Wed 26 October, 2016

03:16 The Tell: Bank of England, economists likely got it wrong about U.K.’s post-Brexit growth outlook» MarketWatch.com - Top Stories
After the Brexit vote, economists and key financial institutions—including the Bank of England—issued stark warnings on growth in Britain, significantly downgrading their Q3 GDP forecasts. But they may be proven wrong on Thursday.
03:14 Kering shares climb 7.2% following leap in quarterly sales » MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
03:12 Heineken hikes beer sales but sees bigger currency hit» Top News & Analysis
The maker of Europe's top-selling lager sold 2 percent more beer than a year earlier, with strong growth in Mexico and Asia.
03:08 The Trump-Clinton Twitter war: Bludgeon vs. stiletto» AP Top Business News at 3:06 a.m. EDT
NEW YORK (AP) -- Back in June, when Donald Trump slammed President Barack Obama's endorsement of Hillary Clinton on Twitter, the Democrat's campaign was quick to tweet back a chilly three-word response: "Delete your account ."...
03:06 ConvaTec sets IPO offer price at 225 pence a share, bottom of range» Stock Markets News Headlines - Yahoo! News
British medical products firm ConvaTec on Wednesday said it had raised nearly 1.5 billion pounds in a stock market listing after the offer was priced at 225 pence per share. ConvaTec said in a statement its total market capitalisation when the stock starts trading would be 4.39 billion pounds. The company said it would be admitted to the London Stock Exchange's main market next week after a period of conditional trading starting at 0700 GMT.
03:05 BRIEF-Shares in Monte dei Paschi fail to open» Reuters: Hot Stocks
* Indicated down more than 6 percent at 0.276 euros from 0.295 euros at close on Tuesday Further company coverage: (Reporting by Milan Newsroom)
03:05 Old ways are out as Hyundai Card bets on digital technology» AP Top Business News at 3:06 a.m. EDT
SEOUL, South Korea (AP) -- Hyundai Card CEO Ted Chung is a maverick among the aloof, conservative business elites whose rigidly hierarchical corporate empires, or chaebol, dominate South Korea's economy....
03:04 Lloyds Banking shares fall 2.4% after financial update » MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
03:02 France's CAC opens 0.4% lower at 4,524.95» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
03:01 U.K.'s FTSE 100 opens 0.3% lower at 6,995.32» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
03:01 Stoxx Europe 600 opens 0.2% lower at 342.48» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
02:56 Asian shares hit by gloom on Wall Street, lower oil prices» Stock Markets News Headlines - Yahoo! News

Asian shares hit by gloom on Wall Street, lower oil pricesMarkets fell broadly in Asia on Wednesday after a gloomy session on Wall Street, where shares of household names like appliance maker Whirlpool and athletic apparel maker Under Armour suffered their worst ...

02:55 UK government gives green light to third runway at Heathrow » Top News & Analysis
After decades of wrangling, the U.K. government announces its backing of a third runway at Europe's busiest airport.
02:53 Evolution Of An Investor (A Peek Into My Mind)»

By Chris at www.CapitalistExploits.at

I was interviewed recently by Vesper Capital, a fund which manages a fund of funds for FX trading strategies. The interview was broken into 3 parts.

In the first part we discuss formative years:

Chris MacIntosh - Vesper Capital Interview (Part 1)

(click on the image to listen to the podcast)

Then in part 2, we discuss assessing risk, how psychology can interfere with investing, and much more:

Chris MacIntosh - Vesper Capital Interview (Part 2)

(click on the image to listen to the podcast)

And in part 3, we cover capital allocation, position sizing, and how the Capitalist Exploits blog came to be:

Chris MacIntosh - Vesper Capital Interview (Part 3)

(click on the image to listen to the podcast)

I hope you enjoy them!

- Chris

“Biology gives you a brain. Life turns it into a mind.”  - Jeffrey Eugenides


Liked this podcast interview? Don't miss our future articles and podcasts, and

get access to free subscriber-only content here.


02:53 Donald Trump says he'd 'love' to fight 'Mr Tough Guy' Joe Biden» Top News & Analysis
GOP nominee calls out Biden for comments the VP made last week that if it were high school he'd take Trump "behind the gym."
02:51 Tourism overtakes dairy as New Zealand's top overseas earner» AP Top Business News at 3:06 a.m. EDT
WELLINGTON, New Zealand (AP) -- In New Zealand there are twice as many cows as people, but it's the hobbits that are really making hay....
02:47 Hyundai Motor blames strike as profit hits 7-year-low» AP Top Business News at 3:06 a.m. EDT
SEOUL, South Korea (AP) -- Hyundai Motor's third-quarter profit fell to its lowest level in nearly seven years, well below forecasts, due to a strike that dented production and weak demand in emerging markets....
02:43 As China Liquidates US Treasuries, It is "Gobbling" Up Japanese Government Bonds»

As we reported one week ago, the latest Treasury International Capital report revealed something disturbing: not only had foreign central banks sold a record amount of US Treasurys in the past 12 months, some $346 billion worth...


... but America's largest foreign creditor, China, sold a record $34 billion in US paper in the latest month, and bringing its total holdings to the lowest since 2012.


This led to an obvious question: is China dumping all of its foreign reserve holdings proportionately, or is Beijing strategically offloading its US paper, for financial, political reasons or otherwise, as it buys other foreign government bonds. The answer, at least according to the Nikkei, is the latter.

As the Japanese owner of the Financial Times reports, China is on a shopping spree, and has been "gobbling" up Japanese government bonds, adding that Beijing bought close to a net 9 trillion yen ($86.6 billion) worth of JGBs in the January-August period, more than tripling the amount from the same period last year. Incidentally that's almost equivalent to the number of US Treasurys sold by China.

A simple explanation for the shift is that the People's Bank of China has been reducing its holdings of U.S. Treasurys in anticipation of higher U.S. interest rates and shifting some of its money to JGBs, where higher rates - courtesy of 250% in debt/GDP - are largely guaranteed to never arrive. 

But more importantly, and this could explain the perplexing recent strength in the Yuan, this trend may be a reason behind the yen's appreciation in foreign exchange markets in recent months.

According to Japan's Ministry of Finance, China invested 8.9 trillion yen in Japanese securities in net terms between January and August. Buying started to exceed selling more often on a monthly basis in the second half of 2015. In April, net buying surpassed 3 trillion yen. Curiously, China is not buying the Japanese bonds for the "yield", but rather for liquidity: most of the securities purchased by the PBOC are bonds with maturities of one year or less.

Judging by the latest TIC data, China's selling of US paper is accelerating, which also suggests that just as China has been a factor pushing the Yuan higher, the dollar has been pressured lower by the ongoing Chinese liquidation. One wonders how much higher the USD will jump if and when China decides to halt its selling of US paper, and how much lower the Yuan will then tumble in response, leading to even faster capital outflows from China.

02:43 Swiss private bank Notenstein La Roche cuts jobs in revamp» Reuters: Money
ZURICH (Reuters) - Swiss private bank Notenstein La Roche will cut staff by a fifth, or about 100 jobs, by 2019 as part of a cost-savings drive that will also shift its asset management business to...
02:40 Pope Francis Is Right About Poverty - Just Wrong About The Cause And The Solution» Forbes Real Time
Pope Francis has been talking to the World Food Program in Rome and he's said that we should not lose sight of poverty, real poverty. Similarly, we must not allow ourselves in this world of swift and modern communications to become desensitised to the existence of such absolute poverty. On [...]
02:27 Asia stocks slide on Wall Street losses, oil drops as glut worries return» Stock Markets News Headlines - Yahoo! News

A man looks at an electronic board showing the Japanese yen's exchange rate against Euro outside a brokerage in Tokyo, JapanAsian shares on Wednesday followed in the footsteps of Wall Street, which pulled back overnight on disappointing earnings, while the dollar strengthened and oil prices extended this week's losses. MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.7 percent. Japan's Nikkei reversed earlier losses to close up 0.15 percent as the yen pulled back.

02:26 Volkswagen Phideon Launches In China -- But You've Got To Wonder Why» Forbes Real Time
The most important question about the Phideon is why does it exist at all. Volkswagen’s current offerings are covering 99% of the segment and selling a high end car with a Volkswagen badge is not easy.
02:22 Media titans weigh in on AT&T-Time Warner deal » Business and financial news - CNNMoney.com
It's the elephant in the room that Wall Street Journal reporters couldn't help but ask about: The AT&T and Time Warner deal.
02:20 Ten Questions To Ask When The Headhunter Calls» Forbes Real Time
How can you tell a polite, professional recruiter from an impolite, unprofessional one? Here's how: ask them these ten questions!
02:11 Nordic Europe Rocks High-Speed Internet Access» Forbes Real Time
The Nordic countries of Sweden, Denmark, Norway and Finland have high-speed internet access that makes ISPs in the United States look like amateur league players. Check out what real high-speed internet access looks like as measured by Speedtest.
02:09 Intel Capital Invests $38M In 12 Innovative Technology Startups» Forbes Real Time
Intel's corporate venture capital arm unveiled its new investment philosophy, focused on startups closely aligned to Intel's business units.
02:04 The 9 Most Important Insights for Tech and Media in 2017» WSJ.com: US Business
Technology strategist Michael Wolf predicts a fast-changing landscape that will get harder for advertising-supported content companies while enriching digital gatekeepers such as Google, Facebook, Apple, Amazon and Microsoft.
02:00 Washington's Struggle: Remaining Relevant»

Submitted by Federico Pieraccini via Strategic-Culture.org,

The most important event of the past 70 years is the change in the international order, from a US unipolar domination to a new multipolar reality. The fundamental question lies in understanding how this transition is taking place, its consequences and root causes

The transition in the international order, from a pre-WWI multipolar world to a post-WWII bipolar world, cost humanity a world war involving millions of deaths. The next stage, distinct from the conflicts between the USSR and the US, ended with the fall of the Berlin Wall in 1989, but without the tragedy of direct confrontation. This fundamental historical difference has its own intrinsic logic governing the relationship of forces between powers. The USSR was a country in decline, unable to continue its role on the international stage as the premier anti-hegemonic power.

The transition from a bipolar to a unipolar reality could have had nuclear consequences, but an agreement between the powers avoided this danger. The upshot was an unconditional surrender of the USSR, with catastrophic consequences in economic and cultural terms for the superpower to come to terms with, but at least without the explosion of a large-scale conflict.

With the end of the bipolar model, however, began what some historians declared to be the «end of history»: the transition from a multipolar world, to a bipolar world, to end in a unipolar world. From the point of view of Washington, the story ended with only one global power remaining, thereby granting the United States the power to decide matters for the whole world.

The scenario in which we live today, in terms of international law and the balance of forces, is almost unprecedented in history if looked at in the present context. It is true that the current transition from a unipolar to a multipolar reality is something similar to what has been seen in previous decades, with the transition from British hegemony in the late-nineteenth century to a multipolar situation in the period preceding the two world wars. Nevertheless, resorting to this historical analogy is difficult, given the relative absence of international rules compared to a century ago. Therefore it is difficult to use the earlier transition period to make assumptions about future trends.

The causes of change

The attitude of the US over the last 25 years has been focused completely on the achievement of global hegemony. The dream of having control over every event, in every corner of the world, has ironically led to accelerating the end of America’s unipolar moment. Of course the deep meaning of the word "control" can be expanded upon, examining the merits of the cultural, economic and military impositions that result from a constant quest for global domination.

The US has chosen an impassable road that is full of contradictions to justify their rise as a global power. In two decades we have witnessed the dismantling of all the key principles of the balance of power between Russia and the United States, necessitating the change in international relations from unipolar to multipolar. Similarly, the ratio of economic and military power between China and the United States has significantly worsened, culminating in the dangerous dispute over the South China Sea. The abandonment of the Kissinger doctrine governing relations with Beijing, and the failure of the Clinton reset with Moscow, have pushed two global powers, Russia and China, to forge an alliance that allows for a world where there are more powers on the international stage and not just Washington as the central focus of global relations.

The failure of the foreign doctrine of the United States was a direct consequence of the arrogance and the utopia of being able to dominate the planet, seeking to extend indefinitely the unipolar moment and forging a worldwide system culturally and economically based on the will of Washington, reinforced by a power and military posture without precedent.


Had Washington thought more carefully about the consequences of their actions, and thereby employed a more considered strategic vision, it would certainly have opted for different choices. As a demonstration of this, we note Washington’s attitude in the Middle East, the deciding ground for prospects of continued US global hegemony.

Much of Washington’s remaining capacity to influence global decisions is attributable to the dollar and the trading of goods such as oil in that currency. With the appearance of a world with more regional or global powers, it is easy to guess that the rise of the Iranian Republic has consequences for the whole of the Middle East region. The odds are evident that Tehran, culturally, economically and militarily, will be the first regional power. Washington has realized this and has decided to reach an agreement with the Islamic Republic in order to remain relevant in the region and not to be cut off from future agreements. Washington also seeks, in doing so, to counterbalance the situation with her most influential regional allies, Saudi Arabia and Qatar.

It is a strategy that in the Middle East has had a negative impact in the immediate present for Riyadh, Doha, and in some ways even Ankara, who have all opted for an autonomous and interventionist approach in the region without much consultation with Washington. Nevertheless, the choice to include Iran as a dialogue partner for the Middle East balance has allowed Washington to conserve the illusion that in the future it will maintain an important role in regional decisions. This is a decision that has created many problems with historic allies, but Washington hopes, with a view to the future, to have made an appropriate choice. This also explains why so many of the neoconservatives and liberals (the promoters of a prolonged unipolar doctrine, the cause of so many failures ) are clearly opposed to this agreement.

Washington and its establishment have opted for a cultural and economic confrontation with Moscow, possibly militarily with Beijing in the South China Sea, in the process impelling the emergence of a multipolar world in which more powers have the ability, by joining together, to resist the will of the greater global power. In fact, it is easier to frame the international balance in a multipolar model that is slowly becoming bipolar.

We consider that Russia and China (and to a lesser extent Iran) do not possess the military capability to successfully oppose American power in a conventional conflict on a grand scale. For this reason, it is easy to understand that shaping a multipolar international order perhaps remains quite optimistic at this time. It is similarly optimistic to maintain a unipolar world order that remains anchored in the illusions of the American elite.

Reality rather shows us a bipolar world, where the alternative pole to the US is represented by the union and alliances (cultural, economic and military) of Beijing, Moscow and Tehran. And their partnership has resulted in a change in the pattern of international relations. The cause of this union is to be found in the will of the US elites to prolong their unipolar moment. Instead of opting for an agreement with another global power (probably China) and seal the international stage in a realistic model with two poles, facing no real opposition, Washington has exacerbated the differences by pushing countries like Russia, China, Iran and India closer and closer together, forging what currently might be termed a temporary bipolar model of world order.

The certainty is that the future will turn fully into a multipolar model, and this obliges Washington to struggle in every way possible to remain relevant. To date, apart from nuclear agreements, every choice has been counterproductive and wrong. Will Washington’s elites ever learn, or will they eventually become irrelevant?

01:59 4 Strategies For Women Of Color To Negotiate A Higher Salary» Forbes Real Time
It's no secret that the gender wage gap impactswomen of color more acutely – black women make 63 cents to the white man's dollar and a Hispanic woman stands to lose over $1 million over her 40-year-career compared toher white, non-Hispanic male counterpart. Statistics like these got Jacqueline Twillie to quit [...]
01:58 ASX leads losses across Asian markets; Ardent Leisure tumbles 15%» Top News & Analysis
Asia markets fell across the board on Wednesday, with Australian shares leading losses as oil prices withdraw further.
01:57 Currencies: Dollar struggles to move higher; Aussie dollar surges on inflation » MarketWatch.com - Top Stories
The Australian dollar soared after the faster-than-expected inflation growth helped recede expectations for the central bank to launch an extra easing in the near future, while the U.S. dollar struggled to move up.
01:30 Post-Kobe, Los Angeles Lakers Fans Dream Of More Cubs Comparisons And Less Full-Blown Failure» Forbes Real Time
The Los Angeles Lakers and irrelevancy do not belong in the same sentence. But for the first time in two decades, the NBA’s gold standard for headlines, winning expectations and Hollywood-level drama enter the season devoid of any true buzz. ANAHEIM, CA - OCTOBER 21: D'Angelo Russell #1 and Luke Walton [...]
01:27 Airbus profits in tailspin on weakness in commercial and helicopter divisions» Top News & Analysis
Europe's largest aerospace group said quarterly operating profit before one-off items fell 21 percent to 731 million euros.
01:26 Clydesdale shares fall in Australia amid its proposal to buy RBS's Williams and Glyn operations» Stock Markets News Headlines - Yahoo! News

Clydesdale shares fall in Australia amid its proposal to buy RBS's Williams and Glyn operationsShares of Clydesdale and Yorkshire Banking Group (CYBG) were trading lower in Australia on Wednesday. This was amid its announcement overnight that it had formally proposed to buy Williams and Glyn banking operations from the Royal Bank of Scotland Group (RBS). CYBG was formed by the National Australia Bank in February 2016, in advance of the divestment of its UK business through a stock market flotation.

