringe on their intellectual-property rights, South China Morning post says.

Banks are making preparations for Brexit. Bank of America Merrill Lynch has rented a huge office space in Paris, Bloomberg reports, and Citigroup says it plans to open a European private banking hub in Luxembourg.

Stock markets around the world are higher. Japan's Nikkei (+0.35%) led the gains in Asia, and Britain's FTSE (+0.12%) edges up in Europe. The S&P 500 is set to open little changed near 2,553.

US economic data flows. PPI and initial claims will both be released at 8:30 a.m. ET. The US 10-year yield is down 1 basis point at 2.34%.

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Here is what you need to know. 

The Fed is worried it won't achieve one of its key objectives for a while. Minutes from the September FOMC meeting released on Wednesday show many members of the committee believe inflation will remain below the Fed's 2% target for longer.

Rate hike odds were unfazed. The market sees a 76.7% chance the Fed hikes again before the end of the year, according to Bloomberg World Interest Rate Probability data. 

Earnings season kicks off. Citigroup and JPMorgan report ahead of the opening bell. 

Goldman Sachs has a simple plan to make a killing during earnings season. The bank combed through 25,000 earnings reports since 1996 and found that buying straddles (buying both a put and a call)  that costs less than the implied earnings-related stock move netted an average profit of 24%, with a success rate of 56%.

Bitcoin passes $5,000. The cryptocurrency hit an all-time high of $5,136 a coin in early action on Thursday. 

The Justice Department will likely try to block a Sprint-T-Mobile deal. A merger between the two mobile carriers would create a company that controls more than half of the market for pre-paid plans, favored by people with little or poor credit, Reuters says.   

Tech giants are blaming Chinese regulations for breaching intellectual-property rights. US industry groups representing Apple, IBM and others say China’s rules on inbound investment infrige on their intellectual property rights, South China Morning post says. 

Banks are making preparations for Brexit. Bank of America Merrill Lynch has rented a huge office space in Paris, Bloomberg reports, and Citigroup said it plans to open a European private banking hub in Luxembourg.

Stock markets around the world are higher. Japan's Nikkei (+0.35%) led the gains in Asia and Britain's FTSE (+0.12%) edges up in Europe. The S&P 500 is set to open little changed near 2,553.

US economic data flows. PPI and initial claims will both be released at 8:30 a.m. ET. The US 10-year yield is down 1 basis point at 2.34%. 

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JPMorgan Chase is set to announce third-quarter earnings Thursday at 6:45 a.m. 

Wall Street estimates the firm will announce earnings of $1.645 per share on a GAAP basis, down from $1.83 the previous quarter. 

Here's what else analysts are expecting:

• Revenues of $25.6 billion, down slightly from $25.76 billion in the second quarter. 
• Net income of $5.9 billion on a GAAP basis, up from $6.55 billion in the second quarter.
• A hit to trading: Jamie Dimon  said in September that trading revenues could drop 20%.

JPMorgan is kicking off the earnings cycle for US banks, which have for weeks been preparing investors for a blow to trading results. 

Analysts are also expecting total loan growth to have stalled amid economic and political uncertainty.

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President Donald Trump wants you to think that the stock market is hitting record highs because he's in office.

In a recent tweet, he even went as far as to characterize the post-election stock rally as "virtually unprecedented," and criticized the so-called "Fake News Media" for not reporting on it.

Business Insider took that to heart, and dissected Trump's claims that he's catalyzed stock market records. The final conclusion was that while he drove some periods of gains, there were many other times when the market climbed higher for other reasons entirely.

Now we're here to test the mettle of Trump's argument that the stock market has rarely surged this much following an election.

As it turns out, you only have to go back to... (drum roll)... the period after the 2012 election to find a comparable period of stock market strength. That's right, the S&P 500 climbed 19.2% during the span from Barack Obama's re-election through October 11, 2013 — almost exactly same move that we've seen since Trump took office.

But surely that's the only instance of such a rally, right? Nope. As you can see in the chart above, the S&P 500 has rallied more than 19% on four out of 14 occasions, dating back to the election of John F. Kennedy in 1960. And three of those times, the index spiked more than 23%.

So while the definition of "unprecedented" is certainly subjective, it can be safely concluded that both similar and superior rallies have followed presidential elections.

