Raphael Stevens

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    Many Americans think they’re insulated from climate change. Their finances indicate otherwise

    Just 55% of Americans believe global warming will “hurt them a moderate amount,” according to a new study by Stanford University and Resources for the Future.
    Climate change is already having a financial impact on most Americans, economists said.
    Higher insurance rates for homeowners, inflation for groceries, and lost earnings due to heat are a few examples of broad economic impacts.

    A delivery driver takes a break in the shade during high temperatures in Philadelphia on June 21, 2024.
    Joseph Lamberti/Bloomberg via Getty Images

    Many Americans think they’re insulated from the effects of global warming. But climate change is already having negative and broad impacts on household finances, according to experts.
    Just to give a few examples: Insurers are raising premiums for homeowners in many states across the country, pointing to mounting losses from natural disasters as a factor. Extreme weather and flooding raise prices for everyone at the grocery store. Wildfire smoke and heat waves like the one currently blanketing large swaths of the U.S. lower job earnings for many workers.

    That’s not to mention the perhaps more obvious costs like rebuilding or relocating after a hurricane, flood or wildfire — disasters that are growing in frequency and intensity.

    An American born in 2024 can expect to pay about $500,000 during their lifetime as a result of climate change’s financial impacts, according to a recent study by ICF, a consulting firm.
    “Climate change is already hitting home, and of course will do so much more in the future,” said Gernot Wagner, a climate economist at Columbia Business School.
    “There are a bazillion pathways” to adverse financial impact, he added.
    More from Personal Finance:People are moving to Miami and building there despite climate riskHow to buy renewable energy from your electric utilityYou may soon get new federal rebates for energy efficiency

    Yet, in 2024, just 55% of Americans believe global warming will “hurt them at least a moderate amount,” according to a joint report published Monday by Stanford University and Resources for the Future.
    That’s down 8 percentage points from an all-time-high 63% observed in 2010, the study found.
    It’s likely that survey respondents were thinking more about physical than financial impact when answering the survey question, said Jon Krosnick, a report co-author and director of Stanford’s Political Psychology Research Group.
    However, when it comes to financial impact, “I think you could argue the correct answer for [people] is, ‘It’s already hurting me,'” Krosnick said.

    Economic effects ‘increasingly adverse’

    People stand outside a bodega during a summer heat wave in the Bronx borough of New York on July 11, 2024. 
    Angela Weiss | Afp | Getty Images

    Weather-related disasters cause the U.S. at least $150 billion a year in “direct” damage, according to the Fifth National Climate Assessment, a report the federal government issues every four to five years that summarizes the latest knowledge on climate science. (The latest edition was published in 2023.)
    The economic fallout will be “increasingly adverse” with each additional degree of warming, the report said. For example, 2°F of additional warming is expected to cause more than twice the economic harm than an increase of 1°F.
    And that financial accounting is just for “direct” rather than indirect effects.

    Climate change is already hitting home, and of course will do so much more in the future.

    Gernot Wagner
    climate economist at Columbia Business School

    Extreme heat reduces worker productivity

    Many of the impacts can be somewhat unpredictable, Wagner added.
    For example, in addition to negative effects on human health, wildfire smoke also reduces earnings for workers in sectors like manufacturing, crop production, utilities, health care, real estate, administration and transportation, according to a 2022 study by economists at the University of Illinois at Urbana-Champaign and the University of Oregon. Some of that impact may be due to missed days of work, for example.
    On average, workers’ foregone earnings amounted to a total of $125 billion a year between 2007 and 2019, the economists found.
    That became relevant for workers in perhaps unexpected places like New York City last year, when Canada wildfire smoke drifted into the U.S., creating an orange haze over the city. On at least one day during that period, the city ranked as having the world’s worst air pollution.
    “Nobody’s climate-effect bingo card included that particular entry five years ago,” Wagner said.

