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  • What markets are watching after digesting the US jobs data | CNN Business

    What markets are watching after digesting the US jobs data | CNN Business

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    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
     — 

    In an unusual coincidence, the US jobs report was released on a holiday Friday — meaning stock markets were closed when the closely-watched economic data came out.

    It was the first monthly payroll report since Silicon Valley Bank and Signature Bank collapsed. It also marked a full year of jobs data since the Federal Reserve began hiking interest rates in March 2022.

    While inflation has come down and other economic data point to a cooling economy, the labor market has remained remarkably resilient.

    Investors have had a long weekend to chew over the details of the report and will likely skip the typical gut-reaction to headline numbers.

    What happened: The US economy added 236,000 jobs in March, showing that hiring remained robust though the pace was slower than in previous months. The unemployment rate currently stands at 3.5%.

    Wages increased by 0.3% on the month and 4.2% from a year ago. The three-month wage growth average has dropped to 3.8%. That’s moving closer to what Fed policymakers “believe to be in line with stable wage and inflation expectations,” wrote Joseph Brusuelas, chief economist at RSM in a note.

    “That wage data tends to suggest that the risk of a wage price spiral is easing and that will create space in the near term for the Federal Reserve to engage in a strategic pause in its efforts to restore price stability,” he added.

    The March jobs report was the last before the Fed’s next policy meeting and announcement in early May. The labor market is cooling but not rapidly or significantly, and further rate hikes can’t be ruled out.

    At the same time Wall Street is beginning to see bad news as bad news. A slowing economy could mean a recession is forthcoming.

    Markets are still largely expecting the Fed to raise rates by another quarter point. So how will they react to Friday’s report?

    Before the Bell spoke with Michael Arone, State Street Global Advisors chief investment strategist, to find out.

    This interview has been edited for length and clarity.

    Before the Bell: How do you expect markets to react to this report on Monday?

    Michael Arone: I think that this has been a nice counterbalance to the weaker labor data earlier last week and all the recession fears. This data suggests that the economy is still in pretty good shape, 10-year Treasury yields increased on Friday indicating there’s less fear about an imminent recession.

    There’s this delicate balance between slower job growth and a weaker labor market without economic devastation. I think this report helps that.

    As it relates to the stock market, I would expect the cyclical sectors to do well — your industrials, your materials, your energy companies. If interest rates are rising, that’s going to weigh on growth stocks — technology and communication services sectors, for example. Less recession fears will mean investors won’t be as defensively positioned in classic staples like healthcare and utilities.

    Could this lead to a reverse in the current trend where tech companies are bolstering markets?

    Yes, exactly. It’s difficult to make too much out of any singular data point, but I think this report will hopefully lead to broader participation in the stock market. If those recession fears begin to abate somewhat, and investors recognize that recession isn’t imminent, there will be more investment.

    What else are investors looking at in this report?

    We’ve seen weakness in the interest rate sensitive parts of the market — areas that are typically the first to weaken as the economy slows down. So things like manufacturing, things like construction. That’s where the weakness in this jobs report is. And the services areas continue to remain strong. That’s where the shortage of qualified skilled workers remains. I think that you’re seeing continued job strength in those areas.

    What does this mean for this week’s inflation reports? It seems like the jobs report just pushed the tension forward.

    it did. I expect that inflation figures will continue to decelerate — or grow at a slower rate. But I do think that the sticky part of inflation continues to be on the wage front. And so I think, if anything, this helps alleviate some of those inflation pressures, but we’ll see how it flows through into the CPI report next week. And also the PPI report.

    Is the Federal Reserve addressing real structural changes to the labor market?

    The Fed was confused in February 2020 when we were in full employment and there was no inflation. They’re equally confused today, after raising rates from zero to 5%, that we haven’t had more job losses.

    I’m not sure why, but from my perspective, the Fed hasn’t taken into consideration the structural changes in the labor force, and they’re still confused by it. I think the risk here is that they’ll continue to focus on raising rates to stabilize prices, perhaps underestimating the kind of structural changes in the labor economy that haven’t resulted in the type of weakness that they’ve been anticipating. I think that’s a risk for the economy and markets.

    A few weeks ago, Before the Bell wrote about big problems brewing in the $20 trillion commercial real estate industry.

    After decades of thriving growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall. Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Fed’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.

    Recent banking stress will likely add to those woes. Lending to commercial real estate developers and managers largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.

    Since then, things have gotten worse, CNN’s Julia Horowitz reports.

    In a worst-case scenario, anxiety about bank lending to commercial real estate could spiral, prompting customers to yank their deposits. A bank run is what toppled Silicon Valley Bank last month, roiling financial markets and raising fears of a recession.

