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The technologies disrupting the insurance industry and what incumbents can do to stay ahead

5 hours 12 min ago  |  Clusterstock

Tech-driven disruption in the insurance industry continues at pace, and we're now entering a new phase — the adaptation of underlying business models. 

That's leading to ongoing changes in the distribution segment of the industry, but more excitingly, we are starting to see movement in the fundamentals of insurance — policy creation, underwriting, and claims management. 

This report from Business Insider Intelligence, Business Insider's premium research service, will briefly review major changes in the insurtech segment over the past year. It will then examine how startups and legacy players across the insurance value chain are using technology to develop new business models that cut costs or boost revenue, and, in some cases, both. Additionally, we will provide our take on the future of insurance as insurtech continues to proliferate. 

Here are some of the key takeaways:

  • Funding is flowing into startups and helping them scale, while legacy players have moved beyond initial experiments and are starting to implement new technology throughout their businesses. 
  • Distribution, the area of the insurance value chain that was first to be disrupted, continues to evolve. 
  • The fundamentals of insurance — policy creation, underwriting, and claims management — are starting to experience true disruption, while innovation in reinsurance has also continued at pace.
  • Insurtechs are using new business models that are enabled by a variety of technologies. In particular, they're using automation, data analytics, connected devices, and machine learning to build holistic policies for consumers that can be switched on and off on-demand.
  • Legacy insurers, as opposed to brokers, now have the most to lose — but those that move swiftly still have time to ensure they stay in the game.

 In full, the report:

  • Reviews major changes in the insurtech segment over the past year.
  • Examines how startups and legacy players across distribution, insurance, and reinsurance are using technology to develop new business models.
  • Provides our view on what the future of the insurance industry looks like, which Business Insider Intelligence calls Insurtech 2.0.
Subscribe to an All-Access pass 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

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Tesla short sellers raked in $1 billion after Elon Musk revealed his personal struggles in an eye-opening interview (TSLA)

5 hours 30 min ago  |  Clusterstock

  • Tesla short sellers received a sizable payday hours after The New York Times published an eye-opening interview with an emotional Elon Musk, the electric-car company's chief executive.
  • Investors betting against Tesla raked in about $1 billion on Friday, according to data from the analytics firm S3 Partners.
  • The Times' interview with Musk came out late Thursday night. In it, Musk lamented the many personal and professional challenges he has faced in the past year.
  • Musk's admissions come at a tumultuous time for Tesla, but the CEO predicted that the pain isn't quite over yet.

Tesla short sellers received a sizable payday hours after The New York Times published an eye-opening interview with an emotional Elon Musk, the electric-car company's chairman and CEO.

The investors betting against Tesla raked in about $1 billion on Friday, The Times reported, citing data from the analytics firm, S3 Partners. Shares of Tesla closed down nearly 9% on the day, and dropped close to 1% lower in after hours trading, landing at $303.05.

That means investors shorting Tesla on Friday recovered the majority of what they lost after Musk's now-infamous August 7 tweet, in which he floated the idea of taking Tesla private. On that day, the company's stock rose 11%, and siphoned roughly $1.3 billion out of short sellers' pockets.

The Times' interview featuring Musk came out late Thursday night. In it, Musk lamented the many personal and professional challenges he has faced in the past year. By Musk's own admission, he has been burning it on all sides while Tesla struggles to crank out thousands of its first mass-market car, the Model 3 sedan.

Immense pressure has left the tech billionaire and serial entrepreneur drained, sleepless, and irritable, as evidenced by his recent erratic behavior, which has caused additional problems for the company.

Musk accurately predicted the pinch from Tesla's shorts isn't over yet. The CEO told The Times he expects "at least a few months of extreme torture from the short-sellers," who he believes are intent on seeing Tesla fail.

SEE ALSO: Elon Musk didn't used to care about short sellers — here's why he does now

DON'T MISS: Every bizarre thing that has happened since Elon Musk sent his 'funding secured' tweet about taking Tesla private

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NOW WATCH: Chase Cards CEO on the coveted Sapphire Reserve card and working with Jamie Dimon

Fintech could be bigger than ATMs, PayPal, and Bitcoin combined

Fri, 08/17/2018 - 10:02pm  |  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.

Fintech broke onto the scene as a disruptive force following the 2008 crisis, but the industry's influence on the broader financial services system is changing. 

The fintech industry no longer stands clearly apart from financial services proper, and is increasingly growing embedded in mainstream finance. We’re now seeing the initial stages of this transformation.

For instance, funding is growing more internationally distributed, and startups are making necessary adjustments to prove sustainability and secure a seat at the table. Most fintech segments in the ascendant a year ago have continued to rise and grow more valuable to the broader financial system. Meanwhile, several fintech categories have had to make adjustments to stay on top. New subsegments are also appearing on the scene — such as digital identity verification fintechs — as new opportunities for innovation are discovered. 

Significantly, incumbents are responding more proactively to the rising influence of fintech by making updates to their consumer-facing channels, back-end systems, and overall business operations. Most are realizing that the best way to adapt is to work alongside the fintechs that are transforming the financial services environment, either by partnering with them or acquiring the startups entirely. As fintech's power grows, incumbents will have no choice but to change in order to stay relevant and competitive. All around, fintech is becoming embedded in mainstream finance.

Business Insider Intelligence, Business Insider's premium research service, has written the definitive Fintech Ecosystem report that looks at the shifts in the broader environment that fintechs operate in, including funding patterns and regulatory trends; examines the adaptations that some of fintech's biggest subsegments have had to make to secure a foothold in the financial services system; and discusses how the continued rise of the fintech industry is pressuring incumbents to make fundamental changes to their business models and roles. It ends by assessing what a global economy increasingly influenced by innovative fintechs will look like.

