ReportWire

Tag: Video First

  • How UnitedHealth Group grew bigger than the nation’s biggest banks

    How UnitedHealth Group grew bigger than the nation’s biggest banks

    [ad_1]

    UnitedHealth Group has the highest price per share of any company on the Dow Jones Industrial Average and it’s the tenth heaviest-weighted stock on the S&P 500.

    In fact, not only is UnitedHealth the biggest health-care conglomerate in the United States based on market cap and revenue, it’s even bigger than JPMorgan Chase, the nation’s largest bank.

    And it is a Wall Street darling, with experts optimistic about the company’s future: 22 of 25 analysts currently label it a buy.

    “If I had to pick one stock, only one stock to buy, I’d buy United[Health],” said Ana Gupte, principal at AG Health Advisors.

    UnitedHealth “has had superior stock performance over everybody else for two reasons,” said Lance Wilkes, managing director and senior research analyst at Bernstein Research. “One would be strategic vision and the other is strategic capital management.”

    UnitedHealth has increased its annual revenue since 2012 by more than $100 billion, when adjusted for inflation. It achieved this by engaging in a unique acquisition strategy. It started with smaller deals that have grown while many of UnitedHealth’s competitors such as Aetna and Humana or Anthem and Cigna tried to broker much larger ones, only to be stopped by regulators.

    Conversely, UnitedHealth leaned into a vertical-integration strategy, buying up smaller companies and building them into its growing health-care business.

    UnitedHealth’s size makes it “relatively immune to economic cycles” due to the company’s wide diversity, Gupte said. “It makes it very attractive from an economic cycle and a macro environment perspective.”

    Until recently, its acquisition strategy allowed it to grow without catching too much scrutiny from regulators. But in January 2021, UnitedHealth and Change Healthcare announced a nearly $8 billion all-cash deal that was challenged by the Department of Justice due to antitrust concerns.

    Health-care companies “are becoming more and more [like] utilities,” Wilkes said. “Consequently, I think they’re going to have very large market shares because … you wouldn’t want redundant services through the system.”

    “I think at this point you we would consider UnitedHealth Group just kind of like … core health infrastructure at this point in America,” said Matt Stoller, director of research at the American Economic Liberties Project and author of “Goliath: The Hundred Year War Between Monopoly Power and Democracy.” “It’s too big to manage.”

    “UnitedHealth Group is committed to improving the health system for everyone, advancing evidence-based practice and aligning incentives across the system to ensure people get the right care at the right time in the right place,” UnitedHealth Group told CNBC.

    “Because we serve people throughout every aspect of the health system, we have a unique ability to identify opportunities to better integrate care and benefits, develop solutions and deploy them at scale to improve access, lower costs and make the experience better for patients and providers,” it said.

    Watch the video above to learn how UnitedHealth Group grew so big and what that means for the U.S. health-care system.

    [ad_2]

    Source link

  • Americans are spending big with credit cards. Here’s what that means for the possibility of a recession

    Americans are spending big with credit cards. Here’s what that means for the possibility of a recession

    [ad_1]

    Economists have been forecasting a recession for months, and that looming downturn is one of the most anticipated in U.S. history. But it’s not yet materialized, in part due to strong consumer spending.

    “Consumer spending represents more than half of the economy,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. “So if consumer spending is strong, that alone is, generally speaking, enough to keep the economy from slipping into a recession.”

    In the first quarter of 2023, gross domestic product grew at a 1.1% rate compared to the previous quarter. This modest level of growth is an improvement from mid-2022 GDP figures, which initially brought recession fears to light.

    More from Personal Finance:
    What debt ceiling standoff means for money market funds
    Why missing one $2 expense could derail a national park trip
    MIT economist helps decide when recessions begin and end

    A key reason for the fear: Inflation stayed stickier than economists anticipated. In May, the U.S. Bureau of Labor Statistics reported headline annual inflation of 4.9%.

    To combat inflation, the Federal Reserve has hiked its overnight bank lending rate 10 times over the past year or so. At the Fed’s May meeting, policymakers hinted that they may pause further interest rate increases, barring unexpected developments.

    The end of this tightening cycle may be coming into focus as consumers reach their breaking point. As the pandemic fades, historic levels of personal saving have taken a nosedive. Deposits at banks have crested as consumers keep spending amid continually rising prices.

