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• CVS, which owns pharmacies as well as operates a pharmacy benefit manager, saw its stock drop sharply on Thursday when it emerged that Amazon has been approved for wholesale pharmacy licenses for at least 12 states. 
• Then The Wall Street Journal reported that CVS had offered to buy health-insurance company Aetna and the shares rallied.
• The sudden moves in CVS' stock price neatly encapsulate a broader shift in corporate America: sit still and risk getting disrupted, or go out and strike a deal. 

The chart above says it all.

On Thursday afternoon, Samantha Liss at the St. Louis Post-Dispatch reported that Amazon had been approved for wholesale pharmacy licenses for at least 12 states. The news sent a number of stocks down, including CVS, Walgreens, and Express Scripts. 

Less than 90 minutes later, a Wall Street Journal report that CVS has offered to buy health-insurance company Aetna, sending the stock tearing higher. 

Corporate America is facing a decision: Go out and do deals to shore up their competitive position, and take their fate in to your own hands, or sit still and risk getting disrupted.

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Shares of Aetna jumped more than 12% after reports that CVS was in talks to acquire the insurance provider, according to a report from CNBC.

CVS saw a smaller jump after the report, paring some of its losses from earlier in the trading session.

The Wall Street Journal reported that CVS proposed buying Aetna for more than $200 per share.

This story is developing, check back here for more...

Click here to watch Aetna's stock price live

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• CVS Health is in talks with health insurer Aetna about an acquisition, according to a Wall Street Journal report.
• The deal would value Aetna at about $66 billion, or roughly $200 per share.
• The news comes less than a year after a judge blocked Aetna's attempt to acquire rival insurer Humana on anticompetitive grounds.

CVS Health, the retail pharmacy giant, is in talks to purchase Aetna, one of the five large publicly traded health-insurance companies, according to a new report.

The Wall Street Journal's Dana Mattioli reported that CVS offered more than $200 per share of Aetna, which was at $160 a share before the news broke. The deal would be worth about $66 billion, according to the report.

Aetna previously agreed to buy rival insurer Humana for $34 billion, but that deal was blocked by the Department of Justice. A judge ruled in favor of the DOJ in January, saying that the combination of the two companies would have been anticompetitive.

An Aetna representative declined to comment on the report, telling Business Insider, "We don't comment on rumors or speculation."

A representative for CVS also declined to comment, saying, "We don’t comment on market rumors such as this."

Following the news, Aetna shares jumped about 11.5%, to $178.60 a share, as of 4:15 p.m. ET. CVS shares slipped by roughly 3% to $72.60 a share.

In 2016, CVS acquired Target's pharmacy business, which included 1,660 pharmacies in 47 states. If a deal with Aetna materializes, it would be the biggest M&A in the US in 2017.

SEE ALSO: New study says Obamacare premiums will soar 34% in 2018 — in large part because of Trump

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Stocks rebounded from Wednesday's drop as companies including Ford and DowDuPont beat on earnings. 

Here's the scoreboard: 

• Dow: 23,421.90 +92.44 (0.40%)
• S&P 500: 2,561.94 +4.79 (0.19%)
• Nasdaq: 6,561.19 -2.70 (-0.04%)

1. The European Central Bank said it will further taper its bond-buying programme but extended quantitative easing until at least September 2018, as had been widely forecast prior to the decision. From January, the ECB will reduce its bond-buying to €30 billion per month, down from €60 billion per month. 
2. Twitter slightly beat Wall Street's expectations for its third-quarter earnings but reported that it had overstated monthly users since late 2014. The company said that with cost-cutting measures, it expects to turn a profit in the fourth quarter. Its stock surged 18%.
3. The House passed the Senate's budget resolution on Thursday by a vote of 216 to 212. It was the last procedural step before the GOP can move to fast-track tax-reform legislation that's expected to be unveiled next week.
4. Ford on Thursday reported third-quarter earnings that topped analysts' expectations, and raised the lower end of its 2017 guidance. The company said profits were "driven by North America and a record 3Q pre-tax profit in Asia Pacific."

Additionally: 

The stock market just showed that its biggest fear is overblown

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China is churning out a new billionaire every 5 days

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We just got another hint that Amazon is getting into healthcare. 

Samantha Liss at the St. Louis Post-Dispatch reports that Amazon has been approved for wholesale pharmacy licenses for at least 12 states. That's based on regulatory filings reviewed by the Post-Dispatch. 

While the licenses don't necessarily indicate that Amazon is going to start to sell prescription drugs, the news was enough to make the stocks of some of the major players in the pharmaceutical supply chain move. 

• CVS, which owns pharmacies as well as operates a pharmacy benefit manager was down 4%. Walgreens was also down 3%.
• Express Scripts, one of the largest pharmacy benefit managers, was down 3%. 
• The news especially hit drug wholesalers Cardinal Health (down 4%), Amerisource Bergen (down 5%), and McKesson (down 5%).

This isn't the first time the prescription drug industry has been concerned about Amazon entering the pharma business. CNBC reported in May that Amazon is seriously considering entering the pharmacy business, leading to speculation about what that might look like.  

CNBC in October reported that Amazon's expected to make a decision about whether it's getting into the prescription drug business by Thanksgiving. 

SEE ALSO: Pharmacies take a $10 billion hit as Amazon lands Whole Foods deal

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The bitcoin hard fork will execute as planned, according to core developer Jeff Garzik.

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• Despite the damage done by Hurricanes Irma and Maria, many of the islands in the Caribbean are open for tourism this winter.
• AAA recommends that tourists remain aware of conditions that might affect their travel and use an agent to ensure a painless vacation experience.
• Luxury travel advisor Jaclyn Sienna India is sending her clients to high-end resorts in St. Vincent & The Grenadines, Turks & Caicos, and a private island in the West Indies.

The Caribbean islands are a signature vacation spot for travelers looking to escape the cold, winter months around the holidays. But in the wake of Hurricanes Irma and Maria, many have been left wondering whether it would be safe to travel to the region this year.

In early September, Irma formed in the Atlantic Ocean before moving northwest across parts of the Caribbean, Florida, and further west through parts of Georgia. Maria moved in a similar direction but did not reach as far north as Irma did. As a result of the hurricanes, Puerto Rico, St. Barts, the Virgin Islands, St. Croix, and Barbuda, among other Caribbean destinations, received significant damage and have been recovering since.

But, according to the travel organization AAA, many of the Caribbean islands — including the Bahamas, Cayman Islands, and Barbados — will be open for tourism this winter.

AAA recommends tourists stay informed of global events that could affect travel and use an agent to make their vacation experience as seamless as possible.

AAA has a full list of Caribbean destinations it recommends visiting this winter. On the list are places that suffered minimal to no damage from the hurricanes — Antigua, Aruba, Bahamas, Barbados, Belize, Bermuda, Bonaire, Curaçao, Dominican Republic, Jamaica, Martinique, Saint Lucia, St. Kitts & Nevis, St. Vincent & The Grenadines, The Cayman Islands, Trinidad and Tobago, Turks & Caicos, and St. Vincent & The Grenadines.

Where to stay

Jaclyn Sienna India, who owns the luxury travel company Sienna Charles, takes the hassle out of vacation planning for her high-end clients, making sure their vacations are successful logistically and emotionally.

Her recommendations change each year in response to the threat of natural disaster, disease, or violence, as well as the quality of accommodations for tourists. To ensure the quality of her clients' experience, she visits each potential location before booking it to get a first-hand look at how its operates.

"I’m particularly interested in seeing how all private island resorts have made enhancements for the upcoming season that will be particularly compelling," she said to Business Insider in an email.

She has often sent clients to St. Barts in the past, but this year, she says she's sending her clients to resorts that excel at the fundamentals — prime locations and high-quality residences with scenic views — and that offer amenities that make them stand out from their competition. Though some of her clients have opted to avoid the Caribbean and pursue skiing trips in Europe this year, India has been impressed by some of the offerings made by high-end Caribbean destinations. 

Many of her clients fly in private jets, so the recently extended runway at Mandarin Canouan Island, situated in the middle of St Vincent & The Grenadines, was an appealing choice this year.

But her clients have diverse needs, so she makes sure she keeps a variety of scenarios in mind when considering her client's options. Como Parrot Cay, located in the Turks & Caicos, gets high marks from India for its healthy dining options and top-notch spa and wellness programs.

Oetker Jumby Bay, located on a private island in the West Indies, was her go-to choice for families because of its villas that come with access to private pools and beaches.

What to do before traveling

Before making reservations or hiring a travel agent, AAA recommends that travelers take steps to guard against the risks any trip presents.

Given the prevalence of hurricanes this year, and the potential for further storms before hurricane season ends on November 30, AAA advises travelers to invest in travel insurance, which could protect against hurricane-related cancellations. AAA also suggests enrolling in the US Department of State's Smart Traveler Enrollment Program (STEP), which will make it easier for US consulates or embassies to notify travelers in case of of emergencies.

While the height of hurricane season is likely behind us, it's never a bad idea to prepare for the worst.

SEE ALSO: 23 reasons why your next Caribbean vacation should be to Jamaica

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• A new report by UBS and PwC found the total wealth of the world's billionaires grew by 17% in 2016 to $6 trillion. 
• The reports says that growth is being driven by Asia, with three quarters of all new billionaires coming from India and China. 
• China had the highest number of new billionaires, adding one every 5 days.  

The US might be the wealthiest country in the world, but it's not churning out the most billionaires. 

That title goes to China, which added 67 new billionaires in 2016, or one about every five days, according to a report on billionaires by UBS and PwC released Thursday.

"According to the Asian billionaires we interviewed for this report, a combination of geopolitical stability in Greater China, rising Chinese real estate prices, infrastructure spending, the growing middle class and buoyant commodity prices all joined together to boost wealth," the report said. 

For the first time ever, Asia had more billionaires (637) than the US (538), the report found. Still, the US maintained a higher concentration of billionaire wealth, but Asia top that measure in the next three to four years. 

The major driver of wealth in Asia, according to the report, was technology. John Matthews, the report's coauthor, told Business Insider that Asian countries are better at deploying and integrating new technology, which for the most part is first conceived of by companies in the US.

