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

Tue, 07/02/2019 - 2:51pm  |  Clusterstock

  • A wealth tax would make ultra-wealthy Americans pay the federal government a small percentage of their net worth each year.
  • Presidential candidates, tax experts, and billionaires alike have said the revenue from a wealth tax could be used to fight climate change and repair the country's infrastructure — if the IRS can find a way to enforce it.
  • Despite popular support, a wealth tax bill would have to overcome opposition in both Houses of Congress, the White House, and the Supreme Court before becoming law.
  • Visit Business Insider's homepage for more stories.

Income inequality in America is a serious problem, and all indications say it's only getting worse.

Since 1989, the wealthiest 1% of Americans have added $21 trillion to their combined net worths, while the poorest 50% of Americans have seen their combined net worths drop $900 billion, an analysis of Fed data reported in New York Magazine found.

A federal wealth tax is one potential solution that has been touted by presidential candidates and hedge fund billionaires alike. And the idea has support among Americans: An INSIDER poll shows that more than half of Americans support Senator Elizabeth Warren's wealth tax proposal.

However, the revenue raised by the proposed wealth tax would likely be much lower than its advocates expect, former Department of Justice tax attorney James Mann, who is now a tax partner at law firm Greenspoon Marder, told Business Insider. 

What is a wealth tax?

Today, ultra-wealthy Americans pay taxes on things like superyachts and fine art when they purchase them — but not after. A wealth tax would change that, making them pay taxes on their wealth every year.

One of the most frequently cited proposals, Elizabeth Warren's "Ultra-Millionaire Tax," calls for a 2% annual tax on households with a net worth between $50 million and $1 billion and a 3% annual tax on households with a net worth over $1 billion.

The US has never had a wealth tax, but other countries have implemented them with mixed success. France introduced a wealth tax in 1988 that resulted in a massive capital flight, prompting President Emmanuel Macron to replace the wealth tax in 2017. The tax's repeal was unpopular and helped spark the country's yellow jacket protests, according to the Washington Post.

What would the benefits of a wealth tax in the US be?

Introducing a wealth tax is one of the few issues that a majority of Americans agree on.

An INSIDER poll from February shows that 54% of Americans support Warren's plan, while only 19% disapprove of it. Warren's wealth tax even has the support of some of the billionaires who would be paying it. That includes George Soros, Abigail Disney, and members of the Pritzker and Gund families, who signed an open letter on June 24 outlining their request. Real estate magnate Eli Broad had also separately spoken up in favor of a wealth tax.

Read more: A majority of Americans approve of Elizabeth Warren's new tax on the wealthy, according to a new poll

The June 24 letter was signed by 19 ultra-wealthy Americans who noted that the revenue raised by the tax could be used to fund environmental initiatives, fuel economic investment, and reduce the cost of health care. 

Elizabeth Warren has said that the wealth tax could generate $2.75 trillion in revenue in a decade. She claims that a wealth tax could also help limit growing economic inequality by funding programs that would benefit the poorest Americans, but doesn't say by how much it will reduce inequality — or how quickly.

What are the drawbacks?

The biggest problem with a wealth tax would be figuring out how to enforce it, Deutsche Bank Managing Director of Wealth Management Blanche Lark Christerson told Business Insider. It's easy for the IRS to figure how much to tax a billionaire's investment portfolios, Christerson said, but the value of other assets like yachts and fine art are up for interpretation.

Appraising is more of an art than a science, Christerson said, and the IRS would have to verify those appraisals. Neither Christerson nor Mann believes that the IRS is currently equipped to do that.

To make matters worse, ultra-wealthy Americans are so good at finding ways to reduce their tax bill that they would likely be able to find a way around any anti-evasion measures, Eric Hananel, a tax consultant at UHY Advisors focusing on high net worth individuals, said. Hananel also said that billionaires might be motivated to move their money outside the country to avoid the tax, hurting the economy in the process.  

Read more: The IRS pursues fewer cases of tax evasion than it did 10 years ago — and experts fear more people will get away with tax fraud

Mann, Christerson, and Hananel agree that it's unlikely that a wealth tax would raise as much revenue as its proponents hope, though they did not specify an alternate estimate as to how much it would actually raise. Mann, for his part, noted that it's impossible to estimate exactly how successful a wealth tax would be without more data.

"These are the people who obviously have access to the most sophisticated financial planners and lawyers and accountants," Mann said about the ultra-wealthy people who the wealth tax would target, "and I think it's naive to think that they wouldn't plan to minimize their wealth tax burden."

"It's just when you look at the practical application of how would this really work, it's hard to imagine that it would work successfully," Christerson said.

How would a wealth tax change my taxes?

Warren estimates that her "Ultra-Millionaire Tax" would only affect the wealthiest 75,000 households in the US. For those families, even figuring out how much they owe will be a massive headache, according to Christerson.

Multi-millionaires and billionaires would need to enlist the help of appraisers to put a price on hard-to-value assets like yachts and jewelry, and then file separate documents with the IRS to pay the tax on them. The whole process would be independent of the current income tax system and likely run on a different schedule, Mann said.

"It would really be like filing an annual estate tax return," Christerson said. 

This could pose a problem for Americans who have inherited most of their wealth. Many heirs and heiress inherit their fortunes in the form of real estate and fine art, not liquid assets like cash or stocks, according to Christerson. A new tax bill could force them to liquidate.

Little would change in the tax bills for Americans who fall in or below the middle class, Christerson said.

When could we see a wealth tax?

A "pretty seismic change in the political landscape" would be required to add a wealth tax to the tax code, Christerson said. Progressive Democrats would have to gain control of both Houses of Congress and the White House. The constitutionality of such a tax would likely end up debated in front of the Supreme Court as well, according to Mann. 

Alongside her proposal, Warren released a letter from professors at leading law schools arguing that a wealth tax is constitutional based on a clause in Article I Section 8 of the Constitution that allows the federal government to "collect taxes, duties, imposts and excises" as long as they are "uniform throughout the United States." However, Article I Section 9 prohibits a "capitation, or other direct tax ... unless in proportion to the census or enumeration herein before directed to be taken."

Constitutional scholars disagree about which clause a wealth tax would fall under, Mann said. To Mann, Warren's plan has one major fault: The letter fails to mention the Supreme Court's most recent discussion of which taxes are constitutional.

"They talk a lot about Supreme Court cases from 100 years ago. They don't talk about the most recent one," Mann said, referencing the 2012 case that briefly upheld Obamacare by classifying it as a tax. However, that decision still doesn't define how the Supreme Court decides whether or not a tax is constitutional. 

Ultimately, Mann and Christerson agree: The chances of a wealth tax before 2025 are essentially zero.

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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A former AOL exec says taking someone else's startup idea might sound like cheating, but it's exactly how the most successful founders work

Tue, 07/02/2019 - 1:56pm  |  Clusterstock

  • AOL achieved tremendous success by picking up where other internet startups had left off.
  • That's according to Jean Case, a former AOL exec and the author of "Be Fearless."
  • In turn, Case writes, contemporary tech giants like Google and Facebook have benefited from AOL's innovations.
  • Click here for more BI Prime stories.

AOL was built on the backs of other businesses' failures.

And as former AOL executive Jean Case writes in her book, "Be Fearless," the company's ability to pick up where others had left off was nothing short of brilliant.

Earlier in her career, Case worked at a company called The Source, which she describes as "a text-based information utility for consumers that featured early versions of email, conferencing, and content." While the service was unthinkably slow by today's standards, Case writes that the concept behind it "was a really powerful idea, democratizing access to information and communication."

It just needed the proper execution.

After The Source failed to take off, Case moved on to the company that would become AOL. It was founded by Steve Case (Jean Case's husband), Marc Seriff, and Jim Kinsey — three founders who'd already experienced their own series of business failures.

The previous iteration of the company, Quantum Computer Service, had been a partner of Apple's, until so much conflict led Apple to back out of the deal, as Steve Case writes in his 2016 book, "The Third Wave." From that experience, the founders learned that they wanted to create their own brand and pay for their own marketing.

QCS' service was rebranded as America Online in 1989.

Read more: Billionaire AOL cofounder Steve Case says he waited 10 years for the moment he realized his company was a success

As Jean Case boasts in the book, AOL had nearly 30 million subscribers at its peak and was the first Internet company to go public. She writes that Steve Case "led the team to experiment in areas that had previously limited growth for our competitors," including consumer-friendly pricing and membership plans.

In turn, today's tech giants found success by modeling themselves at least partly after AOL.

Case writes that Facebook, Google, and Twitter "all benefited from the innovations that AOL introduced." She adds, "Innovators can take major leaps or make a Big Bet by looking at where previous efforts fell short, and fully exploiting the lessons of those failures."

SEE ALSO: I've been an angel investor in 100 companies over 8 years, including a bunch of unicorns. There are 3 ways to tell which startup ideas will blow up and get a piece of the deal.

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Here's the exact day and month you can retire with full Social Security benefits, depending on when you were born

Tue, 07/02/2019 - 1:25pm  |  Clusterstock

The Social Security retirement age is between 66 and 67 for nearly all of today's working Americans.

Otherwise known as full or normal retirement age, it's the age a person who has worked at least 10 years can begin claiming 100% of their Social Security benefit, which is equal to an average of monthly wages for their 35 highest-earning years, adjusted for inflation. The average benefit for Social Security recipients is $1,420 a month, according to the Social Security Administration.

Americans born in 1960 or later — age 59 or younger in 2019 — can retire with full Social Security benefits at age 67. For Americans born before 1960, the full retirement age is between 66 and 67 years, as follows:

  • Born between 1943 and 1954: age 66
  • Born in 1955: age 66 and two months
  • Born in 1956: age 66 and four months
  • Born in 1957: age 66 and six months
  • Born in 1958: age 66 and eight months
  • Born in 1959: age 66 and 10 months.

