Raphael Stevens

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    GM and Hyundai agree to explore collaboration on vehicles and manufacturing to reduce capital spending

    General Motors and Hyundai Motor said they have entered into an agreement to explore “future collaboration across key strategic areas” in an effort to reduce capital spending and increase efficiencies.
    Potential areas of interest include production of passenger and commercial vehicles, internal combustion engines, and electric and hydrogen technologies.
    The agreement, a nonbinding memorandum of understanding, comes as the automotive industry has renewed its focus on capital efficiency following years of aggressive spending.

    Mary Barra, chair and CEO of General Motors, and Euisun Chung, executive chair of Hyundai Motor Group, during the signing of an agreement between the two companies to explore future collaboration across key strategic areas.
    Courtesy image

    DETROIT — General Motors and Hyundai Motor have entered into an agreement to explore “future collaboration across key strategic areas” in an effort to reduce capital spending and increase efficiencies, the companies announced Thursday.
    The automakers’ potential areas of interest include co-development and production of passenger and commercial vehicles, internal combustion engines, and clean-energy, electric and hydrogen technologies, they said in a joint press release.

    The agreement, a nonbinding memorandum of understanding, comes as the automotive industry has renewed its focus on capital efficiency following years of aggressive spending to develop electric, autonomous and software-defined vehicles that have yet to manifest into profitable businesses.
    The automakers also said they will “review opportunities for combined sourcing in areas such as battery raw materials, steel and other areas.”
    The framework agreement was signed by Hyundai Motor Group Executive Chair Euisun Chung and GM Chair and CEO Mary Barra, the companies said.

    A GM Hydrotec fuel cell power cube on display at the company’s joint venture facility with Honda in Brownstown, Michigan.
    Michael Wayland/CNBC

    Spokespeople for the companies declined to provide additional details about the announcement, including potential capital investments or expected savings or efficiency gains.
    The agreement comes months after Barra said now is a “prime time” for industry collaboration to share in capital spending. Both Barra and Chung echoed those comments in statements Thursday.

    “GM and Hyundai have complementary strengths and talented teams. Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently,” Barra said.
    “This partnership will enable Hyundai Motor and GM to evaluate opportunities to enhance competitiveness in key markets and vehicle segments, as well as drive cost efficiencies and provide stronger customer value through our combined expertise and innovative technologies,” Chung said.

    Read more CNBC auto news

    This is the first such agreement for Hyundai, according to a spokesman. GM, meanwhile, has been part of many partnerships or deals. Some tie-ups have led to products, but many others have not worked out or did not accomplish as much as initially expected.
    Most notably, GM and Honda Motor have been involved in several partnerships involving fuel cells, all-electric vehicles, and autonomous vehicles, the latter with Cruise, a majority-owned subsidiary of GM. Success with each has varied.
    An announced memorandum of understanding between GM and Nikola Corp. in 2020 failed to produce any meaningful results amid a litany of problems with the once-promising automotive startup.
    In the early 2010s, before Barra was CEO, GM had notable partnerships with Ford Motor and former French automaker PSA Peugeot Citroën, now Stellantis, that also didn’t deliver their anticipated results. More

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    Dutch neobank Bunq goes on hiring spree, targeting digital nomads, as other fintechs slash jobs

    Bunq, the Dutch digital bank, told CNBC it plans to increase its global headcount by over 70% in 2024.
    It’s expected to help the fintech expand into new regions including the U.K. and the United States, where the company is applying for local licenses.
    It comes as other companies, including PayPal and Klarna, have significantly reduced their workforces amid a tougher environment for fintech.

    Dutch digital bank Bunq is plotting re-entry into the U.K. to tap into a “large and underserved” market of some 2.8 million British “digital nomads.”
    Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images

    Dutch challenger bank Bunq told CNBC that it plans to grow its global headcount by 70% this year to over 700 employees, even as other financial technology startups have decided to cut jobs.
    Bunq, which operates in markets across the European Union, is looking to expand into new regions including the U.K. and the United States, taking on the fintechs already in those countries, including the likes of Britain’s Monzo and Revolut, and American neobank Chime.

    Bunq said it needs corresponding talent in those regions to support its global expansion ambitions. To that end, the firm said it plans to see out the year with 735 employees globally — up 72% from its 427 members of staff at the start of 2024.
    “Bunq focusses on digital nomads who tend to roam the world,” Ali Niknam, Bunq’s CEO and co-founder, told CNBC via emailed comments.
    So-called “digital nomads” are defined as people who travel freely while working remotely, using technology and the internet to work abroad from hotels, cafes, libraries, co-working spaces, or temporary housing.
    “We’d love to be able to service our users wherever they go — given the regulatory environment we’re in, this results in us having to have a lot of extra people to make this happen,” Niknam added.

