Tag: General Dynamics Corp

Somali pirates are back on the attack at a level not seen in years, adding to global shipping threats

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PUNTLAND, SOMALIA – JANUARY 29: Puntland Maritime Police Forces (PMPF) are patrolling against the recently increasing pirate attacks off the coast in Puntland, Somalia on January 29, 2024. (Photo by Abuukar Mohamed Muhidin/Anadolu via Getty Images)

Anadolu | Anadolu | Getty Images

Somali pirates are back on the attack, with piracy around the Horn of Africa rising sharply in recent months and adding to concerns for shipping vessels, government forces and private security already locked in a battle in the Red Sea with Houthi rebels.

Over the past three months, there has been more piracy in the Horn of Africa region than at any point in the last six years, according to Royal United Services Institute (RUSI), an independent think tank, with high ransoms for seafarers or vessels, and robbing of ship passengers by pirates.

Piracy off the coast of Somalia had been on the decline in recent years after peaking in 2011 when Somali pirates launched 212 attacks. The United Nations Security Council (UNSC) passed seven resolutions targeting Somalia piracy between December 2010 and March 2022, permitting foreign naval and air forces to enter and patrol Somali waters and authorizing the European Union Naval Force Operation Atalanta, working with a U.S.-led task force, to use “all necessary means to repress piracy and armed robbery at sea.”

The cost of piracy to the global economy is a steep one. A 2013 World Bank study, still widelt cited today, estimated that piracy cost the global economy around $18 billion annually.

According to the UNSC, the anti-piracy measures in place to enforce the freedom of navigation off the coast of Somalia expired quietly after its last renewal for three months after December 3, 2021.

Since last November, merchant vessels have been the target of about 20% of Somali piracy-related incidents, according to Dan Mueller, lead analyst for the Middle Eastern Region for maritime security firm Ambrey. On December 14, The International Chamber of Shipping reported the hijacking of a Handymax bulk carrier, the first successful hijacking of a vessel off the coast of Somalia since 2017. The pirates have also been attacking fishing vessels, mostly Iranian, as well as many other small boats such as skiffs.

Ocean piracy is rising across the world

Data from 2023 shows that by many key measures, piracy is on the rise in key global shipping lanes.

There were 120 incidents of maritime piracy and armed robbery against ships reported in 2023, compared to 115 in 2022, according to the annual Piracy and Armed Robbery Report of the ICC International Maritime Bureau (IMB). The IMB also found increased threats to crew safety, with the number of crews taken hostage rising from 41 to 73 in 2023, and crews kidnapped from two to 14.

A spokesperson for the International Maritime Organization (IMO) which represents the seafarer spokesperson stressed to CNBC in an email, “The entire world depends on international shipping and seafarers, and therefore ships and cargoes should not be the subject of any type of attacks. The safety of seafarers are paramount – they are innocent victims who are simply doing their jobs in very harsh conditions.”

The UNSC did not respond to CNBC’s request for comment about reinstating anti-piracy resolutions related to Somalia.

The IMO said it is working very closely with countries in the region through the Djibouti Code of Conduct to address piracy and avoid any escalation, through capacity-building, national legislation, information sharing and regional coordination.

“We are also looking the possibility of updating the IMO guidance on piracy to take into account new threats and technologies that can affect the safety of seafarers,” said a spokesperson.

A 2010 photo of an armed Somali pirate keeping vigil on the coastline at Hobyo, northeastern Somalia, while the Greek cargo ship, MV Filitsa is anchored just off the shores of Hobyo where it was held by pirates after beimng captured some 513 nautical miles northeast of the Seychelles as it was sailing from Kuwait to Durban in South Africa loaded with fertilizer.

Mohamed Dahir | Afp | Getty Images

According to maritime security firm Dryad Global, shipping from the coast of the Horn of Africa to the coast of India is considered a “high risk zone.” There are 25 countries in the region with their naval forces, but given the size of the area, the numbers are not a sufficient guarantee of safe navigation.

A slight increase in piracy has also been recorded in the Gulf of Guinea on Africa’s West Coast, where 22 piracy incidents were recorded in 2023, compared to 19 in 2022, 35 in 2021, and 81 in 2020. According to the IMB, these waters accounted for three of the four globally reported hijackings, all 14 crew kidnappings, and 75% of reported crew hostages and two injured crew in 2023.

The Singapore Straits are another area of concern due to the high number of incidents in the region. While the IMB considers these incidents low-level opportunistic crimes, 95% of the reported incidents were successful.

