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  • Jamie Dimon says inflation eroding consumer wealth may cause recession next year

    Jamie Dimon says inflation eroding consumer wealth may cause recession next year

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    JPMorgan Chase CEO Jamie Dimon said inflation could tip the U.S. economy into recession next year.

    While consumers and companies are currently in good shape, that may not last much longer, Dimon said Tuesday on CNBC’s “Squawk Box.” Consumers have $1.5 trillion in excess savings from Covid pandemic stimulus programs and are spending 10% more than in 2021, he said.

    “Inflation is eroding everything I just said, and that trillion and a half dollars will run out sometime midyear next year,” Dimon said. “When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about.”

    The veteran JPMorgan CEO began to raise concerns about the economy earlier this year. In June, he said he was preparing his bank for an economic hurricane on the horizon, in part because of the Federal Reserve’s reversal of bond-buying programs and the Ukraine war.

    Adding to pressure for borrowers, the Fed’s benchmark interest rate is headed to 5%, Dimon noted Tuesday. That rate “may not be sufficient” to subdue inflation, he added.

    During the wide-ranging interview, Dimon called cryptocurrencies “a complete sideshow” that is rife with criminality and said globalization was in the process of being partly reversed as supply chains are restructured amid heightened geopolitical tensions.

    Dimon, 66, has led the New York-based bank since 2006. Under his leadership, JPMorgan became the biggest U.S. bank by assets as it weathered the 2008 financial crisis, its aftermath and the 2020 coronavirus pandemic.

    While the prospects for the economy may be dimming, the banking industry will be able to withstand a cycle of higher loan defaults, he said. That’s in part because of the new capital requirements imposed on the industry after the 2008 crisis.

    “The American banking system is unbelievably sound in a million different ways,” Dimon said. “Our capital cup runneth over.”

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  • Jamie Dimon says Ukraine war shows we still need cheap, secure energy from oil and gas

    Jamie Dimon says Ukraine war shows we still need cheap, secure energy from oil and gas

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    Dimon said in June that he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.

    Al Drago | Bloomberg | Getty Images

    One key lesson of the past year is that the world is not ready to move away from oil and gas as the dominant source of fuel, according to JPMorgan Chase CEO Jamie Dimon.

    The bank leader said on CNBC’s “Squawk Box” on Tuesday that the ongoing war in Europe highlighted that fossil fuels are still a key component of the global economy and would remain so for the foreseeable future.

    “If the lesson was learned from Ukraine, we need cheap, reliable, safe, secure energy, of which 80% comes from oil and gas. And that number’s going to be very high for 10 or 20 years,” Dimon said.

    Russia’s invasion of Ukraine earlier this year sent commodity prices soaring, including oil and natural gas. U.S. oil benchmark West Texas Intermediate crude traded above $100 per barrel for much of the spring and summer, though it has since eased back toward pre-war levels.

    The rising price of natural gas has been a particular pain point in Europe, which previously relied on heavily on Russian gas for home heating.

    Dimon said that world leaders while pursuing renewable alternatives need to focus on an “all of the above” energy strategy to maintain fuel for economies and reduce carbon emissions, not neglecting oil and gas production in the near term.

    “Higher oil and gas prices are leading to more CO2. Having it cheaper has the virtue of reducing CO2, because all that’s happening around the world is that poorer nations and richer nations are turning back on their coal plants,” Dimon said.

    The JPMorgan leader had previously declined a pledge to stop doing business with fossil fuels, saying in a Congressional hearing that the move would be a “road to hell for America.”

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  • OPEC+ agrees to stick to its existing policy of reducing oil production ahead of Russia sanctions

    OPEC+ agrees to stick to its existing policy of reducing oil production ahead of Russia sanctions

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    Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November.

    Vladimir Simicek | Afp | Getty Images

    An influential alliance of oil producers on Sunday agreed to stay the course on output policy ahead of a pending ban from the European Union on Russian crude.

    OPEC and non-OPEC producers, a group of 23 oil-producing nations known as OPEC+, decided to stick to its existing policy of reducing oil production by 2 million barrels per day, or about 2% of world demand, from November until the end of 2023.

    Energy analysts had expected OPEC+ to consider fresh price-supporting production cuts ahead of a possible double blow to Russia’s oil revenues.

    The European Union is poised to ban all imports of Russian seaborne crude from Monday, while the U.S. and other members of the G-7 will impose a price cap on the oil Russia sells to countries around the world.

    The Kremlin has previously warned that any attempt to impose a price cap on Russian oil will cause more harm than good.

    Oil prices have fallen to below $90 a barrel from more than $120 in early June ahead of potentially disruptive sanctions on Russian oil, weakening crude demand in China and mounting fears of a recession.

    Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November. It came despite calls from the U.S. for the group to pump more to lower fuel prices and help the global economy.

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  • The Fed’s path to a ‘Goldilocks’ economy just got a little more complicated

    The Fed’s path to a ‘Goldilocks’ economy just got a little more complicated

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    A ‘help wanted’ sign is displayed in a window of a store in Manhattan on December 02, 2022 in New York City. 

