ReportWire

Tag: financial results

  • Saudi oil giant Aramco becomes latest energy firm to post record profits | CNN Business

    Saudi oil giant Aramco becomes latest energy firm to post record profits | CNN Business

    [ad_1]


    Dubai
    CNN
     — 

    Saudi Arabian oil giant Aramco on Sunday reported a record annual net profit of $161.1 billion for 2022, up 46% from the year earlier, on higher energy prices, increased volumes sold and improved margins for refined products.

    The profits follow similar reports in February from international peers BP, Shell, Exxon Mobil and Chevron which have mostly posted record profits for last year.

    Oil prices swung wildly in 2022, climbing on geopolitical worries amid the war in Ukraine, then sliding on weaker demand from top importer China and worries of an economic contraction.

    “Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real – including contributing to higher energy prices,” Aramco’s chief executive Amin Nasser said in the results statement.

    To address those challenges, the company is not only focused on expanding oil, gas and chemicals production, but also investing in new lower-carbon technologies with potential to achieve additional emission reductions, Nasser said.

    Aramco’s capital expenditure rose 18% to $37.6 billion in 2022 and the company said it expects this year’s spending to be around $45.0 billion to $55.0 billion including external investments.

    Aramco declared a dividend of $19.5 billion for the fourth quarter, an increase of 4% from the previous quarter.

    Its board also recommended to issue bonus shares, with eligible shareholders receiving one share for every 10 shares owned.

    Free cash flow reached a record of $148.5 billion in 2022, compared to $107.5 billion in 2021.

    [ad_2]

    Source link

  • Credit Suisse delays annual report after ‘late call’ from the SEC | CNN Business

    Credit Suisse delays annual report after ‘late call’ from the SEC | CNN Business

    [ad_1]


    London
    CNN
     — 

    Credit Suisse can’t catch a break.

    In the latest piece of troubling news, the beleaguered Swiss bank has delayed the publication of its 2022 annual report following a “late call” from the US Securities and Exchange Commission on Wednesday evening.

    The SEC got in touch over revisions the bank had previously made to its cash flow statements for 2019 and 2020, Credit Suisse

    (CS)     said in a statement Thursday.

    Shares in the bank, which have been trading around record lows, slid 5%.

    “Management believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments received,” the company said.

    Credit Suisse added that its 2022 financial results were not impacted. Those revealed the biggest annual loss since the financial crisis in 2008, laying bare the scale of the challenge the bank faces as it attempts a turnaround.

    Thursday’s news underscores that challenge and will also add to concerns about governance at Credit Suisse. It is already in the crosshairs of Switzerland’s financial regulator, which is reportedly looking into comments the lender’s chairman made about the health of its finances.

    Customers withdrew 111 billion Swiss francs ($121 billion) in the final three months of 2022, when the bank was hit by social media speculation that it was on the brink of collapse.

    The rumors, which sparked a selloff in the lender’s shares, followed a series of missteps and compliance failures that have hurt the bank’s reputation and profit, as well as costing top executives their jobs.

    Finma, the Swiss regulator, is seeking to establish the extent to which Axel Lehmann, and other bank representatives, were aware that clients were still withdrawing funds when he told reporters that outflows had stopped, Reuters reported last month, citing people familiar with the matter.

    Finma declined to comment and Credit Suisse told CNN it did not “comment on speculation.”

    In October, Credit Suisse embarked on a “radical” restructuring plan that entails cutting 9,000 full-time jobs, spinning off its investment bank and focusing on wealth management.

    “We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises,” CEO Ulrich Körner said on February 9.

    [ad_2]

    Source link

  • $30 million of Funko Pop! toys will be thrown in the trash | CNN Business

    $30 million of Funko Pop! toys will be thrown in the trash | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Thirty million dollars worth of Funko

    (FNKO)     Pop! figures – those big-headed, vinyl pop-culture dolls – will soon make their way into the hands of a new collector: The garbage collector.

    Funko said in its fourth quarter earnings report that a combination of waning demand for the toys and a surplus of inventory is creating financial trouble for the company. Last year, they had to rent excess warehouse space just to hold the buildup of Funko figures, which range from Baby Yoda to Eddie Van Halen.

    Funko was holding onto about $246.4 million worth of dolls at the end of 2022. That’s 48% more than what they had on hand just one year before.

    The company intends to “eliminate” a bit of that nearly $250 million in inventory in the first half of 2023 “to reduce fulfillment costs by managing inventory levels to align with the operating capacity of our distribution center,” Funko said in a statement Wednesday. “This is expected to result in a write down in the first half of 2023 of approximately $30 to $36 million.”

    In short, the product they’re storing is now worth less than the cost of keeping it on hand, so they’re dumping at least $30 million worth of it.

    On a call with investors last week, CEO Brian Mariotti said Funko had already filled its Arizona distributing center to the brim with dolls and was forced to rent excess storage containers for them. The cost of that extra storage, he said, was causing the company to lose money at a rapid clip.

    Company executives also announced that they would cut 10% cut of their workforce as a cost-saving measure.

    Funko benefited during the pandemic boom, posting $1 billion in net sales for 2021 – a 58% increase from 2020 – but those gains didn’t hold up as the global economy reopened.

    The company reported a total loss of $47 million in the fourth quarter of 2022. That’s down from a profit of $17 million during the same period the year before.

    “It was clear on our last earnings call that the business and our operations hit an inflection point,” Mariotti said. “A combination of macro factors and Funko-specific issues have disrupted our financial and operating performance to an unacceptable degree.”

    Funko stock has fallen by 9.4% so far this year.

    [ad_2]

    Source link

  • What you need to know about this earnings season | CNN Business

    What you need to know about this earnings season | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    About 99% of all S&P 500 companies have reported fourth quarter earnings and the results aren’t great.

    Companies listed in the S&P 500 index beat analysts’ earnings estimates by an average of just 1.3% last quarter. For context, that’s way down on the index’s 5-year average of 8.6%, according to FactSet data.

    What’s happening: There have been some steep and disappointing profit misses as corporate America feels the sting of sticky inflation and the Federal Reserve’s interest rate hikes.

    Tech companies fared poorly this season: Apple

    (AAPL)     recorded a rare earnings miss while Intel

    (INTC)     and Google-parent company Alphabet also fell short of expectations.

    But it wasn’t all doom-and-gloom. Energy companies brought in yet another quarter of record profits, with Big Oil companies — such as Chevron, ConocoPhillips, Exxon and Shell — notching their most profitable years in history. Elsewhere, Tesla

    (TSLA)     reported record revenue gains and beat earnings expectations. Big box retailers Target

    (TGT)     and Walmart

    (WMT)     also surpassed estimates as US consumers kept on spending.

    Here’s what else traders need to know about the final few months of last year and beyond.

    Corporate profits could drop for the first time since 2020

    S&P 500 companies are on track to report a 4.6% drop in earnings year-over-year, according to FactSet data. That would mark their first earnings decline since the third quarter of 2020, when Covid shut down large swaths of the economy.

    Gloomy forecasts abound

    About 81 S&P 500 companies have issued negative earnings-per-share guidance for the first quarter of 2023, according to FactSet. That’s a lot higher than the 23 companies reporting positive guidance.

    There was no shortage of foreboding forecasts from top execs on earnings calls this season.

    Walmart beat estimates last quarter, but they also lowered expectations for future earnings.

    Home Depot

    (HD)     CEO Ted Decker said he was concerned that consumers were becoming less resilient to the economy. “We noted some deceleration in certain products and categories, which was more pronounced in the fourth quarter,” he said on an analyst call.

    Lowe’s executives, meanwhile, warned that they were preparing for a “more cautious consumer” this year.

    Investors feel like celebrating

    Wall Street traders appear to be taking this dour earnings season in their stride. The market is “rewarding positive earnings surprises more than average and punishing negative earnings surprises much less than average for the fourth quarter,” reports FactSet.

    Inflation is (still) a big deal

    More than 325 S&P 500 companies have cited the term “inflation” during their earnings calls for the fourth quarter. That’s well above the 10-year average of 157, according to FactSet document searches.

    But the worries over price hikes appear to be waning, at least a little bit. This marks the lowest number of S&P 500 companies using the “I”-word on their calls since the third quarter of 2021. Since last quarter, the number of inflation mentions has fallen by about 20%.

    ▸ ISM Services PMI — a report that measures the strength of the US service sector — is due out at 10 a.m. ET. The data is expected to show a slight slowdown in growth between January and February (54.5 in February vs. 56.5 in January. For context, a reading above 50 means the services economy is expanding).

    That deceleration would be a big deal. It would signal that the economy is beginning to cool and that the Fed’s efforts to fight inflation by raising interest rates are working. If services sector growth accelerates, however, it could signal that more aggressive rate hikes are ahead and send markets lower.

    ▸ Wall Street is anticipating (or dreading, depending on who you ask) next Friday’s unemployment report. The February data is expected to shed some light on a shockingly resilient labor market.

    Another unexpected surge in non-farm payrolls, like the 517,000 new jobs added in January, could indicate more Fed rate hikes are ahead. That could roil markets in this “good news is bad news” environment.

    Analysts expect that the economy added 200,000 new jobs last month, according to Refinitiv data.

    ▸ The Chinese economy surprised investors this week by quickly bouncing back from its zero-Covid shutdowns. China’s first consumer price index, producer price index and trade figures of 2023 are set to be released next week, which will show the full extent of the country’s rebound.

