• According to an annual survey by Wall Street intelligence firm Greenwich Associates, asset management compensation increased by 7% from 2016 to 2017.
• Despite this, 2018 is likely to be a tough year for managers thanks to the rise of passive investing and high technology costs.

Life was good for Wall Street asset managers in 2017.

According to an annual report by intelligence firm Greenwich Associates, average compensation for asset managers in the United States is set to increase 7% from 2016 to this year. In aggregate, pay is likely to be higher for managers in equities as opposed to fixed income, in a split that's expected to be wider than previous years.

But the gains might be short lived.

The firm warns that "these heady days are likely an Indian Summer" and that "winter may be coming, so asset management firms and professionals should prepare."

As investors shift money out of actively managed portfolios and into lower-cost passive products, like indexes and ETF’s, inflows have taken a hit.

“For most active managers, increases in AUM over the past 12 months have been caused by asset appreciation—not growth in new assets," says the report. "The industry is shifting towards a structure which rewards managers based on performance, rather than fixed fees that are paid by clients regardless of return.

"Employees will feel that pressure in several ways, including reductions in incentives and the “juniorization” of jobs that depress salaries and overall compensation for internal roles. At the same time, professionals will also be asked to do more, meaning they will be covering more clients, sectors, etc."

Not surprisingly, technology and data were two bright spots in the report, fueled by increased spending on cost-saving solutions.

"In the technology space, business efficiency, security and the desire to improve the customer experience are driving demand," said the report. 

“The boom in quantitative products and continued strong demand from hedge funds has created a buyers’ market for experienced programmers and data scientists. In both areas, the fact that asset managers are being forced to compete for talent against companies across financial services, technology and virtually all other industries is putting upward pressure on compensation."

SEE ALSO: One of the top recruitment firms on Wall Street just published its annual compensation guide for traders — and it's not pretty

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NOW WATCH: The CIO of a crypto hedge fund explains the value in cryptocurrency — and why the market will explode over the next 2 years

• President Donald Trump loves to take credit for the relentless rally in stocks that took on fresh momentum in 2017.
• A Council on Foreign Relations analysis uses international stock comparisons to show US markets have been riding the coattails of stronger global growth.
• Interest in equities from other rich nations has been nearly as strong during the rally, suggesting US policies have little to do with the market's strength.

President Donald Trump tends to get really excited about a rallying stock market, neglecting that most of the benefits from rising share prices accrue to the richest Americans.

He also loves to take credit for the run-up in equities that, while having preceded him, took on new momentum in 2017. Unfortunately for him, not only do presidents generally have little control over the direction of financial markets, but there is a particular reason not to ascribe the recent record-breaking surge in stock prices to this administration.

My colleague Joe Ciolli has analyzed Trump's stock market claims extensively, finding that "while there have been times this year when the so-called Trump trade— or the promise of business-friendly policies — has undoubtedly been responsible for the gains, there have also been long stretches when other factors were driving returns."

Now a new analysis from the Council on Foreign Relations takes a different approach to dissecting Trump's stock market claims — but comes to a remarkably similar conclusion.

"The S&P 500 index is up 28%," a CFR economist, Benn Steil, and analyst, Benjamin Della Rocca, write in Foreign Affairs. "But is the president right to credit himself? A wider and closer look at the numbers shows he is not."

"With the exceptions of a post-election bump, subsequently reversed, and the recent boost from Republican tax cut legislation, which the president has merely cheerled from the sidelines, the markets have done no more than reward US stocks for riding the coattails of global growth," they argue.

To be clear, US markets have outperformed many of their rich-country peers. The Dow Jones industrial average has jumped 23% this year, while Germany's DAX, for instance, has put in a solid but less impressive 15%. It is overseas growth, however, including in Europe and in China, that has shown surprising strength this year, underpinning equities globally.

But Steil and Della Rocca try to "extract the market's expectations of earnings prospects around the world" to gauge "to what degree the US market actually stands out."

The results suggest the "Trump effect" on stock prices was "precisely nil: the U.S. market under Trump had done no better than its peers abroad."

As the chart below shows, investors were just as keen to buy Canadian, European, and Japanese stocks, "even though the policy agendas under which those companies operate are very different from those in the United States."

SEE ALSO: Trump just took credit for stock-market records once again — so we graded his claims

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NOW WATCH: The Fed is trying to prepare for the next recession without causing it

There's one stand-out feature of "Star Wars: Battlefront II:" It's ridiculously gorgeous.

The new game, which is available for Microsoft's Xbox One, Sony's PlayStation 4, and Windows PCs, is full of lovingly detailed scenes like the one above. It's visually stunning throughout, from its brief single-player campaign to its large-scale online multiplayer mode. 

Unfortunately, that's about the only good thing about "Battlefront 2."

SEE ALSO: The new 'Star Wars' game is embroiled in controversy, and fans are furious — here's what's going on

WARNING: Spoilers ahead!

This review will include important details about "Star Wars Battlefront II's" story and gameplay. So, if you don't want to see or read any spoilers, turn back!

Review note: I played a review copy of "Battlefront II" provided by game publisher Electronic Arts on a PlayStation 4 Pro in 4K resolution.

"Battlefront II" is a middling first-person shooter game wrapped in expensive clothing.

The first few times I shot a gun in "Battlefront II," it was cool. It made the characteristic "Star Wars" gun noise. The corresponding stormtrooper or Rebel soldier reacted accordingly. 

The thousands of times after that were far less satisfying.

That's because the act of shooting in "Battlefront II" is terribly boring. There just aren’t a lot of weapons to choose from, and the game doesn’t allow you to customize the ones it does include in the single-player campaign.

What's more, there's an almost carnival game-like feeling to shooting weapons in "Battlefront II." For one thing, it generally doesn't seem to matter where you hit your enemies. For another, those enemies repeatedly tend to come out of obvious "monster closets," areas of the game that open to release bad guys when you when you trip a particular trigger.

