Finance

About 1 in 5 American workers have a job with “high exposure” to artificial intelligence, according to Pew Research Center. It’s unclear if AI would enhance or displace these jobs.
Workers with the most exposure to AI like ChatGPT tend to be women, white or Asian, higher earners and have a college degree, Pew found.
Technology has led some to “lose out” in the past, largely when their job is substituted by automation, one expert said.

Tomml | E+ | Getty Images

The notion of technological advancement upending the job market isn’t a new phenomenon.
Robots and automation, for example, have become a mainstay of factory floors and assembly lines. And it has had various effects on the workplace, by displacing, changing, enhancing or creating jobs, experts said.

related investing news

Artificial intelligence — a relatively nascent and fast-moving type of technology — will undoubtedly do the same, experts said. However, it’s likely such tech will target a different segment of the American workforce than has been the case in the past.
“AI is distinguished from past technologies that have come over the last 100-plus years,” said Rakesh Kochhar, an expert on employment trends and a senior researcher at Pew Research Center, a nonpartisan think tank. “It is reaching up from the factory floors into the office spaces where white-collar, higher-paid workers tend to be.”
“Will it be a slow-moving force or a tsunami? That’s unknown,” Kochhar added.

About 1 in 5 American workers have ‘high exposure’ to AI

In basic terms, AI is built to mimic a human’s cognitive ability — i.e., to think like a human. It lets computers and machines perform tasks by themselves, Kochhar said.
ChatGPT — an AI chatbot developed by San Francisco-based OpenAI — went viral after debuting to the public in November 2022, fueling a national debate as millions of people used the program to write essays, song lyrics and computer code.

Such technology differs from robots, which generally perform physical tasks like lifting or moving objects.  
In a new Pew study, Kochhar found that 19% of U.S. workers are in jobs with high exposure to AI. The study uses the term “exposure” because it’s unclear what AI’s impact — whether positive or negative — might be.
More from Personal Finance:Don’t keep your job loss a secretYou can use A.I. to land a job, but it can ‘backfire’The job market is still favorable for workers
The high exposure group includes occupations like budget analysts, data entry keyers, tax preparers, technical writers and web developers. They often require more analytical skills and AI may therefore replace or assist their “most important” job functions, the report said.
Workers with the most AI exposure tend to be women, white or Asian, higher earners and have a college degree, the report said.
“Certainly, there could be some [job] displacement,” said Cory Stahle, an economist at job site Indeed. However, AI could also “open new occupations we don’t even know about yet.”
“The jury is still out,” he added.

Conversely, 23% of American workers have low exposure to AI, according to the Pew report.
These workers — like barbers, dishwashers, firefighters, pipelayers, nannies and other child care workers — tend to do general physical activities that AI (at least, in its current form) can’t easily replicate. The remaining share of jobs — 58% — have varying AI exposure.
In 2022, workers in the most exposed jobs earned $33 per hour, on average, versus $20 in jobs with the least exposure, according to the Pew study, which leveraged U.S. Department of Labor data from the Occupational Information Network.

Which workers may win and lose with AI

onurdongel | E+ | Getty Images

Fear of technology and its ability to destroy jobs has been around since the Industrial Revolution, said Harry Holzer, a professor at Georgetown University and former chief economist at the federal Labor Department.
“To date, these fears have been mostly wrong — but not entirely,” Holzer wrote recently.
Over time, automation often creates as many jobs as it destroys, added Holzer, the author of the 2022 book titled “Shifting Paradigms” about the digital economy.
Technology makes some workers more productive. That reduces costs and prices for goods and services, leading consumers to “feel richer” and spend more, which fuels new job creation, he said.
In advanced economies like the U.S., new technologies have a negative short-term impact on net jobs, causing total employment to fall by 2 percentage points, according to Gene Kindberg-Hanlon, a World Bank economist. However, the impact swings “modestly positive” after four years, he found.

Will it be a slow-moving force or a tsunami? That’s unknown.

