Raphael Stevens

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    Social network Commonstock aims to harness retail investor energy and verify ‘YOLO’ trades

    Commonstock is a relatively new social media platform dedicated to financial markets. It requires traders to link to their brokerage account to verify the investments they post about really happened. 
    The San Francisco-based start-up announced a $25 million Series A funding round Tuesday. Hedge fund managers Bill Ackman, Dan Loeb and Stanley Druckenmiller are among Commonstock’s early strategic investors. 
    “The ability for anybody to prove they own Tesla or Peloton by percentage, and show their skin in the game, weeds out a lot of the grifters who might say they had a 1,000% return,” says David McDonough, Commonstock’s founder and CEO.

    David McDonough, founder and CEO of Commonstock
    Commonstock

    A new social network is betting that enthusiastic retail traders are here to stay and that they want more transparency than what’s offered on Reddit. 
    Commonstock is a social media platform for talking about trades and financial markets. It features a Twitter-like news feed, with users ranking and commenting on investment strategies. But unlike Reddit’s popular WallStreetBets forum, it’s not anonymous. Traders to link to brokerage accounts in order to verify the investments they post about are real.

    “The ability for anybody to prove they own Tesla or Peloton by percentage, and show their skin in the game, weeds out a lot of the grifters who might say they had a 1,000% return,” Commonstock’s CEO and founder David McDonough told CNBC in an interview. “There’s no lying about it — you can see somebody’s performance in real time.” 
    The San Francisco-based start-up announced a $25 million Series A funding round on Tuesday, led by Coatue along with QED, Floodgate, Upside Ventures and others. It did not disclose a valuation. Hedge fund managers Bill Ackman, Dan Loeb and Stanley Druckenmiller are also among Commonstock’s early, strategic investors. 
    The company uses software known as an API to let traders link to Fidelity, Robinhood, E-Trade and other brokerage accounts. Profiles feature a user’s stock picks and performance. Instead of total followers, the feed shows the aggregate dollar amount of people following someone. 
    The platform officially launched in August 2020, a few months before the stock market went viral. In late January 2021, a group of retail traders banded together on social media to buy GameStop and inflict pain on the hedge funds betting against it. McDonough, who left Google in 2017 to start Commonstock, said there was an immediate user boost from the meme-stock saga. The client base was doubling month over month without marketing, he said.

    The Roaring Kitty effect

    GameStop aside, the past few years have brought a renaissance in retail stock trading. An estimated 10 million new traders entered the market this year alone, on pace with last year’s record, according to JMP Securities. The ubiquity of zero-commissions, fractional trades and the availability of stimulus checks, combined with people looking for new entertainment during the pandemic, have helped fuel new interest in investing.  

    “It sounds counterintuitive, but Roaring Kitty, AMC and GME probably did more to educate a generation of people than any of the financial textbooks and classes before,” McDonough said. “Investing is now interesting, and it’s part of the social discussion.”
    Some of that frenzy has already faded, with retail trading volume down from the peak in January. Still, McDonough said the platform is seeing elevated levels of engagement and “stickiness.” Commonstock users who may have been lured in by the entertainment of GameStop have kept their money in the markets, according to McDonough. For the most part, he said younger traders are not placing “YOLO” or “you only live once” bets. Their investments tend to follow Fidelity fund manager Peter Lynch’s adage of “invest in what you know.”
    That’s often internet culture and meme stocks, or brand names like Peloton or Nike, and Tesla.
    “They know that when Elon Musk tweets, it’s going to drive a lot of attention to Tesla, or they love their Peloton bike so they’ll buy a share of Peloton — when you have 10 million more people doing that, it creates a new purchasing power in the market that can move prices,” McDonough said. 

    Commonstock’s social media interface
    Commonstock

    Frank Rotman, co-founder and partner at QED Investors, was one of Commonstock’s early backers. Having an “all signal, no noise” social media outlet led them to double down in the Series A, he said.
    “On Reddit, everyone is willing to raise their hand and show you what to trade, but you don’t know who these people are and why they’re giving you the information they are,” Rotman said. “It’s devolved into high-fiving each other and memes, and it’s not about stocks or the companies themselves.”
    Commonstock hasn’t started monetizing yet. McDonough said he plans to follow Facebook, Twitter, Snapchat’s playbook of growing the network and user engagement, and making money down the road.
    Eventually, McDonough said Commonstock would consider a subscription service, advanced features, and aggregating and anonymizing data. But he said they would never sell data to hedge funds, or other third parties, and instead plan to offer that data as a resource to retail traders. 

