The Hamburg flag flies in front of Hapag-Lloyd containers on the Hapag-Lloyd containership “Berlin Express” at Burchardkai in the Port of Hamburg.
Marcus Brandt | Picture Alliance | Getty Images
Two shipping giants, Hapag-Lloyd and Maersk, are pausing their travel through the Red Sea and the Bab el-Mandeb Strait in the Middle East following a series of attacks on their vessels by Iranian-backed Houthi militants from Yemen.
Maersk, the world’s second largest container shipping company, moves 14.8% of the world’s trade. It said it would divert ships away from the Red Sea. The Houthi group backs Hamas, the Palestinian militant group, and has said it is targeting vessels headed for Israel.
In an email to CNBC, a Maersk spokesman said the Danish company is deeply concerned about the highly escalated security situation in the southern Red Sea and Gulf of Aden. The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers, the spokesman added, saying that employees’ safety is the company’s top priority.
“Following the near-miss incident involving Maersk Gibraltar yesterday and yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice,” the representative said.
Maersk said it would release more details about potential next steps in the coming days.
Hapag-Lloyd, which controls about 7% of the global container ship fleet, told CNBC in an email, that it will “pause all container ship traffic through the Red Sea until Monday. Then we will decide for the period thereafter.”
The Bab el-Mandeb Strait is between the Horn of Africa and the Middle East. It connects the Red Sea to the Gulf of Aden and the Arabian Sea, which feed into the Indian Ocean. This waterway is used by container ships and exports of petroleum and natural gas from the Persian Gulf.
Approximately 12% of the world’s trade, which includes 30% of all global containers, move through the Suez Canal. That then feeds through the Red Sea and Bab el-Mandeb. The significance of the Suez Canal was thrust into the spotlight in March 2021, when container ship the Ever Given was stuck for six days.
A boat of the Lower Saxony water police sails along in front of the container ship “Morten Maersk” of the Danish shipping company Maersk Line, which is moored at a quay wall at the container terminal JadeWeserPort.
Picture Alliance | Getty Images
Israel based ocean carrier ZIM has re-routed vessels to avoid the Arabian and Red Seas to safeguard their vessels and crew amid the threats by the Houthis. The vessels are traveling around the Cape of Good Hope in South Africa. This alternative route to the Indian Ocean adds 10 to 14 days of travel time to a vessel’s journey. The long way around Africa also incurs higher fuel costs because of the longer travel distance.
Since Houthi militants threatened Saturday to attack any vessels that have ownership ties to Israel, or does business in the country, there have been as many as seven incidents. Overall, 13 vessels have been attacked since the Israel-Hamas war began in early October.
In response to Friday’s attacks, in which three vessels were attacked, the World Shipping Council said it is deeply alarmed and concerned about the escalating crisis, and that it’s calling for decisive action to protect seafarers.
“The right of freedom of navigation stands as a fundamental right under international law, and must be safeguarded,” the council said. “The time for resolute international engagement is now.”
The U.S. government has been in discussions with countries of the 39-member Combined Maritime Forces to form a maritime task force to “ensure safe passage” of ships in the Red Sea.
U.S. Central Command, which oversees America’s military interests in the Middle East, has told CNBC discussions are ongoing.
The Club on Friday is changing the rating and price target on one of our favorite semiconductor stocks, while updating the price targets on four other names in the portfolio to reflect recent earnings, new internal developments and broader economic forces. AVGO YTD mountain Broadcom year-to-date performance. We’re increasing our price target on Broadcom to $1,200 a share, up from $1,000 to reflect the strong quarter it reported last week. At the same time, we are bullish on the integration of recently acquired VMware , and appreciative of the semiconductor firm’s capital returns through a growing dividend and aggressive share-repurchase program. The stock has been one of the best performers in the S & P 500 this week, advancing roughly 20% compared to the index’s 2.5% gain. Given the run it’s had in such a short period of time, we are downgrading our rating to 2, meaning we would be buyers on a pullback. In addition, Broadcom’s surge this week has us feeling a little greedy on this big position. It’s not every week you see a company of its size go on a run like this — with the company’s market cap swelling to roughly $460 billion. We plan to trim a small number of shares out of discipline to lock in our huge gains when we are not restricted from trading. COST YTD mountain Costco Wholesale year-to-date performance. We are increasing our price target on Costco Wholesale to $680 a share, up from $630. The decision reflects the stronger-than-expected quarter the retailer reported Thursday, with earnings of $3.58 per share beating estimates of $3.42. We think more gains are ahead for Costco on appreciation of its $15-a-share special cash dividend and anticipation of a membership-fee increase that could come sometime in late 2024. HON YTD mountain Honeywell year-to-date performance. We are nudging up our price target on Honeywell to $230 a share, from $225. The market didn’t care at first for Honeywell’s $4.95 billion acquisition of Carrier ‘s security business, but we loved the deal for its high margin, recurring revenue characteristics at an attractive price of 13 times earnings. We also thought it was a smart play on the reindustrialization boom underway in the U.S. Honeywell was a laggard in 2023, with shares down roughly 5% year-to-date, but we think the setup for the next few years will be better as its aerospace business continues to thrive and the struggling parts of its business — like warehouse automation and building products — trough and finally turn a corner. PANW YTD mountain Palo Alto Networks year-to-date performance. We are increasing our price target on Palo Alto Networks to $320 a share, up from $300. The move comes after raising our price target earlier in the month to $300, from $280. That decision proved too conservative, as the market continued to favor cybersecurity leaders. We see no reason to change our bullish views on Palo Alto Networks because cybersecurity is one of the most important areas of investment in the IT space. It’s become a secular theme due to the rising threat from bad cyber actors. WFC YTD mountain Wells Fargo year-to-date performance. We’re raising our price target on Wells Fargo to $54 a share, up from $50. Wells Fargo made a new 52-week high Friday, with bank stocks significantly benefiting from the Federal Reserve’s dovish pivot Wednesday. What the market is betting on is that lower interest rates rejuvenate loan activity and ease pressure on commercial real estate, of which Wells Fargo has notable exposure. But even after the move, the stock still looks cheap at around 10 times earnings, along with a dividend yield of 2.8%. (Jim Cramer’s Charitable Trust is long AVGO, COST, HON, PANW, 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 Broadcom chip in an Apple iPhone.
Brent Lewin | Bloomberg | Getty Images
The Club on Friday is changing the rating and price target on one of our favorite semiconductor stocks, while updating the price targets on four other names in the portfolio to reflect recent earnings, new internal developments and broader economic forces.
New York Federal Reserve President John Williams said Friday rate cuts are not a topic of discussion at the moment for the central bank.
“We aren’t really talking about rate cuts right now,” he said on CNBC’s “Squawk Box.” “We’re very focused on the question in front of us, which as chair Powell said… is, have we gotten monetary policy to sufficiently restrictive stance in order to ensure the inflation comes back down to 2%? That’s the question in front of us.”
The Dow Jones Industrial average shot to a record and the 10-year Treasury yield fell below 4.3% this week as traders took the Fed’s Wednesday forecast for three rate cuts next year as a sign the central bank was changing its tough stance and would start cutting rates sooner than expected next year.
Traders are betting that the central bank would cut rates deeper than three times, according to fed funds futures. Futures markets also indicate that the Fed could start cutting rates as soon as March.
Williams is reining in some of that enthusiasm a bit, it appears.
“I just think it’s just premature to be even thinking about that,” Williams said, when asked about futures pricing for a rate cut in March.
Williams said the Fed will remain data dependent, and if the trend of easing inflation were to reverse, it’s ready to tighten policy again.
“It is looking like we are at or near that in terms of sufficiently restrictive, but things can change,” Williams said. “One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse.”
The Fed projected that its favorite inflation gauge — the core personal consumption expenditures price index — will fall to 2.4% in 2024, and further decline to 2.2% by 2025 and finally reach its 2% target in 2026. The gauge rose 3.5% in October on a year-over-year basis.
“We’re definitely seeing slowing in inflation. Monetary policy is working as intended,” Williams said. “We just got to make sure that … inflation is coming back to 2% on a sustained basis.”
Southwest Airlines Executive Vice President Bob Jordan speaks as he is interviewed by CNBC outside the New York Stock Exchange (NYSE) in New York City, U.S., December 9, 2021.
