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British Prime Minister Liz Truss on Wednesday that cutting taxes was "the right thing to do morally and economically."
Speaking at the Conservative Party Conference, Truss doubled down on a series of debt-funded economic reforms that have sparked in-party fighting and market turmoil.
"We must level up our country in a Conservative way," she said.
Prime Minister Liz Truss is seeking to rally MPs around her her tax-cutting policies following political infighting and market turmoil.
LONDON — British Prime Minister Liz Truss insisted Wednesday that cutting taxes was "the right thing to do morally and economically," doubling down on a series of debt-funded economic reforms that have sparked in-party fighting and market turmoil.
Speaking at the Conservative Party Conference, Truss said she was determined to "level up our country in a Conservative way" in an effort to unite MPs around her tax-cutting plans and shore up her dwindling authority.
"Cutting taxes is the right thing to do morally and economically," Truss said, adding that the Conservative Party "will always be the party of low taxes."
"Cutting taxes helps up face the global economic crisis, putting up a sign that Britain is open for business," she said in her first conference speech as Conservative Party leader.
"For too long, our economy hasn't grown as strongly as it should have done," she continued. "We must level up our country in a Conservative way."
"We will keep an iron grip on the country's finances," she said, in an apparent nod to her political idol, Margaret Thatcher, otherwise known as the Iron Lady. "I have three priorities for our economy: growth, growth and growth."
Party infighting and dwindling support
The four-day conference, hosted in Birmingham, England, has been beset by cabinet infighting and animosity as long-time Tory lawmakers have spoken out against newly-installed Truss's "growth-focused" economic policies.
The latest rebellion has centered on Truss' resistance to raising welfare benefits in line with inflation — currently running around 9.9% in the U.K. — reneging on a promise laid out by her predecessor Boris Johnson.
Instead, she reportedly plans to increase support in line with average earnings growth, which, including bonuses, was around 5.5%, according to the latest figures.
Truss has said the proposals would save billions of pounds for the government while "helping more people into work." But fellow party members, including rightwing supporters, have cautioned the PM against cutting the incomes of Britain's poorest as the country faces its worst cost-of-living crisis in a generation.
Protesters have taken to the streets of the U.K. to demonstrate their anger at the new Conservative government headed by Prime Minister Liz Truss.
The leader of the House of Commons, Penny Mordaunt, who ran against Truss during this summer's Tory leadership contest, said Tuesday that she supported benefits "keeping pace with inflation," joining a chorus of MPs who have warned that cuts could spur a party rebellion.
Indeed, some Tories have warned that the prime minister — less than a month into the job — is now fighting for her survival amid plunging poll ratings.
Grant Shapps, former transport secretary, said Tuesday that it was possible the Conservatives could change leader again if Truss "does badly."
Britain's opposition Labour Party was seen as having a 33-point lead over the Conservative Party on Thursday, days before the Conservative Party Conference, according to a YouGov poll.
Still, Truss remained committed to her policies Wednesday, saying: "Not everyone will be in favor of change, but everyone will benefit from the result."
The prime minister's speech was disrupted by shouts from environmental protesters, who were escorted from the audience after Truss requested: "Let's get them removed."
It follows a series of protests in Birmingham over the past week, with members of the public taking to the streets to demonstrate their anger toward the government.
Backlash over tax cuts
Truss's government has been plagued by controversy over the announcement last month of a string of debt-funded tax cuts — estimated to total £43 billion ($49 billion) — which critics say disproportionately benefit the wealthy and businesses.
The prime minister herself has argued the cuts will spur growth at the top end of the economy, with knock-on effects across society.
Amid the backlash, the government on Monday was forced to abandon its plan to abolish the 45% top rate of income tax, in an effort to quell financial markets after the proposals unleashed chaos on U.K. assets.
Britain's Prime Minister Liz Truss has admitted she should have laid the groundwork better for recent "growth-focused" tax cuts that roiled financial markets.
Announcing the decision in a tweet, Finance Minister Kwasi Kwarteng said "we get it, and we have listened," adding that the plans had become a "distraction" following rising backlash from both sides of the political aisle.
The tax cuts — one of several supply side reforms introduced in a Sept. 23 "mini budget" — sparked turmoil in financial markets, causing the British pound to hit a record low of $1.0382 and U.K. 10-year government bond yields to soar as high as 4.6%.
As a result, the Bank of England was forced to step in with a £65 billion bond-buying plan to support U.K. pension funds.
Sterling has since recovered marginally and was seen trading at $1.1371 at 11.50 a.m. local time, shortly after the prime minister's speech. | 2022-10-05T11:32:23Z | www.cnbc.com | UK's Liz Truss pledges tax-cutting future in speech plagued by protest | https://www.cnbc.com/2022/10/05/uks-liz-truss-pledges-tax-cutting-future-in-speech-plagued-by-protest.html | https://www.cnbc.com/2022/10/05/uks-liz-truss-pledges-tax-cutting-future-in-speech-plagued-by-protest.html |
Weekly mortgage applications plummet 14% as higher interest rates and Hurricane Ian crush demand
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75% from 6.52%.
Mortgage applications to purchase a home fell 13% for the week and were a steep 37% lower year over year.
Total mortgage application volume fell 14.2% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index, to the lowest level since 1997.
"The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone," noted Joel Kan, an MBA economist.
"There was also an impact from Hurricane Ian's arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31%, compared to 14% overall, on a non-seasonally adjusted basis," Kan added. | 2022-10-05T11:32:29Z | www.cnbc.com | Weekly mortgage applications plummet 14% as higher interest rates and Hurricane Ian crush demand | https://www.cnbc.com/2022/10/05/weekly-mortgage-applications-plummet-14percent-as-higher-interest-rates-and-hurricane-ian-crush-demand.html | https://www.cnbc.com/2022/10/05/weekly-mortgage-applications-plummet-14percent-as-higher-interest-rates-and-hurricane-ian-crush-demand.html |
The stock market has whipsawed investors over the past two weeks, making even a sharp two-day rally feel fragile. There are some stocks, however, that have track record of being less volatile and outperforming the market. The list below shows stocks in the broad S & P 1,500 index that are less volatile than the market. The stocks have also risen in 2022 and have a long term track record of consistent success, outperforming the market on a total return basis over last decade. Additionally, they sport a dividend yield of at least 2%. The volatility of the stocks is shown by their beta rating. Beta is a calculation of how correlated a stock is to a broad index. A measure of 1 means that a stock moves in tandem with the index, while readings less than 1 show stocks that tends to be less volatile than the market. Several of the low beta stocks on the list come from traditionally defensive sectors. For example, insurer Allstate , health care giant Amgen and utility firm Atmos Energy , all have a beta of 0.6. The stock on the list with the lowest beta is City Holding Co ., at just 0.3, and that has proven true over the past few weeks. During the last seven trading sessions, City Holding has moved more than 1% in either direction on two occasions. The S & P 500 , meanwhile, has done so six times, including a 3% move on Tuesday. The stock on the list that has performed best this year is tax services company H & R Block . Shares have gained more than 70% year to date, fueled by big bounces after each of H & R Block's last two earnings reports in May and August. And the best performing stock on the list over the past 10 years has been Keurig Dr. Pepper . The consumer staples stock has delivered a total return of roughly 21% over the past decade, well above the market average of 12%. Another area that has proven to be a bulwark for portfolios is defense contractor stocks. Because defense contractors tend to get the bulk of their revenue from the government, they are less sensitive to economic trends than the broader market. Lockheed Martin and General Dynamics both made the cut with dividends above 2%. And shipbuilder Huntington Ingalls is one of the best long-term performers on the list, with an annualized total return of just over 20% for the past decade. | 2022-10-05T14:35:04Z | www.cnbc.com | Here's your ultimate all-weather stock portfolio to ride out this market volatility | https://www.cnbc.com/2022/10/05/heres-your-ultimate-all-weather-stock-portfolio-to-ride-out-this-market-volatility.html | https://www.cnbc.com/2022/10/05/heres-your-ultimate-all-weather-stock-portfolio-to-ride-out-this-market-volatility.html |
Enrollment declines and underfunding have hit the higher education system hard.
Post-pandemic, a number of colleges are in financial jeopardy.
Increasingly, high school students are rethinking the value of college. More now question the return on investment, and some have decided against a four-year degree.
To be sure, undergraduate enrollment was falling even before the pandemic, but remote learning — coupled with the sky-high cost — triggered a nosedive. The number of undergraduates enrolled in college nationwide is now down 9.4% compared to two years ago — a loss of nearly 1.4 million students.
Those steep declines caused tuition revenue to fall, putting some schools in financial jeopardy. A few have had to shut down entirely.
Everything parents need to know about student loan forgiveness
"I worry that the trend is going to continue because nobody is doing anything to improve affordability, and universities are going to continue to suffer," said Hafeez Lakhani, founder and president of Lakhani Coaching in New York.
More colleges are struggling financially
Lincoln College in Lincoln, Illinois, closed at the end of the spring semester.
"Lincoln College has been serving students from across the globe for more than 157 years," President David Gerlach said. "The loss of history, careers and a community of students and alumni is immense."
The San Francisco Art Institute closed after 150 years. Marymount California University in Rancho Palos Verdes and Becker College in Worcester, Massachusetts, also recently shut their doors. So have other institutions across the country.
Photo Courtesy: Stepanstas | Wikipedia CC
The number of colleges closing down in the past 10 years has quadrupled compared with the previous decade, according to a report in The Wall Street Journal.
Heading into the 2022-2023 academic year, New Jersey City University declared a financial emergency.
"A national trend of declining enrollment for college-aged students has resulted in a long-term erosion in the university's ability to operate," said Joseph Scott, chair of the Jersey City, New Jersey, school's board of trustees, in a statement.
Funding cuts have created a 'crunch' for smaller schools
At the same time, deep cuts in state funding for higher education have pushed more of the costs onto students and paved the way for significant tuition increases.
Meanwhile, college costs are still rising. Tuition and fees plus room and board for a four-year private college averaged $55,800 in the 2021-2022 school year; at four-year, in-state public colleges, it was $27,330, according to the College Board.
"The real issue is that federal support for students and state support for students has been declining," said Barbara Mistick, president of the National Association of Independent Colleges and Universities.
"It's inevitable there will be a crunch somewhere along the line."
Not all schools are struggling, however. In fact, the country's most elite institutions are faring better than ever.
Smaller, less selective schools — and those serving low- and middle-income students — have been the hardest hit.
Nobody is doing anything to improve affordability, and universities are going to continue to suffer.
founder and president of Lakhani Coaching
"If those schools are closed, you are going to have a real gap in access," Mistick said.
College is becoming a path only for those with the means to pay for it, other reports also show. "The real challenge is that high school students are looking for an affordable school," she said.
Consider a college's finances before you enroll
If college is on the horizon, look into a school's financial standing, Mistick advised. "Do research, know the community you are joining," she said. "Talk to students on campus, talk to faculty before you enroll."
There may be other consequences of a college's financial distress that could impact your education or degree.
To stay afloat, some colleges have cut faculty and slashed areas of academic study, including programs in sociology, creative writing, music and religion.
"Entire philosophy departments, history departments are closing down," Lakhani said. | 2022-10-05T16:06:15Z | www.cnbc.com | Colleges struggle with enrollment declines, underfunding post-Covid | https://www.cnbc.com/2022/10/05/colleges-struggle-with-enrollment-declines-underfunding-post-covid.html | https://www.cnbc.com/2022/10/05/colleges-struggle-with-enrollment-declines-underfunding-post-covid.html |
Cosplayers dressed in Mandalorian armor and Black Widow pose for a photo during Day 4 of New York Comic Con 2021 at Jacob Javits Center on October 10, 2021 in New York City. (
ReedPop, which represents a relatively tiny corner of global conglomerate RELX's empire, is still learning – and recovering – from Covid. It now operates live pop culture events in just three countries (the United States, the United Kingdom and Australia) after licensing the intellectual property for several other events in Europe and Asia to third parties. "We will go back when the time is right," Fensterman said.
Revenue for live events hasn't quite bounced back, either: Fensterman said that it's about 70% of what it was before the pandemic, in relative terms. (ReedPop doesn't disclose revenue in dollar figures.) It also had to lay off about 30% of its live events staff, he said. Overall, ReedPop has about 160 employees, compared with the roughly 190 it had before Covid.
That's especially important as major brands such as DC and Marvel also expand their digital reach. The two long-time funny-book rivals, who have been pillars of fan conventions for years, have had to adapt, as well.
New York Comic Con also comes as DC and Marvel establish more direct pathways to fans. Disney has its D23 Expo and Star Wars Celebration events. This week, DC will hold a separate event featuring creative chief Jim Lee and other talent blocks away from the Javits Center at Hudson Yards. | 2022-10-05T16:14:51Z | www.cnbc.com | New York Comic Con 2022: Marvel, DC fans flock to Javits Center | https://www.cnbc.com/2022/10/05/new-york-comic-con-2022-marvel-dc-jacob-javits-center.html | https://www.cnbc.com/2022/10/05/new-york-comic-con-2022-marvel-dc-jacob-javits-center.html |
Art Cashin, UBS director of floor operations, is wary of this week's two-day monster rally in stocks. "The rally was very impressive, unfortunately I was not happy with the spark that started it, that event-risk routine," he said on CNBC's "Squawk on the Street" on Wednesday. Cashin sees the rally as started by the Bank of England's move to scrap the selling of gilts (U.K. government bonds) and begin temporarily buying long-dated bonds to calm a potential market meltdown that was caused by the new government's budget. Later, the government had to reverse its plans to drop its top income tax rate. Furthermore, the United Nations Conference on Trade and Development recently warned central banks that continued interest rate hikes could hurt the global economy. "Part of the move that we saw, and it's really a terrific two-day rally, is people assuming that the Fed and other central banks might pause," said Cashin. What's up next Next, Cashin said he will be watching for earnings season, which begins soon. Until then, he'll be on the lookout for markdowns to estimates. He's also impressed by a few other things in the market, such as the yields on Treasury inflation-protected securities, which seem to show that inflation is coming down and may even be close to the Federal Reserve's 2% target. "One swallow doesn't make a summer, but keep your eye on the TIPS yield here," he said. If inflation does continue to come down, it could cause policymakers to halt rate hikes and reflect on their next move, Cashin added. "We don't want to see them actually turn around," he said. "We just want to see them pause and reflect." | 2022-10-05T17:33:51Z | www.cnbc.com | Why UBS' Art Cashin doesn't like the market's monster 2-day rally | https://www.cnbc.com/2022/10/05/why-ubs-art-cashin-doesnt-like-the-markets-monster-2-day-rally.html | https://www.cnbc.com/2022/10/05/why-ubs-art-cashin-doesnt-like-the-markets-monster-2-day-rally.html |
Watch live: President Joe Biden addresses Hurricane Ian victims in Fort Myers, Florida
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President Joe Biden traveled to Fort Myers, Florida on Wednesday to address the aftermath of Hurricane Ian.
The hurricane is shaping up to be the costliest Florida hurricane since Andrew in 1992, with wind and storm surge damage estimated to be between $28 billion and $47 billion. | 2022-10-05T19:09:30Z | www.cnbc.com | Watch live: President Joe Biden addresses Hurricane Ian victims in Fort Myers Florida | https://www.cnbc.com/2022/10/05/watch-live-president-joe-biden-addresses-hurricane-ian-victims-in-fort-myers-florida.html | https://www.cnbc.com/2022/10/05/watch-live-president-joe-biden-addresses-hurricane-ian-victims-in-fort-myers-florida.html |
Portfolio managers who've traditionally used a 60/40 stocks-to-bonds split for clients say that now is the time to consider buying more heavily into fixed income to weather volatility and economic weakness ahead. Both asset classes have had a rough year. Bond yields have rebounded lately, and some areas of the market are showing solid income for investors. Yields move opposite bond prices. "Bonds are more attractive than they've been in a while, probably over a decade," said Barry Gilbert, an asset allocation strategist for LPL Financial, adding that they make the most sense for investors who are more conservative or looking to pad income in their portfolio. At the same time, stocks have been volatile and are likely to continue to whiplash. That's already prompted investors to sell out of the riskier assets in exchange for the safety of fixed income. The ratio between equities and bonds has fallen since mid-August, Credit Suisse analyst David Sneddon wrote in a Monday note. "This suggests that we may be seeing a more decisive turn lower and a more sustainable downtrend as investors move out of equities further and finally start moving into bonds, with the equity downtrend itself expected to gather pace," he said. Which bonds make sense The threat of a potential recession is spurring movement into bonds, especially as continued high inflation and rate hikes from the Federal Reserve weigh on stocks. "We think equities have further room to fall particularly as earnings are at further risk in a recession scenario," said Michael Reynolds, Glenmede's vice president of investment strategy. In such an economic environment, being underweight market risk makes sense. It also seems sensible to turn to fixed income for some protection. Historically, bonds mitigate risk and blunt volatility that equities usually see. Although this year has been rough on both asset classes, it hasn't changed that fact, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial. "What has changed this year is that income is looking more attractive today with yields coming back up," he said. "When you start getting 4% for the two-year and near 4% on the 10-year, those are attractive yields." Currently, the yield on the two-year U.S. Treasury is about 4.14%, while the yield on the 10-year is 3.75%. Shorter duration bonds are popular with investors right now due to these higher yields. For instance, rates on the U.S. one-year and three-year bonds are above 4%. "Right now, we are putting our over weights into short duration fixed income," said Reynolds. "We're also less exposed there to rise in interest rates." He noted that the firm's sweet spot is in the two-to-three-year range, as that's where they're finding the best value. Those with more bonds in their portfolio would want to lean more heavily on the shorter end of the yield curve for the most protection and income, according to LPL's Gilbert. However, investors with a more traditional 60/40 split would probably want to hold duration around six or seven years, he said. Of course, if there is a recession in the next few years, there will come a point when it makes sense to beef up on bonds even more and look for investments farther out on the yield curve. "In recession environments you want to have a little bit of duration and if interest rates come in you can get a big payoff on those bets," said Reynolds of Glenmede. Now, he noted, that bet is a little premature because interest rates are likely to go a bit higher. Other areas of fixed income To be sure, investors may be wary of bonds as they've also been hit hard this year, resulting in price declines on both sides of the 60/40 portfolio. For those that are looking for income but don't want to play too heavily in bonds, there are some other options, according to Rob Burnette, CEO and financial advisor at Outlook Financial Center in Troy, Ohio. That includes blue-chip stocks that pay solid dividends like IBM or looking at other investments such as preferred securities or structured notes. Preferred securities are fixed income instruments that hold some qualities of stocks and bonds and generally offer higher yields, while structured notes are debt issued by financial institutions. It may also make sense to have a larger cash holding on the sidelines ready to go back into equities. "It's good to have some dry powder on the sidelines in the environment like this, you never really know what sort of opportunities will arise," said Reynolds. It may also be a good time to buy stocks and bonds now and move back toward a 60/40 split, said Gilbert. "You should be looking at opportunities when it feels the worst to do it," he said. It might make sense to rebalance Investors who want to position appropriately for the coming months may not have to do much to bring their portfolios in line, given the sell-off in equities year to date. Still, it makes sense to regularly reassess the balance of bonds, stocks and cash to make sure your allocation meets your goals. Many investors may find that even if they haven't seen great gains this year, they're still set up for success in the long term and shouldn't make any emotionally driven changes. "A well-diversified portfolio continues to be the best path forward for investors," said Saglimbene. | 2022-10-05T20:10:04Z | www.cnbc.com | Investors with a 60/40 portfolio may want to shift focus into fixed income now | https://www.cnbc.com/2022/10/05/investors-with-a-60/40-portfolio-may-want-to-shift-focus-into-fixed-income-now.html | https://www.cnbc.com/2022/10/05/investors-with-a-60/40-portfolio-may-want-to-shift-focus-into-fixed-income-now.html |
Costello, who also had a residence in La Jolla, Calif., used about $42,000 of investors' money for costs associated with his wedding to Katrina Rosseini, prosecutors said.
A video of that wedding reviewed by CNBC shows both a cake and an ice sculpture boasting the James Bond movie logo of the numbers "007" over a semi-automatic pistol and a belly-dancing performance by Rosseini, who is not charged in the cases facing her husband.
An attorney for Costello, who previously lived in Bellevue, Washington, did not return a request for comment.
Costello had agreed through his lawyer to surrender last Thursday to the FBI office in San Diego after being informed he had been indicted on criminal charges by a grand jury in federal court in Washington state a day earlier, law enforcement officials told CNBC. The complaint accuses him of 22 counts of wire fraud and three counts of securities fraud in the case.
On the same day, the SEC slapped Costello and an alleged co-conspirator David Ferraro, with a civil lawsuit accusing them of defrauding investors and of using Twitter to promote penny stocks without disclosing their own sales of the stocks as prices rose.
The SEC said in one instance, Costello sold a married couple $1.8 million in stock at a more than 9,000% mark-up to its price.
Ferraro, a 44-year-old Radford, Va., resident who was not charged in the criminal indictment with Costello, did not immediately return a request for comment from CNBC.
After Costello failed to surrender Thursday, the FBI soon after issued a "Wanted" poster featuring Costello, noting he was a fugitive.
The poster noted that the couple might be traveling with their small dog, who is named Harry.
On Tuesday night, Costello was arrested by an FBI Swat team in El Cajon, Calif., in San Diego County, according to Emily Langlie, a spokeswoman for the U.S. Attorney's Office for the Western District of Washington.
Costello's apprehension was welcome news to Steven Selna, an Oakland, Calif., lawyer whose client, CCSAC Inc., was one of the three cannabis companies allegedly swindled by Costello.
CCSAC has a pending lawsuit against Costello and his companies in U.S. District Court for the Northern District of California, over his failure, despite claims to the contrary, to pay $2.2 million in taxes to the state of California on CCSAC's behalf from its account at Pacific Banking Corp.
The criminal indictment against Costello accuses him of fraudulently diverting $300,000 of CCSAC's money deposited with Pacific Banking to purchase shares in a publicly traded shell company in 2019 for the purposes of ultimately completing a reverse merger with Costello's then-privately held company, GRN Holding Corp.
GRN Holding's most recent SEC filing says that Costello resigned as CEO of the company in April, the same month that he solder 144 million shares of GRN Holding to its current CEO for $140,000.
According to the indictment, a judge in the civil case filed against Costello by CCASC last month ordered him to declare under the penalty of perjury the name of the financial institution, and other details about the account where the balance of CCSAC's funds was being held.
Costello submitted a sworn declaration saying that at least $2.9 million in CCSAC's funds were being held in a credit union in Tacoma, Wash., in the name of GRN Funds LLC, the indictment notes.
"All we're interested in is getting our client's money back, and if it facilitates that it's a good thing," Selna said.
The lawyer also said that Costello, in dealings with CCSAC, "certainly presented himself as being highly successful in this industry, and that he would protect our client's money. And that wasn't true."
He also claimed to have done two tours in Iraq as a member of the Special Forces, and been shot twice, leaving shrapnel in his leg, the complaint says.
Costello also falsely said "he was a billionaire"; "he managed money for wealthy individuals, including a Saudi sheikh"; and "he had 14 years of experience on Wall Street," the indictment said.
That same year, Costello had GRN Holdings issue a press release stating it had non-binding letters of intent to acquire at least 10 companies, and that in the following months issued 10 press releases announcing the completion of due diligence for each company, the indictment said.
"Most of the companies were instead acquired by Renewal Fuels Inc., another [over-the-counter market-]traded company controlled by Justice Costello."
Between July 2019 and May 2021, "over 7,500 investors purchased and sold GRN Holding Corporate stock while Justin Costello was making, and continuing to be made, the material misrepresentations concerning GRN Holding," the indictment said. | 2022-10-05T22:11:59Z | www.cnbc.com | Man claimed to billionaire, Harvard MBA, Iraq vet in financial fraud | https://www.cnbc.com/2022/10/05/man-claimed-to-billionaire-harvard-mba-iraq-vet-in-financial-fraud.html | https://www.cnbc.com/2022/10/05/man-claimed-to-billionaire-harvard-mba-iraq-vet-in-financial-fraud.html |
Visitors stands in front of an electronic ticker at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Monday, Nov. 30, 2020.
Shares in the Asia-Pacific are set to fall on Thursday after Wall Street's two-day rally fizzled.
The Nikkei futures contract in Chicago was at 27,100 while its counterpart in Osaka was at 27,070. That's slightly lower compared against the Nikkei 225's last close at 27,120.53.
In Australia, the S&P/ASX 200 fell 0.34%. Mainland China markets are closed for a holiday this week. | 2022-10-05T23:43:16Z | www.cnbc.com | Asia markets: Stocks, economic data, currencies, oil | https://www.cnbc.com/2022/10/06/asia-markets-stocks-economic-data-currencies-oil.html | https://www.cnbc.com/2022/10/06/asia-markets-stocks-economic-data-currencies-oil.html |
Stocks around the world have taken a beating this year, and major indexes on Wall Street remain deep in negative territory. Wall Street is coming off a tough month, with the Dow and S & P 500 notching their biggest monthly losses since March 2020. The Dow shed 8.8% in September, while the S & P 500 and Nasdaq Composite lost 9.3% and 10.5%, respectively. Though the beginning of this week brought something of a relief rally , global and Wall Street indexes are still well in the red year to date. The MSCI World index and the S & P 500 are more than 20% down, while the Dow fell by about 17%. The Nasdaq Composite lost nearly 30%. That could present an opportunity for investors looking for quality stocks and upside in a volatile environment. The stocks in the table below are trading within 10% of their 52-week low, but have a "buy" rating from more than half the Wall Street analysts who cover them. The stocks have an average price target upside of 20% or more, and their earnings are forecast to grow by at least 10% this year. There were some big names in the screen, such as tech giant Microsoft and payments giant Mastercard . Microsoft generates much of its revenue from subscriptions from both consumers and businesses, which are seen as more resilient than other types of spending. Microsoft, like other tech stocks, tumbled this year, dropping about 25% year to date. However, analysts overwhelmingly (90%) gave it a "buy" rating, and an average price target with upside of 30%, according to FactSet. Booking Holdings was also on the list, with one of the highest projected earnings per share growth at about 140%. Online travel agency Agoda, a unit of Booking Holdings, said in late September that travel resumed quickly in Europe and the United States. Asian tourism is, however, expected to return to pre-pandemic levels more gradually, by 2024, according to Agoda. — CNBC's Jesse Pound, Tanaya Macheel and Zavier Ong contributed to the report. | 2022-10-06T01:14:32Z | www.cnbc.com | Buy the dip on cheap stocks amid so-called relief rally | https://www.cnbc.com/2022/10/06/buy-the-dip-on-cheap-stocks-amid-so-called-relief-rally.html | https://www.cnbc.com/2022/10/06/buy-the-dip-on-cheap-stocks-amid-so-called-relief-rally.html |
With the market still tumultuous as investors react to recessionary concerns, one investor recommends a plain-yet-trusted move: high-dividend growth stocks. Wednesday brought choppy waters as the three major averages slipped, recovered, and then ultimately ended the session with small losses. It marked a turn from two days of a relief rally that came earlier in the week. Investors remain unnerved as the Federal Reserve raises interest rates in an attempt to temper inflation, raising concerns of a recession on the horizon. In response to the rocky market, Kevin Simpson, chief investment officer of Capital Wealth Planning, selected five stocks that he sees as hedging against inflation through growing dividends. Simpson said these stocks have the earnings to back up their dividends, so they aren't companies promising a return to investors they can't actually provide. Free cash flow, earnings and earnings before interest, taxes, depreciation and amortization, known as EBITDA, are some of the major indicators he looks at to make this judgment about a company. These names also post strong compound annual growth, he said, meaning they have not just dividends, but they are growing each year. A steady play that's becoming exciting Though some market participants view this type of play as "boring," he said, dividends are an important place to look because they ensure a return for investors who hold, even in periods of market downturns. "When you focus on fundamentals and valuations, you can be somewhat less concerned about the noise and the big macro picture in the background," Simpson said. "If you invest in dividend growth stocks to help combat inflation, at the very least you're insured to get paid something while you wait for better times or for economic conditions to improve." Among the stocks on the list is fast-food titan McDonald's with a dividend yield of 2.3%. He said McDonald's not only posts data that points to increasing dividends it can back, but the company's investment in real estate can help an investor further diversify a portfolio. Devon Energy , one of the winners in the market benefiting from fluctuating oil prices, is also among Simpson's picks. The stock has the highest yield among the names he's highlighted at 6.75%. Two health care companies, Merck & Co. and UnitedHealth Group , are both included. Like consumer staples, he said these stocks are especially smart because people will always need health care, regardless of the condition of the broader economy. RBC also spotlighted UnitedHealth Group as a stock that can weather the current macro climate . Simpson said choosing companies with high growth dividends and the earnings to back them up is always a smart play. "Investing in 2022 is different than the way we've invested," Simpson said. "For the past 10 years or so, dividend-paying stocks may not have been the most exciting place to invest. But for those of us who practice active management, we know all too well sometimes boring can be quite good." | 2022-10-06T01:14:38Z | www.cnbc.com | Investor Kevin Simpson picks 5 dividend-paying stocks to survive high inflation | https://www.cnbc.com/2022/10/06/investor-kevin-simpson-picks-5-dividend-paying-stocks-to-survive-high-inflation.html | https://www.cnbc.com/2022/10/06/investor-kevin-simpson-picks-5-dividend-paying-stocks-to-survive-high-inflation.html |
U.S stocks closed lower on Wednesday, as they failed to build on a two-day winning streak. The dip marks yet another episode in what has been a topsy turvy year for stock markets. Aswath Damodaran, a professor of finance at New York University's Stern School of Business, believes the volatility boils down to two key reasons — what's happening in the macro environment and the prevailing "mood and momentum" in the market. "My advice to investors is to recognize that the day-to-day movements that you see in this market have little to do with fundamentals, and a great deal to do with mood and momentum because people are off balance, too," Damodaran, sometimes referred to as the "Dean of Valuation," told CNBC's "Street Signs Asia" on Wednesday. "Much has happened this year for people to try to make sense of what's coming and until they get some consensus on where we are going, we are going to get this volatility, these up and down days," he added. Damodaran believes this is just a temporary phenomenon, with fundamentals set to eventually return as the main driving force for stocks. "You have got to be ready for when it comes back," he said. Stocks 'at a bargain' How then, should investors trade in the present, given the unpredictability of the stock market? "Your big concern if you're an investor is to buy companies that can withstand a hurricane, a catastrophe if it does happen, because the odds of it happening might be no," Damodaran said. "But we could be in for a really severe recession and risk capital not returning to the game for a year or two years, maybe even three years." Damodaran said he is steering away from companies with high operating and financial leverage, and toward companies with solid earnings and cash flows — even if they are unable to deliver growth at this juncture. Read more Market is heading toward the ‘best week of the year,’ pro says — and names 2 stocks to play it Should investors flee stocks? Strategists give their take — and reveal how to trade the volatility Investment pro says ETFs are now a better bet than stocks — and reveals areas of 'tremendous' value Within the big tech space, Damodaran said he owns shares in Meta , Amazon , Alphabet , Apple , and Microsoft . He also owns "winners that have fallen on hard times," such as Nvidia . With their stock prices down significantly this year, he said investors will be getting these stocks "at a bargain." "These companies — they're not going anywhere. These are not levered companies; they don't have a lot of debt. They're going to survive. They're going to make money. They're going to sell their products. So, from that perspective, I feel more comfortable with these stocks than with the traditional safe companies," he said. For instance, Damodaran said he would rather put money in Apple than Coca-Cola, given the former's greater "staying power." "I might be an outlier in this. But I think big tech has a lot more staying power in terms of revenues and earnings than people give it credit," he said. | 2022-10-06T01:14:44Z | www.cnbc.com | NYU Dean of Valuation names big tech stocks that are a better bet | https://www.cnbc.com/2022/10/06/nyu-dean-of-valuation-names-big-tech-stocks-that-are-a-better-bet.html | https://www.cnbc.com/2022/10/06/nyu-dean-of-valuation-names-big-tech-stocks-that-are-a-better-bet.html |
Investors in China have had a difficult time recently. The Shanghai Composite Index has fallen by 17% this year and is down around 10% over the past five years. But one fund manager thinks there are pockets of value in certain "core sectors" even while financial conditions are tight. Edmund Harriss, head of Asian and emerging market investments at Guinness Asset Management, is optimistic about China over the long term despite its recent challenges over Covid-19 lockdowns and an overextended real-estate market . He believes China's government has decided to "reset" and face some of the country's long-term challenges, such as an aging population and a smaller labor force. "That means your labor force has to become more productive or produce higher value-added activities. And so, they are looking to move into core industries in which they can dominate," he said. The electric vehicle play Harriss, who manages the Guinness Asian Equity Income fund, said companies in the electric vehicle sector, factory automation, and sustainable energy field would likely outperform their global peers over the next five to 20 years. He cited BMW 's decision to award Chinese companies CATL and Eve Energy the contract to set up battery manufacturing plants in Europe as examples of companies succeeding in those sectors. Both companies will begin supplying the German carmaker with batteries from 2025 for its next-generation electric vehicles. "[Chinese] battery makers are very good. A lot of capital has gone into that area. That is a visible example of where China is looking to excel," he added. Shares for CATL, the world's largest EV battery maker, have fallen by 30% this year but are up by more than 650% over the past five years. Earlier this year, the company was reportedly firming up expansion plans to set up a battery production facility in South Carolina and Kentucky to supply BMW and Ford . Its customers also include Tesla and Volkswagen . Similarly, Eve Energy has seen its share price decline by 25% this year but is up by 530% over the past five years. "I seem to be a bit out of step with the rest of the market because I think there's lots to buy in China," the fund manager overseeing more than $200 million in assets said. "Valuations across the board are looking pretty attractive in my view." Eve Energy and CATL make up 5.65% of the KARS ETF, which is available to both U.S. and U.K . investors. | 2022-10-06T01:14:50Z | www.cnbc.com | 'There's lots to buy in China,' fund manager says and names these 2 EV stocks | https://www.cnbc.com/2022/10/06/theres-lots-to-buy-in-china-fund-manager-says-and-names-these-2-ev-stocks.html | https://www.cnbc.com/2022/10/06/theres-lots-to-buy-in-china-fund-manager-says-and-names-these-2-ev-stocks.html |
— This is the script of CNBC's People of the Week for China's CCTV on September 30, 2022.
