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You can donate your points and miles to charity, and it's one of the easiest ways to give back

Tue, 12/03/2019 - 5:38pm

  • Even if you don't have the time to volunteer for your local charity, it's possible to turn your everyday credit card spending into something that can help your favorite nonprofits.
  • Most hotel, airline, and credit card loyalty programs offer you the ability to donate your points directly to charity.
  • Some credit cards, like the Charity Charge World Mastercard, actually raise money for nonprofits instead of giving you rewards.
  • If you want to earn points while donating to charity, consider a card like the Chase Freedom Unlimited or the Blue Business® Plus Card from American Express to maximize your rewards.
  • Read more personal finance coverage.

Many people genuinely want to give back or do something to make a difference through charity work. But what can you do if your schedule won't allow time to volunteer or if charitable donations aren't workable with your budget?

Fortunately, the credit card points and miles you earn from everyday spending can be used to make a positive social impact. It's possible to donate many of them directly to reputable charities. And some co-branded credit cards even raise money directly for charity in lieu of racking up personal rewards.

Here's how to turn your credit card spending into a force for social good.

Donating your points to charity

If you already have a robust credit card points ecosystem in place, you don't have to completely change everything in order to start directing your rewards toward social impact. Most hotel, airline, and credit card rewards programs on the market allow you to donate your cash back, points, and miles directly to a number of well-respected nonprofits.

All you have to do is log in to a particular account and select what charity you want to donate to. The following brands have whole pages devoted to their reward donation platforms:

  • American Airlines — The airline lets you donate miles to Miles for Our Social Good, Miles for Our Well-Being, and Miles for Our Heroes
  • American Express — You can donate Amex Membership Rewards points to more than 1.5 million US charities through JustGiving
  • Hilton — Create a PointWorthy account and link it to your Hilton account, then you donate your Hilton points to thousands of charities.
  • JetBlue — You can donate TrueBlue points to charities including the American Red Cross and Make-A-Wish.
  • United Airlines — United partners with the Americares Foundation, Guide Dogs of America, and dozens of other charities.

You may be wondering exactly how the rewards you donate translate into charitable donations, and the answer is that it varies depending on the program and the organization. For some charities, your points or miles are using toward travel, while in other cases, like with Amex, your points are given a value in cash and then a cash donation is made to the charity. 

Even if the program you have points with doesn't tout any charity partners on its website, it never hurts to call and see if it's possible to donate any of your points to charity.

As a bonus, most rewards programs count charitable donations as account activity. So if you have any points in danger of expiring, making a small donation is a great way to reset the clock and make the world a better place.

Credit cards that give to charity

In the same way the World of Hyatt Credit Card and the American Airlines AAdvantage MileUp℠ Card direct all your rewards into the World of Hyatt and American AAdvantage programs, respectively, there are credit cards that turn the rewards of your everyday spending directly into charitable contributions.

The most flexible of these is the Charity Charge World Mastercard, which allows your spending to benefit up to three nonprofit partners as a time. The card rewards them with 1% cash back on every purchase, which counts as a tax-deductible donation.

For credit card users passionate about animal rights, Bank of America's World Wildlife Fund credit card donates up to 3% cash back of every purchase directly to the nonprofit. There are plenty of perks in it for cardholders as well, with an introductory 0% APR offer on purchases for the first 15 months (then a variable rate of 15.49% to 25.49%) and no annual fee.

The best credit cards for earning rewards on your donations

Many credit cards offer bonus points for your spending in categories like dining out or office supplies. However, there is one card that gives impressive points bonuses when you use them to donate to charity.

With the U.S. Bank FlexPerks Travel Rewards Visa Signature Card, you'll earn 2 points for every dollar spent on donations. This equated to about 3 cents in travel for every dollar you donate to charity, so the rewards for your good deeds are pretty sweet.

If you want a card that's great in general, and not just for making charitable donations, the Blue Business Plus Credit Card from American Express is a perfect business credit card for freelancers and small business owners. It earns a stellar 2 Membership Reward points for every dollar spent, regardless of purchase category (up to $50,000 per year, then 1 point per dollar), and there's no annual fee. This is a great card to use for your business all year, and then cap the final quarter off with a last-minute donation to charity if you can work it into your budget. Maybe that last gift in spending will help you qualify for a free flight or hotel stay.

If you can't qualify for a business credit card, the Chase Freedom Unlimited is a good option, as it earns 1.5% cash back on all purchases. Plus, if you also have a Chase card that earns Ultimate Rewards points, like the Chase Sapphire Preferred Card, you can effectively earn points instead of cash back with the Freedom Unlimited, so you'd be getting 1.5 points per dollar on your charitable spending.

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The Chicago real estate market is even worse than Hong Kong's, new data shows

Tue, 12/03/2019 - 5:35pm

  • Chicago's commercial real estate values posted the worst performance of all major cities in 2019, The Wall Street Journal reported, even falling behind protest-stricken Hong Kong.
  • The prices of offices, retail outlets, hotels, and apartment buildings fell 4.1% through the year, according to Real Capital Analytics data cited by The Journal. Hong Kong's commercial real estate fell 2.6% as antigovernment demonstrations pulled the city into its first recession in a decade.
  • Chicago's housing prices also underperformed, growing 1.5% from the third quarter of 2018 to the third quarter of 2019, according to the Federal Housing Finance Agency. The national average rose 4.9% in the same period.
  • The city is struggling to repay massive pension debts, but research firm Green Street Advisors warned that tax hikes could cut into attempts to attract new investment.
  • Visit the Business Insider homepage for more stories.

Chicago's commercial real estate posted the worst performance of all major metropolitan areas over the past year, The Wall Street Journal reported, even falling behind protest-stricken Hong Kong's property market.

The prices of office buildings, retailers, hotels, and apartments in Chicago fell 4.1% in the last year, according to Real Capital Analytics data cited by The Journal. The total commercial real estate sales in Cook County, which includes Chicago, sank by 42% this year. Sales also slowed in surrounding counties, including those near the Illinois-Indiana border.

Hong Kong's commercial real estate market tumbled 2.6% through the year as antigovernment demonstrations dragged the city into its first recession in a decade.

Residential buildings didn't fare much better in Chicago. The Second City's housing prices grew 1.5% from the third quarter of 2018 to the third quarter of 2019, according to the Federal Housing Finance Agency. The national average jumped 4.9% in the same period.

A combination of tax-hike fears and worse-than-expected growth weighed on Chicago's properties through 2019. The number of job postings in the city fell 0.5% in November compared to the year-ago period, according to Glassdoor data cited by The Journal, below the national average of 1% growth.

The city has also struggled to pull in new companies, sitting between coastal giants like San Francisco or New York and expanding mid-sized cities like Nashville, Tennessee and Austin, Texas.

Chicago already hosts the second-highest residential property taxes in the nation, but rates could surge even higher, according to research firm Green Street Advisors. A new property valuation method used by the city's tax assessor is raising uncertainty among business owners around how rates will change. Chicago is also looking for ways to pay off massive pension debts, but the firm previously warned that tax increases could drive workers away from the city.

"The primary reason that Chicago is struggling from an investment-sales perspective is the outlook of higher taxes in the future," Green Street managing director Dave Bragg told The Journal.

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

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Read the goodbye letter Google cofounders Larry Page and Sergey Brin wrote to announce they're stepping down from their leadership roles at Alphabet (GOOG, GOOGL)

Tue, 12/03/2019 - 5:30pm

  • Google cofounders Larry Page and Sergey Brin are stepping down from their respective roles as CEO and president of Alphabet, the company announced on Tuesday.
  • Google CEO Sundar Pichai will be taking over as the CEO of Alphabet, while Page and Brin remain involved with the company as board members and shareholders.
  • Brin and Page published a letter announcing the change that reflects on their decision and the evolution of the company they founded in 1998.
  • Visit Business Insider's homepage for more stories.

Google cofounders Larry Page and Sergey Brin, who served as CEO and president, respectively, of the search giant's parent company, Alphabet, announced on Tuesday that they would be relinquishing their leadership roles at the company.

Google CEO Sundar Pichai will be taking over as the chief executive of Alphabet, which means he'll be overseeing Google in addition to the company's Other Bets businesses, such as its autonomous-car division Waymo and the drone delivery firm Wing.

"We've never been ones to hold on to management roles when we think there's a better way to run the company," the letter reads. "And Alphabet no longer needs two CEOs and a President."

Though Pichai will be steering the company, Brin and Page are staying on as cofounders, board members, and shareholders of Alphabet.

The two cofounders published a letter announcing the news that reflects on the reason behind the shift and the evolution of Google since they founded it in 1998.

"The company is not conventional and continues to make ambitious bets on new technology, especially with our Alphabet structure," they wrote. 

Here's the full letter that Page and Brin published to announce their departure.


Our very first founders' letter in our 2004 S-1 began:

"Google is not a conventional company. We do not intend to become one. Throughout Google's evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world."

We believe those central tenets are still true today. The company is not conventional and continues to make ambitious bets on new technology, especially with our Alphabet structure. Creativity and challenge remain as ever-present as before, if not more so, and are increasingly applied to a variety of fields such as machine learning, energy efficiency and transportation. Nonetheless, Google's core service—providing unbiased, accurate, and free access to information—remains at the heart of the company.

However, since we wrote our first founders' letter, the company has evolved and matured. Within Google, there are all the popular consumer services that followed Search, such as Maps, Photos, and YouTube; a global ecosystem of devices powered by our Android and Chrome platforms, including our own Made by Google devices; Google Cloud, including GCP and G Suite; and of course a base of fundamental technologies around machine learning, cloud computing, and software engineering. It's an honor that billions of people have chosen to make these products central to their lives—this is a trust and responsibility that Google will always work to live up to.

And structurally, the company evolved into Alphabet in 2015. As we said in the Alphabet founding letter in 2015: 

"Alphabet is about businesses prospering through strong leaders and independence."

Since we wrote that, hundreds of Phoenix residents are now being driven around in Waymo cars—many without drivers! Wing became the first drone company to make commercial deliveries to consumers in the U.S. And Verily and Calico are doing important work, through a number of great partnerships with other healthcare companies. Some of our "Other Bets" have their own boards with independent members, and outside investors.

Those are just a few examples of technology companies that we have formed within Alphabet, in addition to investment subsidiaries GV and Capital G, which have supported hundreds more.  Together with all of Google's services, this forms a colorful tapestry of bets in technology across a range of industries—all with the goal of helping people and tackling major challenges.

Our second founders' letter began:

"Google was born in 1998. If it were a person, it would have started elementary school late last summer (around August 19), and today it would have just about finished the first grade."

Today, in 2019, if the company was a person, it would be a young adult of 21 and it would be time to leave the roost. While it has been a tremendous privilege to be deeply involved in the day-to-day management of the company for so long, we believe it's time to assume the role of proud parents—offering advice and love, but not daily nagging!

With Alphabet now well-established, and Google and the Other Bets operating effectively as independent companies, it's the natural time to simplify our management structure. We've never been ones to hold on to management roles when we think there's a better way to run the company. And Alphabet and Google no longer need two CEOs and a President. Going forward, Sundar will be the CEO of both Google and Alphabet. He will be the executive responsible and accountable for leading Google, and managing Alphabet's investment in our portfolio of Other Bets. We are deeply committed to Google and Alphabet for the long term, and will remain actively involved as Board members, shareholders and co-founders. In addition, we plan to continue talking with Sundar regularly, especially on topics we're passionate about! 

Sundar brings humility and a deep passion for technology to our users, partners and our employees every day. He's worked closely with us for 15 years, through the formation of Alphabet, as CEO of Google, and a member of the Alphabet Board of Directors. He shares our confidence in the value of the Alphabet structure, and the ability it provides us to tackle big challenges through technology. There is no one that we have relied on more since Alphabet was founded, and no better person to lead Google and Alphabet into the future.

We are deeply humbled to have seen a small research project develop into a source of knowledge and empowerment for billions—a bet we made as two Stanford students that led to a multitude of other technology bets. We could not have imagined, back in 1998 when we moved our servers from a dorm room to a garage, the journey that would follow.


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30 companies worth at least $1 billion that didn't exist 10 years ago

Tue, 12/03/2019 - 5:24pm

  • The tech landscape looks completely different today than it did at the beginning of the decade.
  • Numerous tech companies that didn't even exist before 2010 joined the ranks of the unicorns in 2019, reaching the vaunted benchmark of a $1 billion valuation.
  • Some of the young companies to reach unicorn status this year include Lyft, Instagram, Casper, Snapchat, and Warby Parker.
  • Visit Business Insider's homepage for more stories.

During the decade of the 2010s, future unicorns — a term used to denote startups worth at least $1 billion — were born left and right. 

