Finance

The U.S. fell to fourth place worldwide in a study of “financial inclusion” in 42 markets.
Financial inclusion means having access to useful and affordable financial products.
Consumer sentiment in the U.S. is down across financial systems and employers.

“Financial inclusion,” defined as individuals and businesses having access to useful and affordable financial products, has declined in the U.S., according to new industry research.
The U.S. fell to fourth place, from second, this year in the second annual Global Financial Inclusion Index compiled by the Centre for Economics and Business Research in London and Des Moines, Iowa-based Principal Financial Group. Singapore continued to hold the top spot.

Singapore is followed by Hong Kong, Switzerland, the U.S. and Sweden in the 2023 rankings, according to the research, which examined 42 markets worldwide. Singapore’s small size, with a population of just six million people, helps it in the ranking, but it is also boosted by its commitment to financial literacy, financial technology adoption and employer support. 
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A country’s employers, financial systems and governments are the pillars for what makes a system inclusive, which, in turn, affects consumer sentiment.
Consumer sentiment in the U.S. is down across financial systems and employers but is especially pronounced when it comes to the government. The percentage of people who feel the government acts in a way that helps them feel financially included declined to 50% in 2023, from 72% in 2022. Political polarization, evident in developments such as the recent threat of a federal shutdown, make matters worse. 
“It creates uncertainty and causes people to delay decisions that they might otherwise make about purchase around savings, and you don’t want to paralyze people’s decision-making around financial security,” Dan Houston, Principal Financial Group Chair and CEO, told CNBC in an exclusive interview.  More

The Supreme Court will hear oral arguments Tuesday in Consumer Financial Protection Bureau v. Community Financial Services Association of America.
The plaintiff alleges CFPB funding is unconstitutional because it’s not subject to annual appropriations from Congress.
Depending on how the court rules, past rules issued by the CFPB may be deemed illegal. Funding mechanisms of agencies like the Federal Reserve and government programs like Social Security might also be thrown into doubt.

Visitors walk across the U.S. Supreme Court plaza on the first day of the court’s new session on Oct. 2, 2023.
Bill Clark | Cq-roll Call, Inc. | Getty Images

The Supreme Court is set to hear oral arguments Tuesday in a case with the potential to gut the Consumer Financial Protection Bureau, a watchdog agency created in the wake of the 2008 financial crisis.
The case — CFPB v. Community Financial Services Association of America — hinges on the constitutionality of the agency’s funding. If the High Court sides with CFSA, a trade group representing payday lenders, its ruling could have broad and significant impacts for consumers, according to legal experts and consumer advocates.  

For example, any rules the CFPB has issued in the past 12 years — whether about credit cards, mortgages, payday loans or debt collection, for example — could be nullified, experts said. Some regulators like the Federal Reserve and government programs like Social Security share a similar funding model to the CFPB’s; they may also be called into question.
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“[The CFPB’s] future is on the line before the Court,” Better Markets, a consumer advocacy group, wrote Monday.
A ruling could come as late as June 2024.

Why the CFPB’s funding may be unconstitutional

The Consumer Financial Protection Bureau headquarters in Washington.
Samuel Corum/Bloomberg via Getty Images

The CFPB was established in 2011 by the Dodd-Frank financial-reform law in the wake of the Great Recession.

Lawmakers created the federal agency to protect consumers from predatory financial practices. To date, it has collected $17.5 billion in financial relief for about 200 million eligible people, according to agency data.
The recent case isn’t the first to pose a threat to CFPB operations. The Supreme Court ruled against the agency in a 2020 case, Seila Law v. CFPB, finding part of its structure to be unconstitutional but ultimately keeping the agency intact.
In the current case, the CFSA trade group sued the CFPB in 2018, seeking to invalidate a 2017 rule that cracked down on payday lenders.

[The CFPB’s] future is on the line before the Court.