"Asia is the land of implementation and integration," Matthews said. For instance, the US gave birth to new finance apps like Venmo and PayPal, but it's in Asian countries where such apps have scaled the most. 

"People don't use cash or credit cards in China, they use apps," Matthews said. 

Still, billionaire wealth in Asia, Matthews noted, is very volatile because it is so closely linked to the public markets. 

"So they can be a billionaire one day, but not the next," he said. "Only 40% of billionaires [in the US] have their wealth tied to public markets, compared to 70% in Asia."

SEE ALSO: Billionaires are buying sports teams for different reasons than they used to

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The House passed the Senate's budget resolution on Thursday by a vote of 216 to 212, in the last procedural step before the GOP can move to fast track tax reform legislation that is expected to be unveiled next week. Here's what you need to know. 

In related news, Gary Cohn is reportedly set to leave the White House as soon as tax reform is done. He's also reportedly out of the running for Fed Chair — here are the remaining candidates. President Donald Trump appeared to solicit suggestions for the position during an interview with Fox Business host Lou Dobbs on Wednesday.

He also contradicted his own tweet, saying 401(k)s could now be up for negotiation.

The European Central Bank on Thursday announced that it will further taper its bond-buying programme but extended quantitative easing until at least September 2018, as had been widely forecast prior to the decision.

In trading news, CBOE, the largest options exchange in the US, is moving in on a $1.6 billion bitcoin opportunity.

In markets news, David Einhorn just started one of the most important conversations we can have in a bubble, according to Business Insider's Linette Lopez. Deutsche Bank asked: "Has the music stopped playing?"

We spoke to Sharon French, head of beta solutions at OppenheimerFunds, about smart beta and the most pressing issues facing markets today.

The world's billionaires are now worth $6 trillion — but succession is a big problem. The richest families in America are pouring money into healthcare startups. 

In markets news and views:

• The stock market just showed that its biggest fear is overblown
• Tech stocks took a hit heading into a crucial stretch of earnings — but traders are still betting on blockbuster results
• Traders betting against Chipotle made $260 million in a single day on its earnings disaster
• Traders were blindsided by Celgene's massive earnings flop
• Nike is going through a "massive transformation" to keep pace with the competition

Lastly, here are the 14 countries with the most billionaires.

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• A new report by UBS and PwC found the total wealth of the world's billionaires grew by 17% in 2016 to $6 trillion. 
• Billionaires, according to the report, are "turning their attention to sports."
• John Matthews, coauthor of the report, told Business Insider that owning a sports team is not just an ego play for billionaires.

Billionaire wealth grew by 17% to $6 trillion, according to a report released Thursday by $3 trillion money manager UBS and consultancy PwC.

And a chunk of that money is going into sports. 

Billionaires, according to the wide-ranging report, are looking to leave their mark on history and are ramping up their philanthropy efforts and patronage of the arts and sport. 

"Billionaires are turning their attention to sports," the report said. "As the price tags on sports clubs appreciate, often it’s only billionaires who have the financial firepower to buy
them and make the necessary follow-on investments."

In Asia, for instance, the uber wealthy are driving the growth of soccer with billionaire's like Alibaba's Jack Ma funding new training schools. 

Wealthy people, of course, have always been patrons of sports teams and clubs, but the reason why they are backing sports has changed, according to John Matthews, one of the reports coauthors. He told Business Insider that owning a sports franchise used to be an ego play, and he often advised his billionaire clients against buying teams. 

"I would tell my clients the fastest way to become a millionaire is to become a billionaire and then buy a sports team," he said. 

Today the motivation behind owning a team is more pragmatic. As such, Matthews thinks it makes good sense for some billionaires to buy a team. For instance, owning a sports team can help billionaires connect with communities they might have business interests in. 

"Yet owning a sports club is more than a prestige project or business venture," the report said. "In the US and to a certain extent in Europe, this is a chance to promote your community, to establish a legacy as the person who took the community’s sports club to great success."

Owning a team can also open the door to other business opportunities. 

"One billionaire told us that you do not really buy sports clubs for financial returns," the report said. "Instead it opens the door to amazing people – you sit at the table with 'stars, sheikhs, famous businessmen and regular guys from around the world, all in the same room, all talking only about the ball.'”

The report said 109 billionaires own the top 140 sports brands. The average age of these tycoons is 68. Here's an overview of the sports teams owned by billionaires:

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The price of litecoin appears to be benefiting from crypto market conditions, but low volumes suggest any larger lift-off might not be in play.

• Celgene turned in a brutal third-quarter earnings report, missing revenue forecasts and cutting its long-term profit outlook.
• Traders were woefully unhedged by several measures, leaving them vulnerable to feel the brunt of the stock's 20% drop.

Traders weren't prepared at all for the huge stock drop that befell Celgene after a disastrous third-quarter earnings report.

The drug developer saw shares plummet as much as 20% after quarterly revenue fell short of analyst estimates and the company lowered its long-term profit forecast for 2020, yet investors entered the reporting period woefully unhedged.

Investors were paying the lowest premium in almost three years to protect against a 10% decline in Celgene's stock over the next three months, relative to bets on a 10% increase, according to data compiled by Bloomberg. When the measure — known as skew — is low, it implies either directional bullishness or a simple lack of downside protection.

It was an even starker situation for traders placing hedges against a deeper drop. Skew for 20% downside hedges over a three-month period, relative to wagers on a 20% spike, was the lowest since December 2007 heading into Celgene's earnings.

One would think traders would've been more wary heading into the quarterly report, considering the company was less than one week removed from announcing that they'd failed a late-stage trial in a highly anticipated Crohn's disease drug. That news caused an 11% single-day drop in the stock, which has plunged 30% since the start of September.

One possible explanation is that investors thought that weakness meant the stock was at low risk of slipping further, and they pared hedges accordingly.

That they were so wrong provides a cautionary tale for traders heading into earnings season. No matter how downtrodden a stock may appear, all it takes is a devastating report to make matters even worse.

SEE ALSO: Traders betting against Chipotle made $260 million in a single day on its earnings disaster

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Peter Thiel, the billionaire co-founder of PayPal, believes that critics of bitcoin are "underestimating" the cryptocurrency.

Why Bitcoin's new forked cryptocurrency matters.

• The wealth of the world's billionaires rose to $6 trillion in 2016, driven by self-made entrepreneurs, according to a new report by UBS and PwC.
• Growth occurred fastest in Asia, with one new billionaire in the region created every two days.
• Growth was largely driven by four sectors: technology, minerals, industrials, and financial.

The combined wealth of the world's billionaires rose by 17% to $6 trillion in 2016, according to a UBS and PwC's Billionaires Insights report.

The surge in wealth was driven by self-made entrepreneurs and rapid wealth creation in Asia, the report said.

"What we are seeing is the acceleration of entrepreneurs in the billionaire cohort," said Josef Stadler, head of global ultra high net worth at UBS. While only 45% of billionaires were self-made in 1995, the percentage of entrepreneur billionaires has now risen to 80%.

For the first time, Asian billionaires outnumber those in the US: there are 637 billionaires in Asia compared to 563 in the US. One new billionaire was created in Asia every two days in 2016. Although the average wealth of US billionaires is still greater, their Asian counterparts are expected to overtake them within 3-4 years.In the US, almost all wealth is now "self-made," said John Mathews, head of private wealth management and ultra high net worth at UBS Americas.

"The entrepreneur is alive and well," Matthews said, and the US is still "the land of innovation."

But tech companies and products that begin their lives in the US are increasingly moving to Asia, which is "the land of implementation and integration into society."

It is this widespread adoption in Asia that is creating wealth at a much more accelerated pace, he said.

Prominent Asian billionaires include real estate mogul Wang Jianlin, with a net worth of $29.7 billion and one of China's richest men, and Indian industrial magnate Mukesh Ambani, who has a net worth of $41.4 billion.

New additions to the billionaire list in 2016 included Zhou Qunfei, founder of Lens Technology, who is the world's richest self-made woman and worth an estimated $10.2 billion. Cheng Wei also joined the list after cofounding Uber's biggest competitor in China, Didi Chuxing.

Last year's surge in wealth creation was driven by four sectors: materials, industrials, financial and technology. While growth in the materials industry is largely cyclical, James Purcell, head of hedge funds at UBS, said that the boost in the tech industry is structural and likely to generate future and sustainable growth.The tech industry creates the youngest billionaires — although most of the wealth creation was still driven by those over the age of 50.

"It takes time to create this type of wealth," said Marcel Widrig, a partner at PwC. "It's not an overnight success."Stadler said there is a growing cohort of next-generation "serial entrepreneurs." The report also found:

• The total wealth of billionaires rose from $5.1 trillion to $6 trillion, double the rate of the MSCI World Index.
• Billionaires own or partly own companies that employ at least 27.7 million people worldwide, roughly the same as the UK's working population.
• The new billionaires created in 2016 employ at least 2.8 million people.

UBS said the biggest problem facing the current crop of billionaires is the issue of succession. Many younger generations don't necessarily want to inherit the family business but to instead invest in other sectors as well as in social projects.

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• Microsoft is set to report its third-quarter earnings after the closing bell on Thursday.
• The company hit an all-time intraday high of $79.42 ahead of its earnings.
• Wall Street is expecting adjusted earnings of $0.72 per share on revenue of $23.55 billion.

Analysts are generally bullish ahead of the company's report. 25 of the 34 surveyed by Bloomberg rate the company a buy. Just two analysts rate Microsoft a sell.

Microsoft reports on one of the busiest days of the earnings season. Amazon, Intel, Comcast, and others are also reporting on Thursday.

Microsoft is up 0.65% on Thursday ahead of earnings and is 26.47% higher this year.

Get a live stock price for Microsoft here...

SEE ALSO: Microsoft is now trying to use Google's secret cloud weapon against it

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• Life sciences companies, especially those that make medical devices, are tapping funding outside of the venture capital community.
• Family offices, which manage the money of very wealthy investors, are appealing backers because they can also consider the philanthropic aspect of funding healthcare technology.