01:16 French presidential hopeful fails key election test: The price of a chocolate croissant» Top News & Analysis
Presidential hopeful Jean-Francois Cope shocked French voters on Monday when he failed a key election test: The price of pain au chocolat
01:15 AT&T CEO Says Time Warner Deal Not About Raising Prices» WSJ.com: US Business
AT&T Inc. will launch a $35-a-month “mobile-centric” video service next month, Chief Executive Randall Stephenson said Tuesday, pointing to it as an example of how prices won’t rise as a result of the carrier’s $85.4 billion deal to buy Time Warner Inc.
01:06 Futures Movers: Crude prices push further below $50 on rising U.S. inventories, OPEC fears» MarketWatch.com - Top Stories
Data by the American Petroleum Institute showed U.S. crude stockpiles surged 4.8 million barrels in the week ended October 21. More supply data is due Wednesday.
00:54 Apple Pins Hopes on iPhone Revival» WSJ.com: US Business
Apple posted its first annual revenue decline in 15 years, but projected a return to growth in the current quarter behind strong sales of its new iPhone 7.
00:49 This is the easiest place in the world to do business» Business and financial news - CNNMoney.com
Starting a new business in New Zealand takes less than one day. In Venezuela, it takes 230.
00:48 The GOP's Apocalypto Moment» Forbes Real Time
No, sacrificing the GOP on the altar of national populism won’t Make America Great Again
00:44 China's central bank is planning more steps to tackle rising debt in the economy» Top News & Analysis
The PBOC will take into account off-balance sheet financing at commercial banks to assess their overall financial health.
00:39 World Markets Live: European markets struggle to make gains; Novozymes down 10 percent» Top News & Analysis
Our live blog is tracking market reactions as European stocks struggle to make gains amid investors eyeing a raft of earnings data.
00:38 Report: Twitter Expected To Make Hundreds Of Job Cuts» Forbes Real Time
Twitter appears to be preparing for a new round of job cuts after shedding about 8% of its total work force a year ago.
00:30 Bullion Banks "pass the parcel" on El Salvador’s Gold Reserves»

Submitted by Ronan Manly, BullionStar.com

Eighteen months ago I wrote a short synopsis of a gold sales transaction by the central bank of El Salvador wherein it had sold 80% (about 5.5 tonnes) of its official gold reserves. The title of the post was “El Salvador’s gold reserves, the BIS, and the bullion banks“. If you thought, why the focus on the Banco Central de Reserva de El Salvador (BCR), it’s not a major player on the world gold market, you’d be correct, it’s not in its own right that important.

However, the point of the article was not to profile the gold transactions of a relatively obscure central bank in Central America, but to introduce the topic of central bank gold lending to LBMA bullion banks, and the use of short-term ‘gold deposits‘ offered by these bullion banks. The reason being is this is a very under-analysed topic and one which I will be devoting more time to in the future.  Gold loans by central banks to bullion banks are one of the most opaque areas of the global gold market. The fact that I’m using the central bank of El Salvador as the example is immaterial, it’s just convenient since the BCR happens to report the details of its gold lending operations, unlike most central banks.

A Quick Recap

At the end of September 2014, the BCR claimed to hold 223,113 ozs of gold (6.94 tonnes), of which 189,646 ozs (5.9 tonnes) was held in the form of “deposits of physical gold” with the Bank for International Settlements (BIS), and 33,467 ozs (1.04 tonnes) which was held as “time deposits” of gold (up to 31 days) with 2 commercial bullion banks, namelyBarclays Bank and the Bank of Nova Scotia.

The following table and all similar tables below are taken from the BCR’s ‘Statement of Assets backing the Liquidity Reserve’, or ‘Estado de Los Activos Que Respaldan la Reserva de Liquidez’, which it publishes every 3 months.

BCR gold position as of 30 September 2014

In November 2014, the BCR executed a small sale of 5007 ozs of its gold from its quantity held with the BIS, leaving a holding of 218,106 ozs (6.784 tonnes) as of 31 December 2014, comprising 184,639 ozs held in “deposits of physical gold” with the BIS, and 33,467 ozs of “time deposits” (of between 2 and 14 days duration) with 2 bullion banks, namely BNP Paribas and the Bank of Nova Scotia. Notice that as of the end of 2014, BNP Paribas was now holding one of the time deposits of gold, and that Barclays was not listed.

BCR gold position as of 31 December 2014

Notice also in the above table the tiny residual time deposit gold holding attributed to Standard Chartered Bank Plc. Rewind for a moment to 30 June 2014. At the end of June 2014, the BCR’s gold deposits were placed with 3 LBMA bullion banks, namely, Barclays, Bank of Nova Scotia, and Standard Chartered.

This is the way short-term gold deposit transactions work. A central bank places the short-term gold deposit with one of a small number of bullion banks, most likely at the Bank of England, and when the deposit expires after e.g. 1 month, the central bank places the deposit again, but not necessarily with the same bullion bank. The deposit rates on offer (by the bullion banks) and the placements by the central banks are communicated over a combination of Bloomberg terminals, or by phone and then the transactions are settled by Swift messages. More about the actual mechanics of this process in a future article.

BCR gold position as of 30 June 2014


BCR sold its gold at the BIS, put the rest on deposit

In March 2015, the BCR sold 174,000 ozs (5.412 tonnes ) of gold, which left El Salvador with 44,000 ozs. When I wrote about this transaction 18 months ago I had speculated that:

“Since the Salvadoreans had 189,646 ozs on deposit with the BIS and needed to sell 179,000 ozs, the gold sold was most definitely sold to the BIS or to another party with the BIS acting as agent.

It would not make sense to sell some or all of the time deposits that are out with the bullion banks such as Barclays and Scotiasince a large chunk of the BCR gold at the BIS would have to be sold also. It would be far easier to just deal with one set of transactions at the BIS

The above would leave the time deposits of 33,467 ozs (and accrued interest) out with the bullion banks, rolling over each month as usual. The other roughly 11,000 ozs that the BCR held with the BIS could be left with the BIS,or else this too could be put out on deposit with the bullion banks.”

This speculation turns out to have been correct. By 31 March 2015, the BCR held 10,639 ozs of gold “deposits of physical gold” with the BIS, and the same 33,467 ozs of “time deposits“, but this time split evenly between BNP Paribas and Barclays. The entire 174,000 ozs of gold sold came from the “deposits of physical gold” that El Salvador held with the BIS.

BCR gold position as of 30 March 2015

By 30 June 2015, the central bank of El Salvador had moved its remaining 10,639 ozs of “deposits of physical gold” from the BIS, and placed it into “time deposits” with bullion banks, with the entire 44,106 ozs being evenly split across Bank of Nova Scotia, BNP Parias and Standard Chartered, each holding 14,702 ozs.

BCR gold position as of 30 June 2015

Over the 12 months from end of June 2014 to 30 June 2015, a combination of at least 4 LBMA bullion banks, namely,Barclays, Bank of Nova Scotia, Standard Chartered and BNP Paribas were holding short-term gold deposits on behalf of the central bank of El Salvador. I say at least 4 banks, because there could have been more. The snapshots every 3 months only reveal which banks held gold deposits on those dates, not the full list of deposits that could have been placed and matured over each 3 month period.

These time deposits are essentially obligations by the bullion bank in question to repay the central bank that amount of gold. The original gold which was first deposited into the LBMA system could have been sold, lent or otherwise encumbered. It has become a credit in the LBMA unallocated gold system. Ultimately it needs to be paid back to the central bank by whichever bullion bank holds the deposit when the central bank decides that it no longer wants to roll its short-term deposits. This is why the anology of pass the parcel is a suitable one.

Looking at the more recent 3 monthly snapshots from September 2015 to June 2016, the same 4 LBMA bullion bank names were still holding the BCR’s gold deposits, namely Bank of Nova Scotia, Barclays, Standard Chartered and BNP Paribas.

As of 30 September 2015 – Bank of Nova Scotia, Barclays and BNP Paribas, evenly split between the 3 of them.

BCR gold position as of 30 September 2015

On 31 December 2015 – Bank of Nova Scotia, BNP Paribas, and Standard Chartered, evenly split between the 3 of them.

BCR gold position as of 30 December 2015

On 30 March 2016 – Bank of Nova Scotia and BNP Paribas, evenly split between the 2 of them.

BCR gold position as of 30 March 2016

On 30 June 2016, the BCR gold deposits were held by Bank of Nova Scotia and BNP Paribas, evenly spilt between the 2. The 30 June 2016 file on the BCR website doesn’t open correctly so this data was taken from the Google cache of the file.

IMF Reporting standards

Finally, let’s take a quick look at what monetary gold and gold deposits actually are, as defined by the International Monetary Fund (IMF).

“Monetary gold is gold owned by the authorities and held as a reserve asset.  Monetary Gold is a reserve asset for which there is no outstanding financial liability”, IMF Balance of Payments Manual (BPM)

In April 2006, Hidetoshi Takeda, of the IMF Statistics Department published a short opinion paper on the ‘Treatment of Gold Swaps and Gold Deposits (loans)‘ on behalf of the Reserve Assets Technical Expert Group (RESTEG) of the IMF Committee on Balance of Payments (BoP) Statistics. The paper was called “Issues Paper (RESTEG) #11“. In the Issues paper, Takeda states:

“monetary authority make  gold deposits ‘to have their bullion physically deposited with a bullion bank, which may use the gold for trading purpose in world gold markets‘”

“‘The ownership of the gold effectively remains with the monetary authorities, which earn interest on the deposits, and the gold is returned to the monetary authorities on maturity of the deposits'”

 ” Balance of Payments Manual, fifth Edition (BPM5) is silent on the treatment of gold deposits/loans. However, the Guidelines states that, “To qualify as reserve assets, gold deposits must be available upon demand to the monetary authorities” 

You can see from the above that once the gold balance that is represented by the gold deposit is under the control of a bullion bank as a unallocated balance, then it becomes an asset of the bullion bank and can be used in subsequent bullion bank transactions, such as being lent again,  or used to support its trading book, etc.

The big question is whether the gold as represented by the gold deposit is available on demand by the central bank which lent it. For ‘available on demand’ think using an ATM or walking into your local bank and withdrawing some cash from your account. It’s as simple as that.

Takeda said:

“Regarding the statistical treatment of gold deposits/loans, keeping the status quo is suggested. That is, if the deposited/loaned gold is available upon demand to the monetary authorities, it can be included in reserve assets as monetary gold. However, if the gold is not available upon demand, it should be removed from reserve assets

Takeda’s paper also covers the topic of “Double counting of gold from outright sales of gold acquired through gold swaps or gold deposits/loans” where he says logically:

“double counting of gold can occur when a bullion bank sells outright gold acquired through gold deposits/loans from… monetary authorities”

If the gold sold is not removed from the central bank’s balance sheet, it could:

“pose a problem when international statistical standards allow swapped/deposited gold to remain in the reserve assets of the gold provider.”

Given that nothing has changed in the IMF’s reporting standards since 2006, i.e. the IMF did not take on board Takeda’s recommendations on gold loan accounting treatment, and given that all central banks still report gold as one line item of “gold and gold receivables”, then you can see how these gold deposits that are being continually rolled over by central banks using a small number of LBMA bullion banks based in London a) are being double counted if the gold involved has been sold, b) only represent claims by a central bank on a bullion bank, and c) allow bullion banks to increase their unallocated balances which can then be used in myriad leveraged and hypothecated ‘gold’ trading transactions

If you think 4 LBMA bullion banks passing a parcel of central bank gold claims around between them is excessive, wait until you see 28 bullion banks doing the same thing! Coming soon in a future article.

This article originally appeared on BullionStar.com - Bullion Banks pass the parcel on El Salvador’s gold reserves



00:29 Asian shares hit by gloom on Wall Street, lower oil prices» AP Top Business News at 3:06 a.m. EDT
TOKYO (AP) -- Markets fell broadly in Asia on Wednesday after a gloomy session on Wall Street, where shares of household names like appliance maker Whirlpool and athletic apparel maker Under Armour suffered their worst declines in years. Weaker oil prices also cast a pall....
00:08 Xiaomi's swanky new phones won't be enough to dominate the phablet market, analysts say» Top News & Analysis
The untimely demise of Samsung's Galaxy Note 7 has opened up a chunk of the phablet market for the taking. Xiaomi is stepping in.
00:05 Here's how much college will cost you this year» Business and financial news - CNNMoney.com
Here's how much tuition, fees, room and board will cost you this year at public, private and community colleges.
00:01 Will Xiaomi's Concept Mi Mix Be Enough To Re-Invent The Brand?» Forbes Real Time
The MIX device will help Xiaomi shed its reputation as a cheap smartphone maker and crack China’s high-end smartphone segment, but production is likely to be limited.
00:01 This holiday first means malls are losing more ground to the web» Top News & Analysis
Shoppers will allocate an equal amount of their holiday budgets toward online and physical stores this year.
00:01 This chart shows how quickly shoppers definition of 'fast' is changing» Top News & Analysis
Fewer shoppers are impressed by shipments that take longer than two days to arrive on their doorsteps.
00:01 Your employer's insurance costs are growing slower, but you're likely still feeling a pinch» Top News & Analysis
Median incomes have not kept pace with the inflation rate for job-based health insurance costs, straining family budgets.

Tue 25 October, 2016

23:43 Google Pushes Deeper Into Hardware With A Giant Touchscreen Powered By Google Cloud» Forbes Real Time
Google continues its aggressive push into making its own hardware.
23:40 The Wall Street Journal: Spotify dismisses exclusive deals, but plans more ‘original content’» MarketWatch.com - Top Stories
Spotify AB executives argued Tuesday against signing artists to exclusive deals but said the music-streaming service is planning to invest more in “original content” in the near future.
23:39 Developer on VR sexual assault: 'My heart sank'» Business and financial news - CNNMoney.com
Read full story for latest details.
23:28 Asia Markets: Australian wipeout leads Asian market declines» MarketWatch.com - Top Stories
Shares in Asia were broadly lower early Wednesday, tracking declines on Wall Street after a spate of disappointing earnings reports and weaker-than-expected economic data.
23:07 Is BMW’s new car commercial also the fall’s best action movie?» MarketWatch.com - Top Stories
BMW this week released “The Escape,” a 13-minute short film that’s essentially one long chase scene featuring the new 2017 BMW 5 Series sedan.
23:00 Foreign funds boost Bursa outlook» Stock Markets News Headlines - Yahoo! News
KUALA LUMPUR: Bursa Malaysia seems to be expecting greater liquidity and vibrancy as foreign fund flows have turned steady of late, said analysts. Things could also get rosy for the local stock market following a small-and mid-cap listed company research scheme and a RM3 billion fund from government-linked investment companies (GLICs) proposed in the 2017 Budget. Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew said stock market liquidity is gradually improving, supported by foreign funds.
23:00 'Agents of S.H.I.E.L.D.' Season 4 Episode 5 Recap: 'Lockup'» Forbes Real Time
It's all style in this week's Agent of S.H.I.E.L.D.
22:57 Asia stocks slide after Wall Street losses, oil drops on glut concerns» Stock Markets News Headlines - Yahoo! News

Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange in TokyoBy Nichola Saminather SINGAPORE (Reuters) - Asian shares tumbled in early trade on Wednesday, following in the footsteps of Wall Street, which pulled back on disappointing earnings, while the dollar inched down from a seven-month high and oil prices slid. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent. Japan's Nikkei lost 0.2 percent, while South Korea's KOSPI dropped 0.8 percent and Australia fell 1.4 percent.

22:42 Michael Moore: "Trump's Election Will Be The Biggest Fuck You Ever Recorded In Human History"»

Some fascinating comments from the overtly liberal, Hillary-supporting Michael Moore, who in a recently leaked speech comes perilously close in a speech explaining why on November 8, what is left of middle America will look to cast its vote for Donald Trump for one reason:

Americans might be penniless, they might be homeless, they might be fucked over and fucked up it doesn't matter, because it's equalized on that day - a millionaire has the same number of votes as the person without a job: one. And there's more of the former middle class than there are in the millionaire class. So on November 8 the dispossessed will walk into the voting booth, be handed a ballot, close the curtain, and take that lever or felt pen or touchscreen and put a big fucking X in the box by the name of the man who has threatened to upend and overturn the very system that has ruined their lives: Donald J Trump.

He concludes:

Yes, on November 8, you Joe Blow, Steve Blow, Bob Blow, Billy Blow, all the Blows get to go and blow up the whole goddamn system because it's your right. Trump's election is going to be the biggest fuck ever recorded in human history and it will feel good.

* * *

His full remarks below:

I know a lot of people in Michigan that are planning to vote for Trump and they don't necessarily agree with him. They're not racist or redneck, they're actually pretty decent people and so after talking to a number of them I wanted to write this.


Donald Trump came to the Detroit Economic Club and stood there in front of Ford Motor executives and said "if you close these factories as you're planning to do in Detroit and build them in Mexico, I'm going to put a 35% tariff on those cars when you send them back and nobody's going to buy them." It was an amazing thing to see. No politician, Republican or Democrat, had ever said anything like that to these executives, and it was music to the ears of people in Michigan and Ohio and Pennsylvania and Wisconsin - the "Brexit" states.


You live here in Ohio, you know what I'm talking about. Whether Trump means it or not, is kind of irrelevant because he's saying the things to people who are hurting, and that's why every beaten-down, nameless, forgotten working stiff who used to be part of what was called the middle class loves Trump. He is the human Molotov Cocktail that they've been waiting for; the human hand grande that they can legally throw into the system that stole their lives from them. And on November 8, although they lost their jobs, although they've been foreclose on by the bank, next came the divorce and now the wife and kids are gone, the car's been repoed, they haven't had a real vacation in years, they're stuck with the shitty Obamacare bronze plan where you can't even get a fucking percocet, they've essentially lost everything they had except one thing - the one thing that doesn't cost them a cent and is guaranteed to them by the American constitution: the right to vote.


They might be penniless, they might be homeless, they might be fucked over and fucked up it doesn't matter, because it's equalized on that day - a millionaire has the same number of votes as the person without a job: one. And there's more of the former middle class than there are in the millionaire class. So on November 8 the dispossessed will walk into the voting booth, be handed a ballot, close the curtain, and take that lever or felt pen or touchscreen and put a big fucking X in the box by the name of the man who has threatened to upend and overturn the very system that has ruined their lives: Donald J Trump.


