Raphael Stevens

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    The rich world’s housing crunch is far from over

    At times during the long boom that followed the global financial crisis of 2007-09, it seemed as if house prices would never stop rising. Sales surged as a cocktail of ultra-low interest rates and supply shortages boosted competition for properties. Things are very different today. In countries across the rich world, from America to New Zealand, sales have cratered over the past year, as central banks have embarked on the sharpest monetary-policy tightening cycle in four decades. In almost all major markets prices are now heading in the wrong direction, too, at least from the perspective of homeowners. Yet with the bulk of central banks’ rate rises behind them, many in the property industry are beginning to wonder if the worst may soon be over. In March both America’s Federal Reserve and the Bank of England raised benchmark rates by a mere quarter of a percentage point. Markets are pricing in at most one more rise from each. The world economy has so far proved resilient to the stress of tighter policy, even as a handful of commercial banks have gone to the wall. This has given investors and many homeowners hope that prices may soon be reaching a trough. Perhaps the long-feared housing crunch will turn out to be less terrible than expected.It may be a little early for such optimism, however. Just as rate rises took time to hit property markets, so any relief will come with a delay. Cushions that have thus far softened the blow are starting to look threadbare. Although fixed-rate mortgages, which protect holders from increased borrowing costs, are more common outside America than used to be the case, most are fixed for relatively short periods. In Britain, for instance, nearly half the fixed-rate stock is fixed for no more than two years—more than two-fifths of mortgage-holders will move to new terms this year. Meanwhile, piles of excess savings built up in the pandemic no longer provide as much protection, having been drawn down in the years since. Surveys suggest lower-income households in the euro zone have largely exhausted their buffers.When assessing how far prices have left to fall, the rich world can be divided into three camps. Start with the early adjusters, which include Australia, Canada, New Zealand and Sweden. In many of these countries, central bankers were quick to respond to inflation. They saw house prices soar in the pandemic, as buyers gorged on cheap credit, taking out mortgages mostly on variable-rate terms. According to the OECD, a rich-country club, prices have dropped by 14% in Sweden and New Zealand since peaking. In Australia they have fallen by 9%. The country’s central bank did not raise rates until May, but households entered the period with lots of debt, which sat at an average of more than 200% of net disposable income in 2021, making them more exposed to higher interest costs. Goldman Sachs, a bank, forecasts eventual drops, relative to peaks, of 19% in New Zealand, 17% in Sweden and 15% in Australia, suggesting a bit more pain is still to come in these countries.Next are the bullet-dodgers. The most prominent member of this camp is America, where homeowners are largely insulated from aggressive tightening by fixed-rate mortgages, which often last for two or three decades. After the subprime-lending crisis starting in 2007, regulators pushed borrowers in the direction of such loans, which are less likely to experience mass defaults and thus blow up the financial system. According to Goldman, America has already seen half of its predicted peak-to-trough drop of just 5%. Meanwhile, France, where prices held up in 2022, is predicted to experience an even more paltry drop of 4%. The country benefits from low household debt, which sat at an average of just 124% of net disposable income in 2021. Then there are the slow movers, which have not yet been hit hard, but which are unlikely to escape the pain. In Britain, house prices have already fallen by 5%, but worse may be to come: Capital Economics, a consultancy, forecasts a 12% peak-to-trough fall. The country’s homebuilders are sounding the alarm. Many are holding off on developing new homes; some are dangling cash to incentivise buyers. Persimmon, Britain’s second-biggest builder, even offered to pay mortgages for up to ten months, in an attempt to prop up demand. It is a similar situation in other parts of Europe. The German Property Federation, an industry group, predicts that just 245,000 apartments will be finished in Germany this year, falling well short of the government’s target of 400,000.Since slumping prices across the rich world have been driven in large part by higher interest rates, they are unlikely to make housing more affordable. Those who want to get on the property ladder face eye-watering monthly payments. In Canada, one of the early adjusters, the average buyer of a detached home now needs to spend nearly 70% of their pre-tax household income on mortgage payments, property taxes and utility bills, according to the Royal Bank of Canada, up from 46% at the start of 2020. Falling prices will always make homeowners unhappy. This time around even would-be buyers have little to cheer. ■ More

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    BofA reports inflows into global stocks are on a record-setting pace — and ETFs may be a way to play the hot trade

    There’s a corner of the market gaining traction among ETF investors, according to The ETF Store’s Nate Geraci.
    The firm’s president finds international ETFs are experiencing stronger inflows.