“Crew continue to be harmed with nine taken hostage and two threatened. Guns were reported in three recorded incidents and knives in 15,” the IMB report noted.

Maritime security efforts

To help deter piracy and enhance maritime security, vessels deploy what’s called Best Management Practice (BMP) 5 when operating in the Red Sea, Gulf of Aden, Indian Ocean, and Arabian Sea.

“Private armed security teams have proven effective alongside BMP 5 measures,” Mueller said. “An adequate citadel has proven vital to enable the crew to remain safe until military responses can be coordinated.”

Citadels are a pre-determined fortified area on a vessel built to resist pirates from gaining entry for a period of time to protect a crew.

Dozens of companies in the maritime security space could see an increase in their business as the threats against commercial shipping widen. The size of the maritime safety market has grown to keep up with the flow of trade and will grow from $19.85 billion in 2023 to $21.18 billion in 2024, according to ResearchAndMarkets.com, and is forecast to reach $25.93 billion in 2028 at a compound annual growth rate of 5.2%. The list of major companies operating in the market of maritime safety systems includes several niche players as well as major industrials and defense contractors, such as Raytheon, Honeywell International, Elbit Systems Ltd., L3Harris Technologies, Lockheed Martin, and General Dynamics Corporation.

Mueller said the Indian Navy and Coast Guard along with the EU Operation Atalanta and national counter-piracy missions are active in the region where Somali pirates have attacked.

“Indian forces have successfully operated against PAGs [pirate action group] in four boarding incidents,” he said.

U.S. and allied defense

On February 1, the Biden Administration approved a $3.99 billion sale of drones and military equipment to India to be used to augment its maritime safety and surveillance. Included in the sale, according to the State Department: 31 Sky Guardian drones, 310 small-diameter bombs, 170 Hellfire missiles, and other related support equipment.

A spokesperson for the Atalanta anti-piracy effort based out of the Rota Naval Base, Spain, told CNBC via email that the coalition of maritime forces protecting against pirates around the Horn of Africa will be enhanced.

“In a week’s time, we will have additional ships and forces deployed to the area. We will do our utmost to continue fulfilling our missions, which include the fight against piracy and the protection of Word Food Programme vessels and all vulnerable vessels in our Area of Operations against these criminal networks,” the spokesperson wrote. “We will continue to work together with our international partners to maintain maritime security.”

Atalanta includes permanent flagship vessel ESPS VICTORIA and at certain periods of time, numerous other vessels to support the operation. EUNAVFOR currently has four more ships offering support: ITS Martinengo, FS Alsace, FS Languedoc, and ITS Duilio. The spokesperson said EU member state support allows the operation to increase the number of assets very quickly, if necessary.

In response to a question from CNBC about expanding Red Sea security coverage to the Somali Coast, a U.S. Navy spokesperson wrote, “To protect operational security and the safety of our service members, we do not discuss or forecast future operations or postures.”

“What we can tell you is that Operation Prosperity Guardian (OPG) is working with participating countries to utilize increased patrols in the Red Sea to offer reassurance to the shipping industry and protect maritime traffic,” the Navy spokesperson said.

In the Red Sea, the U.S. Navy is working with allies to increase efforts to prevent Houthi rebel attacks, which are continuing despite multiple U.S. airstrikes against Houthi targets. Much merchant vessel traffic is now taking the longer transit around the Cape of Good Hope instead of transiting the Red Sea. French ocean carrier CMA CGM is among firms to fully halt its Red Sea transits, according to a person familiar with the matter. It joins shipping giants MSC, Maersk, Hapag Lloyd and others who have earlier announced they were diverting away from the Red Sea. According to Kuehne + Nagel data, almost 100% of the former Red Sea traffic has been rerouted around the Cape of Good Hope.

The Houthis most recent attacks on commercial vessels in the Red Sea this week were against a commercial container vessel and a U.S.-owned bulker vessel carrying U.S. cargo. The Houthis have attacked commercial shipping a total of 39 times.

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February 6, 2024
Inflation has created a dark cloud over how everyday Americans view the economy

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Grocery items are offered for sale at a supermarket on August 09, 2023 in Chicago, Illinois.

Scott Olson | Getty Images

When Kyle Connolly looks back at 2023, she sees it as a year defined by changes and challenges.

The newly single parent reentered the workforce, only to be laid off from her job at a custom home-building company in November. At the same time, Connolly has seen prices climb for everything from her Aldi’s grocery basket to her condo’s utility costs.

In turn, she’s cut back on everyday luxuries like eating out or going to the movies. Christmas will look pared down for her three kids compared to years prior.

