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Dow plunges 710 points amid surging COVID-19 cases and oil-market skid

Wed, 06/24/2020 - 4:05pm  |  Clusterstock

  • US equities slid on Wednesday as rising coronavirus case counts around the world renewed fears of a slow economic recovery.
  • COVID-19 cases have increased in California, Texas, and Florida, driving concerns that economic reopenings will fuel a second wave of the pandemic.
  • Investors also braced for a new tariff announcement after a late-Tuesday notice said the Trump administration was mulling duties on $3.1 billion worth of European exports.
  • Oil fell, with West Texas Intermediate crude sliding back well below $40 per barrel at intraday lows.
  • Watch major indexes update live here.

US stocks slid on Wednesday as surging COVID-19 case counts in the US fueled concerns of a protracted economic downturn.

California, Arizona, Texas, Florida, and other states have recently seen large coronavirus outbreaks, leading some to question whether economic reopenings will be extended or reversed. Rising case counts in Germany and China suggest economic pain will last abroad as well.

Investors also braced for a new tariff announcement from the White House. The Trump administration is mulling duties on $3.1 billion worth of exports from France, Spain, Germany, and the UK, according to a notice from the Office of the US Trade Representative published Tuesday evening. Such action could place fresh pressure on US trade relations and spark a new conflict.

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

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

"I imagine there will be significant resistance to restrictions being reimposed but the fear is that they are left with no other option and the recent trends we're seeing in the data is a worry," said Craig Erlam, a senior market analyst at Oanda Europe.

Travel stocks were among the session's biggest losers. Airlines declined, led by Delta, Southwest, and United. Carnival Cruise Line and Royal Caribbean plunged further. Retailers including Gap and Macy's also declined.

The International Monetary Fund added to investors' stressors. The organization forecast an even deeper global recession than it did in April, calling for a 4.9% contraction in global gross domestic product in 2020. It had previously forecast a 3% slide through the year.

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

The IMF also expects the recovery to be worse than initially expected, cutting its 2021 growth estimate to 5.4% from 5.8%. The coronavirus pandemic will leave behind severe economic scarring, particularly in marginalized communities, the organization said.

"The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s," the IMF said.

Oil fell amid concerns of prolonged demand weakness and rising inventories. The American Petroleum Institute reported an increase of 1.75 million barrels in US inventories last week, bringing the total to 545 million barrels. Economists had expected a buildup of just 299,000 barrels, Reuters reported. An oversupply shock could flood the market with unwanted oil and drive prices sharply lower.

Read more: Morgan Stanley handpicks 10 stocks to buy now for the richest profits as travel and outdoor activities transform in the post-pandemic world

West Texas Intermediate crude fell as much as 7.6%, to $37.31 per barrel. Brent crude, the international benchmark, slipped 7%, to $39.63, at intraday lows.

Wednesday's decline came after moderate gains on Tuesday. Soaring tech names pushed the Nasdaq composite to a record high. Bank stocks followed close behind as investors received positive signs from new home sales data and IHS Markit's US purchasing managers' index.

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Goldman Sachs CEO David Solomon sees V-shaped recovery into 2021 before comeback slows

Wed, 06/24/2020 - 3:31pm  |  Clusterstock

  • The US economy is still on track for a V-shaped recovery at least through 2020, Goldman Sachs CEO David Solomon said Wednesday.
  • The nation is "somewhere in the middle" of its rebound and reopenings are slated to sharply boost economic activity, he said during the Bloomberg Invest Global virtual conference.
  • Yet as the V-shaped bounce ends sometime next year, "it's very open-ended as to what kind of economic friction we're going to see as we get through the end of the year and into 2021," the chief executive added.
  • Visit the Business Insider homepage for more stories.

Goldman Sachs CEO David Solomon still sees a V-shaped recovery ahead even as coronavirus cases are increasing throughout the US.

It just might not bring the economy back to its pre-pandemic levels as quickly as hoped.

Appearing in the Bloomberg Invest Global virtual conference, Solomon said the US is "somewhere in the middle" of its turnaround. Just as economic activity nosedived in the second quarter, the CEO sees reopenings driving a similar turn higher through the end of the year.

"This crisis has had a profound impact on the economic environment that we're operating in," he said on Wednesday. "My guess is when you look at the shape of the recovery, the initial shape is going to look quite like a V."

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

Solomon added that uncertainty still clouds such forecasts and second shocks could endanger the nation's long-term trajectory. The healthcare industry represents a major variable, as an effective coronavirus vaccine is largely viewed as the best bet for boosting consumer confidence. Human behavior can also deviate from expectations and either accelerate or halt reopening measures.

These factors will likely slow the US economic bounce-back after 2020 and push a full rebound further down the road, Solomon said.

"I do think we're going to see a sharp V to start with, but it's very open-ended as to what kind of economic friction we're going to see as we get through the end of the year and into 2021," the CEO said.

"I think it's going to take quite a while for us to get back to where we were before this started"

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Morgan Stanley sees Tesla falling 35% from current levels, says rally to $1,000 ignores a host of risks (TSLA)

Wed, 06/24/2020 - 2:55pm  |  Clusterstock

  • Tesla at more than $1,000 per share is plausible but ignores a host of market and execution risks, Adam Jonas of Morgan Stanley wrote in a Monday note. 
  • Shares of Tesla have been trading around the key level since closing at an all-time high of $1,025 per share on June 10. On Tuesday, Tesla again closed above the level, at $1,001 per share. 
  • Morgan Stanley's price target of $650 implies a 35% drop from that level. 
  • Watch Tesla trade live on Markets Insider.
  • Read more on Business Insider.

Tesla might be overvalued at $1,000 per share, according to Morgan Stanley. 

"We understand the attraction of the Tesla story," Adam Jonas of Morgan Stanley wrote in a Monday note, adding "we think investors may have a chance to revisit the stock at a more attractive price." 

He continued: "We believe $1,000/share discounts outcomes that, while plausible, may ignore a host of execution/ market risks." 

Shares of Tesla have been trading around the key $1,000 level since June 10, when the stock closed at an all-time high of $1,025. On Tuesday, Tesla closed at $1,001 per share, beating the level again before paring some gains Wednesday. 

There could be further pain ahead for Tesla stock, according to Morgan Stanley. The firm reiterated its $650 price target, which implies the stock could fall 35% from the key $1,000 level. Morgan Stanley also has the equivalent of a "sell" rating on Tesla. 

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

Tesla interest is coming from tech-oriented investors that see the Elon Musk-led company's valuation as "reasonable and in the framework of discussion amongst large/ tera-cap tech names" such as Amazon, Google, and Apple, said Jonas. 

"However, one would have to consider (or ignore) significant inherent differences in Tesla's business model and capital intensity" compared to other tech names, according to Jonas.

In addition, "one must also take into account many of Tesla's business objectives face a degree of execution risk that may be significantly higher than many of the more proven/ mature companies in this analysis." 

Morgan Stanley's Tesla target price is based on slightly more than 2 million units of annual deliveries by 2030 at a roughly 16.5% Ebitda margin, according to the note. At $1,000 per share and the same margin forecast, Tesla is discounting roughly 4 million units  — double its estimate, said Morgan Stanley. 

Read more: Morgan Stanley handpicks 10 stocks to buy now for the richest profits as travel and outdoor activities transform in the post-pandemic world

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Oil plummets 8% on 2-pronged threat from COVID-19 resurgence and inventory increase

Wed, 06/24/2020 - 2:51pm  |  Clusterstock

  • Oil prices slumped on Wednesday as investors stared down a larger-than-expected jump in US crude inventories and surging COVID-19 case counts in several states.
  • The American Petroleum Institute said inventories last week leaped by 1.75 million barrels, to 545 million barrels, Reuters reported. Economists had expected a buildup of just 299,000 barrels over the period.
  • Meanwhile, a surge in coronavirus cases in several US states threatens to halt travel activity and stifle a demand rebound.
  • West Texas Intermediate crude futures sank as much as 7.6%, to $37.31.
  • Brent crude, the international benchmark, plunged 7.1%, to an intraday low of $39.62.
  • Watch oil trade live here.

Oil futures plummeted on Wednesday after new industry data and coronavirus case counts pointed to an aftershock in the critical commodity market.

The American Petroleum Institute said inventories jumped by 1.75 million barrels in the week ended on Friday, to 545 million barrels, Reuters reported on Tuesday. Economists had expected an increase of just 299,000 barrels. The larger-than-expected buildup threatens to flood the market with unwanted inventory as demand remains well below pre-pandemic levels.

West Texas Intermediate crude contracts slid as much as 7.6%, to $37.31 per barrel, before paring some losses. Brent crude, oil's international standard, fell 7.1%, to $39.62 at intraday lows.

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

The three straight weeks of inventory increases echoed a trend that ultimately pushed oil prices into negative territory in late April. WTI contracts nosedived in their last days before expiration as oil storage reached its limit and demand failed to offset the buildup. The moves haven't been repeated since, though Wednesday's price action pulled contracts sharply lower from their three-month highs.

Soaring COVID-19 case counts throughout the US further rattled investors hoping for a smooth oil-market rebound. Several states including California, Florida, and Arizona have reported spikes in cases throughout the week as reopenings continue. A surge in cases could further tank oil demand as lockdown measures drag on.

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

Growing fears of a new trade conflict also hammered the market. The White House is weighing fresh tariffs on $3.1 billion worth of exports from the UK, France, Spain, and Germany, the Office of the US Trade Representative said late Tuesday. Any slowdown in global trade stands to stifle a bounce-back in crude prices.

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Bank of America says these stocks will be supported as people opt for 'staycations' during the coronavirus crisis

Wed, 06/24/2020 - 2:47pm  |  Clusterstock

  • As the coronavirus pandemic wears on, "staycations" should support stocks tied to solitary leisure, Bank of America analysts led by Robert Ohmes wrote Monday. 
  • Credit card data suggests that spending solitary activities such as golf accelerated in June. 
  • In addition, travel and Google Mobility data show that consumers are staying closer to home and increasing visits to parks and beaches over restaurants and malls. 
  • Here are three stocks that Bank of America upgraded as they're poised to gain from the "staycation" trend. 
  • Read more on Business Insider.

Even as the US economy reopens, many Americans are still practicing social distancing rules that are even impacting how they vacation, according to Bank of America. 

