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Sprint and T-Mobile are reportedly working to save their merger after talks breakdown (S, TMUS)

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

john legere t-mobile

  • Sprint and T-Mobile are reportedly working to save their merger after earlier talks failed. The wireless carriers could announce a deal within weeks as Sprint considers a new offer from T-Mobile, according to a report by The Wall Street Journal's Ryan Knutson and Dana Mattioli on Thursday.
  • Sprint shares gained as much as 5% in extended trading, while T-Mobile rallied 3%. 
  • Nikkei reported earlier this week that talks ended after SoftBank, the Japanese telecom company that owns Sprint, insisted on retaining a controlling stake in the combined firm. Deutsche Telekom, T-Mobile's owner, showed interest in taking control but was rebuffed, the report said.
  • SoftBank looked into buying T-Mobile as far back as 2014 but backed down after telecom regulators made it clear they would block any acquisition of the fourth-largest US carrier. 

SEE ALSO: The GOP tax plan has the real-estate industry in a panic and talking about housing recessions

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Funding the Blockchain Future of the Digital Media Industry

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

Funding the Blockchain Future of the Digital Media Industry

BTC Media, the largest media group in the blockchain and cryptocurrency space, announced the launch of BTC Labs, a venture studio focusing on launching and incubating blockchain applications for the digital media industry on September 25, 2017.  

BTC Labs, in turn, introduced Storyboard Ventures, a venture financing arm of the organization, seeded with $2 million to fund forward-thinking and promising media projects. According to BTC Media, Storyboard Ventures will be vigorously searching for those entrepreneurs who are “building use cases that leverage decentralization to disrupt longstanding inefficiencies” within the digital media industry.

“The internet drastically altered how we consume and distribute information, but the media industry has failed to adapt its underlying business model,” Jeremy Kandah, Storyboard Venture’s Portfolio Manager, said in a statement.

“Blockchain technology is revolutionizing the way that digital information is transacted, creating a host of new monetization models and connecting content creators directly with consumers. Storyboard Ventures will support the projects and pioneers shaping this media landscape of the future.”

On November 1, 2017, BTC Labs announced their second project, the MAD Network, a decentralized ecosystem for the ad tech industry designed to return lost value to advertisers and publishers. The MAD Network will become the programmatic advertising platform within BTC Labs’ decentralized media suite, a collection of blockchain-based tools for the media industry.

BTC Labs is working closely with the MAD Network to develop its technical architecture, as well as advising them on their upcoming token sale, which will take place on November 30th, 2017.

“The MAD Network is one example of the suite of decentralized media applications that BTC Labs will support through research, development and funding,” Tyler Evans, CEO of BTC Labs, said to Bitcoin Magazine. “It is a perfect use case for distributed ledger technology because it takes the value that is traditionally captured by middlemen and brokers in the digital advertising ecosystem and instead, redistributes that value to the stakeholders in the network.”

“BTC Labs has been instrumental in the development of the MAD Network,” Adam Helfgott, Project Lead at the MAD Network, said. “We’ve been able to leverage their breadth of expertise and knowledge in the blockchain space to help formulate our development plan and go-to-market strategy.”

The first project backed by the venture studio was Po.et, a protocol utilizing and implementing blockchain technology and timestamped metadata to accelerate solutions for the publishing industry. BTC Labs developed the core architecture behind Po.et and helped guide the organization through a successful token sale process. As Bitcoin Magazine is a brand of BTC Media, all content of the publication is verified via Po.et.

Blockchain technology has allowed for increased innovation, resulting in more equitable ways of sharing data and exchangin value. These new benefits of blockchain technology can be also implemented within the media industry to tackle numerous issues, including intellectual property registration, content monetization, licensing, ticketing and ad-tech.

BTC Labs will focus on both the blockchain and media industries with an aim to support disruptive, open-sourced and decentralized networks. It recognizes that, in a decentralized network, every stakeholder can retain the fair value of their work. Thus, the innovation studio will develop decentralized networks to empower not just content creators but also brands and consumers.

Disclaimer: BTC Inc. is the parent company of BTC Media and Bitcoin Magazine.

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Bitcoin Price Analysis: Bitcoin’s Parabolic Envelope Could Push to $8000s

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

Bitcoin Price Analysis

Bitcoin has had a quite a year thus far, to say the least. A 10x return since the beginning of the year has put bitcoin on a parabolic growth path that is testing the limits of this 2-year long bull market:

Figure_1 (17).JPGFigure 1: BTC-USD, 3-Day Candles, Parabolic Growth Envelope

The gains have been incredible for those trading bitcoin for the last couple years, and it appears that this parabolic envelope is coming to a close. In order for this bull market to remain viable, it will need to keep up on a very aggressive, parabolic growth path that has the immediate upper resistance at between $8,000 – $9,000. Similarly, the lower support is around $5,800.

A break of either the support or resistance will put bitcoin in a very precarious position. If bitcoin breaks the upper, parabolic resistance trend and manages to find support on the trendline, this could signal an entirely new bull market. However, if bitcoin breaks the lower support, this would send a very, very bearish signal to traders, indicating a breakdown of the 2-year long bull market.

Given the trend we have seen over the last two years, it would not be at all surprising to see a test of the $8,000s before any sort of market correction (micro or macro) takes place. We are on a very aggressive growth path and, on a macro-scale, one that has has shown a consistent trend of testing the upper curve prior to correction.

This is a very strong bull market and it it should not be underestimated. However, in an effort to remain objective, it’s important to present the not-so-obvious argument and state the consequences of a disruption of this macro bull market.

Figure_2 (14).JPGFigure 2: BTC-USD, 1-Day candles, Retests of Previous All-time Highs

Throughout the life of this parabolic run, bitcoin has shown a penchant for retests during market pullbacks. We can see in the image above that every time the market peaks the upper resistance curve, it has pulled back to retest the previous all-time high before the resumption of uptrend. Part of the consequences of this parabolic growth is we are at a point where the growth is so aggressive that a retest of the previous all-time high would throw the market trend well outside the parabolic envelope. And, as stated above, that would send a very strong macro bearish signal to traders and investors as this marks a breakdown of the 2-year long trend.

Summary:

  1. The parabolic trend bitcoin has seen over the last two years is approaching a very aggressive level that could make bitcoin see aggressive price swings in the coming weeks.

  2. The upper boundary of the parabolic curve could have bitcoin testing the $8,000s.

  3. A break below the lower curve could spark a macro bear market as this signals the breakdown of the bull market’s multi-year trend.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.




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The head of JPMorgan’s nearly $2 trillion funds business issued a stark warning for a large group of Wall Streeters (JPM)

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

Mary Erdoes

  • Mary Erdoes, the head of JPMorgan Chase's $1.9 trillion asset and wealth management business, painted a bleak future for many Wall Street stock analysts at a conference Thursday.
  • Asset managers like JPMorgan are expected to slash research budgets by as much as 50% in response to European regulatory reform known as MiFID II.
  • That means money to pay analysts will shrink, leaving only top-tier talent with a higher standard of excellence.
  • "I was dealing with 10 of you; I don't want 10 of you anymore, I only want the five best of you," Erdoes said. 

 

Wall Street stock analysts are about to find themselves on the chopping block, and only the best will survive. 

That was the hard truth Mary Erdoes had for a room full of analysts Thursday at the BancAnalysts Association of Boston Conference.

Erdoes, the head of JPMorgan Chase's $1.9 trillion asset and wealth management business, was asked about impacts from MiFID II — Europe's sweeping financial regulatory changes that will be implemented in 2018 — and painted a future in which asset mangers chop their budgets and only pay for research from top-tier analysts.

"On the buy side, the larger firms will absorb the costs and figure out how that cascades its way through," Erdoes said. "It probably means they'll tighten up a lot on what they spend on sell-side research, which is why the two go hand in hand."

Firms are planning to make cuts because MiFID II requires asset managers pay for research separately from commissions for trading execution, whereas it previously often came bundled with other products. 

Most of the largest asset managers, including JPMorgan, are absorbing the multi-million dollar costs and funding the research internally, rather than passing the costs on to their customers.

"I only want the five best of you."

This is bad news for stock analysts, as it could result in a 50% "compression" in research budgets, according to Credit Suisse. That means less money to go around.

Erdoes plainly laid out what happens next: "I was dealing with 10 of you; I don't want 10 of you anymore, I only want the five best of you."

She noted that the sell-side research industry had already contracted massively in recent years, with investment banks spending "50% of what they used to spend."

"So you're the precious few. The rest of them are not here. Maybe this room was five-times bigger before, I don't know," Erdoes told the audience of analysts, many of whom would presumably not be there the following year given the looming cuts.

The upside? The research quality will improve as the fat is trimmed. 

"It'll just make the industry better," Erdoes said. "It will constantly get you to excellence and get rid of the less than excellence."

That's the cold hard truth sell-side stock analysts are facing: If you're not in the top-tier, the Mary Erdoes's of the world won't have much use for you anymore. 

Some who get edged out, however, will likely find work within buy-side asset managers, she added. 

Erdoes also anticipates the number of sell-side research providers will shrink, as the smaller firms will have to price competitively with the larger firms while still paying for top talent. 

"It's going to be very difficult for the the bespoke, research-driven firms to be able to do that on the sell side," Erdoes said.

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Bitcoin Price Tests $7,000 Following Flash Crash

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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STOCKS CLIMB: Here's what you need to know

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

WASHINGTON, DC - NOVEMBER 02: House Way and Means Chairman Kevin Brady (L) (R-TX) and Speaker of the House Paul Ryan (R) (R-WI), joined by members of the House Republican leadership, introduce tax reform legislation November 2, 2017 in Washington, DC. The tax reform legislation is a centerpiece of U.S. President Donald Trump's legislative agenda. (Photo by Win McNamee/Getty Images)

Stocks climbed late in the afternoon, with the Dow closing at a new high. Earlier, Trump announced his decision for Jerome Powell to replace Janet Yellen as Fed Chair and the GOP finally unveiled its massive tax plan.

First up, the scoreboard:

  • Dow: 23,525.93, +90.92, (+0.39%)
  • S&P 500: 2,580.33, +0.97, (+0.04%)
  • Nasdaq: 6,716.97, +0.46, (+0.01%)

1. Trump chooses Jerome Powell to replace Janet Yellen as Fed ChairPowell is seen as a relatively safe, Wall Street-friendly choice at a crucial time for the central bank. The Fed has begun the process of raising interest rates from post-recession lows and is unwinding its massive asset-buying program — a response to the financial crisis a decade ago.

2. House GOP leaders on Thursday unveiled the "Tax Cuts and Jobs Act," which includes a broad set of proposed changes to the corporate and individual tax systems. 

  • House Ways and Means Committee Chair Kevin Brady, the author of the tax bill, said the bill would add $1.51 trillion to the federal deficit over the next 10 years. 
  • The Senate is set to use the process known as budget reconciliation to move the bill and avoid a Democratic filibuster.
  • Brady, House Speaker Paul Ryan, and other House GOP leaders touted the bill in a press conference on Thursday and argued it would save the average family of four $1,182 a year on their taxes.
  • Here's how your tax bracket may change under the new tax plan, in one chart.

3. The tax plan has the real-estate industry in a panic and talking about housing recessions. The plan would cap the mortgage-interest deduction — which allows homeowners to subtract interest payments from their taxable income — on new homes at $500,000. This could dampen the benefit of the deduction outside of the most expensive housing markets and may lower home values. "We're worried about a national housing recession," Jerry Howard, the CEO of the National Association of Home Builders, a lobbying group based in DC, told Business Insider.

4. A part of the new tax plan will be tough sell for Republicans in New Jersey, New York, and California. The bill proposes the elimination of the state and local tax (SALT) deduction, which is a benefit that allows people to deduct those taxes from their federal bill. This is a hangup for Republican representatives in districts that benefit from the deduction. 

5. The companies most likely to benefit from the tax plan surged. These companies can be broken into two main groups: (1) Those who pay the most taxes, and would, therefore, benefit most from a cut, and (2) those with the most cash stashed overseas and would see a huge windfall from a proposed one-time repatriation tax holiday.

Diving deeper into the new tax bill:

In other market news:

Bitcoin passes $7,300.

Alibaba surged after beating on earnings and boosting its outlook for the year.

Facebook said Thursday that it's looking into calls to cut off the far-right website Breitbart from its ad network.

We keep hearing that billionaire hedge funder Steven Cohen has been crushing it recently — and just at the right time.

Bridgewater, the world's largest hedge fund, faces a race against time to avoid a loss in its biggest strategy.

SEE ALSO: Xi Jinping is officially China's most powerful leader since Mao — here's what that means for the economy

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NOW WATCH: THE BOTTOM LINE: Chipotle's earnings disaster, Amazon's new headquarters, and the unstoppable stock market

The emergence of a new kind of fund could 'radically alter' the investment industry

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

trader surprised shocked

  • Passive investment has exploded in popularity, putting pressure on active managers that charge higher fees.
  • Variable pricing mutual funds are a way that active managers can charge fees on a performance-driven basis, but they're not without their risks

 

The popularity of low fee exchange-traded funds has come at the expense of active managers, who now have no choice but to fight back. And in order to stay afloat, they're going to have to get creative.

That could very well involve reinventing themselves by charging fees based on performance. While that may seem obvious, most funds have historically charged their clients a flat management fee, regardless of returns.

Now it may be in their best interest to implement so-called variable pricing mutual funds, the adoption of which could "radically alter" money management as we know it, according to Citigroup.

"The rise of passive investment management has undermined the profitability of the asset management industry," Robert Buckland, chief global equity strategist at Citigroup, wrote in a client note. "The stock market has recognized this. In the old days, asset managers used to outperform the bull market. That is no longer the case. Companies need to reinvent themselves."

How did it come to this?

Before we get into the specifics of the potentially game-changing variable pricing funds, let's take a step back and assess how we ended up in this situation.

At the root of the shift has been the proliferation of passive investment, as Buckland mentioned above. ETFs, which typically follow and index and stand in contrast to their actively managed mutual fund counterparts, have become one of the world's hottest investment products.

According to the EPFR, passive equity funds have seen global inflows of $620 billion in the past 12 months, while active funds have seen outflows of $359 billion. In terms of sheer size, the combined assets of US ETFs hit $3.1 trillion in August, increasing roughly $700 billion in a single year, Investment Company Institute data show.

A big part of this divergence in flows stems from how much cheaper passive funds are. Citigroup notes that the average charge for a US-based active equity mutual fund is currently 84 basis points, compared to just 11 basis points for passive. Hence the importance of active managers making their pricing more attractive.

