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Steph Curry's new shoe hasn't even officially hit shelves yet, but Randal Konik, an analyst at Jefferies, is already calling it.

"Our calls, store visits, social media analysis and review of StockX pricing of Curry 4 soft launches (official launch 10/27) points to very strong buzz in the market," Konik wrote in a note to clients. "With competitor products aging, we believe Curry 4 will become the #1 sneaker in basketball this year which should also help Under Armour shares rebound."

The Curry 4 is Steph Curry's follow up to his somewhat disappointing Curry 3 sneakers. The new shoes still aren't available for general purchase, but they were released in a "More Rings Championship Pack" on Tuesday to coincide with the start of the NBA regular season.

Konik says the long lines and already frenetic social media activity around the new shoes is evidence of its coming popularity. Curry has been promoting his new shoes since last season's NBA finals, and some of the lucky few that have nabbed a pair are reselling the shoes for an 80%-100% markup, according to Konik.

Konik even went as far as to count the number of Instagram hashtags for the new shoes to try and predict its popularity at launch. Curry4 has been used more than 5,000 times, which is impressive, according to Konik, as the Curry3 hashtag has been used a total of 28,000 times since that shoe was released.

For Under Armour, the maker of the shoe and sponsor of Curry, the hype is all good news. The company's Curry 3 shoe was a bit of a disappointment and forced the company to play catch-up with its rivals. The popularity of the Curry 4 could change that.

"After a very unsuccessful Curry 3 launch which caused the Curry line to lose share in basketball, the Curry 4 buzz combined with intel of slowing competitor products gives us conviction that Curry 4 can regain the #1 share in bball this year," Konik wrote.

Konik rates Under Armour as a buy with a price target of $28, about 85% higher than the company's current price of $15.11. Konik's rating is by far the most bullish on Wall Street, which has an average price target of $19.85.

Under Armour has been hit by a sector-wide decline in retail, and is down 41.32% this year.

Read more about what teens think of Under Armour's brand here.

SEE ALSO: Teens say that Under Armour isn't cool anymore — and it's a huge crisis (UA)

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IBM beat Wall Street expectations in its third-quarter financial results on Tuesday, sending its stock up about 3% in after-hours trading.

Even so, IBM failed to put an end to its 22-quarter revenue decline. 

Here's what the company reported:

• Revenues (GAAP) were at $19.15 billion, down from $19.23 billion in the year ago period, but above analyst estimates of $18.59 billion.
• Earnings per share (non-GAAP) were at $3.30, compared to analyst estimates of $3.28.
• Projected earnings for fiscal 2017 (non-GAAP) are $13.80, compared to analyst estimates of $13.75. 

Despite the decline, IBM appears to be growing where it counts.

Cloud services — one of the company's key areas of focus — saw revenues of $4.1 billion for the quarter, up 20% from the third quarter last year. Last quarter, cloud revenues were at $3.9 billion, up 15% from the second quarter last year. 

SEE ALSO: IBM is using the technology behind bitcoin to help businesses in countries with weak banking systems

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Earnings season is officially in full swing.

Netflix hit an all-time high on Tuesday after reporting after the bell on Monday. Morgan Stanley and Goldman Sachs both crushed their earnings estimates before the bell on Tuesday.

The Dow Jones industrial average crossed 23,000 today but closed just below the milestone. It was the first time the index closed below a 1,000 point milestone it hit on the same day since it hit 16,000. It's still a record-high close.

Here's the scoreboard:

• Dow: 22,996.30, +39.34, (0.17%)
• S&P 500: 2,559.56, +1.92, (0.08%)
• Nasdaq: 6,623.09, -0.35, (-0.01%)
• US 10-year yield: 2.30%, -0.02
• WTI crude oil: $51.95, 0.03, 0.06%

1. MORGAN STANLEY: A stock market correction is 'looking more likely.' The correction could stretch beyond 5%, according to the bank.
2. Financial networks and businesses are distancing themselves from Marc Faber after a racist investor letter. Faber wrote, "thank god white people populated America, and not the blacks" in his October newsletter.
3. New York City yellow cabs have taken a back seat to Uber. People took more Ubers than yellow cabs for the first time ever in June.
4. Wall Street found a parasite growing in the US economy that could spur the next recession. Wall Street's short sellers are beginning to talk about healthcare as the next major threat to the US economy.
5. Key senators just reached a deal to save the Obamacare payments Trump just killed. The payments help to defray costs to insurers that are mandated to provide plans with low out-of-pocket costs to poorer Americans.

Other headlines

Traders can't stop betting against battered Blue Apron

Dow hits 23,000 for the first time

Wilbur Ross told Forbes he hid $2 billion from the government and then took it back

Netflix CEO Reed Hastings joins Forbes list of richest Americans with net worth of $2.3 billion

JEFFERIES: Amazon is adding 1 million square feet of warehouse space a week — and not slowing down anytime soon

Goldman Sachs just let slip how badly a key business is performing

SEE ALSO: What you need to know on Wall Street today

Join the conversation about this story »

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

Earnings season is officially in full swing.

Netflix hit an all-time high on Tuesday after reporting after the bell on Monday. Morgan Stanley and Goldman Sachs both crushed their earnings estimates before the bell on Tuesday.

The Dow Jones industrial average crossed 23,000 today but closed just below the milestone. It was the first time the index closed below a 1,000 point milestone it hit on the same day since it hit 16,000. It's still a record-high close.

Here's the scoreboard:

• Dow: 22,996.69, +39.73, (0.17%)
• S&P 500: 2,559.53, +1.72, (0.07%)
• Nasdaq: 6,623.66, -0.35, (-0.01%)
• US 10-year yield: 2.30%, -0.02
• WTI crude oil: $51.95, 0.03, 0.06%

1. MORGAN STANLEY: A stock market correction is 'looking more likely.' The correction could stretch beyond 5%, according to the bank.
2. Financial networks and businesses are distancing themselves from Marc Faber after a racist investor letter. Faber wrote, "thank god white people populated America, and not the blacks" in his October newsletter.
3. New York City yellow cabs have taken a back seat to Uber. People took more Ubers than yellow cabs for the first time ever in June.
4. Wall Street found a parasite growing in the US economy that could spur the next recession. Wall Street's short sellers are beginning to talk about healthcare as the next major threat to the US economy.
5. Key senators just reached a deal to save the Obamacare payments Trump just killed. The payments help to defray costs to insurers that are mandated to provide plans with low out-of-pocket costs to poorer Americans.

Other headlines

Traders can't stop betting against battered Blue Apron

Dow hits 23,000 for the first time

Wilbur Ross told Forbes he hid $2 billion from the government and then took it back

Netflix CEO Reed Hastings joins Forbes list of richest Americans with net worth of $2.3 billion

JEFFERIES: Amazon is adding 1 million square feet of warehouse space a week — and not slowing down anytime soon

Goldman Sachs just let slip how badly a key business is performing

SEE ALSO: What you need to know on Wall Street today

Join the conversation about this story »

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Healthcare stocks rose after a bipartisan deal was struck that would save Obamacare's cost sharing reduction (CSR) payments from President Donald Trump's axe.

Less than a week after Trump said his administration would put an end to these payments, Republican and Democratic lawmakers moved to formally appropriate the payments to insurers, which helps cover insurers' costs for the mandated plans it provides to poorer Americans.

The preliminary plan would keep CSR payments flowing through 2019 and would restore $106 million devoted to outreach to get people to sign up for Obamacare plans.

Here's a look at how the biggest healthcare companies are trading on Tuesday:

• Anthem (ANTM) +2.45% at $188.27
• UnitedHealth (UNH) +6.24% at $205.26
• Tenet Healthcare (THC) +6.24 at $13.71
• Humana (HUM) +1.86% at $241.58
• Community Health Systems (CYH) +8.31% at $6.39
• HCA (HCA) +2.56% at $77.11

SEE ALSO: Trump just ignited a battle within the Republican Party about whether to save Obamacare

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If you've used Siri, Google's Assistant or Amazon's Alexa, then you've interacted with an artificial intelligence.

As an example of the innovation in artificial intelligence going on now, Google is working on technology to classify street signs, identify objects in photos and translate speech between two languages in real time. The company, in a product event showing off these technologies recently, admitted that this is just the beginning.

Stephen Chin, an analyst at UBS, agrees with Google and sees huge potential growth in the sector, especially in the silicon that makes it possible.

"The democratization of AI now underway could drive a new phase of growth in Semis that our new proprietary model estimates could represent a $35B revenue total addressable market by 2021 (ex-memory), or a 41% compound annual growth rate from current levels," Chin said.

The AI that currently exists is relatively rudimentary compared to its future potential, but even so, it requires huge amounts of computing power. Computer chip makers have realized this, and are currently in a race to provide the chips that can power current and future AI systems.

Graphics processing units, like those made by AMD and Nvidia, will make up 54% of the total AI market in 2021, according to Chin, while central processing units, like those from Intel and AMD, will make up about 40% of the markets. Chin said that data centers will make up a majority of the demand for AI-focused chips in the future, as smaller consumer computers won't have the power to train AI systems in a reasonable time frame. 

With that in mind, Chin says that Nvidia is the company to beat in the space.

"We estimate Nvidia has a time to market advantage of 1+ year and should be able to sustain this lead," Chin said.

Nvidia has been on a world tour in recent weeks, announcing new AI-themed partnerships with drone makers, car companies and more. The company was crowned the smartest company in the world by MIT this year, in part, because of its dominance in the AI space.

Nvidia is also focusing on providing the tech necessary to power autonomous cars, another AI growth area, according to Chin. The company's "Drive" series of chips are already being used by a large number of car manufacturers.

Tesla, one of the biggest names in self-driving cars, is reportedly working with Nvidia's competitor AMD to produce a custom self-driving car chip, though. The autonomous car space could be a huge market for chip makers, coming in just behind data centers, said Chin. 

Nvidia and Intel are the only two companies Chin sees as having a solution for every part of the current AI market. Most of the other companies, like AMD, Qualcomm, Samsung and even Google, fail to capture the entire breadth of that market.

This is an important advantage for the two companies, though it's not everything.

The computing ability of these chips is important, as the faster a chip is, the faster it can crunch through the huge data sets required to create artificial intelligence systems. AMD is working on CPUs that can rival Intel's and GPUs that can compete with Nvidia's. Chin said it could start to gain market share because of this.

