Finance

Headline consumer price inflation slid to 7.9% in June from 8.7% in May, while core inflation — which excludes volatile energy, food, alcohol and tobacco prices — stayed sticky at an annualized 6.9%.
As of Tuesday morning, the market was pricing around a 62% chance that the Monetary Policy Committee will opt for a 25 basis point hike to interest rates and take the main Bank rate to 5.25%.

Andrew Bailey, Governor of the Bank of England, attends the Bank of England Monetary Policy Report Press Conference, at the Bank of England, London, Britain, February 2, 2023. 
Pool | Reuters

LONDON — Market expectations are split over the Bank of England’s next monetary policy move on Wednesday, as policymakers near a tipping point in their fight against inflation.
As of Tuesday morning, the market was pricing around a 62% chance that the Monetary Policy Committee will opt for a 25 basis point hike to interest rates and take the main Bank rate to 5.25%, according to Refinitiv data.

The other 38% of market participants expect a second consecutive 50 basis point hike, after the central bank surprised markets with a bumper increase in June. U.K. inflation looks to be abating, but is still running considerably hotter than in other advanced economies and well above the Bank’s 2% target.
Headline consumer price inflation slid to 7.9% in June from 8.7% in May, while core inflation — which excludes volatile energy, food, alcohol and tobacco prices — stayed sticky at an annualized 6.9%, but retreated from the 31-year high of 7.1% of May.
Data from the British Retail Consortium on Tuesday also showed annual shop price inflation cooled from 8.4% in June to 7.6% in July, and fell for the first time in two years in month-on-month terms, indicating that the country may be through the worst of its prolonged cost-of-living crisis.

The British economy has proven surprisingly resilient, despite a run of 13 consecutive rate hikes from the Bank of England. The U.K. GDP flatlined in the three months to the end of May, but Britain is no longer projected to fall into recession.
Goldman Sachs noted over the weekend that the MPC will be watching three indicators of inflationary persistence to determine how much additional monetary policy tightening is needed — slack in the labor market, wage growth and services inflation.

“Following a very strong April labour market report in the run-up to the June meeting, jobs activity softened notably in May. Wage growth, however, has remained very firm with private sector regular pay rising further to 7.7%,” Goldman’s European economists James Moberly, Ibrahim Quadri and Jari Stehn highlighted.
“While core inflation surprised to the downside in June, services inflation momentum remains strong. BoE officials have provided little guidance on how they assess the incoming data since the June meeting.”
Given the limited read on how the MPC has received the latest two months of economic data, Goldman said this week’s meeting is a “close call,” but that the 25 basis point move is more likely than another half-point hike. The Wall Street giant expects an 8-1 split vote, with the one dissenting opinion in favor of keeping rates unchanged.

“The overall dataset, while firm, is more mixed going into the August meeting than it was in the run-up to the June meeting, when data on the labour market, wage growth, and services inflation had all been surprising to the upside,” the economists said.
“Furthermore, this week’s developments — including the weak flash PMI, non-committal messaging from the Fed and ECB, and receding market pricing for the August meeting — would support the case for a 25bp increase.”
Both the U.S. Federal Reserve and the European Central Bank implemented quarter-point hikes last week and struck cautious tones. They highlighted that inflation is heading in the right direction but retains a hawkish tilt as it remains above target.
MPC happy to ‘front-load’ tightening
The initial PMI (purchasing managers’ index) readings for July indicated that the slowing economic momentum in the second quarter had continued into the third — especially in the services sector, where the Bank of England’s aggressive rate hikes finally appear to squeeze demand.
Consumer confidence also fell sharply in July, and the latest figures put unemployment at 4% — above the Bank of England’s May forecast — with vacancies continuing to decline.
The labor market remains very tight despite some loosening, and observers still marginally favor another big hike on Thursday.
Barclays believes a half-point increase is in the cards, as wages and core inflation stay high, meaning more “resolute action” is a chance for the beleaguered MPC to “enhance credibility.”
“We expect an 8-1 vote split (for +50bp vs hold), unchanged forward guidance, and for the forecasts to explicitly incorporate greater inflationary persistence,” Barclays economists Abbas Khan, Mariano Cena and Silvia Ardagna concluded in a research note Friday.
This was echoed by BNP Paribas European economists Matthew Swannell and Paul Hollingsworth, who said that the MPC will be willing to “front-load” tightening, based on Governor Andrew Bailey’s comments at the Sintra central bank conference.

“If we were really of the view that we were going to do 25 and then we were really sort of baked in for another 25 based on the evidence we’d seen, it would be better to do the 50,” Bailey justified the jumbo hike of June.
“Even allowing for the inflation surprise, the data we have seen since June’s meeting clearly support the MPC delivering more than 25bp of further tightening, in our view,” Swannell and Hollingsworth said.
Looking beyond this week’s meeting, Goldman Sachs said the meaningful progress in rebalancing labor market supply and demand so far was not yet sufficient for this to be the last increase in the Bank’s base rate, since further demand cooling and a sustainable return to the 2% headline inflation target are a long way off.
“That said, this assessment is subject to significant uncertainty depending, in particular, on the growth outlook, the outlook for labour supply, and the formation of inflation expectations,” Goldman economists added.
The lender therefore expects further 25 basis point increments to an eventual peak rate of 5.75%, or until the MPC sees signs of a meaningful slowdown in spot wage and services inflation. More

Ugur Karakoc | E+ | Getty Images

From China’s Ant Group to Sweden’s Klarna, here is the complete list of the world’s top 200 fintech companies.
CNBC partnered with independent research firm Statista to establish a transparent overview of the top fintech companies.

