Finance

Chinese electric car company Xpeng saw its shares soar after reporting an improvement in profit margin and an upbeat outlook for second-quarter deliveries.
Xpeng reported that vehicle margin rose 5.5% in the first three months of the year, from a negative 2.5% in the prior quarter. Vehicle margin is a measure of profitability.
The company forecast deliveries of 29,000 to 32,000 cars in the second quarter, a year-on-year increase of at least 25%.

The Xpeng X9 electric MPV on display at the Beijing auto show on April 25, 2024.
CNBC | Evelyn Cheng

BEIJING — Chinese electric car company Xpeng saw its shares soar after reporting an improvement in profit margin and an upbeat outlook for second-quarter deliveries.
The company’s Hong Kong-listed shares rose more than 13% in morning trade Wednesday. U.S.-listed shares had climbed by nearly 6% in U.S. trade Tuesday after reporting first quarter results.

Xpeng reported that vehicle margin rose 5.5% in the first three months of the year, from a negative 2.5% in the prior quarter. Vehicle margin is a measure of profitability — the higher the margin, the greater the profit the company is making on its car sales.
The company forecast deliveries of 29,000 to 32,000 cars in the second quarter, a year-on-year increase of at least 25%.
Xpeng delivered 21,821 cars in the first quarter of the year, and 9, 393 cars in April.

Following the earnings release, Nomura analysts said in a note Wednesday they are reviewing their estimates for Xpeng.
“Overall, we see XPENG forging ahead with its business plans, and believe that it may enjoy some development ahead,” the report said.

“Meanwhile, considering the intensifying competition in the overall market, that renders smaller players more vulnerable, we remain slightly cautious and suggest investors to closely monitor the new model to be launched under the MONA brand next month,” the Nomura analysts said.

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Similar to other companies looking to stay competitive in China’s electric car market, Xpeng is expanding its product lineup with a lower-cost vehicle brand called Mona.
The first Mona car — an electric sedan below 200,000 yuan ($27,890) — is set for release in June and scheduled to begin mass deliveries in the third quarter, according to the company.
Xpeng attributed several hundred million yuan in services revenue to its partnership with German automaker Volkswagen. The services segment overall surged by 93.1% year-on-year to 1 billion yuan in the first quarter.
The Chinese company said that in the first half of this year it is establishing partnerships with auto dealership groups in Western Europe, Southeast Asia, the Middle East and Australia to open new stores. In all, Xpeng said it plans to expand its sales network to more than 20 countries. That’s according to a first quarter earnings call transcript from FactSet. More

Three decades ago, when women now entering their 40s became fertile, East Asian governments had reason to celebrate. If a South Korean woman behaved in the same way as her older compatriots, she would emerge from her childbearing years with 1.7 offspring on average, down from 4.5 in 1970. Across the region, policymakers had brought down teenage pregnancies dramatically. The drop in birth rates, which occured over the span of a single generation, was a stunning success. That was until it carried on. And on.A South Korean woman who is now becoming fertile will have on average just 0.7 children over her childbearing years if she follows the example of her older peers. Since 2006 the country’s government has spent $270bn, or just over 1% of GDP a year, on babymaking incentives such as tax breaks for parents, maternity care and even state-sponsored dating. Officials would love even just a few of the “missing” births back. More

Many renters and homeowners can opt to get their electricity from renewable energy sources, such as solar and wind.
Such customers can choose a green energy program offered through their electric utility.
Consumers should select a green power option or renewable energy certificate that has been verified by an independent third party.

Wind turbines in Dawson, Texas, on Feb. 28, 2023. 
Mark Felix | Afp | Getty Images

As carbon emissions from fossil fuels keep warming the planet, eco-conscious consumers may wonder if there’s a way to buy electricity from renewable sources without installing technology like solar panels or windmills on their property.
In short, the answer is yes.

However, the option isn’t necessarily available to all homeowners and renters. It also often comes with a slight price premium, experts said.

Few people are aware they can buy green energy

Renewable energy sources — including wind, solar, hydropower, geothermal and biomass — accounted for about 21% of U.S. electricity generation in 2023, according to the U.S. Energy Information Administration.
Most, or 60%, of energy sources came from fossil fuels like coal, natural gas and oil. These energy sources release carbon dioxide, a greenhouse gas that traps heat in the atmosphere and contributes to global warming.
The White House aims for electricity generation to be free of greenhouse gas emissions by 2035.