A unicorn is not a mythical creature in Silicon Valley. With great help from the tech boom and investors with deep pockets, unicorns are everywhere. You see ads for them in the subway, scroll past posts of influencers touting their products on social media, and you may even sleep on one at night

The last decade introduced too many startups to count. Only a few hundred of them, though, ever went on to see a $1 billion valuation.

The more notable billion-dollar startups born in the 2010s include ride-hailing app Lyft, millennial-marketing mastermind Glossier, and WeWork. But if you get your insurance from a sleekly designed app called Lemonade, or order your Sweetgreen salad via Postmates, you'll start to realize there are unicorns all around you. 

With that in mind, take a look at 30 companies worth at least $1 billion that didn't exist 10 years ago.

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Paris-based Meero has become the go-to tool for photo editors since its launch in 2016. The company raised $230 million, pushing its valuation to $1 billion this past June.

Meero is an online editing and production tool assistant for photographers that uses artificial intelligence, akin to Photoshop — but much quicker and more streamlined. The tech behind Meero lets AI edit raw images automatically. It also matches freelance photographers with companies looking for content, with a 24-hour turnaround time. Meero raised $230 million in June, pushing its valuation to $1 billion to become one of Europe's fastest growing companies of the decade. 

Meero CEO Thomas Rebaud wants to host more photographer meet-ups in the future, host masterclasses, and maybe even launch a magazine.

Juul Labs launched in 2015 and has grown into a multi-billion-dollar company, with a valuation of $24 billion. But the company has come under fire over the last few years, making its future uncertain.

One of the more controversial startups of this decade, Juul, the e-cigarette company, sparked national outrage, congressional investigations, and criticism by the Food and Drug Administration, leading to total product bans in some countries

Juul's rise was fast, thanks in part to its marketing strategy. Advertisements on social media — depicting young adults in flashy, bright-colored ads promoting e-cigarette flavors like cucumber and mango — are what some critics attribute to the epidemic of teenage nicotine use. A year after Juul's launch, sales rose 700%, selling over 1 million products. 

But in September, Juul's CEO stepped down under increasing scrutiny over vaping's effect on lung health, despite the company touting its product as the safer alternative to cigarettes. The company also recently halted advertising in the US and its lobbying efforts in Washington. Its valuation fell from $38 billion earlier this year. 

DoorDash, the popular food delivery service, is valued at $13 billion.

DoorDash launched in San Francisco in 2013, and has since gained a fair amount of competitors like UberEats, Postmates, and Seamless. This past summer, the company faced backlash for its pay model for delivery workers that sometimes meant workers didn't actually receive customers' tips. The company changed its policy following the criticism.

DoorDash remains a private company and cofounder Tony Xu told Forbes the company will not disclose financials, but is still not profitable. He said the company plans to continue to raise money, launch new products, and expand the service.


WeWork, the commercial real estate and shared workspace company launched in 2010, was the most valuable private tech startup at the beginning of 2019 at $47 billion. Today, it's worth a fraction of that.

When WeWork was first introduced into society's consciousness, it was called revolutionary. WeWork's office spaces, sleek and full of amenities, attracted all kinds of members. Cofounder Adam Neumann proved to be so charming and persuasive that he secured a $4.4 billion investment from SoftBank CEO Masayoshi Son.

But when WeWork publicly filed its IPO paperwork in 2019, the public got its first look at the company's financials, which showed mounting losses, in the billions, concerning corporate governance. Combined with reports of erratic behavior by its eccentric CEO, Neumann, the IPO plans hit a wall and initial measures to placate potential investors weren't enough to save the public offering. WeWork eventually shelved its plan to go public indefinitely, and Neumann stepped down, but not without walking away with more than $1 billion. According to CB Insights, WeWork's valuation is around $8 billion now.

The on-demand grocery delivery app Instacart founded in 2012 was last valued at nearly $8 billion.

Instagram's partnerships with large chain grocery stores, like Amazon's Whole Foods, and its willingness to cater to "brick-and-mortar retailers," according to Recode, are essential for its future growth.

Like DoorDash, Instacart's fleet of workers have publicly called out the company for its pay model, which replaced tips with a service fee. The company brought the option to tip back, but the move still drew criticism after the location of the tipping feature changed.

The company's pay model still is an issue of contention for its workers, who just this past summer urged the platform's users to tip in cash instead of through the platform, and have even gone on strike

Robinhood, the no-fee stock-trading app popular among millennials, launched in 2013, and as of October 2019 was valued at $8.78 billion.

With a user base of over 6 million, the app also offers the option of buying and trading of cryptocurrencies like bitcoin, ethereum, and litecoin.

"There were a lot of people who didn't believe in it, and we had to bang down a ton of doors," cofounder Vlad Tenev told Business Insider. Some of Robinhood's flashier investors include Snoop Dogg and San Francisco-based venture capital firm Index Ventures. 

Robinhood's rise didn't come without some roadblocks. Earlier this year, the company had to walk back the launch of its high-yield checking and savings accounts within just one day of its announcement.

SoFi, the US-based online personal money management startup, was founded in 2011 and has a valuation of $4.8 billion.

In 2015, the company announced a $1 billion series F round led by SoftBank, making it the largest "single largest financing round in the fintech space" at the time. 

In 2017, former SoFi CEO Mike Cagney stepped down after a New York Times investigation reported Cagney was at the center of sexual harassment claims and the company's "toxic" environment. Since the scandal, Anthony Noto — former chief operating officer of Twitter and former managing director at Goldman Sachs — has taken over and shown interest in SoFi entering the cryptocurrency game.

Scooter and bike rental startup Lime is valued at $2.4 billion after raising over $777 million since its launch in 2017.

The last two years have seen a rise in e-scooter companies like Lime, which first launched in its hometown of Santa Monica and is now available in 120 markets around the world. Last year, however, was a tumultuous one for Lime, but was also the same year it hit the billion-dollar valuation mark

The city of San Francisco sent the company a cease and desist alleging its "current business practices [that] create a public nuisance." Multiple studies examined the number of injuries caused by e-scooters, leading to a very public backlash, while newer reports suggest that cities don't know how to regulate them, or end up banning them completely, and riders don't really know how to ride them.  

Postmates was first introduced in San Francisco in 2011. Today, the company, which employs thousands of couriers who deliver groceries, takeout, and more locally, operates in over 3,000 cities.

This past September, Postmates was valued at $2.4 billion after raising $225 million in funding — raising its total funding to $906 million. It first reached billion-dollar valuation status in 2018 as better-funded competitors entered the market. The company was expected to go public by the end of 2019, but its IPO has reportedly been shelved until 2020 at the earliest.

According to a report by Business Insider, Postmates remains "unprofitable and lags a crowded field of rivals in the food delivery market."

Plant-based food company Impossible Foods is currently valued at $4 billion and is expected to go public soon.

Founded in 2011, Impossible Foods makes plant-based foods to replace meat, dairy, and fish. This past year, the Silicon Valley-based company launched a nationwide partnership with Burger King, bringing its plant-based burgers to thousands of locations across the US. 

Demand for its products led Impossible Foods to complete a $300 million Series E funding round in May, skyrocketing its valuation to $2 billion as the demand for a better vegetarian burger fires up. Some noteworthy investors include pop singer Katy Perry, tennis star Serena Williams, and Microsoft cofounder Bill Gates. At the end of 2018, the company said it was turning out a million pounds of the product every month — and there are no signs of demand slowing down.

It it now raising $350 million at a $4 billion valuation, according to PitchBook.

Hims, the online platform where men can order personal care products discreetly, reached unicorn status in January 2019 and is currently valued at $1.1 billion.

The success of Hims, which was founded in San Francisco in 2017, is largely attributed to its splashy, millennial-focused ad campaigns. Hims offer users sexual-health products, birth control, skin care, and hair-loss treatments without having to physically go to the doctor to get a prescription. 

The company has raised nearly $200 million since its launch, but has also sparked concern among some doctors who said the health startup's effort to increase the number of online patients that could be treated with generic Viagra was worrisome. 

Glossier, the online beauty brand that sells makeup and skincare, reached a billion-dollar valuation in the first half of 2019.

Founded in 2010, CEO Emily Weiss harnessed the power of her social media presence to build a community of dedicated makeup and skincare enthusiasts where "less is more" is the motto.

Glossier's products, famous for its "millennial pink" packaging, have been used by countless celebrities, but the company has also made a point of tracking down "micro" and "nano" influencers (those with 1,000 to 100,000 followers) and paying them to promote the brand through their personal Instagram profiles. With a small number of brick-and-mortar stores, Glossier instead does semi-regular pop-ups where customers can come shop IRL.

Casper, the mattress and bedding company, was founded in 2014 and is credited with being one of the first bed-in-a-box startups.

With over $400 million in revenue for 2018, and $355 million in total funding to date, Casper reached a $1.1 billion valuation in March.

The company opened a retail store last year, and plans to open over a hundred more in the coming year, on top of its products being available in most Target stores.

In addition to popularizing the boxed delivery of mattresses, Casper's success can be linked to a marketing strategy taken up by many other popular-among-millennial brands: ads, ads, ads — on the subway, on podcasts, on billboards, on social media. So what's next for the company dedicated to revolutionizing sleep? A possible IPO.

Warby Parker, a direct-to-consumer brand that sells eyeglasses, reached unicorn status just five years after it launched in 2010.

Warby Parker offers a wide variety of stylish eyewear and sunglasses, as well as eye exams, at low costs, attracting millions of customers and raking in nearly $300 million in funding. It was last valued at $1.75 billion. 

Warby Parker has hundreds of stores around the US, but new features such as its "virtual try-on" is an attempt to attract customers outside of metropolitan hotspots and those who just don't have time to make an appointment.  In 2018, the company said it had reached profitability, and its founders are talking about an initial public offering in terms of "when" not "if," according to Recode. 

Ride-hailing giant Lyft went public at $72 a share and a $29 billion valuation in March — the first of its competitors to do so.

Lyft was founded in 2012 and quickly became one of Uber's closest competitors, though Uber remains the leader in the crowded ride-hailing market. Since it launched in San Francisco, the  company went on to raise around $5 billion from big-name investors like General Motors, Andreessen Horowitz, and Google's parent company Alphabet, before eventually going public at $72 a share.

Since then, its share price has traded below the IPO share price. On Friday, it was trading at around $49 a share.

Lyft is available in nearly 700 cities in the US, despite having no clear timeline for reaching profitability. Lyft has also come under fire for some of the same reasons users revolted against Uber. In October, over 30 women filed a lawsuit against the company saying it did not do enough to protect them against sexual assault and, in some cases, kidnapping. Lyft drivers also went on strike in May to protest what they called poor work conditions and low pay rates. 

Founded in early 2015, Away, the suitcase retailer that prides itself on sleek design and durable materials, reached a $1.45 billion valuation in May.

With its products being praised as "Instagram worthy," Away has raised $181 million in total, sold over 1 million of its lightweight, high-tech suitcases, and is backed by models including Karlie Kloss.

Away's cofounder Jen Rubio got her start at Warby Parker. Rubio and the Away team are now working on wellness products and travel-approved apparel in addition to their luggage lineup.

When tech meets mindfulness, you get Calm, the meditation app born in 2012 that reached a $1 billion valuation this year.

As mental health initiatives spread across the country, the Calm app and its many features, like breathing exercises and sleep stories, have gained a lot of traction. Calm got the attention of celebrities like Aston Kutcher and his VC firm Sound Ventures. In July, Calm completed a $115 million Series B raise — bringing its valuation to a bit over $1 billion and making it the first so-called unicorn startup focused on meditation

Cofounders Alex Tew and Michael Acton Smith plan to expand Calm through its partnerships with XpresSpa, American Airlines, Sonos, and Uber.

Famously used by human resource professionals, ZipRecruiter was founded in 2010 with the intent to connect candidates to companies looking to hire. It reached a $1.5 billion valuation in October 2018.

ZipRecruiter uses artificial intelligence to connect hiring managers with job seekers. Over 100,000 businesses use ZipRecruiter to find the candidates, according to TechCrunch. With no whispers of a potential IPO just yet, cofounder Ian Siegel said the company will continue to improve its existing software. 

Instagram, founded in 2010, was estimated to be worth over $100 billion in 2018, according to a report from Bloomberg Intelligence. In 2012, Facebook bought the image-sharing platform for $1 billion.

It is safe to say Facebook's $1 billion investment in Instagram paid off. According to Bloomberg Intelligence, Instagram would be worth at least $100 billion as a standalone company. In 2018, the company announced it had reached 1 billion active monthly users, a number many expect to rise

Since its launch, Instagram has expanded beyond photo sharing. There's IG TV, shopping, live video, stories, and even the ability to donate to different nonprofit organizations. More recently Instagram announced it was testing a feature that would do away with likes — a move that some praised and others threatened to quit the app over.