With all of that said, the question that must be asked is: How much are post-election returns dictated by whether stocks are already in a bull market? After all, the currently bull period was roughly 7 1/2 years into its run when Trump won the 2016 election.

As you'll see in the chart above, other major post-election rallies corresponded to bull market stretches, most notably the 35% spike enjoyed by Bill Clinton to start his second term. That was in 1996 and 1997, when the stock market was firmly locked into its longest bull market on record.

Between this analysis and our findings from Wednesday, maybe it's time to conclude that presidents don't really have a huge hand in determining stock gains after all.

(Bob Bryan contributed reporting. Check out his coverage of Trump's policies here.)

SEE ALSO: Trump just took credit for stock-market records once again — so we graded his claims

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A cryptocurrency bill has been submitted to Ukraine's national legislature, setting the stage for new regulations in the country.

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LONDON — Bitcoin has hit a fresh all-time high on Thursday, passing above the $5,000 mark for the first time in its history in early morning European trade.

By 9.20 a.m. BST (4.20 a.m. ET) the cryptocurrency is trading up by close to 6.5% on the day, hitting a value of $5,136, as the chart below illustrates:

Bitcoin has seen its value increase by more than $750 per coin in the last week alone, with a rally that coincides with renewed interest in the currency from investment banks. The Wall Street Journal last week reported that Goldman Sachs is looking at setting up a bitcoin trading operation and Morgan Stanley CEO James Gorman said recently that the cryptocurrency is "certainly more than just a fad."

The cryptocurrency's massive boom has its detractors however, with Michael Novogratz, a former manager at the $72 billion investor Fortress, calling it "one of the great manias of all time" in an interview on CNBC earlier this week.

"It would not surprise me if, in the next six to 10 months, we're over $10,000," Novogratz told CNBC on Tuesday.

Also this week, a team of analysts led by Gautam Chhugani and Gaurav Jangale from research house Bernstein said that bitcoin is still just a "censorship-resistant asset class," out of the reach of state control and yet to form a part of the system of settlement and credit that defines money.

"Fiat money is still the final form of settlement – governments still collect taxes in fiat money and salaries are still paid in fiat money," the team said in a note to clients on Wednesday.

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LONDON — US bank Citi will open a European private banking hub in Luxembourg after Brexit, the bank confirmed on Thursday.

Citi's private bank — which services clients with more than $25 million in total assets — will see a new booking centre set up in Luxembourg as a means to mitigate potential disruption to business that might stem from Britain leaving the European Union.

According to the Financial Times, which first reported the news, Citi said in a statement that it has "taken the decision to build a booking centre in Luxembourg for its European resident UHNW clients, in the event of a hard Brexit."

"The decision is based on what is best for our clients and what will allow us to continue to service our clients without any disruption," the bank added, saying that the new office "will leverage Citi’s existing legal vehicle and presence in Luxembourg."

Banks from across the world are currently assessing their options when it comes to Britain's impending exit from the European Union. Most lenders from Japan and the USA currently have their European bases in London, but are expected to shift those jobs to continental Europe to maintain an EU presence after Brexit.

Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU, after Brexit.

Cities including Dublin, Paris, and Frankfurt are battling to win business from London as a result of Brexit.

Insurance giant AIG is one of numerous firms putting in place plans to set up a new base in Luxembourg, saying in March that the country "offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets."

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Bitcoin developers are making progress on Schnorr, a function for aggregating signatures and in turn, a way to increase the capacity of the network.

LONDON — Planning officials at Westminster council in London have ruled to reject plans by a media mogul to create the UK's most expensive flat. 

Ashley Tabor, who owns radio stations including Classic FM, applied to knock two properties in the luxury Knightsbridge Apartments together to create a £200 million penthouse flat complete with 10 bedrooms, a cinema, and a butler's pantry.

Officials ruled on Thursday that the proposed "amalgamation" of two flats would "result in the loss of a family-sized residential unit, which is contrary to the council's housing policy.

Tabor had hoped to create the apartment, which could have been worth around £200 million, after buying the flat adjoining his existing home earlier this year. The Knightsbridge Apartments is a luxury development near Harrod's in central London.

The most expensive UK flat on record is a triplex apartment in the One Hyde Park development, which sold for £140 million in 2014. 

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LONDON – The UK tax collector has paid out nearly £2 million to informants over the last four years, according to data obtained by Business Insider.