Rakesh Kochhar
senior researcher at Pew Research Center

However, some workers “lose out,” Holzer said. That group largely includes workers who are substituted by technology — those directly replaced by machines and then forced to compete.
“Digital automation since the 1980s has added to labor market inequality, as many production and clerical workers saw their jobs disappear or their wages decline,” Holzer said.
Business owners, who generally reap more profit and less need for labor, are often the winners, he said.
The “new automation” of the future — including AI — has the potential to “cause much more worker displacement and inequality than older generations of automation,” perhaps eliminating jobs for millions of vehicle drivers, retail workers, lawyers, accountants, finance specialists and health-care workers, among many others, he said.
It will also create new challenges and needs like retraining or reskilling; those may have knock-on effects, like child care needs for disadvantaged workers, Holzer said.

Indeed data suggests there’s been a “pretty significant uptick” in the number of employers looking for workers with AI-related skills, Stahle said.
For example, about 20 jobs listings per million advertised by Indeed in July 2018 sought some type of AI skill. That figure had swelled to 328 jobs per million as of July 2023.
This remains a small share of overall Indeed job ads but is noticeable growth from “basically zero” five years ago, Stahle said. And most of the growth has occurred in the past year, likely tied to the recent popularity of ChatGPT, he added.
The growth has largely occurred in two camps: Workers building AI technology and those in more creative or marketing roles who use those A.I. tools, Stahle said.
Jobs in the latter group will be an especially interesting area to watch, to see how artificial intelligence might disrupt roles as varied as marketing, sales, customer service, legal and real estate, he added. More

A bipartisan push in Washington to clamp down on credit card fees is pitting retailers like Walmart against network payment processors such as Visa.
Bipartisan support for the Credit Card Competition Act has surged since it was introduced last year.
“It’s time to inject real competition into the credit card network market, which is dominated by the Visa-Mastercard duopoly,” Sen. Dick Durbin, D-Ill., said.

Visa Inc. and Mastercard Inc. credit cards are arranged for a photograph in Tiskilwa, Illinois, U.S.
Daniel Acker | Bloomberg | Getty Images

A bipartisan push in Washington to clamp down on credit card fees is pitting retailers against network payment processors — and both sides are working hard to gain the attention of consumers.
The Credit Card Competition Act was reintroduced last month in both the House and the Senate, after not being brought up for a vote in either chamber during the previous Congress.

The measure aims to bolster competition for credit card processing networks by requiring big banks to allow at least one network that isn’t Visa or Mastercard to be used for their cards. This would give merchants who pay interchange fees a choice they otherwise rarely get. 
Amazon, Best Buy, Kroger, Shopify, Target and Walmart are among the list of nearly 2,000 retailers, platforms and small businesses urging lawmakers to pass the bill. Retailers in support of the legislation argue credit card processing costs are hurting consumers by driving up the cost of business, and, in turn, the price shoppers pay at checkout.
On the other side of the fight, major credit card processing networks like Visa, Mastercard, Discover and Capital One say the bill will actually hurt consumers by diminishing popular credit card rewards programs and lessening fraud protections.
Bipartisan support for the bill has surged since it was introduced last year. As of now, there is no vote scheduled on the measure in either chamber of Congress, but there are indications a vote could come by year-end.
Doug Kantor, a member of the Merchants Payments Coalition executive committee, remains “optimistic” that the Credit Card Competition Act could end up as an amendment attached to a larger piece of legislation at some point.

