Finance

Erin Scott | Reuters

Check out the companies making the biggest moves midday:
Peloton — Shares of Peloton plunged over 18% after the company reported quarterly results Thursday showing a wider-than-anticipated loss and declining revenue. The company also did not give an outlook for its next fiscal year.

Salesforce — Shares of the enterprise software maker dropped 3.39% after the company gave a disappointing forecast for fiscal 2023. Salesforce did report earnings and revenue that topped analysts’ estimates, while approving a $10 billion stock buyback program, a first for the company.
Snowflake – Snowflake shares surged 23.07% after beating Wall Street’s revenue estimates in the recent quarter. The cloud data platform provider said product revenue grew 83% year-over-year.
Splunk — Splunk shares dropped 12% after reporting earnings after the bell Wednesday, despite posting better-than-expected revenue. The big-data company noted headwinds affected the quarter. CNBC’s Jim Cramer believes the stock “is in the crosshairs of Snowflake.”
Figs – Figs shares jumped 17.92% after billionaire investor Ron Baron said on CNBC’s “Squawk Box” that he’s been buying shares of the medical apparel company. Baron called it the “Lululemon of health care,” referring to one of the fastest-growing apparel stocks of the past decade.
SoFi Technologies – Shares of SoFi gained 3.72% a day after President Joe Biden forgave $10,000 in federal student loan debt for most borrowers. On Wednesday, Mizuho said the company is a buy following the news.

Dollar Tree — Shares of the discount retailer slumped 10.22% after the company cut its forecast for the full year, citing attempts to offer competitive pricing. The company beat on earnings estimates but reported revenue that fell in line with Wall Street’s expectations.
Autodesk — Shares of the software maker gained 2.67% midday after the company reported better-than-expected results for the latest quarter and issued upbeat financial guidance. Autodesk also said it’s seeing “robust” demand.
American Well and Teladoc – Shares of American Well jumped 6.09% in Thursday’s midday trading after Amazon announced late Wednesday it was shutting down its telehealth service, Amazon Care. Teladoc shares also gained 4.01% on the news.
Semiconductors — Shares of semiconductors rose along with the broader market. Advanced Micro Devices jumped 4.8%, Micron Technology rose 4.96% and ON Semiconductor gained 6.5%. Nvidia, which fell in premarket trading after reporting earnings, changed course rose 4.01%.
— CNBC’s Samantha Subin, Carmen Reinicke, Yun Li, Tanaya Macheel and Jesse Pound contributed reporting.

WATCH LIVEWATCH IN THE APP More

President Joe Biden said Wednesday that the government would forgive up to $20,000 in federal student loans per borrower.
He also proposed reforms to income-driven repayment plans. One change regarding “non-discretionary” income is linked to a $15 hourly minimum wage.
The White House and many Democrats have been pushing for a $15 national pay floor. The current minimum wage is $7.25 an hour.

Fast-food workers and supporters fight to raise the minimum wage to $15 an hour.
James Leynse | Corbis Historical | Getty Images

The Biden administration seems to have pegged a student loan policy announced Wednesday to its broader push for a national $15-an-hour minimum wage.
The White House detailed a long-awaited plan to forgive up to $20,000 in federal student debt for borrowers, and extended a payment pause through the end of 2022.

But tucked into the broader package of policy measures were tweaks to “income-driven repayment plans.” These plans help make monthly payments more affordable for low-income borrowers.
The administration linked one of those tweaks — specifically, one relative to a definition of “non-discretionary” income — to a $15 minimum wage.

How student debt ties to a $15 minimum wage

“Non-discretionary” income is basically the income a household funnels into essentials like rent, mortgage payments and food.
For borrowers in income-driven plans, the government protects their non-discretionary income by exempting it from repayment. The amount is based on household annual income relative to the federal poverty line.

Under current rules, a borrower with income of less than 150% of the federal poverty level qualifies for a $0 monthly loan payment. In 2022, that equates to roughly $20,385 before tax for a single individual — about $9.80 an hour for a full-time worker.
President Biden proposed raising that threshold to 225% of the federal poverty level — about $30,577.50 of annual income, or $14.70 an hour.
The policy guarantees that “no borrower earning under 225% of the federal poverty level — about the annual equivalent of a $15 minimum wage for a single borrower — will have to make a monthly payment,” according to the U.S. Department of Education.

The policy — which applies to undergraduate student loans — means more borrowers in income-driven plans would qualify for a $0 monthly payment or owe a smaller monthly bill, according to student loan experts.
“These changes make things more affordable for borrowers and allow borrowers to avoid default,” according to Whitney Barkley-Denney, senior policy counsel at the Center for Responsible Lending.

