Finance

A Nordstrom store in Irvine, California.
Scott Mlyn | CNBC

Check out the companies making headlines after hours.
Nordstrom — Shares jumped 7% after the retailer surpassed earnings expectations and raised its full-year outlook. Nordstrom CEO Erik Nordstrom said the company has experienced a surge in demand from shoppers refreshing their closets for “long-awaited occasions.”

Urban Outfitters — Shares initially dropped 1.7% after the retailer reported an earnings miss. Urban Outfitters’ CEO said rising costs offset revenues. The company earned 33 cents per share on revenues of $1.05 billion, according to FactSet. Analysts polled by Refinitiv were expecting earnings of 42 cents per share on revenues of $1.068 billion.
Intuit — Shares popped 3% after the financial software company topped earnings expectations. Intuit reported revenues of $5.6 billion, as compared with consensus estimates of $5.514 billion from Refinitiv.

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A man photographs a banner for Snap Inc. on the facade of the New York Stock Exchange on the morning of the company’s IPO in New York City, March 2, 2017.
Brendan McDermid | Reuters

Check out the companies making headlines in midday trading Tuesday.
Snap — Shares of Snapchat’s parent company plummeted 43.1% after Snap said it’s unlikely to meet revenue and earnings estimates in the current quarter and plans to slow hiring to tame expenses. The social media company cited inflation, supply chain shortages and uncertainties surrounding Apple’s privacy changes among the reasons for the warning.

Roblox — Shares of Roblox plunged nearly 10% after Atlantic Equities downgraded the online gaming platform’s stock to neutral, citing weakening user engagement and app downloads.
Meta, Alphabet, Apple — Tech stocks fell Tuesday following a warning from Snapchat that it’s likely to miss its own earnings and revenue targets for the current quarter. Shares of Apple, Alphabet, Twitter, Meta Platforms, Roku and Pinterest fell 1.9%, 5%, 5.6%, 7.6%. 13.7% and 23.6%, respectively.
Abercrombie & Fitch — Shares of the apparel retailer tumbled 28.6% after the company reported that freight and product costs weighed on sales for the fiscal first quarter. The company also slashed its sales outlook for fiscal 2022, adding that economic headwinds could remain through at least the end of the year.
Omnicom Group — The advertising stock dropped 8.4% after a revenue warning from Snap caused concerned about the digital ad market. An Omnicom executive said at a JPMorgan conference on Tuesday that the environment for advertising was “challenging,” according to a transcript from FactSet.
AutoZone — Shares gained 5.8% following an earnings beat from the auto parts retailer. AutoZone earned $29.03 per share in its most recent quarter, more than the $26.05 per share expected by analysts polled by Refinitiv. Revenue also beat estimates.

Zoom — Shares jumped 5.6% after the videoconferencing company surpassed earnings expectations and raised its outlook. Zoom said it is working on products to service a hybrid workplace. The company posted earnings of $1.03 per share compared with a Refinitiv consensus estimate of 87 cents per share.
Petco – Shares of the pet products retailer popped 3.7% after a better-than-expected quarterly report. Petco reported an adjusted first-quarter profit of 17 cents per share on revenue of $1.48 billion. Analysts had expected earnings of 15 cents per share on revenue of $1.46 billion, according to Refinitiv. The company also beat Wall Street expectations for comparable-store sales.
Snowflake — Shares of the cloud data company dropped 6.6% ahead of its quarterly earnings report this week. Snowflake fell even after analysts at Rosenblatt Securities said the stock can surge 84%.
— CNBC’s Tanaya Macheel, Hannah Miao, Jesse Pound and Samantha Subin contributed to this report.

