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FAA expects Boeing to come up with new software to fix the grounded 737 Max in a matter of weeks (BA)

Mon, 04/01/2019 - 10:58pm

  • The Federal Aviation Administration (FAA) expects Boeing to submit its package of software fixes for the 737 Max airliner "over the coming weeks."
  • The agency said on Monday that it won't approve the software until it's satisfied.
  • Most of the software updates will be to the 737 Max's Maneuvering Characteristics Augmentation System (MCAS).
  • Initial reports from the Lion Air Flight JT610 investigation, however, indicate that a faulty angle-of-attack (AOA) sensor reading may have triggered MCAS shortly after the flight took off. Observers fear Ethiopian Airlines Flight ET302 may have experienced a similar issue.
  • The US Department of Transportation is auditing the Boeing 737 Max 8's FAA certification process.

The Federal Aviation Administration (FAA) announced on Monday that it expects Boeing to submit the final software fixes for the 737 Max "over the comings weeks."

"The FAA expects to receive Boeing’s final package of its software enhancement over the coming weeks for FAA approval," the agency said in a statement. "Time is needed for additional work by Boeing as the result of an ongoing review of the 737 MAX Flight Control System to ensure that Boeing has identified and appropriately addressed all pertinent issues." 

Once Boeing's submission is complete, FAA is expected to conduct a review of the updated flight-control system. 

"The FAA will not approve the software for installation until the agency is satisfied with the submission," FAA said.

Until then, all 371 Boeing 737 Max airliners already in service will remain grounded. 

Read more: The Boeing 737 Max is likely to be the last version of the best-selling airliner of all time.

Most of the software updates will be to the 737 Max's Maneuvering Characteristics Augmentation System (MCAS).

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

Initial reports from the Lion Air Flight JT610 investigation, however, indicate that a faulty AOA sensor reading may have triggered MCAS shortly after the flight took off. Observers fear Ethiopian Airlines Flight ET302 may have experienced a similar issue.

Read more: Boeing just unveiled how it's going to fix the 737 Max that was grounded after 2 fatal crashes in recent months.

The updated software will "provide additional layers of protection if the AOA sensors provide erroneous data," Boeing said in a press release last week. The updates are also geared toward reducing the workload on pilots during emergency situations.

Both Boeing and FAA have come under increasing scrutiny over the flight certification of the Boeing 737 Max.
On March 19, Secretary of Transportation Elaine Chao announced her agency's intention to audit the 737 Max 8's FAA certification process.

Last week, the Office of Inspector General at the Department of Transportation confirmed that it has initiated the audit. 

SEE ALSO: The Boeing 737 Max is now one of the most controversial airliners of all time. Here are 3 others.

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JPMORGAN: These 4 drivers are all you need to understand if you want to make a killing in markets this quarter

Mon, 04/01/2019 - 10:46pm

  • JPMorgan lays out the four catalysts that investors should fully understand if they want to beat the market in the second quarter.
  • Multiple drivers broken down by JPMorgan circle back to the pace of global growth, which the firm says has a strong likelihood of recovering during the upcoming period.

Sometimes, with so much going on in the global marketplace, a bit of simplicity can go a long way towards helping an investor figure out what to do.

The cross-asset strategy team at JPMorgan realizes this and has arrived at a four-part framework to help traders wrap their heads around what will transpire in the second quarter.

At the core of the firm's outlook is the idea that fears surrounding the yield curve are overblown. To hear JPMorgan tell it, the relative levels of Treasury yields are not as closely tied to market action as many investors think.

"Since curve shape is a symptom of the macroeconomic setting and not the driver of financial conditions or returns, this Q2 outlook focuses instead on four underlying issues that will determine cross-asset performance," John Normand, JPMorgan's head of cross-asset fundamental strategy, wrote in a client note.

When viewed collectively, these catalysts should be all an investor needs to understanding in order to crush the market in the second quarter. And while fully comprehending them is easier said than done, perhaps the following commentary from JPMorgan will help.

1) Will global growth be revived?

JPMorgan says economic expansion might pick up in the coming months because of three main policy changes:

  1. A Fed pause that loosens financial conditions
  2. Easing in China that results in a high likelihood that the economy keeps growing at a consistent pace
  3. A US-China trade truce normalizes signals like corporate spending.
2) Will corporate earnings increase?

JPMorgan notes that if global growth recovers, that should also lift corporate profits. And given that earnings forecasts currently look rather low, the firm thinks there could be decent upside here.

Even the firm's biggest pessimists are finding it difficult to get too bent out of shape about the state of earnings.

"Within JPM there are differing views on margins, but even the most conservative view is for a bias lower rather than a multi-point contraction," Normand said.

He continued: "Importantly, some high-frequency monthly proxies for margins remain firm, and equities have tended to correlate slightly better with EPS growth that margins."

3) Will central banks validate the easing priced into yield curves?

After pricing in a set number of rate hikes for much of 2018, the market has changed course and now expects the Federal Reserve to cut lending costs this year.

"With the US curve pricing a cut by end-2019 and two more by end-2021, a Fed that does nothing can suddenly become a market event," Normand said. "Given that investors appear to be quite long of Treasuries and EM assets, the possibility of a destabilizing steepening of the US curve is a major risk for Q2."

JPMorgan says the following chain of events could occur during such a repricing: firmer US growth, no additional dovishness from the Fed, higher US rates, a stronger dollar, weaker EM assets, and weaker US stocks.

Normand added: "Though all of these corrections are probably only intra-month if growth supports earnings and the Fed continues signaling no hikes until well into 2020."

4) What's next on the political/geopolitical front?

When it comes to geopolitical drivers, it's really a grab bag that depends on the day.

There's the Trump administration, which appears to have dodged a bullet in the form of an underwhelming Mueller report. There's also the debt ceiling debate, but JPMorgan says that's more of a third-quarter concern than anything that will strike markets in the near term.

Looking globally, the firm expects the ongoing US-China trade conflict to be more of a drag on specifically vulnerable companies, rather than the entire market. There's also the Brexit fiasco.

JPMorgan also highlights the oil market as a potential flashpoint. Normand says a "destabilizing" move towards $80 a barrel for Brent crude could have wide-reaching effects.

SEE ALSO: There’s a swelling avalanche of evidence that investors are getting more and more worried about another stock-market crash

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A Disney heiress who has donated $70 million over the past 30 years says she would outlaw private jets if she could

Mon, 04/01/2019 - 4:56pm

  • Private jets allow rich people to "get around a certain reality," the Disney heiress Abigail Disney told The Cut.
  • Disney said that though her family had a 737 private jet, she decided to stop using it once she considered her carbon footprint and the cost her trips incurred.
  • Private jets are popular purchases among many millionaires and billionaires looking for quick and easy travel.

Mark Cuban, Jeff Bezos, and other billionaires may own private jets, but the heiress Abigail Disney has a different set of thoughts on the topic.

"If I were queen of the world, I would pass a law against private jets, because they enable you to get around a certain reality," Abigail Disney recently told The Cut. "You don't have to go through an airport terminal, you don't have to interact, you don't have to be patient, you don't have to be uncomfortable. These are the things that remind us we're human."

