Finance

The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. 
Tyrone Siu | Reuters More

Retail sales rose by 2.5% in July from a year ago, below expectations for a 4.5% increase, according to analysts polled by Reuters.
Industrial production rose by 3.7% in July from a year ago, below the 4.4% increase analysts had expected.
Fixed asset investment rose by 3.4% for the first seven months of the year from a year ago, below the 3.8% forecast by the Reuters poll.

BEIJING — China reported July data that broadly missed expectations. The National Bureau of Statistics report also did not include the unemployment figure for young people, which has soared to record highs in recent months.
Retail sales rose by 2.5% in July from a year ago, below expectations for a 4.5% increase, according to analysts polled by Reuters.

Industrial production rose by 3.7% in July from a year ago, below the 4.4% increase analysts had expected.
Fixed asset investment rose by 3.4% for the first seven months of the year from a year ago, below the 3.8% forecast by the Reuters poll.
The urban unemployment rate ticked up to 5.3% in July from 5.2% in June.

We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, shore up confidence and prevent risks.

National Bureau of Statistics

Contrary to prior reports, the latest release did not break down unemployment by age. The age 16 to 24 category has seen unemployment far above the overall jobless rate, reaching a record high of 21.3% in June.
A spokesperson for the National Bureau of Statistics said the bureau is suspending the youth unemployment number release due to economic and social changes, and is reassessing its methodology.

On a year-to-date basis, real estate investment fell by 8.5% from a year ago as of July, a greater decline than as of June.

China’s massive real estate market has struggled after decades of debt-fueled, rapid growth.
Bloomberg | Bloomberg | Getty Images

Online retail sales of physical goods rose by 6.6% in July from a year ago, a sharp slowdown from double-digit increases in recent months, according to CNBC calculations of official data.
Within retail sales, catering saw the biggest increase of 15.8%, while sports and entertainment products saw a 2.6% year-on-year increase. Big-ticket items such as autos and home appliances saw sales declines in July from a year ago.
Jewelry saw sales drop by 10% during that time.
Retail sales posted the slowest growth since a decline in December, according to official data.
The statistics bureau on Tuesday released retail sales from services for the first time — showing a 20.3% increase for the first seven months of the year from a year ago, pointed out Bruce Pang, chief economist and head of research for Greater China at JLL.
He added that some services sector spending, especially in tourism, isn’t captured by the official data because it looks at businesses operating above a certain scale.
The bureau did not release monthly figures or a monetary amount for retail sales of services.

The statistics bureau noted an “intricate and complicated” situation overseas and domestically, and “insufficient” domestic demand.
“We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, shore up confidence and prevent risks,” the bureau said in an English-language release.

Slowing growth, deflation concerns

Domestic demand has remained muted outside of summer tourism. Imports fell by 12.4% year-on-year in July and have mostly declined each month from the same period in 2022.
The consumer price index fell in July, adding to growing worries about deflation.
However, core CPI, which strips out food and energy prices, actually posted its fastest increase in July since January. Factory activity in July picked up to its highest since March, despite a continued decline.

Real estate worries

Weighing on the economy is an ongoing slump in the massive real estate sector. Property market troubles have come to the forefront again with developer Country Garden now on the brink of default.
When asked Tuesday about Country Garden and the real estate slump, statistics bureau spokesperson Fu Linghui said those events have affected market expectations.
But he described the real estate sector overall as being in a period of “adjustment” and that the current “phase” would pass as policy changes took effect. That’s according to a CNBC translation of his Mandarin-language remarks.
Top leaders in late July signaled a shift away from its crackdown on real estate speculation. Authorities have announced a raft of measures to boost consumption, private sector investment and foreign investment.

Read more about China from CNBC Pro

Earlier on Tuesday, the People’s Bank of China unexpectedly cut a key interest rate called the medium-term lending facility (MLF) — to 2.50% from 2.65%.
The last time the central bank cut by more than 10 basis points was in April 2020, according to Larry Hu, chief China economist at Macquarie.
“To be sure, cutting rate is far from enough. The biggest issue in the Chinese economy right now is the property sector,” Hu said.
“The property sector is at a critical juncture and the key concern is the downward spiral between sales and confidence,” he said. “Therefore, it’s hard for individual developers to save themselves. Policy is the only game changer for now.”
So far the overall approach to additional stimulus has been cautious, especially in real estate.
“Beijing has already done some things to ease the tensions in the property sector, but it has been too slow and too little, in our view,” Ting Lu, chief China economist at Nomura said in a note Monday.
“We believe that at some point in time Beijing will be compelled to take more measures to stem the downward spiral.” More

Former Goldman Sachs CEO Lloyd Blankfein pushed back on a report saying he had offered to return to the firm to help current CEO David Solomon.
When asked if he would return to helm Goldman, as CEOs at Disney and Starbucks have done in recent years, Blankfein laughed and said it never came up in conversation.