    “These numbers will offer the first official indications of mainland China’s reopening effect following the rebound seen in PMI numbers,” wrote analysts at S&P Global.

    Global manufacturing rose in February for the first time in seven months, according to the latest PMI surveys compiled by S&P Global. That growth was largely spurred on by China’s reopening.

    Shares of Silvergate Capital, a large lender to cryptocurrency firms, plunged nearly 60% — a record drop — on Thursday after the company told the Securities and Exchange Commission that it won’t be able to file its annual report on time and cited concerns about its ability to remain in business.

    The majority of Silvergate’s crypto clients, including Coinbase, Paxos, Galaxy Digital and Crypto.com, quickly cut ties with the bank amid the chaos.

    So what does it all mean?

    My colleague Allison Morrow explains: The California-based lender reported a $1 billion loss for the fourth quarter as investors panicked over the collapse of FTX, the exchange founded by Sam Bankman-Fried that is now at the center of a massive federal fraud investigation.

    FTX’s collapse in November rippled through the digital asset sector, forcing several firms to halt operations and even declare bankruptcy as liquidity dried up and investors fled.

    But unlike FTX, BlockFi, Celsius, Voyager and other crypto companies that folded last year, Silvergate is a traditional, federally insured lender that has positioned itself as a gateway to the crypto sector.

    It’s among the first major instances of crypto’s volatility spilling into the mainstream banking system — a scenario regulators and crypto skeptics have long feared.

    [ad_2]

    Source link

  • The US dollar is at a crossroads | CNN Business

    The US dollar is at a crossroads | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Wall Street investors are reaching for their neck braces in preparation for yet another volatile swing in stock markets: A surging US dollar.

    The greenback — which is not just the dominant global currency but also “the key variable affecting global economic conditions,” according to the New York Federal Reserve — reached a 20-year high last year after the Fed turned hawkish with its aggressive rate hikes.

    Since then, inflation seemed to have softened, pushing the dollar down. But in recent weeks, as a slew of economic data has shown the Fed’s inflation battle is far from over, the currency soared by about 4% from its recent lows, and now sits near a seven-week high.

    Investors are stressing about this sudden rebound, since a stronger dollar means American-made products become more expensive for foreign buyers, overseas revenue decreases in value and global trade weakens.

    Multinational companies, naturally, aren’t thrilled about any of this. And around 30% of all S&P 500 companies’ revenue is earned in markets outside the US, said Quincy Krosby, chief global strategist for LPL Financial.

    What’s happening: The US dollar “finds itself at a significant crossroads yet again,” said Krosby. “While the Fed remains steadfastly data dependent, the dollar’s course as well remains focused on inflation and the Fed’s monetary response.”

    “The strong US dollar has been a headwind for international earnings and stock performance (for US investors),” wrote Wells Fargo analysts in a recent note.

    February was a rough month for markets: The Dow ended February down 4.19%, the S&P 500 fell 2.6% and the Nasdaq lost just over 1%.

    What’s next: Investors are clearly focused on the next Fed policy meeting, which is still three weeks away, for signals about the direction of rates. But until then, investors may gain some insight Tuesday when Fed Chairman Jerome Powell speaks before the Senate Banking Committee.

    They’ll also be watching next Friday’s jobs report for any softening in the labor market that could temper the Fed’s hawkish mood.

    Don’t forget the debt ceiling: Another significant threat to the dollar is looming in Congress — the ongoing debt ceiling fight. The United States could start to default on its financial obligations over the summer or in the early fall if lawmakers don’t agree to raise the debt limit — its self-imposed borrowing limit — before then, according to a new analysis by the Bipartisan Policy Center.

    That could potentially lead to a disastrous downgrade to America’s credit rating and could send the dollar spiraling as investors start to sell off their US assets and move their money to safer currencies.

    “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise,” Treasury Secretary Janet Yellen told CNN in January.

    ▸ A lot has changed in the last twenty years. The gender pay gap hasn’t.

    In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.

    That’s a big leap from the 65 cents that women were earning in 1982. But it has barely moved from the 80 cents they were earning in 2002.

    “Higher education, a shift to higher-paying occupations and more labor market experience have helped women narrow the gender pay gap since 1982,” the Pew analysis noted. “But even as women have continued to outpace men in educational attainment, the pay gap has been stuck in a holding pattern since 2002, ranging from 80 to 85 cents to the dollar.”

    ▸ Initial jobless claims, which measures the number of people who filed for unemployment insurance for the first time last week, are due out at 8:30 a.m. ET on Thursday.

    This will be the last official jobs data investors see before February’s heavily anticipated unemployment report next Friday.

    Economists are expecting 195,000 Americans to have filed for unemployment, which is higher than the seasonally adjusted 192,000 who applied two weeks ago.

    Initial claims have come in lower than expected in recent weeks and remain well below their pre-pandemic levels.

    The white-hot labor market in the US added more than 500,000 jobs in January, blowing analysts’ expectations out of the water and bringing the unemployment rate to its lowest level since May of 1969.

    That’s bad news for the Federal Reserve where policymakers have been attempting to tame inflation by cooling the economy through painful interest rate hikes.

    ▸ It’s a big day for groceries. Kroger (KR), Costco (COST) and Anheuser-Busch (BUD) all report earnings on Thursday.

    Investors will be watching closely for clues about consumer sentiment during an uncertain retail earnings season. On Tuesday, Kohl’s reported that it had a rough holiday season and executives at the company put the blame on inflation. The company said higher prices squeezed sales and forced it to mark down some products to entice shoppers — which hurt its profit margin.

    Those comments echoed those of other big box retailers like Walmart (WMT) and Target (TGT), who have said consumers are feeling the pinch of inflation.

    Still, Target and Walmart’s bottom lines were bolstered by food sales even as consumers pulled back on discretionary purchases.

    The US Senate voted on Wednesday to overturn a Biden administration retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other ESG factors when picking investments.

    As my CNN colleagues Ali Zaslav, Clare Foran and Ted Barrett write: The rule is not mandated – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

    Republicans complained that the rule is a “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines.

    “This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,’” countered Senator Patty Murray (D-WA) on the Senate floor Wednesday. “It’s about acknowledging these factors are reasonable for asset managers to consider.”

    The measure will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

    [ad_2]

    Source link

  • Norfolk Southern is paying $6.5 million to derailment victims. Meanwhile, it’s shelling out $7.5 billion for shareholders | CNN Business

    Norfolk Southern is paying $6.5 million to derailment victims. Meanwhile, it’s shelling out $7.5 billion for shareholders | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Norfolk Southern CEO Alan Shaw pledged Tuesday the freight railroad will spend $6.5 million to help those affected by the release of toxic chemicals from its derailment nearly three weeks ago in East Palestine, Ohio. But in a plan released earlier this year, the company said it’s planning to spend more than a thousand times that amount — $7.5 billion — to repurchase its own shares in order to benefit its shareholders.

    The company spent $3.4 billion on share repurchases last year, and $3.1 billion in 2021, bringing its recent share repurchases to $6.5 billion. That towers over what it said is its financial commitment to East Palestine, which it said exceeds $6.4 million in direct aid to families and government agencies, in addition to what will be required in cleanup costs.

    There is no estimate as to the total cost to Norfolk Southern from the derailment, including the cost of cleanup that the Environmental Protection Agency says will be the railroad’s responsibility.

    It’s not clear how much of the accident’s cost will fall on Norfolk Southern. The company revealed Wednesday during a conference call with investors that it has as much as $1.1 billion worth of liability insurance coverage that it can draw upon to compensate third parties for losses caused by the accident. It also has about $200 million worth of insurance coverage to cover damage to its own property, such as tracks or equipment.

    In March 2022, Norfolk Southern

    (NSC)     announced a new $10 billion share repurchase plan. Its latest annual financial report, filed just hours before the derailment this month, shows that it still had $7.5 billion available to buy additional shares under that repurchase plan as of December 31.

    Norfolk Southern did not respond to questions Wednesday on whether it expects to change its share repurchase plans in the wake of the derailment.

    The company also returned an additional $1.2 billion to shareholders in the form of dividend payments in 2022, and $1 billion in 2021, bringing total payments to shareholders to $4.6 billion last year and $4.1 billion in 2021.

    The shareholders did much better than the company’s 19,000 employees. Total employee compensation in 2022 came to $2.6 billion, up from $2.4 billion in 2021.

    The amount that Norfolk Southern and other major freight railroads are spending on shareholders got a lot of attention in December, when they successfully fought a move in Congress to require them to give hourly workers at least seven sick days a year as part of a labor contract imposed on the industry by Congress in order to avoid an economically crippling rail strike. And it’s getting new attention in the wake of the derailment, along with questions about whether the environmental disaster could have been avoided if the railroad had spent more on staffing and safety.

    “Corporations do stock buybacks, they do big dividend checks, they lay off workers,” said Democratic Sen. Sherrod Brown of Ohio, on CNN’s State of the Union on Sunday. “They don’t invest in safety rules and safety regulations, and this kind of thing happens.”

    The accident is under investigation by the National Transportation Safety Board. While the cause has yet to be determined, it is known that freight railroads have fought tougher safety rules in the past.

