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I use 25 credit cards to travel more than 6 months a year. Here's the best advice I can give you to build credit in your 20s.

Sat, 07/06/2019 - 9:30am  |  Clusterstock

I got my first credit card when I was 18 years old, because I knew that building my credit history was important. This was before I had even heard of getting a credit card in order to earn points and miles.

Around two years later when I first heard about points and miles, I had a short but solid credit history that allowed me to start getting better credit cards. Fast forward seven more years and I have a credit history that is longer and more solid than many of my peers. I also took a number of non-credit card related steps that help me earn miles and points even faster, and were a great option when my credit history was still shorter. 

Now, I have 25 cards in total and  I travel six to eight months of the year with a good portion of travel booked on rewards.

Here are the steps I followed to make that a possibility. 

First things first: Pay your bills every month

The most effective strategies for earning points and miles are all linked to credit cards — but it only makes sense if you're paying off your card every month. There's no credit card that rewards you more than you'll pay in interest by carrying a balance, so it's critically important to not spend more than you can afford, to pay by the due date, and to have a plan to do so even before you apply for your first card.

Open accounts with various loyalty programs, even if you're not sure you'll use them

One great place to start is to open loyalty accounts with airlines and hotels. This will make sure you have an account ready to go if you want to transfer points from a flexible points program, or if you later open a credit card linked to that loyalty program. 

It also makes sure you won't run into any restrictions on new accounts. For example, you can't transfer Avios points between British Airways and Iberia accounts unless both are at least 90 days old, and if you want to transfer points between two people's Marriott accounts, both have to be at least 60 days old.

Having an account open lets you receive targeted promotions, and sets you up to earn bonus miles or points through partnerships. For example, you can earn Delta miles for Airbnb stays, and earn Delta, Hilton, and Jetblue points for rides taken with Lyft.

Get your credit report started as an authorized user

See if a parent or guardian is willing to add you as an "authorized user" on one of their credit cards — that will make the account show up on your credit report, which makes lenders likely to see you as a lower risk when you apply for cards of your own.

Make sure you trust your credit in their hands though, since if they fail to pay on time or default on a balance, the negative marks can also hurt your credit history.

This is a step that I didn't take until much later — just this year, in fact! I was able to have my parents add me to a card they have had since before I was born and my average age of accounts (and therefore my credit score) increased by quite a bit. 

If you can't get added as an authorized user, consider a secured credit card

With a secured credit card, you put down a deposit (say $500) and then get a credit card with a credit limit equal to the deposit. Using the card and paying it off every month demonstrates that you can handle a credit card responsibly, and once the bank feels confident, you can upgrade to a regular credit card and get your deposit back. 

The Petal Card offers a $500 to $10,000 credit limit, 1% cash back on purchases (increasing to 1.5% cash back after 12 on-time payments), and no late fees, foreign transaction fees, or no annual fees., or you can check with your credit union or bank to see if they offer a secured card option.

Start with entry-level, no-annual-fee credit cards 

Once you have a bit of credit history, you can apply for your first full-fledged credit card — but you probably don't want to start with a flashy high-end card like the Chase Sapphire Reserve or the Platinum Card® from American Express. These cards are targeted to high spenders with high credit scores and excellent credit histories, so you're likely to get denied.

Instead, start with a basic card like the Chase Freedom Unlimited: With that card, you'll earn 3% cash back for the first year (up to $20,000 in purchases) and 1.5% thereafter, and there's no annual fee. 

Perhaps the best part of this card is that while it's marketed as a cash back card, it's actually part of the Ultimate Rewards family — so that 3% cash back is really 3x Ultimate Rewards points. If you save up your balance and later open a full-fledged Ultimate Rewards card like the Chase Sapphire Preferred Card or Chase Sapphire Reserve, you can pool those points from the Freedom Unlimited with your new card and transfer them to airline or hotel loyalty programs.

Set up automatic payments

Virtually all credit cards allow you to arrange for payments to be automatically withdrawn from your bank account on the due date — as long as you'll have enough money in your account, this makes sure you won't have to worry about late fees or interest charges.

If you're worried about overdrawing your checking account, at least set up automatic payments for the minimum amount due to avoid late fees, but make sure you still make payments every month to cover the remaining balance — see Rule No. 1 above.

Be mindful of the Chase 5/24 rule

If your goal is to earn points and miles toward travel, don't go applying for a bunch of cards right away: Chase's 5/24 rule means many of its most rewarding cards aren't available if you've opened five or more personal credit cards with any bank in the past 24 months. This includes all of the cards that earn Ultimate Rewards points, as well as United Airlines, Southwest Airlines, and Marriott credit cards. 

Pro tip: Keep track of your credit cards so you know how many credit cards you've opened and to make sure you don't miss out on any signup or welcome bonuses: Using a tool like Travel Freely can help.

Use your miles and points — they never gain value over time

Miles and points are a terrible investment — they'll almost always lose value, as airlines and hotels make changes to eliminate the best redemptions, make flights and hotels more expensive, and move towards "dynamic pricing" instead of predictable set pricing for redemptions.

So while it may be worth it to save up for a little bit so you can get an awesome award, hoarding your points over time can only end in disappointment. You're doing this to be able to travel — so get out there and use your points!

Find the best cards to help you build credit and start earning rewards with CreditCards.com's free CardMatch tool »

Join the conversation about this story »

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The 25 best states to live for 20-somethings, where jobs are booming and rent is affordable

Sat, 07/06/2019 - 8:49am  |  Clusterstock

It can be daunting for a young 20-something to transition into adulthood, but living in the right location can ease the process.

MoneyRates.com recently ranked the best states for young millennials to live in, including Washington, DC. It grouped eight sets of data from the Bureau of Labor Statistics and Census Bureau into three major categories — job market, affordability and access, and lifestyle, awarding each state an average ranking in each category.

Turns out, Midwestern states like North Dakota and Iowa have the most factors that appeal to millennials. Nebraska, for example, has a higher proportion of young adults than places like New York and California, according to the report.

Below, see the ranking of best places to live for young 20-somethings. We included the unemployment rate for those ages 20 to 24, the median rent, and the number of bars, pubs, and nightclubs per capita.