Better Markets

The case was ultimately heard by the U.S. Court of Appeals for the Fifth Circuit, which ruled in October 2022 that the CFPB’s funding mechanism violated the Constitution’s appropriations clause.
The agency isn’t subject to annual appropriations, the budget process whereby Congress allocates funding to various parts of the federal government. (A breakdown of this process is what almost led to a government shutdown on Sunday.)   
Instead, the CFPB’s funding isn’t authorized by Congress each year. It has an independent funding structure sourced through the Federal Reserve — an attempt to shield the agency from political pressures, experts said. Its director requests those funds each year, capped at 12% of the Federal Reserve System’s total operating expenses.

The Fifth Circuit ruled this structure was unconstitutional, and that the payday rule was therefore illegal.
Such a ruling appears to be unprecedented, the Congressional Research Service said.
“The Fifth Circuit’s decision is significant as the first appellate decision — and perhaps the first court decision ever — to conclude that congressional action, as opposed to executive or judicial action, can violate the Appropriations Clause,” it wrote.

Why the Supreme Court may gut the CFPB

If the Supreme Court were to agree, it could pose an “existential” threat to the agency, said John Coleman, partner at the law firm Orrick and former deputy general counsel for litigation at the CFPB from 2016 to 2021.
For one, it’s possible that the agency would exist only as a shell of its former self.
“It would still exist as a creation of Congress,” Coleman said. “But if its funding stream is deemed unconstitutional, it cannot spend those funds, which calls into question how it pays its employees.
“Without employees, an agency can’t do anything.”

Rohit Chopra, director of the CFPB, testifies during a House Financial Services Committee hearing on June 14, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

Additionally, such a ruling would call into question the agency’s past and future rulemakings, experts said.
“[It] could cast legal doubt over every substantive action that the CFPB has taken since at least July 21, 2011, when the Bureau’s authorities went into full effect, if not since its inception a year earlier, as well as any future Bureau action,” the Congressional Research Service said.
“This would include myriad regulatory actions, such as dozens of rulemakings, enforcement actions, and examinations the Bureau has conducted over the past 12 years,” it added.
Such a ruling would have a “devastating” impact on the real estate industry, including the destabilization of the mortgage market, for example, according to a court filing made by industry groups including the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors.

Numerous other government agencies and programs are funded outside the annual appropriations process, said Rachel Gittleman, financial services outreach manager at the Consumer Federation of America.
They include, among others: the Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Federal Housing Finance Agency, National Credit Union Administration, Farm Credit Administration, Farm Credit Insurance Corporation, Medicare, Medicaid, Social Security, the Affordable Care Act and unemployment benefits, she said.
Such an outcome is unlikely, however, Coleman said. If it were to rule against the CFPB, the High Court would likely preserve the validity of CFPB’s past rulemakings and give Congress some time to determine an alternative funding mechanism, he said. (Of course, the latter might be difficult in a divided Congress during an election year, he said.)
“We’ll know a lot more on Tuesday after we hear from the justices,” Coleman said. More

Co-CEOs, Neil Blumenthal & Dave Gilboa of Warby Parker at the NYSE, September 29, 2021.
Source: NYSE

Check out the companies making headlines before the bell.
Warby Parker — Warby Parker jumped about 4% after Evercore ISI upgraded the eyeglass retailer to an outperform rating, saying that shares could rally more than 50% as the company’s margins and revenue growth reaccelerate.

Eli Lilly, Point Biopharma — Shares of Point Biopharma popped 85% after Eli Lilly announced it would buy the cancer therapy maker for $12.50 in cash, or roughly $1.4 billion.
HP — Shares added 2.5% after being double upgraded by Bank of America to buy from underperform. The bank expects improving fundamentals for the PC maker, with free cash flow hitting a bottom in 2023.
McCormick— Shares of the spice maker slipped about 3% before the bell. McCormick reported earnings of 65 cents per share, excluding items, for the recent quarter on revenues of $1.68 billion. That came in roughly in line with the EPS of 65 cents and $1.7 billion in revenue expected by analysts polled by StreetAccount.
Warner Music Group — Warner added 3.5% after UBS upgraded the stock to buy from neutral. UBS said the company should be a long-term beneficiary of trends in the music industry. 
Airbnb — Airbnb shares slipped 3% in the premarket after KeyBanc Capital Markets downgraded the short-term home-rental stock as tailwinds from the post-pandemic boom in travel demand ease.

