Finance

Nvidia shares surged to a record high Thursday after the company beat earnings and revenue estimates for the fiscal first quarter.
The chipmaker also announced a 10-for-1 stock split on Wednesday in its report.
Wall Street analysts have since grown more bullish following the results.

Nvidia CEO Jensen Huang delivers a keynote address during the Nvidia GTC Artificial Intelligence Conference at SAP Center on March 18, 2024 in San Jose, California. 
Justin Sullivan | Getty Images

Nvidia shares jumped more than 9% on Thursday after the company on Wednesday reported earnings that topped Wall Street estimates and showed that there’s still ferocious demand for its artificial intelligence chips. The company’s data center revenue grew by a whopping 427% during the quarter.
Shares closed above $1,000 for the first time, reaching a high of $1,037.99. Its previous high of $953.86 was set on May 21.

First-quarter revenue came in higher than expected at $26.04 billion compared with the LSEG estimate of $24.65 billion. And the demand isn’t wavering.
The company issued strong guidance, saying it expects $28 billion in revenue for the current quarter, beating the LSEG estimate of $26.61 billion.
Despite some analysts fearing an “air pocket,” others have grown even more bullish on the company since its results. Bernstein’s Stacy Rasgon increased the firm’s price target to $1,300, writing in a note to investors that the narrative surrounding the company is “clearly nowhere near its end, or likely nowhere near its peak.” He wrote that shares seem inexpensive.
Jefferies raised its target on the stock to $1,350 due to a strong ramp for its new AI graphics processors called Blackwell and anticipation of an acceleration in “magnitude of beats” later this year when the platform launches.
Nvidia posted net income of $14.88 billion, or $5.98 per share, a dramatic pop from the $2.04 billion, or 82 cents per share, it reported in the year-ago quarter.
Nvidia on Wednesday announced a 10-for-1 stock split, with shares set to begin trading on a split-adjusted basis at market open on June 10. More

Norfolk Southern has agreed to pay $310 million to settle charges over the East Palestine, Ohio, train derailment that occurred in February 2023, with the majority of that going to cleanup costs.
The company will pay a $15 million fine for alleged violations of the Clean Water Act as part of the federal settlement.
Norfolk Southern is estimating it will spend $1.7 billion in total costs associated with the incident.

Officials continue to conduct operation and inspect the area after the train derailment in East Palestine, Ohio, United States on February 17, 2023. 
EPA | Anadolu | Getty Images

Norfolk Southern has agreed to pay $310 million to settle charges over a toxic train derailment in East Palestine, Ohio, in February 2023, the company announced on Thursday.
The majority of the settlement is an estimated $235 million to cover all past and future cleanup costs. Per the agreement, the company will also pay a $15 million civil penalty to resolve alleged violations of the Clean Water Act.

The agreement resolves a lawsuit filed in March 2023 by the EPA and the U.S. Department of Justice against Norfolk Southern for allegedly violating the Clean Water Act after the derailment of a freight train carrying hazardous substances ignited a dayslong fire that forced local residents to evacuate and contaminated the soil and waterways.
“We are pleased we were able to reach a timely resolution of these investigations that recognizes our comprehensive response to the community’s needs and our mission to be the gold standard of safety in the rail industry,” Alan Shaw, president and CEO of Norfolk Southern, said in a statement. “We will continue keeping our promises and are invested in the community’s future for the long-haul.”

Smoke rises from a derailed cargo train in East Palestine, Ohio, on February 4, 2023.
Dustin Franz | Afp | Getty Images

The settlement, if approved by the U.S. District Court for the Northern District of Ohio, would require Norfolk Southern to not only “take measures to improve rail safety” but also “pay for health monitoring and mental health services for the surrounding communities,” among other actions, the EPA said Thursday. That includes paying an estimated $7 million for remediation projects to curb pre-existing pollution and boost the region’s water quality.
“No community should have to experience the trauma inflicted upon the residents of East Palestine,” said EPA Administrator Michael Regan in a statement. “Today’s enforcement action delivers on this commitment, ensures the cleanup is paid for by the company, and helps prevent another disaster like this from happening again.”

US President Joe Biden receives an operational briefing from officials on the continuing response and recovery efforts at the site of a train derailment which spilled hazardous chemicals a year ago in East Palestine, Ohio on February 16, 2024. 
Mandel Ngan | Afp | Getty Images

Norfolk Southern is estimated to have spent approximately $1.7 billion in total costs associated with the incident. The company said Thursday’s settlement won’t add to that total figure because it had already set aside money and had been anticipating the cost.