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Just three days after being sworn in as president in January 2017, Donald Trump signed an executive order withdrawing America from the Trans-Pacific Partnership (tpp), a 12-country free-trade deal he had railed against on the campaign trail. On May 23rd, 488 days after his own swearing-in, President Joe Biden tried to reverse some of the damage by unveiling a new pact, the 13-country Indo-Pacific Economic Framework (ipef). That Mr Biden took so much longer to launch his Asian trade policy illustrates one basic truth: it is far easier to tear up agreements than it is to craft them anew.Inevitably, one way to look at the ipef is by way of comparison to the tpp (which lives on in reduced form, absent America). Some bits sound rather familiar. One selling-point for the tpp was that it was a “21st-century trade agreement” complete with high standards for workers’ rights and e-commerce rules. The ipef is also “a 21st-century economic arrangement”, according to Jake Sullivan, America’s national security adviser. The original tpp members accounted for nearly 40% of global gdp, roughly the same share as the current ipef partners (the biggest change is that the new deal swaps out Mexico and Canada for India and South Korea). Most crucially, China is still excluded. The ipef, like the tpp, is an attempt to build a trading structure in Asia that enshrines both America’s economic principles and its economic power—welcomed by many in the region as a counterbalance to China’s heft.That, however, is where the similarities end. Mr Trump’s success in winning support with his calls to stop countries “ripping off” America has made many in Washington leery of ambitious free-trade deals. So rather than starting work on a pact that would require approval from Congress, Mr Biden’s team has designed a framework that is more malleable and may avoid that political death-trap. In announcing the launch, Katherine Tai, the United States Trade Representative (ustr), pledged to “keep Congress close” in shaping the ipef—a far cry from putting it to a vote.Malleability has a few big downsides. It limits what America can offer. A cut in tariff rates, a plank of most free-trade deals, is a non-starter because it would require congressional support. America still vows to push for strong labour and environmental standards but, unable to offer more access to its vast market, it lacks a key bargaining chip. The durability of the ipef is also in doubt. Were Mr Trump to return to the Oval Office in 2024, he would not need three days to ditch the framework.The Biden administration has tried to make a virtue of these limits. Rather than conceiving of the ipef as a traditional deal, it has declared that the pact will rest on four pillars, with trade promotion just one. The other three goals are to make supply chains more resilient; to promote infrastructure investment and clean energy; and to form new rules on taxation and anti-corruption. It is tempting to dismiss such a wide-ranging agenda as too vague to amount to anything. But paradoxically, a near-stumble at the launch of the framework illustrated that it could, in theory, have force to its contents: America had to tone down the language in its founding documents, otherwise some in Asia would have balked at signing them.Matthew Goodman of the Centre for Strategic and International Studies, a think-tank, notes that the focus on topics such as digital trade, competition policy and bribery makes for a good menu for the ipef. “These are issues that are very much in the interest of our partners in the region,” he says. At the same time, breadth poses a challenge. Instead of just having the ustr as the lead negotiator, as in normal trade talks, the commerce department is in charge of the non-trade portfolio. That risks turning it into a multi-headed beast.For now, many in the region are most pleased by the symbolism. The wounds from America’s tpp exit are still raw. Since Mr Biden’s election victory, allies have waited and waited for America to devise a new Asian trade strategy. At last it has arrived, even if it is more notable for its political constraints than its economic potential. “We are just happy to have them at the table,” says one Australian official. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

“Consumers are in good shape, not overleveraged,” Moynihan, CEO of the second biggest U.S. bank by assets, told Bloomberg Television from Davos, Switzerland.
The bank’s customers have checking and savings accounts that are still larger than before the pandemic and are spending 10% more so far in May than the year-earlier period, he said.
“What’s going to slow them down? Nothing right now,” Moynihan said.

Brian Moynihan, CEO of Bank of America, speaking at the WEF in Davos, Switzerland on May 23rd, 2022. 
Adam Galica | CNBC

U.S. consumers are “in good shape” and will keep spending at an elevated clip, at least in the near term, according to Bank of America CEO Brian Moynihan.
“Consumers are in good shape, not overleveraged,” Moynihan, CEO of the second biggest U.S. bank by assets, told Bloomberg Television from Davos, Switzerland.

The bank’s customers have checking and savings accounts that are still larger than before the pandemic and are spending 10% more so far in May than the year-earlier period, he said.
“What’s going to slow them down? Nothing right now,” Moynihan said.
The Federal Reserve is in the middle of an inflation-fighting campaign that has pummeled markets, especially for formerly high-flying growth stocks. Concern has been mounting that inflation at multidecade highs and a central bank slamming the brakes on easy-money policies will tip the economy into recession. American consumers could help the U.S. avoid that scenario.
“The Fed has this typically very difficult thing of getting them to slow down without slowing down too much,” Moynihan said. “I believe they are going to be able to manage this flow, but it’s going to be tricky.”
Among bank CEOs, Moynihan has been more optimistic that the U.S. can dodge a recession. Earlier this month, JPMorgan Chase CEO Jamie Dimon put the odds at 66% that the U.S. will have some kind of economic slowdown.
“The odds are the following: something like, yes, they can engineer a soft landing, a third of a percent chance,” Dimon told Bloomberg. “Probably a third of a percent chance they can engineer a mild recession …and then there’s a chance this could be much harder than that.”