    Bunq is currently in the process of applying for banking licenses in both the U.S. and U.K. Last year, the firm submitted an application for a federal banking license. And in the U.K., Bunq is awaiting a decision from financial regulators on an application to become a licensed e-money institution, or EMI.

    The digital bank said it was actively looking to hire across sales and business development, product marketing, PR, affiliate marketing, and market analysis, as well as user support, development, and quality assurance.
    Many of these positions will be part of a “tailored digital nomad” program that allows staff to work from anywhere in the world, Bunq said.
    However, the firm stressed it’s not closing down office space and that many new hires would work in its offices, including in Amsterdam, Sofia, Istanbul, Munich, Paris, Dublin, Madrid, London, and New York City.

    A contrast from jobs cuts at other fintechs

    Over the past two years, one of the biggest stories in both the fintech and broader technology industry has been companies slashing jobs to cut back on the massive spending implemented during in the pandemic years of 2020 and 2021.

    The operating environment for fintech firms has gotten tougher, meanwhile, with inflation knocking consumer confidence and higher interest rates making it harder for startups to raise money.
    In January last year, cryptocurrency exchange Coinbase slashed 950 jobs. It was followed by payments giant PayPal, which reduced its global headcount by 2,000 people in early 2023, and then by another 2,500 jobs in early 2024.
    Meanwhile, some fintechs are looking to artificial intelligence to take on a growing number of roles.
    Swedish buy now, pay later firm Klarna, for instance, said last month that it was able to reduce its workforce from 5,000 to 3,800 over the past year from attrition alone. It added that it is looking to further cut employee numbers down to 2,000 through the use of AI in marketing and customer service.
    “Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits,” the company said in first-half earnings.
    Klarna said that its average revenue per employee had risen 73% year-over-year, thanks in no small part to the internal application of AI.
    Bunq’s Niknam said he doesn’t see AI as a way to help firms reduce headcount, however.
    “We’ve been deploying AI systems and solutions years before they became mainstream, [but] in our experience AI empowers our employees to be able to do better by our users, more effectively and efficiently,” he told CNBC.
    Bunq earlier this year reported its first full year of profitability, generating 53.1 million euros ($58.51 million) in net profit in 2023. The business was last valued privately by investors at 1.65 billion euros. More

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    Using ETFs to capture momentum during the market’s wild swings

    September is living up to its reputation as a volatile month, and this creates more challenges to the Big Tech trade. But one low-volatility ETF is still betting big on it.
    Alliance Bernstein is behind the AB US Low Volatility Equity ETF. According to FactSet, its top three holdings include megacap winners Microsoft, Apple and Alphabet.

    “Technology touches everything that we do in most facets of our life, but there are other industries in play,” Noel Archard, the firm’s global head of ETFs and investor solutions, told CNBC’s “ETF Edge” this week. “So, we’re continuing to see a lot of interest in investing broadly.”
    For comparison, FactSet lists the top holdings for Invesco’s Low Volatility ETF as stocks that are traditionally more stable: Berkshire-Hathaway, Coca-Cola and Visa.
    Archard notes there’s still a place for historically less volatile stocks such as consumer staples and financials. He sees them as “bumpers” that can help mitigate risk.
    For example, FactSet shows that Alliance Bernstein’s low-volatility ETF also includes exposure in names including Procter & Gamble and Fiserv.
    “You sort of forget about volatility until it’s there, and then all of a sudden it becomes very front and center,” said Archard.

    The AB US Low Volatility ETF is up 16% so far this year as of Wednesday’s close.
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    Restaurant chain BurgerFi files for Chapter 11 bankruptcy protection

    BurgerFi filed for bankruptcy protection, joining the growing list of restaurant chains that have turned to Chapter 11 to turn around their businesses.
    The company owns its namesake burger chain and Anthony’s Coal Fired Pizza & Wings.
    BurgerFi went public through a deal with a special purpose acquisition company in 2020.

    A BurgerFi location is seen on August 20, 2024 in Arlington, Virginia. 
    Tierney L. Cross | Getty Images

    BurgerFi filed for Chapter 11 bankruptcy protection on Tuesday, less than a month after it warned investors it had “substantial doubt” about its ability to operate.
    The company joins the growing list of restaurant chains that have resorted to bankruptcy to turn around their businesses, from Red Lobster to Buca di Beppo. Broadly, the restaurant industry has seen chains, independents and franchisees alike struggle with declining traffic and high interest rates.