New York-based health insurance startup Oscar Health was founded in 2012 and is worth $3.2 billion.

Oscar raised $375 million from Alphabet last year, and said it pulled in nearly $1 billion in revenue. Oscar caters to the digital-savvy in search of adequate health insurance who don't want to deal with too much red tape typically associated with signing up for insurance. The company has a couple hundred thousand users, its biggest age group being those 26 to 35 years old. Alphabet's $375 million in 2018 gave Google's parent company a ~10% stake, and pushed Oscar's valuation to $3.2 billion.

For the first nine months of 2018, according to state insurance filings reviewed by Business Insider, Oscar lost $12 million. That's significantly less of a loss than 2017, when it reported a $96 million loss in the third quarter alone. For the first half of 2019, the company said it took in $678 million in gross premium revenue, and that it generated a gross underwriting profit of $128 million. 

This past summer, CEO Mario Schlosser announced Oscar's marketplace would start selling Obamacare plans, including Medicare Advantage plans, in 12 new markets starting in 2020

Additional reporting by Lydia Ramsey and Clarrie Feinstein.

Robotic food-preparation company Zume, known for its pizza-making robots, landed a $375 million investment led by SoftBank in 2018, skyrocketing its valuation to over $2 billion. It's now reportedly seeking additional funding at a $4 billion+ valuation.

A year before Zume hit unicorn status, it was valued at only $170 million. But since its launch in 2015, Zume Pizza set out to revolutionize the pizza-making process — employing robots and artificial intelligence to man the kitchen and send out orders more swiftly at a low cost. CEO and cofounder Julian Collins said from Zume's data collection, it "predict what pizza you want before you even order it."

But the company is now pivoting amid an executive exodus as it restructuring to focus on growing revenues, Business Insider's Megan Hernbroth reported in November. In September, Zume announced a partnership to launch mobile kitchens, expanding into compostable packaging and food-truck services.

Allbirds, the company that manufactures the trendy wool sneakers dubbed "the world's most comfortable shoes," reached a $1.4 billion valuation this year.

Allbirds launched in Silicon Valley in 2014 and has since raised over $77 million from investors including Fidelity and legacy firm Tiger Global Management. The core concept of Allbirds is its commitment to sustainability — the foam in the sneakers are made from sugarcane, and the textile of choice is, of course, Merino wool. Celebrities like Jessica Alba, Amy Adams, and Blake Lively have been seen sporting the sneaker, too. 

The company has recently filed a lawsuit alleging Austrian footwear company Giesswein Walkwaren of copying its iconic kicks. And it wasn't the first time Allbirds went to court over another company over copying concerns. In 2017, the brand settled a suit with footwear giant Steve Madden. Allbirds recently called out Amazon's own wool shoes, and CEO Joey Zwillinger penned an open letter to Jeff Bezos asking the company to "please steal our approach to sustainability."

As for the future of Allbirds, founders of Tim Brown and Joey Zwillinger still plan on challenging "the status quo" of sustainable material innovation. 

Online resale retailer The Real Real was valued at $1.65 billion and went public this summer.

The Real Real got its start in 2011 in San Francisco. At first, the company was only online, but with its success selling items like Adidas Yeezys, Hermes Birkin bags, Chanel shoes, and Louboutin heels, it opened its first store in 2017

Consumers eager to buy used designer items led The Real Real to grow quickly, opening new fulfillment centers and three stores in Los Angeles and New York City. 

Julie Wainwright, the company's founder and CEO, told Recode that the luxury resale market remains largely online still — so don't get your hopes up for The Real Real department stores all over the world any time soon

Gusto, the platform that makes payroll easier for managers, was founded in 2011 and has a valuation of $3.8 billion.

According to CEO Joshua Reeves, customer service and satisfaction are what drive him and his team to refine Gusto as a product for the average small business owner. Gusto's simplified platform has attracted over 100,000 customers, processing billions of dollars of payroll every year. It even lets business owners offer their employees health insurance, retirement and savings plans. 

This past July, Gusto raised $200 million in funding, bringing its total to over $500 million. The next step for Gusto is to hire more employees and "double down on research and development," according to Crunchbase. 

Fintech insurance startup Lemonade has raised a total of $480 million in funding, launching its valuation to $2.1 billion earlier this year.

Lemonade uses an AI bot to create personalized renters and homeowners insurance policies on a simplified platform where users can be insured starting from $5 and $25 per month. Lemonade's ability to thoughtfully explain technical terminology, like what a deductible is, while making it easy to submit claims has won it the support of many millennials

The startup has reportedly sold more than half a million insurance policies and generated more than $57 million in revenue last year. After a successful 2018, Lemonade announced its plans to bring the platform to all 50 states and Europe, as well as hire more employees to help manage its rapid growth. 

Snapchat went public in 2017, and today its market valuation is around $23 billion, making a rebound from its low of $7 billion last December.

Snapchat, the photo-and-video-based messaging app, launched in July 2011, and attracted millions of younger users who loved the platform's disappearing message feature. That's no longer the app's only draw, however. Snapchat has evolved as a social media company, introducing its Discover page, where users can find news and famous internet personalities, and a text chat feature, among other features. The app has almost 200 million daily users and continues to be one of the preferred platforms for Gen Z. 

And though the company is worth around $23 billion today, and is considered to be this year's "best performing" tech stock, the LA Times reported in April that Snapchat has three years to reach profitability before it runs out of cash.

Coinbase, the cryptocurrency exchange, launched in 2012 and hit unicorn status in October 2018 with an $8 billion valuation.

If you are interested in Bitcoin, Ethereum, and Litecoin, chances are you're already aware of Coinbase, though the app didn't really take off until 2014 when investors like rapper Nas and VC firms like Andreessen Horowitz began to take notice

With more than half a billion dollars in total funding, Coinbase hopes to expand outside of the United States. Coinbase vice president Dan Romero told Business Insider in 2018 that the company's goal was to become the Google of crypto.

With big investments from industry giants like Ford and Volkswagen, Argo AI reached a $7.25 billion valuation in July, just two years after the company launched.

Autonomous vehicles seem to be on the mind of every car maker, including the biggest: VW is the world's biggest automaker by sales volume last year. And that's where Argo AI comes in. The autonomous-driving tech startup caught the eye, and cash, of two of the largest car makers in the world. Ford invested early with $1.6 billion, and with Volkswagen's $2.6 billion total investment, Argo AI's valuation reached new heights in 2019.

These partnerships will help Argo share the cost of getting its autonomous cars to the market, while also turning its attention to the future automation of off-road equipment, too. But with so many other competitors in the field, the race is on


Healthcare is a ripe industry to disrupt, and San Francisco-based Clover Health knows it. The company, founded in 2014, is valued at $1.2 billion.

Clover Health's incentive is to do away with paperwork and focus more on the patient by using "predictive analytics technology" — a feature Clover promoted as a way to keep costs down using the Medicare Advantage Plan.

But the road hasn't been easy for the startup. Last year, seniors insured on Clover began receiving medical bills for blood work, a surprise experience that was not supposed to happen, according to the company.

And even five years after launching, Clover has managed to make its way into "select counties" in seven states, thanks to the historically slow-moving healthcare industry, one many other startups are attempting to disrupt. But that doesn't mean investors are not interested — in January, Clover raised $500 million, bringing its total funding to over $900 million, with help from Alphabet's venture arm GV

Valued at over $3.6 billion when it went public, gene sequencing startup 10x Genomics continues to help doctors and scientists understand cancers and cell therapy.

Launched in 2012, 10x Genomics went public in September after hitting unicorn status in January. The company focuses on "single-cell sequencing" and has worked with institutions like Fred Hutchinson Cancer Research Center.

In 2017, the company, backed by investors like Softbank, said its sales reached $71 million. CEO Serge Saxonov was one of the founding researchers at 23andMe, and hopes 10x can help scientists better understand genetics down to a single-cell level. The company continues to sell its handful of products to academic, federal, and drug-development labs across the country, with plans to expand further, and make more DNA-focused acquisitions. 

Check out a list of all the companies that hit $1 billion valuation in 2019 over on PitchBook. 

PIMCO's flagship hedge fund has lost more than 14% in 2019 — a rare stumble for the $3 billion credit strategy

Tue, 12/03/2019 - 5:10pm

  • The Global Credit Opportunity Fund is PIMCO's flagship hedge fund, and runs more than $3 billion. 
  • The fund has lost more than 14% this year, sources said, after making money last year.  The average hedge fund has meanwhile lost 4%. 
  • The fund is run by Dan Ivascyn, the chief investment officer of the bond giant, and Jon Horne, a managing director at the firm. The fund has made money in four of the last five years. 
  • Click here for more BI Prime stories.  

The flagship of Pacific Investment Management Company's hedge fund suite has dropped by more than 14% this year, according to several sources.

The Global Credit Opportunity fund, which manages more than $3 billion in assets, lost roughly 1.75% in October to bring its year-to-date losses to more than 14%. The fund is run by Dan Ivascyn, who replaced PIMCO founder and billionaire Bill Gross as the firm's chief investment officer, and Jon Horne, a managing director that joined the massive fixed-income manager in 2006. 

The Global Credit Opportunity fund had managed to avoid losing money for several years. Last year, when the average fund lost money, the flagship fund returned nearly 9%. The only year since 2014 that the fund hasn't finished with positive returns was 2017, when it broke even. 

The firm declined to comment on the performance of private funds. 

Another fund in the firm's hedge fund suite, Tactical Opportunities, is up nearly 6% for the year. It's managed by a team including Ivascyn, managing director Josh Anderson, and managing director Alfred Murata. The fund also runs more than $3 billion. 

Ivascyn's troubles this year extend to PIMCO's retail products as well. Reuters reported in August that the massive PIMCO Income Fund, which currently manages $131.2 billion, was lagging its peers thanks to some bad bets on mortgage-backed securities and Treasuries. 

In comments to Reuters in August, Ivascyn said the firm is willing to take losses in the near-term if it believes in the investment idea.

"We believe that corporate credit is fundamentally weak and could overshoot to the downside if the economy deteriorates," he said to Reuters. "We also think developed government bond yields are too low and could easily reverse so we are comfortable with low rate exposure."

The fund currently lags the average fund in its Morningstar category by more than 2%, and is behind 86% of its 308 peers. On a ten-year basis however, the biggest bond fund in the world, and one of the largest actively managed funds regardless of asset class, is still best-in-class. 

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Wall Street firms rank data analysis far above relationship building when picking the must-have skills for future traders

Tue, 12/03/2019 - 4:24pm

  • A recent survey conducted by Greenwich Associates of people at a variety of Wall Street firms found data analysis is believed to be the most important skill for the trading desk of the future.
  • Meanwhile, "relationship management" and "economic knowledge" were on the other end of the spectrum, garnering only 38% and 23% of responses, respectively. 
  • Finding investment opportunities was the top choice among what will be the most useful insights from analytic tools in the future. 
  • Click here for more BI Prime stories.

Hopeful traders of the world, be warned: It is no longer about who you know but, instead, what you know. 

When asked about the most important skills needed to work on a trading desk in the future, a vast majority of respondents pointed to analyzing data.

Meanwhile, only slightly more than one-third of participants cited managing relationships, which has long been a critical trait of any successful trader on Wall Street. 

The survey, conducted by Greenwich Associates, polled 107 people working across financial services around the globe about the future effect data would have on trading. 

One question asked what the important skills were for working on a trading desk in the next three to five years. Nearly three-quarters of respondents picked "data analysis," followed by "market knowledge" and "market structure knowledge," coming in at 65% and 60%, respectively. 

It should come as no surprise that working with data is viewed as a top priority. Gathering as much information as possible has become table stakes on Wall Street. While things like market and reference data have long been considered critical to any financial firm, alternative data, or unique datasets from nontraditional sources, has also come into vogue recently.

Meanwhile, "relationship management" and "economic knowledge" were on the other end of the spectrum, garnering only 38% and 23% of responses, respectively. 

As for where financial firms will look to use the analytics expertise they are so interested in, one area stands out: finding alpha. When asked what useful insights were expected from data and analytic tools in the future, "investment opportunities" was the leading pick among respondents, garnering 29% of the votes, 

Interestingly, it appears Wall Street is less concerned about using such tools to better understand its exposures, from either investments or trading partners. "Market risk" and "counterparty risk" nabbed just 14% and 6% of the votes, respectively. 

Read more: Here's the pitch deck that Apteo, a startup focused on the ultra-hot alternative data space, used to raise its seed round

Read more: Giants like JPMorgan, Morgan Stanley, and Tradeweb are embracing a credit-trading revolution to move multi-billion-dollar bond portfolios in minutes

Read more:Wall Streeters say AI is going to disrupt their business more than any other tech. Many big investors are getting left behind.


