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Washington’s efforts to curb inflation will fall short particularly this year, according to market forecaster Jim Bianco.
And, he believes this week’s key inflation data will help prove it.

“I don’t see anything that will reduce the inflation rate. There are some things that might reduce prescription drug prices and maybe a couple of other things,” the Bianco Research president told CNBC’s “Fast Money” on Monday. “But will that bring down CPI? Will that bring down core CPI to a point where we can actually start pricing that in? No, I don’t think so.”
The government releases its Consumer Price Index [CPI], which tracks prices people pay for goods and services, for July this Wednesday. Dow Jones expects the number to come in at 8.7%, down 0.4% from June. The headline number includes energy and food, unlike Core CPI. On Thursday, the government releases its Producer Price Index [PPI].
Bianco contends peak inflation may still be ahead.
“Inflation is persistent. Is it going to stay 9.1%? Probably not. But it might settle down into a 4%, 5% or 6% range,” he said. “What does that mean? We’re going to need a 5% or 6% funds rate, if that’s where inflation is going to settle.”
There’s no near-term solution, according to Bianco. As long as wage numbers come in hot, he warns inflation will continue to grip the economy.

“Wage inflation, from what we saw in the report on Friday, is at 5.2% [year-to-year], and it’s looking pretty sticky there,” Bianco said. “If we have 5% wages, you can pay 5% inflation. So, it’s not going to go much below wages. We need to get wages down to 2% in order to get inflation down to 2% and wages aren’t moving right now.”

‘If you’re not going to pay extra for that car, then you’re going to have to walk’

Bianco lists used car prices as a major example of relentless inflation. He believes high sticker prices won’t meaningfully budge for months due to demand, supply chain issues and chip shortages forcing automakers to reduce features in new cars.
“If you’re not going to pay extra for that car, then you’re going to have to walk because that’s the only way you’re going to get a ride right now,” said Bianco.
According to the CarGurus index, the average price for a used car is $30,886, up 0.2% over the past 90 days and 10.5% year-over-year.
“Used car prices in the last 18 months have actually outperformed cryptocurrencies,” he added .”It’s been one of the best investments that people can have.”
Bianco expects the Inflation Reduction Act, which was passed by the Senate this weekend, would have a negligible impact if it’s enacted.
“A lot of this stuff doesn’t kick in for another couple of more years,” Bianco said. “In a world where we want to know what the Fed is going to do in September and when inflation is going to peak, those are ’22, ’23 stories. Those are going to continue to dominate the markets.”
The House is expected to vote Friday on the legislation.
Disclaimer

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Take a look at some of the biggest movers in the premarket:
Palantir (PLTR) – The data analytics company’s stock plunged 15.6% in premarket trading after it reported an unexpected quarterly loss, and lowered its full-year forecast due to the uncertain timing of some government contracts.

Signify Health (SGFY) – CVS Health (CVS) is planning a bid for Signify in an effort to expand in-home health services, according to people familiar with the matter who spoke to The Wall Street Journal. The paper had reported last week that Signify was exploring strategic alternatives including a sale. Its stock surged 16.7% in the premarket.
Global Blood Therapeutics (GBT) – The maker of blood disorder treatments will be bought by Pfizer (PFE) for $5.4 billion, or $68.50 per share in cash. Global Blood shares soared 88% over the past two sessions following reports that a deal was near, and gained another 4.2% in the premarket.
Tyson Foods (TSN) – The beef and poultry producer reported quarterly profit of $1.94 per share, 4 cents a share shy of estimates. Revenue beat forecasts, however, as beef demand remained high. Chicken volume fell 2.1% but Tyson said that business continues to improve. Tyson shares slid 2.5% in premarket trading.
Barrick Gold (GOLD) – The mining company’s shares added 3.2% in premarket trading following better-than-expected quarterly results, helped by higher copper output.
Baidu (BIDU) – The China-based search engine company won approval to operate driverless taxi services in two Chinese cities, the first such approvals in the country. Baidu added 1.2% in premarket action.