“I’ve trimmed everything that I possibly can,” said the 41-year-old. “It sucks having to tell my kids no. It sucks when they ask for a little something extra when we’re checking out at the grocery store and having to tell them, ‘No, I’m sorry, we can’t.’”

Economic woes have seemed more apparent within her community in Florida’s panhandle. Connolly has noticed fewer 2022 Chevy Suburbans on the road, replaced by older Toyota Camry models. The waters typically filled with boats have been eerily quiet as owners either sold them or tried to cut back on gas costs. Fellow parents have taken to Facebook groups to discuss ways to better conserve money or rake in extra income.

The struggles among Connolly and her neighbors highlight a key conundrum puzzling economists: Why does the average American feel so bad about an economy that’s otherwise considered strong?

‘High prices really hurt’

By many accounts, it has been a good year on this front. The annualized rate of price growth is sliding closer to a level preferred by the Federal Reserve, while the labor market has remained strong. There’s rising hope that monetary policymakers have successfully cooled inflation without tipping the economy into a recession.

Yet closely watched survey data from the University of Michigan shows consumer sentiment, while improving, is a far cry from pre-pandemic levels. December’s index reading showed sentiment improved by almost 17% from a year prior, but was still nearly 30% off from where it sat during the same month in 2019.

“The main issue is that high prices really hurt,” said Joanne Hsu, Michigan’s director of consumer surveys. “Americans are still trying to come to grips with the idea that we’re not going back to the extended period of low inflation, low interest rates that we had in the 2010s. And that reality is not the current reality.”

Still, Hsu sees reason for optimism when zooming in. Sentiment has largely improved from its all-time low seen in June 2022 — the same month the consumer price index rose 9.1% from a year earlier — as people started noticing inflationary pressures recede, she said.

One notable caveat was the drop in sentiment this past May, which she tied to the U.S. debt ceiling negotiations. The 2024 presidential election has added to feelings of economic uncertainty for some, Hsu said.

Inflation vs. the job market

Continued strength in the labor market is something economists expected to sweeten everyday Americans’ views of the economy. But because consumers independently decide how they feel, jobs may hold less importance in their mental calculations than inflation.

There are still more job openings than there are unemployed people, according to the latest data from the Bureau of Labor Statistics. Average hourly pay has continued rising — albeit at a slower rate than during the pandemic — and was about 20% higher in November than it was in the same month four years ago, seasonally adjusted Labor Department figures show.

That’s helped boost another widely followed indicator of vibes: the Conference Board’s consumer confidence index. Its preliminary December reading was around 14% lower than the same month in 2019, meaning it has rebounded far more than the Michigan index.

While the Michigan index compiles questions focused on financial conditions and purchasing power, the Conference Board’s more closely gauges one’s feelings about the job market. That puts the latter more in line with data painting a rosier picture of the economy, according to Camelia Kuhnen, a finance professor at the University of North Carolina.

“You think that they’re talking about different countries,” Kuhnen said of the two measures. “They look different because they focus on different aspects of what people would consider as part of their economic reality.”

A hot job market can be a double-edged sword for sentiment, Michigan’s Hsu noted. Yes, it allows workers to clinch better roles or higher pay, she said. But when those same workers put on their consumer hats, a tight market means shorter hours or limited availability at their repair company or veterinarian’s office.

Silver linings for some

Other reasons why consumers feel positively about the economy this year can only be true for certain — and often wealthier — groups, economists say.

UNC’s Kuhnen said Americans would be pleased if they are homeowners seeing price appreciation. Another reason for optimism: If they had investments during 2023’s stock market rebound.

Without those cushions, people on the lower end of the income spectrum may feel more of a pinch as higher costs bite into any leftover savings from pandemic stimulus, Kuhnen said. Elsewhere, the resumption of student loan payments this year likely also caused discontent for those with outstanding dues, according to Karen Dynan, a Harvard professor and former chief economist for the U.S. Treasury Department.

Marissa Lyda moved with her husband and two kids to Phoenix from Portland earlier this year, in part due to lower housing costs. With profits from the value gained on the property she bought in 2019, her family was able to get a nicer house in the Grand Canyon state.

Yet she’s had to contend with an interest rate that’s more than double what she was paying on her old home. Though Arizona’s lower income tax has fattened her family’s wallet, Lyda has found herself allocating a sizable chunk of that money to her rising grocery bill.

The stay-at-home mom has switched her go-to grocer from Kroger to Walmart as value became increasingly important. She’s also found herself searching harder in the aisles for store-brand food and hunting for recipes with fewer ingredients.

