Raphael Stevens

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    United Airlines reaches tentative labor agreements with ground workers union

    United Airlines has reached tentative agreements with a union representing nearly 30,000 ground workers, the labor group said Wednesday.
    The two-year agreements cover “industry-best” wage rates, as well as job protection and certain guards against outsourcing roles.
    The airline remains in negotiations with its pilots over a new contract.

    An airline passenger checks in at the United airlines desk at the Tampa International Airport in Tampa, Florida, January 19, 2022.
    Octavio Jones | Reuters

    United Airlines has reached tentative agreements with a union representing nearly 30,000 ground workers, the labor group said Wednesday.
    The International Association of Machinists and Aerospace Workers said the two-year tentative agreements cover “industry-best” wage rates, as well as job protection and certain guards against outsourcing roles. The specific terms of the contracts were not disclosed.

    The deal comes while United is in talks with labor unions representing its pilots and flight attendants. Pilots last year rejected a preliminary agreement, and negotiations have since resumed.
    Members of IAM District 141 will receive more details about the tentative agreements, the union said in a statement. The union will soon announce a schedule for a ratification vote.
    “Job security and industry-leading wages are rightfully two top priorities for our membership at United Airlines,” said Tom Regan, airline coordinator for IAM’s Air Transport Territory.
    In a statement, IAM District 141 said that if the agreements are ratified by members, the union “will be back in negotiations one year from the date these agreements are ratified to bargain for more.”
    The two-year tentative agreements cover seven work classifications: fleet service workers, passenger service workers, storekeepers, central load planners, maintenance instructors, fleet technical instructors and security officers. More

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    Pending home sales squeezed out a tiny gain in February, as mortgage rates jumped

    After a sharp gain in January, pending home sales rose just 0.8% in February, according to the National Association of Realtors.
    The average rate on the popular 30-year fixed mortgage started February right around 6% and ended the month just over 7%

    A For Sale sign displayed in front of a home on February 22, 2023 in Miami, Florida.
    Joe Raedle | Getty Images

    Higher mortgage rates took some of the juice out of the housing recovery in February.
    After a sharp gain in January, pending home sales rose just 0.8% month to month, according to the National Association of Realtors. Sales were 21.1% lower than February last year. Pending sales are based on signed contracts during the month.

    Mortgage rates shot higher in February after dropping sharply in January. The average rate on the popular 30-year fixed mortgage started February right around 6% and ended the month just over 7%, according to Mortgage News Daily. That gave homebuyers considerably less purchasing power.
    Regionally sales moved higher month to month in every region except the West, where they fell 2.4%. That is likely because the West is the priciest region for housing, and buyers there are thus stretching the most to afford a home. Any jump in mortgage rates would have an outsized effect there.
    “The affordable U.S. regions – the Midwest and South – are leading the recovery,” Yun added. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amidst uncertainty in the financial market,” Lawrence Yun, chief economist for the Realtors, said in a release. “While access to commercial mortgage loans could become increasingly difficult, residential mortgage loans are expected to be more readily available.”
    Home prices have eased considerably since last summer, but housing is still expensive by historical standards. Price drops may also have stalled in January, due to the big jump in buyer demand. Real estate agents anecdotally reported more bidding wars in January, given still very short supply. More

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    Space infrastructure company Redwire trims quarterly losses, builds order backlog

    Space infrastructure company Redwire said it trimmed its quarterly losses as it continued building its order backlog.
    Redwire brought in $53.7 million in fourth-quarter revenue, up 31% from the same period a year ago.

    Pete Cannito, Redwire Corporation at the New York Stock Exchange, September 8, 2021.
    Source: NYSE

    Space infrastructure company Redwire reported fourth-quarter results on Wednesday, saying it further trimmed its losses and built its order backlog.
    After rising as much as 10% in premarket trading, Redwire stock fell slightly soon after the opening bell.

    The company brought in $53.7 million in fourth-quarter revenue, up 31% from the same period a year ago. Its total backlog of orders nearly doubled to $465.1 million as of the end of 2022, compared to the end of 2021.
    Redwire also trimmed its adjusted EBITDA loss on a quarter-over-quarter basis, to $773,000 from $1.5 million in the third quarter.
    “Our financial performance showed improvement on both a sequential and year-over-year basis,” Redwire  CFO Jonathan Baliff said in a statement.

