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    Jim Cramer says market is in a period of consolidation, getting rid of ‘weak-handed investors’

    Monday – Friday, 6:00 – 7:00 PM ET

    CNBC’s Jim Cramer warned investors that stocks could continue to fall — at least in the near future.
    Stocks tumbled on Wednesday after December retail sales data heightened fears of a recession and investors took profits on gains from earlier this month.

    CNBC’s Jim Cramer on Wednesday warned investors that stocks could continue to fall — at least in the near future.
    “I think we have a … period of consolidation, as we get rid of the weak-handed investors. And we certainly wash out those who got carried away and committed personal fouls, like buying bitcoin above $20,000 or fooling around in meme stocks,” he said.

    Stocks tumbled on Wednesday after December retail sales data heightened fears of a recession and investors took profits on gains from earlier this month. The S&P 500 closed at its lowest level since Dec. 15, and the Nasdaq Composite fell, breaking a seven-day win streak.
    “Right now, the market’s working off one of the most overbought conditions we’ve had in ages. In the last two weeks, we simply rallied too far, too fast. It’s not that everything’s horrible,” Cramer said.
    He pointed out that while Microsoft said that it’s laying off 10,000 employees, other industries have stayed much more resilient. Many companies, including United Airlines recently, have reported great quarters so far this earnings season, he added.
    “Vast swaths of the economy are holding up just fine. The problem lies in tech, as I’ve been telling you for months on end,” he said.
    However, that won’t stop the market from enduring more pain, at least in the short term, Cramer warned. “The bears — they will be out in full force tomorrow.”

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    Homebuilder sentiment rises in January for the first time in a year, thanks to lower mortgage rates

    Sentiment rose four points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index.
    “While NAHB is forecasting a decline for single-family starts this year compared to 2022, it appears a turning point for housing lies ahead,” said Robert Dietz, NAHB’s chief economist.

    Builder sentiment in the single-family housing market posted an unexpected gain in January, rising for the first time in 12 straight months. Economists had predicted a slight decline.
    Sentiment rose 4 points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index. Anything below 50 is still considered negative sentiment. The metric stood at 83 in January 2022.

    “It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” said Jerry Konter, NAHB chairman and a homebuilder from Savannah, Georgia. “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”

    Homes under construction in Tucson, Arizona, U.S., on Tuesday, Feb. 22, 2022. Sales of new U.S. homes retreated in January after a flurry of purchases at the end of 2021, indicating a jump in mortgage rates may be starting to restrain demand.
    Rebecca Noble | Bloomberg | Getty Images

    All three of the index’s components posted gains in January: current sales conditions rose 4 points to 40, sales expectations in the next six months increased 2 points to 37, and buyer traffic rose 3 points to 23.
    Both builders and consumers are likely responding to the recent drop in mortgage rates. The average contract interest rate on the 30-year fixed mortgage last peaked at 7.37% at the end of October, according to Mortgage News Daily. It then fell throughout December and stood at 6.17% as of Tuesday.
    “While NAHB is forecasting a decline for single-family starts this year compared to 2022, it appears a turning point for housing lies ahead,” said Robert Dietz, NAHB’s chief economist. “In the coming quarters, single-family home building will rise off of cycle lows as mortgage rates are expected to trend lower and boost housing affordability.”

    Dietz noted the nation still has a structural housing deficit of 1.5 million units and said improved affordability should increase demand.
    A measure of mortgage applications to purchase a home did rise sharply last week, according to the Mortgage Bankers Association. Unfortunately, the number of new listings on the market is down from a year ago.

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    Bed Bath & Beyond looks for capital infusion, buyer ahead of likely bankruptcy filing

    Bed Bath & Beyond has been in discussions with lenders as it tries to nail down financing that would keep it afloat during a likely bankruptcy filing, according to people familiar with the matter.
    The company is also running a sale process in hopes of selling its home goods chain of stores, as well as its Buybuy Baby banner, the people said.
    Interested buyers include Sycamore Partners and Authentic Brands, they added.

    A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, Jan. 6, 2023.
    Johnny Milano | Bloomberg | Getty Images

    Bed Bath & Beyond has been in discussions with prospective buyers and lenders as it works to keep its business afloat during a likely bankruptcy filing, according to people familiar with the matter.
    The retailer is in the midst a sale process in hopes of finding a buyer that would keep the doors open for both of its major chains, its namesake banner and Buybuy Baby, said the people, who weren’t authorized to discuss the matter publicly.

