News Feeds

Aviva on the hunt for acquisitions as CEO says: 'We want to turn Aviva into a fintech'

8 hours 22 min ago  |  Clusterstock

LONDON — Aviva, the 321-year-old British insurance giant, wants to become a financial technology company.

CEO Mark Wilson declared at a press conference on Wednesday: "We want to turn Aviva into a fintech."

"We will do acquisitions in this space," he said but added: "I don't mean billions. There's nothing imminent."

Wilson named artificial intelligence and big data as areas of particular interest for Aviva, which has a market cap of £21 billion.

He was talking to journalists at Aviva's "Digital Garage" in Hoxton, a trendy area of East London. The office holds a few hundred staff, away from Aviva's City of London office, and is home to its digital innovation and development teams.

Wilson said the "Garage," which opened at the start of last year, was part of an effort to change the culture in Aviva to help transform it into a digitally-focused company. The office houses staff who are data scientists, not actuaries, and others who used to work as games developers. Wilson said the aim was for the satellite office to "compete and cannibalise" the rest of Aviva.

"We believe what we have is world leading," he said. "What we're trying to do is fundamentally change the insurance industry. How long will it take? I don't know."

Fintech has become one of the hottest areas of investment in the last decade and one of the latest wave of innovation is InsurTech, startups and technology aimed at digitising the paper-heavy and arcane world of insurance.

Aviva is spending at least £100 million a year on digital transformation internally and has set up a venture capital fund, Aviva Ventures, with £200 million to invest by 2020. So far it has made 6 investments, with a 7th imminent.

Wilson touted a recent deal with Chinese internet giant Tencent as evidence of Aviva's advances when it comes to technology. He said: "They paid us because of some of the IP you're going to see today."

Aviva demoed products such as MyAviva, a dashboard that lets customers see all their policies in one online hub, and Ask Me Never, a feature that gives customers automated and pre-approved quotes without them having to input details.

While that may not sound revolutionary, Wilson and Andrew Brem, Aviva's chief digital officer, said the features took months and a lot of capital to build given the legacy systems that insurers still rely on. Wilson said: "We're one of the last industries to be truly disrupted."

As well as looking to acquire and invest in startups, Wilson said Aviva is in conversation with Silicon Valley companies and is open to partnerships around the world. It is experimenting with blockchain, micro-insurance, and "on-demand" policies for the sharing economy.

Wilson stressed that the "Garage" was not simply a flashy showroom meant to impress customers and partners, but was tied to Aviva's commercial mission. "It's not a lab," he said, "It's a business. It's objective is to make money."

He said: "I don't know how big a lot of this stuff can get but we think it can get pretty big pretty quickly."

Join the conversation about this story »

NOW WATCH: Crocs has a new comeback plan — here's why it could actually work

10 things you need to know in markets today

8 hours 30 min ago  |  Clusterstock

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

1. The European Central Bank has ruled out the possibility that Brexit could pose a major threat to the euro area economy, rejecting warnings from the Bank of England that a messy UK withdrawal could leave EU companies without vital services, the FT reports. The ECB’s vice-president Vítor Constâncio said on Thursday that Brexit could "really not harm significantly the ongoing recovery in the euro area."

2. British security officials investigating the Manchester terror attack are considering withholding sensitive information from Washington after a series of damaging leaks they fear are endangering British lives, the FT reports. Such a move would break with years of ever-closer counter terrorism work between the US and the UK that has followed the September 11 attacks.

3. OPEC ministers are gathering in Vienna on Thursday to address the ongoing oil glut and figure out their next move. Most analysts expect the cartel to extend production cuts for another six to nine months following recent statements from major oil players.

4. Oil prices rose ahead the meeting. Brent crude futures were trading at $51.74 (£39.83) per barrel at 6.15 a.m. BST (1.15 a.m. ET) up 0.74% from their last close.

5. Anglo-Swiss chemicals firm Ineos has bought the oil and gas business of Dong Energy for £1 billion, a major milestone in the Danish company’s switch from hydrocarbons to renewable energy, the Guardian reports. The acquisition takes it from 28th biggest oil and gas producer in the region to the top 10.

6. Aston Martin has moved to head off speculation it is revving up for a listing as the legendary sports car company reported a strong acceleration in sales, the Telegraph reports. The Warwickshire-based business said revenues from sales of its high-performance cars doubled in the first quarter, as a turnaround programme takes hold.

7. One of the co-founders of Fevertree Drinks is to sell a £40 million tranche of shares in the expensive tonic maker, the Times reports. Charles Rolls, who relinquished his executive role in the business, is taking advantage of a remarkable increase in the share price since Fevertree floated at £1.34 in November 2014 after consistently beating market forecasts. Shares are currently worth nearly £17.50.

8 Japanese stocks edged up on Thursday as investors bought futures after the yen weakened in Asian trade, while a surge in index-heavyweights such as SoftBank supported sentiment, Reuters reports. Information technology conglomerate SoftBank jumped as much as 4.5% after Bloomberg reported that the company had built a $4 billion (£3.08 billion) stake in Nvidia. In midmorning trade, the Nikkei share average edged up 0.5% to 19,849.10, after opening a tad lower.

9. A £200 million settlement between Royal Bank of Scotland and thousands of aggrieved shareholders has been hit by further delays after it emerged that lawyers were having difficulty tracking down some investors to ask them to agree to the deal, the Telegraph reports. A High Court trial into RBS’s £12 billion rights issue at the height of the financial crisis has now been adjourned until June 7.

10. A US academic who claimed to be Donald Trump’s likely ambassador to the EU has never been under consideration for the position, according to the US government, the FT reports. Ted Malloch caused alarm among European politicians by celebrating Brexit and predicting the "collapse" of the euro and the EU.

Join the conversation about this story »

NOW WATCH: These are the watches worn by the smartest and most powerful men in the world

Further reading

8 hours 34 min ago  |  FT Alphaville

Vix manipulation; tulips, myths and cryptocurrencies; the exquisitely English world of London clerks; where unicorn horns can be worn without raising eyebrows; Norges Bank launches new bank notes in style; other stuff.

Continue reading: Further reading

There's one big problem with the Fed's plan to unwind its gigantic balance sheet

10 hours 8 min ago  |  Clusterstock

The late economist John Kenneth Galbraith famously stated economic forecasting was invented to make astrology look respectable. 

The Federal Reserve seems bent on proving Galbraith right, this time when it comes to guidance about what it intends to do with its $4.5 trillion balance sheet, which expanded sharply in response to the Great Recession of 2007-2009.

Both the steep downturn and tepid recovery that followed took the Fed by surprise. For years now, US central bankers have forecast stronger growth than ultimately materialized, thereby overestimating how quickly they could raise interest rates after keeping them low for a prolonged period. 