Worse than all that, though, is the enemy encounters aren't particularly exciting. The game has only a limited number of different types of enemies, and they aren't very smart. That may be an intentional reflection of how the movies portray stormtroopers. But even if it is, it's just not very fun.

The single-player story is a mess, even by video game standards.

Compared with the original "Battlefront," "Battlefront II" has one big new feature: a single-player story mode.

The story focuses on Iden Versio, an Imperial Special Forces officer. In its pre-launch marketing of the game, Electronic Arts, "Battlefront II's publisher," has been billing Versio as a loyal member of the Bad Guys. 

Versio's story begins when she sees the second Death Star explode, as depicted in "Star Wars Episode VI: Return of the Jedi." That sends her on a mission of revenge — or so we're led to believe, anyway. What actually happens is she soon realizes she's fighting for the wrong side and abruptly changes her allegiances.

The problem is that her about-face is literally unbelievable. We're supposed to just swallow the idea that even though Versio is an elite-forces commander whose father reported directly to the leaders of the Imperial Army, she didn't realize she was fighting for the Bad Guys until after the fall of the Empire.  

Versio's abrupt switch might have been OK if it had been handled well. But it's not. Instead, her "turning point" moment is so poorly executed it's impossible to believe. One minute she's blindly following orders, and the next minute she's turning on long-time colleagues and murdering dozens of former comrades. 

It's the kind of deus ex machina nonsense that video games are notorious for, but how it's handled in "Battlefront 2" is among the worst cases I've seen.

• Twitter shares are up after JPMorgan upgraded the company and called it a top idea for 2018.
• New product improvements could bring a lot of new users and advertisers to the platform.
• The company also said it will start acting on its previously announced rules banning hate speech on Monday.
• Watch the stock trade in real time here.

Shares of Twitter are up 7.31% to $24.01 after an upgrade from JPMorgan and saying it will begin enforcing its rules aimed at reducing hateful and abusive speech.

On Monday, JPMorgan upgraded Twitter to overweight, calling it one of the bank's best ideas for 2018.

"We believe both the Twitter story and financial results will strengthen over the next year as the company continues to build on its differentiated value proposition for users and returns to revenue growth," Doug Anmuth, an analyst at JPMorgan, said in a note to clients.

Anmuth said that the negative drumbeat around Twitter could start to change in the coming new year. The company is improving its product, growing users and ad revenue, and should become GAAP profitable in 2018, according to Anmuth. 

Twitter has started to make good on its promise to clean up its platform. On Monday, the company said it will begin taking action against users that promote or glorify violence on or off the platform. Offending tweets will be removed, and multiple violations will result in a permanent ban, according to Twitter.

Twitter has faced harsh criticism in the past from its users from not taking action against hateful accounts. After releasing new features that haven't combated hate speech, users often criticize the company for not working to "ban nazis." The new rule enforcement includes a loophole for members of the military or government, which means US President Trump would not be subject to the rules.

Twitter has also implemented a new way of tweeting threaded tweets and a longer character count recently. Anmuth says these, and other product announcements will help accelerate user and advertising growth on the platform.

JPMorgan has a $27 price target on Twitter, which is about 12.5% higher than the company's current price. Anmuth's earnings estimate for 2018 is about 15% higher than Wall Street's consensus.   

Twitter is up 45.13% after Monday's move.

Click here to read about the top research analysts on Wall Street.

SEE ALSO: Introducing Wall Street's Rising Stars of Equity Research age 35 and under

Join the conversation about this story »

NOW WATCH: This is why you should be buying gold

• Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, explains his third dissent against interest-rate hikes this year, citing weak labor-force participation and low inflation.
• Kashkari worries the Fed's interest-rate hikes are actively contributing to a decline in US inflation expectations that could make the central bank's job harder in the next downturn.
• "The job market is not as tight as the 4.1% unemployment rate suggests," Kashkari writes in a blog explaining his dissent.

For many Federal Reserve officials, the lack of wage growth in a labor market that has improved steadily and brought the unemployment rate to a historically low 4.1% remains a mystery.

Not so much for Neel Kashkari, the president of the Minneapolis Fed who has dissented against all three of the Fed's interest-rate increases this year, including last week's rise to a range of 1.25% to 1.50%.

"Why aren't wages picking up?" Kashkari wrote in a blog post explaining his latest dissent. "In my view, the two most likely explanations are that the job market is not as tight as the 4.1% unemployment rate suggests and that people's expectations for future inflation have fallen, which can become self-fulfilling."

Kashkari says low labor-force participation and other underlying pockets of weakness are still leaving workers in too precarious a situation to bargain for higher wages.

"One measure of the labor force — the participation rate for workers between 25 and 54 years old, typically called 'prime age' — suggests that there could be more than a million workers still on the sidelines," Kashkari said.

"We don't know how many will return, but with wage growth still well below its precrisis pace, it's easy to argue that we might not really be at full employment," he said. "If wage growth climbs, I expect to see more people come into the labor force."

Kashkari is similarly concerned about low inflation and inflation expectations, which he fears points to the same kind of underlying weakness he sees in the labor market.

"People's beliefs about future inflation are enormously important to where inflation is actually headed," he added. "If workers believe inflation will be low in the future, they demand smaller wage increases from their employers."

US inflation has been below the Fed's 2% target for most of this economic recovery, despite seven years of zero interest rates and several rounds of bond purchases aimed at stimulating economic growth. Wage growth has also lagged, with average hourly earnings climbing a modest 2.5% in the year to November.

"While high inflation is clearly bad for society, excessively low inflation can limit the Fed's ability to respond to future recessions, potentially making them longer and more damaging," Kashkari said. "Market-based measures suggest that US inflation expectations have fallen well below precrisis levels."

Kashkari remains skeptical of the argument made by some of his colleagues that a recent decline in inflation is temporary.