Brendan McDermid | Reuters
With the peak Christmas travel season just days away, Southwest Airlines‘ CEO vowed that the carrier will not have a repeat of last year’s meltdown that stranded thousands of customers and cost the airline more than $1 billion.
“It will never happen again,” Bob Jordan said at an event Thursday at the Wings Club in New York.
Last year, Southwest canceled close to 17,000 flights over the crucial Christmas and New Year’s holiday period as it failed to recover from severe weather that gripped most of the country. Rival carriers were also affected but recovered more quickly.
Southwest struggled with staffing issues as storms left flight attendants and pilots out of position for their next flights, thousands of passenger bags piled up, and planes were behind on de-icing.
The carrier has been stocking up in de-icing and other winter-weather equipment to prepare for the season throughout the year. It has also upgraded technology.
“Winter will not be perfect,” Jordan said. But he added that the airline is prepared for the season, pointing to a quick recovery after heavy snowfall in October at its key airport in Denver.
Ford workers produce the electric F-150 Lightning pickup at the automaker’s Ford Rouge Electric Vehicle Center on Dec. 13, 2022.
Michael Wayland | CNBC
DETROIT — Ford Motor will cut planned production of its all-electric F-150 Lightning pickup roughly in half next year, marking a major reversal after the automaker significantly increased plant capacity for the electric vehicle in 2023.
The new production plans call for average volume of around 1,600 F-150 Lightnings a week at Ford’s Rouge Electric Vehicle Center in Dearborn, Michigan, starting in January, according to a source familiar with the decision. The automaker most recently planned to produce roughly 3,200 of the vehicles on average per week.
“We’ll continue to match production with customer demand,” a Ford spokeswoman said Monday.
Ford executives have recently said the automaker will match production to demand, as the company cancels or postpones $12 billion in upcoming EV investments.
The production cuts for the F-150 Lightning were first detailed in a planning memo to suppliers obtained by Automotive News. The memo cited “changing market demand” for the cuts, according to the publication.
EV demand has been slower than many expected, as prices and interest rates remain high. Automakers are working to cut costs of producing all-electric vehicles, while rethinking production and product plans for the years ahead.
Ford spent six weeks earlier this year to increase capacity of the F-150 Lightning at the Michigan plant, which was expected to be capable of producing 150,000 of the all-electric trucks, three times its initial planned output.
Sales of the F-150 Lightning have steadily increased in 2023, notching a monthly record of roughly 4,400 sold in November. The company has only sold 20,365 of the trucks this year through November, up 54% from a year earlier.
PARIS, ILE DE FRANCE, FRANCE – 2017/09/14: The Olympic Rings being placed in front of the Eiffel Tower in celebration of the French capital won the hosting right for the 2024 summer Olympic Games. (Photo by Nicolas Briquet/SOPA Images/LightRocket via Getty Images)
Sopa Images | Lightrocket | Getty Images
Training of elite athletes dates as far back as the Ancient Olympic Games, when so-called gymnastes advised runners, chariot racers, wrestlers and boxers on technique, nutrition and strength conditioning.
Fast forward to today’s Olympians prepping for next summer’s Paris Games. Their trainers and coaches adhere to the same Olympic motto — faster, higher, stronger — yet have the added benefit of millennia of ever-advancing technology, which now has been super-charged with artificial intelligence.
Trainers and coaches at U.S. Soccer, one of the 47 National Governing Bodies overseen by the United States Olympic and Paralympic Committee, are using AI technology to instantaneously identify and track player movements and ball positions. A suite of software tools allows them to study a variety of human performance metrics, such as body position, velocity, speed and timing in real time on the field of play.
“Utilizing advances in AI and computer vision, we’ve been able to track and study personalized analytics from a variety of sports to determine the strengths and deficiencies in an athlete’s movement and help them make data-informed training and competition plans that can help them improve their performance, as well as their own health,” said Mike Levine, director of performance innovation business operations at the USOPC, based in Colorado Springs, also the home of a high-tech Olympic training center.
While the USOPC and NGBs employ in-house experts in bleeding-edge technology development, data analytics and sports sciences and medicine, big tech companies lend their AI know-how as well. USA Surfing staff, for instance, has teamed up with Microsoft engineers to figure out how best to ride waves. They take digital videos of surfers in action and use AI to analyze data on body movement, surfboards and waves to determine what they did well and what could be improved.
“This work saves coaches and staff hundreds of hours of video tagging, facilitates the accumulation of more and higher-quality data and affords analysts and coaches significantly more time to analyze the data and implement learnings into real-life training and performance,” Levine said.
Creating 3-D models of athletes’ bodies with Intel technology
These are manifestations of computer vision systems, which use AI technology to replicate the capabilities of the human brain responsible for object recognition and classification. A commercial application, called 3D Athlete Tracking (3DAT), was developed by Intel‘s Olympic Technology Group a few years ago and is now being utilized by trainers in numerous sports. 3DAT incorporates sensor-less motion capture and digital video to create three-dimensional models of an athlete’s entire body, from head to toes, which trainers use to tweak and improve performance.
“We’re able to see ways athletes move and detect things not possible with just the human eye,” said Jonathan Lee, who as senior director of sports technology at Intel helped develop 3DAT and is now chief product officer at London-based sports tech company ai.io, which recently acquired the system from Intel.
3DAT has been adopted by Exos, a coaching company in Scottsdale, Arizona, that trains college football players for the National Football League’s annual scouting combine, an evaluation ahead of the league’s yearly draft. “Exos uses 3DAT to analyze the 40-yard dash and help players get faster,” Lee said. Digital video cameras, mounted on timing gates incrementally positioned along the course, capture data on how a runner comes off the line, his acceleration and velocity, and his body’s angle of attack.
The data instantaneously constructs a personalized skeletal model of each player for immediate review. Before a player’s next sprint, a trainer might say, “You need to be more upright or lean forward, and give him tips on how to achieve that,” Lee said.
The NFL-Amazon digital player and concussion-risk tracking
The NFL itself is harnessing AI and computer vision to enhance its Digital Athlete program, developed in partnership with Amazon Web Services beginning in 2019. The Digital Athlete provides a complete view of each NFL players’ experience by analyzing data from his training and game activity, which is captured by sensors and tags in equipment and hours of video from cameras in stadiums. Computer vision and machine learning systems track speed, collisions, blocks and tackles. This data is shared with clubs and allows teams to precisely understand what players need to stay healthy, recover quickly and perform at their best.
“AI and machine learning are the backbone of the program,” said Jennifer Langton, NFL senior vice president of health and safety innovation. “We’re able to analyze a substantial amount of data and automatically generate insights into which players might benefit from altering either training or recovery routines, a process that used to be so manual and cumbersome.”
The AI was taught to identify trauma by repeated exposure to and digestion of digital video images of helmets from all angles, Langton said, and then to cross-reference visual information from statistical data to determine what player was wearing what helmet. “With enough practice, the AI becomes exponentially faster and more reliable than humans at accurately identifying and classifying head collisions throughout a game and the season,” she said, allowing trainers and coaches to see which players are due to reduce their workloads and which have room for a more intensive workout.
The Digital Athlete program was rolled out as a pilot with four NFL teams last year and this season is available to all 32 franchises via a dedicated online portal. “The portal provides teams with a daily training load and risk-mitigation information, as well as league-wide injury trends and benchmarks they hadn’t had before,” Langton said, adding that the NFL will assess the data at the end of the season to evaluate tangible results of the program.
‘The next big thing’: Twin hearts of elite athletes
Another AI-enabled technology that’s making its way into elite athlete training is the digital twin, a virtual replica of a physical object, process or system that can be used to simulate, predict and improve real-world scenarios. Tata Consultancy Services, headquartered in Mumbai, recently announced a partnership with French tech developer Dassault Systèmes to produce a digital twin heart, mimicking the flesh-and-blood one of Des Linden, a two-time Olympic marathoner and winner of the 2018 Boston Marathon (sponsored by TCS, along with the races in New York, Chicago and London).
Des Linden makes her way to the finish line during the 127th Boston Marathon in Boston, Massachusetts on April 17, 2023.