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    The company had $53.3 million in available liquidity at the end of the year, which was a split mix of cash and borrowing capacity.
    For 2023, Redwire forecast full year revenue between $220 million to $250 million, up from $160.6 million in 2022 revenue. More

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    Stocks making the biggest moves premarket: Lululemon, Paychex, Micron Technology and more

    A Lululemon store in New York, US, on Tuesday, March 28, 2023.
    Stephanie Keith | Bloomberg | Getty Images

    Check out the companies making headlines before the bell.
    Lululemon – Lululemon shares surged more than 16% before the Wednesday open after posting a strong holiday quarter and sharing upbeat guidance for the current fiscal year. The athleisure wear company reported adjusted earnings of $4.40 a share on $2.77 billion in revenue and said same-store sales climbed by 27%.

    Carnival Corp — Shares of the cruise line climbed 2.5% in premarket trading after Susquehanna upgraded Carnival to positive from neutral. The investment firm said in a note to clients that Carnival has “ample liquidity” and should be able to improve its unit margins this year.
    Urban Outfitters, Burlington, Foot Locker, Ross Stores — Major apparel and home goods retailers were in the red on Wednesday morning after UBS downgraded the group to sell from neutral, saying it sees at least 23% downside to its price targets for each of the companies as a slowdown in consumer spending curbs the industry’s earnings prospects. Shares of Urban Outfitters and Ross were down 2.3%, Burlington by 2.6% and Foot Locker was down 1.9% before the bell.
    Bath & Body Works — Shares of the home care and fragrances retailer fell more than 2% after a UBS downgrade, saying it expects a recessionary environment to weigh on the stock this year and next. UBS calls many of the company’s products as discretionary, pointing to candles as an example, and areas where consumers “will choose to spend less in a challenging macro environment.”
    Micron Technology — The semiconductor manufacturer added 2.6% after falling 1% Tuesday. Micron fiscal second quarter results missed analyst expectations on both the top and bottom lines, according to Refinitiv consensus estimates. Micron lost $1.91 per share, larger than the loss of 86 cents per share expected, while revenue came in at $3.69 billion vs a $3.71 billion consensus estimate. Micron plans a larger-than-originally anticipated headcount reduction and told Barron’s bloated customer inventories are diminishing.
    Paychex Inc. — Shares of the payroll services company were up nearly 3% premarket ahead of fiscal third-quarter earnings due after the close on Wednesday. Analysts expect revenue of $1.36 billion and earnings per share of $1.25, according to FactSet. The stock has dropped 5.9% so far this year.

    UBS — Shares of the Swiss bank stock were 2.7% higher in early trading after UBS said former CEO Sergio Ermotti will replace current CEO Ralph Hamers effective next week. Ermotti was CEO for nine years until Oct. 2020 and Hamers will stay on to advise during the transition. UBS agreed on March 19 to buy Credit Suisse for 3 billion Swiss francs, or $3.2 billion.
    — CNBC’s Jesse Pound, Alex Harring, Tanaya Macheel and Samantha Subin contributed reporting. More

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    ‘Call of duty’: With Sergio Ermotti, Switzerland gets a cost-cutting local to restore its reputation

    UBS announced on Wednesday that the former CEO Sergio Ermotti would replace Ralph Hamers from April 5.
    The board decided that Ermotti’s experience in picking UBS up from the canvas after the 2008 financial crisis rendered him uniquely qualified to lead the new combined entity.
    Asked by CNBC during Wednesday’s press conference about his motivation for returning to UBS, Ermotti said there was “a call of duty aspect” to his decision.

    Sergio Ermotti, chief executive officer of UBS Group AG.
    Stefan Wermuth | Bloomberg | Getty Images

    Incoming UBS CEO Sergio Ermotti on Wednesday said his return to the helm was “a call of duty,” as the Swiss veteran takes on the task of restoring order to the country’s battered financial reputation.
    UBS announced on Wednesday that the former CEO would replace Ralph Hamers from April 5, as the Swiss bank undertakes the mammoth task of integrating fallen rival Credit Suisse into its business.

