Raphael Stevens

More stories

  • 113 Shares189 Views

    in Finance

    China reports second-quarter GDP growth of 4.7%, missing expectations

    China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7%.
    That’s slower than the 5.3% year on year GDP increase in the first quarter.
    Retail sales for June missed expectations, while industrial production figures beat.

    Chinese-made cars wait to be loaded onto a ship for export at Yantai Port on July 12, 2024, in Shandong province of China.
    Vcg | Visual China Group | Getty Images

    BEIJING — China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7% year on year, missing expectations of a 5.1% growth, according to a Reuters poll.
    June retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast.

    “We estimate that discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns,” Oxford Economics Lead Economist Louise Loo said in a note.
    The firm now pegs China’s 2024 GDP growth at 4.8%, higher than the 4.4% it estimated in December 2023 for the year ahead.
    Industrial production year-on-year growth in June, however, beat expectations at 5.3%, compared with Reuters’ estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in June.

    Urban fixed asset investment for the first six months of the year rose by 3.9%, meeting expectations. Investment in infrastructure and manufacturing slowed on a year-to-date basis in June versus May, while real estate investment declined at the same 10.1% rate.
    Housing-related wealth in China rose by 2.2% in 2023, down sharply from the13% average annual pace between 2016 and 2021, Oxford Economics said in late May.

    “We must work harder to invigorate the market and stimulate the internal impetus,” the bureau said in an English-language press release.
    It also called for efforts to “consolidate and enhance the momentum for economic recovery and growth, so as to ensure the sustained and sound development of the economy.”
    The urban unemployment rate in June was unchanged from the prior month at 5%, the bureau said. The jobless rate for people ages 16 to 24 who are not in school typically comes out a few days after the overall figure. The latest data available showed the youth unemployment rate remained high, at 14.2% in May.
    For the first half of the year, average per capita disposable income for city residents was 27,561 yuan ($3,801), a nominal growth of 4.6% from a year ago, the data showed.
    Rural disposable income grew at a faster rate, up 6.8% in nominal terms, but at 11,272 yuan, it was less than half that of urban residents.

    No press conference

    The National Bureau of Statistics did not hold a press conference for the data release. Separately, China’s high-level policy meeting, the Third Plenum, kicks off Monday.
    Bruce Pang, chief economist and head of research for Greater China at JLL, said he was looking forward to how the plenary meeting can boost confidence and stabilize expectations.
    More work will be needed for China to reach its target of around 5% growth, because the economy only expanded by 5% in the first half, and growth in the second half will likely be slower, he said.
    China’s GDP grew by 5.3% year on year in the first quarter in real terms.
    In nominal terms, GDP grew by 3.97% in the first quarter, and 4.01% in the first half of the year, according to data accessed via Wind Information.
    China’s exports as a driver of growth have held up better than expected, but there are uncertainties about the future due to trade tensions, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science.
    He said China could increase its fiscal support and ease monetary policy in the second half of the year.
    China’s exports rose by a more-than-expected 8.6% from a year earlier, customs data released Friday showed. But imports fell by 2.3% year on year in June, missing expectations for slight growth.

    Cosmetics sales plunge

    Retail sales for the first six months of the year rose by 3.7%, with online sales of physical goods rising by 8.8%. Services sector sales rose by 7.5%.
    Sales of communications equipment, sports and other entertainment goods, as well as alcohol and tobacco rose by more than 10%. Sales of grain, oil and food jumped 9.6%.
    In June, the sports category saw sales drop by 1.5% from a year ago, while alcohol, tobacco and communication equipment saw sales rise.
    Cosmetics product sales plunged by 14.6% year on year in June as the worst-performing category.
    Catering sales rose by 5.4% in June from a year ago, for 7.9% growth for the first half of the year.
    Other measures also pointed to muted domestic demand.
    China’s consumer prices rose by 0.2% in June, year on year, missing expectations. Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year on year in June, slightly slower than the 0.7% increase in the first six months of the year.