Joseph Prezioso | Afp | Getty Images
Linden’s avatar organ — created using AI-analyzed data from CT scans and MRIs — can simulate her heart rate, blood flow and oxygen levels, providing instant feedback that can be interpreted to adjust her training and competition. “We want to understand what is a safe zone for Des’ trainer to put her through,” said Dr. Srinivasan Jayaraman, a principal scientist at TCS. Instead of having her run on a treadmill or outdoors, “We can run simulations using her digital twin heart to vary different cardiovascular parameters and fine-tune her training.”
Linden is no stranger to sports tech, from online message boards back in her high school days for remotely comparing times with other runners to today’s state-of-the-art running shoes that world-class marathoners have broken records wearing. “The digital twin heart is going to be the next big thing,” she said. “Being able to map out [my training] and see the gains and drawbacks ahead of time will allow me to work smarter, not harder.”
That’s what Linden, aided by her digital twin heart, will be doing to train for the 2024 Olympic marathon trials in February. Qualifying for her third Team USA slot “will be a tough task,” said the 40-year-old runner, “but I’ll take a crack at it.”
AI and sports training diets
Although there’s no news yet of a digital twin of the human digestive system, AI is involved in planning Olympic athletes’ diet and nutrition. Alicia Glass, a senior sports dietician for the USOPC, designs meal plans for about 300 athletes with USA Track and Field and USA Swimming, a labor-intensive, hand-written task that’s been simplified with an AI-powered app called Notemeal. “They collected data from 37 dieticians from professional sports teams and organizations and used those data sets to generate individualized meal plans,” she said. “The value-add is that it’s a network of sports dieticians working with the best of the best athletes in the world.”
Glass still relies on her professional skills to understand the events each athlete competes in, their training regimens and goals, as well as their genetics, lean body mass and metabolic rate. Even athletes who train and compete in the same events require totally individualized meal plans, she said. “Notemeal makes that process a lot easier,” she said.
The athletes access Notemeal with a smartphone app. “I hit a toggle on my phone, and they get a text saying a meal has been created for you,” Glass said, adding that the app also applies AI to design personalized shopping lists and recipes.
Glass won’t claim that high-tech dietary planning will win medals next summer in Paris, but “many athletes would admit it helps improve their lifestyle because they’re more aware” of their personal fueling needs.
Linden says there is no turning back from the increasing role of technology in the lives of elite athletes. “Let’s just personalize the heck out of training and make sure we’re getting the maximum gains without setbacks from overworking,” she said.
The Paramount logo is seen on a building in Los Angeles on Nov. 13, 2023.
Nurphoto| Getty Images
Paramount Global shares surged Friday following reports from Deadline and Puck News that Skydance and RedBird Capital were exploring potentially taking over the media giant.
Paramount shares closed up more than 12% Friday. The company has a market cap of about $10.4 billion and its year to date share price is virtually flat, lagging the S&P 500’s 20% gain.
Paramount’s controlling shareholder, Shari Redstone, has been open to making big deals, especially as the company weathers the storms of declining revenue and streaming losses.
RedBird, controlled by longtime former Goldman Sachs partner Gerry Cardinale, is invested in a variety of media and sports assets, including David Ellison’s Skydance, which helped produce Paramount’s 2022 blockbuster “Top Gun: Maverick,” among other hits.
DETROIT — As sales of all-electric vehicles grow more slowly than expected, major automakers are increasingly meeting their customers in the middle.
More and more companies are reconsidering the viability of hybrid cars and trucks to appease consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.
The shifting strategies run counterintuitively to industrywide EV messaging of recent years. Many auto companies have begun to invest billions of dollars in all-electric vehicles, and the Biden administration has made a push to get more EVs on U.S. roadways as quickly as possible.
But hybrid vehicles — those with traditional internal combustion engines combined with EV battery technologies — could help the automotive industry lower fuel consumption and emissions in the short-term, while easing consumers into vehicle electrification.
Sales of traditional hybrid electric vehicles, or HEVs, such as the Toyota Prius, are outpacing those of all-electric vehicles in 2023, according to Edmunds. HEVs accounted for 8.3% of U.S. car sales, about 1.2 million vehicles sold, through November of this year. That share is up 2.8 percentage points compared with total sales last year.
EVs made up 6.9% of sales heading into December, or roughly 976,560 units, up 1.7 percentage points compared with total sales last year. Sales of plug-in hybrid electric vehicles, or PHEVs, accounted for only 1% of U.S. sales through November.
“There’s been so much talk over the past few years about the move toward electrification and sort of forgoing hybrids, but … hybrids are not dead,” said Jessica Caldwell, Edmunds executive director of insights. “There’s a lot of consumers out there that are interested in electrification, maybe not ready to go fully electric.”
Hybrids can also cost less and relieve many concerns typically associated with EVs such as range anxiety and lack of charging infrastructure. The average hybrid this year cost $42,381, according to Edmunds. That’s below the roughly $59,400 average for an EV; $60,700 for a PHEV; and $44,800 for a traditional vehicle.
Morgan Stanley earlier this month said Toyota Motor, Honda Motor and Hyundai Motor, including Kia, account for 9 out of 10 hybrid sales in the U.S. Representatives for those automakers said they are actively attempting to increase production and sales of hybrid vehicles in the U.S.
“While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near and mid-term goals,” Eric Watson, vice president of Kia America sales, said in a statement to CNBC.
And other companies, such as the Detroit automakers, are following suit.
The Detroit automakers have varying strategies for hybrid vehicles.
Ford Motor offers PHEVs but is leaning into HEVs, announcing plans in September to double sales of the V-6 hybrid model during the 2024 model year to roughly 20% in the U.S. It’s part of Ford CEO Jim Farley’s plans to quadruple the company’s production of gas-electric hybrids.
Ford’s hybrid sales through November of this year are up 23% over the same period in 2022 to more than 121,000 units, or 6.8% of its total sales through that point. In comparison, Ford’s EV sales are up 16.2% to roughly 62,500 units, accounting for 3.5% of its total sales.
Battery breakdown
Both hybrids and plug-in hybrids have a traditional engine combined with EV technologies. A traditional hybrid such as the Toyota Prius has electrified parts, including a small battery, to provide better fuel economy to assist the engine. PHEVs typically have a larger battery to provide for all-electric driving for a certain number of miles until an engine is needed to power the vehicle or electric motors.
Chrysler parent Stellantis, for its part, is leaning on PHEVs for its electrification strategy, before introducing a host of EVs starting next year. The company is the top seller of plug-in hybrid electric vehicles in the U.S., and the vehicles accounted for about 10% of the company’s third-quarter sales, led by Jeep Wrangler and Grand Cherokee SUVs.
But General Motors isn’t ready just yet to alter its EV plans, which include a goal to exclusively offer all-electric vehicles by 2035.
GM led the way for plug-in electric vehicles with the Chevrolet Volt during the 2010s. The company discontinued the vehicle in early 2019, citing demand and cost concerns.
Since then, the automaker has not offered another hybrid vehicle in the U.S. other than the recently launched Chevrolet Corvette E-Ray, a hybrid version of the famed sports car. GM does offer hybrids, including PHEVs, in China.
2024 Chevrolet Corvette E-Ray hybrid sports car
GM
“We still have a plan in place that allows us to be all light-duty vehicles EV by 2035,” GM CEO Mary Barra said Monday during an Automotive Press Association meeting in Detroit. “We’ll adjust based on where the customer is and where demand is. It’s not going to be ‘if we build it they will come.’ We’re going to be led by the customer.”
Her comments come after GM President Mark Reuss told CNBC in August that he was “flexible” regarding hybrids as a way of meeting federal regulations.
“If it means we have to do that by law, then we have to do that by law,” he said. “If there’s regulations that get dealt on us, then we’re going to look at everything in our toolbox to meet them.”
Major auto companies, including the Detroit automakers, were counting on EVs to assist in offsetting the emissions and low fuel economies of larger SUVs and trucks that can cost them hundreds of millions of dollars in fines by the federal government.
GM and Stellantis were forced to pay a combined $363.8 million in penalties for failing to meet federal fuel-economy standards for cars and trucks they produced in previous years, according to information published by the National Highway Traffic Safety Administration in June.
Such fines would significantly increase under current proposals by the Biden administration to improve fuel efficiency of vehicles and move toward EVs, according to automaker lobbying groups.
