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Consumer Reports no longer recommends Tesla's Model 3 (TSLA)

Thu, 02/21/2019 - 2:57pm  |  Clusterstock

  • Consumer Reports no longer recommends Tesla's Model 3 sedan, the publication said on Thursday.
  • The vehicle lost its recommendation due to feedback from Consumer Reports' annual reliability survey.
  • Consumer Reports subscribers cited problems with the Model 3's door handles, loose interior trim and molding, paint defects, and cracked windows.
  • A Tesla representative told Business Insider that it has fixed "the vast majority" of the Model 3 issues cited by Consumer Reports subscribers.

Consumer Reports no longer recommends Tesla's Model 3 sedan, the publication said on Thursday.

The vehicle lost its recommendation due to feedback from Consumer Reports' annual reliability survey. Consumer Reports subscribers cited problems with the Model 3's door handles, loose interior trim and molding, paint defects, and cracked windows. The Model 3 now has an overall vehicle score of 65 out of 100 points, and a predicted reliability rating of two out of five points.

In addition to the Model 3, Consumer Reports does not recommend Tesla's Model S sedan or Model X SUV. It previously recommended the Model S sedan, but the vehicle also lost that recommendation due to reliability issues.

A Tesla representative told Business Insider that it has fixed "the vast majority" of the Model 3 issues cited by Consumer Reports subscribers.

"We’re setting an extremely high bar for Model 3," the representative said. "We have already made significant improvements to correct any issues that Model 3 customers may have experienced that are referenced in this report, and our return policy allows any customer who is unhappy with their car to return it for a full refund."

Read more: Tesla is bleeding executives, and experts say it may create problems for the company

Tesla's vehicles have received a wide range of feedback from Consumer Reports and its subscribers. The automaker placed 19th among 33 brands in the publications 2019 overall ranking of auto brands, and has topped the publication's ranking of the most satisfying auto brands for three consecutive years. But Tesla was rated 27th of 28 brands in the publication's 2019 ranking of the most reliable auto brands, and Consumer Reports placed the Model X among its 10 least reliable vehicles.

The Model 3 topped Consumer Reports' 2019 owner satisfaction ranking for cars, and the publication has complimented the vehicle's handling and acceleration, while criticizing its touchscreen-based controls, ride stiffness, and rear seat comfort.

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A future of erratic weather, higher seas, and extreme heat could lead to an economic 'Great Dying' twice as severe as the Great Depression

Thu, 02/21/2019 - 2:51pm  |  Clusterstock

  • A new book by David Wallace-Wells, a national fellow at the New America foundation and a deputy editor at New York magazine, explores how the modern world could be transformed by severe climate change: not just sea levels and wildfires, but climate conflict, crop failure and new global-warming geopolitics.
  • In the following adapted excerpt, Wallace-Wells suggests that the economic effects may be especially traumatic. Although some people see capitalism as the primary threat to the climate, capitalism may also be endangered by climate change.
  • The book, called “The Uninhabitable Earth,” was published Tuesday.

It has been a long, destabilizing decade since the financial crash of 2008. But just how destabilizing it was to the post-Cold War order of free markets and liberal internationalism has become especially clear in the last few years, as self-doubt started beaming out from the highest citadels of contemporary capitalism.

In 2016, the IMF published a self-scrutinizing paper called “Neoliberalism: Oversold?”. The same year, Paul Romer, the chief economist of the World Bank, proposed that macroeconomics — the “science” of capitalism — was perhaps a fantasy field of study equivalent to string theory, which no longer had any legitimate claim to describing the workings of the real economy.

Romer won the Nobel Prize last year, and a couple months later, Oliver Blanchard, Romer’s counterpart as the former chief economist of the IMF, asked, baldly, “What comes after capitalism?”

The question sounds enigmatic, but the answer may be simple: climate change.

Some on the left tend to think of untrammeled capitalism as the primary threat to the climate. The inverse is true as well: Capitalism is endangered by climate.

The most eye-opening research on the economics of warming has come from Solomon Hsiang, Marshall Burke, and Edward Miguel — professors of economics at Stanford and Berkeley. They offer a bleak analysis: In a country that’s already warm, every degree Celsius of warming reduces growth, on average, by about one percentage point. That’s an enormous number, considering we count growth in the low single digits as strong.

Compared to the trajectory of economic growth with no climate change, their average projection is for a 23% loss in per capita earning globally by the end of this century.

Beyond shaving off the meaningful margins of our economic growth, there’s a more alarming possibility that, at least in parts of the globe, climate change will wipe out the very possibility of growth — and perhaps even cut into existing productivity. There is a 51% chance that climate change will reduce global output by more than 20% by 2100, this research suggests, compared to a world without warming. And there’s a 12% chance that it lowers per capita GDP by 50% or more by then unless emissions decline. By comparison, estimates suggest the Great Depression dropped global GDP by about 15%, and the more recent Great Recession lowered it by about 2%.

Hsiang and his colleagues estimate a one-in-eight chance of an ongoing and irreversible effect on the economy by 2100 that is 25 times worse than the 2008 crash. Last year, another team of economists suggested that these could be dramatic underestimates.

The breakdown by country is perhaps even more alarming. Some northern countries stand to benefit from warmer temperatures: Canada, Russia, Scandinavia, Greenland. But in the mid-latitudes, the countries — the US and China — that produce the bulk of the world’s economic activity would lose nearly half of their potential output. Closer to the equator, it’s worse; the World Bank estimated last year that 800 million people living throughout South Asia could be dragged into extreme poverty by climate change just over the next decade. India alone, one study suggested, would shoulder more than a quarter of the economic suffering inflicted on the entire world by climate change by 2100.

We have gotten used to setbacks on our erratic march along the arc of economic history, but we know them as temporary and expect elastic recoveries. What climate change has in store is not a Great Recession or a Great Depression but, in economic terms, a Great Dying.

How could that come to be? There are many factors. There is the threat to agriculture if low yields put small farms, cooperatives, and even empires of agribusinesses underwater (to use the oddly apposite accountant’s metaphor). And then there is the real flooding that 2.5 million American homes and businesses — representing more than $1 trillion in present-day value — will suffer chronically by 2100, according to a 2018 study by the Union of Concerned Scientists. In Miami Beach, 14% of real estate could be flooded by 2045. By that same year, the real-estate impact in New Jersey alone will be $27 billion.

Heat also poses a direct cost to growth. Some of these effects we can see already — for instance, the warping of train tracks or the grounding of flights due to high temperatures. From Montreal to Finland, heat waves have also necessitated the closure of power plants when cooling liquids have become too hot to do their job. And in India, 670 million lost power in 2012 when the country’s grid was overwhelmed by farmers irrigating their fields without the help of the monsoon season, which never arrived.

Other, less obvious effects are also visible — for instance, productivity. The negative cognitive effects of direct heat are accumulating more research support by the day. Globally, warmer temperatures dampen worker productivity. The effects begin early in life — you can see measurable declines in a person’s lifetime earnings for every day temperatures passed 90 degrees during the nine months before they were born. Heat hurts test-taking performance, as does pollution associated with global warming.

