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ACCOUNTS PAYABLE AUTOMATION: The multitrillion-dollar accounts payable market is finally digitizing — here's how payments providers can grab a piece of it

21 hours 31 min ago  |  Clusterstock

 

The $22 trillion business-to-business (B2B) US payments market is facing a paradox. High invoice volume (a business can see anywhere from hundreds to tens of thousands of invoices per month) and small departments that still use largely analog process are driving a desire to digitize: Enterprises using digital payables platforms can see 81% lower processing costs and 73% faster processing cycle times, per Kofax.

But accounts payable is a complex process, and entrenched habits and limited resources have stymied digitization and kept companies set in their ways.

Today, more firms are starting to seek accounts payable solutions that automate the invoicing and payments process, as they look to cut costs, decrease fraud, improve efficiency, and gain more visibility into payment data. These changes are bringing a deluge of providers — including software companies, card networks and providers, banks, and payment networks — into the ecosystem.

By moving into B2B payments, players in the space can diversify their businesses by capturing a new source of volume and attracting a new set of clients, attractive prospects as growth in digital consumer payments begins to slow.

For these providers, striking while the iron is hot and chasing the classes of businesses with the most opportunity — including small sellers, the middle market, cross-border companies, and the gig economy — will prove the top strategies in a successful pursuit of the B2B market.

In this report, Business Insider Intelligence will size the accounts payable market in the US; evaluate the breakdown between analog and digital processes at all three stages of an accounts payable transaction; and evaluate barriers toward digitization.

We will then identify four key segments where there's particular opportunity in accounts payable and assess the value in each. Finally, we will examine four best-in-class providers serving these areas and explain why their solutions could be a blueprint for other providers entering B2B.

The companies mentioned in this report are: Bottomline Technologies, Intuit, JPMorgan Chase, MineralTree, Oracle, SAP, SWIFT, Tipalti, Visa, Xerox.

Here are some key takeaways from the report:  

  • The $22 trillion US B2B payments market has been slow to digitize, with 36% of firms using paper invoicing, 47% relying on manual processes for approval, and 49% of payments made by check.
  • Forty-four percent of businesses are looking to add automation to their payables processes as a way to capitalize on the efficiency and cost-cutting benefits it brings in, while also cutting fraud and increasing access to payment data.
  • Large enterprises have the highest budgets for digital solutions, but they're also the most likely to already be using them, which makes small businesses, middle-market companies, cross-border businesses, and the gig economy the ripest targets for innovation.

In full, the report:

  • Explains the typical accounts payable process and identifies pain points within each stage.
  • Lists the benefits of automating accounts payables and highlights friction points preventing businesses from digitizing.
  • Analyzes how payments providers can best move into the space and capture a large volume share as the market is on the cusp of rapid digitization.
  • Evaluates four best-in-class strategies that payments providers looking to move into payables can take to scale quickly.

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  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Sign up for Payments & Commerce Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week. >> Get Started
  3. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  4. Current subscribers can read the report here.

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Why are Apple Pay, Starbucks' app, and Samsung Pay so much more successful than other wallet providers?

22 hours 30 min ago  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

In the US, the in-store mobile wallet space is becoming increasingly crowded. Most customers have an option provided by their smartphone vendor, like Apple, Android, or Samsung Pay. But those are often supplemented by a myriad of options from other players, ranging from tech firms like PayPal, to banks and card issuers, to major retailers and restaurants.

With that proliferation of options, one would expect to see a surge in adoption. But that’s not the case — though Business Insider Intelligence projects that US in-store mobile payments volume will quintuple in the next five years, usage is consistently lagging below expectations, with estimates for 2019 falling far below what we expected just two years ago. 

As such, despite promising factors driving gains, including the normalization of NFC technology and improved incentive programs to encourage adoption and engagement, it’s important for wallet providers and groups trying to break into the space to address the problems still holding mobile wallets back. These issues include customer satisfaction with current payment methods, limited repeat purchasing, and consumer confusion stemming from fragmentation. But several wallets, like Apple Pay, Starbucks’ app, and Samsung Pay, are outperforming their peers, and by delving into why, firms can begin to develop best practices and see better results.

A new report from Business Insider Intelligence addresses how in-store mobile payments volume will grow through 2021, why that’s below past expectations, and what successful cases can teach other players in the space. It also issues actionable recommendations that various providers can take to improve their performance and better compete.

Here are some of the key takeaways:

  • US in-store mobile payments will advance steadily at a 40% compound annual growth rate (CAGR) to hit $128 billion in 2021. That’s suppressed by major headwinds, though — this is the second year running that Business Insider Intelligence has halved its projected growth rate.
  • To power ahead, US wallets should look at pockets of success. Banks, merchants, and tech providers could each benefit from implementing strategies that have worked for early leaders, including eliminating fragmentation, improving the purchase journey, and building repeat purchasing.
  • Building multiple layers of value is key to getting ahead. Adding value to the user experience and making wallets as simple and frictionless as possible are critical to encouraging adoption and keeping consumers engaged. 

In full, the report:

  • Sizes the US in-store mobile payments market and examines growth drivers.
  • Analyzes headwinds that have suppressed adoption.
  • Identifies three strategic changes providers can make to improve their results.
  • Evaluates pockets of success in the market.
  • Provides actionable insights that providers can implement to improve results.
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

Purchase & download the full report from our research store

 

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One of Europe's brightest young investors has just raised her second fund in under a year to take on Silicon Valley

22 hours 33 min ago  |  Clusterstock

  • Blossom Capital founder Ophelia Brown closed her second fund in less than 12 months to help scale European and US tech companies. 
  • Blossom Capital has raised $185 million from institutional investors, taking its total funding to $270 million. 
  • Previous investments in the fund's portfolio include Duffel, Checkout.com, and Tines. 
  • "Blossom is like a startup, we've had to convince people of the strategy," Brown told Business Insider in an interview. "We believe in the market opportunity, investors have backed us and we have done exactly what we said we'd do." 
  •  Click here for more BI Prime stories.

One of Europe's most highly regarded young investors has raised a second fund, less than 12 months after she raised her first. 

Blossom Capital, founded by former general partner at LocalGlobe and principal at Index Ventures Ophelia Brown, has raised an additional $185 million. That takes her total funds to $270 million. Blossom's original $85 million raise was previously touted as the fastest first-time funding by a female-founded venture capital firm.  

The European tech system had a strong 2019 (attracting $34 billion of VC funding) and 2020 is off to a strong start, as US investors increasingly target European startups. 

"Blossom is like a startup, we've had to convince people of the strategy," Brown told Business Insider in an interview. "We believe in the market opportunity, investors have backed us and we have done exactly what we said we'd do." 

Investors in the round weren't named but Brown indicated that the round was led by existing investors with all but one from the US. Aside from Brown, Blossom Capital's partners include former Index investor Imran Ghory, and former Deliveroo CTO Mike Brown.

In 2019 Blossom invested in European tech startups including travel tech company Duffel, Irish cybersecurity company Tines, and payments processor Checkout.com.

Venture capital funds don't tend to give open information about their returns and performance but Blossom proclaims that it's in the top 5% of funds in the US and EU. That's according to private investment benchmark data from Cambridge Associates and Preqin, cited in Blossom Capital's release. This is despite the fact that Blossom only invests in five companies a year.

"There is a clear, fundamental shift in Europe which gives rise to our belief in early-stage startups," Brown added. "Founders want to work with us because of our links to the US and our unique proposition."  

Brown appeared on Business Insider's Tech 100 2019, a list of the 100 most influential people in UK tech, at number four.

SEE ALSO: We asked 9 of the most prominent VC investors in European tech to pick out fintech startups they think will blow up in 2020. Here are the 15 they chose.

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NOW WATCH: Watch Elon Musk unveil his latest plan for conquering Mars

Self-driving startup Cruise is bankrolled by GM, but it just revealed a new vehicle that envisions the end of cars (GM)

23 hours 29 min ago  |  Clusterstock

  • Self-driving startup Cruise revealed its new Origin vehicle in San Francisco on Tuesday night.
  • The vehicle is fully autonomous, all-electric, and has no traditional controls, such as a steering wheel or pedals.
  • It's the result of a partnership between Cruise, GM, and Honda.
  • Cruise CEO Dan Ammann continued to argue that it's time for the world to enter a post-car era, with personal auto ownership coming to an end.