Disney — who is the granddaughter of Roy Disney, a cofounder of The Walt Disney Co. — is an heiress to the Disney fortune. While she stayed mum on the exact size of her inheritance, she told The Cut that she could be a billionaire if she wanted to be and that she's donated more than $70 million since turning 21.

Her dad’s plane was a 737 with a queen-size bed and a shower, she said: "We would use the plane occasionally because I have four kids, so it was much easier, obviously, to ride on my dad’s plane with them. Then, at a certain point, I just said, 'No, I think this is really bad for everybody.'"

That defining moment, she told The Cut, came after thinking about her carbon footprint and the cost of her trip while riding on the jet alone for a quick trip from New York to California.

Read moreAn heiress to the Disney fortune has given away $70 million, and teaches her kids that money is the least important thing about them

Owning a private jet is typically a hallmark among millionaires and billionaires, especially high-powered executives and investors working in the tech industry. For them, a private jet can allow for quick and easy travel if they need to be on the other coast on the same day, according to Business Insider's Paige Leskin.

Even the notoriously frugal Warren Buffett has his own private jet. He once told CNBC it's "the only thing that I do that costs a lot of money."

But design trends in planes are evolving: Business Insider's Katie Warren previously reported that the super-wealthy no longer want their private jets to look like private jets. Instead, they want them to look like extensions of their homes or offices, and they are designing them in clean lines and cool color tones.

Read the full story on The Cut »

SEE ALSO: People born into massive family fortunes go down 2 different paths, says a Disney heiress who has donated $70 million over the past 30 years

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Lyft plunges below its IPO price (LYFT)

Mon, 04/01/2019 - 4:18pm

  • Lyft shares plunged 13% Monday, the company's first full day of trading after debuting on the Nasdaq.
  • The stock traded below its initial public offering price of $72 a share.
  • Watch Lyft trade live.

Lyft plunged nearly 12% Monday in its first full trading session, closing at $69.01 a share, below its initial public offering price of $72. The company on Friday became the first ride-hailing company to hit the public market.

"Feels like just some of the faster money exiting the stock following the solid first-day pop," Tom White, an analyst at D.A. Davidson who has a "buy" rating on the stock, said in an email. "LYFT also caught a Neutral rated initiation today which probably isn't helping either."

On Monday, Guggenheim began covering Lyft with a "neutral" rating in part because of uncertainty surrounding the company's path to profitability and revenue-growth sustainability.

"We see four paths to profitability: cut driver pay, turn off incentives, reduce insurance costs or shift to self-driving cars," wrote Jake Fuller, an analyst at the firm. "The first two would be tough in a highly competitive category, the third might not be enough by itself and the fourth is likely 10 years out."

Lyft's initial public offering was oversubscribed, and shares opened for trading on Friday at $87.24 apiece, well above the $72 where they had priced the prior evening.

The debut, however, was ultimately something of a mixed bag. Though shares booked a 9% gain, they closed at session lows and turned negative in after-hours trading.

Other analysts are concerned about the risks surrounding the fledgling company. Lyft posted a $911 million loss last year, and faces stiff competition. Its rival Uber is expected to go public next month.

"While Lyft is purely a domestic vendor within the US, there remains some wild cards around the path of the company's autonomous vehicle ambitions, international expansion," as well as further market-share gains, Dan Ives, an analyst at Wedbush, wrote in a note to clients last week.

Of the seven Wall Street analysts covering Lyft shares, most are neutral. Five have a "hold" rating, and two say "buy." None recommend selling.

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

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Here's how much life insurance you need at every income level

Mon, 04/01/2019 - 4:05pm

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • Life insurance needs are based on myriad factors, from the size of your family, to whether or not you own a home or have debt, to how much money you're earning and saving.
  • Since life insurance needs are so specific to an individual or family, a life insurance calculator will typically yield the most accurate estimate.
  • Business Insider created three sample scenarios and ran them through SmartAsset's life insurance calculator to estimate life insurance needs in a high cost-of-living US city, a lower cost-of-living US city, and an average cost-of-living US city.
  • All three scenarios are for a hypothetical 35-year-old married homeowner with two kids and a working spouse.

It's not easy to put a price on your life. There's a lot to consider to find out how much life insurance you need, including whether or not you have kids, a working spouse, a mortgage or other debt, and savings or investments.

Not everyone needs life insurance. Insurance-comparison website Policygenius boils it down to a simple question to decide whether you need it: Does anyone rely on your income for their financial well-being? That could be children, a spouse, aging parents, or anyone else who could be considered some level of dependent. If someone else relies on your income, then you probably need life insurance.

In most cases, explains Policygenius, a limited-time, or term life insurance policy is a good fit for coverage, because life insurance gets more expensive the longer you wait to purchase it and the longer the term of coverage. Stay-at-home parents, retirees, and children generally don't need life insurance.

Read More: The insurance policy that can protect a family's future isn't nearly as complicated or expensive as you'd think

Typically, the higher your income and the more expensive the city you live in, the more money your family will need in your absence.

Business Insider created three sample scenarios to estimate life insurance needs for people at different income levels in a comparatively high cost-of-living city (Brooklyn, New York), lower cost-of-living city (Dallas, Texas), and average cost-of-living city (Denver, Colorado) and ran them through SmartAsset's life insurance calculator

Each calculation was based on a handful of assumptions, which you can see in full at the end of this post.* High-level, the hypothetical insurance-holder in this scenario is a 35-year-old with two kids and a working spouse, who owns a median-priced home in their city and has savings and investments.

The charts below show the estimated life insurance policy needed for five different income levels with the above assumptions:

It's important to note that these life insurance estimates are independent of group life insurance offered through an employer. If you're signed up for group life insurance through work, you only need to supplement that amount with an individual policy.

Many companies offer life insurance coverage for employees, but it's usually not enough to replace income for a family. According to NerdWallet, typical coverage amounts are $25,000, $50,000, or an employee's annual salary. The policy is often free and the money is guaranteed, so it's often worth taking.

Considering life insurance? Business Insider's partner Policygenius can help you find the best fit for you »

Some employers offer supplemental life insurance to make up the difference, but it's smart to compare rates with other insurers to find the best option.

Calculate your own estimated life insurance needs with SmartAsset's free calculator: 

*The above calculations are made using the following assumptions for a 35-year-old:

  • Spouse of the same age, earns $60,000 a year and lives to age 95
  • Two kids, birth years 2014 and 2012
  • Plans to pay for both kids four-year out-of-state public college tuition
  • Owns a median-value home with a mortgage (home value for each city sourced from Zillow)
  • Has current savings and investments equal to twice their salary (Fidelity recommendation for 35-year-old)
  • Savings and investments earn conservative 4% annual return
  • Beneficiaries receive Social Security
  • Family needs 50% of current income for 20 years
Considering life insurance? Business Insider's partner Policygenius can help you find the best fit for you »

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Slack is reportedly going for a direct listing on the New York Stock Exchange

Mon, 04/01/2019 - 3:44pm

  • Slack is planning to direct list its shares on the New York Stock Exchange in the next few months, The Wall Street Journal says, citing sources.
  • Last year, Spotify became the first big technology company to direct list its shares.
  • Companies avoid paying fees by direct listing shares, but there are some risks. 