    “We’re watching it pretty closely,” said Michael Reynolds, vice president of investment strategy at Glenmede, a wealth manager. While he doesn’t expect office loans to become a problem for all banks, “one or two” institutions could find themselves “caught offside.”

    Signs of strain are increasing. The proportion of commercial office mortgages where borrowers are behind with payments is rising, according to Trepp, which provides data on commercial real estate.

    High-profile defaults are making headlines. Earlier this year, a landlord owned by asset manager PIMCO defaulted on nearly $2 billion in debt for seven office buildings in San Francisco, New York City, Boston and Jersey City.

    Dig into Julia’s story here.

    Tech stocks led market losses in 2022, but seemed to rebound quickly at the start of this year. So as we enter earnings season, what should we expect from Big Tech?

    Daniel Ives, an analyst at Wedbush Securities, says that he has high hopes.

    “Tech stocks have held up very well so far in 2023 and comfortably outpaced the overall market as we believe the tech sector has become the new ‘safety trade’ in this overall uncertain market,” he wrote in a note on Sunday evening.

    Even the recent spate of layoffs in Big Tech has upside, he wrote.

    “Significant cost cutting underway in the Valley led by Meta, Microsoft, Amazon, Google and others, conservative guidance already given in the January earnings season ‘rip the band- aid off moment’, and tech fundamentals that are holding up in a shaky macro [environment] are setting up for a green light for tech stocks.”

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  • Video: A pause on AI development, why it’s the worst time to buy a car in decades on CNN Nightcap | CNN Business

    Video: A pause on AI development, why it’s the worst time to buy a car in decades on CNN Nightcap | CNN Business

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    The dangers of AI, the worst time to buy a car in decades, and the next Elizabeth Holmes?

    NYU’s Gary Marcus tells “Nightcap’s” Jon Sarlin why he signed an open letter calling for a six-month pause on AI development. Plus, CNN’s Peter Valdes-Dapena explains why car prices may never go back to where they were pre-Covid. And Forbes’ Alexandra Levine details the arrest of Charlie Javice, the 31-year-old fintech founder who sold her company to JPMorgan and now stands accused of fraud. To get the day’s business headlines sent directly to your inbox, sign up for the Nightcap newsletter.

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  • Cineworld shares tank after Regal Cinemas owner ditches plans to sell US and UK businesses | CNN Business

    Cineworld shares tank after Regal Cinemas owner ditches plans to sell US and UK businesses | CNN Business

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    London
    CNN
     — 

    Shares in Cineworld plunged more than 30% Monday, hitting their lowest level since late August, after the owner of Regal Cinemas said it planned to terminate efforts to sell its US, UK and Irish businesses.

    The world’s second-largest movie theater chain also announced a debt restructuring plan with lenders to help it exit bankruptcy. The deal does not provide for any recovery of funds for shareholders, the company said in a statement.

    “This agreement with our lenders represents a ‘vote of confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment,” said CEO Mooky Greidinger.

    Cineworld — which, like many cinema operators, was hit hard by the pandemic — filed for Chapter 11 bankruptcy protection in September. Over the past year, the company’s shares have lost more than 93% of their value.

    Under the proposed debt restructuring, lenders will reduce Cineworld’s debt pile by $4.5 billion and receive equity in the reorganized group; provide $1.46 billion in new debt; and backstop a $800 million share issue.

    The company said it had received offers for its businesses in other parts of the world and was considering them. In addition to the United States, the United Kingdom and Ireland, Cineworld operates cinemas in Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel.

    It will abandon plans to sell its US, UK and Ireland arms unless it receives an “all-cash bid” significantly higher than the current value of the businesses.

    The British company continues to operate its theaters around the world. After two rounds of closures in the United States, around 500 Cineworld theaters remain across the country.

    The company said in February that it expected shareholders to be wiped out entirely by the bankruptcy process, even in the event of a sale of some of its businesses.

    The pandemic forced movie theaters around the globe to close, dealing a devastating blow to Cineworld and others in the industry, and it is still affecting visitor numbers. Cineworld lost $2.7 billion in 2020 and another $566 million in 2021. It reported another loss, of $294 million, in the six months ending in June 2022.

    Cinema operators are coming up with creative ways to claw back revenue. Cineworld’s larger rival AMC Theaters announced recently that it would price tickets based on seat location, charging extra for more desirable seats in the middle of a theater.

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  • This is one of the worst times to buy a car in decades. 3 charts explain why | CNN Business

    This is one of the worst times to buy a car in decades. 3 charts explain why | CNN Business

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    CNN
     — 

    It has almost never been as hard to buy a new or used car in the United States as it is today, despite improving supply issues and inflation beginning to steady.

