Finance

Chinese President Xi Jinping contacted U.S. President Joe Biden on Friday to wish the American leader a speedy recovery from Covid, according to state media.
Biden tested positive for Covid-19 and has “very mild symptoms,” the White House said Thursday.
The U.S. embassy in Beijing did not immediately respond to a CNBC request for comment on the report.

Pictured here is a news broadcast in China of President Xi Jinping during a virtual summit with U.S. President Joe Biden in November 2021.
Kevin Frayer | Getty Images News | Getty Images

BEIJING — Chinese President Xi Jinping contacted U.S. President Joe Biden on Friday to wish the American leader a “speedy recovery” from Covid, according to state media.
Biden tested positive for Covid-19 and has “very mild symptoms,” the White House said Thursday. The U.S. embassy in Beijing did not immediately respond to a CNBC request for comment on the report.

China’s news agency Xinhua used “sends [a] message” to describe Xi’s contact with Biden.
Xi expressed his “deepest sympathies,” according to a CNBC translation of the Chinese state media report. The brief report did not mention whether the leaders communicated on other topics.
On Wednesday, Biden told reporters at a briefing he expected to speak with Xi within 10 days, but did not specify reasons or topics for a call.
The two leaders last spoke in March, mostly about Russia’s invasion of Ukraine. China has refused to call the attack an invasion.
Correction: This story has been updated to reflect that the official English language version of the state media report said Xi sent a message to Biden.

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Nasdaq futures fell in overnight trading Thursday as investors digested a fresh batch of corporate earnings and disappointing results from Snap, which sent social media shares reeling.
Futures tied to the Dow Jones Industrial Average slipped 0.15%, or 48 points. S&P 500 futures fell 0.37% and Nasdaq 100 futures tumbled 0.68%. 

Shares of the Snapchat parent company plummeted a whopping 26% after posting second-quarter results that fell short of analysts’ expectations and noting that it plans to slow hiring.
The results from Snap weighed on other social media and technology stocks investors feared could get impacted by slowing online advertising sales. Shares of Meta Platforms, Alphabet, Twitter and Pinterest fell 5.2%, 2.9%, 1.8% and 7%, respectively, following the news.
The Invesco QQQ Trust slid 0.72% after hours.
The news ruined what has been a hot streak for tech shares. The Nasdaq Composite posted its third straight positive session on Thursday. That came on the back of positive quarterly results from Tesla, which popped nearly 10% on Thursday.
The Nasdaq finished the regular trading day Thursday 1.36% higher to close at 12,059.61, while the S&P 500 rose 0.99% to 3,998.95. The Dow Jones Industrial Average added 162.06 points, or 0.51%, to settle at 32,036.90. The Dow is on track for a 2.4% weekly gain, while the S&P and Nasdaq are on course to close out the week 3.5% and 5.3% higher.

Shares of growth-focused technology companies jumped in trading on Thursday as the dollar cooled down from its surge. The European Central Bank hiked rates by 50 basis points in its first increase in 11 years while initial jobless claims hit their highest level since November 2021.
“This is showing you that market expectations are really low, that a little bit of good news can go a long way when you have low expectations,” said Truist’s Keith Lerner, noting that investors rotated back into growth stocks even amid this weak economic data.
On the earnings front, investors are awaiting results from American Express, Verizon and Twitter slated to report before the bell on Friday.

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People walk past Snap Inc. Snapchat signage displayed in downtown Los Angeles, California on October 2, 2021.
Patrick T. Fallon | AFP | Getty Images

Check out the companies making headlines after the bell: 
Snap – Shares of the Snapchat parent company plummeted more than 26% in extended trading after reporting a miss on the top and bottom lines in the recent quarter. Snap also said revenue is flat so far in the current quarter year-over-year and that it plans to slow hiring.

