Finance

A new ETF designed to shield investors from the risk of market volatility starts trading on Wednesday. 
The Calamos S&P 500 Structured Alt Protection ETF (CPSM) promises to deliver investors “100% downside protection” against the index’s losses over a one-year outcome period, according the firm’s news release.

Calamos’ head of ETFs Matt Kaufman helped build the new product.
“There’s no tricks. There’s no magic,” he told CNBC’s “ETF Edge” on Monday. “This is the secret sauce.”
Kaufman explained the new ETF enters into three options positions. Investors in the fund are subject to limits on the extent to which they can capture gains tied to the S&P 500.
“They all work together. It’s a fully funded options package that delivers the upside of the S&P 500 to a cap with 100% capital protection over a 365-day outcome period,” he said. “Then at the end of that year, the options reset, stay in the ETF and keep on going.”
The fund will have an annual expense ratio of 0.69%.

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In order to receive the full downside protection against losses in the S&P 500 that the fund promises, Kaufman noted investors must buy it Wednesday when it hits the market.
“If you buy in on day one, you get that 100% protection,” he said. “[But] even day two [or] day three, there’s probably opportunities to buy in all along the way.”

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The fund is just one of a suite of 12 structured protection ETFs the firm plans to launch over the course of the next year. Upcoming funds include those aiming to protect against losses tied to the Nasdaq 100 and Russell 2000 benchmarks. 
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An Amazon worker walks past his Amazon Prime delivery truck in Washington, DC, on February 19, 2022.
Stefani Reynolds | Afp | Getty Images

Check out the companies making headlines in extended trading.
Amazon — Shares gained nearly 2% after the company beat on both top and bottom lines. Amazon posted earnings of 98 cents per share on $143.31 billion in revenue. Analysts surveyed by LSEG had forecast earnings of 83 cents per share on $142.5 billion in revenue. The advertising and Amazon Web Services segments also topped expectations. However, the company’s second-quarter revenue forecast was shy of estimates. 

Starbucks — Shares slipped almost 10% in extended trading after the coffee chain missed fiscal second-quarter estimates on the top and bottom line. Starbucks earned 68 cents per share on revenue of $8.56 billion, and missed the forecast from analysts polled by LSEG of 79 cents per share for earnings and $9.13 billion for revenue.
Advanced Micro Devices – The chip company fell more than 7% after its gaming segment revenue for the first quarter came in at $922 million, down 48% on a year-over-year basis. Total revenue was slightly ahead of the Street’s expectations at $5.47 billion, versus the consensus estimate of $5.46 billion, per LSEG. It forecast revenue for the current quarter in line with the analyst forecast of $5.70 billion.
Pinterest — Shares surged nearly 19% following an earnings and revenue beat in the first quarter. Pinterest reported adjusted earnings of 20 cents per share, topping forecasts for 13 cents per share, according to LSEG. Revenue growth also accelerated in the quarter.
Super Micro Computer — Shares dropped nearly 8% after Super Micro Computer posted fiscal third-quarter revenue of $3.85 billion, missing the $3.95 billion consensus estimate, according to LSEG. Adjusted per-share earnings of $6.65 topped the per-share estimate of $5.78. The company also issued strong fourth-quarter revenue guidance.
Chesapeake Energy — Shares were little changed after the natural gas producer posted disappointing earnings of 56 cents per share, excluding items. The results missed the FactSet consensus estimate of 59 cents per share.

Caesars Entertainment — The casino stock lost about 3% on disappointing first-quarter results. Caesars posted a wider-than-expected loss of 73 cents per share, while analysts had estimated losses of 7 cents per share, per LSEG data. Revenue also missed forecasts, coming in at $2.74 billion versus consensus estimates of $2.84 billion. 
Mondelez International — The snack company’s shares slipped more than 1% despite announcing better-than-expected first-quarter results. Mondelez posted adjusted earnings of 95 cents per share on $9.29 billion in revenue. Analysts’ estimates called for earnings of 89 cents per share and $9.16 billion in revenue, according to LSEG data. However, management said it expects currency translation to reduce net revenue growth by around 1.5% this year. 
Diamondback Energy – The oil and gas company posted earnings of $4.50 per share, excluding items, that beat analysts’ estimates by 4 cents per share, according to FactSet, for the first quarter. Revenue came in at $2.23 billion, beating expectations of $2.10 billion. The shares fell 1% after hours. 
Clorox — The consumer goods company slipped 3%. Revenue in the fiscal third quarter came in at $1.81 billion, missing estimates of $1.87 billion, according to LSEG.
— CNBC’s Sarah Min, Brian Evans, Alex Harring, Darla Mercado and Tanaya Macheel contributed reporting More

