Raphael Stevens

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    in Finance

    The job market is still favorable for workers. ‘You’re in a lucky position,’ economist says

    Layoffs declined, employers hired more workers and “quits” increased in May, according to the monthly JOLTS report issued by the U.S. Bureau of Labor Statistics.
    Private-sector employers also added significantly more jobs than expected in June, according to ADP data issued Thursday.
    In all, the job market is cooling gradually but remains favorable for workers, economists said.

    Sturti | E+ | Getty Images

    The U.S. job market is gradually cooling but remains hot despite a year-long government campaign to reign it in, amounting to a favorable environment for many jobseekers, economists said.
    “It still boils down to higher worker leverage, better outside opportunities, an easier time exchanging jobs for better ones and substantially greater job security,” said Julia Pollak, chief economist at ZipRecruiter.

    “You’re in a lucky position,” she added, referring to employees.
    Federal and private labor data issued Thursday support that notion.
    More from Personal Finance:Companies recognize importance of “out of office” time30% of Americans say “tipping culture is out of control”White House gives student loan borrowers payment leeway
    In May, layoffs declined slightly and employers hired more workers, according to the Job Openings and Labor Turnover Survey, issued monthly by the U.S. Bureau of Labor Statistics.
    Americans also quit their jobs in larger numbers, according to the JOLTS report. Since most workers quit for new employment, the uptick suggests a rebound in workers’ confidence they can find a new job, economists said.

    While job openings — a barometer of business’ demand for workers — fell by about 500,000 in May, they remain well above their pre-pandemic level.
    In all, job openings and monthly quits are respectively 40% and 15% higher than they were before the Covid-19 pandemic, while monthly layoffs are 21% lower, pointing to a “robust and resilient labor market,” Pollak said.

    Further, payroll processing firm ADP said Thursday that jobs surged by 497,000 in the private sector in June — handily beating the 220,000 estimate. The U.S. Department of Labor will issue its monthly jobs report on Friday morning, and the ADP data may signal continued strength across the U.S. job market.

    Rate hikes, banking turmoil have little effect

    Workers gained unprecedented leverage as the U.S. economy reopened broadly in early 2021. Workers started to quit in record numbers — in a trend that came to known as the “great resignation” — and their wages grew at the fastest pace in decades.
    The job market has somewhat cooled as the Federal Reserve has raised borrowing costs to rein in inflation, and as banks have pulled back on lending due to turmoil earlier this year. But it has continued to defy expectations to the upside.
    “It’s really mind-blowing that with all the monetary tightening, with inflation, a banking crisis, that job openings are still this high,” said Aaron Terrazas, chief economist at career site Glassdoor.

    It’s really mind-blowing that … job openings are still this high.

    Aaron Terrazas
    chief economist at Glassdoor

    “Overall, the market continues a gradual slowdown,” he added.
    However, it’s not good news for all workers; there are some areas of weakness, economists said.
    “It’s still the story of a two-track economy,” Terrazas said.
    For example, the information sector (which includes technology and media companies) saw 6% more layoffs and 17% fewer quits in May relative to pre-pandemic levels, Pollak said, citing JOLTS data.

    Broadly, while jobseekers can take comfort in ample hiring and their ability to quit for better jobs, it may take longer to find a good match amid a gradual labor market slowdown, Pollak said.
    That might mean signing up for job alerts and being sure to apply right away, she said.
    “It is a numbers game, and workers may have to play it more smartly going forward,” Pollak added. More

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    in Business

    You don’t need to tip when you buy coffee, Shake Shack founder Danny Meyer says

    Shake Shack founder Danny Meyer said he doesn’t think customers need to tip when picking up takeout or a cup of coffee.
    “If you’re just taking out food, and it was just a transaction — I give you money, you give me a cup of coffee — I don’t think there’s any obligation to tip whatsoever,” Meyer said on CNBC’s “Squawk Box.”

    Restaurateur Danny Meyer doesn’t think customers need to tip when they pick up takeout or buy coffee.
    “If you’re just taking out food, and it was just a transaction — I give you money, you give me a cup of coffee — I don’t think there’s any obligation to tip whatsoever,” Meyer said on CNBC’s “Squawk Box” on Thursday.

    Meyer founded Shake Shack and serves as chair of its board. The burger chain added tipping to its restaurants last year. He also founded Union Square Hospitality Group, which mostly operates full-service restaurants. The company’s eateries include Union Square Cafe, Gramercy Tavern and fast-casual chain Daily Provisions.
    As more businesses adopt Square’s and Toast’s point-of-sale systems, customers are getting more used to being prompted to tip as they pay. But some leave feeling overcharged or confused about how much they should tip.

