Raphael Stevens

Corporations are learning that without mandates or strong arming, many workers prefer not to come back to the office most of the time.
IBM CEO Arvind Krishna told CNBC’s Sara Eisen at the Aspen Ideas Festival that about 20% of the tech company’s U.S.-based workers are back in the office three days or more, and he never thinks that will return to anything near 60%.

As major American corporations began to welcome workers back in the spring, they were surprised by what they saw: fewer employees than they expected who wanted to return to offices. That was the case at Ford, which told CNBC back in April that the initial numbers were “lower than we expected,” and more recent comments from the CEO of IBM show that many workers at the biggest firms prefer to remain working from anywhere but the office, at least most of the time.
Only 20% of IBM’s U.S. employees are in the office for three days a week or more, the tech company’s CEO Arvind Krishna told CNBC’s Sara Eisen at the Aspen Ideas Festival on Monday. Krishna added that he does not see a scenario where the balance ever gets back to over 60% of workers in the office more often than not.

In an earlier tech era, IBM was one of the first major tech firms to embrace remote work before it was common, with at one point in the 2000s as much as 40% of its workers remote, but it ended up reversing course and requiring workers to again be based in offices in 2017. Now, the paradigm has shifted again.
“I don’t think it’ll ever cross 60,” Krishna said. “So I think we’ve learned a new normal.”
IBM had over 280,000 workers globally at the end of last year.
Krishna does expect employers to get some leverage back when it comes to wages, though only a lower level of wage inflation rather than a reversal of it. “We will get an adjustment of wages,” Krishna said at the Aspen Ideas Festival. “I expect to see a decrease in the growth rate, a step down.”
He also indicated the wage pressures will vary depending on market.

“The 8-9% inflation or the 5% in wages is not uniform. Some pockets are 9 to 20,” he said. “Some pockets are close to flat, and that’s going to cause some inequity as we go forward.”
Krishna added that IBM’s own hiring inflation has been 9%-plus. “Ours is on the upper end, ours is well above nine I would say for replacement workers,” he said. “It is so hard to get people.”
Most of the layoffs taking place in tech, he said, are at the unprofitable firms, and other recent reporting from CNBC and survey data from the tech industry do show that workers remain in the driver’s seat when it comes to job offers and many firms plan to continue aggressively hiring.
Krishna does not expect overall inflation to come down quickly, staying well above the Fed’s target of 2% next year. IBM is preparing for a “period of more sustained inflation,” Krishna said, and a return to the Fed target of 2% not realistic for another three to four years.
This doesn’t mean he sees a recession coming, as he described the current period of high inflation combined with a labor market shortage as atypical and making past economic precedents less significant as forecasting tools.
Meanwhile, tech spending remains strong in the business to business segment, Krishna said, with sectors including retail, banking and finance, and pharmaceuticals and biotech all spending more on technology.
“We’re not seeing a slowdown in the B2B space,” he said.
Watch the vide above for highlights from the full interview with the IBM CEO at the Aspen Ideas Festival during which Krishna also provides the tech giant’s view on the Supreme Court abortion decision and its approach to responding to political issues.
Disclosure: NBCUniversal News Group is the media partner of the Aspen Ideas Festival. More

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CNBC’s Jim Cramer on Monday told investors that while the market remains volatile as it receives contrasting signals about the state of inflation, the seesawing could give way to a soft landing.
“The news is precarious. It could go either way. But maybe that’s what we need to see if we’re going to have a soft landing, not a horrific crash landing,” he said. 

CNBC’s Jim Cramer on Monday told investors that while the market remains volatile as it receives contrasting signals about the state of inflation, the seesawing could give way to a soft landing.
“The news is precarious. It could go either way. But maybe that’s what we need to see if we’re going to have a soft landing, not a horrific crash landing,” he said. 

“If all the data were strong, we’d be set up for a series of aggressive rate hikes that would wreck the economy. If all the data were weak, then it’s already too late,” he added. 
The “Mad Money” host pointed to several pieces of bad and good news the market has received recently, including that pending home sales were up 0.7% in May compared with April and that durable goods orders rose in May.
At the same time, the major indices saw declines Monday and several commodity prices are coming down, though the energy sector saw gains, he added.
“The ideal outcome here is to get enough of a slowdown that the Fed can take up rates gradually without throwing a ton of people out of work,” Cramer said. But Wall Street could be bracing for layoffs after a hiring boom during the height of the pandemic.

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JetBlue’s latest effort to win over Spirit comes ahead of a shareholder vote on an existing deal between Frontier and Spirit.
JetBlue increased its reverse break-up free to Spirit shareholders should regulators not approve the deal.
Frontier sweetened its bid to merge with Spirit late Friday.

JetBlue Airways again increased its offer for Spirit Airlines with a shareholder vote for the discounter’s deal to merge with Frontier Airlines just days away.
Frontier sweetened its offer on Friday. Spirit’s CEO Ted Christie told CNBC then that Spirit’s board still found the deal to combine with fellow budget airline Frontier a superior option than going with JetBlue.

