Raphael Stevens

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    Spirit Airlines postpones shareholder meeting to continue deal talks with Frontier and JetBlue

    Spirit Airlines is postponing its shareholder meeting, previously scheduled for Friday, until June 30.
    The carrier will continue talks over competing offers from Frontier Airlines and JetBlue Airways.
    Both Frontier and JetBlue sweetened their offers in the last week.

    A JetBlue Airlines plane takes off near Spirit Airlines planes at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.
    Joe Raedle | Getty Images

    Spirit Airlines is postponing its shareholder meeting, previously scheduled for Friday, until June 30 so it can continue deal talks with Frontier Airlines and JetBlue Airways, and with its stockholders, the carrier said Wednesday.
    Spirit’s announcement came two days after JetBlue sweetened its offer for the discount airline, which has had a merger agreement in place with fellow budget carrier Frontier since February.

    Frontier and JetBlue both say they see Spirit Airlines as key to their future growth. Either combination would create the fifth-largest airline in the U.S.
    Spirit has repeatedly rebuffed JetBlue’s offers and said that an acquisition would be unlikely to pass muster with regulators, while JetBlue has contended both deals would face scrutiny from the Justice Department
    JetBlue had previously offered to divest Spirit’s assets in New York and some in Florida to make the deal more palatable to regulators.
    “We welcome this development as a necessary first step toward genuine negotiation between the Spirit Board and JetBlue,” JetBlue CEO Robin Hayes said in a statement Wednesday. “Spirit shareholders are clearly urging the Spirit Board to engage with us constructively and provide us with the same information previously made available to Frontier so that we can reach a consensual transaction.”
    Spirit didn’t immediately comment further.

    JetBlue on Monday raised its offer for a reverse breakup to $350 million if the Justice Department were to block its purchase of Spirit. Frontier last week offered a $250 million reverse breakup fee, payable to Spirit shareholders, if that deal is knocked down by regulators.
    Spirit shareholders were due to vote on the cash-and-stock Frontier deal on Friday. JetBlue urged Spirit stockholders to reject that merger.
    Proxy advisory firm Glass Lewis last week recommended shareholders vote in favor of the Frontier deal while another firm, ISS, said they should reject it.
    Shares of Spirit and Frontier were up less than 1%, while JetBlue was down modestly in premarket trading Wednesday.
    Frontier didn’t immediately comment.

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    Stocks making the biggest moves premarket: Campbell Soup, Moderna, Western Digital and others

    Check out the companies making headlines before the bell:
    Campbell Soup (CPB) – The food producer’s shares rallied 3.7% in the premarket after Campbell reported an adjusted quarterly profit of 70 cents per share, 9 cents above estimates. Sales also beat forecasts, and the company raised its full-year sales outlook. Campbell also maintained its prior earnings forecast, noting it now expects core inflation to run hotter than its previous outlook.

    Thor Industries (THO) – The recreational vehicle maker’s stock surged 6.9% in premarket trading following better-than-expected quarterly results. Thor earned $6.32 per share, well above the $4.77 consensus estimate, amid strong demand for its products. Thor also said it is seeing signs of improved supply chain issues.
    Moderna (MRNA) – Moderna added 1.6% in the premarket after a modified version of its Covid-19 booster shot prompted a stronger immune response than the company’s original vaccine against the omicron variant. Data will be submitted to U.S. regulators in the coming weeks.
    Western Digital (WDC) – Western Digital said it is reviewing strategic alternatives, including a possible split of its flash memory and disk drive businesses. Activist investor Elliott Management, which owns 6% of Western Digital, has been pushing for those changes. Shares jumped 3.8% in premarket action.
    Roku (ROKU) – Shares of the video streaming device maker rallied 8.1% in the premarket after a Business Insider article highlighted talk inside Roku about possibly being acquired by Netflix (NFLX).
    Hasbro (HAS) – Hasbro will be successful in pushing back a board challenge from activist investor Alta Fox, according to people familiar with the matter who spoke to Reuters. Alta Fox has been critical of various aspects of the toymaker’s strategy and wants Hasbro to spin off its Wizards of the Coast unit.

