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1. 'The market is robust:' Goldman Sachs-backed Circle doubles minimum bitcoin trade size to $500,00020:06[−]

happy trader

  • Circle Trade, the trading operation of Circle, has increased its minimum ticket size on bitcoin trades to $500,000.
  • The move comes during a trading lull in the market for digital currencies across crypto exchange venues.
  • Chief executive Jeremy Allaire told Business Insider the size of block trades has grown significantly since the beginning of the year.

Trading activity at one of the largest cryptocurrency trading shops is picking up despite a lull across exchanges that trade crypto.

In an interview with Business Insider, Circle chief executive Jeremy Allaire said the size of block trades made by Circle Trade, the firm's over-the-counter trading desk, has grown since the beginning of the year.

That's despite a sharp decline in cryptocurrency trading volumes across retail exchanges. Per data from CoinMarketCap, 24-hour trading volumes are down to about $20 billion a day from all-time highs near $70 billion at the beginning of the year.

But "the market is robust" for Circle.

"The minimum ticket size has moved up to $500,000 with an average of $1 million," Allaire said.

Some transactions, according to Allaire, are larger than $100 million. Previously, the minimum ticket size to make a trade at Circle was $250,000.

"That water mark will continue to rise," Allaire said.

OTC trading occurs off exchange venues, such as Coinbase's GDAX or Kraken, for instance. The point of such desks is to provide a platform for high-net-worth crypto-holders and institutions to make large trades without impacting the broader market.

As an alternative to crypto-exchanges, they typically have deeper liquidity to support such transactions. One industry insider told Business Insider that deeper liquidity in OTC markets has played into the growth of a number of trading shops.

"If I have $5 million, I can't do that trade on GDAX," the person said.

OTC desks can also provide a more secure alternative to crypto exchanges, which are known for hacks and outages.

Circle, which counts investment bank Goldman Sachs as a a strategic backer, trades more than $2 billion in cyptocurency a month. It recently expanded its operations in Asia, Bloomberg reported.

Recently, Circle announced it acquired Poloniex, a cryptocurrency exchange. It plans to scale the business by bringing it to new markets, adding the number of coins on its platform, and enabling fiat-to-crypto transactions.

Elsewhere in the cypto OTC market, DRW's Cumberland operates a trading desk. Kraken, as Business Insider first reported, recently launched their own, too.

A person familiar with operations at Genesis, another cryptocurrency trading shop, told Business Insider its average trade size has increased to about $300,000. The company trades $1 to $2 billion a month, the person said.

SEE ALSO: A veteran Wall Streeter has left Credit Suisse for a crypto trading desk

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2. The pro-privacy backlash against Facebook might actually make it even stronger (FB)19:36[−]

facebook ceo mark zuckerberg

  • Pro-privacy regulations could have an unintended consequence: reinforcing Facebook's dominance.
  • New rules taking effect next month in Europe and ones being discussed in the US and elsewhere could throw up barriers to competitors and funnel more ad dollars to Facebook, a Morningstar analyst said in a new report.
  • Another analyst agreed the concern was "plausible," but said the new rules could also end up fundamentally changing the market.

Battered over privacy issues in recent weeks, Facebook faces tough new regulations in Europe and potentially elsewhere, including at home.

But rather than curtailing the social networking giant's power, the rules could leave it stronger than ever.

That's the take of Morningstar Equity Research analyst Ali Mogharabi. The new regulations could actually create hurdles that will be a bigger burden for potential competitors to Facebook than for Facebook itself, Mogharabi said in a research note Friday.

"Future regulations, such as the General Data Protection Regulation in Europe or some bills being proposed in the United States, are likely to create barriers to entry," he wrote. "This might actually make it harder for competing social networks to collect valuable user data to sell ads, and in turn may help Facebook maintain its dominant position as the social network of choice for advertisers."

Set to take effect next month, the European Union's General Data Protection Regulation (GDPR) promises to give European consumers more control over their private information. Following the Cambridge Analytica scandal, some US lawmakers are discussing putting in place similar rules.

While some have seen such rules as a way to rein in Facebook, GDPR and similar potential regulations in the US could prove to be a financial windfall for the company, especially if they help weed out its competitors, Mogharabi said.

"Further regulations could limit Facebook's access to and/or utilization of user data, which could lower its advertising prices," he wrote. But, he added, "we think they could also ... help Facebook maintain its dominant position in the social network space, possibly resulting in higher Facebook ad prices as advertisers find even fewer digital alternatives."

The analyst estimates Facebook's stock, which closed regular trading Friday at $166.28, has a "fair value" of $198.

Not everyone's convinced Facebook will benefit from the rules

But other Facebook analysts aren't as optimistic about how the company will fare under new regulations. Instead, they argue that stricter privacy rules could precipitate a broader transformation in the market that may or may not work in Facebook's favour.

GDPR will likely cause "a general slowdown in digital spending in Europe," Pivotal Research Group's Brian Wieser said in his own research note Thursday. While Facebook "may very well grow its share, growth will likely slow along with the market share."

facebook zuckerberg hearing senator Richard BlumenthalWieser has been far more bearish on Facebook than Mogharabi and other financial analysts. He has a rare "sell" rating on the company's shares and a price target of $138.

Mogharabi's analysis of how Facebook might benefit from regulations is "plausible," Wieser told Business Insider. But, he added, the analysis is also "willfully optimistic."

GDPR and similar regulations will make it more difficult for Facebook and other companies to use customers' data. That could lead to an increased stream of ad dollars into Facebook, Wieser said. But it could also spark a broader shift in online advertising.

If advertisers see user-targeting through Facebook and similar services as increasingly difficult, they might fall back on older strategies, such as placing ads next to content — videos, articles, and the like — that itself is targeted at particular audiences. Traditional publishers can accommodate that kind of strategy, but Facebook can't, he said.

Similarly, you might see companies emerge that are "legitimately GDPR-privacy-friendly-by-design," Wieser said. These would be Facebook alternatives that wouldn't be reliant on user-targeted advertising and so wouldn't be constrained by GDPR or similar regulations. Such companies might also see a boost from increased consumer awareness of privacy issues, he said.

More radically, if the new regulations are accompanied by a sea change in attitudes towards public data sharing, Facebook and other social networking services may see their use and relevance diminish.

"They exist today, and something different could exist in the future. People can get tired of Facebook," Wieser said. "You can't take it as a given that it persists. It probably does, but it could just as easily fade away."

SEE ALSO: Facebook's drones unit is conducting a mysterious test in the desert near New Mexico's 'spaceport'

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3. The market is stuck in a traffic jam — so Goldman Sachs has picked 14 stocks set to break the gridlock by exploding higher19:13[−]

Traffic Jam

  • There's gridlock in the US equity market, with intra-stock correlations sitting close to their highest level on record.
  • Goldman Sachs has identified 14 stocks that are operating with a mind of their own and seem to offer a big upside.

Stocks in the US market are increasingly following the herd, and it has created a huge dilemma for investors who prove their bona fides picking single companies.

Goldman Sachs finds that stock correlations within the benchmark S&P 500 have surged into the 95th percentile since 1980. In addition, average three-month correlations have spiked by 43 percentage points since January, which is the fastest and biggest increase since the 1987 market crash.

To put it in the simplest terms, this indicates that the US equity market is mired in a traffic jam in which almost everyone is stuck moving in the same direction. This makes it exceedingly difficult to generate returns when a broad move transpires, simply because there are so few outliers. Stock pickers loathe this correlation for these reasons.

Screen Shot 2018 04 19 at 3.19.00 PM

So how did we get here? For one, the rapid rise of exchange-traded funds and passive investing has resulted in traders buying and selling large swaths of the market at once, leaving little room for single-stock fluctuations. Goldman also notes that large pullbacks in stocks have been driven largely by valuation concerns, rather than individual company earnings.

