• Oil markets have recovered much of the loss they suffered in March and April. 
• The recovery stalled this week, but oil refiners — which make products like gasoline — are way up in market value, relative to March. 
• That's due in part to the growth of fuel demand, Goldman Sachs analysts said in a note Thursday.  
• The analysts laid out their top refining stock picks.  
• For more stories like this, sign up here for our weekly energy newsletter, Power Line.

After locking down for weeks to slow the spread of the novel coronavirus, which cratered global oil demand, cities and states around the world are starting to open up again. That translates to more gas-guzzling cars on the road and more planes flying overhead. 

One big beneficiary of an open economy is the refining industry, home to companies that turn oil that comes out of the ground into products like gasoline and jet fuel. These firms are also called downstream businesses, within the oil and gas sector. 

The price of oil slipped this week, as fears of a second wave of infection mounted. But refining equities "are up sharply" since bottoming out on March 23, according to a note published Thursday by analysts at Goldman Sachs led by Neil Mehta. 

The S&P 1500 Refining Index, an index of refining equities, is up about 90%, since that date, while the broader S&P 500 has rallied only 36%.  

Click here to subscribe to Power Line, Business Insider's weekly energy newsletter.

In addition to the increase in fuel demand, the analysts attribute the surge in refining equities to improving refining margins — which they note are still low — and the reopening of credit markets. Since March 1, five of the nine companies that fall under Goldman's coverage issued new bonds totaling more than $7 billion, they said. 

Oil prices are set to improve in the long-term, Goldman says. Still, it still favors refiners that have a more diversified business — in other words, downstream companies that have streams of income that are not so tethered to the price of oil.

6 refining stocks to buy — and one to sell

"Within our refining coverage, we prefer stocks with high levels of business diversification," the bank's analysts said, citing other business lines like retail, or gas stations, and midstream services, such as transporting fuels. Those will help "help insulate select refiners from near-term volatility." 

Goldman has a buy rating for Marathon Petroleum Corporation (MPC), Phillips 66 (PSX), Valero (VLO), and Par Pacific Holdings (PARR). 

The bank says that more than 60% of Marathon's value, as determined by a sum-of-the-parts valuation, is tied to non-refining businesses including retail. That proportion is even higher for Phillips, which has chemical, midstream, and marketing divisions, the bank said. 

"While we believe the margin environment for chemicals will be challenged in the near-term, we believe the stable earnings stream from midstream and strong near-term margins for the marketing business should help offset the refining and chemicals volatility," the bank said of Phillips 66. 

One reason the analysts favor Valero is because of its renewable diesel business. Renewable diesel is similar to biodiesel in that it's produced using biomass.

Valero is evaluating a potential new renewable diesel facility that would produce 400 million gallons of fuel a year by as soon as 2024, the analysts write. "We would view the expansion positively," they said. 

The bank also highlighted two other renewable diesel picks that are also buy-rated — the finish company Neste (NTOIY) and Texas-based Darling (DAR).

Finally, Goldman mentioned another company focused on renewable diesel — HollyFrontier (HFC). But it rated this company, headquartered in Dallas, as a sell, noting that the profitability of its feedstock is lower than that of Valero. Plus, "the company is taking on large construction risk in 2021 to build out its renewable capabilities," the bank said. 

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NOW WATCH: Pathologists debunk 13 coronavirus myths

• Karanjit Paul, an analyst at broker-dealer AmeriVet Securities, walked Business Insider through what it was like to work inside the makeshift hospital at the Javits Center in New York City.
• Paul, who is a part of the Navy Reserve, worked in the center for two months as an administrator, keeping track of patients coming in when hospitals were overflowing with coronavirus patients
• "We were learning as we went. A week before we got there, there was nothing there — it was an empty convention center."
• For more stories like this, sign up here for our Wall Street Insider newsletter.

The Javits Center has been home to politicians' election night parties, the biggest charity balls thrown in the city, the FEMA center after 9/11, and —  this Spring — more than 1,000 coronavirus patients. 

When the pandemic was raging in New York late March and early April, with the city's hospitals overflowing, Governor Andrew Cuomo made the decision to open the convention center to patients in what he called a "rescue mission."

City, state, and federal agencies like FEMA and the National Guard of the state came together to build and then staff the hospital rapidly. One of those people inside was Karanjit Paul, an analyst at broker-dealer AmeriVet Securities and a Navy Reserve officer.

Paul called up to serve in the center, and he told Business Insider about the rapid transition from working at a desk in Midtown Manhattan to tracking patients coming into a makeshift hospital.  

In his three years in the Reserve, he's worked stints in Virginia and Maryland in different roles. 

Read more: Photos show the National Guard converting New York City's Javits Center into a disaster hospital for coronavirus patients

"We were learning as we went. A week before we got there, there was nothing there — it was an empty convention center," he said. 

On April 5th, he was called to go down to Fort Dix, an Army base south of Trenton, New Jersey, to get instructions on what to expect at Javits. A day later he was working at the Javits Center in throes of the pandemic after he was one of nine chosen out of 450 people in his unit to staff the hospital.

Paul's job was to keep track of patient and doctor paperwork and general logistics — "basically maintain the hospital," he says, with five other volunteers per shift. "Maintain patient flow and keep everything in order" is how he described his role.

It's similar to past roles he's had with the Navy Reserve; when he worked at Walter Reed Hospital in Bethesda, Maryland, for a month in August in a similar capacity, and he told Business Insider that it wasn't too different than "filling out [requests for proposals]" at AmeriVet.

An employee getting called up to serve isn't rare for AmeriVet, an institutional broker-dealer that strives to have veterans make up 50% of its workforce. The firm works across equity and debt capital markets, as well as public finance, the unit Paul works in. 

Read more: How a massive New York hospital secured 130,000 N95 masks from China with help from a senior partner at Goldman Sachs, private jets, and a call to Warren Buffett

Still, "coming into Javits that first day, it was shock — like this is really happening," he said.

"I was never really placed in a situation where I had so much responsibility. Being a part of that, it really gives you confidence," he said.

His shift was only for eight hours a day, but the amount of time to put his PPE on and take it off each shift added up. 

The situation can be disorienting for anyone, but Paul said his company's support helped him get through it. He said AmeriVet "had an understanding" of what it meant for him to get called up and ultimately selected to serve, which meant less stress about missing work.

"While I was at Javits, I was always waking up to text messages of support from people back at the firm," he said.

"It feels good being able to be a part of something where I was able to help when called."

SEE ALSO: edge funds are in unchartered waters right now. Here's how billionaires like Ray Dalio, Steve Cohen, and Seth Klarman rode out 2008.

SEE ALSO: How a massive New York hospital secured 130,000 N95 masks from China with help from a senior partner at Goldman Sachs, private jets, and a call to Warren Buffett

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NOW WATCH: Pathologists debunk 13 coronavirus myths

• John Hussman — the outspoken investor and former professor who's long been skeptical of stocks — says that the economy isn't recovering in a traditional sense. It's the government that's propping things up.
• Due to an improvement in market internals, Hussman is "agnostic" in his market view.
• However, he notes that extreme valuations suggest a 66% drop in stocks. 
• Click here to sign up for our weekly newsletter Investing Insider.
• Click here for more BI Prime stories.

There's no denying that last Friday's nonfarm-payrolls report was unexpected.

US employers added 2.5 million jobs in May, foiling expectations of a 7.5 million decrease. In response, stocks rallied over 2.5% adding to an already historic 50-day, 40% climb.

While some have heralded the report as a sign of an economy that's on the mend, not all share that sanguine perspective. 

"What we are observing is not 'recovery,' it's the impact of a government program that is paying the salaries of employees that are kept on payroll, whether they are actually working or not," said John Hussman, the former economics professor who is now president of the Hussman Investment Trust.

"Still, Wall Street was shocked and exuberant that reported employment bounced back by 2.5 million, evidently not giving a moment's thought of what has financed this rebound, nor the fact that this support is impermanent."

To Hussman, the market's reaction to the news was ill-founded — and is deepening the chasm between soaring stocks and a disparate economy. What's worse, this behavior looks strikingly familiar to him.

"Severe economic recessions often feature what might be called an 'incubation phase,' where an exuberant rebound from initial stock market losses becomes detached from the quiet underlying deterioration of economic fundamentals and corporate balance sheets," he said.

"Part of the current enthusiasm of investors seems to be the idea that the stock market typically reaches its low before the economy does (though this was certainly not true of the 2001 recession)."

He continued: "The problem is that post-recession bull markets typically begin at valuations about 40% of those we observe at present."

Hussman provided the following charts to demonstrate the market's lofty valuations.

Below is his proprietary profit margin-adjusted price-to-earnings ratio. Its current level rivals that of the Great Depression and tech bubble.

And here's a look at Hussman's nonfinancial market capitalization to nonfinancial corporate gross-value added. He says it's "the most reliable valuation measure that we've studied or introduced over time." Currently, it's nearing tech bubble valuations, insinuating a frothy market.

"Current valuation extremes suggest that the S&P 500 could lose about two-thirds of its value over the completion of the current market cycle, even without moving below historically reliable valuation norms," he said. 

Still, even though the market is wildly overvalued in Hussman's opinion, he's not ready to adopt a completely bearish view until market internals give him the signal to do so.

"Despite these headwinds, the repeated series of bubble-crash cycles of recent decades teach that there is no natural limit to the stupidity of Wall Street," he said. "When investors get the speculative bit in their teeth, it's fine to be neutral, but it's best not to fight the speculation by adopting or amplifying a bearish outlook."