“It’s time to inject real competition into the credit card network market, which is dominated by the Visa-Mastercard duopoly,” Sen. Dick Durbin, D-Ill., said in a statement to CNBC. He’s a sponsor of the bill and one of its most outspoken advocates.
Visa and Mastercard account for 80% of all credit card volume, according to data from the Nilson Report, a publication tracking the global payment industry. Durbin says the legislation would “help reduce swipe fees and hold down costs for Main Street merchants and their customers.”
Swipe fees are often built into the price consumers pay for goods and services and have more than doubled in the past decade, hitting a record $160.7 billion in 2022, according to the Nilson Report. On average, U.S. credit card swipe fees account for 2.24% of a transaction, according to the Merchants Payments Coalition. That’s why some businesses add a surcharge to bills for customers paying with debit or credit cards to encourage cash transactions. 
The new legislation would require banks with assets over $100 billion to provide customers with a choice of at least two different payment networks to process credit card transactions. The bill also stipulates that Visa and Mastercard can only account for one of the choices as a way to prevent the two largest networks from being the only options offered to merchants. 
“Interchange fees are effectively attacks on commerce,” said Shopify president Harley Finkelstein. “We began to notice that these fees kept climbing and climbing and climbing, and we felt that something was up.”
The e-commerce platform known for helping businesses create their own custom digital stores, operates in 175 countries worldwide. “”Relative to every other country Shopify operates in, interchange fees are the highest in America,” Finkelstein said.
Larger platforms and retailers like Amazon, Shopify and Walmart, as well as payment processors like Capital One, Discover and Visa, are funding efforts to pass or block this bill. In total, 26 organizations have mentioned the Credit Card Competition Act by name in their 2023 first-quarter lobbying reports, which were filed before the legislation was reintroduced last month, according to data from Open Secrets, a nonprofit group tracking campaign finance and lobbying data. 
The Electronic Payments Coalition, a group representing big banks, credit unions, community banks and payment card networks said the legislation “would add billions of dollars to the bottom lines of mega-retailers every year while eliminating almost all the funding that goes towards popular credit cards rewards programs, weakening cybersecurity protections, and reducing access to credit,” in a June 9 post on its website. 

Simon Dawson | Bloomberg | Getty Images

CNBC reached out to major credit card processors including Visa, American Express, Discover and Capital One. All declined to comment or referred us to the Electronic Payments Coalition. Mastercard did not provide a response despite CNBC’s multiple attempts to get one.
Shares of Visa and Mastercard are up more than 12% each this year as of Friday’s close.
“Interchange revenue will dry up,” according to Aaron Stetter, the executive director of the Electronic Payments Coalition. 
Stetter describes the bill as a “bait and switch that harms consumers,” because it “ultimately gives the decision-making of where the transaction is going to be routed to the merchant” instead of the card issuer or consumer. 
Opponents say the bill misleads consumers who may think that their Mastercard or Visa credit card is being processed over the Visa network but could actually end up being routed over a separate cheaper network with fewer fraud protections and little to no customer rewards programs, according to Stetter.

History repeats itself?

In 2010, lawmakers passed the Durbin amendment as part of the Dodd-Frank Act, which sought to tighten financial regulation in the wake of the 2008 economic crisis. The amendment was supposed to cause a trickle-down savings effect, where merchants would pass along debit card processing savings to customers in the form of lower prices for their goods and services.
But a 2015 survey conducted by the Richmond Federal Reserve found the Durbin amendment did little to lower costs for consumers and merchants. Just 1.2% of the surveyed merchants reduced prices, and 11.1% said their debit card processing costs declined. Nearly one-third of respondents reported even higher debit card swipe fees, according to the survey. 
Brian Kelly, founder of the travel blog The Points Guy, referred to Durbin as the “grim reaper of debit card rewards” during his July 11 appearance on CNBC’s “The Exchange.”

“When he passed that amendment over a decade ago, not only did we see fees go up, but consumers could no longer earn rewards on debit cards,” Kelly said. ThePointsGuy.com is compensated by credit card companies for the card offers listed on its website, according to a disclosure at the bottom of the webpage.
But a new research paper from the global payments consulting firm CMSPI argues the new bill won’t have the kind of dire impact Kelly is warning about. “Credit card rewards are unlikely to disappear based on current issuer margins on rewards and experience from other markets,” according to the CMSPI paper.
The same firm also estimates the new legislation would save merchants and their customers more than $15 billion a year in swipe fees. That savings would be nearly 70 times the amount of any expected reduction in rewards, according to the new study.