The workplace-messaging platform Slack is planning to direct list its shares on the New York Stock Exchange in June or July, according to The Wall Street Journal, citing sources. 

Doing so would make Slack the second big technology company after Spotify to bypass a traditional initial public offering. 

A direct listing differs from a traditional IPO in that it cuts out the usual underwriting process that involves lining up investors ahead of time and lets the open market play a larger role in setting the share price.

This will allow Slack to avoid paying the hefty fees that are involved in the process, and also can give shares more liquidity by avoiding the lock-up periods associated with going public through a traditional IPO.   

Read more: Here's how a direct listing works.

"When we think about why companies go public, they do it for liquidity, to raise their profile, for capital," John Tuttle, head of global listings at NYSE, told Business Insider in February 2018. "But for those companies that are well-capitalized, all they really need is liquidity."

Still, there are some risks involved with a direct listing. While Slack has name recognition and a private-market valuation of about $7 billion, there is still the chance that demand could be weak without a banking contingency doing the marketing behind the scenes. The process also doesn't involve underwriters generating interest among investors.  

Monday's report is another blow to the Nasdaq, which lost out on the Spotify direct listing. Last month, the exchange tweaked its rules, allowing it to provide more clarity around direct listings to compete with the New York Stock Exchange 

"The exchanges want to clarify the rules so that there is no ambiguity that might deter a company from listing on that exchange," Jay Ritter, a finance professor at the University of Florida, told Business Insider's Dan DeFrancesco.

"It's unlikely that Spotify is going to be a one-off direct listing. Some other prominent companies are very likely to use the procedure as well."

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Millennials are about to overtake Baby Boomers as the largest adult generation — and it could drastically alter the US housing market

Mon, 04/01/2019 - 3:36pm

  • Millennials are projected to overtake Baby Boomers as the largest living adult generation.
  • As older generations age and look to sell properties, growth in the rental market could outpace homeownership over the next decade.
  • Americans have already begun to lean toward rentals, as softer construction activity and housing shortages price potential buyers out of the market.

Growth in the rental market could outpace homeownership over the next decade as older generations age and look to sell properties, according to analysts.

Home supply appears set to jump by more than two-thirds over the next 10 years, Morgan Stanley said in a new research note. But demand among generations Y and Z — which include those born between 1981 and 2012 — looks poised to edge just 7% higher over that period.

Millennials are projected to overtake Baby Boomers as the largest living adult generation this year, according to population projections from the US Census Bureau. And with new generations could come an increasing demand for rentals.

"Gen Z + Y are more likely to rent than own, and the bulge in supply when the Baby Boomers sell looks to dampen net single-family demand," the analysts said. "This drives a surge in rentership while ownership is challenged."

Certain real-estate markets could see more exaggerated shifts toward rental demand than others. New England and the Rust Belt have far more Baby Boomers than other generations, according to Morgan Stanley, while the opposite is the case for the Pacific and the West South Central.

Americans have already begun to lean toward rentals, as softer construction activity and housing shortages price potential buyers out of the market. While lower mortgage rates could pull some in from the sidelines, new tax laws have also reduced incentives for Americans to own homes.

"Home sales are set to tread water over the next couple of years, which is good news for the rental sector," Capital Economics economists Matthew Pointon and Andrew Burrell said in a research note. "If Americans aren't buying homes, many will look to rent one instead."

Still, some think demand for homes will hold up among younger generations over the next decade. Millennials still accounted for most of the growth in the overall homeownership rate in 2018, according to Mark Fleming, chief economist at First American.

“I believe millennials will be the most important generational source of demand in the housing market, as well as the general economy, for a number of years to come,” he said.

SEE ALSO: A housing-market slowdown could be bad news for renters

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Saudia Arabia's oil giant Aramco is printing money as the world's most profitable company

Mon, 04/01/2019 - 3:20pm

  • Saudi Aramco, Saudi Arabia's state-owned oil company, filed for its international bond debut Monday with crazy high profits.
  • The company made $111.1 billion in net income last year, according to Moody's, making it more profitable than Apple, Amazon, and Alphabet (Google's parent company) combined.
  • Aramco is issuing a $10 billion bond to investors after doubling its profits in 2018 on the back of improved oil prices.

Saudi Arabia's state-owned oil giant blows the rest of the world out of the water with its gargantuan profits.

Saudi Aramco reported $111.1 billion in net income last year, according to Moody's, making it more profitable than Apple, Amazon, and Alphabet combined. The company filed for its international bond debut on Monday, a $10 billion issuance following a doubling of its profits after oil prices rose last year.

For context, Apple's earnings shot up to $60 billion last year, while Amazon brought in $10 billion in profits. Similarly, the oil giants Exxon Mobil and Royal Dutch Shell made profits of $20.8 billion and $17.5 billion in 2018.

The company's credit rating, A1 from Moody's, is tied to that of Saudi Arabia given the links between the two entities.

"The company is wholly-owned by the state and is expected to remain largely under government ownership even after any potential IPO in the future," Moody's said. "The oil sector also comprises a substantial portion of Saudi Arabia's GDP and dominates its exports."

It's the first major opportunity for investors to scrutinize the offering of one of the world's largest energy companies given the usually secretive nature of Aramco's disclosures. It's part of a transparency push on behalf of Saudi Arabia as part of a will-they-won't-they over the company's plans for an initial public offering, which it shelved last year. One of the main advantages of issuing the bond is to gain high ratings from the various credit agencies. (Aramco doesn't need the money, after all.)

Among the key risk factors purported by the company are environmental issues and other climate-change-related challenges indicating a broad understanding of the manifold demand constraints facing the oil and gas industry. Saudi Aramco accounted for approximately one in eight barrels of crude oil produced globally from 2016 to 2018, according to the prospectus.

Oil prices were boosted last year after Saudi-led efforts at a meeting of major oil exporters secured supply cuts in an attempt to improve languishing prices by taking approximately 1.2 million barrels a day out of the market.

Saudi Arabia is attempting to diversify its oil-heavy economy and attract new capital to the kingdom.

SEE ALSO: Oil set for strongest quarter in a decade on OPEC-led cuts and trade talk optimism

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Congestion pricing could mark the beginning of the end of New York's famous yellow taxis (LYFT)

Mon, 04/01/2019 - 3:14pm

  • Congestion pricing in New York City will achieve the goal of reducing gridlock.
  • But the way it's structured could also spell the end of the taxi business.
  • Congestion pricing represents a hard bargain between well-capitalized ride-hailing companies, such as Uber and Lyft, and governments desperate for money to fix aging mass-transit systems.

Yellow taxi cabs and New York City — what could be more iconic?

Successfully hailing a cab has always been a rite of passage for New Yorkers. It has bewildered out-of-towners but was traditionally handled with little effort by seasoned residents of the Big Apple: spot an on-duty cab, raise a hand, hop inside, enjoy a potentially strange, yet authentic, experience.

