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'Vulnerable to catastrophe': One market bear explains why stocks will crash 30% by the end of 2019 — and then completely flatline for the next 12 years

Sun, 04/14/2019 - 6:05am

  • Stocks are almost back at a new record high, and investors may think they dodged a bullet following the late-December market meltdown.
  • John Hussman — the outspoken investor and former professor who's been predicting a stock collapse — says overconfident traders are being lulled into a false sense of confidence.
  • He explains why he sees the benchmark S&P 500 tumbling 30% by the end of 2019 before trading completely sideways for the next decade or so.
  • Visit BusinessInsider.com for more stories.

With the S&P 500 back within 1% of an all-time high, you may be thinking stocks are headed for another lengthy period of strong gains.

After all, the ongoing 10-year equity expansion stared a bear market in the face on Dec. 24 and rebounded with aplomb. What doesn't kill you makes you stronger, right?

Wrong, says John Hussman, the former economics professor who is now president of the Hussman Investment Trust.

For months, even years, he's been telling anyone that will listen that stocks are just as overvalued now as they were ahead of the 1929 and 2000 market crashes. And he views the post-December rebound as the latest in a long series of bullish head fakes built on irrationally exuberant sentiment.

Hussman says it's that overconfidence that will ultimately be the market's demise. In his mind, the recovery since the Dec. 24 bottom is exactly the type of development that makes investors put their blinders up.

"Full-cycle risks have a way of emerging in ways that investors wholly rule out at market peaks," he wrote in a recent blog post. "Glorious half-cycle market advances leave investors vulnerable to catastrophe, because investors hold contempt for anyone who suggests there may be a cliff on the other side of the mountain."

Read more: JPMorgan quant guru Marko Kolanovic shared with us the often-overlooked force dictating market returns — and revealed what it's saying about the future

What kind of catastrophe is Hussman expecting? His expectation for a two-thirds loss in total market value is well-documented at this point. But he has an updated forecast that calls for stocks to drop 30% by the end of 2019.

To make matters more ominous, Hussman says the market's ability to reach a new record high is irrelevant in the grand scheme of things. And that's just the first half of his bearish call.

The S&P 500 will lose "an additional 50% of its remaining value over the rest of the down-cycle," Hussman said. "That, after all, is how a market loses 65% of its paper value."

He continued: "That's not so much a forecast as a based case. A 65% loss, unfortunately, would presently represent a run-of-the-mill cycle completion from current valuation extremes."

But what about the following decade? That's where Hussman's forecast gets even more dire. He says that the S&P 500 will see total returns averaging roughly zero over the next 12 years.

The scatter plot below offers a look at how Hussman is thinking about the matter. It shows the relationship between the ratio of market cap to corporate gross-value added, relative to subsequent 12-year returns. As you can see, that ratio is currently close to the lowest on record.

When faced with all of that evidence, a more bullishly inclined investor might argue that valuations can normalize on the fly as fundamental growth catches up to prices.

Hussman isn't buying it.

"The main reason it’s unlikely is that it would require the absence of even a single period of severe risk-aversion among investors, for at least a decade or more," he said. "Another reason is that the question vastly underestimates the length of time that would be required for fundamentals to 'catch up' with current valuations.

Read more: Credit Suisse studied 20 years of Warren Buffett's acquisitions to replicate his approach — and it's identified 12 stocks you should buy right now

So there you have it. Hussman is staunchly refusing to give up his bearish stance. He does, however, acknowledge that investor speculation can be an uncontrollable runaway train of sorts — something that can defy market signals for uncomfortably long, frustrating bulls like himself. That's why he's taking his foot off the brake somewhat.

"All of this effort to jam the speculative bit back into the horse’s teeth requires us to adopt a rather neutral outlook here, until we observe fresh deterioration in market internals," Hussman said.

He continued: "Given the late-stage condition of the financial markets and the economy, my sense is that, as in 1929, they may just run this poor horse straight up and over the cliff."

Hussman's track record

For the uninitiated, Hussman has repeatedly made headlines by predicting a stock-market decline exceeding 60% and forecasting a full decade of negative equity returns. And as the stock market has continued to grind mostly higher, he's persisted with his calls, undeterred.

But before you dismiss Hussman as a wonky permabear, consider his track record, which he breaks down in his latest blog post. Here are the arguments he lays out:

  • Predicted in March 2000 that tech stocks would plunge 83%, then the tech-heavy Nasdaq 100 index lost an "improbably precise" 83% during a period from 2000 to 2002
  • Predicted in 2000 that the S&P 500 would likely see negative total returns over the following decade, which it did
  • Predicted in April 2007 that the S&P 500 could lose 40%, then it lost 55% in the subsequent collapse from 2007 to 2009

In the end, the more evidence Hussman unearths around the stock market's unsustainable conditions, the more worried investors should get. Sure, there may still be returns to be realized in this market cycle, but at what point does the mounting risk of a crash become too unbearable?

That's a question investors will have to answer themselves. And one that Hussman will clearly keep exploring in the interim.

SEE ALSO: Bank of America has discovered a simple trade that’s tripled the market's return: Buy stocks the 'smart money' hates. Here’s how you can get involved.

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Italy's economy is one of the biggest downside risks to the global financial system and could spell disaster for Europe

Sun, 04/14/2019 - 4:21am

  • The IMF has slashed Italy's growth prospects down from 0.9% this year to 0.1%. Some analysts see the country as a significant risk to the eurozone's financial stability. 
  • Italy's economy has been a topic of much debate since last summer with fears that the country's beleaguered banking sector and ailing productivity could spell disaster. 
  • Banks in Italy are still loaded up with non-performing and poor-quality loans, which underline growing concerns about whether the eurozone laggard will be able to service its debt going forward. 

Italy's ongoing economic problems don't appear to going anywhere soon. The country's bad debts could — in theory — topple the European banking system and slow global growth.

At a fundamental level, Italy poses a threat to an already unstable eurozone. Italian banks are saddled with billions of euros of bad loans, much of it governmental, and fears of contagion are never far away. The eurozone comprises the 19 countries that use the euro as a currency, under the auspices of the European Central Bank. The ECB is duty bound to ensure none of is countries defaults. Italy's debts raise a question, according to analyst Jack Allen of Capital Economics: Why should the healthy economies of Northern Europe, like Germany, continue to support Italian debt that will be technically at risk of default for years or even decades?  

"Over the next ten years, we think that Italy’s economy will fail to grow because productivity growth will remain weak and total employment will fall. As a consequence, the public debt ratio will probably continue rising and eventually prove unsustainable. This would be a bigger problem than the previous euro-zone crisis and could once again endanger the single currency itself," Allen told clients recently.

A similar situation happened in Greece after the 2008 financial crisis. That country was crippled by its own inability to pay its debts. The crisis was contained because Greece's economy is relatively small. Italy, by contrast, is the 9th largest economy globally and sits at the core of the European economy.

A recent IMF report indicated that "potential losses on non-performing loans and mark-to-market declines in the value of government bonds could result in a significant hit to capital for some banks."

The country's issues have been much publicized after the arrival of a new populist government last year and the ensuing battle it had with the European Commission to get its budget approved. 

Italian banks have some €800 billion in government debt on their books and many are carrying risky loans on their balance sheets. Italian institutions hold around 8% of Europes non-performing loans, according to the European Banking Authority figures as of the end of 2018.

After Italy, French banks have the most exposure to Italian government debt with some €285 billion ($323 billion) held in major lenders like Credit Agricole and BNP Paribas. Some $481 billion of Italian government debt was held in non-Italian banks as of June 2018, according to Bloomberg. 

It re-invents fears of a so-called "doom loop" which can see governments struggling to protect banks whose profits are hit by a drop in value of government bonds because of their own inherent weakness.  

"A protracted period of elevated yields in Italy would put further stress on Italian banks, weigh on economic activity, and worsen debt dynamics," the IMF added. Attempts by European institutions to stimulate lending have been unsuccessful for Italy.

The country took on an estimated one-third of the €724 billion ($817 billion) of so-called "targeted longer-term refinancing operations" — a low-interest loan product designed by the ECB to promote lending — but still saw a contraction in loan demand from corporates, according to reporting by the Financial Times. 

Things aren't going to improve anytime soon either. The IMF slashed Italy's growth prospects down from 0.9% this year to 0.1%. The country's stagnating economy and relatively high bond yields put the country in a precarious fiscal position, Oxford Economics wrote in a recent research note. 

The country's low productivity growth could lead to Italy's public debt ratio rising further to unsustainable levels. Jack Allen suggested that Europe's economic laggard could find itself in a "perma-recession," which could have consequences worse than the previous eurozone crisis.

One of the few green shoots for Italy's economy has been the fact that the country's purchasing managers index figures for March reached their highest levels since September 2018, with new orders growing at their fastest pace in six months, according to IHS Markit data.

SEE ALSO: Recession-hit Italy faces a fresh budget crisis after reports of planned government tax hikes

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The cofounder of MoviePass recounts what led to his firing from the company he'd built from the ground up

Sat, 04/13/2019 - 10:45am

  • MoviePass cofounder Stacy Spikes breaks his silence about what led to his exit from the company.
  • Spikes told Business Insider that in January 2018, he was let go after months of disagreeing with the new owner of MoviePass, Helios and Matheson Analytics, about the $10 subscription price point.
  • Though it was giving the company thousands of new subscribers, Spikes felt it wasn't sustainable.
  • Visit BusinessInsider.com for more stories.

 

MoviePass cofounder Stacy Spikes admits he was not a happy camper a few months after Helios and Matheson Analytics bought MoviePass in summer 2017. And it's likely a big reason why he was then let go in the new year. 

Since 2005, Spikes had been building the scrappy startup into a revenue stream the US box office had never had before: movie-ticket subscription. The app was evolving with the times and slowly growing in popularity among moviegoers, with the price point ranging from $12 a month to up to $75 (which included access to 3D and IMAX showings). 

But the moment when the company suddenly came into the popular lexicon, and grabbed the attention of the industry, was in 2017 when Helios and Matheson Analytics became interested in buying MoviePass.

"Ultimately the proposal came in at $25 million for 51% of the company," Spikes told Business Insider. "And in the proposal it said they wanted us to temporarily drop the subscription price to $10 to help climb up to 100,000 subscriptions." 

Spikes said nothing in that proposal worried him, and in the summer of 2017, Helios and Matheson became the owners of MoviePass. In August of that year, the $10-a-month to see a movie a day deal was launched and MoviePass hit 100,000 subscribers in 48 hours. 

"So I'm like, 'OK, turn it off, we reached our goal,'" Spikes said.

But the attention MoviePass suddenly received was too intoxicating for most at the company, especially the new owners. And despite Spikes' warnings, things went forward.