Innovation and lower fees

Sheldon Cooper | Lightrocket | Getty Images

Businesses are trying other ways to cut fees, regardless of legislation.
Tandym, a startup offering e-commerce brands the chance to create a private label debit and credit card, similar to big-box retailer-branded credit cards, is tackling the problem of high interchange fees through technology.
Before founding Tandym, CEO Jennifer Galspie-Lundstrom worked at Capital One for seven years. She believes the Credit Card Competition Act would take years and cost billions of dollars to execute, calling it a “massive resource drain.” Instead, she said innovation will provide the answer to lower fees. 
“We do not ride the Visa, Mastercard, American Express or Discover rails,” she said. “We’ve created essentially an alternative network where we can connect directly to a merchant.”
Tandym’s interchange fees are typically 80% lower because it is not using the revenue to fund its own cash back incentives or rewards programs. Instead, Tandym helps small digital businesses like online bike retailer Jenson USA build integrated loyalty programs with the savings.
Jenson started offering Tandym as a payment option to customers earlier this year. Orders processed over Tandym’s network cost about 2% less compared with Visa and Mastercard, according to Jenson’s director of IT, Jeff Bolkovatz. Those savings are now being used to help fund a 5% rewards program for Jenson USA’s customers. 
“We basically just turned the savings that we got by using Tandym and gave it back to the customer to entice them to use it. The goal is to get them to be more loyal,” he said.
Customers seem to like the program. Each shopper has placed an average of two and a half orders since Jenson USA started offering Tandym as a payment option, Bolkovatz said.  More

Viewing cryptocurrency as “digital gold” may be a mistake.
State Street Global Advisors’ George Milling-Stanley, whose firm runs the world’s largest gold exchange-traded fund, believes cryptocurrency is no substitute for the real thing due its vulnerability to big losses.

“Volatility does not back up any claims for crypto to be a long-term strategic asset as a competitor to gold,” the firm’s chief gold strategist told CNBC’s “ETF Edge” earlier this week.
Milling-Stanley’s firm is behind SPDR Gold Shares, the world’s largest physically backed gold ETF. It has a total asset value of more than $57 billion as of last week, according to the company’s website. The ETF is up 7% year to date as of Friday’s market close.
Milling-Stanley believes gold’s 6,000-year history as a monetary asset serves as a significant sample basis to understand the benefits of investing in gold.
“Gold is a hedge against inflation. Gold’s a hedge against potential weakness in the equity market. Gold’s a hedge against potential weakness in the dollar,” he noted. “To me, historically, the promise of gold for investors has … overtime [helped] to enhance the returns of a properly balanced portfolio.”
The precious metal is having trouble this year staying above the $2,000 an ounce mark. But Milling-Stanley believes the economic backdrop bodes well for gold — recession or not.

“It’s pretty clear that we’re liable to be in a period of slow growth. … Historically, gold has always done well during periods of slower growth,” Milling-Stanley said.
Milling-Stanley also believes the relaxation of Covid-19 restrictions in China should spark more demand for gold. It’s known as the world’s largest consumer of gold jewelry behind India, according to the World Gold Council.
“It’s not just China and India. It’s Vietnam, it’s Indonesia, it’s Thailand and Korea. It’s a whole raft of Asian countries that are really the main drivers of gold jewelry demand,” Milling-Stanley said.
Gold settled at $1,960.47 an ounce Friday. The commodity is up more than 7% so far this year.

Disclaimer More

Signage outside Intel headquarters in Santa Clara, California, Jan. 30, 2023.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in midday trading. 
Intel — The chip stock jumped more than 6% after the company posted better-than-expected second-quarter earnings results. The latest quarter marked a return to profitability after two consecutive losing periods. Intel’s forecast for the third quarter also came in above analyst expectations.

Roku — Shares popped 31% after the company reported a smaller-than-expected loss for the recent quarter. The streaming stock posted a loss of 76 cents a share, ahead of the $1.26 loss per share expected by analysts, according to Refinitiv. Revenue came in at $847 million versus the estimated $775 million.
New York Community Bancorp — The regional bank stock added 4.9% after JPMorgan upgraded shares to overweight from neutral, calling it a “massive market share taker” in the near and medium term.
Biogen — The biotech company rose nearly 1% after the company said it’s acquiring Reata Pharmaceuticals for $172.50 per share, in a cash deal valued at about $7.3 billion. Shares of Reata popped 54% following the news.
Procter & Gamble — The consumer giant’s stock climbed nearly 3%, boosting the blue-chip Dow Jones Industrial Average. The rally came after the company reported quarterly earnings and revenue that beat analysts’ expectations. P&G did release a gloomy outlook for its fiscal 2024 sales that fell short of Wall Street estimates, however.
Exxon Mobil — The oil giant saw its shares dip 1.2% after the company posted mixed second-quarter results. The company reported earnings of $1.94 a share, excluding items, lower than the $2.01 estimate by analysts, per Refinitiv. Revenue came in at $82.91 billion, above the expected $80.19 billion.