"We believe COVID-19 is accelerating the consumer spending shift away from traditional entertainment (e.g. amusement parks, movie theaters, & tourist attractions) and international travel to 'solitary' leisure activities (e.g. golf, marine, hiking, camping) and 'staycations'," a group of analysts led by Robert Ohmes wrote in a Monday note. 

There are a few data points that back up the claim, according to the note. First, travelers are holding back and choosing to stay local as the coronavirus still presents a health threat, Bank of America said.

Google mobility data through mid-June suggests that visits to parks, beaches, and marinas are growing, and tracking nearly 70% above pre-COVID levels. At the same time, visits to restaurants, shopping centers, theme parks, museums, libraries, and movie theaters are 16% below pre-COVID levels. 

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

Credit and debit card data also suggests that consumers are spending more money on solitary leisure activities, according to the report. Through mid-June, spending on entertainment such as movie theaters and amusement parks is down nearly 90% from a year ago, while spending on activities such as golf and marine activities are up double-digits on the year and continuing to gain. 

This trend will support three stocks that "should benefit from a potential sustained change in consumer habits due to rising consumer demand for active social distancing & contactless leisure experiences," according to Bank of America.

In addition, the "solitary leisure" stocks will especially gain with fears of a potential second wave of coronavirus cases mounting, Ohmes wrote. 

These are the three "solitary leisure" stocks Bank of America recommends. 

1. Dicks Sporting goods

Ticker: DKS

Price target: $50 (from $45) 

Rating: Buy 

"We believe DKS is the best positioned retailer to benefit from the increasing popularity of golf as one of the largest equipment retailers in the U.S.," Ohmes wrote. 

 

Source: Bank of America



2. Columbia Sportswear

Ticker: COLM

Price target: $90 (from $82) 

Rating: Buy 

"COLM should see momentum from more participation in Camping, Hiking, and Fishing as visits to national parks continue to increase," Ohmes wrote Wednesday.

"Columbia Sportswear apparel, including its PFG line, should be a beneficiary," he said, adding, Columbia Brand Footwear "should see momentum especially in hiking & trail running categories."

Source: Bank of America



3. Yeti

Ticker: YETI

Price target: $42 (from $35) 

Rating: Buy 

"We also see YETI as a key beneficiary of the shift towards solitary leisure activities as its coolers & drinkware are used across marine, fishing, park, and beach activities," wrote Bank of America analysts led by Ohmes. 

Source: Bank of America



Morgan Stanley, UBS, Wells Fargo, and Bank of America's Merrill Lynch won't disclose the racial diversity of their financial advisers

Wed, 06/24/2020 - 2:34pm  |  Clusterstock

  • The largest US wealth managers have renewed their commitments to promoting racial diversity as the deaths of Black men and women at the hands of police in recent weeks spurred a national outcry. 
  • At the same time, Morgan Stanley, Wells Fargo, and Bank of America's Merrill Lynch business won't disclose the racial diversity of their advisers.
  • JPMorgan meanwhile said last year that less than 5% of its 3,700 advisers are Black.
  • Last week, a former Morgan Stanley executive filed suit against the firm and one of its wealth management executives for racial discrimination and retaliation.
  • Contact this reporter on the encrypted app Signal at (631) 901-5340 or at rungarino@businessinsider.com.
  • For more stories like this, sign up for our Wall Street Insider newsletter.

As a historic reckoning with systemic racism grips the US in recent months, most of the country's largest wealth managers and their big-bank parent firms have made vows recommitting themselves to promoting diversity internally and in the communities where they operate.

But the industry's effort is limited by the information firms choose to disclose to the public. As companies like Wells Fargo, Morgan Stanley, and Bank of America publicize their efforts, they won't break out how many of their thousands of financial advisers are Black and people of color. 

The disconnect between commitments and a general lack of transparency into more granular race data — even within a notoriously secretive business — does little to instill confidence in the wealth management industry's efforts to make itself less white and male, something it's said it's improved in recent years. 

Four days after Minneapolis police killed George Floyd and protests started sweeping the US, Wells Fargo chief executive Charlie Scharf sent an email to all employees committing that "our company will do all we can to support our diverse communities" and foster an inclusive culture.

"As a white man, as much as I can try to understand what others are feeling, I know that I cannot really appreciate and understand what people of color experience and the impacts of discriminatory behavior others must live with," he wrote in the email later posted to the firm's website.

Wells Fargo, the fourth-largest US bank by assets, does not provide numbers around diversity for each line of business, only at the corporate level, a spokesperson said. It operates one of the largest US wealth management businesses, with 13,450 advisers overseeing some $1.4 trillion.

As of 2019, 44% of its US workforce is ethnically and racially diverse, according to the latest figures in the company's business standards report. The firm, which employs 263,000 people globally, does not break out its US headcount. 

Within financial services, it's typical for a firm to disclose gender and racial diversity figures at the firm level though not offer more detailed data, said John Streur, the president and chief executive of Calvert Research and Management, the investment management firm owned by Eaton Vance that specializes in responsible investing. 

A firm may not disclose figures because "the numbers aren't where they'd like them to be," or there may be a risk management-related reason a firm may not disclose figures at the business segment level, he said. 

"But we have to get past that," Streur said in a phone interview. "I think getting the industry into a transparency and a reporting groove would be really healthy and important."

Outsiders got a rare glimpse into a large wealth operation's racial diversity when JPMorgan said in January that less than 5% of its nearly 3,700 financial advisers are Black, the New York Times first reported.

The firm's disclosure came after Congressional Democrats questioned JPMorgan over a Times report on racism at some of the bank's Arizona branches. A spokesperson defended the bank's treatment of a former financial adviser and a client at the center of the report, the Times reported. 

Read more: 'Diversity' and 'inclusion' are the emptiest words in corporate America. Here's what we really need to dismantle systemic racism in the office.

"The leaders of the new US Wealth Management business are all-in, dedicated to make meaningful progress hiring more Black advisors," a JPMorgan spokesperson said in a statement to Business Insider.

Of 271 participants in the firm's Advisor Development program, a two- to three-year program focused on recruiting and developing new advisers who have little or no traditional financial services experience, more than 20% have identified as Black, the spokesperson said. 

Some advisers have made career moves around the lack of representation they felt in the workplace.

After growing frustrated with the lack of racial diversity at legacy firms where she previously worked, Anna N'Jie-Konte, who identifies as Afro-Latin, founded a registered investment adviser last year catering to "single millennial women of color in their 30s and 40s," according to a recent report from the website ThinkAdvisor. 

"The lack of diversity in both the staff and client base is abysmal. It's the elephant in the room," said N'Jie-Konte, whose firm has a dozen clients and some $5 million in client assets, ThinkAdvisor reported.

A disconnect between commitment and transparency

Morgan Stanley, the New York investment bank and wealth manager, said earlier this month that it would allocate $25 million toward establishing an internal group to oversee the mentoring, development, and promotion of diverse employees, chief executive James Gorman said in a June 5 post. It also plans to donate $5 million to the non-profit NAACP Legal Defense Fund.

Though it's made commitments, a spokesperson for Morgan Stanley declined to disclose figures showing the racial diversity of its 15,432 financial advisers. The firm's elite wealth unit is the world's largest, with some $2.4 trillion in client assets as of late March. 

The spokesperson said half of participants in the firm's financial adviser training program are "diverse candidates," referring to both gender and racial diversity, and declined to disclose the size of its program. 

Last week, lawyers representing Marilyn Booker, Morgan Stanley's former global head of diversity from 1994 until 2011, filed suit against her former employer and a wealth management executive there for racial discrimination and retaliation. 

Read more: 10 diversity leaders who are fighting inequality in corporate America

Booker believes she was fired last December because she "pushed too hard" for initiatives geared toward advancing Black employees and people of color within the firm and specifically within its financial adviser and adviser trainee ranks, according to the complaint filed in federal court in Brooklyn. A company spokesperson said in a statement that the firm rejects Booker's allegations and intends to defend itself.

Other wealth management giants have provided just as little transparency into their financial adviser forces.

While Bank of America discloses its diversity figures on a firm-wide level (roughly half of its US workforce is racially or ethnically diverse, the company says), it does not do so for individual business lines, including its Merrill Lynch Wealth Management business. Merrill reported 17,646 advisers and other wealth representatives through March, and manages some $2.2 trillion. 

"At Bank of America, and within the Merrill business specifically, diversity and an inclusive workplace are core to our culture," a spokesperson said.

Currently, the firm's financial adviser training program is the most diverse class of advisers in its history, the spokesperson said. Nearly 30% of the program's group of some 3,000 adviser trainees are women, and more than a third are people of color.

Bank of America said on June 2 that it would allocate $1 billion over four years to help communities address economic and racial inequality, with one focus on recruiting and retaining employees in low- to moderate-income communities. 

After Business Insider published this article, a UBS spokesperson said global wealth management co-head Tom Naratil disclosed to employees in an internal town hall last week that 1% of its financial advisers in the Americas are Black, and disclosed other details about how it aims to improve diversity in its ranks. UBS is among the largest wealth managers with $2.3 trillion in assets and roughly $1.2 trillion managed in the US. 

In February, the firm released a workforce diversity report that showed 25% of its employees at the end of 2019 were people of color.

"Black Americans are clearly the ones that are least represented and that is where we clearly see opportunity to improve," Tom Naratil, co-head of the global wealth management division and president of the Americas, told Reuters at the time of its report

Naratil said at the time that the bank hoped it would hold itself more accountable on matters of internal and external diversity if it voluntarily disclosed its figures, and that more work was required to improve diversity among its force of some 10,000 advisers, who are "primarily" white and male. Nearly 6,500 advisers of the firm's advisers operate in the US through March. 

Do you have a tip about these firms or the wealth management industry? Contact this reporter on the encrypted app Signal at (631) 901-5340 or at rungarino@businessinsider.com.

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Read the letter a fintech-focused VC sent investors laying out why 'hype rounds' that drove ballooning valuations just won't work anymore

Wed, 06/24/2020 - 2:29pm  |  Clusterstock

  • Financial Venture Studio's cofounders and managing partners, Ryan Falvey and Tyler Griffin, believe momentum investing and "hype rounds" will no longer be a sustainable strategy for VCs. 
  • The lack of social gatherings post-pandemic will make it too hard for VCs to coordinate investments and pick winners, they wrote. 
  • They argued that thesis-driven investing will prevail in the coming months.
  • Sign up here for our Wall Street Insider newsletter.