    This is happening as the least well off are increasingly relying on credit in their day-to-day lives. Roughly 29% of households earning less than $50,000 a year were using credit cards to finance their spending, according Bank of America Institute economists. Credit-use rates have risen steadily in recent years despite being below higher pre-pandemic levels.

    Moderate-income Americans also are facing the significant headwind of less tax-refund money. The average refund this year is $2,777 through April 28, down 8% from the same period last year, according to IRS data.

    “Because this is the same household that rely more on the tax refund to finance their spending, a lower refund really has some negative impact on their spending,” said Anna Zhou, an economist at the Bank of America Institute.

    Analysts at the New York Federal Reserve report record levels of credit card debt in 2023. This underscores the economic split in the country, with some consumers flush with savings following a thrifty pandemic while others are finding it increasingly difficult to spend wisely amid rising prices, mounting layoffs and the potential of recession.

    Still economists see the chance for a soft landing. “We don’t think … the slowdown process will be as dramatic as some people have feared,” said Zhou. “And it will be a gradual process.”

    Watch the video above to learn how U.S. consumer spending has so far fended off a recession.

    [ad_2]

    Source link

  • How A.I. could change the future of work

    How A.I. could change the future of work

    [ad_1]

    The recent rapid rise of accessible artificial intelligence tools has the potential to upend dozens of industries. Tools like Chat-GPT and Dall-E 2 by OpenAI can be used to create written content and visual outputs that in previous years required skilled workers who had years of training in art or writing.

    “For myself as both an economist and an engineer, I’m absolutely shocked at the rate at which some of these generative content mechanisms are improving,” said J. Scott Marcus, a senior fellow at Bruegel, a Brussels-based think tank. “There’s also been a long-standing debate, what’s the impact likely to be on the workforce?”

    A recent report by Goldman Sachs laid out some stark possibilities when it comes to AI and the economy. The report estimates two-thirds of jobs in the U.S. and Europe, and around 300 million positions worldwide could be exposed to automation from new AI advances. The report also notes that one-fourth of all work being done could be replaced by generative AI.

    “The interaction between humans and AI will become more and more prevalent as we move forward,” said Georgios Petropoulos, a researcher at the Massachusetts Institute of Technology Initiative on the Digital Economy. “Then we will see that they can be really good because they can increase our productivity or efficiency, we can be much more productive in the tasks we are doing.”

    Watch the video above to find out more about how AI could change the future of work

    [ad_2]

    Source link

  • Americans are saving far less than normal in 2023. Here’s why

    Americans are saving far less than normal in 2023. Here’s why

    [ad_1]

    The U.S. personal savings rate remains below its historical average, according to the U.S. Bureau of Economic Analysis.

    The seasonally adjusted annual rate of personal saving was 4.6% in February. That’s well below the average annual rate of more than 8%, according to the data, which traces back to 1959. In June 2022, the rate had dipped to 2.7%, a 15-year low.

    This was a large fall from periods of the pandemic when households across the country were saving as much as 30% of their monthly income.

    “Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.

    Collectively, Americans have trillions in excess savings compared with expectations leading up to the pandemic, according to Federal Reserve economists.

    “That really has helped to buoy the economy,” said Shelley Stewart, a senior partner at McKinsey & Company, “particularly in a place like the U.S., where consumption is such a big part of GDP.”

    Federal Reserve economists note that the lion’s share of excess savings is concentrated in the top half of households by income.

    But the lower half built up savings in this time, too, according to the central bank’s October note. They noted at the time that the lower half of earners had roughly $5,500 in excess savings per household. Experts believe these stockpiles of cash will begin to dwindle in 2023.

    In the months since, headline inflation stayed stubbornly high, at an annual rate of 5% in March. This weighs on consumer spending, while devaluing savings held in low return positions such as cash.

    Watch the video above to learn about how the personal savings rate affects you and the wider economy.

    [ad_2]

    Source link

  • Why Americans are saving less in 2023

    Why Americans are saving less in 2023

    [ad_1]

    Share

    Americans started the 2020s with a personal savings boom. The trillions in excess personal savings built up in the pandemic are beginning to vanish amid high inflation, according to Federal Reserve economists. The annual savings rate fell to a 15-year low in 2022. It started a recovery in 2023, but remains well below long-term trends. Despite this slowdown in saving, consumer spending has remained robust, keeping the U.S. from recession.

