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Friday, August 7, 2020

PayPal's CFO outlines ambitious plans to become your virtual wallet and why potential partnerships with the likes of Amazon and Alibaba make more sense now

* PayPal has been an independent company for five years since it was spun off from eBay, which acquired the payments platform in 2002. * With the expiration of its eBay operating agreement, PayPal is eyeing growth through partnerships with global e-commerce platforms like Alibaba and Shopify. * The company has been red-hot in 2020, with its stock more than doubling since mid-March.  * John Rainey, PayPal's CFO, told Business Insider the payments giant wants to do more than process payments for other companies. PayPal has ambitions to replace physical wallets and become consumers' go-to way to spend.  * Visit Business Insider's homepage for more stories. PayPal has made plenty of big moves since it spun off from eBay in 2015, including a string of acquisitions to solidify itself as more than just the default payment method for the electronic marketplace. But 2020 has arguably brought the most success the payments giant has ever seen, with its stock more than doubling since mid-March as it reports record numbers of new accounts and transactions. Part of that is due to the global shift to online spending as a result of the coronavirus pandemic. But PayPal is also making renewed pushes with new products, like QR codes as a way to pay. And its peer-to-peer app Venmo has continued to grow, even amid shelter-in-place conditions. In the second quarter, PayPal reported 30% growth in volumes, and 25% growth in revenue. It also added over 21 million new accounts, an all-time quarterly high. "A decade ago, PayPal was thought of as a way to pay on eBay," John Rainey, CFO of PayPal, told Business Insider.  "Now, we're launching experiences where you'll be able to go into a CVS pharmacy or a grocery store or a major big box retailer, scan a QR code with your iPhone, and check out that way," he added. Splitting from eBay was always the plan, and PayPal is ready to take off Today, eBay represents just 9% of PayPal's transaction volume. And Rainey expects that number to drop to around 6% by the end of the year. "This is a very manageable transition," Rainey said. "We should be able to withstand this without any fiscal impact to our income statement in terms of profitability." Beyond eBay, PayPal has seen massive transaction volume growth through marketplaces like Etsy and Shopify. While eBay saw about a 30% increase in volume in the second quarter, Etsy and Shopify both reported over 100% growth in sales volumes.  As part a five-year operating agreement established after PayPal's split from eBay, the payments giant continued to process the vast majority of eBay's transactions. However, PayPal was required to give the marketplace better pricing than a handful of eBay's competitors, the names of which were redacted from the agreement.  Now that the agreement has expired, eBay will begin to migrate its payments in-house. But PayPal will still be offered as a way to pay on eBay going forward. Rainey said historically, when marketplaces have made the switch to managing their own payments, PayPal retains around 50% of the checkout volumes. Read more: eBay will manage its own payments now that its 5-year agreement with PayPal has expired, and its head of payments is eyeing $2 billion in new revenue What's more, PayPal is now free to partner with any marketplace, either domestically or abroad. "Now we have the unfettered ability to go partner with anyone in the world," Rainey said. "If you think about some of the larger marketplaces, like MercadoLibre or Alibaba or Amazon, should we have the opportunity to work with them, we now can do that without any restrictions." PayPal is already partnering with MercadoLibre, as well as the likes of Facebook and Google to power their payments.  In its core markets like Canada, Germany, the UK, and the US, PayPal's strategy is to increase user engagement, Rainey said. Internationally, PayPal has more room to grow, with lower penetration in regions like Asia and South America. "MercadoLibre is obviously very big in markets like Brazil, Mexico, Argentina," Rainey said. "Those are places where we actually had some white space in terms of our network." PayPal is also looking to partner with the large e-commerce marketplaces in China, Rainey said. Last December, PayPal acquired Chinese payments platform GoPay, making it the first foreign player with a licence to provide digital payments in China.  PayPal wants to become your daily-use digital wallet PayPal also wants to be a part of consumers' daily lives. Over the past few years it's been laying the groundwork to become more than just a payments processor.  With its acquisitions of peer-to-peer payment app Venmo and rewards startup Honey, it's looking to become a full-fledged digital wallet where consumers can manage their payments, rewards, bills, and credit all in one place. "The analog is somewhat akin to what your physical wallet is today," Rainey said. "We want to invest in areas that are value-add consumers and really play into our value proposition." For example, PayPal wants to help users manage their subscription services to keep credit cards up-to-date and proactively prompting users to renew cards set to expire. It's also looking at ways to integrate rewards into its PayPal and Venmo apps, not only through Honey but also through the existing relationships it has with retailers and banks. Read more: POWER PLAYERS: Meet the 8 PayPal execs shaping the payment giant's future as its stock skyrockets and e-commerce surges Given these relationships, PayPal could serve as a central wallet linking consumers' loyalty points across brands and cards. To that end, PayPal plans to spend $300 million working on these initiatives during the second half of this year. "Even more broadly, if we were to add airlines or rental cars, we provide utility with those loyalty points because our customers can use those as a funding instrument through our wallet, with any of the merchants that we process around the world," Rainey said. Rainey has big plans for using Venmo As consumers' financial lives move increasingly online, PayPal isn't the only player trying to replace physical wallets. Apple and Samsung are making big pushes toward adoption of their respective mobile wallets. Goldman's consumer bank, Marcus, is also working on mobile-based products that could optimize its users spending, saving, and investing. And American Express has been building out its app, looking to bring together customers' spending and rewards. For PayPal,Venmo figures to be a key part of its digital wallet strategy.  Often, the app has been used in social settings by groups of friends splitting checks at bars and restaurants. But users are still sending money on the platform. During the second quarter, Venmo's transaction volumes grew by over 50%. The app currently has roughly 60 million users.  "Historically, there have been more limited use cases for Venmo," Rainey said.  Especially when it comes to PayPal's push for QR codes as a way to pay, Venmo will be a critical platform to increase user engagement. Venmo also now offers business profiles, and will launch its credit card later this year, Rainey said. Read more PayPal's CFO explains why the payment giant is going against the grain and betting big on QR codes as the new way to pay in-store Goldman Sachs is building an AI-powered digital assistant and checking account for its Marcus consumer bank. Here's how it's shaping up. POWER PLAYERS: Meet the 8 PayPal execs shaping the payment giant's future as its stock skyrockets and e-commerce surges SEE ALSO: Here's how PayPal is looking to boost its credit business by leaning into a buy now, pay later frenzy SEE ALSO: Fintech investors say the Wirecard scandal will put increased regulatory pressure on payments companies and stymie growth for startups Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America