    One rule the industry successfully fought would have required a more modern braking system on trains carrying significant amounts of hazardous materials. The Federal Railroad Administration, which proposed the rule under the Obama administration, estimated a more modern braking system would reduce by nearly 20% the number of rail cars in a derailment that puncture and release their contents.

    The FRA estimated those better brakes would cost the entire industry $493 million, spread over a period of 20 years. The Association of American Railroads, the trade industry group that represents most US freight railroads, estimated a much greater cost — about $3 billion, but again, spread over 20 years. That would mean around $150 million a year for an entire industry that is earning billions of dollars of annual profits.

    Still, it was able to block the rule from ever taking effect, based partly on the argument it was too costly for the potential benefit.

    “The railroads are quick to point out their lack of funds to provide adequate staffing, paid sick leave and improved safety, yet they have billions of dollars to spend on stock repurchases,” said Eddie Hall, national president of the Brotherhood of Locomotive Engineers, the industry’s second-largest union behind the one that represents conductors.

    Share repurchases are designed to help increase the value of the stock by reducing the number of shares outstanding.

    In theory, each remaining share becomes more valuable since it represents a greater percentage of the company’s overall ownership. The earnings per share, a key measure used by investors to judge a company’s profitability, can rise even if the total dollars earned by the company goes down, as the pool of shares available to the public shrinks further.

    But Norfolk Southern’s profits aren’t going down. They’re going up — by quite a bit. It posted record profits from railway operations of $4.45 billion in 2021, and broke that record in 2022 when it earned $4.8 billion on that basis.

    Other freight railroads are also reporting improving profits, and have joined Norfolk Southern in massive share repurchases.

    Union Pacific

    (UNP)     purchased $6.3 billion worth of shares in 2022, and has plans to purchase an additional 84 million shares, worth more than $16 billion at its current value. CSX repurchased $4.7 billion worth of shares last year and has plans to buy an additional $3.3 billion going forward. Like Norfolk Southern, both UP and CSX spent more on share repurchases than they did on total employee compensation.

    Share repurchases are not limited to the rail industry. Chevron

    (CVX)     recently announced plans to repurchase $75 billion worth of its stock with windfall record profits that came from high oil prices. Across corporate America, share repurchases reached almost $1 trillion for the first time last year, coming in at $936 billion according to S&P Dow Jones Indices, up from $882 billion in 2021.

    Share repurchases are forecast to top $1 trillion this year.

    [ad_2]

    Source link

  • Dow drops more than 500 points as retail earnings disappoint | CNN Business

    Dow drops more than 500 points as retail earnings disappoint | CNN Business

    [ad_1]


    New York
    CNN
     — 

    US stocks dropped on Tuesday afternoon after fourth-quarter earnings and forecasts from mega-retailers like Walmart and Home Depot raised concerns about the strength of demand from the US consumer.

    The Dow was down about 500 points, or 1.5%, on Tuesday afternoon. The S&P 500 fell by 1.6% and the Nasdaq Composite was 1.8% lower.

    Walmart

    (WMT)     topped revenue expectations, but shares of the stock fell nearly 2% in morning trading after the retailer lowered its outlook for the year ahead. Walmart

    (WMT)    ’s CFO said that he was worried about inflation and its impact on the US consumer.

    “The consumer is still very pressured, and if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods,” Walmart CFO John Rainey said during the earnings call. “And so that’s why we take a pretty cautious outlook on the rest of the year.”

    Shares of the stock had recovered by the early afternoon and were up by about 0.6%.

    Home Depot

    (HD)     reported record earnings for the fiscal year that ended in January, and boosted both hourly wage and the stock dividend. But the fourth quarter painted a different picture, as the company missed revenue expectations for the first time since 2019, before the pandemic.

    The company also lowered its outlook for the year ahead as executives struck a more cautious tone about recession and inflation forecasts on the call that followed earnings.

    Shares of the stock fell by nearly 6% on Tuesday as the housing market weakens – US existing home sales dropped to their lowest level in more than 12 years in January.

    “After a year of defying gravity, the slowing economy and pressures on consumers have finally caught up with Home Depot,” said Neil Saunders, managing director of GlobalData. “For most of 2022, the number of existing homes sold has been in decline. However, the pace of decline accelerated in December with the volume of completed sales down by a sharp 36.3%.”

    Target, Best Buy, Macy’s and Gap will report later this month.

    Investors, meanwhile, are gearing up for a week full of important economic data. Minutes from the Federal Reserve’s last meeting are coming on Wednesday, a second revision of GDP will be released on Thursday and Friday brings January’s Personal Consumption Expenditures – the Fed’s preferred inflation gauge.

    [ad_2]

    Source link

  • Warren Buffett is missing out on this year’s market comeback | CNN Business

    Warren Buffett is missing out on this year’s market comeback | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN
     — 

    Warren Buffett is arguably the most legendary investor of all time. But the Oracle of Omaha has missed out on this year’s stock market rally. So far, at least.

    Shares of Buffett’s Berkshire Hathaway

    (BRKB)     conglomerate, a company that owns businesses ranging from Geico and the Burlington Northern Santa Fe railroad to consumer brands like Dairy Queen, Duracell and Fruit of the Loom, are down slightly this year — lagging the market, as the S&P 500 is up 6%. (The Nasdaq has done even better, surging 12%.)

    Berkshire Hathaway also has a giant stock portfolio that Buffett helps run. Apple

    (AAPL)     is now by far the top holding for Berkshire, which also has big stakes in Bank of America

    (BAC)    , Chevron

    (CVX)    , American Express

    (AXP)     and Coca-Cola

    (KO)    .

    So is Berkshire’s portfolio, dare we say it, a little too boring? After all, if you want exposure to the big blue chips he owns, you could just buy an S&P 500 index fund.

    Buffett, in fact, has promoted that idea to investors many times, arguing that most individual stock pickers will not be able to beat the market. The 92-year-old Buffett, who has a net worth of more than $100 billion according to Forbes, even said that he wants the trustee in charge of his will to put 90% of his wife’s inheritance in index funds.

    Still, investors pay extremely close attention to Buffett every time he speaks. So traders will be poring over every word in his annual shareholder letter, which will be released the morning of Saturday, February 25, along with Berkshire’s latest earnings report.

    Don’t expect any major surprises. Buffett will probably continue to extol the virtues of a long-term, patient approach to investing and give a bullish outlook for the US economy. And to his credit, that usually pays dividends: Berkshire stock was up 3% last year in a down market.

    But market watchers are looking to see what Buffett says about the current inflationary scourge that has had a big impact on consumers and investors. He has lived through a couple of bouts of high inflation, after all.

    “I would like to hear Buffett address what’s going on with interest rates and inflation up as much they are,” said Steve Check, president of Check Capital Management, an investment firm that owns Berkshire shares. “He talked a lot about how concerned he was in the 1970s and 1980s.”

    Buffett has made numerous comments about inflation over the past few decades. And he was particularly nervous during the late 1970s and early 1980s, when soaring oil prices created an inflationary shock that severely hurt the economy.

    “High rates of inflation create a tax on capital that makes much corporate investment unwise,” Buffett said in his 1980 shareholder letter to Berkshire investors. Buffett also described inflation as a gigantic parasitic “tapeworm” for businesses in 1981.

    Buffett may also need to address how top-heavy and concentrated his portfolio has become. Berkshire’s five largest holdings make up about 75% of the company’s stock investments.

    “The portfolio is significantly overweight [in] technology, energy, consumer staples, and financials relative to the S&P 500,” said Bill Stone, chief investment officer with The Glenview Trust Company, another Berkshire shareholder, in a report. Stone noted that Berkshire also has big stakes in Kraft Heinz

    (KHC)     and oil company Occidental Petroleum

    (OXY)    .

    Investors also want to hear more about what Buffett plans to do with Berkshire’s massive pile of cash. The company has more than $100 billion on its balance sheet. Are more acquisitions coming?

    Buffett has talked for the past few years about how he’s longing to do an “elephant-sized” deal with Berkshire’s cash. Its most recent big deal was last year’s purchase of insurer Alleghany for $11.6 billion.

    Still, the recent sluggish performance of Berkshire’s stock is unlikely to deter the faithful Buffett fans, many of whom are expected to make the annual pilgrimage to Omaha on May 6 for the company’s shareholder meeting.

    Berkshire vice chairman Charlie Munger will likely be on stage with Buffett. So will Greg Abel, the chairman and CEO of Berkshire Hathaway Energy who Buffett has handpicked to eventually succeed him as Berkshire Hathaway CEO.

    Buffett’s faith in the US economy is well founded. American consumers have proven to be remarkably resilient despite rampant inflation. The surprisingly strong retail sales gains for January is further proof of that.

    Investors will get several more clues about consumer spending this week when several top retailers report earnings.

    Dow components Walmart

    (WMT)     and Home Depot

    (HD)     are the highlights. Walmart

    (WMT)    , which has a massive grocery business, should shed some light on how shoppers are coping with surging grocery prices.

    Walmart could still benefit from its reputation as a place for bargains, though. That could even attract more affluent shoppers looking to save a buck.

    “With inflation remaining elevated in the U.S., we expect Walmart to see continued trade-down benefits…particularly from higher-income customers,” said Arun Sundaram, an analyst at CFRA Research, in a report.

    And investors will be looking for clues about the health of the housing market when Home Depot reports. Placer.ai, a research firm that measures foot traffic at top retailers, said in a recent report that consumers are returning to Home Depot and rival Lowe’s at almost pre-pandemic levels — even despite the housing slowdown.