Today, Hussman says that internals are improving. Although he currently holds an "agnostic near-term outlook," he notes internals contain "several features that suggest the improvement is fragile."

Hussman's track record

For the uninitiated, Hussman has repeatedly made headlines by predicting a stock-market decline exceeding 60% and forecasting a full decade of negative equity returns. And as the stock market has continued to grind mostly higher, he's persisted with his calls, undeterred.

But before you dismiss Hussman as a wonky perma-bear, consider his track record, which he broke down in his latest blog post. Here are the arguments he lays out:

• Predicted in March 2000 that tech stocks would plunge 83%, then the tech-heavy Nasdaq 100 index lost an "improbably precise" 83% during a period from 2000 to 2002.
• Predicted in 2000 that the S&P 500 would likely see negative total returns over the following decade, which it did.
• Predicted in April 2007 that the S&P 500 could lose 40%, then it lost 55% in the subsequent collapse from 2007 to 2009.

In the end, the more evidence Hussman unearths around the stock market's unsustainable conditions, the more worried investors should get. Sure, there may still be returns to be realized in this market cycle, but at what point does the mounting risk of a crash become too unbearable? That's a question that Hussman is clearly not shy about answering, given the aforementioned views he outlined.

SEE ALSO: Famed economist David Rosenberg says investors are falling into a classic market trap that's historically preceded a further meltdown — and warns 'there's not going to be much of a recovery'

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NOW WATCH: Why electric planes haven't taken off yet

• Companies should put a lid on executive pay or risk a massive backlash, Mark Cuban warned on Friday.
• "The public response to out of line or record executive comp could turn UGLY !" the "Shark Tank" star and Dallas Mavericks owner tweeted.
• Public-company bosses should also look at fairer pay structures and give stock to all employees, or they might face major fallout, Cuban said in a second tweet.
• "Your brand and business could get CRUSHED," he added.
• Visit Business Insider's homepage for more stories.

  ---

Mark Cuban has warned companies not to overpay their executives at it could spark a fierce public backlash.

"With the run up in stocks and easy fed money for corporations, the public response to out of line or record executive comp could turn UGLY!" the "Shark Tank" star and billionaire owner of the Dallas Mavericks tweeted on Friday.

"Particularly if it comes from a company that closed stores, let people go or reduced wages," he added.

In other words, people who have lost their jobs or seen their salaries cut during the pandemic might not take kindly to their bosses getting massive raises or big bonuses.

The result could be worker revolts, boycotts, and intense criticism on social media, hurting companies' sales and reputations.

Read more:'There is no natural limit to the stupidity of Wall Street': A notorious market bear breaks down why we're not witnessing a recovery — and warns that extreme valuations suggest a 66% drop

Public-company bosses should also explore more equitable pay structures and give shares to all of their workers, Cuban said in a follow-up tweet. 

"If you are the CEO/Director of a public company, or investment fund, NOW is the time to re-evaluate your comp and reward structures and look at bottom up rather than top down reward structures & to give equity to everyone," Cuban said.

"Otherwise your brand and business could get CRUSHED," he added.

Read more:Renowned strategist Tom Lee nailed the market's 40% surge from its worst-ever crash. Here are 17 clobbered stocks he recommends for superior returns as the recovery gains steam.

Cuban, who became a billionaire by selling his company to Yahoo during the tech bubble, said this month that the rebound in stocks and surge in day trading reminded him of the months before the dot-com crash.

Huge increases in executive compensation this year would also fit that narrative.

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• The Beveridge curve shows that the coronavirus pandemic has disrupted the US labor market.
• The graphical chart shows the relationship between unemployment and the job vacancy rate. April data reflecting the coronavirus pandemic shutdowns shifted the curve significantly to the right. 
• This is likely because of the impact of temporary layoffs, which threw off the usual balance between unemployment and job vacancies, Nick Bunker, an economist at Indeed, told Business Insider. 
• As the US economy recovers, it's likely that the Beveridge curve will shift back more in line with the general trend — the same thing that happened during the Great Recession, Bunker said. 
• Visit Business Insider's homepage for more stories.

One wonky chart called the Beveridge curve shows just how much the coronavirus pandemic has hit the US labor market. 

The Beveridge curve, named after the British economist William Beveridge, displays the relationship between unemployment and the job vacancy rate. 

Usually, the curve slopes downward toward the bottom right-hand corner of the chart, showing that as unemployment ticks up, the number of available jobs declines — a data point at the bottom right of the curve generally indicates that the economy is in a recession, characterized by elevated unemployment and a lack of jobs.

But, when the April Job Openings and Labor Turnover Survey data was applied to the model, the Beveridge curve veered sharply to the right — not only not following the curve, but shifting it significantly. This move suggests that the labor market isn't working efficiently as there is high unemployment but also relatively high job openings.

Read more:'There is no natural limit to the stupidity of Wall Street': A notorious market bear breaks down why we're not witnessing a recovery — and warns that extreme valuations suggest a 66% drop

Part of this is likely due to the high number of temporary layoffs the US is seeing from coronavirus pandemic lockdowns, Nick Bunker, an economist at Indeed, told Business Insider. 

"There was a huge shock to unemployment which was driven by separations, people losing their jobs," said Bunker. That led to a spike in the unemployment rate to 14.7% in April, the highest since the Great Recession.

That shock potentially threw off the Beveridge curve because usually unemployment ticks up when hiring declines, Bunker said — a pattern generally following the slope of the curve. 

At the same time, the pandemic impacted the measure of job vacancies in April, also messing with the Beveridge curve. 

During lockdowns, employers didn't post open positions to account for the workers they had to furlough or lay off. Instead, they waited for the economy to reopen so they could recall their workers with a simple phone call or text — something that happened to an extent in May, when the economy added 2.5 million jobs and the unemployment rate declined to 13.3%.

Read more:Renowned strategist Tom Lee nailed the market's 40% surge from its worst-ever crash. Here are 17 clobbered stocks he recommends for superior returns as the recovery gains steam.

Accounting for pandemic factors "solves the puzzle of what we're seeing here," Bunker said. There are a huge number of people who are jobless, but still connected to their previous employers, meaning that rehiring would be much different than what the models underpinning the Beveridge curve are signaling. 

If you were to take temporary layoffs out of the count for unemployment in April, the Beveridge curve would shift back to the right and more closely fall in line with the usual trend, according to Bunker. 

Going forward, it is likely that as the US economy recovers from the deep shock of the coronavirus pandemic and ensuing recession, the Beveridge curve will shift back. This also happened in the years following the Great Recession, Bunker said.

Read more:A fund manager crushing 98% of his peers over the past half-decade told us 4 themes he's betting on and 4 he's betting against — and why the latest market rally still has room to run

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• Offices, hotels, and malls were emptied by the coronavirus. While some are reopening, the disruption has created a new normal. 
• The coronavirus has provided the largest experiment ever in remote work. Experts say it will forever change our relationship with the physical office.
• Flex-space providers like WeWork, Knotel, and Convene, rental startups like Sonder and Zeus Living, iBuyer Opendoor, and brokerages including Compass and Redfin have laid off or furloughed staff. 
• Companies are also rethinking their office footprints and warehouse needs. 
• Click here for more BI Prime stories.

The coronavirus threw the real-estate world into disarray, as people empty out of offices, hotels, and malls and work from their homes. The spread of the virus and the economic disruptions that followed are transforming how people and companies finance, operate, and occupy real estate. 

Big firms are rethinking office needs — and some commercial real-estate deals are being put on ice. A surge in e-commerce, meanwhile, is fueling demand for warehouse space at companies look for new ways to reach customers.

We've also been tracking a slew of layoffs in the venture-backed real estate world, as empty short-term rentals and coworking spaces have hit once-buzzy industries hard.

Here's the latest news on how commercial and residential real estate is being upended, and how experts think these markets will play out in the long run. 

Have a tip about layoffs or major changes in this space? Contact this reporter through the secure messaging app Signal at +1 (646) 768-4772 using a non-work phone, email at anicoll@businessinsider.com, or Twitter DM at @AlexONicoll. You can also contact Business Insider securely via SecureDrop.