Enphase Energy — The solar stock dropped nearly 7% to hit a 52-week low after the company posted a revenue miss. Enphase said its second-quarter revenue reached $711 million, falling short of analyst estimates of $722 million, according to Refinitiv. Deutsche Bank, Wells Fargo and Roth MKM downgraded the stock following the disappointing report.
Boston Beer — The alcohol beverage company saw its shares soar more than 16% following a stronger-than-expected quarterly report. Boston Beer posted earnings of $4.72 per share, well above an estimate of $3.38 per share from FactSet. Its revenue also came in above expectations.
Sweetgreen — Shares of the salad chain slid nearly 9% after the company posted weak sales that missed Wall Street expectations in the second quarter and a net loss of $27.3 million, or 24 cents per share. Sweetgreen also reported narrowing losses and raised its forecast for restaurant-level margins. It’s aiming to turn a profit for the first time by 2024.
Ford Motor — The automaker saw shares fall more than 3% after it said the adoption of electric vehicles is going more slowly than expected and that it expects to lose $4.5 billion on the EV business this year, widening losses from roughly $3 billion a year earlier. Otherwise, Ford posted strong quarterly earnings that beat Wall Street expectations and raised its full-year guidance.
T. Rowe Price — Shares of the asset manager jumped more than 8% after T. Rowe Price reported stronger-than-expected earnings for the second quarter. The company earned an adjusted $2.02 per share on $1.61 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.73 per share on $1.6 billion of revenue. CEO Rob Sharps said in a press release that T. Rowe Price has “identified substantial cost savings” that will slow expense growth going forward.
— CNBC’s Jesse Pound, Tanaya Macheel and Samantha Subin contributed reporting.
Correction: T. Rowe Price earned an adjusted $2.02 per share. A previous version misstated the figure. More

Life Changes

KPMG is offering high school interns $20-$22 an hour to encourage more teenagers to consider a career in accounting and help fix the talent pipeline problem.
Nationwide, accounting firms are facing a significant staffing shortage.
The profession’s lack of diversity is one of the reasons the industry has failed to attract young talent, studies show.

KPMG is offering high schoolers paid internships to help fix accounting’s staffing shortage.

By her own admission, Autumn Kimborough, 17, didn’t have a passion for accounting. But the rising high school senior from Flossmoor, Illinois, heard about a well-paid summer internship at KPMG, which included a $250 clothing stipend, and got excited.
For the first time, the Big Four accounting firm organized a three-week session geared toward high schoolers with the specific goal of encouraging younger adults to consider a career in the field, according to Jennifer Flynn, KPMG’s community impact lead.

Nearly 200 teenagers are participating in the summer internship program, which pays $20 or $22 an hour plus clothing and transportation stipends and meals, and includes a business etiquette class, among other skill-building tools.
More from Personal Finance:This strategy could shave thousands off the cost of collegeHow to understand your financial aid offerThe cheapest states for in-state college tuition
Students are also paired with mentors who track their progress. “We wanted to make sure our interns are getting a really full experience,” Flynn said.
“I had some preconceived notions that it’s sitting at a desk,” Kimborough said, about being a CPA. “Now I’ve learned that with accounting you can travel and meet people and that drew me in.”

Accounting firms face a shortage of CPAs

Accounting firms have been facing a significant staffing shortage.

Between the long hours, stressful deadlines and unflattering stereotype, more people are quitting the profession than going into it.
Instead, students straight out of college are choosing to pursue careers in related fields such as investment banking, consulting or data analysis. The additional credit hours required to earn a certified public accountant license don’t help either.
To tap the next generation of number crunchers, other accounting firms and nonprofit groups are also trying new strategies to address the talent pipeline problem by appealing directly to teenagers.

