Raphael Stevens

More stories

  • 175 Shares179 Views

    in Finance

    Citigroup CEO Jane Fraser says low-income consumers have turned far more cautious with spending

    Citigroup CEO Jane Fraser said Monday that consumer behavior has diverged as inflation for goods and services makes life harder for many Americans.
    Fraser, who leads one of the largest U.S. credit card issuers, said she is seeing a “K-shaped consumer.”
    That means the affluent continue to spend, while lower-income Americans have become more cautious with their consumption.

    Citigroup CEO Jane Fraser said Monday that consumer behavior has diverged as inflation for goods and services makes life harder for many Americans.
    Fraser, who leads one of the largest U.S. credit card issuers, said she is seeing a “K-shaped consumer.” That means the affluent continue to spend, while lower-income Americans have become more cautious with their consumption.

    “A lot of the growth in spending has been in the last few quarters with the affluent customer,” Fraser told CNBC’s Sara Eisen in an interview.
    “We’re seeing a much more cautious low-income consumer,” Fraser said. “They’re feeling more of the pressure of the cost of living, which has been high and increased for them. So while there is employment for them, debt servicing levels are higher than they were before.”
    The stock market has hinged on a single question this year: When will the Federal Reserve begin to ease interest rates after a run of 11 hikes? Strong employment figures and persistent inflation in some categories have complicated the picture, pushing back expectations for when easing will begin. That means Americans must live with higher rates for credit card debt, auto loans and mortgages for longer.
    “I think, like everyone here, we’re hoping to see the economic conditions that will allow rates to come down sooner rather than later,” Fraser said.
    “It’s hard to get a soft landing,” the CEO added, using a term for when higher rates reduce inflation without triggering an economic recession. “We’re hopeful, but it is always hard to get one.”

    Don’t miss these exclusives from CNBC PRO More

  • 113 Shares99 Views

    in Business

    Equinox launches $40,000 membership to help you live longer

    High-end fitness chain Equinox is launching a $40,000-per-year program aimed at improving overall health and longevity.
    “Optimize by Equinox” is a personalized health program that includes everything from personal training and nutrition plans to sleep coaching and massage therapy.
    It’s part of the fast-growing market for longevity and wellness, where the fields of medicine, biotech, fitness and nutrition are merging in the quest to slow the effects of aging.

    Equinox gym
    Courtesy: Equinox

    High-end fitness chain Equinox is launching one of the most expensive gym memberships in the world — a $40,000-per-year program aimed at improving overall health and longevity.
    Equinox is teaming up with lab-test startup Function Health to launch “Optimize by Equinox,” a personalized health program that includes everything from personal training and nutrition plans to sleep coaching and massage therapy. The program, announced Monday, is part of the fast-growing market for longevity and wellness, where the fields of medicine, biotech, fitness and nutrition are merging in the quest to slow the effects of aging.

    “It’s really a paradigm shift in how we’re able to live with vitality and avoid suffering,” said Jonathan Swerdlin, co-founder of Function Health. “It deals with what’s above the surface, your abs and glutes, which you can see in the mirror that are great. But it also deals with what’s below the surface and what you can’t see in the mirror. And that’s revolutionary.”
    The Optimize program starts with a battery of tests. Function Health will test members for 100 biomarkers — everything from heart, liver and kidney health to metabolic and immune systems to cancer markers and nutrients. Equinox will then run its own battery of fitness tests, including VO2 max, strength and movement range. The tests are repeated twice a year.
    An Equinox “concierge” pulls all the tests and data together and helps the member design a personalized plan to improve their overall health and fitness. Each member will have a core team that includes a fitness trainer, a nutrition coach and sleep coach as well as a massage therapist.
    The Optimize membership includes three, 60-minute training sessions per week with a top-level trainer. It also includes two half-hour sessions a month with a nutrition coach, two half-hour sessions a month with a sleep coach and one massage therapy session per month. In all, the program amounts to 16 hours a month of coaching and training, according to Equinox.
    “It’s the same as Formula One or an athlete, where you are given a team of top experts in all these different verticals, to design a program based on all the data that we collected,” said Julia Klim, vice president of strategic partnerships and business development at Equinox.

