Business

Trevor Milton was found guilty of three of four counts of fraud on Friday.
The founder of Nikola was charged with making fraudulent statements to drive up the value of Nikola’s stock.

Trevor Milton CEO of Nikola
Massimo Pinca | Reuters

Trevor Milton, the founder and former chairman and CEO of electric heavy truck maker Nikola, was found guilty in federal court Friday of three of four counts of fraud relating to false statements he made to drive up the value of Nikola’s stock.
Milton was charged with two counts of securities fraud and two counts of wire fraud, all related to statements he made about Nikola’s business while he was chairman and CEO of the company. Jurors found him guilty on one count of securities fraud and both of the wire fraud counts.

Milton will be sentenced on Jan. 27. He faced up to 25 years in prison if convicted on all four counts.
“Trevor Milton lied to Nikola’s investors — over and over and over again. That’s fraud, plain and simple,” said Damien Williams, the U.S. Attorney for the Southern District of New York. Williams said that the case against Milton should “serve as a warning” to others who make misrepresentations to investors.”It won’t end well,” he said.
WIlliams’ office in Manhattan had alleged that Milton lied about “nearly all aspects of the business” he founded in 2014 during his time leading the company. Those lies, prosecutors said, were intended to induce investors to bid up the price of Nikola’s stock.
“On the backs of those innocent investors taken in by his lies, he became a billionaire virtually overnight,” Assistant U.S. Attorney Nicolas Roos said in his opening statement in September.
Nikola’s stock price briefly surged to over $90 per share in June 2020, just days after it went public via a merger with a special purpose acquisition company. For a short period, Nikola — a company with no revenue — was more valuable than century-old Ford Motor.

That ambitious valuation didn’t last. Nikola’s shares fell sharply once Milton was forced out of the company in September 2020, after the company’s board of directors found that some of the fraud allegations made by short-seller Hindenburg Research had merit.
The U.S. Department of Justice and the Securities and Exchange Commission both opened investigations in the months following Milton’s departure. In July 2021, a grand jury indicted Milton on three counts of fraud; a fourth count was added in June 2022.
Nikola itself wasn’t facing charges in this case. The SEC had brought related civil charges against the company last year. Those charges were settled in December after Nikola agreed to pay a $125 million fine. Although Milton still owns Nikola stock, the company had otherwise cut ties with him.

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A spate of fresh data this week showed consumers are feeling the sting from high inflation. While that likely means more pain for retail stocks, new Wall Street research suggests club holding Amazon (AMZN) is consumers’ most preferred online shopping platform, buttressing the Club’s long-term belief in the e-commerce giant. Consumer spending was flat month-over-month in September, according to an estimate of retail sales for the month provided by the Commerce Department on Friday. But those figures were not adjusted for inflation, indicating that consumer spending on retail actually fell last month. The retail sales data came on the back of the latest consumer price index survey , which showed consumer prices rose 0.4% in September, the Bureau of Labor Statistics reported Thursday, all but ensuring another 75 basis point interest rate hike from the Federal Reserve next month. Meanwhile, a consumer survey from the University of Michigan showed inflation expectations were increasing, sending stocks lower Friday. The S & P 500 closed down more than 2%. The Wall Street view In this environment of rising prices, Baird surveyed roughly 1,000 online shoppers, with a majority saying they plan to spend less on holiday purchases this year compared to last year. But while consumers are tempering their discretionary budgets this holiday season, Amazon remains their shopping platform of choice, according to Baird. Amazon is the “clear leader” in the online shopping internet space among U.S. consumers, capturing almost 60% of market share, Baird analysts wrote in a research note Friday. In a separate note Thursday, Cowen said its shopping survey of Gen Z and Millennials showed Amazon to be their “most preferred” shopping website. Respondents said speed of delivery and convenience were key factors for shopping on Amazon, outweighing price concerns, according to analysts at Cowen. The new research comes the same week as Amazon’s two-day Prime Early Access Sale , the initial results of which showed that while Amazon may remain a top online retail destination it’s not immune from inflationary pressures. Amazon said Prime members bought more than 100 million items during the sales event, compared to the record 300 million items purchased during Amazon’s July Prime Day event. Bank of America estimated Amazon’s sales event brought in $8 billion in gross merchandise value (GMV), down 25% from July’s $10.7 billion in GMV, according to a research note published Friday. Shares of Amazon, which have fallen more than 35% year-to-date, closed down 5% Friday, at $106.9 a share. The Club take We’re happy to see that Amazon is the preferred platform for consumer shopping — but we also know its so much more than that. For example, its cloud business, Amazon Web Services, consistently posts robust revenue growth and delivers high profit margins, allowing us to be bullish on the company despite growing macroeconomic headwinds. Furthermore, Amazon’s nascent agreement with the National Football League to stream “Thursday Night Football” on Prime Video has attracted a record number of Prime signups and should support advertising revenue growth. The Club continues to rate Amazon a 1, meaning we’d buy the stock here. (Jim Cramer’s Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