    At the same time, Bed Bath has also been looking for a lender to provide financing that would keep the company going if it were to file for bankruptcy protection in the coming weeks, the people said.
    A Bed Bath spokeswoman said Wednesday the company doesn’t comment on specific relationships but has been working with strategic advisers to evaluate all paths to regain market share and enhance liquidity.
    “Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” the spokeswoman said, declining to comment further.

    A representative for AlixPartners, which CNBC recently reported was hired as the company’s advisor, declined to comment.
    Earlier this month Bed Bath warned it may need to file for bankruptcy after its turnaround plans failed to substantially boost sales and repair its balance sheet. The company reported net losses that exceed $1.12 billion for the first nine months of the fiscal year. It’s blown through its liquidity in recent months, shouldered a heavy debt load, and faced strained relationships with its suppliers.

    Comparable sales declined 32% year over year in the most recent fiscal quarter, ended Nov. 26. Company leaders said the company has had a harder time keeping shelves stocked, as vendors change payment terms or decide not to ship merchandise because of the retailer’s financial challenges.
    Last week, CNBC reported Bed Bath had begun another round of layoffs in an attempt to further cut costs. The company had about 32,000 employees as of Feb. 26, 2022, according to public filings.
    The company has been working to find a route that sees its chains survive, the people added. A day before Bed Bath issued a “going concern” warning, it announced in an employee memo that it had hired Shawn Hummell, a former Macy’s executive, to lead its namesake brand’s retail, store operations and merchandising operations as senior vice president of stores. Prior to his time at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that underwent a turnaround.
    One possible buyer circling Bed Bath is private equity firm Sycamore Partners, according to the people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, Bed Bath’s banner for infants and toddlers, which has outperformed the broader company. Buybuy Baby has been deemed most likely to survive going forward, the people said.
    Still, a sale of Bed Bath as a whole remains on the table — albeit with a much smaller footprint of stores than it currently has, the people said.
    Sycamore is known for acquiring retailers, like women’s apparel chain Talbots, including distressed companies that have sought bankruptcy attention like Ascena’s Ann Taylor. A Sycamore Partners spokesperson declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.
    Bed Bath has also drawn interest from companies that acquire the intellectual property, or brands, of companies, particularly those under distress, the people said. Authentic Brands, which has frequented many bankruptcy-run sales for retailers like Forever 21, has also been looking at Bed Bath, the people said. A representative for Authentic Brands declined to comment.
    Short of a sale, the company and its advisors have been looking to nail down additional financing for a bankruptcy filing, which could occur in the coming weeks, the people said. The company’s advisors are looking for a loan of at least $100 million, one of the people said.
    Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which has provided financing to other retailers like J.C. Penney and Designer Brands.
    Sixth Street’s facility could be converted into bankruptcy financing, the people said, or the lender or others could convert their debt to equity and become Bed Bath’s owner. A representative for Sixth Street declined to comment.
    Bed Bath’s financing strategy comes as fellow retailer Party City sought Chapter 11 protection this week. Also with a hefty debt load, Party City is looking to restructure its balance sheet and move forward with a smaller footprint.
    Bankruptcy attorney Eric Snyder from law firm Wilk Auslander said a sale was unrealistic for Bed Bath due to its declining sales and inventory, as well as its expanded losses.
    “They don’t have the availability to right the ship, and they don’t have the cash to continue to operate,” Snyder said. “I just don’t see any other option other than a bankruptcy and a liquidation.”
    —CNBC’s Melissa Repko contributed to this report.

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    Crypto publication CoinDesk hires Lazard to explore sale as crisis deepens at parent company DCG

    Crypto publication CoinDesk has engaged investment bank Lazard as it considers a full or partial sale of the business, which is owned by Barry Silbert’s Digital Currency Group.
    The crypto meltdown has hit DCG, which faces mounting debt and a regulatory probe at lender Genesis.

    Barry Silbert, Founder and CEO, Digital Currency Group 
    Anjali Sundaram | CNBC

    Crypto trade publication CoinDesk is exploring a potential sale, hiring advisors at Lazard to weigh a move that would remove it from Barry Silbert’s Digital Currency Group.
    “Over the last few months, we have received numerous inbound indications of interest in CoinDesk,” CEO Kevin Worth said in an emailed statement. The Wall Street Journal was first to report on the media company’s hiring of Lazard.

