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Boeing has finished the software update to fix the grounded 737 Max that was involved in 2 fatal crashes (BA)

Thu, 05/16/2019 - 4:19pm  |  Clusterstock

  • Boeing announced on Thursday that it has finished development work on the software fix for the grounded 737 Max aircraft.
  • The company is now working with the FAA to schedule certification test flights and submit its final certification documents. 
  • All 371 Boeing 737 Max airliners in service have been grounded since March 13 after the deadly crashes of Lion Air Flight JT610 and Ethiopian Airlines Flight ET302.
  • Visit Business Insider's homepage for more stories.

Boeing announced on Thursday that it finished development work on the software fix for the grounded 737 Max aircraft.

The Chicago-based aviation giant also said it has completed the simulator testing and engineering test flights associated with the software fix for the plane's Maneuvering Characteristics Augmentation System (MCAS). 

"With safety as our clear priority, we have completed all of the engineering test flights for the software update and are preparing for the final certification flight," Dennis Muilenburg, Boeing's chairman and CEO, said in a statement. "We're committed to providing the FAA and global regulators all the information they need, and to getting it right."

Muilenburg added, "We're making clear and steady progress and are confident that the 737 MAX with updated MCAS software will be one of the safest airplanes ever to fly."

Read more: American Airlines CEO reveals when he would feel safe flying on the Boeing 737 Max again.

According to Boeing, it's providing the Federal Aviation Administration with details on "how pilots interact with the airplane controls and displays in different flight scenarios." The company is also working with federal regulators to schedule certification test flights and submit final certification documents. 

It's unclear how long the certification process will take once the FAA receives Boeing's final package of proposed fixes. 

Boeing also announced that is has developed "enhanced" training materials that are under review by the FAA, international regulators, and airlines. 

All 371 Boeing 737 Max airliners in operation have been grounded around the world since March 13 after the crashes of Lion Air Flight JT610 and Ethiopian Airlines Flight ET302, which occurred less than five months apart. A total of 342 passengers and crew died in the two crashes. 

At the heart of the controversy is MCAS. It's a control system found on board the 737 Max that was not disclosed to airlines and pilots until the Lion Air crash in October. Boeing confirmed in April that faulty readings from malfunctioning angle-of-attack sensors triggered MCAS ahead of both crashes.

In March, Boeing rolled out a series of proposed software updates designed to roll back the intrusiveness of MCAS along with additional pilot training on the differences between the previous generation 737NG and the 737 Max. 

SEE ALSO: American Airlines CEO reveals why a small Italian airline is the focus of the nastiest feud in the airline industry

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Pinterest is crashing after giving light guidance in its first public quarterly report (PINS)

Thu, 05/16/2019 - 4:16pm  |  Clusterstock

  • Pinterest shares plunged by 19% late Thursday after the company released its first quarterly results as a public company.
  • Its full-year sales guidance and adjusted loss per share both disappointed.
  • Shares had rallied 60% since debuting on the New York Stock Exchange on April 18.
  • Watch Pinterest trade live.

Pinterest shares plunged by as much as 19% late Thursday after the company released its first quarterly report as a public company.

While the visual-bookmarking platform reported quarterly sales that topped expectations, its sales guidance and adjusted loss per share both fell short.

Pinterest managed to narrow its net loss from the same point last year. It lost $41.4 million during the first three months of this year, down from the $52.7 million that it lost during the first three months of 2018. Revenue rose 54% versus a year ago to $201.9 million. 

"We were particularly encouraged by the strength we saw in US revenue and international user growth," Todd Morgenfeld, Pinterest's chief financial officer, said in the earnings release.

Here's what Pinterest reported compared with what analysts polled by Bloomberg were expecting:

  • Revenue: $201.9 million ($200.8 million expected)
  • Adjusted loss per share: -$0.32 (-$0.10 expected)
  • EBITDA: -$38.4 million (-$42.1 million expected)
  • Full-year 2019 revenue outlook: $1.06 billion to $1.08 billion ($1.09 billion expected)

Wall Street has been concerned about two things when it comes to Pinterest — its path to profitability and how it can compete for digital advertisement dollars against other giants like Facebook and Google. Pinterest debuted one month ago and is one of a slew of young money-losing technology companies to hit the market this year.

"Despite strong fundamentals & a promising runway for future growth, we see the current risk/reward on shares as balanced given the stock performance & valuation since IPO," UBS analysts wrote on Monday.

"Risk factors include competition for digital advertising budgets, the path to profitability in coming years (compared to current margin structure) & dual-class stock structure and management stability," they added.

The company's "quiet period" ended earlier this week, ushering in a deluge of Wall Street commentary that reflected a pretty lukewarm view. In their reports, some analysts cautioned that Pinterest's valuation is a bit too rich.

"We are very constructive on PINS position in mobile advertising and the company's growth and margin cadence," Barclays analysts wrote in a Monday note to clients. "The only thing giving us pause is the current 12x 2020 revenue multiple and the track record of mobile advertising IPOs chopping around for a bit after the initial post IPO pop."

Read more: Pinterest, the latest unicorn to hit the public market, jumps 25% in its trading debut

The firm carries a $28 price target on the name and an "equal-weight." 

Wall Street is mostly neutral on the name. Of the analysts surveyed by Bloomberg, 12 recommend "hold," five say "buy," and just one recommends "sell." 

Pinterest surged 7% during Thursday's session to its highest level in two weeks. Shares were up 60% since debuting on April 18. 

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NOW WATCH: Warren Buffett, the third-richest person in the world, is also one of the most frugal billionaires. Here's how he makes and spends his fortune.

A top Aurora cannabis exec dishes about what it's like working with famed investor Nelson Peltz, and reveals why he told the company not to rush into any CPG partnerships

Thu, 05/16/2019 - 4:04pm  |  Clusterstock

  • Cam Battley, Aurora Cannabis' chief corporate officer, sat down for an interview at Business Insider's Manhattan headquarters following Aurora's earnings on Wednesday.
  • Battley revealed what Aurora's unique relationship with famed billionaire Nelson Peltz brings to the table, why they're not rushing into any partnerships with CPG companies, and why they're not bullish on cannabis-infused beverages. 

Cam Battley is a busy man.

Coming off of Aurora Cannabis's quarterly earnings call on Wednesday, the CCO's destinations over the next two weeks include a trip to London for a cannabis conference, a pitstop in Toronto, where he lives with his family, a trip to Edmonton for a series of meetings at Aurora's headquarters, and then it's off to an "undisclosed" location in South America where he's set to meet with government officials about opening up new cannabis production facilities.

Such is the life of a cannabis exec in 2019, said Battley.

As Aurora's chief corporate officer and one of the most public faces of the Canadian cannabis behemoth, Battley sat down for an interview in Business Insider's Manhattan offices on Wednesday afternoon. 

He shed light on the company's recent strategic partnership with famed investor Nelson Peltz, why Aurora isn't bullish on cannabis beverages, and whether or not the company would pursue big acquisitions in the US in the near future.

Read more: Marijuana retailer Curaleaf is snapping up Cura Partners for $949 million in the largest US marijuana merger to date as a wave of consolidation sweeps the industry

The unique arrangement with Peltz — a hedge fund legend who's worth a cool $1.6 billion — came about over a dinner in New York City.

"I think he was really just curious at first," said Battley. "He was interested in this new business that's being born before our eyes."

After both parties hit it off over a dinner in New York City the casual advice became more structured: Peltz took a formal role as a strategic advisor to Aurora in March. He'll be compensated handsomely, with 20 million in stock options that vest over four years.

"It's really important because some people ask us, 'oh, he's an activist investor, is he trying to take over the company?'" said Battley. "No, his involvement is very different because this is not a mature industry where there's stuff broken that needs to be fixed."

What excites Peltz the most, said Battley, is that Aurora is helping to invent a brand new global industry. "So there's no cost-cutting to be done," said Battley. "He's about helping us grow faster because we're still so small compared to where we're going to be in a very short number of years."

One of Peltz's first pieces of sage advice was not to rush into any major partnerships with a single company in the consumer packaged goods, beverage, or tobacco industries — unlike some other cannabis companies that have announced landmark deals in recent months

For one, Aurora's value is increasing every quarter, said Battley, so it would be the most beneficial to shareholders to pump the breaks on giving up control over a large chunk of the company. Aurora was linked to rumors about a deal with Coca-Cola last year, though those talks never came to fruition. 

