Citigroup CEO Jane Fraser at the World Economic Forum in Davos, Switzerland, on Jan. 17, 2023.
Adam Galica | CNBC
Citigroup said it was cutting 10% of its workforce in a bid to help boost the embattled bank’s results and stock price.
About 20,000 employees will be let go over the “medium term,” New York-based Citigroup said Friday in a slideshow tied to fourth-quarter earnings. While it wasn’t immediately clear how long that is, the bank has previously used that term to denote a three- to five-year period.
Citigroup had roughly 200,000 workers at the end of 2023, excluding Mexican operations that are in the process of being spun out, according to the presentation.
Citigroup CEO Jane Fraser announced a sweeping overhaul of the third-largest U.S. bank by assets in September. The company has been left behind by peers since the 2008 financial crisis as Fraser’s predecessors couldn’t get a handle on expenses and is the lowest valued among the six biggest U.S. banks.
In November, CNBC reported that managers and consultants involved in the effort — known internally by the code name “Project Bora Bora” — discussed job cuts of 10% in several major businesses.
The company has since executed several waves of layoffs, beginning with the top layers of the bank, with another round of cuts set for Jan. 22, according to a person familiar with the matter. A Citigroup spokeswoman declined to comment.
American banks have been trimming jobs all throughout the past year, led by Wells Fargo and Goldman Sachs, to lower costs amid stagnant revenue. Citigroup had been a notable outlier, maintaining staffing levels at around 240,000 for all of 2023, including its Mexico operations.
Citigroup said Friday it booked a $780 million charge in the fourth quarter tied to Fraser’s restructuring project, and that it may post another $1 billion in severance and other expenses in 2024. The moves could help trim up to $2.5 billion in costs over time, the bank said.
In a footnote to its presentation, Citigroup said the 20,000 job cuts could be “slightly lower” if it chooses to use internal resources rather than outsource functions.
Given the outlook for thousands of more job cuts over the next few years, some Citigroup employees are using vacation time or mental health leave to search for their next position, said the person familiar with the matter, who declined to be identified speaking about personnel matters.
“People are looking aggressively,” the person said. “I know senior VPs who are on vacation now, but they’re never coming back.”
A ‘now hiring’ sign is displayed in a retail store in Manhattan on January 05, 2024 in New York City.
Spencer Platt | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Hot jobs market The U.S. labor market added 216,000 jobs in December. That’s much more than the 170,000 expected by economists surveyed by Dow Jones, and the downwardly revised 173,000 jobs added in November. The unemployment rate held steady at 3.7%, defying estimates of a 10-basis-point rise. Meanwhile, average hourly earnings rose 4.1% from a year earlier, higher than the 3.9% forecast.
Losing week U.S. stocks inched up slightly Friday, but couldn’t reverse a weekly decline. Treasury yields ticked up for the second day, with the 10-year yield closing at 4.051%. The pan-European Stoxx 600 index retreated 0.27%. Retail stocks fell 1.1%, leading sector losses, after data showed German retail sales fell 2.5% for the month, much more than estimates of a 0.1% slide.
Grounded airplanes The U.S. Federal Aviation Administration has ordered a temporary grounding of the Boeing 737 Max 9 aircraft, which means airlines won’t be able to use those particular Boeing models for flying. The directive comes after a piece of the aircraft blew out in the middle of an Alaska Airlines flight, leaving a gaping hole on the side of the plane.
Potential Apple lawsuit Apple just can’t catch a break. Fresh off a downgrade to its shares by Barclays and Piper Sandler, the technology giant is potentially facing an antitrust lawsuit by the U.S. Department of Justice, according to a report from The New York Times. The lawsuit could target how the Apple Watch works exclusively with the iPhone, as well as the company’s iMessage service, which excludes non-Apple devices.
[PRO] Numbers to watch The U.S. consumer price index report comes out Thursday this week, and will be the major catalyst for markets as investors assess if the U.S. Federal Reserve is edging closer to its goal of keeping inflation at 2%. But don’t neglect Friday, which is jam-packed with earnings reports from big banks such as JPMorgan Chase, Citigroup and Bank of America.
The headline number on the U.S. jobs report’s undeniably startling — 216,000 new jobs in December, compared with an expected 170,000. The unemployment rate defied forecasts for it to fall, while average hourly earnings were higher than estimates too.
The data suggests the U.S. labor market’s still running hot despite the 11 interest-rate hikes implemented by the Federal Reserve.
But the numbers aren’t so drastic that rate hikes could be back on the table. Look more closely and you’ll find pockets of weakness in the report.
The headline number, expectation-busting as it is, probably won’t persuade the Fed to resume hiking.
“While the Dow Jones estimate is for a nonfarm payrolls gain of 170,000, Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000,” CNBC’s Jeff Cox noted.
Consider also how October and November’s jobs numbers were downwardly revised, which point to a weaker-than-expected labor market last quarter. And when viewed on an annual basis, 2023 saw job growth of 2.7 million, dramatically lower than 2022’s addition of 4.8 million jobs.
The theme of growth continuing — but slowing — was also seen in December’s ISM services index, which measures business activity, such as price and inventory levels. The reading came in at 50.6%, indicating growth in the service sector, but that’s nearly two percentage points below expectations as well as November’s reading.
That’s probably why stocks managed to eke out small gains Friday, despite the shock of the headline jobs number.
But those marginal increases couldn’t prevent major indexes from registering their first negative week in 10. For the week, the S&P fell 1.52%, the Dow lost 0.59% and the Nasdaq slumped 3.25%, its biggest decline since September.
Investors hoping for a positive catalyst for markets will be keeping their fingers crossed, hoping December’s consumer price index report comes in cooler than expected.
A pedestrian holds an umbrella as they walk along a street in the rain in Times Square, New York, on Sept. 26, 2023.
Ed Jones | AFP | Getty Images
The state of the U.S. economy may be a chief concern among Americans, but 2023 wound up as a pretty good year for the macroenvironment.
Spending remained high, markets posted big gains and the Federal Reserve’s battle against inflation showed signs of cooling — without freezing. Then there’s the almost logic-defying resilience of the job market.
The U.S. labor market ended the year strong, creating more than 200,000 jobs in December, according to figures released Friday by the U.S. Bureau of Labor Statistics. While previous job creation estimates for October and November were revised downward by a combined 75,000, the unemployment rate remained at a low 3.7%, and December marked the 36th consecutive month of job creation for the U.S. economy.
In total, the U.S. created nearly 2.7 million jobs in 2023, when seasonally adjusted. That figure came despite concerns that the Federal Reserve’s ongoing fight against inflation through interest rate hikes might cool the labor market and put a chill on consumer spending.
Neither of those concerns came to fruition, however. In fact, consumer spending remained robust throughout the year, with monthly advanced retail sales staying above the $600 million mark for most of 2023, proving that despite many economic headwinds, U.S. consumers could not be deterred.
Here are nine other charts that show how the economy rounded out 2023.
While inflation continues to be top of mind for U.S. consumers, the rate of inflation cooled significantly in 2023. Meanwhile, wages rose throughout the year, eventually outpacing price increases.
U.S. consumers were in a mood to spend, particularly on experiences: 2023 was officially the year that travel rebounded, with the Thanksgiving holiday period breaking U.S. records. Nearly 150 million passengers were screened by the Transportation Security Administration across U.S. airports in November and December.
Americans spent on entertainment, too. With major hits such as “Barbie,” “Oppenheimer” and Taylor Swift’s The Eras Tour concert film, the U.S. box office came back in a big way last year from its Covid-19 pandemic lows.
Even assets such as crypto saw a rebound in 2023 after hitting a low in November of the previous year. Bitcoin prices ended the year at almost three times that previous low.
After its historic rate increases in 2022, the Federal Reserve tempered its war on inflation and only raised rates at four of its eight meetings in 2023. While the central bank’s target range for interest rates is the highest it has been since 2006, recent comments from Chair Jerome Powell have Fed watchers optimistic that rate cuts may be coming in 2024.
There were some trouble areas for consumers, however. Mortgage rates continue to be high. The average 30-year fixed rate in October was nearly triple what it was at the end of 2020 — although rates came down significantly by the end of the year — and existing home sales remain low, according to data from the National Association of Realtors. Until more housing inventory comes online, those issues are likely to persist into 2024.
Shortly after the murder of George Floyd at the hands of Minneapolis police in 2020, Google was among many tech companies that set up new programs aimed at supporting Black employees. The goal, CEO Sundar Pichai wrote, was “to build sustainable equity for Google’s Black+ community, and externally, to make our products and programs helpful in the moments that matter most to Black users.”
Google’s vocal commitments included improving representation of underrepresented groups in leadership by 30% by 2025; more than doubling the number of Black workers at nonsenior levels by 2025; addressing representation issues in hiring, retention and promotions; and establishing better support for the mental and physical health for Black employees.
