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• Billionaire hedge-fund manager Bill Ackman lost his bid to get three of his own candidates on the board of ADP, the human-resources company.
• The vote came after a three-month testy back-and-forth between the activist investor and ADP.
• Ackman says that despite the loss, he and investors in his fund, Pershing Square, have actually won in the long-term.
• "What our investors want us to do is make them money. We've made them money so far in our investment in ADP," Ackman told Business Insider.
• The stock price has improved since Pershing Square got involved with ADP, which has translated into about $300 million in gains for his fund, he said. And he'll continue to have influence on the stock.
• ADP is essentially a win-win no matter what, Ackman said. 
• Ackman said his loss won't change his strategy – and that activism hasn't changed.

Bill Ackman's Pershing Square lost its bid Tuesday to appoint three nominees to the board of Automatic Data Processing, the human-resources company. But according to Ackman, he also won. 

Pershing Square in August disclosed an 8% stake in the company that handles many Americans' paychecks. Tuesday's vote capped a testy three months that included, among other things, insults slung from ADP's CEO, Carlos Rodriguez, and rival hedge fund managers alike. 

Ackman has contended that ADP, though it has performed well, could perform better, and deliver gains to his fund and other shareholders alike.

Overall, he's optimistic about ADP, despite the proxy loss. ADP's stock price has improved since Pershing Square made its presence known, to the tune of some $300 million in gains, he said. And he's confident ADP will act to make changes that his firm suggested, bringing on more gains. A win-win, so to speak.

Regardless, times have been tough for Pershing Square. An infamous long-term bet against Herbalife failed to produce gains, for instance, and assets at Pershing Square have dropped by $1.6 billion in the past five months, Business Insider earlier reported. A proxy fund for the firm is down about 3.3% after fees for the year through October, meanwhile.

We caught up with Ackman after the vote Tuesday to get his take on his strategy on ADP and activism going forward.

Rachael Levy: I wanted to know what happens to your strategy on ADP going forward? How does this change your strategy, if at all?

Bill Ackman: It doesn't change our strategy at all. The company has tried to characterize this as a major win for the company. It's actually a major win for the shareholders.

The company has tried to characterize this as a major win for the company. It's actually a major win for the shareholders.

So I got 31% support from shareholders out of the votes cast for my seat on the board, not including another 14% that were withheld from the guy I ran against. Because ISS, the proxy advisory firm, said, "Support Bill by withholding votes from Eric Fast." So looked at correctly, I got 45% support from shareholders for my candidacy in the board. It's not a win, but it's a major minority, or just shy of majority vote, for the board.

Shareholders throughout the contest totally supported our view that this company should be operating much more efficiently and should address the problems it has in its enterprise segment.

In order to win this contest, the company had to come out publicly and make statements about improving their margins, improving their competitiveness, about accelerating growth on the back half of next year. We're going to monitor the company very carefully. And now the ball is in management's court. Will they deliver on the promises they made to shareholders? And if not, nine months from now we nominate another slate of directors.

Levy: What happens to the $500 million you raised for this position?

Ackman: That capital is committed for four-and-a-half years. We're a long term investor in the company and we have no plans to meaningfully change our position.

Levy: What did you learn from this experience? Would you have done anything differently?

Ackman: The thing that hurt us a lot is that ISS did not support all three of our candidates like Glass Lewis and Egan Jones did. They recommended a very unusual way for shareholders to support my election to the board, which was to withhold votes for Eric Fast. That's ultimately what cost us the election.

Had I had known that was a possibility, I probably would have just run one candidate myself. It was a very simple decision – do they want to vote in favor? It almost becomes a referendum on our idea and there's no need to go through the gymnastics of withholding for one director to support me on the board. That, I would say, is the biggest takeaway from this experience.

Levy: Let me make sure I understand this. So instead of proposing three board members, you'd have proposed only one?

Ackman: Well, had I known that ISS would, I was confident that we'd get support from the proxy advisor firms and we did. Except in the case of ISS, they said, support Bill for the board, but do it in a backhanded way. Do it by withholding support from one of management's nominees. Those 14% of shareholders that voted that way, that withheld votes, were 14% of votes that I didn't get. That's what hurt our candidacy here.

But look, the unaffected price here before us, the stock was $97 or $98 a share. Today it's $112-plus. We own the economics of 33 million shares in the company. We're up a lot of money, $300 million or so in our investment in the company. That's a good start.

Levy: What other options do you have now? You mentioned the proxy vote in nine months. Is there anything else you can do as an activist?

Ackman: The ball, as I said, is back in management's court. They've committed to address the issues that we've identified. They already have plans underway to address these issues. So the question is are they going to address these issues or not? If they don't deliver for shareholders, next year we'll get the support we need to get on the board of the company. If they're successful, and we hope they're successful, the stock should go up a lot. So either way, we win.

Levy: And how are you going to approach activist positions going forward?

Ackman: The same way we always do. Again, we run very few proxy contests. The last proxy contest we ran was for board seats at Canadian Pacific. If we have to run another proxy contest, we will in the future.

One of the things that hurt us in this contest is the stock has done well. I don't think anyone's ever run a proxy contest with a stock as up as much as ADP before. And I think we've shown with the amount of minority support we got here that shareholders will support an activist in a case even where the stock has done well if  there is a significant chance of improvement.

ADP stock has done well over the years, therefore it's not a natural target for an activist. But over the last three months, we've explained why this is a target, because the company has huge potential for improvement.

What our investors want us to do is make them money. We've made them money so far in our investment in ADP.

Levy: Going forward, are there any new positions you can announce today?

Ackman: No.

Levy: More broadly, this is more of a philosophical question about the nature of activism, do you get the sense that activism has changed? Is it any different today in this raging bull market?

Ackman: I don't know that it has. Look, I'll point out the following which I think is something that isn't well understood. Activism isn't about winning proxy contests. It's about making money for investors by getting companies that aren't achieving their potential to achieve their potential.

Activism isn't about winning proxy contests. It's about making money for investors by getting companies that aren't achieving their potential to achieve their potential.

Proxy contests are one of the tools in the activist tool kit to motivate a company. We used that tool here, we were forced to, it wasn't our first choice. But we were forced to.

It has had the intended effect, OK? The ADP management team and board are going to be very motivated over the next nine months to deliver for shareholders. They know they have a major owner of the company who is watching everything they're doing and they have a much more educated shareholder base.

So it's a completely different company today and that's what creates an interesting opportunity.

Levy: With stock market highs as they are, does that make it harder to win support from investors?

Ackman: No. I think the facts are specific to every company. We were always viewed as underdogs here because ADP stock has done well. The fact that we got 31% support of shareholders, not including the 14%, shareholders that voted against Eric Fast to support me, is a very powerful indication.

By the way, we also got the support of the second largest shareholder of the company.

Levy: Was that BlackRock or Vanguard?

Ackman: BlackRock.

Levy: More generally, back to this broader question, do you think activists wield the same power when the market is this high?

Ackman: If activists have good ideas, they will get one of two things, they will get support from shareholders or companies will be pushed to address the issues that an activist identifies.

Levy So essentially, yes, they should have the same power they had previously.

Ackman: Bear in mind, ADP is the second biggest company ever for an activist to take a position in.

Levy: Right. What is the significance of that?

Ackman: The bigger the company, the more difficult the target, typically.

Levy: One other thought I had on this, this was an interesting campaign in that ADP was fairly active in speaking out. The CEO went on major news networks often, as well. If companies that activists target have advisors talking them through activist defense, counter communications campaigns, that kind of thing, does that make it so the lower hanging fruit of investments have been picked off? Does that make your job harder, essentially?

Ackman: Look, if every company in America is run efficiently, that's not good for activists. That's good for Americans, but not for activists.

Look, if every company in America is run efficiently, that's not good for activists. That's good for Americans, but not for activists.

We do very few of these, maybe one a year, and they're not usually proxy contests. I think we can find one or two interesting ideas a year. That's all we need to make a living.

Levy: Could you speak about overall stock market valuations?

Ackman: I'm not an overall stock market prognosticator. I'm the wrong guy for that question.

Levy: Back to ADP specifically, why go after a company that has been doing well over a company that could use a bigger boost?

Ackman: The gap where they could be and where they are is extremely wide. Because the company is in a good industry, there are good tailwinds, so that we do well, even if we are to fail as an activist, we'd still make money as an investor.

Levy: Bill, thank you so much for taking the time. Is there anything else that you think we should add, or that I didn't get to ask you that you think we should consider?