"We don't know that for certain, and the longer it persists, the more tenuous the transitory factors story becomes," he said.

SEE ALSO: Something doesn't add up in Janet Yellen promise of higher wages

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NOW WATCH: Why bitcoin checks all the boxes of a bubble

Bitcoin hit a record high of nearly $18,000 per coin on Friday, December 15.

Two years ago, the idea of buying the virtual currency even at that price was laughable. After a rapid rise in value in 2013, the cryptocurrency's value more than halved by mid-2015.

At its lowest point, one bitcoin was equal to about $230.

Given the currency's covert nature, the average person still may not understand how buying and selling actually works.

Using the app Coinbase, which lets anyone trade bitcoins for a small fee, we decided to find out.

A brief warning: If you're going to do this, tell your bank you're about to buy bitcoin. More on that later.

And to read more about blockchain, the technology powering bitcoin, click here.

SEE ALSO: Bitcoin is trying to make a comeback

This is what the Coinbase app looks like on an iPhone.

When you first open the app, you're presented with the latest price of bitcoin and its change within a certain period. You can see in the chart below how wild the latest moves have been. (We bought the bitcoin in January 2017.)

I happen to be one of the many who have never traded bitcoin before. There's a certain level of wariness in buying into the cryptocurrency world.

Welcome to Finance Insider, Business Insider's summary of the top stories of the past 24 hours. Sign up here to get the best of Business Insider delivered direct to your inbox.

Every day, an army of Wall Street stock analysts issue target prices, stock predictions and forecasts for many of the thousands of publicly traded companies.

We scoured our contacts for the best and brightest of these analysts, receiving recommendations from bosses, colleagues, investors and recruiters. The editors made final decisions. To be eligible, the rising stars had to be aged 35-years-old or younger as of December 1, and involved in sell-side equity research at a Wall Street firm, as well as be distinguished in some way from the pack.

You can read Business Insider’s list of the top young Wall Street stars of equity research here. 

You can read what they had to say about the markets here. 

In finance news, the hedge fund world is talking about a huge new fund from the former investment chief at Viking Global. And in deal news, Campbell and Hershey both announced billion-dollar acquisitions of snack makers.

We've launched Crypto Insider, a roundup of all the bitcoin and cryptocurrency news you need to know today. Sign up here to get the email delivered direct to your inbox.

In markets news: 

• GOLDMAN SACHS: Here's how to make a killing in a market that's barely moving
• Here's what 12 Wall Street pros are predicting for the stock market in 2018
• There's an easy way to show the stock market rally has little to do with Trump
• Bitcoin's wild volatility could soon start shaping other markets
• Bitcoin falls after CME Group launches bitcoin futures
• JPMORGAN: Twitter is one of our top ideas for 2018
• Warren Buffett's Berkshire Hathaway tops $300,000 a share for the first time
• CSX CEO dies after taking unexpected medical leave

Lastly, we talked to Nobel Prize-winning economist Paul Krugman about tax reform, Trump, and bitcoin

Join the conversation about this story »

NOW WATCH: The 5 issues to consider before trading bitcoin futures

• The final version of the Republican tax bill includes a change that would allow real estate investors to get a tax break.
• The change, according to reports, would likely benefit President Donald Trump and GOP Sen. Bob Corker.
• Corker denied that he flipped from a "no" on the tax bill to a "yes" because of the change.

Republicans revealed the final version of their massive tax bill on Friday, and a last-minute adjustment appears to have made it easier for some real estate investors to take a huge tax break.

The change would allow owners of business that hold certain types of depreciable assets, such as real estate, to receive a significant deduction on their profits.

The provision would also likely benefit President Donald Trump and Sen. Bob Corker, who has investments in real estate and flipped his vote to a "yes" on the tax bill Friday.

The deduction

The deduction is a change to the tax treatment of so-called pass-through businesses. Pass-throughs are businesses in which the owner books the company's profits as their personal income, like a limited liability corporation or a sole proprietorship.

In the final version of the bill, named the Tax Cuts and Jobs Act (TCJA), the owners of these businesses would get a 20% deduction on qualified income from the pass-through. The provision does have some guardrails that are designed to prevent owners of businesses like hedge funds from taking the deduction, and Republicans painted the provision as a way for small business owners to get a benefit.

In the Senate's version of the deduction, owners of wealthier businesses with only a few employees were limited from getting the deduction, but the new bill changes that. Owners of large pass-throughs can now deduct 25% of the wages they pay to employees plus 2.5% of the purchase price of their depreciable assets.

Some real estate is considered a depreciable asset in tax treatment, despite market prices that can fluctuate over time. This means that owners of large real estate-focused pass-throughs would be able to get access to more of the deduction than in the previous versions of the TCJA.

Trump and Corker could benefit

A large chunk of Trump's income is made though a series of LLCs and other pass-through entities that control his various properties.

While the original bill might have limited the amount that the president was able to deduct, the new provisions appear to open a method for him to claim the new deduction. It is unclear exactly how much Trump would save, since the president bucked decades of tradition and did not release hs tax returns.

Another beneficiary, according to the International Business Times and since confirmed by other outlets, would be Corker. According to the report, financial disclosure records show that Corker has large stakes in real estate LLCs that could receive substantial benefits from the new deduction, though it is unclear just how much the benefit would be.

Corker was the only Republican senator to vote no on the initial TCJA when it came to the Senate, but announced Friday that he would support the final version of the measure that was released by the conference committee.

The Tennessee Republican insisted over the weekend that he did not change his vote due to the new change, but sent a letter to Senate Finance Chairman Orrin Hatch to discern how the measure was inserted into the final bill.

Hatch slammed critics of the provision for calling it a kickback, saying the provision was added before Corker said he would change his vote.

"I am unaware of any attempt by you or your staff to contact anyone on the conference committee regarding this provision or any related policy matter," Hatch's letter said.