The move was part of a broader trend in the wake of the Floyd killing, which sparked societal unrest and drew attention to the power imbalances in corporate America and the tech industry specifically. Corporations pledged to invest millions of dollars to improve diversity in their ranks and support external groups doing work on diversity, equity and inclusion, or DEI.
But in 2023, some of those programs are in retreat.
By mid-2023, DEI-related job postingshad declined 44% from the same time a year prior, according to data provided by job site Indeed. In November 2023, the last full month for which data was available, it dropped 23% year over year.
That’s a sharp contrast with the period from 2020 to 2021, when those postings expanded nearly 30%.
In line with this broader trend, both Google and Meta have cut staffers and downsized programs that fell under DEI investment.
The year’s cuts have also impacted smaller, third-party organizations who counted on big tech clients for work, despite the continued growth of those tech giants.
“Whenever there is an economic downturn in tech, some of the first budgets that are cut are in DEI, but I don’t think we’ve seen such stark contrast as this year,” said Melinda Briana Epler, founder and CEO of Empovia, which advises companies and leaders to use a research-based culture of equality.
“When George Floyd began to become the topic of conversations, companies and executives doubled down on their commitments and here we are only a couple years later, and folks are looking for opportunities to cut those teams,” said Devika Brij, CEO of Brij the Gap Consulting, which works with tech companies’ DEI efforts. Brij said some of her clients had cut their DEI budgets by as much as 90% by midyear.
However, more than just broken promises are at stake, experts told CNBC in a series of interviews.
The cuts come at a time when technology companies are forging ahead on the biggest technology shift in a decade: artificial intelligence. If diverse people are not included in AI development, that may result in even greater power imbalances for both corporate workers, as well as consumers who will use their products.
“Our commitment to DEI remains at the center of who we are as a company,” a Meta spokesperson wrote in a statement to CNBC. “We continue to intentionally design equitable and fair practices to drive progress across our people, product, policy and partnerships pillars.”
“Our workforce reductions and company-wide efforts to sharpen our focus span the breadth of our business,” said a Google spokesperson, saying that the company remains committed to underrepresented communities and DEI work. “To be absolutely clear, our commitment to that work has not changed and we invested in many new programs and partnerships this year.”
The Google spokesperson did not dispute any specifics in this story, but pointed to new investments in partnerships this year, including committing more than $5 million to historically Black colleges and universities to help build a stronger pipeline to the tech industry for underrepresented talent, and launching the Google for Startups Women Founders Fund to help women entrepreneurs.
In 2021,after facing complaints about pay equity in its Engineering Residency program, Google said it would be sunsetting the program and replacing it with a new one called Early Career Immersion, or ECI, which is aimed at helping underrepresented talent develop skills. (Google said sunsetting Engineering Residency was an unrelated business decision.)
But Google decided not to hire a 2023 cohort of ECI software engineers, citing an uncertain hiring outlook, according to correspondence viewed by CNBC. It also laid off some staffers associated with the program.
Participants in a separate Google program called Apprenticeships also lodged complaints about a lack of pathways and pay inequities in the last year, CNBC found.
“Apprentices become part of our mission to build great products for every user, and their different experiences help ensure that our products are as diverse as our users,” Google’s Apprenticeships website states.
But Apprenticeships participants complained they were getting paid less than other engineers during the course of the 20-month program despite doing similar work. They said they were doing “Level 3” work with L3 expectations and contributing significantly to Google’s codebase while earning half of full-time L3 software engineers’ base salary, according to internal correspondence seen by CNBC.
The apprentices even confronted the executive sponsor of the program, Aparna Pappu, vice president of Google Workspace, pointing out the executive’s prior stated goal “to increase representation of underrepresented talent across Google.”
The company said that apprentices are paid a salary for the learning and training they receive as part of the program, and that it reviews compensation annually to ensure alignment with the market.
The Apprenticeships program, which included real-work job training for underrepresented backgrounds, followed other failed efforts to improve diversity. In 2021, for instance, Google said it shut down a long-running program aimed at entry-level engineers from underrepresented backgrounds after participants said it enforced “systemic pay inequities.” That same year, CNBC found the company’s separate program that worked with students from historically Black colleges, suffered extreme disorganization, racism and broken promises to students.
Google and Meta also made cuts to personnel who were in charge of recruiting underrepresented people, according to several sources and documentation.
Nearly every member of Meta’s Sourcer Development Program, more than 60 workers, was let go from the company as part of its layoff of over 11,000 workers, CNBC learned. They claimed to have received inferior severance packages compared with other workers who were laid off in the same time period. Meta’s Sourcer Development Program was intended to help workers from diverse backgrounds obtain careers in corporate technology recruiting.
Google also cut DEI leaders who worked with Chief Diversity Officer Melonie Parker, while Meta made cuts to several DEI managers — some of whom it hired in 2020.
Layoffs at Google and Meta also included employees who held leadership roles in their respective Black employee resource groups, known as ERGs.
“There’s a lowering of physiological safety with layoffs or impending layoffs, and holding ERGs accountable for that is not fair and can lead to even more burnout,” Epler said.
In addition to cutting staff who worked on DEI programs and ERGs, both Meta and Google cut planned learning and development training for underrepresented talent, according to multiple sources who asked not to be named due to fear of retaliation. Meta said that learning and development programs were “merely streamlined to make them more impactful.”
“There’s a consistent amount of folks who have completely failed, mostly because they don’t have the internal teams to keep the mission forward,” said Simone White, who is a senior vice president at Blavity, a media organization that focuses on content for the Black community, and puts on AfroTech, which became a popular tech conference for Black tech talent and companies seeking to hire them.
While internal DEI programs have suffered, the cuts were arguably even harder for external organizations who expected the same amount of corporate sponsorship and support from tech companies in 2023 as they had the prior few years.
In early 2023, big tech leaders, including Google and Meta were among companies that lessened their work with third parties that were counting on projects, according to several organizations and sources who spoke with CNBC.
Brij, CEO of Brijthe Gap Consulting, explained how the steep cuts have affected her firm, which consults with companies on building an effective workforce for underrepresented workers and includes workshops and programs.
“Right now with these budgets being entirely limited or cut, we’re just really backpedaling on so much of the work that we’ve done.”
Brij said some companies have even asked her to provide work for free.
“A lot of companies we worked with started to make progress before the cuts,” Epler said. “Now, it’s like some of them are essentially wiping away that work.”
Stefania Pomponi, founder of Hella Social Impact, said executives have blamed cost-cutting as they’ve canceled contracts with the firm, which consults with companies’ leadership to create more inclusive workplaces through programs and training.
“I’ve been telling them, ‘look, your bottom line is also your people and these types of cuts are going to impact your business'” Pomponi said, pointing to various studies on diverse teams producing higher performance outcomes.
“As I talk to my colleagues across the space, some of the monies that were set aside around the time of George Floyd’s murder have not been fully extended, and that says to me that organizations like ours are needed now more than ever,” said Brenda Wilkerson, CEO of AnitaB.org, which puts on Grace Hopper, the largest women’s tech conference, which took place in September.
Some large tech companies, including Meta, pulled back from sponsorship or attendance for employees to attend Grace Hopper 2023, according to sources who asked to remain anonymous because they are not authorized to speak to the media. Some companies, including Microsoft, ended up sending some leaders to attend virtually so they wouldn’t have to pay for travel, according to two sources who wished to remain anonymous.
Microsoft said it still sent some employees physically, and both Microsoft and Meta told CNBC that Grace Hopper’s virtual option allowed more employees to participate.
Other companies such as Google, which still had a presence at the conference, retracted travel for some employees who had previously been approved to attend, according to several sources who asked to remain anonymous. Google is also among companies to reduce their spending with Blavity, the organization that puts on AfroTech, according to sources who asked not to be named due to being unauthorized to speak.
“We do have a significant amount of our existing corporate partners that are telling us ‘Hey, we can’t participate this year because our DEI team doesn’t even exist anymore,'” said Blavity’s Simone White, who declined to name specific companies. “Week to week, we have new contacts at companies, and folks we worked with for years to organize this work are no longer there.”
“To say our progress is not in peril would not be truthful,” AnitaB.org’s Wilkerson said, although she’s optimistic the tide could turn around in 2024. “We’re working with multiple challenges in our society, so we have made a lot of the progress but some of that was erased in the last year. Then you have this backlash against racial reckoning.”
The backlash she referred to includes things like the Supreme Court’s June decision to end affirmative action at colleges, as well as backlash against DEI programs in conservative circles. “You have this ‘wokeism’ drama.” Wilkerson said, pointing to Florida legislation such as banning books and downplaying Black history, as well as laws impacting the LGBTQIA+ community.
Because of that backlash, 2023 will be the last year the organization will hold Grace Hopper in Florida, Wilkerson said. It will be held in Philadelphia next year.
A Meta spokesperson said that it increased its engagement with some third-party organizations such as The Executive Leadership Council, which aims to increase Black leadership in C-suites.
