Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 3, 2024.
David A. Grogen | CNBC
Berkshire Hathaway‘s monstrous cash pile topped $300 billion in the third quarter as Warren Buffett continued his stock-selling spree and held back from repurchasing shares.
The Omaha-based conglomerate saw its cash fortress swell to a record $325.2 billion by the end of September, up from $276.9 billion in the second quarter, according to its earnings report released Saturday morning.
The mountain of cash kept growing as the Oracle of Omaha sold significant portions of his biggest equity holdings, namely Apple and Bank of America. Berkshire dumped about a quarter of its gigantic Apple stake in the third quarter, making the fourth consecutive quarter that it has downsized this bet. Meanwhile, since mid-July, Berkshire has reaped more than $10 billion from offloading its longtime Bank of America investment.
Overall, the 94-year-old investor continued to be in a selling mood as Berkshire shed $36.1 billion worth of stock in the third quarter.
No buybacks
Berkshire didn’t repurchase any company shares during the period amid the selling spree. Repurchase activity had already slowed down earlier in the year as Berkshire shares outperformed the broader market to hit record highs.
The conglomerate had bought back just $345 million worth of its own stock in the second quarter, significantly lower than the $2 billion repurchased in each of the prior two quarters. The company states that it will buy back stock when Chairman Buffett “believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
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Berkshire Hathaway
Class A shares of Berkshire have gained 25% this year, outpacing the S&P 500’s 20.1% year-to-date return. The conglomerate crossed a $1 trillion market cap milestone in the third quarter when it hit an all-time high.
For the third quarter, Berkshire’s operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, totaled $10.1 billion, down about 6% from a year prior due to weak insurance underwriting. The figure was a bit less than analysts estimated, according to the FactSet consensus.
Buffett’s conservative posture comes as the stock market has roared higher this year on expectations for a smooth landing for the economy as inflation comes down and the Federal Reserve keeps cutting interest rates. Interest rates have not quite complied lately, however, with the 10-year Treasury yield climbing back above 4% last month.
Notable investors such as Paul Tudor Jones have become worried about the ballooning fiscal deficit and that neither of the two presidential candidates squaring off next week in the election will cut spending to address it. Buffett has hinted this year he was selling some stock holdings on the notion that tax rates on capital gains would have to be raised at some point to plug the growing deficit.
The Washington Post Building at One Franklin Square Building in Washington, D.C., June 5, 2024.
Andrew Harnik | Getty Images
The Washington Post said Friday that it will not endorse a candidate in the presidential election this year — or ever again — breaking decades of tradition and sparking immediate criticism of the decision.
But the newspaper also published an article by two staff reporters revealing that editorial page staffers had drafted an endorsement of Democratic nominee Kamala Harris over GOP nominee Donald Trump in the election.
“The decision not to publish was made by The Post’s owner — Amazon founder Jeff Bezos,” the article said, citing two sources briefed on the events.
Trump, while president, had been critical of the billionaire Bezos and the Post, which he purchased in 2013.
The newspaper in 2016 and again in 2020 endorsed Trump’s election opponents, Hillary Clinton and President Joe Biden, in editorials that condemned the Republican in blunt terms.
In a 2019 lawsuit, Amazon claimed it had lost a $10 billion cloud computing contract with the Pentagon to Microsoft because Trump had used “improper pressure … to harm his perceived political enemy” Bezos.
The Post since 1976 had regularly endorsed candidates for president, except for the 1988 race. All those endorsements had been for Democrats.
In a statement to CNBC, when asked about Bezos’ purported role in killing the endorsement, Post chief communications officer Kathy Baird said, “This was a Washington Post decision to not endorse, and I would refer you to the publisher’s statement in full.”
The Post on Friday evening published a third article, signed by opinion columnists for the newspaper, who said, “The Washington Post’s decision not to make an endorsement in the presidential campaign is a terrible mistake.”
“It represents an abandonment of the fundamental editorial convictions of the newspaper that we love, and for which we have worked a combined 218 years,” the column said. “This is a moment for the institution to be making clear its commitment to democratic values, the rule of law and international alliances, and the threat that Donald Trump poses to them — the precise points The Post made in endorsing Trump’s opponents in 2016 and 2020.”
CNBC has requested comment from Amazon, where Bezos remains the largest shareholder.
Amazon founder Jeff Bezos arrives for his meeting with British Prime Minister Boris Johnson at the UK diplomatic residence in New York City, Sept. 20, 2021.
Michael M. Santiago | Getty Images News | Getty Images
Post publisher and chief executive Will Lewis, in an article published online explaining the decision, wrote, “The Washington Post will not be making an endorsement of a presidential candidate in this election. Nor in any future presidential election.”
“We are returning to our roots of not endorsing presidential candidates,” Lewis wrote.
“We recognize that this will be read in a range of ways, including as a tacit endorsement of one candidate, or as a condemnation of another, or as an abdication of responsibility,” he wrote.
“That is inevitable. We don’t see it that way. We see it as consistent with the values The Post has always stood for and what we hope for in a leader: character and courage in service to the American ethic, veneration for the rule of law, and respect for human freedom in all its aspects.”
Seven of the 13 paragraphs of Lewis’ article either quoted at length or referred to Post Editorial Board statements in 1960 and 1972 explaining the paper’s rationale for not endorsing presidential candidates in those years, which included its identity as “an independent newspaper.”
Lewis noted that the paper had endorsed Jimmy Carter in 1976 “for understandable reasons at the times” — which he did not identify.
“But we had it right before that, and this is what we are going back to,” Lewis wrote.
“Our job as the newspaper of the capital city of the most important country in the world is to be independent,” he wrote. “And that is what we are and will be.”
Post editor-at-large Robert Kagan, a member of the paper’s opinions section, resigned following the decision, multiple news outlets reported.
More than 10,000 reader comments were posted on Lewis’ article, many of them blasting the Post for its decision and saying they were canceling their subscriptions.
“The most consequential election in our country, a choice between Fascism and Democracy, and you sit out? Cowards. Unethical, fearful cowards,” wrote one comment. “Oh, and by the way, I’m canceling my subscription, because you are putting business ahead of ethics and morals.”
The announcement came days after Mariel Garza, the head of The Los Angeles Times‘ editorial board, resigned in protest after that paper’s owner, Patrick Soon-Shiong, decided against running a presidential endorsement.
“I am resigning because I want to make it clear that I am not okay with us being silent,” Garza told the Columbia Journalism Review. “In dangerous times, honest people need to stand up. This is how I’m standing up.”
Soon-Shiong, like Bezos, is a billionaire.
Marty Baron, the former editor of The Washington Post, called that paper’s decision “cowardice, with democracy as its casualty.”
″@realdonaldtrump will see this as an invitation to further intimidate owner @jeffbezos (and others),” Baron wrote. “Disturbing spinelessness at an institution famed for courage.”
The Washington Post Guild, the union that represents the newspaper’s staff, in a statement posted on the social media site X said it was “deeply concerned that The Washington Post — an American news institution in the nation’s capital — would make a decision to no longer endorse presidential candidates, especially a mere 11 days ahead of an immensely consequential election.”
“The message from our chief executive, Will Lewis — not from the Editorial Board itself — makes us concerned that management interfered with the work of our members in Editorial,” the Guild said in the statement, which noted the paper’s reporting about Bezos’ role in the decision.
“We are already seeing cancellations from once loyal readers,” the Guild said. “This decision undercuts the work of our members at a time when we should be building our readers’ trust, not losing it.”
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Former Post reporters Bob Woodward and Carl Bernstein, whose stories about the Watergate break-in during the Nixon administration won the newspaper a Pulitzer Prize for Public Service, in a statement said, “We respect the traditional independence of the editorial page, but this decision 11 days out from the 2024 presidential election ignores the Washington Post’s own overwhelming reportorial evidence on the threat Donald Trump poses to democracy.”
