Business

Mining companies have spent much of the past decade in investors’ bad books. Throughout the 2000s and early 2010s the industry, betting that the surge in commodity prices brought on by China’s economic rise would persist, splurged on investments and racked up hefty debts in the process. At the height of the frenzy in 2013 the combined capital expenditure of the world’s 40 largest mining firms by market value reached $130bn, according to pwc, an advisory firm, nearly four-fifths of their earnings before interest, tax, depreciation and amortisation (EBITDA). That spending spree left mining bosses red-faced as economic growth in China slowed, causing commodity prices—and the industry’s profits—to plummet.Miners spent the years that followed cleaning up the mess. In 2015 more than $50bn-worth of assets were written down. BHP, the world’s most valuable mining firm, spun off its least-loved sites to raise money and simplify its sprawling business. Others followed suit. Cash was used to pay off debts instead of financing new projects.image: The EconomistSince then, profits and commodity prices have recovered. But investment has not. In 2022 the 40 largest miners together invested $75bn, equivalent to a mere quarter of EBITDA (see chart 1). BHP, which on February 20th reports its results for the second half of 2023, invested some $7bn last year, analysts reckon—a third as much as it spent in 2013.That is a problem. Decarbonising the global economy will require 6.5bn tonnes of metal between now and 2050, according to the Energy Transitions Commission, a think-tank. Although much attention has been paid to the lithium and nickel needed for batteries, that is only one part of the picture. Fully 170m tonnes a year of steel, comprising mostly iron ore, will be needed for everything from wind turbines to electric vehicles (EVs)—more than ten times current global production. Vast amounts of copper will be required to expand and upgrade electricity grids. Demand for aluminium, cobalt, graphite and platinum will rise substantially, too. That will require a lot of blasting and drilling, which must begin now. Why isn’t it happening?image: The EconomistOne reason miners are reluctant to loosen the purse-strings is that they are still trying to win back the confidence of investors. The value of the MSCI world metals and mining index, which tracks share prices in the industry, has risen by about 10% in the past decade, compared with a doubling in the world’s stockmarkets as a whole (see chart 2). Returns on new projects in the industry are currently around 7%. That is hard to sell to investors when the yield on investment-grade corporate bonds in America is above 5%.Wary of risky new developments, miners are prioritising expanding or selectively acquiring existing sites. Last year BHP bought OZ Minerals, an Australian miner of copper, gold and nickel, for $6.4bn. Mining firms are also handing more cash back to shareholders through dividends and buybacks than at any time since 2007, according to S&P Global, a data provider.Yet miners and their cautious investors are not entirely to blame for the dearth of activity. Mike Henry, chief executive of BHP, notes that doing business has become more difficult and expensive in recent years. Rising costs for labour and equipment have squeezed returns, says Jonathan Price, boss of Teck Resources, a Canadian mining giant. The nearly $9bn price tag to develop its Quebrada Blanca 2 copper mine in Chile, which opened last year, was almost double what it had estimated in 2019.The scope of what miners are expected to do to minimise the environmental impact of sites has also widened considerably, says James Whiteside of Wood Mackenzie, a research firm. Companies can no longer simply rely on diesel generators to power sites. They are increasingly being told either to connect to the grid or to install renewable-energy sources such as solar panels. Governments worried about water use have compelled miners to build desalination plants. All that has further increased costs.Miners, nervous of disappointing investors, have become more prone to pausing or cancelling projects when costs go up or prices come down. “You really have to have the stomach to think long-term,” says Jakob Stausholm, the boss of Rio Tinto, the world’s second-most-valuable miner. That is not always easy. On February 15th BHP said that it would write down the value of its Western Australian nickel business by $2.5bn in response to higher costs and a slump in the price of the metal due to an expansion of Indonesian supply.Another reason for miners’ lack of investment is woefully lengthy permitting processes, which delay projects and add uncertainty. In America obtaining permits often takes between seven and ten years, with companies required to consult a variety of government agencies and other interested parties. In some countries environmental concerns have led to approvals being withdrawn. The Serbian government revoked the licence of Rio Tinto, another mining behemoth, for a $2.4bn lithium mine after environmental protests broke out in 2022.One thorny issue is access to the ancestral lands of indigenous populations. In America the majority of resources—97% of nickel, 89% of copper and 79% of lithium—are either on Native American reservations or within 35 miles (56km) of them. One example is the Resolution Copper project near Phoenix, Arizona. The site, jointly owned by BHP and Rio Tinto, could meet a quarter of America’s current copper needs, but has encountered stiff resistance from the Native American community. In 2020 the former chief executive of Rio Tinto was forced to step down after the company blew up two ancient Aboriginal rock shelters in Australia, sparking public outrage. The chairman also resigned the next year.Few bosses want to tempt a similar fate; others are also put off by spending in far-flung jurisdictions where governance is poor, for fear of irking sustainability-minded investors.BlastedAs Western miners have retreated, others have piled in. Cash-rich Gulf entities are taking an interest. International Resource Holdings, an Emirati mining firm, is buying a 51% stake in Mopani, a Zambian copper miner, for $1.1bn. The government of the United Arab Emirates has agreed to invest $1.9bn to develop at least four mines in the Democratic Republic of Congo. Manara Minerals, a Saudi Arabian mining fund, is hunting for more investments after buying a stake in the base-metals unit of Vale, a Brazilian miner, for $3bn last year. The kingdom is also scouring its own vast deserts for resources and has opened itself up to foreign miners. It is making it easier for miners to operate by supporting the development of infrastructure including railways and desalination plants, says Bandar Alkhorayef, the minister for mining and industry.The bigger threat to Western miners, however, comes from China. In the first half of 2023 its firms invested $10bn abroad in mining, 130% more than in the first six months of the previous year. Nine of the world’s 40 most valuable listed mining companies today are Chinese. Firms such as CMOC, Minmetals and Zijin Mining have snapped up assets from Bolivia and Botswana to Serbia and Suriname. Many of these firms are backed by state-owned banks or investment funds. Compared with the Western majors, they face less pressure from shareholders to rein in spending.Western governments, alarmed by China’s growing control over the commodities needed for the energy transition, have turned to diplomacy. In 2022 America established the Minerals Security Partnership (MSP) with various allies in order to channel investment into the extraction and processing of critical metals. This month Japan, under the auspices of the MSP, signed an agreement with the Democratic Republic of Congo to expand “business opportunities”. America is also reportedly in discussions with the eu to team up with resource-rich countries and facilitate projects. Yet for as long as investors are timid, costs stay high and the permitting process glacial, all this will do little to get miners to dig in. ■ More

