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    It may take $10 million to achieve ‘financial freedom,’ say ‘Earn Your Leisure’ hosts

    Rashad Bilal and Troy Millings created “Earn Your Leisure,” a popular podcast, in early 2019 to help spread financial literacy.
    The duo, one a former financial advisor and the other a teacher, said it likely takes a seven- or eight-figure net worth to achieve “financial freedom.”
    But if you try and fall short, “you’ll still probably be better [off] than you would have been” if you hadn’t tried, Bilal told CNBC.

    Troy Millings, left, and Rashad Bilal, co-creators of Earn Your Leisure.
    Source: Tyrell Davis

    Rashad Bilal and Troy Millings are among a growing class of financial influencers who want to help people be smarter about money.
    The duo — a former financial advisor and a teacher, respectively — launched the podcast “Earn Your Leisure” nearly five years ago with a mission to promote literacy around money and entrepreneurship.

    About 1 in 7 people lost more than $10,000 in 2022 due to a lack of financial literacy, according to a study by the National Financial Educators Council.
    “I realized there were certain things that weren’t taught inside schools — financial literacy and financial education being one of them,” Millings said of the idea to create Earn Your Leisure.
    More from Personal Finance:As mortgage rates hit 8%, home ‘affordability is incredibly difficult,’ economist saysStudent loan borrowers reenter ‘a very messy system’The 10-year Treasury tops key 5% level: Here’s what that means for you
    Today, Earn Your Leisure has expanded to create multiple podcasts, host live events and offer an online educational platform, EYL University. It has 1.4 million Instagram followers and another 1.4 million YouTube subscribers. Its flagship podcast has an average 3 million downloads a month, said Bilal and Millings. It’s also developing a financial literacy curriculum for high schools.
    CNBC interviewed the duo — who have been friends since childhood — to talk about personal finance and financial literacy in the U.S.

    This interview has been edited and condensed for clarity.

    ‘Investing is not just for rich and wealthy people’

    Greg Iacurci: You told CNBC last year that your “purpose is financial literacy and empowerment.” When it comes to financial literacy, what’s the No. 1 mistake you see people making with their finances?
    Rashad Bilal: Not understanding the importance of investing, or [not] knowing how compound interest works.
    For a long period of time, investing was something that people looked at more as a luxury, not a necessity, [thinking] if you’re able to invest then you’re in the top 1%, or you have to be wealthy to even consider that.
    Investing is not just for rich and wealthy people. It’s for everybody. You can start with smaller balances and dollar-cost average.
    Troy Millings: The relationship with money: People don’t understand what to do with it or how to save it. These are simple concepts we’re not taught. When we don’t know what to do, we do what we know, and that’s often spending outside our means. Mistakes are made because nobody is educated.

    People may have heard that investing and compound interest are important but might not know why. Can you speak to that?
    Bilal: The only way to really achieve financial freedom is if your money is growing without you working for the money. How to achieve that is through investing. One dollar will only be $1 if it’s saved in the bank. But $1 can become $2 if it’s invested.
    Most people understand this without even fully realizing that they understand it because they have a retirement plan. The whole point of a retirement plan is investing. You put money into a 401(k), and that money gets invested with the expectation that when you’re 65, 70 years old you’ll have a nest egg you can draw from and live off of in retirement.
    The only pathway to not working forever, to having money in abundance, is to find ways to make more money with the money you currently have.

    What it takes to achieve financial freedom

    Troy Millings, left, and Rashad Bilal, co-creators of Earn Your Leisure.
    Source: Greenleaf Multimedia

    You mentioned financial freedom. How much money does someone need to be financially free?
    Bilal: I think everybody is different. I think it depends on where you live. But I would say, I think you have to be in the eight-figure-net-worth range if you live in suburban or metropolitan areas. I would say around that $10 million figure would provide some level of comfort if other aspects of your life are maintained.
    And what is financial freedom?
    Millings: I think it’s having enough financial resources to pay for your lifestyle, your living expenses, and also allows you money to invest.
    It could differ. It could be in that eight-figure range. Or it could be seven figures. It’s really about having the financial resources to do what you want and invest and create generational wealth. It needs to be something that lasts for generations.