And because of cannabis's potential to disrupt many different industries as more jurisdictions legalize the plant, Battley said Peltz advised that Aurora should look to pursue partnerships with multiple companies across multiple different industries, rather than pigeonholing themselves too early. 

Not following in Canopy's footsteps — yet 

While Aurora is moving slower than it's peers on partnering with more established companies — both Canopy Growth and Cronos Group have landed significant investments from the alcohol and tobacco industries — that's not to say Aurora isn't evaluating similar types of deals.

Especially when it comes to entering the lucrative US market, said Battley.

Canopy Growth's recent deal that would give it the right to buy US cannabis cultivator Acreage Holdings within seven-and-a-half years — provided the federal government legalizes cannabis or at least provides a policy framework for allowing these types of international cannabis corporations — sent shockwaves throughout the industry and spurred both analysts and reporters to ask whether Aurora would look at a similar transaction with a different US cannabis company. 

Read more: Top cannabis CEOs say Canopy Growth's $3.4 billion purchase of pot cultivator Acreage 'shakes the foundation of what has been true' and will spur a cannabis M&A boom

"What Canopy did with Acreage has shown that's another option on the table for the biggest cannabis companies," said Battley, though he declined to say whether or not Aurora has been in discussions with any US companies.

"We know we are going to be in the US market in a big way," said Battley. "If you want to be a global leader, you have to be in the US market."

Sticking to what they know works 

On the home front, as Canada moves towards allowing THC vape pens, edibles, and beverages in retail stores this Fall, Battley said the company is taking its cues from the most mature recreational cannabis markets in US states like Colorado and California.

And that means that developing cannabis beverages will take a backseat to form factors, like vape pens, that they know sell well in legal markets. 

"Take a look at the market share that cannabis-infused beverages have in consumer legal states," said Battley. "It's typically around 2% right? So I'm not saying that consumer behavior won't change, it's just that it hasn't yet. We can take a little longer to get into that segment."

On top of that, vapes are easier to produce than beverages and offer higher margins than other cannabis products.

"I really wish those who go into beverages first, I wish them luck," said Battley. "I want them to develop those segments. But we're entering the segments first where the consumer behavior is already clear." 

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NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

I interviewed 100 of the world’s wealthiest people and learned 4 tricks that explain how the super-rich get to the top — and stay there

Thu, 05/16/2019 - 3:42pm  |  Clusterstock

  • Dr. Greg Reid interviewed 100 of the world's richest people — from entertainment pioneers to real estate tycoons — to find out how they built their wealth and held onto it.
  • He and co-author Gary M. Krebs published the findings in a book, "Wealth Made Easy," which contains proven, real-world strategies for hanging onto money.
  • For example, buy land in an area eight miles from a fast-growing town, rent it out to local farmers to cover the costs, and then sell it to a large retail developer for much more than you paid.
  • Another strategy: Combine unrelated business ideas for something brand new that meets the needs of a wide range of people.
  • Visit Business Insider's homepage for more stories.

Ever wonder how you can discover the insider secrets — or wealth hacks — that millionaires and billionaires used to build their lives of sustained prosperity?

If you don't have access to super wealthy people, don't sweat it. Below are four simple wealth hacks to get you started.


SEE ALSO: The 7 most crucial money lessons to learn before age 30, according to a Harvard grad who was raised in poverty and now runs a finance site

1. Buy dirt

Canadian land mogul Brian Sidorsky shares a concept so powerful it challenges your imagination. When asked how he amassed a fortune in raw, undeveloped land, he sat back in his chair and exclaimed, "Time plus dirt is wealth."

Sidorsky then clarified his concept. "Find a town anywhere in North America that is growing 20 to 25 percent a year. Pinpoint their 'Main Street' and draw a line out eight miles from that location and buy that land. That is the 'dirt.' Rent the soil to local farmers who will pay the rent that covers the costs, so it's free. As the town continues to expand, eventually it ends up on your property where you own the largest lot and, since you are already near Main Street, you can then sell that land to a big-box store for one hundred times what you paid for it."


2. Combine unrelated business ideas

Gene Landrum did something seemingly impossible when he founded Chuck E. Cheese's. He created an entirely new business model by combining several different ideas into one chain: food, family, and amusement park-type entertainment.

Food: Kids love pizza. Amusement park-type entertainment: Kids are fixated on video games, whack-a-mole, and air hockey.

Combine pizza and amusement park entertainment, and you have occupied kids and happy parents. Why parents? Because they can sit at the table, take a breather, and eat while their kids are busy playing in the gaming area.

The hybrid pizza chain/entertainment center concept was revolutionary, and it reversed old thinking that had kept dining and kids' entertainment separate.

What businesses can you combine to create something entirely new?

3. Take advantage of obsolescence

When machinery and other office equipment gets old, most companies see junk. What do they do with the junk? They donate it or toss it out.

Ron Klein — who's also the founder of the credit card magnetic strip — does not see junk: He sees opportunity.

When Klein ran General Associates, Inc., a data communications company, he acquired large quantities of surplus Teletype equipment from the Western Union Company.

Why did he buy worthless junk? Where others saw a relic, he saw beauty — and money  — in obsolescence. Klein refurbished the old Teletype equipment and sold it to major communications companies. As a special service, GA converted many of the machines into special teleprinters for the hearing impaired with messages imprinted in Braille.

He created an innovative use for what had been considered junk. What junk do you have lying around that can be converted into cash?

4. Go against the grain — work with your competitors

Competition is the new collaboration. Why are there four gas stations on every main intersection? Would you rather start your restaurant on a dirt road or situate it alongside restaurant row in the best part of town?

Some may see this type of competition as a bad thing, but businesses can often help each other. Ernesto Ancira, Jr., who owns a slew of auto dealerships throughout the San Antonio, Texas area, doesn't think this way. This has been to the benefit of the industry, the community, and even for his own business, Ancira-Winton Chevrolet, Inc.

When the economy went down, Ernesto joined with his competitors and the Texas Automobile Dealers Association to reverse the negative image of the auto industry in their area. They worked together on special deals for customers and other joint events and offers — and everyone benefited, primarily because they created a level of sustained trust between consumer and dealer.

What can you do to partner with your competitors and improve the image of your industry?

Now: Take some action! To make any wealth hack work, you must think it, feel it, and get off your butt and do it.

Dr. Greg Reid is a world-renowned speaker, filmmaker, and entrepreneur. Published, coauthored, and featured in more than 50 books and  five motion pictures, Reid is also the founder and CEO of the Secret Knock, an event and professional collaboration community focused on partnership, networking, and business development.

Based on content from "Wealth Made Easy," Copyright © 2019 by Dr. Greg Reid with Gary M. Krebs.

AmEx Platinum vs AmEx Gold: Which rewards credit card is better for you

Thu, 05/16/2019 - 3:39pm  |  Clusterstock

Business Insider may receive a commission from The Points Guy Affiliate Network if you apply for a credit card, but our reporting and recommendations are always independent and objective.

  • Both the Platinum Card® from American Express and the American Express® Gold Card offer valuable rewards on purchases, large welcome bonuses, and useful benefits.
  • Both cards also have a few annual statement credits that can offset their annual fees.
  • Given the similarities, we've laid out the differences to help you pick the best card for you.

Late last year, American Express refreshed and relaunched its Gold Card, giving it new benefits and rewards in an effort to make it a stronger competitor in an increasingly crowded credit-card market.

That relaunch followed an early-2017 refresh of the AmEx Platinum Card, which also brought improvements and new benefits to the card.

Both cards have tangible benefits like annual statement credits that make up for the annual fee, but there are some pretty significant differences between them. Read on to learn more about the two cards and to see which is better for you.

Click here to learn more about the American Express Platinum Card from Business Insider's partner: The Points Guy. Click here to learn more about the American Express Gold Card from Business Insider's partner: The Points Guy.

SEE ALSO: The best credit card rewards, bonuses, and benefits of 2019

DON'T MISS: The best American Express cards

You can earn rewards quickly with both cards thanks to bonus categories.

The Platinum Card

The AmEx Platinum Card earns a massive 5x points per dollar spent on airfare, as long as you book directly with the airline or through AmEx Travel, and on prepaid hotel stays booked through AmEx Travel. It earns 1x point per dollar on everything else.