Wilkerson was among experts who told CNBC that DEI work is more important than ever given the growing work on artificial intelligence, which hit breakneck speed in 2023.
“We’re in a big technology inflection point, and what happens is as AI begins to take off and if organizations are less inclusive, the product is not reflective of the users,” Wilkerson said.
Apple, Google and other tech giants are still grappling with displaying and identifying images accurately. A New York Times investigation this year found Apple and Google’s Android software, which underpins most of the world’s smartphones, turned off the ability to visually search for primates for fear of labeling a person as an animal.
“We know that AI is trained on historic data and that historic data is missing critical segments of the population, and having women and noncentered folks as decision-makers is going to be critical to making sure it doesn’t happen again,” Wilkerson said.
White said companies who made cuts this year may have a difficult time building future relationships with DEI stakeholders, and it may impact their ability to attract and retain talent, should they decide to build up again in the future.
“Younger generations increasingly care who has a seat at the table,” White said. “And they’re going to remember who did what they said they were going to do.”
WASHINGTON — Democratic lawmakers on Thursday praised workers at a New Mexico branch of Wells Fargo for becoming the first branch of the nation’s fourth-largest bank to unionize.
“Your success brings the fight for the Dignity of Work directly to Wall Street’s front door,” said Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking Committee.
“I look forward to watching your movement grow from branch to branch across the country,” Brown said in his statement.
Workers at the bank’s Albuquerque branch voted 5 to 3 on Wednesday to unionize under the Communications Workers of America’s Wells Fargo Workers United.
The vote made Wells Fargo the first major U.S. lender with a unionized workforce.
“This is the first union at a big bank in the country! #UnionStrong,” Rep. Melanie Stansbury, a New Mexico Democrat, wrote in a post on the social media site X, formerly known as Twitter.
The organizing move follows successful negotiations by the United Auto Workers, SAG-AFTRA and the Writers Guild of America after weeks of strikes earlier this year.
But workers at an Alaska Wells Fargo branch last week withdrew a petition to form a union.
Wells Fargo was among the banks eyed in an industry-wide investigation into discriminatory mortgage lending in 2022.
A trader works, as a screen displays a news conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023.
Brendan Mcdermid | Reuters
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Asia markets fall U.S. markets mostly rose Friday amid a tumultuous day of trading, giving major indexes their seventh consecutive week of gains. However, Asia-Pacific markets slumped Monday, with Hong Kong’s Hang Seng index falling around 1%. It was dragged down by shares of SenseTime, which plunged as much as 18.25% to its all-time low on news the company’s founder had passed away.
Lowered risk appetite For the first half of the year, family offices in Asia had bet big on risky assets, said Hannes Hofmann of Citi Private Bank. That’s because Asian family offices were anticipating a rebound in China’s economy. But as the country’s economy slows down and Asian stock markets lag behind that of the U.S., that appetite for risk’s dwindling, according a Citi Private Bank global survey.
AI job losses There are signs humans are losing jobs to artificial intelligence. According to a recent report from ResumeBuilder, 37% of respondents say AI has replaced workers this year, while 44% report AI will result in layoffs in 2024. But experts say this trend isn’t a wholesale replacement of humans — but a redefinition of the sort of jobs we can do.
[PRO] ‘Poised to pounce’ Jefferies is “poised to pounce” on several global stocks next year, the investment bank’s analysts wrote. Three stocks, which include companies with strong cash flows and attractive risk-reward ratios, made it to Jefferies’ top choices for 2024. And all of them have at least a 60% potential upside.
The “everything rally” spurred by Wednesday’s Federal Reserve meeting appears to have lost its legs — not least because the Fed itself seemed slightly spooked by how aggressively markets are pricing in rate cuts for next year.
According to the dot plot, which is a projection of where Fed officials expect interest rates to be in the future, there could be three 25-basis-point cuts next year. But markets think there’s more than a 38% chance rates will plummet to a range of 3.75% to 4% — that’s six 25-basis-point cuts — by December next year, according to the CME FedWatch Tool.
On Friday, New York Federal Reserve President John Williams tried to rein in some of that exuberance.
“I just think it’s just premature to be even thinking about that,” Williams said, when asked about futures pricing for a rate cut in March.
Williams even warned rates might go up.
“One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse.”
That said, Friday also saw a quarterly event known as “triple witching,” the confluence of expiring stock index futures and options, as well as individual stock options. Furthermore, the S&P and Nasdaq-100 rebalanced their indexes, meaning the weight of some stocks on the index was changed. That could have exaggerated price moves and increased volatility as investors, accordingly, rebalanced their portfolios.
Finally, perhaps investors shouldn’t be surprised or disappointed the rally’s subsiding. “The market doesn’t go up every day, no matter how strong a trend is,” Chris Larkin, managing director of trading and investing at E-Trade points out. “Pullbacks and pauses are inevitable, regardless of how big they are or how long they last.”
The corollary to that is even a decline won’t last. Barring any shocks, signs are pointing to Santa spreading cheer in markets as the year wraps up.
Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on December 14, 2023, in New York City.
Angela Weiss | Afp | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Triple witching U.S. markets mostly rose Friday amid a tumultuous day of trading, which could have been triggered by an event known as “triple witching” — the simultaneous expiration of stock options, and stock index futures and options. Europe’s Stoxx 600 index ended the day flat, giving away earlier gains of around 0.5%. But it rose 0.91% last week, its fifth week of wins.
Cooling the heat Following the euphoria markets experienced after the U.S. Federal Reserve’s last meeting, during which it indicated three rate cuts for 2024, Fed officials seem to be dampening the enthusiasm. “We aren’t really talking about rate cuts right now,” New York Federal Reserve President John Williams told CNBC. “We need to be ready to move to tighten the policy further, if the progress of inflation were to stall.”
Citi works remotely Citigroup employees were told they can work remotely in the final two weeks of December, CNBC has learned, making last week the final in-person experience of this year for many staffers. But this perk comes at a tense moment. Some employees expressed concern over whether their job will still exist next year as CEO Jane Fraser finalizes her sweeping corporate reorganization — one that’s already resulted in layoffs.
AI job losses There are signs humans are losing jobs to artificial intelligence. According to a recent report from ResumeBuilder, 37% of respondents say AI has replaced workers this year, while 44% report AI will result in layoffs in 2024. But experts say this trend isn’t a wholesale replacement of humans — but a redefinition of the sort of jobs we can do.
[PRO] Focus on PCE In comparison to last week, this week’s relatively light on economic data and market-moving events. But investors should keep an eye on the personal consumption expenditure index, out Friday. Economists expect the PCE to show inflation’s receding. But if it surprises to the upside, it’ll throw a wrench into the Fed’s plan to pivot — and possibly halt the ferocious market rally.
The “everything rally” spurred by Wednesday’s Federal Reserve meeting appears to have lost its legs — not least because the Fed itself seemed slightly spooked by how aggressively markets are pricing in rate cuts for next year.
According to the dot plot, which is a projection of where Fed officials expect interest rates to be in the future, there could be three 25-basis-point cuts next year. But markets think there’s a 34.7% chance rates will plummet to a range of 3.75% to 4% — that’s six 25-basis-point cuts — by December next year, according to the CME FedWatch Tool.
On Friday, New York Federal Reserve President John Williams tried to rein in some of that exuberance.
“I just think it’s just premature to be even thinking about that,” Williams said, when asked about futures pricing for a rate cut in March.
Williams even warned rates might go up.
“One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse.”
That said, Friday also saw a quarterly event known as “triple witching,” the confluence of expiring stock index futures and options, as well as individual stock options. Furthermore, the S&P and Nasdaq-100 rebalanced their indexes, meaning the weight of some stocks on the index was changed. That could have exaggerated price moves and increased volatility as investors, accordingly, rebalanced their portfolios.
Finally, perhaps investors shouldn’t be surprised or disappointed the rally’s subsiding. “The market doesn’t go up every day, no matter how strong a trend is,” Chris Larkin, managing director of trading and investing at E-Trade points out. “Pullbacks and pauses are inevitable, regardless of how big they are or how long they last.”
The corollary to that is even a decline won’t last. Barring any shocks, signs are pointing to Santa spreading cheer in markets as the year wraps up.
Southwest Airlines Boeing 737-700 aircraft is seen landing at dusk time at Ronald Reagan Washington National Airport in Arlington, Virginia.
Nicolas Economou | Nurphoto | Getty Images
Southwest Airlines and its pilots’ union are closing in on a new contract that would raise pay for the carrier’s more than 11,000 aviators and end months of contentious negotiations, weeks ahead of the crucial holiday travel season.
The company and the union have agreed on pay, retirement and other items but are working on an implementation schedule, the Southwest Airlines Pilots Association said in a message to its members on Thursday.
If a preliminary agreement is approved by Southwest pilots’ union board in the coming weeks, it would then go to pilots for a ratification vote.
The union and the airline declined to provide specifics of the deal.
