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    Here’s what changed in the new Fed statement

    This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in November.
    Text removed from the November statement is in red with a horizontal line through the middle.

    Text appearing for the first time in the new statement is in red and underlined.
    Black text appears in both statements.

    Arrows pointing outwards

    Watch Fed Chair Jerome Powell’s press conference here. More

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    UniCredit raises stake in Commerzbank to 28% as Orcel ups ante on pursuit

    Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives.
    Investors are watching whether UniCredit will take the leap with a buyout of the German lender or pursue its simultaneous bid for Italy’s Banco BPM.
    The German government has so far opposed UniCredit’s courtship of Commerzbank.

    The Commerzbank AG headquarters, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
    Emanuele Cremaschi | Getty Images News | Getty Images

    Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives, as markets watch whether it will take the leap with a buyout of the German lender.
    This marks an increase from a 21% holding previously.

    Italy’s second-largest bank said its ownership now consists of a 9.5% direct stake and around 18.5% through derivative instruments.
    UniCredit has applied to the European Central Bank for permission to acquire a stake of up to 29.9% in the German bank, as CEO Andrea Orcel simultaneously pursues a bid for Italian peer Banco BPM.
    “This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystalized,” UniCredit said in a press release Wednesday. “It reflects the belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany’s economic development.”
    The lender stressed its position remains “solely an investment” at this time and does not impact its 10-billion-euro ($10.49 billion) offer on Banco BPM. Analysts hold that Orcel could still sweeten his bid and introduce a cash component to pursue domestic consolidation. In a statement accompanying its Banco BPM offer in November, UniCredit noted that such a merger would serve it to “consolidate its competitive position and expand its presence in Italy,” where it is second to Intesa Sanpaolo.
    UniCredit has yet to warm its German takeover target or the Berlin administration to a potential deal. Commerzbank on Wednesday said it has “taken note of the announcement” but declined to comment beyond pointing to its strategy, which is currently being upgraded and will be disclosed on Feb. 13.

    The German government has so far opposed Orcel’s courtship of Commerzbank, but faces its own turbulence after the collapse of the ruling coalition and Chancellor Olaf Scholz’s loss of a no-confidence vote earlier this week cleared the path for elections in February. The German administration retains a 12% holding in Commerzbank, after offloading a 4.5% stake in September in an effort to exit its position in the lender it bailed out during the 2008 financial crisis.
    A merger with Commerzbank in Germany, where UniCredit operates through its HypoVereinsbank division, could create synergies in capital markets, advisors, payments and trade finance activity, analysts have previously signaled.
    UniCredit shares were up 1.1% at 9:44 a.m. London time, with Commerzbank stock rising 3.1%.
    — CNBC’s Greg Kennedy contributed to this report. More

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    Why the Dow is in such a historic funk and how concerned you should be

    The biggest laggard in the Dow Jones Industrial Average has been UnitedHealth, which has contributed to more than half of the decline over the past eight sessions.
    There’s a rotation going on with investors selling out of the cyclical names in the 30-stock Dow that initially popped on Trump’s election in November.
    There are many reasons to believe the Dow’s historic losing streak is not a source for major concern.

    Traders work on the floor at the New York Stock Exchange on Dec. 10, 2024.
    Brendan McDermid | Reuters

    The Dow Jones Industrial Average has been declining for nine straight days, posting its longest losing streak since February 1978. What is going on and how concerned should investors be?
    First off, let’s explain which stocks are driving the losses.

    The biggest laggard in the 30-stock Dow during this losing streak has been UnitedHealth, which has contributed to more than half of the decline in the price-weighted average over the past eight sessions. The insurer has plunged 20% this month alone amid a broad sell-off in pharmacy benefit managers after President-elect Donald Trump’s vow to “knock out” drug industry middlemen. UnitedHealth is also going through a tumultuous period with the fatal shooting of Brian Thompson, the CEO of its insurance unit.