Fiverr International — Shares gained 2.8% after Roth MKM upgraded the Fiverr International to buy from neutral. The Wall Street firm is “incremental positive” on the stock, citing a freelancer survey that supports Fiverr’s leading position among gig workers.
Emerson Electric — The industrial giant dipped 1% in premarket trading after UBS downgraded the stock to neutral from buy, citing the company’s valuation and limited upside. The firm increased its price target, however.
— CNBC’s Alex Harring, Sarah Min, Michelle Fox and Pia Singh contributed reporting More

The Sphere is seen during its opening night with the U2:UV Achtung Baby Live concert at the Venetian Resort in Las Vegas on Sept. 29, 2023.
Tayfun Coskun | Anadolu Agency | Getty Images

Check out the companies making headlines in midday trading.
Sphere Entertainment — Shares of the media and entertainment company climbed 11.1% in midday trading after a U2 show debuted its Las Vegas Sphere venue Friday night. Built by Madison Square Garden Entertainment, Sphere is said to be the newest iteration of immersive and futuristic concert experiences, complete with a next-generation wraparound screen.

Bitcoin stocks — Stocks tied to digital currency trading advanced in lockstep with a rally in crypto prices. Notably, Riot jumped 5.9%, while Marathon Digital, Coinbase and MicroStrategy finished modestly higher.
Discover Financial Services — The credit card issuer surged almost 4.9% after it disclosed in an 8K filing with the U.S. Securities and Exchange Commission a consent agreement with the Federal Deposit Insurance Corporation.
Gold and silver miners — Gold and silver miners struggled Monday as prices for the metals slid. Coeur Mining and Hecla Mining both dropped more than 7%. Harmony Gold Mining and Gold Resource shares both fell more than 5%.
Instacart — Maplebear, the food delivery company doing business as Instacart, fell 9.2% in midday trading. On Monday, The Information, citing people familiar with the matter, reported the Wall Street bank that underwrote Instacart’s initial public offering forecast a weak second-half outlook with slower revenue growth and lower profits. Separately, Gordon Haskett initiated coverage of the company with a hold rating.
SolarEdge — Shares erased 5.4% following a downgrade to equal weight from overweight at Barclays. The firm said the company will likely see price cuts in the next year.

Insulet — Shares of the diabetes tech company jumped 3.5% after Jefferies upgraded it to buy from hold. The Wall Street bank said investors should buy the dip after the stock’s underperformance in the first half of 2023.
Norfolk Southern — The railroad stock slipped 2.8% after Bank of America downgraded it to neutral from buy. The bank cited continuing service issues, including a data center outage Friday through Saturday, which are “an increasing risk to future earnings.”
Nvidia — Shares of the artificial intelligence beneficiary jumped around 3% Monday after Goldman Sachs added the semiconductor AI stock to its Americas conviction list for the month. Goldman said it expects Nvidia to “maintain its status as the accelerated computing industry standard for the foreseeable future.”
Meta — The Facebook and Instagram parent advanced 2.2% after Truist reiterated a buy rating on the stock. Truist said Meta should see sustained growth into the fourth quarter.
Apple — The iPhone maker rose 1.5% after JPMorgan reiterated Apple as overweight. The firm said lead times for Apple products have moderated.
Amazon — The e-commerce giant added 1.8% following UBS’ reiteration of a buy rating on the stock. UBS is bullish on Amazon’s Prime video content advertising opportunity.
— CNBC’s Yun Li, Lisa Kailai Han, Pia Singh, Michelle Fox, Sarah Min and Scott Schnipper contributed reporting. More

Bill Ackman, Pershing Square Capital Management CEO, speaking at the Delivering Alpha conference in NYC on Sept. 28th, 2023.
Adam Jeffery | CNBC

Pershing Square’s Bill Ackman on Monday sounded alarms on the economy, which he believes has begun to decelerate on the back of aggressive rate hikes.
“[T]he Fed is probably done. I think the economy is starting to slow,” Ackman said on CNBC’s “Squawk Box.” “The level of real interest rates is high enough to slow things down.”