SEE ALSO: The top 18 states rich millennials are moving to

NOW READ: Millennials are flooding into these 25 US cities to find good jobs and earn more money

25. Florida — Tampa, Miami, and Jacksonville, have become hubs for millennials.

Unemployment rate: 6.8%

Median rent: $1,128

Number of bars, pubs, and nightclubs per capita: 1,795

Source10 NewsCurbedJacksonville.com



24. Texas — Dallas-Fort Worth, Austin, and Houston appeal to young adults looking to work for small businesses.

Unemployment rate: 6.7%

Median rent: $987

Number of bars, pubs, and nightclubs per capita: 2,681

SourceChron



23. Indiana — Indianapolis thrives on a growing tech scene and investments in public infrastructure.

Unemployment rate: 7%

Median rent: $793

Number of bars, pubs, and nightclubs per capita: 971

Source: Curbed



22. Virginia — Virginia Beach and Richmond have both seen an uptick in millennial migration.

Unemployment rate: 5.4%

Median rent: $1,179

Number of bars, pubs, and nightclubs per capita: 165

Source: Time



21. North Carolina — Raleigh and Charlotte have plentiful job opportunities and high pay.

Unemployment rate: 5.6%

Median rent: $861

Number of bars, pubs, and nightclubs per capita: 680

SourceThe News & Observer



20. Alaska — Alaska has nine military bases, attracting young-adult soldiers.

Unemployment rate: 11.8

Median rent: 1,201

Number of bars, pubs, and nightclubs per capita: 157

Source: Mic



19. Rhode Island — Rhode Island has jobs, culture, and numerous James Beard restaurants.

Unemployment rate: 6.5%

Median rent: 941

Number of bars, pubs, and nightclubs per capita: 239

Source: Inc



18. Oregon — Portland has many neighborhoods, a relatively affordable cost of living, and a booming economy.

Unemployment rate: 6.4%

Median rent: $1,079

Number of bars, pubs, and nightclubs per capita: 933

SourceBusiness Insider



17. Colorado — Millennials have been flocking to Denver for its high-paying jobs, reasonable commutes, weather, and activities.

Unemployment rate: 4.1%

Median rent: $1,240

Number of bars, pubs, and nightclubs per capita: 762

SourceDenver PostSmartAsset



16. Massachusetts — Tech and life sciences fuel much of the economy.

Unemployment rate: 3.7%

Median rent: $1,208

Number of bars, pubs, and nightclubs per capita: 754

Source: Curbed



15. Vermont — Vermont recently offered Americans up to $10,000 to move to the state and work remotely.

Unemployment rate: 4.6%

Median rent: 950

Number of bars, pubs, and nightclubs per capita: 104

SourceCNN



14. Utah — Millennials are migrating to Salt Lake City to buy homes.

Unemployment rate: 4.9%

Median rent: $986

Number of bars, pubs, and nightclubs per capita: 168

Source: CNBC



13. Oklahoma — Oklahoma City is a boomtown for millennials, partly because of a high increase in wages.

Unemployment rate: 6%

Median rent: $780

Number of bars, pubs, and nightclubs per capita: 402

SourceBusiness Insider



12. Nevada — Las Vegas has cultural attractions, low taxes, and natural beauty.

Unemployment rate: 5.5%

Median rent: $1,051

Number of bars, pubs, and nightclubs per capita: 657

Source: SmartAsset



11. Missouri — St. Louis boasts affordable homes for millennials.

Unemployment rate: 6.2%

Median rent: $800

Number of bars, pubs, and nightclubs per capita: 634

Source: Riverfront Times



T10. Minnesota — Minnesota has a lot to offer active young adults, from biking trails to lakes.

Unemployment rate: 4.7%

Median rent: $939

Number of bars, pubs, and nightclubs per capita: 946

Source: SmartAsset



T10. Idaho — Idaho Falls is attracting millennials with its restaurant scene and recreational activities.

Unemployment rate: 3.5%

Median rent: $822

Number of bars, pubs, and nightclubs per capita: 335

SourceLocal News 8



8. South Dakota — Sioux Falls is a top city for young professionals.

Unemployment rate: 7.2

Median rent: $722

Number of bars, pubs, and nightclubs per capita: 325

Source: Business Insider



T7. Wisconsin — Madison is the top city in the US where women are most successful.

Unemployment rate: 4.8%

Median rent: $819

Number of bars, pubs, and nightclubs per capita: $2,785

Source: SmartAsset



T7. Kansas — Wichita has been undergoing a downtown renovation over the past decade.

Unemployment rate: 5.9%

Median rent: $815

Number of bars, pubs, and nightclubs per capita: 335

SourceSmart Growth AmericaThe Wichita Eagle



5. Wyoming — Wyoming's economy thrives on the conservation and extraction industries.

Unemployment rate: 6.7%

Median rent: $832

Number of bars, pubs, and nightclubs per capita: 163

Source: SmartAsset



4. Montana — Montana offers plenty of opportunities for young entrepreneurs as well as proximity to nature.

Unemployment rate: 5.5%

Median rent: $759

Number of bars, pubs, and nightclubs per capita: 547

SourceABC Fox Montana



3. Iowa — Iowa has one of the largest proportions of young adults in its population.

Unemployment rate: 5%

Median rent: $760

Number of bars, pubs, and nightclubs per capita: 944

Source: Money Rates



2. Nebraska — Nebraska has a higher proportion of young adults than places like New York and California.

Unemployment rate: 4.6%

Median rent: $801

Number of bars, pubs, and nightclubs per capita: 551

Source: Money Rates



1. North Dakota — North Dakota is a magnet for young adults, thanks to its business and pleasure offerings.

Unemployment rate: 3.6%

Median rent: $785

Number of bars, pubs, and nightclubs per capita: 419



Deutsche Bank is about to undergo its biggest restructuring ever. Here's what we know about what's going on at the German bank.

Sat, 07/06/2019 - 3:00am  |  Clusterstock

  • Deutsche Bank CEO Christian Sewing is expected to announce a sweeping overhaul of Germany's biggest bank after a supervisory board meeting on Sunday.
  • The restructuring will reportedly focus on its US business and could include the cutting of 15,000 to 20,000 jobs.
  • We've outlined what we know about what's going on at Deutsche Bank below.
  • Watch Deutsche Bank trade live.

Deutsche Bank CEO Christian Sewing is expected to announce a sweeping overhaul of Germany's biggest bank after a supervisory board meeting on Sunday. The restructuring will reportedly focus on its US business and could include the cutting of 15,000 to 20,000 jobs, or one in six of all full-time employees.

Here's what we know about Deutsche Bank's restructuring:

  • Sewing's restructuring plan is expected to be the largest in the bank's history.
  • It will reportedly focus on deep cuts to its US operations, which employ more than 9,000 people.
  • The job losses are likely to be concentrated in the equities and derivatives trading units.
  • US boss Tom Patrick and other senior executives could leave the bank.
  • The overhaul could cost the bank as much as 5 billion euros in severance pay and other expenses.
  • Garth Ritchie, head of Deutsche Bank's investment banking unit, has agreed to step down.
  • Deutsche Bank could create a separate "corporate bank" that would bring together units such as its transaction bank, which provides everyday financial services such as international payments to companies.
  • It may also create a "bad bank" to hold billions' worth of non-core assets such as long-dated derivatives.

Here's why the restructuring is happening:

SEE ALSO: A day in the life of a Deutsche Bank managing director, who wakes up at 5:00 a.m., spends 10 days of the month traveling, and works out twice a day even while on business trips

Join the conversation about this story »

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YouTube has lately struggled to protect its vulnerable creators. Analysts say the platform may lack a business incentive to do anything about it.

