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Balancing lifestyle costs with regular saving and investing is perhaps the toughest part of personal finance, said Douglas Boneparth, a member of CNBC’s Financial Advisor Council.
Households should consider mastering their cash flow before investing, he said.
Examine any “thoughtless” regular spending to eke some additional savings from your paycheck each month, said Carolyn McClanahan, also a member of the Advisor Council.

Nitat Termmee | Moment | Getty Images

The following is an excerpt from “This week, your wallet,” a weekly audio show on Twitter produced by CNBC’s Personal Finance team. Listen to the latest episode here.
Being a “master of cash flow” is a key element of household finance — and also one of the most challenging, said certified financial planner Douglas Boneparth.

What does mastering that skillset mean? It’s a two-pronged concept: Knowing what it costs to fund your lifestyle and understanding what you can consistently save and invest, said Boneparth, president of Bone Fide Wealth and a member of CNBC’s Advisor Council.
“Balancing these two things [is] arguably the hardest part of all of personal finance,” he said.
Often, people are too quick to invest without having this foundation, he said.
While investing for long-term goals is important due to the power of compounding, “what good is investing if you can’t stay invested?” Boneparth said. Without discipline around cash flow, an unforeseen life event may arise that causes you to dip into those investments that you’d hoped not to touch for years, he added.
Once households have a grasp on cash flow, they can set and prioritize measurable goals: building an emergency cash reserve and saving for retirement, a down payment or a child’s college education, for example, Boneparth said.

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Here are more FA Council perspectives on how to navigate this economy while building wealth.

Households that feel financially stretched can examine if they engage in any “thoughtless spending,” said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida.
She recommends examining what households spend on necessities like housing and transportation (and ensuring that spending in these categories is as cost-efficient as possible) and “wants.” Comb through the latter category to ensure you’re using the services on which you regular spend, like gym memberships and subscriptions to music services such as Spotify and Pandora, McClanahan said.

You can divert any savings — even if it’s just $5, $10 or $25 a month — into a savings account, she added.
“That adds up quickly,” she said.
Savers should make sure these deposits happen automatically, ideally the day after a paycheck hits their bank account.
“If you don’t see [the extra money], you don’t miss it,” McClanahan said. More

JPMorgan acquired all of First Republic’s deposits and a “substantial majority of assets.”
The acquisition came after regulators took possession of First Republic, resulting in the third failure of an American bank since March.
First Republic set off a new wave of concern last month with the revelation that it lost more deposits than expected in March.

A worker cleans the exterior of a First Republic bank on April 26, 2023 in San Francisco, California. 
Justin Sullivan | Getty Images

Regulators took possession of First Republic on Monday, resulting in the third failure of an American bank since March, after a last-ditch effort to persuade rival lenders to keep the ailing bank afloat failed.
JPMorgan Chase, already the largest U.S. bank by several measures, emerged as winner of the weekend auction for First Republic. It will get all of the ailing bank’s deposits and a “substantial majority of assets,” the New York-based bank said.

JPMorgan is getting about $92 billion in deposits in the deal, which includes the $30 billion that it and other large banks put into First Republic last month. The bank is taking on $173 billion in loans and $30 billion in securities as well.
The Federal Deposit Insurance Corporation agreed to share losses on mortgages and commercial loans that JPMorgan assumed in the transaction, and also provided it with a $50 billion credit line.
JPMorgan said it was making a payment of $10.6 billion to the FDIC.
Since the sudden collapse of Silicon Valley Bank in March, attention has focused on First Republic as the weakest link in the U.S. banking system. Like SVB, which catered to the tech startup community, First Republic was also a California-based specialty lender of sorts. It focused on serving rich coastal Americans, enticing them with low-rate mortgages in exchange for leaving cash at the bank.
But that model unraveled in the wake of the SVB collapse, as First Republic clients withdrew more than $100 billion in deposits, the bank revealed in its earnings report April 24. Institutions with a high proportion of uninsured deposits such as SVB and First Republic found themselves vulnerable because clients feared losing savings in a bank run.

Shares of First Republic had lost 97% as of Friday’s close.