    Vehicle transaction prices — the price you actually end up paying after any dealer discounts or markups — have been climbing higher and faster since 2020 than any other point in more than 35 years, according to recent data from the Bureau of Labor Statistics.

    The consumer price indexes for both new and used cars — the average changes in vehicle transaction price over time — are much higher than they were four years ago in 2019.

    There is a silver lining. BLS data shows inflation for used cars has been cooling down just as dramatically since December 2022 as it increased in the months before that. But used cars have a long way to go before approaching 2019 sales prices and new car prices have yet to slow down.

    The average transaction price of a new car has jumped nearly $12,000 in the past five years, according to data from auto website Edmunds.com. For used cars, the average transaction price is still nearly $9,000 higher than it was in February 2018.

    “[Prices are] coming down a bit, but not coming down nearly as fast as one would hope,” said Ivan Drury, the director of insights at Edmunds.com. “If you look back, or if you’ve ever done a transaction before in your life, all of these numbers are bad.”

    Car buyers haven’t seen price hikes like these since the 1970s and 80s. What makes the 2020s unique is how much car prices rose in a short period of time. Over the used car market’s worst 12 months of the pandemic, the index rose 45%. There’s never been a 12-month period since the BLS began keeping records in 1947 when used car prices have inflated more.

    Recent trends in prices have been similar across regions of the United States, though in some areas, the starting prices may be higher than others. Preferences for more expensive vehicles in some areas drive these regional differences, Drury said.

    There’s a large market for pickup trucks and SUVs in the south, he said, where BLS data shows new car transaction prices have risen the most since 1987.

    The average price of a large pickup truck nationwide was $62,430 in 2022, according to Edmunds.com. The average midsize car price was only $31,381.

    The road to more reasonable prices for new and used cars remains littered with potholes.

    Consumer tastes have shifted towards larger and more expensive pickup trucks and SUVs. New car buyers are loading up on options, compared to more stripped-down models available a few years ago. Both of these trends drive up prices and also create incentive for automakers to produce pricier rides. The used market is still affected by the decline in leasing trade-ins and rental car companies competing with consumers for the same limited supply of three to five-year-old vehicles.

    “We’ve got a few things that are really hindering the US market,” Drury said. “I don’t see those going away anytime soon.”

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  • Silicon Valley Bank left a void that won’t easily be filled | CNN Business

    Silicon Valley Bank left a void that won’t easily be filled | CNN Business

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    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
     — 

    It’s difficult to overstate the influence that Silicon Valley Bank had over the startup world and the ripple effect its collapse this month had on the global tech sector and banking system.

    While SVB was largely known as a regional bank to those outside of the tight-knit venture capital sphere, within certain circles it had become an integral part of the community – a bank that managed the idiosyncrasies of the tech world and helped pave the way for the Silicon Valley-based boom that has consumed much of the economy over the past three decades.

    SVB’s collapse was the largest bank failure since the 2008 financial crisis: It was the 16th largest bank in the country, holding about $342 billion in client funds and $74 billion in loans.

    At the time of its collapse, about half of all US venture-backed technology and life science firms were banking with SVB. In total, it was the bank for about 2,500 venture firms including Andreessen Horowitz, Sequoia Capital, Bain Capital and Insight Partners.

    But the influence of SVB went beyond lending and banking – former CEO Gregory Becker sat on the boards of numerous tech advocacy groups in the Bay Area. He chaired the TechNet trade association and the Silicon Valley Leadership Group, was a director of the Federal Reserve Bank of San Francisco and served on the United States Department of Commerce’s Digital Economy Board of Advisors.

    There’s no doubt that the failure of Silicon Valley Bank left a large void in tech. The question is how that gap will be filled.

    To find out, Before the Bell spoke with Ahmad Thomas, president and CEO of the Silicon Valley Leadership Group. The influential advocacy group is working to convene its hundreds of member companies – including Amazon, Bank of America, BlackRock, Google, Microsoft and Meta – to discuss what happens next.

    This interview has been edited for length and clarity.

    Before the Bell: What’s the feeling on the ground with tech and VC leadership in Silicon Valley?

    Ahmad Thomas: Silicon Valley Bank has been a key part of our fabric here for four decades. SVB was truly a pillar of the community and the innovation economy. The absence of SVB – that void – and coalescing leaders to fill that void is where my energy is focused and that is not a small task.