In a bid to fight stubbornly high inflation, the Federal Reserve has taken interest rates to the highest level since 2006, while signaling borrowing costs will stay elevated for longer. The central bank last month forecast it will raise rates one more time this year. Many on Wall Street have grown worried about a recession as the economy feels the lag effects from massive tightening measures undertaken since March of last year.
“High mortgage rates … high credit card rates, they’re starting to really have an impact on the economy,” Ackman said. “The economy is still solid, but it’s definitely weakening. Seeing lots of evidence of weakening in the economy.”
The billionaire hedge fund manager said he believes long-term Treasury yields could shoot even higher in the current environment. He sees the 30-year rate testing the mid-5% and the benchmark 10-year approaching 5%. Ackman said he’s still shorting the 30-year Treasury bills as a hedge.
The 10-year Treasury note Monday yielded 4.64% after touching a 15-year high last week, while the 30-year on Monday yielded about 4.76%.
“The 30-year Treasury is likely to go higher,” Ackman said. “I don’t know that the 10 year has to go meaningfully above 5% because you’re seeing some weakness in the economy. But on a long term basis, we think structural inflation is going persistently higher in a world like that.”

Ackman said investors who have borrowed short term at a low fixed rate and are getting repriced, especially in the commercial real estate market, are going to have a “very challenging period.”
“I think that’s really the big threat,” he said.
U.S. regulators recently approved Ackman’s unique SPAC structure — called “SPARC,” a special purpose acquisition rights company — in which he will inform investors of a potential acquisition planned for the SPAC before they are asked to pledge funds. More

Check out the companies making headlines before the bell:
Rivian Automotive — Shares popped 3.3% in the premarket. Evercore ISI upgraded Rivian Automotive to outperform from in line, and raised its price target, saying the electric truck maker could be the next Tesla and BYD.

The Sphere is seen during the opening night with U2:UV Achtung Baby Live concert at the Venetian Resort in Las Vegas, Nevada, United States on September 29, 2023. 
Tayfun Coskun | Anadolu Agency | Getty Images

Sphere Entertainment — The stock jumped more than 7% after the entertainment and media company opened its Sphere venue in Las Vegas with a show from U2 on Friday night. The Sphere will host live concerts and sporting events.
Insulet — Shares gained 3.4% in premarket trading. Jefferies upgraded the medical device maker to buy from hold, saying investors should take advantage of recent underperformance to add exposure.
Sunnova Energy International — UBS initiated coverage of the solar company with a buy rating, sending shares up 1.5% in premarket trading. The Wall Street firm believes Sunnova is well positioned to take market share thanks to increasing demand for third-party-owned residential solar systems. Its $16 price target implies nearly 53% upside from Friday’s close. 
Clorox — The consumer products company rose 3.3% in premarket trading after D.A. Davidson upgraded Clorox to buy from neutral. The investment firm said that Clorox’s stock could rally as the company gives investors more clarity about the fallout from an August cyberattack.
AMC Entertainment — Shares of the entertainment company moved up 2% before the bell after it announced that Renaissance: A Film by Beyoncé, would be distributed in the U.S. in December.

SolarEdge Technologies — The solar stock dropped 2.7% after Barclays downgraded SolarEdge Technologies to equal weight from overweight, saying price cuts are “inevitable” next year for the company.
Nvidia — Shares rose more than 1% after Goldman Sachs added the chipmaker to its Americas conviction list for the month, saying this year’s market leader will maintain its position. The Wall Street firm has a buy rating on the stock.
FedEx — The stock rose 0.5% in the premarket. Susquehanna upgraded the transportation company to positive from neutral, saying the long-term opportunity is greater than the near-term risk.
Chubb — Shares fell 1.5% after JPMorgan downgraded Chubb Limited to neutral from overweight, saying neither the commercial lines market nor the stock’s valuation is as compelling.
— CNBC’s Michelle Fox, Lisa Han and Jesse Pound contributed reporting More

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Major oil executives, policymakers and ministers convene in Abu Dhabi at ADIPEC this week to discuss energy markets as the world grapples with a transition to clean energy. It comes just weeks ahead of the COP28 climate talks, which will be held in Dubai later this year.

