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The American consumer is still strong despite roaring inflation and will pose a challenge to the Federal Reserve’s mission to tamp down inflation, Bank of America CEO Brian Moynihan told CNBC’s Jim Cramer on Wednesday.
“One of the toughest jobs they have is the American consumer is still in pretty good shape,” Moynihan said in an interview on “Mad Money.”

The American consumer is still strong despite roaring inflation, and that will pose a challenge to the Federal Reserve’s mission to tamp down inflation, Bank of America CEO Brian Moynihan told CNBC’s Jim Cramer on Wednesday.
“One of the toughest jobs they have is the American consumer is still in pretty good shape,” Moynihan said in an interview on “Mad Money.”

“Data through last Friday basically says that for the month of July … [spending] is up about 10 percentage points from last year’s July first three weeks. And the transaction growth is 6% to 7%, so that means it’s growing,” he added.
Moynihan’s comments come after the Federal Reserve raised interest rates by 0.75 percentage point on Wednesday afternoon and indicated it could take a softer approach with future rate hikes, though Chair Jerome Powell left the door open about the next move.
The chief executive said the bank feels good about the state of the American consumer, noting that consumers’ spending on experiences in particular is holding strong.
“People are spending on vacations. European transactions are through the roof right now. Spending on vacations, theme parks; home improvement [is] a little bit more mitigated, but still holding on bigger than ’19,” he said.
He added that it’s not only affluent Americans who are choosing to spend this summer. Median-income earners who had around $3,500 in their accounts pre-pandemic have about $13,000 now, and their cash flow is still positive, though under pressure due to inflation, according to Moynihan.

High rent prices also threaten to keep inflation from coming down. While some cities saw a decrease in median rent prices earlier this summer, the average rent for an apartment in Manhattan was a new record, at more than $5,000 last month.
“Overall, gas seems to be mitigating, house prices seem to be mitigating, so I think it’s starting to work, but we’ve got to watch and make sure rent doesn’t kick it back through the roof,” Moynihan said.
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Health and Human Services Secretary Xavier Becerra said the federal government will announce allocations of the 786,000 vaccine doses to local authorities on Thursday.
The doses couldn’t be released until the Food and Drug Administration cleared them for use.
The FDA approved the two-dose Jynneos vaccine in 2019 for people ages 18 and older who are at high risk of exposure to monkeypox or smallpox.
Limited supply of the vaccine has led to long lines at clinics across the U.S.

A person holds doses of Imvanex vaccine used to protect against Monkeypox virus at the Edison municipal vaccination centre in Paris, France July 27, 2022.
Alain Jocard | Pool | Reuters

The U.S. will make 786,000 additional monkeypox vaccine doses available to local health departments “as soon as possible” after the Food and Drug Administration approved the shots for distribution, the nation’s top health official said on Wednesday.
Health and Human Services Secretary Xavier Becerra said the federal government will announce more allocations of the two-dose vaccine, called Jynneos, for local health departments on Thursday. The U.S. vaccination campaign against monkeypox has faced major hurdles as demand for the shots has outstripped supply, leading to long lines at clinics and protests in some cities.

The U.S. has reported more than 3,500 cases of monkeypox across 46 states, Washington, D.C., and Puerto Rico, according to the Centers for Disease Control and Prevention. The U.S. has the second-highest number of monkeypox cases in the world behind Spain.
The Jynneos vaccine is made by the Danish biotech company Bavarian Nordic. The FDA had to inspect and sign off on a Bavarian Nordic plant in Denmark to ensure the shots met quality standards. Doses were shipped to the U.S. while the FDA conducted its review this month and can now be distributed to local authorities for use.

House Democrats, in a letter to the White House last week, criticized the pace of the FDA inspection and called on President Joe Biden to use his executive authority to speed up delivery. The FDA began to inspect the facility in early July, two months after the beginning of the global monkeypox outbreak.
“It is unclear why the FDA delayed inspection of a stockpile needed for biodefense, and this omission has cost valuable time in the U.S. response to monkeypox. Bureaucratic delays should not prevent us from getting the vaccine doses we need now,” Reps. Mondaire Jones and Jerrold Nadler, both of New York, wrote in the letter signed by 48 other members of Congress.
The FDA’s top vaccine official, Dr. Peter Marks, told reporters during a call earlier this month that the agency and HHS worked to expedite approval of the Bavarian Nordic facility soon after the first confirmed monkeypox case in the U.S. The doses were originally scheduled for release in the fall, Marks said.