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 29, 2024. 
Brendan Mcdermid | Reuters

The volatility in the bond market has had equity investors on their toes for months, but at what point will rising yields spoil stocks’ 2024 rally?
The answer is 5% on the 10-year Treasury yield, according to Goldman Sachs. In a new 19-page paper using market data since the 1980s, the Wall Street firm said when that threshold is reached, the correlation between bond yields and stocks turns negative.

“While there is no ‘magic number’, historically bond yields at around 5% is when higher yields become a clear problem for equities — that is the point where the correlation with bond yields is no longer decisively positive,” wrote a team of Goldman strategists led by Peter Oppenheimer, chief global equity strategist.
The benchmark 10-year yield jumped 5 basis points Tuesday to 4.67% after data showed employee compensation costs increased more than expected to start the year. It marked yet another danger sign about persistent inflation, which the market thinks will keep the Federal Reserve on hold until later this year before it starts to consider cutting rates. A basis point equals one-hundredth of a percentage point.

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Goldman said investors are currently in the “optimism phase” of the cycle, where confidence — and complacency — grow, pushing valuations higher.
“Equity valuations are higher and the cycle is more mature so equity markets are very sensitive to moves in bond yields,” Goldman said. “They underperform with yields moving higher around news of overheating and higher inflation, while they outperform when the market prices Central Banks to cut interest rates.”
The 10-year Treasury yield, a key barometer for mortgage rates, auto loans and credit cards, has risen almost 80 basis points this year as the market adjusts to a higher-for-longer rate regime. The current rate on the Federal Reserve’s fed funds for overnight lending is 5.25%-5.50%.

After starting the year forecasting at least six reductions in interest rates, the market is now pricing in a 75% chance of just one rate cut, according to the CME Group’s widely followed FedWatch tracker that derives its probabilities from where 30-day fed funds futures are trading. The central bank’s rate-setting Federal Open Market Committee began its two-day meeting Tuesday.
Billionaire investor Warren Buffett has long stressed the impact of interest rates on all investments, saying higher rates exert a huge gravitational pull on asset values, lowering the present value of any future earnings.
Rising yields dent the appeal of risk assets as shorter-dated Treasury bills and longer-dated Treasury notes offer solid yields and a risk-free alternative to stocks.
— CNBC’s Michael Bloom contributed reporting.

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The rich world is in the midst of an unprecedented migration boom. Last year 3.3m more people moved to America than left, almost four times typical levels in the 2010s. Canada took in 1.9m immigrants. Britain welcomed 1.2m people and Australia 740,000. In each country the number was greater than ever before. For Australia and Canada net migration is more than double pre-covid levels. In Britain the intake is 3.5 times that of 2019.Chart: The Economist More

Revenue came in at $20.8 billion, up 3% from the same period a year ago and compared with the median LSEG forecast for about $16.94 billion.
Pretax profit in the January to March period came in at $12.65 billion, falling about 2% from a year ago when profit before tax came in at $12.89 billion.
HSBC has approved a first interim dividend of 10 cents per share, as well as a special dividend of 21 cents per share.

The HSBC Holding logo is being displayed on a smartphone with HSBC visible in the background in this photo illustration taken in Brussels, Belgium, on February 20, 2024. 
Jonathan Raa | Nurphoto | Getty Images

HSBC beat market expectations in its first quarter earnings report on Tuesday, and announced the surprise departure of Group Chief Executive Officer Noel Quinn.
Revenue came in at $20.8 billion, up 3% from the same period a year ago and compared with the median LSEG forecast for about $16.94 billion.

Pretax profit in the January to March period came in at $12.65 billion, falling about 2% from a year ago when profit before tax came in at $12.89 billion. Still, that figure beat the $12.61 billion estimates by analysts’ forecasts compiled by the bank.
Profit after tax income decreased to $10.84 billion — lower than the $11.03 billion seen in the first quarter of 2023.
HSBC, Europe’s largest bank by assets, has approved a first interim dividend of 10 cents per share, as well as a special dividend of 21 cents per share, following the completion of the sale of its banking business in Canada.