    “There is a little bit of performance chasing going on here, because broad international stocks have fairly significantly outperformed U.S. stocks since about the beginning of the fourth quarter of last year,” he told CNBC’s “ETF Edge” this week. “Investors are looking at that performance and perhaps reallocating there.”
    BofA Global Research’s latest market data out late this week appears to support Geraci’s thesis. It shows emerging markets are seeing strong inflows so far this year.
    According to the firm, inflows into emerging-market equities are clipping along at $152.3 billion on an annualized basis. This would mark the group’s largest ever inflows if the pace continues.
    Geraci believes a weakening U.S. dollar due to a potential pivot away from interest rate hikes by the Federal Reserve is partially responsible for the shift. The U.S. Dollar Currency Index is down almost 1% year to date.
    Valuations of overseas companies may also be more attracting investors, he added.

    And, there may be even more growth ahead.
    D.J. Tierney of Schwab Asset Management contends retail investors don’t own enough global stocks. He suggests the upside will continue into the second quarter, which starts Monday.
    “Rebalancing [to international stocks] to get some more exposure could make sense for a lot of investors,” said the senior investment portfolio strategist.
    His firm’s Schwab International Equity ETF, which tracks large- and mid-cap companies in over 20 developed global markets, is up 8.1% so far this year.

    Disclaimer More

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    San Francisco Fed leader Daly likely not a major player in SVB saga, officials say

    San Francisco Fed President Mary Daly’s district oversaw the second-largest bank failure in U.S. history.
    Fed officials past and present said regional presidents can be more or less involved in monitoring their biggest banks, but the key decisions about policy and enforcement would have been taken in Washington.
    The failure of Silicon Valley Bank raised significant questions about the Fed’s bank supervision and its failure to act more forcefully on problems it had previously identified.

    San Francisco Fed President Mary Daly, whose district saw the second-largest bank failure in U.S. history and who has become a target of criticism, would not have typically been a key player in Silicon Valley Bank’s supervision, several former and current Fed officials told CNBC.
    A highly centralized design to the Fed’s oversight of large banks such as SVB with assets over $100 billion put supervision under the staff and leadership of the Federal Reserve Board of Governors in Washington.

    Regional Fed presidents can be more or less involved in monitoring their biggest banks, these officials said, but the key decisions about policy and enforcement would have been taken in Washington, not by Daly.
    “She was not in the chain of command,” one former Fed bank president told CNBC. “Supervisory action taken by the San Francisco Fed staff would have been cleared by Washington.”
    Daly and Fed board officials declined to comment for this report. The officials who spoke to CNBC requested anonymity so they could speak candidly on the issue.

    Washington takes the lead

    Regional bank presidents and the supervisory staff directly supervise smaller community banks with assets under $100 billion.
    But while the examiners for big banks who work in the regional offices are hired and can be fired by the regional bank presidents, the bulk of their reporting is overseen by the board in Washington.

    The failure of SVB earlier in March sent shock waves through the banking industry and ignited fears of bank runs on mid- and small-size banks.
    Data shows hundreds of billions of dollars have poured out of smaller banks, with some going to larger banks, and hundreds of billions of dollars more leaving the banking system and ending up in money market mutual funds.
    It raised significant questions about the Fed’s bank supervision and its failure to act more forcefully on problems it had previously identified, including a concentrated deposit base and poorly managed interest rate duration risk.
    The House and Senate both held hearings this week on the matter, with Republicans accusing Daly and the San Francisco bank of focusing more on the risk of climate change than financial risk.
    “The San Francisco Fed was focused on researching left-wing policies that they had absolutely no expertise in, ignoring one of the most basic risks in banking-interest rate risks,” said Tennessee Republican Sen. Bill Hagerty.

