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    Should you buy expensive stocks?

    On June 7th each share in Nvidia is due to become many. In one sense such stock splits ought not to matter much: they merely lower the share price, usually returning it to somewhere near $100, in order to make small trades easier. Yet for the company and its longtime backers this administrative exercise is cause to pop the champagne. For a split to be necessary in the first place, the share price must have multiplied, commonly by two or three, prompting each share to be divided by the same factor. Each Nvidia share, however, will become ten. Two years ago both Alphabet and Amazon split each of their shares into 20. Investors in big tech have had plenty of opportunities to let the corks fly.All three firms have made traditional valuation measures look hopelessly outdated. Dividend yields, for instance, were once a popular tool for assessing prospective returns. But Amazon has never made such a payout and Alphabet will make its first ever on June 17th (of 20 cents per $175 share). Nvidia’s quarterly dividend after the split will be just one cent per share, each priced at around $120. Plainly, there is no stretch of the imagination by which these payouts explain the stocks’ spectacular returns. More

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    Sternlicht defends gating Starwood REIT withdrawals, hopes it will be a ‘6-month thing’ as rates fall

    Starwood Capital Group CEO Barry Sternlicht defended his decision to cap how much money investors could pull from his real estate fund.
    Starwood introduced new restrictions that cap monthly withdrawals at 0.33% of net asset value.
    Sternlicht said he decided to implement the cap to protect loyal clients who never redeemed.

    Barry Sternlicht, chairman and CEO of Starwood Capital Group, speaks at the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, on May 7, 2024.
    David Swanson | Reuters

    Barry Sternlicht, Starwood Capital Group chairman and CEO, defended his decision to cap how much money investors could pull from his real estate fund amid mounting losses and redemption requests.
    “With all the hysteria in the media, people are saying, ‘I want to get out now and I’ll come back in later when the coast is clear.’ So we took a very tough decision,” Sternlicht said on CNBC’s “Squawk Box” Wednesday. “I decided that for the benefit of the 80% of people who’ve never redeemed we would slow down redemptions. … We hope this is going to be a six-month thing.”

    The investor’s $10 billion Starwood Real Estate Income Trust, which invests in multifamily, industrial and office properties, has suffered from steep declines as it became difficult to refinance loans in light of the Federal Reserve’s aggressive rate hikes.
    In a letter to shareholders on May 23, Starwood introduced new restrictions that cap monthly withdrawals at 0.33% of net asset value, compared with the previous 2% limit. Meanwhile, the firm also decided to waive 20% of its management fee.
    Sternlicht said he decided to implement the cap to protect loyal clients who never redeemed, which represents 80% of his investors.
    The firm said the real estate trust, one of the largest in the world, maintained $752 million of immediate liquidity as of the end of April.
    Sternlicht called the Fed’s monetary policy “unbelievably ineffective,” but he believes interest rates will come down soon.

    “The real estate asset class is probably the biggest victim of the unintended consequence of his actions,” he said. “The spreads are coming in, which means the markets are healing, the future’s getting clearer.”

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    Boeing Starliner launches for the first time carrying NASA astronauts to the ISS

    Boeing launched its first Starliner flight with astronauts on Wednesday.
    The launch took off at 10:52 a.m. ET from Cape Canaveral, Florida.
    Starliner’s crew debut has been delayed by years, while SpaceX’s competing Dragon capsule has flown astronauts for NASA regularly since 2020.

    Boeing launched its first Starliner flight with astronauts on Wednesday, beginning a crucial final flight test of the long-delayed spacecraft.
    The launch took off at 10:52 a.m. ET from Cape Canaveral, Florida, with two NASA astronauts aboard. Starliner is carried by a United Launch Alliance Atlas V rocket and is bound for the International Space Station.

    About 15 minutes after launch, the rocket released the Starliner capsule in orbit as planned, with the flight going as expected, according to mission control.

    A United Launch Alliance Atlas V rocket carrying two astronauts aboard Boeing’s Starliner-1 Crew Flight Test is launched on a mission to the International Space Station, in Cape Canaveral, Florida, on June 5, 2024.
    Steve Nesius | Reuters

    NASA’s broadcast of the launch also noted that although Starliner has cameras onboard to show inside and outside the cabin, Boeing won’t be able to relay video back down to the ground until the spacecraft reaches the ISS.
    Starliner will fly in space for about 25 hours before a planned docking with the ISS at 12:15 p.m. on Thursday. The astronauts will then spend about a week on the ISS, focused on testing Starliner, before returning to Earth.

    Boeing’s crew flight test aims to certify the Starliner system as capable of carrying NASA astronauts to and from the ISS.
    Wednesday’s liftoff comes after a series of attempts to launch the mission. On Saturday, a launch attempt was called off in the final minutes of the countdown due to a problem with one of the computers that provides ground support to the rocket. In early May, another attempt was called off due to an issue detected with the rocket itself.