Ackman: The press is very focused on, they think of an election like a presidential election. This is very different. In a presidential election, the person who loses has no influence going forward. In an activist campaign, even if the shareholder activist loses if you will, I continue to be a shareholder of the company. The company has committed to make a significant number of changes and improvements on the business. And we get to monitor their progress and in nine months from now, we can put another slate of directors if we choose to.

Levy: So the fight continues on.

Ackman: It's the end of the beginning, OK? We're still in the very early innings but we're off to a good start. The stock is up, call it almost 15%, from the unaffected price.

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The Nasdaq edged lower on Tuesday, while the Dow and the S&P 500 were little changed.

• Dow: 23,544.60, -3.82, (-0.02%)
• S&P 500: 2,589.36, -1.72, (-0.06%)
• Nasdaq: 6,765.36, -20.96, (-0.32%)

1. Bill Ackman suffers a big blow in his effort to shake up ADP. Ackman's bid to add three directors including himself to ADP's board was rejected by the company's shareholders on Tuesday. He started a bitter proxy battle with the HR-software provider in August, calling for sweeping changes including the replacement of CEO Carlos Rodriguez.

2. Oil climbed to highs not seen in two years amid increased political tensions in Saudi Arabia. Brent crude oil, the international benchmark, poked above $64 per barrel earlier on Tuesday, before retracing some of those gains later in the day.

3. Republicans dropped a slew of changes to their tax bill on Monday. The amendment, which passed late in the evening on a party line vote, contains seven new adjustments to the tax plan. While Democrats decried the timing and sudden changes in the bill during the Ways and Means Committee markup, the package still was able to pass due to the GOP's overwhelming advantage in the committee.

4. An influential conservative group slammed a key piece of the GOP tax plan as "class warfare." David McIntosh, the president of Club for Growth, said in a statement that the bill contained several provisions that would attack wealthy Americans unfairly.

5. Traders are making big bets on the largest takeover attempt in tech history. Qualcomm may be willing to do whatever it takes to repel Broadcom's $103 billion hostile takeover, but stock investors remain bullish on a deal getting done.

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• Brookfield, an asset manager, is in talks to acquire shopping mall investor General Growth Properties, according to Bloomberg News.
• GGP shares are up 17% on the news, adding to its $18.18 billion market cap.
• The talks are in the early stages, Bloomberg reports, and may not lead to a deal.
• Brookfield currently owns 34% of GGP shares, which it purchased for $462 million as part of an agreement to take the company out of bankruptcy.
• The companies discussed a 10-15% premium above GGP's share price at the start of the week, according to Bloomberg.
• GGP is down 11.9% for the year, even after the move on Tuesday. 

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• Oprah Winfrey owns 10% of Weight Watchers' stock, with options to grow that position to 15%.
• She's made a net $300 million on the investment since late 2015, as the stock has surged almost 700%.

Weight Watchers shareholders rejoiced on Tuesday as the company's stock surged as much as 22%. But no one had more to celebrate than Oprah Winfrey.

The TV superstar and media mogul owns roughly 10% of the company's stock after making a huge investment back in late 2015, and it's paid off handsomely. Including the most recent share spike, Winfrey's total profit from the Weight Watchers bet now sits at a whopping $300 million, according to data compiled by Craig Giamonna of Bloomberg News.

At the root of the most recent stock increase was a stellar third-quarter earnings report, which saw the company beat analyst profit estimates and boost its full-year earnings forecast.

On the heels of Weight Watchers' success, it's clear that the massive profits reaped by Winfrey are fully deserved, considering how much her presence in ad campaigns has boosted sales and brand visibility. And she'll appear in more ads during the ever-important winter season, CEO Mindy Grossman said on the earnings call.

Keep in mind that it was Winfrey's initial investment in the company that kickstarted a resurgence in stock strength. When she first bought into Weight Watchers, it was trading below $7 per share, but then doubled in a single trading session. Its stock has since climbed 674%, including almost 400% in 2017 alone.

And since Winfrey also owns options that could increase her stake in the company to 15%, she could see an even bigger windfall of profits if she elects to exercise them. Including the initial investment of $43 million, her full stake is now worth more than $500 million.

Not bad at all for a side investment.

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• Two luxury car-loving founders behind the crypto currency startup Centra have left the company just weeks after their company raised $32 million through an unregulated fundraising technique. 
• The founders, Sam Sharma and Raymond Trapani, left Centra after a New York Times article brought to light the pair's on-going legal troubles.
• Members of the crypto currency community have also shared concerns that Centra's core product — a prepaid card for spending cryptocurrencies like bitcoin — may never be produced, though the company's new lawyer says these fears are unfounded.

Two of the founders of a flashy crypto currency startup that raised $32 million last month amid a storm of skepticism about its business and leadership have abruptly left the company. 

Sam Sharma and Raymond Trapani, who reportedly had no previous experience running an crypto currency business before founding Centra, but whose love of luxury cars and piles of cash are well documented on both social media and in court documents, "are stepping aside," the company announced Oct. 31 in a blog post. Sharma most recently served as Centra's president and Trapani as its chief operating officer, though both held various titles in the three-month whirlwind that's marked the early days of the startup. 

The co-founders made the decision to leave Centra on their own following an unflattering profile in The New York Times, said Allan Shutt, Centra's general counsel, adding that it's not unusual for founders to leave a company once it's outgrown them. The Times article highlighted the pair's relative inexperience in business and revealed that they have both been indicted for perjury in Manhattan. 

"It wasn't a hard decision to say what is the best course here to push the company foward," he said.

Shutt claimed to speak on behalf of Sharma and Trapani. The pair didn't respond to attempts to reach them via Facebook and LinkedIn. Email sent to Trapani's work address was rejected by Centra's server. 

Centra has said it's developing a debit card that users will be able to link to the digital wallets they use to store cyber currencies including bitcoin and ether. Users would be able to use the debit card to make purchases with their cyber currencies of items being sold for dollars or other traditional currencies. 

After announcing its product in August, the company brought on board celebrity endorsers including boxer Floyd Mayweather and musician DJ Khaled to promote its fundraising effort. In September, Centra raised its $32 million via an initial coin offering, or ICO.

In an ICO, a company creates and exchanges a new cyber currency for an established one, such as bitcoin or ether. Unlike initial public offerings, where companies raise money by selling their stock to the public, ICOs are basically unregulated.

A number of eyebrow-raising events have led some to question Centra as a business.

The executive shakeup comes as questions are being raised about Centra and follow a string of eyebrow-raising events at the company and among its employees.

Just weeks before their departure — and immediately after Centra completed its fundraising — Sharma and Trapani were indicted by a Manhattan grand jury for perjury. The indictments were a result of their testimony in July during a trial over charges that Sharma had driven under the influence last year, according to Times. Sharma and Trapani both testified that Sharma had had only had one drink before getting in his car, according to The Times. 

Despite that, Sharma ended up cutting the trial short and pleading guilty to a misdemeanor DUI charge. The perjury charges accuse Sharma and Trapani of knowing that Sharma had more to drink than they testified at trial, The Times reported. 

But Sharma and Trapani's legal dramas aren't the only questionable things going on at Centra. Before founding the company, neither had any experience running a cyber currency business. Sharma's main business experience was running a luxury car rental business, called Miami Exotics.

According to Florida state records, William Hagner, who is Trapani's grandfather and is replacing Sharma as Centra's president, served as president of a Miami Exotics based in Boca Raton, Florida. Trapani, who is being replaced as Centra's COO by Robert Farkas, another co-founder who previously served as the company's chief marketing officer, served as vice president of Miami Exotics.

Meanwhile, in a blog post in August, a web developer named Harry Denley raised numerous concerns about Centra's then-impending ICO. Most notably he questioned whether Michael Edwards, who Centra at the time listed as its CEO, was a real person. Denley noted that Centra had posted two different photos of Edwards on its site over the course of just a few days. One of the pictures appeared to be of a professor in Canada whose actual name appeared to be Andrew Halayko. He also linked to a questionable LinkedIn profiles of Edwards. 

Denley reported that at least one other person listed as a member of Centra's team also appeared to be a fake. 

After threatening to sue Denley, Centra later attributed the apparently fake profiles to mistakes by freelancers. Edwards' name and that of the other person Denley identified were removed from the company's website and Edwards' LinkedIn profile was deleted.

The company then named Sharma its president. 

The co-founders are out, but Centra still has to build its core product.

Sharma still retains a stake in Centra after leaving the company, said Shutt, the general counsel. He wouldn't say whether Trapani does also. 

Centra's digital wallet app is available for download, but the company hasn't yet distributed its debit card to customers. On its website, Centra says it plans to distribute them by the end of this year. 

Despite the questions raised about the company and the executive upheaval, customers and investors have no cause to worry, Shutt said.

