Business

Mortgage applications to purchase a home dropped 4% for the week and were 30% lower than the same week one year ago.
Applications to refinance a home loan decreased 5% from the previous week and were 44% lower than the same week one year ago.

Contractors work on concrete slabs in the Cielo at Sand Creek by Century Communities housing development in Antioch, California, on Thursday, March 31, 2022.
David Paul Morris | Bloomberg | Getty Images

The average rate on the popular 30-year fixed mortgage crossed over 7% on Tuesday, according to Mortgage News Daily. That is the highest level since early March.
Rates have been rising on a combination of concerns among investors. First, uncertainty over what the Federal Reserve will do with interest rates, given a still strong economy; second, the battle over raising the debt ceiling and the possibility of a U.S. default.

Both of those already had rates climbing last week with mortgage demand pulling back. Total mortgage application volume dropped 4.6% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Last week, the weekly average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.69% for loans with a 20% down payment, according to the MBA. That rate was 5.46% the same week one year ago.
Mortgage applications to purchase a home dropped 4% for the week and were 30% lower than the same week a year ago.
“Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications,” said Joel Kan, vice president and deputy chief economist at MBA.
Applications to refinance a home loan decreased 5% from the previous week and were 44% lower than the same week one year ago. That is the lowest level in two months. Not only are there very few borrowers who could benefit from a refinance, given that rates were so much lower a year ago, but banks have been tightening lending due to recent bank failures.

Even if the debt crisis is resolved before a default, rates don’t have a lot of reason to move significantly lower anytime soon.
“Credit the progressive improvement in bank sentiment, mixed but resilient economic data, and a Federal Reserve that has been steadfast in its reminders about their ‘higher for longer’ rate mantra,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. More

CNBC’s inaugural CEO Council Summit convenes on the West Coast this week

Nike CEO John Donahoe sat down with CNBC during its inaugural CEO Council Summit in Santa Barbara, California, and weighed in on the role corporations play in political debates.
When asked if he’s worried about being labeled a “woke corporation” by Florida Gov. Ron DeSantis, Donahoe said companies need to champion the values integral to their brands.
The sneaker boss pointed to racial and social justice, youth sports and sustainability as Nike’s most important values.

Nike CEO John Donahoe interviewed by Sara Eisen at the CNBC CEO Council Summit in Santa Barbara, California.
Randy Shropshire | CNBC

As a political battle rages between Florida Gov. Ron DeSantis and Disney, Nike CEO John Donahoe said it’s important for corporations to choose their battles, but fight for the values integral to their brands. 
During a sit-down interview at the inaugural CNBC CEO Council Summit in Santa Barbara, California, Monday evening, CNBC’s Sara Eisen touched on the DeSantis controversy and asked Donahoe if he was worried Nike would become a target.

“Aren’t you worried that if Ron DeSantis becomes president, he’s going to go after you as a woke corporation?” Eisen asked Donahoe about the expected Republican presidential contender. 
In response, Donahoe said companies don’t need to weigh in on every political kerfuffle but should be a loud voice when their brand’s values are under attack. 
“I think Bob’s doing a great job at this,” Donahoe said of Disney CEO Bob Iger.
“If it’s core to who you are and your values, then no, you stand up for your values,” he said. “If it’s commenting on some political issue that’s in someone else’s backyard, then we may have that personal feeling, but we don’t comment on it with our brand and publicly.” 
Iger wasn’t leading Disney when, in February 2022, he publicly slammed Florida Republicans’ controversial bill limiting classroom discussion of sexual orientation, which he and other critics have dubbed “Don’t Say Gay.”