SAN FRANCISCO — "We did think about reinventing the wheel," Cruise CEO Dan Ammann joked to an audience that had just seen the former General Motors president reveal the Cruise Origin, the self-driving startup's all-electric, no-steering-wheel, fully autonomous vehicle.

"This is what you'd build if there were no car," he said, building on a radical message first delivered last December, when he argued that the time has come to move past the automobile.

The Origin is the fifth generation of vehicle that Cruise has developed since it was acquired by GM in 2016. Then-CEO (now CTO) Kyle Vogt and his small team had developed a promising self-driving system that could handle the complicated urban environment of San Francisco. Their work caught GM and Ammann's attention. Since then, Japan's SoftBank and Honda, as well as other investors, have raised Cruise's valuation to about $20 billion. 

The Origin, which looks very much like the boxy transportation pod that some auto execs have been expecting, is the result of a collaboration between Cruise, GM, and Honda that started in late 2018. It's constructed on a new all-electric platform, the company said, and should form the basis of a shared-mobility service that Cruise hopes to launch in coming years (a 2019 roll-out was pushed back).

A production-ready vehicle, not a concept car

The vehicle — which Ammann said isn't a concept, but is actually going into production, with a plant to be named shorty — is intended to bring over 100 years of individual car ownership to an end.

Ammann said that it could also conclude an era of unfortunate trade-offs caused by long commute times, expensive auto ownership and maintenance, and, of course, the sacrifice of safety. Almost 40,000 people die in car-related accidents every year in the US alone.

"What if we didn't have to choose?" he asked. "What if we could create a different transportation system entirely — one that is safer, better and more affordable for us, for our cities and for our planet?"

The Origin, according to design director Stuart Norris, enabled the Cruise-GM-Honda group to get back to design fundamentals. 

"There was no first sketch," he said.

Instead, designers considered how the Origin would be used and experienced, and that informed their approach. "We moved away from styling," he noted. "It was a complete paradigm shift."

Vogt pointed out that, while the box-like Origin might seem large, it's really no bigger than a typical car. But it has no engine, nor conventional controls. The twin doors slide open, minivan-style, to avoid taking out cyclists. Inside there's a pair of bench seats, accommodating six riders, along with dual screens and a cargo area. Four sensor arrays at the corners enable the information flow that enables the vehicle to navigate what Vogt characterized as the entropic and random San Francisco streetscape.

A million-mile vehicle

According to Ammann, Cruise's service could provide $5,000 in yearly savings for customers who would be liberated from the cost of car ownership. The vehicles would operate around the clock and be updated on ther sensor and software fronts. But the vehicle itself could operate for a million miles. 

"We're close to cracking the human performance barrier," Vogt said. 

He said the Origin could deliver what he called "superhuman" performance, and that the vehicles could be affordably deployed on a larger scale — at half the cost of an electric vehicle in the current market. 

Cruise relies on an integrated-manufacturing process to distinguish itself from other self-driving companies, such as Waymo (part of Alphabet), which wants to develop a robot "driver" that could operate anything from a minivan to a big semi-trailer rig, and has been supplied with vehicles by Fiat Chrysler and Jaguar Land Rover.

By building its own vehicles, at GM factories, with self-driving technology engineered into the car itself, Cruise hopes to be able to vindicate the $1 billion a year GM is spending to fund the company's growth.

And Cruise doesn't appear to be limiting itself to ferrying just passengers. Ammann teased the prospects for a cargo-delivery service, as well. 

Critically, none of it would require business-as-usual.

"What we came up with isn't a car that you buy," Ammann said. "It's an experience that you share."

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NOW WATCH: Inside Roborace: the Formula One for self-driving cars

The Saudi Crown Prince accused of hacking Jeff Bezos' phone met with more than a dozen tech execs and celebs during the same US trip. From Tim Cook to Oprah, here's everyone Mohammed bin Salman met with.

Tue, 01/21/2020 - 10:52pm  |  Clusterstock

There's a good chance Apple CEO Tim Cook, Google founders Larry Page and Sergey Brin, and venture capitalist Peter Thiel are having their phones examined right about now, in the wake of new reports about the hacking of Jeff Bezos' phone.

A forensic analysis commissioned by Bezos suggests that it's likely his phone was hacked in May 2018 via a file sent from a WhatsApp account used by Saudi Arabian Crown Prince Mohammed bin Salman, according to reports in The Guardian and the Financial Times.

The hacking attack came just weeks after Bezos, the CEO of Amazon and owner of The Washington Post, met in person with bin Salman during the latter's tour of Silicon Valley and the US. The two swapped phone numbers during a dinner meeting and later connected via WhatsApp.

But Bezos wasn't the only tech luminary or celebrity who met with bin Salman on his three-week tour. So too did Cook, Page, Brin, Thiel and plenty of others. There is no evidence that their phones were also compromised, but given the stunning allegations about how Bezos' phone was hacked, it's not unreasonable to wonder whether others may have swapped phone numbers with the crown prince and could be at risk.

The Saudi US embassy called the allegations of hacking "absurd" in a tweet on Tuesday.

Here are some of the tech executives and other notable figures who met with the Saudi crown prince on his 2018 trip, according to The New York Times:

SEE ALSO: Jeff Bezos' phone was reportedly hacked by the crown prince of Saudi Arabia, in a new twist to the saga of his dramatic divorce — here's everything we know so far

Google co-founders Sergey Brin and Larry Page

Google CEO Sundar Pichai

Hiroshi Lockheimer, head of Google's Android and Chrome divisions

Venture capitalist Peter Thiel

An assortment of other venture capitalists and tech leaders, including Sam Altman and Vinod Khosla.

Apple CEO Tim Cook

Apple's executive team, including Chief Operating Officer Jeff Williams

And Microsoft cofounder Bill Gates

But bin Salman didn't just meet with tech titans. He also met with executives from other industries, including media tycoon Rupert Murdoch.

And Virgin Group founder Richard Branson.

Bloomberg founder Michael Bloomberg

AMC CEO Adam Aron

And he met with plenty of celebrities, including Oprah.

Michael Douglas

Morgan Freeman

And Dwayne 'The Rock' Johnson

THE MONETIZATION OF OPEN BANKING: How legacy institutions can use open banking to develop new revenue streams, reach more customers, and avoid losing out to neobanks and fintechs

Tue, 01/21/2020 - 7:05pm  |  Clusterstock

Open banking has arrived, and it's transforming the UK's banking landscape — next up could be the world. Regulatory efforts in the UK are transforming retail banking, reshaping incumbents' relationships with customers, and easing entry for fintechs.

Regulators across every continent are responding with actions of their own. Underpinning open banking initiatives is the idea that ownership of transactional data belongs to consumers instead of incumbent financial institutions.

The implications of this change for established lenders in the UK are significant. For those that act, open banking presents substantial revenue-generating opportunities.

But the consequences of inaction are even more severe: Business Insider Intelligence estimates that by 2024, £6.5 billion ($8.4 billion) of UK incumbents' revenues will be under threat of being scooped up by forward-thinking companies like fintechs and neobanks. Yet even through the financial incentives to act are clear, many incumbents are struggling to determine the best path to monetization. In fact, some aren't even sure what their options are.

In The Monetization of Open Banking report, Business Insider Intelligence identifies monetization strategies incumbents have at their disposal, describes how they can determine the best approach for their specific needs, and outlines actionable steps they need to make their chosen open banking initiative successful.  

The companies mentioned in this report are: Allied Irish Bank (AIB), Bank of Ireland, Barclays, Danske Bank, HSBC, Lloyds Banking Group, Nationwide, RBS Group, and Santander, Monzo, Starling, ING, Yolt, Fidor, BBVA

Here are some of the key takeaways from the report:

  • Driven by regulatory action, open banking is transforming the UK's banking landscape, but it's also gaining momentum globally.
  • For incumbents, open banking entails a significant threat to their entrenched position.
  • But for forward-looking banks, there are substantial opportunities for revenue generation, both directly and indirectly.
  • To seize these opportunities — and avoid losing revenue to fintechs and neobanks — it's critical that legacy players focus their efforts in the right direction, including identifying their strategic priorities.

 In full, the report:

  • Details the UK's Open Banking regulation in depth.
  • Forecasts the size of the UK's Open Banking-enabled banking industry over the next five years.
  • Discusses the types of monetization opportunities available for incumbents, as well as non-direct revenue-generation opportunities.  
  • Provides actionable steps on how banks can best determine the best strategic approach from the options available.

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

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of fintech.