Social media — Social media stocks slipped after hours on the back of disappointing quarterly results from Snap. Meta Platforms, Alphabet, Twitter and Pinterest fell 5%, 3%, 1.9% and 6.9%, respectively, following the report. Investors fear these companies could be hurt by slowing online ad sales.
Mattel — Shares of the toy manufacturer dropped 2.8% after hours despite a beat on the top and bottom lines in the recent quarter. Mattel said revenue took a hit from currency headwinds as the dollar soared. Despite the big beat, the company reiterated its forecast.
Capital One Financial — The financial services stock dropped 4.9% in extended trading after posting disappointing results in the recent quarter. Earnings per share came in 13 cents below analysts’ expectations while revenue fell short by $6 million.
Intuitive Surgical — Shares of the medical devices company plummeted 12.6% in after-hours trading after reporting a miss on earnings and revenue in the recent quarter. Intuitive Surgical reported adjusted earnings per share of $1.14 on $1.52 billion in revenue.
Boston Beer — Shares of the brewer sank 8.4% in extended trading after missing earnings per share estimates in the recent quarter by 12 cents and slashing its full year forecast. Boston Beer reported $616.2 million in revenue in the recent quarter, slightly above consensus expectations of $600.5 million.

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IT WAS ALMOST ten years to the day since Mario Draghi, then the president of the European Central Bank, ended the most acute phase of the euro-zone crisis with the assurance that he would do “whatever it takes” to keep the currency bloc together. Now, with risks of a fresh debt crisis looming, Christine Lagarde, his successor as ecb president, unveiled the bank’s latest attempt to make good on that promise. The Transmission Protection Instrument (tpi), announced on July 21st, is a bond-buying scheme intended to prevent the spread in borrowing costs between euro-zone governments from widening so far that troubled countries would be at risk of a forced exit from the currency.The need for such a tool is apparent. Shortly before the central bank’s meeting Mr Draghi resigned as Italy’s prime minister, a role he had unexpectedly taken up last year at the head of an unwieldy coalition. The turmoil in Rome placed further pressure on Italian bonds, which were already facing higher interest rates amid a potential economic slowdown. Rising bond yields risk trapping Italy in a self-reinforcing cycle of higher borrowing costs, worries over the sustainability of its debt and, ultimately, fears that the third-largest economy in the euro zone could not survive inside it. The unlimited asset purchases and, potentially, unlimited latitude for ECB intervention promised by the tpi should alleviate those worries. The instrument is open-ended in size, allowing the central bank to buy as many assets as it sees fit, including not just government bonds but also those from the private sector. Any sell-off in government debt would have to be “disorderly and unjustified” for the ECB to take action—but the bank has claimed unlimited discretion to define these terms for itself. Ms Lagarde said that the ECB has the “sovereignty” to determine eligibility criteria itself, a word not often heard from the mouths of central bankers.The ECB has left itself much less flexibility, however, when it comes to determining which countries are eligible for the scheme. To win tpi support governments must not be subject to the excessive deficit procedure (edp), a mechanism used by the European Commission to enforce the euro area’s fiscal rules; nor the eu’s excessive imbalance procedure, which assesses a broader set of macroeconomic indicators. A country’s public debt must be “sustainable”, and its fiscal policies “sound”. But in making these judgments the ECB said it will take into account the views of other organisations, including the imf.The ECB has therefore given itself the maximum room for manoeuvre in forestalling any repeat of the euro-zone crisis, while handing to others the politically delicate task of deciding whether governments’ fiscal policies are appropriate and their debt sustainable. This in turn raises the stakes for the commission when deciding whether to place countries into the edp: an assessment that a troubled country has breached the fiscal rules now risks making it ineligible for monetary support. That could provoke a flight from its debt, as well as confrontation with Brussels.Such is the price of consensus. Ms Lagarde boasted that the tpi won unanimous backing in the ECB’s often-fractious governing council. Hawks had worried that the scheme would prevent markets from disciplining poorly run governments and making accurate appraisals of their solvency. Doves fretted that making it too strict would render it pointless. The ecb’s separate decision to raise rates from -0.5% to 0%—its first increase in over a decade, and a larger one than investors had been led to expect by the bank itself—may also have helped the hawks on the council reconcile themselves with such a big intervention in government-bond markets. Either way, Italy’s borrowing costs fell after the meeting as investors digested the details of the scheme. The euro zone faces a difficult few months, with energy bills soaring, a potential hard-right government taking office in Italy, and Russia’s war in Ukraine continuing to fuel economic uncertainty. But making “whatever it takes” subject to the economic judgments of the Eurocrats in Brussels may be enough for now. ■ More