    Talk, but no action

    In response, Michael Barr, the Fed vice chair for supervision, largely acknowledged how the board was at the center of supervision where local examiners report up to the board, saying, “The examiners at the San Francisco Federal Reserve Bank called those issues out to the board, called them out to the bank … and those actions were not acted upon in a timely way.”
    SVB experienced massive growth in 2020 and 2021 and moved into the category of Large Bank Organizations, where the bulk of the supervision was handled by examiners in the San Francisco Fed who reported mostly to Washington.

    San Francisco Federal Reserve President Mary Daly reacts at the Los Angeles World Affairs Council Town Hall, Los Angeles, California, U.S., October 15, 2019.
    Ann Saphir | Reuters

    One former Fed official said Washington sets the strike zone for banks by setting policy, and local examiners figure out whether the bank is meeting those policy requirements.
    In the case of SVB, supervisors issued seven Matters Requiring Attention or Matters Requiring Immediate Attention in regard to its liquidity and interest-rate risk.
    Officials said these MRA or MRIAs would have been approved by Washington. In the summer of 2022, the bank’s rating was lowered to “fair” and its governance rated as “deficient.”
    The bank was said to be not well-managed and it was subjected to growth restrictions. It’s unknown whether examiners pushed Washington for harsher action.
    But regulators did not take more severe steps available to them, including fines, cease-and-desist orders or enforcement actions, which would have been public.

    Conflict of interest

    Former Fed officials interviewed by CNBC said they had experienced instances of frustration when they pushed Washington to act faster or more forcefully in regard to a bank but their complaints had little impact.
    It is not known if Daly urged Washington to take any action.
    The president of SVB sat on the board of directors of the San Francisco Fed, and one Fed official said regional Fed presidents are prohibited from involvement with supervision regarding members of their board.
    However, if the case was severe, Daly could have asked the SVB executive to resign from the board, one former official said.
    The failure of SVB raises significant questions about the Fed’s supervisory structure: Should more authority be delegated to regional presidents? Does the Fed at its highest levels place enough priority on supervision compared to monetary policy?
    One former official told CNBC that Daly is unlikely to emerge blameless in the ongoing review.
    But the official said there’s no way to say she was making the most important decisions surrounding the bank’s failure. A review of what went wrong will likely point more heavily to Washington, its supervisory bureaucracy and the board leadership than to San Francisco.

    Clarification: Fed Vice Chair of Supervision Michael Barr was referring to the SVB board of directors when he spoke of examiners calling out issues with the bank to the “board.” An earlier version was unclear on the reference. For a bank such as SVB, local examiners are charged with making day-to-day decisions based on a supervisory framework set out by the Fed Board of Governors and consult with board staff on consequential decisions. More

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    Here’s what went wrong with Virgin Orbit

    Virgin Orbit is on the brink of bankruptcy, with its valuation tumbling from nearly $4 billion in 2021 to less than $100 million today.
    While it touted a flexible approach to launching small satellites, the Richard Branson-backed company was unable to reach the rate of launches necessary to generate enough revenue.
    CNBC collected insights from company insiders and investors over the past several weeks to explain where things went wrong for Virgin Orbit.

    Virgin Orbit crew poses at the opening bell ceremony as a 70 foot model rocket with satellites is placed in front of the NASDAQ in Times Square of New York City, United States on January 7, 2022.
    Tayfun Coskun | Anadolu Agency | Getty Images

    Not too long ago, Virgin Orbit was in rarified air among U.S. rocket builders, and executives were in New York celebrating its public stock debut.
    The scene was true to the marketing pizazz that has helped Sir Richard Branson build his Virgin empire of companies, showcasing with a rocket model in the middle of Times Square.