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As a freelancer, taxes are complicated, but a high-yield savings account makes them easier — and earns me money

Tue, 01/21/2020 - 5:19pm  |  Clusterstock

A few months ago, I quit my 9-5 to take my business, Her First $100K, full time. I had spent the previous three years building my business to the point where I felt confident enough to become a full-time entrepreneur. 

It has been, by far, the riskiest move I've ever made — and it also means I need to keep my ducks in a row, especially when it comes to covering my financial obligations (read: taxes.) 

To ensure that I have enough to cover my taxes and make sure my money is working for me, I set aside a portion of my tax money in a high-yield savings account before "paying myself" an income. If you're an entrepreneur or have a side hustle, it may be worth it to do the same.

I keep my money in a high-yield savings account from CIT Bank 

If you know me at all, you know I talk incessantly about high-yield savings accounts. Your typical savings account earns you just 0.09% at your local bank — literal pennies. A high-yield savings account, on the other hand, can earn you 20 times more. 

The longer you wait to open up a high-yield savings account, the more money you lose. If your money is going to sit there — might as well have it work harder for you. 

I keep my money at CIT Bank. It currently offers 1.80% interest on its Savings Builder account. In order to receive that rate, you need to have either a $25,000 balance or make monthly deposits of at least $100 (the more doable option). In addition, CIT is FDIC-insured, which means I know that my money is guaranteed up to $250,000.

Open your own Savings Builder account today and start earning more on your money »

As an entrepreneur, I am responsible for withholding my own taxes

Using a high-yield savings account works out great for me as an entrepreneur because, unlike W2 employees, I am responsible for paying my own taxes manually. Because of my income threshold, I pay forecasted taxes quarterly throughout the year. 

The IRS self-employment tax applies to all individuals who gross $400 or more from earnings outside a W2 employer. The 2020 self-employed tax rate is 15.3% on the first $137,700 worth of net income followed by an additional 2.9% on earnings greater than that. 

I automate 30-40% of my gross earnings into my high-yield savings account

I know I just said the self-employed tax rate is 15.3%, but when you're self-employed, you're responsible for both the employee and employer portions of Social Security and Medicare. Those are shared between traditional W2 employees and their employers, but because I'm responsible for both, I set aside extra money to cover those amounts at tax time.

To make sure I'm on track to pay my quarterly taxes, I simply put aside 30-40% of my pay into my tax-designated savings account. That way, I have enough money to pay my quarterly estimated taxes — and my money is earning interest throughout the year.

Staying ahead of the game by automating a portion of my earnings to a high-yield savings account means I don't have to worry about quarterly or annual taxes sneaking up on me — why not make some interest off it at the same time?

Open an account with CIT Bank today and start earning 1.80% interest »

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NOW WATCH: Stop using champagne flutes — this is the best way to drink champagne

UBS had 2 multi-billion-dollar clients pull their money out of its massive Americas wealth business, driving overall fourth-quarter outflows (UBS)

Tue, 01/21/2020 - 5:16pm  |  Clusterstock

  • Two large UBS clients withdrew money from the bank's wealth management arm in the Americas during the fourth quarter. One of the clients had an account between $3 billion and $4 billion, while the other was between $1 billion and $2 billion, a person familiar with the matter said.
  • Those outflows helped explain the bulk of the overall unit's $4.7 billion fourth-quarter outflows that the Swiss bank reported in its earnings on Tuesday. 
  • The wealth management unit's adviser force meanwhile shrank again. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier.
  • Visit BI Prime for more wealth management stories.

Two ultra-wealthy clients pulled money out of UBS wealth business in the Americas late last year, driving the lion's share of a global $4.7 billion in outflows from the bank's wealth management arm during the fourth quarter, according to a person familiar with the matter.

One of the clients had an account between $3 billion and $4 billion, and one was between $1 billion and $2 billion, according to the person, who requested anonymity to discuss a private matter. 

The Swiss bank's wealth management business, which is the world's largest, reported its Asia-Pacific and Switzerland regions had net inflows, finance chief Kirt Gardner said on a call to discuss earnings with analysts early Tuesday.

Those two Americas clients were "very low-margin accounts," Gardner said, suggesting they were not accounts that were immediately profitable to the business. He highlighted that full-year net new money of $31 billion was "particularly strong" into Asia-Pacific, a region where the wealth management unit hopes to expand.

In the third quarter, net new money for the unit totaled $15.7 billion.

Global wealth management — one of the bank's four business lines along with personal and corporate banking, asset management, and investment banking — has been a main focus under chief executive Sergio Ermotti and wealth co-heads Tom Naratil and Iqbal Khan. 

Khan, who joined last year from Swiss competitor Credit Suisse, and Naratil are aiming to increase the unit's efficiency through a broad business reorganization across regions.

UBS has long been a leader in managing money of the world's ultra-wealthy clients, and has more recently emerged as the firm's more stable business while its investment bank struggles.

The firm earlier this month said it was overhauling its global wealth management division with structural changes across regions, according to a company memo reviewed by Business Insider, after similar changes were made in the US.

It's all an effort to expand its menu of specialized client offerings, particularly bespoke family office services, and speed up advisers' decision-making and productivity through a closer relationship with investment banking. It was widely reported earlier this month that the unit would slash hundreds of jobs to cut costs.

On the firm's Tuesday call, Gardner called the global family office group "one of our highest-growth opportunities" for the wealth management unit. 

The wealth management unit's adviser force meanwhile shrank again during the fourth quarter. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier.

Overall staff within the business fell by 4% to 22,681 employees. 

Some large adviser teams, some of whom oversaw $1 billion or more, left the firm last year for smaller shops or rival firms. Peer US wealth managers Wells Fargo, Merrill Lynch, and Morgan Stanley have all seen similar exits.

One UBS team managing some $7.5 billion in assets left to join RBC Wealth Management in California last month, and earlier in 2019 a team overseeing $1 billion in client assets left for Rockefeller Capital Management.

UBS has meanwhile made some notable US recruits, including a large North Carolina-based private wealth team, formerly with Merrill Lynch. The team oversees some $10.8 billion in client assets.

As Business Insider reported over the summer, UBS has pulled together a new group to help its wealth advisers provide a "family-office"-like experience, and that comes as the bank works to make good on raking in $70 billion in new US assets over three years.

Read more: UBS is bringing back a junior analyst role in its wealth management arm as the industry grapples with recruiting fresh talent

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NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.

The Trump administration declines to release report justifying car tariffs

Tue, 01/21/2020 - 5:08pm  |  Clusterstock

  • The Trump administration has declined to release a confidential government report it said justified steep tariffs on car imports to the US.
  • The move came in direct defiance of lawmakers who have questioned whether vehicles present a threat to national security.
  • "Releasing it now would interfere with the president's ability to protect confidential executive branch communications and could interfere with ongoing negotiations," a Commerce Department spokesperson told Business Insider. 
  • Visit Business Insider's homepage for more stories.

The Trump administration has declined to release a confidential government report that officials said justified steep tariffs on car imports to the US, an unusual move that came in direct defiance of Congress.  

In a statement to Business Insider, a Commerce Department spokesperson said the administration would continue to withhold the results of an investigation that found certain unnamed imported vehicles present a threat to national security. 

"Releasing it now would interfere with the president's ability to protect confidential executive branch communications and could interfere with ongoing negotiations," the spokesperson said of the Section 232 report. 

In a spending bill provision passed last year, Congress demanded that the Trump administration release the Section 232 report. Lawmakers and businesses have widely objected to the Trump administration claim that car imports pose a threat to national security.

The Justice Department said in a letter released Tuesday that the White House could use executive privilege to defy the request from Congress, saying that "its disclosure would risk impairing ongoing diplomatic efforts to address a national-security threat and would risk interfering with executive branch deliberations."

In November, the Trump administration missed the deadline to make a decision on whether to impose tariffs on foreign vehicle imports. 

But Trump said Tuesday he could still slap tariffs on cars from the European Union if the two sides did not reach a broader trade agreement. Trump has separately threatened to target cars from Japan. 

"We expect to be able to make a deal with Europe," Trump said on the sidelines of the World Economic Forum in Davos. "And if they don't make a deal we'll certainly give that very strong consideration."

Such a move would be expected to increase the price of vehicles by thousands of dollars.

The proposed tariffs could add up to $6,875 to imported vehicle prices, the Center for Automotive Research estimated in a 2018 report. Overall, average car prices would increase $4,400. Economic research groups have reached similar estimates. 