“Under Jeff Bezos’s ownership, the Washington Post’s news operation has used its abundant resources to rigorously investigate the danger and damage a second Trump presidency could cause to the future of American democracy and that makes this decision even more surprising and disappointing, especially this late in the electoral process,” Woodward and Bernstein said.
Post columnist Karen Attiah, in a post on the social media site Threads, wrote, “Today has been an absolute stab in the back.”
“What an insult to those of us who have literally put our careers and lives on the line to call out threats to human rights and democracy,” Attiah wrote.
Rep. Ted Lieu, a Democrat from California, in his own tweet on the news wrote, “The first step towards fascism is when the free press cowers in fear.”
Trump in August told Fox Business News that Bezos called him after the Republican narrowly escaped an assassination attempt in July at a campaign rally in western Pennsylvania.
“He was very nice even though he owns The Washington Post,” Trump said of Bezos.
Bezos last posted on X on July 13, hours after the assassination attempt.
“Our former President showed tremendous grace and courage under literal fire tonight,” Bezos wrote in that tweet. “So thankful for his safety and so sad for the victims and their families.”
Trump on Friday met in Austin, Texas, with executives from the Bezos-owned space exploration company Blue Origin, among them CEO David Limp, the Associated Press reported
People hold signs during a strike rally for the International Association of Machinists and Aerospace Workers (IAM) at the Seattle Union Hall in Seattle, Washington, on October 15, 2024.
Jason Redmond | AFP | Getty Images
Boeing machinists voted against a new labor deal that included 35% wage increases over four years, their union said Wednesday, extending a more than five-week strike that has halted most of the company’s aircraft production, which is centered in the Seattle area.
The contract’s rejection by 64% of the voters is another major setback for the company, which warned earlier Wednesday that it would continue to burn cash through 2025 and reported a $6 billion quarterly loss, its largest since 2020.
The strike is costing the company about $1 billion a month, according to S&P Global Ratings.
New CEO Kelly Ortberg had said reaching a deal with machinists was a priority in order to get the company back on track after years of safety and quality problems.
“My focus is getting everybody looking forward, get them back to work, improve that relationship,” Ortberg told CNBC’s “Squawk on the Street” earlier in the day, when asked about the strike.
Ortberg’s laid out his vision for Boeing’s future, which could includes slimming down the company to focus on core businesses. Earlier this month, he announced Boeing will cut 10% of its global workforce of 170,000 people.
Boeing’s more than 32,000 machinists in the Puget Sound area, in Oregon and in other locations walked off the job on Sept. 13 after overwhelmingly voting down a previous tentative agreement that proposed raises of 25%. The International Association of Machinists and Aerospace Workers union had originally sought wage increases of 40%. It is the machinists’ first strike since 2008.
The latest proposal, announced last Saturday, included 35% raises over four years, increased 401(k) contributions, a $7,000 bonus and other improvements.
Workers had pushed for higher pay amid a surge in living costs in the Puget Sound area. Some machinists were upset about losing their pension plan in a previous contract that they signed in 2014, but the latest proposal didn’t offer a pension.
Boeing agreed in the new contract to build its next aircraft in the Pacific Northwest, which had also been a sticking point with unionized workers after Boeing moved all of its 787 Dreamliner production to a non-union factory in South Carolina.
“We have made tremendous gains in this agreement. However, we have not achieved enough to meet our members’ demands,” said Jon Holden, president of IAM District 751, at a news conference Wednesday night. He said the union will push to go back to the negotiating table.
Boeing declined to comment on the voting results.
The labor strife is the latest in a long list of problems at Boeing, which started the year when a door plug blew out midair from a packed Boeing 737 Max 9, its best-selling plane, reigniting regulator scrutiny of the company.
The strike began as Boeing was working to ramp up production of the 737 and other aircraft.
The extended stoppage is also a challenge for the aerospace supply chain, which is fragile coming out of the pandemic, as the company’s web of suppliers had to train new workers quickly.
Spirit AeroSystems last week said it would temporarily furlough about 700 workers and that layoffs or other furloughs are possible if Boeing machinists’ strike continues.
A McDonald’s located on Route 66 in Azusa, California, on April 1, 2024.
Robert Gauthier | Los Angeles Times | Getty Images
McDonald’s shares dropped in extended trading Tuesday after the Centers for Disease Control and Prevention said an E. coli outbreak linked to McDonald’s Quarter Pounder burgers has led to 10 hospitalizations and one death.
The agency said 49 cases have been reported in 10 states between Sept. 27 and Oct. 11, with most of the illnesses in Colorado and Nebraska. “Most” sick people reported eating a McDonald’s Quarter Pounder, the CDC added.
One of the patients developed hemolytic uremic syndrome, which is a serious condition that can cause kidney failure. An older adult in Colorado died.
McDonald’s shares dropped about 7% in after-hours trading Tuesday.
In a statement Tuesday, McDonald’s said it is taking “swift and decisive action” following the E. Coli outbreak in certain states.
The company said initial findings from the ongoing investigation show that some of the illnesses may be linked to slivered onions — or fresh onions sliced into thin shapes — that are used in the Quarter Pounder and sourced by a single supplier that serves three distribution centers. McDonald’s has instructed all local restaurants to remove slivered onions from their supply and has paused the distribution of that ingredient in the affected area.
This map shows where the 49 people in this E. coli outbreak live.
Source: CDC
Quarter Pounder hamburgers will be temporarily unavailable in several Western states, including Colorado, Kansas, Utah and Wyoming, and portions of other states, McDonald’s said. It added that it was working with suppliers to replenish ingredients.
The majority of states and menu items are not affected by the outbreak, McDonald’s USA President Joe Erlinger said in a video. The company’s other beef products, including the cheeseburger, hamburger, Big Mac, McDouble and the double cheeseburger, are not affected, he added. Those sandwiches use a different type of onion product.
“We are working quickly to return our full menu in these states as soon as possible,” Erlinger said. “I hope these steps demonstrate McDonald’s commitment to food safety.”
Quarter Pounder hamburgers are a core menu item for McDonald’s, raking in billions of dollars each year. In 2018, McDonald’s launched fresh beef for its Quarter Pounders across most of its U.S. stores.
The CDC said the number of people affected by the outbreak is “likely much higher” than what has been reported so far. The agency said that is because many people recover from an E. coli infection without testing for it or receiving medical care. It also typically takes three to four weeks to determine if a sick patient is part of an outbreak, the CDC added.
E. coli refers to a group of bacteria found in the gut of nearly all people and animals. But some strains of the bacteria can cause mild to severe illness if a person eats contaminated food or drinks polluted water.
Symptoms, including stomach cramps, diarrhea and vomiting, usually start three to four days after swallowing the bacteria, according to the CDC. Most people recover without treatment after five to seven days.
There have been several past reported cases of E. coli at McDonald’s restaurants.
In 2022, at least six children developed symptoms consistent with E. coli poisoning after eating McDonald’s’ Chicken McNuggets Happy Meals in Ashland, Alabama. Four of the six children were admitted to a hospital after experiencing severe adverse effects.
The Super Heavy booster lands on the company’s launch tower during the fifth Starship flight on Oct. 13, 2024.
SpaceX
SpaceX launched its fifth test flight of its Starship rocket on Sunday and made a dramatic first catch of the rocket’s more than 20-story tall booster.
The achievement marks a major milestone toward SpaceX’s goal of making Starship a fully reusable rocket system.
Elon Musk‘s company launched Starship at 8:25 a.m. ET from its Starbase facility near Brownsville, Texas. The rocket’s “Super Heavy” booster returned to land on the arms of the company’s launch tower nearly seven minutes after launch.
“Are you kidding me?” SpaceX communications manager Dan Huot said on the company’s webcast.
“What we just saw, that looked like magic,” Huot added.
SpaceX catches the first-stage “Super Heavy” booster of its Starship rocket on Oct. 13, 2024.
Sergio Flores | Afp | Getty Images
NASA Administrator Bill Nelson congratulated SpaceX in a post on social media.