A woman walks by an AT&T store in Washington D.C.
Ting Shen | Xinhua News Agency | Getty Images

Check out the companies making headlines in midday trading.
Danaher – Shares of the medical conglomerate jumped more than 9% after the company reported better-than-expected earnings and revenue for its most recent quarter, citing higher sales that helped offset an increase in its expenses. Danaher posted adjusted earnings of $2.76 per share on revenue of $7.75 billion, compared to expected earnings of $2.35 per share on revenue of $7.3 billion, according to Refinitiv.

Tesla – Tesla rose 9.8% a day after the automaker reported earnings that were slightly better than Wall Street expected in the second quarter. Tesla posted adjusted earnings of $2.27 per share on $16.93 billion in revenue, compared to expected earnings of $1.81 per share on revenue of $17.10 billion, according to Refinitiv.
AT&T – Shares of the telecom giant plunged 7.6% after AT&T trimmed its free cash flow guidance for the full year. AT&T topped analysts’ estimates on the top and bottom lines in the second quarter, posting adjusted earnings of 65 cents a share on revenues of $29.64 billion.
CSX Corp. – The transport stock gained 4.2% after CSX reported stronger-than-expected revenues for the second quarter. CSX said higher prices and a fuel surcharge helped boost revenue. Loop upgraded CSX to buy from hold after the report, saying that the company’s pricing power could make it a smart recession play for investors.
Philip Morris – Philip Morris’ shares gained 4.2% after the company reported quarterly earnings that beat analyst expectations. The cigarette maker also increased its growth expectations for profit going forward.
United Airlines and American Airlines – Shares of both United and American dropped 10.2% and 7.4% respectively after both airlines reported quarterly results. United’s earnings fell short of Wall Street’s expectations, while American scaled back its growth plans. United posted its first profitable quarter since the start of the pandemic.

Cruise stocks – Shares of cruise lines were slammed after Carnival sold an additional $1 billion in stock at a significant discount, pricing the deal at $9.95 per share, roughly 11% lower than Wednesday’s close. Carnival slipped 11%. Royal Caribbean and Norwegian also traded lower — they fell 8.2% and 7.3%, respectively.
Discover Financial – Shares of Discover Financial Services slumped 8.9% after the company announced it would suspend share buybacks and had started an investigation into compliance in its student loan servicing business. The company also announced quarterly earnings that beat expectations but were overshadowed.
 — CNBC’s Samantha Subin, Jesse Pound and Tanaya Macheel contributed reporting.

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Credit-card companies pitch sign-up bonuses to attract new customers, who typically must spend hundreds or thousands of dollars within a certain time to redeem rewards.
Forty-five percent of consumers holding a credit card with travel perks opened a card solely for the sign-up bonus, according to a ValuePenguin poll; 32% whose card came with a bonus spent more than they could afford to meet the card’s requirements.

Virojt Changyencham | Moment | Getty Images

Nearly half of consumers holding a credit card with travel perks opened the card to chase the rewards — and a big share of them blew their budgets in the pursuit, according to a new survey.
Specifically, 45% travel credit cardholders opened a card solely for its sign-up bonus, according to a ValuePenguin poll of 1,008 consumers. However, 32% of consumers whose credit card came with a sign-up bonus say they spent more than they could afford to meet the card’s requirements.