    CoinDesk, which launched in 2013, broke the first story about potential balance sheet improprieties at Sam Bankman-Fried’s Alameda Research. That reporting sparked a downward spiral at crypto exchange FTX, ultimately leading to the collapse of the company in November, the arrest of Bankman-Fried and multiple regulatory probes.
    The contagion from the FTX meltdown hit CoinDesk sister company Genesis, a crypto lender also owned by DCG that’s hired advisors for a potential bankruptcy filing after freezing withdrawals and loan originations. Genesis is also the subject of a Securities and Exchange Commission charge alongside crypto exchange Gemini.
    Worth said Lazard will help CoinDesk “explore various options to attract growth capital to the CoinDesk business, which may include a partial or full sale.”
    A representative for DCG did not immediately respond to requests for comment.
    WATCH: The SEC charges Genesis for unregistered securities sales

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    Holiday retail sales tanked, but trucking data shows e-commerce wasn’t the issue

    State of Freight

    DHL Supply Chain is investing heavily in North American e-commerce operations.
    The retail holiday sales data for 2022 was a disappointment, but DHL said it is “continuing to see large growth in e-commerce.”
    Categories including autos, engineering, manufacturing, and high-end consumer goods are doing well.
    Core consumer retail may rebound in the mid-to-late second quarter, DHL’s head for North America tells CNBC.

    The market did not like what it saw from the final retail holiday sales numbers for 2022 which sets up a tough year for retailers, but e-commerce is continuing to boom, including in areas outside the core retail consumer.
    Trucking data shared by DHL with CNBC shows that while the core consumer market has pulled back, in many categories e-commerce sales remain strong.

    “E-commerce is continuing to boom,” said Jim Monkmeyer, president of transportation for DHL Supply Chain, North America.
    DHL described large growth in e-commerce and the logistics company is investing heavily in that segment.
    “I would say the other spaces that are still growing fairly rapidly for us are automotive and high engineering, manufacturing as well as high-end consumer goods and spirits. Food products and life sciences areas are also doing well,” Monkmeyer said.
    Amid weak holiday sales year over year, it was online and nonstore sales that saw the biggest year-over-year gains, jumping 9.5% during the holiday season, according to the National Retail Federation data released on Wednesday.
    But Monkmeyer said DHL is seeing a continued downturn of the core retail consumer, with the near-record inventories a stark reminder of the pullback. As a result, more retailers are slashing prices to get rid of their inventory.

    Arrows pointing outwards

    In December, Scott Sureddin, CEO of DHL Supply Chain, told CNBC he anticipated more discounts post-holiday. “I have never seen inventory levels like this and after the first of the year, retailers can’t continue to sit on this inventory so the discounts they’ve been pushing will have to continue,” he said.
    Inflation is one of the reasons behind frugal consumer holiday spending.
    Retail sales data released on Wednesday showed a decline of 1.1% in December, slightly more than the 1% forecast, reflecting tepid consumer demand during the holiday shopping season.
    The holiday sales period was facing difficult annual comparisons given the Covid boom, and Monkmeyer is confident there will be a turnaround as supply chain inflationary pressures, such as freight rates, fall back below pandemic peak levels. Recent inflation readings, both the Consumer Price Index and Producer Price Index, have provided confirmation of inflation easing.
    “I think we’ll see the turning point come sometime in mid to late second quarter,” he said. “The cost of the ocean containers moving from $20,000 a container to $3,000 will drive down costs to a lot of different products. And on top of that, you have fuel costs coming down, and they’re projected to continue to go down slowly but steadily for the rest of this year. I think consumers will notice that right away and we will hopefully get back to some of that spending that we were seeing in the last two years.” More

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    Stocks making the biggest moves after hours: Discover Financial, Alcoa and more

    An aluminum coil stands in a warehouse awaiting transport, at an Alcoa World Alumina Australia smelting plant, partially owned by Alumina Ltd., in Point Henry, Australia.
    Carla Gottgens | Bloomberg | Getty Images

    Check out the companies making headlines in after-hours trading.
    Discover Financial Services — Shares of Discover Financial Services slid 6.2% after the credit card company posted quarterly earnings. The firm reported earnings per share of $3.77 on $3.73 billion in revenue where analysts expected earnings of $3.66 per share and $3.66 billion in revenue, according to Refinitiv. The bank also boosted its provision for credit losses compared to the prior year, potentially signaling that it sees a weaker economy ahead.