His tweet the bill “will put vulnerable, young LGBTQ people in jeopardy” put more pressure on Disney’s CEO at the time, Bob Chapek, to break his silence about the legislation.
After Disney came out against the bill, DeSantis and his allies targeted the Orlando-area special tax district that has allowed Walt Disney World to essentially self-govern its operations for decades. The clash has gone on for more than a year, and it has continued even after Iger returned as CEO in November following Chapek’s ouster.
Donahoe pointed to three values that are integral to Nike’s brand: racial and social justice, sustainability and youth involvement in sports, particularly for young girls.
When it comes to racial and social justice, Donahoe said Nike built its brand in partnership with some of the most iconic Black and brown athletes in history, such as Michael Jordan, Serena Williams and LeBron James. 
“In addition, our core consumer for the Nike brand, the Jordan Brand, the converse brand, are urban Black and brown communities — that’s where sneaker culture started,” Donahoe explained. “And so, we listen to our athletes and to our consumer about what they care about and they care about racial and social justice and so we view that as core to who we are, core to our identity … so it gives us a little more courage to speak out.” 
The company has focused on youth involvement in sports as young girls are dropping out of athletics at “an alarming rate,” Donahoe said.
“Turns out one of the biggest reasons girls drop out is they don’t have female coaches when they hit puberty,” said Donahoe. “So, we’re trying to train 20,000 female coaches, moms and other former athletes to be coaches to promote youth. So that’s less of a controversial issue, but it’s one we care about as a value.” 
On sustainability, Donahoe said as “the leader” in the industry, Nike must set an example for change because if it doesn’t, “it won’t happen.”  More

Netflix said it began alerting customers that their password-sharing days were over.
In an email to members, the streamer said: “Your Netflix account is for you and the people you live with — your household.”
Members can transfer a profile of someone outside of their household so that the person can begin a membership they pay for on their own. Or they can pay an extra fee — $7.99 a month — per person.

Netflix sign-in page displayed on a laptop screen and Netflix logo displayed on a phone screen are seen in this illustration photo taken in Krakow, Poland, on Jan. 2, 2023.
Jakub Porzycki | Nurphoto | Getty Images

Netflix’s crackdown on password sharing has come to the U.S.
The streaming service said it began alerting members on Tuesday about its new sharing policy, noting that Netflix accounts are only to be shared within a single household.

“Your Netflix account is for you and the people you live with — your household,” the company said in an email, which it posted to its blog on Tuesday.
The email goes on to say that members can transfer a profile of someone outside of their household so the person can begin a new membership they pay for on their own. Or they can pay an extra fee – $7.99 a month – per person outside of their household using their account.
On Netflix’s subscription plans page, it notes that extra members can be added to its standard and premium plans without ads.
Netflix warned it would be tightening its guidelines on password sharing in a push to boost revenue and subscriber numbers, soon after the company began seeing growth stagnate.

What Netflix plans cost

Here’s how Netflix prices its tiers in the United States:

Standard ad-supported (2 devices at a time): $6.99/month
Basic (1 device at a time): $9.99/month
Standard (2 devices at a time): $15.49/month
Premium (4 devices at a time): $19.99/month

Originally, Netflix was expected to roll out its crackdown on people who borrow other accounts to create their own profiles late in the first quarter, but alerted investors and customers during an earnings call last month that it was pushing the move until the second quarter.
The streamer has said than more than 100 million households share accounts, which is about 43% of its global user base. Netflix said this has affected its ability to invest in new content.
Earlier this year, Netflix outlined password-sharing guidance in four other countries: New Zealand, Canada, Portugal and Spain. Netflix said it would ask members in those countries to set a “primary location” for their accounts, and allow users to establish two sub accounts for those who don’t live in their home base for extra fees.
Read more: Netflix’s expected password-sharing crackdown puts college students on edge
In Tuesday’s notice, the company didn’t provide such specifics for U.S. households, and rather gave the two options of either transferring a profile or paying a fee for an extra member.
The company said it had seen its subscriber growth affected internationally where it had rolled out such initiatives during the first quarter. But Netflix still managed to add 1.75 million customers during the quarter.
In Latin America, Netflix executives said it saw cancellations after the news was announced, affecting near-term growth. But they found those password borrowers would later activate their own accounts and add existing members as “extra member” accounts. As a result, the company has seen more revenue, the execs said.
Netflix executives have likened the paid-sharing transition to that of price increases: people initially balk and cancel, then slowly return and sign up for their own accounts.
In addition to its crackdown on password sharing, Netflix also recently introduced a cheaper, ad-supported tier in an effort to boost revenue. Both measures have come in response shortly after Netflix reported its first subscriber loss in more than a decade in early 2022.
Media companies across the board have been looking for ways to make their streaming plays profitable, leaning on methods such as content cost-cutting, advertising and finding other ways to attract more customers to their platforms.
On Tuesday, Warner Bros. Discovery relaunched its streaming service as Max, which is a combination of the HBO Max and Discovery+ services.
Paramount Global also announced this week that its Paramount+ with the Showtime combined app would be available in late June. Disney has also recently announced it’s adding Hulu content to Disney+. More

