Finance

Check out the companies making headlines before the bell:
Target (TGT) – Target plummeted 22.1% in the premarket after the retailer reported an adjusted quarterly profit of $2.19 per share, below the $3.07 consensus estimate. Revenue and comparable-store sales beat forecasts, but like rival Walmart yesterday, higher costs ate into Target’s bottom line.

Lowe’s (LOW) – Lowe’s fell 2.9% in the premarket after the home improvement retailer’s quarterly comparable-store sales fell more than expected and revenue come in slightly below Street forecasts. Lowe’s beat bottom-line estimates by 29 cents with quarterly earnings of $3.51 per share.
Walmart (WMT) – Walmart fell another 1.9% in premarket action after tumbling 11.4% yesterday following its earnings miss. The retailer’s stock suffered its worst one-day loss since 1987.
Carrier Global (CARR) – Carrier fell 2.7% in the premarket after Bank of America Securities downgraded the stock to “neutral” from “buy.” The firm said it is now more bearish on the residential HVAC market following a recent industry conference and said Carrier has the highest relative exposure of its peers to that market.
Penn National Gaming (PENN) – The casino operator’s shares rallied 3.2% in the premarket after Jefferies upgraded the stock to “buy” from “hold,” noting the current stock price only assigns minimal value to Penn’s digital operation. Jefferies feels the unit could demonstrate good returns over time.
Shoe Carnival (SCVL) – The footwear retailer reported a quarterly profit of 95 cents per share, 9 cents above estimates, with revenue also beating consensus. Shoe Carnival also raised its full-year outlook. Shoe Carnival added 1% in premarket trading.

Analog Devices (ADI) – The chipmaker earned an adjusted quarterly profit of $2.40 per share, 29 cents above estimates, and reported better-than-expected revenue. The company said it was able to increase output despite supply chain challenges, with demand remaining strong. Analog Devices added 1.9% in premarket trading.
Warby Parker (WRBY) – Warby Parker slid 2.1% in premarket trading after the stock was downgraded to “neutral” from “buy” at Goldman Sachs. Goldman said it sees a longer path to growth for the eyewear retailer, which reported lower-than-expected quarterly earnings earlier this week.
Container Store (TCS) – Container Store surged 8.2% in the premarket after reporting better-than-expected profit and revenue for its latest quarter. The storage and organization products retailer also said it aimed to achieve $2 billion in annual sales by 2027.
Doximity (DOCS) – Doximity plunged 14.5% in premarket action after the cloud-based platform for medical professionals issued a weaker than expected current-quarter revenue forecast. Doximity also reported better-than-expected quarterly profit and revenue.

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Americans are more stressed about money than they’ve ever been, according to the American Psychological Association’s latest Stress In America Survey.
“Eighty-seven percent of Americans said that inflation and the rising costs of everyday goods is what’s driving their stress,” said Vaile Wright, senior director of health care innovation at the American Psychological Association.

More than 40% of U.S. adults say money is negatively impacting their mental health, according to Bankrate’s April 2022 Money and Mental Health report.
“I was in debt off and on all of my 20s and early 30s,” Tawnya Schultz, founder of The Money Life Coach, told CNBC. “I was in this debt cycle of trying to get out of debt, paying off debt, getting back into it. And I was just tired of feeling like I could never get out of it or feeling like I was always going to have debt.”
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Some Americans lack hope they will ever have enough money to retire, with roughly 40% saying their ability to be financially secure in retirement is “going to take a miracle,” according to the 2021 Natixis Global Retirement Index.
“I think that people need to have a sense of hope,” said Mark Hamrick, Washington bureau chief at Bankrate. “When the economy is working for them, there’s a greater likelihood that people will have hope that they can accomplish their basic personal financial objectives.”

Watch the video above to learn why Americans are more stressed than ever about money and how it’s impacting their mental health.
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Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April.
The bank does not expect China will start fully easing Covid controls before the second quarter of 2023.
On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.

Since March, mainland China has struggled to contain its worst Covid outbreak in two years. Notably, the metropolis of Shanghai, pictured here on May 18, only started this week to begin discussing resumption of normal activity — with a goal of mid-June.
Hector Retamal | Afp | Getty Images

BEIJING — Goldman Sachs analysts on Wednesday cut their forecast for China’s GDP to 4% after data for April showed a slump in growth as Covid-19 controls restricted business activity.
The new forecast is even further below the “around 5.5%” growth target the Chinese government announced for the year in March.