First Solar (FSLR) – The solar company was upgraded to “buy” at Guggenheim and to “overweight” at J.P. Morgan Securities, with both saying First Solar is among those poised to benefit most from the Senate-passed Inflation Reduction Act. First Solar gained 4.2% in premarket action, with other solar stocks rallying as well.
Emerson Electric (EMR) – The manufacturing company is selling its InSinkErator garbage disposal business to appliance maker Whirlpool (WHR) for $3 billion.
Avalara (AVLR) – The tax software provider agreed to be acquired by private-equity firm Vista Partners for $8.4 billion, including debt, or $93.50 per share. Avalara fell 4% in the premarket but had risen 30% since reports of a potential deal first surfaced in early July.

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In the north-western corner of Saudi Arabia, not far from the mouth of the Gulf of Aqaba, sits a patch of mostly bare desert—the ostensible location of Neom. This would-be city is intended to be a bold step into the future, and the showpiece of the kingdom’s attempt to diversify its economy away from oil. There has been talk of robots doing menial work, beaches lined with crushed marble and fleets of drones forming an artificial moon. One recent whim is to create the world’s longest buildings; like skyscrapers laid flat, these self-contained ecosystems would stretch for more than 100 miles. Estimates suggest the city could cost as much as $500bn to build.When this wild dream was first unveiled in 2017, financing it seemed near impossible. Now a torrent of oil money may allow Saudi Arabia to get things rolling. The world economy’s recovery from covid-19, and Russia’s invasion of Ukraine, have pushed up oil prices, triggering a staggering transfer of wealth from global consumers to fuel-exporting countries. From January to June, the price of a barrel of Brent crude rose from $80 to more than $120 (it is back at $95 today). The imf estimates that energy exporters in the Middle East and Central Asia will this year net $320bn more in oil revenues than it had previously expected, a figure equivalent to about 7% of their combined gdp. Over the next five years, the cumulative surplus could reach $1.4trn. Gulf leaders must now work out how to spend the proceeds of what could be the last big gush of oil wealth. Some promise to pay down debts and save for a post-petroleum future. Yet there will be pressure to share the bounty with the public—and few checks on those who wish to splash out on mega-projects or global influence. The impact in diplomatic circles is already visible. On a visit to Jeddah in July President Joe Biden bumped fists with Muhammad bin Salman, the Saudi crown prince. Mr Biden had until recently kept the prince at arm’s length; the current political imperative to bring down petrol prices leaves little room for moral stances.Back in blackExpensive oil augments the financial power of the Gulf states at home and abroad, opening a gusher of public spending and steering flows of money around the world. The long rise in oil prices in the 2000s helped fuel huge global imbalances, depressed interest rates and attracted a stream of supplicants looking to curry favour. Cheap oil brings shrinking ambitions. When the last sustained period of high prices ended in 2014 it seemed as if the old social contract, which promised hefty subsidies and cushy lifetime gigs in the public sector, would have to change. There was talk of diversification, higher domestic fuel and food prices—even taxes. A period of rock-bottom oil prices, and the hit from covid, saw fiscal positions deteriorate. This year’s windfall offers an opportunity to strengthen them (see chart 1). Bahrain’s public debt rose to 130% of gdp in 2020, but the country’s budget is based on the assumption that oil will fetch a mere $60 a barrel. High prices may allow it to reduce its debt ratio by about 12 percentage points this year, even though it is the smallest producer in the Gulf Co-operation Council (a group that also comprises Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). Oman’s debt burden is projected to fall by more than 20 percentage points of gdp. Other leaders aim to save much of their earnings. Mohammed al-Jadaan, the Saudi finance minister, says his government will not touch its oil bonanza, at least this year. It will sock away the money at the central bank, then use it in 2023 to replenish foreign reserves or top up the Public Investment Fund (pif), the sovereign-wealth fund that has become the kingdom’s main driver of investment. Bahrain will use some of its surplus to refill a fund meant to provide for future generations, which it drained during the pandemic.Yet the pressure to spend will be intense. Gulf economies have not been as squeezed by soaring prices as the rest of the world. The imf expects inflation in the gcc to peak at 3.1% this year, well below levels in America and Europe. Abundant, cheap foreign labour keeps wage costs low. Most countries rely on fuel subsidies to limit inflation. A strong dollar, meanwhile, holds down the cost of imports (five of the six gcc members peg their currencies to the greenback). Residents in the Gulf are nonetheless feeling the pinch. The uae phased out its fuel subsidies in 2015, and petrol prices climbed 79% from January to July, when the government raised them once again, to 4.52 dirhams ($1.23) a litre. That is not bad by global standards, but shockingly expensive for a rich petrostate—drivers in Saudi Arabia pay half as much. In July the uae announced that it would almost double the welfare budget for poor citizens, from 2.7bn dirhams to 5bn. Eligible families will receive stipends for housing and education, plus an allowance to offset higher food and energy costs. With just 1m citizens, representing 10% of the total population, the uae can afford to splurge a bit. Satisfying the citizenry will be a bigger challenge in Saudi Arabia, where two-thirds of the population of 35m are nationals. The Saudi government used past oil booms to offer more jobs and higher wages in the public sector. Doing so now would run counter to