Nike, Mattel, PayPal, Cisco, Levi Strauss and UPS are just a few of the companies that have announced layoffs in recent weeks.
Corporate leaders have tried to show Wall Street that they’re aggressively countering inflation-fueled expense increases and adjusting as consumer demand normalizes.
Industry experts said companies are catching their breath and taking a hard look at how they operate after an unusual four-year stretch caused by the pandemic. They also said there’s safety in numbers, as more companies tighten their belts.

Mathisworks | Digitalvision Vectors | Getty Images

Corporate America has a message for Wall Street: It’s serious about cutting costs this year.
From toy and cosmetics makers to office software sellers, executives across sectors have announced layoffs and other plans to slash expenses — even at some companies that are turning a profit. Barbie maker Mattel, PayPal, Cisco, Nike, Estée Lauder and Levi Strauss are just a few of the firms that have cut jobs in recent weeks.

Department store retailer Macy’s said it will close five of its namesake department stores and cut more than 2,300 jobs. JetBlue Airways and Spirit Airlines have offered staff buyouts, while United Airlines cut first-class meals on some of its shortest flights.
As consumers watch their wallets, companies have felt pressure from investors to do the same. Executives have sought to show shareholders that they’re adjusting to consumer demand as it returns to typical patterns or even softens, as well as aggressively countering higher expenses.
Airlines, automakers, media companies and package giant UPS are all digesting new labor contracts that gave raises to tens of thousands of workers and drove costs higher.
Companies in years past could get away with passing on higher costs to customers who were willing to splurge on everything from new appliances to beach vacations. But businesses’ pricing power has waned, so executives are looking for other ways to manage the budget — or squeeze out more profits, said Gregory Daco, chief economist for EY.
“You are in an environment where cost fatigue is very much part of the equation for consumers and business leaders,” Daco said. “The cost of most everything is much higher than it was before the pandemic, whether it’s goods, inputs, equipment, labor, even interest rates.”