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

    United Launch Alliance — or ULA, a joint venture of Boeing and Lockheed Martin — replaced the rocket’s problematic valve after the May attempt and replaced a faulty part in the ground infrastructure computer after Saturday’s attempt.

    The United Launch Alliance Atlas V rocket with Boeing’s CST-100 Starliner spacecraft sits at the Space Launch Complex 41 at the Kennedy Space Center in Cape Canaveral, Florida, on June 3, 2024.
    Miguel J. Rodriguez Carrillo | AFP | Getty Images

    Between the two previous launch attempts, NASA and Boeing found a “small” helium leak in Starliner, causing the agency and company to perform another series of assessments.
    After analysis, NASA and Boeing said the source of the leak was in the spacecraft’s helium propulsion system. But officials said after an investigation that the leak was “stable” and “not a safety of flight issue.”

    SpaceX competition

    A United Launch Alliance Atlas V rocket carrying two astronauts aboard Boeing’s Starliner-1 Crew Flight Test is launched on a mission to the International Space Station, in Cape Canaveral, Florida, on June 5, 2024.
    Joe Skipper | Reuters

    The astronauts

    NASA astronauts Butch Wilmore, right, and Suni Williams wait for liftoff inside the Boeing Starliner capsule at Space Launch Complex 41 in Cape Canaveral, Florida, on June 5, 2024.
    NASA via AP

    Butch Wilmore and Suni Williams are flying on Starliner, with the former serving as the spacecraft’s commander and the latter as its pilot.
    Wilmore joined NASA in 2000 and has flown to space twice previously on the Space Shuttle and Russia’s Soyuz. Before NASA, Wilmore was a U.S. Navy pilot.

    NASA astronauts Butch Wilmore, left, and Suni Williams.
    Credit: Kim Shiflett | NASA

    Williams was selected by NASA in 1998 and has also flown to space twice before, on the Space Shuttle and then the Soyuz. Williams was also a Navy pilot, like Wilmore, before joining the space agency.

    The rocket and capsule

    Boeing’s Starliner spacecraft atop the United Launch Alliance Atlas V rocket is seen on the launch pad of Space Launch Complex 41 at Cape Canaveral Space Force Station in Florida on May 30, 2024.
    Isaac Watson | NASA

    Starliner launches on ULA’s Atlas V. The rocket debuted in 2002, and the Starliner crew flight test represents its 100th launch.
    The capsule itself is built to carry as many as four NASA astronauts per flight and more than 200 pounds of research and cargo. The spacecraft lands using a parachute and airbag system. Starliner is reusable, with each capsule designed to fly as many as 10 missions.

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    Hanesbrands to sell Champion brand to Authentic Brands in $1.2 billion deal

    Hanesbrands said Wednesday that it signed a deal to sell its Champion brand to Authentic Brands Group.
    The deal could reach up to $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met.
    This comes after Hanesbrands announced it was considering selling the business in late September.

    A shopper walks past the American sportswear fashion brand Champion store in Hong Kong.
    Budrul Chukrut | Getty Images

    Hanesbrands agreed to sell its global Champion business to Authentic Brands Group in a transaction valued at $1.2 billion, including a contingent cash consideration, the company announced on Wednesday.
    The deal has the potential to reach $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met, according to a press release from Hanesbrands.

    The company expects to receive net proceeds of $900 million from the deal, the release says. Hanesbrands said the company plans to use the net proceeds to accelerate debt reduction.
    Hanesbrands shares popped more than 5% during Wednesday’s trading session.
    As of the end of the first quarter of 2024, Champion generated around $75 million of adjusted EBITDA over the past 12 months.
    “We believe this transaction will enable the company to accelerate its debt reduction while positioning Hanesbrands to deliver consistent growth and cash flow generation through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain,” said board chairman Bill Simon.
    The agreement, which the Hanesbrands’ board of directors approved unanimously, comes months after the company said it was considering a sale of Champion.

    CNBC reported in November 2023 that Authentic Brands Group and fellow brand management firm WHP Global were both interested in buying Champion.
    Hanesbrands first announced it was considering offloading Champion in late September, which was just over one month after activist firm Barington Capital Group began pressuring Hanesbrands to cut costs and generate cash amid declining sales.

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    Walmart rolls out new training programs for skilled trades as it tries to fill high-demand roles

    Walmart on Wednesday announced new training programs for store and warehouse employees.
    As the nation’s largest private employer, the company needs to fill hard-to-find roles, including pharmacy and HVAC technicians.
    The big-box retailer is piloting a new program in the Dallas area for employees who want to get into a skilled trade.