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Statista analyzed over 1,500 firms across nine different market segments, evaluating each one against a set of key performance indicators, including revenue, user numbers, and total funding raised.
The final list includes some of the biggest companies in the sector — Ant Group, Tencent, PayPal, Stripe, Klarna and Revolut — as well as several up-and-coming startups seeking to mold the future of financial services.
The categories include:

Neobanking
Digital payments
Digital assets
Digital financial planning
Digital wealth management
Alternate financing
Alternate lending
Digital banking solutions
Digital business solutions

You can search by country, category, or company name to see which firms made the cut.

For a deep dive on the categories and the standout trends within each one, click here.

Methodology
To identify the top 200 fintech companies, Statista carried out a quantitative analysis of the global market across nine categories.
These categories reflect the fact that fintechs in different fields can’t be compared like-for-like. A business like Monzo, for example, operates in a very different manner to Stripe (Stripe isn’t a licensed bank and can’t originate its own loans).
To help with the research, CNBC issued a public call for nominations in March, giving eligible fintechs the chance to share more information on their business model, revenue, transaction volumes, and other key data.
Since many fintech businesses are privately held, they aren’t required to disclose their accounts publicly. Voluntary sharing of information about business models was key to analyzing the market.
Statistics
More than 1,500 fintech companies were assessed by Statista during the analysis period, and over 10,000 data points were assessed, including annual reports, company websites, and news articles.
Statista developed a scoring model for the companies by calculating the aggregated scores on how firms performed versus their respective KPIs — revenues and revenue per employee, for example — along with a separate score on how the companies performed against specific KPIs within their respective market segments.
Between five and 40 companies were selected for each individual market segment.
To decide which ones should make the cut, Statista broke down the scoring model into a 40% weighting for general KPIs, and 60% for segment-specific KPIs.
The companies with the highest score within their market segment made the list.
The number of companies awarded per market segment varied depending on the size of the respective market segment. More

From across the globe, spanning a diverse range of applications in finance — these are the world’s top 200 fintech companies.
Together, CNBC and independent market research firm Statista worked to compile a comprehensive list of companies building innovative, tech-enabled and finance-related products and services.

The partnership set out to list the top fintech companies using a clearly defined methodology identifying how various different companies performed against a set of key performance indicators, including total number of users, volumes, and revenues.
The chosen companies have been divided up into nine categories: neobanking, digital payments, digital assets, digital financial planning, digital wealth management, alternate financing, alternate lending, digital banking solutions, and digital business solutions.
This was done to account for the fact that business performance of fintechs in different fields of finance can’t be compared like-for-like.
The fintech space has gone through a tumultuous period. Companies have seen their valuations slashed, funding is scarce, and businesses are cutting back on staffing and other costs in a bid to keep investors happy.
At the same time, innovation is continuing to happen. Several firms are developing tools to help customers budget in more effective ways and predict what their future financial situation might look like.

In the digital assets space, meanwhile, there’s been a greater focus on building technology to help improve some of the financial services industry’s biggest challenges, from moving money across borders to real-time settlement.
CNBC has broken the list up category by category — from neobanking all the way down to digital business solutions.
Quicklinks:

For the full list and the methodology, click here.

Neobanking

Digital banks, or neobanks, are continuing to grow and develop new products. These are companies, typically with their own bank license, that have been set up with the aim of challenging large established lenders.
Neobanks have been among the hardest hit by a souring of investors on fintech, particularly as their business model — spending lots to attain large numbers of customers and make money on card payments — has come under scrutiny with consumer spending slowing.
Still, several neobanks have performed surprisingly well out of the rise in interest rates. Many have gotten into lending. In Europe, for example, Monzo recorded its first monthly profit after a jump in lending volume.
There are many expected names present in the neobanks category, including Revolut, Monzo, and Starling. However, there are also less established players represented from emerging markets, like Nigeria-based fintech Kuda and Indian foreign exchange startup Niyo.

Digital payments

The worldwide digital payments industry is currently estimated to be worth over $54 trillion, according to data from JPMorgan — and that’s only set to grow as more of the world starts to see digital adoption.
It’s a colossal market, with many different players fighting it out for their slice of the hyper-competitive pie. But that has meant there’s been room for other industry players to innovate and compete with their own offerings as well.
Statista identified 40 firms as top digital payments companies. These include major players such as Chinese mobile wallet Alipay and tech giant Tencent, which operates the WeChat Pay payment services, and U.S. online payments powerhouse Stripe.
Klarna, Affirm, and Afterpay also feature. The buy now, pay later space has been under huge pressure amid fears of a drop in consumer spending — but it has equally become a lifeline for many as rising inflation forces people to search for flexible payment methods.
Lesser-known firms, including French telecoms firm Orange and payments compliance startup Signifyd, were also selected. Orange operates Orange Money, a mobile money service. It is highly popular in Africa and counts more than 80 million accounts worldwide.

