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TRANSFORMING USER EXPERIENCE IN BANKING: Here are the strategies winning financial institutions are using to deliver a superior user experience

Fri, 07/03/2020 - 4:00pm

As digital channels become a more critical part of the overall banking journey, banks' design teams need to strategize on how best to create user experiences (UX) that resonate with their customers.

A strong UX enables banks to deliver a simple, intuitive, and frictionless digital banking experience.  A superior UX can also help banks improve customer satisfaction and bring in new customers.

Offering a wide range of in-demand mobile banking features, for example, can satisfy existing customers and drive bank selection among new ones — but only if these features are designed and implemented well: JD Power found that customer satisfaction was negatively impacted across both online and mobile channels by the flood of complex and hard to understand features that are common in banking apps today, per an analysis from its 2019 customer satisfaction ratings. 

The risk of not delivering a solid UX strategy is high — slower-moving banks face the threat of fintechs and big tech firms that boast a great UX as their main competitive advantage. Fintechs' excellently designed apps are pleasing to the eye and simple to navigate.

Meanwhile, leading cross-industry players like Amazon and Google have long raised the bar for digital experiences within their core services — and as they venture into finance, they join fintechs in threatening legacy FIs' established market positions. Large financial institutions (FIs) are already focusing on UX design as they reshape their organizations by enhancing their digital channels, and smaller ones can learn best practices from these early movers to inform their own UX strategies.

In Transforming User Experience In Banking, Business Insider Intelligence looks at winning UX design strategies employed by leading banks to reveal how other FIs can best capture the UX opportunity. We conducted exclusive interviews with nine major FIs to examine their UX teams in detail, offer insight into their approach to designing UX, and illustrate winning strategies for delivering a superior UX.

Their strategies highlight the need to create multidisciplinary teams that place customers' needs and desires at the center of design initiatives, as well as the importance of utilizing a UX design methodology to deliver successful propositions in a timely manner.

The banks interviewed in the report are: Bank of America, BBVA USA, Capital One, DBS Bank, Goldman Sachs, HSBC, JP Morgan, Lloyds Banking Group, and U.S. Bank.

Here are a few key takeaways from the report:

  • FIs should put customers at the center of their design initiatives by involving them in all stages of the process to ensure maximum uptake of their UX initiatives. 
  • They should use an established UX design methodology — like Design Thinking or Double Diamond — to zero in on the best solutions to users' problems. 
  • FIs should create multidisciplinary design teams with a broad range of talent and expertise to develop meaningful experiences more efficiently. UX design teams should in turn collaborate with other teams and senior leaders to identify solutions that account for user demands, banks' business needs, and what is technologically feasible.
  • Although the majority of customer interactions are happening digitally, FIs shouldn't neglect physical channels when designing UX, as the customer experience often still involves these channels.
  • FIs need to find the right tools to measure the success of their UX initiatives to better link UX to business outcomes. 

In full, the report:

  • Identifies the UX oppportunity and provides an overview of popular UX design methodologies that can by deployed by banks.
  • Utilizes exclusive interviews with nine leading banks to show how different FIs structure UX teams, approach UX design processes, and measure UX to link it to business outcomes. 
  • Helps banks identify strengths and weaknesses in their own UX strategies by providing insights on winning strategies for designing a superior UX. 

Interested in getting the full report? Here's how to get access:

  1. Business Insider Intelligence analyzes the banks industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more. >> Check if your company has BII Enterprise membership access to the full report 
  2. Sign up for the Banking Briefing, Business Insider Intelligence's expert email newsletter tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. >> Get Started
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Billions of dollars of Las Vegas development hang in the balance right now, but the owner of Caesars Palace sees the city's crisis as an opportunity to imagine its next mega-project.

Fri, 07/03/2020 - 2:27pm

  • VICI Properties is arranging to buy 23 acres just east of the Las Vegas strip for roughly $100 million. 
  • Together with existing land holdings held by VICI, the purchase would allow the company to assemble 50 contiguous acres that could accommodate millions of square feet of mixed-use development, including housing, retail, hotel, and office space. 
  • Las Vegas has felt the impact of the Covid-19 crisis, which shuttered casinos for months and has stymied tourism and business travel and imperiled billions of dollars of new development in the city. 
  • VICI sees the land deal as a way to lay development plans for brighter economic times in the future when Las Vegas recovers from the crisis.  

The $17.3 billion merger of two casino giants could create Las Vegas's next mega-development.

VICI Properties, a public company spun off to hold the real estate assets of Caesars Entertainment three years ago, is planning to acquire 23-acres of land for roughly $100 million a block from Las Vegas Boulevard.

Combined with existing parcels held by VICI, the purchase will allow the company to assemble 50 contiguous acres that can potentially accommodate millions of square feet of new development.

"Over the decades, other builders have tried to extend the strip," Edward Pitoniak, VICI's chief executive, told Business Insider, using the local moniker for Las Vegas Boulevard. "We're intrigued with the opportunity."

Read More: Vacancy rates are soaring above 15% in Washington DC's normally recession-proof office market. Here's why some industry players are still optimistic.

The $103.5 million acquisition is an offshoot of the planned $17.3 billion merger deal between Caesars Entertainment and Eldorado Resorts, which just received consent from the Federal Trade Commission.

VICI is arranging to provide a $400 million mortgage with a hefty 7.7% interest rate against the recently-built 300,000 square foot Caesars Forum Convention Center and holds an option to purchase the building in 2025 and lease it back to the casino operator.

Eldorado, in turn, plans to sell VICI the additional acreage once it completes the merger with Caesars Entertainment. The mortgage and the land sale are contingent on one another.  The parcels are located just south of the new Caesars convention center and will nearly double VICI's land holdings east of the strip.

Because the land is not located along a designated gaming corridor, it is unlikely to be a site for new casino development. Instead, it could allow for millions of square feet of other mixed-use space, such as housing, hotel, office, and retail.

Las Vegas real estate development isn't for the faint of heart.

The financial crisis of a decade ago toppled mega-projects such as the Cosmopolitan, a $4 billion casino and resort that fell into the hands of its lender, Deutsche Bank, which oversaw its completion and then sold it at a loss to the Blackstone Group for $1.73 billion in 2014.

Wall Street tycoon Carl Icahn purchased the unfinished Fontainebleau resort on the north end of the strip for $150 million in 2010 after its developer declared bankruptcy. Icahn raked in profits by selling the 27-acre property in 2017 for $650 million.

Read More: Inside a 'big short' bet against malls: Investors like Carl Icahn are claiming wins, and a research analyst who said the wagers were misguided is out.

Billions of dollars of development that was undertaken during boom times in recent years now faces a dramatically different economy that is mired in a recession due to the Covid crisis, which has sharply diminished gaming revenue, tourism and business travel.

"Are the conditions ideal right now for new projects that are set to open? No," said Michael Parks, an executive vice president for CBRE's global gaming group. "But if there is a vaccine early next year, we're hopeful this is an unfortunate, short-term blip that Las Vegas will overcome."

Pitoniak said that development of the land site would likely be years in the future and take place during healthier economic conditions.

"A lot of value can ultimately be realized by the actions you take during a time of crisis," Pitoniak said. "There will come a point when the virus is under control and Vegas will reassert itself as one of the world's greatest destinations."

VICI was created in 2017 to take over the real estate assets of Caesars Entertainment after the casino company's Chapter 11 bankruptcy in 2015. The spinoff, whose market cap is now $11.5 billion, owns 32.5 million square feet of casino and retail space and 12,000 hotels rooms across the country. Its holdings include the major Las Vegas resorts Caesars Palace and Harrah's, both of which it leases to Caesars Entertainment. The merger deal between Eldorado and Caesars Entertainment will give VICI the right to purchase a third major resort along the strip, the LINQ, which is adjacent to Harrah's and is currently owned and operated by Caesars Entertainment.

VICI exclusively net leases its assets to casino operators, an arrangement in which its tenants not only pay rent, but cover the costs of maintaining the properties and other expenses that landlords are normally responsible for, such as property taxes.

Net leases are generally considered more secure than conventional lease arrangements and VICI has reported full rent collections in its portfolio through the pandemic so far.

"We have received 100% of the cash rent due from third party tenants through April, May, and June," Pitoniak said.

Analysts have predicted a stable outlook for the company despite the concentration of its holdings in a gaming market that has been upended by the virus crisis.

"We believe VICI's large tenants have sufficient liquidity to make their rent payments and that the company has engaged in various transactions that have enhanced its liquidity," said Melissa Long, a credit analyst at Standard & Poor's who covers the gaming sector. "There seems to be a healthy level of pent up demand for casinos as they reopen."

VICI could pursue a similar net lease structure for the development of the land it is assembling, which is located just east of the Harrah's and LINQ casinos, or opt to partner with a builder and participate more directly in envisioning what will be raised on the site.

"It's way too early to tell how the structure would work," Pitoniak said. "So much will be contingent who has the best vision for the parcel."

Pitoniak said that VICI expects to close on the land purchase by the end of the year. 

Wooing pedestrians away from the lights, activity and marquee names of the strip has been a daunting task. VICI believes its holdings on Las Vegas Boulevard could eventually allow it to draw in visitors and guide them east to the new development.

"If you were going to build Vegas all over again you would deck over the roads and make it into a huge pedestrian wandering experience," Pitoniak said. "For us, it's about creating apertures in that big wall of casinos along the strip that invite people in to discover something new."

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SEE ALSO: Vacancy rates are soaring above 15% in Washington DC's normally recession-proof office market. Here's why some industry players are still optimistic.