Vision 2030, an economic-diversification plan meant to shift the kingdom away from oil. Firms already grumble about how hard it is to retain talent. Many young Saudis see private-sector work as a fun distraction until a government job comes along.Oil wealth offers other ways to shield citizens from cost pressures. In 2016 the Gulf states agreed to introduce a 5% value-added tax, and four have done so since (the laggards are Kuwait and Qatar). Saudi Arabia has gone much further. In 2020 it tripled vat to 15%, hoping to offset the fiscal effects of the pandemic and low oil prices. “You have a policy tool you didn’t have before,” says Nasser Saidi, a Lebanese economist who runs an advisory firm in Dubai. “Rather than increase spending or hiring, you could lower vat.” Competing with such concerns is the need to think long-term: beyond the boom and, ultimately, beyond oil. At the modernist offices of Bahrain’s sovereign-wealth fund, such thoughts are sobering. “Of course we’re all happy the oil price is high, but the focus needs to stay on the non-oil economy,” says an executive. Working out what that means in practice is no easy task. Some sovereign-wealth managers in the Gulf say their mandates have become almost contradictory. They are meant to husband oil wealth for future generations, but are increasingly asked to deploy capital to fuel non-oil growth, a job that entails plenty of risk.Gulf countries have not always done a good job of judging which risks to take. The region is littered with failed mega-projects from earlier booms. Saudi Arabia’s gleaming financial district, meant to compete with Dubai’s, was plagued by delays and cost overruns. When it was eventually finished, it sat empty: banks saw no reason to move. The uae spent billions to create artificial islands shaped like a map of the world. More than a decade later, the archipelago is derelict. The uae’s ambitious plans to become a semiconductor-manufacturing hub, and a centre for health tourism, have similarly fizzled out. Wild flights of fancy like Neom stand ready to absorb a hefty chunk of the oil money this time round. Saudi Arabia also wants to host the Asian Winter Games in 2029, spraying desert mountains with snow; Dubai has a zany plan to create 40,000 jobs in the metaverse in five years. Even less ostentatious projects may prove wasteful. Saudi Arabia sees tourism as the centre of its post-oil economy, providing at least 10% of jobs and gdp. The oil boom will give the pif billions to throw at resorts, amusement parks and other diversions. Yet Saudi officials cannot point to a proper assessment showing that its hoped-for 100m tourists will in fact choose to visit the kingdom each year. As Ali al-Salim, a Kuwaiti investor, notes: “It’s a pretty fickle business to be the linchpin of your economic plan.”The Gulf states would be wise to focus on areas where they have clearer competitive advantages. Developing expertise in desalination techniques and technologies, much as Israel has done, could make a virtue of the region’s aridity. Investments in green-energy technologies like hydrogen could offer a source of revenues after the energy transition. Mr Saidi proposes investing in renewables projects and climate-mitigation strategies in Asia and Africa, as a green version of China’s Belt and Road Initiative. “This is a moment when you want to look again at how you provide foreign aid,” he argues. Teeing offCertainly, the boom stands to reshape the Gulf’s relations with the rest of the world—as demonstrated by Mr Biden’s trip to Jeddah. Enormous quantities of Saudi money are being spent to burnish the kingdom’s reputation in other contexts as well. The world of golf, for example, is being transformed as liv Golf, a Saudi-backed rival to the pga tour, lures stars with fantastical payouts. The country started hosting a Formula 1 race in 2021. Pop stars including Justin Bieber, Mariah Carey and David Guetta have recently performed in the kingdom.The boom will also have less tangible international consequences. The gcc’s combined current-account surplus this year may run to more than $400bn, or 0.4% of global gdp (see chart 2)—a slightly higher share of world output than the biggest surpluses achieved before the global financial crisis of 2007-09. In past booms oil profits have been recycled into investment flows back to America (through purchases of Treasuries, for instance), boosting America’s current-account deficits. Yet America has become the world’s largest producer of oil, and big emerging economies have grown richer and developed a thirst for the stuff. Thus the Gulf’s surplus today is matched by weaker balance-of payments positions in big emerging economies. That includes China and India, but also scores of smaller countries, including a few, like Sri Lanka, for which the surge in the cost of imported oil has been crippling. High oil prices have hit the world as a whole harder than they did in the 2000s. This is because they are largely the result of interruptions to supply, especially from Russia, rather than robust growth in global demand. More than a few governments have already approached Gulf leaders for money—albeit to meet urgent obligations rather than to green their economies. Like China and India, Saudi Arabia and the uae have played a growing role lending to poorer countries over the past two decades, taking over a position once reserved for advanced economies and multilateral institutions like the World Bank. The developing crisis across low- and middle-income economies should give Gulf states significant leverage over less fortunate places, should they choose to wield it.It may well be the last such opportunity. In poor countries and rich ones, the pain of soaring energy costs adds a new urgency to efforts to reduce dependence on fossil fuels. At the heart of the boom, the feeling is palpable. “There’s a ‘days-are-numbered’ kind of sentiment,” says Mr al-Salim, the Kuwaiti investor. “You look at the state Europe is in, I don’t think they’re going to allow themselves to be this vulnerable years from now.” Which raises a question. Will the Gulf? ■ More