Now, minutes of the Fed’s May meeting offered a blueprint for when and how the central bank intends to begin reducing the size of its balance sheet by gradually ceasing a policy of reinvesting the proceeds of maturing bonds back into new securities. The trouble is, Fed officials will eagerly admit they have little clue how their actions will impact financial markets and, in turn, borrowing costs. 

During the economic slump and financial crisis that centered on the housing market but quickly affected most of the global banking system, the Fed bought trillions of mortgage and Treasury bonds in an effort to keep long-term interest rates low. Policymakers had already brought down the official benchmark, known as the federal funds rate, to zero as of December 2008.

So how does the Fed expect to reverse its balance sheet expansion?

"Under the [staff’s] proposed approach, the committee would announce a set of gradually increasing caps, or limits, on the dollar amounts of Treasury and agency securities that would be allowed to run off each month, and only the amounts of securities repayments that exceeded the caps would be reinvested each month," the minutes said.

"As the caps increased, reinvestments would decline, and the monthly reductions in the Federal Reserve’s securities holdings would become larger. The caps would initially be set at low levels and then be raised every three months, over a set period of time, to their fully phased-in levels. The final values of the caps would then be maintained until the size of the balance sheet was normalized."

How did officials react? "Nearly all policymakers expressed a favorable view of this general approach."

What about the timing? "Nearly all policymakers indicated that as long as the economy and the path of the federal funds rate evolved as currently expected, it likely would be appropriate to begin reducing the Federal Reserve’s securities holdings this year."

Here’s the problem: Reducing the Fed’s balance sheet at the same time as the central bank is raising interest rates adds an unnecessary element of complexity to the monetary tightening process. Officials themselves acknowledge that they are less sure about the impact of a reduction in asset holdings on financial conditions than they are with the more familiar tool of an interest rate increase. 

At the same time, the Fed has now set up an expectation among market participants that, if upset along the course of highly unpredictable economic, political and market events over the course of this year, would be another ding on the central bank’s already battered credibility.

After all, the minutes state, optimistically, that "under this approach, the process of reducing the Federal Reserve’s securities holdings, once begun, could likely proceed without a need for the Committee to make adjustments as long as there was no material deterioration in the economic outlook."

We’ll see about that.

SEE ALSO: The Fed's actions speak louder than its words, which is why bond buying is here to stay

Join the conversation about this story »

NOW WATCH: Former Navy SEAL commanders explain why they still wake up at 4:30 a.m. — and why you should, too

A new report slams Tesla working conditions, claims employees have suffered twice as many serious injuries (TSLA)

Wed, 05/24/2017 - 8:38pm  |  Clusterstock

Tesla is continuing to come under fire for injury rates at its flagship plant in Fremont, California, but the electric carmaker says factory conditions are improving.

Worksafe, a California-based worker advocacy group, released a report Wednesday showing that injury rates at the company's Fremont manufacturing facility were higher than the industry average in 2014 and 2015. The report also calls into question Tesla's claim that injury rates have fallen between 2016 and 2017.

Tesla has not disputed that its incident rate was above the industry average between 2013 and 2016, but has said injury rates have fallen since then.

The report follows a February blog post published by Jose Moran, a Tesla factory employee, detailing injury rates and long work hours at the Fremont plant as part of a unionization effort with the United Auto Workers.

"We may have had some challenges in the past as we were learning how to become a car company, but what matters is the future and with the changes we've made, we now have the lowest injury rate in the industry by far," a Tesla spokersperson told Business Insider. "Our goal is to have as close to zero injuries as humanly possible and to become the safest factory in the auto industry."

The findings

Worksafe compiled data from Tesla's OSHA Form 300, an injury and illness record-keeping form that companies are legally required to submit to the US Department of Labor.

The organization then compared the data to the industry average provided by the US Bureau of Labor Statistics and found:

  • In 2014, Tesla's total recordable incident rate (TRIR) was 8.4 injuries per 100 workers, which was 15% higher than the industry average of 7.3 that year
  • In 2015, Tesla's TRIR was 8.8 injuries per 100 workers, which was 31% higher than the industry average of 6.7 that year

Worksafe also analyzed Tesla's DART rate, which refers to "serious nonfatal injuries" that result in leaves of absences, restricted duty, or job transfer. It found:

  • In 2014, Tesla had a DART rate of 7.1 injuries per 100 workers, which was 69% higher than the industry average of 4.2 that year
  • In 2015, Tesla had a DART rate of 7.9 injuries per 100 workers, which was 103% higher than the industry average of 3.9 that year

For 2016, Worksafe did compile Tesla's TRIR (8.1) and DART (7.3), however, the US Bureau of Labor Statistics has yet to release industry-wide averages for last year.

In a blog post, Tesla said it has made changes to improve factory conditions, like reducing the number of hours employees work and hiring an ergonomist to redesign equipment to prevent on-site injuries.

These changes have resulted in a 52% reduction in DART incident rates and 30% reduction in recordable incidences between the first quarter of 2016 and first quarter of 2017, Tesla claims.

Worksafe said it doesn't have "sufficiently reliable data" to assess that claim.

The group claimed, however, that Tesla's 2017 first-quarter rates may be lower because the Fremont factory was shut down for 10 days in February to prepare for Model 3 production.

"Moreover, one quarter is not a sufficient length of time to accurately identify a meaningful and lasting trend in injury reduction," Worksafe wrote in its report.

Model 3 ramp-up

The unionization effort seems to be intensifying as Tesla prepares for production of its first mass-market vehicle, the Model 3.

The UAW called Worksafe directly and asked it to analyze incident rates for the report released Wednesday, Doug Parker, the executive director of Worksafe said on a press call with journalists.

The report's publication comes less than a week after The Guardian published a bombshell report detailing grueling work conditions at Fremont where employees regularly pass out.

Three Tesla human resources executives have left the company since details of the unionization effort surfaced in February, BuzzFeed News first reported. Tesla announced the departure of Arnnon Geshuri, its VP of human resources since 2009, in a blog post Tuesday.

Tesla CEO Elon Musk has called reports of excessive injuries at the Fremont plant "disingenuous or outright false."

But Musk softened his tone somewhat when interviewed by The Guardian, saying he slept in the Fremont factory in 2016 because he knew employees were having a tough time.

"I knew people were having a hard time, working long hours, and on hard jobs. I wanted to work harder than they did, to put even more hours in," Musk told The Guardian.

Worksafe's Parker said Tesla needs to address issues at the Fremont plant before ramping up production for the Model 3. Tesla has an ambitious goal of increasing production to 500,000 vehicles a year starting in 2018, a five-fold production increase.

"Whatever they're doing, they're going to be facing a whole new health and safety environment if they're going to be ramping up production like that," Parker said.

SEE ALSO: Tesla factory employees describe grueling work conditions where people pass out 'like a pancake'

Join the conversation about this story »

NOW WATCH: Buying Tesla stock is like buying a call option on Elon Musk

OPEC is gearing up to extend production cuts

Wed, 05/24/2017 - 8:17pm  |  Clusterstock

OPEC ministers are gathering in Vienna on Thursday to address the ongoing oil glut and figure out their next move.