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    Pepsi earnings top estimates despite higher supply chain costs, company raises revenue forecast

    PepsiCo raised its full-year forecast after its quarterly earnings and revenue topped analysts’ expectations.
    The company’s organic revenue climbed 9% in the quarter.
    But growth of Pepsi’s North American beverage unit moderated during the quarter.

    PepsiCo on Tuesday raised its full-year forecast after its quarterly earnings and revenue topped analysts’ expectations, despite higher costs and snarls in the supply chain.
    Pepsi shares rose less than 1% in premarket trading.

    Executives said supply chain disruptions and inflationary pressure for labor, commodities and transportation weighed on its fiscal third-quarter results. CFO Hugh Johnston said on CNBC’s “Squawk Box” that the company has been raising prices on its beverages and snacks and he expects another price hike in the first quarter of 2022.
    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    Earnings per share: $1.79 adjusted vs. $1.73 expected
    Revenue: $20.19 billion vs. $19.39 billion expected

    For the quarter ended Sept. 4, net income fell to $2.22 billion, or $1.60 per share, from $2.29 billion, or $1.65 per share, a year earlier.
    Excluding items, the food and beverage giant earned $1.79 per share, topping the $1.73 per share expected by analysts surveyed by Refinitiv.
    Net sales rose 11.6% to $20.19 billion, beating expectations of $19.39 billion. The company’s organic revenue, which strips out the impact of acquisitions and divestitures, climbed 9% in the quarter.

    Pepsi’s North American beverage business reported organic revenue growth of 7% for the quarter. While the unit’s organic sales have risen 10% on a two-year basis, growth has moderated since bouncing back 21% in the prior quarter. The company said that it saw double-digit net revenue growth for its food service business, which includes sales to restaurants, stadiums and college campuses. Worldwide, the company’s away-from-home drink business is down just 10% from 2019 levels.
    Frito-Lay saw its organic revenue increase by 5% as consumers maintained many of their pandemic snacking habits. Pepsi said that it gained market share in the salty and savory snack categories during the quarter.
    Quaker Foods North America, which has been the most challenged of Pepsi’s business units, saw its organic revenue increase by 1%. It was the only segment to report shrinking volume, which excludes the impact of price changes, and reported the largest drop in operating profit.
    For the full year, Pepsi said it expects its organic revenue to increase by 8%, up from its prior forecast of 6% growth. The company reiterated its forecast for core constant currency earnings per share of 11% growth. Analysts were forecasting full-year earnings growth of 13% and a revenue increase of 9.5%.
    Looking ahead to 2022, executives said they expect organic revenue growth and core constant currency earnings per share growth to be in line with the company’s long-term objectives.

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    National Institutes of Health Director Dr. Francis Collins is stepping down by year's end

    NIH Director Dr. Francis Collins said Tuesday he is stepping down by the end of the year.
    Collins helmed the agency for 12 years and became a crucial source for information on the Covid-19 pandemic.

    Francis Collins, director of the U.S. National Institutes of Health (NIH), holds a model of Covid-19 while speaking during a Senate Appropriations Subcommittee hearing in Washington, D.C., on Thursday, July 2, 2020.
    Saul Loeb | AFP | Bloomberg | Getty Images

    National Institutes of Health Director Dr. Francis Collins – who has helmed the agency for 12 years and became a crucial source for information on the Covid-19 pandemic – said Tuesday he is stepping down by the end of the year.
    “It has been an incredible privilege to lead this great agency for more than a decade,” Collins, 71, said in a statement. “I love this agency and its people so deeply that the decision to step down was a difficult one, done in close counsel with my wife, Diane Baker, and my family. I am proud of all we’ve accomplished.”

    Collins is the 16th NIH director, appointed by former President Barack Obama in 2009. He was asked to continue in his role by former President Donald Trump, and in 2021, by President Joe Biden. He is the first presidentially appointed NIH director to serve in more than one administration.
    In an interview with the Washington Post published late Monday, Collins said he had been contemplating whether to step down in May and eventually concluded that this year was the best time to do it.
    “There comes a time where an institution like NIH really benefits from new vision, new leadership,” he told the Post. “This was the right timing.”
    Prior to becoming the NIH director, Collins served as the director of the National Human Genome Research Institute from 1993 to 2008, leading the international project to map the human genome.
    During the pandemic, Collins, along with National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci, became fierce advocates for people to wear masks and get vaccinated.

