Business

Boeing’s CFO forecast the company would have negative free cash flow in 2024 as manufacturing troubles persist.
The company has slowed production since a door plug blew out of a nearly new 737 Max 9 in January.
Aircraft deliveries won’t likely improve in the second quarter from the first, CFO Brian West said.

An American Airlines Boeing 737 MAX 8 flight from Los Angeles approaches for landing at Reagan National Airport shortly after an announcement was made by the FAA that the planes were being grounded by the United States in Washington, U.S. March 13, 2019. 
Joshua Roberts | Reuters

Boeing will burn through cash this year and deliveries of new planes won’t improve in the second quarter from the first, as the manufacturer deals with a host of production challenges tied to its bestselling planes, the company’s CFO, Brian West, said Thursday.
A month ago, West forecast Boeing would generate free cash flow “in the low single-digit billions.” The new forecast shows the mounting costs of the plane maker’s latest crises.

Boeing burned through nearly $4 billion in cash in the first quarter and West said that figure could be similar or “possibly a little worse” in the second quarter, but that the company would likely return to generating cash in the second half of 2024.
The company’s aircraft deliveries in the first quarter fell to the lowest level since the pandemic. The bulk of a plane’s price is paid when it’s handed over to a customer.
Boeing’s shares lost more than 7% on Thursday after West’s comments at a Wolfe Research industry conference, a slide that weighed down the Dow Jones Industrial Average.
“We have frustrated and disappointed our customers because of some of the production supply chain issues that we’re up against,” West said at the conference. “And while I understand that frustration, the most important thing we can do for our customers and the supply chain in the industry is to focus on the actions that are underway as we speak so that we could stabilize this production system, improve quality, and get more predictable.”
Boeing CEO Dave Calhoun in March said he would step down by the end of the year, and the company replaced the chairman and chief executive of its commercial airplane unit. Leading up to the shake-up, CEOs of major airline customers complained about delivery delays and difficulty planning flights because of surprise disruptions.

Boeing’s latest production issues surfaced after a door plug blew out midair from a nearly new 737 Max 9 at the start of the year, just as the company was trying to repair years of reputational damage from two fatal Max crashes in 2018 and 2019.
The accident increased federal scrutiny of the company, whose executives have vowed to stamp out production flaws and regain the trust of regulators, airline customers and the public.
Next Thursday, Boeing leaders are set to meet with the Federal Aviation Administration to present the company’s plan to improve its quality control, the FAA said. The agency gave Boeing 90 days to complete the plan starting in late February.
Other problems have also sprung up, including a pause on deliveries of 737 Max planes to China to review batteries for the cockpit voice recorder. Boeing said in a statement that it is working with “our Chinese customers on the timing of their deliveries as the Civil Aviation Administration of China completes its review of batteries contained within the 25-hour cockpit voice recorder assembly unit.”
Earlier this month, the FAA said it opened a new probe into the 787 Dreamliner inspections after the company disclosed “misconduct” by some employees. The agency said it was looking into whether employees falsified records.
Parts shortages have also slowed deliveries of Dreamliners, Boeing has said. American Airlines last month said it would cut some international flights because of delays of the wide-body jets. Other carriers, including United Airlines and Southwest Airlines, said they had to scale back growth and hiring plans because of delayed Boeing jets.

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For the first time, more Americans are using marijuana on a daily or near-daily basis than alcohol.
From 1992 to 2022, the per capita rate of daily or near-daily cannabis use increased 15-fold.
Some analysts on Wall Street think increased cannabis adoption will have an impact on the alcohol industry, with the potential for mergers and fewer beer sales.

In this photo illustration, dried cannabis flowers are displayed on April 30, 2024 in San Anselmo, California. The U.S. Drug Enforcement Administration (DEA) announced plans to reclassify marijuana as a less dangerous drug and designate it a Schedule III controlled substance instead of a Schedule I drug where it is currently listed. 
Justin Sullivan | Getty Images

Americans are reaching for buds more than booze.
Daily or near-daily marijuana use is now more common than similar levels of drinking in the U.S., according to 40 years of data analyzed by Carnegie Mellon University.