    Spencer Platt | Getty Images

    As far as jobs reports go, November’s wasn’t exactly what the Federal Reserve was looking for.

    A higher-than-expected payrolls number and a hot wage reading that was twice what Wall Street had forecast only add to the delicate tightrope walk the Fed has to navigate.

    In normal times, a strong jobs market and surging worker paychecks would be considered high-class problems. But as the central bank seeks to stem persistent and troublesome inflation, this is too much of a good thing.

    “The Fed can ill afford to take its foot off the gas at this point for fear that inflation expectations will rebound higher,” wrote Jefferies chief financial economist Aneta Markowska in a post-nonfarm payrolls analysis in line with most of Wall Street Friday. “Wage growth remains consistent with inflation near 4%, and it shows how much more work the Fed still needs to do.”

    Payrolls grew by 263,000 in November, well ahead of the 200,000 Dow Jones estimate. Wages rose 0.6% on the month, double the estimate, while 12-month average hourly earnings accelerated 5.1%, above the 4.6% forecast.

    All of those things together add up to a prescription of more of the same for the Fed — continued interest rate hikes, even if they’re a bit smaller than the three-quarter percentage point per meeting run the central bank has been on since June.

    Little effect from policy moves

    The numbers would indicate that 3.75 percentage points worth of rate increases have so far had little impact on labor market conditions.

    “We really aren’t seeing the impact of the Fed’s policy on the labor market yet, and that’s concerning if the Fed is viewing job growth as a key indicator for their efforts,” said Elizabeth Crofoot, senior economist at Lightcast, a labor market analytics firm.

    Much of the Street analysis after the report was viewed through the prism of comments Fed Chairman Jerome Powell made Wednesday. The central bank chief outlined a set of criteria he was watching for clues about when inflation will come down.

    Among them were supply chain issues, housing growth, and labor cost, particularly wages. He also went about setting caveats on a few issues, such as his focus on services inflation minus housing, which he thinks will pull back on its own next year.

    “The labor market, which is especially important for inflation in core services ex housing, shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2 percent inflation over time,” Powell said. “Despite some promising developments, we have a long way to go in restoring price stability.”

    In a speech at the Brookings Institution, he said he expected the Fed could cut the size of its rate hikes — the part that markets seemed to hear as grounds for a post-Powell rally. He added that the Fed likely would have to take rates up higher than previously thought and leave them there for an extended period, which was the part the market seemed to ignore.

    “The November employment report … is precisely what Chair Powell told us earlier this week he was most worried about,” said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. “Wages are rising more than productivity, as labor supply continues to shrink. To restore labor demand and supply, monetary policy must become more restrictive and remain there for an extended period.”

    The path to ‘Goldilocks’

    To be sure, all is not lost.

    Powell said he still sees a path to a “soft landing” for the economy. That outcome probably looks something like either no recession or just a shallow one, nevertheless accompanied by an extended period of below-trend growth and at least some upward pressure on unemployment.

    Getting there, however, likely will require almost a perfect storm of circumstances: A reduction in labor demand without mass layoffs, continued easing in supply chain bottlenecks, a cessation of hostilities in Ukraine and a reversal in the upward trend of housing costs, particularly rents.

    From a pure labor market perspective, that would mean an eventual downshifting to maybe 175,000 new jobs a month — the 2022 average is 392,000 — with annual wage gains in the 3.5% range.

    There is some indication the labor market is cooling. The Labor Department’s household survey, which is used to calculate the unemployment rate, showed a decline of 138,000 in those saying they are working. Some economists think the household survey and the establishment survey, which counts jobs rather than workers, could converge soon and show a more muted employment picture.

    “The biggest disappointment was the strong wage growth number,” Mark Zandi, chief economist at Moody’s Analytics, said in an interview. “We’ve been at 5% since the beginning of the year. We’re not going anywhere fast, and that needs to come down. That’s the thing we need to most worry about.”

    Still, Zandi said he doubts Powell was too upset over Friday’s numbers.

    “The inflation outlook, while very uncertain at best, has a path forward that is consistent with a Goldilocks scenario,” Zandi said. “263,000 vs 200,000 — that’s not a meaningful difference.”

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  • Goldman Sachs warns traders of shrinking bonus pool as Wall Street hunkers down

    Goldman Sachs warns traders of shrinking bonus pool as Wall Street hunkers down

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    David Solomon, chief executive officer of Goldman Sachs, speaks during the Milken Institute Global Conference in Beverly Hills, April 29, 2019.

    Patrick T. Fallon | Bloomberg | Getty Images

    Goldman Sachs traders and salespeople will have to contend with a bonus pool that’s at least 10% smaller than last year, despite producing more revenue this year, according to people with knowledge of the situation.

    That’s because the New York-based bank is dealing with a slowdown across most of its other businesses, especially investment banking and asset management, areas that have been hit by surging interest rates and falling valuations this year.

    Goldman began informing executives in its markets division this week to expect a smaller bonus pool for 2022, according to the people, who declined to be identified speaking about compensation matters. The figure will be cut by a “low double-digit percentage,” Bloomberg reported, although pay discussions will be ongoing through early next year and could change, the people said.