In the Italian parliamentary elections unveiled on Monday, the center-right coalition of Meloni, leader of the Brotherhood party, united with two other parties, won about 45 percent of the vote, meaning that Meloni is likely to become Italy's first female prime minister. It is widely believed that she would form Italy's most right-wing government since the end of World War II. Italy is the third-largest economy in the eurozone and is currently facing an energy crisis, high inflation, and an economic slowdown, as are many European countries.
At the same time, it is also one of the countries with the heaviest debt burden in the eurozone, so how the new government will handle its relationship with the EU is one of the main concerns. Although Meloni's party is far-right, some analysts believe she may try to take a more moderate line after her official inauguration, avoiding open confrontation with the EU and staying away from any notion of leaving the EU or the euro as a way to continue to gain support from EU recovery funds.
This week, Forbes magazine released its list of the 400 richest people in the United States, and Trump's wealth rose from $2.5 billion last year to $3.2 billion this year, returning to the list. He slipped from that list last year for the first time in 25 years. So, where does Trump's wealth increase this year come from?
This is thanks to the new company he set up after leaving the presidency: Trump Media and Technology Group, which is described by Forbes as one of his most valuable assets. It is reported that Trump owns more than 80% of the business. But at the same time, his New York properties are suffering from the effects of the epidemic, and it is estimated that the net value of Trump Tower is down $78 million year-over-year this year. At the moment, Trump is also facing allegations from the New York State Attorney General's office that he inflated his net worth to secure favorable loans. Despite the suspicion of an overstatement, Forbes said Trump's assets "are still extremely valuable".
David Malpass is the president of the World Bank. He's been under a lot of pressure lately. He was asked at a conference organized by the New York Times whether he thought that man-made emissions were warming the planet. He did not answer the question directly, saying only: "I'm not a scientist." This answer was criticized by many environmentalists, and some even called on him to step down.
Even the White House condemned his evasive attitude, saying, "We expect the World Bank to be a global leader of climate ambition and mobilization." Although Malpass has apologized for his previous comments and stressed that he is not a climate change denier, many Democratic lawmakers are still calling for Biden to fire him. The president of the World Bank is generally nominated by the U.S. president. Malpass was appointed by Trump in 2019. The World Bank's annual meeting will be held in Washington in mid-October. At that time, Malpass may face more criticism. | 2022-10-06T04:17:20Z | www.cnbc.com | CCTV Weekly Script 30/09/22 | https://www.cnbc.com/2022/10/06/cctv-script-30/09/22.html | https://www.cnbc.com/2022/10/06/cctv-script-30/09/22.html |
Published Thu, Oct 6 202212:15 AM EDT Updated 15 Min Ago
First, we need to know that this OPEC+ announcement of a 2 million barrel per day oil production cut refers to the target and not the actual production. The actual reduction in production is only half of this figure, between 900,000 and 1 million barrels per day.
The main task of cutting production will fall on several major oil producers, including Saudi Arabia, the UAE, and Kuwait. Of these, Saudi Arabia's actual production cut will be about 400,000 barrels per day. This further highlights Saudi Arabia's role as the backbone of the international oil supply.
In addition, market analysis suggests that the production cuts will create some spare capacity for several major oil-producing countries such as Saudi Arabia. This will make some preparation for the future when the economy recovers and demand rebounds, requiring a renewed increase in production.
As market expectations for production cuts were already at a high level before the news was officially announced, international oil prices did not react strongly overnight, climbing only slightly.
In fact, before the meeting, the Biden administration contacted the major oil producers in the Middle East and, in the words of a source familiar with the matter, "made every effort" to get them to abandon their decision to cut production, warning that the U.S. would respond aggressively if production was cut.
Sure enough, after the resolution was announced, the White House issued a statement calling the plan to drastically cut production "short-sighted," and Biden has reportedly instructed the U.S. Energy Department to release another 10 million barrels of strategic oil reserves into the market next month.
Meanwhile, the Wall Street Journal reported that the Biden administration is preparing to scale down sanctions on Venezuela's authoritarian regime to allow Chevron Corp. to resume pumping oil there. In addition, the Biden administration has pushed companies to keep up production. However, many analysts believe that in the energy market, no one is listening to the White House.
Investor's next concern will be the next OPEC+ meeting on Dec. 4. This timing is worth noting because, on December 5, the EU embargo on Russian "seaborne crude" will come into effect. The details of the measures proposed by the G7 to impose a price cap on Russian crude should also be in place by then. In addition, what will be the state of the energy crisis in Europe and the global economic situation come winter? Everything is full of uncertainty. So is there a corresponding adjustment for OPEC+ at the next meeting? The Saudi energy minister said yesterday in an interview with CNBC, their action purpose is to pre-empt.
Saudi Arabia's Energy Minister
"We make sure in order to pre-empt, you have to be assertive. you have to be pre-emptive, assertive, and of course, we have to be proactive." | 2022-10-06T05:22:42Z | www.cnbc.com | CCTV Script 06/10/22 | https://www.cnbc.com/2022/10/06/cctv-script-06/10/22.html | https://www.cnbc.com/2022/10/06/cctv-script-06/10/22.html |
The vast majority of companies on the GCEL still have no intention of retiring the coal assets, which are propelling us towards a breakdown of our climate systems.
Heffa Schuecking
Director of Urgewald
Today, there are more than 6,500 coal plant units globally with a combined capacity of 2,067 gigawatts. | 2022-10-06T05:22:48Z | www.cnbc.com | Climate: Nearly half the coal industry is still on an expansion course | https://www.cnbc.com/2022/10/06/climate-nearly-half-the-coal-industry-is-still-on-an-expansion-course.html | https://www.cnbc.com/2022/10/06/climate-nearly-half-the-coal-industry-is-still-on-an-expansion-course.html |
Russia has denied that the Kremlin was behind the suspected attack, calling such accusations "stupid."
"The continued preliminary investigation must show whether someone can be served with suspicion and later prosecuted," Sweden's Security Police said in a statement.
In a separate statement, Sweden's Prosecutor's Office said the area in the Baltic Sea was no longer cordoned off.
Denmark's armed forces said at the time that video footage showed the largest gas leak created a surface disturbance of roughly 1 kilometer (0.62 miles) in diameter, while the smallest leak caused a circle of approximately 200 meters. The cause of the gas leaks is not yet known. | 2022-10-06T11:54:08Z | www.cnbc.com | Nord Stream gas leaks: Suspicion of gross sabotage, Sweden says | https://www.cnbc.com/2022/10/06/nord-stream-gas-leaks-suspicion-of-gross-sabotage-sweden-says.html | https://www.cnbc.com/2022/10/06/nord-stream-gas-leaks-suspicion-of-gross-sabotage-sweden-says.html |
Peloton CEO says company has 6 months to show whether its growth plans can pay off
A man walks in front of a Peloton store in Manhattan on May 05, 2021 in New York.
Peloton has six months to show that its latest growth initiatives can help it survive as a standalone company, CEO Barry McCarthy said, according to a report from The Wall Street Journal.
A Peloton spokesman told CNBC that McCarthy's comments were focused more on whether the company's new initiatives, including partnerships with Amazon and Hilton, can show their worth in the next six months.
Peloton also plans to cut 500 jobs, or about 12% of its workforce, the Journal said, adding that employees were told of the reductions Thursday. The company has already had multiple layoff rounds this year.
Shares of the fitness-product company rose more than 2% in premarket trading following the report.
"If we don't grow," McCarthy, who took over as CEO earlier this year from co-founder John Foley, told the Journal, "We need to grow to get the business to a sustainable level."
McCarthy has overseen drastic changes to Peloton's business model this year as the company struggled after a boom during the earlier days of the Covid pandemic. A former Spotify and Netflix executive, he has pushed the connected-fitness company's business into subscriptions while broadening its products' availability beyond Peloton's direct-to-consumer roots. | 2022-10-06T11:54:14Z | www.cnbc.com | Peloton has 6 months to show how it can grow, CEO says | https://www.cnbc.com/2022/10/06/peloton-has-6-months-to-show-it-can-survive-500-job-cuts-coming.html | https://www.cnbc.com/2022/10/06/peloton-has-6-months-to-show-it-can-survive-500-job-cuts-coming.html |
The compound, called La Dune, draws from a tiny pool of of buyers, likely billionaires, and has been on and off the market since 2016.
The estate spans more than four acres, across two adjacent lots with two homes, two swimming pools and a sunken tennis court.
La Dune, named after the sandy dune it sits behind, spans about four acres, across two adjacent lots with two homes, two swimming pools and a sunken tennis court.
"This house is the furthest thing from a tear down, but if the house wasn't here, this lot alone, each one of them would be worth $50 million," listing agent Shawn Elliott of Nest Seekers told CNBC.
"I believe this is, 100%, a very realistic price point to attract buyers in this market place," said Elliott, who co-lists the home with Geoff Gifkins.
"In real estate we always know it's location, location, location, that's not a cliche," Elliot said. "You are truly on the 50 yard line of nothing but wealth."
She re-listed La Dune in August with a new brokerage firm and raised the ask to $150 million.
The two most recent 9-figure deals, according to public records, were both in Water Mill, a hamlet also in the Town of Southampton about two miles east of La Dune.
In 2022, an even bigger sale eclipsed that one in the quiet off-market purchase of 70 Cobb Road, recorded at $118 million. That compound which sits on a creek, not the ocean, was comprised of four contiguous lots spanning about 21 acres. The sale included two homes that together delivered more than 32,000 square feet of living space. The mega-deal remains the Hamptons' second-highest sale of all time.
Library in the estate's second residence
Home theatre.
The main home's swimming pool is flanked by two bars and white collumns.
Deck and stairway leading to a 400 ft stretch of sand on Southampton's exclusive beachfront. | 2022-10-06T12:15:49Z | www.cnbc.com | Inside a $150 million Hamptons summer home for sale | https://www.cnbc.com/2022/10/06/inside-a-150-million-hamptons-summer-home-for-sale.html | https://www.cnbc.com/2022/10/06/inside-a-150-million-hamptons-summer-home-for-sale.html |
A return on investment from a college education has been in steady decline for a while.
An expensive four-year college education isn't the only path to personal and financial success.
Young Americans and their parents should carefully weigh all their education and job training options to help avoid going into crushing debt.
At an individual level, sometimes a trade school makes the most sense for your or your children's financial future.
While my parents never had the opportunity to attend college, they were indeed very successful.
Their success afforded me the opportunity to pursue higher education, but ironically, I doubt I'll ever be nearly as successful as them.
My mom is one of the founders of the Wealth Enhancement Group — to which I would mention her as "my inspiration to be in the financial services industry."
As for my dad, he wrote computer programs that sorted data and he turned it into a direct mail marketing business.
But what I think makes them so special is on top of all that, they also did real estate development. My dad got his general contractor license so he could oversee the projects. Then they went on to design their own homes. They were never scared of losing it all because they never had it all.
I doubt I'm not the only one who feels this way about higher education. As a financial advisor, I see this narrative play out every day in my office with clients.
Many people still believe attending a four-year college is the only way to financial stability and success, but that isn't always the case.
Over the past few decades, the middle class has expanded, along with the desire for white-collar jobs. Therefore, college became the default path, contributing to the cost of higher education increasing 169% from 1980 to 2020, according to a Georgetown study.
The pool of candidates with a college degree became so saturated that it enables employers to keep entry-level wages low. To make matters worse, roughly 34% of college graduates are underemployed.
A return on investment from a college education has been in steady decline for a while. And that gap between cost and payoff has become so large that it recently required government intervention.
And while President Joe Biden's student debt forgiveness plan has undoubtedly provided some relief for many Americans, it's just a Band-Aid on a major laceration.
As tuition continues to rise and wages don't seem to match, many Americans need to ask the question: "Is college even worth it?"
Weigh all your options
As a parent, I know that we're often so fearful of our children missing out on opportunities that we sometimes steer them away from paths that deserve a longer look. As an advisor, I find it frightening that we've normalized advice to take on mountains of debt without even weighing alternatives.
And with the way things are heading, the value of a college education — in both perception and reality — will be drastically different in 10 or 20 years, when students (and their parents, many of whom are currently feeling anxious about how to save for college) need to make a decision about what to do after high school.
Why college is so expensive in America
Consider all the options. Hand in hand with the premium placed on a college education is a terrible stigma about trade schools and blue-collar jobs. But the pandemic showed us that we need those jobs to function as a society. And at an individual level, sometimes a trade school makes the most sense for your (or your children's) financial future.
For others, direct entry into the workforce makes the most sense.
We continue to see more job growth in construction, health care, computer science and tech. In those sectors, there's an abundance of opportunity outside of traditional schooling. Coding boot camps, the growth of opportunities for entrepreneurship and the gig economy have all transformed how we should be thinking about the future. It's a future that doesn't necessarily lead through a four-year college.
Be prepared no matter what
What are the implications for financial planning?
Emotionally and psychologically, reassessing college plans might help you reorient your current priorities.
Maybe you're sacrificing an emergency fund or saving for retirement because of the pressure of rising tuition. For you, knowing that there are good — and for many individuals, better — options outside of college might help you feel at ease putting money where it should be going.
And 529 college savings plans — the most popular vehicle for college savings — are much more flexible than you might realize. Assets in a 529 plan can be used at two-year associate degree programs, trade schools and vocational schools.
The most common fear stopping people from starting a 529 early is the prospect of paying a 10% penalty and taxes on the earnings should the child not use the funds for qualified education expenses, but don't let the fear of the penalty stop you from good planning. Those penalties are offset by tax-deferred gains and recapturing state income tax deductions.
I'm about investing in people, not blindly investing in a path that everyone says is the only way to success. There are many doorways to a financially stable, prosperous life. I hope you'll take the time to consider all of them.
— Nicole Webb, Senior vice president/financial advisor at Wealth Enhancement Group | 2022-10-06T13:25:26Z | www.cnbc.com | A college degree isn't the only path to a successful career | https://www.cnbc.com/2022/10/06/a-college-degree-isnt-the-only-path-to-a-successful-career.html | https://www.cnbc.com/2022/10/06/a-college-degree-isnt-the-only-path-to-a-successful-career.html |
"People have displayed extraordinary resilience and ingenuity continuing to work in the face of a public health crisis," he says. "But that comes at the cost of burnout, which been accentuated by the fact that we keep changing the rules of how we work … at some point, the fatigue catches up with you." | 2022-10-06T13:25:32Z | www.cnbc.com | Microsoft: 50% of people are burned out at work—here's why | https://www.cnbc.com/2022/10/06/microsoft-50-percent-of-people-are-burned-out-at-work.html | https://www.cnbc.com/2022/10/06/microsoft-50-percent-of-people-are-burned-out-at-work.html |
One thing that separates fledgling investors from the pros is reading financial statements. For amateurs, comparing the so-called headline numbers — sales and earnings — to estimates is the full extent of research into a company, whereas in more experienced hands, they are just a starting point. If you want to become a better investor, make like a pro and digest the financials. It's the best way to truly understand a company's performance. In the lead up to the start of earnings season later this month, we've put together a five-part series to help Club members better understand all the tables and charts and how to analyze them. Here's Part 3: Cash flow analysis. Part 3: Cash flow analysis The cash flow statement is the middle child in a financial report — it gets overlooked. And for good reason: It's the least straightforward of the three main parts, which includes the income statement and the balance sheet — covered in Part 1 and Part 2, respectively — and can, therefore, be the most confusing. But cash flow should get more attention, because it's arguably the most important section. It's all about quality control, and explains the real strength (or weakness) of a company's earnings. Profits backed by actual cash are higher quality than those backed by what are essentially IOUs. Another way of looking at the cash flow statement is as a polygraph, or lie detector: it reveals the truth. The cash flow statement is divided into three sections: operating cash flow (represented in red: cash generated in the course of a company's normal operations), investing cash flow (represented in blue: funds used for investments) and financing cash flows (represented in black: money pulled in to run the company). While all three sections are important, the operating section is arguably the most crucial of the three as it demonstrates the company's ability to generate cash internally. Once again, we'll use Apple's recent earnings report as an example. We will be reviewing what is known as the "indirect method," which is what most companies use. It involves backing into free cash flow by starting with net income and making adjustments for income and balance sheet items that did, or did not, require the use of cash. One thing to keep in mind: Companies pay for and sell things via credit or cash but in the end, cash is how all debts must be settled. As a result, generating positive cash flow is of the utmost importance to the long-term sustainability of a business. Final cash flow matters most, everything else is simply part of the equation. As an investor, the more you understand the better, but you don't need to have a forensic accountant level of understanding to make smart decisions. As you review the financials of your holdings, try not to lose yourself in the weeds. Keep an eye on the big picture total cash flows; an emerging company may be forgiven for burning cash to grow, but eventually must generate positive cash flow to survive without constantly taking on more debt or selling equity (and diluting existing investors). The other thing to watch out for is large fluctuations from period to period after accounting for normal seasonality; for example, a large uptick in inventory is normal ahead of the holiday shopping season. Largely consistent numbers are ideal. Operating cash flow This is net income that is adjusted for items on the income and balance sheets that did not involve spending or receiving actual cash. Apple breaks the operating cash flow into two categories, "adjustments to reconcile net income to cash generated by operating activities" (income statement) and "changes in operating assets and liabilities" (balance sheet). Let's start with " adjustments to reconcile net income to cash generated by operating activities ." Depreciation and Amortization : These expenses reduce net income, but they are not expenses that come in the form of a cash outlay. Instead, this represents the gradual decline in an asset's value, similar to how one's car loses value over time. Given that it reduces net income but does not require a cash outlay, we add it back to net income. Why you should care: While the cash may not be laid out every period, depreciated assets must eventually be replaced and that does require cash. These are very real expenses. Additionally, this is a line item that investors should especially pay attention to when companies report metrics not used under the Generally Accepted Accounting Principles (GAAP). Often management teams will attempt to focus on earnings before interest, taxes, depreciation & amortization (EBITDA), rather than operating income (EBIT). And to be clear, we often will focus on EBITDA when companies report because it's the metric the market uses to value companies. For example, the Street often uses enterprise value-to-EBITDA. Share-based compensation expense : This is wages paid in stock rather than actual cash. While this expense would be included in the selling, general and administrative (SG & A) expense line of the income statement, because it is not an actual cash outlay, it is added back to net income. Why you should care: This is certainly one to take note of when companies report "adjusted non-GAAP" earnings because one of those adjustments may very well be to exclude stock-based compensation. Again, while we will focus on those adjusted figures because that is simply what the market has determined acceptable (and, as a result, what the stock tends to trade on), it likely impacts the bottom line. This is not the case with Apple or any other company that only reports and trades on GAAP numbers. Investors may be inclined to accept this as an expense to be adjusted out, but there are two important factors to consider. First, every time payment is made with stock, it dilutes existing shareholders. Second, if a company is conducting buybacks, they won't be as meaningful to reducing the share count if the company is buying back shares from the open market with its left hand and paying employees in stock with its right. Deferred income tax expense/(benefit) : Income taxes that were charged on the income statement but the cash has not yet been laid out. Had this been the use of a tax benefit — a case in which the company was able to reduce taxes in a way that resulted in a net benefit to income — it would be a negative on the cash flow statement because it increases income without any actual cash being received. Other : A catch all that incorporates any miscellaneous items that impacted the bottom line but did not include cash transactions, Next, let's take a look at the effect of " changes in operating assets and liabilities ." For those of you doing the math, you may notice that the numbers here may not add up exactly to the changes seen in the balance sheet. They are close, but not always exact. The reason for this is due to minor fluctuations that impact the individual line items. For example, a quick look at Apple's 10-Q notes that the "accounts receivables" line item in the balance sheet is adjusted to reflect an allowance for credit losses; at the same time, the 10-Q notes that the inventory line of the cash flow statement relates only to those inventories "associated with underlying transactions that are classified as operating activities." Why you should care: Generally, this is not a cause for alarm. But it does make clear the importance of a fully audited annual report. In Apple's case, a quick look at its 2021 10-K (under the section titled "Report of Independent Registered Public Accounting Firm") tells us that the company's independent auditor, Ernst & Young, provided an "unqualified opinion," which said the statements provided are fairly and appropriately reported, without exception, and comply with GAAP. Accounts receivable, net : When sales are made on credit, the company will record the full amount as a sale. But cash has not actually been received and as a result is logged as a receivable on the balance sheet. Because no cash has been received, we would subtract this amount if receivables have increased, and add this amount if receivables have decreased. Because the company is constantly receiving cash from sales made on credit while making new sales on credit, it is the net number that is important. For example, if net receivables increased, it tells us that more new sales were made on credit than total cash collected from prior sales made on credit; put another way, the bottom line saw a greater benefit than cash actually received. The reverse is also true. If more cash from old credit sales was received than new sales were made on credit, then receivables would decrease and we would see this number added back into the equation. More cash was actually pulled in than what the income statement would indicate. Inventories : If cash is used to purchase inventory, then it means cash flowed out and inventory came in. On the balance sheet, that may not indicate any change in the level of assets. For example a $100 decrease in cash and $100 increase in inventory would leave total assets unchanged. However, it does mean that actual cash has flown out from the company and that change is reflected here. Vendor non-trade receivables : As noted in our review of the balance sheet, vendor non-trade receivables represent components that Apple purchases directly from suppliers and then sells to its manufacturing vendors for assembling into the final products. So this line is simply telling us how much of that activity was actually conducted with cash. Other current and non-current assets : A catch-all for any balance sheet asset fluctuations that involved cash that do not fit the definitions of the other line items. Accounts payable : This is almost the exact opposite of the accounts receivable line item noted above. Recall, Apple may purchase inventory on credit. When that happens, the accounts payables line item of the balance sheet (a current liability) would increase because it is a payment Apple must make in the next year. That purchase would read as an expense on the income statement. However, given that the purchase was made with credit, no cash has actually left the company. In this case, we would see payables increase and the cash flow statement add back that increase to net income to represent that no cash was used on that expense. On the other hand, when that payable is ultimately settled, cash has indeed left, and the payables line item decreases to reflect the reduction of that debt. In this scenario, the reduction is subtracted from the cash flow equation to indicate a cash outflow. Deferred revenue : As noted in our study of the balance sheet, deferred revenue represents money that has been collected in advance of a product or service being delivered. While that future sale may not have been recorded on the income statement — which only represents sales actually made and delivered on in the period — it does represent an inflow of cash. That inflow is reflected here. Other current and non-current liabilities : A catch-all for any balance sheet liability fluctuations that involved cash that do not fit the definitions of the other line items. Once we add up all of these figures (after starting with net income), our end result is the net total amount of cash that Apple has either pulled in or paid out in the period. Why you should care: Before moving on to investing and financing cash flows, we want to address a popular non-GAAP metric that investors should be aware of that we do place a high level of importance on: Free cash flow. While there are a few ways to calculate this metric, most companies will simply define it as operating cash flow (the number we just backed into) less capital expenditures — typically expenses for items including property, plant and equipment (PP & E), a line item we will see in our analysis of investing cash flows. Here's why we care about this number: While expenditures on PP & E may not be categorized as an operating expense because they do not relate directly to operations in the period in question, without these investments a company would find itself hard pressed to continue operations going forward. After all, as we alluded to above, once an asset used in day-to-day operations is fully depreciated it must be replaced. Good luck creating future iPhones with outdated plants and equipment. Investing cash flow This is much more straightforward than operating cash flows, where we indirectly backed into the number by starting with net income and adjusting for non-cash expenses or fluctuations in balance sheet assets and liabilities. Here we simply see a recording of cash used in activities that are not part of the company's core operations. As most of these are self-explanatory, we will keep it as brief as possible. In general, given that these items represent investments, the end result is a cash outflow; after all, investing is all about exchanging cash for assets one expects to appreciate over time. Purchases of marketable securities : As noted in our study of the balance sheet, in addition to actual cash, companies will hold extremely liquid non-cash securities that can quickly be converted into cash if needed, such as stocks, bonds, derivatives and other similar investments. When those securities are purchased, cash moves out of the cash line item of the balance sheet and the value of the purchased asset moves into the marketable securities line item. In that instance, while the total asset value may be unchanged, cash has decreased. That outflow is recorded here. Proceeds from maturities of marketable securities : Where as the line item above calls out "purchases," here we see "proceeds," simply indicating the exact opposite activity; cash is coming in. We also see the term "maturities," which indicates that these flows relate to securities that have reached their maturity dates, such as corporate paper, bonds or some form of derivative. When these securities mature, the marketable securities line item of the balance sheet (which includes all marketable securities, stocks included) would decrease while cash increases, in which case we would see an inflow here. Proceeds from sales of marketable securities : This is very similar to the above line item but since these sales are not the result of maturing securities, we can assume that equity holdings sold for cash would be recorded here, as well as any other securities sold prior to maturity. Why you should care: For all three of the above line items, an easy way to picture the dynamic is to think of your own investing account. When you first started, it was funded with cash, you then exchanged your cash for securities (be they stocks, bonds , or some derivative instrument such as options or futures contracts). With every purchase, cash diminished while the value of these "marketable securities" increased. The only way you got your cash back was to sell the securities, or in the case of bonds and derivatives, let them mature (if not sold prior to maturity). The same thing is happening here. Payments for acquisitions of property, plant and equipment : These are the cash outlays made in the period for the purchase of property, plant and equipment. That doesn't necessarily mean the assets were purchased (think expensed) in the period, but represents any cash outlay associated with those purchase during the period. Payments made in connection with business acquisitions, net : Here we see any cash paid out or pulled in as a result of mergers and acquisitions. Other : A catch-all for any investments involving cash that do not fit the definitions of the other line items. Why you should care: Adding all of these line items up provides us with a net total of all cash pulled in or used in investing activity for the period. Financing cash flow Payments for taxes related to net share settlement of equity awards : Essentially cash tax payments related to equity-based compensation. Payments for dividends and dividend equivalents : Cash dividend payments made to shareholders. Repurchases of common stock : Those juicy buybacks we love so much? Here we see the cash outflow related to them. Proceeds from issuance of term debt, net : Cash pulled in due to the selling of debt with a maturity more than a year out. Repayments of term debt : Cash outlays related to the repayment of debt that initially has a maturity of greater than one year, either due to the repurchase of that debt prior to maturity or as a result of that debt maturing. Proceeds from commercial paper, net : Cash pulled in due to the selling of debt with a maturity of less than one year. Other : A catch-all for any financing activity involving cash that does not fit the definitions of the other line items. Why you should care: Adding all of these line items up provides us with a net total of all cash pulled in or used in financing activity for the period. Decrease in cash, cash equivalents and restricted cash : The sum total of operating cash flow, investing cash flow and financing cash flow, which on a net basis will increase or decrease the total cash level of the balance sheet. Bottom line While these statements can be intimidating when viewed as a whole, they're much easier to digest line by line. We encourage all members to keep the big picture in mind and not be overly concerned should a line here or there be particularly confusing. If you have at least a decent understanding of what these statements are saying, you are well on your way to becoming a more knowledgeable investor. We encourage members to keep this series handy and review them every earnings season in conjunction with the quarterly analysis we provide for each of our holdings. While we do our best to highlight the most important dynamics in any given quarter, it is simply not possible to provide members with a line-by-line analysis of all financial statements (nor is it necessary every quarter). However, this guide equips members with a fine-toothed comb to use as they would like. Lastly, as a reminder, if ever you have a question or desire to dig even deeper, a company's annual report (10-K for U.S. companies) is a great place to look. Moreover, in every annual report is a section called "Management's Discussion and Analysis of Financial Condition and Results of Operations" that provides a great context for the data seen in these financial statements. We highly encourage members to take the time to review it alongside their review of these statements. Stay tuned for Part 4 in our financial statement series for the Investing Playbook, where we will go over Apple's cash flow statement. (Jim Cramer's Charitable Trust is long AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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One thing that separates fledgling investors from the pros is reading financial statements. For amateurs, comparing the so-called headline numbers — sales and earnings — to estimates is the full extent of research into a company, whereas in more experienced hands, they are just a starting point. If you want to become a better investor, make like a pro and digest the financials. It's the best way to truly understand a company's performance. In the lead up to the start of earnings season later this month, we've put together a five-part series to help Club members better understand all the tables and charts and how to analyze them. Here's Part 3: Cash flow analysis. | 2022-10-06T14:17:46Z | www.cnbc.com | How to analyze an earnings report — Part 3: Cash flow analysis | https://www.cnbc.com/2022/10/06/how-to-analyze-an-earnings-report-part-3-cash-flow-analysis.html | https://www.cnbc.com/2022/10/06/how-to-analyze-an-earnings-report-part-3-cash-flow-analysis.html |
More car buyers pay at least $1,000 a month for their loan, as high prices, rate hikes deal 'a one-two punch'
For electric and hybrid vehicles, the share of car buyers paying for than $1,000 monthly is higher than for gas-powered cars.