    Some people might hear that — seven or eight figures — and think, “How is that possible for me?” Do you think it’s possible for most people?
    Bilal: Most people probably aren’t going to make $10 million — I’m just being honest to the question you asked. We have to be honest.
    But some people will. This is why we’re big on entrepreneurship, we’re big on investing. You might not be able to accumulate $10 million in your lifetime, but you might be able to accumulate $1 million or $1.5 million. That’s still better than being 70 years old with $20,000 in your bank account.
    I think the aspiration towards a certain goal, you might not be able to actually obtain that goal, but if you fall short you’ll still probably be better [off] than you would have been if you had no aspiration and didn’t follow any rules or didn’t try to invest or start a business; you live off what you have. You won’t buy a $1 million home if you only have $1,000 in your bank account. Your life will still be better financially than if you didn’t follow the pathway towards the goal.

    Making it ‘cool to be educated’ about money

    For the person who’s just starting out investing, how would you suggest they go about it?
    Millings: When you’re young, you want to be as aggressive as possible, and when you’re older, you want to get more conservative. Risk mitigation is a huge part of that. We always tell people to start with indexes — an entire index or entire [industry] sector in an exchange-traded fund. That keeps you from having the volatility of watching a stock either appreciate — where you might get some upside — or depreciate, where the risk on the downside is far greater. 

    In a recent discussion with entrepreneur and musician Sean “Diddy” Combs, you mentioned that when he met you, he said you “make it cool to be educated.” How do you go about that?
    Millings: We’re authentically ourselves, so there’s a natural relatability because people see themselves in us. When people talk about finance they try to make it a language that is upspoken to the masses. Our mission was to democratize it, to make it seem like something that can be very relatable and digestible. We show up the way we are, we wear sweatshirts, we wear hoodies. We represent everybody. It doesn’t feel like it’s only for the elite or it’s only for a select crowd.
    It’s the same thing in the classroom: A student has to realize this is someone I can learn from and who I want to teach me. Our audience kind of feels that way when they look at us. We’re also very vocal that we’re learning as well. We don’t know everything, and we bring people on [the show] who can educate us.

    ‘Having money doesn’t alleviate the problems’

    For your podcasts, you’ve interviewed several famous and wealthy people — pro athletes, musicians and entertainers, for example. Are there certain things about finance that seem just as confusing for the rich and famous as for the average person?
    Bilal: Yeah, I think a lot of people don’t have a full understanding of finance. It doesn’t matter how much money you make. That’s a common misconception.
    Having money doesn’t alleviate the problems, it just makes the problems even worse. Understanding money or having a good understanding of money isn’t something that’s correlated with how much money you have.
    Financial literacy is something I think gets metastasized on the highest level. Those are the same issues that everybody else has, it’s just everybody else doesn’t have the opportunity to lose $30 million or invest $20 million into a bad investment and then it goes belly up. If given the opportunity they probably would, it’s just they don’t have it. It’s a bigger microscope on celebrities because they’re public figures.
    Is that because wealthy people and celebrities have a capacity to overspend more than the average person?
    Bilal: I think it’s not so much just a spending situation. That’s a common misconception also, that they go broke because they spend money lavishly. That’s one part of it. But another major part is they’re actually trying to do the right thing, they’re just misinformed.
    You see a lot of people make bad decisions when it comes to investing. They’ll invest in things that might be Ponzi schemes, bad real estate deals, they’ll be led down a bad path when it comes to financial advisors or people they trust. They think they’re doing something productive with their money but they actually are losing money because the investments aren’t fully vetted, they don’t fully understand what they’re investing in.
    So I think it’s a little more complicated than just spending habits. It all comes back to not having a basic level of understanding and education when it comes to money.