The potentially game-changing role of variable pricing mutual funds

That's where variable pricing mutual funds come in. Pioneered by AllianceBerstein earlier in 2017, the methodology is simple: the bigger the outperformance, the bigger the fee.

Citigroup finds that this fee structure generally delivers investors better net returns than at the present time, except during periods of substantial outperformance. In other words, they may cap potential upside, but they also don't leave investors wanting more in the event of more average returns.

It also incentivizes the mutual fund managers to crush their benchmarks, especially since they'll get a smaller fee if performance is middling. Here's a visual representation:

Screen Shot 2017 11 02 at 2.28.40 PM

With all of that in mind, Citigroup says these funds will "radically alter" the industry in the following four ways:

  • Management fee rates and thus revenues would likely tumble for many players
  • Underperformance could rapidly consolidate the market should the product find mass adoption
  • It could raise execution risks around compensation and expense management, capital management, and introduce significant P&L volatility
  • The industry's multiple would likely compress

Where do we go from here?

In addition to the risks outlined above, Citigroup also sees active manager margins coming under serious pressure during periods of market losses. And such a development would hit investors right in the wallet, given the "significant cultural pressure on compensation" that would likely result from lower fees.

Citigroup also warns that potential investors in variable pricing mutual funds could end up paying high fees for trailing performance that they didn't themselves enjoy. On the flipside, following weak periods, the firm says that funds would have to worry about "free riding" — the mutual fund version of value investing, which involves finding underpriced assets with strong upside.

Overall, variable pricing mutual funds are an intriguing proposition, but one that certainly has its fair share of drawbacks. Still, no one ever said disruption was easy. And regardless of whether these vehicles become widespread, it's clear that active managers must somehow adapt to survive.

SEE ALSO: The investment chief at the world's first tax-reform ETF tells us how to trade Trump's plan

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A revolutionary gene-editing technology is on track to be a $10 billion market by 2025

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

dna cut and paste crispr

  • CRISPR, a revolutionary gene-editing technology, has only been around for a few years, but its use has already exploded among the life sciences.
  • According to a new report by Citi GPS, the market for CRISPR will go to $10 billion by 2025.
  • It's a big leap considering that the technology hasn't been tested in human trials yet in the US and the market's currently less than $1 billion.


A revolutionary gene-editing tool will grow into a $10 billion market in 2025, according to a new report by Citi GPS.

CRISPR, short for "clustered regularly interspaced short palindromic repeats," is a revolutionary tool that allows researchers to go into a cell's DNA and modify a mutated part of the gene, a process known as gene editing. It's currently being used in research settings, and it has the potential to be used to treat diseases, enhance agriculture and livestock, and even modify human embryos. 

"The shift to CRISPR genome editing and the rapid expansion of its use is expected to have a disruptive and far-reaching impact on multiple branches of science and medicine," Citi biotech analyst Yigal Nochomovitz wrote in the report.

Getting to a $10 billion market

The technology is still relatively new. CRISPR as it's being used today has only been around since 2012, and trials to see how the technology works in humans have yet to kick off here in the US, though human trials have begun in China. According to Citi's report, human trials in the US are expected to kick off in late 2017 or early 2018. 

But there have been some promising developments, which led Nochomovitz to think that the technology would have a huge market potential in the next eight years, up from the less than $1 billion market size it has in 2017. 

Nochomovitz said:

"Currently the CRISPR market is small, with its main offerings dedicated to lab work and scientific research via research toolkits. However, the real economic potential of CRISPR lies with human therapeutics. With CRISPR-based therapeutics having already entered human trials last year in China, the first CRISPR-based medicine could reach the market in ~6 years or less."

"If CRISPR gene editing works in early test cases of human disease, the long-term upside for the technology could be much, much greater," Nochomovitz added.

By Citi's count, there has also been more than $300 million in venture funding for gene-editing startups, and the publicly traded companies in this space have a combined $3 billion+ market cap.

SEE ALSO: Meet the 30 biotech leaders under 40 who are searching for breakthrough treatments and shaping the future of medicine

DON'T MISS: A startup cofounded by a 31-year-old just got a step closer to transplanting pig organs into humans

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(+) Trade Recommendation: Litecoin

CryptoCoins News, 1/1/0001 12:00 AM PST

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Trump plays it safe with Fed chair pick choosing Jerome Powell to replace Janet Yellen

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

U.S. Federal Reserve Chair Janet Yellen (L) congratulates Fed Governor Jerome Powell at his swearing-in ceremony for a new term on the Fed's board, in Washington in this handout photo taken and released June 16, 2014. REUTERS/U.S. Federal Reserve/Handout via Reuters

  • Jerome Powell, the current Fed board governor and former private-equity executive, is US President Donald Trump's pick to replace Janet Yellen as the central bank's chair.
  • Powell will face key decisions, including honing consensus around whether to continue raising interest rates in a steady-growth but low-inflation environment.
  • He is seen as the safe bet, having already served on the Fed for 5 years. 
  • Janet Yellen's term ends in February. 


US President Donald Trump has named Jerome Powell, a current Federal Reserve governor and former finance executive, as his choice to replace Janet Yellen as chair of the world's most powerful central bank — ending months of speculation about who would take charge.

Powell, who is expected to be confirmed to the role, will face key decisions on whether to continue raising interest rates as the economy sends mixed signals about the growth outlook and US inflation remains well below the Fed's official 2% target.

Powell is seen as a relatively safe, Wall Street-friendly choice at a crucial time for the central bank. The Fed has begun the process of raising interest rates from post-recession lows and is unwinding its massive asset-buying program — a response to the financial crisis a decade ago.

Trump's decision not to grant Yellen a second term as chair is a break with the recent tradition of presidents nominating sitting chairs to a second term, even when they have different political affiliations. Yellen is a Democrat and served in the administration of former US President Bill Clinton. Her term ends in February.

Still, Powell does offer continuity of sorts, and in that sense is the best alternative to Yellen among those who were on Trump's shortlist of candidates. Other candidates reportedly considered included White House adviser and ex-Goldman Sachs executive Gary Cohn and Kevin Warsh, a former Fed governor and Morgan Stanley banker.

The selection was a drawn-out affair conducted in Trump's very public style. The president tweeted as he met candidates, and last week posted and an Instagram video previewing the decision.

Predictable is good

Powell, a 64-year-old Republican, was appointed to the Fed's powerful Washington-based board of governors in 2012 by US President Barack Obama. The appointment of Powell, who is among the wealthiest members of the Fed, is likely to be well received on Wall Street, which will see him as a friendly face on possible deregulation but also, importantly, as somewhat predictable on interest-rate policy at a key time for the central bank.

He is likely to maintain the Fed's course of gradual but cautious rate increases, with an eye to an inflation rate that continues to undershoot the central bank's 2% goal. This points to economic activity and a labor market still running below their potential, a point highlighted by weak wage growth for most Americans.

The Fed has raised interest rates four times since December 2015, and it recently began gradually winding down its $4.5 trillion balance sheet. Fed officials are predicting several additional rate increases this year and next, but financial markets are more skeptical.

Powell worked in private industry much of his life and was a partner at Carlyle Group from 1997 to 2005. Lacking a formal education in economics and having graduated with law degree from Yale University, Powell had to learn on the job when it came to monetary theory and interest-rate policy. Still, his financial background made him well equipped.

He has focused on more tangential issues for the Fed like the regulation of scandal-ridden Libor interest rates, financial innovation, and housing policy. His most recent speech on monetary policy was in June for the Economic Club of New York. At that point he said:

"The healthy state of our economy and favorable outlook suggest that the FOMC should continue the process of normalizing monetary policy. The Committee has been patient in raising rates, and that patience has paid dividends."

Julia Coronado, a former Fed economist and founder of MacroPolicy Perspectives, says Powell’s greater familiarity with banking and finance than monetary policy makes him more likely to follow the consensus, often driven by staff forecasts, on interest rate policy.

"He has been in line with the leadership on monetary policy in recent years,” she told Business Insider. “His comfort zone and leadership has been in getting his hands dirty on regulatory and financial sector plumbing issues. He is smart and collegial and knows how to lean on the staff’s expertise."

She said Powell "will probably be a different kind of Fed chair in that he will be forging a consensus more than driving it on monetary policy," like Yellen, a monetary economist in her own right.

In contrast, said Coronado, "Powell’s depth on financial infrastructure could come in handy if and when the FOMC needs to confront decisions on balance sheet policy again."

SEE ALSO: It looks like Trump has made the safe choice for Fed chair — and Wall Street will love it

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Pastor Sentenced to Five Years for Aiding An Illegal Bitcoin Exchange

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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We keep hearing that billionaire hedge funder Steve Cohen has been crushing it recently — and just at the right time

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

steve cohen

  • The billionaire Steve Cohen has been posting double-digit gains this year following a period of underperformance, according to multiple people we've spoken with.
  • The gains come as a third-party firm has been pitching potential investors on Cohen's comeback.
  • Cohen may open up to outside capital again in 2018 after his firm was banned from the industry for insider trading.


It sounds as if the billionaire Steve Cohen is having a surge in performance — and at exactly the right time.

Exact numbers are hard to come by — even some senior staff members at Cohen's family office, called Point72 Asset Management, don't have a complete picture — but several people with knowledge of the matter say the hedge fund manager is posting gains just as he plots his return to managing outside money again.

Point72, with $11 billion in assets, is up by as much as the high teens this year, one person close to Point72 said — though that number requires caveats.

Here's a breakdown of what we've heard from people close to Point72:

  • The firm was up about 8.5% after expenses through August, according to a separate person who said they had seen the figures.
  • In September, the firm's main fund posted gains of 3% to 3.5%, largely because of its fundamental long-short portfolio, bringing gains to about 11% after expenses through September, according to the first person.
  • And in October, the fund posted gains of about 8%, this person said.

On the high end, that would mean Point72 could be up as much as 19% this year — though it's unclear whether that figure takes into account expenses. But it roughly lines up with what another person, who is close to Cohen, has said: that the fund is up this year in the mid-teens.

And numerous other people in the hedge fund launch space have said the fund is doing better this year, though few of them had specific details.

Point72's expenses are high, meaning fees could shave off several percentage points on the numbers we've heard, according to people who have worked there.

Jonathan Gasthalter, a spokesman for Cohen, declined to comment.

Point72 has been cagey about releasing its performance, and not all staffers receive it. Even investors who have been pitched on a potential new fund haven't gotten updated figures. That has led to a lot of speculation.

What's universally said, though, is that performance has gotten better since last year, when the fund finished roughly flat.

The underperformance had concerned Cohen, according to a person close to him. After all, he was known for knockout returns in the 30% range before his hedge fund SAC Capital was shut down over insider trading.

Cohen is mostly known for long-short equity investing. He has been running a family office called Point72 Asset Management, with some $11 billion of his personal fortune and that of some staffers, since 2014 after he agreed not to manage other people's money and return outside investors' capital. The agreement came after a multiyear insider-trading investigation at SAC that ended with a conviction for one of Cohen's subordinates but not him. His failure, according to the SEC, was to supervise those traders as head of SAC Capital. SAC also pleaded guilty and paid a record fine, $1.2 billion, to settle insider-trading claims.

Cohen, via an external marketing firm, has been laying plans to potentially manage other people's money for the first time since shutting three years ago. The new fund would be called Stamford Harbor.

To be sure, Cohen could still decide against launching. Everyone we've spoken with stressed that it was not official yet, even though some investors have been pitched.

The Wall Street Journal reported in May that Cohen was seeking to raise about $9 billion, which combined with his roughly $11 billion family office would lead to a $20 billion fund — the biggest hedge fund launch of all time.

But a person with direct knowledge of the plans told Business Insider last month that Cohen's Stamford Harbor fund was likely to aim closer to $2 billion in fresh funds.

Either way, the fund is one of the most talked about among investors, and banks' prime brokerage units have been clamoring to get a piece of the business.

The external marketing firm, ShoreBridge Capital Partners, has been pitching Cohen's potential new fund to some of the world's biggest hedge fund investors and is said to be requiring minimums of $100 million, Business Insider earlier reported.

Doug Blagdon, who has facilitated investor meetings regarding Stamford Harbor at ShoreBridge, didn't respond to a voice message and email.

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The group that represents America's small businesses slams the new GOP tax bill

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

WASHINGTON, DC - NOVEMBER 02: House Way and Means Chairman Kevin Brady (L) (R-TX) and Speaker of the House Paul Ryan (R) (R-WI), joined by members of the House Republican leadership, introduce tax reform legislation November 2, 2017 in Washington, DC. The tax reform legislation is a centerpiece of U.S. President Donald Trump's legislative agenda. (Photo by Win McNamee/Getty Images)

  • The House GOP unveiled its massive tax-reform bill on Thursday.
  • The bill included new tax brackets, a lower corporate rate, changes to how small businesses are taxed, and a compromise on the state and local tax deduction.
  • The National Federation of Independent Businesses (NFIB) said it's "unable" to support the tax bill in its current form.

 

The National Federation of Independent Businesses (NFIB) says it's "unable" to support the newly unveiled House Republican tax reform bill released on Thursday.

"This bill leaves too many small businesses behind. We are concerned that the pass-through provision does not help most small businesses," Juanita Duggan, president and CEO of NFIB, said in a statement.

"Small business is the engine of the economy. We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs," she continued. "We will work with Chairman Brady to make the necessary corrections so that the benefits of tax reform extend to all small businesses."

The Trump administration and congressional Republicans took a step forward in their attempt to overhaul the US tax code on Thursday by revealing the "Tax Cuts and Jobs Act," which will include a broad set of proposed changes to the corporate and individual tax systems, building off a nine-page framework the White House and congressional Republican leaders released in September.

Among other changes, the proposals include a 25% tax rate for pass-through businesses. Instead of getting taxed at an individual rate for business profits, people who own their own business would pay at the lower so-called pass-through rate.

There will be some guardrails, however, on what kinds of businesses can claim this rate, to avoid individuals abusing the lower tax. 

Check out the full run-down of what's in the new tax bill here.

SEE ALSO: A part of the new GOP tax plan will be a tough sell for Republicans in New Jersey, New York, and California

Join the conversation about this story »

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

Politician Ron Paul is Worried Big Brother is Spying on Your Bitcoin Transactions

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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Confideal’s Crusade to Harness the Power of Smart Contracts

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

Confideal Thumb

In his book “Down The Rabbit Hole: Discover The Power of Blockchain,” author Tim Lea highlights the evolution of smart contracts and their use ensuing from the blockchain.