Here's everything we know right now: 

Latest news

• Brookfield CEO Bruce Flatt lays out how retail and office space can still thrive and why private infrastructure is the next big opportunity
• Companies from banks to tech giants are looking to shed huge chunks of office space. Here's a look at 8 key sublease offers — and what they mean for rents in big-city markets.
• Amazon just signed a lease on a huge NYC warehouse used by one-time rival Jet.com. The e-commerce giant has been gobbling up industrial space as demand for deliveries surges.
• Bankrupt Neiman Marcus's $80 million flagship store in the glitzy Hudson Yards mega-mall is now being marketed as office space. It's another black eye for the city's retail market.
• Burning through cash and nothing coming in: We talked to 7 VC investors about what's keeping them up at night in their proptech portfolios
• Inside a 'big short' bet against malls: Investors are claiming wins, and a research analyst who said the wagers were misguided is out
• WeWork's US head of real estate is leaving the coworking giant as the firm works through a major turnaround attempt

State of the commercial real estate market

• IBM is ditching a big WeWork office it has been renting in NYC — showing risks for the flex-space model as the pandemic prompts big companies to rethink real-estate needs
• Lease obligations are 'suffocating' retailers — and a potential court fight over a Victoria's Secret flagship NYC store highlights a wider battle between tenants and landlords
• Big investors poured billions into student housing — thinking it was a recession-proof bet. Then the pandemic emptied campuses and turned that thesis on its head.
• Facebook is eyeing offices in cities like Dallas, Atlanta, and Denver to act as 'hubs' to support 50% of its workers staying remote — and it's a move that could upend Silicon Valley and NYC real estate
• Warehouses are the new darling of commercial real-estate thanks to a surge in e-commerce, with firms like Macy's and Boeing selling while Amazon snaps space up
• Knotel and insurance startup Rhino didn't disclose its CEOs were brothers when it struck a complex financial deal. Now a key partner could be on the hook as Knotel scrambles to pay bills, slashes staff, and plans to shed portions of its portfolio.
• Macy's is slashing the size of its brand-new global headquarters by nearly 40% in another drastic step to cut costs
• WeWork's revenue growth rate was cut in half in Q1, as the company burned through nearly $500 million in 'free cash outflow'
• Global firms are cutting down on their real-estate footprint as CEOs across industries are considering a permanent switch to remote work
• Meet the 4 dealmakers driving Blackstone's $325 billion commercial real estate portfolio. They walked us through how they're thinking about opportunities in the downturn.
• A blockbuster Facebook office deal is a make-or-break moment for the future of commercial real estate. 3 leasing experts lay out the stakes.
• Neiman Marcus just filed for bankruptcy, and it could mark a major blow to NYC's glitzy Hudson Yards — one of the most expensive mega-malls in US history. Here's why.
• Inside the drama over control of the iconic Chrysler Building: A real-estate tycoon and a prestigious college are renegotiating a critical $150 million deal
• The CEO of real estate heavy-hitter Eastdil explains the types of deals that are must-do right now — and warns that a 'de-retailing' trend is set to accelerate
• As WeWork and flex-space rivals stumble, 18 million square feet of space in NYC is at risk. Here's what that means for the real-estate market.
• Airbnb and RXR Realty are scrapping a partnership at Rockefeller Center that the home-sharing giant had touted as a '21st-century hospitality model'
• The lender to a trendy Brooklyn hotel is looking to offload an $80 million mortgage as the hospitality sector craters — and it's the type of deal distressed-debt investors have been waiting for
• Real-estate tycoon Aby Rosen is abandoning $600 million worth of acquisitions as the coronavirus slams New York City's multibillion-dollar sales market
• Major tenants are delaying big leases in NYC as they re-think their office space needs for the post-coronavirus world
• Blackstone bet big on 4 huge Las Vegas casinos. Then the coronavirus brought Sin City to a halt, right as the PE giant was trying to unload one of its multi-billion-dollar jewels.
• Airbnb-backed corporate housing startup Zeus Living is asking landlords to renegotiate their leases and withholding April and May rent until they sign
• Knotel is scrambling to pay millions in bills that started stacking up before the coronavirus hit, and hasn't paid April rent at some locations
• Leaked documents from Knotel show the WeWork competitor struggled to hit financial targets well before the coronavirus hit
• 'This is the day of reckoning' for companies like WeWork. 10 real-estate insiders lay out the future of flex-offices, and how employers are preparing now.
• Hospitality startup Sonder is pushing ahead with plans to open its largest NYC apartment hotel yet as coronavirus cripples the travel industry
• 7 charts show how the coronavirus could clobber real estate, from retail vacancies of nearly 15% to plunging office rents in Texas cities
• A surge in grocery deliveries is creating a huge opportunity for industrial real-estate developers. Here's how the coronavirus is transforming retail and warehousing.

The future of real estate

• Construction firms that get tech right could see Silicon Valley-like valuations. Here's how an old-school industry can transform itself.
• Silver Lake just added to a string of recent travel bets by leading a $108 million investment in vacation property startup Vacasa
• Companies need to add contactless-entry tech to safely reopen offices. Here are 7 firms ranging from startups to huge conglomerates that are set for a surge in business.
• Robots, remote hires, and insourcing: A top UBS exec lays out how the Swiss bank is tackling the future of work and thinking about real-estate needs
• A smart home startup that raised $41 million from Amazon and Bain just launched an app that lets landlords and residents give remote access for deliveries, guests, and self-guided tours
• Zillow tapped a former US surgeon general for advice as it restarts its iBuyer business. She laid out how the company will get home-flipping up and running safely.
• Here's which real-estate tech startups will soar and which will flop in the new normal of how we occupy space, according to 7 top proptech VCs
• 10 CEOs from Coldwell Banker, JLL, Cushman Wakefield, and more lay out a post-pandemic future of how we'll buy, build, and use real estate
• The office as we knew it is dead
• Mandatory temperature-taking is largely seen as a critical way to return workers to offices. But some big NYC landlords are worried about its effectiveness.
• The future of real estate could be virtual open houses on Facebook. Coldwell Banker's CEO explains why the in-person industry needs to embrace going digital.
• 'We should be prepared for a new normal': 3 real estate experts on how the coronavirus is transforming offices and accelerating the rise of industrial property
• What to expect when you're back in the office: 7 real-estate experts break down what the transition will look like, and why the workplace may never be the same
• Virtual tours are being hyped as a way for commercial real estate giants like CBRE and JLL to keep deals flowing. Here's a look at how they work — and what factors they can't replace.
• Real-estate services giant JLL explains how the coronavirus could usher in a permanent 'paradigm shift' towards more remote work

Layoffs, pay cuts, and furloughs

• Airbnb-backed Zeus Living slashes almost half of its remaining staff less than two months after a round of layoffs
• Leaked WeWork document reveals a huge reorg under way for people who manage its buildings. Here's how the new structure works — and the complex process for staff to save their jobs.
• WeWork is rolling out global layoffs over Zoom and has kicked off talks to slash jobs in the UK as the coworking giant struggles to cope with coronavirus fallout
• Flatiron School slashed at least 100 jobs and is permanently shuttering some campuses as part of bigger WeWork cuts. Here's everything we know about the layoffs WeWork is quietly rolling out.
• Read the full memo Airbnb CEO Brian Chesky just sent to staff announcing 1,900 job cuts. It lays out severance details and which teams are getting hit the hardest.
• SoftBank-backed Compass is cutting pay and offering equity in exchange — a month after it slashed 15% of staff
• Some of WeWork's outsourced cleaners just lost their jobs — even as the coworking giant keeps offices open and charges members for space they can't use
• SoftBank-backed iBuyer Opendoor just slashed 35% of staff after the coronavirus forced the startup to halt its home-flipping operations
• Real-estate brokerage Redfin is furloughing agents and laying off 7% of staff as housing demand plunges
• Peter Thiel-backed insurance startup Jetty lays off 40% of staff days after pausing the sale of all new policies
• Flex-space unicorn Knotel just laid off 30% of workers and furloughed another 20% as the coronavirus cripples a once buzzy industry
• Days after laying off 20% of its workforce, Brookfield-backed Convene furloughs more than half of remaining employees due to coronavirus closures
• Brookfield-backed Convene just laid off 20% of its workforce as the coronavirus upends the flex-space and events industries
• Airbnb-backed Zeus Living just laid off 30% of staff as the coronavirus upends travel and hospitality startups
• The coronavirus is slamming iBuyers, and firms like Zillow and SoftBank-backed Opendoor are halting their capital-intensive home-flipping businesses
• SoftBank-backed real estate brokerage Compass just slashed 15% of staff and is pausing marketing as coronavirus slams the housing market

SEE ALSO: The ultimate guide to Wall Street's summer internships: Here's how they'll go virtual, and how to impress remotely

SEE ALSO: POWER PLAYERS: Meet the bankers, traders, investors, and lawyers seeing huge opportunities in a wave of corporate distress and bankruptcies

Join the conversation about this story »

NOW WATCH: Pathologists debunk 13 coronavirus myths

• Four years after its public launch and nearly $80 million in outside funding later, women-focused digital wealth manager Ellevest's $635 million in assets trails rival robo-advisers.
• That Ellevest, co-founded by wealth management industry veteran Sallie Krawcheck, hasn't had more traction highlights the ultra-competitive nature of managing money.
• Its growth is further complicated by marketing to women whose tastes vary wildly between generations. And at least six software engineers left the company last year.
• For more stories like this, sign up here for our Wall Street Insider newsletter.

Ellevest, a women-focused digital wealth manager, launched just ahead of the 2016 US presidential election. 

At the time, the dialogue on gender playing out across the country was impossible to ignore. Krawcheck and Charlie Kroll, Ellevest's co-founder and chief operating officer, wanted to unveil a startup they hoped would empower women, just as Hillary Clinton was facing off with Donald Trump in hopes of becoming the country's first woman president.

That May, Sallie Krawcheck, the chief executive of Ellevest and once one of the most senior women on Wall Street, appeared on stage at TechCrunch Disrupt NY to discuss her new investing startup.

"This isn't 'for women,' 'pink it and shrink it,' 'make it smaller,'" Krawcheck said. "We're going to forecast out your life so that you can achieve your goals. And then we'll put a bespoke investment portfolio against each goal to help her achieve them."

Four years later, Krawcheck is promoting the same message that helped lift Ellevest off the ground: women in the US earn less than men and have different trajectories, and should have tailored financial services.

Now, mission-driven VC investing has gained renewed attention amid a national outcry over systemic racism and pledges by venture-capital firms to earmark funding to back firms led by Black Americans and people of color. Some women-focused startups have also been called on to do more to promote intersectional feminism and broaden their notion of diversity beyond gender.