The firm knows it has become a difficult environment, and it's here to help. Its chief US equity strategist, David Kostin, has calculated a so-called dispersion score for each S&P 500 company, for which he factors in (1) the proportion of returns driven by company-specific factors and (2) Goldman's forecast of the volatility associated with the proportion of return attributable to those micro factors.

"Stocks with high dispersion scores are more likely to have heightened responses to idiosyncratic news and present the best alpha generation opportunities," Kostin wrote in a recent client note.

Goldman then takes its analysis a step further and identifies the companies within the high-dispersion universe that have the biggest upside to the firm's price target.

Without further ado, here are the 14 high-dispersion stocks, arranged in increasing order of which ones have the biggest upside to current trading levels:

SEE ALSO: The stock market's 'secret medication for longevity' has vanished — and that leaves it highly vulnerable to a meltdown

14. Take-Two Interactive

Ticker: TTWO

Industry: Information technology

Market cap: $11 billion

Dispersion score: 2.7

Upside to Goldman target: 37%

13. Tyson Foods

Ticker: TSN

Industry: Consumer staples

Market cap: $21 billion

Dispersion score: 1.8

Upside to Goldman target: 37%

12. Broadcom

Ticker: AVGO

Industry: Information technology

Market cap: $99 billion

Dispersion score: 2.5

Upside to Goldman target: 40%

See the rest of the story at Business Insider

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4. 'A Quiet Place' continues to amaze by winning the weekend box office again, while the new Amy Schumer movie and 'Super Troopers 2' perform better than expected18:14[−]

a quiet place

  • Paramount's "A Quiet Place" is back on top of the domestic box office with $22 million this weekend.
  • It's now made $132 million domestically (with only a $17 million budget).
  • "I Feel Pretty" ($16.2 million) and "Super Troopers 2" ($14.7 million) had solid opening weekends.

This weekend marks the last before Disney/Marvel Studio's "Avengers: Infinity War" opens and pretty much sucks up the majority of the box office for the next few weeks, so the rest of Hollywood tried to get its dollars in now before the faucet is turned off.

For the most part, they were successful.

After the worldwide success of Dwayne "The Rock" Johnson's latest movie "Rampage" last weekend, Paramount's surprise hit "A Quiet Place" continues to amaze as it's back on top of the domestic box office in its third weekend in theaters. The movie earned an estimated $22 million this weekend, according to Exhibitor Relations.

That now puts its domestic total at $132 million (it was made for just $17 million).

"Rampage" came in second with $21 million. The Warner Bros.' hit dropped under 50% domestically this weekend to land in third place, a respectable drop and even more impressive seeing the movie is based on a video game, a genre that historically isn't a big draw past the first weekend. The movie has made over $192 million worldwide.

In third place is the Amy Schumer comedy, "I Feel Pretty," which despite a 34% rating on Rotten Tomatoes and how fickle audiences are about comedies these days, took in $16.2 million.

super troopers 2 fox searchlightBut the big surprise of the weekend was the performance of "Super Troopers 2."

The sequel to the now cult classic 2002 release from comedy troupe Broken Lizard that follows the antics of five Vermont state troopers took in $14.7 million this weekend. That's far above its $5 million to $7 million projection for the weekend.

The movie, released by Fox Searchlight, won Friday with a $7.9 million take (pretty much making up its $5 million production budget in one day). It also didn't hurt that the date on Friday was 4/20, a marketing godsend for a marijuana-focused franchise.

"I Feel Pretty," released by STX Films/Voltage/Wonderland Sound, also exceeded its industry projections ($11 million to $14 million), which is a major rebound for Schumer, who lost a lot of points with audiences and critics with the disappointing comedy "Snatched" last year.

Warner Bros. is also happy to see its Steven Spielberg hit, "Ready Player One," cross the $500 million milestone at the worldwide box office. That includes over $200 million in China, making it the 10th-highest grossing US-made release in the Middle Kingdom all-time.

SEE ALSO: Inside the surprise success of "A Quiet Place" — from a worriesome test screening to a 100% Rotten Tomatoes score

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5. Wall Street agrees that earnings season will send stocks soaring — here are 5 trades to help you make the most of it18:14[−]

trader celebrate

  • Wall Street is in agreement that first-quarter earnings season will be a boon for the stock market, providing a breath of fresh air after a turbulent few months.
  • JPMorgan has five specific trade recommendations designed to help investors maximize their profits in what should be a fruitful period.

Considering the roller-coaster ride stocks have been on for the past several weeks, you can hardly blame investors for wanting a calming influence.

Lucky for them, they're about to get just that in the form of corporate earnings season, at least according to firms across Wall Street.

A big part of that support stems from what JPMorgan and Deutsche Bank see as latent demand from systematic trading — which includes the types of passive and often price-insensitive strategies that can wield great influence over the entire market.

The two firms note that commodity trading advisers are running low equity allocations at the moment. This is because the turbulence that rocked markets earlier this year forced them to shed stock holdings as they tried to rebalance their exposure to volatility.

Good news, everyone: Since both realized and implied volatility have declined over the past couple of weeks, JPMorgan and Deutsche see those CTAs spring-loaded to buy more stocks.

Going beyond systematic demand for equities, Goldman Sachs and other firms have highlighted the robust sales and earnings growth that has been forecast for both the quarter and the full year. In a recent client note, Goldman estimated that S&P 500 revenue would grow by 10% in the first quarter, which would be its fastest pace since 2011. The firm even went as far as to identify single stocks it expected to outperform.

Convinced yet? If so, you're probably still wondering what to do with all of this information. Namely, where to invest and what trades to make.

JPMorgan has you covered. Led by the strategist Bram Kaplan, the firm's equity derivatives team has five trade recommendations — one that applies to the whole US market and four addressing single stocks.

1) Buy calls on stocks that are poised to outperform this season and have cheap earnings volatility

For the first qualification, Kaplan & Co. are specifically referring to stocks positioned to most benefit from this year's new tax bill, as well as those set to get a boost from record share buybacks. Within that subset, JPMorgan recommends identifying stocks whose implied earnings moves are being underpriced by the market.

2) Buy Allstate ( ALL) May $97.50 calls

Allstate is JPMorgan's top property and casualty insurance pick for earnings, and the firm thinks the company's 2018 guidance is conservative. It notes the option market is pricing in an earnings-related move of 3.4%, which is below its recent average realized move of 3.9%.

3) Buy US Steel ( X) $39 weekly calls expiring May 4

JPMorgan says a continued rally in steel prices should continue driving earnings upside for US Steel, which is the firm's top pick in the industry. It notes the option market is implying an earnings-related move of 8.1%, well below its three-year average realized move of 9.8%.

4) Sell Marriott ( MAR) $137 weekly puts expiring May 11

The firm's recommendation is built largely on the positive first-quarter preannouncement recently made by Hilton Hotels. And since Marriott has recently been underperforming Hilton, JPMorgan says it has limited downside. The firm says the option market is pricing in an earnings-related move of 3.6%, above its three-year average realized move of 2.5%.

5) Buy bullish risk reversals on Dick's Sporting Goods ( DKS), Imperial Brands ( ITB), and the SPDR S&P Metals and Mining ETF ( XME)

This strategy — which involves selling an out-of-the-money put contract and buying an out-of-the-money call — is designed to profit from a large increase in a stock. These recommendations match JPMorgan's bullish view on homebuilders and materials, as well as their positive fundamental view on Dick's specifically.

SEE ALSO: The stock market's 'secret medication for longevity' has vanished — and that leaves it highly vulnerable to a meltdown

Join the conversation about this story »

NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

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6. Goldman Sachs' top oil gurus lay out a completely different take than Trump has on where prices should be17:20[−]

Oil worker

  • President Donald Trump lashed out at OPEC on Friday, tweeting that oil prices were "artificially very high" after oil rose to a three-year high on Thursday.
  • Saudi Arabia is said to be targeting $80 a barrel.
  • In a note, commodity strategists at Goldman Sachs laid out the case for Brent crude oil hitting $80 a barrel by the end of this year.

