Finance

A woman wearing a face mask rides a scooter past the U.S. Federal Reserve in Washington, D.C., the United States, on Jan. 27, 2021.Lie Jie | Xinhua News Agency | Getty ImagesThe Federal Reserve has a “staggering” lack of diversity among its directors who are charged with running the central bank’s 12 districts, according to a report Tuesday from a leading Washington think tank.”The Federal Reserve System … has a diversity problem,” said the Brookings Institution report, authored by economists Peter Conti-Brown and Kaleb Nygaard. “This has long been obvious at the top of the organization, among the members of the Fed’s Board of Governors and the presidents of the Federal Reserve Banks.”While those top Fed officials are “overwhelmingly white, overwhelmingly male,” the report said, the problem also extends into the boards of directors at the local operations, where “we find a staggering homogeneity among them, with only recent signs of diversification.”Directors also are “overwhelmingly drawn from the business communities within their districts, with little participation from minorities, women, or from areas of the economy—labor, nonprofits, the academy—with important contributions to make to Fed governance.”The report notes that in the central bank’s history, there have been just three Black members of the Fed’s board of governors, one Black regional president and only three nonwhite regional presidents.There currently are two female Fed governors out of six — Lael Brainard and Michelle Bowman — and three female regional presidents out of 12 — Esther George in Kansas City, Loretta Mester in Cleveland, and Mary Daly in San Francisco. There is only one Black regional president, Raphael Bostic in Atlanta.In the past few years, the Fed has made some inroads with reserve bank directors, increasing the total of women and minorities from 20 in 2017 to 27 this year. The total for reserve bank branches rose from 42 to 51 during the same period.The report suggests the Fed make the selection process for directors “more transparent” so it can be evaluated in how members are selected.”There is also a sense that these principals are overwhelmingly promoted from within, creating a risk for groupthink and intellectual homogeneity,” Conti-Brown and Nygaard wrote.Fed officials have been challenged repeatedly over the lack of diversity within their ranks.Fed Chairman Jerome Powell was asked at the issue in February during a hearing before the House Financial Services Committee.”I would say we’re not where we want to be on this,” the central bank leader said then. “It’s something that I’m personally committed with and that all the leadership of the Fed and the whole Fed is very focused on strengthening our workforce diversity.”The issues run deeper than the top, though.An examination by the authors, using of the Fed’s own research, shows that women and minorities have been underrepresented on the regional boards going back to the bank’s inception in 1914.Those boards elect the regional presidents that help the governors make decisions on interest rates and other aspects of monetary policy.No nonwhites served as Fed governor until the late 1970s, and they had less than 10% representation at the director level as late as the latter part of the last decade. It took until the 1990s until women made up 10% of directors, with the total hitting 37% as of 2019.The study also found the manufacturing sector underrepresented and said just 5% of directors held a Ph.D. in economics.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

In this articleDISCAFOLDENDPSFIXTEAMSource: Stitch FixCheck out the companies making headlines after the bell on Tuesday:Atlassian — Shares of the Australian software company ticked up 1% on revised revenue guidance for the fiscal third quarter. Atlassian now expects revenue between $566 million and $572 million. Analysts polled by FactSet previously predicted revenue of $487.2 million for the company’s third quarter. The new forecast is also above Atlassian’s previous revenue guidance for the quarter. Stitch Fix — Shares of the personal styling service slid 3.2% after the company announced that founder and CEO Katrina Lake will become the executive chairperson and Elizabeth Spaulding will take over as CEO, effective Aug. 1.Endo International — The pharmaceutical company’s shares ticked up slightly after the company announced that promising phase 3 data on a cellulite treatment was published in the official journal of the American Society of Dermatologic Surgery. The data demonstrated that the treatment provides a clinically