    It seems there’s some relatability there for everyday people.
    Bilal: For sure. Look at crypto, for example. If you look at [the cryptocurrency] dogecoin, a lot of people made misinformed decisions. They thought they were doing something productive. They didn’t go into it with the intention of losing money. In their brain it was like, ‘This is an opportunity to turn $5,000 into $20,000.’ And they potentially lost all of their money.
    It’s the same thing [with celebrities]. It’s just played out on bigger levels. More

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    Coke and Pepsi stocks are both struggling — but one beverage giant has more to worry about than the other

    Coca-Cola and PepsiCo both beat Wall Street’s estimates for their third-quarter results, but only Coke reported volume growth.
    Both companies’ stocks have struggled this year as investors worry about higher interest rates and the possible negative impact of weight loss drugs.
    But Coke’s business looks better, thanks to growing demand for its drinks.

    Coca-Cola Co. and Pepsi Co. soda machines stand in a shopping center parking lot in Jasper, Indiana.
    Luke Sharrett | Bloomberg | Getty Images

    Coca-Cola and PepsiCo’s rivalry spans decades, but Coke usually comes out on top.
    This quarter was no different.

    The beverage leaders’ stocks have struggled this year, hurt by higher interest rates and investor concerns about the possible negative impact of weight loss drugs like Wegovy. (Coke’s $242 billion market cap beats Pepsi’s by roughly $20 billion.)
    Even so, both companies topped Wall Street’s estimates for their third-quarter results and raised their full-year forecasts. Strong demand for Coke products drove the Atlanta-based company to raise its forecast, while Pepsi’s cost-management improvements have bolstered its full-year outlook for earnings.
    But only Coke managed to report volume growth. The metric, which strips out the effects of pricing and currency, has become more critical to investors in recent quarters as food and beverage companies pause the price hikes that drove sales growth last year. Those same increases have also alienated some shoppers who are trying to save money on their grocery bills.
    Coke’s overall volume rose 2% in the third quarter, while Pepsi reported flat beverage volume and a 1.5% decline in its food volume. In North America, the differences between the two businesses were even more stark. Coke reported flat volume, while Pepsi’s North American beverage unit saw volume fall 6%.
    Coke also raised both its top- and bottom-line outlook for the full year, while rival Pepsi only upped its forecast for its full-year earnings, signaling the better outlook might not be due to higher demand for its products.

    Here’s a rundown of the five key factors that helped Coke edge out Pepsi:

    Pricing strategy

    Coke started raising prices across its portfolio in the spring of 2021. PepsiCo followed its lead, starting its own price hikes that summer.
    More than two years later, both companies reported that higher prices have boosted sales. Pepsi paused price hikes earlier this year but plans a “modest” increase next year. Coke took longer to pause its higher prices, but CEO James Quincey said in July the company is done raising them for now in the United States and Europe.
    Because of the timing of their price increases, Coke’s North American drink prices were up only 5% this quarter, compared with Pepsi’s increase of 12%.
    “The higher the price increase, you would expect a bigger drag on volume,” Edward Jones analyst Brittany Quatrochi said.

    Better brands

    But Coke is also winning over shoppers with its drinks, while Pepsi is focused on revitalizing some of its non-soda brands like Gatorade.
    “Coke has been taking share from Pepsi for many, many quarters,” RBC Capital Markets analyst Nik Modi said.
    When its drinks business falters, Pepsi is usually saved by its Frito-Lay unit, which includes Cheetos, Doritos and other snacks. But snacking has slowed as shoppers trade down to cheaper options in the face of Frito-Lay’s double-digit price increases.
    “The reason why snacks have done so well relative to other categories is because it was really a trade down option on a meal,” Modi said.
    As the price for a bag of chips has climbed, some shoppers have reached for private-label brands — or just leftovers in the fridge.
    Pepsi is also getting rid of its less-profitable promotions. The strategy helps its earnings, but resulted in a 2.5% hit to its North American drink volume, executives said on the company’s conference call.