President Donald Trump turned on the oil market in a Friday-morning tweet.

"Looks like OPEC is at it again," Trump said, referring to the Organization of Petroleum Exporting Countries, a group of mostly Middle Eastern and African oil producers that has historically influenced prices by adjusting its production.

"With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High!" Trump tweeted. "No good and will not be accepted."

Oil prices have risen by about 12% this year as OPEC and some of its allies, including Russia, stuck to their agreement to cut production. Trump's tweet came a day after oil prices rose to three-year highs, catapulted by a government report showing US inventories to be lower than average for this time of year.

Bloomberg reported last week that Saudi Arabia was targeting a price of $80 a barrel to boost the valuation of its state-owned oil company, Aramco, before its initial public offering.

That also happens to be the forecast of commodity strategists at Goldman Sachs. In a note Thursday, out before Trump tweeted, the strategists forecast that Brent crude, the international benchmark of prices, would rise to $80 a barrel by the fourth quarter of this year.

"We expect that global oil demand will remain strong this year and contribute to further declines in oil inventories," Damien Courvalin, Goldman's head of commodity research, said in a note on Thursday.

Brent fell by as much as 1%, to $72.86 a barrel, after Trump tweeted on Friday. West Texas Intermediate crude, the US benchmark, fell 0.4% to $67.94 a barrel.

As US shale oil boomed, OPEC members started up their pumps to avoid losing market share to American producers. That tug-of-war caused an oversupply and drove prices lower starting in 2014.

Oil has more than doubled from the lows of early 2016, when the supply glut drove prices to levels most recently seen during the financial crisis.

Goldman sees oil heading even higher, and China, the world's second-largest oil consumer, would be central to this increase.

According to Courvalin, the data on China's oil consumption from its National Bureau of Statistics doesn't fully cover independent refineries. Using alternative sources, the team concluded that China's demand level was higher than estimated, which would require higher oil production to balance the market.

Both Goldman's estimates and official estimates show a big drop in global demand growth in March. According to Courvalin, that was partly caused by unusually heavy snowfalls in Europe and the US, which reduced transportation and some economic activity.

As the weather normalizes, Goldman doesn't forecast a slowdown in the global economy, and oil demand, even as trade-war bombs continue to fly.

In fact, Trump's tariff policies and sanctions on other countries could boost oil demand, Courvalin said. For example, US sanctions on Venezuela could force the country to export to India and China instead of to closer American and European refineries, Courvalin said.

"We believe that the strong combination of strong developed market momentum and accelerating emerging market growth will combine to keep oil demand growth above consensus expectations," Courvalin said.

SEE ALSO: 21 companies that give stock pickers their best shot at crushing the market, according to Goldman Sachs

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NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

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7. GOLDMAN SACHS: Tech stocks face a looming risk that would make them less appealing16:35[−]

facebook ipo nasdaq bell

  • As the tech industry worried about regulation last week, equity analysts at Goldman Sachs highlighted another risk to tech stocks.
  • S&P Dow Jones Indices is set to make some changes to the S&P 500 in September, and tech stocks are at the center of them.

Tech investors and analysts were captivated last week as Facebook CEO Mark Zuckerberg faced two days of grilling on Capitol Hill over Facebook's handling of users' data.

The concern was that lawmakers may create new regulations that threaten Facebook and its competitors' growth.

At a Goldman Sachs conference with policy experts during Zuckerberg's testimony, the consensus was that new regulation was unlikely this year, according to David Kostin, Goldman's chief US equity strategist.

There is, however, another risk investors should be watching just as closely, he said.

S&P Dow Jones Indices is set to make some changes to the S&P 500 in September. It will take some media and tech stocks and add them to the Telecommunication Services sector, which will be renamed Communication Services. That's in recognition of the fact that many companies have become more integrated; Alphabet, for example, provides internet access through Google Fiber and original media content on YouTube.

"Constituent re-classification represents a second risk to the tech sector," Kostin said in a note on Friday.

He added: "With two of the largest and fastest-growing companies transitioning out of Information Technology, the sector will lose some of its appeal to growth investors. The future 'legacy' Tech (i.e., firms remaining in the sector) will have much slower expected sales and earnings growth and lower margins than both the current Tech sector and the new Communication Services sector, which will also include Telecom and select Consumer Discretionary stocks ( DIS, NFLX, and others)."

But this change also represents opportunities for stock pickers, who study the fundamentals of each company before making a trading decision.

"Attractive opportunities exist in the future 'legacy' Tech sector, which will have lower earnings growth, lower valuation, higher shareholder yield, and less regulatory risk than the departing firms," Kostin said.

For example, the largest tech stocks in what's remaining of the sector after the changes will be Apple, Microsoft and Intel. They each have lower earnings growth but also lower valuations, Kostin said.

Below is a breakdown of how the changes would affect the largest tech stocks and their current and future sectors.

Screen Shot 2018 04 16 at 9.05.35 AM

SEE ALSO: Bank of America has identified a major discount in the stock market that’s about to get even more enticing

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NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

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8. Trump's trade fight is getting blasted by some of the most powerful economic groups in the world16:03[−]

donald trump

  • President Donald Trump has begun a pursuit of protectionist trade policies — like tariffs.
  • Major economic groups including the Federal Reserve, World Trade Organization, and International Monetary Fund have all warned against these measures.
  • The groups warned that continued protectionist policies could sink the global economy.

President Donald Trump's recent trade moves have drawn a strong rebuke in recent days from the world's largest economic organizations — all of who are sending dire warnings about the risk of a trade war.

Officials from the Federal Reserve, International Monetary Fund, and World Trade Organization have all mentioned the recent rash of protectionist policy and rhetoric, particularly from the US, in terse public statements over the past few weeks.

The groups seem to have one message for the president: Be careful.

'Downside risks for the US economy'

The worries over a trade war began in earnest with Trump's tariffs on steel and aluminum, announced at the beginning of March.

Since then, Trump ignited a battle with China by rolling out tariffs on $50 billion worth of Chinese goods. He subsequently threatened additional tariffs on another $100 billion of Chinese goods.

Trump also mixed the new restrictive policies with combative tweets, threats to pull the US out of major trade deals, and warnings about more tariffs.

This protectionist shift warranted a mention by the Fed in their March meeting minutes, released April 11. The central bankers said the metal tariffs wouldn't matter much to the US economy, but warned the move could set the country on a dangerous path.

"Participants did not see the steel and aluminum tariffs, by themselves, as likely to have a significant effect on the national economic outlook, but a strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the US economy," the minutes said.


Trump's recent trade posturing may already be affecting the US economy.

"Increased trade protectionism is already having a noticeable impact on US economic data, depressing private sector confidence, weighing on activity, and gradually pushing up inflation," said Jake McRobie, an associate economist at Oxford Economics.

McRobie noted that a rash of economic outlook surveys, from the Empire Manufacturing Index to the University of Michigan's consumer confidence survey, sank in part due to trade concerns. McRobie also cited large jumps in steel and aluminum prices that have already begun pushing up costs for manufacturers.

And the concerns have been felt globally.

'The last thing the world economy needs'

Several globally influential economic groups have also issued warnings about Trump's trade policies over the past two weeks.

Maurice Obstfeld, the IMF's chief economist, said in a recent report that the world economy's current strength could be hurt by anti-free trade policies like tariffs.

"The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely," Obstfeld said.

The economist did not mention Trump by name, but he noted that the president's trade policies are highly unlikely to help with Trump's stated goal for the tariffs: reducing the US trade deficit.

"These initiatives will do little, however, to change the multilateral or overall US external current account deficit, which owes primarily to a level of aggregate U.S. spending that continues to exceed total income," Obstfeld said.