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Lincoln's president explains why China is critical for the luxury brand — and why the company hasn't yet gone fully electric (F)

Tue, 12/03/2019 - 4:09pm

At the 2019 Los Angeles Auto Show the week before Thanksgiving, Lincoln unveiled a hybrid version of its new Corsair SUV, bringing another plug-in hybrid to the brand's revamped SUV line. The Corsair joined the Aviator, also available in a grand-touring, or GT, trim.

At the event, Business Insider had a chance to catch up with Joy Falotico, who took over at Lincoln more than a year ago and is one of the few women in the car business to run a luxury automaker. 

Of particular interest was Falotico's point of view on Lincoln's expanding China operations. The brand has been in the middle of a reimagining, started under Kumar Galhotra, who now oversees all of Ford's North American activities (Lincoln is Ford's longstanding premium nameplate).

Even people with just a passing acquaintance with the badge could have seen the numerous ads featuring the actor Matthew McConaughey gliding through LA nightlife or offering esoteric musings from behind the wheel of a Lincoln vehicle.

Falotico said the McConaughey relationship wasn't going anywhere and then moved on to a relatively upbeat assessment of Lincoln's China business. She had just returned from the country, where Lincoln had launched its three-row Aviator midsize SUV.

Challenges in China

"We're really pleased with positioning of the product there, and we're excited to launch Aviator," she said, adding that sales in the Middle Kingdom have been encouraging for certain models in 2019, with the iconic Navigator SUV and the Nautilus midsize SUV leading the charge.

Lincoln has been making up for lost time in China. Other premium automakers have been selling vehicles there for longer — more than a decade versus only about five years for Lincoln.

But thus far, while Ford itself has struggled to match General Motors and Volkswagen in the country, the Lincoln story has given the No. 2 US carmaker something to brag about, even as overall sales have declined. Lincoln sold more than 750,000 vehicles there in 2018, but through the first three quarters of 2019, sales slid 24% year over year. Navigator and Nautilus, however, posted gains.

Falotico wants to build on that momentum.

"The brand is really healthy," she said. "But awareness is something we have to work on and accelerate. It's a big market, and we're new."

Lincoln has some pluses, however. Its "Lincoln Way" strategy, emphasizing effortless luxury over high-performance and edgy styling, was developed in China and brought to the US market. ("We aren't trying to out-German the Germans," Falotico said.)

Falotico also said women were growing in power in China, making up a larger number of buyers. Consequently, Lincoln wants to have whatever insights it has gathered about its Chinese customers in its vehicles before they hit the market.

The pace of new-car sales in China has been slowing from a historically torrid rate, leading Falotico to consider that the country's growth might be coming into alignment with mature luxury markets. What she's optimistic about is the future increase in sales volumes that China could deliver if the market added another few million in annual unit sales each year, above its nearly 30 million level. (China is now the largest auto market, distancing itself from the US and its 17 million yearly sales.)

The electric question

This all leads naturally to the question of how Lincoln is going to manage the electrification of its vehicles in China. 

Falotico said electric vehicles could "marry well" with the luxury customer in China.

"They want the latest technology," she said. "But we have to be able to remove range anxiety."

That's why Lincoln is rolling out hybrids first in China, just as it has in the US, despite having a fully electric vehicle slated for launch in the coming years. (It's worth mentioning that Ford stole the show in LA with the reveal of its Mustang Mach-E EV.) 

"We're starting with hybrids because it gives you choice — a way of easing in," she said. "But we do think there will be heavy electrification in the luxury segment."

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Trump administration proposes slapping new tariffs on $2.4 billion worth of French goods to retaliate against big tech tax

Mon, 12/02/2019 - 6:15pm

  • The US proposed retaliatory tariffs against France on Monday for its new digital services tax.
  • Critics said the tax has disproportionately hit technology companies based in the US.
  • The US has separately prepared to broaden tariffs against the EU bloc as part of a long-running dispute over aircraft subsidies.
  • Visit Business Insider's homepage for more stories.

The United States proposed retaliatory tariffs against France on Monday for its new digital services tax, which has targeted American technology giants like Amazon and Facebook. 

The Trump administration said in a statement it was proposing "duties of up to 100%" on $2.4 billion worth of French products, including sparkling wine, cheese, and other goods.

The move, which needs presidential approval, is meant to penalize the American ally for its 3% tax on technology companies that was signed into law in July.

"[US Trade Representative's] decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies," US Trade Representative Robert Lighthizer said in a statement. "Indeed, USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey. The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies."

Officials have been investigating whether that legislation disproportionately hit technology companies based in the US. The tax applies to companies with global revenue of at least 750 million euros and digital sales of at least 25 million euros in France.

Monday's announcement was the result of the five-month investigation, in which the USTR "concluded that France's Digital Services Tax (DST) discriminates against US companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies."

Spain, Italy, Britain and several other European countries have separately announced plans to tax digital revenue, saying that technology companies avoid taxes by building subsidiaries in other countries. 

Trump was swift to retaliate against France for its digital services tax in July. The two countries reached an interim agreement shortly after, delaying that threat for 90 days.

"If anybody taxes them, it should be their home Country, the USA," Trump wrote on Twitter this summer, referring to technology companies.

Trade relations between the US and the European Union have appeared to sour on separate fronts this year. The US has also prepared to broaden tariffs against the bloc as part of a long-running dispute over aircraft subsidies.

SEE ALSO: Trump restores metal tariffs on Brazil and Argentina in surprise move

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

Thanks to 2 rewards cards and the Southwest Companion Pass, I book almost all my family's travel with points

Mon, 12/02/2019 - 6:11pm

Using some simple strategies, I'm able to travel several times a year at virtually no cost. In fact, I recently flew to Florida for work, took my mom for free on a Companion Pass (no points were used for her flight), and pocketed $657 in Southwest Airlines credit.

I've also flown round-trip to New York City three times this year plus two round-trip airfares to Honolulu. In fact, Travel + Leisure recently launched a "bleisure" section highlighting business leisure travel, and featured my tips

Here's how I use the Southwest Companion Pass and the airline's co-branded credit cards to earn as many Rapid Rewards points as possible and fly with my family for nearly free.

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

All household expenses earn us points

The key is accumulating points. Years ago, this meant making sure my personal Rapid Rewards number was on any Southwest flights my work purchased. There were only a few of those, but it gave me a couple of thousand points. Then, in 2009, my husband and I enrolled for the Southwest Rapid Rewards Premier card and set up most of our automatic bills to be charged to the card.

To this day, we use the Southwest Premier card to pay our homeowners insurance, auto insurance, and cell phone bills. We also put our groceries and household supplies on the card, and anything else, really, that we can to earn the points.

For this system to work to our benefit, we have to pay the card off every month. The APR otherwise is pretty high and would eat up any benefit of free airfare, as would, of course, late fees. There's an annual fee of $99 for this card, but I don't mind it. (Also, the US federal government requires a TSA security fee of $5.60 to be paid on all airline tickets, including frequent flyer awards.)

Click here to learn more about the Southwest Premier card. My business expenses earn points

Five years ago when I set up banking and accounts for my business, I knew I'd want to use a Southwest card for business expenses, too. The first few months I used a bank credit card, but after I had all my business registration set up, I applied for a Southwest Rapid Rewards Premier Business card with a $99 annual fee, and I set up all automatic expenses to be charged to the card.

In my line of business, we buy pay-per-click ads for clients, and that can add up pretty quickly. We also have several independent contractors who do work for us regularly, and the invoices are charged to our Southwest Premier Business card.

My husband's business expenses earn points, too

Earlier this year, my husband got back into his own business on the side. He works full-time as a construction superintendent, but he'd previously spent 25 years installing and refinishing hardwood floors. The area in which we live has a booming housing market, but few people with the skill set for hardwood floors. As more and more people asked him to work, we went ahead and set up a small business this spring to manage all of it.

Again, we set up as many automatic expenses as possible to be paid with the Southwest Premier Business card. Then, we also use the card for any business expenses. On an install project, that can also mean that we have to buy anywhere from $5,000 to $10,000 in materials. Those expenses go on the card, are paid in full every month, and are covered by the deposit we require customers put down to start their project.

The Companion Pass is the holy grail of free travel

The Southwest Companion Pass is one of the most unique (and valuable) benefits in the world of frequent flyer programs. It allows you to designate one person to fly with you at no cost beyond taxes and fees. The companion pass is good for a full calendar year plus the months of the year left in the calendar year earned, so the best strategy is to earn it as early into a new calendar year as possible. You can change your companion up to three times per year.

To qualify for a Southwest Companion Pass, you have to earn 110,000 qualifying points or fly 100 qualifying one-way flights in a calendar year (starting in 2020, you'll need to earn 125,000 qualifying points). Points you earn from Southwest credit card sign-up bonuses, as well as points you earn from credit card spending, count toward this requirement, so it's not hard for us to earn this benefit.

I've taken my husband to New York City for free as a companion, my daughter to Florida last year for a wedding, and my mom to Hawaii a couple of months ago as well as Florida just last week.

Since Rapid Rewards accounts are individually owned, only one personal credit card and one business card can be tied to it. (A business can't own Rapid Rewards points; only a person.)

When we opened my husband's Southwest Rapid Rewards Premier Business card, we had to assign it to his Rapid Rewards account. While I was initially annoyed both of our business cards couldn't earn rewards to one Rapid Rewards account (mine), this actually works in our favor in two ways.

First, we earned a sign-up bonus 60,000 points (the Premier Business card is currently offering a welcome bonus of 60,000 points after you spend $3,000 in the first three months). Second, there's a possibility we can get a Companion Pass on his Rapid Rewards account as well as mine, which means we could each easily add a daughter as our companion and take our family of four on a trip for free!

Get a voucher if your plans are flexible

I hadn't known the beauty of overbooking compensation until a recent Southwest flight (which I booked using points and my mom flew for free on my Companion Pass). While we were waiting to board our flight from Ft. Meyers, Florida home to Kansas City, an announcement was made. Southwest Airlines had overbooked the flight and if someone was willing to take another flight, they'd be reimbursed for their flight and given a bonus voucher.

The first time the announcement went over the loudspeaker, I thought it wouldn't be worth the risk of not making it home that day or that maybe I wouldn't qualify because I'd used points to book the flights. The second time the announcement came over the loudspeaker, the Southwest employee said, "If your final destination is Kansas City, I can get you on another flight, boarding now, and will arrive only 2 hours later than this booked flight."

Getting a few hundred dollars for getting home just a couple of hours later seemed like a pretty good deal. Then, to my surprise, the Southwest LUV voucher the employee handed me was for $400. Then another voucher for $257 printed and was handed to me. I was given $657 compensation for flights I hadn't even paid for! It was magical.

From what I could gather on the SW Airlines website, overbooking seats can happen every now and then, and if someone volunteers for a different flight, they receive a $100 voucher, plus the reimbursement of the one-way tickets. It wasn't all sunshine and rainbows; my mom and I did end up sitting on the runway for those 2 hours due to weather, but that might have happened on our original flight anyway.

My family reaps the rewards

This might sound like a lot of work, and it may not be worth it if you don't like to travel. But our family loves it. We're going to Corpus Christi in December this year and are planning something more tropical like Hawaii or Belize next Christmas. I used to think you had to be really rich to be able to travel, but that's really not true if you play your points right.

Click here to learn more about the Southwest Premier Business card.

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The housing-backed investment vehicles that fueled the financial crisis are enjoying their best stretch in years

Mon, 12/02/2019 - 4:10pm

  • Mortgage-backed securities hit a three-month winning streak after outperforming US Treasuries through November, Bloomberg reported Monday.
  • The surge was primarily driven by lower refinance rates and a drop in volatility for mortgage-backed assets. When more borrowers refinance loans with lower interest rates, the securities lose their appeal against Treasury bonds.
  • The assets gained new fame in 2008 when subprime mortgage-backed securities powered the year's housing market meltdown and subsequent recession. Those who bet against the assets won millions and even billions when the housing bubble popped.
  • Visit the Business Insider homepage for more stories.

Mortgage-backed securities hit a three-month winning streak after outperforming US Treasuries through November, Bloomberg reported Monday.

The surge is now the longest consecutive monthly outperformance for the assets since the end of 2017. The Bloomberg Barclays US Mortgage-Backed Securities index's excess return against US Treasuries reached 19 points by November's close, bringing the year-to-date total 20 points, according to Bloomberg.

The assets gained new notoriety in 2008 after several subprime mortgage-backed securities fueled that year's housing market meltdown. The small group of investors who bet against the housing-backed assets profited from the downturn, with some of the short-sellers highlighted in Michael Lewis' bestselling book "The Big Short."

The latest run-up has been supported by a drop in volatility and a lagging refinance rate among homeowners. The index saw a massive leap higher through the first half of 2019 before stabilizing below its five-year moving average, according to Bloomberg. The lower volatility signals a shrinking chance of refinancing among homeowners.

