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    Stocks making the biggest moves premarket: Bank of America, Pinterest, Masimo & more

    A pedestrian walks by the Pinterest headquarters on April 09, 2019 in San Francisco.
    Justin Sullivan | Getty Images

    Check out the companies making the biggest moves before the bell:
    Bank of America — Bank of America added 0.4% in the premarket after beating top and bottom line estimates for the second quarter. BofA’s results were helped by more profitable lending, boosted by higher interest rates.

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    Bank of N.Y. Mellon — The bank reported better-than-expected profit and revenue for the second quarter. Like BofA, Bank of N.Y. Mellon benefited from the impact of higher interest rates. However, the stock fell more than 1%
    PNC Financial — PNC fell 2.7% in the premarket after posting lower-than-expected quarterly revenue, even as earnings beat forecasts. Deposits and net interest income both fell at PNC.
    Verizon, AT&T — Verizon gained 1% in premarket trading, while AT&T rose 0.7%. Both have been tumbling in recent days, with AT&T hitting its lowest level since 1993 Monday and Verizon dipping to its lowest since 2010. Analysts have been concerned about potential liability from miles of lead-encased cables across the U.S.  
    Masimo — Masimo plummeted 28% in the premarket after the medical device maker forecast lower than expected sales for its second quarter, as hospitals cut back on equipment spending amid increased personnel costs.
    Novartis — Novartis jumped 2.9% in premarket action after the drug maker raised its full-year outlook on strong pharmaceutical sales. Novartis also said its planned spin-off of generic drug division Sandoz would take place early in the fourth quarter.

    Pinterest — Pinterest rallied 3.3% in off-hours trading following an upgrade to “outperform” from “in-line” at Evercore ISI. Evercore said it sees digital ad spending stabilizing, with indications of a recovery in the second half of the year.
    Norwegian Cruise Line — The cruise line operator’s stock slid 1.8% in premarket action after Truist downgraded the stock to a hold from a buy. The firm is bullish on cruise industry trends but notes the stock’s recent outperformance. More

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    Twitter laid off most of its workers in Africa last year. They say they’ve been ignored and left without severance

    As part of new owner Elon Musk’s cost-cutting efforts, Twitter fired nearly all of the staff at its only office in Africa.
    Following the announcement of the wave of global job cuts, Musk tweeted in November that “unfortunately there is no choice when the company is losing over $4M/day.”
    Since Musk’s $44 billion acquisition of the social media platform in October, Twitter has lost nearly half of its advertising revenue.

    Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of Twitter, gestures as he attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023.
    Gonzalo Fuentes | Reuters

    Former Twitter employees in Ghana, who were laid off in November, have been left without severance pay and have not heard from the company for three months, sources told CNBC.
    As part of new owner Elon Musk’s cost-cutting efforts, Twitter fired nearly all of the staff at its only office in Africa.

    Following the announcement of the wave of global job cuts, Musk tweeted in November that “unfortunately there is no choice when the company is losing over $4M/day.”
    “Everyone exited was offered 3 months of severance, which is 50% more than legally required,” he added, though it was unclear to which office and jurisdiction he was referring.
    Under Ghanaian employment law, staff must be paid redundancy and should be granted three months’ notice before they are made redundant. Twitter’s workers in the capital Accra were given less than a month, according to the sources.
    One former employee, who wished to remain anonymous due to sensitive nature of situation, told CNBC Monday that the workers requested compensation in lieu of notice and emotional distress damages as part of the negotiated settlement with Twitter, but both were rejected.
    “Twitter has dealt with us in bad faith since we were laid off in November 2022. There was no attempt to even negotiate a severance with us until international news started to report on this, and after we had approached the Labour Office in Ghana,” said another source, who also spoke to CNBC on condition of anonymity due to sensitive nature of situation.

    “It’s been a tedious process and they rejected some of our requests, which we thought were fair given the circumstances and how we’ve been treated.”
    Through their legal representative, the employees eventually reached out to accept what they saw as a watered down severance offer in May, but have endured radio silence from Twitter since then.
    “We played ball and accepted the offer that they made just so we could move forward with our lives. However, they have completely ignored us since our lawyer reached out to theirs to accept the offer in May. For many of us, expenses owed have also not been paid,” the second source added.
    Twitter responded to CNBC’s request for comment with an automated response.
    The first source also told CNBC that “everyone is tired and frustrated.”
    “This settlement is not even what was promised but we decided to just accept it and that has been a struggle,” they said.
    “Some still haven’t gotten jobs yet, have families to feed and this severance will go a long way, so having it delayed in this [manner] is just so sad.”