"Where things started to divide is: Myself and a handful of others were methodical about testing price points," Spikes said. "The lowest we ever got down to was $12.99 and as high as $75, where we added Imax and 3D. We knew what was sustainable. But the overriding voice was, 'No, this is awesome, look how fast we're growing.' And it was this moment of 'but $10.' It doesn't fly."

By December, Spikes said the company was growing at a quarter million subscribers a month. And despite his warnings that the company could not survive at that price point, no one would listen. 

With a clear divide between Spikes and the new leaders of the company — Mitch Lowe, who came on as CEO in 2016 (Spikes took the role of COO), and Helios and Matheson CEO Ted Farnsworth — Spikes said he received an email on January 9, 2018 that his services we no longer needed at the company.

Read more: Disney revealed the details of its Netflix rival, Disney Plus, including its price and release date

"After that, I've never spoken to Mitch or Ted," Spikes said. "And I've been watching it all unfold, like everyone else."

Spikes said he and the leadership "just disagreed on the approach." But he's not bitter about leaving the company he launched because, in his eyes, the idea of movie-ticket subscription working in the industry became a reality with AMC, Cinemark, Sinemia, Studio Movie Grill, soon Alamo Drafthouse, and others all getting into the movie-ticket subscription game.

"The good side was cinema had not been taken seriously since Netflix really got its footing," Spikes said. "So what I liked about that was this had risen to the zeitgeist of conversation. 75% of our members were under the age of 26. Cinema was an event people cared about again. So while there is a sadness around the brand, I was happy to see that this is front and center."

Read the entire Business Insider interview with Stacy Spikes. 

SEE ALSO: The 4 new Netflix original movies and TV shows released this weekend

Join the conversation about this story »

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A mysterious condition makes marijuana users violently ill, and it reveals a hidden downside to the drug's growing popularity

Sat, 04/13/2019 - 10:05am

  • Frequent marijuana use appears to be causing a mysterious syndrome characterized by severe nausea and repeated vomiting.
  • Little is known about the condition, which is called cannabinoid hyperemesis syndrome, or CHS.
  • Business Insider interviewed half a dozen patients diagnosed with CHS, as well as emergency-room doctors who've treated it and scientists who are studying it.
  • Patients say the condition has turned their lives upside down. Experts are concerned it may be more common than once believed.
  • Marijuana is gaining acceptance in the US as more states legalize the drug. But we're just beginning to understand the variety of benefits and risks associated with it.
  • Visit BusinessInsider.com for more stories.

Alice Moon once reviewed marijuana edibles for a living. So when a doctor told the 29-year-old Californian that she had to stop using cannabis because of a newly discovered syndrome, it threatened to turn her world upside down.

Before giving up the drug, she wanted one last hurrah. She'd end five years of daily weed use on a high note, she thought.

At a special dinner that evening, Moon ate a five-course cannabis-infused meal prepared by the award-winning chef Holden Jagger. Between dishes, Moon and the other guests were encouraged to take hits of an assortment of joints,  hand-selected to complement the flavors in each dish.

Before the meal began, Moon joked with Jagger that it would be her last supper.

A few hours later, she was at home vomiting uncontrollably. She'd spend the next few days in the hospital.

Moon had previously been diagnosed with a condition called cannabinoid hyperemesis syndrome, or CHS.

Very little is known about CHS, which was first identified in the early 2000s. The recognized hallmarks of the condition are heavy, consistent marijuana use, violent vomiting and nausea, and a tendency to use extremely hot baths or showers for relief.

Initially believed to be very rare, CHS has increasingly cropped up in medical journals and emergency rooms (ERs) around the world. There is no known cure. The only long-lasting treatment is quitting cannabis completely.

The condition may be preventable, however, which is one reason doctors and researchers say they want more people to know about it. Research suggests that more adults are using marijuana in recent years; whether that has to do with more states legalizing the plant remains unclear.

Cannabis isn't one drug. It is a plant with hundreds of compounds. Each of them could have a unique effect on our health. But we are only just beginning to scratch the surface of what those effects look like because the drug was widely illegal for decades, experts say.

Marijuana's benefits could include relief for the symptoms linked with serious health conditions, from pain and nausea to digestive issues and seizures. At the same time, its risks might include addiction, reduced cognitive performance, and CHS.

"We must recognize that the full range of potential adverse health consequences from cannabis consumption are not fully understood," Dr. Nora Volkow, the director of the National Institute on Drug Abuse, wrote recently in a major medical journal.

CHS could affect millions of Americans, but we don't know much about it

In interviews that Business Insider conducted with doctors, researchers, and more than half a dozen people who have symptoms of CHS, people painted a picture of a severe but still mysterious illness. Some researchers estimate it could affect millions of Americans; others hope it is less common.

Because marijuana remains illegal on the federal level and the condition was only recently identified, exact numbers on how many people have CHS are difficult to pin down.

The syndrome appears to affect people who consume marijuana heavily across all backgrounds, ages, and genders. Most say they've consumed cannabis several times a day for between two years and up to multiple decades. They describe a condition that appears suddenly and without warning, sometimes hours after marijuana consumption.

For people who've been using marijuana for years, it's as if a switch gets flipped. After the first occurrence, every time someone with CHS uses cannabis, they risk becoming violently ill. Using pesticide-free marijuana, edibles, concentrates, CBD-only products, or vape pens doesn't make a difference, they say.

In some cases, as with other chronic conditions, CHS appears to cause flare-ups that are difficult to predict. Patients can sometimes go weeks without symptoms and then suddenly suffer a particularly intense bout.

Many people with the condition end up in emergency rooms or urgent-care centers, and some are admitted to the hospital. Complications can range from mild to severe and include problems such as infections, kidney failure, and significant weight loss.

If left untreated, CHS can be deadly.

'People don't relate it to marijuana'

Initially, Moon was hesitant to believe that her illness was related to marijuana.

She'd been using the drug for half a decade with no symptoms. To make things more perplexing, she had first turned to cannabis as a way to relieve occasional pain and nausea linked to things such as menstrual cramps. Doctors say Moon isn't alone in her initial disbelief.

"People don't relate it to marijuana because they’ve been smoking for decades" with no recognizable issues, said Dr. Joseph Habboushe, an associate professor at New York University Langone Health and the lead author of a study on the condition published last year.

Moon had been using various forms of marijuana (edibles, concentrates in vape pens, and several strains of the flower form) daily for about three years. Then one day in 2016, several hours after smoking part of a joint, she ended up bowled over with nausea.

After that, she’d get sick to her stomach roughly every month or so. Thinking that alcohol might have something to do with her symptoms, she quit. It didn't help.

She tried improving her diet. Nothing worked. Eventually, she wound up in an urgent-care center, where doctors diagnosed her with heartburn.

Moon's symptoms continued for more than a year. The only thing that helped was spending hours in a steaming-hot bath. 

In 2018, things took a turn. She was throwing up every week. A specialist she saw around that time said it could be CHS and told her the cure was to quit using marijuana. She didn't want to believe it, but she decided she needed to try quitting.

But before giving it up, she went to one last cannabis event. Moon described it as her last supper.

Moon spent that evening — and most of the next two weeks — in the bathroom. Every day, her vomiting was so bad she felt like she could barely come up for air. One morning, she was so weak that she passed out on her front lawn. At that point, she'd had enough.

'I was in denial. I didn't want to believe it was true.'

She quit marijuana completely for three months and was symptom-free. Then she tried CBD, hoping there was some form of cannabis she could enjoy. One day she took 200 milligrams of CBD in capsules. That night, she ended up in the ER.

Within about a week in the ER, Moon developed three ulcers, a hernia, and an infection. She dropped 12 pounds from her already slender frame, missed Christmas with her family and New Year's with her friends.

"I looked like I was dying," she recalled. 

In Colorado, where marijuana is legal, CHS was recently identified as one of the leading drivers of emergency-room visits tied to cannabis.

For a study published last month, researchers looked at ER visits between 2012 and 2016 and concluded that stomach issues such as nausea and vomiting were the main cause of the trips, ahead of reasons such as intoxication and paranoia. Of the stomach issues, CHS was the most commonly reported problem.

"CHS is certainly not very rare," Dr. Andrew Monte, the lead author on the study and an associate professor of emergency medicine at UCHealth University of Colorado Hospital, told Business Insider. "We see it absolutely every week in our ER."

For Moon, it took a CT scan, an MRI, and an endoscopy to rule out other issues before she took her doctor's initial diagnosis to heart: She had CHS, and she had to stop consuming marijuana.

"I was in denial. I didn’t want to believe it was true," she said. "Cannabis is my world. It's my whole life."

Hot showers give temporary relief, but the only cure is quitting

Researchers first began describing the symptoms of CHS in the early 2000s, but it was not until recently that doctors in different hospitals around the world began defining it as a unique syndrome. Initially, it was often lumped in with other digestive conditions that share some of its features, such as cyclic vomiting.

It is still unknown how many cases of cyclic vomiting could actually be CHS, Habboushe said. Conversely, it’s also possible that some cases of CHS are something else entirely. Complicating things further, some people initially turn to marijuana to help with their nausea and vomiting. (The federally approved THC-containing drug Marinol is prescribed to treat the nausea and vomiting caused by treatments for cancer and AIDS.)

One of CHS's most distinctive features is the tendency for patients to use hot baths or showers to temporarily relieve the symptoms. Other standard remedies for nausea, such as anti-nausea medications, don't work.

Habboushe believes heat helps because of something to do with the way CHS interferes with the body's natural temperature and pain controls. For some reason, hot water signals to the body that everything is okay, and the pain and nausea from CHS subside for at least as long as the water remains scalding.

"It was this need to be swaddled," Susie Frederick, a 30-year-old Portland resident who was told she might have CHS last year, told Business Insider. "That feeling of needing comfort all over."

Frederick asked Business Insider not to use her real name because she works in the cannabis industry.

Frederick is unsure whether her symptoms are CHS or something else, perhaps something linked to hormonal changes. She has a history of other digestive issues, head injuries, and problems with her gallbladder, which complicate things.

Frederick said her episodes of vomiting and nausea tend to happen when she's on her menstrual cycle and when she's traveling or dealing with added stress. She had her first episode after she got a small upper-arm birth-control implant, which releases the hormone progestin to prevent pregnancy.

"It’s hard for me to say distinctly that CHS is actually what's happening. It does mimic quite a few other things," Frederick said. 

The nausea linked to CHS appears to be stronger and more intense than the typical nausea linked to things such as motion sickness or pregnancy, according to patients.

Barry Howard, a 28-year-old chef in Birmingham, Alabama, said what struck him most about his CHS was the feeling that he urgently needed to rid his body of something, such as a toxin. Business Insider isn’t using Howard’s real name because he lives in a state where cannabis is illegal.