Travel website (and Business Insider e-commerce partner) The Points Guy subjectively values AmEx Membership Rewards points at 2¢ each, so that means a whopping 10% of value back on the bonus categories.

While that isn't the most rewarding card of all-time, 5x points is a fantastic earning rate, and if you book your own travel frequently, the points will add up quickly.

The Gold Card

The AmEx Gold Card offers 4x points per dollar spent at US restaurants, 4x points back at US supermarkets (on up to $25,000 per year — 1x point per dollar for anything beyond that), and 3x points per dollar on flights booked directly with the airline or with AmEx travel. It earns 1x point on everything else.

The AmEx Gold Card's US restaurant category is broad — I've gotten the category bonus at restaurants, bars, pubs, and cafes. The supermarket category excludes big-box stores where you might buy groceries, like Target or Walmart, but includes most dedicated US supermarkets.

Using The Points Guy's valuations, you get a huge 8% of value back on those two top bonus categories from the Gold Card. This makes it one of the best available cards for dining

Both cards have annual fees, but thanks to a few statement credit benefits, the effective fees are lower than you might think.

The Platinum Card

The Platinum Card has one of the highest annual fees you'll find in a mainstream charge or credit card — $550. However, the various annual statement credits the card offers bring the effective fee down to just $50.

The first is up to a $200 airline fee credit each calendar year. Every January, you pick one airline for that credit to apply toward. While the credit doesn't cover tickets, it covers incidental fees like checked bags, seat assignments on basic economy tickets, change fees, and more. Sometimes you can even be reimbursed for airline gift cards that you can apply toward tickets, even though this is an unpublished benefit — do some Googling to see whether that works on your airline of choice.

Second, you can get up to $200 in Uber credits each cardmember year, which is broken down into monthly chunks. Each month, cardholders receive $15 of credits to use on Uber rides or for Uber Eats. In December, that's boosted to $35.

Finally, you can get up to $100 in shopping credits each year at Saks-brand stores, broken into two chunks: You'll get up to $50 during the first six months of the year, and another $50 during the second.

Since the airline fee credit is given each calendar year, you can actually collect it twice if you open your card mid-year and maximize the credit before and after January of that first cardmember year.

That would mean you're not just making up for the annual fee, you're actually getting more value than the fee in the first place. That's without even considering the other benefits and rewards.

The Gold Card

The AmEx Gold Card's $250 annual fee puts it squarely in the mid-tier category, although one could make an argument that it's really a premium card with a lower-than-premium fee.

Thanks to two annual statement credits, the effective fee is just $30 — as long as you maximize them.

The first is up to $120 each year in dining credits, broken into monthly $10 portions. These credits only apply to a few participating chain restaurants — specifically Cheesecake Factory, Ruth's Chris Steak House, and some Shake Shack locations — but they also apply to popular food ordering services GrubHub and Seamless. The credits apply automatically to any qualifying purchase.

The AmEx Gold also offers up to $100 in airline fee credits each calendar year. This works just like the Platinum Card's credit, meaning it's possible to earn it more than once each cardmember year.

Both cards have a new member bonus, although the Platinum Card's is higher.

Since both cards are part of the AmEx Membership Rewards program, it's easy to compare the sign-up bonuses directly.

Platinum Card

The Platinum Card has a welcome offer of 60,000 Amex Membership Rewards points when you spend $5,000 on purchases within the first three months.

Using The Points Guy's subjective valuations, that's worth about $1,200.

The Gold Card

The Gold Card's welcome bonus is 35,000 Membership Rewards points after you spend $2,000 in the first three months. That's worth about $700, based on The Points Guy.

Click here to learn more about, or apply for, the American Express Platinum Card from Business Insider's partner: The Points Guy. Click here to learn more about, or apply for, the American Express Gold Card from Business Insider's partner: The Points Guy.

Both cards earn Membership Rewards points, which you can pool between your AmEx cards.

AmEx offers a few ways to use Membership Rewards points.

However, redeeming for anything aside from travel offers a poor value, usually 0.5-0.8¢ each, and is generally a poor use of points.

You can get a slightly better value by booking flights through AmEx Travel, either online or by phone. Points are worth 1¢ each towards flights, but if you book a hotel or anything else, you'll only get 0.7¢ per point.

Another option is to use points to bid for upgrades on a flight. You'll only get 1¢ per point, but it can be a decent redemption if you want to try for an upgrade but don't want to pay cash.

The best use and value — potentially — is to transfer points to airline frequent flyer partners and book flights that way. You might be able to get a dramatically higher value for points this way.

That's because booking frequent flyer "award tickets" is different than buying reservations outright — you can read more about how it works here. In most cases, the cash price and the miles price of a ticket aren't linked, so it's possible to get exponentially increased value from your points by transferring them and booking an award ticket instead.

That means potentially being able to fly long-haul in first or business class with points, among other things.

For example, my wife and I recently flew first class to Japan and back by transferring credit card points to Virgin Atlantic, then booking flights on Virgin's partner airline All Nippon Airways. You can read about exactly how we booked the flights here.

The only catch is that you may need to search for saver availability — which are lower-priced award tickets. This can be tricky, but there are a ton of helpful guides online. Once you have a flight in mind, if you're having trouble figuring out how best to use your points, just do a Google search for that specific trip.

AmEx's partners include: Aer Lingus, AeroMexico, Air Canada, Air France/KLM, Alitalia, ANA, Cathay Pacific, Avianca, British Airways, Delta, El Al, Emirates, Etihad, Iberia, Hawaiian Airlines, JetBlue, Singapore Airlines, and Virgin Atlantic, as well as Choice Hotels, Hilton, and Marriott.

Click here to learn more about, or apply for, the American Express Platinum Card from Business Insider's partner: The Points Guy. Click here to learn more about, or apply for, the American Express Gold Card from Business Insider's partner: The Points Guy.

The cards come with a few other benefits and perks, too, although the Platinum Card's are more substantial

The Platinum Card

Added benefits is where the Platinum Card really shines.

One of the flagship perks is access to more than 1,200 airport lounges around the world.

The Platinum Card's lounge access is more extensive than anything offered by any other card. When you have the card, you can use Delta Sky Clubs whenever you fly the airline, AmEx's own proprietary Centurion Lounges, and any lounge that participates in the Priority Pass network. You can also use any of 11 international AmEx-branded lounges, and a handful of other random lounges, including ones that fall under the Plaza Premium, Air Space, and Escapes brands — these number more than 50.

The Gold Card

While the Gold Card doesn't have nearly as many flashy perks as the Platinum Card, it still has a few benefits worth keeping in mind.

  • Secondary rental car insurance
  • Roadside assistance
  • Various purchase and shopping protections
  • Baggage loss and damage coverage
  • Complementary ShopRunner membership (it works like Amazon Prime in a lot of ways, at other retailers).

Bottom line.

No matter which card you choose, both the American Express Platinum Card and the American Express Gold Card offer valuable rewards. Plus, both cards have benefits and rewards that significantly offset their annual fees, as long as you make the most of them.

However, if you're interested in a larger welcome bonus, or benefits on top of the rewards, the Platinum Card might be the best choice.

Click here to learn more about, or apply for, the American Express Platinum Card from Business Insider's partner: The Points Guy. Click here to learn more about, or apply for, the American Express Gold Card from Business Insider's partner: The Points Guy.

Everything we know going on at Goldman Sachs

Thu, 05/16/2019 - 2:58pm  |  Clusterstock

Here's what we know about what's going on inside of Goldman right now, from its growing digital wealth business, to shakeups in its inner ranks. 

Consumer banking/wealth Technology Trading Deals Careers 

Join the conversation about this story »

NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

As Airbnb and Instacart gear up for rumored IPOs, here are the VC firms that have made the most early investments in billion-dollar startups

Thu, 05/16/2019 - 2:57pm  |  Clusterstock

With Uber, Lyft, and Pinterest now public companies, all eyes are on other billion-dollar businesses in the IPO pipeline.

According to a new report from CB Insights, early-stage tech investing firms SV Angel and Y Combinator are poised to make a hefty return if either Airbnb or Instacart go public in 2019. The two firms are early investors in both companies, which are each valued well above $1 billion.