    Since Musk’s $44 billion acquisition of the social media platform in October, Twitter has lost nearly half of its advertising revenue and continues to generate negative cash flow, Musk said over the weekend, along with shouldering a substantial debt pile.
    The company also faces competition from new Meta platform Threads, which registered over 100 million users in its first week in operation.
    Scott Galloway, professor of marketing at New York University’s Stern Business School, wrote on Friday that Twitter last week “became MySpace: a social network void of innovation being slowly euthanized by Meta.”
    “The decline in revenue is correlated to its reduction in workforce, but not caused by it,” Galloway added. More

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    Is Biden’s $39 billion student loan forgiveness action legal? ‘Be assured it’s going to stay,’ says expert

    The Biden administration Friday announced $39 billion of student loan forgiveness for 804,000 borrowers.
    Beneficiaries may wonder if courts would likely bar that relief, as the Supreme Court did when it ruled against a separate, more sweeping loan forgiveness plan on June 30.
    The most recent appears to be on sound legal footing, experts said, and is based on borrowers in income-driven repayment plans for lower earners.

    President Joe Biden and U.S. Secretary of Education Miguel Cardona, June 30, 2023.
    Demetrius Freeman/The Washington Post via Getty Images

    How are the two loan forgiveness actions different?

    The latest action isn’t the same as the broad debt-cancellation plan originally sought by the White House, which Supreme Court justices struck down in a 6-3 decision on June 30. That action would have erased up to $20,000 of student debt for tens of millions of borrowers carrying federal loans. It had an estimated cost of $400 billion.
    Friday’s announcement concerns borrowers in income-driven repayment plans. There are four of these plans, which aim to make loan payments more affordable for lower earners.

    IDR plans cap monthly payments, generally at 10% or 20% of a household’s discretionary income, depending on the plan. The U.S. Department of Education is trying to enact a new plan with a 5% cap.

    Importantly, borrowers who make regular payments — generally for 20 or 25 years — get their remaining loan balances erased at that time.
    However, the Biden administration said that forgiveness hasn’t occurred in many cases — even though borrowers had earned it — due to administrative errors.
    Beneficiaries of the new policy will see their debt automatically discharged in coming weeks, the Department of Education said.
    “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement announcing the action.

    The recent plan has a different legal precedent

    Some lawmakers issued statements last week questioning the newest forgiveness action’s legal footing.
    For example, Rep. Virginia Foxx, R-N.C., chair of the House Committee on Education and the Workforce, said the Biden administration was “trampling the rule of law” and attempting to “circumvent” the Supreme Court’s recent ruling on loan forgiveness.
    Yet, the two actions are grounded in different legal precedents, experts said.
    “The two programs have nothing to do with one another,” said attorney Abby Shafroth, co-director of advocacy and director of the student loan borrower assistance program at the National Consumer Law Center.
    The sweeping — and now-defunct — forgiveness plan President Joe Biden announced in August 2022 rested on the Heroes Act of 2003. That law gave the president power to revise student loan programs during national emergencies.

    This program is narrowly tailored to people who’ve been in repayment for decades already.

    Abby Shafroth
    co-director of advocacy and director of the student loan borrower assistance program at the National Consumer Law Center

    The White House argued the Covid-19 pandemic was one such emergency. The Trump administration had leveraged the Heroes Act to implement a student loan payment pause at the onset of the Covid-19 pandemic. That pause persists today but will end in the fall.
    The Supreme Court disagreed with the Biden administration. The Department of Education needs authorization from Congress to cancel such a large amount of consumer debt, justices said.
    However, Congress has already authorized loan forgiveness relative to income-driven repayment plans, dating to when it created them in the 1990s.
    “This program is narrowly tailored to people who’ve been in repayment for decades already,” Shafroth said. “It all goes back years and is really about proper implementation of a program Congress established in 1995.”
    The plan is on “really sound legal footing,” she added. In fact, the Department of Education was almost legally compelled to fix its past errors or open itself up to lawsuits from borrowers, she said.
    Beneficiaries of the new policy are predominantly those who are or once were in the Income-Contingent Repayment program, the only one of the four IDR plans that has existed long enough to deliver debt forgiveness, Kantrowitz said. The average borrower in that program has a loan balance of $48,000, he said.