"It’s not a normal, 'Oh, I’m sick to my stomach' feeling. You feel like your insides want to come out — like you’re trying to push something out," Howard told Business Insider.

Brian Smith died of dehydration after struggling with CHS for months

If someone with CHS keeps using marijuana, severe complications may unfold. In one case, a 17-year-old in Indiana named Brian Smith died after struggling with CHS for more than six months.

Regina Denney, Smith's mother, told Business Insider that Smith was first diagnosed with CHS in an emergency room in spring 2018. On the way to the hospital, he had been vomiting so badly that she had to pull to the side of the road about five times.

At the ER, doctors told Denney that her son was severely dehydrated and warned her that his kidneys, the body's natural toxin-filtering system, were on the verge of shutting down. 

At first, Denney thought his symptoms were related to the heartburn he'd been diagnosed with at age 10, which they'd been treating for years with doctor-prescribed medications such as Prilosec.

After putting Smith on fluids and running a series of tests, they decided to keep him in the hospital overnight.

While waiting on the results, a doctor asked Smith if he smoked marijuana. When he said yes, the doctor said she thought he had CHS. The doctor said CHS is caused by cannabis, and she told Smith the cure was quitting. She didn't say it could be deadly.

'All we'd ever heard about marijuana were the benefits'

Like others diagnosed with CHS, Smith was somewhat doubtful. He'd been using marijuana for years without problems. Nevertheless, he agreed to stop until he saw a specialist.

"All we’d ever heard about marijuana were the benefits," said Denney. "How it helps nausea, how it helps appetite."

The specialist, a gastroenterologist, confirmed the ER doctor's diagnosis a few days later and didn't run any additional tests. He said Smith had CHS and needed to stop using marijuana. Although Smith and his mom still had their doubts, she urged him to stop smoking.

The next two months were excruciating for Denney. Although her son had stopped vomiting — at least as far as she could tell — he continued to lose weight. He also occasionally complained about nausea. At first, she assumed it was related to his heartburn. But one day when she noticed his shoulder blades poking out from the thin cotton of his T-shirt, she began to suspect he was using cannabis again.

"He was skin and bones," Denney said.

Then one night, Denney got up in the middle of the evening to find her son on the couch in the living room holding his stomach. He said he didn't feel good. The next morning, he started vomiting violently. Between sprints to the bathroom, where she'd bend over to hold a bucket under her son and rub his back, and the kitchen, where she was making dinner for her infant grandson, Denney called the doctor.

They'd send some medicine for her to pick up at the pharmacy, they said. But when Denney picked it up, it was the same anti-nausea medication he'd gotten at the ER. After she told the doctor that the medicine they ordered didn't work, they said they would order something else. In the meantime, she went back home.

All of a sudden, at home, Smith collapsed. He grabbed his back, near his kidneys, then his chest. He told his mom he couldn't breathe. Denney immediately called 911. 

By the time the paramedics arrived, Smith had stopped breathing. They tried CPR. Smith was pronounced dead half an hour later.

On her birthday, Denney received her son's coroner's report. When Smith died, he had been severely dehydrated, according to the document. The cause of death on the report, which Business Insider viewed, read "dehydration due to CHS."

Denney couldn't believe it.

"I said marijuana couldn't have killed my son. It doesn’t take people’s lives," she said.

When Denney was cleaning out her car a few days after Smith died, she pulled her son's backpack from the backseat. Inside, she found an unsealed baggy of edibles that looked like candy.

"I have to do something to make people aware," Denney said. "I don’t want anybody to have to go through this. No parent should have to lose a child, especially to something like this."

'People say I work for the feds'

Some people with CHS are hesitant to talk about the condition out of fear that they’ll be viewed as opposed to marijuana and efforts to legalize the plant. Moon and Howard said they got significant pushback from friends, family members, and other people in their communities when they told them about CHS. 

After Moon shared an article that someone recently published about her experience with the condition, her inbox was flooded with hate mail.

"People say I work for the feds. People say I should leave the industry," she said.

Clinicians and researchers are studying marijuana compounds for their potential ability to treat dozens of ailments, and there's already a cannabis-based drug to curb epileptic seizures.

But, at the same time, as research into cannabis' potential benefits continues, a dicey marijuana-as-a-cure-all trend has sprouted. As they seek to take advantage of the growing public perception of cannabis as universally beneficial, hundreds of companies are hawking everything from CBD-based lotions and drinks to cupcakes and candy — many of them without research to support their claims.

People such as Moon, Frederick, and Howard — people who turned to marijuana because they said it helped with other health issues — appear to be caught in the middle. Frederick began using cannabis for sports injuries and said she also used it to help her transition off a high dose of antidepressants and anti-anxiety medications. 

Howard first turned to marijuana because he thought its therapeutic qualities outweighed its risks.

Howard, who was working toward a college scholarship, had played soccer competitively in high school when he developed a compression fracture in his lower back. The injury left him with lifelong pain. Wanting to avoid opioid painkillers out of concern he'd become addicted, he turned to cannabis.

"If anything, I thought [marijuana] was helping what I was going through," Howard said.

'This doesn't mean marijuana is bad or good'

Monte and Habboushe emphasized that most CHS patients are using very high levels of marijuana — far higher than what they’d consider standard or "recreational" use. To them, that suggests that while CHS is severe, it may also be avoidable with moderate cannabis consumption.

"Using in moderation is probably the best answer to help people avoid this," Monte said. "People who are using 10 times a day are likely at a high risk. Even just daily use is probably too much, unless you’re doing it for medical purposes."

Despite her struggle with CHS, Moon hasn't left the marijuana industry. She no longer reviews cannabis products, having given up any form of the drug, including CBD. Today, she works for multiple marijuana companies and serves as the head of public relations for a cannabis tech startup called Paragon. 

"I'm passionate about cannabis, and I believe in its healing properties. But I also recognize that maybe I’ve had too much," she said.

Since her son Brian's death, Regina Denney has created her own Facebook group in his memory. She hopes to raise awareness about CHS. 

"My goal is to bring something positive out of the heartbreak," she said.

SEE ALSO: A mysterious syndrome that makes marijuana users violently ill is starting to worry doctors

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One of Uber's earliest investors explains why he invested in the first place, and how the company is going to keep growing past its IPO (UBER)

Sat, 04/13/2019 - 9:45am

  • Uber filed regulatory documents Thursday for its highly anticipated public offering.
  • Menlo Ventures, a prominent Silicon Valley venture capital firm, led Uber’s $32 million Series B fundraise in 2011.
  • Shawn Carolan, who co-led Menlo's original investment, says that he's confident Uber is on the right track, citing its willingness to experiment with new lines of business like UberEats. 
  • He says that founder and ousted CEO Travis Kalanick played an undeniably crucial role in the success of Uber, but also acknowledges that his management style led to big problems at the company. 
  • Now, he says, Uber CEO Dara Khosrowshahi is the right person to take the company through its IPO and beyond, citing his humility and vulnerability as major pluses. 
  • Visit BusinessInsider.com for more stories.

When Menlo Ventures partner Shawn Carolan first considered investing in Uber, circa 2011, there was reason to be skeptical. For one thing, the deal would value the startup at a $290 million pre-money valuation — pricey for a two-year-old company. 

His attitude changed when he pulled up the app and ordered his first Uber from the second floor of his building. He says the car was waiting for him by the time he walked downstairs. That's when it clicked. 

"[Uber] was the perfect customer experience, similar to what Google did for search,” said Carolan. “They had a viral growth engine and a product people were willing to pay for. You never see that.”

And so, Menlo ultimately decided to invest: That same year, Carolan co-led Uber's $32 million Series B round of funding that same year. Uber would ultimately raise over $24 billion in venture capital and debt financing. 

Fast forward to this week, when Uber filed the regulatory documents to go public ahead of its long-awaited initial public offering, which could value the company as high as $100 billion. Needless to say, Menlo Ventures stands to make a significant return on what Carolan had thought was a pricey investment.  

Read: Here's who's getting rich on Uber's massive IPO

Now, Carolan says, Uber has an even brighter future ahead — assuming it continues to execute. 

“In the end it all comes down to good old fashioned execution. You have to keep making the business better and keep finding the right talent to build the best product. You invest in the areas that build the business and divest from the areas that don’t,” said Carolan.

Kalanick's contribution, and the rise of Khosrowshahi

Carolan says Uber’s growth may not have been possible without founder Travis Kalanick, who was ousted as CEO in 2017, but remains the company’s largest individual stakeholder even after selling $1.4 billion worth of his shares in the company to Softbank. 

Carolan says it’s “undeniable” that Kalanick was an incredible entrepreneur, but the skills and values that helped him build the business didn’t always hold up as it scaled — leading to a string of controversies that shook up the company and, by the company's own admission, damaged the Uber brand.

“I really admired the guy," Carolan said. "Many of the ways he changed the way transportation was working, especially that quickly, needed his skill set. Obviously, it had downsides as well in the business and the culture. There was a lack of sensitivity in people working at the company. The company values around hustle were not being held in check."

Carolan said the decision as a major investor to support the ousting of Kalanick was “sad,” but that ultimately, stakeholders knew Dara Khosrowshahi was a better fit to lead the company as it scaled. According to Carolan, it was Khosrowshahi’s humility and vulnerability that best indicated his ability to lead the company past its troubles. 

Read More: Uber gave CEO Dara Khosrowshahi $45 million in total pay last year, but it paid its COO even more

“I deeply admire Dara. I felt the difference between him and Travis in Dara’s letter [in the filing]. There was a ton of vulnerability, and that language is so powerful coming from leaders of companies like this. That’s real. Nobody’s perfect, and he’s the type of person I know will be working really hard and trying his best to figure out how the system should work,” Carolan said.

Business moves

As Uber continues to meet with potential investors ahead of its IPO, Carolan thinks the company’s investment in long-term lines of business will pay off. 

He points to the success of UberEats, one of the fastest growing parts of Uber’s business, as evidence that the company is willing to take big bets before achieving profitability. He also points to Uber’s acquisition of Jump, a motorized bike startup that Menlo Ventures had previously invested in, as evidence of a longer term strategy around chasing new, often eco-friendlier, modes of transportation.  

"One thing that was always striking was the simplicity of the value [proposition] at the heart of these truly incredible businesses. [Uber]'s is getting from point A to point B. Whether it's a person or a meal, it's a ubiquitous value proposition on the planet."

Join the conversation about this story »

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Millennials might say they want to buy a house, but too many aren't doing anything about it

Sat, 04/13/2019 - 9:30am

It's no secret millennials are eager to be homeowners.

Earlier this year, a Realtor.com report revealed millennials as a generation are now responsible for the largest share of new mortgage loans by dollar volume, narrowly surpassing Gen X for the first time. As millennials age and start families, they're buying more homes than ever, and they're making lower down payments despite rising home prices, which require larger mortgages.