“As we prepare to go back to the Moon under Artemis, continued testing will prepare us for the bold missions that lie ahead,” Nelson wrote.
Starship separated and continued on to space, traveling halfway around the Earth before reentering the atmosphere and splashing down in the Indian Ocean as intended to complete the test.
There were no people on board the fifth Starship flight. The company’s leadership has said SpaceX expects to fly hundreds of Starship missions before the rocket launches with any crew.
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The full Starship system has flown four spaceflight tests previously, with launches in April and November of last year, as well as this March and June. Each of the test flights have achieved more milestones than the last.
SpaceX emphasizes that it tries to build “on what we’ve learned from previous flights” in its approach to developing the massive rocket.
SpaceX’s Starship lifts off from Starbase near Boca Chica, Texas, on October 13, 2024 during the rocket’s fifth flight test.
Sergio Flores | Afp | Getty Images
The Starship system is designed to be fully reusable and aims to become a new method of flying cargo and people beyond Earth. The rocket is also critical to NASA’s plan to return astronauts to the moon. SpaceX won a multibillion-dollar contract from the agency to use Starship as a crewed lunar lander as part of NASA’s Artemis moon program.
The Federal Aviation Administration issued SpaceX with a license to launch Starship’s fifth flight on Saturday, sooner than the regulator previously estimated. But the company wanted to launch the fifth flight earlier than October, leading both SpaceX and Musk to be vocally critical of the FAA, saying that “superfluous environmental analysis” was holding up the process.
While the FAA and partner agencies at the U.S. Fish and Wildlife Service and the Commerce Department’s National Marine Fisheries Service conducted assessments more quickly than anticipated, SpaceX has also had to pay fines to environmental regulators regarding unauthorized water discharges at its Texas launch site.
The SpaceX Starship is seen as it stands on the launch pad ahead of its third flight test from Starbase in Boca Chica, Texas on March 12, 2024.
Chandan Khanna | AFP | Getty Images
With the booster catch, SpaceX has surpassed the fourth test flight’s milestones.
The company completed its goal of returning the booster back to the launch site and used the “chopstick” arms on the tower to catch the vehicle. The company sees the ambitious catch approach as critical to its goal of making the rocket fully reusable.
“SpaceX engineers have spent years preparing and months testing for the booster catch attempt, with technicians pouring tens of thousands of hours into building the infrastructure to maximize our chances for success,” the company wrote on its website.
The catch requires thousands of criteria to be met, the company said. If it hadn’t been ready, the booster would have diverted from the return trajectory to instead splash down off the coast in the Gulf of Mexico.
“We accept no compromises when it comes to ensuring the safety of the public and our team, and the return will only be attempted if conditions are right,” SpaceX said.
Starship is both the tallest and most powerful rocket ever launched. Fully stacked on the Super Heavy booster, Starship stands 397 feet tall and is about 30 feet in diameter.
The Super Heavy booster, which stands 232 feet tall, is what begins the rocket’s journey to space. At its base are 33 Raptor engines, which together produce 16.7 million pounds of thrust — about double the 8.8 million pounds of thrust of NASA’s Space Launch System rocket, which launched for the first time in 2022.
Starship itself, at 165 feet tall, has six Raptor engines — three for use while in the Earth’s atmosphere and three for operating in the vacuum of space.
The rocket is powered by liquid oxygen and liquid methane. The full system requires more than 10 million pounds of propellant for launch.
Former President Donald Trump and Vice President Kamala Harris face off in the ABC presidential debate on Sept. 10, 2024.
Getty Images
With the U.S. election less than a month away, the country and its corporations are staring down two drastically different options.
For airlines, banks, electric vehicle makers, health-care companies, media firms, restaurants and tech giants, the outcome of the presidential contest could result in stark differences in the rules they’ll face, the mergers they’ll be allowed to pursue, and the taxes they’ll pay.
During his last time in power, former President Donald Trump slashed the corporate tax rate, imposed tariffs on Chinese goods, and sought to cut regulation and red tape and discourage immigration, ideas he’s expected to push again if he wins a second term.
In contrast, Vice President Kamala Harris has endorsed hiking the tax rate on corporations to 28% from the 21% rate enacted under Trump, a move that would require congressional approval. Most business executives expect Harris to broadly continue President Joe Biden‘s policies, including his war on so-called junk fees across industries.
Personnel is policy, as the saying goes, so the ramifications of the presidential race won’t become clear until the winner begins appointments for as many as a dozen key bodies, including the Treasury, Justice Department, Federal Trade Commission, and Consumer Financial Protection Bureau.
CNBC examined the stakes of the 2024 presidential election for some of corporate America’s biggest sectors. Here’s what a Harris or Trump administration could mean for business:
The result of the presidential election could affect everything from what airlines owe consumers for flight disruptions to how much it costs to build an aircraft in the United States.
The Biden Department of Transportation, led by Secretary Pete Buttigieg, has taken a hard line on filling what it considers to be holes in air traveler protections. It has established or proposed new rules on issues including refunds for cancellations, family seating and service fee disclosures, a measure airlines have challenged in court.
“Who’s in that DOT seat matters,” said Jonathan Kletzel, who heads the travel, transportation and logistics practice at PwC.
The current Democratic administration has also fought industry consolidation, winning two antitrust lawsuits that blocked a partnership between American Airlines and JetBlue Airways in the Northeast and JetBlue’s now-scuttled plan to buy budget carrier Spirit Airlines.
The previous Trump administration didn’t pursue those types of consumer protections. Industry members say that under Trump, they would expect a more favorable environment for mergers, though four airlines already control more than three-quarters of the U.S. market.
On the aerospace side, Boeing and the hundreds of suppliers that support it are seeking stability more than anything else.
Trump has said on the campaign trail that he supports additional tariffs of 10% or 20% and higher duties on goods from China. That could drive up the cost of producing aircraft and other components for aerospace companies, just as a labor and skills shortage after the pandemic drives up expenses.
Tariffs could also challenge the industry, if they spark retaliatory taxes or trade barriers to China and other countries, which are major buyers of aircraft from Boeing, a top U.S. exporter.
Big banks such as JPMorgan Chase faced an onslaught of new rules this year as Biden appointees pursued the most significant slate of regulations since the aftermath of the 2008 financial crisis.
Those efforts threaten tens of billions of dollars in industry revenue by slashing fees that banks impose on credit cards and overdrafts and radically revising the capital and risk framework they operate in. The fate of all of those measures is at risk if Trump is elected.
Trump is expected to nominate appointees for key financial regulators, including the CFPB, the Securities and Exchange Commission, the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation that could result in a weakening or killing off completely of the myriad rules in play.
“The Biden administration’s regulatory agenda across sectors has been very ambitious, especially in finance, and large swaths of it stand to be rolled back by Trump appointees if he wins,” said Tobin Marcus, head of U.S. policy at Wolfe Research.
Bank CEOs and consultants say it would be a relief if aspects of the Biden era — an aggressive CFPB, regulators who discouraged most mergers and elongated times for deal approvals — were dialed back.
“It certainly helps if the president is Republican, and the odds tilt more favorably for the industry if it’s a Republican sweep” in Congress, said the CEO of a bank with nearly $100 billion in assets who declined to be identified speaking about regulators.
Still, some observers point out that Trump 2.0 might not be as friendly to the industry as his first time in office.
Trump’s vice presidential pick, Sen. JD Vance, of Ohio, has often criticized Wall Street banks, and Trump last month began pushing an idea to cap credit card interest rates at 10%, a move that if enacted would have seismic implications for the industry.
Bankers also say that Harris won’t necessarily cater to traditional Democratic Party ideas that have made life tougher for banks. Unless Democrats seize both chambers of Congress as well as the presidency, it may be difficult to get agency heads approved if they’re considered partisan picks, experts note.
“I would not write off the vice president as someone who’s automatically going to go more progressive,” said Lindsey Johnson, head of the Consumer Bankers Association, a trade group for big U.S. retail banks.