    Wall Street is grappling with sharp declines in investment banking revenue after parts of the industry involved in taking companies public, raising funds and issuing stocks and bonds seized up this year. Goldman was first to announce companywide layoffs in September, and since then Citigroup, Barclays and others have laid off staff deemed to be underperformers. JPMorgan Chase will use selective end-of-year cuts, attrition and smaller bonuses, and this week Morgan Stanley CEO James Gorman told Reuters that he planned to make “modest” cuts in operations around the world.

    Despite the tough environment, trading has been a bright spot for Goldman. Geopolitical turmoil and central banks’ moves to fight inflation led to higher activity in currencies, sovereign bonds and commodities, and the bank’s fixed-income personnel took advantage of those opportunities.

    Revenue in the markets division rose 14% in the first nine months of the year compared with the same period in 2021, while the company’s overall revenue fell 21%, thanks to large declines in investment banking and asset management results. Accordingly, the amount of money the bank set aside for compensation and benefits also fell by 21%, to $11.48 billion through Sept 30.

    “We always tell people their bonus is based on how they did, how their group did, and finally how the company did,” said a person with knowledge of the company’s processes. “This year, some of the good money traders made will have to go fund the other parts of the bonus pool.”

    Employees should know that big banks including Goldman try to smooth out compensation volatility, meaning that valued workers contending with a slow environment may get better bonuses than the revenue figures would suggest, and vice versa, according to this person.

    A Goldman spokeswoman declined to comment on the bank’s compensation plans.

    While the overall size of bonus pools will be shrinking everywhere, individual performers may see more or less than they earned in 2021 as managers seek to reward employees they want to retain while signaling to others that they should pack their bags.

    The decrease in the bonus pool comes off a strong year for both trading and investment banking in 2021. In retrospect, that was probably the last gasp of a low interest rate era that encouraged companies to go public, issue securities and borrow money.

    The need for job cuts and smaller bonuses on Wall Street became clear by mid-year, when a hoped-for revival in capital markets failed to materialize.

    Investment bankers are likely to face the deepest pay cuts, with those involved in underwriting securities facing drops of up to 45%, according to industry consultants.

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  • Payrolls and wages blow past expectations, flying in the face of Fed rate hikes

    Payrolls and wages blow past expectations, flying in the face of Fed rate hikes

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    Job growth was much better than expected in November despite the Federal Reserve’s aggressive efforts to slow the labor market and tackle inflation.

    Nonfarm payrolls increased 263,000 for the month while the unemployment rate was 3.7%, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for an increase of 200,000 on the payrolls number and 3.7% for the jobless rate.

    The monthly gain was a slight decrease from October’s upwardly revised 284,000. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 6.7%.

    The numbers likely will do little to slow a Fed that has been raising interest rates steadily this year to bring down inflation still running near its highest level in more than 40 years. The rate increases have brought the Fed’s benchmark overnight borrowing rate to a target range of 3.75%-4%.

    In another blow to the Fed’s anti-inflation efforts, average hourly earnings jumped 0.6% for the month, double the Dow Jones estimate. Wages were up 5.1% on a year-over-year basis, also well above the 4.6% expectation.

    The Dow Jones Industrial Average fell more than 200 points after the report as the hot jobs data could make the Fed even more aggressive. Treasury yields jumped after the news, with the two-year note, the most sensitive to monetary policy, up more than 10 basis points to about 4.36%.

    “To have 263,000 jobs added even after policy rates have been raised by some [375] basis points is no joke,” said Seema Shah, chief global strategist at Principal Asset Management. “The labor market is hot, hot, hot, heaping pressure on the Fed to continue raising policy rates.”

    Leisure and hospitality led the job gains, adding 88,000 positions.

    Other sector gainers included health care (45,000), government (42,000) and other services, a category that includes personal and laundry services and which showed a total gain of 24,000. Social assistance saw a rise of 23,000, which the Labor Department said brings the sector back to where it was in February 2020 before the Covid pandemic.

    Construction added 20,000 positions, while information was up 19,000 and manufacturing saw a gain of 14,000.

    On the downside, retail establishments reported a loss of 30,000 positions heading into what is expected to be a busy holiday shopping season. Transportation and warehousing also saw a decline, down 15,000.

    The numbers come as the Fed has raised rates half a dozen times this year, including four consecutive 0.75 percentage point increases.

    Despite the moves, job gains had been running strong this year if a bit lower than the rapid pace of 2021. On monthly basis, payrolls have been up an average of 392,000 against 562,000 for 2021. Demand for labor continues to outstrip supply, with about 1.7 positions open for every available worker.

    “The Fed is tightening monetary policy but somebody forgot to tell the labor market,” said Fitch Ratings chief economist Brian Coulton. “The good thing about these numbers is that it shows the U.S. economy firmly got back to growth in the second half of the year. But job expansion continuing at this speed will do nothing to ease the labor supply-demand imbalance that is worrying the Fed.