    Weak credit demand

    China’s credit data released Friday showed a sharp drop in the growth of broad money supply and new yuan loans in the first half of the year versus the same period in 2023.
    Household loans increased by 1.46 trillion yuan ($200 billion) in the first six months of the year, nearly half the 2.8 trillion yuan in new loans for the category last year, according to the People’s Bank of China.
    Loans to businesses increased by 11 trillion yuan in the first half of the year, slightly less than the 12.81 trillion yuan recorded for the same period last year.
    “June money and credit data indicated credit demand remained weak,” Goldman Sachs analysts said in a report Friday. “The recent policy communication suggests that the PBOC continues to focus on enhancing monetary policy transmission and downplay the importance of aggregate credit growth. Looking ahead, the growth of new CNY loans and M2 may gradually slow down further.” More

  • 138 Shares99 Views

    in Finance

    Here’s the deflation breakdown for June 2024 — in one chart

    Deflation measures how quickly prices are declining for consumer goods and services.
    Prices have deflated for a range of items like physical goods, airfare, gasoline and some groceries since June 2023, according to the consumer price index.
    One explanation: Supply and demand dynamics have normalized after being thrown out of whack during the Covid-19 pandemic.

    97 / Getty

    Inflation has throttled back significantly since peaking two years ago. The U.S. economy is even seeing some prices deflate for consumers.
    Deflation measures how quickly prices are falling for a consumer good or service. It’s the opposite of inflation, which gauges how quickly prices are increasing.

    Physical goods have accounted for much of the deflation over the past year, according to economists. This is happening as supply and demand dynamics that were thrown out of whack in the pandemic normalize.

    Commodity prices (excluding those related to food and energy) — so-called “core” goods — have declined by 1.8%, on average, since June 2023, according to the consumer price index, a key inflation measure.
    “We have seen core-goods deflation in quite a few categories,” according to Olivia Cross, a North America economist at Capital Economics.
    “It’s quite broad based,” she added. “I think that’s something we expect to persist for a little while.”
    Prices on gasoline and many grocery items have also pulled back.

    However, consumers shouldn’t expect a broad and sustained fall in prices across the U.S. economy. That generally doesn’t happen unless there’s a recession, economists said.

    Why prices are deflating for goods

    Demand for physical goods soared in the early days of the Covid pandemic as consumers were confined to their homes and couldn’t spend on things such as concerts, travel or dining out.
    The health crisis also snarled global supply chains, meaning goods weren’t hitting the shelves as quickly as consumers wanted them.
    Such supply-and-demand dynamics drove up prices.

    The environment has changed, though: The initial pandemic-era craze of consumers fixing up their homes and upgrading their home offices has diminished, cooling prices. Supply-chain issues have also largely unwound, economists said.
    Since June 2023, consumers have seen prices deflate for goods like home furniture for a living room, kitchen or dining room (down by 4.9%), appliances (-3.6%), toys (-6%), dishes and flatware (-10.2%) and outdoor equipment like grills and garden supplies (-4.3%).
    More from Personal Finance:High inflation largely not Biden’s, Trump’s fault: economistsHere’s the inflation breakdown for June 2024 — in one chartHere’s why housing inflation is still stubbornly high
    Car buyers have also seen prices for new vehicles fall more than 1% and for used vehicles by roughly 10% over the past year. Vehicle prices were among the first to surge when the economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.
    “Vehicle prices remain under pressure from improved inventory and elevated financing costs,” Sarah House and Aubrey George, economists at Wells Fargo Economics, wrote in a note this week. (Higher financing costs are the result of the Federal Reserve raising interest rates to tame inflation.)

    Outside of supply-demand dynamics, the U.S. dollar’s strength relative to other global currencies has also helped rein in prices for goods, economists said. This makes it less expensive for U.S. companies to import items from overseas, since the dollar can buy more.
    Long-term forces like globalization have also helped, such as importing more lower-priced goods from China, Cross said. However, a shift toward higher tariffs and less free trade could serve to push up goods prices “quite significantly,” she added.

    Why there’s been deflation for food, travel, electronics

    Prices have also declined for items including food, travel and electronics.
    Grocery prices have fallen for items such as ham, rice, potatoes, coffee, milk and cheese, according to CPI data.
    Each grocery item has their own supply-and-demand dynamics that can influence pricing, economists said. For example, apples prices are down 12% in the past year due to a supply glut, while egg prices surged in 2022 due largely to a historic and deadly outbreak of bird flu.

    Gasoline prices have fallen by 2.5% in the past year. Weaker recent prices were the result of “tepid gasoline demand, increasing supply, and falling oil costs,” according to AAA.
    Travelers have seen deflation for airline fares (prices are down 5.1% annually) amid factors like an increased volume of available seats. Hotel rates are also down, by 2.8%, and car rental rates by 6.3% since June 2023.