Hsiang, Burke and Miguel have identified an optimal annual average temperature for economic productivity: 13 degrees Celsius, which happens to be the historical median for the United States and several other of the world’s biggest economies. Today, the US climate hovers around 13.4 degrees, which translates to about half a percentage point of GDP loss — though, like compound interest, the effects grow over time. As the planet warms, the country could see another full degree Celsius added to its average temperature, and therefore lose a full percentage point of GDP. Of course, as the country has warmed, some regions have seen their temperatures rise closer to the ideal. The greater San Francisco Bay area, for instance, is sitting pretty right now, at exactly 13 degrees.

Over the last several decades, the mainstream assumption about responses to climate change has been that actions are only tolerable if they’re cost-free or serve as avenues of economic opportunity. But as the cost of green energy has fallen in recent years, the equation has flipped: We now know that it will be much more expensive to not act on climate than to take even the most aggressive action today.

In 2018, one paper calculated the global cost of a rapid energy transition by 2030 to be negative $26 trillion; in other words, rebuilding the energy infrastructure of the world would make us that much money, compared to a static system. On the emissions course we are currently on, the cost of climate impacts could top $550 trillion by the end of the century — nearly double all the wealth that exists in the world today.

Hsiang, Burke, and Miguel’s estimate that there’s a 12% chance the global economy could fall by 50% comes from the very high end of what’s possible — a worst-case scenario for economic growth due to climate change. But last year, Burke published a paper with several colleagues exploring the growth consequences of some scenarios closer to our present predicament. In it, he considered a future in which the world limits warming to between 2.5 and 3 degrees Celsius of temperature rise. Relative to a world with no additional warming, Burke and his colleagues estimated, global per-capita economic output in that situation would get cut between 15% and 25% by the end of the century. Four degrees of warming, which is where we could be headed, would lead to a cut  of 30% or more.

That is a trough twice as deep as the deprivations that scarred our grandparents in the 1930s. But you can only really call it a trough after you climb out of it and look back from a new peak. There may not be such relief from climate deprivation.

Can capitalism survive this? The question is a prism, spitting out different answers to different ranges of the political spectrum. To those on one end, global warming could cultivate emergent forms of eco-socialism, while to those on another, it could conceivably produce a collapse of faith in anything but the market.

Trade will surely endure, perhaps even thrive, as it did before capitalism. Rent-seeking, too, will continue. Depending on your ideological inclinations, you could even imagine a shift in the existing order that puts carbon budgets at the center of trade agreements, punishes poorly behaving petro-states with sanctions, and offers some reparations-like aid for the countries hit hardest by climate change — all without actually overturning the whole apple cart. But even relatively fractional adjustments to the west’s basic orientation towards business and capitalism are likely to arrive like earthquakes.  

“Someone once said that it is easier to imagine the end of the world than to imagine the end of capitalism,” the literary critic Fredric Jameson has written. That someone might say today, “Why choose?”

The intimidating size and power of markets has long been a problem for those hoping to change things — it’s a familiar idea to anyone who has ever listened to undergraduates debate about capitalism. But going forward, climate change will likely accelerate two trends already undermining the promise of growth: First, it will produce a global economic stagnation that will play, in some areas, like a breathtaking and permanent recession; and second, it will make even more evident the world’s increasingly stark income inequality by punishing the poor much more dramatically than the rich.

In an economic future doubly mangled by those forces, the world’s very wealthy will likely have much more to answer for.

The predictions of economic hardship, remember, are enormous: 20% of potential global GDP or more lost, under business-as-usual conditions by 2100 — an impact much bigger than the Great Depression. And it would not be temporary.

It is hard to imagine any system surviving that kind of decline perfectly intact, no matter how “big.”

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54 Kingdoms -Storytellers in Fashion

Thu, 02/21/2019 - 6:00am  |  Timbuktu Chronicles
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A post shared by 54 Kingdoms (@54kingdoms) on Aug 25, 2018 at 5:46pm PDT

54 Kingdoms - Storytellers in Fashion - is an apparel and accessory company that brings the Pan-African creative, history and culture to the doorstep of global fashion.

A new Intuit survey says 68% of SMBs use an average of four apps to run their businesses — here's how they're choosing payment providers

Thu, 02/21/2019 - 12:03am  |  Clusterstock

In an increasingly digitized world, brick-and-mortar retailers are facing immense pressure to understand and accommodate their customers’ changing needs, including at the point of sale (POS). 

More than two years after the EMV liability shift in October 2015, most large merchants globally have upgraded their payment systems. And beyond upgrading to meet new standards, many major retailers are adopting full-feature, “smart” devices — and supplementing them with valuable tools and services — to help them better engage customers and build loyalty.

But POS solutions aren’t “one size fits all.” Small- and medium-sized businesses (SMBs) don't usually have the same capabilities as larger merchants, which often have the resources and funds to adopt robust solutions or develop them in-house. That's where app marketplaces come in: POS app marketplaces are platforms, typically deployed by POS providers, where developers can host third-party business apps that offer back-office services, like accounting and inventory, and customer-retention tools, like loyalty programs and coupons.

SMBs' growing needs present a huge opportunity for POS terminal providers, software providers, and resellers. The US counts roughly 8 million SMBs, or 99.7% of all businesses. Until now, constraints such as time and budget have made it difficult for SMBs to implement value-added services that meet their unique needs. But app marketplaces enable providers to cater to SMBs with specialized solutions. 

App marketplaces also alleviate some of the issues associated with the overcrowded payments space. Relatively new players that have effectively leveraged the rise of the digital economy, like mPOS firm Square, are increasingly encroaching on the payments industry, putting pricing pressure on payment hardware and service giants. This has diminished client loyalty as merchants seek out the most affordable solution, and it's resulted in lost revenue for providers. However, app marketplaces can be used as tools not only to build client loyalty, but also as a revenue booster — Verifone, for instance, charges developers 30% of net revenue for each installed app and a distribution fee for each free app.

In this report, Business Insider Intelligence looks at the drivers of POS app marketplaces and the legacy and challenger firms that are supplying them. The report also highlights the strategies these providers are employing, and the ways that they can capitalize on the emergence of this new market. Finally, it looks to the future of POS app marketplaces, and how they may evolve moving forward.

Here are some of the key takeaways from the report:

  • SMBs are a massive force in the US, which makes understanding their needs a necessity for POS terminal providers, software providers, and resellers — the US counts roughly 8 million SMBs, or 99.7% of all businesses.
  • The entrance of new challengers into the payment space has put pricing pressure on the entire industry, forcing all of the players in the industry to find new solutions to keep customers loyal while also gaining a new revenue source.
  • Major firms in the industry, like Verifone and Ingenico, have turned to value-added services, specifically app marketplaces, to not only build loyalty but also giving them a new revenue source — Verifone charges developers 30% of net revenue for each installed app and a distribution fee for each free app.
  • According to a recent survey by Intuit, 68% of SMBs stated that they use an average of four apps to run their businesses. As developers flock to the space to grab a piece of the pie, it's likely that increased competition will lead to robust, revenue-generating marketplaces.
  • And there are plenty of opportunities to build out app marketplace capabilities, such as in-person training, to further engage with users — 66% of app users would hire someone to train and educate them on which apps are right for their businesses. 