    And then there’s a rotation going on with investors selling out of the cyclical names in the Dow that initially popped on Trump’s election in November. Sherwin-Williams, Caterpillar and Goldman Sachs, all stocks that typically gain when the economy is revving up, are each down at least 5% in December, dragging down the Dow significantly. These names all had a big November as they were seen as beneficiaries of Trump’s deregulatory and pro-economy policies.
    The Dow, largely comprised of blue-chip consumer discretionary and industrial names, is widely viewed as a proxy for overall economic conditions. The extended sell-off did coincide with renewed concerns about a weaker economy in light of a small jump in jobless claims data released last week. However, investors still remain quite optimistic about the economy for 2025 and see nothing on the horizon like the stagflationary period of the late 1970s.
    Most investors are shrugging it off
    There are many reasons to believe the Dow’s historic losing streak is not a source for major concern and just a quirk of the price-weighted metric that’s more than a century old.
    First and foremost, the Dow anomaly comes at a time when the broader market is still thriving. The S&P 500 hit a new high on Dec. 6 and sits less than 1% from that level. The tech-heavy Nasdaq Composite just reached a record on Monday.

    Meanwhile, while the length of Dow’s sell-off is alarming, the magnitude is not the case. As of Tuesday midday, the average is only down about 1,582 points, or 3.5% from the closing level on Dec. 4, when it first closed above the 45,000 threshold. Technically, a sell-off of 10% or greater would qualify as a “correction” and we are far from that.
    The Dow was first created in the 1890s to model a regular investor’s portfolio — a simple average of the prices of all constituents. But it could be an outdated method nowadays given its lack of diversification and concentration in just 30 stocks.

    “The DJIA hasn’t reflected its original intent in decades. It is not really a reflection of industrial America,” said Mitchell Goldberg, president of ClientFirst Strategies. “Its losing streak is more of a reflection of how investors are gorging themselves on tech stocks.”
    The Dow price-weighted nature means that it’s not capturing the massive gains from megacap stocks as well as the S&P 500 or the Nasdaq. Although Amazon, Microsoft and Apple are in the index and are all up at least by 9% this month, it’s not enough to pull the Dow out of the funk.
    Many traders believe the retreat is temporary and this week’s Federal Reserve decision could be a catalyst for a rebound especially given the oversold conditions.
    “This pullback will be the pause that refreshes before a reversal higher to close 2024,” said Larry Tentarelli, founder and chief technical strategist of the Blue Chip Daily Trend Report. “We expect buyers to come in this week. … Index internals are showing oversold readings.”
    — CNBC’s Michelle Fox, Fred Imbert and Alex Harring contributed reporting.

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    After taking morning profits, we’re afternoon buyers of 2 stocks in an oversold market

    We’re buying 25 shares of Home Depot at roughly $407 each and 15 shares of Blackrock at roughly $1,041. Following Tuesday’s trades, Jim Cramer’s Charitable Trust will own 200 shares of HD, increasing its weighting to 2.25% from about 2%. The Trust portfolio, used by the CNBC Investing Club, will own 75 shares of BLK after the trade, increasing its weighting to about 2.15% from about 1.75%. This is our second trade alert of the day. We raised cash Tuesday morning by trimming our position in Broadcom to lock in triple-digit percentage gains into the stock’s recent parabolic move; and also by selling Advanced Micro Devices shares on fundamental concerns. Those were sales made out of discipline. But there is another discipline we must honor: the S & P 500 Short Range Oscillator . This technical tool showed that the market became a little more oversold after Monday’s session. When the market is oversold, according to the Oscillator, we view broader market weakness as an opportunity to buy stock of quality companies. That’s why we are putting cash to work. HD YTD mountain Home Depot YTD One quality stock we’re buying into its recent weakness is Home Depot. Shares of the home improvement retailer have pulled back about 6% from its recent high and have dipped slightly since the company reported a better-than-expected third quarter . We were very encouraged by Home Depot’s earnings report, which showed the smallest decline in comparable sales in nearly two years. This was a good sign that business is bottoming and will inflect positively next year. BLK YTD mountain BlackRock YTD We’re also adding to our position in the world’s largest asset manager, BlackRock. Our most recent buy was last Monday shortly after the firm announced its $12 billion acquisition of HPS Investment Partners. This was a great deal for BlackRock because it will make it a leader in private credit, which is one of the fastest-growing areas of finance. Once the acquisition is completed, BlackRock will become a top-five credit manager with about $220 billion in pro-forma private credit client assets. Not only does the deal add to BlackRock’s growing fee base, we would argue that the stock should command a higher price-to-earnings multiple in the market as a result. The company’s recent buying spree into faster-growing opportunities like HPS and the recently closed Global Infrastructure Partners deal should cause the stock’s multiple to re-rate from a traditional money manager to that of an alternative manager, which generally gets a higher valuation in the market. (Jim Cramer’s Charitable Trust is long BLK. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More

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    ETFs will soon beat mutual funds among financial advisor holdings, report finds

    ETF Strategist

    ETF Street
    ETF Strategist

    Financial advisors expect to hold more client assets in exchange-traded funds than mutual funds by 2026, for the first time, according to Cerulli Associates.
    ETFs generally have certain advantages over mutual funds relative to taxes, fees, transparency and liquidity, experts said.
    However, ETFs aren’t likely to gain a foothold in retirement accounts any time soon.