    IDR forgiveness roots predate a Supreme Court ruling

    That said, the Biden administration had some leeway when deciding on the scope of forgiveness, Kantrowitz said.
    Largely, that leeway concerned whether certain loan payments should or shouldn’t count toward a borrower’s overall payment tally, and ultimately, whether they have or haven’t satisfied the criteria for loan forgiveness (i.e., by making two decades of regular payments).
    The Department of Education looked at three broad areas in this regard: economic hardship deferments, loan forbearance and partial or late payments, Kantrowitz said. Here, it appears “well within” the Department of Education’s discretion to decide which payments count and which don’t, he said.

    “The court is likely to give great deference to the federal agencies on those matters,” he said.
    The Department of Education said last year that it would be undergoing a review of all IDR enrollees and make a one-time adjustment to their accounts. The latest action is the result of that review, which was announced in April 2022, before Biden unveiled his sweeping plan in August 2022 to forgive up to $20,000 for all borrowers.   
    In other words, the roots of Friday’s announcement to forgive $39 billion of debt predate both the Supreme Court ruling and the original policy announcement on which the court ruled, experts said.
    Additionally, questions over legality are largely moot anyway for borrowers who get relief before any sort of lawsuit arrives, Kantrowitz said. “The court wont claw back [your] forgiveness.” More

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    Bank of America tops analysts’ expectations amid higher interest rates

    Bank of America reported second-quarter earnings.
    The bank posted earnings of 88 cents a share, vs. 84 cents a share, according to an estimate from Refinitiv.
    BofA reported revenue of $25.33 billion vs. an expected $25.05 billion.

    Brian Moynihan, CEO of Bank of America Corp., during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., Sept. 22, 2022.
    Al Drago | Bloomberg | Getty Images

    Bank of America on Tuesday posted second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.
    Here’s what Bank of America reported:

    Earnings: 88 cents a share vs. 84 cents a share Refinitiv estimate
    Revenue: $25.33 billion vs. expected $25.05 billion

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    The bank said earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier. Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion, essentially matching the expectation of analysts surveyed by FactSet.
    “We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” CEO Brian Moynihan said in the release. “Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.”
    Bank of America shares climbed less than 1% in premarket trading.
    The company’s Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, edging out the $2.77 billion estimate, and equities trading slipped 2% to $1.6 billion, topping the $1.48 billion estimate.
    Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn’t played out that way. The company’s net interest income, one of the main drivers of a bank’s revenue, has been questioned lately as loan and deposit growth has slowed. Last week, rival JPMorgan Chase posted a far stronger jump in net interest income that helped fuel a 67% surge in quarterly profit.

    BofA shares declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.
    This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.
    On Friday, JPMorgan, Citigroup and Wells Fargo each posted earnings that topped analysts’ expectations amid higher interest rates. Morgan Stanley also reported earnings Tuesday. Goldman Sachs wraps up big bank earnings Wednesday.   More

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    Henry Kissinger meets with China’s defense minister in Beijing

    Henry Kissinger, a former U.S. secretary of State, met with China’s defense minister, Li Shangfu, in Beijing on Tuesday, the ministry said in a statement.
    Kissinger’s meeting with Li comes as John Kerry, special presidential envoy for climate, is also in Beijing for climate talks.
    The U.S. Embassy in Beijing did not immediately respond to a CNBC request for comment.

    Former U.S. diplomat Henry Kissinger appears on a screen as he delivers a video address to the participants of the World Economic Forum (WEF) 2023, in the Alpine resort of Davos, Switzerland, January 17, 2023.
    Arnd Wiegmann | Reuters

    BEIJING — Henry Kissinger, a former U.S. secretary of State, met with China’s defense minister, Li Shangfu, in Beijing on Tuesday, the ministry said in a statement.
    The U.S. Embassy in Beijing did not immediately respond to a CNBC request for comment.