    Away-from-home business

    Roughly half of Coke’s sales come from away-from-home occasions, like movie theater visits or dining out, executives said during the early days of the pandemic. In the third quarter, those away-from-home purchases grew faster than the company’s at-home business, Quincey said on Tuesday’s conference call.
    “There’s still a rebound and strong growth in away-from-home channels, not just some of the restaurants, but the amusements, travel, leisure, hospitality, those things,” Quincey told analysts.
    Coke could also be benefiting from consumers trading down outside of the grocery store.
    “If you were going to a mid-tier restaurant, maybe now you’re going to quick-serve fast food, which is where Coke has a lot of its business,” Modi said.
    McDonald’s, for example, has said in recent quarters that diners trading down to its restaurants has boosted its U.S. sales. McDonald’s has served Coke products since Ray Kroc opened his first franchised location, and is the beverage company’s largest restaurant customer.
    Pepsi, on the other hand, lags behind Coke with its away-from-home business, although it does have some large restaurant companies, like Taco Bell owner Yum Brands, as customers. Pepsi has not disclosed the size of this business.

    International strength

    Coke also has a larger international presence than Pepsi. Roughly 40% of Pepsi’s sales come from outside of the U.S., while more than 60% of Coke’s revenue is derived from international markets, according to FactSet.
    “There’s stronger growth in those international markets,” Edward Jones’ Quatrochi said.
    International success can offset more sluggish domestic demand, like the 6% volume decline for Pepsi’s North American beverage. But that comes at a price.
    Some international markets, like Argentina and Turkey, have been dealing with hyperinflation, leading Coke to raise prices even after pausing hikes in the U.S. and Europe. And the strong dollar means Coke anticipates that currency exchange rates will dent its sales and earnings more than previously expected this year.

    Franchising its bottling

    The biggest difference between Coke and Pepsi isn’t found in their portfolios. It’s how they bottle their soda.
    Coke works with independent bottlers who manufacture, package and ship their drinks to customers. Those bottlers know their markets well and can make their own informed decisions for their businesses.
    In contrast, Pepsi owns more than three-quarters of its North American bottling operations. The strategy is meant to help the company exert more control and cut costs, but it also requires devoting resources and capital to bottling soda, a category that has faced waning demand for nearly two decades.
    “Right now, I think the whole bottling owned versus not owned is showing up in the results,” Modi said. More

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    Abercrombie & Fitch, ex-CEO sued over sex abuse and trafficking accusations

    Abercrombie & Fitch was sued for allegedly turning a blind eye to former CEO Mike Jeffries, who’s accused of running a sex trafficking ring and sexually abusing young men.
    The lawsuit, which is seeking class action status, claims more than 100 men were sexually abused by Jeffries under the guise it would land them modeling contracts.
    Jeffries left the company in 2014 and Abercrombie has since made a comeback on Wall Street.

    Abercrombie & Fitch.
    Courtesy: Abercrombie & Fitch

    Abercrombie & Fitch is in the middle of a major comeback, but the retailer is still being haunted by the alleged sins of former chief executive Mike Jeffries. 
    The company was sued Friday for turning a blind eye to Jeffries’ alleged misconduct, court records show. He’s accused of running a sprawling sex trafficking ring that exploited young men hoping to become models for the brand. 

    The suit alleges that Jeffries, who’s also listed as a defendant, sexually abused numerous men under the guise it would land them coveted modeling contracts. 
    It comes just weeks after BBC published an investigation into Jeffries and Abercrombie that made similar accusations. 
    In response, a company spokesperson told CNBC it does not comment on pending litigation. However, after the BBC story was published, the company said it was “appalled and disgusted” by Jeffries’ alleged behavior. It said it had contacted an outside law firm to conduct an independent investigation into the issues BBC raised. 
    “The company’s current executive leadership team and board of directors were not aware of the allegations of sexual misconduct by Mr. Jeffries,” the company said at the time.
    “For close to a decade, a new executive leadership team and refreshed board of directors have successfully transformed our brands and culture into the values-driven organization we are today. We have zero tolerance for abuse, harassment or discrimination of any kind.”