    One reason? Current homeowners may decide to spend more on renovations if they now plan to stick in their current house longer instead of looking to sell.

    “Although the hot home-buying market is cooling off…foot traffic remains close to pre-pandemic levels due to a shift towards projects aimed at sprucing up a current living space,” said Placer.ai’s Ezra Carmel in a report. “It appears that projects that enhance the prospect of staying in place also have the ability to drive visits.”

    Investors will be keeping close tabs on several other retailers set to report earnings this week, including TJX

    (TJX)     — the owner of TJ Maxx, Marshalls and HomeGoods — as well as online retailers eBay

    (EBAY)    , Etsy

    (ETSY)    , Overstock

    (OSTK)    , Wayfair

    (W)     and China’s Alibaba

    (BABA)    .

    The US government is also set to release personal spending figures for January on Friday, another data point that will give a glimpse of consumers’ financial health.

    Monday: US stock and bond markets closed for Presidents’ Day

    Tuesday: US existing home sales; Eurozone and UK PMI; earnings from Walmart, Home Depot, Medtronic

    (MDT)    , Fluor

    (FLR)    , Molson Coors

    (TAP)    , Caesars Entertainment

    (CZR)    , Diamondback Energy

    (FANG)    , Chesapeake Energy

    (CHK)    , Palo Alto Networks

    (PANW)    , Coinbase, La-Z-Boy

    (LZB)     and Hostess Brands

    (TWNK)

    Wednesday: Weekly crude oil inventories; earnings from Stellantis, Baidu

    (BIDU)    , TJX, Garmin

    (GRMN)    , Overstock, Wingstop

    (WING)    , Nvidia

    (NVDA)    , eBay, Etsy and Bumble

    Thursday: US weekly jobless claims; US Q4 GDP (second estimate); Eurozone inflation; Turkey interest rate decision; earnings from Alibaba, Netease

    (NTES)    , Keurig Dr Pepper

    (KDP)    , Wayfair, Newmont, Domino’s

    (DPZ)    , Papa John’s

    (PZZA)    , Yeti

    (YETI)    , Nikola, CNN owner Warner Bros. Discovery, Block

    (SQ)    , Booking Holdings

    (BKNG)    , Live Nation

    (LYV)    , Carvana

    (CVNA)    , Intuit

    (INTU)     and Beyond Meat

    (BYND)

    Friday: US personal income and spending; US PCE inflation figures; US new home sales; Japan inflation; Germany Q4 GDP; earnings from CIBC

    (CM)    , Scripps

    (SSP)     and Cinemark

    (CNK)

    Saturday: Berkshire Hathaway earnings and Warren Buffett annual shareholder letter

    [ad_2]

    Source link

  • In a market that’s gone mad, investors can embrace these dependable stocks | CNN Business

    In a market that’s gone mad, investors can embrace these dependable stocks | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN
     — 

    Many people don’t have the time or inclination to do deep research on stocks.

    It’s often easier to buy an exchange-traded fund that owns a basket of the top blue chips, like Apple

    (AAPL)    , Microsoft

    (MSFT)     and Amazon

    (AMZN)    . Other investors like to bet on themes and memes instead of poring over a company’s financial statements and regulatory filings. Hence the recent craze for momentum stocks like GameStop

    (GME)     and AMC

    (AMC)    .

    But for old-fashioned investors with a little gray in their hair (and veteran business journalists like yours truly) there are other ways to find winning stocks for the long haul.

    I’ve been running stock screens using market data software, first from FactSet and now from Refinitiv, on and off during the more than 20 years I’ve worked at CNN Business. (It was CNNMoney when I first started.)

    I’ve typically done this stock picking feature in early to mid February as a Stocks We Love type of story, pegging it to Valentine’s Day. (Here’s the first one I did in 2002!) So they’ve often been littered with cheesy references to how romantic it is to find a reliable company you can count on for a long-term relationship.

    Well, investing trends have changed a bit in the past two decades. Some would argue that active investing (actually choosing individual companies) is no longer in vogue thanks to the rise of passively run index funds.

    And to be fair, the experts are right, mostly. Investors usually are better off owning an index ETF. If the goal is saving for retirement in particular, a diversified mix of companies is safer than trying the riskier strategy of identifying individual winners and losers.

    But you know what they say about not being able to teach an old dog new tricks? I still believe there’s value in looking for quality stocks at bargain prices. Legendary investors like Warren Buffett and Peter Lynch of Fidelity fame would likely agree.

    With that in mind, I ran one final stock screen for this Valentine’s Day. Like my past screens, I tried to find companies with strong fundamentals (solid sales and earnings growth), low levels of debt and high returns on equity. And perhaps most importantly, I screened for companies trading at a reasonable price based on their estimated earnings.

    This screen wound up identifying 33 companies that could make sense as a buy-and-hold investment. All of them generated double-digit sales growth annually over the past five years and they are all expected to report profit growth of at least 10% a year for the next few years.

    Some of the more prominent companies on the list? IT services/consulting giant Accenture

    (ACN)     made the cut. So did software leader Adobe

    (ADBE)    , semiconductor manufacturer Analog Devices

    (ADI)    , chip equipment juggernaut Applied Materials

    (AMAT)     and Venmo owner PayPal

    (PYPL)    .

    That’s a fair amount of exposure to the tech sector. But several other non-techs made my list too.

    Auto insurer Progressive

    (PGR)     (hi Flo!), health insurer Humana

    (HUM)    , cosmetics retailer Ulta Beauty

    (ULTA)    , UGG boots and Hoka sneakers maker Deckers Outdoor

    (DECK)     and trucker JB Hunt

    (JBHT)     met my criteria.

    As did financial services firm Raymond James

    (RJF)    , perhaps most famous for having its name on the Tampa Bay Buccaneers stadium Tom Brady briefly called home.

    None of these stocks are likely to be moonshots that will surge because of comments that someone makes on Reddit. But they might offer a little more in the way of security and dependability. And after all, isn’t that what we all want from a long-term partner on Valentine’s Day?

    The broader market has continued to rally, in large part due to hopes that inflation pressures (and more Federal Reserve rate hikes) will soon be things of the past. But consumers are still skittish when it comes to buying more costly items.

    Meat processing giant Tyson Foods

    (TSN)     reported disappointing results last week, largely due to a pullback in consumer demand for pricier beef. Luxury apparel retailer Capri Holdings

    (CPRI)    , which owns the Versace, Jimmy Choo and Michael Kors brands, also posted lousy numbers.

    But shoppers still seem to be spending on more affordable goods. Pepsi

    (PEP)     reported sales and earnings last week that topped Wall Street’s targets. Fast food giant Yum! Brands

    (YUM)    , the owner of Taco Bell, KFC and Pizza Hut, issued solid results too.

    That could bode well for several leading consumer companies that are on tap to report earnings this week, including Pepsi competitor Coca-Cola

    (KO)     as well as Restaurant Brands

    (QSR)    , the parent company of Burger King, Popeyes, Tim Horton and Firehouse Subs.

    Kraft Heinz

    (KHC)    , restaurant owner Bloomin’ Brands

    (BLMN)    , Sam Adams brewer Boston Beer

    (SAM)     and food delivery service DoorDash are also scheduled to release their latest results this week.

    The restaurant stocks in particular could do well.

    “Consumers continue to trade goods for services,” said Jharonne Martis, director of consumer research for Refinitiv, in a report. Martis noted that the restaurant and broader leisure sector has continued to outperform other consumer-related industries this year.

    Inflation is obviously still a concern for big consumer brands. Companies have to deal with the challenge of trying to pass on higher costs to customers without driving them away.

    That could become less of a problem though.

    The US government will report both its Consumer Price Index and Producer Price Index for January this week and economists are hoping for a further slowdown in year-over-year prices. Consumer prices rose 6.5% over the past 12 months through December, down from a 7.1% pace in November.

    “There are positive signs. Inflation has passed the peak so there is a little bit of a respite,” said Kathryn Kaminski. chief research strategist with AlphaSimplex.

    Higher prices were a problem for retailers during the holidays. Retail sales fell 1.1% in December from November, according to figures from the US government, following a 0.6% drop in November.

    But retail sales are expected to bounce back as inflation becomes less of an issue. Economists are forecasting a 0.9% increase in retail sales for January when those numbers come out later this week.