Digital assets

Digital assets is a market that has faced huge pressure recently, not least because the regulatory environment for firms has become much tougher following major collapses of notable names such as FTX, Terra, and Celsius.
It’s also incredibly sensitive to movements in prices of digital currencies, which have depreciated considerably since the peak of the most recent crypto rally in November 2021. Exchanges in particular saw their revenues dry up as trading volumes evaporated.
Valuations of companies in the digital assets space have taken major haircuts. And this pain has filtered through to the private markets, too.
Binance, which features as one of the top digital asset companies, is under heightened scrutiny from regulators around the world.
In the U.S., Binance is accused by the U.S. SEC of mishandling customer funds and knowingly offering investors unregistered securities while publicly saying that it doesn’t operate there.
For its part, Binance denies the allegations.
It was important that the company be included, given it remains the largest crypto exchange around and is a prolific backer of ventures focusing on so-called Web3.
Efforts are underway globally to bring digital assets into the regulatory fold. In the U.K., the government has made a play to become a “crypto hub.” And the European Union is making rapid strides with landmark .
Alongside crypto heavyweights Binance and Coinbase, Statista also identified Cayman Islands-based crypto exchange BitMart and nonfungible token marketplace OpenSea as top fintech companies operating in the digital assets category. 

Digital financial planning

Financial planning is another big area of finance that’s being reshaped by technology, as people have turned to online tools to manage their financial lives in favor of more cumbersome paper-based options.
There are now plenty of online platforms that enable users to get better visibility over their finances. Education has become a big focus for many players, too — particularly in light of the rising cost of living, which has put significant pressure on household budgets.
In this field, Statista identified 20 names that fit the bill as companies leading the pack globally when it comes to innovating in financial planning. 
They range from those changing the way people select and educate themselves about financial products, like NerdWallet, to services seeking to help people build up their credit scores, like Credit Karma.

Digital wealth management

A plethora of tech startups have rocked the wealth management space over the past several years with lower fees, smoother onboarding, and more accessible asset picking and trading experiences.
The likes of Robinhood and eToro lowered the barrier to entry for people wanting to own stocks and other assets, build up their portfolios, and acquire the kind of knowledge about financial markets that has previously been the privilege of only a few wealthy pros.
In the Covid-19 era, people built up a glut of savings thanks to fiscal stimulus designed to stem the impacts of lockdowns on world economies. That was a boon to fintechs in the wealth management space, as consumers were more willing to part with their cash for riskier investments.
These companies have been under strain more recently, though. Interest from amateur traders has slipped from the heyday of the 2020 and 2021 retail investing boom. And, as with other areas of fintech, there’s been a greater focus on profitability and building a sustainable business.
In response, platforms sought to prioritize product development and longer-term investing experiences to continue attracting customers. In the context of high interest rates, several companies launched the ability to invest in government bonds and other high-yield savings options.
In the wealth management category, Statista identified 20 names. They include Robinhood, eToro, and Wealthfront, among others.

Alternate financing

Small and medium-sized businesses, which are often turned away by established banks, have increasingly turned to new forms of financing to get the necessary funds to grow their business, meet their overheads, and pay off outstanding debts.
Equity crowdfunding has given companies a chance to give early customers the ability to own part of the services they’re using. 
Meanwhile, revenue-based financing, or borrowing against a percentage of future ongoing revenues in exchange for money invested, became a more popular way for firms typically turned away by banks and venture capitalists alike to get access to funding.
Higher interest rates arguably make these forms of financing more attractive versus seeking loans, which are now far more costly — though it does pose challenges for these businesses, as their own ability to raise capital themselves becomes more difficult.
In the alternate financing category, 20 firms were awarded. They range from Patreon, the popular membership service for online content creators, to crowdfunding companies Kickstarter and Republic.

Alternate lending

Non-bank lending has been a rising trend in the financial services industry over the last several years.
Tech startups looked to provide a better experience than banking incumbents, using cloud computing and artificial intelligence to improve service quality and ensure faster decisioning on loan applications.
The global digital lending platforms market is forecast to be worth $11.5 billion in 2023, according to GlobalData, and this is expected to grow to $46.5 billion by 2030.
Over the last year or so, a number of fintechs pivoted to lending as the primary driver of their business, looking to benefit from rising interest rates — the Federal Reserve, Bank of England and numerous other central banks have rapidly raised rates to combat inflation.
Lending also tends to be the more lucrative part of finance, more generally.
While digital payments is often the area that draws most investor buzz, lending generates more money in financial services. Payments, by contrast, is a notoriously low-margin business since companies tend to make money by taking a small cut of the value of each transaction.
Statista identified 25 fintech companies that fall into the category of top alternate lending firms.
They include American small business lending firm Biz2Credit, Irish e-commerce lending company Wayflyer, and Latvian loan refinancing startup Mintos.