    Fed Chairman Jerome Powell earlier this week said the job gains are “far in excess of the pace needed to accommodate population growth over time” and said wage pressures are contributing to inflation.

    “To be clear, strong wage growth is a good thing. But for wage growth to be sustainable, it needs to be consistent with 2 percent inflation,” he said during a speech Wednesday in Washington, D.C.

    Markets expect the Fed to raise its benchmark interest rate by 0.5 percentage point when it meets later this month. That’s likely to be followed by a few more increases in 2023 before the central bank can pause to see how its policy moves are impacting the economy, according to current market pricing and statements from several central bank officials.

    Powell has stressed the importance of getting labor force participation back to its pre-pandemic level. However, the November reports showed that participation fell one-tenth of a percentage point to 62.1%, tied for the lowest level of the year as the labor force fell by 186,000 and is now slightly below the February 2020 level.

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  • Warren Buffett explains his $750 million charitable donation on Thanksgiving eve

    Warren Buffett explains his $750 million charitable donation on Thanksgiving eve

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    Warren Buffett

    Gerard Miller | CNBC

    Warren Buffett donated more than $750 million in Berkshire Hathaway stock to four foundations associated with his family on Thanksgiving eve, and the legendary investor said the timing was no coincidence as this is his way of giving thanks to his children for their charitable work.

    “I’ve got a personal pride in how my kids turned out,” Buffett told CNBC’s Becky Quick. “I feel good about the fact that they know I feel good about them. This is the ultimate endorsement in my kids, and it’s the ultimate statement that my kids don’t want to be dynastically wealthy.”

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    The 92-year-old investor donated 1.5 million Class B shares of his conglomerate to the Susan Thompson Buffett Foundation, named for his first wife. He also gave 300,000 Class B shares apiece to the three foundations run by his children: the Sherwood Foundation, the Howard G. Buffett Foundation and the NoVo Foundation.

    The recipients this time didn’t include the Bill & Melinda Gates Foundation. The “Oracle of Omaha” has vowed to give away his fortune over time and has been making annual donations to the same five charities since 2006.

    In June, he gave 11 million Class B shares to the Gates Foundation, 1.1 million B shares to the Susan Thompson Buffett Foundation and 770,218 shares apiece to his children’s three foundations.

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  • Citigroup faulted by U.S. banking regulators for poor data management in ‘living will’ review

    Citigroup faulted by U.S. banking regulators for poor data management in ‘living will’ review

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    CEO of Citigroup Jane Fraser testifies during a hearing before the House Committee on Financial Services at Rayburn House Office Building on Capitol Hill on September 21, 2022 in Washington, DC.

    Alex Wong | Getty Images

    Citigroup needs to address weaknesses in how it manages financial data, according to a review of the biggest banks’ so-called living will plans, U.S. banking regulators said Wednesday.  

    Citigroup’s shortcomings could hurt its ability to produce accurate financial reports in times of duress, the Federal Reserve and the Federal Deposit Insurance Corporation said in a letter to the bank’s executives. The biggest U.S. banks submitted plans last year that detail how they could be quickly unwound in the event of a bankruptcy.

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    “Issues regarding the Covered Company’s data governance program could adversely affect the firm’s ability to produce timely and accurate data and, in particular, could degrade the timeliness and accuracy of key metrics that are integral to execution of the firm’s resolution strategy,” the agencies told Citigroup in a letter dated Nov. 22.

    Citigroup was the only bank among the eight institutions reviewed that was found to have a shortcoming in its plan.

    Shares of Citigroup slipped 0.75% in early trading.

    This story is developing. Please check back for updates.

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  • ‘We’re alive and kicking’: CEO of banking app Dave wants to dispel doubts after this year’s 97% stock plunge

    ‘We’re alive and kicking’: CEO of banking app Dave wants to dispel doubts after this year’s 97% stock plunge

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    Mobile banking app provider Dave has enough cash to survive the current downturn for fintech firms and reach profitability a year from now, according to CEO Jason Wilk.

    The Los Angeles-based company got caught up in the waves rocking the world of money-losing growth companies this year after it went public in January. But Dave is not capsizing, despite a staggering 97% decline in its shares through Nov. 18, Wilk said.

    Shares jumped as much as 13% on Monday and closed 7.9% higher.

    “We’re trying to dispel the myth of, ‘Hey, this company does not have enough money to make it through,’” Wilk said. “We think that couldn’t be further from the truth.”

    Few companies embody fintech’s rise and fall as much as Dave, one of the better-known members of a new breed of digital banking providers taking on the likes of JPMorgan Chase and Wells Fargo. Co-founded by Wilk in 2016, the company had celebrity backers and millions of users of its app, which targets a demographic ignored by mainstream banks and relies on subscriptions and tips instead of overdraft fees.

    Dave’s market capitalization soared to $5.7 billion in February before collapsing as the Federal Reserve began its most aggressive series of rate increases in decades. The moves forced an abrupt shift in investor preference to profits over the previous growth-at-any cost mandate and has rivals, including bigger fintech Chime, staying private for longer to avoid Dave’s fate.