    Monday: Earnings from TreeHouse Foods

    (THS)    , Avis Budget

    (CAR)    , FirstEnergy

    (FE)    , IAC

    (IAC)     and Palantir

    Tuesday: US CPI; Japan GDP; UK employment report; earnings from Coca-Cola, Asahi Group, Marriott

    (MAR)    . Cleveland-Cliffs

    (CLF)    , Restaurant Brands, Suncor Energy

    (SU)    , Airbnb, Herbalife

    (HLF)    , GoDaddy

    (GDDY)     and TripAdvisor

    (TRIP)

    Wednesday: US retail sales; UK inflation; weekly crude oil inventories; annual meeting of Charlie Munger’s Daily Journal Co

    (DJCO)    ; earnings from Kraft Heinz, Lithia Motors

    (LAD)    , Sunoco

    (SUN)    , Sonic Automotive

    (SAH)    , Ryder

    (R)    , Barrick Gold

    (GOLD)    , Biogen

    (BIIB)    , Owens Corning

    (OC)    , Krispy Kreme, Cisco

    (CSCO)    , AIG

    (AIG)    , Shopify

    (SHOP)     and Boston Beer

    Thursday: US PPI; US weekly jobless claims: US housing starts and building permits; China housing prices; earnings from US Foods

    (USFD)    , Lenovo

    (LNVGF)    , Nestle

    (NSRGF)    , Paramount Global, Southern

    (SO)    , Hasbro

    (HAS)    , Hyatt

    (H)    , Bloomin’ Brands, WeWork, Applied Materials

    (AMAT)    , DoorDash, DraftKings and Redfin

    (RDFN)

    Friday: Earnings from Deere

    (DE)    , AutoNation

    (AN)    , Sands China

    (SCHYF)     and AMC Networks

    (AMCX)

    [ad_2]

    Source link

  • Lyft shares fall nearly 25% after forecasting revenue below estimates | CNN Business

    Lyft shares fall nearly 25% after forecasting revenue below estimates | CNN Business

    [ad_1]



    Reuters
     — 

    Lyft

    (LYFT)     on Thursday forecast current-quarter revenue below Wall Street estimates, blaming extremely cold weather in some of its major markets and lower prices, especially during peak hours, sending its shares down nearly 25% in extended trading.

    The company’s outlook was in contrast to that of its larger rival Uber

    (UBER)    , whose strong presence globally is helping it ride a boom in demand for ride-hailing services from travelers and office-goers

    Lyft’s bigger presence on the U.S. West Coast, a region that analysts have said was trailing the rest of the United States in return to pre-COVID demand, could be hurting its recovery compared with Uber.

    Company president John Zimmer said in an interview that the West Coast had “not fully” recovered but noted a “material improvement.”

    Lyft forecast first-quarter revenue of about $975 million, which fell below analyst estimates of $1.09 billion, according to Refinitiv data.

    Its forecast for first-quarter adjusted earnings before interest, taxes depreciation and amortization (EBITDA), a key measure of profitability that strips out some costs, was between $5 million and $15 million.

    For the fourth quarter, Lyft reported an adjusted EBITDA of $126.7 million, excluding $375 million it had set aside for increasing insurance reserves. Analysts had forecast $91.01 million.

    “We wanted to ensure we strengthened our insurance reserve … the purpose of doing that is to ensure we don’t have that type of volatility going forward, because we did such a large reserve on the high end of what we could expect given the size of our insurance book,” Zimmer said in an interview.

    Active riders rose 8.7% increase to 20.36 million for the fourth quarter, Lyft said. Analysts were expecting 20.30 million, according to FactSet estimates.

    Rideshare was “really back … we’re happy with the current marketplace conditions,” Zimmer said.

    Revenue rose 21% to $1.18 billion, slightly above the average estimate of $1.16 billion.

    [ad_2]

    Source link

  • Here’s what keeps Jerome Powell up at night and interest rates high | CNN Business

    Here’s what keeps Jerome Powell up at night and interest rates high | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Federal Reserve Chairman Jerome Powell threw markets into a tizzy on Tuesday as he spoke about the economy alongside his former boss, Carlyle Group co-founder David Rubenstein, at the Economic Club of Washington.

    Stocks struggled for direction as investors tried to get a read on Powell’s economic outlook, attitude towards inflation and on future interest rate hikes. Wall Street cheered as the Fed chair said the disinflationary process has begun, then soured when he said the road to reaching 2% inflation will be “bumpy” and “long” with more rate hikes ahead.

    Markets soared to new highs, before quickly falling to session lows and then recovering to close the day in the green.

    “Powell doesn’t want to play games with financial markets,” said EY Parthenon chief economist Gregory Daco after the conversation. But at the same time, he said Powell wanted to communicate that the Fed’s “base case was not for inflation to come down as quickly and painlessly as some market participants appear to expect.”

    Here’s why Powell thinks bringing down prices will be more difficult than investors anticipate.

    Structural changes in the labor market: The US economy added an astonishing 517,000 jobs in January, blowing economists’ expectations out of the water. The unemployment rate fell to 3.4% from 3.5%, hitting a level not seen since May 1969.

    The current labor market imbalance is a reflection of the pandemic’s lasting effect on the US economy and on labor supply, said Powell on Tuesday in answer to a question about the report. “The labor market is extraordinarily strong,” he said. Demand exceeds supply by 5 million people, and the labor force participation rate has declined. “It feels almost more structural than cyclical.”

    “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more,” he said.

    Core services inflation: Powell noted that he’s seeing disinflation in the goods sector and expects to soon see declining inflation in housing. But prices remain stubborn for services. Service-sector inflation, which is more sensitive to a strong labor market, is up 7.5% from the year prior through the end of 2022, and has not abated, he said.

    “That sector is not showing any disinflation yet,” Powell said. “There has been an expectation that [higher prices] will go away quickly and painlessly and I don’t think that’s at all guaranteed.”

    Geopolitical uncertainties: Powell also cited concerns that the reopening of China’s economy after the sudden end of Covid-Zero restrictions, plus uncertainty about Russia’s war on Ukraine could also affect the inflation path in ways that remain unclear.

    ▸ The labor market is strong, but tech layoffs keep coming. There were around  50,000 tech jobs cut in January, and the trend has continued into February.

    Video conferencing service Zoom is one of the latest to announce layoffs. The company said Tuesday that it’s cutting 1,300 jobs or 15% of its workforce. 

    Zoom CEO Eric Yuan said in a blog post on Tuesday that Zoom ramped up employment  quickly due to increased demand during the pandemic. The company grew three times in size within 24 months, he said and now it must  adapt to changing demand for its services.

    “The uncertainty of the global economy, and its effect on our customers, means we need to take a hard — yet important — look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision,” he wrote.

    Yuan added that he plans to lower his own salary by 98% and forgo his 2023 bonus. Shares of Zoom closed nearly 10% higher on Tuesday. 

    The announcement comes just one day after Dell said it would lay off more than 6,500 employees.

    Amazon

    (AMZN)    , Microsoft

    (MSFT)    , Google and other tech giants have also recently announced plans to cut thousands of workers as the companies adapt to shifting pandemic demand and fears of a looming recession.

    ▸ Neel Kashkari, president of the Federal Reserve Bank of Minneapolis told CNN that he is starting to think that the US economy could avoid a recession and achieve a so-called soft landing.

    It’s hard to have a recession when the job market is still so robust, he told CNN’s Poppy Harlow on Tuesday on CNN This Morning.

    Still, “we have more work to do,” Kashkari told Harlow, adding that the labor market is “too hot” and that is a key reason why it is “harder to bring inflation back down.”

    Although many investors are starting to think the Fed may pause after just two more similarly small hikes, to a level of around 5%, Kashkari said he believes the Fed may have to raise rates further. Kashkari has a vote this year on the Federal Open Market Committee, the Fed’s interest-rate setting group.

    ▸ It’s a good time to be in the oil business. BP’s annual profit more than doubled last year to an all-time high of nearly $28 billion.

    The British energy company said in a statement that underlying replacement cost profit rose to $27.7 billion in 2022 from $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

    BP

    (BP)     also unveiled a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

    BP’s shares rose 6% in Tuesday trading following the news. Over the past 12 months, its shares have soared 24%.

    The earnings are the latest in a string of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of skyrocketing oil and gas prices.

    Last week, another energy major Shell reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices jumped following Russia’s invasion of Ukraine.

    On Wednesday it was TotalEnergie

    (TTFNF)    s turn. The French company posted annual profit of $36.2 billion for 2022, double the previous year’s earnings.

    Disney has found itself in the middle of a culture war battle that could end up transferring Disney World’s governance to a board appointed by Florida Gov. Ron DeSantis. And that may be the least of Disney’s problems, writes my colleague Chris Isidore.

    The company faces a media industry in turmoil, plunging cable subscriptions, a still-recovering box office, massive streaming losses, activist shareholders, possible reorganization and layoffs and growing labor disputes with employees. That’s a lot for CEO Bob Iger to handle.

    Iger, who retired as CEO in 2020 only to be brought back in November, has been mostly quiet about his plans for the company since his return. That ends at 4:30 p.m. ET Wednesday when he is set to begin an earnings call with Wall Street investors.

    Click here to read more about what to look for on what is certain to be a closely-followed call.

    [ad_2]

    Source link

  • BP’s annual profit more than doubles to $28 billion | CNN Business

    BP’s annual profit more than doubles to $28 billion | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    BP’s annual profit more than doubled last year to nearly $28 billion, extending a record run of earnings for the world’s oil majors that is adding to calls for higher taxes on the windfall gains.

    The British energy giant said in a statement that underlying replacement cost profit rose to $27.7 billion for 2022, compared with $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

    BP

    (BP)     also announced on Tuesday a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    Last week, Shell

    (RDSA)     reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    — This is a developing story and will be updated.

    [ad_2]

    Source link

  • Former Manhattan attorney says ‘many bits and pieces of evidence’ exist to charge Trump | CNN Politics

    Former Manhattan attorney says ‘many bits and pieces of evidence’ exist to charge Trump | CNN Politics

    [ad_1]



    CNN
     — 

    A former Manhattan special assistant district attorney who investigated Donald Trump said Sunday night there are “many bits and pieces of evidence” the district attorney could use to bring criminal charges against the former president.