Southwest and the union “are working hard to close out the few remaining items,” an airline spokesman told CNBC. “Southwest remains committed to reaching an agreement that rewards our Pilots and places them competitively in the industry.”
Southwest reached a preliminary agreement with its flight attendants’ union earlier this fall that includes 36% pay increases for cabin crew members.
A labor deal with its pilots would end a period of tense negotiations between the company and the union, which recently included laying groundwork for a potential strike, though strikes are extremely rare in the airline industry.
It would also become the latest in a string of big labor deals this year, including agreements between Hollywood writers, actors and studios as well as between automakers and the United Auto Workers union, following strikes.
Stock futures were up Friday morning as the major indexes look for their third straight week of gains. Futures tied to the Dow Jones Industrial Average rose about 80 points, or 0.24%, while S&P 500 futures advanced 0.2%, and Nasdaq 100 futures were essentially flat. On the week, the Dow is up 1.9% through Thursday’s close, the S&P 500 is up 2.1% and the Nasdaq is up 2.3%. Follow live market updates.
People shop in a holiday section ahead of Black Friday at a Walmart Supercenter on November 14, 2023 in Burbank, California.
Mario Tama | Getty Images News | Getty Images
According to Walmart, Christmas may come relatively cheap this year. CEO Doug McMillon said alongside the company’s quarterly earnings report that the retailer expects to see lower prices in some general merchandise and key grocery items. “In the U.S., we may be managing through a period of deflation in the months to come,” he said. “And while that would put more unit pressure on us, we welcome it, because it’s better for our customers.” Shares of the big-box retailer fell 8% on the day following the cautious outlook.
A Boeing 777-9 jetliner aircraft is pictured on the tarmac during the 2023 Dubai Airshow at Dubai World Central – Al-Maktoum International Airport in Dubai on November 13, 2023.
Giuseppe Cacace | AFP | Getty Images
Aircraft manufacturer Boeing racked up 295 orders across four days of the 2023 Dubai Air Show, trouncing its French rival Airbus’ 86 orders, according to company reports and third-party tallies. Each year the Middle East’s largest aviation event comes flush with jet orders. This year’s buyers showed a particular appetite for wide-body planes, CNBC’s Natasha Turak reports. Boeing’s popularity at the show represents a notable rebound after years of safety concerns.
United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
Union workers at General Motors ratified a labor deal with the United Auto Workers, according to results posted by the union Thursday. With tallies from all local chapters in, the agreement received 54.7% of the nearly 36,000 votes cast. It came after a contentious final few days of voting, with several major plants rejecting the contracts. But enough workers at smaller facilities voted in support to seal up ratification. Union workers at Ford Motor and Stellantis are still voting on similar contracts. So far, those agreements have won the support of roughly two-thirds of each automaker’s voting population.
WASHINGTON, DC – OCTOBER 04: U.S. President Joe Biden delivers remarks on new Administration efforts to cancel student debt and support borrowers at the White House on October 04, 2023 in Washington, DC.
Kevin Dietsch | Getty Images
More student loan borrowers are walking away from their debt in bankruptcy proceedings — the result of a policy change by the Biden administration intended to help people who were saddled with debt and struggling financially. Ten months after the policy change, student loan borrowers have filed more than 630 bankruptcy cases, marking a “significant increase” from recent years, officials with the Biden administration said. “Our efforts have made a real difference in borrowers’ lives,” Associate Attorney General Vanita Gupta said Thursday. Outstanding student debt in the U.S. exceeds $1.7 trillion. Economists have said the swelling debt load could slow the U.S. economy.
– CNBC’s Brian Evans, Melissa Repko, Natasha Turak, Michael Wayland and Annie Nova contributed to this report.
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Jane Fraser, CEO of Citigroup Inc., during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations” at the Economic Club of Washington in Washington, D.C., March 22, 2023.
Employees affected by the cuts will be informed starting Wednesday, with new dismissals announced daily through early next week, according to people with knowledge of the situation.
The move tracks with a timeline set by Fraser in a Sept. 13 memo. She announced five new divisions whose heads report directly to her, resulting in the departure of a handful of senior executives. The next phase of disruption will be “communicated and implemented by the end of November,” and “final changes” will be done by the end of March 2024, Fraser said at the time.
Fraser is under pressure to improve Citigroup, which has been mired in a stock slump as headcount and expenses have ballooned in recent years. The CEO, who took over in March 2021, is at a pivotal moment as she faces deep investor skepticism that the bank can hit performance targets she outlined last year.
Employees who have lost their roles may be able to apply for other positions, and Citigroup will offer severance pay where eligible, the bank’s human resources chief told workers last month.
The full extent of job cuts are still being determined, but managers and consultants working on the project — known internally by its code name, “Project Bora Bora” — have discussed dismissals of at least 10% of workers in several businesses, CNBC reported last week.
Workers have flocked to internal chat platforms with questions about the impending cuts, according to the people, who declined to be identified speaking about personnel matters.
A Citigroup spokeswoman declined to comment Wednesday beyond the statement it offered to CNBC previously:
“We’ve acknowledged the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but they’re the right steps to align our structure to our strategy and deliver the plan we shared at our 2022 Investor Day.”
This story is developing. Please check back for updates.
When Dave Bernstein, 87, started working at the U.S. Postal Service in February 1970, he was making $2.35 an hour.
To supplement his income, he also took on other work. Years later, Bernstein decided in 1992 to take a voluntary retirement.
“We knew there was going to be a reduced pension because of the early out,” said Phyllis Bernstein, Dave’s wife, who is 84.
But what came next was something the couple did not expect.
While Dave was expecting a monthly Social Security check of around $800, it ended up being just about half that amount – around $415 – even though he had earned the required 40 credits to be fully insured by the program. The benefits were adjusted based on rules for workers who earn both pension and Social Security benefits.
The couple, who reside in Tampa, Florida, have had a different retirement than they envisioned due to the lower income.
Phyllis kept working until she was 82. They have also turned to family for financial support.
Their lifestyle is frugal, with home-cooked meals and cars they kept for 20 years, or “until the wheels were falling off,” the couple jokes.
But their limited resources have made traveling to Australia and New Zealand – Phyllis’ dream – out of reach.
“When he retired, I was working,” Phyllis said. “We just couldn’t do the travel.”
Today, Dave is pushing for the Social Security rules that reduced his benefits to be changed.
His union, the American Postal Workers Union, has endorsed the Social Security Fairness Act, a bill proposed in Congress that would repeal Social Security rules known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that reduce benefits for workers had positions where they did not pay Social Security taxes, also called non-covered earnings.
The legislation has support from other organizations that represent public workers, including teachers, firefighters and police.
The bill has overwhelming bipartisan support in the House of Representatives – 300 co-sponsors – at a time when that chamber has been politically divided. That support recently prompted House lawmakers to send a letter to leaders of the Ways and Means Committee to request a hearing.
The WEP applies to how retirement or disability benefits are calculated if a worker earned a retirement or disability pension from an employer who did not withhold Social Security taxes and qualifies for Social Security from work in other jobs where they did pay taxes into the program.
Social Security benefits are calculated using a worker’s average indexed monthly earnings, and then using a formula to calculate a worker’s basic benefit amount. For workers affected by the WEP, part of the replacement rate for the average indexed monthly earnings is brought down to 40% from 90%.
The GPO, meanwhile, reduces benefits for spouses and widows or widowers of recipients of retirement or disability pensions from local, state or federal governments.
It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants.
Edward Kelly
general president of the International Association of Fire Fighters
Under the GPO, Social Security benefits are reduced by two-thirds of the government pension. If two-thirds of the government pension is more than the Social Security benefit, the Social Security benefit may be zero.
The impact of the rules is far reaching, according to Edward Kelly, general president of the International Association of Fire Fighters. Many firefighters work in second jobs in the private sector as cab drivers, bar tenders or truck drivers, where they earn credits toward Social Security.
“They steal their money, because they’re also public employees,” said Kelly, who describes his union members as “passionately angry” about the issue.
“It affects hundreds of thousands, if not millions of public employees that paid into Social Security and essentially are being penalized because they also happen to be public servants, whether they are teachers, cops and, obviously, firefighters,” Kelly said.
The WEP and GPO rules were intended to make it so workers who pay Social Security taxes for their entire careers are treated the same as those who do not.
But under those current rules, some beneficiaries receive lower benefits than they would have if they paid into Social Security for all of their careers, while others receive higher benefits, according to the Bipartisan Policy Center.
Yet repealing the WEP and GPO rules would result in Social Security benefits that are “overly generous” for non-covered workers, research has found.
Part of what may create that advantage is that Social Security benefits are progressive, and therefore replace a larger share of income for lower earners. So someone who only has part of their salary history in Social Security may get a higher replacement rate without considering their pension income.
Fully repealing the WEP and GPO rules may also come with higher costs at a time when the program facing a funding shortfall. The change would add an estimated $150 billion to the program’s costs in the next 10 years, according to the Center on Budget and Policy Priorities.