Here are some key takeaways from the report:

  • The fintech industry is far more than a group of digitally native, consumer-centric startups, although they are, in many ways, becoming the new face of financial services. It's increasingly clear that fintech no longer stands apart from financial services proper, and is morphing into an integral part of the financial system. 
  • To secure their position in the mainstream economy, some of the main fintech subsegments have had to adjust their business models. These include neobanks, robo-advisors, and alt lenders. Other fintech categories, meanwhile, have instead found that current conditions are well suited to their original models, and are seeing largely smooth sailing, like regtechs, insurtechs, and payments fintechs. Innovation and dynamism is still alive in fintech too, with new categories still emerging.
  • The rising influence of fintechs is having a dramatic effect on incumbents, from banks to insurers to wealth managers, pushing them to respond proactively to stay relevant. Incumbents are reacting to changes wrought by fintechs on three key fronts: the front end, the back end, and in their core business operations. As such, incumbents and fintechs are converging on a digital middle ground.
  • As this happens, the fintech industry is on the cusp of becoming an integral component of the broader financial services ecosystem. But it will likely first have to go through a complete credit cycle, and survive an economic downturn like the one that set the stage for its arrival in 2008, for this to happen.

In full, the report:

  • Looks at how the environment in which the fintech industry operates is changing, and what that means for the digitization of financial services.
  • Gives an overview of the main subsegments within the global fintech industry, and discusses which categories have had to adapt to survive, which have reaped benefits from their original game plans, and which new segments have come to the fore in the past twelve months.
  • Outlines the adaptations that incumbent financial institutions have begun making to adjust to an economy that's inevitably shifting to digital, and in which tech-savvy fintechs are increasingly setting the standards.
  • Discusses what the future of financial services will look like as fintech embeds itself into the financial mainstream.
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

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Your opinion matters — Join BI Insiders program

Fri, 08/17/2018 - 8:08pm  |  Clusterstock

As a dedicated Business Insider reader, your opinion is important to us. That's why we'd like to invite you to join our BI Insiders program.

The BI Insiders are an exclusive online community of Business Insider readers who like to:

  • Share their opinions about Business Insider and a variety of topics from technology, to trending stories, to finance, politics, sports and many other subjects.
  • Receive sneak peeks of what we learn, and happenings at Business Insider.
  • Earn points towards free stuff.

So join us today by clicking on the link below and apply to become a BI Insider. You’ll be asked to complete a short survey, after which you will receive a notification within 24 hours to let you know if you’ve qualified.

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And today we're giving you one more reason to join:

Apply to be a BI Insider, and we'll give you immediate access to an exclusive slide deck from BI Intelligence, Business Insider's premium research subscription service. Currently sold for $495, The Future of Fintech Slide Deck can be yours today for FREE.

In this deck, we explore what's next for fintech, how it will reach new heights, and the developments that will help it get there.

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How and why the payments industry will experience massive growth over the next five years

Fri, 08/17/2018 - 8:02pm  |  Clusterstock
  • The payments ecosystem is undergoing a period of digital transformation, which will spur tremendous growth in money moved around the globe in the next five years.
  • Consumers and businesses will make 841 billion noncash transactions worldwide in 2023, up from 577 billion in 2018.
  • The next five years will mark a pivotal transformation in how companies and consumers handle payments.

The impact of payments’ digital transformation is rippling around the world, in both advanced economies and developing countries.

Across major global regions, the total volume of e-commerce transactions is expected to rise 91% over the next five years to hit $5.7 trillion by 2023.

With such impending immense growth, it’s crucial for any business that even touches the payments industry to understand what’s ahead.

Take, for example, noncash transactions, which include debit card, credit card, direct debit, and credit transfer transactions that are conducted either online or offline. Consumers and businesses will make 841 billion noncash transactions globally in 2023, a 46% surge from 577 billion in 2018. The rise in global card and terminal penetration, coupled with increasing digital payments volume, will will be the key drivers in this growth.

To successfully navigate this changing landscape, individuals and organizations must understand the full extent to which digital transformation will affect the payments industry, the key drivers of this growth, and how it all relates to the work they do every day.

Business Insider Intelligence, Business Insider’s premium research service, has forecasted the future of the payments ecosystem in The Payments Forecast Book 2018 — and the next five years will be critical for the following four areas:

  • Global Payments: Asia, North America, and Europe will be the three main growth regions in the next five years, and will make up 70% of all noncash transaction growth by 2023.
  • US Payments: In the US, P2P and retail payments combined will still be less than a quarter of the size of the B2B payments market by 2023 ($6.3 trillion vs. $27.3 trillion).
  • US E-Commerce: Total e-commerce spending in the U.S. will surpass $1 trillion by 2023, and the average consumer will spend $2,959 online.
  • US Emerging Payments: By 2023, 67% of US adults will have used BOPIS (Buy Online Pickup In Store) at least once in the last 12 months.

Want to Learn More?

People, companies, and organizations all over the world are racing to adopt the latest payments solutions and prevent growing pains amidst a technological transformation. The Payments Forecast Book 2018 from Business Insider Intelligence is a detailed four-part slide deck outlining the most important trends impacting the payments ecosystem around the world — and the key drivers propelling each segment forward.

Representing thousands of hours of exhaustive research, our multipart forecast books are considered must-reads by thousands of highly successful business professionals. These informative slide decks are packed with charts and statistics outlining the most influential trends on the leading edge of your industry. Keep them for reference or drop the most valuable data into your own presentations to share with your teams.