Her family’s financial situation certainly doesn’t feel like it reflects the economy she hears experts talking about, Lyda said. It’s more akin to the videos she sees on TikTok and chatter among friends about how inflation is still pinching pocketbooks.

“I look at the news and see how they’re like, ‘Oh, best earnings, there’s been great growth,’” the 29-year-old said. “And I’m like, ‘Where’s that been?’”

‘Just trying to hold on’

Economists wonder if social media discourse and discussion about a potential recession have made Americans think they should feel worse about the economy than they actually do. That would help explain why consumer spending remains strong, despite the fact that people typically tighten their belts when they foresee financial turmoil.

There’s also a feeling of whiplash from the runaway inflation that snapped a long period of low-to-normal price growth, said Harvard’s Dynan. Now, even as the annual rate of inflation has cooled to more acceptable levels, consumers remain on edge as prices continue to creep higher.

“People are still angry about the inflation we saw in 2021 and, in particular, 2022,” Dynan said. “There’s something about the salience of … the bill for lunch that you see every single day that just maybe resonates in your brain, relative to the pay increase you get once a year.”

Federal Reserve Board Chairman Jerome Powell speaks during a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, U.S., December 13, 2023.

Kevin Lamarque | Reuters

Another potential problem: The average person may not completely understand that some inflation is considered normal. In fact, the Federal Reserve, which sets U.S. monetary policy, aims for a 2% increase in prices each year. Deflation, which is when prices decrease, is actually seen as bad for the economy.

Despite these quandaries, economists are optimistic for the new year as it appears increasingly likely that a recession has been avoided and the Fed can lower the cost of borrowing money. For everyday Americans like Connolly and Lyda, inflation and their financial standing will remain top of mind.

Lyda has cut treats like weekly Starbucks lattes out of the budget to ensure her family can afford a memorable first holiday season in their new home. In 2024, she’ll be watching to see if the Fed cuts interest rates, potentially creating an opportunity to refinance the loan on that house.

“You just have to realize that every season of life may not be this huge financial season,” Lyda said. “Sometimes you’re in a season where you’re just trying to hold on. And I feel like that’s what it’s been like for most Americans.”

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December 25, 2023
How Tesla rose to retail investor stardom: 'It's always in people's minds'

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Several Tesla electric vehicles are parked in front of a Tesla service center in the Kearny Mesa region, in San Diego, California, U.S., October 31, 2023.

Abhirup Roy | Reuters

Marko Sustic has bet big on Tesla this year.

The investor, who also happens to work in the European auto industry, bought Tesla shares nearly every month in 2023 and has almost doubled the size of his position over the course of the year. Sustic has no other electric vehicle holdings out of a belief that competitors won’t be able to beat Tesla’s technology.

“There is no catching up with them,” said the 32-year-old, who also has two Tesla cars at his home in Croatia. “It’s just a matter of time when the stock will explode.”

Sustic isn’t alone. Tesla, which entered the S&P 500 three years ago this week, is on pace to attract the largest flow of individual investor dollars of any security in 2023, according to data from Vanda Research. The firm calculates net inflows to find these favorites, subtracting the amount of stock sold from what was bought.

That means Tesla will eclipse even the SPDR S&P 500 ETF Trust (SPY), which tracks the largest stock market index in the world. This underscores the stock’s fast ascent to retail-investor glory, especially considering Tesla wasn’t even among the top 20 equities that individual investors bought before 2019, Vanda data shows.

A banner year

Tesla’s increasing favor among retail traders can be tied to its comeback in 2023, according to Christopher Schwarz, a finance professor at the University of California Irvine. After plunging 65% in 2022, the Elon Musk-led stock has more than doubled in 2023.

The stock has outperformed the market this year in tandem with other mega-cap technology equities dubbed the “Magnificent 7.” Many investors looking to play “disruptive” technology in this elite group have focused on Tesla and chipmaker Nvidia. But after more than tripling this year thanks to an appetite for all things tied to artificial intelligence, Schwarz said Nvidia may be too expensive for many individual investors.

Schwarz researches retail trader behavior, and thinks a lot of attention comes from Musk. The Tesla CEO’s contentious purchase of X, formerly known as Twitter, has brought increased media coverage as well as scrutiny of the billionaire business mogul, Schwarz said.

When faced with thousands of stocks to choose from, Schwarz said individual traders mainly look for names that grab their attention, are familiar and have saliency to current trends. Given Musk’s persona, the growing ubiquity of Teslas on the road and concerns about climate change, Schwarz said Tesla checks many boxes for everyday investors.