An Amazon Prime truck is pictured as it crosses the George Washington Bridge on Interstate Route 95 during Amazon’s two-day “Prime Early Access Sale” shopping event for Amazon members in New York, October 11, 2022.
Mike Segar | Reuters

A spate of fresh data this week showed consumers are feeling the sting from high inflation. While that likely means more pain for retail stocks, new Wall Street research suggests club holding Amazon (AMZN) is consumers’ most preferred online shopping platform, buttressing the Club’s long-term belief in the e-commerce giant. More

Kroger must win over federal regulators, investors and shoppers as it tries to close the deal with Albertsons.
Kroger CEO Rodney McMullen said the combined company would lower food prices, boost profitability and speed up innovation.
The acquisition would marry the second and fourth largest grocers in the U.S.

A customer shops for eggs in a Kroger grocery store on August 15, 2022 in Houston, Texas.
Brandon Bell | Getty Images

Kroger knows it needs the blessing of investors and federal regulators to pull off its $24.6 billion deal to buy rival grocery company Albertsons.
It started making its case Friday, when the companies announced the deal. Kroger said the combination would lower food prices in a time of high inflation, boost profitability and speed up innovation in an otherwise fragmented industry.

If approved, the grocers would become a more formidable second place in terms of grocery market share behind Walmart. Together, the companies would capture nearly 16% of the U.S. grocery market, according to market researcher Numerator. Walmart had roughly 21% of the market as of June 30. Albertsons is fourth place. Kroger said it anticipates closing the deal in early 2024, pending regulatory approval.

Significant hurdles remain: Some investors question whether the merged companies can increase profits since the grocery business, already known for thin margins, is facing higher costs and cost-conscious shoppers.
Since Kroger and Albertsons significantly overlap in several markets, regulators may be concerned that a merged company could price out smaller competitors. The companies employ a combined 710,000 people across about 5,000 stores, so potential job losses are a concern, as well.

Convincing regulators

Kroger said it already has a plan to convince regulators. Chief Financial Officer Gary Millerchip said on Friday’s call with investors that the companies anticipate that they will have to divest between 100 and 375 stores.
One possibility, he said, is establishing a subsidiary that would be spun off to Albertsons’ shareholders prior to the deal closing and would operate as a standalone public company. Kroger and Albertsons would work together — and with the Federal Trade Commission — to decide which stores would be part of the spinoff company.

By the numbers

KROGER

2,800 stores in 35 states
420,000 employees
25 banners, including Fred Meyer, Ralphs, King Soopers and namesake stores
$33.3 billion market capitalization, as of Thursday’s close

ALBERTSONS

2,200 stores in 34 states and Washington, D.C.
290,000 employees
22 banners, including Safeway, Acme, Tom Thumb and namesake stores
$15.2 billion market capitalization, as of Thursday’s close

Source: Company websites, FactSet

Millerchip said the $34.10 per share price of the deal would be reduced based on the number of stores.
Kroger has done its homework and feels confident that the deal can go through, CEO Rodney McMullen said. “We’ll sit down with the FTC as soon as we can.”