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LEAKED MEMO: Anthony Scaramucci mourns his relationship with $2.2 trillion Merrill Lynch after it downgraded SkyBridge's main fund

Fri, 07/03/2020 - 2:18pm

  • SkyBridge founder Anthony Scaramucci sent a strongly-worded memo to Andy Sieg, the president of Merrill Lynch Wealth Management, on Thursday after the company downgraded its fund of hedge funds. 
  • SkyBridge was hit with redemption requests after its fund suffered a 24.7% loss in March.
  • Scaramucci said Merrill Lynch erred in a recent due diligence report and that it inaccurately told its advisers that SkyBridge lied. 
  • Sign up here for our Wall Street Insider newsletter.

Anthony Scaramucci sent a strongly-worded letter to the president of Merrill Lynch Wealth Management on Thursday after the $2.2 trillion wealth manager recommended dumping SkyBridge Capital's fund of hedge funds. 

In Thursday's six-page letter to Andy Sieg reviewed by Business Insider, Scaramucci acknowledged his fund's performance suffered in March – it was down 24.7% after a big debt bet, which led to significant redemptions and staff changes under its two portfolio managers. But he highlighted that the fund had its best second quarter – up 6.49% – since 2012.

Credit-focused hedge funds took a big hit in March, on average down 23.2%, per Hedge Fund Research. The only worse-performing strategy in the volatile month were activist funds, which were down 25.3%. Data for the second quarter, which ended Tuesday, have not yet been released. 

In April, Citigroup cut ties with the firm, which could lead to clients pulling $100 million from SkyBridge, the Wall Street Journal reported. The story also said that Merrill Lynch had recently decided against making new investments in SkyBridge.  

With the recommendation to sell, Merrill Lynch's clients currently invested in SkyBridge could be next to exit the firm's Series G fund, its main product that's geared toward wealthy individuals. SkyBridge managed $9.3 billion as of March 30.

A spokeswoman for Merrill Lynch said: "We have full confidence in the rigor and expertise of our due diligence team. We have received the letter from SkyBridge and plan to respond to them directly."

Scaramucci and SkyBridge did not respond to requests for comment. 

"Yet another casualty of the pandemic"

Scaramucci said Merrill Lynch published an inaccurate due diligence report on June 26. These due diligence reports signal to its financial advisers how they should think about various investment strategies on behalf of their clients. 

Scaramucci called the firms' relationship "yet another casualty of the pandemic," writing that the report "reflects a breakdown in communication" between the firms – one he didn't think would happen if executives had met in person.

After the fund's disastrous March performance, SkyBridge sold some of its investments, including in EJF Capital and Hildene Capital Management, and invested in some of the industry's biggest funds: Canyon, Bridgewater, Point72, Renaissance, Brevan Howard, and Oaktree's Value Opportunities Fund.

Those changes shifted the fund from 81% credit on March 1 to 74% on July 1, with more distressed corporate credit and less structured credit. Scaramucci said that Merrill Lynch's report criticized the SkyBridge fund for moving away from a "highly-concentrated, thematic" strategy, which Scaramucci said is not true. 

His other complaints included issues with Merrill Lynch's assessment of the SkyBridge's due diligence, its secondary sales communication, and its Oaktree investment, among other issues.

Scaramucci also criticized Merrill Lynch for refusing to speak with him and another SkyBridge executive.

Scaramucci said Merrill Lynch staff have told financial advisors that SkyBridge lied in due diligence.

He said it felt like Merrill Lynch's due diligence team "spent the last three months playing 'gotcha' in search of a lie. They came up empty handed," he wrote. 

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SEE ALSO: Big-name credit funds like Canyon Partners, Angelo Gordon, and CQS got smacked in March, but some specialized credit investors are set to rake in cash as the chaos presents big opportunities

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Facebook's stock price has had a rollercoaster year driven by an ad boycott, censorship controversies, and blockbuster results. Here are its biggest moves in 2020.

Fri, 07/03/2020 - 11:02am

  • Facebook shares are seeing a steady fall as more advertising brands join a boycott movement against the social-media giant.
  • The tech giant was one among the big few to perform comparatively well despite the storm of the pandemic, but its stock now tells us a different story.
  • Markets Insider rounded up some of Facebook's big stock moves so far this year.
  • Visit Business Insider's homepage for more stories.

As the poster child of Silicon Valley success, Facebook is very rarely a company that avoids the limelight, and 2020 has been no different.

In recent weeks, hundreds of brands have boycotted advertisement collaborations on the social-media platform over its refusal to censor or remove offensive posts by President Trump about protests in the wake of George Floyd's death at the hands of police in Minneapolis.

In a prominent example of one such post, Trump wrote in reference to protests in Minneapolis that "when the looting starts, the shooting starts."

Responding to Zuckerberg's inaction, over 400 brands including Coca-Cola, Starbucks, Unilever, Verizon, Ford, Ben & Jerry's, and The North Face halted their paid advertising on Facebook — some of them just for the month of July.

Facebook shares slid 8.3% last week as advertisers were joining the boycott against the platform.  

That move, however, was not the only big shift in the company's stock price this year.

Markets Insider rounded up big stock moves for the company so far in 2020.

SEE ALSO: A handful of multi-strategy hedge funds posted huge gains in the first half this year, bucking the industry's trend of underperformance

March 9: The pandemic strikes and hits the company's share price

On March 9, Facebook shares fell as much as 8.8% likely driven by a sharp plunge in the overall market from uncertainty related to the coronavirus.

Aside from that, a brewing oil price war between Saudi Arabia and Russia meant that demand for its advertising products could diminish significantly.



March 24: Advertising dwindles but Facebook sees a huge spike in platform activity

On March 24, Facebook said it had seen large spikes in activity across messaging and Facebook news feeds, but also said: "We don't monetize many of the services where we're seeing increased engagement, and we've seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19."

The company declined to say how much its revenue would be hurt.

Facebook's shares dropped as much as 13.3%.

 

 



April 29: Shrugging off coronavirus to report 'stability' in ad revenue

On April 29, Facebook's stock soared as much as 16% after the company reported its first-quarter earnings.

Despite a "significant reduction" in demand for ads, its revenue rose 26% year-on-year to about $15 billion. Its digital ads market took a major hit in light of the coronavirus pandemic. The company said it would not provide full-year guidance.

Facebook's role in connecting people became even more notable this year and was one of the companies able to withstand early losses amid the pandemic.



May 20: Facebook's new e-commerce feature: Shops

On May 20, the company's shares reached an all-time high of $230.75 rising as much as 6.4% after it announced its new e-commerce feature, Facebook Shops.  

Adding more to its plate, the firm said its new feature on both Facebook and Instagram would act as shopfronts for businesses to list their goods.

Facebook was known to operate as a purely advertising-focused business, but the new e-commerce feature boosts its ability to compete with other established online shopping platforms like Amazon, eBay, and Etsy.

 

 



May 30: Facebook employee outrage over Trump's George Floyd post

On May 30, CEO Mark Zuckerberg wrote in a post that the social media platform would not take down President Trump's post about the George Floyd protests taking place in Minneapolis as it was "warning about the possibility that looting could lead to violence."

About 400 employees staged a virtual walkout in reaction, and at least one employee resigned in protest. Zuckerberg had told Trump that the post put Facebook in a difficult position. 

At this stage, shares of the company saw major turbulence. 



June 26: Facebook ad boycott by over 400 brands

On June 26, Facebook's shares fell 8% as multiple advertisers announced boycotts of the social network.

Over 400 brands including Starbucks, PepsiCo, Coca-Cola, Diageo, Unilever, and Verizon all halted advertising on the platform as they called on the company to do more to combat the spread of misinformation and hate speech on the platform.  

In a statement, the vice president of Facebook's global business group said: "We deeply respect any brand's decision and remain focused on the important work of removing hate speech and providing critical voting information. Our conversations with marketers and civil rights organizations are about how, together, we can be a force for good." 



Meet Material Bank, a Bain-backed logistics startup disrupting the architecture industry. Here's a look at its vision for becoming the Amazon of design.

Fri, 07/03/2020 - 10:00am

  • Material Bank is a marketplace for design materials that promises to ship design samples overnight from its Memphis, Tennessee, warehouse.
  • The company raised $28 million in April in a round led by Bain Capital Venture that also included funding from Starwood's Barry Sternlicht.
  • CEO Adam Sandow said its customers are of Fortune 1000 companies, from cruise lines to tech companies to fast-food chains. 
  • The company's secret is its warehouse, operated by robots, and directly next to FedEx's global shipping hub, enabling last-minute overnight orders.
  • Visit Business Insider's homepage for more stories.

Amazon's famous two-day shipping guarantee for all of its Prime members is in the process of becoming a one day guarantee, prompting the company to spend billions on the goal. It has taken Amazon more than 20 years to get to that point.

But Material Bank, a marketplace for design and construction materials that launched in 2019, is able to promise deliveries for packages ordered as late as midnight by 10:30 am the next day. 

While Amazon's delivery empire has grown out of the company's extensive investments in industrial real estate and army of logistics and warehouse workers, Material Bank instead partnered with FedEx and planted its warehouse in Memphis, Tennessee right next to FedEx's global sorting hub to provide speedy delivery. 

The company, founded by design media magnate Adam Sandow, secured $28 million Series B funding in April in a round led by Bain Capital Venture's Merritt Hummer, and includes previous investors Raine Ventures and Starwood Capital CEO and cofounder Barry Sternlicht. Material Bank has raised a total of $55 million in funding to date. 