    I would say there was a fairly high level of unease a few days ago, and I believe the swift steps taken by leaders in Washington have helped quell a fair amount of that unease, but looking at Credit Suisse and First Republic just over the last couple of days, clearly we are in a situation that is going to continue to develop in the weeks and months ahead.

    So how do you fill it?

    We’re working to be a voice around stability, particularly about the fundamentals of the innovation economy. We can acknowledge the void given the absence of Silicon Valley Bank, but I do think we need voices out there to be very clear in highlighting that the fundamentals and the innovation infrastructure remains robust here in Silicon Valley.

    This is a moment where I think people need to take a step back, let cooler heads prevail, and understand that there are opportunities both from an investment standpoint, a community engagement standpoint and corporate citizenship standpoint for new leaders in Silicon Valley to step up.

    Are you working to advocate for more permanent regulation in DC?

    It’s far too early for that. But if there are opportunities to enhance access to capital to entrepreneurs to founders of color or in marginalized communities and if there are opportunities to try and drive innovation and economic growth, we will always be at the table for those conversations.

    Do you have any ideas about how long this crisis will continue for? What’s your outlook?

    The problem is twofold: A crisis of confidence and the set of economic conditions on the ground. The economic conditions remain volatile for a variety of reasons: The softening economy, inflationary pressures and the interest rate environment. But I think right now we need to focus on stabilizing confidence in the investor community, in our business executive community and in the broader set of stakeholders around the strength of the innovation economy. That is something we need to shore up near term.

    From CNN’s Mark Thompson

    Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse (CS) in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.

    “UBS today announced the takeover of Credit Suisse,” the Swiss National Bank said in a statement. It said the rescue would “secure financial stability and protect the Swiss economy.”

    UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.

    Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.

    Credit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

    Read more here.

    From CNN’s David Goldman

    A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.

    On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers won’t need to make any changes to do their banking Monday.

    New York Community Bank bought substantially all of Signature’s deposits and a total of $38.4 billion worth of the company’s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank purchased at a steep discount -— it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.

    At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.

    Not included in the transaction is about $60 billion in other assets, which will remain in the FDIC’s receivership. It also doesn’t include $4 billion in deposits from Signature’s digital bank business.

    Read more here.

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  • Facebook-parent Meta plans to lay off another 10,000 employees | CNN Business

    Facebook-parent Meta plans to lay off another 10,000 employees | CNN Business

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    CNN
     — 

    Facebook-parent Meta plans to lay off another 10,000 workers, marking the second round of significant job cuts announced by the tech giant in four months.

    The latest layoffs, announced on Tuesday, come after Meta said in November that it was eliminating approximately 13% of its workforce, or 11,000 jobs, in the single largest round of cuts in the company’s history.

    In a Facebook post Tuesday, CEO Mark Zuckerberg said the job cuts will take place “over the next couple of months.”

    “We expect to announce restructurings and layoffs in our tech groups in late April, and then our business groups in late May,” he wrote. In a “small number of cases, it may take through the end of the year to complete these changes.”

    “Overall, we expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired,” Zuckerberg said.

    As of September 2022, Meta reported a headcount of 87,314, per a securities filings. With 11,000 job cuts announced in November and the 10,000 announced Tuesday, that would bring Meta’s headcount down to around 66,000.

    Meta is far from the only Big Tech company to undergo layoffs amid higher inflation, recession fears and a whiplash in pandemic-induced demand. In the first months of this year, Amazon, Google-parent Alphabet and Microsoft have all confirmed major job cuts impacting tens of thousands of tech workers.

    Shares of Meta rose more than 4% in early trading Tuesday following the announcement.

    When the first round of job cuts was announced in November, Zuckerberg blamed himself at the time for the company’s over-hiring earlier in the pandemic. Meta  nearly doubled its headcount between March 2020 and September of last year, as the Covid-19 crisis led to a surge in demand for digital services.

    But the situation changed radically for the social media giant and other tech companies last year as pandemic restrictions eased and people returned to their offline lives. Meta’s core business was also hit by privacy changes implemented by Apple and advertisers tightening budgets amid recession fears.

    In its most-recent quarterly earnings report, Meta posted a sharp drop in profits and reported its third straight quarterly decline in revenue. But during the earnings call, Zuckerberg promised investors that 2023 would be the “year of efficiency” for the company, following years of heavy investment in growth and a more immersive version of the internet called the metaverse.

    On that call, Zuckerberg also suggested that more job cuts could be coming.

    “We closed last year with some difficult layoffs and restructuring some teams. When we did this, I said clearly that this was the beginning of our focus on efficiency and not the end,” Zuckerberg said during the earnings call in early February. He added that the company would be focused on “flattening” its org structure and “removing some layers of middle management to make decisions faster.”