The old-school taxi business has been under assault in New York for some time, however, as Uber and Lyft have spent half a decade rapidly expanding their operations. Ride-hailing has flooded Manhattan with cars and driven down the value of the city's allocated taxi medallions: There are 13,500 cabs in New York City — but there is something like 80,000 vehicles aligned with ride-hailing services, according to The Wall Street Journal.

Taxis now have a new challenge, and it could be an existential one: congestion charges in New York, which are set to be the first in a US city.

Read more: Trying to persuade Americans to stop buying cars won't save Lyft from being wildly unprofitable

The congestion-pricing scheme is now part of a New York state budget, with the fees to kick in by 2021. People driving into the congestion zone — Manhattan island below 60th St. — will be hit with a $12 to $14 fee (it will likely be assessed using the E-Z Pass system, which already covers many bridges, tunnels, and toll roads in the region). Taxis will be billed $2.50 per ride, while ride-hailing services will be billed $2.75.

Taxis don't cause congestion

But Uber and Lyft, for example, will be able to carve out a discount for a "pooled" ride, knocking the fee down to $0.75. Taxis won't be able to do this — and it could be impossible to monitor whether ride-hailed pools actually wind up transporting multiple passengers.

The whole thing is intended to generate $15 billion over five years for capital improvements to the city's mass-transit system (in one of those "only in New York" twists, the state government in Albany oversees mass transit in New York City). That's much-needed funding, and one hopes it will be wisely spent. But the most recent expansion of the city's subway, the Second Ave. line, took decades and cost a staggering $3.8 billion, so don't get your hopes up.

Congestion pricing, of course, should ease Manhattan gridlock, but it will do this at the expense of turning over the city's most lucrative sections to Uber and Lyft while continuing the destruction of the taxi business. It's a hard political bargain, which was forged by New York Gov. Andrew Cuomo.

As far as I can tell, the plan combines accepted economic theory about congestion caused by personal cars — it's an unpriced "externality" — with a cunning effort to get well-capitalized Silicon Valley companies to pay for upgrading mass transit.

Taxi drivers caught in the middle

Taxi drivers are caught in the viselike middle. They've persuasively argued that because their numbers have long been capped, they aren't part of the congestion problem. This is accurate — in fact, it's hard to see why taxis aren't exempt from the charge. They're sort of the longstanding third leg of a New York City transit stool, with buses and subways being the other two.

The taxi business has evidently lost that argument and could now have a tough time competing with Uber, Lyft, and others because ride-hailing services — already losing massive amounts of money as they chase the growth that investors desire — will simply cut prices to avoid any passenger sticker shock. 

The double standard at work here is actually so glaring that it's almost hard to believe it's real. Uber, Lyft, and other ride-hailing services simply deluged New York City streets with vehicles in an effort to rapidly build their businesses. And we know how big those businesses can be: Lyft's initial public offering last week valued the company at over $20 billion.

The taxi business is hardly pure — economists have often argued that it was a monopoly, and, at one point, taxi medallions were costing more than $1 million. But New York is now using its lawmaking and budgetary power to pick a clear winner in the transit game; the kind of money that the Ubers and Lyfts can bring to the table is simply too humongous to resist.

Pragmatists will tell you that the horse, so to speak, has left the barn anyway, so it makes sense for New York to effectively tax ride-hailing to make up for years of neglecting the transit systems that have nothing to do with gridlock. In that case, the taxi business, iconic or not, is expendable.

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Marijuana retailer Cresco Labs is buying up a competitor for $825 million in one of the largest US pot deals as the company looks toward a US listing

Mon, 04/01/2019 - 3:06pm

  • Cresco Labs has agreed to buy Origin House in an approximately $825 million deal.
  • The deal would be the largest public acquisition in the US cannabis industry to date, according to Cresco.
  • Deals of nearly $1 billion are becoming common in the US cannabis industry as companies chase down what's set to be a $75 billion market.

The marijuana retail chain Cresco Labs has agreed to buy the marijuana retailer Origin House in an approximately $825 million deal.

The deal, expected to close in June, would be the largest public acquisition in the US cannabis industry to date, according to Cresco. It said that based on the terms of the deal, Origin House shareholders would receive 0.8428 subordinate voting shares of Cresco, which went public on the Canadian Securities Exchange in December.

The acquisition marks Chicago-based Cresco's push into the lucrative California market, where Origin House, formerly CannaRoyalty Corp, has a presence in more than 500 dispensaries.

Cresco Labs CEO Charles Bachtell said in a Monday interview that he was attracted to Origin House because of the company's deep expertise in California. And on the other side, Cresco will help Origin House distribute its California brands to other states, Bachtell said.

Read more: A hot marijuana startup fresh off a $75 million raise just scooped up an exec from ModCloth to lead its retail push, and it's part of a growing trend

"So the two companies kind of fit together like puzzle pieces," Bachtell said.

The California cannabis market is expected to be over $7.7 billion by 2022, according to the industry research firm BDS Analytics.

Once the deal closes, Cresco will have brands in over 725 dispensaries across the US, it said.

Cresco was advised by the investment bank Canaccord Genuity, and the Canadian law firm Bennett Jones acted as legal counsel. Origin House was advised by Cormark Securities, and Norton Rose Fulbright Canada served as legal counsel.

The deal will also give Cresco a retail footprint in Canada, though Bachtell said the company would remain "laser-focused" on the US market.

The opportunity in the US is "so, so challenging" and demands a full-time focus given that each state has different rules and market dynamics, Bachtell said, but Origin House's Canadian retail presence was a "very interesting and valuable additional component."

Buyouts of nearly $1 billion have become common in the US cannabis space as companies compete to capture a market that some Wall Street analysts say could hit $75 billion in the next decade as more states open their doors to commercialized pot.

In March, Harvest Health & Recreation announced its intent to acquire Verano Holdings in an approximately $850 million all-stock transaction. In October, a New York marijuana company called iAnthus acquired MPX Bioceutical in a $640 million deal, and MedMen, a California cannabis chain, acquired PharmaCann in a $682 million all-stock transaction.

The maturing of cannabis M&A

What separates this deal from the other multimillion-dollar marijuana mergers in the past months is that it's not just a play for scale.

"All of the M&A that's been done so far, including from us, has been sort of the land-grabbed geographic expansion," Bachtell said. "You know, acquire a company that gives you another license in another state."

Bachtell said this deal would allow Cresco to "execute better and deeper" in the California market.

"This was a more strategic acquisition than what's been done in the cannabis space so far," Bachtell said. "I think it's the maturing of M&A in the space."

Looking ahead, Bachtell said the company would like to pursue a listing on a US exchange.

"I think it's fair to say that the US capital markets are the goal," Bachtell said. "I don't know that that's too far off."

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Victoria's Secret's Pink brand is 'without fans and rudderless' (LB)

Mon, 04/01/2019 - 2:56pm

  • Pink is the next sore spot for L Brands' Victoria's Secret, according to Jefferies analyst Randal Konik. 
  • He says sales for the brand fell by low double digits in the fourth quarter and are set to keep sliding.  
  • Konik went to a Pink event at Rutgers University that he says proved the brand is "without fans and rudderless."
  • Watch L Brands trade live

Pink is the next trouble spot at Victoria's Secret, according to longtime L Brands skeptic Randal Konik, who last week visited a brand event at Rutgers University. 