"I truly believe that the product will be developed in the near future," he said. "The money is not in jeopardy. It's certainly not a scam."

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• Snap reports third-quarter earnings after the markets close on Tuesday.
• The company is popular among millennials, but many aren't optimistic about the company's earnings, according to Robinhood.
• Watch Snap's stock move in real time here.

Millennials aren't too bullish ahead of Snap's third-quarter earnings report, due out after the bell on Tuesday.

Investors on the Robinhood platform, which is popular among millennial investors, are buying shares of Snap 2% more than they are selling shares in the week ahead of earnings. That's a big drop from last quarter's report, ahead of which Robinhood investors were buying shares 20% more than they were selling.

Snap is the ninth most popular stock on Robinhood's platform.

"Retail investors on Robinhood are losing confidence in Snap ahead of their earnings report today," Sahill Poddar, a data scientist at Robinhood, told Markets Insider.

Wall Street is just as mixed as retail investors. Only nine of the 34 analysts surveyed by Bloomberg rate the company a "buy" while 20 are neutral and five a "sell." Wall Street is expecting an adjusted loss of $0.15 on revenue of $235.5 million.

Snap shares are up about 2.43% at $15.19 a piece ahead of the results. Snap is still trading about 10% below its initial public offering price of $17.

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• CME Group will launch bitcoin futures in the fourth quarter.
• Bitcoin will trade in $25 ticks and have a daily range of no more than 20% above or below the prior settlement price.

CME Group, one of the largest exchange groups in the world, announced last week it will roll out a bitcoin futures contract in the fourth quarter.

The announcement has generated a lot of buzz on Wall Street, and sparked a big rally in the cryptocurrency. Bitcoin climbed from $6,100 on October 30 (the day before the announcement) to more than $7,000 on November 7. 

Futures, which allow two parties to exchange an asset at a specified price at an agreed upon date in the future, have been around since the late 19th century.  In some cases, when a futures contract settles the buyer of the contract can receive their payment in the product itself (a barrel of oil, say), or in cash. The latter are referred to as cash settled futures. CME's bitcoin futures will settle in cash. (You can read a full explainer on bitcoin futures here.)

As futures get ready for trading, CME this week sent out a note setting out how the bitcoin futures will work. Here's what you need to know:

• Each contract is composed of five bitcoin. 
• Each tick (the minimum fluctuation) will be $5 per bitcoin, amounting to $25 per contract. This means that every time the contract moves by the smallest increment a trader will gain or lose $25 per contract they hold. 
• Bitcoin futures will trade on CME Globex and CME ClearPort from 5 p.m. to 4 p.m. CT Sunday to Friday. The long trading hours are typical of futures contracts that are traded electronically. 
• There is a spot position limit of 1,000 contracts. Futures contracts always have limits on the number of contracts one person or entity owns. This prevents someone from being able to "corner the market."
• Bitcoin futures will have a price limit of 20% above or below the prior settlement price. 
• Price settlement will be based on the Bitcoin Reference Rate, or a daily reference rate of the US dollar price of one bitcoin as of 4:00 p.m. London time. 

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• Broadcom's record-breaking $130 billion bid for rival chipmaker Qualcomm could earn banks as much as $280 million in advisory fees.
• Qualcomm is set to reject the unsolicited offer, according to several reports. 
• Wall Street bankers have been on a feeding frenzy orchestrating transactions for a handful of tech chipmaking firms. 
• If pending deals gain approval, bankers will have earned a payday of as much as $790 million in advisory and debt financing fees from four takeover transactions since 2015.
• The deal spree has been especially lucrative for a handful of banks, with JPMorgan working on three of the four deals. 

Broadcom just unloaded a record-breaking $130 billion bid for fellow semiconductor giant Qualcomm.

If completed, it would be the largest tech takeover of all time — and could net the companies' investment bankers a massive payday of as much as $280 million in advisory fees. Qualcomm is reportedly planning to reject the offer. 

This isn't the first mammoth transaction Wall Street bankers have orchestrated involving these two firms. Qualcomm was in the middle of trying to buy NXP Semiconductor's for $47 billion — which also would be one of the largest deals of all time — before Broadcom crashed the party and said it would buy Qualcomm, with or without NXP.

In fact, bankers have been bingeing on lucrative M&A deals involving Broadcom, Qualcomm, and NXP over the past three years. 

The feeding frenzy so far, including the pending transactions, involves four deals since 2015 worth $230 billion. The deals could trigger as much as $790 million in fees for the Wall Street firms running the deals, according to according to Jeffrey Nassof, director of consulting firm Freeman & Co.

That figure includes financing fees — except for the just-announced Broadcom for Qualcomm deal — which adds $210 million to the tally. Broadcom could reportedly require as much as $90 billion in debt to close the deal, which means the total amount of advisory and financing fees paid out to banks could surpass $1 billion. 

In many cases, the same banks have advised on multiple transactions. JPMorgan advised Broadcom on its deal with Avago, signed on to help finance Qualcomm's deal for NXP Semiconductors, and is part of the financing team for Broadcom's bid for Qualcomm. 

Here's a breakdown of the transactions, as well as how much bankers earned in advisory fees:

March 2015: NXP buys Freescale Semiconductor — $16.7 billion 

Announced in March of 2015 and completed later that year in December.

Dutch chipmaker NXP was advised exclusively by Credit Suisse, which also provided financing for the transaction along with several other banks. Credit Suisse earned $25 million in fees for advising on the deal, and a share of the $35 million fee for arranging $5.3 billion in debt financing, according to according to Jeffrey Nassof, director of consulting firm Freeman & Co.

Morgan Stanley was the exclusive advisor to Freescale, which paid the bank $42 million in fees. 

Fees: $102 million

May 2015: Avago Technologies buys Broadcom — $37 billion

Avago announced it would pay $17 billion in cash and $20 billion in stock to acquire Broadcom, adopting the latter company's name and creating the behemoth that's now pursuing Qualcomm. The deal closed at the beginning of 2016.

Avago hired Deutsche Bank as its financial adviser for the deal, paying $22.5 million in fees, according to fillings with the Securities and Exchange Commission. 

Broadcom hired JPMorgan as its adviser, agreeing to pay a fee of 0.14% of the total deal value, which comes to nearly $52 million. 

Wall Street banks also earned $100 million in fees for arranging $16.1 billion in debt financing, according to Nassof. 

Fees: $174.5 million

October 2016: Qualcomm to buy NXP Semiconductor — $47 billion offer

Last year, Qualcomm ponied up an all-cash offer of $47 billion to buy NXP. The deal is still in limbo, as NXP shareholders — including feared activist Elliott Management — had been hoping to extract a sweeter offer. 

The boutique bank Qatalyst Partners was the lead adviser to NXP, along with Barclays and Credit Suisse. On the buy side, Goldman Sachs and Evercore advised Qualcomm. The boutique firm Centerview Partners advised Qualcomm's board. And Goldman Sachs and JPMorgan signed on to provide debt financing.

The banks would share a pot of between $140 million and $160 million, according to Nassof. 

Banks would also earn a $75 million fee for arranging $24.6 billion in debt to finance the deal. 

Fees: As much as $235 million

November 2017: Broadcom to buy Qualcomm — $130 billion offer 

Moelis & Co., Citi, Deutsche Bank, JPMorgan, Bank of America Merrill Lynch, and Morgan Stanley are each advising Broadcom on the potential merger. Those banks could share between $110 million and $135 million in advisory fees, according to Nassof.

Qualcomm has retained Goldman Sachs and Evercore to mount its defense in the deal; the banks could earn between $120 million and $145 million in fees, according to Nassof. 

Bank of America, Citi, Deutsche Bank, JPMorgan, and Morgan Stanley are also helping arrange debt financing, and Silver Lake Partners has agreed to supply $5 billion in convertible debt financing. 

Broadcom could reportedly require as much as $90 billion in debt to close the deal, but it's too early to say how much banks would net from arranging the financing. If they financed the majority of the transaction through the bond markets, however, the fees could top $500 million, according to Nassof. 

Fees: As much as $280 million

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• Approximately 1.8 million veterans in payroll jobs across the US would get a raise if Congress raised the federal minimum wage to $15 per hour by 2024, a study by the Economic Policy Institute found.
• Nearly two-thirds of the veterans who would get the raise are age 40 or older, over 60% have some college experience, and nearly 70% work full time.
• The real federal minimum wage peaked back in 1968.

Nearly 2 million US veterans would benefit from raising the federal minimum wage to $15 per hour.

Approximately 1.8 million of the 9 million veterans in payroll jobs across the US would get a raise if Congress raised the federal minimum wage to $15 per hour by 2024, the liberal-leaning Economic Policy Institute determined in an analysis on the Raise the Wage Act of 2017 in honor of Veterans Day.