The House Democrats also called on the White House to declare a public health emergency and work with Congress to secure additional funding to respond to the outbreak.
The U.S. has shipped more than 300,000 doses of the Jynneos vaccine to state and local health authorities since May, according to the Biden administration. HHS also has secured an additional 5 million doses for the U.S. that will ship through the middle of 2023.
The FDA approved the Jynneos vaccine in 2019 for people ages 18 and older who are at a high risk of exposure to monkeypox or smallpox. The viruses are in the same family, though monkeypox causes milder disease. There is no data on how effectively the vaccines will prevent disease in the current outbreak, according to the CDC.
Monkeypox is primarily spreading through close physical contact during sex, and currently men who have sex with men are the highest risk of infection. About 99% of monkeypox patients in the U.S. are men, and 98% of the 309 patients who provided demographic information identified as men who have had sex with men, according to the CDC.
Vaccination with Jynneos should begin within four days of exposure to monkeypox to have the best chance of preventing disease onset, according to the CDC. The two doses are administered 28 days apart. If the vaccine is administered between four and 14 days after exposure, the shots may not prevent disease but could reduce symptoms.
The CDC is recommending vaccination for people with confirmed or presumed monkeypox exposures as well as people at high risk of infection. The U.S. also has more than 100 million doses of an older generation smallpox vaccine called ACAM2000 that is likely effective at preventing monkeypox, but ACAM2000 can have serious side effects. It’s not recommended for those with weak immune systems including people who are HIV-positive, pregnant women, and people with eczema and similar skin conditions.

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Ford reported second-quarter results that beat Wall Street’s estimates.
The company’s adjusted operating income more than tripled from a year ago, when its production was hit hard by a global shortage of semiconductor chips.
Ford reiterated its previous guidance for the full year and said it will raise its dividend, but wouldn’t comment on reports that it’s planning layoffs.

Ford CEO Jim Farley at the company’s Dearborn, Michigan, plant where it’s building the electric F-150 Lightning on April 26, 2022.
CNBC | Michael Wayland

Ford Motor Company said that its adjusted operating income more than tripled from a year ago, to $3.7 billion, as it was able to deliver more of its hottest new products to customers.
Ford also reiterated its previous guidance for the full year, and said that it will increase its quarterly dividend to 15 cents per share, the amount it paid before the Covid-19 pandemic.

Shares were up over 6% in extended trading after the news was released.
Here are the key numbers:

Adjusted earnings per share: 68 cents, up from 12 cents in the second quarter of 2021. Wall Street analysts polled by Refinitiv had expected 45 cents.
Automotive revenue: $37.91 billion, up from $24.13 billion in the second quarter of 2021. Analysts had expected $34.32 billion, on average, according to Refinitiv.
Net income: $667 million versus $561 million in the second quarter of 2021.

Ford said that its adjusted earnings before interest and tax, or adjusted EBIT, jumped to $3.7 billion from $1.1 billion a year ago, as its margin improved to 9.3% from 3.9% on supply chain improvements and a more profitable mix of products sold. But despite that gain, Ford’s net income was just $667 million after it accounted for a $2.4 billion decline in the value of its stake in electric vehicle startup Rivian Automotive.
Ford’s U.S. sales were up 1.8% in the second quarter from a year ago, powered by an 8% year-over-year increase in sales of Ford brand SUVs and crossovers. Despite ongoing supply chain challenges, the automaker was able to build more of its popular models for its U.S. dealers than a year ago. That was good news for the company’s profit margins, as those incremental SUV sales largely replaced sales of Ford’s now-discontinued and less-profitable car models.
But, the company said, inflation — specifically, higher prices for key commodities and transportation — offset those gains to some extent.

Chief Financial Officer John Lawler said that despite inflation headwinds, Ford is standing by its previous guidance for the full year. It still expects adjusted EBIT of $11.5 billion to $12.5 billion for the year, which would represent 15% to 25% growth from last year, with adjusted free cash flow between $5.5 billion and $6.5 billion.

