Raphael Stevens

People walk by electric truck maker Rivian’s newly opened storefront in the Meatpacking District of Manhattan on June 23, 2023 in New York City.
Spencer Platt | Getty Images

Check out the companies making headlines in premarket trading.
Rivian — Shares of the electric vehicle maker plunged 8.7% after Rivian announced a $1.5 billion convertible bond sale and issued disappointing guidance for the third quarter. The company said it expects between $1.29 billion and $1.31 billion in revenue, while analysts polled by StreetAccount forecast $1.31 billion. Rivian also reported its cash and short-term investments lessened between the end of the second and third quarter.

Energy stocks — Shares of oil firms Occidental Petroleum, Chevron and ExxonMobil were all lower in premarket trading, as crude prices added to Wednesday’s steep declines. Occidental ticked down 0.4%, while Chevron and ExxonMobil both pulled back around 1%.
Clorox — Shares slipped 4.4% in premarket trading Thursday, a day after the product maker offered weaker guidance for the fiscal first quarter than analysts expected. The company also said a cyberattack outweighed benefits from pricing, cost saving and supply chain improvements. Raymond James downgraded the stock to market perform from outperform following the guidance.
UWM Holdings — Shares of the mortgage company rose 4.3% in premarket trading after a BTIG upgrade to buy from neutral. BTIG said the valuation for the parent company of United Wholesale Mortgage does not reflect the upside from a potential stabilization in interest rates.
Orchard Therapeutics — The gene therapy stock soared more than 98% on news that the company would be acquired by Japanese pharmaceutical Kyowa Kirin for $478 million.
Vestis — Shares of the uniform company added 2.4% after Redburn Atlantic initiated coverage of the company with a buy rating. Analyst Oliver Davies noted limited valuation downside and forecast 75% upside. Vestis completed a spinoff from Aramark on Monday.
— CNBC’s Alex Harring, Pia Singh and Jesse Pound contributed reporting. More