    BurgerFi, known for its higher-quality burgers, was founded in 2011. It went public in 2020 through a deal with a special purpose acquisition company, which briefly became a popular alternative to a traditional IPO due to their speed and reduced regulatory scrutiny. Months later, the company bought Anthony’s Coal Fired Pizza & Wings for $156.6 million.
    BurgerFi has assets of $50 million to $75 million and total debts of $100 million to $500 million, according to a bankruptcy filing.
    For the quarter ended April 1, BurgerFi reported revenue of $42.9 million and a net loss of $6.5 million. Same-store sales at its namesake burger chain tumbled 13%.
    Across its two brands, the company has 162 restaurants, roughly half of which are run by franchisees, as of April 1. More

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    Strangely, America’s companies will soon face higher interest rates

    Between early 2022 and mid-2023 the Federal Reserve tightened monetary policy at the fastest pace since the early 1980s, lifting America’s policy interest rate from 0-0.25% to 5.25-5%. When the central bank’s policymakers next meet on September 17th and 18th, they will almost certainly start cutting rates. Investors even wonder whether they will begin with a 0.5-percentage-point reduction, in response to cooler-than-expected economic data. More

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    Berkshire unloads another chunk of Bank of America as CEO Moynihan lauds Buffett as great shareholder

    Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024. 

    Warren Buffett’s Berkshire Hathaway offloaded another chunk of Bank of America shares, bringing its total sales to more than $7 billion since mid-July and reducing its stake to 11%.
    The Omaha-based conglomerate shed a total of 5.8 million BofA shares in separate sales on Friday, Monday and Tuesday for almost $228.7 million at an average selling price of $39.45 per share, according to a new regulatory filing.

    The latest action extended Berkshire’s selling streak to 12 consecutive sessions, matching the 12 consecutive sessions from July 17 to Aug. 1.
    Berkshire has sold more than 174.7 million shares of the Charlotte-based bank for $7.2 billion, with 858.2 million shares remaining, or 11.1% of shares outstanding. BofA has fallen to the No.3 spot on Berkshire’s list of top holdings, trailing behind Apple and American Express. Before the selling spree, BofA had long been Berkshire’s second biggest holding.

    Moynihan on Buffett

    Buffett famously bought $5 billion worth of BofA’s preferred stock and warrants in 2011 in the aftermath of the financial crisis. He converted those warrants in 2017, making Berkshire the largest shareholder in BofA. The “Oracle of Omaha” then added 300 million more shares to his bet around 2018 and 2019.
    BofA CEO Brian Moynihan made a rare comment about Berkshire’s sales Tuesday, saying he has no knowledge of Buffett’s motivation for selling.
    “I don’t know what exactly he’s doing, because frankly, we can’t ask him. We wouldn’t ask,” he said during Barclays Global Financial Services Conference, according to a transcript on FactSet. “But on the other hand, the market’s absorbing the stock …. we’re buying a portion of the stock, and so life will go on.”

    Stock chart icon

    Bank of America

    Shares of BofA have dipped just about 1% since the start of July, and the stock is up 16.7% this year, slightly outperforming the S&P 500.
    Moynihan, who has been leading the bank since 2010, praised the 94-year-old’s shrewd investment in his bank in 2011, which helped shore up confidence in the embattled lender struggling with losses tied to subprime mortgages.
    “He’s been a great investor for our company, and stabilized our company when we needed at the time,” he said.
    To illustrate how lucrative Buffett’s investment has been, Moynihan said if investors were to buy his bank stock the same day Buffett did, they would have been able to capture the low price of $5.50 per share. The stock last traded just under $40 apiece.
    “He just had the guts to do it in a big way. And he did it. And it’s been a fabulous return for him. We’re happy that he gets it,” Moynihan said.
    — CNBC’s Alex Crippen contributed reporting. More

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    Here’s why September and October are historically weak for stocks

    José Luis Gutiérrez | iStock Photo

    Why are September and October historically weak for stocks? For answers, I turned to Mark Higgins, senior vice president at Index Fund Advisors and author of the book, Investing in U.S. Financial History: Understanding the Past to Forecast the Future.
    The answers have been edited for clarity.

    What is it with September and October being weak months for stocks?  Has this always been the case?
    Yes. The most intense panics on Wall Street have tended to occur during the late summer and early autumn months. This can be traced all the way back to the 1800s. A few notable examples of exceptional panics include Black Friday of 1869, the Panic of 1873 and the Panic of 1907.
    But why September and October?
    It is a byproduct of an old weakness in the U.S. financial system. Prior to the reintroduction of a central banking system with the passage of the Federal Reserve Act of 1913, the U.S. was limited in its ability to adjust the money supply in response to market conditions.
    The inelasticity of the U.S. currency made the late summer and early autumn months an especially precarious time, due to the agricultural financing cycle. In the 1800s, the U.S. economy still relied heavily on agricultural production.  For the first eight months of the year, American farmers had a limited need for capital, so excess funds held on deposit in state banks were shipped to New York banks or trust companies to earn a higher rate of return.