Winning over investors

Some investors are already skeptical, if the stocks’ performance Friday is any indication. (Both Kroger and Albertsons were down midday.)
That’s because Wall Street has already seen a spree of grocer acquisitions — including some by Kroger and Albertsons — but no meaningful changes in profit margins. Costs have grown for everything from transportation to packaging, too.
Kroger said this acquisition is different. In the first four years of combined operations, Kroger said the companies expect to save about $1 billion in annual recurring savings. During the first four years after the close, McMullen said total shareholder returns will be “well above Kroger’s standalone model of 8% to 11% per year.”
Kroger plans to keep paying its quarterly dividend and said it expects to raise its dividend over time, depending on board approval.
McMullen pointed to a few examples of where it can drive higher profits and better margins. One of the biggest opportunities is capturing more shopper data across a wider number of banners, which can be turned into lucrative online ads. The combined company would have reach to about 85 million households across the country.
Many retailers, including Walmart, Target and Kroger, have turned to advertising as an alternative stream of revenue after seeing the success of established online players like Amazon. The business has much higher margins than selling cans of soup or gallons of milk.
A bigger Kroger would also have cheaper manufacturing costs and better bargaining power, too, McMullen said. Together, the companies would become one of the largest consumer packaged goods companies in the country with a combined portfolio of about 34,000 total private label products across price points. Those include organic items and premium products that often retail for less than namebrand national competitors.

What about shoppers?

More personalized coupons, fresher produce and lower prices. Those are some perks that Kroger is promising shoppers, if the deal goes through. McMullen said some savings will go directly toward reduced prices for customers.
Kroger plans to invest about half a billion dollars of its cost savings into lower prices. It also said it will spend an additional $1.3 billion toward improving the customer experience at Albertsons stores. And it plans to spend $1 billion on higher wages and better benefits for store employees after the deal closes.
By having a larger network of stores and more distribution centers, McMullen said it can move fresh items like meat, dairy or produce more quickly to shelves and coolers so it lasts longer in customers’ fridges.
It could also better cater to customers’ online preferences, since having more stores could lead to faster delivery times and more pickup options. Plus, the CEO said, its larger portfolio of private brands mean customers have more budget-friendly choices.
Kroger’s pitch to customers may have come at the right time. This week, shoppers got fresh evidence that bigger grocery bills may linger. Food at home prices were up 13% year over year, as of September, according to the Bureau of Labor Statistics — with everyday items like butter and eggs seeing even steeper jumps.

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Medieval Times filed a suit claiming that its employees’ union is infringing on its trademark.
The company says Medieval Times Performers United and its branding are confusingly similar to the dinner-and-show venue.
Other unions bear the name of their associated corporation, including Starbucks Workers United, as well as the recently formed Home Depot Workers United.

Medieval Times Dinner and Tournament, a family dinner theater featuring staged medieval-style games, sword-fighting, and jousting performed by a cast of 75 actors and 20 horses, held in Lyndhurst, New Jersey
Anadolu Agency | Getty Images

Medieval Times has thrown down the gauntlet.
The restaurant-and-show chain is suing its employees’ New Jersey union for allegedly infringing on its trademark by using the Medieval Times name.

The complaint, filed Thursday in a New Jersey federal court, alleges that possible confusion with the union, Medieval Times Performers United, threatens the “established goodwill” of the dining and jousting venue and creates an inevitable association between the union and the company.
The restaurant also takes issue with the fact that the union claims to be located “at or near the Medieval Times castle” grounds in Lyndhurst, New Jersey, where the performers work. In the filing, the company included about half a dozen photos of its castles, which it says it has owned and operated for nearly 40 years.
The union also represents Medieval Times workers at a location in California. There are several Medieval Times locations throughout North America, including in Florida, Maryland and Toronto, Canada.
Medieval Times, which is privately owned, is seeking an injunction on the infringement and payment from the unionized castle workers for damages, attorney’s fees and unjust profits made under the Medieval Times name. There is no indication that the union has any consumer-facing business.
Medieval Times Performers United is a subset of a national performers union called the American Guild of Variety Artists. Other AGVA members include Disneyland Resort performers, the Rockettes and theater performers both on and off Broadway.