Most analysts expect the cartel to extend production cuts for another six to nine months following recent statements from major oil players.

Earlier in May, both Saudi Arabia and Russia, who is not a member of OPEC but is seen as a critical part of any potential agreement, said they backed extending the production cuts until March 2018.

Moreover, Saudi energy minister Khalid al-Falih said in a joint news conference with his Iraqi counterpart, Jabar Ali al-Luaibi, on Monday that Iraq gave the "green light" to a proposal for extending cuts for nine months, according to Reuters. And that's notable given that Iraq was one of the main obstacles to OPEC reaching an agreement on production cuts back in 2016.

Major oil producers have faced financial stresses at home in the lower-for-longer price environment, which has likely been and will likely continue to be a key factor in petro-states embracing production cuts.

"In regards to an extension, while the technocratic oil ministers will likely cite elevated inventories and potentially the lack of long-term investment in conventional projects as reasons, we think that the domestic concerns of state leaders in their respective capitals will be the driving force, especially given the stakes if oil prices were to crater once again," Helima Croft, global head of commodity strategy at RBC Capital Markets, said in a note.

"Assuming an extension is achieved, an extended stay in the mid-fifties per barrel would likely be fine for the flusher GCC producers and key non-cartel producers like Russia — allowing them to execute on core priorities; however, for others it will more just keep them on much needed life support," she added.

OPEC and several non-OPEC producers agreed to cut output back in November, which marked the cartel's first cut since 2008 and reversed its two-year strategy of pumping as much oil as desired. 

The cartel agreed to collectively cap output at 32.5 million barrels per day, a decrease of 1.2 million bpd, with the Saudis bearing the brunt of the cut. The decision reflects producers' desires to end the global oil supply glut, which has kept prices depressed for over two years, which, in turn, hampered the petro-states' economic growth.

When it comes to output cuts, the elephant in the room is, of course, US crude production. Weekly exports have regularly poked through 1 million barrels per day this year, and US oil has likely been a factor in oil prices not rising significantly amid the cuts.

"We have noted before that the growth in US shale production will put a cap on oil prices, at least barring a major geopolitical blowout that takes significant quantities of production elsewhere offline," Croft's team said.

However, it's not just about the prices. BMI Research analysts said in a note that a cut extension will mean supplies from the Middle East will remain "constrained," which then, in turn, further opens up strategic market opportunities for US crude.

China has already upped its consumption of US crude; it was even the largest buyer of US crude in February, according to data cited by BMI Research. And that's a notable detail given that China has been one of the big oil battlegrounds in recent years, with producers like Saudi Arabia and Russia clawing at its coveted market share.

"This is part of a broader strategic shift for the world's largest crude importer to diversify supplies away from its heavy dependence on Middle Eastern grades," the BMI Research analysts explained, referring to China.

"While supplies from the US amounted to less than 1% of the China's total imports in the first two months of 2017, it is likely that this volume will grow over the coming years as US exports rise, cementing its position as a key outlet for US grades." 

Looking to Thursday, although it increasingly seems likely that the cartel and other producers will opt to extend the cuts, the exact countries participating and their exact quota levels remain unclear. Moreover, some analysts have noted that markets could soon start looking for signs of an "exit strategy."

"For now, several factors are keeping OPEC and non-OPEC countries in market management mode. The policy has given OPEC countries roughly at 10% bump in revenues compared to a scenario where output remained high at 4Q16 levels," Barclays' Michael Cohen and Warren Russell wrote in a report to clients.

"But the longer that OPEC engages in such market management, the more concerned market participants will become about the eventual end of the agreement," they continued. "Thus, we believe OPEC needs to articulate an exit strategy."

WTI Crude oil, the US benchmark, was down by 0.3% at $51.30 per barrel, while Brent crude oil, the international benchmark, was down by 0.2% at $53.91 per barrel around 2:43 p.m. ET.

SEE ALSO: Garry Kasparov talks about Deep Blue, AI, and the interplay between machine intelligence and humanity.

Join the conversation about this story »

NOW WATCH: Colonel Sanders' nephew revealed the family's secret recipe — here's how to make KFC's 'original' fried chicken

An Uber rival has snagged $100M from a tech heavyweight to conquer the Brazilian market

Wed, 05/24/2017 - 7:06pm  |  Clusterstock

Japan's SoftBank Group agreed to invest $100 million in Brazilian ride-hailing app 99, the startup said on Wednesday, capping off a fund-raising round totaling more than $200 million.

The investment turns up the heat on Uber, which had been touting its success in Latin American markets. As the ride-hailing goliath stumbles amid lawsuits and investigations, its rivals have seized the moment to capitalize and bring in cash.

Uber's US arch-rival, Lyft, recently closed a $600 million round of funding lead by KKR & Co. Now, Brazil-based 99 will have a flush war chest to take on Uber in one of its most important emerging markets.

Press representatives for 99 declined to specify how big a stake SoftBank's investment entailed. The transaction is subject to approval by Brazil's Cade antitrust regulator.

In January, Didi Chuxing, China's largest ride-hailing company, spearheaded an initial investment of more than $100 million in the Brazilian firm.

The capital injection underscores strong investor demand for the fast-growing ride-hailing market in Latin America's largest economy despite ongoing legal battles that could sharply increase operating costs.

On Tuesday, a Brazilian state appeals court ruled that a driver working for rival Uber Technologies Inc was not entitled to workers' benefits, overturning a lower court decision looming over the San Francisco-based company. The driver may yet appeal to Brazil's top court.

99's discount service, known as 99 POP, competes directly with Uber, seeking to lure drivers by retaining a smaller share of what passengers pay for a ride. The app also allows clients to hail taxis and luxury vehicles.

The Brazilian firm, launched in 2012, said it has more than 14 million registered users who have been served by more than 200,000 drivers. 

SEE ALSO: Uber's bad year — The stunning string of blows that continue to upend the world's most valuable startup

Join the conversation about this story »

THE MOBILE PAYMENTS IN CHINA REPORT: What the US can learn from China's enormous success in mobile payments

Wed, 05/24/2017 - 7:03pm  |  Clusterstock

The US payments ecosystem is in the midst of a shift toward mobile, and countless new and old stakeholders are attempting to accelerate this migration, which is moving at a glacial pace relative to other markets globally. But mobile payments can rise to the mainstream. For companies seeking to build out a robust mobile payments product, China's thriving mobile payments ecosystem offers some insight — and some lessons.  

Total mobile payments volume in China will reach $6.3 trillion by 2020, according to our estimates based on iResearch data. This marks a healthy 33% five-year compound annual growth rate (CAGR). In comparison, the US will generate $154 billion in mobile payments volume this year by our estimates, which amounts to just 6.5% of China's mobile payments volume. 

