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Tag: Wall Street

  • We’re adding a new Bullpen stock, and it’s a financial Cramer has had his eye on

    We’re adding a new Bullpen stock, and it’s a financial Cramer has had his eye on

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    BlackRock CEO Larry Fink speaks during the New York Times DealBook Summit Nov. 30, 2022 in New York City. 

    Michael M. Santiago | Getty Images News | Getty Images

    Jim Cramer has been considering a potential investment in BlackRock, the world’s largest asset manager, and we’re now adding it to our Bullpen stocks-to-watch list.

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  • JPMorgan Chase is set to report third-quarter earnings – here’s what the Street expects

    JPMorgan Chase is set to report third-quarter earnings – here’s what the Street expects

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    CEO of Chase Jamie Dimon looks on as he attends the seventh “Choose France Summit”, aiming to attract foreign investors to the country, at the Chateau de Versailles, outside Paris, on May 13, 2024.

    Lucovic Marin | Getty Images

    JPMorgan Chase is scheduled to report third-quarter earnings before the opening bell Friday.

    Here’s what Wall Street expects:

    • Earnings: $4.01 a share, according to LSEG
    • Revenue: $41.63 billion, according to LSEG
    • Net interest income: $22.73 billion, according to StreetAccount
    • Trading Revenue: Fixed income of $4.38 billion, Equities of $2.41 billion, according to StreetAccount

    JPMorgan will be watched closely for clues on how banks are faring at the start of the Federal Reserve’s easing cycle.

    The biggest American bank has thrived in a rising rate environment, posting record net income figures since the Fed started hiking rates in 2022.

    Now, with the Fed cutting rates, there are questions as to how JPMorgan will navigate the change. Like other big banks, it’s margins may be squeezed as yields on interest-generating assets like loans fall faster than its funding costs.

    Last month, JPMorgan dialed back expectations for 2025 net interest income and expenses, and analysts will want more details on those projections.

    Analysts will also want to hear JPMorgan CEO Jamie Dimon’s thoughts about the upcoming U.S. election and the industry’s efforts to push back against an array of regulatory moves to rein in fees and force banks to hold more capital.

    Shares of JPMorgan have jumped 25% this year, exceeding the 20% gain of the KBW Bank Index.

    Wells Fargo is scheduled to release results later Friday, while Bank of America, Goldman Sachs, Citigroup and Morgan Stanley report next week.

    This story is developing. Please check back for updates.

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  • Warren Buffett’s BofA stock-selling spree surpasses $10 billion

    Warren Buffett’s BofA stock-selling spree surpasses $10 billion

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    Warren Buffett’s conglomerate has added another zero to its haul from a months-long selling spree of Bank of America Corp. stock.

    In its 14th round of disposals, Berkshire Hathaway Inc. eclipsed $10 billion of total proceeds from whittling its stake in the second-largest US bank, a regulatory filing on Monday shows. Buffett, 94, began paring the massive investment in mid-July, putting pressure on the stock’s price ever since.

    In the latest batch, Berkshire reaped $383 million over three trading days, as it unloaded fewer shares than in many previous rounds. Buffett’s selling has tended to trickle off when the stock’s price falls toward $39, his company’s filings show. The shares closed at $39.96 on Monday.

    Berkshire’s remaining 10.1% stake is worth about $31.4 billion at that price.

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    Katherine Doherty, Bloomberg

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  • An analyst upgraded Morgan Stanley to a buy. Why we’re not ready to follow suit

    An analyst upgraded Morgan Stanley to a buy. Why we’re not ready to follow suit

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    Bing Guan | Bloomberg | Getty Images

    Newfound optimism on Morgan Stanley helped its stock close Friday’s session at its highest level of the year. Jim Cramer is still unsure what the Club’s next move should be.

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  • Jobs report stokes Wall Street rally that erases the week’s earlier losses

    Jobs report stokes Wall Street rally that erases the week’s earlier losses

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    Wall Street soared Friday on news that employers are still hiring in strong numbers, recovering from slumps caused by fears that escalating Middle East tensions could impact global energy supply.