Former Goldman Sachs CEO Lloyd Blankfein said he couldn’t imagine returning to his old firm, disputing a news report that said Blankfein offered to return in some capacity.
The New York Times piece “misquoted” the former executive, Blankfein told CNBC Monday in a phone conversation.

The Times reported Friday that Blankfein told his successor, David Solomon, in a June phone call that he was growing impatient with the firm’s progress. He could return to help their efforts, the Times reported.
“My conversation with him was, I offered to be helpful,” said Blankfein, who expressed support for Solomon. “I never used the word ‘return’.”
A New York Times representative didn’t immediately return a request for comment.
Solomon, who took over from Blankfein in October 2018, has been under fire for months for an ill-fated consumer banking effort. Current and former Goldman executives have leaked damaging details to the press about losses tied to the strategy, as well as embarrassing anecdotes about Solomon’s leadership style and DJ hobby.
When asked if he would return to helm Goldman, as CEOs at Disney and Starbucks have done in recent years, Blankfein laughed and said it never came up in conversation.

“I can’t imagine returning to the firm,” Blankfein said. “I think my days working 100-hour weeks are over.”
Blankfein then said he couldn’t speak further as he was in the midst of one of his retirement pursuits — playing a round of golf. More

A Discover Financial Services credit card.
Scott Eelis | Bloomberg | Getty Images

Check out the companies making headlines after the bell.
Discover Financial Services — The financial services stock fell more than 5% after announcing the resignation of its CEO. The board announced that Roger Hochschild would step down from the position, effectively immediately, and appointed John Owen as interim CEO and president.

Homebuilding stocks — Homebuilders D.R. Horton, Lennar and NVR rose in extended trading after regulatory filings revealed Warren Buffett’s Berkshire Hathaway added new positions in the stocks during the second quarter. Lennar and NVR added more than 1% each, while D.R. Horton rose 2.7%.
Getty Images — Shares of the content creation company tumbled about 15% in extended trading after it issued preliminary second-quarter results. Getty Images posted a loss of 1 cent per share, compared with the 9 cents per share earned in the year-ago period. Revenue came in at $225.7 million, down 3.3% from the prior year.
— CNBC’s Darla Mercado contributed reporting. More

UBS will pay a $1.4 billion settlement over “legacy” misconduct related to the bank’s offer and sale of residential mortgage-backed securities, federal prosecutors said.
It’s the final case brought by prosecutors over misconduct by the big banks.
The Justice Department alleged that the banks knew the mortgages underneath the securities were problematic or noncompliant but sold them anyway.

General view of the UBS building in Manhattan, New York, June 5, 2023.
Eduardo Munoz Alvarez | View Press | Corbis News | Getty Images

Swiss bank UBS agreed to pay a combined $1.4 billion in civil penalties over fraud and misconduct in its offering of residential mortgage-backed securities dating back to the global financial crisis, federal prosecutors announced Monday.
The bank, in its own statement Monday, described the settlement as dealing with a “legacy matter” dating from 2006 to 2007, leading up to the financial crisis.

The settlement concludes the final case brought by the U.S. Department of Justice against several of the largest financial institutions over misleading statements made to the purchasers of those mortgage-backed securities. The cumulative recoveries in the cases now total $36 billion, according to the Justice Department.
UBS’ settlement is nearly the same as the value of the residential mortgages it originated between 2005 and 2007, the year it stopped issuing residential mortgage-backed securities. UBS originated $1.5 billion in residential mortgages in those three years, the bank previously said in a 2018 statement challenging the Justice Department allegations.
“The vast majority of loans underlying the 40 RMBS listed in the complaint were originated by other financial institutions,” UBS said at the time.
In the years leading up to the financial crisis, investment banks packaged, securitized and sold bundles of mortgages to institutional buyers. Those securities were rated and graded according to quality, with various “tranches” of mortgages hypothetically safeguarding against the risk of complete default.
But unbeknownst to the buyers, those mortgages were not as high quality as their ratings suggested. UBS, similar to other banks who settled with the Justice Department, were aware that the mortgages underneath the mortgage-backed securities didn’t comply with underwriting standards.