A growing number of individuals and organizations are opting to shift away from fossil fuels: About 9.6 million customers bought 273 Terawatt hours of renewable energy through voluntary green power markets in 2022, according to the National Renewable Energy Laboratory. That’s up fivefold from 54 TWh in 2012.

In the voluntary market, customers buy renewable energy in amounts that exceed states’ minimum requirements from utility companies. Over half of all U.S. states have policies to raise the share of electricity sourced from renewables, though most targets are years away.
Voluntary purchases accounted for 28% of the renewable energy market, excluding hydropower, as of 2016, according to the Environmental Protection Agency. They help increase overall demand for renewable electricity, thereby driving change in the energy mix, the EPA said.

Photovoltaic solar panels at the Roadrunner solar plant near McCamey, Texas, on Nov. 10, 2023. 
Jordan Vonderhaar/Bloomberg via Getty Images

The bulk of the increase is from corporations, according to NREL estimates. Residential sales have grown, too, but more slowly.
Just one in six U.S. adults know that they may have the option to buy renewable power, either from their electric company or another provider, according to the most recent NREL survey data on the topic, published in 2011.
“The market does continue to grow every year in terms of sales and customers,” said Jenny Sumner, group manager of modeling and analysis at the NREL.
“But very few people are aware” that they can opt into green programs, she said. “It’s just not something that’s top of mind for most people.”

How consumers can buy green power

Joe Raedle | Getty Images News | Getty Images

Wind turbines in Solano County, California, on Aug. 28, 2023.
Loren Elliott/Bloomberg via Getty Images

Power companies may offer what’s known as green pricing programs.
Customers in these programs, also known as utility green power programs, pay their utility a “small premium” to get electricity from renewable sources, according to the U.S. Energy Department.
The cost generally exceeds that of a utility’s standard electricity service by about 1 to 2 cents per kilowatt hour, Sumner said.
That may roughly translate to about $5 to $15 more per month, Sumner said. It will ultimately depend on factors like program price and household energy use, she added.
Nearly half of Americans, 47%, said they were willing to pay more to get their electricity from 100% renewable sources, according to a 2019 poll by Yale University’s Program on Climate Change Communication. On average, they said they would be willing to pay $33.72 more per month.
Green power marketing programs
Consumers in some states can also opt into green power marketing programs.
Such states have “competitive” energy markets, meaning consumers can choose from among many different companies to generate their power. But unlike green pricing programs, the company generating the renewable power may not be the customer’s utility, which distributes the power.

According to the U.S. Energy Department and the EPA, residential green power options are available in these states with competitive or deregulated markets: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Virginia.
These also tend to come with a premium, though in some regions they “may be price competitive with default electricity options,” the agencies wrote.
Community choice aggregation
With “community choice aggregation” programs, local governments buy power from an alternative green power supplier on behalf of their residents.
The municipality essentially operates as the supplier for the community’s electricity, Sumner said. These programs are especially prevalent in California, she said.
Unlike the other program types, residents generally don’t have to opt into community choice programs; it’s typically automatic and consumers can opt out if they wish, Sumner said.

How renewable energy certificates work

A solar farm in Imperial, California, on December 6, 2023. 
Valerie Macon | Afp | Getty Images

Just because a consumer opts for renewable power doesn’t mean the electricity being pumped into their home is coming from those renewable sources.
This may sound strange, but it has to do with the physical nature of electricity and its movement through the shared electric grid.
“Once the electrons have been injected into the grid, there’s no way of tagging that these are ‘green’ electrons and these are not green,” said Joydeep Mitra, head of the power system program at Michigan State University. “Nobody knows which electrons are going where.”

Green energy programs instead rely on “renewable energy certificates,” or RECs.
The certificates are essentially an accounting mechanism for the generation and purchase of renewable energy, Mitra said.
You may not be getting the green power, but someone somewhere is. And RECs keep track of it all.
Any consumer, even one who doesn’t have access to a green power program through their utility, can also purchase a REC as a separate, stand-alone product. It’s a way to provide extra funding to a renewable energy project, typically sold by a broker or marketer rather than a utility, Sumner said.
Buying these certificates separately doesn’t impact a consumer’s existing utility service relationship.