Anyone who qualifies for a Social Security benefit can opt to claim it as early as age 62, regardless of whether they've left work or not. However, claiming that early reduces the payout to 75% of the full benefit if born before 1960 and 70% of the full benefit if born in 1960 or later.

Age 70 is the latest it makes sense to claim Social Security benefits. With each 12-month period that benefits are delayed beyond a person's full retirement age (up to age 70), their benefit increases by up to 8% for a maximum of either 24% for those born in 1960 or later or 32% for those born before 1960.

Let's say John, who was born in 1955, is in good health and enjoys his job. John's full retirement age is exactly 66 and two months, at which point he can claim 100% of his monthly Social Security benefit of $1,420 (the 2019 average benefit). John decides to continue working for a few more years, until his 69th birthday, and delays his benefit.

By the time John claims his Social Security benefit at 69, his monthly payout will be $1,742, 122.7% of his full retirement-age benefit. By delaying, John increased his monthly Social Security income by about $320. Note that the rules are different for spouses — consult the Social Security website for details.

Anyone can create a free My Social Security account to find out what their pretax monthly Social Security benefit will be, based on current earnings, and see how that could change depending on the date they leave work. For those in good health or with a greater chance of longevity, it may be worth it to hold out.

New research from United Income found that elderly poverty could be cut in half if every retiree claimed Social Security at the "financially optimal time." The report said retirees stood to lose a collective $2.1 trillion in wealth, or about $68,000 per household, because they chose to claim Social Security benefits at the wrong time, which, for many, is before their full retirement age. 

But new reports show the Social Security trust will be underfunded as soon as next year, leading some experts to suggest workers shouldn't rely on Social Security payments when planning for retirement. 

Join the conversation about this story »

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Stocks are dropping on trade-war jitters after Trump threatens another $4 billion in tariffs on EU goods

Tue, 07/02/2019 - 1:03pm  |  Clusterstock

  • US stocks slid on Tuesday after the Trump administration threatened to slap tariffs on $4 billion worth of EU goods in retaliation for the union's subsidies to Airbus.
  • The news "dented the market sentiment" that had been lifted by the recent truce in the US-China trade war, one analyst said.
  • The US Trade Representative's office has already targeted $21 billion of EU products for potential duties.
  • View Markets Insider's homepage for more stories.

Traders were jittery on Tuesday after the the Trump administration threatened to slap tariffs on $4 billion of meat, cheese, and other EU goods in retaliation for the union's subsidies to aircraft-manufacturer Airbus. While US futures fell, European stocks were mixed. Airbus fell 0.3%.  

Traders' optimism had been lifted after Donald Trump and Xi Jinping struck a truce in the US-China trade war over the weekend, but the prospect of another trade war between the US and Europe "dented the market sentiment," said Konstantinos Anthis, head of research at ADSS. Trump's demand that a trade agreement with China would need to be "somewhat tilted" in America's favor further dampened the mood.

The US Trade Representative's office added the EU products to its list of $21 billion of eurozone goods that it has targeted for potential tariffs, in response to the harm caused to the US by Airbus subsidies. "The EU has taken advantage of the U.S. on trade for many years," Trump tweeted in April. "It will soon stop!"

Here's the market roundup as of 1 p.m. ET:

  • US stocks have drifted lower with the Dow Jones Industrial Average and S&P 500 down 0.2%, and the Nasdaq down 0.3%.
  • European equities were mixed with Germany's DAX flat, the Euro Stoxx 50 up 0.3%, and Britain's FTSE 100 up 0.8%.
  • Asian indexes were also mixed with the Shanghai Composite slightly down, Japan's Nikkei flat, and Hong Kong's Hang Seng up 1.2%.
  • Crude oil prices fell sharply with West Texas Intermediate crude down 3.1% at $57.20 a barrel, and Brent crude down 2.6% at $63.40.
  • Gold climbed 1.4% t0 $1,408 as investors shifted money to the haven asset.
  • Bitcoin was up 2.2% at $10,570.

SEE ALSO: Trump just attacked Mario Draghi — accusing the European Central Bank chief of manipulating the euro

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The US economic expansion is now the longest in history

Tue, 07/02/2019 - 1:00pm  |  Clusterstock

  • The US economic expansion, at 121 months and counting, became the longest on record on July 1.
  • The record-breaking expansion has also been one of the slowest, with job and GDP growth lagging other post-war recoveries.
  • Now, economists are watching how much longer the expansion will run. There have been mixed signals from economic data and trade disputes have weakened the global economy, potentially prompting a slowdown in the US. 
  • Read more on Markets Insider. 

The US economic expansion and recovery from the Great Recession officially made history on Monday July 1: The 10-year, 121-month expansion that started in June 2009 is now the longest ever.

The previous record was set during the 120-month expansion from March 1991 to March 2001, according to the National Bureau of Economic Research. It ended as the dotcom bubble burst. 

While the current expansion is a record breaker, it's also been one of the slowest. Gross Domestic Product has grown 25% cumulatively since the start of the expansion, which is lower than other booms on record. The unemployment rate sits at 3.6%, its lowest point since 1969. It is down from a peak of 10% in October 2009, but job growth took much longer during this recovery than during other recoveries postwar. 

Now, all eyes are on the clock to see just how long the current expansion can keep going.

There have been mixed signals from the US economy and markets about the likelihood of a recession on the horizon. On one hand, the S&P 500 has soared to new highs. On the other, trade tensions sparked a panic in the bond market, sending the yield on the 10-year Treasury below 2%. As investors bought more long-term Treasuries, they shrank the gap between long-dated yields and short-term ones. This triggered a yield-curve inversion, long-watched as a sign that a recession was ahead. 

Trade tensions have also rocked the global economy and contributed to signs of a slowdown outside the US. While there was a sigh of relief Monday after President Donald Trump and Chinese President Xi Jinping agreed to a trade truce, it was short-lived; on Tuesday, the US threatened to expand tariffs against Europe as part of a dispute over aircraft subsidies, sending stocks down on the news

The Federal Reserve has signaled it's open to cutting interest rates in July to support the US economy and keep the expansion chugging forward. Bonds and stocks have rallied on the prospect of lower rates, and many analysts expect the Fed will cut by between 25 bps and 50 bps this year. 

Some, however, worry that the damage has been done and that the Fed won't lower rates fast enough to boost the economy, or that the stimulus won't be enough to avoid a slowdown. An important piece of data — the June jobs report — will be released Friday and shed light on how the US economy is faring. Analysts expect that about 1580,000 nonfarm payrolls were created in June, many more than the disappointing May number of 75,000 jobs.

Join the conversation about this story »

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Bankers are rushing to take Oxford University's fintech courses before robots take their jobs

Tue, 07/02/2019 - 12:57pm  |  Clusterstock

  • Bankers are rushing to take Oxford University's courses on fintech, blockchain strategy, AI, and other futuristic subjects before robots take their jobs.
  • More than 9,000 people, aged 39 on average and predominantly working in financial services, have taken Saïd Business School's online open courses in less than two years.
  • AI is expected to generate $300 billion in cost savings by 2030, partly through the dismissal or reassignment of more than 1.3 million bankers.
  • View Markets Insider's homepage for more stories.

Bankers are rushing to take Oxford University's courses on fintech, blockchain strategy, algorithmic trading, and artificial intelligence before robots take their jobs.

More than 9,000 people from upwards of 135 countries have taken the online open courses, which focus on digital transformation in business, at the university's Saïd Business School, a spokesperson told Markets Insider.

The fintech course, the first of five to be launched, has run 12 times and attracted nearly 4,300 students in less than two years. The average age of participants across the courses is 39, and two-thirds of them came from the financial services sector, suggesting experienced professionals are returning to school to understand how their industry is being disrupted and learn the skills needed to weather the changes.

Bankers' fears of being replaced by robots are well founded. AI is expected to generate $300 billion in global cost savings by 2030, according to IHS Markit, partly through the dismissal or reassignment of more than 1.3 million US bankers. For example, Citigroup's investment bank told the Financial Times it could halve its 20,000 technology and operations staff within five years as machines replace humans.

Finance professionals are witnessing the transformation and automation of their industry in real time, Huy Nguyen Trieu, co-founder of fintech education platform CFTE and an associate fellow at Saïd, told Markets Insider. He added that many of them are driven to study subjects like fintech and AI by a pressing question: "How do I stay relevant and make sure I get the right skills to keep my job and grow in my career?"

Craig Bond is one such individual, according to Saïd. He previously worked as a regional chief executive at Barclays and Standard Bank and is currently taking Saïd's fintech course. His current role is chairman of Envel, a company building an AI-powered digital banking service that autonomously manages users' money. Envel was founded by Steve Le Roux, who took Saïd's first fintech course.

The financial sector is experiencing sweeping changes. Algorithmic trading is forecast to grow 11% a year and reach $19 billion in 2024, financial institutions are pouring about $1.7 billion annually into blockchain, and global digital transactions topped $3.4 trillion in 2018. Apple's upcoming virtual credit card and Facebook's Libra cryptocurrency are two more examples of the shifting tides that bankers need to navigate.

Several universities are working to meet the needs of financial professionals. GetSmarter, which partnered with Saïd to create its online open courses, has created similar ones including fintech at Harvard University, AI and blockchain at MIT, and data science, AI, and machine learning at University of California, Berkeley.