Other changes to income-driven repayment plans

The administration also simultaneously announced other reforms to income-driven plans.
None of the measures are final yet. The Education Department is proposing regulations “in the coming days,” the agency said Wednesday. The public will have a 30-day window in which it can comment on the proposal, and then the Department would then use those comments to craft a final rule, which could differ from the proposal.
In addition to the higher “non-discretionary” income threshold, monthly payments for borrowers would be capped at 5% of income; that’d be half the current 10% cap.

It’s another way of continuing to push the idea that $15 should be the minimum wage.

Abigail Seldin
CEO of the Seldin/Haring-Smith Foundation

Barkley-Denney offered an example of how this would work for a one-person household:
Let’s say a borrower has an income of $60,000 in 2022. As noted above, the first $30,577.50 would be considered “non-discretionary” and therefore protected from repayment. The remaining $29,422.50 would be “discretionary” and used to calculate the borrower’s monthly payment.
The new rules would cap those payments at 5% of discretionary income — roughly $123 a month versus $245 a month under the current 10% maximum.

In addition, borrowers with original loan balances of $12,000 or less would have their debt erased after 10 years of consistent payments (even if that payment is $0 a month). That timeline is currently 20 years.
And interest won’t accrue on loans if borrowers make consistent monthly payments — meaning their balances won’t grow, unlike the dynamic with current income-driven repayment plans.
If these proposals survive as written, the reforms would be significant since they’d be a permanent fixture of the student-loan system, experts said.
“This is a systemic change,” Seldin said. “Debt forgiveness might be a one-time move.”

WATCH LIVEWATCH IN THE APP More

Check out the companies making headlines before the bell:
Dollar Tree (DLTR) – The discount retailer’s stock slid 6.6% in the premarket after cutting its full-year earnings forecast, due to the impact of pricing-related investments at its Family Dollar stores. Dollar Tree reported better than expected profit for its latest quarter, with revenue in line with Wall Street estimates.

 Peloton (PTON) – Peloton tumbled 17.5% in premarket trading after reporting a larger than expected loss and revenue that fell well short of Street forecasts. Peloton also said its connected fitness business would remain challenging into 2023.
 Abercrombie & Fitch (ANF) – Abercrombie shares took a 10.5% hit in the premarket after the apparel retailer reported an unexpected quarterly loss and lower than expected revenue numbers. It also cut its full year sales forecast, citing the impact of inflation.
Dollar General (DG) – Dollar General reported better than expected quarterly results, as well as same-store sales that rose more than analysts had anticipated. The discount retailer also increased its share repurchase authorization. The stock had been higher in the premarket but dipped negative after rival Dollar Tree cut its full-year forecast.
Salesforce (CRM) – Salesforce slid 6.3% in premarket trading after the business software giant cut its full year guidance, as economic uncertainty slows the pace of customer deals. Salesforce posted better than expected sales and profit for its most recent quarter.
Nvidia (NVDA) – Nvidia fell 3.6% in the premarket after missing estimates on the top and bottom lines with its quarterly results. The graphics chipmaker also issued a tepid forecast, as its gaming business continues to deal with weakening demand. 

Autodesk (ADSK) – The design software maker’s stock surged 9.2% in premarket action after it gave an upbeat financial forecast and called demand “robust.”  It also reported better than expected results for its latest quarter.
 Snowflake (SNOW) – Snowflake shares soared 19% off-hours trading after the data software company reported better than expected quarterly revenue. CEO Frank Slootman said the company’s consumption-based model – which lets customers adjust how much they use Snowflake’s services after signing a contract – is proving to be an advantage.
Telehealth stocks – Shares of telehealth companies jumped following news that Amazon.com (AMZN) is shutting down its in-house telehealth service for employees.  Teladoc Health (TDOC) gained 5.5%, Hims & Hers Health (HIMS) added 1.1% and Amwell (AMWL) jumped 7.7%.
 Callaway Golf (ELY) – Callaway Golf rose 2.1% in the premarket after announcing plans to change its name to Topgolf Callaway Brands, to reflect a lifestyle approach to its golf equipment and apparel offerings. The name change will be effective on or about September 6.
Victoria’s Secret (VSCO) – Victoria’s Secret lost 3.7% in premarket trading after the women’s intimate apparel maker cut its full year outlook. The company said it expected its customers to be impacted by inflation and other financial challenges.