"Our visit to Rutgers University on 3/29 shows the PINK brand without fans and rudderless," he wrote in a note sent out to clients on Monday. "We believe PINK sales may be cut in half or more within the next 12-24 months creating further EPS cuts for LB so sell shares."

The problems at Victoria's Secret are nothing new, but what is new is that the Pink brand is struggling. Comp sales for Pink fell by low double digits during the fourth quarter, and Konik says that decline is set to continue. He added that the brand can't rely on heavy promos to keep driving traffic, and that the slowdown is coming as the Bath & Body Works brand also begins to wane. Bath & Body Works' comp sales weren't positive for just the second time in 24 months in February.   

But at least one investor thinks there's still hope at L Brands. Last month, in a letter to Leslie Wexner, the chairman and CEO of L Brands, the activist investor Barington Capital called on the company to quickly improve the performance of Victoria's Secret by "correcting past merchandising mistakes and ensuring that it communicates a compelling, up-to-date brand image that resonates with today's consumers."

Barington asked the company to unlock Bath & Body Works' value by launching an initial public offering for the brand or by spinning off Victoria's Secret. Barington also seeks a shakeup of the L Brands board of directors.

And while Konik thinks that an activist investor is a good thing, he disagrees on the value of L Brands. 

"The leverage is high, the VS brand is broken and they are not calculating the risk of PINK sales being cut in half which is real," Konik wrote. 

"Their view is BBW has all this value and to be fair BBW is a good biz for now but it’s cyclical and mall dependent which means the distribution model is flawed and business momentum not sustainable. Furthermore if the company were to be split all the debt has to be put on BBW not VS where losses are going to mount and cash flows can’t cover interest payments."

Konik has a $16 price target for L Brands — about 41% below where shares were trading on Monday — and "underperform" rating for the stock. 

L Brands was up about 6% this year, including Monday's 1.1% loss. 

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There are 3 staples every wine cellar should have, according to an expert at Christie's

Mon, 04/01/2019 - 2:48pm

  • Peter Rusinak is a wine specialist at the famed Christie's Auction House.
  • He says there are three types of wine everyone should have in their wine cellar: Bordeaux, Burgundy, and Champagne.
  • Rusinak says Bordeaux has been making the best wines from Cabernet and Merlot for 300-400 years, and Burgundy is difficult to make but can be "the silkiest wine on the market" if done right.

When most people think of the famed Christie's Auction House, they probably think of precious jewels or record-setting sales of paintings by famous artists.

But their wine and spirits department has been around since the first Christie's auction in 1766 and offers rare spirits from around the world. 

I recently visited Christie's in New York City, which is located at Rockefeller Center, and met Peter Rusinak, the resident wine specialist. 

Rusinak told me there are three types of wine everyone should have in their wine cellar: Bordeaux, Burgundy, and of course, Champagne.

"Bordeaux, it's been around for ages," Rusinak said. "They've been making the best wines out of cabernet and merlot for the last 300 to 400 years."

As for Burgundy, it's one of the most difficult wines to make, according to Rusinak. "But if the winemaker gets it right, it's the silkiest wine on the market," he said.

And of course, you can't forget the bubbly.

"Champagne's always Champagne," Rusinak said. 

In a presentation at Christie's, Rusinak explained the different types of Champagne you can buy, the most common being Brut, a dry style of Champagne. 

Then there's Blanc de Blancs, which is made of 100% Chardonnay, has a soft flavor, and has the potential to age well. Blanc de Noirs is a dry Champagne made from black grapes such as pinot noir and pinot meunier. 

Demi-Sec is a sweeter type of Champagne that's "perfect for desserts," Rusinak said. "They serve those Champagnes with wedding cake, with chocolate truffles."

Champagne that's called Extra-Dry is misleading because there's actually a slight sweetness to these types, Rusinak said.

And then there's Rosé Champagne, a dry style that's made by blending red grapes or by contact with the skin of red grapes. 

When you're ready to enjoy those bubbles, remember that the traditional flutes and old-fashioned coupe glasses are actually not the best way to serve Champagne, as Business Insider's Lina Batarags previously reported.

Read more: You're probably opening Champagne the wrong way — and serving it in the wrong glass. Here's what you should be doing instead, according to an expert

Instead, you should use a glass that looks like a white wine glass but comes together more noticeably toward the rim, like the one pictured above. 

SEE ALSO: A Hennessy expert in France told me the best way to drink 3 different types of cognac, from mixing it in an absinthe-rinsed glass to adding cold water

DON'T MISS: You're probably opening Champagne the wrong way — and serving it in the wrong glass. Here's what you should be doing instead, according to an expert

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Hackers steered a Tesla into oncoming traffic by placing 3 small stickers on the road (TSLA)

Mon, 04/01/2019 - 2:46pm

  • Cybersecurity researchers from Tencent's Keen Labs say they were able to fool Tesla's Autopilot into merging into oncoming traffic.
  • The hackers also controlled the car using a video game controller.
  • Tesla thanked the group for its research and said no customers had experienced the problems in real driving.

A prolific cybersecurity research firm says it has managed to make Tesla's self-driving feature veer off course by sticking three small stickers on the road pavement.

Keen Labs, a two-time honoree of Tesla's "bug bounty" hall of fame program, said in a research paper on Saturday that it found two ways to trick Autopilot's lane recognition through changing the physical road surface.

The first attempt to confuse Autopilot used blurring patches on the left-lane line, which the team said was too difficult for someone to actually deploy in the real world and easy for Tesla's computer to recognize.

"It is difficult for an attacker to deploy some unobtrusive markings in the physical world to disable the lane recognition function of a moving Tesla vehicle," Keen said.

The researchers said they suspected that Tesla also handled this situation well because it's already added many "abnormal lanes" in its training set of Autopilot miles. This gives Tesla vehicles a good sense of lane direction even without good lighting, or in inclement weather, they said.

Not deterred by the low plausibility of the first idea, Keen then set out to make Tesla's Autopilot mistakenly think there was a traffic lane when one wasn't actually present. The researchers painted three tiny squares in the traffic lane to mimic merge striping and cause the car to veer into oncoming traffic in the left lane.

"Misleading the autopilot vehicle to the wrong direction [of traffic] with some patches made by a malicious attacker is sometimes more dangerous than making it fail to recognize the lane," Keen said.

"If the vehicle knows that the fake lane is pointing to the reverse lane, it should ignore this fake lane and then it could avoid a traffic accident."

In response to Keen's findings, Tesla said the issues didn't represent real-world problems and no drivers had encountered any of the report's identified problems.

"In this demonstration the researchers adjusted the physical environment (e.g. placing tape on the road or altering lane lines) around the vehicle to make the car behave differently when Autopilot is in use," the company said. "This is not a real-world concern given that a driver can easily override Autopilot at any time by using the steering wheel or brakes and should be prepared to do so at all times."

A Tesla representative told Business Insider that while Keen's findings weren't eligible for the company's bug-bounty program, the company held the researcher's insights in high regard.

"We know it took an extraordinary amount of time, effort, and skill, and we look forward to reviewing future reports from this group," a representative said.