meaningful improvement in the appearance of moderate to severe cellulite in the buttocks of adult women compared to placebo. Amicus Therapeutics — The biopharmaceuticals company’s shares rose 3% after analysts at Cantor Fitzgerald upgraded the stock to overweight from neutral, citing the company’s promising gene therapy results.Discovery — Discovery’s Class A and Class C shares dropped 3.8% and 5.1%, respectively, after after CNBC’s David Faber reported that Credit Suisse continues to unload positions in the media company as a result of the blow up of Archegos Capital Management. Citing traders, Credit Suisse sold 19 million of the media company’s Class A shares and 22 million in Class C stock. More

Dana Neely | Stone | Getty ImagesCriminals are targeting a new federal program that pays up to $9,000 in funeral costs for a loved one who died of Covid-19, the Federal Trade Commission said Tuesday.The Covid-19 Funeral Assistance program, overseen by the Federal Emergency Management Agency, opened to applicants on Monday. Individuals have had trouble getting through due to high volume, officials said.Fraudsters are contacting people and impersonating government agents, offering to register them for assistance, according to the FTC.”FEMA has not sent any such notifications and we do not contact people before they register for assistance,” according to a fraud alert on the FEMA’s website.More from Personal Finance:Stimulus check less than expected? How the IRS will let you knowHow to handle an inherited 401(k) or IRAPeople weigh ‘revenge spending’ with $1,400 stimulus checkAbout 563,000 people in the U.S. have died from Covid-19, according to Johns Hopkins University.Criminals may ask for payment to access the financial help, according to the FTC.They may also request sensitive personal or financial information like Social Security, bank account or credit card numbers of would-be victims or a deceased relative.The government program is meant for individuals who incurred funeral costs for a loved one who died after Jan. 20, 2020 from Covid-19.The program was funded by two prior rounds of federal Covid relief, a $900 billion measure in December and last month’s $1.9 trillion American Rescue Plan.Eligible expenses include, among other things: caskets or urns, burial plots, headstones, officiant services, and cremation or internment costs. Individuals can get up to $9,000 per funeral and a maximum of $35,500 per application per state.There’s no income limit to apply for the funds. Documentation, such as a death certificate and receipts, is required.The program has been plagued by technical issues due to initial high call volume, according to FEMA. Individuals must apply by phone.”The call center has received thousands of calls this morning, which is causing some technical issues,” the agency said Monday.”We ask that applicants be patient as we work to correct these issues and have all their important documents ready when they call,” it added.There isn’t currently a deadline to apply. More

In this articlePNCPNC Financial’s Amanda Agati is warning investors the market is in a fragile place on the eve of earnings season because of high valuations and serious risks associated with the Covid pandemic.”I’m not necessarily convinced that Q1 earnings season is really going to be all that wonderful,” the firm’s chief investment officer told CNBC’s “Trading Nation” on Monday. “The market has absolutely set a very high bar.”According to Refinitiv, the S&P 500 should have the strongest earnings growth since 2018’s third quarter. It projects Q1 earnings growth will surge 24% from a year earlier.”We’ve seen a lot of those value-oriented stocks, a lot of the lower-quality names, rally pretty hard in anticipation of earnings season. While we think the high bar is likely to be achievable, we’re not really convinced we’re going to see that outsized beat rate that we’ve seen over the last couple of quarters,” Agati said. “That’s really what we need at these valuation levels to keep this market rally fueled.”Agati, who has $170 billion in assets under management, believes most of the good news is priced into the market.Zoom In IconArrows pointing outwards”We really think that Q1 earnings season, unfortunately, may be a little bit more of a ‘buy the rumor, sell the news’ here until we can get a really meaningful and broad-based acceleration in the underlying fundamentals,” said Agati.But she believes that will be problematic due to the pandemic.”Covid is very much in the driver’s seat even with all the progress that we’ve seen so far this year in terms of reopening