Nearly two-thirds of the veterans who would get the raise are age 40 or older, over 60% have some college experience, and nearly 70% work full time, the EPI found.

"This means that despite their service to the country, the intensive training that they have received, and the access to additional education provided to veterans through the GI Bill, 1 out of every 5 veterans is still being paid so little that they stand to benefit from raising the minimum wage," the Economic Policy Institute's David Cooper and Dan Essrow wrote.

The debate over raising the federal minimum wage has heated up over the past few years. Those against raising it argue that a higher minimum wage could lead businesses to raise their prices or to cut jobs and benefits in an attempt to offset the cost.

Those in favor of raising it, on the other hand, argue that raising the minimum wage above the current $7.25 per hour federal standard would improve living standards, and would enable consumers to spend more. That increased spending would then give a nice, healthy boost to an economy that still shows some slack several years after the Great Recession.

The current federal minimum wage is at $7.25 per hour. Parts of the country have raised their minimum wages above that, including a number of states and major cities like Seattle, Washington and Los Angeles, California.

The Raise the Wage Act of 2017 was introduced by Sens. Bernie Sanders (I-VT) and Patty Murray (D-A), and Reps. Bobby Scott (D-VA) and Keith Ellison (D-MN) back in April. It would incrementally raise the minimum wage to $15 per hour by 2024, and starting in 2025 it would be "indexed" to median wages so that each year the minimum wage would be adjusted based on the growth in median earnings. It would also increase the subminimum wage for tipped workers (which has been at $2.31 per hour since 1991) and phase out the youth minimum wage and the subminimum wage for workers with disabilities.

The real federal minimum wage peaked back in 1968 at $8.54 in 2014 dollars, according to an analysis by the Pew Research Center. The chart below from Pew compares the real (adjusted for inflation to 2014 dollars) federal minimum wage to the nominal (non-inflation adjusted) federal minimum wage since 1939.

A study from The Economist in 2015 found that "one would expect America... to pay a minimum wage around $12 an hour" based on how rich the country is and the pattern among other developed economies in the Organization for Economic Cooperation and Development (OECD).

SEE ALSO: Millions of American adults are not allowed to vote — and they could change history

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CME Group Chairman Emeritus Leo Melamed said he believes in the future of bitcoin and expects major investment in his company's futures contracts.

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Bill Ackman's bid to add three directors, including himself, to ADP's board was rejected by the company's shareholders on Tuesday.

The billionaire founder of the hedge fund Pershing Square started a bitter proxy battle with the HR-software provider in August, calling for sweeping changes which included the replacement of CEO Carlos Rodriguez. Ackman's nominees were supported by less than 20% of ADP's shareholders, the company said. 

With that defeat, we witnessed the fall of a Wall Street god, according to Business Insider's Linette Lopez. 

Elsewhere in investing news, one of the hottest hedge fund launches of the year has doubled its assets in about six months. Bridgewater reportedly paid a $1 million settlement to an employee pushed out after a relationship with a top exec. Leucadia has doubled down on an investment in hedge fund Folger Hill.

And one of the world's hottest investment strategies is slowing — and that could shift the whole landscape.

In deal news, Disney has reportedly been in talks to buy most of 21st Century Fox. The deal could cost Disney $40 billion, according to Jefferies. Disney and Fox need a deal to take on the tech giants, according to Business Insider's Mike Shields. Just not this deal.

Elsewhere in deal news, Tesla is pushing forward with robot manufacturing, and traders are betting that Broadcom's record-setting hostile takeover of Qualcomm will get done.

The Tax Policy Center released an analysis on Monday of the Tax Cuts and Jobs Act, saying the bulk of the benefits from the GOP tax bill would go toward wealthier Americans. A couple of hours later, it retracted its analysis of the bill, following the discovery of an error with their analysis. Here are the rest of the headlines:

• One provision tucked in the bill could face significant resistance from some of the largest companies in the world
• Republicans dropped a slew of changes to their tax bill on Monday — here's what they mean

In related news, Forbes says Commerce Secretary Wilbur Ross inflated his net worth.

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• Snap reports third-quarter earnings after Tuesday's closing bell.
• Snap's stock is up 2.16% ahead of the report.
• Watch Snap's stock move in real time.

Snap is trading up 2.56% at $15.21 a share ahead of the company's third-quarter earnings report, which is scheduled to be released after markets close on Tuesday.

Wall Street is expecting an adjusted loss of $0.15 per share on revenue of $235.5 million. Nine of the 34 Wall Street analysts tracked by Bloomberg rate the company a "buy", while 20 rate it a "neutral" and five rate it a "sell".

Snap has been facing issues with its platform ahead of the report. The company acknowledged that "some" users were experiencing issues with the app and said it's working on a fix. A lot of users tweeted their frustrations about the outage.

The company was hit by layoffs, and executives have said they will slow hiring next year. Recently, 18 people were laid off from the recruiting division and about 12 were cut from the company's hardware division.

Snap is still trading 10.4% below its initial public offering price of $17.

Read more about the company's platform issues here.

SEE ALSO: Snapchat isn't working for a lot of people

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• Broadcom is attempting a hostile takeover of Qualcomm for $103 billion, which would make it the biggest tech deal ever.
• Qualcomm hasn't been receptive to the proposition and plans to fight it, while Broadcom looks ready for a proxy fight.
• Investors are positioning for further share gains for Qualcomm, which can be interpreted as confidence in a deal eventually getting done.

Qualcomm may be willing to do whatever it takes to repel Broadcom's $103 billion hostile takeover, but stock investors remain bullish on a deal getting done.

Despite a 16% spike in Qualcomm shares since initial reports of the proposed deal, traders are still paying the highest premium in more than two years to bet on a further increase, relative to hedges against stock losses.

And while the company's stock still sits roughly 10% below the $70 per share offered by Broadcom, that's to be expected at this point. Even though acquisition targets generally spike on the initial news, they tend to trade at a discount to the offer price until a deal is set in stone on both sides and proper regulatory approval is received.

With that in mind, investor positioning can be a valuable indicator when handicapping the likelihood a deal gets completed. While Qualcomm is very much trading in this middle ground now, the unabashed bullishness being signaled by the options market suggests that they're confident in further share gains that would likely accompany a done deal.

It's possible that traders are being encouraged by Broadcom's aggressive approach to the takeover. According to a Bloomberg report, the company is getting ready for a proxy battle and may make its pitch directly to Qualcomm shareholders if their board rejects the offer. Another tactic Broadcom could use is to nominate directors for Qualcomm’s board ahead of the company’s annual general meeting in 2018.

Investor confidence — and an accompanying lack of downside worry — can be seen through another measure, which looks at the portion of Qualcomm shares being shorted. The indicator, known as short interest, is close to its lowest level in more than six months, according to data compiled by IHS Markit.

So while the ultimate outcome is still very much unknown, those looking to get a read on investor expectations would be well-served to watch both metrics outlined above.

SEE ALSO: One of the world's hottest investment strategies is slowing — and that could shift the whole landscape

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• Disney reportedly held discussions with 21st Century Fox about buying a portion of its assets. Jefferies says those assets could be worth $40 billion. 
• Shares of Disney and Fox are up after the reports of the talks.

Disney reportedly held discussions with 21st Century Fox to buy a portion of its assets. According to Jefferies, those assets could be worth $40 billion.

The media and entertainment company is reportedly eyeing Fox's international cable networks, its Star film studio, and it's non-sports/non-news cable networks, such as FX and National Geographic. In the event of a deal, John Janedis of Jefferies believes Fox and its properties could be worth 40% above current levels, or $39 per share. 

There's value in the "sum of the parts," Janedis notes, which could give Fox considerable upside. He estimates that the international cable networks are worth $14 billion at a multiple of 10x EBITDA, the film studio is worth $560 million at 9X EBITDA, the non-sports or news cable networks is worth $1.2 billion in 8.5X EBITDA, and stakes in SKY and other assets could be valued at $8.6 billion and $5 billion, in addition to Fox's 30% stake in Hulu.

Fox's shares have risen 10% since news of the discussions between the media conglomerates were revealed. Disney's shares have gone up 1.58%.

Rupert Murdoch, the media mogul behind Fox, has reportedly rejected Disney's offer as it currently stands. 

"Given the potential structure, we do not think the remaining assets are appealing enough to FOXA as a standalone to complete a deal in the proposed form," Janedis wrote in a note. Disney would have to offer the company at least $37 billion to make the deal worth it.

Disney has recently made a series of investments to boost its direct-to-consumer video streaming services.