While the letter did not refute the idea that the change would benefit real estate investors, Hatch said that the provision was similar to a part of the House bill, so it was not dropped in out of the blue.

Senate Majority Whip John Cornyn, the second-highest ranking Republican, told ABC's "This Week" that the provision was added to "cobble together the votes we needed to get this bill passed."

The final TCJA is expected to be voted on by the House and Senate on Tuesday and Wednesday to fulfill GOP leaders' goal of getting the bill to Trump's desk before Christmas.

SEE ALSO: A key report shows the final GOP tax bill will boost the US economy — but it'll also fall well short of Republican promises

Join the conversation about this story »

NOW WATCH: Former White House photographer describes what is was like to capture Obama on the worst day of his presidency

Business Insider senior editor Josh Barro sits down with Paul Krugman, a Nobel Prize-winning economist and distinguished professor of economics at the City University of New York. Krugman doesn't attribute the recent run up in stocks to the GOP tax bill. He notes that stocks are up about the same amount all around the world, which is certainly not specific to Trump. In terms of the economy, he doesn't think Trump deserves credit for how strong it is, considering no actual policies have been put into place. He also mentions that the economy has been adding jobs at a steady rate for years now.

Join the conversation about this story »

• Longfin is a small import-export financier that was little known before buying Ziddu, a blockchain company specializing in business-to-business warehouse payments.
• Longfin shares skyrocketed 2,400% in a matter of days after buying Ziddu.
• Shares were up more than 500% on Monday before crashing off their highs. Longfin still trades up 240% on Monday. 
• Longfin is the most recent example in a long-running list of companies that explode after pivoting to cryptocurrencies or announcing a new focus on blockchain technology.

Subscribe to our Crypto Insider newsletter for the best of the blockchain every day.

SEE ALSO: Subscribe to our Crypto Insider newsletter for the best of the blockchain every day.

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NOW WATCH: THE BOTTOM LINE: Bitcoin mania, a Nobel Prize-winning economist talks Trump, and a deep dive on unstoppable tech stocks

Business Insider senior editor Josh Barro sits down with Paul Krugman, a Nobel Prize-winning economist and distinguished professor of economics at the City University of New York. Barro asks Krugman for his thoughts on Trump's threats with regards to global trade, including a withdrawal from NAFTA.

Krugman says something like that would be a huge issue, and points out that there's no such thing as American manufacturing — that it's more accurately described as North American manufacturing, considering how interconnected the US has become with Mexico and Canada. He says disrupting NAFTA would be very costly, and says that trade will be the way we can tell whether there's any Trump unorthodoxy left. From a labor perspective, Krugman says that immigrant workers aren't competing with US-born ones anymore, but rather other immigrants. 

Join the conversation about this story »

• Snap's stock was trading higher after a RBC survey revealed that it was the app of choice among teenagers, a core demographic.
• To see Snap's real-time stock price, click here. 

Snap's stock was up on Monday after a survey conducted by RBC Capital Markets found that its Snapchat app is still the darling of US teenage consumers.

Snapchat was the most popular app among teenagers from aged 13 to 18, with 79% of respondents claiming to have an account. Among the age cohort, 73% said they had an Instagram account and only 57% said they had a Facebook account.

The teenage cohort has become an important demographic among social media platforms because teenagers can provide a signal of future internet consumer trends. 

Snapchat was also the app of choice among teenagers when asked to pick only one social media network they could keep with them if they were stuck on a deserted island. The survey found that 44% of teenagers picked Snapchat, followed by Instagram with 24% and Facebook with 14%.

Though Snap has fallen out of favor with some investors this year—plummeting below $12 a share after its disastrous third-quarter earnings—it has since climbed back after some positive news from analysts. 

The company is trying out a new redesign of its app, which could draw in more users and boost user engagement, a Barclays analyst found. 

Snap's stock was up 1.75% at $16.03 per share on Monday. It's down 5.7% since its March initial public offering. 

To read more about how Snap's new look could change its fortunes for the better, click here.

SEE ALSO: BARCLAYS: Snap's redesign could be a turning point

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NOW WATCH: Why bitcoin checks all the boxes of a bubble

• The short seller Andrew Left's Citron Research has initiated a position against Riot Blockchain.
• Shares of Riot Blockchain have soared more than 375% since the company pivoted to blockchain technology from biotech in October.
• The shares are now shrugging off the news of Left's short position.

Shares of Riot Blockchain are shrugging off the news that the short seller Andrew Left Citron Research has initiated a position against the company. They're trading up 33.5%, near $38 apiece, on Monday.

Riot Blockchain has soared about 375% since the company announced in early October that it was pivoting toward buying cryptocurrency and blockchain businesses. It was previously named Bioptix and focused on making diagnostic machinery for the biotech industry.

"Full mania," Citron's Twitter account said on Monday. "No reason to short any stocks now that even have business while the market has given us stocks like $RIOT. Starting short position here. The bar for finding good shorts has been lowered."

Riot Blockchain is one of many companies that have seen a significant jump in market cap after announcing a pivot to the blockchain space. Over the past week, shares of LongFin Corp. soared as much as 2,400% after announcing it had purchased Ziddu, a blockchain company specializing in business-to-business warehouse payments.

Getting in on blockchain has been a hot trend as of late as companies look to capitalize on the booming cryptocurrency space. Over the weekend, CME Group launched bitcoin futures, sending the cryptocurrency to a record high of nearly $20,000 a coin.

In total, the cryptocurrency universe has a market cap of more than $600 billion, according to CoinMarketCap.com.

Join the conversation about this story »

NOW WATCH: PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was

Business Insider senior political correspondent Josh Barro sits down with Paul Krugman, a Nobel Prize-winning economist and distinguished professor of economics at the City University of New York. Krugman says that, overall, the tax bill won't have a pronounced negative effect on conditions in the US. He thinks that when the economy is near full employment, we should pay down debt and not run up additional obligations, but ultimately doesn't see any sort of crisis resulting from it.