Fri, 07/05/2019 - 6:13pm  |  Clusterstock

  • YouTube has been struggling to monitor the hate speech, child exploitation, and other incidents affecting the platform's most vulnerable creators and users.
  • But some analysts say YouTube may not have much incentive to take drastic measures to fix the problem because the issues have failed to meaningfully affect the platform's advertisers and revenue.
  • YouTube would likely take sweeping action only in a situation like 2017's Adpocalypse, when advertisers pulled their ads from the platform en masse and cost the platform an estimated $750 million, Josh Cohen, the cofounder of the online-video-industry publication Tubefilter, said.
  • Visit Business Insider's homepage for more stories.

These past few months have been nothing short of hellish and eventful for YouTube.

The video-streaming platform has faced much scrutiny as it works to wade through a deluge of scandals, including concerns over child exploitation, the spreading of dangerous conspiracy theories, and the company's policies regarding the LGBTQ community.

But YouTube has been relatively conservative in its reaction to the most recent controversies. The company's incentive to act with drastic changes is low, analysts told Business Insider.

Actions that YouTube has taken have been incremental and reactionary: The website said it would take down white-supremacist videos already on the site, although hate speech and hateful content has flourished for long enough to radicalize users, according to research by Data & Society. YouTube also declined to punish a conservative YouTuber who used racial and homophobic slurs to refer to a Vox journalist.

Despite much criticism and demand from creators, users, and even Google employees to do something, YouTube's most important clients — advertisers — have stayed relatively quiet.

With more than $3 billion in revenue each year just from ads on its platform, YouTube's cost-benefit formula is simple, analysts say: As long as advertisers are still putting their ads on YouTube, there's little reason to make sweeping changes.

"Companies have to weigh the question, 'How much advertising will I lose if I remove this content from my platform?'" the Forrester analyst Renee Murphy told Business Insider. "Users are the product, not the customer."

YouTube has previously been forced to make major changes because of advertiser backlash. In 2017, hundreds of brands pulled their advertising from YouTube after The Times reported their ads were appearing next to extremist videos. Dubbed the "YouTube Adpocalypse," the mass boycott cost YouTube's parent company, Google, an estimated $750 million, a note from analysts at Nomura Instinet said at the time.

YouTube responded with major changes: It gave advertisers more say over the content their ads appear next to and revamped YouTube's Partner Program to exert more control over who and what can be monetized on the platform.

The same pattern happened in February after a YouTuber helped expose a "soft-core pedophile ring" found on the video-sharing platform. After brands like Disney, Nestlé, and the Fortnite-owner Epic Games removed their ads, YouTube announced it would disable comments on most videos featuring kids.

But in more recent months, as further issues and concerns over the policing of its platform have arisen, there hasn't been any exodus of YouTube's most important and biggest advertisers off the platform. YouTube has learned from its past incidents to be "more quick to act and forthright in their communication," Josh Cohen, the cofounder of online-video-industry publication Tubefilter, said.

"From the advertiser perspective, YouTube has achieved all of its goals," Cohen told Business Insider. "None of this is ideal, but I don't think it's having a massive effect on YouTube's business."

Google, which owns YouTube, did not respond to Business Insider's request for comment. 

Although advertisers have yet to pick up and move their business away from YouTube to the extent of what we saw in 2017, we could see a larger shift away from the platform in the next two years for brands that run advertisements next to children's content. A recent PwC report predicts that by 2021, children's advertisers could abandon YouTube, which is under investigation on suspicion that it violated children's privacy laws, in favor of video platforms that are compliant to stricter upcoming digital-privacy laws.

SEE ALSO: How to use TikTok, the short-form video app Gen Z loves and that's ushering in a new era of influencers

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The billionaire cofounder of Home Depot plans on donating up to 90% of his $5.9 billion fortune, and Trump's 2020 campaign will be one of the beneficiaries

Fri, 07/05/2019 - 6:13pm  |  Clusterstock

Home Depot cofounder Bernie Marcus has a plan for how to spend his fortune, he told The Atlanta Journal-Constitution. After the 90-year-old billionaire dies, 80 to 90% of his total wealth will go to his foundation to build centers to help veterans with disabilities around the country, fund medical research, and provide care for children with autism.

Aside from philanthropy, Marcus is also a major political donor: He supported, and intends to again support, Donald Trump's presidential bid.

The Atlanta-based billionaire has a net worth of $5.9 billion, down from its peak of $10 billion in September 2018, according to the Bloomberg Billionaires Index.

Marcus and his wife, Billi, signed The Giving Pledge in 2010. He has already donated $2 billion to more than 300 charities, according to The Washington Post.

According to The Atlanta Journal-Constitution, Marcus refused to name the exact sum he would donate, but the newspaper estimated that Marcus could give away a total of $6 billion to charity in his lifetime based on his commitment to donate 90% of his wealth when he signed The Giving Pledge.

Donation cause No. 1: Trump's campaign

Marcus was one of Trump's largest donors in 2016, giving $7 million to Trump's campaign through outside groups, according to the Center for Responsive Politics. Marcus said he planned to financially support the president in the 2020 election, according to The Atlanta Journal-Constitution.

Read more: Less than 1% of the world's billionaires donate to housing and shelter charities. Here are the top 10 causes the world's richest people give their money to

Donation cause No. 2: philanthropy

Marcus is a noted philanthropist in Georgia, having donated $250 million to fund the construction of the Georgia Aquarium, which opened in 2005. Marcus has also made contributions to an autism center and Grady Memorial Hospital in Atlanta, according to The Atlanta Journal-Constitution.

Healthcare and medical research were the fourth most common cause that billionaires donated to in 2018, Business Insider previously reported. Marcus' political donations are less common among billionaires: only 12.4% donated to public-affairs causes. Education charities are the most popular, receiving donations from 79.5% of billionaires.

"I've got all the houses I need," Marcus told The Atlanta Journal-Constitution. "I live very well. My kids are taken care of. Everything I live for now is finding the right things to put my money into and that can give me a rate of return in emotion and doing good things for this world."

Marcus cofounded Home Depot in 1978 with Arthur Blank after they were fired from their jobs at another hardware store, according to Forbes. Marcus was the company's first CEO and retired in 2002. Bloomberg reported that the chain of home-improvement superstores now has more than 2,200 locations in North America and made $108.2 billion in revenue during the 2018 fiscal year.

SEE ALSO: A former gym teacher who built a hotel empire just became North Dakota's first billionaire, and his take on money lines up with what many of the world's richest self-made people say

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Lee Iacocca, the auto-industry titan who saved Chrysler from bankruptcy and launched the Ford Mustang, has died. Here's a look at his incredible life and career.