    When harvest time arrived in August, state banks began withdrawing their capital from New York, as farmers drew on their accounts to fund transactions required to ship crops to market.
    The agricultural financing cycle created chronic shortages of cash in New York City during the autumn months. If these shortages happened to coincide with a financial shock, there was little flexibility in the system to prevent a panic. 
    How did the government respond to these panics?
    The limited ability of the government to react was the primary impetus for the passage of the Federal Reserve Act of 1913. The Act granted the Fed the power to serve as a lender of last resort during financial crises. Prior to the Act, leading financiers (most notably J.P. Morgan) were forced to assemble ad hoc solutions that relied primarily on private capital. After the U.S. barely avoided a catastrophic collapse of the financial system during the Panic of 1907, there was just enough political support for the return of the third and final iteration of a central banking system in the United States. 
    Did the creation of the Federal Reserve provide more stability to markets? 
    Yes, and if one compares the frequency, intensity and misery of financial panics during the 1800s, this is plainly evident. In fairness, the Fed made a few mistakes along the way, with the most notable being its failure to stop the contagion of bank failures in the 1930s. But, by and large, the U.S. financial system has been much more stable since the Federal Reserve became operational in late 1914. 
    Still, the U.S. economy is not primarily agricultural anymore.  Why are September and October still weak months?
    People tend to fear things that have happened before even if they don’t remember the origin of the fear. It may be that the fall panics have repeated so many times that they have become a self-fulfilling prophecy. In other words, people expect them, and because they expect them, they behave in ways (i.e., reducing risk in late summer and early fall) that make them more likely. I know this sounds like a stretch, but it does seem like it may actually be real. More

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    How retailers and media companies are teaming up to bring live shopping to the 2024 VMAs

    Paramount Global has partnered with shoppable advertising company Shopsense AI for the 2024 MTV VMAs so viewers can shop the red carpet looks they’re seeing in real time.
    Shopsense is debuting its new “Lens” at the start of the awards show, which will allow viewers to snap photos of outfits on screens and get product recommendations.
    The company said it is in discussions with other major media companies and aims to bring the tech to a range of programming, including scripted television and sporting events.

    Courtesy: Shopsense

    When viewers tune in to the 2024 MTV VMAs on Wednesday night, they’ll be able to shop the outfits and designer looks they’re seeing in real time, as legacy media companies look for new ways to monetize content.
    As part of a new partnership between Paramount Global — the parent company of cable TV network MTV — and shoppable advertising company Shopsense AI, viewers will be able to shop the outfits they’re seeing on screen using the startup’s new AI-powered lens, which will launch at the start of the awards show, Shopsense told CNBC.

    The software will allow viewers to snap photos of their favorite looks as they come up on screen and then browse similar options suggested by Shopsense’s product recognition algorithm, the company said.
    The partnership and potential future deals could boost both retailers taking a hit as consumers pull back discretionary spending, and legacy media companies that have tried to maintain profits in a challenging landscape. Each time a person buys something through the new feature, or in some cases even when they just click on an item, some revenue will go back to Paramount, according to Shopsense.
    “Everyone’s got their phone or their tablet in their hand while they’re watching TV,” Bryan Quinn, a former Amazon executive and Shopsense’s co-founder and president, told CNBC in an interview. “This allows folks, in a non-disruptive way … to go through that shopping journey without pausing the content.” 
    Paramount’s partnership with Shopsense was a key component of its Upfront presentation in May, a time when media companies make their annual pitch to advertisers. The agreement comes as legacy media companies look to generate new revenue streams and find different ways to monetize their content.
    While media companies have relied on ad revenue for some time, it’s become more important as they look to make their streaming businesses profitable. Paramount — which recently agreed to a merger with Skydance Media — will air the VMAs on both MTV and its streaming platform, Paramount+. 