How to verify your electricity is green

Experts recommend choosing a green power option or REC that has been verified by an independent third party.
That’s because the voluntary sales and purchases of renewable energy aren’t subject to government oversight, according to the EPA and U.S. Energy Department.
One such independent body is the Center for Resource Solutions, a nonprofit that oversees the Green-e certification standard, the agencies said.
For example, Green-e polices the disclosures energy suppliers make to consumers about renewable energy and verifies that the purchase of that energy isn’t being counted toward state energy mandates, among other things.
In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.
Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at gregory.iacurci@nbcuni.com. More

Fed Governor Waller said Tuesday he does not think further interest rate increases will be necessary.
However, cuts are probably “several months” away, the central bank official said during a speech in Washington.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022.
Al Drago | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller, citing a string of data showing that inflation appears to be easing, said Tuesday that he does not think further interest rate increases will be necessary.
However, the policymaker added he will need some convincing before he backs cuts anytime soon.

“Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary,” said Waller, who has been generally hawkish in his recent views, meaning he supports tighter monetary policy.
The comments came in prepared remarks for an appearance before the Peterson Institute for International Economics in Washington.
Waller pointed to a string of recent data, from flattening retail sales to cooling in both the manufacturing and services sectors, to suggest the Fed’s higher rates have helped ease some of the demand that had contributed to the highest inflation rates in more than 40 years.
Though payroll gains have been solid, internal metrics such as the rate at which workers are leaving their jobs show that the ultra-tight labor market that had driven up wages last a level consistent with the Fed’s 2% inflation goal has displayed signs of loosening, he added.
Yet Waller said he’s not ready to back interest rate cuts. As a governor, Waller is a permanent voting member of the rate-setting Federal Open Market Committee.

“The economy now seems to be evolving closer to what the Committee expected,” he said. “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.”
April’s consumer price index showed inflation running at a 3.4% rate from a year ago, down slightly from March, with the 0.3% monthly increase slightly below what Wall Street economists had been expecting.
The Labor Department report was “a welcome relief,” Waller said, though the “the progress was so modest that it did not change my view that I will need to see more evidence of moderating inflation before supporting any easing of monetary policy.” He gave the report a C-plus grade.
Markets have had to recalibrate their expectations for monetary policy this year.
In the early months, futures markets traders priced in at least six rate cuts this year starting in March. However, a string of higher-than-expected inflation data changed that outlook to where the first cut is not expected to happen until September at the earliest — with at most two reductions of a quarter percentage point before the end of the year, according to the CME Group’s FedWatch Tool.
Waller did not provide an indication for his expectations on the timing or extent of cuts and said he will “keep that to myself for now” on what specific progress he wants to see on future inflation reports. More

Family offices, which manage significant amounts of money for wealthy families, often with small staffs, have become lucrative targets for hackers.
But a growing fear of cyberattacks has not translated into better defenses.
A recent survey shows less than a third of family offices say their cyber risk management processes are well-developed.

A computer with a “system hacked” alert due to a cyber attack on a computer network.
Teera Konakan | Moment | Getty Images

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Family offices are under increasing attack from cybercriminals, and many don’t have the staff or technology to prepare, according to a new survey.

More than three quarters, 79%, of North American family offices say the likelihood of a cyberattack “has increased dramatically in the past few years,” according to a survey of single-family offices by Dentons, a global law firm. A quarter of family offices surveyed reported suffering a cyberattack in 2023, up from 17% in 2020. Half say they know another family office that suffered a cyberattack, according to the survey.
With their large wealth and small staffs, family offices have become lucrative targets for hackers and cybercriminals, experts say.
“It’s the Willie Sutton effect,” said Edward Marshall, global head of family office and high net worth at Dentons, referring to the famous bank robber who targeted banks “because that’s where the money is.”
Marshall said family offices often have minimal staff with access to highly sensitive information about a wealthy family’s finances and private companies. Since family offices value efficiency and speed over risk management, he said, today’s family offices often don’t have adequate technology and planning in place for possible cyberattacks.
“Family offices often have a bias toward efficient service versus security,” he said.

Using in-house security teams can be expensive for family offices, he added, while using third-party vendors and suppliers also creates risks from “sophisticated criminals and bad actors.”
The growing fears of cyberattacks, however, have not yet translated into better defenses. Less than a third of family offices say their cyber risk management processes are well-developed, according to the survey. Just 29% say their staff and cyber-training programs are “sufficient,” and less than half said they have upgraded staff training programs or regularly update cyber policies.
“These findings reveal an alarming gap between awareness of cybersecurity risks and the actions put in place to prevent and repel attacks,” the report said.
A separate report from EY U.S. and the Wharton Global Family Alliance says family offices should tackle cybersecurity by addressing each of the three main components of tech risk: hardware, software and applications.
Rather than sending emails with financial information or personal information, the report recommends that family offices use a website or intranet site. The report also suggests the use of password vaults and better vetting of tech vendors for security.
Marshall said family offices need to take a more proactive stance on overall assessment that goes beyond cyberattacks.
“They need a mind shift from accepting the unexpected to expecting the unexpected,” he said.
Sign up to receive future editions of CNBC’s Inside Wealth newsletter with Robert Frank. More