    “If you told me that only a few months later, we’d be worth $100 million, I wouldn’t have believed you,” Wilk said. “It’s tough to see your stock price represent such a low amount and its distance from what it would be as a private company.”

    Employee comp

    The shift in fortunes, which hit most of the companies that took the special purpose acquisition company route to going public recently, has turned his job into a “pressure cooker,” Wilk said. That’s at least partly because it has cratered the stock compensation of Dave’s 300 or so employees, Wilk said.

    In response, Wilk has accelerated plans to hit profitability by lowering customer acquisition costs while giving users new ways to earn money on side gigs including paid surveys.

    The company said earlier this month that third-quarter active users jumped 18% and loans on its cash advance product rose 25% to $757 million. While revenue climbed 41% to $56.8 million, the company’s losses widened to $47.5 million from $7.9 million a year earlier.

    Dave has $225 million in cash and short-term holdings as of Sept. 30, which Wilk says is enough to fund operations until they are generating profits.

    “We expect one more year of burn and we should be able to become run-rate profitable probably at the end of next year,” Wilk said.

    Investor skepticism

    Still, despite a recent rally in beaten-down companies spurred by signs that inflation is easing, investors don’t yet appear to be convinced about Dave’s prospects.

    “Investors haven’t jumped back into fintech more broadly yet,” Devin Ryan, director of fintech research at JMP Securities, said in an email. “In a higher interest rate backdrop where the cost of capital has been materially raised, we don’t see any abatement in investors challenging companies toward operating at cash profitability … or at the very least, demonstrating a clear and credible path toward that.”

    Among investors’ concerns are that one of Dave’s main products are short-term loans; those could result in rising losses if a recession hits next year, which is the expectation of many forecasters.

    “One of the things we need to keep proving is that these are small loans that people use for gas and groceries, and because of that, our default rates just consistently stayed very low,” he said. Dave can get repaid even if users lose their jobs, he said, by tapping unemployment payments.

    Investors and bankers expect a wave of consolidation among fintech startups and smaller public companies to begin next year as companies run out of funding and are forced to sell themselves or shut down. This year, UBS backed out of its deal to acquire Wealthfront and fintech firms including Stripe have laid off hundreds of workers.

    “We’ve got to get through this winter and prove we have enough money to make it and still grow,” Wilk said. “We’re alive and kicking, and we’re still out here doing innovative stuff.”

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  • U.S. shoppers to spend less this holiday season, but Amazon still stands to gain, Goldman Sachs says

    U.S. shoppers to spend less this holiday season, but Amazon still stands to gain, Goldman Sachs says

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    Amazon signage is displayed outside of an Amazon.com Inc. delivery hub in the late evening of Amazon Prime Day, July 12, 2022 in Culver City, California.

    Patrick T. Fallon | AFP | Getty Images

    Amid mounting economic uncertainty this holiday season, nearly three-quarters of U.S. shoppers plan to spend less than or the same as last year, according to a new Goldman Sachs consumer survey. And Club holding Amazon (AMZN), a leading retailer for holiday sales and promotions, should be a top destination for American bargain-hunters.

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  • Fed’s Bullard says rate hikes have had ‘only limited effects’ on inflation so far

    Fed’s Bullard says rate hikes have had ‘only limited effects’ on inflation so far

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    St. Louis Federal Reserve President James Bullard said Thursday the central bank still has a lot of work to do before it brings inflation under control.

    A voting member on the rate-setting Federal Open Market Committee, Bullard delivered remarks centered on a rules-based approach to policymaking. Using standards set by Stanford economics professor John Taylor, Bullard insisted that the moves the Fed has made so far are insufficient.

    Even using assumptions he characterized as “generous” regarding the progress the Fed has made so far in its inflation fight, he noted in a series of slides that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.”

    “To attain a sufficiently restrictive level, the policy rate will need to be increased further,” he added in the presentation.

    There’s little if any dissent on the Fed over whether rates need to continue to rise. Most members have suggested a few more increases over the next several months that will take the central bank’s benchmark overnight borrowing rate to around 5% from its current target range of 3.75%-4%.

    However, Bullard’s presentation argued that 5% could serve as the low range for the where the funds rate needs to be, and that upper bound could be closer to 7%. That is well out of sync with current market pricing, which also sees the fed funds rate topping out around 5%.

    The Taylor Rule, as it is known, establishes a link between the funds rate compared to inflation and economic growth. Inflation growth has abated recently, but the annual rate remains around the highest in more than 40 years.

    Bullard’s remarks follow statements from multiple other Fed officials expressing the need to keep up the heat against inflation, though several said policymakers could ease up a bit from the level of recent increases. The Fed has approved four consecutive 0.75 percentage point rate increases, and markets widely expect the December meeting to yield a 0.5 percentage point move.

    This is breaking news. Please check back for updates.

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  • Goldman Sachs paid $12 million to female partner to settle sexism complaint, Bloomberg reports

    Goldman Sachs paid $12 million to female partner to settle sexism complaint, Bloomberg reports

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    Goldman Sachs logo displayed on a smartphone.