These investors are betting that the design and construction material industry is waiting for the sort of e-commerce revolution that has changed the face of consumer retail. According to Material Bank, the bet is paying off, Sandow said that the company already has customers at almost 20% of Fortune 1000 companies, from cruise lines to tech companies to fast-food chains. 

Business Insider spoke with Sandow about why he switched from media to logistics, how the company is able to deliver so quickly, and why the pandemic has been good for business, even as some construction projects have stalled. 

" I want to set the bar for our industry in the same way that Amazon set the bar for e-commerce," Sandow told Business Insider. "Amazon forced the entire world to either adopt it or be roadkill."

Read more: A Bain Capital Ventures partner says construction tech is hot and short-term-rental startups are overhyped

The move from media to logistics

Sandow founded his parent company SANDOW in 2003. The company has now grown to include a design consulting firm, the NYCxDESIGN conference and multiple magazines, like Interior Design.

Sandow, always looking to expand, said that Material Bank was formed out of a range of conversations with both design firms and the manufacturers of design materials. His animating question was simple.

"How do we build next generation services, tools, and services that the industry will live on, and how do we leverage our media to grow that?" Sandow told Business Insider.

Sandow decided to focus on the design materials industry. Designers searching for materials for samples to show their clients, and then order in bulk, would either need to reach out directly to multiple manufacturers or go to a physical location to see samples. Materials could take weeks to arrive, substantially lengthening the design and building process.

Sandow's idea was to create a marketplace that could bring together all of these disparate manufacturers and send materials directly to designers much more quickly than the status quo. Sandow told Business Insider that this would have been almost impossible to pull off if it wasn't for the connections his media company had made. 

"Anytime you start a marketplace, you have a chicken or the egg problem," Sandow said. 

The manufacturers will only join a marketplace if they know that there are potential customers already using the site, while potential customers will only use the site if there is a wide range of materials to purchase. 

Sandow said that the company's contacts helped convince manufacturers to join the marketplace before it even launched. 

How to ship tile overnight

While the company has attracted clients with an unprecedented aggregation of design materials, it is making its biggest bounds in logistics. 

The company's operations are based out of a warehouse that borders FedEx's central sorting hub at the Memphis International Airport. FedEx flies almost all of its planes through the hub, sending packages around the country.

For a company looking for next-level shipping speeds without an Amazon-sized shipping empire, there's no better spot. Sandow said that the company formed a partnership with FedEx early on by explaining that it was working to "build a game-changing business on your logistics backbone." 

Read more: Bond, which has raised $15 million from investors including Lightspeed, wants to become the Shopify of logistics by turning vacant retail space into warehouses

The factory itself is largely operated by robots, from Boston-based Locus Robotics, who do the majority of sorting and packing, which Sandow said has prevented the errors that can plague a logistics operation and made its super-fast delivery possible. Sandow said this has allowed the company to pay its warehouse staff $17.50 an hour in a state where the minimum wage is a mere $7.25.

The company ships samples in proprietary packaging that designers can use to return any unused samples for free.

The company receives orders up until midnight for delivery at 10:30 am the next day. Once the last order comes in at midnight, the company has 2 hours to fully pack up all orders and load them into a truck. Around 2:00 am, the truck drives a few minutes directly to the FedEx hub, where the packages are then loaded onto planes making overnight deliveries. FedEx then delivers the product later that morning.

Funding during a pandemic

Sandow said that the company began to search for more funding in January, when the full reality of the pandemic's impact was not yet realized. At the time, Sandow said that the company received a lot of inbound interest from VC firms who wanted a piece, but they chose Bain because of their clarity of vision for the product. 

Part of that clarity was seeing how Material Bank could "carry the industry through the pandemic and beyond." 

Material Bank was useful for both manufacturers and designers affected by the pandemic. For manufacturers, they could cut back on their fixed logistics and shipping costs by working with Material Bank, who instead makes money per each item sold. It also prevented them from having to deal with the headache of shipping materials during a global pandemic. 

For designers working from home, the company made it possible to continue designing and sampling materials from the kitchen table, instead of their corporate office. These designers could access Material Bank's full catalogue remotely, and by the next day, they could hold the tile or carpet in their hands, while retail showrooms remained closed. 

Sandow said that as a result, the company has seen record revenues each month since February. 

Read more: 

SEE ALSO: Bond, which has raised $15 million from investors including Lightspeed, wants to become the Shopify of logistics by turning vacant retail space into warehouses

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SEE ALSO: A Bain Capital Ventures partner says construction tech is hot and short-term-rental startups are overhyped

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These 6 charts from the June jobs report show how much the economy has recovered — and how much further it has to go

Fri, 07/03/2020 - 9:59am

  • The June jobs report released Thursday from the Bureau of Labor Statistics showed that the economy added 4.8 million payrolls during the month, and that the unemployment rate declined to 11.1%.
  • It marks the second month in a row that the nonfarm payrolls report has exceeded expectations. 
  • Here are six charts that show how much the US labor market has rebounded so far in the pandemic recession recovery, and how much further there is to go before reaching pre-crisis levels. 
  • Visit Business Insider's homepage for more stories.

The labor market recovery continued in June as states across the US reopened their economies following coronavirus-pandemic lockdowns earlier in the year. 

The report released Thursday from the labor department showed that the economy added 4.8 million jobs during the month, and that the unemployment rate declined to 11.1% from 13.3% in May.

The June report also marks the second month in a row that nonfarm payrolls have exceeded economists' expectations, showing just how swiftly the US economy has recovered since starting the reopening process. Economists had expected 3 million jobs added, and the unemployment rate to decline to 12.5% in June. 

In May, economists expecting a dismal report were shocked when the US added a revised 2.7 million jobs, and saw the unemployment rate declined to 13.3% from 14.7%. 

"The bounce is impressive and welcome but there is a long road ahead to restore all the jobs that were lost in this recession," Bank of America economists led by Michelle Meyer wrote in a Thursday note. 

President Donald Trump cheered the results in a Thursday press conference, saying "today's announcement proves that our economy is roaring back, it's coming back extremely strong," adding that there are some places where "we are putting out the flames." 

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US stocks went higher after the report, with all three major indexes posting gains. 

While the report shows that the economic recovery from the pandemic recession progressed in June, there is still a long way to go before the labor market is at pre-crisis levels. Even though the US economy has added 7.5 million jobs in the last two months, it still has to add about 15 million more to break even from coronavirus pandemic losses. 

And, there could be trouble ahead — the June report reflects only the first half of the month, before spiking coronavirus cases led more than 20 states and cities to either rollback or pause reopening plans. 

"June is a tale of two cities," Becky Frankiewicz, ManpowerGroup North America president, told Business Insider.

"The first few weeks of June were strong, continuing a nice optimistic trend, and the last two weeks really slowed," she said, adding that the pullback was likely due to hiring slowing in states that rolled back or paused reopening efforts. 

And, while jobs were added, elevated layoffs persist. In a report released simultaneously on Thursday, the Labor Department showed that 1.4 million Americans filed for unemployment insurance last week. 

Read more: A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger

For the full impact of paused plans, re-instated restrictions, and continued layoffs, economists and industry watchers will have to wait for the July report, due in August. 

Here are six charts from the June jobs report that show how much progress the US labor market has made so far, and how much further there is left to go before there's a full recovery. 

1. The US economy added a record 4.8 million jobs in June, following a revised 2.7 million jobs added in May.

The second month of record job gains came mostly from payrolls added in leisure and hospitality, which gained 2.1 million jobs in June.

Employment also jumped by 740,00 in retail trade and 568,000 in education and health services during the month. Manufacturing, transportation, and construction all added jobs in June.

Still, it's important to remember that in all industries, employment remains far below pre-crisis levels. For example, while food services and drinking places (part of leisure and hospitality) added 1.5 million jobs in June after a similar addition in May, it remains 3.1 million payrolls below its February level. 

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2. The unemployment rate also ticked down slightly to 11.1% from 13.3% a month earlier.

In addition, the misclassification error, which had likely weighed down the unemployment rate in previous months, "declined considerably in June," the BLS wrote in the report. 

The error was that a large number of people were being classified as employed but absent from work for "other reasons," when they should probably have been counted as unemployed on temporary layoff.

In June, if all workers had been counted correctly, the unemployment rate would have been one percentage point higher, but still down from the previous month. 

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3. A broader measure of unemployment, called the underemployment rate, or U-6, also declined in June.

The underemployment rate includes workers who say they want a job but haven't been actively looking for one, and people who are working part-time but want a full-time job.

In June, the U-6 rate declined to a seasonally adjusted 18% from from 21.7% in May. Still, its the third month in a row that the rate has remained elevated near 20%. 

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4. The labor force participation rate, or the share of Americans either working or looking for a job, increased for the second month in a row.

As people went back to work in June, the labor force participation rate ticked up. In addition, reentrants to the workforce, meaning people who previously worked but were not in the labor force prior to beginning a job search, increased by 711,000 to 2.4 million in June. 

Still, labor force participation is much lower than it was pre-pandemic, as millions of Americans remain on the sidelines. 

Read more: GOLDMAN SACHS: Buy these 15 super-cheap stocks now before their prices catch up to their strong growth and earnings prospects



5. The employment-to-population ratio also increased as people went back to work.

The employment-to-population ratio, which measures the percentage of the population that is currently working, rose to 54.6% in June from 52.8% in May.

Still, the ratio remains well below its pre-pandemic level of 61.2% in February. 

Read more: Goldman Sachs has formulated a strategy that could triple the market's return within a year as volatility remains higher than normal — including 11 new stock picks for the months ahead



6. Although unemployment declined overall, the rate increased for Black men in June. Minority workers and women also continue to see joblessness at higher rates than whites and men.