SEE ALSO: Oxford University is getting into fintech

Join the conversation about this story »

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I drove a $64,000 BMW Z4 to see if this high-end roadster is worth the steep price tag — here's the verdict

Tue, 07/02/2019 - 12:15pm  |  Clusterstock

  • I sampled BMW's revived roadster, a 2019 Z4 sDrive30i that has been outfitted with a bunch of M-Sport performance extras.
  • The BMW Z4 has always been a very sporty two-door, and the new model is no exception.
  • I did like the car in the 30i trim, with its 255-horsepower four-cylinder engine. But even that is a lot of oomph for a roadster.
  • BMW builds the Z4 so well that you're getting your money's worth, but you could spend tens of thousands of dollars less and get an equally fun set of wheels.
  • Visit Business Insider's homepage for more stories.

The world needs roadsters. That's my belief, anyway. And fortunately, there are several automakers who share my view.

BMW has been in the modern roadster game since the 1990s, but its lineup briefly lacked a two-seat drop-top since the 2016 model year. That gap was filled in 2018 when an all-new Z4 was revealed (it's a collaboration with Toyota, which sells the car as a Supra).

I'm old enough to remember the arrival of the stylish Z3 back when Bill Clinton was president; that car was meant to rival the Mazda Miata by being a burlier, more sporty front-engine, rear-wheel drive two-seater with a ragtop. The Z3's lineage lives on in the new Z4, which is yet again matching up against the Miata. And yet again bringing more horsepower to the open-air party.

I generally don't like a whole lot of HPs in a roadster, which I think of as a car meant to zip around winding roads at 40mph. The Z4 is a helluva lot more car than that. It intends to eat winding roads for breakfast.

How did I feel about getting behind the wheel of that menacing proposition? I felt pretty good — BMW let me borrow a Z4 sDrive30i that had been outfitted with a whole mess of M-Sport high-performance extras. This was the roadster turned up to 11.

It was also — Gulp! — a $64,000 car. That's rich for a roadster.

Too rich? Read on to find out.

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The 2019 BMW Z4 sDrive30i arrived at our suburban New Jersey test center wearing a fetching "San Francisco Red Metallic" paint job. The as-tested price was $64,000, with thousands of dollars in extras adding to the $50,000 MSRP.

The Z-Series roadsters date to the late 1980s for the Bavarian automaker, but the model that really defined the two-seater for BMW was the original Z3 of 1996.

A major — and welcome — change for the sixth-generation Z-Series was the replacement of the retractable hardtop with a soft-top.

Yes, this eliminates the Z4's chances to do double-duty as a coupé, but honestly I prefer a proper ragtop on a roadster.

Plus, I just think the soft top looks right.

It also retracts very quickly, activated by a switch between the seats. The top stows in about five seconds — and takes up essentially no space in the trunk.

There's a removable windscreen between the protective roll bars.

The BMW Z4 is sharp and aggressive, a far cry from the retro Z3 of the mid-1990s, with its throwback, almost steampunk allure ...

... see what I mean?

While I rather like the overall shape of the Z4, with that long hood and scrunched rear, the headlights are a bit much.

They're larger and complicated.

And on my tester, they were LEDs. I can't argue with them at night, but I'd prefer something more low-key.

The BMW kidney grille is a presence up front. but it's blacked out and stretched, so it sort of loses its kidney-ness.

The Bavarian-flag badge hasn't changed, however.

The side vents evoke that beloved Z3 of the Clinton years.

My Z4 came with a few BMW M-Sport high-performance goodies, including M-Sport brakes, part of a $2,450 "Track Handling" package. The 19-inch wheels were an extra $600.

The Z4's rear is something of an optical illusion. In profile, it's out-of-proportion with the front, even with the decklid spoiler adding a flourish. Viewed directly, it's svelte, well-designed, and a credit to the car.

The tail lights, also LEDs, are better than the headlights.

But I don't care for the scoop coming off the fender flanks.

Somehow, that simple black-blue-white propeller (it isn't, but whatever, still looks like one) redeems everything.

The seat-back roll bars are a valuable safety feature, in the unlikely event that the Z4 encounters physics that overcome its low center of gravity.

Time to take a peek beneath the hood.

The 2.0-liter, twin-turbo four-cylinder in our sDrive30i trim level makes 255 horsepower and an impressive 295 pound-feet of torque. That grunt from the small motor had us fooled that we might be driving the 3.0-liter inline six that's also in the lineup. It makes 382 horsepower and 369 pound-feet of torque. The 0-60 mph time in the sDrive30i is about five seconds, and that's plenty quick for this type of car. Fuel economy is appealing: 25 mpg city/32 highway/28 combined.

If you've ever owned a roadster, you know that truck space is hard to come by.

But the Z4's is surprisingly generous. Roughly 10 cubic feet.

Now let's slip inside.

Two seats — good! The interior is black and "Ivory White Vernasca Leather." I have to say, with the Frisco Red exterior and this creamy interior, we're getting far afield of old-school roadster simplicity.

The seats are derived from competition designs and are an M-Sport special. They're superb, but I wouldn't call them forgiving.

Storage is extremely limited in the cabin.

But the back wall between the cabin and trunk is an ideal place to locate some speakers for the excellent Harman Kardon surround-sound system, part of a $2,500 "Executive Package."

If you're the driver, you can set the heated seat nice and low and engage in some terrifically spirited motoring.

The instrument cluster is all digital and quasi-analog. It evokes the familiar BMW cluster of yore, but updates them to display speed and tachometric data on opposing curves.

The leather-wrapped, multi-function wheel has one of the few M-Sport shout-outs.

The eight-speed transmission sends power to the rear wheels through an M-Sport differential. The joystick is standard-issue bimmer these days, but a bit more techno than what I'd like in a roadster (what I'd like is a six-speed stick). There are also paddles behind the steering wheel, for kinda sorta manual shifting. Buttons enable selection of the drive modes: three Sport modes, Comfort, Eco, and Adaptive. The last one learns your driving style and adjusts accordingly.

The 10.25-inch infotainment screen runs BMW's much-improved iDrive system, with Apple CarPlay as a backup option. Navigation with this setup is excellent.

There's a one-year SiriusXM satellite radio subscription. Bluetooth pairing is straightforward, as there are USB and AUX ports for device connection.

iDrive also includes a suite of apps.

So what's the verdict?

The BMW z4 sDrive30i is a smashing set of wheels, especially with the addition of the various M-Sport features. Acceleration is gutsy, and the balance of the car, while not perfect, is pretty close. With robust horsepower and lots of torque on tap, you'll be tempted to subdue corners rather than finesse them.

If you do, the taut suspension, grabby tires, wonderful brakes, and crisp steering, along with the quick-shifting eight-speed, should fill you with confidence. Straight-line velocity is also nothing to scoff at. This Z4 has a bit of the drag racer hiding under the hood, even with the four banger (the six-cylinder can make that run in a hair under four seconds).

The engine isn't a burbling or backfiring menace, but it can get its soundtrack on, if it's in Sport Plus and you're pushing it in manual mode.

Ragtops have long been knocked by enthusiasts for inadequate stiffness (chopping the roof off with do that), but in my experience, the Z4 was plenty firm — at times too much so, according to my passengers. A retractable hardtop would appease the purists somewhat, but I preferred the quick-collapse soft-top.

That's the good stuff. Now the bad. The Z4's natural rivals have always been the Porsche Boxster and the Mazda Miata. With the Boxster, you can spend about what the Z4 costs — or much, much more. From my point of view, the driving dynamics are far different, as the Boxster is a mid-engine sports car, while the Z4 has its motor up front where it belongs.

The Miata, meanwhile, is a relative bargain at $25-$30,000, but its no-turbo four makes just 181 horsepower.

(And for what it's worth, the BMW Z4 shares its underpinnings with the new Toyota Supra — the automakers partnered on development. The Supra is also priced in the Z4's ballpark.)

Anyone who has followed my car reviewing knows that I'm a Miata nut — and a former Miata owner (I had a first-gen car). To me, a roadster should be a low-powered sports car that's all about peppy top-down motoring, not ripping up asphalt.

In that sense, the Z4 is too much machine. I'm not saying I didn't enjoy it; I did indeed. But it's a muscle roadster, and all I sampled was the four-cylinder; the six is definitely a big boy and candidly I'd struggle to get into all the horsepower on public roads.

So if I were buying, and all the Miatas had already been bought, I'd take the Z4 30i. With 255 horsepower, this car is about at the limit of what I'm seeking in a snappy little ragtop. It's also a very well-crafted set of wheels. BMW doesn't disappoint with this package.

Obviously, not the most versatile car in the world, but there are times when versatility is the enemy. And for those times, the BMW Z4 is your chariot.

AND DON'T LEAVE JUST YET BECAUSE ...



The BMW Z4 was the last car that departing Business Insider Transportation Correspondent Ben Zhang drove. (He liked it!)

Since 2014, Ben and I have worked together as closely as I ever have with anyone in journalism. Now he's moving on, to try his hand at corporate communications in the auto industry.

The five years I drove hundred of cars with Ben have been among the most rewarding of my entire, three-decade career. We agreed and disagreed, discussed and debated, and along the way we created Business Insider's annual Car of the Year Award, now headed into its sixth edition for 2019.

Ben knows more about cars (and airplanes) than anyone I've ever met, and I've met a lot of people who know a lot about cars. He put his knowledge to good use, helping Business Insider to greatly expand its coverage of the transportation world.

He also got behind the wheel of Ferraris, Lamborghinis, Porsches and a host of other posh and exotic machines. That kind of experience can warp minds, but Ben was always the model of a professional enthusiast. If you were on the lookout for an admirable example of the car-writer calling, Ben was (and is) most assuredly it.

Almost every Saturday or Sunday, we'd meet in my driveway to compare notes on our test car (and sometimes cars) for that week. I love few things more than to talk about cars in my driveway, so I came to look forward to these sessions, and over the years Ben became almost a member of my family.