Spirit shareholders are set to vote on the Frontier cash-and-stock deal on Thursday; Spirit postponed the vote earlier this month to continue deal talks with both airlines.
Either combination would create the fifth-largest U.S. carrier. The heated bidding war underscores how both JetBlue and Frontier view Spirit as key to their future growth plans at a time when planes and pilots are in short supply.

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC

Spirit had argued that it didn’t think a JetBlue deal would pass muster with regulators, particularly because of its alliance with American Airlines in the Northeast.
“After the Spirit Board’s failure to recognize our decisively superior offer, we’ve discussed our offer directly with Spirit shareholders and are now modifying our proposal in response to shareholders’ expressed interest, to include a monthly payment for shareholders, with the certainty of a significant cash premium at closing,” JetBlue’s CEO Robin Hayes said in a statement.
JetBlue’s new offer raises the reverse break-up fee to $400 million from $350 million if regulators don’t approve the deal and includes a dividend to Spirit shareholders of $2.50 a share, up from a previous offer of $1.50.

It also includes a “ticking fee,” that would pay shareholders 10 cents a share each month from January 2023 through the completion or termination of the deal.
Spirit shares were up 5% in after-hours trading on the news, while JetBlue’s were off less than 1% and Frontier’s were up 1%. Spirit and Frontier shares fell sharply in regular trading.
Frontier on Friday had increased the cash portion of its bid by $2 a share to $4.13 and raised its reverse break-up fee proposal to $350 million, matching JetBlue’s earlier offer.
“We think we have the most compelling offer for shareholders,” Frontier CEO Barry Biffle said in an interview earlier Monday. Biffle spoke from New York, where he is planning to meet with Spirit shareholders this week ahead of the vote on Thursday.
Frontier and Spirit didn’t immediately comment on the revised JetBlue offer.

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Carlyle Group co-chairman David Rubenstein says Chinese government decisions and the Russia-Ukraine war may have more control over the recession odds than anything the Federal Reserve controls.

Much of the U.S. market focus has been on the Federal Reserve’s more aggressive interest rate hikes as a reason to fear a recession.
But Carlyle Group co-founder and co-chairman David Rubenstein, a billionaire investor and philanthropist, says the economy’s path may be beyond the central bank’s control, and two other global players are more important when it comes to assessing recession risk.

The Fed’s efforts to fight inflation with higher interest rates “can be tricky to know how it will work,” Rubenstein said on Monday in an interview with CNBC from the Aspen Ideas Festival. “Nobody knows how that will work out.”
Nevertheless, the two most significant issues in his view are what’s going to happen with China, including its Covid policy causing the global economy to slow down even more, and the length of the Russia-Ukraine war, which is impacting the energy market.
“Currently, no one has the answer,” Rubenstein said. “I don’t think it’s inevitable that there’ll be a recession. I do think it’s tough to avoid a recession, but it’s not inevitable,” he added. 
Inside an organization as large as private equity giant Carlyle Group, he says there is no “common view on any one thing,” but he added, “we don’t feel we’re going into a recession.”
China as a risk factor may remain volatile until later this year and a decision by China’s Communist Party to award a third term for President Xi Jinping. Once the politics are more clear, there should be greater clarity on Covid policies, as well as tech sector regulation which has unnerved investors. He expects a somewhat softer tone with tech companies than China has recently shown.

As the Russia-Ukraine war has led to spikes in energy prices and concerns about energy shortages in Europe, Rubenstein said a reevaluation of the energy transition is taking place. “Everybody wants more climate-friendly energy, of course, but it’s not easy to get there. What we’ve learned from the Russia-Ukraine war is that the world is still very heavily dependent on carbon energy, and right now, the world is scrambling to get more carbon energy.” He added, “The world is realizing you can’t go to carbon-neutral policies overnight; it will take a while.”
Oil prices have already come down from around $140 to $108 per barrel, and Rubenstein thinks the trajectory for prices remains lower with U.S. supply increasing and other major players like Saudi Arabia likely to raise production.
In Carlyle’s deal market, prices have come down, he said, but there is still room for valuations to come down more, referring to EBIT multiples to buy companies that are still at “double-digits levels” — down from roughly 14 times to 11 to 12 times.
“They probably will drift down slightly,” he said.
The deal market is slower, but not dead. Debt remains readily available, the debt component of deals is much lower (under 50%) than it had been historically, and equity valuations are slightly lower if not as low as they will go yet. “Deals are getting done,” Rubenstein said, and after a record year for buyout deals in 2021, “we’re on pace to do a fair number this year,” he added.
Disclosure: NBCUniversal News Group is the media partner of the Aspen Ideas Festival. More

House Speaker Nancy Pelosi on Monday outlined some plans that Democrats are considering in response to the Supreme Court’s decision to overturn Roe v. Wade.
The legislative ideas include measures to protect personal data stored on reproductive health apps, ensure the right to free travel between states and codify the right to an abortion.
“This weekend, the American people spoke out in person and in large numbers about their opposition to the Supreme Court’s disrespect for a woman’s freedom over her reproductive health,” Pelosi wrote.