    Violetastoimenova | E+ | Getty Images

    Financial advisors will soon — and for the first time — hold more of their clients’ assets in exchange-traded funds than in mutual funds, according to a new report by Cerulli Associates.
    Nearly all advisors use mutual funds and ETFs, about 94% and 90% of them, respectively, Cerulli said in a report issued Friday.

    However, advisors estimate that a larger share of client assets, 25.4%, will be invested in ETFs in 2026 relative to the share of client assets in mutual funds, at 24%, according to Cerulli.
    If that happens, ETFs would be the “most heavily allocated product vehicle for wealth managers,” beating out individual stocks and bonds, cash accounts, annuities and other types of investments, according to Cerulli.
    Currently, mutual funds account for 28.7% of client assets and ETFs account for 21.6%, it said.

    More from ETF Strategist:

    Here’s a look at other stories offering insight on ETFs for investors.

    ETFs and mutual funds are similar. They are essentially a legal structure that allows investors to diversify their assets across many different securities such as stocks and bonds.
    But there are key differences that have made ETFs increasingly popular with investors and financial advisors.

    ETFs hold roughly $10 trillion of U.S. assets. While that is about half the roughly $20 trillion in mutual funds, ETFs have steadily eroded mutual funds’ market share since debuting in the early 1990s.
    “ETFs have been attractive for investors for a long time,” said Jared Woodard, an investment and ETF strategist at Bank of America Securities. “There are tax advantages, the expenses are a bit lower and people like the liquidity and transparency.”

    Lower taxes and fees

    ETF investors can often sidestep certain tax bills incurred annually by many mutual fund investors.
    Specifically, mutual fund managers generate capital gains within the fund when they buy and sell securities. That tax obligation then gets passed along each year to all the fund shareholders.
    However, the ETF structure lets most managers trade stocks and bonds without creating a taxable event.
    In 2023, 4% of ETFs had capital gains distributions, versus 65% of mutual funds, said Bryan Armour, director of passive strategies research for North America at Morningstar and editor of its ETFInvestor newsletter.
    “If you’re not paying taxes today, that amount of money is compounding” for the investor, Armour said.

    Of course, ETF and mutual fund investors are both subject to capital gains taxes on investment profits when they eventually sell their holding.
    Liquidity, transparency and low fees are among the top reasons advisors are opting for ETFs over mutual funds, Cerulli said.
    Index ETFs have a 0.44% average expense ratio, half the 0.88% annual fee for index mutual funds, according to Morningstar data. Active ETFs carry a 0.63% average fee, versus 1.02% for actively managed mutual funds, Morningstar data show.
    Lower fees and tax efficiency amount to lower overall costs for investors, Armour said.

    Trading and transparency

    Investors can also trade ETFs during the day like a stock. While investors can place a mutual fund order at any time, the trade only executes once a day after the market closes.
    ETFs also generally disclose their portfolio holdings once a day, while mutual funds generally disclose holdings on a quarterly basis. ETF investors can see what they are buying and what has changed within a portfolio with more regularity, experts said.

    However, there are limitations to ETFs, experts said.
    For one, mutual funds are unlikely to cede their dominance in workplace retirement plans like 401(k) plans, at least any time soon, Armour said. ETFs generally do not give investors a leg up in retirement accounts since 401(k)s, individual retirement accounts and other accounts are already tax-advantaged.
    Additionally, ETFs, unlike mutual funds, are unable to close to new investors, Armour said. This may put investors at a disadvantage in ETFs with niche, concentrated investment strategies, he said. Money managers may not be able to execute the strategy well as the ETF gets more investors, depending on the fund, he said. More

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    MicroStrategy shares jump as bitcoin proxy will join Nasdaq-100 index and ‘QQQ’ ETF

    Michael Saylor, chairman and CEO of MicroStrategy, speaks during the Bitcoin 2022 conference in Miami on April 7, 2022.
    Eva Marie Uzcategui | Bloomberg | Getty Images

    Shares of MicroStrategy were higher Monday after Nasdaq announced the bitcoin proxy will join the tech-heavy Nasdaq-100 index.
    The stock was last higher by more than 3% in premarket trading.