A venture-capital investor is predicting the end of momentum investing and "hype rounds." 

Financial Venture Studio, a San Francisco-backed fintech investor who's backed the likes of personal finance app Dave and student-loan app Pillar, believes big-money rounds fueled by interest in charismatic founders will slow.

Part of the issue lies in the inability of VCs to coordinate and network with each other at social gatherings to identify potential winners, as was the case previously.

Ryan Falvey and Tyler Griffin, the cofounders and managing partners of the firm, explained why the strategy will suffer in a letter penned to their LPs and shared with Business Insider. 

"This fundraising technique (and the underlying GP strategy that enables it) relies on frequent communication and networking among VCs to develop a consensus around such winners," Falvey and Griffin wrote. 

"Scheduling a call with a competitor to discuss what one is seeing in-market is an awkward and unpleasant distortion of casual deal-flow gossip over drinks, and it turns out that "pattern matching" is extremely difficult when managers can't watch other investors play the game as well," they added.

It's still early days, but 2020 has remained a year marked by big rounds, a continuation of a trend that picked up in 2019. Unicorn startups Robinhood and Brex both raised significant amounts of capital in May. Meanwhile, Stripe raised $600 million to value it at $36 billion in April.

Instead, Falvey and Griffin predict thesis-driven models will succeed. Betting on high-skilled founders who fall in line with the investor's long-term vision "has been remarkably effective," and will continue to be the case, they wrote.

To be sure, the prediction is self-serving to the VC, as it's a process Financial Venture Studio specializes in, a point Falvey and Griffin acknowledge. 

"We believe that this return to thesis- driven investing will benefit smaller specialist funds like ours, which can find and support compelling teams, complete thorough early diligence, and telegraph quality to larger multi-stage funds. In short, we expect broad investing trends to break in our favor," they wrote.

Read the full section of the letter here:

Being a "Post-COVID Fund" Similarly to our founders, we believe our own orientation should reflect this new reality. Our view is that the current crisis will last for an extended period of time. We obviously cannot know exactly how long, but we expect that the future is going to look more like today than the period before the virus hit. Significant parts of the venture capital ecosystem seem to have been seriously disrupted, and we expect that disruption to continue. 

The biggest and most obvious impact is to momentum investors. Over the past decade, "hype rounds," in which a major driver of equity value is other funds' interest, grew to be a mainstay of the venture community. Contemporaneously, a certain type of founder has become highly prized in our industry, namely those with a personality that inspires venture capitalists to write large checks and compete aggressively with each other at the early stages. It is important to note that this strategy can be effective, especially with cash-burning businesses for which access to capital is a significant and often decisive advantage. Choosing and lavishly funding a "winner" in a category can effectively become a bet on the category itself, as there is less likelihood that competitors will even get funded in the first place. 

This fundraising technique (and the underlying GP strategy that enables it) relies on frequent communication and networking among VCs to develop a consensus around such winners. Remote work has slowed down interactions among managers and also eliminated spontaneous discussions at networking events, replacing them with calls or videoconferences with enumerated agenda items. Scheduling a call with a competitor to discuss what one is seeing in-market is an awkward and unpleasant distortion of casual deal-flow gossip over drinks, and it turns out that "pattern matching" is extremely difficult when managers can't watch other investors play the game as well. 

Consequently, we expect many talented managers to revert to the earlier, thesis-driven model of investing that has been the core VC strategy since the industry's founding. From the early Fairchild Semiconductor days when investors realized that semiconductor-based businesses would have outsized economic value to Marc Andreessen's famous thesis from 2011 that "software is eating the world," investing in highly skilled founders who match the investor's long-term vision has been remarkably effective. We believe that this return to thesis- driven investing will benefit smaller specialist funds like ours, which can find and support compelling teams, complete thorough early diligence, and telegraph quality to larger multi-stage funds. In short, we expect broad investing trends to break in our favor. 

The other industry that has been seriously disrupted is financial services. The current crisis has highlighted the inadequacy of our existing financial system and the financial fragility of huge swaths of the American middle class. From the chaotic deployment of Payroll Protection Funds to unprecedented unemployment levels, we are experiencing a recession that is fundamentally financial and that will create unparalleled demand for innovative financial services businesses. As such, we predict fintech as a sector to see resurgent interest from both investors and entrepreneurs. 

We believe current circumstances will create a permanent shift towards consumer and business adoption of technological solutions. Social distancing is forcing even reticent consumers and small businesses to use digital products to move money, manage account balances, and pay bills as bank branches reduce hours or close completely and call centers remain overwhelmed. Initial onboarding is by far the highest hurdle for most fintech products, and once configured, the workflows are far more efficient than the analog alternatives. In the same way that many workplaces will be transformed permanently by accommodations for remote work, consumers' and businesses' engagement with fintech products will prove to be very sticky. 

For all of the same reasons, we expect heightened founder interest in this sector. As the best innovators look for challenging problems to solve, financial services will be difficult to ignore. While we do not expect to see genuinely new post-COVID business models for the next few months, we are incredibly excited for what is to come. When they do come, our model of broad national sourcing, focused industry expertise, and intensive founder support will position the fund for success. 

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Dow slips 650 points as spiking virus cases revive economic-recovery worries

Wed, 06/24/2020 - 1:22pm  |  Clusterstock

  • US equities slid on Wednesday as rising coronavirus case counts around the world fueled fresh fears of a slow economic recovery.
  • COVID-19 cases have increased in California, Texas, and Florida, driving concerns about economic reopenings.
  • Investors also braced for a new tariff announcement after a late-Tuesday notice said the Trump administration was mulling duties on $3.1 billion worth of European exports.
  • Oil fell, with West Texas Intermediate crude sliding back below $40 per barrel at intraday lows.
  • Watch major indexes update live here.

US stocks slid on Wednesday as surging COVID-19 case counts in the US fueled concerns of a protracted economic downturn.

California, Arizona, Texas, Florida, and other states have recently seen large coronavirus outbreaks, leading some to question whether economic reopenings will be extended or reversed. Rising case counts in Germany and China suggest economic pain will last abroad as well.

Investors also braced for a new tariff announcement from the White House. The Trump administration is mulling duties on $3.1 billion worth of exports from France, Spain, Germany, and the UK, according to a notice from the Office of the US Trade Representative published Tuesday evening. Such action could place fresh pressure on US trade relations and spark a new conflict.

Here's where US indexes stood at 1:20 p.m. on Wednesday:

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

"I imagine there will be significant resistance to restrictions being reimposed but the fear is that they are left with no other option and the recent trends we're seeing in the data is a worry," said Craig Erlam, a senior market analyst at Oanda Europe.

Travel stocks were among the session's biggest losers. Airlines declined, led by Delta, Southwest, and United. Carnival Cruise Line and Royal Caribbean plunged further. Retailers including Gap and Macy's also declined.

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

Oil fell amid concerns of prolonged demand weakness. West Texas Intermediate crude fell as much as 3.6%, to $38.90 per barrel. Brent crude, the international benchmark, slipped 3.6%, to $41.10, at intraday lows.

Wednesday's decline came after gains on Tuesday. Soaring tech names pushed the Nasdaq composite to a record high. Bank stocks followed close behind as investors received positive signs from new home sales data and IHS Markit's US purchasing managers' index.

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Major Silicon Valley VCs are slamming Trump's immigration restrictions as 'short-sighted' and 'very dangerous' to long-term technical innovation

Wed, 06/24/2020 - 1:19pm  |  Clusterstock

It doesn't happen often, but Silicon Valley CEOs, founders, investors, and employees have found something they can all agree on — President Donald Trump's ban on visas for foreign workers is bad news for tech

On Monday, Trump issued an executive order freezing new work visas until the end of the year. In the announcement, Trump said the ban would help out-of-work Americans find jobs in the beleaguered economy by closing off competition from international candidates.

Silicon Valley insiders said it would do the opposite. 

The region's network of startups, entrepreneurs, and venture-capital firms, which has produced companies like Google, Apple, and Uber, will be deprived of an important ingredient in its recipe for success, they said. And the absence will be felt in both the short term and the long term.

"Startups are a huge driver of the American economy, and 55% of America's billion-dollar startups have an immigrant founder," said Geoff Ralston, the president of Y Combinator, one of Silicon Valley's most famous startup accelerators. 

"In the short term, the new restrictions on H-1Bs and other non-immigrant visas will disrupt the creation of more startups based in the US — which will ultimately impact the creation of American jobs," Raslton told Business Insider in an email.

The H-1B visa is of particular concern for tech companies in Silicon Valley because it applies to highly skilled immigrants with specific technical talent and was singled out in Trump's Monday order. Many tech companies and startups have relied on this category of visa to hire some of the top experts in highly competitive fields, such as machine learning and data analytics.

"Undoubtedly this will have long-term implications on the ability of US-based companies to attract talent and maintain a competitive edge at a global level," Index Ventures partner Mike Volpi told Business Insider.

Some venture-capital investors say that Silicon Valley is shutting the door on smart, technical talent at precisely the wrong time.

Economic recessions have a special place in Silicon Valley lore: Airbnb and Uber were created amid the wreckage of the 2008 financial crisis. Hewlett-Packard got its start during the late 1930s.

"This is when the next big tech companies will be created, now, in the opportunities that exist in this post-COVID moment," Jennifer Neundorfer, the cofounder and managing partner of January Ventures, said.

'A very dangerous message to be sending'

One doesn't need to look very far to see the role of immigrants in the tech industry. Google cofounder Sergey Brin's family emigrated from the Soviet Union in the 1970s. Alphabet CEO Sundar Pichai and Microsoft CEO Satya Nadella both moved to the US from India.

There are parallels to the experiences of an immigrant and an entrepreneur that make the group particularly well-suited to thrive in Silicon Valley, Battery Ventures general partner Neeraj Agarwal said.

By cutting off immigration at earlier stages — such as when an entry-level engineer comes to the US to work for a big company — the country is jeopardizing the "pipeline" of talent that could create the next big thing, he said.

"When that talent pool doesn't show up, that's my primary target audience 10 years later," Agarwal told Business Insider. "They show up here at age 18 to go to university, but when they are 30 years old and have been here on an H-1B, those are the people that disproportionately start companies. This is a very dangerous message to be sending to the technical community around the world."