    11:56

    Thu, Apr 27 20239:54 AM EDT

    [ad_2]

    Source link

  • How A.I.-powered robots are changing retail

    How A.I.-powered robots are changing retail

    [ad_1]

    Eager to boost sales, relieve workers from mundane tasks and respond to the ongoing labor shortage, retailers and supermarkets are adding robots to their store aisles.

    Outfitted with cameras and sensors, autonomous inventory robots that can verify price signs and look for out-of-stock items are being deployed at big box stores like BJ’s Wholesale and Walmart-owned Sam’s Club.

    related investing news

    CNBC Pro

    Inventory is one of the biggest challenges retailers face. Missed sales from empty shelves and out-of-stock items cost U.S. retailers $82 billion in 2021, according to NielsenIQ.   

    “Retailers are spending a lot of money to know what’s coming into their stores through their inventory systems and through their point of sale systems,” said Jarad Cannon, chief technology officer at inventory robot maker Brain Corp. “But in their stores on a daily basis, they don’t have a very good model of what’s actually happening on their shelves.”

    Other companies in the space include Simbe Robotics and Bossa Nova Robotics.

    So what impact will inventory robots have on U.S. retailers and the livelihood of its workers? CNBC got a behind-the-scenes look at Brain Corp. to find out.

    Watch the video to learn more.

    [ad_2]

    Source link

  • Why U.S. vacation policies are so much worse than Europe’s

    Why U.S. vacation policies are so much worse than Europe’s

    [ad_1]

    The United States is the only advanced economy that does not guarantee paid time off. 

    “You have entire cultures like France … where pretty much everybody takes August off, and it’s just part of the culture there,” said Shawn Fremstad, director of law and political economy at the Center for Economic and Policy Research. “You don’t really see that here in the United States.”

    The European Union Working Time Directive, which was passed in the early 1990s, requires at least 20 working days of paid vacation in all EU countries.

    France provides a minimum of 30 paid vacation days per year. What’s more, many European countries have paid holidays as well, giving workers there even more paid days off.

    “When I came to France, I noticed that vacation is a way of life,” said Fatima Cadet-Diaby, an American who has been living in Paris for nearly seven years. “People are constantly talking about their vacations.”

    More vacation time could also equate to overall economic gains in the U.S.

    “I think people have a stereotype of France in their mind as this kind of lazy culture,” Fremstad said. “But if you look at the employment rate there for prime age workers, so basically 25 through 54, it’s higher than in the U.S. So, they have more people working and they’re much more productive per hour.”

    Even though a majority of Americans do have some kind of paid time off, nearly half of workers report not using all of those days. About half worry they might fall behind on their work if they take time off, with close to 20% thinking it could hurt their career growth and 16% saying they fear losing their job, according to data from the Pew Research Center.

    “There’s a certain fear we don’t have any legal protections and people have been fired for taking vacation time,” said John de Graaf, author of the book “Take Back Your Time.” 

    Watch the video above to learn more about why American’s aren’t going on vacation even though they have the days off and what we can learn from our counterparts in France.

    [ad_2]

    Source link

  • Here’s how banks fail

    Here’s how banks fail

    [ad_1]

    Share

    The recent collapse of Silicon Valley Bank, Signature Bank and Credit Suisse is a harsh reminder of how quickly a trusted institution could fail, putting billions of dollars at risk. Over 550 banks have failed since 2001, according to the Federal Deposit Insurance Corp. So what exactly causes a bank to fail? And what are the broader implications on the U.S. economy?

    [ad_2]

    Source link

  • ‘SVB’s failure could and should have been prevented’: Experts argue for better regulation and supervision by the Fed

    ‘SVB’s failure could and should have been prevented’: Experts argue for better regulation and supervision by the Fed

    [ad_1]

    Like any other trusted institutions, banks are capable of failing. Over 550 banks have collapsed since 2001, according to the Federal Deposit Insurance Corp.

    Nonetheless, the recent collapse of Silicon Valley Bank, Signature Bank and Credit Suisse was a harsh reminder of how quickly a trusted institution could fail, putting billions of dollars at risk.

    But experts say these financial disasters could have been prevented.

    “Silicon Valley Bank’s failure could and should have been prevented by better regulation and supervision by the Federal Reserve,” said Aaron Klein, a senior fellow of economic studies at the Brookings Institution. “The Federal Reserve needed to be the one saying, ‘Wait a second, you have some serious interest rate risk that you need to hedge against.’ And they failed [to do that].”