“Given the Q2 Covid-related damage to the economy, we now expect China’s growth to be 4% this year (vs. 4.5% previously),” Hui Shan and a team at Goldman wrote in a report Wednesday. That prediction assumes there will be significant government support, on top of measures to stabilize the property market and control Covid outbreaks.
Since March, mainland China has struggled to contain its worst Covid outbreak in two years. Notably, the metropolis of Shanghai only started this week to begin discussing the resumption of normal activity — with a goal of mid-June.
Among April’s weak data, the Goldman analysts pointed to a plunge in housing starts and sales, half the credit growth that markets expected and a drop below 1% for the increase in consumer prices, excluding food and energy.
Other data for April released Monday showed an unexpected drop in industrial production and a worse-than-expected 11.1% decline in retail sales from a year ago. Exports, a major driver of growth, rose by 3.9% in April from a year earlier, the slowest pace since a 0.18% increase in June 2020, according to official data accessed through Wind Information.

“The weak data highlight the tension between China’s growth target and zero-Covid policy which is at the core of China’s growth outlook,” the Goldman analysts said.

They noted how Chinese leaders have emphasized their “dynamic zero-Covid” policy, and how news that China will not host the Asian Cup next summer due to Covid reflects Beijing’s conservative mindset.
“We now expect reopening does not start before 2023Q2 and the process to be more gradual and controlled than previously assumed,” the Goldman analysts said.
“This is why our 2023 GDP growth forecast only increases by a quarter point to 5.3% (vs. 5.0% previously) despite the half a point downward revision to 2022 full-year growth forecast.”

Other banks cut forecasts

On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.
A few days earlier, JPMorgan had reduced its estimate to 4.3% from 4.6%. Morgan Stanley cut its target in late April to 4.2% from 4.6%.

Read more about China from CNBC Pro

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Just 31% of investors participating in the New York-based bank’s annual shareholder meeting voted in support of a $52.6 million award that was part of Dimon’s 2021 compensation package.
The bonus, in the form of 1.5 million options that Dimon can exercise in 2026, was designed to keep the CEO and chairman at the helm of JPMorgan Chase for another five years.
While the results of the so-called “say on pay” vote are nonbinding, JPMorgan’s board said it takes investor feedback “seriously” and intended Dimon’s bonus to be a one-time event, according to a company spokesman.

JP Morgan Chase & Co. Chairman & Chief Executive Officer Jamie Dimon testifies before the House Financial Services Committee on accountability for megabanks in the Rayburn House Office Building on Capitol Hill in Washington, DC on April 10, 2019.
Mandel Ngan | AFP | Getty Images

JPMorgan Chase CEO Jamie Dimon was handed a rare rebuke on Tuesday with the shareholder disapproval of his massive retention bonus announced by the bank last year.
Just 31% of investors participating in the New York-based bank’s annual shareholder meeting supported the $52.6 million award that was part of Dimon’s 2021 compensation package.

The bonus, in the form of 1.5 million options that Dimon can exercise in 2026, was designed to keep the CEO and chairman at the helm of JPMorgan for another five years. Its estimated value, pegged last year, fluctuates and is dependent on the bank’s share price appreciation, according to bank spokesman Joe Evangelisti.
“The special award was extremely rare — the first in more than a decade for Mr. Dimon — and it reflected exemplary leadership and additional incentive for a successful leadership transition,” Evangelisti said.
While the results of the so-called “say on pay” vote are nonbinding, JPMorgan’s board said it takes investor feedback “seriously” and intended Dimon’s bonus to be a one-time event, he added.
The disapproval was the first time JPMorgan’s board suffered a down vote on compensation since the pay-watch measures were introduced more than a decade ago. Dimon, 66, has led JPMorgan since 2006, helping guide it through several crises and building it into the biggest U.S. bank by assets.
Earlier this month, proxy advisory firms including Glass, Lewis & Co. recommended that shareholders vote against the pay package of Dimon and his top lieutenant, Daniel Pinto. Including the retention bonus, Dimon’s pay last year was valued at $84.4 million.