Healthcare startups are taking a new tack in their efforts to find financial backers.

Instead of tapping venture capital backing — which comes with perks like a network of like-minded businesses, and board members experienced in taking companies public or selling them off — they're tapping the super-rich. This other group, the founders say, has its own perks, including less meddling with how a business is run and, sometimes, a more philanthropic view of health-care investments. 

These deals are wide-ranging in size and scope. Samumed — a $12 billion company with a pipeline of what could be revolutionary treatments to regenerate hair and bone — raised $220 million from anonymous high net worth individuals, for example. Smaller companies have also raised just a few million from family offices, which manage the assets of the wealthy.

The kinds of institutions that invest in these startups differ too. Some are highly sophisticated financial investors, like Pritzker Group, Flatley Ventures, and Stetson Family Office. Others were set up by former pharma executives, like PBM Capital Group. The Bill and Melinda Gates Foundation is a super-charged kind of version as well.

In some cases, family offices are looking to invest for the first time, driven perhaps by a personal experience with a specific illness. 

In part, the money is available because there's been a surge in multi-millionaires around the world, says Peter Meath, head of life sciences for Middle Market Banking at JPMorgan Chase Commercial Banking.

"This alone has spurred more investing in the space from family offices themselves," he told Business Insider in an interview.

One challenge for family offices is developing the expertise and the network to make these kinds of investments, according to Meath. However, there are now organizations, including structured multifamily office funds that are helping the newbie health investors find prospects, he said. 

Finding a wealthy individual or family also means the biotech entrepreneur has to work harder, to build relationships that can help link up with the people. "They likely are funds that operate under the traditional Life Science investing 'radar'," he said.

The movement of family offices into life sciences comes around the same time as other funding moves "upstream," to later rounds when companies are farther along in development, and there's less capital for earlier stage companies.

Filling the gap left by venture capital

Venture capital funds anyway may be less interested in medical device companies because they don't see a straightforward exit like they might from a company with a potential blockbuster drug, said Akhil Saklecha of Artiman Ventures, an early-stage venture firm based in Palo Alto, California. It might take a fund longer to see a return on their investment with a device maker than a drug developer. 

Saklecha, who has invested in some medical device companies says, he's going after big markets, such as hypertension or diabetes, which could make it easier to get the exits that VCs look for. 

A medical device company with friends as investors

"Structured VC companies are not your first choice of partners if you have the choice," said Don Crawford, the CEO of startup Analytics 4 Life. The company has developed a test that's meant to replace "stress tests" and other measures used to figure out if a person should get a more invasive procedure to see if they have coronary artery disease.

The idea is that by using sensors to gather data, and artificial intelligence to analyze that information, doctors might be able to gather key information faster and with less risk than they're able to do today.  The company is still in clinical trials for the device. So far, the company has raised more than $32.5 million.  

Crawford started a medical device company back in 2008 when it wasn't easy to fundraise from venture capitalists, so he had to turn elsewhere. He tapped family offices, wealthy investors, people who came from the world of medical devices, physicians, and orthopedic surgeons — around the world. 

Eventually, he sold the company in 2014, which paid off for his initial investors. From there, he was in a good position to help fund Analytics 4 Life. 

"I started with Analytics 4 Life maybe four months later, but I had 300 friends with a quarter of a billion dollars," Crawford told Business Insider. 

And the choice to partner with these investors again was intentional. 

"Family offices, a lot of times, they are investing, they want a return like everyone else, but they also have some other philanthropic reasons that align the interest of the family to certain areas," he said.

Analytics 4 Life raised its latest $25 million round in September, giving them enough capital to get the device to approval in the US. The device has to go through large clinical trials, which are meant to vet whether the technology can work as well as other tests already available at detecting coronary artery disease. 

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

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• US Commerce Secretary Wilbur Ross claims the US was running a trade surplus with Mexico "every year" before the North American Free Trade Agreement came into effect.
• But data from the US Census, which is part of the Commerce Department, indicates that is not true. The US actually had a trade deficit with Mexico during several years before the agreement was implemented.
• Since 1995, the US has had a trade deficit with Mexico. It has grown over the years, and it has been greater in the post-NAFTA era than in the pre-NAFTA era.

NEW YORK — US Commerce Secretary Wilbur Ross claims the US was running a trade surplus with Mexico "every year" before the North American Free Trade Agreement came into effect.

The Commerce Department's own data shows that isn't true. 

"Before NAFTA came into effect, every year the US had a trade surplus with Mexico, generally ranging between $4 and $5 billion a year," he said, speaking from the White House through Skype at a lunch sponsored by the Swedish-American Chamber of Commerce on Tuesday.

"Guess what our cumulative deficit with Mexico is post-NAFTA?" he continued, "One trillion dollars — with a 'T.' One trillion dollars. That's way too much."

The Trump administration has made re-negotiating NAFTA a priority. President Donald Trump has long argued that the trade agreement is a lopsided deal, highlighting the US' roughly $60 billion trade deficit with Mexico in 2016.

In basic terms, a trade deficit means the US is buying more from Mexico than it sells back to the country. To Trump, and his surrogates, it is a sign that NAFTA benefits Mexico more than it does the US. Some economists argue that this is a misread of the data and changing the agreement wouldn't monumentally reduce the US' overall trade deficit, anyway.

Moreover, data from the US Census (which is part of the Commerce Department) show that the US was consistently running trade deficits with Mexico before NAFTA came into effect — including every year from 1985 to 1990. The US did have a trade surplus with Mexico in the three years immediately before NAFTA — 1991, 1992, 1993 — and also in 1994 when NAFTA was implemented.

In other words, Ross would be right if he didn't claim "every year."

We reached out to the Commerce Department for comment on this story, but have not heard back. 

Since 1995, the US has had a trade deficit with Mexico. It has grown over the years, and it has been greater in the post-NAFTA era than in the pre-NAFTA era.

Bank of America Merrill Lynch's Carlos Capistran and Ethan S. Harris shared a chart in a recent report to clients comparing the 12-month rolling average for the US trade balance with the world and with Canada and Mexico, its NAFTA partners.

The US's trade deficit with the two NAFTA countries is less than 10% of its total trade deficit, and most of the increase in the total deficit actually came several years after the trade agreement was implemented.

"Most economists agree that trade deficits are the result of saving and investment decisions rather than trade agreements," Capistran and Harris said, adding: "In particular, trade deficits are financed by net capital inflows. Capital flows into the US are strong because of low private savings and large budget deficits in the US and elevated savings in China and other EM economies."

Notably, the economists added, nearly half of the US's trade deficit is with China even without any agreement regulating trade between the two countries.

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• Amazon is set to report its third-quarter earnings results after the bell on Thursday, and Wall Street is fairly bullish ahead of the report.
• Shares are little changed, up 0.07% at $973.63 a piece, ahead of the announcement.  
• Wall Street is expecting adjusted earnings of $1.75 per share on revenue of $42.194 billion. Bloomberg data shows. A vast majority, 87%, of analysts surveyed by Bloomberg rate the company as a "buy" compared to just one "sell."
• Goldman Sachs analyst Heath Terry said he will be primarily be watching the performance of Amazon's Web Services business. He expects 41% year-over-year growth in the business.
• Amazon is up 29.24% this year.

Check out which other companies are reporting earnings today. 

SEE ALSO: The absolute best Amazon Echo app just got even better (AMZN)

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• Shares of Alphabet are ticking higher, up 0.53% at $996.68, ahead of the company's third-quarter results which are due out after the closing bell.
• Wall Street analysts are looking for Alphabet to report earnings of $8.34 a share on revenue of $21.95 billion, according to Bloomberg data.
• Ahead of the results, 34 analysts surveyed by Bloomberg have "buy" ratings while six have "holds" and just one says to "sell."
• The stock hit at an all-time high of $1016.31 last week.
• Shares of Alphabet are up more than 25% this year. 

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• Nike has faced increased competition recently from companies like Adidas.
• Some of its biggest brands, like Jordans, have faltered.
• The company is undergoing a "massive transformation" to be more nimble and adaptable to the current retail climate.
• Click here to see how Nike's stock is reacting in real time.

Nike is trying to jump-start a renaissance at the company.

Recently, competition has stormed into many of Nike's most important businesses and left the company looking flat-footed and slow in its responses. Nike is hoping that a new focus on innovation will help it fight back against this competition and regain its crown as king of the sneaker and sportswear markets.

"The company is going through a massive transformation," CEO Matt Parker told CNBC on Wednesday. "The whole speed to market, the connection to the consumer, the direct connection we have to consumers, powered by digital and membership, is enormous. This is a massive change."

Parker said that Nike is now focusing on selling directly to consumers, with a narrower product line and faster development cycles for new products. These changes, he said, are aimed at making Nike a more nimble and innovative company.

The company is also refining how it sells its products to customers, rethinking its e-commerce strategy by partnering with Amazon and reducing the number of retail partners from 30,000 to just 40, according to KGW.

Nike's grip on the market comes down to a simple supply and demand formula, Josh Luber, CEO of sneaker reselling site StockX previously told Jefferies. Demand for Nike's newest products is partially driven by their perceived scarcity, and if Nike produces too many pairs of a new shoe, demand will plummet because the product is then widely available and is no longer limited in its availability. This mostly applies to the sneaker market, but Nike losing its cool factor in one area of its business can seep into others. 

A faster product development cycle will mean that Nike is able to more quickly react to changes in the demand for a product. Luber said that Nike previously has taken as long as two years to fully develop a new shoe. When a new competitor, like Adidas, comes to market with a hot new item that steals away demand from Nike, it would take Nike years to adjust its business to the new climate in some cases.

Parker told CNBC he welcomes the competition, and as a sports company, it strikes at the core of what Nike is built on.

The company's share price jumped 2.8% on Wednesday, amid announcements of the company's transformations during its investor day presentations.

Not all investors were impressed though, as Jefferies analyst Randal Konik said the investor day "didn't do it" for him. Nike didn't do enough to address the growing Adidas competition, and its declining Jordan brand of sneakers, Konik said in a note to clients on Thursday.