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It’s a class of exchange-traded funds designed to prevent your portfolio from hitting dramatic lows — but it may require a level of sophistication.
The idea: Incorporate short-term levered plays including covered call and risk-reversal strategies in order to help investors customize their own defensive strategies similar to hedging.

However, it may come with an unintended price. According to Ben Slavin of BNY Mellon, issuers and advisors may struggle to keep up with continuous product growth and change. 
“The toolkit has expanded immensely over the last couple years, and it’s going to continue to grow,” the company’s global head of ETFs told CNBC’s “ETF Edge” last week. “That said, the negative is really trying to parse all of these different products. Really understand what you’re owning and explain that to investors or even advisors who are struggling to keep up with the nuances between these products.”
Liquidity providers and asset servicers may experience difficulties with product expansion as well, he added.
Yet, it may still benefit investors with low-risk appetites.
Andrew McOrmond, managing director at WallachBeth Capital, joined Slavin on “ETF Edge” to explain how investors can hold defensive, risk-averse positions using leveraged products. 

Playing the levered game
Covered calls grant protection to clients looking to minimize losses, McOrmond said. These short-term levered plays better define outcomes, but in turn investors may miss out on gains.
“If you sell options, and the market moves against you, you’ll be protected — but you’re going to just reduce your upside [potential],” he explained, noting covered calls are “the only option” for risk-averse clients because hedging is complicated for the individual.
McOrmond sees the latest market rallies as a potentially good opportunity to “hedge.” In July, the Nasdaq jumped 12%, and the S&P 500 is up more than 8%.
Buffering the blow
The First Trust Cboe Vest Fund of Buffer ETFs, under the ticker BUFR, was designed to supply capital appreciation and limit downside risk for investors, according to the financial consulting company. 
“The name is perfect,” McOrmond said of the Cboe Vest Fund. “You’re buffered on both sides.”
The defensive strategy uses ladders to preserve capital, and option collars “buffer” the investment to mitigate losses investors might face.
Slavin also suggests the fund of buffer ETFs, citing interest and activity in the space.
The First Trust Cboe Vest Fund of Buffer ETFs is up more than 5% this month.
Disclosure: : Neither Andrew McOrmond nor Ben Slavin have ownership of First Trust Cboe Vest Fund of Buffer ETFs products.
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Senate Democrats unveiled the Inflation Reduction Act last week. The bill is a package of climate change and health-care investments, funded primarily by drug pricing and tax reforms.
The legislation wouldn’t directly increase taxes on households with annual incomes below $400,000, thereby keeping President Joe Biden’s tax pledge intact, experts said.
Opponents contend there’d be an indirect tax on low and middle earners. However, the bill’s aggregate financial benefits may outweigh it.