Even accounting for population discrepancies, China will generate over $1,700 in mobile payments volume per capita in 2016, compared with $475 in the US, based on forecasts from BI Intelligence and eMarketer. China's advantage will eventually diminish, but it will still produce around twice as much volume per capita in 2020. 

China has unique factors buoying the industry, like the dominance of mobile phones, a lack of legacy infrastructure, and the surging popularity of digital retail marketplaces. Some of the characteristics behind the country's success can be mimicked, or even replicated to some extent, in other markets like the US. However, one fundamental barrier in the US is that it's being forced to layer mobile payments on top of an existing payments system, and the ecosystem is very fragmented.

A new report from BI Intelligence takes a deep dive into China's mobile payments ecosystem and deciphers which growth drivers can be exported to the US to help spark its relatively lackluster market. 

Here are some of the key takeaways:

  • China claims the world's largest mobile payments market and serves as the global benchmark for other markets to pursue. China will process a whopping $6.3 trillion in total mobile payments by 2020, according to our estimates based on iResearch data. This marks a healthy 33% five-year compound annual growth rate (CAGR).
  • It dwarfs the US' mobile payments industry. The US will generate $154 billion in mobile payments volume this year by our estimates, which equates to just 6.5% of China's mobile payments volume. Meanwhile, China will generate over $1,700 in mobile payments volume per capita in 2016, compared with $475 in the US, based on forecasts from BI Intelligence and eMarketer.
  • Mobile commerce, a lack of legacy infrastructure, and marketplaces have fueled China's enormous success. Consumers in China are much more comfortable shopping on their mobile phones compared with their counterparts in the US, and the devices face less resistance from other legacy payments methods like credit cards. The open approach to mobile shopping has been fortified by Alibaba, a Goliath-sized marketplace, and WeChat, a go-to messaging platform, which support Alipay and Tenpay, respectively. 

In full, the report:

  • Forecasts and compares mobile payments volume, in-store mobile payments users, mobile payments volume per capita, and mobile commerce penetration in China and the US. 
  • Overviews the key competitors in China's mobile payments market, and how new entrants may shuffle the hierarchy of dominant players.
  • Uncovers the key drivers propelling China's mobile payments market.
  • Identifies which drivers the US can import from China, and which barriers may be standing in the way.

 Interested in getting the full report? Here are two ways to access it:

  1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  2. Purchase & download the full report from our research store. >> Purchase & Download Now

Join the conversation about this story »

NOW WATCH: SCOTT GALLOWAY: I believe every time Amazon reports a profit a manager gets yelled at

The company behind the butter and coffee craze plans to open a café in NYC — Here's what it's like

Wed, 05/24/2017 - 6:53pm  |  Clusterstock

Coffee with butter isn't a typical morning beverage. But it's become a craze among biohackers and those looking to add extra energy to their day.

Championed by Dave Asprey, author of "The Bulletproof Diet," the aptly named "Bulletproof coffee" (BPC) is a mix of specially treated coffee, butter from grass-fed cows, and "brain octane" oil, which is similar to coconut oil.

You've never seen these ingredients on a Starbucks menu. But they're staples at the Bulletproof café in Santa Monica, California — and more cafés could be springing up around the country soon.

On Wednesday, Asprey announced that his company, Bulletproof, had raised an additional $19 million from lead investors CAVU Venture Partners.

With the new money, the company said it plans to fuel its retail expansion, including opening up a store in New York City. Last year, I stopped by Bulletproof's café in Santa Monica to see if a coffee and butter concoction could keep me fueled for my drive back to San Francisco. Here's what it was like:

SEE ALSO: These 13 startups have raised millions — but no one knows what they do

"The goal is not to be the next Starbucks," says founder Dave Asprey. Yet the company has now taken in over $28 million in venture funding and started opening coffee stores to bring biohacking to the masses. Biohacking is a DIY-movement in which people experiment with various supplements or devices that they believe lead to increased productivity, mental acuity and other benefits. For Bulletproof, this is the first location in downtown Santa Monica.

The sign outside is just one indicator of the differences between your typical coffee shop and Bulletproof. Here I'm told to "Hack every meal."

Bulletproof's messaging continues before you set foot in the store. From the door decals, you can see that this café is gluten-free, doesn't use GMOs, and won't add sugar.

See the rest of the story at Business Insider

CBO report says the GOP healthcare bill could throw many insurance markets into chaos

Wed, 05/24/2017 - 6:49pm  |  Clusterstock

The Congressional Budget Office on Wednesday released its latest projections for the GOP healthcare bill, and one new detail showed the newest version of the bill could lead to a disaster that Republicans feared under Obamacare.

In every previous CBO score for both Obamacare and the American Health Care Act, the CBO had said the individual insurance market would remain stable.

That means the marketplaces where people who do not receive coverage through their job or a government program like Medicaid would continue to be able to purchase insurance at an affordable price.

But the final version of the GOP's American Health Care Act, the CBO said, would undermine that stability.

One of the additions to the AHCA since the CBO's last judgment on the legislation came with the MacArthur amendment, which would allow states to waive two of Obamacare's biggest protections: so-called community rating and essential health benefits.

Essential health benefits mandate that insurers cover a baseline of healthcare needs, like maternity care and mental-health services. Community rating compels insurers to charge the same amount to people of the same age in the same area.

The CBO said states that get waivers for those provisions could see a number of adverse effects. For instance, without community rating, people with preexisting conditions could be charged more for insurance, even to the point where it becomes unaffordable to purchase insurance.

These changes and their effects on premiums in the individual market, according to the CBO, could cause insurers to pull out of the market and prices to increase. 

From the CBO report:

"Decisions about offering and purchasing health insurance depend on the stability of the health insurance market — that is, on the proportion of people living in areas with participating insurers and on the likelihood of premiums’ not rising in an unsustainable spiral. The market for insurance purchased individually with premiums not based on one’s health status — that is, non-group coverage without medical underwriting — would be unstable if, for example, the people who wanted to buy coverage at any offered price would have average health care expenditures so high that offering the insurance would be unprofitable."

Put another way, people could exit the market for a variety of reasons — for example, if they're sick and the new plans cost too much, or if the plans cover so little without essential health benefits that out of picket costs are high enough to not make the insurance worth it. That could lead to a risk pool of only the sickest people. This could then lead to market instability.

The CBO did say this would only to parts of the country that theoretically request waivers. But it also projected "one-sixth of the population resides in areas" where the exchanges would "become unstable beginning in 2020."

One-sixth of the population is roughly 54 million Americans.

SEE ALSO: CBO says GOP healthcare bill would leave 23 million more uninsured, undermine protections for people with preexisting conditions

Join the conversation about this story »

NOW WATCH: Watch Hasan Minhaj roast Trump at the White House correspondents' dinner

UBS is going head-to-head with JPMorgan and American Express by dropping a new luxury travel rewards credit card

Wed, 05/24/2017 - 6:05pm  |  Clusterstock

UBS has joined the ranks of America's biggest banks vying for wealthy spenders by dropping a new luxury travel rewards credit card.