They see that the elite who ruined their lives hate Trump. Corporate America hates Trump. Wall Street hates Trump. The career politicians hate Trump. The media hates Trump, after they loved him and created him, and now hate. Thank you media: the enemy of my enemy is who I'm voting for on November 8.


Yes, on November 8, you Joe Blow, Steve Blow, Bob Blow, Billy Blow, all the Blows get to go and blow up the whole goddamn system because it's your right. Trump's election is going to be the biggest fuck ever recorded in human history and it will feel good.

* * *

22:40 Deutsche Bank Considering Alternatives To Paying Cash Bonus»

It has been at least a few weeks since Deutsche Bank appeared in the flashing red breaking news sections of newswires, with news that was - mostly - negative. And while the stock has since rebounded materially, wiping out all losses since the DOJ's $14 billion RMBS settlement leak, it appears that not everything is back to normal for the largest German lender. Because in what may be the worst news yet for DB's employees, moments ago Bloomberg reported that the German Bank is exploring "alternatives to paying bonuses in cash" as Chief Executive Officer John Cryan seeks to boost capital buffers.

According to Bloomberg, DB executives have discussed options including giving some bankers shares in the non-core unit instead of cash bonuses. Another idea under review is replacing the cash component with more Deutsche Bank stock.

The supervisory board may discuss the topic of variable pay at a meeting on Wednesday though no final decisions are expected, the people said, the day before it reports third-quarter earnings. The measures, if pursued in the coming months, would mostly impact the investment bank, the people said. The Frankfurt-based lender is still considering other alternatives, they said.

As Bloomberg adds, any bonus-related decision will depend on the size and timing of Deutsche Bank’s settlement with the U.S. Department of Justice over a probe into the the sale of faulty real-estate securities. Last year, Deutsche Bank awarded staff 2.4 billion euros ($2.6 billion) of bonuses for 2015, 1.45 billion euros of which was for the combined investment banking and trading unit. Of the 2.4 billion euros, 49 percent was deferred stock and cash while the remainder was paid out immediately.  It appears that DB wants to take the 49% number and make it bigger.

The idea echoes a similar move by Credit Suisse Group AG at the height of the financial crisis, when the Swiss firm used its most illiquid loans and bonds to pay employees’ year-end bonuses.

The report is comparable to a similar announcement made exactly one year ago, when DB announced it may slash bonuses by as much as one third. Since then, however, DB's aggressive cost cutting initative has made life for the bank's employees progressively more miserable. Since taking over in 2015, Cryan has suspended the dividend, reduced bonuses, cut risky assets, frozen new hiring and announced plans to shed some 9,000 jobs. The CEO has already said Deutsche Bank may fail to be profitable this year after posting the first annual loss since 2008 last year. Now, DB bankers may end up getting "paid" in some of the billions in impaired tanker loans, carried quietly on the bank's book, if not CDS or interest rate swaps. Those DB certainly has a lot of.

Should DB be successful with this significant shift in compensation strategy without leading to an exodus of workers, it will likely be attempted at other banks as the core problems facing Deutsche Bank, namely declining profitability, have now become systemic across the entire banking sector. Which is bad news for investment bankers everywhere.

22:35 How Half Of America Lost Its F**king Mind»

Authored by David Wong, originally posted at Cracked.com,

I'm going to explain the Donald Trump phenomenon in three movies. And then some text.

There's this universal shorthand that epic adventure movies use to tell the good guys from the bad. The good guys are simple folk from the countryside ...

Lionsgate Films

... while the bad guys are decadent assholes who live in the city and wear stupid clothes:

Lionsgate Films

In Star Wars, Luke is a farm boy ...


... while the bad guys live in a shiny space station:


In Braveheart, the main character (Dennis Braveheart) is a simple farmer ...

Paramount Pictures

... and the dastardly Prince Shithead lives in a luxurious castle and wears fancy, foppish clothes:

Paramount Pictures

The theme expresses itself in several ways -- primitive vs. advanced, tough vs. delicate, masculine vs. feminine, poor vs. rich, pure vs. decadent, traditional vs. weird. All of it is code for rural vs. urban. That tense divide between the two doesn't exist because of these movies, obviously. These movies used it as shorthand because the divide already existed.

We country folk are programmed to hate the prissy elites.

*  *  *

That brings us to Trump...Here are six reasons for the rise of Trump that no one is taking about


1. It's Not About Red And Blue States -- It's About The Country Vs. The City


I was born and raised in Trump country. My family are Trump people. If I hadn't moved away and gotten this ridiculous job, I'd be voting for him. I know I would.

See, political types talk about "red states" and "blue states" (where red = Republican/conservative and blue = Democrat/progressive), but forget about states. If you want to understand the Trump phenomenon, dig up the much more detailed county map. Here's how the nation voted county by county in the 2012 election -- again, red is Republican:

Holy cockslaps, that makes it look like Obama's blue party is some kind of fringe political faction that struggles to get 20 percent of the vote. The blue parts, however, are more densely populated -- they're the cities. In the upper left, you see the blue Seattle/Tacoma area, lower down is San Francisco and then L.A. The blue around the dick-shaped Lake Michigan is made of cities like Minneapolis, Milwaukee, and Chicago. In the northeast is, of course, New York and Boston, leading down into Philadelphia, which leads into a blue band which connects a bunch of southern cities like Charlotte and Atlanta.

Blue islands in an ocean of red. The cities are less than 4 percent of the land mass, but 62 percent of the population and easily 99 percent of the popular culture. Our movies, shows, songs, and news all radiate out from those blue islands.

And if you live in the red, that fucking sucks.

See, I'm from a "blue" state -- Illinois -- but the state isn't blue. Freaking Chicago is blue. I'm from a tiny town in one of the blood-red areas:

As a kid, visiting Chicago was like, well, Katniss visiting the capital. Or like Zoey visiting the city of the future in this ridiculous book. "Their ways are strange."

And the whole goddamned world revolves around them.

Every TV show is about LA or New York, maybe with some Chicago or Baltimore thrown in. When they did make a show about us, we were jokes -- either wide-eyed, naive fluffballs (Parks And Recreation, and before that, Newhart) or filthy murderous mutants (True Detective, and before that, Deliverance). You could feel the arrogance from hundreds of miles away.

Warner Brothers Pictures

"Nothing that happens outside the city matters!" they say at their cocktail parties, blissfully unaware of where their food is grown. Hey, remember when Hurricane Katrina hit New Orleans? Kind of weird that a big hurricane hundreds of miles across managed to snipe one specific city and avoid everything else. To watch the news (or the multiple movies and TV shows about it), you'd barely hear about how the storm utterly steamrolled rural Mississippi, killing 238 people and doing an astounding $125 billion in damage.

Mark Wolfe / FEMA No sports team = no fucks given.

But who cares about those people, right? What's newsworthy about a bunch of toothless hillbillies crying over a flattened trailer? New Orleans is culturally important. It matters.

To those ignored, suffering people, Donald Trump is a brick chucked through the window of the elites. "Are you assholes listening now?"


2. City People Are From A Different Goddamned Planet

"But isn't this really about race? Aren't Trump supporters just a bunch of racists? Don't they hate cities because that's where the brown people live?"

Look, we're going to get actual Nazis in the comment section of this article. Not "calling them Nazis for argument points" Nazis, but actual "Swastikas in their avatars, rooted against Indiana Jones" Nazis. Those people exist.

But what I can say, from personal experience, is that the racism of my youth was always one step removed. I never saw a family member, friend, or classmate be mean to the actual black people we had in town. We worked with them, played video games with them, waved to them when they passed. What I did hear was several million comments about how if you ever ventured into the city, winding up in the "wrong neighborhood" meant you'd get dragged from your car, raped, and burned alive. Looking back, I think the idea was that the local minorities were fine ... as long as they acted exactly like us.

If you'd asked me at the time, I'd have said the fear and hatred wasn't of people with brown skin, but of that specific tribe they have in Chicago -- you know, the guys with the weird slang, music and clothes, the dope fiends who murder everyone they see. It was all part of the bizarro nature of the cities, as perceived from afar -- a combination of hyper-aggressive savages and frivolous white elites. Their ways are strange. And it wasn't like pop culture was trying to talk me out of it:

It's not just perception, either -- the stats back up the fact that these are parallel universes. People living in the countryside are twice as likely to own a gun and will probably get married younger. People in the urban "blue" areas talk faster and walk faster. They are more likely to be drug abusers but less likely to be alcoholics. The blues are less likely to own land and, most importantly, they're less likely to be Evangelical Christians.

In the small towns, this often gets expressed as "They don't share our values!" and my progressive friends love to scoff at that. "What, like illiteracy and homophobia?!?!"

Nope. Everything.


3.Trends Always Start In The Cities -- And Not All Of Them Are Good

The cities are always living in the future. I remember when our little town got our first Chinese restaurant and, 20 years later, its first fancy coffee shop. All of this stuff had turned up in movies (set in L.A., of course) decades earlier. I remember watching '80s movies and mocking the "Valley Girl" stereotypes -- young girls from, like, California who would, like, say, "like" in between every third word. Twenty years later, you can hear me doing the same in every Cracked podcast. The cancer started in L.A. and spread to the rest of America.

Well, the perception back then was that those city folks were all turning atheist, abandoning church for their bisexual sex parties. That, we were told, was literally a sign of the Apocalypse. Not just due to the spiritual consequences (which were dire), but the devastation that would come to the culture. I couldn't imagine any rebuttal. In that place, at that time, the church was everything. Don't take my word for it -- listen to the experts:

Church was where you made friends, met girls, networked for jobs, got social support. The poor could get food and clothes there, couples could get advice on their marriages, addicts could try to get clean. But now we're seeing a startling decline in Christianity among the general population, the godless disease having spread alongside Valley Girl talk. So according to Fox News, what's the result of those decadent, atheist, amoral snobs in the cities having turned their noses up at God?


Drew Angerer/Getty Images, Scott Olson

The fabric has broken down, they say, just as predicted. And what rural Americans see on the news today is a sneak peek at their tomorrow.

The savages are coming.

Blacks riot, Muslims set bombs, gays spread AIDS, Mexican cartels behead children, atheists tear down Christmas trees. Meanwhile, those liberal Lena Dunhams in their $5,000-a-month apartments sip wine and say, "But those white Christians are the real problem!" Terror victims scream in the street next to their own severed limbs, and the response from the elites is to cry about how men should be allowed to use women's restrooms and how it's cruel to keep chickens in cages.


Madness. Their heads are so far up their asses that they can't tell up from down. Basic, obvious truths that have gone unquestioned for thousands of years now get laughed at and shouted down -- the fact that hard work is better than dependence on government, that children do better with both parents in the picture, that peace is better than rioting, that a strict moral code is better than blithe hedonism, that humans tend to value things they've earned more than what they get for free, that not getting exploded by a bomb is better than getting exploded by a bomb.

Or as they say out in the country, "Don't piss on my leg and tell me it's raining."

The foundation upon which America was undeniably built -- family, faith, and hard work -- had been deemed unfashionable and small-minded. Those snooty elites up in their ivory tower laughed as they kicked away that foundation, and then wrote 10,000-word thinkpieces blaming the builders for the ensuing collapse.


4. The Rural Areas Have Been Beaten To Shit

Don't message me saying all those things I listed are wrong. I know they're wrong. Or rather, I think they're wrong, because I now live in a blue county and work for a blue industry. I know the Good Old Days of the past were built on slavery and segregation, I know that entire categories of humanity experienced religion only as a boot on their neck. I know that those "traditional families" involved millions of women trapped in kitchens and bad marriages. I know gays lived in fear and abortions were back-alley affairs.

I know the changes were for the best.

Try telling that to anybody who lives in Trump country.

They're getting the shit kicked out of them. I know, I was there. Step outside of the city, and the suicide rate among young people fucking doubles. The recession pounded rural communities, but all the recovery went to the cities. The rate of new businesses opening in rural areas has utterly collapsed.

See, rural jobs used to be based around one big local business -- a factory, a coal mine, etc. When it dies, the town dies. Where I grew up, it was an oil refinery closing that did us in. I was raised in the hollowed-out shell of what the town had once been. The roof of our high school leaked when it rained. Cities can make up for the loss of manufacturing jobs with service jobs -- small towns cannot. That model doesn't work below a certain population density.

If you don't live in one of these small towns, you can't understand the hopelessness. The vast majority of possible careers involve moving to the city, and around every city is now a hundred-foot wall called "Cost of Living." Let's say you're a smart kid making $8 an hour at Walgreen's and aspire to greater things. Fine, get ready to move yourself and your new baby into a 700-square-foot apartment for $1,200 a month, and to then pay double what you're paying now for utilities, groceries, and babysitters. Unless, of course, you're planning to move to one of "those" neighborhoods (hope you like being set on fire!).

In a city, you can plausibly aspire to start a band, or become an actor, or get a medical degree. You can actually have dreams. In a small town, there may be no venues for performing arts aside from country music bars and churches. There may only be two doctors in town -- aspiring to that job means waiting for one of them to retire or die. You open the classifieds and all of the job listings will be for fast food or convenience stores. The "downtown" is just the corpses of mom and pop stores left shattered in Walmart's blast crater, the "suburbs" are trailer parks. There are parts of these towns that look post-apocalyptic.

I'm telling you, the hopelessness eats you alive.

And if you dare complain, some liberal elite will pull out their iPad and type up a rant about your racist white privilege. Already, someone has replied to this with a comment saying, "You should try living in a ghetto as a minority!" Exactly. To them, it seems like the plight of poor minorities is only used as a club to bat away white cries for help. Meanwhile, the rate of rural white suicides and overdoses skyrockets. Shit, at least politicians act like they care about the inner cities.


5. Everyone Lashes Out When They Don't Have A Voice

It really does feel like the worst of both worlds: all the ravages of poverty, but none of the sympathy. "Blacks burn police cars, and those liberal elites say it's not their fault because they're poor. My son gets jailed and fired over a baggie of meth, and those same elites make jokes about his missing teeth!" You're everyone's punching bag, one of society's last remaining safe comedy targets.

They take it hard. These are people who come from a long line of folks who took pride in looking after themselves. Where I'm from, you weren't a real man unless you could repair a car, patch a roof, hunt your own meat, and defend your home from an intruder. It was a source of shame to be dependent on anyone -- especially the government. You mowed your own lawn and fixed your own pipes when they leaked, you hauled your own firewood in your own pickup truck. (Mine was a 1994 Ford Ranger! The current owner says it still runs!)

Not like those hipsters in their tiny apartments, or "those people" in their public housing projects, waiting for the landlord any time something breaks, knowing if things get too bad they can just pick up and move. When you don't own anything, it's all somebody else's problem. "They probably don't pay taxes, either! Just treating America itself as a subsidized apartment they can trash!"

The rural folk with the Trump signs in their yards say their way of life is dying, and you smirk and say what they really mean is that blacks and gays are finally getting equal rights and they hate it. But I'm telling you, they say their way of life is dying because their way of life is dying. It's not their imagination. No movie about the future portrays it as being full of traditional families, hunters, and coal mines. Well, except for Hunger Games, and that was depicted as an apocalypse.

So yes, they vote for the guy promising to put things back the way they were, the guy who'd be a wake-up call to the blue islands. They voted for the brick through the window.


6. Assholes Are Heroes

"But Trump is objectively a piece of shit!" you say. "He insults people, he objectifies women, and cheats whenever possible! And he's not an everyman; he's a smarmy, arrogant billionaire!"

Wait, are you talking about Donald Trump, or this guy:

You've never rooted for somebody like that? Someone powerful who gives your enemies the insults they deserve? Somebody with big fun appetites who screws up just enough to make them relatable? Like Dr. House or Walter White? Or any of the several million renegade cop characters who can break all the rules because they get shit done? Who only get shit done because they don't care about the rules?

"But those are fictional characters!" Okay, what about all those millionaire left-leaning talk show hosts? You think they keep their insults classy? Tune into any bit about Chris Christie and start counting down the seconds until the fat joke. Google David Letterman's sex scandals. But it's okay, because they're on our side, and everybody wants an asshole on their team -- a spiked bat to smash their enemies with. That's all Trump is. The howls of elite outrage are like the sounds of bombs landing on the enemy's fortress. The louder the better.

Already some of you have gotten angry, feeling this gut-level revulsion at any attempt to excuse or even understand these people. After all, they're hardly people, right? Aren't they just a mass of ignorant, rageful, crude, cursing, spitting subhumans?

Gee, I hope not. I have to hug a bunch of them at Thanksgiving. And when I do, it will be with the knowledge that if I hadn't moved away, I'd be on the other side of the fence, leaving nasty comments on this article the alternate universe version of me wrote.

It feels good to dismiss people, to mock them, to write them off as deplorables. But you might as well take time to try to understand them, because I'm telling you, they'll still be around long after Trump is gone.

22:32 For Apple, surprise hunger for big phones leaves money on table» Reuters: Hot Stocks
Oct 25 (Reuters) - Apple Inc said it was caught off guard by how many people want to buy its biggest smartphone, the iPhone 7 Plus, and the miscalculation may hit profits this holiday season.
22:31 Russia Unveils First Images Of Nuclear Missile Capable Of Reaching US Soil»

Submitted by Alexander Mercouris via TheDuran.com,

Russia reveals photos of a new highly advanced liquid fuelled heavy ICBM capable of evading anti-missile defences and hitting US territory with 10 tonne nuclear payload.