In 2017, Chin estimates the total market for machine learning and artificial intelligence to be about $8.2 billion. By 2021, Chin thinks it could be worth upwards of $35 billion. The companies that can provide the best chips for that growing market stand to benefit from the sector's explosive growth.

Here's how much each of the chip makers is up this year, and their share prices as of about 3 p.m. ET Tuesday:

• Intel (INTC): +8.58%, $39.75
• AMD (AMD): +25.60%, $14.20
• Nvidia (NVDA): +93.74%, $197.51
• Google (GOOGL): +25.09%, $1,009.19

Read more about what you need to know before investing in AI here...

SEE ALSO: Artificial intelligence is going to change every aspect of your life — here's how to invest in it

Join the conversation about this story »

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

If you've used Siri, Google's Assistant or Amazon's Alexa, then you've interacted with an artificial intelligence.

As an example of the innovation in artificial intelligence going on now, Google is working on technology to classify street signs, identify objects in photos and translate speech between two languages in real time. The company, in a product event showing off these technologies recently, admitted that this is just the beginning.

Stephen Chin, an analyst at UBS, agrees with Google and sees huge potential growth in the sector, especially in the silicon that makes it possible.

"The democratization of AI now underway could drive a new phase of growth in Semis that our new proprietary model estimates could represent a $35B revenue total addressable market by 2021 (ex-memory), or a 41% compound annual growth rate from current levels," Chin said.

The AI that currently exists is relatively rudimentary compared to its future potential, but even so, it requires huge amounts of computing power. Computer chip makers have realized this, and are currently in a race to provide the chips that can power current and future AI systems.

Graphics processing units, like those made by AMD and Nvidia, will make up 54% of the total AI market in 2021, according to Chin, while central processing units, like those from Intel and AMD, will make up about 40% of the markets. Chin said that data centers will make up a majority of the demand for AI-focused chips in the future, as smaller consumer computers won't have the power to train AI systems in a reasonable time frame. 

With that in mind, Chin says that Nvidia is the company to beat in the space.

"We estimate Nvidia has a time to market advantage of 1+ year and should be able to sustain this lead," Chin said.

Nvidia has been on a world tour in recent weeks, announcing new AI-themed partnerships with drone makers, car companies and more. The company was crowned the smartest company in the world by MIT this year, in part, because of its dominance in the AI space.

Nvidia is also focusing on providing the tech necessary to power autonomous cars, another AI growth area, according to Chin. The company's "Drive" series of chips are already being used by a large number of car manufacturers.

Tesla, one of the biggest names in self-driving cars, is reportedly working with Nvidia's competitor AMD to produce a custom self-driving car chip, though. The autonomous car space could be a huge market for chip makers, coming in just behind data centers, said Chin. 

Nvidia and Intel are the only two companies Chin sees as having a solution for every part of the current AI market. Most of the other companies, like AMD, Qualcomm, Samsung and even Google, fail to capture the entire breadth of that market.

This is an important advantage for the two companies, though it's not everything.

The computing ability of these chips is important, as the faster a chip is, the faster it can crunch through the huge data sets required to create artificial intelligence systems. AMD is working on CPUs that can rival Intel's and GPUs that can compete with Nvidia's. Chin said it could start to gain market share because of this.

In 2017, Chin estimates the total market for machine learning and artificial intelligence to be about $8.2 billion. By 2021, Chin thinks it could be worth upwards of $35 billion. The companies that can provide the best chips for that growing market stand to benefit from the sector's explosive growth.

Here's how much each of the chip makers is up this year, and their share prices as of about 3 p.m. ET Tuesday:

• Intel (INTC): +8.58%, $39.75
• AMD (AMD): +25.60%, $14.20
• Nvidia (NVDA): +93.74%, $197.51
• Google (GOOGL): +25.09%, $1,009.19

Read more about what you need to know before investing in AI here...

SEE ALSO: Artificial intelligence is going to change every aspect of your life — here's how to invest in it

Join the conversation about this story »

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

Sir Tim Berners-Lee encouraged the blockchain space to think about the unintended consequences of its actions in a talk at Ripple's Swell conference.

Stock traders can't stop kicking Blue Apron while it's down.

The company's stock is already trading at roughly half of its $10 initial public offering price, but apparently that isn't low enough for the bearish speculators adding to wagers.

They've grown bets against Blue Apron to $69.3 million this month, up 12% since the end of September, according to data compiled by financial-analytics firm S3 Partners.

Apparently those short sellers, who have already made a mark-to-market profit of $24.9 million since the company's June 29 IPO, are hoping to pad their bank accounts even more.

And it's not like these wagers are cheap. Amid this recent surge in short interest, borrowing rates have spiked to double where they were just one week ago. In the end, their willingness to pay such a premium shows conviction.

If these traders are right about the direction of Blue Apron's stock, it will be just the latest hit in what's been an extremely tough road for the company since it started the process to go public.

Estimated to be valued at as much as $3 billion during its roadshow, Blue Apron's IPO quest was derailed suddenly when deal-happy retail juggernaut Amazon shelled out $13.7 billion to buy Whole Foods. That proved to be terrible timing for Blue Apron, contributing to its IPO range being cut to $10 to $11 a share from $15 to $17. The eventual price of $10 was 40% below what it originally said.

Blue Apron's problems didn't end there. In addition to the subsequent stock drop to even lower levels, the company announced in August that it had laid off 14 members of its recruitment team and temporarily halted the hiring of salaried employees.

And the competition is only getting more fierce. On Monday, Bloomberg reported that fellow meal-kit startup HelloFresh — which is planning an IPO on the German stock exchange — is marketing its offering by telling investors that it's set to overtake Blue Apron in the US.

What's more, grocery store chain Albertson's acquired Plated — another meal-kit startup — for between $175 million to $200 million.

Amid all of this fervor in the industry, it's looking like traders think no price is too low for Blue Apron's flailing stock. The company's shares rose 0.2% to $5.26 at 1:49 p.m. ET on Tuesday.

SEE ALSO: An obscure company is ground zero for the biggest debate in the stock market

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Businesses and financial networks on Tuesday began distancing themselves from the investor and markets commentator Marc Faber because of an investor letter in which he wrote "thank god white people populated America, and not the blacks."

In the October edition of the "Gloom, Boom, and Doom" report, Faber addressed government regulation and what he considered to be impending issues facing the financial future of the US. He also said too many people were focused on concerns like the removal of Confederate statues, an issue he also addressed as an aside.

"But the very same people are now disturbed by statues of honourable people whose only crime was to defend what all societies had done for more than 5,000 years: keep a part of the population enslaved," Faber wrote in part. "And thank God white people populated America, and not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority."

Faber stood by the remarks in emails to Business Insider on Tuesday.

"If stating some historical facts makes me a racist, then I suppose that I am a racist," Faber said in an email. "For years, Japanese were condemned because they denied the Nanking massacre."

Numerous TV networks told Business Insider they were not planning to book Faber as a guest going forward.

"We do not intend to book him in the future," a CNBC representative told Business Insider on Tuesday.

"Faber does not appear on the network often and will not be on in the future," a representative for Fox Business Network said.

A person familiar with the situation at Bloomberg TV gave a similar statement, noting that the network had not booked Faber since June 2016.

"He hasn't appeared on Bloomberg TV since last summer, and there are no plans to book Mr. Faber," the person said.

In an email to Business Insider, Faber said the networks' decision wasn't consequential to him.

"Not sure this is a huge loss," Faber said.

Additionally, Peter Grosskopf, the CEO of Canadian asset manager Sprott, said Faber would resign from the company's board of directors.

"The recent comments by Dr. Faber are deeply disappointing and are completely contradictory with the views of Sprott and its employees," Grosskopf said in a statement. "We pride ourselves on being a diverse organization and comments of this sort will not be tolerated. We are committed to providing an inclusive workplace for all of our employees and we extend the same respect to our clients and investors."

Business Insider has contacted the other companies where Faber serves as a director and will update this post if we hear back.

SEE ALSO: Marc Faber, author of influential 'Gloom, Doom, and Boom' report, says 'thank God white people populated America, not the blacks'

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The president of Brazil's central bank compared bitcoin to a financial scam, according to newly published statements.

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.

Goldman Sachs and Morgan Stanley both reported third quarter earnings on Tuesday, and both beat handily. 

Goldman Sachs posted earnings per share of $5.02, way ahead of the $4.19 number expected by analysts. The beat was driven by a bump in investing and lending revenue, and was boosted by a strong performance in debt underwriting, where the bank goes from strength to strength.

Fixed income trading remains a problem, however, with CFO Marty Chavez letting slip just how badly the commodities business is doing. 

Morgan Stanley crushed Wall Street expectations for third-quarter, thanks to strong performance from its dealmakers and its wealth-management unit. The investment bank reported earnings of $0.93 a share, while analysts were expecting earnings of $0.81 a share.

In other finance news, an activist hedge fund backed by a former top Credit Suisse executive wants to break up the bank. Private equity firms seem to be the new titans of Wall Street, and they're crushing it this year. And a huge chunk of men who rule corporate America would prefer if everyone focused less on diversity.

In a note to clients, Marc Faber, author of influential "Gloom, Doom, and Boom" report, said "thank God white people populated America, not the blacks."

In markets news, the Dow Jones industrial average breached the 23,000 mark for the first time on Tuesday, helped by a rally in shares of UnitedHealth and Johnson & Johnson. Still, a stock market correction is "looking more likely," according to Morgan Stanley. 

The shareholder list of Meredith Corporation highlights a tug-of-war in the stock market. It's time to think about active money management again, according to Legg Mason. And the next year will be very difficult for investors to predict, according to JPMorgan. 

Allergan’s unusual deal with a Native American tribe could be backfiring.

In tech news, Netflix crushed its Q3 subscriber growth targets, blowing past them on both the domestic and international fronts by adding 5.3 million total. And Netflix's top execs all wore ugly "Stranger Things" sweaters on the earnings call, highlighting an important new business.

Amazon is adding 1 million square feet of warehouse space a week, according to Jefferies, and is not slowing down anytime soon. And Microsoft CEO Satya Nadella nailed his annual report card — netting him a cool $20 million.