Whether you’re newly interested in a topic or you already consider yourself a subject matter expert, The Payments Forecast Book 2018 can provide you with the actionable insights you need to make better decisions.

Get The Payments Forecast Book

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The 2019 Volvo XC40 hits a sweet spot in the compact luxury SUV segment — and it's bringing a new generation of customers to the Swedish brand

Fri, 08/17/2018 - 6:52pm  |  Clusterstock

  • The Volvo XC40 is the newest and smallest addition to the Swedish automaker's SUV lineup.
  • It arrives at the perfect time for Volvo, as the luxury compact SUV segment evolves in the US.
  • The XC40 is a tasteful, high-quality and exceptionally well-packaged small SUV for a starting price of around $33,000. It's also available via subscription through the Care by Volvo program, which lumps the car payment, insurance, and scheduled maintenance into one monthly fee.

The Volvo XC40 is the newest addition to the Swedish automaker's SUV lineup and it joins a growing segment of compact sport-utility vehicles and crossovers currently dominating the market.

Now eight years into its relaunch as a luxury brand under the Chinese automotive conglomerate, Geely Holding Group, Volvo has launched seven new models, three of which are SUVs: the XC90, XC60, and now the XC40.

The 40 is built on Volvo's proprietary small-car skeleton, denoted as the Compact Modular Architecture (CMA) platform which was co-developed with Geely.

As automobiles go, being the smallest and least expensive model in a lineup usually means you'll have to make some compromises — the evidence of which might manifest itself in lower-quality materials and fewer options than the pricier models.

That is not the case here. The XC40 feels nearly every bit as premium as a compact luxury four-wheeler should.

From the moment you pull open its hefty doors, plant yourself into the sculpted, leather and Alcantara-wrapped driver's seat, and grip the thick-rimmed steering wheel with the stoic chrome-plated Volvo badge planted dead-center, you realize you're about to pilot a very capable, exceptionally well-built machine.

At the same time, it's also quaint. And comfortable.

Unlike its larger siblings, the XC40 has no plug-in hybrid variant yet. It can only be had with one of two versions of the company's four-cylinder, turbocharged, gas-powered engines — available with 187-horsepower, or a more energetic 248-horsepower variant. An all-electric version is currently in development.

Volvo recently loaned us a fully loaded XC40 R-Design for a weeklong drive in Los Angeles. These are our impressions:

In pictures, the XC40 looks deceptively small. In reality, it's compact enough for city driving but has plenty cargo and passenger room for longer trips.

The Volvo family resemblance here is unmistakable. By now, you've seen what Volvo lovingly calls the "Thor's hammer" effect prominently featured in the automaker's signature headlights. Up front on the XC40, it gives the car a subtle, unique flair that makes it instantly memorable.

The inscribed "VOLVO" badge on the reflector lens is a nice touch.

See the rest of the story at Business Insider

I drove a $58,000 BMW X4 'Sport Activity Coupe' on a 250-mile road trip — here's the verdict on this offbeat SUV

Fri, 08/17/2018 - 6:23pm  |  Clusterstock

  • The 2019 BMW X4 is a "sport activity coupe," a fastback SUV that strives to combine sporty driving with crossover versatility.
  • The styling is a bit confusing, but the X4's peppy 248-horsepower four-cylinder motor and crisp handling won me over.
  • The BMW X4 has a pretty firm ride, so it might be the best highway cruising choice.

One of the more perplexing vehicles I've tested at Business Insider is the BMW X6.

Back in 2015, I sampled the X6 M, a high-performance version of the vehicle, a "sport activity coupe."

"It's certainly the oddest segment in the motoring world, outside of 'shooting brakes' (two-door station wagons) and limos with hot tubs," I wrote. 

That impression has long stayed with me, even as this weird segment has grown. It was the first thing I thought about when BMW was kind enough to loan me a X4 for a week. Would this smaller, less burly version of the X6 M, this fastback revamping of the stalwart X3 SUV, strike me as strange?

As it turned out, I had a good test lined up: a 250-mile round-trip run to my daughter's sleepaway camp in New York's Catskills. There would be highway driving and some nice twisty, windy roads to put this sportif SUV through its paces.

That's what these vehicles are all about. The idea is to combine crossover SUV versatility with sports-sedan styling and that whole "ultimate driving machine" vibe. I daresay, for the Bayerische Motoren Werke chariot to be all things to all people — but mainly something different from buyers who can't accept a sedan but don't want the stigma of an SUV.

A word on the "coupe" part of "Sport Activity Coupe." A coupé, of course, should have just two doors, not be a convertible, and historically not be a utility vehicle. Times change, obviously. You have to abandon your allegiances to traditional automotive nomenclature. Why? Because BMW says so.

This SAC, a 2019 X4 xDrive 30i, also arrived with all-wheel-drive, which again sort of bucks the whole coupé ideal, giving life to the notion that two-doors with sporting pretensions should be rear-wheel-drive machines.

But anyway, we must address the contraption before us, and so onward. Here's what I thought:

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Behold! The 2019 BMW X4 xDrive 30i! The paint job was a handsome "Dark Graphite Metallic." Styling? A sort of oomphed-up sedan, with a sloping fastback.

The signature BMW kidney grille dominates the front fascia.

A closer look at those bold chrome blades, framing the legendary BMW badge.

See the rest of the story at Business Insider

The 25 highest-paying jobs in the US, ranked

Fri, 08/17/2018 - 4:52pm  |  Clusterstock

  • High paying jobs can feel out of reach, but they're out there.
  • Some lucrative gigs, according to Glassdoor's latest rankings, require years of graduate studies.
  • Others are more easily accessible.