A jump in refinancing activity would cut into the asset's performance, as the securities currently trade at a premium. When homeowners refinance their home loans at lower rates, the premature return of principal pushes the value of mortgage-backed securities lower.

Refinance activity has already fallen moderately over the last three months, 4% lower since the end of August according to Bloomberg. An upcoming November prepayment report is poised to show an 11% decline through the month, Bloomberg added, signaling continued strength as fewer borrowers rush to pay off their loans.

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

Stock pickers are shunning the cardinal rule of investing as they fight the machines trying to replace them — and they're still losing

A Reddit trader claims to have found a new 'infinite money' glitch on Robinhood — but the company denies it exists

Jeff Bezos tells employees why Amazon donates to politicians with different views: 'You have to be able to work with people who don't agree with you on everything'

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

The 15 worst US cities for people trying to sell a house

Mon, 12/02/2019 - 4:07pm

  • A recent study by personal finance platform GoBankingRates revealed a list of the biggest US housing markets where it's most difficult to sell a house.
  • To gather the list, the study looked at cities where home values are greater than median list prices and analyzed each market across six weighted factors using figures from Zillow's 2019 Housing Data.
  • These six factors include: the average median list price, the average number of houses that hit the market, and the average number of days those houses spend on the real-estate listing platform Zillow.
  • Of the top 15 cities that made the list, six are located in Florida.
  • Visit Business Insider's homepage for more stories.

Trying to sell a house in a weak market can lead to disappointment and price cuts. 

However, there are certain factors that owners can analyze to determine whether or not they're entering the market at a good time. For example, when houses in an area are sitting on a listing platform for an average of 100 days or more, it's usually a sign that properties are moving off the market slowly.

A recent study by personal finance platform GoBankingRates revealed a list of the 50 biggest US cities where it's most difficult to sell a house right now. Of the top 15 housing markets that made the list, six of them are located in Florida.

To gather the list, GoBankingRates looked at cities where home values are greater than median list prices and analyzed each market across six weighted factors using figures from Zillow's 2019 Housing Data: the average median list price, the difference between the average home value and the average median list price, the average number of houses that hit the market, the average number of days those houses spend on the real-estate listing platform Zillow, the percentage of listings with price cuts, and the median percentage of the price cuts.

The data in this study represents each market as of November 5, 2019. Keep reading for a look at the 15 cities where it's most difficult to sell a house right now.

SEE ALSO: The 15 best states for America's middle class, ranked

DON'T MISS: The biggest metro areas with the most million-dollar homes in the US

15. Homes in Livonia, Michigan spend an average of 63 days on Zillow.

The average median list price in 2019: $211,600

The average home value in 2019: $212,411

The average number of homes on the market in 2019: 272

The percentage of listings with price cuts: 17.66%

Population: 94,708

14. Homes in Warren, Michigan spend an average of 63 days on Zillow.

The average median list price in 2019: $124,430

The average home value in 2019: $142,856

The average number of homes on the market in 2019: 491

The percentage of listings with price cuts: 14.29%

Population: 135,147

13. Homes in Albany, New York spend an average of 100 days on Zillow.

The average median list price in 2019: $175,828

The average home value in 2019: $182,956

The average number of homes on the market in 2019: 220

The percentage of listings with price cuts: 12.06%

Population: 98,498

12. Homes in Pompano Beach, Florida spend an average of 111 days on Zillow.

The average median list price in 2019: $255,200

The average home value in 2019: $256,911

The average number of homes on the market in 2019: 1,221

The percentage of listings with price cuts: 16.06%

Population: 107,542

11. Homes in Bridgeport, Connecticut spend an average of 89 days on Zillow.

The average median list price in 2019: $191,544

The average home value in 2019: $199,956

The average number of homes on the market in 2019: 346

The percentage of listings with price cuts: 14.32%

Population: 147,586

10. Homes in Honolulu, Hawaii spend an average of 92 days on Zillow.

The average median list price in 2019: $637,937

The average home value in 2019: $1,036,844

The average number of homes on the market in 2019: 2,700

The percentage of listings with price cuts: 13.97%

Population: 402,452

9. Homes in Boynton Beach, Florida spend an average of 97 days on Zillow.

The average median list price in 2019: $276,211

The average home value in 2019: $302,122

The average number of homes on the market in 2019: 1,898

The percentage of listings with price cuts: 18.49%

Population: 74,483

8. Homes in Newark, New Jersey spend an average of 152 days on Zillow.

The average median list price in 2019: $252,844

The average home value in 2019: $266,300

The average number of homes on the market in 2019: 587

The percentage of listings with price cuts: 6.40%

Population: 282,803

7. Homes in Saginaw, Michigan spend an average of 68 days on Zillow.

The average median list price in 2019: $90,778

The average home value in 2019: $105,478

The average number of homes on the market in 2019: 417

The percentage of listings with price cuts: 16.15%

Population: 49,366

6. Homes in Fort Myers, Florida spend an average of 111 days on Zillow.

The average median list price in 2019: $252,387

The average home value in 2019: $254,156

The average number of homes on the market in 2019: 3,588

The percentage of listings with price cuts: 18.26%

Population: 73,712

5. Homes in Paterson, New Jersey spend an average of 146 days on the market.

The average median list price in 2019: $259,354

The average home value in 2019: $265,733

The average number of homes on the market in 2019: 332

The percentage of listings with price cuts: 8.52%

Population: 147,890

4. Homes in Delray Beach, Florida spend an average of 106 days on Zillow.

The average median list price in 2019: $298,150

The average home value in 2019: $343,189

The average number of homes on the market in 2019: 2,105

The percentage of listings with price cuts: 18.23%

Population: 66,453

3. Homes in Naples, Florida spend an average of 135 days on Zillow.

The average median list price in 2019: $401,071

The average home value in 2019: $401,156

The average number of homes on the market in 2019: 6,762

The percentage of listings with price cuts: 15.40%

Population: 21,279

2. Homes in Albany, Georgia spend an average of 115 days on Zillow.

The average median list price in 2019: $88,989

The average home value in 2019: $92,800

The average number of homes on the market in 2019: 462

The percentage of listings with price cuts: 13.22%

Population: 74,892

1. Homes in Miami Beach, Florida spend an average of 188 days on Zillow.

The average median list price in 2019: $495,583

The average home value in 2019: $1,585,267

The average number of homes on the market in 2019: 462

The percentage of listings with price cuts: 13.09%

Population: 92,187

Warren Buffett famously avoids bidding wars. Here are 4 deals he's missed out on because of that approach.

Mon, 12/02/2019 - 3:50pm

  • Warren Buffett, the billionaire who runs Berkshire Hathaway, has long avoided engaging in bidding wars when buying companies. 
  • Buffett was recently outbid by Apollo Global Management for Tech Data, according to CNBC, and has said he will not make another offer.  
  • Here are four times that Buffett has lost out on a deal because he won't participate in a bidding war. 
  • Read more on Business Insider.

Warren Buffett, the Omaha-based billionaire who runs Berkshire Hathaway, has long said that he doesn't engage in bidding wars. 

He explained his thinking in the 2016 annual letter to Berkshire Hathaway shareholders. "We don't participate in auctions," he wrote. 

He continued: "A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: 'When the phone don't ring, you'll know it's me.'" 

This practice was recently put to the test when Berkshire Hathaway was outbid for Tech Data, a technology distributor, according to CNBC. Late Wednesday, Tech Data accepted a bid from Apollo Global Management for $145 per share, or $5.14 billion, which topped Buffett's previous bid of $140 per share, or slightly more than $5 billion. 

Buffett said that he has no intention of making a higher offer, CNBC reported. Tech Data can solicit other bids until December 9, according to a company press release.

Now, it appears that Buffett will have to look elsewhere for opportunities to spend down his record $128 billion cash pile. In a 2018 letter to shareholders, Buffett wrote that Berkshire would like to spend its cash making acquisitions. 

However, it's become increasingly difficult to find companies that are priced at a deal. "Prices are sky-high for businesses possessing decent long-term prospects," Buffett wrote. Berkshire's last major deal was its 2016 purchase of Precision Castparts Corp. for $32 billion. 

Here are four deals that Buffett has lost because he won't engage in a bidding war, in chronological order.

1. Tech Data

Time of Berkshire Hathaway bid: November 2019

Berkshire Hathaway bid: $5 billion, or $140 per share 

Company that outbid: Apollo Global Management 

Winning bid: $5.14 billion, or $145 per share 

Source: CNBC

2. Oncor Electric Delivery

Time of Berkshire Hathaway bid: July 2017 

Berkshire Hathaway bid: $9 billion 

Company that outbid: Sempra Energy 

Winning bid: $9.45 billion 

Source: Business Insider

3. NYSE Euronext

Time of Berkshire Hathaway bid: Late 2012

Berkshire Hathaway bid: Undisclosed 

Company that outbid: Intercontinental Exchange  

Winning bid: $8.2 billion 

Source: CNBC

4. Constellation Energy

Time of Berkshire Hathaway bid: September 2008 

Berkshire Hathaway bid: $4.7 billion for 100%

Company that outbid: Électricité de France SA 

Winning bid: $4.5 billion for 49.9% stake

Sources: CNBC and The Wall Street Journal

The $157,000 Polestar 1 is a spectacular insight into what Volvo's new brand can achieve. It's also the best car China has ever built

Mon, 12/02/2019 - 2:54pm

Volvo's revival under Chinese ownership has been impressive.

Geely, the Swedish automaker's parent company bought it from Ford in 2009, just as the financial crisis was starting to bite. 

We've already seen a new spate of Volvo SUVs and made-in-China sedans — plus a brand-new manufacturing plant in South Carolina. But most intriguing was the establishment in 2017 of the Polestar brand as a stand-alone manufacturer, tasked with carrying the electric-vehicle banner for the Sino-Swedish nameplate.

After a bit of a wait, I finally got a chance to grab some seat time in the first official Polestar product, the aptly named Polestar 1.

Polestar 1 is a bridge to the forthcoming, all-electric Polestar 2. For now, we'll have to subsist on a Polestar diet of a turbocharged-and-supercharged gas engine mated to a pair of electric motors driving the rear wheels. 

It's a potent combination, and I was prepared to be impressed. I just wasn't prepared for how impressed:

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The Polestar 1 I sampled for a few hours, zipping around the New Jersey highways and byways west of New York City, wore a dashing white paint job offset by black highlights and flickers of chrome.

The Polestar 1 is a performance car and it looks it. Volvo coupés have been few and far between. The last two-door in the lineup was the C30 hatchback.

The clear antecedent for the Polestar 1 is the Volvo P1800, a smashing sports car that arrived in the early 1960s and gained fame when driven by Roger Moore in "The Saint."

Polestar 1 is more Swedish than Italian, however (the P1800 enjoyed an Italian design). Its stance and attitude are also less sprezzatura than "Skoal!"

That said, the Polestar lineup will come from a new factory in China.

The Volvo fascia is an acquired taste. But once you acquire it, the taste is addictive. It makes an especially memorable first impression on the Polestar one.

The Thor's hammer headlights, a Volvo signature, have been carried over.

The Polestar badge is cool and EXTREMELY subdued. Polestar was Volvo's performance brand, but in 2017 it was spun off to form a new electrified nameplate.

The grille is an intricate marriage of black and chrome.

The Polestar 1 is ostensibly a grand-touring car, or a 2+2, but unlike GT cars of the past, its relatively modest hood length indicated an equally modest engine. The powerplant is a mere 2.0-liters in displacement.

The wheels on my tester were gorgeous, and the yellow brake calipers were a cool touch. The Polestar 1, being a hybrid, utilized regenerative braking to reclaim power.

This sticker was the most Scandinavian element. But it's also a tip to how much lightweight carbon-fiber the Polestar 1 is made of. A good thing as even a medium-size electric battery takes the weight up above 5,000 pounds.

The Polestar 1 is a fastback coupé, but not a hatch.

The rear is a study in minimalism. There's a small spoiler that can be deployed at the driver's discretion.

Let's take a look under the hood.

There's a lot going on here. The 2.0-liter inline four is turbocharged and supercharged, cranking out 326 horsepower before a pair of battery packs (34 kilowatt hours total) and two electric motors take that to 619 horsepower, with everything piped to a hybrid all-wheel-drive system through an eight-speed automatic gearbox. Top speed is 155 mph and the 0-60 mph run happens in 4.2 seconds.

The trunk isn't exactly huge, but for EV nuts, it has a groovy feature.

It showcases the battery-electric connections, behind a clear panel. They have to be bright orange so that emergency crews can identify them.

Definitely one of the neatest design touches I've seen in an electrified vehicle.

A charging cable is stowed in an easy access case.