In full, the report:

  • Identifies the factors that have changed how SMBs are choosing payment providers.  
  • Discusses why firms in the payments industry have started to introduce app marketplaces over the last four years.
  • Analyzes some of the most popular app marketplaces in the industry and identifies the strengths of each.
  • Breaks down the concerns merchants have relating to app marketplaces, and discusses how providers can solve these issues.
  • Explores what app marketplace providers will have to do going forward in order to avoid being outperformed in an industry that's becoming increasingly saturated. 
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The CEO of Hewlett Packard Enterprise tells us why the company is 'under-appreciated' and how it can beat Amazon in a market that's bigger than cloud computing (HPE)

Wed, 02/20/2019 - 7:53pm  |  Clusterstock

  • Earlier in February, Antonio Neri celebrated the one-year anniversary of his ascension to CEO of Hewlett Packard Enterprise, replacing prominent industry figure Meg Whitman.
  • In October, HPE reported 7% revenue growth for its fiscal year from the year-ago period, and recently announced a new round of dividends.
  • Neri first joined HP in 1995 in customer support, and worked his way up the ladder. He says that HPE's competitive advantages are its legacy of innovation and the quality of its culture. 
  • To that end, he's launched a sweeping initiative to practice what the company preaches and modernize its internal IT infrastructure. It helps the company move faster, while also making HPE simply a better place to work. 
  • In terms of the tech, Neri is placing HPE's bets on edge computing, a market that could very well be bigger than cloud computing. And it's especially important, given that HPE gave up several years ago on competing directly with the market-leading Amazon Web Services cloud. 
  • However, he says that he still has to convince investors of his vision: When HPE reports earnings on Thursday, Wall Street is expecting to post revenue and profits that are flat from the year ago period, and the stock is trading well below its 52-week high. 

As the five-year anniversary of the Hewlett Packard breakup nears, there are reasons to celebrate at Hewlett Packard Enterprise, one of the offspring of the legendary tech company's split.

Earlier in February, Antonio Neri completed his first year as CEO of HPE, after replacing prominent industry figure Meg Whitman. HPE has beaten analyst expectations on profit for the last four quarters running, it grew revenue by 7% in its 2018 fiscal year, and just announced a fresh round of dividends. It even just moved into a swanky new San Jose headquarters, reflecting its plans to grow after an era of shrinkage

At the same time, there are still reasons to be skeptical. When HPE reports earnings on Thursday, Wall Street is expecting the company to report revenue of $7.6 billion and profit of $0.35 per share — just about flat from the year-ago period. At about $16 a share, HPE is valued at $22 billion. The stock is up some 14% since the start of the year, but still below its 52-week high of $19.48.

More broadly, the rise of cloud computing providers like the market-leading Amazon Web Services has cast a shadow over HPE, and any other data center hardware manufacturer — the more customers move their IT infrastructure to the cloud, the less they're going to need expensive servers, storage arrays, and networking gear. It's a trend that has previously eaten significantly into HPE's business.

Still, Neri tells Business Insider that there's plenty of reason to be optimistic, too. He believes that over the next several years, HPE is poised to overtake even Amazon when it comes to edge computing, a technology some see as the next big market after cloud computing.

Before that happens, though, Neri says that he's focused on reinvesting in HPE's culture, including practicing what the company preaches by modernizing its internal IT systems. The general upshot, he says, is that HPE will always be competitive so long as it has the "best talent and the best innovation" — two things that are, to him, a hallmark of the 80-year legacy of Hewlett-Packard, one of the very first Silicon Valley companies. 

And investors, he says, are starting to see the light — beyond dividends and share prices, he suggests that the markets will come to value HPE for its forward-looking nature, the quality of its workforce, and the ways in which it sees tech working to make the world a better place. 

"Investors want to work with companies who care about the future and care about communities," says Neri. 

Started from the bottom

Neri joined Hewlett Packard in 1995, in a role that's about as far down the corporate ladder as it's possible to go — answering phones in its customer service division. As Bloomberg reported last year, his started-from-the-bottom story, and his long tenure at the company through thick and thin, have made him very popular with HPE employees.

He says that his time in customer support taught him some lessons that he uses to inform his decisionmaking today. Specifically, that your best intentions as a company don't matter — things are going to break. What defines you as a company is how seriously you take the feedback, and what you do about it.

"What I took with me was the customer point of view," says Meri. "Customers are the source of truth."

Another benefit of his long tenure, Neri says, is that he "knows every process in every part of the company." That's part of why he's launched a sweeping initiative to modernize the way the company does business. The finance team, for example, is in the process of standardizing on one single financial tracking system, down from ten. 

Rather than just an administrative reform, Neri sees this push as a "strategic weapon." Just for starters, it means the company can move faster — in the case of the finance team, standardizing on one system means it can close the books much more quickly than before, Neri says. 

More existentially, Neri says, it just makes HPE a better place to work, and a living example of what the company is trying to do — help companies reinvent the way they do business by using technology. It's the same reason why Neri gave the design of the new headquarters his personal attention: He wants to attract, and keep, the very best talent.

"This is a capitol for employee morale," says Neri. 

The big opportunity 

Back in 2015, not long after the big split that created HPE, the company pulled the plug on HP Helion, its homegrown competitor to Amazon Web Services, Microsoft Azure, and other cloud giants. 

Now, Neri sees HPE carving out a new niche in the so-called hybrid cloud, where customers keep some of their data in their own servers, and some in the cloud. To that end, HPE last year launched Greenlake Hybrid Cloud, a service that helps companies manage their infrastructure, across AWS, Azure, and their own data centers. 

This is a big bet for HPE: Big businesses, especially in regulated industries — like finance, for example, or retail — can't or won't move all of their data to the cloud. Neri says that the company is wagering that it can help those companies modernize their infrastructure, without having to make that big switch.

"The world will always be hybrid," says Neri. 

Ultimately, though, Neri has his sights set on the shift towards so-called edge computing, which he expects to play out more fully over the next 3 to 10 years.

The basic idea behind edge computing is that in a brave new world of internet-connected appliances, gadgetry, and even vehicles, it's just too inefficient to send data up to the cloud over the internet for processing — a self-driving car, for example, needs to know whether to stop right now, rather than wait for a response from the server.

The answer is to make the so-called edge — that is, the device itself — smarter, in the sense that it should be able to do lots of data processing on its own hardware, relying on the cloud only for the most intensive calculations. 

HPE is in a good place to conquer this market, argues Neri, because its hybrid cloud play already helps customers manage and process huge amounts of data right on their own servers. 

Unlike Amazon Web Services, which is only now dipping its toes in the hybrid cloud market, HPE is well-positioned to help move data back and forth from hardware and the cloud, says Neri. He also points to Aruba Networks, a networking company it bought in 2015 for $3 billion, as giving it the fundamental infrastructure to help those devices connect with each other and the cloud. 

As the number of connected devices in the world increases, says Neri, he expects edge computing to become a $400 billion market, reflecting the fact that almost everything is going to be "smart" in at least some capacity. For HPE, that's "the biggest opportunity," says Neri — much more so than the cloud market, pegged by analysts at $180 billion as of 2018.

"No matter how you slice it, it's bigger than the cloud market," Neri says. 


As HPE moves to take advantage of that opportunity, Neri says that he's had to learn some lessons in leadership. In general, he says, the move to replace Whitman was "the smoothest transition we've ever had" — right before becoming CEO, Neri had served as president of the company, getting plenty of mentorship from his predecessor.

Indeed, in many ways, his strategy is continuing a playbook originally created by Whitman, who left HPE once and for all in January after stepping down from its board. 

However, he says he still had some lessons to learn about what it meant to be the boss. 

"The CEO is the most lonely job on the planet because everything ends with you," says Neri. 