The CB Insights report lays out which investors have staked early claims in the elite group of "unicorns" — startups valued by private investors at $1 billion or more —  with SV Angel coming out on top with 18 unicorn feathers in its proverbial cap. SV Angel's stake in Airbnb is not publicly disclosed, but according to Pitchbook data, the firm would have bought shares at $0.42 each in the round, meaning it's likely to turn a big profit if and when Airbnb IPOs. 

Read More: Check out the pitch deck that Sandbox VR used to get Andreessen Horowitz as lead investor in a $68 million round, and watch the investors discuss the pitch

Notable startup incubator Y Combinator is a close second with 16 early bets. Startups that graduate from Y Combinator's program receive $150,000 in exchange for a 7% stake in the company. At current valuations, Y Combinator's stake in Airbnb is worth around $2.6 billion, and its stake in Instacart is worth $532 million.

Here are the top venture capital firms with the most early-stage investments in billion-dollar businesses, according to CB Insights:

Read the full report from CB Insights.

SEE ALSO: Uber’s first employee is worth over $1 billion as company goes public, and he’s already committed to donating at least $14 million to charity

Andreessen Horowitz tied for fourth place with 11 early bets on startups now valued at or above $1 billion.

CB Insights doesn't share the firm's largest investments, but Andreessen Horowitz was a major early investor in startups like:

  • Airbnb, most recently valued at $29.3 billion.
  • Stripe, most recently valued at $22.5 billion.
  • Coinbase, most recently valued at $8 billion.


Tied for fourth place is Sequoia, one of Silicon Valley’s oldest firms, which made early bets on Airbnb, Instacart, and DoorDash.

Top early stage investments:

  • Airbnb, seed and Series A. Most recent valuation: $29.3 billion
  • Instacart, Series A. Most recent valuation: $7.6 billion
  • DoorDash, Series A. Most recent valuation: $7.1 billion

Also tied for fourth is IDG Capital, an international investment firm that has early stakes in U.S. and Chinese companies.

Top early stage investments:

  • SenseTime, Series A. Most recent valuation: $4.5 billion
  • XPeng Motors, Series A. Most recent valuation: $3.65 billion
  • Zoox, Series A. Most recent valuation: $3.2 billion

Sequoia Capital China, the Chinese counterpart to the Silicon Valley firm, comes in third with early bets on Chinese startups.

Top early stage investments:

  • Chehaoduo, Series A. Most recent valuation: $9 billion
  • VIPKID, Series A. Most recent valuation: $3 billion
  • Ucommune, Series A. Most recent valuation: $3 billion

Y Combinator comes in second with early investments in companies that graduated from its accelerator program.

Top early stage investments:

  • Airbnb, seed-stage. Most recent valuation: $29.3 billion
  • Instacart, seed-stage. Most recent valuation: $7.6 billion
  • Rappi, seed-stage. Most recent valuation: $1 billion

SV Angel has made the most early investments, including in Airbnb and Instacart.

Top early-stage startups investments:

  • Airbnb, Series A. Most recent valuation: $29.3 billion
  • Instacart, Series A. Most recent valuation: $7.6 billion
  • OpenDoor Labs, Series A. Most recent valuation: $3.8 billion

Why Goldman Sachs just did its biggest deal in nearly 20 years as part of a pivot to less wealthy clients

Thu, 05/16/2019 - 2:48pm  |  Clusterstock

  • Goldman Sachs agreed to pay $750 million in cash to buy United Capital, a registered investment adviser with 220 wealth managers and $25 billion in assets under management.
  • The deal is the biggest for Goldman since its $6.5 billion purchase of Spear Leeds in 2000. It's scheduled to close in the third quarter. 
  • Goldman's purchase is part of a push to bring in more stable revenue, which is valued more highly by Wall Street analysts and investors than the more episodic revenue that comes from trading and private investing activities.
  • The bank's stock has lagged broader indexes, in part because of its reliance on the types of volatile businesses that investors discount.  
  • Visit Business Insider's homepage for more stories.

David Solomon is wasting little time. 

The Goldman Sachs CEO, an investment banker who took over from Lloyd Blankfein in October, signed the bank's largest deal in more than 15 years on Thursday, announcing the $750 million purchase of the wealth-management firm United Capital.

The transaction is intended to fill in Goldman's wealth offering and bring in more recurring revenue to a firm that still gets more than 60% of its top line from trading and private investing activities. 

More broadly, the deal is a sign that Solomon and his management team of Chief Financial Officer Stephen Scherr and President John Waldron recognize that investors haven't given the firm credit for maintaining some of the highest returns in the industry, according to analysts.

Over the past 12 months, the bank's share price has fallen 17%, compared with a 4.7% increase for the S&P 500 index. The shares rose 1.6% to $199.40 as of Thursday afternoon. 

"As the stock has underperformed despite solid ROEs, there is a realization the quality of earnings matters rather than the quantity," Christian Bolu, an analyst at Autonomous Research, said in an interview before the deal was announced. "The sense of urgency has probably stepped up."

Read more: Human resources is the next battleground for Wall Street wealth advisers as Morgan Stanley and Goldman Sachs jockey over new turf

The deal is Goldman's biggest since the firm's 2000 purchase of Spear Leeds, done by another investment banker, Hank Paulson. That $6.5 billion deal was largely seen as a failure as trading began to move away from the floor of the New York Stock Exchange, one of Spear Leeds' specialties. Blankfein, a trader, steered clear of large acquisitions during his time as CEO.

Despite the size of the transaction, some current and former Goldman employees worry that the bank needs a much bigger transaction to accelerate its transformation. 

What's Goldman Sachs getting with United Capital?

United Capital is what's known as a registered investment adviser (RIA), which acts as a client fiduciary and tends to make money by managing assets for a flat fee rather than collecting trading commissions. 

The deal gives Goldman 220 financial advisers managing roughly $25 billion of assets across 90 US offices. The additional people will allow Goldman to scale its Ayco business, which offers financial, tax, and investments planning to C-suite executives through partnerships with their employers.

Goldman will now have more people to service those corporate execs who may not be the most senior but still need complex financial advice and investments, according to a statement from the company. United Capital also brings a digital financial-planning tool that is expected to help reach a broader swath of clients. 

Ayco works with more 400 companies, including approximately 60 of the Fortune 100. Goldman signed a deal last year with Google to provide Ayco services to the tech giant's entire employee base.

Ayco has dabbled in the RIA business in the past, though the firm's commitment to it has been uneven. A few years ago, in response to the Department of Labor's proposed fiduciary rule, the firm fired some of its RIA advisers, according to a person with knowledge of the matter. 

The bank has plans to offer a mass-market wealth-management offering through its Marcus digital bank and already manages more than $450 billion for ultra-high-net-worth clients from its private-wealth-management business. Ayco manages roughly $35 billion. 

"On the surface it helps them execute their stated game plan to widen their footprint in wealth management," Shirl Penney, CEO of a tech and back-office-operations provider to the RIA industry, Dynasty Financial Partners, said in an email. "If they can get the divisions cooperating with each other there should be good synergy."

The acquisition will help accelerate Goldman Sachs' wealth plans

The United Capital purchase is not without risk, most notably around merging the cultures of the various groups and retaining talent, according to Mindy Diamond, the president of the financial-adviser recruitment firm Diamond Consultants.

Goldman is already suffering from retention issues in its high-end private-wealth business, according to RIABiz

"Now you will bring in a mass affluent, down stream, down market alternative and if I am a Goldman adviser and positioning myself as the elite, I'm not sure how good I'm going to feel about that," Diamond said. "Retention is the first concern."

Read more: Goldman Sachs execs are opening up about their plans for Marcus, and they think it can do to banking what iTunes did to the music industry

It's also not clear how United Capital's advisers will feel about being part of the Goldman enterprise. RIAs tend to think more independently and don't like being told to sell specific products. When Goldman purchased Ayco in 2003, the firm largely left it alone for the next decade or so, though in recent years some employees have chafed under what they described as a culture that pushed Goldman product. 

"While Goldman certainly understands wealth management, they have a successful and robust private-wealth unit, they don't understand the mass affluent client space at all," Diamond said. 

One reassuring point: Joe Duran, United Capital's CEO, will join Goldman Sachs as a partner, according to a spokesman.