    • S&P 500: 5,751.07 ⬆️ up 0.90%
    • Nasdaq Composite: 18,137.85 ⬆️ up 1.22%
    • Dow Jones Industrial Average: 42,352.75 ⬆️ up 0.81% 
    • STOXX Europe 600: 518.56 ⬆️ up 0.44%
    • Hang Seng Index: 22,736.87 ⬆️ up 2.82%
    • Nikkei 225: 38,635.62 ⬆️ up 0.22%
    • Bitcoin: $62,336.70 ⬆️ up 2.62%

    US: Wall Street gains on stellar jobs report
    US employers added 254,000 jobs in September, surpassing estimates and signaling continued economic strength. The S&P 500 closed up 0.90%, and the Dow neared its record, up 0.81%. Meanwhile, the tech-heavy Nasdaq climbed 1.22% with big gains for Nvidia, Broadcom Corp. and Advanced Micro Devices.

    The news erased losses from earlier in the week, as S&P 500 finished with a 0.22% weekly gain, while the Dow added 0.09%, and the Nasdaq ticked up 0.1%.

    Europe: US jobs report lifts markets abroad
    Europe markets were mixed in early trading but gained on the U.S. jobs report. The Stoxx Europe 600 closed up 0.44% and the U.K.’s FTSE made up for losses early in the day, hovering near its Thursday close.

    China: Hong Kong rally resumes after holiday
    Hong Kong shares resumed their rally on the back of China’s stimulus measures, jumping 2.82% a day after traders took profits following a three-week rise of some 30%.

    Japan: Markets end week near where they started
    The Nikkei 225 ended a yo-yo week with a slight 0.22% gain after new Prime Minister Shigeru Ishiba outlined his economic agenda, which includes above-inflation pay raises and assistance for low-income households.

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    Brooke Seipel

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  • What a resurgence in Wall Street dealmaking means for Morgan Stanley and Wells Fargo

    What a resurgence in Wall Street dealmaking means for Morgan Stanley and Wells Fargo

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    Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC. 

    Anna Moneymaker | Getty Images

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  • Dow sets a record as Wall Street drifts to the finish of another winning week

    Dow sets a record as Wall Street drifts to the finish of another winning week

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    NEW YORK (AP) — U.S. stocks closed another record-setting week with a muted performance Friday, as hope built on Wall Street that the U.S. economy can manage the rare feat of suppressing high inflation without causing a recession.

    The S&P 500 edged down by 0.1% from its all-time high set the day before, its 42nd of the year so far. The Dow Jones Industrial Average rose 137 points, or 0.3%, to set its own record, while the Nasdaq composite slipped 0.4%.

    Treasury yields eased in the bond market after a report showed inflation slowed in August by a bit more than economists expected. It echoed similar numbers from earlier in the month about inflation, but Friday’s report has resonance because it’s the measure that officials at the Federal Reserve prefer to use.

    For more than a year, the Fed had kept its main interest rate at a two-decade high in hopes of slowing the economy enough to drive inflation toward its 2% target. Now that inflation has eased substantially from its peak two summers ago, the Fed has begun cutting rates to ease conditions for the slowing job market and prevent a recession.

    Of course, the risk of a downturn still looms. U.S. employers have slowed their hiring, and the inflation report on Friday also showed growth in U.S. consumer spending in August fell shy of economists’ expectations. That’s important because consumer spending is the main engine of the economy.

    Part of the shortfall may have been because incomes for Americans grew less in August than economists expected. As the Federal Reserve cuts interest rates, Americans will get lower interest payments on their savings accounts and other similar holdings.

    The boost that lower interest rates can give to borrowers, meanwhile, can take longer to come to fruition, “so consumption spending will likely get squeezed,” said Brian Jacobsen, chief economist at Annex Wealth Management.

    More encouraging data arrived later in the morning, when a report said sentiment among U.S. consumers is stronger than economists expected.

    On Wall Street, Costco Wholesale fell 1.8% after delivering weaker revenue in the latest quarter than analysts expected. That was even though its profit topped expectations.

    Another company that depends on people spending money, ski-resort operator Vail Resorts, sank 3.9% after reporting a larger loss for the latest quarter than analysts expected. Scant snowfalls at its Australian resorts hurt its results, and it gave a forecast for profit in its upcoming fiscal year that fell short of forecasts.

    On the winning side of Wall Street, Bristol-Myers Squibb rose 1.6% after receiving U.S. federal approval for its new approach to treat schizophrenia in adults.

    Trump Media & Technology Group climbed 5.5% following the first disclosure of a major investor selling its shares now that a restriction for insiders has lifted.

    A Florida firm owned by former contestants on “The Apprentice” dumped nearly all of its 5.5% ownership stake in TMTG, which owns former president Donald Trump’s Truth Social platform, according to a filing made with U.S. regulators on Thursday..