CNBC’s inaugural CEO Council Summit convenes on the West Coast this week

Nike’s CEO John Donahoe weighed in on growing geopolitical tensions with China during CNBC’s inaugural CEO Council Summit in Santa Barbara, California.
The sneaker boss said there is risk everywhere for global companies but decoupling from the region would be “disastrous.”
“If you really look at the trade flows, both ways, they play a mutually valuable role,” he said.

A Nike store is pictured in Sanlitun on March 27, 2021 in Beijing, China.
VCG | Getty Images

Nike CEO John Donahoe acknowledged geopolitical tensions are rising with China – one of its largest markets – but said decoupling from the region would be “disastrous” for global trade. 
During a sit-down interview at the inaugural CNBC CEO Council Summit in Santa Barbara, California, on Monday evening, CNBC’s Sara Eisen asked Donahoe about the threat of China invading Taiwan and Beijing’s position in Russia’s war with Ukraine. 

“You have to be wondering about first of all, non-zero-percent chance that China invades Taiwan, and then creates a major issue with the United States, that China supplies Russia with military aid, I mean, what happens to Nike in these scenarios, which will create even more tension between the U.S. and China?” Eisen asked Donahoe. 
In response, Donahoe said risk is everywhere for companies like Nike that operate on a global scale.
“If you’re a global company, you’ve got to just accept that and try to steer a course that is consistent with your strategy and consistent with their values,” said Donahoe. 
“The business has to step up when the political institutions are in the state they’re in today and so we’re committed to being a global company, whether that be in China, whether it be in other markets, and yes, there’s risk and you know, we’ve done some contingency planning like all of us have, but we’re clear, we’re going to try to keep moving forward,” he said.

Donahoe said global trade is a good thing for the economy – and geopolitical relations. He said consumers around the world benefit from it. 

“We believe that frankly, it can almost help promote peace and understanding,” he said. 
When asked if there are any plans to “decouple” from the region, Donahoe said no. 
“I think decoupling would be disastrous economically between the U.S. and China or China and the European Union. If you really look at the trade flows, both ways, they play a mutually valuable role,” he said. “Again, we believe in global trade and we’ll continue to try to do everything we can to support that. … We believe that both economies and the European economy as well benefits from thoughtful balanced trade.” 
Donahoe said China – the sneaker giant’s third-biggest market by revenue – is vital to Nike. He added it is important to adhere to the country’s local standards, while not violating any “global rules,” such as human rights violations. 
“We very much understand ourselves to be a local citizen with our China consumers and our China team,” Donahoe said. “We’re trying to maintain very much of a long-term view during this period, there have been ups and downs over history and we’re blessed where we have strong leadership position.” More

Peloton unveiled a new marketing strategy designed to capture a new customer base.
The company is introducing a new, tiered pricing structure for its digital app that includes a free membership option.
“[We’re] now leaning in for the first time to the idea that OK, not everyone is going to bring premium Peloton hardware into their home,” Tom Cortese, Peloton’s co-founder and chief product officer, told CNBC.

When Peloton unveiled its 2019 holiday commercial depicting a husband who gifted his wife a stationary bike for Christmas, the ad was widely panned as sexist, dystopian and reminiscent of a hostage video.
People took umbrage at the commercial’s characters – a white, upper-middle-class family – and said it sent a range of dangerous messages about everything from gender norms to body dysmorphia. 

While the controversy eventually faded from the headlines, the public remembered. The ad solidified Peloton’s nascent identity as a high-end bike company reserved for a certain type of person at a certain income level.
Now, the company is ready to change that perception. 
Peloton on Tuesday is launching a new marketing campaign that bills the retailer as a company for anyone, regardless of age, fitness level and income – or whether they shelled out thousands for a pricey piece of equipment. 
The brand relaunch comes a little over a year into Barry McCarthy’s tenure as CEO. He has worked to transform Peloton from a hardware-focused company into one that’s just as invested in its app and the high-margin subscription revenue that it brings. 