Beginning May 27, the Swiss financial services company will offer the UBS Visa Infinite credit card, a replacement for its current Preferred Visa Signature credit card.

The heavy-metal card carries a $495 annual fee, but touts a 25,000-point sign-up bonus for new clients who spend $3,000 in the first three months. Some may be eligible for a 50,000-point bonus.

It's an effort to cater to UBS' ultra-high-net-worth clients, who, according to the company's estimates, could enjoy $4,500 worth of rewards if they spend $100,000 a year on the card.

The card's suite of lucrative benefits — most now standard among travel rewards credit cards — includes:

  • No foreign transaction fees
  • 24/7 concierge
  • $250 annual statement credit for travel expenses
  • 10,000-point redemption for a $100 personal statement credit
  • $100 application credit for Global Entry or TSA PreCheck
  • Access to over 1,000 airport lounges around the world
  • Upgrades and credits for the Visa Infinite Luxury Hotel Collection, plus VIP amenities at select Ritz-Carlton, Fairmont, and Park Hyatt properties
  • Complimentary Gogo inflight Wi-Fi on 12 flight segments per year

Cardholders who spend $50,000 in a calendar year will also get a $500 statement credit for the purchase of an airport club day pass or annual airport club membership.

Point-earning on the Infinite card is fairly standard for this class of card, with one point for every $1 spent, plus one additional point for gas and grocery purchases, and two additional points for every $1 spent on air travel. Points can be redeemed online for airfare, hotels, cruises, shopping, and gift cards, plus the $495 annual fee can be covered with 35,000 points.

Current UBS Preferred Visa Signature cardholders will automatically be upgraded to the Infinite card on May 27 and can add up to 24 additional users at no extra cost.

SEE ALSO: American Express Platinum cardholders will now be 'Uber VIPs' — but there's a catch

DON'T MISS: Here's how banks can offer credit cards like the Sapphire Reserve with enormous sign-up bonuses and still turn a profit

Join the conversation about this story »

NOW WATCH: 4 lottery winners who lost it all

A bunch of cycling enthusiasts just helped Peloton Cycle raise $325 million — betting it could be 'the Apple of fitness'

Wed, 05/24/2017 - 5:40pm  |  Clusterstock

  • Peloton, the indoor-fitness company, has raised $325 million from investors including Wellington Management, Fidelity Investments, Kleiner Perkins, and Comcast NBCUniversal.
  • The deal, likely to be the last financing round before the company goes public, was put together by a number of cycling enthusiasts.
  • The company is on a steep-growth curve: It has tripled annual revenue, to $170 million, in just a year, and has 100,000 paying subscribers.

Noah Wintroub picked up the phone and cold-called Peloton Cycle founder and CEO John Foley.

A vice-chairman at JPMorgan, Wintroub had ordered a Peloton Cycle indoor bike. Convinced that Foley had built a great product, he wanted to get to know the company better.

"If you've used the product, you get it, innately," Wintroub told Business Insider. "It's like 'Oh my god, these guys are the Apple of fitness.'"

Fast forward 18 months or so, and Peloton Cycle closed a $325 million financing round, with the likes of Wellington Management, Fidelity Investments, Kleiner Perkins, and Comcast NBCUniversal pouring money into the company. JPMorgan was sole placement agent for the offering. Wintroub worked on the deal with another cycling enthusiast, Eric Stein, who is head of North American investment banking at JPMorgan.

The Series E financing round valued the company at around $1.25 billion, making it a unicorn.

Peloton Cycle is built around indoor cycling from the home. It has 22 showrooms around the country, and two studios — a flagship in Manhattan and a studio in Chicago. Customers can choose from a variety of live classes and archived classes. The bike costs $1,995, and unlimited classes cost $39 a month. Some Business Insider employees have tried the bike.

The company is vertically integrated, making its own hardware, producing a tablet computer and the bike it sits on, and software, with 75 software engineers in New York City. It produces 12 hours of live television content a day, and sells through its own retail stores. It also delivers its own bikes in some cities.

“Peloton is a cultural phenomenon and has redefined what it means to build a connected experience disrupting multiple industries simultaneously: in home fitness, boutique class fitness and connected media devices," said Jon Callaghan, cofounder of True Ventures, another investor in the firm.

The new funds will go towards upping the number of retail stores it has, toward 40 by the end of the year, according to Foley, and extending in-house delivery to 10 markets, up from three right now. It also plans to sign a lease on a 30,000 square foot space in Midtown or Downtown Manhattan in the next few months, and to turn it into a fitness facility.

"We believe Peloton is the leader in a new business that has significant potential – Physical Interactive Media,” Mary Meeker, a partner at Kleiner Perkins, said in a statement.

The $325 million fundraiser was bigger than expected and included the sale of both primary equity, or new shares, and existing shares. Foley said he didn't expect there to be another placement, but that that didn't mean an initial public offering was on the immediate horizon.

"We're very well capitalized to have options over the next several quarters," he told Business Insider.

Join the conversation about this story »

NOW WATCH: THE BOTTOM LINE: Jamie Dimon and trillion dollar Apple

The bizarre 'Flintstones House' in a wealthy San Francisco suburb has finally found a buyer

Wed, 05/24/2017 - 4:53pm  |  Clusterstock

A unique house situated in the affluent town of Hillsborough, California, has finally found a buyer.

Known by Bay Area locals as the "Flintstones House" for its kooky attributes, the house was originally listed for $4.2 million in 2015. After two price chops, the listing site finally says that the house has a "sale pending." It's unclear what the final sale price was, though it was most recently listed for $3.19 million.

Indeed, many neighbors and locals call the home an eyesore, especially after it was painted orange and purple, according to Tech Insider.

Take a look around the home that has divided a community. Alain Pinel Realtors had the listing.

SEE ALSO: No one wants to buy this $20 million townhouse owned by a real-life 'Wolf of Wall Street'-er

Even from far away, it's easy to see that the Flintstones House isn't a normal property.

It's made from concrete that's been painted orange and purple, though it was first finished in an off-white color when it was built in 1976.

The odd shape of the house was created by applying shotcrete to both a steel rebar structure and a series of mesh frames held up by inflated balloons typically used for aeronautical research.

See the rest of the story at Business Insider

There's really only one thing to wonder about after the Moody's China downgrade

Wed, 05/24/2017 - 4:48pm  |  Clusterstock

There's really only one thing to wonder about now that Moody's has downgraded China's credit rating, and that's what it means for Janet Yellen and the Federal Reserve.

First, a refresher in case this is how you're getting the news. For the first time since 1989, Moody's — a debt ratings agency — downgraded China's credit rating from A1 from Aa3. Global stocks initially fell on the news but later recovered within the trading day.

That's because the reasons that Moody's cited for the downgrade have been largely known for years. The agency said that China's mounting debt has become a concern.