    Credit Suisse (CS) – Credit Suisse warned of a likely second-quarter loss, due to the negative impacts of the Russia/Ukraine war, monetary tightening and other financial market conditions. The bank did not specify how large such a loss may be. Credit Suisse slumped 6.1% in the premarket.
    Novavax (NVAX) – Novavax soared 15.7% in premarket trading after it won an endorsement of its Covid-19 vaccine from an FDA advisory panel. The full FDA will now consider whether or not to approve the vaccine.
    DocuSign (DOCU) – DocuSign shares rallied 4.6% in premarket action after the electronic signature technology company announced an expanded global partnership with Microsoft (MSFT). The deal enhances the integration of DocuSign technology into Microsoft software applications.

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    Mortgage demand falls to the lowest level in 22 years, amid rising rates and slowing home sales

    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%.
    Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.
    Refinance demand dropped 6% for the week and was down 75% year over year.

    Real estate agents Rosa Arrigo, center, and Elisa Rosen, right, work an open house in West Hempstead, New York.
    Newsday LLC | Newsday | Getty Images

    Mortgage rates are back on the upswing, after a brief decline in May, and the housing market is still suffering from a lack of listings. As a result, mortgage demand continues to drop.
    Total mortgage application volume fell 6.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand hit the lowest level in 22 years.

    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%, with points rising to 0.60 from 0.51 (including the origination fee) for loans with a 20% down payment.
    Refinance demand, which is most sensitive to weekly rate moves, fell another 6% for the week and was 75% lower than the same week one year ago. The vast majority of mortgage holders now have rates considerably lower than the current one, and even those who would like to pull cash out of their homes are choosing second mortgages, rather than refinancing their first liens.
    “While rates were still lower than they were four weeks ago, they remained high enough to still suppress refinance activity. Only government refinances saw a slight increase last week,” said Joel Kan, an MBA economist.
    Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.
    “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months. These worsening affordability challenges have been particularly hard on prospective first-time buyers,” Kan said.

    Mortgage rates moved even higher to start this week, according to a separate survey by Mortgage News Daily. Rates have been in a narrow range for several weeks after moving decidedly higher in the previous months.
    “There’s some chance that the upper boundaries of that range end up being a ceiling for rates, but that will depend on inflation and other incoming economic data,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “With a key inflation report set to release on Friday morning, the potential for volatility remains high.”

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    Shares of Chinese EV maker BYD jump after exec says company is set to supply batteries to Tesla

    A senior executive at China’s BYD said during a Chinese state media interview that the firm is poised to supply Tesla with batteries “very soon.”
    Hong Kong-listed shares of BYD jumped 2.79% on Wednesday, mirroring broader positive sentiment in tech as the Hang Seng Tech index advanced 4.76% to 4,818.36. Shares of other Chinese EV makers in Hong Kong also rose, with Nio up 5.07% while Xpeng surged 6.13%.
    Mainland-listed shares of Chinese battery maker and Tesla supplier Contemporary Amperex Technology plunged more than 7% during Wednesday trading before recovering from those losses to rise 0.218% by the close.

    This photo from Dec. 2019 shows robotic arms spray painting a car body shell at the BYD Automobile Company Limited Xi’an plant. BYD is set to supply Tesla with batteries “very soon,” a senior company executive told a Chinese state media anchor.
    Yuan Jingzhi | Visual China Group | Getty Images

    Shares of electric vehicle maker BYD jumped on Wednesday after a senior executive said during an interview with Chinese state media that the company is set to supply batteries to Tesla “very soon.”
    “We’re now good friends also with Elon Musk, because we’re preparing to supply batteries to [Tesla] very soon,” BYD Vice President Lian Yubo said during an interview with Chinese state media anchor Kate Kui.