Nike is up another 0.73%  and is trading around $55.57 on Thursday following Parker's remarks and the company's investor day. Nike will report its second-quarter figures in December.

Nike is up 6.66% this year.

Read more about the formula that decides Nike's success here.

SEE ALSO: Nike has lost its crown as king of the sneaker market - and a sneaker mogul has a simple explanation for why

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• Deutsche Börse CEO Carsten Kengeter resigns.
• Kengeter attempting to settle insider trading investigation against him.
• Shareholder pressure for him to resign has been mounting.

LONDON — The CEO of Deutsche Börse is stepping down amid mounting pressure from investors over an insider trading investigation.

The German company, which operates the Frankfurt Stock Exchange, announced on Thursday that Carsten Kengeter will step down by the end of the year.

German prosecutors began investigating Kengeter for suspected insider trading in February. The investigation centred around talks held between the group's management and the London Stock Exchange between July/August and December 2015. An attempted merger between the two was announced shortly after but eventually fell through.

Kengeter negotiated a settlement of the probe, agreeing to pay €500,000, but earlier this week a German court refused to approve the settlement.

Shareholders representing 6% of Deutsche Börse's stock told the Financial Times on Wednesday that Kengeter's position had "become untenable." An unnamed source told the paper: "The best advice to him is voluntary resignation."

Deutsche Borse said in a statement that Kengester was quitting "to allow the Company to focus its energy back onto clients, business and growth and to avoid further burdens caused by the ongoing investigation."

Kengester and Deutsche Börse have previously said that the allegations against them are unfounded.

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• The biggest risk facing the world's billionaires is how to pass on their wealth, according to UBS.
• Over a third of the world's billionaire's combined wealth is held by individuals over the age of 70.
• Billionaires are living in a "gilded age" that may not last, with wide gaps between the richest and poorest in society and wealth concentrated among a few.

LONDON — The biggest risk facing the world's billionaires is how to pass on their wealth, according to leading advisors to ultra high net worth individuals.

The world's billionaires are worth a combined $6 trillion and 39% of it is owned by individuals over the age of 70, according to UBS and PwC's Billionaires Insights report. $2.4 trillion will be transferred to the next generation over the next 20 years, the report predicts. It will be "a huge windfall for their heirs but also for charities."

"The biggest idiosyncratic risk is succession," said Josef Stadler, head of global ultra high net worth at UBS.

In the past, billionaires have passed their wealth on to younger generations of their family but this is changing, Stadler said. Often this takes the form of passing on the family business.

But younger generations increasingly don't want that and are instead looking to invest in other sectors and in philanthropic projects. There is also a decision to be made about whether passing on the business to an outsider with more experience and skills would be better for the firm itself.

"The risk is to convince the family to do the best thing for the firm," says Stadler.

Another problem is complex tax law, the report says. This has made planning "increasingly convoluted."

The problems are compounded in very old, large families, Stadler said.

"The more family members you have, the more liquidity you need to generate for those not involved in the business," he said. "There could be 600 people in a family if the empire was started in the 1800s," and "everybody wants a piece of that pie."

The wealth of the world's billionaires increased by 17% in 2016 to $6 trillion, driven largely by entrepreneurs and strong growth in Asia. The majority of wealth is now created, rather than inherited.

"We believe this growth is sustainable," Stadler said.

However, he concedes billionaires are living in a "gilded age," which may not last. "We are at an inflection point" in which the world's wealth is highly concentrated among a very few individuals, he said. Wealth concentration is now as high as it was at the start of the twentieth century.

"The last gilded age lead to the Sheridan [Antitrust Act of 1890] Act," he says, a competition law that broke up the monopolies held by a few powerful families.

"We're at the peak point again now," he says, "will that happen next?"

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• One of the stock market's biggest fears has long been what will happen to huge short-volatility positions when price swings increase.
• Wednesday's trading showed that a spike in the VIX isn't the doomsday scenario that many had anticipated.
• Data shows that traders actually used the increase to pile into more short-VIX wagers.

For months, stock market doomsayers have warned about the glaring lack of price swings taking place.

And they've been particularly harsh on the herd of investors betting against volatility, arguing that the quick profits they're enjoying are setting the market up for a catastrophic event in the longer term.

Don't get complacent or lulled into a false sense of security, because a reckoning is coming as soon as volatility picks up, these skeptics say.

However, Wednesday's events showed that perhaps their fears are overblown.

As the CBOE Volatility Index (VIX) spiked as much as 18% amid the benchmark S&P 500's biggest drop in seven weeks, traders did something unexpected: they placed more short bets on the so-called fear gauge.

Roughly $100 million in new short bets were placed on exchange-traded products tracking the VIX on Wednesday, according to data compiled by the financial analytics firm S3 Partners. There's now a whopping $1.38 billion of short interest in instruments betting on a VIX increase.

That wasn't supposed to happen. If short-VIX pessimists were to be believed, any major spike in the index was supposed to trigger a "short squeeze," with traders forced to close their bearish positions.

That was the warning issued by Alain Bokobza, the head of global asset allocation at Societe Generale. He characterized record short-VIX positioning by hedge funds and large speculators as "dancing on the rim of a volcano" in a recent client note. "If there is a sudden eruption (of volatility) you get badly burned," was his ominous warning.

So what's going on? Why didn't a short squeeze materialize?

It's possible that short-VIX enthusiasts simply used the fear gauge's spike to load up on more positions — an inverse buy-the-dip scenario of sorts.

And that's been a winning strategy this year. Just ask Seth M. Golden, a former Target manager who went viral in August after saying he grew his net worth from $500,000 to $12 million in five years by shorting the VIX. His approach? Make purchases on sharp VIX increases, then close out quickly. Rinse and repeat.

But with all of this said, it's important to note that Wednesday's 18% VIX spike was relatively small in the grand scheme of things. The index has been locked near record lows for months, so any sort of upward move will look outsized.

The warnings issued by Bokobza and others on Wall Street should be heeded if the market appears ready to settle into a higher-volatility regime for the long term.

The only question is: Since so many traders have a vested interest in keeping the VIX low, when will that actually happen? Based on how things have gone, we could be waiting a while.

SEE ALSO: Here's how to protect yourself against a stock market 'fragility event'

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• Twitter is up 12.25% in early trading before earnings.
• Twitter reported a beat on earnings and revenue.
• The company said it overstated monthly users in the past, but still saw growth in the third quarter.

Twitter reported a beat on its third-quarter earnings ahead of Thursday's opening.

The company earned an adjusted $0.10 per share, doubling the Wall Street consensus of $0.05 per share. It took in $590 million in revenue, compared to the $587 million that analysts were expecting.

Shares of Twitter rose as much as 12.25% immediately following the results.

The company said its number of monthly actives users climb 4% versus a year ago to 330 million. It also said the number of daily active users was up 14% from a year ago, but didn't give a number.

Twitter disclosed that it had overstated monthly users in its previous earnings reports. The company said that by including certain third-party apps in its measurements, it had mistakenly overstated the number of users by 1 million in the fourth quarter of 2016 and 2 million in the first half of 2017.

The company said that with cost-cutting measures, it expects to turn a profit in the fourth quarter.

Twitter is up 16% this year after its post-earnings bump.

Read more about the company's earnings here.

SEE ALSO: Twitter overstated monthly users for three years, but says it could finally turn a profit next quarter

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• Twitter is up 12.25% in early trading before earnings.
• Twitter reported a beat on earnings and revenue.
• The company said it overstated monthly users in the past, but still saw growth in the third quarter.

Twitter reported a beat on its third-quarter earnings ahead of Thursday's opening.

The company earned an adjusted $0.10 per share, doubling the Wall Street consensus of $0.05 per share. It took in $590 million in revenue, compared to the $587 million that analysts were expecting.

Shares of Twitter rose as much as 12.25% immediately following the results.

The company said its number of monthly actives users climb 4% versus a year ago to 330 million. It also said the number of daily active users was up 14% from a year ago, but didn't give a number.

Twitter disclosed that it had overstated monthly users in its previous earnings reports. The company said that by including certain third-party apps in its measurements, it had mistakenly overstated the number of users by 1 million in the fourth quarter of 2016 and 2 million in the first half of 2017.

The company said that with cost-cutting measures, it expects to turn a profit in the fourth quarter.

Twitter is up 16% this year after its post-earnings bump.

Read more about the company's earnings here.

SEE ALSO: Twitter overstated monthly users for three years, but says it could finally turn a profit next quarter

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The dollar is higher on Thursday.

The US dollar index was up by 0.5% at 94.06 at 8:18 a.m. ET.

Initial claims, which count the number of people who applied for unemployment insurance for the first time, rose to 233,000.

Economists forecast that claims would rise to 235,000 from the prior week's upwardly revised reading of 223,000.

As for the rest of the world, here was the scoreboard at 8:19 a.m. ET:

• The euro was down by 0.5% at 1.1753 against the dollar after the European Central Bank announced it will reduce its bond-buying to €30 billion per month, down from the current level of €60 billion per month starting in January 2018, as was widely expected.
• The British pound was down by 0.5% at 1.3196 against the dollar.
• The Russian ruble was little changed at 57.6801 per dollar, while Brent crude oil, the international benchmark, was down by 0.2% at $58.34 per barrel.
• The Japanese yen was little changed at 113.83 per dollar.
• The Indian rupee was down by 0.2% at 64.860 per dollar.

SEE ALSO: BANK OF AMERICA: 2 charts show why ripping up NAFTA wouldn't solve Trump's big issues with the deal

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

• Today marks the busiest day of earnings season. Check our calendar to see which companies are reporting.
• The Spanish IBEX is climbing on hopes that Catalonia tensions are soon to ease.
• Aluminum is hitting 5-year highs.