He says that he's most at home in terms of making product decisions; he knows how to work with engineering and sales teams. The "one to learn," he says, was how to talk to investors, and give them "clarity on the narrative" on what HPE is all about. 

"I think we are under-appreciated," says Neri.  

To Neri, everything at HPE is moving in the right direction: It's continuing to attract PhDs and other industry experts, the fundamentals of the business are strong, and it's making smart bets on where it fits into the future of computing. 

"I think that's pretty darn good," says Neri. 

SEE ALSO: Cisco CEO Chuck Robbins tells us how he led the $200 billion company to growth when everybody expected it to get crushed in the cloud wars

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These four charts show why Apple's China troubles aren't going away anytime soon (AAPL)

Wed, 02/20/2019 - 7:24pm  |  Clusterstock

  • Apple's problems in China are likely to linger, HSBC's Erwan Rambourg said in a new research note.
  • Wealthy Chinese are starting to shift their brand preferences to Huawei from Apple, Rambourg said, citing a proprietary survey.
  • They also don't want to spend what Apple charges for its latest phones, according to the survey.
  • And many want their next phone to support 5G, but Apple isn't expected to offer an iPhone compatible with the new wireless standard until late next year.

Don't expect Apple's China woes to get better anytime soon.

Wealthy Chinese consumers are still swapping out their phones at a fairly rapid rate, HSBC Global Research analyst Erwan Rambourg said in a new note Wednesday, citing a proprietary survey. But Apple could lose out as they do. Such customers are starting to prefer Huawei's phones over iPhones, and more than half of such consumers say when they upgrade they're unlikely to spend what Apple charges for its latest devices, Rambourg said.

Apple's "China issues [are] likely to continue beyond the short term," he said in the note.

Greater China — China, Taiwan, and Hong Kong — is Apple's third largest geographic market, accounting for about 20% of the company's sales in its last fiscal year. But a slowing Chinese economy and trade tensions with the United States, among other factors, appear to have hurt the iPhone maker's business there. During the holiday quarter, Apple's overall revenue fell by about 5%, thanks in large part to a 27% year-over-year drop in its Greater China sales.

Read this: The most important things we learned from Apple's earnings call

HSBC's survey data indicates a rebound won't happen anytime soon, Rambourg said.

Chinese consumers still love to upgrade their phones

In past years, consumers in the United States and other countries swapped out their phones around every two years or so. But with the devices becoming more expensive and with fewer new must-have features, owners have been upgrading them less frequently in many places.

But that trend hasn't really hit China yet, according to HSBC's data, which it derived from surveying 2,000 affluent consumers there. About 64% of those customers say they swap out their phones at least every two years, according to the survey.

That poses a danger to companies if consumer loyalties or brand images start to shift; they could lose customers relatively quickly. Unfortunately for Apple, that seems to be happening.

Among the Chinese consumers HSBC surveyed, 33% have a Huawei phone and 32% have an iPhone. However, for their next phone, 39% say they'll buy a Huawei device, while just 31% said they would buy and iPhone. By contrast, about 40% of such consumers said they had an iPhone last year, while less than 25% said they had a Huawei phone.

"There is clear evidence of shifts in consumer preference with Apple losing in terms of aspiration to Huawei," Rambourg said.

Apple's phones are too pricey for Chinese consumers

Another dangerous sign for Apple: Even many of these wealthy Chinese customers say they don't want to pay what it costs to get the newest iPhones. Only 16% said they were likely to spend more than RMB 8,000 (about $1,190) for their next smartphone, and less than half — 49% — said they were likely to spend more than RMB 5,000 ($744) for their next phone.

The only iPhone model Apple sells that's priced less than RMB 5,000 is the iPhone 7, which is more than two years old. It starts at RMB 3,899 ($580). The least model expensive among Apple's latest iPhones — the XR — starts at RMB 6,499 ($967). The XS, meanwhile, starts at RMB 8,699 ($1,294), and the XS Max has a base price of RMB 9,599 ($1,428).

"Local competitors are perceived as having a better price/performance ratio than Apple," Rambourg said.

Apple seems to be trying to address its pricing problems, in part by offering generous trade-in amounts for older phones. But the company could face other problems in the near future in luring new customers or convincing older ones to stay loyal.

When asked what new feature might spur them to upgrade to a new phone earlier than they were planning, the top reason surveyed consumers gave was to get more memory. But the no. 2 reason — cited by well more than half of those surveyed — was support for 5G, or fifth generation wireless, a fast new standard for cellular data transmissions. That's a problem for Apple, because while some of its competitors — including Huawei — are expected to debut 5G phones this year, the iPhone maker isn't expected to release a 5G device until late next year at the earliest.

SEE ALSO: Here's why Apple's China situation is at 'code red,' and why it needs to take dramatic action to plug up a key weakness in the business

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Deutsche Bank lost $1.6 billion on a trade gone bad involving Warren Buffett

Wed, 02/20/2019 - 6:45pm  |  Clusterstock

  • Deutsche Bank lost $1.6 billion on an investment in a portfolio of municipal bonds and related derivatives, according to the Wall Street Journal. 
  • In 2007, the bank bought a $7.8 billion portfolio of municipal bonds, the report said. The following year, Deutsche purchased default protection from Berkshire Hathaway.
  • After almost a decade of the deal, Deutsche Bank offloaded the bonds in 2016, incurring $1.6 billion in losses, the report said. 

Deutsche Bank lost $1.6 billion on an investment in which it purchased prior to the 2008 financial crisis, according to a report from Wall Street Journal.

In 2007, the bank bought a $7.8 billion portfolio of municipal bonds.  A year later, the German lender purchased  default protection from Berkshire Hathaway for the investment, paying $140 million up front for the transaction.

Internally, Deutsche Bank's executives had debated over the valuation of the bonds after the purchase, the report said. Financial auditors from KPMG also questioned whether the bank has set aside sufficient funds to cover potential losses, however, the bank shrugged off those concerns, according to the report. 

Deutsche Bank eventually decided to offload the bonds and related derivatives nine years after the purchase. 

"This transaction was unwound in 2016 as part of the closure of our Non-Core Operations" unit, a bank spokesman told the Journal in an email. "External lawyers and auditors reviewed the transaction and confirmed it was in line with accounting standards and practices."

Executives at Deutsche Bank never decided to restate its financial statements to include the losses before an internal investigation closed last year, the report said. 

See also:

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I visited the Chanel store in SoHo the day after Karl Lagerfeld died, and it was clear why the brand has been an icon for nearly 100 years

Wed, 02/20/2019 - 6:10pm  |  Clusterstock

  • Renowned fashion icon Karl Lagerfeld died on Tuesday, February 19, at the age of 85.
  • Lagerfeld was well-known for his role as the creative director of the Chanel and Fendi luxury brands.
  • One day after his death, I visited the Chanel storefront in SoHo to see if they had any sort of tribute set up for the fashion icon.
  • The store's artful yet classic layout and blend of both historic and trendy pieces contributed to its feel of timeless luxury.

At his time of death, Karl Lagerfeld had worked with the Chanel brand for 36 years.

The Chanel company was founded by Gabrielle "Coco" Chanel in 1910, but Lagerfeld, who joined the company 1983 and had a wide impact on the fashion industry at large, is credited with modernizing the failing brand and carrying it into the 21st century.