“It’s always in people’s minds to trade when they’re looking for something to trade,” Schwarz said.

Tesla over the last 5 years

‘That was a bargain’

Individual investors told CNBC that Tesla’s bumpy ride in recent years hasn’t made them doubt the company as much as it’s created opportunities to pick up shares at cheaper prices. To them, there’s little doubt Tesla’s share price will continue to surge.

One of those is Jeremy Ford, a construction contractor in Virginia who first bought Tesla shares as the pandemic took hold in 2020. He became interested when his wife considered — and ultimately ended up — purchasing a Tesla.

Ford has tried to time buying and selling shares to Tesla news over the past year. For example, he sold some stock before what turned out to be poor third-quarter delivery numbers, only to load back up ahead of the release of new details about Tesla’s electric pickup truck.

The 48-year-old now holds about the same number of Tesla shares as he did when 2023 began, but lowered his cost basis. Given an interest in disruptive technology, Ford reallocated some of those profits to new stakes in Palantir and Nvidia. The latter is tracking to see the fourth largest net inflows this year, while the former is not in the top 20, according to Vanda data.

Elon Musk speaks onstage during The New York Times Dealbook Summit 2023 at Jazz at Lincoln Center on November 29, 2023 in New York City.

Slaven Vlasic | Getty Images

Still, he’s all in on Tesla’s story, citing the push into robots and AI chips as cause for long-term optimism. His only serious concern would be if Musk left and the company’s performance worsened.

“If you can find a company that makes a product that people love, and it’s different than anything that other people have, then you have that chance to really make substantial money,” Ford said. “At some point, I do believe that I’ll look back at the price of the stock now and go, ‘Wow, that was a bargain.’”

‘Guts and heart’

Despite Tesla’s strong year on Wall Street and Main Street, others see challenges ahead. Roth MKM analyst Craig Irwin said profit margins could come under pressure from additional price cuts amid cooling growth.

But that may not dent individual investors’ enthusiasm. In fact, Irwin said the stock could be a beneficiary of turbulence in the electric vehicle industry, because any uncertainty would lead investors to companies like Tesla that have proven they can design, make and sell vehicles.

Given their affinity for the brand, Irwin said retail investors may also stick with Tesla longer than institutional investors. That could keep Tesla stock “levitating” above where it would otherwise be priced.

“Retail tends to trade on guts and heart,” Irwin said. “And a lot of people love Tesla.”

Changes in individual investor sentiment are so key to Tesla’s stock performance that hedge funds take note of these trends when evaluating what to do, the analyst noted earlier this year.

Irwin is in the majority on Wall Street in giving Tesla a neutral rating of no more than “hold,” neither recommending it be bought nor sold. Following 2023’s rebound, the average analyst surveyed by LSEG sees the stock falling about 13% over the next year.

Individual investors have often been the butt of the joke, with investing experts pointing to their inability to time the market and best allocate their money.

Yet individual traders have gained attention following the rise of short-squeezed “meme” stocks during the pandemic. Even as that craze fizzled, retail trading remains popular: Everyday investors put more than four times the amount of money into their 20 most-bought securities in 2023 than they did in all of 2018, according to Vanda data from early December.

For Schwarz, the UC professor, the flight to Tesla this year is complicated.

It’s concerning, he said, if individual investors are making bigger bets on single stocks than funds that invest in diversified indexes like the S&P 500 ETF. Still, while investments that spread bets across a pool of stocks is safer, trying to pick certain companies is more desirable than not being in the market at all, he said.

“Traders would be much better off if they just bought [the] index and forgot the password to their brokerage account,” he said. But, “even if Tesla doesn’t do as well as the market, it’s still better than probably just spending it on useless consumption and not participating.”

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December 20, 2023
The Israel-Hamas war is affecting the financial outlooks of these large companies

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The ‘Rhapsody of the Seas’ cruise liner carrying US citizens leaves the Israeli port of Haifa to be evacuated to the Mediterranean island of Cyprus on October 16, 2023, amid the ongoing battles between Israel and the Palestinian Islamist group Hamas.

Aris Messinis | AFP | Getty Images

Some of the world’s most well-known companies are already seeing the Israel-Hamas war weighing on operations.

On Oct. 7, militant group Hamas struck Israeli towns in a surprise attack and took more than 200 hostages. More than 7,000 people have been killed in Gaza, per Palestinian health officials, while the Israeli Defense Forces said more than 1,400 have been killed in the country.

Corporations that do business or have operations in the region have already begun seeing the war change their financial outlooks as the unrest weighs on everything from advertising dollars to tourism to supply chains. These early admissions come as world leaders grow increasingly concerned that the conflict will further intensify, with international calls for a cease-fire being rejected.