Source: Peloton

Since McCarthy, a former Netflix and Spotify executive, replaced founder John Foley in February 2022, the company has been on the defense.

It has worked to rein in its gargantuan costs, remedy recalls and find new revenue streams as demand for its connected fitness products slowed and consumers became more cautious about their discretionary spending. 
While the company has yet to return to profitability, it has managed to stop the bleeding. With a new marketing chief at the helm, Peloton says it’s ready to reintroduce itself to the world and shed the image the holiday ad seared into some minds.
“We know that the perception externally does not match the reality of who we are,” Peloton’s chief marketing officer, Leslie Berland, who started with the company in January and led the relaunch, told CNBC in an interview. “This company historically has been thought of as an in-home bike company for fitness enthusiasts but over the years, it has evolved into something that is much more bigger, much broader than that.” 

Peloton focuses on the app

The relaunch comes along with a new, tiered app strategy that includes an unlimited free membership option (with no credit card required) and levels that cost $12.99 and $24 monthly.
The content people will have access to varies by the level and, in some cases, legacy users will have less access come December when a grace period ends. Currently, people who pay $12.99 a month to use the Peloton app can do a bike class every day, but in December, they’ll only be able to do three per month.
The relaunch includes a “Gym” function that allows users to take Peloton’s app into the gym with them and create custom workouts. 

Arrows pointing outwards

Source: Peloton

Peloton is also saying goodbye to its trademark fire engine red and black colors in favor of a new mix of hues it says better captures the “energy” of a workout and the “afterglow” that comes. New branding materials include shades of purple, pink, green and a lighter red.
In a splashy 90-second marketing video shared with CNBC, Peloton’s app takes center stage. It shows people of all shapes, sizes, fitness abilities and ages using it to take strength and yoga classes at home, but also in gyms, which have long been considered a threat to Peloton’s business. 
While Peloton features its Bike, Tread and Row machines in the clip, it does not show the hardware until about 30 seconds into the video.

The message is a far cry from Peloton’s earlier commercials and marketing materials, which predominantly featured ultra-fit athletes using its equipment.
“[We’re] now leaning in for the first time to the idea that OK, not everyone is going to bring premium Peloton hardware into their home,” Tom Cortese, Peloton’s co-founder and chief product officer, told CNBC in an interview. “Our members have a phone, we’re on their phone, they take their phone where they want to go and if you want to put [the Peloton app] on someone else’s hardware, that’s fine, and if you want to bring it into someone else’s gym, that’s great.”
Peloton insisted the focus on selling subscriptions does not mean it has abandoned its hardware business, and said the company is on a dual track with both. The new campaign focuses on the app because there’s been so little advertising of it, and market research shows just 4% of consumers know about it, the company said.
“When we first started coming out of Covid, and the press likes to be tough on Peloton, it was ‘everyone’s going back to the gyms’ but we know that our members were using our products in the gym,” said Jennifer Cotter, Peloton’s chief content officer.  

Arrows pointing outwards

Source: Peloton

She pointed out that Peloton’s strength training content, not its cycling or running classes, is the No. 1 type of class for digital members and the No. 2 among those who have Peloton hardware. It shows how eager users are to consume Peloton content that has nothing to do with its equipment.
“When it comes to this initiative, we’re just excited that No. 1, our members will feel reflected and new members will feel like Peloton is for them,” said Cotter. “And then, you know, the tiering structure allows us to welcome people up the ramp.” 
Briana Deserio, 32, has been a Peloton member since the early days of the pandemic. She said the brand’s competitive and aspirational appeal originally led her to buy a Bike. 
When briefed about the company’s new marketing strategy, she told CNBC she supports the move and its focus on being inclusive. But she said there’s a chance making Peloton accessible to everyone could dilute its brand.
“It’s kind of like a club and now everyone’s coming into the club,” said Deserio. 
Berland, Peloton’s new marketing chief, isn’t concerned about the brand losing strength. She said the new marketing strategy reflects what the company already is.
“Our members, our instructors, our classes, our content. That is unchanged. The company has evolved into all of this,” said Berland. “It’s time for the brand and the marketing to represent all of that and all of its vibrancy.”