The Makeyev Design Bureau – the designer of Russia’s heavy liquid fuelled Intercontinental Ballistic Missiles (“ICBMs”) – ie. of missiles capable of reaching US territory from Russian territory, has published the first picture of Russia’s new heavy Sarmat ICBM which is due to enter service shortly, probably in 2018.

The picture is accompanied by a short statement which reads

“In accordance with the Decree of the Russian Government ‘On the State Defence Order for 2010 and the planning period 2012-2013,’ the Makeyev Rocket Design Bureau was instructed to start design and development work on the Sarmat. In June 2011, the Bureau and the Russian Ministry of Defense signed a state contract for the Sarmat’s development.  The prospective strategic missile system is being developed in order to assuredly and effectively fulfil objectives of nuclear deterrent by Russia’s strategic forces.


The Sarmat is the planned replacement of the R-36 family of Russian ICBMs, which entered service with the Soviet armed forces in the 1960s.  The R-36 family culminated in a series of missiles known in the USSR and Russia as the R-36M, which entered service in the 1970s.  With a throw weight of 8,800 kg these were the heaviest and most powerful ICBMs built up to now.  Here is a video of one being launched:

The specifications of the Sarmat have not been disclosed and are classified.  However it is believed to be a significantly smaller and lighter missile than the R-36 family, but to have a larger throw weight of up to 10,000 kg. 

Advances in the chemical industry and in the design of rocket engines since the 1960s have made it possible to build smaller and lighter rockets having the same or greater capability as the heavier rockets designed in the 1960s.


The Sarmat has been specifically designed to defeat the US’s Anti Ballistic Missile systems, which are being deployed in eastern Europe. 

Its range of countermeasures is classified and not known.  However it is believed the Sarmat is capable of manoeuvres during its flight trajectory to confuse incoming missiles, that it is able to launch decoys – also to confuse incoming interceptor missiles – and that at least one of the warheads being designed for it is a hypersonic warhead, which rumours say was tested successfully in April, and which is believed to be impervious to interception by incoming missiles.

A little mentioned fact about the military strategic balance between the US and Russia, is that Russia has been steadily upgrading its strategic deterrent with new advanced missiles, which are entirely different to those of the 1960s, which formed the basis of the Soviet strategic deterrent. 

These include the Topol and Yars light road mobile solid fuel ICBMs, and the very advanced solid fuelled Bulava ICBM, which is sea launched from Russia’s advanced Borei strategic nuclear missile submarines. (Below)


Topol ICBM




Bulava ICBM


Borei-class Strategic Nuclear Submarine

By contrast the US strategic deterrent still relies on missile systems such as the ground-based Minuteman III and the sea launched Trident II, which have their origins in the 1960s and early 1970s.

With the Sarmat missile, which is supposed to enter service in 2018, the Russians will add another powerful modern advanced system to their strategic armoury.

22:25 Caterpillar Says Sales Woes Could Linger» WSJ.com: US Business
Caterpillar is predicting another tough year in 2017, as the company deals with the fallout from the global commodities bust and prepares for a transition in top leadership.
22:24 China consumer sentiment climbs to six-month high in October, survey shows» Top News & Analysis
Gains in the Westpac MNI China Consumer Sentiment Indicator were led by improvements in buying conditions and current personal finances.
22:20 North Carolina Major Infractions Case Takes Another Curious Turn» Forbes Real Time
The University of North Carolina Athletic Academic Fraud Scandal-The Gift That Keeps on Giving
22:16 Forget The Fancy Job Title -- I Just Want The Money» Forbes Real Time
Grant is negotiating a job offer. He thought the original salary offer was too low, so he asked for more -- and now the company is proposing a beefed-up job title as a bargaining chip. What would you do in Grant's position?
22:12 The Biggest Video Game Controversies Of 2014» Forbes Real Time
22:12 Bethesda's Decision To Withhold Review Copies Is Bad For Gamers And Sets A Dangerous Precedent» Forbes Real Time
Bethesda's decision to withhold review copies until the eve of release is terrible for consumers and sets a dangerous precedent.
22:10 Meet The Apple iPhone 7 And 7 Plus» Forbes Real Time
22:10 Apple iOS 10.1: Should You Upgrade?» Forbes Real Time
Apple 10.1 adds a lot, but has one potentially risky bug...
22:02 5 Psychological Reasons Why Users Can't Stop Playing Disney Crossy Road» Forbes Real Time
Disney Crossy Road was developed by Australian gaming startup, Hipster Whale, who have already created a viral smash hit game with Crossy Road, downloaded over 150 million times since November 2014. What makes games like this so addictive?
22:01 How Crowdfunding Can Supercharge Your Campaign In 2016» Forbes Real Time
Crowdfunding has helped a lot of businesses recently. Want to join the queue? Here's how to raise funds for your projects.
22:00 Alphabet presses pause on Google Fiber expansion» MarketWatch.com - Top Stories
Alphabet Inc. is largely pulling the plug on its high-speed fiber internet expansion, as it likely pivots to cheaper wireless delivery methods.
21:58 VW Buyback Deal on Diesel-Emissions Scandal Approved» WSJ.com: US Business
Volkswagen received final approval of a $14.7 billion deal reached with consumers and government agencies that could get nearly half a million dirty diesel vehicles off U.S. roads.
21:48 German Ammunition Sales Skyrocket Tenfold In First Half Of 2016»

While the rest of the world is devolving into proxy, or even outright warfare, one nation is profiting handsomely. Germany's ammunition exports skyrocketed in the first half of 2016, a leaked report has revealed according to Germany's Deutsche Welle. And ironically Turkey, a country whose political relationship with Germany has deteriorated sharply over the past year - if only for popular consumption - and is currently suppressing its political opposition, has moved up the list of the country's best customers.

As DW reports, the German government has allowed the country's gun-makers to sell even more ammunition around the world in the first half of 2016, according to an arms export report leaked to the DPA news agency and due to be discussed in a cabinet meeting on Wednesday. The sales of small arms themselves have fallen slightly, from 12.4 million euros ($13.5 million) to 11.6 million euros, but the approved ammunition sales rose from 27 million euros to 283.8 million euros.

This broke down into 275 million euros worth of sales to EU, NATO, and NATO-allied countries (Australia, New Zealand, Japan, and Switzerland) as well as some 5.4 million euros to Iraq. The three biggest single customers were France, Poland, and Iraq, where Germany is supporting the Kurdish fighters in their battle against "Islamic State."

Think of it as a razor-razorblade model, just far more deadly.

Sebastian Schulte, defence analyst and Germany correspondent for military magazine "Jane's Defense Weekly," said the increase in ammunition was not particularly surprising, given the intensification of the battles in Syria and northern Iraq. "The coalition is at the gates of Mosul, they're going through a lot of ammunition, and Germany has decided to support the coalition - notably the Kurds," he told DW. "You can go through several barrels of ammo for a machine gun in a day. That is quite normal." 

Not only that, Germany is probably also sending a lot of ammunition to Turkey, he speculates: "And as you know, Turkey is also highly involved both in Syria and in anti-IS operations." As Schulte explained, Germany's assault rifle ammunition is designed to be used in several different guns across NATO armies - though not in older guns like the Soviet-designed Kalashnikov or the 1960s era German machine gun, the G3.

What Schulte did not comment on is that it almost appears that German's interests are alligned with those of the US, to perpetuate a state of warfare in Syria and Iraq. After all, while weapons purchases ultimately plateau, the need for ammunition if virtually infinite.

* * *

The arms export report also revealed that Turkey has become a better weapons customer in the last few years: moving up from 25th place to 8th place since the beginning of the refugee crisis. Two-thirds of these sales came in plane parts, unmanned drones, and other military equipment. South Korea is also buying more from Germany, thanks to escalating tension with its northern neighbor, and has bought 205 million euros worth of military equipment, including military ships, submarine and helicopter parts, missiles and missile defense systems.

But few are as good or steady clients of Germany as the biggest sponsor state of terrorism around the globe, Saudi Arabia which remains Germany's third-biggest buyer, increasing its purchases from 179 million euros in the first half of 2015 to 484 million euros, while the United Arab Emirates almost doubled its purchases from Germany from 46 million euros to 85 million euros.

In top spot, somewhat surprisingly, and the best individual customer in the first half of 2016, was Algeria buying 1.04 billion euros of German military equipment, closely followed by the US, who bought 914 million euros' worth.

Meanwhile, Germany's faux pacifism has once again been exposed. Vice Chancellor Sigmar Gabriel, who as economy minister is responsible for Germany's arms sales, has promised to reduce Germany's exports of small arms, which are by far the biggest cause of deaths in conflicts around the round the world.

Alas, it was easier said than done. At the start of July, it was revealed that the value of Germany's total arms sales had doubled from 2014 to 2015 (from 3.97 billion euros to 7.86 billion euros) - something that the Social Democratic Party leader blamed on a few major individual sales that had been agreed before his tenure. But Germany's anti-arms activists would not accept this excuse, saying that the German government always has the power to cancel deals.

Tuesday's report appears to show Gabriel breaking his promise again, angering the Left party's arms export spokesman Jan van Aken: "We need clear legal bans, and first and foremost an immediate ban on small arms exports," he told DPA. The Green party's Agnieszka Brugger was equally outraged by the latest figures, tweeting: "The government is throwing its own strict export guidelines in the garbage bin. No sense of responsibility!"

Yes, well, while outraged and disguasted German pacificst tweet, the German weapons industry is set to enjoy another blockbuster year thanks to what has been an unprecedented  outbreak of conflict and near-war around the globe. Which should help least answer the first and foremost question any time a conflict breaks out anywhere: qui bono. And since demand for weapons and ammo transcends such trivial limitations and FX exchange rates, once German arms makers have hooked enough foreign "clients", even a spike in the Euro - should the ECB eventually taper its QE - would not result in a notable loss in future revenue.

21:36 Clues emerge on who was behind huge cyberattack» Business and financial news - CNNMoney.com
President Obama says the U.S. doesn't know who carried out the massive cyberattack that crippled the internet last week, but one top federal official said "preliminary" evidence indicated it was not done by a government.
21:12 Alaska governor halts sale of pension obligation bonds» Reuters: Money
(Reuters) - Alaska Governor Bill Walker has called off the planned sale of up to $3.3 billion in state pension obligation bonds due to a lack of support from members of the state senate, he said on...
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21:00 Robo-advisors not ready to replace humans - Credit Suisse exec» Finextra Research Headlines
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21:00 Mozambique Bonds Crash On Plans To Restructure After Government Admits Nation In "Debt Distress"»

With over-subscribed new issuance the new normal in this 'reach for any yield' world, perhaps the rapid demise of Mozambique will remind some greater fools that 'high' yields are high for a reason.

As we warned 4 months ago, Mozambique has a broad swath of problems within its governing councils.  Back in December of 2005, Management Systems International based out of Washington issued a report titled CORRUPTION ASSESSMENT: MOZAMBIQUE which said point blank: "The scale and scope of corruption in Mozambique are cause for alarm".

Mozambique's head of state Joaquim Chissano left office in February 2005 after 15 years.  His replacement, Armando Guebza, that same year opened Mozambique's coastline to international companies seeking to search for resources.  Between 2005 and 2006 three firms were able to capture rights to explore the coast, Anadarko, Italy's Eni, and Petronas.  Some 75 trillion cubic feet of natural gas was discovered and this set of a a blitz into Mozambique as international banks, corporations, and organizations flooded the area.  This opened a breeding ground for corruption and unregulated financing, specifically the controversial Tuna Bond that was supposed to be used to support regional fishing and was instead used for military expenditures and to purchase some 40 boats that remain anchored to this day.

Since then, the New Metical has crashed hyperinflation-like to record lows against the dollar...


In June, The IMF blamed "undisclosed loans" for Mozambique's sudden surge to 86% Debt/GDP ratio. 

"Mozambique's economic growth will likely slow to 4.5 percent in 2016 from 6.6 percent the previous year due to rapidly rising inflation and growing government debt, the International Monetary Fund said on Friday. The leader of a Fund team that visited the southern African country, Michel Lazare, said the discovery of more than $1 billion of previously undisclosed government debt would increase pressure on the economy."

Which seemed to spark dip-buying in the bonds...until today (as Bloomberg reports)

Mozambique is in “debt distress,” according to the International Monetary Fund’s criteria, and plans to start talks with creditors in coming days.


The southern African nation has appointed Lazard Freres SAS and White & Case to “engage in a constructive dialogue with creditors,” it said in a presentation to investors dated Oct. 25 and posted on the Finance Ministry’s website. The government aims to achieve ‘debt sustainability’ with the agreement of creditors before starting talks about an International Monetary Fund loan, it said.

The yield on Mozambique’s $727 million of Eurobonds due 2023 jumped 554 basis points to 20.78 percent by 5:22 p.m. in Maputo, the highest on record.

The country’s debt ratio will reach 112.6 percent of GDP this year after $1.4 billion in previously undisclosed loans were uncovered in April, the IMF said in a report posted to its website today. Government already this year restructured over $800 million in loans it received for a fleet of tuna fishing vessels, repackaging the debt as a $727 million of Eurobonds.

Any new restructuring will be complicated by the existence of about $1.2 billion in loans Credit Suisse and VTB secretly made to other Mozambican state-owned companies and then resold to other investors. It is unclear how holders of the loans would be treated compared with bondholders. As WSJ reports,

Several creditors who financed the borrowings to the state-owned businesses said they are considering litigation. They spoke on condition of anonymity because they weren't authorized to talk to the press.

In their crosshairs isn’t just Mozambique, but also Credit Suisse and VTB, the two banks that arranged the loans and are currently being investigated by authorities in the U.K. and Switzerland over their conduct.

Both banks deny wrongdoing, as does the Mozambican government, which blames its troubles on the delays in bringing its vast gas reserves online because of low global energy prices.

Mozambique full investor presentation...

20:50 MarketWatch First Take: Apple needs Mac to return to growth in the holiday quarter» MarketWatch.com - Top Stories
Apple Inc. needs the Mac to return to growth and it is counting on its big product launch Thursday to re-accelerate sales, which have been hurt by Alphabet Inc.’s Chromebooks.
20:49 Twitter's stock is popping on 'market gossip' that Disney is interested again (TWTR)» Markets

jack dorsey

Twitter investors are still eager for a sale.

The company's shares popped in after hours trading on Tuesday following a report from Betaville that says Disney has "rekindled interest" in buying the struggling social network.

Citing "well informed types," Betaville's Ben Harrington says the two companies are "now thrashing out a deal after agreeing on a price - thought to be in the high 20s per share - at the back end of last week."

Twitter and Disney declined to comment.

Twitter's stock immediately jumped more than 4%  in after hours trading to over $18 per share on the report despite Betaville's caution that it should be treated as "market gossip that hasn't been tested through formal journalistic channels."

Wall Street is clearly eager for a Twitter acquisition, particularly after the last round of supposed bidders, including Disney, Google and Salesforce, all vanished.

SEE ALSO: Twitter's stock is up on Softbank M&A chatter, but there's no real evidence of a deal

Join the conversation about this story »

NOW WATCH: The story of Lisa Brennan-Jobs, the daughter Steve Jobs claimed wasn't his

20:24 Detroit Car Makers Stall on Wall Street» WSJ.com: US Business
Investor concerns about slowing U.S. light-vehicle sales, margin pressure in North America and the fallout from Brexit overshadowed solid profit growth from two of the biggest American auto makers Tuesday.
20:19 Chipotle Outlines New Initiatives to Speed Recovery» WSJ.com: US Business
Chipotle Mexican Grill reported profit tumbled 95% in the latest quarter amid concerns that pricey promotions to get customers to return after illness outbreaks aren’t working.
20:17 Yum CEO Talks Fast Food in the Age of Amazon» WSJ.com: US Business
Yum Brands is at a pivotal moment as it faces what Chief Executive Greg Creed calls a “once in a lifetime opportunity” to rethink the company’s business model.
20:10 Investor: Theranos covered 'ad nauseum' by WSJ» Business and financial news - CNNMoney.com
A partner at Draper Fisher Jurvetson, the first firm to put in money into the company helmed by Elizabeth Holmes, thinks that the press' attention to Theranos has been overkill.
20:09 UPDATE 4-Apple's holiday surprise: big sales, not so big profits» Reuters: Hot Stocks
Oct 25 (Reuters) - Apple Inc posted its third successive quarter of declining iPhone sales on Tuesday and forecast slimmer-than-expected profit margins over the upcoming holiday season even as it...
20:09 Singapore loses its crown as world's easiest place to do business» Top News & Analysis
New Zealand is now best for business, the World Bank found, pushing Singapore out of its decade-long top spot.
20:06 Germany Inc. Sits on $500 Billion in Cash Amid Weak Outlook» WSJ.com: US Business
German companies are sitting on a half-trillion dollars of cash but are reluctant to invest it in their own country, potentially threatening the country’s competitive edge and European growth.
20:01 Ingenico tech lets online shoppers pay with contactless cards» Finextra Research Headlines
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20:01 Raphaels Bank selects FIS for Faster Payments push» Finextra Research Headlines
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19:58 Deal Making Preserves Coors Clan as American Beer Dynasty» WSJ.com: US Business
Pete Coors, vice chairman of Molson Coors Brewing, has pursued a series of deals that preserved the independence of the family business, helping his clan survive in an industry other American beer dynasties fled long ago.
19:32 The Wall Street Journal: Defense secretary vows to resolve soldiers’ bonus clawback controversy» MarketWatch.com - Top Stories
U.S. Secretary of Defense Ash Carter vowed Tuesday to resolve a burgeoning controversy over Pentagon efforts to claw back millions of dollars in re-enlistment bonuses from current and former California National Guard soldiers, many of whom served in Iraq and Afghanistan.
19:25 Google Fiber's CEO is stepping down and the company is halting plans to offer service in several cities (GOOG, GOOGL)» Markets

Google Fiber

Google's ambitious plan to spread high-speed internet service across the US has hit a bump in the road as the group leading the charge scales back its operations and is roiled by a management shake up. 