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Billionaire hedge fund manager Bill Ackman said raging inflation will only dissipate if the Federal Reserve acts more aggressively or the market sell-off turns into a full-on collapse.
“There is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction,” Ackman said in a slew of tweets Tuesday.

The Pershing Square hedge fund manager attributed 2022’s market correction to investors’ lack of confidence that the central bank could squash a 40-year high in inflation. He said the market turmoil will only end if the Fed “puts a line in the sand” on soaring prices.
“If the Fed doesn’t do its job, the market will do the Fed’s job, and that is what is happening now,” Ackman added. “The only way to stop today’s raging inflation is with aggressive monetary tightening or with a collapse in the economy.”
The market has been in a big rout this year as the Federal Reserve’s tightening measures to tame inflation stoked fears of a recession. The central bank raised its benchmark interest rate by half a percentage point earlier this month, the most aggressive step yet. The S&P 500 is down about 18% in 2022, and the equity benchmark briefly dipped into bear market territory last week.
But Ackman believes at this point investors will cheer the Fed raising rates more rapidly because inflation is spiraling out of control.
“Markets will soar once investors can be confident that the days of runaway inflation are over. Let’s hope the Fed gets it right,” Ackman said.

The hedge fund manager said the Fed should demonstrate its seriousness by immediately raising rates to neutral and committing to continue to hike borrowing costs until “the inflation genie is back in the bottle.”
The Fed has indicated similar 50 basis point rate increases are likely at its next few meetings. The rate is currently targeted at 0.75%-1%. The rate-setting Federal Open Market Committee next meets June 14-15.
In March 2020 during the depths of the Covid pandemic, Ackman issued a dire warning on CNBC about the health crisis, saying “hell is coming” and imploring the White House to shut down the country for a month. He made $2 billion betting against the market then.

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“Tax us, the rich, and tax us now,” an open letter by the “Patriotic Millionaires said.
The letter, published Monday, included actor Mark Ruffalo and heiress Abigail Disney among its signatories.

Protesters take part in a demonstration against the World Economic Forum (WEF) during the WEF annual meeting in Davos on May 22, 2022.
Fabrice Coffrini | Afp | Getty Images

A group of over 150 millionaires are calling on the elite attendees of this year’s World Economic Forum in Davos, to tax them more.
The group, known as “Patriotic Millionaires,” published an open letter on Monday reiterating calls for the attendees of WEF to “acknowledge the danger of unchecked wealth inequality around the world, and publicly support efforts to tax the rich.”

“Tax us, the rich, and tax us now,” the letter said, which included actor Mark Ruffalo and heiress Abigail Disney among its signatories.
They explained in the letter that the inequality baked into the international tax system had created distrust between the people of the world and its rich elites.
To restore that trust, the group argued that it would take a “complete overhaul of a system that up until now has been deliberately designed to make the rich richer.”
“To put it simply, restoring trust requires taxing the rich,” the millionaires said.
They said that the WEF Davos summit didn’t deserve the world’s trust right now, given the lack of “tangible value” that had come from discussions at previous events.

Some of the millionaires even staged pro-taxation protests at Davos over the weekend.

Cost of living crisis

This latest call from the rich to be taxed more comes as rising prices ratchet up the cost of living for people around the world.
Patriotic Millionaires referred to an Oxfam brief, published Monday, which found a billionaire was minted every 30 hours during the first two years of the Covid-19 pandemic. Oxfam estimated that nearly million people could fall into extreme poverty at a similar rate in 2022.

Julia Davies, founding member of Patriotic Millionaires U.K., said that as “scandalous as it is that governments seem to be utterly inactive on dealing with the cost of living, it is equally scandalous that they allow extreme wealth to sit in the hands of so few people.”
Davies added that “global crises are not accidental, they are the result of bad economic design.”

‘Race to the bottom’ on corporate taxes 

Speaking to CNBC’s Geoff Cutmore on a panel in Davos on Tuesday, Oxfam Executive Director Gabriela Bucher said that last year’s multilateral agreement proposing that companies pay at least 15% tax on earnings, did not go far enough.
The Organisation for Economic Co-operation and Development tax reform agreement was signed by 136 countries and jurisdictions in October, though it is yet to be implemented.
Bucher pointed out that if the agreed rate had been set higher, at 25%, as recommended by tax experts around the world, this would raise a further $17 billion for the developing world.