Jim Watson | Afp | Getty Images

Senate Democrats’ package of climate change, health-care, drug pricing and tax measures unveiled last week has proponents and opponents debating whether the legislation violates a pledge President Joe Biden has made since his presidential campaign, to not raise taxes on households with incomes below $400,000 a year.
The answer isn’t quite as simple as it seems. 

“The fun part about this is, you can get a different answer depending on who you ask,” said John Buhl, an analyst at the Urban-Brookings Tax Policy Center. 
More from Personal Finance:Embryos can count as dependents on Georgia state tax returnsWould you be included in student loan forgiveness?Remote work is helping fight inflation
The White House has used $400,000 as a rough dividing line for the wealthy relative to middle and lower earners. That income threshold equates to about the top 1% to 2% of American taxpayers. 
The new bill, the Inflation Reduction Act, doesn’t directly raise taxes on households below that line, according to tax experts. In other words, the legislation wouldn’t trigger an increase on taxpayers’ annual tax returns if their income is below $400,000, experts said. 

But some aspects of the legislation may have adverse downstream effects — a sort of indirect taxation, experts said. This “indirect” element is where opponents seem to have directed their ire. 

What’s in the Inflation Reduction Act

The legislation — brokered by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., who’d been a key centrist holdout — would invest about $485 billion toward climate and health-care measures through 2031, according to a Congressional Budget Office analysis issued Wednesday.
Broadly, that spending would be in the form of tax breaks and rebates for households that buy electric vehicles and make their homes more energy-efficient, and a three-year extension of the current Affordable Care Act subsidies for health insurance.
The bill would also raise an estimated $790 billion via tax measures, reforms for prescription drug prices and a fee on methane emissions, according to the Congressional Budget Office. Taxes account for the bulk — $450 billion — of the revenue.

Critics say corporate changes could affect workers

Specifically, the legislation would provide more resources for IRS enforcement of tax cheats and would tweak the “carried interest” rules for taxpayers who earn more than $400,000. The change to carried-interest rules — which allow certain private equity and other investors to pay a preferential tax rate on profits — is likely dead, though, after Democratic leaders agreed to scrap it to win support from Sen. Kyrsten Sinema, D-AZ.
Those elements aren’t controversial relative to the tax pledge — they don’t raise the annual tax bills middle and low earners owe, experts said. 
The Inflation Reduction Act would also implement a 15% corporate minimum tax, paid on the income large companies report to shareholders. This is where “indirect” taxes might come into play, experts said. For example, a corporation with a higher tax bill might pass on those additional costs to employees, perhaps in the form of a lower raise, or reduced corporate profits may hurt 401(k) and other investors who own a piece of the company in a mutual fund.

The Democrats’ approach to tax reform means increasing taxes on low- and middle-income Americans.

Sen. Mike Crapo
Republican of Idaho

The current corporate tax rate is 21% but some companies are able to reduce their effective tax rate and therefore pare back their bill.
As a result of the policy, those with incomes below $200,000 would pay almost $17 billion in combined additional tax in 2023, according to a Joint Committee on Taxation analysis published July 29. That combined tax burden falls to about $2 billion by 2031, according to the JCT, an independent scorekeeper for Congress.   
“The Democrats’ approach to tax reform means increasing taxes on low- and middle-income Americans,” Sen. Mike Crapo, R-Idaho, ranking member of the Finance Committee, said of the analysis.  

Others say financial benefits outweigh indirect costs

However, the JCT analysis doesn’t provide a complete picture, according to experts. That’s because it doesn’t account for the benefits of consumer tax rebates, health premium subsidies and lower prescription drug costs, according to the Committee for a Responsible Federal Budget. 
Observers who consider indirect costs should weigh these financial benefits, too, experts argue. 
“The selective presentation by some of the distributional effects of this bill neglects benefits to middle-class families from reducing deficits, from bringing down prescription drug prices and from more affordable energy,” a group of five former Treasury secretaries from both Democratic and Republican administrations wrote Wednesday. 