A related concern is international founders who have historically relocated to the US with a "beachhead" headquarters to better facilitate conversations with US investors, consumers, and regulators. With the Trump administration's new restrictions, it's possible that founders will choose to remain in their home countries or relocate to places like Canada or Australia, which have been more welcoming to entrepreneurial immigration.

"We cannot take for granted that we as a nation are the destination of choice for the next Sergey Brin, Elon Musk, or Sundar Pichai," Haystack VC founder and general partner Semil Shah told Business Insider. "The people who have benefited from the current paradigm — all of us, really — need to pay it forward by clearly organizing against this type of policy, as well as ensuring the unalienable rights of other individuals. Tech cannot cherry-pick an issue when it's convenient or focused on them. We have to be holistic in approach."

Silicon Valley has been undergoing its own reckoning lately, as it grapples with the underrepresentation of people of color and women in its ranks. Employees at companies like Pinterest have spoken out about the tech industry's glaring shortcomings and called on companies and venture-capital firms to do more. 

At a time when the tech industry needs to improve existing problems, the Trump administration's freeze on foreign workers strikes many as a clear step backward.

"Immigrants have always played a vital role building great businesses and communities across the United States and especially in Silicon Valley," Moxxie Ventures founder and general partner Katie Jacobs Stanton told Business Insider via email. "Trump is using this erratic tactic to please his racist and nationalistic base, as opposed to being a true leader who uses data, logic and thoughtfulness to serve the interests of the American people." 

SEE ALSO: Routine anti-bias training didn't boost diversity in Silicon Valley, so this biracial female CEO uses virtual reality to expose VCs and founders to the emotional toll of discrimination and harassment

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Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

Wed, 06/24/2020 - 12:58pm  |  Clusterstock

  • Fund manager Aram Green specializes in finding promising companies that are about to start getting a lot more attention. He shared with Business Insider a series of surprising post-coronavirus bets.
  • Green says he's buying or building positions in companies that have either fallen too far as a result of temporary problems, or which turned have escaped the harm that investors once expected. 
  • His ClearBridge Select Fund has long been one of the strongest performers in the space, as it's doubled its benchmark over the last five years and won a five-star rating from Morningstar.
  • Click here to sign up for our weekly newsletter Investing Insider.
  • Visit Business Insider's homepage for more stories.

There has to be more to the future than working from home and shopping online, right?

Over the last few months Wall Street has fallen hard for companies that could benefit from the growing acceptance of remote work and faster growth in e-commerce. There are a lot of reasons to believe in those themes these days, but there have to be other things to invest in.

That's where Aram Green comes in. He specializes in finding small- and medium-sized companies that are getting ready to blow up — ones getting ready to go from under-the-radar to attracting a lot of attention. 

Over the past five years, Green's Legg Mason ClearBridge Select Fund has returned 18.3% a year to investors, a total that more than doubles its benchmark, the Russell 2000 Mid-Cap Growth Index. It's also in the 99th percentile of comparable funds on a trailing three- and five-year basis, according to Bloomberg data.

An investor who put $10,000 into the fund at its inception in September 2013 would have $41,305 today, a gain of more than 300%. The S&P Mid Cap Growth Index has climbed 98% over that stretch, which would have turned a $10,000 investment into $19,860.

The Select Fund has earned five-star ratings from Morningstar for its performance over the last three and five years, and Kiplinger says it's among the best in the industry over the last one, three, and five years.

While he added some post-pandemic "winners," including high-recurring revenue businesses like Wix, Shopify, and DocuSign, Green says he sees a lot of unappreciated potential in two other areas that have been punished too severely.

"There were thoughts that the businesses would be impacted on the margin and the growth rates were going to be slower than what people forecast, and now having gone through at least the first couple of months of the crisis, that hasn't been the case," he said in an exclusive interview with Business Insider. "I've seen a sharp snapback there."

He also bought stock in companies that lost business during the pandemic — when he was convinced those losses were temporary.

"It's not a secular concern or a company that is less relevant in the future than it was in the past," he said. "Eventually we're going to see volumes return back to the levels that they were at before, and the share prices were substantially discounting those levels to maintain for many years to come."

Here's a series of six companies that Green has bought this year in the hope to take advantage of errors by other investors:

(1) Performance Food Group

Green bought stock in the food distributor early in the second quarter. He told Business Insider that Performance will be able to ride out a very tough time for the restaurant industry and should emerge stronger as it either buys smaller competitors or takes their market share after they fail.

"Some of their customer base is going to go out of business," he said. "But the frequency of people eating out is eventually, over the next 12 to 18 months ... is going to return back to where it was before."

(2) XPO Logistics

In the first quarter Green began building a position in logistics services company XPO, which has roughly doubled in price since dipping under $40 a share in late March.

"Supply chains are kind of out of whack right now, and certain products needs to be accelerated to the end customer. I think that they are going to become and showing that they are a vital part of the solution," he said.

(3) Surgery Partners

Like a lot of healthcare facility operators, Surgery Partners stock has suffered because non-vital procedures were halted during the pandemic. Green says those operations can't be delayed forever, and that eventually, the pandemic will ultimately bring more patients to its centers. As a result, he increased his position during the first quarter.

"A lot of people don't want to go to a hospital to get those procedures done," he said. "You're seeing more surgeries that are going to take place in ambulatory surgery centers away from the hospital."

He explains that insurers will encourage that shift because it's cheaper for them if surgical procedures are done in those types of facilities instead of hospitals. All of that adds up to a trend that will outlast the pandemic, and as a result, he increased his investment in the company during the first quarter.

"We believe that you're going to see continual shifting of procedures out of hospitals and ambulatory surgery centers and Surgery Partners is going to benefit from that."

(4) Expedia

There's no big mystery about why Expedia stock has plunged this year, and why a big rally over the last three month hasn't come close to erasing its February losses. Green acknowledges that the travel website operator is in a world of pain, but he thinks its customers' desperation will eventually work to its advantage.

"When the economy is good, people feel like they don't need a middleman or a broker to clear inventory because people are coming directly from their website," he said. "When times are choppier, they give more inventory to the online travel agencies like Priceline and Expedia."

(5) Trex

Trex has been part of Green's portfolio for almost six years, and he built on his position this year because he sees it as a major beneficiary of the growing interest in home improvement that the pandemic has brought about. 

"We think that they're going to continue to gain share as more and more people understand what the product does and its benefits," he said of the company's alternative decking product. "It's a great in its space in terms of building products for ESG friendly and more and more people are, think are putting more money into their home."

(6) IntercontinentalExchange

Green doesn't buy a lot of financial stocks, but he says ICE was a perfect fit when he wanted to add more exposure to that sector. That's because its business is more involved with technology and intellectual property than with credit and lending.

Not only that, he says the market turbulence of the last few months created huge benefits for two parts of its business 

"Half of ICE's business is the exchanges," he said. "Given the high velocity of the markets in March and April, they were putting up huge numbers."

That was also true for its market data unit, he adds.

"We thought given the increase in volatility, the increase amount of hedging activity that was taking place, that they were going to be a beneficiary. The stock had sold off to a reasonable valuation. We've been watching it for years, and we started a position in the first quarter."

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The IMF now sees an even deeper global recession as economies struggle to recover from COVID-19

Wed, 06/24/2020 - 12:48pm  |  Clusterstock

  • The International Monetary Fund on Wednesday again slashed its forecast for the global economy, saying it sees a deeper recession and longer recovery from the shock of the coronavirus pandemic.
  • The fund now expects global gross domestic product to contract by 4.9% this year, down from its April forecast of a 3% contraction.
  • It also cut its 2021 expectations to forecast growth of 5.4%, a step down from its previous estimate of 5.8% growth.
  • Read more on Business Insider.

The International Monetary Fund on Wednesday slashed its forecast for the global economy again, predicting a sharper recession and longer recovery from the coronavirus pandemic.

The IMF now sees global gross domestic product shrinking by 4.9% in 2020, a worse contraction than the 3% decline it forecast in April. The fund also foresees a slower-than-expected recovery — it cut its expectations for global growth in 2021 to 5.4% from 5.8%.

"The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast," the IMF said in its World Economy Outlook update.

The IMF said in April that the shock of the coronavirus pandemic and sweeping lockdowns to contain the spread of the disease would form the worst economic meltdown since the Great Depression. The IMF said its latest forecast reflected "greater scarring" from a larger-than-anticipated hit to activity and continued lower demand because of social-distancing guidelines.

"The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s," the IMF said.

Read more: Aram Green has crushed 99% of his stock-picking peers over the last 5 years. He details his approach for finding hidden gems — and shares 6 underappreciated stocks poised to dominate in the future.

Overall, the new forecast for 2021 GDP is more than 6 percentage points lower than the IMF's pre-pandemic projection in January, it said. The IMF said that, as in April, the latest forecast comes with a "higher-than-usual degree of uncertainty" because of the pandemic.

The IMF also said that it sees a severe hit to the global labor market and that the loss of work hours in the second quarter was likely equivalent to more than 300 million full-time jobs.

"The hit to the labor market has been particularly acute for low-skilled workers who do not have the option of working from home," the IMF said. "Income losses also appear to have been uneven across genders, with women among lower-income groups bearing a larger brunt of the impact in some countries."

There are some bright spots, according to the IMF. Financial conditions have eased in advanced and, to a lesser extent, emerging economies, forestalling worse near-term losses. Announced fiscal measures are now about $11 trillion globally, up from $8 trillion in April, the report said.

Read more: Morgan Stanley handpicks 10 stocks to buy now for the richest profits as travel and outdoor activities transform in the post-pandemic world

Still, significant downside risks to the forecast remain without a medical breakthrough such as a vaccine or a sharp rebound in business activity. More lockdowns, tightening financial conditions, prolonged unemployment, and wider firm closures could lead to more economic pain.

"This could tip some economies into debt crises and slow activity further," the IMF said.

The IMF sees advanced economies experiencing sharper declines in GDP, forecasting an 8% contraction in 2020 compared with a 3% decline in emerging economies.

US GDP is expected to decline by 8% in 2020 — worse than the IMF's April forecast of 5.9% — and grow by 4.5% in 2021, the report said. Euro-area GDP is expected to slump by 10.2% in 2020 and grow by 6% in 2021. The IMF forecast that China's economy would grow by 1% this year and 8.2% next year.