Bucher was also concerned that the agreement, at the current level, would see a “race to the bottom” for corporate taxes and that countries with higher rates might actually bring them down.
“There’s a danger that we’re not really using this important tool at this moment when we have so many competing crises,” she said, referring to a hunger crisis in both the developing world and in wealthier countries because of the surging cost of living.
Bucher later went on to say that “you can accumulate as much wealth as you want, but if everything ends around you then it doesn’t make much sense.” More

Take a look at some of the biggest movers in the premarket:
Best Buy (BBY) – Best Buy jumped 5.2% in the premarket after the electronics retailer reported a mixed quarter. Best Buy fell 4 cents a share shy of forecasts, with quarterly earnings of $1.57 per share. Revenue was better than expected, however, and comparable-store sales did not fall as much as analysts had anticipated. Best Buy trimmed its full-year outlook based on worsening macroeconomic conditions.

AutoZone (AZO) – The auto parts retailer earned $29.03 per share for its fiscal third quarter, beating the consensus estimate of $26.05 a share. Revenue topped forecasts, and comparable-store sales posted an unexpected gain. Shares gained 1.4% in premarket trading.
Abercrombie & Fitch (ANF) – The apparel retailer’s stock plunged 17.7% in the premarket after the company reported an unexpected quarterly loss, despite better-than-expected revenue. Abercrombie was hit by higher costs, which it expects to remain a headwind for the rest of the year. The company also its full-year outlook.
Snap (SNAP) – Snap plummeted 28.8% in the premarket after the social media company issued a profit warning and said it would slow hiring. The Snapchat parent said it is dealing with a number of issues, including inflation, an uncertain economic environment and Apple’s (AAPL) privacy policy changes. Snap’s warning is weighing on other social media stocks like Meta Platforms (FB), which is down 6.5%, Twitter (TWTR), off 3.4%, and Pinterest (PINS), down 11.9%.
Petco (WOOF) – Petco jumped 5.4% in premarket action after beating top- and bottom-line estimates for its latest quarter, as well as better-than-expected comparable-store sales for the pet products retailer.
Zoom Video (ZM) – Zoom rose 4.7% in premarket trading after the videoconferencing company reported better-than-expected quarterly earnings and raised its profit outlook. Demand for Zoom’s flagship videoconferencing services is waning as people return to offices, but Zoom is shifting its emphasis to products aimed at the hybrid workplace.

VMWare (VMW) – Broadcom’s (AVGO) reported takeover talks with the cloud computing company are centered on a value of about $60 billion, or about $140 per share in cash and stock, according to people familiar with the matter who spoke to The Wall Street Journal. VMWare rose 1% in the premarket.
Insulet (PODD) – Insulet rallied 11.9% in premarket trading following a Bloomberg report that the medical device maker was in talks to be acquired by Dexcom (DXCM), a maker of glucose monitoring systems. Dexcom slid 7.1% in premarket action.
Advance Auto Parts (AAP) – Advance Auto shares sank 3.7% in premarket trading after the auto parts retailer reported quarterly profit and revenue that fell slightly short of Wall Street forecasts. The company also projected full-year comparable sales that are below consensus.

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When the pandemic first hit in 2020, China bounced back from a first-quarter contraction to grow in the second quarter.
This year, the country faces a far more transmissible virus variant, overall weaker growth and less government stimulus.
The “most significant impact” of the Covid resurgence is that it “interrupted” the normal policymaking schedule, said Dan Wang, Shanghai-based chief economist at Hang Seng Bank China.

As Shanghai tries to reopen businesses, one downtown district over the weekend banned residents from leaving their apartment complexes again for mass virus testing. Pictured here, in another district on May 21, 2022, is a line outside a shopping mall.
Xu Kaikia | Visual China Group | Getty Images

BEIJING — China’s economy won’t be snapping back quickly from the latest Covid outbreak, many economists predict.
Instead, they expect a slow recovery ahead.