The Polestar 1 can fully recharge on DC fast charging in less than an hour, the company said. On slower level 1 or level 2 charging, the 70 miles of all-electric range is slower to restore, but owners using 240-volt power should be able to fully re-juice overnight.

The charge port is located aft, left rear.

The Polestar 1's interior is clean and elegant. Not sure how I feel about the bright orange shoulder belt, but it is what it is. The seats are mad comfy, yet supportive when necessary, and covered in Nappa leather.

Yep, it's a 2+2, and plus-two provides adequate legroom for ... Baby Yoda?

The multifunction steering wheel, instrument cluster, and other interior details are borrowed from Volvo.

That's real carbon fiber on the dash.

The Bowers & Wilkins premium audio system sounds magnificent.

For the most part, the Polestar 1's interior is devoid of bling. Except in the center console.

The toggle shifter is crystal.

The infotainment system is based on Volvo's innovative and oft-overlooked Senus setup.

I didn't fully evaluate it on my first drive, but I've used it extensively in Volvos and I have nothing but praise. It used a tablet touchscreen layout and requires some swiping to operate, but it's quite good once you pass the learning curve.

The Polestar 1 has five driving modes, ranging from all-electric to all-performance.

The roof is essentially all sunroof.

This makes for a wonderful experience in the cabin.

The Polestar 1 is stupendous. Not only is it something of a technological marvel, it looks fantastic and drives ever better.

So what's the complete first-drive verdict?

Awesome, awesome, and more awesome!

I'll do a proper review of the Polestar 1 next year, when I can sample the car for a week. But in a few hours, I definitely formed a favorable impression.

Maybe "favorable" isn't a strong enough word. I've driven a few made-in-China vehicles and have found them to be competitive with products from Japan, South Korea, the US, and Germany. 

But Polestar 1 is something else entirely. 

What we have here is a ferociously good grand-touring car that reminded me of the Lexus LC500h and the BMW i8. Of course, the LC 500h, while wonderful, is completely outclassed by the Polestar 1 on power: 354 hp vs 619 hp (the LC500 with a big V8 is a different story — but it still manages just 417 hp).

For the record, 619hp is supercar territory. The Polestar runs with the Corvette Z06, the Ferrari F8 Tributo, the Lamborghini Huracán, the McLaren 650S, the Porsche 911 Turbo S, and the Ford Mustang Shelby GT 350R.

For what it's worth, the mega GTs of the world — the Mercedes AMG GT and Aston Martin DB11 — also have something to think about.

Yes, this comes at a supercar price. The Polestar 1, at $156,500, is Audi R8-esque on the sticker (as well as on the spec sheet). 

The Polestar 1 platform, to simplify, is a front-wheel-drive, gas-powered machine that's not overly stunning on paper; add the batteries and the dual-electric motors to produce rear-wheel-drive and AWD in concert and you get provocative bliss. In all-electric Pure mode, the Polestar 1 is quiet, quick, and torque-y, doing a passable impression of a Tesla Model S. Switch to fun mode, however, and you get the bold petrol-fueled dynamics mated to electric boost. 

In summary, the driving is thrilling, engaging, precise, never less than joyful and at times rapturous. I went into the Polestar 1 with a blank slate and left with a ledger filled with "OOHS!", "AHHS!", "ZOWIES!", "BIFFS!", and "POWS!" I half-expected Adam West to show up and dance the Batusi.

The handling rides a continuum between docile and posh in hybrid mode to downright track-worthy in power mode. I felt confident to throw the car around a bit — and I had to be ever mindful of how fast the Polestar 1 is, as it rocketed to the legal speed limit without a single bead of sweat forming on its chic Scandinavian brow.

The Volvo-Geely deal has long been one of the most interesting in the car business. It's already created a lineup of first-class SUVs and has elevated Volvo from mid-luxury to a sort of thinking person's alternative to BMW and Mercedes. 

With Polestar 1, that deal has become A LOT more interesting. This is easily the coolest set of wheels Volvo has produced in decades. And it's the best car China has ever built.

Trump pledged to revive the manufacturing sector. But it just fell deeper into a recession.

Mon, 12/02/2019 - 2:14pm

  • President Donald Trump won over Rust Belt states in 2016 on pledges to revive American manufacturing.
  • But the sector slipped deeper into a recession in November, with a key gauge of factory activity contracting for the fourth straight month.
  • New orders and employment in the sector dropped at a faster pace last month.
  • Visit Business Insider's homepage for more stories.

Manufacturing slipped deeper into a recession in November, with a key gauge of factory activity contracting for the fourth straight month.

The Institute for Supply Management said on Monday that its factory-activity index fell to 48.1 from 48.3 a month earlier, sliding back toward a decade low in September. A reading below 50 indicates contraction.

New orders and employment in the sector dropped at a faster pace last month. A tit-for-tat tariff dispute between the Trump administration and China has piled onto pressure in the manufacturing sector, which has also grappled with a broader slowdown in factory activity abroad.

"Global trade remains the most significant cross-industry issue," said Timothy R. Fiore, the chair of the ISM Manufacturing Business Survey Committee. "Overall, sentiment this month is neutral regarding near-term growth."

President Donald Trump won over Rust Belt states in 2016 on pledges to revive American manufacturing, arguing that tariffs would ultimately help win fairer policies for the sector. Select factories benefited from those measures in 2017, but the support was only temporary.

A spate of manufacturing companies has over the past two years requested relief from those tariffs, which have raised costs for importers and disrupted global supply chains. Manufacturers shed 2,000 jobs in September, with those losses concentrated in swing states like Pennsylvania, Ohio, Michigan, and Wisconsin.

"We doubt the gap will close anytime soon, absent a resolution to the trade war," said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

The US and China announced an interim trade agreement in October but have clashed over key economic stipulations. Manufacturing accounts for less than 12% of gross domestic product, but it is deeply tied to broader activity in the economy.

SEE ALSO: In latest sign of trade-war pain, the Trump administration announces tariff relief for dozens of Chinese products

Join the conversation about this story »

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

Roku tumbles 16% as Morgan Stanley downgrades the stock on valuation concerns

Mon, 12/02/2019 - 2:08pm

  • Roku shares fell as much as 16% Monday after Morgan Stanley downgraded the stock from "equal-weight" to "underweight."
  • Morgan Stanley analyst Benjamin Swinburne said that in light of Roku's 400% gain this year, the stock's risk/reward profile is skewed to the downside. 
  • Swinburne added that Roku's valuation has surpassed not only most digital media competitors, but also high-growth SaasS companies with larger margins. 
  • Watch Roku trade live on Markets Insider.

Roku's monster year in the stock market is spooking one Wall Street analyst. 

Morgan Stanley's Benjamin Swinburne downgraded the streaming company's stock from "equal-weight" to "underweight" on Monday. The news sent shares of Roku plummeting as much as 16%. 

Swinburne said the stock's risk/reward profile in skewed to the downside amid its 400% rise in price this year. 

Roku's stock posted giant gains in 2019 as the long-awaited streaming wars have finally come to fruition with the launches of Disney Plus and Apple Plus.

According to Swinburne, Roku's valuation has blown past not only other digital media competitors, but also high-growth software-as-a-service companies with healthier margins. 

The chart below demonstrates how Roku's margins are structurally lower than a typical SaaS company. 

"We think it will be increasingly difficult to sustain the current premium," a team led by Swinburne wrote in a note Monday. 

As Roku's growth slows and margins slide, the stock's high valuation could be challenged, the analysts added. 

But, Morgan Stanley is still bullish on Roku's growth prospects. The firm boosted its price target to $110, up from $100 alongside the downgrade. That figure represents almost 21% downside from Roku's share price Monday. 

The price target reflects a 16-times multiple applied to Roku's expected consolidated gross profits in 2021, compared to the roughly 30-times multiple the stock currently trades at. 

Shares of Roku are up more than 355% year-to-date. 



Join the conversation about this story »

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

US-China trade talks are at a critical juncture. Here's a timeline of everything that's happened so far.

Mon, 12/02/2019 - 1:41pm

  • The Trump administration started a trade dispute with China in early 2018, in an attempt to address practices it said put US companies at a disadvantage. 
  • The two sides have since slapped steep tariffs on thousands of products and threatened further escalations, with no clear end in sight.
  • Here's a timeline of the US-China trade war so far.

March 1, 2018: President Donald Trump announces tariffs on all imports of steel and aluminum, including metals from China.

March 22, 2018: Trump announces plans to impose 25% tariffs on $50 billion worth of Chinese goods. China announces tariffs in retaliation to the steel and aluminum duties and promises a response to the latest US announcement.

April 3, 2018: US Trade Representative Robert Lighthizer announces a list of Chinese goods subject to the tariffs. There is a mandatory 60-day comment period for industries to ask for exemptions from the tariffs.

April 4, 2018: China rolls out a list of more than 100 US goods worth roughly $50 billion that are subject to retaliatory tariffs.

May 21, 2018: After a meeting, the two countries announce the outline of a trade deal to avoid the tariffs.

May 29, 2018: The White House announces that the tariffs on $50 billion worth of Chinese goods will move forward, with the final list of goods to be released on June 15. The move appears to wreck the nascent trade deal.

June 15, 2018: Trump rolls out the final list of goods subject to new tariffs. Chinese imports worth $34 billion would be subject to the new 25% tariff rate as of July 6, with another $16 billion worth of imports subject to the tariff at a later date. China retaliates with an equivalent set of tariffs.

June 18, 2018: Trump threatens 10% tariffs on another $200 billion worth of Chinese goods.

July 6, 2018: The first tranche of tariffs on $34 billion worth of Chinese goods takes effect; China responds in kind.

July 10, 2018: The US releases an initial list of an additional $200 billion worth of Chinese goods that could be subject to 10% tariffs.

July 24, 2018: The Trump administration announces a $12 billion bailout package for farmers hurt by retaliatory duties on agricultural products, set to begin in September. 

August 1, 2018: Washington more than doubles the value of its tariff threats against Beijing, announcing plans to increase the size of proposed duties on $200 billion worth of Chinese goods to 25% from 10%.

August 3, 2018: China says it will impose tariffs at various rates on another $60 billion worth of US goods if Trump moves forward with his latest threat.

August 7, 2018: The US announces that the second tranche of tariffs, which would hit $16 billion worth of Chinese goods, will take effect August 23.

August 23, 2018: The US imposes tariffs on another $16 billion worth of Chinese goods, and Beijing responds with tariffs on $16 billion worth of US goods.

September 7, 2018: Trump says the tranche of tariffs on $200 billion worth of Chinese goods is coming "soon" and threatens to impose tariffs on another $267 billion worth of Chinese goods.

September 17, 2018: The US imposes tariffs on $200 billion worth of Chinese goods, and the tariff rate is scheduled to increase to 25% from 10% on January 1.

December 1, 2018: Trump and Chinese President Xi Jinping sit down at the G20 summit in Argentina, where the two leaders hash out a trade truce, delaying the escalation of US tariffs until March 1.

December 4, 2018: Despite the truce, Trump tweets that he is still a "Tariff Man" and says a deal will get done only if it is in the best interest of the US.

February 24, 2019: After a series of negotiations, Trump announces that US tariffs will not increase on March 1. He delays the increase indefinitely.

April 1, 2019: Violent clashes between authorities and pro-democracy protesters break out in Hong Kong, a semiautonomous Chinese territory. The government blames US influence for the demonstrations, but Trump maintains a softer tone with Xi.

May 5, 2019: After apparent progress in talks, the US accuses China of reneging on past trade commitments. Trump threatens to raise tariff rates and place duties on another $300 billion worth of Chinese goods.

May 10, 2019: Trump follows through with those threats, increasing import taxes to 25% from 10% on about $200 billion worth of products from China. Negotiations stall, and the US gives China a three-to-four-week deadline for a deal, according to Bloomberg.

May 13, 2019: China retaliates against the US by announcing it will raise tariff rates on $60 billion worth of American products on June 1.

May 15, 2019: Trump signs an executive order banning American companies from using telecommunications gear from foreign adversaries that officials declared as a threat to national security. He also adds Huawei and dozens of other Chinese companies to the US's "Entity List."

May 21, 2019: Xi calls on China to begin a new "long march," which is seen by some as a signal that the country is gearing up for a prolonged standoff with the US.

May 22, 2019: Xi visits one of the largest suppliers of rare-earth elements in China. The move is widely seen as a reminder of the leverage China holds when it comes to minerals the US relies on for a variety of goods, from jet fuel to wind turbines.

May 23, 2019: Trump rolls out a $16 billion bailout program for farmers who have been hurt by China's retaliatory tariffs on agricultural products.

June 2, 2019: China releases a policy paper blaming the US for stalled trade negotiations, drawing objections from the US Trade Representative. 

June 3, 2019: Secretary of State Mike Pompeo calls on the Chinese government to publicly acknowledge the anniversary of the deadly crackdown on the protests at Tiananmen Square in 1989.