The American Automotive Policy Council, a group representing the Detroit Three, earlier this year said the automakers would face more than $14 billion in noncompliance penalties between 2027 and 2032 barring significant changes to their fleets’ overall fuel efficiency. U.S. automakers have separately warned the fines would cost $6.5 billion for GM, $3 billion at Stellantis and $1 billion at Ford, according to Reuters.
NHTSA in July proposed boosting fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 through 2032, resulting in a fleetwide average fuel efficiency of 58 mpg.
With EVs playing a lesser role than anticipated to boost those fleetwide averages, hybrids could save automakers millions.
“Even without electric vehicles, there’s an expectation that electrification of an internal combustion engine is going to be necessary to meet regulations anyway,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility.
The resurgence of hybrids is especially important for Toyota. The world’s largest automaker is considered the pioneer of traditional hybrids, with the Prius.
The company ironically became a target of environmental groups last year for its strategy to move forward with a mix of hybrids, PHEVs and EVs, which critics viewed as a lack of commitment to an all-electric future.
Toyota’s argument at the time, and still, is that it’s meeting consumer needs and planning for a more gradual global adoption that will naturally include some markets shifting to EVs sooner than others.
The company further says it takes into account the entire environmental impact of producing EVs compared with hybrid electrified vehicles, arguing it can produce eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle and save up to eight times the carbon emitted into the atmosphere.
“People are finally seeing reality,” Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for the slower approach on EVs, said in Octoberregarding EVs, according to The Wall Street Journal.
Toyota CEO Akio Toyoda speaks during a small media roundtable on Sept. 29, 2022 in Las Vegas.
Pedestrians walk past a Levi’s store in Hong Kong.
Sopa Images | Lightrocket | Getty Images
Levi’s CEO Chip Bergh is calling it quits and handing the reins over to his long-anointed successor Michelle Gass, the former CEO of Kohl’s, the company announced Thursday.
Gass will take over the chief executive position on Jan. 29 while Bergh will officially retire on April 26. He will stay on as executive vice chair of the board until then. Once he retires, he will serve as an advisor through the end of the fiscal year.
“Chip has transformed this company and will leave it far better than when he arrived. I know we will continue to benefit from Chip’s strategic perspective as he continues to serve on the company’s board,” said Bob Eckert, chairman of Levi’s board.
Bergh took over as Levi’s CEO in 2011 and is one of just a handful of people who has run the company and was not related to its original founder, Levi Strauss. During Bergh’s tenure, he led Levi’s through its March 2019 initial public offering, its acquisition of Beyond Yoga and its deeper expansion into women’s offerings.
He also transformed the company into a direct-to-consumer powerhouse that is no longer solely reliant on its wholesale partners. In doing so, he reinvigorated the Levi’s brand and kept it relevant despite its 170-year long legacy.
“The Levi’sbrand is the strongest it has ever been, and as we pivot to become more of an omni-channel, direct-to-consumer retailer, it is time for new leadership,” Bergh said in a statement. “While I’ve known Michelle for more than a decade, my time working closely with her this past year has given me great confidence that her experience, track record of innovation and impact, and passion for the business will position the company for sustainable, profitable growth and significant shareholder and stakeholder value creation.”
Levi’s appointed Gass as its next CEO in November 2022. She started at Levi’s in January, and was responsible for leading the company’s namesake brand, including its product, merchandising and marketing functions, along with its digital and global commercial operations. She has set her sights on boosting international growth and transitioning the company into a direct-to-consumer first organization.
“I am honored to be stepping in to lead this iconic brand and company, one that I have deeply admired and respected for many years. Levi’s is more than a denim icon; it’s part of our cultural fabric and an enduring symbol of quality, innovation and progress,” Gass said in a statement.
Similar to many retailers, Levi’s has struggled to get consumers to spend on apparel as inflation straps shoppers’ budgets. In October, the company cut its full-year sales forecast for the second time this year, saying it expects net revenues in a range of flat to up 1% this year.
Levi Strauss shares have fallen 1% this year, trailing the roughly 19% gain in the S&P 500.
Elon Musk, chief executive officer of Tesla Inc., during a fireside discussion on artificial intelligence risks with Rishi Sunak, UK prime minister, not pictured, in London, UK, on Thursday, Nov. 2, 2023.
Tolga Akmen | Bloomberg | Getty Images
Tesla faces a growing revolt in Scandinavia after Danish dockworkers joined a sympathy strike with Swedish mechanics, heaping pressure on the electric vehicle giant to grant collective bargaining rights to employees.
Members of Swedish trade union IF Metall have been at loggerheads with Tesla for six weeks, and have garnered support via a secondary strike action from fellow workers across a range of industries in Sweden, including postal workers, painters, dockworkers and electricians.
Tesla CEO Elon Musk bemoaned the blockage of license plate deliveries by postal workers as “insane” and late last month filed lawsuits against both the Swedish Transport Agency and the postal service.
After Swedish dockworkers blocked the reception of Tesla cars into the country, there had been speculation that the company would seek to deliver cars to Danish ports and transport them by truck across to Sweden.
However, IF Metall requested support from Denmark’s largest trade union, which on Tuesday announced a sympathy strike.
Jan Villadsen, chair of Denmark’s 3F Transport union, said Tuesday that IF Metall and Swedish workers are “fighting an incredibly important battle” and therefore have his union’s full support.
“Just like companies, the trade union movement is global in the fight to protect workers. With the sympathy strike, we are now stepping in to put further pressure on Tesla,” Villadsen said in a statement.
“Of course, we hope that they come to the negotiating table as soon as possible and sign a collective agreement.”
In what appeared to be a direct attack on Musk, Villadsen added that “even if you are one of the richest in the world, you can’t just make your own rules.”
“We have some labor market agreements in the Nordic region, and you have to comply with them if you want to run a business here,” he said.
“Solidarity is the cornerstone of the trade union movement and extends across national borders. Therefore, we are now taking the tools we have and using them to ensure collective agreements and fair working conditions.”
All members of 3F Transport are covered by the sympathy conflict, meaning that dockworkers and drivers will not receive and transport Tesla cars to Sweden.
Swedish labor relations, shaped by a series of accords reached throughout the 20th century, mean that almost all pay is subject to collective agreements between companies and labor unions, without any government intervention.
Tesla has so far refused to sign up to one of these collective bargaining agreements, leading around 120 mechanics in Sweden to launch a strike action in late October.
The striking workers are not asking for more pay, but simply for Tesla to honor the principle of collective bargaining. The dispute highlights the potential for an ongoing ideological stalemate not just between Tesla and 120 mechanics, but between U.S. corporate power and the deeply entrenched principles underpinning the Scandinavian economic model.
The extension of solidarity strikes to Denmark could signal further problems for Musk amid the risk of similar solidarity action in Norway and Germany, where collective agreements are also a key tenet of labor relations.
IF Metall told CNBC on Tuesday that it has no ongoing talks with Tesla but hopes the U.S. giant will “return to the negotiations table as soon as possible.”
“We are confident that they eventually will realize that collective agreement is beneficial for them as well. We are prepared for a prolonged conflict, but we are hoping for a swift solution,” the union said.
French fries arranged at a McDonald’s Corp. fast food restaurant in Louisville, Kentucky, U.S., on Friday, Oct. 22, 2021.
Luke Sharrett | Bloomberg | Getty Images
McDonald’s is expected to share new details about its accelerated expansion plans, a new spinoff brand called CosMc’s and digital strategy at its investor day on Wednesday.
At its last investor presentation three years ago, McDonald’s rolled out a strategy that planned to grow sales by improving and marketing its core menu items, launching a loyalty program, and leaning into chicken and coffee. The company also projected mid-single-digit sales growth in 2021 and 2022.
Wall Street analysts aren’t expecting any major shifts in strategy, but they are predicting that McDonald’s will release another near-term forecast for sales growth and new unit development during Wednesday’s presentation.
However, the company’s predictions may be conservative, given business leaders’ and experts’ worries about the economy. Although inflation has cooled, consumers are still watching their wallets. Fast-food chains like McDonald’s typically outperform the broader restaurant industry during economic downturns.
McDonald’s stock has risen about 8% this year, trailing the S&P 500’s 19% gains. Shares of the company, which has a market value of about $207 billion, have struggled as investors worry about sales potentially weakening because of the economy and weight loss drugs.