Arrows pointing outwards

Source: Peloton

Liz Coddington, Peloton’s chief financial officer, said creating different points of entry to the company’s content will set it up for long-term growth. 
“What we’re doing is we are opening up the total addressable market to Peloton to people who may not have considered us in the past because we weren’t really speaking to them,” said Coddington.
“The real goal truly is just to bring more people into the ecosystem of Peloton however they want to come in, and then help them on their journey in how they want to consume our content over time, whether it’s through the free option, through the lower tier or through the higher tier or eventually buying or renting our hardware,” she said.
The company has not incorporated potential upside from the app and marketing strategy into its financial outlook, and said some paid app members will likely downgrade to the free membership option. 
In the past, churn rates have briefly spiked when Peloton changed prices, but soon returned to typical levels, she said. 
“We are optimistic about it,” said Coddington. “But it’s hard to know until we know.” More

JAB Holding is preparing to take Panera Brands public through an initial public offering by switching up its leadership.
Panera Brands CEO Niren Chaudhary will be succeeded by Einstein Bros. Bagels CEO Jose Dueñas, effective July 1.
The restaurant company’s revenue surpassed $4.8 billion last year.

Customers patronize an open Panera Bread location in the Walt Whitman Mall on March 26, 2020 in Huntington Station, New York.
Bruce Bennett | Getty Images

Panera Bread’s parent company is switching up its leadership as it prepares to go public again.
The announcement, made Tuesday, confirms that the restaurant company is interested in an initial public offering after calling off a deal last year with Danny Meyer’s SPAC to go public again.

The arrangement would have exchanged shares of USHG Acquisition for the sandwich chain’s stock and allowed the company to survive a merger with Panera’s subsidiary Rye Merger. However, Panera scrapped those plans in July, citing market conditions.
JAB Holding, the investment arm of the Reimann family, bought Panera Bread in 2017 for $7.5 billion, taking it private. The firm combined the sandwich chain with Einstein Bros. Bagels and Caribou Coffee to form Panera Brands.
In the press release, Panera Brands said the leadership changes are “in preparation for its eventual IPO.”
Current CEO Niren Chaudhary will step down July 1 but plans to stick around as chairman of the company’s board. Chaudhary served as chief executive for four years after joining the company from Krispy Kreme. JAB Holding also owned the doughnut chain before its IPO in 2021 and still retains a 45% ownership stake, according to Factset.
Einstein Bros. Bagels CEO Jose Dueñas will take the reins from Chaudhary. Before joining the bagel chain in 2019, he served as chief brand officer for Sonic Drive-In. His resume also includes time at Darden Restaurants’ Olive Garden and Kellogg.

In 2022, Panera Brands’ revenue surpassed $4.8 billion. Panera Bread, the largest chain in the portfolio, has long been known as a technology leader in the restaurant industry. Digital orders account for more than half of the chain’s total sales, and its loyalty program has 53 million members. Panera Bread has also been testing A.I. drive-thru order taking and Amazon’s palm-scanning technology.
Panera Brands isn’t the only restaurant company publicly talking about going public. On Friday, Mediterranean fast-casual chain Cava filed to go public through an IPO. More

Lowe’s cut its full-year sales outlook.
The home improvement retailer beat first-quarter earnings and revenue expectations.
The company’s shares dipped in premarket trading.

A Lowe’s Home Improvement Warehouse worker collects carts in a parking lot on August 17, 2022 in Houston, Texas. 
Brandon Bell | Getty Images News | Getty Images

Lowe’s cut its full-year outlook Tuesday, as lumber prices fell and do-it-yourself customers bought fewer discretionary items.
The home improvement retailer lowered its forecast even as it beat Wall Street’s revenue and earnings expectations for the fiscal first quarter.