June 4, 2019: A Foreign Ministry spokesman condemns Pompeo in a statement, saying his statement amounted to interference in its internal affairs. The Chinese government issues travel warnings for the US, saying its citizens had been subject to what it called harassment by American law enforcement.

June 10, 2019: Trump says that tariffs on $300 billion worth of Chinese products will take effect "immediately" if progress isn't made at an anticipated meeting with Xi in Japan at the end of the month. 

June 17, 2019: Hundreds of company representatives travel to Washington to testify against planned tariff escalations before the US Trade Representative. Throughout seven days of hearings, many warn that taxing all imports from China would increase costs and threaten US jobs. 

June 17, 2019: Trump says he has spoken with Xi by phone in recent days. He confirms that the two leaders will sit down at G20 and adds that trade delegations will be in contact before then.

June 25, 2019: Bloomberg reports that the US is preparing to stall additional tariffs on China at the Trump-Xi meeting. 

June 27, 2019: The Wall Street Journal reports that Xi plans to head to his meeting with Trump armed with conditions for de-escalation, including lifting tariffs and a ban on Huawei. The Trump administration doubles down on previous threats, saying escalation is still on the table.

June 29, 2019: Trump and Xi reach a trade-war ceasefire on the sidelines of G20, delaying planned tariffs on roughly $300 billion worth of Chinese products. The two sides agree to restart negotiations that stalled in May. 

July 3, 2019: Trump accuses other countries, including China, of currency manipulation and suggests the US should weaken the dollar to compete. 

July 9, 2019: Weeks after blacklisting Huawei, the Commerce Department says it will consider issuing licenses to companies who do business with the Chinese telecommunications giant. 

July 11, 2019: Trump accuses China of reneging on a past commitment to purchase more American agricultural products. 

July 29, 2019: Lighthizer and Treasury Secretary Steven Mnuchin resume trade talks with their Chinese counterparts in Shanghai.

July 31, 2019: Those negotiations end, with the next round expected in September. Both sides portray the discussions as constructive, but there are few signs of concrete progress.

August 1, 2019: In a reversal, Trump abruptly announces the US will move forward with tariffs on virtually all remaining imports from China. 

August 2, 2019: China warns it will retaliate with "the necessary countermeasures" if Trump follows through with his latest tariff threats, which the country says violate an agreement reached at G20. 

August 5, 2019: The US Treasury Department labels China as a currency manipulator after the country allows the yuan to breach the psychologically key level of seven against the dollar. China says it will halt purchases of American agricultural products. 

August 9, 2019: Trump threatens again that the US will cut ties with Huawei. The Commerce Department says it will hold off on making a decision on licenses to do business with the telecommunications giant.

August 13, 2019: The US delays a portion of tariffs on China, set to take effect September 1, until December 15. The administration says the move was meant to avoid disruptions to the holiday shopping season in the US, a rare acknowledgement that tariffs can raise prices. 


August 19, 2019: The Commerce Department says it will grant a temporary reprieve to Huawei, giving companies an extra 90 days to find an alternative to the telecommunications giant.

August 23, 2019: China prepares retaliatory tariffs on $75 billion worth of US products and says it will reinstate duties on cars. The escalations are set to go into place the same dates as on the US side.

Trump vows to hit back against those countermeasures, announcing the US will raise the tariff rates on Chinese products by about 5%. Financial markets tumble sharply as the president also orders private US companies to leave China, sowing confusion even though the command carries no legislative weight. 

August 25, 2019: Trump suggests to reporters that he's having "second thoughts" on trade escalations. The White House clarifies that statement hours later, saying the president only regrets not raising tariffs on China further. 

August 26, 2019: Trump moves to cast a positive light on trade negotiations as financial markets open. He says Chinese officials called over the weekend and want to make a deal but declines to elaborate. China disputes that claim.

August 29, 2019: Trump tells Fox News that his trade team is talking with China "at a different level." The White House says both sides remain in communication, but doesn't elaborate. 

August 30, 2019: The Washington Post reports that the Trump administration is looking into a plan to cut taxes by the amount raised in Chinese tariffs, an apparent admission that the cost of the trade wars has fallen on Americans. 

Trump blames companies at home for expressing concerns about tariffs, claiming without evidence that they only want to shift blame away from internal issues.

September 1, 2019: The Trump administration follows through with plans to enact tariffs on roughly $112 billion worth of Chinese imports, including clothing and household staples. China retaliates with tariffs on thousands of American products including cars.

September 4, 2019: Trump says the Dow Jones Industrial Average would be "10,000 points higher" if he hadn't started a trade dispute with China. The comment offers a rare acknowledgement that investors are nervous about his policies. 

September 11, 2019: China exempts 16 American product types from tariffs, including animal feed ingredients and cancer drugs. But the move is seen as more of an effort to shield Chinese businesses and consumers than as a concession to the US. 

September 19, 2019: Deputy-level trade officials from the two sides meet in Washington to lay the framework for higher-level negotiations. 

September 20, 2019: The US exempts roughly 400 Chinese products from tariffs, ranging from plastic straws to pet supplies, in the latest sign that the trade dispute is taking a toll on American companies. 

China cancels planned visits to American farms in the Midwest, without offering any official reasoning. 

September 21, 2019: USTR announces it "looks forward to welcoming a delegation from China for principal-level meetings in October." But no specific dates are given.

October 7, 2019: The US adds 28 technology companies in China to an export blacklist late Monday over alleged human rights abuses in the Xinjiang region. Chinese Foreign Ministry spokesman Geng Shuang hints at future retaliation. 

October 10, 2019: Trump, Lighthizer and Mnuchin host a 13th round of economic negotiations in Washington with a delegation led by Chinese Vice Premier Liu He. Behind closed doors, the White House continues to weigh potential new economic penalties against China.

October 11, 2019: The US announces a so-called phase-one trade agreement with China, which is said to involve intellectual property rules, financial market access and agricultural purchases. Trump holds off on scheduled escalations that would have raised tariff rates on thousands of Chinese products to as high as 30%. 

October 29, 2019: China says it will take steps to ease foreign investment restrictions and technology rules. But key terms of the interim trade agreement, which is still not put to paper, remain elusive.

October 31, 2019: Chile says it will no longer host a pair of global summits where Trump and Xi had originally planned to sign the announced trade agreement. The cancellation, attributed to a recent surge of unrest and protests in the country, raises concerns about the fate of negotiations.

November 12, 2019: Trump says the first part of a deal with China could be finalized "soon" but emphasizes that escalations against China would ensue if not.

"If we don't make a deal, we're going to substantially raise those tariffs," the president says.

November 15, 2019: The two sides continue to negotiate the terms of the phase-one trade agreement announced a month earlier. But multiple White House advisers say Trump isn't ready to sign anything yet.

November 21, 2019: The Wall Street Journal reports that Chinese Vice Premier Liu He has invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to an in-person meeting. The US side does not indicate whether it will attend. 

November 25, 2019: China rolls out plans to bolster its rules on patents, copyrights and trademarks. In an official document, the State Council and the Central Committee of the Communist Party say they will seek higher compensation for rights infringements and stricter enforcement mechanisms.

November 27, 2019: Trump signs bipartisan legislation that outlined support for pro-democracy demonstrations in Hong Kong. The move angers officials in Beijing, who warn of potential retaliation, and casts uncertainty over trade talks. 

November 29, 2019: The US announces it will shield dozens of products from tariffs. The new exclusions are seen as a way to mitigate domestic concerns ahead of the 2020 elections.

Airlines are joining in on Cyber Monday with major flight deals — here's how you can save

Mon, 12/02/2019 - 1:36pm

Airlines from all over the world are offering major sales for Cyber Monday, including on a ton of flights within and from the US.

We'll be updating this list as the world's airlines announce their Cyber sales, so be sure to check back and refresh.

In the meantime, scroll down to find the best airline Cyber Monday flight deals of 2019.

SEE ALSO: I flew Delta's reviled 767 business class seat from Europe to New York. Here's what it was actually like.

United Airlines

United is also offering Black Friday/Cyber Monday specials on vacation packages. Save up to $600 on flight + hotel packages, including up to 74% off hotels, and get 10,000 bonus United miles on select packages.

Make sure to book by December 5 to take advantage of the sale prices.

You can also score cheap flights when you book using miles. United is running a series of flash sales all day on Monday, December 2, offering flights from the mainland US to destinations in Asia and Europe for fewer miles than it would normally cost.

You have to book by 11:59 p.m. on Monday to get the deals on travel between January 12–March 29, 2020.

Click here to look at United's Black Friday and Cyber Monday vacation packages.

Click here to search for United award flights to Europe or Asia.


Delta is offering a ton of Cyber Monday flight deals.

The airline is offering cut-rate sales on a ton of individual routes throughout its network, on both domestic US and international flights.

To get the best deals, book by Wednesday, December 4. The travel periods depend on the route, but are generally in December, January, or February — a few include days in March and April, too.

Delta's also offering a Black Friday/Cyber Monday deal on vacation packages. You can get up to $350 off or 35,000 bonus miles when you book a vacation package. That's in addition to the usual savings from booking a flight and hotel together as a package.

Click here to browse Delta's Cyber Monday flight deals.

Click here to book Delta's vacation package deals.


American Airlines

American Airlines is offering Black Friday/Cyber Monday specials on vacation packages booked through the airline.

You can already get discounts by booking your flight and hotel together as a vacation package, but the current sale offers an extra discount on top of that.

Visit American's Vacations website and use promo code "Friday2019" to see sale prices. Packages must be booked by December 11 for travel by July 31, 2020.

Click here to search Black Friday vacation deals through American Airlines.

Spirit Airlines

Spirit Airlines is offering flights for as little as $23.50 one-way on Cyber Monday.

The catch is that you'll have to fly on Tuesdays and Wednesdays to take advantage of the deal, so that means you'll likely end up staying for a full week — no long weekend deals to be found here.

Book by December 3 at 11:59 p.m. ET for travel on select dates in December 2019 and January–February 2020.

Check the Cyber Monday page to see the available flights.

Click here to book Spirit Airlines' Cyber Monday deal.


Southwest is offering a ton of low fares for Cyber Monday. 

The fares currently listed must be purchased by Thursday, December 5, at 11:59 p.m. PT, for travel later in December through next year, depending on your destination.

Visit the sale page and check the interactive search tool to browse options. Keep in mind that listed prices are all one-way.

Click here to browse Southwest Black Friday fares.

Alaska Airlines

Alaska is offering steep Cyber Monday discounts on a handful of routes across its network, including flights for as low as $29 one way.

The one day sale is good for travel from January 7–March 11, 2020.

Check out the Cyber Monday deal page to browse available routes and dates.

Click here to search Cyber Monday deals on Alaska Airlines.

Air New Zealand

Air New Zealand is offering some fantastic fares for Cyber Monday, with a handful of routes available.

A variety of routes and all cabins are included, but some of the best offers include:

  • Los Angeles to the Cook Islands for $599
  • Mainland US cities to New Zealand for $779
  • Mainland US to Australia for $788

Book by December 2 to get the sale prices.

Click here to visit Air New Zealand's deals page.

British Airways

British Airways' also has a Cyber Monday sale on its vacation packages for US-based travelers.

You can get a round-trip flight to London and 4 nights in a hotel for as little as $579 per person. The sale is on until December 9 — book by then to lock in the best prices.

For customers based in the UK, there's an even wider selection of sales, with discounts on flights, holiday packages, and more, including both short-haul and long-haul trips. There are even some discounts on luxury holiday packages with business class flights. You'll have to book by December 3 to snag these deals, though.

Click here to search British Airways' Cyber Monday sale for US customers.

Click here to search British Airways' Cyber Monday sale for UK customers.


Emirates is offering steep discounts on flights from its 12 US gateways to a variety of destinations.

Black Friday fares start at $449 round-trip in economy and $2,959 in business class.

To get the best prices, book by December 5. Travel dates vary depending on cabin and routin, but are generally throughout 2020.

Click here to shop Emirates Cyber Monday deals.

Qatar Airways

Qatar Airways is offering $150 off round-trip economy flights and $300 off business class flights — including Qatar's award-winning Q Suite seats — to a handful of destinations from the US.

Tickets must be purchased by December 2 to get the discount

Visit Qatar's Cyber Monday page to see a full list of eligible routes.

Click here to book a Cyber Monday deal on Qatar Airways.


Etihad is offering discounts on various routes across its network for Black Friday and Cyber Monday.

Many of the fares aren't the best we've seen, but there are some good deals grouped in with the rest, like Chicago to Johannesburg for $766, or Los Angeles to Nairobi for $674.

Visit the sale page and browse options from your city — book by December 2 to get the deals.

Click here to search Etihad's Cyber Monday flight deals.