    BYD and Tesla did not immediately respond to CNBC’s requests for comment.
    Rechargeable batteries and photovoltaic (the conversion of light from the sun to electricity) made up 7.29% of BYD’s revenue pool in 2021, dwarfed by the more than 50% share taken up by automobiles and related products, according to the company’s latest annual report.
    Hong Kong-listed shares of BYD jumped 2.79% on Wednesday, mirroring broader positive sentiment in tech as the Hang Seng Tech index advanced 4.76% to 4,818.36. Shares of other Chinese EV makers in Hong Kong also rose, with Nio up 5.07% while Xpeng surged 6.13%.
    Mainland-listed shares of Chinese battery maker and Tesla supplier Contemporary Amperex Technology (CATL) plunged more than 7% during Wednesday trading before bouncing back to close 0.218% higher. CATL had roughly 25% of global EV battery market share in 2020, far ahead of BYD’s 7%, according to Nomura research.
    Elsewhere in Asia, shares of Panasonic in Japan dipped 0.78% while South Korea’s LG Energy Solution dropped 1.5%. Both companies also supply batteries to Tesla.
    — CNBC’s Evelyn Cheng contributed to this report.

    Read more about electric vehicles from CNBC Pro

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    Crypto poses a threat to the safety of global payment systems, fintech boss warns

    Cryptocurrencies are a “threat to the safety of our payment schemes,” Anne Boden, CEO of U.K. digital bank Starling, warned Tuesday.
    Regulators are concerned about the financial system becoming more entwined with the volatile world of crypto.
    Roughly $400 billion has been erased from the combined value of all cryptocurrencies in the past month.

    Starling CEO Anne Boden.
    Harry Murphy | Sportsfile for Web Summit via Getty Images

    AMSTERDAM — The boss of Goldman Sachs-backed digital bank Starling has doubled down on criticisms of crypto, calling digital currencies a threat to the safety of payment infrastructure.
    “It is very dangerous,” Anne Boden, who founded Starling in 2014, warned Tuesday at the Money 20/20 fintech conference in Amsterdam. Based in Britain, Starling offers fee-free checking accounts and loans through an app. The firm was last privately valued at £2.5 billion ($3.1 billion) and counts the likes of Goldman and Fidelity as investors.

    “A lot of [crypto] wallets are being connected directly to payment schemes,” Boden said. “This is a threat to the safety of our payment schemes around the world.”
    Major payment players are embracing cryptocurrencies — credit card giants Mastercard and Visa opened their networks to digital assets, for example, while PayPal also lets users trade bitcoin and other cryptocurrencies. Regulators are concerned about the financial system becoming more entwined with the volatile world of crypto.
    Roughly $400 billion has been erased from the combined value of all cryptocurrencies in the past month, as investors were rattled by the collapse of terraUSD, a popular so-called stablecoin that was meant to always be worth $1.

    It’s not the first time Boden has warned about the dangers of the crypto space. She has previously sounded the alarm about the risk of consumers falling victim to fraud as a result of investments in crypto.
    “Customers are being scammed,” the Starling chief said Tuesday. “We’re spending far more of our time protecting customers from the scammers than we are trying to promote crypto.”

    Asked whether Starling would ever offer crypto, Boden said it was unlikely to happen in the next couple of years, adding crypto companies have a lot of catching up to do when it comes to anti-money laundering controls.
    In April, the U.K.’s Financial Conduct Authority published the findings of a review that found online-only challenger banks aren’t doing enough to tackle financial crime.
    The regulator didn’t name any names, but Starling confirmed it was among the firms whose systems were scrutinized, with a spokesperson saying the company has been “extremely vocal” about fighting fraud.