With backing from some of the biggest names in Corporate America, Ellevest has grown its assets under management to more than $600 million, a good amount for a startup that's just a few years old. But that's a sum far smaller than rivals catering to a broader audience.

Business Insider spoke with a dozen people including former Ellevest employees, analysts, VC investors, and other fintech and wealth insiders about the rise and positioning of Ellevest in the ultra-competitive business of managing money — and whether or not a startup targeting a smaller subset of users, women versus everyone, can compete long term.

Read more: Robo-advisers like Wealthfront and Betterment are in a tricky spot — here's why one fintech banker thinks buyers and public investors will be hard to win over

Ellevest drew big-name backers

Investors have come out in droves to back Ellevest, which now offers both automated investing and premium advisory offerings. From Melinda Gates and Valerie Jarrett to tennis star Venus Williams, Ellevest has raised nearly $80 million from notable women investors and philanthropists. 

Ellevest oversees some $635 million in assets across digital, premium, and private wealth management as of June 7, a spokesperson said. That's up from the $580 million disclosed in a February SEC filing. 

That pales in comparison to other older fintech firms in the wealth space who cater to customers of all kinds. Some of the largest robo-advisers, like Wealthfront and Betterment (launched in 2011 and 2010, respectively), and hybrid firms like Personal Capital, launched in 2011, each manage billions. Wealthfront has a war chest of venture capital dollars that's more than double what Ellevest has raised. Traditional wealth giants like UBS and Morgan Stanley oversee trillions. 

In an interview with Business Insider, Krawcheck said Ellevest's uniqueness as the only wealth offering specifically geared towards women make it difficult to compare to others, and that pay gaps make AUM an imperfect measuring stick for Ellevest. With women making less than men, the amount of wealth they generally have for Ellevest to manage is lower too.

"There have been so many people who went after the target market and failed," Krawcheck told Business Insider. "If you'd woken me up in the middle of the night three years ago and asked if we'd be at $640 million in assets under management, I'd have said, 'We'll be lucky to be at one.'"

Read more:Inside the quest to reboot Personal Capital, the wealth manager grappling with its identity in the cutthroat robo-advisory age

A career in wealth

Krawcheck led some of the largest wealth-management businesses on Wall Street years before rallying cries for a more inclusive financial services industry.

She began her career as an analyst at Sanford C. Bernstein, today AllianceBernstein, and rose to become the firm's chief executive. Krawcheck later served as CEO of Smith Barney (what is today Morgan Stanley Wealth Management), Citi's finance chief and head of strategy, chairman and chief executive of Citi's Global Wealth Management, and head of global wealth and investment management at Bank of America. 

Her last job in traditional wealth management was heading up Merrill Lynch until 2011.

She and Kroll — the founder of financial-technology firm Andera, which was acquired for roughly $47.6 million  — founded Ellevest in November 2014. 

Kroll, who is still president at the company, is far less visible than Krawcheck, who regularly discusses Ellevest, investing, and the gender wealth gap in the press.

A clear mission from the start

Ellevest, headquartered in New York City's Flatiron neighborhood, started with a core team focused on investments, engineering, product, design, and marketing, with some still there today. Prior to the coronavirus pandemic, around 75% of Ellevest's 92 employees worked out of that office, a spokesperson said.

Sylvia Kwan, the chief investment officer, and Melissa Cullens, chief experience officer overseeing design efforts, both joined in 2015.

Alexandria Stried, the chief product officer, also joined that year from Weight Watchers, where she was the director of product management. 

One former employee said the feeling and culture formed during earlier days of the company was very much mission-driven, and Krawcheck's reputation leading massive wealth units was core to getting it off the ground.

"The credibility Sallie has is what made Ellevest what it is" today, the person said.

In 2016, Ellevest hired the once-hot, now-shuttered home interior design startup Homepolish to design the glossy new offices, the website Officelovin' reported. 

There were some hallmarks of a fresh startup, with funky twists: pastel armchairs and modern lamps; a sunny, open-office concept; and a whiteboard with rows of Post-it notes scattered nearby. There were twin seats with white shag covering near the reception area, where a hardcover Coco Chanel biography was kept on a table.

In earlier days, Kroll's thinking around Ellevest's hires was that everyone "had to have a story," the former employee said. 

Stried, for instance, had experience at Weight Watchers creating a personalized coaching program for customers. Cullens, a creative and design strategist, had worked with clients like Vogue. 

"Incorporating someone's 'story' is one of many factors in our hiring process," a spokesperson said. "Ellevest was built on foundational belief in the power of diversity in building strong businesses, and we take that seriously." 

But in a message on Ellevest's website earlier this month, Krawcheck, like executives at many other firms, publicly addressed her failings and commitments around diversity and inclusion. She noted Ellevest doesn't have "a single Black person" on her leadership team. 

In the post, she included a breakdown of diversity across Ellevest: some 15% of all employees are Black, and 46% are people of color. At the leadership level, 30% of employees are people of color. 

"You also have my commitment that the amplification we've been doing of Black voices on our social channels, in our articles, and in our newsletters will continue," Krawcheck wrote as she vowed to add Black executives to her leadership team. 

Building Ellevest 

The early focus at Ellevest was on building up a team of engineers, creating infrastructure for the eventual platform, and cultivating research on women and investing. 

While the official launch came in November 2016, Ellevest ran a closed-beta version with a small number of users beginning earlier in the year, a spokesperson said.

At the time, there were only automated tools in mind. The financial-planner offering and private wealth management services would come later. 

The team worked to create tools with fees that could compete with existing robo-advisers. For the straightforward investing tool, clients pay an annual fee of 0.25% of assets under management, with no minimum balance.

For Ellevest's premium product, which requires a $50,000 minimum and comes with a fee of 0.50%, clients also have access to certified financial planners and executive coaching. 

Krawcheck said that the idea wasn't welcomed with open arms by all women, but it was able to win over skeptics. 

"We had a double-digit percent of women, essentially at the time, shoot us the bird," Krawcheck said. "They said, 'For women? That sounds sexist, how dare you. I don't need my own thing to manage money, you know, for women.'" 

Quest to add deluxe offerings

September 2017 marked another milestone for Ellevest:  a $34.6 million fundraise. Rethink Impact, a US-based venture firm investing in female tech entrepreneurs, led the round.

Ellevest had some $54 million under management at the time. 

PSP Growth, the growth-equity arm of PSP Partners — run by billionaire businesswoman and former US Secretary of Commerce Penny Pritzker — and Salesforce Ventures joined as first-time investors. 

Ellevest said it would use the funds to launch a financial-planning offering and a private-wealth service for clients with investable assets of at least $1 million.

Initially branded Ellevest Ascent, financial advisers would help customers strategize various areas of their personal finances. 

From a financial perspective, it was easy to see why the rollout was attractive: the margins on the business are traditionally much higher than robo-advisers, and bringing on bigger accounts would help offset customer acquisition costs.

Anisha Kothapa, an analyst at the market intelligence and research firm CB Insights, told Business Insider that Ellevest made a smart move shifting into more of a hybrid wealth-management product, rather than stick with an automated-only offering. 

Still, one way to propel asset growth would be to widen its approach and cater to different demographics, rather than focusing on women, she said. 

Heartstrings and purse strings

Three former employees, all of whom requested anonymity to speak candidly about their experience, noted there was never much talk of an end-game for Ellevest, and one said they never received a real straight answer about what any eventual exit might look like.

This isn't necessarily unusual for a startup. Founders focus on building big businesses rather than discussing ways to hand them off. However, many startups that have focused on niche audiences, such as women or college students, either find they later need to expand their userbases to stay competitive or wind up with disappointing outcomes. 

SheCapital, Swell, and WorthFM, all of which targeted either women or socially-responsible investing, have shuttered within the past few years. 

It's a delicate balance between deciding what "pulls at the heartstrings, as well as the purse strings," Genevieve O'Connor, an assistant professor of marketing at Fordham University's Gabelli School of Business, said in a recent phone interview. 

"Companies need to stay away from 'pink-washing,'" O'Connor said. The phrase has roots in labeling brands that critics say exploit rainbow color schemes and the color pink in marketing around breast cancer awareness and LGBTQ causes, but has widened to describe the notion that products for women should come with a lighter touch — a general practice Krawcheck has railed against.

Building the wealth-management side of the business could also help improve key metrics or statistics potential investors would look at. But according to one former employee, the announcement came before the actual tech platform needed to support the wealth-management offering was complete.

"They weren't really bridging the gap between the robo side and being tech-enabled on the wealth-management side," the source said. 

Reporting features and the actual client site lagged behind the robo offering.

"They just weren't applying the technology with the same, I would say, gusto, that they were with the other side because the other side was the tried and true proven business that really kept the funding going," the source added.

However, that lack of a wealth-management platform didn't stop the push to try and build the business up.

The directive from management was to continue to get assets in the door from high-net worth individuals with the caveat of, "we'll figure the rest out later," the source said.

The wealth-management platform was in a closed beta phase at the time of the announcement, a spokesperson said. 

As for the discrepancies between the robo and wealth-management side, the spokesperson said it's natural for products to mature over time.

"There are fundamental differences in the service models for our digital and private wealth management offerings," the spokesperson said. "Our digital investing offering relies almost exclusively on technology, whereas our private wealth offering is driven by financial advisers, who are tech-enabled. We continue to invest in all of our products."

Turnover had also become an issue for some teams, according to the source. In 2019, at least six software engineers left between February and August. 