Ford is in the midst of a major restructuring, devoting more resources to electric vehicles and trimming $3 billion in annual costs from its internal-combustion development efforts. Starting next year, the company will report results for three business units: Ford Blue, representing its legacy internal-combustion business; Ford Model e, its electric vehicle business; and Ford Pro, its commercial vehicle operation.
Lawler reiterated that Ford is targeting a total company adjusted EBIT margin of 10% — and an 8% EBIT margin from its EVs — by 2026. He did acknowledge that it is not “cost competitive” with rivals at the moment, something that the company is working to change. But he declined to comment on a Wall Street Journal report that Ford is planning to lay off thousands of workers as part of its restructuring plan.
Ford said that its shipments in Europe were up about 22% from the year-earlier period to about 222,000 vehicles on supply chain improvements and strong demand for its commercial vehicles. But Ford’s wholesale shipments in China fell 24% in the second quarter, to about 114,000 vehicles, amid extended government-mandated shutdowns near Shanghai and in other parts of eastern China.
Ford said last week that it has secured 100% of the battery supplies it will need to deliver electric vehicles at a rate of 600,000 per year by the end of 2023, and that it’s on track to build 2 million a year by 2026.

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CNBC’s Jim Cramer on Wednesday said that investors should judge stocks individually rather than on fears of a looming recession, after the Federal Reserve indicated it could start taking a softer approach to raising interest rates.
“The Fed looks to be out of the way until the next meeting in September — maybe they’re ahead of the game, even — with the data starting to go their way,” the “Mad Money” host said.

CNBC’s Jim Cramer on Wednesday said that investors should judge stocks individually rather than on fears of a looming recession, after the Federal Reserve indicated it could start taking a softer approach to raising interest rates.
“The Fed looks to be out of the way until the next meeting in September — maybe they’re ahead of the game, even — with the data starting to go their way,” the “Mad Money” host said.

“So, let’s go case by case and I bet that with a softer background, the best earnings will be rewarded with higher stock prices, while the declines in everything else at last could be more muted,” he added.
The Fed raised interest rates by 0.75 percentage point on Wednesday in an effort to tamp down inflation. Chairman Jerome Powell said in a press conference that the central bank could raise interest rates by another 0.75 percentage point in September, but that decision hinges on what the economic data shows.
All the major averages closed up for the day, with tech names leading the way after Alphabet and Microsoft missed on earnings and revenue but still reported better-than-feared results elsewhere.
Cramer theorized that the Fed will be able to engineer a soft landing by taking a data-driven approach.
“We now know that Powell doesn’t want to cause a recession and doesn’t think he needs to cause a recession, so there’s an advantage for the bulls here, especially because he’s caught up to the curve and may be past it,” he said.

Disclosure: Cramer’s Charitable Trust owns shares of Alphabet and Microsoft.

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Spirit and Frontier announced plans to merge in February.
Jetblue came in with an all-cash offer in April.
Both suitors sweetened their offers though Spirit delayed a vote four times as it lacked shareholder support for the Frontier deal.

A Frontier Airlines airplane taxis past a Spirit Airlines aircraft at Indianapolis International Airport in Indianapolis, Indiana, on Monday, Feb. 7, 2022.
Luke Sharrett | Bloomberg | Getty Images

Spirit Airlines terminated its merger agreement with Frontier Airlines on Wednesday, months after a rival bid by JetBlue Airways marred the planned tie-up.
The announcement ends a protracted battle over the budget airline known for its bare bones service and low fares. Spirit said it would continue its “ongoing discussions with JetBlue as we pursue the best path forward for Spirit and our stockholders.”

A JetBlue takeover would create the country’s fifth-largest airline. A combined Spirit and Frontier would have also ranked fifth.
Shareholders on Wednesday were set to vote only on the proposed Spirit-Frontier combination, which JetBlue spent weeks urging shareholders to turn down. The New York-based carrier said in a statement that it was pleased the Frontier agreement was terminated and that it is engaged in discussions with Spirit “toward a consensual agreement as soon as possible.”
The termination of the Spirit-Frontier deal is a blow to the discount carriers that planned to combine forces into a budget behemoth. Frontier’s CEO and other people familiar with the matter had previously said Spirit lacked the shareholder support for the Frontier combination.
Spirit postponed the shareholder vote on the merger four times as it struggled to drum up enough shareholder support. In a July 10 letter to his Spirit counterpart, Frontier CEO Barry Biffle called its latest sweetened offer its “best and final.”
The termination of the Spirit-Frontier deal makes it easier to get to a takeover deal done with JetBlue, which is seeking to buy the budget airline outright for about $3.7 billion and refurbish its planes in JetBlue style, featuring seatback screens and legroom. Ongoing talks for a JetBlue takeover could still fall apart.

