Satisfy the lady fighting Wall Street’s Flash Boys

Like lots of people on Wall Street and beyond, Sara Furber devoured Michael Lewis’s Flash Boys, the very best-selling book that contended high-speed traders had rigged the world’s greatest stock markets. Now, Furber continues to be given the job of showing that executives and investors want an alternate.

Lewis’s book told the storyplot of Kaira Katsuyama, who, while working at Royal Bank of Canada, spotted what he saw like a gigantic ripoff within the markets and generate a company, IEX, he wished would finish it.

This past year, he hired Furber, a 20-year Wall Street veteran and md at Morgan Stanley, to mind in the new stock exchange’s listing business – poaching business in the New You are able to Stock Market and Nasdaq, perhaps two of the most effective stock markets on the planet.

Sara Fuber. Sara Fuber. Photograph: Ali Cruz for that Protector

The greatest lesson she learned was more responsibility didn’t mean less freedom. “I assumed the greater-profile, more senior position I’d have, the less control I would need to manage the existence I needed outdoors of labor. Getting children, family balance.

“Looking back among the greatest things If only someone had explained is it’s inversely correlated. The greater-profile, more responsibility roles, the greater versatility you need to structure your existence how you want. You’ve better people on your side, you’ve more authority, you’re setting once the conferences are, exactly what the agenda is. That control is actually empowering.

“Nobody examines me for seeing a parent teacher conference,” she states. “I don’t believe that degree of autonomy exists at ‘abnormal’ amounts. Regardless if you are a guy or perhaps a lady.”

IEX has rent Wall Street. In 2014, a disagreement between Katsuyama and Bill O’Brien, then president from the Bats exchange, on CNBC introduced buying and selling to some dead stop because the IEX founder and Lewis contended investors appeared to be scammed. “I believe the financial markets are rigged i think you’re area of the rigging,” Katsuyama told O’Brien. Katsuyama (and Lewis) were responsible for “falsely accusing literally lots of people and perhaps scaring countless investors in order to promote a company model”, stated O’Brien.

A lot of the disagreement focuses on the necessity – or otherwise – for that new exchange’s most well-known claim that they can fame: a 38-mile coiled cable designed like a “speed bump” to slow lower our prime-speed transactions that now dominate buying and selling. The cable is made to stop high-frequency traders (HFTs) utilizing their algorithms to trade interior and exterior shares at speeds that permit them to benefit from slower investors – frequently individuals searching to create a lengthy-term bet on the company’s fundamental worth.

If you’re IEX or its supporters this really is tantamount to scalping. IEX’s critics charge it is only how efficient markets be employed in digital age. In either case, it’s all very complicated. And that’s the issue, states Furber. Financial complexity isn’t just an excessive amount of for ordinary investors, it is also an excessive amount of for individuals on Wall Street.

Furber ran investor relations at Merrill Lynch throughout the credit crisis. “One of what formed my view incredibly was there were many people in those days saying: ‘You just don’t comprehend the risk, it’s very complex.’ Like a smart, educated person, when individuals create lots of complexity and opaqueness, we must trust our gut. Should you can’t explain it, there’s something fair about our feeling of unease. What we should are attempting to do is create more transparency and ease because that produces better trust.”

Whomever you accept, Wall Street does have trouble. During the last decade the amount of listed companies in america has halved and the amount of companies doing initial public choices (IPOs) can also be in freefall, lower from about 300 annually within the 1990s to around 100 annually. Big the likes of Albertsons, Bloomberg, Koch Industries are remaining private. A brand new generation of tech giants, Airbnb, Pinterest, Lyft and Uber, are remaining private for extended.

Area of the desire not to join the stock markets happens because the present exchanges appear interested in earning money for traders than helping lengthy-term investors maximise their returns or companies raise money, states Furber.

“The market structure we’ve today has changed during the last ten to fifteen many it’s being optimised for various participants than companies and investors,” she states. “It doesn’t mean everything doesn’t work with them,” she states, but you will find “pain points”.

New york stock exchange and Nasdaq sell tiers of information and greater-speed services to traders who are able to use that benefit to make quick returns which are unavailable to individuals that do not repay. IEX won’t do this.

“Everyone states they’re great in clients service if your business design operates in a manner that doesn’t advantage them, I’d question that,” she states. On the top of there are a lot of charges and rebates that IEX will eliminate that they argues create “financial incentives that aren’t aligning the broker constantly using their client”.

But dealing with the incumbent forces won’t be easy. Nasdaq and New york stock exchange dominate the listings market – IEX has in regards to a 2% share of the market of buying and selling in US equities. The 2 exchanges have fought against hard against allowing IEX to get an exchange and it is speed bump, quarrelling it added unnecessary complexity. However the Registration gave IEX a tight schedule-ahead last June. Certainly one of NYSE’s exchanges, New york stock exchange American, presenting a speed bump too.

“It validates the issues which exist,Inches she states. The present big exchanges still drive a substantial part of their revenues from selling tiers of information and tiers of speed. “The individuals who will pay probably the most for your are the individuals who can optimise individuals variations as competitive advantages,” she states.

“Imitation may be the sincerest type of flattery,” Furber states having a smile. It is also probably the most deadly.

Facebook Navigates an Internet Fractured by Governmental Controls

On a muggy, late spring evening, Tuan Pham awoke to the police storming his house in Hanoi, Vietnam.

They marched him to a police station and made their demand: Hand over your Facebook password. Mr. Tuan, a computer engineer, had recently written a poem on the social network called “Mother’s Lullaby,” which criticized how the communist country was run.

One line read, “One century has passed, we are still poor and hungry, do you ask why?”

Mr. Tuan’s arrest came just weeks after Facebook offered a major olive branch to Vietnam’s government. Facebook’s head of global policy management, Monika Bickert, met with a top Vietnamese official in April and pledged to remove information from the social network that violated the country’s laws.

While Facebook said its policies in Vietnam have not changed, and it has a consistent process for governments to report illegal content, the Vietnamese government was specific. The social network, they have said, had agreed to help create a new communications channel with the government to prioritize Hanoi’s requests and remove what the regime considered inaccurate posts about senior leaders.

Populous, developing countries like Vietnam are where the company is looking to add its next billion customers — and to bolster its ad business. Facebook’s promise to Vietnam helped the social media giant placate a government that had called on local companies not to advertise on foreign sites like Facebook, and it remains a major marketing channel for businesses there.

The diplomatic game that unfolded in Vietnam has become increasingly common for Facebook. The internet is Balkanizing, and the world’s largest tech companies have had to dispatch envoys to, in effect, contain the damage such divisions pose to their ambitions.

The internet has long had a reputation of being an anything-goes place that only a few nations have tried to tame — China in particular. But in recent years, events as varied as the Arab Spring, elections in France and confusion in Indonesia over the religion of the country’s president have awakened governments to how they have lost some control over online speech, commerce and politics on their home turf.

Even in the United States, tech giants are facing heightened scrutiny from the government. Facebook recently cooperated with investigators for Robert S. Mueller III, the special counsel investigating Russian interference in the American presidential election. In recent weeks, politicians on the left and the right have also spoken out about the excess power of America’s largest tech companies.

As nations try to grab back power online, a clash is brewing between governments and companies. Some of the biggest companies in the world — Google, Apple, Facebook, Amazon and Alibaba among them — are finding they need to play by an entirely new set of rules on the once-anarchic internet.

And it’s not just one new set of rules. According to a review by The New York Times, more than 50 countries have passed laws over the last five years to gain greater control over how their people use the web.

“Ultimately, it’s a grand power struggle,” said David Reed, an early pioneer of the internet and a former professor at the M.I.T. Media Lab. “Governments started waking up as soon as a significant part of their powers of communication of any sort started being invaded by companies.”

Facebook encapsulates the reasons for the internet’s fragmentation — and increasingly, its consequences.

Graphic | Global Reach

The company has become so far-reaching that more than two billion people — about a quarter of the world’s population — now use Facebook each month. Internet users (excluding China) spend one in five minutes online within the Facebook universe, according to comScore, a research firm. And Mark Zuckerberg, Facebook’s chief executive, wants that dominance to grow.

But politicians have struck back. China, which blocked Facebook in 2009, has resisted Mr. Zuckerberg’s efforts to get the social network back into the country. In Europe, officials have repudiated Facebook’s attempts to gather data from its messaging apps and third-party websites.

The Silicon Valley giant’s tussle with the fracturing internet is poised to escalate. Facebook has now reached almost everyone who already has some form of internet access, excluding China. Capturing those last users — including in Asian nations like Vietnam and African countries like Kenya — may involve more government roadblocks.

“We understand that and accept that our ideals are not everyone’s,” said Elliot Schrage, Facebook’s vice president of communications and public policy. “But when you look at the data and truly listen to the people around the world who rely on our service, it’s clear that we do a much better job of bringing people together than polarizing them.”

Friending China

By mid-2016, a yearslong campaign by Facebook to get into China — the world’s biggest internet market — appeared to be sputtering.

Mr. Zuckerberg had wined and dined Chinese politicians, publicly showed off his newly acquired Chinese-language skills — a moment that set the internet abuzz — and talked with a potential Chinese partner about pushing the social network into the market, according to a person familiar with the talks who declined to be named because the discussions were confidential.

At a White House dinner in 2015, Mr. Zuckerberg had even asked the Chinese president, Xi Jinping, whether Mr. Xi might offer a Chinese name for his soon-to-be-born first child — usually a privilege reserved for older relatives, or sometimes a fortune teller. Mr. Xi declined, according to a person briefed on the matter.

But all those efforts flopped, foiling Facebook’s attempts to crack one of the most isolated pockets of the internet.

China has blocked Facebook and Twitter since mid-2009, after an outbreak of ethnic rioting in the western part of the country. In recent years, similar barriers have gone up for Google services and other apps, like Line and Instagram.

Even if Facebook found a way to enter China now, it would not guarantee financial success. Today, the overwhelming majority of Chinese citizens use local online services like Qihoo 360 and Sina Weibo. No American-made apps rank among China’s 50 most popular services, according to SAMPi, a market research firm.

Chinese tech officials said that although many in the government are open to the idea of Facebook releasing products in China, there is resistance among leaders in the standing committee of the country’s Politburo, its top decision-making body.