    Workers in the afternoon heat in Baker, California, on July 10, 2024. A long-duration heat wave led many California cities to break all-time heat records while numerous wildfires have been sparked around the state.
    Mario Tama | Getty Images News | Getty Images

    Wagner’s own research shows that extreme heat causes labor productivity to plummet, triggering reduced earnings.
    Workers lose about 2% of their weekly paychecks for each day over 90 degrees Fahrenheit, he found. For the average person, that’d amount to a roughly $30 pay cut for each day over 90 degrees — which can be extremely consequential for people who live in certain places like Phoenix, he said.
    June 2024 was the 13th consecutive month of record-breaking global temperatures.

    How global warming and inflation intersect

    Climate change also exacerbates inflation, research shows — a dynamic dubbed “climate-flation.”
    Warming is expected to raise global inflation by 0.3 to 1.2 percentage points per year, on average, by 2035, according to a recent study by researchers at the European Central Bank and Potsdam Institute for Climate Impact.

    “That’s big,” Wagner said, noting that over half the U.S. annual inflation target (about 2% a year) may potentially be attributable just to climate impact, he said.
    So-called climate-flation is due partially to effects on grocery prices: say, if extreme weather were to knock out a harvest for crops like avocados, corn, rice, maize or wheat, triggering global prices to spike, he added.

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    Microsoft’s hiring of staff from AI startup Inflection referred for UK merger probe

    Microsoft’s hiring of employees from artificial intelligence startup Inflection has been referred for an initial merger investigation in the U.K.
    If it finds reason to investigate further, the Competition and Markets Authority can refer the case for an in-depth investigation, known as a “Phase 2” probe.

    Mustafa Suleyman, co-founder and chief executive officer of Inflection AI UK Ltd., speaks at the World Economic Forum in Davos, Switzerland, on Jan. 18, 2024.
    Stefan Wermuth | Bloomberg | Getty Images

    Microsoft’s hiring of certain former employees from artificial intelligence startup Inflection has been referred for an initial merger investigation in the U.K.
    Britain’s Competition and Markets Authority (CMA) said Tuesday that the hiring of Mustafa Suleyman, Inflection’s co-founder, along with most of the startup’s staff, should be assessed to decide whether it constitutes a merger under U.K. rules and therefore could result in less competition within the AI sector.

    If it finds reason to investigate further, the CMA can refer the case for an in-depth investigation, known as a “Phase 2” probe. The CMA said it would announce a decision on whether to refer the case for a Phase 2 investigation by Sept. 11.
    Microsoft announced in March it had hired Suleyman from Inflection, along with a number of other key employees at the firm.
    Suleyman was appointed Microsoft’s executive vice president and CEO of Microsoft AI, a newly formed unit of the company focused on its AI products, including Copilot, the company’s AI assistant which it integrated into its Windows and Microsoft 365 software.
    In addition to Suleyman’s senior executive appointment, the Washington-based tech giant selected Karen Simonyan to join the firm as its chief scientist, reporting to Suleyman.
    Both Suleyman and Simonyan were former employees of DeepMind, the Google-owned AI lab.
    This is a breaking news story. Please refresh for updates. More

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    Deutsche Bank criticized by German regulator for financial reporting error

    Deutsche Bank incorrectly disclosed deferred tax assets in its 2019 financial statement, German regulator BaFin said Tuesday.
    2.076 billion euros ($2.26 billion) worth of deferred tax assets had not been disclosed separately in the notes for Deutsche Bank’s U.S. business, BaFin said.
    Deutsche Bank says the financial statement is still compliant with international reporting standards.

    A general meeting of Deutsche Bank
    Arne Dedert | picture alliance | Getty Images

    Deutsche Bank incorrectly disclosed deferred tax assets in its 2019 financial statement which did not meet international accounting standards, the German regulator BaFin said on Tuesday.
    “The declarations on deferred tax assets in the consolidated financial statement were not complete,” the regulator, known formally as the Federal Financial Supervisory Authority, said in a statement translated by CNBC.

    It said that 2.076 billion euros ($2.26 billion) worth of deferred tax assets had not been disclosed separately in the notes for Deutsche Bank’s U.S. business. The bank should have made the disclosure because it recorded several years of losses, it said.
    Additionally, the bank should have explained why it was sure that it would make sufficient profits in the future, which it also did not do, BaFin said.
    The disclosure error was against rules laid out by the International Accounting Standards, BaFin said in a second statement.