HM Revenue and Customs (HMRC) paid £421,460 for information about financial crimes in 2016/17, according to data released in a Freedom of Information request.

HMRC paid £460,433 in 2015/16, which compares to a spike of £605,000 in 2014/15, and to £402,000 in 2013/14.

HMRC declined to say how many informants the figures related to, stating disclosing this information could "prejudice the assessment or collection of any tax or duty or of any imposition of a similar nature," and "endanger the safety of any individual."

It has also previously declined to say how much was recovered using the information.

HMRC has a secure form on its website through which whistleblowers can provide information, as well as a tax evasion hotline, but does advertise payments.

The UK's tax gap, the difference between the amount of tax due and the amount collected, was at its lowest ever level of 6.5% in 2014/15, according to the most recent statistics. Although the official estimate that £36 billion went uncollected, through tax evasion and avoidance, error and other criminal activity, advocacy group Tax Justice Network said the figure was closer to £122 billion.

HMRC has come under increased pressure to crack down on evasion in recent years, particularly following the Panama Papers scandal, and has been asked to triple the number of criminal investigations for "serious and complex tax crime" and recover an additional £7.2 billion in tax by 2020/21.

A series of new laws to help achieve these targets came into force this year, including the Criminal Finances Act, which includes a new criminal offence of failing to prevent tax evasion. Earlier this year, HMRC also warned of the potentially "life changing consequences" of failing to disclose offshore-held wealth by September 2018, under new transparency legislation.

The government is allegedly preparing to publish new draft legislation on a register of beneficial ownership for overseas companies that own UK property or participate in UK government procurement, according to someone with knowledge of the plans.

HMRC didn't immediately respond to emailed requests for comment.

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• Foreign exchange startup Revolut has 16,000 business customers four months after launch.
• Signing up 3,000 to 3,5000 new retail customers each day.
• Plans to launch in the US, Australia, Canada, Singapore, and Hong Kong in the first quarter of 2018.

LONDON — Foreign exchange startup Revolut is expanding rapidly, signing up 16,000 companies to its business accounts in just four months.

CEO Nikolay Storonsky disclosed the figure during a presentation at the LendIt Europe conference in London on Tuesday. Storonsky said Revolut is signing up 40 to 50 new businesses a day and hopes to scale that sign-up rate to 100 business a day. The two-year-old startup launched business accounts in June.

London-based Revolut, founded in 2015, offers a pre-paid card linked to an app that lets people buy, hold, and transfer money in multiple currencies at low rates. The company has since branched out into lending and insurance and Storonsky told Business Insider that its ambition is to become a "global banking alternative."

Revolut's core retail accounts also continue to grow rapidly, with 3,000 to 3,500 new sign ups each day.

Storonsky told Business Insider that 60% of new signups come from continental Europe, while the rest come from the UK. Britain is Revolut's biggest retail market, followed by France, Spain, Greece, and Lithuania.

The startup now has 900,000 customers and has processed $5 billion-worth of transactions since launch, Storonsky said. It has 180,000 daily active users and 600,000 customers who use the app at least once a month.

Revolut was forced to temporarily stop issuing new cards at the end of last year after a partner found some cards were being issued outside of Europe. The startup is now "putting a lot of resource into compliance" to facilitate its rapid growth, Storonsky said.

"The way we split it, compliance consists of two teams: compliance services, people who just follow processes that we set up; and compliance product — developers, designers, data sciences who design products, for example, onboarding, know your customer, know your business, issuing fraud, acquiring fraud etc. etc.," Storonsky said.

"Overall in compliance, we have definitely more than 30 people now. We scale it ahead of growth. Recently we hired a lot of people in compliance."

Storonsky said Revolut's plans to launch in-app cryptocurrency buying and trading have been delayed by a partner but said he thought the feature would now launch within "two or three weeks."

"I think in terms of engagement, it will be much higher, just because we see there is a huge demand for bitcoin from all of our customers," Storonsky said of the new feature. "I'm getting bombarded all the time, when are you launching cryptocurrencies etc. etc.

"At the moment, the process to buy crypto, there is a friction there — you need to pass KYC, you need to verify your bank account, your cards. It takes time. With Revolut, you're already onboarded — you just see bitcoin appear in your currency exchange wallet and then you buy or sell. It's very easy."

Revolut plans to launch in the US, Australia, Canada, Singapore, and Hong Kong all by the end of the first quarter of 2018, Storonsky says.