Lastly, hilarious listing photos show what not to do when putting your house on the market.

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• Allergan struck an unusual deal with the Saint Regis Mohawk Tribe to transfer patents of the eye drug Restasis, a move that gives the drug sovereign immunity from certain patent challenges. 
• But on Monday, a district court judge invalidated some of Restasis 's patents through another channel. 
• The loss in district court means that Allergan won't get much of the upside from the St. Regis deal, and analysts highlight the "public relations backlash the company has suffered from going through with the agreement in the first place."

Allergan, the drugmaker behind Botox, on Monday, had patents on one of its key drugs invalidated by a district court judge.

The case was regarding Restasis, a blockbuster eye drug whose patents Allergan had in September given to the Saint Regis Mohawk Tribe. The unusual move gave Restasis sovereign immunity from certain patent challenges, and led to a lot of backlash from lawmakers and the public.

"The Court has serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed," Judge William Bryson said in a memorandum opinion accompanying his decision. Allergan's stock dropped as much as 6% Monday on the news. 

Because of the outcome of the case, however, the benefits of having sovereign immunity from certain patent challenges might be moot. Allergan was trying to avoid a procedure that lets parties challenge the validity of patents called inter partes review, a process that could have also invalidated the Restasis patents in addition to the route the district court case took.

Analysts at Credit Suisse adjusted their model following the news, citing in part, the response to the St. Regis deal. 

"Even before today, AGN’s stock had lost 12% of its value since the company announced the controversial Restasis patent agreement with the Saint Regis Mohawk Tribe. The loss in the District Court takes away the potential upside AGN could have obtained by removing the Inter Partes Review (IPR) challenge through the patent agreement," Credit Suisse wrote in a note. "However, it does not erase the public relations backlash the company has suffered from going through with the agreement in the first place."

Credit Suisse had concerns about whether the St. Regis deal had any impact on the judge's decision to invalidate the patents and the lasting implications of the deal on the company's reputation. 

"We have generally been fans of the AGN management team, but find it challenging to defend the steps that were taken with the patent agreement, especially given that the patents have now been invalidated by the Court," the analysts wrote. "We believe it will take some time for the management team to regain the credibility it has lost through this process."

SEE ALSO: One of Allergan's blockbuster drugs was dealt a major legal blow

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 An engineer for BitGo, Jameson Lopp, faced down a horde of police officers with rifles at his home in Durham, North Carolina after someone sent an anonymous tip regarding a hostage situation at his home. The engineer has been vocal on Twitter about upcoming changes in the protocol. “They shut down most of my neighborhood,” he said. “There were dozens of patrol units, a SWAT… Read More

[…]

The post Terminally Ill Man Borrows over $300,000 to Invest in Bitcoin, is a Millionaire Now appeared first on CryptoCoinsNews.

• More than 20% of Meredith Corporation's shares are owned by ETFs, with much of that being held in dividend-focused funds.
• This is among the highest percentages in the US market, and serves as a microcosm for the debate around the effect rapidly-growing ETF investment is having on the stock market.

You may not have heard of Meredith Corporation, but its shareholder list highlights a tug-of-war in the stock market.

A little known fact about the $2.4 billion media conglomerate is that well over 20% of its stock is owned by exchange-traded funds (ETFs). And roughly two-thirds of those holdings are concentrated in dividend-based funds, according to data compiled by Credit Suisse.

Sure, Meredith has paid a dividend for at least the past decade, while also quadrupling that shareholder distribution over the same period. But so have a lot of companies, and their ETF ownership is nowhere near the same level.

In fact, Meredith has the second-biggest chunk of passive ownership out of all US companies, Credit Suisse finds. And while some companies have lots of different types of ETFs on the shareholder register, MDP is heavily exposed to a single kind.

For a company like Meredith, there are benefits and drawbacks to the situation it finds itself in. In the event that investors pull money from ETFs, and dividend funds in particular, it could be particularly exposed, given its heavy passive component. But inflows in to dividend ETFs could bump the stock price higher.

Either way, the huge share of passive ownership makes the company a poster child of the passive investment revolution — one that's seen ETFs make up an increasingly large chunk of the stock market.

It's that growing portion of passive holdings that's the focus of what might be the investment community's most hotly-contested debate. Is the growing level of ETF holdings a ticking time bomb, or simply an innocuous development with little downside?

On one side you have active managers who make their living analyzing company fundamentals and placing bets accordingly on single stocks. They argue that the rise of ETFs — which are often used as vehicles for price-insensitive, quantitative-based trading — have made the stock market more homogenous, while also sapping it of volatility. For them, price swings represent opportunity, and their jobs are much harder with the market sitting still.

This group includes hedge fund managers, who have made their distaste for ETFs and passive investment no secret. Jason Karp, who runs $3.4 billion Tourbillon Capital, bemoaned the "tidal wave" of passive inflows and the effect it's had on his portfolios in an August investor letter. Dmirtry Balyasny of $12.6 billion Balyasny Asset Management agrees, and says the rise of ETFs means active investors need to be sharper as the hunt for returns gets more competitive.

It's worth noting, however, that it's in the best interest of hedge fund managers to blame underperformance on external factors like ETFs. They charge higher fees than the indexed funds they dislike so much, and likely feel threatened.

On the other side of the ETF debate are the providers themselves, as well as some Wall Street analysts. Obviously the firms that create and market the funds see no resulting market distortion, and have argued that their presence both provides liquidity and makes markets even more efficient.

From a data perspective, the idea that there are no single-stock investment opportunities also seems far-fetched. About 54% large-cap mutual-fund managers are beating their benchmarks in 2017, the highest-ever success rate at this time of year, according to Bank of America Merrill Lynch data going back to 2009. If they keep up the pace through the end of the quarter, it would be the first year since 2007 that more than half of them outperformed benchmarks.

Credit Suisse analyst Victor Lin is also skeptical of the argument that passive ownership is depriving the stock market of actionable opportunities. He argues that effective stock price discovery can always be achieved, regardless of how many shares are available to trade.

And he doesn't buy into fears that ETFs leave stocks vulnerable to so-called short squeezes — which happen when a sharp spike in a stock results in forced buying by bearish speculators. In his mind, the price-insensitive nature of passively-held shares actually makes short sellers less likely to cover.

While it's difficult to tell which side will ultimately prove to be right, many point toward a future stock market downturn as a potential catalyzing event.

So when will that happen? Well, that's a debate for another day.

SEE ALSO: MORGAN STANLEY: A stock market correction is 'looking more likely'

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Canada and Mexico will reject the US's latest proposals for NAFTA but offer to continue negotiating, CNBC reported. 

The Trump administration last week made some tough submissions, included raising the auto rules of origin to 85%, up from the current 62.5%, and adding a sunset clause, which would lead to NAFTA expiring every five years unless all three countries agree to extended it.

Mexican and Canadian officials are set to release a joint statement at 3 p.m. ET on Tuesday, following talks that ended Monday.

 Trump has threatened to terminate the trade agreement if Canada and Mexico do not agree to his demands. It's possible that his administration is trying to sabotage the agreement to justify a withdrawal, said Paul Ashworth, the chief US economist at Capital Economics. 

"Even if the national impact is limited, a NAFTA collapse would hit certain US states and industries quite
hard," Ashworth said in a note. "Michigan, Illinois and Texas are the states that would suffer greatest disruption. Because of its complex supply chains that cross both borders, the auto industry would suffer the most, with autos accounting for nearly 40% of exports to Canada and 22% of exports to Mexico."

The Mexican peso weakened against the dollar, trading down 0.2% at 19.0768.

SEE ALSO: Mexican peso tumbles as the US comes out with tough NAFTA demands

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Razzy Ghomeshi has quickly climbed the ladder during his short time at RBC Capital Markets. 

Ghomeshi, the firm's head of investment grade trading in the US, began his career at RBC out of college.

He started in investment-grade credit, and after a year and a half he got his own trading book. Soon after, Ghomeshi was promoted to run the investment-grade trading book, normally the biggest and most actively traded at the firm.

So, he knows what it takes to get ahead. 

Ghomeshi, an inductee to Business Insider's Rising Stars of Wall Street list, recently shared with Business Insider the two attributes he thinks are key for finding success on Wall Street early on. 

A good attitude, according to Ghomeshi, is paramount. 

"This means showing humility, modesty and an eagerness to learn, all of which will help you excel," he said.

He says young Wall Streeters shouldn't go into things thinking they have all the answers. 

"It’s okay (and expected) to ask questions often," he said.

The second key to success, according to Ghomeshi, is consistency. Here's Ghomeshi:

"Being consistent throughout everything you do from your performance to showing up and being present to your demeanor and behavior. If you have a good attitude and remain consistent, you’ll be in a great position to succeed."

The 30-year-old has made a name for himself on the Street during his short career, having been recognized three times as one of the "Most Helpful Traders" in investment-grade credit, according to Greenwich Associates.

He graduated from Washington University in St. Louis in 2009 with a degree in finance, international business, and marketing.

Here's Business Insider's full list of Wall Street Rising Stars >>

SEE ALSO: Meet the Rising Stars on Wall Street shaking up investing, trading and dealmaking

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Netflix’s growth continues to explode overseas.

In addition to earnings that beat on both top and bottom line growth, the company on Monday said it added 4.45 million international subscribers, beating both Wall Street and in-house estimates.

Based on these impressive numbers, Morgan Stanley has raised its price target for shares of Netflix to $235 from $225 — 11% above the stock’s price of $200 Tuesday morning.

"Following the strong 3Q17 results and 4Q17 guidance, primarily driven by Netflix adoption internationally, we raise our long-term international subscriber forecast and currently expect +15.75mm international streaming net adds in '18E (vs. prior +14.2M)," analyst Ben Swinburne said in a note Tuesday morning.

This international growth, coupled with cable TV partnerships at home and its investment in original programming, will help Netflix strengthen its moat against encroaching competitors like Disney, which last month announced it would yank its content from Netflix and launch its own streaming service.

"As it navigates a wary but likely still willing partnership with traditional, vertically integrated media companies, its position as a studio and the clear positive impact that its original programming is having on the business provide a nice hedge to strategic shifts by historical suppliers such as Disney."