“The term smart contract was first coined by a computer scientist Nick Szabo,” Lea writes. “In his 1996 article in the magazine Extrophy, he broadly described a smart contract as the ability to bring refined legal practices of contract law to the e-commerce protocols between strangers and the internet.”

In their most basic form, smart contracts are self-executing contracts that function within mutually agreed upon terms between two or more parties. These agreements, which are written into lines of computer code, exist as part of a distributed, decentralized blockchain network facilitating the automatic execution of contractual terms with no further involvement from any of the parties involved, including external third-party intermediaries.

This disruptive approach runs counter to the prevailing tradition of drafting and enforcing deals through involvement with external players like banks, lawyers and escrows. This practice is both time consuming and costly, especially in cases involving overseas deals. While smart contract technology helps to overcome these and other administrative and legal roadblocks, a complex set of programming skills are required to draft blockchain-based digital contracts.

Enter Confideal

One company that’s making major inroads in this new age of smart contracts is Confideal, a platform for managing and enforcing smart contracts. Based in Ireland, a hub for crypto adoption in Europe, Confideal is forging a path toward the removal of barriers to digital transactions throughout the world. The company champions transparency, opening up essential business tools to those without legal or coding skills.

Confideal is a service designed for a wide audience from individuals to business owners, and available for everyone,” said Petr Belousov, Confideal’s founder and CEO. “Our ultimate goal is mass adoption of blockchain among real sector businesses worldwide.”

Because Confideal’s data is encrypted and protected by the Ethereum blockchain, the immutability of the agreement terms is assured. In addition, Confideal offers the following value propositions:  

     An internal arbitration module with top-rated arbiters and unbiased ratings. Arbiters selected to resolve a dispute on the Confideal platform are either a qualified third-party legal firm or a professional.

     A smart contract management option that provides full control over transactions (e. g. close deals, end them, set up fines and down payments).

     Cryptocurrencies are utilized to eliminate all payment barriers. No need for intermediaries which results in lower costs.

With the groundbreaking advancements of blockchain technology, Confideal is on a steady path to bridge the gap between the smaller circle of computer programmers and coders who understand the inner workings of the technology and the larger population of average, everyday users. With efforts to move smart contracts toward mainstream adoption, efficient models of user interface become vital. With Confideal’s efforts as a visual smart contract builder, it’s clear that momentum in this space is heading in the right direction. Of course, Confideal is not only about the builder itself. The three main features of Confideal are: smart contracts, built-in arbitration, and CDL tokens. There are tons of projects out there that offer only one feature and often they don’t even have a ready to use product. Confideal, on the other hand, does have a product and the project created a complete ecosystem that comes together into a harmonious product. The built-in arbitration module is used in case of a dispute and basically it means that a third party arbitrator will help you resolve or mediate the dispute.

Confideal’s initial coin offering (ICO) will commence on November 2, 2017, under the token name “Confideal” or “CDL.” The total supply of CDL tokens will be 100,000,000 with a price breakdown of 1,000 CDL to 1 ETH. The total supply will never increase and no additional tokens will ever be released.

CDL tokens are the internal, native currency for the Confideal platform. For all transactions made in CDL, 1 percent of the contract fee is exempted. Moreover, token users can participate in voting for arbiters.

Of the total ICO supply, 74 percent of the tokens will be sold via the ICO. The remainder will be distributed as follows: 6 percent were sold during the pre-ICO; 10 percent have been set aside for the team behind the platform; 4 percent for promotional activities; 4 percent for advisors; and 2 percent for a bounty campaign.

“Following our ICO, we have a detailed roadmap planned for developing the product,” Belousov said. “It includes the launch of the arbitration module, API and widget, implementation of multiple smart contract templates for various purposes, multi-language support, integration with other technologies and blockchains. It is with this that we are excited about the future of smart contracts.” 

You can reach out for more on Confideal through Telegram.

Note: Trading and investing in digital assets is speculative. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

The post Confideal’s Crusade to Harness the Power of Smart Contracts appeared first on Bitcoin Magazine.

What you need to know on Wall Street today

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

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

House GOP leaders on Thursday took their biggest step yet in their attempt to overhaul the US tax code by releasing legislation that proposes sweeping changes to the current system. Here's what you need to know:

President Donald Trump is expected to appoint Jerome Powell, a Federal Reserve board governor who previously worked as a private-equity executive, as Fed chair, replacing Janet Yellen.

In finance news: 

And in company news: 

Join the conversation about this story »

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

Homebuilders come out swinging against the GOP's tax plan as their shares tank

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

housing construction california

  • The Republican tax plan unveiled Thursday was rejected in various corners of the housing market. 
  • At issue is the mortgage-interest deduction, the cap for which will be halved at $500,000. This could reduce the benefit of the deduction outside of more expensive housing markets, and hurt home prices, trade associations said.
  • The National Association of Homebuilders said it was worried about a housing recession. The National Association of Realtors said the act confirmed its biggest concerns.   
  •  An exchange-traded fund that tracks homebuilder stocks had its biggest decline in a year. 

 

Two powerful trade associations slammed the GOP's tax plan on Thursday, saying that the reduction of a key benefit for homeowners could hurt the market.

The National Association of Homebuilders and the National Association of Realtors opposed the Tax Cuts and Jobs Act after details of the mortgage-interest deduction emerged. 

The plan caps the mortgage-interest deduction, which subtracts interest payments from homeowners' taxable income, on new homes at $500,000. This could dampen the benefit of the deduction outside of the most expensive housing markets and may lower home values. 

On Sunday, the NAHB, a Washington-based lobbying group, said it would not support the legislation. When the text emerged on Thursday, it amplified its criticism. 

"The details that are coming out show that the House Republicans are picking large corporations and wealthy Americans over small businesses and middle-class American homeowners," Jerry Howard, the NAHB's CEO, told Business Insider. 

Risk of declining

Howard estimated that 7 million homes would be excluded from the mortgage-interest deduction, amounting to about a third of the homes in California. 

"You're talking about potentially causing housing recessions in some of the biggest markets in the country, and those kinds of recessions tend to have spillovers," the NAHB said. "We're worried about a national housing recession."

The trade association had been working with lawmakers to replace the mortgage-interest deduction — which lets homeowners subtract interest payments from their federal tax bill — with a tax credit offering the same incentive.

"The House Republicans have violated the president's charge of doing a tax reform that helps middle America," Howard added. "Values of [Americans'] homes are at risk of declining. Baby boomers ought to think about putting off retirement for a couple of years because they may not have the equity in their homes that they thought they did."

Realtors expressed a similar concern that the GOP's plan could hurt home prices. 

"Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that," William Brown, the NAR's president, said in a statement on Thursday.

Investors sold off shares of homebuilders. The SPDR S&P Homebuilders exchange-traded fund fell 3%, its biggest decline in a year.

Screen Shot 2017 11 02 at 10.53.00 AM

SEE ALSO: Homebuilders tank as the GOP's tax plan caps a big benefit for homeowners

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NOW WATCH: $6 TRILLION INVESTMENT CHIEF: Bitcoin is a bubble

Credit Suisse CEO: Bitcoin the 'Very Definition of a Bubble'

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

Credit Suisse CEO Tidjane Thiam has said that bitcoin is in a bubble, and interest in the cryptocurrency will soon wane.

Realtors are worried that the GOP's tax plan could slump the housing market

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

realtor open house

  • The National Association of Realtors said the Tax Cuts and Jobs Act released Thursday confirmed its biggest concerns. 
  • The trade group is worried that a reduced cap on the mortgage interest deduction would lower home prices and hurt middle class homeowners. 
  • If passed, the tax act would cap the deduction for interest paid on mortgage debt at $500,000, down from $1,000,000. 

 

The National Association of Realtors opposed the GOP's tax plan on concerns that it could hurt home prices. 

The Tax Cuts and Jobs Act unveiled on Thursday would cut the mortgage interest deduction that new homeowners enjoy in half, to loans of $500,000 or less.

"Eliminating or nullifying the tax incentives for homeownership puts home values and middle class homeowners at risk, and from a cursory examination this legislation appears to do just that," William Brown, the NAR's president, said in a statement on Thursday.

Prior to the release of the act, the trade association was on "high alert" for details that could threaten the tax benefits of homeownership. It said it would comment further after a thorough reading of the bill. 

The legislation has been met with backlash elsewhere in the housing market. The National Association of Homebuilders amplified its criticism of the change to the mortgage interest deduction, saying it favored wealthy Americans over the middle class. 

"You're talking about potentially causing housing recessions in some of the biggest markets in the country," Jerry Howard, the NAHB's CEO, told Business Insider.

Investors sold off shares of homebuilders. The SPDR S&P Homebuilders exchange-traded fund fell 3%, its biggest decline in a year.

SEE ALSO: Homebuilders come out swinging against the GOP's tax plan

Join the conversation about this story »

NOW WATCH: THE BOTTOM LINE: A market warning, the big bitcoin debate and a deep dive on tech heavyweights

The Slippening: Ethereum Price Falls to 7-Month Low Against Bitcoin

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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MORGAN STANLEY: Tesla's future will be decided by 3 questions (TSLA)

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

Elon Musk

  • Tesla is getting clobbered after disappointing earnings results and a potential tax credit cut.
  • There are just three questions to consider when trying to evaluate the company's future, according to Morgan Stanley.
  • Hitting the company's first-quarter of 2018 production goals could be a good step toward reversing Thursday's downward slide.
  • Watch Tesla's stock price move in real time here.

 

Tesla reported a terrible third-quarter on Wednesday, including its biggest quarterly loss ever. Analysts scrambled on Thursday to make sense of the earnings, trying to decide whether to bet on the company's promising future or troubling present.

For Adam Jonas, an analyst at Morgan Stanley, there are just three things to think about when evaluating Tesla.

"(1) What is happening to demand for the product? (2) What is the pace of cash consumption? (3) How open are capital markets to funding Tesla’s very ambitious growth plan?," Jonas wrote in a note to clients.

After the earnings results, Jonas said he feels great about demand for Teslas, is slightly concerned about the company's cash flow and thinks Tesla's growth plan funding is in good shape "... for now."

Demand for Tesla's vehicles continues to be strong. The company delivered its 250,000th car in the third quarter and expects to deliver 100,000 Model S and Model Xs in 2017, a 30% jump from the previous year.

For the Model 3, the company's first mass-marketed car, more than 450,000 people have preordered the car. GOP lawmakers added a potential roadblock to Tesla's plans on Thursday, though,  as reports say the current $7,500 tax credit buyers can receive for the purchase of an electric vehicle could be cut as a part of the party's tax-reform efforts, according to Bloomberg.

The second question, the pace of cash consumption, is one of Jonas' biggest worries.

"Fourth quarter capex guidance is around $200 million above our current $800 million forecast," Jonas said. "Discussion of future cash flow was characteristically vague but the CFO emphasized that the eventual Model 3 ramp will be accompanied by substantial operating cash flow."

Tesla burned through $1.4 billion in cash in the third quarter, according to data from Bloomberg.

As the carmaker matures into a larger, more established company, execution becomes more and more of an issue, Jonas said. Battery production bottlenecks have thus-far crippled production of the Model 3, and Tesla only made 260 in the third quarter. The company's goal to produce 5,000 Model 3s a week in December has been pushed back to the end of the first quarter. Hitting that goal could be a good step toward a rising stock price, Jonas said.

"If such production is not accompanied by an increase in cash consumption, we believe the stock will trade materially higher than it does today," Jonas said while cautioning that forecasting Tesla's ability to hit this goal is extremely difficult.

For now, Jonas said betting on Tesla isn't worth it. He said he's "watching from the sidelines," but says there is a future where Tesla's shares start moving higher.

Tesla is down close to 8% on Thursday but is still up 37.88% this year.

Read more about Tesla's third quarter results here...

tesla stock price

SEE ALSO: Tesla is getting clobbered after disappointing earnings results and potential tax credit cut

Join the conversation about this story »

NOW WATCH: A $6 trillion investment chief reveals the one area of the stock market to avoid

MORGAN STANLEY: Tesla's future will be decided by 3 questions (TSLA)

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

Elon Musk

  • Tesla is getting clobbered after disappointing earnings results and a potential tax credit cut.
  • There are just three questions to consider when trying to evaluate the company's future, according to Morgan Stanley.
  • Hitting the company's first-quarter of 2018 production goals could be a good step toward reversing Thursday's downward slide.
  • Watch Tesla's stock price move in real time here.

 

Tesla reported a terrible third-quarter on Wednesday, including its biggest quarterly loss ever. Analysts scrambled on Thursday to make sense of the earnings, trying to decide whether to bet on the company's promising future or troubling present.

For Adam Jonas, an analyst at Morgan Stanley, there are just three things to think about when evaluating Tesla.

"(1) What is happening to demand for the product? (2) What is the pace of cash consumption? (3) How open are capital markets to funding Tesla’s very ambitious growth plan?," Jonas wrote in a note to clients.

After the earnings results, Jonas said he feels great about demand for Teslas, is slightly concerned about the company's cash flow and thinks Tesla's growth plan funding is in good shape "... for now."

Demand for Tesla's vehicles continues to be strong. The company delivered its 250,000th car in the third quarter and expects to deliver 100,000 Model S and Model Xs in 2017, a 30% jump from the previous year.

For the Model 3, the company's first mass-marketed car, more than 450,000 people have preordered the car. GOP lawmakers added a potential roadblock to Tesla's plans on Thursday, though,  as reports say the current $7,500 tax credit buyers can receive for the purchase of an electric vehicle could be cut as a part of the party's tax-reform efforts, according to Bloomberg.

The second question, the pace of cash consumption, is one of Jonas' biggest worries.

"Fourth quarter capex guidance is around $200 million above our current $800 million forecast," Jonas said. "Discussion of future cash flow was characteristically vague but the CFO emphasized that the eventual Model 3 ramp will be accompanied by substantial operating cash flow."

Tesla burned through $1.4 billion in cash in the third quarter, according to data from Bloomberg.

As the carmaker matures into a larger, more established company, execution becomes more and more of an issue, Jonas said. Battery production bottlenecks have thus-far crippled production of the Model 3, and Tesla only made 260 in the third quarter. The company's goal to produce 5,000 Model 3s a week in December has been pushed back to the end of the first quarter. Hitting that goal could be a good step toward a rising stock price, Jonas said.

"If such production is not accompanied by an increase in cash consumption, we believe the stock will trade materially higher than it does today," Jonas said while cautioning that forecasting Tesla's ability to hit this goal is extremely difficult.

For now, Jonas said betting on Tesla isn't worth it. He said he's "watching from the sidelines," but says there is a future where Tesla's shares start moving higher.

Tesla is down close to 8% on Thursday but is still up 37.88% this year.