    Consumers also appear to be more price sensitive, which has caused retailers to be a bit more cautious, economists said.
    For example, there have been more price promotions lately at grocery stores, with a few “major retailers recently announcing price cuts that are likely to pressure competitors’ pricing,” wrote House and George of Wells Fargo.
    Elsewhere, some deflationary dynamics may be happening only on paper.
    For example, in the CPI data, the Bureau of Labor Statistics controls for quality improvements over time. Electronics such as televisions, cellphones and computers continually get better, meaning consumers generally get more for the same amount of money.
    That shows up as a price decline in the CPI data.

    Don’t miss these insights from CNBC PRO More

  • 150 Shares169 Views

    in Business

    SpaceX’s Falcon 9 rocket suffers rare inflight failure, is grounded during investigation

    A launch of SpaceX’s Falcon 9 rocket carrying Starlink satellites suffered a rare midflight failure Thursday evening.
    The rocket’s upper second stage failed to reignite its engine as planned and was destroyed, SpaceX CEO Elon Musk confirmed.
    Falcon 9 is grounded until the Federal Aviation Administration signs off on SpaceX’s investigation of the incident, the federal regulator confirmed to CNBC.

    SpaceX’s Falcon 9 is pictured launching satellites to orbit in space after it lifted off from the Vandenberg Space Force Base in California, U.S., in this screenshot obtained from a handout video released on July 12, 2024. 
    Spacex | Via Reuters

    SpaceX’s Falcon 9 rocket is grounded, pending an incident investigation, after an inflight failure — a rare misfire for the company’s workhorse vehicle.
    The mission, known as “Starlink Group 9-3,” launched from California’s Vandenberg Space Force Base on Thursday evening and was carrying 20 satellites bound for low Earth orbit.

    The rocket’s lower first stage, or booster, operated as expected before returning to land. But the rocket’s upper second stage failed to reignite its engine as planned and was destroyed, SpaceX CEO Elon Musk confirmed.
    “Upper stage restart to raise perigee resulted in an engine RUD for reasons currently unknown,” Musk wrote in a post on social media. RUD, or “rapid unscheduled disassembly,” is a term SpaceX uses to refer to an explosive or destructive event. The company said in a later update that the engine failure came after a leak of liquid oxygen in the second stage.
    Falcon 9 is grounded until the Federal Aviation Administration signs off on SpaceX’s investigation of the incident, the federal regulator confirmed.
    “The FAA will be involved in every step of the investigation process and must approve SpaceX’s final report, including any corrective actions,” the agency said in a statement to CNBC.

    A SpaceX Falcon 9 rocket flies carrying a payload of 22 Starlink internet satellites into space after launching from Vandenberg Space Force Base, as seen from Los Angeles, on March 18, 2024.
    Mario Tama | Getty Images

    The Starlink mission was the 69th Falcon 9 launch of the year — with the company averaging a blistering pace of a launch every two to three days in 2024 — but the investigation will likely delay launches planned in the weeks ahead, including two crewed missions: The private Polaris Dawn and NASA’s Crew-9.

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

    SpaceX still deployed the 20 Starlink satellites but noted that the second stage engine failure means the satellites were in “a lower than intended orbit.” In an update Friday afternoon, the company said it made contact with 10 of the satellites in an effort to use the satellites onboard thrusters to climb higher in orbit.
    Despite the attempted recovery, SpaceX confirmed that the “enormously high-drag environment” from being in the wrong, lower orbit means the satellites will not be recovered. The 20 satellites will re-enter the Earth’s atmosphere and burn up.
    “They do not pose a threat to other satellites in orbit or to public safety,” the company wrote in a statement on its website.

    A SpaceX Falcon 9 rocket lifts off on the USSF-124 mission for the U.S. Space Force and Missile Defense Agency in Cape Canaveral, Florida, on Feb. 14, 2024.
    Joe Skipper | Reuters

    Falcon 9 has been on an unrivaled run of success for nearly a decade, chocking up more than 300 consecutive successful orbital launches since its previous inflight failure in June 2015, during the NASA cargo mission CRS-7.
    In total, SpaceX’s Falcon 9 has launched 354 missions to orbit, with more than 300 of those featuring successful landings and resulting in the reuse of rocket boosters more than 280 times.