Craig Barratt, the head of Google Access, is stepping down and the company is freezing plans to roll out the high-speed Google Fiber broadband service to 8 new cities, company announced on Tuesday.

Access, which is owned by Google parent company Alphabet, will lay off about 9% of its staff, or between 100 and 200 employees, as part of the change, a source familiar with the matter told Business Insider. 

The move marks a significant setback for one of parent company Alpahbet's most high-profile and ambitious projects. And it represents the latest sign of turmoil among Alphabet's collection of subsidiary companies, coming on the heels of CEO exits at Nest and Google's Project Wing drone group.

The change is likely to raise questions about Alphabet's committment to the diverse money-losing projects under its roof, particularly ahead of the company's quarterly earnings report on Thursday.

In an emailed statement to Business Insider, Alphabet CEO Larry Page said the company was not abandoning its role in the internet service business.

"I'm excited about the potential of providing super fast internet to more people. Craig has worked hard to scale this business, and I look forward to continue working with him in his new role as an Advisor," Page said.

Barratt, a former CEO of wireless chip company Atheros who joined Google in 2013, will stay at Google parent Alphabet as an advisor. Google has tapped a trio of Access executives, including longserving Access member Milo Medin, to lead the group on an interim basis while it looks for a replacement for Barratt.

Goodbye Los Angeles

Google said it will continue to offer its Fiber service in cities where it has launched, but it has pulled the plug on plans to expand to Los Angeles, Portland, Oregon and a handful of other cities.

"For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches,"  Barratt said in a blog post announcing the news.

"In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base," he said.

The layoffs will primarily involve workers involved in the deployment of Google Fiber in the new cities, the person familiar with the matter said.

Going wireless

Google Fiber started offering Gigabit speed internet access to Kansas City residents in 2010, expanding the service to a handful of other cities aftewards.

Craig BarrattBut the effort, which involves digging up streets and gettting access rights to utility poles, is extremely costly and subject to a thicket of regulatory and competitive challenges

Google Fiber is among the most capital intensive of Alphabet's so-called Other Bet companies. In the second quarter, the Other Bets lost a combined  $859 million on revenue of $185 million.

Over the past year or so, Access has increasingly turned its sights to wireless technology as an alternative means of delivering high speed access to consumers, particuarly with the June acquisition of Webpass.

According to the person familiar with the matter, the Access group is halting Fiber rollout plans in the new cities because it has decided to refocus the service on wireless, which is ultimately a much faster way to roll out internet service across cities.

As Business Insider has previously reported, the company is currently working on various wireless technologies that can best serve the differing environments and landscapes of various cities. 

SEE ALSO: Apple shares sink on first annual drop in revenue since 2001

Join the conversation about this story »

19:18 The Wall Street Journal: FanDuel, DraftKings settle with New York for $6 million each» MarketWatch.com - Top Stories
Fantasy-sports websites FanDuel and DraftKings will each pay $6 million to resolve lawsuits in New York over their advertising practices, state attorney general Eric Schneiderman said Tuesday, resolving a year-long legal battle over the popular online games.
19:12 Cramer Remix: Regulators won't play by the rules for AT&T and Time Warner» Top News & Analysis
Jim Cramer broke down his thoughts on the current M&A market environment, and how regulators will react.
19:11 US millennials choose security over the latest technology fads for instant mobile payments» Finextra Research Headlines
VocaLink, the global payment partner to banks, corporates and governments, today launched “The Mille...
19:10 Growth will take off in 2017, Salesforce billionaire CEO Marc Benioff predicts» Markets

Marc Benioff

With the tech industry still rocking from AT&T's planned acquisition of Time Warner for a massive $85 billion, clearly this season of M&A is still in full swing.

One of the people taking full advantage of it has been Salesforce CEO Marc Benioff. He's spent $4 billion on acquisitions in the past year, buying three companies in September alone and another one, Krux (for $700 million) in October.

Speaking at the Intel Capital Summit on Tuesday in San Diego on Tuesday, Benioff explained why the time has been right to buy. He also predicted that all this activity is going to result in some spectacular growth across in the global economy in 2017. 

"2008 was obviously this brutal year for our economy and the European economy and while we thought we were coming out of it in 2011, we never kind of got of out it. I think a lot CEOs feel like we're finally coming out of it and that we're going to enter a new investment cycle," he said.

He quoted "general economy theory" which says that eventually "things get fully depreciated and companies have to go in and invest again and growth returns," he said. 

And he predicts we are about to hit that new phase.

"I strongly believe that growth is returning. Especially when we get over this election and in 2017," he says.

Companies that had flat revenue or flat stock prices but had the ability to make an acquisition have been doing so now,  "because you have these incredibly low interest rates," he said.

And all of those things will erupt in a hotter economy in 2017, he predicts.

SEE ALSO: 9 tech trends that will make billions of dollars starting in 2017

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NOW WATCH: Watch millennials try a McDonald's Big Mac for the first time

18:58 Mushy Apple and other earnings could steer stocks Wednesday» Top News & Analysis
Apple's mushy post-earnings performance, other earnings news and weaker oil prices could be catalysts for stocks Wednesday.
18:53 Seattle's drive for an NBA team just got an assist» Business and financial news - CNNMoney.com
Investor Chris Hansen announced on Tuesday that his group was no longer seeking public funding for an arena in Seattle. That makes it easier for the NBA to expand in the city.
18:46 Apple CEO Tim Cook got testy after an analyst asked him if Apple has a 'grand strategy' (AAPL)» Markets

Tim Cook

Apple may have hit its targets in its fiscal fourth quarter, but investors are clearly not dazzled by the shrinking shipments across all of the company's key product lines.

Shares of Apple fell about 3% in after hours trading on Tuesday. And CEO Tim Cook struggled to convince Wall Street that the company was poised for a new growth spurt.

But the moment that best defined the company's current predicament came during the conference call on Tuesday, when Apple CEO Tim Cook fielded a remarkable question from an analyst and reacted in what can best be described as a defensive manner.

The analyst started by pointing out that Apple hasn't released a major new product in a while, and then asked: "Does Apple have a grand strategy for the next 3-5 years? I know you're not going to tell us, but do you have one?"

Cook responded by saying: "We have the strongest pipeline that we've ever had and we're really confident about the things in it but as usual we're not going to talk about what's in it"

The "strongest pipeline" phrase was standard Apple boilerplate language for these kinds of questions. But it was hard to miss a sense of annoyance in Cook's voice, especially when he didn't follow-on with any other comments, if even just some more platitudes about how focused on innovation Apple is.

Then something really interesting happened.

The unthinkable question

The analyst followed up by pressing on whether Apple has a grip on its strategy or if it simply reacts to changes to the market. 

"We have a strong sense of where things go and we’re very agile to shift it," Cook said tersely.

It was a striking sign of how much Apple's reputation has changed from even just a few years ago, as the company experiences three quarters of declining revenue and struggles to unveil a new, game-changing gadget.

Apple was the undisputed leader of the tech industry during the Steve Jobs era. It would have been unthinkable for a Wall Street analyst to have the temerity to ask whether the company has a grand strategy or simply reacts to others.

Apple is the maker of the iPhone. The company does not react to others; It sets the agenda.

But these days, the Wall Street analysts who asked questions on Apple's call on Tuesday aren't taking anything for granted. As a group, they pressed the company's leadership for more information on the direction of the company — like the long-rumored Apple Car — or details about its financial operations. 

SEE ALSO: Apple shares sink on first annual drop in revenue since 2001

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NOW WATCH: Astronomers reported 234 mysterious signals in space — and yes, it could be aliens

18:34 Traders weigh equipment stocks after Caterpillar's mixed quarterly results» Top News & Analysis
The "Fast Money" traders debated whether to jump on the dip in Caterpillar shares after the company posted mixed quarterly results on Tuesday.
18:19 Apple's quarterly sales fall, but forecast calls for gains» AP Top Business News at 3:06 a.m. EDT
SAN FRANCISCO (AP) -- After stumbling in 2016, Apple is betting on a better year ahead....
18:18 The next job at risk of being marginalized by robots: Major League Baseball’s umpires» Top News & Analysis
The World Series between the Chicago Cubs and Cleveland Indians could be the last in which balls and strikes are called by a homeplate umpire.
18:18 Cramer bites into Apple: Wall Street still ignoring the most important part of earnings» Top News & Analysis
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18:17 UPDATE 2-Edwards Lifesciences 3rd-qtr sales disappoint, shares slide» Reuters: Hot Stocks
Oct 25 (Reuters) - Edwards Lifesciences Corp on Tuesday reported third quarter sales of its minimally invasive heart valve replacements that fell short of Wall Street estimates, and its previously...
18:10 UPDATE 2-Pandora Media cuts revenue forecast amid stiff competition» Reuters: Hot Stocks
* Announces on-demand service "Pandora Premium" (Adds details on Pandora Premium; Updates share move)
18:05 Fixing this would boost economy by $1.2 trillion» Business and financial news - CNNMoney.com
Closing the economic gap between men and women could boost the U.S. economy by $1.2 trillion a year, a new report from the World Economic Forum has found.
18:04 Apple's new MacBook Pro has no escape key» Top News & Analysis
It turns out that images of Apple's new MacBook Pro, set to be unveiled on Thursday, are actually hiding inside the latest macOS Sierra update, The Verge reports.
18:02 Self-driving truck makes first shipment» Business and financial news - CNNMoney.com
Read full story for latest details.
18:02 Apple's Tim Cook: 'We're returning to growth'» Top News & Analysis
After reporting three straight quarters of lower year-over-year sales, Apple says it is returning to growth.
18:01 The World Economic Forum's annual gender gap report is out and the outlook is gloomy» Markets

women working

The World Economic Forum (WEF) revealed its annual global gender gap report today, and the results are depressing.

The US slipped down to 45th on their ranking of countries by gender equality, behind four African countries and all major European countries (all of which are in the top 20), and down from 28th last year. 

This dramatic fall is partly because women's participation in the labor force has declined over the past year and the number of women in senior positions is shrinking.

On a more positive note, the US closed its education gender gap in 2016. This means there is a large pool of educated female talent, even though fewer women are actually working, as can be seen in the table showing the United States' scores below. 

WEF Gender Gap Survey - USThe annual report looks at progress towards equality between men and women in four key areas: educational attainment, health and survival, economic opportunity, and political empowerment.

Progress towards economic equality in 2016 has slowed globally, with the economic participation and opportunity sub-index dipping to 59% — worse than any point since 2008.  According to the report, the global economic gender gap is not forecasted to close until the year 2196. 

That slowdown is partly due to imbalances in salaries, with women around the world on average earning just half of what men earn despite working longer hours, as well as a drop in women's labor force participation, with the global average for women standing at 54% compared to 81% for men. This is despite the fact that women attend university in equal or higher numbers than men in 95 countries. 

The number of women in senior positions also continues to be low, with only four countries in the world having equal numbers of male and female legislators, senior officials and managers. 

"The world is facing an acute misuse of talent by not acting faster to tackle gender inequality, which could put economic growth at risk and deprive economies of the opportunity to develop," according to a statement issued by the WEF.

More progress has been made in the education sub-index, with the gender gap there having closed 95%. Similarly, the health and survival sub-index has also improved, with that gap having closed 96%.

The slow rate of economic progress for women poses a particular risk because many of the jobs that usually employ women are "likely to be hit the hardest by the coming age of technological disruption" says the report.

"This 'hollowing out' of female livelihoods could deprive economies further of women’s talents and increases the urgency for more women to enter high-growth fields such as those demanding STEM skills." STEM refers to a high education skill set consisting of science, technology, engineering and math. 

The top four nations that lead the WEF's report are all Scandinavian countries, with Iceland taking the lead, followed by Finland, Norway, and Sweden. The next highest are Rwanda, Ireland, the Philippines, Slovenia and new Zealand. Rounding out the top 10 is Nicaragua. 

The Global Gender Gap Index ranks 144 countries to understand whether countries are distributing their resources equally between women and men, irrespective of their overall income levels. The variables used to create the index come from publicly available data from international organizations like the International Labor Organization, the United Nations Development Programme and the World Health Organization among others, and from perception surveys conducted by the WEF.

SEE ALSO: The 20 highest-paying jobs for women

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NOW WATCH: Beware of fraudulent IRS emails in your inbox

18:00 Draghi Defends ECB's Easy-Money Policies» WSJ.com: US Business
European Central Bank President Mario Draghi launched a strong defense of the ECB’s easy-money policies, stressing that the central bank is committed to keeping interest rates low until it hits its inflation target.
17:50 The Feds are starting to dig in at the biggest middle-man in the pharmaceutical game» Markets

Preet Bharara, U.S. Attorney for the Southern District of New York, is photographed after speaking at the Crain's Business Forum in Manhattan, New York September 30, 2014.  REUTERS/Adrees Latif

The Feds are gunning for the biggest middle man in the American pharmaceutical game, Express Scripts, according to government filings published on Tuesday along with the company's earnings.

Express Scripts is the largest pharmacy benefit manager (PBM) in the country.

It's used by insurers and employers to try and keep a lid on what they spend on pharmaceuticals. It also has its own internal mail-order pharmacy, and manages patient assistance programs for drug companies.

All of that has made it an behemoth. 

And all of that is what's worrying politicians Washington and other federal agents. Both the US Attorney’s Office for the Southern District of New York and the Department of Justice and US Attorney’s Office for the District of Massachusetts want to know more about the company's client payment plans, pricing structures, and its patient assistance programs.

These are all issues that have come up over the last year as drug price hikes have become part of our national conversation. Usually, however, that conversation centers around pharmaceutical firms, not the middle men that distribute the drugs. 

From the company's filings:

On August 15, 2016, the Company received a civil investigative demand from the United States Attorney’s Office for the Southern District of New York, requesting information regarding the Company’s relationships with pharmaceutical manufacturers and prescription drug plan clients, and payments made to and from those entities. The Company intends to cooperate with the inquiry and is not able to predict with certainty the timing or outcome of this matter.

On September 12, 2016, the Company received a subpoena duces tecum from the Department of Justice and United States Attorney’s Office for the District of Massachusetts requesting information regarding relationships between pharmaceutical manufacturers, independent 501(c)(3) charitable foundations providing cost-sharing assistance to federal health care program beneficiaries, and specialty pharmacies. The Company intends to cooperate with the inquiry and is not able to predict with certainty the timing or outcome of this matter.

Express Scripts is already being sued by one of its largest clients, Anthem Insurance, for unfair dealing in their contract. That's just one of a few suits in which clients or whistleblowers accuse Express Scripts of taking advantage of its power and the lack of price transparency in the industry.

This is a huge deal in Washington, and not just because of recent scandals with EpiPen and Martin Shkreli. Republicans in Congress have been causing a stink about Express Scripts and other PBMs because they believe their vertical integration is giving them too much power and killing competition. Democrats worry that PBMs could be part of the reason why drug prices are so high, which is part of what's threatening Obamacare.

With these two investigations, we can expect more clarity as to whether or not those concerns are valid.

We should also note, by the way, that while the number of prescriptions Express Scripts declined in the third quarter, but the company beat earnings anyway on profits. That should tell you something.

SEE ALSO: These companies you've never heard of are about to incite another massive drug price outrage

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NOW WATCH: These are the business skills you learn from being in a gang

17:50 Ex-Oppenheimer adviser pleads guilty to U.S. insider trading charges» Reuters: Money
NEW YORK (Reuters) - A former investment adviser at an Oppenheimer Holdings Inc unit pleaded guilty on Tuesday to charges that he engaged in an insider trading scheme based on information supplied by...
17:45 Chipotle to ditch ShopHouse Asian food chain as it narrows its focus» Top News & Analysis
Chiptole is ditching its Asian food concept ShopHouse in favor of driving innovation at its namesake and bolstering its pizza and burger concepts.
17:43 New Wells Fargo CEO to employees: 'We're sorry'» Top News & Analysis
Newly appointed Wells Fargo CEO Tim Sloan has told employees that he is "sorry for the pain" that the bank's employees have felt.
17:40 U.S. funds downbeat on AT&T even before Time Warner deal» Reuters: Money
BOSTON (Reuters) - Many actively managed U.S. mutual funds were cool toward AT&T Inc even before the telecom giant's planned $85.4 billion acquisition of Time Warner Inc.
17:40 Hospitals have already experienced Obamacare taper, analyst says» Top News & Analysis
2017 will be quite a different year for Obamacare, analyst Ipsita Smolinksi says.
17:36 Mercedes-Benz unveils first pickup truck» Business and financial news - CNNMoney.com
The new truck will be available in markets outside the United States and will feature typical Mercedes-Benz luxury features.
17:31 Wall St. slips on earnings; Apple falls late after results» Stock Markets News Headlines - Yahoo! News

A woman passes by the New York Stock Exchange during the morning commute in New York CityApple , the largest U.S. company by market capitalization, posted after the bell better-than-expected iPhone sales that however continued a declining trend and shares fell about 2 percent, briefly dragging S&P 500 futures to session lows. Sherwin Williams' outlook also disappointed Wall Street and shares fell 10.9 percent to $247.61. "Lackluster results from Whirlpool and Sherwin Williams may indicate a slowing in the housing cycle," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

17:29 World markets lose steam, oil falls; US earnings mixed» Stock Markets News Headlines - Yahoo! News

US  markets posted slight declines with some big name companies reporting earningsNew York (AFP) - Global stock markets lost steam Tuesday amid a deluge of US corporate earnings reports showing mixed results, as well as solid German economic data, while oil dropped below the psychological $50 level.