    CEO of Shake Shack Randy Garutti (Left) and founder and Chairman Danny Meyer are viewed on the floor of the New York Stock Exchange (NYSE) on January 30, 2015 in New York City.
    Spencer Platt | Getty Images

    At full-service restaurants, some advocacy groups like One Fair Wage are pushing to eliminate the tipped wage. Tipping opponents say that the practice results in unstable income for servers and can fuel sexual harassment and racial discrimination.
    President Joe Biden pledged to end the tipped wage on the campaign trail in 2020. A handful of states, including California, have already banned the pay system.
    Meyer has a complicated history with tipping. In 2015, he announced his restaurants would no longer accept tips in an effort to narrow the income gap between servers and cooks. Five years later, as many of Meyer’s restaurants reopened their doors during the Covid pandemic, he reversed the decision.
    “It was inhumane to tell our servers that you can’t accept that expression of gratitude,” he said Thursday. More

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    Nikola will soon find out whether its shareholders have approved its plan to sell more stock

    Nikola is hoping to sell stock to raise additional cash.
    Before it can sell new stock, it needs shareholder approval to increase its total shares outstanding.
    The company will reveal Thursday whether it has secured enough votes to proceed.

    Nikola TRE FCEV2
    Courtesy: Nikola

    Electric heavy-truck maker Nikola will find out later Thursday whether its shareholders have approved its plan to raise money by selling more stock.
    Nikola hopes to raise more capital to help ramp up production of its new fuel-cell-powered electric heavy truck, set to launch later this month. But before it can sell additional stock to raise money, it needs to increase the total number of shares it’s authorized to issue to 1.6 billion from 800 million. That move requires shareholder approval.

    Nikola first put the plan to its shareholders at its annual meeting in June. While 77% of those who voted were in favor, there weren’t enough total shares voted to pass the proposal. Nikola is incorporated in Delaware, and under that state’s law, at least half of the total outstanding shares of a company’s common stock must be voted in favor for a share-increase proposal to pass.
    The company adjourned its annual meeting for a month to try to get more of its shareholders to cast votes. The meeting will resume at 4:00 p.m. ET on Thursday, at which time Nikola will reveal whether the proposal passed – or if it will adjourn again to try to get more shareholders to vote.
    This isn’t the first time that Nikola has had to adjourn a shareholder meeting to drum up more votes for a proposal to sell new stock. Last year’s annual meeting was adjourned three times before Nikola won enough votes to raise its total shares outstanding to 800 million from 600 million.
    Nikola said Wednesday that it built 33 of its battery-electric Tre semitrucks in the second quarter and delivered 45 to its dealers. Its dealers sold 66 trucks to customers during the period, and a total of 99 since the beginning of 2023.
    Nikola said on May 9 that it suspended production of the battery-electric Tre to focus on launching the fuel-cell version of the Tre, which has significantly longer range. At the time, it said that 12 fleet customers had ordered a total of 140 of the upcoming fuel-cell trucks.  

    Nikola is working to build out a network of hydrogen refueling stations to support those upcoming fuel-cell trucks. It said on Tuesday that the California Transportation Commission had awarded it a $41.9 million grant to build six of those stations in southern California, in collaboration with the state’s department of transportation.
    Nikola is expected to report its second-quarter results in early August. More

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    Ford’s U.S. sales jump 9.9% on big gains for its F-Series trucks

    Ford Motor’s second-quarter sales increased 9.9% from a year earlier, spurred by significant sales gains of its F-Series trucks.
    The Detroit automaker Thursday reported sales of 531,662 vehicles from April through June, up from subdued results a year ago.
    Ford’s EV sales during the quarter declined 2.8%, to 14,843 vehicles, as supplies of the Mach-E were short.

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

    DETROIT – Ford Motor’s second-quarter sales increased 9.9% from a year earlier, spurred by significant sales gains of its F-Series trucks.
    The Detroit automaker Thursday reported sales of 531,662 vehicles from April through June, up from subdued results of 483,688 cars and trucks that were weighed down by supply chain problems in the year-ago period.

    Sales of Ford’s F-Series trucks jumped 34% during the second quarter compared with the prior year, including sales of an all-electric version of the F-150 that more than doubled to 4,466 units sold.
    Ford’s overall truck sales, a key driver of the company’s profits, were up 23% in the first half of the year from the same period in 2022. All-new Super Duty trucks and higher production of other models helped drive the gain, the company said.
    “Ford achieved both best-selling brand and truck for six consecutive months this year on the strength of F-Series, vans, our new Escape, and F-150 Lightning,” said Andrew Frick, Ford vice president of sales, distribution and trucks, in a statement. “Our EV sales continue to grow. Improved Mustang Mach-E inventory flow began to hit at the end of Q2 following the retooling of our plant earlier this year, which helped Mustang Mach-E sales climb 110% in June.”
    However, Ford’s EV sales during the quarter declined 2.8%, to 14,843 vehicles, as supplies of the Mach-E were short amid an overhaul of the factory that makes the EV. Ford revamped that plant to increase production of the Mach-E during the quarter, part of a larger plan to significantly boost its electric vehicle production and turn a profit on its EV business by the end of 2026.
    Ford’s electric vehicle sales remain small for now: EVs represented just 2.8% of the automaker’s total sales during the second quarter, while traditional internal combustion engines represented roughly 91% of sales. Hybrids represented 6.5% of sales. More