    Brian Bieber, Jeffries’ attorney, didn’t deny the claims when contacted by CNBC.
    “Mr. Jeffries will not comment in the press on this new lawsuit, as he has likewise chosen not to regarding litigation in the past. The courtroom is where we will deal with this matter,” Bieber said in an email.
    David Bradberry, who brought the suit, claims he was recruited for a modeling opportunity in 2010 and introduced to a scout who said he was working on behalf of the brand.
    “He then made it clear to David Bradberry that he held the key to the next level in the Abercrombie process and that unless he let the scout perform oral sex on him, Bradberry would not be meeting with Abercrombie or its CEO, Michael Jeffries,” the lawsuit, filed in Manhattan federal court, states. 
    Bradberry was then assaulted by the scout and paid, the lawsuit states. 
    Soon after, he was invited to a casting event at Jeffries’ house in the Hamptons that Bradberry assumed was a “legitimate Abercrombie-sponsored function” because it included a meeting with the CEO and he was forced to wear the brand’s clothes for the event, the lawsuit states. 
    But instead of a professional casting event, Bradberry was soon raped by Jeffries and forced to take poppers, a type of drug that made him feel lightheaded, the suit states. 
    “Amidst the confusion caused by the poppers, David Bradberry began to focus on the four older, larger, physically fit men who appeared to be security guards observing the activity in the room,” the lawsuit alleges. 
    “These imposing men, dressed in Abercrombie clothing, caused Bradberry to feel like there was no way that he could leave the room safely or resist what Jeffries was demanding.” 
    Following the event, Bradberry was flown to Nice, France, where he was again forced to perform sex acts on Jeffries, the suit states. 
    The lawsuit, which is seeking class action status, alleges that similar events happened to more than 100 other victims and Abercrombie allowed it to happen. 
    Jeffries, who previously served as the president of the bankrupt women’s retail chain Alcott & Andrews, was tapped by Abercrombie’s former owner Leslie Wexner to be the brand’s CEO in 1992 and bring it back to life. 
    Under his tenure, Abercrombie became one of the most prominent names in retail and was known for its sexually charged advertising and shirtless male models, who were frequently positioned outside of the brand’s stores. 
    The company saw steady growth in earnings and sales during that time, but its success was soon overshadowed by accusations of discrimination against its staff and claims that its clothes were only meant for attractive people. 
    In 2004, Abercrombie paid $40 million to settle a class action lawsuit that accused the company of discriminating against Black, Hispanic and Asian employees. In 2012, it settled a case brought by a former pilot that accused the company of age discrimination. 
    Following its mid-2000s heyday, Abercrombie developed a reputation for racism and being a clothing brand that was only reserved for certain types of people and lost relevancy among American consumers. 
    Jeffries left the company in 2014 and Abercrombie has since rebranded itself as an inclusive retailer under CEO Fran Horowitz, who became the company’s chief executive in 2017. 
    Recently, Abercrombie has surprised Wall Street with earnings and profits that blew past estimates and has opened new stores, even as other retailers close doors and the economic outlook remains uncertain.
    The company’s shares have more than doubled this year.Don’t miss these CNBC PRO stories: More

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    JPMorgan Chase stock slips after bank says CEO Jamie Dimon is selling 1 million shares

    JPMorgan Chase CEO Jamie Dimon will begin to sell one million shares of the bank he runs next year, the company said.
    The plan sparked concern that Dimon, who is 67 years old, could be contemplating retirement.
    A spokesperson for the New York-based bank said the move wasn’t related to succession planning, and that Dimon has “no current plans” for another sale.

    JPMorgan Chase CEO Jamie Dimon will begin to sell one million shares of the bank he runs next year, the company said Friday in a filing.
    The plan sparked concern that Dimon, 67, could be contemplating retirement. Dimon is arguably the country’s top banker. He has led JPMorgan since 2005, helping build it into the biggest and most profitable American bank. His stewardship included navigating JPMorgan through two banking crises, helping stabilize the industry by acquiring failed banks.