Read more: A CEO overseeing $147 million outlines his 4-part strategy for identifying which stocks to buy — and shares 2 he sees primed to explode higher right now

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Simon Property is at the center of 3 big legal battles as stores finally begin to reopen. Here's what the future holds for the biggest US mall REIT.

Wed, 06/24/2020 - 12:23pm  |  Clusterstock

  • Simon Property Group is suing Taubman Properties to back out of its $3.6 billion deal to acquire the mall company.
  • It's also suing Gap, its largest tenant, and Brooks Brothers for withholding rent.
  • Here's what analysts think the future holds for the biggest US mall REIT. 
  • Visit Business Insider's homepage for more stories.

Brick-and-mortar retail has been reopening across the country, punctuated Monday morning by the reopening of non-essential retail stores in coronavirus hotspot New York City. 

Even so, retailers and their landlords are looking to ride out a period where regulation, a shutdown of international tourism, and consumers' fear about virus transmission and a second pandemic wave will likely keep retail foot traffic subdued for months. 

In the midst of this, the largest US mall landlord, the Simon Property Group, has filed three major lawsuits: two to get paid rent from struggling retailers, and one to get out of a deal to buy a competitor.

In recent years, it's also been on a streak to buy up struggling tenants to help keep it malls stable. 

Simon's first-quarter profits fell about 20%, and it's laid off or furloughed workers while cutting exec salaries. CEO David Simon was optimistic on an earnings call in May that the company's tenants and their customers were eager to reopen. 

Outlook for Simon

The real estate investment trust (REIT) has sued Gap for $65.9 million and Brooks Brothers for $8.7 million in unpaid rent during the coronavirus closings. Meanwhile, it's also looking to get out of a $3.6 billion acquisition of mall REIT Taubman Properties, saying the acquisition target took an outsized hit from the pandemic. 

We spoke to retail experts and analysts about the future for the company as brick-and-mortar retail opens nationwide. They told us that Simon is not immune to the headwinds facing the mall sector, and that these lawsuits highlight some of the major challenges for the company — and malls in general.

However, they were clear that if any retail REIT can successfully operate shopping centers right now, it would be Simon because of its billions in dry powder and long track record of success. 

"The challenges that malls have are still there," Alexander Goldfarb, a managing director and senior research analyst for Piper Sandler, told Business Insider, highlighting how the coronavirus pandemic has exacerbated long-term secular changes to brick and mortal retail. "Simon is the only one positioned to win."

Simon declined to speak with Business Insider for this story. 

The Simon-Taubman deal collapse

Pre-pandemic, Simon had been on an expansion streak rare in the mall REIT world, using its relatively strong financial position to pick off smaller players as their share prices sank. 

Its all-cash deal for fellow mall REIT Taubman was announced on February 10,  just a month before the pandemic prompted a massive drop in US retail sales. Now, the prospects for Simon hinges on its ability to get out of — or at least renegotiate, that arrangement. 

Since the deal was originally announced, mall REITs have plummeted. A June 10 note from Green Street Advisors projects that Taubman would likely trade at less than $14 a share without the deal bolstering its stock price, an 80% reduction from the original deal price. Before the deal was announced and the pandemic hit mall REIT equity hard, Taubman was trading at $34.28 at the close of market on February 7.

"Their move to say that they don't want to make this acquisition strengthens their liquidity and leverage," Ranjini Venkatesan, a senior analyst at Moody's, told Business Insider.

Simon has roughly $4.5 billion in cash on hand, which would increase to $7 billion if the deal is cancelled, an industry-leading amount of dry powder. Still, the deal could still be forced through in various ways.

Legal experts have noted that it's tricky to prove that a material adverse change should be the basis of breaking a deal — and that there's not much encouraging legal precedent, especially for short-term hiccups that don't post a drastic underlying change in the business itself. 

A JPMorgan note from June 10 said that share prices after the deal cancellation was announced made it appear that "the market seems to be viewing the Simon press release as more of a 'next step' in re-pricing the transaction rather than a final nail in the coffin on the deal."

The key will be if Simon is able to "compel a judge that Taubman is disproportionately affected," Goldfarb from Piper Sandler, told Business Insider.

Read more: M&A fine print that prompted lawsuits after the financial crisis is back in the spotlight as mega-deals like Simon Property-Taubman crumble

Plotting a way forward, Taubman or no Taubman

To be sure mall properties are not a monolithic asset class. Simon has whittled down its inventory to the highest-performing shopping centers and malls over the last few years, something analysts say will help it outperform other mall REITs. 

In contrast, CBL Property Group, a mall REIT that Fitch Ratings said had a high concentration of not so high performing regional malls, posted a 27% rent collection rate in April. In the company's most recent 10-K filing, the company said it had "substantial doubt about our ability to continue as a going concern within one year," because the company failed to make an interest payment on June 1, and projects it will have similar problems over the next three quarters.

If the deal goes through, Simon takes on Taubman's 27 property portfolio, which includes many enclosed malls that rely on tourist traffic, such as the Short Hills Mall in New Jersey.  

Some of Simon's own 200 plus properties are similarly indoor-enclosure focused, like Copley Place in Boston, but the company is also a leader in outdoor outlet centers, which customers may view as safer post-pandemic.

 Still, outlet malls have their own drawbacks post-pandemic, as many are destinations that depend heavily on free-flowing travel of customers. 

"A negative for Simon's outlet malls is that a lot of them are dependent on tourist trade," Craig Johnson, owner of retail consultant group Customer Growth Partners, told Business Insider.

In legal filings on June 18, Taubman said that pandemic-related "buyers remorse" is not enough reason to cancel the deal, and that Simon was aware of the pandemic's potential effects when the deal was signed in February. 

The company "clearly understood that the coronavirus and the deteriorating retail market would severely impact the shopping mall industry when they made their strategic judgment to acquire the Taubman Parties — despite the brewing pandemic — so as to achieve a long-term business objective they had held for many years," Taubman's filing argued. 

The first hearings in the case are scheduled for Wednesday.

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

Buying tenants — or taking them to court 

Mall REITs also need to keep retailers in their malls and continue collecting rent. 

In the case of struggling mall staples, Simon has already shown it's willing to simply buy them in Chapter 11. In February, Simon; retail operator Brookfield Property Partners; and the Authentic Brand Group acquired retailer Forever 21 for $81 million. Brookfield and Simon acquired Aeropostale in 2016.

The Wall Street Journal reported Tuesday that Simon and Brookfield were also exploring a bid to buy JCPenney, which filed for Chapter 11 bankruptcy in May. This strategy allows Simon to keep its mall business stable and prevents co-tenancy clauses in leases from creating a cascading wave of vacancies. JCPenney is Simon's second-largest anchor tenant, and rents 5.6% of the company's total US space.

Read more: A flagship Neiman Marcus store in the glitzy Hudson Yards mega-mall is being marketed as office space, showing how developers are making a big pivot as retail bankruptcies mount

But for tenants who aren't bankrupt, Simon has been more litigious. The company is suing Gap, its largest tenant by number of stores for $65.9 million, after Gap publicly announced in April that it wouldn't pay rent on shuttered stores. Simon filed suit against Brooks Brothers claiming nonpayment of $8.7 million in rent on Friday. 

"It is important for the industry to hold the line and say a contract is a contract," Haendel St. Juste, an analyst at Mizuho Securities, told Business Insider about the nonpayment lawsuits.

Simon has not disclosed how many tenants have paid rent during the coronavirus crisis, but rent collection rates in April have been as low as 26% for mall operator Macerich with the National Association of Real Estate Investment Trusts' average for shopping center retail REITs in April at a 47.1%. 

Read more:

SEE ALSO: A flagship Neiman Marcus store in the glitzy Hudson Yards mega-mall is being marketed as office space, showing how developers are making a big pivot as retail bankruptcies mount

DON'T MISS: Inside a 'big short' bet against malls: Investors are claiming wins, and a research analyst who said the wagers were misguided is out

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

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AirSynQ Nigeria provider of long-duration solar-powered automated aerial surveillance services for the Oil & Gas Industry via @Techpointdotng

Tue, 06/23/2020 - 10:52pm  |  Timbuktu Chronicles
Techpoint reports:...Tayo Sadique and his team of software and hardware engineers do not think this should continue. To this end, AirSynQ was founded in August 2019. “We offer long-duration solar-powered automated aerial surveillance services especially to oil and gas companies to predict and prevent pipeline vandalism by detecting threats in real-time,” says Sadique, CEO, AirSynQ....[more]

The Global Agripreneurs Summit

Tue, 06/23/2020 - 10:28pm  |  Timbuktu Chronicles
From Future Agro Challenge:The Global Agripreneurs Summit is an assembly of agrifood innovators and leaders from around the world – where farmers, agripreneurs, chefs, investors, organisations, policy makers, and other thought leaders work together to help bring life to game changing innovations, and propel agriculture as a sustainable source of growth and economic development.

Renowned VC Marc Andreessen says he gets no emotional rush when he wins big on an investment, and that keeps him from making irrational bets. 'I actually don't have the gambling gene'

Tue, 06/23/2020 - 7:33pm  |  Clusterstock

  • On June 13, legendary venture capitalist Marc Andreessen told angel investor Sriram Krishnan about his approach to building a firm and evaluating potential investments, for Krishnan's newsletter, The Observer Effect.
  • Andreessen said that he doesn't have the gambling gene in that he doesn't feel a dopamine rush when he gambles and wins.
  • Although many people outside venture capital have compared the practice to gambling, Andreessen said it's actually those who are detached from the emotional aspects of it that perform the best.
  • He likened his industry to poker players who make increasingly large bets on mundane outcomes, like how many blue cars show up in a parking lot, to emotionally distance themselves and gain an edge on the competition.
  • Click here for more BI Prime stories.

Venture capital is regularly compared to gambling because of its incredibly high stakes and the essentially unknown outcomes years down the line. Wall Street financiers and hedge fund managers trade quickly on publicly available knowledge. Venture capitalists go with their gut.

But one of venture capital's most prominent figures disagrees. His trade might be compared to gambling, sure, but there's a lot more to it than outsiders think.

On June 13, Marc Andreessen told angel investor Sriram Krishnan about his approach to building a firm and evaluating potential investments for Krishnan's newsletter, The Observer Effect. In that conversation, Andreessen said that he doesn't feel elated when he wins at the poker table or in the boardroom, a process that has helped him methodically approach all his investment decisions.