In 2016, Facebook took tentative steps toward embracing China’s censorship policies. That summer, Facebook developed a tool that could suppress posts in certain geographic areas, The Times reported last year. The idea was that it would help the company get into China by enabling Facebook or a local partner to censor content according to Beijing’s demands. The tool was not deployed.

In another push last year, Mr. Zuckerberg spent time at a conference in Beijing that is a standard on the China government relations tour. Using his characteristic brand of diplomacy — the Facebook status update — he posted a photo of himself running in Tiananmen Square on a dangerously smoggy day. The photo drew derision on Twitter, and concerns from Chinese about Mr. Zuckerberg’s health.

For all the courtship, things never quite worked out.

“There’s an interest on both sides of the dance, so some kind of product can be introduced,” said Kai-Fu Lee, the former head of Google in China who now runs a venture-capital firm in Beijing. “But what Facebook wants is impossible, and what they can have may not be very meaningful.”

This spring, Facebook tried a different tactic: testing the waters in China without telling anyone. The company authorized the release of a photo-sharing app there that does not bear its name, and experimented by linking it to a Chinese social network called WeChat.

One factor driving Mr. Zuckerberg may be the brisk ad business that Facebook does from its Hong Kong offices, where the company helps Chinese companies — and the government’s own propaganda organs — spread their messages. In fact, the scale of the Chinese government’s use of Facebook to communicate abroad offers a notable sign of Beijing’s understanding of Facebook’s power to mold public opinion.

Chinese state media outlets have used ad buys to spread propaganda around key diplomatic events. Its stodgy state-run television station and the party mouthpiece newspaper each have far more Facebook “likes” than popular Western news brands like CNN and Fox News, a likely indication of big ad buys.

To attract more ad spending, Facebook set up one page to show China’s state broadcaster, CCTV, how to promote on the platform, according to a person familiar with the matter. Dedicated to Mr. Xi’s international trips, the page is still regularly updated by CCTV, and has 2.7 million likes. During the 2015 trip when Mr. Xi met Mr. Zuckerberg, CCTV used the channel to spread positive stories. One post was titled “Xi’s UN address wins warm applause.”

Fittingly, Mr. Zuckerberg’s eagerness and China’s reluctance can be tracked on Facebook.

During Mr. Xi’s 2015 trip to America, Mr. Zuckerberg posted about how the visit offered him his first chance to speak a foreign language with a world leader. The post got more than a half million likes, including from Chinese state media (despite the national ban). But on Mr. Xi’s propaganda page, Mr. Zuckerberg got only one mention — in a list of the many tech executives who met the Chinese president.

Europe’s Privacy Pushback

Last summer, emails winged back and forth between members of Facebook’s global policy team. They were finalizing plans, more than two years in the making, for WhatsApp, the messaging app Facebook had bought in 2014, to start sharing data on its one billion users with its new parent company. The company planned to use the data to tailor ads on Facebook’s other services and to stop spam on WhatsApp.

A big issue: how to win over wary regulators around the world.

Despite all that planning, Facebook was hit by a major backlash. A month after the new data-sharing deal started in August 2016, German privacy officials ordered WhatsApp to stop passing data on its 36 million local users to Facebook, claiming people did not have enough say over how it would be used. The British privacy watchdog soon followed.

By late October, all 28 of Europe’s national data-protection authorities jointly called on Facebook to stop the practice. Facebook quietly mothballed its plans in Europe. It has continued to collect people’s information elsewhere, including the United States.

“There’s a growing awareness that people’s data is controlled by large American actors,” said Isabelle Falque-Pierrotin, France’s privacy regulator. “These actors now know that times have changed.”

Facebook’s retreat shows how Europe is effectively employing regulations — including tough privacy rules — to control how parts of the internet are run.

The goal of European regulators, officials said, is to give users greater control over the data from social media posts, online searches and purchases that Facebook and other tech giants rely on to monitor our online habits.

As a tech company whose ad business requires harvesting digital information, Facebook has often underestimated the deep emotions that European officials and citizens have tied into the collection of such details. That dates back to the time of the Cold War, when many Europeans were routinely monitored by secret police.

Now, regulators from Colombia to Japan are often mimicking Europe’s stance on digital privacy. “It’s only natural European regulators would be at the forefront,” said Brad Smith, Microsoft’s president and chief legal officer. “It reflects the importance they’ve attached to the privacy agenda.”

In interviews, Facebook denied it has played fast and loose with users’ online information and said it complies with national rules wherever it operates. It questioned whether Europe’s position has been effective in protecting individuals’ privacy at a time when the region continues to fall behind the United States and China in all things digital.

Still, the company said it respected Europe’s stance on data protection, particularly in Germany, where many citizens have long memories of government surveillance.

“There’s no doubt the German government is a strong voice inside the European community,” said Richard Allen, Facebook’s head of public policy in Europe. “We find their directness pretty helpful.”

Europe has the law on its side when dictating global privacy. Facebook’s non-North American users, roughly 1.8 billion people, are primarily overseen by Ireland’s privacy regulator because the company’s international headquarters is in Dublin, mostly for tax reasons. In 2012, Facebook was forced to alter its global privacy settings — including those in the United States — after Ireland’s data protection watchdog found problems while auditing the company’s operations there.

Three years later, Europe’s highest court also threw out a 15-year-old data-sharing agreement between the region and the United States following a complaint that Facebook had not sufficiently protected Europeans’ data when it was transferred across the Atlantic. The company denies any wrongdoing.

And on Sept. 12, Spain’s privacy agency fined the company 1.2 million euros for not giving people sufficient control over their data when Facebook collected it from third-party websites. Watchdogs in Germany, the Netherlands and elsewhere are conducting similar investigations. Facebook is appealing the Spanish ruling.

“Facebook simply can’t stick to a one-size-fits-all product around the world,” said Max Schrems, an Austrian lawyer who has been a Facebook critic after filing the case that eventually overturned the 15-year-old data deal.

Potentially more worrying for Facebook is how Europe’s view of privacy is being exported. Countries from Brazil to Malaysia, which are crucial to Facebook’s growth, have incorporated many of Europe’s tough privacy rules into their legislation.

“We regard the European directives as best practice,” said Pansy Tlakula, chairwoman of South Africa’s Information Regulator, the country’s data protection agency. South Africa has gone so far as to copy whole sections, almost word-for-word, from Europe’s rule book.

The Play for Kenya

Blocked in China and troubled by regulators in Europe, Facebook is trying to become “the internet” in Africa. Helping get people online, subsidizing access, and trying to launch satellites to beam the internet down to the markets it covets, Facebook has become a dominant force on a continent rapidly getting online.

But that has given it a power that has made some in Africa uncomfortable.

Some countries have blocked access, and outsiders have complained Facebook could squelch rival online business initiatives. Its competition with other internet companies from the United States and China has drawn comparisons to a bygone era of colonialism.

For Kenyans like Phyl Cherop, 33, an entrepreneur in Nairobi, online life is already dominated by the social network. She abandoned her bricks-and-mortar store in a middle-class part of the city in 2015 to sell on Facebook and WhatsApp.

“I gave it up because people just didn’t come anymore,” said Ms. Cherop, who sells items like designer dresses and school textbooks. She added that a stand-alone website would not have the same reach. “I prefer using Facebook because that’s where my customers are. The first thing people want to do when they buy a smartphone is to open a Facebook account.”

As Facebook hunts for more users, the company’s aspirations have shifted to emerging economies where people like Ms. Cherop live. Less than 50 percent of Africa’s population has internet connectivity, and regulation is often rudimentary.

Since Facebook entered Africa about a decade ago, it has become the region’s dominant tech platform. Some 170 million people — more than two thirds of all internet users from South Africa to Senegal — use it, according Facebook’s statistics. That is up 40 percent since 2015.

The company has struck partnerships with local carriers to offer basic internet services — centered on those offered by Facebook — for free. It has built a pared-down version of its social network to run on the cheaper, less powerful phones that are prevalent there.

Facebook is also investing tens of millions of dollars alongside telecom operators to build a 500-mile fiber-optic internet connection in rural Uganda. In total, it is working with about 30 regional governments on digital projects.

“We want to bring connectivity to the world,” said Jay Parikh, a Facebook vice president for engineering who oversees the company’s plans to use drones, satellites and other technology to connect the developing world.

Facebook is racing to gain the advantage in Africa over rivals like Google and Chinese players including Tencent, in a 21st century version of the “Scramble for Africa.” Google has built fiber internet networks in Uganda and Ghana. Tencent has released WeChat, its popular messaging and e-commerce app, in South Africa.

Facebook has already hit some bumps in its African push. Chad blocked access to Facebook and other sites during elections or political protests. Uganda also took legal action in Irish courts to force the social network to name an anonymous blogger who had been critical of the government. Those efforts failed.

In Kenya, one of Africa’s most connected countries, there has been less pushback.

Facebook expanded its efforts in the country of 48 million in 2014. It teamed up with Airtel Africa, a mobile operator, to roll out Facebook’s Free Basics — a no-fee version of the social network, with access to certain news, health, job and other services there and in more than 20 other countries worldwide. In Kenya, the average person has a budget of just 30 cents a day to spend on internet access.

Free Basics now lets Kenyans use Facebook and its Messenger service at no cost, as well as read news from a Kenyan newspaper and view information about public health programs. Joe Mucheru, Kenya’s tech minister, said it at least gives his countrymen a degree of internet access.

Still, Facebook’s plans have not always worked out. Many Kenyans with access to Free Basics rely on it only as a backup when their existing smartphone credit runs out.

“Free Basics? I don’t really use it that often,” said Victor Odinga, 27, an accountant in downtown Nairobi. “No one wants to be seen as someone who can’t afford to get online.”

Chips Off the Old Block: Computers Are Taking Design Cues From Human Brains

SAN FRANCISCO — We expect a lot from our computers these days. They should talk to us, recognize everything from faces to flowers, and maybe soon do the driving. All this artificial intelligence requires an enormous amount of computing power, stretching the limits of even the most modern machines.

Now, some of the world’s largest tech companies are taking a cue from biology as they respond to these growing demands. They are rethinking the very nature of computers and are building machines that look more like the human brain, where a central brain stem oversees the nervous system and offloads particular tasks — like hearing and seeing — to the surrounding cortex.