Fri, 07/05/2019 - 6:11pm  |  Clusterstock

  • Lee Iacocca, the auto-industry titan who served as CEO of Chrysler and president of Ford during a nearly 50-year career in the business, died at his Southern California home on July 2.
  • Iacocca was one of the most colorful and most celebrated car-company executives. Among other things, he is credited with saving Chrysler from bankruptcy in the 1980s.
  • Here's a look at Iacocca's storied life and career.
  • Visit Business Insider's homepage for more stories.
1924

Lido Anthony "Lee" Iacocca is born in Allentown, Pennsylvania, to Italian immigrant parents who operate Yocco's Hot Dogs.

Source: Lehigh Valley Live



1945

Iacocca graduates from Lehigh University with a degree in industrial engineering. He receives his master's degree in engineering from Princeton one year later, in 1946.

Source: The New York Times



1946

Ford Motor Co. hires Iacocca as an engineer, but he soon makes the transition into sales.

Source: The Detroit News



1956

Iacocca marries Mary McCleary, a receptionist at a Ford Motor Co. office in Philadelphia.

Source: The Washington Post



1964

Iacocca is credited with bringing the Ford Mustang onto the market. He lands several promotions at Ford after this, and within two years of the Mustang's launch, the one-millionth example of the car rolls off the assembly line.

Source: Barron's and Automotive News Europe



1970

Iacocca becomes the president of Ford. He introduces the Ford Mustang II three years later, in 1973.



1978

Henry Ford II fires Iacocca, but he is hired by Chrysler four months later. Chrysler has again been on the rocks because of failed expansions, debt, skyrocketing gas prices, falling sales, and increasing international competition.

Source: NBC News



1979

Iacocca becomes Chrysler's CEO.



1980

President Jimmy Carter signs the Chrysler Corp. Loan Guarantee Act of 1979, which gives Chrysler $1.5 billion in federal loans after Iacocca's petitioning of the US government for assistance. The money helps save the struggling automaker from bankruptcy.

Iacocca also sets about cutting production costs, revamping operations, and creating a stronger advertising campaign that attracted buyers around the US. The company repays its government loan seven years early and, by 1984, pulls in more than $2.4 billion in profit, solidifying Iacocca's fame as an intrepid automotive executive.

Source: Bloomberg



1983

Iacocca's first wife, McCleary, dies from complications of diabetes. Iacocca later establishes the Iacocca Family Foundation to fund diabetes research.

Source: The New York Times



1983

Chrysler creates the revolutionary minivan, which lays the groundwork for the SUV.

Source: The Washington Post



1992

Iacocca retires from Chrysler and dedicates more time to his foundation. He then marries Peggy Johnson before divorcing her a year later and marrying Darrien Earle.

Source: Los Angeles Times Archives



1996

Iacocca appears on the cover of Fortune magazine. In an extensive interview with the publication, he declares he has "flunked retirement."

Source: Fortune



1997

Iacocca revives his career, founding EV Global Motors in 1997. "I plan to provide a range of new and exciting electric vehicles that are quiet, clean, safe, and fun," he tells The Washington Post's Warren Brown.

Source: The Washington Post



2007

The automotive legend writes his third book, "Where Have All the Leaders Gone?"



2019

Lee Iacocca dies from complications of Parkinson's Disease on July 2 at the age of 94.



Stocks slide after strong jobs report diminishes hopes for Fed rate cut this month

Fri, 07/05/2019 - 6:07pm  |  Clusterstock

US stocks slipped from record levels on Friday after a stronger-than-expected jobs report dimmed expectations that the Federal Reserve will cut interest rates later this month. 

All the three major indices had rallied to record highs during a shortened trading session Wednesday ahead of Independence Day.

Here's how they closed on Friday: 

  • The S&P 500 fell 0.2% to 2,990.41
  • The Dow Jones Industrial Average fell 0.2% to 26,922.12
  • The Nasdaq Composite fell 0.1% to 8,161.79

A report from the Labor Department showed that employers added 224,000 nonfarm payrolls in June, rebounding from an unexpectedly weak showing in May. 

The robust gains prompted traders to review their expectation that the Fed will cut interest rates to support the economy. According to the CME's FedWatch tool, the market still priced in a 100% probability of a cut in July. But the odds of a 50-basis-point reduction fell while those of a cut by 25 basis points rose.

"Fed watchers hoping for evidence for deeper rate cuts will likely be disappointed by this report which shows a relatively healthy labor market," said Daniel Zhao, a senior economist at Glassdoor, in a note Friday.

Within the S&P 500, here were the biggest losers:

Shares of Electronic Arts declined for a second-straight session as investors doubted the competitiveness of the second-season launch of "Apex Legends."

IPG Photonics pared gains after having its best day in four months on Monday.

And here were the biggest gainers:

Jefferies gained after the company's fiscal-second-quarter earnings results showed a jump in trading revenue.

Nordstrom rallied as data from Prodco Analytics showed that traffic declines at apparel retailers moderated in the week ahead of Independence Day.

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

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The Disney heiress who has demanded a wealth tax on the ultrarich and thinks private jets should be outlawed finally sets the record straight on her personal net worth

Fri, 07/05/2019 - 3:51pm  |  Clusterstock

Abigail Disney is an outspoken critic of the wealth divide in America — but, before a June 5 interview with the Financial Times, she had declined to share exactly how wealthy she is.

"I'm going to just say it," Disney told the Financial Times. "I'm roughly around $120m and I have been for some time now."

Disney, the granddaughter of The Walt Disney Company cofounder Roy Disney, said she found it easier to talk about sex than money.

Despite this, the 59-year-old heiress does not seem to mind speaking out about wealth inequality in the US. She criticized the salary of Disney CEO Bob Iger and defended Meryl Streep after she called Walt Disney a "bigot" in 2014, according to CNN Business

In June, she was among a group of 19 ultrawealthy Americans who signed an open letter to the 2020 presidential candidates expressing the group's support for a moderate wealth tax on the 1%. The wealth tax, the letter's signees said, would generate revenue that could pay for initiatives to slow climate change, fuel economic growth, and fund public healthcare. George Soros and members of the Pritzker and Gund families also signed.

Read more: Wealth tax explainer: Why Elizabeth Warren and billionaires like George Soros alike are calling for a specialized tax on the ultra-wealthy

Disney said in March that she would outlaw private jets if she could because they shield billionaires from discomfort, according to The Cut.

"[Income inequality] is the game changer that we're living in right now," Disney said on "CNN Tonight" on June 24. "We're creating a superclass so far above the vast majority of people that they don't share the same planet anymore."

Disney has given away $70 million of her personal fortune over the past 30 years.

"The internet says I have half a billion dollars and I might have something close to that if I'd been investing aggressively," Disney said, according to the Financial Times.