"Honestly, this also goes a little bit to my psychology — I actually don't have the gambling gene," Andreessen said. "I get no rush from the bet or the result. I sit down for one of those and nothing happens. My pulse chemistry is just flat. And then the mathematical part of my brain is like, well, the expected return for this exercise is negative, what the f--- am I doing? And so it becomes unfun in the first 10 seconds and then I just walk away."

Naturally, Andreessen's psychology has seeped into the culture at his firm, Andreessen Horowitz. He admitted that the team doesn't necessarily celebrate their "wins" as often as they should, but it's part of a process of objectively measuring the firm's success on the typical 10-year cycle within which most venture firms operate. 

"It's really hard to get good metaphors but it's poker, right? It's really, really, really hard to be a good poker player," Andreessen said. "And if you're kicking yourself every time you have a bad hand, the bad habits just simply happen. You just need to be able to have a system that lets you think through the process."

Andreessen's system, then, could be compared to professional poker players, although more in theory than in practice. He said that many professional poker players gamble by night, but during the day they make increasingly large bets on mundane outcomes to help soften the emotional effect of the dopamine rush most people naturally have when gambling.

"It's literally a side bet of sitting in a diner and betting on whether there are going to be more red cars than blue cars passing by," Andreessen said. "What they're doing is 'steeling' their own psychology to be able to pull the trigger on bets like that with a purely mathematical lens and with no emotion whatsoever. They're trying to steel themselves to be able to be completely clinical."

That's similar to how Andreessen sees investing, he said. It's all a set of probabilistic outcomes, and so his success or failure is nothing more than a mathematical equation that needs to be solved. 

"What they then hope for that night when they sit across the table from someone is to hope they're dealing with somebody who's super emotional. Because the clinical person is going to just slaughter the emotional person," Andreessen said.

SEE ALSO: Two CFOs from Brex and Rippling advise these financial moves for startups reopening after a shutdown. One tip: Make the office desk a perk, and work-from-home the staffers' norm

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The most ridiculous law in every state

Tue, 06/23/2020 - 5:40pm  |  Clusterstock

We've all heard urban legends and rumors about absurd laws in America, but you can't believe everything you read on the internet.

Sites like dumblaws.com — which rarely link to states' current statutes or may misinterpret them — only perpetuate the myths. Yes, it's illegal for a drunk person to enter a bar in Alaska. No, a woman's hair does not legally belong to her husband in Michigan. The list goes on.

We decided to undertake some legal legwork and identify the strangest statute still on the books in each state. You might find you're guilty of one or two violations.

A previous version of this article was co-authored by Christina Sterbenz.

SEE ALSO: Here's where you can legally smoke weed in 2019

ALABAMA: The City of Mobile may know how to throw down on Mardi Gras, but the use of plastic confetti is strictly prohibited.

To carry, manufacture, sell, or handle any non-biodegradable, plastic-based confetti is unlawful, according to Municode Library.



ALASKA: A person cannot get drunk in a bar and remain on the premises.

According to Alaska State Legislature, the statute says an intoxicated person may not "knowingly" enter or camp out where alcohol is sold.

In 2012, police in Anchorage, Alaska, started enforcing the law by sending plainclothes officers into bars to identify excessively drunk people and arrest suspects, according to ABC News.



ARIZONA: No one can feed garbage to pigs without first obtaining a permit.

However, you can swap out the trough for a wastebasket if the swine are raised for your own consumption, according to Arizona State Legislature.



ARKANSAS: A pinball machine can't give away more than 25 free games to a player who keeps winning.

The statute aims to prohibit machines that encourage gambling, according to the Arkansas State Legislature.



CALIFORNIA: A frog that dies during a frog-jumping contest cannot be eaten and must be "destroyed" as soon as possible.

This health code likely made its way into the books to protect competitors at the Calaveras County Fair and Frog Jumping Jubilee, a decades-old tradition in the gold-mining town of Angels Camp. Tourists and jockeys compete to see how far their frogs can leap.



COLORADO: You have to get a permit to modify the weather.

In some states, it's legal to perform activities that create changes in the composition or behavior of the atmosphere. However, not in Colorado without a permit.

Weather modification is not only possible, but it's actually a lucrative business. Colorado ski resorts pay private companies to burn silver iodide on the slopes. The material carries into the clouds and stimulates precipitation, which creates a fresh sheet of powder for skiers.

Requiring a permit ensures minimal harm to the land and maximum benefit to the people.



CONNECTICUT: Junk collectors may be out of luck in this state.

In Hartford, it's illegal to collect "rags, paper, glass, old metal, junk, cinders or other waste matter in the city" without a license, according to Municode.



DELAWARE: It's a misdemeanor to sell, barter, or offer the fur of a domestic dog or cat.

Any products made in whole or in part from the hair — say, a coat made of 101 dalmatians — may result in a fine of $2,500 and a ban on owning a dog or cat for 15 years after conviction, according to the State of Delaware.



FLORIDA: People who own bars, restaurants, and other places where liquor is sold may be fined up to $1,000 if they participate in or permit any contest of "dwarf-tossing."

Florida outlawed tossing little people in 1989 after the bar activity caught on in southern parts of the state. A Florida state legislator tried to repeal the law in 2011 but was unsuccessful.



GEORGIA: Those engaged in llama-related activities, such as riding, training, or goofing around at a county fair, are responsible for any personal injuries they suffer.

The Georgia Department of Agriculture law protects llama owners from liability in the event of harm or death with few exceptions. Someone may pursue legal action if they were simply watching from an authorized area.



HAWAII: Billboards have no place in paradise. They're outlawed in the state with few exceptions, including notices from public offices and signs posted where goods are sold.

The "urban beautification" initiative dates back to 1927 when an all-white circle of Hawaii's power wives created the Outdoor Circle Club and lobbied for the ban on outdoor ads.



IDAHO: Cannibalism is strictly prohibited and punishable by up to 14 years in prison.

However, the law is allowed under "life-threatening conditions as the only apparent means of survival," according to the Idaho State Legislature.



ILLINOIS: Urban legend says it's a crime in Illinois to possess more than $600 worth of salamanders.

That's 75-plus salamanders, according to fair market value.

In reality, it's illegal under Illinois law to possess any variety of aquatic life that was captured or killed in violation of the Fish and Aquatic Life Code or whose value exceeds $600, according to the Illinois General Assembly.



INDIANA: Liquor stores can't sell refrigerated water or soda.

The law specifies that a beer and wine store should be in the exclusive business of selling adult beverages and that any water or soda sold needs to be room temperature, according to Find Law.



IOWA: Anyone trying to pass off margarine as real butter is guilty of a misdemeanor under food-labeling laws in Iowa.

"Renovated butter" must also be labeled as such, according to Iowa State Legislature.



KANSAS: There's no place like home to get tipsy. It's illegal to sell liquor by the glass in over 25 counties across Kansas, which repealed prohibition a full 15 years after Congress.

In Kansas, individual counties may by resolution or petition prohibit the sale of alcohol in public places where 30% or less of their gross revenue comes from the sale of food, according to Kansas State Legislature and TIME.



KENTUCKY: Every legislator, public officer, and lawyer must take an oath stating that they have not fought a duel with deadly weapons.

When it entered the Kentucky Constitution in 1849, the law was meant to deter men who might aspire to public office from participating in the once rampant Southern tradition. Some evidence suggests that trial by combat might technically be legal on a federal level even today.



LOUISIANA: Jambalaya prepared in "the traditional manner" is not subject to state sanitary code.

According to Louisiana State Legislature, the Creole stir-fry, made with rice, meat, and veggies, may be prepared for public consumption in the open using iron pots and wood fires.



MAINE: A game of chance called Beano (like Bingo) is regulated here.

The law says that a person may assist players by playing their cards while they take a bathroom break, according to Maine State Legislature. This allowance does not apply in high-stakes Beano, which, apparently, is also a thing.



MARYLAND: Fortune telling is illegal in Maryland.

Anyone "pretending to forecast or foretell the future of another by cards, palm reading or any other scheme, practice or device" can be found guilty of a misdemeanor and fined up to $500, or even serve time in jail, according to Maryland State Legislature.



MASSACHUSETTS: Whether you're at Gillette Stadium or Fenway Park, you'll never hear just half of the "Star-Spangled Banner."

Singing or playing only part of the national anthem or remixing it as dance music is punishable by a fine of not more than $100, according to Massachusetts State Legislature.



MICHIGAN: A statute on the books since 1931 makes adultery a felony in this state.

According to the Michigan State Legislature, breaking this law is punishable by a maximum sentence of four years in prison and possibly a $5,000 fine.

In 2012, a Portage police sergeant was fired for on-the-job misconduct after allegedly cheating on his wife and furthering a relationship with a local waitress using a city-issued cellphone. The man was neither fined nor imprisoned, suggesting Michigan doesn't take the law too seriously.



MINNESOTA: Any contest in which participants try to capture a greased or oiled pig is illegal.

The same laws also prohibit turkey scrambles, according to the Minnesota State Legislature.



MISSISSIPPI: In 2010, profanity in public could land a person in jail for up to 30 days.

While this law appears to be a direct assault on the First Amendment, it's thought to have been conceived in order to protect the public.

However, while it's no longer officially illegal for anyone to use vulgar or obscene language in the presence of two or more people, people still can't display obscene stickers, paintings, decals, or emblems in public on motor vehicles or clothing.



MISSOURI: If a bull or ram over the age of one year runs rampant for more than three days, any person may castrate the animal without assuming liability for damage.

Three town residents must attest in writing that the animal is loose, and its owner must fail to reclaim or confine the beast after notice is given, according to Missouri State Legislature.



MONTANA: Driving animals onto a railroad track with intent to injure the train can result in a fine.

The fine can be up to $50,000. Breaking this law can also result in a stay at the state prison not exceeding five years and other damages, according to the Montana State Legislature.



NEBRASKA: No person who is afflicted with a sexually transmitted disease can marry.

While it's nearly impossible to enforce this law, and no blood test or medical history is required to get a marriage license, this health code could have prevented marital bliss for more than 9,700 Nebraskans who reported cases of chlamydia or gonorrhea to the Nebraska Department of Health and Human Services in 2015.