After years of stagnation, the computer is evolving again, and this behind-the-scenes migration to a new kind of machine will have broad and lasting implications. It will allow work on artificially intelligent systems to accelerate, so the dream of machines that can navigate the physical world by themselves can one day come true.

This migration could also diminish the power of Intel, the longtime giant of chip design and manufacturing, and fundamentally remake the $335 billion a year semiconductor industry that sits at the heart of all things tech, from the data centers that drive the internet to your iPhone to the virtual reality headsets and flying drones of tomorrow.

“This is an enormous change,” said John Hennessy, the former Stanford University president who wrote an authoritative book on computer design in the mid-1990s and is now a member of the board at Alphabet, Google’s parent company. “The existing approach is out of steam, and people are trying to re-architect the system.”

The existing approach has had a pretty nice run. For about half a century, computer makers have built systems around a single, do-it-all chip — the central processing unit — from a company like Intel, one of the world’s biggest semiconductor makers. That’s what you’ll find in the middle of your own laptop computer or smartphone.

Now, computer engineers are fashioning more complex systems. Rather than funneling all tasks through one beefy chip made by Intel, newer machines are dividing work into tiny pieces and spreading them among vast farms of simpler, specialized chips that consume less power.

Changes inside Google’s giant data centers are a harbinger of what is to come for the rest of the industry. Inside most of Google’s servers, there is still a central processor. But enormous banks of custom-built chips work alongside them, running the computer algorithms that drive speech recognition and other forms of artificial intelligence.

Google reached this point out of necessity. For years, the company had operated the world’s largest computer network — an empire of data centers and cables that stretched from California to Finland to Singapore. But for one Google researcher, it was much too small.

In 2011, Jeff Dean, one of the company’s most celebrated engineers, led a research team that explored the idea of neural networks — essentially computer algorithms that can learn tasks on their own. They could be useful for a number of things, like recognizing the words spoken into smartphones or the faces in a photograph.

In a matter of months, Mr. Dean and his team built a service that could recognize spoken words far more accurately than Google’s existing service. But there was a catch: If the world’s more than one billion phones that operated on Google’s Android software used the new service just three minutes a day, Mr. Dean realized, Google would have to double its data center capacity in order to support it.

“We need another Google,” Mr. Dean told Urs Hölzle, the Swiss-born computer scientist who oversaw the company’s data center empire, according to someone who attended the meeting. So Mr. Dean proposed an alternative: Google could build its own computer chip just for running this kind of artificial intelligence.

But what began inside data centers is starting to shift other parts of the tech landscape. Over the next few years, companies like Google, Apple and Samsung will build phones with specialized A.I. chips. Microsoft is designing such a chip specifically for an augmented-reality headset. And everyone from Google to Toyota is building autonomous cars that will need similar chips.

This trend toward specialty chips and a new computer architecture could lead to a “Cambrian explosion” of artificial intelligence, said Gill Pratt, who was a program manager at Darpa, a research arm of the United States Department of Defense, and now works on driverless cars at Toyota. As he sees it, machines that spread computations across vast numbers of tiny, low-power chips can operate more like the human brain, which efficiently uses the energy at its disposal.

“In the brain, energy efficiency is the key,” he said during a recent interview at Toyota’s new research center in Silicon Valley.

Change on the Horizon

There are many kinds of silicon chips. There are chips that store information. There are chips that perform basic tasks in toys and televisions. And there are chips that run various processes for computers, from the supercomputers used to create models for global warming to personal computers, internet servers and smartphones.

For years, the central processing units, or C.P.U.s, that ran PCs and similar devices were where the money was. And there had not been much need for change.

In accordance with Moore’s Law, the oft-quoted maxim from Intel co-founder Gordon Moore, the number of transistors on a computer chip had doubled every two years or so, and that provided steadily improved performance for decades. As performance improved, chips consumed about the same amount of power, according to another, lesser-known law of chip design called Dennard scaling, named for the longtime IBM researcher Robert Dennard.

By 2010, however, doubling the number of transistors was taking much longer than Moore’s Law predicted. Dennard’s scaling maxim had also been upended as chip designers ran into the limits of the physical materials they used to build processors. The result: If a company wanted more computing power, it could not just upgrade its processors. It needed more computers, more space and more electricity.

Researchers in industry and academia were working to extend Moore’s Law, exploring entirely new chip materials and design techniques. But Doug Burger, a researcher at Microsoft, had another idea: Rather than rely on the steady evolution of the central processor, as the industry had been doing since the 1960s, why not move some of the load onto specialized chips?

During his Christmas vacation in 2010, Mr. Burger, working with a few other chip researchers inside Microsoft, began exploring new hardware that could accelerate the performance of Bing, the company’s internet search engine.

At the time, Microsoft was just beginning to improve Bing using machine-learning algorithms (neural networks are a type of machine learning) that could improve search results by analyzing the way people used the service. Though these algorithms were less demanding than the neural networks that would later remake the internet, existing chips had trouble keeping up.

Mr. Burger and his team explored several options but eventually settled on something called Field Programmable Gate Arrays, or F.P.G.A.s.: chips that could be reprogrammed for new jobs on the fly. Microsoft builds software, like Windows, that runs on an Intel C.P.U. But such software cannot reprogram the chip, since it is hard-wired to perform only certain tasks.

With an F.P.G.A., Microsoft could change the way the chip works. It could program the chip to be really good at executing particular machine learning algorithms. Then, it could reprogram the chip to be really good at running logic that sends the millions and millions of data packets across its computer network. It was the same chip but it behaved in a different way.

Microsoft started to install the chips en masse in 2015. Now, just about every new server loaded into a Microsoft data center includes one of these programmable chips. They help choose the results when you search Bing, and they help Azure, Microsoft’s cloud-computing service, shuttle information across its network of underlying machines.

Teaching Computers to Listen

In fall 2016, another team of Microsoft researchers — mirroring the work done by Jeff Dean at Google — built a neural network that could, by one measure at least, recognize spoken words more accurately than the average human could.

Xuedong Huang, a speech-recognition specialist who was born in China, led the effort, and shortly after the team published a paper describing its work, he had dinner in the hills above Palo Alto, Calif., with his old friend Jen-Hsun Huang, (no relation), the chief executive of the chipmaker Nvidia. The men had reason to celebrate, and they toasted with a bottle of champagne.

Xuedong Huang and his fellow Microsoft researchers had trained their speech-recognition service using large numbers of specialty chips supplied by Nvidia, rather than relying heavily on ordinary Intel chips. Their breakthrough would not have been possible had they not made that change.

“We closed the gap with humans in about a year,” Microsoft’s Mr. Huang said. “If we didn’t have the weapon — the infrastructure — it would have taken at least five years.”

Because systems that rely on neural networks can learn largely on their own, they can evolve more quickly than traditional services. They are not as reliant on engineers writing endless lines of code that explain how they should behave.

But there is a wrinkle: Training neural networks this way requires extensive trial and error. To create one that is able to recognize words as well as a human can, researchers must train it repeatedly, tweaking the algorithms and improving the training data over and over. At any given time, this process unfolds over hundreds of algorithms. That requires enormous computing power, and if companies like Microsoft use standard-issue chips to do it, the process takes far too long because the chips cannot handle the load and too much electrical power is consumed.

So, the leading internet companies are now training their neural networks with help from another type of chip called a graphics processing unit, or G.P.U. These low-power chips — usually made by Nvidia — were originally designed to render images for games and other software, and they worked hand-in-hand with the chip — usually made by Intel — at the center of a computer. G.P.U.s can process the math required by neural networks far more efficiently than C.P.U.s.

Nvidia is thriving as a result, and it is now selling large numbers of G.P.U.s to the internet giants of the United States and the biggest online companies around the world, in China most notably. The company’s quarterly revenue from data center sales tripled to $409 million over the past year.

“This is a little like being right there at the beginning of the internet,” Jen-Hsun Huang said in a recent interview. In other words, the tech landscape is changing rapidly, and Nvidia is at the heart of that change.

Creating Specialized Chips

G.P.U.s are the primary vehicles that companies use to teach their neural networks a particular task, but that is only part of the process. Once a neural network is trained for a task, it must perform it, and that requires a different kind of computing power.

After training a speech-recognition algorithm, for example, Microsoft offers it up as an online service, and it actually starts identifying commands that people speak into their smartphones. G.P.U.s are not quite as efficient during this stage of the process. So, many companies are now building chips specifically to do what the other chips have learned.

Google built its own specialty chip, a Tensor Processing Unit, or T.P.U. Nvidia is building a similar chip. And Microsoft has reprogrammed specialized chips from Altera, which was acquired by Intel, so that it too can run neural networks more easily.

Other companies are following suit. Qualcomm, which specializes in chips for smartphones, and a number of start-ups are also working on A.I. chips, hoping to grab their piece of the rapidly expanding market. The tech research firm IDC predicts that revenue from servers equipped with alternative chips will reach $6.8 billion by 2021, about 10 percent of the overall server market.

Across Microsoft’s global network of machines, Mr. Burger pointed out, alternative chips are still a relatively modest part of the operation. And Bart Sano, the vice president of engineering who leads hardware and software development for Google’s network, said much the same about the chips deployed at its data centers.

Mike Mayberry, who leads Intel Labs, played down the shift toward alternative processors, perhaps because Intel controls more than 90 percent of the data-center market, making it by far the largest seller of traditional chips. He said that if central processors were modified the right way, they could handle new tasks without added help.

But this new breed of silicon is spreading rapidly, and Intel is increasingly a company in conflict with itself. It is in some ways denying that the market is changing, but nonetheless shifting its business to keep up with the change.

Two years ago, Intel spent $16.7 billion to acquire Altera, which builds the programmable chips that Microsoft uses. It was Intel’s largest acquisition ever. Last year, the company paid a reported $408 million buying Nervana, a company that was exploring a chip just for executing neural networks. Now, led by the Nervana team, Intel is developing a dedicated chip for training and executing neural networks.

“They have the traditional big-company problem,” said Bill Coughran, a partner at the Silicon Valley venture capital firm Sequoia Capital who spent nearly a decade helping to oversee Google’s online infrastructure, referring to Intel. “They need to figure out how to move into the new and growing areas without damaging their traditional business.”