    The move will mark a major test of Equinox’s continued efforts to expand beyond fitness into the broader health and wellness business, which has become a booming market among the affluent.
    The company recently closed a new $1.8 billion funding round that refinances $1.2 billion in existing debt. It said its performance last month made for its second-best April in company history.
    Equinox is planning to open new clubs in Philadelphia and the Pacific Palisades neighborhood of Los Angeles later this year, bringing its total locations in the pipeline to 27. The company currently operates 107 locations globally, according to its website.
    Klim said Equinox has always focused on “the four pillars” of longevity: movement, regeneration, nutrition and community.
    “I sometimes joke that we’ve always been in the longevity business and the science is catching up,” she said.
    The new program will cost $3,000 a month for a minimum of six months. The fee doesn’t include an Equinox gym membership, which brings the total to about $40,000 or more for the year.
    “It’s a human-first, highly luxury service meets data meets coaching program,” Klim said.
    The Optimize program will initially be available starting at the end of May in New York City and Highland Park, Texas, and will eventually roll out to other states, according to Equinox. Members will be able to train at Equinox’s elite “E Clubs,” which are more like private gyms with higher membership fees.
    Swerdlin said Function Health’s mission is to help people live “100 healthy years.” The company’s own program costs $499 for the tests of 100 biomarkers. Yet demand is so strong that it has a waitlist of more than 200,000 people. He said Function wanted to partner with Equinox “because they’re the leader in the category.” He said Function’s data is most useful when it can be applied, which is where Equinox, with its personalized fitness and health programs, comes in.
    “Living 100 healthy years doesn’t happen inside of a doctor’s office,” Swerdlin said. “It happens in your daily decisions. And it also happens with the way in which you exercise, and Equinox really helps close the loop on that.”
    Sign up to receive future editions of CNBC’s Inside Wealth newsletter with Robert Frank. More

  • 175 Shares149 Views

    in Finance

    Buffett’s Berkshire Hathaway gains as insurance lifts first-quarter profit and cash nears $200 billion

    Berkshire Hathaway shares rose Monday after Warren Buffett’s conglomerate reported a surge in operating earnings as well as a record cash hoard. Berkshire’s Class A shares were higher by 0.3%, while Class B shares gained about 0.4%.
    The company’s stock has already outperformed this year, with each share class having advanced more than 10%. The S&P 500 is up by over 7% this year.

    Warren Buffett poses with Martin, the Geico gecko, ahead of the Berkshire Hathaway Annual Shareholder’s Meeting in Omaha, Nebraska on May 3rd, 2024.
    David A. Grogan | CNBC

    Berkshire Hathaway shares rose Monday after Warren Buffett’s conglomerate reported a surge in operating earnings as well as a record cash hoard.
    The company’s Class A shares were higher by 0.3% in morning trading. Meanwhile, Class B shares last gained about 0.4%.

    Those moves come after Berkshire posted first-quarter operating profit of $11.22 billion, up 39% from the year-ago period, mainly driven by an increase in insurance underwriting earnings. Operating profit measures earnings encompassing all of Berkshire’s businesses.

    Stock chart icon

    Berkshire Hathaway Class B

    The strength in the insurance businesses, particularly its crown jewel Geico, comes as the sector as a whole benefits from stronger demand and increased pricing power. Insurance underwriting earnings rose to $2.598 billion, a 185% increase from $911 million in the year-earlier quarter. Geico earnings swelled 174% to $1.928 billion from $703 million a year prior.
    Berkshire’s cash hoard swelled to a record, partly due to the holding company’s inability in recent years to find a suitable acquisition target. Cash soared to a record $188.99 billion in the first quarter, up from $167.6 billion in the fourth quarter.
    “We had much-improved earnings in insurance underwriting. And then our investment income was almost certain to increase,” Buffett said Saturday at the conglomerate’s annual shareholder meeting in Omaha, Nebraska. “And I said that in the annual report because yields are so much higher than they were last year. And we have a lot of fixed, short-term investments that are very responsive to the changes in interest rates.”
    Berkshire Hathaway shares have already outperformed this year, with each share class having advanced more than 10%. The S&P 500 is up by more than 7% this year.

    Class A shares marked an all-time closing high this year, reaching $634,440 in March; they closed at $603,000 on Friday. Class B shares were recently priced Monday at about $402.60 a share, or about 4% below their record close of $420.52, also set in March.
    But Wall Street analysts continue to be positive on the company’s outlook. UBS analyst Brian Meredith has a buy rating on Berkshire, citing the earnings beat and noting that Geico is on pace to catch up to competitors Progressive and others on data analytics by 2025. His $734,820 price target, raised from $722,234, is nearly 22% above where the shares closed Friday.
    Elsewhere, Edward Jones’ analyst James Shanahan has a hold rating on Berkshire, saying the current stock price is already fairly priced. However, he said he continues to “expect solid earnings from BRK’s diverse group of operating companies.”
    Correction: UBS analyst Brian Meredith’s price target is nearly 22% above where the shares closed Friday. An earlier version misstated the percentage.