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    Volkswagen will start testing self-driving cars in Austin as it moves on from Argo AI

    Volkswagen said on Thursday that it will begin testing self-driving electric vehicles in Austin, Texas, later this month.
    It will deploy about 10 of its ID Buzz electric vans equipped with autonomous-driving systems developed with Mobileye by the end of 2023.
    For now, all of its self-driving vehicles will have human safety drivers on board while testing.

    Volkswagen Group of America (VWGoA) starting its first autonomous vehicle test program in Austin beginning in July 2023.
    Courtesy: Vokswagen AG

    Volkswagen said Thursday that it will begin testing self-driving electric vehicles in Austin, Texas, later this month.
    The German auto giant said it will deploy about 10 of its ID Buzz electric vans equipped with autonomous driving systems developed with Mobileye by the end of 2023. The first two of those vans are already in the U.S. and will begin testing before the end of July, it said.

    The self-driving ID Buzz vans are equipped with lidar, radar and camera systems. The vehicles are “geofenced,” meaning they will operate only in specific areas of the city that have been carefully mapped, Volkswagen said.
    For now, all of its self-driving vehicles will have human safety drivers on board while testing.
    “We selected Austin as the first U.S. hub, as the city has a track record for embracing innovation and offers a conducive climate for the testing of autonomous vehicles,” said Katrin Lohmann, the executive leading Volkswagen’s self-driving efforts in the U.S.
    Lohmann said that the company expects to expand its Austin fleet and add testing operations in at least four more U.S. cities over the next three years.

    Volkswagen Group of America (VWGoA) starting its first autonomous vehicle test program in Austin beginning in July 2023.
    Courtesy: Vokswagen AG

    The move is the latest in a series of steps the auto giant has taken to revamp its self-driving strategy in recent months, including a deeper partnership with Mobileye and new investments in MOIA, its Europe-based ride-sharing service.

    While the company has been working toward a robotaxi service in Europe, it isn’t planning a ride-sharing service of its own in the U.S. as of now. Instead, it plans to offer autonomous ID Buzz vans and fleet management capabilities to other businesses offering ride-sharing or delivery services.
    Along with Ford Motor, Volkswagen was an investor in the now-defunct Pittsburgh-based self-driving startup Argo AI. For a while, Argo was considered a leader in the race to develop fully autonomous vehicles – but Ford and Volkswagen decided to wind down the company in October of 2022, citing spiraling costs and differences around strategy.
    Ford in March launched a new subsidiary, called Latitude AI, to expand on its BlueCruise hands-free highway driving system. That unit includes about 550 employees who previously worked for Argo AI.
    Volkswagen has also hired some of Argo AI’s former employees for its U.S. self-driving effort, it said.

    Volkswagen Group of America (VWGoA) starting its first autonomous vehicle test program in Austin beginning in July 2023.
    Courtesy: Vokswagen AG More

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    Stocks making the biggest moves premarket: JetBlue Airways, Meta, Sweetgreen and more

    The exterior of Sweetgreen’s Naperville location
    Source: Sweetgreen

    Check out the companies making headlines before the bell:
    JetBlue Airways — JetBlue Airways declined 1.3% in premarket trading after the company said it would end its partnership in the northeastern U.S. with American Airlines and focus on Spirit Airlines. Shares of American Airlines declined about 0.9%, while shares of Spirit Airlines popped 2.3%.

    Meta Platforms — The social media giant added about 2% in premarket trading after the launch of Threads, a direct competitor to Twitter. Meta CEO Mark Zuckerberg said on his Threads account early Thursday that 10 million people had signed up for the platform in seven hours after launching.
    Sweetgreen — Sweetgreen jumped more than 4% after Bank of America upgraded the stock to buy from neutral. The firm cited the salad chain’s growing foot traffic, as well as its plans to automate operations.
    Keurig Dr Pepper — Shares added nearly 2% after being upgraded by Morgan Stanley to overweight from equal weight. The Wall Street firm said the stock’s valuation was too low amid highly visible refreshment beverage trends.
    Bank of America — Shares of Bank of America were little changed in premarket trading after the bank announced that it was hiking its quarterly divided to 24 cents per share from 22 cents. The increase of roughly 9% puts the bank’s dividend yield at about 3.3%, based on Wednesday’s closing price. The hike comes days after Bank of America said it was discussing with the Federal Reserve differences in the results between the central bank’s stress test and an internal version of the test.
    Microsoft — Microsoft added 0.8% in the premarket. Morgan Stanley hiked its price target on the tech giant, saying artificial intelligence could bring the market valuation of the firm to above $3 trillion.