    The deal, facilitated by a so-called blank check company, gave Virgin Orbit a valuation of nearly $4 billion. But that moment in December 2021 – when the craze surrounding public offerings centered on special purpose acquisition companies, or SPACs, was dying out – previewed the pain to come.
    Now, Virgin Orbit is on the brink of bankruptcy. The company on Thursday halted operations and laid off nearly all of its staff. Its stock was trading around 20 cents Friday, leaving it with a market value of about $74 million.
    When Virgin Orbit closed its SPAC deal, it raised less than half of the nearly $500 million expected due to high shareholder redemptions, shortening its runway. With the broader markets turning against riskier yet-unprofitable assets like many new space stocks, Virgin Orbit shares began a steady slide, further limiting its ability to raise substantial outside investment.
    Branson, Virgin Orbit’s largest stakeholder, was unwilling to fund the company further, as CNBC previously reported. Instead, he began hedging against his 75% equity stake through a series of debt rounds. That debt gives the flashy British billionaire first priority of Virgin Orbit assets in the event of the now-impending bankruptcy.
    While Virgin Orbit touted a flexible and alternative approach to launch small satellites, the company was unable to reach the rate of launches necessary to generate the revenue it sorely needed.

    Sign up here to receive weekly editions of CNBC’s Investing in Space newsletter.

    Virgin Orbit’s technical staff acquitted themselves well over the company’s brief existence, but were ultimately undone in by its leaders’ financial mismanagement. It’s a story too often told in the history of the space industry: Exciting, or even innovative, technologies do not necessarily equal great businesses.
    It became one of a few U.S. rocket companies to successfully reach orbit with a privately developed launch vehicle. It launched six missions since 2020 — with four successes and two failures — through an ambitious and technically difficult process known as “air launch,” with a system that uses a modified 747 jet to drop a rocket mid-flight and send small satellites into space.
    But Virgin Orbit had dug a nearly $1 billion hole, flying missions just twice a year while its payroll expenses climbed. The company’s leadership was aware of the deteriorating situation and lack of progress, and even considered changes last summer to make the business more lean. But no clear or dramatic plan came to fruition – leading to Thursday’s fall.
    This story collects insights from CNBC’s discussions with company insiders and industry investors over the past several weeks, as well as from regulatory disclosures, to explain where things went wrong for Virgin Orbit. Those people asked to remain anonymous in order to discuss internal or competitive matters.
    A Virgin Orbit spokesperson declined to comment for this story.

    Lacking execution

    The company’s 747 jet “Cosmic Girl” releases a LauncherOne rocket in mid-air for the first time during a drop test in July 2019.
    Greg Robinson / Virgin Orbit

    Virgin Orbit was spun-off from Branson’s space tourism company, Virgin Galactic, in 2017, after a team within the latter sister company saw potential in using an aircraft as a platform to launch satellites. While “air launching” satellites was not a novel idea to Virgin Orbit, the company aimed to surpass the air-launched Pegasus rocket – developed by Orbital Sciences, which is now owned by Northrop Grumman –for a fraction of the cost per mission.
    Headquartered in Long Beach, California, Virgin Orbit flew most of its missions out of the Mojave Air and Space Port. The exception to that was its most recent launch, which took off from Spaceport Cornwall in the United Kingdom. Virgin Orbit had been working with other governments to provide launches by flying out of airports around the world, signing agreements with Japan, Brazil, Australia and the island of Guam.
    The advertised flexibility and potential of Virgin Orbit’s approach attracted quite a bit of attention from leaders in the U.S. national security community. Following meetings with top Pentagon brass in 2019, Branson proclaimed that Virgin Orbit is “about the only company in the world that could replace [satellites] in 24 hours” during a military conflict.
    At the time, the Air Force’s acquisition lead, Will Roper, said he was “very excited about small launch” after meeting with Branson. He said the U.S. military had “huge money to invest” in buying rocket launches.
    The company had hoped to launch its debut mission as early as 2018, but that goal kept moving every six months or so. Eventually, Virgin Orbit launched its first mission in May 2020, which failed shortly after the rocket was released from the jet. It got to orbit successfully for the first time in January 2021.
    Given the company’s burn rate near $50 million a quarter, Virgin Orbit was targeting profitability once it got beyond a launch rate, or cadence, of a dozen missions per year. When it went public, Virgin Orbit CEO Dan Hart told CNBC that the company was aiming to launch seven rockets in 2022, to build on that momentum.
    At the same time, Virgin Orbit was already in a deep financial hole – with a total deficit of $821 million at the end of 2021, due to steady losses since its inception. While Virgin Orbit had aimed to launch seven missions last year, that number was steadily guided down quarter after quarter, closing out 2022 with just two completed lunches – the same as the year before.
    Some people within the company who had been critical of Virgin Orbit’s execution pointed to several executives’ backgrounds at Boeing, which has had its share of space-related snags over the years.
    Virgin Orbit CEO Dan Hart had spent 34 years at Boeing, where he was previously the vice president of its government space systems. COO Tony Gingiss joined Virgin Orbit from satellite broadband company OneWeb, but before that had spent 14 years in Boeing’s satellite division. And Chief Strategy Officer Jim Simpson had also spent more than eight years in Boeing’s satellite division before joining Virgin Orbit.
    As one person emphasized, the company launched the same amount of rockets in a year with a staff of 500 as it did with a workforce of over 750 people. Others complained of a lack of cross-department coordination, with projects and spending done in silo of each other – leading to a disconnect in schedules.
    Two people mentioned wastefulness in ordering materials. For example: The company would buy enough expensive items with limited shelf-life to build a dozen or more rockets, but then only build two, meaning it would have to throw away millions of dollars’ worth of raw materials away.
    When Virgin Orbit announced an employee furlough March 15, people familiar with the situation said the company had about half a dozen rockets in various states of production in its Long Beach factory.
    As the lack of a financial lifeline made the situation increasingly more desperate, multiple Virgin Orbit employees voiced frustration with how Hart communicated the company’s position – and even more so with the lack of clarity after the furlough.
    The day of the initial pause in operations, people described company leadership running around frantically while many employees stood around waiting for word on what was happening. One person emphasized the tumultuous and sudden furlough happened because executives tried to keep the company alive as long as possible. Several employees expressed disappointment with Hart holding the March 15 all-hands meeting virtually, speaking from his office rather than face-to-face, and not taking any questions after announcing the pause in operations.
    That frustration continued after the pause, with employees confused by the lack of specifics about which investors were speaking to Virgin Orbit leadership. Thursday’s update that a deal fell through came as little surprise to a workforce that was largely in limbo. Many were already hunting for new jobs.