I'm proud of the man, who took a risk when he came to Business Insider with the idea that he might have a few things to say about automobiles and airplanes. A good car guy is hard to find. But Ben is one on the best.

Good luck in the new gig, my friend! They might not yet know how lucky they are to have you.



Markets Live: Tuesday, 2nd July 2019

Tue, 07/02/2019 - 6:06am  |  FT Alphaville

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Soon nearly a third of US consumers will regularly make payments with their voice

Mon, 07/01/2019 - 11:04pm  |  Clusterstock

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

A revolution in payments and banking is beginning as virtual assistants like Siri and Alexa gain the abilities of cashiers, personal shoppers, and bank tellers.

Already, Siri can help users make peer-to-peer (P2P) transfers with Venmo, Alexa can pay off Capital One credit card bills, and Google Assistant can let users shop with their voice from nearby stores. 

This is just the beginning. Today, 18 million US consumers have made a voice payment, and Business Insider Intelligence projects that figure will quadruple over the next five years. 

In a new report, Business Insider Intelligence explores how and why financial services providers such as PayPal and Bank of America are positioning for voice interfaces to take off. The report includes actionable recommendations that draw on interviews with executives spearheading voice initiatives, as well as exclusive survey data from our proprietary research panel. 

Here are some of the key takeaways from the report:

  • Voice payments are catching on — 8% of US respondents to a 2017 Business Insider Intelligence survey said they used voice commands to buy something, send money to a friend, or pay a bill.
  • Adoption is set to grow from 8% to 31% of US adults by 2022. Three factors will fuel this growth: an explosion of voice-enabled devices, generational gains in AI, and a strong consumer value proposition for voice payments.
  • Payments providers are moving in: Amazon, Apple, Google, and PayPal are part of the growing list of companies making these next-generation payments possible.
  • Banks are betting on AI, too. Bank of America, Capital One, USAA, and more are rolling out conversational interfaces to their customers.
  • Next-generation voice assistants will blow the current generation away. Voice payments will evolve from clunky and poorly scripted sessions to interactions as natural as one might have with a personal shopper or bank employee.
  • Getting to the next generation will not be easy, but the payoff will be large. Grounded in realistic expectations of adoption in the years ahead, providers of voice payments and banking experiences stand to accumulate early advantages by moving in early.

 In full, the report:

  • Shares current and projected adoption of voice payments.
  • Outlines voice payments and banking integrations on the market.
  • Examines growth drivers and barriers to consumers' voice payments adoption.
  • Provides strategies for successfully deploying voice interfaces.
Get The Voice Payments Report

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San Francisco's $2.2 billion transit center finally reopened after a cracked beam kept it closed for the better part of a year — take a look around

Mon, 07/01/2019 - 6:03pm  |  Clusterstock

  • San Francisco's four-block-long Salesforce Transit Center and its rooftop park are now officially reopened to the public after an almost 10-month-long hiatus following the discovery of a cracked beam in the terminal's third-floor deck.
  • Bus service through the transit center remains closed, but when it eventually restarts, eleven bus lines will stop at the station, and transit officials plan to eventually connect it to rail lines as well. 
  • A project almost two decades in the making, the transit center was designed to be a central nexus for local transportation.
  • The $2.2 billion transit center is being hailed as the "Grand Central Station of the West," and some have compared its park to The High Line in New York.
  • Visit Business Insider's homepage for more stories.


San Francisco's highly-anticipated Salesforce Transit Center and the new park located on its roof are officially reopened to the public after the discovery of two cracked beams closed the center just six weeks after opening in September 2018.

Located in a colossal white building that snakes its way through the city's downtown South of Market district, the transit project was almost two decades in the making and was designed as a much-needed improvement to San Francisco's notoriously clogged transportation systems.

Bus service through the transit center remains closed, but routes on eleven bus lines will eventually stop at the transit center. In the future, the Caltrain commuter rail system will stop at the transit center, as will California's long-promised high-speed rail system, which would connect the city with Los Angeles. 

The center's urban design has drawn comparisons to New York's new Oculus transit station, while its rooftop park has been likened to The High Line in New York, a park that's located on a former elevated rail line. But its new nickname harkens back further into Gotham's history.

The center has been dubbed the "Grand Central Station of the West." It's an apt moniker, given the building's scale and $2.2 billion price tag.

Take a look around San Francisco's "Grand Central Station."

SEE ALSO: There's a 'water bar' in San Francisco that will pour you shots of fruit water, not booze — take a look inside

The transit center's bulbous white facade spans four blocks in downtown San Francisco. It's hard to miss.

Its exterior is made from perforated white aluminum that was shaped into wave-like forms.

The main building consists of five levels, including the rooftop park and the Grand Hall on its ground level.

The Bus Deck is above the ground level. The structure's two other levels are below-ground floors that were designed for rail lines but aren't yet in use.

Source: Transbay Program



The transit center has a street-level entrance directly across from the new Salesforce Tower that provides easy access for the company's employees.

The cloud computing giant shelled out $110 million for naming rights to the transit center.

Salesforce's corporate sponsorship has been a contentious issue among San Francisco locals. Originally, the structure was going to be called the Transbay Terminal, the same name as the building it replaced. 

Source: Business Insider and Business Insider



Ground-level visitors enter into the Grand Hall, which is marked by large skeletal beams.

Overhead, a giant domed skylight bathes the Grand Hall with natural light.

The design is reminiscent of New York's Oculus transportation hub.

Like Salesforce Transit Center, the Oculus is a futuristic white shell of a building. Some have compared it to a dinosaur skeleton or a whale carcass.

Source: Business Insider



Like the Oculus, the Salesforce Transit Center is designed to accommodate a mass influx of people — 45 million each year in its case.

Eleven transit systems, including Greyhound, Amtrak, and San Francisco's Muni, have bus routes that stop at the station. Those bus routes provide connections to the eight surrounding counties and points beyond.

Source: Transbay Program



Commuters can find their bus connections and arrival times listed on a giant display board.

The center has several street-level exits.

Parts of the transit center are still under construction.

When the work is done, there will be entrances all around the center, including this one, which is directly across from Business Insider's San Francisco office building.

Inside the station, lit pillars indicate where commuters should go, with food and transit lines one way ...

... and other bus routes another way.

You can take the stairs or escalators up to the food hall.

But that, too, isn't quite finished yet.

Eventually, the transit center will have 100,000 square feet of retail space.

Source: Business Insider



Although it's not yet finished, the transit center is already being used by commuters, like this man who ran past to catch a bus.

He's a part of a large community of San Francisco Bay Area commuters who can now get into and out of the city from one central terminal.

The station's bus deck is above ground and offers a refreshing alternative to cramped subterranean stations.

The structure's perforated exterior lets plenty of natural light into the bus loading areas.



The bus deck features a succession of loading bays for different lines.

A digital display in each bay shows expected arrival times.

While you're waiting for your ride, you can get your tech fix at a Best Buy vending machine — the same kind you can find at some airports.

Some bathrooms on the level are available only to bus drivers.

You can take an elevator to the station's different levels.

Such as the fourth level, where you'll find Salesforce Park.

Sitting on top of the transit center, the park is open to everyone.

The 5.4-acre space includes winding pathways, plentiful foliage, and numerous seating areas.

It's similar to New York's High Line, a former elevated rail line on the west side of Manhattan that was converted into a park.

However, the Salesforce Transit Center is much smaller than the High Line.



Tiny, one-person benches line the park's walking paths.

Some people sat on them taking calls. One couple I saw squeezed onto one together.



A spacious lawn runs the length of the park, with moveable chairs and tables for people to use.

Parts of the space look grown-in already, and people are already taking advantage of them by relaxing in the grass.

Attached to the railings that line the walking paths are metal plates detailing the origin and nature of the plant species bedded in the gardens.

In some spots, the greenery was lush and high enough that I felt like I was in an arboretum.

The air smelled nice and earthy too. I forgot that I was in the middle of one of the most technologically advanced cities in the world.

A quick look around, and up at the imposing Salesforce tower, reminded me where I was.

The hashtag icon of office messaging service Slack was in view, albeit hidden through the trees.

I spotted the office housing investment firm BlackRock's iShares branch along the south edge of the park...

...as well as Charles Schwab offices...

...and LinkedIn's new black cube-like headquarters loomed in the distance.

Source: Business Insider



It was like an outdoor museum exhibit of some of the city's most prosperous companies.

I could see San Francisco's newest skyscraper at 181 Fremont too.

Facebook's Instagram branch will soon make 51 floors of it their new headquarters, and a number of multi-million-dollar condos take up the top portion of the tower.

Source: Business Insider



The Instagram offices are currently still being developed. I could spot some nifty technicolor-lit pillars from the park.

Instagram's employees and residents in the building will be able to walk right into the park through a special access point.

The same goes for Salesforce employees from their offices across the way. They're the only two buildings with direct access to the park.

They, and others in the park, have some uniquely striking sights of the city. Besides office views and ritzy high-level restaurants, perspectives of the city like this can be hard to come by.

I could easily get lost walking around — it's a 5.4-acre park after all — but these posted icons were scattered around the space, which were actually really helpful.

Over on the west side of the park, the six-block-long "mini Bay Bridge" can be seen, where buses can easily enter the Bus Deck from the actual Bay Bridge without having to maneuver through the city's congested streets. Its cables mirror the bone-like design of the rest of the center.

Source: The San Francisco Chronicle



Also from the west section, I could easily see into a couple of residences. It made me wonder how the occupants felt about their privacy being impacted by the new structure.

A stage that will be used for concerts and other events is on this side as well.

Toward the east side of the park is a plaza of sorts. A giant dome serves as the skylight that hangs over the grand foyer below.