Medieval Times Performers United on Thursday called the complaint a “frivolous lawsuit” and “unlawful thuggery.”
“It is a grotesque attempt to retaliate against workers for exercising their legally protected right to form a union and bargain collectively,” the union said in its statement. “But it will fail.”
Medieval Times did not immediately respond to a request for comment.
Should the lawsuit be successful, it could hold trademark implications for similarly named labor unions, which frequently include the name of the business represented by the employees that are organizing. But Julia Matheson, a partner and trademark expert at Potomac Law Group, sees no basis for a trademark claim.
Organizations such as these unions are entitled to “nominative fair use,” which allows them to use the name as means of identifying the group and its association with the company, Matheson said.
She noted that Medieval Times doesn’t hold a trademark on the castle imagery and red-gold color scheme that is noted in the filing, but said it likely wouldn’t matter even if it did, because potential customers are not at risk of confusing the two organizations.
Trademark “is a consumer protection statute and consumers are not involved,” Matheson said. “If the union were engaged in commercial activities that were trading on the employer, that would be a bit of a different horse.”
Many other unions bear the name of their associated corporation, including Starbucks Workers United, as well as Trader Joe’s United and the recently formed Home Depot Workers United.
“It’s a sensitive topic that most employers don’t want to take on, they don’t want the bad PR,” Matheson, whose firm has previously represented both plaintiffs and defendants in similar claims, told CNBC. “Honestly, given how much difficulty so many organizations are having finding employees these days, it’s very interesting that Medieval Times chose this route.”
Matheson’s firm isn’t involved in the Medieval Times case, but represents Starbucks on some matters.

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Year-end Planning

Series I bonds, an inflation-protected and nearly risk-free investment, may reduce annual rates to roughly 6.48% in November, experts say.
While it’s down from the current 9.62% rate through Oct. 31, it’s still higher than other savings options.

Morsa Images | E+ | Getty Images

Fixed rate for I bonds will ‘most likely be zero’

I bond rates have two parts, a fixed rate, which remains the same after purchase, and a variable rate, which changes every six months based on inflation.
The variable part is the percentage change in inflation over the past six months based on the consumer price index for all urban consumers, known as CPI-U, reported by the U.S. Bureau of Labor Statistics. 

However, there’s no set formula for the fixed rate, which is currently 0%, according to David Enna, founder of Tipswatch.com, a website that tracks I bond rates. 
While he predicts a 50/50 chance of the fixed rate changing, he said many experts believe it won’t be necessary due to existing high demand for I bonds.
“If we get to 0.3% or 0.5% [for the fixed rate], it will be somewhat a surprise,” Enna said. “I think most likely it will be zero.” This chart from the Treasury Department shows the history of both rates since November 2021.

New rate is still higher than other savings products

While 6.48% is lower than the past two I bond rates, it’s still higher than other options for cash, like savings accounts or certificates of deposits, Tumin said. 
Although interest rates are climbing, most banks still aren’t paying more than 4% for a one-year CD, he said. And top high-yield savings accounts are offering even less: 3.5% at most, as of Oct. 14, according to DepositAccounts.com. The national average is 0.20%.

However, you need to know that you can’t access I bond money for at least one year and there’s a three-month penalty if you cash in the funds within five years. There’s also a $10,000 purchase limit for electronic I bonds per calendar year, with a few options to buy more.
Still, if you need the money in the short-term, it may be better to diversify with other options to tap the funds sooner.
“If you’re using it for emergency funds, it’s important to ease into it,” Tumin said. “Slowly ramp up, and don’t put all your eggs in that basket.” More

California regulators this week approved a $140 million desalination plant that could convert up to 5 million gallons of seawater each day into drinking water.
The approval of the plant comes as record temperatures and drought conditions have forced states like California to address a future with dwindling water supplies.
The Doheny Ocean Desalination Project in Orange County, Southern California could be functioning within the next five years and supply water for thousands of people in the South Coast Water District.