Noel Quinn to retire

The company also announced the retirement of Quinn, who has been in that position for nearly five years.
“The Board would like to pay tribute to Noel’s leadership of the Company. Noel has had a long and distinguished 37-year career at the Bank and we are very grateful for his significant contribution to the Group over many years,” said Group Chairman Mark Tucker.

“During his tenure, HSBC has delivered record profits and the strongest returns in over a decade,” said Aileen Taylor, group company secretary and chief governance officer in HSBC.
Quinn will remain as Group CEO as the bank begins the process of searching for his successor. HSBC said he has agreed to remain available through to the end of his 12-month notice period — which ends on April 30, 2025 — to support the transition.
Here are the other highlights of the bank’s first quarter financial report card:

Net interest margin, a measure of lending profitability, decreased to 1.63% — compared with 1.69% a year ago.
Common equity tier 1 ratio — which measures the bank’s capital in relation to its assets — was 15.2%, compared with 14.8% in the fourth quarter of 2023.
Basic earnings per share came in at $0.54, slightly higher than $0.52 in the same period a year ago.

Outlook

HSBC also reiterated its outlook for 2024, saying it remains unchanged from the guidance in February.
The bank continues to target a return on average tangible equity “in the mid-teens” for 2024, with banking net interest income of at least $41 billion, subject to global interest rate conditions.
HSBC said its CET1 capital ratio is expected to be within its medium-term target range of 14% to 14.5%, while its dividend payout ratio is targeted to be 50% for 2024, excluding material notable items and related impacts.
Following the results, shares of HSBC in Hong Kong gained 1.56%, on pace for its seventh straight day of gains.

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Correction: This story has been updated to accurately reflect that HSBC’s first quarter revenue for 2024 was 3% higher than a year ago. That figure was misstated due to an editing error. More

The yen is on a wild ride. In early trading, as Asian markets opened on April 29th, the currency plummeted to a 34-year low of 160 to the dollar, adding to its hefty fall against the greenback over the past three years (see chart). In the afternoon, the decline reversed sharply. The yen rose by more than 2%, ending the trading day in Asia back at 155 to the dollar.Chart: The EconomistIts reversal prompted rumours of intervention by the Bank of Japan (BOJ), acting on behalf of the finance ministry. Officials declined to comment, but said the yen’s volatility was excessive. Data on interventions are released with a delay. The last time officials acted to prop up the currency, in 2022, they burned through over $60bn in foreign-exchange reserves.There is little relief in sight. With inflation in America still above the Federal Reserve’s target of 2%, interest-rate cuts are no longer expected imminently, which has caused the dollar to strengthen. The comparison with Japan, where rates remain ultra-low, is stark. Although the BOJ in effect ended its policy of yield-curve control and raised its benchmark rate from between minus 0.1% and zero to between zero and 0.1% in March, the shift is small in an international context. American, British and euro-zone benchmark interest rates have each risen by at least 4.5 percentage points since 2022. Investing in assets outside Japan simply provides higher returns.Other factors reinforce the yen’s weakness. Japan is the world’s largest creditor, with a huge stock of investments overseas that are generated by the savings of thrifty corporations and households. Returns from investments abroad surged to ¥57trn ($400bn) in the year to February—more than double the amount a decade ago. Yet the firms involved do not seem to repatriate much foreign profit. Instead, as Karakama Daisuke of Mizuho Bank has noted, they reinvest overseas in assets that produce better returns, reducing demand for yen. Mr Karakama even suggests that Japan’s current account may not actually have been in surplus, as official statistics suggest, in 2022 and 2023.What does a weaker yen mean for Japan’s economy? The price of imported goods has climbed by an eye-watering 64% since 2020. Japan imports almost all its fuel, so businesses and households face higher energy costs. And the impact on exporters is less positive than it once would have been. A falling yen may make goods produced by domestic firms cheaper, but today Japanese companies have big operations in Europe, North America and South-East Asia. The greatest upside may now be for the tourist industry, as the slumping yen makes holidaying in the country cheaper. In February 2.8m travellers arrived, up by 89% from the same month last year and 7% from the same month in 2019, before covid-19.A weak yen is unpopular with Japanese consumers, who suffer higher prices, and thus with politicians, too. The country’s central bankers also fret when the currency moves rapidly, and are loth to give speculators influence over monetary policy. Yet they lack good options. To keep the yen from weakening further in the short term, analysts at Bank of America reckon that they would probably have to make even bigger interventions than in 2022. Neither the huge gap between Japanese interest rates and those in the rest of the world nor the behaviour of Japanese companies is set to change soon. BOJ officials have stressed the interest-rate rise in March is not intended to be the first of many. As a result, the future is one of further yen weakness, or of enormous spending to prevent it. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Local Chinese authorities have removed restrictions on Tesla cars after the company’s China-made vehicles passed the country’s data security requirements, the automaker said Sunday.
The breakthrough came as Tesla CEO Elon Musk arrived in Beijing for an unexpected meeting with Chinese Premier Li Qiang, amid the first major auto show in the city in four years.
Musk’s visit to China on Sunday also raised expectations that Tesla’s driver-assist software “Full Self Driving” would soon be available in the country.