United Airlines said fourth-quarter performance could vary depending on the length of flight suspensions in Tel Aviv. Its updated range for adjusted earnings per share came in below analysts’ forecasts.

“We have unmatched geographic diversity with a large domestic network complemented by the largest long-haul international network and both are solidly profitable,” CEO Scott Kirby said earlier this month. “While this is a great attribute, it does create some short-term risk and volatility as we’re seeing right now with the transitory hit to margins this quarter as a result of the tragedy in Israel.”

Travel changes

United is one of several carriers including Delta Air Lines and American Airlines that have rushed to change schedules as the conflict has unfolded. Notably, El Al, the Israeli flag carrier, said it would fly on the Jewish Sabbath for the first time in more than four decades to help bring reservists abroad back to the country.

Across the travel industry, the war is on the mind of corporate leaders. Plane-maker Boeing said in a regulatory filling that the conflict could potentially affect certain suppliers, in addition to airlines.

About 1.5% of Royal Caribbean capacity in the fourth quarter had planned to visit Israel, CEO Jason Liberty said on the cruise line’s call on Thursday. A few of the adjusted sailings that were previously expected have home ports in Haifa, a city in the northern region of the country.

The company also offered free use of its Rhapsody of the Seas vessel to the U.S. government to aid in the evacuation of Americans from Israel. Between the changed itineraries and use of the ship, the company estimated it would have an impact of 5 cents per share on its earnings. The company expects to see between $6.58 and $6.63 in adjusted earnings per share for the year.

El Al Airlines airplane flying on February 2023.

Nurphoto | Nurphoto | Getty Images

“I would … like to recognize the incredible effort from our shoreside teams and crew on board Rhapsody of the Seas who have been working tirelessly with the U.S. Department of State to help safely evacuate Americans from Israel,” Liberty said. “My heartfelt gratitude goes out to all involved.”

Still, Liberty said the cruise line’s customer base is sticky, so it may become more of a question of where they are going to travel rather than if they are going to cancel their plans.

“They’re going to go somewhere with us,” he said. “That’s what we’re focused on making sure they’re doing.”

‘Unpredictable nature’

Technology companies were among those seeing the conflict affect the workforce, advertising spending and supply chains.

Snap said in its latest earnings release that it saw pauses in spending from a “large number of primarily brand-oriented advertising campaigns” immediately after the war began. That has weighed on revenue quarter to date.

While the company said some of the campaigns that initially paused have now resumed, the company has also seen others that didn’t originally stop advertising now pause. Snap said it would be “imprudent” to offer formal guidance on what to expect for the current quarter “due to the unpredictable nature of war.”

Meta finance chief Susan Li said the Facebook and Instagram parent has seen softer advertising spending so far in the quarter, correlating in timeline with the start of the conflict. Li noted that it isn’t necessarily due to any one event, but cooler spending has aligned in the past with the start of conflicts such as the Russian invasion of Ukraine last year.

“This is something that we’re continuing to monitor,” Li told analysts during the company’s earnings call on Wednesday. “We’ve reflected the latest trends and advertiser reaction that we’ve seen into our Q4 outlook — which, again, we think reflects the greater uncertainty and volatility in the landscape ahead.”

Align Technology is expecting increased headwinds from the uncertainty and potential supply chain issues tied to the conflict, according to Chief Financial Officer John Morici. He said the fourth-quarter operating margin, when adjusted for generally accepted accounting principles, should be down from the prior quarter as the company offers severance to adjust to headcount changes in this situation.

Multiple corporations including Aon and West Pharmaceutical noted a continued focus on supporting employees and their family members who live and work in the region. Israel is known in part for its vibrant startup and technology scene, with entrepreneurs now wondering how to push forward in the new normal, especially as citizens get called to serve in reserve units.

ServiceNow CEO William McDermott said during the company’s call with analysts on Wednesday that employee Shlomi Sividia was among those murdered at the Supernova Music Festival. He said Sividia was “highly respected, admired and a good friend to many.”

“We stand in solidarity with our team and with their families. Terrorism has caused the unfathomable humanitarian crisis that now engulfs millions of people in Israel and Gaza,” McDermott said. “Our hearts pray for the innocent on all sides. Even with optimism in short supply, we choose to honor the dream of a peaceful and prosperous future for the Middle East region.”

Companies specializing in defense have also been on alert as another international conflict breaks out.