Digital banking solutions

An emerging category of fintech companies takes a different approach to disrupting financial incumbents — giving other companies the ability to offer their own digital banking offerings rather than being the face of those services themselves.
Banking-as-a-service has been a buzzword in fintech for some time now. It’s not exactly a well-known term, but it refers to the ability for non-financial companies to provide their customers a range of financial products including checking accounts, cards, and loans.
Embedded finance, where third-party financial services like bank accounts, brokerage accounts and insurance policies are integrated into other businesses’ platforms, has also gained traction.
Another theme that falls within this world is open banking, or the ability for non-bank firms to launch new financial services using customers’ account data.
Digital banking solutions has become a more closely-watched aspect of fintech, as attention has turned away from consumer-oriented services to business-focused ones. However, it hasn’t been without its own challenges.
Like other areas of fintech, the space has been vulnerable to a funding crunch as hawkish central bank actions have made capital more expensive. Railsr, formerly a U.K. fintech darling, entered liquidation in March after reports that it was struggling to find a buyer. 
“Not all programs were created equal,” Peter Hazlehurst, CEO of Synctera, one of the top 200 awardees, told CNBC. “As a result, a number of folks were unable to raise their next round or continue to grow or to continue to get customers.”
In the digital banking solutions category, 15 firms were awarded, including Airwallex, ClearBank, and Solaris.

Digital business solutions

Digital business solutions might not be the most attractive part of fintech, but it’s the one gaining much of the love from investors at the moment.
These are companies selling a range of financial solutions to businesses, ranging from accounting and finance, to human resources and anti-fraud solutions.
As the economic outlook has darkened for many businesses, the need for products that help firms deal with their own costs and operate in a compliant manner has become critical.
In the digital business solutions category, Statista identified 25 companies.
They include tax and accounting software firm Intuit, human resources platform Deel, and fraud prevention startup Seon.  More

The central government announced 20 measures Monday to support tourism, as well as spur consumption of electric cars and so-called smart appliances.
The measures and official comments at a briefing later that day emphasized the need to boost consumption in rural areas and at the mass market level.
Monday’s announcement was another firm signal that Beijing will not pursue nationwide consumption vouchers, as the U.S. and Hong Kong did in the wake of the pandemic.

Tourists at a water park on July 23, 2023 in Nanjing, China.
Yang Bo | China News Service | Getty Images

BEIJING — Instead of handing out cash, China is trying to make sure consumers and businesses spend where it matters economically.
On Monday, the central government announced 20 measures to support tourism, as well as spur consumption of electric cars and so-called smart appliances. That refers to household devices that typically can be customized with a smartphone app, and are often more environmentally friendly.

The measures aren’t just for consumers, but also for suppliers to know what to focus on, Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science, said on Tuesday.
Overall, he said the measures are meant to stabilize spending on more expensive, big-ticket items, while addressing areas of weakness such as in rural areas.

High on the list was support for purchases of new energy vehicles, which include battery-powered and hybrid cars.
While China has already extended tax breaks for new energy vehicles, authorities on Monday also called for installing battery charging stations and other measures to lower costs for electric car drivers.
Among other big-ticket items, the new measures called for encouraging households to remodel and install a complete “smart home.” Such linked appliances are also known as the internet of things.

The rural market

The measures and official comments at a briefing late Monday emphasized the need to boost consumption in rural areas and at the mass market level.
The support measures announced included an entire section on spurring rural consumption. Specifics included subsidizing trade-ins for purchase of smart household appliances, improving delivery services and promoting rural tourism.
Policy for spurring consumption starts with helping consumers spend frugally, buy higher quality products and avoid illegal schemes, said Li Chunlin, deputy director of the National Development and Reform Commission, which oversees economic planning. That’s according to a CNBC translation of his Mandarin-language remarks at Monday’s briefing.
When asked about consumer incomes, he noted the recovery in tourism directly increases locals’ income.
Li also said authorities would work to enable more low-income groups to enter the middle class. He did not share details.

Just under one third of China’s 1.4 billion people were considered middle class in 2022, according to Boston Consulting Group. The firm defined the middle class as households with monthly disposable income of 9,500 yuan to 29,900 yuan, or between $1,325 to $4,172.
The majority of people in China had far less disposable income, the report showed.
Median disposable income for rural households rose by 6.1% in the first half of the year from a year ago, official data showed. But at 8,920 yuan ($1,245) in disposable income, rural households only had about 40% of what urban households had to spend.
Urban households saw median disposable income grow by 4.4% in the first half of the year from a year ago – slower than the 5.5% GDP increase, the data showed.
A lack of consumer confidence and uncertainty about future income has weighed on China’s retail sales, which was expected to drive the overall economic recovery after three years of Covid controls.

Domestic tourism and vacations

Since China ended those restrictions in December, local tourism has picked up quickly.
Domestic flights in July have recovered to slightly more than their 2019 levels, while the movie box office is also above pre-pandemic levels, Nomura analysis showed.
The firm expects retail sales to rise 5.5% year-on-year in July, up from 3.1% in June.
The new measures also encouraged employers to give more paid days off and for people to take off-peak vacations. Most workers in China only get a few vacation days a year, in contrast to two to four weeks offered by employers in countries such as the U.S.
Authorities said they would promote concerts, sports events and other cultural activities.
An inherent challenge China faces is trying to get consumers to drive economic growth, when policy has long favored an investment-led model.
Xu said more effort is needed to shift the economic balance toward consumers, such as giving consumer loans a greater share of bank loans versus business loans.
He expects retail sales will grow by less than 10% for all of 2023.