Fox's shares are trading at $28.27 though it has been lagging down 4.39% year over year. Disney stock is trading at $101.63 and is down 5.07% for the year.

To read more about the upside of Disney's streaming services bet, click here.

SEE ALSO: CREDIT SUISSE: Disney needs to be rewarded for going after Netflix

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• Blue Apron reported disappointing earnings results last week.
• Competition in the meal-kit delivery service is growing.
• Shares hit an all time low of $3.35.
• Watch the stock move in real time here.

Blue Apron is down 13.66% on Tuesday at $3.35 a share, a new all-time low.

On Tuesday, there were no new downgrades from Wall Street and no announcements from the company. But still, the company plunged to new lows.

Blue Apron posted its third-quarter earnings earlier this month, reporting $210.6 million of revenue, which was higher than Wall Street's expectations. The company, however, still saw a bigger than expected loss per share of $0.47.

Blue Apron said it reduced its marketing costs by 31% in the quarter, which was the reason for its 6% decline in total customers. The numbers continued to work against Blue Apron, as the cost of goods sold increased 13% year-over-year, accounting for 71% of its revenue in the most recent quarter.

The company's largest competitor, Hello Fresh, went public in Germany last week. Hello Fresh reported revenue growth in its most recent quarter, and a net loss much smaller than Blue Apron's.

Blue Apron is down 66.13% since its initial public offering of $10 a share.

Read more about Blue Apron's competitors here.

SEE ALSO: Blue Apron costs surge despite layoffs and reduced marketing spend

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• Forbes Magazine has accused Commerce Secretary Wilbur Ross of inflating his net worth, saying the bankruptcy financier is wealthy, but not a billionaire.
• Forbes says Ross repeatedly lied and misled the magazine about his net worth for more than a decade, both to pad his ego and to help land business opportunities. 
• Forbes reports the deception started to unravel after he accepted the position in President Donald Trump's cabinet, requiring Ross to disclose his financial assets and revealing inconsistencies with what he'd been telling the magazine for years.
• Ex-employees of Ross' private equity firm claim that he has for years been lying to the magazine, investors, and colleagues. 

Commerce Secretary Wilbur Ross isn't a billionaire — and it's possible he never was, according to a bombshell report by Dan Alexander in Forbes Magazine. 

Ross has come under fire recently for leaving $2 billion he told Forbes he owned off of his financial disclosure forms when he joined President Donald Trump's administration after the election. Senate Democrats have called for an investigation into the missing billions. 

Forbes, which bumped Ross from its annual Forbes 400 list of wealthiest Americans last month with a far lower net worth of $700 million, conducted an investigation of its own and believes it has solved the mystery (emphasis added):

"That money never existed. It seems clear that Ross lied to us, the latest in an apparent sequence of fibs, exaggerations, omissions, fabrications and whoppers that have been going on with Forbes since 2004. In addition to just padding his ego, Ross' machinations helped bolster his standing in a way that translated into business opportunities."

Forbes conducted interviews with 10 former employees from Ross' private equity firm WL Ross & Co., and reported that Ross has for decades lied to not just the magazine, but also investors, colleagues, and employees. 

Forbes said it sent questions to Ross and the Commerce Department. This was their response, according to Forbes:

"Secretary Ross has filed all required disclosures in accordance with the law and in consultation with both legal counsel and ethics officials at the Department of Commerce and Office of Government Ethics. As we have said before, any misunderstanding from your previous conversation with Secretary Ross is unfortunate."

Read the full story at Forbes.

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• Bill Ackman lost his proxy fight for seats on ADP's board on Tuesday.
• Shares of ADP fell about 1.4% after the vote count came in.
• Watch ADP's stock price move in real time here.

ADP has been battling Bill Ackman to fend off the addition of three Ackman-friendly directors to the company's board. On Tuesday, the final vote came in and ADP's shareholders decided to deny Ackman his seats.

Shares of ADP are down 1.24% to $109.95 after the vote.

Ackman disclosed an 8% stake in the HR software giant when he started his proxy fight in August and had said he didn't plan on selling his shares if the vote didn't go his way. The investor said he would continue calling for changes at the company to increase margins and profitability.

Under the tenure of CEO Carlos Rodriguez, shares have almost doubled, but Ackman started his proxy fight by saying that shares could double again if the company focused on increasing shareholder value.

Shares have moved 7.57% higher over the last year.

Read more about Ackman's fight with ADP here.

SEE ALSO: Bill Ackman suffers a big blow in his effort to shake up ADP

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The dollar is higher, nearing its best level in four months.

The US dollar index was up by 0.4% at 95.11 at 8:41 a.m. ET.

Later on Tuesday, we will hear from two Federal Reserve policy makers: outgoing chair Janet Yellen and Randal Quarles, who recently joined the board of governors.

Yellen's speech comes less than one week after President Donald Trump's announcement that he will replace her  with Jerome Powell at the end of her term in February 2018. As for Quarles, he will be taking part in a discussion on financial regulation in what will be his first extensive comments since taking up the job.

"Typically it would be Yellen’s comments that would be of most interest but under the circumstances, it may be Quarles that most are interested in hearing from," Craig Erlam, senior market analyst at OANDA, said in emailed comments. "Yellen’s term will end in February and a rate hike in December is almost entirely priced in, leaving us with little to potentially take from her message, especially given the number of positions still to be filled on the board."

As for the rest of the world, here was the scoreboard at 8:47 a.m. ET:

• The euro is down by 0.4% at 1.1564 against the dollar. Earlier, German industrial production fell by 1.6% month-over-month in September, compared to expectations of a 0.8% drop.
• The British pound is down by 0.4% at 1.3125 against the dollar after UK retail sales disappointed. 
• The Russian ruble is up by 0.4% at 58.8651 per dollar, while Brent crude oil, the international benchmark, is down by 0.4% at $64.05 per barrel.
• The Indian rupee is weaker by 0.6% at 65.005 per dollar.
• The Japanese yen is lower by 0.3% at 114.09 per dollar
• The Canadian dollar is down by 0.6% at 1.2776 per dollar

SEE ALSO: Millions of American adults are not allowed to vote — and they could change history

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ADP shareholders voted against adding three directors to its board including Bill Ackman, handing a loss to the activist investor after a three-month long campaign, The Wall Street Journal and Bloomberg reported on Tuesday. 

The billionaire founder of the hedge fund Pershing Square has engaged in a bitter proxy battle with the HR-software provider, calling for sweeping changes including the replacement of CEO Carlos Rodriguez. 

Ackman, whose hedge fund disclosed an 8% stake in the $49 billion company in August, said the company's margins were "vastly below" what they could be. He said ADP's stock price could double in five years without the company needing to change its dividend or capital structure. 

ADP shares were down by less than 1% in premarket trading on Tuesday. 

SEE ALSO: Disney has reportedly been in talks to buy most of 21st Century Fox

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Bitcoin prices dropped to a four-day low below $6,950 yesterday before regaining some poise. So has the pullback run out of steam?

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

• US markets are mixed while the rest of the world is mostly red.
• Oil holds 2-year highs.
• The US dollar is rising.

Here's Lutz:

Good Morning!  Getting back to speed after some R&R down at Mile Marker Zero.  US futures are mixed early, with DJIA in the green, but Nasdaq and S&P slightly lower.   Mostly a sea of red overseas, where the DAX is down small.  Fins are higher in Germany, but Healthcare is getting hit across the continent.   Energy Issues running still, but Maersk getting hit on #s, while Autos weaker on BMW.   FTSE down 20bp despite a bid in Big Oil, while Media weaker on SKY.  Eyes remain on Saudi’s Tadawul Exchange which was 3% lower early, but has mitigated losses to 1% right now.   It was a ripsaw in Asia - Nikkei up 1.7% as Yen weakens - Hang Seng up 1.4% as Energy rallies - Shanghai added 70bp - KOSPI lost small, while Aussie’s Energy Sector up 2.6% propelling ASX over 6,000.

The Greenback is rebounding from yesterday’s weakness, jumping upside 95 in the early go.   Weaker UK retail Sales weigh on Sterling, while Stronger EU Retail Sales are not helping Euro early, which has dropped under 1.16 - Soft Wage data weighs on Yen, while the Aussie $ is getting hit as the Central Bank holds rates.   Ore jumped 2.5% overnight in China, but Industrial metals are getting worked over, with Platinum, Nickel, Copper and Silver all 1%+ lower.   Oil holding 2Y+ highs from Saudi Crackdown ahead of outlooks from OPEC and EIA today, while Natty is giving back some of yesterday’s squeeze, getting rejected from $3.15 in the early go.  

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

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

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The founder of financial futures and former chairman of the CME Group is bullish on bitcoin.