    Before now, Dimon has never sold shares of JPMorgan except for technical reasons such as exercising options. He has also spent his own money snapping up JPMorgan shares in the past.
    Shares of the bank slipped 3.6%, worse than the 2.3% decline of the KBW Bank Index.
    “This is a reminder that the CEO is getting closer to retirement,” Wells Fargo analyst Mike Mayo said in a note. Dimon may transition from his current role in about three and a half years, if prior statements prove accurate, Mayo added.
    A spokesperson for the New York-based bank said the move wasn’t related to succession planning, and that Dimon has “no current plans” for another sale, though his needs could change over time.
    Here is the bank’s statement:

    Chairman & CEO Jamie Dimon confirmed today that he and his family plan to sell a portion of their holdings of JPMorgan stock for financial diversification and tax-planning purposes. Starting in 2024 they currently intend to sell 1 million shares, subject to the terms of a stock trading plan. This is Mr. Dimon’s first such stock sale during his tenure at the company.
    Mr. Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant. He and his family currently hold approximately 8.6 million shares, and in addition he continues to have unvested Performance Share Units relating to 561,793 shares and Stock Appreciation Rights relating to 1,500,000 shares, subject to the terms and conditions of each grant.
    Mr. Dimon will use stock trading plans to sell his shares, in accordance with guidelines specified under Rule 10b5-1 of the Securities and Exchange Act of 1934.

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    Ford shares fall 12% after earnings underline worries about costs and EV plans

    Ford stock is trading sharply down after the automaker reported earnings that fell short of estimates.
    While Ford was the first of the Detroit automakers to reach a tentative deal with the UAW, the new contract will raise Ford’s already-high costs if ratified.
    Ford is also delaying $12 billion in investments on EV production as demand isn’t what it expected.

    Ford Motor Company’s electric F-150 Lightning on the production line at its Rouge Electric Vehicle Center in Dearborn, Michigan, on Sept. 8, 2022.
    Jeff Kowalsky | AFP | Getty Images

    Shares of Ford Motor traded sharply lower Friday after the company reported earnings that missed estimates and said that demand for its electric vehicles was falling short of expectations.
    The stock closed down more than 12% on Friday.

    Ford reported its third-quarter results after the markets closed Thursday, and they weren’t what Wall Street had expected. Ford’s revenue and profit both fell short of analysts’ estimates, shortfalls that executives attributed to lost production following the United Auto Workers’ decision to strike three of Ford’s key U.S. factories, including an important truck factory in Kentucky.
    The results were a stark contrast to rival General Motors’ third-quarter report Tuesday. GM’s revenue and profit both handily beat Wall Street estimates.
    Ford on Wednesday night became the first of the three Detroit automakers to reach a tentative agreement with the UAW. It won a surprising concession that should help its fourth-quarter numbers: Striking workers will return to their jobs before the new deal is officially ratified.
    But Ford’s new contract will be an expensive one. Chief Financial Officer John Lawler said the UAW deal, if ratified by members, will add $850 to $900 in costs to every vehicle assembled in the U.S. That will put additional pressure on CEO Jim Farley’s ongoing efforts to improve Ford’s costs and quality.
    Ford also said it plans to delay about $12 billion in previously announced spending on EV manufacturing capacity, saying that its customers in North America are no longer willing to pay a premium for an EV vehicle versus a comparable internal-combustion or hybrid alternative.

    While executives emphasized Ford isn’t cutting back on or delaying its plans to develop a range of more advanced EVs, investors concerned about the company’s ability to compete with Tesla and other new EV entrants were given a new reason for caution.
    Ford also withdrew its previous financial guidance for 2023 in light of the pending deal with the UAW.Don’t miss these CNBC PRO stories: More

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    Disney pulls Jonathan Majors movie ‘Magazine Dreams’ from schedule amid assault case

    Disney pulled the Jonathan Majors movie “Magazine Dreams” movie from its schedule.
    Majors, also a star in Disney’s Marvel franchise, faces a trial for assault charges in New York.
    It’s not clear whether the schedule change was connected to Majors’ legal issues.