High paying jobs are out there — you've just got to know where to look.

Fortunately, Glassdoor has compiled a list of the most lucrative occupations in the US. All of the jobs on the list had to have at least 100 salary reports between July 2018 and July 2018 on the job site. C-suite roles were cut from the list, too.

Here's a look at the highest paying jobs in the US:

SEE ALSO: 16 high-paying jobs that saw some of the biggest pay raises over the past 12 months

DON'T MISS: 12 six-figure jobs everyone wants but are incredibly hard to get

SEE ALSO: The 50 best jobs in America in 2018

25. Data scientist

Median base salary: $96,116

Job openings on Glassdoor: 4,986

24. Tax manager

Median base salary: $96,175

Job openings on Glassdoor: 3,690

23. Cloud engineer

Median base salary: $96,449

Job openings on Glassdoor: 1,077

See the rest of the story at Business Insider

Tesla's largest US Supercharger station has a plush, private customer lounge in the middle of a folksy California town — take a look inside (TSLA)

Fri, 08/17/2018 - 4:39pm  |  Clusterstock

KETTLEMAN CITY, California — Amid swaths of farmland and a smattering of gas stations, fast-food restaurants, and motels, Tesla's largest-ever Supercharger station sits tucked away from the main street that runs underneath the 5 Freeway, on a corner lot that used to be a Burger King drive-thru.

Across the street to the east is a gas station and a Carl's Jr., to the south an auto-repair shop, and to the west two budget hotels.

Farther south across State Route 41, there's a recently built strip mall, curiously named Bravo Farms, whose architecture was designed to resemble old Western saloons of generations past.

The Tesla Supercharger station, unlike the Burger King before it, makes use of nearly all the available space. An expanse of covered solar parking shelters the 40 Superchargers on the lot. A private lounge invites Tesla travelers to rest in plush armchairs, plug in their mobile devices, and enjoy soothing music.

There are vending machines, restrooms, and Tesla staff inside the lounge. A separate display section shows off Tesla Energy products: the solar panels and Powerwall battery packs it sells to residential and commercial customers.

On one of the two large flat-screen displays inside the lounge is a real-time world map with the locations of every Supercharger station on the planet. There are three numbers at the bottom of the screen — kilowatt-hours delivered, miles enabled, and gallons of gasoline saved — that tick up as you watch.

This is now Tesla's domain. Its presence in an otherwise folksy enclave — one of at least six on the route here from Los Angeles — is a clear sign that Tesla is gearing up to own the electric-car future.

SEE ALSO: Tesla Model 3s are starting to show up in stores for the first time

DON'T MISS: Mercedes-Benz stole BMW's crown in US luxury-car sales for 2 consecutive years — now BMW is planning a comeback

Tesla says the Kettleman City Supercharger is its largest in the US. Another in Baker, California, sits along a major route connecting Los Angeles and Las Vegas.



This trip served two purposes: to determine whether I could make it to the Kettleman City Supercharger without stopping to top up, and to check out Tesla's newest digs.

I planned to drive from Los Angeles in the red Model S P100D Tesla loaned to me. Before I got on the road, I stopped briefly at the Supercharger station on the SpaceX campus in Hawthorne.

See the rest of the story at Business Insider

Here's how fintech is taking over the world — and what's coming next

Fri, 08/17/2018 - 4:32pm  |  Clusterstock

Digital disruption is affecting every aspect of the fintech industry.

Over the past five years, fintech has established itself as a fundamental part of the global financial services ecosystem.

Fintech startups have raised, and continue to raise, billions of dollars annually, pushing incumbent financial institutions to get in on the action. Legacy players have begun using fintech to remain competitive in a rapidly evolving financial services landscape.

So what's next?

Business Insider Intelligence, Business Insider's premium research service, explores recent innovations in the fintech space as well as what might be coming in the future in our brand new exclusive slide deck, The Future of Fintech: How Fintech Is Taking Over The World and What Comes Next.

To get your copy of this free slide deck, click here.

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What issuers can do to win market share in a period of unprecedented regulation and competition

Fri, 08/17/2018 - 4:04pm  |  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.

The US prepaid card ecosystem is huge, with 10.7 billion prepaid card transactions made in 2016 reaching $290 billion. And it’s shifting focus from low-income, un- and underbanked consumers toward millennials and higher-income adults.

But as the market evolves, legacy prepaid issuers, like Green Dot, are under threat. The market is becoming more competitive as tech companies like Apple, Square, and Venmo develop their own prepaid offerings, likely as part of a push to drive customers to engage with their core peer-to-peer (P2P) transfer or digital wallet apps. These players’ robust digital offerings and ability to offer prepaid services for lower, or no fees are undercutting legacy businesses. And on top of crowding, the Consumer Financial Protection Bureau (CFPB) is implementing regulations next year that could impact some issuers’ monetization strategies.

As a result, the US prepaid card market is becoming an increasingly complicated space for issuers to navigate, so prepaid issuers need to rethink their strategies to best attract consumers. Companies can attract a bigger user base if they target younger users from both low-income and high-income segments. They should also provide convenient offerings, that integrate digital features to make account information accessible, to cater to young consumers’ preferences.

Business Insider Intelligence has put together a detailed report that explores the evolving prepaid card industry, identifies how issuers can maintain profitability in a market that’s being challenged by new players and impending government regulations, and evaluates various paths to success.