On a snowy Wednesday, I took the train uptown to SoHo’s Chanel store. The SoHo location is one of three Chanel boutiques in Manhattan, along with the Madison Ave. store and the recently unveiled 57th St. location. I was curious to see if the store would have any kind of tribute displayed for the late fashion icon and to get a sense of how the store felt in person.

Overall, the store’s variety of high-end products and thoughtful layout contributed to its overall feel of luxury. I found that inventory was displayed not just as products for browsing but rather as pieces of art.

Here's what the SoHo Chanel store looks like.

SEE ALSO: Meet Virginie Viard, the designer taking Karl Lagerfeld's place at Chanel who has been by his side since she was an intern there

NOW READ: Karl Lagerfeld owned more than 1,000 of his iconic high-collared shirts, and he helped design them himself

Chanel has boutique locations scattered across Manhattan. I recently visited the SoHo store, which is in the heart of SoHo's shopping district and is surrounded by other luxury brands ...

Source: Chanel

... including Tiffany & Co. ...

... and Balmain.

See the rest of the story at Business Insider

$650 billion asset manager Franklin Templeton is embedding data scientists in a key investment team, and it's a sign of how the industry is changing

Wed, 02/20/2019 - 6:03pm  |  Clusterstock

  • The boundaries between technology and business are already blurring. Soon, the two won't be separate, Joe Boerio, Franklin Templeton's chief technology officer, told Business Insider. 
  • In addition to embedding data scientists in investment teams, Boerio is training finance professionals to have some technology skills. 
  • It's easier to teach investing staff tech skills than vice versa, he said. 

The boundaries between technology and business are blurring more than ever in finance, said the longtime chief technology officer for a $650 billion firm.

"Longer-term, you won’t have the separation of tech and business," Joe Boerio told Business Insider during a recent interview at Franklin Templeton's San Mateo headquarters. 

See more: The CTO at $55 billion asset manager Cohen & Steers explains why AI is 'in the middle of a hype cycle' and what he's investing in instead 

Boerio, who has worked on technology at Franklin for more than 30 years, said the firm has adopted a "hub-and-spoke" model for integrating technology into its investment teams, with a central tech team serving various departments, and data scientists working with particular groups. For example, Franklin bought Random Forest Capital, a data science-focused investment team last year, then embedded the team in its fixed income group. 

That model helps with an asset management-wide issue: technologists' lack of investment-specific knowledge. 

"Everyone across industries is facing the domain expertise problem, but it’s exacerbated in investments," Boerio said.

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Because "it’s easier to teach someone with investment skills the technology than vice versa," Franklin Templeton is working on enhancing its investors' expertise. 

"We’ll see more formal programs over the next few years with ways to measure levels of data science adoption and maturity of practices within teams," Boerio said. "It could be a combination of things that gets you to a desired state maturity level. The ongoing challenge with maturity is that it is a moving target with the advancements of technology and business the definition of maturity is always in motion."

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Tesla is bleeding executives and it could create problems for the company, experts say (TSLA)

Wed, 02/20/2019 - 5:18pm  |  Clusterstock

  • Tesla is known for its high rate of turnover among executive and senior-level employees.
  • As Tesla expands its product line and presence in foreign markets, it will become a more complicated business to run and require a more stable management team, Maryann Keller, the principal at the automotive consulting firm Maryann Keller & Associates, told Business Insider.
  • The level of turnover Tesla has experienced in its senior ranks is unusual in the auto industry and could make recruiting more difficult, Keller said.
  • Tesla did not immediately respond to a request for comment.

The Wall Street Journal reported on Wednesday that Dane Butswinkas, Tesla's general counsel, would leave the automaker just two months after joining it, the latest in a long string of executive departures.

Tesla is known for its high rate of turnover among executive and senior-level employees. The past year has seen senior employees in Tesla's manufacturing, engineering, finance, sales, and communications departments leave the automaker.

Tesla CEO Elon Musk has developed a reputation as a challenging boss to work for, and the automaker is known for having a demanding, fast-paced work culture, Ed Kim, the vice president of industry analysis at the automotive research firm AutoPacific, told Business Insider, an impression employees have shared in media reports

"That sort of company culture doesn't really work for everybody," Kim said.

Read more: Tesla's top lawyer is leaving the company after two months — here are all the key names who have departed in recent months

Tesla plans to introduce a crossover SUV, semi-truck, and pickup truck while building a factory in China and increasing production of solar roof tiles and home batteries in the coming years. These initiatives will make Tesla a more complicated business to run and require a more stable management team, said Maryann Keller, the principal at the automotive consulting firm Maryann Keller & Associates.

"You want a stable executive team. For a company that is growing and has such huge and global plans, it can't be a one-man show," Keller said.

The level of turnover Tesla has experienced in its senior ranks is unusual in the auto industry, which is known for stable management teams, and suggests that too much responsibility is concentrated in Musk. The high frequency of executive departures could raise questions for potential Tesla employees and make it more difficult for the automaker to recruit, Keller said.

Tesla did not immediately respond to a request for comment.

SEE ALSO: Walmart is quietly taking charge of its rail operations — and it could cut serious transportation costs as the country's largest retailer seeks to boost e-commerce profits

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Most traditional investing advice fails to take women's pay gaps and longer lifespans into account — Ellevest is changing that

Wed, 02/20/2019 - 4:39pm  |  Clusterstock

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  • Most traditional investing advice fails to take the pay gaps and longer lifespans of women into account, resulting in missed opportunities for financial growth. 
  • Ellevest is an online robo-advisor led by a former Wall Street CEO who wants to help women reach their full financial potential. 
  • It creates customized investment portfolios for you based on your financial goals, and there's no minimum to get started. There's a 0.25% annual fee to the service, which includes industry-tested investment advice and unlimited human concierge support. 
  • Right now, Ellevest is offering Business Insider readers $25 towards their first funded goal during the month of February. Click here to start investing with Ellevest today

While serving as the CEO of Merrill Lynch Wealth Management and Citi Wealth Management, Sallie Krawcheck realized a key truth about the investing industry: it's made by men, for men. 

On average, women are paid less, don't invest to the same extent that men do, and live longer than men — all factors that affect their financial standing and aren't taken into account by the 86% of investment advisors who are men. Thanks to these differences, the "gender investment gap" can cost a woman more money over their lifetime than the gender pay gap. 

To help women manage their money through methods that factor in these differences, Krawcheck co-founded online robo-advisor Ellevest. Ellevest is on a mission to tackle an industry that doesn't represent women and instead has often asked them to change their habits and preferences, rather than change itself. 

In addition to using an algorithm that takes into account gender differences in pay, career breaks, and lifespan, Ellevest uses the client's personal financial goals (e.g. buying a home or starting a business) to create customized investment portfolios. 

Krawcheck, who serves as Ellevest's CEO, says, "We're not your dad's old investing firm — and we're not a tech-bro startup either. We're busy waging water to help you close your personal 'gender investing gap' and take control of your financial future." 

Here's how Ellevest works and more about the services it offers.

The onboarding process asks you to share your basic information, financial goals and prioritization of those goals, timeline, and external financial account information.  

Ellevest currently offers seven goal options, including Retirement, Emergencies, Build Wealth, Kids, and Home Down Payment. You can add more than one goal and rearrange the prioritization to your liking. Later on if you decide to fund your account but have limited cash to deposit, you can put certain goals "on hold" to make room for others. 