    Don’t miss these exclusives from CNBC PRO More

  • 175 Shares199 Views

    in Business

    Ex-CEO Howard Schultz says Starbucks needs to revamp its stores after big earnings miss

    Former Starbucks CEO Howard Schultz said the chain needs to fix its U.S. store experience to win back customers.
    In its latest quarter, Starbucks reported a surprise decline in same-store sales and slashed its full-year forecast.
    Since the report, the company’s shares have fallen 17%, dragging its market value down to $82.8 billion.

    Howard Schultz, former chief executive officer of Starbucks Corp., drinks from a Starbucks mug during a Senate Health, Education, Labor, and Pensions Committee hearing in Washington, DC, US, on Wednesday, March 29, 2023.
    Al Drago | Bloomberg | Getty Images

    Former Starbucks CEO Howard Schultz weighed in Sunday on the coffee chain’s dismal latest quarterly report, saying he believes the company will recover if it improves its U.S. stores.
    Schultz, who no longer has a formal role within Starbucks, wrote that the company needs to improve its mobile order and pay experience and overhaul how it creates new drinks to focus on premium items that set it apart.

    “The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” Schultz wrote in a letter on Sunday evening posted to LinkedIn.
    On Tuesday, Starbucks slashed its full-year forecast after a surprise decline in same-store sales led the company to miss Wall Street’s estimates for quarterly earnings and revenue. Since the report, the company’s shares have fallen 17%, dragging its market value down to $82.8 billion.
    Analysts, caught off guard by the chain’s underperformance, have been looking for an explanation for why Starbucks’ U.S. traffic fell 7% in the quarter. The chain could still be dealing with the repercussions of social media backlash related to its position on conflict in the Middle East, Bank of America Securities analyst Sara Senatore wrote in a research note Monday.
    Schultz, who turned Starbucks from a small chain into a coffee giant, stepped down from his latest stint as chief executive a little over a year ago. He handed the reins over to Laxman Narasimhan, who previously was CEO of Lysol owner Reckitt. Schultz also stepped down from the Starbucks board last year.
    He appeared to offer advice to his successor as he tries to turn the chain’s sales around.

    “Leaders must model both humility and confidence as they work to restore trust and increase performance across the organization,” Schultz wrote.
    A year and a half ago, Schultz told CNBC that he does not plan to come back as Starbucks’ chief executive again. More

  • 188 Shares159 Views

    in Finance

    Buffett says Berkshire sold its entire Paramount stake: ‘We lost quite a bit of money’

    OMAHA, Neb. — Warren Buffett revealed that he dumped Berkshire Hathaway’s entire Paramount stake at a loss.
    “I was 100% responsible for the Paramount decision,” Buffett said at Berkshire’s annual shareholder meeting. “It was 100% my decision, and we’ve sold it all and we lost quite a bit of money.”

    Berkshire owned 63.3 million shares of Paramount as of the end of 2023, after cutting the position by about a third in the fourth quarter of last year, according to latest filings.
    The Omaha-based conglomerate first bought a nonvoting stake in Paramount’s class B shares in the first quarter of 2022. Since then the media company has had a tough ride, experiencing a dividend cut, earnings miss and a CEO exit. The stock declined 44% in 2022 and another 12% in 2023.

    Stock chart icon

    Just this week, Sony Pictures and private equity firm Apollo Global Management sent a letter to the Paramount board expressing interest in acquiring the company for about $26 billion. The firm has also been having takeover talks with David Ellison’s Skydance Media.
    Paramount has struggled in recent years, suffering from declining revenue as more consumers abandon traditional pay-TV, and as its streaming services continue to lose money. The stock is in the red again this year, down nearly 13%.
    Buffett said the unfruitful Paramount bet made him think more deeply about what people prioritize in their leisure time. He previously said the streaming industry has too many players seeking viewer dollars, causing a stiff price war. More

  • 175 Shares139 Views

    in Finance

    Warren Buffett says Greg Abel will make Berkshire Hathaway investing decisions when he’s gone

    “I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett told an arena full of shareholders at Berkshire’s annual meeting.
    While Buffett has made clear that Abel would be taking over the CEO job, there were still questions about who would control the Berkshire public stock portfolio.

    OMAHA, Nebraska — Warren Buffett said Saturday his designated successor Greg Abel will have the final say on Berkshire Hathaway’s investing decisions when the Oracle of Omaha is no longer at the helm.
    “I would leave the capital allocation to Greg and he understands businesses extremely well,” Buffett told an arena full of shareholders at Berkshire’s annual meeting. “If you understand businesses, you’ll understand common stocks.”