Intel’s internal conflict is most apparent when company officials discuss the decline of Moore’s Law. During a recent interview with The New York Times, Naveen Rao, the Nervana founder and now an Intel executive, said Intel could squeeze “a few more years” out of Moore’s Law. Officially, the company’s position is that improvements in traditional chips will continue well into the next decade.

Mr. Mayberry of Intel also argued that the use of additional chips was not new. In the past, he said, computer makers used separate chips for tasks like processing audio.

But now the scope of the trend is significantly larger. And it is changing the market in new ways. Intel is competing not only with chipmakers like Nvidia and Qualcomm, but also with companies like Google and Microsoft.

Google is designing the second generation of its T.P.U. chips. Later this year, the company said, any business or developer that is a customer of its cloud-computing service will be able to use the new chips to run its software.

While this shift is happening mostly inside the massive data centers that underpin the internet, it is probably a matter of time before it permeates the broader industry.

The hope is that this new breed of mobile chip can help devices handle more, and more complex, tasks on their own, without calling back to distant data centers: phones recognizing spoken commands without accessing the internet; driverless cars recognizing the world around them with a speed and accuracy that is not possible now.

In other words, a driverless car needs cameras and radar and lasers. But it also needs a brain.

Kushner’s White-colored House role ‘crushed’ efforts to woo investors for New york city tower

states it features a strong national portfolio of qualities, including 20,000 residential apartments and 13 million square ft of business space.

“This is a asset of Kushner [Companies], Morali stated, describing 666 Fifth Avenue. “It is a part of our assets.”

Kushner divested his stake within the property in The month of january, selling it to have an undisclosed add up to a trust controlled by his sister, Nicole Kushner Meyer.

Kushner declined to become interviewed. White-colored House spokesman Josh Raffel stated inside a statement that within the lead-to the election, Kushner centered on winding lower his property work.

“Throughout the campaign, Jared progressively reduced his day-to-day-role in Kushner Companies,” Raffel stated. “Starting several days prior to the election until he fully resigned, his focus at the organization was on transitioning over his responsibilities and relationships.”

The Manhattan skyscraper isn’t the only Kushner project to attract attention because the election. The organization has acknowledged that federal prosecutors within the Eastern District of recent You are able to have subpoenaed documents about utilisation of the EB-5 visa program at One Journal Square, an organized Jersey City development. Meyer touted her brother’s White-colored House position in courting Chinese investors underneath the program, that provides temporary visas in return for $500,000 investments.

Meyer later apologized, however the Jersey City project lost a condition tax break and it is parting ways with co-working start-up WeWork.

The family’s network of federally subsidized apartments originates under fire from congressional Democrats within the company’s hard-nosed quest for delinquent renters.

In the White-colored House role, Kushner made an appearance before Senate committees to describe conferences with foreign officials he stated he unintentionally overlooked from his security clearance questionnaire. And special counsel Robert S. Mueller III, who’s investigating whether Russia colluded using the Trump campaign, is analyzing Kushner’s dealings, The Washington Publish has reported.

As investigations proceed, pressures at 666 Fifth Avenue are building. The issues trace to a brash decision Kushner, then 26 along with a Manhattan property novice, made about ten years ago.

Pressurized

Manhattan real estate was booming when Kushner bought 666 Fifth Avenue in 2007 for $1.8 billion — the greatest cost compensated in those days to have an office tower within the U . s . States. Experts speculated that Kushner had vastly overpaid.

Kushner had over the organization because his father, Charles, had just offered amount of time in federal prison for tax evasion, illegal campaign contributions and witness tampering. Wanting to re-brand their company, the Kushners had offered a lot of their Nj property holdings to help make the Manhattan gamble.

To assist a colossal loan package, the Kushners were built with a $2 billion evaluation, based largely around the premier retail space fronting Fifth Avenue, but several weeks finally, before using your building, the truly amazing Recession pummeled values.

By 2010, Kushner risked losing your building. He was delinquent on payments, based on a study by Trepp, which analyzes property transactions, and that he joined debt restructuring negotiations. He offered the retail portion in a profit, which helped cover the Kushner family’s investment, however the office portion was loss of blood, based on losses outlined in lending documents.

Kushner was under remarkable pressure using their company investors. Kushner, who’d married Ivanka Trump in ’09, switched to 2 buddies of his father-in-law for help.

Barrack, who ran a California investment company known as Colony Capital, had met Jesse Trump within the 1980s as he negotiated with respect to a customer for that purchase from the Plaza Hotel.

This Year, Barrack’s company acquired area of the distressed debt on 666 Fifth Avenue. He invested $45 million and finally designed a profit, he stated.

This Year, Trump known as Barrack to set up a gathering for Kushner. As Barrack remembered it, “Donald known as and stated: ‘Look, I do not know what’s happening. Jared has some deal you’ve got an interest in.’ ”

Kushner travelled to California and told Barrack about his intend to salvage the work. He came alone, without lawyers, and Barrack was impressed. Kushner told him that investors should pay a restructuring intend to keep your project afloat — however some of these would get under they expected using their investment.

After 75 minutes, Barrack decided to help, concluding that “it appears enjoy it is within everyone’s interest to restructure this.” He stated he known as Trump and told him: “You is deserving of lower in your knees that the daughter found this kid. He has run out of central casting. He was sincere, he was totally current around the details and also the figures coupled with a really persuasive attitude.”

Kushner also switched to Steve Roth, Trump’s partner in another Manhattan business building. Roth’s clients are Vornado Real estate Trust. Its ties to Trump attracted attention lately if this invest in a brand new FBI headquarters building, a task the administration later canceled. Roth declined to comment with this article.

This Year, Roth’s company bought 49.5 percent from the office part of 666 Fifth Avenue, enabling Kushner to restructure your debt and extend the $1.2 billion loan to 2019, based on lending documents. Vornado announced at the end of 2012 it compensated $707 million for that retail portion.

Other investors weren’t as lucky. Area Property Partners held $105.4 million of Kushner’s debt, based on lending documents, and objected towards the restructuring terms. The Publish reported in May how Kushner, as who owns the brand new You are able to Observer media outlet, advised reporters to pursue an adverse tip about Area Property’s leader. The Observer reporters stated the end was unfounded with no story was printed. Area declined to comment. Kushner has declined to comment when requested concerning the Observer matter.

At that time, Kushner was positive about 666 Fifth Avenue and the capability to attract new tenants.

Since that time, the occupancy rate has plummeted to 70 percent, far lacking expectations, based on lending documents. Citibank, a principal tenant when Kushner bought your building, has vacated the home aside from a little retail space. Phillips Nizer, an attorney that’s been a tenant for 22 many occupies two floors from the building, is departing in the finish of the year, based on managing partner Marc Landis.

Revenue has declined. When Kushner Cos. required within the property in 2007, the internet operating earnings was $61 million. That dropped to $41 million in 2016 due to the purchase from the retail portion and declining office occupancy, based on Trepp.

Morali stated the building struggles to compete inside a soft commercial market by which office leases have now use trendier Manhattan spaces for example Hudson Yards.

The stress around the Kushners is difficult to evaluate. The organization is independently held, also it declined to supply a completely independent financial report.

The organization has had steps to boost its finances. In 2016, right before Trump’s election, it refinanced its area of the former New You are able to Occasions building, together with a $285 million loan from Deutsche Bank, passing on $74 million greater than Kushner had compensated last year, based on securities filings. The organization declined to specify the way the $74 million has been utilized.

Their greatest challenge was finding a method to turn 666 Fifth Avenue right into a moneymaker prior to the debt came due.

Tall order

The program for turning 666 Fifth Avenue into an 80-story office tower was given to prospective investors and welcomed with skepticism if this grew to become openly known this past year. The Real Thing, a brand new You are able to property publication, described it as being a “tower of hubris” for that Kushners.

The program known as for vacating your building and constructing the taller tower, including rooms in hotels and luxury housing, within design by famous architect Zaha Hadid, who died this past year. A lot of the proposal is conceptual, however a rendering demonstrated a structure having a squat base with top-flight retail along with a tall, thin tower for luxury residences. While financing details haven’t been disclosed, an essential component from the plan is always to have new investors feet a lot of the balance, enabling the Kushner Cos. debt to become upon the market or renegotiated and providing the organization a stake within the new property.

Kushner Cos. valued the renovation at $7.5 billion. Numerous New You are able to City’s greatest property businesses that preferred quick returns declined to obtain involved, based on New You are able to property executives and analysts. The program relied partially on raising money from foreign investors with the EB-5 program. The organization has stated that trying to get such funds was permitted underneath the rules.

Kushner and the company also employed deep-pocketed global investors who might begin to see the building in an effort to create a distinctive mark in Manhattan. However the effort posed ethical questions as Kushner moved into his role with Trump. In 2016, Kushner concurrently helped run Trump’s presidential campaign and offered as president of the company seeking vast amounts of dollars from foreign entities.

One deal that came near to fruition was with Anbang, a business carefully associated with china government that considered investing $400 million, based on Bloomberg News. Anbang had just bought the landmark Waldorf Astoria hotel when Kushner met using its representatives there per week following the election, based on the New You are able to Occasions. Anbang later issued an announcement stating that “there isn’t any investment” and declined to comment further.

Another potential investor would be a fund operated by the previous pm of Qatar, Hamad Bin Jasim al-Thani, among the world’s wealthiest men, who’d have given $500 million, based on the Intercept. Hamad didn’t react to a request comment. Kushner Cos. has confirmed the China and Qatar efforts. Neither effort been successful.

Concerns about Kushner’s business dealings intensified if this was disclosed captured he met in December using the top executive from the Russian bank Vnesheconombank, or VEB. The financial institution has stated the executive, Sergey Gorkov, who’s near to Russian President Vladimir Putin, discussed “promising business lines and sectors” with Kushner. VEB is Russia’s economic development bank and it is considered a leg from the Kremlin.

Kushner assured Congress inside a July 24 statement the meeting didn’t involve “any discussion about my companies, transactions, property projects, loans, banking plans or any private business of any sort.Inches Democrats have required an analysis.