Further, Krugman doesn't attribute the recent run up in stocks to the GOP tax bill. He notes that stocks are up about the same amount all around the world, which is certainly not specific to Trump.

Join the conversation about this story »

Stocks added to Friday's gains as the GOP tax plan continues to edge closer to President Donald Trump's desk. A report out Monday found the final bill to be "pro-growth" but not to the full effect that Republicans had promised. Lawmakers are expected to pass the final Tax Cuts and Jobs act on Wednesday. 

CME's bitcoin futures launched Sunday night, and the cryptocurrency shot to all-time highs before ultimately settling lower. CME's launch follows a similar launch by Cboe a week ago.

The Dow, S&P 500 and Nasdaq all posted gains on Monday. 

Here's the scoreboard:

• Dow: 24,799.20, +150.46, (+0.57%)
• S&P 500:2,690.56, +14.75, (+0.54%)
• Nasdaq: 6,993.38, +57.93, (+0.84%)
• US 10-year yield: 2.35%, +0.00
• WTI crude oil: $57.17, -0.19, (-0.33%)

1. Warren Buffett's Berkshire Hathaway tops $300,000 a share for the first time. This comes despite four straight quarters of lower operating profit.
2. GOLDMAN SACHS: Here's how to make a killing in a market that's barely moving. Goldman recommends investors look for stocks with high Sharpe ratios.
3. A Fed official who has been voting against rate hikes thinks he knows why wages aren't rising faster. Minneapolis Fed President Neel Kashkari worries the central bank's interest-rate hikes are actively contributing to a decline in US inflation expectations that could make its job harder in the next downturn.
4. Campbell Soup is buying snacks maker Snyder's-Lance for $4.87 billion. Campbell Soup has agreed to buy Snyder's-Lance for $50 a share in an all-cash deal.

Other Stories

Bitcoin falls after CME Group launches bitcoin futures

Citron Research gets short Riot Blockchain, says it's reached 'full mania'

A little-known import/export financier soared 2,400% after buying a blockchain technology — but now shares are crashing off their highs

SEE ALSO: A little-known import/export financier soared 2,400% after buying a blockchain technology — but now shares are crashing off their highs

Join the conversation about this story »

NOW WATCH: The Fed is trying to prepare for the next recession without causing it

In 2000, the Clay Mathematics Institute announced the Millennium Prize problems. These were a collection of seven of the most important math problems that remain unsolved.

Reflecting the importance of the problems, the Institute offered a $1 million prize to anyone who could provide a rigorous, peer-reviewed solution to any of the problems.

While one of the problems, the Poincare Conjecture, was famously solved in 2006 (with the mathematician who solved it, Grigori Perelman, equally famously turning down both the million dollar prize and the coveted Fields Medal), the other six problems remain unsolved.

Here are the six math problems so important that solving any one of them is worth $1 million.

SEE ALSO: Everything about the way we teach math is wrong

P vs NP

Some problems are easy, and some problems are hard. 

In the world of math and computer science, there are a lot of problems that we know how to program a computer to solve "quickly" — basic arithmetic, sorting a list, searching through a data table. These problems can be solved in "polynomial time," abbreviated as "P." It means the number of steps it takes to add two numbers, or to sort a list, grows manageably with the size of the numbers or the length of the list. 

But there’s another group of problems for which it’s easy to check whether or not a possible solution to the problem is correct, but we don’t know how to efficiently find a solution. Finding the prime factors of a large number is such a problem — if I have a list of possible factors, I can multiply them together and see if I get back my original number. But there is no known way to quickly find the factors of an arbitrary large number. Indeed, the security of the Internet relies on this fact. 

For historical and technical reasons, problems where we can quickly check a possible solution are said to be solvable in “nondeterministic polynomial time,” or “NP.” 

Any problem in P is automatically in NP — if I can solve a problem quickly, I can just as quickly check a possible solution simply by actually solving the problem and seeing if the answer matches my possible solution. The essence of the P vs NP question is whether or not the reverse is true: If I have an efficient way to check solutions to a problem, is there an efficient way to actually find those solutions?

Most mathematicians and computer scientists believe the answer is no. An algorithm that could solve NP problems in polynomial time would have mind-blowing implications throughout most of math, science, and technology, and those implications are so out-of-this-world that they suggest reason to doubt that this is possible. 

Of course, proving that no such algorithm exists is itself an incredibly daunting task. Being able to definitively make such a statement about these kinds of problems would likely require a much deeper understanding of the nature of information and computation than we currently have, and would almost certainly have profound and far-reaching consequences. 

Read the Clay Mathematics Institute's official description of P vs NP here.

The Navier-Stokes equations

It’s surprisingly difficult to explain what happens when you stir cream into your morning coffee. 

The Navier-Stokes equations are the fluid-dynamics version of Newton’s three laws of motion. They describe how the flow of a liquid or a gas will evolve under various conditions. Just as Newton's second law gives a description of how an object's velocity will change under the influence of an outside force, the Navier-Stokes equations describe how the speed of a fluid's flow will change under internal forces like pressure and viscosity, as well as outside forces like gravity.

The Navier-Stokes equations are a system of differential equations. Differential equations describe how a particular quantity changes over time, given some initial starting conditions, and they are useful in describing all sorts of physical systems. In the case of the Navier-Stokes equations, we start with some initial fluid flow, and the differential equations describe how that flow evolves.

Solving a differential equation means finding some mathematical formula to determine what your quantity of interest actually will be at any particular time, based on the equations that describe how the quantity changes. Many physical systems described by differential equations, like a vibrating guitar string, or the flow of heat from a hot object to a cold object, have well-known solutions of this type.