    Plug Power — Plug Power shares rose 1.8%. Citi initiated coverage of the firm with a buy rating, saying it could become one of the largest green hydrogen suppliers in the world.
    Textron — Citi initiated coverage of aircraft maker Textron with a buy rating, saying the stock is ready for a comeback this year. Shares rose nearly 0.9% in premarket trading.
    — CNBC’s Brian Evans, Michelle Fox and Jesse Pound contributed reporting More

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    Mortgage demand drops to lowest level in a month, as interest rates rise

    Rising interest rates had a direct impact on mortgage demand, which had been rising for several weeks.
    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.85% from 6.75%
    Mortgage demand to purchase a home, which had been rising for three straight weeks, dropped 5% for the week.

    A “For Sale” sign outside a house in Albany, California, on Tuesday, May 31, 2022.
    David Paul Morris | Bloomberg | Getty Images

    Mortgage rates last week hit their highest level since the end of May, which in turn weighed on mortgage demand.
    Total mortgage application volume dropped 4.4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is now at its lowest level in a month.

    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.85% from 6.75%, with points rising to 0.65 from 0.64 (including the origination fee) for loans with a 20% down payment.
    While that was the average rate for the week, a separate survey from Mortgage News Daily showed the rate crossed over 7% last Thursday. It has remained above that mark since then, rising to 7.08% on Tuesday of this week.
    As a result, mortgage demand to purchase a home, which had been rising for three straight weeks, dropped 5% for the week and was 22% lower than the same week one year ago.
    “Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country,” wrote Joel Kan, MBA’s deputy chief economist, in a release. “However, the average loan size for a purchase application declined to $423,500 – its lowest level since January 2023.”
    The drop in loan size, according to Kan, was likely driven by a decline in homebuying in some high-price markets and more activity in some of the lower price tiers.

    Applications to refinance a home loan fell 4% for the week and were 30% lower than the same week one year ago. As the summer progresses, the annual comparison is likely to shrink, as last summer was when mortgage rates shot significantly higher for the first time since before the Covid pandemic, and refinance demand consequently fell off its high cliff.
    While the 30-year fixed has remained over 7% for the last week, it could be affected by employment data set to be released Thursday and Friday. That could influence the Federal Reserve’s next moves, which are likely to include further rate hikes. More

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    Janet Yellen arrives in Beijing on mission to find common ground for U.S. and China

    Yellen is scheduled to be in Beijing July 6-9.
    Yellen will discuss with China officials the importance of responsibly managing their bilateral relationship, communicating directly about areas of concern, and working together to address global challenges.

    U.S. Treasury Secretary Janet Yellen landed in Beijing July 7 on a four-day trip aimed at finding common ground for a mutually beneficial economic relationship between the world’s two largest economies.
    Kevin Dietsch | Getty Images News | Getty Images

    Treasury Secretary Janet Yellen landed in Beijing Thursday on a four-day trip aimed at finding common ground as rivalry between the U.S. and China becomes increasingly adversarial.
    Yellen’s trip marks a deepening thaw in ties between the U.S. and China and comes weeks after Secretary of State Antony Blinken’s visit to Beijing in last month, which was the first high-level meeting between the two countries after months of tensions.

    “The two sides are basically talking, trying to find the strategic space for both sides to operate, and this will be very good for the rest of the world,” Andrew Sheng, a distinguished fellow at the University of Hong Kong’s Asia Global Institute, told CNBC Thursday.

    Yellen’s trip comes just days after China abruptly imposed export curbs on chipmaking metals and its compounds, escalating Beijing’s technological war with the U.S. and Europe.
    Before departing for China, Yellen had a “frank and productive discussion” with Xie Feng, the Chinese U.S. ambassador, according to the U.S. Treasury.
    “While in Beijing, Secretary Yellen will discuss with [People’s Republic of China] officials the importance for our countries — as the world’s two largest economies — to responsibly manage our relationship, communicate directly about areas of concern, and work together to address global challenges,” the Treasury Department said Sunday.
    In an April speech, Yellen stressed the importance of fairness in the U.S. economic competition with China.

    She outlined three economic priorities for the U.S.-China relationship: securing national security interests and protecting human rights, fostering mutually beneficial growth and cooperating on global challenges like climate change and debt distress.
    A senior administration official told reporters Sunday that Yellen’s visit will underscore these objectives.
    “We do not seek to decouple our economies,” the official said. “A full cessation of trade and investment would be destabilizing for both of our countries and the global economy.” More