Here’s what McDonald’s will likely address during its investor day:
Earlier this year, the company announced it would be refocusing its priorities and accelerating restaurant expansion. Tied to that announcement, McDonald’s reorganized its corporate structure and laid off hundreds of workers.
CEO Chris Kempczinski said the restructuring was needed to streamline the organization and avoid silos. But since then, the company has shared relatively little information about how the restructuring will affect its decision-making and broader business.
An illuminated lofo of McDonald’s corporation in front of an American flag in the storefront at Broadway avenue in New York City, USA. McDonalds is a multinational fast food chain with thousands or restaurants over the world with headquarters in Chicago Illinois. It is the world’s largest fast food restaurant chain famous for the burgers and fries. Manhattan, New York, USA on May 10, 2023 (Photo by Nicolas Economou/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
Before the Covid pandemic, McDonald’s priorities for its U.S. stores dealt with remodels and store upgrades, like self-order kiosks. Then came lockdowns and a massive shift in how diners bought and ate their food. While some customers have returned to McDonald’s dining rooms, many others have maintained their new habits, like ordering on the McDonald’s app.
The chain has already announced some small tweaks coming to U.S. restaurants. For example, it’s phasing out self-serve soda stations, which allowed customers to refill their soft drinks.
But McDonald’s also seems to have bigger plans in mind. The chain has already said it wants to accelerate its restaurant development in the U.S. to meet today’s higher demand for its Big Macs and McNuggets.
While the U.S. may seem saturated with McDonald’s locations, executives have said that its current footprint doesn’t reflect where consumers currently live, including the shift to the South and Southeast.
“Our footprint reflects what the population looked like probably 20 or 30 years ago,” Kempczinski said on the company’s conference call in July.
The chain is now also ready to experiment with fresh restaurant formats and features for those new locations. It opened a location in Texas that’s mostly automated. Executives have teased the launch of CosMc’s, a spinoff brand of small-format locations inspired by an old McDonaldland character. Some McDonald’s locations have also tested using artificial intelligence to take drive-thru orders.
McDonald’s plans to accelerate growth also include building more locations in its international operated markets, a segment that includes Canada, Germany, Australia and France. Kempczinski said in July that the growth in those markets has been “pretty anemic” compared with the opportunity available.
McDonald’s also recently bought back a minority stake in its China business for a reported $1.8 billion. China is now the company’s second-largest market by number of locations, but investors will be looking for more on why McDonald’s did the deal and management’s long-term hopes for the market.
McDonald’s operates roughly 5% of its U.S. restaurants, giving the company little insight about who its customers are and what they want. But its growing digital business, from self-order kiosks to its mobile app, has given the company more access to its franchisees’ customer bases.
Take its loyalty program, for example. McDonald’s hadn’t launched its loyalty program nationwide at the time of its last investor day. Since then, the chain has shared some comments on the program, including that it drives a 15% increase in visits from members. But investors are eager to hear more about what McDonald’s has learned about its customers, how it plans to implement those takeaways and what other digital innovations could unlock.
Ike Boruchow, Wells Fargo Securities senior analyst, joins ‘Squawk on the Street’ to discuss why Boruchow favors Nike over Lululemon, clues from the holiday shopping season that may have influenced Wells Fargo’s decision, and much more.
Southwest Airlines Boeing 737-700 aircraft is seen landing at dusk time at Ronald Reagan Washington National Airport in Arlington, Virginia.
Nicolas Economou | Nurphoto | Getty Images
Southwest Airlines and its pilots’ union are closing in on a new contract that would raise pay for the carrier’s more than 11,000 aviators and end months of contentious negotiations, weeks ahead of the crucial holiday travel season.
The company and the union have agreed on pay, retirement and other items but are working on an implementation schedule, the Southwest Airlines Pilots Association said in a message to its members on Thursday.
If a preliminary agreement is approved by Southwest pilots’ union board in the coming weeks, it would then go to pilots for a ratification vote.
The union and the airline declined to provide specifics of the deal.
Southwest and the union “are working hard to close out the few remaining items,” an airline spokesman told CNBC. “Southwest remains committed to reaching an agreement that rewards our Pilots and places them competitively in the industry.”
Southwest reached a preliminary agreement with its flight attendants’ union earlier this fall that includes 36% pay increases for cabin crew members.
A labor deal with its pilots would end a period of tense negotiations between the company and the union, which recently included laying groundwork for a potential strike, though strikes are extremely rare in the airline industry.
It would also become the latest in a string of big labor deals this year, including agreements between Hollywood writers, actors and studios as well as between automakers and the United Auto Workers union, following strikes.
The drugmaker observed high rates of adverse side effects, which were mostly mild and gastrointestinal, among patients. A significant share of patients alsostopped taking the drug.
“At this time, twice-daily danuglipron formulation will not advance into Phase 3 studies,” the company said.
But Pfizer said it still plans to release phase two trial data on a once-a-day version of the drug in the first half of 2024, which will “inform a path forward.” The pharmaceutical giant will wait to see that data before deciding whether to start a phase three study on the once-daily pill, which Wall Street views as the more competitive form of the treatment.
Shares of Pfizer fell 4% in premarket trading Friday after it announced the trial results.
Still, the data on the twice-daily drug is a blow to Pfizer’s hopes to win a $10 billion slice of the booming weight loss drug market, which CEO Albert Bourla has said could grow to $90 billion. The company is betting on a successful weight loss pill to help it rebound from plummeting demand for its Covid products and a roughly 40% share price drop this year.
But investors have been pessimistic about Pfizer’s potential in the weight loss drug space since the company scrapped a different once-daily pill in June and proceeded with the less attractive danuglipron. Now, Friday’s data puts Pfizer even further behind the dominant players in the weight loss drug market, Eli Lilly and Novo Nordisk, which are racing to develop more convenient pill versions of their blockbuster weight loss and diabetes injections.
Pfizer’s phase two trial on its twice-daily pill followed around 600 obese adults who did not have Type 2 diabetes. The trial examined the drug’s effect on weight loss after 26 or 32 weeks, at different dosage amounts ranging from 40 milligrams to 200 milligrams.
Like Novo Nordisk’s Wegovy and Ozempic, Pfizer’s pill works by mimicking a hormone produced in the gut called GLP-1, which signals to the brain when a person is full.
Pfizer said the trial on danuglipron met the primary goal of demonstrating “statistically significant” reductions in body weight.
Patients who took the pill twice a day lost 6.9% to 11.7% of their body weight on average at 32 weeks, and from 4.8% to 9.4% at 26 weeks.
Meanwhile, patients on a placebo gained 1.4% of their body weight at 32 weeks and 0.17% at 26 weeks.
When adjusting for the difference between the weight gain observed in patients who took the placebo, Pfizer’s twice-daily pill caused 8% to 13% weight loss on average at 32 weeks and 5% to 9.5% at 26 weeks.
The company said high rates of adverse events were observed among patients in the study, with up to 73% experiencing nausea, up to 47% vomiting and up to 25% experiencing diarrhea. More than 50% of patients across all dose sizes stopped taking the pill, compared to roughly 40% among those on the placebo, according to Pfizer.
No new safety issues were observed, and danuglipron was not associated with increased liver enzymes like Pfizer’s other discontinued weight loss pill.
Data from the phase two trial will be presented at a future scientific conference or published in a peer-reviewed journal.
The tolerability issues align with some analysts’ predictions ahead of the data release.
Leerink Partners analyst David Risinger wrote in a Monday note that the proportion of patients who discontinue treatment with Pfizer’s twice-daily danuglipron in the phase two trial would likely be higher than those who stopped taking a once-daily pill from Eli Lilly.
By comparison, 10% to 21% of patients who took Eli Lilly’s pill, orforglipron, in a mid-stage trial discontinued the treatment at 32 weeks due to adverse side effects, he noted.
Risinger said that’s likely because danuglipron’s total daily dose is far higher, which may cause more adverse effects. Patients on the highest dose size of Pfizer’s pill took 400 milligrams each day, while those on the highest dosage of Eli Lilly’s drug took 45 milligrams a day.