SEE ALSO: Meet the 18 ultra-wealthy Americans begging for a wealth tax, from a Facebook cofounder to a Disney heiress

DON'T MISS: A billionaire who built 2 Fortune 500 companies just joined the chorus of ultra-wealthy Americans begging to be taxed more

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Electronic Arts slides as 'Apex Legends' season 2 fails to convince investors that it can replicate Fortnite’s massive success (EA)

Fri, 07/05/2019 - 2:58pm  |  Clusterstock

  • Shares of Electronic Arts, the creator of "Apex Legends," dropped by as much as 5.6% on Friday after the release of the second season of the Battle Royale game.
  • Investors, gamers, and analysts were all looking forward to the update to see whether Apex Legends could legitimately compete with Fortnite, a cross-platform Battle Royale game with about 250 million players. 
  • The season-two update included new weapons, skins, a character named Wattson, and changes to the map. 
  • Watch Electronic Arts trade live. 
  • Visits the Markets Insider homepage for more stories.

Electronic Art's Fortnite competitor just received a much-anticipated update that has left investors unimpressed. 

Apex Legends, a free-to-play Battle Royale-style game that garnered more than 50 million players in its first month across Xbox One, PlayStation 4, and PC, introduced its second season on Tuesday with changes to its map, characters, and weapons

But EA shares fell by as much as 5.6% on Friday, the most in five months, after the update failed to ease concerns over "Apex Legends'" potential to compete with Fortnite, a Battle Royale game from Epic Games with close to 250 million users worldwide. EA was the worst-performing stock on the S&P 500 on Friday. 

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According to Bloomberg, a video also surfaced on Reddit identifying a flaw in the newly released character that can reveal the exact location of the player when using a new perimeter security ability. 

Games like Fortnite and Apex Legends are free to play but make money by selling additional in-game items like character and weapon skins. Users can also pay $10 for the Apex Legends Season Two Battle Pass which includes special items, skins, and a new character named Wattson. 

The second-season update was hotly anticipated by gamers and analysts alike. Bank of Montreal analyst Gerrick L. Johnson increased his price target for EA from $116 to $130 on July 2 based on positive reviews of previews for the season-two update. 

EA is up as much as 16.5% so far this year. 

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

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Dynatrace, a Cisco and Broadcom rival, is going public in an IPO that could raise as much as $300 million

Fri, 07/05/2019 - 2:49pm  |  Clusterstock

  • Dynatrace filed papers for an IPO on Friday. The company aims to raise $300 million with Goldman Sachs, JP Morgan and Citigroup as lead underwriters.
  • Dynatrace helps businesses monitor the performance of software applications. It competes with Cisco and Broadcom in that market.
  • Visit Business Insider's homepage for more stories

Dynatrace, which helps businesses track the performance of their software applications, filed to go public on Friday.

Dynatrace is looking to raise $300 million in an initial public offering underwritten led by Goldman Sachs, JP Morgan and Citi, according to a filing with the Securities and Exchange Commission.

The Waltham, Massachusetts-based company said it plans to list on the New York Stock Exchange under the ticker symbol "DT."

Dynatrace, which was founded in 2005, offers software that detect and diagnose issues in business applications. Dynatrace is one of the leading players in this market, where it competes with Cisco and Broadcom, according to analyst group Gartner.

Dynatrace posted revenue of $431 million in its 2019 fiscal year which ended March 31, up 8% from the previous year, according to the filing. The company reported a net loss of $116 million in FY 19, compared to a profit of $9 million the previous year.

Last month, Dynatrace, which is led by CEO, John Van Siclen, was named the company with the best leadership team in the US, based on a survey by Comparably, a website that monitors workplace culture and compensation.

Got a tip about Dynatrace or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel. You can also contact Business Insider securely via SecureDrop.

 

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NOW WATCH: MacKenzie Bezos pledged to donate more than half of her life's fortune. Here's how she went from one of Amazon's first employees to an award-winning novelist.

Trump attacks Fed again, saying they don't know what they're doing and calling for rate cuts

Fri, 07/05/2019 - 2:31pm  |  Clusterstock

  • President Donald Trump criticized the Federal Reserve again on Friday, saying the central bank does not know what it is doing. 
  • If the Fed were to lower interest rates, the US "would be like a rocket ship," Trump told reporters. 
  • Trump has long argued that the Fed should lower borrowing costs to help the US economy grow. 
  • Read more on Markets Insider.

President Donald Trump's criticism of the Federal Reserve continues. 

After the Labor Department reported the US economy added 224,000 jobs in June, a number that Trump told reporters was "unexpectedly good," he said the central bank should cut interest rates. 

"We don't have a Fed that knows what they're doing, so it's one of those little things," Trump told reporters at the White House on Friday. He said that if the Fed did ease, it "would be like a rocket ship." 

Trump has made this argument before. He has long called for lower interest rates to help the US economy grow and compared the interest rates that have prevailed during his tenure with those President Barack Obama had.

"He paid close to zero interest rates," Trump said of Obama. "I'm paying real interest." 

Trump also said the economy is much better than it has ever been. The recovery from the Great Recession entered its 10th year this week, becoming the longest period of economic expansion in history.

For some, that's a sign that the Fed shouldn't play ball and capitulate to Wall Street's expectations of interest-rate cuts. The jobs added in June — the 105th straight month of gains — suggested that the US economy was running just fine and quelled fears that a disappointing jobs number in May was a sign that growth was beginning to slow. 

Still, it is likely that the Fed will soon begin to ease, potentially delivering a rate cut in July. The CME's FedWatch tool puts the probability of a rate cut this month at 100%. Federal Reserve Chairman Jerome Powell has signaled that he's open to rate cuts to protect the US economy amid trade uncertainties and threats to global growth. 

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Here's what it's like to watch New York's Fourth of July fireworks show from 7,000 feet in a private plane

Fri, 07/05/2019 - 2:30pm  |  Clusterstock

Millions of New Yorkers flocked to either side of the East River on Thursday for the annual Macy's Fourth of July fireworks show — but a few lucky New Yorkers got an especially unique view of the action.

During the half-hour fireworks spectacular, nearly a dozen private and sightseeing aircraft were seen circling and hovering above Brooklyn to watch the fireworks display. In addition to a few helicopters that operate tourist flights above the city, a small airplane spent the show circling off the southern tip of Manhattan.

Filip Wolak@filipwolak on Instagram — is a commercial and art photographer who also happens to be a private pilot. He and a friend, Krys Krudysz, took Filip's Cessna 172M Skyhawk, a four-seat single-engine propeller plane, out above the water to watch the fireworks on Thursday. As Krudysz took the controls, Wolak got to work with his camera and three different lenses.

"It was too dark for any zoom," he told Business Insider. "That made shooting a lot more difficult because the frame was actually achieved by the position of the plane."

He stayed slightly above 7,000 feet for the whole show to avoid Class B controlled airspace, in which he would have required a special permit and would have been required to stay in constant contact with air traffic control. At his flight level, he was well clear of any departing or approaching traffic from the nearby airports, and Kris was able to monitor the onboard radar for safety.

This was his first time photographing the fireworks from this height, and the results are stunning, eerie, and breathtaking. Read on to see the amazing photographs.

SEE ALSO: Delta says it will launch new perks for economy passengers on international flights, giving it an edge over United and American

Here they are — the Fourth of July fireworks.