The entire cleanup effort is currently anticipated to conclude on or around November 2024, but that “may change,” according to EPA spokesman Remmington Belford.
The resolution with the EPA comes one month after the company agreed to pay $600 million in a class-action lawsuit settlement related to the 2023 derailment. More

If current forecasts are accurate, 2064 will be the first year in centuries when fewer babies are born than people die. Birth rates in India will fall to below the level seen in America last year. Even with immigration and successful pro-natal policies, America’s population will only have a little bit of growth left. By 2100 there will be many fewer migrants left to attract. The world’s fertility rate will hit 1.7. Just two Pacific islands and four African countries will manage to reproduce above replacement level.Sooner or later, therefore, every big economy will collide with a demographic wall. The bill from pensions and hospitals will pile on fiscal pressure. Sapped of workers and ideas, economic growth could collapse while public debt balloons. Just how catastrophic the situation becomes depends on whether policymakers maintain budgetary discipline, withstand pressure from angry older voters and, crucially, are willing to inflict pain on populations now in order to save future generations from more later on. More

As one of the leaders of the passive-investing revolution, BlackRock is usually a disruptive force in the financial world. But the asset-management giant’s battle with Saba Capital, an activist fund, has cast it in an unfamiliar role: as besieged incumbent. Ten of BlackRock’s investment vehicles, known as closed-end funds, are in Saba’s sights.The funds—worth nearly $10bn based on current share prices—run at a steep discount to the value of the assets in their portfolios. Like publicly listed firms, closed-end funds sell shares in an initial public offering and trade on secondary markets. Since they do not offer new shares to incoming investors, as mutual and exchange-traded funds do, their share prices are able to drift far from the value of their assets. Boaz Weinstein, Saba’s founder, wants BlackRock’s funds to offer to buy back shares from investors, pointing to a history of poor returns. He argues that if investors could exit at the full value of their assets, some $1.4bn in value would be unlocked. Saba is also promoting a slate of nominees to the funds’ boards at shareholder meetings scheduled across the second half of June. These representatives will, it says, negotiate for lower fees. More

At last, it seemed time for a manufacturing take-off. Having struggled to compete with China’s industrial might, other emerging markets stood ready to benefit as their rival’s labour costs surged and rising tensions between it and the West pushed firms to look for new factory locations. Last year foreign direct investment into China fell to a 30-year low.But China has started to fight back. To reverse an economic slowdown and cement its control over global supply chains, its leaders have launched an investment spree in high-tech goods, such as batteries, electric vehicles and other green devices. Weak domestic demand for traditional products, such as cars, chemicals and steel, mean they are also flooding global markets. The average price of Chinese manufactured exports fell by nearly 10% from 2022 to 2023. China’s export volumes have surged to near-record levels. More

Three decades ago much of the housing in China’s cities belonged to state-owned enterprises, which provided homes to workers at low rents. A lot has changed since then. China is now blessed, if that is the right word, with a sprawling commercial property market, which has produced vast numbers of flats and equal amounts of drama. Since the height of the last boom in 2020, sales have dropped by more than half. To try to put a floor under the market, China’s government has turned to a new, old solution. It wants state-owned enterprises to step in to buy unsold property and turn it into affordable housing.The policy was announced on May 17th after an unusual video conference by He Lifeng, China’s economic tsar. The country’s central bank will offer cheap loans worth up to 300bn yuan ($42bn) to 21 banks, which will in turn lend to eligible enterprises owned by city governments. These firms will use the money to buy finished but unsold flats from property developers, including private-sector ones. The flats can then be either sold or rented at below-market rates to low-income buyers. More

Roundhill Investments wants to mimic the success of its Magnificent Seven ETF (MAGS) in China.
The firm’s CEO Dave Mazza plans to launch the Lucky Eight ETF, which aims to be China’s answer to the success of Wall Street’s big tech stocks.

“There’s a lot of question marks about the Chinese economy and the potential for growth of the consumer in China,” Mazza told CNBC’s “ETF Edge” on Monday. “But at the end of the day, we believe that investors are looking for exposures that give them precision, just like we found with MAGS.”
Trading under the ticker “LCKY,” the Lucky Eight ETF will include equal-weighted exposure to Tencent Holdings, Alibaba, Meituan, BYD, Xiaomi, PDD Holdings, JD.com and Baidu at launch. According to Roundhill’s SEC filing on May 17, these names were chosen due to their “market dominance in technological innovation.”
“Particularly if they’re coming out of an economic slowdown, that could be an opportunity for investors to step into China and do so in just really the names that matter,” Mazza said. 
While existing exchange-traded funds such as the KraneShares CSI China Internet ETF offer broad exposure to Chinese tech, Mazza hopes to give investors the option to focus on just a few key names in the space.
“I firmly believe in broad based diversification for big parts of a portfolio,” Mazza said. “But if you just want those names, it’s hard to get with some traditional Chinese ETFs. And this is going to do that.”