    Deal efforts fall apart

    The rocket for the company’s second demonstration mission undergoing final assembly at its factory in Long Beach, California.
    Virgin Orbit

    A pivot in Virgin Orbit’s strategy became apparent and necessary shortly after it went public.
    Virgin Orbit aimed to raise $483 million through its SPAC process, but significant redemptions meant it raised less than half of that, bringing in $228 million in gross proceeds. The funds it did raise came from the minority of SPAC shareholders who stuck around, as well as private investments from Virgin Group, the Emirati sovereign wealth fund Mubadala, Boeing, and AE Industrial Partners.
    Unlike its sister company Virgin Galactic, which built its cash reserves to more than $1 billion through stock and debt sales after going public in October 2019, Virgin Orbit did not build its cash coffers. And that meant leadership should have buckled down and made changes to run the company in a more lean way, one person emphasized, to rebuild momentum.
    And then Virgin Orbit’s apparent strength in the national security sector began to falter. Despite half of its missions flying Space Force satellites, the company lost out to competitor Firefly Aerospace for a launch contract under the “Tactically Responsive Space” program. Awarded in October, the mission seemed right up Virgin Orbit’s alley, especially since the prior mission under that Space Force program flew on the similarly air-launched Pegasus rocket.
    As the financial situation worsened, a few bankers who spoke to CNBC wondered why the search for a deal was dragging on. According to one banker, Virgin Orbit could raise anywhere from $10 million to $15 million quickly to stop-gap the situation while it found a larger buyer. Another investor estimated that Virgin Orbit had about $270 million in net tangible assets, further sweetening the potential for a wholesale deal even despite its plunging market value.
    A white knight seemed to appear last week in the form of Matthew Brown, who discussed making an 11th-hour deal with Virgin Orbit, to reportedly inject as much as $200 million into the company. However, within days, the talks fell apart. The company continued to discussions with another, unnamed investor this past week.
    But in the words of Hart on Thursday, Virgin Orbit was “not been able to secure the funding to provide a clear path for this company.”
    And while the 675 employees laid off Thursday likely have strong job prospects, Virgin Orbit seems now destined for bankruptcy. More

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    Judge rejects Fox motions, allows Dominion’s $1.6 billion defamation suit to go to trial

    A Delaware judge said Dominion’s defamation lawsuit against Fox can move to a trial in April after rejecting all of Fox’s motions and some of Dominion’s.
    Fox and Dominion met before the judge last week, each urging for the court to make a ruling on their behalf and bypass a trial.
    The judge said he would not make a ruling on Dominion’s argument that Fox acted with malice as several of its hosts helped spread pro-Trump election conspiracy theories.