A top strategist says 'stars are aligned against' the dollar this year and Europe will eclipse the US

* The world's reserve currency can expect a tough quarter ahead as "stars are aligned against" the greenback, according to a top currency strategist.  * "This is one of the rare occasions when Europe will actually outperform the US," private bank Brown Brothers Harriman's head of global currency strategy told CNBC in an interview on Thursday. * The dollar index has lost over 7% in the last three months, while gold has touched a record high and shot past the $2,000 mark this month. * The strategist turned bearish against the dollar in April, when the US central bank began to pump record amounts of stimulus to shore up the economy against the economic downturn triggered by the COVID-19 pandemic. * Visit Business Insider's homepage for more stories. --- The US dollar is in for an unpleasant quarter, according to a currency strategist who believes the "stars are aligned against" the world's reserve currency. The ability of the US government to fight the pandemic as successfully as other countries is acting as a drag on investor confidence in the dollar, Win Thin, global head of markets strategy at Brown Brothers Harriman, told CNBC on Thursday.  "This is one of the rare occasions when Europe will actually outperform the US," the strategist said in a CNBC "Trading Nation" interview. "The stars are aligned against the dollar."  The dollar index, which measures the performance of the dollar against six major currencies, has lost 7% over the last three months, falling to its lowest in over two years, while gold, which tends to profit from dollar weakness, has gained more than 30% in this time to hit record-highs above the $2,000 mark.  On Friday, the dollar index stood around 93.15. Thin predicts it will tease the 2018 low of 89.24 before the year ends. Indeed, the euro is 2020's top performing currency from amongst the G7, with a gain of 5% against the dollar.  "I do suspect given the cyclicals, we'll test the downside of that range, and for the dollar index, that's around 88," he said. "So, we've got some ways to go." It was in April, when the Federal Reserve began to pump trillions of dollars into the economy to limit the damage from the pandemic, that Thin turned bearish against the dollar. But he does not believe the weakening in the dollar will be long-lasting, as there's an ongoing debate over whether it's a "structural or cyclical decline." "The Fed is being much more aggressive than other central banks, and the US economy is likely to underperform in the coming months due to the pandemic. So to me, that's a cyclical issue," he said. Not everyone agrees on how long the world may see a weaker dollar. Another strategist at Citigroup said last month that the dollar "could enter into a bear market that could last for five to 10 years." Goldman Sachs too has said how some countries' strong fiscal positions and smooth reopening have created attractive opportunities to short the dollar.  The US healthcare system and its profit-driven nature have hampered its ability to fight the pandemic, according to a number of economists. The US is projected to suffer the biggest increase in economic misery this year, as inflation slows and unemployment spikes, according to Bloomberg's Misery Index, which tracks 60 economies around the world. The country dropped to No. 25 from No. 50 alongside Israel, Iceland, and Panama.  SEE ALSO: China exports jump a surprise 7.2% in July driven by rising demand for medical supplies, despite Trump's 'tech grenade' Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America