$13 billion hit

The weekend auction, which drew bids from JPMorgan Chase and PNC, as well as interest from other banks, was a “highly competitive bidding process,” according to the FDIC.
The transaction will cost the FDIC’s Deposit Insurance Fund an estimated $13 billion, according to the regulator. By way of comparison, the SVB process cost the fund about $20 billion.
The California Department of Financial Protection and Innovation said Monday it had taken possession of First Republic and appointed the FDIC as receiver. The FDIC accepted JPMorgan’s bid for the bank’s assets.
“As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours,” the FDIC said in a statement. “All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”
JPMorgan CEO Jamie Dimon touted the acquisition in a statement early Monday morning.
“Our government invited us and others to step up, and we did,” he said. “This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
In the wake of the takeover Monday morning, the Treasury Department sought to reassure Americans about the country’s financial system.
“The banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function of providing credit to businesses and families,” a Treasury spokesperson said.

Weak link

First Republic’s deposit drain in the first quarter forced it to borrow heavily from Federal Reserve facilities to maintain operations, which pressured the company’s margins because its cost of funding is far higher now. First Republic accounted for 72% of all borrowing from the Fed’s discount window recently, according to BCA Research chief strategist Doug Peta.
On April 24, First Republic CEO Michael Roffler sought to portray an image of stability after the events of March. Deposit outflows have slowed in recent weeks, he said. But the stock tanked after the company disavowed its previous financial guidance and Roffler opted not to take questions after an unusually brief conference call.
The bank’s advisors had hoped to persuade the biggest U.S. banks to help First Republic once again. One version of the plan circulated recently involved asking banks to pay above-market rates for bonds on First Republic’s balance sheet, which would enable it to raise capital from other sources.
But ultimately the banks, which had banded together in March to inject $30 billion of deposits into First Republic, couldn’t agree on the rescue plan, and regulators took action, ending the bank’s 38-year run. More

A view of the First Republic Bank logo at the Park Avenue location, in New York City, March 10, 2023.
David Dee Delgado | Reuters

Check out the companies making headlines before the bell:
First Republic Bank, JPMorgan Chase — First Republic shares were halted during premarket trading after falling more than 45%. The move comes after JPMorgan took control of First Republic after the beleaguered bank was taken over by regulators. JPMorgan Chase added 3.6% in the premarket.

SPDR S&P Regional Banking ETF — The regional banking fund fell 0.4% in premarket trading as investors reacted to the failure of First Republic. That bank had a weighting of less than 0.15% in the fund as of Friday. Among other regional banks, PacWest was one of the biggest decliners, falling more than 5%.
Norwegian Cruise Line — The cruise line stock jumped 3% after Norwegian Cruise Line Holdings beat first-quarter expectations on the top and bottom lines. The firm reported an adjusted per-share loss of 30 cents, narrower than the anticipated 41 cent loss, according to consensus estimates from Refinitiv. It posted revenue of $1.82 billion, greater than the expected $1.75 billion.
General Motors — The auto giant saw its stock climb nearly 3% in premarket after Morgan Stanley upgraded GM to overweight from equal weight. The Wall Street firm’s analyst Adam Jonas said GM’s stock is oversold. The stock is down 2% year to date despite recent strong earnings.
Exxon Mobil — Shares slid 1.5% after Goldman Sachs downgraded the oil giant to neutral from buy, saying its multiyear run could be cooling. On Friday, the stock rose 1.3% after the company said it saw record first-quarter profit.
SoFi Technologies — SoFi Technologies jumped 6% after the company’s quarterly results topped expectations. The student loan refinancing firm reported a loss of 5 cents per share on revenue of $460.16 million. Analysts polled by Refinitiv expected a loss per share of 7 cents on revenue of $441 million.

ON Semiconductor — The semiconductor stock rose 1.2% ahead of the firm’s first quarter earnings reportlater Monday. Analysts polled by Refinitiv expect a profit of $1.09 per share on revenue of $1.93 billion.
— CNBC’s Alex Harring, Yun Li and Jesse Pound contributed reporting. More