    Mark Pomerantz, a former senior prosecutor on the Manhattan DA’s team investigating Trump and his organization’s business dealings, said prosecutors weighing similar evidence against anyone other than the former president would have moved ahead with charges in a “flat second.”

    Pomerantz made the comments in a “60 Minutes” interview promoting a new book about his time investigating Trump. He pointed to evidence he had access to during the investigation – principal among them, that Trump personally signed off on inflating his own net worth to obtain more favorable banks loans.

    “There were many bits and pieces of evidence on which we could rely in making that case,” Pomerantz told CBS’s Bill Whitaker.

    New York Attorney General Letitia James, a Democrat, filed a civil lawsuit against Trump, his eldest children and others alleging they were engaged in a decade long fraud by using inaccurate financial statements to obtain favorable loan and insurance rates and tax treatment. The burden of proof in a civil lawsuit is lower than what prosecutors need to prove a criminal case. Trump has called the lawsuit politically motivated and has denied any wrongdoing.

    The allegations come nearly a year after Pomerantz resigned from the DA’s office in protest and days before the release of his new book, which has prompted pushback from District Attorney Alvin Bragg.

    Pomerantz resigned after Bragg, who was newly sworn into office, refused to give him a green light to seek an indictment against Trump. The district attorney’s office previously brought tax fraud charges against the Trump Organization and chief financial officer Allen Weisselberg, who pleaded guilty.

    Pomerantz resigned last February along with general counsel Carey Dunne.

    “If you take the exact same conduct – and make it not about Donald Trump and not about a former president of the United States, would the case have been indicted? It would have been indicted in a flat second,” Pomerantz said Sunday. He called Bragg’s decision not to bring the case a “grave failure of justice.”

    Pomerantz’s claims detailed in his forthcoming book have drawn the ire of his former boss and the DA’s Association of the State of New York, who claim that a former prosecutor speaking out about a case he used to be a part of could damage its integrity.

    Bragg’s office asked to review the book before its publication out of concern it would reveal information obtained from a grand jury. Simon & Schuster, the publisher, moved ahead with publication.

    “After closely reviewing all the evidence from Mr. Pomerantz’s investigation, I came to the same conclusion as several senior prosecutors involved in the case, and also those I brought on: more work was needed. Put another way, Mr. Pomerantz’s plane wasn’t ready for takeoff,” Bragg said in a statement to CNN.

    Bragg added that he hasn’t “read the book, and won’t comment on any ongoing investigation because of the harm it could cause to the case. But I do hope there is at least one section where Mr. Pomerantz recognizes his former colleagues for how much they have achieved on the Trump matter over the last year since his departure.”

    In January, a New York judge fined the Trump Organization $1.6 million – the maximum possible penalty – for running a decade-long tax fraud scheme, a symbolic moment because it is the only judgment for a criminal conviction that has come close to the former president.

    Two Trump entities, The Trump Corp. and Trump Payroll Corp., were convicted last year of 17 felonies, including tax fraud and falsifying business records. Trump himself was never charged or convicted.

    On Sunday Pomerantz expanded on what evidence he believes they had against Trump, including Trump’s signature on a Deutsche Bank loan certifying that all of his financial statements were accurate.

    “He warrants that the financial statements are true and correct in all material respects. Finally of course on the guaranty is his sharpie signature, Donald J. Trump,” Pomerantz said. He also alleges he has documents proving Trump knew the accurate size of his 10,996-square-foot Fifth Avenue condominium, but lied anyways, claiming in 2015 and 2016 accounting documents that it was really 30,000 square feet.

    CNN previously reported that some prosecutors did not believe they had enough evidence to prove Trump’s intent and they lacked a credible narrator to explain how the financial statements were put together.

    In a letter to Pomerantz, Trump’s lawyer threatened legal action against the former prosecutor if he releases the book. The lawyer, Joe Tacopina, told CNN in a statement that Pomerantz’s “desperate attempt to sell books will cost him everything. Not to mention, it is clear that he was very much in the minority in his position that President Trump committed a crime.”

    In the book, which publishes on Tuesday, Pomerantz compares Trump to John Gotti, the head of the Gambino organized crime family, according to an advanced copy obtained by The New York Times, and lays out the complicated investigation that saw many close to the former president charged with crimes.

    Meanwhile, Bragg’s office last week accelerated its investigation into Trump’s alleged role in a hush money payment made to silence adult film star Stormy Daniel’s allegations of an affair. Trump has denied the affair.

    [ad_2]

    Source link

  • Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

    Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

    [ad_1]



    CNN
     — 

    In less than three months, four of the big five US tech companies have cut tens of thousands of employees combined, shattering myths about the industry’s seemingly unstoppable growth in the process.

    But there has been one notable exception: Apple.

    To date, Apple

    (AAPL)     has not announced any substantial cuts, thanks in part to slower headcount growth than some of its peers during the pandemic and continued demand for its core products. Some analysts think more modest cost cuts could be coming, however.

    The iPhone maker is set to report earnings results for the final three months of 2022 on Thursday after the bell. It is expected to post a rare year-over-year decline in revenue.

    While these expectations show the strain Apple’s business is under, Wedbush Securities’ Dan Ives said in a note this week that pent-up demand for upgrading iPhones remains strong. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs from Cupertino this week,” Ives wrote.

    Tom Forte, a senior research analyst at DA Davison, agreed there will be staff reductions, but likely not as drastic as those at other large tech companies. “Apple will cut headcount,” he said in a recent interview on Bloomberg TV, but suggested the cuts would come through attrition or reductions at the retail level.

    “While they haven’t done so yet, like everyone else, they will adjust their headcount for the current level of demand,” he said.

    Fueled by a surge in demand for digital products earlier in the pandemic, Big Tech went on a massive hiring spree.

    Amazon

    (AMZN)     and Meta each doubled their headcount between the third quarter in 2019 and the third quarter 2022, according to data shared in the companies’ securities filings. Alphabet, meanwhile, grew its headcount 64% during that time, and Microsoft grew its staff by more than 50% over approximately the same period.

    Apple, by comparison, grew its headcount by a more modest 20%. As of September 2022, Apple said it had approximately 164,000 full-time employees.

    Many tech CEOs, with varying degrees of remorse, have blamed over-hiring in the early days of the pandemic for the mass layoffs now. As pandemic restrictions eased last year, the demand for digital services shifted back toward pre-pandemic levels. Inflation pinched consumer and business spending, and rising interest rates evaporated the easy money tech companies had tapped into. And one-by-one, amid the whiplash, household names in Silicon Valley began announcing widespread layoffs to adjust to the new environment.

    While Apple has not announced layoffs, its business has been strained in other ways. Like other Big Tech companies, it has faced threats of antitrust action in the United States and EU. Earlier this month, Apple also said CEO Tim Cook had agreed to a massive pay cut this year, following a shareholder vote on his compensation package after its stock fell about 27% in 2022.

    As consumer spending tightened, global smartphone shipments plunged 18% in the fourth quarter of 2022, according to market research firm Canalys. Apple’s business also faced supply chain hurdles linked to China’s Covid lockdowns and unrest that hit a key production site in Zhengzhou, China late last year.

    Still, Apple’s business is weathering the downturn better than some of its fellow tech giants. In its most-recent earnings report, the company reported sales grew 8% year-over-year and that the company hit a September quarter revenue record for iPhone.

    Thursday’s earnings results will show whether Apple can keep defying gravity.

    “Apple continues to innovate with high-quality, industry-leading products supported by a powerful digital platform,” analysts at Monness, Crespi and Hardt wrote in an investor note Tuesday. “However, regulatory headwinds persist and we believe the darkest days of this downturn are ahead of us.”

    [ad_2]

    Source link

  • Shell profits double to record $40 billion | CNN Business

    Shell profits double to record $40 billion | CNN Business

    [ad_1]


    Hong Kong/London
    CNN
     — 

    Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

    The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

    Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron

    (CVX)     reported a record full-year profit of $36.5 billion.

    That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

    Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

    Shell

    (RDSA)     also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

    — This is a developing story and will be updated.

    [ad_2]

    Source link

  • Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

    Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

    [ad_1]


    New York
    CNN
     — 

    For years, Facebook and its CEO Mark Zuckerberg invested heavily in growth, including in areas like virtual reality with unproven potential. But after a brutal year in which the company lost more than $600 billion in market value, Zuckerberg has started speaking Wall Street’s language — and they are rewarding him for it.

    Facebook-parent Meta on Wednesday posted its third straight quarterly decline in revenue and a sharp drop in profit for the final three months of 2022, as it confronted broader economic uncertainty, heightened competition in the social media market and incurred significant charges from a recent round of layoffs.

    But the company nonetheless outperformed Wall Street analysts’ expectations for sales. Moreover, it pledged to focus on “efficiency,” lowered its forecast for capital expenditures in the year ahead and announced plans to boost its share repurchase plan by $40 billion. All of that helped send shares of Meta up nearly 20% in after hours trading Wednesday.

    “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said in a statement with the earnings results.

    Meta reported nearly $32.2 billion in revenue for the quarter, down 4% from the year prior but ahead of the $31.5 billion analysts had projected. The social media giant’s quarterly net income was just shy of $4.7 billion, down 55% from the same period in the prior year and below analysts’ expectations.

    Meta announced plans to lay off around 11,000 employees in November. The company also currently has a broad hiring freeze in place and plans to limit hiring throughout the year, Meta CFO Susan Li said on a call with analysts Wednesday.