    Trump has said he does not plan to sell any of his shares, and he owns more than half of the company, but the stock has been shaky amid speculation about whether he may.

    All told, the S&P 500 slipped 7.20 points to 5,738.17, but it still closed out a third straight winning week and its sixth in the last seven. The Dow rose 137.89 to 42,313.00, and the Nasdaq composite lost 70.70 to 18,119.59.

    Markets overseas made bigger moves, as stocks in Shanghai rallied 2.9% to close their best week since 2008. Hong Kong’s Hang Seng jumped 3.6% to cap its best week since 1998.

    They soared following a barrage of announcements through the week from China’s central bank and government in hopes of propping up the world’s second-largest economy. Investors aren’t convinced all the stimulus will ultimately succeed, but they say they’re impressed by the size of it all following earlier piecemeal efforts.

    In the bond market, the yield on the 10-year U.S. Treasury eased to 3.75% from 3.80% late Thursday.

    The two-year Treasury yield, which moves more closely with expectations for what the Fed will do with short-term rates, fell to 3.56% from 3.63%.

    Traders are betting on a 55% probability the Fed will cut the federal funds rate by another half of a percentage point at its next meeting in November, according to data from CME Group. It usually moves rates by just a quarter of a percentage point.

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    Associated Press

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  • Wall Street braces for a turbulent October with jobs report on deck next week

    Wall Street braces for a turbulent October with jobs report on deck next week

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  • The Fed forecasts lowering rates by another half point before the year is out

    The Fed forecasts lowering rates by another half point before the year is out

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    U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., July 31, 2024. 

    Kevin Mohatt | Reuters

    The Federal Reserve projected lowering interest rates by another half point before the end of 2024, and the central bank has two more policy meetings to do so.

    The so-called “dot plot” indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 4.4% by the end of this year, equivalent to a target range of 4.25% to 4.5%. The Fed’s two remaining meetings for the year are scheduled on Nov. 6-7 and Dec.17-18.

    Through 2025, the central bank forecasts interest rates landing at 3.4%, indicating another full percentage point in cuts. Through 2026, rates are expected to fall to 2.9% with another half-point reduction.

    The central bank lowered the federal funds rate to a range between 4.75%-5% on Wednesday, its first rate cut since the early days of the Covid pandemic.

    Here are the Fed’s latest targets:

    “The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.

    The Fed officials hiked their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June.

    Meanwhile, they lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.

    — CNBC’s Jeff Cox contributed reporting.

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  • Here’s what Morgan Stanley, Wells Fargo stand to gain from lower interest rates

    Here’s what Morgan Stanley, Wells Fargo stand to gain from lower interest rates

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    Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the bank’s William McChesney Martin building on May 01, 2024 in Washington, DC. 

    Chip Somodevilla | Getty Images

    Big Wall Street banks and interest rates have a complicated relationship.

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  • How investors should play Wells Fargo stock after newly announced regulatory action

    How investors should play Wells Fargo stock after newly announced regulatory action

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    A person walks past the entrance to a Wells Fargo bank branch on Amsterdam Avenue on June 25, 2024, in New York City. 

    Gary Hershorn | Corbis News | Getty Images

    Wells Fargo’s latest regulatory hiccup isn’t a doomsday scenario.

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  • NYC bills propose sign marking Wall Street as first slave market, along with reparations study

    NYC bills propose sign marking Wall Street as first slave market, along with reparations study

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    New York City lawmakers approved legislation Thursday to study the city’s significant role in slavery and consider reparations to descendants of enslaved people.

    If signed into law, the package of bills passed by the City Council would follow in the footsteps of several other municipalities across the U.S. that have sought ways to address the country’s dark history, as well as a separate New York state commission that began working this year.

    New York fully abolished slavery in 1827. But businesses, including the predecessors of some modern banks, continued to benefit financially from the slave trade — likely up until 1866. The lawmakers behind the proposals noted that the harms caused by the institution are still felt by Black Americans today.

    “The reparations movement is often misunderstood as merely a call for compensation,” Council Member Farah Louis, a Democrat who sponsored one of the bills, told the City Council on Thursday. She explained that systemic forms of oppression are still impacting people through redlining, environmental racism and services in predominantly Black neighborhoods that are underfunded.

    The bills still need to be signed by Democratic Mayor Eric Adams. City Hall signaled his support in a statement calling the legislation “another crucial step towards addressing systemic inequities, fostering reconciliation, and creating a more just and equitable future for all New Yorkers.”