Results from a recent INSIDER and Morning Consult survey may offer some insight as to why millennials are increasingly relying on mortgages: Many are just not saving enough cash.

Of the 4,400 Americans polled, 1,207 identified as millennials, defined as ages 22 to 37 (237 respondents did not select a generation). The margin of error was plus or minus 1 percentage point.

While 40% of surveyed millennials who expect to own a home in the future are saving for one — though we don't know how much — about 31% of millennials said they expect to own, but aren't currently saving at all.

How much would a home cost you? Find out with these offers from our partners:


According to a recent SmartAsset study, it would take the median earner in the 25 largest US cities between four and 10 years to save enough cash for a 20% down payment on a median-priced home. That's generously assuming they're saving 20% of their annual income for the down payment, but most probably aren't.

Read more: Millennials are delusional about the future, but they aren't the only ones

However, Realtor.com found millennials' down payments are typically lower than those of Gen Xers and baby boomers at an average of an 8.8% down payment on a mortgaged home, despite the fact that they're generally buying cheaper homes at a median price of $238,000.

On the whole, millennials' savings are abysmal, according to the INSIDER and Morning Consult survey. While 70% of millennial survey respondents have a savings account, 58% have a balance under $5,000. That's likely not enough to cover expenses in the event of an emergency, let alone a down payment and closing costs. 

Millennials' paltry savings are likely attributable to a heavy debt load. Despite mostly steering clear of credit-card debt — 32% have none at all and 36% have under $5,000 — nearly 45% of millennials have student-loan debt. When asked what they would do with an extra $1,000 cash, millennials were more likely to prioritize paying off debt over saving (a difference of five percentage points), the survey found.

Read more: Nearly half of indebted millennials say college wasn't worth it, and the reason why is obvious

Molly Stanifer, a financial advisor with Old Peak Finance, recommends aspiring homeowners make a "savings policy" once they decide when they want to buy a home, whether it's in two years or 10 years. 

"It includes a monthly automatic amount and then a percentage of any larger inflow, like a bonus," Stanifer previously told Business Insider. "That will give a pretty clear expectation of when and how to accomplish the goal. Then, the client could set their own goals of cutting back spending or saving additionally beyond the automatic amounts to reach their goal faster."

Stanifer recommends aiming for a 20% down payment and putting the cash in a savings account or non-retirement brokerage account. "They are both liquid — or could be withdrawn easily — and have a low chance of changing much in value from the time you put the money in to the time you need it," she said.

Stanifer said it's ultimately best to hold your down payment fund in one account and not over-complicate diversification. Keeping the money safe and accessible is key.

Can you afford your dream home? Find out with this calculator from our partners:

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Meet the most powerful Goldman Sachs banker you've never heard of; Silicon Valley has made top data-science talent too expensive for many hedge funds

Sat, 04/13/2019 - 9:29am

 

Dear Readers,

It was "millennial money week" here at BI, where we got the results back from an INSIDER and Morning Consult survey that polled 4,400 young Americans on their spending habits. 

We published a number of stories based on the results. Here are some of the key findings. 

If you're new to the Wall Street Insider newsletter, you can sign up here.

Finances

1) Twenty-eight percent of millennials think they're worse off financially than they thought they'd be a decade ago.

2) A variety of economic factors have played a role in delaying some millennials' wealth-building process. The Great Recessionstudent-loan debt, and a higher cost of living have made it difficult for millennials to save.

College

1) Nearly half of millennials who have or have had student-loan debt think college wasn't worthwhile.

2) The divide between people who do think college was worth it and those who don't is clear: Millennials who are still paying off their student-loan debt feel worse about having gone to college than millennials who have already paid off their debt.

Retirement

1) Many Americans expect to buy a house or retire one day but aren't saving for it.

2) One-quarter of millennials who expect to retire between ages 66 and 75 have no retirement savings account.

3) Nearly half of Gen Xers have no retirement account, despite most expecting to retire between 56 and 75.

But, despite all of these money worries, our survey shows that millennials aren't curbing their spending. In fact, if given an extra $1,000 in a month, millennials and baby boomers would spend similarly. And while millennials are delaying major life events such as buying a house and having kids (due in large part to massive student loan debt), they aren't abandoning these things entirely. 

Bottom line: millennials have been accused of killing razors, mayo, golf, weddings, beer, and cereal. The rationale for this (at least according to the Fed) has been that it's because younger Americans don't have as much money to spend than previous generations. But the truth is a lot more complicated. 

Thanks for reading and have a great weekend! 
Olivia

'It's good to be Rich': Meet the Goldman Sachs banker who has built a private investing empire that goes head-to-head with Blackstone — and you've probably never heard of him

The Champagne was flowing in February 2018 when the Goldman Sachs executive Rich Friedman welcomed a couple hundred guests to the Rainbow Room. The Manhattan landmark, opened in 1934, offers a menu with beef Wellington and baked Alaska and serves a $162 brunch. Overlooking Manhattan from the 65th floor of Rockefeller Center, guests danced and chatted as Stevie Wonder played piano.

On the surface, the event was a celebration of Friedman's 60th birthday. But it could have easily been a celebration of a Goldman Sachs career entering its golden years. Therecent retirement of CEO Lloyd Blankfein made Friedman the longest-tenured partner at Goldman.

Since 1991, Friedman has built the bank's private-investing activities into a sprawling collection of funds that have invested more than $180 billion in real estate and infrastructure, private equity, and credit markets that often competes with flashier investment firms like Blackstone, Carlyle, and KKR.

Though advocates put him in the pantheon of buyout greats, Friedman hasn't enjoyed the same name recognition as men with names like Schwarzman, Kravis, and Rubenstein. That's by design, according to interviews with about a dozen current and former colleagues, clients, and competitors.

READ MORE HERE >>

Tim Throsby sent an email to Barclays' CEO with the title 'irreconcilable.' He warned that a plan to gut compensation by 20% and boost profitability was unrealistic.

Tim Throsby, a former JPMorgan banker hired by Barclays to much fanfare to run its investment bank, drafted an email over the weekend of March 23 to 24. By the time he got around to sending it to CEO Jes Staley, he was already out.

The subject line of the email, according to someone who had seen it, was "irreconcilable."

The email was sent to Staley and a number of other senior leaders on March 28, a day after Throsby's shock departure from Barclays was announced, and rehashed the concerns he held over his boss' strategy. The email said Staley planned for cost reductions and job cuts — including a 20% cut to total compensation — for Barclays International, as well as a reduction in reserves held in case of credit losses, according to the person.

READ MORE HERE>>

Silicon Valley has made top data-science talent too expensive for many hedge funds, so they're getting creative to compete

On one side, there are billions of dollars from the world's biggest investors ready to be run by your algorithm. On the other, there's a chance to work at the most talked-about companies on the planet —right as they promise to turn their employees into millionaires overnight.

The battle for top tech talent between Wall Street and Silicon Valley is nothing new, but it's reaching a fever pitch in the hedge fund industry, industry participants and consultants said, as both sides eye billions of dollars up for grabs thanks to a host of buzzy tech unicorns expected to go public, like Uber, Slack, and Pinterest.

This Silicon Valley gold rush has forced hedge funds to grapple with a problem they hardly ever run into: The industry is being outbid for the top talent.

READ MORE HERE >>

YieldStreet, a fintech company offering exotic investments in things like art, but experts are warning about the risk

Wealthy individuals who want to reap the financial benefits of investing in a Monet without actually owning an $80 million painting will soon have a new option.

YieldStreet, a financial platform that offers exotic investment products like marine finance and loans to law firms to the mass affluent, is buying an company called Athena Art Finance from private equity firm Carlyle in a deal valued at $170 million. YieldStreet's 100,000 investors will be able to invest in art financing as a result of the deal.

The deal comes as more financial technology players are trying to open up access to investments previously reserved for institutional or ultra-wealthy investors, such as private equity. Earlier this week, Nasdaq and iCapital, a BlackRock-backed alternative investment company, said they're working to create a platform that will launch later this year to allow private fund investors to sell their stakes before the end of a fund's life.

READ MORE HERE >>

BlackRock-backed iCapital is teaming up with Nasdaq to create a private equity fund selling platform for wealthy investors

As wealthy individuals get into private equity and other illiquid investments in greater numbers than ever, they're increasingly looking for ways to get out, too.

Institutional investors, who long dominated strategies like venture capital, private equity real estate, and private credit, have worked with advisers to sell their fund stakes on the secondaries market. That option hasn't been available to individual investors, who may not be able to keep their capital locked up for the decade or longer that a private fund requires.

Nasdaq and iCapital, a BlackRock-backed alternative investment company, are now seeking to give investors that option by creating a platform that will launch later this year, executives told Business Insider.

READ MORE HERE >>

An inside look at Digital Asset, the blockchain company that's shifting strategies as Wall Street loses interest in the technology

A blockchain company that no longer deals solely with blockchains.

Digital Asset made a name for itself as a leader in how distributed-ledger technology would be implemented on Wall Street when it burst onto the scene in 2014. Big-name backers, large funding rounds, and a former high-profile bank executive caused it to turn heads.

Five years later the industry is still considering how best to implement distributed-ledger technology. While nearly every Wall Street firm has invested resources into investigating blockchains, real-world applications of the technology beyond pilot programs have been largely nonexistent.

READ MORE HERE >>

Wall Street move of the week:

Barclays just lost two more executives as Ravi Singh departs after only four months

In markets:

In tech news:

Other good stories from around the newsroom:

Join the conversation about this story »

I rode the East River ferry to get a view of the infamous 58-story NYC skyscraper that's leaning 3 inches to one side — here's what it looks like

Sat, 04/13/2019 - 9:26am

  • An unfinished 58-story skyscraper in New York City is tilting 3 inches to the north.
  • The tower's contractor is suing the developer, saying it allowed for the tower to be built on a shoddy foundation.
  • The developer says there's no safety issue and that the "misalignment" can actually be fixed.
  • I went to see the leaning tower for myself, and I couldn't tell that it was tilted.
  • Visit BusinessInsider.com for more stories.

A New York City skyscraper that's leaning to one side has sparked a legal dispute between the building's contractor and the developer.

The 58-story tower, known as One Seaport or 161 Maiden Lane, is tilting three inches to the north, Business Insider's Aria Bendix previously reported.

Read more: Hudson Yards, NYC's $25 billion neighborhood, was financed with more than $1 billion that was meant for 'distressed' urban areas. Here's a look inside the glitzy development

The contractor of the building, Pizzarotti, sued the tower's developer on March 22 after a subcontractor discovered the building was askew. Pizzarotti alleges that the developer allowed for the tower to be built on a shoddy foundation. The developer, Fortis Property Group, says Pizzarotti filed the suit to distract from its inability to complete the project.