Credit-card companies pitch sign-up bonuses to attract new customers.
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Generally, they offer benefits like a cash bonus or “points” that can be redeemed for travel discounts. However, customers must spend a certain sum — often hundreds or thousands of dollars — within a preset time period to see those rewards land in their account.
Examples of sign-up bonuses they might encounter, according to Ted Rossman, a senior industry analyst at CreditCards.com, include those from the Chase Sapphire Preferred and Wells Fargo Active Cash cards.
The Chase Sapphire Preferred card is currently offering 60,000 points (the equivalent of a roughly $750 bonus for travel, Rossman said) to new users who spend at least $4,000 in the first three months. The Wells Fargo Active Cash card has an offer for a $200 cash bonus to customers who spend $1,000 in the first three months.

Why sign-up bonuses can be a ‘siren song’

Sign-up bonuses can be lucrative but may also be a “siren song” if customers don’t use their cards wisely, Rossman said.
Overspending can snowball into a larger issue for consumers if they’re unable to fully pay their bill each month. Making just a minimum payment each month and carrying a balance, for example, subjects customers to high interest rates that can spiral out of control if left unchecked. It also erodes or even eliminates the value of those rewards you’re chasing.

“Credit cards are like power tools: They could be really useful, but they could be dangerous, too,” Rossman said.
Many travelers appear to be seeking out cards with travel rewards amid rising vacation costs, ValuePenguin said. Forty-nine percent of survey respondents are considering applying for a travel card in the next six months, according to its poll.

‘Consider the total cost of ownership’ before applying

Before getting a card, consumers should first understand its guidelines. For example, how much time do you have to reach the spending minimum? What benefits will you get? Is there an annual card fee?
The sweet spot: when there’s a valuable bonus as well as an intent to use and benefit from the card over the long haul, Rossman said.
“Consider the total cost of ownership: the bonus, annual fee and how you’ll use the card,” he said. “Everyone’s a little different.”

Customers can best take advantage of a card by spending as they normally would. In other words, don’t spend more money than is typical for your household just to get a bonus, Rossman said.
For example, if you normally spend $500 a month on a credit card, don’t sign up for card that requires you to spend $6,000 in three months.
Ideally, you’d be able to get the bonus through a normal routine of expenditures, and pay your bill in full to avoid interest charges.
Or, you can time a large purchase you’d been planning anyway — like a home renovation or a big trip — with the opening of a new credit card. This is an easy way to hit a card’s dollar threshold without overspending, Rossman said.