The startup raised £50 million at a reported valuation of £300 million in June.

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All earnings seasons are an ideal time to make money trading stocks. Investors are given a huge load of tradeable information, and the resulting price swings create major opportunities.

But there's something particularly special about the third quarter that conjures up stock movements not seen throughout the rest of the year, says Goldman Sachs.

This is likely because it's the period in which companies provide the most forward guidance. It's also possible that the seasonally heavy demand for tech and consumer discretionary — two massively influential industries — have investors playing particularly close attention, the firm says.

So with all that opportunity for profit, what's the best way to ensure you cash in?

It's simple: buy straddles.

Straddles involve the purchase of both call and put contracts. If the stock price moves up dramatically, a trader can use the call option to buy shares at a big discount, while if the price drops far enough, the put option will instead turn a profit.

There's just one catch, however. The straddle should cost less than the implied earnings-related stock move, Katherine Fogertey and the Goldman derivatives team wrote in a client note on Wednesday.

To reach this conclusion, they sifted through more than 25,000 corporate earnings reports since 1996. The team found that investors that bought straddles five days before earnings, then closed those positions the day after the report, would've made an average profit of 24%, with a success rate of 56%.

"This is significantly greater than the returns from buying options on all stocks broadly regardless of this signal," said Fogertey.

While Goldman's recommendation is just one way to trade earnings season, it's hard to argue with those results. So before you go digging through those financial statements for the hidden nugget that will unlock huge future gains, consider making things a little easier on yourself by buying straddles.

Earnings season kicks off on Thursday, as Citigroup and JPMorgan report results, followed by Bank of America and Wells Fargo on Friday.

SEE ALSO: It's the most important time of the year for stocks — here's what Wall Street is saying

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Northern California wine country has been devastated as a series of dangerous fires continues to threaten the areas around Napa and Sonoma. 

The region is an economic powerhouse for the state, and many notable wineries, hotels, and restaurants have suffered damage. Among the wineries that have been reduced to rubble and ash are Signorello Estate in Napa and Paradise Ridge Winery in Santa Rosa.

Other wineries won't know the full extent of damage until after the evacuation order has lifted, but initial confirmed photos show a great deal of destruction. Multiple fires are ravaging more than 50,000 acres of land in multiple wine-producing counties.

Depending on the path that the fires take, the smoke could have some adverse effects on this year's wine harvest. 

According to ETS Laboratories, which conducts scientific research for wineries and the accompanying industry, wildfire smoke can cause something called "smoke taint" — off-seeming flavors that are sometimes described as "smoky," "bacon," "campfire," and "ashtray."

The flavor is "usually long lasting and linger on the palate even after the wine is swallowed or spit out," reads a page on ETS Laboratories' website. Smoke taint occurs when vines and berries absorb chemical compounds, called volatile phenols, from wildfire smoke. 

Luckily, an estimated 90% of grapes had been picked from vines before the fires started on Sunday night, leaving them less vulnerable to smoke taint, according to the nonprofit trade association Napa Valley Vintners. Even Signorello Estate, whose winery burned down, does not expect to lose next year's vintage wines, a spokesperson told Business Insider.

Napa Valley Vintners said in a press release: "It is too soon to tell how the fires and related challenges will impact this year's vintage overall. What we do know is that of the grapes remaining on the vine, it is almost all Cabernet Sauvignon. Our winemakers report that this thick-skinned variety, fully developed and ready to be picked for the 2017 harvest, is not expected to be impacted by the smoke from the fires."

Smoke taint can be removed through a process of reverse osmosis, though wine industry professionals say it's unlikely for that to be necessary at this stage in the harvest. 

Kelly Carter, a spokesperson for Alpha Omega Winery in St. Helena, told Business Insider: "Due to the maturity stage of the fruit, smoke is not expected to permeate the skin. Should smoke somehow permeate the skin, technology can remove the smoke."

Carter continued: "No matter the circumstances, Napa Valley winemakers remain committed to upholding Napa Valley's reputation for making some of the world's finest wines and they will do everything possible to ensure the highest quality winemaking for the rest of the 2017 vintage."

Smoke taint has caused problems for winemakers in the past. In 2008, fires that took place earlier in the growing season left Mendocino County vintners deciding whether to sell their wine at all. 