While there are signs that the market is cooling, that amount is 10.3% higher than the same period in 2021.
Overall, 14.3% of consumers who financed a new vehicle in the third quarter committed to payments at or above that amount, up from 8.3% during the same time period in 2021, according to Edmunds. For buyers of electric vehicles, the share is 26%; for hybrids, 24%.
The average price paid for a new car is nearly $46,000
The average price paid for a new car in the third quarter was $45,971, according to an estimate from J.D. Power and LMC Automotive. While there are signs that the market is cooling, that amount is 10.3% higher than the same period in 2021.
Contributing to those higher prices, sales incentives from manufacturers are minimal. In September, the average discount was about $936, down 47.8% from a year earlier, the J.D. Power/LMC estimate shows.
Ongoing inventory shortages are also partly to blame for elevated prices, as are consumer preferences changing over the past decade.
"We've seen Americans embrace a bigger-is-better mindset by gravitating toward larger vehicles," Caldwell said, adding that these autos also come with more creature comforts and advanced technologies, which cost more.
Trade-in values help keep loan amounts down
The increase in monthly payments would be larger if not for the higher trade-in values on buyers' used cars, King said. The average trade-in equity for September was an estimated $9,617, up 21.7% from a year ago.
While it's hard to know which credit score will be used by a lender — they have options — having a general goal of avoiding dings on your credit report helps your score, regardless of the specific one used, experts say. | 2022-10-06T18:00:09Z | www.cnbc.com | Growing share of car buyers pays $1,000 or more a month for loans | https://www.cnbc.com/2022/10/06/growing-share-of-car-buyers-pays-1000-or-more-a-month-for-loans.html | https://www.cnbc.com/2022/10/06/growing-share-of-car-buyers-pays-1000-or-more-a-month-for-loans.html |
Eli Lilly's obesity treatment tirzepatide has been granted "fast track" status by the Food and Drug Administration, which means it could win approval as early as late 2023. The drug, which was already approved to treat type 2 diabetes under the name Mounjaro in May, has the potential to be a blockbuster, analysts have said. Last month, UBS estimated peak annual sales will reach $25 billion , which would eclipse sales of AbbVie's rheumatoid arthritis treatment Humira, which currently holds the title of the "biggest drug ever." Lilly said Thursday that it plans to begin an application for FDA approval on a rolling basis by the end of this year, and will have results for its second phase 3 clinical trial complete by the end of April. Wells Fargo analyst Mohit Bansal said it would typically take the FDA between six and 10 months to review the data, but the expedited process could shave time off the process, as data from its earlier clinical trials and manufacturing information can be submitted before the Surmount-2 trial is completed. "We see high likelihood of a 6-month review making approval in 4Q'23 likely," Bansal wrote in a research note. Morgan Stanley analyst Terence Flynn estimated a first half 2024 launch of the product. Although this timing is in line with what the company had previously outlined, there had been some anticipation that the process could move even faster based on the strong results in the first of two Phase 3 clinical trials. On par with bariatric surgery The company's Surmount-1 study had shown that patients lost between 16% and 22.5% of their body weight while taking the medication, which is much closer to the results achieved by bariatric surgery. More than 40% of U.S. adults have obesity, according to the Centers for Disease Control and Prevention , and its prevalence is expected to rise in the future. Obesity puts people at greater risk for a whole host of other conditions and costs the U.S. nearly $173 billion each year in 2019 dollars, the CDC said. In July, Morgan Stanley had said it expected the weight loss market could be worth more than $50 billion by the end of the decade. Lilly shares were up slightly Thursday on the news, but the stock has gained more than 20% since the start of the year. On Sept. 28, it hit a 52-week high of $341.70. In a research note, Morgan Stanley's Flynn said any weakness in Lilly's stock is a buying opportunity. He rates the stock as overweight and has a price target of $412, which implies roughly 24% upside from Wednesday's close. More pressure on Novo Nordisk The timetable also turns up the heat for Novo Nordisk's competing treatment, Wegovy. Both drugs use glucagon-like peptide-1, or GLP-1, receptor agonists to slow gastric emptying, promote satiety and regulate blood sugar, but tirzepatide has has a second incretin hormone, glucose-dependent insulinotropic polypeptide, or GIP. Wegovy has been shown to help patients lose about 15% of their body weight on average, and the drug has been very popular. However, sales have been constrained by manufacturing issues, which have limited its sales. In addition, the cost of the drug, which isn't always covered by health insurance plans, also prevents some patients from taking it. Wegovy has a list price of about $1,300 a month. Read more UBS upgrades Eli Lilly to buy, says it's developing possibly 'the biggest drug ever' Investors bet on obesity drugs before without much success. Why this next wave could be different Novo Nordisk shares were trading down less than 1% on Thursday. The company's stock is down nearly 6% year to date. Beyond its enormous potential as a treatment for diabetes, obesity and overweight, tirzepatide is also being studied as a treatment for a range of other conditions such as kidney disease, sleep apnea, non-alcoholic steatohepatitis, pre-diabetes and cardiovascular issues. Bank of America's Geoff Meacham has estimated that the drug could reach as much as $100 billion in annual sales by 2035 if it were to win approval for these other illnesses. —CNBC's Michael Bloom contributed to this story. | 2022-10-06T19:31:29Z | www.cnbc.com | Eli Lilly 2022 gains grow to 20% as it lays out plan for obesity drug, tirzepatide | https://www.cnbc.com/2022/10/06/eli-lilly-2022-gains-grow-to-20percent-as-it-lays-out-plan-for-obesity-drug-tirzepatide.html | https://www.cnbc.com/2022/10/06/eli-lilly-2022-gains-grow-to-20percent-as-it-lays-out-plan-for-obesity-drug-tirzepatide.html |
Fidelity Investments, Vanguard Group and Alight Solutions — three of the largest administrators of 401(k) plans — teamed up to automatically reconnect workers with savings left behind at old employers.
The firms account for about 40% of investors in workplace retirement plans. they hope to grow rthe network to benefit more people.
Along with Retirement Clearinghouse, they created a consortium — Portability Services Network, LLC — to automatically reconnect workers with old 401(k) accounts they may have lost or left behind after leaving a job.
The partnership, which the companies call a first of its kind for the industry, is meant to address what they see as a structural flaw in the current retirement system.
If workers leave behind 401(k) accounts with less than $1,000, current rules let employers cash out the funds and issue a check. That cash-out may come with taxes and penalties if you don't move the funds to a new qualified retirement plan within a short window.
Employers generally can't cash out accounts of $1,000 or larger. But they can shift those with $1,000 to $5,000 out of a 401(k) and into an individual retirement account, where — unless the employee takes action — funds are often invested by default in cash on their behalf, a strategy inconsistent with building a nest egg over decades, experts said
Retirement Clearinghouse teams up with 401(k) recordkeepers for under-served retirement savers
This is where the new consortium of plan administrators is focusing their efforts. When a worker changes jobs and has $5,000 or less in their account, Fidelity, Vanguard and Alight will automatically shift 401(k) assets to the employee's new workplace plan when possible. Basically, the money will follow the worker.
The worker can choose to cash out at that time, though Dave Gray, head of workplace retirement platforms at Fidelity, expects more than 90% to keep the money invested.
And it's not just 401(k) balances — the transfers will also apply to similar workplace plans outside the private sector, including 403(b), 401(a) and 457 plans. Women, minority and low-income savers stand to benefit most, since they disproportionately have account balances of less than $5,000, Gray said.
If the participant moves outside the universe of these three firms, then you haven't really improved the outcome.
Philip Chao
founder of Experiential Wealth
The firms account for roughly 44 million workplace retirement savers, or roughly 40% of the market. They collectively work with 48,000 employer-sponsored retirement plans.
The fee is expected to come down over time, Gray said. The service is meant as a utility to retirement savers and the consortium is operating at a break-even price, he added. | 2022-10-06T19:32:07Z | www.cnbc.com | The 401(k) industry launches rollover plan for old retirement accounts | https://www.cnbc.com/2022/10/06/the-401k-industry-launches-rollover-plan-for-old-retirement-accounts.html | https://www.cnbc.com/2022/10/06/the-401k-industry-launches-rollover-plan-for-old-retirement-accounts.html |
Club holding Constellation Brands (STZ) reported solid fiscal second-quarter earnings before the opening bell Thursday. The beer, wine and liquor company reported net sales of $2.66 billion, up 12% year over year and ahead of Wall Street expectations of $2.52 billion. On the bottom line, the company said it had adjusted earnings of $3.17 per share, an increase of 33% over the prior year and a beat versus the $2.85 consensus. Excluding equity losses from Constellation's stake in cannabis firm Canopy Growth , adjusted EPS came in at $3.33 per share. In addition to the headline numbers, adjusted operating income of $883 million was up 21% year over year and well above the $788 million consensus. Operating cash flow came in at $1.7 billion, significantly more than the $878 million estimate. Free cash flow of $1.2 billion was also well ahead of the $677 million the Street was looking for. Bottom line These were very good results in a very difficult operating environment. In addition to the better-than expected headline numbers, cash flow performance was stronger than anticipated and management positively revised their full fiscal year sales and earnings guidance. If there was anything to nitpick it would be in the Wine and Spirits segment, which is why we were pleased to see management announce their intention to divest the lesser performing wine brands and focus on the higher-end of the portfolio. With the transaction expected to close later Thursday, we think Constellation Brands is an even stronger company going forward than the one that put out these solid results and is well positioned to deliver on the revised guidance. The reaction we are seeing in the stock — roughly a 1.3% decline Thursday — is not unlike what we saw on the prior quarterly release — and similar to then, may be due to management's choice not to pass through the full magnitude of the quarterly beat into forward guidance. However, as we thought last time, we believe this to be a buying opportunity as investors will come in to take advantage of shortsighted traders who are selling a market share leader that continues to gain share. We spoke to this view and more on Thursday's "Morning Meeting" and look forward to learning more when CEO Bill Newlands speaks with Jim Cramer on Thursday's edition of "Mad Money" at 6 p.m. ET. We have a 1-rating on STZ, meaning we see current levels a buy. In fact, we bought for the Club portfolio last month. Share reclassification As noted in Wednesday's commentary ahead of Constellation's earnings, we said we would like to see the company's reclassification proposal to eliminate Class B shares get resolved. A day after, on the earnings call, Newlands said, "We have called a special meeting of shareholders to vote on the reclassification next month on November 9." He later said the move is expected to result in a $1.5 billion cash payment. The reclassification would strip the founding Sands family of outsized voting rights. In the case of STZ, the Class B-removal is a good thing because the Sands family has made questionable capital allocation decisions in the past. Wine portfolio sales Before digging into the quarter, we want to call out that in addition to the reported results, management announced that they had reached an agreement with The Wine Group "to divest a portion of its mainstream and premium wine portfolio, including Cooper & Thief, Crafters Union, The Dreaming Tree, Monkey Bay, 7 Moons, and Charles Smith Wines." The deal is expected to close later Thursday. On the call, management said, "When it closes, we believe this transaction will further enable us to focus our portfolio and efforts to deliver the industry-leading growth end margins that we continue to work toward." We are fans of the move as it will serve streamline the company's portfolio with an increased focus on the higher-end brands, which as we note below have seen better depletion rates than those brands being sold. Depletions measure U.S. domestic distributor shipments of Constellation's branded products to retail customers based on third-party data. Company results Beer sales of $2.14 billion, up 15% year over year, were better than expectations of $1.98 billion. Operating income on beer rose 25% to $865.6 million, outpacing the $766 million consensus. Aiding the outperformance, operating margin in the segment increased 330 basis point versus the year ago period, climbing to 40.5%, well ahead of the 38.7% consensus estimate. The company cited "favorable pricing, lower obsolescence charges, fixed cost absorption from strong volume growth, and lower marketing spend driven by timing more than offset expected higher raw material costs." Additionally, shipments to distributors were up 12.1% annually while depletions increased 8.9% versus the year ago period. On the call, management called out depletion growth of over 37% for Pacifico, adding it was a top-ten share gaining brand in tracked channels. Meanwhile, Modelo Chelada drinks saw depletion growth of over 60% in the quarter, with management adding "it remains the Number 1 brand in the space and owns nearly 60% market share of the Chelada segment nationwide." Constellation said it was the top share gainer in the U.S. beer industry, with four of the top 15 growing high-end brands, noting that Modelo Especial remains both the No. 1 brand in high-end and the leading share gainer. Modelo Especial achieved over 10% depletion growth in the quarter. Wine and Spirits net sales came in at $515.8 million, an increase of 1% year over year and ahead of the $503 million expected on Wall Street. On the other hand, operating income of $99.4 million was a bit short versus the $109 million expected as segment operating margin contracted 40 basis points to 19.3%, below the 21.67% the Street was looking for. Driving the operating margin contraction was an increase in the cost of goods sold (COGS) and higher selling, general, and administrative (SG & A) costs that were partially offset by higher spirits sales, lower marketing as a percent of net sales, and favorable pricing. On the call, management said, "The increase in COGS was mainly a result of higher supply chain cost, particularly container surcharges and warehousing and higher material costs including grapes and glass partially offset by favorable fixed cost absorption as a result of the lapping of the New Zealand frost and the wildfires in the U.S. The increase in general and administrative expense was driven by compensation and benefits primarily to improve marketing effectiveness. Marketing was favorable due to the timing of spend." Shipments were up 7.4% annually while depletions declined 2.2% versus the year ago period. Importantly, on the release, management said, "Constellation's largest premium wine, fine wine, and craft spirits brands — Meiomi, Kim Crawford, Ruffino, Robert Mondavi Private Selection, The Prisoner Wine Company, High West Whiskey, Casa Noble Tequila, and Mi Campo Tequila — all delivered positive depletion growth." The divergence in depletions between the segment total and those called out above — many of which were included in the list of what management is holding onto — speaks to why we like management's aforementioned decision to divest the lower-end of the portfolio as we believe the move stands to support growth. Guidance Looking ahead, management upwardly revised fiscal year 2023 segment sales and earnings guidance. Excluding Canopy, management now anticipates consolidated earnings of $11.20 to $11.60 — up slightly from the $11.20 to $11.50 per share range previously provided — and well ahead of the expectations of $11.01 per share coming into the print. Assumed in this guidance are more robust beer sales and operating income growth of 8% to 10% and 3% to 5%, respectively. Behind the segment higher topline guidance is an anticipated 2% to 3% price increase due to ongoing supply chain headwinds. That's up from the 1% to 2% management was previously factoring into their outlook. Wine and spirits sales are expected to be flat to down 2% versus the down 1% to down 3% previously provided. That will be offset by operating income growth of 3% to 5% — down from the 4% to 6% range previously provided. On the cost side, management commented on the call that they expect to continue to see margin pressure resulting from elevated corn prices as well as higher costs for cans, cartons and glass. Though the team does have a hedging policy that should blunt the blow to some extent, they will likely be less effective in the second half compared to the first half of the year due to timing. "While we're nicely hedged, they just won't be at the favorable rates if you will as we were in the first half," they explained. Another factor that will pressure margins is investments being made in advance of additional capacity coming online. As members know, when we see a company that is a market leader and taking share, we take no issue with management pressing their advantage and investing in future growth. Finally, on cash flow, management reiterated their operating cash flow forecast of $2.6 billion to $2.8 billion a tad short versus the $2.82 billion expected. Taking out capital expenditures of $1.3 billion to $1.4 billion (also unchanged) and we got a reiterated free cash flow forecast of $1.3 billion to $1.4 billion, which at the midpoint is also slightly below the $1.41 billion expected. (Jim Cramer's Charitable Trust is long STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Trucks with Constellation Brands Inc. Corona and Modelo beer sit during a delivery in the Zona Rosa neighborhood in Mexico City, Mexico.
Susana Gonzalez | Bloomberg | Getty Images | 2022-10-06T19:32:13Z | www.cnbc.com | There's very little to nitpick in beer giant Constellation Brands' solid quarter and guidance | https://www.cnbc.com/2022/10/06/theres-very-little-to-nitpick-in-beer-giant-constellation-brands-solid-quarter-and-guidance.html | https://www.cnbc.com/2022/10/06/theres-very-little-to-nitpick-in-beer-giant-constellation-brands-solid-quarter-and-guidance.html |
The U.S. will rout passengers who have been in Uganda to one of five airports in the U.S. to undergo screening for Ebola.
Uganda is battling on Ebola outbreak with 63 cases and 29 deaths. No cases of Ebola have been reported in the U.S., according to CDC.
The U.S. will rout and screen passengers for Ebola at five designated airports if they have traveled in Uganda within three weeks prior to their arrival, federal officials said on Thursday.
Uganda, a nation in East Africa, is battling a deadly outbreak of Ebola with 63 confirmed and probable cases and 29 deaths, according to the World Health Organization. No cases of Ebola have been reported in the U.S., according to the Centers for Disease Control and Prevention.
Passengers arriving from Uganda at those airports will undergo temperature checks and verification of their contact data, a federal health official said. Airlines will send passenger information to the Centers for Disease Control and Prevention so the agency can conduct health follow ups, the official said. Contact information will also be sent to state health departments so they can conduct follow ups locally.
Uganda is battling an outbreak caused by a strain of Ebola called Sudan ebolavirus. The virus spreads through direct contact with body fluids of a person who has fallen ill with the virus or died from it, as well as infected animals and contaminated objects, according to CDC. Ebola does not spread through airborne transmission, the health agency said.
U.S. will screen people arriving from Uganda for ebolavirus at five airports | 2022-10-06T19:32:25Z | www.cnbc.com | U.S. will screen people arriving from Uganda for Ebola as East African nation battles outbreak | https://www.cnbc.com/2022/10/06/us-will-screen-people-arriving-from-uganda-for-ebolavirus-at-five-airports.html | https://www.cnbc.com/2022/10/06/us-will-screen-people-arriving-from-uganda-for-ebolavirus-at-five-airports.html |
It is now up to U.S. Attorney for Delaware David Weiss, an appointee of former President Donald Trump, to decide whether to prosecute Hunter for those crimes, noted The Post, which cited people familiar with the investigation.
In a statement to NBC News, Chris Clark, Biden's lawyer, said: "It is a federal felony for a federal agent to leak information about a Grand Jury investigation such as this one. Any agent you cite as a source in your article apparently has committed such a felony. We expect the Department of Justice will diligently investigate and prosecute such bad actors."
The Post in its report noted that the potential gun-related charge relates to Hunter's October 2018 purchase of a handgun, which required him to fill out a federal form that asked whether was a user of or addicted to narcotics. Hunter answered "no" to that question, despite being a user of crack cocaine at the time, according to a book that he later wrote. | 2022-10-06T19:44:07Z | www.cnbc.com | Hunter Biden case: Feds believe evidence supports tax and gun charges | https://www.cnbc.com/2022/10/06/hunter-biden-case-feds-believe-evidence-supports-tax-and-gun-charges.html | https://www.cnbc.com/2022/10/06/hunter-biden-case-feds-believe-evidence-supports-tax-and-gun-charges.html |
AMD issued preliminary third-quarter results on Thursday that are well below its initial guidance.
Lisa T. Su, CEO of Advanced Micro Devices
issued preliminary third-quarter results on Thursday that are well below its initial guidance.
The company reported preliminary quarterly revenue of approximately $5.6 billion. It had initially said it expected $6.7 billion in revenue for the quarter, plus or minus $200 million. AMD also said that its non-GAAP gross margin is expected to come in around 50%, while it had previously expected gross margin to be closer to 54%.
Shares fell more than 3% in after-hours trading.
AMD's Client segment revenue came in at about $1 billion, the company said, down 40% year-over-year. Its Gaming segment generated about $1.6 billion in revenue, up 14% year-over-year, and its Data Center business also generated about $1.6 billion in sales for the quarter, up 45% year-over-year.
The boost in its Embedded business AMD's Embedded business, which is primarily the result of acquiring Xilinx earlier this year, generated about $1.3 billion.
Overall, the stock is down about 53% for the year while the S&P 500 is down more than 21%. | 2022-10-06T21:02:27Z | www.cnbc.com | AMD warns of third quarter revenue shortfall on weaker PC demand, supply chain issues | https://www.cnbc.com/2022/10/06/amd-warns-of-third-quarter-revenue-shortfall-on-weaker-pc-demand-supply-chain-issues.html | https://www.cnbc.com/2022/10/06/amd-warns-of-third-quarter-revenue-shortfall-on-weaker-pc-demand-supply-chain-issues.html |
Canopy Growth Corporation shares jumped 22% Thursday after President Joe Biden announced he'll pardon thousands of people for federal marijuana offenses.
The Canada-based cannabis company applauded Biden's decision.
Earlier Thursday, Constellation Brands, which owns a large chunk of Canopy, recorded a $1 billion writedown related to the cannabis venture.
applauded President Joe Biden's announcement Thursday that he will pardon thousands of people convicted of marijuana possession.
"Today represents action from the Administration that we have been waiting for – an acknowledgement that cannabis prohibition has failed and that too many lives have been significantly impacted as a result," David Culver, vice president of government relations Canopy, said in a statement.
Shares of the Canadian-based cannabis company, the world's largest, jumped 22% after the news, closing at $3.75. Shares of fellow cannabis firm Tilray Brands
gained over 30%. Tilray couldn't be reached for comment by CNBC.
"President Biden, in keeping with his campaign commitments, has set into motion the actions needed to heal the harms of the past and chart a course for responsible, legal cannabis markets in the future," Culver said.
Canopy Growth operations in Smiths Falls, Ontario.
The move could be a step toward a broad loosening of the federal classification of the drug. More than 6,500 individuals with prior convictions for simple marijuana possession were impacted by the pardons, according to the White House. This includes thousands more through pardons under D.C. law.
"There are thousands of people who have prior federal convictions for marijuana possession, who may be denied employment, housing, or educational opportunities as a result. My action will help relieve the collateral consequences arising from these convictions," Biden said in a statement announcing the pardons.
Biden urged governors to issue similar pardons for cases regarding state offenses of civil possession of marijuana.
In an earnings report Thursday morning, Constellation Brands
, which owns 36% of Canopy's outstanding shares, said it took a $1 billion writedown related to its stake in the cannabis company.
Canopy's stock has fallen more than 70% in the last 12 months amid slowing sales across the cannabis industry. The stock is more than 90% off its all-time high of $56.89.
–CNBC's Christina Wilkie contributed to this report. | 2022-10-06T22:33:50Z | www.cnbc.com | Cannabis company Canopy applauds Biden marijuana pardons, stock surges | https://www.cnbc.com/2022/10/06/cannabis-company-canopy-applauds-biden-marijuana-pardons-stock-surges.html | https://www.cnbc.com/2022/10/06/cannabis-company-canopy-applauds-biden-marijuana-pardons-stock-surges.html |
Are you considering studying abroad? Here are 5 tips to help you prepare financially
Study abroad programs can cost as much as $15,000 at some universities. Here's how to plan for that.
Published Thu, Oct 6 2022
Each year, American undergraduate students flock across the globe to study abroad. During the 2019/2020 academic year, 162,633 students did so, reflecting a 53% decrease due to the Covid-19 pandemic — in the before times, that number had hovered around the 341,000 mark and was slowly increasing every year.
Traveling can be expensive, though — excursions to different countries with your classmates during your semester abroad are no exception. You'll need to foot the bill not only for tuition, but meals, housing, flights, activities and everything else as well. Even with the many scholarships and grants that are available, those costs can certainly add up and become a financial burden for students and their families.
Below, Select shares some tips to help students financially prepare to study abroad so they can make the most of their experience in a new country.
Ask your family if studying abroad seems financially reasonable to them
Studying abroad can wind up being an enormous expense. The University of Louisville estimates that, on average, the cost of a semester-long study abroad program can range from $7,000 to $15,000 per student. It's important to discuss this upcoming expense with your family so you can determine whether or not this is something they could reasonably assist you with.
You should also speak to the study abroad coordinator at your school to help you figure out where you'd like to go, what you would be able to study there, which programs are available and how much it will be. That way, you can bring a more precise representation of the associated costs to your family.
Keep in mind that the type of program you decide to do can affect the cost, too. A one-month program will likely be significantly less expensive than a program that lasts the entire semester. There are also certain programs that allow you to study solo and live with a host family or study as part of a group with other students from your university. Your school's study abroad coordinator will be able to break it all down for you and help you select the option that's best for your financial and academic goals.
Find out if there are scholarships or grants available
Now would also be a good time to find out if there are any scholarships or grants available that would cover some or all of the cost, and to do some research about which ones you can apply for. Unlike student loans, scholarships and grants don't need to be repaid — you'll just need to go through an application process in order to qualify for them. These funding options can significantly reduce the financial responsibility that comes along with studying abroad, and are definitely worth looking into.
If scholarships and grants are not available and your family can't afford to contribute to the cost of your trip, it might be worth devising a financial plan to pay for your study abroad program if it's something you're still really interested in.
Get a job on or off campus and save what you can
You can make a decent amount of money by partaking in on-campus jobs, getting a job at a nearby store or restaurant, doing research, babysitting or tutoring in your college town, among other jobs. There are many ways for college students to take on a side hustle or part-time gig to earn extra money. Apps such as Wag! or TaskRabbit can be helpful for finding flexible-hour jobs like dog walking or assembling furniture if you're unable to commit to more structured working hours.
Another popular way to earn money is by selling stuff you no longer need on apps such as Depop or Mercari. Select recently interviewed a 22-year-old seller on Depop who earns between $1,500 and $2,500 per month. Typically, all you need to get started selling is a phone and a PayPal account.
Depop collects a 10% fee for each item sold on the platform. On top of that, payment processor Paypal takes an additional 2.9% and $0.20 per transaction.
Either the buyer or seller can cover the cost of shipping; shipping labels are generated by Depop and costs depend on the weight and dimensions of your package.
The app is available in both the App Store (for iOS) and on Google Play (for Android); there's also a web version, but the app is more functional.
You'll need a PayPal account in order to get paid. However, there are two options for sellers on Depop: Getting paid directly through your PayPal, which is linked to your Depop account, or through Depop Payments. If your shop uses Depop payments, buyers can use Apple Pay, Google Pay or a credit or debit card to finance purchases from your shop (you'll still need a linked PayPal account though). If your shop is linked to your PayPal, buyers can only use PayPal to pay for their purchases.
You only have to pay fees when you sell an item (no listing fees)
You can post the listings and manage your shop all from your phone
Depop takes a higher commission fee (10%) than some other resell platforms
You can't use it for in-person deliveries or orders
Sellers pay a 10% fee for each item that's sold. There's also a payment processing fee of 2.9% plus $0.30.
Either the buyer or seller can cover the cost of shipping; shipping labels are generated by Mercari and costs depend on the weight and dimensions of your package.
Mercari has an app that's available in both the App Store (for iOS) and on Google Play (for Android), and you can also list and shop via its website.
After the transaction has been completed, the payment will show up on your Mercari balance. You can either have the money directly deposited into your bank account ($10 minimum payout) or get it deposited onto a debit card (there's a $2 fee for this option).
People who want to sell items locally can use Mercari Local
Mercari take a higher commission fee (10%) than some other resale platforms
Once you start earning some money, it's a good idea to keep it in a high-yield savings account, which will pay you more in interest for your balance compared to a traditional savings account. That means your savings can grow just a little bit faster and as a result, get you to your goal quicker. While you likely won't earn hundreds of dollars per month in interest unless you deposit a really large sum of money, it's still better than earning just the amount of interest that's typically paid by traditional savings accounts.
Select ranks Marcus by Goldman Sachs High Yield Online Savings as one of the best accounts since it has no monthly fees, no excessive transaction fees and no overdraft fees. Synchrony Bank High Yield Savings is another strong contender that also offers an ATM card to make withdrawing cash easier, which could be helpful when you're abroad.
Synchrony Bank High Yield Savings
Synchrony Bank is a Member FDIC.
None, but may result in account closure
Try to study abroad during an off-peak time
While traveling abroad during a destination's off-peak season has many perks — you'll save money on activities, encounter fewer tourists and have shorter wait times for most attractions and museums, for instance — the biggest draw for avoiding peak season travel is it lets you save money on flights. If you're able to save money on your flights, it can bring down your total cost of studying abroad and make the whole thing feel a bit more affordable.
Do your research so you know when the peak season for your desired destination is. According to GoOverseas.com, some off-peak season times of the year in popular study abroad destinations are October–January for Western Europe, May–March for Greece, June–October for New Zealand, October–April for Indonesia and May–September for Brazil.
Use studying abroad as a way to rack up credit card rewards
As you near the start of your study abroad experience, consider signing up for a credit card that offers travel rewards so you can get more of a bang for your buck, especially when it's time to book flights and pay for meals while you're abroad. There are a number of credit cards aimed at helping students build their credit, as well as others that offer simpler reward systems. Plus, you'll want a card that doesn't charge foreign transaction fees when swiping abroad (most debit cards charge foreign transaction fees).
Select named the Bank of America® Travel Rewards for Students credit card as one of the best for students who travel thanks to the fact that cardholders earn 1.5 points per dollar for all purchases. You can redeem rewards such as a statement credit to help cover the cost of qualifying travel purchases, which works as a simple way to reduce your out-of-pocket costs for traveling abroad.
Be sure to spend cautiously whenever you're using a credit card — this is not free money after all — and your balance needs to be paid back in full or else you'll be charged interest. When you're not paying upfront with cash, it can be easy to lose sight of that. Plus, credit card rewards are most valuable when you pay off your balance each month to avoid accruing interest charges.
Remember to notify your bank and credit card company about your upcoming trip so they don't suspect fraud when you make a purchase abroad and freeze your account.
Figuring out how you and your family will pay for your study abroad experience can be a difficult challenge, but by planning ahead, making and saving some money and using the right financial products, the costs will become less daunting and you'll be able to enjoy your travels even more.
The best college student credit cards of September 2022
Use these insider travel tips to save hundreds on your next vacation
Traveling abroad? Save money and maximize rewards with these 5 credit cards | 2022-10-06T22:34:21Z | www.cnbc.com | 5 Tips To Help You Prepare Financially To Study Abroad | https://www.cnbc.com/select/how-to-prepare-financially-to-study-abroad/ | https://www.cnbc.com/select/how-to-prepare-financially-to-study-abroad/ |
: "They're trying to cure pain. ... We know who didn't do it well, and we're not even going to mention it."
: "You don't know what's in it. ... You can't make a good judgement."
: "I say, pass."
: "Buy some here, buy some a little bit lower."
Sociedad Quimica y Minera de Chile
: "Fertilizer's in short supply and so is lithium. That makes that stock a buy in my eyes."
: "As much as I like nCino, I like its product, it's losing money. So, we can't buy it." | 2022-10-07T00:05:20Z | www.cnbc.com | Cramer's lightning round: GXO Logistics is a buy | https://www.cnbc.com/2022/10/06/cramers-lightning-round-gxo-logistics-is-a-buy.html | https://www.cnbc.com/2022/10/06/cramers-lightning-round-gxo-logistics-is-a-buy.html |
Asia-Pacific markets set to fall ahead of U.S. jobs report
The logo of the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), is displayed at the bourse in Tokyo, Japan, on Friday, Oct. 2, 2020.