"Ultimately, the tariffs could increase the price of motor vehicles sold in the United States, prompting some consumers to delay purchases or purchase used cars instead of new vehicles, and generating inflationary pressures,"  the nonpartisan Congressional Research Service said in June.

In a May letter to White House economic adviser Larry Kudlow, nearly 160 members of Congress warned against the proposed auto tariffs. 

"We are convinced that the products hard-working Americans in the auto sector design, build, sell, and service are not a threat to our national security," the letter said. "We strongly urge you to advise the President against imposing trade restrictions that could harm the auto sector and the American economy."

The White House did not respond to an email requesting comment.

SEE ALSO: US threatens to slap tariffs on Italy and Britain in digital tax fight

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

8 credit cards that get you elite hotel status just by having them in your wallet

Tue, 01/21/2020 - 4:14pm  |  Clusterstock

Two people can book the same exact hotel room for the same exact price, but have totally different experiences. One person may end up in an upgraded room on a high floor in a corner, with extra space and a couch, all while enjoying free breakfast, free premium internet, and earning a ton of extra points, checking in early and checking out late.

The other person might get a fine standard room, maybe on a lower floor next to the elevator. Basic internet might be included, but if that person plans to use it heavily for work or streaming, they may want to pay a few dollars a day to upgrade to premium. The breakfast buffet is $20 per person, and late checkout isn't available, even for a fee — although the hotel is happy to hold their bags until their late flight.

These two people booked the same exact room using identical booking methods (directly with the hotel.) So what gets the first person here such better treatment?

The answer: elite status. And you don't need to spend dozens of nights on the road each year to earn it; some credit cards will grant you status just for having an account in good standing. Read on to see which credit cards offer these free benefits, as well as what you can get when you hold one.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Read more: The best hotel credit cards

The Platinum Card from American Express

If you're not too particular about which hotel brand you stay at, the Platinum Card could be the perfect option. That's because it offers complimentary elite status at two major chains — Hilton and Marriott — that together offer more properties than any other brand.

At Hilton, Amex Platinum cardholders who connect their accounts get complimentary Gold level status. This mid-tier status is particularly valuable at Hilton, including free breakfast at most hotels, room upgrades and late checkout subject to availability, a fifth reward night for free any time you stay for four nights using points, an 80% bonus on points earned during paid stays, free water bottles in-room, and more.

Read more: Amex Platinum card review

Platinum Card members also get Gold status at Marriott, although Gold perks at this brand are slightly different. You'll get a room upgrade at check-in when it's available, as well as check-out time as late as 2 p.m., complimentary premium internet, a 25% bonus on earned points, and a small welcome gift of bonus points.

Finally, for independent hotels, Platinum cardholders can book through Amex's Fine Hotels & Resorts program to get perks at a ton of different properties.

The Amex Platinum card comes with plenty of other perks too, including access to airport lounges, up to $200 a year in Uber credits, an annual $200 airline fee credit, concierge services, access to exclusive events, and more.

Click here to learn more about the Amex Platinum Card » Marriott status

Marriott and Starwood merged their hotel loyalty programs, and as a result their portfolios of credit cards were updated and merged as well. Thankfully, the days of confusing branding are behind us — all cards have Marriott Bonvoy branding, but some credit cards are issued by Amex, and some are issued by Chase.

In addition to the Amex Platinum Card, which comes with Marriott Gold status, here are the cards that get you status with the Marriott Bonvoy brand.

1. Marriott Bonvoy Boundless Credit Card

This Marriott co-branded card from Chase gets you Silver-level elite status with Marriott.

While Silver doesn't get you much, it's still something — you'll get a 10% bonus on points earned, priority for late checkout, access to a dedicated customer service line, free Wi-Fi, and more. While it's not a published benefit, you may also be given preferential rooms. When you spend $35,000 on the card in a given year, you'll earn Gold status instead.

The card offers 6 points on every dollar spent at Marriott hotels, and 2x points on everything else. After your first year, you'll get a free night certificate every year on your account anniversary, good for any property that costs 35,000 nights or fewer.

If you haven't had this card before — and you haven't opened a Marriott card in the past few years — you can currently earn 100,000 Marriott points when you spend $5,000 in the first three months. The card has a $95 annual fee.

Click here to learn more about the Marriott Bonvoy Boundless card » 2. Marriott Bonvoy Brilliant™ American Express® Card

The Marriott Bonvoy Brilliant offers Gold status just for holding the card — just like the Amex Platinum — which includes room upgrades and a 25% bonus on earned points.

If you spend $75,000 or more on the card in a calendar year, you can get Platinum status for the next year, which includes better upgrades, free breakfast, and access to hotel lounges. 

In addition to elite status, you'll get a $300 annual credit for Marriott and SPG purchases, an annual free night certificate good for hotels that normally cost up to 50,000 points, access to Priority Pass airport lounges, and plenty more to make up for the $450 annual fee, which isn't waived the first year.

The Bonvoy Brilliant earns 6x points on Marriott purchases, 3x points at US restaurants and flights booked directly with the airline, and 2x points on everything else.

Click here to learn more about the Marriott Bonvoy Brilliant Amex » Hilton status

Hilton's loyalty program, Hilton Honors, can offer hotel guests a great value — even if Hilton points aren't worth quite as much as other hotel loyalty points, like Marriott, it's often easier to earn them quickly.

Plus, the status you can get from a credit card is particularly valuable. While there are three cards that offer various levels of status, only two of those cards are worth considering.

1. Hilton Honors American Express Card

The baseline Hilton Honors card has a decent set of benefits for a no-annual-fee card, including Silver elite status in the Hilton Honors program.

At Hilton, holding Silver status doesn't get you a ton, but you'll still be eligible for things like late check-out, free water bottles in your room during stays, a free fifth night on award stays, and bonus points. When you spend $20,000 on the card in a calendar year, you'll get upgraded to Gold status, which includes the same perks as Silver, plus free breakfast, room upgrades, and more bonus points.

The card offers 7 points per dollar spent on Hilton purchases, 5 points per dollar spent at restaurants, gas stations, and supermarkets within the US, and 3x points on everything else.

When you open a new account, you can earn a welcome bonus of 75,000 Hilton Honors points when you spend $1,000 in the first three months. For a no-fee card this is pretty solid, but you can do better with the other Hilton options.

Click here to learn more about the Hilton Honors Amex » 2. Hilton Honors American Express Surpass® Card

With an annual fee of $95, including the first year, the Hilton Surpass is the best mid-range option in Hilton's line-up.

The Surpass offers complimentary Gold status, which potentially an incredible deal. The free breakfast alone can make up for the annual fee in just a few days — hotel breakfast is expensive, often costing over $20, but sometimes it's the only option.

If you spend $40,000 on the Surpass card within a calendar year, you'll be upgraded to Diamond status. In addition to the same benefits you'd get from Gold status, Diamond gets you higher priority for room upgrades, executive lounge access, and more. The card also comes with 10 free day passes to Priority Pass airport lounges.

When you open a Surpass card, you can earn 125,000 Hilton Honors points when you spend $2,000 in the first three months. You'll also get a free weekend night's stay if you spend $15,000 on the card within a calendar year.

The card also has a better earning rate than the regular Hilton card. It earns 12x points on Hilton purchases, 6x points at US restaurants, US gas stations, and US supermarkets, and 3x points on everything else.

Click here to learn more about the Hilton Surpass card » 3. Hilton Honors American Express Aspire Card

The Aspire is the premium Hilton card, and even though it has a $450 annual fee, including the first year, it offers an absurd amount of potential value to blow that away.

The card comes with complimentary top-tier Diamond status without any spending requirement, getting you those room upgrades, executive lounge access, and more, in addition to all the benefits of lower tiers such as free breakfast.

It features up to a $250 airline fee credit per calendar year, and up to a $250 Hilton resort statement credit each card member year — right away that's $500 in value. But it doesn't stop there. The Aspire card also offers a $100 Hilton on-property credit every time you book a stay of two nights or longer at a Hilton property — you just need to book through a specific website for cardholders.

Cardholders also get a free weekend night reward each year — regardless of how much you spend — and a second if the spend $60,000 on the card in a calendar year.

The Aspire, naturally, has the highest rewards earning rate of the Hilton cards: 14 points per dollar spent with Hilton, 7x points on flights booked wit the airline, car rentals, and at US restaurants, and 3x points on everything else.