    Experts say the focus should be on ensuring that the rules are being enforced.

    “As recently as 2019 and more recently even, there were warnings that things needed to be changed here, that they’re taking on additional interest rate risk, and that they’re going to have some potential liquidity problems in the event that interest rates begin to rise,” said William T. Chittenden, an associate professor of finance and economics at Texas State University.

    The collapse of SVB also revealed the danger of deregulation. Several politicians and researchers have pointed to the rollback of Dodd-Frank regulations by the Trump administration as one of the main reasons for the bank’s failure.

    “What happened in Dodd-Frank was they said that all banks over $50 billion would be subject to enhanced prudential standards,” explained Klein. “The rollback said nobody’s subject to that between $50 billion and $100 billion, and between $100 billion and $250 billion, it is optional.”

    “SVB happened to fall in that category of between $50 billion and $250 billion so when they raised that, they weren’t subject to this great scrutiny,” said Chittenden.

    Watch the video to find out more about why banks fail in the U.S.

    [ad_2]

    Source link

  • U.S. cities are filling up with luxury apartments despite ‘housing recession’

    U.S. cities are filling up with luxury apartments despite ‘housing recession’

    [ad_1]

    Scores of luxury homes are coming to major cities across the United States.

    Analysts at Yardi Matrix projected that more than 400,000 units were completed in 2022, and they expect another strong showing in 2023. Experts believe much of this new stock is built with upper-tier customers in mind.

    “You often see new housing branded as ‘luxury,’ in part because it’s new,” said Ethan Handelman, deputy assistant secretary at the U.S. Department of Housing and Urban Development. “When you get to affordable housing, we need to be providing some additional capital and/or rental assistance to help make that housing affordable to the people who need it most.”

    Market-rate rents for new apartments can easily be multiple thousands of dollars monthly. For many high-wage earners in cities, this is achievable. But for moderate-income Americans, the sky-high prices appear disconnected from reality.

    “The marketplace is structured not to house certain people. We need to admit that,” said Dominic Moulden, a resource organizer at Organizing Neighborhood Equity DC.

    Builders say the high cost of housing in the U.S. is related to the large amount of regulation in the housing sector. For example, they say, many U.S. cities are short on land due to restrictive zoning codes.

    “Currently, 40% of the cost of multifamily development is in regulation,” said Sharon Wilson Géno, president at the National Multifamily Housing Council. “We have to do something about that if we’re going to build more housing.”

    In 2022, the Biden administration announced a housing action plan that aims to shore up housing supply within five years. But these efforts may not have a material impact on prices for some time.

    “Unfortunately, I don’t think we’re going to see rents going down a whole lot over the next one to two years,” said Al Otero, a portfolio manager at Armada ETF Advisors. “Developers cannot make a profit at those more affordable price points. Therefore, we see the development and the new construction at the much higher, higher end of the spectrum.”

    Watch the video above to see why the United States is awash in new luxury apartments.

    [ad_2]

    Source link

  • Rent control policies are gaining support nationwide. Here’s why economists still think it’s a bad idea.

    Rent control policies are gaining support nationwide. Here’s why economists still think it’s a bad idea.

    [ad_1]

    In December 2022, $1,981 was the typical monthly rent in the United States — a 7.4% increase from the year prior. But while rent has begun to stabilize nationwide, rent affordability remains difficult for many Americans. 

    “There’s literally nowhere in the country where a tenant is not burdened by their rent,” according to Leah Simon-Weisberg, an adjunct professor of law at UC San Francisco.

    In response, support for rent control policies has gained traction.

    But this isn’t the first time such policies have had widespread support. After the massive economic disruption caused by World War II, the federal government imposed rent control on roughly 80% of rental housing between 1941 and 1964.

    Over time, it was abandoned because prominent economists unanimously argued against the policy. That sentiment mostly continues today.

    “There are various surveys of economists. One done by IMG showed that only 2% thought that rent controls in places like New York and San Francisco were having a positive impact on affordable housing,” said Jay Parsons, chief economist at RealPage.

    Economists argue that rent control would deter developers from building more homes, which would only worsen the housing supply crisis in the United States.