Electric vehicles have become a polarizing issue between Democrats and Republicans, especially in swing states such as Michigan that rely on the auto industry. There could be major changes in regulations and incentives for EVs if Trump regains power, a fact that’s placed the industry in a temporary limbo.
“Depending on the election in the U.S., we may have mandates; we may not,” Volkswagen Group of America CEO Pablo Di Si said Sept. 24 during an Automotive News conference. “Am I going to make any decisions on future investments right now? Obviously not. We’re waiting to see.”
Republicans, led by Trump, have largely condemned EVs, claiming they are being forced upon consumers and that they will ruin the U.S. automotive industry. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of the vehicles.
If elected, he’s also expected to renew a battle with California and other states who set their own vehicle emissions standards.
“In a Republican win … We see higher variance and more potential for change,” UBS analyst Joseph Spak said in a Sept. 18 investor note.
In contrast, Democrats, including Harris, have historically supported EVs and incentives such as those under the Biden administration’s signature Inflation Reduction Act.
Harris hasn’t been as vocal a supporter of EVs lately amid slower-than-expected consumer adoption of the vehicles and consumer pushback. She has said she does not support an EV mandate such as the Zero-Emission Vehicles Act of 2019, which she cosponsored during her time as a senator, that would have required automakers to sell only electrified vehicles by 2040. Still, auto industry executives and officials expect a Harris presidency would be largely a continuation, though not a copy, of the past four years of Biden’s EV policy.
They expect some potential leniency on federal fuel economy regulations but minimal changes to the billions of dollars in incentives under the IRA.
Both Harris and Trump have called for sweeping changes to the costly, complicated and entrenched U.S. health-care system of doctors, insurers, drug manufacturers and middlemen, which costs the nation more than $4 trillion a year.
Despite spending more on health care than any other wealthy country, the U.S. has the lowest life expectancy at birth, the highest rate of people with multiple chronic diseases and the highest maternal and infant death rates, according to the Commonwealth Fund, an independent research group.
Meanwhile, roughly half of American adults say it is difficult to afford health-care costs, which can drive some into debt or lead them to put off necessary care, according to a May poll conducted by health policy research organization KFF.
Both Harris and Trump have taken aim at the pharmaceutical industry and proposed efforts to lower prescription drug prices in the U.S., which are nearly three times higher than those seen in other countries.
But many of Trump’s efforts to lower costs have been temporary or not immediately effective, health policy experts said. Meanwhile, Harris, if elected, can build on existing efforts of the Biden administration to deliver savings to more patients, they said.
Harris specifically plans to expand certain provisions of the IRA, part of which aims to lower health-care costs for seniors enrolled in Medicare. Harris cast the tie-breaking Senate vote to pass the law in 2022.
Her campaign says she plans to extend two provisions to all Americans, not just seniors: a $2,000 annual cap on out-of-pocket drug spending and a $35 limit on monthly insulin costs.
Harris also intends to accelerate and expand a provision allowing Medicare to directly negotiate drug prices with manufacturers for the first time. Drugmakers fiercely oppose those price talks, with some challenging the effort’s constitutionality in court.
Trump hasn’t publicly indicated what he intends to do about IRA provisions.
Some of Trump’s prior efforts to lower drug prices “didn’t really come into fruition” during his presidency, according to Dr. Mariana Socal, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.
For example, he planned to use executive action to have Medicare pay no more than the lowest price that select other developed countries pay for drugs, a proposal that was blocked by court action and later rescinded.
Trump also led multiple efforts to repeal the Affordable Care Act, including its expansion of Medicaid to low-income adults. In a campaign video in April, Trump said he was not running on terminating the ACA and would rather make it “much, much better and far less money,” though he has provided no specific plans.
He reiterated his belief that the ACA was “lousy health care” during his Sept. 10 debate with Harris. But when asked he did not offer a replacement proposal, saying only that he has “concepts of a plan.”
Top of mind for media executives is mergers and the path, or lack thereof, to push them through.
The media industry’s state of turmoil — shrinking audiences for traditional pay TV, the slowdown in advertising, and the rise of streaming and challenges in making it profitable — means its companies are often mentioned in discussions of acquisitions and consolidation.
While a merger between Paramount Global and Skydance Media is set to move forward, with plans to close in the first half of 2025, many in media have said the Biden administration has broadly chilled deal-making.
“We just need an opportunity for deregulation, so companies can consolidate and do what we need to do even better,” Warner Bros. Discovery CEO David Zaslav said in July at Allen & Co.’s annual Sun Valley conference.
Media mogul John Malone recently told MoffettNathanson analysts that some deals are a nonstarter with this current Justice Department, including mergers between companies in the telecommunications and cable broadband space.
Still, it’s unclear how the regulatory environment could or would change depending on which party is in office. Disney was allowed to acquire Fox Corp.’s assets when Trump was in office, but his administration sued to block AT&T’s merger with Time Warner. Meanwhile, under Biden’s presidency, a federal judge blocked the sale of Simon & Schuster to Penguin Random House, but Amazon’s acquisition of MGM was approved.
“My sense is, regardless of the election outcome, we are likely to remain in a similar tighter regulatory environment when looking at media industry dealmaking,” said Marc DeBevoise, CEO and board director of Brightcove, a streaming technology company.
When major media, and even tech, assets change hands, it could also mean increased scrutiny on those in control and whether it creates bias on the platforms.
“Overall, the government and FCC have always been most concerned with having a diversity of voices,” said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investment. “But then [Elon Musk’s purchase of Twitter] happened, and it’s clearly showing you can skew a platform to not just what the business needs, but to maybe your personal approach and whims,” he said.
Since Musk acquired the social media platform in 2022, changing its name to X, he has implemented sweeping changes including cutting staff and giving “amnesty” to previously suspended accounts, including Trump’s, which had been suspended following the Jan. 6, 2021, Capitol insurrection. Musk has also faced widespread criticism from civil rights groups for the amplification of bigotry on the platform.
Musk has publicly endorsed Trump, and was recently on the campaign trail with the former president. “As you can see, I’m not just MAGA, I’m Dark MAGA,” Musk said at a recent event. The billionaire has raised funds for Republican causes, and Trump has suggested Musk could eventually play a role in his administration if the Republican candidate were to be reelected.
During his first term, Trump took a particularly hard stance against journalists, and pursued investigations into leaks from his administration to news organizations. Under Biden, the White House has been notably more amenable to journalists.
Also top of mind for media executives — and government officials — is TikTok.
Lawmakers have argued that TikTok’s Chinese ownership could be a national security risk.
Earlier this year, Biden signed legislation that gives Chinese parent ByteDance until January to find a new owner for the platform or face a U.S. ban. TikTok has said the bill, the Protecting Americans From Foreign Adversary Controlled Applications Act, which passed with bipartisan support, violates the First Amendment. The platform has sued the government to stop a potential ban.
While Trump was in office, he attempted to ban TikTok through an executive order, but the effort failed. However, he has more recently switched to supporting the platform, arguing that without it there’s less competition against Meta’s Facebook and other social media.
Both Trump and Harris have endorsed plans to end taxes on restaurant workers’ tips, although how they would do so is likely to differ.
The food service and restaurant industry is the nation’s second-largest private-sector employer, with 15.5 million jobs, according to the National Restaurant Association. Roughly 2.2 million of those employees are tipped servers and bartenders, who could end up with more money in their pockets if their tips are no longer taxed.
Trump’s campaign hasn’t given much detail on how his administration would eliminate taxes on tips, but tax experts have warned that it could turn into a loophole for high earners. Claims from the Trump campaign that the Republican candidate is pro-labor have clashed with his record of appointing leaders to the National Labor Relations Board who have rolled back worker protections.
Meanwhile, Harris has said she’d only exempt workers who make $75,000 or less from paying income tax on their tips, but the money would still be subject to taxes toward Social Security and Medicare, the Washington Post previously reported.