Click here to learn more about the Hilton Aspire card »

Read more: Hilton Aspire Amex credit card review

Hyatt

Hyatt loyalists only have one credit card option, but it's a solid one. If you're a fan of the brand and prefer to stay there, here's the card you should consider to earn elite status.

The World of Hyatt Credit Card

The World of Hyatt card offers complimentary Discoverist status — Discoverist is the first of three Hyatt elite tiers, followed by Explorist and Globalist. Discoverists are entitled to bonus points during stays, complimentary premium internet, free water bottles, late check-out on request, preferred rooms (though not upgrades), and more.

You'll also receive 5 qualifying night credits each year toward the next elite tier, and you'll earn an additional 2 night credits every time you spend $5,000, making it easier to earn enough stays for Explorist or Globalist. 

The Hyatt card earns 4 points per dollar spent on Hyatt purchases, 2x points at restaurants, on flights purchased directly from the airline, local transit, and gyms, and 1 point per dollar on everything else.

The card offers a sign-up bonus of up to 50,000 Hyatt points — 25,000 points when you spend $3,000 on the card within the first three months, and an additional 25,000 points when you spend a total of $6,000 in the first six months. It has an annual fee of $95, which isn't waived the first year.

Click here to learn more about the World of Hyatt card » IHG

IHG doesn't have quite the same brand recognition as chains like Hilton and Mariott, but don't let that fool you; the mega-chain, which encompasses brands like Holiday Inn, InterContinental, Kimpton Hotels, Hotel Indigo, and others, is one of the world's biggest hotel companies with more than 5,400 properties in more than 100 countries around the world.

The IHG Rewards Club Premier Credit Card

The IHG Premier card offers free Platinum elite status to cardholders for as long as they keep the account open. Platinum elites are entitled to room upgrades (where available), late check-out, complimentary internet, a welcome gift, bonus points, free drinks in some hotels, and more.

The card comes with plenty of other benefits, including a free night certificate — good for any property that costs up to 40,000 points — on your card anniversary, a fourth night for free during award stays, and up to a $100 credit for Global Entry/TSA PreCheck.

Read more: IHG Rewards Club Premier card review

The IHG Premier card earns 10 points per dollar spent at IHG hotels, 2 points per dollar spent at gas stations, grocery stores, and restaurants, and 1 point per dollar on everything else. Currently, though, new cardholders can earn 25x points on IHG purchases for the first 12 months.

The card's currently offering an 80,000-point sign-up bonus when you spend $2,000 in the first three months. It has an $89 annual fee, which isn't waived for the first year.

Click here to learn more about the IHG Premier card » Bottom line

Ultimately, which card is best for you depends on which hotel brand you tend to stay with, how often you stay, and which elite perks you value. If you're a Hyatt or IHG fan, there's only one card — if you stay with Hilton or Marriott, there are more choices.

Unless you're an absolute loyalist, the Amex Platinum may be the best. It comes with mid-level status at two of the biggest chains, includes free breakfast at Hilton properties, and offers excellent non-hotel perks, like airline lounge access.

Our top pick for hotel elite status: Click here to learn more about the Amex Platinum card »

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Boeing slides to its lowest level in 13 months after pushing the 737 Max's ungrounding to mid-2020

Tue, 01/21/2020 - 3:51pm  |  Clusterstock

  • Boeing shares slumped as much as 5.5% in late Tuesday trading after the company announced its 737 Max won't return to service until at least mid-2020.
  • The stock tanked to its lowest price since December 2018, wiping out more than $10 billion in market value.
  • The company's latest estimate for the model's return to service "is informed by our experience to date with the certification process," according to a Tuesday statement.
  • Watch Boeing trade live here.

Boeing shares tanked as much as 5.5% in late Tuesday trading after the jet manufacturer announced its 737 Max model won't return to service until at least mid-2020.

The company's latest estimate "is informed by our experience to date with the certification process," Boeing said in a Tuesday statement. The company will provide additional information on its push to return the 737 Max to service in its fourth-quarter earnings report scheduled for release on January 29.

"Returning the MAX safely to service is our number one priority, and we are confident that will happen," the company said.

Boeing stock traded as low as $305.83, its lowest price since December 2018. The Tuesday drop erased more than $10 billion in market value.

Major US stock indexes dropped on the news. The Dow Jones Industrial Average slumped as much as 0.68%, while the S&P 500 tumbled as much as 0.37%. Boeing is the most heavily weighted stock in the Dow.

The best-selling model has been grounded since March after two fatal crashes in late 2018 and early 2019 killed 346 passengers. The crashes, both attributed to technical issues in the jet, prompted congressional hearings, the firing of CEO Dennis Muilenburg, and even a projected hit to US gross domestic product in the new year.

The firm announced in mid-December it would halt production of the 737 Max in January as it continued to seek regulatory approval for the model. Boeing shares sank 4.3% on the news. The pause also hit the share prices of firms in Boeing's supply chain.

The Federal Aviation Administration called the company's initial timeline for returning the 737 Max to service "not realistic" in emails leaked on December 12.

Boeing stock traded at $312 per share as of 3:20 p.m. ET Tuesday, down roughly 4.2% year-to-date.

The company has 10 "buy" ratings, 16 "hold" ratings, and three "sell" ratings from analysts, with a consensus price target of $361.97, according to Bloomberg data.

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Warren Buffett tops list of America's biggest givers after donating nearly $15 billion in 5 years

Tue, 01/21/2020 - 3:31pm  |  Clusterstock

  • Warren Buffett topped the list of America's biggest givers after donating almost $15 billion to charitable causes between 2014 and 2018.
  • The famed investor and Berkshire Hathaway boss led the pack in all five years, primarily giving to causes chosen by the Bill and Melinda Gates foundation.
  • The high-profile philanthropist couple ranked second after Buffett, beating out George Soros, Michael Bloomberg, and the Walton family.
  • Visit Business Insider's homepage for more stories.

Warren Buffett gave nearly $15 billion to charitable causes between 2014 and 2018, topping a list of America's 25 biggest givers compiled by Forbes and SHOOK Research.

The famed investor and Berkshire Hathaway boss led the pack in all five years, giving mostly to causes chosen by the Bill and Melinda Gates Foundation. The high-profile philanthropist couple took second place, followed by hedge-fund manager George Soros, former New York City mayor and Democratic presidential candidate Michael Bloomberg, and Walmart founder Sam Walton's family.

Forbes and SHOOK ignored pledges to give and donations to charitable vehicles, focusing instead on money that reached beneficiaries. They also calculated what percentage of each giver's fortune was given away.

Buffett donated $14.7 billion or just over 16% of his $90 billion net worth, the pair found. As part of the Giving Pledge he took in 2006, the billionaire vowed to gradually give more than 99% of his wealth to philanthropic foundations.

"In my entire lifetime, everything that I've spent will be quite a bit less than 1% of everything I've made," the billionaire said in "Becoming Warren Buffett," a HBO documentary.

"The other 99% plus will go to others because it has no utility to me," Buffett added. "So it's silly for me to not transfer that utility to people who can use it. It's doing me no good."

The Gates, his close friends, gave away nearly $10 billion or about 9% of their almost $110 billion Microsoft fortune. Their high-profile foundation focuses on healthcare, education, economic development, and tackling poverty.

Soros gave $3 billion — roughly 37% of his $8.3 billion fortune — to causes such as protecting voting rights and reforming the criminal-justice system. Bloomberg gave $2.3 billion, or about 5% of his $60 billion net worth, towards fighting climate change, improving public health, and strengthening gun control.

Meanwhile, the Walton Family Foundation deployed $2.3 billion — about 1.3% of the $181 billion Walmart fortune — to educational and environmental initiatives.

Other notable entries on the list were Facebook boss Mark Zuckerberg and his wife Priscilla Chan, who gave away $1 billion, representing 1.2% of their $82 billion net worth. Duty Free Shoppers cofounder Chuck Feeney — who told Forbes he aspired to die broke — distributed $1.6 billion to nonprofits in the five-year period.

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

JPMorgan is hiring to grow a team that designs tech used by its bankers and clients — and it shows the huge impact fintech's having on Wall Street

Tue, 01/21/2020 - 3:24pm  |  Clusterstock

  • JPMorgan's corporate and investment bank has plans to grow its user experience team by over 20% to roughly 160 by the end of 2020. In 2016, the group consisted of just 20 people.
  • Debra Herschmann, who leads JPMorgan CIB's user experience efforts, told Business Insider the bank's efforts stem in part from younger, tech-savvy employees wanting better design in the tools and platforms they use at work. 
  • Herschmann outlined the makeup of her team, and the goals the bank has set for 2020 when it comes to its work in the UX space. 
  • Click her for more BI Prime stories.