SEE ALSO: Hackers found a way to trigger a Tesla's brakes from miles away

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People born into massive family fortunes go down 2 different paths, says a Disney heiress who has donated $70 million over the past 30 years

Mon, 04/01/2019 - 1:46pm

  • People born into wealth can go one of two ways, Disney heiress Abigail Disney told The Cut.
  • They either spend money all the time and seek attention — "the Kim Kardashian West route," Disney said.
  • Alternatively, they do the opposite and try to hide their wealth, Disney said.

There are two different paths those born into extreme wealth end up taking, Abigail Disney recently told The Cut.

Granddaughter of Roy O. Disney, cofounder of The Walt Disney Company, Abigail is an heiress to the Disney fortune. While she stayed mum on the exact size of her inheritance, she told The Cut that she could be a billionaire if she wanted and that she's donated more than $70 million since turning 21. 

"I think that people who grow up in this kind of life go one of two ways," Disney said. "They either go the Kim Kardashian route, which is spending, spending, spending, completely absorbing the idea that, 'Yes, you are that special,' and wanting everyone to look at you." 

She continued: "Or, and I know a lot of people who've gone this way — especially my women friends — you do the opposite. I wore shitty clothes around. I didn't want anyone to know what I had. I spent most of my 20s in graduate school, and graduate school is where people shame you for having money. I was embarrassed by it. I didn't want anyone to know."

Read more: An heiress to the Disney fortune has given away $70 million, and teaches her kids that money is the least important thing about them

She went on to say that her kids are somewhat the same way as she was, wanting to support themselves and not let anyone know their background.

It's not hard to find differences in how those who inherited money choose to display their wealth. 

Just look at the "Rich Kids of Instagram," now known as "Rich Kids of the Internet," a group of millennial influencers who are known for flaunting their wealthy lifestyles on social media. They've shown off everything from beach vacations in Malaysia to their private jets and yachting trips around Monte Carlo.

It's a stark contrast to Warren Buffett's three kids, to whom Buffett only plans to leave a small fraction of his $84-plus billion fortune. Like their father, they don't flash their riches: They were raised to find their own place in the world, and all three are philanthropists.

Read the full story on The Cut »

SEE ALSO: A woman who studied 600 millionaires says the key to getting rich has nothing to do with how smart you are

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Here are all the differences between Tesla's sedans — the Model S and Model 3 (TSLA)

Mon, 04/01/2019 - 12:50pm

  • Tesla sells two sedans, the Model S and the Model 3. 
  • The Model S is a more luxurious mid-size four-door that can almost stretch to full-size duty.
  • The Model 3 is a compact four-door that takes a more minimalist approach than the Model S.

Since 2017, Tesla has officially been selling two sedans, the Model S and the Model 3. Both are fully electric, but with the arrival of the base, $35,000 Model 3, there's now a wide price difference between the cheapest Tesla four-door and the most expensive Model S, which can cost over $100,000, depending on the configuration.

What, you might wonder, do you get for your money with each car?

Glad you asked. I've provided a simple breakdown. The bottom line is that you currently have more options with the Model 3, but the Model S is more premium and serves up better performance — if you pay extra for it. Otherwise, although the cars are in different segments, they have a lot in common.

Read on to learn more:

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The Model S is Tesla's oldest vehicle now in production. The mid-size sedan arrived in 2012 and has been updated and reconfigured numerous times, but the average price is around $100,000.

Currently, Tesla sells three versions of the Model S, each with a "dual motor" all-wheel-drive configuration.

The Standard Range is $79,000 to start, with a 270-mile range and a 0-60mph time of 4.2 seconds.

The Long Range is $83,000, with a 335-miles range and a 0-60mph time of 4.1 seconds.

The Performance is $99,000, with a 315-mile range and a 0-60 time of 3 seconds.

(These prices are all before tax credits and fuel savings.)



Adding Ludicrous Mode to the Performance trim for $15,000 takes the 0-60 mph time down to 2.4 seconds. That's supercar fast.

See the rest of the story at Business Insider

The best way to build your credit is the same strategy people use to build wealth

Sun, 03/31/2019 - 11:30am

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • It can seem intimidating to build your credit score, but it's not hard to maintain once it's established.
  • Your credit is represented by a credit score, a three-digit number that gives lenders an idea of how risky you are as a borrower that fluctuates with credit-related activity, like taking out a loan or paying off credit card debt.
  • Strategies like automatic payments, prioritizing your debt repayment, and spending within your means can help you build and maintain your credit.
  • Building and maintaining good credit boils down to spending less than you earn and using the rest to get debt-free, save, and invest — the same general personal finance strategy that enables you to build wealth.

Your credit score is a number between 300 and 850 that tells creditors your risk of not paying back a credit card or other loan. Think of it kind of like your high school GPA, but instead of helping you get into college it helps you get the best credit cards and interest rates.

If you're trying to build your credit, or maintain your credit, a few basic, impactful strategies can help you get up to 800 and beyond.

Make minimum payments automatic

The biggest factor in your credit score is your on-time payment history, so you should start by making sure that is perfect going forward. The easiest way to ensure you never miss a payment due date is to turn on automatic billing and payments using your bank's bill pay or your credit card billing website.

Related: 5 credit cards that offer free credit scores — and lucrative rewards

If you are worried about overdrafting your checking, you can set your bill pay to always pay the minimum, and then pay any additional balance manually. Either way, if you're setting up automatic payments you'll want to be checking your credit card and checking account balances regularly to make sure you have the cash you need on hand. You can do this through your bank's website, or through a money-tracking app like Mint or Personal Capital.

The biggest goal is to avoid a late or missed payment. Late payments show up on your credit report for seven years. That's a long time for one little mistake to drag down your score. With automatic payments, you never have to worry about accidentally missing a due date and getting dinged for the better part of a decade.

Build a debt avalanche for existing balances

The second biggest factor in your credit score is your outstanding debt balances. Big balances on credit cards and other revolving credit accounts can drag your score down quickly. However, paying them off is also typically the fastest way to improve a credit score.

The debt avalanche, a twist on the debt snowball popularized by money guru Dave Ramsey, is a system where you pay the minimum balance on all of your balances each month except for the one with the highest interest rate. Pay as much as you can possibly squeeze from your budget into that one account. Once it is paid off, move on to the next highest interest rate with a bigger payment and so on until you are debt free.

Read More: I paid off $40,000 of student loans in 2 years thanks to a math-based strategy I'd recommend to just about anyone

While it is easier said than done, it is also mathematically the best strategy to get out of debt. As those balances go down with on-time monthly payments, you should see your credit score go up. It can take up to a month for payments to show up on your credit report and in your credit score.

Only apply for credit you really need

New credit inquiries show up on your credit report each time you apply for a new loan or credit card, and each one of those inquiries temporarily brings down your score by a few points. A lot of inquiries shows you have applied for a lot of credit, and lenders see that as high risk.

Read More: The best credit card for millennials, based on their spending habits, rewards, and benefits

New credit also reduces your average age of credit, another metric in your credit score. A new account generally lowers your score temporarily and increases it in the long term. But that only works if you only apply for accounts you can manage responsibly and pay as agreed.