    Members of Rise and Resist participate in their weekly “Truth Tuesday” protest at News Corp headquarters on February 21, 2023 in New York City. 
    Michael M. Santiago | Getty Images News | Getty Images

    A Delaware judge on Friday said Dominion Voting’s $1.6 billion defamation lawsuit against Fox Corp. and its networks could go to trial in April.
    Judge Eric Davis of Delaware’s Superior Court rejected Fox’s arguments that it should bypass a trial since it’s protected by the First Amendment. The judge granted some of the voting machine maker’s motions, with the exception of its argument that Fox and its hosts acted with malice in broadcasting false claims about the 2020 presidential election between Donald Trump and Joe Biden.

    The ruling comes more than a week after Fox and Dominion’s attorneys met before Davis over two days in Delaware, urging him to make a ruling rather than go to trial with jury in mid-April.
    “We are gratified by the Court’s thorough ruling soundly rejecting all of Fox’s arguments and defenses, and finding as a matter of law that their statements about Dominion are false. We look forward to going to trial,” Dominion said late Friday afternoon.
    Fox also weighed in on the judge’s ruling.
    “This case is and always has been about the First Amendment protections of the media’s absolute right to cover the news. FOX will continue to fiercely advocate for the rights of free speech and a free press as we move into the next phase of these proceedings,” the company said.
    Dominion brought its lawsuit against Fox News and Fox Business, as well as their parent Fox Corp., in 2021, arguing the channels and their hosts pushed false claims that its voting machines were rigged in the 2020 election that saw Biden triumph over Trump. The former president, who was indicted Thursday in an unrelated criminal matter, has repeatedly made false claims about the election being rigged against him.

    Last year, as part of Dominion’s evidence gathering, the company deposed executives at both Fox Corp. — including Chairman Rupert Murdoch and his son and Fox CEO Lachlan Murdoch — and Fox News, as well as the top hosts on the network. In recent weeks, a trove of evidence has been released as part of the case, showing the hosts, as well as Rupert Murdoch, were skeptical of the election fraud claims being made on air.
    Dominion has argued Fox defamed the company, affecting its business, and acted with malice. Fox has argued it was reporting on newsworthy allegations, at the time stemming from Trump and attorneys, and is protected by the First Amendment.
    The judge pointed to the statements regarding election fraud, that Dominion manipulated vote counts through software and algorithms, that it was founded in Venezuela to rig elections on behalf of late dictator Hugo Chavez, and that it paid kickbacks to government officials who used the machines in the election – all of which were said on air on Fox – to be defamatory.
    “The statements also seem to charge Dominion with the serious crime of election fraud. Accusations of criminal activity, even in the form of opinion, are not constitutionally protected,” Davis said in court papers.
    While the judge on Friday granted summary judgement on some of Dominion’s arguments, including defamation, he didn’t grant one on actual malice.
    In order to win a defamation case, a plaintiff needs to prove that the individual or business they are suing knowingly made false statements that caused harm, and that it acted with “actual malice,” meaning the speaker knew or should have known what they were saying to be untrue.
    In the evidence released in recent weeks, internal text messages and emails between Fox executives and its hosts have shown they were skeptical of the claims being made on air. Still, Dominion argues, Fox continued to host guests such as Trump attorneys Rudy Giuliani and Sidney Powell, who repeated erroneous claims of election fraud.
    Fox argued last week in court that the basis of its case was “whether the press accurately reports the allegations, not whether the underlying allegations are true or false.” Attorneys have built the media company’s case around the notion that “any reasonable viewer” of the news would be able to discern what was allegations or facts on Fox’s networks.
    In Friday’s opinion, Davis, the judge, aid there was “no clear and convincing evidence of actual malice.” Instead, Davis said it is a matter a jury should decide.
    Similarly, on Fox’s arguments against the $1.6 billion in damages Dominion is seeking in this case, Davis said the matter is for a jury to decide – including the calculation of how much the damages should be.
    The trial, which is expected to last for weeks, is set to begin on April 17, with a pre-trial conference and jury selection taking place the week before.
    Dominion is requesting Fox’s top hosts, including Tucker Carlson, Sean Hannity, Maria Bartiromo and Jeanine Pirro, as well as former host Lou Dobbs and Fox News CEO Suzanne Scott, appear on the stand for questioning. The depositions of both Murdochs, as well as other Fox Corp. executives, are to be included in the trial, too.
    Former Fox producer Abby Grossberg was also added to Dominion’s witness list. Grossberg, who worked on the shows of Bartiromo and Carlson, filed a lawsuit against Fox alleging she was coerced into providing misleading testimony as part of the Dominion lawsuit.
    Read the ruling. More