    Legacy meets AI

    Advertisers and media companies have been leaning into generative AI tools, such as shoppable advertising. Disney announced a similar partnership earlier this year with Gateway Shop, and launched a beta program for its first native streaming shoppable ad format.
    Across the ad industry, the growth of AI is “revolutionizing how brands reach audiences,” said Natalie Bastian, global chief marketing officer at Teads.
    “The integration of AI is driving measurable outcomes, maximizing media effectiveness and improving return on ad spend across the industry,” Bastian said.
    Since most celebrities attending the VMAs on Wednesday will likely be wearing custom, couture items, the Shopsense software will suggest so-called dupes at a range of price points. It can recognize more than 1 billion items that are sold off the rack, according to Shopsense.
    “For impulse buys, the immediacy of this format is particularly effective, as it capitalizes on the viewer’s spontaneous desires, often triggered by limited-time offers or exclusive deals,” said Laura Taylor, retail media investment lead at Goodway Group.
    TV viewership is largely driven by live events, namely sports, news and awards shows such as the VMAs. As it draws the most eyeballs, live content has attracted the most advertising dollars, even as the ad market is in the midst of a rebound from down years. 
    The ad market slumped soon after the onset of the pandemic, as companies often pull back on advertising spending during times of economic uncertainty. However, companies have reported this year that the ad market is on the rebound, especially for streaming and digital players. 
    While advertising revenue for Paramount’s traditional TV business dropped during its second quarter, Paramount+ turned its first profit, driven by subscriber growth and higher prices. Though a wave of consumers has shifted from the pay TV bundle toward streaming, the majority of viewership still comes from traditional TV viewing, said John Halley, president of Paramount Advertising. 
    As Paramount gears up for another major live event, Halley called the Shopsense integration “totally game changing” when it comes to how viewers will experience the VMAs.
    “It’s something that provides brands an amazing access point and opportunity to reach consumers … in an environment that is actionable to purchase their products,” said Halley.
    “Once you get the consumer into the environment, No. 1, they tend to dwell, so they’ll go through and look at a bunch of stuff, and No. 2, the revenue per user in those environments is extremely high. The conversion rates are high,” he said. “It’s really a matter of bringing the consumer into the second screen experience and the tech does the rest of it.”
    Down the line, Shopsense is looking to work with other media companies and their wardrobe teams so viewers can shop the exact products featured on all sorts of television programs, such as the power blazers featured on HBO’s “Industry” or the cookware featured on Fox’s “MasterChef.”
    “We’re turning TV into this retail powerhouse, right?” said Glenn Fishback, Shopsense’s CEO and other co-founder. “We’re promoting, enabling and activating and allowing the prospective TV broadcasters to win back the living room and create this curated secondary screen experience. This should be a form of entertainment that not only am I enjoying the shows, I can buy the furniture. I’m a part of it, and that’s what we think the Lens does.”
    Quinn declined to say what other broadcasters the retailer is in negotiations with, but did say Shopsense is in “active conversations with all the major media companies.” 

    What about the retailers?

    Shopsense has teamed up with over 1,000 retailers, including Macy’s, Nordstrom, Urban Outfitters and Revolve, to feature their products in the platform. The partnership gives retailers a chance to capture customers at the moment they’re inspired by something they’re watching on television. It’s another example of how they’re leveraging artificial intelligence to make online shopping more experiential and engaging — though it’s unclear whether it drive significant sales.
    In 2022, Walmart teamed up with Roku to create interactive product ads that allowed viewers to use their remote to click on an item and purchase it. However, the consumer was required to pause the content and use their TV screen to check out, which took them away from what they were watching and wasn’t exactly a seamless shopping experience. 
    “The biggest difference here is complete lack of friction. You pull a phone out, you point it at the TV, and here comes the gallery,” said Paramount’s Halley. “What we’ve learned over and over and over again is it has to be a seamless experience. You can’t require a viewer to take a fundamentally different behavior, right? People are typically watching television with their phones and an opportunity to extend the … experience right there to the second screen is incredibly compelling.”
    Not only will consumers be able to find the looks they’re seeing on television, Shopsense will also feature curated collections inspired by the content. For example, as the VMAs kick off on Wednesday night, it’ll feature lookalikes from last year’s event and a curated “Get ready with me” selection from Macy’s that includes red carpet looks, fragrances and accessories, Shopsense said.
    “We’re often times bringing in similar items that are thematically aligned with the content,” said Quinn. 
    For example, a curated selection of winter looks in New York could accompany a season of Disney’s “Only Murders in the Building” or a range of burnt-orange clothing could be offered with a Texas Longhorns game. 
    Jessica Ramirez, a senior research analyst at Jane Hali & Associates, said marrying television with retail is a great way to help consumers with product research and reel them in when many are cutting back on discretionary purchases. 
    “When you’re watching TV, you’re looking at something. ‘Oh I really like that lipstick, I like that dress, maybe it’s something I want to wear for a wedding’ and if there’s a way for you to easily browse while you’re shopping, it’s another channel,” said Ramirez. “It’s a great idea and it makes sense, but with these kinds of things, execution is crucial.” More