China’s sweeping moves on Friday to increase support for real estate will take time to show results, analysts said.
For real estate to see significant stabilization, homebuyers’ demand and confidence will need to improve after a market downturn of nearly three years, Edward Chan, director, corporate ratings, S&P Global Ratings, said during the firm’s webinar on Monday.
S&P is still sticking to its base case from earlier in the month that China’s property market is likely still “searching for a bottom,” he said.

A real estate construction site in Wanxiang City, Huai ‘an City, East China’s Jiangsu province, May 17, 2024. 
Future Publishing | Future Publishing | Getty Images

BEIJING — China’s sweeping moves on Friday to increase support for real estate will take time to show results, analysts said.
Despite the news, S&P is still sticking to its base case from earlier in the month that China’s property market is likely still “searching for a bottom,” Edward Chan, director, corporate ratings, said during the firm’s webinar on Monday.

“The significance of the policy rollout last Friday was that the government is rolling out all these policies at one go, at the same day, at one time,” he said. “This shows the government is serious, as well as dedicated, in stabilizing the property sector.”
But he pointed out that for real estate to see significant stabilization, homebuyers’ demand and confidence will need to improve after a market downturn of nearly three years.
Hong Kong-listed property stocks surged late last week, but were barely changed on Monday, according to an industry index from financial database Wind Information.

Chinese authorities on Friday lowered down payment minimums to as low as 15%, versus 20% previously, in addition to cancelling the floor on mortgage rates nationwide.
Policymakers also sought to boost developers’ liquidity by releasing 300 billion yuan ($42.25 billion) in financing for local state-owned enterprises to buy unsold, completed apartments in order to turn them into affordable housing.

We believe Beijing is headed in the right direction with regard to ending the epic housing crisis.

Chief China economist, Nomura

“Although some of these measures are unprecedented (e.g., the minimum downpayment requirement was never below 20% previously), they are still insufficient compared to our property team’s estimates of at least RMB1tn funding needed to start digesting excess inventory and to allow new home prices to find a bottom within a year,” Goldman Sachs’ Chief China Economist Hui Shan said in a note Sunday.
“We believe Beijing is headed in the right direction with regard to ending the epic housing crisis,” Nomura’s Chief China Economist Ting Lu said in a report Monday.
“Beijing has already pivoted from building public housing to ensuring the delivery of numerous pre-sold homes to rebuild buyers’ confidence, marking a significant step towards cleaning up the big mess.”
“However, this is proving to be a daunting task, and we think markets need to exercise more patience when awaiting more draconian measures,” he said.
Official data released Friday showed real estate investment declined at a steeper pace in April versus March, with new commercial floor space sold for the first four months of the year down by 20.2% from a year ago. The data also showed retail sales grew less than expected in April.
The majority of household wealth is in property, while uncertainty about future income has weighed on consumer spending.

Rebuilding homebuyer confidence

Homebuyers’ confidence depends partly on their economic outlook, and whether they can receive apartments they have paid for but have yet to receive, S&P’s Chan said.
Apartments in China are usually sold ahead of construction. But in recent years, financing troubles for property developers and other issues have prolonged delivery times — with some buyers waiting for several years.

“If there is stabilization in home price, I think there will be more homebuyers willing to enter the market,” Chan said. He noted that since buying an apartment is a major investment for most people, they “don’t want to see their capital shrinking.”
The official 70-city house price index released Friday fell more quickly in April than in March, according to Goldman Sachs analysis that looks at a seasonally adjusted, annualized weighted average.
Housing prices in China have dropped by 25% to 30% on average from their historical highs in 2020 and 2021, Nomura’s Lu estimates.
He also estimates there are still around 20 million pre-sold apartments that have yet to be completed, for a funding gap of around 3 trillion yuan ($414.58 billion).
Lu expects that in the next few months, Beijing will likely conduct a national survey of residential projects to estimate how much money is needed to finish construction and deliver homes.
“In our view, rebuilding homebuyers’ confidence in the presale system is the precondition for a true revival of China’s housing markets,” he said. More

JPMorgan Chase CEO Jamie Dimon signaled retirement is closer than ever, striking a key change in messaging during the bank’s investor day.
The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts.
Dimon is 68 years old.
“We’re on the way, we’re moving people around,” Dimon said.