“Excessive one-off grants to the CEO and COO amid tepid relative performance worsen long-standing concerns regarding the company’s executive-pay program,” Glass Lewis said in its report.
Dimon and his other directors received support otherwise from investors, which is more typical of a shareholder vote at a large company.
Glass Lewis had also advised that shareholders vote against the compensation of rival CEO David Solomon, who leads Goldman Sachs and was awarded a $30 million retention bonus in October. In that case, however, about 82% of Goldman’s shareholders voted in favor of management.

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Robinhood will launch a stand-alone app that lets users custody their own cryptocurrencies and NFTs, putting it squarely in competition with Coinbase. 
The self-custody wallets also will accelerate the company’s international launch. 
 It’s the brokerage firm’s latest move into digital assets as it searches for growth beyond stock trading, with company shares down 88% from their all-time high.

Robinhood is handing over the keys to some of its customers’ crypto.
The trading and investing company announced Tuesday it will let users hold and custody their own cryptocurrencies and NFTs in a separate, stand-alone app. It’s the latest move in the digital asset space for Robinhood as it reaches for growth beyond stock trading. The company shares are off more than 70% since its IPO.

The new app will put Robinhood squarely in competition with Coinbase and start-ups like MetaMask. Coinbase CEO Brian Armstrong called his company’s product the most downloaded, mobile self-custody wallet in the U.S. in a tweet Monday.

Vlad Tenev, CEO and co-founder Robinhood Markets, Inc., is displayed on a screen during his company’s IPO at the Nasdaq Market site in Times Square in New York City, U.S., July 29, 2021.
Brendan McDermid | Reuters

The app will let users store non-fungible tokens, and connect to NFT marketplaces and “decentralized” stock exchanges. It will also let users earn yield through other platforms and access a “variety” of crypto assets on other exchanges, Robinhood said.
Who holds, or “custodies,” someone’s cryptocurrency has become a contentious question in the industry, fueling the viral phrase “not your keys, not your coins.” Some fear storing assets on an exchange makes them more vulnerable to hacks, or censorship. 
Robinhood, which topped last year’s CNBC Disruptor 50 list, made its name by offering commission-free stock trading. Its value and user base soared during the pandemic as it ushered in a new generation of traders. The company also became the center of the meme-stock saga after restricting trading in GameStop, the highly shorted name Reddit traders bought in defiance of Wall Street short sellers.
The trading business has slowed significantly over the past year. For the three months ended March 31, Robinhood’s revenue fell 43% from a year ago. Since its public debut in August, shares have plummeted more than 70% and are more than 88% off of the all-time high. 

In an effort to spur revenue and user growth, Robinhood has been adding more cryptocurrency products and features, and in late March it added extended stock trading hours. It launched an earlier version crypto of wallets to customers in April, which will still be available within the core Robinhood app.
“We believe that crypto is more than just an asset class,” Vlad Tenev, Robinhood’s co-founder and CEO said in a press release. “By offering the same low cost and great design that people have come to expect from Robinhood, our web3 wallet will make it easier for everyone to hold their own keys and experience all the opportunities that the open financial system has to offer.”
Robinhood said the new wallet will roll out with a waitlist first and will be available internationally.
The new app notably won’t charge network fees, despite Ethereum and bitcoin fees running at $70 in some cases. A Robinhood spokesperson said the crypto product will rely on third-party liquidity providers “competing” for customers’ transactions behind the scenes, in order to offset those network fees.
Robinhood makes most of its revenue off of transaction fees in its core trading business, through a brokerage-industry practice called payment for order flow.
— CNBC’s Jesse Pound contributed reporting.

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Exterior view of a Walmart store on August 23, 2020 in North Bergen, New Jersey
VIEW press | Corbis News | Getty Images

Check out the companies making headlines in midday trading.
Walmart — Shares dropped over 11% after the big-box retailer reported quarterly earnings that significantly missed Wall Street’s expectations. Walmart posted adjusted first-quarter earnings of $1.30 per share on revenue of $141.57 billion. Analysts had expected a profit of $1.48 per share on revenue of $138.94 billion, according to Refinitiv consensus estimates. Walmart cited cost pressures from rising fuel prices, higher inventory levels and overstaffing.