17:26 A deal makes sense for TD Ameritrade, not for us, Charles Schwab CEO says» Top News & Analysis
A deal makes sense for TD Ameritrade, not for us, Charles Schwab CEO Walt Bettinger says.
17:24 Red ink will rule, but optimism in the oilpatch as earnings released» Stock Markets News Headlines - Yahoo! News
Precision Drilling announced some full-on good news last week with its third-quarter earnings. Precision Drilling employed 4,337 people at the end of 2015, as compared with 7,834 a year earlier. In a conference call with analysts, Precision's chief executive Kevin Neveu said that sentiment in the industry was the best he had seen in two years.
17:23 Wall Street slips on earnings; Apple falls late after results» Stock Markets News Headlines - Yahoo! News

Traders work on the floor of the NYSENEW YORK (Reuters) - U.S. stocks slipped from two-week highs on Tuesday as results and forecasts from companies in sectors including housing and consumer products failed to live up to expectations.

17:22 If Monsanto Loses Its Name, What Will Its Haters Have Left to Hate?» WSJ.com: US Business
Bayer’s $57 billion offer for Monsanto—aka “Monsatan”—means GMO protesters must rethink familiar old slogans and insults, and compose new songs for a company that has long been a target for activists.
17:21 Marcus Lemonis donates front-row World Series tickets to 97-year-old WWII vet» Top News & Analysis
Jim Schlegel was there in '45 the last time the Cubs played in the World Series, but didn't expect he'd be able to go this year.
17:15 Apple CEO Tim Cook on Samsung customers: 'We obviously welcome all switchers'» Top News & Analysis
Apple CEO Tim Cook told CNBC that "it is hard to estimate" the opportunity of Samsung's Note 7 dilemma, "but we obviously welcome all switchers."
17:14 Strategist Yardeni says bad headlines providing great buying opportunity for these stocks» Top News & Analysis
Widely followed strategist Ed Yardeni lifted his outlook on financial and health care stocks due to attractive valuations.
17:13 General Motors beats earnings expectations; investor fears linger» Stock Markets News Headlines - Yahoo! News

Cars are seen inside the General Motors Corp world headquarters in DetroitGM's quarterly results zoomed past analysts' forecasts. Ford Motor Co shares fell 1.6 percent to $11.85, and supplier Delphi Automotive PLC fell 1.6 percent. GM Chief Executive Mary Barra told analysts on Tuesday "we are working hard to make sure the core business is operating in a very disciplined fashion" while the company invests in future technology such as self-driving cars.

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17:08 Chipotle turnaround still slower than expected» Top News & Analysis
It looks like Chipotle Mexican Grill isn't headed for a turnaround any time soon as earnings disappointed again.
17:06 Apple: Sales of iPhone, iPad and Mac All Shrink But Better Signs Ahead» Barron's Most Viewed Today
17:06 Apple's cash hoard swells to $237.6 billion, a record» Top News & Analysis
The tech giant also reported earnings that beat Wall Street expectations on Tuesday.
17:04 Watchdogs hunt for Wells Fargo fake account copycats» Business and financial news - CNNMoney.com
The Wells Fargo scandal has prompted a review by regulators into the sales practices of other midsize and large U.S. banks.
16:56 TruRating brings customer ratings to the POS» Finextra Research Headlines
TruRating, a global new mass-market ratings system offering an alternative model to TripAdvisor and...
16:53 Asia Pacific ATM cash withdrawals soar» Finextra Research Headlines
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16:51 Chipotle to pursue strategic alternatives for ShopHouse brand restaurants» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
16:51 New Wells Fargo CEO to employees: 'We're sorry'» AP Top Business News at 3:06 a.m. EDT
NEW YORK (AP) -- Newly appointed Wells Fargo CEO Tim Sloan told employees Tuesday that he is "sorry for the pain" that the bank's employees have suffered as a result of the company's sales practices scandal....
16:44 U.S. stocks slip on earnings, dollar off highs» Stock Markets News Headlines - Yahoo! News

Traders work on the floor of the NYSEBy Hilary Russ NEW YORK (Reuters) - U.S. stocks fell on disappointing earnings reports on Tuesday, while the U.S. dollar slipped from multi-month highs after Chancellor Governor Mark Carney cast doubt on expectations for more monetary stimulus. Oil prices fell more than 1 percent, with U.S. crude breaking below $50 per barrel for a second straight day, ahead of weekly data that could show a build in inventories. On Wall Street, nine of the eleven sectors in the benchmark S&P 500 stock index closed lower, with housing and consumer products companies among those failing to live up to forecasts on third-quarter earnings.

16:42 GLOBAL MARKETS-U.S. stocks slip on earnings, dollar off highs» Stock Markets News Headlines - Yahoo! News
U.S. stocks fell on disappointing earnings reports on Tuesday, while the U.S. dollar slipped from multi-month highs after Bank of England Governor Mark Carney cast doubt on expectations for more monetary ...
16:37 Win or lose, the Cubs are a money machine» Business and financial news - CNNMoney.com
Cubs' 71 year absence from the World Series hasn't stopped the franchise from being among most profitable baseball teams, even in down years.
16:36 What Florida voters want» Business and financial news - CNNMoney.com
Read full story for latest details.
16:32 Apple stock rises 1% in after-hours trade following results » MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
16:32 Apple Q1 revenue forecast $76 bln-$78 bln, vs. FactSet est. $74.9 bln» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
16:31 Apple Q4 revenue $46.9 bln , vs. $51.5 bln, FactSet est. $47 bln» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
16:31 Apple sold 45.5 million iPhones last quarter (AAPL)» Markets

customers buy iphone 7 at apple store

Apple's earnings for the third quarter are out, and the big number on everyone's mind is iPhone sales.

Apple reported that it sold 45.5 million iPhones last quarter. Analysts were expecting 45 million iPhone sales. It's a slight beat.

iPhone sales have been in decline all year, as Apple faces a saturated high-end smartphone market.

This was the first quarter to represent at least some iPhone 7 sales. But the iPhone 7 only went on sale on September 16. Next quarter, which includes the holidays, will be the big test for the iPhone 7.

Apple says it expects revenues to start growing again next quarter, which is likely due to high demand for the iPhone 7.

The iPhone may also get a boost from Samsung's Galaxy Note 7 debacle this fall. Samsung was forced to cancel and recall the Note 7 following several reports that the device overheated and started smoking and/or caught fire.

Here's a chart from BI Intelligence showing iPhone sales growth:

bii apple iphone sales q3 2016

SEE ALSO: Full coverage of Apple's earnings

Join the conversation about this story »

NOW WATCH: Why your iPhone alarm snooze is automatically set to 9 minutes

16:31 Apple Q4 EPS $1.67 , vs. $1.96, FactSet est. $1.66» MarketWatch.com - Real-time Headlines
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
16:24 Edwards Lifesciences boosts outlook after profit meets Street view» Reuters: Hot Stocks
Oct 25 (Reuters) - Edwards Lifesciences Corp on Tuesday reported higher third quarter profit in line with Wall Street estimates on increased sales of its minimally invasive heart valve replacement,...
16:12 Chipotle misses big on sales but says next year will be great (CMG)» Markets

chipotle guac serving scooping

Chipotle on Tuesday reported third-quarter results that showed sales fell more than expected, about one year since outbreaks of E. coli and norovirus were linked to its food.

The company reported revenue of $1 billion, and said sales at locations open for at least one year fell 22%. Analyst had forecast revenue of $1.09 billion, and a sam-store sales decline of 19%.

Diluted earnings per share fell to $0.27 from $4.59.

That includes 29 cents related to the impairment charges at its ShopHouse Asian restaurants and another 23-cent charge due to unredeemed giveaways through Chiptopia, its new rewards program.

Analysts had forecast EPS of $1.56, although this may not be comparable to the reported figure of $0.27. 

The disease outbreaks drove customers away from Chipotle and, in the first quarter, led to the company's first sales decline since it went public. Chipotle launched aggressive marketing campaigns and promotions to lure customers back. 

"We continued to make steady progress in our sales recovery during the third quarter," said co-CEO Monty Moran in the earnings release. "We are earning back our customers' trust, and our research demonstrates that people are feeling better about our brand, and the quality of our food."

Chipotle anticipated that next year will be better. In 2017, it forecast that comparable restaurant sales will rise in the "high single-digits."

For the full-year 2016, Chipotle expected that new restaurant openings would be at or above the high-end of its previously announced range of 220 to 235. It saw same-store sales declines in the "low single-digits" for the fourth quarter. 

The shares gained as much as 3% in after-hours trading before slipping. They were down 15% this year through the close of trading on Tuesday.

Join the conversation about this story »

NOW WATCH: LIZ ANN SONDERS: The most unsettling outcome for the markets would be a surprise Trump win

16:11 Here's the memo Citi's investment banking head just sent his team to say congratulations» Markets

Ray McGuire

Monday was a big day for dealmakers, and bankers across the Street are sure to be celebrating.

Citigroup advised on a number of deals Monday and throughout the past week.

To congratulate the team, Citi's global head of corporate and investment banking, Ray McGuire, sent the following memo to his team.

Here it is:


"Merger Monday is alive and well! Thanks to the partnership between Coverage and M&A and the hard work and perseverance of deal teams across the globe, our transactions are the ones that headlined the world's financial publications today.

"It wasn't just an impressive Monday morning or weekend, it has been a strong week. Citi advised on 10 transactions of roughly $1B or more, only the 3rd time in our history that we've announced so many in such a short timeframe.

"Here are some of the highlights:

  • Advising Time Warner on its $108B transaction with AT&T, the fifth largest M&A transaction of all time
  • Advising B/E Aerospace on its $8B sale to Rockwell Collins
  • Advising Coca-Cola East Japan Co. on its $6B merger with Coca-Cola West Co.
  • Advising Energeticky a Prumyslovy Holding (EPH) on a series of transactions valued at more than $5B to change its shareholder structure and sell infrastructure assets to Macquarie
  • Advising TD Ameritrade on its $4B acquisition of Scottrade Financial Services
  • Advising Sealed Air on its spin-off of its Diversey Care division
  • Advising China Oceanwide on its $3B acquisition of Genworth Financial
  • Advising Onex on its $1B acquisition of Save-A-Lot
  • Advising Centerbridge on the sale of Culligan International to Advent
  • Advising Esselte, a JW Childs portfolio company, on its sale to ACCO Brands

"In total, we announced more than $140B worth of transactions over the last 7 days, our 2nd best week ever. While this was a great week our momentum has been on the rise for a few months now. Since August 1, we are the #3 global M&A advisor with a 26% volume share.

"We know it takes long hours, late nights and weekends to get these deals to the finish line. On days like today, we hope that you can take a step back and appreciate the quality and depth of our Client Coverage and M&A Business and the contribution that each and every one of you makes. Our M&A pipeline reflects the level of intensity and client impact that you are maintaining through the end of the year. It is now at an all-time high. There are a number of significant landmark transactions still in the works, some of which could sign in the next few weeks.

"Thank you to Mark and Pete for their leadership. Congratulations to the deal teams. Let's continue the momentum and finish the year strong."

SEE ALSO: Wall Street banks could earn up to $200 million from Merger Monday

Join the conversation about this story »

NOW WATCH: Bass Pro Shops is buying its rival Cabela’s for $5.5 billion

16:07 Paysafe partners Handpoint on EMV-ready mPOS and online payment services» Finextra Research Headlines
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16:02 JetBlue Knows How Painful Flying Has Become. Here's Its Fix.» Barron's Most Viewed Today
16:00 STOCKS FALL: Here's what you need to know (CAT, MMM, UA)» Markets

niagara falls waterfall frozen

Business Insider has launched Markets Insider, which combines the best of Business Insider with real time market data. You can follow the site on Twitter @MktsInsider, and on Facebook.

Stocks closed lower on Tuesday after some key companies on the Dow Jones Industrial Average announced earnings forecasts that were weaker than analysts had expected.

Here's the scoreboard:

  • Dow: 18,169.27, -53.76, (-0.30%)
  • S&P 500: 2,143.16, -8.17, (-0.38%)
  • Nasdaq: 5,283.40, -26.43, (-0.50%)
  1. Caterpillar lowered its outlook for profit this yearThe retailer of large industrial equipment said it expected 2016 earnings per share excluding restructuring costs to be $3.25, down from an earlier projection of $3.55. "Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged," CEO Doug Oberhelman said. The company's sales have not grown on an annual basis since 2012. 
  2. Under Armour shares slumped 14% after the company beat third-quarter earnings forecasts but warned about future sales growthThe retailer said it expected revenue to rise in the low 20% range during 2017 and 2018, which would be its slowest pace since 2009, according to Bloomberg. Third-quarter earnings beat as demand for Under Armour's apparel, shoes, and accessories grew.
  3. 3M Co, the maker of Scotch tape and Post-it notes, is struggling to grow sales in emerging markets, and on Tuesday lowered its full-year revenue and earnings forecasts for the second time. The company now expects revenue to be flat for the year, excluding the impact of currencies, down from a prior estimate of flat-1%. 
  4. Home prices are still rising amid strong demand and a shortage of homes for sale. The S&P/Case Shiller report for August showed that prices in 20 major US metro areas rose 0.24% month-on-month, and 5.1% year-on-year, both more than expected. Also, the FHFA house price report showed that home prices rose 0.7% in August, more than forecast. "Continued inventory shortages are leading to intense competition, escalating prices and mounting buyer frustration, with the average home search over the past year taking more than four months," Zillow Chief Economist Svenja Gudell in a note.
  5. The Conference Board's consumer confidence index fell to 98.4 in October from 104.1 last month, which was a post-recession high. Consumers were less optimistic about current business and employment conditions, but remained hopeful about their income prospects. 


Apple sinks after earnings

Sprint slid despite topping estimates and raising guidance

Morgan Stanley CEO had some harsh words about the US election process

Marijuana stocks are going crazy ahead of elections that could transform their industry

A quick Q&A with Andrew Left, the short-seller who helped take down Valeant

Join the conversation about this story »

NOW WATCH: LIZ ANN SONDERS: The most unsettling outcome for the markets would be a surprise Trump win

15:58 Designing the workplace of the future» Business and financial news - CNNMoney.com
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15:58 Sumitomo Mitsui Trust Bank starts blockchain trials» Finextra Research Headlines
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15:56 Apple shares sink on first annual drop in revenue since 2001 (AAPL)» Markets

Tim Cook

Apple reported its first annual revenue decline in 15 years as sales of the iPhone continue to shrink and Wall Street frets that the world’s most valuable company doesn’t have a game-changing new product to revive its growth.

Shares of Apple’s stock slipped about 2 percent in after hours trading on Tuesday.

In the three months ended September 24, Apple said its revenue declined about 9% year on year. The company’s $46.9 billion in fiscal Q4 revenue was in line with Wall Street’s lackluster expectations, as Apple marked the third consecutive quarter that iPhone sales have declined.

Apple CEO Tim Cook said that the recently released iPhone 7 and 7 Plus models were off to a strong start, with demand for the phones outstripping supply.That will help Apple return its revenue to growth in the next quarter, he said.

“It’s very hard to gauge demand as you know when you’re selling everything you’re making,” Cook said on a conference call.

Cook deflected analyst questions about the company’s rumored efforts developing self-driving car technology during a conference call, describing the potential for technology to revolutionize the car experience as “interesting.”

Here's what Apple reported for the September quarter: 

  • Q4 EPS (GAAP): $1.67 per share, down 14.79% year-over-year (y/y), versus expectations of $1.65
  • Q4 revenue: $46.9 billion, down 8.93% y/y, versus expectations of $46.9 billion
  • Gross margin: 38%, down 4.76% y/y, versus expectations of 37.9%
  • iPhone unit sales: 45.5 million, down 5.3% y/y, versus expectations of 45 million
  • iPhone ASP: $618, down 7.7% y/y, versus expectations of $625
  • iPad unit sales: 9.2 million, down 6.8% y/y, versus expectations of 9.1 million
  • Mac unit sales: 4.8 million, down 15.7% y/y, versus expectations of 5.1 million
  • December quarter revenue guidance: Between $76 billion and $78 billion. At its midpoint, that guidance suggests 1.44% growth next quarter over last year. 


Here's a table with all the results:

Apple Eearnings

Here are the charts:

bii apple iphone sales q3 2016

bii apple ipad sales q3 2016bii apple mac sales q3 2016

bii iphone vs ipad vs mac ASP YOY Growth 3Q16

bii iphone vs ipad vs mac ASP 3Q16

bii apple topline revenue and YoY growth 3q16bii apple quarterly revenue share by product 3Q16bii apple quarterly revenue by product 3Q16bii apple quarterly revenue growth by product 3Q16

Here are our notes from the earnings call:

5:02: Apple really should use Beats 1 as the hold music. 

5:03: Apple CEO Tim Cook opens by talking about Thursday's MacBook Pros, which leaked today!

5:04: iPhone sales up y/y in 33 markets, says Cook. Apple music rev grew by 22% thanks the growing popularity of apple music.

5:05: Cook talking Apple Pay in Japan. "We expect a strong response and rapid adoption ... we are seeing strong growth in transaction volume in Apple Pay. Transactions up 500% y/y for the September quarter." Says more transactions in September than in all of 2015. 

5:06: "We have almost doubled the size of our services revenue in the last four years," says Cook.

5:06: Demand continues to outstrip supply for new iPhone 7 and 7 Plus, says Cook. 

5:07: Finally Cook gets around to talking Apple Watch. Apple still doesn't give Apple Watch revenue, but "other products" were down. 

5:09: Tim Cook talks Apple's Home app and its new smart home integrations. "We expect over 100 HomeKit products on the market this year ... all reviewed by Apple," Cook says. 