No vouchers

However, the latest support measures are another firm signal that Beijing will not pursue nationwide consumption vouchers, as the U.S. and Hong Kong did in the wake of the pandemic.
On one hand, the government doesn’t have much money, economists said.
On the other, despite a variety of views within the government, Chinese authorities just aren’t used to giving cash directly to consumers, said Wang Jun, chief economist at Huatai Asset Management.
“There’s no consensus,” he said in Mandarin, translated by CNBC. He said local governments, especially those with better finances, might try some form of consumption voucher.

Read more about China from CNBC Pro

Monday’s announcement followed a top-level Politburo meeting last week that laid out economic policy directions for supporting the property market and consumption. China’s leaders typically take a break in early August.
“At this point, what the [central] government is able to do, the things it is willing to do, have basically all been done,” Wang said.
While he described China’s economy as needing time to slowly heal, he expects double digit growth in retail sales growth from last year. More

Elf complexion sponges arranged in Germantown, New York, July 17, 2023.
Gabby Jones | Bloomberg | Getty Images

Check out the companies making headlines after hours.
SolarEdge Technologies — The solar stock dropped 11% in extended trading. SolarEdge missed revenue expectations in its second quarter, posting $991 million compared to the expected $992 million from analysts polled by Refinitiv. The company beat earnings estimates, posting an adjusted $2.62 per share, better than the $2.52 per-share estimate.

Advanced Micro Devices — The chip stock jumped nearly 4% after Advanced Micro Devices reported better-than-expected quarterly results. AMD reported second-quarter adjusted earnings of 58 cents per share on revenue of $5.36 billion. Analysts polled by Refinitiv expected per-share earnings of 57 cents on revenue of $5.31 billion.
Freshworks — Freshworks advanced nearly 14% after reporting second-quarter earnings that exceeded expectations on the top and bottom lines. The software company reported adjusted earnings of 7 cents per share on revenue of $145 million. Analysts polled by Refinitiv had expected per-share earnings of 2 cents on revenue of $141 million.
Starbucks — Starbucks declined 1% after reporting a revenue miss. The coffee chain reported fiscal third-quarter revenue of $9.17 billion, lower than the $9.29 billion estimated by analysts polled by Refinitiv. Starbucks did post adjusted per-share earnings of $1.00, better than the 95 cent estimate.
Virgin Galactic — Virgin Galactic shares dipped 3% after the space tourism company posted a revenue miss in its second quarter. It reported revenue of $1.9 million, lower than the consensus estimate of $2.7 million, according to Refinitiv. It did beat on earnings expectations. Virgin Galactic posted a loss per share of 46 cents, better than the estimated loss of 51 cents per share.
Pinterest — Pinterest slipped 0.5% after the bell despite posting a top-and-bottom line beat. The image-sharing platform reported adjusted earnings of 21 cents a share on revenues of $708 million, per Refinitiv.

e.l.f. Beauty — The beauty stock surged 15% after e.l.f. Beauty topped analysts’ expectations in its most recent quarter. e.l.f. Beauty posted first-quarter adjusted earnings of $1.10 per share on revenue of $216 million. Analysts polled by Refinitiv had expected per-share earnings of 56 cents per share on revenue of $184 million.
Match Group — Shares surged 11% after Match Group exceeded analysts’ second-quarter expectations. The dating app company posted earnings of 48 cents per share on revenue of $830 million. Analysts polled by Refinitiv had expected per-share earnings of 45 cents on revenue of $811 million.
Devon Energy — The stock fell about 2% after Devon Energy missed revenue expectations in its second quarter. Devon Energy posted revenues of $3.45 billion, lower than the estimated $3.74 billion from analysts polled by Refinitiv. Earnings came in line with estimates. Devon reported adjusted earnings of $1.18 per share.
Frontier Group Holdings — Frontier Group rose more than 3% after reporting earnings that beat on the top and bottom lines. The airline company reported second-quarter adjusted earnings of 31 cents per share on revenue of $967 million. Analysts polled by Refinitiv expected per-share earnings of 28 cents on revenue of $966 million.
Electronic Arts — Electronic Arts slid 3.5% after its fiscal first-quarter revenue missed analysts’ expectations. The video game company reported $1.58 billion, lower than the consensus estimate of $1.59 billion, according to Refinitiv. It posted earnings per share of $1.47, topping the forecasted $1.02 per share.
Caesars Entertainment — Caesars Entertainment fell more than 2% in extended trading. The casino company reported second-quarter revenue of $2.88 billion, beating the estimate of $2.87 billion, according to Refinitiv. The earnings per share figure was not comparable.
— CNBC’s Samantha Subin contributed to this report. More

The Rivian name is shown on one of their new electric SUV vehicles in San Diego, U.S., December 16, 2022.
Mike Blake | Reuters

Check out the companies making headlines in midday trading.
Toyota Motor — Shares rose 2.1%, hitting a new 52-week high, after the company reported a revenue beat in the fiscal first quarter. Toyota posted operating income of 1.12 million yen ($7.84 billion), which was 94% higher than a year prior. Analysts polled by Refinitiv had expected 9.878 trillion yen.