    An employee adjusts a price label for Barbie dolls displayed for sale ahead of Black Friday at a Walmart Supercenter in Burbank, California, Nov. 14, 2023.
    Mario Tama | Getty Images

    Walmart on Wednesday said it will offer new training programs and certifications to fill high-demand roles across its business, such as HVAC technicians, opticians and software engineers.
    The big-box retailer said it will also offer another reason for hourly store workers to stick around: a bonus of up to $1,000 per year.

    Walmart, the nation’s largest private employer, has been investing in its stores and its workforce as it tries to hang on to the title of the nation’s top retailer, with Amazon hot on its heels. The retail giant aims to retain market share gains, particularly in the grocery department, during a period of high inflation.
    Early this year, the company announced that store managers could earn more than $400,000 a year, including bonuses, as it began offering $20,000 of stock grants in April. Walmart also kicked off a $9 billion project to upgrade and modernize more than 1,400 of its stores, representing more than a quarter of the total Walmart stores across the country.
    The company said its average hourly wage is nearly $18, up by about 30% over the past five years. The starting pay in stores ranges from $14 to $19, depending on the location. Walmart raised its minimum wage in January 2023.
    Yet Walmart, which reported about $648 billion in total revenue last year and has a market value of nearly $537 billion, still faces criticism for its wages. The company’s total annual compensation for the median employee was $27,642 in the most recent fiscal year, according to the company’s 2024 proxy report. For a family of four people, that falls below the poverty line of $31,200, according to the U.S. Department of Health and Human Services.
    That compares with the median compensation of $26,696 at Target and $36,274 at Amazon, according to those companies’ most recent proxy reports. Those calculations include part- and full-time workers.

    Walmart’s new programs give employees more ways to move into higher-paying jobs. The company is piloting a six-month training program in the Dallas-Fort Worth area with 100 store and warehouse associates who want to work in skilled trades, such as technician roles for facilities maintenance, refrigeration and HVAC. Those skilled trade jobs pay between $19 and $45 per hour, said Lo Stomski, the company’s chief talent officer.
    The initiative was inspired by a similar program for another high-demand role: truck drivers. The associate-to-driver program has produced more than 500 new drivers since launching in spring 2022, according to the company.
    Workers who participate in the programs are not required to keep working for Walmart, but Stomski said they will be needed as Walmart adds automation and robotics across its warehouses and online fulfillment centers.
    Walmart said Wednesday that it’s also increased the number of skills certificates it offers to more than 50, up from five in 2020. The certifications can help employees move into salaried or leadership positions in stores, clubs and supply chain facilities. On average, employees receive the certificates in four months, Stomski said.
    This week’s announcement coincides with two of Walmart’s major events. Its shareholder meeting will be held virtually on Wednesday. On Friday in its hometown of Bentonville, Arkansas, Walmart will throw its annual associates celebration, a combination of a pep rally and an employee awards program that draws thousands of workers from across the globe and features surprise celebrity appearances and musical performances.

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    Alphabet taps Eli Lilly’s Anat Ashkenazi as new CFO

    Alphabet’s new chief financial officer is Anat Ashkenazi, who will join the company after more than two decades at pharmaceutical giant Eli Lilly.
    Ashkenazi will replace current CFO Ruth Porat, effective July, as the latter shifts to a new role as president and chief investment officer of Google.
    Google’s finance unit has undergone restructuring as the company devotes more resources to the AI race.

    A view of Google Headquarters in Mountain View, California, United States on April 16, 2024. 
    Tayfun Coskun | Anadolu | Getty Images

    Eli Lilly Chief Financial Officer Anat Ashkenazi will become Alphabet’s new CFO effective July 31, Google’s parent company announced Tuesday, almost a year after Alphabet first announced that current CFO Ruth Porat would move into a new role as president and chief investment officer.
    Ashkenazi had a 23-year career at Eli Lilly, which in a separate release confirmed her departure.

    “We’re very pleased to have found such a strong CFO, with a track record of strategic focus on long-term investment to fuel innovation and growth,” Alphabet CEO Sundar Pichai said in a release.
    Ashkenazi joined Eli Lilly in 2001 and has been CFO since 2021. She will continue to serve on the pharmaceutical company’s executive committee until her departure. She previously served as CFO for several of the company’s global business areas, helping manage the revenue windfall from Eli Lilly’s weight loss and diabetes drugs.
    Porat had a nearly three-decade career as an investment banker at Morgan Stanley, culminating as its CFO, before joining Google in 2015. She helped Google grow into one of the most valuable companies in the world, including while the company has recently contended with threats ranging from the artificial intelligence race to antitrust investigations.
    The leadership shuffle has long been in the works. Google first announced in 2023 that Porat would step down and has since been mounting a search process.
    Google’s finance unit has been grappling with other changes in recent months as well. Porat announced earlier this year that Google was restructuring its finance unit as the company pushed to favor investments in AI, CNBC previously reported, with layoffs and relocations that would impact teams worldwide.