After you enter all this information, Ellevest considers your current external account savings, inflation, taxes, salary growth projections, gender pay gap, and market performance, and puts together a free investment plan.

This plan recommends an investment portfolio for each of your goals, including breakdowns of asset allocation, and projections based on a 70% likelihood of reaching your goal. 

Lastly, fund your account to officially get started with Ellevest. The service recommends that you set up the auto-deposit feature to coincide with each paycheck, so you can "pay yourself first." 

Right now, Ellevest is offering Business Insider readers $25 towards their first funded goal during the month of February. You can get started with the onboarding process here.

There are three Ellevest services: Digital, Premium, and Private Wealth Management. All three include unlimited human concierge support. 

Ellevest Digital: No minimum or maximum fund amount, with a 0.25% annual fee. It includes tax minimization methods, patent-pending risk management technology, and investments built with best-in-class research. 

Ellevest Premium: $50,000 minimum and no maximum fund amount, with a 0.50% annual fee. In addition to the benefits of Digital, it includes one-on-one personalized guidance from certified financial planners and one-on-one executive coaching from the Ellevest Career Team. 

Private Wealth Management: Clients with more than $1,000,000 in investable assets can take advantage of this service that provides them with a dedicated private wealth manager and investing options that focus on social impact and advancing women. 

Another feature that the company says it's excited about is its Impact Portfolio. 

This option lets you invest up to half of your portfolio in companies that "power positive change by advancing women." These are companies that have strong women leadership, promote policies that advance women, meet higher standards for sustainability and ethical practices, and provide community services to people in need. 

This portfolio is designed with the same qualities of Ellevest's core investment portfolios — risk minimization through diversification across asset classes, cost minimization through thoughtful fund selection, and tax minimization (you can learn more about its methodology here) — but with added investments focused on effecting positive change for women, letting you put your money toward the causes you believe in. 

Ellevest is the robo-advisor that caters to all aspects of your life, notably including the ones that traditional investing services have long ignored. With its smart algorithm and team of experienced advisors, it's changing the conception of investing as a boys' club. 

Get started with Ellevest here to receive $25 towards your first funded goal

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THE EVOLUTION OF THE US NEOBANK MARKET: Why the US digital-only banking space may finally be poised for the spotlight (GS, JPM)

Wed, 02/20/2019 - 4:35pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Neobanks, digital-only banks that aren’t saddled by traditional banking technology and costly networks of physical branches, have been working to redefine retail banking in major markets around the world.

Driven by innovation-friendly regulatory reforms, these companies have especially gained traction in Europe over the last three years. While the US is home to some of the oldest neobanks — including Simple, which set up shop in 2009, and Moven, which was founded in 2011 — the country's neobank ecosystem has lagged behind its European counterpart.

That’s largely because of an onerous regulatory regime, which has made it very difficult to obtain a banking license, and the entrenched position incumbents hold in the financial lives of US consumers. Navigating the tedious and costly scheme for obtaining a banking charter and appropriate approvals has been a major stumbling block for the country’s digital banking upstarts. However, developments over the past year suggest these startups are finally poised for the spotlight in the US. 

In this report, Business Insider Intelligence maps out the factors contributing to this shifting tide, examines how key players are positioning themselves to take advantage, and explores how incumbents can embark on their own digital transformations to stave off disruption.

The companies mentioned in this report are: Aspiration, Chime, Goldman Sachs' Marcus, JPMorgan Chase's Finn, N26, and Revolut. 

Here are some of the key takeaways from the report:

  • Despite lagging behind Europe, recent developments suggest that neobanks are finally ready for the spotlight in the US.
  • Three distinct influences are responsible for creating the fertile ground for this evolution: regulation, shifting consumer attitudes, and the activity of incumbent banks.
  • Among those driving this evolution in the US are foreign neobanks including Germany’s N26 and UK-based Revolut.
  • Meanwhile, two notable incumbent-owned outfits have deployed amid great fanfare: Marcus by Goldman Sachs and Finn by Chase. 
  • In this increasingly competitive landscape, incumbent banks have a range of strategic options at their disposal, including overhauling their entire business for the digital era.

 In full, the report:

  • Details the factors contributing to a shift in the US' neobank market.
  • Explains the different operating models neobanks in the US are deploying to roll out their services and meet consumer demands.
  • Highlights how incumbent banks are tapping into the advantages offered by stand-alone digital outfits. 
  • Discusses the key strategies established players need to deploy to remain relevant in the US' increasingly digital banking landscape.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
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The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Fintech.

SEE ALSO: Latest fintech industry trends, technologies and research from our ecosystem report

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The Fed just said it contributed to the stock market's wild ride in December

Wed, 02/20/2019 - 3:25pm  |  Clusterstock

  • December's FOMC communications were seen as contributing to a turbulent month in financial markets.
  • Stocks had posted their worst December since the Great Depression. 
  • Market sentiment fell after FOMC communications were seen as not fully appreciating softening data, meeting minutes said Wednesday.

Communications from Federal Reserve officials were among a string of factors behind the gloomy mood on Wall Street at the end of 2018, adding to concerns about political and economic strains, the central bank said in meeting minutes out Wednesday.

"A variety of factors—including FOMC communications, weaker-than-expected data, trade policy uncertainties, the partial federal government shutdown, and concerns about the outlook for corporate earnings—were cited by market participants as contributing to a deterioration in risk sentiment early in the period," the minutes said.

As US stocks plunged toward their worst year since 2008 and as trade and growth uncertainties persisted, market watchers had been closely monitoring December's meeting for signs the central bank could put the brakes on rate hikes.

While conveying a more tentative approach to monetary policy in 2019 than previously expected, the Federal Open Market Committee had that month increased its benchmark interest rate by a quarter percentage point to a target range of between 2.25% and 2.5%. It cited a strong labor market and inflation levels that were approaching its target. 

"December FOMC communications were reportedly perceived by market participants as not fully appreciating the implications of tighter financial conditions and softening global data over recent months for the U.S. economic outlook," the minutes said.

At the January FOMC meeting, officials reversed further and signaled the end of this tightening cycle could be in sight. 

SEE ALSO: MORGAN STANLEY: Delusional currency investors are making a huge mistake that could blow up in their faces — but these trades could save the day

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$5.3 trillion fund giant Vanguard hired a new strategy chief, and it highlights one of the hottest new hiring areas at trillion-dollar asset managers

Wed, 02/20/2019 - 3:25pm  |  Clusterstock

  • Vanguard in January tapped consulting firm BCG's former head of asset and wealth management as its new chief strategy officer. 
  • In a move not previously reported, Brent Beardsley replaced Ann Combs, who retired at year-end. 
  • The role of chief strategy officer is increasingly important for large asset managers, executive recruiters told Business Insider.

Vanguard just tapped a partner at a powerhouse consulting firm to head up strategy for the asset management firm. 

In a move not previously reported, Brent Beardsley in January joined $5.3 trillion asset manager as its chief strategy officer after spending more than 17 years at BCG, where his roles included global head of asset and wealth management.

Beardsley replaced Ann Combs, who retired at year-end, a Vanguard spokeswoman confirmed. 

Read more: We asked 8 Wall Street recruiters about the hottest trends in hiring across banking, trading, hedge funds, and asset management

Beardsley is leading a team responsible for corporate and business line strategy, which includes its innovation center. 