General Dynamics, the biggest U.S. artillery shell producer, had already been ramping up artillery production to meet needs amid the war in Ukraine, according to finance chief Jason Aiken. Now, the company is working to increase production to as high as 100,000 units per month, up from 14,000.

“I think the Israel situation is only going to put upward pressure on that demand,” Aiken said during General Dynamics’ Wednesday earnings call.

— CNBC’s Robert Hum, Morgan Brennan and Leslie Josephs contributed reporting.

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October 28, 2023
Stocks making the biggest midday moves: Microsoft, Alphabet, Boeing and more

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A GE AC4400CW diesel-electric locomotive in Union Pacific livery is seen near Union Station in Los Angeles, California, September 15, 2022.

Bing Guan | Reuters

Here are the stocks making headlines on Wednesday, July 26.

Microsoft — The Xbox owner saw its shares slide 4% after issuing quarterly revenue guidance that fell short of analysts’ expectations. The soft revenue outlook was partly due to weakness in the segment that contains Windows software. Microsoft did report earnings and revenue that beat Street estimates for the calendar second quarter, however.

Alphabet — Shares of the Google parent rose more than 6% after Alphabet beat analysts’ revenue and profit in the second quarter. The parent company of YouTube reported $1.44 in earnings per share on $74.6 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.34 per share on $72.82 billion of revenue.

Boeing — The aerospace company’s shares jumped almost 6% and hit a new 52-week high after its second-quarter earnings announcement. Boeing’s revenue of $19.75 billion topped analysts’ estimates of $18.45 billion, according to Refinitiv. The company also reported an 82-cent-loss per share, while Refinitiv analysts had estimated a loss of 88 cents per share.

WW International — Shares of the weight loss company soared more than 18% after an upgrade to overweight from Morgan Stanley. The bank highlighted WW International’s recent acquisition of Sequence, which analyst Lauren Schenk said will aid growth by providing exposure to weight loss drugs.

Texas Instruments — Shares dropped 5% as investors focused on the company’s guidance for the current quarter. Texas Instruments said to expect between $1.68 and $1.92 in earnings per share in the current quarter, meaning much of the range was below the $1.91 estimate of analysts polled by FactSet. Meanwhile, the company guided revenue to between $4.36 billion and $4.74 billion against a FactSet consensus estimate of $4.59 billion. However, the company’s second quarter results exceeded analysts’ expectations.

Visa — The credit card stock slipped more than 1% despite Visa beating estimates for its fiscal third quarter. The company reported $2.16 in adjusted earnings per share on $8.12 billion of revenue. Analysts surveyed by Refinitiv were looking for $2.12 in earnings per share on $8.06 billion of revenue. The company did report that payments volume growth was slowing slightly.

Chubb — Shares of the insurance company jumped more than 5% after a stronger-than-expected second-quarter report. The company posted $4.92 in adjusted earnings per share, above the $4.41 expected by analysts, according to Refinitiv. The net premiums written for property and casualty lines came in at $10.68 billion, above estimates of $10.64 billion.

Spotify — The music streaming company’s shares gained 3.2% Wednesday. Shares closed 14% lower Tuesday after Spotify’s second-quarter results missed analysts’ expectations. Deutsche Bank wrote in a Wednesday note that the post-earnings selloff created an attractive entry point for investors.

PacWest – Shares of the community bank surged more than 27% afterit agreed to be acquired by Banc of California in all-stock deal, which includes $400 million in equity from Warburg Pincus and Centerbridge. The combined holding company will operate under the Banc of California name. Shares of Banc of California rose less than 1%.

Union Pacific – The railroad operator saw its shares jump 10% after it named Jim Vena its new CEO. The announcement overshadowed its second-quarter results, which missed estimates. The Omaha-based company reported $2.54 in adjusted earnings per share on $5.96 billion of revenue. Analysts surveyed by Refinitiv had penciled in $2.75 per share and $6.12 billion. Union Pacific blamed softening consumer markets, inflation, a one-time labor expense and increased workforce levels but said resource levels were more aligned with demand to finish the quarter.

Robert Half — Shares of the staffing consulting firm tumbled more than 5% after Robert Half reported disappointing second-quarter results. The firm reported $1.00 in earnings per share on $1.64 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.14 per share and $1.69 billion of revenue.

General Dynamics — The defense contractor climbed 3% after General Dynamics reported better-than-expected second-quarter results. The company logged $2.70 in earnings per share on $10.15 billion of revenue. Analysts surveyed by Refinitiv had estimated $2.56 in earnings per share on $9.46 billion of revenue.