Another way of handling the disparity may be to create a proportional approach to income replacement. Instead of the WEP, workers’ benefits would be calculated based on all of their earnings and then adjusted to reflect the share of their careers that were in jobs covered by Social Security. A similar approach may be taken with the GPO.
However, a proportional formula may not solve all the inequities in the current system, according to Emerson Sprick, senior economic analyst at the Bipartisan Policy Center, which has prompted to think tank to work on refining its proposal.
An important advantage to reforming the current formulas would be making it easier for workers to understand and plan for their retirements.
“It is definitely extremely complex, and very hard for folks preparing for retirement or in retirement, to understand what it means for their benefits,” Sprick said.
Social Security statements that provide retirement benefit estimates do not take these rules into account.
Consequently, many workers find out their benefits are adjusted when they are about to retire.
shapecharge | E+ | Getty Images
“The young guys don’t pay attention to it because it’s too far out; they’re not worried about it,” Kelly said of the firefighters.
“It’s not until you’re ready to go out the door that you actually start paying attention to what you’re going to have to live off when you actually retire,” he added.
The reductions to their Social Security benefits can be a shock.
For beneficiaries like the Bernsteins who start out with lower benefits, it can be difficult to catch up, even after a record 8.7% Social Security cost-of-living adjustmentw went into effect this year.
“Gas this summer and in the spring at $4 a gallon ate that money up like it wasn’t even there,” Dave Bernstein said.
Homebuyers are dealing with record-high costs this year amid interest rate hikes and shrinking supply.
While shopping for homes is increasingly competitive, prospective buyers should consider an additional factor when weighing the pros and cons of a given property: the homeowners association, or HOA.
Homeowners associations are run by community residents elected to be members of the board of directors, which govern the neighborhood by a set of rules and regulations. Homeowners pay the HOA fees to have common areas such as parks, roads and community pools maintained and repaired.
Mandatory membership in an HOA can cost homeowners a pretty penny, with dues as high as $1,000 a month, according to the American National Bank of Texas.
If the board is running low on money or didn’t budget right, all they have to do is charge a special assessment, said Raelene Schifano, founder of the organization HOA Fightclub.
“Unless the association members have 51% of the majority voting power, they can’t outvote a budget,” she added. “I’ve seen budgets go from $300 a month to $800 a month.”
As 84% of newly built single-family homes sold in 2022 belonged to HOAs, per the U.S. Census Bureau, it will be important for prospective buyers to vet these organizations ideally before signing the deed.
Different types of homes can be affiliated with an HOA,from single-family homes to co-operatives.
Single-family homes are separate units where residents own both the plot of land and the house on it, said Clare Trapasso, executive news editor at Realtor.com. They have their own entrances and access to the street and don’t share utilities or other systems with other homes.
Townhomes and rowhomes are somewhat similar; however, they do share walls with units next to them, although they are separated by a ground-to-roof wall, added Trapasso.
Meanwhile, condominiums, often called condos, and co-operatives, or co-ops, are units in a shared building where residences jointly own the common space, but their ownership structure is different.
In a condo, residents own their individual units but jointly own the land and the common areas with other residents. Condos are run with a board of people on the homeowners association making decisions for the community, said Jaime Moore, a premier agent for Redfin.
In a co-op, residents own shares of a company that owns the building and will have a board made up of each member of each unit creating a community where all parties have a say, he added.
“Co-ops are popular in places like New York and Boston, but condos are generally more common throughout the rest of the country,” said Trapasso.
A high percentage of new homes built nationwide today are part of developments managed by an HOA due to the financial benefit for local governments, according to Thomas M. Skiba, CEO of the Community Associations Institute, a membership organization of homeowner and condominium associations.
“They don’t have to plow the street anymore [or] do all that maintenance and they still collect the full property tax value,” Skiba added, referring to local authorities.
Homebuyers who want to avoid the additional costs associated with HOAs can search older homes on the outskirts of developments, said Redfin agent Moore. If you’re left with no other choice than to buy within an HOA-affiliated area, here are a few ways you can evaluate the organization.
While real estate agents are not required nationwide to disclose to buyers if a property is tethered to an HOA, homebuyers can take initiative themselves and review the organization.
Some states such as Nevada do require sellers to provide potential buyers a disclosure of all things that relate to the homeowners association, including their financial status and meeting minutes, said Redfin’s Moore. However, brush up with local and state laws to be aware of what your rights are as a homebuyer and potential homeowner.
These vetting tips may not apply to co-ops, and you may not have the time to completely investigate a given HOA.
Here is a checklist from experts:
Ask for a copy of all HOA paperwork, such as covenants, bylaws, rules and regulations, which serve as the community’s constitution, said Schifano of HOA Fightclub. Also ask for meeting minutes to see what repairs have been done or discussed.
Inquire about monthly or annual fees, the HOA’s budget and the history of how assessments have gone up year to year, said Skiba.
Look into the community’s reserve funds, which ensures repair and renovation. Check if the community is putting enough money aside for big expenses or if they are properly funded. “No one likes surprises, and that is the kind of big financial surprise [that can] be really problematic for every homeowner,” said Skiba.
Search the HOA on the county website to see how many liens, judgments and foreclosures have been recorded within the community’s lifespan, said Schifano.
Look at the financials and see how much in attorney’s fees is disclosed. This signals whether they are having a lot of issues, said Schifano.
Check for permits with the county for reroofs, electrical and plumbing services for the community, she added.
Request to attend at least one board or annual meeting if possible. A meeting helps buyers understand who is controlling the finances and decisions of the community, said Schifano. The annual meeting includes other homeowners. As a litmus test of whether the board is doing a good job, note if residents seem to be happy, in a fight or complacent.
“The most important thing a buyer can do is to ask questions to their agent, the community association and neighbors,” said Skiba.
United Auto Workers (UAW) members strike at a General Motors assembly plant that builds the U.S. automaker’s full-size sport utility vehicles, in another expansion of the strike in Arlington, Texas, October 24, 2023.
James Breeden | Reuters
DETROIT – General Motors plans to invest roughly $13 billion in U.S. facilities by April 2028, the United Auto Workers union said as part of its recent tentative agreement with the automaker.
GM has already announced some of the planned investments such as $4 billion at Orion Assembly in suburban Detroit and $2 billion in Spring Hill, Tennessee, for new electric vehicles. Others, such as $1.25 billion for a future electric vehicle plant at Lansing Grand River, are new.
Many of the new investments include hundreds of millions of dollars for assembly plants to support or add additional volume as well as engine and components plants.
Details of the tentative agreement were released Saturday after local UAW leaders with GM approved the pact, which must still be ratified by a simple majority of the union’s 46,000 members with the automaker. GM was the last Detroit automaker to reach a tentative agreement following Ford Motor and Chrysler-parent Stellantis.
GM’s U.S. investments through the terms of the 4 ½-tear tentative compared to $8.1 billion announced by the union at Ford and $18.9 billion at Stellantis, including $6.2 billion in previously announced parts plants in Kokomo, Indiana.
GM declined to comment on the released details, referring back to a statement by CEO Mary Barra when the tentative deal was initially announced: “GM is pleased to have reached a tentative agreement with the UAW that reflects the contributions of the team while enabling us to continue to invest in our future and provide good jobs in the U.S.,” she said. “We are looking forward to having everyone back to work across all of our operations, delivering great products for our customers, and winning as one team.”
The tentative labor agreement was announced Monday after roughly six weeks of targeted strikes by the union against GM, Stellantis and Ford, also known as the “Big Three” automakers. The work stoppages began on Sept. 15 after the sides failed to reach deals covering 146,000 UAW members with the automakers by a strike deadline.
“There’s a reason why the Big Three and their allies feel like they just got taken to the cleaners. This contract has wage increases and economic gains like nothing we’ve ever seen before, said UAW Vice President Mike Booth during an online broadcast Saturday. “The gains in this contract are worth more than four times the last contract.”
Like the UAW’s tentative agreement with Stellantis and Ford, the deal includes 25% pay increases, bonuses and other enhanced benefits for autoworkers, such as profit-sharing payments and a $5,000 ratification bonus.
The 25% raises include an 11% increase upon ratification, followed by a 3% bump-up in the next three years and then a 5% increase in September 2027.
At GM, the union also made major gains in cutting down different tiers, or levels, of workers to be paid the same or similar to their traditional colleagues at assembly plants. UAW President Shawn Fain said some workers will receive an immediate raise of 89% if ratified by members.
“One of our central goals in this round of negotiations was the elimination of tiers,” Fain said during the broadcast. “While we didn’t win everything, we made enormous strides at GM. We did more to eliminate wage tiers than any of the Big Three.”
New workers added to the agreement include employees at GM’s Ultium Cells joint venture for battery cells, Fain reconfirmed Saturday. The battery workers will receive a raise of between $6 and $8 an hour, he said.