    Abel, 61, became known as Buffett’s heir apparent in 2021 after Charlie Munger inadvertently made the revelation at the shareholder meeting. Abel has been overseeing a major portion of Berkshire’s sprawling empire, including energy, railroad and retail.
    Buffett offered the clearest insight into his succession plan to date after years of speculation about the exact roles of Berkshire’s top executives after the eventual transition. The investing icon, who’s turning 94 in August, said his decision is influenced by how much Berkshire’s assets have grown.
    “I used to think differently about how that would be handled, but I think that responsibility should be that of the CEO and whatever that CEO decides may be helpful,” Buffett said. “The sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. It just doesn’t work.”
    Berkshire’s cash pile ballooned to nearly $189 billion at the end of March, while its gigantic equity portfolio has stocks worth a whopping $362 billion based on current market prices.
    “I think what you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things,” Buffett added. “I think the responsibility ought to be entirely with Greg.”

    While Buffett has made clear that Abel would be taking over the CEO job, there were still questions about who would control the Berkshire public stock portfolio, where Buffett has garnered a huge following by racking up huge returns through investments in the likes of Coca-Cola and Apple.
    Berkshire investing managers, Todd Combs and Ted Weschler, both former hedge fund managers, have helped Buffett manage a small portion of the stock  portfolio (about 10%) for about the last decade. There was speculation that they may take over that portion of the Berkshire CEO role when he is no longer able.
    But it seems, based on Buffett’s latest comments, that Abel will have final decisions on all capital allocation — including stock picks.
    “I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move,” Buffett said.
    Abel is known for his strong expertise in the energy industry. Berkshire acquired MidAmerican Energy in 1999 and Abel became CEO of the company in 2008, six years before it was renamed Berkshire Hathaway Energy in 2014.
    Correction: Berkshire’s equity portfolio is worth $362 billion. A previous version misstated the figure. More

  • 150 Shares169 Views

    in Finance

    Warren Buffett says Berkshire Hathaway is looking at an investment in Canada

    OMAHA, Neb. — Warren Buffett said that Berkshire Hathaway is looking into an investment in Canada.
    “We do not feel uncomfortable in any shape or form putting our money into Canada,” he told an arena full of investors Saturday. “In fact, we’re actually looking at one thing now.”

    The billionaire investor has placed bets in the country in the past. He’s previously taken a roughly $300 million position in Home Capital Group that investors took as a vote of confidence in the troubled Canadian mortgage underwriter.
    The “Oracle of Omaha” said during the annual shareholder meeting that he does not expect to make significant bets outside the U.S., saying his recent investments in Japanese trading houses were a compelling exception. But Buffett noted the similarity in operations between the Canada and the U.S.
    “There’s a lot of countries we don’t understand at all,” Buffett said. “So, Canada, it’s terrific when you’ve got a major economy, not the size of the U.S., but a major economy that you feel confident about operating there.”

    Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024.
    David A. Grogen | CNBC

    Buffett did not reveal the specific company he’s looking at north of the border or whether it was public or private.
    “Obviously, there aren’t as many big companies up there as there are in the United States,” Buffett said. “There are things we actually can do fairly well that Canada could benefit from Berkshire’s participation.”

    Canada’s S&P/TSX Composite Index is up about 5% this year. The economy has large financial and commodity industries.
    The Berkshire Hathaway shareholder meeting is exclusively broadcast on CNBC and livestreamed on CNBC.com.

    More from Berkshire Hathaway’s Annual Meeting More

  • 213 Shares109 Views

    in Finance

    ‘A lot of money on the sidelines’: Calamos Investments thinks ETFs should target CD, money market customers

    There may be an untapped market for exchange-traded funds.
    According to Calamos investments’ Matt Kaufman, there are trillions of dollars across CD and money market accounts, and it is a market ETFs should look to capture.

    “That’s larger than almost the ETF space itself,” the firm’s head of ETFs told CNBC’s “ETF Edge” earlier this week. “There’s a lot of money on the sidelines that could move into this.”
    Kaufman, who is in the interest rates will stay higher for longer camp, thinks structured and options ETFs designed for risk management and income can provide stability.
    “We saw it being difficult to get risk management and income from bonds when rates were so low,” he said. “As rates have moved … off of zero or 4, 5% now, we can afford to deliver capital protection over an outcome period. And, when you can do that, there’s a lot of opportunities to use these products.”
    Kaufman mentioned ETFs in this higher-rate environment can be particularly beneficial for people looking for opportunities to outpace inflation — especially retirees.
    “You can get greater than the risk-free rate. …Your money is linked to the market with no greater downside risk,” Kaufman added. “This is all tax-deferred growth.”
    Kaufman’s firm Calamos just started launching a suite of 12 structured protection ETFs.

    Disclaimer More