The news confirms Swinburne’s thesis that Netflix has created a model it can replicate in international markets. He explained how this works in an interview with Markets Insider last week ahead of earnings:

"History would tell you that given time, [Netflix] 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."

Shares of Netflix rocketed past $200 and hit an all-time high Monday afternoon into Tuesday morning after the earnings report, but are currently trading down 1.22%. 

Watch Netflix's real-time stock price here.

SEE ALSO: The 27 best scary movies on Netflix

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Marc Faber, the über-bearish author of an investing newsletter who frequently appears as a guest on financial TV, wrote in his latest "Gloom, Doom, and Boom" report that he was glad the US "enjoyed 200 years in the economic and political sun under a white majority."

In the October edition of his report, which is available only in print and was seen by Business Insider, Faber focused on the economic policies of major governments.

In a section of the report discussing "Free Markets and Capitalism Versus Socialism," Faber variously decried the tearing down of Confederate monuments as well as what he called the "liberal media" and New York City's "righteous socialist" mayor, Bill de Blasio.

Faber said contemporary society focused too much on issues like the monuments rather than on issues such as the growing amount of outstanding debt and "unfunded government pension liabilities." The report then went into an aside regarding his thoughts on the Confederate monuments.

From the report:

"I don't want to enter into a serious discussion of the tearing down of monuments of historical personalities, but I cannot omit mentioning how the liberal hypocrites condemned the Taliban when they blew up the world's two largest standing Buddhas (one of them 165 feet high), situated at the foot of the Hindu Kush mountains of central Afghanistan, in 2001. But the very same people are now disturbed by statues of honourable people whose only crime was to defend what all societies had done for more than 5,000 years: keep a part of the population enslaved. And thank God white people populated America, and not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority. I am not a racist, but the reality — no matter how politically incorrect — needs to be spelled out as well. (And let's not forget that the African tribal heads were more than happy to sell their own slaves to white, black, and Arab slave dealers.)"

Faber, also known as "Dr. Doom," has been a provocative market commentator for some time, predicting that various possible economic calamities would cause large crashes in the stock market.

Faber confirmed to Business Insider that the report was authentic.

"I am naturally standing by this comment since this is an undisputable fact," Faber said in an email.

In a follow-up email, Faber further defended the note: "If stating some historical facts makes me a racist, then I suppose that I am a racist. For years, Japanese were condemned because they denied the Nanking massacre."

He also included the full text and images from a USA Today report on the banning of the book "To Kill a Mockingbird" in Biloxi, Mississippi.

SEE ALSO: LARRY SUMMERS: The new argument for Trump's tax plan is 'dishonest, incompetent and absurd'

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Shares of Netflix hit a record high of $204.38 early Tuesday after the company reported subscriber growth that blew past estimates. Shares have since pared their gains, and are currently up 0.51% at $203.72. 

The company reported a total net add of 5.3 million subscribers in the third quarter, which was above estimates of 4.5 million. It missed slightly on earnings per share, coming in at $0.29 versus the Wall Street consensus of $0.32. Revenue beat, coming in at $2.99 billion versus the $2.97 billion expected.

Following the results, a number of analysts upgraded their price targets for Netflix, which Goldman Sachs said could happen if the company had a good earnings report. The consensus price target among analysts rose 8.4% to $217.74 from $200.85 from before the report, according to data from Bloomberg.

Goldman, which was previously the most bullish firm on Netflix, raised its price target from $235 to $250 after the report and remains the most bullish. Oppenheimer raised its price target t0 $245 from $215.

"Everything moving in right direction now, but investor anxiety over 2018 cash burn and content competition looms if sub growth slows," Jason Helfstein, an analyst at Oppenheimer wrote.

Helfstein is referring to the $7 billion to $8 billion that Netflix has said it wants to spend on original content in 2018. The company raised its prices for US customers by an average of $1 recently, which should help with the growing content budgets, though Netflix said the timing of the price increase is not linked with the plan to grow its library.

"Many investors have sort of criticized us in the past for being under-priced, and I think for us, we want to make sure that we do this commensurate with value," David Wells, CFO of Netflix, said on the company's earnings call. "And as we take up the content library value as we're doing more global originals that people have exclusively and only on Netflix, there's a great association of that value, and we think that we can grow that value and that price slowly and steadily over time."

Netflix said it hopes to add another 5.05 million subscribers in the fourth quarter, due, in part, to several popular show releases set for the fourth quarter. 

Netflix is up 56.87% this year.

Read more about the results from Netflix's third-quarter earnings, click here. 

SEE ALSO: Netflix blows past subscriber growth targets, and hits an all-time high

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Blockchain-based platform Ethereum has successfully updated its code with a planned hard fork, as part of its Ethereum Improvement Protocols (EIPs), which aim to improve the platform as a whole.

This marks the implementation of the first phase of a large-scale upgrade planned since 2015, the second phase of which does not yet have a release date.

The update will result in a number of changes designed to make the platform more efficient — for example, it will decrease the rewards miners get, thereby making the creation of new blocks cheaper and faster. In turn, that will allow faster applications to be built on the platform.

Due to the structure of the fork, it is highly unlikely that a new cryptocurrency will emerge, counter to what we saw happen with Bitcoin this summer. That's probably why, despite some oscillation, the price of Ether, the cryptocurrency belonging to Ethereum, hasn't seen any wild drops or gains. Additionally, while there have been some concerns about the update, with bugs found in the code only days before release, it has been running without any issues since implementation on Sunday morning.

The smooth and successful update is good news for Ethereum, as it indicates that the platform can adapt and scale, and may encourage more developers to use it for their own blockchain-based solutions.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain in banking that:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

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

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The dollar is ticking up on a relatively quiet day for US economic data. 

The US dollar index was up by 0.4% at 93.60 at 9:09 a.m. ET.

The dollar slid last week after inflation data came in below expectations and the September FOMC minutes showed that many Fed officials are concerned that inflation will remain lower for longer.

The index is up by about 9% since US President Donald Trump's inauguration.

As for the rest of the world, here was the scoreboard at 9:15 a.m. ET:

• The Mexican peso was up by 0.3% at 18.9791 per dollar, reversing some of its losses. The currency was getting slammed earlier this week as the US came out swinging in the fourth round of NAFTA re-negotiations. "There are two ways to read the US demands," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said in commentary. "The first is from the perspective of "The Art of the Deal" where strong demands are made to forces a favorable compromise. The second is that making unreasonably onerous demands may force a collapse of the agreement that the US President has called among the worst in history."
• The euro was down by 0.4% at 1.1753 against the dollar. Earlier, German ZEW economic sentiment came in at 17.6 for October, below expectations of 20.0. Meanwhile, Spain cut its economic forecast for 2018, citing the impact of the political situation in Catalonia.
• The British pound was down by 0.5% at 1.3184 against the dollar. Earlier, data showed that the UK's CPI rose 3.0% year-over-year in September, in line with expectations, and above the prior month's reading of 2.9%. 
• The Russian ruble was little changed at 57.3996 per dollar, while Brent crude oil, the international benchmark, was up by 0.3% at $57.99 per barrel.
• The Indian rupee was down by 0.5% at 65.027 per dollar.
• The Japanese yen was down by 0.2% at 112.37 per dollar.

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

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Trading on major bank stocks were mixed after two of the big banks reported earnings early Tuesday.

Goldman Sachs and Morgan Stanley beat estimates for the third-quarter to mixed fanfare. Goldman stock was down 1.82% while Morgan Stanley shares were up 1.61%.

Goldman posted earnings per share of $5.02, ahead of the $4.19 expected by analysts. This was largely credited to a surge in investing and lending revenue.

Meanwhile, Morgan Stanley reported earnings per share of $0.93, ahead of estimates of $0.81 per share. The bank saw strong performance from its dealmakers and wealth management unit.

Tuesday's results followed the strong performances by JPMorgan, Citibank, Bank of America and Wells Fargo, which all posted earnings beats last week.

The S&P 500 Financials Index, which is comprised of banks and financial institutions, was down 0.25% after Tuesday's opening bell, but up 12.87% for the year. Here's a look at how the major banks are trading on Tuesday: 

• JPMorgan (JPM) +0.01% at $97.85 
• Citigroup (C) +0.92% at $72.43
• Bank of America (BAC) +0.34% at $26.33 
• Wells Fargo (WFC) -0.56% at $53.48
• Goldman Sachs (GS) -1.82% at $238.00
• Morgan Stanley (MS) +1.61% at $49.73

SEE ALSO: MORGAN STANLEY: A stock market correction is 'looking more likely'

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

• Netflix beat earnings after the bell on Monday and shares hit all-time highs.
• Goldman Sachs and Morgan Stanley crushed earnings expectations.
• Spain's IBEX continues to fall amid Catalonia tensions.
• Oil is adding to previous gains as Iraqi and Kurdish forces clash.

Here's Lutz:

Good Morning!  US Futures are drifting around unchanged, with some big tech rallying behind NFLX up 2.5%.   Slightly Green in Europe, with the DAX up 10bp in very light volumes.   Staples acting good behind Danone #s and Banks rallying as activists target Credit Suisse.  IBEX continues to underperform into Thursday’s Catalonia presser, and Italian Banks are under some pressure early.   In London, FTSE up small in heavy turnover - Sharp weakness in Merlin offset by Pearson’s leap higher, and weakness in Miners offset by a rally in FTSE banks.   In Asia, TOPIX up 20bp - Hang Seng Unch and Shanghai off small in terrible liquidity - KOSPI up20bp, but Tech-Heavy KOSDAQ up 1.7%, and Aussie popped 70bp as Miners shares rallied behind RIO shipment #s. 

The US 10YY is unch after being rejected from the 200d earlier – but Fed Funds at 87% for December and the 2YY at 9year highs and the DXY continues to rally as Taylor’s chances increase in Washington.   Broad based rally in the Dollar, as UK Inflation posts inline at 5Y+ highs and Euro weaker as Germany’s ZEW comes in light.  Ore retreated 2% overnight, and we have some profit-taking in Copper, off 1% early.   Gold Continues to retreat from $1300 and the 200dma as the stronger $ outweighs North Korea angst.   WTI adding to yesterday’s gains as Iraqi and Kurdish forces continue to clash, and Natty Gas rebounding, up nearly 2% as Traders on the East Coast awaken to a chilly morning.