Here are some key takeaways from the report:

  • There were 10.7 billion prepaid card transactions worth $290 billion in 2016, according to The Federal Reserve. Business Insider Intelligence expects that to grow to $396 billion by 2022. 
  • The prepaid space has historically been filled with incumbents like Green Dot. But new players, like Apple, Amazon, and Venmo, are trying to gain share, which is pushing large prepaid firms to merge or acquire one another to grow.
  • Issuers can adapt to the change in the space, and grow their share of the market, by providing convenient, multichannel access, and doing so in a way that facilitates profitability. Targeting younger consumers, both from the underbanked and high-income segments, as well as accessing users from physical as well as digital channels, can help facilitate this growth.

In full, the report:

  • Sizes the US prepaid card market and estimates its future trajectory.
  • Identifies industry leaders and the newcomers to prepaid that are threatening their market share.
  • Evaluates growth factors and inhibitors that are increasing competition in the space.
  • Issues recommendations and strategies that issuers can implement to stay ahead in such a rapidly shifting space.
Subscribe to an All-Access pass 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

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Crypto exchanges are set to rake in twice as much money as last year even though bitcoin is down 51%

Fri, 08/17/2018 - 3:35pm  |  Clusterstock

  • Cryptocurrency exchanges are making money hand-over-fist this year, despite a bear market that's gripped the market for digital currencies.
  • Crypto trading revenue could more than double to as much as $4 billion in 2018, according to a new report. 

Bitcoin has been stuck in the doldrums for much of 2018, but that doesn't mean every market participant is heading to the poor house. 

In fact, a recent Bloomberg News report found that crypto exchanges are set to rake in twice as much money as last year even though bitcoin is down a whopping 51%, according to Markets Insider data. In total, the market for digital currencies has shed over $500 billion since it topped $800 billion in January. 

Exchanges, which notably experienced outages and hacks as bitcoin soared to $20,000 at the end of 2017, make money by facilitating the matching of buyers and sellers. 

Citing data from Sanford C. Bernstein & Co, Bloomberg reported that crypto exchange trading revenues could more than double to as much as $4 billion in 2018. In 2017, they brought in about $1.8 billion. Only global cash equities businesses on Wall Street beat crypto trading revenues.

San Francisco-based Coinbase is enjoying 50% of these revenues, Bernstein found.

Exchanges may get a further boost if they're able to lure larger investors to their platforms with so-called white-glove services.

Offering these services to large institutions — from face-to-face meetings to block trades — is one way the market could mature, experts says.

Kiran Nagaraj, KPMG's leader of cryptocurrency services, said larger investors need to be supported on crypto-specific issues such as managing crypto forks — when a crypto splits into two — for them to enter the market in a serious way. Big investors, Nagaraj says, don't want to be concerned with the technicals.

"They're in the investment business," he said. "They can't hold their own private key. Maybe you'll find some that'll do it, but they are looking for market exposure. They don't want to deal with the operations."

See also: 

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NOW WATCH: An early bitcoin investor explains what most people get wrong about the cryptocurrency

Elon Musk didn't used to care about short sellers — here's why he does now (TSLA)

Fri, 08/17/2018 - 3:34pm  |  Clusterstock

  • Tesla CEO Elon Musk actually has a relatively brief history of counter-attacking short sellers.
  • For much of Tesla's 15-year history, Musk has considered Wall Street something of a necessary, but tolerable, evil.
  • That's changed in the past 12 months as Tesla has struggled to launch its Model 3 and short-seller criticism has picked up even as Tesla's stock price has risen.

Tesla has existed for 15 years and has been a public company since 2010. That could all change if CEO Elon Musk is able to take the car maker private, but in the meantime, the pitched battle between Musk and Wall Street short sellers has only intensified.

In a revealing interview with the New York Times published Thursday, Musk offered his current view of the shorts, whose ranks include big-name fund managers such as David Einhorn of Greenlight Capital and Jim Chanos of Kynikos Associates (Chanos is noted for shorting a pre-bankruptcy Enron). 

Musk told the Times that "short sellers are desperately pushing a narrative that will possibly result in Tesla’s destruction," but that wasn't the most interesting comment he made about the shorts. Rather, it was the credit he gave them.

"They’re not dumb guys, but they’re not supersmart," Musk said. "They’re OK. They’re smartish."

If there's one thing Musk respects, it's smart. With his other company, SpaceX, he spent half his time dealing with actual rocket scientists.

He also isn't against shorting as a market mechanism; that would be naive. But nor is he preoccupied with the financial grind of running a business, considering himself primarily a designer and an engineer — a problem-solver.

For years, Musk and Tesla were able to ignore Wall Street

Market obsessives forget that Tesla's 2010 IPO was relatively modest, raising just over $225 million at $17 per share. The stock remained at that level for several years, taking off only after Motor Trend named the Tesla Model S its Car of the Year in 2013.

With a decade and a half of zero annual profits, but a market capitalization now at around $60 billion, Tesla has attracted the most buccaneering of shorts. Musk would rather not think about them, and until late last year, he was doing a pretty good job of it. 

From about 2014 until 2017, Tesla's philosophy was to ignore Wall Street. Yes, the company had to talk to the markets every quarter, but for the most part, Musk — who personally owns 20% of Tesla — valued his major shareholders for their commitment and viewed the investment banks as facilitators of periodic equity and debt fundraises.

A shift occurred this year, when in an email to Tesla, Musk wrote that "[w]hat drives us is our mission to accelerate the world's transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable."

"That is a valid and fair criticism of Tesla's history to date," he added.

Musk doesn't think that analysts who have persistently complained about Tesla's lack of profits are misguided, and he doesn't think that short sellers are completely clueless.