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    Credit Suisse issues profit warning for second quarter, citing Ukraine war and rate hikes

    Credit Suisse said despite the trading revenues benefiting from the spike in volatility, the impact of these conditions, combined with “continued low levels of capital markets issuance” and widening credit spreads, have “depressed the financial performance” of the investment bank in April and May.
    This is “likely to lead to a loss for this division as well as a loss for the Group in the second quarter of 2022,” the trading update said.

    A sign above the entrance to the Credit Suisse Group AG headquarters in Zurich, Switzerland, on Monday, Nov. 1, 2021.
    Thi My Lien Nguyen | Bloomberg | Getty Images

    Credit Suisse said on Wednesday that it is likely to post a loss for the second quarter as the war in Ukraine and monetary policy tightening squeeze its investment bank.
    In a trading update early Wednesday morning, the embattled lender said the geopolitical situation, significant monetary tightening from major central banks in response to soaring inflation, and the unwinding of Covid-19 era stimulus measures had caused “continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”

    Credit Suisse said despite the trading revenues benefiting from the spike in volatility, the impact of these conditions, combined with “continued low levels of capital markets issuance” and widening credit spreads, have “depressed the financial performance” of the investment bank in April and May.
    This is “likely to lead to a loss for this division as well as a loss for the Group in the second quarter of 2022,” the trading update said.
    The bank’s shares fell more than 5% shortly after markets opened on Wednesday.

    Credit Suisse has endured a string of scandals and mishaps in recent years, leading some shareholders to call for a change in leadership. Chairman Axel Lehmann told CNBC in May, however, that CEO Thomas Gottstein has his full backing to continue with the “rebuilding” of the company.
    Gottstein took the reins in 2020 following the resignation of predecessor Tidjane Thiam over a protracted spying scandal.

    The bank reported a net loss for the first quarter of 2022 and announced a management reshuffle as it continues to grapple with litigation costs relating to the Archegos hedge fund collapse.

    “We would note that our reported earnings will also be affected by continued volatility in the market value of our 8.6% investment in Allfunds Group,” the bank added.
    Spanish wealthtech platform Allfunds Group, which launched on the Euronext Amsterdam in April 2021, has seen its share price plunge 52% year-to-date.
    Credit Suisse said 2022 will remain a year of “transition” for the bank, vowing to accelerate cost-cutting across the group, and will provide further details at its Investor “Deep Dive” on June 28.
    The bank aims to operate a group common equity tier one capital ratio, a measure of bank solvency, of 13.5% in the near-term, in line with its goal of 14% by 2024.

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    Japan is about to welcome back foreign travelers, but domestic tourism remains its priority

    After more than two years of closed border policies, Japan is set to welcome back international travelers this week.
    Come June 10, foreign tourists traveling via packaged tours can enter Japan.

    However, the government’s priority still lies in boosting domestic tourism numbers, said Tadashi Shimura, president of Japan Association of Travel Agents.
    Even before the pandemic, domestic tourism contributed far more to Japan’s overall gross domestic product than foreign tourism, according to JATA.

    Tourism numbers

    Overall tourism contributed 28 trillion yen ($211 billion) to Japan’s economy in 2019, with nearly 80% — or 22 trillion yen — coming from domestic tourists, according to a report by the Japan Tourism Agency.

    Despite a rise in Covid cases in 2021, tourism spending from those living in Japan still managed to bring in 9.2 trillion yen that year, JTA said.
    Nevertheless, boosting international arrivals to Japan is still vital, especially for the heavily hit hospitality, transportation and travel sectors, said Shimura.

    Japan welcomed about 32 million foreign visitors in 2019 and had been on track to achieve its goal of 40 million in 2022, said Ejaz Ahmed, a research analyst at the Economist Intelligence Unit, during a webinar on June 1.
    However, the pandemic caused arrival numbers to plummet rapidly, and there were only 250,000 foreign visitors in 2021, government data previously showed.