    “As part of this, we’re going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial, but my main focus is on increasing the efficiency of how we execute our top priorities,” Zuckerberg said.

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  • The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed | CNN Business

    The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed | CNN Business

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    CNN
     — 

    For much of the weekend, Silicon Valley scrambled to find a way through what one prominent tech investor described as an “extinction-level event for startups” after the collapse of a top lender in the industry.

    Startups raced to line up loans from venture funds and fintech firms to make payroll. Venture-backed retailers hosted last-minute sales to boost their cash reserves. And at least one prominent startup accelerator convinced thousands of CEOs and founders to sign an “urgent” petition calling for Treasury Secretary Janet Yellen and others to offer “relief.”

    Then, late Sunday, federal officials stepped in to guarantee that all customers of the failed Silicon Valley Bank would have access to their full deposits on Monday. The sense of relief was palpable throughout the tech sector.

    “Obviously, I’m quite relieved,” said Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, who told CNN that his company would have had to shut down by the end of the week without the government intervention. “It was a very stressful weekend and I’m quite relieved with the news.”

    Parker Conrad, the CEO of HR platform Rippling, who had previously said some customers’ payrolls were being delayed by the bank failure, tweeted Sunday: “Anyone else breathing a sigh of relief and looking forward to a good night’s sleep tonight?”

    And Garry Tan, the CEO of tech startup accelerator Y Combinator who authored the petition to Yellen, praised the federal government for “decisive action.” Tan, the investor who had previously warned of “an *extinction level event* for startups” that would “set startups and innovation back by 10 years or more,” added his appreciation on Sunday for “everyone who helped us through a very very intense time.”

    But even as the tech industry enjoys a respite from a fearful weekend, unknowns remain. “You can feel the collective *sigh*,” Ryan Hoover, a tech founder and investor wrote on Twitter Sunday. “I’m still nervous,” he added. “Hard to predict the collateral effects.”

    It’s unclear how the aftershocks of the bank’s collapse will add to the startup industry’s growing challenges accessing capital. SVB’s collapse also risks changing how the world, and prospective recruits, think of Silicon Valley.

    For years, the term itself conjured an image of an enclave of bright, contrarian, libertarian engineers and thinkers who could see around corners and make big bets on the future. Now, that same industry is relying on the federal government to survive after failing to see the risk, or worse, contributing to it through a shared hysteria.

    In the chaotic days leading up to the bank’s collapse on Friday, some venture firms reportedly urged their portfolio companies to withdraw their money, which may have contributed to the bank failing.

    Then, over the weekend, many venture capitalists and tech founders banded together to try and lobby government and public goodwill towards saving the companies impacted by Silicon Valley Bank’s sudden collapse.

    While some VCs appeared to embrace fear-mongering on Twitter, much of the public messaging focused on the small businesses with exposure to Silicon Valley Bank that might be not be able to continue operating after losing access to the money in their bank account.

    “We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy,” the Y Combinator petition stated. “We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank.”

    A separate coalition of more than a dozen venture capital firms, including Lightspeed Venture Partners and Upfront Ventures, released a joint statement late Friday supporting Silicon Valley Bank, given its unique and vital role in the startup economy. The bank worked with nearly half of all venture-backed tech and healthcare companies in the United States.

    “For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US,” the statement read. “In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.”

    Even before the bank’s collapse, the startup industry was in a tough moment. Venture capital funding had dwindled amid rising interest rates and broader macroeconomic uncertainty; tech companies were cutting staff and ambitious projects; and some of the biggest private companies were reportedly slashing their valuations.

    The instability at a top tech lender, and the lingering questions about its impact on other regional banks and the broader financial system, risk making it even harder for money-losing startups to access the capital they need to survive.

    President Joe Biden emphasized in remarks Monday that “no losses will be borne by the taxpayers” related to the government’s intervention for Silicon Valley Bank. But some are already skeptical of that statement, including Democratic Sen. Elizabeth Warren of Massachusetts, who wrote in an op-ed Monday morning, “We’ll see if that’s true.”

    More immediately, there’s uncertainty around how long it will take for companies to get their money out of the bank.

    As of Monday, Kalb said the money in his Silicon Valley Bank account has not been transferred yet to the new JPMorgan Chase account he set up for Shelf Engine on Thursday. “I’ve been obsessively checking my email,” he said. “Hopefully the money will be able to be transferred shortly.”

    Ben Kaufman, the co-founder of venture-backed toy store and online retailer Camp, told CNN’s Poppy Harlow in an interview Monday morning that he and his team spent the weekend trying to “fight for survival,” including holding a last-minute 40% off sale, using the code “BANKRUN,” to raise capital over the weekend.