    The findings are the outcome of a random sampling examination, which was initially launched by Germany’s now defunct Financial Reporting Enforcement Panel, the regulator noted.
    In a statement to CNBC, Deutsche Bank said the financial statement was still compliant with international reporting standards.

    “There is no suggestion on BaFin’s part that there is any inaccuracy in Deutsche Bank’s 2019 accounts, and no restatement or other action is required. It is Deutsche Bank’s view today, as at the time of publication, that its 2019 financial statements and other disclosures comply fully with IFRS [International Financial Reporting Standards] requirements,” a spokesperson for the bank said in emailed comments.
    Deferred tax assets are figures on a company’s financial statements that effectively reduce its taxable income in the future, for example related to a previous overpayment or advance payment of taxes.
    The disclosure of them is important for transparency about expected future tax implications, BaFin noted.
    Europe-traded shares of Deutsche Bank were last down by 0.9% on Tuesday morning. More

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    GM’s 2025 EV production capacity target in doubt after Barra comments

    GM’s target of being capable of producing 1 million all-electric vehicles in North America by the end of 2025 is heavily in doubt.
    The production capacity goal was one of the last standing EV targets GM hadn’t lowered or withdrawn amid slower-than-expected demand for EVs.
    More details about the automaker’s EV plans could come when GM reports second-quarter results on July 23.

    General Motors’ goal of being capable of producing 1 million all-electric vehicles in North America by the end of 2025 in heavily in doubt, following comments Monday by CEO Mary Barra.
    The production capacity target for next year was one of the last EV targets the automaker hadn’t lowered or withdrawn as demand for EVs has not materialized as quickly as many companies such as GM previously expected.

    “We won’t get to a million just because the market is not developing, but it will get there,” Barra said Monday at a virtual CNBC CEO Council event. “We’re going to be guided by the customer.”
    For more than two years, GM has said it would have production capacity of 1 million in EVs in each China and North America by 2025. Even after it changed or withdrew several EV targets and product plans in the last year, the company continued to say it would install the North American capacity for EVs.
    A GM spokesman said the company’s target was about the production capacity, while the question was regarding actually producing 1 million EVs in 2025. Barra did not specifcally address whether it was production or production capacity that she was referring to.
    The spokesman later said the company would no longer reiterate the EV production capacity plans for 2025. The company has continually said its EV plans will be flexible to meet demand.
    More details about the automaker’s EV plans could come when GM reports second-quarter results on July 23. More

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    China’s leaders face miserable economic-growth figures

    The Jingxi Hotel in Beijing is known for its home-made yogurt—and for hosting some of the most important meetings in the history of the Chinese Communist Party. They include the “third plenum” of 1978, which confirmed Deng Xiaoping’s rise to power and the opening of the Chinese economy. The country’s leaders are now gathering for another “third plenum” in this closely guarded venue from July 15th-18th. They should savour their yogurt. Because outside the hotel walls, the economy is turning sour again. More

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    Dimon and other Wall Street CEOs react to Trump assassination attempt: ‘Deeply saddened’ by violence

    The leaders of Wall Street’s most powerful firms are speaking out to condemn the attempted assassination of former President Donald Trump at a Pennsylvania rally over the weekend.
    JPMorgan Chase CEO Jamie Dimon told employees Sunday that he and his management team were “deeply saddened by the political violence.”
    Goldman Sachs CEO David Solomon addressed the matter at the start of an earnings call Monday morning, calling the attempted assassination a “horrible act of violence.”

    The leaders of Wall Street’s most powerful firms are speaking out to condemn the attempted assassination of former President Donald Trump at a Pennsylvania rally over the weekend.
    JPMorgan Chase CEO Jamie Dimon told employees Sunday that he and his management team were “deeply saddened by the political violence” and attempt on Trump’s life. The shooting killed one bystander and injured two more.