Pfizer’s phase-two trial also didn’t allow downtitration, or decreasing the dose of a drug over time once a specific response has been achieved. Eli Lilly’s mid-stage trial on its pill did.
There is hope that patients will better tolerate the once-daily version of danuglipron compared to the twice-daily form. Pfizer appears to believe a once-daily version of the drug could lessen gastrointestinal side effects, according to some analysts.
They pointed to Pfizer’s second-quarter earnings call, when the company’s chief scientific officer, Mikael Dolsten, suggested that a once-daily version may improve a patient’s tolerability of the drug, which could lessen the gastrointestinal side effects “that have been seen as limiting” danuglipron.
But the effects will be unclear until the mid-stage trial data is released next year.
Notably, the weight loss caused by twice-daily danuglipron appeared to fall short of analysts’ expectations.
Ahead of the data release, several analysts said Pfizer’s twice-daily pill has to be about as effective as Eli Lilly’s once-a-day pill to be competitive. That means at least a 14% to 15% weight loss, Cantor Fitzgerald analyst Louise Chen told CNBC earlier this month.
Risinger also wrote in October that Pfizer’s danuglipron needs to show weight reduction in the “mid-teens” percentages to be considered competitive with Eli Lilly’s pill.
Obese or overweight patients who took 45 milligrams of Eli Lilly’s pill once a day lost up to 14.7% of their body weight, or 34 pounds, after 36 weeks, according to the company’s phase-two trial results.
Eli Lilly’s results appear consistent with the weight reduction caused by a high-dose oral version of Novo Nordisk’s semaglutide – the active ingredient used in the diabetes drug Ozempic and weight loss treatment Wegovy – but came over a shorter trial period.
More than 2 in 5 adults have obesity, according to the National Institutes of Health. About 1 in 11 adults have severe obesity.
Clarification: This story was updated to reflect that some weight-loss data was adjusted to include results from the placebo group.
Charlie Munger at Berkshire Hathaway’s annual meeting in Los Angeles California. May 1, 2021.
Gerard Miller
The late investment icon Charlie Munger said Berkshire Hathaway, the conglomerate he and Warren Buffett built over the last five decades, could have doubled its value if they applied leverage, or borrowed money, when buying businesses and common stocks.
Munger, Berkshire Hathaway’s vice chairman who died Tuesday just a month shy of his 100th birthday, stressed that he and Buffett almost never used this common Wall Street practice, because they always put their shareholders first.
“Berkshire could easily be worth twice what it is now. And the extra risk you would’ve taken would’ve been practically nothing. All we had to do is just use a little more leverage that was easily available,” Munger said in CNBC’s special “Charlie Munger: A Life of Wit and Wisdom,” which aired Thursday.
“The reason we didn’t is the idea of disappointing a lot of people who had trusted us when we were young … If we lost three quarters of our money, we were still very rich. That wasn’t true of every shareholder,” he told CNBC’s Becky Quick in the previously unaired interview. “Losing three quarters of the money would’ve been a big letdown.”
The use of leverage is prevalent on Wall Street as it provides a way to boost buying power and enhance the potential return in any given investment. But it also significantly increases the risk as losses can multiply quickly if the investment doesn’t pan out as expected.
Beware an ‘unsettled mind’
Buffett, often called the “Oracle of Omaha,” previously explained the perils of using debt and leverage to buy stocks, saying it can make an investor short-sighted and panicky when times turn volatile.
“There is simply no telling how far stocks can fall in a short period,” he wrote in his 2017 annual letter to shareholders. “Even if your borrowings are small and your positions aren’t immediately threatened by the plunging market, your mind may well become rattled by scary headlines and breathless commentary. And an unsettled mind will not make good decisions.”
Munger said he and Buffett had been “very cautious” in handling their shareholders’ money over the years. Berkshire shareholders tend to be long-term investors like all the conglomerate’s top executives, often treating their stock like a savings account.
“If Warren and I had owned Berkshire without any shareholders that we knew, we would’ve made more. We would’ve used more leverage,” Munger said in the CNBC special.
Still, Munger acknowledged that Berkshire did use leverage in the form of its insurance float. Insurers receive premiums upfront and pay claims later, so they can invest the large sums collected — cost free — for their own benefit.
“Insurance float gave us some leverage. That’s why we went into it,” he said.
Shoppers arrive at an Ulta Beauty store in Las Vegas, Nevada, US, on Monday, May 22, 2023. Ulta Beauty Inc. is scheduled to release earnings figures on May 25.
Bridget Bennett | Bloomberg | Getty Images
Shares of Ulta Beauty rose in after-hours trading on Thursday, as the company said its third-quarter sales rose while shoppers showed once again they’re willing to spend on makeup, face masks and more even when the budget is tight.
The specialty beauty retailer raised the bottom end of its range for full-year sales and earning expectations. It said it expects net sales for the fiscal year to be between $11.10 billion and $11.15 billion, and comparable sales to range from 5.0% to 5.5%. It said adjusted earnings per share for the year will range from $25.20 to $25.60
In a news release, CEO Dave Kimbell said the retailer saw healthy sales trends and added customers to its loyalty program. He said it’s ready for the holidays and believes “the outlook for the Beauty category is bright.”
Here’s what Ulta reported for the three-month period that ended Oct. 28:
Earnings per share: $5.07
Revenue: $2.49 billion
It was not immediately clear if those numbers were comparable to consensus estimates from LSEG, formerly known as Refinitiv.
The company’s shares rose as much as 10% in extended trading.
Ulta also announced a leadership change on Thursday. Chief Financial Officer Scott Settersten is retiring in April after nearly two decades at the beauty retailer. The company said he will be replaced by Paula Oyibo, Ulta’s senior vice president of finance.
In the fiscal third quarter, net income rose to $249.5 million, or $5.07 per share, from $274.6 million, or $5.34 per share, in the year-ago period. Revenue increased from $2.34 billion in the year-ago period.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 4.5% year over year.
During the quarter, customers made more trips to Ulta’s stores and website, but spent slightly less. Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
Beauty has been one of the hottest categories for retailers over the past year. Even as consumers pull back on other types of discretionary purchases, they have continued to spend on makeup, face masks, fragrances and more.
That’s inspired retailers, including Macy’s, Target and Kohl’s to lean into the category by adding new brands, products and square footage. Target, for example, has a growing number of Ulta shops in its stores.
As of Thursday’s close, Ulta shares had fallen about 9% so far this year. That compares to the S&P 500, which is up about 19% year to date.
Shares of the company closed at $425.99on Thursday, bringing the company’s market value to about $20.97 billion.
This is breaking news. Please check back for updates.
Billionaire Charlie Munger, the investing sage who made a fortune even before he became Warren Buffett’s right-hand man at Berkshire Hathaway, has died at age 99.
Munger died Tuesday, according to a press release from Berkshire Hathaway. The conglomerate said it was advised by members of Munger’s family that he peacefully died this morning at a California hospital. He would have turned 100 on New Year’s Day.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement.
In addition to being Berkshire vice chairman, Munger was a real estate attorney, chairman and publisher of the Daily Journal Corp., a member of the Costco board, a philanthropist and an architect.
In early 2023, his fortune was estimated at $2.3 billion — a jaw-dropping amount for many people but vastly smaller than Buffett’s unfathomable fortune, which is estimated at more than $100 billion.
During Berkshire’s 2021 annual shareholder meeting, the then-97-year-old Munger apparently inadvertently revealed a well-guarded secret: that Vice Chairman Greg Abel “will keep the culture” after the Buffett era.
Munger, who wore thick glasses, had lost his left eye after complications from cataract surgery in 1980.
Munger was chairman and CEO of Wesco Financial from 1984 to 2011, when Buffett‘s Berkshire purchased the remaining shares of the Pasadena, California-based insurance and investment company it did not own.
Buffett credited Munger with broadening his investment strategy from favoring troubled companies at low prices in hopes of getting a profit to focusing on higher-quality but underpriced companies.
An early example of the shift was illustrated in 1972 by Munger’s ability to persuade Buffett to sign off on Berkshire’s purchase of See’s Candies for $25 million even though the California candy maker had annual pretax earnings of only about $4 million. It has since produced more than $2 billion in sales for Berkshire.