The markets themselves have a different view. Over the past two weeks, a familiar pattern of Tesla volatility has returned, driven by the go-private debate. However, the stock is essentially flat year-to-date and up about 30% over the past three years. All-time, it's returned 1,000%. As Tesla has increased production of its Model 3, its quarterly revenue has also begun to accelerate. 

Musk vs. the short-sellers

In that context, a reasonable person might ask why Musk has started to spend so much time obsessing over the shorts. After treating Wall Street like his ATM for years, Musk abruptly got hung up on short-sellers, taunting them on Twitter and expressing his view in big interviews.

"They’re jerks who want us to die," he told Neil Strauss in Rolling Stone last year. "They’re constantly trying to make up false rumors and amplify any negative rumors. It’s a really big incentive to lie and attack my integrity. It’s really awful."

In May of this year, he dispatched his infamous "short burn of the century" tweet, and ever since then he's poked the Tesla bears frequently.

The markets have mostly vindicated him, so short sellers like Chanos have pivoted from highlighting Tesla's lack of profits to complaining about a variety of operational/managerial issues, or predicting that vehicles such as the Model 3 won't yield a wide gross margin of that the company is being damaged by executives leaving

If Musk has been able to handle the torrents of negativity personally because he's used to them, he dislikes the persistence of media-savvy shorts because he has a fundamental loyalty to Tesla's nearly 40,000 employees. It's Musk NATO Article 5: an attack on one is an attack on all. 

He also appears to have an innate understanding of what the shorts are all about. Just as he's on a mission to make Tesla a large and thriving company, the shorts are on a mission to make as much money as possible for their investors.

Chanos's fund manages $2 billion, and he's showing no signs of capitulating, even though some of his criticisms of Tesla look pretty thin under scrutiny. Einhorn's Greenlight lost 18% in the first half of 2018, thanks to his $5.5-billion fund's Tesla short. Musk tweeted that he'd send the guy a box of short shorts for comfort.

Musk knows what he's up against

Funny, but Musk knows that these investors are extremely well capitalized, experienced, and ruthless. In an email to Tesla employees announcing his go-private goals, Musk wrote that "as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company."

It's certainly worth noting that prior to last year, Musk was at times himself a sort of Tesla short. 

"I've gone on the record several times that the stock price is higher than we have the right to deserve and that's for sure true based on where we are today," he said last July.

In retrospect, Musk perhaps offered that view because he knew that Tesla shares bid up too high would simply intensify short interest, even though it can be argued that shorting Tesla is a complete waste of time.

This has all left plenty of Tesla-watchers pondering Musk's behavior of late. In this respect, it might be worth it to consider him in the context of what he has become with Tesla: the first entrepreneur to launch a successful new American car company since Walter Chrysler in 1925.

Musk is sometimes also compared to Preston Tucker, who tried and failed to launch a new company after World War II. Silicon Valley likes to see him as a new Steve Jobs, but I've always thought of him as far more like Enzo Ferrari, the founder of the legendary Italian sports-car manufacturer. 

Elon and Enzo

As a race-car driver in his youth, Enzo cheated death in days when drivers died in horrible crashes every week. He went on to run Ferrari like a king. But he was always in need of money, mainly because he sold road cars only to fund Ferrari's racing efforts. Nobody told Enzo what to do when it came to motorsport, not even Henry Ford II, who sought to buy Ferrari in the early 1960s. Enzo told the Deuce to take a hike when Ford tried to influence racing.

Enzo was, in short, a man with a mission. He was also an autocrat. Musk isn't, but his own mission has never been in doubt. 

"[The overarching purpose of Tesla Motors ... is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution," he wrote in 2006.

True, Tesla has made Musk a multibillionaire. But the mission still matters more than the money, and Tesla is the means to a noble end, in Musk's view. The money matters above all else to the shorts, and while he might admit that they serve a purpose, we shouldn't expect him to do anything less than take their criticisms very personally.

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NOW WATCH: What's going on with Elon Musk

Three simple charts show just how dedicated Google is to dominating Amazon and Microsoft in artificial intelligence (GOOG, GOOGL)

Fri, 08/17/2018 - 2:36pm  |  Clusterstock

  • Researchers at CB Insights waded into Google's earnings, public statements and patent filings to illustrate where the search giant is headed.
  • When it comes to artificial intelligence, Google is filing for more AI-related patents than Amazon, Microsoft and Facebook. 
  • Their extensive report shows that when it comes to the amount of money Google commits to  overall R&D when compared to competitors, the search giant spends on the high-end.
  • Google CEO Sundar Pichai said he believes AI will have more impact on our lives than the invention of fire. 

Researchers at CB Insights have released an extensive report on Google's business, illustrating just how dedicated the search company is to artificial intelligence.

CB Insights found that Google typically files each year more AI-related patents than the company's top rivals, including Amazon, Microsoft and Facebook.

Google's top execs have long said that AI is  core to the company's future growth, but CB Insights looked at a wide variety of data to try and learn how determined Google is to dominate AI. One area within AI that is of particular interest to Google is neural networks.

"Google is also focused on building out its deep learning capabilities," CB Insights researchers wrote, "which is more complex than traditional machine learning in that it generates predictions using an artificial neural network inspired by the human brain." 

CB Insights searched the patent filings and noted that among Google's top patent keywords, "neural network" was becoming more prominent.  

When it comes to overall Research & Development, the amount Google spends compared to rivals is on the high side, according to CB Insights--both in terms of absolute dollars and as a percentage of sales.

According to CB Insights, Google's plan is to defend the core search business while disrupting such industries as  transportation, logistics, and healthcare. But at the center of everything is AI.