    Omar Marques | SOPA Images | LightRocket via Getty Images

    Goldman Sachs paid more than $12 million to a former female partner to settle claims that senior executives created a hostile environment for women, Bloomberg reported Tuesday.

    The former partner alleged that top executives, including CEO David Solomon, made vulgar or dismissive remarks about women at the firm, according to Bloomberg, which cited people with knowledge of her complaint. The complaint alleged that women at Goldman were paid less than men and referred to in insulting ways, Bloomberg said, citing the anonymous sources.

    Goldman management was “rattled” by the complaint and settled it two years ago to keep word of the claims from being made public, according to the news outlet. The female partner, who now works for a different employer, declined to comment to Bloomberg, which said it withheld her name in part because she never went public with her allegations.

    Wall Street continues to deal with accusations that its hard-charging culture results in unfair treatment for female employees. Solomon, who took over from predecessor Lloyd Blankfein in 2018, faces a class-action lawsuit alleging gender discrimination that could go to trial next year; Goldman has denied the claims and attempted to get the lawsuit dismissed. Earlier this year, an ex-Goldman managing director published a memoir detailing episodes of harassment over her 18-year career at the bank.

    In public remarks, Solomon has said hiring and promoting more women and minorities were top priorities of his, and the company has publicized its efforts to boost the ranks of women at the bank.

    Other male-dominated industries such as tech and law have also dealt with accusations of systemic bias against women. In June, Alphabet subsidiary Google agreed to pay $118 million to settle a lawsuit alleging that the technology company had discriminated against thousands of female employees.

    The incidents described by the Goldman partner allegedly happened in 2018 and 2019, and included male executives critiquing female employees’ bodies and assigning menial tasks to women, according to Bloomberg, which cited people with knowledge of the complaint. The partner rank is exceedingly difficult to achieve, and fewer than 1% of the firm’s employees have that title, which comes with enhanced compensation and other perks.

    Top Goldman lawyer Kathy Ruemmler said in a statement to CNBC that the firm disputed the Bloomberg article. The New York-based bank declined to comment beyond its statement or answer questions about whether it had paid the $12 million settlement.  

    “Bloomberg’s reporting contains factual errors, and we dispute this story,” Ruemmler said in the emailed statement. “Anyone who works with David knows his respect for women, and his long record of creating an inclusive and supportive environment for women.”

    A Bloomberg spokeswoman had this response to Goldman’s comment: “We stand by our reporting.”

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  • What the Club is watching Tuesday — more cooler inflation, Dow stock earnings, price target hikes

    What the Club is watching Tuesday — more cooler inflation, Dow stock earnings, price target hikes

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    U.S. stock futures point to strong Wall Street open Tuesday as another government report points to slowing inflation.

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  • We’re selling some bank shares and buying some more beer stock

    We’re selling some bank shares and buying some more beer stock

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    Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., November 11, 2022. 

    Andrew Kelly | Reuters

    We’re selling 125 shares of Morgan Stanley (MS) at roughly $90.44 each, and buying 45 shares of Constellation Brands (STZ) at roughly $242.25 each.

    Following Friday’s trades, the portfolio will own 1,475 shares of Morgan Stanley, decreasing its weighting in the portfolio to 4.69% from 5.07%; and 435 shares of Constellation Brands, increasing its weighting to 3.58% from 3.22%

    The Morgan Stanley trim will right-size our position, which had grown to an over 5% weighting due, in part, to its spectacular run higher for the past month. We are also downgrading the stock to a 2 rating, which is also a reflection of its recent strength and not any change in our long-term view. We still very much believe in Morgan Stanley going forward. This sale will lock in a small gain of about 1% on stock purchased in July 2021.

    Following our consistent buying of Morgan Stanley in the spring to early summer in the low $80s and the stock’s outperformance over the past month — up nearly 18% versus 10% for the S&P 500 — our position in Morgan Stanley had swelled to the second largest in the portfolio. Although we are rightsizing this position following Thursday and Friday’s strength, we continue to like shares of this investment bank and asset gather for its push into fee base revenues, an eventual resurgence in IPO market, and its steady dividend and buyback programs.

    We’re taking the Morgan Stanley funds and redeploying them into Constellation Brands on a nearly dollar-for-dollar basis. This was a milestone week for the Corona beer maker as it received enough shareholder votes at a special meeting to execute its plan to remove its dual-class share structure. We wrote all about the event Thursday, explaining why this is great news from a corporate governance standpoint and should lead to a more shareholder-friendly capital allocation policy. We anticipate less expensive and unprofitable acquisitions, greater investment in the growth of the beer portfolio, and more share repurchase.

    If Constellation allocates its capital in this fashion, we think the stock’s price-to-earnings multiple will expand over time. But with shares down a bit Friday — more so when we mentioned the buy on the “Morning Meeting” — some may wonder if this decline is an indictment on Constellation’s decision to pay a premium to remove the super-voting Class B shares. We do not think that is the case and think STZ is getting swept up in this sector rotation move out of defensives. Given our propensity to buy strength and sell weakness, we are adding to our STZ position.