A spokesperson confirmed that turnover and said Ellevest took actions to improve retention, and that since August 1, 2019, voluntary attrition among engineers has been less than 5%.

There was also a departure at the C-level as Lisa Stone, who joined in August 2017 as chief marketing officer before transitioning to chief strategy officer in April 2018 and leaving one year after, according to her LinkedIn. 

More big names get involved 

The company nabbed more funding in March 2019, raising $34.5 million in an extension of its Series A round.

Rethink Impact and PSP Growth led the extension, but a who's who of backers also joined. 

Among them were Melinda Gates' Pivotal Ventures; PayPal Ventures; Mastercard; Elaine Wynn, the cofounder of Wynn Resorts; Eric Schmidt, the former executive chairman of Google and Alphabet; and Valerie Jarrett, former senior adviser to President Barack Obama. Former Goldman Sachs tech banker Linnea Roberts, through her VC firm Gingerbread Capital, also participated.

"Unlike other fintech start-ups, Ellevest is changing women's behavior, changing the narrative around women and money, and in so doing, giving women the means to change their own lives," Jenny Abramson, founder and managing partner of Rethink Impact, said, adding Ellevest is "more than meeting its benchmarks for success." 

None of Ellevest's other investors returned Business Insider's requests for comment, while a representative for Elaine Wynn could not be reached.

The wealth-management business, re-branded Ellevest Private Wealth Management, had reached $100 million in assets under management, Krawcheck said in a statement at the time of the last fundraise. 

"After this round, I feel like I'm at the end of a marathon — one in which I threw up, hallucinated a giant rabbit running next to me for the final four miles, and broke my knee," she wrote in an annotated press release posted to Ellevest's website.

The road ahead for Ellevest

The March 2019 raise was the last big news the company reported.

A spokesperson declined to disclose how its assets are currently split across digital, premium, and private wealth beyond noting the latter has grown "in multiples" over the past year. 

Ellevest still lags behind both upstarts and traditional players. It's not profitable, a spokesperson said, declining to disclose burn rate or profitability figures. To be sure, many startups in the space have yet to turn a profit, as most tend to focus on growth. 

"At Ellevest, we don't see digital investment platforms as direct competitors because we have a different audience demographic," Krawcheck said in a statement, adding that "in comparing us to other companies in the category, you have to consider the fact that Ellevest's membership base doesn't have the same amount of money to invest as others' users."

So where does Ellevest go from here?

"This idea of you build a startup with an eye on the exit door, and who are you going to sell to, and who's it going to be — it hasn't entered the equation. We've never talked to our investors about it. We spend no time as a leadership team about it," Krawcheck said. 

"We can easily be a publicly traded company. We can easily be a profitable private company. Any of those things can be available to us as we're successful," she said. 

Business Insider spoke with five venture capitalists who have made investments in personal-finance startups. They were not authorized to speak publicly about Ellevest and requested anonymity to preserve relationships in the industry. 

While all spoke highly of Krawcheck and her vision for the platform, none had pursued making an investment beyond initial conversations.

Ellevest's relatively small total assets versus the amount of money it's raised was one red flag cited by a few of the VCs.

"They are way smaller than they should be," one venture investor said. "For the amount of money they have raised … It doesn't make sense."

Another venture investor highlighted the risks that come with focusing on a specific segment. That approach, some venture sources said, can sometimes limit scale.

In interviews, multiple sources pointed to another woman-focused financial planning startup, LearnVest, as one way they could see Ellevest's path playing out.

The personal-finance software startup was acquired by Northwestern Mutual Life Insurance for $250 million in 2015. Three years later, in May 2018, LearnVest's offering was discontinued. 

There are no shortage of onlookers rooting for what's been the most successful women-focused investing startup in the wave of digital wealth managers over the last decade. Still, not every woman has wanted an investing service with a gender lens.

"Many of women's money woes do originate in unequal pay and lopsided caretaking burdens, and it's nice to see that acknowledged — but financial advice can't fit it," personal finance writer Helaine Olen wrote for Slate in 2015. "Only social change can do that."

"Women are not monolithic, any more than men are," she wrote. 

A former employee said in an interview that Ellevest's stated goal was never unclear: get more women investing in the market, and close the gender wealth and income gap. 

"We were all, and many of us still are, true believers," they said. "There were a million things that went wrong, as with any new company. But one thing that was true was everyone believed in that mission, and the goals."

Read more: 

• • Why Morgan Stanley, which has 15,000-plus financial advisers catering to the super-wealthy, is buying a discount broker known for its talking baby ads
  • Wells Fargo is eyeing even lower minimums for its robo-adviser as it looks to go head-to-head with Robinhood and Acorns

SEE ALSO: Inside the quest to reboot Personal Capital, the wealth manager grappling with its identity in the cutthroat robo-advisory age

SEE ALSO: Robo-advisers like Wealthfront and Betterment are in a tricky spot — here's why one fintech banker thinks buyers and public investors will be hard to win over

SEE ALSO: SigFig raised $120 million on the promise of reinventing investing, but hasn't announced a big partnership in years. Here's how it went from inking deals with UBS and Wells Fargo to struggling to compete.

SEE ALSO: WEALTH MANAGEMENT 2030: Read the full responses to our survey about wealth management and the financial adviser of the future

Join the conversation about this story »

NOW WATCH: Tax Day is now July 15 — this is what it's like to do your own taxes for the very first time

Digital transformation has just begun.

Not a single industry is safe from the unstoppable wave of digitization that is sweeping through finance, retail, healthcare, and more.

In 2020, we expect to see even more transformative developments that will change our businesses, careers, and lives.

To help you stay ahead of the curve, Business Insider Intelligence has put together a list of 30 Big Tech Predictions for 2020 across Banking, Connectivity & Tech, Digital Media, Payments & Commerce, Fintech, and Digital Health.

This exclusive report can be yours for FREE today.

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• This is a preview of The Payments Ecosystem research report from Business Insider Intelligence.
• Purchase this report.
• Business Insider Intelligence offers even more consumer coverage with Payments & Commerce Pro. Subscribe today to receive industry-changing payments and commerce news and analysis to your inbox.

The power dynamics in the payments industry are changing as businesses and consumers shift dollars from cash and checks to digital payment methods. Cards dominate the in-store retail channel, but mobile wallets like Apple Pay are seeing a rapid uptick in usage.

At the same time, e-commerce will chip away at brick-and-mortar retail as smartphones attract a rising share of digital shopping. Digital peer-to-peer (P2P) apps are supplanting cash in the day-to-day lives of users across generations as they become more appealing and useful than ever.

And change is trickling down into bigger industries long-dominated by cash and check, like remittances and business-to-business payments.

In response, providers are scrambling for market share. Skyrocketing consolidation that creates mega-giants is forcing providers to diversify in search of new volume.

New entrants, especially from big tech, are threatening the leads of giants. And as payments become increasingly effortless, new types of fraud are threatening data security and privacy. While demand for richer payments offerings is creating opportunities across the space, it's also leaving the industry in search of ways to adapt to change that is putting trillions in volume and billions in revenue up for grabs.

In this report, Business Insider Intelligence examines the payments ecosystem today, its growth drivers, and where the industry is headed. It begins by tracing the path of an in-store card payment from processing to settlement across the key stakeholders. That process is central to understanding payments, and has changed slowly in the face of disruption.

The report also forecasts growth and defines drivers for key digital payment types through 2024. Finally, it highlights three trends that are changing payments, looking at how disparate factors, such as new market entrants and surging fraud, are sparking change across the ecosystem.

The companies mentioned in this report are: ACI Worldwide, Adyen, Amazon, American Express, Apple, Bank of America, Braintree, Bento for Business, Capital One, Citi, Diebold Nixdorf, Discover, Earthport, Elavon, EVO, Facebook, First Data, Fiserv, FIS, Global Payments, Goldman Sachs, Google, Green Dot, Honda, Ingenico, Intuit, JPMorgan Chase, Kabbage, Macy's, Mastercard, MICROS, MoneyGram, NatWest, NICE, NCR, Oracle, Paymentus, PayPal, Rambus, Remitly, Ria, Samsung, SiriusXM, SF Systems, Square, Stripe, Synchrony Financial, The Clearing House, Target, Tipalti, Toast, Transfast, TSYS, Venmo, Verifone, Vocalink, Visa, Walmart, Wells Fargo, WePay, Western Union, Xoom, Zelle

Here are some of the key takeaways from this report:

• In-store payment methods are still on the rise in the US, comprising 89% of retail volume this year. Credit and debit cards continue to lead the segment, as cash and check usage slowly ticks downward. But surging contactless penetration is set to bring mobile in-store payments to prominence for the first time in the years ahead.
• Surging e-commerce will eat away at in-store payments' share of overall retail. PCs will continue to lead the way, but smartphones will inch closer to being the top channel for purchasing, in turn driving growth. At the same time, new payment tools, like voice assistants, wearables, and even cars will begin to give consumers even easier ways to pay.
• The digitization of payments isn't just contained to retail, though, with mobile P2P payments, digital remittances, and digital business payments continuing to blossom as change spreads through the ecosystem.

In full, the report:

• Traces the path of an in-store card payment from processing to settlement across key stakeholders.
• Discusses emerging alternatives to card payments.
• Examines the shifting role of key categories of providers as the ecosystem digitizes and matures.
• Forecasts growth in key categories, including in-store payments, e-commerce, mobile P2P payments, remittances, and B2B payments.
• Identifies three trends set to shape payments in 2020 and evaluates what changes the ecosystem is set to undergo.