    Don’t miss these insights from CNBC PRO More

  • 150 Shares159 Views

    in Finance

    Citigroup tops expectations for profit and revenue on strong Wall Street results

    Citigroup on Friday posted second-quarter results that topped expectations for profit and revenue on a rebound in Wall Street activity.
    Investment banking revenue surged 60% to $853 million, driven by strong issuance of investment grade bonds and a rebound in IPO and merger activity from low levels in 2023.
    Citigroup was just this week rebuked for failing to address its regulatory shortfalls, so analysts will be keen to ask Fraser about her long-running efforts to address the issue.

    Jane Fraser, CEO of Citi, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023. 
    Patrick T. Fallon | AFP | Getty Images

    Citigroup on Friday posted second-quarter results that topped expectations for profit and revenue on a rebound in Wall Street activity.
    Here’s what the company reported:

    Earnings: $1.52 a share vs. $1.39 a share expected, according to LSEG
    Revenue: $20.14 billion vs. $20.07 billion expected, according to LSEG

    The bank said net income jumped 10% from a year earlier to $3.22 billion, or $1.52 a share. Revenue rose 4% to $20.14 billion.
    Equities trading revenue rose 37% to $1.5 billion, driven by strength in derivatives and a rise in hedge fund balances, roughly $300 million more than the StreetAccount estimate.
    Fixed income revenue dipped 3% to $3.6 billion, essentially matching analysts’ expectations, on lower activity in rates and currency markets.
    Investment banking revenue surged 60% to $853 million, driven by strong issuance of investment grade bonds and a rebound in IPO and merger activity from low levels in 2023.
    Shares of the bank climbed 3% in premarket trading.

    “Our results show the progress we are making in executing our strategy and the benefit of our diversified business model,” Citigroup CEO Jane Fraser said in the release. “Markets had a strong finish to the quarter leading to better performance than we had anticipated.”
    Citigroup was just this week rebuked for failing to address its regulatory shortfalls, so analysts will be keen to ask Fraser about her long-running efforts to address the issue.
    Last year, Fraser announced plans to simplify the management structure and reduce costs at the third-biggest U.S. bank by assets. But earnings will take a backseat if the bank cannot appease regulators’ concerns about its data and risk management.  
    JPMorgan Chase reported results earlier Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
    This story is developing. Please check back for updates.
    Correction: This article has been updated to correct that Citigroup reported revenue of $20.14 billion for the second quarter. A previous version misstated the figure due to a rounding error. More

  • 125 Shares169 Views

    in Finance

    JPMorgan Chase tops second-quarter revenue expectations on strong investment banking

    JPMorgan Chase on Friday posted second-quarter profit and revenue that topped analysts’ expectations as investment banking fees surged 52% from a year earlier.
    Revenue rose 20% to $50.99 billion, topping the consensus estimate of analysts surveyed by LSEG.
    CEO Jamie Dimon noted in the release that his firm was wary of potential future risks, including higher-than-expected inflation and interest rates.

    JPMorgan Chase on Friday posted second-quarter profit and revenue that topped analysts’ expectations as investment banking fees surged 52% from a year earlier.
    Here’s what the company reported:

    Earnings: $4.26 per share adjusted vs. $4.19 estimate of analysts surveyed by LSEG
    Revenue: $50.99 billion vs. $49.87 billion estimate

    The bank said earnings jumped 25% from the year-earlier period to $18.15 billion, or $6.12 per share. Excluding items related to the bank’s stake in Visa, profit was $4.26 per share.
    Revenue rose 20% to $50.99 billion, topping the consensus estimate of analysts surveyed by LSEG, helped by better-than-expected investment banking fees and equities trading results.
    CEO Jamie Dimon noted in the release that his firm was wary of potential future risks, including higher-than-expected inflation and interest rates, even while stock and bond valuations currently “reflect a rather benign economic outlook.”
    “The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown,” Dimon said. “There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”
    Shares of JPMorgan slipped 1% in premarket trading.