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Coinbase – Shares of the crypto exchange dropped 4.5% after a federal judge said some crypto assets are securities regardless of the context in which they are sold. The opinion came from the same Manhattan federal court that handed down a controversial ruling in the Securities and Exchange’s suit against Ripple in July, which said the opposite in the case of Ripple’s XRP token and gave investors optimism that Coinbase might prevail in its own battle with the SEC.
ResMed — The health technology stock advanced 1.3% after RBC upgraded shares to outperform, citing an appealing risk-reward profile.
Gap, American Eagle— Shares of Gap were up 3.1% after Barclays upgraded the stock to overweight from equal weight. Analyst Adrienne Yih assigned a $13 price target to the company, which suggests shares could rally 26.2% from Monday’s close. Barclays also upgraded retailer American Eagle, which gained 4.2%.
DoorDash — Shares tumbled 4.6% ahead of the company’s quarterly earnings announcement Wednesday after the bell.
ZoomInfo Technologies – Shares tumbled almost 27% after the data company reported a weak revenue outlook for the third quarter in its financial update late Monday. ZoomInfo forecast $309 million to $312 million in revenue for the quarter. Analysts expect $326 million, according to Refinitiv. The company also missed revenue expectations for the most recent quarter.

JetBlue Airways – The airline saw shares fell more than 8% after it cut its 2023 outlook and warned of a potential loss in the current quarter, pointing to challenges from a shift toward international travel and the the end of its partnership with American Airlines in the Northeast. Earnings and revenue for the second quarter were in line with analysts’ estimates.
Zebra Technologies — The stock slid more than 17% after the company posted disappointing results for the second quarter. While earnings topped analyst estimates, revenue came below expectations. The company’s third-quarter earnings guidance of 60 cents to $1 also missed analyst estimates of $3.76 earnings per share from FactSet. 
Norwegian Cruise Line Holdings, Carnival — Shares of Norwegian Cruise Line plunged 12% Tuesday. While the company posted an earnings and revenue beat in the second quarter, its third-quarter guidance missed analyst estimates. Carnival’s shares also shed 5.7% in tandem.
Rockwell Automation — The industrial automation company’s stock fell 7.5% after a disappointing earnings report. The company reported $3.01 earnings per share and revenue of $2.24 billion. Analysts had estimated $3.18 earnings per share on $2.34 billion in revenue, according to FactSet. 
Monolithic Power Systems — The semiconductor-based electronics company’s stock lost 1.6% following its earnings announcement Monday after the bell. Despite reporting better-than-expected earnings and revenue in the second quarter, its third-quarter revenue guidance was lower than analysts were expecting.
Molson Coors Beverage — Shares fell 4.6l% after the brewing and beverage company reported mixed quarterly results before the bell. Its second-quarter revenue of $3.27 billion fell short of the $3.29 billion expected from analysts polled by StreetAccount. Adjusted earnings per share, however, topped expectations.
Leidos Holdings — The defense solutions company’s shares rallied 6.9% after its second-quarter results topped analyst estimates. The company posted $1.80 earnings per share on $3.84 billion in revenue. Analysts polled by FactSet had expected $1.57 earnings per share on $3.72 billion in revenue. 
Eaton Corporation — The power management company’s shares increased 6.6% after beating analyst expectations on both earnings and revenue in the second quarter. The company’s full-year earnings guidance also came above estimates. 
Global Payments — Shares jumped 9.5% following the company’s second-quarter earnings announcement. Global Payments reported $2.62 adjusted earnings per share on $2.2 billion in adjusted net revenue. Meanwhile, analysts had estimated $2.59 earnings per share on $2.19 billion in revenue, according to FactSet. 
— CNBC’s Alexander Harring, Yun Li, Pia Singh, Tanaya Macheel, Michelle Fox and Sarah Min contributed reporting More