In keeping with the campaign’s more labor-friendly approach, Harris is also pledging to eliminate the tip credit: In 37 states, employers only have to pay tipped workers the minimum wage as long as that hourly wage and tips add up to the area’s pay floor. Since 1991, the federal pay floor for tipped wages has been stuck at $2.13.
“In the short term, if [restaurants] have to pay higher wages to their waiters, they’re going to have to raise menu prices, which is going to lower demand,” said Michael Lynn, a tipping expert and Cornell University professor.
Whichever candidate comes out ahead in November will have to grapple with the rapidly evolving artificial intelligence sector.
Generative AI is the biggest story in tech since the launch of OpenAI’s ChatGPT in late 2022. It presents a conundrum for regulators, because it allows consumers to easily create text and images from simple queries, creating privacy and safety concerns.
Harris has said she and Biden “reject the false choice that suggests we can either protect the public or advance innovation.” Last year, the White House issued an executive order that led to the formation of the Commerce Department’s U.S. AI Safety Institute, which is evaluating AI models from OpenAI and Anthropic.
Trump has committed to repealing the executive order.
A second Trump administration might also attempt to challenge a Securities and Exchange Commission rule that requires companies to disclose cybersecurity incidents. The White House said in January that more transparency “will incentivize corporate executives to invest in cybersecurity and cyber risk management.”
Trump’s running mate, Vance, co-sponsored a bill designed to end the rule. Andrew Garbarino, the House Republican who introduced an identical bill, has said the SEC rule increases cybersecurity risk and overlaps with existing law on incident reporting.
Also at stake in the election is the fate of dealmaking for tech investors and executives.
With Lina Khan helming the FTC, the top tech companies have been largely thwarted from making big acquisitions, though the Justice Department and European regulators have also created hurdles.
Tech transaction volume peaked at $1.5 trillion in 2021, then plummeted to $544 billion last year and $465 billion in 2024 as of September, according to Dealogic.
Many in the tech industry are critical of Khan and want her to be replaced should Harris win in November. Meanwhile, Vance, who worked in venture capital before entering politics, said as recently as February — before he was chosen as Trump’s running mate — that Khan was “doing a pretty good job.”
Khan, whom Biden nominated in 2021, has challenged Amazon and Meta on antitrust grounds and has said the FTC will investigate AI investments at Alphabet, Amazon and Microsoft.
Workers picket outside a Boeing Co. facility during a strike in Everett, Washington, US, on Monday, Sept. 16, 2024. Boeing Co. factory workers walked off the job for the first time in 16 years, halting manufacturing across the planemaker’s Seattle hub after members of its largest union voted overwhelmingly to reject a contract offer and go on strike.
M. Scott Brauer | Bloomberg | Getty Images
Boeing withdrew a contract offer for 33,000 machinists who have been on strike since mid-September, and said further negotiations “do not make sense at this point.”
The machinists walked off the job on Sept. 13 after overwhelmingly rejecting a tentative labor deal, halting production of most of Boeing’s aircraft, which are made in the Puget Sound area. Boeing later sweetened the offer, increasing pay raises, a ratification bonus and other improvements, which the union turned down, arguing that it was not negotiated.
Talks again broke down this week, meaning the strike will continue. The stoppage will cost Boeing more than $1 billion per month, S&P Global Ratings said Tuesday as it issued a negative outlook for the aerospace giant’s credit ratings.
Stephanie Pope, CEO of Boeing’s commercial aircraft unit, said the company improved contract pay during talks this week but said the union didn’t consider the proposals.
“Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business,” Pope said in a staff note.
The union, the International Association of Machinists and Aerospace Workers, said Tuesday that Boeing refused to improve wages, retirement plans and vacation or sick leave.
A Spirit commercial airliner prepares to land at San Diego International Airport in San Diego, California, U.S., January 18, 2024.
Mike Blake | Reuters
Spirit Airlines shares tumbled to a record low on Friday after a report that it’s exploring Chapter 11 bankruptcy protection. The carrier faces a deadline this month to renegotiate more than $1 billion in debt.
A bankruptcy filing would mark a dramatic turn for the carrier with its iconic yellow planes that caters to budget-conscious travelers.
Profitable and punctual before the pandemic, Spirit’s no-frills service became a punchline for late-night comedians and a thorn in the side of big network carriers, enticing customers with double-digit fares and fees for everything else from seat assignments to carry-on luggage.
But big airlines soon successfully copied much of that business model with their lowest bare-bones fares. And a federal judge at the start of the year blocked Spirit’s planned acquisition by JetBlue Airways on antitrust grounds, halting what both carriers argued was a key avenue to compete with larger rivals. The scuttled dealleft Spirit on its own to struggle with a Pratt & Whitney engine recall, shifting consumer travel patterns and higher costs.
After the JetBlue deal fell apart, Spirit said in January that it was looking at options to refinance its debt.
Spirit has $1.1 billion in loyalty-program backed debt that is due next September. It has until Oct. 21 to refinance or extend those secured notes.
The carrier has been losing money since 2020 and has reported disappointing results this year, including a nearly $193 million loss in the second quarter. The company has spent much of this year scrambling to cut costs, including furloughing pilots, slashing flights and deferring Airbus jetliner orders.
Spirit reduced its November and December capacity growth plans by about 17%, Barclays airline analyst Brandon Oglenski said earlier this week.
“As we’ve said, Spirit has been implementing a comprehensive plan to help us better compete, strengthen our balance sheet, and return to profitability,” CEO Ted Christie said in a note to staff on Friday. “We remain engaged in productive conversations with our bondholders, and we’re focused on securing the best outcome for the business as quickly as possible.”
A Spirit spokesman declined to comment on a the Wall Street Journal report that the carrier is considering a bankruptcy filing. Spirit adviser Perella Weinberg Partners declined to comment.
Spirit’s stock price dropped more than 24% Friday to a record low of $1.69. Shares are down nearly 90% so far this year.
Shares of Frontier Airlines, which originally planned to merge with fellow budget airline Spirit before JetBlue swooped in in 2022, surged 16% on Friday. Shares of other airlines also rallied.
Carlos Tavares, chief executive officer of Stellantis NV, speaks to the media at the Stellantis auto manufacturing plant in Sochaux, France, on Thursday, Oct. 3, 2024.
Nathan Laine | Bloomberg | Getty Images
DETROIT — Stellantis is suing the United Auto Workers, escalating a monthslong battle between the transatlantic automaker and American union, CNBC has learned.
In an internal message Friday to employees that was confirmed to be authentic, the company said it is suing the UAW as well as a local chapter in California that participated in a strike authorization request vote at Stellantis’ Los Angeles Parts Distribution Center.
“This lawsuit would hold both the International and the local union liable for the revenue loss and other damages resulting from lost production due to an unlawful strike,” Tobin Williams, Stellantis senior vice president of North America human resources, said in the message.
The lawsuit is intended to “prevent and/or remedy a breach of contract” by the UAW, according to a copy of the complaint that was filed Thursday in U.S. District Court in the Central District of California.
A supermajority of UAW members at Stellantis’ Los Angeles Parts Distribution Center voted to request strike authorization from the International Executive Board if the company and union can’t reconcile, the union said Friday morning.
The UAW did not immediately respond to a request for comment Friday afternoon regarding the lawsuit.
United Auto Workers (UAW) President Shawn Fain speaks to the attendees during a campaign rally for U.S. Vice President and Democratic Presidential candidate Kamala Harris and her running mate Tim Walz in Romulus, Michigan, U.S., August 7, 2024.
Rebecca Cook | Reuters
The dispute between the two sides centers on the union alleging Stellantis has not kept contractual obligations as part of a deal the two sides reached late last year. It comes after Stellantis has made several cuts to plant production, conducted worker layoffs and delayed potential investments outlined as part of the 2023 contract.
The automaker has argued, including in the Friday letter to employees, that there’s language in the contract that gives it leniency to change plans based on market conditions, plant performance and other factors.