    The bills would direct the city’s Commission on Racial Equity to suggest remedies to the legacy of slavery, including reparations. It would also create a truth and reconciliation process to establish historical facts about slavery in the state.

    One of the proposals would also require that the city install an informational sign on Wall Street in Manhattan to mark the site of New York’s first slave market, which operated between 1711 and 1762. A sign was placed nearby in 2015, but Public Advocate Jumaane D. Williams, a Democrat who sponsored the legislation, said its location is inaccurate.

    The commission would work with the existing state commission, which is also considering the possibility of reparations. A report from the state panel, which held its first public meeting in late July, is expected in early 2025. The city effort wouldn’t need to produce recommendations until 2027.

    The city’s commission was created out of a 2021 racial justice initiative during then-Mayor Bill de Blasio’s administration, which also recommended the city track data on the cost of living and add a commitment to remedy “past and continuing harms” to the city charter’s preamble.

    “Your call and your ancestors’ call for reparations had not gone unheard,” Linda Tigani, executive director of the racial equity commission, said at a news conference ahead of the council vote.

    A financial impact analysis of the bills estimated that the studies would cost $2.5 million.

    New York is the latest city to study reparations. Tulsa, Oklahoma, where a notorious massacre of Black residents took place in 1921, announced a similar commission last month.

    Evanston, Illinois, became the first city to offer reparations to Black residents and their descendants in 2021, including distributing some payments of $25,000 in 2023, according to PBS. The eligibility was based on harm suffered as a result of the city’s discriminatory housing policies or practices.

    San Francisco approved reparations in February, but the mayor later cut the funds, saying that reparations should instead be carried out by the federal government. California budgeted $12 million for a reparations program that included helping Black residents research their ancestry, but it was defeated in the state’s Legislature this month.

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    The Associated Press

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  • JPMorgan, Bank of America Set 80 Hour Week Limit: Overwork | Entrepreneur

    JPMorgan, Bank of America Set 80 Hour Week Limit: Overwork | Entrepreneur

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    An 80-hour workweek means working from 8:30 a.m. to 10 p.m. six days a week — not the norm for most Americans, who log an average of 34 hours per week.

    But for some junior bankers on Wall Street, an 80-hour week maximum workweek will be a relief.

    JPMorgan Chase is now instituting a limit to working hours after new investigations showed that junior investment bankers are putting in more than 100 hours per week.

    Bank of America is also trying to enforce an 80-hours per week cap with a new time reporting tool, the Wall Street Journal reported on Wednesday, citing anonymous sources. The tool will reportedly roll out next week and ask junior bankers to log daily hours instead of weekly hours. It also asks for more detail about what the bankers are working on and which senior employees are managing them on each assignment.

    The changes come after the death of 35-year-old Bank of America junior banker Leo Lukenas III earlier this year. Lukenas joined Bank of America in 2023 as an associate and passed away in May 2024 from a blood clot in his heart. Though the coroner’s report didn’t link the death to overwork, Lukenas had reportedly been working 110-hour weeks on a $2 billion acquisition for the bank and indicated before his death that he wanted to leave because of the long hours.

    Related: JPMorgan Says Its AI Cash Flow Software Cut Human Work By Almost 90%

    A WSJ investigation in August reported that Bank of America bosses routinely pressured junior bankers to lie about the number of hours they worked, circumventing policies implemented a decade ago after the death of an investment banking intern in Bank of America’s London office.

    The 21-year-old intern, Moritz Erhardt, had epilepsy and died from an epileptic seizure. He had been working until 6 a.m. for three days in a row. Bank of America subsequently asked junior bankers to take at least four weekend days off per month and to take their yearly vacation time.

    After the investigation, Bank of America asked junior bankers to go to higher-ups or human resources if managers overworked them. The new time reporting tool is also intended to make it harder for junior bankers to downplay how many hours they spend in the office and keep managers more accountable to the bank’s limits.

    Related: Bank of America Threatens Workers Who Won’t Return to the Office With ‘Disciplinary Action’ — Read What the Letters Said

    Goldman Sachs and Morgan Stanley still have no policy limits on how many hours analysts and associates can work, but Goldman has a “protected Saturday” policy that blocks out Friday from 9 p.m. to Sunday at 9 a.m. as time off.