Shares in the Asia-Pacific are poised to fall on Friday ahead of the monthly U.S. jobs report, which is likely to guide the Federal Reserve's monetary decision in November.
The Nikkei futures contract in Chicago was at 27,005 while its counterpart in Osaka was at 27,000. That's lower compared against the Nikkei 225's
fell 0.65%. Markets in mainland China remain closed for a holiday. | 2022-10-07T00:05:32Z | www.cnbc.com | Asia markets: Nonfarm payrolls, economic data, currencies, oil | https://www.cnbc.com/2022/10/07/asia-markets-nonfarm-payrolls-economic-data-currencies-oil.html | https://www.cnbc.com/2022/10/07/asia-markets-nonfarm-payrolls-economic-data-currencies-oil.html |
In the same way that consumers with savings can benefit from rising interest rates, some companies also stand to gain from the Federal Reserve's push to stamp out inflation, which has resulted in higher Treasury bill yields. These companies are ones that temporarily hold a lot of cash on behalf of customers, receiving premium income from, let's say insurance policies, and paying it out later in the form of claims. In the meantime, those companies get to invest that money at prevailing rates. Income may not have been material when the fed funds rate was zero, but can be significant when three-month Treasury bill yields top 3.3%, where they stand today. Warren Buffett, chairman and CEO of Berkshire Hathaway, which owns the giant auto insurer Geico, has often extolled the virtues of what he calls "float." In one letter to Berkshire shareholders , Buffett explained the attraction of property and casualty insurers like this: "P/C insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers' compensation accidents, payments can stretch over many decades. This collect-now, pay-later model leaves P/C companies holding large sums – money we call 'float' – that will eventually go to others. Meanwhile, insurers get to invest this float for their own benefit." Potential float winners Bank of America analysts this week updated the concept by highlighting half a dozen companies that "will benefit from higher rates through improvements in float income." The benefit to those companies' profits ranges from 3% to as high as 20%, the bank estimates, although it says that alone is insufficient to warrant investing in them. Consequently, Bank of America also screened for stocks that are favored by its research teams for other reasons, ignoring banks in favor of "names where lending and investing is not core" to the business model. Among the stocks that turned up on the firm's screen were these: The firm's analysts noted that Charles Schwab in July raised its revenue guidance for 2022. The financial services provider "targets a $350-550 million revenue lift from each additional Fed rate hike on a revenue base of about $21 billion in 2022." HealthEquity , which has owned the flexible spending account manager WageWorks for more than three years, is "well positioned to benefit from a faster Fed hiking cycle in '22," the bank said. Its analysts recently raised their 2023 EBITDA estimate by about 10% as a result of custodial contracts that are typically priced around the end of the year. The stock is higher by about 50% in 2022. For its part, PayPal "stands to benefit from rising interest rates as the company holds significant balances of customer funds stored in PayPal and Venmo," Bank of America wrote. The bank estimates PayPal's float revenue just from holding available-for-sale debt securities and time deposits in customer accounts may have reached $130 million in the third quarter against the second quarter's $53 million, and that annual run rate on this float revenue could surge as high as $520 million. Whatever PayPal's final float revenue, it "should all flow through to operating profit." Progressive Corp. might also applaud the Federal Reserve's higher interest rates. The bank says, the "earnings power of the company's investment portfolio has increased by 30% over the past six months to $313 million pre-tax for the trailing three months ended August 2022." The investment portfolio accounts for about a third of Progressive's operating income. Progressive shares have rallied nearly 20% this year. | 2022-10-07T00:05:45Z | www.cnbc.com | Think about stocks whose profits grow even as rates rise, Bank of America says | https://www.cnbc.com/2022/10/07/think-about-stocks-whose-profits-grow-even-as-rates-rise-bank-of-america-says.html | https://www.cnbc.com/2022/10/07/think-about-stocks-whose-profits-grow-even-as-rates-rise-bank-of-america-says.html |
Stock markets in the U.K. saw heavy selling in September. The blue-chip FTSE 100 fell 3.6% over the month, while the FTSE 250 index of mid-caps slipped more than 7.5%. The country's bond markets and currency also fell as investors balked at the new government's fiscal policy announcements. Sterling has since pared its losses, but equity markets remain in the red. Amid such volatility, four notable companies saw large insider purchases — when a director, officer or executive buys stock of their own company. Big Yellow Group James Gibson, chief executive of Big Yellow , bought more than half a million pounds of stock in September. He spent £249,998 ($281,569) on Sept. 20 and £250,120 on Sept. 28 purchasing the company's shares. In between that, Nicholas Vetch, executive chairman and co-founder of the self-storage provider, also bought £249,480 worth of shares. These three transactions are the first insider trades in the company this year. Only a month before shares hit an all-time high in Dec. 2021, Vetch had warned investors that "historically high levels of occupancy" at the company's sites could soon return to "normal" levels. Shares in the £1.8 billion company have fallen by more than 40% since. IWG IWG is another property company that saw a notable insider transaction in September. Mark Dixon, chief executive of flexible office space provider IWG, purchased £1.26 million worth of stock in the company at an average price of £1.26 a share on Sept 27. It is the only purchase from the Dixon since the start of the Covid-19 pandemic. Shares in the firm, which owns the Regus brand of office buildings around the world, have fallen by more than 55% this year to £1.31. However, all but one analyst covering the company has a buy rating on the stock, with an average price target of £2.47, according to FactSet Estimates. Equity research analyst Sam Dindol at Stifel has previously said the company's move to an asset-light business model should help drive growth. "Failing that, we believe IWG could be an attractive acquisition target for P.E. firms at current levels, with CEO, founder and 28.5% shareholder Mark Dixon, aged 62, potentially a more willing seller than in 2018," the analyst said in a note to clients, referring to private-equity funds as potential buyers for the company. Darktrace Poppy Gustafsson, CEO of Darktrace , bought £120,606 worth of shares at £3.21 a share on average on Sept 26. In May, Gustafsson had purchased stock worth £99,402 at £3.37 a piece. Shares in the cyber security company have fallen by 40% since its most recent high in August after it rejected a takeover offer from American private equity firm Thoma Bravo. According to FactSet Estimates, seven of 11 analysts covering the stock give it a buy rating, with a price target 49% higher than current trading levels. Equity analyst Rob Owens from Piper Sandler, who has a price target of £4.50 on the stock, said: "With shares rebasing lower after announcing the end of talks with Thoma Bravo, we remain buyers given the expanded product portfolio, execution across the business and a favorable valuation compared to security peers." Lloyds Banking Group Lloyds Bank disclosed that its chief executive Charlie Nunn had bought £135,000 worth of shares on Sept 22. At the time of the disclosure, the bank's shares were down by more than 10% this year. However, it came a day before the U.K. finance minister's mini-budget, which rocked financial markets in London. Shares in the bank have since fallen by around another 10%. On average, analysts have a buy rating on the stock, with a price target of 58p a share. This is about 35% higher than its current share price. | 2022-10-07T00:44:23Z | www.cnbc.com | Sliding UK markets saw Darktrace's CEO and three others snap up their own stock | https://www.cnbc.com/2022/10/07/sliding-uk-markets-saw-darktraces-ceo-and-three-others-snap-up-their-own-stock.html | https://www.cnbc.com/2022/10/07/sliding-uk-markets-saw-darktraces-ceo-and-three-others-snap-up-their-own-stock.html |
Tehran blocked access to WhatsApp and Instagram, two of the last remaining uncensored social media services in Iran. Twitter
, YouTube and several other platforms have been banned for years.
Iran shuts down the internet as government cracks down on protests
VPNs are a common way for people under regimes with strict internet controls to access blocked services. In China, for instance, they're often used as a workaround to restrictions on Western platforms blocked by Beijing, including Google
, Facebook and Twitter. Homegrown platforms like Tencent's WeChat are extremely limited in terms of what can be said by users. | 2022-10-07T03:07:56Z | www.cnbc.com | VPN use skyrockets in Iran as citizens navigate internet censorship | https://www.cnbc.com/2022/10/07/vpn-use-skyrockets-in-iran-as-citizens-navigate-internet-censorship.html | https://www.cnbc.com/2022/10/07/vpn-use-skyrockets-in-iran-as-citizens-navigate-internet-censorship.html |
Signage hangs over the entrance of a Credit Suisse Group AG branch in Zurich, Switzerland, on Sunday, Sept. 25, 2022. Inflation in Switzerland has more than doubled since the start of the year and the State Secretariat for Economic Affairs expects it to come in at a three-decade-high of 3% for 2022. Photographer: Pascal Mora/Bloomberg via Getty Images
Troubled bank Credit Suisse offered to buy back up to $3 billion of debt securities Friday. | 2022-10-07T05:31:29Z | www.cnbc.com | Credit Suisse to repurchase $3 billion of debt securities | https://www.cnbc.com/2022/10/07/credit-suisse-to-repurchase-3-billion-of-debt-securities.html | https://www.cnbc.com/2022/10/07/credit-suisse-to-repurchase-3-billion-of-debt-securities.html |
European markets are set for a slightly lower open on Friday to round out a volatile week, as global investors await a key monthly jobs report out of the United States.
The report due at 1:30 p.m. London time is expected to show an increase in payrolls of 275,000 in September, with unemployment projected to remain steady at 3.7%, according to economists surveyed by Dow Jones. The reading will likely influence the U.S. Federal Reserve's monetary policy decision in November.
Markets in Asia-Pacific retreated on Friday, with Hong Kong's Hang Seng index
leading losses, while U.S. stock futures also pulled back slightly in early premarket trade. Major U.S. averages closed lower during regular trading on Thursday but are still on course for their best week since June 24.
is set to shed around 64 points to 12,407 and France's CAC 40
is set to slip by around 18 points to 5,918. | 2022-10-07T07:02:50Z | www.cnbc.com | Europe markets: Key U.S. jobs report due at the end of a volatile week | https://www.cnbc.com/2022/10/07/europe-markets-key-us-jobs-report-due-at-the-end-of-a-volatile-week.html | https://www.cnbc.com/2022/10/07/europe-markets-key-us-jobs-report-due-at-the-end-of-a-volatile-week.html |
It comes as Ukrainian forces reclaim dozens of settlements in the south of Ukraine, adding to a growing list of military setbacks for the Kremlin. Ukrainian President Volodymyr Zelenskyy said the country's forces have recaptured 500 square kilometers (193 square miles) in the Kherson region alone since the start of October. | 2022-10-07T07:42:05Z | www.cnbc.com | Live updates: Latest news on Russia and the war in Ukraine | https://www.cnbc.com/2022/10/07/russia-ukraine-live-updates.html | https://www.cnbc.com/2022/10/07/russia-ukraine-live-updates.html |
The final recipient, Memorial, was founded in 1987 in the former Soviet Union to honor victims of political oppression.
It is not the first time it has been awarded to several recipients. In 2021, the Peace Prize was split between journalists Maria Ressa, co-founder of Philippines new site Rappler, and Dmitry Muratov, a Russian reporter. Both have worked to expose corruption and authoritarianism and spoken out in defense of free speech. | 2022-10-07T09:43:49Z | www.cnbc.com | Belarusian activist Ales Bialiatski and human rights groups win 2022 Nobel Prize | https://www.cnbc.com/2022/10/07/belarusian-campaigner-and-two-human-rights-groups-win-2022-nobel-prize.html | https://www.cnbc.com/2022/10/07/belarusian-campaigner-and-two-human-rights-groups-win-2022-nobel-prize.html |
Frida Maanum of Arsenal in action during the FA Women's Super League match between Arsenal and Tottenham Hotspur at Emirates Stadium on Sept. 24, 2022 in London.
Some corporate juggernauts have already signed major deals around the women's game. Heineken
were Euros sponsors, Mastercard
sponsors Arsenal Women, and Barclays is the headline sponsor of the WSL. | 2022-10-07T11:37:00Z | www.cnbc.com | England women’s soccer viewership is soaring. Will sponsorship follow? | https://www.cnbc.com/2022/10/07/england-womens-soccer-viewership-is-soaring-will-sponsorship-follow.html | https://www.cnbc.com/2022/10/07/england-womens-soccer-viewership-is-soaring-will-sponsorship-follow.html |
Photo illustration of former President Donald Trump and Twitter logos.
Elon Musk's renewed efforts to buy Twitter
could pave the way for President Donald Trump's return to the platform that permanently banned him a year earlier.
Musk, who offered to buy Twitter for $54.20 a share in April but then tried to scrap the deal, this week signaled through a regulatory filing that he once again wants to proceed with the original transaction. News of the deal, which is still not finalized, sent Twitter's stock soaring.
Before getting cold feet on the deal over the summer, Musk said he planned to lift Trump's Twitter ban if he took over the company. "I do think it was not correct to ban Donald Trump," Musk said back in May.
Twitter's suspension of Trump "took away his megaphone," said Jonathan Nagler, co-director of NYU's Center for Social Media and Politics and Professor of Politics. The tech giant's move "lessened his ability to push bogus election fraud claims" and "incite action against election officials," he said.
Musk has not yet reiterated that he will lift Trump's Twitter ban if the latest buyout plans come to fruition. With sources telling CNBC that a deal could happen as soon as Friday, it's possible that Trump could be allowed to resume tweeting before the Nov. 8 midterm elections.
What's more, Twitter is used much more heavily by most media organizations and politicians, both in the U.S. and around the world. But Nagler warned that Trump may not want to be "100% beholden to Elon Musk, the world's richest man," as his social-media enabler. | 2022-10-07T13:08:24Z | www.cnbc.com | Here's what Musk's potential takeover of Twitter could mean for Trump | https://www.cnbc.com/2022/10/07/heres-what-musks-potential-takeover-of-twitter-could-mean-for-trump.html | https://www.cnbc.com/2022/10/07/heres-what-musks-potential-takeover-of-twitter-could-mean-for-trump.html |
Nonfarm payrolls increased 263,000 for the month, compared to the Dow Jones estimate of 275,000. The unemployment rate was 3.5% vs the forecast of 3.7% as the labor force participation rate edged lower to 62.3% and the size of the labor force decreased by 57,000.
A drop of 25,000 in government jobs was a big contributor the report missing expectations. Hiring at the state and local level is highly seasonal, so the decline points to a report that otherwise was largely in line with expectations and shows a resilient jobs market. | 2022-10-07T13:08:27Z | www.cnbc.com | Jobs report September 2022: | https://www.cnbc.com/2022/10/07/jobs-report-september-2022.html | https://www.cnbc.com/2022/10/07/jobs-report-september-2022.html |
Polestar plans to launch its newest model, an electric SUV called the Polestar 3, next week.
Polestar, the Swedish electric performance car company, has announced that the world premiere of its next car, the Polestar 3 electric performance SUV, will be in October 2022. Polestar 3 is the company's first SUV.
Swedish electric vehicle maker Polestar
said Friday that it is still on track to deliver 50,000 vehicles in 2022 after its factory resumed full production following disruptions from Covid outbreaks in China.
Polestar said it delivered 9,215 vehicles in the third quarter, bringing its total deliveries so far this year to about 30,400 vehicles. That's roughly double its total from a year ago – but the fourth quarter will be a critical for the company's goals.
Polestar's corporate parent, Chinese automaker Geely
, had to idle its Luqiao factory for several weeks in the first half of 2022 because of government-mandated Covid-19 lockdowns. That factory makes the Polestar 2 crossover as well as models for other Geely brands.
Polestar is a joint venture between Sweden's Volvo Cars
and Geely, which has owned Volvo Cars since 2010. It went public via a merger with a special-purpose acquisition company in June.
Polestar's next model, an SUV called Polestar 3, will be made in both Luqiao and the U.S., where it will be produced at a Volvo plant in South Carolina. The Polestar 3 is expected to make its formal debut at an event in Copenhagen next week, with production beginning soon thereafter. | 2022-10-07T13:08:35Z | www.cnbc.com | Polestar confirms it will deliver 50,000 electric vehicles in 2022 | https://www.cnbc.com/2022/10/07/polestar-confirms-it-will-deliver-50000-electric-vehicles-in-2022.html | https://www.cnbc.com/2022/10/07/polestar-confirms-it-will-deliver-50000-electric-vehicles-in-2022.html |
President Joe Biden signed an executive order to implement a new framework to protect the privacy of personal data shared between the U.S. and Europe.
A European court undid an earlier version of the framework in 2020.
The new Privacy Shield seeks to address European concerns of surveillance by U.S. intelligence agencies.
European Council President Charles Michel, President of the European Commission, Ursula von der Leyen and US President Joe Biden meet within EU -USA Summit in Brussels, Belgium on June 15, 2021.
Dursun Aydemir | Anadolu Agency | Getty Images
President Joe Biden signed an executive order to implement a new framework to protect the privacy of personal data shared between the U.S. and Europe, the White House announced on Friday.
The new framework fills a significant gap in data protections across the Atlantic since a European court undid a previous version in 2020. The court found the U.S. had too great an ability to surveil European data transferred through the earlier system.
The court case, known as Schrems II, "created enormous uncertainty about the ability of companies to transfer personal data from the European Union to the United States in a manner consistent with EU law," then-Deputy Assistant Commerce Secretary James Sullivan wrote in a public letter shortly after the decision. The outcome made it so U.S. companies would need to use different "EU-approved data transfer mechanisms" on an ad hoc basis, creating more complexity for businesses, Sullivan wrote.
The so-called Privacy Shield 2.0 seeks to address European concerns of surveillance by U.S. intelligence agencies. In March, after the U.S. and EU agreed in principle to the new framework, the White House said in a fact sheet that the U.S. "committed to implement new safeguards to ensure that signals intelligence activities are necessary and proportionate in the pursuit of defined national security objectives."
The new framework will allow individuals in the EU to seek redress through an independent Data Protection Review Court made up of members outside of the U.S. government. That body "would have full authority to adjudicate claims and direct remedial measures as needed," according to the March fact sheet.
Before a matter reaches the DPRC, the civil liberties protection officer in the Office of the Director of National Intelligence will also conduct an initial investigation of complaints. Its decisions are also binding, subject to the independent body's assessment.
The executive order directs the U.S. intelligence community to update policies and procedures to fit the new privacy protections in the framework. It also instructs the Privacy and Civil Liberties Oversight Board, an independent agency, to examine those updates and conduct an annual review of whether the intelligence community has fully adhered to binding redress decisions.
"The EU-U.S. Data Privacy Framework includes robust commitment to strengthen the privacy and civil liberties safeguards for signals intelligence, which will ensure the privacy of EU personal data," Commerce Secretary Gina Raimondo told reporters Thursday.
Raimondo said she will transfer a series of documents and letters from relevant U.S. government agencies outlining the operation and enforcement of the framework to her EU counterpart, Commissioner Didier Reynders.
The EU will then conduct an "adequacy determination" of the measures, the White House said. It will assess the sufficiency of the data protection measures in order to restore the data transfer mechanism.
— CNBC's Chelsey Cox contributed to this report.
WATCH: Why the U.S. government is questioning your online privacy
Why the U.S. government is questioning your online privacy | 2022-10-07T14:39:45Z | www.cnbc.com | Biden signs executive order to protect data transfers between US, EU | https://www.cnbc.com/2022/10/07/biden-signs-executive-order-to-protect-data-transfers-between-us-eu.html | https://www.cnbc.com/2022/10/07/biden-signs-executive-order-to-protect-data-transfers-between-us-eu.html |
The U.S. stock market may be down 21% this year, but it's far better than most of the rest of the world. The U.S. stock market, which has been outperforming most other markets for a long time, is continuing to increase its market share of global equities. Bank of America chief investment strategist Michael Hartnett noted that U.S. equities are now 66% of the MSCI World Index, a market-capitalization weighted index that is a benchmark for global equity funds. That 66%, Hartnett says, is an all-time high. What's going on? Europe is having a tough time due to the Russian invasion of Ukraine, and the Pacific region, heavy on emerging markets, is having a tough time due to the strong dollar and economic weakness in China. Global markets in 2022 South Korea (EWY) - 35% Taiwan (EWT) - 33% Vanguard Europe (VGK) - 30% China (MCHI) - 30% Japan (EWJ) - 25% It all translates into a lower global market capitalization for stocks. How much lower? Hartnett notes that Tesla's market cap, at roughly $750 billion, is now the same as the entire European banking sector. One thing's for sure: this year's downturn only adds to the dominance of the United States. Whereas Hartnett says the U.S. accounts for 66% of the value of all the stocks in the world, the iShares ACWI ETF (ACWI), an index of global developed and emerging market countries, notes that the U.S. is 60.3% of its index. Regardless: the U.S. is the global colossus when it comes to stocks. Nothing else comes close. U.S. stock market: king of the hill (by market capitalization) U.S.: 60.3% Japan 5.4% China 4.1% UK 3.9% Canada 3.2% France 2.7% Switzerland 2.5% Australia 1.9% Germany 1.9% Taiwan 1.6% Other 12.2% | 2022-10-07T14:39:57Z | www.cnbc.com | U.S. stock market is taking hits, but we’re still doing better than the rest of the world | https://www.cnbc.com/2022/10/07/dont-worry-about-us-stocks-were-doing-better-than-the-rest-of-the-world.html | https://www.cnbc.com/2022/10/07/dont-worry-about-us-stocks-were-doing-better-than-the-rest-of-the-world.html |
One thing that separates fledgling investors from the pros is reading financial statements. For amateurs, comparing the so-called headline numbers — sales and earnings — to estimates is the full extent of research into a company, whereas in more experienced hands, they are just a starting point. If you want to become a better investor, make like a pro and digest the financials. It's the best way to truly understand a company's performance. In the lead up to the start of earnings season later this month, we've put together a five-part series to help Club members better understand all the tables and charts and how to analyze them. Here's Part 4: The ratios. Part 4: The ratios Now that you have a better understanding of the income , balance and cash flow statements — parts 1, 2, and 3, respectively — let's go over how to use them to get a complete picture of a company's financial health. That means using some key financial ratios. What follows is not an exhaustive list, but a good starting point for most investors, which includes many of the most important measures used by the Club. Current ratio The current ratio, which compares current assets to current liabilities, is a great first metric. As members will recall, current assets include cash, assets that can quickly be converted to cash (such as marketable securities), and those assets expected to be converted to cash within less than a year (such as receivables and inventory). Current liabilities are debts that must be repaid within the next year. Ideally, we want to see a ratio of greater than 1, which indicates sufficient current assets to cover current liabilities. If we take a look at Club holding Apple 's (AAPL) balance sheet statement for the third quarter of this year, we see current assets of $112.29 billion (represented on the release in millions as $112,292) and current liabilities of $129.87 billion. The former divided by the latter yields a ratio of about 0.865. (To represent that as a percentage, move the decimal point two places to the right.) That's not great. But there are a few reasons why we're not concerned with it comes to Apple. First and foremost, remember that Apple categorizes a significant amount of marketable securities as non-current assets. Simply adding this line item to the assets side of the equation would put us well over the 1 ratio threshold. That's a rather straightforward and appropriate adjustment to consider given those marketable securities are still highly liquid assets. Apple's management factors them into their calculation when discussing cash and equivalents on its earnings calls. Second, Apple generates a significant amount of free cash flow (roughly $21 billion expected in the upcoming quarter alone). Finally, Apple's overall strong balance sheet and top-tier credit rating mean that they could always roll over some debt by selling longer-dated bonds to help pay off some nearer-term obligations. While the simple equation — current assets divided by current liabilities — is how you calculate the current ratio, we encourage members to think critically about the inputs and possibly consider making adjustments that seem logical. For example, one adjustment we like to consider here is to exclude deferred revenue from the current liabilities. Recall that deferred revenue is a liability that will be fulfilled by delivering a service, such as Apple Music. It's a liability because Apple already collected the cash. That doesn't require a cash outlay and, as a result, is something we can exclude from the equation. In Apple's case, this would reduce current liabilities by $7.73 billion and lead to a modified current ratio of about 0.92, which is much closer to 1. The gap between current assets and current liabilities also falls to around $9.85 billion from around $17.58 billion, easily made up by one quarter's free cash flow. Another consideration is how to handle term debt and commercial paper. You definitely do not want to exclude these two line items. But remember that companies, especially ones with as strong a reputation as Apple, can always sell more debt to pay off maturing debt. For example, Apple could always choose to sell long-term debt to pull additional funds in now. Keep this in mind if the ratio falls below 1. Some high-quality companies may run current ratios below 1, but can remedy that with debt or equity sales. The current ratio also doesn't take into account cash flow generation, which companies can also use to meet near-term obligations. Quick ratio The quick ratio focuses only on current assets that can quickly be converted to cash. This usually means removing inventories, but some investors go a step further and remove any other current assets they deem less liquid and include only cash, cash equivalents, marketable securities and accounts receivables. The idea is to determine liquidity if we had to convert current assets to cash and pay off current liabilities quickly without worrying about the need to sell inventory, the value of which depends on consumer demand that can fluctuate. Current liabilities are left unchanged. When it comes to Apple, we start with current assets of $112.29 billion and remove the $5.43 billion in inventory we see on the balance sheet (again, see above, this is represented in millions as $5,433). This results in current assets less inventory of $106.86 billion. Dividing that by current liabilities yields a result well below 1. However, we could also opt to remove deferred revenue from the liabilities side to get a better picture of how large the gap is between what Apple has on hand and what it owes over the next 12 months. And again, in Apple's case, a significant amount of marketable securities are categorized as noncurrent despite their liquidity. It's important to consider at least a portion of these securities when thinking about the company's liquidity position, along with its high free cash flow. This consideration of noncurrent marketable securities and cash flow profile is not meant to be an excuse for a poor ratio, but rather demonstrates why diligent investors must think beyond just mindlessly plugging numbers into a predetermined equation. That said, we reiterate that a result less than 1 for either the current ratio or quick ratio absolutely warrants further investigation. Net debt-to-EBITDA Of the leverage ratios, net debt-to-EBITDA is the main one. This involves taking the net debt (which is essentially total debt minus cash and cash equivalents) and dividing it by a full year's earnings before interest, tax, deprecation and amortization (EBITDA). Corporations have the ability to take on debt to fund investments. As investors, we want profitable companies to lever up, to an extent, because strong management teams can make good use of that debt to provide strong long-term returns. The net debt-to-EBITDA ratio helps us determine appropriate debt levels given a company's EBITDA generation. What the appropriate level is will be highly dependent on the industry and company in question. As a result, the best way to think through this metric is by researching historical levels and levels across the industry. In Apple's case, this isn't really a ratio of concern because Apple actually has negative net debt as a result of having more cash equivalents (including current and non-current marketable securities) than outstanding debt. We previously raised the point ( in Part 1 of our series in the operating income section) that some investors may not prefer the use of EBITDA since it factors out the real cost of depreciation and amortization. But it does make more sense in this equation because, in a worst-case scenario, a company could look to pay off debts before replacing depreciated equipment, for example. Dividend payout ratio This ratio measures the portion of earnings being paid out in dividends. A ratio north of 1 is simply unsustainable as a company cannot pay out more cash to investors than it generates in net income. That would be like giving your kids an allowance that is greater than your take-home pay. Apple's third-quarter statement showed dividend payments of $3.81 billion (in millions as $3,811 on the release) and net income of $19.44 billion. If we divide the payout by the net income, we get a payout ratio of about 0.196. Clearly, Apple will have no issue sustaining these payouts. However, when you see a shockingly high dividend yield, it's important to consider whether or not it's a fluke — an "accidental high yielder," which is what we refer to as a stock that yields a lot simply because the shares became oversold despite a perfectly sustainable payout. Cash conversion ratio Another important ratio that ties into earnings is the cash conversion ratio. Investors may look to use operating cash flow or free cash flow for this equation. In our view, because free cash flow removes payments for capital expenditures, it is the more conservative of the two. This ratio compares earnings to actual cash received. Earnings that are backed by cash are of a higher quality because, after all, you can't pay dividends, buy back shares or invest in growth with IOUs. Ideally, we want a ratio as close to 1 as possible, which indicates that earnings are entirely backed by cash. Return on equity Return on equity (ROE) calculates the ratio of net income to shareholder equity — net income divided by shareholder equity, or total assets minus total liabilities. It tells us how many dollars the company makes for every dollar of shareholder equity. The higher the ratio, the more efficiently the company is making use of its equity, which is essentially shareholders' stake in the business after netting out assets and liabilities. Another way to calculate ROE is through what is known as the DuPont equation. The extended version is calculated by multiplying five individual ratios. While these ratios ultimately cancel out to yield a simple ROE equation (net income divided by equity), this breakdown allows one to better understand the individual components impacting a company's ROE. To better understand the utility of this equation, let's consider what it looks likes for two rival companies, Club holding Advanced Micro Devices (AMD) and Intel . (We will use numbers pulled from FactSet for the 2021 calendar year; the numbers are represented in millions.) AMD clearly offers a significantly better ROE than Intel, a result of lower tax and interest burdens. The company also makes more efficient use of its assets. Finally, we see that AMD has less leverage. Less debt also means less future obligations and a stronger balance sheet, which is especially favorable in an economic slowdown. All of these positives for AMD serve to more than offset Intel's superior operating (EBIT) margin. While calculating ROE is the goal — and we could have gotten the answer by simply dividing net income (found on the income statement) by shareholder equity (found on the balance sheet) — this breakdown allows us to better understand what is driving that ROE. Bottom line So, there we have it, a review of some noteworthy financial metrics. We hope this will help members better use the financial statements companies provide and allow them the ability to do even more due diligence on the companies in which they are invested or are thinking about taking positions. Stay tuned for Part 5 in our financial statement series for the Investing Playbook, where we will go over Apple's cash flow statement. (Jim Cramer's Charitable Trust is long AAPL, AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
One thing that separates fledgling investors from the pros is reading financial statements. For amateurs, comparing the so-called headline numbers — sales and earnings — to estimates is the full extent of research into a company, whereas in more experienced hands, they are just a starting point. If you want to become a better investor, make like a pro and digest the financials. It's the best way to truly understand a company's performance. In the lead up to the start of earnings season later this month, we've put together a five-part series to help Club members better understand all the tables and charts and how to analyze them. Here's Part 4: The ratios. | 2022-10-07T14:40:09Z | www.cnbc.com | How to analyze an earnings report — Part 4: The ratios | https://www.cnbc.com/2022/10/07/how-to-analyze-an-earnings-report-part-4-the-ratios.html | https://www.cnbc.com/2022/10/07/how-to-analyze-an-earnings-report-part-4-the-ratios.html |
Investing in real estate hasn't been easy of late. Real estate investment trusts have been beaten up more than the overall stock market this year. While the S & P 500 slid 21% year to date, REITs plunged 30%, per the MSCI US REIT Index . The index, which has 132 constituents, represents about 99% of the U.S. REIT universe. Last year, the MSCI US REIT Index gained 42%, compared to the S & P's increase of nearly 27%. Their underperformance this year can be pinned to rising interest rates, since investors who have REITS for their high dividend yields may dump the assets for risk-free Treasurys. Those Treasury yields have been climbing this year, with the 10-year yield at one point topping 4% last week. On top of that, while REITS have been historically known as hedges against inflation, that isn't the case this time around, according to a recent Morningstar report. The assets won't immediately feel the benefit of higher inflation and might even see negative effects due to several reasons, including the fact that many sectors won't be able to react with rent increases due to long-term leases, Morningstar senior equity analyst Kevin Brown wrote in the report. Inflation also drives up operator costs, the price of building materials and labor costs, he pointed out. In addition, the REIT market has significantly changed over the years. As a result, REITS are generally undervalued, Brown said. "The long-term fundamentals for the sector are still healthy and strong and that should support growth of the stocks over the next three years," he told CNBC. How should you invest in REITS? There are several things to take into account when deciding whether to invest in REITs and what to buy. For one, REITs should be an intermediate- to long-term investment. They should also be part of an overall diversified portfolio. "To determine the amount of your portfolio that should be allocated to alternate investments such as REITs, keep in mind your time horizon, your income needs, the tax efficiency of your portfolio and, of course, what is the end play," advised certified financial planner Omar Morillo, founder and senior wealth advisor at Imperio Wealth Advisors in Miramar, Florida. Keep an eye on the path of the Federal Reserve 's continued interest rate hikes , which is impacting Treasury yields, said CFP Chuck Failla founder and CEO of Sovereign Financial Group in Stamford, Connecticut. Names that are more sensitive to higher rates will likely continue to underperform until those yields come down. However, Failla is now looking to get ahead of the Fed. While he had reduced his firm's exposure to REITs due to rising interest rate fears, he's now thinking about increasing that exposure. REITs typically make up 5% to 10% of his firm's 10-year plus portfolio portfolio, with the exposure currently at the lower end of that range. Another factor to consider is performance — to a degree. "Performance is a starting point," Failla said. "I'm looking for performance that makes sense: What I would expect it to do in various market conditions, more so than outperformance." If you buy those that have their great fundamentals already priced in, you'll be getting in at the peak, Morningstar's Brown added. "You have to identify the undervalued sectors, whose short-term issues should get resolved over the long term," he said. Sectors in focus Think strategically when focusing on specific sectors within the REIT market. For instance, REITs that hold office buildings may not be the best idea right now, as office occupancy rates remain low due to hybrid and remote work. New York City commercial office buildings saw a 45% decline in values in 2020 and 39% in the longer-run, with the latter representing $453 billion in value destruction, according to a National Bureau of Economic Research paper titled " Work From Home and the Office Real Estate Apocalypse ." As of late September an average 47.2% of offices in 10 cities were occupied , according to Kastle's Back to Work Barometer. Yet, there are some REITs that are poised to do well, experts said. In this environment, companies that are less sensitive to rising interest rates should outperform, said Morningstar's Brown. His top pick is Simon Property Group , because its long-term leases help insulate it from any immediate negative impact of an economic slowdown. The company also has a strong balance sheet and significant free cash flow, he said. Hotels REITS are another good investment, particularly because they have years of revenue growth recovery ahead, Brown said. They'll benefit from inflation in the short term because they can immediately raise room rates, he noted. "They should be less sensitive overall to interest rates movements given that most investors are not in hotel names for the dividend," Brown said. Investors just need to be aware that if there is a recession, that will slow down their recovery. Brown specifically likes Park Hotels & Resorts and Pebblebrook Hotel Trust . Meanwhile, solid fundamentals and positive long-term trends, like an aging Baby Boom population, should provide an advantage to the health-care sector, said Imperio Wealth Advisors' Morillo. Hospitals, medical offices and long-term care facilities are within that space. "People still get sick and they still need health care no matter what happens in the economy," he said. Brown also believes the health-care sector should do well thanks to its solid fundamentals, although he cautions it will likely continue to underperform during the rising rate environment. He likes Ventas , which has exposure to senior housing. The population of people aged 65 and older was 54.1 million in 2019 and is projected to reach 80.8 million by 2040 and 94.7 million by 2060, according to the Administration for Community Living . All but a tiny percentage live in non-institutional settings, the organization said on its website. Other sectors that look interesting are multi-family housing and self-storage units, as well as warehouses, as retail continues to move towards fast shipping to customers, Failla said. | 2022-10-07T14:40:21Z | www.cnbc.com | REITs are suffering big time as rates rise, but there's opportunity in the carnage | https://www.cnbc.com/2022/10/07/reits-are-suffering-big-time-as-rates-rise-but-theres-opportunity-in-the-carnage.html | https://www.cnbc.com/2022/10/07/reits-are-suffering-big-time-as-rates-rise-but-theres-opportunity-in-the-carnage.html |
Two doses of the Covid vaccines prevented at least 330,000 deaths and nearly 700,000 hospitalizations among adult Medicare recipients in 2021, the Department of Health and Human Services said.