Christine Lagarde, head of the International Monetary Fund (IMF), attends a conference at the Cannes Lions Festival in Cannes, France, June 23, 2017.                 REUTERS/Eric Gaillard

IMF Managing Director Christine Lagarde also extolled the virtues of the current trade system, using global poverty reduction as an example of how lowering trade barriers can be successful. The IMF chief warned against abandoning the system in favor of protectionism.

"But that system of rules and shared responsibility is now in danger of being torn apart," Lagarde said. "This would be an inexcusable, collective policy failure."

The WTO expressed its concern in an April 12 economic outlook report. The WTO economists responsible for the report found that the current trajectory but the specter of trade fights could damage this outlook.

"Balanced against these broadly positive signs is a rising tide of anti-trade sentiment and the increased willingness of governments to employ restrictive trade measures," said the report.

WTO director-general Roberto Azevedo followed up the report with his own word of caution about the escalating tensions between countries such as the US and China.

"A cycle of retaliation is the last thing the world economy needs," Azevedo said.

Whether or not Trump heeds the international community's warnings remains to be seen. So far, the president has shown a willingness to take the rougher edges off the tariffs. For instance, he allowed exemptions to the metal tariffs. But it is tough to judge whether this pattern will continue, given the president's erratic approach to policy.

SEE ALSO: The leader of one of Asia's richest economies says a US-China trade war could threaten 'the security and stability of the world'

Join the conversation about this story »

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9. 21 companies that give stock pickers their best shot at crushing the market, according to Goldman Sachs15:34[−]

FILE PHOTO: Traders work on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., February 6, 2018. REUTERS/Brendan McDermid

When stocks trade too similarly, it's tougher for stock pickers to profit from unique opportunities.

The average three-month stock correlation on the S&P 500, a gauge of how uniformly stocks on the index trade, jumped from 9% in January to 52% last week. That was the largest and fastest increase outside 1987, according to David Kostin, Goldman Sachs' chief US equity strategist.

But there's some good news for stock pickers: Kostin expects correlations to fall, as regulation on tech companies and other policy risks create more individualized opportunities.

"We expect correlations for these stocks would likely revert to historical averages and present potential buying opportunities given their underperformance since March," Kostin said.

The list below highlights 21 buy-rated stocks that Kostin says are more likely to have heightened responses to individual news and offer the best opportunities for stock pickers to beat their benchmarks.

"Consumer Discretionary and Health Care currently offer the best stock-picking opportunities," Kostin said.

SEE ALSO: GOLDMAN SACHS: Tech stocks face a looming risk that would make them less appealing

MGM Resorts International

Ticker: MGM

Sector: Consumer Discretionary

Market cap: $19 billion

Upside to Goldman Sachs' target: 28%


Ticker: AMZN

Sector: Consumer discretionary

Market cap: $691 billion

Upside to Goldman Sachs' target: 28%

Nucor Corp.

Ticker: NUE

Sector: Materials

Market cap: $19 billion

Upside to Goldman Sachs' target: 28%

See the rest of the story at Business Insider

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10. There's a subtle shift underway at JPMorgan, and it shows how Amazon's influenced the Wall Street giant15:31[−]

FILE PHOTO - A view of the exterior of the JPMorgan Chase & Co. corporate headquarters in New York City, U.S. on May 20, 2015.  REUTERS/Mike Segar/File Photo - RTSW2DW

  • Business Insider recently sat down with Lori Beer, chief information officer at JPMorgan Chase. In that role, she oversees an annual tech spend of $10.8 billion and 50,000 technologists.
  • We discussed JPMorgan's tech strategy and how JPMorgan's taking inspiration from Amazon.
  • "Jeff Bezos has always looked at his company as being very customer-obsessed," Beer said. "We’re thinking of JPMorgan Chase in the same light."

It's evident when JPMorgan CFO Marianne Lake talks about the bank's opportunity to "delight" customers. Or when co-president Gordon Smith sends a memo to staff highlighting the bank's "customer obsession." CEO Jamie Dimon has even specifically referenced Amazon Prime.

That's right. It's clear that JPMorgan's taking inspiration from Amazon.

The US banking behemoth has a close relationship with Amazon, partnering with the company on healthcare along with Berkshire Hathaway. It's also reportedly held talks with Amazon over a partnership around a checking account-type product. It's a user of Amazon Web Services. But the relationship goes further.

There's a subtle shift in mindset across JPMorgan's businesses, and it closely reflects Amazon's own approach, both to customers and to tech.

"We’re transitioning from meeting the needs of our customers to anticipating their needs," Lori Beer, chief information officer at JPMorgan Chase, told Business Insider.

In her role, Beer oversees an annual tech spend of $10.8 billion and 50,000 technologists. And she's playing a key role in the shift that's taking place at JPMorgan.

It could mean opening an API store, giving JPMorgan's markets clients access to the bank's data, analytics and execution tools. Or working with fintech startups. Or experimenting with Finn, an all digital bank that's being trialed in St. Louis and is built using the same technology that powers the Chase mobile platform.

Business Insider recently sat down with Beer to talk about the bank's tech strategy, Amazon, and experimenting with new products. The following is a lightly edited transcript of the conversation:

Matt Turner: Jamie Dimon recently talked about giving away some things for free as part of a profitable customer relationship, and he cited the Amazon Prime model. What's changed in how you think about the customer relationship?

Lori Beer: What we talk about on the retail side is the Chase customer model. If you think about products, traditionally, we looked very vertically, whether it's a credit card or auto loan. But we're now in 61 million households, almost one in two. The ability to take what we know about a consumer and apply that, knowledge, and insight to how we manage the overall relationship is very powerful.

Lori Beer JPMorganWe want to be there for our customers in an end-to-end continuum, focusing on how they want to interact with a bank longer-term.

Turner: To what extent is Amazon an inspiration, then?

Beer: When we talk about becoming a digital bank, we actually say, "Powered by a leading technology company." Being a leading technology company is one of our firm-wide priorities. When I was named as the Global CIO, I was also named to the Operating Committee. That's the first time the CIO has actually been on the Operating Committee. I think it's really important from the perspective of how many things are going on and how much technology is being leveraged across the firm.

Jeff Bezos has always looked at his company as being very customer-obsessed. We’re thinking of JPMorgan Chase in the same light. We’re transitioning from meeting the needs of our customers to anticipating their needs. How do you anticipate their unmet needs? How do you anticipate where they might need you in the future? How that translates for us into technology, is that companies like Amazon are really good at thinking about how they're building out their platforms. Amazon envisioned how they could leverage technology for future business models.

Turner: What does that actually mean in terms of how you run the business?

Beer: I think for us, it's driving down into, how are we more thoughtful about platforms? How are we more thoughtful about the data and the connectedness of the information? Technology is different now. I went through those generational shifts where when you wanted to go from one system to another system, you had those big bang system migrations, and there was risk in that. With technology today, you can bring data together. You can bring unstructured data more effectively together and you can do it with speed. It's all these things that are helping enable machine learning, too, as we go down that path. We’re not only being thoughtful about being customer-obsessed, but also, think through the design of the platforms and how customers might use those platforms, and how they need to work together.

Turner: It strikes me that what you're describing is a pretty significant shift beyond the traditional product mindset you tend to see in finance.

Beer: We have a product mindset that includes designing from a customer experience mindset. We'll do consumer testing, where we actually bring customers into our facilities and test products and technology, almost live, and review how these functions might play out and how customers react. We’re moving to a much more agile development environment, something we learned from tech companies. We’ve shifted from releasing software every few months down to every few weeks for some of our newer products.

Turner: What you're doing with Finn sounds a little like what you're describing.

Beer: If you think about how we created Finn, we used the power of technology at the firm. We started by thinking about, 'How do we leverage the great platforms we've built?’ We were able to build Finn using the same technology that powers the Chase mobile platform. The pace and speed to market that enables is a significant advantage for us. We can test new user interface designs, test new products, see how they’re adopted and then bring that feedback into our Chase Mobile platform.