The post “A Very Important Step in Bitcoin’s History”: CME Pioneer Heralds New Asset Class appeared first on CryptoCoinsNews.

[…]

The post Bitcoin2X is Just Around the Corner: What You Should Know appeared first on CryptoCoinsNews.

Here is what you need to know. 

The US dollar nears a 4-month high. The US Dollar Index trades up 0.36% at 95.09 and is threatening its best level since the middle of July. 

The Reserve Bank of Australia is worried about household debt. The central bank held its benchmark interest rate at 1.50% and warned, "Household incomes are growing slowly and debt levels are high."

Oil hits its best level in 2.5 years. Brent crude oil hit $64.65 early Tuesday as political tensions in Saudi Arabia remain elevated.

Goldman Sachs says Bitcoin could get close to $8,000. "It exceeded an equality target from the July low at 6,044," Goldman Sachs technical head Sheba Jafari wrote. "This break indicated potential for an impulsive advance, one that could reach at least 7,941."

Disney has reportedly been in talks to buy most of 21st Century Fox. A deal would exclude Fox broadcast network and Fox's sports channels, according to CNBC's David Faber. 

Broadcom offers to buy Qualcomm in the largest tech deal ever. The offer of $60 in cash and $10 a share in Broadcom shares values Qualcomm at about $130 billion on a pro forma basis, including $25 billion of net debt. 

Salesforce reveals its 2019 guidance. A press release issued at Salesforce's 170,000-person tech conference said the company expects to finish its next fiscal year with revenue of between $12.45 billion and $12.5 billion, making for about 20% growth versus the current year. 

Stock markets around the world are mixed. Japan's Nikkei (+1.73%) led the advance in Asia and Britain's FTSE (-0.17%) lags in Europe. The S&P 500 is set to open little changed near 2,591.

Earnings reporting remains heavy. Mallinckrodt and Valeant report ahead of the opening bell while Snap releases its quarterly results after markets close.

US economic trickles out. JOLTS Job Openings will be released at 10 a.m. ET. The US 10-year yield is up 1 basis point at 2.33%.

Join the conversation about this story »

Here is what you need to know.

The US dollar nears a 4-month high. The US Dollar Index trades up 0.36% at 95.09 and is threatening its best level since the middle of July.

The Reserve Bank of Australia is worried about household debt. The central bank held its benchmark interest rate at 1.50% and warned, "Household incomes are growing slowly and debt levels are high."

Oil hits its best level in 2 1/2 years. Brent crude oil hit $64.65 early Tuesday as political tensions in Saudi Arabia remain elevated.

Goldman Sachs says bitcoin could close in on $8,000. "It exceeded an equality target from the July low at 6,044," Goldman Sachs technical head Sheba Jafari wrote. "This break indicated potential for an impulsive advance, one that could reach at least 7,941."

Disney has reportedly been in talks to buy most of 21st Century Fox. A deal would exclude the Fox broadcast network and Fox's sports channels, according to CNBC's David Faber.

Broadcom offers to buy Qualcomm in the largest tech deal ever. The offer of $60 in cash and $10 a share in Broadcom shares values Qualcomm at about $130 billion on a pro forma basis, including $25 billion of net debt.

Salesforce reveals its 2019 guidance. A press release issued at Salesforce's 170,000-person tech conference said the company expected to finish its next fiscal year with revenue of $12.45 billion to $12.5 billion, making for about 20% growth versus the current year.

Stock markets around the world are mixed. Japan's Nikkei (+1.73%) led the advance in Asia, and Britain's FTSE (-0.17%) lags in Europe. The S&P 500 is set to open little changed near 2,591.

Earnings reporting remains heavy. Mallinckrodt and Valeant report ahead of the opening bell, while Snap releases its quarterly results after markets close.

US economic trickles out. Jolts Job Openings will be released at 10 a.m. ET. The US 10-year yield is up 1 basis point at 2.33%.

Join the conversation about this story »

• "It's about 20 that have something that is already being assessed,” the ECB's Daniele Nouy said.
• Non-EU lenders must apply for new licences to continue operating services in the bloc after Brexit.
• Major banks are all expected to shift some staff from Britain as a result.

As many as 20 lenders have applied for new EU banking licences as they make preparations for a shift in Europe's financial services landscape after Brexit, one of the European Central Bank's most senior figures has said.

Speaking on Tuesday, Daniele Nouy said that nearly two dozen applications for licences are "already being assessed," following the UK's decision last year to leave the EU. 

"It's about 20 that have something that is already being assessed," Nouy, who is Chair of the ECB's Supervisory Board said, according to a report in the Financial Times.

"Maybe they have not signed it, but they have made a pretty comprehensive application that can be formalised very fast."

Under current rules, Britain is under the jurisdiction of the so-called financial passport — a set of rules and regulations that allow UK based financial firms to access customers and carry out activities across Europe. Many non-EU lenders use the passport to operate a hub in the UK and then sell services across the 28-nation bloc.

Once Britain leaves the EU, however, it is almost certain to lose passporting rights, which are tied strongly to membership of the European Single Market, a marketplace the UK intends to leave as part of Brexit.

As a result, major lenders — especially those from the USA and Japan — are making preparations to set up new hubs in continental Europe so that they can continue serving their customers in Europe without any disruption.

Banks need at least a year to set up fully functioning branches and subsidiaries in Europe to maintain activities, so are starting the process now.

Nouy is the head of the Single Supervisory Mechanism, which has final oversight of granting banking licences for all eurozone member states, and as a result is the body with the biggest say in the new licences banks need after Brexit.

Major lenders are all expected to shift staff out of the UK as a result of Brexit, with Japanese banks the fastest on the draw.

Four big Japanese banks, MUFG, Nomura, Daiwa, and Sumitomo Mitsui have all announced new EU HQs, with three choosing Frankfurt, and one, MUFG, opting for the Dutch capital Amsterdam. American giant Citigroup also confirmed that it will send some staff to Frankfurt, while Goldman Sachs CEO Lloyd Blankfein recently tweeted that he'd be "spending a lot more time" in the city.

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• The "smart beta" fund industry, a kind of hybrid between active and passive fund management, boomed in 2015 and 2016, with close to 200 funds launched in 24 months.
• But the business has gotten increasingly competitive, and its year-over-year growth is slowing.
• As smart beta decelerates, many in the investing industry will face the ongoing question about how to remain competitive, and the answer is probably to cut fees.

As the battle between active money managers and their computer-driven passive counterparts has raged for years, one investment strategy has served as a compromise of sorts.

Known as "smart beta," it takes the passive approach of mirroring an index and combines it with the more analytical practice of stock picking. And that fundamental overlay usually adheres to a predetermined investment style, such as low-volatility or high-growth.

The ability to straddle that line has translated into an area of serious growth for exchange-traded fund providers looking to capture the massive flow of capital into passive strategies while also proving their bona fides as active managers.

But unfortunately for those providers looking to break into smart beta, the window to get involved appears to be closing. Only 36 new smart-beta funds have been launched this year, on pace for the lowest annual number since 2014, according to data compiled by Goldman Sachs.

'Smart beta ETFs are facing increasing pressure'

"The economics in smart beta ETFs are facing increasing pressure," a group of analysts led by Alexander Blostein wrote in a client note. "Market share is ultimately consolidating among top players, fees are migrating lower and the limited success of several recent launches could discourage others from entering the space."

Goldman offers three clear-cut reasons that fund managers may be discouraged from entering the smart-beta space:

• New entrants into the space — The smart-beta heyday of 2015 and 2016, when roughly 100 new funds were launched each year, saw loads of new providers get into smart beta. That creates a considerable barrier to entry for an already-inundated area.
• The biggest providers are continuing to grow — BlackRock, Vanguard, Invesco, WisdomTree, and State Street are the big dogs of the ETF world. The massive amount of capital they've accrued gives them a big advantage in both bringing new funds to market and consolidating with other firms.
• Fee rates are trending lower — Goldman finds that "fee pressures are accelerating significantly," which will make it more difficult for new entrants to break into the ETF marketplace.

With forays into the universe of smart beta looking decreasingly appealing, managers using an active stock-picking component must find a way to adapt. After all, just because smart beta is slowing doesn't mean passive investment is.

The huge shift to passive management from active

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, according to Investment Company Institute data.

A huge part of this divergence stems from a factor mentioned in the third bullet above: Passive funds are cheaper. With the opportunity in smart beta shrinking, perhaps it's time for active managers to stop trying to combine their efforts with passive funds and start making their pricing more competitive.

One possible route would be for active managers to pursue vehicles known as variable pricing mutual funds. Pioneered by AllianceBernstein earlier this year, the methodology is simple: the bigger the outperformance, the bigger the fee. Citigroup sees the strategy delivering investors better net returns on average and says it could "radically alter" money management as we know it.