    In its earnings report, Meta said it has cut its guidance for capital expenditures for 2023 down slightly to between $30 billion and $33 billion, citing plans for lower data center construction spending. It also added that “substantially all of our capital expenditures continue to support the Family of Apps,” a term that refers to Facebook, Instagram and WhatsApp, perhaps in an effort to reassure investors skeptical of its plan to center its business model around the future version of the internet it calls the metaverse.

    For the first quarter of 2023, Meta expects revenue between $26 and $28.5 billion, the upper end of which would represent an increase from the year-ago quarter and would break Meta’s streak of consecutive quarterly revenue declines. The guidance is somewhat better than Snapchat-parent Snap’s from earlier in the week, which said it expects first quarter revenue to fall between 2% and 10% compared to the previous year.

    Zuckerberg explained the focus on efficiency during the analyst call by acknowledging that for the first 18 years of the company’s history, its revenue grew sharply each year. “And then obviously that changed very dramatically in 2022, where our revenue was negative growth for the first time in the company’s history … and we don’t anticipate that’s going to continue but I don’t necessarily think it’s going to go back to the way it was before.”

    He added: “So I think this is a pretty rapid phase change there that I think just forced us to basically take a step back and say, okay, we can’t just treat everything like it’s hyper-growth,” although Zuckerberg said he thinks the shift in mindset “actually makes us better.”

    Meta’s user numbers also marked a bright spot from Wednesday’s report. Facebook now has 2 billion daily active users, and Meta’s family of apps grew its daily active people by 5% year-over-year to 2.96 billion, a welcome sign for the company following concerns about stagnant user growth last year.

    The company’s core advertising business fell just over 4% to nearly $31.3 billion, a “better-than-expected” result that “should refute concerns over the state of the digital advertising industry,” said Jesse Cohen, senior analyst at Investing.com. Li said that ad revenue growth from its top advertising verticals, online commerce and consumer packaged goods, remained negative during the December quarter but fell at a slower rate than in the previous quarter.

    Still, Meta’s average price per ad fell 22% year-over-year during the December quarter, and 16% overall in 2022, as the company grapples with Apple’s app tracking changes and increased competition from the likes of TikTok.

    The company also lost a total of more than $13.7 billion in its “Reality Labs” unit which houses its metaverse efforts. Fourth quarter Reality Labs revenue fell 17% to $727 million, due to lower sales of its Quest 2 headset, the company said.

    [ad_2]

    Source link

  • ExxonMobil earnings more than double to annual record | CNN Business

    ExxonMobil earnings more than double to annual record | CNN Business

    [ad_1]


    New York
    CNN Business
     — 

    ExxonMobil’s earnings slowed from a peak earlier in the year but the oil giant still reached a full-year record profit more than double what it reported a year ago.

    The company earned adjusted income of $14 billion in the quarter, down from the record $18.7 billion it earned in the third quarter, but it was up from $8.8 billion in the fourth quarter of 2021. That was also better than the forecast from analysts surveyed by Refinitiv.

    The solid fourth quarter lifted full-year earnings to $59.1 billion from $23 billion in 2021, and well above the previous record net income of $45.2 billion it reported for 2008, the year that saw the record high for oil and US gasoline prices before the records set last year.

    The company was helped by soaring oil prices following Russia’s invasion of Ukraine nearly a year ago. But oil prices have been coming down from the peak reached in June, and are now down to pre-invasion levels.

    Oil companies such as ExxonMobil have faced criticism from the White House and some members of Congress for taking much of the profit and using it to repurchase shares and increase dividend, rather than increase production.

    CEO Darren Woods defended the company’s investments in production, saying the company’s North American refineries had their greatest output ever, and that it had its highest global refinery production since 2012.

    “Our results clearly benefited from a favorable market,” said Woods. “But, to take full advantage of the undersupplied market our work began years ago, well before the pandemic when we chose to invest counter-cyclically. We leaned in when others leaned out, bucking conventional wisdom. We continued with these investments through the pandemic and into today.”

    Still, the company returned $29.8 billion to shareholders during the year, with about half of it coming through dividends and half through share repurchases.

    That compares to $22.4 billion in spending on exploration and other capital spending. It also reported a $22.8 billion, or 336%, increase in cash on hand, ending the year with $29.6 billion in cash on its balance sheet. And it repaid $7 billion in debt.

    The full-year results come to an average of $1,874 of profit for every second during the course of the year. Since it takes about two minutes to pump 20 gallons of gas, that means that in the time it takes to fill a nearly empty tank of a full-size SUV or pickup, ExxonMobil earned about $225,000, on average.

    Shares of ExxonMobil were slightly lower in premarket trading initially after the report, perhaps on investor disappointment that no new share repurchase program was announced. But shares were slightly higher in morning trading after the open.

    [ad_2]

    Source link

  • Samsung profits sink to 8-year low as smartphone and PC demand drops | CNN Business

    Samsung profits sink to 8-year low as smartphone and PC demand drops | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    Samsung’s quarterly profits have plunged to their lowest level in eight years as customers snapped up fewer cell phones and laptops.

    The tech giant reported operating profit of 4.3 trillion Korean won ($3.5 billion) on Tuesday for the three months ended December, down 69% from a year ago. Revenue fell 8% to just under 70.5 trillion won ($57.3 billion), it said in a statement.

    It was the company’s weakest quarterly profit since the third quarter of 2014, when its smartphone business lost serious ground to competitors.

    “The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” Samsung noted in the statement.

    The dreary results were anticipated. Samsung

    (SSNLF)     had flagged the lackluster performance in a pre-earnings forecast earlier this month, with analysts citing falling memory chip prices and fewer orders of consumer devices.

    In a presentation to investors, the electronics maker confirmed that “mobile and PC demand was weak,” and its memory chip business had also suffered “as customers continued to adjust their inventories amid deepening uncertainties.”

    Samsung expects some of those problems to continue in the coming months due to global economic uncertainty, though it anticipates overall demand to start recovering in the second half of the year.

    Smartphone demand will likely slide again this quarter compared to the same period a year ago, “due to the economic slowdown in major regions,” it said.

    Samsung’s shares dropped 3% in Seoul on Tuesday.

    There were some bright spots. Samsung said it took in 302.2 trillion won ($245.7 billion) in revenue for the full year of 2022, up from 279.6 trillion won ($227.4 billion) in 2021, and a record high.

    Analysts have said, however, that they expect the company’s profits to drop again this quarter because of a continued decline in memory chip prices.

    [ad_2]

    Source link

  • Here’s why you should always wait for the earnings call | CNN Business

    Here’s why you should always wait for the earnings call | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Investors are pretty bad at living in the moment. We’re currently in the thick of fourth quarter earnings reports, but traders don’t seem to care about how companies fared during the final months of 2022. They’re more focused on what’s going to happen in the future.

    Case-in-point: Earnings calls, where top execs pontificate about their economic outlook, have been moving markets more than earnings-per-share and revenue reports.

    What’s happening: The mantra on Wall Street has become, as Ritholtz Wealth Management CEO Josh Brown puts it, “ignore the numbers, wait for the call.”

    Microsoft reported great fourth quarter earnings last Tuesday that beat Wall Street’s expectations, but the stock dropped 4% the next day. That’s because CEO Satya Nadella got on an earnings call with investors and warned of a slowdown in the company’s cloud business and software sales. His negative outlook came just as the company announced it was letting go of 10,000 employees, further spooking investors. 

    Other tech companies are following suit — while things are fine for the time being, they’re reporting that the future is foggy.

    IBM stock sank 4.5% last Thursday even as the tech titan beat Wall Street’s Q4 expectations. The reason for the drop might be because Jim Kavanaugh, IBM’s finance chief, warned on the conference call that it would be wise to expect the company’s total 2023 revenue growth to be on the low end. IBM also announced layoffs – the company said it plans to cut around 3,900 jobs or 1.5% of its total workforce. 

    The economic environment is rapidly changing. CEOs on earnings calls are talking more about recession than inflation now, according to an analysis by Purpose Investments.

    Wall Street is also beginning to fear an economic downturn more than painful rate hikes and as a result investors are putting more weight on CEO and CFO forecasts.

    And they’re looking bleak. As of Friday, 19 companies in the S&P 500 had issued forward earnings-per-share guidance for the first quarter of 2023, according to FactSet data. Of these 19 companies, 17, or 89%, issued negative guidance. That’s well above the 5-year average of 59%.

    “My best guess is that cautious tones on conference calls will be the norm, not the exception,” wrote Brown in a recent post. These slowdowns have been partially factored into stock prices, he said, “but not necessarily in full.”

    The upside: Market reaction appears to go both ways. American Express missed on earnings last week but said that credit card spending was hitting new records and that the future looks bright. The stock shot up more than 10%. 

    Prices at the pump typically fall during the coldest months as wintry weather keeps Americans off the roads. But something unusual is happening this year, reports my colleague Matt Egan. Gas prices are rocketing higher.

    The national average for regular gas jumped to $3.51 a gallon on Friday and remained there through the weekend, according to AAA. Although that’s a far cry from the record of $5.02 a gallon last June, gas prices have increased by 12 cents in the past week and 41 cents in the past month.

    All told, the national average has climbed by more than 9% since the end of last year – the biggest increase to start a year since 2009, according to Bespoke Investment Group.

    Why are gas prices jumping? It’s not because of demand, which remains weak, even for this time of the year. Instead, the problem is supply.