When branches of First Republic Bank, the latest regional lender to buckle in the face of surging American interest rates, open on May 1st, they will do so as branches of JPMorgan Chase. The banking giant snapped up the troubled California-based lender in an auction arranged by the Federal Deposit Insurance Corporation (fdic), a regulator, over the weekend. JPMorgan will buy all of First Republic’s $100bn-odd deposits; losses on the bank’s residential and commercial loans will be shared with the fdic. First Republic began to look vulnerable after the collapse of Silicon Valley Bank (svb) in March. Both banks had lots of depositors not covered by federal deposit insurance, who tend to be flighty. And flee many did: First Republic’s deposit base collapsed in the first quarter of the year, from $176bn at the end of 2022 to $104bn at the end of March. The bank turned to expensive short-term borrowing, some of it from the Federal Reserve’s emergency facilities, to plug the gap. Loans it had made when interest rates were low have slumped in value, leading to worries about its solvency. In short, First Republic faced a more extreme version of the problem faced by other lenders. Rapidly rising interest rates have hit American banks on both sides of the balance-sheet. Their assets, in the form of loans and bonds, are worth less thanks to high interest rates. Their liabilities, in the form of deposits, are increasingly uncompetitive against highly liquid and safe American money-market funds, which offer yields of almost 5%.The deal offers two points of reassurance for the rest of the American banking system. The first is that the takeover is not a bolt from the blue. First Republic’s share price fell by 89% between March 8th and 20th, the period of acute panic after the fall of svb. Since then, its name has been top of the list of lenders about which investors are fretting. When its share price began crashing again after it released a dismal set of quarterly earnings on April 24th, other American banks’ shares were unruffled, offering hope that its woes will not be contagious.The second point of reassurance is that a sale has been arranged at all. It suggests big banks still see opportunities in acquiring the assets of their struggling peers. The takeover may also be a step towards a healthier industry. America has around 4,700 banks and other savings institutions; some consolidation would not go amiss. On this occasion, a rule that banks with more than 10% of deposits nationwide cannot buy other lenders appears to have been waived to get a deal through, since it would have disbarred JPMorgan from making the purchase.But such reassurance applies to the banking industry as a whole—not to firms in similar positions. The first attempt to steady First Republic came in March when several big banks, including JPMorgan, announced they would deposit $30bn with the institution. Evidently, the vote of confidence was insufficient to reassure investors and depositors. Despite their resilience in the last week of April, American regional-bank shares are down 30% from two months ago, and have not recovered at all since svb’s collapse. Attractive yields on short-term government bonds held by money-market funds will continue to be a source of pressure. Meanwhile, the fdic estimates that its deposit-insurance fund will shoulder a cost of about $13bn in facilitating the deal, to add to the $20bn it lost after the collapse of SVB and the $2.5bn when Signature Bank went under. Together, the losses account for more than a quarter of the $128bn the deposit fund held at the end of 2022. As the fund is run down, banks may be forced to chip in to refill it.The questions now are how other midsized banks respond to the pressure of rising rates, and what the extent of the economic damage will be. PacWest Bancorp, another regional lender with a battered share price, recently announced it was exploring asset sales in response to deposit outflows. Tan Kai Xian of Gavekal, a research firm, has noted that more asset sales by smaller banks means fewer new loans, and more conservative lending standards: “This self-reinforcing cycle seems unlikely to be quickly broken.” America’s banking turmoil is not yet at an end. ■ More