Here's Lutz:

Good Morning, and welcome to the Busiest day of Earnings this season, with 67 S&P500 companies printing.  Markets are quiet right now as we await the ECB (7:45 Headers, 8:30 Presser.  Extend and taper from €60bn/month to €30bn expected) – as well as a slew of Mega-Cap tech after the close.  Bulls are in control early in Europe, where the DAX is up 40bp, but Eyes on the IBEX climbing 1% on Headers Puigdemont will call elections instead of announcing secession.  Italian banks are a fan as well, pulling the EU fin Index up 1% despite Barclays and DB under pressure on #s.   NOK getting smoked has Helsinki off 2% early tho.   Miners climbing small, while Semis are liking the #s from STMicro.  In Asia, Nikkei up 15bp as discretionary rallied - Hang Seng hit for 35bp as Tech was hit for 1% - Shanghai up 30bp - KOSPI weaker with KOSDAQ down 1.4% - Aussie up small, while Sensex is adding to yesterday’s bank induced gains

Ahead of House vote on Budget Later today, the US 10YY is off small as Bunds catch a small bid and Euro holding $1.18 into the ECB Call.  The DXY is flat tho, as sterling retraces lower.  Norway’s Norges Bank and Sweden’s Riksbank have no change, and South Africa’s Rand still getting hit on angst about a ratings downgrade.  Ore off small, Rebar hit for 1% in China has Copper off 30bp, but Zinc and Nickel are in the green, while Aluminum is hitting 5Y highs and Gold drifts around unch.   WTI is up small, but Energy traders are watching Natty gas getting hit for 1% into Inventory data later today.

Read about the 10 things you need to know today...

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

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

• Today marks the busiest day of earnings season. Check our calendar to see which companies are reporting.
• The Spanish IBEX is climbing on hopes that Catalonia tensions are soon to ease.
• Aluminum is hitting 5-year highs.

Here's Lutz:

Good Morning, and welcome to the Busiest day of Earnings this season, with 67 S&P500 companies printing.  Markets are quiet right now as we await the ECB (7:45 Headers, 8:30 Presser.  Extend and taper from €60bn/month to €30bn expected) – as well as a slew of Mega-Cap tech after the close.  Bulls are in control early in Europe, where the DAX is up 40bp, but Eyes on the IBEX climbing 1% on Headers Puigdemont will call elections instead of announcing secession.  Italian banks are a fan as well, pulling the EU fin Index up 1% despite Barclays and DB under pressure on #s.   NOK getting smoked has Helsinki off 2% early tho.   Miners climbing small, while Semis are liking the #s from STMicro.  In Asia, Nikkei up 15bp as discretionary rallied - Hang Seng hit for 35bp as Tech was hit for 1% - Shanghai up 30bp - KOSPI weaker with KOSDAQ down 1.4% - Aussie up small, while Sensex is adding to yesterday’s bank induced gains

Ahead of House vote on Budget Later today, the US 10YY is off small as Bunds catch a small bid and Euro holding $1.18 into the ECB Call.  The DXY is flat tho, as sterling retraces lower.  Norway’s Norges Bank and Sweden’s Riksbank have no change, and South Africa’s Rand still getting hit on angst about a ratings downgrade.  Ore off small, Rebar hit for 1% in China has Copper off 30bp, but Zinc and Nickel are in the green, while Aluminum is hitting 5Y highs and Gold drifts around unch.   WTI is up small, but Energy traders are watching Natty gas getting hit for 1% into Inventory data later today.

Read about the 10 things you need to know today...

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

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• Bitcoin presents a $1.6 billion revenue opportunity for exchanges, according to a wide-ranging report on cryptocurrencies by Bank of America Merrill Lynch.
• Cboe, a first mover in cryptocurrencies among exchanges, appears the best positioned to capitalize on the opportunity, according to the bank. 
• Cboe has partnered with Gemini, a digital currency exchange, to roll out bitcoin-linked products as early as this year. 

Bitcoin represents a $1.6 billion revenue opportunity for Wall Street's exchanges.

That's according to a wide-ranging report on cryptocurrencies by Bank of America Merrill Lynch, which said exchanges could benefit from a "significant revenue stream" from bitcoin. And one exchange group has moved to the front of the queue to take advantage of this potential opportunity. 

Cboe, the Chicago-based exchange operator that's home to the largest options exchange in the US, recently partnered with Gemini, a digital assets exchange started by Tyler and Cameron Winklevoss, to roll out bitcoin futures by this year or early next. Futures are contracts that allow two parties to exchange an asset at a specified price at an agreed upon date in the future. It is also looking to list a bitcoin exchange-traded fund.

That followed an earlier attempt by Bats Global Markets, which was acquired by Cboe earlier this year, to list a bitcoin exchange-traded fund from the Winklevoss twins. That attempt was rejected by regulators, with the Securities and Exchange Commission citing the lack of "surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity."

The Cboe deal with Gemini might help address that. 

"The ETF and futures contracts do not depend on each other, but clearly, they would be reinforcing," Bank of America said. "If these efforts to apply existing exchange technology to [bitcoin] work, then this creates a new revenue pool for the exchange industry."

Cboe's chairman and CEO, Edward Tilly, has taken a position on bitcoin that is contrary to that of his peers in the space. At a recent conference he said, "like it or not, people want exposure to bitcoin."

Meanwhile, rivals have shied away from cryptocurrencies. For instance, Adena Friedman, the CEO of Nasdaq, referred to initial coin offerings, a red-hot cryptocurrency-based fundraising method, as "bleeding edge" and CME president Bryan Durkin told Bloomberg his firm wasn't looking at bitcoin futures. 

That's despite bitcoin soaring more than 400% this year. The market for cryptocurrencies has exploded from $17 billion to $170 billion since January. Volumes per day for bitcoin are up from $57 million at the beginning of the year to $628 million, according to Blockchain.info.

Cboe is positioning itself to capitalize on this explosive growth. Here's John Deters, chief strategy officer of Cboe:

"It has now evolved to a point that its utility as both a payment vehicle and a store of value is clear, while the overall popularity of digital assets has proven to be pretty resilient."

Deters told Business Insider that the exchange is exploring a broader family of cryptocurrency products in addition to the bitcoin futures product.

$1.6 billion opportunity

The $1.6 billion bitcoin revenue figure is a bull case scenario, according to Bank of America, and is based on the assumption that cryptocurrency volumes end up at about 10% of current fiat currency trading volumes.

Here's the bank:

"The FX market is highly liquid. For example, spot FX volumes were $1.65tr as of the most recent BIT Triennial survey in April 2016. If these volumes were to materialize, with the same relationship between spot market and futures, and the same revenue per contract, the revenue pool would be about $1.6bn."

The estimate also assumes "there is no substitution of coin volumes for other contracts."

Just because Cboe is best positioned to take advantage of this opportunity, Bank of America doesn't think it will be the only firm to benefit from it. The bank expects other exchanges and market structure companies to jump on the bitcoin bandwagon if Cboe's futures or ETF products are successful. 

"We would assume that other major derivative players like DB1’s Eurex and the CME would try to become involved," the bank said. 

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Bitcoin prices are edging up on Thursday, though a look at the charts suggests a bigger move might be possible.

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• European Central Bank cuts bond-buying programme to €30 billion per month, down from €60 billion previously.
• The move had been widely expected in the markets.
• Bond-buying will continue until at least September 2018, but will likely go for longer.
• President Mario Draghi will give a press conference to explain ECB's thinking at 1.30 p.m. BST (2.3o p.m. CET; 8.30 a.m. ET).

The European Central Bank on Thursday announced that it will further taper its bond-buying programme but extended quantitative easing until at least September 2018, as had been widely forecast prior to the decision.

The ECB announced that it will reduce its bond-buying to €30 billion per month, down from the current level of €60 billion per month. The reduction in purchases will come into force in January 2018, the central bank said in a statement, saying that QE will continue for nine months longer than previously announced.

"As regards non-standard monetary policy measures, purchases under the asset purchase programme (APP) will continue at the current monthly pace of €60 billion until the end of December 2017," the ECB said in a statement.

"From January 2018 the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim."

Total bond purchases are on track to reach €2.28 trillion by the end of this year, which means spare capacity will only be just over €200 billion — less than the forecast purchase amount for 2018 of €270 billion.

Purchases are set to continue until at least September 2018, but will likely extend beyond that, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics wrote in an email.

"This is a key provision for the ECB, which distinguishes it from the Fed which announced a pre-set 'taper.' We do not expect a hard stop for QE in September next year, and sees the ECB buying, albeit at a reduced pace of €15B-to-€20B, until the end of 2018, at least," Vistesen argues.

While the ECB was widely expected to reduce the quantity of bonds it buys, there was little chance it would change interest rates, and the bank left its deposit rate at -0.4%, while its main refinancing rate remained at 0.0%.

"Today’s decision is a sea change but a very gentle one; not a big-bang u-turn in ECB monetary policy. In fact, the QE recalibration the ECB has announced illustrates that the ECB wants to start the exit as cautiously as possible, ideally without seeing the euro appreciate or bond yields increase," Carsten Brzeski of ING said in reaction to the ECB's announcement.

The euro dropped sharply on the decisions, falling below the 1.18 level against the dollar, as the chart below illustrates:

At 1.30 p.m. BST (2.3o p.m. CET; 8.30 a.m. ET) ECB President Mario Draghi will give a press conference explaining the bank's decisions and taking questions from journalists.

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• Ford earned an adjusted $0.43 a share, topping the Wall Street consensus of $0.33.
• The company raised the lower end of its 2017 earnings guidance.

Ford on Thursday reported third-quarter earnings that topped analysts' expectations, and raised the lower end of its 2017 guidance.

The automaker reported adjusted earnings per share of $0.43, outpacing the Wall Street consensus of $0.33, according to Bloomberg.

Net income rose year-on-year to $1.60 billion from $1 billion.

The company said profits were "driven by North America and a record 3Q pre-tax profit in Asia Pacific," according to the earnings release.

"With improved operating performance, and traction against cost initiatives, tightening adj. EPS guidance range to $1.75 to $1.85," Ford said. The company previously saw a range of $1.65 to $1.85.

Ford's F-Series had its best third-quarter sales performance since 2005, gaining 14% versus a year earlier. The average transaction per truck jumped $2,800 versus a year ago to $45,400. 

Ford shares are up about 2% ahead of the opening bell. They have less than 1% this year. 