    A rebound in Wall Street activity, especially on the advisory side, was expected to aid banks this quarter, and JPMorgan’s results bear that out.
    JPMorgan reaped $2.3 billion in investment banking fees, exceeding the StreetAccount estimate by roughly $300 million.
    Equities trading revenue jumped 21% to $3 billion, topping the estimate by $230 million, on strong derivatives results. Fixed income trading jumped 5% to $4.8 billion, matching the estimate.
    But the bank had a $3.05 billion provision for credit losses in the quarter, exceeding the $2.78 billion estimate, which indicated that it expects more borrowers will default in the future. A rise in charge-offs and moves to build loan loss reserves in the quarter was driven by the firm’s massive credit-card business, the bank said.
    “JPMorgan has navigated a challenging interest rate environment very well,” said Octavio Marenzi, CEO of consulting firm Opimas.
    Still, while banking and equities trading boosted results, “We see Main Street banking beginning to sputter,” Marenzi said. “Provisions for credit losses were up significantly, showing us that JPMorgan is expecting to see a rough patch in the US economy.”
    Wells Fargo and Citigroup also posted earnings Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
    This story is developing. Please check back for updates. More

  • 175 Shares199 Views

    in Business

    Women are set to inherit trillions of dollars in the great ‘horizontal wealth transfer’

    Up to $9 trillion is expected to be passed along to spouses and partners in the coming years as part of what’s being called “the horizontal wealth transfer,” according to a new report.
    There are over 43 million people in the Americas over the age of 75, with over $50 trillion in combined transferrable wealth.
    Women now make up over 11% of the world’s millionaires, nearly double the share in 2016, according to Julius Baer.

    Charday Penn | E+ | Getty Images

    Up to $9 trillion is expected to be passed along to spouses and partners in the coming years as part of what’s being called “the horizontal wealth transfer,” according to a new report.
    Over the next 20 to 30 years, aging baby boomers and older generations are expected to pass down $84 trillion in wealth to charity and family members. Younger generations, including Generation X, millennials and Generation Z are expected get the bulk of the inheritances.

    Yet because surviving spouses and partners typically get the initial inheritances, and because women typically outlive men, bequests in the coming years will largely go to women, according to the UBS Global Wealth Report.
    An estimated $9 trillion will be transferred “intra-generationally,” meaning from one spouse to another, according to the report.
    “Life expectancy varies between men and women, and quite frequently couples have an age gap, therefore the inheriting spouse will typically own and hold onto this wealth for an average of four years before passing it on,” the report said.
    UBS calls it the “horizontal wealth transfer,” since the wealth is moving intra-generationally rather than intergenerationally. And while little noticed, the horizontal transfers have the potential to reshape the wealth management, investing and luxury spending landscape, which has largely been dominated by men.
    “Most people have a rather feudal idea of wealth going down through generations,” said Paul Donovan, chief economist of UBS Global Wealth Management. “But about 10% is likely to go sideways, to spouses or partners and not yet giving it to children, although it will shift over time.”

    According to the report, the largest horizontal wealth transfers will be in the Americas. There are over 43 million people in that region over the age of 75, with over $50 trillion in combined transferrable wealth. The average age of the individuals passing down wealth is over 85, the report said.

    While some families may pass fortunes directly to next generations, inheritances can often be a two-step process — first going to the surviving spouse and then handed down by that spouse to the next generation. (Estate law typically allows the surviving spouse to inherit property of unlimited value without being subject to estate tax).
    The report estimates that after $9 trillion is passed to spouses, they will pass down over $8.4 trillion to next generations, making them key decision makers in the great wealth transfer.
    Those transfers, along with other broader forces in the economy, are adding to the so-called “feminization of wealth.” With women’s incomes and wealth rising, combined with inheritances for both older and younger inheritors, analysts expect women will make up a growing share of high net-worth investors and consumers.
    Women now make up over 11% of the world’s millionaires, nearly double the share in 2016, according to Julius Baer.

    Get Inside Wealth directly to your inbox

    The biggest impact will be on wealth management. Donovan said 45% of UBS’s wealth clients are now women.
    “It’s important when it comes to wealth management,” he said. Wealth management clients, he said, will likely be “different people, with different ideas and different things they want to do with their wealth.”
    A McKinsey report estimated that women are expected to control most of the $30 trillion in baby boomer wealth by 2030. While the wealth management industry has been traditionally dominated by male clients and male advisors (accounting for 85% of the latter group), McKinsey said that’s changing fast.
    “After years of playing second fiddle to men,” the report said, “women are poised to take center stage.”
    McKinsey said that compared with five years ago, 30% more married women are making financial and investment decisions, and more women than ever are the family breadwinners, “spurring growth in their investible assets.” 
    Luxury brands traditionally geared toward men are also adapting. In the luxury watch market, women’s watches are one of the fastest growing segments. Jean-Christophe Babin, the CEO of Bulgari, told me earlier this year that “the trend is toward more and more feminine and more unisex watches. Women have increasing power, in terms of independence, autonomy and purchasing power. We think that will continue.”
    Philanthropy could also benefit from the horizontal wealth transfer. Giving to groups focused on women and girls grew 9% in 2020, the latest year measured, to over $8 billion, according to the Women’s Philanthropy Institute at the Lilly Family School of Philanthropy.
    Melinda French Gates just pledged $1 billion to women’s and girls’ causes, and MacKenzie Scott has given away over $17 billion of her fortune since 2019, including large grants to Girl Scouts of the USA.
    “We will see a dramatic shift in ownership of wealth,” Donovan said. “It is going to be quite significant in looking at who controls the resources that finance the global economy.”