    “We did not know how long it was going to take for us to get our cash out … we still kind of don’t, they say today, we’ll see what happens,” he said, noting the bank held 85% of his company’s assets. “We hope we can, and we’re so grateful that the Fed stepped in, and the way they did.”

    When asked if the past week’s events would change how and where he stores his money, Kaufman said that is “going to have to be a consideration moving forward.”

    “I don’t want to do this again,” he said.

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  • 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

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    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.

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  • 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

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    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.

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  • US safety regulators to investigate Tesla for steering wheels that can fall off | CNN Business

    US safety regulators to investigate Tesla for steering wheels that can fall off | CNN Business

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    New York
    CNN
     — 

    Federal safety regulators are investigating Tesla’s Model Y SUV after at least two instances in which owners said their steering wheels became detached while the vehicle was being driven.

    The National Highway Traffic Safety Administration is looking at the 2023 model year. It said in the two instances in which the steering wheel came off, the cars were delivered to buyers without the retaining bolt that attaches the steering wheel to the steering column.

    The report from the agency did not say if there were accidents or injuries as a result of the problem.

    NHTSA said around 120,000 vehicles on US roads could be affected by the problem. This is an investigation, a step the agency takes before ordering a recall.

    Tesla is not the only company facing safety questions about its steering wheel. Nissan also just disclosed to NHTSA that it is recalling about 1,100 Nissan Ariyas, its electric SUV, because it may be missing a bolt required on its steering wheel.

    There were three vehicles found in dealer inventories in which there was too much play in the steering wheels, and upon inspection it was discovered the bolts were missing in each. But in none of those cases did the steering wheel come off while the cars were being driven, and there were no reports of accidents or injuries caused by the missing bolts.

    In February, Tesla was required to issue a recall of nearly 363,000 vehicles equipped with what it calls its “Full Self Driving” software after NHTSA determined it “led to an unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws.”

    Among the traffic rules the cars violated in FSD mode was “traveling straight through an intersection while in a turn-only lane, entering a stop sign-controlled intersection without coming to a complete stop, or proceeding into an intersection during a steady yellow traffic signal without due caution.”

    Tesla CEO Elon Musk objected to calling that a “recall,” saying it entailed only an over-the-air software update that did not require the owner to bring the cars to service centers to be fixed.

    But Tesla did order a recall last month of 3,470 2022-2023 Model Y cars due to bolts in the second-row seat back frames not being secured correctly, which could cause the seat belts in those seats to not work properly in a crash.

    Tesla has not had a public relations staff for several years and email inquiries to its press office are no longer accepted.

    CNN’s Ramishah Maruf contributed to this report.

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  • $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

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    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.

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  • Tesla recalls almost 3,500 Model Y cars for loose bolts | CNN Business

    Tesla recalls almost 3,500 Model Y cars for loose bolts | CNN Business

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    New York
    CNN
     — 

    Tesla is recalling 3,470 2022-2023 Model Y cars due to bolts in the second-row seat back frames not being secured properly.

    An estimated 4% of cars are affected, a recall report submitted in late February said.

    The loose bolts could cause the seat belts to not work properly in a crash, “which may increase the risk of an injury for occupants seated in affected second-row seating positions,” the National Highway Traffic Administration said.

    On Model Y vehicles, the second-row driver- and passenger-side seat back frames are secured with four bolts per seat back. But during production for certain Model Y cars, one or more of the bolts securing the seat back frames to the lower seat frame “may not have been torqued to specifications.”

    Owners can tell if their car is affected by seeing if their second-row seat back frame folds improperly or if it’s loose and rattles when driving.

    Tesla found five warranty claims regarding the bolts since last December, but is not aware of any injuries or deaths due to it.

    A driver in Fremont, California, found a faulty seat back bolt last December, triggering a Tesla investigation and risk assessment which ended February 17. A recall determination was made on the same day.

    Tesla will inspect the bolts and tighten them if necessary for free of charge, and owner notification letters will be mailed.

    The recall was filed the same month Tesla recalled all 363,000 US vehicles with the “Full Self Driving” driver assist software due to safety risks, a significantly larger recall, which was a blow to the automaker’s business model.

    The NHTSA said, based on its analysis, Tesla’s “Full Self Driving” feature “led to an unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws.” And it warned the feature could violate traffic laws at some intersections “before some drivers may intervene.”

    “The FSD Beta system may allow the vehicle to act unsafe around intersections, such as traveling straight through an intersection while in a turn-only lane, entering a stop sign-controlled intersection without coming to a complete stop, or proceeding into an intersection during a steady yellow traffic signal without due caution,” said the recall notice, posted on NHTSA’s website.