Fitness classes are scheduled through the end of October, likely to ramp up involvement and attendance in the park.

People made themselves at home on the picnic tables, playing board games provided by a games cart. A family of three hashed out a round of Connect Four behind it.

A foosball table was up for grabs...

...and food vendors offered reasonably priced hot dogs and sandwiches. A more permanent restaurant is planned to eventually go up in this spot, so the vendors are temporary.

Source: Business Insider



Park goers lined up at the bar, where you could get a beer for $7. Not bad by San Francisco standards.

As I was making my laps, the pathway along the north edge split into two, with one slice of it decked out with tiles. I didn't know what it was at first...

...until I saw spigots along the middle spewing water! A plaque further down described how the installation was designed.

As buses pass on the Bus Deck below, sensors are alerted to their movement which then activate the water jets. So the more traffic there is, the more fountain activity — pretty nifty.

Near the bus fountain is where the park's glass aerial tram will spit out passengers.

The glass elevator was included in the Transit Center project to encourage passerby on the street level to check out the city park above.

But it can only transport 20 people at a time, which will likely result in some fairly long lines. It was poised to open in June, but that date has since been pushed back.

Source: Business Insider



Until then, park goers can use elevators, stairs, and escalators. Elevators are placed at the far ends of the park, as well as toward the middle.

Though with a transit center right smack in the middle of the city, it's easy to access any part of it.

Bradley Tusk, a former political strategist and now a prominent VC, explains why he invested in a $25 million fund for marijuana, sex tech, alcohol, and e-cigarettes

Mon, 07/01/2019 - 6:00pm  |  Clusterstock

  • On Thursday, Vice Ventures announced it raised its first $25 million fund to back early-stage companies in highly regulated "vice" industries like alcohol, marijuana, and e-cigarettes.
  • The fund was created by Catharine Dockery, a former Walmart executive, and has backing from Bradley Tusk and Marc Andreessen.
  • Tusk told Business Insider that he was impressed by Dockery's "aggressive and ambitious" approach to running her own fund, and felt that his experience in navigating uncertain regulatory waters would be helpful to Vice Ventures' portfolio.
  • Tusk said he would have hired Dockery "outright" for his own firm, Tusk Ventures, but believes the long-term partnership will help accelerate funding for early-stage companies facing compliance challenges that are traditionally overlooked by other investors.
  • Click here for more BI Prime stories.

A little vice won't scare away Bradley Tusk.

The political-strategist-turned-venture-investor thinks he can help early-stage startups navigate the murkiest of regulatory issues, and has advised insurance startup Lemonade, sports betting site Fanduel, and marijuana delivery service Eaze, among others.

Last week, he took his self-described "marginal approach" a step further by backing Vice Ventures' first $25 million fund. As the name suggests, Vice Ventures primarily makes early-stage investments in those industries that more traditional VC firms often turn away from — marijuana, sex tech, alcohol, and e-cigaretttes, among other areas. 

Tusk says these areas are typically overlooked because of "vice" clauses some firms have with existing limited partners that restricts the type of industries they can invest in.

"I liked the category because there's so much regulatory arbitrage there," Tusk told Business Insider. "A company can be incredibly successful around these spaces but there's lots of regulatory risks to deal with, so it will come down to how savvy you are and how you handle this stuff."

According to a VentureBeat report, Vice Ventures plans to invest around $500,000 in each of its portfolio companies, and has already invested in CBD beverage company Recess, Founders Fund-backed alcohol company Bev, and cannabis vaping creator Indose. 

'I would have just hired her outright' 

New-York-based Vice Ventures is the brainchild of Catharine Dockery, a former Walmart executive that led private investments for former Bonobos CEO Andy Dunn

Read More: This New York investor just raised a $60 million fund to capitalize on what he sees as a big weakness in the Silicon Valley VC firms

"I would have just hired her outright but I like that she was so aggressive and ambitious. She wanted to do her own thing," Tusk said.

As a former campaign strategist and Uber's first political strategist, Tusk is well aware of the compliance and regulatory hurdles many of these companies will face as they expand into new markets, and was eager to partner up with Dockerty to identify promising young companies and help them grow.

To that end, Tusk said that his personal investment in Vice Ventures will help build a strategic partnership with his venture firm Tusk Ventures. Where Tusk Ventures usually targets startups that already have some traction, Vice Ventures is currently looking to write smaller checks at the pre-seed and seed stages. 

Furthermore, Tusk says, he's excited to be a part of what stands to be one of the very few women-led venture capital funds in Silicon Valley.

"Everyone in tech talks a big game about diversity and female founders, so this was a chance to put my money where my mouth is," Tusk told Business Insider. "You can say all that stuff but until you do it, what does it mean? Nothing."

SEE ALSO: Please only use the sharing functionality at the top of the article. These stories are exclusive to our members. Email bi-prime@businessinsider.com to buy additional rights. More information on BI Prime can be found here. Read more at: https://www.businessinsider.com/m13-procter-gamble-exec-director-of-virgin-groups-hires-2019-6 This LA investment firm backed Ring before Amazon acquired it, and it just made several new hires to change early-stage tech startups

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American Airlines is suspending its first route because of the 737 Max grounding

Mon, 07/01/2019 - 5:57pm  |  Clusterstock

  • American Airlines has suspended its Oakland-Dallas/Fort Worth flight from July 6 to September 4.
  • The airline has canceled 115 daily flights because of the 737 Max grounding, covering other routes with different aircraft. This is the first time it has had to suspend an entire route.
  • Passengers traveling between the two cities can connect in Phoenix or take a direct flight to Dallas/Fort Worth from nearby San Francisco or San Jose, California.

For the first time since the Boeing 737 Max aircraft was grounded worldwide, American Airlines has suspended a route as a direct cause of the dormant planes.

The airline will suspend flights between Oakland and Dallas/Fort Worth from July 6 to September 4 because of the Max grounding, a spokesperson for the airline confirmed to Business Insider.

Although American's Oakland-Dallas/Fort Worth flight is operated by a 737-800, a different version of the 737 airframe that is not affected by the grounding, the fact that American's 24 737 Max aircraft are unable to fly means that the airline has had to be strategic with its other aircraft to ensure full coverage. 

"A flight that was not scheduled as a MAX flight might be canceled to enable our team to cover a MAX route with a different aircraft," the American spokesperson said. "Our goal is to minimize the impact to the smallest number of customers."

American has canceled around 115 daily flights because of the unavailability of the Max, according to the spokesperson, but this is the first time that the airline has completely suspended a route. 

American has extended those cancellations several times during the Max grounding, which is scheduled to continue through September 3. However, the Max is forecast to remain grounded through at least this fall.

American has three to four daily flights from Oakland. Passengers seeking to travel from the city to Dallas/Fort Worth can either connect in Phoenix, or take a direct flight from nearby San Francisco or San Jose, California.

SEE ALSO: United Airlines put an underage passenger on a plane to the wrong country, prompting an all-night ordeal between a panicked mother and the airline to keep the plane from taking off

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Facebook had to invent a totally new programming language, Move, for its Libra cryptocurrency project because no other language was up to the task (FB)

Mon, 07/01/2019 - 4:41pm  |  Clusterstock

Last week, Facebook announced a brand new cryptocurrency of its own called Libra — an initiative that has already drawn the attention of Silicon Valley, government officials, and even astrologists

Less noticed was the fact that Facebook also launched a new programming language to use with Libra, called Move. This language is specifically designed for blockchain transactions, and for developers to build apps that work with Libra. It's still in its early stages, but the idea is that the Move programming language allows apps to move Libra coins from one account to another without being misplaced or duplicated.

"One of the things that's powerful about Move is it's very expressive," Ben Maurer, tech lead for the Libra-focused Facebook subsidiary Calibra, told Business Insider. "Move can express things ranging from simple transactions like sending money to more complex transactions like how money is created and destroyed."

Subscribe to read: Facebook had to invent a totally new programming language, Move, for its Libra cryptocurrency project because no other language was up to the task

SEE ALSO: As Jony Ive prepares to leave Apple, a Wall Street analyst says that he's 'clearly irreplaceable' and it's a 'major changing of the guard'

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Ray Dalio shares what he's learned from his succession plan at the world's largest hedge fund

Mon, 07/01/2019 - 3:54pm  |  Clusterstock
  • Ray Dalio is the founder and co-CIO of Bridgewater Associates, the world's largest hedge fund, with $150 billion in assets under management.
  • In an interview for Business Insider's podcast, "This Is Success," Dalio said that the succession plan he began in 2010 taught him to be a better leader.
  • There were multiple people who had to be moved in and out of roles, and Dalio had to learn how to step back and prepare a co-CEO successor who was already familiar with the requirements.
  • He's learned that a leader cannot be stretched too thin, and that trying an approach is more effective than over-planning.
  • Visit Business Insider's homepage for more stories.

The following is a transcript of the video.

Ray Dalio: A lot of learning comes from having the same mistake over and over again until you learn it.

Richard Feloni: I notice that you had said that in 2016, when you had to move your chosen successor, Greg Jensen, out of a co-CEO role to be just co-CIO, that that was the biggest regret that you had had at Bridgewater.

And what I found interesting about that is that essentially the problem there, and correct me if I'm wrong, was that he had two jobs, running both the management and the investment side of things. But what I found interesting is that a decade prior to that you said that you had found that same problem for yourself in 2008. That you had two full-time jobs and that you couldn't do both. How did you not see that you were kind of passing on the same thing that you had gone through?

Dalio: First of all, I would say a lot of learning comes from having the same mistake over and over again, and until you learn it. So, in my particular case, you know, the company grew up under me, and there I was, and I was handling too many things, and I was getting by, and I was figuring out how to get those things by, but not adequately. And then I figured, OK, now that's my situation, my dilemma, and I should pass along both my dilemma and my circumstances to him, and we should try to figure out how to deal with that together.