5:11: Tim Cook: iPhone sales in India were up over 50% in fiscal 2016 compared to the prior year.

5:13: Now Apple CFO Luca Maestri is on the line. 

5:15: Maestri points out the average selling price for the iPhone is up on a sequential basis, and expects another jump in the December quarter. 

5:16: Services revenue up 20% from a year ago, and App Store growth has accelerated for five straight quarters. 

5:17: Now Luca Maestri is teasing Apple's Mac launch on Thursday. He's confident that next quarter, Apple's China performance will be better. 

5:19: Maestri is "seeing great examples" of iPad and Mac usage in businesses. 

5:21: Here's what investors want to hear about: Maestri talking share buybacks. Apple has reduced its share count by 1.5%.

5:22: Apple made four acquisitions in September quarter, Maestri says. 

5:23: Question time! First question is about the Apple Car.

5:25: "I can't speak about rumors but you know we look for ways we can improve the experience on different sets of products and we're always looking at new things and the car space in general is an area it's clear there is a lot of technologies that will become available or will be able to revolutionize the car experience so it's interesting from that point of view, but nothing to announce today," Cook said about the car. 

5:28: Luca Maestri says Apple is more supply constrained on the iPhone 7 Plus than it was last year on the iPhone 6S Plus.

5:29: R&D question! "Are R&D investments less efficient than they were earlier in the company's history?"

5:30: "There's clearly some amount of R&D on products that are in the development phase that have not reached the market, that's part of it, and we feel really great about the things we've got, we've also put a lot of emphasis on our services business, and making the ecosystem even better, we're confidently investing in the future, and that's why you see R&D investment increasing," Cook said. 

5:31: "We had a surge of upgrades" in 2016 "for the iPhone 6 or 6 Plus" in China. "When the upgrade rate returned to a more normal upgrade rate, akin to what we saw with the iPhone 5S, that's the main reason why you see a difference. We didn't forecast that accurately, so we put in too much channel inventory in Q1 of last year, those two issues," are why Apple's China iPhone sales have been disappointing, according to Cook. 

5:33: Tim Cook: "We're giving you guidance that we're returning to growth, which obviously feels very good for us."

5:39: Does Apple see itself making content or does it seem like more of a ecosystem play?

5:40: "I would confirm that television has intense interest with me and many other people here," Tim Cook said.

5:41: Tim Cook seems more low-energy than usual, and doesn't seem to have the same joy he usually has when he gives non-answers to questions about the Apple Car or TV service. 

5:43: Siri gets 2 billion requests per week, Tim Cook says. 

5:45: Tim Cook says it's a false tradeoff that you have to "give up" privacy to have good artificial intelligence. Compares it to "privacy vs. security." Cook says we should have both. 

5:46: "Does Apple have a grand strategy? I know you're not going to tell us, but do you have one?"

5:47: "We have the strongest pipeline that we've ever had and we're really confident about the things in it but as usual we're not going to talk about what's in it," Cook gave a salty reply. "We have a strong sense of where things are going."

5:50: Tim Cook says when looking at India you are looking at then number of people entering the middle class in the next 10 years. "The smartphone has not done as well in India in general," he says, pointing to the lack of infrastructure. 

5:53: "There are going to be a lot of people in the middle class who are going to want a smartphone, and I think we can compete for some of those," Cook said. He seems to be hedging a lot when talking about India.  

5:58: Maestri talking about the strong dollar, and pointing out that two thirds of Apple's revenue comes from overseas.

6:00: We announce our thinking on capital return every April, Tim Cook says. 

6:01: And we're done! Thanks for tuning in! 

SEE ALSO: Apple's new MacBook Pro just leaked

Join the conversation about this story »

NOW WATCH: Countries around the world are pouring billions of dollars into France's revolutionary nuclear fusion reactor

15:23 Morgan Stanley CEO had some harsh words about the US election process» Markets

clinton trump

Morgan Stanley CEO James Gorman does not sound pleased with the US presidential election process. 

At Bloomberg's The Year Ahead conference in New York on Tuesday, Gorman said that it would be more productive to focus on issues that impact people's lives the most, rather than on the most opinionated thing either candidate said.

"What can we sensibly say about this electoral process?" Gorman said. "One, is it goes for too long... It's like you go to bed every night listening to these voices telling you about the election."

Rather, Gorman said, "I'm looking forward to a time when we can get past the rhetoric and we can talk about real substance and how real things get changed."

Gorman is originally from Australia, and became a US citizen in time for the 2004 election.

He suggested that much of the criticism of the US economy heard on the campaign trail is far from reality.

"Stepping back… the fundamental truth that has come out, to my mind, is the country has done much better than the population, meaning the aggregate performance has done better than the individual," Gorman said.

"How is it possible that with all this innovation, all these technological advances, that the vast majority of people feel that they got left behind, not just for five years or ten years, but for three decades. And in fact wages would suggest that they’re right?"

Gorman said he does not believe much of the campaign rhetoric represents views that would be held in "all circumstances." 

"So many things have been said that are so absurd that the good part of me just wants to believe that they're not truly held beliefs," Gorman said. 

"This is the world’s leading democracy, and all of us want to see it continue to be that way."

SEE ALSO: MORGAN STANLEY CEO: 'From our perspective ... there's nothing good about Brexit'

Join the conversation about this story »

NOW WATCH: Poll: Clinton sprints to a double-digit lead with less than 15 days until the election

14:57 Marijuana stocks are going crazy ahead of elections that could transform their industry (MJNA, AMMJ, TRTC, CANN, CBDS, CGRW, CNAB, MCOA, OWCP)» Markets

marijuana cannabis weed pot

Nine states will vote in November on whether to legalize medical or recreational marijuana, or both.

Leading up to the elections, the industry's penny stocks are trading as if most states will say yes to legalization.

Shares of marijuana firms that trade over-the-counter — not via central exchanges like the Nasdaq — are rallying in the run-up to the votes.

Companies in the industry struggle to get approved to list on the major exchanges partly because marijuana is still illegal under federal law.

Here's General Cannabis Corp., which leases space for companies to grow the plant:

Screen Shot 2016 10 25 at 2.02.54 PM

And here's Cannabis Sativa, which Libertarian presidential candidate Gary Johnson was CEO of until he resigned in January. It has a subsidiary that makes moisturizers and lip balm.

Screen Shot 2016 10 25 at 2.03.47 PM

Here's United Cannabis Corp., a provider of medical cannabis treatments:

Screen Shot 2016 10 25 at 2.12.22 PM

A number of other marijuana penny stocks — priced below $5 a share — have run-ups like these, which are speculative in nature. Briefing Trader shared the following set of charts on Twitter:

The results of the votes next month could be a huge deal for the industry. California's vote is considered the most crucial given the state's size; its economic output in 2015 made it the sixth largest economy in the world, ahead of countries like France.

Earlier in October, Pew Research published a poll that showed that 57% of US adults say marijuana use should be legalized. A decade ago, just 32% were in favor of legalization.

The best companies would stand to profit even more in the industry, which is projected to grow to nearly $21 billion by 2020, according to Arcview Market Research.

SEE ALSO: Marijuana legalization is having an incredible impact on illegal marijuana use

Join the conversation about this story »

NOW WATCH: We went inside the grow facility that makes Colorado's number one marijuana strain

14:57 MORGAN STANLEY CEO: 'There's nothing good about Brexit'» Markets

James Gorman

Morgan Stanley CEO James Gorman has a blunt assessment on Brexit.

Speaking at the Bloomberg The Year Ahead conference, he said that for the financial sector, there's "nothing good" about the UK's decision to leave the European Union.

He said: 

"From our perspective, just narrowly from the financial sector and from our institution, there’s nothing good about Brexit. We love the rule of law in England, our folks like working in London. You have all the infrastructure ... the pipes, the plumbing ... it's all there."

"None of this is good. We’re going to have to move employees and their families from London to other places. And we’re trying to minimize the absolute number of people we have to do that with."

He added that Brexit would have a disproportionate impact on the trading business, asking whether it makes sense to move trading businesses in London to Frankfurt, Paris, New York, Hong Kong or Tokyo.

"I think it's going to open the door of having people looking at why they're placed geographically where they're placed," he said. 

He said that New York stood to benefit from this shift, due to the infrastructure already in place, and to its time zone advantages. 

"I'm not saying it's going to be large scale … but on the margin, the assumption that everything will now move to another European country — it’s not necessarily the case."

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14:54 Bank Of America Preferred Stocks Come Crashing Down To Earth» Most popular articles
14:48 Why Tim Cook is Steve Ballmer and why he still has his job at Apple (AAPL)» Markets

ballmer cookWhat happens to a company when a visionary CEO is gone? Most often innovation dies and the company coasts for years on momentum and its brand. 

Rarely does it regain its former glory.

Here’s why.

Microsoft entered the 21st century as the dominant software provider for anyone who interacted with a computing device. 16 years later it’s just another software company.

After running Microsoft for 25 years, Bill Gates handed the reins of CEO to Steve Ballmer in January 2000. Ballmer went on to run Microsoft for the next 14 years. If you think the job of a CEO is to increase sales, then Ballmer did a spectacular job. He tripled Microsoft’s sales to $78 billion and profits more than doubled from $9 billion to $22 billion. The launch of the Xbox and Kinect, and the acquisitions of Skype and Yammer happened on his shift. If the Microsoft board was managing for quarter to quarter or even year to year revenue growth, Ballmer was as good as it gets as a CEO. But if the purpose of the company is long-term survival, then one could make a much better argument that he was a failure as a CEO as he optimized short-term gains by squandering long-term opportunities.

How to Miss the Boat – Five Times

Despite Microsoft’s remarkable financial performance, as Microsoft CEO Ballmer failed to understand and execute on the five most important technology trends of the 21stcentury: in search – losing to Google; in smartphones – losing to Apple; in mobile operating systems – losing to Google/Apple; in media – losing to Apple/Netflix; and in the cloud – losing to Amazon. Microsoft left the 20th century owning over 95% of the operating systems that ran on computers (almost all on desktops). Fifteen years and 2 billion smartphones shipped in the 21st century and Microsoft’s mobile OS share is 1%. These misses weren’t in some tangential markets – missing search, mobile and the cloud were directly where Microsoft users were heading.  Yet a very smart CEO missed all of these.  Why?

Execution and Organization of Core Businesses

It wasn’t that Microsoft didn’t have smart engineers working on search, media, mobile and cloud. They had lots of these projects. The problem was that Ballmer organized the company around execution of its current strengths – Windows and Office businesses. Projects not directly related to those activities never got serious management attention and/or resources.

For Microsoft to have tackled the areas they missed – cloud, music, mobile, apps – would have required an organizational transformation to a services company. Services (Cloud, ads, music) have a very different business model. They are hard to do in a company that excels at products.

Ballmer and Microsoft failed because the CEO was a world-class executor (a Harvard grad and world-class salesman) of an existing business model trying to manage in a world of increasing change and disruption. Microsoft executed its 20th-century business model extremely well, but it missed the new and more important ones. The result?  Great short-term gains but long-term prospects for Microsoft are far less compelling.

In 2014, Microsoft finally announced that Ballmer would retire, and in early 2014, Satya Nadella took charge. Nadella got Microsoft organized around mobile and the cloud (Azure), freed the Office and Azure teams from Windows, killed the phone business and got a major release of Windows out without the usual trauma. And is moving the company into augmented reality and conversational AI. While they’ll likely never regain the market dominance they had in the 20th century, (their business model continues to be extremely profitable) Nadella likely saved Microsoft from irrelevance.

What’s Missing?

Visionary CEOs are not “just” great at assuring world-class execution of a tested and successful business model, they are also world-class innovators. Visionary CEOs are product and business model centric and extremely customer focused.

The best are agile and know how to pivot – make a substantive change to the business model while or before their market has shifted. The very best of them shape markets – they know how to create new markets by seeing opportunities before anyone else. They remain entrepreneurs. 


One of the best examples of a visionary CEO is Steve Jobs who transformed Apple from a niche computer company into the most profitable company in the world. Between 2001 to 2008, Jobs reinvented the company three times. Each transformation – from a new computer distribution channel – Apple Stores to disrupting the music business with iPod and iTunes in 2001; to the iPhone in 2007; and the App store in 2008 – drove revenues and profits to new heights.


These were not just product transitions, but radical business model transitions – new channels, new customers and new markets–and new emphasis on different parts of the organization (design became more important than the hardware itself and new executives became more important than the current ones).

Visionary CEOs don’t need someone else to demo the company’s key products for them. They deeply understand products, and they have their own coherent and consistent vision of where the industry/business models and customers are today, and where they need to take the company.  They know who their customers are because they spend time talking to them. They use strategy committees and the exec staff for advice, but none of these CEOs pivot by committee.

Why Tim Cook Is the New Steve Ballmer

And that brings us to Apple, Tim Cook and the Apple board.

One of the strengths of successful visionary and charismatic CEOs is that they build an executive staff of world-class operating executives (and they unconsciously force out any world-class innovators from their direct reports). The problem is in a company driven by a visionary CEO, there is only one visionary. This type of CEO surrounds himself with extremely competent executors, but not disruptive innovators. While Steve Jobs ran Apple, he drove the vision but put strong operating execs in each domain – hardware, software, product design, supply chain, manufacturing – who translated his vision and impatience into plans, process and procedures.


When visionary founders depart (death, firing, etc.), the operating executives who reported to them believe it’s their turn to run the company (often with the blessing of the ex CEO).  At Microsoft, Bill Gates anointed Steve Ballmer, and at Apple Steve Jobs made it clear that Tim Cook was to be his successor.

Once in charge, one of the first things these operations/execution CEOs do is to get rid of the chaos and turbulence in the organization. Execution CEOs value stability, process and repeatable execution. On one hand that’s great for predictability, but it often starts a creative death spiral – creative people start to leave, and other executors (without the innovation talent of the old leader) are put into more senior roles – hiring more process people, which in turn forces out the remaining creative talent. This culture shift ripples down from the top and what once felt like a company on a mission to change the world now feels like another job.

As process oriented as the new CEOs are, you get the sense that one of the things they don’t love and aren’t driving are the products (go look at the Apple Watch announcements and see who demos the product).

Tim Cook has now run Apple for five years, long enough for this to be his company rather than Steve Jobs’. The parallel between Gates and Ballmer and Jobs and Cook is eerie. Apple under Cook has doubled its revenues to $200 billion while doubling profit and tripling the amount of cash it has in the bank (now a quarter of trillion dollars). The iPhone continues its annual upgrades of incremental improvements. Yet in five years the only new thing that managed to get out the door is the Apple Watch. With 115,000 employees Apple can barely get annual updates out for their laptops and desktop computers.

But the world is about to disrupt Apple in the same way that Microsoft under Ballmer faced disruption. Apple brilliantly mastered User Interface and product design to power the iPhone to dominance. But Google and Amazon are betting that the next of wave of computing products will be AI-directed services – machine intelligence driving apps and hardware. Think of Amazon Alexa, Google Home and Assistant directed by voice recognition that’s powered by smart, conversational Artificial Intelligence – and most of these will be a new class of devices scattered around your house, not just on your phone. It’s possible that betting on the phone as the platform for conversational AI may not be the winning hand.

It’s not that Apple doesn’t have exciting things in conversational AI going on in their labs. Heck, Siri was actually first. Apple also has autonomous car projects, AI-based speakers, augmented and virtual reality, etc in their labs. The problem is that a supply chain CEO who lacks a passion for products and has yet to articulate a personal vision of where to Apple will go is ill equipped to make the right organizational, business model and product bets to bring those to market.

Four Challenges for the Board of Directors

The dilemma facing the boards at Microsoft, Apple or any board of directors on the departure of an innovative CEO is strategic: Do we still want to be a innovative, risk taking company?  Or should we now focus on execution of our core business, reduce our risky bets and maximize shareholder return.

Tactically, that question results in asking: Do you search for another innovator from outside, promote one of the executors or go deeper down the organization to find an innovator?

Herein lies four challenges. Steve Jobs and Bill Gates (and 20th century’s other creative icon -Walt Disney) shared the same blind spot: They suggested execution executives as their successors. They confused world-class execution with the passion for product and customers, and market insight. From the perspective of Gates there was no difference between him and Ballmer and from Jobs to Cook. Yet history has shown us for long-term survival in markets that change rapidly that’s definitely not the case.

The second conundrum is that if the board decides that the company needs another innovator at the helm, you can almost guarantee that the best executor – the number 2 and/or 3 vice president in the company – will leave, feeling that they deserved the job. Now the board is faced with not only having lost its CEO, but potentially the best of the executive staff.

The third challenge is that many innovative/visionary CEOs have become part of the company’s brand. Steve Jobs, Jeff Bezos, Mark Zuckerberg, Jeff Immelt, Elon Musk, Mark Benioff, Larry Ellison. This isn’t a new phenomenon, think of 20th-century icons like Walt Disney, Edward Land at Polaroid, Henry Ford, Lee Iacocca at Chrysler, Jack Welch at GE and Alfred Sloan at GM. But they’re not only an external face to the company, they were often the touchstone for internal decision-making. Years after a visionary CEO is gone companies are still asking “What would Walt Disney/Steve Jobs/Henry Ford have done?” rather than figuring out what they should now be doing in the changing market.

Finally, the fourth conundrum is that as companies grow larger and management falls prey to the fallacy that it only exists to maximize shareholder short-term return on investment, companies become risk averse. Large companies and their boards live in fear of losing what they spent years gaining (customers, market share, revenue, profits.) This may work in stable markets and technologies. But today very few of those remain.