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11. There could be big consequences for Google if YouTube can't get its act together for advertisers (GOOG, GOOGL)15:00[−]

Susan Wojcicki

Despite all of YouTube's popularity, and no matter how much ad money it stuffed into Google's coffers during the past quarter, the site's future is cloudier than ever.

Late Thursday night, CNN published a report that calls into question the effectiveness of YouTube's year-long efforts to remove material that advertisers found objectionable. Representatives for YouTube were not immediately available for comment.

In March 2017, it was reported that ads from Fortune 500 companies were appearing on videos promoting hate speech, terrorism and wild conspiracy theories. In response, YouTube began to rid the site of offensive and disturbing clips.

That was supposed to be the end of the story — but CNN recently found ads on YouTube, paid for by more than 300 companies and government groups, that continue to run alongside unsavory fare. The cable news channel wrote that the videos included such themes as white nationalism, pedophilia, and North Korean propaganda.

Some of the advertisers affected told CNN that they were pulling their ads until YouTube corrected these issues. But that's the big question now: Does YouTube have the ability to police the service? At minimum, can YouTube's managers create a safe haven for advertisers?

If not, the situation could have big implications for Google's parent company Alphabet Inc., and its relationship with Wall Street. Google is considered a growth company but investors want to know where that growth will come from in the future.

It's against this background that Alphabet will announce its latest quarterly earnings on Monday. Analysts expect Alphabet to report first-quarter earnings of $9.33 per share on revenue of $30.3 billion, according to Thomson Reuters.

In search of something new

For some time, the financial world has wondered when one of Alphabet's promising side ventures might develop into another significant source of revenue. One day, even the revenue bonanza known as search advertising will top out, and Google will need something new to bring in the cash.

YouTube is one of the top contenders. The iconic video-sharing service has emerged as one of the must-be places for advertisers seeking to reach the site's gargantuan teen and young-adult audience.

"We continue to believe YouTube is the major growth driver on the ad front," wrote Daniel Ives, head of tech research at market research firm GBH Insights. "This dominant platform now has north of 1.5 billion users watching on average 60 minutes per day."

Since Alphabet doesn't break out YouTube's financial numbers, nobody outside the company knows for sure how much money the video site makes. What we do know is that scaring away large advertisers is unlikely to help.

The regulation factor

Regulators around the world are also wary of the effects that big digital networks are having on society. If YouTube can't sponge the site clean of pedophiles and terrorists, how long will it be before YouTube CEO Susan Wojcicki is forced to follow Mark Zuckerberg to Capitol Hill?

And that's not the end of the bad news. Google, Facebook, and other big tech companies face big regulatory scrutiny in Europe on a range of issues.

One of YouTube's problems there began in 2015 when the European Commission concluded that the financial relationship between content creators and services such as YouTube was too one sided. The unit of the European Union that proposes legislation and enacts them if they become law, said copyright rules need to be "modernized" so creators can negotiate better deals with YouTube-esque platforms. Since then, the commission has tried to get proposals passed that ensures YouTube pays more to creators.

At the same time, some analysts believe music may be more important to YouTube than ever.

"Google is just starting to tap the potential in YouTube," wrote Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University, on his blog. " And if it is able to position it as a competitor to Spotify in music streaming and Netflix in video streaming, it could discover a new source of revenue growth with strong operating margins."

YouTube's longer-term prospects appear to be much rosier. The service has no significant competitors while continuing to add viewers. And Facebook has shown, these regulatory hassles don't seem to drag a stock price down for very long.

On March 16, Facebook's stock was trading at $185 and then plummeted on March 28, during the Cambridge Analytica scandal to $153. But the share price has already begun to recover. On Friday, the stock closed at $166.

SEE ALSO: There may be a surprise winner in YouTube's latest advertising mess: YouTube

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12. One popular trade is stuck in its worst stretch in 35 years — but Morgan Stanley has the perfect strategy for a big comeback13:05[−]

trader stare glare

  • A trade that was formerly very popular with long-term investors has delivered two straight quarters of negative total return for the first time since 1973.
  • Morgan Stanley sees the trade as set for a comeback, and says it has a strategy that's perfect for playing a rebound.

Given how the past few quarters have unfolded, long-term investors are probably asking themselves when it'll be safe to start buying Treasurys again.

After all, intermediate Treasurys — defined as those with maturity between 1 and 10 years — have been stuck in a serious rut. They've turned in consecutive quarters of negative total return for the first time 1973, according to data compiled by Morgan Stanley.

They might not have to wait much longer, says the firm. The Bloomberg Barclays Intermediate Treasury total return index (BBIT) has seen similar streaks of futility on eight occasions over the past 35 years, and each time the gauge delivered a positive cumulative return over the following four quarters, Morgan Stanley data show.

Further, looking across all eight past instances, the BBIT has provided an average return of 6.32% over the subsequent year, according to the firm.

Screen Shot 2018 04 20 at 10.21.35 AM

This data provides the foundation for Morgan Stanley's strategic recommendation, which involves purchasing intermediate-maturity Treasurys and holding them for three to four quarters. That means buying now and holding until the conclusion of fourth-quarter 2018 or first-quarter 2019.

Nervous about it? Morgan Stanley strategist Tony Small doesn't think you should be.

"Take comfort in knowing history is on your side," he wrote in a client note.

Of course, it must be noted that market conditions are not consistent over time. Investment environments are constantly shifting, so the question must be asked: Does historical precedent even matter in this situation?

Morgan Stanley hears those concerns loud and clear, and has tested scenarios to address the following two current drivers: (1) rising yields and (2) Federal Reserve rate hikes.

The firm is wise to address past rising-yield scenarios, since that type of environment theoretically leaves bond prices spring-loaded to move higher once the period is over, creating a bias of sorts. In order to test this, the firm isolated returns between 1973 and 1981 and found that returns were positive in each of the subsequent four quarters. So far so good.

Morgan Stanley also notes the strategy it's recommending has delivered positive returns during Fed tightening cycles in the 1970s, 1980s, 1990s, and 2000s. So much for that concern.

"Our analysis finds that positive total returns were experienced irrespective of market environment," Small said.

In the end, while the strategy floated by Morgan Stanley has been 100% effective in the past, its sample size of just eight instances makes it far from a sure thing. Investors considering it should still do their homework and use it in tandem with other fundamental market observations. But in a market that's been frequently starved for opportunity, it's an excellent starting point.

SEE ALSO: The stock market's 'secret medication for longevity' has vanished — and that leaves it highly vulnerable to a meltdown

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13. Goldman Sachs' hot new business is lending to subprime consumers, and Wall Street's starting to ask questions (GS)04:10[−]

Goldman Sachs Marcus ad

  • Goldman Sachs launched Marcus, an online lending business, in October 2016.
  • The business has originated $3 billion in loans, according to Goldman Sachs CFO Marty Chavez.
  • But analysts have expressed concern about the quality of these loans, with one analyst noting on Goldman Sachs' first-quarter earnings call on Tuesday that a chunk of the loan book is subprime.

Goldman Sachs is lending to subprime consumers. Yes, you read that right.

The prestigious Wall Street bank launched Marcus, an online lending business, in October 2016, and it has grown swiftly since. The unit has now originated $3 billion in loans, according to CFO Marty Chavez.

The credit quality of those loans has been a concern for Wall Street analysts, with several asking in October about the quality of the loan book, and again in November at a Bank of America Merrill Lynch.

Goldman Sachs said in February in its 10-K filing that "greater than 80% of the Marcus loans receivable had an underlying FICO credit score above 660."

The implication, then, is that more than 10% of Marcus loan receivables had a FICO score of less than 660, making them subprime.