Jamie Dimon, Chairman and CEO of JPMorgan Chase, testifies during a Senate Banking Committee hearing at the Hart Senate Office Building on December 06, 2023 in Washington, DC.
Win Mcnamee | Getty Images

Jamie Dimon’s days as CEO of JPMorgan Chase are numbered — though it is unclear by how much.
In a response to a question Monday about the bank’s succession planning, Dimon indicated that his expected tenure is less than five more years. That is a key change from Dimon’s previous responses to succession questions, in which his standard answer had been that retirement was perpetually five years away.

“The timetable isn’t five years anymore,” Dimon said at the New York-based bank’s annual investor meeting.
The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts. Over nearly two decades, Dimon, 68, has made his lender the largest in America by assets, market capitalization and several other measures.
Still, Dimon added Monday that he still has “the energy that I’ve always had” in managing the sprawling company.
The decision of when he moves on will ultimately be up to JPMorgan’s board, Dimon said, and he exhorted investors and analysts to examine the executives who could take his place.
Atop the short list of candidates is Marianne Lake, CEO of JPMorgan’s consumer bank, and Jennifer Piepszak, who co-leads its commercial and investment bank. The executives were given their latest assignments in January.

“We’re on the way, we’re moving people around,” Dimon said.
Even when he steps down as CEO, however, it is likely he will stay on as the bank’s chairman, JPMorgan has said.

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When pressed about the timing of a potential boost to the bank’s share repurchase program, Dimon did not mince words.
“We’re not going to buy back a lot of stock at these prices,” Dimon said.
JPMorgan, the biggest U.S. bank by assets, has seen its shares surge 40% over the past year, reaching a 52-week high of $205.88 on Monday before Dimon’s comments dinged the stock.

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

Jamie Dimon thinks shares of JPMorgan Chase are expensive.
That was the message the bank’s longtime CEO gave analysts Monday during JPMorgan’s annual investor meeting. When pressed about the timing of a potential boost to the bank’s share repurchase program, Dimon did not mince words.

“I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” Dimon said.
JPMorgan, the biggest U.S. bank by assets, has seen its shares surge 40% over the past year, reaching a 52-week high of $205.88 on Monday before Dimon’s comments dinged the stock. That 12-month performance beats other banks, especially smaller firms recovering from the 2023 regional banking crisis.
It also makes the stock relatively pricey as measured by price to tangible book value, a commonly used industry metric. JPMorgan shares traded recently for around 2.4 times book value.

‘A mistake’

“Buying back stock of a financial company greatly in excess of two times tangible book is a mistake,” Dimon said. “We aren’t going to do it.”
Dimon’s comments about his company’s stock, as well as an acknowledgement that he may be nearing retirement, sent the bank’s shares down 4.5% Monday.

To be clear, JPMorgan has been repurchasing its stock under a previously authorized buyback plan. The bank resumed buybacks early last year after taking a pause to build up capital under new expected guidelines.
Dimon’s guidance simply means it is unlikely the program will be boosted anytime soon. JPMorgan is likely to purchase shares at a $2 billion to $2.5 billion quarterly clip, Portales Partners analyst Charles Peabody wrote in a March research note.
The JPMorgan CEO has often resisted pressure from investors and analysts that he deemed short-sighted. When interest rates were low, Dimon kept relatively high levels of cash, rather than plowing funds into low-yielding, long-term bonds. That helped JPMorgan outperform other lenders, including Bank of America, when interest rates jumped higher.

Underappreciated risks

Dimon’s desire to hoard cash is not just because of impending capital rules. On multiple occasions Monday, he said he was “cautiously pessimistic” about economic risks, including those tied to inflation, interest rates, geopolitics and the reversal of the Federal Reserve’s bond-buying programs.
Markets are currently underappreciating those risks, Dimon said. For instance, prices of high-quality corporate bonds do not adequately reflect the potential for financial stress, Dimon said.
“The investment grade credit spread, which is almost the lowest it’s ever been, will be dead wrong,” Dimon said. “It’s just a matter of time.”
Since 2022, Dimon has warned of an economic “hurricane” set off by geopolitical risks and quantitative tightening. While the continued strength of the economy has surprised many on Wall Street, including Dimon, his concerns have informed his decision-making process ever since.
“We’ve been very, very consistent — if the stock goes up, we’ll buy less,” he said Monday. “When it comes down, we’ll buy more.”

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