The report looks at U.S. data from more than 1.6 million participants collected across 27 surveys between 1979 and 2022.
Although alcohol overall remains more widely used, first-time daily marijuana use overtook drinking at the same frequency in 2022, with roughly 17.7 million cannabis users and 14.7 million drinkers.
That is a 15-fold increase for cannabis since 1992 when 900,000 Americans disclosed using the drug daily compared with 8.9 million daily drinkers.
“We believe — and data clearly indicates — the younger demographic cohort is increasingly accepting cannabis on a daily and monthly use at a higher rate than other generations,” said Roth MKM analyst Scott Fortune.
“As there are indications of consumers substituting away from other pleasure uses (alcohol, tobacco), we think as younger generations grow up with legal cannabis options, the acceptance of cannabis will become more prevalent and substitute away from traditional options,” he added.

This report comes as the cannabis industry is expecting the Drug Enforcement Administration to ease federal restrictions and reclassify marijuana, which would increase access to funding, research and investment opportunities for cannabis-related companies like Tilray, Canopy Growth and Curaleaf.
The spirits and alcohol industry, however, has been working to defend its market share despite shifting trends among younger consumers.
“From the U.S. alcohol side, the youngest legal drinking-age consumers are turning to alcohol less often, and when they do imbibe, it is fewer drinks,” said Roth MKM analyst Bill Kirk.
Kirk said there have been growing trends that are contributing to that, including more abstinence from drinking, better availability of quality non-alcoholic options and increased cannabis use.
“From the cannabis side, we wouldn’t say alcohol stands to be necessarily hurt by this trend, but would look for alcohol to partner, invest or acquire into U.S. cannabis when federal regulations allow it to capitalize on anticipated industry growth,” Fortune said.
However, some analysts on Wall Street expect greater impact to the alcohol industry from cannabis adoption.
“We estimate that legal cannabis could be negatively impacting beer volume [compound annual growth rate] by up to 230 bps in Canada and 75 bps in the U.S. where legal,” said Bernstein analyst Nadine Sarwat, referring to basis points (bps). One basis point equals one-hundredth of a percentage point.
She added that conflicting state-by-state policies for cannabis soften the blow to the biggest brewers and distillers like Constellation Brands, Diageo, AB InBev and Molson Coors.
“Federal legalization has the potential to increase the risk to alcohol, but this appears a long way off in the current political climate,” Sarwat said.

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GM CEO and Chair Mary Barra on Thursday said she has no plans to retire anytime soon, citing a need to ensure the company’s transformation is on “a good path.”
Barra, who is the longest-tenured CEO outside of the company’s founder, has been asked about retirement for several years.
Barra said she serves at the pleasure of the GM Board and that she continues to have “fun,” calling this time period “the most exciting time” for the automotive industry.

General Motors chair and chief executive officer Mary Barra participates in an Economic Club of Washington discussion on “the transformation of the automotive industry to an all-electric future, the path to autonomous vehicles, and the recent negotiations with GM’s workforce” in Washington, U.S., December 13, 2023. 
Elizabeth Frantz | Reuters

DETROIT – General Motors CEO and Chair Mary Barra on Thursday said she has no plans to retire any time soon as she tries to ensure the company’s transformation is on “a good path.”
Barra, who is the longest tenured CEO outside of the company’s founder, has been asked about retirement for several years. The questions have grown as executives of competitors have come and gone under Barra’s more than 10-year tenure leading GM.

“I’m having a lot of fun, and I want to make sure we have our transformation on a good path,” she said during a fireside chat at a Detroit Economic Club meeting. “So, I’m young and in good health, I’ve got a supportive family, so I don’t think I’m headed anywhere soon.”
Many potential successors within GM have come and gone during Barra’s tenure. Several left the company for other opportunities, while others retired or left the company for unspecified reasons.
Barra reiterated she serves at the pleasure of the GM board and that she continues to have “fun.” She said she is working through “the most exciting time” for the automotive industry during her career.
GM, like other automakers, is investing billions of dollars into all-electric vehicles, despite consumer adoption coming more slowly than many expected just a couple years ago.
The Detroit automaker also is attempting to relaunch its Cruise autonomous vehicle business after it ceased public operations following an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise robotaxi.
Cruise and EVs, along with software-defined vehicles and services, have been among the largest potential growth areas under Barra, who became CEO in January 2014. More

Warner Bros. Discovery’s internal focus has been on potentially matching a package of games earmarked for Amazon, sources tell CNBC.
Warner Bros. Discovery CEO David Zaslav believes NBCUniversal is overpaying for the NBA if it signs a $2.5 billion per year deal, sources said.
The NBA hasn’t had any communication with Warner Bros. Discovery about its plans, as the league hasn’t yet signed a deal with any media partners, which would trigger Warner Bros. Discovery’s matching rights.