Fain on Saturday reiterated the union’s plans to use the record contracts with GM, Ford and Stellantis as leverage to unionize other automakers.
“We aren’t bashful or quiet about what our plans are: Our goal is to spend the next few years organizing auto workers across this country,” Fain said. “The Big Three aren’t the only auto companies making record profits. Auto workers at Toyota, Honda, Volkswagen, Hyundai and Tesla, they deserve record contracts. too.”
Toyota Motor earlier this week announced plans to hike wages at its U.S. factories. The new rates would see hourly manufacturing employees at top rates in Kentucky receive roughly 9% pay increases to $34.80 an hour – still below the more than $40 an hour top rate under the UAW’s tentative agreements with the Detroit automakers.
UAW members at Ford have already started voting on that tentative agreement. Most notably, 82% of workers at Ford’s Michigan Assembly Plant voted in support of the pact this week. The suburban Detroit plant was among the first to strike alongside other assembly plants with GM and Stellantis.
UAW members with Stellantis and GM are expected to vote on the deals over the next couple of weeks.
United Auto Workers President Shawn Fain gestures in solidarity with striking workers during a rally at UAW Local 551 on Saturday, Oct. 7, 2023, in Chicago.
John J. Kim | Tribune News Service | Getty Images
DETROIT – United Auto Workers President Shawn Fain wants to expand the union’s battle from the Detroit automakers to Tesla, Toyota Motor and other non-unionized automakers operating in the U.S.
The outspoken leader plans to use record contracts recently won after contentious negotiations and U.S. labor strikes with General Motors, Ford Motor and Chrysler-parent Stellantis to assist in the union’s embattled organizing efforts elsewhere.
“We’ve created the threat of a good example, and now we’re going to build on it,” Fain said Thursday night when discussing Stellantis’ tentative agreement. “We just went on strike like we’ve never been on strike before and won a historic contract as a result. Now we’re going to organize like we’ve never organized before.”
Doing so would greatly assist the union’s bargaining efforts and membership, which has been nearly halved from roughly 700,000 members in 2001 to 383,000 at the beginning of this year. UAW membership peaked at 1.5 million in 1979.
The UAW has previously failed to organize foreign-based automakers in the U.S. Most recently, plants with Volkswagen and Nissan Motor fell short of the support needed to unionize. The UAW has previously discussed organizing Tesla’s Fremont plant in California with little to no traction in those efforts.
It remains to be seen whether the recent efforts are gaining traction at any other automakers, but Fain has vowed to move beyond the “Big Three” — Ford, GM and Stellantis — and expand to the “Big Five or Big Six” by the time its 4½-year contracts with the Detroit automakers expire in April 2028.
The deals include 25% wage increases that would boost top pay to more than $40 an hour, reinstatement of cost-of-living adjustments, enhanced profit-sharing payments and other significant pay, healthcare and workplace benefits. The contracts must still be ratified.
The union has already received significant interest from non-union automakers in light of the tentative agreements, Fain said. And last month, he rejected comments from Ford Chair Bill Ford arguing the company and union should be working together to battle non-American automakers.
“Workers at Tesla, Toyota, Honda, and others are not the enemy — they’re the UAW members of the future,” Fain said.
Fain has taken particular aim at Toyota in recent days.
The automaker earlier this week confirmed plans to hike wages at its U.S. factories. The new rates would see hourly manufacturing employees at top rates in Kentucky receive roughly 9% pay increases to $34.80 an hour.
Fain on Thursday called that pay raise “the UAW bump,” joking that UAW stands for “U Are Welcome” to join the union’s movement.
UAW President Shawn Fain marches with UAW members through downtown Detroit after a rally in support of United Auto Workers members as they strike the Big Three auto makers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | Getty Images
“Toyota isn’t giving out raises out of the goodness of their heart,” Fain said. “They could have just as easily raised wages a month ago or a year ago. They did it now because the company knows we’re coming for ’em.”
Toyota, which has 49,000 hourly and salaried U.S. workers, said the “decision to unionize is ultimately made by our team members.”
“By engaging in honest, two-way communication about what’s happening in the company, we aim to foster positive morale which ultimately leads to increased productivity,” the company said Friday in an emailed statement. “Working together has provided a history of stable employment and income for our team members.”
The UAW has so far not been able to establish enough support to force an organizing vote at Tesla’s facilities, including its Fremont, California, plant where the union previously represented workers when it was a GM-Toyota joint venture.
Fain on Thursday told Bloomberg News he believes organizing Tesla and taking on CEO Elon Musk is “doable.”
“We can beat anybody,” Fain told Bloomberg. “It’s gonna come down to the people that work for him deciding if they want their fair share… or if they want him to fly himself to outer space at their expense.”
Still, Musk has historically clashed with union proponents.
As some workers sought to form a union at the company’s Fremont factory in in 2017 and 2018, Tesla was paying a consultancy named MWW PR to monitor employees in a Facebook group and on social media more broadly, as CNBC previously reported.
Elon Musk, CEO of Tesla and owner of X, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, September 13, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Tesla also terminated the employment of a union activist named Richard Ortiz in 2017. And in 2018, Musk said in a tweet, “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”
The tweet violated federal labor laws, the National Labor Relations Board later found.
An administrative court ordered Tesla to reinstate Ortiz and to have Musk delete his tweet, which it concluded had threatened workers’ compensation. Tesla appealed the ruling, and Musk’s offending post remains on the social media platform which Musk now owns, has rebranded as X and runs as CTO and executive chairman.
In February, a different group of organizers filed a complaint with the NLRB claiming that Tesla had fired more than 30 employees at its Buffalo facility in retaliation for a union push there by Tesla Workers United. Tesla called the workers’ allegations false, saying 4% of its Autopilot data labeling team in Buffalo had been terminated due to performance issues.
The Equal Employment Opportunity Commission, the federal agency responsible for enforcing civil rights laws against workplace discrimination, sued Tesla in September, alleging widespread racist harassment of Black workers, and retaliation against those who spoke out.
And in late October, just over 100 of Tesla’s service employees in Sweden, members of the industrial labor group IF Metall, walked off the job for a short strike. Hundreds of mechanics and technicians at non-Tesla shops also agreed not to repair any of the EV makers’ cars in solidarity. However, Tesla has so far refused to negotiate with IF Metall.
Tesla did not immediately respond to a request for comment.
The need for second — and often third — incomes is mounting, according to a top digital bank executive.
Current CEO Stuart Sopp finds almost half of the firm’s payment customers have more than one job.
“If you’re having a paycheck over the past year, 20, 25% of paycheck depositors have at least one extra job. A further 20% incremental from there have two jobs,” Sopp told CNBC’s “Fast Money” on Thursday. “They’re trying to make that money go further because of inflation.”
“Wage inflation is moderating quite substantially,” he said. “America has a sort of tail of two cities right now. Two groups: The wealthy and less affluent.”
Sopp launched Current, which provides mobile banking without monthly fees and offers secured credit cards, in 2015. It originally focused on helping medium to lower income customers. His company Current reports almost five million members.
He’s particularly concerned about less affluent consumers spiraling into debt to pay for basic necessities.
“They’re being forced into risks like risky credit cards,” noted Sopp, a former Morgan Stanley trader. “Unsecured credit cards… are not suitable for everyone.”
Lana Payne celebrates on stage as Unifor, Canada’s largest private sector union, announce Lana Payne as their new president to replace outgoing leader Jerry Dias in Toronto, Ontario, Canada August 10, 2022.
Cole Burston | Reuters
DETROIT – After reaching a tentative agreement Saturday with the United Auto Workers union, Chrysler-parent Stellantis is now facing a national labor strike in Canada.
Canadian union Unifor called a national strike of more than 8,200 autoworkers early Monday morning after the sides failed to reach a new agreement by 11:59 p.m. Sunday.
The Canadian work stoppage comes two days after the Stellantis reached a tentative deal for roughly 43,000 U.S. autoworkers with the UAW after roughly six weeks of targeted strikes that began Sept. 16.
The new strikes in the Canadian province of Ontario affect two large assembly plants that produce the Chrysler 300 sedan and Pacifica minivan and Dodge Challenger and Charger muscle cars.
The latter vehicles, produced at Stellantis’ Brampton Assembly, are specifically notable, as the company is producing the final traditional V-8 models of the Dodge muscle cars ahead of production stopping at year’s end.
The Canadian work stoppage comes nearly three weeks after Unifor launched a roughly 12-hour national strike against General Motors after the sides failed to reach a tentative agreement by a union-set deadline.
Unifor, which represents 18,000 Canadian workers at the Detroit automakers, took a more traditional approach to its negotiations than its U.S. counterpart. The Canadian union is negotiating with each automaker separately and using a deal first reached last month with Ford as a “pattern” for GM and Stellantis.
That traditional patterned-bargaining approach runs counter to the UAW’s new strategy of bargaining with all three automakers at once.