Seeing them from 7,000 feet above is a totally different experience.

This shot was taken from right above the barges.

Four barges were arranged just south of the Brooklyn Bridge. The exact positioning of the barges changes each year based on weather and river currents.

Millions of people gathered to watch the fireworks this year from Manhattan and Brooklyn, according to WNBC.

The barges are synchronized to launch simultaneously.

You can see One World Trade Center through the smoke from the fireworks.

Here's a closer look of the gotham cityscape enveloped in colorful plumes emitted by the fireworks.

And here it is again, as the smoke cleared out.

As reported by WNBC, a record 70,000 aerial shells were used for this year's display.

According to AM New York, the first fireworks display took place in 1958.

One thing is for certain — there's nothing like celebrating the Fourth of July from above.

Uber has a new competitor in one of its most competitive overseas markets that's backed by Softbank, Hyundai and other big names (UBER)

Fri, 07/05/2019 - 2:17pm  |  Clusterstock

  • Ola, an Indian ride-hailing service, says its planning to launch in London this fall after receiving permission to operate. 
  • The company has investments from SoftBank, which also backed Uber, as well as automakers including Hyundai and Kia.
  • London has been a tricky market for Uber, where it was forced to stop giving rides for about a year by a court. 
  • Visit Business Insider's homepage for more stories.

Ola, a ride-hailing firm based in India, said Thursday that's its received a license to operate in London, one of the world's largest markets for app-based taxi companies.

The company is targeting a launch this September in the British capital city, a company spokesperson told Business Insider:

London is one of the world's most iconic cities and hosts a progressive mobility environment. We couldn't be more excited to bring Ola to London in the time ahead! We are looking forward to building world-class mobility offerings for London, by collaborating with drivers, riders, the government and local authorities. Londoners will hear more from us closer to our launch in the city, as we get ready to serve them.

Ola's been targeting London, where traditional taxi cab drivers are still angry as ever at the ride-hailing industry's effect on their business, since at least 2018. News of its license comes as Uber attempts to shore up its lead in many international markets where it has struggled.

In 2017, London officials revoked Uber's license to operate in the city because of instances where the company acted like it was 'above the law,' as a judge put it at the time. The company won back its right to operate in June 2018, but the court has an option to revisit that after a 15-month conditional period.   

Ola, meanwhile, is already operating in many cities throughout the UK, with a total of 110 cities total across four countries. The company has racked up a valuation of more than $5 billion, according to PitchBook data, with backers including Softbank (also an Uber investor), Hyundai, Kia, and more.

The fact that it's so easy for a fledgling company to begin providing app-based taxi rides is a risk for Uber, according to Wall Street analysts.

"We view barriers to entry as fairly low for major technology providers and auto manufacturers, posing the biggest threat for existing ridesharing providers," CFRA analyst Angelo Zino said in a recent note to clients. "Ridesharing companies will need to increasingly compete with certain non-ridesharing transportation-asa-service network companies and taxi companies as well as traditional automotive manufacturers, such as BMW and Tesla, which have entered or plan to enter market."

Other ride-hailing competitors in London include Gett, ViaVan, Addison Lee, and a handful of others.

SEE ALSO: Uber is slowly quitting developing markets in Asia — here's why India is probably next

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Amazon's stock price on its 25th anniversary shows the potential of investing early in game-changing companies that become consumer favorites (AMZN)

Fri, 07/05/2019 - 2:04pm  |  Clusterstock

  • Amazon was founded 25 years ago today, on July 5, 1994. The company was the second in the US to hit a market capitalization of $1 trillion in 2018, but it had a long road to that success. 
  • Early investors would've seen disappointing returns for the first decade of Amazon's performance as a public company.
  • The company is a cautionary tale for investors looking to cash in on banner initial public offerings coming to market this year. Industry watchers say it's better to invest in companies you believe in for the long haul. 
  • Read more on Markets Insider.

When Amazon first listed shares on a public exchange in 1997, a crisp $20 bill would've bought a share in the company. 

Today, that same share is worth nearly $2,000. 

Amazon was founded 25 years ago Friday, although it didn't go public until a few years after its inception. Still, early investors in the company would have a fortune today if they held on to shares over the past 2 1/2 decades.

The anniversary comes during a banner year for new initial public offerings as companies such as Lyft, Uber, and Chewy have all rushed to the public market, many hoping to disrupt a major industry the way Amazon has. In addition, investor interest in IPOs has been piqued by companies like Beyond Meat, whose shares have gone up by as much as 700% since it first listed in May. Although Amazon has had astronomical growth and, in 2018, became the second company to hit a market capitalization of $1 trillion, Apple was the first, it had a long and sometimes bumpy road to success. 

The tech company's stock made its public debut at $18, and early investors might've been disappointed by its performance for the first decade of its life on the public market. Shares struggled to make meaningful gains through the early 2000s as the dot-com bubble burst. But that fate began to turn in 2008 and 2009, when momentum in the stock started to pick up and send it on an upward trajectory. That momentum increased even more in 2014 — in the past five years, the stock has soared more than 460% to $1,938 from about $340 per share. 

Today, Amazon has something of a cult following, where it garners more attention than other competitors. Usually that type of following is because of a charismatic CEO like Elon Musk or Jeff Bezos, Rory Carron, the head analyst at MyWallStreet, an investing app, told Markets Insider. 

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Leadership is important in assessing the success or failure of a young company. It's important to look at senior leadership, the plan they present for future growth, and their ability to execute that plan, John Jacobs, the executive director of the Georgetown Center for Financial Markets and Policy and the former chief marketing officer of Nasdaq, told Markets Insider. 

But leaders aside, the most successful investors are the ones who can pick investment vehicles to go along with sustained trends, Carron said. For example, Amazon was an early player in e-commerce, a trend that now dominates many industries from retail and beyond. 

Where investing in IPOs can be difficult is when investors get swept up in something that's popular only for the short term. 

"People aren't very good at separating fads from sustainable trends," Carron said. For example, when "Pokémon Go," the artificial-intelligence driven mobile game, was popular, investors piled money into shares of Nintendo, Carron said. What those investors didn't realize right away was that Nintendo had only a small hand in the game and the game would have little impact on Nintendo's performance as a company, Carron said. 

Generally, Carron advises that investors make sure they do their research before investing in any company, but especially IPOs. There's usually a bit of a frenzy around IPOs because when a company becomes public, it's the first time the majority of investors get to look at it, Carron said. 

"That's always going to create excitement in the markets," Carron said. What Carron suggests is that investors look to buy into companies where they understand both the consumer value and the financial basics — how the company makes money, what its potential growth opportunities are, and what the competitive landscape looks like. 

Ultimately, investors need to be confident that the new company they're investing in is going to grow at a faster rate than expected, or it's going to unlock potential that people don't understand. 

"That's when you understand a business and can be comfortable holding it for the long term," Carron said. 

Shares of Amazon are trading up roughly 29% year to date. 