In the 21st Century an Execution CEO as a Successor Increasingly May be The Wrong Choice

In a startup the board of directors realizes that risk is the nature of new ventures and innovation is why they exist. On day one there are no customers to lose, no revenue and profits to decline. Instead there is everything to gain. In contrast, large companies are often risk-averse engines – they are executing a repeatable and scalable business model that spins out the short-term dividends, revenue and profits that the stock market rewards. And an increasing share price becomes the reason for existing. 

The irony is that in the 21st century, the tighter you hold on to your current product/markets, the likelier you will be disrupted. (As articulated in the classic Clayton Christensen book The Innovators Dilemma, in industries with rapid technology or market shifts, disruption cannot be ignored.)

Increasingly, a hands-on product/customer, and business model-centric CEO with an entrepreneurial vision of the future may be the difference between market dominance and Chapter 11. In these industries, disruption will create opportunities that force “bet the company” decisions about product direction, markets, pricing, supply chain, operations and the reorganization necessary to execute a new business model.  At the end of the day CEOs who survive embrace innovation, communicate a new vision and build management to execute the vision.

Lessons Learned

  • Innovation CEOs are almost always replaced by one of their execution VPs
  • If they have inherited a powerful business model this often results in gains in revenue and profits that can continue for years
  • However, as soon the market, business model, technology shifts, these execution CEOs are ill-equipped to deal with the change – the result is a company obsoleted by more agile innovators and left to live off momentum in its twilight years.

This article originally appeared on Steve Blank's web site and is reproduced here by permission.

A shorter version appeared in the Harvard Business Review.

APPLE EARNINGS: What to expect

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14:26 Apple is working on its car in Canada (AAPL)» Markets

Tim Cook

Apple has an office based in a suburb of Ottawa, Canada, that is dedicated to building software for its unofficial car project, Bloomberg's Mark Gurman and Gerrit De Vynck report

The office is partially staffed with two dozen engineers poached from BlackBerry, according to the report.

Earlier this year, Apple hired Dan Dodge, who used to be CEO of QNX, BlackBerry's automotive software division. 

They are working on the "software core" of what could become Apple's car platform. Apple's self-driving software would apparently run on top of this core operating system, and is being developed by a separate team.

The self-driving team is using virtual reality to test its autonomous driving software. Apparently Doug Bowman, who developed a VR simulation room at Virginia Tech, is working on a simulator that could allow Apple to test its self-driving software without taking a car out onto a public road. 

One interesting detail about the way Apple is approaching its car is that the company has envisioned a kind of windshield on steroids that shows apps such as maps or other apps, and is controlled by Siri, Apple's voice assistant. 

Apple's car may be stuck in neutral. The executive in chage, Bob Mansfield, who came out of retirement to head the project, has given the team a deadline of late 2017 to decide the overall direction of the project.

Apple's car focus has already shifted away from developing a physical electric car to working on automotive software.

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NOW WATCH: Here's why the time is always 9:41 in Apple product photos

14:21 UPDATE 4-Baker Hughes posts smaller-than-expected loss as costs fall» Reuters: Hot Stocks
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14:20 Here’s why India’s population is the envy of economies everywhere» Markets


BlackRock India Chart1As developed economies around the world face the reality of funding a growing number of retirees, India is just getting to work.

The average age of the country’s 1.3 billion people is just 28 years old. This presents a massive opportunity for economic growth as more and more young people enter the workforce.

india chart 7

Developed Regions comprise Europe, North America, Australia, New Zealand and Japan. Data sourced from United Nations, Department of Economic and Social Affairs, Population Division (2015).


A recent report by EY forecasts that India’s working age population will rise to 869 million by 2020, representing 28% of the world’s workforce. To put that in perspective, the entire US labor force is just under 160 million

Of course, these demographic shifts have their challenges. Putting all of those people to work will require significant training, job creation, and infrastructure. And India's women, who have historically been underrepresented in the workforce, are now joining the ranks seeking employment.

The government is moving in the right direction managing these shifts, and the rewards of getting it right are enormous.

Benefits of a booming workforce

As India’s workforce expands, savings could increase, helping provide an important source of funding for investment. A growing pool of labor could also mean lower wage cost pressures for businesses.

But, most important for the local economy, a growing working population could drive consumption and growth.

These trends are already bearing fruit. Indian household spending rose from $426 billion in 2004 to over $1.17 trillion in 2014, according to World Bank data. If this growth continues alongside the booming workforce, domestic consumers could emerge as major drivers of the Indian economy.

If you’re looking to access the Indian market, consider the iShares MSCI India ETF (INDA), or broaden your search to other countries.

EXPLORE: Research other countries in the Worldviews series




This post is sponsored by iShares® by BlackRock®.

Visit www.iShares.com or www.BlackRock.com to view a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal.

International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets and in concentrations of single countries.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

©2016 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS-19361

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14:17 Why Trump walked off a CNN interview in 1990 » Business and financial news - CNNMoney.com
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14:15 This tight market could trigger the recovery in Tokyo» Markets



Here's a statistic any worker would love: Japan has 1.37 job openings for every applicant.

The last time the country’s labor market was this tight was more than two decades ago. Back then, Tokyo’s stock market and economy were roaring. Japanese investors were in a speculative frenzy, bidding up the price of stocks, real estate and consumer goods until the bubble burst.

Today, it’s a very different story. Japan's economy badly needs a jump start and is fighting against falling prices (deflation). The rising number of jobs could be the first step in a sustainable recovery. 

The reason? A tight labor market can bring about inflation, which is what Japan needs right now. 

japan1 chart 4

Source: Bloomberg, as of August 2016.


Why inflation is important for Japan

As businesses compete to secure workers, they typically bid up wages. This increase in wages often leads to a rise in prices on goods and services: inflation. It also encourages workers to spend their money today, as it will buy less and less tomorrow. 

World Bank records show Japanese household spending has been falling sharply since 2012, as the lack of inflation has encouraged people to hold on to their money. 

And, according to World Bank data, prices in Japan have gone almost nowhere for 20 years.

Boosting prices for goods and services (inflation) is one of the key goals of Prime Minister Shinzo Abe’s economic plan. To do that, his government has introduced aggressive monetary and fiscal stimulus, dubbed “Abenomics.”

The success of the program has yet to be seen, but the country’s drum-tight labor market might prove a telling factor in stimulating inflation and ultimately household spending. And on the back of that rising demand, help spur Tokyo’s next rally.

If you’re looking to access the Japanese market, consider the iShares MSCI Japan ETF (EWJ), or broaden your search to other countries.  

EXPLORE: Research other countries in the Worldviews series



This post is sponsored by iShares® by BlackRock®.

Visit www.iShares.com or www.BlackRock.com to view a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal.

International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets and in concentrations of single countries.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

©2016 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS-19360

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14:00 AT&T's new streaming TV service will give you 100+ channels for $35 a month (T)» Markets

AT&T President and CEO Randall Stephenson

AT&T just dropped a bombshell by announcing that its streaming TV streaming package, DirecTV Now, will include more than 100 channels for only $35 a month.

That $35 includes unlimited mobile data for your TV viewing, AT&T CEO Randall Stephenson said Tuesday at The Wall Street Journal's digital conference.

The service will debut in November.

DirecTV Now will be a package of live TV delivered over the internet wherever you are — no cable box or satellite dish necessary.

It will target the 20 million people in the US who don't have pay TV, but the company plans for it to be the primary TV platform by 2020, according to Bloomberg.

DirecTV Now's $35 price point undercuts the early industry norms for live-streaming TV. The market leader Sling TV charges $20 for "25+" channels, and its highest package has about 50 channels for $40. Sony's PlayStation Vue charges $54.99 for about 100 channels, and its lowest package gives you "60+" channels for $39.99 a month. Other competitors including Hulu and YouTube are reportedly readying their own packages for streaming live TV but have yet to name a price.

DirecTV Now seems to be blowing them all out of the water on price, though the full catalog of channels has yet to be announced. It will have channels from Time Warner, NBCUniversal, Fox, Disney, and others. AT&T can afford the low price point because it didn't have to create and service legacy equipment like satellite dishes, Stephenson said.

As is the norm for "over-the-top" services like Netflix or Sling TV, DirecTV Now also won't lock you into an annual contract.

Pay TV as an app

DirecTV Now won't break the mold of pay TV; it will simply make the delivery more fluid and improve on price.

"It's pay TV as an app," AT&T's senior vice president of strategy and business development, Tony Goncalves, told Business Insider in a recent interview.

AT&T sees itself as an "aggregator of aggregators," and its strength will be in the breadth of content it provides (more than 100 channels), as well as in a pain-free technical experience. As a user of Sling TV, I have had many tech issues, and that element should be factored in prominently.

Stephenson also said DirecTV Now would eventually be bolstered by AT&T's 5G network. He presented 5G as an alternative to broadband moving forward.

Time Warner

This announcement comes on the heels of AT&T's proposed $85 billion purchase of Time Warner. The deal, if it goes through, would link AT&T's "pipes" — wireless, broadband, and satellite — to Time Warner's media properties, which include HBO, CNN, and Warner Brothers.

Stephenson said Time Warner channels would be available on DirecTV Now.

For a full overview of AT&T's DirecTV Now strategy, see our interview with Tony Goncalves.

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13:59 GOLDMAN SACHS CEO: 'The world wants me to be scared to death'» Markets

Lloyd Blankfein

Goldman Sachs CEO Lloyd Blankfein may seem at ease in front of cameras or when speaking at conferences — but he says he's on edge all the time.

"I live in fear that one of my tens of thousands of employees ... will do something wrong, and their bad behavior will be ascribed to me — not simply because I failed to supervise, but in this current milieu, it will be ascribed to me as if I intended that bad act," the chief executive said in a recent interview with CNN's Fareed Zakaria.

"I'm scared to death of mistakes that are made in my organization — and guess what, the world wants me to be scared to death of that."

Regulating Wall Street has become a hot topic in the US presidential race, and the Democratic nominee, Hillary Clinton, has been criticized for her close ties to the industry.

But Blankfein, who said earlier in the interview that he supports Clinton, said Wall Street is already on high alert.

"Guess what? You have an anxious industry," he said. "I'm sure that people are happy that it's that way."

Congress introduced the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to prevent the kinds of activities that led to the 2008 financial crisis. Since then, banks have scaled up their compliance departments and scaled down many risky businesses.

Asked about CEO accountability when banks "do bad things," Blankfein said there's a difference between malevolence and mistakes.

"Sometimes what's going on here is that people are trying to proscribe malevolence for people who were wrong, and the evidence that they were simply wrong is look how much money they lost," Blankfein said.

"At the end of the day, if you still think that their behavior was off, to be punished the way people are saying they should be punished, you still have to find some kind of a criminal intent."

He continued:

"Maybe the law shouldn't be this way, but stupidity is not a crime."

Watch more of the interview on CNN »

SEE ALSO: Goldman Sachs is now using Spotify to recruit millennials

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09:21 MIDEAST STOCKS-Banking shares buoy Saudi, EFG Hermes gains on U.S. expansion» Stock Markets News Headlines - Yahoo! News
* All 12 listed Saudi lenders climbed * Petrochemical shares firmed as crude prices stabilised * ADIB falls on flat Q3 net profit, FGB drops ahead of earnings * Profit taking hits Dubai's DXBE * EFG Hermes jumps on opening permanent U.S office * Egypt's Juhayna Food gains on company's new strategy By Celine Aswad DUBAI, Oct 25 (Reuters) - Banking shares boosted Saudi Arabia's stock market on Tuesday while the majority of other Gulf markets sagged on uninspiring quarterly results. Egypt recovered sightly, but investors remain anxious over dollar shortage woes. ...
08:26 FTSE Moves: London market buoyed by brighter earnings data» Stock Markets News Headlines - Yahoo! News

FTSE Moves: London market buoyed by brighter earnings dataBlue chip stocks climbed in afternoon trading after upbeat economic and corporate data across Europe.

08:23 For British bank start-up, Brexit has silver lining: more loans» Reuters: Money
LONDON (Reuters) - Rishi Khosla didn't vote for Brexit, but he says it has proven a boon for his new start-up bank.
08:20 GLOBAL MARKETS-Stocks, commodities climb as economic confidence rises» Stock Markets News Headlines - Yahoo! News
LONDON, Oct (Shenzhen: 000069.SZ - news) 25 (Reuters) - World markets (Xetra: 4WM.DE - news) had a swagger about them on Tuesday as upbeat economic data and signs of a revival in inflation pushed up stocks and commodity prices and kept the dollar at a nine-month high. Wall Street was set to tick higher with consumer confidence figures due and analysts already tucking into healthy-looking earnings from Procter & Gamble, General Motors (NYSE: GM - news) and drugs giant Merck (LSE: 0O14.L - news) , but also a profit downgrade from Caterpillar (NYSE: CAT - news) . Europe had been cheered as Germany's Dax hit its highest level of the year after the closely-watched Ifo survey beat expectations a day after purchasing manager numbers had done the same.
08:16 Wealth manager St. James's Place sees asset boost after Brexit vote» Reuters: Money
LONDON (Reuters) - Wealth manager St James's Place has reported a near 9 percent rise in the value of its assets, buoyed by financial market gains and strong demand for its personal investment advice...
08:13 GM reports record 3Q earnings despite slowing US sales» Stock Markets News Headlines - Yahoo! News

FILE - In this Thursday, Sept. 22, 2016, file photo provided by General Motors, GM President North America and Global Chevrolet Brand Chief Alan Batey introduces the 2018 Chevrolet Equinox compact SUV, in Chicago. General Motors reports financial results Tuesday, Oct. 25, 2016. (Brian Kersey/General Motors via AP, File)DETROIT (AP) — General Motors reported a record third-quarter profit that doubled results in the same period a year ago, despite falling sales and market share in the U.S.

07:33 Nationwide appoints outside experts to board IT committee» Finextra Research Headlines
Nationwide Building Society has engaged a team of outside experts to provide fresh insights to a boa...
07:31 ConvaTec's London listing expected to price at bottom of range - sources» Stock Markets News Headlines - Yahoo! News
The London flotation of British medical products and technology company ConvaTec is expected to price at 225 pence a share, the bottom of an earlier price range, two sources said, amid shallow investor support for new stock market listings. Danish debit card company Nets was trading some 13 percent below its offer share price of 150 Danish crowns on Tuesday, while UK gym operator Pure Gym and German real estate company OfficeFirst pulled their planned IPOs earlier this month. Books for ConvaTec's IPO are expected to close later on Tuesday after the minimum deal size of $1.8 billion was covered on Oct. 18.
07:08 Wall Street Breakfast: Apple Earnings Take Center Stage» Most popular articles
07:00 A Small-Cap REIT That Became A Cinderella Story» Most popular articles
06:14 The Next Big Moves in Health-Care Stocks» Barron's Most Viewed Today
The T. Rowe Price Health Sciences fund is looking beyond the sector’s downturn to its next surge.
06:10 Raining on Their Parade» Traders Magazine - Latest News
A recent study suggested that rain, sleet and snow have an effect on trading, but as guest columnist Bill Harts says, today's modern markets can weather any storm.
05:49 Bank of America to roll out AI chatbot» Finextra Research Headlines
Bank of America has unveiled Erica, an AI chatbot that will be available to answer queries and help...
05:22 'Siri, catch market cheats': Wall Street watchdogs turn to A.I.» Stock Markets News Headlines - Yahoo! News

People sit outside the NYSE during the morning commuteBy John McCrank NEW YORK (Reuters) - Artificial intelligence programs have beaten chess masters and TV quiz show champions. Two exchange operators have announced plans to launch artificial intelligence tools for market surveillance in the coming months and officials at a Wall Street regulator tell Reuters they are not far behind. A.I. may even sniff out new types of chicanery, said Tom Gira, executive vice president for market regulation at the Financial Industry Regulatory Authority (FINRA).

05:15 Alipay marches into the US with First Data/Verifone deals» Finextra Research Headlines
Chinese payments behemoth Alipay is moving in to the US market through deals struck with Eftpos term...
04:42 Asian markets mixed as South Korea reports weak GDP data» Stock Markets News Headlines - Yahoo! News

Asian markets mixed as South Korea reports weak GDP dataAsian stock market indices were trading mixed on Tuesday (25 October), while the Shanghai Composite was up 0.02% at 3,128.87 as of 6.52am GMT. This followed South Korea reporting a weak gross domestic product (GDP) for the third quarter.

04:39 Britain's advisory group eyes more power for retail investors» Reuters: Money
LONDON (Reuters) - Investor advisory firm ShareSoc on Tuesday called for greater power to be given to individual shareholders as part of a government plan to overhaul Britain's corporate governance...
04:32 BUZZ-Egypt's Juhayna jumps as it outlines plan to reduce imports» Stock Markets News Headlines - Yahoo! News
** Shares in Juhayna Food surge 6.4 percent to 3.99 Egyptian pounds ** Company said total investment likely to reach 500 million Egyptian pounds ($56.3 million) by year-end as it seeks to reduce import activity due to country's U.S. dollar shortage, pound devaluation ** To rely on local raw materials and animal fodder to reduce imports, while focusing on completing all current projects and deferring start of any new projects ** Stock price has been trading near four-year lows ** Broad Egypt stock market index up 0.2 percent (Reporting by Celine Aswad; Editing by Andrew Torchia)
03:14 Trump brand loses luster with affluent» AP Top Business News at 3:06 a.m. EDT
NEW YORK (AP) -- Event planner Beth Bernstein decided she had had enough with Donald Trump after his 2005 hot-mic boasts about groping women came to light earlier this month. She removed photos of weddings she had thrown at a Trump hotel in Chicago from her website, wrote to hotel staff to remove her from the list of "preferred vendors" and posted a sort of call to arms on her blog....