    The loss of international travelers cost Japan “about 10 trillion yen over the past two years,” said Shimura, as spending from international students and long-term foreign residents brought in an average of 4.3 million yen per person per year, he said, citing a report by Nomura Research Institute.
    Travel agencies in Japan are gearing up for the return of tourists with packaged tours to famous destinations across the country.
    All Japan Tours has six tour packages, including the “Golden Route Japan Tour” which takes participants on an eight-day tour around Tokyo, Osaka and Kyoto for $2,698.

    What are the rules? 

    The daily cap on the number of visitor arrivals — which includes Japanese nationals and returning foreign residents — doubled from 10,000 to 20,000 on June 1, according to the Japan National Tourism Organization.
    Local reports indicate the government may increase the limit to 30,000 people in July.
    Still, Shimura said, those limits are too low, as the country used to welcome “140,000 [visitors] per day.”
    Countries are classified into three categories — blue, red and yellow — and travelers may be subjected to additional restrictions depending on where they are coming from, according to the Ministry of Foreign Affairs of Japan. 
    Travelers from 98 countries and regions — including the United States, United Kingdom, Singapore and China — fall under the “blue” category and are not required to test or quarantine on arrival or be vaccinated to enter.
    Travelers from any of the 99 countries in the “yellow” category are also exempted from testing and quarantining upon arrival if they have had three doses of an accepted Covid-19 vaccination. The category includes countries such as India, Vietnam and Sri Lanka.
    Those coming from “red” countries, such as Fiji, Pakistan and Sierra Leone, must test on arrival and quarantine for a period of three to seven days. More

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    Even if oil hits $150 a barrel, J.P. Morgan's Marko Kolanovic predicts stocks will reclaim 2022 highs

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    J.P. Morgan’s Marko Kolanovic predicts oil is surging higher — but so are stocks.
    Kolanovic, who serves as the firm’s chief global markets strategist and co-head of global research, believes the U.S. economy is strong enough to handle oil prices as high as $150 a barrel.

    “There could be some potential further spikes in oil, especially given… the situation in Europe and the war. So, we wouldn’t be surprised,” he told CNBC’s “Fast Money” on Tuesday. “But it could be a short-lived spike and eventually, sort of, normalize.”
    WTI crude is trading around three month highs, settling up 0.77% to $119.41 a barrel on Tuesday. Brent crude closed at the $120.57 mark. The bullish move came as Shanghai reopened from a two month Covid-19 lockdown, opening the door for higher demand and more upside.
    “We think the consumer can handle oil at $130, $135 because we had that back in 2010 to 2014. Inflation adjusted, that was basically the level. So, we think the consumer can handle that,” said Kolanovic, who has earned top honors from Institutional Investor for accurate forecasts multiple years in a row.
    His base case is the U.S. and global economy will avoid a recession.

    Read more about energy from CNBC Pro

    But at a financial conference last week, JPMorgan Chase Chairman and CEO Jamie Dimon told investors he’s preparing for an economic “hurricane” which could be a “minor one or Superstorm Sandy.”

    Kolanovic contends its vital to be ready for all possibilities.
    “We do forecast some slow down,” he said. “Nobody is saying that there are no problems.”
    His firm’s official S&P 500 year-end target is 4,900. But in a recent note, Kolanovic speculated the index would end the year around 4,800, still on par with all-time highs hit on Jan. 4. Right now, the S&P is 16% below its record high.
    ‘We don’t think investors will stick in cash’
    “We don’t think investors will stick in cash for the next 12 months, you know, waiting for this recession,” Kolanovic said. “If we continue to see [the] consumer especially on the services side holding up — which we do expect — then we think investors will gradually come back into equity markets.”
    Kolanovic’s top call is still energy, a group he has been bullish on since 2019.
    “Actually, valuations went lower despite the stock price appreciation,” Kolanovic said. “Earnings grow faster, so multiples are actually lower now in energy than they were a year ago.”
    He’s also bullish on small caps and high-beta technology stocks that have gotten crushed this year.
    Disclaimer

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