Interested in getting the full report? Here's how to get access:

1. Purchase & download the full report from our research store. >> Purchase & Download Now
2. Sign up for Payments & Commerce Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week. >>Get Started
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4. Current subscribers can read the report here.

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• Sgt. 1st Class Joshua David, a Green Beret, gets paid by the US Army to play video games.
• David and the Army's other esports players stream for roughly five hours a day, but still maintain the service's military standards.
• Here's what his day looks like and how recruits can also become a member of the Army's esports league.
• Visit Business Insider's homepage for more stories.

US Army Sgt. 1st Class Joshua David, a Green Beret, can speak two dialects of Arabic and handle a Special Forces attack dog.

But David isn't conducting close-quarters combat training for the Army at his regular job — he could instead be found playing video games, for hours on end, as a member of the Army's esports team.

David, an active-duty soldier, is getting paid by the federal government to play video games.

The 30-year-old Oklahoma native started off playing video games during the Nintendo-64 era with titles like "Perfect Dark" and "GoldenEye," and eventually made his way to the Halo series following the launch of the Xbox.

"When Xbox came out with 'Halo: Combat Evolved', I pretty much became obsessed," David said. "When 'Halo 2' came out, I chased that."

The third title of the Halo series eventually tempered his expectations and set him on the path to public service.

"When 'Halo 3' came out, that's when I figured I wasn't going to be good at the 'Halo' series anymore," David said. "And that's right around when I joined the Army. They may be linked."

"There's probably a good relation there," David joked. "That might be why I'm not good in school, because I was playing too much Halo."

With his academic prospects dimmed, David, who "didn't know anything about the military," joined the Army as an infantryman in 2008.

"I didn't even know what a Ranger was," he said, referring to the title earned by completing one of the Army's light infantry training schools. "It got offered to me in Basic Training and I said, 'Sure.'"

After a few years in a Ranger regiment and two deployments to Afghanistan, David tried out for the Army's Special Forces selection process and then made his way to the 5th Special Forces Group. Four deployments later, he volunteered to become part of the Army's newest initiative with the esports community and began streaming video games on a full-time basis.

Much like the difficulty in the Special Forces selection process, the Army had to filter through thousands of applicants for their esports team — about 6,500 in total.

Not all of his colleagues in the Special Forces community were on board with his career move while others cast friendly shade: "He was doing the 'Call of Duty' thing in real life and now he's doing it in a video game," David recalled.

"When I got offered to do it full-time ... it was probably about 70-30 in favor of what I was doing," David said. "Guys my age and younger really are open and they understand what was going on."

"Some of the older guys weren't that happy," he added. "You know, they don't really understand how many people actually play videos games and watch it. But once you start showing them statistics, they really start to open up."

Esports and game streaming has exploded in recent years. Business Insider Intelligence estimates esports viewership to increase at a 9% compound annual growth rate (CAGR) from 2019 to 2023 — from 454 million to 646 million — nearly doubling the audience from 2017.

A separate study from the Activate consulting firm indicates that the number of American esports viewers will exceed the audience from every other US-based professional sports league, except the NFL, by next year.

David's transition from using real weapons to firing them in-game wasn't all too difficult and he says there wasn't an overlap with his military training. But there were other social barriers he needed to overcome in order to fit in with his new community.

"For me, being a little older than what most people ... by 8-10 years, I'd say the hardest thing for me is that I had to learn the terminology," David said. "There's so many words people use these days that I have no idea what they're saying."

'Nerdy soldiers'

David's day starts out just like any other active-duty soldier in the Army: physical training (PT) in the morning and a day out of the week for administrative tasks.

"Just like a normal unit, we have PT every morning, usually around 6:30; and then go eat breakfast; shower; get in your uniform," David said. "We're usually back to work by 9:00. Basically from there, we're either practicing our game and creating content for YouTube or whatever social media platform."

The esports league is part of the Army's broader Marketing and Engagement Brigade based in Fort Knox, Kentucky, where other military marketing teams are also stationed, such as the Golden Knights parachuting team.

"So the cool thing about the esports team is that we're right next door to the Army Crossfit and Strongman Team — so we get that unique opportunity [for] them kind of designating a workout for us," David said. "So now we have all these, you know, 'nerdy soldiers' because of how much video games they play."

David and the Army's other esports players stream to the public for roughly five hours a day, and then select highlights for upload on platforms like Twitch.

"When you're gaming ... it's really hard to get off that and then go sit back and try to clip stuff and create content if you want to do multiple platforms," he said. "There's really not enough time in the day to do everything, so you have to try and micromanage that time."

'I want to enlist as a gamer'

As a community outreach program and a recruiting tool, David and other members of the Army's esports league are bombarded with questions from potential recruits. Through their conversations, the esports team realized there have been misconceptions about what they do and how to become a member.

"I'd say the biggest misconception about our program is that you cannot join the Army to be a 'video game player,'" David said. "It's not a job in the Army where you can just come off the street and say, 'Hey, I want to enlist as a gamer. Let's do that.'"

"You're still an infantryman, you're still a medic, you're still something," David added. "You can try out as an extracurricular activity, and maybe make the E-sports team."

Because the Army and every other military branch does not offer it as an occupational specialty, recruits are not able to join the esports league at the beginning of their military careers. Once they become a soldier, they can apply to become a member on an extracurricular basis, and then, hopefully, transition into becoming a full-time streamer or competitive gamer on the team.

"It's almost daily — the younger guys, 16-17, they're like, 'I want to do what you're doing,'" David said. "But then they kind of want to do everything that I'm doing and they don't want to put in a lot of work. To even be a Green Beret, it's two years of school."

"But I actually get a lot of interest on this," David added. "Guys actually talk to me about wanting to game, and ... maybe they want to try out for Special Forces or want to be a Ranger."

Soldiers with the esports league are also required to abide by certain rules, such as not being able to solicit subscriptions from the Army's official Twitch account and keeping their profanity down to a minimum.

"The last 12 years of my life I had quite a mouth on me," David said. "When we're streaming to the Army channels, we definitely try to be family friendly because you never know who's going come in and watch you."

"We're usually very good about our language," David added. "I mean, every now and then we'll slip up, followed by a quick apology, Especially if we're in the heat of the moment in a 'Call of Duty' match, sometimes we do slip up."

Once a soldier becomes a member of the esports team, they are assigned that role for the next three years. Soldiers must maintain the Army's requirements, including keeping up with its physical standards.

"If you're in any kind of negative standing in the military, or if you can't pass your PT test, you're not even eligible to try out," David said. "Soldier first, gamer second."

"You just got to remember: Yeah you're a gamer, but at the same time you're a soldier representing the United States Army," David added. "A lot of gamers these days are pretty toxic, especially in the "Call of Duty" world. You might be best player ... but if you can't portray the Army in a positive light, there's nothing we can really do with you."

SEE ALSO: Navy SEAL who oversaw the Osama bin Laden raid says 'Batman and Superman are not coming' in a speech advising college graduates to become their own heroes

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It's a fascinating time for fintech.

What was once a disruptive force in the financial world has become standard practice for many industry leaders. 

Fintech industry funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.

Some new regions, including South America and Africa, are emerging on the scene.

And some fintech companies, including a number of insurtechs, have dipped into new markets to escape heightened competition.

Now that fintech has become mainstream, the next focus is on the rising stars in the industry. To that end, Business Insider Intelligence has put together a list of 10 Up and Coming Fintechs for 2019.

Coconut

Total raised:   £1.9 million ($2.5 million)

What it does: Coconut is a UK-based current account and accounting platform for small- and medium-sized businesses (SMBs).

Why it's hot in 2019: Next week, Coconut will launch its first subscription service, dubbed Grow, which will bundle unlimited invoicing and end of year tax reports, for £5 ($6.51) a month. This will make it a very attractive option for SMBs, that conventionally don't have a lot of time on their hands to handle their accounting.

Brex

Total raised: $282 million

What it does: Brex is a US-based corporate credit card provider, which initially focused on serving startups.

Why it's hot in 2019: The startup gained unicorn status in 2018, only months after it launched its first product. Now, after receiving debt financing worth $100 million, Brex wants to target larger enterprises with its topic — opening it up to a whole new set of customers and helping bring the company to the next level.

Want to get the full list?

There's plenty more to learn about the future of fintech, payments, and the financial services industry. Business Insider Intelligence has outlined the road ahead in a FREE report, 10 Up and Coming Fintechs for 2019. 

>> Download the report now

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Both globally and in the US, the payments ecosystem is evolving.

Two related trends: the slow death of cash and the fast rise of digital payments, are transforming how consumers, businesses, governments, and even criminals move money.

Annual global non-cash transactions are expected to pass the 1 trillion milestone by 2024. This major transformation is being propelled by several factors, including increased usage of digital wallets, more small vendors adapting to accept credit cards, and the explosive growth of mobile commerce.

In The Death of Cash slide deck, Business Insider Intelligence projects what the payments ecosystem will look like through 2024 by examining the driving forces powering digital payment proliferation.

This exclusive report can be yours for FREE today.

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• Inigo Fraser-Jenkins of AllianceBernstein is giving investors a list of seven inexpensive "value" stocks that steer clear of the usual value standbys of financial and commodity stocks.
• Fraser-Jenkins says these stocks haven't made big gains in the recent value-stock rally, and they have some strong business fundamentals.
• That means they could be worth buying for reasons other than their low prices.
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Some of the least-popular stocks on Wall Street are finally feeling some love these days. That can be a good thing, but it creates a Catch-22: If all the cheaper stocks go up, where can investors find bargains?