While headline unemployment ticked down in June, minorities and women still have higher rates of joblessness than white workers and men. 

In June, the unemployment rate fell to 10.2% for men and 11.2% for women. The white unemployment rate declined to 10.1%, the Black unemployment rate fell to 15.4%, and the Hispanic rate was 14.5%. The unemployment rate for Asians was 13.8%, little changed from May. 

There was one outlier in the report — the unemployment rate for Black men increased to 16.3% in June, and is now at the pandemic-recession high. 

While it's not immediately clear what led to the increase for Black men, it could be due to the "last hired, first fired" trend, Olugbenga Ajilore, senior economist at the Center for American Progress, told Business Insider. 

He also noted the unemployment overall is highly elevated, and that the only group that doesn't have a double-digit unemployment rate is white men. "We shouldn't get used to double-digit unemployment rates," said Ajilore. 



'Capital markets are not free': Billionaire investor Ray Dalio says the Fed is boosting asset prices, valuation metrics don't apply, and the US dollar is at risk

Fri, 07/03/2020 - 9:54am

  • Billionaire hedge-fund manager Ray Dalio said the Federal Reserve is boosting markets, conventional valuation metrics don't apply anymore, and the US dollar could lose its appeal in a Bloomberg interview on Thursday.
  • "The capital markets are not free markets allocating resources in the traditional ways," the Bridgewater Associates co-chief said.
  • Dalio also predicted that central banks' balance sheets will "explode," but argued the Fed needed to take sweeping measures because "the whole economy is systemically important."
  • Visit Business Insider's homepage for more stories.

Billionaire investor Ray Dalio warned that the Federal Reserve is artificially inflating markets, normal valuation metrics no longer apply, and the US dollar risks being displaced as the world's reserve currency in a Bloomberg interview on Thursday.

"The capital markets are not free markets allocating resources in the traditional ways," said the co-chief of Bridgewater Associates, the world's largest hedge fund with $138 billion in assets at last count.

"The economy and the markets are driven by the central banks in coordination with the central government," Dalio continued.

The Fed has spent trillions of dollars on bonds and other assets to boost liquidity in financial markets and prevent companies from collapsing during the coronavirus pandemic.

Dalio defended the central bank's unprecedented actions. He argued more sweeping measures were justified compared to the 2008 financial crisis, when it focused on shoring up the financial sector.

"The whole economy is systemically important," he said. "If they didn't go out and lend to companies ... we would lose large parts of our economy."

Read more: GOLDMAN SACHS: Buy these 13 stocks that are poised to crush the market within the next 2 weeks as earnings season gets underway

However, Dalio cautioned that actions on that scale have consequences.

"You are going to see central banks' balance sheets explode," he said.

Moreover, the flood of cash into markets has detached them from the real economy, meaning valuations no longer reflect fundamentals, Dalio said.

Investors might feel "sticker shock" when they see price-to-earnings ratios north of 40, but those are "no less implausible than zero interest rates," he continued.

"Multiples shouldn't be used in the traditional way of a frame of reference," he added.

Read more: A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger

Dollars could lose their appeal

Dalio, who famously said "cash is trash" in January, doubled down on that stance during the Bloomberg interview.

He argued that investors should avoid cash and bonds because rock-bottom interest rates mean they offer no returns, or even negative real returns after taxes are paid. There's been a shift towards "storeholds of wealth" such as gold and equities as a result, he said.

The Bridgewater boss also described the limits to the Fed's current interventions. If a compelling alternative to the dollar emerges, investors will pile into it and dump bonds offering no return, he said.

"That would be terrible for the United States," Dalio continued. "It would be probably the biggest disruptor not only to the markets but to the whole world geopolitical system."

The outflow of money would force the central bank to buy even more bonds or raise interest rates, he continued.

Hiking rates might not be possible as it would push down asset prices, he added, and potentially spark a wave of defaults due to the high levels of debt in the economy.

Read more: The most accurate tech analyst on Wall Street says these 6 stocks have potential for huge gains as they transform the sector

Join the conversation about this story »

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From warehouses to office space, real-estate markets are being turned upside down. These are the winners and losers.

Fri, 07/03/2020 - 9:52am

  • Offices, hotels, and malls were emptied by the coronavirus. While some are reopening, the disruption has created a new normal. 
  • Big firms are rethinking office needs — and some commercial real-estate deals are being put on ice.
  • A surge in e-commerce, meanwhile, is fueling demand for warehouse space from companies like Amazon. 
  • Click here for more BI Prime stories.

The coronavirus threw the real-estate world into disarray, as people empty out of offices, hotels, and malls and work from their homes. The spread of the virus and the economic disruptions that followed are transforming how people and companies finance, operate, and occupy real estate. 

Big firms are rethinking office needs — and some commercial real-estate deals are being put on ice. A surge in e-commerce, meanwhile, is fueling demand for warehouse space at companies look for new ways to reach customers.

We've also been tracking a slew of layoffs in the venture-backed real estate world, as empty short-term rentals and coworking spaces have hit once-buzzy industries hard.

Here's the latest news on how commercial and residential real estate is being upended, and how experts think these markets will play out in the long run. 

Have a tip about layoffs or major changes in this space? Contact this reporter through the secure messaging app Signal at +1 (646) 768-4772 using a non-work phone, email at anicoll@businessinsider.com, or Twitter DM at @AlexONicoll. You can also contact Business Insider securely via SecureDrop.

Here's everything we know right now: 

Latest news Warehouse space is heating up Office sublease deals adding supply to the market Retail and commercial real estate State of the commercial real estate market Coworking and short-term rentals The future of real estate Layoffs, pay cuts, and furloughs

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JPMorgan volatility traders raked in $700 million through June — 3 times what they brought in for all of 2019. Here's how they outpaced Goldman Sachs and Morgan Stanley on the hottest trade of the year.

Fri, 07/03/2020 - 9:19am

  • Markets have produced bizarre and historic results in the first half of 2020, creating stark swings and diverging fortunes for traders.
  • That's especially true in the world of equity derivatives and the traders that bet on volatility, where some investment funds have flamed out spectacularly while many Wall Street banks have minted hundreds of millions in revenues.
  • JPMorgan Chase's flow volatility team has racked up $700 million in the first half of the year — nearly three times what it brought in last year, sources told BI.
  • A trio of French banks, on the other hand, absorbed $1.5 billion in losses earlier this spring when structured derivatives tied to corporate derivatives went up in smoke. 
  • Overall trading numbers in Q2 are expected to come in strong compared with 2019 — KBW is predicting a 15% increase year-over-year in stock trading across the big-5 US banks.
  • Visit Business Insider's homepage for more stories.

This week marked the end of the first half of the fiscal year for most banks. For one equities-trading desk at JPMorgan Chase, they've already eclipsed their revenue haul for the entirety of 2019 — nearly three times over. 

The market convulsions amid the COVID-19 pandemic have produced bizarre and historic results, and created stark swings and diverging fortunes. There is perhaps no clearer example of it than the world of equity derivatives and the traders that bet on volatility. 

In aggregate, performance is expected to suffer at Wall Street banks as the economy struggles to right itself in the face of the coronavirus — KBW is predicting earnings to fall 25% year-over-year at the median universal bank in the second quarter.

But sales and trading desks have provided a robust buffer against declining interest income and loan loss reserves.

Big banks, by and large, have seen stunning results from their derivatives squads, especially the flow derivatives teams — which specialize in complex directional trades betting how much stocks, indexes, or other macro products will move — that have been in the trenches amid record surges of volatility. 

None moreso than JPMorgan. The firm in the first quarter eclipsed $1.1 billion in equity derivatives revenues, on par with what it made in all of 2019, with a little less than half of the tally coming from its flow derivatives traders, according to people familiar with the numbers. 

Though the shocks have been mild by comparison to those of March, volatility in the second quarter has remained elevated, and JPMorgan's equity derivatives number is expected to land at around $1.3 billion for the first two quarters. The global flow team will finish the first half of 2020 with more than $700 million in revenues, nearly three times as much as the roughly $250 million the group earned in all of 2019, the sources said. 

Other banks posted monster equity derivatives numbers in the first quarter as well, with several eclipsing $200 million from their flow desks. Globally, flow derivatives trading was up 200% in the quarter across the banks.

But even as volatility calmed, JPMorgan continued to press its lead in the second quarter, and there isn't a runner up in flow derivatives — Goldman Sachs and Morgan Stanley have dominated the space in recent years and are said to be next in line — within $100 million of first place, the sources said.

JPMorgan, Goldman Sachs, and Morgan Stanley declined to comment. 

Diverging fortunes

But volatility trades that have minted fortunes for banks have upended investment funds that took the opposite side and bet the cards would fall differently.  

During the meltdown in February and March, financial assets across stocks, bonds, currencies, and commodities hit watermarks, either in terms of how far or how fast they plunged. 

For instance, the CBOE Volatility Index, known as the VIX, swung violently and set multiple records — the two largest ever single-day VIX spikes came in mid-March, and the 82.69 close on March 16 is the highest ever.

As Business Insider reported in March, some flow derivatives desks had put on protection trades that provide a substantial but usually long-shot payoff if intense volatility strikes. 

Investment funds that took the opposite side of those trades, collecting small premiums to insure the banks against massive losses, ended up in a world of pain.

In an autopsy of the carnage, Institutional Investor last week detailed how in one type of trade, Wall Street banks paid funds to effectively cover unlimited losses in the event of a severe market crash — in part to unload risk from their books and pass muster with regulators — which counterparties were happy to do since they presumed the contract would never pay out. 