The UAW has been gradually increasing the strikes since the work stoppages began after the sides failed to reach tentative agreements by Sept 14. The targeted, or “stand-up,” strikes are taking place instead of national walkouts.
However, once the UAW reached a tentative agreement, which must still be ratified by members, Wednesday with Ford Motor, it has used that deal as a template for proposals with Stellantis and GM.
Striking United Auto Workers (UAW) members from the General Motors Lansing Delta Plant picket in Delta Township, Michigan September 29, 2023.
Rebecca Cook | Reuters
DETROIT – The United Auto Workers union believes there is “more to be won” in ongoing contract negotiations with the Detroit automakers following five weeks of labor strikes against the companies, UAW President Shawn Fain said Friday.
His comments come despite record contract offers from General Motors, Ford Motor and Stellantis that now include 23% hourly pay increases and other significantly enhanced benefits during the terms of the four and a half-year deal.
“There is more to be won,” Fain said during an online broadcast. “These are already record contracts, but they come at the end of decades of record decline. So it’s not enough to be the best ever, when auto workers have gone backwards over the last two decades. That’s a very low bar.”
Despite Fain’s comments, the union did not announce additional strikes Friday against any of the companies. He said the “bottom line is we’ve got cards left to play, and they’ve got money left to spend.”
Fain did not address a Friday report by Bloomberg that the union has asked for a 25% increase in general wages.
The union has not announced any additional strikes since initiating an unexpected walkout on Oct. 11 at Ford’s Kentucky Truck Plant that produces highly profitable pickup trucks and SUVs. That’s despite Ford having the best proposal regarding economics, as outlined Friday by Fain.
Fain spent quite a notable amount of time during the online broadcast discussing how the union plans to use these talks to assist in organizing non-union plans. He also heavily criticized the Monday comments of Ford Chair Bill Ford to bring an end to the negotiations.
“Bill Ford said it shouldn’t be Ford versus the UAW. He said it should be the UAW and Ford against foreign automakers,” Fain said. “I want to be crystal clear on one thing: The days of the UAW and Ford being a team to fight other companies are over … Non-union autoworkers are not the enemy. Those are our future union family.”
Ford said it remains “eager to conclude these negotiations with a contract” that benefits its workers, citing it’s “good that Mr. Fain acknowledged Ford’s contract offer ‘already’ is a record and remains the best one on the table.”
Stellantis said the sides “continue to be productive, building on the momentum from the past several weeks,” but declined to discuss specific details. GM declined to comment regarding Fain’s comments, citing details it released of its most recent offer earlier Friday.
The UAW hasn’t expanded strikes at GM since Sept. 29 or at Stellantis since Sept. 22, despite offers made this week not meeting details of Ford’s proposal from last week and Fain last week saying the union was initiating a “new phase” of strikes and contract negotiations.
“Right before a deal is when there’s the most aggressive push for that last mile. They just want to wait us out,” Fain said. “They want division. They want fear. They want uncertainty. And what we have is our solidarity.”
The strike at Ford’s Kentucky plant — responsible for $25 billion in revenue annually — marked a major escalation in the UAW’s targeted, or “stand-up,” strikes. It also represents a shift in strategy, as Fain had previously publicly announced the targets before the work stoppages occurred.
The UAW has been gradually increasing the strikes since the work stoppages began after the sides failed to reach tentative agreements by Sept 14.
About 34,000 U.S. automakers with the companies, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, were on strike.
Here are details of current proposals by the companies to UAW:
Wages: All three automakers have offered a 23% pay increase over four and a half years.
Wage tiers: All three automakers have agreed to eliminate wage tiers at parts facilities where workers have historically been paid less than production-line workers.
Wage progression: Ford has offered a three-year progression to the top wage rate, a system that was in place from the mid-1990s until the aftermath of the 2008 economic crisis. GM has also offered a three-year progression, but only for current workers. GM wants a more gradual four-year progression for future hires. Stellantis has offered only a four-year progression.
Cost of living adjustments (COLA): Ford has offered to restore its COLA formula to the level last used in 2009, meeting the UAW’s demand. Fain said that GM is “approaching restoration but not fully there,” while Stellantis wants to delay cost-of-living adjustments by a year.
Job security: Ford and Stellantis have agreed to give the union the right to strike over plant closures, a key UAW demand. GM has so far rejected that demand.
Temporary workers: Ford has offered to convert current temp workers with 90 days of service to full-time employees, with a raise to $21 per hour for remaining and future temps. Whether those future temps will be converted to full-time employees automatically is still being negotiated, Fain said. GM has proposed to convert current and future temps with one year of service to full time employees, and has matched Ford with a $21 per hour wage for remaining and future temps. Stellantis agreed to convert “thousands” of current temps to full-time status, with a wage increase to $20 per hour for remaining and future temps. As with Ford, the automatic conversion of future temps is “still being negotiated,” Fain said.
Retirement plans: All three automakers have offered a $3 increase to pension benefits. Ford and Stellantis have offered to increase their 401(k) contributions to 9.5% plus $1 per hour. GM offered an increase to 8% plus $1.25 per hour.
Payments to retired workers: Ford offered annual lump sum payments of $250 to retired workers, with surviving spouses eligible to continue to receive the payments. GM offered a one-time lump sump payment of $1,000, with surviving spouses not eligible. Stellantis rejected all increases to retiree pay. Fain said all three offers were “deeply inadequate.”
Profit sharing: Ford offered to improve its existing profit-sharing formula by including profits from Ford Credit, its financing subsidiary, and to make temp workers eligible to receive profit-sharing payments. Stellantis and GM both want to maintain their current profit-sharing formulas, but GM has offered to make temp workers with 1,000 hours of service eligible to receive payments. Stellantis has not offered to make its temporary workers eligible to receive profit-sharing payments.
Work-life balance: All three automakers have offered to make Juneteenth an official paid holiday and have offered two weeks of paid parental leave.
The average 30-year fixed mortgage rate just hit 8% for the first time since 2000, putting housing financing costs at historically high levels.
Given high prices and high interest rates, homebuyers must earn $114,627 to afford a median-priced house in the U.S., according to a recent report by Redfin, a real estate firm, which analyzed median monthly mortgage payments in August 2023 and August 2022.
The firm considers a monthly mortgage payment to be affordable if the homebuyer spends no more than 30% of their income on housing. At the time of the analysis, the average 30-year fixed mortgage was 7.07%.
The median U.S. household income was $75,000 in 2022, Redfin found. While hourly wages in the U.S. grew 5% over the past year, according to the real estate firm, that has not outpaced rising housing costs.
Those current market trends have left homeownership out of reach for many people, experts say.
“Housing affordability is incredibly difficult for potential homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.
In August 2020, the typical monthly mortgage payment was $1,581, based on an average interest rate of 2.94%, Redfin found. At the time, the typical house cost roughly $329,000, and homebuyers would have needed an annual income of $75,000 to afford it.
However, those record-low levels were the result of “highly unusual events, like a pandemic and a nearly catastrophic financial crisis,” said Mark Hamrick, senior economic analyst at Bankrate.com.
Nowadays, the typical U.S. homebuyer’s monthly mortgage payment is $2,866, according to Redfin — an all-time high.
Phiromya Intawongpan | Istock | Getty Images
While the economy and the housing markets move through cycles, it’s unlikely for mortgage rates to decline substantially in the near term, especially as the Federal Reserve is expected to keep the benchmark rate high for longer, added Hamrick.
Additionally, the constrained supply of homes for sale is a “direct result of the lock-in effect,” said Hamrick. The low supply pressures prices upward as current homeowners are less compelled to move or put their houses on the market as they don’t want to trade their low-rate mortgage for one that is significantly higher.
“Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability,” Alicia Huey, NAHB’s chairman and a homebuilder and developer from Birmingham, Alabama, previously told CNBC.
“People should know that this pain shall pass,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. “In the next year or two years, interest rates will be lower, and people will have the ability to refinance.”
That said, competition for homes on the market is likely to be worse in a few years as interest rates cool, she said. There are many buyers who remain on the sidelines because of current high rates.
“When interest rates come down, everyone’s going to come back to the marketplace,” said Cohn.
The decision of purchasing a home is intensely personal and prospective homebuyers should tread with caution, experts say.
“When deciding to purchase a home, it comes down to personal finances, stability and the length of time they plan on owning,” said Lautz.
In addition to mortgage costs, prospective homebuyers should keep their other financial goals in mind, as well as maintenance costs, said Hamrick. The biggest regret among recent homebuyers was not being prepared for maintenance and other costs, according to a Bankrate survey.
However, “homeownership is the primary means of wealth creation in this country,” said Hamrick.
The typical homeowner has $396,200 in wealth compared to the average renter at $10,400, added Lautz.
First-time homebuyers may consider tapping retirement funds or taking advantage of first-time homebuyer programs that may offer down payment assistance.Buyers can also consider temporary buydowns, which are paid by either the real estate broker or seller, to help lower the monthly payment, said Cohn.