CNBC’s Steve Sedgwick is joined in Abu Dhabi by the CEOs of BP, Shell and other major international energy companies for a discussion on the challenges of the energy transition.
Titled “Actions for a net-zero world: solving the current energy trilemma,” Monday’s panel includes Murray Auchincloss, interim BP CEO, Occidental CEO Vicki Hollub, Eni CEO Claudio Descalzi, TotalEnergies CEO Patrick Pouyanne, Shell CEO Wael Sawan and Tengku Muhammad Tufik, the president and CEO of Petronas.
Subscribe to CNBC on YouTube.  More

Billions in FTX customer and investor money is tied up in an ongoing bankruptcy process.
Some who have lost millions of dollars tell CNBC they haven’t lost faith in the industry and are cashing out through other means in order to reinvest in crypto.
“I’m in quite a big hole right now,” says one customer. “I’m probably going to have to file for bankruptcy.

FTX’s multibillion-dollar cryptocurrency blowup hasn’t destroyed all faith in the industry. 
In a new documentary premiering Monday, FTX customers, insiders and investors tell CNBC that despite not receiving a single dollar worth of cryptocurrency back, they’re optimistic on the industry and plan to keep investing. 

Evan Luthra, an app developer, entrepreneur and angel investor, told CNBC he lost $2 million dollars in the collapse of FTX. Luthra said he knew when FTX filed for bankruptcy in late 2022 that he wouldn’t have “access to any of this money for the next few years.” He continues to speak at crypto conferences

FTX Customer, Evan Luthra, spoke to CNBC in Miami before speaking at a crypto conference.

“I do want everybody to understand that the mistake here was not bitcoin, the mistake was not crypto,” Luthra said. “The fundamental reason why we buy bitcoin, why we use bitcoin has not changed.” 
Luthra said his hefty loss on FTX hasn’t shaken his bitcoin bullishness.
“I know it’s going to end up at over $100,000 sooner or later anyways, so for me it’s a great buy,” he said. Bitcoin is currently trading at about $26,900, down from a high of about $69,000 in December 2021.
“All the success is made in the trenches, not when everybody’s already celebrating,” he said. 

FTX, once one of the largest cryptocurrency exchanges in the world, spiraled into bankruptcy after its swift collapse last year. Shortly after, FTX investigators said they discovered $8.9 billion dollars in customer assets were missing from the exchange.
FTX founder and ex-CEO Sam Bankman-Fried faces seven criminal charges for fraud and violating campaign finance violations. He’s pleaded not guilty to all charges. Jury selection begins in Manhattan on Tuesday.

FTX Founder Sam Bankman-Fried leaves from Manhattan Federal Court after court appearance in New York, United States on June 15, 2023.
Fatih Aktas | Anadolu Agency | Getty Images

At a bankruptcy hearing in April 2022, an attorney for FTX said $7.3 billion dollars in cash and liquid crypto assets had been recovered from the exchange. So far, none of the customers interviewed by CNBC have received any of their money back. 
Jake Thacker, an FTX customer in Portland, Oregon, told CNBC he lost hundreds of thousands of dollars shortly after losing his job in the tech industry.
“I’m in quite a big hole right now,” Thacker said. “I’m probably going to have to file for bankruptcy.”

FTX customer, Jake Thacker spoke with CNBC after losing hundreds of thousands of dollars on the exchange.

Thacker told CNBC he “would encourage people to still invest in crypto.” 
“I probably would give them some different advice at this point,” he said. That advice would come with the warning, “Here’s what I learned, don’t make the same mistakes I did.” 
Bhagamshi Kannegundla said he first heard about FTX in an advertisement featuring comedian Larry David that aired during the Super Bowl. 
“I was like, oh my goodness, there’s all these big name people utilizing FTX,” Kannegundla said. “So I was like, OK, hey, I think I’ll be safe using this.”
Less than a year later, Kannegundla was out $174,000, representing around 60% of his crypto portfolio, from FTX’s collapsed.