While strategy heads are common at most companies large and small, the asset management industry (with the exception of heavily diversified firms like BlackRock) has only begun to add the role in recent years, executive recruiters say.

"An asset management company used to be a pretty rudimentary business to run, with focus primarily on manufacturing and distribution," said Arnaud Tesson, the head of US asset management at executive recruiting firm Egon Zehnder. "Now, it has become more complex, the environment is more complex and senior needs are changing." 

The asset management industry is facing increased pressures, as volatile markets pushed billions of capital out in the last few months and demand for lower fees continued to eat into revenue. Vanguard, however, has largely weathered those storms, pulling in $234 billion last year – the most new money for any asset manager, according to Morningstar.

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"The asset management industry was traditionally not very strategic, but now firms realize the need for a long-term approach that takes the outside world into account," Tesson said. "We see increasing interest in building out or strengthening strategy teams, starting with a head of strategy and then everything under that. The industry hasn't developed those people, so they often have to import them from financial services or other industries."

Tesson said he sees more interest from asset managers of all sizes for a head of strategy. Last week, for example, multi-family office Proficio Capital Partners, which manages $1 billion, hired a former Wellington Management vice president for its first chief strategy officer. 

Another executive recruiter cited the headwinds facing asset managers, including market volatility, fee pressures, and changing investor preference, as catalysts for the uptick in the strategy roles she's seen. 

"If firms aren't considering strategy, they're burying their heads in the sand," she said. 

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Amazon's investment in an electric truck company could spell doom for Tesla's dominance, a widely followed Wall Street analyst says (AMZN, TSLA)

Wed, 02/20/2019 - 2:57pm  |  Clusterstock

  • Rivian, an electric truck startup, announced last week that Amazon was leading a $700 million fundraising round
  • Morgan Stanley says its the most significant event for electric vehicles since Tesla's 2010 IPO
  • What's more, the bank's widely followed autos analyst, says it could be the most important event for the industry this year.

It's only February, but Morgan Stanley thinks we've already seen the most important milestone to hit the automotive industry all year.

Adam Jonas, the Wall Street bank's widely followed autos analyst says it's the biggest thing to happen for electric vehicles since Tesla went public nearly a decade ago.

"We view Amazon's leading of a $0.7 billion investment in US electric pickup truck maker Rivian as not just the most significant milestone for EVs since Tesla's 2010 IPO," he said in a note to clients Tuesday.

"It may prove to be the most significant milestone for US autos for all of 2019," he continued.

It's not a hard comparison to follow. Sure, the Prius has been around for years. But for many Americans, a Tesla is their first experience seeing — or driving — a fully electric car. In 2010, when Tesla hit public markets, there were less than 100,000 electric vehicles on the road. Today, it's getting close to 1 million.

Electric Vehicles are at a tipping point

Tesla might have spurred the segment's growth, but now that Amazon is entering the race, it's anyone's game.

"Just when it seemed like Tesla's lead over the competition in EVs couldn't be any wider, we have Amazon making a bold move right into US-made EVs," says Jonas. "We view Amazon and Tesla as competitors rather than partners/collaborators in advancing the future of transport."

Rivian showed off two concepts at the Los Angeles auto show in January. The R1S SUV and R1T truck should be available by 2020, the company said.

And Tesla's not the only automaker at risk of disruption.

"We see Amazon's increased and more direct involvement in revolutionizing a century-old propulsion and business model ecosystem to be more of a treat than an opportunity for our coverage," said Jonas.

SEE ALSO: Tesla challenger Rivian just announced a $700 million investment led by Amazon

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We got our first look at CVS Health's financials since its $70 billion takeover of Aetna, and it's going to be a bumpier year than Wall Street expected

Wed, 02/20/2019 - 2:15pm  |  Clusterstock

  • CVS Health reported its first earnings since closing its merger with health insurer Aetna. 
  • The pharmacy giant said its profit this year will be a lot lower than Wall Street expected, sending its stock plunging.
  • In a call with analysts, CVS mentioned "headwinds" 10 times. Among the challenges CVS is facing: drug-pricing scrutiny and a deteriorating long-term-care pharmacy business.
  • CVS Health Chief Executive Officer Larry Merlo said the company has a strategy to confront the challenges, and called 2019 "a bridge to the future."

CVS Health is making a big bet that it can reshape the way the health industry works, but getting there isn't necessarily going to be smooth. 

At the end of 2018, CVS closed its $70 billion merger with Aetna. The merger combines a chain of nearly 10,000 pharmacies that also owns a drug benefits business with one of the biggest US health insurers. The result is an entirely new healthcare company that can wield a tremendous amount of power over how healthcare gets paid for and provided to patients.

On Wednesday, CVS reported its first quarterly earnings since the merger closed. Throughout the course of its call with investors, CVS mentioned a key word 10 times: "headwinds."

Blaming those headwinds, CVS told investors that its expected 2019 earnings will be in a range of $6.68 to $6.88 a share. That was far less than analysts' expectations, sending CVS shares down 7% on Wednesday.

"The healthcare supply chain is not healthy," Baird Equity Research analyst Eric Coldwell said in a note Wednesday in reaction to the earnings projections for 2019. 

During the call, CVS executives detailed the multiple headwinds the business is facing around the company's pharmacy business and the company's long-term care business, called Omnicare.

In particular, CVS Chief Executive Officer Larry Merlo noted that in 2019, CVS is expecting less of a benefit from new generics driving the prices of medications down, and lower inflation on brand-name drugs. That is, drugmakers aren't raising the prices of their drugs as much as they have in the past, which is impacting CVS's business which stands to benefit from that inflation.

Another headwind facing CVS's pharmacy benefit business — and that industry as a whole — is a Trump administration proposal that would effectively ban some payments between big pharma companies and middlemen that have been blamed for driving up drug prices called rebates.

CVS is facing these challenges as it works to transition its business model.

"We expect 2019 to be a year of transition as we integrate Aetna and focus on key pillars of our growth strategy, creating a more consumer-centric health care experience," Merlo said on Wednesday's call. 

One of the ways CVS is focusing its post-merger power is through new "HealthHUB" stores, the first three of which opened in Houston in February. The stores have an increased focus on health services, including a wellness center and more chronic care management for diseases like diabetes, committing about 20% of the physical store space to health endeavors rather than snacks or other convenient store supplies.

Read more: Take a look inside CVS's new health hubs that are a key part of its plan to change how Americans get healthcare

CVS's work with other health insurers contributed to the company's headwinds as well for 2019. For one, Anthem is moving faster in setting up its own PBM, IngenioRx, in collaboration with CVS. CVS said that the accelerated timeline will cost it more money this year. Another insurer, Centene, is moving its business away from CVS and over to RxAdvance, a PBM it's invested in.

CVS's long-term-care pharmacy business, Omnicare, is facing challenges of its own. CVS acquired the business in 2015, and has been having trouble growing the business as long-term care facilities it works with have faced lower occupancy and financial instability, leading to bankruptcy.

Longer term, owning a health plan is a strategy to mitigate these headwinds. But getting to that point could lead to a bumpy few years that aren't the immediate success Wall Street might have been looking for. 

Merlo outlined the health insurer's plans to overcome the headwinds, including cost-cutting and a new strategy for the pharmacy-benefits business. But acknowledged that the strategy may take some time to pull off. 