    Other top executives at the firm include Chief Business Officer Philipp Schindler, Head of Google Search Prabhakar Raghavan and Google Cloud CEO Thomas Kurian.
    Google’s “old guard” has experienced shifts beyond just Porat, CNBC has previously detailed. YouTube CEO Susan Wojcicki, former Chief Business Officer Robert Kyncl and widely respected AI authority Geoffrey Hinton are among those who have departed or announced their departure since 2023.
    Google shares were slightly up in premarket trading Tuesday.
    — CNBC’s Jenn Elias and Annika Kim Constantino contributed to this report. More

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    Ron Baron, big Tesla shareholder, supports Elon Musk’s $56 billion pay package

    Billionaire investor Ron Baron, longtime Tesla bull and shareholder, wrote an open letter in support of CEO Elon Musk’s controversial $56 billion pay package.
    The Baron Capital chairman and CEO said Musk’s compensation contract in 2018 included “aggressive” performance metrics that few believed could be achieved. Musk would have earned nothing if these ambitious goals had not been met, he said.

    “Elon is the ultimate ‘key man’ of key man risk,” Baron said in the letter. “Without his relentless drive and uncompromising standards, there would be no Tesla. Especially considering how he slept on the floor of Tesla’s Fremont factory when the company was going through what he called ‘production hell!'”

    Ron Baron, founder of Baron Capital
    Anjali Sundaram | CNBC

    The pay package, proposed by Tesla’s board of directors, has repeatedly come under fire for its close ties with Musk. The package has no salary or cash bonus and sets rewards based on Tesla’s market value rising to as much as $650 billion over the 10 years from 2018.
    If passed, it would be the largest pay package for a CEO in corporate America. Tesla’s shareholder meeting is scheduled for June 13.
    “I’m voting for the pay package,” Baron said on CNBC’s “Squawk Box” Wednesday.
    In January, Judge Kathaleen McCormick of Delaware’s Court of Chancery voided the original pay package. Musk then sought to move Tesla’s state of incorporation to Texas from Delaware.

    Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. Tesla is the biggest holding in Baron’s oldest and biggest fund, Baron Partners Fund (BPTIX), accounting for nearly 30% of the portfolio.
    “At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon,” he said. More

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    Electric air taxi maker Archer Aviation gets key FAA sign-off

    Archer Aviation said it received a key FAA certification that gets it closer to flying passengers.
    United Airlines agreed to buy dozens of Archer’s eVTOL aircraft.
    The company said it now working on getting its aircraft “Midnight” certified by the FAA.

    Midnight, an all-electric aircraft from company Archer Aviation, is seen at the Salinas Municipal Airport in Salinas, California, on Aug. 2, 2023.
    Carlos Barria | Reuters

    The Federal Aviation Administration has granted Archer Aviation a key certification that gets the electric air taxi maker closer to eventually flying travelers, the company said Wednesday.
    Archer is making electric vertical takeoff and landing aircraft, or eVTOLs, and won orders and backing in 2021 from United Airlines, which says the new technology could reduce carbon emissions.

    Carriers have been investing in or ordering eVTOL aircraft, which take off and land vertically like helicopters and whose developers say they can cut down on emissions in congested areas. United, for example, says passengers could take them to and from the airport in big cities, such as between Manhattan and United’s hub in Newark, New Jersey.
    “Today we have received the Part 135 certification, which allows us to effectively become an airline so we can carry passengers,” Archer CEO Adam Goldstein told CNBC.
    The process has taken Archer about two years: It submitted more than 2,000 pages of documents and 14 manuals outlining operational procedures, training and maintenance.
    Now Archer has to get its four-passenger aircraft, called “Midnight,” certified by the FAA, which the company is currently working on, Goldstein said. That could put the air taxis into service as early as next year, the company estimates. Goldstein said he couldn’t give an exact time frame but when asked about certification delays on variants of older aircraft, he noted that Archer’s aircraft are much simpler with far fewer components than commercial jets.
    Archer’s aircraft can fly up to 60 miles at top speeds of 150 mph.

    United is working with Archer on what it would look like to enter the electric aircraft into service.
    “This is not something that is a push of a button,” said Andrew Chang, managing director of United Airlines’ venture arm. “It’s matching how quickly [Archer] can progress the operational side and how to fit that within our airport hubs.”
    Archer has partnered with automaker Stellantis to produce hundreds of the electric air taxis.
    Archer’s rivals have also made strides. Joby Aviation received its Part 135 certificate two years ago, has a partnership with the U.S. Air Force, and has won orders and backing from Delta Air Lines. On Tuesday, Joby said it plans to acquire the autonomy division of autonomous aviation company Xwing.

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