Guy Moszkowski, an analyst at Autonomous Research, highlighted this fact in Goldman Sachs' first-quarter earnings call on Tuesday after the investment bank smashed analysts' expectations, saying several of his clients were surprised by the scale of subprime lending at Marcus:

"In discussing Marcus, you did say that you were tracking your credit expectations, but I think that a lot of the clients that I've spoken with were a little surprised in your 10-K when you noted the higher-than-expected percentage of assets, which are clients which are essentially subprime, at least according to the FICO definition. And I was wondering if you could give us a little bit more color on what you're seeing in terms of delinquency, formation, and the like in the Marcus portfolio?"

Chavez said there had been "no surprises in the evolution of that business at all," adding: "We're well aware of where we are in the credit cycle as we set those expectations, and we monitor it closely."

He said later:

"We're not approving large numbers of applications. We could approve more, but we're choosing not to, because it's all part of this deliberate organic growth process. We are always thinking of where we are, which is maybe more accurately said as where we might be in the credit cycle, since there will be no announcement of the turn of the credit cycle or any harbingers of when it's going to turn. And so taking all of those into account, we're going to proceed with this methodical growth, always open to revisiting it."

Chavez in November provided some granular detail on the makeup of the Marcus loan book in a presentation at a Bank of America Merrill Lynch event. The loan portfolio has an average annual percentage rate of 12%, he said then, compared with charges of 16%-plus on credit-card balances.

The loans have an average tenor of four years, with an average loan amount of $15,000, a slide from the presentation deck says.

5a0afb3735876e861e8b5aa8 750 564

The bank has previously said it sees a $1 billion revenue opportunity in the Marcus loan-and-deposit platform.

Meanwhile, Chavez has said Goldman Sachs can see a $13 billion lending opportunity with Marcus over three years, assuming a 6% market share in what Goldman calculates is an addressable market of $200 billion to $250 billion.

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14. A Wall Street analyst thinks he's figured out the real price Netflix would need to charge to break even — and he says it would destroy the company's growth (NFLX)00:26[−]

Reed Hastings

  • The Wedbush analyst Michael Pachter on Tuesday reiterated his "underperform" rating on Netflix's shares.
  • His bearish view comes despite the company's earnings report Monday that said it added about 1 million more subscribers in the first quarter than analysts had expected.
  • Pachter is concerned about Netflix's cash burn and thinks the company can't turn that around and post significantly positive cash flow without raising prices to the point that it curtails growth.

When it comes to Netflix, Michael Pachter remains a bear — even after seeing the company post standout quarterly results on Monday.

Long skeptical of the streaming-video company's business model and its ability to generate meaningful returns for investors, the Wedbush analyst on Tuesday reiterated his "underperform" rating on Netflix's shares.

He did increase his price target to $125 a share from $110, but that only underlines his pessimism; in recent trading, Netflix shares were trading at $336.92, up $29.14 a share, or about 9%.

In explaining his rating, Pachter pointed to Netflix's ongoing cash burn. The company had a net outflow of about $284 million in its latest quarter, stemming from its operations and its investments in equipment and DVDs for its legacy business.

The company said Monday that it expected to continue burning through cash for the "several more years," Pachter noted. Realistically, the company won't be able to stanch the bleeding unless it dramatically raises prices — a move that could severely crimp its growth, he said.

"Until we see evidence that it can successfully deliver positive free cash flow, we advise investors to seek more compelling investment opportunities," Pachter said in a research note. "We believe that Netflix's valuation is unwarranted."

While Netflix's reported Q1 revenue and profits were in line with Wall Street's expectations, it added 7.4 million subscribers, about 1 million more than analysts had forecast. Many of Pachter's colleagues on the Street used Netflix's results to issue bullish reports on the company and raise their price targets to the stock's current level or beyond.

Even Pachter was impressed with that kind of subscriber growth.

"Netflix is absolutely delivering on its growth goals," Pachter said, adding that the company "is clearly doing something right."

But Netflix is essentially boosting its subscriber growth by underpricing its service, he said.

While the company posts a profit on its income statement, that accounting ledger accounts for only a portion of what it's spending on producing and licensing movies and TV shows. Once you factor in all the money Netflix is sending out the door, the company's cash flow is deeply in the red and getting worse.

Last year, the company's free cash flow — which takes into account operating expenses and investments in property and equipment and other long-lived assets — was in the red by $2 billion. This year, the company expects an outflow of $3 billion to $4 billion.

To break even from a cash flow perspective, Netflix would have to raise its prices to about $15 a month globally, Pachter estimated; right now, it charges $11 a month in the US and about $9 internationally.

To be a significantly profitable business, he said, it would have to charge about $20 a month.

At that level, Netflix's growth rate would almost certainly slow to a crawl, given the increasing number of competitors, all of which offer their services at significantly lower prices.

"In conclusion, we aren't yet ready to drink the Netflix Kool-Aid," Pachter said.

SEE ALSO: Netflix doesn't have to worry about the cloud threatening companies like Facebook and Google says CEO Reed Hastings

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15. Netflix has rejected showing its movies at some willing theaters, and Hollywood insiders don't understand why (NFLX)Сб., 21 апр.[−]

Mudbound Steve Dietl Netflix final

  • Netflix briefly considered acquiring Landmark Theatres, according to the Los Angeles Times.
  • The move would have allowed the streaming giant to get their prestige titles better award seasons consideration.
  • However, numerous sources told Business Insider that Netflix has the opportunity to screen its movies at more theaters but has declined some offers.

It seems that, for at least a fleeting moment, Netflix was interested in buying movie theaters that would play its movies on the big screen.

According to the Los Angeles Times, the streaming giant “explored” the idea of acquiring Landmark Theatres, the 53-theater chain with locations in New York, Los Angeles, Denver, and San Francisco (among others).

Netflix eventually decided the price was too high, according to the paper (a source familiar with the situation confirmed to Business Insider that Netflix is not buying Landmark). But the news has puzzled many in the movie theater community because for years Netflix has been playing a cat-and-mouse game with exhibitors, especially arthouses.

On one hand, Netflix paints itself as the ultimate Hollywood disrupter — releasing movies simultaneously across the world on its streaming service, from blockbusters to award-season bait. However, on the other hand, Netflix craves prestige from Hollywood and wants its movies to be recognized with multiple Oscar nominations, just like how its TV shows are received by the Emmys.

But the big problem is movie theaters still hold some strong cards. Specifically, no movie can receive Oscar consideration unless it plays in movie theaters in New York and Los Angeles for a specific time. Because Netflix rarely gives its moves theatrical releases, and when it does they are "day-and-date" (playing in theaters when the movies are already streaming), the major movie chains refuse to show them.

This hasn’t stopped Netflix from getting acclaimed documentaries recognized (Netflix’s documentary “Icarus” recently won the best documentary Oscar), but when it comes to its narrative titles they are all but ignored. The acclaimed “Mudbound” received four nominations at this year’s Oscars, but none were for any of the major categories.

AMC theaterSo Netflix considering buying its own movie theaters to show its titles makes sense.

“They are looking for awards to boost subscription revenue and buying a theater chain would potentially allow them greater access to awards through key theatrical runs in target markets,” a source who works in exhibition told Business Insider.

However, some in the business are wondering why they just don’t play on more arthouse screens.

“Wouldn’t it be infinitely cheaper to just exhibit their movies like everyone else?” asked one source.

Despite the major multiplexes like AMC and Cinemark blocking Netflix movies because it does day-and-date, independent theaters want them.

Multiple sources in the arthouse community told Business Insider that Netflix has refused theaters that have asked to show its movies. Alamo Drafthouse, which has screened Netflix titles in the past, asked to screen “Mudbound” and Netflix declined, according to numerous sources.

“Netflix has specifically chosen not to make its films available,” a source said.

And there’s another reason why Netflix may have decided owning theaters wasn’t worth it: They would have finally have had to reveal to the public how their titles perform.

“Netflix movies do not report their grosses through comScore, which would likely have to end if they owned a theater company,” one industry source said. “It would look very bad for Netflix movies to underperform against traditional releases in their own theaters.”