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    Stocks making the biggest moves midday: Bed Bath & Beyond, Digital World Acquisition, Nikola and more

    An exterior view of a Bed Bath & Beyond store on February 7, 2023 in Clifton, New Jersey.
    Kena Betancur | Corbis News | Getty Images

    Check out the companies making headlines in midday trading.
    Bed Bath & Beyond — Shares continued to slide in Friday’s session with a 28% tumble. On Thursday, the company once again warned that it may need to file for bankruptcy protection if its proposed $300 million stock offering fails. The retailer’s stock has lost nearly 40% of its share value this week.

    related investing news

    Digital World Acquisition — Shares of the SPAC linked to former President Donald Trump advanced 7.6%. On Thursday, a New York grand jury formally indicted Trump on charges related to “hush money” payments made before his 2016 campaign.
    Nikola — Nikola shares sank 13.6% after the electric-truck maker announced plans for a $100 million secondary stock offering priced 20% below Thursday’s close.
    Virgin Orbit — The satellite launch services provider dived 41.2% after announcing it will halt operations “for the foreseeable future” and eliminate about 90% of its workforce.
    BlackBerry — BlackBerry popped 14% after the company posted a smaller per-share earnings and adjusted EBITDA loss than analysts polled by StreetAccount expected for the fourth quarter. The company’s revenue, however, missed analyst expectations.
    Regional banks — Shares of closely followed regional bank stocks advanced, with the SPDR S&P Regional Banking ETF (KRE) up 1%. Metropolitan Bank led the index with a 33.6% jump. PacWest and Popular were also among top performers, adding more than 3% and 4%, respectively. Zions, on the other hand, was among the worst performers of the group with a 1.2% loss.

    Ventas — The real-estate investing stock slid 1.5% after announcing it would take ownership of collateral supporting a nearly half-billion dollar loan.
    Generac Holdings — The battery backup company dropped 3.5% following a downgrade to underperform from neutral by Bank of America. The firm said Generac’s fiscal year 2023 expectations could be out of reach.
    Alphabet — The Google parent gained 2.8% after Piper Sandler reiterated its overweight rating on the stock. The firm said the company has undeniable market share but could see search revenues impacted by artificial intelligence.
    Restaurant Brands — Shares of the parent company of Burger King rallied 2.9% after TD Cowen upgraded the stock to outperform from market perform. The Wall Street firm said it’s bullish on Restaurant Brands’ new chairman and CEO and the company’s potential to turn around the brand.
    elf Beauty — The cosmetic company’s stock gained 4.4%, reaching a 52-week high. Shares jumped after Morgan Stanley said elf has nearly 20% upside. The analyst said the company has strong momentum on both near- and long-term growth and reiterated his overweight rating on the stock.
    Mercadolibre — Shares rose 4.1% after Morgan Stanley named the Latin American e-commerce company a top pick. The firm said it sees multiple growth drivers ahead.
    — CNBC’s Samantha Subin, Yun Li and Hakyung Kim contributed reporting More

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    Nikola shares sink after its $100 million stock offering priced at 20% below market

    Nikola on Thursday announced plans for a $100 million secondary stock offering.
    The offering priced at a 20% discount to Thursday’s close, pushing the truck maker’s shares lower on Friday morning.