You could build the fastest racecar in the world, but if the gas and brake pedals aren't near each other, its top speed won't matter.

The same thinking applies to building technology on Wall Street. How fast a tool can execute a trade or analyze risk is pointless if it is designed in a way that makes it difficult to use.

And with the billions of dollars banks are pouring into their tech these days, the stakes have never been higher.

But getting designers involved in tech projects isn't always an easy pitch. Technologists can be protective of their work. 

Debra Herschmann has been fighting that battle her entire career. As a result, Herschmann, who serves as head of user experience of JPMorgan's corporate and investment bank, has a quick response for those who push back against letting her team get involved early on. 

 "When people say 'I don't have enough time to think about design or to incorporate design in the process,' I remind them that it's really expensive to build the wrong thing," Herschmann told Business Insider. "Design is a way to thoughtfully craft exceptional client experience, while de-risking delivery."

Herschmann is no stranger to designing tools for Wall Street. After stints at Citibank, Lehman Brothers, and Goldman Sachs, Herschmann joined JPMorgan at the end of 2016.

At the time, the bank only had a team of approximately 20 people focused on user experience. However, during the interview process Herschmann said she got the sense leadership believed in the value user experience could bring to the bank, which spent over $11 billion on tech in 2019.

Three years later Herschmann's group has grown to 130, with plans from JPMorgan to continue to put more resources towards it. The bank is looking to add 20-30 more roles in 2020.

The rise of fintechs has led to a closer eye on UX

It should come as no surprise Wall Street has turned its attention to user experience. The importance of design has been a selling point for the startups that have increasingly cut into legacy players' market share on the retail side of their business.

Fintechs like Robinhood and Wealthfront have made a name for themselves, and attracted younger generations, thanks to a slick, flashy user interface. 

It goes beyond just fintechs, though. User experience has become a critical piece of nearly every app people use in their day-to-day lives, from Instagram to Uber.

As a result, peoples' expectations of how tools and platforms at work should look and feel has risen considerably, Herschmann said. 

"Digital natives are used to having amazing products and services at their fingertips," Herschmann said. "They expect the same quality of experience and delight in the products they need to get their jobs done."

To be clear, user experience isn't just about good-looking apps and nice color schemes. What Herschmann describes as user interface — things like screen design, how the content is structured, whether something is clickable or not — all do play a part.

But there is also the actual user's experience. Herschmann describes it as understanding the problem the app or tool is looking to solve and working to accomplish that. 

Finally, there is consideration of the service experience, something that is fairly new to the bank. At it's core, it's about making sure the entire journey is consistent.

Herschmann draws an example from Apple, pointing to the consistency someone would get from purchasing a product online to bringing it into a store for a repair. 

"Trying to change our thought process from being product oriented to being service oriented," Herschmann said. "And examining how we deliver end-to-end journeys that are seamless and satisfying." 

UX teams require a unique mix of talents

Such a wide remit requires a diverse set of skills. Herschmann's group is made up of everything from designers developing what is actually seen on screen to researchers working to better understand the end user of the product and what they are looking for. 

There are also hybrids, who Herschmann describes as "creative technologists", that sit between being an engineer and designer.

"Talented individuals who can design and code — who can go from identifying user needs to designing and then developing a solution — are unicorns," Herschmann said. "This blend of skills in one person is exceptionally powerful — and exceptionally hard to find."

Going forward, Herschmann said the focus will be to back up all the work her team is doing with data to justify it's making a difference.

Currently, the team has anecdotal evidence of that, but Herschmann said she is pushing for more quantifiable figures. 

"We are becoming increasingly data driven in our product design, measuring how people are embracing our technology, how productive and engaged they are," Herschmann said. "We are improving our ability to learn from the metrics we capture, to enhance the current experience and define future products."

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'Signs of excess are building': 4 Wall Street giants explain why the stock market's rally may have gone too far — and share their advice for what happens next

Tue, 01/21/2020 - 3:23pm  |  Clusterstock

  • The stock market's record rally has unnerved some Wall Street strategists.
  • They're concerned about the slower pace of profit growth, as well as lingering risks. 
  • The views of four major Wall Street firms on the market's rally, and what they recommend investors do next, are summarized below.
  • Click here for more BI Prime stories

The stock market's record advance, which gained steam late last year, now has multiple Wall Street experts worried. 

At issue for many of them is that the rally has run far ahead of profit growth and lifted the ratios of stock prices to profits to levels rarely seen during this bull-market run. A composite gauge of 34 valuation metrics compiled by RBC Capital Markets recently broke through its highest level of this nine-year bull market. 

With the fourth-quarter-earnings season underway, investors will be watching closely for the guidance companies provide on their profitability this year.

Meanwhile, some strategists said traders who have made outsize bets for continued gains could be penalized if the market were pulled lower by risks such as a conflict between the US and Iran.

The views of four major Wall Street firms on the market's rally, and what they recommend investors do next, are summarized below.

1. JPMorgan: 'Signs of excess are building'

This so-called excess is not exclusive to stocks: Investor positioning across major asset classes, including equities and fixed income, is at levels associated with market corrections, according to John Normand, the head of cross-asset fundamental strategy at JPMorgan. 

Additionally, he sees multiple risks that could stop the rally in its tracks, including a progressive Democrat like Sen. Bernie Sanders gaining traction in the primaries, a slowdown in the Fed's balance-sheet expansion, and the US-Iran conflict. 

"Given early signs of excess in global markets, any of these spoilers could justify at least a warning about drawdown and possibly a material change in portfolio allocation or hedges," Normand said in a note on Friday.

Recommendation (emphasis added): "We are already positioned for two of these potential stress events — for the Democratic primaries via underweights of US vs non-Equities and shorts in the dollar; and oil supply stress via broad overweights of Energy across Equities & FICC."

2. Goldman Sachs: 'Lackluster' Q4 earnings should be a turning point  

David Kostin, Goldman Sachs' chief US equity strategist, expects fourth-quarter earnings to be lackluster after three preceding periods of declines last year. Notably, profit margins are expected to shrink across all sectors for only the fourth time since 1990, he said.

However, the fourth quarter should represent a turning point as investors shift their focus to 2020, Kostin said. He forecasts 6% earnings-per-share growth for the full year and sees this upturn driving the S&P 500 to 3,400 by year-end.

"Investors should focus on the commentary provided by managements on earnings calls to understand the extent to which political uncertainty is likely to affect corporate decision making," Kostin said in a note on Friday. 

Recommendation: Cyclical stocks could rally alongside an acceleration in economic growth, which Goldman's economists expect. Kostin recommends an overweight on the industrial sector, which should benefit from this upswing. 

3. Bank of America: Watch out for 'tactical risks' heading into February

While there are "plenty of reasons" to be bullish on stocks in 2020, risks abound for the nearer term, according to Stephen Suttmeier, the chief equity technical strategist at Bank of America. 

For starters, February is a seasonally weaker month for the S&P 500. Since 1928, the index has averaged a 3.3% gain from November through January but -0.02% in February. This means the rally may pause after a three-month stretch that has delivered above-average gains. 

But beyond the calendar effect, a few technical trends stand out to Suttmeier. These include the put-call ratio, which compares traders' bets for higher prices with their wagers for lower prices. At 0.53, the ratio is at its lowest and "most complacent" level since 2012, Suttmeier said, meaning that bullish bets disproportionately outnumber bearish ones. 

Recommendation: "Don't fight the Fed: A down January has not consistently preceded a down year since the Great Recession," Suttmeier said in a note on Tuesday.

4. Societe Generale: Stocks have an 'incredible valuation problem'

Andrew Lapthorne, the French bank's head of quantitative-equity research, said that while stock prices have climbed, earnings growth has been in decline since the first quarter of 2019. 

Meanwhile, the ratio of stock prices to earnings forecast 12 months from now has spiked to its highest level since 2002, according to Bloomberg data. 

Lapthorne further crunched the numbers by isolating growth stocks, or companies where investors have the greatest expectations for profits. The price-to-earnings ratio for this cohort has jumped to levels seen during only eight months of a three-decade span, he said. 