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What could happen if China uses its 'nuclear option' in the trade war

Thu, 05/16/2019 - 2:42pm  |  Clusterstock

  • Earlier this week, the editor-in-chief of the Global Times, a state-aligned Chinese tabloid, said Chinese scholars were looking into the possibility of China dumping US Treasurys.
  • UBS looked at the Federal Reserve's tapering to try and figure out what kind of effect China selling $1.1 trillion of Treasurys would have on the bond market and concluded the 10-year yield could rise by up to 40 basis points.
  • Bloomberg's Joe Weisenthal thinks yields could actually fall if China sold its holdings.
  • The debate is likely for naught as China needs to hold Treasurys, according to one analyst.
  • Visit Markets Insider's homepage for more stories.

Chinese scholars are reportedly looking into the so-called nuclear option in the trade war — Beijing dumping US Treasurys. 

"Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically," Hu Xijin, the editor-in-chief of the state-aligned Chinese tabloid Global Times, tweeted on Monday, setting off a debate about what the consequences would be if China divested its holdings.

While UBS strategists think it's unlikely China would sell the entirety of its holdings, they looked into what could happen just in case. To do so, they looked at the effect the Fed's tapering had on yields. 

"Through quantitative easing programs, the Fed expanded its balance sheet by about $3.5trn," the strategists wrote. "We estimated that this compressed US term premium by about 110bp. Through its balance sheet unwind of $600bn, we estimated that 10-year term premium had risen by about 20-30bp."

Therefore, they concluded that China unloading all $1.1 trillion of its Treasurys, or about 7% of the entire market, would cause the 10-year yield to climb by 30 to 40 basis points. 

But not everyone agrees that yields would go higher. In Bloomberg's daily markets email, Joe Weisenthal, the executive editor for daily news, suggested Treasury yields could actually fall.

"What's more plausible than spiking yields is that if word got out that China really did want to dump U.S. debt in size," he wrote.

"Yields would fall because people would assume that this 'nuclear option' represented a gigantic break in the U.S.-Sino relationship. All that would hurt the global economy, causing the Fed to be even slower with expected rate hikes. In the immediate term, there would likely be a flight to Treasuries, amid a big risk-off move in markets. The Treasury market often behaves counterintuitively," he added. 

Of course, the whole debate is likely for naught.

"What people don't understand is that it is not a choice" for China to keep so many Treasurys, J Capital Research cofounder Anne Stevenson-Yang told Business Insider's Linette Lopez. "This is a dollar world and China hold Treasurys to manage its trade with the world."

Selling Treasurys is a "good meme for the Chinese people but it doesn't actually mean anything," she said.

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Tesla's senior director of global communications is leaving the company — here are all the key names who have departed in the past year (TSLA)

Wed, 05/15/2019 - 10:40pm  |  Clusterstock

    • Tesla is known for its high rate of executive turnover, and the past year has been no different.
    • During a year in which the automaker faced production and delivery issues, investigations from the federal government, and questions about the decision-making of CEO Elon Musk, departures from senior employees have added yet another challenge.
    • Tesla's senior director of global communications Dave Arnold is leaving the company. Arnold served the electric automaker for two years.

Tesla has seen a lot of senior employees leave in the last year.

As the automaker has faced production and delivery issues, investigations from the federal government, and questions about the decision-making of CEO Elon Musk, departures from senior employees have added yet another challenge.

The outflow hasn't stopped in 2019, either.

Read more: Tesla's price target has been slashed by 3 major Wall Street banks. Here's where other analysts stand right now.

After losing its CFO in January, its top lawyer in February, and its senior director of global security in April, Tesla's senior director of global communications Dave Arnold is leaving the company. Arnold served the electric automaker for two years.

"We'd like to thank Dave for his work in support of Tesla's mission, and we wish him well," a Tesla spokesperson said in a statement to Business Insider on Wednesday.

These are the key names who have left Tesla or have announced their departure in 2018 or so far in 2019, as well as when they left and where they went next (according to their LinkedIn profile or company announcements):

  • January 2018 - Jason Mendez, director of manufacturing engineering: LinkedIn profile does not list next position
  • January 2018 - Will McColl, manager of equipment engineering: founded WaveForm Design
  • February 2018 - Jon McNeill, president of global sales and services: became COO of Lyft
  • March 2018 - Eric Branderiz, chief accounting officer: became CFO of Enphase Energy
  • March 2018 - Susan Repo, corporate treasurer and vice president of finance: became CFO of Topia (she left Topia in June, according to her LinkedIn page)
  • April 2018 - Jim Keller, head of Autopilot hardware engineering: became head of silicon engineering at Intel
  • April 2018 - Georg Ell, director of Western Europe operations: became CEO of Smoothwall
  • May 2018 - Matthew Schwall, director of field performance engineering: became heady of field safety at Waymo
  • July 2018 - Ganesh Srivats, vice president overseeing retail, delivery, and marketing: became CEO of Moda Operandi
  • September 2018 - Sarah O'Brien, vice president of communications: became VP of executive communications at Facebook
  • September 2018 - Gabrielle Toledano, chief people officer: became executive in residence at Comcast Ventures
  • September 2018 - Dave Morton, chief accounting officer: became CFO of Anaplan
  • September 2018 - Liam O'Connor, vice president of global supply management: became chief procurement officer and head of bikes and scooters at Lyft
  • September 2018 - Antoin Abou-Haydar, senior director of production and quality: became vice president of global quality for Byton
  • October 2018 - Justin McAnear, vice president of worldwide finance and operations: became CFO of 10X Genomics
  • November 2018 - Phil Rothenberg, vice president in the legal department: became general counsel of Sonder
  • November 2018 - Jeff Jones, head of global security: LinkedIn profile does not list next position
  • November 2018 - Dan Kim, senior director of global sales, marketing, and delivery: became director of Airbnb Plus at Airbnb
  • December 2018 - Aaron Chew, director of investor relations: LinkedIn profile does not list next position
  • January 2019 — Todd Maron, general counsel: LinkedIn profile does not list next position
  • January 2019 — Charles Mwangi , senior director of engineering: LinkedIn profile says he is working at an unnamed startup
  • February 2019 — Cindy Nicola, vice president of global recruiting: LinkedIn profile does not list next position
  • February 2019 — Dane Butswinkas, general counsel: returning to his trial practice at the firm Williams & Connolly
  • March 2019 — Deepak Ahuja, CFO: retired
  • March 2019 — Praveen Arichandran, director of growth: joining Citizen in April to lead growth.
  • April 2019 — Karl Wagner, senior director of global security: PTSD and suicide-prevention advocacy
  • May 2019 — Dave Arnold, senior director of global communications: LinkedIn profile does not list next position.

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SEE ALSO: Uber plans to sell around $10 billion worth of stock in its IPO, seeks $90 billion valuation

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Trump pardons convicted fraudster Conrad Black, an ex-media mogul who wrote a book praising him in 2018

Wed, 05/15/2019 - 9:51pm  |  Clusterstock

  • President Donald Trump signed a full pardon for the former media mogul Conrad Black, who was convicted in 2007 of fraud and obstruction of justice.
  • Black was found guilty of scheming to siphon off millions of dollars from the sale of newspapers. He spent roughly 42 months in prison.
  • "Lord Black's case has attracted broad support from many high-profile individuals who have vigorously vouched for his exceptional character," the White House said in a statement.
  • Black, 74, is Canadian-born British citizen and ran an international newspaper empire that included the Chicago Sun-Times, Britain's Daily Telegraph and the Jerusalem Post. He is an outspoken Trump supporter who published a book on Trump's political rise.
  • Visit Business Insider's homepage for more stories.

President Donald Trump on Wednesday signed a full pardon to the former media mogul Conrad Black, who was convicted in 2007 of fraud and obstruction of justice.

Black, 74, a Canadian-born British citizen, once ran an international newspaper empire that included the Chicago Sun-Times, Britain's Daily Telegraph, and the Jerusalem Post.

"Lord Black's case has attracted broad support from many high-profile individuals who have vigorously vouched for his exceptional character," the White House said in a statement announcing the pardon.

"In light of these facts, Mr. Black is entirely deserving of this Grant of Executive Clemency," the White House added.

Read more: Trump pardons former Army Ranger convicted of fatally shooting an Iraqi prisoner

Black was found guilty in the US of scheming to siphon off millions of dollars from the sale of newspapers owned by Hollinger Incorporated, where he was chief executive and chairman. He spent roughly 42 months in prison.

Two of his three fraud convictions were later voided, and his sentence was shortened. He was released from a Florida prison in May 2012 and deported from the US.