But, in other words, I can't not pass it along, and yet we don't have a solution yet, and so we will try to deal with that together.

And that's the path that we went down, and we found out that we couldn't do that together because it was just too much for him, too much for me.

So I guess I would say, you know, you form a theory, and the theory doesn't work, and then you try again, and you form another theory, and that's part of the learning process.

SEE ALSO: 'Pain is a great teacher': How Ray Dalio, the world's most successful (and mysterious) hedge-fund founder, came back from financial ruin

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Broadcom tells Wall Street it will focus on acquiring software companies, a year after the Trump administration squelched its $117 billion Qualcomm acquisition (AVGO)

Mon, 07/01/2019 - 3:46pm  |  Clusterstock

  • Semiconductor giant Broadcom grabbed headlines last year during its $117 billion hostile takeover bid for Qualcomm. Now the company is turning away from semiconductor acquisitions.
  • In a conversation with Morgan Stanley, Broadcom Chief Financial Officer Tom Krause said that the remaining independent semiconductor companies are too expensive, which makes it unlikely that any deals will get done.
  • Krause told Morgan Stanley that Broadcom management has its eyes on the infrastructure software space, which includes companies like CA Technologies, which Broadcom acquired for $19 billion last July.
  • Click here for more BI Prime stories.

It's been sixteen months since President Donald Trump intervened to prevent Broadcom's $117 billion takeover bid for Qualcomm, its competitor in the semiconductor space. 

Now Broadcom has shifted its M&A strategy away from semiconductor consolidation and into the software sector, citing concerns that there aren't enough cheap semiconductor companies left to acquire.

In a conversation with analysts at Morgan Stanley, Broadcom Chief Financial Officer Tom Krause said management thinks that the infrastructure software space is ripe for the type of consolidation that started shrinking the semiconductor landscape five years ago.

Morgan Stanley analyst Craig Hettenbach shared his takeaways from the conversation with Krause in a note to investors on Monday.

Read more: The president of $85 billion Qualcomm explains his master plan for growth, 4 months after Trump blocked its takeover by Broadcom

Broadcom already took a major step into the software sector last July, when it acquired CA Technologies for $19 billion. That investment is already nearing a 14% return, according to the note.

While investors have shared their concerns that the mainframe software market, where CA Technologies sits, is shrinking, Hettenbach said Broadcom isn't worried.

Broadcom's management team believes that there's a place for infrastructure software in hybrid cloud implementations, Hettenbach wrote. In hybrid clouds, customers use combinations of on-premise and public cloud services to power their computing infrastructure. 

Broadcom isn't the only acquirer to take a step back from semiconductors. Consolidation in the chip space has slowed in recent months as global trade tensions have put a hold on many cross-border deals, including Broadcom's hostile takeover bid for Qualcomm last year.

Broadcom relocated its headquarters to San Jose, California from Singapore as part of an effort to ease cross-border concerns. Its relocation was finalized in April 2018, just weeks after the Trump administration blocked the Qualcomm takeover, citing national security concerns. 

Krause told Morgan Stanley that the remaining independent semiconductor companies are too expensive, which lowers the chances of getting deals done.

"In semiconductors, [Broadcom] was early and led the wave of consolidation seen across the industry," Hettenbach wrote. "However, with many assets already off the board and remaining companies trading at high valuation multiples, the opportunity set in semis is much lower today."

However, Hettenbach emphasized that he expects Broadcom will ultimately make acquisition decisions based off of what makes the most sense financially.

"First and foremost, Broadcom's approach to M&A is to deliver high cash on cash returns, which it has been quite successful in achieving to date," he wrote.

SEE ALSO: Meet the jet-setting Goldman Sachs banker who led Qualcomm through a hostile takeover, got stuck in Trump's trade war, and made magic happen across the semiconductor industry

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WeWork rival Convene is betting a healthcare startup can help it win new customers by bringing office clinics to the masses

Mon, 07/01/2019 - 3:34pm  |  Clusterstock

  • Convene, a WeWork rival, has partnered with the healthcare startup Eden Health to deliver primary care in its workspaces. The companies just opened their first clinic in Convene's New York offices in midtown Manhattan.
  • Eden plans to open at least 24 more health clinics in partnership with Convene over the next 18 months. 
  • Convene CEO Ryan Simonetti called the partnership a means to provide quick access to healthcare and win over tenants.
  • Click here for more BI Prime stories.

The newest must-have office amenity isn't an indoor Ferris wheel, a water lounge, or arcade games. Instead, Convene and the startup Eden Health are betting it's a doctor's office.

Convene, which operates flexible office spaces, partnered with Eden to build at least 25 primary-care clinics in Convene's workspaces. The first opened in New York last month at Convene's flagship site in midtown Manhattan. There, workers can get a flu shot or a checkup without leaving the office.

Employers are offering more perks, including healthcare, to boost their employees' productivity and win the war for talent as the unemployment rate stays low. Companies like Convene are offering similar perks to woo tenants. Convene CEO Ryan Simonetti said Convene wanted to stand apart from rivals by offering an amenity that is typically available at only the largest corporations. 

"To have immediate access to healthcare like that is something you can't get unless you're a massive company, based in their headquarters," Simonetti told Business Insider.  

Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare.

WeWork, the most recognizable name — though not the biggest company — in the flexible-office-space business, doesn't have health clinics in its offices. The company declined to comment for this article. 

Workers want more than a cool office

Unlike WeWork, Convene got its start as an event-space provider with an eye toward luxury touches, such as high-end chefs. It then morphed into a provider of flexible offices and coworking spaces, much like WeWork. Convene has 28 outposts in the US, with half of them in New York City, compared with WeWork's 485 locations. WeWork's most recent funding round in January valued the company at $47 billion.

In July 2018, Convene raised $152 million from investors, including Revolution Growth, Brookfield Property Partners LP, and the Durst Organization, in a series D round that valued the company at more than $500 million, according to Bloomberg News. The rival to WeWork is expanding rapidly and believes the on-site clinics can offer a new type of workplace experience.

Melanie Gladwell, the Americas head of flexible workplace solutions at the real-estate company Cushman & Wakefield, said long-standing space providers like Regus and Servcorp have "dabbled in" healthcare in response to member demand for more than just a cool office. Gladwell has worked at a number of different providers of flexible office space.

"Because work and personal life is so blurred these days, and business is done at every hour, the accessibility to these amenities is in high demand," she said. "It's giving companies the edge. You don't have to go far to get what you need, and you can still be a rock star." 

Large companies like Apple and Goldman Sachs have long had on-site or near-site healthcare options. Workplace clinics have been around for almost a century, but over the past few years, they've grown in popularity.

According to a 2018 survey from the employer-benefits consultant Mercer, about one-third of employers that have more than 5,000 workers have an on-site or near-site clinic, up from 24% in 2012 and 17% in 2007. 

Read more: The company that runs health clinics for Facebook and LinkedIn just made a big bet that the future of healthcare is moving online

Eden, for its part, tends to work with smaller employers. For instance, Convene as an organization employs about 500 people. 

"Now is really the right time," Eden CEO Matt McCambridge told Business Insider. "You've had large employers for a long, long time have on-site clinics. You even talk to the large consulting groups who are fed up with, frankly, the level of service that is seen. Trying to give people what they intuitively expect is important."

Founded in 2009, Convene designs and services places for people to work, host meetings, and put on events, similar to WeWork. Convene partners with landlords to offer companies and building tenants access to the workspace and amenities. 

Eden provides virtual and in-person primary care to employees, pairing up patients through its app with a care team of physicians and medical experts. Patients can choose to seek care virtually — according to Eden, 70% of patient encounters happen online — but they can set up in-person appointments, too. 

Eden and Convene announced their partnership in March, shortly after Eden raised $10 million in a series A round from investors, including Convene. Beyond New York, the plan is to put clinics in Chicago, Philadelphia, Washington, DC, Boston, and Los Angeles.

"Wellness is really important in these environments," Simonetti told Business Insider. "We want to bring that driving experience at Convene and to our landlord partners as a broader amenity to the building."

A tour of Eden's first clinic at Convene's midtown Manhattan site

A recent tour of Convene's midtown location provides a preview of what's to come. Convene's three-floor open office space is in the middle of a midtown office building. There are kitchens filled with snacks, glass-enclosed conference rooms, a roof deck, and a workout room with a Peloton bike.

To find the clinic, take a left just after the entrance. Inside the private enclosed room, Eden users can sit on an exam table and talk with a healthcare professional in a white coat. The door to the exam room is the only thing signaling that this is a doctor's office — there's no waiting room.

Eden says patients can book an appointment on the app, walk in, and see a member from its primary-care team without a long wait. 

By the end of 2019, Eden plans to have four New York clinics open (right now it operates an independent location and the initial one with Convene), two in Chicago, and two in Washington, DC. Another 25 are planned for 2020. The partnership with Convene will play a big role in growing that capital-intensive brick-and-mortar presence. 

"That allows us to have pretty immediate national scale," McCambridge said. "For employers who this day and age have people everywhere, it's really important to achieve scale for them quickly if you're going to promote having physical clinics." 

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The deadly poison sarin was detected in a mailbag at Facebook's offices in California (FB)

Mon, 07/01/2019 - 3:31pm  |  Clusterstock

  • The deadly poison sarin has been detected in a mail facility at Facebook's Silicon Valley headquarters, prompting FBI involvement and reported evacuations.
  • It's possible that the detection is a false positive, according to a fire official. 
  • Workers at the facility are now being monitored, but none have so far shown any symptoms of exposure, officials said. It's unknown how many people may have been exposed.
  • Visit Business Insider's homepage for more stories.