The Navier-Stokes equations, however, are harder. Mathematically, the tools used to solve other differential equations have not proven as useful here. Physically, fluids can exhibit chaotic and turbulent behavior: Smoke coming off a candle or cigarette tends to initially flow smoothly and predictably, but quickly devolves into unpredictable vortices and whorls.

It's possible that this kind of turbulent and chaotic behavior means that the Navier-Stokes equations can't actually be solved exactly in all cases. It might be possible to construct some idealized mathematical fluid that, following the equations, eventually becomes infinitely turbulent. 

Anyone who can construct a way to solve the Navier-Stokes equations in all cases, or show an example where the equations cannot be solved, would win the Millennium Prize for this problem.

Read the Clay Mathematics Institute's official description of the Navier-Stokes equations here.

Yang-Mills theory and the quantum mass gap

Math and physics have always had a mutually beneficial relationship. Developments in mathematics have often opened new approaches to physical theory, and new discoveries in physics spur deeper investigations into their underlying mathematical explanations.

Quantum mechanics has been, arguably, the most successful physical theory in history. Matter and energy behave very differently at the scale of atoms and subatomic particles, and one of the great achievements of the 20th century was developing a theoretical and experimental understanding of that behavior.

One of the major underpinnings of modern quantum mechanics is Yang-Mills theory, which describes the quantum behavior of electromagnetism and the weak and strong nuclear forces in terms of mathematical structures that arise in studying geometric symmetries. The predictions of Yang-Mills theory have been verified by countless experiments, and the theory is an important part of our understanding of how atoms are put together.

Despite that physical success, the theoretical mathematical underpinnings of the theory remain unclear. One particular problem of interest is the "mass gap," which requires that certain subatomic particles that are in some ways analogous to massless photons instead actually have a positive mass. The mass gap is an important part of why nuclear forces are extremely strong relative to electromagnetism and gravity, but have extremely short ranges.

The Millennium Prize problem, then, is to show a general mathematical theory behind the physical Yang-Mills theory, and to have a good mathematical explanation for the mass gap.

Read the Clay Mathematics Institute's official description of the Yang-Mills theory and mass gap problem here.

• The GOP tax bill separates owners from earners on Wall Street in a meaningful way.
• Many in the industry are worried about the cap on state and local tax deductions.
• That means the GOP is taking from a class of people that used to vote for them — the party should prepare for the consequences.

I'm not writing this to ask you to feel sorry for anyone, I'm just reporting the news here.

I have to say that because it's hard for most Americans to feel sorry for anyone on Wall Street. Since 2008, generally, the feeling is that the fiefdom of finance got off free, thanks to its influence in Washington. The bankers blew up the economy. We picked up the pieces.

Now, though, it seems that influence only extends to the richest among them. The GOP's tax bill will create two different Wall Streets — one of the worried wealthy, and another of the carefree, mobile Masters of the Universe. This bill will widen the separation between the rich and the filthy, tycoon-like, oligarch rich.

The worried wealthy is a class comprised of rich people trying to stay rich. These are the wage earners at banks and hedge funds and wealth management shops. This is the Wall Street that is worried about the all-but elimination of state and local (SALT) deductions.  This is a Wall Street where suddenly getting that second home on Long Island is looking like a mistake. Suddenly having a bunch of kids to send to private school is feeling like more of a burden.

And those kids must go to private school. And you must have that house on Long Island. It is ever so vital, after all, to keep up with the Jones' on Wall Street. It can be a large part of what makes the culture so toxic.

That is because keeping up means collecting money at breakneck speed. In 2015 the IRS data showed that in New York City — Wall Street's ancestral home and spiritual capital — deductions for state and local income taxes averaged more than $57,400 while deductions for property taxes averaged $14,400. So you can see how for some, a $10,000 deduction simply will not do. Not if they want to keep giving impressive checks to their favorite charities — if they want to stay on the board of this or that, and make sure their kids want for everything (and get it).

But don't worry, some people are still gods

And now for the other Wall Street. The one populated by the super rich — by people who can just get in their jets and fly away. They'll be getting much richer. These are Wall Street's owners — the hedge fund managers, the private equity titans, the executives who get paid eye-popping salaries.

This is the Wall Street where other worries are shrugged off as the elimination of the estate tax (at least up to $11 million) means a huge windfall for the next generation. It's where the best accountants can be hired to ensure that provisions for pass-through businesses can be fudged to their maximization. Which is to say, to maximize wealth for the wealthy.

One billionaire investor I spoke to said that his people, like the rest of us, are still trying to wrap their minds around how the pass-through provisions work. It's a lot of information and makes for slow-going, but he could tell me one thing for sure — "lots of loopholes, apparently."

On Friday, Josh Brown, CEO of New York City investment firm Ritholtz Wealth Management wrote about this growing inequality with a voice that would sound at home in the pages of Jacobin Magazine:

New York / New Jersey got f ——d on this tax bill they’re voting on Monday. No more state and local tax deduction above $10,000. 

Professionals and business owners also got f ——d. Accountants, lawyers, realtors, insurance agencies, doctors, investment advisors, etc with pass-through entities (LLCs, Partnerships) are EXCLUDED from the tax reduction that corporations will get.

In other words, retirees who merely own stocks and bonds will fare better than working people who run businesses. This is a bill that favors the idle rich over the actual job creators. It’s a payback for the donor class, not a fiscal stimulus.

You know who comes out ahead? Corporate CEOs, hedge funds/private equity and real estate moguls; The carried interest loophole remains undefeated.

Who could’ve seen that coming?

Ask your tax preparer next week. Sorry if you got conned.

Or, as Congressman Steve Israel (R-NY) put it in a column for Newsday, a Long Island paper [emphasis ours]:

Often, I’d bring my colleagues to Long Island to let them see for themselves. I took an Oregon congressman through Wyandanch; a California congressman through Huntington Station; a Georgia Republican to Cold Spring Harbor (OK, maybe that backfired). Their images of Long Island as one massive Hampton hedgerow were shattered. They saw that far from being a Gold Coast community raiding the federal treasury, Long Island taxpayers have been gypped by the federal government. Now we’ve been mugged by this tax bill.