Don't spend more than you can pay off in full each month

To get into the right mindset and set yourself up for credit score success, you should go into a credit score improvement strategy with your eyes wide open. A good budget can help you ensure you only spend what you can afford to pay off in full each month on your credit cards and can help you avoid overdrafts if you pay by debit card.

In fact, much of personal finance can be distilled down to this rule: Spend less than you earn and use the rest to get debt free, save, and invest. If you can do that, you'll be on track for success with your credit score and your finances overall.

Join the conversation about this story »

Morgan Stanley warns General Motors investors to lower their expectations for Cruise autonomous cars (GM)

Sun, 03/31/2019 - 10:48am

  • GM's Cruise autonomous driving unit plants to double in size this year. 
  • Morgan Stanley, meanwhile, is warning investors that revenue and profit could still be far off. 
  • The Wall Street bank says the ability to remove safety drivers from the cars is crucial, but could take years.

Morgan Stanley is trying to tamper investor excitement for General Motor's Cruise robo-taxi unit.

In a note to clients this week, the Wall Street bank told clients that the self-driving department may not ever turn revenue if it can't remove backup safety drivers from the cars.

"While we think GM Cruise has important technological value, we urge investors to lower expectations on revenue generation and profitability of the unit," analyst Adam Jonas told clients in a research note.

"Taking nothing away from GM cruise, it is our understanding that the technology required to remove human drivers at an acceptable level of consumer safety is likely many years away," he continued. "And the legal and regulatory construct to support, even proven technology, may present even greater hurdles largely outside of GM Cruise's control."

Jonas is far from the first to downplay the hype around self-driving cars.

Take Google's Waymo, for instance, which is running the only consumer-facing, revenue-driving self-driving fleet. Even Waymo still has backup drivers in cars, making the service a de-facto Uber ride, for all practical purposes.

GM's hope is that Cruise can soon operate without a driver — and eventually in a car that doesn't even have a steering wheel. Federal regulators have opened up that possibility to the public in a 60-day comment period on GM's 15-month old proposal.

High-profile incidents, like the killing of a pedestrian in Arizona by an Uber self-driving car in 2018, have added to some skepticism of the technology. Still, given the massive number of road deaths each year in the US, advocates point to more safety with robots at the wheel than humans.

"We are constructive on the development of autonomous cars, but see room for the market to elongate the adoption curve scenarios," Jonas said. "Given the technological challenge as well as the legal and regulatory framework."

SEE ALSO: GM wants to build cars without steering wheels — and the government wants people to weigh in on the proposal

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Millennials would rather spend money on experiences than on things. There are 4 reasons why that's a smart money move, according to a financial expert

Sun, 03/31/2019 - 10:30am

  • Millennials, who prefer to spend their money on experiences, might be getting something right when it comes to their spending habits.
  • Spending money on experiences can create a longer-lasting, more substantial payoff, according to financial expert Jean Chatzky.
  • Experiences not only create memories and anticipation, but they can involve other people and exercise — all of which can boost happiness, Chatzky said.

Millennials are all about the experience economy.

They pay more for things such as travel, entertainment, and dining compared to their parents and grandparents, according to findings by JPMorgan. And in Fidelity Investments' 2018 Millennial Money Study, more than a quarter of respondents said that after a rough week, the thing that would bring them the most joy is some form of entertainment, such as going to the movies, happy hour, or a concert. 

Turns out, they might be on to something.

"Spending money on experiences tends to have a longer-lasting and more substantial payoff," Jean Chatzky, financial editor of NBC's "Today" Show, wrote in her latest of 11 books, "Women with Money."

Here's why, according to Chatzky.

1. Experiences get better with time.

"When you experience something, you make memories," Chatzky wrote. "That allows you to go back and revisit, which brings the original burst of happiness you felt in the moment back to the fore. You may even embellish a bit and make it better than it was IRL."

Consider the influence of social media in bringing up these memories — seeing it on your timeline or reposting a #TBT rekindles those "warm fuzzies," Chatzky said.

A study conducted at Cornell University found that posting experiences on Facebook and other social media sites helps improve a person's memory, according to Digital Journal in a post syndicated on Business Insider.

Rich millennials, in particular, prioritize posting their experiences on social media, but they do so for more than just to relive the experience — they're also seeking validation.

Read more: Millennials are treating themselves to experiences — but it doesn't mean they're bad with money

2. Experiences often involve planning.

Planning your experience builds anticipation.

"When you start fleshing out the details of that upcoming trip to, say, Nashville, researching which place to go to for barbecue and which for hot chicken, figuring out who's playing in town the night you're there, you start to get excited," Chatzky wrote. "Putting the dates on the calendar gives you something to look forward to."

Just ask Justin Maiman, who's currently taking Yale's happiness class — the university's most popular class ever — "The Science of Well-Being." He learned during the course that experiences are worth investing in partly because the anticipation of the experience leads to more happiness and joy, he wrote.

3. Experiences tend to include other people.

"The social aspect of being with others is, for most, a happiness plus," Chatzky wrote.

She cited research by Michael Norton, Harvard Business School professor and co-author of the book "Happy Money: The Science of Happier Spending," who found that spending within reason to strengthen relationships is generally a good use of money.

Strong relationships are the key to happiness, Gretchen Rubin, happiness expert and author of "The Happiness Project," said in a video for Business Insider. She found evidence of a correlation between happiness, healthiness, and strong relationships — if something will strengthen a relationship, it will probably boost happiness in the long run, she said.

Watch: Happiness expert shares the one key both philosophers and scientists agree is necessary to be happy

4. Experiences sometimes involve physical activity.

According to Chatzky, spending money on exercise can boost happiness in several ways — like reducing stress. 

"In the short term, exercise makes you feel better because you blow off some steam," she wrote. "In the long term, it makes you physically stronger and more able to handle whatever stresses life is throwing your way."

Even if you're not experiencing stress, Chatzky said, getting healthier can make you happier.

A 30-year-old communications specialist told Chatzky that her $250-per-month CrossFit class gave her confidence and made her feel healthier, which in turn made her happier. She found other ways to cut $250 out of her monthly expenses to afford it.

She's part of the "wellness generation" of millennials known for splurging on pricey gym memberships or $30 SoulCycle spin classes. For many, the long-term benefits they reap make the upfront cost worth it.

SEE ALSO: 7 ways rich millennials spend and display their money differently than rich baby boomers

DON'T MISS: 5 things rich millennials do differently with their money than the rest of their generation

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7 ways to use your tax refund to build wealth this year

Sun, 03/31/2019 - 10:15am

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • During last year's refund season, the average family received $2,727 back from the federal government.
  • If your goal is to build wealth, consider making a smart choice with your money when you have it.
  • By using your tax refund wisely, you could save money on interest, build up new income streams, and create long-term wealth that lasts.

The average federal tax refund was $2,727 nationally for the 2017 tax year, and after a tense few weeks and rumors of lower refunds in early 2019, it looks like things are just about back to normal.

Still, you have an important choice to make this year. Will you blow your refund on new furniture? How about a vacation to the Bahamas? Maybe you will look for ways to leverage your refund that could leave you with more money in your pocket later in life.