The overwhelming majority of Medicare recipients, 86%, are seniors ages 65 and older. The elderly face the highest risk of severe disease and death from Covid.
The U.S. has rolled out new booster shots that target the dominant omicron BA.5 subvariant, which health officials believe will provide stronger protection this fall and winter.
A patient receives a Covid-19 vaccine booster shot at a Pfizer-BioNTech vaccination clinic in Southfield, Michigan, on Sept. 29, 2021.
Covid vaccines prevented at least 330,000 deaths and nearly 700,000 hospitalizations among adult Medicare recipients in 2021, the Health and Human Services Department said in a new report published Friday.
The reduction in hospitalizations due to vaccination saved more than $16 billion in medical costs, according to the HHS report. A 10% increase in vaccination coverage was associated with a 12% and 15% decline in the chances of hospitalization and death, respectively, among adult Medicare recipients, according to the study.
The HHS study looked at county level data on vaccination rates and changes in hospitalization and death among a sample of Medicare beneficiaries ages 18 and older. Texas and Hawaii were not included in the study due to incomplete vaccination data.
The overwhelming majority of Medicare recipients, 86%, are seniors ages 65 and older. Select groups under 65, such as people with disabilities, are also eligible for coverage. People who are not seniors make up about 14% of Medicare beneficiaries, according to data from the Center for Medicare and Medicaid Services.
The elderly face the highest risk of severe disease and death from Covid. Nearly 93% of people ages 65 and older in the U.S. have received two doses of a Covid vaccine, according to the Centers for Disease Control and Prevention.
Despite the vaccine coverage within the highest risk group, more than 300 people are still dying a day on average from Covid, while more than 3,300 are hospitalized daily, according to CDC data. Dr. Ashish Jha, who heads the White House Covid task force, said 70% of Covid deaths are among people ages 75 and older.
"This is unacceptable, particularly because we can now prevent almost every Covid death in the country with vaccines and treatments that we have," Jha told reporters during a call Friday.
Although most people ages 75 and older received their primary vaccine series, those who are dying are either not up to date on their boosters or are not receiving treatments such as Paxlovid when they have a breakthrough infection, Jha said. He added that death rates are dramatically higher among people in this age group who did not receive their first booster last fall.
"If you are up to date on your vaccines and you get treated when you have a breakthrough infection, your chances of dying are close to zero even in that high risk population," Jha said.
Jha said the most important step people in this age group can take to protect themselves is to receive the new booster shots that target the dominant omicron BA.5 subvariant along with the original strain of Covid that first emerged in Wuhan, China in 2019.
The original Covid vaccines were developed against the first strain that emerged in China, and their effectiveness at preventing infection and mild illness has dropped substantially as the virus has mutated. Though they still generally protect against the worst outcomes, their ability to prevent hospitalization has also declined over time, particularly among elderly people who have not stayed up to date with their shots.
Health officials believe the new boosters will provide substantially better protection against disease because the shots now match the main Covid variant circulating in the U.S.
But the FDA and CDC authorized the new BA.5 boosters without data from human trials, so it's unclear how much more effective they will be than the old shots. FDA officials have said they authorized the boosters using the same process they use to change flu vaccines every year, which also normally doesn't rely on direct human data.
The HHS study did not look at the effect of booster shots on severe disease and death because those shots just started rolling out at the end of 2021.
The FDA authorized Pfizer's and Moderna's vaccines in December 2020. Seniors were the first in line to get the shots, and eligibility gradually expanded over the course of 2021. | 2022-10-07T16:50:27Z | www.cnbc.com | Covid vaccines prevented at least 330,000 deaths among U.S. seniors in 2021 | https://www.cnbc.com/2022/10/07/covid-vaccines-prevented-at-least-330000-deaths-among-us-seniors-in-2021.html | https://www.cnbc.com/2022/10/07/covid-vaccines-prevented-at-least-330000-deaths-among-us-seniors-in-2021.html |
Kevin O'Leary just weighed in on Elon Musk's controversial Twitter deal — and he's siding with the world's richest person.
The "Shark Tank" investor told CNBC's "Squawk Box" on Thursday that he predicts Musk's $44 billion offer to acquire Twitter will go through — and that it'll end up going in Musk's favor.
"I happen to have watched [Musk] forever, and I think this guy is Teflon man," O'Leary said. "And he can obviously multitask. I bet on him in this deal. By the time all this stuff is over, I think he's going to have a good outcome."
Musk, who has a net worth of $219.1 billion as of Friday afternoon, has been locked in a legal dispute with Twitter's board over a proposed takeover bid since April. The battle, over Musk's attempt to pull out of the deal after initially agreeing to buy the social media platform for $54.20 per share, hit a new escalation this week when Musk said he wanted to avoid litigation by returning to his original deal.
Twitter refused to oblige, and a Delaware judge ruled that Musk has until October 28 to close the acquisition if he wants to avoid a trial.
O'Leary predicted that Musk will indeed assume ownership of Twitter once the dust settles, saying he thinks the Tesla CEO will improve the social media platform's user experience substantially once in charge. Currently, Twitter is falling behind, O'Leary said: Many users don't regularly post on it anymore, and with the rise of video content on other platforms, it's losing popularity.
"It's a terrible company," O'Leary said. "I use the platform, too, and I look at the metrics versus all the other [social media companies] including Tiktok and LinkedIn and Instagram and Facebook. It's the worst in terms of getting your message out."
In its fourth quarter last year, Twitter had an average of 217 million daily users, according to Twitter's 2021 annual report. For comparison, Meta's platforms collectively had an average of 1.93 billion users in December 2021.
O'Leary said he thinks Musk is overpaying by 40% in the deal, but added that the inflated number might be worth it: By owning Twitter, Musk could use his influence and popularity on the platform to financially benefit his other companies, like Tesla and SpaceX.
"[Tesla] is the only car company on Earth that pays nothing on advertising," O'Leary said. "He [advertised] it on the back of Twitter and other social media platforms. Very few people get to own their own unregulated network."
Kevin O’Leary on his best ‘Shark Tank’ investments ever: ‘75% of my returns have come from companies run by women’ | 2022-10-07T18:21:56Z | www.cnbc.com | Kevin O'Leary says he's betting on Elon Musk amid Twitter drama | https://www.cnbc.com/2022/10/07/kevin-oleary-says-hes-betting-on-elon-musk-amid-twitter-drama.html | https://www.cnbc.com/2022/10/07/kevin-oleary-says-hes-betting-on-elon-musk-amid-twitter-drama.html |
A storefront in Ocean City, New Jersey, on Aug. 18, 2022. Photographer: Al Drago/Bloomberg via Getty Images
However, September's pace of job growth is still strong, economists said. It outpaces pre-pandemic gains, for example, when the labor market was thought to be quite healthy and growth averaged less than 200,000 jobs a month, economists said. | 2022-10-07T18:22:02Z | www.cnbc.com | Long-term unemployment dips by another 70,000 people | https://www.cnbc.com/2022/10/07/long-term-unemployment-dips-by-another-70000-people.html | https://www.cnbc.com/2022/10/07/long-term-unemployment-dips-by-another-70000-people.html |
Energy names were the biggest winners in the market this week, as a major production cut by OPEC+ boosted oil prices. Stocks posted a big rally early in the week but lost steam heading into Friday . Currently, the S & P 500 and Dow Jones Industrial Average are set to end the week 2% higher, while the Nasdaq Composite is up about 1.5% in the same timeframe. Earlier in the week, however, they were up more than 5%. Energy names, on the other hand, have gained steam as the week wore on. On Wednesday, the Organization of Petroleum Exporting Countries and its allies announced they would cut production by 2 million barrels per day, their largest cut since 2020 . Oil prices jumped on the news, and West Texas Intermediate crude topped $90 per barrel earlier on Friday. That helped lift the energy sector. The Energy Select Sector SPDR Fund is up 15% so far this week, on pace for its best week since Nov. 13, 2020. Top performers in the fund include Marathon Oil , APA Corp . and Halliburton , which are all up more than 22% week to date. In addition, eight of the top 10-performing S & P 500 stocks this week are energy names. DexCom, a medical device company that's surged nearly 30% this week, and technology company Western Digital Corporation that's jumped nearly 20%, are the only non-energy names rounding out the top ten. Stocks poised for major gains Of the top performing names this week, three energy names are standouts in that they are positively rated by many analysts covering them, and consensus price targets see them gaining at least another 20%. Nearly 68% of analyst covering Halliburton have a buy rating on the energy company, and the consensus price target for the firm implies upside of nearly 40%, according to data from FactSet. This year, Halliburton's stock price has increased more than 34%, including this week's more than 22% gain. APA Corporation is also seen as rising sharply over the next 12 months. The upside implied by the consensus price target on APA about 25%. About 46% of analysts that cover APA Corporation have a buy rating on the stock. This year, it's gained more than 60%, including a 25% jump this week. Diamondback Energy is the third energy name where analysts see strong gains in the future. This week, the stock has surged nearly 10%, leaving it up nearly 32% on the year. Nearly 72% of the analysts covering the stock say it's worth buying, and the upside seen by analysts on average is of more than 20%. Outside of energy names, analysts are also very bullish on Western Digital. Even though the firm gained nearly 20% this week, it's down about 44% on the year, meaning it might be at a good spot to buy. Of the analysts that cover the technology company, roughly 40% have buy ratings on the name. There's a nearly 35% upside to the consensus price target, however. Energy names Devon Energy , Hess , Pioneer Natural Resources and Schlumberger complete the list. | 2022-10-07T18:22:33Z | www.cnbc.com | This week's best-performing S&P 500 stocks include 3 energy names expected to jump at least 20% | https://www.cnbc.com/2022/10/07/this-weeks-best-performing-sp-500-stocks-include-3-energy-names-expected-to-jump-at-least-20percent.html | https://www.cnbc.com/2022/10/07/this-weeks-best-performing-sp-500-stocks-include-3-energy-names-expected-to-jump-at-least-20percent.html |
Here are the strategies one Select reporter used to pay off his large student loan balance.
Source: Brett Holzhauer
It's a moment many student loan borrowers look forward to, and after nearly eight years, it's my turn: As of Oct. 3, I've finally paid off my student loans!
After accruing nearly $80,000 worth of student loans, I can remember graduating at 21 years old and thinking to myself — during many sleepless nights — that I would do everything in my power to pay them off in full before I hit 30. Now, just a few weeks shy of my 29th birthday, I can finally breathe that long-awaited sigh of relief.
The journey hasn't been easy. On some of my darkest days, I chose to skip meals or not turn on my heater in the winter out of immense guilt. Now that I've reached the other side of my student loans, I've learned how destructive student debt really is and how much it affects so many people's lives.
While some student loan payoff stories tend to highlight spending extremes, mine is more of a story of finding a balance. In short, I decided to live my life fully without losing sight of accomplishing my goal — while I could have paid my loans off even faster, I chose not to because I wanted to prioritize other goals, along with simply enjoying my life.
Overall, the success of paying off my student loans can be summarized by two simple principles: making more money and maximizing student loan refinancing. Here's how I did it.
How I paid off my student loans in less than 8 years
First off, I attended two years of community college, which was covered by my parents. Then, for my second two years, I decided to attend college out-of-state, which came at a premium cost.
The kicker was I was unable to qualify for any loans or grants through FAFSA since my parents' expected contribution was so high. My parents hadn't saved up for me to go to college, so I was forced to apply for private student loans through Wells Fargo.
My 19-year-old self had no idea what he was getting into, but after graduating in August 2015, I had to face the financial reality of being $72,669 in debt — an amount which eventually ballooned to just under $80,000 thanks to accruing interest.
Thankfully, roughly 85 months later, I was able to crush my student debt by using these tactics:
Side hustling
Having a side hustle or two has become quite popular over the last decade. As wages stagnate and the cost of living continues to rise, Americans have found themselves needing to supplement their income from their full-time job.
In my case, I was looking for a way to pay down my student debt without having to sacrifice my lifestyle — and that's where side hustling comes in. I've had many side gigs, including delivering groceries for Instacart at the beginning of the Covid-19 pandemic, working as a lifeguard for private pool parties, reselling items online and doing freelance writing projects. I've also taken full advantage of welcome bonuses from certain credit cards and bank accounts.
While I had little to no money coming in some months from my side hustles, other times I'd see upwards of $5,000 per month. Through it all, the one requirement I had for myself at the time was that these side jobs would always be flexible within my current schedule. I was already working around my full-time job's fixed schedule so I didn't want to work in another concrete schedule on top of that.
Over the last four years, I would estimate I've made about $30,000 in side hustle income. And while it did help me to aggressively pay down my student loans, having that side income also gave me the flexibility to enjoy my life.
If you're considering picking up a side hustle, follow my advice and do something you enjoy. It will make the time fly by and paying down your student loans (or other debt) will be a less agonizing experience.
A recent Forbes study showed that employees who stayed at one job for more than two years would end up making 50% less than those who made the jump to another job. Moreover, if your salary hasn't increased in the last two years, you've likely been experiencing a much tighter monthly budget as record-high inflation continues to drive consumer prices higher.
At this point, I'm on my 10th job out of college. Yes, this might seem like an extreme case of job-hopping, but it's also been a very lucrative one. By doing this, I've been able to increase my salary by over 175% since graduating, and this didn't happen by accident.
Shortly after graduation I realized that while you can only cut back so much on your budget, there's no cap on how much money you can make. I decided then to focus my energy on maximizing my income to pay down the debt, rather than living a super frugal lifestyle.
If you haven't marketed your services to new employers in the last few years, it may be time to put yourself out there.
Interest-rate hacking
Accruing interest on student loans is where many borrower horror stories come from and at one point, I was starting to become part of that narrative. After graduation, my loans had grown by roughly $6,000 even though I was making on-time payments.
I knew there had to be a better way and came across student loan refinancing. It's a simple concept: You move your debt from one loan servicer to another in order to receive better repayment options. The process is very simple, too, as there is no collateral involved, as is the case with a mortgage or a car loan.
It's common for borrowers to refinance one or two times to take advantage of better interest rates or repayment terms. My case is a more extreme example since I ended up refinancing six times as I worked to pay down my student loans.
As a result, I was able to lower my interest rate from over 7%, eventually reaching 2.25% by opening a personal line of credit with First Republic Bank — I detailed my step-by-step journey in this article. By doing this while aggressively paying the principal of my loan down, I quickly got in control of my debt.
If you find yourself getting crushed by high interest payments, consider checking to see which interest rates you qualify for. Keep in mind, however, that if you have public student loans and choose to refinance them, you won't be eligible for any student loan forgiveness or other federal protections.
Here are some of our favorite private student loan lenders for refinancing:
Federal, private, graduate and undergraduate loans
Starting at 2.49% (rates include a 0.25% autopay discount)
Flexible terms anywhere between 5-20 years
A minimum of $5,000, up to $500,000 (residents of California must request to refinance $10,000 or more)
No income requirement
Investing along the way
While I could have paid my student loans off even faster, I decided to begin investing heavily in 2018 once my interest rate was around the 4% mark. At that rate, I knew I had a high likelihood of making more money by investing over the long term compared to the amount of my monthly interest payments.
I started putting more money into my 401(k), Roth IRA and Health Savings Account and doing this has definitely paid off. Notably, when the initial stock market plummet happened in March and April of 2020, I began throwing as much money as I could into my investment accounts as a way to buy the dip. At that point, my student loans were down to a 2.25% interest rate, so it made much more sense to invest.
If you have your student loans under control and a low interest rate, it may be beneficial to put them on the back burner for a bit and prioritize investing for the future. These brokers and offer IRAs and taxable investment accounts:
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Vanguard account, but minimum $1,000 deposit to invest in many retirement funds; robo-advisor Vanguard Digital Advisor® requires minimum $3,000 to enroll
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock and ETF trades; zero transaction fees for over 3,000 mutual funds; $20 annual service fee for IRAs and brokerage accounts unless you opt into paperless statements; robo-advisor Vanguard Digital Advisor® charges up to 0.20% in advisory fees (after 90 days)
Robo-advisor: Vanguard Digital Advisor® IRA: Vanguard Traditional, Roth, Rollover, Spousal and SEP IRAs Brokerage and trading: Vanguard Trading Other: Vanguard 529 Plan
Stocks, bonds, mutual funds, CDs, ETFs and options
Retirement planning tools
What I've learned by paying off my student loans
The road to paying my student loans off has not been easy at all — it's been filled with heartache, mistakes, stress and frustration. Now that that's all in the rearview mirror, here's what I've learned:
A solid credit score is critical to financial success
I started building my credit before I was old enough to drive or vote — my parents added me to their credit cards as an authorized user when I was 15, which allowed me to start building my credit score.
Once I was old enough to apply for my own credit card, I began my journey by earning millions of points and miles to use for travel and continuing to bolster my credit score. This meant I would graduate with a high credit score, which made it easier when it came time to refinance my student loans. Had it not been for my credit score, I wouldn't have been able to knock down the interest rate as aggressively as I did.
If you're considering refinancing — for student loans or any other type of loan — be sure to build your credit score and check it through a credit monitoring service to see what else your credit history contains.
Chase Credit Journey
Credit bureaus monitored
Dark web scan
Yes, up to $1 million
Experian Dark Web Scan + Credit Monitoring
Yes, one-time only
Identity insurance
Don't let debt stop you from living your life
Life doesn't stop because of your student debt, and you shouldn't stop either.
In the last seven years after graduating from college and paying off my student loan debt, I've experienced and accomplished a ton. I lived as a digital nomad, got married and divorced, job hopped numerous times, moved several times, bought a home, traveled more than most, and enjoyed nights out with friends and family. As long as you have your debt under control and a plan dedicated to paying it off you should try to enjoy your life.
Whether it's getting married, going on that trip you've been dying to go on, starting a family or any other life adventure you want, don't let your student debt bog down.
What student loan borrowers should do with their refunds from making pandemic-era payments
20 million Americans will soon be student debt free — here are the money moves they should make now
A 35-year-old who spent 9 years paying off $81,000 in student loan debt shares her big wake-up call | 2022-10-07T18:22:39Z | www.cnbc.com | How I Paid off $80,000 in Student Loans Within 8 Years of Graduation | https://www.cnbc.com/select/how-i-paid-off-80000-student-loans-within-8-years/ | https://www.cnbc.com/select/how-i-paid-off-80000-student-loans-within-8-years/ |
Wall Street can be confusing. Sometimes good news is good news for the stock market. Sometimes bad news is good news. Sometimes bad news is bad news. And finally, some times good news is bad news. The good-news-is-bad-news theme was an overarching reason behind Friday's sharp sell-off in stocks and the sharp increase in bond yields. The good news was that the nation's unemployment rate dropped to 3.5% in September when it was expected to hold steady at 3.7%, according to data released Friday morning. This is good for Main Street that fewer people are out of work. But it's bad for Wall Street because it's more evidence of a tight labor market and a signal the Federal Reserve won't be able to lighten up on its aggressive campaign of interest rate hikes. The Fed's dual mandate After all, the reason the Fed is hiking rates to begin with is to slow the economy in an effort to get inflation back down to its targeted 2% range. But if economic data, like the jobless rate, comes in better-than-expected, it means the economy is still chugging along and the Fed must take further action to slow things down. The central bank has raised rates by 75 basis points at three meetings in a row. With little to persuade the Fed otherwise in Friday's jobs numbers, the market expects another raise of 75 points at November's meeting. The need to cool the job market may seem counterintuitive because the Fed's dual mandate calls for maximizing employment and fostering price stability. The job market has been strong so central bankers only need work on inflation, right? Unfortunately, the two pillars of this dual mandate can work against each other. We want low unemployment. But when it's rock bottom, like it is now, what you get is wage inflation on top of already stubbornly high prices. Employers are forced to bid up wages in order to successfully attract talent — again, good for Main Street. However, the Fed has to stop that. As we've discussed in the past, when consumers get too flush, they spend more. In this current environment, this vicious cycle has too many dollars chasing too few goods and driving prices higher. That's even without considering the added inflationary pressures of elevated commodities due to geopolitical factors or increased supply chain costs due to shortages and bottlenecks. Spiraling inflation is bad for everyone, especially for regular folks. That's why the Fed has to put the brakes on it, which is bad for the stock market. How to cool wage inflation In addition to the unemployment rate decline, the government's September jobs report showed that average hourly earnings — wage inflation — rose 5% year over year. While a tick below expectations, it was still very high versus pre-Covid pandemic levels. This combination of low unemployment and high wage inflation is problematic for the Fed because it feeds overall inflation. One part of the jobs data, if it were to be looked at by itself, could be viewed as softer. Only 263,000 nonfarm payrolls were created in September, the lowest level since April 2021 and below expectations. It was also far below August's 315,000 and July's 537,000. However, the addition of 263,000 last month wasn't so bad — remember bad would be good for stocks — to buoy the market. As a result, the market expects the central bank to maintain its hawkish stance and continue raising rates at a record pace. From an economic perspective, inflation poses a far greater threat than 4% unemployment, and the Fed is intent on making that trade off via continued rate hikes. To this point, according to the CME FedWatch Tool , the probability of a 75-basis-point Fed rate hike in November now stands at over 80%, up from around 75% coming into the jobs report. Rising rates erode stock values Higher rates pose a problem for equity valuations in a few ways. On the one hand, bonds are finally, for the first time in a long time, offering a return — risk-free in the case of government-backed U.S. Treasurys — high enough to draw funds away from the stock market. At the same time, using a discounted cash flow valuation model , we see the present value of future cash flows reduced, which in turn makes a company's stock less attractive. In terms of the market action, higher rates are certainly more negative for high multiple stocks — think those secular growers that make little to no money now with promises of big profits far out in the future. Even the lower-value, money-making cyclicals are under pressure because the second major fear behind inflation is that the Fed is going to rate hike the world right into a recession, which hurts everyone. There is a lag between Fed action and the impact seen in the actual economy. Bottom line The Fed is in a very difficult spot. If it doesn't hike enough and inflation isn't addressed, then purchasing power continues to erode. If they hike too much, they can push the economy into a recession. This jobs print demands the central bank take action to address the former. On the other hand, there are signs that past actions are working, which is why investors fear the Fed may be acting too aggressively. On Thursday, Club holding Advanced Micro Devices (AMD) warned of weaker-than-expected sales for the third quarter, the latest in a growing list of companies to guide down going into earnings season. These announcements are noteworthy because they show that companies are being forced to lower prices in order to liquidate inventory due to declining demand and a consumer less able to accept high prices. Unfortunately, we won't know if the next hike is warranted until well after the action is taken. But the one thing investors hate more than bad news is uncertainty. The action in the market Friday speaks to the incredible amount of uncertainty swirling around the world — from the appropriateness of the Fed's continued hawkishness to Russia's war in Ukraine and China's slow and halting reopening plan. (Jim Cramer's Charitable Trust is long AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. | 2022-10-07T19:13:58Z | www.cnbc.com | Here's why good jobs news is bad news for the Fed and the stock market | https://www.cnbc.com/2022/10/07/heres-why-good-jobs-news-is-bad-news-for-the-fed-and-the-stock-market-.html | https://www.cnbc.com/2022/10/07/heres-why-good-jobs-news-is-bad-news-for-the-fed-and-the-stock-market-.html |
Aramark investors should forget their home town team this baseball playoff season and instead root for those clubs that have the company's concession stands at their stadiums, according to Bank of America. Major League Baseball's playoffs, which begin Friday afternoon, have been expanded to include 12 teams, up from 10 last year. As a result, the maximum number of potential games for the 2022 playoffs is 53, compared to 43 last year, BofA analyst Heather Balsky wrote in a note Friday. Of those 12 teams in the playoffs, Aramark provides food and beverage services for four: the Houston Astros, Toronto Blue Jays, Philadelphia Phillies and New York Mets. "Based on 2022's seeding, the company stands to cater between 6 to 33 playoff games (vs. 14 last year). Our best-case scenario for its revenues would be a deep run by the Houston Astros and New York Mets," she said. Balsky assumes all games will sell out and average spending will reach $30 per capita. "Notably, Aramark management has indicated that sports fans in 2022 have been spending more [year over year] and we also know that the company has raised prices," Balsky said. The optimal scenario is that all 33 games are hosted at stadiums where Aramark is a vendor. If that happens, Aramark's sales could grow by 65 basis points (0.65 of a percentage point) and its earnings-per-share growth could benefit by 290 basis points. The bear case is that the Astros, Blue Jays, Phillies and Mets all lose quickly, with Aramark hosting a bare minimum of six games. In that case, Aramark could face 25 basis points headwinds on sales and 100 basis points headwinds on EPS growth, according to Bank of America. Bank of America is bullish on Aramark in any case, noting that it is still recovering from the disruptions brought on by the Covid pandemic. Its price target of $44 per share implies 29% upside from Thursday's close. — CNBC's Michael Bloom contributed reporting. | 2022-10-07T19:14:17Z | www.cnbc.com | Why Aramark investors should root for the NY Mets this baseball post-season | https://www.cnbc.com/2022/10/07/why-aramark-investors-should-root-for-the-ny-mets-this-baseball-post-season.html | https://www.cnbc.com/2022/10/07/why-aramark-investors-should-root-for-the-ny-mets-this-baseball-post-season.html |
The S & P 500 gained more than 1% this week, but it sure didn't feel that way after the market's big slide on Friday. Let's talk a little bit more about what happened. Leading up to the September jobs report on Friday morning, there was an argument that if the labor market started to show signs of cracking — with wages moderating and job gains slowing — this would give way to the possibility of the Federal Reserve only doing a couple more medium rate hikes to rein in inflation before pausing. But as the better-than-expected jobs report showed , the Fed still has plenty more rate hikes left in the tank — an understanding that caused the Dow to plummet by more than 600 points Friday. The central bank has the cover it needs with the unemployment rate back down to 3.5% . The numbers are still in the hawks' favor and they continue to be right. We are on a course where the Fed has to continue to raise rates aggressively to combat rising prices. That said, we could get a positive surprise next week, if we see the highly anticipated Producer Price Index and Consumer Price Index reports — released on Wednesday and Thursday, respectively — come in weaker than expected. The setup into CPI and PPI this month will be better than next month, but we need to see some letup in inflation, or else the Fed will continue to be relentless. If we don't get the break we need to see in the inflation data, the near-term stock opportunities may be limited, at least until the S & P Short Range Oscillator becomes grossly oversold, much as it was at the end of last week. A reading of minus 4% to minus 5% may not cut it. (Anything below a minus 5% indicates the market is oversold.) Still, we believe in the seasonality of the charts as laid out this week , and we do recognize that tech is hated because of the Covid pull-forward (think Advanced Micro Devices ) and oil is loved because OPEC+ is cutting its output. History is also on the market's side in this midterm election year. So we will have to pick and choose what to buy as prices fall. Many companies are now trading well below where they should be, but until we get some sign that the Fed may be nearing its end of rate hikes, the value out there is limited. The equity markets are up against a 2-Year Treasury that offers a compelling risk-free return north of 4% that stocks simply cannot compete with. If yields continue to go higher, stocks will continue to struggle. As for the week that was, energy led all sectors to the upside, followed by industrials and materials. Real estate led to the downside followed by utilities and consumer discretionary. Meanwhile, the U.S. dollar index is hovering around the 112 level. Gold rebounded back to around $1,700 per ounce. West Texas Intermediate crude prices climbed back over $90 on news that OPEC+ will cut crude production next month. The yield on the 10-year Treasury advanced to around 3.9% on the back of the September nonfarm payroll report. Looking back We got earnings results from Constellation Brands (STZ) on Thursday. On Monday, ISM Manufacturing data came in at 50.9 for the month of September, below the 52 level expected. On Tuesday, factory orders were reported to be unchanged in August, in line with expectations. On Wednesday, ADP reported that the labor market added 208,000 jobs in September, more than the 200,000 expected by analysts. Also Wednesday, ISM Services came in at 56.7, better than expectations for a 56 reading. On Thursday, initial jobless claims for the week ending Oct. 1 came in at 219,000, an increase of 29,000 from the prior week and above expectations of 204,000. Finally on Friday, nonfarm payrolls were reported to increase by 263,000 in September, below the 275,000 estimate. However, despite the lower-than-expected reading — a would-be positive for a market concerned with Fed rate hikes — investors keyed into a drop in the unemployment rate that will likely force the Fed to raise rates by another 75 basis points in November. What's ahead Earnings kick off next week. Within the portfolio, we will hear from Wells Fargo (WFC) and Morgan Stanley (MS) on Friday before the opening bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Tuesday, October 11 Before the bell: AZZ Inc (AZZ) Wednesday, October 12 Before the bell: PepsiCo (PEP), Wipro Ltd (WIT) After the bell: Duck Creek Tech (DCT) 8:30 a.m. ET: Producer Price Index 2:00 p.m. ET: FOMC Minutes Thursday, October 13 Before the bell: Taiwan Semi (TSM), Delta Air Lines (DAL), BlackRock (BLK), Fastenal (FAST), Progressive (PGR), Wallgreens Boots Alliance (WBA), Domino's Pizza (DPZ) 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Consumer Price Index Friday, October 14 Before the bell: JPMorgan Chase (JPM), Citigroup (C), UnitedHealth Group (UNH), PNC Financial (PNC), US Bancorp (USB) , First Republic Bank (FRC) 8:30 a.m. ET: Retail Sales (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor of the New York Stock Exchange on Wall Street in New York City.