The $64 billion of total Affordable Care Act subsidies alone would “be more than enough to counter net tax increases below $400,000 in the JCT study,” according to the Committee for a Responsible Federal Budget, which also estimates Americans would save $300 billion on costs and premiums for prescription drugs.
The combined policies would offer a net tax cut for Americans by 2027, the group said. 
Further, setting a minimum corporate tax rate shouldn’t be viewed as an “extra” tax, but a “reclaiming of revenue lost to tax avoidance and provisions benefitting the most affluent,” argued the former Treasury secretaries. They are Timothy Geithner, Jacob Lew, Henry Paulson Jr., Robert Rubin and Lawrence Summers. 

There are additional wrinkles to consider, though, according to Buhl of the Tax Policy Center. 
For example, to what extent do companies pass on their tax bills to workers versus shareholders? Economists differ on this point, Buhl said. And what about companies with a lot of excess cash on hand? Might that cash buffer lead a company not to levy an indirect tax on its workers? 
“You could end up going down these rabbit holes forever,” Buhl said. “It’s just one of the fun parts of tax pledges,” he added.

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Some firms will be forced to exit the mortgage industry as refinance activity dries up, according to Tim Wennes, CEO of the U.S. division of Santander.
Santander left the mortgage business in February as part of a strategic pivot to focus on higher-return services like its auto lending franchise. The decision now seems prescient.
JPMorgan Chase and Wells Fargo have cut mortgage staffing levels to adjust to the lower volumes.
Smaller nonbank providers are reportedly scrambling to sell loan servicing rights or even merge or partner with rivals.

A sign hangs from a branch of Banco Santander in London, U.K., on Wednesday, Feb. 3, 2010.
Simon Dawson | Bloomberg via Getty Images

Banks and other mortgage providers have been battered by plunging demand for loans this year, a consequence of the Federal Reserve’s interest rate hikes.
Some firms will be forced to exit the industry entirely as refinance activity dries up, according to Tim Wennes, CEO of the U.S. division of Santander.

He would know: Santander — a relatively small player in the mortgage market — announced its decision to drop the product in February.
“We were a first mover here and others are now doing the same math and seeing what’s happening with mortgage volumes,” Wennes said in a recent interview. “For many, especially the smaller institutions, the vast majority of mortgage volume is refinance activity, which is drying up and will likely drive a shakeout.”
The mortgage business boomed during the first two years of the pandemic, driven by rock-bottom financing costs and a preference for suburban houses with home offices. The industry posted a record $4.4 trillion in loan volumes last year, including $2.7 trillion in refinance activity, according to mortgage data and analytics provider Black Knight.
But surging interest rates and home prices that have yet to decline have put housing out of reach for many Americans and shut the refinance pipeline for lenders. Rate-based refinances sank 90% through April from last year, according to Black Knight.

‘As good as it gets’

The move by Santander, part of a strategic pivot to focus on higher-return businesses like its auto lending franchise, now seems like a prescient one. Santander, which has about $154 billion in assets and 15,000 U.S. employees, is part of a Madrid-based global bank with operations across Europe and Latin America.

More recently, the largest banks in home loans, JPMorgan Chase and Wells Fargo, have cut mortgage staffing levels to adjust to the lower volumes. And smaller nonbank providers are reportedly scrambling to sell loan servicing rights or even considering merging or partnering with rivals.
“The sector was as good as it gets” last year, said Wennes, a three-decade banking veteran who served at firms including Union Bank, Wells Fargo and Countrywide.
“We looked at the returns through the cycle, saw where we were headed with higher interest rates, and made the decision to exit,” he said.

Others to follow?