The result: Malachite Capital, Ronin Capital, Parplus Partners, and Allianz's Structured Alpha hedge funds were wiped out, while Canadian public fund AIMCo lost more than $1.5 billion and the Canada Pension Plan Investment Board was burned to the tune of $515 million. 

Stock-trading results have been mixed this year at the banks, too, even within product subsets.

In the first quarter, equities revenues at the 12 largest banks increased just 3% from last year to $11.2 billion, despite the substantial increase in trading activity and strong showing in flow derivatives, according to a quarterly report from Coalition. 

That's in part due to weaker prime brokerage performance as hedge funds took hits, but also because while volatility was spurring some desks, other banks "reported significant write downs" thanks to structured derivatives products that went awry, according to the report. 

Those writedowns are alluding to losses at French banks BNP Paribas, Societe Generale, and Natixis, which saw complex equity derivatives tied to shareholder returns go up in smoke after an unexpected and "sudden cut in corporate dividends," S&P Global said in a report last week. 

That erased around $1.5 billion in revenues between the three firms, according to a report from Bloomberg.

Read more: Inside Wall Street's coronavirus-fueled trading frenzy, where historic shocks of volatility are creating massive paydays

Echoes of 2018

The last time banks made such eye-popping trades from their volatility desks was during the VIX spike back in February 2018. Prior to the frenzy earlier this year, the 116% rise in the VIX on February 5, 2018 — which followed a long stretch of unprecedented market calm — was the largest single-day increase on record.

The flow derivatives teams at Wall Street banks raked in hundreds of millions in the process. That year, Goldman Sachs led the field with about $650 million, followed by Morgan Stanley with about $550 million, according to sources familiar with the numbers. 

In the aftermath, a poaching war ensued, and many of the standout traders cashed in their chips that spring and summer for promotions and raises at other firms, resulting in dozens of seat changes. 

At JPMorgan, global volatility trading is now run by Rachid Alaoui, a 15-year company veteran who took over the role after Fater Belbachir left for Barclays in early 2019.

Other roles have turned over since 2018 as well. Senior US flow traders David Kim and Seok Yoon Jeon decamped for Bank of America and Citigroup, respectively, amid the hiring frenzy in 2018. 

That summer, JPMorgan in turn poached Borzu Masoudi — who was instrumental in Goldman's $200 million trading day during the February VIX spike — to run volatility trading in the US, where much of JPMorgan's derivatives trading gains have come this year.

As markets recovered in April and May of this year, volatility fell from the meteoric heights seen in March but remained at historically elevated levels. Overall trading numbers are expected to be strong compared with 2019 — KBW is predicting a 15% increase year-over-year in stock trading across the big-5 US banks — but equities revenues are expected to fall about 14% compared with the first quarter. 

Very little has been predictable about 2020, and with coronavirus cases on the rise again in the US, it's unclear how the economy and markets might respond in the second half of the year.

The record numbers produced by derivatives traders at Wall Street banks could still significantly increase — or decrease — if conditions devolve and American businesses suffer deeper losses, sending more sudden jolts of volatility into the markets. 

Read more:

SEE ALSO: 'I've never seen it like this in 10 years': How the VIX blow-up led to a talent raid on Wall Street trading floors

SEE ALSO: Inside Wall Street's coronavirus-fueled trading frenzy, where historic shocks of volatility are creating massive paydays

SEE ALSO: Barclays made $250 million in one day of trading last week as banks raked in money on market volatility

Join the conversation about this story »

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Commercial real-estate hiring is heating back up. From strategy-focused exec jobs to the red-hot industrial space, 4 recruiters lay out roles they're trying to fill.

Fri, 07/03/2020 - 8:53am

  • After a pause at the beginning of the pandemic, the commercial real-estate job market is heating back up.
  • We spoke to four recruiters about opportunities and how the search for talent has changed. 
  • Commercial real estate companies are on the lookout for executives to oversee investment strategies in new asset classes, or to grow already existing businesses. 
  •  There's also demand for jobs in the industrial space, which has remained resilient during the pandemic. 
  • Sign up here for our Wall Street Insider newsletter.

In the early days of the coronavirus crisis, the real-estate job market slammed to a halt. 

Richard Birgel, president and owner at Real Estate Executive Search, said that 16 of the 20 roles his firm was working on went on a hiatus, while Jodi Shaw, who runs her own real-estate recruiting firm J. Shaw Enterprises, said that all but one open role was paused.

The job market has partially recovered since then, as firms' initial shock has worn off and they turn to make preparations for the future. Firms have also found ways to meet with candidates in person, even if they're atypical locations like public parks. 

Business Insider spoke to four real-estate recruiters about the state of the real estate job market and where hiring is picking back up.

They said that while demand is clearly higher for companies that work in businesses that have been buoyed by the pandemic, like industrial, they continue to fill roles in industries like retail that have been hit hard. They also said that they're seeing increased demand at the executive level for more strategic roles a sign that organizations are using the coronavirus as an opportunity to transform their whole organizations. 

Which commercial-real estate firms are hiring? 

Employers who have a long-term vision and a balance sheet to support it have used the pandemic as an opportunity to make strategic changes to their business earlier than expected. 

"COVID was not the reason that a firm was out in the market, but it certainly was a catalyst to push forward an initiative that was part of the strategy pre-COVID," Andrew Fein, a principal at executive search firm Heidrick & Struggles, told Business Insider.

He is working on a "half-dozen" roles like this for real estate firms. Fein said these clients are mostly private-equity real estate groups that work in asset types like senior housing, retail, and manufactured housing, but also include a real estate services firm. 

Read more: Big investors poured billions into student housing — thinking it was a recession-proof bet. Then the pandemic emptied campuses and turned that thesis on its head.

These companies are looking for hires who will help them create new investment strategies in new asset classes, or to grow already existing businesses.

While the job market may be tough for areas like retail and hospitality, commercial real estate companies who are well-capitalized may actually be viewing their asset class's challenge as an opportunity. 

"Some people might see the advantage in the market being at a lower rate and they can buy now," Shaw said. Shaw placed a candidate for an acquisitions role with a focus on class A office buildings, even as remote work and the challenges of returning to the office have made some doubt the future for the sector.

Other areas, especially industrial real estate, have seen a surge in demand during the pandemic, and firms are now looking for staff to support that growth. 

"Industries that are buoyed by the market, like industrial, where if anything, they've seen valuations increase, they feel like they're in a good position to grow." Fein said.

Read more: Amazon just signed its largest-ever warehouse lease in NYC. Here's how it's been making deals left and right to grow its massive storage and distribution network.

However, the challenge of remote onboarding may also prevent those who are looking to hire from actually doing so.

"Industrial been busy throughout, but one of my industrial clients put their searches on hold because onboarding people virtually is so much harder," Shaw said.  

Generally, transaction-oriented roles like brokers and analysts have taken a hit. Recessionary periods generally lead to major slowdowns in real estate transactions, and the current crisis also makes in-person tours somewhere between hard and impossible, slowing things down even more. 

Justin Zale, a principal at executive search firm Egon Zehnder, told Business Insider that this slowdown in transactions has led to layoffs and a tightening of the job market for those sorts of roles.

JLL reportedly laid off around 30 members of its capital markets team, but nothing has yet approached the mass layoffs in the sector seen in 2008. 

Fein, who was recruiting in real-estate during 2008, said that some of this has to do with the rise of alternative real estate financing outside of banks after the crisis. Alternative funders, who have drastically risen in influence and size as banks' tightened their lending practices, have found ways to grow without hiring people.

"They realized they needed to just do bigger deals and then they didn't have to do two-times the number of deals," Fein said. 

As a result, Fein said, real estate investment is already a lean industry, without many places to cut back. While there may not be a surge in hiring of new professionals, he doesn't foresee major layoffs. 

Read more: Meet the 4 dealmakers driving Blackstone's $325 billion commercial real estate portfolio. They walked us through how they're thinking about opportunities in the downturn.

How are firms recruiting remotely?

While recruiting continues, the pace has slowed.

"The whole process was stretched out significantly longer than normal to keep engagement consistent with candidates, Fein said.

While virtual interviews and recruiting has taken off in other industries during the pandemic, the real estate world still has a strong preference for in-person meetings. 

"People get into real estate because it's tangible, so people in real estate have a hard time conducting the process without meeting someone in person," Fein said. 

Clients who would usually interview many candidates in-person at their offices now meet only the finalists or late-stage candidates, trading the boardroom for a park or an outdoor restaurant. Shaw said that she had met one candidate in their backyard.

But never seeing the person face-to-face is not a deal-breaker for everyone. Birgel said that he actually was able to hire someone in North Carolina for a remote role at a Chicago-based private-equity company.

SEE ALSO: Amazon just signed its largest-ever warehouse lease in NYC. Here's how it's been making deals left and right to grow its massive storage and distribution network.

SEE ALSO: Companies from banks to tech giants are looking to shed huge chunks of office space. Here's a look at 8 key sublease offers — and what they mean for rents in big-city markets.

SEE ALSO: Here's how to land a spot in real-estate giant CBRE's ultra-competitive sales internship program that's harder to get into than Harvard

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10 things you need to know in markets today

Fri, 07/03/2020 - 8:10am

US markets are closed to celebrate the Fourth of July. Here's what you need to know in global markets today.

1. Chinese stocks hit their highest level in 5 years, while Europe looks for direction with US markets closed for July 4th. Liquidity was thin with few US investors online during the day.

2. Goldman Sachs says global oil demand won't rebound to pre-coronavirus crisis levels until at least 2022. Gasoline demand is expected to be the fastest to recover among oil products due to a transition in consumer behaviour.