and slow but steadier progress around vaccine distribution and deployment,” Agati said. “The reality is we are still facing pretty significant Covid waves across many parts of the globe.”Agati also highlights fresh risks surrounding the long-term effectiveness of the coronavirus vaccines.”We’re starting to see data coming out of medical journals here recently that we may need to start thinking about a booster shot after six months time of being vaccinated,” she added. “You think about when vaccinations started in December. It’s starting to come back into the narrative right around midyear.”Due to the unsettled backdrop and stretched valuations in U.S. stocks, Agati is urging investors to look abroad for the most upside.”Without a doubt, we continue to believe that emerging markets is the brightest star in the equity asset class universe,” Agati said. “Emerging markets has the strongest earnings growth backdrop not only for this year, but also in 2022 as well. … They did not fall anywhere near as far as the rest of the developed world in 2020.”CNBC’s Robert Hum contributed to this report.Disclaimer More

Check out the companies making headlines before the bell:Altimeter Growth (AGC) — Southeast Asia’s ride-hailing giant Grab is going public via a SPAC merger with Altimeter Growth, valued at nearly $40 billion. Grab says it intends to list on the Nasdaq under ticker symbol “GRAB” following the deal’s completion. Altimeter’s shares surged nearly 9% in premarket trading.Johnson & Johnson (JNJ) — Shares of the drugmaker fell 2.8% in the premarket after the Food and Drug Administration said it is asking states to pause administering J&J’s Covid-19 vaccine after six people in the U.S. developed a rare disorder involving blood clots. The FDA said the recommendation is “out of an abundance of caution.” Moderna shares popped more than 7% in early trading on the news. FedEx (FDX) — Shares of the shipping company rose in premarket trading about KeyBanc Capital Markets upgraded FedEx to “overweight.” The Wall Street firm also set a $350 per share price target on FedEx. KeyBanc said FedEx can still grow volume even with the return to in-person shopping.JetBlue (JBLU), Spirit Airlines (SAVE) — Shares of the airlines popped in premarket trading after Susquehanna Financial Group upgraded JetBlue and Spirit Airlines to “positive.” “With a recovery in U.S. domestic air travel underway, we want to own the low-cost carriers,” the firm’s analyst told clients.Booking Holdings (BKNG) — The travel company gained in premarket trading after Jefferies upgraded Booking to “buy” from “hold” on a rebound in global travel. The first also hiked its 12-month price target to $2,800 per share from $2,300 per share.3M (MMM) — Shares of the manufacturing giant edged lower in the premarket after Deutsche Bank added a “catalyst call” sell on 3M. The Wall Street firm said the stock has curiously outperformed in recent weeks despite Deutsche Bank’s expectation for a miss on upcoming earnings.NortonLifeLock (NLOK) — The security company dipped in premarket trading after Bank of America initiated the stock with an “underperform” rating and a $19 per share price target. “Last year’s COVID-related spike in demand may unwind in the next few quarters and the company may return to negative trends in churn and subscriber additions, negatively impacting the revenue growth,” the firm said.Honeywell (HON) — Shares of Honeywell rose in premarket trade after Deutsche Bank put a catalyst call “buy” rating on the stock. The firm said investors are unenthusiastic about Honeywell, despite a recovery taking hold.Bristol-Myers Squibb (BMY) — Shares of the pharmaceutical company rose in the premarket about Truist upgraded Bristol-Myers Squibb to “buy” from “hold” with a $74 per share price target. The Wall Street firm said it likes Bristol-Myers Squibb’s drug pipeline.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