UBS conducted “extensive” due diligence on the underlying loans before it created and sold the securities to its clients, prosecutors alleged, and despite knowing of the significant issues with the products, continued to sell them to financial success.
UBS had previously said that it had “fulfilled” its obligations to its clients, which the bank said were “highly sophisticated investors” and “some of the biggest financial institutions in the world.
The Justice Department has secured settlements with 18 other financial institutions over mortgage-backed security issues, including Bank of America, Citigroup, General Electric, Goldman Sachs, JPMorgan and Wells Fargo.
Credit Suisse, the defunct Swiss bank now owned by UBS, also settled with the Justice Department over misconduct related to MBS offerings. More

Russia’s rouble is now worth less than a solitary cent: on August 14th it slipped past the value of 100 to the American dollar. The currency is at its cheapest since the immediate aftermath of the invasion of Ukraine, and has become one of the world’s worst performers this year, outdone only by perennially troublesome peers like the Argentine peso, Venezuelan bolivar and Turkish lira. By the end of the day, the Bank of Russia had announced it would hold an emergency meeting on August 15th. Officials are expected to raise interest rates. It was the first time policymakers have had to scramble since the early stages of the invasion. Why has the currency collapsed, and what does it mean for Vladimir Putin’s ability to wage war? Often currency collapses are prompted by nervous international investors or fleeing domestic capital. Yet trading in the rouble, especially against the dollar, remains thin. Sanctions and capital controls have left Russia isolated from the international financial system. Therefore instead of reflecting the aggregated opinions of thousands of speculators, the behaviour of the rouble reflects the textbook economic model, acting as a barometer for the relative flow of exports out of the country (which earn foreign currency), against imports (which must be paid for with these earnings). Since the g7 group of large rich countries imposed a $60 price cap on Russian oil in December, the value of exports has slumped. Russia’s earnings were 15% lower in dollar terms from January to July than during the same period last year, a fact only partly explained by a lower global oil price. Imports have surged as the government prosecutes its war, and buys the goods to do so. In the first seven months of the year Russia’s current-account surplus, a measure of how much more foreign currency the country receives than spends, fell by 86%, to $25bn. On the one hand, this suggests the oil-price cap is having an impact. Attempts to dodge the policy—via wheezes involving the cost of shipping or transferring cargoes in “dark fleets”—are not making up for being forced to sell some oil at a discount. Yet on the other hand, it suggests Russia is finding ways to continue importing goods. German exports to Russia’s friendlier neighbours, for instance, have shot up suspiciously.A cheap currency raises the rouble value of the government’s oil revenues, but it also raises the cost of the imports. In June Andrei Belousov, Russia’s deputy prime minister, said the value at the time of 80-90 roubles a dollar was best for the country’s budget, exporters and importers. When the rouble was far stronger last year, thanks to oil revenues, the Russian government was happy to tout it as evidence Western sanctions were failing. That confidence has now been replaced by concern. On August 14th Maxim Oreshkin, an adviser to Mr Putin, wrote a column stressing the importance of a strong rouble and blaming the currency’s fall on the central bank. It is not clear that the Bank of Russia can do much in the short term. The country’s isolation means higher interest rates are unlikely to tempt “hot money” (speculative funds seeking short-term returns). Instead, the focus will be on the Russian capital that is now at risk of fleeing. Strengthening capital controls, introduced in 2022 and weakened a little this year, could staunch the flow, but would take time to have an impact. Direct intervention in currency markets is another option. The central bank has already scaled back purchases of foreign currency. Under a budgetary rule, Russia used to buy other currencies in exchange for roubles if it had a surplus of oil and gas revenue, in order to build up reserves. On August 9th this rule was abandoned. According to official figures, the country had foreign-currency reserves of $587bn at the start of August, suggesting the central bank has the firepower to prop up the rouble’s value should it wish. The problem is that some $300bn of these reserves are frozen by the West.That leaves the government with a choice. It could cut back on spending, including on its armed forces, to reduce imports. Alternatively, and in all likelihood, the civilian economy will take the pain. Rising inflation and higher interest rates will weaken the purchasing power of ordinary Russians, forcing them to buy fewer foreign goods. Thus the fate of Russia’s economy will not be decided by the judgments of international financiers but by the depths of Mr Putin’s aggression. It is a far more unhappy situation in which to be trapped. ■ More

Traders work on the floor of the New York Stock Exchange, Aug. 22, 2022.
Brendan McDermid | Reuters

Check out the companies making headlines in midday trading.
AMC — Shares of the movie theater stock sank almost 35% after a judge late Friday approved AMC Entertainment’s plan to convert its preferred shares to common stock. AMC’s preferred units, or APEs, surged about 17%.