WATCH LIVEWATCH IN THE APP More

Across europe, two questions will set the political weather this winter. How high will my energy prices go? And what will the government do to protect me? Attempting to shelter from the gathering storm, French and Spanish politicians, among others, have already capped or otherwise lowered gas and electricity prices. With wholesale gas futures for early 2023 still climbing—up to more than €300 ($299) per mwh, from less than €30 last summer—and Europe’s economic indicators blinking red, more will follow suit. That prospect is enough to drive economists to despair.Politicians want to protect voters from big bills, but also need to cut energy use, so as to avoid blackouts and reduce Russia’s oil-and-gas revenues. Price caps help voters, but do so inefficiently and reduce the incentive to cut energy use. Until recently, however, economists would have said that their impact on fuel consumption was minor and their impact on gas consumption uncertain. A body of research had found that consumers were largely unresponsive to higher petrol prices: they need to drive to work, and will do so even if expensive. In this analysis, capping prices would not make a huge difference to energy consumption.Yet a new batch of studies have overturned the conventional view, suggesting prices really do matter. The difference reflects a change in research methods. The earlier generation of studies analysed aggregate data, such as weekly sales and prices in a region, not demand from individual consumers or even driving patterns. This is a problem because crucial information gets lost when aggregating data. A mild increase in the weekly average price could hide a drop at the start of the week. If that drop encourages more demand, an aggregate analysis might find that a higher price leads to more consumption, not less. And prices at the pump are not set in isolation. They respond to demand, making the price-demand relationship two-way. Disentangling this is tricky.More recent research analysing micro data has produced striking results. To assess how consumers react to higher petrol prices, Laurence Levin of Visa, a payments firm, and co-authors looked at daily card transactions from 243 American cities in the late 2000s. They found a sizeable response. For a 10% rise in petrol prices, consumption fell by about 3%. They also showed that, if they had used aggregate data, they would have concluded there had been a much smaller drop. Christopher Knittel of the Massachusetts Institute of Technology and Shinsuke Tanaka of Tufts University used even more granular data, looking at a Japanese fuel-economy app, and found similar results with one extra detail: drivers not only responded to higher prices by driving less, they also drove more carefully to save fuel. Natural gas, like petrol, is also an essential good. But here, too, new research finds that consumers cut back when prices are higher. Maximilian Auffhammer of the University of California, Berkeley, and Edward Rubin of the University of Oregon looked at 300m energy bills in California. In some parts of the golden state similar households are supplied by two different gas firms, which employ different price-adjustment mechanisms—providing the researchers with something akin to the treatment and control groups that are often used in medical research. They established that a 10% rise in gas prices led to an average 2% drop in consumption. An interesting variation hid behind these figures. During summer months, there was hardly any response to prices; in winter, households cut use by 4%California’s price changes were small compared with those Europe is facing. How households respond to enormous price shocks has rarely been studied, owing to a lack of real-world data. One exception is that produced by Ukraine, which Anna Alberini of the University of Maryland and co-authors have studied, looking at price rises in 2015 after subsidies were cut. They found that among households that did not invest in better heating or insulation a doubling of prices led to a 16% decline in consumption.Policies to help households cope with high prices have also been studied—and the results are bad news for politicians capping prices. In California, where a government programme cut the marginal price of gas for poor households by 20%, households raised their consumption by 8.5% over the next year to 18 months. Ukraine has found a better way to help. Households struggling to pay their bills can apply for a cash transfer. Since such a transfer is unrelated to consumption, it preserves the incentive for shorter showers, and thus does not blunt the effect of high prices on gas use. Another option is a halfway house between a price cap and a transfer. An Austrian state recently introduced a discount on the first 80% of a typical household’s consumption, which means people retain an incentive to cut back on anything over that.Spilt milkHouseholds are not the only consumers of gas. Early in the war, manufacturers and agricultural producers argued against doing anything that might risk supplies, since production processes took time