Read more about Tesla's third quarter results here...

tesla stock price

SEE ALSO: Tesla is getting clobbered after disappointing earnings results and potential tax credit cut

Join the conversation about this story »

NOW WATCH: Why Amazon's new headquarters sweepstakes makes it the 'smartest company in the world'

Bridgewater, the world's largest hedge fund, faces a race against time to avoid a loss in its biggest strategy

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

Ray Dalio

  • Bridgewater's Pure Alpha strategy, which managed about $75.8 billion as of the end of September, was down through that month, according to client documents.
  • The strategy is long stocks, short bonds and long emerging market currencies versus the dollar and the euro, according to the documents. 
  • Bridgewater now has one quarter to turn around performance. If it finishes down for 2017, it will be the first down year in over a decade.

 

NEW YORK – The world's largest hedge fund firm, Bridgewater Associates, is facing the possibility of an annual loss in one of its major strategies. 

Bridgewater's Pure Alpha II has lost about 2% after fees this year through September, according to client documents, a slight gain from end of July, when it was down 2.8%. The strategy has posted gains each year since at least 2005. 

The Pure Alpha II fund is the biggest of the firm's Pure Alpha strategies, running what it calls 18% volatility, with about $36 billion as of the end of September, per a person familiar and documents.

There are other Pure Alpha funds and managed accounts that run multiple volatility levels deploying a similar strategy.

For example, a smaller fund running the same strategy, the Pure Alpha 12% Strategy, is down about 1% this year through September, according to documents. That fund manages about $10 billion, according to a person familiar with the numbers. Pure Alpha 12% is potentially facing its first lost since 2000, when it lost about 3.5%, according to client documents.

The Pure Alpha strategy managed about $75.8 billion in total as of the end of September, according to a person with knowledge of the figures – a huge chunk of the firm's $160 billion in assets. 

Bridgewater's Pure Alpha was long stocks and short bonds at the end of the third quarter, according to a document. The strategy is also:

  • long bonds in emerging markets
  • long emerging market currencies against the dollar and euro
  • long the dollar against developed currencies
  • long oil and other industrial commodities
  • long gold.

These positions reflect public statements Dalio has made, as well as research notes to clients over recent months. For instance, in August, founder Ray Dalio told clients that they should put 5% to 10% of their assets in gold. And Dalio has said that the Federal Reserve may be making a mistake in moving to raise rates, and that "the risks are asymmetric on the downside."

Bridgewater manages money for some of the world's largest public and private pensions, university endowments, and other institutional investors. Dalio has recently been promoting his book, "Principles," about his firm's infamously eccentric culture. Dalio has spoken with Business Insider and a number of other media outlets over the past several months while promoting the book on at Wall Street conferences and on LinkedIn and Twitter. 

Dalio did not respond to messages seeking comment. Prosek Partners, Bridgewater's external public relations firm, declined to comment.

Underperformance

Bridgewater tells clients that its Pure Alpha 12% strategy should underperform the stock market when it rises, and outperform when the market loses. In the client documents, the firm said that the average market return for the S&P 500 during positive quarters is 6%, whereas Pure Alpha's average return is 2.4%.

Pure Alpha 12% is underperforming that spread. It's down -1% through September compared to a 12.5% gain in the S&P 500 over the same period. In recent years, it has delivered returns of between 0.6% and 3.5% per year, according to client documents. 

Facepalm statueBridgewater's other big strategy, All Weather, has fared better, gaining about 7% this year through September after fees, documents show. The strategy made a 3.5% gain in the third quarter. Its returns have been volatile, however, in recent years.

Here's All Weather's annual performance:

  • 2016: +10%
  • 2015: -7%
  • 2014: +7.5%
  • 2013: -4%
  • 2012: 15%

The All Weather strategy managed $53 billion as of the end of September, according to the person with knowledge of Bridgewater's assets.

Join the conversation about this story »

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The $50 billion hedge fund cofounded by right-wing donor Bob Mercer has been crushing it

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

renaissance

  • Renaissance Technologies, the legendary and secretive hedge fund cofounded by conservative donor Bob Mercer, has been making a ton of money lately, and is attracting new investors.
  • Mercer just announced he would be stepping down from his role as co-CEO.

Renaissance Technologies, the legendary and secretive hedge fund cofounded by conservative donor Bob Mercer, has been crushing competitors.

All three of its funds are up in the double digits this year, according to a person familiar with the firm. These are the numbers this year through October:

  1. Renaissance Institutional Equities Fund 15%
  2. RIDA 10.5%
  3. RIDGE 14%

By comparison, the average hedge fund is up 5.7% this year through September, according to data from HFR. October figures weren't yet available.

Investors have given Renaissance $1 billion in the month of November, the person familiar with the firm said. The hedge fund now manages more than $50 billion.

The Long Island-based firm has been raising money for some time, growing by more than $6 billion in the first half of 2017, according to the Absolute Return Billion Dollar Club ranking.

Renaissance is one of the hedge fund industry's most notable funds, known by investors for its consistently high returns.

Mercer told clients in a letter Thursday that he would be stepping down from his role as co-CEO and selling his stake in Breitbart to his daughters - including Rebekah Mercer, a Republican donor who served on the executive committee of President Donald Trump's transition team.

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The GOP's tax plan could make it harder to get tax deductions for medical expenses

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

donald trump kevin brady

  • Republicans released their massive tax reform bill on Thursday. 
  • Part of the plan would repeal an itemized deduction related to medical expenses. 
  • The provision could impact people who spend a lot on healthcare, and who have historically been able to subtract that amount from their federal taxes. 

 

Republicans in the House of Representatives are set to reveal their tax plan, titled the "Tax Cuts and Jobs Act."

The bill sets up a broad set of changes to the corporate and individual tax systems, including major changes to the things that can be deducted from your federal taxes. 

The Republican tax plan repeals an itemized deduction that applies to healthcare expenses. That's key for families with high medical costs, like those dealing with chronic conditions that require medical devices and other expensive equipment. Right now, those expenses can be deducted from their taxes, but under the Republican tax plan, they wouldn't be able to. 

Under current law, individuals who spend over 10% of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction. According to the Internal Revenue Service, for 2016 taxes, individuals were able to deduct in an itemized way "only the amount of your unreimbursed allowable medical and dental expenses that is more than 10 percent of your adjusted gross income."

The IRS broadly defines medical expenses as the "costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body," including insurance premiums, devices, and long-term care.

SEE ALSO: The massive Republican tax plan is set to be released — here's what to expect

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NOW WATCH: $6 TRILLION INVESTMENT CHIEF: Bitcoin is a bubble

The investment chief at the world's first tax-reform ETF tells us how to trade Trump's plan

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

trump

  • The EventShares US Tax Reform Fund was launched last week; its methodology can shed crucial light on how to trade Trump's tax plan.
  • EventShares CIO Ben Phillips says that, from an investment standpoint, the biggest focus should be on the corporate tax cuts.


If you're going to create an exchange-traded fund around a specific policy proposal — such as tax reform — you'd better be able to identify the companies that will be most affected by it.

That much should be self-evident. Actually nailing it, though, isn't so simple, because tax reform has so many different aspects to it, and certain facets of it are proving to be much more exciting to investors than others.

EventShares just launched the first policy-driven ETF. It's called the EventShares US Tax Reform Fund, and in a recent interview its chief investment officer, Ben Phillips, told Business Insider how to wade through investor sentiment and political action to pick the most likely beneficiaries of the Republican effort to cut taxes.

Pulling less weight will be major exporters — or those most likely to benefit from a repatriation tax holiday — and companies poised to be positively affected by capital-expenditure deductions. Instead, focus on the companies paying the highest effective tax rate because they're the ones with the most to gain.

With this in mind, two-thirds of the tax reform ETF is made up of more domestically focused small-cap stocks with $1 billion to $10 billion in market cap, since they're poised to benefit most from a lower US tax rate, Phillips says.

Beyond the methodology for the tax reform ETF — outlined in more detail below, along with single stock picks — Phillips and I also talked about how the fund came about in the first place, as well as what other ETFs EventShares might have up its sleeve in the future.

This interview has been edited for clarity and length.

Joe Ciolli: Can you walk through the methodology for the tax reform ETF?

Ben Phillips: Right now, the fund is 100% equity, equal-weighted, and thoughtfully active. We want to rebalance quarterly, like most traditional ETFs, but we still reserve the right to change the portfolio intra-quarter if we need to, or if it’s valuable to fund holders.

Tax reform really focuses on three key buckets: tax cuts (largest, with about half), exporters, and capex deductions. Of course a lot of companies can fit into multiple buckets. We drill down on securities that we expect to move the most on the policy initiatives.

Roughly two-thirds of the portfolio is small-cap stocks, with $1 billion to $10 billion of market cap. The rest of the companies are bigger.

One of the tax-cut beneficiaries, in our opinion, is Caleres. They benefit from a shift to a territorial tax system. They make shoes in the US. They’re one of the few US-centric retailers that actually makes its products here. They’re not like many other retailers. The fact that they make them here puts them at a competitive advantage.

Fiserv is a large-cap high taxpayer, and they stand to benefit pretty significantly from tax reform, just because of their high rate.

We have Phillips 66 in there, and the idea there is that they pay high taxes, and also would benefit from the fact that lower taxes would make US oil and gas exporters more profitable relative to the rest of the world.

Within exporters, you have Ford, which has the largest amount of local production out of any car company in the world, which gives them the potential to see the biggest benefit from tax reform.

LyondelBasell is a triple whammy — it has a high tax rate, it’s a major potential beneficiary from capex deductibility, and US-produced plastic pellets would be more competitive on a global basis.

Ciolli: What about repatriation specifically?

Phillips: We don’t have any in there just for cash repatriation, although a lot of our components have that embedded. It’s really a one-time event, and it doesn’t have a huge multiplier effect on corporate market valuations. We thought it was much more beneficial for a company that receives tax cuts, which would help it improve its earnings stream into perpetuity.

Ciolli: In terms of the Trump tax plan being released this week, what are you watching most closely?

Phillips: The TAXR portfolio is built specifically around the tax reform framework announced by congressional leadership on September 27. It’s largely focused on the corporate beneficiaries.

A lot of the changes being discussed and debated after that announcement in late December are on the individual tax rates. We think the corporate tax cuts are most likely to stand. The exporters are still likely to benefit from a lower tax regime, and we think the capex reduction will stay. We don’t see much changing on the corporate side. It’s really important how the Senate receives it, more so than just the House announcement.

Ciolli: Does some of the opposition we’ve seen affect the corporate side of things? Or does it not matter to you because your ETF is a way to play either side of the trade?

Phillips: People can express a view on the short side if they don’t think tax reform is going to go through. Our internal view, however, is that there’s enough impetus in DC to get some form of tax reform done.

People can express a view on the short side if they don’t think tax reform is going to go through. Our internal view, however, is that there’s enough impetus in DC to get some form of tax reform done.

Whether that includes the full package, that’s to be determined. But I think there is enough momentum behind tax reform to get something done, and the corporate side specifically is highly likely.

Ciolli: Given their composition, do you think your funds can be used as a proxy for investor sentiment around tax reform?

Phillips: You can definitely get some view into what those that are investing in ETFs or public stocks are saying, and you can read the tea leaves around sentiment shifts that are going on.

In mid-August, there was more of a focus on tax reform, and we saw a lot of activity in those stocks in our portfolio. They give you really interesting indicators.

More important, the most value for investors is if some tax-reform legislation goes through, and then the expected performance of that fund ends up being very strong. The goal is to have a really strong fund in and of itself with this embedded tax-reform catalyst. But leading up to the Senate vote, it might be an important indicator to watch.

Tax reform has implications for almost every company that does business in the US, as well as for every person who lives in the US.

Ciolli: What was the genesis for the tax-reform fund? How long ago did you start working on it?

Phillips: Two of the three cofounders are Goldman alums. While we were at Goldman, we saw these institutional products being offered to institutional clients. We saw these high-tax baskets offered by various large banks. Our thought was that these products were out there, but only the big banks offered them, and they were often expensive and illiquid. The thought of bringing a product and an ETF wrapper to anyone with a brokerage account was appealing.

Ciolli: The launch seems very well timed. How did you anticipate the need for a fund like this?

Phillips: Tax reform has implications for almost every company that does business in the US, as well as for every person who lives in the US.

We thought that if there really is major tax reform, this deserves a stand-alone product.

Ciolli: Do you have any other similar ETFs planned for the future?

Phillips: The European Union Breakup Fund (ticker: EXIT) is expected to be our fourth fund. Brexit was the genesis of the idea. When we saw it occur, it made us think that Europe has some geopolitical questions that we should be asking, namely, what happens if countries start to leave the EU, and what are investors supposed to do about that? There’s no product out there like that. I would say stay tuned for 2018.

SEE ALSO: Traders don't want to get burned again by Trump's tax reform promises

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The companies most likely to benefit from the GOP tax plan are surging

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

Trump Mnuchin

  • The GOP tax reform plan prompted rallies in the two areas of the stock market most sensitive to the proposed measures: highly taxed companies and those with cash overseas.
  • After losing confidence in tax reform, investors appear to be swayed in the short term that progress is being made.

 

The stocks most closely linked to the GOP's tax plan rallied on Thursday on signs of progress for policies that are expected to boost profits.

These companies can be broken into two main groups: (1) Those who pay the most taxes, and would, therefore, benefit most from a cut, and (2) those with the most cash stashed overseas and would see a huge windfall from a proposed one-time repatriation tax holiday.

That tax plan details were released on Thursday and not delayed further was clearly viewed as a positive sign for investors who have been crouched in wait-and-see mode for weeks.

Here's a round-up of the action:

Highly taxed companies

A Goldman Sachs basket of 50 companies that pay high taxes, spread across a variety of US industries, climbed sharply around the time details of the GOP tax plan started trickling out. After trading little changed for much of the morning, the index then rose as much as 0.4%.

The chart below shows how Goldman's high-tax basket has traded relative to the S&P 500. Note that while the line had descended to the lowest level since the election in recent weeks, it climbed on Thursday, indicating outperformance relative to the US equity benchmark.

High Tax Stocks

 

Companies that hold the most cash overseas

A Goldman Sachs basket of companies that make a large portion of their earnings overseas, and thereby have big foreign cash holdings. The GOP tax plan is designed to have those firms bring cash held internationally back into the US. After trading down as much as 0.6% Thursday morning, the index sharply pared those losses and is now around breakeven for the day.

The chart below shows how Goldman's high-overseas cash basket has traded relative to the S&P 500. Note that while the line had fallen over the previous week, it climbed on Thursday, indicating outperformance relative to the US equity benchmark.