In the three years before covid-19 rich-world consumer prices rose by a total of 6%. In the three years since then they have risen by close to 20%. People are looking for someone to blame—and corporations are often top of the list. According to a recent survey by Morning Consult, a pollster, some 35% of Americans believe that “companies’ attempts to maximise profits” have contributed “the most” to inflation, more than any other factor by far. It is not just the general public who blame fat cats. “Recent inflation has been driven by an unusual expansion of profit margins,” Paul Donovan of ubs, a bank, has argued. A study by America’s Bureau of Labour Statistics (bls) suggests that “dealer mark-up” has raised the price of new vehicles. Central bankers are getting in on the act, too. Last month Fabio Panetta of the European Central Bank said that “there could be an increase in inflation due to increasing profits.” Last year Lael Brainard, a former vice-chairwoman of the Federal Reserve, now a White House official, said that “reductions in mark-ups could also make an important contribution to reduced pricing pressures”. The problem is that, at an aggregate level, evidence for head-honcho greed is thin on the ground. What actually seems to be happening is that families and businesses are sharing the spoils of the post-pandemic economy. This makes sense. Arguments for “greedflation” rest on unsure theoretical ground. Companies did not suddenly become avaricious. Red-hot demand, linked in part to massive stimulus programmes in 2020-21, is the true source of price pressure—and can sometimes result in margins expanding. The theory also fails on its own terms. To believe that corporations are making out like bandits is to believe they are winning the fundamental battle in economics. Output must flow either to owners of capital—in the form of profits, dividends and rents—or to labour, as pay and perks. Economists refer to this as the “capital” or “labour” share of gdp. When one group wins, by definition the other must lose. For the moment, the evidence suggests an even match-up. We have estimated the labour share across the oecd, a group of mostly rich countries. Labour has had the upper hand for most of the past three years, though more recently its share has fallen (see chart 1). In 2020 firms continued to pay people’s wages—helped by stimulus programmes—even as gdp dropped. In 2021 and 2022 strong demand for labour allowed many existing workers to demand more pay. It also pulled new people into the workforce. Across the oecd the share of working-age folk in a job is at an all-time high of 70%. Another way of assessing the balance of power is to look at “unit prices”. The second chart shows recent changes in the price of an average American good or service, split into the relative contributions of profits and labour costs. Corporations had the early spoils, but since 2021 workers have fought back. A calculation for the euro area published in a recent paper by Goldman Sachs, a bank, also suggests a relatively even match-up. If you are fuming at paying $10 for a coffee, blame the barista serving it to you as much as the owner. Recent months have been tougher for firms. In the first quarter of this year profit margins at companies in the s&p 500 are expected to sharply drop, perhaps because consumer tolerance for higher prices has worn thin. Workers, though, seem to be holding their own. The oecd’s headline rate of inflation is now decisively declining, even as there is little evidence of slowing wage growth. The latest monthly data from the bls show that, after falling for much of 2021 and 2022, American hourly real pay is rising again. David has not defeated Goliath, but he is putting up a good fight. ■ More

Charlie Munger reportedly believes there is trouble ahead for the U.S. commercial property market.
The 99-year-old investor told the Financial Times that U.S. banks are packed with “bad loans” that will be vulnerable as “bad times come” and property prices fall.
“It’s not nearly as bad as it was in 2008,” he told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else.” 

Charles Munger at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, April 29, 2022.
David A. Grogan | CNBC

Charlie Munger believes there is trouble ahead for the U.S. commercial property market.
The 99-year-old investor told the Financial Times that U.S. banks are packed with “bad loans” that will be vulnerable as “bad times come” and property prices fall.

“It’s not nearly as bad as it was in 2008,” he told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else.” 
Munger’s warning comes as U.S. regulators have asked banks for their best and final takeover offers for First Republic by Sunday afternoon, the latest in what has been a tumultuous period for midsized U.S. banks.
Since the failure of Silicon Valley Bank in March, attention has turned to First Republic as the weakest link in the American banking system. Shares of the bank sank 90% last month and then collapsed further this week after First Republic disclosed how dire its situation is.
Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment partner, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial property loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”
Read the complete Financial Times interview here. More

U.S. regulators have asked banks for their best and final takeover offers for First Republic by Sunday afternoon, in a move that authorities hope will cap a period of uncertainty for regional lenders.
JPMorgan Chase and PNC are likely bidders for the ailing lender, which would be seized in receivership and immediately sold to the winning bank, according to sources.
Bank of America is among several other institutions that are weighing a potential bid for First Republic, according to people with knowledge of the matter.

A First Republic bank branch in Manhattan on April 24, 2023 in New York City.
Spencer Platt | Getty Images

U.S. regulators have asked banks for their best and final takeover offers for First Republic by Sunday afternoon, in a move that authorities hope will calm markets and cap a period of uncertainty for regional lenders.
JPMorgan Chase and PNC are likely bidders for the ailing lender, which would be seized in receivership and immediately sold to the winning bank, according to people with knowledge of the situation. The Wall Street Journal reported those banks’ interest late Friday.

Other companies are likely to step up. Bank of America is among several other institutions that are weighing a bid for First Republic, CNBC has learned according to other people with knowledge of the situation.
If regulators led by the Federal Deposit Insurance Corp. receive an acceptable offer by Sunday, it’s possible a new First Republic owner could be announced early Monday. That scenario would create the least disruption for First Republic customers, who would start the week knowing their bank was now owned by a financially-stable operator.
The First Republic auction may end a tumultuous period for midsized U.S. banks. Since the failure of Silicon Valley Bank in March, attention has turned to First Republic as the weakest link in the American banking system. Shares of the bank sank 90% last month, and then collapsed further this week after First Republic disclosed how dire its situation is.
Like SVB, which catered to the tech startup community, First Republic is also a California-based specialty lender. It focused on serving rich Americans, enticing them with low-rate mortgages in exchange for leaving cash at the bank. That model unraveled in the wake of the SVB collapse as First Republic clients withdrew more than $100 billion in deposits, the bank disclosed Monday.