Lapthorne attributed the divergence in stock prices and earnings growth to central banks, which continue to inject liquidity in markets and maintain an accommodative policy stance. 

The mismatch is not only evident in US stocks: The average MSCI World Index stock has gained 26% over the past year, but the average change in forward earnings-per-share expectations is 1.5%, Lapthorne said in a recent note.

Recommendation: Buy quality small-cap stocks via the MSCI USA Select Strong Balance Sheet Index. If earnings do not improve, investors may punish the smallest companies with the weakest balance sheets the hardest. 

SEE ALSO: The stock market's biggest driver of gains is rapidly losing steam. One market expert lays out why it spells doom for investors, and how to safeguard your portfolio.

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

US threatens to slap tariffs on Italy and Britain in digital tax fight

Tue, 01/21/2020 - 3:13pm  |  Clusterstock

  • Mnuchin said Tuesday the US will impose fresh tariffs on Italy and Britain if they move forward with plans to tax technology companies like Google and Facebook.
  • The Trump administration argues such taxes discriminate against Silicon Valley and are inconsistent with international tax policy. 
  • The warning came a day after the US reached a truce over a similar tax that was passed in France last year. 
  • Visit Business Insider's homepage here.

The US will impose fresh tariffs on Italy and Britain if they move forward with plans to tax technology companies like Google and Facebook, Treasury Secretary Steven Mnuchin said Tuesday. 

Speaking on the sidelines of the World Economic Forum in Davos, Mnuchin urged Italy and Britain to reverse digital services taxes that were separately set to take effect in the two nations this year. The Trump administration argues such taxes discriminate against Silicon Valley and are inconsistent with international tax policy. 

"If not they'll find themselves faced with President Trump's tariffs," Mnuchin told The Wall Street Journal in an interview. "We'll be having similar conversations with them." 

The warning came a day after the US reached a truce with France over a 3% digital services tax that was passed last year, applying to companies with global revenue of at least 750 million euros and digital sales of at least 25 million euros. France is expected to temporarily pause that tax while the two countries negotiate a broader agreement.

In return, President Donald Trump will suspend threatened tariffs of up to 100% on $2.4 billion worth of products such as wine and cheese. While those tariffs were meant to penalize France, they would have also raised prices for US businesses and consumers. 

"We had a very good conversation. It worked out very well," Trump said following a meeting with French President Emmanuel Macron at the WEF. "The US is very happy with the result, and we appreciate very much what President Macron did."

Other European countries have separately announced plans to crack down on big tech, saying the sector avoids taxes by building subsidiaries in other countries.

SEE ALSO: China tariffs could stay on even after a phase-2 trade deal, Mnuchin says

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

Last year, Southwest ran a blockbuster credit card offer that scored travelers 2-for-1 travel, but the airline's current deal could be even better

Tue, 01/21/2020 - 2:59pm  |  Clusterstock

If you fly Southwest Airlines, chances are you heard about the credit card offer in 2019 that could earn you the Companion Pass for spending $4,000 in your first three months as a cardholder.

Unsurprisingly, this deal was a huge hit. The Companion Pass allows you to choose one person to fly with for almost free (taxes and fees are not covered), and earning the Companion Pass the "normal way" required earning 115,000 "qualifying points" in a calendar year. That threshold has since increased to 125,000 points. So the ability to earn it by meeting one credit card spending requirement was a much quicker route to enjoying two-for-one travel.

That offer has yet to come back, but you still have options if you want a shortcut to earning the Companion Pass. In fact, I think the current offer on Southwest's three personal credit cards has the potential to be even more valuable than last year's offer, because you can leverage this bonus to earn the Companion Pass for well over one year.

The current sign-up bonus offers up to 75,000 Southwest points, which gets you more than halfway toward qualifying for the Companion Pass. If you pair this offer with spending on your credit card, a Southwest business credit card bonus, or qualifying Southwest flights, you can earn the Companion Pass for the rest of 2020, plus all of 2021.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Use the current Southwest credit card offer to earn the Companion Pass

Currently, the three consumer Southwest credit cards are offering an elevated sign-up bonus. You'll earn 40,000 points after you spend $1,000 in the first three months, and another 35,000 points after you spend $5,000 in the first six months.

That offer is available on the following three cards:

To qualify for the Companion Pass, you need to earn 125,000 qualifying points in a calendar year. Earning 75,000 points with this sign-up bonus would leave you 50,000 points shy of the requirement, but when you factor in the points you'd earn from meeting the minimum spending requirement to earn the 75,000-point bonus, you'd actually earn at least 81,000 points — leaving you just 44,000 points short of the Companion Pass requirement.

Read more: Southwest credit card comparison

How to earn the rest of the points

You have a few options for making up the difference. The quickest option is to apply for a Southwest business credit card and earn its sign-up bonus, since that would get you more than enough points to earn the Companion Pass. Not only is this the simplest solution, but this could help you maximize your time with the Companion Pass, because the sooner you meet the 125,000-point threshold, the longer you'll have to enjoy this benefit.

You could be able to qualify for a business credit card even if you don't have a formal business. If you're a freelancer, for example, that's likely enough to make you eligible.

Here are the Southwest business credit cards:

That option won't work for everyone, though, in which case you'll want to look into booking travel on Southwest to help make up the difference.

If you have any upcoming trips planned, consider booking flights with Southwest if possible, since paid flights will earn you points toward the Companion Pass as well. 

In addition to earning 2x to 3x points on Southwest purchases if you pay with a Southwest credit card, you'll earn 6 to 10 points per dollar when you book flights through Southwest depending on what type of fare you book.

Finally, you could consider paying your federal tax return with a Southwest credit card. Unless you have a very large bill, that spending probably won't get you all the way toward earning the Companion Pass, but by putting all your spending on a Southwest credit card, you should be able to chip away at the requirement. 

Read more: Tips for maximizing the Southwest Companion Pass once you've earned it

Our favorite Southwest card: Click here to learn more about the Southwest Rapid Rewards Priority card »

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Uber surges 6% after offloading its Indian food-delivery business (UBER)

Tue, 01/21/2020 - 2:51pm  |  Clusterstock

  • Uber announced Monday that it had sold its Indian food-delivery service to competitor Zomato for a 9.99% stake. 
  • Shares of Uber surged as much as 6% Tuesday. 
  • Offloading parts of the business that are not profitable brings Uber closer to its goal of being profitable on an Ebitda basis by 2021. 
  • Watch Uber trade live on Markets Insider.
  • Read more on Business Insider.

Shares of Uber gained as much as 6% Tuesday after the company announced that it sold its food-delivery business in India to Zomato, a startup backed by China's Ant Financial. 

After the all-stock transaction, which closed Monday, Uber will own a 9.99% stake in Zomato, one of the largest food-delivery platforms in India. Zomato is valued at about $3 billion after raising money from Jack Ma's Alibaba affiliate Ant Financial this month, according to Reuters

The sale comes amid increasing pressure for Uber to turn a profit. The company has had a dismal stock performance in its first months as a public company, falling as much as 22% from its May 2019 initial public offering through Friday's close. Selling parts of the business that are unprofitable will give the company a boost as it strives to be profitable on an Ebitda basis before 2021. 

"India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader," Dara Khosrowshahi, Uber CEO, said in a press release. 

In addition, there's been a wave of consolidation in food-delivery markets around the world as different companies battle each other for domination. The sale "is another proof point - following our decision to exit Uber Eats South Korea in October 2019 - of our commitment to take a hard look at Eats markets where we do not have a path to leadership," Nelson Chai, Uber's chief financial officer, said in a company filing Tuesday.

He continued: "At least some of the investment that we would have otherwise made in India will now be redeployed to other countries we serve where we believe we have a clear path to #1 or #2."

Uber expects that it will gain about $143 million from the sale, net of taxes, according to the filing.

Wall Street analysts are largely bullish on the company and have a consensus price target of $44.46 with 28 "buy" ratings, 12 "hold" ratings, and zero "sell" ratings on the equity, according to Bloomberg data. 

The ride-hailing company has gained 18% year-to-date through Friday's close.

 

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The CEO of a private-equity giant that invested alongside SoftBank says it pushed too hard for growth without making the economics work first

Tue, 01/21/2020 - 2:44pm  |  Clusterstock

  • At a Davos panel, Bill Ford, the CEO of General Atlantic, said he's seen where SoftBank has gone wrong in investments that the two companies did together. 
  • Ford said SoftBank has pushed companies to expand globally before they're ready and they haven't focused on getting unit economics working. 
  • Stacey Cunningham, the president of the New York Stock Exchange, also said private investors shouldn't use a valuation from "one high-profile investor."
  • For more BI Prime stories, click here.