    (Jim Cramer’s Charitable Trust is long MS and STZ. See here for a full list of the stocks.)

    As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.

    THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER.  NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB.  NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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  • What Cramer is watching Thursday — cooler inflation, FTX crypto fallout, TJX upgrade

    What Cramer is watching Thursday — cooler inflation, FTX crypto fallout, TJX upgrade

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    U.S. stock futures shot up more than 800 points and the 10-year Treasury yield sank below 4% after CPI release.

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  • What Cramer is watching Wednesday — Disney CEO must go, no Red wave, Meta job cuts

    What Cramer is watching Wednesday — Disney CEO must go, no Red wave, Meta job cuts

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    U.S. stocks lower the day after the midterm election. Investors await results from too-close-to-call races.

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  • Berkshire Hathaway’s operating earnings jump 20%, conglomerate buys back another $1 billion in stock

    Berkshire Hathaway’s operating earnings jump 20%, conglomerate buys back another $1 billion in stock

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    Berkshire Hathaway Chairman and CEO Warren Buffett.

    Andrew Harnik | AP

    Berkshire Hathaway on Saturday posted a solid gain in operating profits during the third quarter despite rising recession fears, while Warren Buffett kept buying back his stock at a modest pace.

    The Omaha-based conglomerate’s operating earnings — which encompass profits made from the myriad of businesses owned by the conglomerate like insurance, railroads and utilities — totaled $7.761 billion in the third quarter, up 20% from year-earlier period.

    Berkshire spent $1.05 billion in share repurchases during the quarter, bringing the nine-month total to $5.25 billion. The pace of buyback was in line with the $1 billion purchased in the second quarter.

    However, Berkshire did post a net loss of $2.69 billion in the third quarter, versus a $10.34 billion gain a year before. The quarterly loss was largely due to a drop in Berkshire’s equity investments amid the market’s rollercoaster ride.

    Berkshire suffered a $10.1 billion loss on its investments during the quarter, bringing its 2022 decline to $63.9 billion. The legendary investor told investors again that the amount of investment losses in any given quarter is “usually meaningless.”

    Shares of Buffett’s conglomerate have been outperforming the broader market this year, with Class A shares dipping about 4% versus the S&P 500‘s 20% decline. The stock dipped 0.6% in the third quarter.

    Buffett continued to buy the dip in Occidental Petroleum in the third quarter, as Berkshire’s stake in the oil giant has reached 20.8%. In August, Berkshire received regulatory approval to purchase up to 50%, spurring speculation that it may eventually buy all of Houston-based Occidental.

    The conglomerate amassed a cash pile of nearly $109 billion at the end of September, compared to a total of $105.4 billion at the end of June.

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  • U.S. payrolls surged by 261,000 in October, better than expected as hiring remains strong

    U.S. payrolls surged by 261,000 in October, better than expected as hiring remains strong

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    Job growth was stronger than expected in October despite Federal Reserve interest rate increases aimed at slowing what is still a strong labor market.

    Nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%, the Labor Department reported Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 more jobs, but worse than the 3.5% estimate for the unemployment rate.

    Although the number was better than expected, it still marked the slowest pace of job gains since December 2020.

    Average hourly earnings grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to serve as a price pressure as worker pay is still well short of the rate of inflation. The yearly growth met expectations while the monthly gain was slightly ahead of the 0.3% estimate.

    Health care led job gains, adding 53,000 positions, while professional and technical services contributed 43,000, and manufacturing grew by 32,000.

    Leisure and hospitality also posted solid growth, up 35,000 jobs, though the pace of increases has slowed considerably from the gains posted in 2021. The group, which includes hotel, restaurant and bar jobs along with related sectors, is averaging gains of 78,000 a month this year, compared with 196,000 last year.

    Heading into the holiday shopping season, retail posted only a modest gain of 7,200 jobs. Wholesale trade added 15,000, while transportation and warehousing was up 8,000.

    The unemployment rate rose 0.2 percentage point even though the labor force participation rate declined by one-tenth of a point to 62.2%. An alternative measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, also edged higher to 6.8%.

    Stock market futures rose following the nonfarm payrolls release, while Treasury yields also were higher.

    September’s jobs number was revised higher, to 315,000, an increase of 52,000 from the original estimate. August’s number moved lower by 23,000 to 292,000.

    The new figures come as the Fed is on a campaign to bring down inflation running at an annual rate of 8.2%, according to one government gauge. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point interest rate increase, taking benchmark borrowing rates to a range of 3.75%-4%.

    Those hikes are aimed in part at cooling a labor market where there are still nearly two jobs for every available unemployed worker. Even with the reduced pace, job growth has been well ahead of its pre-pandemic level, in which monthly payroll growth averaged 164,000 in 2019.

    But Tom Porcelli, chief U.S. economist at RBC Capital Markets, said the broader picture is of a slowly deteriorating labor market.

    “This thing doesn’t fall of a cliff. It’s a grind into a slower backdrop,” he said. “It works this way every time. So the fact that people want to hang their hat on this lagging indicator to determine where we are going is sort of laughable.”

    Indeed, there have been signs of cracks lately.