“He weaned me away from the idea of buying very so-so companies at very cheap prices, knowing that there was some small profit in it, and looking for some really wonderful businesses that we could buy in fair prices,” Buffett told CNBC in May 2016.
Or as Munger put it at the 1998 Berkshire shareholder meeting: “It’s not that much fun to buy a business where you really hope this sucker liquidates before it goes broke.”
Munger was often the straight man to Buffett’s jovial commentaries. “I have nothing to add,” he would say after one of Buffett’s loquacious responses to questions at Berkshire annual meetings in Omaha, Nebraska. But like his friend and colleague, Munger was a font of wisdom in investing, and in life. And like one of his heroes, Benjamin Franklin, Munger’s insight didn’t lack humor.
“I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are,” the then-93-year-old Munger told the thousands of people at Berkshire’s 2017 meeting.
He believed in what he called the “lollapalooza effect,” in which a confluence of factors merged to drive investment psychology.
Charles Thomas Munger was born in Omaha on Jan. 1, 1924. His father, Alfred, was a lawyer, and his mother, Florence “Toody,”was from an affluent family. Like Warren, Munger worked at Buffett’s grandfather’s grocery store as a youth, but the two future joined-at-the-hip partners didn’t meet until years later.
At 17, Munger left Omaha for the University of Michigan. Two years later, in 1943, he enlisted in the Army Air Corps, according to Janet Lowe’s 2003 biography “Damn Right!”
The military sent him to the California Institute of Technology in Pasadena to study meteorology. In California, he fell in love with his sister’s roommate at Scripps College, Nancy Huggins, and married her in 1945. Although he never completed his undergraduate degree, Munger graduated magna cum laude from Harvard Law School in 1948, and the couple moved back to California, where he practiced real estate law. He founded the law firm Munger, Tolles & Olson in 1962 and focused on managing investments at the hedge fund Wheeler, Munger & Co., which he also founded that year.
“I’m proud of being an Omaha boy,” Munger said in a 2017 interview with Dean Scott Derue of the Michigan Ross Business School. “I sometimes use the old saying, ‘They got the boy out of Omaha but they never got Omaha out of the boy.’ All those old-fashioned values — family comes first; be in a position so that you can help others when troubles come; prudent, sensible; moral duty to be reasonable [is] more important than anything else — more important than being rich, more important than being important — an absolute moral duty.”
In California, he partnered with Franklin Otis Booth, a member of the founding family of the Los Angeles Times, in real estate. One of their early developments turned out to be a lucrative condo project on Booth’s grandfather’s property in Pasadena. (Booth, who died in 2008, had been introduced to Buffett by Munger in 1963 and became one of Berkshire’s largest investors.)
“I had five real estate projects,” Munger told Derue. “I did both side by side for a few years, and in a very few years, I had $3 million — $4 million.”
Munger closed the hedge fund in 1975. Three years later, he became vice chairman of Berkshire Hathaway.
In 1959, at age 35, Munger returned to Omaha to close his late father’s legal practice. That’s when he was introduced to the then-29-year-old Buffett by one of Buffett’s investor clients. The two hit it off and stayed in contact despite living half a continent away from each other.
“We think so much alike that it’s spooky,” Buffett recalled in an interview with the Omaha World-Herald in 1977. “He’s as smart and as high-grade a guy as I’ve ever run into.”
“We never had an argument in the entire time we’ve known each other, which is almost 60 years now,” Buffett told CNBC’s Becky Quick in 2018. “Charlie has given me the ultimate gift that a person can give to somebody else. He’s made me a better person than I would have otherwise been. … He’s given me a lot of good advice over time. … I’ve lived a better life because of Charlie.”
The melding of the minds focused on value investing, in which stocks are picked because their price appears to be undervalued based on the company’s long-term fundamentals.
“All intelligent investing is value investing — acquiring more than you are paying for,” Munger once said. “You must value the business in order to value the stock.”
Warren Buffett (L), CEO of Berkshire Hathaway, and vice chairman Charlie Munger attend the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019.
Johannes Eisele | AFP | Getty Images
But during the coronavirus outbreak in early 2020, when Berkshire suffered a massive $50 billion loss in the first quarter, Munger and Buffett were more conservative than there were during the Great Recession, when they invested in U.S. airlines and financials like Bank of America and Goldman Sachs hit hard by that downturn.
“Well, I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes,” Munger told The Wall Street Journal in April 2020. “We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity. We’re not playing, ‘Oh goody, goody, everything’s going to hell, let’s plunge 100% of the reserves’ [into buying businesses].”
Munger donated hundreds of millions of dollars to educational institutions, including the University of Michigan, Stanford University and Harvard Law School, often with the stipulation that the school accept his building designs, even though he was not formally trained as an architect.
At Los Angeles’ Harvard-Westlake prep school, where Munger had been a board member for decades, he ensured that the girls bathrooms were larger than the boys room during the construction of the science center in the 1990s.
“Any time you go to a football game or a function there’s a huge line outside the women’s bathroom. Who doesn’t know that they pee in a different way than the men?” Munger told The Wall Street Journal in 2019. “What kind of idiot would make the men’s bathroom and the women’s bathroom the same size? The answer is, a normal architect!”
Munger and his wife had three children, daughters Wendy and Molly, and son Teddy, who died of leukemia at age 9. The Mungers divorced in 1953.
Two years later, he married Nancy Barry, whom he met on a blind date at a chicken dinner restaurant. The couple had four children, Charles Jr., Emilie, Barry and Philip. He also was the stepfather to her two other sons, William Harold Borthwick and David Borthwick. The Mungers, who were married 54 years until her death in 2010, contributed $43.5 million to Stanford University to help build the Munger Graduate Residence, which houses 600 law and graduate students.
Asked by CNBC’s Quick in a February 2019 “Squawk Box” interview about the secret to a long and happy life, Munger said the answer “is easy, because it’s so simple.”
“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful in spite of your troubles. You deal with reliable people and you do what you’re supposed to do. And all these simple rules work so well to make your life better. And they’re so trite,” he said.
“And staying cheerful … because it’s a wise thing to do. Is that so hard? And can you be cheerful when you’re absolutely mired in deep hatred and resentment? Of course you can’t. So why would you take it on?”
A Shein pop-up store inside a Forever 21 store in Times Square in New York on Nov. 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
Shein has confidentially filed to go public in the U.S. as the Chinese-founded fast-fashion juggernaut looks to expand its global reach with a long-rumored initial public offering, CNBC has learned.
The retailer was last valued at $66 billion and could be ready to start trading on the public markets as soon as 2024, people familiar with the matter said Monday.
It is unclear how much the company is currently worth, but its valuation has been a central point of debate among Shein and the advisors it’s working with, people familiar with the matter said.
A confidential filing is common, as it allows companies to communicate with the U.S. Securities and Exchange Commission and make any necessary adjustments to their filings in private. Over the next few months, Shein will likely make tweaks to its paperwork and answer numerous questions from the agency. The filing will be made public once the company is ready to move forward with its IPO. At that point, those communications with the SEC and any adjustments to its paperwork will be released as well.
Shein has been on a meteoric rise over the past few years after it won over consumers across the globe with its fashion-forward designs, endless assortment and dirt-cheap prices.But Shein has faced a series of challenges along the way and faced accusations of using forced labor in its supply chain, violating labor laws, harming the environment and stealing designs from independent artists.
The company is currently under investigation by the newly formed House Select Committee on the Chinese Communist Party and has faced scrutiny over its ties to Beijing. Numerous lawmakers, including 16 Republican attorneys general, have called on the SEC to ensure Shein isn’t using forced labor in its supply chain before it’s allowed to start trading in the U.S.
In October, Marcelo Claure, the company’s newly minted group vice chair and former SoftBank CEO, told CNBC in an interview that Shein is cooperating with lawmakers and taking time to meet with them to explain the business. He said, “there’s no such thing as forced labor” in the Shein factories that he has visited. But the company has repeatedly acknowledged that forced labor has been found in its supply chain and noted that it’s taking steps to fix it.
As Shein grew from an obscure Chinese retailer into a global behemoth with headquarters in Singapore, it largely stayed in the shadows. It said and did very little publicly until this year, when it began to open up in an apparent attempt to prepare for a U.S. IPO.