Netflix declined to comment for this story.

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16. MORGAN STANLEY: We’re already seeing the 'true tell' of the start of a bear marketСб., 21 апр.[−]

cliff edge dangerous

  • Morgan Stanley's US equity strategists have identified early signs that the nine-year old bull market may be coming to a close.
  • Although talk of the end of the cycle evokes a 'sell everything' response, their forecast is for 10-20% price swings over the next year or two — not the wipe-out scenario bears have been calling for.

If Morgan Stanley's US equity strategists are correct, the February sell-off in stocks was a glimpse of things to come.

In a note on Thursday, the team of strategists led by Michael Wilson laid out their case for why they think stocks are further into the cycle than most of their peers do. And, they singled out one trend.

"The true tell will be when the market begins to rotate more aggressively towards defensive leadership," Wilson said. "We have seen some early signs of defensive outperformance emerge recently as the 10-year stopped its ascent, volatility rose and tech's market leadership has been challenged."

In the periods since the stock market peaked for the year in January, and after its most recent top mid-March, utilities, traditionally a defensive group of companies, have been the best-performing sector.

Screen Shot 2018 04 13 at 2.19.03 PM

This doesn't do away with what several strategists are expecting to be a strong earnings season that could provide a lift to stocks. Several companies have raised their earnings guidance, and analysts are expecting more of the same, thanks to benefits from corporate tax reform, including share buybacks.

But that's exactly what could mark the death knell for earnings growth, the most important driver of stocks, according to Wilson. If 2018 earnings are disproportionately strong, it sets up the risk of an earnings recession in 2019 even if an economic one in the US is unlikely, he said.

"The bottom line for us is that the US equity market is going through a fairly clear topping process," he said.

It's a familiar warning for anyone who's kept track of Wilson's work in recent months. He had the most bullish outlook on stocks among major strategists in 2017. But his 2018 outlook, published late last year when volatility was still almost non-existent, warned that the favorable financial conditions keeping markets calm were set to turn.

That's certainly what investors saw in February, when the stock market had its first 10%-plus correction in two years as volatility spiked and moderate wage growth raised fears of inflation and higher interest rates.

Just before that, relentless buying from retail and institutional investors alike struck Wilson as euphoria, the stage that marks the beginning of the end of a bull market.

"With volatility now much higher, we think that a return to those levels of exuberance is very unlikely," Wilson said. "This leaves us with forward earnings estimates which are still likely to rise from here, at least for the next few quarters."

Still in a secular bull market

It's always hard to time market cycles. An investor who pulls out too early would miss out on what's historically the strongest period of the bull market — right before the peak. Also, it's commonplace for bull markets to be interrupted by big drawdowns.

It's why Wilson stressed that although we're seeing a cyclical top for US stocks, we're still in the middle of a secular bull market.

"Whenever one invokes the words 'late-cycle' or 'end of the cycle', the natural response is to want to sell everything, especially since memories of the 2008-09 or 2000-02 corrections are still vivid," Wilson said.

"Instead, we envision a 1-2-year consolidation with 10-20% price swings and concentrated pain in certain sectors that are either overbought, expensive or fundamentally challenged. This will not be the wipe-out scenario that some of the perma-bears out there have been warning about for the past eight years."

Wilson and his team included a checklist of signs that this phase of bull market is topping out. As seen below, they've ticked seven out of 10 conditions.

"We remain confident that our fundamental signals will happen later this year," Wilson said.

Screen Shot 2018 04 13 at 1.57.40 PM

SEE ALSO: The volatility that rocked stocks was just the beginning — and 2 markets are at the epicenter of impending chaos, SocGen says

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17. Tesla's Model 3 struggles have traders paying record prices to protect against a stock drop (TSLA)Сб., 21 апр.[−]

Elon Musk

  • Tesla's stock has been remarkably resilient in recent days even as negative headwinds continue to pile up.
  • Still, traders are paying close to the highest premium on record to protect against a big drop in the company's stock, indicating that worries linger under the surface.
  • Follow Tesla's stock price here.

Based on how Tesla's stock has reacted to the past week's events, one might think it's downright invincible at this point.

Take Tuesday's price action for instance. Following an announcement that the company would temporarily suspend its Model 3 assembly line, Tesla's stock actually rose as much as 0.3% intraday before finishing the day 1.2% lower.

Then, on Wednesday, following reports that CEO Elon Musk wrote a letter to employees raising the company's Model 3 production target, the stock climbed more than 4% at one point.

Considering Tesla has drawn the ire of investors by repeatedly moving the goalposts for production estimates — which they've also missed on multiple occasions — the gain shows traders are still more than willing to take Musk's word for it, further reinforcing the company's air of invincibility.

But one statistic suggests Tesla investors are actually bracing for the worst. In fact, they're more worried than they've ever been.

As this chart shows, traders are paying close to the highest premium on record to protect against a 10% decline in Tesla's stock over the next month, relative to wagers on a 10% gain. The measure — known as skew — hit a peak in early April and has stayed elevated ever since.

4 18 18 tesla skew COTD

Despite the resilience of Tesla's stock in recent days, it's not altogether surprising that traders are paying up for downside protection when you consider the many headwinds that have rocked the company in recent months.

Those hurdles include an an ongoing government investigation into a fatal Model X crash in California and a downgrade from Moody's. More recently, a report from the Center for Investigative Reporting out Monday said Tesla deliberately concealed serious injuries from public reports to boost its safety statistics.

And while those issues combined to drag Tesla shares down 16% over a series of weeks, 71% of Wall Street analysts covering the company still have either a "buy" or "neutral" rating on the stock. This once again reaffirms the idea that despite its myriad woes, Tesla can do no wrong in the eyes of many.

One last caveat that must be mentioned is the propensity for investors to short large technology companies as a proxy for a broader market hedge. Tesla in particular is a lightning rod for this strategy, due to the outsized returns generated by shorting it, according to financial analytics firm S3 Partners.

In fact, from March 19 through March 31, shorting Tesla yielded a whopping 16.7%, almost four times more than a strategy that involves shorting exchange-traded funds tracking the benchmark S&P 500.

At this point, it's anyone's guess what the next month will hold for Tesla. But regardless of what happens, if things end up going awry for the heavily scrutinized company, traders seem ready for it.

Screen Shot 2018 04 18 at 11.55.58 AM

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18. How The Rock conquered the China box office and proved he's the biggest movie star on the planet (TWX)Сб., 21 апр.[−]

Rampage 3 Warner Bros

  • With its $55 million opening-weekend take in China, Dwayne Johnson's latest movie, "Rampage," is further evidence he's one of the few actors who can bring in major coin across the world.
  • But his dominance in China, the world's second-largest movie market, has been years in the making.

For many studio heads these days, glancing at how their latest movie did in China is in some ways more important than seeing how it did in North America. That is because things are changing drastically for an industry in which the domestic box office had been considered the true indicator of a movie's worth for over a century.

Since the early 2000s, the movie market in China has gone from almost nonexistent to second behind only the US. And it could become No. 1 by 2020, as movie theaters continue to be built at a hurried pace to feed the interest of not just the Hollywood titles but those made by the country's burgeoning homegrown production industry.

Everyone in Hollywood is trying to figure out how to navigate this sea change. Which stories work best? Which are duds? And which movie stars can rake in the cash?

That last one has become an easy answer: Dwayne "The Rock" Johnson.

His latest CGI (and testosterone) heavy blockbuster, "Rampage," won the US box office over the weekend with a $35.8 million take for its studio Warner Bros. But what the movie did in China has the studio ecstatic, as it took in $55.2 million there as part of a $115.7 million international gross.

But this is far from an overnight success. The Rock has been big in China for a while.

Dominance years in the making

Johnson's elevation to a global box-office draw came when he joined the "Fast and the Furious" franchise with 2011's "Fast Five." But his potential worth in China expanded dramatically over the next few years.