There are some exceptions to the recent cost-cutting wave: Walmart, for example, said last month that it would build or convert more than 150 stores over the next five years, along with a more than $9 billion investment to modernize many of its current stores.
And some companies, such as banks, already made deep cuts. Five of the largest banks, including Wells Fargo and Goldman Sachs, together eliminated more than 20,000 jobs in 2023. Now, they’re awaiting interest rate cuts by the Federal Reserve that would free up cash for pent-up mergers and acquisitions.
But cost reductions unveiled in even just the first few weeks of the year amount to tens of thousands of jobs and billions of dollars. In January, U.S. companies announced 82,307 job cuts, more than double the number in December, while still down 20% from a year ago, according to Challenger, Gray and Christmas.
And the tightening of months prior is already showing up in financial reports.
So far this earnings season, results have indicated that companies have focused on driving profits higher without the tailwind of big price increases and sales growth.
As of mid-February, more than three-quarters of the S&P 500 had reported fourth-quarter results, with far more earnings beats than revenue beats. The quarter’s earnings, measured by a composite of S&P 500 companies, are on pace to rise nearly 10%. Revenues, however, are up a more modest 3.4%.

Layoffs, flight cuts and store closures

While companies’ drive for higher profits isn’t new, they have made bolstering the bottom line a priority this year.
Downsizing has rippled across the tech industry, as companies followed the lead of Meta’s 2023 cuts, which many analysts credited with helping the social media giant rebound from a rough 2022. CEO Mark Zuckerberg had dubbed 2023 the “year of efficiency” for the parent of Facebook and Instagram, as it slashed the size of its workforce and vowed to carry forward its leaner approach.
In recent weeks, Amazon, Alphabet, Microsoft and Cisco, among others, have announced staffing reductions.
And the layoffs haven’t been contained to tech. UPS said it was axing 12,000 jobs, saving the company $1 billion, CEO Carol Tome said late last month, citing softer demand. Many of the largest retail, media and entertainment companies have also announced workforce reductions, in addition to other cuts.
Warner Bros. Discovery has slashed content spending and headcount as part of $4 billion in total cost savings from the merger of Discovery and WarnerMedia. Disney initially promised $5.5 billion in cost reductions in 2023, fueled by 7,000 layoffs. The company has since increased its savings promise to $7.5 billion, and executives suggested in its Feb. 7 quarterly earnings report that it may exceed that target.
Last week, Paramount Global announced hundreds of layoffs in an effort to “operate as a leaner company and spend less,” according to CEO Bob Bakish. Comcast’s NBCUniversal, the parent company of CNBC, has also recently eliminated jobs.
JetBlue Airways, which hasn’t posted an annual profit since before the pandemic, is deferring about $2.5 billion in capital expenditures on new Airbus planes to the end of the decade, culling unprofitable routes and redeploying aircraft in addition to the worker buyouts.
Delta Air Lines, which is profitable, in November said it was cutting some office jobs, calling it a “small adjustment.”
Some cuts are even making their way to the front of the cabin. United Airlines, which also posted a profit in 2023, at the start of this year said it would serve first-class meals only on flights more than 900 miles, up from 800 miles previously. “On flights that are 301 to 900 miles, United First customers can expect an offering from the premium snack basket,” according to an internal post.
Several of the country’s largest automakers, such as General Motors and Ford Motor, have lowered spending by billions of dollars through reduced or delayed investments on all-electric vehicles. The U.S.-based companies as well as others, such as Netherlands-based Stellantis, have recently reduced headcount and payroll through voluntary buyouts or layoffs.
Even Chipotle, which reported more foot traffic and sales at its restaurants in the most recently reported quarter, is chasing higher productivity by testing an avocado-scooping robot called the Autocado that shortens the time it takes to make guacamole. It’s also testing another robot that can put together burrito bowls and salads. The robots, if expanded to other stores, could help cut costs by minimizing food waste or reducing the number of workers needed for those tasks.