Stockmarkets, the economist Paul Samuelson once quipped, have predicted nine out of the last five recessions. Today they stand accused of crying wolf yet again. Pessimism seized trading floors around the world in 2022, as asset prices plunged, consumers howled and recessions seemed all but inevitable. Yet so far Germany is the only big economy to have actually experienced one—and a mild one at that. In a growing number of countries, it is now easier to imagine a “soft landing”, in which central bankers succeed in quelling inflation without quashing growth. Markets, accordingly, have spent months in party mode. Taking the summer lull as a chance to reflect on the year so far, here are some of the things investors have learned.The Fed was serious…Interest-rate expectations began the year in an odd place. The Federal Reserve had spent the previous nine months tightening its monetary policy at the quickest pace since the 1980s. And yet investors remained stubbornly unconvinced of the central bank’s hawkishness. At the start of 2023, market prices implied that rates would peak below 5% in the first half of the year, then the Fed would start cutting. The central bank’s officials, in contrast, thought rates would finish the year above 5% and that cuts would not follow until 2024.The officials eventually prevailed. By continuing to raise rates even during a miniature banking crisis (see below), the Fed at last convinced investors it was serious about curbing inflation. The market now expects the Fed’s benchmark rate to finish the year at 5.4%, only marginally below the central bankers’ own median projection. That is a big win for a central bank whose earlier, flat-footed reaction to rising prices had damaged its credibility.…yet borrowers are mostly weathering the stormDuring the cheap-money years, the prospect of sharply higher borrowing costs sometimes seemed like the abominable snowman: terrifying but hard to believe in. The snowman’s arrival has thus been a double surprise. Higher interest rates have proved all-too-real but not-so-scary. Since the start of 2022, the average interest rate on an index of the riskiest (or “junk”) debt owed by American firms has risen from 4.4% to 8.1%. Few, though, have gone broke. The default rate for high-yield borrowers has risen over the past 12 months, but only to around 3%. That is much lower than in previous times of stress. After the global financial crisis of 2007-09, for instance, the default rate rose above 14%.This might just mean that the worst is yet to come. Many firms are still running down cash buffers built up during the pandemic and relying on dirt-cheap debt fixed before rates started rising. Yet there is reason for hope. Interest-coverage ratios for junk borrowers, which compare profits to interest costs, are close to their healthiest level in 20 years. Rising rates might make life more difficult for borrowers, but they have not yet made it dangerous.Not every bank failure means a return to 2008In the panic-stricken weeks that followed the implosion of Silicon Valley Bank, a mid-tier American lender, on March 10th, events started to feel horribly familiar. The collapse was followed by runs on other regional banks (Signature Bank and First Republic Bank also buckled) and, seemingly, by global contagion. Credit Suisse, a 167-year-old Swiss investment bank, was forced into a shotgun marriage with its long-time rival, ubs. At one point it looked as if Deutsche Bank, a German lender, was also teetering.Mercifully a full-blown financial crisis was averted. Since First Republic’s failure on May 1st, no more banks have fallen. Stockmarkets shrugged off the damage within a matter of weeks, although the kbw index of American banking shares is still down by about 20% since the start of March. Fears of a long-lasting credit crunch have not come true.Yet this happy outcome was far from costless. America’s bank failures were stemmed by a vast, improvised bail-out package from the Fed. One implication is that even mid-sized lenders are now deemed “too big to fail”. This could encourage such banks to indulge in reckless risk-taking, under the assumption that the central bank will patch them up if it goes wrong. The forced takeover of Credit Suisse (on which ubs shareholders were not given a vote) bypassed a painstakingly drawn-up “resolution” plan detailing how regulators are supposed to deal with a failing bank. Officials swear by such rules in peacetime, then forswear them in a crisis. One of the oldest problems in finance still lacks a widely accepted solution.Stock investors are betting big on big tech—againLast year was a humbling time for investors in America’s tech giants. These firms began 2022 looking positively unassailable: just five firms (Alphabet, Amazon, Apple, Microsoft and Tesla) made up nearly a quarter of the value of the s&p 500 index. But rising interest rates hobbled them. Over the course of the year the same five firms fell in value by 38%, while the rest of the index dropped by just 15%.Now the behemoths are back. Joined by two others, Meta and Nvidia, the “magnificent seven” dominated America’s stockmarket returns in the first half of this year. Their share prices soared so much that, by July, they accounted for more than 60% of the value of the nasdaq 100 index, prompting Nasdaq to scale back their weights to prevent the index from becoming top-heavy. This big tech boom reflects investors’ enormous enthusiasm for artificial intelligence, and their more recent conviction that the biggest firms are best placed to capitalise on it.An inverted yield curve does not spell immediate doomThe stockmarket rally means that it is now bond investors who find themselves predicting a recession that has yet to arrive. Yields on long-dated bonds typically exceed those on short-dated ones, compensating longer-term lenders for the greater risks they face. But since last October, the yield curve has been “inverted”: short-term rates have been above long-term ones (see chart). This is financial markets’ surest signal of impending recession. The thinking is roughly as follows. If short-term rates are high, it is presumably because the Fed has tightened monetary policy to slow the economy and curb inflation. And if long-term rates are low, it suggests the Fed will eventually succeed, inducing a recession that will require it to cut interest rates in the more distant future. This inversion (measured by the difference between ten-year and three-month Treasury yields) had only happened eight times previously in the past 50 years. Each occasion was followed by recession. Sure enough, when the latest inversion started in October, the s&p 500 reached a new low for the year.Since then, however, both the economy and the stockmarket have seemingly defied gravity. That hardly makes it time to relax: something else may yet break before inflation has fallen enough for the Fed to start cutting rates. But there is also a growing possibility that a seemingly foolproof indicator has misfired. In a year of surprises, that would be the best one of all. ■ More