Jalen Brunson #11 of the New York Knicks drives to the basket during the game against the Indiana Pacers during Round 2 Game 1 of the 2024 NBA Playoffs on May 6, 2024 at Madison Square Garden in New York City, New York. 
Nathaniel S. Butler | National Basketball Association | Getty Images

Warner Bros. Discovery is considering matching an offer for the media rights to a package of National Basketball Association games as the league looks to finalize terms — but its focus could be on a potential Amazon package rather than games slated for Comcast’s NBCUniversal, according to people familiar with the matter.
It’s the latest turn in what’s been a relatively messy renegotiation for Warner Bros. Discovery, one of two incumbent holders of NBA rights, along with Disney. Warner’s Turner Sports has carried NBA games for nearly 40 years.

Warner Bros. Discovery continues to consider ways to partner with the NBA to broadcast a package of games as the league plans its next media partners, said the people, who asked not to be named because the discussions are private.
The league is close to signing agreements with Disney, NBCUniversal and Amazon for three different packages of games, the people said. If that happens without a side agreement with Warner Bros. Discovery, its CEO, David Zaslav, will have a chance to leverage matching rights that were secured — and paid for — as part of its previous deal with the league.
Under the terms of that agreement, which runs out after the 2024-25 season, Warner Bros. Discovery can match a competing bid for the games it currently licenses from the NBA. Warner Bros. Discovery hasn’t yet seen the three potential packages, because the league hasn’t officially signed agreements with any of its potential media partners. It also hasn’t communicated any plans on matching or not matching with the league, the people said.
Still, the company has been working with its lawyers to determine how matching would work if the league carves up Warner Bros. Discovery’s current package into deals for both NBCUniversal and Amazon.
Amazon has reportedly offered $1.8 billion a year for a slate of games, while NBCUniversal has offered about $2.5 billion per year, according to people familiar with the matter. The league has set up frameworks for both deals but hasn’t yet signed paperwork formalizing the bids. When it does, Warner Bros. Discovery will have five days to match, according to a person familiar with the language of the contracts.

It’s possible Warner Bros. Discovery chooses not to match any of the packages, or it may push to strike a side deal with the league for either a settlement or a smaller, fourth package of games. It’s unclear whether the NBA would be amenable to either of those solutions.
Spokespeople for the NBA, Warner Bros. Discovery and NBCUniversal declined to comment. Representatives from Amazon didn’t immediately respond to a request for comment.

Matching Amazon

If the current slate of NBA games aired on TNT is split into two or more packages, Warner Bros. Discovery believes it has the right to match any of those offerings, or at least the parts of them that include the current TNT games, according to people familiar with the company’s thinking.
“We’ve had a lot of time to prepare for this negotiation, and we have strategies in place for the various potential outcomes,” Zaslav said earlier this month during Warner Bros. Discovery’s quarterly earnings conference call. “We have matching rights that allow us to match third-party offers before the NBA enters into an agreement with them.”

David Zaslav attends the world premiere of “The Flash”, in Hollywood, Los Angeles, California, U.S., June 12, 2023.
Mike Blake | Reuters

That could gum up an NBA deal with either NBCUniversal or Amazon or potentially lead to a lawsuit between Warner Bros. Discovery and the league. It’s unclear if the league can reject Warner Bros. Discovery’s matching rights if it chooses a different partner.
Warner Bros. Discovery is interested in a more affordable package of games given its gross debt of about $42 billion — more than double its current market capitalization of about $20 billion — making the package that’s likely earmarked for Amazon appealing. That package tentatively includes All-Star games and conference finals games, which have aired on TNT, according to a person familiar with the matter.
The NBA wants a robust streaming offering as a third package to extend the reach of its product beyond cable TV. Warner Bros. Discovery owns both cable network TNT and its flagship streaming service, Max, which is expanding internationally. The company announced Wednesday it had struck a deal with ESPN to sublicense College Football Playoff games for five years — with the games to be aired on TNT and streamed on Max.
Still, unlike Amazon’s Prime Video streaming service, Max plans to tier its sports offerings to customers, forcing them to pay more and potentially diminishing reach, which the NBA may not prefer.
It’s possible Zaslav’s focus on Amazon may be a strategic move to get a settlement from the league by focusing on a package specifically designed for a big tech streamer.
The College Football Playoffs deal and the company’s recent rights agreement for a package of NASCAR races beginning in 2025 has put Zaslav in a place where he’s content to lose the NBA if Warner Bros. Discovery management decides the cost is too much, according to people familiar with the matter.
Zaslav has told colleagues he believes NBCUniversal is overspending for the NBA, based on his company’s research into ratings and potential subscriber value for a subscription streaming service, according to a person familiar with the matter.
An offer of $2.5 billion or more would more than double the NBA’s previous asking price of $1.2 billion, and the new package would contain fewer games because of the introduction of a third media partner.
Warner Bros. Discovery could use the money saved from not spending on the NBA for other sports, including UFC, which will likely sign a new rights deal next year.