Shifting patterns

Industry experts have chalked up some recent cuts to companies catching their breath — and taking a hard look at how they operate — after an unusual four-year stretch caused by the pandemic and its fallout.
EY’s Daco said the past few years have been marked by a mismatch in supply and demand when it comes to goods, services and even workers.
Customers went on shopping sprees, fueled by government stimulus and less experience-related spending. Airlines saw demand disappear and then skyrocket. Companies furloughed workers in the early pandemic and then struggled to fill jobs.
He said he expects companies this year to “search for an equilibrium.”
“You’re seeing a rebalancing happening in the labor markets, in the capital markets,” he said. “And that rebalancing is still going to play out and gradually lead to a more sustainable environment of lower inflation and lower interest rates, and perhaps a little bit slower growth.”
The auto industry, for example, faced a supply issue during much of the Covid pandemic but is now facing a potential demand problem. Inventories of new vehicles are rising — surpassing 2.5 million units and 71 days’ supply toward the end of 2023, up 57% year over year, according to Cox Automotive — forcing automakers to extend more discounts in an effort to move cars and trucks off dealer lots.
Automakers have also been contending with slower-than-expected adoption of EVs.
David Silverman, a retail analyst at Fitch Ratings, said companies are “feeling a bit heavy as sales growth moderates and maybe even declines.”
Cost cuts at UPS, Hasbro and Levi all followed sales declines in the most recent fiscal quarter. Macy’s, which reports earnings later this month, has said it expects same-store sales to drop, and there’s early evidence that may come to bear: Consumers pulled back on spending in January, with retail sales falling 0.8%, more than economists expected, according to the latest federal data.
Most major retailers, including Walmart, Target and Home Depot, will report earnings in the coming weeks.
Credit ratings agency Fitch said it doesn’t expect the U.S. economy to tip into recession, but it does anticipate a continued pullback in discretionary spending.
“Part of companies’ decision to lower their expense structure is in line with their views that 2024 may not be a fantastic year from a top-line-growth standpoint,” Silverman said.
Plus, he added, companies have had to find cash to fund investments in newer technology such as infrastructure that supports e-commerce, a resilient supply chain or investments in artificial intelligence.

Forward momentum

Companies may have another reason to cut costs now, too. As they see other companies shrinking the size of their workforces or budgets, there’s safety in numbers.
Or as Silverman noted, “layoffs beget layoffs.”
“As companies have started to announce them it becomes normalized,” he said. “There’s less of a stigma.”
Even with rolling layoffs, the labor market remains strong, which may help explain why Wall Street has by and large rewarded those companies that have found areas to save and returned profits to shareholders.
Shares of Meta, for example, almost tripled in price in 2023 in that “year of efficiency,” making the stock the second-best gainer in the S&P 500, behind only Nvidia. After laying off more than 20,000 workers in 2023, Meta on Feb. 2 announced its first-ever dividend and said it expanded its share buyback authorization by $50 billion.
UPS, fresh from job cuts, said it would raise its quarterly dividend by a penny.
Overall, dividends paid by companies in the S&P 500 rose 5.05% last year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, and he estimated they will likely increase nearly 5.3% this year.
— CNBC’s Michael Wayland, Alex Sherman, Robert Hum, Amelia Lucas and Jonathan Vanian contributed to this story.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. More

Carl Icahn won two seats on the board of JetBlue Airways.
The new board seats came less than a week after he disclosed a nearly 10% in JetBlue and that talks were underway for board representation.
JetBlue has been losing money since 2020 and new CEO Joanna Geraghty has promised to cut costs and restore reliability.

A JetBlue Airways plane prepares to take off from the Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

Carl Icahn won his push for seats on JetBlue Airways’ board of directors, according to a statement from the airline Friday, days after disclosing a nearly 10% stake in the New York-based airline and that he was in talks for board representation there.
The two new directors are Jesse Lynn, general counsel of Icahn Enterprises, and Steven Miller, a portfolio manager of Icahn Capital.

Shares of JetBlue were up about 4% in after-hours trading following the announcement.
The JetBlue investment isn’t Icahn’s first investment in the airline industry. In one of his more infamous activist campaigns, the corporate raider took TWA private in the late 1980s, and the airline struggled and filed for bankruptcy.
Icahn said in disclosing his JetBlue stake that he believes the shares are undervalued. JetBlue’s stock is down more than 19% over the last 12 months as of Friday’s close. The NYSE Arca Airline Index, which tracks the broader sector, is up about 7% over the same period.
JetBlue’s new CEO, Joanna Geraghty, took the helm Monday, and the carrier has appointed a pair of airline veterans to get it back on track.
“Building on our distinct brand and unique value proposition, we are focused on delivering value to our shareholders and all of our stakeholders, and we welcome the contributions of our new board members as we move forward with that common goal,” Geraghty said in a statement on Friday.