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

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Goldman Sachs reported third-quarter earnings on Tuesday, crushing Wall Street estimates. 

The earnings beat was driven by a huge quarter for the investing and lending business, which posted a 35% increase in revenues. And the fixed income, currencies and commodities business, which has been struggling, jumped 25%  from a terrible second quarter. 

But while Goldman Sachs' bond trading woes have garnered plenty of column inches, Goldman's gains in arranging bonds, otherwise known as debt capital markets work, have attracted less attention.

In the earnings release Tuesday, Goldman Sachs noted:

• Debt underwriting produced year-to-date net revenues of $2.03 billion, the highest for the first nine months of the year, reflecting a leading position for the firm’s leveraged finance franchise.

To put that in to perspective, here are the nine months revenue figures for Goldman Sachs' debt underwriting business for the past few years:

• September 30 2017 - $2.03 billion
• September 30 2016 - $1.885 billion
• September 30 2015 - $1.57 billion
• September 30 2014 - $1.83 billion
• September 30 2013 - $1. 856 billion
• September 30 2012 - $1.37 billion
• September 30 2011 - $1.09 billion
• September 30 2010 - $962 million

In other words, Goldman Sachs' debt underwriting revenue has doubled since 2010. 

According to Dealogic, Goldman Sachs ranked fourth for US marketed debt capital markets work for the first nine months of the year, behind powerhouse commercial banks Citigroup, Bank of America Merrill Lynch and JPMorgan, but ahead of traditional debt players like Wells Fargo, Barclays and Deutsche Bank. The bank ranked sixth over the same period a year earlier. 

And Goldman Sachs has made up ground in just about every segment of the debt market. It's a top five player in: investment grade debt; financial institution group debt; US marketed loans; yankee debt; high yield and leveraged loans. 

The benefit for Goldman Sachs here is twofold. First, the gains in debt capital markets have helped soften the blow of reduced trading revenues. Second, those gains could also help boost the trading business. 

A recurring talking point in discussions around Goldman Sachs' FICC position is its position (or lack thereof) with corporates. While universal banks can count on recurring revenue from multinational corporate accounts, Goldman Sachs has been more heavily exposed to the fortunes of hedge funds.

President and COO Harvey Schwartz said in September that Goldman Sachs is hoping to grow the corporate franchise within FICC, which currently makes up 16% of the business, and boost revenues by $250 million. 

"We have the leading investment banking franchise," Schwartz said. "We also have a significant global financing franchise. However, our corporate client base is underweight versus peers and we are committed to expanding it."

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LONDON — The UK could consider reversing Brexit, the Organisation for Economic Cooperation and Development said on Tuesday, saying that doing so would give a "significant" boost to Britain's ailing economy.

The OECD released its latest economic survey of the UK on Tuesday, and argued that should the UK decide to change course on Brexit, either through a second referendum, or a new government deciding that leaving the EU is not in Britain's best interests, the gains to the economy would be substantial.

"In case Brexit gets reversed by political decision (change of majority, new referendum, etc.), the positive impact on growth would be significant," the OECD's survey said.

Since Britain voted to leave the European Union last June, the country's economy has slowed significantly. Growth in the first two quarters of 2017 was just 0.2% and 0.3% respectively, while inflation has surged, squeezing the incomes of regular Brits in the process.

Britain could address this sclerotic growth and income squeeze simply by remaining in the EU, the report says, noting that leaving the EU could knock as much as £40 billion off the UK's GDP growth by the end of 2019.

Britain risks a so-called "no deal" Brexit where talks with the EU break down and the UK simply falls out of the bloc without any sort of agreement about the two parties' new relationship.

Here's the scenario described by the OECD as a "disorderly Brexit":

"A break-up of EU-UK negotiations, cancelling out the prospect of a trading relationship in the foreseeable future, would trigger an adverse reaction of financial markets, pushing the exchange rate to new lows and leading to sovereign rating downgrades. Business investment would seize up, and heightened price pressures would choke off private consumption. The current account deficit could be harder to finance, although its size would likely be reduced."

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Morgan Stanley crushed Wall Street expectations for third-quarter results Tuesday, thanks to strong performance from its dealmakers and its wealth management unit.

The investment bank reported earnings of $0.93 per share, while analysts were expecting earnings of $0.81 per share.

“Our third quarter results reflected the stability our Wealth Management, Investment Banking and Investment Management businesses bring when our Sales and Trading business faces a subdued environment," Morgan Stanley CEO James Gorman said. "Our balanced business model and the consistent performance of our franchise enabled us to deliver solid returns for our shareholders.”

Here are the other key figures:

• Revenues: $9.2 billion, beating expectations of $9.04 billion and up from down from $8.9 billion in the third quarter of 2016.
• Net income: $1.8 billion, beating estimates of $1.5 billion and up from $1.6 billion in the third quarter of 2016.
• Wealth management: $4.2 billion in revenues, up from $3.9 billion a year ago. Fee-based assets under management hit a record of $1 trillion.
• Investment banking revenues: $1.3 billion, up from $1.1 billion a year ago.
• Trading revenues: $2.9 billion, missing estimates of $3.01 billion and down from $3.2 billion a year ago.
• FICC: $1.2 billion, down from $1.5 billion a year ago. 

Morgan Stanley produced strong results despite the heavy, but not unexpected, hit to its trading business. While fixed income, currencies, and commodities (FICC) trading declined 20%, equities trading was relatively even compared to last year with revenues coming in at $1.9 billion.

Through the first nine months, though, trading at the firm is up to $8.9 billion compared with $7.4 billion last year, despite a steep reduction in FICC headcount. 

FICC trading revenues have particularly suffered at the big banks, with Bank of America reporting a 22% drop, Citi reporting a 16% drop, and JPMorgan reporting a 27% drop.

Nonetheless, each of the three competing banks beat earnings estimates handily last week and produced otherwise positive results.

Morgan Stanley was buoyed by strong wealth management and investment banking performances.

Wealth management revenues were up nearly 9% to $4.22 billion, with revenue per advisor growing to $1.1 million.

Investment banking climbed 15% to $1.3 billion in revenues, thanks primarily to strong performance in underwriting, which increased third-quarter revenues to $715 million from $600 million last year.  

This story is developing.

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An upstart financial conference yesterday saw discussion of digital assets – though so-called "unregulated" cryptocurrencies were the butt of barbs.

Bitcoin cash saw a big boost today, spurred like many recent rallies by strong volumes from South Korea's local exchanges.

Goldman Sachs will report third-quarter earnings results Tuesday at 7:30 a.m.

Wall Street analysts are expecting the investment bank to produce earnings of $4.19 per share, up from $3.95 in the second-quarter.

Here are the other figures Wall Street is expecting:

• Revenues: $7.5 billion, down from $7.9 billion in the second quarter.
• Net income: $1.7 billion, up from $1.63 billion in the second quarter.

Goldman Sachs is expecting a hit to its trading business. Credit Suisse analysts previously forecast a 23% decline in sales and trading revenues across FICC and equities at Goldman Sachs.

Fixed income, currencies, and commodities trading revenues have particularly suffered at the big banks, with Bank of America reporting a 22% drop, Citi reporting a 16% drop, and JPMorgan reporting a 27% drop. 

Nonetheless, each of the three competing banks beat earnings estimates handily last week and produced otherwise positive results.

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The growth in popularity of ride-hailing apps like Uber has affected ridership  numbers for New York City's yellow cab industry over the past several years.

But the once David and Goliath relationship between competitors now looks much more even.

For the first time ever, more people took Uber than yellow cabs, according to some number-crunching from the New York Times. The Times reported that in July, Uber had an average of 289,000 rides per day while yellow cabs came in second with 277,000.

The report credits Uber's growth mainly to its availability in the outer boroughs where yellow cabs have become an increasingly rare sight. Half of Uber's rides in New York City now start in an outer borough. That is up from 25% two years ago.

This will add pressure to an already stressed yellow cab industry. Taxi medallion prices have fallen from a high of over $1 million in 2013 to less than $200,000 currently. In response to the drastic fall in medallion values, the New York City Council's Committee on Transportation recently approved a task force to study the medallion market.

But following Uber's banishment from London, these numbers must be a welcome sight for the Silicon Valley unicorn.

SEE ALSO: A Greenwich hedge fund is behind the mysterious buyer of the NYC 'Taxi King's' medallions

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Earnings season can be a euphoric time for stocks.

It's a time when companies have the opportunity to show off growth that matches their valuations, and it can give traders looking to put money to work the rationale they need to invest.

However, that may not be the case this time around, Morgan Stanley warns.

A big part of that has to do with how investors approach earnings season. When they anticipate strong results, stocks tend to rally heading into the season, only to fade as results are actually reported, the firm says.

This scenario has played out in a relatively benign way twice already this year, with the maximum loss reaching just 3%. But it's different this time around, with the benchmark S&P 500 holding roughly just half of its previous upside, according to Morgan Stanley forecasts.

"If stocks follow the pattern they have been all year, actual earnings season will be a sell the news event and we could have a decent pull back or consolidation," a group of equity strategists led by Michael J. Wilson wrote in a client note. "Near term, a correction is looking more likely."

So what could cause this decline, which the firm says could stretch further than 5%? Wilson & Co. lay out five possible negative catalysts:

• The unwinding of the Fed's massive balance sheet
• Tax cut legislation proves to be more difficult than simply making promises
• The announcement of a new Fed chief could "disrupt financial conditions"
• The US dollar, fresh off multi-year lows, looks to be reversing to the upside
• Leading economic indicators are hitting extremes, suggesting peaks are "more likely than not"

With all that said, Morgan Stanley is far from calling the end of the 8 1/2-year bull market. The firm is simply warning about the possibility of a relatively mild pullback from what have been record-high valuations.

In fact, the firm is the most bullish on Wall Street, with a 2,700 target on the S&P 500 by the end of first quarter 2018. That's 5.6% above the index's closing price on Monday.

As such, Wilson recommends that investors use whatever weakness results from a potential correction as an opportunity to load back up on equity exposure. In other words, buy the dip — the unofficial slogan of the unstoppable bull market.

SEE ALSO: Bets on a 'dangerous' trade that reminds experts of the 1987 market crash just broke a record

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LONDON — Inflation in September jumped to its highest level in five years, as Brexit continues to push up the cost of living in the UK.