    Tesla will attempt to fix the feature, which costs $15,000, through an over-the-air software update, the notice added.

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

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

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    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.

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  • Tesla, Musk sued by shareholders over self-driving safety claims | CNN Business

    Tesla, Musk sued by shareholders over self-driving safety claims | CNN Business

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    Reuters
     — 

    Tesla

    (TSLA)     and its Chief Executive Elon Musk were sued on Monday by shareholders who accused them of overstating the effectiveness and safety of their electric vehicles’ Autopilot and Full Self-Driving technologies.

    In a proposed class action filed in San Francisco federal court, shareholders said Tesla defrauded them over four years with false and misleading statements that concealed how its technologies, suspected as a possible cause of multiple fatal crashes, “created a serious risk of accident and injury.”

    They said Tesla’s share price fell several times as the truth became known, including after the National Highway Traffic Safety Administration began investigating the technologies, and reports that the Securities and Exchange Commission was investigating Musk’s Autopilot claims.

    The share price also fell 5.7% on Feb. 16 after NHTSA forced a recall of more than 362,000 Tesla vehicles equipped with Full Self-Driving beta software because they could be unsafe around intersections.

    Tesla has said it acquiesced to the recall, though it disagreed with NHTSA’s analysis.

    “As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common stock, plaintiff and other class members have suffered significant losses and damages,” the complaint said.

    Tesla, which does not have a media relations department, did not immediately respond to requests for comment.

    Monday’s lawsuit led by shareholder Thomas Lamontagne seeks unspecified damages for Tesla shareholders from Feb. 19, 2019 to Feb. 17, 2023. Chief Financial Officer Zachary Kirkhorn and his predecessor Deepak Ahuja are also defendants.

    Tesla’s share price closed Monday up $10.75, or 5.5%, at $207.63, but the stock has lost about half its value since peaking in Nov. 2021.

    Musk is expected at Tesla’s March 1 investor day to promote the company’s artificial intelligence capability and plans to expand its vehicle lineup.

    The case is Lamontagne v Tesla Inc et al, U.S. District Court, Northern District of California, No. 23-00869.

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  • The US dollar is at a crossroads | CNN Business

    The US dollar is at a crossroads | CNN Business

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    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.

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  • Alphabet’s self-driving car unit has cut 8% of its staff this year | CNN Business

    Alphabet’s self-driving car unit has cut 8% of its staff this year | CNN Business

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    CNN
     — 

    Waymo, the self-driving car division of Google

    (GOOGL)    ’s parent company Alphabet, said on Wednesday that it has cut approximately 8% of its staff across two rounds of layoffs this year.

    Some 209 jobs were eliminated in total, after cuts in late January and another more recent round, the company confirmed on Wednesday.

    “We took a thoughtful approach and feel confident that we’re providing for each of these former teammates through this transition,” the company said in a statement to CNN Wednesday. “We’re confident that we have the right teams in place to achieve success for Waymo.”

    The Waymo job cuts come amid a spate of layoffs in the tech sector, as the industry adjusts to waning demand for digital services years into the pandemic and confronts broader uncertainty in the global economy. Rising interest rates have also dried up the easy access to funding tech companies used to fuel ambitious projects and bets on the future.

    Alphabet said in January that it was cutting 12,000 jobs, or 6% of its workforce, after having grown by more than 50,000 employees over the prior two years. The cuts to Waymo highlight how even Alphabet’s most ambitious and high-profile long-term bets are not immune to its renewed focus on reining in costs.

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  • Nissan recalling more than 700,000 SUVs that can accidentally shut off while driving | CNN Business

    Nissan recalling more than 700,000 SUVs that can accidentally shut off while driving | CNN Business

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    New York
    CNN
     — 

    Nissan is recalling more than 700,000 Rogue and Rogue Sport compact SUVs because they can be shut off accidentally while driving.

    Some model year 2016 through 2020 Nissan Rogue and 2017 through 2022 Rogue Sports, have jackknife-style keys – the type in which the metal blade of the key flips out from within a plastic key fob. An internal joint in the key can weaken over time, allowing the key to accidentally fold while in use. If this happens while the key is in the ignition, then the vehicle can be accidentally turned off if they is key is touched or bumped.

    The recall only involves the base Rogue S and smaller Rogue Sport S models. Nissan hasn’t yet worked out a solution to the problem, according to documents the automaker filed with the National Highway Traffic Safety Administration. Once a solution is available, according to NHTSA, it will be provided by Nissan dealers free of charge.