"We understand acutely the importance of balancing near-term execution with longer-term vision, and we are confident that these actions will position us well in 2020 and beyond," he said. "We view 2019 as a bridge to the future."

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AI IN BANKING AND PAYMENTS: How artificial intelligence can cut costs, build loyalty, and enhance security across financial services

Wed, 02/20/2019 - 2:07pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here

Artificial intelligence (AI) is one of the most commonly referenced terms by financial institutions (FIs) and payments firms when describing their vision for the future of financial services. 

AI can be applied in almost every area of financial services, but the combination of its potential and complexity has made AI a buzzword, and led to its inclusion in many descriptions of new software, solutions, and systems.

This report from Business Insider Intelligence, Business Insider's premium research service, cuts through the hype to offer an overview of different types of AI, and where they have potential applications within banking and payments. It also emphasizes which applications are most mature, provides recommendations of how FIs should approach using the technology, and offers examples of where FIs and payments firms are already leveraging AI. The report draws on executive interviews Business Insider Intelligence conducted with leading financial services providers, such as Bank of America, Capital One, and Mastercard, as well as top AI vendors like Feedzai, Expert System, and Kasisto.

Here are some of the key takeaways:

  • AI, or technologies that simulate human intelligence, is a trending topic in banking and payments circles. It comes in many different forms, and is lauded by many CEOs, CTOs, and strategy teams as their saving grace in a rapidly changing financial ecosystem.
  • Banks are using AI on the front end to secure customer identities, mimic bank employees, deepen digital interactions, and engage customers across channels.
  • Banks are also using AI on the back end to aid employees, automate processes, and preempt problems.
  • In payments, AI is being used in fraud prevention and detection, anti-money laundering (AML), and to grow conversational payments volume.

 In full, the report:

  • Offers an overview of different types of AI and their applications in payments and banking. 
  • Highlights which of these applications are most mature.
  • Offers examples where FIs and payments firms are already using the technology. 
  • Provides descriptions of vendors of different AI-based solutions that FIs may want to consider using.
  • Gives recommendations of how FIs and payments firms should approach using the technology.
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

Purchase & download the full report from our research store

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Zara is part of the biggest fashion company in the world. Meet the other brands it owns.

Wed, 02/20/2019 - 1:19pm  |  Clusterstock

  • Zara is one of the best-known global fashion brands, with more than 2,000 stores around the world. The chain is owned by Inditex, a Spanish retail conglomerate that operates seven other brands. 
  • One of its teen-focused brands, Pull&Bear, launched online in the US this month. 
  • Find out more about these trendy brands below. 

Zara has become one of the best-known and most successful fashion brands in the world. However, US consumers tend to know little about not only the parent company driving its success but also its sister brands around the world. 

Since Zara's billionaire founder Amancio Ortega opened the first Zara store in northern Spain in 1975, it has grown to become an enormous, over 2,000-store chain, with a presence in 96 countries around the world. 

In that time, Ortega has also grown his business by acquiring and launching other fashion brands, which now fall under the umbrella of Inditex. Inditex is considered the largest fashion retailer on the planet, turning out more than $30 billion in sales in 2017.

While many of these other Inditex brands do not currently have a presence in the United States, they are found in hundreds of countries around the world and make up a mammoth combined store count of 7,442 locations. 

One of its teen-focused brands, Pull&Bear, launched online in the US this month.

Find about more about these brands below:

SEE ALSO: Zara has a fleet of secret stores where it masters its shop design and plots how to get you to spend money


Bershka is the second-largest chain by store count in Inditex's entire operation. It has over 1,000 stores in 70 markets, and its sales represent 9% of the total revenue for the whole group.

This low-cost brand is targeted at younger male and female shoppers. 

In October 2017, it opened its first store in the US, a pop-up in New York's Soho neighborhood. 

Massimo Dutti

Massimo Dutti was originally a men's fashion label that was acquired by Inditex in 1991. Several years later, it added women's wear to its offering, and in 2003, kids also joined. 

This is Inditex's higher-end label, and it's targeted at an older customer. Prices are higher than at Zara, and the focus here is less on staying on trend but rather on creating more classic, timeless styles. 

It currently has 762 stores around the world. 


Oysho doesn't currently have a store presence in the US, and much to the annoyance of some shoppers here, you are unable to order items online and have them delivered to a US address. 

Founded in 2001, Oysho specializes in women's wear, including lingerie, nightwear, swimwear, and athletics wear. 

It has 666 stores in 65 markets around the world. 

See the rest of the story at Business Insider

HSBC keeps pounding the table on Apple's slowdown in China (AAPL)

Wed, 02/20/2019 - 12:50pm  |  Clusterstock

  • Apple's slowdown in China won't abate anytime soon, HSBC told clients this week.
  • The firm's analysts turned "neutral" on the stock in early December — long after many on Wall Street grew cautious, but prior to Apple's iPhone warning in January.
  • The bank's latest survey of wealthy Chinese consumers reflected a shift away from Apple.
  • Watch Apple trade live.

Analysts at HSBC just issued their latest warning on Apple, with weakness in China and changing consumer behavior in the region at the heart of their concerns.

The firm's survey of affluent Chinese consumers reflects "clear evidence" of a shift away from Apple and toward competitors like Huawei and Samsung. 

The results led HSBC to write its third cautious Apple report in as many months, and caused the bank's analysts to slash their 2019 earnings-per-share estimates for the tech giant from $12.67 to $12.19. 

"While we see reasons for Apple continuing to compound in the US, we believe that emerging markets will remain a question mark unless there is a sizeable shift in strategy and we also believe that Europe is at risk of slippage in terms of market share as more value for money propositions, notably from Chinese players, gain in relevance," analysts led by Erwan Rambourg told clients Tuesday.

Respondents who already owned iPhones were relatively less likely to choose Apple as their next smartphone brand. Additionally, Huawei was the most popular choice as to which smartphone brand respondents would buy next. 

HSBC reiterated its "hold" rating and $160 price target — 7.5% below where shares were trading Wednesday — and said Apple's healthy cash flow had kept it from turning completely bearish just yet.

Elsewhere in the survey, Chinese consumers showed little appetite for smartphones priced at more than $1,200, and said they may be more inclined to upgrade their smartphone faster with improvements to memory and battery life.

Read more: Apple's iPhone sales in China collapsed last quarter, and it's because they cost too much

HSBC initially lowered its Apple recommendation from "buy" to "hold" and cut its price target back in early December.

That was prior to the iPhone giant's pre-announcement in early January that its revenue would come in lower than previously forecasted due mostly to iPhone weakness in Greater China — but after other Wall Street firms and suppliers had sounded the alarm on an iPhone slowdown. Goldman Sachs, for example, slashed its price target three times in November alone. 

Read more: Apple sounds the alarm on a slowdown in China

Then, last month, Rambourg and his team slashed their price target again, warning of persistent economic weakness in China.

Apple reported quarterly earnings results last month that were in line with what Wall Street analysts had expected, even coming in slightly better than feared. After all, the tech company had already lowered its expectations, setting up for an earnings report that featured no surprises. Still, analysts advised clients that challenges like slowing iPhone sales and weakness in China weren't going away.

In HSBC's Tuesday note, analysts said China still remains one of the most profitable regions for Apple "despite volatile trends over the last three years," and noted the country represented nearly 20% of the company's total revenue in 2018. 

Although Apple shares are trading 26% below their all-time high last October, they've risen 18% so far this year.

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