Sitting in a medical clinic recently, as a young-looking nurse extracted blood from his veins, your columnist’s mind turned to the flexibility of the American labour market. How long, exactly, had she been on the job? The somewhat shocking answer: it was her first month. Six weeks of training was all it took, she explained, to make the transition from eyelash technician to phlebotomist, which offered higher pay and better hours.Workers ditching old jobs for better ones has been a feature of the post-covid American economy. Early last year about 3% of Americans quit their jobs in any given month, the highest in two decades. Since July that has fallen to 2.3%, back to its pre-pandemic level. The decline is a sign that the labour market is gradually normalising. It has gone from being ultra-tight—beset by a seemingly endless worker shortage—to merely moderately tight.image: The EconomistDuring the period of ultra-tightness, analysts and investors paid close attention to a chart. The Beveridge curve, named after William Beveridge, a mid-20th-century British economist, depicts the link between unemployment and job vacancies. It is an inverse relationship: vacancies rise as unemployment falls. The logic is simple. When nearly all would-be workers have jobs, companies struggle to find new staff and have more vacancies.What makes the Beveridge curve fascinating but also frustrating is that it moves around. There is no fixed relationship between vacancies and unemployment. Take, for instance, an unemployment rate of 6%. This was consistent with about 2.5% of jobs in America being unfilled in the early 2000s, but 3.5% in the 2010s and 6% in 2021. As a rule, the higher the vacancy level for any given unemployment rate, the less efficient the labour market, since firms must fight to find workers. In graphical terms, an inefficient Beveridge curve shifts outwards, away from the origin point.The fascinating bit is the explanation for this. Normally, the location of the Beveridge curve is viewed as a measure of skills-matching. If workers lack the skills wanted by employers, the vacancy rate will be higher. During covid-19 and its aftermath, though, the problem was less a skills mismatch than a willingness mismatch. Many people were scared of illness and thus less willing to work. At the same time, having profited from a rapid recovery, many companies were willing to hire additional workers.An exceedingly inefficient labour market was the result. There were two job openings per unemployed person at the start of 2022, the most on record. Given such a Beveridge curve, the dismal conclusion was that unemployment would soar as the Federal Reserve wrestled down inflation. The causal chain went like this: to tame inflation, the Fed had to generate slower wage growth; for wages to slow, vacancies had to fall; finally, in an inefficient labour market, a big fall in vacancies implied a big rise in unemployment.Skip ahead to the present, though, and these fears have receded. Job vacancies have declined without much unemployment. There are now 1.5 job openings per unemployed worker. The labour market, in other words, looks more efficient. The Beveridge curve has shifted inwards, reverting to somewhere close to its pre-pandemic location. The typical explanation is that the willingness mismatch has abated: Americans have re-entered the labour force, while companies have cut their help-wanted advertisements.Question everythingThat, at least, is the conventional story. But think about it for a second and it is does not sit quite right. After all, the Beveridge curve is supposed to depict the state of the labour market. If, however, the curve itself is liable to move around, as this story suggests, it surely cannot be of much use. Do adjustments take place along the curve or does the curve itself change locations? After the fact it seems clear enough. In the moment, it is guesswork.There is a different, and better, way of constructing the Beveridge curve. The standard curve implies that it is the unemployed who fill job vacancies. The problem, as testified by your columnist’s phlebotomist, is that in reality, holes are often filled by job-switchers, not the unemployed. In research published by the Fed’s branch in St Louis, Paulina Restrepo-Echavarría and Praew Grittayaphong have reflected this, proposing a revised Beveridge curve that links prospective job-switchers to vacancies.Instead of the inverse traditional curve, their one has a positive slope: as vacancies rise, more workers consider jumping ship for new jobs. Indeed, they find that about four-fifths of vacancies since 2015 have been geared towards job-switchers, not the jobless. Along with its faithfulness to reality, their curve has another advantage in that it appears to be mostly stable. The pandemic was unusual because of the large rise in both job vacancies and job seekers, but that was an extrapolation of their revised curve, not a shift to a new location. One conclusion is that a relatively soft landing looks more plausible today. Although a decline in vacancies is still needed to calm wage growth, that largely translates into less job-switching rather than higher unemployment.There may be a more profound lesson to draw. In 2020 Katharine Abraham and colleagues at the University of Maryland also looked at whether they could improve the Beveridge curve, this time by incorporating job searchers who are already employed or out of the labour force. Their revised curve, like that of the St Louis Fed’s economists, is more stable than the traditional curve. The implication of that stability is that the economy actually does a decent job of matching workers with jobs.Many people, including politicians from both sides of the aisle, declare that America is plagued by a skills mismatch. Yet the evidence suggests that workers respond to wages, and that firms which are willing to invest can train them up. The skills shortage may be more of a talking-point than a fundamental constraint to growth. Remember: America is a country in which eyelash technicians can become phlebotomists in a matter of weeks. ■Read more from Free exchange, our column on economics:Why the state should not promote marriage (Sep 28th)Renewable energy has hidden costs (Sep 21st)Does China face a lost decade? (Sep 10th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Hongbaos are usually reserved for special occasions, such as birthdays, weddings and the Chinese mid-autumn festival, which got under way on September 29th. But now these red envelopes, stuffed with cash, are part of a push by China’s banks to get citizens thinking about retirement. They are being offered to customers who register for private-pension accounts.Under a law introduced last November, workers may set aside savings in tax-deferred accounts accessible upon retirement, much like America’s Individual Retirement Accounts (iras). Those who want to enrol must open an account with a bank, before allocating their deposits to a licensed wealth manager. Savers can deduct contributions from taxable income; they pay no tax on capital gains and only a 3% tax rate at the time of distribution.If these terms sound attractive, it is because officials cannot afford for the scheme to fail. Chinese workers retire young—as early as 50 for women and 60 for men. Last year the population shrank for the first time since Mao Zedong’s “Great Leap Forward” in 1962, even as the number of old folk grew. China’s compulsory basic pension, which has more than a billion enrollees and is paid for through employer contributions, will be in deficit by 2028 and run out entirely by 2035, according to modelling by an official think-tank.When the reforms were introduced, analysts estimated that they would raise the value of China’s private pensions from $300bn (which had accumulated during the pilot version of the scheme), to at least $1.7trn by 2025. Such a pot would rival the world’s largest pension funds and give officials capital to channel to favoured industries. The scheme would also give Chinese people a new avenue for saving, drawing them away from the country’s troubled property market. Unfortunately, though, things are not going entirely to plan.Banks, which are mostly state-owned, have offered customers incentives to open accounts, including discounts on phone bills, rewards for referrals and even free ibuprofen (there was a shortage at the time). Although these have lured customers, with more than 40m having signed up by June, getting them to actually save is a struggle. In March fewer than one-third of accounts contained funds. The government has since stopped releasing figures, but there is little reason to believe that savings have risen in the intervening period. Moreover, the president of one bank estimates that 70% of funds deposited go uninvested, remaining in bank accounts, perhaps because depositors want to enjoy the tax advantages without entering financial markets they perceive to be risky.What is going wrong? Some of the problems facing the pension system reflect its design. Banks, with which customers are required to open accounts, are unfazed by the low contributions. They simply want to beat their rivals on sign-ups, and some are too busy defusing bad debts to focus on pensions, notes an analyst.But there are deeper issues at play, too. Officials say that workers are unaware of the importance of pension planning. Bankers propose bigger tax breaks and a higher maximum contribution, which is currently 12,000 yuan ($1,700) a year, or 15% of the average disposable income in Shanghai. Neither group wants to confront the possibility that the problem is even more profound. Chinese stockmarkets have long struggled to attract investors, with households preferring property. Financial assets are seen as too volatile—and too vulnerable to political interference.The situation is unlikely to improve any time soon. Pension pots cannot be invested offshore, meaning that they do not offer a way to escape a weak domestic economy. Local stockmarkets are not exactly becoming any more alluring: Shanghai’s main equity index is down this year. The government is also expected to raise the retirement age, which delays when savers can gain access to their investments. Last month the pensions ministry was forced to refuse requests from working-age depositors to withdraw their funds. All this means that another worry—a failing private pension system—can be added to the long list facing Chinese policymakers. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