    H.B. Fuller — H.B. Fuller shares fell 4.2% after the company reported earnings that missed estimates. The adhesives manufacturer reported adjusted earnings per share of $1.04 on $958 million in revenue. Wall Street expected adjusted earnings of $1.24 on $1.01 billion in revenue, according to Refinitiv.
    Alcoa — Shares of Alcoa fell 3.6% after the company reported earnings that showed a net loss of $374 million for the quarter, or $2.12 per share. The company also said that it faced challenging market conditions in the period, including high costs for energy and raw materials alongside low pricing for aluminum.

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    Davos elites see a major risk ahead for markets with looming U.S. debt standoff

    The finance and tech CEOs gathering at the World Economic Forum this week expressed measured optimism about the economy in 2023 — but at least one major risk looms for markets, they said.
    The world’s largest economy risks defaulting on its debt for the first time in American history this summer as politicians wrangle over raising the country’s debt limit, currently capped at $31.4 trillion.
    “I don’t think anybody knows what would happen if they really went further than what happened in 2011,” the CEO of a Wall Street bank said on the sidelines of the conference.

    DAVOS, Switzerland – The finance and tech CEOs gathering at the World Economic Forum this week expressed measured optimism about the economy in 2023 — but at least one major risk looms for markets, they said.
    The resilient U.S. economy, a mild European winter and China’s reopening have given investors and forecasters hope that a severe recession can be avoided, Citigroup CEO Jane Fraser told CNBC’s Sara Eisen on Tuesday.

    “All in all, the year has started off better than everyone expected,” Fraser said. “Everyone’s converging now in the states more around a mild, manageable recessionary scenario, driven by the strength that we’ve got in the labor markets.”
    The U.S. economy has slowed since the Federal Reserve began raising interest rates last year, sowing fears that a recession was unavoidable.
    In the early weeks of 2023, investors have begun to hope that moderating inflation and strong employment figures could result in a so-called soft landing. But budding optimism at the annual meeting of billionaires, heads of state and business leaders in the Swiss Alps collided with a fresh threat, on top of existing concerns including the Ukraine war and global climate change.
    The world’s largest economy risks defaulting on its debt for the first time in modern history this summer as politicians wrangle over raising the country’s debt limit, currently capped at $31.4 trillion. The U.S. is expected to reach its debt limit Thursday, Treasury Secretary Janet Yellen said last week. After that, the Treasury will find ways to fund their debt obligations until at least early June, Yellen said.
    That sets up a standoff in Congress in the weeks ahead. Republicans and Democrats will engage in brinkmanship over political goals. The last time a potential default risk surfaced was in 2011, when lawmakers averted disaster after markets convulsed and the U.S. had its credit rating downgraded.

    “I don’t think anybody knows what would happen if they really went further than what happened in 2011,” the CEO of a Wall Street bank said on the sidelines of the conference. “That’s why it’s scary.”
    The CEO, who declined to be identified speaking candidly, said he had just met a group of U.S. lawmakers worried about the coming impasse.
    “It would affect markets and it would be a drag on economic activity because of the uncertainty,” he said. “It would be really bad for us.”
    But coming to a deal to increase the U.S. debt limit won’t be easy in a political environment that’s grown even more polarized in the past decade.
    Addressing the debt ceiling “is going to be hard,” said Salesforce CEO Marc Benioff on Wednesday. House Speaker Kevin McCarthy, R-Calif., has “got to handle it, but he’s got a lot of issues,” he said.
    The newly elected McCarthy is in a bind. While conservative members of his caucus insist they do not want the country to default on its debt, McCarthy is under pressure to demand deep spending cuts. McCarthy has suggested that he won’t support raising the debt ceiling without a compromise on spending.
    The situation is a “mess” with at least one possible solution: Congress could pass a “clean debt limit,” according to Peter Orszag, CEO of financial advisory at Lazard. That refers to a borrowing increase without spending cuts.
    McCarthy, however, would likely not survive as speaker if he agreed to that, Orszag said.
    Another top Wall Street CEO said he planned to push lawmakers at Davos to focus more on spending cuts rather than the debt ceiling.
    The worries contrast with early signs this month that formerly frozen markets have begun to awaken. For instance, debt issuance has been “incredibly strong” in January so far, according to Fraser.
    It’s too early to say whether those signs are a harbinger of better times for investment banks and the wider economy, she said.
    “We’re not out of the woods yet,” Fraser said. More