    “We must all stand firmly together against any acts of hate, intimidation or violence that seek to undermine our democracy or inflict harm,” Dimon said in the memo. “It is only through constructive dialogue that we can tackle our nation’s toughest challenges.”
    Goldman Sachs CEO David Solomon addressed the matter at the start of an earnings call Monday morning, calling the attempted assassination a “horrible act of violence.”
    “We are grateful that he is safe and also want to extend my sincere condolences to the families of those who were tragically killed and severely injured,” Solomon said. “It is a sad moment for our country. There’s no place in our politics for violence.”
    The shooting on Saturday shocked a nation gearing up for a contentious November election. Wall Street firms don’t officially endorse political candidates since they have to deal with both Republican and Democrat officials, though their executives and employees often donate to campaigns.

    BlackRock CEO Larry Fink told CNBC’s “Squawk on the Street” on Monday that the weekend events were “a tragedy.”

    “It is a statement of America today, though. We need to create hope. All of us have a responsibility, every political candidate, every leader, every pastor, minister, rabbi, we all have a responsibility of bringing our community together to bring hope,” Fink said.
    BlackRock, the world’s largest asset manager, said Sunday in an email that it ran an advertisement in 2022 in which the suspected shooter, Thomas Matthew Crooks, appears briefly in the background along with other students of Bethel Park High School in Pennsylvania.
    “We will make all video footage available to the appropriate authorities, and we have removed the video from circulation out of respect for the victims,” BlackRock said in a statement.
    Bank of America CEO Brian Moynihan also addressed employees over the weekend.
    “We are deeply saddened for the family of the rally attendee who died at the event,” Moynihan said in the staff email. “Our thoughts are with former President Donald Trump, all those injured, and their families.”
    — CNBC’s Jim Forkin contributed to this report.

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    Macy’s ends buyout talks with Arkhouse and Brigade after months of negotiations

    Department store Macy’s said Monday its board has unanimously decided to end negotiations with the activist group that had been looking to take the retailer private for roughly $6.9 billion.
    Arkhouse and Brigade had for months been attempting to buy out the storied retailer.
    Macy’s is in the middle of a turnaround effort led by CEO Tony Spring, who stepped into the top job in February.

    The Macy’s company logo is seen at the Macy’s store on Herald Square on January 19, 2024 in New York City. Macy’s department-store chain announced that they will be laying off roughly 2,350 employees which is about 3.5% of their workforce. The company says that it will also be closing five stores in order to adjust to the online-shopping era. (Photo by Michael M. Santiago/Getty Images)
    Michael M. Santiago | Getty Images News | Getty Images

    Department store Macy’s said Monday its board has unanimously decided to end negotiations with the activist group that had been looking to take the retailer private for roughly $6.9 billion, saying in a statement that questions on financing and premium were insurmountable.
    “We have concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value,” Macy lead independent director Paul Varga said in a press release.

    Arkhouse and Brigade had for months been attempting to buy out the storied retailer. Earlier this month, the bidders increased their offer to $24.80 per share, the latest in a series of price hikes since they first launched their takeover effort last year.
    Macy’s said the company had gone “well beyond what is customarily required” in a due diligence period, offering the bidder group store-by-store profit and loss information and leases for each location. The company also noted that Arkhouse and Brigade had been allowed to share that confidential information with more than a dozen “credible financing sources.”
    Arkhouse, after its initial efforts had been rebuffed, said earlier this year it intended to mount a proxy fight for control of Macy’s. The two sides were able to reach a settlement in April, adding two independent directors to the Macy’s board.
    Arkhouse did not immediately return a request for comment. Shares of Macy’s fell roughly 15% in premarket trading Monday.
    Macy’s is in the middle of a turnaround effort led by CEO Tony Spring, who stepped into the top job in February. The department store operator announced earlier this year that it would close about 150 of its namesake stores and open new locations of Bloomingdale’s and Bluemercury, its two brands that have put up stronger results. It’s also opening smaller Macy’s locations in bustling strip malls in the suburbs.