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We visited the regional chain that Southerners say is better than In-N-Out and Shake Shack — here's the verdict

Fri, 07/05/2019 - 1:32pm  |  Clusterstock

  • Cook Out is the fast-food king of North Carolina. 
  • The chain only has locations in 10 states but has developed a cult following in the South. 
  • We visited a Richmond, Virginia, location and saw why customers adore Cook Out. 

New Yorkers love Shake Shack. The West Coast swears by In-N-Out.

But North Carolinians say that there's one burger chain that trumps them all.

Cook Out is a North Carolina-based fast-food chain serving up burgers, barbecue, and milkshakes, and it's renowned in the South for its low prices and high quality.

But if you don't live in one of the 10 states the chain is in, you might have never heard of this cult restaurant and its fervent following.

So we went to Richmond, Virginia, to sample the much-hyped chain and see how it measured up to the coastal titans of the burger business.

SEE ALSO: We tried two cult chicken chains that are quickly taking over the nation — and the winner was clear

DON'T MISS: Southerners swear by this regional chicken chain's breakfast menu — we went to see if it lives up to the hype

While Cook Out is known for its classic drive-thru locations with outdoor seating, the chain has recently been opening more sit-down restaurants.

As we walked into the rustic restaurant, gentle strains of Christian rock piped over the speakers — the kind of songs where you can't quite tell whether the lyrics are describing a romantic love or a more spiritual suitor.

The menu is wide-ranging, and the best way to sample it is by ordering a Cook Out Tray. The food is outrageously inexpensive when compared with what we typically see in New York City, and where else can you get a quesadilla and a corn dog as sides in addition to your entree?

And then ... there are the milkshakes.

There are more than 40 flavors to choose from — picking just one is a Sisyphean task. So we ordered two: mint chocolate chip and Reese's Cup.

Our food order consisted of two combo trays — a lot of food for less than $15.

The double burger is far from a classic fast-food burger, especially when ordered Cook Out style. The burger is topped with chili, coleslaw, mustard, and onion, which makes for a surprisingly balanced palate.

The beef and the hearty chili add a satisfying heft despite the burger's standard size. The vinegary kick of the coleslaw and mustard cuts through the savory chili, and the coleslaw adds a unique crunch to its textural tapestry. This is a burger inspired by Carolinian culinary traditions — you can't get that at any old In-N-Out.

Cook Out's real star shines with another item not found at most fast-food joints: the barbecue sandwich. It's the right size — filling, but not overwrought. It's unique without being flashy.

It's a shame a lot of fast-food chains don't have barbecue pork on the menu, but it makes Cook Out's all the better. The pork is incredibly tender and rich — just fatty enough to satisfy the brain's primal taste receptors. The slaw plays a bright and crisp foil to the meat, and the bun is noble in its simplicity and strength.

The choice of sides is astounding in its breadth. You can get a corn dog with your burger — what a time to be alive. This corn dog won't change your life, but the mere fact that it can be ordered is reason to celebrate.

The hush puppies, another traditional Southern addition, pack a punch. The taste of cornmeal is robust and flavor-forward in these crispy, fried nuggets of Southern hospitality.

Less inspiring are the onion rings, which attempt to overcompensate for a lack of flavor with an oversized structure that often ends up unwieldy and limp. They're OK, but that's it.

As we picked up our milkshakes, we noticed something else that isn't present at most fast-food joints: a Bible verse printed on the cup, plus a patriotic "God Bless America" next to it.

The milkshakes are perhaps the thickest ever made. They're practically ice cream in a cup. And this is no complaint. While difficult to drink at first, waiting a few minutes helps. Or you can take the quickest route and just use a spoon. There's a wealth of Reese's chunks throughout — no skimping here.

The mint chocolate chip is another crowd-pleaser. Again, Cook Out doesn't skimp on add-ins — the chain has packed it with chocolate chips, providing a rich counterbalance to the mint. The biggest issue (if you can call it that) with Cook Out's shakes is how filling they are. Finishing one and the hearty tray of food is probably more calories than we should ingest in a day, much less in a meal. But the shakes are so tasty, it's hard not to just keep going.

The shockingly low prices make Cook Out a destination unto itself, and the quality of the food is solid. The barbecue pork is tender and juicy, and the burger is stalwart in its simplicity. Cook Out has a leg up on the competition thanks to the inclusion of Southern fast-food classics on the menu — and, of course, the more than 40 flavors of milkshakes.

But a question lingers: Is it better than Shake Shack or In-N-Out? For burger quality, probably not. But if you're looking for a chain that serves a corn dog as a side and a burger covered in coleslaw and chili, Cook Out will beat the coastal-elite competitors any day of the week.

An Uber glitch sent drivers to riders' final destinations — before picking anyone up (UBER)

Fri, 07/05/2019 - 12:46pm  |  Clusterstock

  • An issue with Uber's dispatching software is sending drivers to a rider's final destination before picking up the rider.
  • Both riders and drivers have reported the recurring issue over the past week.
  • The company did not respond to a request for comment from Business Insider, but it's official support account said on Twitter that it was aware of the issue.
  • Visit Business Insider's homepage for more stories.

Many Uber drivers and riders are reporting a peculiar problem: drivers were being sent to their destinations instead of the pickup point.

The issue appears to be mainly affecting the Uber Driver app, which is a separate product from the rider app, and sending drivers to a requested destination before picking up the passenger who requested to go there.

"It showed me my pickup location correctly," one disgruntled customer said on Twitter. "It showed the driver my destination location, instead. This happened 2x. The second time, I called the driver and reset my pickup location w/o moving the pin. Only then did the driver get the correct location."

Usually, drivers are not shown a riders' destination until the ride has begun. This helps to avoid cancelled rides if a driver doesn't like the direction or length of a requested trip.

An Uber spokesperson confirmed to Business Insider that the issue was affecting rides and that it was the result of a service interruption.  "The team worked quickly to resolve and ensure riders and drivers' trips returned to a five star experience," the representative said. 

Still, the issue appeared to affect many trips before it was fixed:

 

@Uber_Support please help. My driver went to the destination instead of pickup and refuses to cancel the ride. I called him, but he told me he would not cancel. Now i am stranded and will miss my class.

— Kimberds of Paradise (@fodgelistic) July 3, 2019

hey @Uber_Support , something is wrong with your system.  i've had two drivers within 10 mins drive directly to my destination instead of my pickup point.  what gives?

— pound cake baby (@jessjones327) July 3, 2019

Drivers said that they were experiencing the issue as well.

"Anyone else have this problem," asked a driver in Florida on the popular UberPeople forum. "3 times in Fort Lauderdale in the past two days, I get a ping, head to pickup point and find it is the destination and pax is waiting for me at an address the app did not provide.

App issues are a major complaint among drivers. In interviews with Business Insider, many have said the company often takes months to respond to, and properly address, bugs in the platform.