Recently, The Deloitte Foundation, Urban Assembly and Outlier.org, which works with schools to offer for-credit online college courses, kicked off a dual enrollment pilot program in New York.
Starting in the fall, some public high school juniors and seniors can take an Intro to Financial Accounting class and earn three college credits through the University of Pittsburgh, which they can then transfer to the college of their choice.
The goal is also to inspire more diverse students to consider accounting careers.

This isn’t the sexiest of professions.

Elena Richards
KPMG’s chief diversity, equity and inclusion officer

“We know this isn’t the sexiest of professions,” said KPMG’s chief diversity, equity and inclusion officer Elena Richards. “We are really trying to focus on starting earlier and broadening the reach.”
“This is our way of getting them to know this is a profession that has a lot of opportunities.”
The profession’s lack of diversity is another reason the industry has failed to attract young talent, separate studies show. Just 2% of CPAs are Black and 5% are Hispanic despite significant job opportunities in the field, according to a recent AICPA Trends Report.
Accounting often ranks among the top jobs with the best future outlook and six-figure salaries, according to other reports.
Subscribe to CNBC on YouTube. More

Signage outside Intel headquarters in Santa Clara, California, on Monday, Jan. 30, 2023.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines before the bell.
Intel — Shares popped 6.7% after the chipmaker posted better-than-expected second-quarter results and a return to profitability after two consecutive losing periods. Intel’s forecast for the third quarter also came in above analyst expectations. The company reported adjusted earnings of 13 cents a share on revenues of $12.95 billion.

related investing news

an hour ago

Roku — The streaming stock rallied nearly 10% after reporting a narrower-than-expected loss for the second quarter. Roku reported a loss of 76 cents a share and revenues of $847 million. Analysts polled by Refinitiv had anticipated a loss of $1.26 per share and $775 million in revenue.
Biogen — Biogen shares moved slightly lower after the biotechnology company said it’s acquiring Reata Pharmaceuticals for $172.50 per share, in a cash deal valued at about $7.3 billion. Shares of Reata soared more than 51% on the news.
Procter & Gamble — The consumer giant saw shares rise more than 1% in premarket trading after the company reported quarterly earnings and revenue that beat analysts’ expectations. However, P&G released a gloomy outlook for its fiscal 2024 sales that fell short of Wall Street’s estimates.
Exxon Mobil — Shares moved slightly lower after the oil stock posted mixed second-quarter results. The company reported earnings of $1.94 a share, excluding items, that fell short of the $2.01 expected by analysts, per Refinitiv. Revenues came in at $82.91 billion, above the expected $80.19 billion.
Chevron — The oil stock lost nearly 1% even after reporting a beat on the top and bottom lines for the second quarter. Earnings fell from a year ago due to a drop in oil prices.

First Solar – Shares soared 12% after the solar company posted earnings per share of $1.59 on revenue of $811 million for the second quarter. Those results beat Wall Street expectations of 96 cents per share on revenue of $721 million, according to Refinitiv. The company also announced plans to invest up to $1.1 billion to build a fifth manufacturing facility in the United States.
Enphase Energy – Shares of Enphase dropped more than 15% after the company posted second-quarter revenue Thursday of $711 million that fell short of analyst estimates of $722 million, according to Refinitiv. The stock also faced a wave of downgrades Friday morning from Deutsche Bank, Wells Fargo and Roth MKM.Sweetgreen – Shares of the salad chain slid more than 13% after the company posted weak sales that missed Wall Street expectations in the second quarter and a net loss of $27.3 million, or 24 cents per share. Sweetgreen did say it’s aiming to turn a profit for the first time by 2024.Ford Motor – The automaker said adoption of electric vehicles is going more slowly than the company forecast and that it expects to lose $4.5 billion on the EV business this year, widening losses from roughly $3 billion a year earlier. Otherwise, Ford posted strong quarterly earnings that beat Wall Street expectations and raised its full-year guidance. Shares were flat in premarket trading.
Juniper Networks — Shares of the technology company fell 8% after Juniper’s third-quarter guidance came in lighter than expected. The company said it expects earnings per share between 49 cents and 59 cents, with revenue between $1.34 billion and $1.44 billion. Analysts had penciled in 62 cents per share and $1.48 billion of revenue. The company’s second-quarter results did come in slightly above expectations.
AstraZeneca — U.S. listed shares of the drugmaker added more than 5% before the bell. The U.K.-based company reported second-quarter earnings of $2.15 per share on $11.42 billion in revenue. That surpassed the EPS of $1.95 expected by analysts polled by Refinitiv on revenues of $11.03 billion. AstraZeneca also said it would buy a portfolio of preclinical rare disease gene therapies from Pfizer for up to $1 billion.
Xpeng — The Chinese electric vehicle stock jumped more than 6% in the premarket. Jefferies upgraded shares to a buy from a hold, citing Xpeng’s joint development plan with Volkswagen
New York Community Bancorp — The regional bank stock rose about 2% before the bell after JPMorgan upgraded New York Community Bancorp to an overweight rating from neutral. The Wall Street firm called the company a “massive market share taker” in its upgrade.
Mondelez International — Mondelez International added 2.7% before the bell on strong second-quarter results. The snack maker on Thursday reported earnings of 76 cents a share, excluding items, on $8.51 billion in revenue. Analysts polled by Refinitiv had estimated EPS of 69 cents and revenues of $8.21 billion.
— CNBC’s Tanaya Macheel, Yun Li and Jesse Pound contributed reporting More