In theory, financial indices are similar to thermometers, providing objective numbers that reflect external conditions. In reality, especially if the underlying securities are bonds, human choices about their composition make an enormous difference—as India is now demonstrating.On September 21st JPMorgan Chase, a bank, decided to include Indian government bonds in its emerging-markets index. The decision was hailed by Indian ministers, and Jamie Dimon, JPMorgan’s boss, as a sign of India’s rise. Then, on September 29th, ftse Russell, another indexer, announced, with much less ado, that it would not follow suit, owing to concerns about how markets function in India. Investors are awaiting a call by Bloomberg Barclays Emerging Market Bond Index.JPMorgan’s move may now prompt an influx of $24bn into India’s government-bond market as the switch is made, according to one estimate. Were Bloomberg’s managers to make a similar decision, and ftse Russell’s to be won over by reforms, the gain could rise to around $40bn. That is a sizeable figure, particularly when set against net purchases of Indian government bonds by foreigners, which amounted to just $3.8bn in the first eight months of this year. The changes in JPMorgan’s index, which will take place over a ten-month period beginning in June, could reduce India’s benchmark ten-year interest rate by as much 0.45 percentage points, or about 7%, reckon some economists.JPMorgan’s decision was prompted by support from large investors—when surveyed, 73% backed India’s inclusion in the firm’s emerging-markets index. Once the reallocation is complete, India’s share of the index will be 10%, matching those of China, Indonesia, Mexico and Malaysia. To accommodate India, there will be cuts in excess of one percentage point to Brazil, the Czech Republic, Poland, South Africa and Thailand. The result will be an increase in the relative importance of Asia.India’s inclusion is not an unalloyed good for the country, however. Outside money will strengthen the rupee, and thus depress inflation and the price of imports, benefiting consumers and some manufacturers. But it will also reduce the competitiveness of Indian exports, at a time when the government is keen to boost it, and swell the country’s large trade deficit. Foreign investors can also be skittish, leading to volatility and raising the chance of a sudden stop to capital inflows.Investors also face pitfalls. Bringing money into and out of India is, at best, messy. Foreign-ownership registration and reporting requirements are unhelpfully complex. There are taxes on transactions and gains, and then extra hurdles for those wishing to take their gains outside of India. These add costs, undermine returns and in the past have pushed away all but the most determined investors.Large local brokers and international banks are thrilled by JPMorgan’s decision, in part because it means lots of money will be arriving into the financial system, which they can help (for a fee) circumvent such impediments. Other firms are likely to try to create derivative products that capture the swings of Indian bonds without the accompanying burdens, which will annoy the Indian government.The happiest outcome would be for India to use the transition to do away with some of the regulation facing its securities markets, making the country more welcoming to foreign investment. The government now has an added incentive to be responsible in other areas, too. After all, smaller fiscal deficits would mean less vulnerability to capital flight. If such changes were made, the short-term relief of lower costs of capital would be joined by a more profound transition to greater financial stability. A lot can ride on the decisions made by anonymous index compilers. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