“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier Board took a disciplined approach throughout the course of its negotiations with Spirit,” said William Franke, chair of Frontier’s board and managing partner of Indigo Partners, Frontier’s majority shareholder in a release.
Spirit’s has board repeatedly rebuffed JetBlue’s increasingly sweetened offers, arguing that it was unlikely that regulators would approve the takeover.
Even if JetBlue and Spirit reach a deal they would face a high hurdle for the Justice Department’s blessing. The Biden administration has vowed to crack down on consolidation.
Executives for all three airlines said their preferred deal would help them compete better with the top four U.S. carriers — American, Delta, United and Southwest — which control about three-quarters of the domestic market. They also argued the deals would give them access to narrow-body jets, orders for dozens more, and trained pilots, which are in short supply.
Spirit, however, has raised concerns about a JetBlue takeover because of that airline’s alliance with American in the Northeast, a partnership the Justice Department last year sued to undo.
Also on Wednesday, Frontier Airlines reported a $13 million profit for the second-quarter, a drop from last year and 2019. The carrier said higher costs offset a surge in revenue, which came in at a record $909 million, 43% higher than the same quarter of 2019, before the pandemic.
Denver-based Frontier said it expects to generate record revenue in the third quarter.
Frontier shares were little changed in after-hours trading, while JetBlue’s were down 0.6%. Spirit shares were up more than 2%.

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Best Buy on Wednesday cut its forecast for the year and the second quarter, citing weaker demand as consumers feel pressure from inflation.
The retailer said it expects same-store sales to decline around 11% for the fiscal year, compared with the drop of between 3% and 6% that it forecast in May.
CEO Corie Barry, however, emphasized that sales are higher than pre-pandemic levels and the company is in a strong position despite a more challenging economic backdrop.

Customers shop at a Best Buy store on August 24, 2021 in Chicago, Illinois.
Scott Olson | Getty Images

Best Buy on Wednesday cut its forecast for its fiscal year and second quarter, saying it has seen weaker demand for consumer electronics amid inflation.
The consumer electronics retailer said it now expects same-store sales to decline about 13% for the current three-month period, which ends Saturday. That’s lower than what Best Buy said in May, when it predicted comparable sales would be roughly in line with the 8% decline in the first quarter.

For the 12-month period that ends in late January, Best Buy said it expects same-store sales to decline around 11% compared with the drop of between 3% and 6% that it forecast in May.
Best Buy said it will pause share buybacks, but will continue to pay its quarterly dividend. It also said in a news release that it “will continue to actively assess further actions to manage profitability.” The company did not immediately respond to a request for details about those potential steps.
With Wednesday’s announcement, Best Buy joins a growing list of retailers including Gap, Adidas, Kohl’s, Target and Walmart that have warned of lower sales or profits as consumers feel pinched by inflation or shift spending to services, such as travel and dining out, rather than goods.
Yet Best Buy said its inventory levels at the end of the second quarter will be approximately flat compared with the year-earlier period. That’s a notable difference from Walmart, Target and Gap, which have a glut of unwanted inventory weighing on profit margins.
Best Buy already anticipated its sales would slow as it lapped a period when consumers had stimulus dollars and unusually big appetites for new laptops, home theater equipment and kitchen appliances during the pandemic. It had already lowered its forecast in May.

At that time, CEO Corie Barry said consumers were “pulling back at a faster, deeper pace than we had initially assumed” as they spent money on experiences or became more budget-conscious as food and gas prices rose.
On Wednesday, Barry said the economic backdrop has become more challenging.
“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May,” she said in a news release.
Yet Barry added that its sales are higher than before the pandemic, emphasizing the company’s strong position even in a turbulent time.
The company has chased new growth opportunities, such as adding merchandise like exercise equipment, electric bikes and high-tech beauty gadgets, and has launched Totaltech, a subscription program that includes perks like tech support and extended warranties.
Best Buy’s announcement comes after Walmart sent shock waves across the retail industry on Monday, when the big-box behemoth cut its profit outlook. Walmart also said consumers are skipping over higher-margin discretionary goods, citing rising prices for food and gas. The company raised its sales outlook, however, saying shoppers have turned to its stores for low-priced groceries.
Target slashed its profit margin forecast twice, first in May and then in June, saying it would take aggressive steps to get rid of unwanted merchandise ahead of the crucial back-to-school and holiday seasons — including canceling orders and offering deep discounts.
Best Buy shares initially fell more than 10% following the announcement, but shares were only down about 2% after investors digested the news. The company will report its second-quarter earnings results on Aug. 30.
Read the company’s news release here.

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