The NBA on NBC

Zaslav views NBCUniversal as a direct competitor in a fight for survival among legacy media companies, according to people familiar with his thinking. If NBCUniversal ends up paying too much for the NBA, he views that as a competitive advantage for Warner Bros. Discovery, they said.
If Warner Bros. Discovery chooses to match a potential Amazon package or stand down completely, it would clear the way for the NBA to get back in business with NBCUniversal, which lost league rights in 2002.
A member of NBCUniversal’s music licensing team recently reached out to John Tesh, the owner of “Roundball Rock,” the old “NBA on NBC” theme song, and mentioned potential interest in bringing the jingle back to NBC if the company gets the media rights, according to a person familiar with the matter.
Like Disney, which owns ABC, NBCUniversal has a broadcast network in NBC that is free over-the-air and can expand ratings for games. Neither Amazon nor Warner Bros. Discovery owns a broadcast network.
NBCUniversal also owns Peacock, its domestic-only streaming service, which could also become a platform for NBA games.
Disclosure: NBCUniversal is the parent company of CNBC. More

Sales of newly built homes dropped in April as prices and interest rates rose.
The median price of a new home sold in April was $433,500, 4% higher than it was in April 2023.
The average rate on the 30-year fixed mortgage at the end of March was in the high 6% range, but then shot up to 7.5% during the April.

A pile of lumber at a home under construction at the Cold Spring Barbera Homes subdivision in Loudonville, New York, US, on Wednesday Nov. 8, 2023. 
Angus Mordant | Bloomberg | Getty Images

Sales of newly built homes dropped 4.7% in April compared with March, and fell a larger 7.7% from the prior year, the U.S. Census said Thursday.
March sales were also revised significantly lower.

Higher mortgage rates are clearly hampering sales. The monthly reading is based on signed contracts, so it reflects people shopping during the month and inking deals based on current rates.
The average rate on the 30-year fixed mortgage was in the high 6% range at the end of March, but then shot up to 7.5% during April, cutting into affordability.
Adding to that, the median price of a new home sold in April was $433,500, 4% higher than it was in April 2023. Some of that is due to the mix of homes selling, which is mostly on the higher end of the market. Those buyers are not as influenced by mortgage rates, as they often use all cash.
Builders say they cannot lower prices due to high costs for land, labor and materials. The big production builders have been buying down mortgage rates to help boost sales, but they are able to do that because of their size. D.R. Horton and Toll Brothers reported strong earnings in their latest quarters, beating expectations and citing growing demand due to low supply in the resale market.
“For all the happy talk from the big builders (who are taking market share), the entire new build industry is selling new homes at a pace below the 5 yr average,” noted Peter Boockvar, chief investment officer at Bleakley Financial Group and a CNBC contributor.

In the first quarter of 2024, 38% of a median household income nationally was needed to make the mortgage payment on a median-priced new single-family home, according to a new index launched Thursday by the National Association of Home Builders and Wells Fargo. Low-income families, which it defines as those earning just 50% of the area’s median income, would have to spend 77% of their earnings to pay for the same new home. 
Prices continue to rise for both new and existing homes due to a lack of supply. There is very little available for sale on the lower end of the resale market. While the number of newly built homes continues to rise, up 12% year over year, new homes come at a price premium and are out of range for lower-income buyers.
“With a nationwide shortage of roughly 1.5 million homes, the lack of housing units is the primary cause of growing housing affordability challenges,” said Robert Dietz, NAHB’s chief economist. “Policymakers at all levels of government need to enact policy changes that will allow builders to construct more homes, such as speeding up permit approval times, providing resources for skilled labor training and fixing building material supply chains.” 

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The mass wealth migration to Florida from New York and other high-tax states has created record demand for household staff in elite Florida enclaves — especially Palm Beach.
A shortage of housekeepers for wealthy homes and elite hotels has led to a surge in hourly wages.
“I have been placing staff for 30 years, and I’ve never seen anything like this,” said April Berube, founder of The Wellington Agency.