    Nasdaq rebalances its Nasdaq-100 index every year. The companies flagged for inclusion are mostly based on the market cap rankings as of the final trading day of November. The stocks also need to meet liquidity requirement and have a certain number of free floating shares.
    The index inclusion, which takes effect Dec. 23, comes after MicroStrategy’s massive surge this year. In 2024, the stock is up 547% — far outpacing the S&P 500’s 26.9% advance — as the price of bitcoin scales to all-time highs. Bitcoin last traded around $103,806.69, up less than 1% on the day.

    Stock chart icon

    MSTR year to date

    The addition also means MicroStrategy will be included in the popular Invesco QQQ Trust ETF, which tracks the Nasdaq-100. This will likely lead to passive inflows for MicroStrategy stock, potentially giving it another boost.
    Michael Saylor, the company’s founder and chairman, also announced on X Monday morning that MicroStrategy has bought an additional 15,350 BTC for about $1.5 billion, or roughly $100,386 per coin. It now holds 439,000 bitcoin.
    MicroStrategy has been building its bitcoin reserves for years, making it a proxy for the digital currency.

    “MSTR’s Bitcoin buying program is unprecedented on street, and makes it the largest corporate owner of Bitcoin (2% of supply equivalent to $44Bn market value),” Bernstein analyst Gautam Chhugani wrote Monday. “Inclusion in Nasdaq100 further improves MSTR’s market liquidity, further expanding its capital flywheel and Bitcoin buying program.”
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    Invesco launches ETF to maximize on the tech concentration craze

    Invesco launched an exchange-traded fund designed to give investors exposure to the top 45% of companies in the Nasdaq-100 Index.
    Brian Hartigan, the firm’s global head of ETFs and index instruments, runs Invesco QQQ Trust (QQQ), which is the fifth-largest ETF in the world, according to VettaFi. Now Hartigan is taking on the Invesco Top QQQ ETF (QBIG), which launched Dec. 4.

    According to Hartigan, there is a demand to capture the megacap concentration story within the Nasdaq.
    “That’s what investors were asking us for. How do I dial up that, that exposure and really capture the majority of the drivers of returns in the Nasdaq,” Hartigan said on CNBC’s “ETF Edge” this week.
    As of Wednesday, some of Invesco Top QQQ ETF’s top holdings were Apple, Nvidia and Microsoft, according to Invesco’s website.
    Hartigan notes investors can balance out their portfolio risk with similar funds.
    “You have this precision that investors are using ETFs to really balance out either under concentration or over concentration for their portfolios,” he said.

    As of Friday’s close, Invesco Top QQQ ETF is up around 5.5% since its debut.
    Nate Geraci, president of The ETF Store, notes other new funds have launched to allow investors to be concentrated on megacaps.
    “We’ve seen other issuers launch products either targeting the largest mega-cap names or specifically avoiding them. And what that tells you is issuers are clearly aware of this battle of the markets right now. I think we’re going to continue to see sort of this tug of war play out moving forward,” he said.

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    You don’t need to be a ‘Silicon Valley entrepreneur’ to be rich, financial advisor says. Here’s how to retire a millionaire

    Almost anyone can save $1 million for retirement, according to financial advisors.
    There have been thousands of new 401(k) plan and individual retirement account millionaires this year, according to Fidelity Investments.
    Starting early is key, advisors say. This lets investors harness the power of compound interest.

    Goran Babic | E+ | Getty Images

    Building a $1 million nest egg may seem an impossible feat.
    However, amassing such retirement wealth is within reach for almost anyone — provided they take certain steps, financial advisors say.

    “You might think that, ‘Well, I have to become a Silicon Valley entrepreneur to become rich,'” said Brad Klontz, a financial psychologist and certified financial planner.

    In fact, you can be a fast-food worker your whole life and amass wealth, said Klontz, a member of the CNBC Financial Advisor Council and the CNBC Global Financial Wellness Advisory Board.
    The calculus is simple, he said.
    Every time you’re paid a dollar, save and invest a percentage toward your “financial freedom,” Klontz said.
    With this mindset, “you can work almost any job and retire a millionaire,” he said.