Experts obviously suggest the latter, especially since your tax refund is "extra" money you may not even need. If your goal is building wealth, consider using your tax refund for these expert-recommended goals in 2019:

Establish an emergency fund

Considering four in 10 Americans didn't have the funds to cover a $400 emergency last year, stashing your tax refund in a high-yield savings account could be a good idea.

Financial advisor Tricia Rosen of Access Financial Planning said it would be ideal to save up three to six months of expenses over time. "This will prevent you from having to take out high-interest debt in the future," noted Rosen.

Need a smart place to save your emergency fund? Consider these offers from our partners:

Read More: Saving an emergency fund is a good start, but where you put those savings can matter even more

Pay down high interest debt

If you have high-interest debt, then that's another clear winner in terms of how to spend your refund.  

"It's the same as getting a no-risk return of 14% to 18%, depending on what rate you are paying on the debt," said Rosen.

Not only can paying off debt help you save on interest, but it can increase your cash flow and make it easier to save.

 

Boost your workplace 401(k) contributions — and snag an employer match

Financial planner R.J. Weiss of The Ways to Wealth suggests taking stock of your tax refund and heading to your workplace Human Resources department. Boost the percentage you contribute to a retirement account like a 401(k), he said, and try to maximize any employer match you can qualify for.

"A 401(k) match is often the highest-returning investment available," he said. "As such, it's an opportunity that shouldn't go to waste."

Read More: Here's how big tax refunds could be this year for people earning between $21,000 and $266,000

Make a lump sum contribution to an IRA

Brandon Renfro, a financial advisor and the Assistant Professor of Finance at East Texas Baptist University, also suggests contributing money to a traditional or Roth IRA provided you qualify.

You can contribute up to $6,000 total across both accounts in 2019, and contributions to a traditional IRA may be tax deductible depending on your income and other factors.

 

Invest in real estate

Ready to dive into real estate? Consider using your refund as a down payment on a starter home or rental property, said Renfro.

If you don't want to own physical land or buildings but you still want to invest in real estate, you can also invest into an REIT, or real estate investment trust, via most online brokerage accounts. Real estate platforms like Fundrise also let you invest money in to real estate notes that can help you grow your net worth over time — and without the hassle and stress of managing rental property.

Build new income streams

Don't rule out leveraging your tax refund to build a business or additional revenue stream, noted Renfro. If you have a unique idea that needs funded or a side hustle idea that requires equipment or an initial investment, your tax refund may be the answer to your prayers.

Renfro also says your refund may be helpful when it comes to advertising a small business you already have, whether you make custom furniture, tutor college kids, or bake wedding cakes.

Read More: A self-made millionaire who retired at 30 says the 2 best ways to build long-term wealth don't require working overtime or obsessing about the stock market

"Think about using some of your refund to promote your business," he said. "The increased exposure may boost your income and possibly allow you to sustain even greater savings and wealth building."

 

Open an account with a robo-advisor

If your other financial ducks are in a row, CPA and financial expert Riley Adams, who blogs at Young and the Invested, says to look to robo-advisors like Betterment and Wealthfront for your investing needs.

"Robo-advisors take varying amounts of money and automate their investments into low-cost, diversified investments," he said. 

Low account minimums are one reason robo-advisors have gained steam over the past few years, and another benefit is lower fees. Where financial advisors may charge 1% to 2% a year for their services, robo-advisors usually charge between .25% and .50% of your portfolio annually.

Betterment, which has a $0 account minimum for its digital product, charges a fee of .25% a year for digital portfolio management for nonbusiness investors; Wealthfront, which has a $500 minimum, also charges .25%.

SEE ALSO: Your state tax refund may take longer to hit your bank account than your federal refund — here's how to find out when it's coming

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This CEO explains how the hottest trend in software development helped his startup take off and raise $50 million in new funding

Sun, 03/31/2019 - 8:30am

  • Many organizations are starting to embrace Agile, a kind of process of software development that involves working on small pieces of a project in parallel and frequent iteration.
  • One of the companies that's benefitting from that shift is Sauce Labs, a San Francisco startup that offers an automated app testing service.
  • Sauce Labs' system is designed to help organizations speed up the testing of their web and mobile apps.
  • It just raised $50 million that it plans to use to help expand its offerings.

It's taken a while, but Sauce Labs may finally be right where it wants to be.

The San Francisco startup offers a cloud-based service that allows developers to automatically test their web and mobile applications for bugs. It specializes in offering programmers the chance to test their applications on multiple simulated devices or browsers at once, allowing them to markedly speed up the process of development. 

The company, which has about 300 employees and development teams in Berlin and Warsaw, announced last that it's secured $50 million in new, late-stage venture funding from Riverwood Capital. The new company's new funds came with a valuation north of $380 million, or more than double what it was in 2016 when Sauce Labs last raised capital.

The company launched 10 years ago, but it didn't really take off until an industry-wide shift in app development took root, said Charles Ramsey, Sauce Labs's CEO. But now that it has, business is booming, he said.

"The market is changing rapidly, to our advantage," he said.

Sauce Labs is benefitting from an Agile approach

In recent years, a growing number of companies have embraced so-called Agile software development. In Agile, big software projects are divided up into discrete chunks. Small teams typically work on those different pieces of the projects in parallel and by iterating on them repeatedly. The process usually allows organizations to develop software faster than with older methods, in which development is generally done sequentially and only after each step is completed, and allows them to more rapidly fix problems and introduce new features.

One of the things that can delay Agile development, though, is testing each new feature in and iteration of an app, Ramsey said. In the past, testing was a largely manual process, requiring actual human beings — whether volunteers or paid employees — to try out apps and features, he said. That can be a slow, potentially expensive or logistically challenging, and often incomplete; it's often hard to test all of an app's features in a set amount of time.

Read this: $25 billion Atlassian is releasing a new tool to help developers release code faster as it takes on GitHub

That's where Sauce Labs' service comes in. By offering automated testing and allowing organizations to tap into multiple simulators simultaneously, its service can quicken the process and allow it to be more comprehensive.

"Testing is a constraint to really great Agile development," Ramsey said, "and so we're getting a lot of attention."

It has more offerings in the works

Sauce Labs' service, which it offers as a subscription, allows organizations to test their apps to make sure they work across different operating systems, browsers, and devices. In addition to its simulators and emulators, it also offers a service that allows organizations near the end of the development process to try out their apps on actual devices via manual testing.

And the company, whose offerings have already become popular in the financial services, health care, and media industries, is planning to offer an even more comprehensive service, Ramsey said. It's developing a feature that would allow programmers to test out small snippets of code. The feature reflects how the development environment continues to evolve as more organizations are embracing Agile, he said. Those organizations are wanting to test their code more often and earlier in the development process, he said.

Sauce Labs plans to continue to add on to its offerings, including through an acquisition that Ramsey said is imminent but declined to discuss. It should have the opportunity to do so, thanks to this newest round of funding.

"We want people to be able to test at every step of the development process with the appropriate tool," Ramsey said.

Got a tip about a startup or other tech company? Contact this reporter via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

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