Luxury homes in the historic district of Palm Beach, Florida.
Felixmizioznikov | Istock | Getty Images

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Housekeepers in Palm Beach and South Florida are cleaning up, with salaries often topping $150,000 and bidding wars between mansion owners becoming common, according to staffing companies.

The mass wealth migration to Florida from New York and other high-tax states has created record demand for household staff in elite Florida enclaves — especially Palm Beach. Demand for butlers (now called “hospitality managers” or “estate managers”) as well as nannies, chefs, drivers and personal security has surged, according to staffing agencies.
It’s the shortage of housekeepers, however, that has created the biggest mess for wealthy homeowners. Many of the wealthy emigres to Florida bought big homes and now need people to clean them. Hotels, resorts and businesses are also vying for cleaning staff. The result: Typical pay for housekeepers has rocketed from about $25 an hour in 2020 to $45 or $50 an hour today, according to some agencies.
“I have been placing staff for 30 years, and I’ve never seen anything like this,” said April Berube, founder of The Wellington Agency, which places household staff in Palm Beach, Miami, New York and other locations. “We’ve seen such a boom from people relocating, especially Palm Beach and Miami.”
In Palm Beach, housekeepers with experience in wealthy homes are typically making between $120,000 and $150,000 a year, along with 401(k) plans, health care and benefits, including overtime.
“For housekeepers it’s wonderful,” Berube said. “For us it’s extremely difficult. It’s a severe shortage.”

Melissa Psitos, founder of Lily Pond Services, said she recently had a Florida client hoping to hire a housekeeper for $75,000 a year. They ended up paying $110,000, which was reasonable for the market. Executive housekeepers, who often help direct a staff of other housekeepers and laundresses, can make even more. Psitos said she knows one head housekeeper in Palm Beach who makes $250,000 a year, including overtime, and travels with the family to their various homes.
“There is just not enough supply,” she said.
Bidding wars between wealthy homeowners have become common. Staffing agencies are posting “Help Wanted” ads all over the web and throughout West Palm Beach. Clients are growing frustrated.
“At first they’re in shock, and they say, ‘No way I’m paying that,'” Berube said. “It’s even uncomfortable for me to give them the numbers. But when they try to hire someone for less, with less experience, they almost always come back to us and say, ‘I learned my lesson. We are willing to pay for the experience.'”
Berube said the housekeepers for the wealthy need highly specific skills — from how to move quietly and unnoticed throughout the house, to how to carefully clean antiques, flatware and fine art and how to properly wash and press fine linens.
“There are specific tools and skills you need to work in fine homes,” she said.
Berube said with so few qualified candidates, she’s thinking of launching a school to teach high-end housekeeping skills and generate more housekeepers.
“I would love to do it, but I don’t have the time, since we’re busy trying to find staff.”
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Dear Max, My employer has a policy of allowing dogs in the office. Almost everyone there seems to think this is tremendous but I don’t like the things. (To be honest, I don’t like people either but I accept that they should be allowed to come to the workplace.) Is there anything I can do, or do I have to grin and bear it?You are not alone: I probably get more letters about this topic than any other. It’s very hard to admit to disliking dogs, so lots of people end up suffering them in silence. You could talk to HR about ending the policy, but would risk being known to all your colleagues as the psychopath who hates puppies. It’s much better to try to subvert the system. My advice is to say that you need to bring another type of much less acceptable animal to the office. If pressed, use the word “wellness” and hint at discrimination if they do not seem keen. With luck they will reach the conclusion that it is best simply to ban all pets. More

In the electronics department, every television is tuned to the same channel, showing a commercial for a cosmetics brand. At the end of the aisle is a sponsored stall promoting bags of popcorn. The music wafting through the air on the in-store radio is occasionally interrupted by advertising spots. Even at the checkout, a few final commercials pop up on screen to catch customers before they leave.Anyone strolling around a branch of Walmart, as more than 200m Americans do each month, will see thousands of goodies on offer. Increasingly, its shoppers are being served up as products, too. Walmart, the world’s top retailer by sales, has discovered that there is serious money to be made in selling access to its customers. On May 16th the company reported that its booming advertising business had helped it deliver a 9.6% increase in operating income, year on year, for its quarter ending in April. As it carpets its physical and virtual stores in commercials, the company is taking a growing share of the ad market. More