Fortis also says there's no safety issue and that the "misalignment" can actually be fixed.

I went to go look at the 670-foot tower — here's what it looked like. 

SEE ALSO: I visited a $22 million, 3-floor 'sky mansion' steps from NYC's Hudson Yards, and found it had a selling point that set it apart from luxury penthouses nearly 4 times the price

DON'T MISS: I climbed Vessel, the $200 million, 2,500-step sculpture in Hudson Yards — and the view from the inside blew me away

A 58-story skyscraper in Manhattan is reportedly leaning three inches to the north. The tower, which sits in lower Manhattan along the East River, is known as One Seaport or 161 Maiden Lane.

Source: Business Insider



The contractor is suing the developer, saying the developer allowed the tower to be built on a shoddy foundation. But the developer, Fortis Property Group, says Pizzarotti filed the lawsuit to draw attention away from its inability to finish the project.

Source: Business Insider



I went to go get a look at the 670-foot tower, which reached its full height in September 2018, to see if the tilt was visible to the naked eye.

Source: Bisnow



See the rest of the story at Business Insider

Ousted exec Tim Throsby sent an email to Barclays' CEO calling his plans 'irreconcilable' and destructive

Sat, 04/13/2019 - 9:26am

  • After his ouster from Barclays, the exec Tim Throsby sent an email to CEO Jes Staley and other senior leaders criticizing what he considered unrealistic and destructive profitability demands and targets set by Staley, according to sources familiar with the email.
  • In the email, which had the subject line "irreconcilable," he pushed back on what he said were plans for a 20% cut in compensation at Barclays International, as well as a pullback in risk.
  • He also questioned plans to reduce capital reserves that buffer against potential losses. 
  • Throsby thought such measures were not only unrealistic but also destructive to morale and loyalty at the bank, which has been on a hiring spree over the past year. 
  • Visit BusinessInsider.com for more stories.

Tim Throsby, a former JPMorgan banker hired by Barclays to much fanfare to run its investment bank, drafted an email over the weekend of March 23 to 24. By the time he got around to sending it to CEO Jes Staley, he was already out.

The subject line of the email, according to someone who had seen it, was "irreconcilable."

The email was sent to Staley and a number of other senior leaders on March 28, a day after Throsby's shock departure from Barclays was announced, and rehashed the concerns he held over his boss' strategy. The email said Staley planned for cost reductions and job cuts — including a 20% cut to total compensation — for Barclays International, as well as a reduction in reserves held in case of credit losses, according to the person. 

Throsby said in his message that he had planned on discussing the points in the email with Staley before he was shown the door, according to the person.

The former CEO of Barclays International and head of the investment bank was blanching at what he considered unrealistic and destructive demands and targets set by Staley, according to people familiar with the email. Throsby, known for his brazen, headstrong style, thought Staley’s goals to boost profitability, dividends, and buybacks weren’t possible — that the demands were “irreconcilable,” the people said. 

It was this difference in vision about the future of Barclays that may have led to Throsby's downfall. 

The episode, and the contents of the email, holds implications for whether Barclays can meet the activist-investor group Sherborne Investors' demands without gutting the investment bank and, ultimately, for how long Staley will be able to keep his job.

Throsby did not respond to multiple requests for comment. Barclays declined to comment. 

'Irreconcilable'

In the email, Throsby criticized parts of Staley's strategy to boost firmwide return on tangible equity to more than 9% — a figure he felt no investor realistically expected the firm to reach this year. The strategy to get there involved boosting revenues for Barclays International by 5% while reducing compensation costs by 20%, which included cutting jobs, according to the email. Throsby also detailed what he said was a plan to scale back the firm's risk and impairment reserves held to buffer against potential credit losses, according to a source who read the email. 

It isn't clear whether specific plans outlined in the email remain in effect, including the extent of the compensation reduction. People familiar with the matter said the firm's executive committee agreed to a plan to reach the more than 9% target since Throsby's departure, and that there is no prospect of a 20% cut to total compensation. 

But Throsby seemingly considered the plans serious enough to draft the email and to send it after he left. And the concerns appear to be at the crux of his disagreement with Staley. 

The firm's investment-banking division had a strong year in 2018 and recaptured market share, especially in sales and trading, which increased 13% to $6.5 billion in revenues. Barclays was home to the fastest-growing equities shop in the industry, growing that business by 30%. The return on tangible equity in the investment bank more than doubled over the past two years to 7.1%, but it still lagged behind the rest of the bank.

Nonetheless, Staley — who is trying to quell investor discontent and fight off Sherborne CEO Edward Bramson's campaign for a board seat and deep cuts to the investment bankhas pledged firmwide return on tangible equity target to more than 9% for 2019 and 10% in 2020. Barclays International, the division Throsby ran that holds the corporate and investment bank, as well as its US payments and cards division, accounts for about two-thirds of the bank's revenues.

Not only that, in February, Staley promised to return more capital to investors in the form of buybacks and dividends. Barclays has cut dividends in recent years to deploy more capital to clean up its balance sheet and turn around its investment bank, and it hasn't done a buyback since 2015.

These ambitious goals came amid a brutal first-quarter trading environment, with most banks expected to announce double-digit declines in markets revenues, according to analyst estimates. Trading fell 17% at JPMorgan Chase, which reported earnings on Friday

"The board recognises that Barclays does not yet perform at the level at which it should," Barclays said in a statement on Thursday that outlined its defense against Sherborne. "We are highly focused on business execution to deliver returns above our cost of equity. Another strategic overhaul is not what Barclays needs right now." 

To reach Staley's return targets, the bank must slash costs by 7%, Bank of America estimated in a note earlier this month, saying that "looks hard to do even if investment spend is delayed."

But Throsby thought cost cuts and a pullback in risk would be destructive to morale and culture, especially after the firm went on a hiring spree over the past year to help jump-start the investment bank, according to a person familiar with the email. He also questioned the wisdom of the more aggressive approach to their impairment reserves. 

Throsby wrote that the interplay between Staley's demands were what some might call an "impossibility," according to a source that read the email. 

Bracing for the fallout

The ouster of Throsby, followed shortly by the departure of his deputy, Art Mbanefo, shocked many both inside and outside the bank, and has left employees anxious about a future without the top two leaders that had led the investment bank's turnaround. 

While Throsby was the external face of Barclay's investment bank, Mbanefo, a 10-year veteran of the bank who previously ran markets in Europe and Asia, was more of the internal face and enforcer of his boss' strategy. As the chief information officer of Barclays International, he ran day-to-day operations for Barclays International and straddled many roles, including overseeing business managers and the office of the CEO, as well as supervising markets.

He followed his boss out, resigning days later. Two more senior execs are following them out the door, Business Insider reported on Friday. 

On Mbanefo's last day at the office on April 3, scores of Barclays employees gathered to line the hallways in the New York headquarters and gave him a long standing ovation, according to people present that day. Mbanefo, who was known to be brusque and kept a "bulls---" button on his desk, according to those who'd seen it, walked out giving hugs and shaking hands as he left the building for the last time as a Barclays employee.

Amid the loss of the senior leaders, insiders worry about the strategy for the investment bank going forward and whether job cuts are looming.

Protecting against such cuts appears to be, in part, what Throsby clashed with Staley over. 

The firm has also lost leaders who were critical in crafting the original activist defense against Bramson at a time when Bramson is only cranking up the pressure further. Mbanefo and his Financial Resource Management unit was charged with optimizing the firm's balance sheet and squeezing out capital to deploy toward revenue-generating operations.

"Most people don’t understand what’s next," a Barclays insider said. "People had bought lock, stock, and barrel into what Tim was building."

This post has been updated from its original version. The article initially said Staley raised ROTE targets. The targets had already been in place and were reaffirmed.  

Join the conversation about this story »

NOW WATCH: Here's how North Korea's Kim Jong Un became one of the world's scariest dictators

Check out the hottest cars and concepts coming to the 2019 Shanghai motor show

Sat, 04/13/2019 - 9:17am

  • The 2019 Shanghai motor show opens on April 18.
  • Western, Japanese, and Chinese automakers are showcasing a range of concepts, electric cars, and luxury vehicles.
  • China is the world's largest auto market, with more than 20 million in annual sales.


The 2019 Shanghai motor show — officially called Auto Shanghai 2019 — opens to the public on April 18 and runs through April 25.

We typically expect to see some buzz around a few new luxury vehicles from western carmakers, plus an effort by Chinese brands to showcase their wares. In recent years, electric vehicles have also been a feature of the motor show, which alternates between Shanghai and Beijing and is a showcase for the world's biggest car market.

For 2019, California's Karma Automotive is planning a splashy rollout of three vehicles and concepts, while Audi is bringing two electrified concepts. Lexus and China's Geely, meanwhile, are thinking ... minivans. Don't scoff! These vehicles are popular in the Middle Kingdom

Take a closer look at some of the vehicles we've got our eyes on for next week. 

FOLLOW US: On Facebook for more car and transportation content!

Karma Automotive plans to pull the cover off a collaboration with Pininfarina, the legendary Italian design shop that was acquired by India's Mahindra in 2015.

Karma has two other reveals in store for Shanghai: the BMW-powered Revero and ...

... Its Vision concept car.

See the rest of the story at Business Insider

Boeing's problems are mounting and things are going to get worse before they get better (BA)

Sat, 04/13/2019 - 9:07am

  • Boeing has been through a tough month as it faces a bevy of lawsuits and investigations.
  • However, it may have even more serious and fundamental issues to confront such as fixing the design flaw in 737 Max, regaining the trust of passengers and crew, and maybe even coming up with a replacement for the 737 Max.
  • The global fleet of 371 Boeing 737 Max airliners have been grounded since the crash of Ethiopian Airlines Flight ET302. 
  • Visit Business Insider's homepage for more stories.

It's been a tough 30 days for Boeing. In the month since the tragic crash of Ethiopian Airlines Flight ET302, the American aviation giant has seen its hot-selling 737 Max airliner grounded, its stock plunged 10%, and its reputation tarnished by the scandal.

Boeing admitted last week that a faulty sensor triggered the 737 Max's Maneuvering Characteristics Augmentation System or MCAS on both the Lion Air Flight JT610 and the Ethiopian Airlines plane. The system's activation precipitated nose dives that likely led to both crashes. 

"The 737 Max grounding and what we are learning from it shows that this is not the typical airplane accident we've seen in the past and this is not the typical airplane grounding we've seen recently," Henry Harteveldt, travel industry analyst and founder of Atmosphere Research Group, told Business Insider. "This is a very serious problem for Boeing and a big problem for the airline operators and a problem I don't think will be easy to fix."

Read more: Boeing's reputation has been stained by the 737 Max, and it's going to have to fight to convince people the plane is safe.