Kushner’s family company stated that by The month of january it’d not searched for investments from entities linked to foreign governments, although that doesn’t eliminate taking money from wealthy people from other countries who also provide business prior to the U.S. government. An individual near to the organization stated that company officials still talk with potential investors in the U . s . States along with other countries.

What you ought to learn about Jared Kushner’s ties to Russia. (Thomas Manley/The Washington Publish)

Morali stated that excluding foreign government funds won’t preclude him from finding investors. “We are actually in a point where we’ve explored lots of different options and I’m happy with the progress we’ve made in it,Inches he stated, “so I’m able to anticipate that more than the following handful of several weeks their bond will make a choice.Inches

Nevertheless, steering obvious of foreign government funds could narrow his options.

From the 10 priciest office-building purchases this past year in Manhattan, two were created with a sovereign wealth fund in China (China Investment Corp.) along with a third was through the central bank of Hong Kong. Three from the other purchases originated from private entities in Saudi Arabia, Canada and The country, sometimes investing public money.

New You are able to property consultant Arthur J. Mirante II, who advised the Kushner family around the original deal, stated 666 Fifth Avenue could most likely be re-leased as an office with modest investment. Redevelopment is much more difficult, he stated.

“If they need to ignore that market due to Jared finding yourself in the White-colored House, they’re going to need to look elsewhere,” Mirante stated.

Meanwhile, the eye rate around the Kushner company’s principal loan rose to five.5 percent from 5 percent this season and continuously rise to no more than 6.3 percent, based on Trepp. The borrowed funds takes place by several investment banks and investors brought by Whirlpool and Wells Fargo.

That, consequently, has produced an chance for Kushner’s partner, Roth’s Vornado. Unlike Kushner Cos., Vornado’s central clients are leasing New You are able to office structures. Some analysts expect Roth to hold back the Kushner redevelopment plan and, whether it fails, attempt to dominate the home — despite what Roth has stated openly.

Captured, Roth told shareholders that 666 Fifth Avenue “is a continuing, complex, dynamic and unpredictable situation . . . which is the rare situation whenever we might be sellers.”

Barrack stated that whenever Kushner visited the White-colored House, his father, Charles — who’d helped devise the redevelopment proposal — should have known that his efforts could be undermined. Charles Kushner didn’t react to a request comment.

“This was [Charles’s] dream and the baby,” Barrack stated. “When Jared made the decision to visit Washington, he most likely had cardiac arrest.Inches

Because of the Kushner focus, Barrack stated, investors need to ask themselves, “Are they willing to accept scrutiny of the items arrives with” investing with Kushner Cos.?

‘It Was a Frat House’: Inside the Sex Scandal That Toppled SoFi’s C.E.O.

SAN FRANCISCO — For months, the text messages came. Some were flirtatious, asking her to meet him late at night. Sometimes, the texts were sexually explicit.

The messages were directed at Laura Munoz, an executive assistant at the online lending start-up Social Finance. The texts were from her boss, Mike Cagney, the company’s chief executive, according to five people who spoke with Ms. Munoz or saw the messages. Given Mr. Cagney’s stature at Social Finance, known as SoFi, Ms. Munoz was at a disadvantage.

That became apparent when SoFi’s board was informed of Mr. Cagney’s communications with Ms. Munoz in late 2012. The board said it found no evidence of a sexual relationship. Ms. Munoz was then paid about $75,000 to leave the company, according to three people familiar with the proceedings who spoke on the condition of anonymity because they were not authorized to talk publicly. Ivo Labar, a lawyer representing Ms. Munoz, said matters were resolved between his client and SoFi.

Around the same time, SoFi’s board and executives also heard complaints from investors that Mr. Cagney had made misstatements to them over the start-up’s student loan products, according to emails between investors, executives and the board that were obtained by The New York Times. Directors stood by Mr. Cagney in that instance, too.

The board’s support allowed Mr. Cagney to build SoFi into a fast-growing start-up that is trying to take on the big banks by offering lending, insurance and asset management online. The company has been valued at more than $4 billion.

But within SoFi, Mr. Cagney, a married father of two, continued to raise questions among employees with his behavior. He was seen holding hands and having intimate conversations with another young female employee, according to six employees who saw the two together. At late-night, wine-soaked gatherings with colleagues, he bragged about his sexual conquests and the size of his genitalia, said employees who heard the comments.

Mr. Cagney’s actions were echoed in other parts of SoFi. The company’s chief financial officer talked openly about women’s breasts and once offered female employees bonuses for losing weight, according to more than a dozen people who heard his comments. Some employees said on a few instances, they caught colleagues having sex with supervisors at SoFi’s main satellite office in Healdsburg, Calif., which was the subject of a sexual harassment lawsuit filed last month.

Even as other Silicon Valley companies such as ride-hailing giant Uber have been in the spotlight this year for inappropriate treatment of women, Mr. Cagney’s case goes a step further. Although many of the issues at other firms stemmed from the actions of midlevel executives or investors, Mr. Cagney personally faces questions about his role. His conduct was described by more than 30 current and former employees, most of whom asked to remain anonymous for fear of retribution.

The behavior went largely unchecked until Monday, when SoFi’s board acted after weeks of growing scrutiny of the company. The start-up said Mr. Cagney, 46, would leave as chief executive by the end of the year and that he would step down immediately as chairman. In a statement announcing Mr. Cagney’s departure, SoFi did not explain the executive change.

The company said its business was performing well, and that SoFi was becoming a “major, innovative player in consumer finance.” A SoFi spokesman said the company did not comment on personnel matters and disputed that its business had taken on too much risk. Through the spokesman, Mr. Cagney also said he “vehemently denies” any improprieties at after-hours events with colleagues.

Yet Mr. Cagney’s position had become increasingly delicate after the filing of the sexual harassment suit, which accused him of “empowering other managers to engage in sexual conduct in the workplace.”

His situation was also exacerbated by claims about his approach to SoFi’s business, which uses money from Wall Street investors to fund student loans, personal loans and mortgages. At several points, Mr. Cagney ignored warnings from colleagues that he was being too aggressive with the business, according to more than a dozen employees who were involved in the conversations.

That included a time when Mr. Cagney decided to put customer service representatives in charge of lending determinations, despite them having no experience in the area. Another time, he told investors that SoFi had $90 million in debt financing for a loan product; the company did not in fact have the money, according to the internal emails reviewed by The Times.

SoFi’s board, which includes representatives of Japanese conglomerate SoftBank and the influential hedge fund Third Point Capital, now faces questions about whether it needed more checks and balances on Mr. Cagney.

Companies like SoFi show how boards are incentivized to prioritize cash flow and growth over governance, said David F. Larcker, a professor at Stanford University’s Graduate School of Business who specializes in corporate governance. “The board now has a duty to correct for things that have gone wrong,” he said.

The board said that it found “no allegation or evidence of a romantic or sexual relationship” between Mr. Cagney and Ms. Munoz and referred all other questions to SoFi.

Workplace Pursuits

Mr. Cagney, who was born in New Jersey, started his career in finance in 1994 at Wells Fargo, where he climbed the ranks to the trading desk. He later left the giant bank to begin a financial software company, and then his own hedge fund, Cabezon, in 2005. On the side, he attended Stanford’s business school.

In 2011, Mr. Cagney began SoFi with several co-founders. The start-up, established as venture capitalists were getting excited about financial technology, raised nearly $100 million in its first year. In total, SoFi has now taken in $1.9 billion from investors including SoftBank, Discovery Capital and Baseline Ventures.

Even with other co-founders, Mr. Cagney quickly established himself as the company’s center of gravity. SoFi’s offices, with glassed-in conference rooms and cheap Ikea furniture, were set up in San Francisco’s Presidio, the park near the Golden Gate Bridge, because Mr. Cagney’s hedge fund already had its offices there. His home was less than a mile away.

Mr. Cagney exhibited an aggressive attitude at the office that he may have learned as a trader at Wells Fargo. He sometimes shouted obscenities and excoriated employees in front of others when they made mistakes.

Mr. Cagney hired deputies who had similar characteristics. One was Nino Fanlo, a former executive at Goldman Sachs and the private equity firm Kohlberg Kravis Roberts, who became SoFi’s chief financial officer in 2012.

Mr. Fanlo, 57, sometimes kicked trash cans in the office when angry. He also commented on women’s figures, including their breasts; said that women would be happier as homemakers; and once told two female employees he would give them $5,000 if they lost 30 pounds by the end of the year, according to more than a dozen people who heard the comments and witnessed the weight-loss offer.

Mr. Fanlo said it was “patently false” that he did not respect women and that his team at SoFi had many women who received promotions and professional accolades. He also attributed his shouting and kicking of trash cans to frustration about deals and start-up pressures.

“You’re under extraordinary pressures at a company that is growing that fast,” Mr. Fanlo said.

More than two dozen former SoFi employees said they were uncomfortable with Mr. Cagney’s pursuit of women in the office. In 2012, he sent the text messages to Ms. Munoz, the executive assistant, until her colleagues took the issue up with executives and the board, according to the five people who spoke with Ms. Munoz about the matter.

Even as Mr. Cagney was texting Ms. Munoz, he also chased another young female employee. Six employees said they saw Mr. Cagney and the employee holding hands and talking intimately. One day in 2013, when Mr. Cagney was flirting with her at the office in front of colleagues, she grew enraged and left, according to three employees who witnessed the episode. Soon after, she left the company.

Around that time, SoFi’s board asked Mr. Cagney to not engage in inappropriate conduct with employees, according to two people with knowledge of the conversations. The situations were awkward in the office given that Mr. Cagney’s wife, June Ou, began working at SoFi in 2012, rising to become the company’s chief technical officer. Her desk was near Mr. Cagney’s. Ms. Ou did not respond to a request for comment.

Pushing the Business

SoFi’s business works in the following way: It loans money to students, home buyers and individuals with high credit scores. The company funds those loans with money from hedge funds and banks, who buy the loans through securities or bonds that SoFi creates.

As early as 2012, Mr. Cagney ran into trouble with some of his investors. That year, the company said it had secured $90 million in debt financing for one of its loan products, called Refi A. But some investors who had bought the securities noticed their returns were not in keeping with SoFi’s estimates and voiced concerns to executives and to a board member, according to the emails obtained by The Times.