California Gov. Gavin Newsom (R) tastes wastewater that was treated at the Antioch Water Treatment Plant with Antioch Mayor Lamar Thorpe (L) on August 11, 2022 in Antioch, California.
Justin Sullivan | Getty Images

California regulators this week approved a $140 million desalination plant that could convert up to 5 million gallons of seawater each day into drinking water, as the state grapples with a persistent megadrought and plummeting water supplies.
The state’s Coastal Commission on Thursday voted 11-0 to approve the Doheny Ocean Desalination Project in Orange County in Southern California. The plant could be functioning within the next five years and supply water for thousands of people in the South Coast Water District.

The approval comes as record temperatures and drought conditions have forced states like California to address a future with dwindling water supplies.
The megadrought gripping the Western U.S. has generated the driest two decades in the region in at least 1,200 years, and scientists say that human-caused climate change has fueled the conditions. Water levels at the two largest reservoirs in the country, Lake Mead and Lake Powell, have hit their lowest levels ever recorded.

More from CNBC Climate:

In August, California Gov. Gavin Newsom unveiled a plan to address an anticipated loss of 10% of the state’s water supply by 2040. California officials earlier this year warned the state could face its third consecutive dry year because of a significant lack of snow this season. And water officials slashed State Water Project allocations from 15% to 5% for urban water consumers and farmers.
State regulators in May unanimously rejected a much larger $1.4 billion desalination plant in Huntington Beach, citing the costs of the water, potential risks to marine life and hazards associated with sea level rise and flooding.
However, officials have argued that the smaller Doheny plant will have an environmental design that better addresses potential damage to marine life. 
There are 12 existing desalination facilities throughout California, according to the state’s Water Resources Control Board, including the Carlsbad desalination project in San Diego County, which is the largest desalination plant in the western hemisphere and produces three million gallons of drinking water each day.

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The NFL still hasn’t picked a winner in its Sunday Ticket negotiations.
Apple’s discussions for the package are complicated by existing restrictions for the package, sources say.
The tech giant wants to partner with sports leagues rather than act as a standard rental conduit for broadcast rights, said Apple executive Eddy Cue.

Kansas City Chiefs quarterback Patrick Mahomes (15) is sacked by Los Angeles Chargers linebacker Drue Tranquill (49) in the first quarter at Arrowhead Stadium on Thursday, Sept. 15, 2022, in Kansas City, Missouri.
Tammy Ljungblad | Tribune News Service | Getty Images

The National Football League season is heading into Week 6, and it’s still unclear which company will become the new owner of Sunday Ticket rights — the only remaining exclusive broadcast package that hasn’t been renewed until 2030.
Apple has been among the favorites to land the package, in part because the league already has broadcast deals in place with rival bidders, including Disney and Amazon. A partnership with Apple would allow the NFL to build a relationship with the deepest-pocketed company in the world.

But existing restrictions around Sunday Ticket have slowed negotiations between Apple and the NFL in recent months, according to people familiar with the matter. Talks between the league and potential buyers of Sunday Ticket are continuing, the people said.
Spokespeople for Apple and the NFL declined to comment.
The NFL and Apple, two of the most powerful corporate entities in the world, are used to getting what they want.
Apple isn’t interested in simply acting as a conduit for broadcasting games, according to Eddy Cue, Apple’s senior vice president of services. Cue oversees Apple’s media and sports partnerships and its streaming service, Apple TV+. Apple is looking for partnerships with sports leagues in which it can offer consumers more than standard rights agreements — such as having free rein to offer games globally or in local markets. Apple has that type of deal with Major League Soccer, a 10-year partnership that begins in 2023.
“We weren’t interested in buying sports rights,” Cue said this week at a Paley Center for Media panel in New York. “There’s all kinds of capabilities that we’re going to be able to do together because we have everything together. And so if I have a great idea, I don’t have to think about, OK, well, my contract or the deal of interest will allow this.”