JetBlue hasn’t posted a profit since before the pandemic and has been cutting costs, trying to become more reliable after a post-Covid travel surge and a blocked merger with budget carrier Spirit Airlines. A federal judge last month ruled against a combination of the two airlines, citing reduced competition.
JetBlue had argued it needed the tie-up to help it compete against the largest American carriers. JetBlue and Spirit are appealing the judge’s ruling. More

The United Auto Workers is threatening a labor strike at Ford Motor’s Kentucky Truck Plant if local union demands are not resolved by 12:01 a.m. on Feb. 23.
Local contracts differ from the national agreements that the union ratified in late 2023 with Ford, General Motors and Chrysler parent Stellantis.
The union said “core issues” at the local level include health and safety in the plant as well as “Ford’s continued attempts to erode the skilled trades at Kentucky Truck Plant.”

United Auto Workers President Shawn Fain during an online broadcast updating union members on negotiations with the Detroit automakers on Oct. 6, 2023.
Screenshot

DETROIT — The United Auto Workers is threatening a labor strike at Ford Motor’s largest U.S. plant if local union demands aren’t resolved by next week.
The Detroit union on Friday said nearly 9,000 UAW autoworkers at Ford’s Kentucky Truck Plant could strike at 12:01 a.m. on Feb. 23 if local contract issues remain. The plant — Ford’s largest in terms of employment and revenue — produces Ford Super Duty pickups as well as Ford Expeditions and Lincoln Navigator SUVs.

Local contracts differ from the national agreements that the union ratified in late 2023 with Ford, General Motors and Chrysler parent Stellantis. They deal with plant-specific issues and can many times go unresolved for months, if not years, after the national deals are ratified.
The union said “core issues in Kentucky Truck Plant’s local negotiations are health and safety in the plant, including minimum in-plant nurse staffing levels and ergonomic issues, as well as Ford’s continued attempts to erode the skilled trades at Kentucky Truck Plant.”

Factory workers and UAW union members form a picket line outside the Ford Motor Co. Kentucky Truck Plant in the early morning hours on October 12, 2023 in Louisville, Kentucky.
Luke Sharrett | Getty Images

It was not immediately clear why the union set the strike deadline at the Ford plant and not others. There are 19 other open local agreements across Ford, along with several open local agreements at GM and Stellantis. 
Ford, which has prided itself on its relationship with the UAW, in an emailed statement said: “Negotiations continue and we look forward to reaching an agreement with UAW Local 862 at Kentucky Truck Plant.”
The strike deadline comes a day after UAW President Shawn Fain criticized Ford CEO Jim Farley over comments he made indicating the automaker will “think carefully” about where it builds future vehicles in light of changing market conditions and contentious negotiations last year with the union, which included six weeks of targeted strikes.

Farley specifically mentioned the UAW’s October strike against the Kentucky Truck Plant as a key moment in the company’s changing relationship with the union.
“We were the first truck plant they shut down … Clearly our relationship has changed. It’s been a watershed moment for the company. Does it have business impact? Yes,” Farley said Thursday during a Wolfe Research investor conference. “As we look at this EV transition and [internal combustion engine] lasting longer and our truck business being more profitable, we have to think carefully about our footprint.”
Fain, who has been a historically combative union leader, responded, in part, by saying: “Maybe Ford doesn’t need to move factories to find the cheapest labor on Earth,” he said. “Maybe it needs to recommit to American workers and find a CEO who’s interested in the future of this country’s auto industry.” More

Shares of Intuitive Machines jumped for a second consecutive day after the company issued an update that its moon lander mission “is in excellent health.”
The Texas-based lunar company launched its inaugural cargo mission, known as IM-1, on a SpaceX rocket and aims to land on Feb. 22.
“There’s a tremendous amount of focus on the moon right now. Most investors don’t have much, if any, space exposure currently,” ProcureAM CEO Andrew Chanin, who runs the “UFO” space-focused ETF, told CNBC.

Intuitive Machines’ Nova-C lander “Odysseus” deploys from the upper stage of SpaceX’s Falcon 9 rocket to begin the IM-1 mission.

Shares of Intuitive Machines jumped for a second consecutive day after the company issued an update that said its moon lander mission “is in excellent health.”
The Texas-based lunar company launched its inaugural cargo mission, known as IM-1, on a SpaceX rocket early Thursday morning.