About 10 SoFi executives met to discuss the situation; it was then that some of them learned Mr. Cagney had not actually secured the $90 million for the loan product, according to people who were at the meeting. Some attendees said they were dismayed at the possibility that they had made material misstatements to investors.

In October 2012, SoFi bought back the Refi A securities from investors for what they had paid, plus the investment return they had anticipated, or gave them the option to put their money into a different product. Mr. Cagney said in an investor letter that the product had been “imperfect,” but did not offer any details about the $90 million. The SoFi spokesman said that “no consumers were harmed in the process.”

In 2015, SoFi began offering mortgages. In meetings with the compliance officer overseeing the program, Mr. Cagney was told that SoFi was not doing enough to document the income of borrowers and was rushing to offer loans more quickly than competitors did, according to a person involved in the mortgage business. A SoFi spokesman said the company complied with all laws.

Mr. Cagney also led a push into personal loans last year. To strengthen that business, he asked customer service representatives to review and approve loans, a job that had previously been done by the company’s underwriters, said two people involved in the loan business. Many employees opposed the change because customer service representatives do not have the experience of approving loans, but the move helped SoFi double the amount of loans it issued in just a few months.

That created another problem: SoFi did not have enough money to fund all the loans it was giving out. Mr. Cagney told employees that because of the funding shortfall, it could take as long as 30 days for some new customers to get the money they borrowed. But the employees who dealt with the customers were told by a supervisor to say that people would still get the money within 72 hours as promised.

“We had to lie to them and tell them that we were a little behind or that the transfer got lost — just something to keep them off our backs,” said Marie Lombard, who worked from 2014 to 2016 at SoFi’s operations center in Healdsburg.

Mr. Cagney eventually took customer service representatives off the underwriting decisions.

A SoFi spokesman said that customer service representatives did not approve loans and that the company’s proprietary software made those decisions. He added that SoFi always communicated timing changes on its loans to borrowers and that delays have never run as high as 30 days.

An Internal Toll

Mr. Cagney’s risk-taking outside of SoFi also created problems. In January 2015, his hedge fund, Cabezon, suffered big losses on a currency trade. In the aftermath, SoFi’s board agreed to buy Cabezon for $3.25 million and give the hedge fund’s employees jobs at SoFi. That caused resentment at SoFi among some workers.

A SoFi spokesman said the company bought Mr. Cagney’s hedge fund partly because the board was concerned about Mr. Cagney’s ability to focus on both companies.

At the time, SoFi was growing rapidly. Since 2011, when it had five people in a one-room office, the company has grown to 1,200 employees and lent more than $20 billion to about 350,000 customers. Earlier this year, the private equity firm Silver Lake Partners led a new round of fund-raising that gave SoFi another $500 million and valued the company at $4.3 billion.

Mr. Cagney’s co-founders nonetheless left the company one by one, and Mr. Fanlo departed this summer. (Mr. Fanlo said that he left to pursue a new opportunity.)

In 2015, an anonymous email was sent to everyone in the company, complaining in detail about the work environment and nepotism in hiring, according to five employees who received the email. SoFi said that it takes every complaint seriously.

At the start-up’s office in Healdsburg, Yulia Zamora, who worked as an underwriter there from 2015 to 2016, said it often seemed as if there were no rules. She said she was propositioned by a supervisor numerous times.

“It was a frat house,” Ms. Zamora said. “You would find people having sex in their cars and in the parking lot. It was a free-for-all.”’

SoFi has recently been taking steps to contain the damage. Earlier this month, the company started an investigation into the harassment claims in the Healdsburg satellite office. At the same time, questions over Mr. Cagney’s own behavior also surfaced.

In recent days, Mr. Cagney canceled a trip to Singapore to attend a board meeting at SoFi’s offices in San Francisco on Monday. At the meeting, Mr. Cagney argued for his job — but eventually lost out to board members who viewed him as a liability, according to two people with knowledge of the meeting.

“I want SoFi to focus on helping members, hiring the best people, and growing our company in a way consistent with our values,” Mr. Cagney wrote in a letter announcing his departure. “That can’t happen as well as it should if people are focused on me, which isn’t fair to our members, investors, or you.”

Gap between rising prices and pay widens as wage growth figures disappoint; unemployment drops to 4.3pc

Market report

Concerns that Imagination Technologies’ Apple earnings will disappear earlier than expected sent the takeover target sliding as the new iPhone’s delayed release sunk suppliers across the globe.

While some of Imagination’s intellectual property remains in the new iPhone X, Apple stated that it has designed the graphics processing unit (GPU) in the new product, hinting that the company will begin to phase-out its relationship with the Hertfordshire-based company, which had derived around half of its revenues from the Silicon Valley giant.

Nearly £470m was wiped off Imagination’s valuation overnight in April after Apple revealed that it was ditching the company and making its own GPU from 2018.

Decimated by the share price plummet, the company then put itself up for sale with Beijing-backed private equity fund Canyon Bridge Capital Partners rumoured to be in the running. It appears, however, that the world’s largest listed company has fast-forwarded its plans to take full control of its products’ GPU, weakening Imagination 7.3p, or 5.1pc, to 135.8p.

If confirmed, it would mean less per device Apple royalty payments a year earlier than expected, said Stifel analyst Lee Simpson.

The iPhone X’s delayed November release date took the shine off the tech giant’s latest unveiling with unimpressed investors dumping shares in suppliers reliant on a strong Apple sales boost in the fourth quarter of the year.

Tiny Welsh chipmaker IQE, whose share price has tripled since speculation mounted that the company would be integral to the new iPhone’s 3D-tracking technology, was one of Apple’s victims, retreating 10.3p to 136.8p.

Over in the US, Apple continued to fall, shedding another 1pc after the opening bell in New York as traders attempted to decipher the impact of the tech firm’s delayed release on earnings.

Elsewhere, industrial metal producers torpedoed the FTSE 100 as copper slipped to pull down miners Glencore and Rio Tinto 8.9p to 363.6p and 66p to £36.25, respectively.

BP and Royal Dutch Shell ‘B’ climbing 3.5p to 452.4p and 14p to £21.92, respectively, on the price of oil rallying mitigated the blue-chip index’s 20.99-point fall to 7379.70, however. Brent crude prices advanced 1pc to just under $55 per barrel after the International Energy Agency forecast higher demand in 2017 as OPEC’s production begins to ebb, encouraging traders that the oil market is finally beginning to rebalance.

Finally, newspaper publisher Johnston Press popped 0.13p to 12.8p after private equity firm Custos upped its stake in the I and The Scotsman publisher from 5pc to just over 8pc.

5:13PM

Markets wrap: Squeeze on UK households tightens as wage growth figures disappoint

High inflation and stagnant wage growth has muddied Mark Carney and the MPC’s decision 

The squeeze on UK households got a little tighter today after the ONS confirmed that wage growth lags far behind rising inflation, knocking hopes of an early interest rate rise.

While unemployment dropped to a fresh 42-year low at 4.3pc, the tighter labour market couldn’t pull up wages, which stagnated at 2.1pc in the three months to July.

Hawkish hopes of an early rate hike were ignited yesterday when inflation jumped to 2.9pc but sluggish wage growth has added another layer of uncertainty with the Bank of England Monetary Policy Committee due to meet tomorrow.

Although no change in policy is expected in tomorrow’s meeting, inflation soaring well ahead of the bank’s 2pc target has cranked up the pressure on Mark Carney and the MPC with chief economist Andy Haldane deemed the most likely to jump ship to the hawks.

The pound coming off a one-year high against the dollar following the job figures couldn’t help the FTSE 100, which has been sunk by miners retreating on the price of copper slipping.

IG market analyst Joshua Mahony explained the miners’ drag on the FTSE 100 today:

“Miners provided a drag upon the FTSE 100 throughout today’s session, as the deterioration in both precious and industrial metals dragged the likes of Antofagasta, Anglo American, Fresnillo and Glencore to the bottom of the leaderboard.

“Copper was today’s big loser amongst a sea of red for metals, while a selloff in gold in the face of equity market weakness saw the precious metal finally trade like a physical commodity rather than just a safe haven asset.”

4:34PM

Hospital drugs firm Clinigen snaps up troubled rival Quantum for £150m

Clinigen supplies drugs to hospitals

One of the largest companies on London’s junior market Aim, hospital drugs supplier Clinigen, has agreed a deal to snap up troubled rival Quantum Pharma for £150m.

The news sent shares in Quantum Pharma up 18pc. However, its suitor, which has a market cap of over £1.1bn, suffered a 3pc fall as investors mulled over the tie-up.

The offer is for 37p in cash and 0.0405 new Clinigen shares per Quantum share.

Shaun Clinton, chief executive of Clinigen, told the Telegraph the move would boost its ability to supply novel drugs to clinicians and enable it to expand further into continental Europe.

He said further acquisitions could be on the cards, saying: “We would consider further bolt-on deals to add speciality pharma products or to extend our geographical footprint.”

Read Iain Withers’ full report here

4:20PM

US markets lose steam after jumping to record closes

Apple and energy shares are engaging in a tug of war in the US

After jumping to record all-time closes yesterday, the Dow Jones and S&P 500 have lost their steam slightly over in the US this afternoon.

Both indices are in flat territory with the tug of war between Apple’s 1.2pc retreat and energy stocks buoyed by stronger prices resulting in a flat finish.

Buyers are running out of steam, according to CMC Markets analyst David Madden.

He commented:

“Stock markets in Europe are experiencing low volatility as the rally that we saw at the start of the week has lost momentum.

“The bullish sentiment on the back of Hurricane Irma not being as severe as predicted, and no new tensions in relation to North Korea, has been replaced with a lacklustre attitude. You could say traders are pausing for breath, after the positive run.”

3:52PM

Blackpool Airport returns to public ownership after 13 years as Balfour Beatty sells stake

Simon Blackburn, leader of Blackpool Council, said today’s sale would protect the 30 people currently employed by the airport

Balfour Beatty has agreed to sell its majority stake in Blackpool Airport to the council, as the local authority looks to protect the future of the site.

Construction company Balfour agreed the deal to sell 95pc of the airport for £4.25m, saying that it “further simplifies the portfolio, in line with the group’s strategy”.