    In the meantime, owners of vehicles involved in the recall are advised not to attach anything to the keys that might pull it down and, also, to insert the key into the ignition in a direction that allows the key to fold fold only upward, not down.

    Nissan will begin alerting owners about the recall later in March. Owners with questions about recall can also call NHTSA’s Vehicle Safety Hotline at 888-327-4236.

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  • 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

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    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.

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

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

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    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.

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  • With a little ‘tickle,’ a new technology gives hope to stroke patients with paralysis | CNN

    With a little ‘tickle,’ a new technology gives hope to stroke patients with paralysis | CNN

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    CNN
     — 

    For nearly a decade, Heather Rendulic hasn’t been able to use her left hand to feed herself or pick up something as light as a soup can – but that changed when she became part of a clinical trial that could radically improve the lives of people who’ve been paralyzed after a stroke.

    The results of that trial were published Monday in the journal Nature Medicine.

    Rendulic has a rare brain disease called cavernous angioma, a blood vessel abnormality that can cause stroke. She had series of them – five total – over a period of 11 months when she was just 22 years old that left her paralyzed on her left side.

    “The most challenging part of my condition is living one-handed in a two-handed world,” the Pittsburgh resident said.

    A stroke cuts off the blood supply to the brain, and cells start to die within minutes. A person can have paralysis if the stroke damages the part of the brain that sends messages to trigger muscles to move.

    Rendulic eventually regained some function on her left side, but she was still unable to use a fork or make a fist with that hand.

    In 2021, as a part of a joint project between the University of Pittsburgh and Carnegie Mellon University, researchers implanted a pair of thin metal electrodes along her neck.

    Doctors already use spinal cord stimulation technology to treat persistent pain. Research has shown that the technology could be used to restore leg movement after a spinal cord injury, but hand movements are a little trickier. A hand that functions properly has a unique kind of dexterity and a wide range of motion.

    For the trial, scientists implanted electrodes along the surface of the spinal cord that look like strands of spaghetti. The electrodes give tiny impulses that stimulate specific regions and activate nerve cells inside the spinal cord.

    “The sensory nerves from the arm and hand send signals to motor neurons in the spinal cord that control the muscles of the limb,” said study co-author Dr. Douglas Weber, a professor of mechanical engineering at the Neuroscience Institute at Carnegie Mellon University. “By stimulating these sensory nerves, we can amplify the activity of muscles that have been weakened by stroke. Importantly, the patient retains full control of their movements: The stimulation is assistive and strengthens muscle activation only when patients are trying to move.”

    This technology could work with a wide range of patients, the researchers said.

    Rendulic said the stimulation feels “kind of like a tickle.” It’s never painful, but it takes a little getting used to.

    As tiny black plastic boxes light up and flashing green lights travel up and down her arm, the device allows motion that would have been unthinkable years ago.

    Even on the first day, she had a new range of movement. She didn’t have to be shown how to open the hand or reach the arm, the researchers said. For more complex tasks, a little training was needed.

    “When the stimulation is on, I feel like I now have control of my arm and my hand again that I haven’t had in over nine years,” she said.

    Rendulic can lift her arm above her head, use a fork to bring food to her mouth, and fully open and close her fist. The other person participating in the trial had similarly promising results.

    At one point during the trial, Rendulic picked up a soup can and released it on a marked spot on a board. The lab around her erupted in cheers, and she pumped her other arm in the air in triumph.

    “It’s just awesome,” she said.

    The researchers got another pleasant surprise, too: “We found that after a few weeks of use, some of these improvements endure when the stimulation is switched off, indicating exciting avenues for the future of stroke therapies,” said study co-author Dr. Marco Capogrosso, an assistant professor of neurological surgery at Pitt.

    This means even after the device is removed, with some intense physical training, subjects may have long-term improvements, the researchers said.

    No treatments are considered effective for treating paralysis six months or more after a stroke, in what doctors call the chronic stage.

    The stimulation technology needs to be tested further, but it has great potential, the researchers said.

    And it may fill a growing need. Doctors predict that 1 in every 4 people over the age of 25 will have a stroke in their lifetime, and many will develop some kind of paralysis, according to the World Stroke Organization.

    “Creating effective neurorehabilitation solutions for people affected by movement impairment after stroke is becoming ever more urgent,” said study co-author Dr. Elvira Pirondini, an assistant professor of physical medicine and rehabilitation at Pitt.

    “Even mild deficits resulting from a stroke can isolate people from social and professional lives and become very debilitating, with motor impairments in the arm and hand being especially taxing and impeding simple daily activities, such as writing, eating and getting dressed.”

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