    America already suffers from a deficit of 3.8 million homes, especially at low-income price points, according to Habitat for Humanity.

    “We have not invested as a nation in building the supply of housing in a variety of communities, in a variety of different price points. We’ve instead relied on the private sector to do so,” said Sharon Wilson Géno, president of the National Multifamily Housing Council. “But unless that money comes into the market and investors see that as a better investment than some other kind of equity or some other kind of investment, they’re not going to come.”

    Watch the video to find out why so many economists are against the idea of widespread rent control.

    [ad_2]

    Source link

  • 69-year-old pilot pays $4,000/month to live in a residential airpark: ‘All I have to do is taxi out and take off’

    69-year-old pilot pays $4,000/month to live in a residential airpark: ‘All I have to do is taxi out and take off’

    [ad_1]

    When Joe Sobczak was looking for a new home in Groveland, California, his priority was unique: he needed a property that could house his airplanes.

    That’s when the 69-year-old test pilot found a residential airpark at the Pine Mountain Lake Airport. In 2017, Sobczak bought a 3-bedroom, 7-bathroom, 5,000-square-foot home with a 3,600-square-foot hangar for $698,000. He has a mortgage of $4,000 a month.

    “It’s a phenomenal social environment because you have an immediate group of people who have common interests,” Sobczak tells CNBC Make It. “The services are somewhat limited, but the trade-off is easily offset by the serenity and peacefulness of [the community].”

    There are about 90 homes with hangars that have deeded access to use the taxiways and runway at the Tuolumne County airport in the residential airpark. In his hangar, Sobczak keeps a Beechcraft T-34 Mentor plane he bought with another pilot for $175,000.

    Sobczak bought the house for $698,000 and has a monthly mortgage of $4,000.

    Katie Tarasov. Photo by CNBC Make It

    The two of them split the cost of maintaining the aircraft. They save money on repairs because Sobczak is an FAA-certified A&P mechanic, so he often does the work himself.

    As a test pilot, Sobczak works primarily out of the San Francisco International Airport (SFO). Instead of doing the three-hour drive, he jumps in one of his airplanes and takes a 45-minute flight to nearby San Carlos Airport and drives 15 minutes to SFO.

    “The reason I feel safer in the airplane is because I have total control of my environment, as opposed to driving a car where it’s me and the 5,000 other cars that pass me by on the way to the Bay Area,” he says. “In the airplane, it’s all under my control.”

    Sobczak usually flies down to work at the San Francisco International Airport in his Beechcraft T-34 Mentor plane.

    Erin Black. Photo by CNBC Make It

    Fueling the plane costs about $1 more per gallon than a car, he says. He pays around $120 roundtrip for jet fuel, so the cost is comparable to what he would spend driving his car to and from work.

    Because the Tuolumne County airport has no control tower, residents of the airpark use a common traffic advisory frequency so pilots can broadcast their position and intended flight path.

    “I don’t really have to tell anybody if I’m going flying. All I have to do is taxi out and take off,” Sobczak says. “It’s never loud …. It’s so quiet that it’s noisy.”

    Part of Sobczak’s deed includes access to the Tuolumne County airport.

    [ad_2]

    Source link

  • London’s rental market is in crisis. Here’s why and how renters are struggling

    London’s rental market is in crisis. Here’s why and how renters are struggling

    [ad_1]

    Stories about soaring rents and the search for a new place to live taking months are all too common in London right now. The city’s rental market is in crisis, and renters are facing the consequences. 

    One of them is Daniel Lloyd, who lives with his flatmate in southwest London. After living in their two-bedroom apartment for almost a year, their landlord asked them to pay 27% more rent. 

    “We were shocked at how high the rent increase was,” he told CNBC’s Make It. While they were expecting their rent to go up, they had not anticipated it being by that much. 

    “We were willing to accept an acceptable level of increase. However, going close to 30% would have been an increase of just over £4,000 [$4,854], and we were not going to be earning an extra £4,000 by the end of the tenancy,” Lloyd explained. 

    They would therefore not be able to afford the higher rent, and would be forced to move. But as rent prices have gone up across the city, they would likely have to move further from the center — somewhere with worse transport links and away from their local community. 

    “None of the areas that we’ve found potential properties for would really suit our living situation,” Lloyd said.

    Him and his flatmate also realized that most other renters in their building were facing the same issue. They got together and tried to push back against the rent increases after realizing that their landlord was breaching their tenancy agreements, which limit how much rents can go up. 