Blackpool Council had originally owned the airport until 2004, when it sold the stake to a consortium led by City Hopper Airports and Mar Properties for £13m. The council retained the remaining 5pc, while the rest was sold to Balfour Beatty in 2008.

However, falling passenger numbers and a legal dispute with operator Jet2 over the opening hours of the airport led to the site falling into administration in 2014.

Read Rhiannon Bury’s full report here

3:25PM

Jobs growth accelerates but pay disappoints in interest rate dilemma for Carney 

Unemployment tumbled to a new 42-year low in July, with more Britons than ever before in work.

Private and public hiring picked up in the three months to July with employment rising by 181,364, the fastest pace of jobs growth since 2015. More than 31.2m people are now in work, while joblessness dropped to 1.46m, or 4.3pc – a low not seen since mid-1975.

Employers appear keen to keep on hiring as the Office for National Statistics found 774,000 vacancies in August, a modest rise on the month.

The number of public sector workers also rose for the first time in a year to 5.44m.

Read Tim Wallace’s full report here

2:58PM

Galliford Try avoids large infrastructure projects as charge on legacy contracts hits profits  

Peter Truscott, Galliford’s chief executive, said that the company was remaining “cautious” about the impact of political uncertainty and the outlook for the macro economy

The developer and construction company Galliford Try has said it will no longer bid for large fixed-price infrastructure contracts after its profits were hit by a charge on legacy contracts. 

Pre-tax profits fell nearly 60pc to £59m due to the £98m charge it announced in May, relating to problem legacy contracts for the the Queensferry Crossing and part of a road in Aberdeen. But the company posted a 7pc rise in revenues to £2.7bn in the 12 months to June 30, and a 9pc increase in pre-tax profits excluding exceptional items including the charge.

Galliford added that the amount set aside was unchanged and it was making “good progress” on its target to increase profits by 60pc by 2021.

Its housebuilding arm, Linden Homes, and the regeneration division both reported stronger results, with operating profits up 16pc and 27pc respectively, but the construction side suffered, with margins on its underlying business squeezed to virtually nothing. 

Read Isabelle Fraser’s full report here

Galliford Try
2:40PM

Pound and dollar await crucial Thursday

Weak inflation is holding back interest rates rises in the US

Sterling has dipped into the red against the dollar in the last half an hour but today’s movements could be small fry compared to a big day for the two currencies tomorrow.

While sterling has the Bank of England’s Super Thursday to contend with, the US’s own inflation and interest rate hike worries will be the focal point for traders stateside.

Persistently sluggish inflation in the US has dampened hike hopes but a pick-up could reignite expectations that the Federal Reserve will raise rates for a third time in the cycle before the end of the year.

Lukman Otunuga, research analyst at FXTM, said this on tomorrow’s US figures:

“Thursday’s CPI report is a big deal, especially when considering how concerns over stubbornly low inflation rates remain one of the key culprits weighing heavily on US rate hike expectations.

“Price action suggests that dollar bears still remain in control, as investors become increasingly sceptical over the Federal Reserve’s ability to raise interest rates again before the end of the year. A soft inflation figure on Thursday that falls below market estimates is likely to dent the prospect of higher US rates, consequently punishing the vulnerable dollar further.”

2:01PM

Brent crude rallies close to $55 per barrel on upgraded demand forecast

Oil stocks have been boosted by the IEA’s upgraded forecast

Oil demand will pick-up faster than expected this year, the International Energy Agency has forecast today, boosting the price of Brent crude to close to $55 per barrel.

The IEA said that the market is beginning to rebalance as oil demand grows and production among OPEC members begins to fall.

Brent crude jumped 0.8pc to its highest level since late May after the report bumped up its demand growth forecast by 1.6m barrels per day.

Oil stocks have lagged behind crude’s rally in recent months but today the two oil giants on the FTSE 100, BP and Shell, have advanced 0.5pc and 0.6pc, respectively.

1:27PM

UK funds back DNA data miner that can diagnose disease

Sophia Genetics holds a database of 125,000 human genomes

A biotech offering artificial intelligence that can diagnose diseases by mining hundreds of thousands of patients’ DNA data has completed a $30m (£22.6m) fundraising, backed by names including UK venture capital giant Balderton Capital.

Sophia Genetics said it would use the cash to expand its network of hospital tie-ups, which already stands at 330 hospitals in 53 countries, including nine in the UK. The push will be focused on expansion outside Europe.

It will also help fund a move into cancer diagnostics, with the latest therapies from drugmakers increasingly being tailored to suit a patient’s genetic profile.

Swiss-based Sophia Genetics has already analysed the genomic profiles of over 125,000 patients, providing a database that aids doctors in diagnosing a range of conditions from cystic fibrosis and hereditary heart problems.

Read Iain Withers’ full report here

1:02PM

Halfords names Dixons Carphone software boss as new chief executive

Halfords said summer sales had been boosted by a rise in the number of Brits choosing to vacation closer to home

Halfords has appointed the boss of Dixons Carphone’s software business as it new chief executive.

Graham Stapleton has been hired to replace Jill McDonald, who is taking the reigns at Marks & Spencer’s clothing, home and beauty business next month.

Mr Stapleton, who joins the company in January, has previously served as chief executive of Dixons Carphone’s Connect World Services division. Prior to that, he was chief executive of Carphone Warehouse UK & Ireland.

Earlier in his career he held senior positions at Kingfisher and Marks & Spencer.

Read Sam Dean’s full report here

12:48PM

Lunchtime update: Squeeze on households confirmed by stagnant wage growth

The gap between inflation and wage growth has continued to widen

The squeeze on UK households got a little tighter today as the ONS confirmed that wage growth lags far behind rising inflation.

Unemployment dropped to its lowest level in 42 years but the tighter labour market failed to translate to earnings with wage growth stagnating at 2.1pc.

The fall has knocked hawkish hopes of an earlier-than-expected interest rate rise at the Bank of England and the pound has pared its early gains on the currency markets. Sterling remains at a one-year high against the dollar, however, trading at $1.3274.

The FTSE 100’s losses have eased but it is still stuck in the red, bucking the trend on markets. Miners weighed heavily on the blue-chip index as copper slipped to a three-week low while Tesco is the sharpest faller on a broker downgrade.

Spreadex analyst Connor Campbell commented on this morning’s action:

“While sterling’s slide took the edge off the FTSE’s losses it couldn’t fully lift it out of the red. Instead the index is still down 30 or so points, weighed down by its mining stocks. As for the Eurozone, the euro’s bounce against the pound meant there was little for the DAX and CAC to enjoy, instead both indices sitting flat as the morning went on.  

“Looking to this afternoon and for now the Dow Jones seems to have stalled at 22100. The index is set to start the US session flat at that level, with little on the agenda – bar the latest PPI reading – to help it on its way to a fresh all-time high.”

12:26PM

Slow wage growth a global problem

Today’s wage growth figures are proving a bit of a head scratcher for economists. The normal connection between a tight labour market and wage growth just hasn’t been feeding through into the figures recently.

Real wage growth has fallen in almost all sectors with only a handful, including finance and arts, enjoying a rise. 

Looking at the employment figures by region, Northern Ireland lags behind with just 68.2pc of its population in work compared to 79.6pc in the South East.  

Investec economist Philip Shaw points out that slow wage growth is not just a UK problem:

“Both basic economic theory and common sense suggest that pay growth is likely to be bid up as labour becomes scarcer and shortages become more commonplace.

“However, soft wage growth is not just a feature of the UK economy, but an international phenomenon, with the authorities in the US, the euro area and Japan attempting to make sense of similar developments, despite tight, or at least tightening labour markets there.”

Ashurst employment partner Crowley Woodford believes that confidence is key to sluggish wage growth:

“There is still a lack of confidence amongst employers with regards to the longer term future whilst workers still feel insecure in their jobs. This dampens the pressure on employers to offer higher pay and employee representative bodies to demand it.”

11:57AM

Apple’s iPhone X unveiling pulls down European suppliers

The iPhone X will be released in November and cost £999

Unless you’ve been living under the rock or taken a vow against capitalism, you may have noticed that Apple unveiled its new iPhone X yesterday and the markets are of course not immune to the latest release from the world’s largest listed company.

Disappointment that the iPhone X will not hit stores until November dragged down Apple shares 0.4pc last night in the US with the new £999 phone available to buy on November 3, a considerable delay compared to previous releases.

Given that Apple left its fourth quarter guidance in tact, it suggests that the tech giant expects to compensate for the delay with sales of its new iPhone 8, which will be released later this month.

Apple’s share price knock has had a read across to its suppliers with British semiconductor firm IQE falling nearly 6pc while in Europe suppliers AMS and Dialog have both retreated. Imagination Tech shares, which have plummeted since Apple announced that it would soon stop using the company’s chips, have fallen 4.5pc.

11:28AM

Markets update: easyJet jumps on new long-haul booking service

EasyJet has moved into long-haul through its ‘Worldwide by easyJet’ service

All that wage growth excitement has led me to neglect the big movers in London this morning so let’s take a quick look at the laggards and leaders.

On the FTSE 100, easyJet has been propelled to the top of the leaderboard after making the move into long-haul through a new service that allows passengers to book connecting flights on partner airlines.

At the other end, Tesco has dropped 1.9pc on a broker downgrade from Exane BNP Paribas while mining stocks are struggling as the price of copper falls to a three-week low.

On the mid-cap FTSE 250, homeware store Dunelm has popped over 7pc after it told shareholders of a strong start to its financial year while wholesale retailer Booker has retreated 2.5pc following a broker downgrade.

10:58AM

Dunelm sales drop as it warns of difficult trading climate in the UK

Dunelm like-for-like sales were down last year

Homewares retailer Dunelm has warned that it expects trading conditions to remain difficult in the UK as it reported a drop in like-for-like sales.

In its full-year results, Dunelm said like-for-like sales in its stores were down 2.4pc in the year to the start of July.

Overall like-for-like sales were down 0.5pc, and pre-tax profits fell to £92.4m from £128.9m in the previous year.

The decrease came despite an 8.5pc jump in total revenues, from £881m to £956m.  