The UK's Consumer Prices Index (CPI) inflation rate — the key measure of inflation — was 3% in September, up from 2.9% in the previous month, according to the Office for National Statistics.

September's figure marks the first time since April 2012 that prices have increased by 3% or more.

CPI measures the weighted average of prices of a basket of goods and services, such as food, transportation, and medical care.

CPIH, a measure which includes costs associated with maintaining a home — and which the ONS cites as a more useful indicator of living costs than CPI — was 2.8% in the month, up from 2.7% in August.

"Food prices and a range of transport costs helped to push up inflation in September. These effects were partly offset by clothing prices that rose less strongly than this time last year," Mike Prestwood, the ONS' head of inflation.

"While oil and fuel costs continued to rise, overall, the rates of inflation for raw materials and goods leaving factories were little changed in September."

The chart below illustrates the sharp rise in inflation following last year's Brexit vote. OOH represents owner occupiers' housing costs, which measures the cost of owning, maintaining, and living in one's own home:

"The pound in your pocket is depreciating, as the rising price of goods continues to chip away at its value. Consumer spending remains remarkably resilient in the face of inflationary pressures and weak wage growth, but the current squeeze on household budgets is a slow burner, as it takes some time for economic reality to hit home," Laith Khalaf, a senior analyst at Hargreaves Lansdown said in an emailed statement.

The sharp fall in the value of the pound following the UK's vote to leave the EU last year has raised the cost of imports and pushed up the rate of inflation. Most major forecasters believe that inflation's peak is likely to be somewhere around the 3% mark it reached in September.

Inflation's impact on the British economy is being exacerbated by the fact that real wages are actually growing more slowly than prices are rising, meaning that the average Brit is actually seeing the amount of money they have to spend decrease.

The ONS' latest wage growth numbers will be released on Wednesday, helping to create a fuller picture of just how intense the squeeze on Britain's consumers is right now.

Tuesday's inflation number is likely to make an interest rate hike from the Bank of England in November virtually certain. The bank's policymakers have repeatedly said that a hike in interest rates from 0.25% to 0.5% could come in the near future.

At its simplest level, the policy dilemma facing Britain's central bank when it comes to rates, is that it must balance surging inflation with the slowdown in the economy, dwindling consumer spending and declining inward investment. With inflation hitting 3% last month, it seems more likely than ever before that the bank will see the see-saw tilting toward the inflation side of the argument, prompting a rate hike.

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LONDON — Shares in the theme park and leisure group behind Legoland and Thorpe Park crashed more than 20% on Tuesday after the company warned terrorism and bad weather are denting business.

Merlin Entertainment, which also owns Alton Towers, Madame Tussauds, and Sea Life aquariums, warned investors on Tuesday that it had experienced "difficult summer trading" across Europe "as a result of the series of terror attacks and unfavourable weather."

CEO Nick Varney said in a statement:

"After strong early season momentum across most of our businesses, we have experienced difficult trading over the summer period, as the spate of terror attacks witnessed in the UK marked an inflection point in Midway London and UK theme park trading. Poor weather in Northern Europe and extreme weather in Italy and Florida also impacted peak season trading.

"Despite the diversity of our business - by geography, brand and visitor mix - our markets continue to be impacted by certain external shocks, not least terrorism which is currently at record levels of intensity in Europe. We also continue to face significant cost pressures, largely brought about by employment legislation, particularly in the UK."

It's the second time this year Merlin has warned that terrorism is hitting its business, following a similar investor update in June.

Merlin warned that profits for the year are set to be flat, below market expectations. The profit warning sent shares crashing by nearly 20%:

Neil Wilson, a senior market analyst at ETX Capital, said in an email: "Merlin reports ‘unprecedented levels of demand volatility’ as tourists shunned busy London attractions.

"Merlin cites a material deterioration in international tourism over the peak trading period, but this does not tally with the figures showing record inbound tourism in the UK, which may be indicative of a problem with some the older attractions it owns. The outlook is also gloomy, with the company expecting depressed earnings from London sites to persist ‘for the foreseeable future’."

Varney said Merlin plans to "'adjust the tiller' given the difficult market conditions." £100 million that would have been spent on renovating and upgrading Merlin's existing attractions will now be spent on the company's hotels business, which is performing better than attractions.

Merlin also announced two new attractions being developed: 'The Bear Grylls Adventure' and a 'Peppa Pig' theme park. The company confirmed that Legoland New York is set to open in 2020, with development estimated at $350 million (£262 million).

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The UK government is proposing to expand its ability to intervene in mergers and takeovers when it believes they threaten national security.

On Tuesday the government published a Green Paper, "National Security and Investment and Infrastructure Review," and launched a public consultation into the plans.

The consultation is seeking views on how the government can "best ensure that investments and takeovers do not raise national security concerns," and notes that openness to trade in the UK needs to come with "safeguards."

Under the Enterprise Act 2002, the government can intervene in takeovers on "exceptional public interest" grounds, which include national security concerns and taking action to ensure the stability of the UK financial system.

The government is now seeking views on a short-term proposal to amend the Enterprise Act, to allow it to examine and potentially intervene in mergers that fall outside the current threshold in two sectors: the dual use and military use sector, and in parts of the advanced technology sector.

For these areas, the government is proposing to lower the supplier turnover threshold from £70 million to £1 million, and remove the current requirement for the merger to increase the share of supply to over 25%.

This part of the consultation will last four weeks, closing on 14th November.

"Britain has and always has had a proud record of being open to the world as the foremost advocate of free trade.  It is right that every so often the Government reviews its mergers regime to close loopholes where they arise and this is what these proposals do in the area of national security," Business, Energy and Industrial Strategy Secretary Greg Clark said in a statement after the plans were announced.

Chinese firm Canyon Bridge's planned acquisition of Imagination Technologies has caused some concern in government, since the firm was blocked from carrying out a takeover in the US after defence officials raised concerns.

The second part of the consultation will focus on potential long-term reforms to ensure that investments and takeovers do not raise national security concerns.

This part of the consultation will last for 12 weeks, closing on January 9 2018.

On Monday European aerospace firm Airbus announced it will acquire a 50.01% stake in Bombardier's C-Series jet project, in order to boost sales.

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LONDON — Online lender RateSetter has been fully authorised by the Financial Conduct Authority (FCA).

RateSetter, one of the UK's three biggest peer-to-peer lenders, announced on Tuesday that it has been authorised. It follows authorisation for the other big two platforms, Funding Circle and Zopa, in May.

RateSetter is a peer-to-peer lending platform that matches investors with businesses and consumers looking to borrow money.

Founded in 2010, the company has lent over £2 billion across its platform and has 250,000 active customers.

RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been "a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent."

RateSetter has increased the amount of market data it makes public and earlier this month announced plans to simplify early access for investors to their money.

FCA CEO Andrew Bailey told Business Insider in December that the "transparency and fairness" of peer-to-peer lending platforms were one of the "big challenges" of the sector.

RateSetter's transparency has been in the spotlight recently following revelations about its lending practices. The company left industry group the Peer to Peer Finance Association in August after it was found to be in breach of the group's transparency rules. RateSetter had invested in three businesses it lent to, telling customers only after the fact.

The Times also reported in September that RateSetter had been investing customer money into loans on rival peer-to-peer sites Wellesley and Archover, a practice that the FCA also warned it was worried about.

Lewis said in Tuesday's statement: "Transparency is vital to our business because our customers need to understand what we do to appreciate the risk of lending on RateSetter.

"We are proud to receive full regulatory authorisation from the FCA. We have always aspired to have a regulatory framework for our business and our industry. We strongly support effective regulation to protect customers and enable industries to compete and grow.

"Authorisation is a milestone but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter."

RateSetter is backed by City investment heavyweight Neil Woodford among others and appointed City grandee Paul Manduca to chair its board in May, fuelling speculation it could be gearing up for a stock market listing.

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LONDON — Housebuilders in the UK are struggling to recruit the talent needed to build significant numbers of homes, holding back the country's construction sector.

On Tuesday, homebuilder Bellway released its preliminary results for the 2016=2017 financial year, putting in a solid showing with increased revenues, profits and operating margins from the previous financial year.

Buried within the results, however, was some bad news for the construction sector as a whole.

"Growth in output in the construction sector and the wider industry skills shortage continued to place upward pressure on sub-contractor costs, particularly for trades such as bricklayers and scaffolders," Bellway said.

The lack of skilled workers is pushing up the wages they are able to demand, impacting the profitability of companies, and most importantly, limiting the number of homes that can be built.

"The skills shortage facing the entire construction sector is a moderator to the industry's overall ability to deliver growth," Bellway said.

Things could get even worse should post-Brexit immigration controls limit the number of workers from overseas — a key recruiting ground for the construction sector — coming to the UK. There is however, no evidence of that so far, Bellway said.

"Whilst there is some reliance upon overseas labour, predominantly in the south east and London, there is no evidence that this valuable resource has diminished as negotiations to leave the EU progress."

Britain's construction sector has struggled to gain momentum in the year and a quarter since the Brexit referendum, with the sector seeing a recession late in 2016. It now looks to heading for another recession, if IHS Markit's widely respected PMI survey of the sector is to be believed.

Bellway's results were broadly positive, with highlights including:

• Gross profits of £661.6 million, up from £574.8 million last year.
• Revenues of £2.56 billion, up from £2.24 billion in 2016.
• A proposed dividend for shareholders of £1.22 per share, up from £1.08.

Shares jumped at the open, before pulling back slightly. Here's the chart as of 8.40 a.m. BST (3.40 a.m. ET):

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LONDON — Youth fashion retailer ASOS shrugged off mounting signs of a UK consumer slump on Tuesday as it announced a 27% jump in sales to £1.8 billion.

The online retailer's group revenue rose by 27% to £1.9 billion in the year to August 31, while UK sales in the period rose by 16% to £698.2 million.

Pre-tax profit leapt by 145% to £80 million as retail profit margins improved by 10 basis points to 48.6%.

ASOS' strong performance comes despite data from Visa earlier this year showing the worst slump in consumer spending in four years, with clothing particularly affected.

ASOS is known for its millennial-focused fast-fashion, selling own-brand products alongside brands like Adidas and Polo Ralph Lauren. Two-fifths of sales are own-brand and the company launches 5,000 new products on its site each week. At any one time the company has around 85,000 products in stock.