China's media responded to this by accusing Moody's of not taking its reform efforts into account — an unfair accusation. Here's what Moody's said about the reforms:

“The planned reform program is likely to slow, but not prevent, the rise in leverage. The importance the authorities attach to maintaining robust growth will result in sustained policy stimulus. Such stimulus will contribute to rising debt across the economy as a whole.”

Essentially what this is saying is that China is caught in a difficult balancing game. It needs to keep greasing the wheels of the economy in order to hit it's target growth number (6.5% GDP growth) while at the same time cutting back on leverage.

Damned if you do, damned if you don't

Now, the country has gotten somewhat serious about bank reform in the last few months. Specifically, regulators are going after wealth management products and off-balance sheet securities that make up China's massive shadow banking system. Back in June of 2016, HSBC made quite clear how dangerous that system is in a note to clients.

"If Wealth Management Products (WMPs) continue to expand at their current rate, in two years' time as much as a third of the retail funding activities in China's banking system will take place off balance sheet. That will make it even harder for regulators to estimate risk in the banking sector and to monitor linkages between the country's shadow banking activities, capital markets and the real economy."

So reform is necessary, and since the economy has been stable this year, now is the time to do it. However, curtailing the shadow banking system has caused some rumbling in China's domestic markets (bonds and stocks), but has yet to really spill out onto the rest of the world.

This warning is Moody's way of saying it just might.

That brings us to the US Federal Reserve. The first time the Fed hiked rates at the end of 2015 — China puked. The country's currency — the yuan — started to fall as people pulled money out of the country, and its stock market was roiled. Economists, investors, and political leaders at the World Economic Forum in Davos worried that the China's economy might crash.

After that, Yellen waited a full year to hike rates. In the meantime, Beijing stimulated the economy again, levering its banking system up even more until it stabilized.

It also anticipated the second US rate hike, tightening its own interest rates slightly to discourage the outflows. Still, as recently as January, Fed Chair Janet Yellen said she was worried about China. 

So in sum, we'll have to see if this new commentary on China gives Yellen pause in terms of its next rate hike. Because if China pukes again we could all get sick. 

Join the conversation about this story »

NOW WATCH: The Marine Corps is testing a machine gun-wielding robot controlled with just a tablet and a joystick

CBO says GOP healthcare bill would leave 23 million more uninsured, undermine protections for people with preexisting conditions

Wed, 05/24/2017 - 4:34pm  |  Clusterstock

The Congressional Budget Office on Wednesday released an updated score for the American Health Care Act, the House GOP healthcare bill, that said it could leave millions more uninsured and undermine protections for people with preexisting conditions.

The CBO projected that 23 million more Americans would be uninsured by 2026 compared with the current healthcare system — slightly lower than the 24 million more Americans it estimated would be uninsured under the previous iteration of the bill.

"Premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums," the CBO's report said.

The report, conducted in the wake of two amendments to the bill before it passed the House earlier this month, projected that the AHCA would cut the federal deficit by $119 billion — $32 billion less than the savings the CBO estimated in March.

That aspect is crucial because Republicans introduced the bill using a process known as budget reconciliation, which means it must be projected to shave at least $2 billion from the federal deficit to be able to pass with a simple majority in the Senate. House Speaker Paul Ryan had delayed sending the bill to the Senate in anticipation of the latest CBO score.

The report also confirmed one of the biggest worries of health-policy experts and constituents: that the bill could undermine protections for people with preexisting conditions.

The CBO looked at the possible effects of an amendment that would allow states to apply for a waiver to repeal the essential health benefits and community-rating protections established by the Affordable Care Act, the healthcare law also known as Obamacare.

Ryan, who championed the AHCA, said the report confirmed it "achieves our mission: lowering premiums and lowering the deficit." But Democrats and some Republicans slammed the bill and suggested that a new approach might be needed.

"With today's news, the 'collapse and replace' of Obamacare may prove to be the most effective path forward," Republican Sen. Lindsey Graham of South Carolina said on Wednesday.

About one-sixth of the US population lives in a state that the CBO projects would receive a waiver for community rating, which mandates insurers charge people of the same age living in the same area the same premiums. Health-policy experts have said that by repealing community rating, insurers could charge people with preexisting conditions more and price them out of the market.

That concern was echoed by the CBO and Joint Committee on Taxation's report, which projected that sick people could eventually be priced out of insurance:

"CBO and JCT expect that, as a consequence, the waivers in those states would have another effect: Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under HR 1628 to help reduce premiums."

The report's conclusions run contrary to statements from Republicans leaders who had said that even with the waiver provision, the AHCA had "layers of protections" to make sure people with preexisting conditions would be covered.

The CBO said that about one-third of the population lived in states that would receive waivers for the essential health benefits, a set of procedures and care — such as maternity care and emergency-room visits — that insurers are mandated to cover. Their elimination would cause premiums to fall 20% from the current baseline in those states, according to the CBO, because "insurance policies would provide fewer benefits."

In states that waive the benefits, the CBO said, more people could have coverage but end up paying higher costs.

"Although premiums would decline, on average, in states that chose to narrow the scope of EHBs, some people enrolled in nongroup insurance would experience substantial increases in what they would spend on healthcare," the report said. "People living in states modifying the EHBs who used services or benefits no longer included in the EHBs would experience substantial increases in out-of-pocket spending on healthcare or would choose to forgo the services."

The report said out-of-pocket costs for things like maternity care, substance-abuse treatments, and mental-health care would increase substantially for some people.

In its earlier reports, the CBO said previous versions of the AHCA would not cause the ACA's individual insurance exchanges to become unstable. With the waiver provision, however, that wouldn't be the case.

"The agencies estimate that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020," the report said. "That instability would result from market responses to decisions by some states to waive two provisions of federal law, as would be permitted under HR 1628."

The Senate is expected to craft a healthcare bill of its own instead of using the current form of the AHCA.

SEE ALSO: Trump reportedly wants to make a move that experts say could make Obamacare 'explode'

DON'T MISS: The future of Obamacare suffers another huge blow as the worst-case scenario looms in one state

Join the conversation about this story »

NOW WATCH: Watch Sally Yates go toe to toe with Ted Cruz over Trump's immigration ban

STOCKS CLIMB AFTER FED MINUTES: Here's what you need to know

Wed, 05/24/2017 - 4:00pm  |  Clusterstock

Stocks ticked up slightly after the release of the Federal Reserve's May minutes but remained close to their starting levels on Wednesday.

Treasury yields took a turn into negative territory following the release of the minutes and oil bounced around all day as news from OPEC members trickled out.