High Overseas Cash Stocks

SEE ALSO: Traders don't want to get burned again by Trump's tax reform promises

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AT&T and Time Warner are falling after news the DOJ is considering a lawsuit (TWX, T)

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

time warner stock market

  • AT&T offered to buy Time Warner in an $85 billion dollar deal last year.
  • Shares of both companies are falling after reports the DOJ is weighing an antitrust lawsuit over the merger. 


Trading of Time Warner stock was halted Thursday morning after a Wall Street Journal report that the Department of Justice is considering filing an antitrust lawsuit over AT&Ts potential acquisition of the company.

Shares of Time Warner fell more than 6% from their $98.28 opening price, settling at $93.60.

AT&T, on the other hand, initially jumped over 2%, before falling back a half-percent below its opening price.

The $85 billion deal was announced last October, and was considered likely to be approved. A merger would allow AT&T to deliver Time Warner content to any device as viewing habits shift from traditional linear TV to over the top web and on-demand services.

An AT&T spokesperson told The Wall Street Journal“Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. While we won’t comment on our discussions with DOJ, we can say that this transaction should be no exception.”

Time Warner stock price

 

 

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A part of the new GOP tax plan will be a tough sell for Republicans in New Jersey, New York, and California

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

Paul Ryan

  • The House GOP unveiled its massive tax reform bill Thursday.
  • One of the biggest hangups for Republicans in states like New York, New Jersey, and New York has been the proposed elimination of the state and local tax (SALT) deduction, which allows people to deduct those taxes from their federal bill.
  • House Ways and Means Committee Chair Kevin Brady said Tuesday the GOP reached a deal that would allow people to deduct state and local property taxes up to $10,000 but not income or sales taxes.

 

The Trump administration and congressional Republicans took a step forward in their attempt to overhaul the US tax code on Thursday by releasing legislation proposing sweeping changes.

The "Tax Cuts and Jobs Act" will include a broad set of proposed changes to the corporate and individual tax system, building off a nine-page framework the White House and congressional Republican leaders dropped in September

Among the details of the new bill emerging Thursday morning is a proposed elimination of the state and local tax (SALT) deduction, which is a benefit that allows people to deduct those taxes from their federal bill. House Ways and Means Committee Chair Kevin Brady said Tuesday the GOP reached a deal that would allow people to deduct state and local property taxes up to $10,000 but not income or sales taxes.

While most House Republicans are in favor of getting rid of the SALT deduction, this proposal is likely to be one of the biggest hangups for those House Republicans in states like New York, New Jersey, and California, which could prove to be an obstacle to the bill's passage.

average salt deduction county map

The two largest beneficiaries of the SALT deduction are higher earners and states with a lot of high-income residents, according to the Tax Policy Center. 

Most of the claimants that benefit from the deduction live in traditionally Democratic states like California and New York. The Committee for a Responsible Federal Budget found that New York and California receive about 30.5% of the total benefits from the SALT deduction.

52 congressional districts held by Republicans registered above-average use of the SALT deduction in 2015, according to data from the Internal Revenue Service cited by Bloomberg. Those include a number of districts in New York, New Jersey, California, and an Illinois district of Representative Peter Roskam, the chairman of a key panel on tax policy.

Some Republican House members in those states have already spoken out against SAL. Republican congressman for New Jersey's third district Tom MacArthur went on Fox Business on Wednesday to defend keeping the property tax deduction.

Check out of the full run down on the "Tax Cuts and Jobs Act" here.

SEE ALSO: Trump's tax plan could lead to billions of dollars flooding back to the US

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Homebuilders tank as the GOP's tax plan caps a big benefit for homeowners (XHB, DHI, LEN, PLT)

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

Screen Shot 2017 11 02 at 10.23.12 AM

  • Homebuilder stocks fell Thursday after reports showed that the GOP's tax plan caps the mortgage-interest deduction at homes worth $500,000. 
  • The cap could reduce the benefit of the deduction outside of the priciest housing markets, and hurt home values. 
  • A powerful homebuilders trade association earlier opposed the bill because of the planned cap. 

 

Homebuilder stocks slumped in trading on Thursday as details of the GOP's tax plan emerged.

According to several reports, the tax plan caps the mortgage-interest deduction, which subtracts interest payments from homeowners' taxable income, at homes worth $500,000. Additionally, it caps the state and local tax (SALT) deduction at $10,000.

These measures could dampen the benefit of the deduction outside of the most expensive housing markets, and may lower home values. 

The SPDR S&P Homebuilders exchange-traded fund fell 3%. Its top holdings include D.R. Horton, Pulte Group, and Lennar, all of which were down nearly 3%. 

On Sunday, the National Association of Homebuilders, a powerful lobbying group, said it would not support the tax legislation. The trade association had been working with lawmakers to replace the mortgage-interest deduction — which lets homeowners subtract interest payments from their federal tax bill — with a tax credit offering the same incentive.

SEE ALSO: A key homebuilders' group is now opposing the Republican tax plan — and it's a sign of trouble to come

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Ryanair's passenger numbers actually went up despite cancelling thousands of bookings

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

Ryanair Chief Executive Michael O’Leary poses for a picture after a news conference in Berlin, Germany, September 14, 2017.

  • Ryanair's October passenger numbers up 8% to 11.8 million.
  • Rise despite thousands of booking being cancelled in September and 25 planes grounded until next March.


LONDON — Ryanair's traffic grew by 8% in the wake of its recent cancellation crisis, the budget airline said on Thursday.

Ryanair's customer numbers in October rose to 11.8 million, 8% higher than the same month in 2016, and load factor — a measurement of how full planes it flew were — rose 1% to 96%. On a rolling annual basis, Ryanair's traffic grew by 12% to 128.2 million in October.

The strong performance came despite a cancellation crisis in September. The Irish carrier was forced to cancel thousands of bookings and ground 25 of its aircrafts until March next year after a pilot rostering error. There were reports that Ryanair was also struggling to retain pilots.

Ryanair's Kenny Jacobs said in Thursday's statement: "These figures include the flight cancellations announced in September. Ryanair customers can look forward to even lower fares when they make advance bookings for winter or summer, so there's never been a better time to book a low fare flight on Ryanair."

Ryanair slashed prices in the wake of its cancellation problems, with some fares as low as £5. Earlier this week Ryanair said the crisis will cost it €25 million in refunds to customers and €100 million a year extra as a result of new deals to keep pilots happy.

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The Fed has a forgotten role — and it will be critical in getting the US economy 'running on all cylinders'

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

janet yellen

  • Federal Reserve officials are paying increasing attention to the central bank's community development activities, which focus on real world economic issues. 
  • James Bullard, St. Louis Fed President, told us these issues are "very important to the macroeconomy."
  • The effort comes as the Fed looks set for a change of guard, with President Donald Trump reportedly getting ready to appoint Jerome Powell as Fed chair. 

 It’s not setting interest rates, or regulating the big Wall Street banks. Those are crucial tasks, and the primary function of the US central bank.

But for Patrick Harker, president of the Federal Reserve Bank of Philadelphia, meeting people in his district and learning their stories is the most fulfilling part of the job, Harker said in a recent speech.

Harker, who has made an effort to engage with community leaders in his district since taking office in July 2015, was addressing the Investing in America’s Workforce conference earlier this month. The event was an effort to bring together non-profits, the private sector and Fed experts to address outstanding concerns about the labor market — including those beyond the scope of monetary policy.

"One of the most impactful parts of being a Fed president [is] getting to see the real life implications of the data that we all view at the Fed on a daily basis and how it translates, into the lives of people in our district and around the country," Harker said. "Talking to employers and job seekers and educators just resonates more than a line on a graph.

Talking to employers and job seekers and educators just resonates more than a line on a graph.

Harker, who said he grew up in a family of pipe fitters, knows on a personal level "how those jobs, those careers, gave people solid, middle-class lives, even without a college degree. I’m the result of that. I’m the beneficiary of a time and a place that offered a host of railways to the terminus of financial security."

His comments come as the Fed looks set for a change of guard, with President Donald Trump reportedly getting ready to appoint current Fed governor Jerome Powell to replace Janet Yellen as Fed chair. Powell will have to face important social issues in the US economy like widening income inequality and job polarization, both which fit well into the mandate of the Fed's community development divisions. 

"The Fed has a unique Community Development function that seeks to mobilize ideas, networks, and approaches that address a wide range of community and economic development challenges," Powell said in an April speech.

The Federal Reserve System, comprised of the Washington-based board and 12 district banks, recently released a report called "Investing in America’s Workforce: Report on Workforce Development Needs and Opportunities."

The research, said Harker, was driven by a recent modification in the Community Reinvestment Act, for whose enforcement the Fed is responsible,  that "allows banks to include workforce development as an investment opportunity."

Regional Fed banks lead the way

Several regional Fed banks, and the central bank’s board itself, have ramped up efforts to deal with issues like low labor force participation, inequality, low-paying and erratic work. 

In a recent interview with Business Insider, St. Louis Fed James Bullard said issues surrounding community and workforce development are "very important to the macroeconomy if you think about American labor markets and how bifurcated they are."

He worries about a growing split between "this professional class of people that go to college and get good jobs and then another, kind of underclass where things don't go so well, they have less opportunity, they get less good jobs, they are out of the labor force more often," Bullard said.

"If we could get running on all cylinders and really using all our talent in the best possible way that would be a great gain for the US economy."

If we could get running on all cylinders and really using all our talent in the best possible way that would be a great gain for the US economy.

The Community Reinvestment Act dates back to the 1970s and was aimed at combatting redlining and exclusion of poorer US communities and neighborhoods. 

Still, Bullard, said, while the function "has been expanded some during the time that I’ve been president … if you look at the total budget we’re spending a very small amount on this."

Bullard sees two key roles for the Fed — "a convener" between workers, non-profits, lenders and employers, as well as a reliable source for relevant research and data.

"One of the best things that we can do is get everybody in the room at the same time and all talking to each other. We can’t put money in directly but we can pair people up and get them thinking," he said.

Meanwhile, the Philly Fed's Harker worries the central bank will not be able to achieve its dual mandate of low and stable prices and full employment without at least helping to address other underlying problems in the economy.

"Ultimately, we’re creating the conditions for economic growth. But those conditions won’t be as fertile if we can’t fill the jobs that are out there now, not to mention the ones coming in the future," he said. "The US can only reach its potential when the needs of both business and the labor force are addressed in stronger alignment. So, we took a deep dive into what’s happening now and what we need to plan for the future."

He also highlighted "barriers that aren’t related to skills, like addiction, incarceration, child-care costs. There are also logistical impediments; in the case of housing and insufficient transportation — the simple consequence of place."

Another issue is the quality of jobs, not just their quantity.

"While we’re essentially at the point of maximum employment — in its simplest terms, if you want a job, you can get one relatively easily — that doesn’t mean it’s a good job, or that it pays a living wage, or that it comes with the benefits that can be truly family-sustaining," Harker said.

SEE ALSO: A Federal Reserve committee executed a brutal takedown of Trump's budget

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Here's what Wall Street is looking for from Starbucks' earnings report (SBUX)

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

Starbucks barista

  • Starbucks will report fourth quarter earnings after the bell on Thursday.
  • Wall Street is expecting the Seattle-based coffee chain to post earnings of $0.55 per share on revenue of $5.81 billion, according to Bloomberg data.
  • Wall Street is also expecting adjusted net income of $795.52 million.

 

Ahead of the earnings announcement, Wall Street’s outlook for the company is mostly optimistic. 26 of the 34 analysts surveyed by Bloomberg rate Starbucks’ stock as "buy," while eight give it a "hold" recommendation.

The away-from-home coffee market continues to grow at roughly 5% every year, estimates from Bernstein show, with Starbucks barely outpacing that growth. Still, away-from-home coffee makes up just 30% of all coffee consumption, according to data from the National Coffee Association, so there’s more room for the segment to grow.

Wall Street will also be watching Starbucks’ digital rewards program, which has showed slower growth in recent quarters.

Shares of Starbucks are down 0.38% so far this year.

Starbucks stock price

SEE ALSO: Starbucks' holiday cups are here — and they aren't red

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Tesla is getting clobbered after disappointing results (TSLA)

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

Elon Musk

  • Tesla shares are down 6% on Thursday after the company reported a bigger loss than analysts expected. 
  • Production bottlenecks still plague the Model 3, but a fix could be coming soon.
  • Watch Tesla's stock move in real time here...

Tesla's stock is getting clobbered after the company reported its largest-ever quarterly loss on Wednesday.

The shares are down 5.98% to $301.89 in early trading Thursday.

Tesla reported an adjusted loss of $2.92 per share compared to the $2.23 Wall Street expected. It reported revenues of $2.98 billion, which was higher than the $2.39 billion expected. Tesla burned through $1.4 billion in cash in the quarter, compared to expectations of $1.2 billion, according to data from Bloomberg.

The company has been way behind in its Model 3 production goals due to bottlenecks at the company's Gigafactory in Nevada. Its previous production goal of 5,000 Model 3 vehicles a week in December of this year is now the company's goal for late in the first quarter of next year.

The carmaker has faced troubles in the battery production area of its factory, which resulted in the production of just 260 Model 3s in the third quarter. Tesla said it has recently figured out the problem and is working on a fix which should speed up production.

Tesla said it delivered its 250,000th car in the third-quarter and said it expects to deliver 100,000 Model S and Model X cars in 2017. If hit, it would be an increase of 30% compared to 2016 for Tesla's two higher-priced models.

The stock is up 40.51% this year.

Read more about the company's production bottlenecks here.

tesla stock price

SEE ALSO: Tesla just revealed why Model 3 production is behind schedule

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The dollar is ticking down

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

dollar

The dollar is weaker on Thursday morning ahead of the expected release of the Republican tax bill and the expected announcement of the new Federal Reserve Chair.

The US dollar index was down by 0.2% at 94.68 at 8:45 a.m. ET after being even further down around 94.50 during Asian trade.

The Republican tax bill, which was originally slated to be released on Wednesday, is now expected to be released on Thursday. Analysts have argued that the delay, as well as the fact that reports have suggested some key details have been left until the last minute, are concerning developments.

"We remain struck by how fluid the issues seemed to up until the last moment. Even the one-day delay, while not material, makes for poor optics," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said in commentary.

"The market will have a knee-jerk reaction to the headlines as markers are placed on expected winners and losers.  Sharp moves are unwarranted, it is very early on in the process."

Separately, US President Donald Trump is expected to name current Fed governor Jerome Powell as the next Fed Chair later on Thursday.