The S&P 500 gained more than 1% this week, but it sure didn't feel that way after the market's big slide on Friday. | 2022-10-07T22:16:59Z | www.cnbc.com | Two key inflation readings that will shape our investing game plan | https://www.cnbc.com/2022/10/07/two-key-inflation-readings-that-will-shape-our-investing-game-plan.html | https://www.cnbc.com/2022/10/07/two-key-inflation-readings-that-will-shape-our-investing-game-plan.html |
: "I am neutral to this stock after being a big supporter for a very long time."
: "The company's losing money, and I'm not recommending any companies that lose money."
: "Unsustainable yield. Unsustainable numbers. I don't want you to touch it."
: "They are so cheap. ... Just own some. Keep it up with the fundamentals."
Bandwidth Inc
: "I will not recommend companies that are losing money."
Cramer's lightning round: ZIM Integrated Shipping is not a buy | 2022-10-07T23:44:16Z | www.cnbc.com | Cramer's lightning round: ZIM Integrated Shipping Services is not a buy | https://www.cnbc.com/2022/10/07/cramers-lightning-round-zim-integrated-shipping-services-is-not-a-buy.html | https://www.cnbc.com/2022/10/07/cramers-lightning-round-zim-integrated-shipping-services-is-not-a-buy.html |
A general view shows a road-and-rail bridge, which is constructed to connect the Russian mainland with the Crimean peninsula, at sunrise in the Kerch Strait, Crimea November 26, 2018.
REUTERS | Pavel Rebrov
Russian authorities reported on Saturday that a truck explosion triggered a large blaze on the only bridge linking mainland Russia to the occupied Crimean Peninsula.
At 6:07 a.m. local time, Russian state-backed media cited the national anti-terrorism committee as saying that a truck exploded on the road traffic side of the Kerch bridge. The blaze set fire to seven oil tankers being carried by rail to Crimea, they added.
The Kerch bridge is one of Russian President Vladimir Putin's prestige projects, built after the Kremlin annexed Crimea in 2014 to support its claims to the territory.
Images and videos shared on social media appeared to show the scale of the fire and damage. CNBC was not able to independently verify the authenticity of the reports and images. | 2022-10-08T08:12:55Z | www.cnbc.com | Russian authorities say a truck bomb caused a fire and damage to key Crimea bridge | https://www.cnbc.com/2022/10/08/russian-authorities-say-a-truck-bomb-caused-a-fire-and-damage-to-key-crimea-bridge.html | https://www.cnbc.com/2022/10/08/russian-authorities-say-a-truck-bomb-caused-a-fire-and-damage-to-key-crimea-bridge.html |
Within the past six years, General Motors
CEO Mary Barra has pushed the company towards a total transition from gas vehicles to electric as deals and consumer interest are increasing. GM plans to sell up to 175,000 electric vehicles to Hertz Global by 2027 – rentals are a key method to introduce more people to EVs without having to commit to a purchase. And the company also had to close reservations for its high-end all-electric Hummer last week after reaching 90,000 people.
is on a similar track, and it had to close reservations for its F-150 Lightning pickup, and the auto maker raised prices for the second time on the EV pickup, too.
Taking the Hummer into the world of EVs shows that auto companies are betting on continued interest at the high-end of the market, where Tesla
made its name. Mercedes, too, is betting that luxury consumers will continue to lead the EV adoption curve. But there's also a transformation taking place across auto categories and including the best-selling vehicles in the U.S. As GM rebrands as an EV company it is featuring a growing range of electric vehicles, from the Chevrolet Silverado (its F-150 rival and together, the two most-popular vehicles in the U.S.) to the Cadillac Lyriq and to under $30,000 with its base model Bolt sedan. | 2022-10-08T14:44:41Z | www.cnbc.com | How GM plans to convince car buyers to make the EV switch | https://www.cnbc.com/2022/10/08/how-gm-plans-to-convince-car-buyers-to-make-the-ev-switch.html | https://www.cnbc.com/2022/10/08/how-gm-plans-to-convince-car-buyers-to-make-the-ev-switch.html |
The corporate earnings season is just around the corner, and expectations for corporate profits are muted at best. Data compiled by FactSet showed that third-quarter S & P 500 earnings are expected to grow by just 2.4% on a year-over-year basis. That lackluster forecast comes as corporations deal with rising interest rates and persistently high inflation. These conditions have raised concern that the U.S. could fall into a recession. On Sept. 28, billionaire investor Stanley Druckenmiller said he thinks the Federal Reserve's attempts to wind down easy monetary policies could lead to a "hard landing" for the economy by the end of 2023 . "I will be stunned if we don't have recession in '23. I don't know the timing but certainly by the end of '23. I will not be surprised if it's not larger than the so-called average garden variety," he said. With this in mind, CNBC Pro set out to find which stocks could still do well in this environment of muted overall earnings growth and increasing odds of a U.S. recession. To this, we screened the S & P 500 for stocks that met the following criteria: Expected 2022 earnings per share growth of at least 20% Buy ratings from at least 70% of analysts covering the stock Analysts on average see upside of at least 20% for the stock Here are the names that made the list: Generac Holdings has the most potential upside of any stock on the list. Analysts on average expect the residential generator builder to rise more than 110% going forward, and its earnings are expected to grow by 25% in 2022. Cowen initiated the stock with an outperform rating on Sept. 30 , saying that housing market uncertainty is already priced into the stock. The firm also said that: "The instability of the grid continues to drive significant power outages across the U.S. during periods of extreme weather." Generac shares have struggled in 2022, losing 56.2% in that time. Another stock that met our criteria is Disney . Analysts see 2022 earnings per share growing by 67%, and the stock advancing 42% from current levels. Nearly three-quarters of those covering the stock rate it a buy. To be sure, the media giant's stock has been battered this year, losing 37.3%. The company has also faced pressure from activist investor Dan Loeb recently. In late September, Disney and Loeb's Third Point reached a deal that included adding former Meta executive Carolyn Everson to its board. Energy stocks EQT and Diamondback Energy also made the list. EQT's earnings are expected to grow by 420% in 2022, and 81% of analysts covering the stock rate it a buy. Diamondback's earnings per share are also expected to more than double, and nearly three-quarters of analysts have buy ratings on the stock. Both stocks have handedly outperformed the broader market, with EQT up 97.9% year to date, and Diamondback Energy advancing 3.2%. The S & P 500, meanwhile, is in a bear market, down 23% year to date. Energy stocks have gotten a boost this year from rising oil prices. In 2022, West Texas Intermediate crude has gained nearly 24%. Other stocks that made our list are: Signature Bank, Monolithic Power Systems, ServiceNow, Synopsys, CDW, Assurant and Howmet Aerospace. | 2022-10-09T11:37:40Z | www.cnbc.com | These stocks are sharply growing earnings despite the economic slowdown, and analysts love them | https://www.cnbc.com/2022/10/09/these-stocks-are-sharply-growing-earnings-despite-the-economic-slowdown-and-analysts-love-them.html | https://www.cnbc.com/2022/10/09/these-stocks-are-sharply-growing-earnings-despite-the-economic-slowdown-and-analysts-love-them.html |
Apple CEO Tim Cook speaks during Apple's annual Worldwide Developers Conference in San Jose, California, June 6, 2022.
That said, the company also said that it would double its construction investments and undertake other strategic moves that will slow the ramping of certain DRAM and NAND processes. But these steps will ensure a smoother long-term growth runway. "From our perspective, we believe that these actions highlight Micron
's commitment to make difficult decisions to preserve profitability and shareholder return and are likely to be well-received by investors, per our previous conversations," noted Hari, reiterating a Buy rating on the MU stock. Taking into account the near-term headwinds, though, the analyst cut the price target from $63 to $62.
In a bid to enhance its Prime platform, Amazon also offered its U.S. Prime members a free one-year membership to Grubhub+. The company has also been investing heavily in improving its content portfolio in the past few months. Moreover, White also believes that Amazon'
s acquisition of MGM Holdings.
Barrington Research analyst Gary Prestopino believes that DHI
has the advantage of a long-term secular demand for tech specialists. "DHI specializes in employment categories in which there is long-term excess demand for highly skilled technologists who work in a variety of industries or have active government security clearances," said the analyst. (See DHI Group Stock Chart on TipRanks)
"We view McDonald's
as one of the strongest restaurant concepts in the world that is in the middle stages of a multi-year sales recovery. After several years of lackluster results, management has restored sales and earnings growth through a combination of relevant menu offerings, restaurant upgrades, digital engagement and stronger leadership," said Saleh, who also noted that these steps have improved sales trends. | 2022-10-09T11:37:46Z | www.cnbc.com | Top Street analysts are bullish on Apple & Amazon | https://www.cnbc.com/2022/10/09/top-street-analysts-are-bullish-on-apple-amazon.html | https://www.cnbc.com/2022/10/09/top-street-analysts-are-bullish-on-apple-amazon.html |
Robo-advisors are a hands-off way to manage investments but they aren't always best for everyone.
Published Sun, Oct 9 2022
Oscar Wong / Getty
Managing your investments can be an arduous task, especially when the market feels extremely volatile or you're nearing a major milestone like retirement and you're afraid of making a misstep. Luckily, though, you have different options to help guide you on your investing journey.
Financial advisors have always been a key asset to wealth management, but robo-advisors have grown in popularity over the years for their hands-off and low-cost approach to managing your investments. Before you decide which route you'd like to take to help you manage those assets, there are a few things you should consider about each option.
It's important to note that a financial advisor can be more helpful to your overall financial health since robo-advisors are only meant to provide investment recommendations while financial advisors provide a more holistic approach to managing your money. Advisors can provide recommendations on more than just investing, including budgeting, spending, major life events and more.
What's the difference between a robo-advisor and a financial advisor?
Robo-advisors are essentially software platforms that invest on your behalf. A robo-advisor's job is to create an investment portfolio for you and then manage it over time so you don't have to. When using a robo-advisor, you'll usually be asked a few questions which include your age, investment goals, investment time horizon and your overall risk tolerance.
The robo-advisor then uses this information to help decide how your assets should be allocated — like, should you hold more riskier assets or mostly conservative assets. As market conditions change, or as you invest more money, the robo-advisor will automatically adjust your portfolio to align with reaching your goals. This process is called rebalancing.
A financial advisor, on the other hand, is an individual who assists clients with specific, immediate financial matters — like your investments or estate planning. You can work with a financial advisor just a few times or you can choose to have an ongoing relationship with them. Generally, you'd have meetings with your financial advisor in their office but if they aren't local, you'd have phone calls or virtual meetings with them instead.
Costs for a robo-advisor vs. costs for a financial advisor
Generally, both robo-advisors and financial advisors charge a percentage of the total assets being managed. However, the two differ in how big of a percentage they each charge. Robo-advisors usually charge anywhere from 0.25% to 0.5% of your assets managed per year, while financial advisors typically charge around 1% of your assets managed per year.
You'll want to do your research to make sure you're choosing robo-advisors that come with the lowest possible costs and offers the features you need. Wealthfront, for instance, charges just 0.25% of your account balance — in other words, you'll pay $25/year per $10,000 you have invested.
There are many financial advisors that charge a flat yearly fee or even an hourly fee. Also keep in mind that at times, both robo-advisors and financial advisors may require that clients have a specified minimum amount of total assets before they can work together. The minimum will vary but for some financial advisors, that minimum amount could be as much as $250,000. Ellevest, which is an investment platform for women, has portfolio-specific balance minimums that range from $1 to $240. Wealthfront's minimum balance requirement, by contrast, is $500.
Really, it's a matter of matching your financial needs with the fee structure that's most compatible with your circumstances.
Advantages and disadvantages of using a robo-advisor
When you sign up to use a robo-advisor like Wealthfront or Betterment, you'll be asked some questions about your financial goals, investment time horizon and risk tolerance. As time goes on, your risk tolerance and goals may change, which means you may need to make some adjustments to the assets you're invested in.
This is where robo-advisors can truly shine. They have the ability to automatically rebalance your portfolio for you so you don't have to manually change any asset allocations — or spend time going back and forth with someone to figure out the best course of action for that.
At the same time, though, it's important to keep in mind that a robo-advisor may have a limited view of your financial picture since it won't know how any of your other assets, debts, or other investments come into play. A robo-advisor also may not help you develop a strategy for investing more money to reach your goals faster.
While some robo-advisor platforms may let you connect all of your financial accounts, personalized advice that takes into account the nuances of your situation may still be necessary to help you reach your goals.
Select ranked the best robo-advisors, considering factors like account minimums, fees, choice of investments and types of accounts offered (i.e. IRAs and/or taxable brokerage). Here are a few of our top choices:
No minimum deposit to start investing and no minimum account balance for Ellevest Membership advisory service; however, there are portfolio-specific minimums (ranging from $1 to approximately $240)
Fees may vary depending on the investment vehicle selected. Ellevest Essential membership costs $1/month (or $12/year), Ellevest Plus costs $5/month (or $54/year) and Ellevest Executive costs $9/month (or $97/year); fund fees range from 0.05% to 0.10% across all Ellevest Core Portfolios and 0.13% to 0.19% across all Ellevest Impact Portfolios
Use code GOFORGOLD to get $20 when you join membership and start investing (offer expires EOD Aug. 13, 2021)
Robo-advisor: Ellevest robo-advisor IRA: Ellevest Traditional, Roth, SEP and Rollover IRAs
Stocks, bonds, ETFs, ESG, mutual, alternative and impact funds
Online workshops, email courses and video resources
Advantages and disadvantages of using a financial advisor
Unlike robo-advisors, financial advisors have the ability to take a look at all aspects of your financial life to provide appropriate recommendations and next steps. Your financial life is interconnected, so your debts, budget, spending habits and other financial responsibilities (like caring for aging parents or paying for your child's college tuition) can all impact how much you're able to invest and how long it could take for you to reach your investment goals. Robo-advisors don't take these factors into account.
Because of this, it's valuable to have a human assist you with working out feasible next steps. Financial advisors will also, of course, take into account factors like your time horizon and risk tolerance when making investment recommendations.
Since financial advisors cannot automatically rebalance your portfolio the way a robo-advisor can, you'll need to spend the time discussing any adjustments with your advisor so they can manually make changes to your portfolio. That's not all that bad, though, since it gives you an opportunity to try to understand some of the changes being made.
Robo-advisors offer the convenience of a hands-off investment management strategy at a lower cost. However, if you prefer more human interaction and need recommendations based on a more nuanced view of your overall financial picture, a financial advisor could be the way to go. Either way, make sure you double check the fee structure before you agree to the services.
5 warning signs that you're not ready to start investing, according to financial planners
There's 'a lot of life to live' before age 59: How to plan out your savings for the next 10 years
Here's how beginner investors can build an investment portfolio | 2022-10-09T15:19:55Z | www.cnbc.com | Robo-advisor VS. Financial Advisor: Which Should You Choose? | https://www.cnbc.com/select/robo-advisor-vs-financial-advisor/ | https://www.cnbc.com/select/robo-advisor-vs-financial-advisor/ |
Luxury automaker Porsche's market cap raced past its former parent company Volkswagen Group's a week after its stock market debut. Shares in Porsche AG closed more than 10% higher at the end of its first week of trading, valuing the company at 82.65 billion euros ($80.6 billion) — making it Europe's most valuable car maker. Volkswagen , which sold 25% of Porsche, was valued at 79 billion euros. Where does Porsche go from here? Porsche is now the fifth-most-valuable listed company in Germany, after Linde , SAP , Deutsche Telekom and Siemens . While it's already set to be added to the MSCI World Index on Oct. 12, the stock is also likely enter the country's premier DAX index soon. Automotive equity analysts at Jefferies valued the company at 85 billion euros at the time of its IPO, which is still nearly 3% below current trading levels. Compared to its parent company VW, which makes nearly 10 million cars annually, Porsche manufactures just over 300,000 cars, but accounts for a quarter of profits at Volkswagen. Some investors, such as Louis Navellier of Navellier, are already comparing the German firm to Tesla , the largest electric carmaker in the world. "Do not be surprised if Porsche soon trades at Tesla-like valuations since Porsche's electrification plan for its hot-selling Macan EV is expected to be an instant success," the fund manager, who oversees $1 billion in assets, said. Porsche AG — the spun off carmaker — is not to be confused with Porsche SE, the holding company for the Porsche family, which owns 31.4% equity in Volkswagen and 12.5% in Porsche AG. But what about VW? The Volkswagen Group still holds a 75% stake in Porsche. The company said it would distribute funds from its 25% stake sale as a special double-digit dividend, which some analysts argue will be hard to resist for investors. Although shares in VW have declined by 30% over the past year, they offer 5.7% in regular dividends already. VW recently appointed a new CEO — Oliver Blume — who has been chief executive of Porsche since 2015. As such, analysts are holding off on judging the company's new strategy for now. According to FactSet estimates, analysts have an average price target of 204.56 euros on VW's stock, which is 54% higher than the share's current price. Philippe Houchois of Jefferies, the only analyst with a sell rating on the company, remains cautious about the impact to VW's profits from its in Porsche sale. "Selling down high-multiple assets to raise capital and fund a capital-intensive strategy could result in a negative stub," Houchois, who is among 16 analysts covering the stock, said. "For now, we reiterate our Underperform and continue to see VW slipping from early mover to slow follower in an industry where size matters less than intelligent scale." | 2022-10-09T23:40:00Z | www.cnbc.com | Porsche vs VW: Which stock to buy, according to the pros | https://www.cnbc.com/2022/10/10/porsche-vs-vw-which-stock-to-buy-according-to-the-pros.html | https://www.cnbc.com/2022/10/10/porsche-vs-vw-which-stock-to-buy-according-to-the-pros.html |
It was the first time in 30 years of tracking the rental market that this phenomenon occurred in the third quarter, according to a new report by RealPage, a real estate data analytics firm.
According to the data, the net demand for rental apartments was negative 82,095 units in the third quarter, bringing the total to negative 47,143 units for the year. If there's negative demand, it means more people are moving out than moving in.
It is noted in the report that move-outs are in line with seasonal levels, while move-ins have slowed significantly. Data for the third quarter indicate a slight increase in vacancy rates to 4.4%, but the rate remains relatively low compared with historical levels.
In the third quarter, 119 of the 150 large U.S. metropolitan areas saw a decline in apartment demand. Several large cities have high "red light" rental demand.
These cities include Phoenix, Las Vegas, Orlando, Florida, Tampa, and others. With an average vacancy rate of about 1.5% in these locations, there has been a large increase in apartment vacancies.
Rents declined by 0.2% in September from a year ago, while they increased by 9% year-over-year, the first increase under double digits since summer 2021.
The slowdown in growth in the housing rental market may reflect a lack of consumer confidence, experts say. Seventy-six percent of 6,000 renters surveyed by apartment rental website Zumper believe the U.S. is in recession.
As a result of inflation and job instability, RealPage economist Parsons has noted that tenants are taking a wait-and-see attitude. The author believes that people are less likely to make major spending decisions when they have uncertainty about the future, such as moving out of their parents' home for the first time and renting a separate apartment on their own.
In terms of rental supply, new apartments are currently at a 40-year high, and the number of new homes on the market will peak before the second half of next year, so rents are unlikely to rise again quickly. | 2022-10-10T04:22:33Z | www.cnbc.com | CCTV Script 07/10/22 | https://www.cnbc.com/2022/10/10/cctv-script-07/10/22.html | https://www.cnbc.com/2022/10/10/cctv-script-07/10/22.html |
— This is the script of CNBC's People of the Week for China's CCTV on October 9, 2022.
In this edition of People of the Week, we begin with: British Prime Minister Elizabeth Truss and Chancellor of the Exchequer Kwasi Kwarteng.
The new government of Britain is experiencing market turmoil just a month after taking office. Truss and Kwarteng made some adjustments to their controversial fiscal policy this week. Kwarteng said the government has abandoned the plan in the mini-budget to abolish the 45% top rate of income tax. Also this week, Truss spoke at the Conservative Party convention, pledging to strengthen fiscal discipline in the government.
Combined with the recent Bank of England bailout, this shift in tax reform has restored calm to the markets for the time being. The pound has recovered against the dollar, and UK government bond markets recovered. The situation, however, is not as optimistic as it appears.
The Truss government's credibility has been damaged as a result of this shift, according to many analysts. The Conservative Party leader has made reducing taxes and preserving growth the main theme of his election campaign, and that will play a critical role in determining whether the party wins the next election. Recent polls have shown that Truss's personal approval rating is lower than when Boris Johnson left office. A report by the Eurasia Group says there is a 25 percent chance that Truss will not make it through this year as prime minister.
This week, OPEC+, led by Saudi Arabia and Russia, announced that it will cut production significantly due to falling oil prices. And in an interview with CNBC, Saudi Arabia's energy minister said the purpose of OPEC+'s action is to be pre-emptive and proactive.
During that day's press conference, a small incident occurred. The Saudi energy minister not only refused to answer Reuters' question but also angrily accused the journalist of relying on "unorthodox sources" and ignoring official information.
After 12 years of searching for a handover opportunity, Dalio finally managed to hand over his voting rights and transfer control of the company to the operating board this week. He is also stepping down from his role as a co-chief investment officer and taking a backseat.
Dalio, 73, founded Bridgewater in 1975 and built it into the world's largest hedge fund, with more than $150 billion in assets.
In 2008, he was one of the first to predict the financial crisis. He believes that the Fed's increasing interest rates on top of inflation will result in stagflation, and Bridgewater has profited from shorting European stocks this year. LCH Investments reports that Bridgewater has made $52 billion for its investors since its founding in 1975, making it one of the most profitable hedge funds. Although Dalio left Bridgewater, he didn't retire, according to his LinkedIn article. In his words, he will continue to "play" the market, until the day he leaves the world. | 2022-10-10T04:22:39Z | www.cnbc.com | CCTV Weekly Script 09/10/22 | https://www.cnbc.com/2022/10/10/cctv-weekly-script-09/10/22.html | https://www.cnbc.com/2022/10/10/cctv-weekly-script-09/10/22.html |
Elon Musk told the FT that Beijing doesn't want him to sell his Starlink satellite internet service in China. In this picture, Musk speaks about Starlink at Mobile World Congress in June 2021.
Musk's electric car giant Tesla
relies on China for more than 20% of its revenue and has a large factory in Shanghai.
and Huawei, have helped China achieve one of the highest penetrations of 5G internet in the world. | 2022-10-10T04:53:00Z | www.cnbc.com | Musk says Beijing doesn't want him to sell Starlink in China: FT report | https://www.cnbc.com/2022/10/10/musk-says-beijing-doesnt-want-him-to-sell-starlink-in-china-ft-report.html | https://www.cnbc.com/2022/10/10/musk-says-beijing-doesnt-want-him-to-sell-starlink-in-china-ft-report.html |
We welcome anyone to join the CPTPP, including the U.S.: Canadian minister
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership is a multilateral trade deal signed in 2018 that was formed after the United States withdrew from the Trans-Pacific Partnership.
UK's accession to CPTPP will set standard for future ones: Australian politician | 2022-10-10T05:53:54Z | www.cnbc.com | Canada minister: Exports to CPTPP countries outpaced exports elsewhere | https://www.cnbc.com/2022/10/10/canada-minister-exports-to-cptpp-countries-outpaced-exports-elsewhere.html | https://www.cnbc.com/2022/10/10/canada-minister-exports-to-cptpp-countries-outpaced-exports-elsewhere.html |
Two Mississippi River Basin blockages near Stark Island and Memphis have been opened to one-way traffic under certain restrictions as of Sunday, according to the US Coast Guard. This means that the previous situation of more than 2,000 barges stranded on the Mississippi River due to low water levels will be somewhat alleviated.
It is a critical time in the United States for the transport of crops for the fall harvest. Traditionally, at this time of year, the majority of barges heading south along the Mississippi River transported harvested produce, while the majority of barges heading north carried fertilizer needed by farmers for the next season's planting.
Historically, soybeans, distillate fuel oil, and corn are the top three commodities transported on the Mississippi River. According to USDA data, single shipments of barges carrying soybeans are already 38 percent lower than normal due to lower water levels and narrower shipping lanes.
At the end of September, the freight price for a full barge load of soybeans on the Upper Mississippi River was about 33% higher than a year ago. And last week, barge companies had to stop taking immediate delivery orders for bulk commodities including metals, agricultural products, and fertilizers because of disruptions in some sections of the river.
The soybean cash basis, which reflects farmers' earnings, has sunk to its lowest level since 2003, according to a report from U.S. grain data provider GeoGrain.
With barge traffic hampered, many shippers are looking at alternative modes of transportation, such as rail and truck, but that means transportation costs will be much higher.
With normal water levels, a single barge carries the equivalent of 16 rail cars for dry cargo or 70 trucks. For liquid transportation, a single tank barge carries the equivalent of 46 rail cars or 144 trucks.
We can see that the cost of rail transportation is climbing.
Furthermore, manpower is also an issue. U.S. nonfarm payroll data show that about 11,000 jobs in this sector disappeared in September, the largest drop since 2009, except for the impact of the new crown epidemic in April 2020. This suggests that alternative transportation options will also be affected by the labor shortage.
Overall, 92% of U.S. agricultural exports come from the Mississippi River Basin. And in addition to exports, goods transported on the Mississippi River go to a variety of domestic industries in the U.S., from automobiles to appliances to grocery stores and restaurants.
Delays in the transportation of coal destined for power plants can drive up the price of electricity. Delays and blockages in agricultural shipments will also push up U.S. food inflation, which is already at a high level. | 2022-10-10T07:25:16Z | www.cnbc.com | CCTV Script 10/10/22 | https://www.cnbc.com/2022/10/10/cctv-script-10/10/22.html | https://www.cnbc.com/2022/10/10/cctv-script-10/10/22.html |
Multiple explosions hit the center of Ukraine's capital Kyiv Monday, with reports of dead and injured, according to the city's emergency services.
It comes just two days after a blast destroyed part of Russia's Kerch Bridge, the only bridge linking Russia to the Crimean peninsula, which Moscow annexed in 2014.
Russian President Vladimir Putin is set to convene a meeting of his national security council and has called the Kerch Bridge explosion a "terrorist attack" carried out by Ukraine.
Putin has called the blast on the strategically important infrastructure a "terrorist attack" and blamed it on Ukrainian special services. | 2022-10-10T07:25:28Z | www.cnbc.com | Live updates: Latest news on Russia and the war in Ukraine | https://www.cnbc.com/2022/10/10/russia-ukraine-live-updates.html | https://www.cnbc.com/2022/10/10/russia-ukraine-live-updates.html |
Shares of U.S. chipmakers Nvidia
tumbled in Friday's trading session as worries about falling demand dragged down the sector.
dominates the manufacturing capacity for the world's most advanced semiconductors. Netherlands-based ASML is the world's only company able to make the highly complex machines that are needed to produce the most advanced chips. | 2022-10-10T10:28:01Z | www.cnbc.com | Chinese chip stocks tumble after U.S. calls for new curbs on high-end tech | https://www.cnbc.com/2022/10/10/chinese-chip-stocks-tumble-after-us-calls-for-new-curbs-on-high-end-tech.html | https://www.cnbc.com/2022/10/10/chinese-chip-stocks-tumble-after-us-calls-for-new-curbs-on-high-end-tech.html |
Bernanke's analysis of the Great Depression in the 1930s showed how and why bank runs were a major reason the crisis was so long and severe. Diamond and Dybvig's work, meanwhile, looked at the socially important role banks play in smoothing the potential conflict between savers wanting access to their money and the economy needing savings to be put into investments; and how governments can help prevent bank runs by providing deposit insurance and acting as a lender of last resort.
The Fed's delayed inflation response was a mistake, says former Chair Ben Bernanke | 2022-10-10T10:28:14Z | www.cnbc.com | Nobel economics prize awarded to U.S.-based economists including Bernanke | https://www.cnbc.com/2022/10/10/nobel-economics-prize-awarded-to-ben-bernanke-and-2-others-for-work-on-financial-crises.html | https://www.cnbc.com/2022/10/10/nobel-economics-prize-awarded-to-ben-bernanke-and-2-others-for-work-on-financial-crises.html |
Shaquille O'Neal attends the second preseason NBA game between Atlanta Hawks and Milwaukee Bucks at Etihad Arena on October 8, 2022 in Abu Dhabi, United Arab Emirates. "If you invest in things, it's going to change people's lives, you will definitely get a nice return," the previous NBA star recalled Bezos sharing in a tech conference in Vegas.
Watch CNBC’s full interview with NBA legend Shaquille O'Neal | 2022-10-10T10:54:08Z | www.cnbc.com | Shaquille O’Neal shares investing tip Jeff Bezos gave him | https://www.cnbc.com/2022/10/10/shaquille-oneal-shares-investing-tip-jeff-bezos-gave-him.html | https://www.cnbc.com/2022/10/10/shaquille-oneal-shares-investing-tip-jeff-bezos-gave-him.html |
Elon Musk waded into geopolitics once more suggesting an arrangement whereby Taiwan becomes a "special administrative zone" of China, with Beijing likely having some control over the self-ruled island. That suggestion has drawn the ire of Taiwanese politicians. Taiwan's government has previously rejected such a proposal.