BEIJING — Local Chinese authorities have removed restrictions on Tesla cars after the company’s China-made vehicles passed the country’s data security requirements, the automaker said Sunday.
The breakthrough came as Tesla CEO Elon Musk arrived in Beijing for an unexpected meeting with Chinese Premier Li Qiang, amid the first major auto show in the city in four years.

Although Tesla’s electric cars are some of the most popular vehicles in China, they have reportedly been banned from some government-related properties due to concerns about what data the U.S.-based automaker can collect.
Tesla’s press release did not specify which local authorities had removed restrictions on the cars. The Biden administration earlier this year announced a probe into whether imported cars from China pose national security risks due to their ability to potentially collect data about the U.S. and send it back to China.
Tesla’s vehicles were not the only ones that passed the data security rules.
In addition to Tesla’s Model 3 and Model Y, several new energy vehicles from BYD, Lotus, Nezha, Li Auto and Nio passed China’s data security requirements, the China Association of Automobile Manufacturers and the National Computer Network Emergency Response Technical Team/Coordination Center of China said Sunday.

The new data security requirements for “connected vehicles” were released in November and cover cars released in 2022 and 2023 which automakers voluntarily submit for inspection, the center said.

The rules test for whether the cars anonymize facial recognition data outside the vehicle, default to not collecting cockpit data, process that data inside the car and prominently notify users of personal information processing. Tesla was included in the first batch of automakers that met the data compliance requirements.
Tesla said in its press release that it localized data storage in 2021 at its Shanghai data center, and passed the ISO 27001 international standard for information security after a review by third-party auditors.
Musk’s visit to China on Sunday also raised expectations that Tesla’s driver-assist software Full Self Driving would soon be available in the country.
However, JL Warren Capital CEO and Head of Research Junheng Li said on X that the rollout of a “supervised” version of FSD in China is “extremely unlikely.”
She pointed to challenges for Tesla to support local operation of the software as a foreign entity in China. Li said there’s “no strategic value” for Beijing to support FSD’s domestic rollout when there are many high-quality local alternatives, such as Xpeng’s driver-assist software.
Premier Li visited Xpeng and other companies at the Beijing auto show on Sunday, and called for innovation and demand to drive production, according to state media.
Tesla is not exhibiting at this year’s auto show, as has been the case since a protester stood on one of its cars during the auto show in Shanghai in 2021. The show alternates between Beijing and Shanghai on an annual basis, and wasn’t held in 2022 due to the Covid-19 pandemic. More

ARK Invest’s chief futurist lists five groups that should give tech investors an edge.
According to Brett Winton, robotics, artificial intelligence, multi-omics sequencing, public blockchain and energy storage are key areas because they’re all entering the marketplace at the same time.

“We believe that this is a unique time in technological economic history,” he told CNBC’s “ETF Edge” this week.
Winton collaborates with ARK Invest CEO Cathie Wood to maintain the ARK Venture Fund (ARKVX), which allows investors to buy into the private technology space.
According to the firm’s website, the goal of the fund is to make venture capital offerings of innovative spaces in the market accessible to individual investors. As of April 10, it shows the fund’s top holdings include Epic Games, known for online video game Fortnite, and biotech companies Freenome and Relation Therapeutics.
“Our emphasis is that we are investing in innovation over the long term and going to support management teams,” said Winton.
He contends it’s a strategy that’s often not prioritized.

“That’s a real challenge a lot of public market investors don’t have that long-term view,” Winton added.
The ARK Venture Fund is down more than 7% so far this year. However, it’s up almost 39% percent over the past 52-weeks.

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