While banks used to dominate the American mortgage business, they have played a diminished role since the 2008 financial crisis in which home loans played a central role. Instead, nonbank players like Rocket Mortgage have soaked up market share, less encumbered by regulations that fall more heavily on large banks.
Out of the top ten mortgage providers by loan volume, only three are traditional banks: Wells Fargo, JPMorgan and Bank of America.
The rest are newer players with names like United Wholesale Mortgage and Freedom Mortgage. Many of the firms took advantage of the pandemic boom to go public.Their shares are now deeply underwater, which could spark consolidation in the sector.  
Complicating matters, banks have to plow money into technology platforms to streamline the document-intensive application process to keep up with customer expectations.
And firms including JPMorgan have said that increasingly onerous capital rules will force it to purge mortgages from its balance sheet, making the business less attractive.
The dynamic could have some banks deciding to offer mortgages via partners, which is what Santander now does; it lists Rocket Mortgage on its website.
“Banks will ultimately need to ask themselves if they consider this a core product they are offering,” Wennes said.

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Confetti falls as Lyft CEO Logan Green (C) and President John Zimmer (LEFT C) ring the Nasdaq opening bell celebrating the company’s initial public offering (IPO) on March 29, 2019 in Los Angeles, California. The ride hailing app company’s shares were initially priced at $72.
Mario Tama / Getty Images

Check out the companies making headlines in midday trading Friday.
Warner Bros. Discovery — The media company’s stock cratered 16.5% after Warner Brothers posted its first earnings report since its merger. Warner Bros. Discovery also said it plans to combine its HBO Max and Discovery+ streaming services.

Lyft — Lyft soared 16.6% after sharing an unexpected profit for the recent quarter. Revenue fell in-line with estimates.
Beyond Meat — The plant-based meat maker’s stock soared 21.9% even after the company shared results for the recent quarter that missed on the top and bottom lines. Beyond Meat also said its cutting 4% of its workforce.
Carvana — Shares of the online used-car seller soared 40.1% on Friday as the company said it would aggressively cut costs in preparation for an economic downturn.
Block – Shares of the Square owner lost more than 2% on the back of a 34% drop in Cash App revenues in the previous quarter. That drop overshadowed a stronger-than-forecast profit.
DraftKings – The sports betting company jumped 9.8% after it reported better-than expected-revenue and adjusted earnings for its latest quarter. DraftKings also raised its full-year revenue forecast despite a gloomy macro outlook.

Paramount — Shares dropped 4.2% after JPMorgan downgraded Paramount to underweight from neutral, citing greater macro challenges ahead for the media company. Paramount reported strong second-quarter earnings this week, but falling income and free cash flow numbers weighed on results.
DoorDash – Shares of the food delivery company traded 1.3% lower, giving up earlier gains, as investors digested a quarterly report that showed a greater loss per share than anticipated. DoorDash lost 72 cents per share in the second quarter, wider than a loss of 41 cents analysts were expecting, according to Refinitiv. Its revenue beat expectations, however.
AMC Entertainment – The theater chain rallied 18.9% after announcing late Thursday it planned to issue a dividend in the form of preferred shares, under the symbol “APE.” The move came after investors rejected the company’s efforts to issue additional stocks last year as a way to raise money. 
Sunrun — Shares jumped 4.5% after Barclays initiated coverage of the residential solar installer company with an overweight rating. The investment firm said shares of Sunrun could surge on the back of an ambitious clean energy bill that could “kick off a long subsidized growth cycle” if passed. Sunrun also reported earnings this week that beat analyst expectations, according to FactSet.
Virgin Galactic — Shares plummeted 17.5% after the company said it’s pushing back the commercial launch of space flights until the second quarter of 2023. Truist downgraded shares of Virgin Galactic to a sell rating as the company continues to run through cash and delay flights.
Twilio — Twilio’s stock tumbled 13.5% despite a revenue beat after the communications software company shared weak guidance for the current period. Following the report, Stifel downgraded shares of the technology company to a hold from a buy and halved its price target on the stock.
iRobot — Shares of iRobot skyrocketed more than 19.1% after Amazon announced it plans to acquire the robotic vacuum maker for $1.7 billion, or $61 a share.
— CNBC’s Sarah Min, Tanaya Macheel, Yun Li and Michelle Fox contributed reporting.