This week, Boeing investors filed a proposed class-action lawsuit in Chicago alleging the company defrauded its shareholders by failing to reveal potential safety shortcomings of the 737 Max airliner after two fatal crashes in five months. 

Lawyers representing the 346 victims of Lion Air Flight JT610 and the Ethiopian crash have filed multiple suits against Boeing. 

At the same time, the airlines whose 371 grounded 737 Max are sitting in storage collecting dust have initiated compensation proceedings to collect damages from Boeing. 

Boeing's troubles are mounting and things are going to get worse before it gets better. 

Design trouble

The US Department of Transportation has commenced an audit on how the Federal Aviation Administration managed to certify the 737 Max to fly with substantial control issues. 

Boeing and the FAA's cozy relationship has come under scrutiny from members of Congress. 

Certification issues aside, Boeing will have to answer for the design flaw that is at the heart of the controversy surrounding the 737 Max in the coming weeks and months.

To fit the Max's larger, more fuel-efficient engines, Boeing had to position the engine farther forward and up. This change disrupted the plane's center of gravity and caused the Max to have a tendency to tip its nose upward during flight, increasing the likelihood of a stall. In response, Boeing created MCAS as a software fix to automatically counteract that tendency and point the nose of the plane down when the plane's angle-of-attack (AOA) sensor triggers a warning.

"MCAS was a band-aid that infected the wound instead of healing it," Ross Aimer, an aviation consultant and former Boeing 787 training captain, said in an interview with Business Insider. 

One of the most confounding issues with MCAS is that it can be triggered by a single AOA sensor even though there are two on the plane. This is a departure from Boeing standard operating procedure which normally calls for a dual point of failure. 

"Since you have two (AOA sensors) in order to get certified, why not use them, I just don't understand it," aviation consultant and former aeronautical engineer Robert Mann told Business Insider in an interview. 

"From a design perspective, it doesn't make any sense."

Pilots and passengers don't trust the 737 Max

One of the 737 Max's greatest selling points was the idea that it could be easily integrated into existing 737 fleets with minimal additional training. Since the 737 has long been one of the most dependable airplanes in the world, this congruency helped make the 737 Max a hot seller.

However, the 737 Max is a very different plane from the 737NG it replaced. It has new engines mounted in a different location, redesigned wings, and new avionics. These are all things the pilots knew about. 

What they didn't know was that MCAS had been installed on the 737 Max. Pilots found out about MCAS being on the plane after the Lion Air 737 Max crash into the Java Sea on October 28. 

"Boeing in the past always told the pilots and airlines exactly what was on those airplanes," Aimer said. "I have been a Boeing pilot for over 50 years and have loved their products, but they have lost my trust."

Aimer, who is the CEO of Aviation Consulting Experts and a retired United Airlines Captain, feels like Boeing put money ahead of the well-being of passengers and crew.

"Boeing kept that from us purely because they didn't want to bother the airlines with some extra training," he told us. "This was purely a monetary decision on behalf of Boeing and the airlines themselves to keep this away from the pilots and the result was disastrous." 

And then there's the traveling public.

poll conducted by Business Insider a week after the Ethiopian crash showed that 53% of American adults would not want to fly on a Boeing 737 Max even after the FAA clears the aircraft for service.

"The 737 Max has stained Boeing's brand reputation," Harteveldt said. "This can't be denied."

Business Insider reached out to Boeing for comment on the matter. A Boeing spokesperson noted that company CEO Dennis Muilenberg made a speech on Thursday touting the need to regain public trust.

"We know every person who steps aboard one of our airplanes places their trust in us," Muilenburg said in the speech. "We’ll do everything possible to earn and re-earn that trust and confidence from our airline customers and the flying public in the weeks and months ahead."

"We take the responsibility to build and deliver airplanes that are safe to fly and can be safely flown by every single one of the professional and dedicated pilots all around the world," the Boeing CEO added.

Boeing might need a replacement for the 737 Max

The Boeing 737 Max is the fastest-selling plane in Boeing history. It's the latest generation of Boeing's money-making 737 family of airliners.

The various versions of the Boeing 737 currently account for 80% of Boeing's 5,800-plane order backlog.

It's going to be an uphill battle for Boeing to restore confidence in the grounded jet. 

"You can't hide the 737, you've got thousands of them of all types flying worldwide today for airlines," Harteveldt said.

As a result, you can't simply rebrand the plane. 

"People are going to see right through that," he added.

Therefore, Boeing is going to either have to convince people to fly the 737 Max or come up with a replacement.

"Yes, (737 Max) is the last iteration," Teal Group aviation analyst Richard Aboulafia told Business Insider in March. "They ran out of steam in terms of range and capacity."

That means whichever aircraft Boeing chooses to replace the 737 will be a clean sheet design. 

It's not all gloom and doom for Boeing

The situation Boeing finds itself in is not insurmountable.

Aimer said Boeing's engineering team should be able to come up with an effective fix for the 737 Max. 

"They can fix this issue, right now they need to be honest and forthright and try to fix this issue to the best of their ability," Aimer said. 

Harteveldt said Boeing can convince passengers to feel safe in the 737 Max.

"Boeing has to become a bit more of a consumer-facing organization to reinstill confidence in its brand so that the saying 'if it's not Boeing I'm not going' can be said again with pride by travelers," the analyst said. 

On the other hand, Mann believes Boeing won't have to do much to get people to return to the 737 Max. 

"Once the airplane routinely does what it's designed to do and safely, all of this goes away. And it's crass to say it, but the fact is the traveling public has a very short memory," Mann said.

SEE ALSO: JetBlue is going to London in 2021

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NOW WATCH: Take a closer look at Bugatti's $19 million La Voiture Noire — the most expensive car ever sold

Here are the officials who vote on the Federal Reserve committee that sets interest rates

Sat, 04/13/2019 - 9:04am

  • Interest rates are set through a voting system on the Federal Open Market Committee. 
  • That group consists of Fed governors and leaders of central bank branches across the country. 
  • Officials tend to be labeled as dovish or hawkish, depending on how much they focus on inflation or employment. 

President Donald Trump often blames his monetary policy frustrations on Federal Reserve Chairman Jerome Powell. But interest rates are determined by a group of central bankers, not by Powell alone.

Members of the Federal Open Market Committee typically meet eight times a year to vote on the federal funds rate. Seven individuals on the Board of Governors always vote — there are currently two of these seats open that Trump is planning nominations for.

Fed presidents from across the country take turns on the FOMC each year, though the New York bank’s leader always votes.

Here's who will be on the committee through 2021 and how they tend to view monetary policy, according to analysis by Bank of America Merrill Lynch. Inflation doves are seen as more concerned about employment than rising prices, while hawkish officials tend to favor higher interest rates.

Governors

Presidents

SEE ALSO: Trump has been turning up the heat on the Fed and now the IMF is warning political pressure on central banks is 'dangerous'

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Tesla isn't the next Theranos — here are 10 reasons why (TSLA)

Sat, 04/13/2019 - 8:57am

  • Tesla and Theranos are sometimes discussed in the same terms, as Tesla CEO Elon Musk has jousted with the SEC and former Theranos CEO Elizabeth Holmes faces criminal charges for accusations of fraud.
  • The Tesla-Theranos comparison, like the Tesla-Enron comparison, makes for fiery debates, but the comparison falls apart on closer scrutiny.
  • At base, Tesla has a product that's relatively easy to understand — cars — while Theranos product was shrouded in secrecy.
  • Visit Business Insider's homepage for more stories.


If you have the misfortune to follow or even periodically stumble across the discussion of Tesla impending bankruptcy on Twitter (#TSLAQ) or elsewhere on the internet, you're aware that the company is now often being compared to Theranos, the onetime $9-billion blood-testing startup that's now worth nothing and whose former CEO, Elizabeth Holmes, is currently facing criminal charges.

Tesla CEO Elon Musk has poured fuel on the #TSLAQ fire by running afoul of the Securities and Exchange Commission, just as Holmes did (she settled and was barred from serving as an officer of a public company for a decade). Tesla also added Oracle's Larry Ellison to its board — and Ellison was a Theranos investor.

As l'affaire Theranos has broken out of the business press. John Carreyou's Bad Blood, his account of Holmes' and Theranos' rise and fall, is a bestseller, with a film starring Jennifer Lawrence as Holmes in development. An HBO documentary premiered last month. A general climate of skepticism about Silicon Valley's "save the world" ambitions has also emerged in the aftermath of Facebook's scandals. 

Read more: The biggest question for Tesla is whether the company can make steady profits on its cars

This has all undermined the reality of Tesla and replaced it with a sort of wildly speculative canvas onto which assorted conspiracies and malfeasances can be painted. At base, Tesla is a relatively small auto company that, remarkably, has come to dominate the mostly abandoned electric-car business (there are more than a billion cars on the road worldwide, and almost none of them run on electricity).

Outlandish enthusiasm on Wall Street for the future of electric cars — coupled with too much money sloshing around in the economy thanks to post-financial crisis government action — has minted a stupid-high stock price for Tesla and intensified the focus on the company. Tesla itself has struggled mightily with its manufacturing fundamentals, becoming an outlier in an industry that easily built over 17 million cars and light trucks in the US alone last year, while Tesla managed 250,000.

Looks bad, right? But is it Theranos bad? Hardly. Here's why:

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1. Nobody understood Theranos' product.

Theranos' small-sample blood tests were supposed to be executed using a device named "Edison" that accelerated diagnostics, lowered costs, and democratized lab work. But the device never worked, something that the company concealed. Holmes' claims about the technology evidently confused experts for years.

Superficially, Tesla's and Musk's commitment to automated manufacturing could be construed as sort of "Edisonian" — except that everybody in the auto industry understands automation and its limits. They also understand the end product, which is an automobile. It's pretty easy to tell if either the production system is flawed or the product is bad: the cars don't roll off the assembly lines; or the cars don't work.



2. Theranos never went public.

Tesla staged an IPO in 2010 and for nine of its 15 years in business has been compelled by law to expose its financials four times a year.

Theranos was founded in 2003 and had no legal obligation to report its financials until it collapsed in 2018.

An IPO isn't a perfect mechanism to open up a company to scrutiny. But investors have been able to analyze Tesla's balance sheet and financials for almost a decade.



3. Theranos was the only thing Holmes had ever done.

Holmes dropped out of Stanford to start Theranos when she was 19. She had no background in business nor startups.

Musk sold his first company in 1999 and parlayed that success into another company that would eventually become PayPal. He then sank all his money into Tesla and SpaceX. 

Consequently, Musk knew that a real product was going to be critical to Tesla's survival.