3. Chinese PMI hits the highest level in a decade in latest sign that the world's 2nd largest economy is surging back. The services PMI came in at 58.4, up from 55 in May.

4. 'Capital markets are not free': Billionaire investor Ray Dalio says the Fed is boosting asset prices, valuation metrics don't apply, and the US dollar is at risk. "The economy and the markets are driven by the central banks in coordination with the central government," he said.

5. A handful of multi-strategy hedge funds posted huge gains in the first half this year, bucking the industry's trend of underperformance. The big winners were Chicago-based Citadel Advisors, Izzy Englander's Millennium Management, and Balyasny Asset Management.

6. Leaked emails show Amazon is delaying Prime Day again to October as concerns grow that a new COVID-19 demand spike may hit supply chains. The annual Prime Day shopping event is postponed to October, the third delay this year.

7. The most accurate tech analyst on Wall Street says these 6 stocks have potential for huge gains as they transform the sector. Many of the companies covered by the analyst have made enormous gains and far surpassed his price targets in the past few months.

8. A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger. He thinks investors who hail the Federal Reserve as a panacea are "going to pay."

9. Asian stocks are up. In Europe, Germany's DAX fell 0.5%, Britain's FTSE 100 fell 1.2%, and the Euro Stoxx 50 fell 0.7%. In Asia, China's Shanghai Composite rose 2%, Hong Kong's Hang Seng rose 0.9%, and Japan's Nikkei rose 0.6% at the close. In the US, futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose 0.5%.

10. On the economic front. The IHS Markit Purchasing Managers Index for major European economies were released today.

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GOLDMAN SACHS: Buy these 13 stocks that are poised to crush the market within the next 2 weeks as earnings season gets underway

Fri, 07/03/2020 - 8:05am

  • Goldman Sachs says stock liquidity remains historically low, and companies that stand out from their less liquid peers have been outperforming the market.
  • Strategist Vishal Vivek has created a list of the 13 most liquid S&P 500 stocks and says they're likely to outperform as earnings season gets underway. 
  • Earnings season will probably reflect the most severe economic damage wrought by the coronavirus pandemic, making it far less predictable than usual.
  • Click here to sign up for our weekly newsletter Investing Insider.
  • Visit Business Insider's homepage for more stories.

Stocks have been historically volatile in 2020, and anything that brings a little more stability and predictability is going to be deeply appreciated.

Enter liquidity: Goldman Sachs Equity Derivatives Associate Vishal Vivek writes in a note to clients that while overall market liquidity has nosedived this year, the stocks that are the most liquid — meaning they can trade heavily without a clear, volatile drop in price — are faring much better than their peers.

That has huge implications for the upcoming earnings season, which might be the most unpredictable round of company reports in a long time thanks to the economic damage wrought by the coronavirus pandemic.

"Low levels of liquidity can exacerbate stock moves, especially on event days" such as earnings reports, Vivek wrote. "We believe when volumes increase in a stock without a proportionate increase in volatility (two day factors in our liquidity model), it bodes well for performance over the subsequent two weeks."

While liquidity has improved a little bit since March thanks to high trading volumes, elevated market volatility means it's still very low compared to recent history. For that reason, the stocks that can endure an increase in trading without a spike in volatility are that much more appealing as earnings get going.

"We expect this indicator to play an important role, as market participants continue to assess the impact of the COVID-19 pandemic on company fundamentals, and liquidity broadly remains low," he wrote.

Vivek and his team measured the liquidity of every stock on the S&P 500 index based on factors including trading costs, volumes, and bid-ask spreads. They've identified these 13 as more liquid than 95% of their peers, which was the average ranking among all the names they picked. Those stocks are ranked from lowest to highest based on that measurement.

Read more:

SEE ALSO: Stock analysts are having a moment in the sun as the market gets flipped upside down. We spoke to 11 of the top-ranked on Wall Street to get their forecasts and single-stock picks.

13. Simon Property Group

Ticker: SPG

Sector: Real estate

Market cap: $21.2 billion

Year-to-date performance: -55.9%

Liquidity percentile vs. S&P 500 stocks: 95%

Source: Goldman Sachs



12. SL Green Realty

Ticker: SLG

Sector: Real estate

Market cap: $4 billion

Year-to-date performance: -46.6%

Liquidity percentile vs. S&P 500 stocks: 96%

Source: Goldman Sachs



11. Southwest Airlines

Ticker: LUV

Sector: Industrials

Market cap: $20.3 billion

Year-to-date performance: -36.2%

Liquidity percentile vs. S&P 500 stocks: 96%

Source: Goldman Sachs



10. Advanced Micro Devices

Ticker: AMD

Sector: Information technology

Market cap: $60.8 billion

Year-to-date performance: +15.2%

Liquidity percentile vs. S&P 500 stocks: 97%

Source: Goldman Sachs



9. Under Armour

Ticker: UAA

Sector: Consumer discretionary

Market cap: $3.8 billion

Year-to-date performance: -54%

Liquidity percentile vs. S&P 500 stocks: 97%

Source: Goldman Sachs



8. Harley-Davidson

Ticker: HOG

Sector: Consumer discretionary

Market cap: $3.6 billion

Year-to-date performance: -37.8%

Liquidity percentile vs. S&P 500 stocks: 98%

Source: Goldman Sachs



7. MGM Resorts International

Ticker: MGM

Sector: Consumer discretionary

Market cap: $8.2 billion

Year-to-date performance: -49.4%

Liquidity percentile vs. S&P 500 stocks: 98%

Source: Goldman Sachs



6. Boeing

Ticker: BA

Sector: Industrials

Market cap: $103 billion

Year-to-date performance: -44%

Liquidity percentile vs. S&P 500 stocks: 99%

Source: Goldman Sachs



5. Delta Air Lines

Ticker: DAL

Sector: Industrials

Market cap: $18 billion

Year-to-date performance: -51.9%

Liquidity percentile vs. S&P 500 stocks: 99%

Source: Goldman Sachs



4. Alliance Data Systems

Ticker: ADS

Sector: Information technology

Market cap: $2.2 billion

Year-to-date performance: -59.9%

Liquidity percentile vs. S&P 500 stocks: 99%

Source: Goldman Sachs



3. United Airlines Holdings

Ticker: UAL

Sector: Industrials

Market cap: $9.8 billion

Year-to-date performance: -60.5%

Liquidity percentile vs. S&P 500 stocks: 100%

Source: Goldman Sachs



2. Royal Caribbean Cruises

Ticker: RCL

Sector: Consumer discretionary

Market cap: $10.3 billion

Year-to-date performance: -57.4%

Liquidity percentile vs. S&P 500 stocks: 100%

Source: Goldman Sachs



1. American Airlines Group

Ticker: AAL

Sector: Industrials

Market cap: $6.6 billion

Year-to-date performance: -54%

Liquidity percentile vs. S&P 500 stocks: 100%

Source: Goldman Sachs



A handful of multi-strategy hedge funds posted huge gains in the first half this year, bucking the industry's trend of underperformance

Fri, 07/03/2020 - 7:33am

  • Multi-strategy hedge funds have made massive gains in the first six months of the year aided by the Federal Reserve's efforts to prop up financial markets, according to the Financial Times. 
  • The big winners were: Chicago-based Citadel Advisors, Izzy Englander's Millennium Management, and Dmitry Balyasny's Balyasny Asset Management.
  • Their double-digit gains indicate that the pandemic caused a massive split between more prominent hedge funds and the smaller ones.
  • Visit Business Insider's homepage for more stories.

Multi-strategy hedge funds have posted substantial gains for the first half of 2020 despite being unprepared for what hit them in March, the Financial Times reported on Friday. 

During the start of the pandemic, the Federal Reserve stepped in to save the US economy from the pandemic by rolling out new efforts almost weekly since then by slashing rates to zero and re-activating large scale asset purchases.

After the Fed's boost, the big multi-strategy hedge fund winners were Citadel Advisors, Millennium Management and Balyasny Asset Management, the FT said.

These funds posted double-digit gains in the first six months, according to the FT:

(AUM: Assets under management)

  • Citadel Advisors: Gained 1.7% in June in its flagship Wellington fund. Up 13.3% year-to-date. (AUM: $30 billion)
  • Millennium Management: Gained 2.9% in June. Up 10% in the first half of the year. (AUM: $42 billion)
  • Balyasny Asset Management: Gained 2.5% in its Atlas Enhanced fund in June. Up 15% year-to-date. (AUM: $6.8 billion)
  • Point72 Asset Management: Gained 1% in June. Up 3.9% year-to-date. (AUM: $14 billion) 

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Multi-strategy funds are designed in a manner to be less exposed to financial market volatility with long and short positions sized equally across portfolios. 

Their risks are monitored to steer clear from trades with potential massive losses and to run winning bets. 

The gains posted by these funds add to concerns that the pandemic caused a split between big hedge funds and the smaller ones, FT said.

While many large funds were able to attract investors and make money, smaller ones were left in the lurch. 

Their double-digit wins are much higher than the average 1% posted by other funds this year to July 1, the newspaper said citing data from HFR.

In the first half of the year, the S&P 500 was down 4%.

Read More: A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger

SEE ALSO: Goldman Sachs says global oil demand won't rebound to pre-coronavirus crisis levels until at least 2022

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The Future of Fintech: AI & Blockchain

Fri, 07/03/2020 - 7:04am

Sweeping global regulations, the growing penetration of digital devices, and a slew of investor interest are catapulting the fintech industry to new highs.

Of the many emerging technologies poised to transform financial services, two of the most promising and mature are artificial intelligence (AI) and blockchain.