to alter and output losses could cascade through the economy. But initial evidence from the German dairy and fertiliser industries suggests that even heavy users respond to higher prices. Farmers have switched from gas to oil heating; ammonia, fertiliser’s gas-intensive ingredient, is now imported instead of being made locally. Over time, households and industry will adapt more to higher prices, meaning that with every passing month demand for gas will fall. If Europe’s politicians are serious about cutting gas use, they should heed the latest research and avoid price caps. There is even a self-interested case for doing so. Without high prices to encourage households and industry to cut back on their energy consumption, governments will have to find ways other than the price mechanism to allocate scarce resources. Who wants to be the politician to have introduced rationing? ■Read more from Free Exchange, our column on economics:Does unemployment really have to rise to bring down inflation? (Aug 18th)America v Europe: A comparison of riches leaves both sides red-faced (Aug 13th)How high property prices can damage the economy (Jul 30th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Many countries are moving away from Russia, but one is getting closer: Turkey. Russian tourists and émigrés are pouring into Istanbul and the country’s coastal resorts, snapping up properties by the thousand. Russia is helping to fund a nuclear plant costing $20bn in Akkuyu, in the south. While many countries have cut exports to Russia since its invasion of Ukraine, Turkey’s have surged by 60% in dollar terms. Western firms, constrained by sanctions, appear to be using Turkey as a go-between to export to Russia.Turkey’s bizarre monetary policy is one reason why the country is so keen on Russian cash. Despite inflation soaring to 80%, on August 18th Turkey’s central bank cut its interest rate from 14% to 13%—the opposite response to what any sane economist would recommend. Recep Tayyip Erdogan, Turkey’s president, wants lower borrowing costs in order to goose the economy, and thus improve his chances at the election next summer. But loose monetary policy has caused the lira to slide. It has lost three-quarters of its value against the dollar since 2018, and a weaker currency adds to Turkey’s inflation difficulties by raising the cost of imports still higher.Enter the sanctions-busting gambit. Turkey desperately needs foreign currencies in order to buy lira on financial markets, thus supporting the currency’s value without raising rates. The central bank has probably spent tens of billions of dollars in this way in recent months. Russia is swimming in hard currency from exports of hydrocarbons, and is short on friends and foreign goods. Turkish exports to Russia help bolster Mr Erdogan’s foreign reserves, since exporters now have to exchange some of their foreign earnings with the government for domestic currency. Sanctions-busting and madcap monetary policy are thus two sides of the same coin. American politicians have signalled their unease at Turkey’s strategy. Analysts warn it risks secondary sanctions. But Mr Erdogan sees money as more important than warm relations with the West. “He has an election to win,” says Timothy Ash of BlueBay Asset Management. “He is going to push it to the limit”. For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Julian robertson was the archetypal hedge-fund manager. He had the kind of Southern charm that inspired fierce loyalty and opened the wallets of Wall Street titans. He was competitive, energetic and athletic—in short, a classic jock—who flew his staff out west on his private jet for gruelling hikes, mountain climbs and dips in icy lakes. He founded the archetypal hedge fund, too. Mr Robertson picked stocks—buying firms he liked and going short on those he did not. And he was exceptionally good at it. He set up his fund, Tiger Management, in 1980 aged 48, with just $8m. Between then and its peak in 1998 its annual returns averaged 32% after fees (the s&p 500 delivered 13%). By 1998, the fund managed $22bn.This expansion may have been his undoing. Tiger began betting on currencies. In 1998 it lost almost $2bn in a single day when the yen surged against the dollar. The fund then bet against the tech boom. It lost 19% in 1999 and a further 14% in the first few months of 2000, before Mr Robertson shut it down.“I didn’t want my obituary to read ‘he died getting a quote on the yen’,” he recalled in 2013. So he invested in young managers, often former employees. His pawprints are all over Wall Street. A litter of “tiger-cub” funds flourished, and 200-odd hedge funds can trace their roots to him in some form or another.But his death on August 23rd comes as the cubs are struggling. Last year Bill Hwang blew up Archegos, his family office. This year a fund run by Chase Coleman, another cub, is down by 50% or so. Today the most successful hedge funds are mostly run by quants who rely on algorithms not instinct. Mr Robertson was the archetype of an era, but that era has come to an end.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