    Some of Lloyd’s neighbors have heard back from their landlord through the property manager and new, lower rent increases have been suggested, but most are still worriedly waiting. 

    Buying instead of renting?

    Dave Chawner was in a similar situation and moved out when his landlord proposed a 26% rent increase. 

    “When we said, ‘look, I think it’s reasonable that there is going to be inflation, I think it is reasonable that prices do go up. We will negotiate at, say, 15%. Does that sound good to you?’ And they said absolutely not. It’s a 26% increase or nothing,” he told CNBC’s Make It. 

    The rent increase was unaffordable for them and would have slashed their budget for food and bills, Chawner said. 

    Chawner and his partner were already saving and were able to buy an apartment together when they did move. Their mortgage is now lower than their increased rent would have been.  

    “We were incredibly fortunate in order to be able to buy somewhere,” Chanwer said, adding that he is very aware that most of London’s renters are not in the same position. 

    He is not, however, the only person opting to buy, explained Richard Donnell, executive director of research at real estate company Zoopla. 

    “We’re seeing people sort of leaving rented accommodation to buy property and just looking further afield. So that’s one approach. And actually the fact that rents are going up so fast themselves will push some renters into buying,” he told CNBC’s Make It. 

    A recent survey by housing charity Dolphin Living, published in the U.K.’s The Times newspaper, said that eight-in-10 renters in London were struggling to keep up with the cost of accommodation.

    The root of the crisis

    The key issue that has led to this crisis, that saw rents rise by 17% throughout 2022, according to Zoopla, is demand and supply, Donnell explained. 

    “Supply and demand are really out of kilter at the moment. On the supply side, the average London estate agent would typically have had 17 to 20 properties for rent on their books. That’s down to 10 or less than 10 at the moment,” he said. 

    The rent shifts also link back to the coronavirus pandemic, and the sudden drop in demand for rental flats that occurred when London went into lockdown and people could not travel or move there. This caused rents to fall by as much as 10-15%, Donnell recalled. 

    Laws and regulations also play a role: There are no rent controls in London, and landlords have the option of so-called “no fault” evictions. These allow them to force people to move out even if they have not breached their tenancy agreement, so for example if they do not agree to pay higher rent. 

    This has led to intense competition for rental properties, Katinka Hill, the regional director for central London lettings at the estate agent Chestertons, said. 

    “Viewing levels have increased dramatically year on year. Properties aren’t staying on the market long, if at all,” she told CNBC’s Make It. 

    “We often don’t have to to ask tenants to offer over asking price. They just offer over asking price because they’ve lost out on the last two or three properties that they’ve bid for,” Hill added. 

    As well as making higher offers, people are also providing bios and pictures of themselves, and are creating resumes for their pets to help secure them a home, she explained. 

    Looking ahead, Donnell believes rent prices are likely to keep increasing, but probably at a slower pace. Long term solutions are needed, he said. “We really need to see more supply in London. A lot of that’s going to come off new build development,” he said. 

    For now however, the situation is likely to remain difficult for London’s renters. 

    [ad_2]

    Source link

  • How Zelle is different from Venmo, PayPal and CashApp

    How Zelle is different from Venmo, PayPal and CashApp

    [ad_1]

    More than half of smartphone users in the U.S. are sending money via some sort of peer-to-peer payment service to send money to friends, family and businesses.

    Stocks of payment services like PayPal, which owns Venmo, and Block, which owns Cash App, boomed in 2020 as more people began sending money digitally.

    related investing news

    CNBC Pro

    Zelle, which launched in 2017, stands out from the pack in a few ways. It’s owned and operated by Early Warning Services, LLC, which is co-owned by seven of the big banks and it’s not publicly traded. The platform serves the banks beyond generating an independent revenue stream.

    “Zelle is not really a revenue-generating enterprise on a stand-alone basis,” said Mike Cashman, a partner at Bain & Co. “You should think of this really as a little bit of an accommodation, but also as an engagement tool versus a revenue-generating machine.”

    “If you’re already transacting with your bank and you trust your bank, then the fact that your bank offers Zelle as a means of payment is attractive to you,” said Terri Bradford, a payment specialist at the Federal Reserve Bank of Kansas City.