On July 28th the Bank of Japan (boj) took markets by surprise. At the end of a two-day policy meeting Ueda Kazuo, the central bank’s governor, announced an unexpected change to its increasingly expensive policy of yield-curve control. The boj raised its cap on ten-year government-bond yields, which it defends with regular and sometimes vast purchases, from 0.5% to 1%. Ten-year yields climbed to around 0.57% after the announcement, the highest in nearly a decade. Surging inflation over the past two years has led central banks around the world to raise interest rates forcefully. Japan’s central bank has been a stubborn outlier, keeping most of its monetary-stimulus measures—including negative interest rates and aggressive bond purchases—firmly in place. All told, the boj’s ultra-low interest-rate regime, introduced in an attempt to boost the country’s sluggish rate of economic growth and prevent outright deflation, has now been active for a quarter of a century. Tweaking yield-curve control is not quite an abandonment of the regime. It does, however, set the country on course for higher rates.Under yield-curve control, the boj buys government bonds when yields approach the stated cap—pushing yields, which move inversely to bond prices, back down. The approach has been in place since 2016, when it was introduced as an alternative to huge asset purchases, which were distorting the bond market. In the past year the policy has come under pressure as inflation has soared worldwide. In January the boj was forced to make enormous bond purchases—surpassing ¥13trn ($100bn) in one week—in order to defend the policy. Hedge funds have short-sold government bonds, expecting that the boj eventually will have to abandon the policy. Every extra boj bond purchase increases eventual losses on the central bank’s portfolio should yields eventually rise. And with the boj owning vast amounts of government bonds, there are few left for others to trade, leaving the market increasingly illiquid. Most economists had therefore expected the boj to eventually junk or tweak the policy, though not until later in the year. The boj says that allowing a wider trading range will bring flexibility, allowing the bond market to function better, whichever way the economic winds blow. The central bank also said that it would be “nimbly conducting market operations” when the ten-year yield was between 0.5% and 1%. The central bank seems to be giving itself wriggle room to buy bonds, even if yields do not bump up against the new upper bound. In doing so, it risks causing confusion about its goals.Despite the boj’s insistence that the change to yield-curve control is not an act of monetary tightening, any loosening of the band inevitably means higher market interest rates, since yields were already bumping up against the previous cap. Even if the boj does not want to fire the starting gun on a cycle of tighter policy, the move is “effectively akin to a rate hike”, as Naohiko Baba of Goldman Sachs, a bank, has written.For now there are few advocates of more aggressive tightening at the boj. But rate rises no longer look as unlikely as they did. Based on the price of interest-rate swaps, investors expect short-term interest rates to rise from -0.1% now to zero in a year’s time. Data released on July 28th showed core inflation (excluding fresh food and fuel) in Tokyo rising by 4% year-on-year in July, twice the boj’s target. What happens in the labour market will be crucial. Signs of broader pressures on wages are still limited, but the shunto, springtime wage negotiations, saw promises of the largest wage rises in three decades. Years of ultra-low interest rates have left Japan exposed to higher interest rates, whether market or official ones. The most obvious source of risk is the country’s government debt, which on a net basis ran to a staggering 161% of gdp last year, and which will become much more expensive to service. Despite low borrowing costs in recent years, the government already spends 7.4% of its annual budget on interest payments—more than it does on defence, education or public infrastructure. Higher interest rates for any sustained period would put huge pressure on Japan’s fiscal arithmetic.Thus the BoJ faces a balancing act. Backing away from its yield-control policies without sending yields surging will require immaculate communication. If inflation fades as the boj hopes, officials may just pull it off. But if price pressures are more sticky and sustained, then painful monetary tightening will follow. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