Bhagamshi Kannegundla, an FTX customer, told CNBC he sold his bankruptcy claim to reinvest in crypto.

“Based on all the other bankruptcies and everything that happened in the crypto market, I was really, really worried about getting anything back, and then how long I would have to wait,” Kannegundla said.
Instead of waiting for the recoveries to eventually be distributed to FTX customers,  Kannegundla went online and found a company that would help him sell his bankruptcy claim for pennies on the dollar to get a little bit of cash more quickly.
Kannegundla said his bankruptcy claim was for $174,000. He received around $19,000 in the sale. 
“The buyer was, after all the due diligence and everything, it went down to like 11% of the $174,000,” he said.
Years later, if the FTX bankruptcy process recovers more than the 11 cents on the dollar for his claim, the buyer pockets the difference. Kannegundla said he will have “zero regrets” if that money gets recovered because he has a different strategy.
“I wanted to get the cash from the bankruptcy claim, primarily to invest in crypto again,” he said. “I felt as if there was a good chance for me to make money in the next five to 10 years.” 
Kannegundla understands that it may be an odd choice.
“People might think I’m crazy for this,” he said. “After going through the FTX and all these other bankruptcies, why would you want to buy any more crypto?” 
He rationalized his decision. 
“When you believe in something as far as technology, you will go through it, you know, it’s kind of like the same person who bought like, let’s say Amazon stock,” he said. 
Another FTX customer, Sunil Kavuri, who has a background in traditional finance, said he moved his digital assets from rival exchange Binance to FTX because he believed it was a safe place for his money. He pointed to the fact that the company raised money from top venture capital firms Sequoia and Paradigm.  
“I thought OK, this is a very safe, institutionally backed exchange,” he said.

Bahamas-based crypto exchange FTX filed for bankruptcy in the U.S. on Nov. 11, 2022, seeking court protection as it looks for a way to return money to users.
Nurphoto | Nurphoto | Getty Images

In an email to CNBC, Kavuri said he hasn’t purchased any crypto since the collapse of FTX because he “wanted to take a break from suffering a massive loss.” Over the last 10 months, he said the majority of his time has been spent fighting “for the rights of all FTX users that lost money due to the FTX bankruptcy.” 
“It hasn’t shaken my faith in the underlying asset itself,” Kavuri said. “I think cryptocurrencies generally, it should be here to stay.”

FTX Customer, Sunil Kavuri spoke with CNBC about his multi-million dollar loss after the exchange filed for bankruptcy.

Across the industry, crypto still has its believers despite the madness of 2022.
Brett Harrison, the former President of FTX’s U.S. business, said he was blindsided by his parent company’s collapse. But he’s doubling down on cryptocurrencies.
Harrison, who left FTX less than two months before its demise, told CNBC he “had no reason to suspect that FTX wasn’t anything other than extremely profitable and in great shape” prior to his departure.

Brett Harrison, the Former President of FTX US left the company less than two months before it’s collapse.

Speaking about his plan to move forward, Harrison said he’s been raising money to start a new company in the space called Architect Financial Technologies. 
“I’d really like to build a technology and a tech-forward brokerage that allows people to trade seamlessly and easily in digital assets and any kind of other tokenized products in addition to other asset classes,” Harrison said. 
Anthony Scaramucci, founder of Skybridge Capital, said he felt like he was late to the game. He didn’t make his first bitcoin investment until October 2020. He later started Skybridge to focus on digital assets. 

Anthony Scaramucci, the founder of Skybridge Capital, spoke with CNBC at his office in New York.

Scaramucci told CNBC he “was building a close relationship with Bankman-Fried” and felt “betrayed and disappointed” when FTX collapsed after making a $10 million dollar investment in the exchange’s FTT token.
He said he still sees “a very strong bull case for Web 3,” referring to broad technologies surrounding crypto and the prospective future of a distributed internet.
“You got to be patient” he said. “If you’re going to go through a period of fraud, and fraudsters and over leverage, you have to see it to the other side.” More