    Kissinger’s meeting with Li comes as John Kerry, special presidential envoy for climate, is also in Beijing for climate talks. Kerry’s trip to China follows those of U.S. Treasury Secretary Janet Yellen and U.S. Secretary of State Antony Blinken in the last several weeks.
    Li and his U.S. defense counterpart have not spoken officially despite increased tensions around the Taiwan Strait.
    Blinken said he failed to restore military-to-military talks with China during his visit last month. More

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    Warren Buffett’s Berkshire Hathaway cuts Activision stake as Microsoft deal inches closer

    Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles as he plays bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska, May 5, 2019.
    Nati Harnik | AP

    Warren Buffett’s Berkshire Hathaway dumped a significant portion of its stake in Activision Blizzard as Microsoft’s deal to buy the video game company edged closer to the finishing line.
    The Omaha, Nebraska-based conglomerate disclosed a 1.9% stake in Activision with 14,658,121 shares, a new 13G filing released Monday evening showed. That compared with a 6.3% stake at the end of March and a 6.7% stake at the end of 2022.

    Shares of Activision soared more than 9% last week on news that the Federal Trade Commission lost its bid to block Microsoft’s $68.7 billion acquisition of the video game publisher. Microsoft’s appeal against U.K. regulators’ block on Monday was granted a two-month pause.
    The stock closed Monday at $93.21 apiece. In January 2022, Microsoft announced intentions to buy Activision for $95 per share.
    The “Oracle of Omaha” previously revealed that one of his investing lieutenants, Ted Weschler and Todd Combs, first took a stake in Activision in October and November 2021with an average cost of $77 per share.
    The 92-year-old investing legend has since added to the holding in a merger arbitrage play, betting that Microsoft’s proposed acquisition of the video game company would close.
    Buffett revealed that he and his longtime business partner Charlie Munger started doing merger arbitrage deals five decades ago, back when it was called “workouts.” More

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    Stocks making the biggest moves midday: Ford, AT&T, Yelp, Figs and more

    The Ford F-150 Lightning Electric Truck.
    John Tlumacki | Boston Globe | Getty Images

    Check out the companies making the biggest moves midday.
    Ford — Shares of the automaker fell 5.94% after the company said prices on its electric F-150 Lightning pickups would fall as much as $10,000. All versions of the electric vehicle will get price cuts of at least $6,000 as Ford works to boost production this fall. Rivian shares fell about 3%.

    Tesla — Elon Musk’s electric-vehicle company rose 3.2% after building its first Cybertruck over the weekend following multiple delays.
    Black Knight — The stock popped 16.14% after the mortgage-data vendor announced it will sell its Optimal Blue business to a subsidiary of Constellation Software for $700 million, paving the way for its acquisition by Intercontinental Exchange.
    AT&T — The telecommunications stock lost 6.69%, building on Friday’s losses, after Citi downgraded it to neutral. The bank cited uncertainty related to its historical use of lead-sheathed cables.
    BridgeBio Pharma — Shares surged 75.85% following the company’s announcement that its heart disease drug showed a “highly statistically significant improvement” in patients during a Phase 3 study.
    Activision Blizzard — The video-game maker added 3.49% after Microsoft and Sony struck a deal to keep its Call of Duty game on Sony’s PlayStation consoles following Microsoft’s acquisition of Activision Blizzard.

    Paramount Global — The entertainment company’s stock shed 3.76% after the new “Mission: Impossible” movie underperformed expectations at the box office. The latest installment in the franchise earned $56.2 million domestically over the weekend — which was below the previous movie in the franchise — and $80 million over its first five days of release, according to Variety.
    Apellis Pharmaceuticals — Shares sank 37.92% after the American Society of Retina Specialists said there have been reports of intraocular inflammation following the administration of Apellis Pharmaceuticals’ Syfovre, including six cases of occlusive retinal vasculitis.
    Yelp — The digital advertising stock gained 10.2% after Goldman Sachs upgraded it to buy from neutral. The firm said the company’s risk/reward skew has turned more positive.
    Progressive — Shares gained 4.42% after being upgraded to overweight from neutral by JPMorgan. The Wall Street firm said Progressive’s valuation is now compelling after its poor results in June, and said the company has long-term earnings power and growth potential.
    Yeti — The cooler company’s stock fell 6.53% following a downgrade to underweight from sector weight by KeyBanc. The Wall Street firm cited concerns over Yeti’s growth and its heavy wholesale channel inventory.
    State Street — The asset manager slipped more than 2.33% after the firm was downgraded by multiple Wall Street firms, including JPMorgan. State Street’s second-quarter earnings report Friday showed a drop of about 10% in net interest income compared with the first quarter.
    Figs — The apparel retailer dropped 3.34% after being downgraded by Raymond James to market perform from outperform. The firm said a slowing economy and the restart of student loan payments could hurt Figs’ growth in the near term.
    Crypto stocks — Several crypto mining stocks were higher after the bitcoin hash rate hit an all-time high last week despite seasonally higher U.S. power prices. Cantor also lifted its price target on mining stocks in its coverage following Ripple’s partial court victory Thursday, including CleanSpark, which ended 1.01% down Monday, as well as Iris Energy, which slipped 1.54%.
    — CNBC’s Samantha Subin, Alex Harring, Tanaya Macheel and Brian Evans contributed reporting. More