    The extreme weather in much of the United States near the end of last year caused a series of outages at the refineries that produce the gasoline, jet fuel and diesel that keep the economy humming. US refineries are operating at just 86% of capacity, down from the mid-90% range at the start of December, according to Bespoke.

    Beyond the refinery problems, oil prices have crept higher, helping to drive prices at the pump northward. US oil prices have jumped about 16% since December partially due to expectations of higher worldwide demand as China relaxes its Covid-19 policies and also because oil markets are no longer receiving massive injections of emergency barrels from the Strategic Petroleum Reserve.

    What’s next: Expect more pain at the pump. Patrick De Haan, head of petroleum analysis at GasBuddy, worries the typical springtime jump in prices will be pulled forward.

    “Instead of $4 a gallon happening in May, it could happen as early as March,” De Haan told CNN. “There is more upside risk than downside risk.”

    A return of $4 gas would be painful to drivers and could dent consumer confidence. Moreover, pain at the pump would complicate the inflation picture as the Federal Reserve debates whether to slow its interest rate hiking campaign.

    Goldman Sachs had a rough time in 2022, and the investment bank’s CEO, David Solomon, is being punished for it. Well, kind of. 

    The investment banking giant said in a Securities and Exchange Commission filing Friday that Solomon received $25 million in annual compensation last year. While that is still a very large amount of money, it’s down nearly 30% from the $35 million that Solomon raked in during 2021, reports my colleague Paul R. La Monica. 

    Solomon’s $2 million annual salary is unchanged. But the company said that his “annual variable compensation,” paid in a mix of performance-based restricted stock units and cash, was well below 2021 levels.

    Goldman Sachs (GS) shares fell more than 10% in 2022. The company also  reported a 16% drop in revenue in the fourth quarter and profit plunge of 66% earlier this month, mainly due to the lack of merger activity and initial public offerings.

    Maybe Solomon can make that extra $10 million with payouts from his burgeoning DJ career. 

    [ad_2]

    Source link

  • Jobs report to give further clues about where economy is headed | CNN Business

    Jobs report to give further clues about where economy is headed | CNN Business

    [ad_1]

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN
     — 

    The Federal Reserve is going to raise interest rates again on Wednesday. But will it be another half-point hike or just a quarter-point increase? And what about the rest of the year?

    The Fed’s actions beyond this week’s meeting will depend primarily on whether inflation is truly slowing. Investors will get another clue when the January jobs report is released on Friday.

    Economists predict that 185,000 jobs were added last month, a slowdown from the gain of 223,000 jobs in December and 263,000 in November. A further deceleration in the labor market would likely please the Fed, as it would show that last year’s rate hikes are successfully taking some air out of the economy.

    The Fed knows it’s in a tough situation. Inflation pressures are partly fueled by wage gains for workers. In an environment where the unemployment rate is at a half-century low of 3.5%, employees have been able to command big increases in pay to keep up with rising prices of consumer goods and services.

    Along those lines, average hourly earnings, a measure of wages that is also part of the monthly jobs report, are expected to increase 4.3% year-over year. That’s down from 4.6% in December and 5.1% in November.

    As wage growth cools, so do price increases. The Fed’s favorite measure of inflation – the Personal Consumption Price Index or PCE – rose “just” 5% over the past 12 months through last December, compared to a 5.5% annual increase in November.

    That is still uncomfortably high, but the trend is moving in the right direction.

    The problem for the Fed, though, is that it may need to keep raising interest rates until there is further evidence that the labor market is cooling off enough to push the rate of inflation even lower.

    Several other job market indicators continue to show that the US economy is in no serious danger of a recession just yet. The number of people filing for weekly jobless claims dipped last week to 186,000, a nine-month low. Investors will get the latest weekly initial claims numbers on Thursday.

    The market will also be closely watching reports about private-sector job growth from payroll processor ADP and the Job Openings and Labor Turnover Survey (JOLTS) from the Department of Labor this week. The last JOLTS report showed that more jobs were available than expected in November.

    Still, some expect that wage growth should continue to fall, which should take pressure off the Fed somewhat.

    “Wage growth has been on a slowing trajectory, and we suspect that softer wage growth will be a trend in 2023 as jobs available contract,” said Tony Welch, chief investment officer at SignatureFD, a wealth management firm, in a report.

    Not everyone agrees with that assessment. Organized labor has been winning bigger pay increases lately in the transportation industry. And more workers at tech and retail giants have been unionizing as of late.

    “Workers will be loath to relinquish the bargaining power they perceive to have gained over the past year,” said Jason Vaillancourt, global macro strategist at Putnam, in a report.

    Vaillancourt also pointed out that many consumers are still flush with cash that they saved up during the early stages of the pandemic. That could mean that inflation isn’t going away anytime soon.

    And even though the pace of jobs gains may be slowing, it’s not as if economists are starting to predict monthly job losses like the US has had in previous recessions.

    “Combine a strong labor market with a still substantial reserve of excess savings, and you have all the components in place to keep the Fed up at night,” Vaillancourt said.

    So as long as hopes for an economic “soft landing” persist, the Fed will have to keep worrying that inflation is too high. That increases the chances the Fed could go too far with rate hikes and ultimately lead to a recession.

    Wall Street is clearly buying into the “soft landing” argument. Just look at how well tech stocks have done so far this year, despite a series of high-profile layoff announcements from top Silicon Valley companies in the past few months.

    The Nasdaq is up 11% so far in January, putting it on track for its best monthly performance since July.

    Some argue that more tech layoffs won’t be a problem. Investors seem to be (somewhat perversely) taking the view that companies cutting costs is a good thing for profits and that revenue likely won’t be impacted in a negative way because consumers are still spending.

    “A theme that can’t go unnoticed this month is how traders are rewarding firms for cutting jobs. With corporate layoffs making headlines each evening, you might think the consumer is strained. Maybe not so much. It turns out that demand is decent,” said Frank Newman, portfolio manager at Ally Invest, in a report.

    But a continuation of the Nasdaq’s surge may depend a lot on how well a quartet of tech leaders do when they report fourth quarter earnings next week: Facebook and Instagram owner Meta Platforms, Apple

    (AAPL)    , Google owner Alphabet

    (GOOGL)     and Amazon

    (AMZN)    .

    “A set of much weaker-than-expected reports from these firms could dent the market’s strong start to 2023,” said Daniel Berkowitz, senior investment officer for investment manager Prudent Management Associates, in a report.

    So far, tech earnings season is not off to an inspiring start, with Microsoft

    (MSFT)    , Intel

    (INTC)     and IBM

    (IBM)     all reporting weak results. But it’s important to note that that trio is part of the “old tech” guard while Apple, Amazon, Alphabet and Meta all have more rapidly growing businesses.

    Tesla

    (TSLA)     reported strong results last week, which could be a sign of good things to come from other more dynamic tech companies.

    Monday: IMF releases world outlook; earnings from Philips

    (PHG)    , GE Healthcare, Franklin Resources

    (BEN)    , SoFi, Ryanair

    (RYAAY)    , Whirlpool

    (WHR)     and Principal Financial

    (PFG)

    Tuesday: China official PMI; Europe GDP; US employment cost index; US consumer confidence; earnings from Exxon Mobil

    (XOM)    , Samsung

    (SSNLF)    , GM

    (GM)    , Phillips 66

    (PSX)    , Marathon Petroleum

    (MPC)    , UPS

    (UPS)    , Pfizer

    (PFE)    , Sysco

    (SYY)    , Caterpillar

    (CAT)    , UBS

    (UBS)    , McDonald’s

    (MCD)    , Spotify

    (SPOT)    , Mondelez

    (MDLZ)    , Amgen

    (AMGN)    , AMD

    (AMD)    , Electronic Arts

    (EA)    , Snap

    (SNAP)     and Match

    (MTCH)

    Wednesday: Fed meeting; US ADP private sector jobs; US JOLTS; China Caixin PMI; Europe inflation; earnings from AmerisourceBergen

    (ABC)    , Humana

    (HUM)    , T-Mobile

    (TMUS)    , Novartis

    (NVS)    , Altria

    (MO)    , Peloton

    (PTON)    , Meta Platforms, McKesson

    (MCK)    , MetLife

    (MET)     and AllState

    (ALL)

    Thursday: US weekly jobless claims; US productivity; BOE meeting; ECB meting; Germany trade data; earnings from Cardinal Health

    (CAH)    , ConocoPhillips

    (COP)    , Merck

    (MRK)    , Bristol-Myers

    (BMY)    , Honeywell

    (HON)    , Eli Lilly

    (LLY)    , Stanley Black & Decker

    (SWK)    , Hershey

    (HSY)    , Sirius XM

    (SIRI)    , Penn Entertainment

    (PENN)    , Ferrari

    (RACE)    , Harley-Davidso

    (HOG)    n, Apple, Amazon, Alphabet, Ford

    (F)    , Qualcomm

    (QCOM)    , Starbucks

    (SBUX)    , Gilead Sciences

    (GILD)    , Hartford Financial

    (HIG)    , Clorox

    (CLX)     and WWE

    (WWE)

    Friday: US jobs report; US ISM non-manufacturing (services) index; earnings from Cigna

    (CI)    , Sanofi

    (SNY)    , LyondellBasell

    (LYB)     and Regeneron

    (REGN)

    [ad_2]

    Source link