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    Sherin Shibu

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  • ETFs are on pace to break record annual inflows, but this wild card could change it all

    ETFs are on pace to break record annual inflows, but this wild card could change it all

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    Exchange-traded fund inflows have already topped monthly records in 2024, and managers think inflows could see an impact from the money market fund boom before year-end.

    “With that $6 trillion plus parked in money market funds, I do think that is really the biggest wild card for the remainder of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it be flows into REIT ETFs or just the broader ETF market, that’s going to be a real potential catalyst here to watch.”

    Total assets in money market funds set a new high of $6.24 trillion this past week, according to the Investment Company Institute. Assets have hit peak levels this year as investors wait for a Federal Reserve rate cut.

    “If that yield comes down, the return on money market funds should come down as well,” said State Street Global Advisors’ Matt Bartolini in the same interview. “So as rates fall, we should expect to see some of that capital that has been on the sidelines in cash when cash was sort of cool again, start to go back into the marketplace.”

    Bartolini, the firm’s head of SPDR Americas Research, sees that money moving into stocks, other higher-yielding areas of the fixed income marketplace and parts of the ETF market.

    “I think one of the areas that I think is probably going to pick up a little bit more is around gold ETFs,” Bartolini added. “They’ve had about 2.2 billion of inflows the last three months, really strong close last year. So I think the future is still bright for the overall industry.”

    Meanwhile, Geraci expects large, megacap ETFs to benefit. He also thinks the transition could be promising for ETF inflow levels as they approach 2021 records of $909 billion.

    “Assuming stocks don’t experience a massive pullback, I think investors will continue to allocate here, and ETF inflows can break that record,” he said.

    Disclaimer

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  • 3 ways Wall Street’s largest banks are leveraging AI to increase profitability

    3 ways Wall Street’s largest banks are leveraging AI to increase profitability

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    Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Tuesday, Aug. 27, 2024.

    Bloomberg | Bloomberg | Getty Images

    Big banks are jumping headfirst into the AI race.

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  • U.S. job growth revised down by the most since 2009. Why this time is different

    U.S. job growth revised down by the most since 2009. Why this time is different

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    People line up as they wait for the JobNewsUSA.com South Florida Job Fair to open at the Amerant Bank Arena on June 26, 2024, in Sunrise, Florida. 

    Joe Raedle | Getty Images

    There’s a lot of debate about how much signal to take from the 818,000 downward revisions to U.S. payrolls — the largest since 2009. Is it signaling recession?

    A few facts worth considering:

    • By the time the 2009 revisions came out (824,000 jobs were overstated), the National Bureau of Economic Research had already declared a recession six months earlier.
    • Jobless claims, a contemporaneous data source, had surged north of 650,000, and the insured unemployment rate had peaked at 5% that very month.
    • GDP as reported at the time had already been negative for four straight quarters. (It would subsequently be revised higher in the two of those quarters, one of which was revised higher to show growth, rather than contraction. But the economic weakness was broadly evident in the GDP numbers and ISMs and lots of other data.)

    The current revisions cover the period from April 2023 to March, so we don’t know whether current numbers are higher or lower. It may well be that the models used by the Bureau of Labor Statistics are overstating economic strength at a time of gathering weakness. While there are signs of softening in the labor market and the economy, of which this could well be further evidence, here’s how those same indicators from 2009 are behaving now:

    • No recession has been declared.
    • The 4-week moving average of jobless claims at 235,000 is unchanged from a year ago. The insured unemployment rate at 1.2% has been unchanged since March 2023. Both are a fraction of what they were during the 2009 recession.
    • Reported GDP has been positive for eight straight quarters. It would have been positive for longer if not for a quirk in the data for two quarters in early 2022.

    As a signal of deep weakness in the economy, this big revision is, for now, an outlier compared to the contemporaneous data. As a signal that job growth has been overstated by an average of 68,000 per month during the revision period, it is more or less accurate.

    But that just brings average employment growth down to 174,000 from 242,000. How the BLS parcels out that weakness over the course of the 12-month period will help determine if the revisions were concentrated more toward the end of the period, meaning they have more relevance to the current situation.

    If that is the case, it is possible the Fed might not have raised rates quite so high. If the weakness continued past the period of revisions, it is possible Fed policy might be easier now. That is especially true if, as some economists expect, productivity numbers are raised higher because the same level of GDP appears to have occurred with less work.

    But the inflation numbers are what they are, and the Fed was responding more to those during the period in question (and now) than jobs data.