    Jonathan Majors, and his girlfriend, Meagan Good, flanked by his lawyer Priya Chaudhry (R), arrive to Manhattan Criminal court for his pre trial hearing on August 03, 2023 in New York City.
    Alexi Rosenfeld | Getty Images

    Disney on Friday said it was pulling troubled star Jonathan Majors’ next film, “Magazine Dreams,” from the schedule this December.
    The movie had been set for a Dec. 8 release. Now it’s no longer set for a release at any time, according to a statement from the company, but Disney could choose to add it back to the schedule. Majors’ trial for assault charges is scheduled to begin Nov. 29 in New York.

    It’s not clear whether the schedule change is connected to Majors’ legal issues. Disney hasn’t weighed in on the matter, despite Majors being front and center for the company’s plans for its lucrative Marvel Cinematic Universe. His roles in “Loki” and “Ant-Man and the Wasp: Quantumania” have positioned him as the next major villain for the franchise.
    Disney didn’t immediately respond to CNBC’s request for comment Friday.
    Majors was on a fast track to superstardom, following his turns in HBO’s “Lovecraft Country,” the Marvel properties and March’s “Creed III.” But then later in March, New York police arrested him over accusations that he assaulted his then-girlfriend, choreographer Grace Jabbari.
    Majors has denied wrongdoing, but a judge this week rejected his bid to dismiss the case.
    “Magazine Dreams,” a drama about a bodybuilder played by Majors, premiered at the Sundance Film Festival earlier this year to critical acclaim. It was at one point considered a potential Academy Award contender.
    Disney also moved the timing of several other planned releases, including a live action remake of “Snow White,” which was delayed by a year to March 2025. More

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    Spirit Airlines halts new pilot, flight attendant training after difficult quarter, Pratt engine issue

    Spirit Airlines posted a third-quarter loss and forecast another for the last three months of 2023.
    The carrier told pilots it will suspend new pilot and flight attendant training next month.
    The budget airline reported softer demand and said it will have to ground dozens of planes due to a Pratt & Whitney engine manufacturing issue.

    A Spirit Airlines airplane taxis for takeoff at Denver International Airport in Denver on Feb. 7, 2022.
    Michael Ciaglo | Bloomberg | Getty Images

    Spirit Airlines will suspend training for new pilots and flight attendants next month “until further notice,” according to company memos, as it plans for slower growth amid softer demand and the expected grounding of dozens of aircraft for inspections because of a manufacturing problem with some Airbus planes’ engines.
    The company had already slowed hiring and captain upgrades, Greg Christopher, vice president of flight operations at Spirit, said Thursday in a memo to pilots, which was seen by CNBC. “With these recent developments, however, we will also be suspending all new-hire training efforts starting in November, until further notice.”

    The company told flight attendants that it will halt new flight attendant training starting Nov. 7 for the foreseeable future. It is also planning to offer voluntary time off for cabin crew members, according to a separate memo from Tina Milton, vice president of inflight experience.
    A Spirit spokesman confirmed the changes.
    “This is not a decision we’ve taken lightly, but it’s necessary to ensure our crew staffing levels match our operational need given the number of aircraft we can fly,” he said in a statement.
    The Miramar, Florida-based discount carrier said it expects to have to ground an average of 26 Airbus A320neo aircraft for inspections of engines made by RTX unit Pratt & Whitney after that company disclosed a manufacturing defect in August. The carrier said it expects 13 grounded planes in January, rising to 41 in December of next year. The airline had a fleet of 202 Airbus planes as of Sept. 30, according to a filing.
    “This expectation drives a dramatic decrease in the Company’s near-term growth projections,” Spirit said in a filing. It said it expects capacity to be flat to up mid-single digits next year compared with 2023. The airline is in talks with RTX about compensation for the issue.