With Chinese CEO Sky Xu still at the helm, Shein tapped former Bear Stearns investment banker Donald Tang to be its executive chair and public face earlier this year.It has hosted a series of well-publicized pop-up events, sent influencers to its Chinese factories in a poorly received public relations campaign and courted the business press with splashy parties that featured its independent designers and other friends of the company.
Shein has worked hard to beat the many negative accusations that have come to define the company and has made its executives available for interviews as it worked to change the narrative.
Recently, it acquired about one-third of Sparc Group — a joint venture that includes brand management firm Authentic Brands Group and mall owner Simon Property Group — and in doing so, made a powerful U.S. ally that could help legitimize the company in the eyes of U.S. regulators.
As part of the deal, Shein has partnered up with former rival Forever 21 to unveil a co-branded clothing line that will see Shein design, manufacture and distribute the clothes primarily on its website. Shein has been hosting pop-up events inside of Forever 21’s stores.
Shein still has more work to do before it can win the trust of U.S. regulators.Beyond its myriad of issues, its CEO remains a mysterious figure who doesn’t give interviews or speak publicly about the company. The practice is a major departure from other firms that are publicly traded in the U.S., which regularly make their CEOs available.In October, the company did not tell CNBC whether Xu is still a Chinese citizen.
Tom Blyth and Rachel Zegler star as Coriolanus Snow and Lucy Gray Baird in Lionsgate’s “Hunger Games: The Ballad of Songbirds and Snakes.”
Lionsgate
This year’s Thanksgiving box office was both feast and famine for the theatrical industry.
Lionsgate’s “Hunger Games: The Ballad of Songbirds and Snakes” had a solid second week run in cinemas, generating an estimated $42 million for the five-day Thanksgiving frame and Apple’s “Napoleon,” an R-rated war epic distributed by Sony, snared around $32.5 million.
Meanwhile, Disney’s latest animated feature “Wish,” which celebrates the company’s 100th anniversary, fell startlingly short of box office expectations, tallying just $31.7 million over its first five days in theaters. Analysts had foreseen an opening of $45 million to $55 million for the five-day period.
“It wouldn’t be a holiday box office season without some occasional upsets and this weekend is delivering on that front,” said Shawn Robbins, chief analyst at BoxOffice.com. “‘Napoleon’ is a solid win for Sony, Apple, theaters and moviegoers all around. Another successful adult-driven film was needed right now after the vacancy left behind by ‘Dune: Part Two’ and the light holiday calendar still ahead.”
Top Thanksgiving box office titles (five-day)
“Hunger Games: The Ballad of Songbirds and Snakes” (Lionsgate) — $42 million
“Napoleon” (Apple/Sony) — $32.5 million
“Wish” (Disney) — $31.7 million
“Trolls Band Together” (Universal) — $25.3 million
“Thanksgiving” (Sony) — $11.13 million
“The Marvels” (Disney) — $9.2 million
“The Holdovers” (Focus Features/Universal) — $3.75 million
“Saltburn” (Amazon MGM/Warner Bros. Discovery) — $2.72 million
“Next Goal Wins” (Disney) — $2.57 million
“Five Nights at Freddy’s” (Universal) — $2.5 million
Taylor Swift’s Eras Tour concert film (AMC) — $2.33 million
** All figures are estimated by studios
Yet, the underperformance of “Wish” continues to call attention to issues over at Disney’s animation studios, which have struggled to lure audiences back to theaters since the pandemic. For comparison, Universal’s “Trolls Band Together” managed to snag $25.3 million for the five-day period and it was the film’s second week in theaters.
“Disney’s ‘Wish’ is struggling to reach even the most conservative of expectations,” said Robbins. “It is a performance that again highlights the studio’s long road ahead to rebuild brand and audience confidence while making their films stand out as theatrical events again rather than have them be cannibalized by the impact of flailing streaming-focused strategies.”
Overall, the Thanksgiving box office secured around $172 million, an improvement over the previous three years of pandemic-pressured ticket sales. Prior to the coronavirus outbreak, the five-day Thanksgiving spread — consisting of the Wednesday before Thanksgiving through Sunday — had resulted in more than $250 million in ticket sales each year.
Thanksgiving 5-day frame over the last decade
2023 — $172 million (estimated)
2022 — $122.8 million
2021 — $142.7 million
2020 — $21.4 million
2019 — $263.4 million
2018 — $315.6 million (biggest all-time Thanksgiving frame)
2017 — $270.5 million
2016 — $260.8 million
2015 — $258.5 million
2014 — $230.2 million
2013 — $294.2 million
Source: Comscore
“This important period of Thanksgiving moviegoing has been solid though not earth-shattering,” said Paul Dergarabedian, senior media analyst at Comscore. “This week’s performance is encouraging for the industry, though at under $200 million, the total box office has not returned to the heyday years of pre-2020 levels.”
Still, Dergarabedian noted that the Thanksgiving box office offered moviegoers an eclectic selection of films across genres and age demographics, something that has been lacking in recent years.
“Overall, this is a positive step forward for Thanksgiving box office moviegoing traffic as the industry continues to learn how to navigate a rapidly evolving marketplace,” said BoxOffice.com’s Robbins.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “The Holdovers,” “Trolls Band Together” and “Five Nights at Freddy’s.”
Black Friday shoppers pick out clothing in a Lacoste store as retailers compete to attract shoppers and try to maintain margins on Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, U.S. November 24, 2023.
Vincent Alban | Reuters
Black Friday e-commerce spending popped 7.5% from a year earlier, reaching a record $9.8 billion in the U.S., according to an Adobe Analytics report, a further indication that price-conscious consumers want to spend on the best deals and are hunting for those deals online.
“We’ve seen a very strategic consumer emerge over the past year where they’re really trying to take advantage of these marquee days, so that they can maximize on discounts,” said Vivek Pandya, a lead analyst at Adobe Digital Insights.
Black Friday’s spending spike reflects a consumer who is more willing to spend than in 2022, when gas and food prices were painfully high.
Pandya noted that impulse purchases may have played a role in the Black Friday growth since $5.3 billion of the online sales came from mobile shopping. He noted that influencers and social media advertising have made it easier for consumers to get comfortable spending on their mobile devices.
Still, shoppers are price-sensitive, managing tighter budgets due to last year’s record inflation and interest rates. According to the Adobe survey, $79 million of the sales came from consumers who opted for the ‘Buy Now, Pay Later’ flexible payment method to stretch their wallets, up 47% from last year.
The best-selling categories of Black Friday, the Adobe report found, were electronics like smartwatches and televisions, along with toys and gaming. Meanwhile, home-repair tools underperformed. Pandya said top sellers directly correlated to whichever products had the best discounts.
Adobe gathers its data by analyzing one trillion visits to U.S. retail websites, 18 product categories and 100 million unique items. It does not track brick-and-mortar retail transactions.
A Mastercard analysis of this year’s Black Friday sales found that in-store sales rose just over 1% versus online sales, which grew by over 8% compared to last year.
“I do think the paradigm has changed around the in-store Black Friday experience, the long lines and things like that,” said Adobe’s Pandya.
Consumers are “more in the driver’s seat” when they are online shopping, he added, because it is easier to make side-by-side price comparisons and secure a better price.
Retailers are aware of the rise of deal-hunting consumers and want to capture as many of them as possible. Companies like Best Buy and Lowe’s have both announced higher discounting levels. Other retailers like Target and Ulta Beauty have rolled out pop-up promotions that offer 24-hour discounts on certain brands and items.
Black Friday kept the momentum going from the day before on Thanksgiving when online sales totaled $5.6 billion, according to a prior Adobe analysis.
Adobe expects the spending strength to hold over the weekend and through Cyber Monday with the biggest bargains still ahead. The report forecasts that online shoppers will spend roughly $10 billion over the course of Saturday and Sunday, and a record $12 billion on Cyber Monday.
But spending will likely begin to taper off deeper into the holiday season, according to Pandya. Cyber Monday, as the last major deal day of the holiday season, could be the final spending spike on non-essential goods for the rest of the year.
“We do expect growth to weaken because those discounts will weaken and they are dictating a lot in terms of buyer behavior this season,” said Pandya.
He noted that there are always gift-givers who procrastinate their holiday shopping so spending could continue to trickle in late into December. But the real growth surges, he said, “end up being in November and Thanksgiving week.”