    Don’t miss these insights from CNBC PRO More

  • 150 Shares169 Views

    in Finance

    Wells Fargo shares tumble after net interest income falls short of estimates

    In the second quarter, Wells Fargo recorded $11.92 billion in net interest income, a key measure of what a bank makes on lending, marking a 9% year-over-year decline.
    That was below the $12.12 billion expected by analysts, according to FactSet. The bank said the drop was due to the impact of higher interest rates on funding costs.
    Wells Fargo’s second-quarter earnings and revenue exceeded Wall Street expectations.

    Wells Fargo on Friday reported a 9% decline in net interest income, even though its second-quarter earnings and revenue exceeded Wall Street expectations.
    Here’s what the bank did compared with Wall Street estimates, based on a survey of analysts by LSEG:

    Earnings per share: $1.33 versus $1.29 cents expected
    Revenue: $20.69 billion versus $20.29 billion expected

    The San Francisco-based lender recorded $11.92 billion in net interest income, a key measure of what a bank makes on lending, marking a 9% year-over-year decline. That was below the $12.12 billion expected by analysts, according to FactSet. The bank said the drop was due to the impact of higher interest rates on funding costs.
    Shares of Wells Fargo fell more than 5% in premarket trading.
    “We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” CEO Charlie Scharf said in a statement. “The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees.”
    Wells Fargo saw net income dip to $4.91 billion in the second quarter, from $4.94 billion during the same quarter a year ago. The bank set aside $1.24 billion as provision for credit losses, which included a modest decrease in the allowance for those losses. Revenue rose to $20.69 billion in the quarter.
    The bank repurchased more than $12 billion of common stock during the first half of 2024 and it expects to increase the third-quarter dividend by 14%.
    The stock is up more than 22% this year, outperforming the S&P 500.

    Don’t miss these insights from CNBC PRO More

  • 138 Shares169 Views

    in Business

    Inside a $60 million beachfront mansion with subterranean secrets and Italian flair

    The owner of a beachfront mansion in Delray Beach, Florida, is looking to shatter a local price record with a home that delivers old-school Italian flair above ground and hidden personality below.
    The upper levels are adorned with 300 stone-carved columns, vaulted ceilings and even a fresco painted in Florence, Italy.
    Meanwhile, the home’s subterranean space is packed with modern luxuries including a super car gallery, glowing tequila bar and a steel vault packed with piles of cash.
    CNBC takes a tour of the mansion, currently listed for $60 million.

    The Mar Pietra compound in Delray Beach, Florida, is being offered at $60 million.
    Daniel Petroni

    The owner of a beachfront mansion in Delray Beach, Florida, is looking to shatter a local price record with a home that delivers old-school Italian flair above ground and hidden personality below.
    While the upper levels are adorned with 300 stone-carved columns, vaulted ceilings and even a fresco painted in Florence, Italy, the home’s subterranean space is packed with modern luxuries including a super car gallery, glowing tequila bar and a steel vault packed with piles of cash.

    The two distinct design themes are wrapped in a limestone-clad residence located on the town’s ultra-high-end South Ocean Boulevard. The 23,000-plus square-foot home is called Mar Pietra, Italian for “sea stone.”
    “So much stone went into this house, I thought it was appropriate,” owner Massimo Musa told CNBC.

    Musa founded and sold several companies in the eye-care industry. He also develops real estate and built Mar Pietra with this now ex-wife.
    The passion project took five years to complete and employed dozens of craftsmen, painters and sculptors, many of them from Italy. Tons of limestone were shipped here from Mexico’s Yucatan Peninsula; hand-carved marble made the journey from Verona, Italy; and massive panels of cedar arrived from Colombia.