It's a nuanced approach that certainly gives providers more flexibility than simply making huge fee cuts — a practice Goldman sees as ultimately futile, given the wide pricing discrepancy that already exists. The firm instead recommends the "surgical" lowering of select fees.

Beyond these suggestions, it's clear that the investing industry will continue to carve out new paths toward profitability as others dry up. And it's a wise move because, for the time being, it appears as if the smart-beta ship has sailed.

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

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• Former Vice President Al Gore has been working on a sustainable investment firm since 2004.
• The Trump administration has been working to unravel landmark environmental moves put in place under the Obama years.
• Gore and his business partner, David Blood, former head of Goldman Sachs Asset Management, say their investment approach is unaffected by public policy.
• "The train has left the station," Gore said.

Since leaving political office, former Vice President Al Gore has been working on, among other things, an investment firm that focuses on sustainable investing.

He teamed up with the former head of Goldman Sachs Asset Management and others in 2004 to launch London-based Generation Investment Management.

The $18 billion firm chooses companies it thinks will be successful in the long term. Among the requirements: the companies must provide products or services that have a low-carbon footprint, and in Generation's words, lead to a "prosperous, equitable, healthy and safe society."

We recently caught up with Gore and his business partner, David Blood, the former Goldman exec, to talk about the firm's approach, and what, if anything, has changed since President Trump was elected last year.

The Trump administration, under new Environmental Protection Agency head Scott Pruitt, has vowed to kill Obama's centerpiece climate-change action, the Clean Power Plan, which was to reduce carbon-dioxide emissions. The president also vowed to remove the United States from the landmark Paris climate agreement.

But by and large, policy doesn't affect Generation's investments – nor has it affected the pace at which sustainable companies are looking to innovate, Gore and Blood said.

You can read the relevant excerpt from our interview below:

Levy: Since President Trump was elected in November of last year, he's had a few different roll outs that environmental activists haven't been happy about. I wonder if, in any way, this current administration has changed the way Generation views its investment strategy?

Gore: I think that it has affected our strategy far less than anybody might have worried at the time they took over. I think that first of all, we don't really base investments on the anticipation of policy in any case. At times, it's of course material. But again, the trends in the marketplace are so powerful and have so much momentum now. You know, the cost curves and renewable energy and batteries and electric vehicles and more important, the thousands of new efficiency improvements that are sweeping through the economy, they're almost independent of policy. It's not that policy doesn't matter, of course it does, but just to take the Paris agreement as an example. The first step on which the US could legally withdraw anyway is the first day after the next presidential election. Other governments around the world said we're still with Paris. California, New York, lots of other states, hundreds of cities, thousands of CEOs, have all said, 'Look, this train has left the station. We're still on it. We got this.' The economy is undergoing this massive shift and it's hardening in a way, but our first job again is to get the best returns for our investors by integrating these trends and our analyses — we're deeply focused on research — into the investment decisions.

Blood: I would add ... we have never been investing based on regulation or public policy or what we expect public policy to be. Like Al said, it matters and is certainly an important backdrop, but our fundamental investing strategy is to actually not forget the core fundamentals of finance, the core fundamentals of business. What you see if you keep that focus, what you would see is that the technology change — the number of really interesting business models — that have emerged over the last five years to address the transition to a low carbon economy, have been just spectacular. The cost curve on solar, as an example, exceeds expectations, and we expect it will continue to do so. I guess what I'm trying to say to you is the train has left the station. The number of businesses that are driving towards a sustainable, low carbon economy, it's really absolutely mainstream now. That doesn't mean all businesses will be successful, that have taken that mantra, but it gives us an opportunity or choice to deploy capital in a way that is very exciting. It's unfortunate, the decision of the President, but as Al said, we're still in the Paris accord and it turns out there are others who are American who believe passionately that this is in our economic interests. That's another thing I want to come back to. We're passionate. We're about mission at Generation, but we see mission and the economy and really what's driving long term growth as one in the same. In this particular instance, it's one and the same.

SEE ALSO: $18 billion fund manager started by Al Gore and a Goldman Sachs exec sets sights on Silicon Valley

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• Oil continues to rise as Saudi Arabia political tensions grow.
• Kingdom's ruling class has purged what it says are corrupt officials who seek to undermine the country.
• Saudi Arabia is the world's second largest oil producer so disruption in the country can have a big impact on global oil markets.

LONDON — The price of oil rose to highs not seen in at least two years on Tuesday as investors weighed the ongoing political purge occurring in Saudi Arabia, the world's second largest oil producer.

Brent crude oil, the international benchmark, passed above $64 per barrel late on Monday, and continues to rise during early European trade on Tuesday, gaining a further 0.47% to trade at $64.40 as of around 8.45 a.m. GMT (3.45 a.m. ET).

"Brent Crude continued to be the main driver of growth this Tuesday, with little else to challenge it in terms of market-swaying power," Connor Campbell, analyst at Spreadex said in an email on Tuesday morning.

"The black stuff has now crossed $64 per barrel, as commodity investors continue to rub their hands in glee at the potentially disruptive political purge currently underway in Saudi Arabia."

Here's the chart:

Dozens of people have been detained in the crackdown, which has consolidated Crown Prince Mohammed bin Salman’s power. Billionaire Prince Alwaleed bin Talal, Saudi Arabia's best-known international investor, is also being held, officials said at the weekend.

The kingdom then started to freeze bank accounts of those captured in the purge, according to a report from Reuters. 

The purge gained a prominent supporter late on Monday after US President Trump tweeted about the incident.

"I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing," he tweeted.

"Some of those they are harshly treating have been 'milking' their country for years!" 

The crackdown comes as plans for Saudi Arabia's economic reform programme accelerate, with the jewel in the crown — the public listing of state oil company Saudi Aramco — fast approaching.

As the world's second largest producer of oil, and the de facto head of the oil cartel OPEC, any possible disruption to production in the Kingdom would likely have a huge impact on the global balance of supply and demand for the commodity.

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• Insurance firm Hiscox estimated natural catastrophes occurring this year were likely to cost the industry $100 billion.
• High claims were likely to push up some premium prices by 50%.
• Claims following hurricanes Harvey, Irma and Maria were likely to cost $225 million, the group said.

LONDON — International insurance firm Hiscox said natural catastrophes in 2017 had cost the industry an estimated $100 billion, and could push some insurance prices up by 50%.

In its report for the first nine months of the year, Hiscox pointed to the destruction caused by hurricanes Harvey, Irma and Maria, for which it estimated combined net claims would total $225 million.

Hiscox said: "It is not surprising that we are seeing signs of a hardening market." The company estimated rising insurance prices of between 10-50% in some lines of business in the US.

"2017 is turning out to be an historic year for catastrophes and Hiscox's first priority is to help our customers get back on their feet," said CEO Bronek Masojada.

"Our long-held strategy of balance and diversity was built for this environment, as our retail businesses provide stability when volatility impacts the big-ticket areas. Our balance sheet is strong, and we are in a good position to capitalise on changes in the market," he said.

Although Hiscox said claims arising from the Mexico earthquakes and California wildfires were "not expected to be material for the group," they too were likely to push up premium prices. 

Overall, gross written premiums for the group grew by 12.4% in 2017 to £2,088.8 million, up from £1,858.2 million in 2016. Growth was driven by its US arm, which saw gross written premiums rise 29.2%, a trend expected to continue throughout the fourth quarter of the year.

Meanwhile, Hiscox UK and Ireland increased gross written premiums by 12.2%, and Hiscox Europe by 11.2%. Hiscox Europe benefited in particular from the group's experience in cyber and classic cars, it said.

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• British retail spending dropped 1% in October on a like-for-like basis.
• Spending registers its fastest drop-off rate for nine years.

LONDON — British retail spending dropped last month at the fastest rate for any October since 2008 as shoppers cut back on non-food goods in face of rising inflation.

Figures from the British Retail Consortium show that retail sales fell 1% on a like-for-like basis from October 2016, when they had increased 1.7% from the preceding year.

That fall was driven largely by a decline in non-food sales. Over the three months to October 2017, in-store sales of non-food items declined 2.9% on a like-for-like basis.

On a 12-month basis, the total decline was 2.1%, the deepest since records began in January 2012.

BRC chief executive Helen Dickinson said the figures were a cause for concern as Christmas approaches.

"With total growth at its lowest since May and below the 12-month average, retailers will have cause for concern as they prepare for the crucial run up to Christmas," she said.

"The growth in food sales meanwhile, adds some colour to this otherwise anaemic picture, but these figures are very much buoyed by inflation."