"Uber delayed two months about bugs in the app, when it was crashing as I was trying to login," Harmony, a driver in Tennessee who asked to keep her last name private to avoid pushback from the company, said. "Finally I gave up and started driving for Lyft instead."

@Uber_Support I just spent 20 minutes waiting for Uber and when he finally "arrives" he actually is at the destination rather than the pickup point. I think you need to hit that "rollback" button for whatever you released today.

— Niccolo Maisto (@nmaisto) July 3, 2019

@Uber_Support twice today I was sent to the rider's destination instead of the pickup location. One passenger told me over the phone that the same thing happened to the first 2 drivers he requested. In Tucson, AZ

— Patrick Curtis (@Player2b) July 3, 2019

Do you work for Uber? Have a news tip? Get in touch with this reporter at grapier@businessinsider.com. Secure contact methods are available here.

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Big banks view consumer trust as an advantage over challengers (JPM, BAC, WF)

Fri, 07/05/2019 - 11:17am  |  Clusterstock
  • This is an excerpt from a story delivered exclusively to Business Insider Intelligence Banking subscribers.
  • To receive the full story plus other insights each morning, click here.

As waves of fintech startups rise up to challenge legacy banks, incumbents are finding their high levels of consumer trust to be a chief advantage, CNBC reports. "Customers trust legacy banks to keep their money safe, but they're slightly unsure of fintechs keeping their money safe," Amelia Nicholls, chief of staff at RBS' digital standalone bank Bo told CNBC.

Incumbents have several other advantages over their challengers beyond trust, including:

  • Low customer acquisition costs. Big banks already enjoy huge customer bases: Chase, for example, reported over 50 million digital customers alone as of Q1 2019. And incumbents have a high degree of brand recognition, something upstarts in the space sorely lack. Combined, these two advantages mean that when consumers are searching for financial services providers, incumbents are likely top of mind, and may even be recommended via word of mouth from friends and family who are current customers.
  • Better ability to cross-sell customers to other products. Banks offer a wide array of financial services and have the opportunity to cross-sell their products to existing customers. This helps improve the profitability of their businesses and can keep consumers more engaged. Fintech startups, on the other hand, struggle with profit margins: For example, UK neobank Monzo reported a $42.1 million loss before taxes last year.
  • Astronomical tech budgets. Major banks set aside enormous sums of money to spend on technology. JPMorgan, Bank of America, and Wells Fargo had tech budgets of $11.4 billion, $10 billion, and $9 billion, respectively. With that much capital to spend on new technologies, banks have a chance to develop their own digital banking features to rival the tools offered by competing neobanks.
  • Resources to absorb competitors. The wealth the incumbent banks enjoy also means that if they deem a challenger particularly threatening, they can simply buy it. For example, Goldman Sachs bought personal finance startup Clarity Money in April 2018, per Reuters, while BBVA acquired both Simple (in 2014) and Holvi (in 2016).

However, some fintechs may be too big for banks to simply snap up. Monzo, for example, earned a valuation of $2.5 billion after a funding round in June, and UK fintech OakNorth hit $2.8 billion after a February round of funding, CNBC reports.

As these companies grow in size, even major banks are likely to consider them too much of an investment to acquire and will need to instead find a way to design in-house alternatives. This may be challenging, even given banks' numerous advantages: JPMorgan Chase shuttered its all-digital banking offering Finn in June, citing poor adoption due to a failure to differentiate the service from Chase's other offerings, for instance.

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Everything we know about uBiome, the startup that convinced Silicon Valley that testing poop was worth $600 million, and then saw its top leaders depart amid an FBI investigation

Fri, 07/05/2019 - 11:15am  |  Clusterstock

The Silicon Valley startup uBiome was founded in 2012, on the promise of helping ordinary people understand the bacteria living in and on them, known as their microbiome.

The company morphed from citizen science project to venture-backed startup, taking in $105 million from investors and reaching a valuation of $600 million.

Then the troubles began. The FBI raided the company in April, reportedly as part of an investigation into the startup's billing practices. By the end of June, the company's top leadership and many of its board members had departed.

Read more: uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here's the inside story.

Here's everything we know about what's going on at uBiome.

The inside story Leadership exits Science and poop tests Complaints and probes

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After a strong jobs report, Wall Street expects a smaller rate cut from the Fed in July

Fri, 07/05/2019 - 11:10am  |  Clusterstock

  • The US economy added 224,000 jobs in June, more than economists expected. 
  • The Friday jobs report was a positive economic data point showing that the longest economic expansion is still running.
  • The stock market slid after the report, and traders lowered their expectations for a half-percentage-point cut in interest rates from the Federal Reserve this month.
  • Read more on Markets Insider. 

The US economy added more jobs in June than economists expected, reversing what looked to be a slowing trend of job growth during the longest-ever economic expansion. 

Now, it's less likely that the Federal Reserve will lower interest rates in July by as much as the market had hoped to stimulate an economy that appears to be running just fine on its own.  

Traders are still pricing in a 100% probability of a rate cut in July, but by less than previously expected. The CME's FedWatch tool showed Friday that expectations for the Fed to lower its benchmark rate by 50 basis points fell to 9% from 29%. However, the market is still pricing in a 25-basis-point rate cut — expectations rose to 91% from 70.8%. 

"Not only was the number strong enough to take a 50bp rate cut off the table, but it was also just high enough to add a shadow of doubt to a July cut as well," wrote Scott Buchta, the head of fixed income strategy at Brean Capital, in a note.  

The better-than-expected jobs number came after both debt and equity markets priced in multiple rate cuts by the Federal Reserve through the end of the year. The bond market has been screaming for a rate cut for some time — a bond rally sent yields on 10-year Treasurys below 2% before Friday's report. In addition, the S&P 500 had soared to new highs on speculation that the Fed will lower rates, which would give the market even more steam to run. 

Market action after the jobs report suggested that confidence in a Fed cut had faded.

Safe-haven assets, which investors flock to during times of volatility or when it looks like riskier assets such as stocks are going to slide, fell on the positive jobs data. As Treasurys sold off, the 10-year yield rose above 2% and the 2-year climbed to 1.88%. Gold fell once again below $1400, a key psychological price point for the precious metal. The dollar rose against every other G10 currency and upward momentum could continue, wrote Lukman Otunuga of FXTM in a Friday note. 

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"The employment picture continues to be one of the positives to the US economy," said Ryan Detrick, senior market strategist for LPL Financial. "Services and manufacturing are both slowing, but the good news is we don't see a recession on the horizon and continued strong jobs data is one of the main reasons."

To be sure, not all economists think that the Fed should move rates lower at all in July.

"The economy does not need the Fed to ease, but the market continues to scream for action on July 31," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. 

Still, he thinks that a Fed cut is on the table as the jobs report alone isn't enough to keep the Fed from easing. 

"This Fed won't disappoint unless the data between now and then are so clear that market expectations shift substantially. That's entirely possible, but don't bet on it," he wrote.

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