    Amazon on Thursday said it is pausing hiring for roles in its corporate workforce, an announcement that came after the online retail behemoth said it was halting new hires for its corporate retail jobs.

    Also, Apple said it will be freezing new hires except for research and development. Ride-hailing company Lyft reported it will be slicing 13% of its workforce, while online payments company Stripe said it is cutting 14% of its workers.

    Fed Chairman Jerome Powell on Wednesday characterized the labor market as “overheated” and said the current pace of wage gains is “well above” what would be consistent with the central bank’s 2% inflation target.

    “Demand is still strong,” said Amy Glaser, senior vice president of business operations at Adecco, a staffing and recruiting firm. “Everyone is anticipating at some point that we’ll start to see a shift in demand. But so far we’re continuing to see the labor market defying the law of supply and demand.”

    Glaser said demand is especially strong in warehousing, retail and hospitality, the sector hardest hit by the Covid pandemic.

    This is breaking news. Please check back here for updates.

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  • Stocks making the biggest moves after hours: Avis, Stryker and more

    Stocks making the biggest moves after hours: Avis, Stryker and more

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    A customer waits for his car at the garage of Avis Budget Group at the San Francisco airport.

    David Paul Morris | Bloomberg | Getty Images

    Check out the companies making headlines in after-hours trading.

    Avis Budget Group – Shares of the budget care rental company jumped 2% following its quarterly results. Avis reported adjusted per-share earnings of $21.70, compared to expectations of $14.64 per share, according to Refinitiv.

    Stryker – The medical technology company fell 5.5% after it reported a miss on the top line in its latest quarterly results. Stryker posted adjusted earnings per share of $2.12, compared to estimates of $2.23, according to Refinitiv. The company narrowly beat expectations on revenue.

    Hologic – Shares of the medical supplier added 7.5% as it beat expectations of analysts’ expectations on top and bottom lines for the latest quarter, according to Street Account. For the fiscal year ending September 2023, the company expects earnings per share between $3.30 and $3.60 compared to FactSet’s expectation of $3.43, while revenue is expected by the company between $3.7 billion and $3.9 billion against the anticipated $3.81 billion.

    Goodyear Tire & Rubber Company – Shares of the tire company tumbled more than 8%. Goodyear posted quarterly earnings per share of 40 cents on revenue of $5.31 billion. Analysts expected per-share earnings of 55 cents on revenue of $5.36 billion, according to Street Account.

    IDEXX Laboratories – The science company with a focus on animals and water added 2.8% in post-market trading as investors looked to earnings coming Tuesday ahead of the market’s open.

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  • Oil giant Shell reveals plans to hike dividend as it reports third-quarter profit

    Oil giant Shell reveals plans to hike dividend as it reports third-quarter profit

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    The logo of Shell on an oil storage silo, beyond railway tanker wagons at the company’s Pernis refinery in Rotterdam, Netherlands, on Sunday, Oct. 23, 2022.

    Bloomberg | Bloomberg | Getty Images

    British oil major Shell reported a third-quarter profit Thursday, but lower refining and trading revenues brought an end to its run of record quarterly earnings.

    Shell posted adjusted earnings of $9.45 billion for the three months through to the end of September, meeting analyst expectations of $9.5 billion according to Refinitiv. The company posted adjusted earnings of $4.1 billion over the same period a year earlier and notched a whopping $11.5 billion for the second quarter of 2022.

    The oil giant said it planned to increase its dividend per share by around 15% for the fourth quarter 2022, to be paid out in March 2023. It also announced a new share buyback program, which is set to result in an additional $4 billion of distributions and expected to be completed by its next earnings release.

    Shares of Shell are up over 41% year-to-date.

    The London-headquartered oil major reported consecutive quarters of record profits through the first six months of the year, benefitting from surging commodity prices following Russia’s invasion of Ukraine.

    Shell warned in an update earlier this month, however, that lower refining and chemicals margins and weaker gas trading were likely to negatively impact third-quarter earnings.

    On Thursday, the company said a recovery in global product supply had contributed to lower refining margins in the third quarter, and gas trading earnings had also fallen.

    “The trading and optimisation contributions were mainly impacted by a combination of seasonality and supply constraints, coupled with substantial differences between paper and physical realisations in a volatile and dislocated market,” Shell said in a its earnings release.

    Change in leadership

    The group’s results come soon after it was announced CEO Ben van Beurden will step down at the end of the year after nearly a decade at the helm.

    Wael Sawan, currently Shell’s director of integrated gas, renewables and energy solutions, will become its next chief executive on Jan. 1.

    A dual Lebanese-Canadian national, Sawan has held roles in downstream retail and various commercial projects during his 25-year career at Shell.

    “I’m looking forward to channelling the pioneering spirit and passion of our incredible people to rise to the immense challenges, and grasp the opportunities presented by the energy transition,” Sawan said in a statement on Sept. 15, adding that it was an honor to follow van Beurden’s leadership.

    “We will be disciplined and value focused, as we work with our customers and partners to deliver the reliable, affordable and cleaner energy the world needs.”

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