    Last month, RTX said it expected repairs to take between 250 and 300 days, with an average of 350 planes powered by the geared turbofan engines grounded worldwide between 2024 and 2026.
    The budget airline Spirit on Thursday posted a net loss of $157.6 million, which was more than four times its loss a year ago. It forecast negative margins for the last three months of the year.
    “We continue to see discounted fares for travel booked through the pre-Thanksgiving period,” CEO Ted Christie said in an earnings release. “And, unfortunately, we have not seen the anticipated return to a normal demand and pricing environment for the peak holiday periods.”
    JetBlue Airways is in the process of trying to acquire Spirit, a deal the Justice Department has already sued to block. The trial is expected to begin next week in Boston.
    Frontier Airlines, a fellow discount carrier, continues to hire flight attendants, pilots, and mechanics, an airline spokeswoman said.Don’t miss these CNBC PRO stories: More

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    GM, UAW may be nearing a labor deal after marathon negotiating session

    Contract negotiations between the United Auto Workers and General Motors are set to reconvene Friday after intense talks occurred Thursday night and into the morning.
    Both GM CEO Mary Barra and UAW President Shawn Fain participated in the marathon bargaining, however the union leader was doing so virtually, said two sources.
    Fain was also negotiating with Stellantis, including North American COO Mark Stewart.

    Striking United Auto Workers (UAW) members from the General Motors Lansing Delta Plant picket in Delta Township, Michigan September 29, 2023.
    Rebecca Cook | Reuters

    DETROIT — Contract negotiations between the United Auto Workers and General Motors are reconvening midday Friday after intense talks occurred Thursday night and into the morning, according to sources familiar with the discussions.
    The potential deal is being based on a tentative agreement the union reached Wednesday with Ford Motor and appears to be nearing the finish line, said three sources who agreed to speak on the condition of anonymity because the talks are private.

    Both GM CEO Mary Barra and UAW President Shawn Fain participated in the marathon bargaining, however the union leader was doing so virtually, said three of the sources.
    Fain was attempting to simultaneously negotiate with GM and Chrysler parent Stellantis, which were hosting talks with the union roughly 30 minutes from one another. Stellantis, including North American COO Mark Stewart, also held extensive talks overnight, two of the sources said.
    Stellantis also could be closing in on a deal after the sides also negotiated into the early morning, however issues still remained. The sides are scheduled to reconvene Friday afternoon, according to one source.
    The sources said the talks remain fluid and could change. Spokespeople with GM, Stellantis and UAW declined to comment on specific details of the talks.
    Tentative agreements would likely put an end to six weeks of targeted labor strikes by the union after the sides failed to reach new deals before a Sept. 14 deadline. The union called back striking Ford workers after reaching a tentative deal with the automaker.

    Ford’s deal included 25% pay increases over the term of the agreement, including an initial increase of 11%. The raises and benefits cumulatively raise the top wage to more than $40 an hour, including an increase of 68% for starting wages to over $28 an hour.
    It also reinstated cost-of-living adjustments, reduced an eight-year path to top wages to three years and allowed the right to strike over plant closures, among other significantly enhanced benefits.
    Any tentative deals still must be approved by local UAW leaders and then ratified by a simple majority of each automaker’s union-represented workers.
    The progress came after contentious negotiations between UAW leaders, including Fain, and company executives, which saw thousands of union members walk out of plants and onto picket lines beginning Sept. 15.
    The strikes have collectively cost GM, Ford and Stellantis billions of dollars in lost production. Ford said Tuesday that the union’s strike has cost it $1.3 billion and the deal, if ratified by members, would increase labor costs by roughly $850 to $900 per vehicle produced.
    The proposed agreements are record-setting for the union, which was far more confrontational and strategic during the talks than in recent history.
    The union initiated negotiations with all three automakers at once, breaking from recent history when UAW leaders would bargain with each automaker individually, select a lead company to focus efforts on and then pattern the remaining deals off a leading tentative agreement.
    It’s not immediately clear how much the labor deals will increase labor costs for the companies, which had argued that giving in to all of the union’s demands would affect their competitiveness and even long-term viability.
    Deutsche Bank recently estimated the overall cost increase of the agreement at Ford to be $6.2 billion over the term of the agreement; $7.2 billion at GM; and $6.4 billion at Stellantis. More