We've got all of the headlines you need to know, but first, the scoreboard:

  • Dow: 21,010.88 +72.97, (+0.35%)
  • S&P 500: 2,404.32, +5.90, (+0.25%)
  • Nasdaq: 6,163.02, +20.52, (+0.34%)
  • US 10-year yield: 2.266%, -0.019
  • WTI crude oil: $51.35, -0.12, -0.23%
  1. The Fed says it'll be appropriate to raise interest rates again 'soon.' The Fed didn't seem too worried about flagging consumer spending numbers, saying the slowdown was due to temporary factors. The Fed also addressed the question of shrinking its $4.5 trillion balance sheet by proposing a gradual raise to it caps on the dollar amounts of Treasurys and other securities that would be allowed to run off into maturity each month.
  2. Moody's downgraded China's credit rating. The credit rating agency dropped the China's rating from Aa3 to Aa1 due to the growing levels of debt in the economy.
  3. Bitcoin once again smashed record highs. The cryptocurrency blew through $2,300 and $2,400 per coin to set a new all-time high after a new scaling agreement was reached by Digital Currency Group.
  4. The market for existing homes has never been this tight. The average time a home stays on the market hit a record low in the month of April according to the National Association of Realtors. Sales of existing condos, coops, and single-family homes fell by 2.3%, or a seasonally adjusted annual rate of 5.57 million.
  5. The Bank of Canada hold interest rates. The central bank held the target for its overnight rate at 0.50%, as most economists were expecting. In the accompanying statement, the bank noted that, "The global economy continues to gain traction and recent developments reinforce the Bank’s view that growth will gradually strengthen and broaden over the projection horizon."
  6. The Container Store beat on earnings and the stock surged nearly 30%. Net sales for the period were $221 million, exceeding consensus estimates of $213 million. The specialty retail chain said full-year 2017 net sales would be between $830 million and $850 million, and forecast earnings per share of $0.25 to $0.35. Both beat analyst estimates.


GOLDMAN SACHS: Hedge funds are betting billions that these 18 stocks are doomed

People are making a fortune buying government-seized bitcoins

Ben Bernanke on Japan

A European banking dynasty just made 4 big US hires

Join the conversation about this story »

NOW WATCH: Here's why the American flag is reversed on military uniforms

The Fed warns the auto glut could get worse

Wed, 05/24/2017 - 3:57pm  |  Clusterstock

In the minutes from its May policy meeting, the Federal Reserve's Board of Governors warned the auto glut could get worse.

According to the Fed, "Automakers' assembly schedules suggested that motor vehicle production would increase in the second quarter despite somewhat elevated levels of vehicle inventories."

After posting record sales numbers last year, 2017 has seen a slowdown with every major carmaker falling short of sales expectations in April.

And after the big three automakers — Ford, GM, and Fiat Chrysler — posted weak sales for the fourth straight month, dealers are trying to entice potential buyers with discounts and incentives.

The combination of these factors — rising production rates combined with rising inventories due to slow sales — could force auto companies to reevaluate their strategies. Earlier this week, Ford's CEO "retired" amid his company's lackluster performance, though reasons for his "retirement" likely go back further than the current slowdown.

But if automakers don't adjust their production rates to match their inventory levels, the auto industry as a whole could be hurting for some time to come.

SEE ALSO: Automakers get slammed after reporting a 4th straight month of weak sales

Join the conversation about this story »

NOW WATCH: China built a $350 million bridge that ends in a dirt field in North Korea

This Montauk estate is on the market for $48 million — 7,600% more than what its owners paid for it

Wed, 05/24/2017 - 3:46pm  |  Clusterstock

A Montauk estate built on a plot of land that was originally bought for $620,000 in 1992 is now on the market for a whopping $48 million.

Owned by framing business owner Eli Wilner and his wife, Barbara, the estate encompasses more than 36 acres of private reserve on the waterfront next to where Andy Warhol once lived. It's in a particularly remote part of Montauk, and, Wilner said, their initial purchase didn't even come with a permit to build on the empty, hilly land. 

But after their petition for permits was approved, the couple spent millions on constructing the home and fixing up the landscaping. They now enjoy a 400-foot private beach, which borders a 3,000-foot beach that rarely gets visitors. 

"We were amazingly lucky. We found it by chance," Wilner told Business Insider. "I enjoyed the whole process."

The couple is selling the home now because they are moving to Florida to be closer to family. It was previously on the market for $35 million in 2008, then $50 million in 2010. According to property records, the price was bumped up further to $55 million in 2016 before being brought to market at its current price by Brown Harris Stevens

If the home ends up selling at $48 million, its value would have appreciated by about 7,600% over what the owners originally paid for the land. 

SEE ALSO: No one wants to buy this $20 million townhouse owned by a real-life 'Wolf of Wall Street'-er

According to the listing, the three-story home has about 7,000 square feet of space. Its blue roof was built in a Japanese-inspired style.

There are plenty of gorgeous beach views to be taken in from the various rooms ...

... and wide decks make the most of the home's perch.

See the rest of the story at Business Insider

These 7 planes are trying to end Airbus and Boeing's dominance in the skies (BA, AIR)

Wed, 05/24/2017 - 3:19pm  |  Clusterstock

The single-aisle airliner market is one of the most lucrative and hotly contested segments in the aviation business. But for the past 15 years, that white-hot competition has almost exclusively been between two companies — Airbus and Boeing. 

In recent years, companies from around the world have launched aircraft aimed at breaking the Airbus-Boeing duopoly. 

On Monday, China's COMAC and the Russia's United Aircraft Corporation announced a joint venture called the China-Russia Commercial Aircraft International Corporation or CRAIC. According to the two companies, the new joint venture will be tasked with developing a new long-range wide-body airliner. 

CRAIC is the product of a joint venture agreement signed by COMAC and UAC in June of 2016 with the blessing of Chinese president Xi Jinping and Russian president Vladimir Putin. 

"We will cooperate sincerely with UAC, unite as one, and strive to make the program a model of Sino-Russian cooperation," COMAC chairman Jin Zhuanglong said in a statement. "We will follow the latest international mainstream airworthiness standards, build more competitive long-range widebody aircraft, and strive to provide customers with better service and make new contributions to the global aviation market."

The new JV will be will be based in Shanghai near COMAC's existing facilities and will also produce its future aircraft in the Chinese city. 

In addition to the new Sin0-Russia wide-body, there is a slew of state-of-the-art airplanes from around the world designed to challenge Airbus' and Boeing's market dominance. 

But before we get to their challengers, let's take a look at the next generation offerings from Airbus and Boeing.

SEE ALSO: The Airbus A380 superjumbo is the next big thing in private jets

Airbus A320neo family

The Airbus A320neo family of airplanes are updated versions of the company's original A320-family with new-generation engines and optimized aerodynamics.

The line up of medium-range airliners includes a trio of models — the 160-seat A319neo, the 189-seat A320neo, and the 240-seat A321neo. All three variants can be equipped with modern CFM LEAP-1A or Pratt & Whitney PW1100G turbofan engines. 

Thus far, Airbus has more than 5,000 orders for the various versions of the A320neo. The first A320neos entered service in early 2016.


Airbus A350XWB

The Airbus A350 XWB or Extra Wide Body is a family of next-generation long-haul widebody airliners. More than 70% of the aircraft is built using carbon composites, titanium, and advanced aluminum alloys. As a result, Airbus claims the A350 delivers 25% lower operating costs, fuel burn, and C02 emissions.  