AllianceBernstein strategist Inigo Fraser-Jenkins is tackling that question and directing his attention away from the usual answers. He thinks it's a good idea for investors and portfolio managers to put some money into value stocks, but urges them to be choosy.

When investors look for value stocks, he points out, they often focus on banks. But he's not sure that's the best way to apply that strategy. 

"We are still skeptical of banks to meaningfully stage anything other than a tactical rally," he wrote in a note to clients. "They are tied to the economic cycle, to the default cycle that we still face and to the uncertainties of the evolution of policy."

He has doubts about energy companies as well. They've also become popular with some value managers because the stocks have plunged along with oil prices. But because the companies' performance is still fundamentally a bet on the health of the economy, Fraser-Jenkins is also excluding them from his field of possible targets.

He adds that instead of focusing on share prices or the economic cycle, he wants to recommend companies whose businesses have real potential and not just financial appeal based on their fallen stock prices.

"We hope to find stocks that (a) still have further to go after the recent value rebound and (b) have a case that is rooted in the fundamentals of the business rather than purely being a macro call," he said.

That leaves this list of seven US and European companies that Bernstein rates at "Overweight." They're ranked from lowest to highest based on how much they would have to rise to equal the firm's price target on each stock.

SEE ALSO: Mitch Rubin's fund has used a unique approach to reap 26% returns and double client assets this year. He breaks down his 3-part process for deciding which stocks to buy — and what to bet against.

7. Kroger

Ticker: KR

Market cap: $25.3 billion

Target price: $37

Upside to target: 13.1%

Quote: "Kroger continues on its path to improve core performance and expand into what we believe is a winning omnichannel grocery solution. ... We expect this value will be more fully unlocked when the company makes a firm commitment to move forward with its Walgreens tests."

Source: AllianceBernstein

6. L3Harris Technologies

Ticker: LHX

Market cap: $43.2 billion

Price target: $243

Upside to target: 23.7%

Quote: "L3Harris offers the opportunity to invest in the defense industry at a low price point with relatively low risk. Among large defense contractors, we see L3Harris as having the best top line growth and highest margins."

Source: AllianceBernstein

5. Associated British Foods PLC

Ticker: ABF (London Stock Exchange)

Market cap: $19.2 billion

Price target: £2500 

Upside to target: 31.1%

Quote: "AB Foods is a long-term quality compounder. With growing sales and increasing operating leverage on a high-fixed-cost business model, we expect to see top and bottom line improvement across each of the five businesses."

Source: AllianceBernstein

4. Darden Restaurants

Ticker: DRI

Market cap: $9.4 billion

Price target: $100

Upside to target: 37.1%

Quote: "Darden has consistently outperformed the casual dining industry over time ... Olive Garden and LongHorn had recovered 62% and 56% of prior volumes by mid-May through their off-premise platforms."

Source: AllianceBernstein

3. Accor SA

Ticker: AC (Euronext Paris)

Market cap: $7.7 billion 

Price target: €35

Upside to target: 38.1%

Quote: "Accor is ... the market leader in every region ex-US and China and having a diverse portfolio of brands. Coronavirus has been a major shock to the sector, but Accor has the liquidity to absorb a prolonged shutdown and this will likely accelerate market share gains."

Source: AllianceBernstein

2. Delta Air Lines

Ticker: DAL

Market cap: $18 billion

Price target: $39

Upside to target: 43.4%

Quote: "We think the industry can survive with the competitive equilibrium intact ... When the health crisis has passed, we are confident that Delta will return to its position of leadership and be able to repair its balance sheet."

Source: AllianceBernstein

1. EasyJet PLC

Ticker: EZJ (London Stock Exchange)

Market cap: $3.7 billion

Price target: £1100

Upside to target: 44.7%

Quote: "EasyJet is taking bold strides in the corona crisis that should set it up for enhanced earnings power in the next cycle. ... [I]t is using the current environment as a burning platform to launch a far-reaching program that touches all areas of the business."

Source: AllianceBernstein

• Cyclical stocks have historically shown great sensitivity to economic growth and served as reliable forward-looking indicators of both market and economic recoveries. 
• Since the market's bottom in March, cyclicals have mostly underperformed the broader market and are signaling to Societe Generale strategists that the recovery is not as airtight as the rally indicates.
• Their trajectories after the 1929 and 1932 market downturns provide templates for how this recovery may unfold. 
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Stock-market investors got two doses of reality last week that interrupted a seemingly unstoppable rally.

They came via warnings of a prolonged economic recovery from the Federal Reserve chairman, and a rise in new coronavirus infections and hospitalizations in states that are reopening their economies. The newsflow culminated in the S&P 500 recording its longest daily losing streak since the thick of the crash in March. 

This brief sell-off notwithstanding, investors have been grappling with the question of whether the market's roaring comeback from its 33% decline was too far ahead of economic reality. Quantitative strategists at Societe Generale dove into history to come up with an answer — and what they found is yet another gut check for the bulls. 

The team led by Andrew Lapthorne examined the market crash of 1929 that preceded the Great Depression, as well as the one that followed in 1932. Their aims were to discover how the market advanced from its bear-market bottoms, how those compare to the 2020 rally, and what the results suggest about the months ahead. 

They handpicked those two years because investors faced nearly identical economic conditions but played the recoveries very differently. 

Cyclicals told you what happened next

More than any other class of stocks, cyclicals that are sensitive to economic growth were accurate prognosticators of what followed in both instances. 

Cyclicals fell more than 35% in the first year after the 1929 market bottom. Meanwhile, the broader market ripped nearly 50% in the first four months from the bottom. But if you were paying attention to cyclicals, you may have sniffed out the bigger crash that followed.

Stocks eventually bottomed in 1932, when cyclicals staged a persistent rally that added up to 200% within the first year of the trough. 

The contrasting trends in cyclicals are shown in the chart below.

It's worth acknowledging the privilege of hindsight we have now, although it could equally serve as a cautionary tale for the future. 

"The weak and whipsawing of cyclical performance we saw in the weeks until this last one, which is far short of the classically clear resurgence that we observe in genuine recoveries, as cyclicals' vote of confidence to an upcoming economic recovery could indicate how fragile the underlying economic recovery might be and raises questions about whether the worst is over for the markets," Lapthorne said in a recent note. 

He added that continued gains in cyclicals would be an encouraging signal for the strength of the recovery. However, the trend so far has largely been more similar to 1929 than 1932. 

Lapthorne noted that other equity factors which historically trend in certain ways were consistent with the messages cyclicals sent in 1929 and 1932. 

The size factor — which involves a strategy of buying small-cap stocks and selling large-cap — fell by as much as 40% from its trough in 1929 but exploded 250% within two years after 1932.

Small caps are similar to cyclicals in that they are also sensitive to economic growth. And in 2020, they largely lagged the broader market from the March low until mid-May.

Put together, the recent gains for small-cap and cyclical stocks in 2020 could be interpreted as strong, forward-looking signals of the economy's v-shaped rebound. And on some level, it's not worth fighting the broader uptrend. 

But Lapthorne is erring on the side of caution before jumping to any firm conclusions. After all, the economy is still in recession, consumer demand has not recovered, and there's a weight of uncertainty about the pandemic's future. All these risk factors were largely sidestepped by investors until last week.

If the Fed is talking about "a long road" to recovery even with full knowledge of the resources at its disposal, perhaps investors should embrace that mindset, too.  

Read more: 

• MORGAN STANLEY: The stock market is entering a new phase of a playbook that's thrived in past recessions. Here's how to tweak your portfolio to take advantage.

• Baillie Gifford cashed in on Amazon and Tesla before the vast majority of investors. A 33-year partner at the firm breaks down a risk that scares him more than the pandemic — and details 3 stocks he's buying for the new era.

SEE ALSO: Renowned strategist Tom Lee nailed the market's 40% surge from its worst-ever crash. Here are 17 clobbered stocks he recommends for superior returns as the recovery gains steam.

Join the conversation about this story »

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• Warren Buffett loaned about $300 million to Harley-Davidson during the financial crisis.
• "It was the bridge we needed to get us through a rough time," the motorcycle maker's finance chief said in 2014.
• Buffett's Berkshire Hathaway probably netted about $150 million in profit from the five-year loan, but could have made more than $1 billion if it had invested $300 million in Harley-Davidson stock over the same period.
• "I knew enough to lend them money; I didn't know enough to buy the equity," Buffett later explained.
• Visit Business Insider's homepage for more stories.

  ---

Warren Buffett loaned a little over $300 million to Harley-Davidson in February 2009, when the famous motorcycle maker was reeling from a one-two punch of weaker demand and a cash crunch during the financial crisis.

A few weeks earlier, Harley-Davidson unveiled a three-part plan to weather the downturn: invest in its brand, cut costs, and find the money to cover its financing division's roughly $1 billion in yearly costs.

The first two elements translated into targeting younger and more diverse riders; closing plants, combining operations, and outsourcing some distribution; and laying off about 1,100 employees or about 12% of its workforce.

However, paralyzed credit markets made it tricky to fulfill the third part of the plan. The company ultimately decided to borrow from its largest shareholder, Davis Selected Advisers, as well as Buffett's Berkshire Hathaway.

The pair effectively loaned it a combined $600 million for five years at a hefty 15% annual interest rate.