PayPal — PayPal stock added 2% after the company announced Intuit’s Alex Chriss would take over as chief executive beginning in September.
U.S. Steel, Cleveland-Cliffs — The steel maker founded by Andrew Carnegie and J.P. Morgan climbed nearly 32% after rejecting a buyout offer from peer Cleveland-Cliffs on Sunday, with the company asserting plans to consider other offers. Cleveland-Cliffs stock, meanwhile, climbed more than 8%.
Tesla — Shares slipped 2% after the company announced lowered prices on some models in China.
Hawaiian Electric — Shares plummeted more than 33% after Wells Fargo lowered its target price on the stock earlier and maintained an underweight rating Monday, citing wildfires in Maui as a looming risk.
Nikola — The stock lost 9% after the green truck maker announced a recall of 209 electric trucks following an independent investigation of a June fire. The company, which is coming off blows from complicated second-quarter earnings and news of a CEO departure, said this doesn’t affect its hydrogen fuel cell trucks.

Okta — Stock in the identity management firm added 2.4% in midday trading after an upgrade to buy from Goldman Sachs over an improving risk/reward ratio.
Teledyne Technologies — The conglomerate climbed 4% after Goldman Sachs upgraded the stock to a buy from neutral. Goldman called the company a cash compounder.
— CNBC’s Samantha Subin, Alex Harring, Pia Singh and Hakyung Kim contributed reporting. More

Workers replace a roller that compresses steel at the A&T Stainless steel plant in Midland, Pennsylvania, March 2, 2020.
Michael Rayne Swensen | Bloomberg via Getty Images

Check out the companies making headlines in premarket trading.
U.S. Steel — Shares of the steel producer surged more than 26% premarket after it rejected a $7.3 billion buyout proposal on Sunday from rival Cleveland-Cliffs and said it’s reviewing “strategic alternatives.” Cleveland-Cliffs shares were flat.

Tesla — The electric vehicle stock fell 2.2% in premarket trading. The move comes after Tesla lowered the price in China on its Model Y long-range and performance models by 14,000 yuan, according to a company post on Chinese social media platform Weibo.
Okta — The identity management company’s stock popped 5% before the bell. Goldman Sachs upgraded shares of Okta to a buy rating, citing a favorable risk reward and expectations for an inflection in subscription revenues.
Hawaiian Electric — The power stock slipped 2.2% before the bell after Wells Fargo pulled back its target price for shares and reiterated its underweight rating. Wells Fargo tied the price target cut to the wildfires risk.
Keysight Technologies — The tech stock dropped 2.2% following a Bank of America downgrade to underperform from neutral, citing the likelihood of worsening order trends. Keysight’s earnings report for the fiscal third quarter is slated for release Thursday.
Urban Outfitters — The clothing retailer shed 2.5% following a downgrade by Citi to neutral from buy. While the Wall Street firm expects an earnings beat when Urban Outfitters reports next week, it believes the risk/reward is more balanced at current levels. The Urban Outfitters brand will be slower to turn around, ultimately limiting possible upside to earnings per share, the firm wrote.

Parsons Corporation — The technology stock climbed 2.5% in premarket trading following a rare double-upgrade in rating to buy from underperform by Bank of America. The firm said Parsons has better growth than expected.
EPR Properties — The real estate stock shed 1.3% before the bell after a downgrade to neutral from buy by Bank of America. The firm said EPR can face pressure on its multiple as a result of the Hollywood strikes given its exposure to movie theaters.
Nikola — Shares of the green truck maker dropped 15% to $1.65 after it announced a recall of 209 electric trucks following an independent investigation of a June fire. The company said this doesn’t impact its hydrogen fuel cell trucks.
— CNBC’s Samantha Subin, Hakyung Kim, Sarah Min, Tanaya Macheel and Michelle Fox contributed reporting More