Shares of the company were down more than 1% in early trading.
Here’s what the company reported for the three-month period ended May 5 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $3.67 adjusted vs. $3.44 expected
Revenue: $22.35 billion vs. $21.6 billion expected

Lowe’s net income for the three-month period was $2.26 billion, or $3.77 per share, compared with $2.33 billion, or $3.51 per share, a year earlier.
Net sales fell nearly 6% to $22.35 billion from $23.66 billion in the year-ago period, but exceeded Wall Street’s expectations.
Comparable sales dropped 4.3% in the fiscal first quarter. That’s lower than the 3.4% decline that Wall Street expected, according to StreetAccount.

The home improvement retailer said it now expects total sales for the full year to range between $87 billion and $89 billion, lower than the $88 billion to $90 billion it had previously forecast. It said it projects comparable sales to decline by 2% to 4% this fiscal year, below the flat to down 2% that it had said before.
It said adjusted earnings per share will range between $13.20 and $13.60, below its previous range of $13.60 to $14.00.
CEO Marvin Ellison said in the company’s news release that lumber deflation, unfavorable weather and lower spending by DIY customers hurt quarterly sales. He said the lowered forecast reflects weaker-than-expected consumer demand.
Yet, he added, Lowe’s digital sales and its comparable sales among home professionals rose in the first quarter compared with the year-ago period.
He said the company remains “optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share.”
Lowe’s is the latest retailer to warn of slower sales ahead, as consumers become thriftier and reluctant to spend on big-ticket and discretionary items. Many other retailers, including Walmart, Target and Home Depot, also noticed fewer purchases outside of the necessities.
For Lowe’s and Home Depot, however, the time of year adds significance. Spring is the biggest sales season for home improvement.
The companies are not only competing for shoppers’ dollars as higher prices for groceries and more take up more of household budgets. They also are dealing with a shift in demand, as the spree of Covid pandemic-fueled home projects fades and consumers juggle other spending priorities, such as commutes, summer vacations and meals at restaurants.
Lowe’s competitor, Home Depot, posted a rare revenue miss with its quarterly report last week. The company missed sales expectations for the second consecutive quarter and cut its full-year forecast, as customers skipped big-ticket items like grills and opted for smaller, less expensive home projects.
Like Lowe’s, Home Depot also chalked up lower sales to colder and wetter weather in the western U.S. and falling lumber prices.
Shares of Lowe’s closed Monday at $203.15, bringing the company’s market value to $121.15 billion. Its stock is up nearly 2% so far this year, trailing the S&P 500’s gains of 9%. More

United is planning to add 35 flights to the Denver International Airport, its fastest-growing hub.
New nonstop routes include service to Greensboro, North Carolina; Dayton, Ohio; Lexington, Kentucky; and San Juan, Puerto Rico.
United is also slated to open a new lounge and reopen one of two remodeled clubs.

A row of United Airlines passenger planes parked at gates at Denver International Airport in Denver, Colorado.
Robert Alexander | Getty Images

United Airlines plans to beef up its schedule and add new lounges at Denver International Airport, the carrier’s bet that demand for flights at its fastest-growing hub will keep rising.
United said Tuesday that it will add 35 flights at the Colorado airport this year. New nonstop routes include service to Greensboro, North Carolina; Dayton, Ohio; Lexington, Kentucky; and San Juan, Puerto Rico. The airline’s Denver service this summer will average 450 daily departures, a spokeswoman said.

United was the airport’s largest carrier last year with 46% market share, compared with Southwest Airlines’ 31% share, Frontier Airlines with 10%, Delta Air Lines with 5% and American Airlines with 4%, according to airport data.
But its new service comes as shifting travel patterns during the pandemic are forcing airlines to rethink their networks and where to best deploy planes, which are in short supply.
Airport passenger traffic expanded rapidly during the pandemic as the city grew and travelers sought outdoor destinations amid restrictions aimed at stopping Covid-19 from spreading. Last year, the Denver airport handled a record of more than 69 million passengers, making it the world’s third busiest, up from 16th in 2019, according to Airports Council International.
In comparison, San Francisco, another United hub, which enjoyed a corporate travel business before the pandemic, served 57.5 million passengers in 2019 and just 42.3 million last year.
United is also slated to open a new lounge and reopen one of two large remodeled clubs the latest sign of airlines scrambling to make room for scores of high-spending travelers.
Last year, United opened a grab-and-go mini lounge at Denver aimed at travelers connecting to other flights. More