The ambassador added that Taiwan "will enjoy a high degree of autonomy as a special administrative region, and a vast space for development."
Musk, who runs electric carmaker Tesla
and is currently looking to close a deal to buy social networking site Twitter
, has form when it comes to wading into geopolitics. | 2022-10-10T11:59:31Z | www.cnbc.com | Elon Musk wades in to debate over Taiwan-China relations | https://www.cnbc.com/2022/10/10/elon-musk-wades-in-to-debate-over-taiwan-china-relations.html | https://www.cnbc.com/2022/10/10/elon-musk-wades-in-to-debate-over-taiwan-china-relations.html |
We are getting ready to deploy our recession playbook, says legendary investor Paul Tudor Jones
"I don't know whether it started now or it started two months ago," Jones said on CNBC's "Squawk Box" on Monday when asked about recession risks. "We always find out and we are always surprised at when recession officially starts, but I'm assuming we are going to go into one."
To battle inflation, the Fed is tightening monetary policy at its most aggressive pace since the 1980s. The central bank last week raised rates by three-quarters of a percentage point for a third straight time, vowing more hikes to come. Jones said the central bank should keep tightening to avoid long-term pain for the economy. | 2022-10-10T13:31:31Z | www.cnbc.com | Paul Tudor Jones believes we are in or near a recession and history shows stocks have more to fall | https://www.cnbc.com/2022/10/10/paul-tudor-jones-believes-we-are-in-or-near-a-recession-and-history-shows-stocks-have-more-to-fall.html | https://www.cnbc.com/2022/10/10/paul-tudor-jones-believes-we-are-in-or-near-a-recession-and-history-shows-stocks-have-more-to-fall.html |
"Earthdivers" writer Stephen Graham Jones at New York Comic Con on Oct. 7, 2022.
NEW YORK – Even in fourth grade, Stephen Graham Jones thought the heroic story of Christopher Columbus was a crock.
"It's easy to say representation matters. But it's different to understand it."
Hollywood wants in on "Earthdivers," too. According to Jones, he received several offers before Disney
-owned 20th Television optioned it for development into a series. Jones said he will be an executive producer on the "Earthdivers" show. | 2022-10-10T13:32:02Z | www.cnbc.com | Christopher Columbus is the target in Stephen Graham Jones' 'Earthdivers' | https://www.cnbc.com/2022/10/10/stephen-graham-jones-comic-book-earthdivers-kill-columbus.html | https://www.cnbc.com/2022/10/10/stephen-graham-jones-comic-book-earthdivers-kill-columbus.html |
Paul Tudor Jones said Monday cryptocurrencies still hold a small place in his portfolio despite the recent sell-off. "I've still got a very minor allocation. I've always had a small allocation to it," Jones said on CNBC's " Squawk Box " on Monday when asked about crypto. The founder and chief investment officer of Tudor Investment Corp. said in the last decade, the U.S. went through a "massive experimentation" with monetary and fiscal policies and the 2020s will see a reversal of that. "The ['10s] is all about suppressing yields right? I think the '20s will be just the opposite, meaning higher term premiums in bond markets, higher term premiums in stock markets," Jones said. Jones believes that debt dynamic is so dire right now that the government could conduct fiscal retrenchment in the near future. Fiscal retrenchment means that a government has to introduce deflationary fiscal measures to reduce the amount of borrowing and debt, including raising taxes and cutting spending. "In a time when there's too much money, which is why we have inflation, too much fiscal spending, something like crypto specifically bitcoin and ethereum, when there's a finite demand of that, will have value at some point. Someday. I don't know when that will be," Jones said. Bitcoin dropped below $20,000 in August and continued to trade under that threshold as investors dumped risk assets after the Fed affirmed its commitment to an aggressive tightening path. | 2022-10-10T15:02:23Z | www.cnbc.com | Paul Tudor Jones still owns cryptocurrencies and explains why they will have value long term | https://www.cnbc.com/2022/10/10/paul-tudor-jones-still-owns-cryptocurrencies-and-explains-why-they-will-have-value-long-term.html | https://www.cnbc.com/2022/10/10/paul-tudor-jones-still-owns-cryptocurrencies-and-explains-why-they-will-have-value-long-term.html |
A striking dockworker on a picket line outside the Port of Liverpool during a strike in Liverpool, UK, on Tuesday, Sept. 20, 2022. Dockers at Britains fourth-biggest container port voted unanimously to reject their employers latest pay offer -- and walk off the job for two weeks in a strike that gets into full swing on Tuesday. Photographer: Anthony Devlin/Bloomberg via Getty Images
Dockworkers in Liverpool, a significant U.K. port and a port where the U.S. is the No. 1 trading partner, will start a seven-day strike from October 11 to 17 October.
, which own brands such as Tommy Hilfiger, Calvin Klein, Warner's, Olga, and True & Co, and VF Corp
How increased port automation can reduce supply chain congestion | 2022-10-10T15:54:42Z | www.cnbc.com | Second strike at Liverpool to add to European port congestion | https://www.cnbc.com/2022/10/10/second-strike-at-liverpool-to-add-to-european-port-congestion.html | https://www.cnbc.com/2022/10/10/second-strike-at-liverpool-to-add-to-european-port-congestion.html |
They generally work best for assets like stocks that have fallen in value and which are expected to rebound relatively quickly.
A grantor-retained annuity trust — pronounced "Grat," for short — facilitates the benefit.
In basic terms, the wealthy put assets like stocks or shares in a privately held business into the trust for a specified time, maybe two, five or 10 years. Afterward, any investment growth passes to heirs and the owner gets back their principal.
Depressed assets that are likely to "pop" in value over the trust's duration therefore yield the highest likelihood of success.
, a barometer of U.S. stocks, is down about 24% this year — making it a ripe time to consider a grantor-retained annuity trust, estate planners said.
The Grat technique makes most sense for households subject to estate tax, experts said.
Some of the nation's richest people and well-known business scions have leveraged Grats, according to reports. They include Michael Bloomberg; Meta co-founder Mark Zuckerberg; Sheldon Adelson, the late casino magnate; the Walton family of Wal-Mart fame; Charles Koch and his late brother, David Koch; fashion designer Calvin Klein; Laurene Powell Jobs, the widow of Apple founder Steve Jobs; media mogul Oprah Winfrey; Lloyd Blankfein, senior chairman of Goldman Sachs; Stephen Schwarzman, chairman and co-founder of the private equity firm Blackstone.
The estate-tax threshold is scheduled to be cut in half starting in 2026, absent an extension from Congress. A Republican-passed tax law in 2017 doubled the estate-tax threshold to around its current level, but only temporarily.
This looming deadline may mean individuals with roughly $6 million estates (or $12 million for married couples) may weigh a wealth transfer now, too, experts said.
The 7520 rate, set monthly, is currently 4%, up significantly from 1% in October 2021. It's risen as the Federal Reserve aggressively increases its benchmark interest rate to reduce high inflation.
And while the technique makes sense when there's a significant market downturn, it's tough to say how soon stocks will rebound, Douglas added.
"Calling the low on it is always difficult," he said. | 2022-10-10T18:05:27Z | www.cnbc.com | Here's how uber-rich pass wealth tax-free to heirs when markets are down | https://www.cnbc.com/2022/10/10/heres-how-uber-rich-pass-wealth-tax-free-to-heirs-when-markets-are-down.html | https://www.cnbc.com/2022/10/10/heres-how-uber-rich-pass-wealth-tax-free-to-heirs-when-markets-are-down.html |
CEO Jamie Dimon on Monday warned that a "very, very serious" mix of headwinds was likely to tip both the U.S. and global economy into recession by the middle of next year.
Asked for his views on the outlook for the S&P 500
, Dimon said the benchmark could yet fall by "another easy 20%" from current levels, adding that "the next 20% would be much more painful than the first." | 2022-10-10T18:05:33Z | www.cnbc.com | JPMorgan: Jamie Dimon warns U.S. likely to tip into recession soon | https://www.cnbc.com/2022/10/10/jpmorgan-jamie-dimon-warns-us-likely-to-tip-into-recession-soon.html | https://www.cnbc.com/2022/10/10/jpmorgan-jamie-dimon-warns-us-likely-to-tip-into-recession-soon.html |
The bump to benefits is slated to be announced on Thursday along with new consumer price index data for the month of September.
The Senior Citizens League, a non-partisan senior group, estimated last month that the COLA could be 8.7% next year. That would make it the highest increase in decades, topping this year's 5.9% annual cost-of-living adjustment, which was the largest in about 40 years.
The reason: Medicare Part B premiums, which are typically deducted directly from benefit checks, as the standard monthly premium is set to go down by $5.20 next year to $164.90, from $170.10 in 2022.
The Federal Reserve raised the target federal funds rate by 0.75 percentage points on Sept. 21. But the preceding interest rate hike of the same size that happened in July will likely have a bigger influence on the September data, according to Johnson.
It could bring the insolvency date forward a year sooner.
president of the Committee for a Responsible Federal Budget
A much-bigger COLA will cost the program tens of billions of dollars, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told CNBC.com at the time. | 2022-10-10T18:05:40Z | www.cnbc.com | Social Security may offer largest cost-of-living adjustment in 40 years | https://www.cnbc.com/2022/10/10/social-security-may-offer-largest-cost-of-living-adjustment-in-40-years.html | https://www.cnbc.com/2022/10/10/social-security-may-offer-largest-cost-of-living-adjustment-in-40-years.html |
Committees with jurisdiction in both chambers already have begun meeting to begin that process.
"I think the opportunity for that to happen would be … following the midterm elections when [lawmakers] would be doing some tax-related bills," Richman said. "It would be the right place because most of the changes would affect the tax code."
Here are some key provisions under consideration for Secure 2.0, some of which are the same or similar in both the House and Senate Secure — and others that are not.
Our understanding is that staff of the committees with jurisdiction have begun discussions.
Paul Richman
Chief government and political affairs officer for the Insured Retirement Institute
Under both House and Senate proposals, victims of recent domestic abuse would also not face the 10% penalty for withdrawing up to $10,000 from their retirement savings (or 50% of the account balance, whichever is less).
Under current law, many lower- and middle-income workers are eligible for the so-called saver's tax credit. It's worth either 50%, 20% or 10% (depending on income) of contributions made to a workplace plan or IRA, for a maximum credit of $1,000 ($2,000 for married couples).
The House-passed bill would increase the income cutoff and expand how many people qualify for the full credit.
It excludes existing plans, businesses with 10 or fewer employees and companies that are less than 3 years old.
The Senate has not proposed auto enrollment.
Making part-timers 401(k)-eligible earlier
The original Secure Act made it so part-time workers who book between 500 and 999 hours for three consecutive years could be eligible for their company's 401(k). Both the House and Senate now want to reduce that to two years.
(Companies already have been required to grant eligibility to employees who work at least 1,000 hours in a year.)
Leaving behind small 401(k) balances
Proposals in both the House and Senate would make it easier for employers to make contributions to 401(k) plans (and similar workplace plans) on behalf of employees who are making student loan payments instead of contributing to their retirement account.
Under the House-passed bill, required minimum distributions, or RMDs, from retirement accounts would start at age 75 by 2033, up from the current age 72 (which was increased in the original Secure Act from age 70½).
Both would reduce the penalty for failing to take RMDs to 25% (and in some cases, 10%) from the current 50%. | 2022-10-10T19:36:20Z | www.cnbc.com | Congress still considering retirement rule changes, including catch-up contributions | https://www.cnbc.com/2022/10/10/congress-still-considering-retirement-rule-changes-including-catch-up-contributions.html | https://www.cnbc.com/2022/10/10/congress-still-considering-retirement-rule-changes-including-catch-up-contributions.html |
We're selling 150 shares of Qualcomm (QCOM) at roughly $115.16 each. Following Monday's trade, Jim Cramer's Charitable Trust will own 700 shares of QCOM, decreasing its weighting to 3.03% from 3.66%. In addition to this Qualcomm sale, we would be trimming back our positions in Advanced Micro Devices (AMD) and Nvidia (NVDA) to 1% weightings each if we were not restricted from trading them. Their current weightings are both around 1.5% of our portfolio. In Monday's broad semiconductor decline, we're holding off from paring back our Marvell Technology (MRVL) exposure for now. Consistent to what we have been saying, it has already de-rated significantly lower and it has the least consumer exposure of the group. But this is a situation we're actively monitoring. Accordingly, we are downgrading our ratings on all four semiconductor stocks to 2. We'll update our price targets around the earnings reports, but we acknowledge they all have a negative bias to them. While this QCOM move is a tough sale to make — and the AMD and NVDA trims will hurt whenever we can make them — we believe it is necessary to reduce our exposure to a group. It's too tough to own so much of a group that's going through a period of significant price-to-earnings multiple compression and earnings cuts — trends that will continue as the economic data worsens. Fortunately, we own less semis than we did closer to the start of the year. In fact, the action we are making Monday is somewhat similar to the exercise we did in April when the Federal Reserve started to talk tough about inflation. Between April 6 and April 11th , we slashed our positions in Marvell, AMD, and Nvidia at prices that felt low at the time — but in actuality, turned out to be timely as we protected the big gains we had in each position. As we think about what happened to this industry that once promised secular growth year after year, it has been two-fold. There has been a massive slowdown, if not collapse, in the consumer electronics industry. From personal computers to smartphones, the electronics that were gobbled up over the past few years due to the rise in hybrid work and Covid pandemic stimulus payments are now going through a massive inventory correction. There's very limited visibility into how long it will. This information isn't revelatory, but it was accentuated last Thursday night after AMD reported a revenue shortfall of more than $1 billion in a segment that management previously viewed as largely de-risked. Demand for PCs fell off a cliff. The much bigger issue is what we consider to be new information, and it's why we are taking action. The export restrictions the U.S. government is placing on semiconductor companies is a newer risk that we have to increase caution around. It first started with artificial intelligence chips for Chinese customers with military end markets, it expanded Friday to chip-manufacturing equipment used to make advanced memory chips — and now Monday, we are worried that it could be extended to the sales of all high-performance computing. Those are the chips that go into data center, inference, and networking applications. This is what we fear the most. Almost no chips would be immune. This is a very new position of ours and when the facts change, we have to change our stance. Our interpretation of the rules is that the U.S. doesn't want any U.S. company to sell anything to China that could be used as a weapon. Before the data center wasn't considered a weapon — but now, it looks like the government wants to go full stop against China. This is creating a lot of uncertainty, which the market always hates because it makes it too hard to estimate where earnings will land next year. Of course, one could argue that the group's sharp year-to-date declines front runs some big earnings cuts that are likely to happen in the future. But as we saw with AMD before its preannouncement, things can always get weaker and the numbers still have further room to fall. With a loss of certain sales from China, the earnings outlook won't quite be the same, which could lead to investors becoming less willing to pay up for those future earnings. Also, it will be hard for the multiples on semiconductor stocks to re-rate higher from here, unless we get some pivot from the Fed, which we do not expect any time soon. One could also argue why not move completely to the sidelines and sell everything? Sure it's possible that we could side-step more declines, but the problem is you won't know when to get back in. Micron Technology (MU) is a good example of a company that pre-announced bad numbers, gave an awful outlook when it came time to report, but the stock is higher Monday than what it was prior to the print. That's why we think the best course of action is to right-size these positions, and not cut and run completely. Now, these are all still great U.S. companies and they could bounce if China changes its ways — hard to believe, but possible — or if everyone adjusts numbers down and the rest of their businesses start to improve. Unfortunately, we are not close to that moment. So despite the decline, we still must take action. It hurts to sell some QCOM at a 30% loss, but we play with an open hand and when the facts change — and we didn't see this U.S. policy initiative coming — we have to take action. These stocks are down big, but we take solace that we sold the bulk of our positions at much higher prices and have taken a more defensive posture to our portfolio over the past few months. (Jim Cramer's Charitable Trust is long QCOM, AMD, NVDA and MRVL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Cristiano Amon, chief executive officer of Qualcomm Inc., in New York, on Friday, Sept. 23, 2022. | 2022-10-10T19:36:26Z | www.cnbc.com | Facts changed and part of tech sank. We're changing our view and trimming exposure | https://www.cnbc.com/2022/10/10/facts-changed-and-part-of-tech-is-getting-slammed-were-changing-our-view-and-trimming-exposure.html | https://www.cnbc.com/2022/10/10/facts-changed-and-part-of-tech-is-getting-slammed-were-changing-our-view-and-trimming-exposure.html |
Employers are also trying to keep wages in sync with inflation, she says, which has affected the price of food and shelter, among other expenses, this past year. The consumer price index rose 8.3% year over year in August.
Nearly a third of millennials would end a relationship for a raise | 2022-10-10T19:36:51Z | www.cnbc.com | Top U.S. metro areas for salary growth for median incomes | https://www.cnbc.com/2022/10/10/the-top-ten-metros-for-salary-growth-for-median-income-earners.html | https://www.cnbc.com/2022/10/10/the-top-ten-metros-for-salary-growth-for-median-income-earners.html |
Moody's Corp
: "They're such a good company, but there's been so little issuance for them to rate to begin with."
: "I've been against them the whole way down. They're losing money."
: "I've been saying, 'sell this stock,' the whole way down. And I'm not done."
Healthpeak Properties Inc
: "It just simply isn't as good as Ventas | 2022-10-11T00:01:45Z | www.cnbc.com | Cramer's lightning round: BlackBerry is not a buy | https://www.cnbc.com/2022/10/10/cramers-lightning-round-blackberry-is-not-a-buy.html | https://www.cnbc.com/2022/10/10/cramers-lightning-round-blackberry-is-not-a-buy.html |
This image, from July 2021, shows a Citroen e-C4 electric vehicle on display at a showroom in Paris, France. Citroen is a brand of Stellantis, one of the world's biggest automakers.
is turning to Australia as it looks to procure the materials needed for its electric vehicle strategy in the years ahead.
On Monday, the automaker said a non-binding memorandum of understanding related to the "future sale of quantities of battery grade nickel and cobalt sulphate products" had been signed with Sydney-listed GME Resources Limited
In April, the CEO and president of Volvo Cars
predicted that scarcity of battery supply would become a pressing issue for his sector, telling CNBC the firm had made investments that would help it gain a foothold in the market.
Monday also saw Mobilize, a brand of the Renault Group
, announce plans to roll out an ultra-fast charging network for EVs in the European market. Mobilize Fast Charge, as it's known, will consist of 200 sites in Europe by the middle of 2024 and "be open to all electric vehicles." | 2022-10-11T00:02:04Z | www.cnbc.com | Stellantis looks to Australian materials for its EVs | https://www.cnbc.com/2022/10/11/stellantis-looks-to-australian-materials-for-its-evs.html | https://www.cnbc.com/2022/10/11/stellantis-looks-to-australian-materials-for-its-evs.html |
Chinese tech stocks continue to be beaten down , but short sellers appear to be targeting another sector known for its high valuations: real estate. The real estate industry in China had the largest increase in short selling compared to other sectors in the third quarter, according to data analytics firm S3 Analytics, with $742 million of new bearish bets in total. That compares to a reduction of around $150 million in shorts on the tech sector. Short-sellers profit when stocks fall. They borrow shares, sell them and plan to repurchase them when the price is lower and make a profit from the difference. Troubles in China's real estate market aren't new. ETFs tracking the MSCI China Real Estate index, such as CHIR , have declined by more than 35% this year. Short sellers of China's real estate sector already have profits on paper of $2.6 billion year-to-date, according to S3's data. That's a 45% increase over the same period last year. But although short sellers have been taking profits throughout the year, they've also kept taking new short positions in stocks that haven't fallen by as much. "Short interest in the China Real Estate sector has been declining for most of 2022, but it would be incorrect to think that short sellers were trimming their positions," says the research note from S3 to its clients. Here are the five stocks that have seen the most significant increase in short positions in U.S. dollar terms in September: KE Holdings , which saw the largest increase in shorts in September, is alleged to be "engaged in systemic fraud" by Muddy Waters. The short-seller says the Chinese company, whose New York-listed shares are up 34% this year, has inflated its new home sales by over 126%. KE Holdings, for its part, has denied the allegations and said Muddy Waters' report "shows a lack of basic understanding of the housing transactions industry in China." Analysts on average have a buy rating on the stock, giving it almost 30% upside to its current price, according to FactSet data. The second most-shorted stock, China Overseas Land & Investment , is also popular. Analysts have, on average, a buy rating on the stock and give it an upside of over 32%, according to FactSet. What's behind the new bearish bets? China's real estate market had boomed for two decades, resulting in a rise in speculative behavior. About two years ago, Beijing cracked down on developers' high reliance on debt to make housing more affordable to its citizens. This move, along with its zero-Covid policy, has exacerbated the housing downturn and impacted the broader economy. Chinese authorities are now finding it hard to revive the sector despite cutting interest rates to drive up demand from first-time buyers. The People's Bank of China has cut its 5-year Loan Prime Rate three times this year to 4.3% from 4.65% at the end of 2021. "Efforts to push down mortgage rates are clearly intended to support housing demand. But we doubt this alone will be sufficient to put a floor beneath home sales, which have continued to decline," said Julian Evans-Pritchard, senior China economist at Capital Economics. "The key factors holding buyers back aren't the cost of borrowing but the expectation that prices will fall further and concern about the ability of indebted developers to complete pre-sold apartments." As the downturn in the real-estate sector is predicted to last longer, "short sellers should continue to be active," according to S3 Analytics. "Short sellers may not get the performance they earned in their China Evergrande Group trade , but they expect to outperform short selling in the other regional sectors," it added. | 2022-10-11T00:10:27Z | www.cnbc.com | China's tech stocks are tumbling, but short sellers have a different sector in their sights | https://www.cnbc.com/2022/10/11/chinas-tech-stocks-are-tumbling-but-short-sellers-have-a-different-sector-in-their-sights.html | https://www.cnbc.com/2022/10/11/chinas-tech-stocks-are-tumbling-but-short-sellers-have-a-different-sector-in-their-sights.html |
Gold prices slid to a one-week low Monday as concerns mounted that the Federal Reserve would stay the course on its aggressive pace of interest rate hikes after strong U.S. jobs data Friday . The precious metal has come under pressure this year, with the dollar's big gain weighing on gold prices. While gold is traditionally seen as an inflation hedge and a safe haven in periods of economic turmoil, a stronger dollar makes gold more expensive for non-dollar buyers, dampening demand for the precious metal. Spot gold was trading down 1% at $1,676 per ounce Monday — near a 2.5-year low. So is now the time to buy? CNBC Pro asked several market watchers for their thoughts. 'Historical bull market' For Euro Pacific Capital's Peter Schiff, the case for buying gold is contingent on the Fed's determination to quash inflation. "I think central banks are about to throw in the towel on the inflation fight. I think inflation is going to win. We're just getting started, inflation is going to ravage some of these major economies for years to come," Schiff, who is chief economist and market strategist at the investment advisory firm, said on CNBC's "Street Signs Asia" last week. While the U.S. dollar may be favored by some as a safe haven in times of economic uncertainty, Schiff instead sees the dollar as the "epicentre of the next crisis." He believes investors should instead "seek refuge" in gold, which has served a "unique role" throughout history as a store of value. "I think a lot of people are going to end up getting out of fiat currencies and into real money. I think we are in the early stages of what's going to be probably a historic bull market in gold," he said. "The logical place for them to go is gold and in a big way," he added. Gold has 'no guarantee' But Bart Melek, head of commodity strategy at TD Securities, believes that while inflation will not be easily tamed, the Fed is not "giving up the fight." He thinks this could mean higher interest rates for most of 2023. Higher real rates imply a higher cost of carry for gold, due to increased competition from higher-yielding investments. Investors are thus likely to reduce their exposure to gold, according to Melek. Hedge fund manager David Neuhauser has a similar view. "I am a gold bull. But recent events, especially with the dollar gaining a lot of steam, have created a massive headwind for gold. Historically, it does really well when rates are negative, and it does really poorly when rates are high," he said. He believes the global economy could potentially descend into stagflation, should higher interest rates curb economic growth while failing to rein in inflation — a scenario he said "is really good" for gold. Neuhauser, whose firm owns stakes in Toronto-based miner Amaroq Minerals , believes gold has "stood the test of time" and "has a place" in everyone's portfolio — particularly given today's market conditions. "When you look at some of the valuations of some of the gold miners, they are extremely cheap. You just can't print any more gold unlike a lot of other things. You could print securities, you could print money, but you can't print gold, and there are less mines and even fewer new discoveries out there today," he said. "Owning a gold mine that's printing cash in a safe jurisdiction with a really good asset is something where you should be invested in today," he added. Read more Is it time to buy the dip? These stocks look set for big upside, according to Wall Street Fund manager says oil is in a multi-year bull market – and names 3 stocks to cash in Goldman says these 'cheap' global stocks are set to win in the short and long-term George Cheveley, a portfolio manager at asset management firm Ninety One, believes gold equities are a long-term holding for any investor. "They are something you keep in your portfolio, because when you need them, they work and that's the history of gold and gold equities. We have seen that many, many times," he said. He acknowledged that gold equities can be inherently quite volatile, but said these companies deliver good returns over the long-term — irrespective of what happens in other markets. Price upside Gold has lost approximately 7% of its value this year, but Cheveley believes the precious metal has managed to hold its own. "Gold prices are down marginally but have done much better than most asset classes in the face of aggressive tightening and a very strong dollar," he said. He added that he continues to see a "very strong" market for gold and gold equities over the longer-term. Joni Teves, precious metals strategist at UBS Investment Bank, believes gold should see a recovery into year end, with prices set to trend higher over the course of 2023 as inflation and monetary policy ease. "Once we get to that point where tightening stops, and potentially depending on how economic data plays out, there's room to shift back into easy mode to support any weakness in growth and that should create a more positive backdrop for gold," she said. Teves has a price target of $1,800 per ounce for gold into the end of the year and expects the price of the precious metal to move towards $1,900 by end-2023. "So, upside but not overly bullish ... I think the point where it gets a lot more bullish for gold is if we are starting to think about quantitative easing and if the economic weakness is much more dramatic," she added. | 2022-10-11T03:13:12Z | www.cnbc.com | Wall Street pros weigh in on buying gold as prices tick lower | https://www.cnbc.com/2022/10/11/wall-street-pros-weigh-in-on-buying-gold-as-prices-tick-lower-.html | https://www.cnbc.com/2022/10/11/wall-street-pros-weigh-in-on-buying-gold-as-prices-tick-lower-.html |
Chipotle is focusing on speedily serving a customer base it's growing through game-like rewards and TikTok engagement. That's good news for shareholders, according to Bernstein. Analyst Danilo Gargiulo began research coverage of the Mexican grill chain with an outperform rating and a price target of $2,000, implying an upside of 35%. He said the chain is both cutting costs while finding new ways to increase base of consumers, meaning "the growth story is far from over." "Chipotle is unlike any other company in the restaurant space," Gargiulo wrote in a note to clients Monday. "Companies that can grow annual revenue at a sustained 15%+ over 15+ years are few and far in-between, let alone in the restaurant industry that is fragmented and highly competitive." Chipotle should continue to expand top line revenue because only one out of every three Americans has one nearby, while 30% of the country has no Latin American limited-service food option. Chipotle has gained market share in recent years as demand for the cuisine increased, the analyst said. Chipotle's consumer skews higher-income, educated and around the ages that would be part of the Millennial or Gen Z generations, Gargiulo said. This is a product of the brand advertising more on TikTok than McDonald's, Starbucks and Wendy's combined, he said. Chipotle also has what he called an "addictive" rewards program where spending resembles a game with special rewards and challenges. Meanwhile, Gargiulo said Chipotle could expand further by moving into breakfast or deserts. "Chipotlanes," the term used for drive throughs at certain stores that mostly require ordering ahead on the app, open stores to a wider breadth of customers, he said. They have generated 10% to 15% higher sales than traditional stores and have a higher share of digital sales, which are more efficient than in-person orders. Gargiulo also believes Chipotle can reach historically high margins of 28% in an industry known for slim profits, as digital penetration increases and the chain further implements robotic in-store additions like "Chippy," an automated tortilla chips maker. Chipotle is eventually expected to be able to produce about one-third more entrees during peak hours. Chipotle isn't without challenges. It could be hurt by rising labor costs, an inability to boost prices or higher interest rates curbing its appeal to potential franchisees. But Chipotle is well positioned vs competitors because of a lack of debt, concentrated North American business and higher-income costumer base. — CNBC's Michael Bloom contributed to this report. | 2022-10-11T04:44:33Z | www.cnbc.com | Chipotle is courting young consumers through TikTok – maybe resulting in 35% upside | https://www.cnbc.com/2022/10/11/chipotle-is-courting-young-consumers-through-tiktok-maybe-resulting-in-35percent-upside.html | https://www.cnbc.com/2022/10/11/chipotle-is-courting-young-consumers-through-tiktok-maybe-resulting-in-35percent-upside.html |
Germany on Monday said it plans to urgently implement a 96 billion euro plan. This plan is proposed by Germany's expert commission and will be funded by the 200 billion euro energy bailout announced by the German government last month.
Specifically, the plan will be in two phases. First, the German government will make a one-off payment to households and small and medium-sized businesses for December of this year, for gas fee. The December relief would be worth 5 billion euros.
Second, a brake will be placed on gas and heating prices. The brake would reduce the gas price to 12 cents per kilowatt hour (kWh) from March of next year to April 2024 on 80% of usage. For large industrial customers, a price brake of 7 cents is to apply to the procurement price from January 2023.
This plan comes amid rising energy costs and high inflation in Germany, which reached its highest level in 25 years in September at 10.9%.
In addition, a survey of nearly 600 German medium-sized companies conducted by the Federal Federation of German Industries in September showed that one in 10 medium-sized companies had reduced or even stopped production due to soaring gas prices; in particular, the chemical industry, which is highly dependent on natural gas, has begun to shift production to other regions or purchase from abroad.
Once the news of the aid plan came out, the shares of German energy-intensive companies have soared, including Covestro, BASF, etc., whose overnight share prices rose by more than 4%.
The expert commission said the plan both protects consumers and gives some room to encourage them to save energy. But some EU member states criticized Germany's move as a "maverick" and said Germany should work with other EU countries to limit energy prices.
The German government's new €200 billion energy bailout, combined with the €100 billion in support funds already allocated, makes Germany's subsidies far larger than those of other European countries.
The bailout plan will be achieved by raising debt. It has long been a constitutional requirement in Germany that the debt ceiling should not exceed 0.35% of GDP, but this was suspended in 2020 after the outbreak of the new crown epidemic. The German government hopes to use this time period to raise more debt to support this fiscal plan.
It is worth noting that Germany's borrowing costs are much lower compared to other countries in the Eurozone. Investors are concerned that if other countries follow Germany's lead and issue large amounts of debt to subsidize people and businesses, it will push up the overall debt level in Europe and may even lead to a debt crisis in some countries.