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    Marvel movies are set to return to China, but Covid could weigh on ticket sales

    Marvel Cinematic Universe movies will return to China in February for the first time in nearly four years.
    “Black Panther: Wakanda Forever” will hit Chinese theaters on Feb. 7 and “Ant-Man and the Wasp: Quantumania” will arrive on Feb. 17.
    Box office analysts worry piracy and Covid could hurt the movies’ grosses in China

    Marvel Studios’ “Ant-Man and the Wasp: Quantumania.”

    Marvel films are returning to China in February, marking the first time in nearly four years that Disney’s comic book cinematic universe landed a release in the country.
    “Black Panther: Wakanda Forever” will hit Chinese theaters on Feb. 7, and “Ant-Man and the Wasp: Quantumania” will arrive Feb. 17. The reopening of the Chinese market is likely a boon for Disney in the long term, but box office analysts worry these upcoming February releases may not provide substantial ticket sales due to online piracy and a recent Covid surge.

    China has been a crucial distribution hub for Hollywood blockbusters, especially those connected to the Marvel Cinematic Universe. Since 2012′s “The Avengers,” China has been the second-highest-grossing box office market for all Marvel movies, just behind the U.S. and Canada.
    “It’s a welcome dose of positive news for Disney and the industry as a whole considering how much money has been left on the table without China releases for recent Marvel films,” said Shawn Robbins, chief analyst at BoxOffice.com. “Global releases can’t truly be global when such a major market is absent.”
    The last Marvel film to open in China was 2019’s “Spider-Man: Far From Home.” The de facto ban started in 2021, when “Shang-Chi and the Legend of the Ten Rings” became the first film in the MCU not to be granted approval for distribution in the country, and only the second not to be released in the region. The underlying controversy stemmed from the film’s casting and the perception of the comic book series that “Shang-Chi” is based on.
    The 2021 release of “Black Widow,” coincided with a blackout period in China in which the country leaves theaters open for local productions and boxes out foreign films. Therefore, while it was approved for distribution, it did not make it to Chinese theaters.
    In addition, “Eternals,” “Doctor Strange in the Multiverse of Madness” and “Thor: Love and Thunder” were not approved for release in China, nor was the Sony-Disney coproduction “Spider-Man: No Way Home.”

    “Black Panther: Wakanda Forever” will break that pattern. Yet, since it was released in other markets in November, it likely experienced a surge in online piracy because it was unavailable to the Chinese public. While moviegoers will still attend screenings, the film may not see the same number of ticket sales that it might have if it was released earlier.
    There are also concerns about muted ticket sales from China as the coronavirus once again roils the region since the government lifted its “zero Covid” policy. The market was slated to be a major source of revenue for releases like Disney and James Cameron’s “Avatar: The Way of Water,” but has underperformed expectations there.
    At present, the film has generated around 11% of its total global gross from China, or about $214 million. For comparison, the first “Avatar” collected around $250 million in ticket sales during its run in 2009 and 2010.
    If the Covid wave ebbs in the region, “Quantumania” could get a welcome ticket boost. The previous two Ant-Man solo films generated 20% of their box office from China.

    Additionally, while previous Ant-Man films have tallied smaller global box office numbers in comparison to other flicks in the MCU — 2015’s “Ant-Man’ scored $519 million and “Ant-Man and the Wasp” snared $622 million — “Quantumania” is expected to pull in more moviegoers because it features the MCU’s newest major villain, Kang.
    Kang, played by “Lovecraft Country” star Jonathan Majors, is the next overarching villain of the MCU and is expected to remain a looming threat throughout the Multiverse Saga, which includes phase four, five and six of the franchise. He was introduced in the Disney+ show “Loki.”
    “The feature film debut of one of the most dynamic and intriguing characters in the MCU, Kang the Conqueror in the film could push its potential global revenue into the $1 billion realm which would be a first for ‘Ant-Man’ films,” said Paul Dergarabedian, senior media analyst at Comscore. “And with the addition of the China market, the planets could align to make ‘Ant-Man and the Wasp: Quantumania’ the first global mega-hit of 2023.”

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