"It was the bridge we needed to get us through a rough time," Harley-Davidson's finance chief, John Olin, told Fortune magazine in 2014.

The group needed the cash to continue offering financing to motorcycle dealerships and retail customers, and to keep its production lines humming, Olin continued.

The high-interest loan was its only option to borrow money without giving up a stake in the company, he added.

Read more:Bernstein says buy these 7 stocks that are unfairly beaten-down and built for explosive gains in the future

'I knew enough to lend them money'

Buffett struck a bunch of similar deals during the crisis. For example, he invested $5 billion in Goldman Sachs and $3 billion in General Electric in the fall of 2008.

"Credit remained virtually nonexistent," Alice Schroeder said about that period in "The Snowball: Warren Buffett and the Business of Life."

"Buffett lent at interest rates that in some instances bordered on usurious."

The famed investor also showed his ruthlessness by refusing Harley-Davidson's request to repay its loan early. Berkshire said it was happy with the agreed terms, the company told Fortune.

Buffett likely netted a healthy $150 million in profit from the loan. However, he could have raked in upwards of $1 billion by investing the $300 million in Harley-Davidson stock instead, as its shares more than quadrupled in value between 2009 and 2014.

A shareholder asked Buffett why he opted for debt instead of equity during Berkshire's annual meeting in 2010.

"I knew enough to lend them money; I didn't know enough to buy the equity," the investor replied.

"I kind of like a business where your customers tattoo your name on their chest," he continued. "But figuring out the economic value of that ... I'm not sure even going out and questioning those guys I'd learn much from them."

Buffett made the loan because he was confident at the time that "a) Harley-Davidson was not going out of business, and that b) 15% was going to look pretty damned attractive."

Read more:The recent stock-market crash and the Great Depression of 1929 share an unnerving similarity that suggests the recovery will be more painful than many investors expect

Keeping it simple

Berkshire made "very good money" by making a simple judgement that the company wouldn't go broke and lending it money, Buffett said at the meeting.

Buying its stock would pose tougher questions such as whether the motorcycle market would shrink or Harley-Davidson's margins would suffer from the downturn, he added.

Crisis deals such as the Harley-Davidson loan also showed how Berkshire policy of keeping some cash in the bank and never going all in on stocks can pay off handsomely, Buffett argued.

"We felt very good about where that philosophy left us," he said. "We actually could do things at a time when most people were paralyzed, and we'll keep running it that way."

Read more:Renowned strategist Tom Lee nailed the market's 40% surge from its worst-ever crash. Here are 17 clobbered stocks he recommends for superior returns as the recovery gains steam.

Join the conversation about this story »

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• Barstool Sports founder David Portnoy has made waves in recent weeks for his rambunctious day-trading and encouragement of similar risk-loving investors. 
• Yet Portnoy's actions point to a severe dislocation between stock prices and economic reality that risks a return to bearish territory, according to Peter Cecchini, the former global chief market strategist at Cantor Fitzgerald.
• Government stimulus checks accelerated the growth of casual retail investing with discount brokerages like Robinhood, Cecchini said.
• Combine the influx of "found money" with relief from the Federal Reserve and Congress, and the market rally rests on "an unholy speculative mix," Cecchini wrote in a Friday LinkedIn post.
• Visit the Business Insider homepage for more stories.

When the S&P 500 turned positive year-to-date in the final minutes of Monday's session, experts were already warning of an overextended rally.

This was before Barstool Sports' flippant founder Dave Portnoy began pulling his 1.5 million Twitter followers into the market with videos touting hefty gains and unrivaled bullishness. While the media giant notes in his "Davey Day Trader Global" videos that he isn't a financial advisor, he frequently espouses the naively optimistic mantra that "stocks only go up."

Not all observers share his positivity, and some are pointing to it as a perfect symbol for how dislocated equity prices are from the greater economy. Peter Cecchini, former global chief market strategist at Cantor Fitzgerald, deems the phenomenon the "Portnoy Top."

"His attention-getting, wild style is emblematic of just how emotional and extreme equity markets are now," Cecchini said in a LinkedIn post on Friday. "It's both impulsive and compulsive. His behavior really just explains everything."

The strategist pointed to a specific tweet to introduce his hypothesis. On Tuesday, Portnoy uploaded a video claiming he "killed" legendary investor Warren Buffett with his recent day-trading success.

"I'm sure Warren Buffett is a great guy but when it comes to stocks he's washed up. I'm the captain now," he wrote.

Read more:Bernstein says buy these 7 stocks that are unfairly beaten-down and built for explosive gains in the future

By Thursday's close, equities had fallen the most since March and dragged the S&P 500 back to a year-to-date loss. Portnoy characterized the session as a "bloodbath," but returned to cheering on wins come Friday morning.

Portnoy's legion of energetic retail investors existed well before his trading streams began in March. The trend emerged last year, Cecchini said, when popularity in zero-fee brokerage accounts soared. Anyone with a smartphone, funds, and interest in the stock market was able to join a flood of speculative bets fueled by hype over fundamentals.

The movement grew more important once the coronavirus pandemic began. Government relief checks created a "never-before-seen dynamic," Cecchini said, noting that the swaths of "found money" drove an influx of capital from casual traders. That new financial ammunition was soon met with trillions of dollars in economic relief from the Federal Reserve and Congress.

"When combined with easy access to markets through platforms like Robinhood, it's an unholy speculative mix," Cecchini said.

Read more:The recent stock-market crash and the Great Depression of 1929 share an unnerving similarity that suggests the recovery will be more painful than many investors expect

Risk-taking activity compounded, and as institutional and retail investors alike rushed back to stocks, prices rapidly recovered. For roughly two months, it seemed as though Portnoy was right in claiming "stocks only go up."

As outspoken as Portnoy is, Cecchini sees him as a symptom of the risk-on zeitgeist. Congress and the Federal Reserve plunged investors into "an unbreakable cycle of addiction to not only monetary policy but also fiscal policy," he said. Portnoy's limitless confidence isn't a call to action, but a warning of the correction to come, Cecchini added. 

"This may be the reason why David Portnoy just thinks stocks go up and up ... can he really be serious?" the strategist said. "It's not about him; it's about what the rants represent."

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

Renowned strategist Tom Lee nailed the market's 40% surge from its worst-ever crash. Here are 17 clobbered stocks he recommends for superior returns as the recovery gains steam.

Hertz spikes 68% after revealing plan to sell up to $1 billion in stock that could 'ultimately be worthless'

Former Citigroup CEO touts Morgan Stanley, Charles Schwab as 'really very good buys' for a financial-sector rebound

Join the conversation about this story »

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• This is a preview of The Rise of Banking-as-a-Service research report from Business Insider Intelligence.
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Fintechs are encroaching on incumbents' share in the banking game, forcing them to explore new business models — but tech-savvy legacy banks can treat this as an opportunity rather than a threat by moving into the Banking-as-a-Service (BaaS) space.

BaaS platforms enable fintechs and other third parties to connect with banks' systems via APIs to build banking offerings on top of the providers' regulated infrastructure. This means banks that launch BaaS platforms can actually benefit from fintechs entering the finance space, as it turns fintechs into customers rather than just competitors. Other benefits from launching a BaaS platform include being able to monetize such platforms, establishing strong relationships with fintechs, getting ahead of the curve in terms of open banking, and accumulating additional data from third parties.

In TheRise of Banking-as-a-Service, Business Insider Intelligence looks at the benefits banks stand to gain by offering BaaS platforms, discusses key players in the industry that have already successfully launched BaaS platforms, and recommends strategies for FIs looking to move into BaaS.

The companies mentioned in this report are: BBVA, Clearbank, 11:FS Foundry, Starling.

Here are some key takeaways from the report:

• Offering BaaS also allows banks to unlock the opportunity presented by open banking, which is becoming a vital part of the financial services industry.
• There are two key types of players — BaaS-focused fintechs and BaaS providers with a retail banking arm — that banks will need to learn from and compete against in the BaaS space.
• Banks that have embraced digital will have an easier time ensuring that their infrastructure and systems are suitable for third parties.
• It's vital for incumbents to accurately assess third-party needs to create an in-demand portfolio of white-label BaaS products.

 In full, the report:

• Outlines what BaaS is and how it relates to open banking. 
• Highlights the benefits of launching a BaaS platform, including two different monetization strategies.
• Explains what BaaS players are currently doing in the space, and outlines the services they offer.
• Discusses what incumbent players can do in order to launch their own successful BaaS platform.

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The coronavirus pandemic has sparked a public health crisis, the effects of which are now rippling throughout the global economy.

Cities have been shut down, travel is limited, and major central banks have begun to intervene in financial markets at levels unseen since the 2008 recession.

To find out how industry leaders think COVID-19 and related containment efforts will impact their companies and the economy as a whole, we surveyed executive decision makers from around the world.

Simply enter your email for a FREE download of our executive survey results.

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Sweeping global regulations, the growing penetration of digital devices, and a slew of investor interest are catapulting the fintech industry to new highs.

Of the many emerging technologies poised to transform financial services, two of the most promising and mature are artificial intelligence (AI) and blockchain.

74% of banking executives believe AI will transform their industry completely, and 46% of global financial services employees expect blockchain to improve transparency and data management.

In The Future of Fintech: AI & Blockchain slide deck, Business Insider Intelligence explores the opportunities and hurdles of adopting the two technologies within financial services.

This exclusive slide deck can be yours for FREE today.

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