    One limitation of PayPal, Venmo and Cash App is that users must all be using the same service. Zelle, on the other hand, appeals to users because anyone with a bank account at one of the seven participating firms can make payments.

    “For banks, it’s a no-brainer to try to compete in that space,” said Jaime Toplin, senior analyst at Insider Intelligence. “Customers use their mobile-banking apps all the time, and no one wants to cede the opportunity from a space that people are already really active in to third-party competitors.”

    Watch the video above to learn more about why the banks created Zelle and where the service may be headed.

    [ad_2]

    Source link

  • Why the big banks created Zelle

    Why the big banks created Zelle

    [ad_1]

    Share

    Competition among peer-to-peer payment apps like Venmo, PayPal, Cash App and Zelle have been heating up for the past 10 years. The big banks tried to compete in the space when PayPal first came on the scene 25 years ago, but their business models failed. Now, Zelle, a seven-bank platform, is outpacing its rivals in average transaction value. But a rise in reported fraud activity recently got the attention of Congress, with allegations that the banks aren’t supporting those affected customers.

    [ad_2]

    Source link

  • This 29-year-old and her partner pay $1,000/month for a 3-bedroom apartment in San Juan, Puerto Rico

    This 29-year-old and her partner pay $1,000/month for a 3-bedroom apartment in San Juan, Puerto Rico

    [ad_1]

    Months into their hunt for an apartment in San Juan, Valentina Valldejuli and her partner, Rafael, pivoted from searching local real estate websites to browsing Facebook Marketplace.

    Valldejuli was born and raised in Puerto Rico and has lived her entire life in San Juan.

    The 29-year-old “Modo de Vida” art director, told CNBC Make It that it was essential to find a two-bedroom in the city to be close to her family.

    “I love that anywhere you’re on the island, you have the beach nearby. I live in this center of an area, but I can just take a ten-minute drive and get to the beach here in Ocean Park in San Juan,” she says.

    Hato Rey is the financial district in San Juan, Puerto Rico.

    CNBC Make it

    In October 2020, the couple found a Facebook Marketplace listing for a three-bedroom, two-bathroom in Hato Rey, Puerto Rico, for $1,000 a month.

    Valldejuli says that because the hurricane season in Puerto Rico is only getting worse as the years go by, the most important thing for them was that the apartment has what they call “tormenteras,” or storm shutters, and for the building to have a backup generator, too.

    “The moment we saw this apartment, we just fell in love,” Valldejuli says.

    She added that although the rent for the apartment was only $1,000 a month, there was a catch: it didn’t come with a refrigerator or an oven.

    The kitchen didn’t come equipped with an oven or a refrigerator, but the couple were willing to compromise and buy the appliances themselves.

    CNBC Make It

    After getting approved for the apartment, the couple paid a $1,000 security deposit, the first month’s rent, and about $1,200 for a refrigerator and $600 for an oven.

    “We were willing to compromise to get those appliances because we love the space so much. We had already seen four different places, and it was very difficult to get a place this big and [in that] price range,” Valldejuli says.

    The couple put the three bedrooms to good use by making one their primary bedroom, turning the second into Rafael’s office and music studio, and using the third as Valldejuli’s home office.

    Valldejuli describes their decor as a mix of boho with a mid-century vibe and a bit eclectic.

    CNBC Make It

    “I’m a photographer and a graphic designer, and I wanted to explore what interior design would look like from a perspective of a photographer and a graphic designer,” Valldejuli says.

    The art director describes their apartment decor as a mix of boho with a mid-century vibe and a bit eclectic.

    The couple doesn’t plan on moving anytime soon

    [ad_2]

    Source link

  • How Bank of America achieved a massive comeback from the brink of collapse

    How Bank of America achieved a massive comeback from the brink of collapse

    [ad_1]

    The 2008 financial crisis had a devastating impact on Bank of America. Shares of the bank were trading for as low as $2.53 in 2009 and net income dropped from a high of $21 billion in 2006, to just $4 billion in 2008.

    “Bank of America was one reason why much of the investing public and consumers and government lost faith and trust in banking,” recalled Mike Mayo, a bank analyst at Wells Fargo. “If the government did not intervene for Bank of America and the other banks, Bank of America would have failed.”

    Fast forward to today, BofA is thriving despite concerns over inflation and threats of a possible recession. The bank reported net income of $31.9 billion in 2021, compared with just $4 billion in 2008.