Pending SEC approval, the Lucky Eight ETF is set to launch this summer.
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A dispute between a fintech startup and its banking partners has ensnared potentially millions of Americans, leaving them without access to their money for nearly two weeks, according to recent court documents.
Synapse serves as a middle man between customer-facing fintech brands and FDIC-backed banks, but it has had disagreements with several of its partners about how much in customer balances it owed.
The situation left users of several fintech services stranded with no access to their funds, according to testimonials filed this week in a California bankruptcy court.

Sarinyapinngam | Istock | Getty Images

A dispute between a fintech startup and its banking partners has ensnared potentially millions of Americans, leaving them without access to their money for nearly two weeks, according to recent court documents.
Since last year, Synapse, an Andreessen Horowitz-backed startup that serves as a middle man between customer-facing fintech brands and FDIC-backed banks, has had disagreements with several of its partners about how much in customer balances it owed.

The situation deteriorated in April after Synapse declared bankruptcy following the exodus of several key partners. On May 11, Synapse cut off access to a technology system that enabled lenders, including Evolve Bank & Trust, to process transactions and account information, according to the filings.
That has left users of several fintech services stranded with no access to their funds, according to testimonials filed this week in a California bankruptcy court.
One customer, a Maryland teacher named Chris Buckler, said in a May 21 filing that his funds at crypto app Juno were locked because of the Synapse bankruptcy.
“I am increasingly desperate and don’t know where to turn,” Buckler wrote. “I have nearly $38,000 tied up as a result of the halting of transaction processing. This money took years to save up.”

10 million ‘end users’

Until recently, Synapse, which calls itself the biggest “banking as a service” provider, helped a wide swath of the U.S. fintech universe provide services such as checking accounts and debit cards. Former partners included Mercury, Dave and Juno, well-known fintech firms that catered to segments including startups, gig workers and crypto users.

Synapse had contracts with 20 banks and 100 fintech companies, resulting in about 10 million end users, according to an April filing from founder and CEO Sankaet Pathak.
Pathak did not immediately respond to an email from CNBC seeking comment. A spokesman for Evolve Bank & Trust declined to comment, instead pointing to a statement on the bank’s website that read, in part: “Synapse’s abrupt shutdown of essential systems without notice and failure to provide necessary records needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law.”
It is unclear why Synapse switched the system off, and an explanation could not be found in filings.

‘We are scared’

Another customer, Joseph Dominguez of Sacramento, California, told the bankruptcy court on May 20 that he had more than $20,000 held up in his Yotta fintech account.
“We are scared that money will be lost if Synapse can not provide ledgers and documents to Evolve or Yotta to prove we are the legitimate owners,” Dominguez wrote. “We don’t know where our direct deposit has gone, we don’t know where our pending withdrawals are currently held.”
The freeze-up of customer funds exposes the vulnerabilities in the banking as a service, or BAAS, partnership model and a possible blind spot for regulatory oversight.
The BAAS model, used most notably by the pre-IPO fintech firm Chime, allows Silicon Valley-style startups to tap the abilities of small FDIC-backed banks. Together, the ecosystem helped these companies compete against the giants of American banking.

Regulators stay away

Customers mistakenly believed that because funds are ultimately held at real banks, they were as safe and available as any other FDIC-insured accounts, said Jason Mikula, a consultant and newsletter writer who has tracked this case closely.
“This is 10 million-plus people who can’t pay their mortgages, can’t buy their groceries. … This is another order of disaster,” Mikula said.
Regulators have yet to take a role in the dispute, partly because the underlying banks involved have not failed, the point at which the FDIC would usually intervene to make customers whole, Mikula added.
The FDIC and Federal Reserve did not immediately respond to CNBC’s calls seeking comment.

A warning

In pleading with the judge in this case, Martin Barash, to help the affected customers, Buckler noted in his testimonial that while he had other resources besides the locked account, others are not as lucky.
“So far the federal government is not willing to help us,” Buckler wrote. “As you heard, there are millions affected who are in far worse straits.”
Reached by phone on Wednesday, Buckler said he had one message for Americans: “I want to make people aware, yeah, your money might be safe at the bank, but it is not safe if the fintech or the processor fails,” he said. “If this is another FTX, if they were doing funny business with my money, then what?”

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