UAW President Shawn Fain has routinely said the union will strike if needed, however Stellantis has argued that would be unlawful under the contract.
This is breaking news. Please check back for additional updates.
The average rate on the 30-year-fixed mortgage jumped 27 basis points Friday morning following the release of the government’s monthly employment report. The rate is now 6.53%, according to Mortgage News Daily.
That is 42 basis points higher than Sept. 17, the day before the Federal Reserve cut its benchmark rate by half a percentage point. Mortgage rates do not follow the Fed, but they loosely follow the yield on the 10-year U.S. Treasury.
For mortgage rates, it is all about what the expectation is next for the Fed. As such, there was a lot of anticipation leading up to this particular monthly report, since the last two pointed to weaker labor market conditions.
“Indeed, the Fed’s decision to cut by 0.50 vs 0.25 last month had much to do with the fear/expectation that reports like today’s would be in shorter supply going forward,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The only salvation here would be the notion that this is just one jobs report in a recent run that’s been mostly weaker and that perhaps the next one won’t be so damning for bonds.”
However, the report does shift the outlook slightly for rates going forward, since most had assumed the trajectory would be lower.
“MBA’s forecast is for longer-term rates, including mortgage rates, to remain within a relatively narrow range over the next year,” the Mortgage Bankers Association’s chief economist, Michael Fratantoni, wrote after the jobs report was released. “This news will push mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6% over the next 12 months.”
Today’s homebuyers are highly sensitive to rate moves, as house prices continue to rise from year-ago levels. There is also still very low inventory on the market, which has only served to keep prices higher. Rates are a full percentage point lower than they were a year ago, but the housing market has not seen much of a boost yet.
A view of a SpaceX rocket, as seen across the Rio Grande in Brownsville, Texas, U.S., July 22, 2024.
Veronica Cardenas | Reuters
SpaceX launched a rescue mission for the two stuck astronauts at the International Space Station on Saturday, sending up a downsized crew to bring them home but not until next year.
Since NASA rotates space station crews approximately every six months, this newly launched flight with two empty seats reserved for Wilmore and Williams won’t return until late February. Officials said there wasn’t a way to bring them back earlier on SpaceX without interrupting other scheduled missions.
By the time they return, the pair will have logged more than eight months in space. They expected to be gone just a week when they signed up for Boeing’s first astronaut flight that launched in June.
NASA ultimately decided that Boeing’s Starliner was too risky after a cascade of thruster troubles and helium leaks marred its trip to the orbiting complex. The space agency cut two astronauts from this SpaceX launch to make room on the return leg for Wilmore and Williams.
Williams has since been promoted to commander of the space station, which will soon be back to its normal population of seven. Once Hague and Gorbunov arrive this weekend, four astronauts living there since March can leave in their own SpaceX capsule. Their homecoming was delayed a month by Starliner’s turmoil.
Hague noted before the flight that change is the one constant in human spaceflight.
“There’s always something that is changing. Maybe this time it’s been a little more visible to the public,” he said.
Hague was thrust into the commander’s job for the rescue mission based on his experience and handling of a launch emergency six years ago. The Russian rocket failed shortly after liftoff, and the capsule carrying him and a cosmonaut catapulted off the top to safety.
Rookie NASA astronaut Zena Cardman and veteran space flier Stephanie Wilson were pulled from this flight after NASA opted to go with SpaceX to bring the stuck astronauts home. The space agency said both would be eligible to fly on future missions. Gorbunov remained under an exchange agreement between NASA and the Russian Space Agency.
“I don’t know exactly when my launch to space will be, but I know that I will get there,” Cardman said from NASA’s Kennedy Space Center, where she took part in the launch livestream.
Hague acknowledged the challenges of launching with half a crew and returning with two astronauts trained on another spacecraft.
“We’ve got a dynamic challenge ahead of us,” Hague said after arriving from Houston last weekend. “We know each other and we’re professionals and we step up and do what’s asked of us.”
SpaceX has long been the leader in NASA’s commercial crew program, established as the space shuttles were retiring more than a decade ago. SpaceX beat Boeing in delivering astronauts to the space station in 2020 and it’s now up to 10 crew flights for NASA.
Boeing has struggled with a variety of issues over the years, repeating a Starliner test flight with no one on board after the first one veered off course. The Starliner that left Wilmore and Williams in space landed without any issues in the New Mexico desert on Sept. 6, and has since returned to Kennedy Space Center. A week ago, Boeing’s defense and space chief was replaced.
Delayed by Hurricane Helene pounding Florida, the latest SpaceX liftoff marked the first for astronauts from Launch Complex 40 at Cape Canaveral Space Force Station. SpaceX took over the old Titan rocket pad nearly two decades ago and used it for satellite launches, while flying crews from Kennedy’s former Apollo and shuttle pad next door. The company wanted more flexibility as more Falcon rockets soared.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Friday’s key moments. 1. Wall Street was mixed Friday but still heading for solid weekly gains. The 10-year Treasury yield dipped, but the S & P 500 was little changed after the August reading of the Federal Reserve’s favorite inflation gauge came in tame. Headline and core PCE were getting closer to the Fed’s 2% inflation target. Next Friday, investors get the September jobs report, the latest look at the health of the second part of the central bank’s dual mandate: the labor market. The economic data between now and the Fed’s meeting on Nov. 6-7 will be key to how much further interest rates will be cut. 2. Shares of Best Buy rose more than 2% on Friday after JPMorgan added the stock to its analyst focus list. The analysts have had a buy-equivalent rating on the stock since February, which is around when we started buying. Looking back, that was a good call with shares up 30% year to date. JPMorgan sees value because investors are underappreciating the AI-powered personal computer cycle and the potential for TVs and appliances to inflect as housing improves. Other housing plays in our portfolio include Stanley Black & Decker and Home Depot . 3. Wells Fargo shares were slightly lower Friday, one day after popping 5% on an encouraging Bloomberg News report about the Fed-mandated asset cap, which was put in place at the bank in 2018. Bloomberg reported that Wells Fargo submitted a third-party review of its risk and control overhauls to the Fed for sign-off to remove the cap. Despite Thursday’s gains, Wells Fargo shares are having a tough month. The bank delivers quarterly earnings on Oct. 11. Our other financial name, Morgan Stanley , reports Oct. 16. (Jim Cramer’s Charitable Trust is long BBY, WFC. 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.
A Southwest Airlines plane takes off from Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, US, on Friday, July 12, 2024.
Elijah Nouvelage | Bloomberg | Getty Images
Southwest Airlines is planning to reduce service to and from Atlanta next year, cutting more than 300 pilot and flight attendant positions, according to a company memo seen by CNBC.
The changes come a day before Southwest’s investor day, when executives will map out the company’s plan to cut costs and grow revenue as pressure mounts from activist investor Elliott Investment Management.
Southwest told staff it isn’t closing its crew base in Atlanta. Instead, it will reduce staffing by as many as 200 flight attendants and as many as 140 pilots, for the April 2025 bid month.
The airline also isn’t laying the crews off, but they will likely have to bid to work from other cities.
Read more CNBC airline news
Southwest will reduce its Atlanta presence to 11 gates next year from 18, according to a separate memo from the pilots’ union.
It will service 21 cities from Atlanta starting next April, down from 37 in March, the carrier said.
“Although we try everything we can before making difficult decisions like this one, we simply cannot afford continued losses and must make this change to help restore our profitability,” Southwest said in its memo. “This decision in no way reflects our Employees’ performance, and we’re proud of the Hospitality and the efforts they have made and will continue to make with our Customers in ATL.”
The unions that represent Southwest’s pilot and flight attendants railed against the airline for the staffing and service cuts.
“Southwest Airlines management is failing Employees while impacting Customers. Management continues to make decisions that lack full transparency, sufficient communication with Union leadership, and most alarmingly, a lack of focus on what has made the airline great, the Employees,” said Bill Bernal, the flight attendants’ union president.