    In a press conference, UBS Chairman Colm Kelleher lauded Hamers’ tenure, highlighting the company’s “unprecedented success despite a challenging environment” under the Dutchman’s tutelage, and his instrumental role in delivering the Credit Suisse deal.
    UBS has posted two consecutive years of record profits and returns to shareholders under Hamers, but Kelleher said the acquisition of Credit Suisse “created a new reality” and “imposes new priorities” on the board.
    Kelleher said the board decided that Ermotti’s experience in picking UBS up from the canvas after the 2008 financial crisis rendered him uniquely qualified to lead the new combined entity through what promises to be a challenging and drawn out integration.

    “In particular, he built financial strength and improved resilience by putting the firm’s leading global wealth management business and Swiss universal bank at its core,” Kelleher said of Ermotti’s tenure as CEO from November 2011 to October 2020.
    “Sergio swiftly transformed the investment bank by cutting its footprint, and achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders while restoring people’s pride in working for UBS.”

    He added that this, combined with Ermotti’s “deep understanding of the financial service industry in Switzerland and globally,” made the Swiss banking veteran the man for the job.
    Credit Suisse’s emergency sale to UBS followed years of losses and scandals, and Swiss authorities and regulators’ hasty brokerage of the deal over the course of a weekend dealt a blow to the country’s reputation for financial stability.
    Kelleher emphasized that Ermotti’s task — the successful integration of Credit Suisse into UBS — was “essential for both banks’ clients, people and investors, for Switzerland and for the global financial system in general.”
    Ermotti’s first stint as CEO began amid the fallout from a $2.3 billion loss inflicted on the bank by a rogue trader in London. He inherited an ailing investment bank that had been forced to write off more than $50 billion during the great financial crisis, along with being implicated in what would become a costly Libor investigation.
    After a campaign of sweeping job cuts, an exit from substantial portions of the fixed income trading division, the investment bank was focused and streamlined, and Ermotti’s radical course of action was welcomed by investors.
    ‘Call of duty’
    Ermotti leaves his post as chairman of Swiss Re, one of the world’s largest reinsurance companies, in order to take the reins at the new combined Swiss banking behemoth.
    Asked by CNBC during Wednesday’s press conference about his motivation for returning to UBS, Ermotti said there was “a call of duty aspect” to his decision.
    “And also, frankly speaking, I always thought that despite all these discussions and the size of the bank, I always felt that the next chapter I wanted to write back then was a chapter of doing a transaction like this one.”
    He also confirmed that he will be in the role for “as long as they want me,” and emphasized that bank wants to “take away uncertainty as soon as we can” regarding its restructuring and prospective layoff plans.
    “I’m fully aware that we need to work very hard here to avoid any consequence for the taxpayers in Switzerland. You have my word and my commitment that together with my team, we will work and do everything that it takes to make this transaction successfully, and to write another very important and successful chapter in UBS’ history,” Ermotti told Wednesday’s press conference.

    “I am convinced that together with my colleagues, by focusing very hard on the needs of our clients, taking consideration also of the needs of all the employees that I’m sure are right now somehow concerned about their future, and also the interests of our shareholders, by balancing at best the interests of those three stakeholders, we will be able also to make all of society and all the rest of the stakeholders in Switzerland pleased with what we do.”
    The banking turmoil has created a febrile political environment in Switzerland as the government looks to shore up the system ahead of the federal election in October.
    Beat Wittmann, partner at Zurich-based Porta Advisors, told CNBC on Wednesday that the appointment of Ermotti was “a Swiss solution” to the uncertainties facing the country, and the challenge of rebuilding trust in Switzerland’s banking sector and policymakers.
    “We should not underestimate the anger of the population at the failure of successive management at Credit Suisse, all self-inflicted casualty, and the trinity of policymakers — the central bank, FINMA and the finance ministry — didn’t really act prematurely and in a timely manner, but really let this happen and had then basically to forge a solution over the weekend,” he said.
    “This decision here to put Sergio Ermotti — proven, trustworthy in the view of the public at large and also the industry — in place here as the CEO is certainly going to calm these kinds of discussions, and that’s certainly also one of the motivations.” More

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    Mortgage demand gets a boost from bank volatility, but it may be short-lived

    Overall mortgage demand rose 2.9% last week compared with the previous week.
    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.45% from 6.48%.
    Mortgage applications to purchase a home increased 2% for the week but were 35% lower than the same week one year ago.