Black is an outspoken Trump supporter who published a book dedicated to his journey to the White House.

"I think he's done quite well," Black said of Trump in 2018, according to The Guardian.

Black previously downplayed the suggestion that he gave his appraisal in hopes to receive a potential pardon.

"This irritating mindreading by people who don't know me, this imputation of motives, I think, is discreditable," Black said in 2018. "There is, at this point, no thought of a pardon whatsoever."

SEE ALSO: Trump pardons former Army Ranger convicted of fatally shooting an Iraqi prisoner

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Tesla is losing another top executive amid a brutal week for the electric automaker (TSLA)

Wed, 05/15/2019 - 9:44pm  |  Clusterstock

  • Tesla is losing another top executive, this time in the communications department. The senior director of global communications Dave Arnold is leaving the company.
  • Arnold served the electric-car company for two years. He follows a long line of Tesla executives who have parted ways with the company in the past year.
  • "We'd like to thank Dave for his work in support of Tesla's mission, and we wish him well," a Tesla spokesperson said in a statement to Business Insider on Wednesday. Arnold will remain at the company for another month while Keely Sulprizio, the director of global communications, takes over his duties.
  • Visit Business Insider's homepage for more stories.

Tesla's senior director of global communications Dave Arnold is leaving the company. Arnold served the electric automaker for two years.

"We'd like to thank Dave for his work in support of Tesla's mission, and we wish him well," a Tesla spokesperson said in a statement to Business Insider on Wednesday. Arnold will spend another month at the company, while Keely Sulprizio, the director of global communications, takes over his duties.

Arnold follows a long procession of Tesla executives who have left the company in the past year.

Tesla lost its CFO, Deepak Ahuja, in January. Its general counsel, Dane Butswinkas, left in February after just two months on the job.

The high rate of turnover in Tesla's executive ranks is just one of a number of challenges the company is staring down at the moment.

Read more: It's time for Tesla to go into stealth mode for the rest of 2019

Ongoing production challenges and difficulty shipping its Tesla Model 3 to international markets have weighed heavily on the company's share price. A Tesla analyst at Evercore ISI slashed his target price for Tesla shares to $200 — down from $240 per share — for the second time in a month. On Monday, Tesla shares hit their lowest point since January 2017.

Dustups between CEO Elon Musk and US federal regulators have also rattled investors.

More recently, Tesla's disappointing first-quarter earnings report did the company no favors with a $702 million loss on the books for the three-month period that ended March 31.

Despite the turmoil, Tesla has been able to count some victories. The company recently boosted the size of its latest capital raise from $2.3 billion to $2.7 billion, and AutoTrader named Tesla the most-loved car brand this week.

SEE ALSO: Tesla's senior director of communications is leaving the company — here are all the key names who have departed in recent months

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President Trump's national emergency likely won't stop you from buying a Huawei phone, much less an iPhone. Here's what it means for you.

Wed, 05/15/2019 - 9:06pm  |  Clusterstock

  • President Trump's declaration of a national emergency and executive order banning tech products made by US adversaries isn't likely to affect consumers here anytime soon.
  • Although the order is broad, it's widely expected to be used to target China and Chinese equipment maker Huawei.
  • It likely will be applied to equipment purchased by telecommunications companies, not consumer products and almost certainly won't be applied to iPhones or other goods made in China for US firms.
  • It's unclear exactly when the rules implementing the order will take effect or precisely what they'll cover.
  • Visit Business Insider's homepage for more stories.

President Donald Trump made a dramatic move Wednesday when he declared a national emergency and issued an executive order banning the import of technology products and services from US adversaries.

The action, which appeared to be targeted at China in general and at Chinese equipment maker Huawei in particular, seemed likely to ratchet up the trade tensions between the two countries. It also seemed likely to put further pressure on Huawei's business and that of its partners. And because of how broadly the order was written, it could potentially be applied to a vast swath of goods and services, since so many technology products — even those that carry US brand names — are made in China.

Read this: Trump declares a national emergency, which could set up a huge blow to China's Huawei

It's not clear exactly how the order will be implemented. But at least for now, it likely will have little effect on everyday consumers. So you shouldn't worry about being barred from purchasing a Huawei phone — much less an iPhone — anytime soon.

What kinds of products will be barred from being imported into the US under the emergency order? Communications and technology equipment and services.

Which countries' products are affected by the order? It's unclear. The order doesn't specify any particular nations. Instead, it applies to unnamed "foreign adversaries." However, it's widely assumed that the order is targeted at China.

Which companies' products are covered by the order? Again, it's unclear. The order doesn't include a blacklist of specific corporations, but it's written broadly enough to cover a wide range of them. It applies to any technology or communications product "designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary" that poses a security risk to the United States.

"We're all in the dark" about exactly how it will be implemented, said Steve Becker, a partner at the law firm Pillsbury who focuses on international trade law.

Who will determine which products are covered? Secretary of Commerce Wilbur Ross after conferring with a group of other administration officials, including the attorney general, the US trade representative, and the secretaries of State, Defense, Treasury, and Homeland Security.

What kinds of products are likely to be banned? While the order is broad, Ross is widely expected to apply it fairly narrowly to Huawei's networking equipment. He's unlikely to target consumer products and almost certainly won't bar devices made in China on behalf of US companies, such as Apple's iPhones or Dell computers, Becker said.

"Clearly, the main focus has been on backbone equipment — network switches and routers," Becker said.

When will the order take effect? Nominally, the order takes effect immediately. But it could be five months or more before the regulations that will flesh it out will be in place. The president gave Ross 150 days to publish rules to carry out the order. But even if he meets that deadline, those rules will be subject to public comment or some delay before they carry the force of law.

Will consumers or companies have to hand over previous purchases of affected products? Generally, no. Trump's order applies to products and services purchased on or after Wednesday and to purchases that were still pending at that time. It doesn't apply to previous purchases.

Is this going to affect the rollout of 5G services in the United States? It's unclear. Huawei is one of the leaders in equipment for 5G — or fifth generation — wireless networks. The big US carriers had already promised not to use Huawei equipment. But, assuming that Huawei is indeed the target of the order, it could bar smaller carriers from buying the company's equipment. That could force them to pay higher prices, and they may delay rolling out their services as a result.

Got a tip about tech? Contact this reporter via email at, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Trump's secretary of state warned Britain and savaged China in a stinging attack on Huawei

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Trump's Huawei ban could spark a tit-for-tat fight with Beijing that puts Apple in the middle of the crossfire (AAPL, NVDA, INTC, AMD, QCOM)

Wed, 05/15/2019 - 8:51pm  |  Clusterstock

  • The US ban on Chinese tech giant Huawei could trigger a major retaliation by Beijing.
  • Analysts say China could hit back at US tech giants doing business in the Asian nation, with Apple especially at risk.
  • One analyst believes the reaction could be so severe that the effect on some US tech companies could be 'disastrous.'
  • Visit Business Insider's homepage for more stories

A ban on Chinese tech giant Huawei by the Trump Administration could spark a tit-for-tat with Beijing that would turn the heat up on US tech companies, with Apple vulnerable as high-profile target for retaliation, analysts said Wednesday.

One analyst thinks Beijing's reaction could be 'disastrous' for American companies.

The ban on doing business with Huawei was imposed shortly after President Trump's executive order aimed at "foreign adversaries" in the technology industry. According to the US Commerce Department order, Huawei is now prohibited from buying parts and components from US companies without US government approval.

Huawei has been repeatedly accused of spying and violating US laws. Huawei has denied the accusations, while Beijing has denounced the charges as unfair.

Spying allegations vs Huawei

"This is clearly targeted at China spying via Huawei, something that has not been conclusively proven yet," analyst Tim Bajarin of Creative Strategies Inc. told Business Insider. "But it represents a ban on a Chinese product in the US that has other ramifications."

The spying allegations "could be real," he added. But so is China's potential reaction.

"China could retaliate by banning US products from the Chinese market using the same pretense, even it may be false," he said. "A tit-for-tat fight that could be disastrous for any company that  sells a lot of goods into China, especially technology-based goods, if they get banned for any reason as part of a Chinese retaliatory move."

And coming on the heels of the recent tariffs that the US and China have imposed on hundreds of millions of dollars of each other's goods, a potential Chinese ban on certain US companies could cause significant problems.