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    China’s floundering economy is a test for Xi Jinping

    When janet yellen visited Beijing this month she did her bit for the local restaurant trade. America’s treasury secretary dined with her team at an establishment known for Yunnanese dishes, which subsequently unveiled a “God of Wealth” menu in her honour. She also hosted a lunch with female entrepreneurs and economists (including a representative of The Economist). Although restaurants have prospered since China dropped its covid controls at the end of last year, the gods of wealth have been less kind to the rest of the country’s economy—as gdp figures released on July 17th revealed. They showed that the economy grew by 6.3% in the second quarter compared with a year earlier. That looks impressive. But it was slower than expected. And the figure was flattered by a low base in 2022, since Shanghai and other cities were locked down last year. The economy grew by only 0.8% in the second quarter compared with the first three months of the year, an annualised rate of merely 3.2% (see chart 1).Obstacles to growth were both foreign and domestic. The dollar value of China’s exports, for example, shrank by more than 12% in June, compared with a year earlier—the sharpest drop since the height of the pandemic in February 2020. “The recovery of the world economy has been sluggish,” said Fu Linghui of the National Bureau of Statistics, by way of explanation. Meanwhile, the recovery of China’s property market is lost in the vegetable patch. Sales of flats fell by 27% in June compared with a year earlier. They are now running well below the pace economists think would be justified by underlying demand, given China’s urbanisation and the widespread desire for better accommodation. China’s “nominal” growth, before adjusting for inflation, was also weaker than the inflation-adjusted figure; something that has happened only four times in the past 40 quarters. It suggests that the price of Chinese goods and services is falling. Indeed, it implies they fell by 1.4% in the year to the second quarter, which would be the sharpest drop since the global financial crisis (see chart 2). Consumer prices did not rise at all in June compared with a year earlier, and producer prices—charged at the factory gate—fell by 5.4%. China’s statisticians have blamed this weakness on changes in global commodity prices, such as the falling cost of oil. That is an unconvincing explanation for the weakness of China’s nominal growth, because gdp should count only the value added to a good in China itself, thus excluding the value of imported commodities. Perhaps deflationary pressures are spreading. Or perhaps China’s statisticians have got their sums wrong. Some members of the public feel the economy is doing even worse than the official figures suggest. There is a “temperature difference” between the macroeconomic data and “micro feelings”, as one commentator put it. In response, Mr Fu of the National Bureau of Statistics pointed out that macroeconomic data is more comprehensive and reliable than “micro feelings”—prompting a netizen to joke that if state statisticians say you are okay, you should adjust your feelings accordingly. The government’s own feelings towards the economy are hard to read. During the global financial crisis, after world trade fell off a cliff, China’s authorities swooped in with vast stimulus, which propelled economic growth and spilled over to the rest of the world. Today they seem in no such rush. The country’s central bank has cut interest rates a little. Tax breaks on the purchase of electric vehicles have been extended. Yet those hoping that the State Council, China’s cabinet, would release a detailed fiscal stimulus plan after its meeting on Friday 14th were disappointed. This lack of urgency may reflect the government’s enduring confidence in the recovery. Officials may believe that the economy still has enough momentum to meet their targets for the year, including for gdp growth of around 5%. The government’s restraint may also betray its misgivings about additional stimulus. Policymakers do not want a lending and spending spree to erode the profitability of state-owned banks or undermine financial discipline among local governments.China’s economic reopening so far has been led by services industries, such as restaurants, that tend to be labour-intensive. China’s cities have added 6.8m jobs in the first six months of the year, more than half of the government’s 12m target for the year. Although unemployment among urban youth increased to 21.3%, the overall jobless rate remained steady at 5.2% in June, below the target of 5.5%.But the labour market can be a lagging indicator of economic momentum. If growth remains weak, unemployment will eventually edge up. In such a scenario, the government may be forced to do more to revive the economy. Officials can tolerate a temperature difference between data and people’s feelings. They will be unwilling to tolerate a glaring gap between the economy and their targets. ■ More