In an update Friday afternoon, Intuitive wrote that the mission remains on track but that it has delayed the first attempt at igniting the lander’s engine. That represents a step Intuitive calls “engine commissioning,” or the first time the engine starts in the vacuum of space. The company noted it tested the engine “thousands of times” before the mission but that the process’ timeline needed to be adjusted after reviewing mission data.
Intuitive did not say when it expects to attempt the engine commissioning, but reiterated earlier statements that the lander is in “excellent health.”
Intuitive Machines’ stock jumped as much as 30% in early trading Friday before paring gains finish the day up 9% at $7.32 a share.
The stock surged 35% on Thursday after the IM-1 mission launched successfully. Since IM-1 launched, Intuitive Machines’ stock had gained 47% as of Friday’s close.
The company’s shares still trade below its post-SPAC merger debut pricing a year ago, however.

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Andrew Chanin, CEO of ProcureAM, which runs the “UFO” space-focused ETF, emphasized to CNBC that he is “never shocked to see volatility related to a space company, especially a pure-play space company” and noted that the yet-unprofitable Intuitive Machines is a relatively small company by market size.
“We’re rooting for them. To the extent that they can show success here … hopefully that will bring more belief that this is something that’s doable,” Chanin said.
The IM-1 lander, carrying both government and commercial research payloads, is expected to spend about eight days traveling to the moon before making a landing attempt on Feb. 22.
“There’s a tremendous amount of focus on the moon right now. Most investors don’t have much, if any, space exposure currently and to the extent that the U.S. commercial businesses, [NASA], or foreign governments see success on the moon, it appears that it’s only going to encourage other entities to also ramp up their focus and spending on the moon,” Chanin said.

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The average rate on the 30-year fixed mortgage jumped to 7.14%, according to Mortgage News Daily.
Mortgage rates hit their last high in October, but then fell sharply over the next two months, leveling at around 6.6% in December.

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

Mortgage rates shot higher Friday after a monthly government report on wholesale prices showed inflation is still persistent and hotter than most analysts had expected.
The average rate on the 30-year fixed mortgage jumped to 7.14%, according to Mortgage News Daily. That is the highest level in two months.

Mortgage rates hit their last high in October but then fell sharply over the next two months, leveling out at around 6.6% in December. They climbed back over 7% last Friday after another government report on consumer prices came in higher than expected.
“There are two ways to look at recent rate trends in light of the data-driven spikes over the past two weeks,” said Matthew Graham, chief operating officer at Mortgage News Daily. “On one hand, we can take solace in the fact that rates are still almost a percent lower than they were in October. On the other, the optimism for lower rates in 2024 has abruptly given way to skepticism.”
The drop in rates at the end of last year had caused optimism in the housing market as higher interest rates, coupled with high home prices, sidelined buyers in the fall. Sales of newly built homes soared 8% in December, according to the U.S. Census Bureau, with lower rates acting as the primary driver.
Homebuilder sentiment, based on an index from the National Association of Home Builders, has been rising for the past three months as builders reported that lower interest rates were driving buyer traffic to their model homes. In February’s report, builders said they expected mortgage rates to continue to moderate in the coming months.
“Buyer traffic is improving as even small declines in interest rates will produce a disproportionate positive response among likely home purchasers,” said NAHB Chairman Alicia Huey, a homebuilder and developer from Birmingham, Alabama. “And while mortgage rates still remain too high for many prospective buyers, we anticipate that due to pent-up demand, many more buyers will enter the marketplace if mortgage rates continue to decline this year.”

Demand has been strong, despite high home prices and very low supply of homes for sale. Adding to that, President’s Day weekend is considered to be the unofficial start of the all-important spring housing market.
But this new upswing in rates could drive buyers away. In January, when rates flattened from their declines, both signed contracts on existing homes and new listings weakened, according to Redfin, a national real estate brokerage.

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KKR’s family office survey of 75 chief investment officers around the world found that family offices will have 52% of their portfolios invested in alternative investments this year, up from 42% in 2022.
Cash holdings fell from 11% to 9% from 2022 to 2023, and their holdings of publicly traded stocks fell from 32% to 29%.
Their favorite alternatives include private credit, infrastructure, private equity and commodities.

Strauss/curtis | The Image Bank | 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.
While many institutional investors are trimming their alternative investments such as hedge funds and private equity, family offices are pouring even more money into the sector, according to a new study.