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• Billionaire investor David Einhorn thinks he's pointed out the salient characteristics of some of the frothiest stocks in today's market.
• Those are the stocks that can show you the narrative of this bubble — the story we've told ourselves that's worth more than actual money.
• Maybe it's time to give that story a name.

David Einhorn, the founder of hedge fund Greenlight Capital, has started one of the most important conversations we can have during any stock market bubble.

It is not "When will it burst?" Nobody can answer that. The question is "What is it called?"

Bubbles are mostly characterized, after the fact, by their worst excesses. The housing bubble of course was named for excesses in the mortgage market, and the dot-com bubble of the '90s was characterized by the market's obsession with companies with websites, regardless of their profitability. In each case, value was assigned to a security because of a prevailing narrative and not because it was generating cash for its shared owners.

So what will we call this bubble? What is the narrative driving its worst excesses?

Here's how Einhorn is thinking about it, as he wrote in his fund's quarterly letter, sent to investors this week:

"Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value.

"What if equity value has nothing to do with current or future profits and instead is derived from a company's ability to be disruptive, to provide social change, or to advance new beneficial technologies, even when doing so results in current and future economic loss?"

Specifically here, Einhorn was addressing the fact that his basket of "bubble shorts" — which includes market darlings like Amazon, Netflix, and Tesla — is continuing to rise despite a lack of profitability. So the question is, what is the narrative investors are assigning to these companies that somehow means more than money? 

He's telling us what he thinks it looks like and politely suggesting we give this sucker a name.

Some characteristics for your consideration

It almost physically pains me to say it, but Einhorn should call this the disruption bubble.

"Disruption" is overused and uncool, but that's usually true of anything by the time Wall Street gets to it. The idea that "disruption" gets a premium in the stock marke goes with the rise of the antiestablishment feeling around us. All the stocks om Einhorn's basket challenge established businesses — businesses so big that they're institutions.

Current events suggest humans are not so keen on big established institutions right now.

People all over the world have come to distrust legacy institutions in politics and in society, so it's not a stretch to think it's doing the same thing in markets. Additionally, it's reasonable to think we can observe this behavior not just in stocks that are going up, but in stocks that are going down.

I don't mean the obvious shrinking businesses like Macy's that are seeing some of their worst times. I mean the profitable giants that are doing relatively OK and somehow are getting punished for spending money to adapt to the new market. Disney comes to mind.

After Netflix announced that it would burn billions to create content over the next few years and remain cash flow negative (as Einhorn noted in his letter), Wall Street analysts cheered it with a higher stock price.

Around the same time, Disney announced it would invest in its streaming service. In response, Guggenheim analyst Michael Morris downgraded the stock.

"While we are optimistic that the company's proposed direct-to-consumer video products will create long-term value, we expect the initial investment and long lead time into the launch of the Disney-branded offering will weigh on sentiment over the next 12 months,” Morris said.

Oh, so Netflix can burn billions on programs that could be flops (ever heard of "Hemlock Grove"?) and get high-fives all around, and Disney, with decades of content that people around the world are obsessed with, can't invest in a streaming service without getting docked? Guys.

It's probably going to get dumber

I still believe that value is still value. I come from a generation of business writers who cut their teeth during the financial crisis, as bank analyst Meredith Whitney was warning the colossus of Wall Street, "You're either making money or you're not. If you're not making money, get out of the business."

Some of them did (leave certain businesses, that is).

It was a moment when we, as market participants and fearful witnesses, were acutely aware that businesses that do not make money cannot survive. Money was scarce, and so we didn't have time to make up new fun narratives for why money doesn't matter as much as x.

But that moment has passed, as it will in every economic cycle. Now we're in another moment, and in this moment we are buying not just actual destruction — but also the hope of destruction.

Here's another example: Wall Street's newfound love of cryptocurrencies. Nothing says antiestablishment like an attempt to create a currency outside the state and investors are loving cryptos for it. That, of course, doesn't mean we're anywhere near buying McDonald's with bitcoin — or that we ever will be. But we're thinking about it, and in today's world, has finally met the mainstream.

The fact that Lloyd Blankfein is being forced to acknowledge something that's inherently subversive, though, should give you pause. Once legitimized as the establishment, can it still keep its "disrupter" premium?

Wall Street jumping on the bitcoin bandwagon is a little like your mom joining Facebook. Maybe she's awesome, but her participation marked the end of Facebook being young and cool. Bitcoin and other cryptocurrencies, once sanitized and securitized by the beige-ness of banking, will cease to be subversive and interesting as well.

Not to mention that they'll continue to lack any kind guarantee from any legitimate state or even nonstate entity with any power whatsoever. After that subversive, disruptive, destruction premium is gone, that fact remains: You're either making money or you're not, and you either have some power backing your money or you don't.

I can't end this article without acknowledging the following. Yes, low interest rates are pushing money into the stock market and contributing to this bubble (again, if you believe it's a bubble). As we know, there's an inverse correlation between US Treasury bond yields and stock-market returns.

Regardless of the Fed, though, it is in the narrative we spin around this bubble that you'll find the frothiest behavior. That's where the bubble gets its name, and that comes from us.

So what shall we call this one?

SEE ALSO: Wall Street found a parasite growing in the US economy that could spur the next recession

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• Deutsche Bank Strategist Alan Ruskin argues that the mood for risk appetite in the markets is shifting.
• Ruskin references infamous 2007 "We're still dancing" quote from Citi CEO Chuck Prince.
• The developing fiscal story in the US will end up being very bad news for either stocks or bonds.

LONDON — "Has the music stopped playing?"

That's the question posed by Deutsche Bank Macro Strategist Alan Ruskin in a note circulated to clients on Wednesday. Ruskin's question — which references a famous comment from the Citi CEO Chuck Prince just before the financial crisis — is in its simplest terms whether or not risk appetite in the markets has started to shift.

"As long as the music is playing, you’ve got to get up and dance," Prince told the Financial Times in July 2007, just as the subprime mortgage collapse, which would eventually lead to the crisis, began to crystallise. "We're still dancing," he added.

Prince's comments related to the cheap credit-fuelled buy-out boom happening at the time, and later became synonymous with the hubris shown by many major bank executives in failing to spot the crisis coming, even as the US subprime crisis worsened in the summer of 2007.

Ruskin repurposes the comments to ask if what's going on in the markets right now a shift away from the prevailing narrative of recent years. His conclusion? "The music may not have stopped completely, but there is a change in tone."

What is happening, Ruskin argues, is a developing fiscal story in the US that will end up being very bad news for either stocks or bonds. Here's Ruskin in his own words (emphasis ours):

"Our worry here is as follows: If the US comes through with even a modest fiscal package in 2018 (call it a 0.5% of GDP increase in the cyclically adjusted primary deficit), the yield curve from short to back-end has plenty of scope to backup.

"If there is no fiscal package of even that modest magnitude, then the market’s next big questions have to relate to what this says about the dysfunction of the US political process, and any fallout in the mid-term elections. Political dysfunction could at the margin help T.Bonds, but may then damage global risk through the equity channel.

"The point is the US fiscal story sets up a fork in the road, whereby either the bond leg, or the equity leg, will not be nearly as risk friendly and vol suppressing as it has been in 2017 so far."

A similarly worrying pattern has started to emerge in the UK, where more and more companies have started to issue profit warnings in recent months, suggesting that some sort of downturn may be on its way.

"UK quoted companies issued 75 profit warnings in Q3 2017, significantly above average for the period and well above the 45 issued in the previous quarter. The biggest quarterly rise in profit warnings in almost six years has come directly after one of the biggest falls, reflecting the unpredictable economic climate," a report from EY notes.

Here's the chart:

Companies aren't the only ones affecting the mood music – central banks are also disrupting the tune.

Central banks are expected to start the reversal of the policy of ultra-low interest rates, even as the world shifts into a period of political uncertainty, in the form of events such as the election of President Donald Trump and the UK voting to leave the European Union.

The US Federal Reserve is expected to hike rates several times next year and in 2019 and shrink its $4.4 trillion balance sheet as part of a retreat from the monetary stimulus that has characterised policy in the years since the 2008 crisis. 

Meanwhile, the European Central Bank is widely expected to announce cuts to its asset-purchase program on Thursdsay and the Bank of England has warned market participants that it may raise rates as soon as November.

All these factors point to a reversal in risk taking.

Peter Elston, chief investment officer, Seneca Investment Managers, said: “There’s much talk about when the bull market in equities will end. We believe it will be around 2019, ahead of an economic downturn in 2020, but it’s vital to take action well in advance.

“This month we further reduced our equity holdings across all of our funds. With a global economic downturn expected in 2020, a bear market will set in ahead of this. We have created a framework to reduce our risk exposure gradually over time to avoid the need for drastic asset allocation changes once the market does turn."

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• Researchers found that earnings calls which use complex industry jargon tend to predict stock declines.
• Earnings calls which feature short, monosyllabic words are associated with positive results.
• "Natural language processing" could use that information to predict stock movements.
  

  ---

LONDON — Earnings calls have long been criticised for their use of corporate jargon and insider gobbledygook, but researchers now believe it contains valuable trading information.

Research from S&P Global Market Intelligence cited by the Financial Times has found that earnings calls featuring long-winded, polysyllabic language tend to come before a fall.

The FT cites the example of an second-quarter earnings call in April from the head of US software firm Seagate Technology. Stephen Luzco told analysts:

"I think from our perspective, we’ve always viewed this business as attractive in terms of its core business of selling into OEMs as well as servicing cloud service providers at one level, but really the opportunity to, I think, as architectures evolve and different customer needs evolve, to have the capability to optimize the devices either at the device level, at the subsystem level or the systems level, and if you do not have the software capability to do that, you really cannot take advantage of what we think would be a potentially significant long-term trend."

Following the call — which featured some of the most convoluted language of all S&P 500 earnings calls that quarter — Seagate's stock plummeted by 17%.

"When people have good news, they tend to say it directly. When they have bad news, they tend to dance around it," S&P's David Pope told the FT.

S&P's research forms part of the growing field of "natural language processing," a discipline which applies machine analysis to human language, and which investors believe could prove incredibly valuable.