Keep your delusion

You may think that Wall Street cheered this tax cut, and to a degree it did. What's good for corporate America, in theory, is good for stockholders.

But that doesn't mean it fully swallowed the Trump administration's tax delusions — not even when those delusions were spoon-fed to Wall Street by two of its own, Goldman Sachs alums Treasury Secretary Steve Mnuchin and White House adviser Gary Cohn.

In fact, Goldman projected that the tax plan will fall far short of the administration's growth expectations. 

"We have increased our estimate of the growth effects of the legislation slightly, to around 0.3pp in 2018 and 2019..." analysts wrote in a note to clients earlier this month. 

"On the corporate side, we disregard the temporary increase in tax payments in 2018 related to the tax on deemed repatriation; we do not estimate a growth effect from those repatriated profits, either," it continued.

After the Bush tax cuts in 2004 only one in five Americans felt like the cuts made a difference in their lives. The tax cuts didn't jump start the economy either. Repatriated profits had little impact. And finally wages didn't grow either. 

At least then, however, as my colleague Josh Barro pointed out, the GOP was much better at selling the idea that the tax cuts were for everyone.

"A key talking point the Bush administration used repeatedly to sell their tax plan was that it would 'reduce taxes on everyone who pays income taxes,'" Barro noted. 

That isn't the case this time around. Most of America hates this plan, and a few thousand dollars more for the middle class is unlikely to change that over the next few years. We forget too much, and the amount of money returned is too little. 

As for Wall Street, the GOP should watch out for this new class of worried wealthy. They used to be donors. They used to be bundlers. Many used to be supporters. And now the party will feel their wrath.

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• A new report from the Tax Policy Center showed that, on average, Americans at every income level will receive a tax cut from the GOP tax bill.
• The benefits will also be tilted towards the rich, according to the TPC analysis.
• Additionally, by 2025, 10.9% of middle-income tax filers could see an increase in their tax bill.

A new analysis of the GOP tax bill, released just 24 hours before a final vote is expected to take place on the bill in the House, showed that majority of the benefit from the plan would go to the wealthiest Americans.

The report from the nonpartisan Tax Policy Center (TPC) found that while Americans at all income levels would, on average, get a tax cut form the final version of the tax bill, the benefit would be skewed towards people at the upper range of income earners.

"In general, higher income households receive larger average tax cuts as a percent age of after-tax income, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution," TPC's report said.

The largest change would come at the end of the 10-year budget window for the bill, but most of the effects would be due to the expiration of individual tax brakes after 2025. Republican leaders have been confident that those tax breaks will be extended, but it is not guaranteed.

Here's a rundown of the benefits for different income groups in different years under the final version of the TCJA:

• 2018:
  • Bottom quintile (Incomes less than $25,000 a year): On average, this group would receive a tax break of $60, increasing after tax incomes by 0.4%. This would account for 1% of the federal tax change. 1.2% of tax units would see an increase in their tax burden, while 53.9% would receive a cut.
  • Middle quintile (Incomes from $49,000 to $86,000): On average, this group would receive a tax break of $930, increasing after-tax incomes by 2.9%. This would account for 11.2% of the federal tax change. 7.3% of tax units would see an increase in their tax burden, while 91.3% would receive a cut.
  • Top quintile (Income of $149,400 and above): On average, this group would receive a tax break of $7,640, increasing after-tax incomes by 1.6%. This would account for 65.3% of the federal tax change. 6.2% of tax units would see an increase in their tax burden, while 93.7% would receive a cut.
  • 95th to 99th percentiles (Incomes from $308,000 to $733,000): On average, this group would receive a tax break of $13,480, increasing after-tax incomes by 4.1%. This would account for 22.1% of the federal tax change. 9.3% of tax units would see an increase in their tax burden, while 90.7% would receive a cut.
• 2025:
  • Bottom quintile: On average, this group would receive a tax break of $70, increasing after-tax incomes by 0.4%. This would account for 1.3% of the federal tax change. 5.1% of tax units would see an increase in their tax burden, while 49.8% would receive a cut.
  • Middle quintile: On average, this group would receive a tax break of $910, increasing after-tax incomes by 1.3%. This would account for 11.4% of the federal tax change. 10.9% of tax units would see an increase in their tax burden, while 87.4% would receive a cut.
  • Top quintile: On average, this group would receive a tax break of $7,460, increasing after-tax incomes by 2.3%. This would account for 65.8% of the federal tax change. 13.1% of tax units would see an increase in their tax burden, while 86.8% would receive a cut.
  • 95th to 99th percentiles: On average, this group would receive a tax break of $12,860, increasing after-tax incomes by 3.2%. This would account for 21.6% of the federal tax change. 5.7% of tax units would see an increase in their tax burden, while 94.2% would receive a cut.
• 2027:
  • Bottom quintile: On average, this group would see a tax increase of $30, decreasing after-tax incomes by 0.1%. This would account for -4.6% of the federal tax change. 32.6% of tax units would see an increase in their tax burden, while 11.1% would receive a cut.
  • Middle quintile: On average, this group would see a tax increase of $20, decreasing after-tax incomes by less than 0.1%. This would account for -2.1% of the federal tax change. 69.7% of tax units would see an increase in their tax burden, while 24.4% would receive a cut.
  • Top quintile: On average, this group would receive a tax break of $1,260, increasing after-tax incomes by 0.4%. This would account for 107.3% of the federal tax change. 52.3% of tax units would see an increase in their tax burden, while 46.7% would receive a cut.
  • 95th to 99th percentiles: On average, this group would receive a tax break of $1,010, increasing after-tax incomes by 0.2%. This would account for 16.4% of the federal tax change. 41.5% of tax units would see an increase in their tax burden, while 58.0% would receive a cut.