The deadly poison sarin has been detected at a mail facility for Facebook in Menlo Park, California, prompting building evacuations and FBI involvement.

On Monday, routine tests for sarin detected the presence of the substance in a mailbag at the social-media tech firm's offices, a Menlo Park Fire Department (MPFD) official told Business Insider. The mailbag is now under quarantine. The news was first reported by NBC Bay Area

It is possible that the detection is a false positive, the official said.

A number of people who work at the facility are now being monitored, but no one is showing any symptoms of exposure, according to officials. The MPFD official could not say exactly how many people were being monitored, though other news reports have suggested two people.

A Facebook spokesperson said the company evacuated four buildings in response to the news, three of which have now been brought back into use.

Sarin is a man-made nerve agent used in chemical warfare. Exposure can cause loss of consciousness, convulsions, paralysis, respiratory failure, and death, according to the Centers for Disease Control and Prevention.

Law enforcement has been notified and the FBI is en route. 

In a statement, the Facebook spokesperson Anthony Harrison said: "At 11:00 AM PDT this morning, a package delivered to one of our mail rooms was deemed suspicious. We evacuated four buildings and are conducting a thorough investigation in coordination with local authorities. Authorities have not yet identified the substance found. As of now, three of the evacuated buildings have been cleared for repopulation. The safety of our employees is our top priority and we will share additional information when it is available."

This story is developing ...

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NOW WATCH: Watch Apple's 2019 WWDC event in 11 minutes

Inside 'Area X': the elite teams at JPMorgan that help decide which tech projects to green light — and which to kill

Mon, 07/01/2019 - 2:43pm  |  Clusterstock

  • JPMorgan is assembling rapid-response innovation teams inside its investment bank with the goal of quickly bringing ideas to life and making faster decisions on which projects to pursue — and what should get killed.
  • The teams — made up of experts in strategy, product management, data science, engineering, and user experience — will be asked to take ideas from paper to prototype in roughly six weeks.
  • They're part of JPMorgan's continued effort to accelerate the pace of innovation and surface new ideas from its 256,000 global employees.
  • Click here for more BI Prime stories.

JPMorgan is taking another swing at cracking the innovation code, forming rapid-response teams inside its investment bank with the goal of quickly bringing ideas to life and making faster decisions on which projects to pursue — and what should get killed.

Under a new program called Area X, the bank is putting together teams of half a dozen employees to take ideas from paper to prototype in roughly six weeks. Each group will have experts in strategy, product management, data science, engineering, and user experience, according to Michael Elanjian, the head of digital strategy and fintech for the investment bank.

"There's no point capturing good ideas if we lack the ability to implement them," he said in an interview last week. "By building something functional but without all of the bells and whistles, we can quickly, cheaply, and more tangibly assess if we want to further invest in the offering, or fail quickly and move on. I want us to spend more time doing product strategy and less time doing PowerPoint strategy."

Elanjian joined JPMorgan just over a year ago from Goldman Sachs to pull together and coordinate a collection of disparate innovation efforts spread across the bank's trading and investment banking unit. He reports to David Hudson and Guy Halamish, coheads of the 36,000-person-strong digital and platform services team. Last November, Elanjian added a line into Max Neukirchen, the head of strategy, to better align the work he's doing with the strategies set at the top of the firm.

Read more: We talked to some of the smartest minds on Wall Street about how tech is transforming finance. Here's what they had to say.

Elanjian has designed the Area X groups to sit outside traditional reporting structures but work closely with business units. A team won't begin work on a project until it's gotten buy-in from the business that would manage the product. And once the demo has been built and gotten approval for more resources, the Area X team will hand it back to a larger, more traditional tech team to take it through its next phase of growth. The teams will be based in large offices such as New York, London, and Hong Kong and focus on products that face an employee or client.

Why Area X? The "x" is meant to denote something that spans the entire corporate and investment bank, while the intention of "area" is to summon visions of JPMorgan's global footprint. Each office will have a name befitting its location, so New York will be Area383, for 383 Madison, while London will be Area25, for 25 Bank St.

Elanjian has already started hiring. He declined to say how many people that may be, but a recent job advertisement gives some sense of what JPMorgan is looking for. The bank is hiring for an associate or vice-president-level software engineer in New York to be "involved in the full development life cycle of analysis, design, implementation, testing and deployment of our platform."

Experience in a startup environment is "desirable," according to the posting, while essential skills involve working with JavaScript, knowing how to use a code library for building user interfaces, and working with what is essentially a track-changes program for computer code.

There's no assurance that the Area X program will succeed. Spurring innovation can be difficult to do from inside a 100-year-old bank. JPMorgan recently closed down its digital-only banking app, Finn, after some senior executives expressed doubts after the app failed to gain traction with consumers. Goldman Sachs is slowly winding down a once praised email app it developed in house after realizing third parties could update software more quickly and cheaply.

Area X is one piece of a larger strategy to centralize and inspire more innovation within the largest US bank by assets. Another, an idea competition known as Originate, took place earlier this year. Three teams were selected as finalists and flown to Miami to present to the 350 most senior people in JPMorgan's corporate and investment bank.

The ideas they came up with: a way to securely share know-your-customer information with third parties using blockchain; a plan to use machine learning to analyze 1,000 stocks in five seconds; and an alternative to traditional approaches to client entertainment, with bankers working alongside clients in community-service projects. The blockchain project took first place.

Read more: Goldman Sachs is scrapping a homegrown email app it once touted — and it's a sign the bank is moving away from building tech in house

And yet another program, named Rapid POC, for proof of concept, is a system to make it easier for tech startups and other third parties to collaborate with JPMorgan. The system will include automated negotiation of nondisclosure agreements, preapproved data sets that can be used with the startup's product in real time, and a walled working environment where partners can work with the bank without imperiling its systems.

When completed, the approach should shave the length of time between the first meeting with a potential partner and when the two can start working together to just three days, he said. In total, the time it takes to evaluate prospective fintech partners should be reduced to three weeks from nine months, Elanjian said.

Read more: INTRODUCING: The 10 people transforming finance

Elanjian, who grew up with an investment banker father and never really thought about getting into anything but finance, is well aware of the challenges facing the industry and his employer. And yet a poster in his office shows his confidence and sense of humor. Designed to look like the opening of the second movie in the original "Star Wars" trilogy, it has these words in yellow on a black background: "Episode V THE INCUMBENTS STRIKE BACK."

"Scale is a huge advantage," Elanjian said, "but we also have to increase agility and nimbleness. So we've thought a lot about how to leverage scale when it's helpful but not allow it to slow us down. After all, innovation is a means to an end. It's not an end."

Join the conversation about this story »

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.

Warren Buffett just announced he's donating $3.6 billion in Berkshire Hathaway shares to 5 foundations. Here's how the notoriously frugal billionaire spends his $87.3 billion fortune

Mon, 07/01/2019 - 2:32pm  |  Clusterstock

Still living in the house he bought in the 1950s and driving an equally modest car, Berkshire Hathaway chairman Warren Buffett prefers to keep and grow his money rather than take it out of the bank. Not one for lavish purchases, he spends relatively little of his billions — except when it comes to philanthropy.

Buffett announced July 1 that he will donate $3.6 billion in Berkshire Hathaway shares to five groups including the Bill & Melinda Gates Foundation. Buffett is regarded as one of the most generous philanthropists in the world, having donated more than $46 billion since 2000.

Now 88, the Oracle of Omaha's estimated net worth stands at $87.3 billion according to the Bloomberg Billionaires Index — but you wouldn't know it from Buffett's frugal ways.

However he uses his money, not much is spent on himself. See how Buffett spends — or doesn't spend — his billions.

SEE ALSO: 24 mind-blowing facts about Warren Buffett and his $87 billion fortune

DON'T MISS: What George Soros' life is really like: How the former hedge-fund manager built his $8.3 billion fortune, purchased a sprawling network of New York homes, and became the topic of international conspiracy theories

Warren Buffett has a net worth of $87.3 billion, making him the world's fourth-richest person.

Source: Forbes



The CEO of Berkshire Hathaway began building his wealth by investing in the stock market at age 11.

Source: Forbes



As a teenager, he was raking in about $175 a month by delivering "The Washington Post" — more than his teachers (and most adults).

Source: Business Insider



He had amassed the equivalent of $53,000 by the time he was just 16.

Source: Business Insider



But 99% of his wealth was earned after his 50th birthday.

Source: Business Insider



He reportedly earns a salary of $100,000 at Berkshire Hathaway.

Source: GOBankingRates



And in 2013, Buffett made on average $37 million per day — more than what Jennifer Lawrence made the entire year.

Source: MarketWatch



His wealth is greater than the GDP of Uruguay.

Source: Business Insider



But you wouldn't know Buffett is a billionaire by the way he spends his money.

He previously told CNBC and Yahoo Finance's "Off the Cuff" that he's "never had any great desire to have multiple houses and all kinds of things and multiple cars."

Source: CNBC



Buffett lives in a modest home in Omaha, Nebraska, which he bought for $31,500 in 1958. Adjusted for inflation, it's about $276,700 in today's dollars.

Source: Business Insider



As of 2017, it was worth an estimated $652,619, what he calls the "third-best investment he's ever made."

Source: Business Insider



The home spans 6,570 square feet. It has five bedrooms and two-and-a-half bathrooms.

Source: Business Insider



It's also guarded by fences and security cameras.

Source: Business Insider



In 1971, Buffett purchased a vacation home in Laguna Beach, California, for $150,000.

Source: Business Insider



Part of a gated community called Emerald Bay, it's walking distance from the beach.

Source: Business Insider



According to the listing, the home comes with a $9,264 annual association fee, which grants him access to nearby amenities like a pool and spa, picnic area, playground, and tennis court.