The FTSE 250 company said the sales drop in its stores was the result of lower footfall as a result of “unusually warm weather”.

Shares jumped 40p to 650.5p, a 6.6pc increase, following the update.

Read Sam Dean’s full report here

10:48AM

Job figures reaction: link between wages and unemployment weakening

Minister for Employment Damian Hinds said today’s figures show employers investing Britain

The link between wages and unemployment is weakening, according to Deloitte’s chief economist Ian Stewart.

He said:

“Job creation is a huge UK success story. Despite Brexit uncertainties and slower growth, the UK continues to generate ever lower unemployment and ever more jobs.   “

“But the recession, and its aftermath, has weakened the link between unemployment and wages. In the past this degree of tightness in the jobs market would be pushing wages higher. Instead earnings growth has flat lined in the last couple of years.”

Here’s the reaction of the Minister for Employment Damian Hinds to today’s job figures:

“The strength of the economy is helping people of all ages find work, from someone starting their first job after leaving education, to those who might be starting a new career later in life.

“Britain’s employment success is largely about a growth in full-time and permanent work, as employers invest in Britain and offer quality job opportunities that put more money into people’s pockets.

“But there is more to do, and we will continue to build on our achievements through our employment programmes and the work of Jobcentre Plus.”

Unfortunately that extra money in people pockets is being pinched by high inflation.

10:34AM

Job figures reaction: high inflation and weak wage growth muddies BoE decision

The Bank of England is stuck between a rock and a hard place ahead of tomorrow’s monetary policy meeting after wage growth failed to keep up with inflation.

While high inflation boosts hopes that the central bank will soon take a hawkish turn, today’s poor wage growth figures in a tight labour market has added another layer of uncertainty. 

Ranko Berich, head of market analysis at Monex Europe, believes today’s figures have put the central bank in an uneviable position:

“Looking at the across the board inflation increase reported in August and low unemployment rate, you’d be forgiven for thinking that the BoE’s policy decision will be a no brainer in favour of higher rates at some stage in the next 12 months. But today’s miss on average earnings highlights the fact that this is just not the case: wage growth remains sluggish, and real wages are in deep contraction in the UK.

“The BoE is in an unenviable position heading into tomorrow’s MPC meeting, given that inflation is above target but the latest wage and investment data show that the economy is hardly going through a demand driven boom that needs an immediate monetary response.”

Wage growth failing to keep pace with inflation has muddied the decision at the Bank of England, according to ETX Capital analyst Neil Wilson.

He explained:

 “At the same time inflation is exchange rate rather than demand driven and therefore expected to retreat soon enough. Hopes of a hike by year-end may well be dashed on the rocks of economic uncertainty.

“In the short-term, cable may find it hard to hold onto gains if there is no additional indications from the Bank that it is prepared to hike this year. Today’s wage growth data would appear to temper any hawkish inclination, proving bearish for sterling in the near-term.”

10:06AM

Wage growth reaction: today’s disappointing figures pull down early interest rate hike hopes

Wage growth has weakened this year despite the decline in job market slack, according to Pantheon Macro

Has today’s disappointing wage growth wounded hopes of an early interest rate hike?

The chance of an early rate rise have been dealt a blow this morning, according to Jake Trask, FX Research Director at OFX.

He said:

“Before this morning’s data, there had been some speculation that the Bank of England’s Chief Economist would switch tack tomorrow, and address above-target inflation by voting for a rate hike.

“But this morning’s sluggish reading will likely see him sit on his hands a while longer, to avoid adding pressure to consumers already facing rising prices.”

Pantheon Macro UK economist Samuel Tombs agrees that today’s job figures weaken the argument of monetary policy hawks.

He explained:

“The latest labour market data are, on balance, a setback for the hawks on the MPC arguing for higher interest rates. Admittedly, employment rose by 181K, or 0.6%, in the three months to July, the fastest growth since the end of 2015.

“But the three-month average number of job vacancies in August was 0.9% lower than in the previous three months, pointing to a slowdown in employment growth ahead.”

9:57AM

Gap between wages and inflation widens

Today’s wage growth figures will reignite concerns that the tightening labour market is still failing to feed through to wage growth.

Wage growth was expected to nudge up to 2.2pc but the figures remained steady at 2.1pc.

The figures mean that the gap between wages and inflation, which rose to 2.9pc yesterday, has widened even further to tighten the squeeze on UK households.

London Capital Group analyst Ipek Ozkardeskaya believes the pound’s retreat following today’s data could be short-lived, however.

She added:

“The widening price-wage inflation gap is becoming a serious headache for the Bank of England (BoE) policymakers as lower wages require a dovish monetary policy, but only as long as the inflation allows. 

“Despite the slow improvement in wages and street protests from several sector workers, the rising inflationary pressures could encourage some Monetary Policy Committee (MPC) members to vote in favour of an interest rate hike in the coming months.”

9:44AM

Job figures key takeaways

Wage growth now lags far behind inflation

  1. Wage growth remains steady at 2.1pc, lower than expectations. The disappointing figures widen the gap between pay and rising prices.
  2. Unemployment nudges down to 4.3pc, its lowest rate since 1975.
  3. 32.14m people were in work in the three months to July, 181,000 more than the period between February to April.
  4. Pound retreats back to flat territory on the currency markets following sluggish wage growth data.
9:33AM

Wage growth disappoints; unemployment nudges down to 4.3pc

Wage growth disappoints, remaining steady at 2.1pc to widen the gap between rising prices and pay.

Unemployment nudges down to 4.3pc, a 0.1 percentage point drop.

Pound slips back towards flat territory against dollar, trading 0.1pc higher at $1.3280.

9:20AM

Pound eases off morning highs; still firmly in positive territory against most major currencies

The pound has jumped 0.3pc higher against the dollar this morning

The pound’s ascent on the currency markets has eased off a little as we approach the job figures at the bottom of the hour with sterling flirting with flat territory against the euro.

The FTSE 100 is continuing to suffer at the expense of the stronger pound, according to Spreadex analyst Connor Campbell.

He said:

“With the UK jobs report on the way the FTSE continued to suffer in the shadow of sterling’s September rise.   The FTSE plunged more than 50 points after the bell, swiftly falling to a 7350-grazing near one week low. The miners have all moved lower, while BP and Shell are both down half a percent.

“However, the main reason for the UK index’s decline was the pound’s latest climb. Though only up 0.2%, that takes cable to a fresh, $1.33-plus one year peak; it has also risen 0.1% against the euro, cementing a 6 week high.”

9:05AM

Job figures preview: what the experts say

Let’s have a quick round-up of what the experts are saying ahead of today’s job figures.

CMC Markets analyst Michael Hewson believes strong figures today will lift interest rate hike hopes.

He said:

“A solid wages number could shift the calculus on the MPC further towards a rate rise with Chief economist Andrew Haldane likely to join the other two hawks Michael Saunders and Ian McCafferty in pushing for a rate rise, given recent comments he made during the summer, when inflation ticked up to the same level it is now.

“He suggested that “beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second part of the year”, though the caveat was that the data supported such a move.”  

He added that it would have been a “delicious irony” if inflation had pushed past 3pc and Bank of England governor Mark Carney had been forced to write a letter to chancellor Philip Hammond to explain why the figures had so badly missed the central bank’s 2pc target.

Many blame Mr Carney and co’s emergency monetary policy change after the EU referendum for knocking down the value of the pound and pushing up inflation.

Disappointing wage figures will only complicate matters at the central bank, according to Accendo Markets head of research Mike Van Dulken.

He commented:

“Following yesterday’s much hotter than expected inflation prints, the Bank of England will be hoping for a reciprocal surprise from wages too.

“A disappointment, however, will add yet another level of complexity to their current interest rate quandary, with policymakers hesitant to increase rates which consumers  are subject to an extended pinch on their pockets.”

8:48AM

Job figures preview: what to expect

Unemployment is expected to remain at a 42-year low

Yesterday’s jump in inflation reignited hawkish hopes of an interest rate hike before the end of the year, sending the pound soaring on currency markets.

There are concerns at the dovish end of the Bank of England’s Monetary Policy Committee, however, that the UK economy is too fragile to withstand a rate rise. Could today’s figures be enough to persuade wavering MPC members, such as chief economist Andy Haldane, to back a hike?

What to expect

Wage growth is expected to nudge up to 2.2pc in the three months to July, a 0.1 percentage point rise on last month’s figures and lagging far behind inflation.

Meanwhile, unemployment will remain unchanged at 4.4pc, a 42-year low, according to economists.

8:27AM

Agenda: Pound pushes past $1.33 against dollar ahead of wage growth data

Housebuilder Galliford Try posted profits at the upper end of estimates

Lagging wage growth is the focal point for the markets this morning with the ONS’ figures expected to show the gap between pay and rising prices continuing to widen.

Average earnings growth will nudge up to 2.2pc, according to the consensus of economists, cranking up the pressure on households and marking another knock-back for real wages.

The pound this morning has built on yesterday’s post-inflation data gains against the dollar, rising 0.4pc at $1.3326, a one-year high. 

The FTSE 100 under pressure from the buoyant pound missed out on the relief rally pulling up equities globally yesterday. This morning it has lurched into the red while European stocks’ rally has stuttered with the CAC 40 in flat territory and the DAX nudging down.

Galliford Try’s full-year results are the highlight on a slightly lighter corporate calendar. The housebuilder, which was hit by a £98m provision to cover legacy contract costs earlier this year, posted profits at the upper end of estimates, pushing its shares 1.3pc higher earlier on.

Interim results: Alliance Pharma, Ten Entertainment Group, Just Group, Soco International, Gaming Realms, Ingenta, Epwin Group, SQS Software Quality Systems AG, Advanced Medical Solutions Group, Columbus Energy Resources, MyCelx Technologies Corporation

Full-year results: Wilmington, Dunelm Group, Town Centre Securities, Galliford Try, Haynes Publishing Group

AGM: Marechale Capital, Versarien, Tricorn Group, Argo Group, Games Workshop Group, Intercede Group, Hardy Oil & Gas

Economics: Unemployment Rate (UK), Claimant Count Change (UK), Average Earnings Index 3m/y (UK), PPI m/m (US), Industrial Production m/m (EU)Employment Change q/q (EU)