Citigroup — The bank stock rallied 7.7% the day after a regulatory filing revealed that Warren Buffett’s Berkshire Hathaway added more than 55 million shares to build a stake worth $2.95 billion in the first quarter. Shares of Citi have been underperforming the financial sector over the past 12 months and are still down 15% this year.
Paramount Global – Paramount shares surged more than 15% after Berkshire Hathaway revealed a stake worth $2.6 billion in the media company. At the end of the quarter, the media company was Berkshire’s 18th-largest holding.
United Airlines – Shares of the air carrier jumped more than 7% after the Federal Aviation Administration cleared 52 Boeing 777 planes to fly again, after they were grounded for engine failure. The planes represent 10% of United’s capacity. United has said it plans to bring the planes back gradually starting later this month.
Take-Two Interactive Software — Shares surged 11% despite light guidance and a miss on a bookings metric from the video game company. Analysts are expecting a better outlook after the company closes a pending acquisition of Zynga.
JD.com – Shares of the Chinese e-commerce giant gained more than 4% after the company beat revenue estimates for its most recent quarter, despite seeing a slowdown in growth as Covid-19 lockdowns weighed on consumer spending. Revenue came in at 239.7 billion Chinese yuan, an 18% increase from the previous year, compared with expectations of 236.6 billion yuan, according to Refinitiv.

Tencent Music Entertainment – U.S. traded shares of the Chinese online entertainment platform slid more than 1%. Tencent Music posted quarterly revenue of 6.64 billion yuan, a 15% decline from the prior year.
AMD – Shares of the semiconductor stock jumped 8.7% after Piper Sandler upgraded Advanced Micro Devices to overweight from neutral and said shares could rally nearly 50% after dipping this year.
Workday — Shares dipped 1.5% after UBS downgraded the HR software stock to a neutral rating from buy. The firm said Workday could be hit hard during an economic downturn.
Maxar Technologies — The space stock retreated nearly 2% after Bank of America downgraded Maxar to an underperform rating from neutral. The bank said it expects lower revenue and margins at the satellite imaging company moving forward.
Molson Coors — The beverage stock dipped more than 1% following a downgrade from Bernstein. The investment firm said that the recovery trade for Molson Coors has largely run its course and moved its rating to market perform from outperform.
— CNBC’s Yun Li, Jesse Pound, Sarah Min, Samantha Subin and Tanaya Macheel contributed reporting.

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In the otherwise-sleepy town of Arthur, Illinois, this week brought a life-changing surprise for hundreds of workers at locally based garage-door maker, C.H.I. Overhead Doors. 
 C.H.I.’s private equity owner, KKR, is selling the company to steel manufacturer Nucor in a $3 billion deal. The sale marks one of KKR’s largest returns in recent history, generating a massive windfall for both the firm and — uniquely — C.H.I.’s employees, from truck drivers to factory workers. 

On average, hourly workers at C.H.I. will receive $175,000 in a payout, with the most-tenured earning more than $750,000 as a result of the sale.

Source: CNBC

Rhonda Jamison, an office manager at C.H.I., has been with the company for 17 years and will be taking home 5.5 times her annual salary. 
“Words cannot explain how my mind was going in a hundred directions,” she said. “There is no way that I would have ever expected this much money.” 
The idea of giving rank-and-file workers equity grants in a sale is the brainchild of Pete Stavros, KKR’s co-head of U.S. Private Equity. Stavros said he became interested in employee ownership at a young age due to his father’s work experience.  
“My dad was a construction worker for 45 years,” Stavros said. “He actually loved his job, except for, really, two things: one, he couldn’t create wealth, on an hourly wage. And then second, the hourly wage itself really led to a misalignment of incentives with his employer, because the employer wants fewer hours and no overtime, and the workers want just the opposite.” 

Employee ownership model

Once he hit a leadership position at KKR, Stavros began experimenting with employee ownership models in the investments he oversaw. 
“We had good success. So, it delivered great results for companies, great outcomes for workers, he said. “This isn’t charity, it’s not a gift. They drove an unbelievable amount of productivity in the business.” 
Now, the firm uses an employee ownership model in all of its U.S. buyouts and it’s hoping to convince its peers to do the same. 
Other large private equity firms, including Apollo Global, Ares Management, Silver Lake, and TPG, have partnered with Stavros’ nonprofit called Ownership Works. Each firm has committed to implementing shared ownership models within at least three of their portfolio companies by the end of 2023. 