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• Marks & Spencer's 2017 Christmas advert stars Paddington Bear.
• 90-second short ties in with Paddington 2 film, released on November 10.

LONDON — The Christmas advert season is upon us, with retailers spending huge sums on cinematic TV adverts in the hopes of boosting sales over the crucial festive period.

Marks & Spencer is the first of Britain's major retailers to debut its offering: an advert staring an animated Paddington Bear.

In the 90-second short, Paddington mistakes a burglar for Santa and then sets about helping him somewhat unwittingly deliver presents.

Watch the full film, called "Paddington and the Christmas visitor" and developed by London ad agency Grey, below:

Patrick Bousquet-Chavanne, M&S' executive director of marketing, said in a release: "Paddington has enchanted children and families all over the world for nearly 60 years which is why we couldn’t turn down the chance to bring the wonderfully endearing, much-loved British character and his world into the heart of our Christmas campaign this year.

"We always want to surprise and delight our customers; the timing is perfect as we’re partnering together just ahead of the release of Paddington 2."

The Paddington 2 film will be released on November 10 and the M&S advert will be shown before every screening, as well as on TV.

Marks & Spencer will be launching a £3 storybook to accompany the advert, with all proceeds going to children's charity NSPCC.

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• Confederation of British Industry's President said capitalism "seems to have forgotten about its purpose" at trade body's annual conference on Monday.
• Recent political events have been a "wake-up call" that businesses need to do more to prove their worth to society, BT CEO said at the same event.
• Labour leader Jeremy Corbyn told the conference: "The economic system simply is not working."

LONDON — Behind the day of speeches at the annual Confederation of British Industry (CBI) conference in London on Monday, was one existential question – is capitalism in crisis? 

The big themes at the conference, which is one of the highlights in the UK business calendar, were Brexit, infrastructure, Britain's productivity crisis, the fourth industrial revolution.

Unifying them was a sense of unease that the system of capitalism that had been shaped and built by the businesses of CBI members had lost its way.

The head of the CBI, the OECD, the chief of BT, and the leaders of both Britain's main political parties addressed the question in one way or another at the event on Monday. The shared conclusion appeared to be that the system is in crisis — but that businesses can do something to rescue it.

'An economy that gives everybody the chance of a secure and fulfilling life'

The conference began with a warning from CBI President Paul Drechsler that "capitalism... seems to have forgotten about its purpose."

The CBI represents 190,000 UK businesses with around 7 million employees and Drechsler called for members to do more to embrace "inclusive capitalism," cautioning that "until everybody feels the benefit of capitalism in their pockets and in their homes, we will have problems."

Business leaders around the world are worrying that the social compact at the heart of the economic system could be broken after a string of political victories built on bashing big business or ignoring it.

Warnings that Brexit would damage economic growth and businesses prior to Britain's EU independence referendum had no effect.

Donald Trump attacked free trade and globalisation during his successful US presidential campaign. And Labour leader Jeremy Corbyn enjoyed an unexpected electoral surge in June's snap UK elections whilst attacking the economic system.

Corbyn, not long ago seen as the boogie man of British business, couldn't resist an "I told you so" moment at Monday's conference.

Addressing the CBI conference for the second time in two years, he said: "I put it to you last year that for too many people, the economic system simply is not working, a system that's delivered rising inequality and falling living standards for the majority."

"I put it to you this year that a crucial reason for the surprising election result — the biggest turnaround in polls during an election campaign in British history — is that Labour went to the country with a vision that offered hope and change. Our manifesto — for the many, not the few — set out a fully costed programme to build an economy that gives everybody the chance of a secure and fulfilling life."

The CBI rejected Corbyn's solution for the problem, which involves renationalising railways and energy. CBI director general Carolyn Fairbairn said in a statement that a rejection of the free market would "hurt those who need help most and make the UK a laggard in the global race for investment." 

But it is getting harder to ignore Corbyn's claims that something is going wrong. BT CEO Gavin Patterson said recent global events have been "a wake-up call" for businesses. 

The worldwide backlash against globalisation, big business, and free trade has spawned the meme "Late Capitalism," which The Atlantic called a "catchall phrase for the indignities and absurdities of our contemporary economy." The leaked trove of tax documents dubbed the "Paradise Papers" hung over the conference, amplifying the sense of a system under attack. 

Ángel Gurría, secretary-general of the OECD, said tax avoidance and evasion by both individuals and corporations "has fueled this backlash against globalisation," and said businesses must promote growth that is "resilient and inclusive" by looking after their workers.

Patterson said: "With globalisation it's clear, the very wealthy have done very well out of it and at the same time it's allowed millions of people around the world to come out of poverty, but there is a group in the middle there, particularly in the western world, who have not seen the benefits of globalisation.

"I think whether you're in government or whether you're in business, it is up to us to try and share the value and ensure that it is seen as a path for good, it drives social mobility and ultimately the case for responsible capitalism is remade," Patterson said. "Business needs to step up and make its case."

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• Startup bank Monzo announced on Tuesday having raised another £71 million ($93 million) in its second fundraising round this year.
• The company's valuation has more than doubled, to £280 million ($336 million) since February.
• The new funding will be used to expand Monzo's team, roll out current accounts and allow crowdfunding investors to increase their investments if they choose.

LONDON — Startup bank Monzo raised £71 million ($93 million) in a new financing round, doubling its valuation since its last fundraising round in February.

The British company is now valued at £280 million ($336 million) and said it and now has more than 20,000 current account holders. Total users have increase by nearly 300% since February's Series C funding round, from 120,000 to 470,000.

"This is an incredible endorsement of our strategy so far, and sets us up to continue the growth we've seen this year into 2018," said CEO Tom Bloomfield.

"We want to make it as easy as possible for people to manage and make the most of their money, to give people total visibility and control over all of their finances, and offer them their pick of the best products that the market has to offer," he said.

Monzo launched its bet prepaid card in October 2015, and in April obtained a full banking license, allowing it to provide current accounts. To date, customers have spent over £800 million ($1 billion) with their Monzo cards.

Investors in this latest funding round include Goodwater Capital, Stripe, Passion Capital and venture capitalist Michael Moritz. The company said funding will be used to expand, roll out current accounts and build its marketplace offering. Since February's funding round, Monzo's London team has more than doubled in size.

£1.5 million ($2 million) has also been reserved to allow existing crowdfunding investors to increase their investment amounts if they choose. More than 8,000 people have invested in Monzo through crowdfunding, and in March last year the bank raised £1 million ($1.3 million) in 96 seconds, the fastest crowdfunding campaign in history.

In October, the bank announced it was ending one of its most popular features, unlimited free ATM withdrawals abroad. It said it would cap current account customers' free overseas withdrawals at £200 per month, and apply a 3% charge on any further withdrawals.

"Monzo's growth in the UK has been incredible, and the fact that it's been driven by word of mouth makes it even more exciting," said Chi-Hua Chien, managing partner of Goodwater Capital.

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• Financial giant JPMorgan has poured $4.2 million into three community development financial institutions that will make loans to veteran-owned small businesses.
• The investment is part of the company's effort to invest $75 million over the next three years to support minority-owned businesses. 

JPMorgan, the financial services giant, has invested $4.2 million into three organizations that will loan money to veteran-owned small businesses. 

The company announced Monday the multi-million dollar contribution, which will benefit three community development financial institutions, including Carolina Small Business Development Fund, PeopleFund, and Main Street Launch. Such lenders seek to loan money to make a profit and fulfill mission-focused goals. 

The investment is part of the company's broader Small Business Forward initiative to invest $75 million over the next three years in businesses owned by folks from underserved backgrounds, according to a release on the news. 

“Veterans make excellent business owners, so it makes perfect sense for us to help connect them with the access to capital they need to succeed,” said Andrew Kresse, CEO of business banking at the firm. “We’re pleased to work with outstanding partners who serve the veteran business community, and in turn, help strengthen the communities in which we all live and work.”

The bank recently found in its Chase Business Leaders Outlook study that veteran-owned businesses beat their peers on a number of metrics. For instance:

• In the next 12 months, more veteran-owned businesses expect to increase: profits, capital expenditures, and credit needs compared to non-veteran peers;
• Veteran-owned businesses also have stronger employment projections–more plan to increase employees/compensation compared to non-veteran peers;
• Veteran-run small businesses reported plans to hire more employees and report stronger optimism. 

The contribution is a "philanthropic investment," according to a press representative. As such, JPMorgan will not directly benefit monetarily from the loans, but it expects a return from the broader impact the loans will have on society. 

The company also said Monday it renewed its partnership with Bunker Labs, an organization that provides veteran entrepreneurs with education and financial resources.

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