    Sunrise over the pool. Under the archways on the left is a loggia that includes an outdoor kitchen, dining area and lounge.
    Daniel Petroni

    According to the listing, the mega home sits on 100 feet of beachfront. There is a main residence and guest house and all together nine bedrooms, 12 full baths and seven half baths. The climate-controlled subterranean garage adds 4,000 more square feet, with even more space added via covered areas such as a luxurious loggia that houses another kitchen, bar, lounge and dining area.

    The massive estate is five times the size of the average Delray Beach home sold during the first quarter, and its eight-figure price tag is more than 18 times the area’s almost $3.3 million average sales price for a luxury home, according to the Elliman Report. The report defines luxury homes as the top 10% of sales.
    The highest sale price ever achieved in Delray Beach was $34 million for a listing also located on South Ocean Boulevard that sold in 2021. According to public records, the top sale price per square foot was also recorded in 2021, at just under $2,600 per square foot. Mar Pietra’s list price would put it right in line with that value metric.

    The grand salon’s ornately carved ceiling was inspired by a palazzo in Rome. The room overlooks the pool and ocean.
    Daniel Petroni

    The trophy home’s massive footprint and its giant oceanfront lawn are a rare sight on this strip of beach in Palm Beach County. According to Musa, that is because of the lot’s unique zoning history.
    Public records show he bought the lot, along with the lot across the street on the Intracoastal Waterway, for $9 million back in in 2002. At the time, the oceanfront parcel had a hotel on it, which means the land was under hotel zoning regulations. Musa, who immigrated to the U.S. from Italy, tore down the old building so he could build a beachfront family home that paid homage to his home country.

    A pair of stone staircases leads from the oceanfront lawn up to Mar Pietra’s limestone-clad sundeck and pool area.
    Daniel Petroni

    Even after the hotel’s demolition, Musa says, the land’s hotel zoning remained intact. That allowed him to build a home with a larger footprint and smaller setbacks. Plus, the residence could extend closer to the shoreline than current residential zoning typically allows. 
    Also grandfathered in was a portion of beachfront lot that was cleared decades ago by the hotel’s owners, something Musa told CNBC current regulation would never allow. That clearing is now a lush evergreen lawn, made of artificial grass, that rolls across the back of his one-acre property where it meets the natural vegetation on the sandy shoreline.

    A balcony on the home’s second level overlooks the pool, ocean and large artificial lawn that borders the beach.
    Daniel Petroni

    The home’s position 21 feet above sea level and its sheer size is impressive, but like many listings at this price point, it is not always easy to find a buyer. While the estate has been on and off the market since December 2021, its $60 million price tag holds steady. It is currently offered by South Florida listing agent Senada Adzem of Douglas Elliman.
    “This trophy estate stands as one of South Florida’s finest bespoke luxury properties, designed to evoke timeless elegance,” Adzem told CNBC.

    The main hall features vaulted ceilings and a few of the home’s 300 stone columns.
    Daniel Petroni

    The kitchen features Italian white marble and reclaimed beams that span the ceiling.
    Daniel Petroni

    According to the Elliman Report, luxury single-family home inventory in the first quarter rose more than 12% over the previous year, and the average sales price of a luxury single-family home in Delray Beach dropped more than 33%.
    Despite data that suggests the market may be experiencing some headwinds, Adzem remains confident in the list price and South Florida’s high-end real estate market.
    “The ultra-luxury real estate market will continue to prosper,” she said. “Wealthy clients love Palm Beach County, valuing oceanfront locations, privacy and uniqueness above all else.”
    To support that claim, Adzem points just 400 meters down the street to a sale in Highland Beach, where just this May an oceanfront home traded for $50 million, or more than $2,800 per square foot. On this coastline, Mar Pietra could actually be considered a relative bargain. A nearby smaller home, also on South Ocean Boulevard, recently listed for $74 million, or about $5,100 a square foot.

    The home’s family room, overlooking the pool and ocean.
    Daniel Petroni

    According to Adzem, Mar Pietra commands a premium in part for its quality of construction and the property’s rare zoning allowances, which she called priceless.
    “These generous zoning allowances enabled our client to create a truly unique property that would otherwise be impossible,” she said.