74% of banking executives believe AI will transform their industry completely, and 46% of global financial services employees expect blockchain to improve transparency and data management.

In The Future of Fintech: AI & Blockchain slide deck, Business Insider Intelligence explores the opportunities and hurdles of adopting the two technologies within financial services.

This exclusive slide deck can be yours for FREE today.

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LATIN AMERICA FINTECH LANDSCAPE: An inside look at 5 of the most innovative regions propelling the LATAM fintech market to surpass $150 billion

Fri, 07/03/2020 - 6:00am

Fintech has had a staggering influence globally, catapulting to new highs in major financial markets like the UK and the US, but Latin America (LATAM) has lagged behind — until now. 

A massive fintech boom is taking hold in the region as innovative upstarts look to leverage widespread smartphone and internet penetration to serve the region's massive unbanked and underbanked populations and small- and medium-sized businesses (SMBs).

Meanwhile, authorities in many of these countries have enacted fintech-friendly regulations, having identified fintech and digital financial services as a way to provide widespread financial access, while international investors have honed in on the region as an attractive investment space as it becomes harder to identify and compete for these startups in mature markets like the US and UK.

And the pace of fintech growth in the region is evidenced by the vast sums LATAM startups have raised: In Q2 2019, fintechs secured $481 million, representing a six-quarter high, at least, and accounting for 69% of the total raised in the region across all of 2018, per CB Insights.

In fact, those Q2 funding figures outpaced the sums raised by both Chinese ($375 million) and Indian ($350 million) fintechs for the first time — both notable Asian hubs that typically rake in substantial funding. All told, LATAM's fintech ecosystem represents a huge opportunity, with the size of the industry estimated to exceed $150 billion by 2021.  

In the Latin America Fintech Landscape report, Business Insider Intelligence identifies five key fintech markets in the region — Brazil, Mexico, Colombia, Argentina, and Chile — that provide meaningful insights into LATAM's fintech ecosystem. The report explores the factors driving fintech growth in each country, identifies the key fintech segments within each market, and discusses what has made major players in each segment successful as well as how they can improve going forward. Finally, we examine opportunities and challenges in each country to illustrate how fintechs and incumbents can leverage the progress already made to further transform the region's financial services landscape. 

The companies mentioned in this report are: Addi, Afluenta, Aliatu, Aspiria, Banco Inter, BBVA, ClearScore, ComparaOnline, ContaAzul, Contabilizei, Credijusto, Cumplo, Finaktiva, Jooycar, Klar, Konfio, Kubo.financiero, Kueski, Lineru, Mercado Credito, MercadoLibre, Moni, Neon, Nubank, Omie, OmniBnk, RapiCredit, Rebanking, RedCapital, Sempli, Starling, Ualá, Uber, Wilobank.

Here are some of the key takeaways from the report:

  • Fintech has spread globally over the past decade, taking root in various hubs worldwide, but Latin America has always lagged behind — until now.
  • This report highlights five countries — Brazil, Mexico, Colombia, Argentina, and Chile — that are dominating LATAM's booming fintech ecosystem.
  • Brazil is the region's economic powerhouse and home to some of the most innovative players.
  • Mexico, LATAM's second largest economy, is battling Brazil to become the dominant fintech hub, and boasts the greatest number of fintechs in the region.
  • Colombia, while considerably behind the region's two dominant fintech ecosystems, has quietly consolidated its position as the third largest fintech ecosystem in LATAM.
  • Argentina's long history of economic booms and busts has created a fertile environment for fintech growth.
  • Although Chile is the smallest fintech ecosystem of the five, it has seen rapid growth of fintech players over the last 18 months.

In full, the report:

  • Identifies the five markets at the forefront of LATAM's fintech revolution: Brazil, Mexico, Colombia, Argentina, and Chile.
  • Discuss the factors driving fintech's growth in each market, highlighting both regional factors as well as localized drivers.
  • Details the most notable fintech segments in each market and the major players in each segment.
  • Outlines the fintech opportunities and challenges in each of those countries going forward.

Interested in getting the full report? Here's how to get access:

  1. Purchase & download the full report from our research store. >>  Purchase & Download Now
  2. Sign up for Fintech Pro, Business Insider Intelligence's expert product suite tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. >> Get Started
  3. Join thousands of top companies worldwide who trust Business Insider Intelligence for their competitive research needs. >> Inquire About Our Enterprise Memberships
  4. Current subscribers can read the report here.

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Goldman Sachs says global oil demand won't rebound to pre-coronavirus crisis levels until at least 2022

Fri, 07/03/2020 - 5:43am

  • Goldman Sachs predicts global oil demand will not return to pre-coronavirus levels until 2022 after a fall of 8% in 2020 and a rebound of 6% in 2021.
  • Analysts said peak demand is unlikely this decade on the assumption that electric-vehicles will replace traditional modes in Europe, and a change in consumer behaviour reflected by a level shift down in business travel and commuting.
  • Gasoline demand is expected to be the fastest to recover among oil products due to a transition in consumer behaviour from public commutes to private transport and increased use of cars compared to flights for domestic travel.
  • The projection comes after global oil prices dramatically recovered in May and June after taking a beating in recent months.
  • Visit Business Insider's homepage for more stories.

Goldman Sachs doesn't expect global oil demand to "fully recover," or jump back to pre-coronavirus levels, until 2022, but says a rebound will be driven by a revival in commuting, private transport and higher spending on infrastructure. 

Global demand will fall by 8% in 2020 and rebound by 6% in 2021, Goldman Sachs analysts said in a note published Thursday.

The "biggest loser" to emerge from the pandemic in terms of fuel demand was jet fuel as air travel time reduced significantly, the analysts said. In the absence of a vaccine, a slump in consumer confidence in travelling could persist with a potential change over the longer term.  

Jet fuel demand will not rebound to pre-crisis levels until 2023, Goldman said.

Among oil products, gasoline will see the fastest pick-up in demand helped by a shift in consumer behaviour from public commuting to private transport and an increased use of vehicles compared to airlines for domestic travel especially in the US, China and Europe, the analysts said. 

Diesel demand is expected to recover to pre-crisis levels by 2021, pushed by an increase in government-spending on infrastructure. 

The analysts expect electric-vehicle adoption in Europe to challenge diesel demand.

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Goldman Sachs' projection follows global oil prices recovering dramatically in May and June as economies eased lockdown restrictions and opened up across much of the world.

Both benchmark global oil prices rose over 80% in the second quarter, but are still stuck in bear market territory, down more than one-third since the start of 2020.

In a slightly varied forecast, the International Energy Agency expects a global recovery in oil demand by 2021.

The agency adjusted its prior forecast of global Brent crude demand falling by 9.1 million barrels a day since better-than-expected deliveries took place amid easing lockdowns. 

International benchmark Crude was trading at $42.70, down 1% on Friday and US West Texas Intermediate stood at $40.19, down 1.1% in early European trading.

Read More: A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger

SEE ALSO: 'We are still in a deep economic hole': 5 economists explain why the June jobs report is weaker than it appears

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Nasdaq closes at record as traders cheer strong jobs report

Thu, 07/02/2020 - 4:04pm

US stocks gained on Thursday after June jobs data beat expectations and further fueled hopes for a near-term economic rebound. The tech-heavy Nasdaq composite closed at a record high.

The economy added 4.8 million nonfarm payrolls last month, the Bureau of Labor Statistics announced on Thursday morning. That exceeded the consensus economist forecast of 3 million job additions.

The unemployment rate fell to 11.1% — lower than economists' forecast of 12.5% — from 13.3% in May.

Here's where US indexes stood at the 4 p.m. ET market close on Thursday:

Read more: The most accurate tech analyst on Wall Street says these 6 stocks have potential for huge gains as they transform the sector

The jobs report revealed healthy hiring activity during economic-reopening efforts. However, its data doesn't cover recent weeks when coronavirus cases have soared in several states. The surge has some experts fearing a second bout of economic pain.

"High-frequency data suggests that the labor market strength had started to wane later in the month, perhaps as households and businesses grew increasingly cautious about the rise in infection rates," said Seema Shah, the chief strategist at Principal Global Investors.

She added: "Indeed, now, with the closings having been reversed or paused across 40% of the US, July's job report may paint a much weaker story."

Indexes trimmed gains through the morning and largely traded flat in the afternoon following the positive data.

Read more: A 22-year market vet explains why stocks are headed for a 'massive reset' as the economy struggles to recover from COVID-19 — and outlines why that will put mega-cap tech companies in serious danger

Jobless claims fell to 1.43 million in the week that ended on Saturday, a slight decline from 1.48 million the prior week. Continuing claims, which track ongoing unemployment benefits, came in at 19.3 million for the week that ended on June 20.

Tesla stock skyrocketed to a record high after it reported second-quarter deliveries that came in above estimates. The automaker said it delivered roughly 90,650 vehicles in the period, while analysts surveyed by FactSet had expected 72,000 deliveries, according to CNBC.

Lemonade, a tech-driven insurance company, spiked as much as 132% in its trading debut on Thursday. The SoftBank-backed firm raised $319 million in the initial public offering, bringing its total valuation to $1.6 billion.

Boeing helped lift the Dow before paring gains later in the session. Shares bounced after the company completed recertification flights of its troubled 737 Max model.

Read more: GOLDMAN SACHS: Buy these 15 super-cheap stocks now before their prices catch up to their strong growth and earnings prospects

Oil prices climbed. West Texas Intermediate crude climbed as much as 2.3%, to $40.74 per barrel. Brent crude, the international benchmark, gained 2.9%, to $43.23 per barrel, at intraday highs.

