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Wall Street Insider February 23

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While not as dramatic as #shoegate, I was shocked by takeaways from some recent housing data analyzed by BI’s Tanza Loudenback. Much has been written that millennials don’t want the “American dream” of their parents — a white picket fence and 2.5 kids in the suburbs. They’re putting off things like marriage and home ownership because they’re too burdened by student debt (not to mention they’ve spent all their money on avocado toast).

But in fact, the data doesn’t support this.

According to a new report from Realtor.com, millennials are taking over the mortgage market in the US. Home-loan data analyzed by Realtor.com show millennials — defined here as the generation aged 19 to 37 — have taken out a larger share of mortgages than Gen Xers or baby boomers in the US since early 2017.

Now, new data reveal millennials are responsible for the largest share (42%) of new mortgage loans by dollar volume, narrowly surpassing Generation X for the first time, and there are two clear reasons why. Millennials as a group are buying more homes than ever, and, individually, they’re making lower down payments despite rising home prices, which require larger mortgages.

Basically, millennials want to own homes. They’ve just taken longer than their parents’ generation to get there (individual Gen X buyers, to be sure, are still taking on the highest loan amounts).

To sum it up: Millennials aren’t that different than previous generations. They haven’t been shunning the idea of homeownership — they’ve just been broke and young until now, just like other generations were before they started buying homes. Now they are older and have more money. So they’re essentially doing the same thing generations did when they got more money and grew older.

There are also striking parallels between how millennials approach homebuying and their behavior with credit cards.

For years, banks assumed that young people didn’t want credit cards, and so they didn’t bother wasting marketing dollars on them. That is, until the hugely popular Chase Sapphire Reserve card came around with flexible dining and travel rewards. The truth wasn’t that millennials loathed credit cards…it was that they just didn’t have much interest in having products that were made and marketed for their parents shoved down their throat. It’s the same with homebuying. Millennials do want the American Dream…they just want it on their terms.

I’d love to hear from my readers. Please let me know if you have thoughts on any of our stories, tips to pass on, or general feedback.

To read most of the stories below, you can subscribe to Prime (or email me at ooran@businessinsider.com for a free trial).

Have a good weekend!

– Olivia


Bloomberg is diving into into the booming alternative data field with a new product that’ll help the market become mainstream

Alternative data is about to be normalized.

Bloomberg LP is the latest mainstream financial company to wade into the once-obscure alternative data field with a new product that will give clients access to data from more than 20 niche firms, report BI’s Bradley Saacks and Dan DeFrancesco.

The datasets will include stats on drug approvals, retail foot traffic tracked through cell phones, construction permits, and more.

As hedge-fund managers seek out ways to beat the market, they’re increasingly turning to alternative-data providers to identify trends before their competitors.

And as the data industry has grown, so have fears about a potential crackdown from regulators about hedge funds and other asset managers information that may have been obtained in an illegal way. Bloomberg’s portal, data companies say, allows them to get their information in front of some of the largest financial institutions in the world without the extended due diligence program typically required to onboard them.

READ MORE HERE>>

Digital Reasoning, a buzzy fintech valued at $270 million and backed by Goldman Sachs and Nasdaq, has lost its CEO and a handful of senior executives

The chief executive of Digital Reasoning, a fintech valued at hundreds of millions of dollars and backed some of the world’s largest banks, resigned earlier this month.

Brett Jackson stepped down as CEO of the AI software firm on February 7, less than two years after joining the company, Business Insider has learned. Jackson departure from the Franklin, Tenn.-based company that is reportedly valued at $270 million is the latest in a long-line of senior departures from the company, whose investors include Goldman Sachs, Credit Suisse, Barclays and Nasdaq, among others.

The company has also lost its head of North American sales, head of product, and its chief product officer in th last six months. Digital Reasoning’s director of global sales operations is also on her way out.

The recent departures were in part, the result of a culture clash between Jackson and Estes, who serves as president of the firm, sources told BI’s Dan DeFrancesco.

READ MORE HERE>>

JPMorgan is building a cloud engineering hub in Seattle minutes away from Amazon and Microsoft, and it’s planning to hire 50 staffers this year

Flickr/Horia Varlan

The cloud simply became too important for JPMorgan to ignore.

As the bank began to embrace cloud computing and the idea of housing information at dozens of disparate data centers rather than a few it tightly controlled, execs at the largest US bank knew it would face a growing demand for engineers who knew how to keep its data safe. The challenge? How to attract that talent.

Many of the best engineers in cloud security work for the largest cloud providers — Amazon Web Services, Microsoft’s Azure and Google Cloud — in Seattle, where there’s a thriving tech scene and a more laid back vibe than in New York. Recruiting those engineers and asking them to move to other locations on the buttoned-up East Coast might have been a tough sell.

So the bank decided to do the next best thing and go to them. Last year, the company began hiring engineers for a new cloud cybersecurity office in Seattle, housed with other JPMorgan employees at an office just blocks from such landmarks as Pike Place Market.

READ MORE HERE>>

Pimco and DoubleLine Capital are players in a tug-boat investment gone bad — and their struggles highlight the dark side of credit markets

Two of the world’s most savvy bond investors have seen an investment in the sometimes murky world of a niche fixed income market run aground.

Pimco and DoubleLine Capital are among the largest investors in a deal sold last May by a Seattle-based tug boat and barge company known as Harley Marine, reports BI’s Dakin Campbell. The investment has taken a hit after expenses rose faster than expected, according to people with knowledge of the deal. A legal spat over $2.6 million in alleged embezzled or misappropriated funds has contributed to the deal’s underperformance.

The deal has, for some, become a symbol of the “late cycle” froth that’s developed in parts of the bond market as investors grasp for yield in riskier securities. It’s a type of deal known as a whole business securitization, transactions that take entire companies and package them into bonds for sale to investors. It’s one subsector in a broader category known as the esoteric ABS market that has nearly doubled in the last four years.

READ MORE HERE>>

Pre-IPO companies like Uber and Airbnb could ‘test the waters’ with investors sooner under a new SEC proposal

Uber CEO Dara Khosrowshahi.
Michael Cohen/Getty Images

New rules proposed by federal regulators will let mega-startups like Uber and Airbnb seek early feedback about investor appetite for an initial public offering.

On Tuesday, the Securities and Exchange Commission proposed a new “test the water” reform which would allow all pre-IPO companies to consult with qualified institutional buyers before filing paperwork to go public, reports BI’s Becky Peterson.

These meetings give startups the chance to see if investors are actually interested in buying their stock before going through the work of filing with the SEC. And it helps institutional investors like Fidelity and T. Rowe Price the chance to see what’s coming up in the IPO pipeline while setting the tone on valuation and price.

READ MORE HERE>>

Quote of the week:

Wall Street move of the week:

A star trader and US head of equity derivatives just quit Bank of America Merrill Lynch after less than 2 years at the bank

In tech news:

In markets:

Other good stories from around the newsroom:



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