Wedbush analyst Dan Ives said the Trump threat could just be all bluster ahead of next month's G-20 Summit in Japan.

"We think the bark is going to be worst than the bite, but this adds more noise when tech investors are already on edge," he told Business Insider. "This is a major shot across the bow. … They continue to ratchet up the heat in the kitchen especially with Huawei given the strategic importance of Huawei in China."

Trade war escalation

China could hit back, he said, which could hurt leading tech names, including chipmakers Nvidia, Qualcomm and Intel.

In a note in December following the US indictment of Huawei CFO Meng Wanzhou, Bernstein analyst Stacy Rasgon said Huawei is "overall a sizeable buyer of semiconductors." But he said the impact on major US chip-makers would be minimal.

Rasgon said the "supply chain could evolve" helping ease the impact of the Huawei ban on US chip companies.

"If the semi companies can't sell to Huawei and thus Huawei can't sell equipment, other companies would eventually take up Huawei's slack, companies that the semis can sell to," he said. "In other words, the Chinese equipment companies would likely lose share to other non-Chinese companies providing similar products, assuming broad demand for those products remains."

But he added: "The transition would likely be messy though."

The worst case scenario, Bajarin said, is if China hits back at Trump and "really hurts some major American company that sells a lot of products in China."

A target on Apple's back

"It could be companies who sell PC's, Servers and telecom equipment as a start," he said. "But if it was true retaliation, it would be a major US company with a solid brand."

Ives of Wedbush thinks the most vulnerable target would be Apple, perhaps the most well-known US tech brand.

"The broader worry here is: does this put more of a target on the back of Apple?" Ives said. "The poster child is Apple."

Crawford Del Prete, president of research firm IDC, said he doesn't think a Chinese reaction would impact other areas of tech immediately.

"As for spreading to other areas, I do not see that as likely at this point," he told Business Insider.

Meanwhile, Huawei faces a tougher situation as it is barred from doing business with US firms, he added.

"For Huawei, they will need to stay focused and on message that they are not a security risk, so that they can maintain business outside of the US," he said.

Got a tip about Huawei, Apple or another tech company? Contact this reporter via email at, message him on Twitter @benpimentel, or send him a secure message through Signal at 510.731.8429. You can also contact Business Insider securely via SecureDrop.

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Deutsche Bank has hired a new credit-trading exec, filling a void after it dismissed a rising star earlier this year

Wed, 05/15/2019 - 8:24pm  |  Clusterstock

  • Deutsche Bank has hired a new credit-trading exec in the US. 
  • Sonny Kathpalia, who left Barclays in 2018, is joining the company running credit-swaps index trading.
  • He'll help fill a void left when rising-star Tian Zeng was dismissed earlier this year. 
  • Kathpalia joins the top-ranked credit-trading team on Wall Street. 
  • Visit Business Insider's homepage for more stories.

Deutsche Bank has hired a new credit-trading exec, filling a hole after the firm dismissed a rising star earlier this year. 

Sonny Kathpalia, most recently a senior index trader at Barclays, is joining the German bank as its head of credit-swaps index trading in the US, according to people familiar with the matter.  

Kathpalia, 36, spent most of his career at Lehman Brothers and Barclays before leaving in 2018, according to FINRA records. 

A Deutsche Bank spokeswoman declined to comment. 

Kathpalia will report into credit-trading head Paul Huchro and help fill a void left when Tian Zeng, a senior credit-index trader, left the firm in February. 

Zeng, a top trader who was brought over from Citadel Securities as part of a build-out of the US credit-trading business, was discharged after Deutsche Bank concluded he'd violated firm policies by disclosing client information to a third party, according to FINRA records

While Deutsche Bank has struggled in recent years and seen its stock tumble, credit trading under Huchro has been a bright spot. The German lender was tied with JPMorgan Chase as the top-ranked credit-trading operation globally in 2018, according to industry data consultant Coalition. 

The firm's fixed income, currencies, and commodities revenues in aggregate fell 15% to $6.3 billion last year. 

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The 'single-best leading indicator for stocks' in recent history is predicting doom

Wed, 05/15/2019 - 8:11pm  |  Clusterstock

  • Copper has been the "single-best leading indicator for stocks over the past 18 months," according to one research firm.
  • Sentiment in the copper market suggests prices should be about 7% below where they are currently trading, a Capital Economics analyst wrote. 
  • Trade-war tensions and the end of the Fed's rate-hike cycle are bad news for stocks, other experts said. 
  • Visit Markets Insider for more stories.

Copper prices are signaling a stock-market sell-off may be brewing. 

The red metal has been the "single-best leading indicator for stocks over the past 18 months," and is flashing a warning sign for risk assets in general, according to a note put out on Wednesday by Tom Essaye, founder of Sevens Report Research. 

"Looking all the way back to early 2018, copper chopped lower the entire month of January, disconnecting with the stock market with which it is normally very closely correlated," he wrote.

Since then, Essaye says the price action in copper has been leading the stock market:

  • Early 2018: Copper prices disconnected from the stock market shortly before short-volatility funds imploded, leading to one of the most-violent stock-market sell-offs in history.
  • Later in 2018: Copper sold off sharply during the summer as the stock market regained its footing. Volatility returned to stocks in the fourth quarter. 
  • Early 2019: Copper rallied amid optimism surrounding a trade deal, decent corporate earnings, and better-than-expected economic data, and shortly thereafter the stock market returned to a record high. 
  • May 1: Copper rolled over and volatility soon returned to the stock market.

"We point all of these instances out, because over the last 18 months, no leading or concurrent indicator has been better than copper at forecasting the next move in stocks, both higher and lower," Essaye added.

Copper prices have been under pressure in recent weeks as a slowing Chinese economy and rising trade-war tensions between the US and China have sent investor net-long positions to the lowest level in four years, according to Ross Strachan, senior commodities analyst at Capital Economics.

"Arguably the decline in investor positions would have been consistent with prices falling to around $5,600 per tonne, rather than remaining close to $6,000," he wrote, citing prices on the London Metals Exchange.

That suggests a drop of about 7%. And, according to Essaye, it would mean bad news for the stock market, which has seen renewed volatility after President Donald Trump announced last week that the US would hike tariffs on $200 billion worth of Chinese goods. A few days later, China retaliated by increasing tariffs on $60 billion of US goods. 

The stock market has gone virtually nowhere over the last eight months. Sure, there was the big sell-off in the fourth quarter as investors worried about the possibility of further rate hikes, and the ensuing rally that developed when they didn't come. But overall, the market is pretty much where it was last October. The problem is the backdrop is deteriorating. 

"While the prospects of a 'no-deal' between the US and China is directly impacting risk sentiment, tariff hikes will be an additional burden for US companies and weigh on future earnings," analysts at Fitch Solutions Macro Research said in a recent note.  

They added: "While a deal is still possible, this recent decision increases the downside risks to global trade and growth, deteriorates risk sentiment and weighs on financial markets."

Of course, all of this comes as the Federal Reserve's tightening cycle draws to a close. The central bank has raised interest rates nine times since late 2015 as it attempts to normalize its balance sheet after coming out of the Great Recession. 

"There is a perception among some investors that the Fed's tightening cycle is already priced into US equities," said UBS strategist Francois Trahan in a recent note to clients. "This notion could prove to be a major surprise this year, a disappointing surprise that is."

Read more: UBS' new equity chief warns that a 10% plunge in the stock market this year will catch investors off-guard — and outlines how to protect against losses

He notes that GDP was the strongest its been in years during the first quarter, and that a strong economy typically occurs at the end of the Fed's rate-hike cycle.

"In short, it takes a full two years for changes in the federal funds rate to be fully reflected in GDP growth," Trahan added. "At least, that was the historical dynamic before the fed funds rate hit zero in late 2008. Most importantly, perhaps, there is no reason to think that this relationship will be any different today."

He sees the S&P 500 falling 10% to 2,550 as the higher borrowing costs take their toll on the US economy. That wouldn't be too different from the downside that Strachan sees for copper. 

Join the conversation about this story »

NOW WATCH: The Karlmann King is a $2 million enormous ultra-luxury SUV built upon a Ford F-550

A Lincoln exec explains why the automaker wasn't surprised by the success of its new Navigator SUV — and promises a fully electric Lincoln is in the works (F)

Wed, 05/15/2019 - 7:58pm  |  Clusterstock

Ford is in the middle of an $11-billion turnaround plan, led by CEO Jim Hackett, that looks to be gaining some traction after about two years. Since the beginning of the year, Ford's stock — declining for much of Hackett's tenure — has reversed course and is now up over 20%.