For increased passengers comfort, the cabin of the aircraft is pressurized to 6,000 ft. of altitude. 

The A350 can be had in three different versions — the 280-seat Dash 800, the 325-seat Dash 900, and the 366-seat Dash 1000. All versions of the A350 are powered by Rolls-Royce Trent XWB turbofan engines.  The A350 has a maximum range of more than 11,000 miles. 

Through April 2017, Airbus has 831 orders for the A350. Eighty-one of the planes are already in service with 12 operators. 


Airbus A330neo

The A330neo or New Engine Option is an upgraded version of the existing Airbus A330 with next fuel-efficient engines, a new wing design, and avionics. The A330neo can be had with 257 seats or 287 seats. 

All versions of the A330neo will be powered by Rolls-Royce Trent 7000 turbofan engines. Through the end of April, Airbus has 210 orders for the A330neo. 


See the rest of the story at Business Insider

The Brooklyn Bridge just turned 134 years old — here are 14 surprising facts about the iconic landmark

Wed, 05/24/2017 - 2:55pm  |  Clusterstock

The Brooklyn Bridge celebrated its 134th birthday on Wednesday. 

The bridge opened to the public on May 24, 1883 and to mark the occasion the city put on an extravagant firework show between Manhattan and Brooklyn. 

Needless to say, the bridge has a long, rich history. Here's a look at some of the lesser known facts about the iconic piece of architecture. 

Jack Sommer contributed to an earlier version of this story. 

1. The original bridge designer died after a strange accident.

In 1869, while on a pier in Brooklyn conducting a survey for the bridge, Chief Architect John Roebling had his foot crushed by a ferry that came in too close. He didn't scream but instead went on barking out orders to his workers.

After they got his foot unstuck, he promptly went to the doctor, who told Roebling they would need to amputate. But when the impatient Roebling was told the extensive after-care instructions, he changed his mind. "No, no, no. Just soaking it in water will be ok," he said. He died a month later.

 2. It took two generations of a family to design and build.

The Brooklyn Bridge took 14 years to build, starting in 1869 and ending in 1883. Roebling, a German immigrant, was named Chief Architect in the initial planning. The bridge looks the way it does today because of his original designs, which took three months to put together.

However, after Roebling's death-by-ferry-accident, his son, Washington Roebling, was left to complete his father's plans.

3. The construction workers used only their two bare hands.

The first step was to build the towers of the bridge. To dig up the mud and get down to bedrock, the workers needed to do all of their work by hand.

They worked around the clock, 24 hours a day, and still they were only able to dig down about six inches a week on the Brooklyn side. 

4. A sickness plagued those who were working on the bridge.

Those who had been working on the first tower in Brooklyn began to come down with an illness that they called Caisson's Disease, named for the large, watertight chambers the construction workers labored in. It is now believed that the workers were getting sick because they failed to decompress after working deep underwater. 

Even Roebling himself was suffering from the effects of the disease by the time the towers were completed in 1874. 

Today we know the disease better as the bends, a disease that commonly afflicts scuba divers. It occurs when a solution in bubbles releases gases that are dissolved and impact parts of the body. 

5. They never reached bedrock on one side of the bridge. 

When working on the tower on the Manhattan side, the workers continued to get sick from Caisson's Disease. At one point they decided that enough was enough.

Bedrock was 107 feet down, but they stopped at 80 feet. The Manhattan side, therefore, is built on an already existing sand bed.

6. Each of the tower weighs 90,000 tons.

Workers had to be very precise in their measurements —the granite brick of the tower needed to be heavy enough to stay firm on the bottom of the river bed, but not so heavy that it would sink in.

7. Roebling's wife was responsible for much of the work. 

Washington Roebling’s wife, Emily, took over the duties after he was no longer able to get to the construction site himself. Emily was not an engineer, but she understood the plans so thoroughly that she could converse with other engineers.

Many people were under the impression that she was the real designer.

8. There are over 14,000 miles of wire in the Brooklyn Bridge.

Each cable is made of 19 separate strands, each of which has 278 separate wires.

The workers would splice the wires together, and then tie them to make the strands. A boat would come from Brooklyn and sail it across to the Manhattan side. Then, two winches on the outside of the towers would hold the strands in place, and they would raise them to the top. This was a very long and tedious process, which weather interrupted constantly. It took about two years to complete the wire strands alone.

9. Even today, the Brooklyn Bridge rises about three inches if it’s extremely cold.

This is a result of the cables contracting and expanding in cold temperatures. 

The wires have done this ever since the bridge was complete. 

10. There were so many fireworks during the bridge's opening that even people from inland New Jersey said they could see the bright lights.

The bridge officially opened on May 24, 1883, after the roads were finished. 

Nearly 150,000 people were counted in front of City Hall alone, which is positioned directly across the Manhattan entrance to the bridge. Thousands more lined the streets of the now-connected boroughs, and the East River was filled with boats and ferries. Hundreds of fireworks were launched off the bridge.

11. Accounting for inflation, the bridge cost $3.5 billion to build. 

The Brooklyn Bridge took twice as long — and cost twice as much — as was expected. 

It cost a whopping $15 million at the time, which is roughly equivalent to $3.5 billion today. 

12. A nearby underground wine cellar helped pay for the bridge's debt. 

Underneath the bridge on the Manhattan side, there was a wine cellar that the builders rented out for $1,000 a year. The money went towards repaying the developers' debts. 

Nicknamed "The Blue Grotto," it was covered in beautiful frescoes depicting vineyards in Germany, Italy, Spain, and France. 

There was another cellar on the Brooklyn side, though rent for that one was only $500.

Both places were popular for a while, but they ended up closing in the 1930s. They were mostly forgotten about, and there is currently no public access to them.

13. A nearby cafe was used as a second office by Thomas Edison during the bridge’s construction.

The Paris Cafe, close to both the bridge and the seaport, was used by Edison while he was working on the first operational power station in the world.

That station would end up being built on Pearl and Fulton Street, just a few blocks away from the Manhattan side of the bridge. 

14. In 2006, workers discovered a bomb shelter underneath the bridge.

Somewhere along the Manhattan side (the city has never revealed the exact location), workers stumbled upon a vaulted room filled with tons of water, 352,000 packets of crackers, and blankets.

There was a label that said "FOR USE, AFTER ENEMY ATTACK." Workers also found newspapers from the late 1950s and 1960s, around the time of Sputnik and the Cuban Missile Crisis.

SEE ALSO: Engineers give US infrastructure a 'D+' — here's a look at how bad things have gotten

Join the conversation about this story »

NOW WATCH: The US has nearly 56,000 structurally deficient bridges — here are the states with the most

About Value News Network

Value is the only commonality in an increasingly complex, challenging and interdependent world.
Laurance Allen: Editor + Publisher

Connect with Us