CoStar Group — Shares of the commercial real estate company slid 7.4% after reporting lighter-than-expected revenue for the second quarter, and softer guidance for the third quarter. CoStar said it generated $605.9 million in revenue during the second quarter and expected between $622 and $627 million in the third. Analysts estimated $607.3 million and $623.4 million for those respective periods, according to FactSet’s StreetAccount.

KeyCorp — Shares of the Cleveland-based regional bank jumped more than 7%. Regional bank stocks moved broadly higher after the deal between Banc of California and PacWest.

— CNBC’s Hakyung Kim, Brian Evans, Yun Li, Tanaya Macheel, Alex Harring and Samantha Subin contributed reporting.

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July 26, 2023
Biden may travel to Europe to mark one-year anniversary of Russia’s Ukraine invasion: reports

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President Joe Biden is considering traveling to Europe next month to mark the one-year anniversary of Russian’s invasion of Ukraine, NBC News and CNN reported Thursday. NBC’s report said multiple locations are under consideration, including Poland, and that administration officials have discussed announcing another major military aid package for Ukraine to coincide with the anniversary. Biden on Wednesday announced the U.S. would send 31 Abrams tanks
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to Ukraine to help it defend itself against the Russian invasion, but he warned that it would take time to deliver the equipment.

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January 26, 2023
Former soldier tasked with getting Navy builder in shipshape

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BATH, Maine — Making the switch from building corporate jets to building Navy warships has been reinvigorating for a soldier-turned-business executive who’s leading Navy shipbuilder Bath Iron Works.

Charles “Chuck” Krugh said he wasted no time in getting his hands dirty, meeting daily with workers on the ships’ “deck plates.”

“I’m a hands-on guy that likes to get into the details,” he said.

Shipbuilders weren’t so sure at first whether it was just an act, but after six months they’re now accustomed to him regularly chatting with shipbuilders to get a handle on their workflow, at all hours of the day and night.

Labor relations have improved along the way.

“It’s all been good. We’re moving in the right direction. We’ve just got to keep moving that way,” said Rock Grenier, president of Local S6 of the Machinists Union, which represents production workers.

Krugh, 58, arrived in June after the abrupt departure of former Bath Iron Works President Dirk Lesko, who led the General Dynamics subsidiary through a difficult period that included a pandemic and a two-month strike, both of which lengthened construction delays.

The future USS Carl M. Levin that completed acceptance trials this month is more than a year behind schedule. The silver lining, Krugh said, is that the warship earned the highest marks for a Bath-built ship in years in a review by the Navy’s Board of Inspection and Survey.

Krugh said he’s encouraging the shipyard’s 7,000 workers to rethink processes to ensure they can complete tasks as efficiently as possible. A big part of that is ensuring proper planning before a task even starts.

“We show people that you can do the impossible, or the seemingly impossible, if you spend enough preparation time to get things ready. So that’s the good news side of what we’re doing, and we’re seeing a momentum building now,” he said.

The Army veteran formerly served at Gulfstream, another General Dynamics subsidiary, which builds business jets, before being tasked with overseeing a historic shipyard that dates to the late 1800s.

He said he was taken aback by labor relations and the condition of the company upon his arrival.

Part of the improvement in relations with the union and in shipbuilding efficiency was the rehiring of shipyard veteran, David Clark, from Marinette Marine, to serve as vice president of manufacturing, Grenier said.

“We’re doing everything we can to keep building those ships faster and more efficient,” the union president said.

The shipyard is continuing to hire hundreds of new workers to replace older workers who are retiring, and Krugh said they’ll picking up the necessary skills to build the latest versions of the Arleigh Burke destroyer along with the next-generation destroyer in coming years.

Continual improvement made possible by cooperation is necessary to assure the shipyard’s survival, said Loren Thompson, a defense analyst at the Lexington Institute.

The future isn’t assured for the shipyard beyond the current decade unless the shipyard continues to become more competitive, Thompson said. Bath Iron Works competes with the larger Ingalls Shipbuilding in Mississippi for contracts to build destroyers, the workhorse of the Navy.

“It is imperative for the union and management to get along because if they don’t, the long-term consequences for the yard could be fatal,” he said.

As for Krugh, he said some outsiders mistakenly suggested he’d struggle with the transition from aerospace to shipbuilding.

But he said he’s rejuvenated by being closer to the military — and urged any critics to watch and see what happens at the shipyard before casting judgment on the shipyard’s abilities.

“This is really personal for me. This is our country. We don’t build mixers here. We’re building the warships that are going to protect my family, your family and other Americans,” he said.

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Follow David Sharp on Twitter @David—Sharp—AP

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December 27, 2022