Some analysts pointed out that Germany's plan is not enough to make consumers reduce energy use, but instead may bring stronger demand. In addition, German companies will benefit from this plan, but companies in other European countries still face high energy prices, which will weaken their competitiveness. This goes against the idea of EU common market. | 2022-10-11T05:15:00Z | www.cnbc.com | CCTV Script 11/10/22 | https://www.cnbc.com/2022/10/11/cctv-script-11/10/22.html | https://www.cnbc.com/2022/10/11/cctv-script-11/10/22.html |
The president of the United Arab Emirates, Sheikh Mohamed bin Zayed al-Nahyan, will head to Russia on Tuesday to meet his counterpart Vladimir Putin.
According to UAE state media WAM, both leaders will be discussing the countries' "friendly relations," alongside "regional and international issues and developments of common interest."
The Kremlin had on Sunday praised the organization's decision to slash output.
According to UAE state media WAM, UAE President Sheikh Mohamed bin Zayed al-Nahyan (pictured) and his Russian counterpart Vladimir Putin will be discussing the countries' "friendly relations," alongside "regional and international issues and developments of common interest."
The UAE ruler's visit comes a week after OPEC+, an alliance of oil producers which includes Russia and the UAE, agreed to impose deep output cuts to shore up crude prices despite calls from the U.S. to pump more to bolster the global economy.
Kremlin spokesperson Dmitry Peskov said that the move was a "balanced, thoughtful and planned work of the countries, which take a responsible position within OPEC," according to Russian media outlets.
The cut had strained relations between the oil cartel and the United States.
The White House said in a statement that President Joe Biden was "disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin's invasion of Ukraine."
Following the announcement of the UAE leader's visit, Dubai's former finance chief said on Twitter that Mohamed was heading to Russia to "[defuse] a European war that exhausted the world."
Calming Russia-West tensions?
One analyst told CNBC that the trip could diffuse tensions between Russia and the West that were sparked by the Ukraine war.
"Due to its diplomatic prowess and high stakes in peace and stability, the UAE is well placed to help Putin grab the golden bridge to exit the war, one that the US and its Western allies have been ready to extend for long," said Asif Shuja, a senior research fellow at the Middle East Institute.
Others were skeptical, however.
"The trip seems to be a politically motivated move and is advertised as the UAE's efforts to bring peace back to the region," said Iman Nasseri, managing director of Facts Global Energy, an energy consultancy.
He added that the UAE and Saudi Arabia, OPEC's "two main players," have shown their support for Russia over the past seven to eight months in several ways: keeping to the previous OPEC+ deal; reacting in a "very small" way to the United States' and Europe's request for a production increase in August; and by softening the impact of EU sanctions through re-exporting Russian petroleum products in the UAE city of Fujairah. | 2022-10-11T06:16:01Z | www.cnbc.com | UAE president to meet Putin in Russia after OPEC+'s output cuts | https://www.cnbc.com/2022/10/11/uae-president-to-meet-putin-in-russia-after-opecs-output-cuts.html | https://www.cnbc.com/2022/10/11/uae-president-to-meet-putin-in-russia-after-opecs-output-cuts.html |
Goldman Sachs sees a resilient growth story in Warner Music Group as music should fare better among subscription services during recessionary periods. Analyst Stephen Laszczyk initiated the stock as a buy with a price target of $32, which is 43% above its previous close. He said the stock should benefit from subscription growth and ad-supported streaming on top of new licensing opportunities. "We view WMG as one of the highest quality long-term growth compounders in our coverage group," he said. Warner Music Group is one of the "big three" music labels in the U.S., along with competitors Universal Music Group and Sony Music Entertainment. The conglomerate will have a new chief executive in 2023 as it looks to break into Web3 while also building out core product offerings within music. Shares are down about 45% year to date and 20% since the company went public in June 2020. Laszczyk thinks macro concerns over subscription churn and digital audio advertising may have been overblown by investors. He noted that music streaming will be more resilient in inflationary periods than other streaming services, particularly video, because of its lower-cost subscription prices at an average cost of $9.99 per month. The consumer base is also stickier than video's, he said, and rights holders are not impacted in the same way as other streaming types when there's churn. Music streaming is also considered an under-monetized sub-sector, creating room for revenue growth within the ad-supported tier. "Simply stated, we believe paid streaming music services will be one of the last services consumers pull back on because of its value proposition," he said. He also balked at claims music streaming is contracting. While recorded growth is set to decelerate from 23.7% in 2021 to 6.9% in 2022, he said approximately 40% of the deceleration is due to "one-off" factors including foreign exchange headwinds, costs related to digital service providers, the closure of its Russian business and the extra week in the 2022 fiscal year. But he said there are still some factors that could inhibit growth including increased competition, costs for music catalogs and royalties and continued challenges to the consumer through interest rates and foreign exchange. — CNBC's Michael Bloom contributed to this report. | 2022-10-11T10:50:10Z | www.cnbc.com | Buy Warner Music Group as it will fare better than other streamers during a recession, Goldman says | https://www.cnbc.com/2022/10/11/buy-warner-music-group-as-it-will-fare-better-than-other-streamers-during-a-recession-goldman-says.html | https://www.cnbc.com/2022/10/11/buy-warner-music-group-as-it-will-fare-better-than-other-streamers-during-a-recession-goldman-says.html |
Phil LeBeau@Lebeaucarnews
A Joby Aviation Electric Vertical Take-Off and Landing (eVTOL) aircraft outside the New York Stock Exchange (NYSE) during the company's initial public offering in New York, U.S., on Aug. 11, 2021.
"The airport routes are the cornerstone routes for any city building really valuable infrastructure that is close to the terminal and can save customers time is critical," Joby founder and CEO JoeBen Bivert told CNBC.
has invested $25 million in Vertical Aerospace and ordered 50 aircraft from the U.K. based company.
Some are targeting 2024, but Joby CEO Bivert won't commit to a launch date. "There are pieces within our control and there are pieces that are not in our control, so I can't give you a firm date," he said. | 2022-10-11T10:50:16Z | www.cnbc.com | Delta invests in electric air taxi startup Joby, plans last-mile airport service | https://www.cnbc.com/2022/10/11/delta-invests-in-electric-air-taxi-startup-joby-plans-last-mile-airport-service.html | https://www.cnbc.com/2022/10/11/delta-invests-in-electric-air-taxi-startup-joby-plans-last-mile-airport-service.html |
GM is starting a new business unit to offer electricity storage and management for homes and businesses.
The new unit, called GM Energy, will provide battery packs, EV chargers, and software to help customers optimize charging and ride out electric grid disruptions.
on Tuesday said that it is forming a new business unit to offer stationary battery packs, solar panels, electric vehicle chargers and other energy-management products for homes and businesses.
The new unit, called GM Energy, aims to build on the battery and software expertise that GM has amassed in recent years to develop a new line of electric vehicles that will, in time, replace its internal-combustion offerings.
GM Energy will offer products and services for what the company calls "energy management," including hardware such as batteries and solar panels as well as hydrogen fuel cells and — importantly — cloud-based software that can link these offerings with electric vehicles and utility companies. The products, some of which will be provided by partners, can be tailored for individual homeowners as well as businesses, including companies operating fleets of electric vehicles.
The commercial operations are already underway, while home energy systems will be available starting next year as the 2024 Chevrolet Silverado EV goes on sale.
The goal of GM Energy is twofold: assist the automaker in controlling the customer experience when they purchase a new EV, and create a sustainable business as GM attempts to double annual revenue to $280 billion by the end of this decade.
Travis Hester, vice president of GM's EV growth operations, said the new business unit offers customers and energy grids "resiliency."
"If you have a sudden unexpected power outage, then you can use your vehicle or your stationary storage box to be able to power your home or small business," he said. And the batteries can feed energy back into a regional power grid during a heat wave or other event.
GM isn't first into this space. Most notably, Tesla
has offered charging, solar and energy storage for several years. There are also more traditional competitors such as Generac. Ford Motor is also entering the space.
The total addressable market of products and services being targeted by GM Energy is between $125 billion and $250 billion, according to Hester. He told CNBC that growing concerns about the U.S. power grid make this a timely offering.
Hester said that GM Energy has already signed up a series of partners that will help it deliver products and services and integrate its offerings into the grid. Those partners include solar giant SunPower
, which will install GM's home systems and provide solar panels, and regional utility companies including Pacific Gas and Electric (PG&E) and Con Edison.
"It was really important to us that when we launched this that it was not a plan for the future, but actually something we're doing right now," Hester said, adding more partnerships will be announced soon.
PG&E is working with GM Energy on a pilot test of a "bi-directional charger," which allows an EV to provide power to a home during a blackout. The EVs charge at night when rates are low and potentially provide energy back to the grid during peak hours.
"The business fundamentals behind this are very solid," Hester said, adding that energy management can save commercial customers hundreds of thousands of dollars a year and provide additional savings, if not income, for consumers.
The companies expect to begin making that charger available to PG&E customers next year.
has a similar deal with PG&E for its electric F-150 Lightning. It also has partnered with Sunrun
as a preferred installer of home energy systems. Installations of those systems began earlier this year. | 2022-10-11T10:50:22Z | www.cnbc.com | GM Energy launches to connect homes, businesses with EV chargers, energy storage | https://www.cnbc.com/2022/10/11/gm-energy-launches-to-connect-homes-businesses-with-ev-chargers-energy-storage.html | https://www.cnbc.com/2022/10/11/gm-energy-launches-to-connect-homes-businesses-with-ev-chargers-energy-storage.html |
People walking along the beach as a navy vessel patrols the Mediterranean waters off Rosh Hanikra, known in Lebanon as Ras al-Naqura, on the Israeli side of the border between the two countries, on October 7, 2022. Israel and Lebanon have brokered a historic agreement to resolve a long-running maritime border dispute on Tuesday, following months of negotiations mediated by the United States. | 2022-10-11T10:50:28Z | www.cnbc.com | Historic agreement between Israel and Lebanon reached | https://www.cnbc.com/2022/10/11/historic-agreement-between-israel-and-lebanon-brokered.html | https://www.cnbc.com/2022/10/11/historic-agreement-between-israel-and-lebanon-brokered.html |
Wars and Military Conflicts
The attacks come in response to the bombing of Russia's prized Kerch Strait bridge linking the mainland with Crimea.
Russia has dramatically ramped up its missile attacks on Ukraine in the last 48 hours, and experts say the country is running out of options — as well as supplies and munitions on the ground.
Air raid sirens were once again sounding out across multiple regions in Ukraine Tuesday, with emergency services warning that more Russian strikes a likely.
It comes a day after a series of Russian attacks on cities including the capital Kyiv — launched in response to the bombing of Russa's prized Kerch Strait bridge to Crimea — left at least 19 people dead and over a hundred injured.
"It's a black hole [in] Russia," he said. "Putin has the monopoly on communication, on the media, his popularity remains high but left and right, things are falling apart. The military is under severe criticism, industry is not producing, and there are signs that the country is falling apart but it's difficult to see how this will play out and how long it will take but the end of Putin's regime is going much faster," he told CNBC in Warsaw.
The multiple attacks on Ukraine Monday came after a strategic and symbolic blow for Russia: an explosion that partially destroyed the Kerch Bridge that links the Russian mainland to Crimea, which Moscow illegally annexed in 2014.
Kyiv has not claimed responsbility for the bridge attack, although the blast was widely seen as humiliating for Moscow and creates another obstacle to Russia supplying its troops in occupied areas of southern Ukraine.
Lesia Vasylenko, a Ukrainian lawmaker, agreed. She told CNBC Tuesday that the country was prepared for more Russian attacks.
"We were not intimidated on the 24th February [when Russia's invasion began], we were not intimidated eight years ago and we were not intimidated for centuries," she told CNBC's Squawk Box Europe. | 2022-10-11T11:37:55Z | www.cnbc.com | Russia lashes out against Ukraine but it's in the death throes of war | https://www.cnbc.com/2022/10/11/russia-lashes-out-against-ukraine-but-its-in-the-death-throes-of-war.html | https://www.cnbc.com/2022/10/11/russia-lashes-out-against-ukraine-but-its-in-the-death-throes-of-war.html |
The logo of German online bank N26 displayed on a smartphone.
While N26 increased lending through buy now, pay later loans and overdrafts, its loan book was small compared to major banks like Deutsche Bank
, Kemper said. The main boost to N26's net interest income came from its 6.1 billion euro horde of deposits, which was up 52% year-on-year in 2021.
"It's not the environment where you want to go out" and list on the stock market, he said, adding the $72 billion listing of German sports car maker Porsche
last month was an outlier in an otherwise bleak year for European IPOs. | 2022-10-11T12:21:51Z | www.cnbc.com | N26 losses widen after ramping up spending on fraud controls | https://www.cnbc.com/2022/10/11/n26-losses-widen-after-ramping-up-spending-on-fraud-controls.html | https://www.cnbc.com/2022/10/11/n26-losses-widen-after-ramping-up-spending-on-fraud-controls.html |
BEVERLY HILLS, CALIFORNIA - SEPTEMBER 06: Mark Cuban speaks onstage during the Vox Media's 2022 Code Conference - Day 1 on September 06, 2022 in Beverly Hills, California. (Photo by Jerod Harris/Getty Images for Vox Media)
Cuban bought a majority stake in the Dallas Mavericks for $280 million for a majority stake the following year, according to the Mavericks' website. | 2022-10-11T13:18:20Z | www.cnbc.com | Mark Cuban credits first tech job to trick question interview strategy | https://www.cnbc.com/2022/10/11/mark-cuban-credits-first-tech-job-to-trick-question-interview-strategy.html | https://www.cnbc.com/2022/10/11/mark-cuban-credits-first-tech-job-to-trick-question-interview-strategy.html |
How to analyze an earnings report — Part 5: A case study
Throughout our series on reading financial statements, we've used earnings reports from Apple (AAPL) for a reason: The tech giant has one of the most bulletproof financial positions in the world. However, we think it's helpful to also take a look at a company that has a shaky financial position. This will help us better spot red flags. Our pick is the highly controversial meme stock AMC Entertainment (AMC). We know lots of folks love this company. Perhaps, it's the nostalgia of going to movie theaters or maybe it's AMC's charismatic CEO, Adam Aron. But our intention is to take a cold, hard look at the financials to determine the worthiness of AMC stock as an investment because, just like on "Mad Money," we are not about friends — and Aron has been on "Mad Money" many times — we're about making money. In this case study, we can apply some of what we covered in Part 1 : The income statement; Part 2 : The balance sheet; Part 3 : Cash flow analysis; and Part 4 : The ratios. We'll begin our AMC analysis by taking a look at the last eight income statements from the company. We could obviously go back further, but eight provides a good amount of data to understand the path the company is on — from the depths of the Covid-19 pandemic though the gradual reopening. We will briefly reference pre-pandemic numbers for comparisons. To simplify, we reformatted the financial statements using excel and added some additional information such as profit margin percentages and growth rates. So what do we see? For starters, we see a significant bounce back in admissions to movie theatres since the height of the pandemic, with $651 million tickets sold in the second quarter of 2022 (represented in millions as $651 in the release). It's indicated by the annual revenue growth rates, with Q2 revenue of $1.17 billion. But that growth is clearly decelerating, and how much more revenue upside is left remains a key question for any potential investor. We see a nice rebound from the first quarter to the second quarter in 2021, as indicated by the sequential growth rate. But that may be due more to seasonality than anything else, as AMC's first quarter appears to have a tendency to be weaker following a strong fourth-quarter movie release season. This is something we saw digging back through pre-pandemic statements, too. Overall sales look good, but they are not yet not back to pre-pandemic levels. Whether they ever will be is for the individual investor to determine. The incredible ramp up of streaming content is a major headwind for movie theaters. Another consideration is the potential for a recession. Going to the movies is a discretionary expense — and costly, especially when you consider the relative value of all sorts of streaming services that you can watch in the comfort of your home with your own popcorn and candy. Sales are only one headline number. In the case of AMC, it's the expenses that are of primary concern. Operating costs and expenses of $1.18 billion in Q2 outweighed total revenue, meaning that the cost of operating the company is higher than the company's total sales — an obviously unsustainable dynamic. On the other hand, AMC management is on the verge of breaking even on an operating profit basis, with just a $16.1 million loss in the second quarter. Put another way, they could get a bit more leverage on marketing, cut structural operating costs, or perhaps simply enhance the margin by charging more for food and beverages. AMC could eke out an operating profit, if demand remains strong. Still interested? The next step is to analyze what management is saying on conference calls and at investor events to determine whether the strategy has merit, or is simply wishful thinking. One nice thing about AMC is that CEO Adam Aron has been an open book when it comes to the path ahead and appears ready to consider every opportunity. Unfortunately, operating expenses are only part of the expense story. The "other" expenses must also be considered, especially — in AMC's case — interest expense. AMC has a lot of debt, costing it about $80 million per quarter just to service it. We find this by looking at the "corporate borrowings" line item. Then there's also expenses related to investment opportunities, slightly more discretionary but highly important given that AMC must grow revenue in order to survive. Management still has to get to operating profitability before they can even think about being profitable on a net income basis. And that's the only basis that matters in the long run. Looking at net income, we can clearly see that the business as it stands today is a money loser, with a net loss before income taxes of $121 million in Q2. However, as was the case with operating profit, we are seeing a trend toward profitability as indicated by the net profit margin over time. Again, it's on the investor to make a decision about where the business goes from here, and if it is a good gamble. This is not the income statement of a sustainable business. While losses may be acceptable for a rapidly growing business with large addressable market opportunities, the concern with movie theaters is that it's an old business in decline as streaming catches on. How long can AMC last? Just how long AMC can survive at these loss rates will depend on how much cash it has on hand (a balance sheet question), its cash burn (a cash flow statement question) and management's ability to raise additional funds, if needed, via debt and/or equity offerings. The cost of additional debt will not come cheap given the already-high debt burden, and with every equity offer comes more dilution for existing shareholders. With those thoughts in mind, let's hop over to the balance sheet, pulled from AMC's 10-Q. For this, we are only going to concern ourselves with the most recent release, since we are most concerned with the current financial health of the company. The cash and debt figures from a year ago are of little importance when thinking about the future. The first red flag is the current ratio (current assets divided by current liabilities, or $1.21 billion divided by $1.62 billion) stands at about 0.75. A ratio less than 1 means AMC does not have enough liquid assets on hand to cover upcoming liabilities. AMC's current ratio can get closer to 1 if we adjust the liabilities by removing the impact of deferred revenue and income, as it won't involve a cash outlay. This figure is likely related to movie tickets that were already sold for screenings not yet attended. After doing this, we're not quite at a 1 ratio. But closer, and close enough that management may be able to make up the difference by stringing together a few positive quarters. It could also sell more equity, to the detriment of current shareholders. Additionally, the company recently said it has access to "undrawn revolver lines," though added that it "does not anticipate the need to borrow under the revolver lines during the next twelve months." Liquidity vs. solvency The current ratio is all about liquidity — and shows AMC needs to figure out a way to come up with cash to pay near-term obligations, be it an equity sale or debt offering. But since total debt also outweighs total liabilities, we also have a solvency issue. That means there are questions about the company's ability to continue operating in the future as a so-called going concern. The difference between liquidity and solvency is that the former is simply a question of being able to raise cash quickly to meet near-term obligations, whereas the latter relates to a company's ability to pay off debts in the long term. A company that can meet near-term obligations may be considered liquid, but if it can't meet large obligations in the future it may become insolvent. As it stands now, shareholders are in an equity deficit. If the company liquidated right now there would not be enough cash or monetizable assets available to make good on the company's financial obligations. In the event of bankruptcy, not only would equity holders get nothing, but lower-tier debt holders may not see a dime either. How AMC added liquidity Management has attempted to address their liquidity issue in the past, taking advantage of 2021's meme-mania by selling 8.5 million shares to Mudrick Capital, which quickly flipped them for a profit for $27.12 per share — raising about $230.5 million. In a brilliant move, AMC offered 11.55 million shares at an average price of approximately $50.85 per share, raising an additional $587 million near the peak of the mania (on a closing basis, shares topped out at $59.26 on June 18). Over $800 million isn't bad, however, it was nowhere near enough to address the company's debt- and cash-burn rates. Of course, if the equity dilution wasn't enough to convince you that shares may have been overpriced back in 2021, Aron also sold 625,000 in what he said was an "estate planning move." The shares were sold at an average price of $40.53, totaling roughly $25 million. He then proceeded to sell additional shares through the end of 2021, bringing the grand total to roughly $42 million before announcing that he was done selling. At the time, he still had over 2.3 million shares, nearly all of which were unvested. We can't fault Aron for making the sales, as he told investors he would ahead of time and has been as transparent a CEO as any retail investor could ask for throughout the mania. Perhaps the real moral of the story here is that when you have a balance sheet this bad, do what the insiders are doing. More recently, management was forced to up their creativity after shareholders said enough to the equity dilution. The solution? To offer up AMC Preferred Equity (APE) Units. Initially, the APE offer, despite representing a different class of stock with its own ticker, was done in the form of a dividend pay out to existing shareholders. This impacted the stock in a similar way that a 2-for-1 stock split would, with AMC shares falling by over 50% in the days leading up to, and through, the day of the distribution. The decision to offer up a new class of stock is not unheard of, however, it is a bit questionable in AMC's case. Unlike the preferred shares of other companies that may provide unique characteristics such as different voting rights or a larger dividend, AMC's APE units were designed to have the same economic value and voting rights as shares of Class A common stock. In the event of bankruptcy, preferred unit holders should have a higher priority claim on assets than common shareholders. However, as it stands now, it's doubtful anything would be left over after the bondholders would finish making their claims. Regarding any future conversion to AMC common, such a move would require the board to make a proposal and shareholders to approve it. That gives us some insight as to why these APE units were even developed to begin with. Prior to the APE announcement, AMC tried and failed to gain wide shareholder support to authorize the sale of additional common stock. However, since these APE units are not technically AMC common stock — despite their similarities — they did not require shareholder approval, effectively providing management a with a new avenue to raise funds. Importantly, the initial distribution did not provide new funds or dilute existing holders since they went to the existing holders (again, similar to a sock split) as a dividend. However, while a grand total of 516.82 million APE units were distributed in August (1for each share of common outstanding), 1 billion APE units were actually authorized. Indeed, shortly after the initial APE dividend payment, management filed that they had entered into an equity distribution agreement to allow for the sale of the remaining APE units (425 million in total after holding some back for compensation). Management has said this distribution agreement was made in an effort to raise cash to pay off its debts. But while it may not be technically dilutive, AMC common shareholders have another class of equity coming in higher up in the capital structure. For a shareholder, the positive is that this plan gives AMC ample liquidity to meet its near-term obligations and buys management time to figure out how to get to profitability. The negative is that the authorization of 1 billion shares opens up the equity base to dilution when those shares that were not distributed as a dividend are sold, even without a vote to authorize additional shares. Solvency remains a longer-term issue and the main concern for those holding equity or low-seniority debt. What is the AMC brand worth? Another line item of concern is assets attributed to "goodwill." Goodwill is an intangible asset: it's not cash, it's not receivables, and it's not really something that can readily be converted into a liquid asset. It's management's best guess at what the AMC brand is worth. As of Q2, it was $2.35 billion. If the business prospects decline — sales fall short of expectations — management may be forced to reduce goodwill via what is referred to as an impairment charge to reflect the loss of brand value. The balance sheet takes a one-two punch: Cash levels come in lower-than-expected (because actual results didn't match up to expectations) and goodwill (and, therefore, total assets) is reduced. This negatively impacts financial ratios. Indeed, we saw "goodwill non-cash impairment charges" of roughly $2.3 billion taken in the year ended Dec. 31, 2020, due to the impact the pandemic had on the "the enterprise fair values" of the Domestic Theatres and International Theatres reporting units. That may not have been a cash hit, but the negative impact it has on shareholder equity could certainly lead to higher borrowing costs. As to the $80 million in corporate borrowing interest payments we noted in our review of the income statement, we can see that the actual debt load causing these costs is about $5.36 billion in total corporate borrowings. Until management can make a dent in this principle, investors should expect those interest payments to continue at around the same rate. Call it somewhere in the range of $300 million to $350 million per year. While some of that debt was necessary just to survive the pandemic, whether management can pay it down, and how quickly, will depend heavily on the team's ability to reach operating profitability and sustainably generate cash. So after considering the income statement and balance sheet, we are looking at a company that is losing money and does not have the ability to meet its financial obligations. That is the reality, as indicated by the most recent financial statements. The only reason AMC is even standing right now is because of the meme-mania we saw during the pandemic, a hysteria that allowed the company's management to both sell equity into a buying frenzy and raise debt in a world where the cost to borrow was very low. We are no longer in that world. Borrowing costs have increased significantly and the buyers that fueled the stock's prior price surges appear to have given up on AMC, or have run out of money. AMC's cash flow Let's finish by taking a look at the cash flow statement. Rather than analyze each individual line item — though members may do so here , as management must provide the statement in full on their 10-Q filing — we will instead focus on the consolidated statement on the operating, investing, financing and free cash flow totals over the most recent four quarters. The investing cash outflow (line one) is to be expected, as management is putting money to work to ensure growth and to get to profitability. The financing cash outflow (line two) shows a slow paying down of the massive debt load that's weighing on the company's balance sheet. What we really want to focus on is operating cash flow (line three), followed by capital expenditures and then free cash flow. AMC has not been able to consistently generate positive cash flow from operations. This means it must either sell assets or look to the bond and/or equity markets in order to find cash. Even in the fourth quarter, it didn't generate enough cash flow to cover the investing and financing outflows, not to mention capital expenditures. Once again, we have an unsustainable financial dynamic: a company simply cannot survive if it is unable to generate cash internally. The individual investor has to determine if management has a plan to turn the ship around and get the company back on track. If you believe they do, then that's the bet. Otherwise, there are no fundamental reasons to take a position in the name. Looking at the operating cash flow alone, AMC needs to make significant changes or it will eat away at cash on the balance sheet. Fortunately, current FactSet estimates do anticipate AMC having positive operating cash flow in 2023. But the projections still don't cover the projected investing and financing cash outflows. Estimates are for another $6 million to flow out in the back half of 2022 ($81 million out in Q3 and $75 million back-in in Q4) and another $154 million and $201 million to flow out in fiscal years 2023 and 2024, respectively (not accounting for any effect that exchange rates may have on cash balances). The takeaway: Cash levels should be expected to decline for the foreseeable future. Bottom line Based on our analysis of AMC's financial statements, the company is in trouble. Its stock price has fallen 76% year-to-date and the cost to borrow is climbing. Options to raise cash externally have become severely limited. Aron was smart enough to leverage the investor frenzy during the pandemic and the then-low borrowing costs to load up the balance sheet. Based on current burn rates and the roughly $965 million in cash, management has a couple years to figure things out. That's still an optimistic take. In the most recent 10-Q, AMC shows a $525.6 million payment due in 2023. The company said it is currently negotiating terms of new debt intended to refinance and extend the maturity of that money owed, but "there are no assurances that the Company will be able to do so." If AMC is unable to refinance these amounts, the principal amounts will be reported as current maturities, which may increase the uncertainty around the company's ability to pay its debts. This renegotiation should be on the radar of every AMC investor and prospective investor. A failure to make do on a new debt agreement will mean a significant cash hit in 2023, and reduce the time on the clock for AMC to turn things around. The next big challenge will be the $3.36 billion in maturities due in 2026. We can cross that bridge when (and if) we come to it. Unless you believe that the movie theater business is about to reignite and the trend we have seen in recent years of viewers trading in the theater experience and $20 popcorn for some Disney+ and microwave popcorn, then there is little reason to be involved with AMC. We would love to see management pull this turnaround off, reinvent the company and provide consumers with an experience they've never seen before. But we have our doubts about management's focus on the core business, given past moves such as investing in the completely unrelated business of a gold mining company . Understand that any position taken in AMC at this point is entirely a bet on management and Aron's vision. To be clear, though we don't predict a bright future for AMC based on its financial position and our own view of the changing consumer preference toward at-home streaming services, we find little fault with Aron. This is not a good hand he is playing with, but he appears ready, willing, and able to do anything and everything he can to save the theater chain. Some may argue that he took advantage of a generation of meme-stock investors. In our view, his transparency throughout the timeline going back to the early days of the pandemic negates that narrative. Instead, we think Aron acknowledged that his shareholder base is majority retail and opted to view and treat that base as members of a club, seeking to listen to what they wanted to see management do with the company — be it showing concerts or selling nonfungible tokens — and then see what financial means the company had at its disposal to do something, anything to get the company back on a path to profitability. (See here for a full list of the stocks in Jim Cramer's Charitable Trust is long.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
AMC Movie theatre
Throughout our series on reading financial statements, we've used earnings reports from Apple
(AAPL) for a reason: The tech giant has one of the most bulletproof financial positions in the world. However, we think it's helpful to also take a look at a company that has a shaky financial position. This will help us better spot red flags.
How to navigate a bear market — we look to history for answers and tell you how we're doing it
Here’s why understanding de-risking is key as the Fed readies another rate hike and earnings loom | 2022-10-11T13:53:02Z | www.cnbc.com | How to analyze an earnings report — Part 5: A case study | https://www.cnbc.com/2022/10/11/how-to-analyze-an-earnings-report-part-5-a-case-study.html | https://www.cnbc.com/2022/10/11/how-to-analyze-an-earnings-report-part-5-a-case-study.html |
The proposed rule sent stocks for gig companies like DoorDash, Lyft and Uber down.
Uber CEO Dara Khosrowshahi is interviewed on the trading floor at the New York Stock Exchange (NYSE) in New York, August 2, 2022.
The proposed rule, if adopted, could raise costs for companies like Lyft
, Instacart and DoorDash
that rely on contract workers to pick up shifts on their own schedules. Shares of Uber and Lyft fell more than 11% Tuesday morning, while DoorDash dropped about 9%.
The companies have argued that flexible schedules are attractive to workers, pointing to surveys showing the popularity of the model, and only possible under a contractor model. Some labor experts and activists have disagreed, however, saying the companies use the contractor model to reduce their own costs while denying workers important protections such as health care benefits, overtime pay, and the ability to organize into unions.
In 2020, a California law went into effect requiring many companies to reclassify contract workers as employees, but later that year, voters approved a proposition that exempted app-based ride-sharing and delivery companies from the law.
Last year, the Biden administration rescinded a rule created under Trump's Labor Department that would have made it it easier for gig companies to classify workers as independent contractors instead of employees. But after a legal challenge, a court reinstated the Trump-era rule.
Biden's Labor Department said in its notice on the Federal Register that it had considered waiting longer to see how the Trump-era rule played out. But it decided to move ahead with the proposed regulation instead because it believes keeping the earlier rule in place "would have a confusing and disruptive effect on workers and businesses alike due to its departure from case law describing and applying the multifactor economic reality test as a totality-of-the-circumstances test."
In a blog post Tuesday, Lyft wrote that there "is no immediate or direct impact on the Lyft business at this time," noting the 45 day public comment period. It added that the rule "Does not reclassify Lyft drivers as employees," and also doesn't force it to change its business model. Lyft said the rule simply reverts the standard to that used under the Obama administration, which previously applied to its company "and did not result in reclassification of drivers."
Uber says it's cutting back on spending to become a free cash flow company | 2022-10-11T14:49:36Z | www.cnbc.com | Uber, Doordash plunge as Labor Dept proposes gig worker change | https://www.cnbc.com/2022/10/11/uber-doordash-plunge-as-labor-dept-proposes-gig-worker-change.html | https://www.cnbc.com/2022/10/11/uber-doordash-plunge-as-labor-dept-proposes-gig-worker-change.html |
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