President Biden said Wednesday that the White House would forgive up to $10,000 in federal student debt per person for most borrowers and up to $20,000 for Pell Grant recipients.
Some consumer groups and lawmakers hailed the move while also saying more aid is necessary.

President Joe Biden’s long-awaited plan to forgive student debt, announced Wednesday, drew immediate pushback from some lawmakers and consumer groups even as they praised the historic measure.
The White House said it would cancel $10,000 in federal student debt for most borrowers and up to $20,000 for recipients of Pell Grants, which are available to undergraduates based on financial need. The plan may eliminate balances for at least 9 million borrowers, according to higher education expert Mark Kantrowitz.

Biden ‘should have, and could have, done much more’

Astra Taylor, co-founder of the Debt Collective, a union for debtors, called Wednesday’s announcement “bittersweet.”
“On the one hand, this is a landmark victory for our movement,” she said in a statement. “Yet, President Biden should have, and could have, done much more than cancel $10,000 or [$]20,000 — and he could have made the relief automatic, instead of imposing unnecessary hurdles.”

Biden cancels $10,000 in federal student loan debt for most borrowers

Nearly 8 million borrowers may be eligible for automatic relief; however, some borrowers may need to apply if the U.S. Department of Education doesn’t have relevant income data, according to the federal student aid website. That application isn’t yet available.
“We intend to keep fighting until all student debt is canceled and college is free,” Taylor said. “If President Biden can cancel this much debt he can cancel it all.”
Biden paired the debt cancellation and payment pause with a measure to cap undergraduate loan repayments at 5% of monthly income.

Warren, Schumer pledge to ‘pursue every available path’

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., hailed the policy announcement Wednesday as “the single most effective action that the President can take on his own to help working families and the economy.”
The duo had been pushing the White House to cancel up to $50,000 in federal student debt — and they alluded to an ongoing fight for more relief.

“Make no mistake, the work — our work — will continue as we pursue every available path to address the student debt crisis, help close the racial wealth gap for borrowers, and keep our economy growing,” Schumer and Warren said.

Canceling $10,000 ‘hardly achieves anything’

Derrick Johnson, president and CEO of the NAACP, lamented that Biden didn’t cancel $50,000 of loans or more per borrower. He called student debt forgiveness a “racial and economic justice issue” that could help close the racial wealth gap, which often pushes Black students to borrow more than other students.

“Canceling just $10,000 of debt is like pouring a bucket of ice water on a forest fire,” Johnson wrote in an op-ed. “It hardly achieves anything — only making a mere dent in the problem.”
Data suggests that doubling the maximum forgiveness amount — to $20,000 — for Pell Grant recipients will most benefit Black student borrowers. To that point, 72% of Black students received a federal Pell Grant during the 2015-16 school year, about double the share of Asian and white students that year, according to the most recent data from the National Center for Education Statistics.
Carlos Moreno, a senior campaign strategist at the American Civil Liberties Union, applauded the policy’s impact on Black borrowers.
“Student debt cancellation will help secure financial stability and mobility for people of color — particularly Black Americans — who are disproportionately burdened with student debt while providing immediate financial relief and peace of mind for millions of Americans,” Moreno said.

We intend to keep fighting until all student debt is canceled and college is free.

Astra Taylor
co-founder of the Debt Collective

Forgiveness could ‘make inflation even worse’

While some voiced concern that the Biden administration didn’t go far enough, others said the White House measures went too far and threaten to exacerbate stubbornly high inflation.
“Washington Democrats have found yet another way to make inflation even worse … and achieve nothing for millions of working American families who can barely tread water,” said Senate Minority Leader Mitch McConnell, R-Ky.
But Adam Green, co-founder of the Progressive Change Campaign Committee, framed the measure as “a bigger investment [in dollar terms] than the G.I. Bill — in young people and millions of others.”
“Today, the cancellation of up to $20,000 of student debt for as many as 43 million Americans will have a historic impact on Americans who have faced a uniquely generational burden,” Green said.

WATCH LIVEWATCH IN THE APP More

In this photo illustration the stock trading graph of Nvidia Corporation seen on a smartphone screen.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Check out the companies making headlines in after hours trading.
Nvidia – Nvidia slipped 2.5% after quarterly earnings missed Wall Street expectations on the top and bottom line. Nvidia brought in adjusted earnings per share of 51 cents versus expectations of $1.26. Revenue was $6.7 billion where analysts expected $8.10 billion, according to Refinitiv.

Salesforce – Salesforce slid 4.7% when the company gave weaker than expected third quarter and full-year guidance on earnings and revenue. Otherwise, the maker of customer relationship management software reported results that beat Wall Street’s expectations on the top and bottom lines in the latest quarter.
Snowflake – Snowflake surged 16.2% after revenue handily beat analyst estimates. Revenue of $497 million topped estimates of $467 million, per Refinitiv.
Autodesk – Autodesk climbed 7.8% after results bested analyst expectations for the software maker. The company brought in an adjusted $1.65 per share and $1.24 billion in sales.
NetApp – NetApp gained 3.2% after hours Wednesday after quarterly earnings beat Wall Street expectations on both the top and bottom lines.
Splunk – Splunk shed 4.5% after reporting quarterly earnings after the bell. The company fell even though it reported better-than-expected revenue and a narrower loss. Still, it noted headwinds affected the quarter.
Victoria’s Secret – Retailer Victoria’s Secret fell 6.1% after sales and earnings fell short of Wall Street’s estimates. The company reported earnings per share of 83 cents and $1.521 billion in sales, where analysts expected earnings of 95 cents and sales of $1.56 billion, per Refinitiv.

WATCH LIVEWATCH IN THE APP More