The iPhone maker is MLS’s exclusive broadcast partner, though some linear networks may buy simulcast rights to the soccer league’s games. The pact allows Apple to stream every game of every season for the next 10 years globally. It plans to build MLS steaming capabilities into its apps, such as Apple News.
While a “great idea” by Cue could potentially manifest into a practical solution quickly with MLS, the same may not be feasible with the NFL, which has been in business with Fox, Paramount Global, Comcast’s NBCUniversal and Disney for decades. The league also sold its “Thursday Night Football” package to Amazon.
The NFL last year renewed broadcast TV agreements with both Fox and CBS until 2030. Those deals guarantee exclusivity of local games. Fox and CBS have devised entire corporate strategies around that exclusivity, including buying local TV stations that line up with NFL markets where they own rights. For example, Fox owns local stations in Atlanta; Charlotte, North Carolina; Chicago; Minneapolis; Philadelphia; Phoenix; San Francisco, Tampa, Florida; and Washington, D.C. — all places with NFC teams, because Fox owns the NFC Sunday package.
Sunday Ticket is also a U.S.-only product. It remains unclear what the NFL is willing to give Apple to enhance a deal beyond what it’s sold to DirecTV for the past 28 years. Still, NFL Commissioner Roger Goodell told CNBC in July part of the benefit of selling to a streamer is to “innovate beyond where we are today.”

Goodell said he plans to choose a new Sunday Ticket home by fall of this year. On that timeline, a winning bidder should be announced in the next 10 weeks. The NFL wants a buyer for Sunday Ticket to pay between $2 billion and $3 billion annually, CNBC has previously reported. That’s a significant increase from the $1.5 billion DirecTV has been paying since 2015. The league is also looking for a company to purchase a minority stake in NFL Media, which includes linear cable networks RedZone and NFL Network, as well as NFL.com. The NFL has been packing the minority stake with Sunday Ticket, though it could decide to sell each separately, Goodell said.
Beyond its MLS partnership, Apple has been laying breadcrumbs that it wants to take a significant plunge into live sports. Apple struck a deal with Major League Baseball to carry exclusive Friday night games this season. And last month, the NFL announced Apple Music as the new partner for the Super Bowl halftime show.
The longer the NFL waits to reach a deal, the less time a new owner of the rights will have to market the product for next season. DirecTV executives have been waiting for nearly two years for a new partner to be announced and have been surprised with how long it’s taken to find one, according to people familiar with the matter. DirecTV has routinely lost money on Sunday Ticket and isn’t participating in this round of bidding, CNBC reported in June.
The satellite provider would be interested in maintaining its commercial agreement to carry games in bars and restaurants or act as a pass-through for the Sunday Ticket winner, where existing DirecTV customers could continue to get the package through its pay-TV service, CNBC reported in June.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
WATCH: Tech analyst Gene Munster on Apple, tech world

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Beyond Meat plans to cut 19% of its workforce, or about 200 employees, the company said Friday in a regulatory filing.
The company also said several top executives were leaving.

Vegetarian sausages from Beyond Meat Inc, the vegan burger maker, are shown for sale at a market in Encinitas, California, June 5, 2019.
Mike Blake | Reuters

Beyond Meat plans to cut 19% of its workforce, or about 200 employees, the company said Friday in a regulatory filing.
The cuts are expected to be completed by the end of the year and are an effort to achieve cash flow positive operations within the second half of 2023.

Shares of the company, already down about 77% so far this year as the company struggles with declining sales, fell in premarket trading Friday. The stock earlier this week notched a 52-week low of $12.76 per share and was last seen trading for about $14.60 per share, dragging the company’s market value to roughly $920 million.
The announcement came as the company also revealed its chief operating officer, Doug Ramsey, left the company weeks after he was arrested for allegedly biting a man’s nose and punching a Subaru in an Arkansas parking garage.
As part of the job cuts, the role of chief growth officer has been eliminated and Deanna Jurgens, who held that role, will leave the company.
The company also said Chief Financial Officer Philip Hardin stepped down from his post earlier this week. Hardin will leave the company after a roughly two-week transition period to pursue another opportunity, according to the filing.
Lubi Kutua, previously Beyond Meat’s vice president for financial planning and analysis as well as investor relations, assumed the top financial role on Thursday.

Beyond Meat did not immediately return a request for comment on the changes.
In August, the company announced it was trimming its workforce by 4%.

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