However, it will be important for prospective buyers to work with professionals in the long run, experts say. Buyers should examine all options, consult with realtors about overlook areas and talk with mortgage brokers to consider all the possible loan options, said Lautz.
“This is potentially the most expensive transaction somebody will be associated with in their lifetimes,” said Hamrick. “It should be done as well as possible to the benefit of the buyer.”
United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
DETROIT – A shift in strategy by the United Auto Workers union this week has some analysts wondering if the parties are — perhaps, counterintuitively — getting closer to a deal.
On Wednesday the union initiated a surprise work stoppage at Ford Motor’s Kentucky Truck Plant. The strike involves 8,700 workers and affects the most crucial plant, by far – responsible for $25 billion in revenue annually – that the union has walked out on since the strikes began Sept. 15. It’s expected to quickly have a ripple effect on other Ford plants and suppliers.
It also ushered in what UAW President Shawn Fain characterized as a “new phase” of strikes and contract negotiations with Ford, General Motors and Chrysler-parent Stellantis, giving the union the element of surprise to keep the automakers on edge during the ongoing negotiations, Fain told members in a Friday presentation.
“We’re entering a new phase of this fight and it demands a new approach,” Fain said Friday. “We’re done waiting until Fridays to escalate our strike.
“We are prepared at any time to call on more locals to stand up and walk out,” he said.
Until this week, Fain had announced all of the union’s new strikes on Fridays, during what has become a weekly livestreamed update for union members.
Some Wall Street analysts and industry experts think this week’s shift in strategy could be a sign that UAW leaders feel a deal with Ford is close, and that they’re increasing pressure as a tactic to get the deal over the finish line — and to help sell a potential tentative deal to their members.
“We continue to believe the escalation at [Ford] this week is a sign the talks may be coming to an end. KY Truck is likely Ford’s most profitable plant, and therefore the strike is the highest level of escalation, aside from a national strike,” Wells Fargo analyst Colin Langan wrote in a Friday note. “This escalation would likely be done to push for final terms.”
But the UAW’s leaders may be looking one more step ahead, to the process of selling a tentative deal with Ford to their members. The thinking is that to convince members to ratify a potential new contract, UAW President Shawn Fain and the union’s leadership will need to convince autoworkers that the union has fought as hard as possible to have their demands met. Striking Ford’s most profitable factory might be one way to do that.
Wolfe Research’s Rod Lache argued the Kentucky strike may allow UAW leadership to claim that they did all that could be done, especially if it leads to one or two more concessions from Ford.
“In another week or two, Fain should be able to credibly announce that he has forced Ford into one last capitulation (battery plants?), and that UAW members have secured the last few ounces of wage, benefits, and job protection concessions that they can get,” Lache wrote Thursday to investors.
Factory workers and UAW union members form a picket line outside the Ford Motor Co. Kentucky Truck Plant in the early morning hours on October 12, 2023 in Louisville, Kentucky.
Only about 34,000 U.S. automakers with the companies, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, are currently on strike.
“Hitting a very high-dollar, high-profitable plant, it certainly gets Ford’s attention very quickly,” said Art Wheaton, a labor professor at the Worker Institute at Cornell University. “It also sends a huge message to Stellantis and General Motors.”
Wheaton argues the escalation in Kentucky may just be the beginning. There are plenty more plants the union could hit for each of the automakers, including the full-size pickup truck plants owned by all three and large SUV plants at GM and Stellantis.
GM avoided a strike at its most profitable SUV plant in Texas last week with a last-minute offer to include battery cell plant workers under the company’s national agreement, however details regarding how that will be done are believed to be still being negotiated.
While Fain declined to expand strikes against GM and Stellantis Friday, Wells Fargo’s Langan thinks that doesn’t necessarily mean they’re spared.
“The lack of GM & STLA strike today, even though both have not matched F’s offer, would be consistent with the UAW holding out the most profitable plants for a final push,” he wrote in a Friday note.
All of that tea-leaf reading aside, rapid escalation-turned-resolution is just one potential outcome.
Another includes the automakers holding out for the union to deplete its resources, specifically its strike and defense fund. Or, the UAW could continue rotating strikes or filing additional unfair labor practice charges against the companies. Yet another outcome could see the sides seeking mediation or legal resources.
“I think they’ve got to be getting close to some sort of an agreement, or you just have to conclude a reasonable deal is not in the making — and that this is really more a matter of a test of will than anything else,” said Marick Masters, a business professor at Wayne State University in Detroit who specializes in labor issues.
An automaker also could submit what’s known as a “last, best and final offer,” which, as it states, is typically a final proposal when bargainers have reached an impasse.
Ford may be close to that point. An executive said Thursday the automaker was “at the limit” of what it can offer UAW in terms of economic concessions.
The Detroit automakers have largely given into many of the union’s demands, but not all of them.
The companies haven’t waved the white flag on demands for a 32-hour workweek — which was always a nonstarter for the companies and which has largely fallen out of union talking points — and a 40% wage increase.
Ford was up to a record 23% wage increase in its recent contract proposal, with the others not far behind.
Then there’s the outstanding issues of benefits for retirees as well as a return to traditional pension plans and future battery plant jobs and workers.
Industry experts and sources familiar with the talks believe regardless of the outcome, the contracts will have ripple effects on the companies potentially in the way of reorganizations, cost cuts and future investments and jobs.
A former high-ranking bargainer for one of the automakers told CNBC that it’s nearly guaranteed that the companies will cut union jobs through product allocation, plant closures or other means to offset increased labor costs once the contracts are set.
“They’re going to have to pay up. The question is how much,” said the longtime bargainer, who agreed to speak on the condition of anonymity. “This ends up with fewer jobs. That’s how the automakers cut costs.”
Investors took a small sigh of relief after a series of bad days on Wall Street. The Dow broke a three-day losing streak, while the S&P 500 and the Nasdaq Composite also took a more positive note after the release of new jobs data. ADP reported Wednesday that private payrolls rose 89,000 in September, far below the 160,000 economists had been expecting. Investors are hoping that means a historically tight labor market might finally be loosening, which could give the Federal Reserve a reason to stop hiking rates. But the ADP numbers can differ significantly from the official government numbers, which are due out Friday, so the relief might be short-lived. Follow live market updates.
Kaiser Permanente employees, joined by Union members representing the workers, walk the picket line in Los Angeles, California on October 4, 2023.
Frederic J. Brown | AFP | Getty Images
There’s a new strike in town. More than 75,000 healthcare workers walked off the job Wednesday at Kaiser Permanente, the nation’s largest healthcare nonprofit organization. The union — which says this is the largest strike of healthcare workers in U.S. history — is seeking a long-term solution to staffing shortages that have left employees burnt out. Its members also say they want better pay and benefits. Negotiations between the two sides are ongoing. Kaiser said it has contingency plans in place to ensure patients receive care during the strike, which is expected to last three days.
Google unveiled two new Pixel phones Wednesday as it continues to try to take smartphone market share away from Apple. The Pixel 8 and Pixel 8 Pro have new AI-powered editing tools built into the camera app, among other features. The new Best Take tool allows users to take a series of photos and then pick the best takes from each image and combine them into one picture where everyone is looking at the camera and smiling. Meanwhile, Apple released a software update that it said will fix a bug that’s led to overheating iPhones. Some consumers who bought the new titanium iPhone 15 models complained online that they were (literally) too hot to handle.
WASHINGTON, DC – OCTOBER 04: U.S. President Joe Biden delivers remarks on new Administration efforts to cancel student debt and support borrowers at the White House on October 04, 2023 in Washington, DC.
Kevin Dietsch | Getty Images
President Joe Biden canceled another $9 billion of student loan debt on Wednesday. The relief comes from his administration’s fixes to a number of programs, including income-driven repayment plans and Public Service Loan Forgiveness. About 125,000 Americans will benefit from the new round of forgiveness. The move comes after the Supreme Court struck down Biden’s plan to cancel up to $20,000 in student loan debt for tens of millions of Americans. That means many people had to start repaying their student loans, beginning on Oct. 1, for the first time in three years after a stretch of time when payments were paused amid the pandemic.
Visitors can avoid lines at Disney World if they buy into the system.
Joseph Prezioso | Anadolu Agency | Getty Images
Maybe dreams do come true. Disney is offering discounts on children’s tickets at its domestic theme parks. The deal, which is good for a limited time, comes as park attendance is lagging. Disney and others in the business have seen a slowdown in attendance and hotel room occupancy as consumers deal with inflation. Nonetheless, parks remain profitable for the company and it’s planning to double down on its parks. For the discounts, children’s tickets (valid for kids aged 3 to 9) for the California-based Disneyland resort will be available for as low as $50, while the Florida-based Disney World will offer half-off children’s tickets and dining plans for four-night stays.
— CNBC’sHakyung Kim, Jeff Cox, Spencer Kimball, Sofia Blum, Kif Leswing, Annie Nova and Sarah Whitten contributed to this report.
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