    A seating area in Mar Pietra’s loggia overlooking the sunrise.
    Daniel Petroni

    It is hard to imagine a potential buyer taking issue with the estate for being too small, but Adzem said in this part of Florida, it is not out of the question. So, the real estate broker and her client are ready to offer a solution.
    “What’s really unique about the home is the fact that my client is willing to sell it with the Intracoastal Waterway lot that would create the only ocean-to-intracoastal compound in Delray Beach, Florida.”
    The two-lot deal, Adzem said, would deliver enough land to develop another waterfront house that could include a rare spot on the Intracoastal Waterway to dock a mega yacht. As for the price tag to buy the full package deal, Adzem said she would only discuss that number with prospective buyers.

    Here is a closer look at Mar Pietra and what you would get for $60 million:

    Vehicles entering the estate pass through a porte-cochere that doubles as a guesthouse.
    Daniel Petroni

    The home’s driveway passes through a grand archway called a porte-cochere that leads to a circular motor court. Inside the limestone structure is a two-story guesthouse spanning more than 2,700 square feet with three bedrooms, three full baths and two half baths.

    At the center of the motor court is a fountain flanked by mature palms and framed by a driving surface that combines mosaics, marble and faux grass.
    Daniel Petroni

    Beyond the circular motor court is a giant stone staircase that ascends to the main residence.

    Mar Pietra’s grand staircase arrival.

    Through the arches at the top of the stairway is a central open-air courtyard. Musa says the design was inspired by Vizcaya Museum and Gardens in Miami.

    Dramatic archways surround the home’s open-air central courtyard.
    Daniel Petroni

    The courtyard leads to the home’s main entrance, where a butterfly staircase reigns over a double-height foyer.

    The foyer’s ceiling rises over 30 feet, with limestone archways, and a grand marble staircase.
    Daniel Petroni

    The two-story library is clad in stained cedar from Colombia, with a large marble fireplace carved in Verona, Italy.
    Daniel Petroni

    The home’s library spans two levels with a spiral staircase that rises up to the second floor — and the room delivers much more than books.

    The upper level of the wood-paneled library offers a closer look at the Italian fresco overhead.
    Daniel Petroni

    Musa says the cedar-wrapped room’s design was inspired by the Vanderbilt estate, while the fresco on the ceiling takes inspiration from the Sistine Chapel. The mural, Adzem told CNBC, was painted in Florence, Italy, shipped to Florida and affixed to the ceiling, where the artist made the final finishing touches.

    The library’s onyx bar with book-matched cedar panel walls and flooring designed with intricate inlays.
    Daniel Petroni

    The lower level of the library includes an onyx bar and a lounge area. On the upper level, windows around the home office are filled with views of the pool and ocean.

    The home office on the library’s upper level.
    Daniel Petroni

    The primary suite is also on the second floor, with views from every window.

    A seating area and double-sided fireplace at the entry of the primary suite’s sleeping quarters.
    Daniel Petroni

    Mar Pietra’s primary suite.
    Daniel Petroni

    The suite’s two baths feature contemporary designs, imported marbles and walk-in closets. The white marble bath flows seamlessly into a boutique-style, walk-in wardrobe with a cabinet island, jewelry showcase and separate shoe closet.

    A marble-clad bath in the primary suite.
    Daniel Petroni

    One of the primary suites’ two walk-in closets.
    Daniel Petroni

    Deep below the dune that Mar Pietra is perched upon is a subterranean lair with a very different design story. It is more modern down there and packed with contemporary luxuries.

    Mar Pietra’s subterranean garage is air-conditioned and spans more than 4,100 square feet.
    Daniel Petroni

    The home’s so-called auto lounge is an underground garage adorned with giant crystal chandeliers, ornate ceilings and parking for seven cars. During CNBC’s visit, it was staged bumper to bumper with $5 million worth of rare Lamborghinis. 

    The lower level’s lounge offers a view of the car salon through a floor-to-ceiling wall of curved glass.
    Daniel Petroni

    The parking area leads to a lounge designed for people who like to admire their rides. A wall of curved glass separates the lounge from the garage and delivers a great view of the parked supercars. The steel vault on the side wall is an art piece with a functioning door and stacks of money inside.

    The lower level’s tequilla bar is clad in white quartzite.
    Daniel Petroni

    The lower level also includes a tequila-only bar wrapped in quartzite. After dark, lights embedded in the stone can ignite the surfaces with a milky-white glow. 

    Mar Pietra’s subterranean home theater.
    Daniel Petroni

    There is also a state-of-the-art theater, with a floor-to-ceiling and wall-to-wall electronic screen, and it is one of the home’s two cinemas. More