Within Ford, there's been a turnaround story that's been ongoing for almost a decade now: Lincoln.

Lincoln was on the chopping block back when Ford was reorganizing before and after the financial crisis. But Ford decided to keep its luxury brand alive, and the marque survived to see its 101st birthday last August.

The revival of the brand has been impressive. Now led by Ford veteran Joy Falotico — she oversees Ford marketing in addition to serving as Lincoln's president — Lincoln enjoyed a great year in 2018 thanks to the redesign of its Navigator full-size SUV, a Business Insider Car of the Year finalist.

Read more: How Lincoln returned from near death and restored Ford's luxury brand

The Navigator is so popular with dealers that Ford hasn't been able to build enough to satisfy demand. But the brand has also been launching new and revamped crossovers to slot in below Navigator. The Aviator and Nautilus are on sale now, and Lincoln launched a new vehicle, the Corsair, at the recent New York auto show to fill out the range and provide customers with an entry-level option.

"We're very pleased with the momentum and energy we have around the brand," Falotico said in an interview with Business Insider at the Corsair's debut.

While the Navigator's sales surge might have surprised some observers who've fixated on new electric vehicles from luxury automakers, Falotico said that Lincoln knew it had a winner with the SUV, which was launched at last year's New York auto show.

"I think we thought if it were going to happen with any vehicle, it would be Navigator," she said. "We created that segment, and the vehicle turned out so beautiful. The team did a great job."

What about electric vehicles?

To a degree, Lincoln has benefited from a shift among buyers away from sedans and over to crossovers. The brand sells four-doors, including the legendary Continental. But it's also had a strong lineup of SUVs, even before it entered its new-product cadence and began to rename crossovers as the brand realigned it identity, first around the "quiet luxury" concept and then later "quiet flight."

But what about the enthusiasm for electric vehicles? Lincoln's crosstown rival, Cadillac, announced prior to this year's Detroit auto show that it would be the tip of General Motors' electrification spear.

Falotico said that Lincoln has plans to electrify the lineup, pointing to a hybrid version of the Aviator that's now at dealerships.

But she also said that Lincoln would make a fully battery-electric vehicle. 

"It's too early to talk about it now," she said. "But it will be coming. For sure."

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Join the conversation about this story »

NOW WATCH: The Karlmann King is a $2 million enormous ultra-luxury SUV built upon a Ford F-550

Business leaders are expressing frustration and uncertainty about the US-China trade war

Wed, 05/15/2019 - 7:50pm  |  Clusterstock

  • Executives at S&P 500 companies sounded off on the US-China trade war during their first-quarter conference calls.
  • Goldman Sachs equity strategists analyzed a selection of executive commentary across S&P 500 earnings calls and found trade-related uncertainty to be a major theme plaguing business.
  • Visit Markets Insider's homepage for more stories.

If there's an elephant in the room that US multinational corporations are grappling with, it's the ongoing trade war between the two largest economies.

Executives at S&P 500 companies addressed how the US-China trade dispute influenced their companies' first-quarter earnings results, detailing a significant degree of uncertainty and the extent of their exposure.

It's one of the three major themes highlighted by Goldman Sachs strategists in a quarterly report released this week analyzing excerpts from 40 first-quarter conference calls. 

Executives said the uncertainty over trade made it more difficult to navigate their relationship with China but did not have significant near-term ramifications.

"The decision by President Trump to raise tariffs surprised both managements and investors who had believed the trade friction was moving towards a resolution," the strategists, led by David Kostin, wrote in a report to clients out Monday.

Downward pressure on profit margins remains a risk for many companies, the strategists said, while some corporations were already preparing to shift their supply chains away from China to minimize the effect.

"We've been very, very highly focused not only at fixing long-term problems by diversifying away from China our supply, but also by creating, through our procurement organization and supply chain, a number of partnerships which are almost standby partnerships, ready to jump in as soon as we have issues," Pierre Brondeau, the chairman and CEO the chemical manufacturer FMC, said on his company's earnings call earlier this month.

It should be noted that the comments listed below were made before the most recent escalation in the trade war, which rocked global markets over the past week. China on Monday hiked tariffs on $60 billion worth of US goods, sending markets plunging. 

That followed President Donald Trump's surprise announcement on Friday that the US would raise tariffs on $200 billion worth of Chinese imports to 25%. The announcement took investors by surprise after Trump earlier this month said Beijing and Washington's trade talks were progressing.

Below is a selection of what companies said about the trade war's influence on business:

Electronic Arts

Ticker: EA

While the company hadn't "heard anything or seen anything that would imply pressure," an executive said on the earnings call earlier this month that the dispute was a source of uncertainty for the business.

"In terms of China, trade policy is a daily question in our mind when we see what tweets come out each morning, so it's hard for us to gauge," Blake Jorgensen, the chief operating officer and chief financial officer at Electronic Arts, said.

United Parcel Service

Ticker: UPS

UPS CEO and chairman David Abney said the US-China trade uncertainty has prompted "softer" industry forecasts throughout the first quarter.

"We certainly encourage leaders of the two countries to find solutions that support increased two-way trade, but also by ensuring many US companies have access to export to China," he said.

Some UPS customers had adjusted their own supply chains to adapt to "changing trade dynamics," he added.

Microchip Technology

Ticker: MCHP

"I think having seen the yo-yo sentiment on the trade talks, I would rather wait for the talks to conclude than analyze what that finality is, whether it ends up at 10% duty or something higher than that or goes all the way to 0%," Microchip Technology CEO and chairman Stephen Sanghi said earlier this month. 

Sanghi said he wanted to wait to make an informed opinion about the trade war's effect on the business by speaking with salespeople "rather than just throw something out."

Church & Dwight

Ticker: CHD

"The other thing that's hurting the business is the tariff war," Matthew Farrell, the Church & Dwight president and CEO, said on the company's first-quarter earnings call earlier this month.

He pointed to China being the No. 1 importer of whey protein from the US and that lower demand has in turn depressed milk prices. 

"But long term, we still feel good about the business because we are effectively making the move diversifying away from dairy," he said.

Farrell made a similar comment on Church & Dwight's quarterly earnings call in November. 

Fortune Brands Home & Security

Ticker: FBHS

All of the Fortune Brands businesses are "attacking the tariff situation" through a combination of cost and pricing, CFO Patrick Hallinan said on the company's first-quarter earnings call in April.

"I would say, in the case of plumbing, more specifically, it's more cost takeout in areas where we could accelerate it, pricing and some cost sharing with vendors more than getting out of China," he said.

That's been more difficult to do within its plumbing category than it has been within other areas, such as cabinets, where its wood-product business is already departing China.

International Paper

Ticker: IP

"I think we're learning every time there's a disruption with China how much of a role it plays in the global economy," International Paper chairman and CEO Mark Sutton said on the company's first-quarter earnings call in April.

While International Paper has customers in 150 countries, Sutton said many of the company's US-based packaging customers have faced uncertainty because they export a portion of their goods to China.

"It's not a big part of their business, but it's a meaningful part," he said. "And it's disruptive to some extent due to tariffs and other things."

Aptiv PLC

Ticker: APTV

"We are certainly dealing with some of the FX and tariffs," said Joseph Massaro, the chief financial officer of Aptiv, a Dublin-based global auto-parts company that's partnered with Lyft.

"We don't give up on those. They're hard to deal with in a particular quarter, over particular couple of quarters, depending on how significant the movement is," he said, adding Aptiv would focus on cost structure to "work to offset those."

More broadly, the company is facing a decline in vehicle production in China, CEO Kevin Clark said.

Leggett & Platt

Ticker: LEG

"A lot of uncertainty" related to the trade dispute has negatively affected consumer confidence through the back half of last year and into the first half of 2019, J. Mitchell Dolloff, Leggett & Platt's chief operating officer, said on the company's first-quarter earnings call in April.

"Certainly retaliatory tariffs in China have reduced demand for inputs there," Dolloff said, adding that steel and aluminum tariffs have raised transaction prices and slowed sales in the US. "Those are really coming through lower incentives that the consumer is having to absorb."


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