Not a systemic risk?

As First Republic’s situation deteriorated, regulators initially cast a wide net, asking a large group of banks what they thought the company was worth, according to a person with knowledge of the process. That group has narrowed in recent days, with the idea that regulators would share information necessary to make a final bid only with the most serious contenders.

Regulators are expected to choose the bid that results in the smallest financial hit to the FDIC for resolving First Republic, according to a person with knowledge of the situation.
The SVB failure, by way of example, will cost the FDIC’s Deposit Insurance Fund roughly $20 billion, the agency said. The biggest banks will bear the brunt of that expense, because member banks will likely be assessed fees to replenish the FDIC fund over several years.
While the emergency takeovers of SVB and Signature both involved invoking a systemic risk exception to protect uninsured depositors from losses, that probably won’t be necessary in the First Republic receivership. That’s because the new owner would presumably be able to handle deposit outflows; in the case of SVB’s receivership, it took two full weeks to announce a deal.

The big get bigger

The auction means it’s likely one of the biggest U.S. banks will grow even larger and benefit from a government-brokered receivership process that leaves the FDIC holding undesirable assets.
That’s what happened when SVB was sold to First Citizens last month; the buyer won a raft of concessions including loss-sharing agreements. First Citizens’ shares shot up 55% on news of the favorable deal.
The likely bidders are all represented in the group of 11 banks that banded together last month to inject $30 billion in deposits into First Republic. That move helped stem the larger deposit drain from midsized banks into top-four institutions including JPMorgan and Wells Fargo, thus giving regulators breathing room to resolve First Republic, CNBC reported last month.

Goldman, Wells Fargo sit out

But not every big bank that participated in the deposit injection will make an offer. Wells Fargo, Goldman Sachs and Citigroup are each unlikely to make a bid, according to people with knowledge of the banks.
Wells Fargo is still laboring under a 2018 asset cap imposed by the Federal Reserve. Goldman has made a strategic decision to pivot away from retail finance and is selling consumer loans. Citigroup has been offloading business units to simplify operations while improving its risk controls.
The takeover makes the most sense for institutions looking to grow among the coastal affluent; First Republic’s branches are concentrated in California, New York, Boston and Florida.
First Republic’s advisors had hoped to avoid a government takeover by persuading the biggest U.S. banks to help once again. One version of the plan circulated recently involved asking banks to pay above-market rates for bonds on First Republic’s balance sheet, which would enable it to raise capital from other sources.
But ultimately the banks wouldn’t bite on the last-ditch effort, leaving the government poised to end First Republic’s 38 year run. More

As luxury stocks make waves overseas, State Street Global Advisors believes investors should consider European ETFs if they want to capture the gains from their outperformance.
Matt Bartolini, the firm’s head of SPDR Americas research, finds three reasons why the backdrop is becoming particularly attractive. First and second on his list: valuations and earnings upgrades.

“That’s completely different than what we saw for U.S. firms,” he told CNBC’s Bob Pisani on “ETF Edge” this week.
His remarks come as LVMH became the first European company to surpass $500 billion in market value earlier this week.
Bartolini lists price momentum as a third driver of the investor shift.
His SPDR Euro Stoxx 50 ETF (FEZ) is considered a broad European ETF. The ETF is up about 20% so far this year, with a price increase of nearly 1.2% since the beginning of January.
While the fund’s top holding is LVMH at 7.29%, according to the company’s website, Bartolini contends the shift applies beyond luxury stocks and to lower-end consumer stocks.

His firm’s website lists French cosmetics company L’Oreal — which is up almost 30% this year — as another one of his fund’s major holdings. It also shows FEZ allocating more than 20% to consumer discretionary — 2.5% higher than its second-most allocated industry.
“That’s on a broad-based level,” he said. “So, basically, buy Europe and sell U.S. has been some of the trade that we have seen.”
FEZ closed the week down 0.41% but ended the month up more than 3.1%.

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