In 2013, "Fast & Furious 6" became the first movie in the Universal franchise to play in China (though years' worth of bootlegs of the previous movies were undoubtedly floating around the country). It took in a respectable $66.5 million there. But when "Furious 7" played there in 2015, it went gangbusters, taking in $391 million in China. A few months later, Johnson showed he didn't need the "Fast" fam to make it in China, where "San Andreas" went on to earn $103.2 million.

fate of the furious the rockThe next movie starring Johnson that went to China was the 2016 animated film "Moana" ( $32.7 million), and then in 2017 "The Fate of the Furious" found incredible success there with $392.8 million, helping the movie earn $1.2 billion worldwide.

With audiences in China already getting a glimpse of Johnson this year when "Jumanji: Welcome to the Jungle" opened there in January ( $78 million), the $55 million "Rampage" opening suggests it doesn't matter whether he's with an ensemble or solo: They want to see Johnson.

"Johnson continues to prove that he is the most bankable star in the world with his growing global appeal," the comScore box-office analyst Paul Dergarabedian told Business Insider. "It's hard to imagine any other star who could have catapulted 'Rampage' to a nearly $150 million worldwide debut."

But in an indication of just how important China is, The Rock made sure to spend some time there before "Rampage" opened.

Mr. Johnson goes to Shanghai

It's pretty standard to tour the globe for publicity on a major Hollywood release, but when you're a huge star like Dwayne Johnson, the hustle can be narrowed down to some key regions. And Warner Bros. made sure one of Johnson's stops was in China.

Johnson went on a promotional tour in Shanghai for "Rampage," his first time visiting the country's largest city, a studio source told Business Insider.

And the way he was treated, he's certain to return.

The movie's press conference in the city was live-streamed through multiple partners across the country, there was a fan screening in Shanghai's biggest theater, and Johnson extended his likability across all ages after he befriended three kids who were dressed as the three monsters from the movie during the press conference (the movie is based on a popular video game in which giant monsters destroy cities).

"Dwayne, or 'Johnson' as they call him in China, was in great spirits and charmed all of the audiences with his signature enthusiasm and humor," the source said.

Along with the $55 million opening weekend, "Rampage" took in $15.7 million on its opening day in China, the third-highest opening day ever for a Warner Bros. movie in the country.

"Dwayne Johnson and giant monsters — that's the perfect recipe for a hit in China these days," Jeff Bock, a senior analyst for Exhibitor Relations, told Business Insider. "In fact, I wouldn't be at all surprised if that was the tipping point for 'Rampage' getting green-lit in the first place."

In an era when the mega movie stars are considered less of a draw than a good superhero movie with "regular" stars, Johnson is showing he's an exception to the trend. He is already a household name in the US, and he's ahead of most stars in conquering China.

SEE ALSO: All the Marvel Cinematic Universe details you need to remember before seeing "Avengers: Infinity War"

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19. Americans agree housing is a good investment — but some deeper differences reveal how severe the new crisis is becomingСб., 21 апр.[−]

san francisco housing crooked bent slant sliding

  • The majority of Americans think housing is a good investment, a survey by the New York Federal Reserve showed. But there are interesting differences by region.
  • The regions most optimistic on housing are also the most expensive and most competitive for people trying to make that investment.
  • It's especially tough in the cheapest end of the market, where demand is strongest.

More than a decade after the housing bust, most Americans agree that a house is a good investment. But there are interesting differences depending on where they live, annual surveys conducted by the New York Federal Reserve show.

Rising home prices have inspired confidence in the housing market, and vice versa. But the West, the region that's most confident in the housing market, has also become the poster child of the new affordability and supply crisis: prices are rising faster than incomes, and there aren't enough affordable houses for young, first-time buyers.

Every year, the New York Fed conducts a survey that poses this hypothetical question: if you had a huge sum of money to invest anywhere, would buying a home in your zip code be a good or bad investment relative to other financial options?

The most recent survey showed nearly two-thirds of people thought housing was a "somewhat good" or a "very good" investment.

But beyond the majority agreement, there were regional differences that serve as a reality check for hopeful homeowners.

Screen Shot 2018 04 18 at 1.02.09 PM

"This likely reflects differences in recent home price growth, which has been strongest in the West and weakest in the Northeast (although even there, price growth as measured by CoreLogic averaged a cumulative 19 percent over the last five years)," the New York Fed's Andreas Fuster said in a blog.

"Of course, it is also possible that households' enthusiasm about housing as an investment — despite the negative experience from the 2007-12 drop in house prices — helped sustain the house price recovery post-crisis."

A separate report from the National Association of Realtors released on Wednesday broke down housing affordability across America by assigning a score based on how many homes are accessible in each income percentile. As expected, several cities in California like Los Angeles, San Diego, and San Francisco have the lowest scores. Here, a typical household can only afford 3%-11% of active listings on the market.

By comparison, the typical household in metros with high scores including Youngstown, Ohio and Wiles-Barre, Pennsylvania can afford nearly 75% of homes on the market.

These findings confirm "the lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest," said Lawrence Yun, the NAR's chief economist.

Existing homeowners in the most expensive, most bullish West Coast states can rest easy if their properties aren't hit by another crisis anytime soon. But for those looking forward to investing in a house, it likely won't be an easy purchase.

SEE ALSO: One of Trump's biggest accomplishments could make the next recession worse

DON'T MISS: All the crazy things happening in San Francisco because of its out-of-control housing prices

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NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

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20. Forget a trade war — there's a more threatening 'bogeyman' that should have traders very scaredСб., 21 апр.[−]

animated trader

  • As trade war fears and geopolitical tensions swirl, Macquarie says investors are overlooking a major market headwind.
  • The firm breaks down the market's true "bogeyman" and offers some trading recommendations for navigating increasingly choppy waters.

With so many countervailing forces whipsawing markets, you can hardly blame investors for overlooking a huge hurdle that's staring them right in the face.

Whether it's fears of a global trade war or escalating geopolitical tensions, recent headlines have been filled with headwinds that appear potentially catastrophic — at least on the surface.

Viktor Shvets, Macquarie's head of global equity strategy, argues that investors should instead focus on a worsening situation that has been flying under the radar.

"The rising 'bogeyman' is the potential for significant liquidity drainage occurring at the time when investors are already on the 'wrong side' of China and eurozone, with a possibility of stronger-than-currently-anticipated reversal of reflationary momentum," Shvets wrote in a note to clients.

If these concerns sound familiar, that's because the so-called liquidity drainage cited by Shvets was a major worry for investors before the specter of a trade war loomed. He views it as a byproduct of the Federal Reserve's monetary-tightening process, which has already begun and will continue in earnest. According to Shvets, the Fed isn't keeping an eye on liquidity and appears on track for a policy error.

But that's not all. Shvets is also perturbed by the US seemingly being on the "wrong side" of China and the eurozone. No, he isn't referring to the brewing trade war — he means reflationary momentum is slowing in both places and bleeding into the global market.

The chart below highlights the ongoing tightening of credit conditions, which Shvets says complements the idea that liquidity is "already starting to drain."

Screen Shot 2018 04 18 at 8.59.54 AM

So with all this in mind, what's an investor to do? Shvets has some positioning ideas.

He says traders should focus on investment factors like quality, sustainability, and thematic approaches. He also recommends they adopt a "hedgehog" strategy that involves staying a singular course, rather than flitting from one idea to the next in pursuit of meaningful patterns that might not exist.

As for specific geographical allocations, Shvets likes northeast Asia, and he says Macquarie has overweight positions in China, Korea, India, and Taiwan.

"We maintain our long-held view that there are no longer any 'safe places' and that value morphed from long-term strategy to short-term trading opportunity," he said.

SEE ALSO: An overlooked corner of the market has been quietly crushing it — and Bank of America has 2 trades to capitalize on more strength

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NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown

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