For america’s commerce secretary, midway through a trip to Beijing, to describe China as “uninvestible” might once have prompted an unpleasant diplomatic spat. Yet when Gina Raimondo did so a month ago, it barely caused a ripple. That was not just because the rest of her visit was a clear attempt at rapprochement. It was also because it is now firmly established that American companies, as well as Western investors more generally, see China in such terms.The bad news just keeps coming. Sometimes it is Chinese authorities raiding the offices of American companies and detaining their staff, as they did to Mintz Group, a due-diligence firm, earlier this year. At other times it is Chinese bosses disappearing, as has happened on numerous occasions in recent years. In September it emerged that an investment banker at Nomura had been barred from leaving the country. All of this is happening in the context of a profound economic malaise. On October 1st the World Bank became the latest institution to downgrade its gdp forecasts for China. And disturbing the sleep of investors is an even bleaker prospect: a Chinese invasion of Taiwan. Should Xi Jinping decide to launch such a war, the resulting sanctions would cause economic and financial chaos, stranding capital ploughed into Chinese assets.It is tempting, then, for Western investors to look at these risks and conclude that China is just too troublesome to think about, which is exactly what many are doing. On the face of it, avoiding China should be a reasonably straightforward task. After all, the world’s second-biggest economy does not have a particularly large presence in equity indices. Take, for example, msci’s broadest index of global stocks, ranked according to market value. American shares occupy a weight of 63%. By contrast, Chinese ones manage barely a thirtieth of that, at just 3%.Yet there is a snag. Investors might easily be able to screen out Chinese stocks. They cannot so easily escape the pull of the world’s second superpower. Therefore even those who cut their exposure to China will have little choice but to keep tabs on the country’s fortunes.To understand why, begin with China’s role in Western supply chains. Prompted both by covid-era trade snarl-ups and by increasing geopolitical concerns, companies are doing their best to diversify. It is proving heavy going, however. In 2022 Apple produced the majority of its products in China. By 2025, despite concerted efforts to find new countries in which to manufacture, that will still be true.Less visible, though no less important, is the share of Western firms’ cash flows that come directly from China. Analysts at Morgan Stanley, an investment bank, have studied the revenues of 1,077 North American companies to determine their exposure to foreign markets. Those in the information-technology sector, which comprises more than a quarter of the s&p 500 index, earn 12% of their revenues from China. For semiconductor firms—such as Nvidia, this year’s star performer—the figure is even higher, at 28%. Western sanctions resulting from an invasion of Taiwan might leave investments in Chinese assets stranded. But reciprocal sanctions from China could hobble some American firms, too.A final line of exposure comes from China’s gargantuan demand for commodities. Analysts at Goldman Sachs, another investment bank, reckon that China accounts for 16% of global demand for oil, 17% for liquefied natural gas, 51% for copper, 55% for steel, 58% for coal and 60% for aluminium. The immediate consequence is that prices for commodities, and the shares of any firm that buys or sells a lot of them, depend heavily on Chinese economic growth, or a lack of it. Given commodities’ impact on broader prices, this also means that if your portfolio is exposed to inflation—or to the swings in interest rates that accompany it—then it is exposed to China.One way to read all this is as a counsel of despair. The risks of staking money on China’s growth and stability are both palpable and large. It is pretty much impossible to construct a portfolio that will benefit from global growth, which also lacks exposure to China, since anything to do with technology, commodity prices, inflation, interest rates or any country dependent on the world’s second-biggest economy brings with it some risk. The other reading is the same as the time-worn case for buying American assets. It is not that they offer guaranteed returns. It is that if they face disaster, so too will everything else.■Read more from Buttonwood, our columnist on financial markets: Investors’ enthusiasm for Japanese stocks has gone overboard (Sep 28th)How to avoid a common investment mistake (Sep 21)Why diamonds are losing their allure (Sep 13th)Also: How the Buttonwood column got its name More

Shares of Britain’s Metro Bank suspended trading Thursday after tanking more than 29%.
It comes amid reports that it was trying to raise £600 million ($727 million) in debt and equity.
The London Stock Exchange, which lists the stock, confirmed to CNBC that the brief suspensions were triggered by its circuit breaker mechanisms.

A close-up of a sign of Britain’s Metro Bank.
Matthew Horwood | Getty Images

LONDON — Shares of Britain’s Metro Bank were briefly suspended from trading twice early Thursday, in a volatile session that saw the stock shed more than 29% from the Wednesday close.
They have since slightly pared losses, having resumed again trading shortly after 9:00 a.m. London time.

The London Stock Exchange, which lists the stock, confirmed to CNBC that the brief suspensions were triggered by its circuit breaker mechanisms because of the extent of the volatile drop.
The halts followed reports that the bank was trying to raise £600 million ($727 million) in debt and equity, according to Reuters. The challenger bank, which launched in 2010, has a market cap of less than £100 million.
Metro Bank said in a statement that it is currently considering “how best to enhance its capital resources,” with a particular focus on a £350 million bond due to mature in October 2025.
Investors traded more than 1.6 million shares immediately after the stock market opened Thursday, according to FactSet. Typically, less than 100,000 Metro Bank shares change hands every hour.
Shares of the bank have lost around two thirds of their value since the middle of February. Metro Bank was valued at £87 million as of the Wednesday close, according to Reuters.

Last mont, the Bank of England’s main regulator, the Prudential Regulation Authority, suggested that it was unlikely to allow the lender to use its own internal risk models for some mortgages.
As such, the Metro Bank would be subject to higher capital requirements — a concern that has weighed on investors.
“It has been clear for some time that [Metro] is short of capital, with the bank operating below MREL requirements,” investment bank Keefe, Bruyette & Woods said in a research note, referring to minimum requirement for own funds and eligible liabilities enforced by authorities.
The key questions now facing the bank center on its ability to raise that capital and whether that will be sufficient to remove capital concerns, the note said.
— CNBC’s Ganesh Rao contributed to this report. More