S&P 500 Outlook: Options Traders Positioned for New All-Time High

Stock market bulls drive S&P 500 price action higher for the fourth consecutive day as fiscal stimulus hopes steer options traders into position for the equity index to print a fresh record close.

Thursday, August 6, 2020

Apple Could Top Out After Stock Split

Apple has nearly doubled in price since October and could post a major top after the August 24th 4-for-1 split.

THE TRUE TIGER KING: Inside the sprawling web of billionaire Julian Robertson, whose legendary Tiger Management has helped spawn hundreds of new hedge funds

* Julian Robertson's network is one of the most sprawling in any industry — the billionaire has seeded dozens of hedge funds, many of which have had their own spin-offs, creating a web of hundreds of names.  * We've mapped out these connections with a searchable graphic. You can hover over the boxes to see more about the individual funds.  * We reported earlier this year that yet another grandcub is on its way, with the former co-chief investment officer at Viking Global Ben Jacobs in the process of starting his own fund, which sources said will be called Anomaly Capital.  Nearly two decades after Julian Robertson closed Tiger Management to outside investors, his fund still constantly pops up in headlines and conversations within the hedge fund industry he helped pioneer.  The billionaire North Carolina native's sprawling network of spin-offs and seeded start-ups is almost overwhelming, and has spawned fellow billionaires like Chase Coleman, O. Andreas Halvorsen, Philippe Laffont, and several others. We've mapped out all of these connections with a searchable graphic. You can hover over the boxes to see more about the individual funds.  The list is massive, with hundreds of names and nearly 200 different firms, many of them already closed or shut down. Funds related to Robertson currently manage, conservatively, more than $230 billion in assets.  Here's our exclusive Tiger Management family tree — it shows Julian Robertson at the center of a quarter-trillion-dollar web that links billionaires, the Pharma Bro, and a 'Big Short' main character   Anyone we missed or know of a new addition to the family tree on the way? Email for all tips and comments. SEE ALSO: What it's like to launch a hedge fund when even the biggest managers are struggling and long-short equity is a 'dirty word' SEE ALSO: Humans are beating machines, and Pershing Square and Greenlight are crushing it. Here's how hedge funds performed in the first half. SEE ALSO: Hedge funds are losing to private equity in a tug-of-war over investors' portfolios, and experts say it's only going to get worse SEE ALSO: By 2030, the machines running a huge chunk of public markets will only be smarter and private equity and hedge funds will collide Join the conversation about this story » NOW WATCH: Inside London during COVID-19 lockdown

Bitmain Delays Antminer Shipments Amid Internal Conflicts

Bitmain announces three-month Antminer order delays, citing “external interference on company operation.”

Reviving Tourism and User Privacy Via Blockchain-Based ID Systems

Blockchain could be key for ensuring user privacy in COVID-19 contact-tracing apps.

FTSE 100 Technical Outlook – Choppy Price Action Still Has Bullish Potential

The FTSE has been weak and may still be on its backfoot in general, but over the past couple of months a bullish sequence may be forming.