His expected nomination is largely seen as a safe pick, signaling continuity with the current low-interest rate environment and of the the slow approach overseen by current Fed Chair Janet Yellen.

"Jerome Powell's most important qualification is that he served with Janet Yellen. His confirmation should depend on his willingness to follow in Yellen's footsteps on both monetary and regulatory policy," Shawn Sebastian, co-director of Fed Up, a campaign from the Center for Popular Democracy, told the Washington Post.

SEE ALSO: Trump's tax plan could lead to billions of dollars flooding back to the US — here's what you need to know

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Bill Ackman's Pershing Square has seen assets drop $1.6 billion in 5 months

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

Bill Ackman

  • Bill Ackman's Pershing Square has seen assets drop $1.6 billion in five months.
  • The firm managed about $11 billion at the end of May, and about $9.4 billion at the end of October.
  • The firm's Pershing Square Holdings vehicle is down -3.3% for the year through October.

 

Assets at Bill Ackman's Pershing Square have dropped by $1.6 billion in five months.

The firm managed about $11 billion at the end of May, and about $9.4 billion at the end of October, according to the website for Pershing Square Holdings, a publicly traded Pershing vehicle. That latest figure includes $500 million Pershing Square recently raised to target Automatic Data Processing, the human resources firm.

Pershing Square Holdings, which is considered a proxy for the flagship hedge fund, is down -3.3% for the year through October.

The fund was up 4.3% this year through May, but lost -2.1% through October. That suggests that assets have dropped due, in part, to redemptions.

Pershing Square investors can redeem one-eighth of their capital per quarter, meaning it takes two years to redeem in full. A significant portion of the firm's assets, about $4.3 billion out of $9.4 billion, are held in Pershing Square Holdings, and cannot be redeemed.

Pershing Square is an activist hedge fund, meaning it takes positions in stocks of companies it hopes to change.

The fund has been on a campaign to shake up ADP and has a position in Chipotle.

Ackman said earlier this week that Pershing Square had exited its short position in Herbalife, and is betting against the company with options. The activist took a $1 billion bet against the nutritional supplements company in 2012, planning for the stock to fall, but it has since risen. 

SEE ALSO: Al Gore and David Blood told us how it's possible to save the world while still making a lot of money

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The pound is dropping after the Bank of England hiked interest rates

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

LONDON — The pound dropped against the dollar after the Bank of England voted to raise interest rates from 0.25% to 0.5%.

Here is the chart as of 12.08 p.m. BST (8.14 a.m. ET):

Screen Shot 2017 11 02 at 12.08.43

Speaking of the MPC's decision, Andrew Sentance, senior economic adviser at PwC, said: "The Monetary Policy Committee (MPC) is right to raise interest rates, even though economic growth has been relatively disappointing so far this year.

"Other economic data - in particular high inflation driven by the weakness of the pound and the low level of unemployment - are much more supportive of a rise in interest rates.

"In addition, the MPC faces a long-term challenge of raising interest rates back to some sort of normal level after an exceptional and unprecedented decade of low rates since the financial crisis.

"This month's MPC decision is an important signal to the public that the era of very low interest rates is coming to an end. Further interest rate increases should be slow and gradual, but this is the first step along that road."

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BANK OF ENGLAND HIKES RATES TO 0.5%

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

Mark Carney Bank of England 2x1

  • Bank of England raises interest rates for the first time in more than a decade.
  • Rates increased from 0.25% to 0.5% — reversing rate cut made in the aftermath last year's Brexit vote.
  • Hike had been widely trailed by the bank and was expected by markets.
  • Governor Mark Carney will speak to the press at 12.30 p.m. GMT (8.30 a.m. ET).

LONDON — The Bank of England on Thursday raised interest rates for the first time in more than 10 years, as had been widely expected by market watchers around the world.

The majority of the central bank's ratesetting Monetary Policy Committee voted to raise the UK's base rate of interest from 0.25% to 0.5%. Rates had previously stood at 0.5% for seven years between 2009 and 2016, before being cut to 0.25% last August in the aftermath of the Brexit vote.

Seven members of the committee voted to raise rates, out of nine. John Cunliffe and Dave Ramsden voted to keep rates at 0.25%.

"With unemployment at a 42-year low, inflation above target and growth just above its new, lower speed limit, the time has come to take our foot off the accelerator," Bank of England Governor Mark Carney said.

"To ensure a sustainable return of inflation to the target we have raised interest rates from 0.25% to 0.5%. That means taking our foot a little off the accelerator, reducing slightly the amount of support we are providing to the economy," the Bank of England said in a statement on its website.

Andrew Sentance, senior economic adviser at PwC, said the central bank was "right to raise interest rates, even though economic growth has been relatively disappointing so far this year."

"Other economic data - in particular high Inflation driven by the weakness of the pound and the low level of unemployment - are much more supportive of a rise in interest rates," said Sentence. "In addition, the MPC faces a long-term challenge of raising interest rates back to some sort of normal level after an exceptional and unprecedented decade of low rates since the financial crisis."

With inflation rising to 3% in September and GDP growing at a steady but unspectacular rate of 0.4% in Q3, the bank — which had signalled strongly in recent months that it would look to increase rates in November — seemingly had little choice to increase rates back to their previous level.

Analysts and forecasters were pretty much unanimous that a hike was coming. Of the dozens of research notes from major banks, asset managers and research houses seen by Business Insider in the run up to the decision, not a single one saw anything other than a hike on Thursday.

Many, however, have questioned the expediency of raising rates in an environment where the UK's economic relationship with the European Union remains unclear, and growth is well below the level that previously would have seen rate hikes — generally around 0.6%-0.7% per quarter.

The bank had to balance those concerns with the fact that inflation is 50% above its target level, and could rise further as the pound's drop since the Brexit vote filters into import prices.

Alongside its decision to raise rates, Britain's central bank also released its quarterly Inflation Report, providing an update of its forecasts for overall economic growth and inflation.

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Bitcoin Payroll Startup Bitwage Adds 18 New Currencies

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

Bitcoin payroll startup Bitwage has announced support for an additional 18 fiat currencies, including the Russian ruble and the Singapore dollar.

10 things you need to know before the opening bell

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

10 things

Here is what you need to know.

Facebook crushed Q3 earnings but warns that future profit will slow. Facebook stock fell in after-market trading after the company cautioned that future profitability would be affected by increased investments around its efforts to fight fake news and abuse.

Tesla posted a big loss, cut Model X and Model S production to catch up on Model 3. The company reported the largest quarterly loss in its history and said it would produce "about 10% fewer" units of those two models.

Alibaba surged after beating on earnings and boosting its outlook for the year. The company projected full-year revenue growth of 49% to 53%, up from its earlier estimate of 45% to 49%.

Blue Apron sales beat expectations, sending shares higher. The company said it earned more revenue per customer in the third quarter.

Donald Trump is expected to name a new Federal Reserve chair on Thursday. He looks set to appoint Jerome Powell, a former private-equity executive at Carlyle Group who now sits on the Fed board.

Bitcoin climbs past $7,300. The recent run has been helped by news on Tuesday that CME Group, the world's largest exchange operator, plans to introduce bitcoin future contracts in response to client demand.

Analysts are unanimously forecasting that the Bank of England will raise rates for the first time in 10 years. The decision will come at noon London time on Thursday.

Stock markets around the world are mixed. Hong Kong's Hang Seng (-0.26%) fell in Asia, while the Nikkei rose (+0.5%). The FTSE 100 (+0.32%) led mixed results in Europe, which saw the Euro Stoxx 50 decline (-0.25%). The S&P 500 is set to open down less than 0.1% near 2,573.

Earnings reporting remains heavy. Starbucks, Wingstop, Herbalife, and Activision Blizzard are among the companies scheduled to report after the market close.

US economic data flows. Initial jobless claims will be released at 8:30 a.m. ET, as will continuing claims and nonfarm productivity. Bloomberg's consumer comfort reading will cross the wires at 9:45 a.m. ET.

SEE ALSO: Bitcoin futures remind one expert of the risky products that caused the financial crisis

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

10 things you need to know before the opening bell

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

10 things

Here is what you need to know.

Facebook crushed Q3 earnings but warns that future profit will slow. The company's stock fell in after-market trading as it cautioned that future profitability will be impacted by increased investments around its efforts to fight fake news and abuse.

Tesla posted a big loss, cut Model X and Model S production to catch up on Model 3. The company reported the largest quarterly loss in its history and said it will to produce "about 10% fewer" units of those two models.

Alibaba surged after beating on earnings and boosting its outlook for the year. The company projected full-year revenue growth of 49%-53%, up from its earlier estimate of 45%-49%.

Blue Apron sales beat expectations, sending shares higher. The company said that it earned more revenue per customer in the third quarter.

Donald Trump is expected to appoint a new Federal Reserve Chair on Thursday. He looks set to appoint Jerome Powell, a former private-equity executive at Carlyle Group who now sits on the Fed board.

Bitcoin climbs past $7,300. The recent run has been helped by news on Tuesday that CME Group, the world's largest exchange operator, plans to introduce bitcoin future contracts in response to client demand.

Analysts are unanimously forecasting that the Bank of England will raise rates for the first time in 10 years. The decision will come at noon London time on Thursday.

Stock markets around the world are mixed. Hong Kong's Hang Seng (-0.26%) fell in Asia, while the Nikkei rose (+0.5%). The FTSE 100 (+0.32%) led mixed results in Europe, which saw the Euro Stoxx 50 decline (-0.25%). The S&P 500 is set to open down less than 0.1% near 2,573.

Earnings reporting remains heavy. Starbucks, Wingstop, Herbalife and Activision Blizzard are among the companies scheduled to report after the market close.x`

US economic data flows. Initial jobless claims will be released at 8:30 a.m. ET, as well as continuing claims and nonfarm productivity. Bloomberg's consumer comfort reading will cross the wires at 9:45 a.m ET.

SEE ALSO: Bitcoin futures remind one expert of the risky products that caused the financial crisis

Join the conversation about this story »

NOW WATCH: THE BOTTOM LINE: A market warning, the big bitcoin debate and a deep dive on tech heavyweights

Newsflash: Bitcoin Price Roller Coaster Hits $7,350, Flash Crashes Below $6,800

CryptoCoins News, 1/1/0001 12:00 AM PST

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Bitcoin blasts past $7,000 to reach another record high in 2017

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

 Bitcoin’s incredible march continues in 2017 after the cryptocurrency broke $7,000 per coin for the first time. The surge even saw it go on to reach a high of $7,200 on some exchanges. The price reached a high of $7,140 on popular exchange Coinbase, that was up nine percent over the last 24 hours, but it since dropped to $7,075. That last month has been an even crazier rollercoaster… Read More

We talked to the head of research at RBC Capital Markets about the storm headed for Wall Street

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

Marc Harris RBC Capital Markets

  • Investment-research firms are scrambling to comply with new European regulations known as MiFID II.
  • We sat down with the head of a quickly rising Wall Street research firm to discuss what's hot in markets today and how RBC Capital Markets is preparing for the new rules.


When Marc Harris joined RBC Capital Markets' team research in 2004, it was a small player on Wall Street with only a few of its analysts being recognized as stars.

This year, with Harris in charge of research for RBC, and his team cracked the top 10 of Institutional Investor magazine's annual analyst rankings. Sixteen of its analysts made the list, with the firm in the top five across 13 different sectors.

Business Insider recently caught up with Harris at RBC's Wall Street headquarters to discuss how he's built the research team, the sweeping changes about to affect equity research around the world, and how he views markets today. This interview has been lightly edited for clarity and length.

Graham Rapier: How did you manage to grow RBC's research division into what it is today?

Marc Harris: Over the course of the past decade, we've transitioned from a boutique, middle-market-oriented product that had a lot of fans — a lot of good, individual analysts, into a true top-10 platform. The way we did that was not by going out as a mercenary and saying we're going to be the highest bidder in the market for the No. 1-, 2-, 3-ranked analysts and just basically add them year after year.

More than half our analysts in the top-ranked categories are organically grown people, people who we brought up inside the organization. That was intentional. There are also sectors where we need to be there yesterday, so sometimes I have to make a choice.

Rapier: Can you give an example?

Harris: One is biotechnology. It's an incredibly important area, and we have a major franchise there. We had someone I had grown from an associate into a senior analyst [Mike Yee]. He had gone, over the course of a six-year period, from being an unranked analyst to literally being the No. 1 guy in the space. He was at the firm for over a dozen years, but he recently left. He ended up getting bid away and went over to another firm — a loss for us.

While I would love to start that over again from scratch, it's too important a space with too much going on. We have three dedicated analysts in this space. We can't be there without a substantive, known quantity, so I went out and hired people to backfill there.

There are other spots where I'm willing to do the three- or four-year view of taking one of our great up-and-coming associates, or an analyst who's covering part of a sector and promote them into a lead role. A good example of that is media, where I took Steve Cahill — who was an associate on the aerospace and defense team — and when our media analyst ended up leaving, I said this is a space where I know I have A-plus talent with the time to develop that over a few years, so we made that investment and put him in there.

In his first full year this year, he's already broken into the top 10 of II, and my bet is he will continue to go higher from there. We do much more of the latter than the former because we've tried to build this thoughtfully, gradually, and sustainably.

I won't name specific competitors, but I could show you companies where every third year they go through a massive hiring streak, pay peak of market for all of their talent on one- or two-year contracts, then drop like a stone, and they have to start all over again. I knew when we were building this that the only way to make it sustainable was to build from the bottom, make a culture where people want to be here and not just for the salary.

Rapier: Are there any other sectors you're expanding into now?

Harris: There's no industry that's not going to be affected by big data, and all the derivatives of that.

There's no industry that's not going to be affected by big data, and all the derivatives of that.

Frankly, if you were looking for something that ties all this together, believe it or not, the backdrop of all of this — one of the defining factors of success or failure — is going to be the ability of every business we analyze, and in our own business, to take big data in all of its various forms and create true information out of it. That's literally everyone.

For consumer companies, it's how do we micro-target consumers and which companies are well prepared to do that. If you're talking about healthcare IT, it's going to be understanding the massive amount of information coming out of the healthcare industry, analyzing it person by person, doing population health analysis, and things like that.

For biotechnology, it's going to be, "Can we use artificial intelligence to start to create jobs?" Google recently launched an effort to basically run through protein folding and use big data to analyze the conclusions out of that, and in essence make themselves into a biotechnology company. That means new competition for biotechnology that they never expected.

This is like the merger of every industry into a tech-led, big-data industry. The way I think about our investments, where we need to be, where the opportunity is, a lot of it comes from thinking about where technology and the acceleration of that technology going to a variety of industries.