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Imagine you are a Parisian investor trying to decide whether to buy American or European bonds. You compare the yields on offer. A ten-year bond issued by America’s Treasury today offers 3%; German bunds return only 1.2%. But buying American means taking a gamble on the euro-dollar exchange rate. You are interested in the return in euros. The bond issued in Washington will be attractive only if the extra yield exceeds any expected loss owing to swings in currency markets.This thinking, known as “uncovered interest parity” (uip), explains why the dollar has recently soared against the euro. On July 12th the greenback reached a one-for-one exchange rate with the euro for the first time since 2002. (It has since fallen slightly.) uip posits that changes in interest rates drive currency movements. If yields on Treasuries rise relative to those on bunds, then the dollar should strengthen until investors expect it to fall over the lifetime of the bonds, so that there is no longer any extra return from buying Treasuries. The Federal Reserve is expected to raise interest rates above 3.5% in 2023, more than twice the rate expected to be reached by the European Central Bank. The dollar has also risen by 20% against the yen in 2022 so far. That is probably because the Bank of Japan is not expected to raise rates above 0.2% in the next three years.Yet there is more to currency valuation than monetary policy. Another theory, purchasing-power parity (ppp), says currencies and prices should adjust until a basket of goods and services costs the same everywhere. The Economist has its own lighthearted measure of ppp: the Big Mac index, which was updated on July 20th. Instead of a basket of goods and services, it uses differences in the price of the ubiquitous McDonald’s burger to judge whether currencies are over- or undervalued.Our measure suggests the weak euro may be justified (see chart). The headline index, which assumes Big Macs should cost the same everywhere, predicts an exchange rate of 1.11 dollars per euro. But a secondary index, which adjusts for differences in gdp, says the euro should trade just below dollar parity. The gdp-adjusted index takes into account differences in the prices of inputs, such as land and labour, that are hard or impossible to trade across borders, and therefore reflect local incomes. At dollar-euro parity, a Big Mac is 11% more expensive stateside. But because America is richer than Europe, such a difference in prices could make sense.For the euro, then, the two theories of currency valuation look aligned. Not so for the yen, which is more than 40% undervalued against the dollar on both Big Mac indices. (Book that flight to Tokyo, American burger-lovers.) The yen has become more undervalued since January, both because the dollar has surged and because inflation is much higher in America. A Big Mac in Japan, including taxes, costs ¥390, a price that has not changed since 2018. The American price, $5.15, has gone up by 11.5% in that time, and by 2.2% since January. That uip is explaining recent movements better than ppp is no surprise. When exchange rates get out of whack with interest rates, traders can make a profit at the touch of a button. To the extent that varying purchasing power presents opportunities, it is to people and firms who might change the site of production or ship goods across borders. That takes time. And it is not always possible: the international delivery of Big Macs would be ill-advised.ppp can fail even within currency zones. Our new index incorporates a change to the source for American Big Mac prices. We used to collect an average price from restaurants in four cities: Atlanta, Chicago, New York and San Francisco. These are relatively expensive places. Now we use a median price for the whole country, provided by McDonald’s, which is lower. The result is that the dollar does not look quite as strong. The change has been made for the whole history of the index, though the previous version is available online. We have also refined our method for calculating the gdp-adjusted index. Fans of burgernomics should tuck in. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Crypto firm Blockchain.com is laying off 25% of its staff, equivalent to about 150 roles.
Most of the layoffs — about 44% — affect employees in Argentina while 26% are based in the U.S. and 16% in the U.K.
The company had exposure to collapsed crypto hedge fund Three Arrows Capital.

Blockchain co-founder and CEO Peter Smith speaks during the Web Summit tech conference in Lisbon, Portugal on November 6, 2018.
Pedro Fiúza | NurPhoto via Getty Images

Crypto startup Blockchain.com says it is laying off 25% of its staff, citing harsh market conditions.
The cuts translate to about 150 roles at the firm.

The company is also shutting down its Argentinian office and scrapping plans to expand in multiple countries.
Most of the layoffs — about 44% — affect employees in Argentina while 26% are based in the U.S. and 16% in the U.K. The company informed staff about the plans Thursday.
Industry website CoinDesk was first to report the news, which was later confirmed to CNBC by a Blockchain.com spokesperson.
Blockchain.com is one of many companies that got caught up in the fallout of crypto hedge fund Three Arrows Capital’s collapse.
3AC filed for bankruptcy protection earlier this month, having owed crypto firms including Celsius and Voyager Digital hundreds of millions of dollars. The company’s co-founders have since gone dark. Lawyers representing its creditors are trying to track their whereabouts.

Blockchain.com had itself lent 3AC $270 million in crypto and is expecting to lose that sum.
On Wednesday, crypto exchange Coinbase denied having any financing exposure to Celsius, Voyager or 3AC.
The collapse of the controversial Terra stablecoin in May had a spiral effect causing the downfall of crypto companies that made risky bets using borrowed funds.
Firms like Celsius and Voyager locked up user accounts after failing to meet redemption requests, before subsequently falling into bankruptcy.
Founded in 2012, Blockchain.com is a crypto exchange and wallet platform. The firm, which ranked No. 7 on this year’s CNBC Disruptor 50 list, claims to be responsible for nearly a third of all bitcoin transactions through its wallet product.
The privately-held company was valued at $14 billion in a funding round announced earlier this year. Its backers include Baillie Gifford, American hedge fund manager Kyle Bass and British tycoon Richard Branson.

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