The House is scheduled to vote on the TCJA on Tuesday and the Senate will take up the bill immediately after, meaning President Donald Trump could sign the measure into law as early as Wednesday.

SEE ALSO: A key report shows the final GOP tax bill boosting the US economy — but by well less than Republicans promised

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• President Donald Trump had a sharp focus on economics during his major national security speech on Monday.
• "For the first time, American strategy recognizes that economic security is national security," he said.

President Donald Trump spent a considerable amount of time talking about the US economy and economic policy in his major speech announcing his national security strategy on Monday.

While he also focused on many of his traditional national security talking points, such as clamping down on immigration, a consistent theme of the speech was that his economic priorities go hand-in-hand with his sense of what makes for strong national security policy.

Specifically, he targeted trade policy, emphasized the need for other nations to contribute more money for their defense, cited a booming stock market, and made mention of slashing domestic regulations, among other topics.

Criticizing past leadership, Trump said, "Our leaders in Washington negotiated disastrous trade deals that brought massive profits to many foreign nations, but sent thousands of American factories, and millions of American jobs, to those other countries."

"They put American energy under lock and key," he added. "They imposed punishing regulations and crippling taxes."

He boasted of withdrawing the US "from job-killing deals such as the Trans-Pacific Partnership and the very expensive and unfair Paris Climate Accord."

"And on our trip to Asia last month, I announced that we will no longer tolerate trading abuse," he said.

Trump went on to discuss how his administration was "liberating" the US economy, citing job growth numbers since his election last fall. He mentioned low unemployment and a consistently rising stock market, in addition to his slashing of regulations.

"As the world watches — and the world is indeed watching — we are days away from passing historic tax cuts for American families and businesses," he said. "It will be the biggest tax cut and tax reform in the history of our country. ... And we are seeing the response we fully expected. Economic growth has topped 3% for two quarters in a row. GDP growth, which is way ahead of schedule under my administration, will be one of America's truly greatest weapons."

Citing Russia and China as "rival powers," Trump said the nations "seek to challenge American ... wealth," which he said was increasing under the Trump administration.

"America is gaining wealth, leading to enhanced power — faster than anyone thought — with $6 trillion more in the stock market alone since the election — $6 trillion," he said.

Labeling it as the "second pillar" of his administration's national security strategy, Trump said he is focused on promoting "American prosperity."

"For the first time, American strategy recognizes that economic security is national security," he said. "Economic vitality, growth, and prosperity at home is absolutely necessary for American power and influence abroad. Any nation that trades away its prosperity for security will end up losing both."

That strategy, he said, "calls for cutting taxes and rolling back unnecessary regulations."

"It calls for trade based on the principles of fairness and reciprocity," he continued. "It calls for firm action against unfair trade practices and intellectual property theft. And it calls for new steps to protect our national security industrial and innovation base. The strategy proposes a complete rebuilding of American infrastructure — our roads, bridges, airports, waterways, and communications infrastructure. And it embraces a future of American energy dominance and self-sufficiency."

Treasury Secretary Steve Mnuchin said in a statement following Trump's speech that his department will implement Trump's "vision by leading freer growth policies in the international financial institutions and advancing fundamental principles of free, fair and reciprocal trade."

As a candidate and as president, Trump often promoted a much-criticized "America first" national security strategy that emphasizes the need to focus on the home front before foreign affairs.

Congress is expected to pass tax reform — which would be the only major legislative achievement of Trump's presidency so far — this week.

SEE ALSO: One of Trump's most vocal critics in the Senate has quickly turned into one of his best friends — and people are shocked

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• GOP Sens. Susan Collins and Mike Lee announced they would support the GOP tax bill.
• Despite the absence of Sen. John McCain due to complication from his cancer treatment, the bill should have enough votes to pass.
• A House vote is expected to take place on Tuesday with a Senate vote shortly afterwards.

Two Republican senators announced they would vote for the final GOP tax reform bill Monday, virtually guaranteeing the measure will pass the chamber.

Sen. Susan Collins, a moderate Republican from Maine, said on Monday during a floor speech that she will vote "yes" on the Republican tax bill after winning some concessions and promises from Republican leadership.

Sen. Mike Lee, a conservative, tweeted that he finished reading the more than 1,000 page bill and would support it when it comes to a vote.

"Just finished reading the final Tax Cuts and Jobs Act," Lee said. "It will cut taxes for working Utah families. I will proudly vote for it."

The decision by Collins and Lee appears to seal a victory on the bill, named the Tax Cuts and Jobs Act (TCJA), for Republicans, as the pair were two of the few members still on the fence about supporting it.

There was some concern that Republicans could fall short on the vote last week, but a change of heart by some members seems to have put the bill on track to pass.

Sen. Bob Corker, the only Republican to vote against the TCJA the first time it came to the Senate floor, said he would vote for the final bill on Friday. Sen. Marco Rubio also relented on Friday after changes were made to the child tax credit.

Republicans will be down a vote, due to the absence of Sen. John McCain for health issues, and Sen. Jeff Flake has yet to say whether he will vote for the bill. But even if Flake defects, that gives the GOP a 50 to 49 vote advantage.

Collins voted for the Senate iteration of the TCJA after she was assured that Congress would consider the bipartisan Alexander-Murray Obamacare stabilization bill and ensure that the Pay As You Go, or Paygo, law that would require mandatory Medicare cuts would be waived before those cuts could go into effect.

There has been no clear move by Congress to waive Paygo and prevent the cuts. Additionally, House Speaker Paul Ryan has not agreed to bring the Alexander-Murray bill for a vote on the House floor. Ryan did suggest that he was open to the idea.

The House is scheduled to take a vote on the final TCJA on Tuesday, with the Senate following either later that day or early Wednesday.

SEE ALSO: The GOP tax bill has a last-minute change that could be a huge win for Sen. Bob Corker and Donald Trump

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