In this articleCOINThe Coinbase cryptocurrency exchange application seen on the screen of an iPhone.Getty ImagesBitcoin surged to a fresh record high of more than $63,000 on Tuesday, as investors awaited the highly-anticipated stock market debut of cryptocurrency exchange Coinbase.The price of bitcoin climbed 5% in the last 24 hours to hit $63,171, according to data from Coin Metrics, before easing slightly to around $62,653. Ether, the second-most valuable digital coin after bitcoin, also set a fresh record, climbing to $2,222.Coinbase is set to go public on Wednesday through a direct listing that could value the company at as much as $100 billion — more than major trading venue operators like Intercontinental Exchange, owner of the New York Stock Exchange. Crypto investors are hailing the company’s stock market debut as a major milestone for the industry after years of skepticism from Wall Street and regulators.”This is really good and really important for the industry,” Marcus Swanepoel, CEO and co-founder of London-based cryptocurrency platform Luno, told CNBC. “It’s going to increase the trust and transparency in our industry.””There’s still a bit of distrust in the industry and I think having a company of that size be public is going to help a lot of people realize that this is not just an asset class to take seriously but also a business to take seriously.”Coinbase, founded in 2012, is the largest cryptocurrency exchange in the United States. It’s seen surging revenues this year thanks to a climb in the value of bitcoin and other cryptocurrencies. The company reported estimated revenues of $1.8 billion in the first quarter of 2021, a nine-fold increase from the same period a year earlier, while profits grew to between $730 million and $800 million.Bitcoin has more than doubled in price since the start of this year, as mainstream investors jumped into cryptocurrencies. Tesla recently made a $1.5 billion bet on bitcoin and now accepts the digital currency as a method of payment for its cars. Meanwhile, Wall Street giants like Goldman Sachs and Morgan Stanley are looking to offer their wealthy clients some exposure to bitcoin.Bitcoin bulls view the cryptocurrency as a store of value akin to gold that can be used to diversify investment portfolios in times of economic crisis. But skeptical economists like Joseph Stiglitz and Nouriel Roubini are unconvinced, viewing bitcoin as extremely volatile and a vehicle for illegal transactions. More

In this article9988-HKA logo of Ant Group is pictured at the headquarters of the company, an affiliate of Alibaba, in Hangzhou, Zhejiang province, China October 29, 2020.Aly Song | ReutersGUANGZHOU, China — Alibaba shares in Hong Kong closed 0.43% higher on Tuesday after regulators ordered the e-commerce giant’s financial technology affiliate Ant Group to revamp its business.That, along with a 18.23 billion yuan ($2.78 billion) fine Alibaba received as a result of an anti-monopoly investigation by regulators, removed a source of uncertainty for investors.”Following the decision and penalties levied by SAMR’s (State Administration for Market Regulation) anti-monopoly investigation of BABA, we think the street has more color about the latest updates on Ant Group,” Jefferies said in a note published Monday.Hong Kong-listed shares of Alibaba jumped about 4% at the open but pared those gains throughout the day. Alibaba’s U.S.-listed shares closed over 9% higher on Monday but were about 1.6% lower in pre-market trade.Alibaba, owns a roughly 33% stake in Ant Group, the company that runs the massively popular mobile payments app Alipay in China. In November, regulators forced Ant Group to suspend what would have been a record-setting $34.5 billion initial public offering (IPO) in Hong Kong and Shanghai.At the time, changes in the financial technology regulatory environment were blamed for the suspension of the listing.That came just days after Jack Ma, the founder of Ant Group and Alibaba, made some comments that appeared critical of China’s financial regulator.In December, the People’s Bank of China (PBOC) ordered Ant Group to rectify its business. And on Monday, the Chinese central bank outlined concrete details on what the company needs to do.The PBOC asked Ant Group to restructure into a financial holding company. Ant Group must also create more separation between its payment app Alipay and its credit products. Yu’e Bao, Ant Group’s money market fund, which was once the world’s largest, must also be reduced in size, the PBOC said.Both Alibaba’s massive anti-trust fine and the Ant Group restructuring plan are part of a broader push by China to get a tighter grip on the country’s technology companies, which turned into giants largely unencumbered. Their activities often span across sectors from gaming to financial technology as well as cloud computing.While so far Beijing’s eyes have been focused on Jack Ma’s empire, there are signs that the crackdown could broaden to more companies and other areas such as data protection. More