A Southwest spokesman confirmed the changes and said the carrier will “continue to optimize our network to meet customer demand, best utilize our fleet, and maximize revenue opportunities.”
Travelers check in at a Southwest counter at Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, US, on Tuesday, July 23, 2024.
Elijah Nouvelage | Bloomberg | Getty Images
The airline had already pulled out of certain airports, some of which it experimented with during the pandemic to focus on more profitable service.
Southwest is not only facing changing booking patterns and oversupplied parts of the U.S. market but aircraft delays from Boeing, whose yet-to-be-certified 737 Max 7 airplanes are years behind schedule
The airline’s COO, Andrew Watterson, told staff last week that it will have to make “difficult decisions” to boost profits.
The reduction in Atlanta, the world’s busiest airport and Delta Air Lines home hub, is the latest development for the airline. In July, Southwest announced it plans to get rid of open seating and offer extra legroom on its airplanes, the biggest changes in its more than half-century of flying.
Also on Wednesday, Southwest released an expanded schedule, selling tickets through June 4. In addition to the planned cuts in Atlanta, the carrier said it will boost service to and from Nashville, Tennessee. It will also start offering overnight flights from Hawaii, beginning April 8. Those include service from Honolulu to Las Vegas and Phoenix; Kona, Hawaii, to Las Vegas; and Maui, Hawaii, to Las Vegas and Phoenix.
The U.S. Justice Department on Tuesday sued Visa, the world’s biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing “exclusionary” agreements on partners and smothering upstart firms.
Visa’s moves over the years have resulted in American consumers and merchants paying billions of dollars in additional fees, according to the DOJ, which filed a civil antitrust suit in New York for “monopolization” and other unlawful conduct.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a DOJ release.
“Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service,” Garland said. “As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”
Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion, as consumers tapped credit and debit cards for store purchases and e-commerce instead of paper money. They are essentially toll collectors, shuffling payments between banks operating for the merchants and for cardholders.
Visa called the DOJ suit “meritless.”
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Visa general counsel Julie Rottenberg.
“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”
More than 60% of debit transactions in the U.S. run over Visa rails, helping it charge more than $7 billion annually in processing fees, according to the DOJ complaint.
The payment networks’ decades-old dominance has increasingly attracted attention from regulators and retailers.
In 2020, the DOJ filed an antitrust suit to block Visa from acquiring fintech company Plaid. The companies initially said they would fight the action, but soon abandoned the $5.3 billion takeover.
In March, Visa and Mastercard agreed to limit their fees and let merchants charge customers for using credit cards, a deal retailers said was worth $30 billion in savings over a half decade. A federal judge later rejected the settlement, saying the networks could afford to pay for a “substantially greater” deal.
In its complaint, the DOJ said Visa threatens merchants and their banks with punitive rates if they route a “meaningful share” of debit transactions to competitors, helping maintain Visa’s network moat. The contracts help insulate three-quarters of Visa’s debit volume from fair competition, the DOJ said.
“Visa wields its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks,” the DOJ said in its release. “These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system.”
Furthermore, when faced with threats, Visa “engaged in a deliberate and reinforcing course of conduct to cut off competition and prevent rivals from gaining the scale, share, and data necessary to compete,” the DOJ said.
The moves also tamped down innovation, according to the DOJ. Visa pays competitors hundreds of millions of dollars annually “to blunt the risk they develop innovative new technologies that could advance the industry but would otherwise threaten Visa’s monopoly profits,” according to the complaint.
Visa has agreements with tech players including Apple, PayPal and Square, turning them from potential rivals to partners in a way that hurts the public, the DOJ said.
For instance, Visa chose to sign an agreement with a predecessor to the Cash App product to ensure that the company, later rebranded Block, did not create a bigger threat to Visa’s debit rails.
A Visa manager was quoted as saying “we’ve got Square on a short leash and our deal structure was meant to protect against disintermediation,” according to the complaint.
Visa has an agreement with Apple in which the tech giant says it will not directly compete with the payment network “such as creating payment functionality that relies primarily on non-Visa payment processes,” the complaint alleged.
The DOJ asked for the courts to prevent Visa from a range of anticompetitive practices, including fee structures or service bundles that discourage new entrants.
The move comes in the waning months of President Joe Biden‘s administration, in which regulators including the Federal Trade Commission and the Consumer Financial Protection Bureau have sued middlemen for drug prices and pushed back against so-called junk fees.
In February, credit card lender Capital One announced its acquisition of Discover Financial, a $35.3 billion deal predicated in part on Capital One’s ability to bolster Discover’s also-ran payments network, a distant No. 4 behind Visa, Mastercard and American Express.
Capital One said once the deal is closed, it will switch all its debit card volume and a growing share of credit card volume to Discover over time, making it a more viable competitor to Visa and Mastercard.
The Mickey Mouse and Minnie Mouse float passes by during the daily Festival of Fantasy Parade at the Magic Kingdom Park at Walt Disney World on May 31, 2024, in Orlando, Florida.
Gary Hershorn | Corbis News | Getty Images
The Walt Disney Company will no longer use Slack for in-house company communication months after a hack that involved more than a terabyte of company data being leaked to the public.
The company had already begun to transition to a new internal “streamlined enterprise-wide collaboration tools,” but officially notified employees and cast members Thursday that most of its business units would move away from Slack usage by the end Disney’s next fiscal quarter, according to a memo from Disney Chief Financial Officer Hugh Johnston that was obtained by CNBC.
Disney told investors in August that the summer data hack, which included a range of financial information, computer codes and details about unreleased projects, was not expected to have a material impact on the company’s operations or financial performance.
Representatives from Disney and Salesforce, the owner of Slack, did not immediately respond to CNBC’s request for comment.
“Companies also have to take the right measure to prevent phishing attacks and to lockdown their employees’ social engineering,” he added. “So, we can do our part, but our customers also have to do their part.”
Benioff noted that Disney continues to use Salesforce products in other aspects of its business including its Disney store, Disney guides, sales and service operations and its call centers.
David Steinbach of Hines discusses the U.S. Federal Reserve’s September interest rate cut and what this means for investor interest in the real estate market.
U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., July 31, 2024.
Kevin Mohatt | Reuters
The Federal Reserve projected lowering interest rates by another half point before the end of 2024, and the central bank has two more policy meetings to do so.
The so-called “dot plot” indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 4.4% by the end of this year, equivalent to a target range of 4.25% to 4.5%. The Fed’s two remaining meetings for the year are scheduled on Nov. 6-7 and Dec.17-18.
Through 2025, the central bank forecasts interest rates landing at 3.4%, indicating another full percentage point in cuts. Through 2026, rates are expected to fall to 2.9% with another half-point reduction.
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.
The Fed officials hiked their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June.