Thursday's upswing followed a mixed session for equities. Stocks whipsawed on Wednesday as investors mulled positive COVID-19 vaccine trial results from Pfizer and soaring case counts across the US. June payroll data from ADP came in lower than hoped for, and some feared that Thursday's jobs report would disappoint.

Now read more markets coverage from Markets Insider and Business Insider:

Trump's favorite trade scorecard worsened in May as exports hit lowest level since 2009

Failure to slow the spread of COVID-19 could spark a full-blown financial crisis, Fed president says

Fed officials pushed for clearer guidance on future policy, meeting minutes show

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The most accurate tech analyst on Wall Street says these 6 stocks have potential for huge gains as they transform the sector

Thu, 07/02/2020 - 3:50pm

Brent Bracelin has watched the cloud-computing companies he covers go sky-high this year.

Bracelin is a senior research analyst at Piper Sandler. As of early June, he was the most accurate analyst on Wall Street, according to the rating database TipRanks.

One big reason for that is that in February and March, businesses had a rude awakening about how critical remote work and cloud computing really were.

Bracelin's companies are all business-focused rather than consumer-focused, and he said many of them jumped 100% in value in just a couple of months. That's brought them to a precarious position. And even though Bracelin thinks the next year might be uneven for those companies, he's very enthusiastic about how much more business they're going to win after that.

"Over the last decade, we've gone from 1% to 10% penetration of cloud or digital in enterprise," he told Business Insider in an exclusive interview. "By 2030, we think that that market could go to 50% penetration."

That might make for some difficult calls for a short-term investor. But for someone thinking about investing for five or 10 years, Bracelin's advice is pretty simple: Buy these six stocks when they dip. It doesn't matter that as of Wednesday all six were trading above his price targets, some by huge amounts.

"These have the biggest opportunities, large addressable markets, differentiated technology with competitive moats," he said. "They all have a longer-term potential to be multibillion-dollar businesses and sustain high growth for the next decade."

If that's too complicated, he said you could always keep it simple and invest in Microsoft.

"Microsoft is probably one of the best-positioned companies to capitalize on this whole shift to cloud and AI," he said. "Their cloud business is north of a $50 billion run rate today. We think it could double."

But for investors who are looking for newer and potentially less familiar companies to invest in, Bracelin said these were his "franchise names." 

(1) MongoDB

MongoDB stock has climbed almost 80% this year, and that's one of the smaller gains on this list. Bracelin said it could become the dominant company in its industry.

"MongoDB is the first database company to come public in 20 years," he said. "They're addressing a $55 billion database software market and have less than 2% penetration, so it's an untapped opportunity essentially to become the next Oracle of the space."

(2) Shopify

Shopify is up 156% this year and left Bracelin's target of $843 a share in the dust in June. On Wednesday it joined an exclusive club of US stocks worth $1,000 per share or more.

Bracelin said there were huge numbers of businesses, including mom-and-pop shops and the 150-year-old Heinz, that would pay for Shopify's e-commerce platform services.

"It's a business that could be a $10 billion, $12 billion kind of business (revenuewise)," he said. That would represent growth of more than 500% from its 2019 total of $1.6 billion.

(3) Twilio

Twilio has more than doubled in value this year, and Bracelin said big companies were flocking to it so they could do a better job of connecting with their customers.

"Twilio is a business that we think could expand to $5 billion, $8 billion in revenue over the next five years," he said. That's up from $1.1 billion last year.

(4) Bill.com

Most small businesses still write checks, Bracelin said, and that means there's a gigantic market for Bill.com's automation services. That helps explain why the stock has rallied 143% in 2020.

"They're automating that whole back-end process for a small business and also layering in the ability to do digital payments," he said.

(5) Veeva Systems

Veeva Systems is up 72% this year, and Bracelin praised the company's services as well as its high profit margins and growth potential.

"They just, in the last five years, not only kind of automated and modernized the front office for life-sciences companies, but now they're automating the back office as well," he said.

(6) Coupa Software

Coupa stock has soared 96% so far this year. Bracelin said that like a few other companies on this list, its products are strong enough that they're starting to overcome businesses' reluctance to change their conservative spending habits. 

"They're automating the procurement process for a large enterprise," he said. "Bill.com is automating the back office for a small business. I think of Coupa as automating the back office for a large enterprise."

Read more:

SEE ALSO: A high-growth fund manager is tripling her peers' returns in 2020 while targeting nontech industries like beer and restaurants. She breaks down how she picked out 5 of the most innovative companies.

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Lemonade, a tech-driven insurance company, soars 132% in trading debut (LMND)

Thu, 07/02/2020 - 2:36pm

  • Lemonade, a tech-driven insurance company backed by SoftBank, soared 132% in its trading debut on Thursday.
  • The company had set its IPO price at $29, representing a market valuation of $1.6 billion.
  • It was valued at $2.1 billion in its 2019 funding round.
  • Lemonade raised $319 million in its IPO.
  • Visit Business Insider's homepage for more stories.

Investors turned lemons into lemonade on Thursday as they bid up shares of Lemonade, a tech-driven insurance company, more than 130% in its trading debut.

Lemonade, which is backed by SoftBank, focuses on digitizing the process of obtaining homeowners and renters insurance.

In late June, it priced its initial public offering at a range of $23 to $26. Lemonade later raised its IPO price and went public at $29 per share, which was also above the expected range of $26 to $28 from early Thursday morning, signaling that investors are hungry for technology companies.

Read more: The No. 1-ranked tech analyst on Wall Street says these 6 stocks have potential for huge gains as they transform the sector

The IPO raised $319 million for the tech company and valued it at $1.6 billion. It was valued at $2.1 billion in its 2019 funding round, representing a 23% decline.

Lemonade began trading at 11:34 a.m. and opened at $50.06.

At its peak on Thursday, Lemonade stock traded up as much as 132%, at $67.46, representing a market valuation of $3.7 billion, well ahead of its 2019 funding round.

Read more: Cathie Wood's firm built 3 of the world's best ETFs, which all doubled in value within 3 years. She told us her 3-part process for spotting underappreciated technologies before they explode.

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NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence

An app helping families save for college used this pitch deck to raise $9 million from investors like Anthos Capital and NBA all-star Baron Davis

Thu, 07/02/2020 - 1:51pm

  • UNest, an app that allows parents to set aside savings for their children, just raised a $9 million Series A.
  • The round was led by Anthos Capital with participation from investors like Northwestern Mutual Future Ventures and former NBA all-star Baron Davis.
  • UNest, which started as a 592 college savings app, has broadened its product offerings since its founding in 2018. Since February, UNest has added 25,000 accounts.
  • Here's the 15-slide pitch deck UNest used to raise its Series A.
  • Visit Business Insider's homepage for more stories.

Millennials aren't kids anymore. In fact, many have kids of their own. And UNest, founded by Ksenia Yudina, is targeting this cohort of new parents with a savings app.

UNest started as a college savings app, offering 529 college savings plans. Since its launch in 2018, the fintech has broadened its scope to include general savings accounts for kids.

"The feedback that we've heard from our existing users is that they don't want to save just for education," Yudina said. "They want to invest in their kids' futures, but be able to save for their first car or a down payment on a home."

Los Angeles-based UNest, which extended its seed round in January, announced a $9 million Series A on June 16 led by Anthos Capital with participation from investors like Northwestern Mutual Future Ventures and former NBA all-star Baron Davis.

As UNest has expanded its product offerings, its userbase has continued to grow, especially amid the coronavirus pandemic during which many parents are spending more time with their kids. Since February, UNest has added 25,000 accounts. The funding will be used to invest in more marketing and brand awareness as UNest looks to grow its userbase, Yudina said.

And the round was raised entirely remotely amid coronavirus shutdowns.

"The concern that most companies seem to have going into the pandemic is that there would be a lot of down rounds," Peter Mansfield, chief marketing officer at UNest, told Business Insider.

Given the economic volatility over the past few months, it's easy for founders to feel a bit bearish, Mansfield said. Instead, UNest was able to leverage the growth it had already experienced, resulting in a "a very big up round," he added.

"We're at a really fortunate spot because we didn't really need to raise," Mansfield said. "That probably gave us more confidence than the average bear to be able to go in there with our heads held high asking for a valuation that we thought was eminently fair."

While UNest's pitch deck itself has gone through a number of iterations, there are other factors to successful fundraising.

"Fundraising is all about relationship building," said Yudina. "You have to get in front of them, you have to show your energy and drive, and prove why you're the right person to solve this problem."

"The pitch deck follows. It's kind of like marketing materials, it's post-fact," Yudina said.

Part of UNest's confidence came from building out an experienced team after its seed round, Yudina said. While Yudina had prior experience as a financial advisor at Capital Group's American Funds, she didn't have experience at a fintech. Mansfield led marketing in the early days of Marqeta, and Mike Van Kempen, UNest's chief operating officer, joined UNest last year from Acorns. 

"We built a super strong team with actual experience in fintech," said Yudina, "and that's what investors like."

And proving you can deliver on product development and user acquisition is key when fundraising, Yudina said. For example, UNest launched with an iOS app, promising investors to build out an Android app, which it launched in February.

Here's the pitch deck UNest used to win over investors and raise its Series A.

SEE ALSO: College-savings startup U-Nest just added $1.5 million to its seed round. Its founder explains why she's hoping to one day be partnering with the type of Wall Street firm she started at.

SEE ALSO: One-click checkout startup Fast used this pitch deck to nab $20 million from investors like fintech giant Stripe. Here's a look at its vision for taking on Apple Pay.

































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