Rapier: Let's talk about the new MiFID [markets in financial instruments directive] regulations. How will those affect RBC's business?

Harris: The sustainability I mentioned earlier will be incredibly important as we go into this new and uncharted environment of content unbundled from the execution at varying degrees. When you take a product that's never been priced in the market before, and you all of a sudden decide to start pricing it, the only way to be in there is to know you have top-tier talent to start with, and then work backward.

When you take a product that's never been priced in the market before, and you all of a sudden decide to start pricing it, the only way to be in there is to know you have top-tier talent to start with.

The largest asset managers will most likely make the choice to start paying in cash [for research] and will basically try to force the sell-side to accept the payment in cash. What that means is that we will all have to figure out a structure that works.

Everybody is going to reorganize their research departments under something that is a registered investment adviser structure. In essence, it means analysts will be dually registered doing half what they have been doing, and the other half doing the advisership thing.

It's a major change, with substantial reorganization to be done for any firm that wants to accept these cash payments. It's really just a question of will enough asset managers start paying in cash, forcing everybody to make the choice.

A lot of our competitors have already made the decision to reorganize as an RIA, and almost everybody is considering it right now. [Editor's note: So far, only Bank of America Merrill Lynch has publicly applied to register as such.] It's the hot topic of discussion in every major sell-side investment bank right now.

Rapier: You sound optimistic.

Harris: I am.

There are a couple of things that are clear. One is that mediocrity in research simply will not have any value. You cannot just be a sort of down in the middle, 15- to 20-ranked firm, producing OK research with OK analysts doing OK work. There was a long period of time where that kind of firm, with enough other peripheral business around them, could survive. Today, that simply will not get paid for in any geography, period. If you're one of those firms, you've got a problem.

There may be consolidation in the research industry, but if you've got the scale and size, with the right people providing that content, you end up in a pretty good position. You'll have to ride through the volatility of a storm, but if you can, you'll end up in a pretty good spot that serves a lot of different consumers.

There are two things driving this. This new set of regulations have sparked this fire, but the reason its spread as rapidly as it has is pretty simple: performance. Quite frankly, performance is also what's going to solve it at the tail end. If active managers are able to outperform passive alternatives, then we won't be having a discussion about the death of sell-side research. The reason this is topic du jour is, for several years, active managers have not been able to outperform passive alternatives.

The reason this is topic du jour is, for several years, active managers have not been able to outperform passive alternatives.

With the added pressure of regulation, what are you going to do? You're going to cut costs.

Rapier: Where are we in the business cycle? Is there still room for the bull market to run?

Harris: Anybody who thinks that volatility in equity markets is dead has not lived long enough. Volatility will return. Nobody can ever define exactly when it's going to come back, but it will. Whether that's going to be caused by some external event — a war, another type of black swan that causes panic — really hard to say. People have been focused lately on the Black Monday crash and there have been lots of musings about what caused it.

The reality is, nobody can define why the Dow dropped 22% that day. In all the books that have been written, with all the historical analyses, there's nobody who can look at that and say, "The reason why that happened was 'blank.'" It's always a group of factors coming together.

I do think volatility will be there, but I also think that those crashes are always good refresh opportunities for the market and particular companies. We need those. It's healthy for the market to have those resets. If we don't have any fear in the market, obviously we've got a problem, especially in equities, which are driven by fear or the lack thereof.

One of the things that could begin to hit the reset on that is when we start to enter a more full-blown Fed cycle. That will begin to sort of pull this back. When people don't have alternatives for returns, equity markets will tend to get a little bit over-inflated perhaps. That's more of a reset to the norm than something where you look and say the earnings today can't justify the current levels.

The reality is, earnings today are in many ways justifying where we are in this process. It's a healthy economy. It's a healthy market. Don't discount the fact that we will get some form of tax reform through. It may not be exactly what's on paper right now, but any incremental amount — I won't opine on whether it will actually help the true economy — but I do know that when earnings go up, companies are considered to be more valuable and more flows down to the bottom line.

There are more positive things putting the wind at our backs still right now than there are negatives.

SEE ALSO: The investment strategist at $245 billion OppenheimerFunds identifies the 'biggest risk to markets right now'

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NOW WATCH: TOP STRATEGIST: Bitcoin will soar to $25,000 in 5 years

A unit at Goldman Sachs has quietly been crushing it — and is poised to become 'a much bigger business' (GS)

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

goldman sachs

  • Goldman Sachs, known for flashy deals and fixed-income trading, is making gains in debt capital markets. 
  • The bank has doubled DCM revenues since 2010 with a simple strategy, and the debt underwriting unit has potential to become "a much bigger business," according to John Waldron, co-head of the investment banking division.
  • Still, growing from here will be harder as JPMorgan, Bank of America and Citigroup compete to keep their share of the business. 

What do you think of when you think of Goldman Sachs? For many, the answer's flashy deals and high flying traders. 

The firm ranks way ahead of its competition for US M&A advisory revenues, with a 14% fee share in the first nine months of the year, according to Dealogic. That's a full five percentage points ahead of JPMorgan in second. Quarter after quarter, the bank trumpets its No.1 position in M&A towards the top of its earnings release

The analysts who cover the bank tend to want to talk about its stuttering fixed-income trading unit, in contrast. Nine-month revenues are down 23% year-on-year, and executives have had to set out their strategy to improve results

But there's another business at Goldman Sachs that's quietly doubled revenues since 2010. And it's not big wins that have gotten it there, so much as connecting the dots. Goldman Sachs' debt-underwriting business has produced revenues of $2.03 billion, the highest for the first nine months of the year.

"Given that they have always been a strong investment banking firm, it makes sense that they would tune up DCM, especially in light of the fact that the issuance environment has been very favorable for years and thus they’ve been able to aim at growing share of a growing pie," Guy Moszkowski, managing partner at Autonomous Research US, told Business Insider. 

John Waldron

The white space

The strategy is straightforward, says John Waldron, co-head of the investment banking division at Goldman.

"We looked at our business  I'd say before the financial crisis, but it was clarified after the financial crisis  and we asked, where do we have relative strength, and where do we have relative weakness?" Waldron told Business Insider. "It was patently obvious back then that we had real strength in M&A and ECM, and we were a mid-tier player in debt. We said that's the white space."

To develop that white space, the bank set out to:

  • Build off of Goldman's strong standing in M&A, both with corporate buyers and private equity firms;
  • Ramp up the relationship lending book.

In M&A, that meant emphasizing that a banker's job didn't begin and end with an M&A mandate. 

"A lot of our bankers in 2002-2007 timeframe would have thought their mission was to get M&A business, and if they missed the investment grade bond deal, they'd still feel like they had done their job," Waldron said. 

Rather than having Goldman Sachs provide M&A advice, and another bank write a check to fund the deal, the bank's now pushing a one-stop shop.

For example, when Amazon struck a deal to buy Whole Foods earlier this year, Goldman Sachs was sole M&A adviser and the so-called "left lead" on the financing, putting together a $6.85 billion debt package, with the bank itself committing $3.5 billion, and GS Lending Partners putting in $3.35 billion. Bank of America also signed up to lend $6.85 billion.  

gs underwriting v2Then there is the buyout business. Goldman Sachs' has long been known as a premier player with private equity firms, often running sales processes for sponsor-backed companies and advising on acquisitions. But more recently, Goldman Sachs has added some firepower in leveraged lending. 

"Since they are now a bank, and have found good sources of deposit funding — and they are good risk analysts – it makes sense that they would channel those attributes into lending of all types, including the sponsor loans," Moszkowski said. 

The bank ranks second for financial sponsor-related loans in the US for the first nine months, according to Dealogic, up from eighth. It's in the mix with the likes of JPMorgan and Bank of America Merrill Lynch, commercial banks with much bigger balance sheets. The leveraged finance franchise even got a shoutout in the bank's latest earnings release. 

"We've always been thought of as a good risk manager in the block trade business in equity capital markets, for example, so it made sense to apply that same expertise in LBOs," Waldron said. 

We've always been thought of as a good risk manager in the block trade business in equity capital markets, for example, so it made sense to apply that same expertise in LBO. 

A ticket

The bank has also grown its relationship-lending book, going into more run-of-the-mill revolving credit facilities with large companies. These loans aren't that attractive from a return perspective, but corporate treasurers often see them as the price of admission: banks often won't get more attractive business without a lending relationship.

The challenge for many banks is the next step — winning the attractive business. Bankers gripe about big loan commitments that aren't matched with returns on strategic transactions. For Goldman, getting the balance right between a focus on returns and patience took time. 

"In the early days we were maybe myopically focused on, 'What's the return on the loan?'" Waldron said. "We've moved to managing that vintage of a loan over a three- to five-year basis. We've learned to think about it in an elongated time frame, and we're going to be patient, and we're going to earn it."

To be sure, the gains in Goldman Sachs' debt business have been earned at a time of historic low-interest rates where debt revenues across the industry have been growing. Revenues have moved in sync with financial advisory revenues. Should interest rates go up, M&A activity drop, or both, the bank's debt capital markets revenues could take a hit. 

In addition, it's likely to be harder to grab market share gains from here. While Goldman Sachs ranks fourth in US marketed DCM volumes for the first nine months, up from sixth, the third-placed player, JPMorgan, is 3.4 percentage points ahead. Bank of America Merrill Lynch and Citigroup both have double-digit market shares, also, versus Goldman Sachs' 7%. 

But Waldron is hoping the business can get bigger. For a start, the bank's structured finance business, which includes everything from aircraft lease financing to collateralized loan obligation financing, is one of the fastest growing parts of the investment bank, according to Waldron.

And Goldman Sachs' is betting on a pick-up in big deal activity in the next couple of years. US inbound M&A volume dropped 39% in the first nine months of the year, with a relative dearth of mega-deals largely behind the decline.

But there are signs that the kinds of complex, consolidation deals that often come with big financing packages could pick up. CVS is reportedly in talks to acquire Aetna, while Rockwell Automation recently rejected an unsolicited purchase offer from Emerson Electric.

"If what we think is going to happen happens, which is more endgame consolidation, that would be really good for this business," Waldron said. "If we could exercise those muscles in more places, we'd be talking about a much bigger business."

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Alibaba surges after beating on earnings and boosting its outlook for the year (BABA)

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

FILE PHOTO: A sign of Alibaba Group is seen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China November 16, 2016. REUTERS/Aly Song

Alibaba on Thursday reported fiscal-second-quarter earnings that were better than analysts had expected, and raised its revenue outlook for the year. 

China's largest ecommerce company reported adjusted earnings per share of 8.57 yuan, topping the forecast for 6.86 yuan according to Bloomberg. 

Revenue totaled 55.12 yuan, more than the expectation for 52.05 yuan. 

The company projected full-year revenue growth of 49%-53%, up from its earlier estimate of 45%-49%. It expects to gain from the acquisition of its logistics arm Cainiao. 

"We are seeing the early results from our efforts to integrate online and offline with our new retail strategy, and consumers have benefited from access to high quality products, improved customer experience and the tremendous convenience of shopping anytime, anywhere," said Daniel Zhang, Alibaba's CEO, in a statement

Alibaba shares gained as much as 4% premarket. They surged 111% this year through the market close on Wednesday.

SEE ALSO: Tesla posts big loss, cuts Model X and Model S production to catch up on Model 3

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NOW WATCH: $6 TRILLION INVESTMENT CHIEF: Bitcoin is a bubble

$7,150: Bitcoin Price Hits New All-Time High; $10,000 by 2017’s End?

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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SEC warns celebs about legal dangers of bitcoin endorsements

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

When celebrities endorse things on social media, a lot of people tend to take their word for it. Now that some of them have also begun endorsing a controversial means of crowdfunding called "initial coin offering" or ICO, which was recently banned in...

The next Federal Reserve chair has a far more difficult job than Yellen did

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

Jerome Powell

  • President Donald Trump is going to name a Federal Reserve chair to replace Janet Yellen on Thursday afternoon.
  • The likely nominee is a current Fed board governor, Jerome Powell, and is seen as driving continuity on interest rate policy.
  • Powell is likely to face more market turbulence and economic uncertainty than Janet Yellen has over the last four years. 
  • Yellen's predecessor Ben Bernanke has warned that 'the current monetary toolbox' might not be sufficient to navigate what's ahead.

Maybe not being reappointed Federal Reserve Chair will prove a blessing for Janet Yellen.

President Donald Trump is going to name the new head of the US central bank later Thursday. Yellen's term ends in February and Trump's not expected to nominate her for a second one. Instead, his pick is probably going to be current Fed Governor Jerome Powell, multiple media outlets have reported this week.

That would be a safe pick — signaling continuity with the current low-interest rate environment and take it slow approach that Yellen has overseen. 

Still, whether it's Powell or not, the next four years could be a lot tougher for the central bank than the last four.

Over the past few years, the economy and stock market have been marked by stable growth and a distinct absence of financial distress. But stocks won't carry on like this for long and there are already signs of financial instability in corners of credit markets. Moreover, the central bank is only just starting its process of unwinding its massive quantitative easing plan, an uncertain proces that could increase volatitility.

"The markets have been remarkably ebullient for the past year," Benn Steil, senior fellow at the Council on Foreign Relations, told Business Insider. "Not just stocks. Everything that’s liquid is hot.  Meanwhile, corporate long-term fixed asset investment is still subdued. This suggests that there’s a lot of cash out there searching desperately for yield without commitment."

That's great for markets in the short run but will eventually become a problem.

"Whenever everyone thinks 'well, it’s liquid – I’ll get out before the trouble hits,' problems occur," said Steil. "So there is, to my mind, a good chance Powell will have to deal with far more turbulence than Yellen has."

One of the biggest concerns for Fed officials about fighting the next recession is a potential lack of tools to combat an economic downturn following a deep recession that forces the central bank to not only slash official interest rates to zero for several years but also to sharply expand its balance sheet to $4.5 trillion.

On Wednesday, the Fed kept interest rates on hold in a 1% to 1.25% range, having raised official borrowing costs four times starting in December 2015. The central bank is also gradually winding down its balance sheet starting this month.

"Powell may at some point need to take balance-sheet reduction off auto-pilot.  I don’t expect him to initiate actual selling, but I can imagine him pausing roll-off and resuming reinvestment if the economy turns sour,” Steil said. “That will present a communications challenge." 

Bernanke weighs in

Ex-Fed Chairman Ben Bernanke, Yellen's predecessor, who now works in the finance industry, doesn’t think the Fed is sufficiently well equipped to handle the next recession. 