    So, the revisions might modestly raise the chance of a 50 basis-point rate reduction in September for a Fed already inclined to cut in September. From a risk management standpoint, the data might add to concern that the labor market is weakening faster than previously thought. In the cutting process, the Fed will follow growth and jobs data more closely, just as it monitored inflation data more closely in the hiking process. But the Fed is likely to put more weight on the current jobless claims, business surveys, and GDP data rather than the backward looking revisions. It’s worth noting that, in the past 21 years, the revisions have only been in the same direction 43% of the time. That is, 57% of  the time, a negative revisions is followed the next year by a positive one and vice versa.

    The data agencies make mistakes, sometimes big ones. They come back and correct them often, even when it’s three months before an election.

    In fact, economists at Goldman Sachs said later Wednesday that they think the BLS may have overstated the revisions by as much as half a million. Unauthorized immigrants who now are not in the unemployment system but were listed initially as employed amounted for some of the discrepancy, along with a general tendency for the initial revision to be overstated, according to the Wall Street firm.

    The jobs data could be subject to noise from immigrant hiring and can be volatile. But there is a vast suite of macroeconomic data that, if the economy were tanking like in 2009, would be showing signs of it. At the moment, that is not the case.

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  • Bernstein analyst finally likes PayPal after correctly staying on sidelines for 3 years

    Bernstein analyst finally likes PayPal after correctly staying on sidelines for 3 years

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  • Bill Ackman’s IPO of Pershing Square closed-end fund is postponed, NYSE says

    Bill Ackman’s IPO of Pershing Square closed-end fund is postponed, NYSE says

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    Bill Ackman, founder and CEO of Pershing Square Capital Management.

    Adam Jeffery | CNBC

    Billionaire investor Bill Ackman is postponing the highly scrutinized listing of Pershing Square’s U.S. closed-end fund, according to a notice on the New York Stock Exchange’s website.

    The initial public offering of Pershing Square USA Ltd., with the ticker PSUS, has been delayed until a date to be announced, according to the website. Ackman is now looking to raise $2.5 billion to $4 billion for the fund, well short of the $25 billion target from a few weeks ago, according to a regulatory filing dated Thursday.

    Pershing Square declined to comment further. The firm issued a statement “to clarify press reports,” saying that it is proceeding with its initial public offering “with the date of the pricing to be announced.”

    Closed-end funds sell a set number of shares during their IPO, and they trade on market exchanges after their debut. The price of the fund does not necessarily match the shares’ net asset value, so the fund may trade at a premium or a discount.

    “There is enormous sensitivity to the size of the transaction,” Ackman said in a July 24 letter to investors that was included in the filing. “Particularly in light of the novelty of the structure and closed end funds’ very negative trading history, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognize that this closed end company will trade at a premium after the IPO when very few in history have done so.”

    Pershing Square had $18.7 billion in assets under management at the end of June. Most of its capital is in Pershing Square Holdings, a $15 billion closed-end fund that trades in Europe. Ackman is seeking to offer a similar closed-end fund listed on the New York Stock Exchange, a move that could pave the way for an IPO of his management company.

    The public listing of Ackman’s fund is seen as a move to leverage his following among Main Street investors after he accumulated more than one million followers on social media platform X, commenting on issues ranging from antisemitism to the presidential election. The publicly traded closed-end fund is expected to invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America.

    In the roadshow presentation that he made public, Ackman highlighted the challenge in managing traditional hedge funds that investors can yank their money out of any time, which can result in constant fundraising and soothing of investors. The advantage of managing permanent capital is that it makes him more focused on the portfolio and gives him the ability to take a long-term approach in investments.

    “If you want to be a long-term investor in businesses, the challenge of managing a portfolio where money can come and might go is significant. Action can have a significant negative impact on one’s returns,” Ackman said.

    — CNBC’s Leslie Picker contributed reporting.

    Don’t miss these insights from CNBC PRO

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  • Investment banking is back — and the recovery is just getting started

    Investment banking is back — and the recovery is just getting started

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    A combination file photo shows Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America and Goldman Sachs.

    Reuters

    Investment banking was the rock star of big bank earnings this season.

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  • Our 5 top-performing stocks since June’s monthly meeting (only one is Big Tech)

    Our 5 top-performing stocks since June’s monthly meeting (only one is Big Tech)

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    A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange in New York City, U.S., June 12, 2024. 

    Brendan Mcdermid | Reuters

    It’s been another great run for stocks since the Club’s last monthly meeting in June.

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