Source: Business Insider



It has 3,500 square feet of living space and six bedrooms. Buffett has renovated it since his initial purchase.

Source: Business Insider



Each bedroom has its own en-suite bathroom.

Source: Business Insider



It's secluded and has plenty of wide-open windows for views of the sea.

Source: Business Insider



It's also secluded and simply decorated, mirroring Buffett's simple spending habits.

Source: Business Insider



He put it on the market for $11 million in early 2017, but cut it down to $3 million later that year.

Source: Business Insider



After nearly two years on the market, it finally sold in October 2018 for $7.5 million.

Source: Business Insider



Buffett also has a modest set of wheels. He previously drove a 2006 Cadillac DTS.

Source: GOBankingRates, US News & World Report



In 2014, he replaced it with a Cadillac XTS, which has an original starting price of $44,600.

Source: GOBankingRates, US News & World Report



He also buys beat-up cars — like hail-damaged cars — at reduced prices and is reluctant to replace them, daughter Susie Buffett said in a BBC documentary.

Source: GOBankingRates



"The truth is, I only drive about 3,500 miles a year so I will buy a new car very infrequently," Buffett once told Forbes.

Source: Forbes



He once auctioned his car for $73,200.

Source: Reuters



His Lincoln Town Car once had a license plate that read "THRIFTY."

Source: The Wall Street Journal



Buffett doesn't spend much on technology, at least when it comes to his mobile phone. He still uses a flip phone instead of a smartphone.

Source: Business Insider



Buffett isn't a fan of high-end designer suits. He only wears suits — of which he owns about 20 — made in China by designer Madame Li.

Source: CNBC



Buffett tops off his style with an $18 hair cut.

Source: Marketwatch



Buffett eats the same thing every morning for breakfast — McDonald's. He spends no more than $3.17 on his order.

Source: Business Insider



He also likes to treat his buddy Bill Gates to lunch at McDonald's — which he's paid for with coupons in the past.

Source: GOBankingRates



Buffett is also a thoughtful friend without spending a lot of money. He picks Gates up at the airport, calls him, and sends him news clippings via snail mail.

Source: GOBankingRates



Buffett also dines at the modest Gorat's steakhouse, his favorite. The menu ranges from $3 to $41.

Source: CNBC, Gorat's



Buffett is also a fan of Coca Cola; he has said he typically drinks five Cokes a day — so you can imagine he spends more on the beverage than the average person.

Source: GOBankingRates



Compared to other CEOs, Buffett doesn't spend a whole lot on his hobbies. He plays bridge for about 12 hours a week.

Source: Business Insider



Buffett also likes to hit the green for some golf — but he doesn't spend his money on fancy golf clubs.

Source: GOBankingRates



"I'm a member of every golf club that I want to be a member of […] I'd rather play golf here with people I like than at the fanciest golf course in the world," he once said in a Q&A.

Source: GOBankingRates



He also puts a lot of money toward books. He's said he has a "disgusting pile" of books by his chair, and he spends 80% of his day reading.

Source: Business Insider, CNBC



Buffett also loves to play the ukulele. Girls Inc of Omaha once hosted a ukulele concert as a benefit for Buffett, in which they earned $344.23 in donations.

Source: Reuters



He took the money and purchased 17 Hilo ukuleles for the group — but not without demanding a discount because he was buying in bulk.

Source: Reuters



He's even frugal when it comes to his kids — he fashioned a dresser drawer into a bassinet for his firstborn, Susie.

Source: GOBankingRates



For his second born, Howard G. Buffett, he borrowed a crib.

Source: GOBankingRates



Buffett once spent $100 to take a Dale Carnegie course on public speaking. It helped him propose to his wife, he said.

Source: Business Insider



The one thing Buffett has splurged on is a private jet. He told CNBC, it's "the only thing that I do that costs a lot of money."

Source: CNBC



But that wouldn't be possible without his wise investing strategies. While 99% of Buffett's net worth is tied to Berkshire Hathaway, he invests the other 1%.

Source: Forbes



He purchased shares in Wells Fargo "a long, long time ago," but it's unclear what his stake in the company is.

Source: Forbes



He also purchased two million shares — an 8% stake — in Seritage Growth Properties for a total estimated cost of $73 million.

Source: Forbes



He also owns an undisclosed amount of JPMorgan stock. He's said to be a fan of the bank's CEO, Jamie Dimon.

Source: The Motley Fool



But not all his investments have been wise — back in 1951, he bought a Sinclair gas station with a friend. The Texaco station across the street was more popular, and he lost $2,000 out of his $9,600 savings.

Source: Forbes



Buffett spends most of his billions on philanthropy; he's considered one of the most generous philanthropists in the world, having donated more than $46 billion to causes since 2000.

Source: CNBC



He teamed up with Bill and Melinda Gates in 2010 to form The Giving Pledge, an initiative that asks the world's wealthiest people to dedicate the majority of their wealth to philanthropy.

Source: Business Insider



In 2016, he donated $2.9 billion to various charities, including The Bill and Melinda Gates Foundation and the Susan Thompson Buffett Foundation, in honor of his late wife.

Source: Business Insider



Buffett, through the Susan Thompson Buffett Foundation, has donated tens of millions to the Planned Parenthood Federation of America and the National Abortion Federation.

Source: Inside Philanthropy



He donated even more to the Bill and Melinda Gates Foundation in 2018 — around $2.6 billion worth of Berkshire Hathaway stock.

Source: FORTUNE



That same week, he donated about $800 million in Berkshire Hathaway stocks to the Susan Thompson Buffett Foundation, Sherwood Foundation, Howard G. Buffett Foundation, and NoVo Foundation.

Source: FORTUNE



Buffett donated another $3.6 billion in Berkshire Hathaway shares to those organizations in June 2019.

Source: Markets Insider



Buffett only plans to leave his kids $2 billion each; the rest of his fortune will be donated to philanthropic causes. He once said he wants to leave his children "enough money so that they would feel they could do anything, but not so much that they could do nothing."

Source: The Washington Post



There is one thing money does buy for Buffett personally, he said in a CNBC interview: Freedom.

Source: CNBC



"My life couldn't be happier" he once said. "In fact, it'd be worse if I had six or eight houses. So, I have everything I need to have, and I don't need any more because it doesn't make a difference after a point.”

Source: CNBC



Analysts are widely skeptical of the US-China trade truce — and some warn that more tariffs are coming within a year

Mon, 07/01/2019 - 2:26pm  |  Clusterstock

  • Even after the US and China agreed to a trade truce, Capital Economics expects the US to escalate tariffs by 2020. 
  • The S&P 500 could see corrections in the near future from current or further tariffs, said analysts from Capital Economics, Bank of America, and Morgan Stanley. 
  • In addition, the prevailing tariffs have hurt the global economy and can't be ignored, according to Piper Jaffray. 
  • Read more on Markets Insider. 

Wall Street analysts and economists are skeptical that the truce the US and China reached over the weekend will lead to lasting relief from the trade war. 

Markets rallied Monday after President Donald Trump and Chinese President Xi Jinping agreed to a trade truce at the G20 summit in Osaka, Japan over the weekend. The S&P 500 climbed to a new intraday record, while safe-haven assets slipped.

But a number of analysts think the rally will be short lived, and that further tariffs could be coming. 

"Our forecast remains that the US will go through with its threat of a 25% tariff on all Chinese imports by early 2020, and that China will in turn retaliate with a combination of additional tariffs and non-tariff measures," wrote Oliver Jones of Capital Economics in a note Monday. 

Pauses on raising tariffs haven't led to much success in the past, Jones said. Last year at the G20 summit in Buenos Aires, Argentina, a trade truce only lasted about six months before the US went ahead with raising tariffs on $200 billion of Chinese imports to 25% from 10%. 

While it's positive that the US and China have agreed to reopen negotiations, there is no proof that this will lead to a resolution. So far, no proposals have been able to address the concerns that both sides bring to the table, leading analysts to believe that further escalation of tariffs and retaliatory measures will be on the horizon at some point. 

"The risk of talks falling apart, or another flare-up in tensions, could still rear its ugly head at some point in the future, blindsiding investors yet again," wrote Han Tan, market analyst at FXTM in a note Monday. 

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In addition, the global economy is still dealing with the damage that the current tariffs have caused, wrote Craig Johnson of Piper Jaffray. The current round of tariffs will likely continue to drag down global growth, a negative going forward, especially if the "kick-the-can policy" continues, Johnson wrote.

It's clearer now that trade and tariff wars are not low-cost affairs, wrote John Stoltzfus, the chief investment strategist at Oppenheimer, in a Monday note. 

To be sure, some industry watchers say that because of the damage inflicted on both economies by tariffs, this trade truce will be different. 

"The need for Mr. Trump to sign a deal with China, given his deeply underwater polling in key 2020 states, means that an agreement over the summer is very likely," wrote Ian Shepherdson, chief economist at Pantheon Economics, in a note Monday. 

Still, some analysts expect that the market highs seen from the current trade truce will reverse in the next few months. Mike Wilson, the chief US equity strategist at Morgan Stanley, has maintained his view that there will be a 10% correction in the third quarter. Analysts at Bank of America think that while a true trade deal could send the S&P 500 over 3,000, additional tariffs would drag the S&P 500 down more than 5%

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

The markets poised to outperform developed countries like the US and UK might surprise you — but investors say they're the best places to look for growth

'There are no obvious opportunities': A Wall Street fixed income investment chief at a $23 billion firm says now is the time to protect returns rather than seek new ones

The RealReal could be valued at $1.6 billion when it starts trading on Friday. Here's what you need to know about the used luxury goods startup's IPO.

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