Experts say that consumers should not expect wine prices to rise in the wake of the fires, though it's far too early to fully assess the damage at this point. 

"If it's a large winery, if they are financially stable and can handle (the effects of the fire) long-term, they may say, 'We've got other assets, we've got vineyards in Chile,' and hold their prices. There's a lot of economics involved," Kevin Riley, a wine executive with beverage distributor Southern Glazer's Wine & Spirits, told USA Today. 

Locals are optimistic for the time being. 

"We are anticipating a successful vintage and that wine values will stay strong," Maria Castellucci, proprietor of Castellucci Napa Valley, told Business Insider. 

SEE ALSO: Before-and-after photos show how California's wineries have been devastated by fires

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LONDON — The UK housing market continued to stall in September, according to the Royal Institute of Chartered Surveyors.

The group's monthly UK Residential Market Survey found surveyors reporting a decline in both sales and new buyer enquiries over the month, meaning sentiment is now flatter than at any point since the EU referendum result last June.

In September, 20% more respondents reported a fall rather than rise in demand from would-be buyers, making it the sixth consecutive month of negative readings.

Additionally, 15% more respondents reported a fall in agreed sales rather than a rise, which is the lowest reading since July 2015.

The immediate future doesn't look much brighter. Over the next 3 months, surveyors' expectation of national sales activity slid to -1% from +7% in August.

The survey also highlighted a big — and growing — regional disparity in housing market activity. London and the surrounding south-east England were at the forefront of the decline in sales, while only Wales and south-west England were reported to have seen an increase in sales, with the rest of the UK flat.

While prices were also steady on the national level, London remained firmly negative, while the price balance in the south-east was also negative for a fourth consecutive month. Both of these regions contained the highest proportion of respondents who perceive the market to be overpriced compared to the rest of the UK.

RICS chief economist Simon Rubinsohn said the survey highlighted stark regional differences in the national housing market and suggested weak sentiment could be related to uncertainty surrounding a possible Bank of England interest rate hike.

"It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest RICS survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time," he said.

"In part, this is a reflection of affordability constraints hitting the higher priced segments of the market. It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years.

"That said, we are continuing to see evidence of shortage of stock both in the new build and second hand market. And despite the announcements at the recent Conservative Party conference, it is hard to envisage this changing any time soon. Against such a backdrop, prices in general are likely to remain elevated and indeed, as the survey indicates, continues to rise over the medium term in most parts of the country."

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In a 1999 interview, Professor Milton Friedman, an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy. He had this to say: 

"I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash."

In November 2008, a paper was posted to a cryptography mailing list titled "Bitcoin: A Peer-to-Peer Electronic Cash System." In this time the value of the first Bitcoin transactions were negotiated by individuals on the bitcointalk forums with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas.

In 2011, based on Bitcoin’s open source code, other cryptocurrencies started to emerge. By 2017, a single bitcoin's worth reached more than $4000

This is greatly attributed to the fact that more people are getting educated on how Bitcoin works. The convenience of receiving payments within seconds, with minimal transaction fees means a lot to a business. More online stores are opening up to accepting Bitcoin as a form of payment from their customers.

"Not only is Bitcoin exciting, it’s also going to play an “important role” in the future of PayPal." - John Donahoe, CEO of eBay

There are many other small e-commerce stores that accept cryptocurrency for purchases. Some industries even have custom cryptocurrencies, which serve like means of payment between parties. 

The use of cryptocurrency is on the rise as it has many benefits, such as security, speed, minimal transaction fees, easy to store and manage and relevance in the digital era. It is evident that we won’t have to wait very long to see cryptocurrency as a globally accepted means of payment.

Expedia.com

Expedia teamed up with Coinbase in implementing the world's largest travel booking agency found online.  Since mid 2014, users have been able to make hotel bookings using the Bitcoin payment option. Expedia currently accepts Bitcoins for hotel bookings only, but are expected to expand to include flight bookings and other activities.

Microsoft

Microsoft users can use Bitcoin to purchase games, movies and apps in the Windows and Xbox stores, as well as the Microsoft online stores.

Virgin Galactic

Since 2013, Virgin Galactic, a commercial space flight venture owned by Entrepreneur Sir Richard Branson, that includes companies such as Virgin Mobile and Virgin Airline, accepts purchases using Bitcoin. You can even pay for space travel with Bitcoin.