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It would normally be cause for unalloyed celebration. According to figures released on August 5th, America’s unemployment rate in July fell to 3.5%, matching a half-century low hit just before covid-19. Moreover, with nearly 530,000 jobs created last month—more than twice as many as expected—the economy has now recovered all of the jobs lost during the pandemic. That caps America’s strongest bounce-back in employment from a downturn in decades.But in many parts of the economy, there is more consternation than celebration. An ultra-tight labour market is a challenge for companies struggling to return to pre-pandemic staffing levels. For investors and policymakers it poses a conundrum, suggesting the central bank may need to forge ahead with yet more jumbo interest-rate rises, despite other signs of slowing economic growth.Ever since the Federal Reserve began tightening monetary policy earlier this year, economists have debated how big a trade-off there will be between inflation and jobs. Actions by the Fed to tame prices inevitably lead to weaker growth, weighing by extension on the labour market. Jerome Powell, chairman of the Fed, has long insisted that labour-market tightness may mean there is a path whereby companies can reduce their demand for new workers without large numbers ending up on the dole. In other words, the trade-off may between inflation and jobs could be less severe than in previous periods of monetary tightening.One key piece of evidence in this debate is the level of job openings. Vacancies in June fell sharply to 10.7m, the lowest in nine months, though still high by historical standards. All else being equal, a decline in vacancies without a concomitant rise in unemployment would lend credence to the Fed’s view that the trade-off may be relatively mild. The counterpoint is that the trade-off has only just begun, since the Fed still has its work cut out to tame inflation. Consumer prices are forecast to have risen by nearly 9% last month, just shy of a four-decade high.To understand the debate, consider the non-accelerating inflation rate of unemployment, known more commonly by its acronym, nairu, or simply as the natural rate of unemployment. It refers to the lowest level of unemployment that an economy can sustain before wage inflation starts to accelerate. The concept of nairu was once central to economic analysis and to the Fed’s thinking about rates. But it fell out of favour before the pandemic when unemployment dipped well below the assumed nairu threshold without any discernible pick-up in inflation. In a strategic review published in 2020, the Fed indicated that the concept would no longer figure prominently in its policy decisions.However, the surge in inflation over the past year alongside the sharp drop in joblessness has put nairu back in the spotlight. The basic problem with the natural rate of unemployment, and why some object to its use, is that it is not observable. Instead, economists must derive estimates of where it lies based on the relationship between unemployment and inflation over time. That is necessarily imprecise. But there is a good case to be made that nairu shifted markedly higher early in the pandemic.In mid-2020 unemployment soared to almost 15%. As Brandyn Bok and Nicolas Petrosky-Nadeau of the San Francisco Fed have noted, in conventional frameworks such a jump would have warranted a bigger slowdown in inflation than actually occurred. In other words, the natural rate of unemployment seemed to have shifted higher, limiting the disinflationary impact of a big rise in unemployment. They estimated that nairu may have reached 8% in 2020, before edging down to 6% at the end of 2021. The economy is now experiencing the flipside of an elevated nairu: high inflation as unemployment falls.Structural changes in the shape of the economy during covid help explain why the natural rate of unemployment likely increased during the pandemic. From the boom in delivery and warehouse work to the later recovery in restaurant and travel work, employers have struggled to keep up with fast-evolving staffing needs. Compounding that has been a change in what people expect from their jobs, epitomised by the shift to more remote working. One response from companies, naturally, has been to offer higher wages. Hourly earnings are up by about 5% in nominal terms compared with a year earlier.A gap between the measured unemployment rate of 3.5% and the estimated natural rate of 6% implies that wage pressure is likely to remain high in the coming months, making for yet more stubborn inflation. Immediately after the latest jobs report, traders ratcheted up their expectations for monetary tightening. They now assign roughly two-in-three odds to the Fed delivering its third consecutive three-quarter-point rate increase at its next meeting in September.A pessimistic interpretation is that the Fed may have to keep raising rates until measured unemployment approaches the nairu level. Millions of people would lose their jobs if so. A hopeful interpretation is that the gap may be closed not by unemployment rising but by nairu falling. At a news conference after the Fed’s most recent rate rise in July, Mr Powell laid out this more hopeful perspective: “Logically, if the pandemic and the disorder in the labour market caused the natural rate to move up, then as the labour market settles down, in principle you should see it move back down.”The result is that wages are at least as important as unemployment in gauging the health of America’s labour market now. It is impressive to see such strong job growth at this point in the economic cycle. But only if that comes alongside a moderation in salary pressures will the consternation give way to celebration. ■ More