    It’s not necessarily a ‘Herculean task’

    Saving $1 million may sound like a “Herculean task” but it “might not be as hard as you think,” Karen Wallace, a CFP and former director of investor education at Morningstar, wrote in 2021.

    The key is to start saving early, perhaps in a 401(k) plan, individual retirement account or taxable brokerage account, experts said. This allows investors to harness the magic of compound interest over decades. In other words, you “let your investments do as much heavy lifting as possible,” Wallace wrote.
    About 79% of American millionaires say their net worth was “self-made,” according to a Northwestern Mutual poll published in September. Just 11% said they inherited their wealth, while 6% got it from a windfall event like winning the lottery, according to the survey of 4,588 U.S. adults, fielded from Jan. 3 to Jan. 17, 2024.
    More from Personal Finance:IRS: There’s a key deadline approaching for RMDsEgg prices may soon ‘flirt with record highs’Federal Reserve is likely to cut interest rates next week
    There were 544,000 Americans with 401(k) balances of more than $1 million as of Sept. 30, according to Fidelity Investments, which is the largest administrator of workplace retirement plans. There were also more than 418,000 IRA millionaires.
    In fact, the number of 401(k) millionaires grew by 9.5%, or 47,000 people, between the second and third quarter of 2024, largely due to stock-market gains.

    How to get to $1 million

    Wera Rodsawang | Moment | Getty Images

    Winnie Sun, a financial advisor, provides an example of the math that links $1 million of wealth with consistent saving.
    Let’s say a 30-year-old makes $60,000 a year after tax. If they were to save $500 a month — or, 10% of their annual income — they’d have $1 million by age 70, assuming average market returns of 7%, she said.
    This doesn’t account for financial factors that might boost savings over that period, like a company 401(k) match, bonuses or raises.

    You can work almost any job and retire a millionaire.

    Brad Klontz
    financial psychologist and certified financial planner

    “In 40 years, you’ll have over $1 million, and that’s doing nothing else but $500 a month,” said Sun, co-founder of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC’s Financial Advisor Council.
    It’s also important to avoid debt, which is probably the “biggest cavity” for building savings, and try not to increase expenses too much, Sun explained.
    Timing is more important than being perfect, Sun said.
    She recommends starting with a low-cost index fund — like one tracking the S&P 500, which diversifies savings across the largest publicly traded U.S. companies — and building from there.
    “Even waiting a year can make a dramatic difference in reaching that $1 million point,” Sun said. “Stop and take action.”

    What is the right amount of savings?

    Damircudic | E+ | Getty Images

    Of course, $1 million in retirement may not be the right amount for everyone.
    An oft-cited rule of thumb — known as the 4% rule — indicates a typical retiree can draw about $40,000 a year from a $1 million nest egg in order to safely assume they won’t run out of money in retirement. (That annual withdrawal is adjusted annually for inflation.)
    For many, this sum would be supplemented by Social Security.
    Fidelity suggests a savings goal based on income. For example, by age 67 a worker should aim to have saved 10 times their annual salary to ensure for a comfortable retirement.
    Ideally, households would aim to save 15% to 20% of their income, Sun said. This is a rule of thumb often cited by financial planners.

    How much wealth you want — and how quickly you want to be rich — will determine the percentage, Klontz said.
    He’s personally aimed for a 30% savings rate, but knows people who’ve shot for close to 90%. Saving such large chunks of one’s income is a common thread of the so-called FIRE movement, which stands for Financial Independence, Retire Early.
    How do they do it?
    “They didn’t move out of their parents’ house, they minimized everything, they don’t buy new clothes, they take the bus, they shave their head instead of paying for haircuts,” Klontz said. “There’s all sorts of hacks you can do if you want to get there faster.”

    How to enjoy today and save for tomorrow

    Of course, there’s a tension here for people who want to enjoy life today and save for tomorrow.
    “We weren’t meant to only survive and save money,” Sun said. “There has to be that good quality of life and that happy medium.”

    One strategy is to allocate 20% of household expenses toward the thing or things that are most important to you — perhaps big vacations, fancy cars, or the newest technology, Sun said.
    Make some concessions — i.e., “scrimp and save” — on the other 80% of household costs, she said. This helps savers feel like they’re not reducing their quality of life, she said. More