Speaker of the House Nancy Pelosi (D-CA) finishes a news conference after the U.S. Supreme Court struck down Roe v Wade, which guaranteed a woman’s right to an abortion, in the Capitol Visitors Center on June 24, 2022 in Washington, DC.
Chip Somodevilla | Getty Images News | Getty Images

House Speaker Nancy Pelosi on Monday said the chamber’s Democrats are exploring legislation to protect personal data stored on reproductive health apps, ensure the right to free travel between states and codify the right to an abortion after the Supreme Court overturned the landmark Roe v. Wade case.
The ideas, posed by Pelosi to fellow House Democrats in a letter dated Monday, follows the court’s ruling on Friday that upended nearly 50 years of abortion rights in the U.S. The decision has sparked nationwide outrage from supporters of abortion access in the days since.

“This weekend, the American people spoke out in person and in large numbers about their opposition to the Supreme Court’s disrespect for a woman’s freedom over her reproductive health,” the California Democrat Pelosi wrote. “While this extremist Supreme Court works to punish and control the American people, Democrats must continue our fight to expand freedom in America.”

Her letter offered three early ideas that Democrats are weighing as a response to the ruling.
The first approach would seek to protect “women’s most intimate and personal data” stored in reproductive health apps. “Many fear,” Pelosi wrote, “that this information could be used against women by a sinister prosecutor in a state that criminalizes abortion.”
Such apps, including Flo of Flo Health, allow women to track their menstruation, prepare for conception, pregnancy, early motherhood and menopause. While the company did not immediately respond to CNBC’s request for comment, a fact sheet published by the business shows that some 32 million people used its app each month and that 12 million had gotten pregnant while using the platform as of May 2020.
The second idea would be to pass legislation that reiterates the constitutional right to travel freely throughout the U.S., ensuring that residents of states that ban abortions could have the procedure done in one that allows it.

The third would codify abortion rights as set out under the 1973 Roe decision in a bill known as the Women’s Health Protection Act.
The chances that such legislation would reach President Joe Biden to be signed into law are slim, because it would face entrenched opposition from Senate Republicans.
Current Senate rules dictate that the majority party must muster 60 votes to overcome an indefinite filibuster staged by the minority opposition. Since Democrats hold a razor-thin majority in a Senate split 50-50 — with Vice President Kamala Harris the key tiebreaker — a bill must get 60 votes to be passed.
Pelosi acknowledged those long odds in her letter, but argued that Democrats should consider scrapping the filibuster rule altogether.
“It is essential that we protect and expand our pro-choice Majorities in the House and Senate in November so that we can eliminate the filibuster so that we can restore women’s fundamental rights — and freedom for every American,” she wrote.
Barring the elimination of the filibuster, Democrats have few legislative options available to counter the high court’s decision to reverse its prior ruling.
GOP Senate Minority Leader Mitch McConnell told voters in his home state of Kentucky that Republicans and Democrats are far apart on any bipartisan compromise.
“In the Senate most things require 60 votes,” he said. “Neither side of this issue has come anywhere close to having 60 votes. So I think this is likely to all be litigated out, dealt with in the various states around the country.”

CNBC Politics

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CVS caps purchases of Plan B and Aftera emergency contraceptives to three per order.
The chain said it had ample supply of the pills but wanted to ensure “equitable access and consistent supply.”
Walgreens said it is not limiting purchases of the pills.

Protesters outside the Supreme Court following the overturning of Roe v. Wade.
Brandon Bell | Getty Images News | Getty Images

CVS is limiting the number of the emergency contraceptives commonly known as “morning after pills” and “Plan B” that people can buy on its website and in its stores after last week’s Supreme Court ruling.
The drug store chain said in a statement it had ample supply of the pills online and in stores, but that it wanted to ensure “equitable access and consistent supply on store shelves.” The move comes after the Supreme Court on Friday overturned the landmark ruling that had protected abortion as a constitutional right for nearly 50 years.

CVS Health said it began limiting purchases of Plan B and Aftera, which cost $49.99 and $39.99, respectively, to three per order on Saturday.
Walgreens does not have a purchase limit in place on emergency contraceptives, a representative for the chain said Monday. A representative for Walmart did not immediately respond to a request for comment. The Wall Street Journal reported sales limits on the pills by retailers earlier Monday.
Emergency contraceptive pills are often sold under the Plan B brand and can be purchased over-the-counter and without an ID or prescription. They work by preventing ovulation or preventing a fertilized egg from attaching to the womb and are taken in the days after unprotected sex, or after a contraceptive fails.
The pills are different from medication abortion, or abortion pills, which require a prescription and involve taking two different pills within 10 weeks of pregnancy, according to the Kaiser Family Foundation.
In the days following the Supreme Court’s decision last many, many people took to social media to urge people to stock up on contraceptive pills. Others said potential shortages could impact those most in need and urged people to instead fund organizations that help distribute the pills to keep it available.
–CNBC’s Melissa Repko contributed to this report.

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