Source: CNBC

Even Nucor will include their own profit-sharing model for C.H.I., and despite all the changes, C.H.I. employees say they have no plans to leave the company. 
“We’ve got more accountability for ourselves and to our teammates,” said Kenroy Morrison who is a general manager for C.H.I. in New Jersey. “It’s one of those things where I don’t see myself going anywhere. I’m here for the long haul.” 
Morrison said he plans to put his bonus toward a college fund for his two-year-old son. 
As for Jamison, who spends her days answering phones and ordering supplies, she also has big plans for her newfound money. 
“Well, we’re going to Disney,” she said. “I’m gonna’ pay off my house, I’m gonna’ pay off my cars, and we’re gonna’ give a little bit to the church and help my kids a little bit.”

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Throughout the pandemic shoppers have learned again and again about the fragility of supply chains. In America the latest product missing from supermarket shelves is infant formula. Whereas previous shortages, affecting everything from cars to couches, presented an inconvenience to consumers, a lack of nourishment for babies creates serious health risks. So the Biden administration has swung into action. On May 16th the Food and Drug Administration (fda) announced that America would loosen restrictions on imports of formula from other countries and take steps to increase domestic production.There are several overlapping explanations for the shortage. The biggest single problem has been a halt to production at a big manufacturing facility in Michigan since February, when officials began investigating bacterial infections in four babies possibly caused by its milk-based powder. Even without that, parents were struggling to buy formula. A lack of packaging materials, delays in the import of ingredients and staffing vacancies have also contributed to the headache. As much as 43% of formula products were out of stock across America in early May, according to Datasembly, a retail-data firm.Some politicians and analysts have also pointed to two more fundamental problems in the American economy supposedly exposed by the shortages: corporate concentration and price gouging. The former is a valid concern; the latter is a misleading distraction.Until shops started running out of milk-based powder for babies, most Americans probably never gave much thought to the industrial structure of the infant-formula market. Now, it is common knowledge: just four companies (Abbott, Gerber, Perrigo and Reckitt Benckiser) make nearly all of America’s baby formula. The production stoppage occurred at a factory owned by Abbott, which alone controls around 40% of the market. It is a graphic illustration of how a decrease in competition, observable in roughly three-quarters of American industries over the past three decades, can serve the economy poorly. Concentration in the formula market has been exacerbated by close regulation. About 98% of formula consumed in America is made domestically because of the fda’s stringent approval process for foreign factories. And more than half is purchased through a nutrition programme for low-income families, which in turn sources from a single supplier in each state. In 2007 when California switched its contract from Abbott to Mead Johnson (now owned by Reckitt), Abbott’s market share there fell from 90% to 5%, while Mead’s rose from 5% to 95%. On May 13th a group of Democratic Senators including Cory Booker called for an antitrust review of the formula industry. If that were to happen, it would not solve the shortages at hand, but it could put the market on sounder footing in the future.More dubious are claims about the severity of price gouging. In a letter to the Federal Trade Commission on May 12th, President Joe Biden asked it to investigate whether “unscrupulous profiteers” were scooping up infant formula in shops and reselling it for hugely marked-up prices online. There have indeed been instances of such anti-social behaviour.But for some in the Democratic Party, these allegations about pricing now fit into a broader narrative about how corporate greed lies at the root of America’s high inflation. Elizabeth Warren, a progressive senator from Massachusetts, and several colleagues introduced a bill on May 12th that would “prohibit the practice of price gouging during all abnormal market disruptions”. They cited a study from the Economic Policy Institute, a left-wing think-tank, which argued that fatter profit margins have driven more than half of price increases since 2020. Mr Biden has also cottoned on to greed as a politically clever explanation for high prices. On May 13th he tweeted that getting the wealthiest corporations to pay “their fair share” would be a way to bring down inflation.In theory the fiscal drag that would come from higher taxes without any offsetting increase in government spending could reduce inflation (as well, unfortunately, as growth more generally). But if corporate greed explains high inflation, why did so many prices only start to soar well after the pandemic began? It is not as if companies just discovered a love of profits. Jeff Bezos, the billionaire owner of Amazon, was right to criticise Mr Biden’s tweet as “misdirection”, accusing him of trying to muddy the water in the debate over prices. Indeed, something far more basic explains the run-up in inflation: a surge in stimulus-fuelled demand, compounded by the many disruptions to supply. For individual products the signal sent by higher prices is the most effective way to bring supply and demand back into balance. In the case of baby formula, it provides an incentive for domestic companies to make more in America and for foreign producers to run the gauntlet of approvals to bring their powder into the country. Rather like infant formula itself, higher prices can play a part in healthy development. ■ More