"Unifying Alphabet’s approach across initiatives is its expertise in AI and machine learning," the researchers wrote, "which the company believes will help it become an all-encompassing service for both consumers and enterprises."

For Google, AI is a major strategic initiative. Even as Google uses AI to bolster its consumer services, its Google Cloud unit is working to gain ground on the cloud market-leading Amazon Web Services, and the second-place Microsoft Azure. 

And besides the competitive impetus, Google believes that AI is really the next big thing.

"AI is one of the most important things humanity is working on," Google CEO Sundar Pichai said earlier this year. "It is more profound than, I don't know, electricity or fire."

SEE ALSO: A former Google China exec says the company's plan to build a censored search engine in the country is likely a violation of human rights

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NOW WATCH: How to hack an election, according to a former NSA hacker

The FDA just approved a generic EpiPen, and analysts think it has the potential to upend Mylan's hold on the market (MYL, TEVA)

Fri, 08/17/2018 - 2:36pm  |  Clusterstock

  • The FDA on Thursday approved Teva Pharmaceuticals' generic version of the drug, dealing a blow to branded EpiPen-maker Mylan.
  • Mylan saw an approximately 63% drop in EpiPen sales between 2017 and 2016, according to calculations made by Wells Fargo analyst David Maris. 
  •  Analysts estimate that Teva estimate that Teva could control as much as a third of the approximate $750 million EpiPen market with its generic.

The EpiPen market is in for a major shakeup.

On Thursday, the FDA approved Teva Pharmaceuticals' generic version of the drug, dealing a blow to branded EpiPen-maker Mylan.

Depending on when Teva launches its generic alternative to the lifesaving allergy injection and what price it comes in at, it has a shot at picking up a big chunk of the epinephrine market as Mylan faces shortages and as parents look to stock up at the start of a new school year. 

Mylan once controlled as much as 90% of the epinephrine market, though that percentage has declined in recent years to around 74%, according to a Wells Fargo estimate. An epinephrine auto-injector made by Impax Laboratories has picked up around 25% of the market, while Auvi-Q — which has a $4,500 for a two-pack list price — has about 2% of the market. 

Raymond James analysts estimate that Teva could control as much as a third of the approximate $750 million epinephrine market, though it remains to be seen what drug companies Teva will take market share away from. 

At its peak, Mylan made about $1 billion in sales a year from EpiPens. Then in 2016, the company came under scrutiny after the public realized that the list price of a two-pack of EpiPen had gone up from $93.88 to $608.61, an increase of more than 500% over a decade. 

In response to that outcry, Mylan came out with a $300 generic version of the EpiPen which now makes up about half of the epinephrine market. That made an impact on EpiPen sales, and in 2017 Mylan said its branded sales fell by $655 million. Though the company didn't break out its branded and generic sales for 2017, Wells Fargo analyst David Maris estimated it to be around $633 million in total. 

While the outrage over the price of EpiPens died down, Mylan's faced another challenge: shortages. 

In May 2017, the FDA said that there was a shortage of EpiPens in the US, because of issues with the device's manufacturer, Pfizer's Meridian Medical Technologies. Mylan said on an earnings call last August that the device may not always be available, varying by pharmacy. Wells Fargo called up 53 pharmacies around the US and found that roughly half of them were out of both Mylan's branded and generic EpiPens. 

In part because of the lack of available EpiPens, prescription volume has been down compared to past years. "We believe there is pent-up demand," Maris said. That could bode well for Teva, depending on when it launches its generic into the market. 

See also: 

SEE ALSO: FDA approves Teva's generic EpiPen in blow to Mylan

DON'T MISS: The strange history of the EpiPen, the device developed by the military that turned into a billion-dollar business and now faces generic competition between Mylan and Teva

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NOW WATCH: 5 animals you wouldn’t suspect are actually fearsome predators

Every bizarre thing that has happened since Elon Musk sent his 'funding secured' tweet about taking Tesla private (TSLA)

Fri, 08/17/2018 - 2:28pm  |  Clusterstock

  • Tesla CEO Elon Musk has attracted controversy for his statements about taking Tesla private.
  • Questions have persisted about the amount of funding Musk had secured when he first suggested he had the backing necessary to convert Tesla into a private company, barring a shareholder vote.
  • The SEC has reportedly asked Tesla about statements made by Musk and the company.

Tesla CEO Elon Musk shocked observers when he said on August 7 that he was thinking about taking the company private. Since then, Musk's comments have captivated Wall Street, drawn the attention of regulators, and raised questions about how close the company is to locking down the financing necessary to leave the public markets.

Here's what you need to know to get caught up:

SEE ALSO: Ex-Tesla employee alleges Elon Musk authorized spying on workers in bombshell SEC tip

November 15, 2017: Elon Musk says in a Rolling Stones interview that he wishes Tesla was a private company.

"I wish we could be private with Tesla," Musk said in the interview. "It actually makes us less efficient to be a public company."


July 31, 2018: Musk claims he met with the managing director of Saudi Arabia's sovereign wealth fund.

Musk claimed in a statement published on Tesla's website on Monday that he had a meeting with the managing director of Saudi Arabia's sovereign wealth fund on July 31. 

During this meeting, Musk claimed the director "expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time. I understood from him that no other decision makers were needed and that they were eager to proceed."

"I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving," Musk said. 

The Saudi sovereign fund did not respond to a request for comment.


August 1, 2018: Tesla reports second-quarter earnings amid fear the company is running out of cash.