KKR’s family office survey of 75 chief investment officers around the world found that family offices had 52% of their portfolios invested in alternative investments in 2023, up from 42% in 2022. The growth in alternatives is coming at the expense of almost every other asset class, as their cash holdings fell from 11% to 9% from 2022 to 2023, and their holdings of publicly traded stocks fell from 32% to 29%.
“At a time when other allocators are pulling back from private allocations, this group’s intentions is to actually increase exposure to private market investments again in 2024 to further take advantage of the illiquidity premium,” the survey said.
The moves are part of a broad shift for family offices, the private investment vehicles for wealthy families, as they move away from public markets toward privates and alternatives — everything from real estate and private equity to direct stakes or ownership in private companies. Since family offices have longer time horizons than other investors, preferring assets that will grow over multiple generations, they can invest in private business and alternatives that pay a premium for more patient capital.
Family offices also have a special advantage in the current market, since banks and more traditional lenders are pulling back on loans to companies. Many large institutional investors are shying away from private equity, venture capital and other asset classes that have suffered from a lack of initial public offerings and acquisitions.
“Now is an interesting time to play offense, given that many others need liquidity, and we don’t,” one CIO told KKR, according to the report. “We are particularly keen on going direct, for example, in sectors where we have owned businesses in the past.”

Family offices plan to continue to move capital from cash and stocks into alternatives this year, according to the survey. Fully 42% plan to shrink their holdings of cash, and 31% plan to trim equities. Their favorite alternatives include private credit (with 45% planning to add to their holdings), followed by infrastructure (31%), private equity (28%) and commodities (18%).
Many are also planning to put more of their money to work in real estate, though only in specific sectors. The report said family offices are concentrating on data centers, logistics and warehouses “that capture the important post-pandemic investment themes.”
Another sector family offices like right now: oil and gas, in both private and public markets.
“Forced selling by other investors exiting the sector is creating tremendous opportunity,” the survey said.
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Nike is cutting 2% of its current workforce as it looks to reinvest in its growth areas and streamline its business.
The sneaker giant is contending with a slowdown in consumer spending and looking to save $2 billion over the next three years as part of a restructuring plan.
“This is how we will reignite our growth,” CEO John Donahoe said in a memo obtained by CNBC.

A man wearing a protective face mask walks past a Nike brand store in Kyiv, Ukraine, on Dec. 10, 2020.
Valentyn Ogirenko | Reuters

Nike is cutting 2% of its current workforce, or more than 1,500 jobs, as part of a broader restructuring, the company said late Thursday.
The Beaverton, Oregon-based sneaker giant said it wants to better use its capital to invest in its growth areas, such as running, women’s and the Jordan brand.

“This is how we will reignite our growth,” CEO John Donahoe said in a memo obtained by CNBC.
“This is a painful reality and not one that I take lightly,” he added. “We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable.”
Nike said the layoffs will take place in two phases. The company will start the first round this week, and finish the second by the end of its fiscal fourth quarter, which typically concludes at the end of May. Cuts in Nike’s EMEA region will be on a different timeline based on local labor laws, the company said.
It’s not clear which departments will experience layoffs, but they will not affect retail employees at Nike’s stores or warehouse workers, the company said.
The cuts come as consumers become more cautious in their spending and the retail industry braces for a demand slowdown for discretionary items such as clothes and shoes, which is Nike’s bread and butter.

In December, Nike unveiled a broad restructuring plan to cut costs by about $2 billion over the next three years. It lowered its sales outlook as it prepared for lower demand and wholesale orders, soft sales online and a marketplace that relies more on promotions.
As part of its plan to cut costs, Nike said it was looking to simplify its product assortment, increase automation and its use of technology, streamline the organization by reducing management layers and leverage its scale “to drive greater efficiency.”
Shortly before the restructuring was announced, The Oregonian reported that Nike had been quietly laying off employees over the past several weeks and had signaled that it was planning for a broader restructuring. A series of divisions saw cuts, including recruitment, sourcing, brand, engineering, human resources and innovation, the outlet reported.
It’s not clear how many jobs in total Nike has cut since December.
On Friday morning, Oppenheimer downgraded Nike to perform and lowered its 12- to 18-month price target, citing sluggish consumer demand, lulls in production innovation and competition.
“While NKE is by no means broken, we believe that the company and its brand are transitioning, near-term,” the firm said.
Donahoe said laid off staffers will receive a comprehensive package of financial, health-care and outplacement support services.
“We will emerge stronger and better equipped to fulfill our purpose to serve all athletes and grow the future of sport,” Donahoe said.Don’t miss these stories from CNBC PRO: More