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• Debenhams sales up 2%, but pre-tax profit down 44.2% as restructuring and a move to digital push up costs.
• The department store plans to trial in-store gyms and beauty bars as part of efforts to make its shops more profitable and a "destination."
• Two unprofitable stores are closing down and a further eight have been identified as at risk.

LONDON — Struggling British department store Debenhams on Thursday announced a raft of new initiatives to try and kick-start its business.

Debenhams announced plans to:

• Partner with Sweat! to offer in-store gyms, initially in three locations;
• Open beauty bars at its Oxford Street store in partnership with digital beauty brand blow LTD, which it invested in back in September;
• Open at least 50 new food and drink concessions within its stores, such as Nandos, The Real Greek, and health-focused Loaf & Bloom, a new brand developed by Debenhams.

Debenhams said the initiatives are part of its "mission to make shopping confidence-boosting, sociable and fun." The changes are part of new CEO Sergio Bucher's plans to "redesign" the department store. Bucher joined from Amazon in May last year and is trying to make Debenhams more digitally focused and reinvent stores.

The company said it has seen positive results from two "test labs" in its stores in Stevenage and Wolverhampton, which let the company quickly test out new ideas.

However, Debenhams full-year results, which were presented alongside the plans, highlight why it is in need of such a radical overhaul:

• Sales up by 2%, but flat in the UK;
• Earnings before exceptional costs down 7% to £217 million;
• Underlying pre-tax profit down 16% to £95.2 million;
• Reported pre-tax profit down 44.2% to £59 million.

Traditional retailers are grappling with the rapid rise of e-commerce, which often undercuts physical retailers on cost due to lower overheads.

Department stores are seen as particularly at risk, given the fact that most have large stores with high staffing and rent costs. Sears, one of the best-known department stores in the US, has been battling to avoid bankruptcy, for example.

Debenhams announced plans to close two underperforming stores, Eltham and Farnborough, in January. A review identified a total of 10 locations at risk of becoming unprofitable and Debenhams took a £10 million writedown on underperforming stores.

UK store sales fell 1.5% last year as customers turned to digital, with online sales rising by 1.4%. The business warned that the shift to online is also contributing to a rise in operating costs, which rose by 3.3% in the year.

Bucher said in a statement that Debenhams is making "good progress with implementing our new strategy."

"There is a lot to do but I am delighted with the enthusiasm and flair shown by my colleagues as we embark on this journey. I'd like to thank the whole team for delivering these results against a background of rapid change in the business."

Nick Bubb, an independent retail analyst, said Debenhams update is "long on words/hope and short on hard facts/current trading news."

Bucher said: "The environment remains uncertain and we face tough comparatives over the key Christmas weeks. However, we are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams."

Neil Wilson, a senior analyst at ETX Capital, said in an email: "Debenhams would appear to embody many of the struggles facing the high street. Shoppers are going online; the weak pound is pushing up input costs, hitting margins; and labour costs are rising."

Debenhams shares opened lower on Thursday but are 2% higher after around half an hour of trade. The share price has been boosted by 57% growth in mobile sales for Debenhams, suggesting its digital push could pay off.

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• Calm waters in the markets hurt trading revenues at Barclays in Q3.
• The third quarter was clearly a difficult one for our Markets business," CEO Jes Staley said.
• Overall profits, however, jumped by 19% before tax to £3.4 billion.

LONDON — Global markets are too quiet for Barclays' markets business, which the bank said on Thursday was hit "hard" during the third quarter of 2017.

Barclays reported its third quarter results on Thursday, and broadly speaking, they were pretty good. Profits jumped by 19% before tax compared to the same period in 2016, which the bank put down to "lower litigation and conduct and Non-Core costs." Profits were £3.448 billion in the quarter.

Beyond the headline number, however, and Barclays' markets business didn't have much fun in the quarter, with the lack of volatility to blame. 

In the words of the bank:

"Markets income decreased 14% to £3,535m reflecting a 27% reduction in Macro income to £1,314m, due to lower market volatility and the impact of exiting energy-related commodities, as well as an 8% reduction in Equities income to £1,267m driven by lower equity derivatives revenue, partially offset by improved performance in cash equities and equity financing.

"The third quarter was clearly a difficult one for our Markets business within BI. A lack of volume and volatility in FICC hit Markets revenues hard across the industry, and we were no exception to this trend," Chief Executive Jes Staley said in a statement alongside the results announcement, reinforcing the numbers.

Staley, however, was broadly positive about the state of the bank in his statement, saying: "The third quarter of 2017 was particularly significant for Barclays as it was the first for many years in which we have not been in some state of restructuring.

"Having closed the Non-Core unit, and sold our controlling interest in Barclays Africa in June, we now have the end state Transatlantic Consumer and Wholesale Bank - in Barclays UK and Barclays International - which we set out to build in March of 2016."

The bank's investors have not taken well to the news of a tough trading season, dropping close to 6% in the first hour of London trade, to just £1.86 per share, a drop of around 11 pence, as the chart below shows:

By no means is Barclays alone as a big bank struggling to make money in its markets business in the current climate, with Deutsche Bank flagging similar problems in its results, which were also released on Thursday morning.

 "The revenue environment remained challenging," Deutsche Bank CEO John Cryan said in a statement.

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

1. The European Central Bank is set to cut back on its bond-buying stimulus and take the biggest step yet in unwinding years of loose monetary policy. The central bank, however, is still concerned about low inflation and is expected to accompany the tapering with an extension of the stimulus in a "less-but-for-longer" move. The ECB's decisions will be announced at 12.45 p.m. BST (7.45 a.m. ET) followed by a press conference with President Mario Draghi 45 minutes later.

2. British retail employment suffered a record decline in the third quarter of 2017. Hours worked in UK retail fell by 4.2% compared with the same quarter a year ago, according to the British Retail Consortium (BRC). The decline is an acceleration from a 3.3% fall in the second quarter and the steepest fall since the BRC began measuring employment in 2008.

3. The banking sector contributed £35.4 billion to the public purse in 2016/17, up from £34.2 billion last year, according to a report commissioned by UK Finance and based on auditor PwC's analysis of 36 banks. Overall, 47.6% of the surveyed banks' profits were paid in taxes. Taxes collected were boosted by the introduction in 2016 of the banking surcharge, as well as an increase in corporation tax.

4. Uncertainty is growing within central London's commercial property market, with nearly three-quarters of respondents in a new survey suggesting the market is heading towards a downturn. 73% of surveyors responding to RICS' quarterly UK Commercial Market Survey said the central London market was at some stage of a downturn, while 67% of respondents said the market is overpriced.

5. The Bank of Canada held its key interest rate at 1.00% on Wednesday, as expected. "This less aggressive stance on interest rates partly reflects concerns over NAFTA renegotiations and, to a lesser extent, the stronger Canadian dollar," David Madani, senior Canadian economist at Capital Economics, said. 

6. A market-wide selloff whacked tech stocks on Wednesday amid a mixed bag of earnings and mounting political uncertainty. The damage spread to the so-called FANG group — consisting of Facebook, Amazon, Netflixand Google — sending it down as much as 1.3% intraday and providing a troubling omen just one day before a crucial period of tech earnings was set to kick off.

7. Saudi Arabia's stock exchange aspires to be the exclusive venue for the listing of Saudi Aramco's initial public offering, the exchange's Chief Executive Officer Khalid al-Hussan said on Thursday. The exchange, known as Tadawul, is working hard to convince Aramco of the merits of such a move, but the company had not yet made a decision, al-Hussan said.

8. President Donald Trump appeared to solicit suggestions for the next Federal Reserve Chair during an interview with Fox Business host Lou Dobbs on Wednesday. "Do you have a preference, out of curiosity," Trump asked after Dobbs began speaking about the position. "Tell me who your preference is."

9. New York City has surpassed San Francisco as the region whose startups attract the most venture capital money, thanks in large part to a mega-round of funding scooped up by co-working company WeWork. VCs invested $4.227 billion in NYC companies over the third quarter of 2017, compared to $4.177 billion in funding for companies in San Francisco and the North Bay Area. These numbers come from the recently released Q3 2017 MoneyTree Report from PwC and CB Insights. 

10. Britain's economy grew faster than expected in the third quarter of 2017, according to a preliminary estimate released by the Office for National Statistics on Wednesday. GDP grew by 0.4%, the ONS said, while annual growth was 1.5%. Prior to the release economists had forecast 0.3% growth, in line with growth in the second quarter of the year, but the data shows a small acceleration from the previous quarter.

And finally ... Business Insider is looking for nominations for the hottest young talents in British finance right now. If you, or anyone you know, is making waves in the City of London (or anywhere else in the UK) and is under 31, we'd love to hear from you. Get in touch on social media, or email: [email protected].

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• The Lord Mayor of the City of London is an incredibly busy man, so needs effective ways of managing his time.
• Staff have devised a code to get him out of meetings if they're overrunning.
• Andrew Parmley spoke to Business Insider as he brings his year as Lord Mayor to a close.

LONDON — "The Archbishop of Canterbury is on the phone, and he'd like a word."

If you ever find yourself in a meeting with the Lord Mayor of the City of London and hear a staff member say those words to the mayor, your time is, unfortunately, up.

The phrase is used by household staff in the Mayor's office — based in the Mansion House close to the Bank of England in the heart of the City — when meetings overrun and the Mayor is needed at another appointment.

"The code in the house is that if somebody overruns, a member of staff opens the door and says 'The Archbishop of Canterbury is on the phone, and would like a word,' Parmley told Business Insider in an interview earlier this week.

"When that happens, I say 'Thank you for coming. It's been a pleasure, but I've got to go.'"

This is just one of the tricks used by the Lord Mayor, the City of London's top , to effectively manage his time.

Although the Lord Mayor position only lasts a year, the daily schedule is punishing. Parmley told BI that he tends to have between 12 and 20 meetings per day, all done in 30 minute slots. 

Those meetings can include anything from audiences with the prime minister, to an abseil down the Cheesegrater, to media interviews. On the day that Business Insider met with Parmley, his schedule included lunch with the Archbishop (a real one, not one to get rid of us), a visit from the City's chaplain, and a dinner to celebrate the opening of Bloomberg's £1 billion new headquarters.