CEO Nick Beighton said in a statement: "It's been a great year for ASOS, with continued growth in sales and profits. Our international performance was excellent, as we reinvested FX tailwinds and benefitted from our continually improving customer proposition. In a competitive UK market, we achieved strong full price performance whilst further increasing market share."

ASOS said it expects sales to grow by 25-30% in 2018 and said it will accelerate investment in the business as a result of the strong performance. The company plans to spend £200-220 million on capital expenditure next year, with a major new US warehouse planned.

Beighton said: "The investments we are making will see us add 1,000 new heads and will lay the foundations for a c.60% increase in unit capacity and c.£4 billion of net sales."

ASOS had 135.7 million visits across mobile and desktop during August and has 15.4 million active customers globally.

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• Exchange traded funds have grown 500% in value since 2008 to $4 trillion.
• ETFs have never been prevalent during a downturn, so there are fears that once the market turns, things might get messy.
• Bond market guru Mohamed El-Erian says ETFs pose a "huge risk of contagion."

LONDON — When the American Stock Exchange launched its S&P 500 Depository Receipt fund in 1993, no one could have foreseen the path it would lay for the future.

The fund was nicknamed the "spider" because of its ticker symbol, SPDR, and is now considered to be the first successful launch of an exchange-traded fund. Fast forward 25 years, and the global market value of such funds is more than $4 trillion and growing.

An exchange-traded fund is a passive fund which tracks an index, rather than an active investment, and seeks to outperform a given index through frequent buying and selling of individual investments.

In 2017, ETFs exist for virtually every imaginable asset class, with investment firms selling ETFs in everything from Bunds to Bitcoin.

Investors have poured money into the products in the past handful of years because when the times are good, ETFs can offer much larger returns than simply investing in underlying assets, or putting money into actively managed funds, which tend to have much higher fees than ETFs.

That outperformance can come from leveraged ETFs, which essentially rely on a cocktail of debt and derivatives to increase the returns on an investment. For example, if the value of bitcoin were to increase by 5%, a three times leveraged ETF could see returns of  15%. The downside to this is that in a down market, losses are also amplified by the same ratio.

Since 2008, the value of the global ETF market has ballooned by five times, and was described as "extraordinary," by Deutsche Bank's renowned strategist Reid and his team in a recent note.

"Putting the numbers in perspective, including ETPs (which make up a much smaller percentage), the global AUM of exchange traded products (all asset classes) is now over $4tn. This compares to around $800bn or so in 2008," Reid said in the 2017 edition of Deutsche Bank's Long Term Asset Return study.

Here's the chart:

ETFs have drawn their fair share of criticism, especially from the managers of active funds  — many of who are understandably annoyed at having business taken away from them and put into ETFs.

Paul Singer, the head of Elliott Management Corporation, a hedge fund specialising in distressed debt, for example, said in July this year that passive funds like have the potential to be "destructive."

"What may have been a clever idea in its infancy has grown into a blob which is destructive to the growth-creating prospects of free-market capitalism."

And no one knows how they will perform when demand for them goes into reverse.

"The trouble with ETFs is that they've never really been tested in a downturn so the thing is we don't know [what will happen]," Peter Dixon, the chief UK economist at Commerzbank told Business Insider.

Why people are worried

The fear is that ETFs have created their own bubble-like momentum: As ETF returns have beaten active managers, more money has gone into them. As more money goes in, the price of the stocks being bought rises. Those rising values attract more money, and so on. ETF investors don't care whether stocks are over-valued, only that they're buying a representative slice of the market.

That has prompted well-known money managers to warn of the effect of passive funds on asset prices, and the danger of a liquidity squeeze when the market is under pressure.

And therein lies one of the biggest issues being flagged about ETFs right now. They simply haven't been tested in a down market. 

ETFs have grown rapidly, but their resilience has not really been tested by any significant market hardship, leading some observers to question if the sector will be able to cope with a substantial market correction should one come in the near future.

This is especially true when considering that some believe ETFs can distort the markets by encouraging investors to put money into big companies — simply because they're big names — regardless of their market fundamentals (things like price-earnings ratios, return on equity etc.)

Here's the explanation from Jim Reid and the rest of his team at Deutsche Bank last month (emphasis ours):

"One argument is that passive investing naturally favours large caps when picking constituents based on factor style (for example momentum, growth etc). In theory this means that the biggest companies are getting bigger, regardless of fundamentals.

The concern therefore being that these companies are perhaps more susceptible to overvaluation and the gap between the small/mid to large caps also widening. This could potentially mean that risks are amplified when you see a big market correction, which arguably ETFs haven’t yet been tested with yet."

Stocks, particularly in the USA, have been going up and up over the last few years, and in 2017 have seen frequent record highs. This year alone the Dow Jones Industrial Average has passed above 20,000 points, while the S&P 500 has also reached never before seen levels.

In Europe, both Britain's FTSE 100 and Germany's DAX have also broken to new all-time highs frequently this year, while other assets like bitcoin have also surged.

In short, ETFs have been able to thrive during a time of great expansion for the markets, but what happens when things almost inevitably start to reverse course and markets start to drop is an unknown right now. According to recent analysis from Goldman Sachs, the probability of stocks entering a bear market — where stocks drop 20% from a peak — in the next 24 months currently stands at about 88%, based on the history of previous bear markets.

A coming storm

So, there's a good chance a market correction is coming, but how will ETFs weather the storm? The short answer is that no one really knows.

Peter Dixon, the Commerzbank economist, told Business Insider, "My concern would have to be that they give the impression that there's lots of liquidity out there. But if everybody is trying to get out at the same time, the question has to be, do ETFs exacerbate or magnify the impact of the decline?"

Jim Reid does point to one small test of ETFs — around 18 months ago drop in the oil price caused a sell-off in the high yield bond markets. Some believe that ETFs made that sell-off worse, while others believed ETFs helped provide liquidity to the market, preventing a worse correction.

"In reality," Deutsche Bank's argument goes, "ETFs and ETPs have not yet been fully tested in a sustained bear market. So the real test could be when we see the next downturn and these products are faced with heavy redemptions. This will be particularly paramount for less liquid asset classes."

People could get badly "burned" once a market downturn does come, Dixon said.

"They're bubbly, and might have also contributed to the recent rally in equities anyway, because everyone is jumping into them."

"I'm just a bit concerned that if and when equities themselves turn around, and they might if US rates start to rise rapidly, you might start to see people starting to get burned," he added, caveating his words by saying "that's not a forecast, that's a concern."

If and when people do get burned, there could be widespread "contagion" in the markets, bond market guru, Allianz chief economic advisor, and former co-CEO of PIMCO Mohamed El-Erian warned at a Bank of England conference in September.

"Risk has become embedded into the system as to the proliferation of instruments that look extremely attractive, because they are very cheap — ETFs — but are overpromising liquidity in inherently illiquid asset classes," he said at the event, which celebrated 20 years of independence for the BoE.

"It is a huge risk of contagion. People are forced to do things they don't want to do, and the next thing you know the real economy is at risk."

"I suspect the next crisis will be from the non-banks," he added, alluding to products such as ETFs.

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

1. The value of a Brexit transition deal is "disappearing by the day," according to a new report from influential financial lobbying group TheCityUK. "EU and UK negotiators cannot delay discussing a transitional deal any longer if they want it to hold any real value," Miles Celic, TheCityUK's CEO, said in a statement on Tuesday.

2. Drugmakers and medical devices companies are drawing up plans to protect supply chains in case of a hard Brexit. MeddiQuest, an eight-person consultancy specializing in medical technology regulations, is in the process of moving from outside Cambridge to Ireland.

3. Older iPhone 7 models are outselling the recently launched iPhone 8 ahead of the early November debut of the premium iPhone X, broker KeyBanc Capital Markets said. Traditionally, new editions of the iPhone have sold quickly as fans queue for the latest upgrade and the surveys would add to signs that the iPhone 8 is not proving as popular as its predecessors.

4. China is offering to buy up to 5% of Saudi Aramco directly. Chinese state-owned oil companies PetroChina and Sinopec have written to Saudi Aramco in recent weeks to express an interest in a direct deal, industry sources told Reuters.

5. JPMorgan launched a new payment processing network that uses blockchain technology, in partnership with Royal Bank of Canada and Australia and New Zealand Banking Group. Blockchain, a shared ledger of transactions maintained by a network of computers on the internet, is the technology that underpins cryptocurrency bitcoin.

6. Ukraine filed a World Trade Organization complaint challenging Russian trade restrictions on beer, vodka, juice and wallpaper. The Economy Ministry said it was launching its third trade dispute against Russia in as many years, accusing Moscow of illegal trading practices under WTO rules.

7. German Chancellor Angela Merkel played down suggestions that a regional election defeat for her party had made her job of forming a three-way national coalition harder. Merkel's conservatives slumped to 33.6% – their poorest showing in Lower Saxony in nearly six decades.

8. Mexico's Finance Minister Jose Antonio Meade said that the peso's recent depreciation reflects uncertainty about the NAFTA renegotiation. The peso slipped over 1% on Monday to its weakest level since May 18.

9. Daimler is recalling 400,000 Mercedes-Benz cars in Britain and a few hundred thousand in Germany as part of a global recall caused by a potential airbag safety issue. Conducting paths related to affected vehicles' steering columns could break and lead to an electrostatic discharge which could unintentionally deploy the driver's airbag.

10. Digital Asset, a blockchain startup funded by some of the world's largest banks, has raised $40 million as it expands globally. The funding round was led by Jefferson River Capital LLC, the family office of Tony James, president and chief operating officer of private equity firm Blackstone.

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• Finance lobby group TheCityUK warns transition deal needed by Q1 2018.
• Value "disappearing by the day" as companies prepare for the worst by moving jobs and capital elsewhere.

LONDON — The value of a Brexit transition deal is "disappearing by the day," according to a new report from influential financial lobbying group TheCityUK.

"EU and UK negotiators cannot delay discussing a transitional deal any longer if they want it to hold any real value," Miles Celic, TheCityUK's CEO, said in a statement on Tuesday.

Jobs, companies, and capital will begin to flee the UK, and potentially even Europe, unless a deal is struck soon, the report warns. If an agreement is left until next year, its value will be hugely diminished as many institutions will have already triggered their Brexit contingency plans.