    An ‘open house’ flag is displayed outside a single family home on September 22, 2022 in Los Angeles, California.
    Allison Dinner | Getty Images

    Stress in the banking system turned out to be a boon for the U.S. mortgage market. As investors hid in the relative safety of the bond market, yields moved even lower last week. Mortgage rates followed.
    Mortgage demand, consequently, rose 2.9% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The string of gains, however, could be short-lived, as rates are now moving higher again.

    Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.45% from 6.48%, with points decreasing to 0.62 from 0.66 (including the origination fee) for loans with a 20% down payment. The rate was 4.8% the same week one year ago.
    Applications to refinance a home loan increased 5% for the week but were still 61% lower year over year. The vast majority of homeowners today have mortgages with interest rates far below today’s rate, leaving them little incentive to refinance. Those who want to take out equity are largely opting for second loans, rather than give up the rates they have in a cash-out refinance.
    Mortgage applications to purchase a home increased 2% for the week but were 35% lower than the same week one year ago. Buyers are coming back into the market for the traditionally busy spring season but are finding very little available for sale.
    “Home-price growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power,” said Joel Kan, an MBA economist in the release. “While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications.”
    Mortgage rates, however, moved more than 20 basis points higher to start this week, according to a separate survey from Mortgage News Daily. With no more bank failures in the news this week, and no major economic data to influence investors, rates could return to the higher trajectory they were on before the bank issues hit. More

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    Macy’s CEO Jeff Gennette, who’s led the company’s turnaround effort, will retire next year

    Macy’s CEO Jeff Gennette will retire in February, the company announced.
    He spearheaded the company’s turnaround effort and led Macy’s during the pandemic.
    Tony Spring, CEO of Macy’s-owned Bloomingdale’s, will succeed Gennette.

    Jeff Gennette, CEO of Macy’s.
    Getty Images

    Macy’s CEO Jeff Gennette will retire early next year after a four-decade career at the company, the department store chain announced Wednesday morning.
    Gennette, 61, plans to step down in February. He will be succeeded by Tony Spring, CEO of the company’s higher-end department store banner, Bloomingdale’s.

    In addition to the CEO change, Macy’s Chief Financial Officer Adrian Mitchell will take on an expanded role and also serve as the company’s chief operating officer. He will lead store operations, technology and supply chain teams, along with his existing role over finance and real estate.
    When Gennette stepped into Macy’s top role in 2017, he faced declining sales and hard questions of whether the storied retailer — and department stores in general — could survive as customers moved online and increasingly shopped at discounters, e-commerce players and fashion-forward brands.
    He spearheaded efforts to reinvigorate the nearly 165-year-old company. He kicked off Macy’s three-year turnaround plan, called Polaris, announced in February 2020. It called for accelerating digital growth, closing underperforming shops and investing in the company’s best stores to boost profits.
    Over the past three years, Gennette navigated the company through another major challenge: A pandemic that forced Macy’s to temporarily shutter its nearly 800 stores and furlough the majority of its employees.
    The retailer emerged from the pandemic with a smaller workforce and store footprint, but with less debt and more modern, data-driven organization.

    Shares of the company have fallen about 50% since March 2017, when Gennette took over the top job, but the stock has rebounded dramatically from lows in March and April 2020, just after Covid was designated a pandemic.
    Last year, the retailer managed to avoid the inventory woes of many of its retail peers — setting it up better for the holiday season and start of the fiscal year. It has recently broken from its typical role of shopping mall anchor by opening and testing several smaller and off-mall locations.
    Gennette has also stood out as an openly gay leader of a publicly traded company. He has been a vocal champion of equal rights, such as publicly backing and expressing company support for the Respect for Marriage Act.
    In a news release, Macy’s said Spring, 58, was tapped as its next leader after an internal and external search.
    Bloomingdale’s, which Spring currently leads, has been one of the strongest parts of Macy’s business. The banner, which has fewer stores, but more luxury brands and bigger-spending customers, outperformed Macy’s namesake banner during each quarter of the past fiscal year.
    The company also includes beauty banner Bluemercury, which Spring also helped reposition into another bright spot for the company.
    Gennette praised Spring’s performance.
    “Tony consistently innovates for the customer, is an exceptional brand builder and an excellent talent developer who has strengthened our culture through his leadership,” he said in a new release.
    Gennette called Spring and Mitchell “an ideal team to build on our momentum and propel Macy’s, Inc. into the future.” More