    CNBC Health & Science

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    US Bank launches bitcoin custody service as institutions race to cater to crypto demand

    U.S. Bank, the fifth biggest retail bank in the nation, is expected to announce Tuesday that its cryptocurrency custody service is available to fund managers, CNBC has learned.
    The offering will help investment managers store private keys for bitcoin, bitcoin cash and litecoin with the help of sub-custodian NYDIG, according to Gunjan Kedia, vice chair of the bank’s wealth management and investment services division.
    Support for other coins like ethereum is expected over time, Kedia said.

    U.S. Bancorp
    George Frey | Bloomberg | Getty Images

    The race to cater to institutional investors who want to wager on cryptocurrency is heating up.
    U.S. Bank, the fifth biggest retail bank in the nation, is expected to announce Tuesday that its cryptocurrency custody service is available to fund managers, CNBC has learned.

    The offering will help investment managers store private keys for bitcoin, bitcoin cash and litecoin with assistance from sub-custodian NYDIG, according to Gunjan Kedia, vice chair of the bank’s wealth management and investment services division. Support for other coins like ethereum is expected over time, Kedia said.
    The move is the latest sign that established financial players are beginning to accept cryptocurrencies as a legitimate asset class. In the realm of custody banks, which verify and safeguard trillions of dollars of traditional assets for money managers, major players including Bank of New York Mellon, State Street and Northern Trust have all announced plans to custody digital assets.
    “Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class,” Kedia said in an interview. “I don’t believe there’s a single asset manager that isn’t thinking about it right now.”

    Gunjan Kedia, vice chair of the bank’s wealth management and investment services division.
    Courtesy: US Bank

    U.S. Bank, which was founded during the Civil War in 1863, is a top ten player in custody with more than $8.6 trillion in assets under custody and administration, according to data from the Federal Deposit Insurance Corp.
    After a key regulator released a paper last year that established that national banks could custody crypto assets, Kedia surveyed the firm’s biggest clients to determine if their interest was genuine. She found that interest in crypto was broad and not limited to niche players, and that clients wanted the bank to move quickly.

    “What we were hearing across the board, is that while every currency might not survive – there may not be room for thousands of coins— there’s something about the potential of this asset class and the underlying technology that would be prudent for us to stand up support for it,” she said.
    Some investment clients already have positions in bitcoin, while others are waiting for custody services to begin, she said. U.S. Bank is one of the first institutions to have a live custody product available, Kedia said.
    The price of bitcoin has whipsawed this year, surging to an all-time high of about $64,000 in April before losing half its value the next month. But the original cryptocurrency has proven to be resilient: It has weathered China’s move to ban the digital currency last month, and early Tuesday hit $50,000 once again.
    There is irony in the fact that while bitcoin was created to cut out financial middlemen, swaths of the old financial order are being recreated to cater to digital currencies. After all, fund managers could choose to store their own cryptocurrency keys. But managers want the imprimatur of established names like U.S. Bank to help allay concerns from their own clients, Kedia said.
    In order to onboard a manager into the crypto product, U.S. Bank has to trace the origin of the client’s funds in the industry’s standard anti-money laundering and “Know Your Client” checks, she said.
    The product is only for institutional managers with private funds in the U.S. or Cayman islands, according to the bank. But if and when the U.S. Securities and Exchange Commission approves a bitcoin ETF, demand is expected to rise.
    “We have a lot of funds who are hoping to invest in ETFs,” Kedia said. “Some literally want custody contracts signed the day the SEC approves an ETF.”

    Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today.

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    PepsiCo CFO says more price hikes could be on the way in the first quarter

    PepsiCo CFO Hugh Johnston is expecting another round of price hikes on the company’s snacks and beverages early next year.
    Pepsi has been raising its drink prices this summer into the fall, while its snack prices are rising now.
    Other consumer packaged goods companies, like Procter & Gamble and Pepsi’s rival Coca-Cola, have also been raising prices to offset the blow from higher costs, which are eating into profits.

    Hugh Johnston
    David A. Grogan | CNBC

    PepsiCo CFO Hugh Johnston is expecting another round of price hikes on the company’s snacks and beverages early next year.
    “I expect we’ll probably see a little bit more pricing increases in the first quarter of next year as we deal with the fact that input costs are just higher,” said Johnston on CNBC’s “Squawk Box” on Tuesday. “That’s just the reality for us and everybody else.”

    This summer, and into the fall, Pepsi’s drink prices have been rising, while its snack prices are starting to climb now, according to Johnston. Other consumer packaged goods companies, like Procter & Gamble and Pepsi’s rival Coca-Cola, have also been hiking prices this year to offset the blow from higher costs, which are eating into profits.
    Like all food and beverage giants, Pepsi buys the commodities and materials it needs months in advance. But those contracts don’t help the company escape inflation.
    “The forward buying can only do so much for us. What it does is buy us about six to nine months of room, so to speak,” Johnston said.
    That wiggle room allows the company and retailers to ease consumers into the higher prices, saving them from sticker shock.
    CEO Ramon Laguarta told analysts on the company’s conference call that consumers are looking at pricing a little bit differently than before. He said that the changes could be due to the strength of its brands and recent innovation.