Norwegian Airlines

Save up to 30% on flights with Norwegian Air, including on short-haul and long-haul flights.

Use promo code "BLACKFRIDAY19" when searching for flights, and check Norwegian's Black Friday page to browse available fares.

Book by December 2 for travel between December 1–March 28, 2020.

Click here to search Norwegian's Black Friday and Cyber Monday flight deals.

Singapore Airlines

Singapore is offering Black Friday flight discounts from a handful of US cities to destinations throughout its route network. Book by December 3 to take advantage of the sale.

Deals include New York to Bali for $549 round-trip, Seattle to Bangkok for $549, and San Francisco to Hong Kong for $499.

Click here to see Singapore Airlines' Black Friday and Cyber Monday flight deals.

Air Italy

Air Italy is offering up to 25% off round-trip flights from the US and Canada to destinations in Italy.

Book by December 2 for travel from December 5–October 24, 2020.

Click here to search Air Italy's Black Friday deals.

Aer Lingus

Aer Lingus, the Irish flag carrier, is offering up to $100 off round-trip flights  in economy from the US and Canada to Ireland and Europe, and $200 off business class for the same flights.

The airline says that the prices will be reflected in search results. Of course, because airline pricing models are incredibly complex and opaque, it's hard to tell how the discounts are being applied.

However, a few sample searches found some stellar prices, including the low $300s from New York to destinations in Ireland and the UK.

Book by December 3 for travel between January 1 and March 8, 2020.

Click here to book a Black Friday deal on Aer Lingus.


Spanish airline Iberia is offering a wide range of discounted flights for Black Friday.

Book by December 2 to get the best prices on travel between now and March 27, 2020.

There are some deals to cities in Spain — like New York to Madrid for $272 round-trip — as well as connecting through Spain to other destinations — like New York to Tel Aviv, Israel for $569.

Click here to book Black Friday fares with Iberia.


Icelandic budget airline Wow Air may have gone bankrupt, but there are still plenty of opportunities to fly to Iceland for cheap.

Icelandair's Black Friday and Cyber Monday sale has discounts on round-trip flights to Reykjavik from all over the US. Fly from New York for about $360, from Seattle for $479, or from a handful of other cities around the country.

You can also connect through Reykjavik and fly to other destinations in Europe, depending on your origin city.

Visit the Black Friday sale page to see options from your home airport. Tickets must be booked by December 3.

Click here to browse Icelandair's Black Friday deals.


The European budget airline is offering different deals every day of "Cyber Week." Check back on its website every day to see the latest.

Click here to browse Ryanair's Cyber Week flight deals.


Aeromexico is offering a handful of discounted flights for Black Friday and Cyber Monday.

Some deals are better than others — for instance, a $325 round-trip flight from New York to Mexico City is a solid deal, while an advertised $1,110 flight from Houston to Lima is far from competitive.

The best thing to do is check Aeromexico's promotion page and explore the various routes and prices to see if something works for you, and then price-compare on Google Flights.

Occasionally, you can score an incredible deal on business class — sometimes it's around the same price as coach — so make sure to search for that too. That's how I got to fly to Santiago, Chile in business class last summer, which was a fantastic experience

Click here to explore Aeromexico Black Friday and Cyber Monday deals.

Hawaiian Airlines

Hawaiian Airlines is also advertising a Black Friday and Cyber Monday sale, although it hasn't offered specifics on pricing or dates.

If you're interested in traveling to Hawaii, the best thing to do would be visit the Cyber Monday sale page and start searching for flights to see if you can find a deal.

Click here to search Hawaiian Airlines' Cyber Monday deals.

Air France

Instead of discounts, Air France is offering triple miles for its Flying Blue frequent flyer members on round-trip flights between the US and Paris.

Book from now until December 2, and travel between December 7 and March 31, 2020 to take advantage of the deal.

Click here to book Air France flights as part of the triple miles promotion.

KLM Royal Dutch Airlines

KLM — which is co-owned with Air France by the larger Air France-KLM group — is offering a similar promotion for Flying Blue frequent flyer members.

Earn triple Flying Blue miles on round-trip flights from the US and Amsterdam when you book by December 2, and travel between December 7 and March 31, 2020.

Click here to book KLM flights as part of the triple miles promotion.

Stock pickers are shunning the cardinal rule of investing as they fight the machines trying to replace them — and they're still losing

Mon, 12/02/2019 - 1:28pm

  • Active fund managers are moving away from the time-honored strategy of portfolio diversification as passive investing threatens their sector.
  • Active US funds holding fewer than 35 stocks have nearly doubled in the last decade, the Wall Street Journal reported, citing Morningstar Direct data.
  • The shift arrives as exchange-traded funds and robo-advisers offer investors diversified portfolios with little to no fees.
  • The concentrated portfolios haven't proved their superiority over the last decade, underperforming the S&P 500 during market surges and tumbles, according to WSJ.
  • Visit the Business Insider homepage for more stories.

Active fund managers are bucking diversification and opting for concentrated stock picks as passive investing grows in popularity.

Their behavior goes against one of the cardinal rules of investing, which suggests that you can mitigate risk and build a stable portfolio by broadly spreading your wagers. But their hand is being forced by the rise of comparatively inexpensive exchange-traded funds and robo-advisers.

Active US funds holding fewer than 35 stocks have almost doubled in the last decade and their managed assets have nearly tripled, the Wall Street Journal reported Monday, citing Morningstar Direct data. 

It's a strategy that trades stability for volatility — and it hasn't exactly worked as intended. WSJ finds that the concentrated funds have still underperformed the S&P 500 and their diversified rivals since the ongoing equity bull market commenced in 2009.

Less diversified funds holding 20 stocks or fewer lagged even more, rising an average 133 percentage points less than the S&P 500 over the same period.

The concentrated portfolios also underperformed during the last economic downturn. Active funds with 35 stocks or fewer fell about 2 percentage points less than the average active fund, but fell behind the S&P 500 by about 0.7 percentage points, according to WSJ.

Concentrated funds never seem to win

Recent market tumbles in 2011, 2015, and 2018 saw mixed results between concentrated and diversified active funds, but the condensed funds never outperformed the broad market during the sell-offs. The market contractions showed stock quantity is less important for active funds, Polen Capital portfolio manager Dan Davidowitz told WSJ. 

"In the financial crisis you pretty quickly saw that it didn't matter how many companies you owned, it really mattered how high-quality they were," Davidowitz told them. The Polen Growth fund holds stakes in Facebook, Alphabet and Microsoft, and has outperformed the S&P 500 since its creation, WSJ reported.

Major firms are also showing new interest in portfolio concentration. UBS's asset management branch now holds a low-double-digit percentage of its active equity cash in concentrated funds, up from nearly zero in 2009, according to WSJ. Investors feel that a concentrated portfolio can bring the same low-risk benefits of a diversified fund if the stocks included are curated, high-quality firms, UBS Asset Management head of equities Barry Gill told WSJ.

"I believe it's inevitable that if you fast forward 10 or 15 years, the bulk of surviving active strategies in developed markets will be high-concentration portfolios," Gill said.

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

A Reddit trader claims to have found a new 'infinite money' glitch on Robinhood — but the company denies it exists

Bank of America: These 4 companies dominated Black Friday, and their stocks are a perfect holiday-season buy

3 funding factors women entrepreneurs looking to pass $100,000 in income need to know before applying for a loan or credit

Join the conversation about this story »

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

An emergency evacuation slide accidentally fell from a Delta plane and landed in someone's backyard in Boston (DAL, BA)

Mon, 12/02/2019 - 1:07pm

An emergency evacuation slide from an airplane fell to the ground outside Boston on Sunday, landing in a home's backyard.

The pilot of Delta Air Lines flight 405 from Paris to Boston reported hearing a loud noise as the plane lined up on its final approach to Boston's Logan Airport the Boston Globe reported.

Stephanie Leguia, a resident of Milton, MA — a Boston suburb — told the Boston Herald that she was standing in a neighbor's backyard on Adams Street chatting when the uninflated slide fell from the sky, bringing down several tree branches along the way.

The slide, which was uninflated, looked like a "giant silver tarp," she said.

Evacuation slide from Delta Air Lines flight 405 falls into front yard of Massachusetts home.

— Breaking Aviation News (@breakingavnews) December 2, 2019


Leguia and her neighbor inspected the item and found a "Boeing" logo. They called the police, suspecting that it fell from a plane. No one was injured by the falling slide.

According to data from FlightRadar24, the flight was operated by a Boeing 767-300 plane. Flight playback data shows that the plane was at an altitude of 2,200 feet and descending when it crossed Adams Street in Milton, four minutes before it landed at Logan Airport.

Delta technicians inspected the plane after it landed and found that a slide was missing. The plane landed without any other incident.

Sunday was expected to be the busiest day of the Thanksgiving travel period, with US airlines carrying a record 3.1 million passengers.

Airplane evacuation slides are designed to automatically inflate if an airplane door is opened without the slide being disarmed. They are used to speed evacuation of a plane during an emergency on the ground, including an emergency landing.

Milton sits directly under the approach path for runway 4L at Logan. In 2010, the body of a 16-year-old suspected stowaway fell from a plane into the neighborhood.

A Delta spokesperson did not immediately return a request for comment to Business Insider, but confirmed to the Boston Globe that the slide fell from the plane. The said it is investigation the incident.

SEE ALSO: VIDEO: A fuel truck careened into 2 American Airlines jets at Dallas-Fort Worth Airport, damaging both of them and causing flights to be cancelled

Join the conversation about this story »

NOW WATCH: Why Tesla's Model 3 received top crash-test safety ratings

Corporate America's debt load is nearing $10 trillion, a record 47% of the overall economy — and experts around the world are sounding the alarm

Mon, 12/02/2019 - 1:02pm

  • US corporate debt has swelled to nearly $10 trillion, according to data recently cited by The Washington Post.
  • That comes out to roughly 47% of the overall economy, which is a record, The Post found.
  • Experts from the International Monetary Fund to the trillion-dollar asset manager BlackRock have warned of the risk posed by ballooning investment-grade debt.
  • Since the 2008 financial crisis, companies have issued record levels of bonds to investors amid historically low interest rates.
  • Visit Business Insider's homepage for more stories.

US corporations are sitting on nearly $10 trillion in debt. That's equivalent to roughly 47% of the overall economy, a record, according to data cited by The Washington Post.

Since the financial crisis in 2008, corporations have splurged on debt amid historically cheap borrowing costs. In recent months, experts have warned that ballooning corporate debt could worsen a future economic downturn.

Here's what experts from the International Monetary Fund to the trillion-dollar asset manager BlackRock have said about rising corporate debt.

Read more: For 30 years, Renaissance Technologies achieved 66% annualized returns. Here's how a group of academics with no trading experience became the most successful hedge fund in history.

International Monetary Fund

As central banks around the world have loosened monetary policy over the past decade, corporations have felt encouraged to pursue "financial risk-taking," according to a report from the IMF published in October.

That dynamic has made some systemically important economies more vulnerable to an economic slowdown, the report found.

"Corporate leverage can also amplify shocks, as corporate deleveraging could lead to depressed investment and higher unemployment, and corporate defaults could trigger losses and curb lending by banks," the IMF wrote.

In a recession half as severe as the 2008 financial crisis, corporate debt-at-risk — which is owned by firms that can't cover interest expenses with their profits — could increase to $19 trillion, or almost 40% of total corporate debt in major economies, the IMF said.


The trillion-dollar asset manager said in an October report that BBB-rated bonds, the lowest bracket of the investment-grade debt, accounted for more than 50% of the market, compared with 17% in 2001.

As demand for investment-grade debt has grown, the creditworthiness of issuers has fallen. According to BlackRock, leverage levels are creeping toward the highest readings since 1992. The firm measured leverage using a ratio of debt minus cash and cash equivalents to 12-month EBITDA.

"We believe the sharp increase in the proportion of BBB-rated constituents has made the investment-grade bond sector riskier than in recent years," BlackRock wrote. "BBB-rated bonds are typically the most vulnerable of all investment-grade debt in a recession."

If BBB-rated bonds were downgraded, they would then be considered high-yield debt, or "fallen angels," which could cause their value to fall, the firm added.

Federal Reserve

The central bank warned in its November "Financial Stability Report" that the riskiest companies accounted for the bulk of rising debt in recent years.

The Fed also expressed concern about outstanding BBB-rated debt approaching an all-time high.

"In an economic downturn, widespread downgrades of bonds to speculative-grade ratings could lead investors to sell the downgraded bonds rapidly, increasing market illiquidity and downward price pressures in a segment of the corporate bond market known already to exhibit relatively low liquidity," the central bank wrote.

The ratio of debt to assets for all publicly traded nonfinancial companies has hit its highest level in two decades, and the leverage ratio among debt-heavy firms is near a historical high, the Fed added.

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