NEVADA: Using an X-ray machine to determine a person's shoe size could get you in trouble in this state.

A device called a shoe-fitting fluoroscope, also known as a pedoscope or foot-o-scope, could expose the patient to radiation. Someone found using the device is guilty of a misdemeanor, according to the Nevada State Legislature.



NEW HAMPSHIRE: It's illegal to carry away or collect seaweed at night.

Though this New Hampshire law might seem strange, marine plants and algae are routinely used to make fertilizer and animal feed, which gives it value.



NEW JERSEY: A person wearing a bullet-proof vest while carrying out a grave criminal act can be charged separately for suiting up. The practical effect is more jail and fines.

The practical effect is more jail and fines, according to Find Law and BulletSafe.



NEW MEXICO: For many years, "idiots" could not vote in most elections. The word was historically used to describe someone mentally disabled or with an IQ below 30.

In 2016, the state Supreme Court scrapped the archaic law from the books, effectively dismantling this ridiculous law, according to Sante Fe New Mexican.



NEW YORK: The Empire State bans "being masked or in any manner" disguised in public with other people dressed in the same getup.

The law has withstood legal challenges since 1845 and included exceptions for parties, according to the New York Times and Find Law.

The law has obviously been partly overturned as a result of the coronavirus pandemic and encouragement from health and legislative officials to wear masks and face coverings in public.



NORTH CAROLINA: A bingo game being conducted or sponsored by a commercial organization may not last more than five hours.

However, according to the North Carolina State Legislature, non-profit groups can go wild.



NORTH DAKOTA: All members of North Dakota's Dry Pea and Lentil Council must be citizens.

The organization was created in 1997 to promote certain agricultural industries, according to the State Historical Society of North Dakota.

A national version of the Dry Pea and Lentil Council also exists. But North Dakota obviously decided it needed a more state-focused group for celebrating chickpeas, lentils, and lupins.



OHIO: Every operator of an underground coal mine must provide an "adequate supply" of toilet paper with each toilet.

This law clearly makes sense, but the fact that it exists at all raises some questions about basic human decency — and Ohio.



OKLAHOMA: McCarthyism is alive and well. A state statute still on the books says it is a "fact that there exists an international Communist conspiracy" committed to overthrowing the US government.

"Such a conspiracy constitutes a clear and present danger to the government of the United States and of this state," the statute continues.



OREGON: Leaving a container of urine or fecal matter on the side of the road is a Class A misdemeanor.

According to the Oregon State Legislature, you can't throw it from the vehicle either.



PENNSYLVANIA: Human trafficking, in general, violates too many international laws to count, but Pennsylvania felt the need to specify under the law that you can't barter a baby.

But if you do find yourself swapping goods or services for your precious bundle, it's only a misdemeanor, which is usually punished less harshly than felonies, according to the Pennsylvania State Legislature.



RHODE ISLAND: Someone who bites off another person's limb will face no more than 20 years in prison but no less than one.

The law only applies if they maimed the victim on purpose, according to the Rhode Island State Legislature.



SOUTH CAROLINA: A male over the age of 16 can't seduce a woman by falsely promising to marry her. However, no law exists with the gender roles reversed.

If found guilty, the man will be charged with a misdemeanor, fined at the court's discretion, and possibly imprisoned for no more than one year — with a number of exceptions, according to the South Carolina State Legislature.



SOUTH DAKOTA: Liquor stores can't sell alcoholic candy containing more than .5% alcohol by weight.

According to one South Dakota law, liquor stores cannot sell candy containing more than .5% alcohol by weight.

Considering Kahlua alcoholic chocolates are around 4%, we can assume they won't be hitting the shelves any time soon.



TENNESSEE: You can't hunt, trap, or harm an albino deer intentionally.

If you do, the fish and wildlife commission will charge you with a Class A misdemeanor, according to Justia.

"White deer," as people often call these mammalian anomalies, are extremely rare. Only about one in every 30,000 deer is born albino. Some even consider the animal a modern-day unicorn.



TEXAS: People wishing to run for office must acknowledge the "Supreme Being." If not, they could be subjected to religious tests.

In other words, the law implies that no atheists are allowed to run.



UTAH: No one may hurl a missile at a bus or bus terminal — except "peace officers" and security personnel.

Anyone outside those positions is guilty of a third-degree felony, according to the Utah State Legislature.



VERMONT: The legislature created a law that prohibits outlawing solar collectors and clotheslines, listing both items as "energy devices based on renewable resources."

This law still technically appears in Vermont State Legislature.



VIRGINIA: An odd law still on the books suggests Virginia is for prudes, not lovers.

"Fornication" or sex is completed banned, except for married couples. It's still technically punishable as a misdemeanor, according to Virginia State Legislature.



WASHINGTON: Doors to nearly all public buildings must open outwardly.

Anyone who violates this will face a misdemeanor charge, according to Washington State Legislature. The statute does explain why though: to avoid congestion during emergencies, like fires.



WEST VIRGINIA: Don't attempt to substitute a hunting dog for a ferret in West Virginia.

Anyone who hunts, catches, takes, kills, injures, or pursues a wild animal or bird with a ferret will face a fine of no less than $100 (but no more than $500) and up to 100 days in jail, according to West Virginia State Legislature.



WISCONSIN: In America's Dairyland, many different kinds of state-certified cheeses, like Muenster, cheddar, Colby, and Monterey Jack, must be "highly pleasing."

According to the Wisconsin State Legislature, non-tasty cheese is technically punishable by law.



WYOMING: It's reportedly illegal to "cut, sever, detach, or mutilate" more than one-half of a sheep's ear.

According to Wyoming State Legislature, violations are felony offenses punishable by up to five years in prison. However, less than one-half is totally fine.



A top Mastercard exec lays out why the card giant is spending $825 million to buy financial-data startup Finicity

Tue, 06/23/2020 - 5:02pm  |  Clusterstock

  • Mastercard announced plans to acquire financial data startup Finicity for $825 million on Tuesday.
  • The deal will help Mastercard grow it's open-banking platform, which launched in Europe last year.
  • Finicity's data-sharing platform enables banks, fintechs, and lenders to access financial data for credit decision-making and real-time payment authentications.
  • Earlier this year, Visa announced plans to acquire data startup Plaid for $5.3 billion, which focuses on enabling startups like Betterment and Venmo to tap into consumers' bank accounts.
  • Sign up here for our Wall Street Insider newsletter.

Mastercard is set to acquire a startup specializing in financial data as US banks and fintechs alike look toward growing open banking, which gives customers more control over how their bank, credit card and savings data are shared.

The payment processor entered into an agreement Tuesday to acquire Finicity for $825 million. It marks the second major deal between an incumbent in the space and a fintech. In January, rival Visa announced its plans to acquire buzzy data startup Plaid for $5.3 billion.

Both deals show the entire industry's ongoing efforts towards open banking. 

The basic idea of open banking is sharing customers' financial data electronically and securely, but only under conditions that users approve. The rise of personal finance apps over the past decade has put a spotlight on the space, as fintechs and lenders want to link into consumers' bank accounts to get financial information. 

Finicity partners with banks, fintechs, and lenders to create a standard for consumer-consented financial data access. Its existing partners include Bank of America, Brex, Experian, and Rocket Mortgage — all of which plug into Finicity's platform to access their users' data.

"Finicity is a company that's always been very stakeholder centric," Michael Miebach, president and CEO-elect at Mastercard, told Business Insider.

Read more: $5.3 billion fintech Plaid is in the middle of a high-stakes fight over customer data. Its CEO told us why the startup wants to give users control.

"They cater to the banks on one side, trying to help the banks make better credit decisions," Miebach said, "but they're also helping the fintechs on the other side by driving better customer stickiness to provide insights into accounts of access."

The acquisition, which is expected to close by the end of the year, has the potential to earn Finicity investors an additional $160 million if "performance targets are met," according to a statement. 

Finicity's data-sharing platform specializes in credit and payments

Based in Salt Lake City, Finicity was founded in 1999 and has raised nearly $80 million to-date from investors, the majority of which has come in recent years as the focus on open banking has surged. 

Finicity's tech will be integrated into Mastercard's existing open-banking platform, which it launched in Europe last year, where neobanks such as Revolut, Monzo and N26 have seen significant adoption.

Miebach acknowledged that part of the motivation for the deal was to extend into North America. 

But he added that Finicity's focus on credit-related data and real-time payments also made it an attractive partner for the card network.

"Finicity very specifically brings credit-related use cases and real-time payment account verifications use cases as well," said Miebach. "As a company that's been in real-time account payments for years, this is a really welcome addition that fits nicely into what we do."

In the US, the private sector is driving data sharing standards

Open banking, while not a new concept, is still coming into form in the US.

In Europe, standards for open banking are more mature thanks to established legislation from regulators. In the US, consumers were guaranteed a right to electronically access their financial data as part of the Dodd-Frank Wall Street Reform Act. But standards for how that data is shared have largely come out of the private sector. 

"[Finicity] has been a leading voice in the industry saying that open banking should follow a particular standard," Miebach said.

Establishing permission-based APIs in financial data sharing is the starting point, Miebach said.  But setting industry-wide standards is key going forward.

"We really don't want to be in a world where two or three years from now, we're still doing screen scraping," Miebach said, referring to the practice of taking a snapshot of a clients' data when they log in with their bank's username and password.

Financial data came into the spotlight in early 2020 after JPMorgan Chase announced fintechs would need to access customer accounts via Chase-issued tokens as opposed to using their passwords, which allows the bank greater control over customers' information, as first reported by the Financial Times.

A few weeks later, in the call announcing Visa's planned acquisition of Plaid, Al Kelly, the payment giant's chairman and CEO, acknowledged some financial firms "would prefer Plaid operate differently in some cases."

In February, Zach Perret, the CEO and cofounder of Plaid, told Business Insider a focus of the startup was working with big banks to put controls in place around customers' data.

See also: Visa's CEO hinted at the need to address 'concerns' Wall Street has about buzzy fintech Plaid, which the payment giant is set to acquire for $5.3 billion

Both Plaid and Finicity are members of the Financial Data Exchange (FDX), an industry-wide group that sets API-driven standards for financial data sharing. Its members include players like American Express, Citi, FICO, and Wells Fargo. 

"The journey that they are on, and they're going to be on with us going forward, is going to get us to an even better world in terms of protecting consumer data," Miebach said. "Not a world where you have to trade off a better consumer experience where you have to be looser on data."