    “There could be also some behaviors as consumers are shopping faster in-store, and they might be paying less attention to pricing as a decision factor, and there might be even more relevance to the brands,” Laguarta said.
    During the third quarter, Pepsi saw higher costs tied to inflation for labor, commodities and transportation, particularly for its Quaker Food North America business unit. The company’s net income fell 3% for the quarter, despite net revenue growth of 11.6%.
    Shares of Pepsi rose about 1% in premarket trading after the company topped analysts’ third-quarter estimates and raised its full-year revenue forecast.

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    Target will pay employees an extra $2 an hour for peak days of holiday season

    Target said it will pay an extra $2 an hour to store and service center employees who work peak days during the holiday season, such as on Saturdays and Sundays in the final weeks before Christmas.
    The big-box retailer previously said it would scale back holiday hiring and give more hours to its staff.
    The retailer is offering higher pay as many retailers struggle to fill jobs and focus on retaining employees ahead of the peak shopping season.

    People walk in front of Target store on March 02, 2021 in New York.
    Emaz | Corbis News | Getty Images

    Target said Tuesday that it will pay $2 an hour more to employees who pick up shifts during peak days of the holiday season.
    The extra pay will go to store employees and service center employees who work on Saturdays and Sundays from Nov. 20 to Dec. 19, on Christmas Eve or on the day after Christmas. Select headquarters employees also qualify, Target said in the announcement on its website.

    Hourly supply chain employees can get the additional pay for peak two-week periods between Oct. 10 and Dec. 18, a crucial time for moving goods to shelves and packing boxes. The specific timing will depend on where the employees work.
    Target’s minimum wage is $15 an hour. The company is sweetening the deal and offering even higher pay for holiday workers as many retailers struggle to fill jobs and focus on retaining employees. Korn Ferry, a talent consulting firm, polled 176 U.S. retailers in September to see if the companies were having trouble hiring, and only 2% responded that it wasn’t an issue.
    Target said last month that it would scale back on seasonal hiring and instead give more hours to its roughly 300,000 current store employees. It also launched an app that allows workers to pick up an extra shift on demand, if they prefer a more flexible schedule that they can juggle with child care or college classes.

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    GM to detail significant revenue expansion plans during highly anticipated investor day

    GM CEO Mary Barra and other executives will detail plans to significantly expand the company’s revenue and earnings opportunities during an investor day this week.
    The growth will be a main focus of the event, which will include detailed targets regarding revenue, profit margins and outlooks on total addressable markets for early expansion businesses.
    Aside from financial targets, GM executives are expected to discuss the company’s plans to move from a traditional automaker focused on costs to a “platform company” that generates new revenue

    GM CEO Mary Barra talks with media prior to the start of the 2017 General Motors Company Annual Meeting of Stockholders Tuesday, June 6, 2017 at GM Global Headquarters in Detroit, Michigan.
    Photo by John F. Martin for GM

    DETROIT – General Motors CEO Mary Barra and other executives will detail plans to significantly expand and diversify the company’s revenue and earnings during a highly anticipated investor event this week in Detroit.
    Future growth is a main focus of the event where executives will disclose specific targets regarding revenue, profit margins and the outlook on total market size for early expansion businesses, like self-driving taxis, according to people familiar with the matter, who asked not to be named because the plans haven’t been made public.

    GM’s revenue last year was nearly $122.5 billion, down 10.8% compared with 2019 thanks largely to factory shutdowns at the beginning of the coronavirus pandemic. It still made $6.4 billion in net income for the year while its adjusted operating profit was $9.7 billion, or $4.90 a share, in 2020.

    Aside from financial targets, GM executives will discuss the company’s plans to move from a traditional automaker focused on costs to a “platform company” that generates new revenue through software, core technologies and additional business lines such as OnStar and its EV commercial start-up BrightDrop, according to the people.
    Barra and other executives have been laying the groundwork for the event for much of this year after expanding the company’s operations beyond simply producing cars and trucks.  
    “I can’t wait to be able to just lay out the complete growth strategy that General Motors has,” Barra said during a Credit Suisse investor event in June. “We’ve talked about a lot of pieces but be able to get back to being face to face and really show it and have the investors meet the teams that are doing it, I think will be key.”