See the rest of the story at Business Insider

2 of America's most acclaimed wealth managers for the ultrarich explain why a famous approach to retirement investing is dead wrong — and reveal what people should do instead

Sat, 04/13/2019 - 8:05am

  • Two of the most successful wealth managers in the US say the most basic approach to retirement investing — that younger people need stocks and older people should own bonds — is wrong.
  • Jeff Erdmann of Merrill Lynch and Peter Mallouk of Creative Planning have different criticisms of the philosophy, but both say investors need a different approach.
  • Forbes has ranked Erdmann as the best wealth manager in the US for three years in a row, while Barron's named Mallouk the no. 1 independent wealth manager four times in the last six years.
  • Visit BusinessInsider.com for more stories.

It's one of those things everyone who has thought about retirement knows: Younger people are supposed invest in stocks, and older people should mostly own bonds.

But two of the most respected wealth managers in the country say that's a bad approach.

The objections come from Jeff Erdmann, who has topped Forbes' list of the best wealth managers in America for the last three years, and Peter Mallouk, who Barron's named the no. 1 independent wealth advisor four times since 2013.

Both are very positive on stocks as long-term investments. That partially reflects their focus on wealthy families and maintaining wealth that can last for generations. But their concerns about the traditional strategy also have major implications for everyday investors and anyone with a 401(k).

The standard thinking about retirement investing is that younger people should own on high-growth assets like stocks, and as the years pass they should gradually get more conservative to get a steady stream of income and protect against big losses. The non-traditional response?

"You should throw that philosophy out the window," Erdmann said in a phone interview with Business Insider.

Erdmann, who works in Merrill Lynch's private banking and investment group, says that investors get such weak returns from bond, CDs and similar assets that they can't rely on them the way they did when that conventional wisdom was established.

Read more: America's No. 1-ranked wealth manager for the ultrarich breaks down the 3 mistakes every millennial investor should avoid — and what they should do instead

For example, the yield on the 10-year Treasury note was more than 10% in 1985, but hasn't touched 5% since early 2001. Last year markets were startled when the 10-year yield briefly "spiked" above 3%. Other conservative investments also don't provide the kind of returns they did in decades past.

"Whether you’re 88 or 18, (with) where we are in the interest rate cycle, your asset allocation is going to not necessarily be tremendously different," Erdmann said.

That's been a big contributor to the 10-year bull market in stocks: More conservative options just haven't appealed to a lot of people for many years. And it's not clear if it will change any time soon.

While Erdmann's objection to the traditional retirement strategy is based on the modern easy-money, low-interest-rate environment, Peter Mallouk of Kansas City-based Creative Planning says he doesn't think the strategy has ever been a good idea.

"The way the industry selects portfolio management ... doesn’t make sense," he said. "It just never has made sense."

Mallouk runs a $39 billion company that was named by Barron's as the best independent wealth management firm in 2017. He told Business Insider that age is nearly irrelevant to retirement investing.

Read more: America’s biggest wealth manager oversees $39 billion for the ultrarich. Here are the 5 ways he says you can invest like 'the millionaire next door.'

In his view, the only thing that's really important is the needs of the investor. A well-off young person with minimal needs can make conservative investments, and an older person who is behind on retirement saving needs to be more aggressive.

Mallouk says the traditional investing philosophy can leave retirees without enough money to meet their needs late in life. 

The two views have different implications: If you agree with Erdmann, you might conclude that investing more heavily in bonds as you age makes sense assuming yields rise substantially in the future. But if you hold with Mallouk, you would focus more on stocks even into retirement.

SEE ALSO: MORGAN STANLEY: This earnings season is the 'moment of truth' for stocks. Here's why the signs are pointing to a major disappointment for investors.

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NOW WATCH: The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years

The Uber IPO exposes how Saudi cash drives Silicon Valley innovation, and even the biggest tech companies can’t stop it

Sat, 04/13/2019 - 8:00am

  • Uber's S-1 filing showed that Saudi Arabia's Public Investment Fund owns 5% of the company.
  • The Public Investment Fund is also a top investor in Softbank's gargantuan Vision Fund, which owns 16% of Uber — not to mention sizable stakes in companies like Slack, WeWork, and DoorDash. 
  • Saudi Arabia has been criticized for human rights abuses and repressive laws, so it's a problematic source of cash for Silicon Valley, which prides itself on changing the world.
  • But Silicon Valley is under attack like never before these days, and that's caused a cynical search for stability that seems to have made taking Saudi money a non-issue. 

Silicon Valley's relationship with an undemocratic regime that has a troubling human rights record is in the spotlight. 

President Donald Trump has spoken out about it. Lawmakers are debating ways to stop the flow of money and data between the two.

The adversary in this cross-border drama is China, which has raised alarm bells in the US as it bulks up its homegrown tech industry and arouses suspicion of spying and influence.

However, there's much less fuss about the cozy ties between another repressive foreign power and Silicon Valley. 

Saudi Arabia's presence in Silicon Valley is greater than it's ever been. 

That became especially clear on Thursday when Uber filed its IPO paperwork. We learned from the S-1 filing that the kingdom's Public Investment Fund owns 5.2% of the ride-sharing company. 

The figure might actually under-count Saudi Arabia's influence within Uber. Softbank, the Japanese tech conglomerate, owns a 16.3% stake in Uber through its Softbank Vision Fund. The biggest investor in the Vision Fund is Saudi Arabia, which contributed $45 billion of the fund's massive $100 billion bankroll

The Vision Fund is Silicon Valley's undisputed kingmaker today, writing big checks and amassing stakes in high-flying startups such as WeWork, Slack, DoorDash and GM Cruise. That means Saudi cash is essentially funding much of Silicon Valley's innovation.

As the New York Times pointed out in October, this gusher of Saudi money is an inconvenient truth for an industry that prides itself on making the world a better place.

From space to augmented reality, Saudi cash is everywhere

Some basic facts about Saudi Arabia: It's a place where torture and arbitrary arrests are widespread, according to Amnesty International; a place where women are not allowed to travel abroad without the permission of a male "guardian." It's the leader of a coalition blamed for airstrikes in Yemen responsible for thousands of civilian deaths and injuries. 

And then there's the gruesome killing of Saudi dissident journalist Jamal Khashogghi, which, according to the CIA's initial conclusion, was ordered by Saudi Crown Prince Mohammed Bin Salman, the Wall Street Journal reported.

In other words, Saudi Arabia is antithetical to everything tech companies' altruistic mission statements claim to stand for.  

Saudi money may be more prevalent in tech now, but it's not new. Prince Alwaleed bin Talal was an early investor in Twitter, and at one point owned a stake larger than cofounder Jack Dorsey's. (Alwaleed was himself detained — in a Ritz Cartlon hotel — for three months in 2017 by his cousin Prince Mohammed, the current leader of the country).

And the Saudi Public Investment Fund is also a shareholder in Magic Leap, Tesla and Virgin Galactic, according to research firm CB Insights. Whether you're in augmented reality or outer space, there's no escaping Saudi money.

A 2018 Quartz article cites an estimate by research firm Quid that Saudi investors directly participated in tech investment rounds totalling at least $6.2 billion during the previous five years.

Uber CEO Dara Khosrowshahi backed out of a conference organized by Prince Mohammed last year after the Khashogghi killing, as did now-former Google Cloud CEO Diane Greene. But for the most part, there's been little pushback among tech startups when it comes to accepting Saudi or Softbank money.

Uber's winds of change

So why is Silicon Valley okay with Saudi money? 

It's true that we live in a world that runs on oil — so drawing a moral line isn't easy when you're pumping gas into your car every day. 

Maybe the tech industry thinks it's bringing the winds of change.

After all, when Uber announced its Saudi investment in 2016, women weren't allowed to drive.

“Of course we think women should be allowed to drive,” Uber's Jill Hazelbaker told the New York Times at the time. “In the absence of that, we have been able to provide extraordinary mobility that didn’t exist before — and we’re incredibly proud of that.”

And two years later, change did happen when the ban on women driving was officially lifted.

Did Uber's presence in Saudi Arabia cause the change? It's impossible to say with certainty, but I'd wager not. 

Much more likely is that Prince Mohammed, looking for a way to burnish his credentials as a "reformer" when he rose to power in 2017, saw the controversial driving ban as an easy and expedient thing to jettison in exchange for goodwill.

The notion of working from the inside to bring about change has a long and not-so-great track record in tech. Think back to Google contorting itself into a pretzel to justify its introduction, and then withdrawal, of a search engine in China. When outrage recently erupted over Google's secret plans to make a new censored search app for China, the company didn't even try to justify itself with a "change from within" argument.

Tech businesses don't really want a revolution

You may ask, at this point, why more companies don't take a stand and turn down Saudi cash. 

The sad reality is that companies are more interested in preserving the status quo that their businesses are built on than in bringing about change; even the "disruptive" tech companies.

That's especially true today, as tech companies are under siege from all sides, blamed for disrupting our privacy, our elections and our children's attention spans. 

Thinking differently is great marketing copy when it sells gadgets. But there's little upside in leading a revolution if it scares away customers. 

Look no further than Google's app store. Thanks to an app called Absher, Saudi men can direct where women travel, and receive alerts when women use a passport to leave Saudi Arabia. After Insider's Bill Bostock investigation into this wife-tracking app, US lawmakers demanded that Google remove Absher from its app store.

Google refused to pull the app. It argued that the app does not violate its terms of service.

Right now, the tech industry's terms of service are clear. Whether it's about policies, products or investors, the golden rule is stability. 

SEE ALSO: Uber can't decide whether cofounder Travis Kalanick is an asset or a liability, and it makes for an awkward but revealing IPO filing

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Here are the 8 clothing companies that could take Patagonia's place as the new keeper of the 'Midtown Uniform'

Sat, 04/13/2019 - 8:00am

  • Following Patagonia's recent decision to be more selective with the number of new clients it will brand apparel for, a market gap has opened for other clothing companies to work with Wall Street and Silicon Valley firms.
  • Patagonia's fleece vests are a key part of finance bros' typical outfit, known as the 'Midtown Uniform' — slacks, a dress shirt, and a vest. 

From the disruptive nature of new technology, to the rising number of agile competitors in the space, Wall Street's list of concerns grows bigger every day.

However, arguably a bigger issue was raised across trading floors earlier this month: The future of the 'Midtown Uniform'.

Patagonia, a critical part of many Wall Street employees' daily outfits, recently decided it would be more selective with the number of new clients it will brand apparel for. The company is focusing on working with "more mission-driven companies that prioritize the planet", potentially excluding some Wall Street and Silicon Valley firms. The American clothing company's fleece vests are an integral part of what is commonly referred to as the 'Midtown Uniform': slacks, a dress shirt, and a vest.

So an opportunity has risen for another clothing company to be the go-to outfitter for the 20-something bankers, hedge funders and technologists. 

Here are eight companies that have the potential to fill the void left by Patagonia based on conversations with those in the industry and the reporter's own personal experience.