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    Bitcoin climbs 5% above $28,000 as investors shrug off regulatory crackdowns

    Bitcoin surged 5% in the past 24 hours to as high as $28,474, retaking the $28,000 level after dipping below it on Monday.
    Investors appeared to be shaking off anxiety surrounding a U.S. regulatory crackdown on crypto after the CFTC sued Binance for alleged violations of trading rules.
    Traders are also betting the U.S. Federal Reserve will reverse its interest rate hiking path later this year.

    Bitcoin is up 50% so far in 2023, beating major commodities and stock indexes. Industry insiders said the bank collapses have sent investors looking for alternatives to the traditional banking system and there is also anticipation of a slowdown in interest rate rises, which is helping bitcoin.
    Filip Radwanski | Sopa Images | Lightrocket | Getty Images

    Bitcoin climbed sharply Wednesday as investors shrugged off initial fears surrounding U.S. regulators’ crackdowns on industry giants and became willing to take some risk.
    The world’s largest cryptocurrency surged 5% in the past 24 hours to as high as $28,474, according to CoinGecko data. Bitcoin has retaken the $28,000 level after dipping below it on Monday following news of the U.S. Commodity Futures Trading Commission FTC’s lawsuit against Binance.

    Ether, the second-biggest digital coin, rose nearly 6% to $1,816.10.
    Bitcoin has been steadily rising this year after a brutal 2022 that saw collapses of major crypto exchanges and a sharp slump in prices. Investors have taken some comfort from the thought of a reversal in the U.S. Federal Reserve’s interest rate hiking moves, which put pressure on risk assets like stocks.
    The reason for the jump Wednesday was not immediately clear. However, it comes amid a broad rise in U.S. stocks. Bitcoin has been known to follow movements in equity markets, with investors treating it like more of a traditional risk asset.
    Nasdaq futures were up 100 points, or 0.9%, Wednesday morning.
    U.S. regulators have sharpened their crackdown on crypto firms of late, with the CFTC suing Binance and its co-founder Changpeng Zhao for allegedly breaking trading rules by courting clients in the U.S. without authorization.

    The Securities and Exchange Commission has also threatened to take legal action against Coinbase for alleged violations of securities rules.
    “Broadly we are looking quite bullish here with Bitcoin reclaiming $28K and looking to target $30K next,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC via email Wednesday.
    “In general, when price action starts to absorb negative news this quickly, it indicates that the market is bullish and trending upward. The CFTC case against Binance, while quite important, doesn’t seem to have affected the market that much.”
    Bitcoin had earlier gotten a boost from woes in the global banking system. Swiss banking giant Credit Suisse was recently rescued by its peer UBS in a government-backed, cut-price deal.
    U.S. tech-focused lender Silicon Valley Bank and crypto-oriented banks Silvergate and Signature have also failed.
    The Federal Reserve has sought to cushion the blow of the banking crisis with a lending program known as the Bank Term Funding Program, or BTFP, which aims to help banks meet their obligations to depositors.
    Proponents of bitcoin say it can serve as a store of value in times of economic distress and a form of money people can access without the need for a bank account.
    However, it is incredibly volatile and has been known to swing up or down 10% in a matter of hours.
    “The market seems to be placing greater importance on macroeconomic factors and that the Fed has already begun a form of QE, now known as BTFP, but also that the interest rate pivot might happen sooner than later,” Ayyar told CNBC.
    “Against the bank failure backdrop over the past month or so and Bitcoin’s rise, this provides the perfect context for Bitcoin to continue remaining bullish and move higher.”
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