When the pandemic first hit in 2020, China bounced back from a first-quarter contraction to grow in the second quarter. This year, the country faces a far more transmissible virus variant, overall weaker growth and less government stimulus.
The latest Covid outbreak that began in March has hit the metropolis of Shanghai the hardest. About a week ago, the city announced plans to emerge from lockdown — and fully reopen by mid-June.
“For China, the main story here is we have seen the light at the end of the tunnel. The worst of supply chain dislocations in China from Covid lockdown looks to be over,” Robin Xing, Morgan Stanley’s chief China economist, said during a webinar Friday.
“But we also think the road to recovery will likely be slow and bumpy,” Xing said.
It’s a process of fits and starts. Over the weekend, a downtown Shanghai district again banned residents from leaving their apartment complexes to conduct mass virus testing. More parts of the capital city of Beijing ordered people to work from home as the local daily case count rose — reaching 83 on Sunday, the highest for the city’s latest outbreak.

Case in point: German automaker Volkswagen, which has factories in two of this year’s hardest-hit regions, said Wednesday its China production sites were up and running, but Covid controls were disrupting supply chains.
The automaker said it was unable to provide a specific figure on production levels as the factories are joint ventures operated with local partners.
Although the national Covid case count has fallen over the last month, pockets of new cases ranging from Beijing to southwest China have prompted stay-home orders and mass testing. Freight volumes remain below normal.
“Many regions and cities have tightened restrictions at the first sign of local cases,” Meng Lei, China equity strategist at UBS Securities, said in a note last week.
“Our case studies of Shanghai, Jilin, Xi’an and Beijing show logistical and supply chain disruptions are the biggest pain points that affect production resumption,” Meng said. “Therefore work resumption is likely to be gradual rather than happening overnight.”

A policymaking cycle ‘interrupted’

The Chinese government has stuck to its stringent policy of “dynamic zero-Covid” despite this year’s emergence of the highly transmissible omicron variant.
The “most significant impact” of the Covid resurgence is that it “interrupted” the normal policymaking schedule, said Dan Wang, Shanghai-based chief economist at Hang Seng Bank China.
She said the latest wave of cases and lockdowns really only started after the central government released its annual economic plan at the “Two Sessions” parliamentary meeting in March.
In China’s heavily managed economy, this annual meeting is a critical part of a cycle for developing and implementing national policies — across departments and regions.
Supply chain disruption and lackluster consumption are manageable, but once the policy schedule is interrupted, “it’s hard to get it back to its original track quickly,” Wang said.
There are so many different economic targets that “a lot of compromises have to be made between different [government] departments,” she said. “That has made the policy process extremely slow and lagging.”
The information office for China’s State Council, the country’s top executive body, did not immediately respond to a CNBC request for comment.
Politics holds particular weight with officials this year ahead of a regular shuffle of leaders scheduled for the fall. Chinese President Xi Jinping is expected to stay on for an unprecedented third term.

Half the stimulus as in 2020

In early March at the “Two Sessions,” Beijing set targets such as GDP growth of “around 5.5%.” But that’s about 1 percentage point or more above the forecast of many investment banks — which have repeatedly slashed their China growth estimates as Covid lockdowns persist.
Wang maintains a relatively high forecast of 5.1% as she expects China to increase stimulus and ease tight Covid controls later in the summer.
But so far, nearly two months after Shanghai locked down in earnest, policymakers have yet to make major changes.
Whether in terms of interest rates or fiscal policy, the level of government stimulus is still about half of what it was during the height of the pandemic in 2020, Morgan Stanley’s Xing said.

Read more about China from CNBC Pro

Except for unemployment, most economic indicators have not reached levels worse than early 2020.
Among other measures, the central government has announced tax and fee cuts for small businesses, and started to cut mortgage rates. But the impact, especially on the massive real estate sector, can take time to play out.
Xing noted that even without Covid, an easing of policies on the property market would take three to six months to affect homebuying activity.

Other parts of China hum along

Still, it’s also possible that growth in China could come faster than many expect.
“The silver lining is, the experiences from the past two years suggest that a Covid-induced recession tends to end quickly, especially with prompt and powerful policy responses,” Larry Hu, chief China economist at Macquarie, said in a note last week.
For much of China, work goes on, even if there are additional virus testing requirements.
About 80% of manufacturing in southern China is back to normal. Though the region’s big city of Shenzhen shut nearly all businesses for about a week in March, moving products via truck within a province is “OK” due to very low numbers of Covid cases in the region, Klaus Zenkel, chair of the south China chapter of the EU Chamber of Commerce in China, told CNBC on Friday.
Members in the southern Guangdong province — a manufacturing hub — “are all busy, they all have work to do,” Zenkel said. He noted businesses were keeping their warehouses fuller than before to prevent a prolonged shortage issue.
But “unpredictability is there,” he said. “You don’t know what will happen.”

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