Meanwhile, they lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets : It has been a choppy session for stocks Tuesday, with the S & P 500 trying to go for two positive sessions in a row after falling four straight last week. The big tech stocks were having a solid day, rallying on Oracle’s upbeat comments about artificial intelligence demand. All of our Super Six megacaps were higher, even Club stock Apple was pushing to stay in the green after getting mixed reviews on Monday’s iPhone 16 event. We think that focusing on what was said on the stage about the AI-enabled device and not the runway being created is shortsighted. Banks : The financial sector was getting hammered Tuesday. It’s hard to get a broader market rally going when the banks act this poorly. A disappointing update from JPMorgan at Barclays Global Financial Services Conference was acting as a drag on the whole group. At the event, JPMorgan President and COO Daniel Pinto shared a discouraging view on its current quarter (third quarter) capital markets business. But what dropped the hammer was when Pinto was asked about 2025. He said he thinks the Street is modeling net interest income (NII) and expense estimates that are “too optimistic.” In other words, Pinto thinks JPMorgan will need to spend a little more and will earn a little less versus what analysts are currently forecasting. That means every analyst needs to lower its earnings estimate for next year. Stock prices tend to follow earnings, which was why Dow stock JPMorgan shares dropped nearly 5.5% on Tuesday. JPMorgan’s comments are reverberating across the sector, with many believing that if estimates for the gold standard are too high, then everyone else’s are also too high. It’s too early to know if Pinto is practicing UPOD –under promise, over deliver, in typical CEO Jamie Dimon fashion. But sometimes, it’s better for stocks when you get the bad news out of the way, which alternatively could be the case. It’s worth mentioning that Club name Wells Fargo backed its 2024 guide at the conference Tuesday while fellow Club holding Morgan Stanley said M & A and IPO revenue will be below trendline through the rest of the year before ramping up in 2025. Both stocks were lower on the session. New boss : Starbucks CEO Brian Niccol has officially been on the job for only two days, but he already published an open letter discussing the four key areas he’s focused on in his first 100 days. They are: (1) Empowering baristas to take care of customers; (2) Get the morning right, every morning; (3) Reestablishing Starbucks as the community coffeehouse; and (4) Telling our [Starbucks’] story. We think it’s clear that Niccol is hitting the ground running. “This letter was strong. Niccol recognizes complexity is the enemy and the baristas have not been empowered to make changes. That will change going forward,” Jim Cramer said Tuesday. The Club owns shares of Starbucks. In the letter, Niccol said the U.S. is where he needs to focus first with planned investments in technology to enhance the partner and customer exposure, improve the supply chain, and enhance the app and mobile ordering platform. Outside the United States, Niccol wrote that in China Starbucks needs to “understand the potential path to capture growth” and capitalize on its strengths. That’s an interesting line because you could argue that Starbucks needs to pullback its aggressive expansion plans in the world’s second-largest economy. Elsewhere, around the world, Niccol said he sees “enormous potential for growth” in international markets, especially in the Middle East where he said Starbucks will “work to dispel misconceptions about our brand.” Up next : After Tuesday’s closing bell, GameStop , Dave & Buster’s , and Petco report earnings. On Wednesday, it’s the August consumer price index. Expectations call for a headline CPI increase of 2.5% year over year and a 3.2% year-over-year rise in the core rate, which excludes volatile food and energy prices. The report could provide some clarity around the debate on whether the Fed should cut 25 or 50 basis points at its Sept. 17-18 meeting. Thursday brings the August producer price index, though it could be said that the Fed is more focused on the softening labor market right now. The Fed’s dual mandate calls for fostering maximum employment and price stability. (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.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. Stocks fell Tuesday despite an early pop in tech stocks, led by Oracle ‘s 11% gain. The database software maker posted a fiscal 2025 first-quarter beat on the top and bottom lines Monday after the bell. The company is aggressively building out data centers to meet artificial intelligence demands from its customers. The Investing Club portfolio has lots of exposure to the AI buildout through its investments in Eaton , Dover , Broadcom and Nvidia , among others. Meanwhile, shares of Apple were down 1% following the company’s iPhone 16 event Monday. While the announcements on its new AI capabilities weren’t needle movers for the stock, they should be a long-term driver of growth. Bank stocks were also down Tuesday, with shares of JPMorgan falling 6.5% after the company offered a cautious outlook at a banking conference. Club stock Wells Fargo was being painted with a broad brush, falling 2%. At the conference, Wells made no change in its forecasts. Jim reiterated his favorable view on Wells Fargo, citing its 3% annual dividend yield and “incredibly cheap” valuation. Also on watch are proposals from the Fed’s vice chair for supervision that would lower the extra capital cushion required of big banks. Costco caught a downgrade Tuesday from Redburn Atlantic. The analysts went to a neutral rating from buy — calling the stock’s valuation too expensive. The analysts increased Costco’s price target to $890 per share from $860. But that’s only right at the level Costco was trading Tuesday. Analysts said the current risk/reward profile on the stock is “skewing less favorably given the even higher than normal expectations.” Jim said, however, “Costco has been expensive and always will be expensive,” suggesting it’s worth it. Stocks covered in Tuesday’s rapid fire at the end of the video were Southwest , Oracle , Johnson Controls , Boot Barn , and Goldman Sachs . (Jim Cramer’s Charitable Trust is long ETN, DOV, AVGO, NVDA, WFC, COST. 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.
A pilot performs a walkaround before a United Airlines flight
Leslie Josephs/CNBC
U.S. passenger airlines have added nearly 194,000 jobs since 2021 as companies went on a hiring spree after spending months in a pandemic slump, according to the U.S. Department of Transportation. Now the industry is cooling its hiring.
Airlines are close to their staffing needs but the slowdown is also coming in part because they’re facing a slew of challenges.
Annual pay for a three-year first officer on midsized equipment at U.S. airlines averaged $170,586 in March, up from $135,896 in 2019, according to Kit Darby, an aviation consultant who specializes in pilot pay.
Since 2019, costs at U.S. carriers have climbed by double-digit percentages. Stripping out fuel and net interest expenses, they’ll be up about 20% at American Airlines this year and around 28% higher at both United Airlines and Delta Air Lines from 2019, according to Raymond James airline analyst Savanthi Syth.
It is more pronounced at low-cost airlines. Southwest Airlines‘ costs will likely be up 32%, JetBlue Airways‘ up nearly 35% and Spirit Airlines will see a rise of almost 39% over the same period, estimated Syth, whose data is adjusted for flight length.
Friday’s U.S. jobs report showed air transportation employment in August roughly in line with July’s.
But there have been pullbacks. In the most severe case, Spirit Airlines furloughed 186 pilots this month, their union said Sunday, as the carrier’s losses have grown in the wake of a failed acquisition by JetBlue Airways, a Pratt & Whitneyengine recall and an oversupplied U.S. market. Last year, even before the merger fell apart, it offered staff buyouts.
Other airlines are easing hiring or finding other ways to cut costs.
Frontier Airlines is still hiring pilots but said it will offer voluntary leaves of absence in September and October, when demand generally dips after the summer holidays but before Thanksgiving and winter breaks. A spokeswoman for the carrier said it offers those leaves “periodically” for “when our staffing levels exceed our planned flight schedules.”
Southwest Airlines expects to end the year with 2,000 fewer employees compared with 2023 and earlier this year said it would halt hiring classes for work groups including pilots and flight attendants. CFO Tammy Romo said on an earnings call in July that the company’s headcount would likely be down again in 2025 as attrition levels exceed the Dallas-based carrier’s “controlled hiring levels.”
United Airlines, which paused pilot hiring in May and June, citing late-arriving planes from Boeing, said it plans to add 10,000 people this year, down from 15,000 in each 2022 and 2023. It plans to hire 1,600 pilots, down from more than 2,300 last year.
It’s a departure from the previous years when airlines couldn’t hire employees fast enough. U.S. airlines are usually adding pilots constantly since they are required to retire at age 65 by federal law.
Airlines shed tens of thousands of employees in 2020 to try to stem record losses. Packages of more than $50 billion in taxpayer aid that were passed to get the industry through its worst-ever crisis prohibited layoffs, but many employees took carriers up on their repeated offers of buyouts and voluntary leaves.
Then, travel demand snapped back faster than expected, climbing in earnest in 2022 and leaving airlines without experienced employees like customer service agents. It also led to the worst pilot shortage in recent memory.
In response, companies — especially regional carriers — offered big bonuses to attract pilots.
But times have changed. Even air freight giants were competing for pilots in recent years but demand has waned as FedEx and UPS look to cut costs.
American Airlines CEO Robert Isom said in an investor presentation in March that the carrier added about 2,300 pilots last year and that it expects to hire about 1,300 this year.
“We will be hiring for the foreseeable future at levels like that,” he said at the time.
Despite the lower targets, students continue to fill classrooms and cockpits to train and build up hours to become pilots, said Ken Byrnes, chairman of the flight department at Embry-Riddle Aeronautical University.
“Demand for travel is still there,” he said. “I don’t see a long-term slowdown.”