China’s housing ministry has announced plans to make it easier for people to buy property.
They include easing purchase restrictions for people wanting to buy a second house, and reducing down payment ratios for first-time homebuyers, according to an article on the Ministry of Housing and Urban-Rural Development’s website.
“It seems to us that [the housing ministry] is quick in response this time and also gets bolder on relaxing property policies,” Jizhou Dong, China property research analyst at Nomura, said in a note Friday.

A residential complex constructed by Evergrande in Huai’an, Jiangsu, China, on July 20, 2023.
Future Publishing | Future Publishing | Getty Images

BEIJING — China’s housing ministry has announced plans to make it easier for people to buy property.
The news, out late Thursday, indicates how different levels of government are starting to act just days after Beijing signaled a shift away from its crackdown on real estate speculation.

related investing news

14 hours ago

14 hours ago

The planned measures include easing purchase restrictions for people wanting to buy a second house, and reducing down payment ratios for first-time homebuyers, according to an article on the Ministry of Housing and Urban-Rural Development’s website.
In an effort to reduce speculation in its massive property market, China has made it much harder for people to buy a second house.
Mortgage rates for the second purchase can be a full percentage point higher than for the first, while the second-home down payment ratio can skyrocket to 70% or 80% in large cities, according to Natixis.

The housing ministry article referred to comments from its minister Ni Hong at a recent meeting with eight state-owned and non-state-owned companies in construction and real estate.
Since it was a meeting at the central government ministry level, it did not discuss policies for individual cities, said Bruce Pang, chief economist and head of research for Greater China at JLL.

But he expects Beijing will encourage local governments to announce real estate policy changes that fit their specific situation. Pang also pointed out that including construction companies at the meeting emphasized their role in promoting investment and stabilizing growth.

Waiting on details

China has not yet announced formal measures for supporting real estate. However, top level leaders on Monday signaled a greater focus on housing demand, rather than supply.
On Tuesday, China’s State Taxation Administration announced “guidelines” for waiving or reducing housing-related taxes. It was not immediately clear what implementation would look like for home buyers.

We continue to expect the property sector rally to continue and advise investors to focus on beta names within the property sector.

Jizhou Dong

The readout of Monday’s Politburo meeting also removed the phrase “houses are for living in, not speculation,” which has been a mantra for Beijing’s tight stance and efforts to rein in developers’ high reliance on debt for growth.
“It seems to us that [the housing ministry] is quick in response this time and also gets bolder on relaxing property policies,” Jizhou Dong, China property research analyst at Nomura, said in a note Friday.
Given such speed, Dong expects markets are anticipating specific policy implementation in cities such as Shanghai or Guangzhou.

Read more about China from CNBC Pro

Hong Kong-traded Chinese property stocks such as Longfor, Country Garden and Greentown China traded higher Friday, on pace to close out the week with gains after plunging on Monday over debt worries.
“We continue to expect the property sector rally to continue and advise investors to focus on beta names within the property sector,” Nomura’s Dong said.
Those stocks include U.S.-listed Ke Holdings, as well as Hong Kong-listed Longfor and China Overseas Land and Investment, the report said, noting Nomura has a “buy” rating on all three.
“We still advise investors to stay away from weaker privately-owned developers.” More