General Atlantic CEO Bill Ford has seen the SoftBank effect – too much money with too few guardrails – up close. 

The private-equity firm, which has $35 billion in assets under management, has a history of investing with SoftBank through its Vision Fund and other vehicles. 

On a panel with Andrew Ross Sorkin at Davos on Tuesday, Ford highlighted SoftBank's missteps as part of a broader trend of "the market losing its discipline."

SoftBank's money has enabled fast growth, which in the last year has been followed by job cuts and pullbacks at some of its biggest investments. 

Ford said the lack of discipline stems in large part from too much money – $500 billion raised for growth equity overall in the last five years. 

SoftBank "would just be one example of other places that pursued growth at all costs," he said. 

"One of the things we really objected to, in terms of places where we invested together, is they were really pushing companies to globalize so quickly even before they perfected their business model in one geography," Ford said. "We were saying, 'let's get the model right, let's get the path to profitability, let's get the unit economics working, and then we can focus on expansion and growth.'"

SoftBank pushed back, Ford said. 

"Instead it was 'no, we've gotta get to China now and we've got the capital to do it,'" he said. "I think that caused the market to lose its way." 

The 11 companies in which General Atlantic and SoftBank invested, per Pitchbook, include those that are still private, like Opendoor, TikTok owner Bytedance, and Gympass.

Other investments include Gilt Group, which was sold to a retailer in 2016 for less than the capital the online shopping platform raised, and messaging platform Slack, which has traded down since its June public listing. 

'It's a concerning trend'

Uber was another SoftBank-backed company that traded down after its 2019 IPO. Like Slack, investors shared concerns about the company's path to profitability — a growing focus 

On the Davos panel, Stacey Cunningham, the president of the New York Stock Exchange, said one big investor should not dictate how everyone views valuation.

WeWork had picked Nasdaq for its IPO, but the offering was eventually shelved in part due to concerns about valuations as well as governance concerns and an unclear path to profits.

"I don't think you can look at the valuations in the private markets that are based on one investor, and then use that as a proxy for 'hey, this is how this company is valued' because it's really one opinion," Cunningham said. "I think it's a concerning trend, especially if you have one high-profile investor who is valuing companies differently than the broader market would, because it is becoming a reference point for the market." 

Get in touch! Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at mmorris@businessinsider.com, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

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Billionaires and heads of state have descended on a ski town in Switzerland. Here's what's happening in Davos, explained in 60 seconds.

Tue, 01/21/2020 - 2:38pm  |  Clusterstock

  • The World Economic Forum in Davos is an annual gathering nicknamed for the ski town it's held in: Davos-Klosters, Switzerland. 
  • The four-day conference brings together heads of state, CEOs, and other government and business leaders from around the world. 
  • The forum holds lectures and panels where government and business leaders speak. 
  • Because of the high-profile attendees, Davos also serves as a place for high-level networking and deal-making. 
  • Visit Business Insider's homepage for more stories.

The World Economic Forum in Davos is kicking off this week.

Leaders from all over the world, in business and politics, are descending on the small ski town in Switzerland to share ideas and discuss important topics impacting society.

If you've never heard of the event, or you've heard the term "Davos" but always wondered what it meant, we've created a guide to help you quickly get familiar with the World Economic Forum so you can understand what the fuss is about.

Take a look.

SEE ALSO: Everything you need to know about Davos, the invitation-only conference that brings billionaires together with business and political leaders at a Swiss resort

DON'T MISS: Swiss officials say they infiltrated a ring of Russians posing as plumbers in order to spy on elites at Davos

What is Davos?

The World Economic Forum, usually referred to simply as "Davos" for the town it's held in, is an annual gathering of government and business leaders.

The four-day conference is held by a non-profit organization of the same name as the conference, the World Economic Forum. 



Where is Davos?

The forum is often referred to simply as "Davos" for the small ski town it's held in each year: Davos-Klosters, Switzerland, the highest town in Europe at 1,560 meters (5,118 feet) above sea level.

While the town functions as a normal ski village the rest of the year, during the World Economic Forum, hotel rates can rise to five times their normal rate, according to the New York Times. 



Who's attending Davos?

Davos is famous for its high-profile attendees, who, aside from speaking at lectures and panels, use the event for networking and deal-making.

Powerful attendees often make news during public comments in speeches and panels at the conference. 

Attendees span from world leaders like President Donald Trump and prime ministers of various countries to activists like Greta Thunberg. You'll also see CEOs from the biggest companies in the world, like Sundar Pichai from Google, Satya Nadella from Microsoft, and Tim Cook from Apple.

Embattled Hong Kong Chief Executive Carrie Lam is slated to speak on the second day of the conference, according to the forum's agenda. German Chancellor Angela Merkel is set to speak on the third day of the forum. 



What's happening at Davos this year?

Davos' main programming includes a variety of panels and lectures. This year's theme is focused on sustainability. 

The first day of the conference includes a panel with Swedish climate activist Greta Thunberg. 

Lectures and panels featuring CEOs and other business leaders often provide insight into companies and industries; for example, an executive at accounting firm Ernst & Young said at Davos that his firm wants to hire more tech-focused roles in the future. 

If you want to follow along with all the happenings in Davos, the World Economic Forum has a full schedule, list of talks and agendas, and even a live blog you can keep an eye on. 



Business Insider is attending Davos this year. Take a look at some of our stories from this year's forum.



Boeing doesn't think its troubled 737 Max will return before summer (BA)

Tue, 01/21/2020 - 2:28pm  |  Clusterstock

  • Boeing does not expect the 737 Max to return before June or July, according to a new CNBC report. Boeing confirmed it is looking at a mid-2020 timeline.
  • The company previously expected the plane to return sooner.
  • Airlines have already pulled the jet from their schedules until early June, although that timeline could be extended.
  • Visit Business Insider's homepage for more stories.

Boeing doesn't expect regulators to sign off on its fixed 737 Max until at least June or July, according to a report by CNBC.

Boeing confirmed in a statement that  its current estimates are that "the ungrounding of the 737 Max will begin during mid-2020."

The early summer date is months later than Boeing previously expected, CNBC said, citing sources "familiar with the matter." The plane maker had initially expected the plane to remain on the ground for just a short period following the March, 2019 crash of Ethiopian Airlines Flight 302.

Boeing warned that the estimated return timeline not definite:

This updated estimate is informed by our experience to date with the certification process. It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process. It also accounts for the rigorous scrutiny that regulatory authorities are rightly applying at every step of their review of the 737 MAX's flight control system and the Joint Operations Evaluation Board process which determines pilot training requirements.

The new date expectations pose another challenge for airlines, who have been forced to adjust their flight schedules and equipment plans just a few months at a time repeatedly since the grounding, as Boeing has continued to offer and subsequently fail to meet optimistic timelines.

American Airlines, Southwest Airlines, and American Airlines — the three US carriers that currently have the Max in their fleets — have all most recently pulled the planes from their schedules through early June. Hundreds of flights have been cancelled daily due to the plane's inoperability, most weeks ahead of scheduled travel.

Shares of Boeing fell more than 5.5% in afternoon trading following the news, reaching a year-long low before trading was suspended pending Boeing's official announcement.

The 737 Max grounding has been a significant drain on Boeing's finances, with the plane-maker taking billions of dollars in charges towards compensating airline customers for the grounding. Boeing is in talks with banks to secure at least $10 billion in loans to help absorb the expenses from the crisis.

Production of the plane was officially suspended on Tuesday, as the grounding has led to a pileup of completed but undeliverable planes at Boeing's facilities.

Crashes involving the 737 Max in Indonesia in October 2018, and Ethiopia in March 2019, killed a combined 346 people.

Both crashes have been attributed to an automated flight control system, MCAS, or the Maneuvering Characteristics Augmentation System. The two crashes killed a combined 346 people.

Reports into the two crashes that led to the grounding indicate that the automated MCAS software erroneously engaged and forced the planes' noses downward. Pilots were unable to regain control of the aircraft.

Do you work for Boeing, or one of the airlines affected by the Boeing 737 Max grounding? Contact this reporter at dslotnick@businessinsider.com.

SEE ALSO: Boeing 737 Max: Here's the complete history of the plane that's been grounded since 2 crashes killed 346 people 5 months apart.

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