Stockmarkets, the economist Paul Samuelson once quipped, have predicted nine out of the last five recessions. Today they stand accused of crying wolf yet again. Pessimism seized trading floors around the world in 2022, as asset prices plunged, consumers howled and recessions seemed all but inevitable. Yet so far Germany is the only big economy to have actually experienced one—and a mild one at that. In a growing number of countries, it is now easier to imagine a “soft landing”, in which central bankers succeed in quelling inflation without quashing growth. Markets, accordingly, have spent months in party mode. Taking the summer lull as a chance to reflect on the year so far, here are some of the things investors have learned.The Fed was serious…Interest-rate expectations began the year in an odd place. The Federal Reserve had spent the previous nine months tightening its monetary policy at the quickest pace since the 1980s. And yet investors remained stubbornly unconvinced of the central bank’s hawkishness. At the start of 2023, market prices implied that rates would peak below 5% in the first half of the year, then the Fed would start cutting. The central bank’s officials, in contrast, thought rates would finish the year above 5% and that cuts would not follow until 2024.The officials eventually prevailed. By continuing to raise rates even during a miniature banking crisis (see below), the Fed at last convinced investors it was serious about curbing inflation. The market now expects the Fed’s benchmark rate to finish the year at 5.4%, only marginally below the central bankers’ own median projection. That is a big win for a central bank whose earlier, flat-footed reaction to rising prices had damaged its credibility.…yet borrowers are mostly weathering the stormDuring the cheap-money years, the prospect of sharply higher borrowing costs sometimes seemed like the abominable snowman: terrifying but hard to believe in. The snowman’s arrival has thus been a double surprise. Higher interest rates have proved all-too-real but not-so-scary. Since the start of 2022, the average interest rate on an index of the riskiest (or “junk”) debt owed by American firms has risen from 4.4% to 8.1%. Few, though, have gone broke. The default rate for high-yield borrowers has risen over the past 12 months, but only to around 3%. That is much lower than in previous times of stress. After the global financial crisis of 2007-09, for instance, the default rate rose above 14%.This might just mean that the worst is yet to come. Many firms are still running down cash buffers built up during the pandemic and relying on dirt-cheap debt fixed before rates started rising. Yet there is reason for hope. Interest-coverage ratios for junk borrowers, which compare profits to interest costs, are close to their healthiest level in 20 years. Rising rates might make life more difficult for borrowers, but they have not yet made it dangerous.Not every bank failure means a return to 2008In the panic-stricken weeks that followed the implosion of Silicon Valley Bank, a mid-tier American lender, on March 10th, events started to feel horribly familiar. The collapse was followed by runs on other regional banks (Signature Bank and First Republic Bank also buckled) and, seemingly, by global contagion. Credit Suisse, a 167-year-old Swiss investment bank, was forced into a shotgun marriage with its long-time rival, ubs. At one point it looked as if Deutsche Bank, a German lender, was also teetering.Mercifully a full-blown financial crisis was averted. Since First Republic’s failure on May 1st, no more banks have fallen. Stockmarkets shrugged off the damage within a matter of weeks, although the kbw index of American banking shares is still down by about 20% since the start of March. Fears of a long-lasting credit crunch have not come true.Yet this happy outcome was far from costless. America’s bank failures were stemmed by a vast, improvised bail-out package from the Fed. One implication is that even mid-sized lenders are now deemed “too big to fail”. This could encourage such banks to indulge in reckless risk-taking, under the assumption that the central bank will patch them up if it goes wrong. The forced takeover of Credit Suisse (on which ubs shareholders were not given a vote) bypassed a painstakingly drawn-up “resolution” plan detailing how regulators are supposed to deal with a failing bank. Officials swear by such rules in peacetime, then forswear them in a crisis. One of the oldest problems in finance still lacks a widely accepted solution.Stock investors are betting big on big tech—againLast year was a humbling time for investors in America’s tech giants. These firms began 2022 looking positively unassailable: just five firms (Alphabet, Amazon, Apple, Microsoft and Tesla) made up nearly a quarter of the value of the s&p 500 index. But rising interest rates hobbled them. Over the course of the year the same five firms fell in value by 38%, while the rest of the index dropped by just 15%.Now the behemoths are back. Joined by two others, Meta and Nvidia, the “magnificent seven” dominated America’s stockmarket returns in the first half of this year. Their share prices soared so much that, by July, they accounted for more than 60% of the value of the nasdaq 100 index, prompting Nasdaq to scale back their weights to prevent the index from becoming top-heavy. This big tech boom reflects investors’ enormous enthusiasm for artificial intelligence, and their more recent conviction that the biggest firms are best placed to capitalise on it.An inverted yield curve does not spell immediate doomThe stockmarket rally means that it is now bond investors who find themselves predicting a recession that has yet to arrive. Yields on long-dated bonds typically exceed those on short-dated ones, compensating longer-term lenders for the greater risks they face. But since last October, the yield curve has been “inverted”: short-term rates have been above long-term ones (see chart). This is financial markets’ surest signal of impending recession. The thinking is roughly as follows. If short-term rates are high, it is presumably because the Fed has tightened monetary policy to slow the economy and curb inflation. And if long-term rates are low, it suggests the Fed will eventually succeed, inducing a recession that will require it to cut interest rates in the more distant future. This inversion (measured by the difference between ten-year and three-month Treasury yields) had only happened eight times previously in the past 50 years. Each occasion was followed by recession. Sure enough, when the latest inversion started in October, the s&p 500 reached a new low for the year.Since then, however, both the economy and the stockmarket have seemingly defied gravity. That hardly makes it time to relax: something else may yet break before inflation has fallen enough for the Fed to start cutting rates. But there is also a growing possibility that a seemingly foolproof indicator has misfired. In a year of surprises, that would be the best one of all. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More