Tesla reported an adjusted loss per share of $3.06 for the second quarter, which was larger than what analysts had predicted, and revenue of $4 billion, which beat analyst projections. Its cash burn, $739.5 million, was lower than analysts expected. The company said it expected to be profitable during the second half of 2018.

"Going forward, we believe Tesla can achieve sustained quarterly profits, absent a severe force majeure or economic downturn, while continuing to grow at a rapid pace," the company said.

During the company's earnings call, Musk apologized to Sanford C. Bernstein & Co. analyst Antonio Sacconaghi. During Tesla's first-quarter earnings call in May, Musk had referred to Sacconaghi's questions as "boring" and "boneheaded."

"I'd like to apologize for being impolite on the prior call. Honestly, I really think there's no excuse for bad manners, and I was kind of violating my own rule in that regard. There are reasons for it in that I had gotten no sleep, had been working 110-hour, 120-hour weeks, but nonetheless, there's still no excuse," Musk said during the second-quarter earnings call.

See the rest of the story at Business Insider

Trump’s economic agenda is exacerbating America’s inequality crisis

Fri, 08/17/2018 - 1:53pm  |  Clusterstock

  • US income inequality, already at its worst levels since the 1920s, is likely to get worse because of President Donald Trump's economic policies, including a tax-cut program that was heavily tilted toward the wealthy.
  • A new report from the Economic Policy Institute finds the average CEO of a large US firm takes home a startling 312 times what their average worker makes.
  • "CEOs are getting more because of their power to set pay, not because they are more productive or have special talents or more education," the report says.

US inequality statistics have been so startling in recent years that they have almost ceased to shock — but they could undergird America’s next financial crisis.

That’s because consumers' increasing reliance on debt in an environment of stagnant wages is leaving more American families financially insecure, to the point where even minor setbacks can be devastating.

A new report from the Economic Policy Institute, a liberal think tank in Washington, highlights just how startling the income gap has become.

It found the average CEO of the 350 largest US firms took home $18.9 million in compensation (including realized stock options), a 17.6% jump from just one year earlier. In contrast, the average worker’s compensation climbed just 0.3%.

But here’s the real whopper: The average CEO now makes some 312 times what their average employee makes. That compares with a 20-1 ratio in 1965 but is still down from a peak of 344-1 in 2000, at the height of the tech bubble.

"Higher CEO pay does not reflect correspondingly higher output or better firm performance," EPI said in the report. "Exorbitant CEO pay therefore means that the fruits of economic growth are not going to ordinary workers."

This matters because policymakers, including top Federal Reserve officials, often blame weak productivity gains for a lack of wage growth. But if CEOs are gobbling up all the benefits of any productivity increases, then workers will have to look elsewhere for raises.

"Over the last several decades, CEO pay has grown much faster than profits, the pay of the top 0.1% of wage earners, and the wages of college graduates," the report says. "CEOs are getting more because of their power to set pay, not because they are more productive or have special talents or more education. If CEOs earned less or were taxed more, there would be no adverse impact on output or employment."

In theory, CEO pay is set by independent boards of directors. In reality, the relationships are often cozier and mutually beneficial. In 2011, the Securities and Exchange Commission implemented measures giving shareholders to have a "say on pay" through a vote — but that is only mandated to happen every three years, is often nonbinding, and acts more as rubberstamp than safeguard.

Several independent analysis conducted ahead of the tax plan's passage found it overwhelmingly favored wealthy Americans. Thus far, they have yet to spur substantial business investment or wage increases.

The good news, say EPI economist Lawrence Mishel and economic analyst Jessica Schieder, is that these policies and the negative trends they cause are eminently reversible. They recommend:

  1. Returning to higher marginal income tax rates at the very top of the income scale.
  2. Set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation.
  3. Set a cap on compensation and tax anything over the cap.
  4. Allow greater use of "say on pay" practices that truly empower shareholders. 

SEE ALSO: Trump’s tax cuts have so far failed to deliver on one key promise

Join the conversation about this story »

NOW WATCH: Is marrying your cousin actually dangerous?

A New York VC gave a college freshman 7 pieces of advice, including land a summer internship by December

Fri, 08/17/2018 - 1:52pm  |  Clusterstock

  • As a new school year begins, New York-based VC Steve Schalfman shared his best advice for college.
  • One was to find your summer internship by December.
  • Another was to schedule early morning classes.


A jittery new batch of freshmen are moving to start their first year of college this month — and advice is pouring in from adults everywhere.

Steve Schalfman, the seed investor for New York-based Primary Venture Partners, provided his own list of must-dos for his mentee Jacob via Twitter. 

My boy @sportskid12 leaves for college this week. Here’s the advice I gave him:

Take wide range of classes
Find summer internship by Dec
Grill faculty about their work not class work
Schedule morning classes
Have fun but don’t stay out past 2am
Find and meet people not like you

— Steve Schlafman

Refugee Code Academy

Fri, 08/17/2018 - 8:02am  |  Timbuktu Chronicles
Inc reports:

...a tech startup based out of Morocco, Refugee Code Academy, has been following the refugee crisis closely. Shocked by the lack of media coverage of what was happening, they started to pool resources together to find a solution for how they could not only help refugees today, but begin building opportunities for them to grab hold of their future.


Refugee Code Academy wants to build coding schools inside the refugee camps so that they can join the tech workforce remotely.

"This year, we are setting up the first higher education platform in a refugee camp on the African continent," stated RCA in an open letter published by the Oxford Journal.More here

Markets Live: Friday, 17th August 2018

Fri, 08/17/2018 - 6:03am  |  FT Alphaville

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Continue reading: Markets Live: Friday, 17th August 2018

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