    Executives also are expected to more deeply discuss the company’s product transition from an automaker heavily reliant on vehicles with internal combustion engines to exclusively offering electric cars and trucks by 2035. That will include more information on the company’s plans to invest $35 billion in electric and autonomous vehicles by 2025, according to the people.

    Cruise

    Dan Ammann, CEO of GM’s majority-owned autonomous vehicle subsidiary Cruise, will tell investors that it sees a path for its ride-hailing business to reach $50 billion in revenue as it ramps up operations.
    It is not expected to detail a timeline to hit such a milestone, but how it can scale up as fast, if not faster, than other transformative businesses, according to one of the people who is familiar with the plans, which were reported earlier by Bloomberg.
    Cruise is expected to start charging for rides as soon as next year pending approval from California regulators, the source confirmed.
    About 100 investors are expected to attend GM’s investor event. Executives will focus on presentations at its design and technical campus on Wednesday, followed by a day at GM’s Milford Proving Grounds for experiencing new products and technologies Thursday.

    GM CFO Paul Jacobson has said details released at the event, including long-term financial objectives, are meant to inform investors on its baseline targets and plans for the coming years.
    “We’ve kind of really plowed deep into our long-term plans and looking at longer-term financial models,” Jacobson said last month during a discussion with RBC Capital Markets. “And there’s some exciting things out there about growth initiatives and opportunities and what the industry looks like. And we’re going to go into some of those details quite a bit at investor day going forward.”
    The investor event overall is expected to provide a “clear strategy” in an effort to increase the company’s valuation to be more like a technology company, much like Tesla is at more than $750 billion. GM’s market cap is about $79 billion.
    GM’s stock this year is up by about 30% to $53.98 as of Monday’s close. It has gained roughly 80% over the last year.

    Engine No. 1

    The stock was up by as much as 4.7% on Monday after upstart activist investment firm Engine No. 1 said it has taken a stake in GM. Engine No. 1 founder Chris James believes the company’s stock could triple in the next five years.
    “We think that this can become a growth company again … we think this stock could triple over the next five years,” James said Monday on CNBC’s “Squawk Box.”
    Engine No. 1 rose to prominence after waging a successful campaign against Exxon. But the firm’s investment in GM is stamp of approval rather than a more traditional activist investor approach, James said.
    “We think this is a real opportunity for people to pay attention and look how a company can disrupt itself in an industry going through transition,” he said. “General Motors is unique in that we think they’re doing the right things.”

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    Unemployment recipients fell by more than half after Labor Day cliff

    The number of people receiving unemployment benefits fell by 55%, to 5 million, as of Sept. 11, according to Labor Department data.
    Federal unemployment programs ended on Labor Day.
    Congress opted not to extend them again.

    People receive information as they attend a job fair at SoFi Stadium on Sept. 9, 2021, in Inglewood, California.
    PATRICK T. FALLON | AFP | Getty Images

    The number of Americans collecting unemployment benefits fell by more than half after the Labor Day “cliff,” when federal assistance ended for millions of people.
    There were just over 5 million people receiving jobless aid as of Sept. 11 — a roughly 55% cut from the 11.3 million who’d been collecting benefits the week prior, according to federal data published Thursday.

    Pandemic-era programs that offered income support to the unemployed lapsed on Labor Day.
    More from Personal Finance:How Biden’s $3.5 trillion economic plan compares to the Great Society and New DealPaid family leave could become lawThese 8 money moves can help you make up for lost income
    At that time, workers like the self-employed, independent contractors and long-term unemployed were no longer eligible for federal benefits through those programs, which had been available since March 2020.
    The number of ongoing recipients is likely to fall by millions more in coming weeks, too. The 5 million ongoing recipients as of Sept. 11 includes about 2 million people who, on paper, received federal aid through lapsed programs — a dynamic that reflects processing delays and backdated applications, according to labor experts.
    Jobless individuals who remain eligible for state benefits can continue to collect that aid. However, they are getting $300 less per week due to the expiration of a federal benefit supplement.

    Congress had extended federal benefit programs in December 2020 and again in March 2021 but opted not to do so a third time due to an improving economy and labor market.
    Twenty-six states opted out of the programs early to try to nudge recipients back to work. However, available evidence suggests enhanced benefits were not keeping large numbers of workers on the sidelines.
    Economists believe other factors like ongoing health risks and childcare responsibilities, especially amid the delta wave of the virus, are playing a bigger role in any worker shortages.
    Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh had urged states with high unemployment rates to continue issuing aid to some unemployed workers using other pots of federally allocated pandemic funds. It doesn’t appear they have done so, however.

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