In a Brookings Institution blog on Oct. 12, Bernanke proposed what he calls "an alternative framework for monetary policy." He calls it "temporary price-level targeting" which is effectively an effort to temporarily overshoot the Fed’s inflation target following a chronic period of missing it to the downside, such as has been experienced recently.

The Fed has fallen short of its 2% inflation target for five years, and the central bank admitted in its policy statement Wednesday that "inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2%." 

The chart below illustrates this — with the light blue line being actual inflation, and the dark blue being the target.

Bernanke inflation chart2The solution, to Bernanke, while somewhat technical, involves essentially a stronger commitment to meeting that target on asymmetric basis — that is, to tolerate too-low inflation just as little as too-high inflation.

"Low nominal interest rates, low inflation, and slow economic growth pose challenges to central bankers," Bernanke wrote. "In particular, with estimates of the long-run equilibrium level of the real interest rate quite low, the next recession may occur at a time when the Fed has little room to cut short-term rates. Problems associated with the zero-lower bound on interest rates could be severe and enduring."

Low inflation sounds great but chronically low price rises often reflect a weak economic and stagnant wages. 

Bernanke adds, rather ominously: "I am not confident that the current monetary toolbox would prove sufficient to address a sharp downturn. We should be thinking now about adjusting the framework in which monetary policy is conducted, to provide more policy 'space' in the future."

That thinking is going to be the job of whomever gets handed the reins of the world's most powerful central bank. 

SEE ALSO: The US economy isn't quite as strong as it looks

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NOW WATCH: $6 TRILLION INVESTMENT CHIEF: Bitcoin is a bubble

Australian Bitcoin Scams are up 126% in a Week: Consumer Watchdog

CryptoCoins News, 1/1/0001 12:00 AM PST

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Free Market Forks? Bitcoin Startups Love the Idea But Brace for Reality

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

Bitcoin startups that were once sold on Segwit2x are preparing for a split, signaling that the market should decide how the hard fork plays out.

Google Kicks Malicious Bitcoin Exchange Apps from Play Store

CryptoCoins News, 1/1/0001 12:00 AM PST

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Bitcoin breaks $7,000

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

LONDON – Bitcoin's rapid rise continues, with the cryptocurrency shooting past $7,000 per coin on Thursday morning.

Bitcoin past $7,000 per coin for the first time and, at 9.05 a.m. GMT (5.05 a.m. ET), the digital currency is up 3.8% against the dollar to $7,003.74:bitcoinBitcoin has been on a tear over the last week, posting record highs on consecutive days. The digital currency had not been higher than $6,300 at the start of the week but has now gained $700 on that level in just a few days.

The recent run has been helped by news on Tuesday that CME Group, the world's largest exchange operator, plans to introduce bitcoin future contracts in response to client demand. This is seen as a stamp of legitimacy from the world of traditional finance for bitcoin.

Traders are also speculating that this week's bull run is partly helped by a coming "fork" in bitcoin's underlying software. The SegWit2x software update is scheduled for November 16 and could split bitcoin in two, creating a new currency.

This has happened in the past with bitcoin cash and bitcoin gold and, in those cases, bitcoin holders got those new coins free. As a result, investors may be piling into bitcoin in the hopes of a SegWit2x dividend.

Bitcoin has been on a tear in 2017, rising by over 600% against the dollar this year. The price rise has been driven by increasing mainstream adoption and awareness of bitcoin and cryptocurrencies more generally. At least 55 cryptocurrency hedge funds have sprung up this year, most focusing on bitcoin.bitcoin

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English wine maker Chapel Wine says production is up 10% and that 2017 produced 'excellent quality fruit'

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

 

Bottles at Chapel Down vineyardLONDON — English wine producer Chapel Down has announced their second highest yield of fruit to date at the completion of their 2017 harvest.

The winery said 2017 yielded "excellent quality fruit" and the second most yet by volume, up 10% from last year.

The news comes despite a difficult start to the growing season, after a number of vineyard sites were hit by frost in late April.

Chapel Down said it had been able to minimise this risk by sourcing from 23 vineyards across the south east of England, from Dorset to Kent.

"Following a challenging start to the season, we enjoyed an excellent flowering season in June and a decent English summer in our vineyards," said CEO Frazer Thompson in a statement.

"With an early harvest in good weather we were able to record our second highest ever harvest by volume — some 10% greater than last year," he said.

The news comes despite a warning from the International Organisation of Vine and Wine in October that global wine production this year is expected to fall to its lowest level since 1961, due to "extreme weather" conditions.

Thompson said Chapel Down had seen some "truly exceptional parcels of Chardonnay," and that demand for their wine continued to grow.

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Bitcoin Gains Continue with Record High Just Shy of $7,000

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

Another day, another record... Bitcoin prices have continued to climb overnight reaching a fresh all-time high of $6,994.

(+) Bitcoin Adds $1,000 in Five Days Ahead of Mid-November Fork

CryptoCoins News, 1/1/0001 12:00 AM PST

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TransferWise raises $280 million from Old Mutual and IVP at $1.6 billion valuation

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

Taavet Hinrikus and Kristo Kaarmann

  • TransferWise raises $280 million at valuation said to be around $1.6 billion.
  • Asset manager Old Mutual Global Investors and Silicon Valley VC IVP lead the round.
  • The money will be used to fund expansion in Asia.


LONDON — International money transfer service TransferWise has raised $280 million (£211.2 million) from asset manager Old Mutual Global Investors and Silicon Valley venture capital firm IVP.

TransferWise announced the fundraising on Thursday, saying in a release that the funding will be used to fund global expansion with a particular focus on Asia and India. The company opened its first Asian hub in Singapore in April.

The company also recently launched a "borderless" business account and has announced plans to launch a foreign currency card to compete with the likes of Revolut. Some of the funding will go towards this.

TransferWise is understood to be valued at around $1.6 billion (£1.2 billion) in the latest funding round, making it one of Britain's most valuable tech startups.

The company, founded in 2011, allows people to cheaply and easily send money abroad online. TransferWise transfers over £1 billion across 750 currency routes each month. The business said in May it is on track to do £100 million in revenues this year and is profitable.

Taavet Hinrikus, co-founder and Chairman, TransferWise said in a statement: "£1 billion is just a slice of the market, which means millions of people are still being ripped off by banks and traditional currency brokers every day.

"It’s great to have the support of Old Mutual Global Investors and IVP in bringing fair and transparent financial services to more people through our Borderless account."

The deal is only the second investment in a private company by Old Mutual Global Investor, which focuses on public markets.

Richard Watts, a fund manager at Old Mutual UK Mid Cap Fund, said in a statement: "Our team looks to invest in companies with the potential to significantly disrupt an industry.

"TransferWise, with its innovative product and customer-centric service, offers people a cheaper way to send money and is rapidly gaining market share from the traditional money transfer providers.

"The opportunity to invest now in a private company, with a hugely exciting global growth story, is particularly compelling and we believe this holding will benefit investors in the funds we manage."

London-headquartered TransferWise is one of Britain's most successful fintech startups. The company has now raised $397 million (£299.5 million) from investors including Richard Branson, renown Silicon Valley VC fund Andreessen Horowitz, Peter Thiel's Valar Ventures, and Baillie Gifford.

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

Newsflash: Rampant Bitcoin Price Breaks Beyond $6,900

CryptoCoins News, 1/1/0001 12:00 AM PST

[…]

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10 things you need to know in markets today

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

Yellow Royal Dutch Shell

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

1. The completion of a $3 billion deal to buy fields from Royal Dutch Shell has established Chrysaor as the biggest independent exploration and production company in the UK North Sea, the Times reports. Linda Cook, chairwoman of Chrysaor, said: “With improving operating costs, competitive fiscal terms and a world-class skills base, the North Sea is undergoing a period of rejuvenation. Through its acquisition of the Shell portfolio, Chrysaor is now firmly placed to take advantage of this change.”

2. The Bank of England has warned that 10,000 jobs could leave the City on “day one” after the UK leaves the EU, the Guardian reports. Sam Woods, a deputy governor of the Bank, also admitted that forecasts of 75,000 job losses over the long-term were “plausible” at an appearance before peers on the Lords EU financial affairs sub-committee on Wednesday.

3. One of Britain’s most famous retail names has lost a legal battle to recover £1.25 billion in interest on overpaid VAT after five Supreme Court justices unanimously dismissed the claim, the Times reports. The claim by Littlewoods, which is owned by the Barclay brothers, involved one of the largest sums to be disputed in a tax case in a British court.

4. The struggling doorstep lender Provident Financial has turned to an executive involved in salvaging value from the wreckage of the nationalised Northern Rock to aid its revival. Sky News reports that Provident, which experienced one of the London market's biggest-ever one-day share price falls when it unveiled a massive profit warning in August, has appointed Rick Hunkin as its first group chief risk officer.

5. Thousands of BT employees will be told later this month of proposed cuts to their pension benefits as the telecoms giant wrestles with a near-£14bn deficit in its retirement schemes. Sky News reports that BT Group will say on Thursday alongside its half-year results announcement to the City that it is close to setting out a concrete plan to slash the soaring cost of its pension obligations.

6. Japan's Nikkei share average extended its strong rally to top a new 21-year peak on Thursday morning, with the mining sector getting a boost while buyers continued to pile into companies such as Honda Motor and Sony on robust earnings prospects, Reuters reports. The Nikkei rose 0.5 percent to 22,527.07 in early deals, the highest level since July 1996, trimming those gains to stand flat at 22,429.30 in midmorning trade.

7. HSBC has been accused of “possible criminal complicity” in a money laundering scandal involving South Africa’s wealthy Gupta family, the Guardian reports. Speaking in the House of Lords on Wednesday, two weeks after he first voiced concerns about UK links to the probe, Lord Hain said he had handed new evidence to the chancellor about the alleged involvement of a British bank in the “flagrant robbery” of South African taxpayers. 

8. The UK has received a damning bill of health in the World Economic Forum’s (WEF) latest gender gap report, the Independent reports, trailing dozens of other countries in areas like primary education, economic participation and healthcare, at a time when the Government is battling a slew of sexual abuse allegations. Out of the 144 countries examined by the WEF, the UK scraped into 15th spot behind G20 peers France and Germany.

9. BT has sparked Government anger by "dragging its feet" over the legal separation of its network arm Openreach, amid concern that critical deadlines could be missed the Telegraph reports. According to Westminster sources, the Government has been irritated by the company's failure to provide a crucial piece of analysis of its massive pension scheme, which is undergoing a major overhaul.

10. Spending on British television programmes will plummet by £500m a year over the next decade as tech giants Amazon, Apple and Netflix seek to dominate the living room, the director-general of the BBC has warned. The Telegrapgh reports that in a speech tomorrow Tony Hall will cite new research predicting that more than a fifth of funding for original homegrown programming will disappear as the advertising market declines and the BBC makes cuts after the latest licence fee settlement.

 

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Why the rapid rise of trendy co-working offices in London is 'something to beware of'

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

The Swiss RE building, known as the Gherkin, is pictured from a nearby office block in the City of London April 7, 2010.

  • The cumulative take-up of flexible space operators has expanded rapidly to nearly 8 million square feet.
  • Operators "have been accumulating a lot of space, they're all in expansion, and ... they're not cycle-tested," said CBRE's Kevin McCauley.

LONDON — The rapid take-up of office space by flexible operators is "something to beware of," because its relative novelty means it not cycle-tested, according to Kevin McCauley, head of London research at commercial property firm CBRE.

Speaking at a CBRE event in London on Tuesday, he said: "[Flexible operators] been accumulating a lot of space, they're all in expansion, and ... they're not cycle-tested."

That, he said, is "something really to beware of, because we've been through this previously. I would argue that the economy and the market has changed, but again, the model is yet to be tested."

In practice, that means the business model flexible operators use — which typically involves signing a long-term lease on a building and sub-letting component parts of it on much shorter leases — could prove risky in a cyclical downturn, which many analysts believe London is heading towards.

The rise and rise of flexible workspace

"Flexible workspace" might sound like a millenial-friendly buzz phrase, but it is fundamentally changing the make-up of office markets around the world.

Co-working spaces have popped up in ever-increasing number since the financial crash of 2008, with start-ups drawn to the flexibility and low financial exposure of short-term leases.

London is perhaps the world's leading city for flexible space, and there are now an estimated 150 co-working offices around the capital, and the chart below shows just how dramatic the impact flexible workspace operators has been on traditional long-term-lease offices:

screen_shot_2017 11 01_at_08.24.27_1024

It shows that total take up of permanent leases of office space under 5,000 square feet (illustrated by the white line) has dropped off sharply, especially in the last twelve months.

Meanwhile, the cumulative take-up of flexible space operators has expanded rapidly to nearly 8 million square feet, although operators have pulled back somewhat since 2016 in response to a slowdown in demand.

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NOW WATCH: We just got a super smart and simple explanation of what a bitcoin fork actually is

(+) Asian Market Update : Asian Stocks Rise as Bitcoin Makes New High

CryptoCoins News, 1/1/0001 12:00 AM PST

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Bitcoin Exchange Bribery Case Ends With 5-Year Jail Sentence

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

A New Jersey pastor convicted of accepting bribes from the now-defunct bitcoin exchange Coin.mx has been sentenced to five years in prison.

Bitcoin soared above $6,900 despite regulatory warning

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

Capture.PNG

  • The price of bitcoin, the red-hot digital coin up more than 550% this year, soared past $6,900 to $6,916 Wednesday evening, according to data by Markets Insider.
  • The rally comes ahead of a warning by the Securities and Exchange Commission on initial coin offerings, a cryptocurrency-based fundraising method.

Bitcoin blew past $6,900 Wednesday even after the Securities and Exchange Commission warned investors about certain cryptocurrency endorsements.

The red-hot digital currency traded at an all-time high of $6,916 per coin, according to Markets Insider data, on Wednesday. The rally followed a price spike triggered by the announcement of the potential launch of a bitcoin-linked financial product by exchange giant CME on Tuesday. The coin is up more than 550% this year. 

The upward march continued Wednesday evening despite a warning by the SEC about initial coin offerings, a red-hot fundraising method. 

ICOs, according to fintech analytics firm Autonomous NEXT, have raised more $2 billion this year. A number of celebrities from champion boxer Floyd Mayweather, to Paris Hilton have supported ICO projects in recent months. But the SEC said Wednesday that such endorsements do not mean that such investments are sound. Here's the agency (emphasis theirs):

"Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services – sometimes even including investment opportunities.  But a celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors.  It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment."

A number of countries, including China, have deemed ICOs illegal because startups have used the method to raise quick money without disclosing substantive information to investors.

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