Vineyard Vines

For many, this is a natural fit to replace Patagonia. Founded in tony Martha's Vineyard, Vineyard Vines is the male equivalent of Lily Pullitzer. The brand is also already the clothing of choice for many hedge funders during their weekend trips to the Hamptons. 

 



Helly Hansen

The Norwegian clothing company might be the perfect foreign substitute for Patagonia. With its wide range of cold-weather apparel, there's a good chance finance bros might already have some Helly Hansen tucked away in their ski houses. 

 



Arc'teryx

The Vancouver-based company has made big strides on the West Coast, which is home to most of the big tech companies that have their own twist on the 'Midtown Uniform' (jeans and a t-shirt instead of slacks and a button down).  However, one problem this pick might have is the fact finance bros seem unlikely to buy from a clothing company they'll struggle to pronounce.



See the rest of the story at Business Insider

Facebook is appointing Peggy Alford to be the first African-American woman on its board, as Netflix CEO Reed Hastings prepares to leave (AAPL, NFLX)

Fri, 04/12/2019 - 5:44pm

  • There are significant changes afoot on Facebook's board.
  • The company is nominating PayPal exec Peggy Alford for election to the board, and she will be the first African-American woman to serve as a director at Facebook.
  • Netflix CEO Reed Hastings and former White House official Erskine Bowles are leaving.

Facebook is shaking up its board of directors — nominating PayPal executive Peggy Alford, and preparing to part ways with the Netflix CEO Reed Hastings and former White House chief of staff Erskine Bowles.

On Friday, the Silicon Valley tech giant announced the news as it released its proxy statement ahead of its annual shareholder meeting on May 30. Alford will be the first African-American woman to join the company's board of directors, which has previously been criticised over its lack of diversity.

"What excites me about the opportunity to join Facebook’s board is the company’s drive and desire to face hard issues head-on while continuing to improve on the amazing connection experiences they have built over the years," she said in a statement. "I look forward to working with Mark and the other directors as the company builds new and inspiring ways to help people connect and build community."

The changes come as Facebook struggles to move past two years of damaging scandals, from Cambridge Analytica to the social network's role in spreading hate speech that fueled genocide in Myanmar. 

Bowles and Hastings will not stand for re-election at the annual shareholder meeting, the company said, bringing their time at the company to an end. The Netflix chief exec leaves as Facebook continues to push into video streaming, beefing up its video products and paying to stream original content on the platform. 

Bowles, who served in the Clinton White House, is the chair of the board's audit committee — the powers of which were boosted in mid-2018 amid Facebook's various crises. His role at Facebook was thrust into the spotlight by a major investigation in The New York Times published in November 2018, which reported that he lashed out at CEO Mark Zuckerberg and COO Sheryl Sandberg in 2017 about Russian activity on Facebook. 

"When the full board gathered later that day at a room at the company’s headquarters reserved for sensitive meetings, Mr. Bowles pelted questions at Facebook’s founder and second-in-command," the newspaper reported. "Ms. Sandberg, visibly unsettled, apologized. Mr. Zuckerberg, stone-faced, whirred through technical fixes."

Alford, payments firm PayPal's Senior VP of core markets, has previous ties to Zuckerberg: She was the the chief financial officer for the Chan Zuckerberg Initiative, the family's philanthropic vehicle, from September 2017 to February 2019.

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Millennials really love plants

Fri, 04/12/2019 - 4:38pm

If there's one thing millennials are keeping alive, it's plants.

"With many millennials delaying parenthood, plants have become the new pets, fulfilling a desire to connect to nature and the blossoming 'wellness' movement," Matthew Boyle for Bloomberg wrote. "For a group that embraces experiences and travel, moreover, plants give Gen-Yers something to care for that won't die — or soil the rug — when they're not around."

It's a trend that's popping up in the most millennial of ways — it's driven, Boyle said, by social media (just check out the hashtag, #plantsofinstagram) and sold by startups. Consider the Sill, which is catering to plants' latest consumers by selling online with slogans such as "Can't Kill It. Just Try.," according to Boyle.

Houseplant sales in the US have nearly doubled over the past three years to $1.7 billion, Boyle reported, citing data from the National Gardening Association. 

Plants are certainly a lucrative industry. Millennials are paying as much as $200 for some varieties, such as variegated Monsteras, and Monstera deliciosa seeds cost twice what they used to, according to Boyle. But millennials aren't just dropping big money on plants — they're cashing in on them, too, opening up their own small brick-and-mortar plant stores, he said.

Millennials' boosting of the plant industry stands in stark contrast to the many industries they've been wiping out, including food products such as napkins, beer, cereal, and yogurt; services such as banks and gyms; retail stores such as casual dining chains, home-improvement stores, and department stores; and sports such as football and golf, Business Insider's Kate Taylor reported.

And that's not to mention homeownership and the starter home, which millennials are also wiping out, largely because of a more expensive real-estate market.

Plants are thriving among millennials because they also tie into another industry: wellness. Millennials have been dubbed the "wellness generation" by Sanford Health, thanks to their increased spending on all things health and wellness, including gym memberships, weeklong retreats, spa treatments, and organic foods.

But, Boyle said, the booming plant business is also a product of millennials pushing off milestones until later in life.

A survey by The New York Times revealed that raising kids is more expensive than it's ever been before — finances are the main reason why people aren't having kids or are having fewer kids than the number they consider ideal, Business Insider's Shana Lebowitz reported. Plants, although costly, are still cheaper than kids.

SEE ALSO: Raising kids is so expensive in America that millennials are prioritizing their pets instead and dropping up to $400 on designer dog clothes

DON'T MISS: Millennials are pouring money into gym memberships and boutique fitness classes. A financial expert says spending on fitness is a good money decision for 2 key reasons.

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NOW WATCH: Physicists have discovered that rotating black holes might serve as portals for hyperspace travel

Here are the world's 10 largest M&A deals this year

Fri, 04/12/2019 - 4:06pm

Chevron on Friday agreed to acquire Anadarko Petroleum in a transaction valued at $47.5 billion, including equity and debt. Under the agreement, Chevron will acquire all of the outstanding shares of Anadarko for $65 a share — a 37% premium to Thursday's closing price. Anadarko shareholders will receive a mixture of cash and stock.

Chevron is the second-largest US energy company behind Exxon Mobil and the transaction will expand the company's capabilities in US shale oil and gas production. Many industry commentators have indicated consolidation in the fragmented sector is overdue, prompting speculation of further deal activity.

This year, 108 deals with a value of over $600 billion have been announced. North America was the most active region, however, Saudi Aramco's $61.9 billion purchase of Saudi Basic Industries was a notable transaction outside the region. Energy deals so far this year have topped $110 billion, including both the Anadarko and the Saudi Basic Industries transactions.

Here are 10 of the largest M&A deals so far this year in ascending order of their valuation size: 

Ultimate Software/Hellman & Friedman

Sector: High technology

Target name: Ultimate Software

Target nation: United States 

Acquirer name: An investor group led by Hellman & Friedman

Acquirer nation: United States 

Deal value net debt: $10.4 billion

Date Announced: February 4, 2019

 

Source: Bloomberg



Newmont Mining/Goldcorp

Sector: Materials

Target name: Goldcorp

Target nation: Canada

Acquirer name: Newmont Mining 

Acquirer nation: United States

Deal value net debt: $12.5 billion

Date Announced: January 14

 

Source: Bloomberg



Centene/Wellcare

Sector: Healthcare

Target name: Wellcare

Target nation: United States 

Acquirer name: Centene

Acquirer nation: United States 

Deal value net debt: $13.5 billion

Date Announced: March 27

 

Source: Bloomberg



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Hudson Yards, NYC's $25 billion neighborhood, was financed with more than $1 billion that was meant for 'distressed' urban areas. Here's a look inside the glitzy development.

Fri, 04/12/2019 - 3:36pm

  • Hudson Yards, NYC's new $25 billion neighborhood, was financed with at least $1 billion through EB-5, an investor visa program intended to combat urban poverty, according to a new report from CityLab.
  • As of March 15, the public can now visit the Vessel, a 150-foot tall, climbable sculpture in the center of Hudson Yards that cost $200 million to build.
  • The Shops and Restaurants at Hudson Yards, a luxury shopping center with stores like Louis Vuitton and Dior, are now open as well.
  • I got to spend the day at Hudson Yards for its grand opening. Here's what it looks like, from the $200 million climbable sculpture to the 7-story luxury shopping center.
  • Visit BusinessInsider.com for more stories.

Hudson Yards officially opened on March 15.

At $25 billion, it's the most expensive real-estate development in US history — but reporting from CityLab shows that it got more than $1.2 billion in financing from EB-5, an investor visa program intended to combat urban poverty.

"This program enables immigrants to secure visas in exchange for real estate investments," wrote Kriston Capps for CityLab.

"EB-5 is supposed to be a way to jumpstart investment in remote rural areas, or distressed urban ones," Capps continued. Because the Hudson Yards area does not qualify as a distressed urban area, he continued, The Related Companies — the developer behind Hudson Yards — managed to link the boundaries of Hudson Yards to Harlem, where the employment rate is, in parts, low enough to qualify as a distressed urban area.

"By utilizing the EB-5 program we were able to finance the critical infrastructure for the project, the platform, where traditional financing is all but non-existent in the post-recession, post Dodd-Frank marketplace," a spokesperson for Hudson Yards told Business Insider.

"This capital, which comes at no cost to the American taxpayers, was the catalyst for the Hudson Yards project and allowed us to immediately create thousands of jobs all over the city," the spokesperson continued.

The spokesperson claimed that Hudson Yards would provide "direct benefits to areas of high unemployment" despite being some 70 city blocks and nearly 5 miles from the southern end of Harlem, where the actual high unemployment exists.

The public can now visit the brand-new neighborhood on Manhattan's West Side, which includes luxurious residential towers, a luxury shopping center with stores like Louis Vuitton and Dior, and a $200 million, 150-foot tall climbable sculpture called the Vessel.

I went to the grand opening ceremony at Hudson Yards and spent the day there. Here's what it looks like.

SEE ALSO: The billionaire behind Hudson Yards, the most expensive real-estate development in US history, says it's 'not a neighborhood for the rich'

SEE ALSO: I got a tour of a $14 million penthouse in NYC's new $25 billion Hudson Yards neighborhood and found that it was perfectly designed to show off its best asset

Hudson Yards, New York City's $25 billion neighborhood, is officially open to the public. On March 15, I attended the grand opening ceremony in the central plaza.

To get there, you take the 7 train to the Hudson Yards stop, a new station that opened in 2015.

Source: Curbed



If you turn your back on the glossy new skyscrapers as you walk down the West Side Highway to Hudson Yards, you can see the remaining visible rail yards just across the street.

See the rest of the story at Business Insider


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