Banks will make final decisions about moving staff by the first quarter of next year at the latest. Banks need at least a year, if not longer, to set up fully functioning branches and subsidiaries in Europe to maintain uninterrupted EU activities. Britain is due to leave the EU in March 2019, meaning March 2018 is a deadline for many banks to make a decision.

Royal Bank of Scotland chairman Howard Davies said recently that timings are becoming "very tight" to avoid any job moves. Without any clarity over future arrangements, banks will execute their worst-case contingency plans at the start of next year.

"Without early agreement on transition, the market will inevitably fragment, impacting services to UK, EU and global consumers, and likely increase the cost of products and services for customers across the continent," TheCityUK report argues.

What a transition deal should look like

TheCityUK's report proposes a two-stage transitional arrangement, starting with a "bridging period" to cover the period form Brexit up until a "new partnership agreement is ratified and becomes unconditional."

After that, there should be an implementation period for Britain and the EU to put new rules into place.

"This will give firms, their customers and regulators time to consider the implications of the new partnership and to adapt to the rules underpinning it. Such an adaptation period is a common feature in FTAs," the report argues.

TheCityUK's warning echoes those of senior figures within the Bank of England. Sam Woods, the chief executive of the Prudential Regulation Authority (PRA), an arm of the BoE, said in a speech earlier in October: "If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in.

"Firms would start discounting the likelihood of a transition in the central case of their planning," Woods told the audience at the City Banquet at Mansion House.

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Corporate America is still run by mostly white, old men. According to a new survey, they're not too bothered about the lack of diversity.

Nearly a third of the men surveyed recently by PwC would prefer if less attention was paid to diversity. Thirty-one percent of men said there is too much focus on it, compared to 4% of women.   

The survey interviewed 866 US public company board members, of which 14% were women – a representative cross section, according to PwC.

Among other findings:

• When asked whether gender diversity was "very important," only 35% of men said so versus 68% of women.
• When asked whether racial diversity was "very important," only 20% of men said so, compared to 42% of women.
• Eighty percent of women said that increasing diversity was happening too slowly, compared to 33% of men.

On every question asked about the importance of diversity, women were far more likely to say that different types of diversity (by age, socioeconomic class, race, etc.) are important. For instance, when it comes to racial diversity on boards, 74% of women but only 26% of men say it's "very important."  The chart below goes into the details.

A big reason for the disparity is that most of the people running these boards are older men who grew up in a different social climate, said Paula Loop, leader of the Governance Insights Center at PwC.

Only 4% of directors at S&P 500 boards are under age 50, and they're overwhelmingly men, per the report.

"You're seeing a lag in the environment these people worked in," Loop told Business Insider. "They're continuing to feel that it’s not missing from their board groups."

One bright spot, according to Loop: men seem to have slightly improved their views on gender diversity since the survey last year. That might be due to pressure from institutional investors who have made gender diversity a hot topic, she said.

SEE ALSO: A star stock picker at Fidelity was reportedly fired after an allegation of sexual harassment

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• Airbus acquired 50.01% of the Bombardier C Series program.
• Zero upfront cash investment from Airbus.
• US-bound C Series jets to be built in Mobile, Alabama.
• A response to the Boeing's trade complaint and 299.45% tariff from US government.
• Airbus will own 100% of the C Series program within 5 years.

On Monday, Airbus and Bombardier announced that the two airplane makers will join forces on the next generation C Series airliner.

The deal sees Airbus acquiring a 50.01% equity stake in the Bombardier C Series program with the production of US-bound C Series jets produced at the Airbus plant in Mobile, Alabama.

Production of all other C Series jets will remain in Canada.

Mechanisms within the deal will see Airbus take 100% ownership of the C Series program within five years.

It's a move that looks to be in direct response to the US Department of Commerce's proposed 299.45% tariff on Delta Air Lines' order for 75 C Series jets. The tariffs are a result of a complaint Boeing filed in April.

Both Airbus and Bombardier believe that shifting production to Alabama will get around any proposed tariffs.

"This looks like a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the U.S. government," Boeing said in a statement. "Our position remains that everyone should play by the same rules for free and fair trade to work."

Airbus will make no upfront financial investment but will provide procurement, marketing, sales, and customer-support expertise.

In other words, Airbus just took ownership of one of the most advanced jetliner programs in the world for zero upfront cash.

"This is a win-win for everybody!" Airbus CEO Tom Enders said in a statement. "The C Series, with its state-of-the-art design and great economics, is a great fit with our existing single-aisle aircraft family and rapidly extends our product offering into a fast-growing market sector."

"Not only will this partnership secure the C Series and its industrial operations in Canada, the U.K., and China, but we also bring new jobs to the U.S. Airbus will benefit from strengthening its product portfolio in the high-volume single-aisle market, offering superior value to our airline customers worldwide," Enders said.

Airbus and Bombardier held talks in 2015 over a potential equity sale of the C Series, however, the two parties could not come to a deal.

But, with no upfront cash required and the proven operational capabilities of the production aircraft, the C Series became much more enticing for Enders this time around.

Today's deal is expected to close in the second half of 2018.

Boeing's complaint

On September 26, the US Department of Commerce's International Trade Administration called for a tariff of 219.63% on Bombardier's C Series jet. A week later, the ITA called for another 79.82% tariff. In total, all C Series jets entering the US could be subject to tariffs of 299.45%.

The action was taken in response to a complaint filed by Boeing in April regarding Delta Air Lines' order for 75 of the Canadian jets.

Boeing believes that its business was harmed by Bombardier using Canadian government subsidies to give Delta a price substantially below the cost of building the planes.

According to its complaint, Boeing claims Bombardier sold the CS100 for just $19.6 million. That's far less than the $33.2 million the Chicago-based aviation giant alleges it cost Bombardier to make the plane and a mere fraction of the CS100's $79.5 million sticker price. As a result, Boeing claims the Montreal-based company is dumping its product on the US market to the detriment of the US aviation workers.

In response, Bombardier and Delta have called the ITA's preliminary decision "absurd." Last week, on the airline's earnings call, Delta CEO Ed Bastian said that his company will not pay the proposed tariffs.

Bombardier and Delta argue that the Boeing complaint is baseless because neither it nor any other US airplane maker currently offers a product comparable to the CS100's size and performance. (The C Series comes in the 110-seat CS100 and 130-seat CS300 variants.)

In fact, Boeing hasn't included the pint-sized 737-600 in its annual price list for more than half a decade. And its last true 100-seat jet, the 717-200, was discontinued in 2005. As a result, they say Boeing didn't lose a sale because they don't have a product in the running. According to Delta, Boeing's only offer in response to the CS100 was for a fleet of second-hand Brazilian Embraer E190s it had taken as trade-ins from Air Canada.

Boeing counters that argument by pointing out that Delta also agreed to an option for 50 planes that includes the possibility of converting to orders for the larger CS300 that is a competitor for their 737 MAX 7.

Even though the aircraft is currently assembled in Canada, its wings come from Northern Ireland and 50% of its components, including its engines, come from the US.

As a result, the dispute has entered the political realm with Canadian Prime Minister Justin Trudeau and British Prime Minister Theresa May threatening punitive actions against Boeing.

The US International Trade Commission will issue a final judgment on the Commerce Department's proposed tariffs in early 2018.

To kill a budding rival

On the surface, Boeing's complaint is about protecting US manufacturing jobs. But dig a little deeper and it's clear that the end-game for Boeing is to stop Bombardier, its groundbreaking jet, and its commercial airliner business from getting off the ground.

Ironically, Boeing's strategy to end Bombardier's budding aspirations to become a third global aviation manufacturing powerhouse comes from its failure to keep Airbus out of the US in the 1970s.

During that decade, Toulouse-based Airbus was brand new to the game. The company's medium-range A300B wide-body airliner survived its early days by subsisting on orders from the European nations that invested in the company.

In the US, the wide-body market was dominated by Boeing's 747, the McDonnell Douglas DC10, and the Lockheed L-1011 Tristar. Airbus was effectively frozen out of the US market.

That is until Frank Borman and Eastern Airlines took a chance on a lease for four A300Bs in 1978. Boeing didn't shut the door on the European interloper.

Borman believed the A300B to be more efficient than its US counterparts and the four-plane deal marked the beginning of Airbus' rise to prominence in the US.

These days, Lockheed is out of the commercial aviation business and McDonnell Douglas is now part of Boeing. At the same time, Airbus is now one-half of a global aviation duopoly.

Boeing sees a lot of Airbus in Bombardier.

For years, the story around the Bombardier C Series program has been that of a critically acclaimed plane plagued by slow sales and development delays.

In 2015, Bombardier was forced to write down $4.4 billion. At the same time, the company took a $1 billion bailout from the Quebec government. In return, the provincial taxpayers took a 49.5% stake in the C Series.

At the heart of Boeing's complaint is a deal that was widely seen as the order that saved the Bombardier C Series program from demise.

Looking for a blockbuster sale to help build traction for the plane in the US, Bombardier went all in on a pitch to United Airlines. Sensing the new competition, Boeing bit the bullet and gave United a whopping 70% discount on the 40 737-700s. While large airlines like United never pay list price, 70% off is the aviation equivalent of a Black Friday sale price.

In January 2016, United announced the sale of 40 737-700s followed by an order of another 25 of the same planes in March. (Oddly enough, United realized several months later they actually didn't want any of these planes and converted them to four of the larger 737-800s and 61 737MAX jets.)

Finally, in April 2016, Bombardier struck pay dirt. Delta Air Lines ordered 75 CS100 airliners in a deal worth up to $5.6 billion. In addition, Bombardier and Delta agreed to an option for 50 additional jets.

With the Delta order, Bombardier has not only found a US launch customer for the C Series, but it had the blockbuster deal it needed to validate the attractiveness of aircraft to other prospective buyers. For Boeing, the strategy was simple. Undo the order that saved the C Series and to keep it from gaining traction in its backyard.

Unfortunately, that plan may have royally backfired on Boeing. Instead of keeping the Canadian jet grounded, Boeing all but pushed C Series into the arms of its greatest rival.

SEE ALSO: AirAsia CEO reveals the one piece of advice he got from Richard Branson that defined his business

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