    “As the rates have gone up and if the recession is shallow, then we’re going to see widening spreads and the ability of Bank of America to have significant earnings from net interest income,” said Kenneth Leon, a research director from CFRA Research. “This is unique to the banking industry and Bank of America being one of the largest banks, stands to benefit the most.”

    The hard-learned lessons from the financial crisis have also led BofA to undergo significant changes, allowing it to earn its position as the bank with the second-largest total assets in the United States. JPMorgan is still comfortably ahead as the largest bank in the U.S. based on total assets.

    “The big change at Bank of America is that they have gone from irresponsible growth to responsible growth,” said Mayo.

    A more conservative lending standard is just one example of the bank’s aim for sustainable growth.

    “One key aspect of Bank of America’s responsible growth is to say no and no more often,” explained Mayo. “So that when they say yes, it results in a lot more growth that’s sustainable, responsible and better for reputation.”

    BofA was unable to participate in CNBC’s coverage of this story.

    Watch the video to learn more about how Bank of America was able to achieve one of the biggest comebacks in banking history.

    [ad_2]

    Source link

  • How Bank of America came back from the brink of collapse

    How Bank of America came back from the brink of collapse

    [ad_1]

    Share

    With assets totaling more than $3 trillion, Bank of America is the second-largest bank in the U.S. today. Shares of the company have seen astonishing gains of over 290% in the last decade. But just more than a decade ago, the 2008 financial crisis pushed the bank to the brink of collapse. It was a loss so catastrophic that it required a $45 billion bailout from the U.S. Treasury. So how was Bank of America able to stage such an impressive comeback and where is it headed next?

    [ad_2]

    Source link

  • How the Fed affects the stock market

    How the Fed affects the stock market

    [ad_1]

    Share

    When members of the Federal Reserve make public statements, investors tend to listen. Over the past two decades, central bankers have consistently shared key information about the future trajectory of important inputs like interest rates. The Fed’s forward guidance on interest rates amid historic inflation has taken stock markets for a ride in 2022. As investors wait for a pivot, a panel of experts explains why many in the market choose not to fight the Fed.

    [ad_2]

    Source link

  • How the Federal Reserve affected 2022’s stock market

    How the Federal Reserve affected 2022’s stock market

    [ad_1]

    The Federal Reserve, over its more than centurylong existence, has emerged as a leading force in the stock market.

    This stature was bolstered by the central bank’s adoption of two unconventional policy tools in the 2000s – large-scale asset purchases and forward guidance.

    Large-scale asset purchases refer to the Fed’s emergency buying of government debt and mortgage-backed securities. Forward guidance refers to the central bank’s public communications about the future trajectory of monetary policies. The guidance often hints at the expected path of the federal funds interest rate target in advance of a policy change.

    Central bankers in 2022 repeatedly told the public to expect tighter economic conditions as it battles inflation. Economists believe this has contributed to months of declining prices across the S&P500.

    “I think they know they gambled and lost and that they have to do something serious in order to get inflation back under control” said Jeffrey Campbell, an economics professor at Notre Dame University and former Federal Reserve economist. “I fear that they took a gamble that inflation wasn’t too real at the beginning of 2021.”

    The Fed has reacted to hotter-than-expected inflation with seven interest rate hikes in 2022. These higher rates can weigh on publicly traded companies, particularly growth stocks in tech.

    Meanwhile, the Fed’s asset portfolio has decreased more than $336 billion since April 2022.  Experts tell CNBC that the full combined effects of this economic tightening are unknown.

    That has many people on Wall Street waiting for the central bank to pivot, and bring interest rates back down. At the same time, many financial advisors are calling for caution.

    “If you have somebody that has a thumb on the scale or has a decided advantage about what’s going to happen, whether we think good things or bad things are going to happen, it’s best not to fight that policy.” said Victoria Greene, founding partner and chief investment officer at G Squared Wealth Management.

    Nonetheless, many experts believe that central bank policy is only one piece of the puzzle. Both black swan events and investor sentiment play a massive role in shaping the trajectory of markets, too. “Sure don’t fight the Fed but … don’t believe too much that the Fed is all powerful,” said John Weinberg, policy advisor emeritus in the research department at the Federal Reserve Bank of Richmond.

    Watch the video above to learn how the Fed shaped 2022’s stock market.

    [ad_2]

    Source link