    Nikola Motor Company
    Source: Nikola Motor Company

    Electric heavy-truck maker Nikola said that its planned $100 million secondary stock offering, announced on Thursday after U.S. markets closed, has priced at $1.12 per share – 20% below the stock’s Thursday closing price of $1.40.
    Nikola’s shares closed on Friday at $1.21, down over 13%.

    related investing news

    Even with the discount, there appears to have been very limited interest in the shares on Wall Street. Nikola’s underwriter, Citigroup, was only able to place about a third of the shares with its clients. An unnamed private investor has agreed to buy the remainder directly from Nikola, the truck maker said.
    Nikola plans to use the money raised for working capital and other general purposes. The company is preparing to launch a new long-range electric semitruck powered by hydrogen fuel cells later this year. The new truck will complement Nikola’s shorter-range Tre battery-electric heavy truck, which began shipping last year.
    Nikola had $233.4 million in cash and equivalents available as of Dec. 31. The truck maker lost $222.1 million in the fourth quarter of 2022. More

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    Sen. Elizabeth Warren says she wants to make banking boring again

    “What I want to do is get banking back where it ought to be, and that is boring,” Sen. Elizabeth Warren said Friday morning on “Squawk on the Street.”
    In the weeks since the collapse of Silicon Valley Bank and Signature Bank, Warren has authored or sponsored three new bills related to bank oversight.
    Banking should not be an industry that attracts risk-takers, Warren said.

    Sen. Elizabeth Warren wants banking to be “boring” again following the failures of Silicon Valley Bank and Signature Bank.
    “What I want to do is get banking back where it ought to be, and that is boring,” Warren, D-Mass., said Friday morning on CNBC’s “Squawk on the Street.” “Banking is supposed to be there for putting your money in and you can count on it’s going to be there, and that’s true if you’re a family, that’s true if you’re a small business.”

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    Warren said the problem started under the Trump administration, when bank CEOs lobbied Congress to weaken regulation for regional and midsized banks. Silicon Valley Bank was among those who lobbied for the changes, Warren pointed out, noting the bank’s profits surged in the years regulations were loosened.
    During a hearing this week, Warren, a longtime critic of the financial industry, pressed the nation’s top banking regulators on how SVB and Signature were able to fail practically overnight earlier this month. Financial regulators shuttered the two banks, citing systematic contagion fears, after negative news triggered bank runs. The failed banks disproportionately serviced startup and cryptocurrency companies.
    The incident marked the largest U.S. banking failures since the 2008 financial crisis, and the second- and third-biggest bank failures in U.S. history.
    In the weeks since the collapse of the banks, Warren has authored or sponsored three new bills related to bank oversight.
    The first would reverse a Trump-era bill that weakened oversight of medium-sized banks. The second would create an inspector general position within the Federal Reserve, and the third would prohibit executives at publicly traded companies from selling stock options for three years.

    U.S. Senator Elizabeth Warren (D-MA) is interviewed on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 31, 2023. 
    Andrew Kelly | Reuters

    “What we want to do is align the incentives,” Warren said Friday. “I have a bipartisan bill for clawbacks and the whole idea is to say to these CEOs going forward ‘hey if you load this bank up on risk and the bank explodes, you’re going to lose that fancy bonus, you’re going to lose that big salary, you’re going to lose those stock options.'”
    Banking should not be an industry that attracts risk-takers, Warren said.
    “I really want to say to bank CEOs, if you’re the kind of guy or gal who wants to roll those dice and take big risks, don’t go into banking,” Warren said. “Banking is about steady profits. Banks should absolutely be able to make profits, but when banks load up on risks, they put depositors at risk, they put small businesses at risk, and ultimately as we’ve learned with these million-dollar banks, they put our whole economy at risk.”
    Warren chided banking regulators for not doing enough and called on Congress to join her in putting safeguards back into place.
    “You’ve got to look at everything that broke here,” Warren said. “We permitted the regulators to take their eye off the ball. Banking is a regulated industry for a reason because of its impact on the rest of the economy. Just as Joe Biden said yesterday – they need to start tightening those regulations down right now.”

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