    But the legacy department store operator’s efforts to grow sales have been stymied by high inflation, as consumers became more selective about spending on discretionary items. Macy’s has had to fight to stay relevant, too, as younger shoppers turn to online players like Shein, big-box stores like Target and off-price chains like T.J. Maxx instead of department stores.
    For the fiscal year, Macy’s expects net sales to range between $22.3 billion and $22.9 billion, which would be a drop from $23.09 billion in 2023. It expects comparable sales, which take out the impact of store openings and closures, to range from a decline of about 1% to a gain of 1.5% on an owned-plus-licensed basis and including third-party marketplace sales.
    On an earnings call in late May, Spring said Macy’s is in the “early innings” of revitalizing its namesake stores. Yet he pointed to better sales results at the first 50 stores where Macy’s had invested in more staffing, sharper merchandise displays and special events.
    Arkhouse is a well-known real estate investment firm led by Gavriel Kahane and Jonathon Blackwell. While it is not a conventional activist investing firm, it has made a handful of unsolicited bids for REITs in the last few years. Brigade Capital Management focuses on retail companies, and has previously invested in names like Sears and Neiman Marcus.
    Together, the bidding group sought to unlock what it saw as trapped value inside Macy’s real estate holdings, while simultaneously overhauling the company’s operations. Other department store names have been activist targets in the recent past for similar reasons: In 2022, activist fund Macellum urged Kohl’s to sell itself. More

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    Goldman Sachs tops estimates on better-than-expected fixed income trading

    Here’s what they reported: Earnings of $8.62 per share vs. $8.34 per share LSEG estimate
    Revenue of $12.73 billion vs. $12.46 billion estimate

    David Solomon, Goldman Sachs interview with David Faber, September 7, 2023.

    Goldman Sachs said Monday that it topped profit and revenue estimates on better-than-expected fixed income results and smaller-than-expected loan loss provisions.
    Here’s what the company reported:

    Earnings: $8.62 per share vs. $8.34 per share LSEG estimate
    Revenue: $12.73 billion vs. $12.46 billion estimate

    Goldman said second-quarter profit jumped 150% from a year earlier to $3.04 billion, or $8.62 per share; the bank’s results a year ago were hamstrung by write-downs tied to commercial real estate and the sale of a consumer business.
    Companywide revenue rose a more modest 17% to $12.73 billion on growth in the bank’s core trading, advisory, and asset and wealth management operations.
    Fixed income was a highlight for the quarter; revenue there jumped 17% to $3.18 billion, roughly $220 million more than the StreetAccount estimate, on activity in interest rate, currency and mortgage trading markets.
    Another boost for Goldman came thanks to the firm’s shrinking exposure to consumer loans: The bank’s provision for credit losses in the quarter fell 54% to $282 million; that is significantly below the $435.4 million StreetAccount estimate.
    In other places, the bank was merely in line with expectations; for instance, equities trading climbed 7% to $3.17 billion, matching the StreetAccount estimate, on strength in derivatives activity.

    The bank’s asset and wealth management division produced a 27% increase in revenue to $3.88 billion, also essentially matching the StreetAccount estimate, on gains in equity investments and rising management fees.
    The firm’s platform solutions division saw revenue climb 2% to $669 million, edging out the $652.1 million estimate, on rising credit card balances and deposits.
    But Goldman’s well-known investment banking business disappointed compared to rivals; investment banking fees rose 21% to $1.73 billion, slightly under the $1.8 billion StreetAccount estimate. The source of the miss appeared to be lighter-than-expected advisory fees of $688 million, compared with the $757.3 million estimate.
    Goldman’s 21% increase in investment banking fees in the quarter compared with jumps of over 50% for both JPMorgan Chase and Citigroup; JPMorgan in particular cited a flurry of activity toward the end of the period that boosted results.
    Goldman CFO Denis Coleman told reporters that the bank still had a No. 1 market share for mergers and the comparison had to do with better relative performance a year ago.
    Shares of New York-based Goldman fluctuated between gains and losses of less than 1% in premarket trading.
    Expectations have been set high for Goldman Sachs, with Wall Street businesses in the midst of a rebound after a dismal 2023. That’s because out of the six biggest U.S. banks, Goldman is the most reliant on investment banking and trading to generate revenue.
    On Friday, rivals JPMorgan and Citigroup both topped expectations thanks to surging investment banking fees and better-than-expected equities trading results.
    Bank of America and Morgan Stanley report results Tuesday.
    This story is developing. Please check back for updates. More