IN THE SPRING of 2020 American consumer prices fell for three consecutive months as the pandemic struck. Rents collapsed; hotel rooms went empty and oil prices turned negative. All sudden spurts of deflation or inflation make headlines twice: first when they happen and then a year later, when they distort comparisons that look back by 12 months. Sure enough on April 13th statisticians announced that consumer prices in March were fully 2.6% higher than a year earlier, up from 1.7% in February. The increase in headline inflation was the biggest since November 2009, when similar “base effects” were in play after the global financial crisis.It would be wrong, however, to dismiss the rise in inflation as a mere mathematical quirk. America’s economy is emerging from the pandemic downturn at great speed as jobs return and vaccinated consumers start spending. In March alone prices rose by 0.6% compared with the previous month, the fastest pace since 2012. Much of that was driven by a big increase in petrol prices but even the “core” consumer-price index (CPI), which strips out food and energy prices, was up by 0.3% (an annualised pace of 4.1%). Services prices in particular have started to rebound: hotel rooms were 4.4% dearer than a month earlier and rent, a big component of the index, has firmed in recent months. Capital Economics, a consultancy, predicts that the combination of base effects and a boomy reopening will drive the headline annual rate of inflation close to 4% by May.The Federal Reserve targets annual inflation of 2%, but on a different measure—the price index for personal consumption expenditures—which tends to run about a third of a percentage point cooler than CPI. Still, if prices rise at a monthly pace consistent with the Fed’s target, as they roughly have in recent months, base effects mean that the target will soon be exceeded in annual terms (see left-hand panel on chart). Any heat in the economy will lead to further overshooting.The path of inflation matters more than usual because of the amount of economic uncertainty in the air. The relaxation of social-distancing restrictions, President Joe Biden’s enormous $1.9trn economic stimulus and the unusual doveishness of the Fed, which is employing a new monetary-policy framework, together comprise an inflation experiment. It has turned some doves into hawks, with economists such as Larry Summers, a former treasury secretary, and Olivier Blanchard, a former chief economist of the IMF, warning that an overheat is on its way. And, as the administration follows up its stimulus with an infrastructure bill, how the experiment pans out will help determine how much more deficit spending the economy can take.The Fed and the White House both expect any pickup in inflation this year to be temporary. Financial markets are less sure. They are pricing in both a growing risk of a prolonged period of inflation above the Fed’s target and increases in interest rates in 2022—whereas at the Fed’s most recent meeting in March the median monetary-policymaker did not forecast lift-off until after 2023. The central-banking view stems chiefly from the state of the labour market, which remains about 8.4m jobs short of the level of employment in February 2020 and even further behind where it would have been had the pre-pandemic trend continued. That amount of economic slack should keep inflation subdued.Yet investors could be forgiven for asking questions of the economists’ models. These have consistently underestimated the pace of America’s jobs rebound. In the second quarter of 2020 the median respondent to the Philadelphia Federal Reserve Bank’s survey of professional forecasters thought unemployment two quarters later would average 11%; in fact it turned out to be only 6.8%. That was the biggest overestimate in the history of the survey and more than three times the next highest such error. In February this year forecasters expected unemployment in the second quarter to average 6.1%, only for it to fall below that rate in March. If the labour market continues to outperform expectations the economy will eat up slack and push up inflation sooner.At that point the Fed will face a choice. Its new policy framework seeks to overshoot its 2% target temporarily after recessions, in order to make up lost ground. But it has been vague about what this “average-inflation targeting” means in practice. Some recent speeches by officials have suggested that the central bank needs to compensate for lost inflation since last spring. Others have implied that August is the starting point for catch-up policy, as that is when the framework changed. But there has been no inflation shortfall since August (see right-hand panel on chart). If the springtime bump in inflation does not melt away, the central bank will be forced to decide precisely what it wants. More