Read more:

SEE ALSO: $5.3 billion fintech Plaid is in the middle of a high-stakes fight over customer data. Its CEO told us why the startup wants to give users control.

SEE ALSO: Visa's CEO hinted at the need to address 'concerns' Wall Street has about buzzy fintech Plaid, which the payment giant is set to acquire for $5.3 billion

SEE ALSO: Visa set to buy Plaid, the fintech that powers apps like Betterment and Venmo, for $5.3 billion

Join the conversation about this story »

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8 positive things that came out of the 2008 financial crisis

Tue, 06/23/2020 - 4:54pm  |  Clusterstock

  • The Great Recession "made us aware of financial fragility," Martin Wolf, chief economics commentator for the Financial Times, told Business Insider.
  • Research shows that recession-era students had less regard for wealth and more regard for other people compared to pre-recession students.
  • The crisis inspired aspiring inventors to pursue their creations, leading to start-up companies like Uber and Groupon.
  • Financial regulation was tightened in a bid to prevent another similar crisis, and agencies such as the Consumer Financial Protection Bureau formed.
  • Visit Business Insider's homepage for more stories.

For many Americans, the 2007 to 2009 Great Recession was a difficult time. Lasting 18 months, the GDP fell 4.3% and unemployment reached 10%. But sometimes there is a silver lining to tragedy and struggle.

Martin Wolf, chief economics commentator for the Financial Times and author of "The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis," told Business Insider that the crisis "taught us to behave more sensibly. It has probably made the financial sector more resilient and that has made it possible to survive the current crisis with less damage."

Here are eight positive things that came out of the Great Recession and financial crisis. 

SEE ALSO: Insider is on Facebook

The financial crisis helped teach the average American about the economy and financial literacy ...

According to Fortune, most Americans didn't realize the country was in deep debt before the Great Recession. The recession helped people understand the negative impact a bad loan can have on the entire economy if left unchecked.

While Wolf said while he can't speak to everyday finances, he believes the crisis taught countries a valuable lesson.

"It made us aware of financial fragility," he said. "It made us aware of the risks of taking financial stability for granted. It made us somewhat more alert to financial malpractice, and the sources of financial instability. In that sense it was a very painful, very costly but necessary lesson."



... and how to manage their personal debt.

According to Fortune, the percentage of household debt to gross domestic product reached nearly 100% before the financial crisis. After the recession, household debt dropped back to around 80%.

"One thing it certainly did in quite a number of countries is persuade a lot of people to reduce their debt, and to some extent they had to," Wolf said. "In quite a number of countries, the immediate impact of the financial crisis was quite a sizable paying down of households of debt, and that was a pretty productive outcome for households from the crisis."



The recession may have influenced younger generations from pursuing status symbols like gigantic houses or expensive cars ...

The Russell Sage Foundation examined data of half a million high school seniors collected by Monitoring the Future since 1976. The Foundation found a correlation between the financial crisis and a change in a high school students' views of wealth. 

Recession-era high schoolers were less likely to put value in status symbols like a brand new car or owning a vacation house, even if they believed it was important to have a job to make a lot of money. The Foundation found that previous recessions may have had a similar effect on younger generations. 

The recession negatively impacted younger generations by making both the job market more competitive and harder to purchase houses, Wolf said. Though he hasn't seen the research, he said it was possible it made them more financially cautious as well.

"We do know from past episodes, which are much bigger, that becoming an adult during the time of a big financial crisis tends to make people more cautious through the rest of their lives," he said.



... and potentially led to an increased concern for other people and for the environment.

According to the Russell Sage Foundation, among young people, there appeared to be a connection between the recession and an increased concern for others.

According to the research, 30% of students "said they thought about social problems quite often, up from 26% before the recession, and 43% of recession-era students said they thought it was important to 'correct social and economic inequalities,' compared to 38% before the recession."

It appears this consideration extended to energy consumption and the environment, as well. More than a third of the students said they were willing to take a bike or public transport to work rather than driving, compared to 28% of student before the crisis.



The Consumer Financial Protection Bureau was created to oversee financial reform.

The Dodd-Frank Wall Street Reform and the Consumer Protection Act was passed to help prevent a similar financial crisis. The Consumer Financial Protection Bureau and Financial Stability Oversight Council were formed as watchdogs over the banking industry and Wall Street.

"As a general proposition, financial regulation after the global financial crisis was very significantly tightened in all major countries," Wolf said. "A lot of the supervision was tightened. Supervision was made more comprehensive and more systematic. Global rules were tightened."

"Overall, I would see the Consumer Financial Protection Bureau and the Financial Oversight Council as part of those efforts," he said. "My impression in both cases is the quality of overall regulation and supervision of the American financial system and consumer protection has improved considerably from before the crisis."



The financial crisis made bank stress tests an annual occurrence ...

Through stress tests, the government evaluates a bank and its practices. According to Fortune, the federal government's stress tests have played a crucial role in eliminating banks' worst lending habits and risky behaviors. 



... and Wall Street became a less dominant part of the economy.

According to Fortune, the crisis bolstered the technology sector and Silicon Valley's roles in the economy while downplaying Wall Street's dominant presence. Studies have shown that economies dominated by the financial sectors ultimately suffer long term.



The financial crisis sparked creativity among inventors, leading to some of today's best-known companies.

According to the LA Times, the recession inspired aspiring inventors to pursue their creations, in part because they were unemployed and tired of endless job fairs.

An economic downturn can provide an opportunity for companies to launch and be successful because there's less competition for talent and office space, according to VentureBeat. During times of economic growth, the market can become oversaturated with businesses going after the same resources.

Uber, Airbnb, and mobile payment companies Square and Venmo launched during the recession. Some new companies were geared towards helping cash-strapped consumers, such as Groupon, which made couponing cool again. According to Time magazine, Groupon started to become popular with consumers toward the end of the recession in 2009. 



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

Tue, 06/23/2020 - 4:42pm  |  Clusterstock

  • Amazon has signed a deal for its largest-ever warehouse in New York City.
  • The e-commerce giant has rapidly assembled the largest portfolio of storage and distribution locations ever by a private company in the city.
  • The warehouses serve as the backbone for Amazon's booming e-commerce business.
  • For more stories, sign up for our Wall Street Insider newsletter.

Amazon just signed its largest lease ever in New York City — a deal to occupy a 1 million-square-foot warehouse that will be purpose-built for the e-commerce giant.

The deal is the latest in a dramatic expansion of the $1.3 trillion company's logistics operations in and around the city. Amazon has rapidly created the largest network of storage and distribution facilities ever assembled by a private company in the city.

"We are excited to increase our investment in the New York City area with a new delivery station that will provide fast and efficient deliveries and create hundreds of job opportunities for the talented local workforce," an Amazon spokeswoman said in a statement, confirming the huge lease.

The new space will be located at 55-15 Grand Ave., a former papermaking factory in Queens, New York, that will be razed and replaced with a multistory warehouse spanning about 1 million square feet that will feature rooftop parking for delivery vehicles.

Amazon's growing warehouse footprint serves as the backbone for the billions of dollars of food and goods it sells and delivers within increasingly quick shipping windows to shoppers in the metropolitan area, which is its largest e-commerce market.

Read more: Amazon just signed a lease on a huge NYC warehouse used by one-time rival Jet.com. It shows just how hot the market for industrial real estate has gotten.

Separately, Amazon is negotiating to lease a 620,000-square-foot office and warehouse space in Red Hook, Brooklyn, that is under construction, a source with direct knowledge of the negotiations told Business Insider. That lease, which has not been previously reported, has not yet been signed the person said. The Amazon spokeswoman did not immediately offer comment on that pending deal, but the company generally does not disclose new locations until it has signed on to take them.

Earlier this month, Business Insider reported that the tech and e-commerce firm just took a 200,000-square-foot warehouse in the South Bronx neighborhood of New York that had previously been lease by its onetime rival Jet.com.

In recent months, Amazon also committed to two warehouses just outside New York City in New Jersey, a roughly 315,000-square-foot warehouse at 1800 Lower Road in Linden and an 185,000-square-foot space in Avenel at 1 Paddock St.

At the start of the year, Amazon leased 450,000 square feet in Staten Island, New York, next door to a newly built 855,000-square-foot distribution center it leased in 2017.

The latest deal at 55-15 Grand Ave. will likely cost hundreds of millions of dollars to develop and will be built by a partnership between the New York City real-estate firm RXR Realty and the Los Angeles industrial landlord LBA Realty. The pair purchased the site two years ago for $72 million.

Read more: Warehouse properties are suddenly red-hot, with Amazon snapping up space while ailing companies sell. Here's a look at key deals and market forecasts that lay out a huge opportunity for industrial real-estate.

The new site is in Maspeth, an industrial area of Queens that is desirable to logistics and e-commerce tenants because it is near the geographic center point of the city, providing quick access to Brooklyn, Queens, Manhattan, and the Bronx for last-mile deliveries.

"You just saw it with the pandemic where you have a dense population that needs to be serviced and delivered to, and Amazon is filling that need," said Joseph Taylor, the president and CEO of the New Jersey industrial builder Matrix Development Group, which built Amazon's two warehouse spaces on Staten Island. "You're seeing it all over the country, but I would imagine that by the sheer volume of the business Amazon does in the city, it's a focus point."

Amazon's e-commerce business has boomed as Americans have increasingly turned to online shopping during the recent lockdowns that were instituted across the country to combat the spread of the pandemic. The industrial-real-estate market, meanwhile, has also surged, even as other property types, such as hotels, retail spaces, and office, face an uncertain future.

Have a tip? Contact Daniel Geiger at dgeiger@businessinsider.com or via encrypted messaging app Signal at +1 (646) 352-2884, or Twitter DM at @dangeiger79. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Warehouse properties are suddenly red-hot, with Amazon snapping up space while ailing companies sell. Here's a look at key deals and market forecasts that lay out a huge opportunity for industrial real-estate.

DON'T MISS: Amazon just signed a lease on a huge NYC warehouse used by one-time rival Jet.com. It shows just how hot the market for industrial real estate has gotten.

UP NEXT: A surge in grocery deliveries is creating a huge opportunity for industrial real-estate developers. Here's how the coronavirus is transforming retail and warehousing.

Join the conversation about this story »

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