• SEE ALSO: 'We've got 6 weeks left before we've lost the battle': The City's top official has a stark warning about the coming Brexit 'exodus' from London

"Last Monday was a 20 event day," Parmley said, adding that he is "down to about three hours of sleep" per night as he deals with the myriad roles that being the Lord Mayor entails.

As well of promoting the city's interests domestically, the Lord Mayor's role is international. In his year in office Parmley has visited countries including Nepal, Colombia, and numerous African countries to discuss how the City can work with governments in these countries.

One frequent collaboration is the Lord Mayor helping to find financing opportunities for infrastructure projects in developing nations.

"I've learned over this year the significance of infrastructure, how one finances infrastructure, and the benefits its brings to people, particularly when it comes to roads and railway lines," he said.

Parmley, who is originally from Blackpool, has also tried to foster good relations between the City and the UK's regions. A notable example of this, he says, came during a meeting with Greater Manchester's Mayor Andy Burnham earlier in the year.

"I happened to be sitting in Andy Burnham's office on the day that Mr Grayling [Transport Secretary Chris Grayling] announced that we're going to have Crossrail 2, but we weren't having HS2 and HS3," he said.

"I had to explain that I'm not a politician, and I don't have any greater access to the prime minister than he does. But I said, what I do have access to is people who know where to find financing arrangements.

"So, if you and I can agree that you need HS2 and HS3, and we need Crossrail 2, why don't we crack on and get all those things built at once for the greater good of the country."

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• New Bank of England paper explores bond bull markets since the 13th century.
• The current market, at 34 years, is the second longest in recorded history.

LONDON — We're currently living through the second longest bond bull market in recorded history, and the longest since the 16th century, according to a new research paper from the Bank of England.

Written by Paul Schmelzing, a Harvard PhD candidate currently working with the bank, the paper, titled "Eight centuries of the risk-free rate: bond market reversals from the Venetians to the ‘VaR shock’" — explores hundreds of years of data around real rates and bonds.

"This paper presents a new dataset for the annual risk-free rate in both nominal and real terms going back to the 13th century. On this basis, we establish for the first time a long-term comparative investigation of ‘bond bull markets’," Schmelzing writes.

The paper — which started out as an entry on the Bank of England's staff blog, Bank Underground — argues that the current bull market in bonds is only surpassed by one longer period of growth in recorded history.

"The average length of bond bull markets stands at 25.8 years, and the range falls between 61 years (1451-1511) and 12 years (1718-1729). Our present real rate bond bull market, at 34 years, is already the second longest ever recorded," Schmelzing writes.

Here's the chart (note that blue shaded areas represent periods of bull markets):

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• Gerry Harvey and Mark Yallop, of the FICC Markets Standards Board and Bank of England's Prudential Regulation Committee, talked to Business Insider about banking culture and malpractice.
• The same 26 patterns of misbehaviour repeat over time in 25 year cycles, they said.
• Post-financial crisis, said Yallop, "people are not interested in scoring points anymore."

LONDON – Misconduct in financial markets comes in 25-year cycles and in 26 guises.

Over the last 200 years, all cases of market misconduct in the UK have fallen into 26 patterns of illicit behaviour, according to a study done by industry body the FICC Markets Standards Board (FMSB).

This repetition is fuelled by a "generational-type problem,” Mark Yallop, Chair of FMSB and a member of the Bank of England's Prudential Regulation Committee tells Business Insider, in which younger generations fail to learn from the mistakes of those that came before them.

"Somebody said to me things happen on a 25-year cycle," he says, because "people's careers are 25 years long... It was a flippant remark, but actually there is some truth in it."

But this problem can be exploited, says Gerry Harvey, CEO of FMSB, since cycles makes future problems predictable.

"We're not dealing with cases when a genius comes along and reinvents things," he says. "By nature of the beast, by nature of the structure and operations of the market place, people are roughly doing the same thing, so it's not unusual or startling these things repeat," he says.

In order to break this cycle, he says, the debate about how to address malpractice needs to "reformulate,” from being reactive to "forward-looking." 

An ambitious goal

FMSB is working with international banks, investors and other stakeholders to create a set of clearly-worded global standards to address conduct problems revealed after the financial crisis, which everyone in the sector can understand.

"No one has ever been able, in the past, to write down what should be happening to stop this stuff happening in an enduring way," says Yallop. "It's ambitious."

From the early 1980s, he says, there has been a "one way trend of increasing globalisation,” which, alongside the rise of technology, has "exploded the scale of trading in markets."

As a result, he says, many more people are involved in financial markets than were even 30 years ago, increasing the potential for malpractice.

During the financial crisis, he says, the "levers that connect the tops of firms" to individual traders on the floor of banks broke. "People in retail bank branches in Dartmouth... had no idea what the Chief Executive of their banking group in London thought about life," or what he wanted to achieve, he says.

One major cause of this disconnect was a "conduct void," or a lack of granular, day-to-day guidance on best practice. This gap has also entrenched the 25 year cycle.

Addressing conduct in wholesale financial markets requires "a different approach," says Yallop, which must be "market-driven" rather than regulator-driven.

Regulators, he says, "are always on the back foot:" they have less information and fewer experienced people, and their concerns are "bounded by the economy that they're trying to protect." Meanwhile, markets are global, and take no notice of "borders between the EU and London, or whatever might be the geographical border of interest at any particular time."

Is banking culture ready to change?

The financial crisis, says Yallop, was a "disgraceful, utterly appalling set of events." But, he says, banks, investors and others working in the sector now seem keen to discuss how to improve market conduct. "To my surprise," he says, stakeholders he speaks to around the world "lap this stuff up with great enthusiasm."

Although he's wary of using expressions like "genuine cultural change," Yallop says over time there is likely to be a "cultural bi-product" of improved standards, "namely, changes in people's behaviours on the trading floors."

"People are not interested in scoring points any longer," he says. "There's a widespread recognition that the aftershocks of the crisis are just mind boggling, and no one wants to play games with theories of how you should regulate firms that potentially risk some repeat."

Harvey agrees that FMSB's efforts to engage key international players have so far been broadly successful, and is optimistic about developing a global set of standards to fill the everyday "conduct void."

"People don't want grey," he says. "I spent my life on the trading floor with people saying, 'Gerry, so and so wants to do this, what's the answer?' I don't get that from looking in a statute book, I don't get that from looking in a rule book, it's from experience, it's what you know about markets."

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• Hours worked in UK retail fell by 4.2% in the third quarter, retail jobs shrunk by 3%.
• It's the steepest decline since the monitor began in 2008.
• 'A technological revolution in retail' and government policy driving the decline.

LONDON — British retail employment suffered a record decline in the third quarter of 2017.

Hours worked in UK retail fell by 4.2% compared with the same quarter a year ago, according to the British Retail Consortium (BRC). The decline is an acceleration from a 3.3% fall in the second quarter and the steepest fall since the BRC began measuring employment in 2008.

The total number of retail jobs decreased by 3% — another record. Full-time jobs falling at a faster rate than part-time.

Helen Dickinson, CEO of the BRC, said in a statement: "The pace of job reductions in the retail industry is gathering steam.

"Behind this shrinking of the workforce is both a technological revolution in retail, which is reducing demand for labour, and Government policy, which is driving up the cost of employment. With both supply and demand pushing in the same direction, it’s little surprise that we’re seeing fewer people working in the industry."

High Street chains are struggling to cope with the rise of online rivals such as Amazon, ASOS, and Boohoo, who are squeezing margins thanks to their lower overheads. 

A senior executive at a well-known British retailer told Business Insider: "When you're a big league retailer, you're spending all your time keeping the shops open and keeping stock on the shelves. Then you have new players opening up all the time and taking slices of your business. Individually it's not a big problem but they add up."

Richard Hyman, an independent retail analyst, told Business Insider: "Tech is changing the economic shape of the industry for ever. Retail is becoming a gradually less profitable industry.

"Tech helps to strip people out of the equation and it is no surprise to see rising job losses across the industry. This poses a massive challenge to retailers. Added value in retail is delivered through people and however much their PR departments might dress it otherwise, we are seeing a progressive diminution of customer service across the sector."

The global trend has led to what has been dubbed a "retail apocalypse" in the US, with thousands of stores facing closure.

While things aren't as bad in the UK, retailers are reducing their store footprints and cutting down on staff to cope with shifting consumer shopping habits.

However, it's not all doom and gloom. Store numbers increased by 2.4% in the third quarter as more smaller convenience stores were opened. 50% of BRC respondents also said they plan to increase hiring in the fourth quarter to cope with the Christmas quarter, traditionally the busiest time in retail.

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• RICS UK Commercial Market Survey finds both domestic and foreign investment demand at the national level has picked up
• But sentiment in London is more cautious: Nearly three-quarters of UK surveyors believe Central London's office market is in some stage of a downturn.

LONDON — Uncertainty is growing within central London's commercial property market, with nearly three-quarters of respondents in a new survey suggesting the market is heading towards a downturn.

73% of surveyors responding to RICS' quarterly UK Commercial Market Survey said the central London market was at some stage of a downturn, while 67% of respondents said the market is overpriced.

Issues currently dampening demand for hyper-expensive commercial London property include a market which looks fully-priced, as well as uncertainty surrounding the future of London's role as a global finance hub after it leaves the European Union.

Simon Rubinsohn, RICS chief economist said: "The feedback to the ... survey reflects some of the broader macro issues, with the underlying momentum in the occupier market a little firmer further away from the capital."

Rubinsohn also played down fears an interest-rate hike from the Bank of England — likely to occur next month — will damage the commercial market significantly.

"A key issue going forward will be how the market responds to the likely first interest rate rise in a decade next month," he said.

"Given that expectations are only for a modest tightening in policy, the likelihood is that it will be able to weather the shift in the mood music. But this remains a potential challenge if rates go up more than is currently anticipated.”

At a national level, there was a pick-up in both domestic and foreign demand. 20% of respondents saw an increase (rather than decline) in investment enquiries across industrial, office, a up from 10% in the second quarter.

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